[ G.R. No. 52824, March 16, 1988 ]

REYNALDO BAUTISTA, PETITIONER, VS. HON. AMADO C. INCIONG, IN HIS CAPACITY AS DEPUTY MINISTER OF LABOR AND ASSOCIATED LABOR UNIONS

(ALU), RESPONDENTS.

This is an illegal dismissal case. The respondent Deputy Minister dismissed the complaint of herein petitioner principally on the ground that no employer-employee relationship existed between the petitioner and respondent Associated Labor Unions (ALU).

The facts as found by the National Capital Region Director of the then Ministry of Labor (MOL), Region IV are as follows:"Complainant (petitioner) was employed by ALU as 'Organizer' in 1972 with a starting salary of P250.00 a month. As such, he paid his monthly SSS contributions, with the respondent as his employer. On March 15, 1979, He was left in the office of ALU while his other-co-organizers were in Cainta, Rizal attending a certification election at Chrysler Philippines, as he was not the organizer assigned in said company. On March 16, 1979, he went on sick leave for ten (10) days. His SSS sickness benefit application form signed by ALU's physician was given to ALU for submission to the SSS. On March 16, 1979, complainant reported back for work upon expiration of his leave but was informed by ALU's Area Vice-President for Luzon of his termination effective March 15, 1979. Hence, this complaint filed on March 28, 1979. On April 18, 1979, however, ALU filed a clearance application to terminate complainant's services effective March 16, 1979 on the ground of abandonment of work." (p. 48, Rollo)Based on these findings, the Director ruled in favor of the petitioner and ordered the respondent Union to reinstate the petitioner to his former position with full backwages and to pay him emergency allowance, 13th month pay and to refund his Mutual Aid Fund Deposit in the amount of P370.00.

Respondent ALU appealed to the Ministry of Labor. On October 23, 1979, the respondent Deputy Minister set aside the order of the Director and dismissed the petitioner's complaint for lack of merit. In his order, the Deputy Minister found that the petitioner was merely accommodated by the respondent union after he was dismissed by his former employer sometime in 1972 and that his membership coverage with the SSS which shows that respondent ALU is the one paying the employer's share in the premiums is not conclusive proof that respondent is the petitioner's employer because such payments were performed by the respondent as a favor for all those who were performing full time union activities with it to entitle them to SSS benefits. The Deputy Minister further ruled that the non-existence of an employer-employee relationship between the parties is bolstered by the fact that respondent ALU is not an entity for profit but a duly registered labor union whose sole purpose is the representation of its bona fide organization units where it is certified as such.

In this petition, the petitioner contends that the respondent Deputy Minister committed grave abuse of discretion in holding that there was no employer-employee relationship between him and the respondent union so much so that he is not entitled to the benefits that he is praying for.

We agree with the petitioner.

There is nothing in the records which support the Deputy Minister's conclusion that the petitioner is not an employee of respondent ALU. The mere fact that the respondent is a labor union does not mean that it cannot be considered an employer of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as a labor organization. In the case of Brotherhood Labor Unity Movement in the Philippines v. Zamora, (147 SCRA 49, 54), we outlined the factors in ascertaining an employer-employee relationship:

"In determining the existence of an employer-employee relationship, the elements that are generally considered are the following: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. It is the so-called 'control test' that is the most important element (Investment Planning Corp. of the Phils. v. The Social Security System, 21 SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72)."

"In the case at bar, the Regional Director correctly found that the petitioner was an employee of the respondent union as reflected in the latter's individual payroll sheets and shown by the petitioner's membership with the Social Security System (SSS) and the respondent union's share of remittances in the petitioner's favor. Even more significant, is the respondent union's act of filing a clearance application with the MOL to terminate the petitioner's services. Bautista was selected and hired by the Union. He was paid wages by the Union. ALU had the power to dismiss him as indeed it dismissed him. And definitely, the Union tightly controlled the work of Bautista as one of its organizers. There is absolutely no factual or legal basis for Deputy Minister Inciong's decision.We are, thus, constrained to reverse the findings of the respondent Deputy Minister. However, the records show that antipathy and antagonism between the petitioner and the respondent union militate against the former's reinstatement. ALU would not want to have a union organizer whom it does not trust and who could sabotage its efforts to unionize commercial and industrial establishments. Severance pay, therefore, is more proper and in order. As we have ruled in the case of Asiaworld Publishing House, Inc. v. Hon. Blas Ople, et al., (G.R. No. 56398, July 23, 1987) quoting the case of Balaquezon EWTU v. Zamora, (97 SCRA 5, 8):"'It should be underscored that the backwages are being awarded on the basis of equity or in the nature of severance pay. This means that a monetary award is to be paid to the striking employees as an alternative to reinstatement which can no longer be effected in view of the long passage of time or because of the realities of the situation. (Underscoring supplied)

WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Deputy Minister is ANNULLED and SET ASIDE. The Order of Regional Director Francisco L. Estrella is REINSTATED and ordered executed but instead of returning the petitioner to his former position, the private respondent is ordered to pay him an amount equal to his backwages for only three years and the separation pay to which he may be entitled as of the end of the three year period under the applicable law or collective bargaining agreement.

[ G.R. No. 87211, March 05, 1991 ]

JOVENCIO L. MAYOR, PETITIONER, VS. HON. CATALINO MACARAIG, HON. GUILLERMO CARAGUE, HON. RIZALINA CAJUCOM, HON. FRANKLIN DRILON,

RESPONDENTS, LOURDES A. SALES AND RICARDO OLAIREZ, PETITIONERS-INTERVENORS.

Five (5) special civil actions are hereby jointly decided because they involve one common, fundamental issue, the constitutionality of Republic Act No. 6715, effective March 21, 1989, in so far as it declares vacant “all positions of the Commissioners, Executive Labor Arbiters and Labor Arbiters of the National Labor Relations Commission,” and operates to remove the incumbents upon the appointment and qualification of their successors. The law is entitled, “AN ACT TO EXTEND PROTECTION TO LABOR, STRENGTHEN THE CONSTITUTIONAL RIGHTS OF WORKERS TO SELF-ORGANIZATION, COLLECTIVE BARGAINING AND PEACEFUL CONCERTED ACTIVITIES, FOSTER INDUSTRIAL PEACE AND HARMONY, PROMOTE THE PREFERENTIAL USE OF VOLUNTARY MODES OF SETTLING LABOR DISPUTES AND REORGANIZE THE NATIONAL LABOR RELATIONS COMMISSION, AMENDING PRESIDENTIAL DECREE NO. 441, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES.”[1] The provision directly dealing with the reorganization of the National Labor Relations Commission is Section 35. It reads as follows:[2]

“SEC. 35. Equity of the Incumbent. Incumbent career officials and rank-and-file employees of the National Labor Relations Commission not otherwise affected by the Act shall continue to hold office without need of reappointment. However, consistent with the need to professionalize the higher levels of officialdom invested with adjudicatory powers and functions, and to upgrade their qualifications, ranks, and salaries or emoluments, all positions of the Commissioners, Executive Labor Arbiters and Labor Arbiters of the present National Labor Relations Commission are hereby declared vacant. However, subject officials shall continue to temporarily discharge their duties and functions until their successors shall have been duly appointed and qualified.”The first of these five consolidated cases was filed by Labor Arbiter Jovencio Ll. Mayor on March 8, 1989. In the year that followed, eight other officers of the Commission, as initiators of their own separate actions or as intervenors, joined Mayor in the attempt to invalidate the reorganization and to be reinstated to their positions in the Government service.

G.R. No. 87211: Jovencio Mayor; and Intervenors Lourdes A. Sales and Ricardo Olairez

Jovencio Ll. Mayor, a member of the Philippine Bar for fifteen (15) years, was appointed Labor Arbiter in 1986 after he had, according to him, met the prescribed qualifications and passed “a rigid screening process.” Fearing that he would be removed from office on account of the expected reorganization, he filed in this Court the action now docketed as G.R. No. 87211. His fears proved groundless, however. He was in fact reappointed a Labor Arbiter on March 8, 1990. Hence, as he himself says, the case became moot as to him.

Like Mayor, both intervenors Lourdes A. Sales and Ricardo N. Olairez were appointed Labor Arbiters in 1986, but unlike Mayor, were not among the one hundred fifty-one (151) Labor Arbiters reappointed by the President on March 8, 1990.

G.R. No. 90044: Pascual Y. Reyes; and Intervenor Eugenio I. Sagmit, Jr.

At the time of the effectivity of R.A. No. 6715, Pascual Y. Reyes was holding the office of Executive Director of the National Labor Relations Commission in virtue of an appointment extended to him on May 30, 1975. As specified by Administrative Order No. 10 of the Secretary of Labor, dated July 14, 1975, the functions of his

office were “to take charge of all administrative matters of the Commission and to have direct supervision over all units and personnel assigned to perform administrative tasks;” and Article 213 of the Labor Code, as amended, declared that the “Executive Director, assisted by a Deputy Executive Director, shall exercise the administrative functions of the Commission.” Reyes states that he has been “a public servant for 42 years,” and “is about to retire at sixty-five (65),” in 1991.

The petitioner-in-intervention, Eugenio I. Sagmit, Jr., was Reyes’ Deputy Executive Director, appointed as such on October 27, 1987 after twenty-five (25) years of government service.

Both Reyes and Sagmit were informed that they had been separated from employment upon the effectivity of R.A. No. 6715, pursuant to a Memorandum-Order issued by then Secretary of Labor Franklin Drilon on August 17, 1989 to the effect that the offices of Executive Director and Deputy Executive Director had been abolished by Section 35, in relation to Section 5 of said Act, and “their functions transferred to the Chairman, aided by the Executive Clerk.”

Reyes moved for reconsideration on August 29, 1989, but when no action was allegedly taken thereon, he instituted the action at bar, G.R. No. 90044. Sagmit was afterwards granted leave to intervene in the action.

G.R. No. 91547: Ceferino Dulay, Rosario G. Encarnacion, and Daniel M. Lucas

Petitioners Rosario G. Encarnacion and Daniel M. Lucas, Jr. were appointed National Labor Relations Commissioners on October 20, 1986, after the Commission was reorganized pursuant to Executive Order No. 47 of President Aquino. Later, or more precisely on November 19, 1986, Lucas was designated Presiding Commissioner of the Commission’s Second Division; and Commissioner Ceferino E. Dulay was appointed Presiding Commissioner of the Third Division.

Executive Order No. 252, issued by the President on July 25, 1987, amended. Article 215 of the Labor Code by providing that “the Commissioners appointed under Executive Order No. 47 dated September 10, 1986 shall hold office for a term of six (6) years ** (but of those thus appointed) three shall hold office for four (4) years, and three for two (2) years ** without prejudice to reappointment.” Under Executive Order No. 252, the terms of Encarnacion and Lucas would expire on October 23, 1992, and that of Dulay, on December 18, 1992.

On November 18, 1989, R.A. No. 6715 being then already in effect, the President extended to Encarnacion, Lucas and Dulay new appointments as Commissioners of the NLRC despite the fact that, according to them, they had not been served with notice of the termination of their services as incumbent commissioners, and no vacancy existed in their positions. Their new appointments were submitted to Congress, but since Congress adjourned on December 22, 1989 without approving their appointments, said appointments became functus officio.

No other appointments were thereafter extended to Encarnacion and Dulay. Lucas was however offered the position of Assistant Regional Director by Secretary Drilon and then by Acting Secretary Dionisio de la Serna (by letter dated January 9, 1990 which referred to his appointment as such Assistant Regional Director supposedly “issued by the President on November 8, 1989”). Lucas declined the offer, believing it imported a demotion.

They all pray that their removal be pronounced unconstitutional and void and they be declared Commissioners lawfully in office, or, alternatively, that they be paid all salaries, benefits and emoluments accruing to them for the unexpired portions of their six-year terms and allowed to enjoy retirement benefits under applicable laws (pursuant to R.A. 910 and the Resolution re Judge Mario Ortiz, G.R. No. 78951, June 28, 1988).

Of the incumbent Commissioners as of the effectivity of R.A. 6715, six (6) were reappointed, namely: (1) Hon. Edna Bonto Perez (as Presiding Commissioner, Second Division [NCR]), (2) Domingo H. Zapanta (Associate Commissioner, Second Division), (3) Lourdes C. Javier (Presiding Commissioner, Third Division [Luzon except NCR]), (4) Ernesto G. Ladrido III (Presiding Commissioner, Fourth Division [Visayas]), (5) Musib M. Buat (Presiding Commissioner, Fifth Division [Mindanao]), and (6) Oscar N. Abella (Associate Commissioner, Fifth Division). Other members appointed to the reorganized Commission were Vicente S.E. Veloso III, Romeo B. Putong, Rustico L. Diokno, Ireneo B. Bernardo, Rogelio I. Rayala, Irenea E. Ceniza, Bernabe S. Batuhan, and Leon G. Gonzaga, Jr. Appointed Chairman was Hon. Bartolome Carale, quondam Dean of the College of Law of the University of the Philippines.

G.R. No. 91730: Conrado Maglaya

Petitioner Conrado Maglaya alleges that he has been “a member of the Philippine Bar for thirty-six (36) years of which 31 years ** (had been) devoted to public service, the last 24 years in the field of labor relations law;” that he was appointed Labor Arbiter on May 30, 1975 and “was retained in such position despite the reorganization under the Freedom Constitution of 1986 ** (and) later promoted to and appointed by the President as Commissioner of the ** (NLRC) First Division on October 23, 1986.” He complains that he was effectively removed from his position as a result of the designation of the full complement of Commissioners in and to all Five Divisions of the NLRC by Administrative Order No. 161 dated November 18, 1989, issued by Labor Secretary Drilon.

G.R. No. 94518: Rolando D. Gambito

Rolando Gambito passed the bar examinations in 1971, joined the Government service in 1974, serving for sixteen years in the Department of Health, and as Labor Arbiter in the Department of Labor and Employment from October, 1986. He was not included in the list of newly appointed Labor Arbiters released on March 8, 1990; and his attempt to obtain a reconsideration of his exclusion therefrom and bring about his reinstatement as Labor Arbiter was unavailing.

The Basic Issue

A number of issues have been raised and ventilated by the petitioners in their separate pleadings. They may all be reduced to one basic question, relating to the constitutionality of the provisions of Republic Act No. 6715 DECLARING VACANT “all positions of the Commissioners, Executive Labor Arbiters and Labor Arbiters of the present National Labor Relations Commission,”[3] according to which the public respondents -

1) considered as effectively separated from the service inter alia, all holders of said positions at the time of the effectivity of said Republic Act No. 6715, including the positions of Executive Director and Deputy Executive Director of the Commission, and

2) consequently, thereafter caused the appointment of other persons to the new positions specified in said statute: of Chairman, Commissioners, Executive Clerk, Deputy Executive Clerk, and Labor Arbiters of the reorganized National Labor Relations Commission. The old positions were declared vacant because, as the statute states, of “the need to professionalize the higher levels of officialdom invested with adjudicatory powers and functions, and to upgrade their qualifications, ranks, and salaries or emoluments.”

As everyone knows, security of tenure is a protected right under the Constitution. The right is secured to all employees in private as well as in public employment. “No officer or employee in the civil service,” the Constitution declares, “shall be removed or suspended except for cause provided by law.”[4] There can scarcely be any doubt that each of the petitioners -- commissioner, administrative officer, or labor arbiter -- falls within

the concept of an “officer or employee in the civil service” since the civil service “embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters.”[5] The Commissioners thus had the right to remain in office until the expiration of the terms for which they had been appointed, unless sooner removed “for cause provided by law.” So, too, the Executive Director and Deputy Executive Director, and the Labor Arbiters had the right to retain their positions until the age of compulsory retirement, unless sooner removed “for cause provided by law.” None of them could be deemed to be serving at the pleasure of the President.

Now, a recognized cause for removal or termination of employment of a Government officer or employee is the abolition by law of his office as a result of reorganization carried out by reason of economy or to remove redundancy of functions, or clear and explicit constitutional mandate for such termination of employment.[6] Abolition of an office is obviously not the same as the declaration that that office is vacant. While it is undoubtedly a prerogative of the legislature to abolish certain offices, it can not be conceded the power to simply pronounce those offices vacant and thereby effectively remove the occupants or holders thereof from the civil service. Such an act would constitute, on its face, an infringement of the constitutional guarantee of security of tenure, and will have to be struck down on that account. It can not be justified by the professed “need to professionalize the higher levels of officialdom invested with adjudicatory powers and functions, and to upgrade their qualifications, ranks, and salaries or emoluments.”

The Constitution does not, of course, ordain the abolition of the petitioners’ positions or their removal from their offices; and there is no claim that the petitioners’ separation from the service is due to a cause other than RA 6715. The inquiry therefore should be whether or not RA 6715 has worked such an abolition of the petitioners’ offices, expressly or impliedly. This is the only mode by which, under the circumstances, the petitioners’ removal from their positions may be defended and sustained.

It is immediately apparent that there is no express abolition in RA 6715 of the petitioners’ positions. So, justification must be sought, if at all, in an implied abolition thereof; i.e., that resulting from an irreconcilable inconsistency between the nature, duties and functions of the petitioners’ offices under the old rules and those corresponding thereto under the new law.

An examination of the relevant provisions of RA 6715, with a view to discovering the changes thereby effected on the nature, composition, powers, duties and functions of the Commission and the Commissioners, the Executive Director, the Deputy Executive Director, and the Labor Arbiters under the prior legislation, fails to disclose such essential inconsistencies.

1. Amendments as Regards the NLRC and the Commissioners

First, as regards the National Labor Relations Commissioners.

A.  Nature and Composition of the Commission, Generally

1.  Prior to its amendment by RA 6715, Article 213 of the Labor Code envisaged the NLRC as being an integral part of the Department of Labor and Employment. “There shall,” it said, “be a National Labor Relations Commission in the Department of Labor and Employment **.” RA 6715 would appear to have made the Commission somewhat more autonomous. Article 213 now declares that, “There shall be a National Labor Relations commission which shall be attached to the Department of Labor and employment for program coordination only **.”

2.  Tripartite representation was to a certain extent restored in the Commission. The same Section 213, as

amended, now provides that the Chairman and fourteen (14) members composing the NLRC shall be chosen from the workers’, employers’ and the public sectors, as follows:“Five (5) members each shall be chosen from among the nominees of the workers and employers organizations, respectively. The Chairman and the four (4) remaining members shall come from the public sector, with the latter to be chosen from among the recommendees of the Secretary of Labor and Employment.”However, once they assume office, “the members nominated by the workers and employers organizations shall divest themselves of any affiliation with or interest in the federation or association to which they belong.”

B. Allocation of Powers Between NLRC En Banc and its Divisions

Another amendment was made in respect of the allocation of powers and functions between the Commission en banc, on the one hand, and its divisions, on the other. Both under the old and the amended law, the Commission was vested with rule-making and administrative authority, as well as adjudicatory and other powers, functions and duties, and could sit en banc or in divisions of three (3) members each. But whereas under the old law, the cases to be decided en banc and those by a division were determined by rules laid down by the Commission with the approval of the ex officio Chairman (the Secretary of Labor) -- said Commission, in other words, then exercised both administrative and adjudicatory powers -- the law now, as amended by RA 6715, provides that -

1)  the Commission “shall sit en banc only for purposes of promulgating rules and regulations governing the hearing and disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration and operations;” but

2)  it “shall exercise its adjudicatory and all other powers, functions and duties through its divisions.”

C. Official Stations, and Appellate Jurisdiction over Fixed Territory

Other changes related to the official station of the Commission and its divisions, and the territory over which the divisions could exercise exclusive appellate jurisdiction.

1. Under the old law, the Commission en banc and its divisions had their main office in Metropolitan Manila; and appeals could be taken to them from decisions of Labor Arbiters regardless of the regional office whence the case originated.

2. Under the law now, the First and Second Divisions have their official station in Metropolitan Manila and “handle cases coming from the National Capital Region;” the Third Division has its main office also in Metropolitan Manila but would have appellate jurisdiction over “cases from other parts of Luzon;” and the Fourth and Fifth Divisions have their main offices in Cebu and Cagayan de Oro City, and exercise jurisdiction over cases “from the Visayas and Mindanao,” respectively; and the appellate authority of the divisions is exclusive “within their respective territorial jurisdiction.”

D. Qualifications and Tenure of Commissioners

Revisions were also made by RA 6715 with respect to the qualifications and tenure of the National Labor Relations Commissioners.

Prescribed by the old law as qualifications for commissioners -- appointed for a term of six (6) years -- were that they (a) be members of the Philippine bar, and (b) have at least five years’ experience in handling labor-management relations.[7]

RA 6715, on the other hand, requires (a) membership in the bar, (b) engagement in the practice of law for at

least 15 years, (c) at least five years’ experience or exposure in the field of labor-management relations, and (d) preferably, residence in the region where the commissioner is to hold office. The commissioners appointed shall hold office during good behavior until they reach the age of sixty-five (65) years, unless they are sooner removed for cause as provided by law or become incapacitated to discharge the duties of their office.

2. Amendments Regarding Executive Labor Arbiters and Labor Arbiters

A.  Qualifications

The old law provided for one hundred fifty (150) labor arbiters assigned to the different regional offices or branches of the Department of Labor and Employment (including sub-regional branches or provincial extension units), each regional branch being headed by an Executive Labor Arbiter. RA 6715 does not specify any fixed number of labor arbiters, but simply provides that there shall be as many labor arbiters as may be necessary for the effective and efficient operation of the Commission.

The old law declared that Executive Labor Arbiters and Labor Arbiters should be members of the Bar, with at least two (2) years experience in the field of labor management relations. They were appointed by the President upon recommendation of the Chairman, and were “subject to the Civil Service Law, rules and regulations.”

On the other hand, RA 6715 requires that the “Executive Labor Arbiters and Labor Arbiters shall likewise be members of the Philippine Bar,” but in addition “must have been in the practice of law in the Philippines for at least seven (7) years, with at least three (3) years experience or exposure in the field of labor-management relations.” For “purposes of reappointment,” however, “incumbent Executive Labor Arbiters and Labor Arbiters who have been engaged in the practice of law for at least five (5) years may be considered as already qualified.” They are appointed by the President, on recommendation of the Secretary of Labor and Employment, and are subject to the Civil Service Law, rules and regulations.

B. Exclusive Original Jurisdiction

Before the effectivity of RA 6715, the exclusive original jurisdiction of labor arbiters comprehended the following cases involving all workers, whether agricultural or non-agricultural:

(1)  Unfair labor practice cases;(2)  Those that workers may file involving wages, hours of work and other terms and conditions of employment;(3)  All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees’ compensation, social security, medicare and maternity benefits;(4)  Cases involving household services; and(5)  Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lockouts.

Some changes were introduced by RA 6715, indicated by italics in the enumeration which shortly follows. The exclusive, original jurisdiction of Labor Arbiters now embraces the following cases involving all workers, whether agricultural or non-agricultural:

(1)  Unfair labor practice cases;(2)  Termination disputes;(3)  If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;

(4)  Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;[8]

(5)  Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts;(6)  Except claims for employees compensation, social security, medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00), whether or not accompanied with a claim for reinstatement.

Now, as before, the Labor Arbiters are given thirty (30) calendar days after the submission of the case by the parties to decide the case, without extension, except that the present statute stresses that “even in the absence of stenographic notes,” the period to decide is still thirty days, without extension.

Furthermore, RA 6715 provides that “Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.”

3. Amendments as Regards the Executive Director and Deputy Executive Director

Prior to RA 6715, there was, as earlier stated, an Executive Director, assisted by a Deputy Executive Director, who was charged with the “exercise (of) the administrative functions of the Commission.”[9] More particularly, his chief functions were “to take charge of all administrative matters of the Commission and to have direct supervision over all units and personnel assigned to perform administrative tasks.”[10] Although not so stated in the law, in the performance of their functions, the Executive Director and the Deputy Executive Director were obviously themselves subject to the supervision and control of the head of office, the ex officio Chairman of the National Labor Relations Commission (the Secretary of Labor), or the Commission itself.

Under RA 6715, the Secretary of Labor is no longer ex officio Chairman of the Commission. There has been created the office of Chairman, who “shall have the administrative supervision over the Commission and its regional branches and all its personnel, including the Executive Labor Arbiters and Labor Arbiters.” In this function, the law says, he shall be “aided by the Executive Clerk of the Commission.”

The Executive Clerk appears to be the officer who used to be known under the old law as the Executive Director. The office of Executive Director is nowhere mentioned in RA 6715. Said Executive Clerk is given the additional responsibility of assisting the Commission en banc and the First Division, in performing “such similar or equivalent functions and duties as are discharged by the Clerk of Court ** of the Court of Appeals.” The positions of Deputy Executive Clerks have also been created whose main role is to assist the other divisions of the Commission (the second, third, fourth and fifth) “in the performance of such similar or equivalent functions and duties as are discharged by the ** Deputy Clerk(s) of the Court of Appeals.”

Summing up -

1. Republic Act No. 6715 did not abolish the NLRC, or change its essential character as a supervisory and adjudicatory body. Under said Act, as under the former law, the NLRC continues to act collegially, whether it performs administrative or rule-making functions or exercises appellate jurisdiction to review decisions and final orders of the Labor Arbiters. The provisions conferring a somewhat greater measure of autonomy; requiring that its membership be drawn from tripartite sectors (workers, employees and the public sector); changing the official stations of the Commission’s divisions; and even those prescribing higher or other qualifications for the positions of Commissioner which, if at all, should operate only prospectively, not to

mention the fact that the petitioners (in G.R. No. 91547) have asserted without dispute that they possess the new qualifications -- none of these can be said to work so essential or radical a revision of the nature, powers and duties of the NLRC as to justify a conclusion that the Act in truth did not merely declare vacant but actually abolished the offices of commissioners and created others in their place.

2. Similar considerations yield the same conclusion as far as the positions of Labor Arbiters are concerned, there being no essential inconsistency on that score between Republic Act No. 6715 and the old law. The Labor Arbiters continue to exercise the same basic power and function: the adjudication, in the first instance, of certain classes of labor disputes. Their original and exclusive jurisdiction remains substantially the same under both the old law and the new. Again, their incumbents’ constitutionally guaranteed security of tenure cannot be defeated by the provision for higher or other qualifications than were prescribed under the old law; said provision can only operate prospectively and as to new appointees to positions regularly vacated; and there is, besides, also no showing that the petitioning Arbiters do not qualify under the new law.

3. The position titles of “Executive Clerk” and “Deputy Executive Clerk(s)” provided for in RA 6715 are obviously not those of newly-created offices, but new appellations or designations given to the existing positions of Executive Director and Deputy Executive Director. There is no essential change from the prescribed and basically administrative duties of these positions and, at the same time, no mention in the Act of the former titles, from which the logical conclusion is that what was intended was merely a change in nomenclature, not an express or implied abolition. Neither does the Act specify the qualifications for Executive Clerk and Deputy Executive Clerks. There is no reason to suppose that these could be higher than those for Executive Director and Deputy Executive Director, or that anything inheres in these positions that would preclude their incumbents from being named Executive Clerk and Deputy Executive Clerks.

WHEREFORE, the petitions are, as they must be, GRANTED, and the following specific dispositions are hereby RENDERED:

1. In G.R. No. 91547, and G.R. No. 91730, the removal of petitioners Rosario G. Encarnacion, Daniel M. Lucas, Jr., Ceferino E. Dulay, and Conrado Maglaya as Commissioners of the NLRC is ruled unconstitutional and void; however, to avoid displacement of any of the incumbent Commissioners now serving, it not appearing that any of them is unfit or has given cause for removal, and conformably to the alternative prayer of the petitioners themselves, it is ORDERED that said petitioners be paid all salaries, benefits and emoluments accruing to them for the unexpired portions of their six-year terms and allowed to enjoy retirement benefits under applicable laws, pursuant to RA No. 910 and this Court’s Resolution in Ortiz vs. Commission on Elections, G.R. No. 79857, 161 SCRA 812;

This disposition does not involve or apply to respondent Hon. Bartolome Carale, who replaced the Secretary of Labor as ex officio Chairman of the NLRC pursuant to RA 6715, none of the petitioners having been affected or in any manner prejudiced by his appointment and incumbency as such;

2.  In G.R. No. 90044, the removal of petitioner Pascual Y. Reyes and petitioner-in-intervention Eugenio L. Sagmit, Jr. as NLRC Executive Director and Deputy Executive Director, respectively, is likewise declared unconstitutional and void, and they are ordered reinstated as Executive Clerk and Deputy Executive Clerk, respectively, unless they opt for retirement, in either case with full back salaries, emoluments and benefits from the date of their removal to that of their reinstatement; and

3.  In G.R. Nos. 87211, and 94518, petitioners-intervenors Lourdes A. Sales and Ricardo Olairez and petitioner Rolando D. Gambito, having also been illegally removed as Labor Arbiters, are ordered reinstated to said positions with full back salaries, emoluments and benefits from the dates of their removal up to the time they are reinstated.

[ G.R. No. 91025, December 19, 1990 ]

UNION OF FILIPRO EMPLOYEES, PETITIONER, VS. THE HONORABLE NLRC AND NESTLE PHILIPPINES, INC., RESPONDENTS.

This special civil action of certiorari assails the resolution (dated June 5, 1989) of the National Labor Relations Commission (NLRC) relative to Certified Case No. 0522, the resolution denying the motion for reconsideration (dated August 8, 1989).

The antecedents are:On June 22, 1988, the petitioner Union of Filipro Employees, the sole and exclusive bargaining agent of all rank-and-file employees of Nestle Philippines, (private respondent) filed a Notice of Strike at the Department of Labor raising the issues of CBA deadlock and unfair labor practice.

The National Conciliation and Mediation Board (NCMB) invited the parties for a conference on February 4, 1988 for the purpose of settling the dispute. The private respondent however, assailed the legal personality of the proponents of the said notice of strike to represent the Nestle employees. This notwithstanding, the NCMB proceeded to invite the parties to attend the conciliation meetings and to which private respondent failed to attend contending that it will deal only with a negotiating panel duly constituted and mandated in accordance with the UFE Constitution and By-laws.

The records show that before the filing of said notice of strike, or on June 30, 1987, the respective CBAs in the four (4) units of Nestle, in Alabang/Cabuyao, Makati, Cagayan de Oro and Cebu/Davao work locations had all expired. Under the said CBAs, Alabang/Cabuyao and Makati units were represented by the UFE; the Cagayan de Oro unit was represented by WATU; while the Cebu/Davao was represented by TUPAS. Prior to the expiration of the CBAs for Makati and Alabang/Cabuyao, UFE submitted to the company a list of CBA proposals. The company on the other hand, expressed its readiness to negotiate a new CBA for Makati and Alabang/Cabuyao units but reserved the negotiation for Cagayan de Oro and Cebu/Davao considering that the issue of representation for the latter units was not yet settled. On June 10, 1987 and July 28, 1987, UFE was certified as the sole and exclusive bargaining representative of Cagayan de Oro and Cebu/Davao units, respectively.

On September 14, 1987, the Company terminated from employment all UFE Union officers, headed by its president, Mr. Manuel Sarmiento, and all the members of the negotiating panel for instigating and knowingly participating in a strike staged at the Makati, Alabang, Cabuyao and Cagayan de Oro on September 11, 1987 without any notice of strike filed and a strike vote obtained for the purpose.

On September 21, 1987, the union filed a complaint for illegal dismissal. The Labor Arbiter, in a decision dated January 12, 1988, upheld the validity of the dismissal of said union officers. The decision was later on affirmed by the respondent NLRC en banc, on November 2, 1988.

Respondent company contends that, “with the dismissal of UFE officers including all the members of the union negotiating panel as later on confirmed by the NLRC en banc, said union negotiating panel thus ceased to exist and its former members divested of any legal personality, standing and capacity to act as such or represent the union in any manner whatsoever.”

The union officers, on the other hand, asserted their authority to represent the regular rank-and-file employees of Nestle, Philippines, being the duly elected officers of the union.

In the meantime, private respondent sought guidelines from the Department of Labor on how it should treat letters from several splinter groups claiming to have possessed authority to negotiate in behalf of the UFE. It is noteworthy that aside from the names of the negotiating panel submitted by one UFE officials, three (3) other groups in the Nestle plant in Cabuyao and two groups in the Makati office have expressed a desire to bargain with management professing alleged authorization from and by the general membership. These groups however, it must be noted, belong to just one (1) union, the UFE.

In a letter dated August 20, 1988, BLR Director Pura Ferrer-Calleja advised:“Any attempt on the part of management to directly deal with any of the factions claiming to have the imprimatur of the majority of the employees, or to recognize any act by a particular group to adopt the deadlock counter proposal of the management, at this stage, would be most unwise. It may only fan the fire.”

On March 20, 1988 and August 5, 1988, the company concluded separate CBAs with the general membership of the union at Cebu/Davao and Cagayan de Oro units, respectively. The workers thereat likewise conducted separate elections of their officers.

Assailing the validity of these agreements, the union filed a case of ULP against the company with the NLRC-NCR Arbitration Branch on November 16, 1988.

Efforts to resolve the dispute amicably were taken by the NCMB but yielded negative result because of the irreconcilable conflicts of the parties on the matter of who should represent and negotiate for the workers.

On October 18, 1988, petitioner filed a motion asking the Secretary of Labor to assume jurisdiction over the dispute of deadlock in collective bargaining between the parties. On October 28, 1988, Labor Secretary Franklin Drilon certified to the NLRC the said dispute between the UFE and Nestle, Philippines, the relevant portion of which reads as follows:

“WHEREFORE, above premises considered, this office hereby certificates the sole issue of deadlock in CBA negotiations affecting the Makati, Alabang and Cabuyao units to the National Labor Relations Commission for compulsory arbitration.

“The NLRC is further directed to call all the parties immediately and resolve the CBA deadlock within twenty (20) days from submission of the case for resolution.” (Rollo, p. 225)

On June 5, 1989, the Second Division of the NLRC promulgated a resolution granting wage increase and other benefits to Nestle’s employees, ruling on non-economic issues, as well as absolving the private respondent of the Unfair Labor Practice charge. The dispositive portion states as follows:

“WHEREFORE, as aforestated, the parties are hereby ordered to execute and implement through their duly authorized representatives a collective bargaining agreement for a duration of five (5) years from promulgation of this Resolution.“SO ORDERED.” (Rollo, p. 180)

Petitioner finds said resolution to be inadequate and accordingly, does not agree therewith. lt filed a motion for reconsideration, which was, however, denied on August 8, 1989.Hence, this petition for certiorari.

Petitioner originally raised 13 errors committed by the public respondent. However, in its Urgent Manifestation and Motion dated September 24, 1990, petitioner limited the issues to be resolved into six (6). Thus, only the following shall be dealt with in this resolution:

1. WHETHER OR NOT THE SECOND DIVISION OF THE NLRC ACTED WITHOUT JURISDICTION IN RENDERING THE ASSAILED RESOLUTION. THE SAME BEING RENDERED ONLY BY A DIVISION OF THE PUBLIC RESPONDENT AND NOT BY EN BANC;2. WHETHER OR NOT THE RESPONDENT NLRC SERIOUSLY ERRED IN HOLDING THAT THE CBA TO BE SIGNED BY THE PARTIES SHALL COVER SOLELY THE BARGAINING UNIT CONSISTING OF ALL REGULAR RANK-AND-FILE EMPLOYEES OF THE RESPONDENT COMPANY AT MAKATI, ALABANG AND CABUYAO;3. WHETHER OR NOT THE RESPONDENT NLRC HAD ACTED WITH GRAVE ABUSE OF DISCRETION AND COMMITTED SERIOUS ERRORS IN FACT AND IN LAW WHEN IT RULED THAT THE CBA IS EFFECTIVE ONLY UPON THE PROMULGATION OF THE ASSAILED RESOLUTION;4. WHETHER OR NOT PUBLIC RESPONDENT HAD SERIOUSLY ERRED IN DENYING PETITIONER’S DEMAND FOR A CONTRACT SIGNING BONUS AND IN TOTALLY DISREGARDING THE LONG PRACTICE AND TRADITION IN COMPANY WHICH AMOUNT TO DIMINUTION OF EMPLOYEES BENEFITS;5. WHETHER OR NOT PUBLIC RESPONDENT SERIOUSLY ERRED IN NOT GRANTING THE UNIONS DEMAND FOR A “MODIFIED UNION SHOP” SECURITY CLAUSE IN THE CBA AS ITS RULING CLEARLY COLLIDES WITH SETTLED JURISPRUDENCE ON THE MATTER;6. WHETHER OR NOT PUBLIC RESPONDENT ERRED IN ENTIRELY ABSOLVING THE COMPANY FROM THE UNFAIR LABOR PRACTICE CHARGE AND IN DISREGARDING THE SUBSTANTIAL INCRIMINATORY EVIDENCE RELATIVE THERETO; (p. 9, Petitioner’s Urgent Manifestation and Motion dated September 24, 1990).

Counsel for the private respondent company filed a motion for leave of court to oppose the aforesaid urgent manifestation and motion. It appearing that the allowance of said opposition would necessarily delay the early disposition of this case, the Court Resolved to DISPENSE with the filing of the same.

We affirm the public respondent’s findings and rule as regards the issue of jurisdiction.

This case was certified on October 28, 1988 when existing rules prescribed that, it is incumbent upon the Commission en banc to decide or resolve a certified dispute. However, R.A. 6715 took effect during pendency of this case. Aside from vesting upon each division the power to adjudicate cases filed before the Commission, said Act further provides that the divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction.

Section 5 of RA 6715 provides as follows:“Section 5. Article 213 of the Labor Code of the Philippines, as amended, is further amended to read as follows:

Art. 213. National Labor Relations Commission. - There shall be a National Labor Relations Commission which shall be attached to the Department of Labor and Employment for program and policy coordination only, composed of (a) Chairman and fourteen (14) Members.

Five (5) members each shall be chosen from among the nominees of the workers and employers organizations, respectively. The Chairman and the four (4) remaining members shall come from the public sector, with the latter to be chosen from among the recommendees of the Secretary of Labor and Employment.

Upon assumption into office, the members nominated by the workers and employers organizations shall divest themselves of any affiliation with or interest in the federation or association to which they belong.

The Commission may sit en banc or in five (5) divisions, each composed of three (3) members. The Commission shall sit en banc only for purposes of promulgating rules and regulations governing the hearing and

disposition of cases before any of its divisions and regional branches and formulating policies affecting its administration and operations. The Commission shall exercise its adjudicatory and all other powers, functions and duties through its divisions. Of the five (5) divisions, the first and second divisions shall handle cases coming from the National Capital Region and the third, fourth and fifth divisions, cases from other parts of Luzon, from the Visayas and Mindanao, respectively. The divisions of the Commission shall have exclusive appellate jurisdiction over cases within their respective territorial jurisdiction.

The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of a judgment or resolution. Whenever the required membership in a division is not complete and the concurrence of two (2) commissioners to arrive at a judgment or resolution cannot be obtained, the Chairman shall designate such number of additional Commissioners from the other divisions as may be necessary.

The conclusions of a division on any case submitted to it for decision shall be reached in consultation before the case is assigned to a member for the writing of the opinion. It shall be mandatory for the division to meet for purposes of the consultation ordained therein. A certification to this effect signed by the Presiding Commissioner of the division shall be issued, and a copy thereof attached to the record of the case and served upon the parties.

The Chairman shall be the Presiding Commissioner of the first division, and the four (4) other members from the public sector shall be the Presiding Commissioners of the second, third, fourth and fifth divisions, respectively. In case of the effective absence or incapacity of the Chairman, the Presiding Commissioner of the second division shall be the Acting Chairman.

The Chairman, aided by the Executive Clerk of the Commission, shall have administrative supervision over the Commission and its regional branches and all its personnel, including the Executive Labor Arbiters and Labor Arbiters.

The Commission when sitting en banc, shall be assisted by the same Executive Clerk, and, when acting thru its Divisions, by said Executive Clerk for its First Division and four (4) other Deputy Executive Clerks for the Second, Third, Fourth, and Fifth Divisions, respectively, in the performance of such similar or equivalent functions and duties as are discharged by the Clerk of Court and Deputy Clerks of Court of the Court of Appeals.” (Underscoring supplied)

In view of the enactment of Republic Act 6715, the aforementioned rules requiring the Commission en banc to decide or resolve a certified dispute have accordingly been repealed. This is supported by the fact that on March 21, 1989, the Secretary of Labor, issued Administrative Order No. 36 (Series of 1989), which reads:

“2. Effective March 21, 1989, the date of the effectivity of Republic Act 6715, the Commission shall cease holding en banc sessions for purposes of adjudicating cases and shall discharge their adjudicatory functions and powers through their respective Divisions.”

Contrary to the claim of the petitioner, the above-cited Administrative Order is valid, having been issued in accordance with existing legislation as the Secretary of Labor is clothed with the power to promulgate rules for the implementation of the said amendatory law.

Section 36 of R.A. 6715 provides:

“Section 36. Rule-Making Authority. - The Secretary of Labor and Employment is hereby authorized to promulgate such rules and regulations as may be necessary to implement the provisions of this Act.”

Moreover, it is to be emphasized and it is a matter of judicial notice that since the effectivity of R.A. 6715, many cases have already been decided by the five (5) divisions of the NLRC. We find no legal justification in entertaining petitioner’s claim considering that the clear intent of the amendatory provision is to expedite the

disposition of labor cases filed before the Commission. To rule otherwise would not be congruous to the proper administration of justice.

As to the second issue, the Court is convinced that the public respondent committed no grave abuse of discretion in resolving only the sole issue certified to by the Secretary and formulating a CBA which covers the bargaining units consisting of all regular rank-and-file employees of the respondent company at Makati, Alabang and Cabuyao only.

In its assailed resolution, public respondent stated:

“A perusal of the records and proceedings of this case reveals that after the issuance by the Secretary of Labor of his Order dated 28 October 1988 certifying the dispute to Us, the Union filed an Urgent Manifestation seeking the modification of the certification order to include the Cebu/Davao and Cagayan de Oro divisions, the employees/workers therein being all bonafide members of the Union which is the sole and exclusive bargaining representative of all the regular rank-and-file workers of the company nationwide. Their non-inclusion in the certification order, the Union argues, would give premium to the alleged unlawful act of the Company in entering into separate ‘Collective Bargaining Agreements’ directly with the workers thereat.

“In the same vein, the union manifested its intention to file a complaint for ULP against the company and its officers responsible for such act, which it eventually did.

“Considering that the Union had reserved the right to prosecute the Company and its officers responsible for the alleged unlawful execution of the CBA directly with the union members in Cagayan de Oro and Cebu/Davao units, as it has in fact filed a case which is now pending with our Arbitration Branch, the issue as to whether such acts constitute ULP is best heard and decided separately from the certified case, not only because of the evidentiary need to resolve the issue, but also because of the delay that may ensue in the resolution of the present conflict.

“Furthermore, the consolidation of the issue with the instant case poses complicated questions regarding venue and joinder of parties. We feel that each of the issues propounded by the parties shall be better dealt with separately according to its own merits.

“Thus, We rule to resolve the sole issue in dispute certified to this Commission, i.e., the deadlock in the collective bargaining negotiations in Cabuyao/Alabang and Makati units.” (Rollo, pp. 174-176)

We agree. Public respondent’s resolution is proper and in full compliance with the order of the Secretary of Labor. The concomittant delay that will result in resolving petitioner’s motion for the modification of the certification order to determine whether to include Cebu/Davao and Cagayan de Oro Divisions or not will defeat the very purpose of the Secretary of Labor’s assumption of jurisdiction and his subsequent certification order for compulsory arbitration.

The assumption of jurisdiction by the Secretary of Labor over labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest is in the nature of a police power measure. It cannot be denied that the private respondent is engaged in an undertaking affected with public interest being one of the largest manufacturers of food products. The compelling consideration of the Secretary’s assumption of jurisdiction is the fact that a prolonged strike or lockout is inimical to the national economy and thus, the need to implement some measures to suppress any act which will hinder the company’s essential productions is indispensable for the promotion of the common good. Under this situation, the Secretary’s certification order for compulsory arbitration which was intended for the immediate formulation of an already delayed CBA was proper.

Corollarily, the NLRC was thereby charged with the task of implementing the certification order for compulsory arbitration. As the implementing body, its authority did not include the power to amend the

Secretary’s order (University of Santo Tomas v. National Labor Relations Commission, UST Faculty Union, G.R. No. 89920, October 18, 1990).

For the same reason, We rule that the prayer to declare the respondent company guilty of acts of unfair labor practice when it allegedly resorted to practices designed to delay the collective bargaining negotiations cannot be subsumed in this petition, it being beyond the scope of the certification order.

Petitioner argues that because of the public respondent’s actuation in this regard, it committed grave abuse of discretion as it allowed multiplicity of suits and splitting causes of action which are barred by procedural rule.

We cannot subscribe to this argument. In the recent case of the Philippine Airlines, Inc. v. National Labor Relations Commission, this Court had occasion to define what a compulsory arbitration is. In said case, this Court stated:

“When the consent of one of the parties is enforced by statutory provisions, the proceeding is referred to as compulsory arbitration. In labor cases, compulsory arbitration is the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties. (G.R. 55159, 22 Dec. 89).”

When sitting in a compulsory arbitration certified to by the Secretary of Labor, the NLRC is not sitting as a judicial court but as an administrative body charged with the duty to implement the order of the Secretary. Its function only is to formulate the terms and conditions of the CBA and cannot go beyond the scope of the order. Moreover, the Commission is further tasked to act within the earliest time possible and with the end in view that its action would not only serve the interests of the parties alone, but would also have favorable implications to the community and to the economy as a whole. This is the clear intention of the legislative body in enacting Art. 263 paragraph (g) of the Labor Code, as amended by Section 27 of R.A. 6715, which provides:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or lockout employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to enforce the same. (Underscoring supplied)

In view of the avowed but limited purpose of respondent’s assumption of jurisdiction over this compulsory arbitration case, it cannot be faulted in not taking cognizance of other matters that would defeat this purpose.

As regards the third issue raised by petitioner, this Court finds the provisions of Article 253 and Article 253-A of the Labor Code as amended by R.A. 6715 as the applicable laws, thus:

“Art. 253. Duty to bargain collectively when there exists a collective bargaining agreement. When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.

“Art. 253-A. Terms of a collective bargaining agreement. - Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in the Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code.” (Underscoring supplied)

In the light of the foregoing, this Court upholds the pronouncement of the NLRC holding the CBA to be signed by the parties effective upon the promulgation of the assailed resolution. It is clear and explicit from Article 253-A that any agreement on such other provisions of the CBA shall be given retroactive effect only when it is entered into within six (6) months from its expiry date. If the agreement was entered into outside the six (6) month period, then the parties shall agree on the duration of the retroactivity thereof.

The assailed resolution which incorporated the CBA to be signed by the parties was promulgated June 5, 1989, and hence, outside the 6 month period from June 30, 1987, the expiry date of the past CBA. Based on the provision of Section 253-A, its retroactivity should be agreed upon by the parties. But since no agreement to that effect was made, public respondent did not abuse its discretion in giving the said CBA a prospective effect. The action of the public respondent is within the ambit of its authority vested by existing laws.

In assailing the public respondent’s actuation, the Union cites the case of Villar v. Inciong (121 SCRA 444) where this Court ruled:

“x x x. While petitioners were charged for alleged commission of acts of disloyalty inimical to the interests of the Amigo Employees Union - PAFLU in the Resolution of February 14, 1977 of the Amigo-Employees Union-PAFLU and on February 15, 1977, PAFLU and the company entered into and concluded a new collective bargaining agreement, petitioners may not escape the effects of the security clause under either the old CBA or the new CBA by claiming that the old CBA had expired and that the new CBA cannot be given retroactive enforcement. To do so would be to create a gap during which no agreement would govern, from the time the old contract expired to the time a new agreement shall have been entered into with the union. x x x “

In the aforecited case, the Court only pointed out that it is not right for union members to argue that they cannot be covered by the past and the new CBAs both containing the same closed-shop agreement for acts committed during the interregnum. What was emphasized by this Court is that in no case should there be a period in which no agreement would govern at all. But nowhere in the said pronouncement did We rule that every CBA contracted after the expiry date of the previous CBA must retroact to the day following such date. Hence, it is proper to rule that in the case at bar, the clear and unmistakable terms of Articles 253 and 253-A must be deemed controlling.

Articles 253 an 253-A mandate the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing during the 60-day period prior to the expiration of the old CBA and/or until a now agreement is reached by the parties. Consequently, there being no new agreement reached, the automatic renewal clause provided for by the law which is deemed incorporated in all CBAs, provides the reason why the new CBA can only be given a prospective effect.

Petitioner claims that because of the prospective effect of the CBA, union members were deprived of substantial amount of monetary benefits which they could have enjoyed had the CBA be given retroactive effect. This would include backwages, the immediate effects of the mandated wage increase on the fringe benefits such as the 13th and 14th month pay, overtime premium, and right to differential pay, leaves, etc. This Court, is not unmindful of these. Nevertheless, We are convinced that the CBA formulated by public respondent is fair, reasonable and just. Even if prospective in effect, said CBA still entities the Nestle workers and employees reasonable compensation and benefits which, in the opinion of this Court, is one of the highest, if not the highest in the industry. Petitioner did not succeed in overcoming the presumption of regularity in the performance of the public respondent’s functions. Even if the resolution fell short of meeting the numerous demands of the union, the petitioner failed to establish that public respondent committed grave abuse of discretion in not giving the CBA a retrospective effect.

The fourth and fifth assignment of errors should be resolved jointly considering that they are the terms and conditions of the CBA.

According to petitioner, the terms and conditions thereof are inadequate, unreasonable, incompetitive and thus, prejudicial to the workers. It further decries public respondent’s alleged taking side with the private respondent. Petitioner contends that in issuing the assailed resolutions, public respondent considered only the position of the private respondent and totally disregarded that of the petitioner. It further avers that the awards are bereft of any factual and legal basis.

Petitioner made so many claims and statements which were adopted and asserted without good ground. It fails to substantiate why, in not granting its demands for the inclusion in the CBA of a “Contract Signing Bonus” and a “Modified Union Shop Agreement,” the assailed resolutions were erroneous and were drawn up arbitrarily and whimsically.

In the case of Palencia v. National Labor Relations Commission, G.R. No. 75763, August 21, 1987, 153 SCRA 247, We ruled that the findings of fact of the then Court of Industrial Relations (now NLRC), are conclusive and will not be disturbed. Thus:

“Following a long line of decisions this Court has consistently declined to disturb the findings of fact of the then Court of Industrial Relations whose functions the NLRC now performs. [Pambusco Employees Union Inc. v. Court of Industrial Relations, 68 Phil. 591 (1939); Manila Electric Co. v. National Labor Union, 70 Phil. 617 (1940); San Carlos Milling Co. v. Court of Industrial Relations, 111 Phil. 323 (1961), 1 SCRA 734; Philippine Educational Institution v. MLQSEA Faculty Assn., 135 Phil. 282 (1968), 26 SCRA 272; University of Pangasinan Faculty Union v. University of Pangasinan and NLRC, G.R. No. 63122, February 20, 1984, 127 SCRA 6911. The findings of fact are conclusive and will not be disturbed in the absence of a showing that there has been grave abuse of discretion. [Philippine Educational Institution v. MLQSEA Faculty Association, 26 SCRA 272, 276] and there being no indication that the findings are unsubstantiated by evidence [University of Pangasinan Faculty Union v. University of Pangasinan and NLRC, G.R. No. 63122, February 20, 1984, 127 SCRA 694, 704].”

Moreover, the NLRC is in the best position to formulate a CBA which is equitable to all concerned. Because of its expertise in settling labor disputes, it is imbued with competence to appraise and evaluate the evidence and positions presented by the parties. In the absence of a clear showing of grave abuse of the discretion, the findings of the respondent NLRC on the terms of the CBA should not be disturbed.

Taken as a whole, the assailed resolutions are after all responsive to the call of compassionate justice observed in labor law and the dictates of reason which is considered supreme in every adjudication.

ACCORDINGLY, PREMISES CONSIDERED, the petition is DISMISSED. The Resolutions of the NLRC, dated June 5, 1989 and August 8, 1989 are AFFIRMED, except insofar as the ruling absolving the private respondent of unfair labor practice which is declared SET ASIDE.

[ G.R. Nos. 97251-52, July 14, 1995 ]

JOVENCIO MINA, RICARDO WANGIT, ANTHONY FARNICAN, PETER ATUBAN AND ARTHUR ALTATIS, PETITIONERS, VS. NATIONAL LABOR RELATIONS

COMMISSION (NLRC) AND ITOGONSUYOC MINES, INC., RESPONDENTS.

This is a petition for certiorari to set aside the decision of the Third Division of the National Labor Relations Commission (NLRC) in NLRC Case No. RAB-I-0044-81 and NLRC Case No. RAB-I-0045-81 upholding the dismissal of petitioners.

I

The facts as narrated by the Labor Arbiter are as follows:

"These cases of illegal dismissal were filed on December 11, 1981 by Anthony Farnican, Arthur Altatis and Ricardo Wangit in the first case, No. 0044-81, and Jovencio Mina and Peter Atuban in the second case, No. 0045-81.  They have been consolidated since the complainants have the same causes of action against the same respondent, Itogon-Suyoc Mines, Inc. The records do not show what was their respective pay when the complainants were all discharged on December 3, 1981.

"On November 20, 1981, between 11:00 p.m. and 11:45 p.m., herein complainants were allegedly caught in the act of highgrading.  According to the respondent's version, five mine patrols proceeded to 14 Vein, 23 Position, 1400 Level underground.  On their way, at about 11:00 p.m., the patrols met the respondent's mine engineer, leadman of the complainants, escorted by two security guards carrying two sacks of highgrade ore.  With headlights off, the patrols went down the manway and when they reached the apprehension site, they saw the complainants breaking and pulverizing highgrade ores in the presence of the posted security guard.  They observed the highgraders in (sic) five (5) minutes, and when the lookout miner noticed their presence and warned his companions: "Adda tao!" in Ilocano, meaning "the guards are here!" —  the mine patrols apprehended the complainants and recovered from the hands of the complainants were a plastic containing the highgrade ores, hammers and iron tubes being used in breaking the ores.

"One of the complainants allegedly bribed the apprehending officers (sic) P1,000.00 each to settle the manner (sic), but the guards refused the offer.  Prior to the apprehension, the security guard (SG) on post, SG Freddie Bragado, allegedly warned the complainants to stop their illegal activity, but the complainants threatened him not to report them otherwise something would happen to him.  Because of the threat, although he was then armed with a shotgun, SG Bragado, the guard on post and star witness of the respondent, became afraid. SG Bragado just let the complainants commit highgrading until the mine patrols arrived to apprehend the highgraders. Complainants were investigated, placed on preventive suspension on November 23, 1981 and subsequently dismissed on December 3, 1981.

"In support of the foregoing allegations, the respondent submitted the sworn statements of Freddie Bragado, joint affidavit of the apprehending security guards, essay report that the recovered effects are highgrade, information and resolution of the fiscal and Order of the Municipal Court all showing prima facie case exists against complainants.

"The complainants, on the other hand, have another version.  They worked under the supervision of Engr.

Melchor Estonilo and security guards.  At about 11:00 p.m., they were ordered to get out, and Engr. Estonilo padlocked their working place so they proceeded to take a crow's bath at the place where they were apprehended.  They denied the allegations of the apprehending security guards and charged them to be more interested in the reward of P100.00 per apprehension plus 30% percent of the value of the allegedly recovered highgrade.  That when they were apprehended, the guard on post told the patrols why they were effecting the arrest when complainants had not done anything illegal.  That they were discharged illegally, without any just and valid cause.  Hence, these complaints.  In support of the foregoing allegations, they submitted sworn statements including that of SG Bragado" (Rollo, pp. 15-17).

On April 28, 1986, the Labor Arbiter rendered his decision finding that the complainants were illegally dismissed.  The dispositive portion of the decision reads:

"WHEREFORE, in the light of the foregoing considerations, the respondent is hereby ordered to reinstate the five (5) complainants to their former respective position without loss of seniority rights with full back wages including ECOLA and 13th month pay for one year and four months, plus full back wages to be counted after the 10th day from receipt of this decision up to the time of their actual reinstatement. Respondent is also ordered to pay complainants ten (10%) percent attorney's fees of the total amounts (sic) awarded.

"Respondent is finally ordered to present proof of compliance with this Order within ten (10) days from receipt of this decision" (Rollo, p. 19).

Private respondent appealed the decision of the Labor Arbiter to NLRC.  On October 18, 1989, the Third Division of NLRC affirmed the Labor Arbiter's decision but limited the award of back wages to three years.

Between the rendition of the decision of the Third Division and the resolution denying the motion for reconsideration, a change in the membership of the division took place.

Administrative Order No. 161 dated November 18, 1989 of the Secretary of Labor and Employment reorganized the NLRC and specified the place of assignment of the newly appointed commissioners.  The new commissioners, Presiding Commissioner Lourdes C. Javier and Commissioner Ireneo B. Bernardo who were assigned to the Third Division, assumed their posts on November 20, 1989 while Commissioner Rogelio I. Rayala assumed his office on November 15, 1989.

In the motion for reconsideration filed by private respondent, the Third Division, as newly constituted, rendered its Decision dated November 29, 1990 setting aside the Resolution dated October 18, 1990 and declaring the dismissal from employment of complainants as valid. Hence, this petition.

II

Petitioners claim that their motion for reconsideration should have been resolved by the same members of the Third Division who rendered the appealed decision.

We do not agree.

Under Article 213 of the Labor Code of the Philippines as amended by R.A. No. 6715, "xxx Of the five (5) divisions [of the NLRC], the First and Second Divisions shall handle cases coming from the National Capital Region and the Third, Fourth and Fifth Divisions, cases from other parts of Luzon, from the Visayas and Mindanao, respectively. The divisions of the Commission shall have exclusive appellate jurisdiction over cases with their respective territorial jurisdiction" (Italics supplied).

Section 2(b), Rule VII of the New Rules of Procedure of NLRC, provides as follows:

"b)  Divisions. — Unless otherwise provided by law, the Commission shall exercise its adjudicatory and all other powers, functions and duties through its five (5) Divisions.  Each Division shall consist of one member from the public sector who shall act as Presiding Commissioner and one member each from the workers and employers sectors, respectively.

"Of the five (5) Divisions, the First and Second Divisions shall have exclusive territorial jurisdiction over appeals of cases coming from the National Capital Region and the POEA; the Third Division, appealed cases from Luzon (Regions I, including the Cordillera Administrative Region, II, III, IV except Metro Manila and V); Fourth  Division, appealed cases from Visayas (Regions VI, VII, and VIII); and, the Fifth Division, appealed  cases from Mindanao (Regions IX, X, XI and XII, including those from the Mindanao Autonomous  Region)" (Italics supplied).

Since petitioners are from Baguio City, the Third Division of NLRC correctly took cognizance of the appealed case.  As may be gleaned from the above-cited rules of NLRC, Baguio City is included in the Cordillera Administrative Region, which is assigned to the NLRC Third Division.  Consequently, the motion for reconsideration filed by petitioners must also be resolved by said Third Division.

The law is clear that the jurisdiction to decide cases appealed to NLRC is vested in the different divisions thereof, not in the individual commissioners assigned to each division. It is therefore of no significance as to who of the commissioners is functioning in the division at any given time. The only matter of concern is that the Commissioners voting on the motion for reconsideration were duly assigned to the division.  By analogy, in the case of Pamintuan v. Llorente and Dayrit, 29 Phil. 341 (1915), the Supreme Court stated that:

"xxx In ordinary parlance judges are spoken of as the courts and the courts are referred to, when the person speaking means the judge simply.  It is common for persons, lawyers, and judges, as well as the law, to use these terms interchangeably.  But, notwithstanding that fact, there is an important distinction between them which should be kept in mind.  Courts may exist without a present judge.  There may be a judge without a court.  The judge may become disqualified, but such fact does not destroy the court.  It simply means that there is no judge to act in the court.  The courts of the Philippine Islands were created and the judges were appointed thereto later.  In a few instances, the judges were appointed before the courts were established.  A person may be appointed a judge and be assigned to a particular district or court subsequently.  So it appears that there is an important distinction between the court, as an entity, and the person who occupies the position of judge." (at pp. 346-347).

Going now to the claim that petitioners were illegally dismissed, we find and so hold that substantial evidence exists to warrant the finding that petitioners were engaged in highgrading.

It is well-established that factual findings of labor administrative officials, if supported by substantial evidence, are entitled not only to great respect but even to finality (Baguio Colleges Foundation v. National Labor Relations Commission, 222 SCRA 604 [1993]; Capitol Industrial Construction Groups v. National Labor Relations Commission, 221 SCRA 469 [1993]).

It is not imperative that all the elements of highgrading or theft of gold as defined by Section 1 of P.D. No. 581 exist to justify respondent company's loss of trust and confidence in petitioners.

The job of petitioners, as miners, although generally described as menial, is, nevertheless, of such nature as to require a substantial amount of trust and confidence on the part of respondent company.  Since there is reasonable ground to believe that petitioners committed the crime of highgrading, respondent company is justified in terminating their services.

WHEREFORE, the petition is DISMISSED.  The Decision of NLRC dated November 29, 1990 is AFFIRMED.

[ G.R. No. 113907, April 20, 2001 ]

MALAYANG SAMAHAN NG MGA MANGGAGAWA SA M. GREENFIELD (MSMG-UWP) VS. HON. RAMOS, NATIONAL LABOR RELATIONS COMMISSION

Before us is petitioners' motion for partial reconsideration of our decision dated February 28, 2000,[1] the dispositive portion of which reads:[2]

"WHEREFORE, the petition is GRANTED; the decision of the National Labor Relations Commission in Case No. NCR-00-09-04199-89 is REVERSED and SET ASIDE; and the respondent company is hereby ordered to immediately reinstate the petitioners to their respective positions. Should reinstatement be not feasible, respondent company shall pay separation pay of one month salary for every year of service.  Since petitioners were terminated without the requisite written notice at least 30 days prior to their termination, following the recent ruling in the case of Ruben Serrano vs. National Labor Relations Commission and Isetann Department Store, the respondent company is hereby ordered to pay full backwages to petitioner-employees while the Federation is also ordered to pay full backwages to petitioner-union officers who were dismissed upon its instigation.  Since the dismissal of petitioners was without cause, backwages shall be computed from the time the herein petitioner employees and union officers were dismissed until their actual reinstatement. Should reinstatement be not feasible, their backwages shall be computed from the time petitioners were terminated until the finality of this decision.  Costs against the respondent company. SO ORDERED."

Petitioners allege that this Court committed patent and palpable error in holding that "the respondent company officials cannot be held personally liable for damages on account of employees' dismissal because the employer corporation has a personality separate and distinct from its officers who merely acted as its agents" whereas the records clearly established that respondent company officers Saul Tawil, Carlos T. Javelosa and Renato C. Puangco have caused the hasty, arbitrary and unlawful dismissal of petitioners from work; that as top officials of the respondent company who handed down the decision dismissing the petitioners, they are responsible for acts of unfair labor practice; that these respondent corporate officers should not be considered as mere agents of the company but the wrongdoers.  Petitioners further contend that while the case was pending before the public respondents, the respondent company, in the early part of February 1990, began removing its machineries and equipment from its plant located at Merville Park, Paranaque and began diverting jobs intended for the regular employees to its sub-contractor/satellite branches;[3] that the respondent company officials are also the officers and incorporators of these satellite companies as shown in their articles of incorporation and the general information sheet.  They added that during their ocular inspection of the plant site of the respondent company, they found that the same is being used by other unnamed business entities also engaged in the manufacture of garments.  Petitioners further claim that the respondent company no longer operates its plant site as M. Greenfield thus it will be very difficult for them to fully enforce and implement the court's decision.  In their subsequent motion filed on the same day, petitioners also pray for the (A) inclusion of the names of employees listed in Annex "D" of the petition which they inadvertently omitted in the caption of the case, to wit: (1) Amores, Imelda (2) Andres, Josefina (3)Aragon, Felicidad (4) Arias, Genevive (5) Arroyo, Salvacion (6) Arceo, Elizabeth (7) Anonuevo, Monica (8) Abellada, Josefina (9) Advincula, Harmelina (10) Ajayo, Rosario (11) Alilay, Marilyn (12) Almario, Anliza (13) Almario, Angelita (14) Almazan, Marilou (15) Almonte, Rosalina (16) Alvaran, Marites (17) Alvarez, Edna (18) Ampo, Anacorita  (19) Aquino, Leonisa (20) Bactat, Celia (21) Carpio, Azucena G. (22) Cruz, Amelia (23) Glifonia, Eugenia (24) Escurel, Evelyn F. (25) Hilario, Bonifacio G. (26) Payuan, Adoracion (27) Perez, Mercedita (28) Rempis, Zenaida (29) Rosario, Margie deL (30) Salvador, Norma (31) Sambayanan, Olivia (32) Tiaga, Aida (33) Torbela, Maria (34) Trono, Nenevina (35) Varona,

Asuncion (36) Vasquez, Elisa M. (37) Villanueva, Milagros (38) Villapondo, Eva C. (39) Villon, Adeliza T.; (B) correction of  their own typographical errors of the names of employees appearing in the caption, which should be as follows: Manuela Avelin, Belen Barquio, Lita Buquid, Violeta C. Ciervo, Marilou Dejocos, Maximina Faustino, Primitiva Gomez, Myrna Palaca, Mercedita Perez, Rebecca Poceran, Amorlita Rotairo, Emma Saludario, Tita Senis, Salvacion Wilson,[4] Anita Ahillon, Gregoria Arguelles, Tessie Balbis, Betty Borja, Rodrigo Buella, Celsa Doropan, Maria Enicame, Josephine Lasco, Julita Maniba, Juanita Osuyos, Juana Overencio, Azucena Postigo, Cristina Rapinan, Roselyn Rivero, Edeltrudes Romero, Rodelia Royandoyon, Fausta Segundo, Teodora Sulit, Elena Tebis, Paulina Valdez,[5] Susan Abogona, Diana Adovas, Carmen Rosimo Basco, Macaria Barrion, Maria Fe Berezo, Matilde de Blas, Rufina Bugnot, Aurora Bravo, Jovita Cera, Precila Carta, Amalia Eugenio, Milagros Fonseca, Jose Irlanda, Rowena Jarabejo, Regina Lapidario, Josie Marcos, Shirley Melegrito, Noemi Menguillo, Teresita Nierves, Ricardo Paloga, Florenia Ragos, Leonila Rodil, Emma Saludario, Narcisa Songuad, Josie Sumarsar, Evangeline Tayco;[6] (C) inclusion of other employees similarly situated whose names were not included in Annex "D" or in the caption of the case, to wit: (1) Dionisa Aban, (2) Alicia Aragon, (3) Vicky Francia, (4) Nelita F. Gelongos, (5) Erlinda San Juan, (6) Erlinda Baby Patungan Manalo, (7) Jenette Patungan,[7] (8) Blandina Simbahan,[8] (9) Asuncion Varona,[9] (10) Josefina Andres, (11) Teresita Arales, (12) Alice Artikulo, (13) Esther Cometa, (14) Eliza Cabiting, (15) Erlinda Dalut, (16) Edna Fernandez, (17) Emily Inocencio, (18) Esperanza Jalocon, (19) Imelda Jarabe, (20) Mercedes Pabadora, (21) Venerado Pastoral, (22) Cristina Perlas, (23) Margie del Rosario.[10]

In their Comment, the Solicitor General interposes no objection to petitioners' prayer for the inclusion of omitted and similarly situated employees and the correction of employees' names in the caption of the case.

On the other hand, private respondent company officials Carlos Javelosa and Remedios Caoleng, in their Comment, state that considering that petitioners admitted having knowledge of the fact that private respondent officers are also holding key positions in the alleged satellite companies, they should have presented the pertinent evidence with the public respondents; thus it is too late for petitioners to require this Court to admit and evaluate evidence not presented during the trial; that the supposed proof of satellite companies hardly constitute newly discovered evidence. Respondent officials interpose no objection to the inclusion of employees inadvertently excluded in the caption of the case but object to the inclusion of employees who were allegedly similarly situated for the reason that these employees had not been parties to the case, hence should not be granted any relief from the court. Respondent company failed to file its comment.[11]

Petitioners' contention that respondent company officials should be made personally liable for damages on account of petitioners' dismissal is not impressed with merit. A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general from the people comprising it.[12] The rule is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities.[13] True, solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in the following cases:[14]

1.  When directors and trustees or, in appropriate cases, the officers of a corporation -

(a)  Vote for or assent to patently unlawful acts of the  corporation;(b)  act in bad faith or with gross negligence in directing the corporate affairs;(c)  are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and other persons.[15]

(2) When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection thereto.[16]

(3) When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily liable with the Corporation.[17]

(4) When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate action.[18]

In labor cases, particularly, the Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of corporate employees done with malice or in bad faith.[19] Bad faith or negligence is a question of fact and is evidentiary.[20] It has been held that bad faith does not connote bad judgement or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty thru some motive or interest or ill will; it partakes of the nature of fraud.[21]

In the instant case, there is nothing substantial on record to show that respondent officers acted in patent bad faith or were guilty of gross negligence in terminating the services of petitioners so as to warrant personal liability.  As held in Sunio vs. NLRC,[22]

"We now come to the personal liability of petitioner, Sunio, who was made jointly and severally responsible with petitioner company and CIPI for the payment of the backwages of private respondents.  This is reversible error. The Assistant  Regional Director's Decision failed to disclose the reason why he was made personally liable.  Respondents, however, alleged as grounds thereof, his being the owner of one half (1/2) interest of said corporation, and his alleged arbitrary dismissal of private respondents.

Petitioner Sunio was impleaded in the Complaint in his capacity as General Manager of petitioner corporation. There appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of private respondents.  His act, therefore, was within the scope of his authority and was a corporate act.

It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related.  Mere ownership by a single stockholder or by another corporation of all or  nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality.  Petitioner Sunio, therefore, should nor have been made personally answerable for the payment of private respondents' back salaries."

Petitioners' claim that the jobs intended for the respondent company's regular employees were diverted to its satellite companies where the respondent company officers are holding key positions is not substantiated and was raised for the first time in this motion for reconsideration.  Even assuming that the respondent company officials are also officers and incorporators of the satellite companies, such circumstance does not in itself amount to fraud.  The documents attached to petitioners' motion for reconsideration show that these satellite companies[23] were established prior to the filing of petitioners' complaint against private respondents with the Department of Labor and Employment on September 6, 1989 and that these corporations have different sets of incorporators aside from the respondent officers and are holding their principal offices at different locations. Substantial identity of incorporators between respondent company and these satellite companies does not necessarily imply fraud.[24] In such a case, respondent company's corporate personality remains inviolable.[25]

Although there were earlier decisions of this Court in labor cases where corporate officers were held to be personally liable for the payment of wages and other money claims to its employees, we find those rulings inapplicable to this case.  In La Campana Coffee Factory, Inc. vs. Kaisahan ng Manggagawa sa La Campana (KKM),[26] La Campana Coffee Factory, Inc. and La Campana Gaugau Packing were substantially owned by the same person.  They had one office, one management, and a single payroll for both businesses.  The laborers of the gaugau factory and the coffee factory were also interchangeable, i.e., the workers in one factory worked also in the other factory.

In Claparols vs. Court of Industrial Relations,[27] the Claparol Steel and Nail Plant which was ordered to pay its workers backwages, ceased operations on June 30, 1957 and was succeeded on the next day, July 1, 1957 by the

Claparols Steel Corporation.  Both corporations were substantially owned and controlled by the same person and there was no break or cessation in operations.  Moreover, all the assets of the steel and nail plant were transferred to the new corporation.

Notably, in the above-mentioned cases, a new corporation was created, owned by the same family, engaged in the same business and operating in the same compound, a situation which is not obtaining in the instant case.

In AC Ransom Labor Union-CCLU vs. NLRC,[28] the Court ruled that under the Minimum Wage Law, the responsible officer of an employer corporation can be held personally liable for non-payment of backwages for "if the policy of the law were otherwise, the corporation employer would have devious ways for evading of back wages." This Court said:

"In the instant case, it would appear that RANSOM, in 1969, foreseeing the possibility or probability of payment of backwages to the 22 strikers, organized ROSARIO to replace RANSOM, with the latter to be eventually phased out if the 22 strikers win their case. RANSOM actually ceased operations on May 1, 1973, after the December 19, 1972 Decision of the Court of Industrial Relations was promulgated against RANSOM."

Clearly, the situation in AC Ransom does not obtain in this case, where the alleged satellite companies were established even prior to the filing of petitioners' complaint with the Department of Labor.

Petitioners' prayer for the inclusion of employees listed in Annex "D" whose names were admittedly inadvertently excluded in the caption of the case and for the correction of typographical errors of the employees' names appearing in the caption, is well taken and is hereby granted.  However, petitioners' prayer for the inclusion of other employees allegedly similarly situated but whose names were not included either in Annex "D" or in the caption of the case must be denied.  A judgment cannot bind persons who are not parties to the action.[29] It is elementary that strangers to a case are not bound by the judgment rendered by the court and such judgment is not available as an adjudication either against or in favor of such other person.[30] Petitioners failed to explain why these employees allegedly similarly situated were not included in the submitted list filed before us. Such inclusion would be tantamount to a substantial amendment which cannot be allowed at this late stage of the proceedings as it will definitely work to the prejudice and disadvantage of the private respondents.[31]

WHEREFORE, petitioners' motion for reconsideration is partially granted so as to include the names of employees listed in Annex "D" which petitioners inadvertently omitted in the caption of this case.

[ G.R. No. 55159, December 22, 1989 ]

PHILIPPINE AIRLINES, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND ARMANDO DOLINA, RESPONDENTS.

Petitioner impugns in this petition for certiorari that part of the public respondent National Labor Relations Commission's (NLRC) decision in NLRC Case No. RB-IV-9319-77 which ordered petitioner to restore private respondent Dolina to its payroll, and to pay his salaries from 1 April 1979 "until this case is finally resolved" [Rollo, p. 33.] Petitioner contends that public respondent NLRC gravely abused its discretion considering that in the same decision public respondent affirmed the decision of the Labor Arbiter in toto granting respondent's application for clearance to dismiss the private respondent.

The pertinent facts are as follows:

Private respondent Dolina was admitted to the Philippine Airlines (PAL) aviation School for training as a pilot beginning 16 January 1973. The training agreement bound PAL to provide regular and permanent employment to Dolina upon completion of the training course. On 25 January 1974, Dolina completed the course, and undertook an equipment qualification course up to 4 October 1974. On 9 October 1974, the Civil Aeronautics Administration issued him a license as Commercial Pilot and PAL then extended him a temporary appointment for six (6) months as Limited First Officer. When his appointment was due to expire on 30 April 1975, Dolina had only logged eighty four (84) hours and fifty five (55) minutes flying time, short of the minimum 500 flying hours required for regularization as First Officer. To enable him to complete the requirement, his employment was extended for another six months which appointment was described as "permanent." On 31 October 1975, when his appointment was again due to expire, he was still short of the minimum flying time requirement such that his appointment was again extended up to 30 April 1976. During this third extension of his appointment, Dolina completed the 500 flying hours requirement, and thus on 31 March 1976 he applied for regularization as First Officer. Pending his physical examination by the chief Flight Surgeon, his appointment was again extended to 31 October 1976. On 17 August 1976, Dolina took a psychological examination wherein his "Adaptability Rating" was found to be "unacceptable" [Annex "L" to the Petition, p. 8; Rollo, p. 116.] On 23 September 1976, complainant was again subjected to an examination and interview by the Pilot Acceptance Qualifications Board as part of the regularization process, which examination revealed the following:

b. Armando Dolina - After thorough evaluation of the candidate’s past records, his performance and the result of his medical examination as submitted by the Medical Sub-Department, the Board finds Mr. A. Dolina not qualified for regular employment in the Company.

[NLRC Decision, pp. 3-4; Rollo, pp. 25-26.]

Conformably, the Board recommended the termination of the complainant pursuant to which PAL filed a clearance application [Rollo, p. 34] for Dolina's termination. In the meantime Dolina was placed under preventive suspension effective 1 October 1976. Dolina countered with a complaint for illegal dismissal on 6 October 1976 [Rollo, p. 35.] On 26 January 1977 the Officer-in-Charge of the Department of Labor Regional Office No. IV lifted the preventive suspension, and ordered petitioner to reinstate Dolina to his former position with full backwages from 1 October 1976 up to actual reinstatement. The issue of termination and damages was referred to the Executive Labor Arbiter for compulsory arbitration [Rollo, p. 71.]

Petitioner appealed the order lifting Dolina's suspension to the Secretary of Labor. However, on 2 March 1977, pending the resolution of petitioner's appeal, the parties signed an agreement before the Undersecretary of Labor, the terms of which are as follows:

AGREEMENT

The undersigned parties hereby agree to the following:

1. While pending final resolution of the complaint of Mr. Armando Dolina against the Philippine Airlines, he shall be considered in the payroll effective 1 October 1976.

2. The order of Regional Director Vicente Leogardo for the reinstatement with backwages of Mr. Dolina is hereby rendered moot and academic.

3. The parties shall consider this arrangement pending final resolution of the case by arbitration.

Subsequently, on 30 May 1977, the Acting Secretary of Labor issued an order finding that the propriety of the suspension had been rendered moot and academic by the above agreement and referred the case for compulsory arbitration to the Executive Labor Arbiter [Annex "J" to the Petition; Rollo, p. 85.] On 23 March 1979, the Labor Arbiter rendered its decision, the dispositive portion of which reads as follows:

IN VIEW OF ALL THE FOREGOING, it is our considered opinion that there is merit on the application for clearance, and therefore, the same should be as it is hereby GRANTED. Consequently, the oppositor's TERMINATION IS IN ORDER.

Since the termination is upheld, perforce the claim for moral damages is denied. Besides pursuant to P.D. No. 1367 dated May 1, 1978, this office is devoid of jurisdiction to entertain said claim.

SO ORDERED. [Decision of Labor Arbiter, p. 12; Rollo, p. 97.]

By virtue of the above decision, PAL removed Dolina from its payroll effective 1 April 1979. Dolina then appealed the Labor Arbiter's decision to the public respondent NLRC on 29 April 1979 and there filed a motion praying that PAL be ordered to return him to PAL's payroll, contending that the Labor Arbiter's decision was not yet final because of his timely appeal. PAL opposed the motion claiming that it was no longer obliged to return Dolina to its payroll since the decision of the Labor Arbiter dated 23 March 1979 in its favor was a final resolution of the case by arbitration [Annex "N" to the Petition, p. 1; Rollo, p. 137.]

On 8 February 1980, public respondent NLRC rendered its decision containing the assailed portion to wit:

In fine it is our considered view that the respondent's application for clearance to dismiss the complainant has sufficiently surmounted the test of validity.

Be that as it may, we are not in accord with the discontinuation of the payment of complainant's salaries. The agreement of the parties stipulated in no uncertain terms that the complainant [Dolina] is to be carried in respondent's payroll until this case is finally resolved. As things stand, the main issue is still being litigated. The complainant, therefore, must be restored to the payroll and paid for his salaries from 1 April 1979, the date he was dropped from the respondent's payroll.

WHEREFORE, the Decision appealed from should be as it is hereby affirmed in toto. However the respondent is ordered to restore the complainant to its payroll and to pay his salaries from 1 April 1979 until this case is finally resolved.

SO ORDERED. [NLRC Decision, pp. 10-11; Rollo, pp. 32-33; Underscoring supplied.]

Hence, this petition, with a prayer for a temporary restraining order. The Court issued a temporary restraining order on 10 October 1980. Private respondent Dolina failed to file his comment and the Solicitor General submitted his own Comment supporting the stand of petitioner. Due to the adverse stand of the Solicitor General, public respondent NLRC submitted its own Comment.

The issue before the Court is whether or not the NLRC committed grave abuse of discretion in holding that private respondent Dolina was entitled to his salaries from 1 April 1979 "until this case is finally resolved."

PAL contends that inasmuch as the respondent Commission acting en banc had affirmed in toto the decision of the Labor Arbiter granting petitioner the clearance for the dismissal of private respondent Dolina, it is an act of grave abuse of discretion amounting to lack of jurisdiction on its part to order petitioner to pay private respondent's salaries from 1 April 1979 until the case is finally terminated. PAL contends that said stipulation refers only to the resolution of the case by arbitration and said arbitration of the case was terminated when the Labor Arbiter rendered its decision dated 23 March 1979. PAL argues that the arbitration of the case is limited to and comprises merely the proceedings before the Labor Arbiter such that when the latter renders a decision, arbitration of the dispute is terminated.

Public respondent NLRC on the other hand contends that arbitration is a continuing process from the time the case is referred by the Secretary of Labor to the Arbitration Branch until the final judgment is had on appeal. Since the Labor Arbiter's decision in favor of petitioner did not finally resolve the case in view of the timely appeal by private respondent from said decision, the case was not yet finally terminated by arbitration and Dolina is entitled to be placed in petitioner's payroll until the complaint is finally resolved.

The above contentions call for the proper interpretation of the agreement between the parties, specifically the third stipulation containing the clause "pending final resolution of the case by arbitration."

It is a basic rule in interpretation of contracts that the circumstances under which an instrument was made, including the situation of the subject thereof and the parties to it, may be considered so that the intention of the contracting parties may be judged correctly [Art. 1371, Civil Code of the Philippines; Section 11, Rule 130, Rules of Court; Lim v. Court of Appeals, G.R. No. L-40258, September 11, 1980, 99 SCRA 668.] In the instant case, the stipulation in the 2 March 1977 agreement that Dolina shall be included in the payroll of PAL until final resolution of the case by arbitration was intended to supersede the order of the Regional Director which, by stipulation of the parties, was rendered moot and academic. In lieu of reinstatement and the payment of his backwages, private respondent was included in petitioner's payroll, effective from the time he was preventively suspended until final resolution of the case by arbitration, without having to perform any work for the petitioner. In entering into the agreement, the parties could not have intended to include in the clause "final resolution of the case by arbitration" the whole adjudicatory process, including appeal. For if it were so, even proceedings on certiorari before this Court would be embraced by the term "arbitration" and private respondent will continue to receive monthly salary without rendering any service to the petitioner regardless of the outcome of the proceedings before the Labor Arbiter, for as long as one of the parties appeal to the NLRC and until the case is finally resolved by this Court. This is clearly an absurdity which could not have been contemplated by the parties.

Neither can proceedings on appeal before the NLRC en banc be considered as part of the arbitration proceeding. In its broad sense, arbitration is the reference of a dispute to an impartial third person, chosen by the parties or appointed by statutory authority to hear and decide the case in controversy [Chan Linte v. Law Union and Rock, Ins. Co., 42 Phil. 548 (1921).] When the consent of one of the parties is enforced by statutory provisions, the proceeding is referred to as compulsory arbitration. In labor cases, compulsory arbitration is the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties [See Wood v. Seattle, 23 Wash. 1, 62 P 135, 52 LRA 369 (1920);

Amalgamated Association v. Wisconsin Employees' Relations Board, 340 U.S. 383-410, 95 L. Ed. 381 (1951).] Under the Labor Code, it is the Labor Arbiter who is clothed with the authority to conduct compulsory arbitration on cases involving termination disputes [Article 217, Pres. Decree No. 442, as amended.] When the Labor Arbiter renders his decision, compulsory arbitration is deemed terminated because by then the hearing and determination of the controversy has ended. Any appeal raised by an aggrieved party from the Labor Arbiter's decision is already beyond the scope of arbitration since in the appeal stage, the NLRC en banc merely reviews the Labor Arbiter's decision for errors of fact or law and no longer duplicates the proceedings before the Labor Arbiter. Thus, the clause "pending final resolution of the case by arbitration" should be understood to be limited only to the proceedings before the Labor Arbiter, such that when the latter rendered his decision, the case was finally resolved by arbitration.

More important, however, is the fact that the NLRC's order for the continued payment of Dolina's salaries is inconsistent with its affirmance of the Labor Arbiter's decision upholding the validity of Dolina's dismissal. In affirming the Labor Arbiter's decision granting the termination clearance, the NLRC held that:

With respect to the issue of whether or not the complainant's [Dolina] dismissal was sufficiently grounded, we are not persuaded that the respondent [herein petitioner PAL] is under obligation to employ him as regular employee simply because he was certified physically fit and technically proficient by the CAA.

This is understandable for it concerns the safety of its properties, and above all, the safety of the lives and properties of its passengers, which by law it is committed to transport safely. In the absence, therefore, of any showing that its standards are unreasonable and discriminatory, which we do not find here, We cannot disturb them. We can only say that for exercising extraordinary diligence in the selection of its pilots, We join the public in commending it.

* * *

In fine, it is Our considered view that the respondent's application for clearance to dismiss the complainant has sufficiently surmounted the test of validity.

In view of the above finding of valid dismissal, the NLRC had no authority to order the continued payment of Dolina's salaries from 1 April 1979 until the case is finally resolved. The NLRC's order would result in compensating Dolina for services no longer rendered and when he is no longer in PAL's employ. This is contrary to the age-old rule of "a fair day's wage for a fair day's labor" which continues to govern the relation between labor and capital and remains a basic factor in determining employees' wages [Durabilt Recapping Plant & Co. v. National Labor Relations Commission, G.R. No. 76746, July 27, 1987, 152 SCRA 328.] So that, if there is no work performed by the employee there can be no wage or pay unless the laborer was able, willing and ready to work but was prevented by management or was illegally locked out, suspended or dismissed. Where the employee's dismissal was for a just cause, it would neither be fair nor just to allow the employee to recover something he has not earned and could not have earned [Santos v. National Labor Relations Commission, G.R. No. 76721, September 21, 1987, 154 SCRA 166.]

Moreover, in ordering the continued payment of Dolina's salaries from 1 April 1979 until the case is finally resolved, the NLRC in effect ordered the payment of backwages to Dolina notwithstanding its finding of a valid dismissal.

This is clearly untenable.

In the first place, backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal [New Manila Candy Workers Union (NACONWA-PAFLU) v. Court of Industrial Relations, G.R. No. L-29728, October 30, 1978, 86 SCRA 37; Durabilt Recapping Plant & Co. v. National Labor Relations Commission, supra; Chong Guan Trading v. National Labor Relations

Commission, G.R. No. 81471, April 26, 1989; Santos v. National Labor Relations Commission, supra.] Where, as in this case, the dismissal was for a just cause, there is no factual or legal basis for ordering the payment of backwages. The order of the NLRC for the continued payment of Dolina's salaries would allow the latter to unjustly enrich himself at the expense of the petitioner. This Court has reiterated time and again that the law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer [Colgate Palmolive Philippines, Inc. v. Ople, G.R. No. 73681, June 30, 1988, 163 SCRA 323.] In this case, the NLRC chose not to adhere with fidelity to this doctrine.

Secondly, NLRC's order for continued payment of Dolina's salary from 1 April 1979 up to the final resolution of the case would place Dolina in a better position than those workers who were found to have been illegally dismissed by their employer. For in the latter case, the backwages that can be recovered by the worker is limited to three years [Mercury Drug Co., Inc. v. Court of Industrial Relations, G.R. No. L-23357, April 30, 1974, 56 SCRA 694; Philippine Airlines, Inc. v. National Labor Relations Commission, G.R. No. 64809, November 29, 1983, 126 SCRA 223; Madrigal & Co., Inc. v. Zamora, G.R. No. L-48237, Madrigal & Co., Inc. v. Minister of Labor, G.R. No. L-49023, June 30, 1987] while Dolina, whose dismissal was found to be valid, can recover approximately ten years backwages, which corresponds to the period from 1 April 1979 until "final resolution" of the instant case.

Considering the foregoing, the Court holds that respondent NLRC's order for the continued payment of Dolina's salaries from "1 April 1979 until the case is finally resolved" is contrary to law and established jurisprudence and the NLRC acted in excess of its jurisdiction in issuing the assailed order. In the recent case of Llora Motors, Inc. v. Drilon, G.R. No. 82895, November 7, 1989 the Court held as an act without or in excess of jurisdiction the portion of the Labor Arbiter's award, which required the employer to pay to its employee an amount equivalent to a half month's pay for every year of service as retirement benefits, for being without basis either in law or contract. Similarly, there is in this case an excess of jurisdiction on the part of the NLRC in ordering the continued payment of Dolina's salaries "from 1 April 1979 until the case is finally resolved."

WHEREFORE, that part of the dispositive portion of the decision of the National Labor Relations Commission in NLRC CASE NO. RB-IV-9319-77 requiring petitioner to restore private respondent to its payroll and ordering the payment of his salaries from 1 April 1979 until the case is finally resolved is hereby declared NULL and VOID and SET ASIDE. The temporary Restraining Order issued by the Court on 10 October 1980 is made PERMANENT.

[ G.R. No. 162401, January 31, 2006 ]

CORAZON ALMIREZ, PETITIONER, VS INFINITE LOOP TECHNOLOGY CORPORATION, EDWIN R. RABINO AND COURT OF APPEALS, RESPONDENTS.

Corazon Almirez (petitioner) was hired as a Refinery Senior Process Design Engineer for a specific project by respondent Infinite Loop Technology Corporation (Infinite Loop) through its General Manager/President-co-respondent Edwin R. Rabino (Rabino) who, by letter[1] dated September 30, 1999 to petitioner, furnished the details of the employment of her services as follows:

Subject: Acceptance of Professional ServicesRefinery – Senior Process Design Engineer

Dear Ms. Almirez

This is to confirm acceptance of your services as per attached Terms and Conditions. Your services will commence effective October 18, 1999 up to the completion of the scope of services and continuation thereof with a guaranty of 12 continuous months as outlined in the attachment or until a mutually agreed date.

We thank you for considering our company as a valued partner in the advancement of Petroleum Processing Technology in our country.

As indicated in the above-quoted portion of Rabino's letter, the terms and conditions attendant to the acceptance of petitioner's "Professional Services"[2] were attached to it reading:

Scope of Professional Services

The Senior Process Design Engineer shall work together with the Process Design Consultant in performing the scope of services below which includes but are not limited to the following:

1. Prepare the Process Design Terms of Reference or Basis of Design and other data required for the proposed 1,200,000 BPSD Petroleum Refinery. These data are to be used in securing the services of a Basic Design Engineering Company as well as part of Project Accomplishment of Infinite Loop Technology Corp.

2. Review and revise/improve as necessary the existing conceptual process block diagram or Process Flow Scheme of the proposed petroleum refinery. Various capacity combinations are to be considered to develop process design modules of 1,200,000 BPSD total capacity.

3. Implement new process technologies that can meet the requirements of Japanese, Australian and US petroleum product standard by the year 2004. As well as the Philippine Clean Air Act provisions applicable to the proposed 1,200,000 BPSD petroleum refinery. Petroleum Product Standards required shall be researched and be part of the Basis of Design or Term of Reference.

4. Participate in discussions during the solicitation of proposals from Basic Design Engineering Companies.5. Review the progress of work being done by the Basic Design Engineering Company and coordinate with the

company management team for an efficient and effective project implementation.6. Make reports and recommendations to the company management team regarding work progress, revisions and

improvement of process design on a regular basis as required by company management team.

7. Represent the Company in technical meetings to be held locally or abroad.8. Perform other related works that are necessary in completing the Engineering Procurement and Construction

(EPC) bid documents and progress reports relevant to schedules of deliveries to the Project Proponent as required by the company.

9. Continue related works when the construction stage of this Proposed Refinery will push through.10. Serve as technical consultant to Infinite Loop Technology Corp. on other relevant works or projects when

required.

Terms of Payments

Professional Fee: US$ 2,000.00 per month (net of tax)To be paid 50/50 split in US Dollars or equivalent Peso every 15th and 30th of the month

Length of Service: Guaranteed minimum of 12 continuous months or up to completion of services, or until a mutually agreed date.

Reimbursable Expenses:Work related expenses which include but not limited to the following:

- Communication Expenses (Cellular phone, fax, tels)- Representation Expenses- Out of town travel expenses

Other Benefits:- US$ 300.00 per month as transportation allowance (Engineer to use her personal car in the performance of work) to be paid in equivalent pesos every end of the month.- Project Bonus at the end of the contract to be mutually agreed upon by both parties.

Others:Infinite Loop Technology Corporation to provide the ff:- Laptop Computer (Pentium III or best available model with modems etc.)

- Printer/ Scanner- Process Simulation Softwares to be identified later (Emphasis in the original; underscoring supplied)

The letter, as well as the attached documents, bore the signature of petitioner and Rabino.For her services, petitioner received the following amounts on the dates indicated:[3]

Voucher date Amount

11/23/99 Salary for Nov. 1-15, 1999 P20,000.00

12/02/99 Salary for Nov. 15-30, 1999 8,000.00

12/15/99 Full payment for Nov. 15-30 salary 2,000.00

Salary for Dec. 1-15, 1999 10,000.00

1/17/00 Salary for Jan. 1-15, 2000 12,000.00

1/16/00 Salary for Jan. 16-31, 2000 12,500.00

1/20/00 Salary for Jan. 1-15, 2000 12,500.00

---------------

Total P77,000.00

By letter[4] dated February 2, 2000, petitioner conveyed to Infinite Loop through Rabino her disappointment with the "salary" she was receiving in this wise:x x x When I agreed with a salary of P30,000.00 monthly, my understanding is that, this amount is already net of tax x x x. However, when I received my salary for the month of January which is only partial, (P25,000) and even less because [of] SSS and tax deductions x x x

I understand that tax should be deducted from my salary for your Accounting records but I would like to ask you not to deduct it from the P30,000.00 salary I am supposed to be receiving. Currently I am paying my SSS contributions voluntarily so there is no need for the company to pay my monthly contributions.

I would like to render my service at Infinite Loop based on the contract that I signed and I am willing to serve as technical consultant to Infinite Loop on other relevant works or projects while we are waiting for the Masbate refinery project.

Responding,[5] Rabino stated that petitioner's letter "was totally different [from] what [they] verbally agreed [upon]" in her house; that "like any other proposed project, [the Proposed 1,200,000 BPSD Petroleum Refinery] can be deferred like its present status;" and that since "the financial side for the engineering design for the proposed [project] is not yet available x x x it would be prudent to SUSPEND her professional services as Senior Process Design Engineer effective February 7, 2000." Rabino assured petitioner that her professional services would be resumed once they are provided with the initial payment requested from the project proponent.

By letter[6] dated August 9, 2000, petitioner, through counsel, wrote Rabino "to compensate [her with] the total amount of her contract," thus:

Our client MS. CORAZON S. ALMIREZ has referred to us for appropriate legal action concerning her contract with your company as a refinery process design engineer.

In the said contract, which was accepted by our said client on September 30, 1999, you stated that our client's services "will commence effective October 18, 1999 up to the completion of the scope of the services and continuation thereof with a guaranty of 12 continuous months as outlined in the attachment or until a mutually agreed date". However, despite your guarantee of at least 12 continuous months of service, you suspended her professional services effective February 7, 2000. The same is a clear violation of the terms and conditions of the contract. Moreover, you have paid her only a total amount of SEVENTY FOUR THOUSAND TWO HUNDRED TWENTY NINE & 17/100 PESOS (P74,229.17), which is way below than the agreed professional fee of US $2,000.00 a month net of tax. On account of your blatant violation of the terms and conditions of the contract, our client suffered sleepless nights, anxiety and besmirched reputation. She was constrained to resign from her job as an engineer at the Technoserve International Co., Inc., in view of her contract with your company.

In view thereof, formal demand is hereby made on you to compensate our client the total amount of her contract or the amount of US DOLLARS: twenty thousand ($ 20,000.00), MORE OR LESS, within five (5) days from your receipt hereof, failing which we shall, much to our regret, be constrained to file the necessary action in court.

Rabino later wrote petitioner, by letter of November 15, 2000,[7] as follows:

Thank you for reminding us about our agreement about this possible landmark project. You all know that Infinite Loop Tech. Corp. is the lead company in this undertaking in association with other companies forming a consortium to cope up with the huge financial and technical requirement of this project. We all have invested a lot of group resources for this, but unfortunately the Project Proponent, Arrox Resources Corp., have encountered re-organization and have not yet paid us for this project.

At the moment, the former Chairman of Arrox Resources Corp. is still in contact with us. We all hope that this project will push thru after our country would overcome all the peace and order, economic and political crisis we are encountering now.

We all hope that you would bear with us. We would inform you soonest once any development from the project proponent would be relayed to us.

On December 12, 2000, petitioner filed a complaint against Infinite Loop and Rabino before the National Labor Relations Commission (NLRC) for "breach of contract of employment," praying that judgment be rendered in her favor ordering Infinite Loop to pay:

(1) $22,000.00 or its peso equivalent representing salaries and wages;(2) P300,000.00 as and for moral damages;(3) P100,000.00 as and for exemplary damages; and (4) 10% of the total claim as and for attorney's fees.

Infinite Loop moved to dismiss[8] petitioner's complaint on the ground that the NLRC has no jurisdiction over the parties and the subject matter, there being no employee-employer relationship between them as the contract they entered into was one of services and not of employment.

By Resolution of November 14, 2001, the Labor Arbiter, finding that paragraph No. 6 of the Scope of Professional Services of petitioner showed that "the company's management team exercises control over the means and methods in the performance of [petitioner's] duties as Refinery Process Design Engineer," held that there existed an employer-employee relationship between the parties.

The Labor Arbiter thus ordered Infinite Loop and Rabino to jointly and severally pay petitioner the sum of US$ 24,000.00 in its peso equivalent at the date of payment less advances in the amount of P77,000.00 plus 5% thereof by way of attorney's fees. It dismissed petitioner's claim for damages, however.[9]

Infinite Loop and Rabino (hereafter respondents) appealed to the NLRC. By Resolution[10] dated September 19, 2002, the NLRC, finding that employer-employee relation between the parties indeed existed, dismissed respondents' appeal.

Before the Court of Appeals to which respondents elevated the case, they argued that the NLRC:

I.x x x ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION AND ERRED IN NOT FINDING THAT THE LABOR ARBITER HAS NO JURISDICTION OVER THE CAUSES OF ACTION PLEADED IN THE COMPLAINT, I.E., NON PAYMENT OF PROFESSIONAL FEE AND BREACH OF CONTRACT.II.x x x COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION AND COMMITTED REVERSIBLE ERROR IN NOT FINDING THAT [PETITIONER] IS NOT AN EMPLOYEE OF [INFINITE LOOP].

III.x x x SERIOUSLY ERRED IN NOT FINDING THE ENVISIONED ENGAGEMENT OF [PETITIONER] AS A REFINERY PROCESS ENGINEER IS CO-TERMINOUS WITH THE PROJECT, WHICH PROJECT DID NOT MATERIALIZE.[11] (Underscoring supplied)

The appellate court, finding that "[petitioner] was hired to render professional services for a specific project' and her "primary cause of action is for a sum of money on account of [Infinite Loop's] alleged breach of contractual obligation to pay her agreed professional fee,' held by Decision[12] dated October 20, 2003 that no employer-employee relationship existed between the parties, hence, the NLRC and the Labor Arbiter have no jurisdiction over the complaint. It accordingly reversed the NLRC decision and dismissed petitioner's complaint.

Hence, the present petition, petitioner contending that the appellate court erred when it:

A. x x x INCONSISTENTLY RULED THAT THERE WAS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES BUT AT THE SAME TIME IT CITED THAT [PETITIONER] IS A PROJECT EMPLOYEE. MOREOVER, THE ASSAILED JUDGMENT IS BASED ON MISAPPRECIATION OF FACTS.B. x x x FAILED TO CONSIDER THE RELIEF MENTIONED IN [PETITIONER'S] COMPLAINT FOR PAYMENT OF SALARY x x x C. x x x RULED THAT THE SEPARATION FROM SERVICE OF [PETITIONER] BECAUSE OF THE PROJECT'S DISCONTINUANCE DID NOT RESULT TO ILLEGAL DISMISSAL.[13]

To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, to wit: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control. Of these four, the last one, the so called "control test" is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship.[14]

Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end.[15]

From the earlier-quoted scope of petitioner's professional services, there is no showing of a power of control over petitioner. The services to be performed by her specified what she needed to achieve but not on how she was to go about it.

Contrary to the finding of the Labor Arbiter, as affirmed by the NLRC, above-quoted paragraph No. 6 of the "Scope of [petitioner's] Professional Services' requiring her to "[m]ake reports and recommendations to the company management team regarding work progress, revisions and improvement of process design on a regular basis as required by company management team" does not "show that the company's management team exercises control over the means and methods in the performance of her duties as Refinery Process Design Engineer." Having hired petitioner's professional services on account of her "expertise and qualifications" as petitioner herself proffers in her Position Paper,[16] the company naturally expected to be updated regularly of her "work progress," if any, on the project for which she was specifically hired.

In bolstering her contention that there was an employer-employee relationship, petitioner draws attention to the pay slips and Infinite Loop's deduction of her SSS, Philhealth, and withholding tax, and to the designation of the payments to her as "salaries."

The deduction from petitioner's remuneration of amounts representing SSS premiums, Philhealth contributions and withholding tax, was made in the only payslip issued to petitioner, that for the period of January 16-31, 2000,[17] the other amounts of remuneration having been documented by cash vouchers. Such payslip cannot prove the existence of an employer-employee relationship between the parties.

The cases of Equitable Banking Corp. v. NLRC[18] and Nagusara v. NLRC[19] should be differentiated from the present case, as the employers in these two cases did not only regularly make similar deductions from the therein complainants" remuneration but also registered and declared the complainants with the SSS and Medicare (Philhealth) as their employees.

As for the designation of the payments to petitioner as "salaries," it is not determinative of the existence of an employer-employee relationship. "Salary" is a general term defined as "a remuneration for services given." It is the above-quoted contract of engagement of services-letter dated September 30, 1999, together with its attachments, which is the law between the parties. Even petitioner concedes rendering service "based on the contract,"[20] which, as reflected earlier, is bereft of a showing of power of control, the most crucial and determinative indicator of the presence of an employer-employee relationship.

WHEREFORE, the petition is DENIED for lack of merit.

[ G.R. No. 112139, January 31, 2000 ]

LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION, PETITIONER, VS. THE HONORABLE COURT OF APPEALS (FORMER EIGHTH DIVISION) AND

COMMANDO SECURITY SERVICE AGENCY, INC., RESPONDENTS.

Before us is a Petition for Review on Certiorari of the decision[1] of the Court of Appeals[2] in CA-G.R. CV No. 33893 entitled COMMANDO SECURITY SERVICE AGENCY, INCORPORATED vs. LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION which affirmed the decision[3] of the Regional Trial Court, 11th Judicial Region, Branch 9, Davao City in Civil Case No. 19203-88.

The pertinent facts as found by the Court of Appeals are as follows:"The evidence shows that in June 1986, plaintiff Commando Security Service Agency, Inc., and defendant Lapanday Agricultural Development Corporation entered into a Guard Service Contract. Plaintiff provided security guards in defendant’s banana plantation. The contract called for the payment to a guard of P754.28 on a daily 8-hour basis and an additional P565.72 for a four hour overtime while the shift-in-charge was to be paid P811.40 on a daily 8-hour basis and P808.60 for the 4-hour overtime.

Wage Orders increasing the minimum wage in 1983 were complied with by the defendant. On June 16, 1984, Wage Order No. 5 was promulgated directing an increase of P3.00 per day on the minimum wage of workers in the private sector and a P5.00 increase on the ECOLA. This was followed on November 1, 1984 by Wage Order No. 6 which further increased said minimum wage by P3.00 on the ECOLA. Both Wage Orders contain the following provision:"In the case of contract for construction projects and for security, janitorial and similar services, the increase in the minimum wage and allowances rates of the workers shall be borne by the principal or client of the construction/service contractor and the contracts shall be deemed amended accordingly, subject to the provisions of Sec. 3 (b) of this order" (Sec. 6 and Sec. 9, Wage Orders No. 5 and 6, respectively)."

Plaintiff demanded that its Guard Service Contract with defendant be upgraded in compliance with Wage Order Nos. 5 and 6. Defendant refused. Their Contract expired on June 6, 1986 without the rate adjustment called for Wage Order Nos. 5 and 6 being implemented. By the time of the filing of plaintiff’s Complaint, the rate adjustment payable by defendant amounted to P462,346.25. Defendant opposed the Complaint by raising the following defenses: (1) the rate adjustment is the obligation of the plaintiff as employer of the security guards; (2) assuming its liability, the sum it should pay is less in amount; and (3) the Wage Orders violate the impairment clause of the Constitution.

The trial court decided in favor of the plaintiff. It held:

"However, in order for the security agency to pay the security guards, the Wage Orders made specific provisions to amend existing contracts for security services by allowing the adjustment of the consideration paid by the principal to the security agency concerned. (Eagle Security Agency, Inc. vs. NLRC, Phil. Tuberculosis Society, Inc. vs. NLRC, et al., May 18, 1989).

The Wage Orders require the amendment of the contract as to the consideration to cover the service contractor’s payment of the increases mandated. However, in the case at bar, the contract for security services had earlier been terminated without the corresponding amendment. Plaintiff now demands adjustment in the contract price as the same was deemed amended by Wage Order Nos. 5 and 6.

Before the plaintiff could pay the minimum wage as mandated by law, adjustments must be paid by the principal to the security agency concerned.

"Given these circumstances, if PTS pays the security guards, it cannot claim reimbursements from Eagle. But if its Eagle that pays them, the latter can claim reimbursement from PTS in lieu of an adjustment, considering that the contract had expired and had not been renewed. (Eagle Security Agency vs. NLRC and Phil. Tuberculosis Society, Inc. vs. NLRC, et al., 18 May 1989).

"As to the issue that Wage Orders Nos. 5 and 6 constitute impairments of contracts in violation of constitutional guarantees, the High Court ruled" The Supreme Court has rejected the impairment of contract argument in sustaining the validity and constitutionality of labor and social legislation like the Blue Sunday Law, compulsory coverage of private sector employees in the Social Security System, and the abolition of share tenancy enacted pursuant to the police power of the state (Eagle Security Agency, Inc. vs. National Labor Relation Commission and Phil. Tuberculosis Society, Inc. vs. NLRC, et al., May 18, 1989)."

Petitioner’s motion for reconsideration was denied;[4] hence this petition where petitioner cites the following grounds to support the instant petition for review:

"1. THE WAGE INCREASES PROVIDED FOR IN THE WAGE ORDERS WERE DUE TO THE GUARDS AND NOT THE SECURITY AGENCY;

2. A SECURITY AGENCY WHO DID NOT PAY WAGE INCREASE TO ITS GUARDS IT HAD ALREADY TERMINATED AND WITHOUT THEIR AUTHORIZATION CANNOT INSTITUTE AN ACTION TO RECOVER SAID WAGE INCREASE FOR ITS BENEFIT;

3. IN THE ABSENCE OF BAD FAITH AND WITHOUT THE TRIAL COURT CORRECTLY ESTABLISHING THE BASIS FOR ATTORNEY’S FEES, THE SAME MAY NOT BE AWARDED.

4. THE NATIONAL LABOR RELATIONS (SIC) IS THE PROPER FORUM THAT HAS THE JURISDICTION TO RESOLVE THE ISSUE OF WHETHER OR NOT THE PETITIONER IS LIABLE TO PAY THE PRIVATE RESPONDENT THE WAGE AND ALLOWANCE INCREASES MANDATED UNDER WAGE ORDER NOS. 5 AND 6." [5]

Reiterating its position below, petitioner asserts that private respondent has no factual and legal basis to collect the benefits under subject Wage Order Nos. 5 and 6 intended for the security guards without the authorization of the security guards concerned. Inasmuch as the services of the forty-two (42) security guards were already terminated at the time the complaint was filed on August 15, 1988, private respondent’s complaint partakes of the nature of an action for recovery of what was supposedly due the guards under said Wage Orders, amounts that they claim were never paid by private respondent and therefore not collectible by the latter from the petitioner. Petitioner also assails the award of attorney’s fees in the amount of P115,585.31 or 25% of the total adjustment claim of P462,341.25 for lack of basis and for being unconscionable.

Moreover, petitioner submits that it is the National Labor Relations Commission (NLRC) and not the civil courts that has jurisdiction to resolve the issue involved in this case for it refers to the enforcement of wage adjustment and other benefits due to private respondent’s security guards mandated under Wage Order Nos. 5 and 6. Considering that the RTC has no jurisdiction, its decision is without force and effect.[6]

On the other hand, private respondent contends that the basis of its action against petitioner-appellant is the enforcement of the Guard Service Contract entered into by them, which is deemed amended by Section 6 of Wage Order No. 5 and Section 9 of Wage Order No. 6; that pursuant to their amended Guard Service Contract, the increases/adjustments in wages and ECOLA are due to private respondent and not to the security guards who are not parties to the said contract. It is therefore immaterial whether or not private respondent paid its security guards their wages as adjusted by said Wage Orders and that since the forty-two (42) security guards are not parties to the Guard Service Contract, there is no need for them to authorize the filing of, or be joined in, this suit.

As regards the award to private respondent of the amount of P115,585.31 as attorney’s fees, private respondent maintains that there is enough evidence and/or basis for the grant thereof, considering that the adamant attitude of the petitioner (in implementing the questioned Wage Orders) compelled the herein private respondent, to litigate in court. Furthermore, since the legal fee payable by private respondent to its counsel is essentially on contingent basis, the amount of P115,583.31 granted by the trial court which is 25% of the total claim is not unconscionable.

As regards the jurisdiction of the RTC, private respondent alleges that the suit filed before the trial court is for the purpose of securing the upgrading of the Guard Service Contract entered into by herein petitioner and private respondent in June 1983. The enforcement of this written contract does not fall under the jurisdiction of the NLRC because the money claims involved therein did not arise from employer-employee relations between the parties and is intrinsically a civil dispute. Thus, jurisdiction lies with the regular courts. Private respondent further contends that petitioner is estopped or barred from raising the question of jurisdiction for the first time before the Supreme Court after having voluntarily submitted to the jurisdiction of the regular courts below and having lost its case therein.[7]

We resolve to grant the petition.

We resolve first the issue of jurisdiction. We agree with the respondent that the RTC has jurisdiction over the subject matter of the present case. It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction.[8] In its complaint, private respondent is not seeking any relief under the Labor Code but seeks payment of a sum of money and damages on account of petitioner’s alleged breach of its obligation under their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over the case belongs to the regular courts.[9] While the resolution of the issue involves the application of labor laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists. Article 217 of the Labor Code as amended vests upon the labor arbiters exclusive original jurisdiction only over the following:

1. Unfair labor practices;

2. Termination disputes;3. f accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates

of pay, hours of work and other terms and conditions of employment;4. Claims for actual, moral exemplary and other forms of damages arising from employer-employee

relations;5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of

strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite;[10] and there is none in this case.

On the merits, the core issue involved in the present petition is whether or not petitioner is liable to the private respondent for the wage adjustments provided under Wage Order Nos. 5 and 6 and for attorney’s fees.

Private respondent admits that there is no employer-employee relationship between it and the petitioner. The private respondent is an independent/job contractor[11] who assigned security guards at the petitioner’s premises for a stipulated amount per guard per month. The Contract of Security Services expressly stipulated that the security guards are employees of the Agency and not of the petitioner.[12] Articles 106 and 107 of the Labor Code provides the rule governing the payment of wages of employees in the event that the contractor fails to pay such wages as follows:"Art. 106. Contractor or subcontractor. – Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.

ART. 107. Indirect employer. – The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project."It will be seen from the above provisions that the principal (petitioner) and the contractor (respondent) are jointly and severally liable to the employees for their wages. This Court held in Eagle Security, Inc. vs. NLRC[13]

and Spartan Security and Detective Agency, Inc. vs. NLRC[14] that the joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance with the provisions therein including the minimum wage. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractor’s employees to secure payment of their wages should the contractor be unable to pay them.[15] Even in the absence of an employer-employee relationship, the law itself establishes one between the principal and the employees of the agency for a limited purpose i.e. in order to ensure that the employees are paid the wages due them. In the above-mentioned cases, the solidary liability of the principal and contractor was held to apply to the aforementioned Wage Order Nos. 5 and 6.[16] In ruling that under the Wage Orders, existing security guard services contracts are amended to allow adjustment of the consideration in order to cover payment of mandated increases, and that the principal is ultimately liable for the said increases, this Court stated:"The Wage Orders are explicit that payment of the increases are ‘to be borne’ by the principal or client. ‘To be borne’, however, does not mean that the principal, PTSI in this case, would directly pay the security guards the wage and allowance increases because there is no privity of contract between them. The security guards’ contractual relationship is with their immediate employer, EAGLE. As an employer, EAGLE is tasked, among others, with the payment of their wages [See Article VII Sec. 3 of the Contract for Security Services, supra and Bautista vs. Inciong, G. R. No. 52824, March 16, 1988, 158 SCRA 665].

On the other hand, there existed a contractual agreement between PTSI and EAGLE wherein the former availed of the security services provided by the latter. In return, the security agency collects from its client payment for

its security services. This payment covers the wages for the security guards and also expenses for their supervision and training, the guards bonds, firearms with ammunitions, uniforms and other equipments, accessories, tools, materials and supplies necessary for the maintenance of a security force.

Premises considered, the security guards’ immediate recourse for the payment of the increases is with their direct employer, EAGLE. However, in order for the security agency to comply with the new wage and allowance rates it has to pay the security guards, the Wage Orders made specific provision to amend existing contracts for security services by allowing the adjustment of the consideration paid by the principal to the security agency concerned. What the Wage Orders require, therefore, is the amendment of the contracts as to the consideration to cover the service contractors’ payment of the increases mandated. In the end, therefore, ultimate liability for the payment of the increases rests with the principal.

In view of the foregoing, the security guards should claim the amount of the increases from EAGLE. Under the Labor Code, in case the agency fails to pay them the amounts claimed, PTSI should be held solidarily liable with EAGLE [Articles 106, 107 and 109]. Should EAGLE pay, it can claim an adjustment from PTSI for an increase in consideration to cover the increases payable to the security guards."[17]

It is clear also from the foregoing that it is only when contractor pays the increases mandated that it can claim an adjustment from the principal to cover the increases payable to the security guards. The conclusion that the right of the contractor (as principal debtor) to recover from the principal as solidary co-debtor) arises only if he has paid the amounts for which both of them are jointly and severally liable is in line with Article 1217 of the Civil Code which provides:"Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.

He who made payment may claim from his codebtors only the share which corresponds to each, with interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. xxx"Pursuant to the above provision, the right of reimbursement from a co-debtor is recognized in favor of the one who paid.

It will be seen that the liability of the petitioner to reimburse the respondent only arises if and when respondent actually pays its employees the increases granted by Wage Order Nos. 5 and 6. Payment, which means not only the delivery of money but also the performance, in any other manner, of the obligation,[18] is the operative fact which will entitle either of the solidary debtors to seek reimbursement for the share which corresponds to each of the debtors.

The records show that judgment was rendered by Labor Arbiter Newton R. Sancho holding both petitioner and private respondent jointly and solidarily liable to the security guards in a Decision[19] dated October 17, 1986 (NLRC Case No. 2849-MC-XI-86).[20] However, it is not disputed that the private respondent has not actually paid the security guards the wage increases granted under the Wage Orders in question. Neither is it alleged that there is an extant claim for such wage adjustments from the security guards concerned, whose services have already been terminated by the contractor. Accordingly, private respondent has no cause of action against petitioner to recover the wage increases. Needless to stress, the increases in wages are intended for the benefit of the laborers and the contractor may not assert a claim against the principal for salary wage adjustments that it has not actually paid. Otherwise, as correctly put by the respondent, the contractor would be unduly enriching itself by recovering wage increases, for its own benefit.

Finally, considering that the private respondent has no cause of action against the petitioner, private respondent is not entitled to attorney’s fees.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals dated May 24, 1993 is REVERSED and SET ASIDE. The complaint of private respondent COMMANDO SECURITY SERVICE AGENCY, INC. is hereby DISMISSED.

[ G.R. No. 124100, April 01, 1998 ]

PHILTRANCO SERVICE ENTERPRISES, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND MR. ROBERTO NIEVA, RESPONDENTS.

Petitioner seeks, in this petition for certiorari under Rule 65, the reversal of the resolution of the National Labor Relations Commission dated November 29, 1995, ordering petitioner to pay private respondent Roberto Nieva back wages and separation pay.

The facts of the case are as follows:

Roberto Nieva who was employed as a driver by petitioner Philtranco Services Enterprises, Inc. (hereafter Philtranco) on April 13, 1977, was assigned to the Legaspi City-Pasay City route. On May 15, 1989, Nieva sideswiped an owner-type jeep, damaging the latter’s park light. Unfortunately, the vehicle’s owner turned out to be a PC colonel who arrested Nieva and brought him to Camp Crame where the corresponding criminal complaint was filed against him.

Nieva obtained his release from detention by virtue of a bail bond secured by Philtranco. He was suspended by the latter for thirty days effective June 8, 1989. Nieva reported back to work after serving his suspension. A few days after resuming his driving duties, however, he was re-arrested on the ground that his bail bond was fake. Nieva reported the incident to the management of Philtranco. On October 15, 1989, Nieva was advised by Philtranco’s administrative officer, Epifanio Llado, that to avoid re-arrest, he would have to refrain from driving until a settlement could be reached with the jeep owner. From then on, Nieva would report for work only to be told to wait until his case was settled. The case was finally settled on July 20, 1991, with Philtranco paying for the damages to the jeep. Three days thereafter, Nieva reported for work, but he was requested to file a new application as he was no longer considered an employee of Philtranco, allegedly for being absent without leave from October 19 to November 20, 1989.

Aggrieved by this turn of events, Nieva filed a complaint for illegal dismissal and 13th month pay with the NLRC’s National Capital Region Arbitration Branch in Manila, which docketed the same as NLRC NCR Case No. 03-01891-92. The case was subsequently assigned to Labor Arbiter Cornelio L. Linsangan.

Philtranco did not appear at the first four conferences scheduled by the arbiter, prompting the latter to warn Philtranco that it would be declared in default if it failed to appear at the next hearing. Threatened with such an eventuality, Philtranco’s representative finally appeared. On August 28, 1992, it filed a position paper with motion to dismiss, stating, among other things, that the complaint should have been lodged with the NLRC’s Regional Arbitration Branch in Legaspi City, not only because Nieva was a resident thereof, but also because the latter was hired, assigned, and based in Legaspi City.[1][1]

The motion to dismiss was denied by the labor arbiter in an order dated January 26, 1993. Nieva then presented his evidence. On August 30, 1993, Philtranco filed a second motion to dismiss, which was likewise denied by the arbiter on the ground that the same did not raise any new arguments. Thereafter, Philtranco presented its evidence to prove that Nieva had abandoned his work, having been absent without leave from October 19 to November 20, 1989.

After considering the evidence of the parties, the labor arbiter gave more credence to Nieva’s version of facts, finding that the latter’s absences were incurred with Philtranco’s permission, since he was instructed not to drive until his case was settled. The arbiter dismissed Philtranco’s allegation that Nieva had abandoned his work, stating that:

“Persistence in pursuing his claim before the Labor Arbiter negates allegation of abandonment (Antonio Evangelista vs. NLRC and Arturo Mendoza, 195 SCRA 603). In the instant case, even before complainant filed his present complaint he had already shown his determination (and) persistence to return to his work as he untiringly kept on reporting for duty. In fact, as ordered by his supervisor in Legaspi City, he even went to respondent’s main office in Pasay City to talk to the operations manager regarding his return to work. There could be no better manifestation of one’s interest to his work than what complainant had done. Definitely, therefore, complainant did not abandon his job.” [2][2]

Thus, on June 14, 1994, the labor arbiter rendered a decision awarding back wages and separation pay to Nieva. Said decision was seasonably appealed to the NLRC by Philtranco. In a resolution issued on September 15, 1995, the NLRC affirmed the decision of the labor arbiter, granting back wages and separation benefits as follows:

“PREMISES CONSIDERED, WHEREFORE, respondent is directed to pay individual complainant Roberto Nieva both his backwages in the amount of P67,392.00 PESOS and separation benefits in the amount of P33,696.00 PESOS. SO ORDERED.”[3][3]

Philtranco’s motion for reconsideration of said resolution having been likewise denied by the NLRC in its resolution of November 29, 1995, Philtranco elevated its case to this Court, raising the following issues:

1. The NLRC committed grave abuse of discretion amounting to lack of jurisdiction when it denied the motion of Philtranco to dismiss complaint based on improper venue;2. The Commission gravely abused its discretion amounting to lack or in excess of jurisdiction in ruling that Philtranco should be imposed backwages and separation pay;3. Respondent Commission acted with grave abuse of discretion amounting to lack of jurisdiction as to its findings of facts and when it confirmed the labor arbiter’s decision that there was no abandonment of work by the private respondent and that the latter showed his persistence to return to work.

The petition lacks merit.

As regards the first issue, this Court has previously declared that the question of venue essentially pertains to the trial and relates more to the convenience of the parties rather than upon the substance and merits of the case.[4][4] Provisions on venue are intended to assure convenience for the plaintiff and his witnesses and to promote the ends of justice. In fact, Section 1(a), Rule IV of the New Rules of Procedure of the NLRC, cited by Philtranco in support of its contention that venue of the illegal dismissal case filed by Nieva is improperly laid, speaks of the complainant/petitioner’s workplace, evidently showing that the rule is intended for the exclusive benefit of the worker. This being the case, the worker may waive said benefit.[5][5]

Furthermore, the aforesaid Section has been declared by this Court to be merely permissive. In Dayag vs. NLRC,[6][6] this Court held that:

“This provision is obviously permissive, for the said section uses the word ‘may,’ allowing a different venue when the interests of substantial justice demand a different one. In any case, as stated earlier, the Constitutional protection accorded to labor is a paramount and compelling factor, provided the venue chosen is not altogether oppressive to the employer.”

Moreover, Nieva, as a driver of Philtranco, was assigned to the Legaspi City-Pasay City route. Sulpicio Lines, Inc. vs. NLRC[7][7] is exactly in point. In said case, we held that:

“Section 1, Rule IV of the 1990 NLRC Rules additionally provides that, ‘for purposes of venue, workplace shall be understood as the place or locality where the employee is regularly assigned when the cause of action arose.’ Since the private respondent’s regular place of assignment is the vessel MV Cotabato Princess which plies the Manila-Estancia-Iloilo-Zamboanga-Cotabato route, we are of the opinion that Labor Arbiter Arthur L. Amansec was correct in concluding that Manila could be considered part of the complainant’s territorial workplace.”

From the foregoing, it is obvious that the filing of the complaint with the National Capital Region Arbitration Branch was proper, Manila being considered as part of Nieva’s workplace by reason of his plying the Legaspi City-Pasay City route.

As regards the second and third issues, Philtranco contends that the NLRC committed grave abuse of discretion when it affirmed the labor arbiter’s finding of non-abandonment by Nieva of his work. It harps on the alleged paucity of Nieva’s evidence, while citing the numerous exhibits marshaled on its behalf. Philtranco cites, as proof of Nieva’s abandonment of his work, two irregularity reports to the effect that Nieva was absent without leave from October 19-31 and November 1-20, 1989; a letter from Philtranco’s assistant manager to Nieva requiring the latter to report within five days from receipt thereof, on pain of being dropped from the roll; and a termination letter from Philtranco’s company lawyer to Nieva, for his failure to report for work as directed.

Suffice it to say that these issues raised by Philtranco relate to the veracity of the findings of fact of the NLRC and the labor arbiter. It should be noted that a petition for certiorari under Rule 65 of the Rules of Court will prosper only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part of the National Labor Relations Commission. It does not include an inquiry as to the correctness of the evaluation of evidence which was the basis of the labor official or officer in determining his conclusion. It is not for this Court to re-examine conflicting evidence, re-evaluate the credibility of witnesses, nor substitute the findings of fact of an administrative tribunal which has gained expertise in its special field.[8][8]

Parenthetically, the labor arbiter, in finding that Nieva did not abandon his job, held that:

“Complainant categorically stated in his position paper and Sinumpaang Salaysay that on 15 October 1989 he was instructed by Epifanio Llado, respondent company’s administrative officer, not to drive his vehicle until the case filed by the PC Colonel arising from the vehicular accident is settled. This assertion repeatedly made by complainant was never refuted by respondent. Such being the case, the respondent cannot conveniently contend that the absence of complainant was without permission.”[9][9]

Considering that the findings of fact of the Labor Arbiter and the NLRC are supported by evidence on record, the same must be accorded due respect and finality.[10][10]

Likewise, the labor arbiter considered Nieva’s absence from work as not equivalent to abandonment. We agree. Time and again, we have held that the immediate filing of a complaint for illegal dismissal by an employee, as in this case, is inconsistent with abandonment.[11][11]

From the foregoing, we hold that the NLRC did not commit abuse of discretion, much less grave abuse, when it denied Philtranco’s motion to dismiss Nieva’s complaint on the ground of improper venue and affirmed the labor arbiter’s award of back wages and separation pay to the latter.

WHEREFORE, finding no grave abuse of discretion committed by public respondent NLRC, the assailed Resolution of November 29, 1995 is AFFIRMED and this petition is hereby DISMISSED for lack of merit. Costs against petitioner.

[1][ G.R. No. 79762, January 24, 1991 ]

FORTUNE CEMENT CORPORATION, PETITIONER, VS. NLRC (FIRST DIVISION) AND ANTONIO M. LAGDAMEO, RESPONDENTS.

This is a petition for certiorari with prayer to annul the resolution dated May 29, 1987 of respondent National Labor Relations Commission (NLRC) reversing the order dated December 3, 1985 of the Labor Arbiter which dismissed private respondent Antonio M. Lagdameo's (Lagdameo for brevity) complaint for Illegal Dismissal (NLRC NCR Case No. 1-228-85) against petitioner Fortune Cement Corporation (FCC for brevity) for lack of jurisdiction.

Lagdameo is a registered stockholder of FCC.

On October 14, 1975, at the FCC Board of Directors' regular monthly meeting, he was elected Executive Vice-President of FCC effective November 1, 1975 (p. 3, Rollo).

Some eight (8) years later, or on February 10, 1983, during a regular meeting, the FCC Board resolved that all of its incumbent corporate officers, including Lagdameo, would be "deemed" retained in their respective positions without necessity of yearly reappointments, unless they resigned or were terminated by the Board (p. 4, Rollo).

At subsequent regular meetings held on June 14 and 21, 1983, the FCC Board approved and adopted a resolution dismissing Lagdameo as Executive Vice-President of the company, effective immediately, for loss of trust and confidence (p. 4, Rollo).

On June 21, 1983, Lagdameo filed with the National Labor Relations Commission (NLRC), National Capital Region, a complaint for illegal dismissal against FCC (NLRC-NCR Case No. 1-228-85) alleging that his dismissal was done without a formal hearing and investigation and, therefore, without due process (p. 63, Rollo).

On August 5, 1985, FCC moved to dismiss Lagdameo's complaint on the ground that his dismissal as a corporate officer is a purely intra-corporate controversy over which the Securities and Exchange Commission (SEC) has original and exclusive jurisdiction.

The Labor Arbiter granted the motion to dismiss (p. 22, Rollo). On appeal, however, the NLRC set aside the Labor Arbiter's order and remanded the case to the Arbitration Branch "for appropriate proceedings" (NLRC Resolution dated April 30, 1987). The NLRC denied FCC's motion for reconsideration (p. 5, Rollo). Dissatisfied, FCC filed this petition for certiorari.

We find merit in the petition.

The sole issue to be resolved is whether or not the NLRC has jurisdiction over a complaint filed by a corporate executive vice-president for illegal dismissal, resulting from a board resolution dismissing him as such officer.

Section 5 of Presidential Decree No. 902-A vests in the SEC original and exclusive jurisdiction over this controversy:

"Section 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

"a) Devices and schemes employed by or any acts, of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or stockholders, partners, members of associations or organization registered with the Commission;

“b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity;

“c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnership or associations." (Section 5, P.D. 902-A; Underscoring supplied.)

In reversing the decision of Labor Arbiter Porfirio E. Villanueva, respondent NLRC held:

"x x x. It is not disputed that complainant Lagdameo was an employee of respondent Fortune Cement Corporation, being then the Executive Vice-President. For having been dismissed for alleged loss of trust and confidence, complainant questioned his dismissal on such ground and the manner in which he was dismissed, claiming that no investigation was conducted, hence, there was and is denial of due process. Predicated on the above facts, it is clear to Us that a labor dispute had arisen between the appellant and the respondent corporation, a dispute which falls within the original and exclusive jurisdiction of the NLRC. A labor dispute as defined in the Labor Code includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment regardless of whether or not the disputants stand in the proximate relations of employers and employees." (pp. 16-17, Rollo.)

The Solicitor General, declining to defend public respondent in its pleading entitled "Manifestation in Lieu of Comment," aptly observed:

"The position of 'Executive Vice-President,' from which private respondent Lagdameo claims to have been illegally dismissed, is an elective corporate office. He himself acquired that position through election by the corporation's Board of Directors, although he also lost the same as a consequence of the latter's resolution.

"Indeed the election, appointment and/or removal of an executive vice-president is a prerogative vested upon a corporate board.

"And it must be, not only because it is a practice observed in petitioner Fortune Cement Corporation, but more so, because of an express mandate of law." (p. 65, Rollo.)

The Solicitor General pointed out that "a corporate officer's dismissal is always a corporate act and/or an intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action." The dispute between petitioner and Lagdameo is of the class described in Section 5, par. (c) of Presidential Decree No. 902-A, hence, within the original and exclusive jurisdiction of the SEC. The Solicitor General recommended that the petition be granted and NLRC-NCR Case No. 1-228-85 be dismissed by respondent NLRC for lack of jurisdiction (p. 95, Rollo).

In PSBA vs. Leaño (127 SCRA 778), this Court, confronted with a similar controversy, ruled that the SEC, not the NLRC, has jurisdiction:

"This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and of Tan's not having been elected thereafter. The matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a person to a corporation, whether as officer or as agent or employee is not determined by the nature of the services performed, but by the incidents of the relationship as they actually exist."

Lagdameo claims that his dismissal was wrongful, illegal, and arbitrary, because the "irregularities" charged against him were not investigated (p. 85, Rollo); that the case of PSBA vs. Leaño (supra) cited by the Labor Arbiter finds no application to his case because it is not a matter of corporate office having been declared vacant but one where a corporate officer was dismissed without legal and factual basis and without due process; that the power of dismissal should not be confused with the manner of exercising the same; that even a corporate officer enjoys security of tenure regardless of his rank (p. 97, Rollo); and that the SEC is without power to grant the reliefs prayed for in his complaint (p. 106, Rollo).

The issue of the SEC's power or jurisdiction is decisive and renders unnecessary a consideration of the other questions raised by Lagdameo. Thus did this Court rule in the case of Dy vs. National Labor Relations Commission (145 SCRA 211) which involved a similar situation:

"It is of no moment that Vailoces, in his amended complaint, seeks other reliefs which would seemingly fall under the jurisdiction of the Labor Arbiter, because a closer look at these - underpayment of salary and non--payment of living allowance - shows that they are actually part of the perquisites of his elective position, hence, intimately linked with his relations with the corporation. The question of remuneration, involving as it does, a person who is not a mere employee but a stockholder and officer, an integral part it might be said, of the corporation, is not a simple labor problem but a matter that comes within the area of corporate affairs and management, and is in fact a corporate controversy in contemplation of the Corporation Code." (Underlining ours.)

WHEREFORE, the questioned Resolution of the NLRC reversing the decision of the Labor Arbiter, having been rendered without jurisdiction, is hereby reversed and set aside. The decision of the Labor Arbiter dated December 3, 1985 dismissing NLRC-NCR Case No. 1-228-85 is affirmed, without prejudice to private respondent Antonio M. Lagdameo's seeking recourse in the appropriate forum. No costs.

[2]

[3]

[4]

[5]

[6]

[7][ G.R. No. 109642-43, January 05, 1995 ]

LESLIE W. ESPINO, PETITIONER, VS. HON. NATIONAL LABOR RELATIONS COMMISSION AND PHILIPPINE AIR LINES, RESPONDENTS.

The controversy generated in the instant case once again calls for the resolution of the issue of whether or not the National Labor Relations Commission (NLRC) has jurisdiction over a complaint filed by a corporate Executive Vice President-Chief Operating Officer for illegal dismissal resulting from the termination of his services as such officer by virtue of four (4) separate resolutions of the Board of Directors of Philippine Air Lines (PAL).

The undisputed facts are as follows:

Petitioner Leslie W. Espino was the Executive Vice President-Chief Operating Officer of private respondent Philippine Airlines (PAL) when his services were terminated sometime in December 1990 by the Board of Directors of PAL as a result of the findings of the panels created by then President Corazon C. Aquino to investigate the administrative charges filed against him and other senior officers for their purported involvement in four cases, denominated "Goldair," "Robelle," "Kasbah/La Primavera," and "Middle East" which allegedly prejudiced the interests of both PAL and the Philippine Government.

Petitioner started his employment with PAL on February 25, 1960 as a Traffic and Sales Trainee and, for 30 years, was successively promoted [1] until he became, by virtue of an election in March 1988 conducted by the Board of Directors, Executive Vice President and Chief Operating Officer for a term of one (1) year and who holds said office until his successor is elected and qualified, pursuant to Section 7, Article III in relation to Section 1, Article IV of the Amended By-Laws of PAL. The last time he was elected as such was on October 20, 1989.

Sometime on July 2, 1990, petitioner and several other senior officers of PAL were administratively charged by Romeo S. David, Senior Vice President for Corporate Services and Logistics Group, for their purported involvement in four cases, labelled as "Goldair," "Robelle," "Kasbah/Primavera" and "Middle East."

Except for the conflict of interest charges in the "Robelle" case, petitioner and several other senior officers of PAL were uniformly charged in the three (3) other aforementioned cases of gross incompetence, mismanagement, inefficiency, negligence, mismanagement, dereliction of duty, failure to observe and/or implement administrative and executive policies, and related acts or omissions resulting in the concealment or coverup and prevention of the seasonable discovery of anomalous transactions which, as a consequence, caused prejudice to the best interest of PAL and the Government.

Pending investigation by the panels created by then President Corazon C. Aquino, petitioner and other senior officers of PAL were placed under suspension by the Board of Directors.

On October 19, 1990, during the organizational meeting of the PAL Board of Directors, the election or appointment of some senior officers of the company who, like petitioner, had been charged administratively with various offenses and accordingly suspended, were deferred by the Board of Directors. During the said organizational meeting, Feliciano Belmonte was elected Chairman of the Board while Dante Santos was elected as President and Chief Executive Officer.

On the basis of the findings submitted by the presidential investigating panels, the Board issued separate resolutions dated January 19, 1991 in the "Goldair," "Robelle," and Kasbah/La Primavera," cases and another dated August 9, 1991 in the "Middle East" case wherein petitioner was considered resigned from the service effective immediately for loss of confidence and for acts inimical to the interests of the company.

As a result of his termination, petitioner Espino filed a complaint for illegal dismissal against PAL with the National Labor Relations Commission, Arbitration Branch, NCR, praying, among others, for reinstatement with backwages, recovery of P50 Million as moral damages, P10 Million as exemplary damages and attorney's fees. The case was docketed as NLRC Case No. 00-05-03210-91.

PAL justified the legality of petitioner Espino's dismissal from the service before the Labor Arbiter but questioned the jurisdiction of the NLRC contending that, because the investigating panels were created by President Corazon C. Aquino, it became, together with the PAL Board of Directors, a "parallel arbitration unit" which substituted the NLRC. As such, PAL argued that since the Board resolutions on the aforesaid cases cannot be reviewed by the NLRC, the recourse of petitioner Espino should have been addressed, by way of an appeal, to the Office of the President of the Republic of the Philippines.

On February 20, 1992, Labor Arbiter Cresencio J. Ramos rendered a decision [2] finding that petitioner Espino was dismissed without just and valid cause and accordingly ordered his reinstatement to his former position as Executive Vice-President-Chief Operating Officer without loss of seniority rights plus full backwages and other benefits appurtenant thereto, without qualification or deduction from the time of his illegal dismissal up to the date of his actual reinstatement. The dispositive portion reads:

"WHEREFORE, premises considered, judgment is hereby rendered:

1) Ordering complainant's immediate reinstatement to his former position as Executive Vice President-Chief Operating Officer without loss of seniority rights plus full backwages and other benefits appurtenant thereto, without qualification or deduction, from the time of his illegal dismissal up to the time of his actual reinstatement. His backwages as of February 29, 1992 as computed are in the total sum of P2,925,000.00 (P195,000.00 x 15 months, including the one month suspension).

2) Ordering respondent PAL to pay complainant Leslie Espino the following sums:

a) Backwages as of February

1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P 2,925,000.00

b) Cash equivalent of Annual trip passes on first class,(1 for international, 1 for regional, and 1 for domestic)for complainant, his spouse, qualified dependent andparents worth approximately US $45,000.00 at currentrate of exchange

P26.50/dollar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,192,000.00

c) Midyear and Christmas bonuses equivalent to two (2)

months pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390,000.00

3) Awarding moral damages to complainant in the sum ofP20 million plus exemplary damages of P2.0 million, atotal of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000,000.00

TOTAL P26,507,000.00

4) Granting attorney's feesof 10%of the total monetary

award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,650,700.00

GRAND TOTAL P28,157,700.00"

From the said decision, PAL filed on March 5, 1992 an appeal with the NLRC and submitted on March 13, 1992 a supplemental memorandum on appeal. PAL argued that the Labor Arbiter's decision is null and void for lack of jurisdiction over the subject matter as it is the Securities and Exchange Commission, and not the NLRC, which has original and exclusive jurisdiction over cases involving dismissal or removal of corporate officers.

Earlier, or more specifically, on February 25, 1992, petitioner Espino filed a motion for issuance of writ of execution on the ground that the decision of the Labor Arbiter ordering reinstatement is immediately executory even pending appeal pursuant to Article 223 of the Labor Code, as amended.

On February 28, 1992, the Labor Arbiter issued a writ of execution.

PAL, for its part, filed a motion to quash the writ of execution reiterating its argument that the Securities and Exchange Commission (SEC) and not the NLRC has original and exclusive jurisdiction over the subject matter involving the dismissal or removal of corporate officers.

On March 31, 1992, after an exchange of pleadings, Labor Arbiter Ramos denied PAL's motion to quash the writ of execution. Thereafter, or on April 2, 1992, an alias writ of execution was issued.

PAL then filed on April 23, 1992 with the NLRC a petition for injunction, later amended to implead the Labor Arbiter, praying for the issuance of a temporary restraining order to enjoin the enforcement of said alias writ of execution.

On April 27, 1992, the NLRC issued a temporary restraining order enjoining petitioner Espino, Sheriff Anam Timbayan, their agents and all persons acting under them, from implementing the alias writ of execution issued on April 2, 1992 upon PAL's posting of P400,000.00 cash or surety bond. On May 5, 1992, PAL posted the P400,000.00 surety bond.

On July 31, 1992, the NLRC promulgated a resolution [3] dismissing the complaint for illegal dismissal for lack of jurisdiction and declaring the nullity of the alias writ of execution. Petitioner Espino, Labor Arbiter Cresencio Ramos and Sheriff Anam Timbayan were permanently enjoined from enforcing the said alias writ of execution.

Petitioner Espino filed a motion for reconsideration but the same was denied on January 8, 1993. [4]

Dissatisfied, petitioner filed the instant petition for certiorari contending mainly that it is the NLRC which has jurisdiction under Article 217, par. (2) of the Labor Code, as amended, to hear the illegal dismissal case he filed against PAL as it involves the termination of a regular and permanent employee and the issues in the dispute involved, not only his removal from office, but also his claim for backwages and other benefits and damages; that PAL is estopped from questioning the jurisdiction of the NLRC.

We rule that the petition lacks merit.

The Court, citing Presidential Decree No. 902-A, laid down the rule in the case of Philippine School of Business Administration v. Leano, [5] and consequently reiterated in three (3) other cases [6] that it is the Securities and Exchange Commission (SEC) and not the NLRC which has original and exclusive jurisdiction over cases involving the removal from employment of corporate officers.

Sec. 5 of Presidential Decree No. 902-A regarding the jurisdiction of the Securities and Exchange Commission provides, as follows:

"SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

(a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or organizations registered with the Commission.

(b) Controversies arising out of intracorporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity.

(c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

(d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this Decree."

In intra-corporate matters concerning the election or appointment of officers of a corporation, Section 5, PD 902-A specifically provides:

"SEC. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

(c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations."Indisputably, the position of Executive Vice President-Chief Operating Officer from which petitioner Espino claims to have been illegally dismissed, is an elective corporate office under Section 7, Article III in relation to Section 1, Article IV of the Amended by-Laws of PAL. The said corporate office has a fixed term of one (1) year and the one elected shall hold office until a successor shall have been elected and qualified. He lost that position when his appointment or election as Executive Vice President-Chief Operating Officer, together with other senior officers who were similarly charged administratively, were deferred by the Board of Directors in its organizational meeting on October 19, 1990. He was later considered by the Board as resigned from the service, for reasons earlier stated, and the said position was later abolished.

The matter of petitioner's not being elected to the office of Executive Vice President-Chief Operating Officer thus falls squarely within the purview of Section 5 par. (c) of P.D. 902-A. In the case of PSBA v. Leano, supra, which involved an Executive Vice President who was not re-elected to the said position during the election of officers on September 5, 1981 by the PSBA's newly elected Board of Directors, the Court emphatically stated:

"This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and that of TAN's not having been elected thereafter. The matter of whom to elect is a prerogative that belongs to the

Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a person to a corporation, whether as officer or as agent or employee, is not determined by the nature of the services performed, but by the incidents of the relationship as they actually exist."

A corporate officer's dismissal is always a corporate act and/or an intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action. [7]

Furthermore, it must be noted that the reason behind the non-election of petitioner to the position of Executive Vice President-Chief Operating Officer arose from, or is closely connected with, his involvement in the alleged irregularities in the aforementioned cases which, upon investigation and recommendation, were resolved by the PAL Board of Directors against him and other senior officers. Evidently, this intra-corporate ruling places the instant case under the specialized competence and expertise of the SEC.

The jurisdiction of the SEC has likewise been clarified by this Court in the case of Union Glass and Container Corporation, et al. v. SEC, et al., [8] thus:

"This grant of jurisdiction must be viewed in the light of the nature and function of the SEC under the law. Section 3 of PD No. 902-A confers upon the latter ‘absolute jurisdiction, supervision, and control over all corporations, partnerships or associations, who are grantees of primary franchise and/or license or permit issued by the government to operate in the Philippines x x x.' The principal function of the SEC is the supervision and control over corporations, partnerships and associations with the end in view that investment in these entities may be encouraged and protected, and their activities pursued for the promotion of economic development.

It is in aid of this office that the adjudicative power of the SEC must be exercised. Thus the law explicitly specified and delimited its jurisdiction to matters intrinsically connected with the regulation of corporations, partnerships and associations and those dealing with the internal affairs of such corporations, partnerships or associations.

Otherwise stated, in order that the SEC can take cognizance of a case, the controversy must pertain to any of the following relationships: (a) between the corporation, partnership or association and the public; between the corporation, partnership or association and its stockholders, partners, members, or officers; (c) between the corporation, partnership or association and the state in so far as its franchise, permit or license to operate is concerned, and (d) among the stockholders, partners or associates themselves."

The fact that petitioner sought payment of his backwages, other benefits, as well as moral and exemplary damages and attorney's fees in his complaint for illegal dismissal will not operate to prevent the SEC from exercising its jurisdiction under PD 902-A. While the affirmative reliefs and monetary claims sought by petitioner in his complaint may, at first glance, mislead one into placing the case under the jurisdiction of the Labor Arbiter, a closer examination reveals that they are actually part of the perquisites of his elective position; hence, intimately linked with his relations with the corporation. In Dy v. NLRC, et al., [9] the Court, confronted with the same issue ruled, thus:

"The question of remuneration, involving as it does, a person who is not a mere employee but a stockholder and officer, an integral part, it might be said, of the corporation, is not a simple labor problem but a matter that comes within the area of corporate affairs and management, and is in fact a corporate controversy in contemplation of the Corporation Code."

The Court has likewise ruled in the case of Andaya v. Abadia [10] that in intra-corporate matters, such as those affecting the corporation, its directors, trustees, officers and shareholders, the issue of consequential damages may just as well be resolved and adjudicated by the SEC. Undoubtedly, it is still within the competence and expertise of the SEC to resolve all matters arising from or closely connected with all intra-corporate disputes.

Petitioner's reliance on the principle of estoppel to justify the exercise of jurisdiction by the NLRC over the instant complaint is misplaced. It is not accurate for petitioner to conclude that PAL did not raise the issue of jurisdiction at the initial stages of the case, for, while it may be predicated on a different ground, i.e., that appeal from the resolution of the Board of Directors of PAL as regards termination of his services, is to the Office of the President, PAL did in fact question the jurisdiction of the Labor Arbiter. An error of this nature, under the circumstances, could not justify petitioner's insistence that PAL did not raise the issue of jurisdiction at the outset, but only before the NLRC.

It is well-settled that jurisdiction over the subject matter is conferred by law and the question of lack of jurisdiction may be raised at anytime even on appeal. [11] The principle of estoppel cannot be invoked to prevent this Court from taking up the question of jurisdiction, which has been apparent on the face of the pleadings since the start of the litigation before the Labor Arbiter. In the case of Dy v. NLRC, supra, the Court, citing the case of Calimlim v. Ramirez [12] reiterated that the decision of a tribunal not vested with appropriate jurisdiction is null and void. Again, the Court in Southeast Asian Fisheries Development Center-Aquaculture Department v. NLRC [13] restated the rule that the invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction upon a tribunal that has none over the cause of action. The instant case does not provide an exception to the said rule.

In fine, the issue of the SEC's jurisdiction is settled and the Court finds it unnecessary to dwell further on other questions raised by petitioner. Thus, finding no grave abuse of discretion on the part of NLRC in dismissing the complaint for illegal dismissal, the instant petition must be dismissed.

WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit. The resolution of the National Labor Relations Commission dated July 31, 1992 dismissing the complaint for illegal dismissal for lack of jurisdiction is AFFIRMED, without prejudice to petitioner's seeking relief, if so minded, in the proper forum. SO ORDERED.

[8]

[9]

[10]

[11]

[ G.R. No. 107660, January 02, 1995 ]

RAMON C. LOZON, PETITIONER, VS. NLRC (SECOND DIVISION) AND PHILIPPINE AIRLINES, INC., RESPONDENTS.

Petitioner Ramon C. Lozon, a certified public accountant, was a Senior Vice-President-Finance of private respondent Philippine Airlines, Inc. ("PAL"), when his services were terminated on 19 December 1990 in the aftermath of the much-publicized "two-billion-peso PALscam." Lozon started to work for the national carrier on 23 August 1967 and, for twenty-three years, steadily climbed the corporate ladder until he became one of its vice-presidents.[1]

His termination from the service was spawned by a letter sent some time in June 1990 by a member of PAL's board of directors, then Solicitor General Francisco Chavez, to PAL President Dante Santos. Chavez demanded an investigation of twenty-three irregularities allegedly committed by twenty-two high-ranking PAL officials. Among these officials was petitioner; he had been administratively charged by Romeo David, Senior Vice-President for Corporate Services and Logistics Group, for his (Lozon) purported involvement in four cases, labeled "Goldair," "Autographics," "Big Bang of 1983" and "Middle East."[2] Pending the investigation of these cases by a panel[3] constituted by then President Corazon C. Aquino, petitioner was placed under preventive suspension.

In the organizational meeting of the PAL board of directors on 19 October 1990, during which occasion Feliciano R. Belmonte, Jr., was elected chairman of the board while Dante G. Santos was designated president and chief executive officer,[4] the board deferred action on the election or appointment of some senior officers of the company who, like petitioner, had been charged with various offenses.

On 18 January 1991, the PAL board of directors issued two resolutions relative to the investigation conducted by the presidential investigating panel in the "Autographics" and "Goldair" cases. In "Autographics," petitioner was charged, along with three other officials,[5] with "gross inefficiency, negligence, imprudence, mismanagement, dereliction of duty, failure to observe and/or implement administrative and executive policies" and with the "concealment, or cover-up and prevention of the seasonal discovery of the anomalous transactions" had with Autographics, Inc., resulting in, among other things, an overpayment by PAL to Autographics in the amount of around P12 million. Petitioner was forthwith considered "resigned from the service x x x for loss of confidence and for acts inimical to the interests of the company."[6] A similar conclusion was arrived at by the PAL board of directors with regard to petitioner in the "Goldair" case where he, together with six other PAL officials,[7] were charged with like "offenses" that had caused PAL's defraudation by Goldair, PAL's general sales agent in Australia, of 14.6 million Australian dollars.[8]

Aggrieved by the action taken by the PAL board of directors, petitioner, on 26 June 1991, filed with the National Labor Relations Commission ("NLRC") in Manila a complaint (docketed NLRC-NCR Case No. 00-06-03684-91) for illegal dismissal and for reinstatement, with backwages and "fringe benefits such as Vacation leave, Sick leave, 13th month pay, Christmas Bonus, Medical Expenses, car expenses, trip pass entitlement, etc., plus moral damages of P40 Million, exemplary damages of P10 Million and reasonable attorney's fees."[9]

On 09 August 1991,[10] the PAL board of directors also held petitioner as "resigned from the company" for loss of confidence and for acts inimical to the interests of the company in the "Big Bang of 1983" case for his alleged role in the irregularities that had precipitated the write-down (write-off) of assets amounting to P553 million from the books and financial statements of PAL.[11] In the "Middle East" case, the PAL board of directors, on the same date, suspended petitioner for six (6) months for his supposed involvement in the anomalous administration of commercial marketing arrangements in which PAL had lost an estimated P120 million.[12]

PAL defended the validity of petitioner's dismissal before the Labor Arbiter. It questioned at the same time the jurisdiction of the NLRC, positing the theory that since the investigating panel was constituted by then President Aquino, said panel, along with the PAL board of directors, became "a parallel arbitration unit" which, in legal contemplation, should be deemed to have substituted for the NLRC. Thus, PAL averred, petitioner's recourse should have been to appeal his case to the Office of the President.[13] On the other hand, petitioner questioned the authority of the panel to conduct the investigation, asseverating that the charges leveled against him were purely administrative in nature that could have well been ventilated under the grievance procedure outlined in PAL's Code of Discipline.

On 17 March 1992, Labor Arbiter Jose G. de Vera rendered a decision ruling for petitioner.[14] The decretal portion of the decision read:

"WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the respondent Philippine Airlines, Inc., to reinstate the complainant to his former position with all the rights,

privileges, and benefits appertaining thereto plus backwages, which as of March 15, 1992 already amounted to P2,632,500.00, exclusive of fringes. Further, the respondent company is ordered to pay complainant as follows: P5,000,000.00 as moral damages; P1,000,000.00 as exemplary damages, and attorney's fees equivalent to ten percent (10%) of all the foregoing awards."SO ORDERED."[15]

A day after promulgating the decision, the labor arbiter issued a writ of execution. PAL filed a motion to quash the writ which petitioner promptly opposed. After the labor arbiter had denied the motion to quash, PAL filed a petition for injunction with the NLRC (docketed NLRC IC Case No. 00261-92). No decision was rendered by NLRC on this petition.[16]

Meanwhile, PAL appealed the decision of the labor arbiter by filing a memorandum on appeal,[17] assailing, once again, the jurisdiction of the NLRC but this time on the ground that the issue pertaining to the removal or dismissal of petitioner, a corporate officer, was within the exclusive and original jurisdiction of the Securities and Exchange Commission ("SEC"). Petitioner interposed a partial appeal praying for an increase in the amount of moral and exemplary damages awarded by the labor arbiter.[18]

On 24 July 1992, the NLRC rendered a decision (in NLRC NCR Case No. 00-06-03684-91)[19] dismissing the case on the strength of PAL's new argument on the issue of jurisdiction.[20] Petitioner's motion for reconsideration was denied by the NLRC.

The instant petition for certiorari filed with this Court raises these issues: (a) Whether or not the NLRC has jurisdiction over the illegal dismissal case, and (b) on the assumption that the SEC has that jurisdiction, whether or not private respondent is estopped from raising NLRC's lack of jurisdiction over the controversy.

We sustain NLRC's dismissal of the case.

Presidential Decree No. 902-A confers on the SEC original and exclusive jurisdiction to hear and decide controversies and cases involving -

a. Intra-corporate and partnership relations between or among the corporation, officers and stockholders and partners, including their elections or appointments;b. State and corporate affairs in relation to the legal existence of corporations, partnerships and associations or to their franchises; andc. Investors and corporate affairs, particularly in respect of devices and schemes, such as fraudulent practices, employed by directors, officers, business associates, and/or other stockholders, partners, or members of registered firms; as well asd. Petitions for suspension of payments filed by corporations, partnerships or associations possessing sufficient property to cover all their debts but which foresee the impossibility of meeting them when they respectively fall due, or possessing insufficient assets to cover their liabilities and said entities are upon petition or motu proprio, placed under the management of a Rehabilitation Receiver or Management Committee.

Specifically, in intra-corporate matters concerning the election or appointment of officers of a corporation, the decree provides:"SEC. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

"(c) Controversies in the election or appointments of directors, trustees, officers or managers of such

corporations, partnerships or associations."

Petitioner himself admits that "vice presidents are senior members of management,"[21] whose designations are no longer than just by means of ordinary promotions. In his own case, petitioner has been elected to the position of Senior Vice-President - Finance Group by PAL's board of directors at its organizational meeting held on 20 October 1989 pursuant to the By-laws,[22] under which, he would serve for a term of one year and until his successor shall have been elected and qualified.[23] Petitioner, for reasons already mentioned, did not get to be re-elected thereafter.[24]

In Fortune Cement Corporation v. NLRC,[25] the Court has quoted with approval the Solicitor General's contention that "a corporate officer's dismissal is always a corporate act and/or intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action." Not the least insignificant in the case at bench is that petitioner's dismissal is intertwined with still another intra-corporate affair, earlier so ascribed as the "two-billion-peso PALscam," that inevitably places the case under the specialized competence of the SEC and well beyond the ambit of a labor arbiter's normal jurisdiction under the general provisions of Article 217 of the Labor Code.[26]

Petitioner contends that the jurisdiction of the SEC excludes its cognizance over claims for vacation and sick leaves, 13th month pay, Christmas bonus, medical expenses, car expenses, and other benefits, as well as for moral and exemplary damages and attorney's fees.[27] Dy v. NLRC[28] categorically states that the question of remuneration being asserted by an officer of a corporation is "not a simple labor problem but a matter that comes within the area of corporate affairs and management, and is in fact, a corporate controversy in contemplation of the Corporation Code." With regard to the matter of damages, in Andaya v. Abadia[29] where, in a complaint filed before the Regional Trial Court, the president and general manager of the Armed Forces and Police Savings and Loan Association ("AFPSLAI") questioned his ouster from the stewardship of the association, this Court, in dismissing the petition assailing the order of the trial court which ruled that SEC, not the regular courts, had jurisdiction over the case, has said:

"The allegations against herein respondents in the amended complaint unquestionably reveal intra-corporate controversies cleverly concealed, although unsuccessfully, by use of civil law terms and phrases. The amended complaint impleads herein respondents who, in their capacity as directors of AFPSLAI, allegedly convened an illegal meeting and voted for the reorganization of management resulting in petitioner's ouster as corporate officer. While it may be said that the same corporate acts also give rise to civil liability for damages, it does not follow that the case is necessarily taken out of the jurisdiction of the SEC as it may award damages which can be considered consequential in the exercise of its adjudicative powers. Besides, incidental issues that properly fall within the authority of a tribunal may also be considered by it to avoid multiplicity, of actions. Consequently, in intra-corporate matters such as those affecting the corporation, its directors, trustees, officers, shareholders, the issue of consequential damages may just as well be resolved and adjudicated by the SEC." (Underscoring supplied.)

We here reiterate the above holdings for, indeed, controversies within the purview of Section 5 of P.D. No. 902-A must not be so constricted as to deny to the SEC the sound exercise of its expertise and competence in resolving all closely related aspects of such corporate disputes.

Petitioner maintains that PAL is estopped, nevertheless, from questioning the jurisdiction of the NLRC considering that PAL did not hold the dispute to be intracorporate until after the case had already been brought on appeal to the NLRC.

In the first place, there would not be much basis to indicate that PAL was "effectively barred by estoppel."[30] As early as the initial stages of the controversy PAL had already raised the issue of jurisdiction albeit mistakenly at first on the ground that petitioner's recourse was an appeal to the Office of the President. The error could not alter the fact that PAL did question even then the jurisdiction of both the labor arbiter and the NLRC.

It has long been the established rule, moreover, that jurisdiction over a subject matter is conferred by law,[31] and the question of lack of jurisdiction may be raised at anytime even on appeal.[32] In the recent case of La Naval Drug Corporation vs. Court of Appeals, G.R. No. 103200, 31 August 1994, this Court said:

"Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the court has no jurisdiction over the subject matter, the action shall be dismissed (Section 2, Rule 9, Rules of Court). This defense may be interposed at any time, during appeal (Roxas vs. Rafferty, 37 Phil. 957) or even after final judgment (Cruzcosa vs. Judge Concepcion, et al., 101 Phil. 146). Such is understandable, as this kind of jurisdiction is conferred by law and not within the courts, let alone the parties, to themselves determine or conveniently set aside. In People vs. Casiano (111 Phil. 73, 93-94), this Court, on the issue of estoppel, held:"’The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same ‘must exist as a matter of law, and may not be conferred by consent of the parties or by estoppel’ (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position--that the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction is conferred by law, and does not depend upon the will of the parties, has no bearing thereon.’"

Petitioner points to "PAL's scandalous duplicity" in questioning the jurisdiction of the NLRC in this particular controversy while upholding it (NLRC's jurisdiction) in "Robin Dui v. Philippine Airlines" (Case No. 00-4-20267) pending before that Commission. We need not delve into whether or not PAL's conduct does indeed smack of opportunism; suffice it to say that Robin Dui is entirely an independent and separate case and, more than that, it is not before us in this instance.

WHEREFORE, the herein petition for certiorari is DISMISSED, and the decision appealed from is AFFIRMED, without prejudice to petitioner's seeking, if circumstances permit, a recourse in the proper forum. No costs.

[ G.R. No. 121143, January 21, 1997 ]

PURIFICACION G. TABANG, PETITIONER, VS. NLRC AND PAMANA GOLDEN CARE MEDICAL CENTER FOUNDATION, INC., RESPONDENTS.

This is a petition for certiorari which seeks to annul the resolution of the National Labor Relations Commission (NLRC), dated June 26, 1995, affirming in toto the order of the labor arbiter, dated April 26, 1994, which dismissed petitioner’s complaint for illegal dismissal with money claims for lack of jurisdiction.

The records show that petitioner Purificacion Tabang was a founding member, a member of the Board of Trustees, and the corporate secretary of private respondent Pamana Golden Care Medical Center Foundation, Inc.,a non-stock corporation engaged in extending medical and surgical services.

On October 30, 1990, the Board of Trustees issued a memorandum appointing petitioner as Medical Director and Hospital Administrator of private respondent’s Pamana Golden Care Medical Center in Calamba, Laguna.

Although the memorandum was silent as to the amount of remuneration for the position, petitioner claims that she received a monthly retainer fee of five thousand pesos (P5,000.00) from private respondent, but the payment thereof was allegedly stopped in November, 1991.

As medical director and hospital administrator, petitioner was tasked to run the affairs of the aforesaid medical center and perform all acts of administration relative to its daily operations.

On May 1, 1993, petitioner was allegedly informed personally by Dr. Ernesto Naval that in a special meeting held on April 30, 1993, the Board of Trustees passed a resolution relieving her of her position as Medical Director and Hospital Administrator, and appointing the latter and Dr. Benjamin Donasco as acting Medical Director and acting Hospital Administrator, respectively. Petitioner averred that she thereafter received a copy of said board resolution.On June 6, 1993, petitioner filed a complaint for illegal dismissal and non-payment of wages, allowances and 13th month pay before the labor arbiter.

Respondent corporation moved for the dismissal of the complaint on the ground of lack of jurisdiction over the subject matter. It argued that petitioner’s position as Medical Director and Hospital Administrator was interlinked with her position as member of the Board of Trustees, hence, her dismissal is an intra-corporate controversy which falls within the exclusive jurisdiction of the Securities and Exchange Commission (SEC).

Petitioner opposed the motion to dismiss, contending that her position as Medical Director and Hospital Administrator was separate and distinct from her position as member of the Board of Trustees. She claimed that there is no intra-corporate controversy involved since she filed the complaint in her capacity as Medical Director and Hospital Administrator, or as an employee of private respondent.

On April 26, 1994, the labor arbiter issued an order dismissing the complaint for lack of jurisdiction. He ruled that the case falls within the jurisdiction of the SEC, pursuant to Section 5 of Presidential Decree No. 902-A.[1]

Petitioner’s motion for reconsideration was treated as an appeal by the labor arbiter who consequently ordered the elevation of the entire records of the case to public respondent NLRC for appellate review.[2]

On appeal, respondent NLRC affirmed the dismissal of the case on the additional ground that “the position of a Medical Director and Hospital Administrator is akin to that of an executive position in a corporate ladder structure,” hence, petitioner’s removal from the said position was an intra-corporate controversy within the

original and exclusive jurisdiction of the SEC.[3]

Aggrieved by the decision, petitioner filed the instant petition which we find, however, to be without merit.

We agree with the findings of the NLRC that it is the SEC which has jurisdiction over the case at bar.The charges against herein private respondent partake of the nature of an intra-corporate controversy.Similarly, the determination of the rights of petitioner and the concomitant liability of private respondent arising from her ouster as a medical director and/or hospital administrator, which are corporate offices, is an intra-corporate controversy subject to the jurisdiction of the SEC.

Contrary to the contention of petitioner, a medical director and a hospital administrator are considered as corporate officers under the by-laws of respondent corporation. Section 2(i), Article I thereof states that one of the powers of the Board of Trustees is “(t)o appoint a Medical Director, Comptroller/Administrator, Chiefs of Services and such other officers as it may deem necessary and prescribe their powers and duties.”[4]

The president, vice-president, secretary and treasurer are commonly regarded as the principal or executive officers of a corporation, and modern corporation statutes usually designate them as the officers of the corporation.[5]However, other offices are sometimes created by the charter or by-laws of a corporation, or the board of directors may be empowered under the by-laws of a corporation to create additional offices as may be necessary.[6]

It has been held that an “office” is created by the charter of the corporation and the officer is elected by the directors or stockholders.[7]On the other hand, an “employee”usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee.[8]

In the case at bar, considering that herein petitioner, unlike an ordinary employee, was appointed by respondent corporation’s Board of Trustees in its memorandum of October 30, 1990,[9] she is deemed an officer of the corporation. Perforce, Section 5(c) of Presidential Decree No. 902-A, which provides that the SEC exercises exclusive jurisdiction over controversies in the election or appointment of directors, trustees, officers or managers of corporations, partnerships or associations, applies in the present dispute. Accordingly, jurisdiction over the same is vested in the SEC, and not in the Labor Arbiter or the NLRC.

Moreover, the allegation of petitioner that her being a member of the Board of Trustees was not one of the considerations for her appointment is belied by the tenor of the memorandum itself. It states: “We hope that you will uphold and promote the mission of our foundation,”[10] and this cannot be construed other than in reference to her position or capacity as a corporate trustee.

A corporate officer’s dismissal is always a corporate act, or an intra-corporate controversy, and the nature is not altered by the reason or wisdom with which the Board of Directors may have in taking such action.[11] Also, an intra-corporate controversy is one which arises between a stockholder and the corporation. There is no distinction, qualification, nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between stockholders and corporations.[12]

With regard to the amount of P5,000.00 formerly received by herein petitioner every month, the same cannot be considered as compensation for her services rendered as Medical Director and Hospital Administrator. The vouchers[13] submitted by petitioner show that the said amount was paid to her by PAMANA, Inc., a stock corporation which is separate and distinct from herein private respondent. Although the payments were considered advances to Pamana Golden Care, Calamba branch, there is no evidence to show that the Pamana Golden Care stated in the vouchers refers to herein respondent Pamana Golden Care Medical Center Foundation, Inc.

Pamana Golden Care is a division of Pamana, Inc., while respondent Pamana Golden Care Medical Center Foundation, Inc. is a non-stock, non-profit corporation.It is stated in the memorandum of petitioner that Pamana, Inc. is a stock and profit corporation selling pre-need plan for education, pension and health care. The health care plan is called Pamana Golden Care Plan and the holders are called Pamana Golden Care Card Holders or, simply, Pamana Members.[14]

It is an admitted fact that herein petitioner is a retained physician of Pamana, Inc., whose patients are holders of the Pamana Golden Care Card. In fact, in her complaint[15]filed before the Regional Trial Court of Calamba, herein petitioner is asking, among others, for professional fees and/or retainer fees earned for her treatment of Pamana Golden Care card holders.[16] Thus, at most, said vouchers can only be considered as proof of payment of retainer fees made by Pamana, Inc. to herein petitioner as a retained physician of Pamana Golden Care.

Moreover, even assuming that the monthly payment of P5,000.00 was a valid claim against respondent corporation, this would not operate to effectively remove this case from the jurisdiction of the SEC. In the case of Cagayan de Oro Coliseum, Inc. vs. Office of the Minister of Labor and Employment, etc., et al.,[17] we ruled that “(a)lthough the reliefs sought by Chavez appear to fall under the jurisdiction of the labor arbiter as they are claims for unpaid salaries and other remunerations for services rendered, a close scrutiny thereof shows that said claims are actually part of the perquisites of his position in, and therefore interlinked with, his relations with the corporation. In Dy, et al., vs.NLRC, et al., the Court said: ‘(t)he question of remuneration involving as it does, a person who is not a mere employee but a stockholder and officer, an integral part, it might be said, of the corporation, is not a simple labor problem but a matter that comes within the area of corporate affairs and management and is in fact a corporate controversy in contemplation of the Corporation Code.’”

WHEREFORE, the questioned resolution of the NLRC is hereby AFFIRMED, without prejudice to petitioner’s taking recourse to and seeking relief through the appropriate remedy in the proper forum.

[ G.R. No. L- 58468, February 24, 1984 ]

PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION VS. LABOR ARBITER LACANDOLA S. LEANO OF THE NLRC AND RUFINO R. TAN, RESPONDENTS.

This Petition for Certiorari questions the jurisdiction of respondent Labor Arbiter over the present controversy (No. NCR-9-20-81) involving private respondent-complainant, Rufino R. Tan (TAN), and petitioners, the Philippine School of Business Administration (PSBA), a domestic corporation, and majority of its Directors.

TAN is one of the principal stockholders of PSBA. Before September 5, 1981, he was a Director and the Executive Vice President enjoying salaries and allowances.

On August 1, 1981, at the PSBA Board of Directors' regular meeting, three members were elected to fill vacancies in the seven-man body.

On September 5, 1981, also during a regular meeting, the Board declared all corporate positions vacant except those of the Chairman and President, and at the same time elected a new set of officers. TAN was not re-elected as Executive Vice-President.[1]

On September 16, 1981, TAN filed with the National Labor Relations Commission (NLRC) (National Capital Region) a complaint for Illegal Dismissal against petitioners alleging that he was "summarily, illegally, irregularly and improperly removed from his position as Executive Vice-President x x x without cause, investigation or notice" (NLRC Case No. NCR-9-20-81) (the Labor Case, in brief).

On September 21, 1981, TAN also filed a one-million-peso damage suit against petitioners before the then Court of First Instance of Rizal, Quezon City, for illegal and oppressive removal (Civil Case No. Q-33444).

And, on September 28, 1981, TAN lodged before the Securities and Exchange Commission (SEC) another complaint against petitioners essentially questioning the validity of the PSBA elections of August 1, 1981 and September 5, 1981, and of his "ouster" as Executive Vice-President (SEC Case No. 2145).

On October 13, 1981, SEC issued a subpoena duces tecum commanding the production of corporate documents, books and records.[2]

On October 15, 1981, respondent Labor Arbiter also issued a subpoena duces tecum to submit the same books and documents.[3]

Before the NLRC, petitioners moved for the dismissal of TAN' s complaint, invoking the principle against split jurisdiction.

On October 22, 1981, petitioners availed of this Petition contending mainly that:

“1. The respondent labor arbiter illegally assumed jurisdiction over the complaint for 'Illegal Dismissal' because the failure of the private respondent to be reelected to the corporate position of Executive Vice-President was

an intra-corporate question over which the Securities and Exchange Commission had already assumed jurisdiction.

“2. The issuance by the respondent labor arbiter of a subpoena duces tecum was likewise without jurisdiction especially if considered in the light of procedural and substantial requirements therefor such that it is imperative that the supervising authority of this Honorable Court should be exercised to prevent a substantial wrong and to do substantial justice."[4]

TAN counter-argues that his sole and exclusive cause of action is illegal dismissal, falling within the jurisdiction of the NLRC, for he was dismissed suddenly and summarily without cause in violation of his constitutional rights to due process and security of tenure. He prays that his dismissal be declared illegal and that his reinstatement be ordered with full backwages and without loss of other benefits.

We issued a Temporary Restraining Order, enjoining respondent Labor Arbiter from proceeding in any manner with the Labor Case, and subsequently gave due course to the Petition.

The jurisdiction of the SEC vis-a-vis the NLRC is in issue. An intracorporate controversy would call for SEC jurisdiction. A labor dispute, that of the NLRC.

Relevant and pertinent it is to note that the PSBA is a domestic corporation duly organized and existing under our laws. General management is vested in a Board of seven directors elected annually by the stockholders entitled to vote, who serve until the election and qualification of their successors. Any vacancy in the Board of Directors filled by a majority vote of the subscribed capital stock entitled to vote at a meeting specially called for the purpose, and the director or directors so chosen hold office for the unexpired term.[5] Corporate officers are provided for, among them, the Executive Vice-President, who is elected by the Board of Directors from their own number.[6] The officers receive such salaries or compensation as the Board of Directors may fix.[7] The By-Laws likewise provide that should the position of any officer of the corporation become vacant by reason of death, resignation, disqualification, or otherwise, the Board of Directors, by a majority vote, may choose a successor or successors who shall hold office for the expired term of his predecessor.[8]

It was at a Board regular monthly meeting held on August 1, 1981, that three directors were elected to fill vacancies. And, it was at the regular Board Meeting of September 5, 1981 that all corporate positions were declared vacant in order to effect a reorganization, and at the ensuing election of officers, TAN was not re-elected as Executive Vice-President.

Basically, therefore, the question is whether the election of directors on August 1, 1981 and the election of officers on September 5, 1981, which resulted in TAN's failure to be re-elected, were validly held. This is the crux of the question that TAN has raised before the SEC. Even in his position paper before the NLRC, TAN alleged that the election on August 1, 1981 of the three directors was in contravention of the PSBA By-Laws providing that any vacancy in the Board shall be filled by a majority vote of the stockholders at a meeting specially called for the purpose. Thus, he concludes, the Board meeting on September 5, 1981 was tainted with irregularity on account of the presence of illegally elected directors without whom the results could have been different.

TAN invoked the same allegations in his complaint filed with the SEC. So much so, that on December 17, 1981, the SEC (Case No. 2145) rendered a Partial Decision annulling the election of the three directors and ordered the convening of a stockholders' meeting for the purpose of electing new

members of the Board.[9] The correctness of said conclusion is not for us to pass upon in this case. TAN was present at said meeting and again sought the issuance of injunctive relief from the SEC.

The foregoing indubitably show that, fundamentally, the controversy is intra-corporate in nature. It revolves around the election of directors, officers or managers of the PSBA, the relation between and among its stockholders, and between them and the corporation. Private respondent also contends that his "ouster" was a scheme to intimidate him into selling his shares and to deprive him of his just and fair return on his investment as a stockholder received through his salary and allowances as Executive Vice-President. Vis-a-vis the NLRC, these matters fall within the jurisdiction of the SEC. Presidential Decree No. 902-A vests in the Securities and Exchange Commission:

"x x x original and exclusive jurisdiction to hear and decide cases involving:

“a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or stockholders, partners, members of associations or organizations registered with the Commission.

“b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members; or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity;

“c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations."[10]

This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and of TAN's not having been elected thereafter. The matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a person to a corporation, whether as officer or as agent or employee, is not determined by the nature of the services performed, but by the incidents of the relationship as they actually exist.[11]

With the foregoing conclusion, it follows that the issuance of a subpoena duces tecum by the Labor Arbiter will have to be set aside.

WHEREFORE, judgment is hereby rendered (1) ordering respondent Labor Arbiter to dismiss the complaint in NLRC Case No. NCR-9-20-81 for lack of jurisdiction; (2) nullifying the subpoena duces tecum issued by him in said case; and (3) declaring the Temporary Restraining Order heretofore issued permanent.

No costs.

[ G.R. No. 136159, September 01, 1999 ]

MACRINA S. SAURA, AMELITA S. SAURA, ROMEO S. SAURA, AND VILLA GOVERNOR FORBES, INC., PETITIONERS, VS. RAMON G. SAURA, JR., AND

CARMENCITA S. MILLAN, RESPONDENTS.

The petition for review on certiorari seeks to annul and set aside the decision of the Court of Appeals[1] and the resolution denying reconsideration of said decision.[2] The Court of Appeals upheld the jurisdiction of the regional trial court over the case pending between the parties.[3]

The antecedent facts are undisputed. They may be related as follows:

The parties in this case are related to one another by blood. They were the children of the late Ramon E. Saura, Sr. Petitioner Macrina Saura is Ramon Sr.’s third wife. She was joined by co-petitioners, her children by Ramon Sr., Amelita Saura-Vergara and Romeo S. Saura, and Villa Governor Forbes, Inc, (VGFI) a corporation duly organized and existing under Philippine laws.[4] On the other hand, respondents Ramon G. Saura, Jr. and Carmencita S. Millan are the legitimate children of Ramon Sr. by his first and second wife, respectively.

Respondents Ramon G. Saura, Jr., and Carmencita S. Millan were the absolute owners of two parcels of land located at Governor Forbes, Sampaloc, Manila, each containing an area of seven hundred (700) square meters, evidenced by Transfer Certificate of Title (TCT) Nos. 135148 and 135149.

In 1979, respondents’ father, Ramon E. Saura, Sr., initiated the incorporation of Villa Governor Forbes, Inc., with his children, and third wife as stockholders.[5] On August 8, 1979, respondents executed a deed of exchange of the two parcels of land for 23,750 shares of stocks of VGFI, valued at P237,500.00. Though the property was appraised by bank examiners to have a value of about P2,000,000.00, respondents’ father gave it a valuation of only P310,000.00. Of this amount, respondents Ramon, Jr. and Carmencita were credited with P73,625.00 each as paid shares of stock. The balance was made to appear as the contribution of petitioners in the corporation: P42,625.00 for Amelita, P42,635.00 for Romeo, and P19,375.00 for Macrina. Their other siblings, namely, Norma T. Saura, Helen G. Saura and Raymundo Y. Saura, were also assigned shares in the amount of P19,375.00 each.

On August 29, 1979, the deed of exchange was registered with the Register of Deeds of Manila resulting in the cancellation of respondents’ certificates of title and the issuance of TCT No. 135150 in the name of VGFI.

On March 25, 1986, respondents Ramon, Jr. and Carmencita[6] filed a complaint with the Securities and Exchange Commission (SEC) against their father Ramon E. Saura, Sr., his wife Macrina and their children Amelita and Romeo, for annulment of subscription, recovery of corporate assets and funds. During the pendency of the proceedings, on May 15, 1992, Ramon, Sr. died.

On October 29, 1990, the SEC panel of hearing officers[7] promulgated a decision approving a compromise agreement between respondent Carmencita S. Millan and petitioners. With respect to respondent Ramon G. Saura, Jr., the panel of hearing officers dismissed the case upon finding that his shares had been declared delinquent and subsequently sold at public auction, making him not a stockholder of the corporation. However, the SEC en banc reversed such finding and remanded the case to the hearing panel for the immediate resolution of the case.

Despite the pendency of the SEC case, on April 11, 1995, petitioners sold the disputed real property to Sandalwood Realty Development Corporation (Sandalwood) for a consideration of P15,000,000.00. The sale was done without the knowledge and consent of respondents Ramon, Jr., and Carmencita. Eventually, the Register of Deeds of Manila issued TCT No. 221008 to Sandalwood.

On May 11, 1995, respondents Ramon Jr. and Carmencita filed with the Regional Trial Court, Manila, a civil case for annulment of sale, declaration of nullity of deed of exchange, recovery of possession, cancellation of title, accounting, damages, with prayer for receivership ex parte.[8]

On August 26, 1995, petitioners Macrina, Amelita and Romeo filed with the trial court a motion to dismiss the complaint based on: (1) forum shopping; (2) res judicata; (3) prescription; (4) lack of jurisdiction; (5) lack of cause of action; (6) estoppel; and (7) litis pendentia.[9]

On September 8, 1995, the trial court denied the motion to dismiss and held that: (1) there was no forum shopping because the cases pending with the SEC and with the regional trial court involved different issues; (2) the civil case was not barred by res judicata since the judgment on compromise of the SEC did not result in a complete and final settlement of the claims which the parties may have against each other; (3) there was no litis pendentia because no identity of parties and issues exists; and (4) Sandalwood Realty Development Corporation’s claim that respondents were not the real party in interest was without basis because they stand to benefit or be injured by the result of the suit. However, the court deferred the resolution of the issue of prescription and lack of cause of action until after trial.

On December 11, 1995, the trial court denied petitioners’ separate motions for reconsideration. On January 26, 1996, petitioners elevated the case to the Court of Appeals via certiorari contending that the trial court gravely erred when it denied the motion to dismiss. They insist that the Securities and Exchange Commission has original and exclusive jurisdiction over the subject matter and nature of the complaint.

In its decision promulgated on November 28, 1997, the Court of Appeals upheld the order of the trial court and dismissed the petition for lack of merit. Though it agreed with petitioners that the trial court had no jurisdiction insofar as the deed of exchange was concerned for being an agreement between VGFI and the respondents who are stockholders of the corporation, the appellate court maintained that the SEC has no jurisdiction over the subject matter of the civil action for annulment of the sale. This was because the validity of the deed of

exchange was not the only matter brought before the trial court. The validity of the deed of exchange is “intricately connected with the sale” of the real property to Sandalwood by petitioners Amelita and Romeo, acting in their capacities as president and vice president, respectively, of VGFI. Sandalwood has no intra-corporate relationship with petitioners or respondents. Hence, there was no intra-corporate dispute.

Specifically, the Court of Appeals held that:

“ Such sale purportedly made by the VGFI to Sandalwood Real Estate & Development Corporation is entirely a different matter. The Deed of Sale (Annex “E,” Petition) indicates that the sale was signed for VGFI by petitioner Amelita S. Saura as President and Romeo S. Saura as Vice President, in favor of another corporation. There is no showing that Sandalwood has any intra-corporate relationship with the petitioners or the private respondents. Hence the questioned sale between VGFI and Sandalwood is beyond the adjudicative power of the SEC.”[10]

Hence, this petition for review on certiorari.

In essence, petitioners Macrina, Amelita and Romeo, claim that the Court of Appeals gravely abused its discretion when it upheld the jurisdiction of the trial court and dismissed their petition. They contend that the main issue involved in the complaint filed with the trial court is the validity of the deed of exchange executed between petitioner VGFI and respondents, which is an intra-corporate matter falling within the original and exclusive jurisdiction of the SEC. Petitioners allege that this issue poses a prejudicial question to the case pending with the trial court, justifying the suspension of the civil case with the trial court. In this petition, petitioners advance the same assignment of errors they made in their petition with the appellate court.

In the present case, we shall not deal with the merits of the questioned sale of real property from VGFI to Sandalwood. That will be resolved by the proper court. What we are examining here is which as between the Regional Trial Court and the Securities and Exchange Commission has the competent jurisdiction over the questioned sale.

The resolution of the petition hinges on the determination of the validity of the sale of realty to a third party not involved in the intra-corporate dispute. Petitioners contend that the main issue to be resolved is the validity of the deed of exchange, one that is intra-corporate in nature since it involved a transaction between the respondents-stockholders and the corporation. On the other hand, respondents do not dispute that the validity of the deed of exchange is in issue; however, they contend that this issue is “intricately connected with the sale of the realty to Sandalwood.” It is their position that this complexity removed the dispute from the ambit of SEC’s jurisdiction and vested it on the trial court.

“To determine which body has jurisdiction over the present controversy, we rely on the sound judicial principle that jurisdiction over the subject matter is conferred by law and is determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein.”[11]

Section 5 of Presidential Decree 902-A sets forth the jurisdiction of the SEC as follows:

“ Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

“(a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of stockholders, partners, members of associations or organizations registered with the Commission;“(b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity;“(c) Controversies in the election or appointment of directors, trustees, officers or managers of such corporations, partnerships or associations;

“(d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities but is under the management of a rehabilitation receiver or management committee created pursuant to this Decree.”

“The grant of jurisdiction to the SEC must be viewed in the light of its nature and function under the law. This jurisdiction is determined by a concurrence of two elements: (1) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy.” [12]

“The first element requires that the controversy must arise out of intra-corporate or partnership relations between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the State in so far as it concerns their individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation, partnership or association.”[13]

In the complaint filed with the trial court, respondents Ramon, Jr. and Carmencita seek the annulment of the sale to Sandalwood. Ultimately, the civil case with the trial court is directed against the buyer of the disputed property, which has no intra- corporate relationship with respondents Ramon, Jr. and Carmencita. Petitioners are only impleaded as necessary parties being the officers of the seller-corporation. Hence, the controversy is an ordinary civil litigation beyond the ambit of the limited jurisdiction of the Securities and Exchange Commission. In the present case, there is no necessity to resort to the expertise of the SEC. Respondents’ complaint for annulment of the sale is an ordinary civil action, beyond the jurisdiction of the SEC.

“It is true that the trend is towards vesting administrative bodies like the SEC with the power to adjudicate matters coming under their particular specialization, to insure a more knowledgeable solution of the problems submitted to them. This would also relieve the regular courts of a substantial number of cases that would otherwise swell their already clogged dockets. But as expedient as this policy may be, it should not deprive the courts of justice of their power to decide ordinary cases in accordance with the general laws that do not require any particular expertise or training to interpret and apply. Otherwise, the creeping take-over by the administrative agencies of the judicial power vested in the courts would render the judiciary virtually impotent in the discharge of the duties assigned to it by the Constitution.”[14]

Since Sandalwood has no intra-corporate relationship with the respondents, it cannot be joined as party-defendant in the SEC case as to do so would violate the rule on jurisdiction. Therefore, respondents’ complaint against Sandalwood for the annulment of the sale of realty was properly filed before the regular court. This action must await the final ruling of the issue raised in SEC Case No. 2968, questioning the validity of the deed of exchange, the resolution of which is a logical antecedent of the issue involved in the civil action against Sandalwood. [15] Thus, respondents’ complaint for annulment of sale can only succeed if final judgment is rendered in SEC Case No. 2968, annulling the deed of exchange executed in favor of VGFI.

Having resolved the issue of jurisdiction, we go into the discussion of other issues raised in the petition.

Petitioners claim that respondents were guilty of forum shopping. The appellate court found that there was no forum shopping.

We sustain the Court of Appeal’s finding. “Forum-shopping exists where the elements of litis pendentia are present, and where a final judgment in one case will amount to res judicata in the other. Thus, there is forum-shopping when, between an action pending before this Court and another one, there exist: ‘(a) identity of parties, or at least such parties as represent the same interests in both actions, (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and (c) the identity of the two preceding particulars is such that any judgment rendered in the other action, will, regardless of which party is successful, amount to res judicata in the action under consideration; said requisites also constitutive of the requisites for auter action pendant or lis pendens.’ Another case elucidates the consequence of forum- shopping: ‘[W]here a litigant sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendentia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and thus would cause the dismissal of the rest.”[16]

Though it might seem that the first requisite was present in the cases pending with the SEC and the trial court, we find that the other requisites were not present. There was no identity in the rights asserted and the relief prayed for. The case pending with the SEC was for the annulment of subscription and recovery of corporate assets and funds. The complaint pending with the trial court relates to the annulment of sale, declaration of nullity of deed of exchange, recovery of possession, cancellation of title, accounting, damages with prayer for receivership ex parte. The case pending with the SEC involved an issue different from the case pending with the trial court, such that any resolution in the first would not amount to res judicata in the other.

In relation to the contention that the judgment on compromise between respondent Carmencita and petitioners barred her from filing the antecedent civil case with the trial court due to res judicata, the appellate court was right in finding that res judicata did not exist. As held in the recent case of Banaga vs. Court of Appeals,[17] res judicata exists when all the following elements are present:

(a) the former judgment must be final;(b) the court which rendered judgment had jurisdiction over the parties and the subject matter;(c) it must be a judgment on the merits;(d) and there must be between the first and second actions identity of parties, subject matter, and cause of

action.

There is no question that the SEC has jurisdiction over the question involved. However, it failed to meet all the elements of res judicata -- identity of subject matter and cause of action. It was not even a complete disposition of the controversies between the parties because the appellate court found that “the compromise agreement did not entirely dispose of the parties’ controversy, particularly in connection with the Gov. Forbes property.”

In light of the foregoing discussion, the appellate court correctly ruled that the civil case for annulment of sale of realty is properly lodged with the regular court.

WHEREFORE, we MODIFY the decision of the Court of Appeals in CA-G.R. SP No. 39557, promulgated on November 28, 1997. We DIRECT the Securities and Exchange Commission to proceed with the hearing and disposition of SEC Case. No. 2968 with all deliberate dispatch, in order to facilitate the proceedings in Civil Case No. 95-73823 pending with the Regional Trial Court, Branch 16, Manila, which are suspended until final outcome of the SEC case.

[ G.R. No. 125221, June 19, 1997 ]

REYNALDO M. LOZANO, PETITIONER, VS. HON. ELIEZER R. DE LOS SANTOS, PRESIDING JUDGE, RTC, BR. 58, ANGELES CITY; AND ANTONIO

ANDA

This petition for certiorari seeks to annul and set aside the decision of the Regional Trial Court, Branch 58, Angeles City which ordered the Municipal Circuit Trial Court, Mabalacat and Magalang, Pampanga to dismiss Civil Case No. 1214 for lack of jurisdiction.

The facts are undisputed. On December 19, 1995, petitioner Reynaldo M. Lozano filed Civil Case No. 1214 for damages against respondent Antonio Anda before the Municipal Circuit Trial Court (MCTC), Mabalacat and Magalang, Pampanga. Petitioner alleged that he was the president of the Kapatirang Mabalacat-Angeles Jeepney Drivers' Association, Inc. (KAMAJDA) while respondent Anda was the president of the Samahang Angeles-Mabalacat Jeepney Operators' and Drivers' Association, Inc. (SAMAJODA); in August 1995, upon the request of the Sangguniang Bayan of Mabalacat, Pampanga, petitioner and private respondent agreed to consolidate their respective associations and form the Unified Mabalacat-Angeles Jeepney Operators' and Drivers' Association, Inc. (UMAJODA); petitioner and private respondent also agreed to elect one set of officers who shall be given the sole authority to collect the daily dues from the members of the consolidated association; elections were held on October 29, 1995 and both petitioner and private respondent ran for president; petitioner won; private respondent protested and, alleging fraud, refused to recognize the results of the election; private respondent also refused to abide by their agreement and continued collecting the dues

from the members of his association despite several demands to desist. Petitioner was thus constrained to file the complaint to restrain private respondent from collecting the dues and to order him to pay damages in the amount of P25,000.00 and attorney's fees of P500.00.[1]

Private respondent moved to dismiss the complaint for lack of jurisdiction, claiming that jurisdiction was lodged with the Securities and Exchange Commission (SEC). The MCTC denied the motion on February 9, 1996.[2] It denied reconsideration on March 8, 1996.[3]

Private respondent filed a petition for certiorari before the Regional Trial Court, Branch 58, Angeles City.[4] The trial court found the dispute to be intracorporate, hence, subject to the jurisdiction of the SEC, and ordered the MCTC to dismiss Civil Case No. 1214 accordingly.[5] It denied reconsideration on May 31, 1996.[6]

Hence this petition. Petitioner claims that:

"THE RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND SERIOUS ERROR OF LAW IN CONCLUDING THAT THE SECURITIES AND EXCHANGE COMMISSION HAS JURISDICTION OVER A CASE OF DAMAGES BETWEEN HEADS/PRESIDENTS OF TWO (2) ASSOCIATIONS WHO INTENDED TO CONSOLIDATE/MERGE THEIR ASSOCIATIONS BUT NOT YET [SIC] APPROVED AND REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION."[7]

The jurisdiction of the Securities and Exchange Commission (SEC) is set forth in Section 5 of Presidential Decree No. 902-A. Section 5 reads as follows:

"Section 5. x x x [T]he Securities and Exchange Commission [has] original and exclusive jurisdiction to hear and decide cases involving:(a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, members of associations or organizations registered with the Commission.

(b) Controversies arising out of intracorporate or partnership relations, between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members, or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity.

(c) Controversies in the election or appointment of directors, trustees, officers or managers of such corporations, partnerships or associations.

(d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they respect very fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this Decree."

The grant of jurisdiction to the SEC must be viewed in the light of its nature and function under the law.[8] This jurisdiction is determined by a concurrence of two elements: (1) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy.[9]

The first element requires that the controversy must arise out of intracorporate or partnership relations between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the State in so far as it concerns their individual franchises.[10] The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation, partnership or association or deal with the internal affairs of the corporation, partnership or association.[11] After all, the principal function of the SEC is the supervision and control of corporations, partnerships and associations with the end in view that investments in these entities may be encouraged and protected, and their activities pursued for the promotion of economic development.[12]

There is no intracorporate nor partnership relation between petitioner and private respondent. The controversy between them arose out of their plan to consolidate their respective jeepney drivers' and operators' associations into a single common association. This unified association was, however, still a proposal. It had not been approved by the SEC, neither had its officers and members submitted their articles of consolidation in accordance with Sections 78 and 79 of the Corporation Code. Consolidation becomes effective not upon mere agreement of the members but only upon issuance of the certificate of consolidation by the SEC.[13] When the SEC, upon processing and examining the articles of consolidation, is satisfied that the consolidation of the corporations is not inconsistent with the provisions of the Corporation Code and existing laws, it issues a certificate of consolidation which makes the reorganization official.[14] The new consolidated corporation comes into existence and the constituent corporations dissolve and cease to exist.[15]

The KAMAJDA and SAMAJODA to which petitioner and private respondent belong are duly registered with the SEC, but these associations are two separate entities. The dispute between petitioner and private respondent is not within the KAMAJDA nor the SAMAJODA. It is between members of separate and distinct associations. Petitioner and private respondent have no intracorporate relation much less do they have an intracorporate dispute. The SEC therefore has no jurisdiction over the complaint.

The doctrine of corporation by estoppel[16] advanced by private respondent cannot override jurisdictional requirements. Jurisdiction is fixed by law and is not subject to the agreement of the parties.[17] It cannot be acquired through or waived, enlarged or diminished by, any act or omission of the parties, neither can it be conferred by the acquiescence of the court.[18]

Corporation by estoppel is founded on principles of equity and is designed to prevent injustice and unfairness.[19] It applies when persons assume to form a corporation and exercise corporate functions and enter into business relations with third persons. Where there is no third person involved and the conflict arises only among those assuming the form of a corporation, who therefore know that it has not been registered, there is no corporation by estoppel.[20]

IN VIEW WHEREOF, the petition is granted and the decision dated April 18, 1996 and the order dated May 31, 1996 of the Regional Trial Court, Branch 58, Angeles City are set aside. The Municipal Circuit Trial Court of

Mabalacat and Magalang, Pampanga is ordered to proceed with dispatch in resolving Civil Case No. 1214. No costs.

[ G.R. No. 141093, February 20, 2001 ]

PRUDENTIAL BANK AND TRUST COMPANY, PETITIONER, VS. CLARITA T. REYES, RESPONDENT.

Before the Court is a petition for review on certiorari of the Decision,[1] dated October 15, 1999 of the Court of Appeals in C.A.-G.R. SP No. 30607 and of its Resolution, dated December 6, 1999 denying petitioner's motion for reconsideration of said decision. The Court of Appeals reversed and set aside the resolution[2] of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 009364-95, reversing and setting aside the labor arbiter's decision and dismissing for lack of merit private respondent's complaint.[3]

The case stems from NLRC NCR Case No. 00-06-03462-92, which is a complaint for illegal

suspension and illegal dismissal with prayer for moral and exemplary damages, gratuity, fringe benefits and attorney's fees filed by Clarita Tan Reyes against Prudential Bank and Trust Company (the Bank) before the labor arbiter. Prior to her dismissal, private respondent Reyes held the position of Assistant Vice President in the foreign department of the Bank, tasked with the duties, among others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased, including the signing of transmittal letters covering the same.

After proceedings duly undertaken by the parties, judgment was rendered by Labor Arbiter Cornelio L. Linsangan, the dispositive portion of which reads:"WHEREFORE, finding the dismissal of complainant to be without factual and legal basis, judgment is hereby rendered ordering the respondent bank to pay her back wages for three (3) years in the amount of P540,000.00 (P15,000.00 x 36 mos.). In lieu of reinstatement, the respondent is also ordered to pay complainant separation pay equivalent to one month salary for every year of service, in the amount of P420,000.00 (P15,000 x 28 mos.). In addition, the respondent should also pay complainant profit sharing and unpaid fringe benefits. Attorney's fees equivalent to ten (10%) percent of the total award should likewise be paid by respondent.

SO ORDERED."[4]

Not satisfied, the Bank appealed to the NLRC which, as mentioned at the outset, reversed the Labor Arbiter's decision in its Resolution dated 24 March 1997. Private respondent sought reconsideration which, however, was denied by the NLRC in its Resolution of 28 July 1998. Aggrieved, private respondent commenced on October 28, 1998, a petition for certiorari before the Supreme Court.[5] The subject petition was referred to the Court of Appeals for appropriate action and disposition per resolution of this Court dated November 25, 1998, in accordance with the ruling in St. Martin Funeral Homes vs. NLRC.[6]

In its assailed decision, the Court of Appeals adopted the following antecedent facts leading to Reyes's dismissal as summarized by the NLRC:"The auditors of the Bank discovered that two checks, No. 011728-7232-146, in the amount of US$109,650.00, and No. 011730-7232-146, in the amount of US$115,000.00, received by the Bank on April 6, 1989, drawn by the Sanford Trading against Hongkong and Shanghai Banking Corporation, Jurong Branch, Singapore, in favor of Filipinas Tyrom, were not sent out for collection to Hongkong Shanghai Banking Corporation on the alleged order of the complainant until the said checks became stale.

The Bank created a committee to investigate the findings of the auditors involving the two checks which were not collected and became stale.

On March 8, 1991, the president of the Bank issued a memorandum to the complainant informing her of the findings of the auditors and asked her to give her side. In reply, complainant requested for an extension of one week to submit her explanation. In a subsequent letter, dated March 14, 1991, to the president, complainant stated that in view of the refusal of the Bank that she be furnished copies of the pertinent documents she is requesting and the refusal to grant her a reasonable period to prepare her answer, she was constrained to make a general denial of any misfeasance or malfeasance on her part and asked that a formal investigation be made.

As the complainant failed to attend and participate in the formal investigation conducted by the Committee on May 24, 1991, despite due notice, the Committee proceeded with its hearings and heard

the testimonies of several witnesses.The Committee's findings were:

`a) The two (2) HSBC checks were received by the Foreign Department on 6 April 1989. On the same day, complainant authorized the crediting of the account of Filipinas Tyrom in the amount of P4,780,102.70 corresponding to the face value of the checks, (Exhibits 6, 22 to 22-A and 23 to 23-A). On the following day, a transmittal letter was prepared by Ms. Cecilia Joven, a remittance clerk then assigned in the Foreign Department, for the purpose of sending out the two (2) HSBC checks for collection. She then requested complainant to sign the said transmittal letters (Exhibits 1, 7 and 25; TSN, 11 March 1993, pp. 42-52), as it is complainant who gives her instructions directly concerning the transmittal of foreign bills purchased. All other transmittal letters are in fact signed by complainant.

b) After Ms. Joven delivered the transmittal letters and the checks to the Accounting Section of the Foreign Department, complainant instructed her to withdraw the same for the purpose of changing the addressee thereon from American Express Bank to Bank of Hawaii (ibid.) under a special collection scheme (Exhibits 4 and 5 to 5-B).

c) After complying with complainant's instruction, Ms. Joven then returned to complainant for the latter to sign the new transmittal letters. However, complainant told Ms. Joven to just hold on to the letters and checks and await further instructions (ibid.). Thus, the new transmittal letters remained unsigned. (See Exhibits 5 to 5-B).

d) In June 1989, Ms. Joven was transferred to another department. Hence, her duties, responsibilities and functions, including the responsibility over the two (2) HSBC checks, were turned over to another remittance clerk, Ms. Analisa Castillo (Exhibit 14; TSN, 4 June 1993, pp. 27-29).

e) When asked by Ms. Castillo about the two (2) HSBC checks, Ms. Joven relayed to the latter complainant's instruction (Exhibit 14; TSN, 4 June 1993, p. 42).

f) About fifteen (15) months after the HSBC checks were received by the Bank, the said checks were discovered in the course of an audit conducted by the Bank's auditors. Atty. Pablo Magno, the Bank's legal counsel, advised complainant to send the checks for collection despite the lapse of fifteen (15) months.

g) Complainant, however, deliberately withheld Atty. Magno's advice from her superior, the Senior Vice-President, Mr. Renato Santos and falsely informed the latter that Atty. Magno advised that a demand letter be sent instead, thereby further delaying the collection of the HSBC checks.

h) On 10 July 1990, the HSBC checks were finally sent for collection, but were returned on 16 July 1990 for the reason `account closed' (Exhibits 2-A and 3-A).'After a review of the Committee's findings, the Board of Directors of the Bank resolved not to re-elect complainant any longer to the position of assistant president pursuant to the Bank's By-laws.On July 19, 1991, complainant was informed of her termination of employment from the Bank by Senior Vice President Benedicto L. Santos, in a letter the text of which is quoted in full:

`Dear Mrs. Reyes:

After a thorough investigation and appreciation of the charges against you as contained in the Memorandum of the President dated March 8, 1991, the Fact Finding Committee which was created to

investigate the commission and/or omission of the acts alluded therein, has found the following:

1. You have deliberately held the clearing of Checks Nos. 11728 and 11730 of Hongkong and Shanghai Banking Corporation in the total amount of US$224,650.00 by giving instructions to the collection clerk not to send the checks for collection. In view thereof, when the said checks were finally sent to clearing after the lapse of 15 months from receipt of said checks, they were returned for the reason `Account closed.' To date, the value of said checks have not been paid by Filipinas Tyrom, which as payee of the checks, had been credited with their peso equivalent;

2. You tried to influence the decision of Atty. Pablo P. Magno, Bank legal counsel, by asking him to do something allegedly upon instructions of a Senior Vice President of the Bank or else lose his job when in truth and in fact no such instructions was given; and

3. You deliberately withheld from Mr. Santos, Senior Vice President, the advice given by the legal counsel of the Bank which Mr. Santos had asked you to seek. As a matter of fact, you even relayed a false advice which delayed further the sending of the two checks for collection. Likewise, you refused to heed the advice of the Bank's legal counsel to send the checks for collection.

These findings have given rise to the Bank's loss of trust and confidence in you, the same being acts of serious misconduct in the performance of your duties resulting in monetary loss to the Bank. In view thereof, the Board has resolved not to re-elect you to the position of Assistant Vice President of the Bank. Accordingly, your services are terminated effective immediately. In relation thereto, your monetary and retirement benefits are forfeited except those that have vested in you.'In her position paper, complainant alleged that the real reason for her dismissal was her filing of the criminal cases against the bank president, the vice president and the auditors of the Bank, such filing not being a valid ground for her dismissal. Furthermore, she alleged that it would be self-serving for the respondent to state that she was found guilty of gross misconduct in deliberately withholding the clearing of the two dollar checks. She further alleged that she was not afforded due process as she was not given the chance to refute the charges mentioned in the letter of dismissal. Hence, she was illegally dismissed.

On the other hand, respondent argues that there were substantial bases for the Bank to lose its trust and confidence on the complainant and, accordingly, had just cause for terminating her services. Moreover, for filing the clearly unfounded suit against the respondent`s officers, complainant is liable to pay moral and exemplary damages and attorney's fees."[7]

The Court of Appeals found that the NLRC committed grave abuse of discretion in ruling that the dismissal of Reyes is valid. In effect, the Court of Appeals reinstated the judgment of the labor arbiter with modification as follows:"WHEREFORE, in the light of the foregoing, the decision appealed from is hereby REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered ordering respondent Bank as follows:

1. To pay petitioner full backwages and other benefits from July 19, 1991 up to the finality of this judgment;

2. To pay petitioner separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement; and

3. To pay attorney's fee equivalent to ten (10%) percent of the total award.

SO ORDERED."[8]

Hence, the Bank's recourse to this Court contending in its memorandum that:"IN SETTING ASIDE THE DECISION DATED 24 MARCH 1997 AND THE RESOLUTION DATED 28 JULY 1998 OF THE NLRC AND REINSTATING WITH MODIFICATION THE DECISION DATED 20 JULY 1995 OF LABOR ARBITER CORNELIO L. LINSANGAN, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED, IN VIEW OF THE FOLLOWING:

I.

IT IS THE SEC (NOW THE REGIONAL TRIAL COURT) AND NOT THE NLRC WHICH HAS ORIGINAL AND EXCLUSIVE JURISDICTION OVER CASES INVOLVING THE REMOVAL FROM OFFICE OF CORPORATE OFFICERS.

II.

EVEN ASSUMING ARGUENDO THAT THE NLRC HAS JURISDICTION, THERE WAS SUBSTANTIAL EVIDENCE OF RESPONDENT'S MISCONDUCT JUSTIFYING THE BANK'S LOSS OF TRUST AND CONFIDENCE ON (sic) HER.

III.

EVEN ASSUMING ARGUENDO THAT RESPONDENT WAS ENTITLED TO BACKWAGES, THE HONORABLE COURT OF APPEALS ERRED IN AWARDING UNLIMITED AND UNQUALIFIED BACKWAGES THEREBY GOING FAR BEYOND THE LABOR ARBITER'S DECISION LIMITING THE SAME TO THREE YEARS, WHICH DECISION RESPONDENT HERSELF SOUGHT TO EXECUTE."[9]

In sum, the resolution of this petition hinges on (1) whether the NLRC has jurisdiction over the complaint for illegal dismissal; (2) whether complainant Reyes was illegally dismissed; and (3) whether the amount of back wages awarded was proper.

On the first issue, petitioner seeks refuge behind the argument that the dispute is an intra-corporate controversy concerning as it does the non-election of private respondent to the position of Assistant Vice-President of the Bank which falls under the exclusive and original jurisdiction of the Securities and Exchange Commission (now the Regional Trial Court) under Section 5 of Presidential Decree No. 902-A. More specifically, petitioner contends that complainant is a corporate officer, an elective position under the corporate by-laws and her non-election is an intra-corporate controversy cognizable by the SEC invoking lengthily a number of this Court's decisions.[10]

Petitioner Bank can no longer raise the issue of jurisdiction under the principle of estoppel. The Bank participated in the proceedings from start to finish. It filed its position paper with the Labor Arbiter. When the decision of the Labor Arbiter was adverse to it, the Bank appealed to the NLRC. When the NLRC decided in its favor, the bank said nothing about jurisdiction. Even before the Court of Appeals, it never questioned the proceedings on the ground of lack of jurisdiction. It was only when the Court of Appeals ruled in favor of private respondent did it raise the issue of jurisdiction. The Bank actively participated in the proceedings before the Labor Arbiter, the NLRC and the Court of Appeals. While it is true that jurisdiction over the subject matter of a case may be raised at any time of the proceedings, this rule presupposes that laches or estoppel has not supervened. In this regard, Bañaga vs. Commission

on the Settlement of Land Problems,[11] is most enlightening. The Court therein stated:

"This Court has time and again frowned upon the undesirable practice of a party submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when adverse. Here, the principle of estoppel lies. Hence, a party may be estopped or barred from raising the question of jurisdiction for the first time in a petition before the Supreme Court when it failed to do so in the early stages of the proceedings."

Undeterred, the Bank also contends that estoppel cannot lie considering that "from the beginning, petitioner Bank has consistently asserted in all its pleadings at all stages of the proceedings that respondent held the position of Assistant Vice President, an elective position which she held by virtue of her having been elected as such by the Board of Directors." As far as the records before this Court reveal however, such an assertion was made only in the appeal to the NLRC and raised again before the Court of Appeals, not for purposes of questioning jurisdiction but to establish that private respondent's tenure was subject to the discretion of the Board of Directors and that her non-reelection was a mere expiration of her term. The Bank insists that private respondent was elected Assistant Vice President sometime in 1990 to serve as such for only one year. This argument will not do either and must be rejected.

It appears that private respondent was appointed Accounting Clerk by the Bank on July 14, 1963. From that position she rose to become supervisor. Then in 1982, she was appointed Assistant Vice-President which she occupied until her illegal dismissal on July 19, 1991. The bank's contention that she merely holds an elective position and that in effect she is not a regular employee is belied by the nature of her work and her length of service with the Bank. As earlier stated, she rose from the ranks and has been employed with the Bank since 1963 until the termination of her employment in 1991. As Assistant Vice President of the foreign department of the Bank, she is tasked, among others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased, including the signing of transmittal letters covering the same. It has been stated that "the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer.[12] Additionally, "an employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them."[13] As Assistant Vice-President of the Foreign Department of the Bank she performs tasks integral to the operations of the bank and her length of service with the bank totaling 28 years speaks volumes of her status as a regular employee of the bank. In fine, as a regular employee, she is entitled to security of tenure; that is, her services may be terminated only for a just or authorized cause.[14] This being in truth a case of illegal dismissal, it is no wonder then that the Bank endeavored to the very end to establish loss of trust and confidence and serious misconduct on the part of private respondent but, as will be discussed later, to no avail.

This brings us to the second issue wherein the Bank insists that it has presented substantial evidence to prove the breach of trust on the part of private respondent warranting her dismissal. On this point, the Court of Appeals disagreed and set aside the findings of the NLRC that Reyes deliberately withheld the release of the two dollar checks; that she is guilty of conflict of interest that she waived her right to due process for not attending the hearing; and that she was dismissed based on loss of trust and confidence. We quote pertinent portions of the decision, to wit:"FIRST: Respondent Bank heavily relied on the testimony and affidavit of Remittance Clerk Joven in trying to establish loss of confidence. However, Joven's allegation that petitioner instructed her to hold the subject two dollar checks amounting to $224,650.00 falls short of the requisite proof to warrant petitioner's dismissal. Except for Joven's bare assertion to withhold the dollar checks per petitioner's

instruction, respondent Bank failed to adduce convincing evidence to prove bad faith and malice. It bears emphasizing that respondent Bank's witnesses merely corroborate Joven's testimony.

Upon this point, the rule that proof beyond reasonable doubt is not required to terminate an employee on the charge of loss of confidence and that it is sufficient that there is some basis for such loss of confidence, is not absolute. The right of an employer to dismiss employees on the ground that it has lost its trust and confidence in him must not be exercised arbitrarily and without just cause. For loss of trust and confidence to be valid ground for an employee's dismissal, it must be substantial and not arbitrary, and must be founded on clearly established facts sufficient to warrant the employee's separation from work (Labor vs. NLRC, 248 SCRA 183).

SECOND. Respondent Bank's charge of deliberate withholding of the two dollar checks finds no support in the testimony of Atty. Jocson, Chairman of the Investigating Committee. On cross examination, Atty. Jocson testified that the documents themselves do not show any direct withholding (pp. 186-187, Rollo). There being conflict in the statement of witnesses, the court must adopt the testimony which it believes to be true (U.S. vs. Losada, 18 Phil. 90).

THIRD. Settled is the rule that when the conclusions of the Labor Arbiter are sufficiently substantiated by the evidence on record, the same should be respected by appellate tribunals since he is in a better position to assess and evaluate the credibility of the contending parties (Ala Mode Garments, Inc. vs. NLRC, 268 SCRA 497). In this regard, the Court quotes with approval the following disquisition of Labor Arbiter Linsangan, thus:This Office has repeatedly gone over the records of the case and painstakingly examined the testimonies of respondent bank's witnesses. One thing was clearly established: that the legality of complainant's dismissal based on the first ground stated in respondent's letter of termination (exh. 25-J, supra) will rise or fall on the credibility of Miss Joven who undisputedly is the star witness for the bank. It will be observed that the testimonies of the bank's other witnesses, Analiza Castillo, Dante Castor and Antonio Ragasa pertaining to the non-release of the dollar checks and their corresponding transmittal letters were all anchored on what was told them by Ms. Joven, that is: she was instructed by complainant to hold the release of subject checks. In a nutshell, therefore, the issue boils down to who between complainant and Ms. Joven is more credible.

After painstakingly examining the testimonies of Ms. Joven and respondent's other witnesses this Office finds the evidence still wanting in proof of complainant's guilt. This Office had closely observed the demeanor of Ms. Joven while testifying on the witness stand and was not impressed by her assertions. The allegation of Ms. Joven in that her non-release of the dollar checks was upon the instruction of complainant Reyes is extremely doubtful. In the first place, the said instruction constitutes a gross violation of the bank's standard operating procedure. Moreover, Ms. Joven was fully aware that the instruction, if carried out, will greatly prejudice her employer bank. It was incumbent upon Ms. Joven not only to disobey the instruction but even to report the matter to management, if same was really given to her by complainant.

Our doubt on the veracity of Ms. Joven's allegation even deepens as we consider the fact that when the non-release of the checks was discovered by Ms. Castillo the former contented herself by continuously not taking any action on the two dollar checks. Worse, Ms. Joven even impliedly told by Ms. Castillo (sic) to ignore the two checks and just withhold their release. In her affidavit Ms. Castillo said:`4. When I asked Cecille Joven what I was supposed to do with those checks, she said the same should be held as per instruction of Mrs. Reyes.' (Exh. "14", supra).

The evidence shows that it was only on 16 May 1990 that Ms. Joven broke her silence on the matter despite the fact that on 15 November 1989, at about 8:00 p.m. the complainant, accompanied by driver Celestino Banito, went to her residence and confronted her regarding the non-release of the dollar checks. It took Ms. Joven eighteen (18) months before she explained her side on the controversy. As to what prompted her to make her letter of explanation was not even mentioned.

On the other hand, the actions taken by the complainant were spontaneous. When complainant was informed by Mr. Castor and Ms. Castillo regarding the non-release of the checks sometime in November, 1989 she immediately reported the matter to Vice President Santos, Head of the Foreign Department. And as earlier mentioned, complainant went to the residence of Ms. Joven to confront her. In this regard, Celestino Bonito, complainant's driver, stated in his affidavit, thus:

`1. Sometime on November 15, 1989 at about 7:00 o'clock in the evening, Mrs. Clarita Tan Reyes and I were in the residence of one Ms. Cecille Joven, then a Processing Clerk in the Foreign Department of Prudential Bank;

2. Ms. Cecille Joven, her mother, myself, and Mrs. Clarita Tan Reyes were seated in the sala when the latter asked the former, Ms. Cecille Joven, how it came about that the two dollar checks which she was then holding with the transmittal letters, were found in a plastic envelope kept day-to-day by the former;

3. Hesitatingly, Cecille Joven said: "Eh, Mother (Mrs. Tan Reyes had been intimately called Mother in the Bank) akala ko bouncing checks yon mga yon.

4. Mrs. Clarita Tan Reyes, upon hearing those words, was surprised and she said: "Ano, papaano mong alam na bouncing na hindi mo pa pinadadala;

5. Mrs. Cecille Joven turned pale and was not able to answer.'

There are other factors that constrain this Office to doubt even more the legality of complainant's dismissal based on the first ground stated in the letter of dismissal. The non-release of the dollar checks was reported to top management sometime on 15 November 1989 when complainant, accompanied by Supervisor Dante Castor and Analiza Castillo, reported the matter to Vice President Santos. And yet, it was only on 08 March 1991, after a lapse of sixteen (16) months from the time the non-release of the checks was reported to the Vice President, that complainant was issued a memorandum directing her to submit an explanation. And it took the bank another four (4) months before it dismissed complainant.

The delayed action taken by respondent against complainant lends credence to the assertion of the latter that her dismissal was a mere retaliation to the criminal complaints she filed against the bank's top officials.

It clearly appears from the foregoing that the complainant herein has no knowledge of, much less participation in, the non-release of the dollar checks under discussion. Ms. Joven is solely responsible for the same. Incidentally, she was not even reprimanded by the bank.

FOURTH. Respondent Bank having failed to furnish petitioner necessary documents imputing loss of confidence, petitioner was not amply afforded opportunity to prepare an intelligent answer. The Court finds nothing confidential in the auditor's report and the affidavit of Transmittal Clerk Joven. Due process dictates that management accord the employees every kind of assistance to enable him to prepare adequately for his defense, including legal representation.

The issue of conflict of interest not having been covered by the investigation, the Court finds it irrelevant to the charge."[15]

We uphold the findings of the Court of Appeals that the dismissal of private respondent on the ground of loss of trust and confidence was without basis. The charge was predicated on the testimony of Ms. Joven and we defer to the findings of the Labor Arbiter as confirmed and adopted by the Court of Appeals on the credibility of said witness. This Court is not a trier of facts and will not weigh anew the evidence already passed upon by the Court of Appeals.[16]

On the third issue, the Bank questions the award of full backwages and other benefits from July 19, 1991 up to the finality of this judgment; separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement; and attorney's fees equivalent to ten (10%) percent of the total award. The Bank argues, in the main, that private respondent is not entitled to full backwages in view of the fact that she did not bother to appeal that portion of the labor arbiter's judgment awarding back wages limited to three years. It must be stressed that private respondent filed a special civil action for certiorari to review the decision of the NLRC[17] and not an ordinary appeal. An ordinary appeal is distinguished from the remedy of certiorari under Rule 65 of the Revised Rules of Court in that in ordinary appeals it is settled that a party who did not appeal cannot seek affirmative relief other than the ones granted in the decision of the court below.[18] On the other hand, resort to a judicial review of the decisions of the National Labor Relations Commission in a petition for certiorari under Rule 65 of Rules of Court is confined to issues of want or excess of jurisdiction and grave abuse of discretion.[19] In the instant case, the Court of Appeals found that the NLRC gravely abused its discretion in finding that the private respondent's dismissal was valid and so reversed the same. Corollary to the foregoing, the appellate court awarded backwages in accordance with current jurisprudence.

Indeed, jurisprudence is clear on the amount of backwages recoverable in cases of illegal dismissal. Employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989 are entitled to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement.[20] Considering that private respondent was terminated on July 19, 1991, she is entitled to full backwages from the time her actual compensation was withheld from her (which, as a rule, is from the time of her illegal dismissal) up to the finality of this judgment (instead of reinstatement) considering that reinstatement is no longer feasible as correctly pointed out by the Court of Appeals on account of the strained relations brought about by the litigation in this case. Since reinstatement is no longer viable, she is also entitled to separation pay equivalent to one (1) month salary for every year of service.[21] Lastly, since private respondent was compelled to file an action for illegal dismissal with the labor arbiter, she is likewise entitled to attorney's fees[22] at the rate above-mentioned. There is no room to argue, as the Bank does here, that its liability should be mitigated on account of its good faith and that private respondent is not entirely blameless. There is no showing that private respondent is partly at fault or that the Bank acted in good faith in terminating an employee of twenty-eight years. In any event, Article 279 of Republic Act No. 6715[23] clearly and plainly provides for "full backwages" to illegally dismissed employees.

WHEREFORE, the instant petition for review on certiorari is DENIED, and the assailed Decision of the Court of Appeals, dated October 15, 1999, is AFFIRMED.

[ G.R. No. 121227, August 17, 1998 ]

VICENTE SAN JOSE, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND OCEAN TERMINAL SERVICES, INC., RESPONDENTS.

Before the Court is a Petition for Certiorari seeking to annul a Decision of the National Labor Relations Commission dated April 20, 1995 in NLRC-NCR-CA-No. 00671-94 which reversed, on jurisdictional ground, a Decision of the Labor Arbiter dated January 19, 1994 in NLRC-NCR Case No. 00-03-02101-93 a case for a money claim - underpayment of retirement benefit. Records do not show that petitioner presented a Motion for Reconsideration of subject Decision of the National Labor Relations Commission, which motion is, generally required before the filing of Petition for Certiorari.

While the rule prescribing the requisite motion for reconsideration is not absolute and recognizes some exceptions, there is no showing that the case at bar constitutes an exception. Nevertheless, we gave due course to the petition to enable the Court to reiterate and clarify the jurisdictional boundaries between Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators over money claims, and to render substantial and speedy justice to subject aged stevedore retiree who first presented his claim for retirement benefit in April 1991, or seven years ago.

Labor law practitioners and all lawyers, for that matter, should be fully conversant with the requirements for the institution of certiorari proceedings under Rule 65 of the Revised Rules of Court. For instance, it is necessary that a Motion for Reconsideration of the Decision of the National Labor Relations Commission must first be resorted to. The ruling in Corazon Jamer v. National Labor Relations Commission, G.R. No. 112630, September 5, 1997, comes to the fore and should be well understood and observed. An ordinary allegation – “... and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law” (Rule 65, Sec. 1, Revised Rules of Court) is not a foolproof substitute for a Motion for Reconsideration, absence of which can be fatal to a Petition for Certiorari. Petitioner cannot and should not rely on the liberality of the Court simply because he is a working man.

In the Jamer case, this court said:

“... This premature action of petitioners constitutes a fatal infirmity as ruled in a long line of decisions, most recently is the case of Building Care Corporation v. National Labor Relations Commission —

The filing of such motion is intended to afford public respondent an opportunity to correct any actual or fancied error attributed to it by way of a re-examination of the legal and factual aspects of the case. Petitioner’s inaction or negligence under the circumstances is tantamount to a deprivation of the right and opportunity of the respondent commission to cleanse itself of an error unwittingly committed or to vindicate itself of an act unfairly imputed...

Likewise, a motion for reconsideration is an adequate remedy; hence certiorari proceedings, as in this case, will not prosper.”

As stated in the Decision of the Labor Arbiter in NLRC-NCR-Case No. 00-03-0201-93, dated January 19, 1994, the facts of this case are undisputed. The Labor Arbiter reported, thus:

“Complainant, in his position paper (Record, pages 11 to 14) states that he was hired sometime in July 1980 as a stevedore continuously until he was advised in April 1991 to retire from service considering that he already reached 65 years old (sic); that accordingly, he did apply for retirement and was paid P3,156.39 for retirement pay... “ (Rollo, pp. 15, 26-27, 58-59).

Decision of the Labor Arbiter in NLRC-NCR-Case No. 00-03-02101-93, January 9, 1994 (Rollo, pp. 15017, at pp. 16-17).

The Labor Arbiter decided the case solely on the merits of the complaint. Nowhere in the Decision is made mention of or reference to the issue of jurisdiction of the Labor Arbiter (Rollo, pp. 15-17). But the issue of jurisdiction is the bedrock of the Petition because, as earlier intimated, the Decision of the National Labor Relations Commission, hereinbelow quoted, reversed the Labor Arbiter’s Decision on the issue of jurisdiction. Reads subject Decision of the Labor Arbiter:

“Respondents, in their Reply to complainant’s position paper, allege (Record, pages 18 to 21) that complainant’s latest basic salary was P120.34 per day; that he only worked on rotation basis and not seven days a week due to numerous stevedores who can not all be given assignments at the same time; that all stevedores only for paid every time they were assigned or actually performed stevedoring; that the computation used in arriving at the amount of P3,156.30 was the same computation applied to the other stevedores; that the use of divisor 303 is not applicable because complainant performed stevedoring job only on call, so while he was connected with the company for the past 11 years, he did not actually render 11 years of service; that the burden of proving that complainant’s latest salary was P200.00 rests upon him; that he already voluntarily signed a waiver of quitclaim; that if indeed respondent took advantage of his illiteracy into signing his quitclaim, he would have immediately filed this complaint but nay, for it took him two (2) years to do so.

The issue therefore is whether or not complainant is entitled to the claimed differential of separation pay.

We find for the complainant. He is entitled to differential.

We cannot sustain a computation of length of service based on the ECC contribution records. Likewise, the allegation that complainant rendered service for only five days a month for the past 11 years is statistically improbable, aside from the fact that the best evidence thereof are complainant’s daily time records which respondent are (sic) duty bound to keep and make available anytime in case of this.

The late filing has no bearing. The prescription period is three years. It is suffice (sic) that the filing falls within the period.

Whether or not complainant worked on rotation basis is a burden which lies upon the employer. The presumption is that the normal working period is eight (8) hours a day and six (6) days a week, or 26 days a month, unless proven otherwise.

Also, the burden of proving the amount of salaries paid to employees rests upon the employer not on the employee. It can be easily proven by payrolls, vouchers, etc. which the employers are likewise duty bound to keep and present. There being non, we have to sustain complainant’s assertion that his latest salary rate was P200 a day or P5,200 a month. Therefore, his retrenchment pay differential is P25,443.70 broken down as follows:

P200 x 26 days = P5,200 x 11 years _______________

__

2

= (P2,600 x 11 years)

- P3,156.30

= P28,600 - P3,156.30

= P25,443.70”

The Decision of the National Labor Relations Commission in NLRC-NCR-CA No. 06701-94, April 20, 1995 (Rollo, pp. 18-21).

The National Labor Relations Commission reversed on jurisdictional ground the aforesaid Decision of the Labor Arbiter; ruling, as follows:

“... His claim for separation pay differential is based on the Collective Bargaining Agreement (CBA) between his union and the respondent company, the pertinent portion of which reads:

xxx ANY UNION member shall be compulsory retired (sic) by the company upon reaching the age of sixty (60) years, unless otherwise extended by the company for justifiable reason. He shall be paid his retirement pay equivalent to one-half (1/2) month salary for every year of service, a fraction of at least six months being considered as one (1) whole year.

xxx The company agrees that in case of casual employees and/or workers who work on rotation basis the criterion for determining their retirement pay shall be 303 rotation calls or work days as equivalent to one (1) year and shall be paid their retirement pay equivalent to one half (1/2) month for every year of service.

Since the instant case arises from interpretation or implementation of a collective bargaining agreement, the Labor Arbiter should have dismissed it for lack of jurisdiction in accordance with Article 217 (c) of the Labor Code, which reads: (Underscoring supplied)

Art. 217. Jurisdiction of Labor Arbiter and the Commission.

(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitrator as may be provided in said agreements.”

Petitioner contends that:

I. THE PUBLIC RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN GIVING DUE COURSE TO THE APPEAL DESPITE THE FACT 4 (SIC) THAT IT WAS FILED OUT OF TIME AND THERE IS NO SHOWING THAT A SURETY BOND WAS POSTED.

II. THE PUBLIC RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION N SETTING ASIDE THE DECISION OF XXX DATED 19 JANUARY 1994 AND DISMISSING THE CASE ON THE GROUND OF LACK OF JURISDICTION WHEN THE ISSUE DOES NOT INVOLVE ANY PROVISION OF THE COLLECTIVE BARGAINING AGREEMENT. (Rollo, pp. 7-8)

The Manifestation and Motion (In Lieu of Comment) sent in on December 6, 1995 by the Office of the Solicitor General support the second issue, re: jurisdiction raised by the Petitioner (Rollo, pp. 26-33, at pp. 38-32).

Labor Arbiter Decision

Labor Arbiters should exert all efforts to cite statutory provisions and/or judicial decision to buttress their dispositions. An Arbiter cannot rely on simplistic statements, generalizations, and assumptions. These are not substitutes for reasoned judgment. Had the Labor Arbiter exerted more research efforts, support for the Decision could have been found in pertinent provisions of the Labor Code, its Implementing Rules, and germane decisions of the Supreme Court. As this Court said in Juan Saballa, et al. v. NLRC, G.R. No. 102472-84, August 22, 1996:

“xxx This Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care, and make certain that they truly and accurately reflect their conclusions and their final dispositions. A decision should faithfully comply with Section 14, Article VIII of the Constitution which provides that no decision shall be rendered by any court without expressing therein clearly and distinctly the facts of the case and the law on which it is based. If such decision had to be completely overturned or set aside, upon the modified decision, such resolution or decision should likewise state the factual and legal foundation relied upon. The reason for this is obvious: aside from being required by the Constitution, the court should be able to justify such a sudden change of course; it must be able to convincingly explain the taking back of its solemn conclusions and pronouncements in the earlier decision. The same thing goes for the findings of fact made by the NLRC, as it is a settled rule that such findings are entitled to great respect and even finality when supported by substantial evidence; otherwise, they shall be struck down for being whimsical and capricious and arrived at with grave abuse of discretion. It is a requirement of due process and fair play that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal. xxx”

This is not an admonition but rather, advice and a critique to stress that both have obligations to the Courts and students of the law. Decisions of the Labor Arbiters, the National Labor Relations Commission, and the Supreme Court serve not only to adjudicate disputes, but also as an educational tool to practitioners, executives, labor leaders and law students. They all have a keen interest in methods of analysis and the reasoning processes employed in labor dispute adjudication and resolution. In fact, decisions rise or fall on the basis of the analysis and reasoning processes of decision makers or adjudicators.

On the issues raised by the Petitioner, we rule:

I. Timeliness of Appeal And Filing of Appeal Bond

The Court rules that the appeal of the respondent corporation was interposed within the reglementary period, in accordance with the Rules of the National Labor Relations Commission, and an appeal bond was duly posted. We adopt the following Comment dated August 14, 1996, submitted by the National Labor Relations Commission, to wit:

“xxx While it is true that private respondent company received a copy of the decision dated January 19, 1994 of the Labor Arbiter xxx and filed its appeal on February 14, 1994, it is undisputed that the tenth day within which to file an appeal fell on a Saturday, the last day to perfect an appeal shall be the next working day.

Thus, the amendments to the New Rules of Procedure of the NLRC, Resolution No. 11-01-91 which took effect on January 14, 1992, provides in part:

1. Rule VI, Sections 1 and 6 are hereby amended to read as follows:

Section 1. Period of Appeal — Decisions, awards or orders of the Labor Arbiter ... shall be final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards or orders of the Labor Arbiter xxx ... If the 10th day ... falls on a Saturday, Sunday or a Holiday, the last day to perfect the decision shall be the next working day. (Underscoring supplied)

Hence, it is crystal clear that the appeal was filed within the prescriptive period to perfect an appeal. Likewise, the petitioner’s contention that private respondent did not post the required surety bond, deserves scant consideration, for the simple reason that a surety bond was issued by BF General Insurance Company, Inc., in the amount of P25, 443.70 (Rollo, pp. 63-64).

2. Jurisdictional Issue

The jurisdiction of Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators is clearly defined and specifically delineated in the Labor Code. The pertinent provisions of the Labor Code, read:

“A. Jurisdiction of Labor Arbiters

Art. 217. Jurisdiction of Labor Arbiter and the Commission. — (a) Except as otherwise provided under this Code the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;

4. claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and,

6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000) regardless of whether accompanied with a claim for reinstatement.

(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitrator so maybe provided in said agreement.

B. Jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators

Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. — The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the collective bargaining agreement. For purposes of this Article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement.

Art. 262. Jurisdiction over other labor disputes. — The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.”

The aforecited provisions of law cannot be read in isolation or separately. They must be read as a whole and each Article of the Code reconciled one with the other. An analysis of the provisions of Articles 217, 261, and 262 indicates, that:

1. The jurisdiction of the Labor Arbiter and Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in Articles 217, 261 and 262, can possibly include money claims in one form or another.

2. The cases where the Labor Arbiters have original and exclusive jurisdiction are enumerated in Article 217, and that of the Voluntary Arbitrator or Panel of Voluntary Arbitrators in Article 261.

3. The original and exclusive jurisdiction of Labor Arbiters is qualified by an exception as indicated in the introductory sentence of Article 217 (a), to wit:

“Art. 217. Jurisdiction of Labor Arbiters ... (a) Except as otherwise provided under this Code the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide ... the following cases involving all workers...”

The phrase “Except as otherwise provided under this Code” refers to the following exceptions:

A. Art. 217. Jurisdiction of Labor Arbiters ...

(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitrator as may be provided in said agreement.

B. Art. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.

Parenthetically, the original and exclusive jurisdiction of the Labor Arbiter under Article 217 (c), for money claims is limited only to those arising from statutes or contracts other than a Collective Bargaining Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and exclusive jurisdiction over money claims “arising from the interpretation or implementation of the Collective Bargaining Agreement and, those arising from the interpretation or enforcement of company personnel policies”, under Article 261.

4. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is provided for in Arts. 261 and 262 of the Labor Code as indicated above.

1. A close reading of Article 261 indicates that the original and exclusive jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is limited only to:

“... unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies... Accordingly, violations of a collective bargaining agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. xxx.”

2. Voluntary Arbitrators or Panel of Voluntary Arbitrators, however, can exercise jurisdiction over any and all disputes between an employer and a union and/or individual worker as provided for in Article 262.

“Art. 262. Jurisdiction over other labor disputes. - The voluntary arbitrator or panel of voluntary arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.”

It must be emphasized that the jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators under Article 262 must be voluntarily conferred upon by both labor and management. The labor disputes referred to in the same Article 262 can include all those disputes mentioned in Article 217 over which the Labor Arbiter has original and exclusive jurisdiction.

As shown in the above contextual and wholistic analysis of Articles 217, 261, and 262 of the Labor Code, the National Labor Relations Commission correctly ruled that the Labor Arbiter had no jurisdiction to hear and decide petitioner’s money-claim underpayment of retirement benefits, as the controversy between the parties involved an issue “arising from the interpretation or implementation” of a provision of the collective bargaining agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators has original and exclusive jurisdiction over the controversy under Article 261 of the Labor Code, and not the Labor Arbiter.

3. Merits of the Case

The Court will not remand the case to the Voluntary Arbitrator or Panel of Voluntary Arbitrators for hearing. This case has dragged on far too long - eight (8) years. Any further delay would be a denial of speedy justice to an aged retired stevedore. There is further the possibility that any Decision by the Voluntary Arbitrator or Panel of Voluntary Arbitrators will be appealed to the Court of Appeals, and finally to this Court. Hence, the Court will rule on the merits of the case.

We adopt as our own the retirement benefit computation formula of the Labor Arbiter, and the reasons therefor as stated in the decision abovequoted.

The simple statement of the Labor Arbiter that “we cannot sustain a computation of length of service based on ECC contribution records”, was not amply explained by the Labor Arbiter; however, there is legal and factual basis for the same. It is unrealistic to expect a lowly stevedore to know what reports his employer submits to the Employee’s Compensation Commission under Book IV, Health, Safety and Welfare Benefits, Title II, Employees Compensation and State Insurance Fund, of the Labor Code, simply because the insurance fund is solely funded by the employer and the rate of employer’s contribution varies according to time and actuarial computations. (See Articles 183-184; Labor Code). The worker has no ready access to this employer’s record. In fact, it is farthest from his mind to inquire into the amount of employer’s contribution, much less whether the employer remits the contributions. The worker is at all times entitled to benefits upon the occurrence of the defined contingency even when the employer fails to remit the contributions. (See Article 196 (b), Labor Code).

All employers are likewise required to keep an employment record of all their employees, namely: payrolls; and time records. (See Book III, Rule X, specifically Secs. 6,7,8, 1 and 12, Omnibus Rules - Implementing the Labor Code).

The respondent-employer was afforded the opportunity to show proof of the petitioner’s length of service and pay records. In both instances, the respondent-employer failed. By its own folly, it must therefore suffer the consequences of such failure. (South Motorists Enterprises v. Tosoc, 181 SCRA 386, [1990] ) From the very beginning - by the provision of the retirement provision of the Collective

Bargaining Agreement, i.e., the length of service as requirement for retirement, and salary as a basis for benefit computation - the employer was forewarned of the need for accurate record keeping. This is precisely the basis of retirement, and the computation of benefits based on years of service and monthly wage.

To recapitulate; the Court hereby rules -

1. That the National Labor Relations Commission correctly ruled that the Labor Arbiter had no jurisdiction over the case, because the case involved an issue “arising from the interpretation or implementation” of a Collective Bargaining Agreement;

2. That the appeal to the National Labor Relations Commission was filed within the reglementary period and that the appeal bond was filed; and

3. That we adopt the computation formula for the retirement benefits by the Labor Arbiter, and the basis thereof. The respondent must therefore pay the petitioner the additional amount of Twenty-Five Thousand Four Hundred Forty-Three and Seventy Centavos P25,443.70) Pesos.

In view of the long delay in the disposition of the case, this decision is immediately executory.

G.R. No. 80774 May 31, 1988

SAN MIGUEL CORPORATION, petitioner, vs. NLRC

In line with an Innovation Program sponsored by petitioner San Miguel Corporation ("Corporation;" "SMC") and under which management undertook to grant cash awards to "all SMC employees ... except [ED-HO staff, Division Managers and higher-ranked personnel" who submit to the Corporation Ideas and suggestions found to be beneficial to the Corporation, private respondent Rustico Vega submitted on 23 September 1980 an innovation proposal. Mr. Vega's proposal was entitled "Modified Grande Pasteurization Process," and was supposed to eliminate certain alleged defects in the quality and taste of the product

"San Miguel Beer Grande:"

Title of Proposal

Modified Grande Pasteurization Process

Present Condition or Procedure

At the early stage of beer grande production, several cases of beer grande full goods were received by MB as returned beer fulls (RBF). The RBF's were found to have sediments and their contents were hazy. These effects are usually caused by underpasteurization time and the pasteurzation units for beer grande were almost similar to those of the steinie.

Proposed lnnovation (Attach necessary information)

In order to minimize if not elienate underpasteurization of beer grande, reduce the speed of the beer grande pasteurizer thereby, increasing the pasteurization time and the pasteurization acts for grande beer. In this way, the self-life (sic) of beer grande will also be increased. 1

Mr. Vega at that time had been in the employ of petitioner Corporation for thirteen (1 3) years and was then holding the position of "mechanic in the Bottling Department of the SMC Plant Brewery situated in Tipolo, Mandaue City.

Petitioner Corporation, however, did not find the aforequoted proposal acceptable and consequently refused Mr. Vega's subsequent demands for a cash award under the Innovation Program. On 22 February 1983., a Complaint 2 (docketed as Case No. RAB-VII-0170-83) was filed against petitioner Corporation with Regional Arbitration Branch No. VII (Cebu City) of the then.", Ministry of Labor and Employment. Frivate respondent Vega alleged there that his proposal "[had] been accepted by the methods analyst and implemented by the Corporation [in] October 1980," and that the same "ultimately and finally solved the problem of the Corporation in the production of Beer Grande." Private respondent thus claimed entitlement to a cash prize of P60,000.00 (the maximum award per proposal offered under the Innovation Program) and attorney's fees.

In an Answer With Counterclaim and Position Paper, 3 petitioner Corporation alleged that private respondent had no cause of action. It denied ever having approved or adopted Mr. Vega's proposal as part of the Corporation's brewing procedure in the production of San Miguel Beer Grande. Among other things, petitioner stated that Mr. Vega's proposal was tumed down by the company "for lack of originality" and that the same, "even if implemented [could not] achieve the desired result." Petitioner further alleged that the Labor Arbiter had no jurisdiction, Mr. Vega having improperly bypassed the grievance machinery procedure prescribed under a then existing collective bargaining agreement between management and employees, and available administrative remedies provided under the rules of the Innovation Program. A counterclaim for moral and exemplary damages, attorney's fees, and litigation expenses closed out petitioner's pleading.

In an Order 4 dated 30 April 1986, the Labor Arbiter, noting that the money claim of complainant Vega in this case is "not a necessary incident of his employment" and that said claim is not among those mentioned in Article 217 of the Labor Code, dismissed the complaint for lack of jurisdiction. However, in a gesture of "compassion and to show the government's concern for the workingman," the Labor Arbiter also directed petitioner to pay Mr. Vega the sum of P2,000.00 as "financial assistance."

The Labor Arbiter's order was subsequently appealed by both parties, private respondent Vega assailing the dismissal of his complaint for lack of jurisdiction and petitioner Corporation questioning the propriety of the award of "financial assistance" to Mr. Vega. Acting on the appeals, the public respondent National Labor Relations Commission, on 4 September 1987, rendered a Decision, 5 the dispositive portion of which

reads:

WHEREFORE, the appealed Order is hereby set aside and another udgment entered, order the respondent to pay the complainant the amount of P60,000.00 as explained above. SO ORDERED.

In the present Petition for certiorari filed on 4 December 1987, petitioner Corporation, invoking Article 217 of the Labor Code, seeks to annul the Decision of public respondent Commission in Case No. RAB-VII-01 70-83 upon the ground that the Labor Arbiter and the Commission have no jurisdiction over the subject matter of the case.

The jurisdiction of Labor Arbiters and the National Labor Relations Commission is outlined in Article 217 of the Labor Code, as last amended by Batas Pambansa Blg. 227 which took effect on 1 June 1982:

ART. 217. Jurisdiction of Labor Arbiters and the commission. (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for decision, the following cases involving are workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Those that workers may file involving wages, hours of work and other terms and conditions of employment;

3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for employees' compensation, social security, medicare and maternity benefits;

4. Cases involving household services; and

5. Cases arising from any violation of Article 265 of this; Code, including questions involving the legality of strikes and lockouts.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (Emphasis supplied)

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 related 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). <äre||anº•1àw> It is evident that there is a unifying element which runs through paragraphs 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," 6 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 the regular courts of justice, were intended by the

legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the money claims of workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the 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.

Applying the foregoing reading to the present case, we note that petitioner's Innovation Program is an employee incentive scheme offered and open only to employees of petitioner Corporation, more specifically to employees below the rank of manager. Without the existing employer-employee relationship between the parties here, there would have been no occasion to consider the petitioner's Innovation Program or the submission by Mr. Vega of his proposal concerning beer grande; without that relationship, private respondent Vega's suit against petitioner Corporation would never have arisen. The money claim of private respondent Vega in this case, therefore, arose out of or in connection with his employment relationship with petitioner.

The next issue that must logically be confronted is whether the fact that the money claim of private respondent Vega arose out of or in connection with his employment relation" with petitioner Corporation, is enough to bring such money claim within the original and exclusive jurisdiction of Labor Arbiters.

In Molave Motor Sales, Inc. v. Laron, 7 the petitioner was a corporation engaged in the sale and repair of motor vehicles, while private respondent was the sales Manager of petitioner. Petitioner had sued private respondent for non-payment of accounts which had arisen from private respondent's own purchases of vehicles and parts, repair jobs on cars personally owned by him, and cash advances from the corporation. At the pre-trial in the lower court, private respondent raised the question of lack of jurisdiction of the court, stating that because petitioner's complaint arose out of the employer-employee relationship, it fell outside the jurisdiction of the court and consequently should be dismissed. Respondent Judge did dismiss the case, holding that the sum of money and damages sued for by the employer arose from the employer-employee relationship and, hence, fell within the jurisdiction of the Labor Arbiter and the NLRC. In reversing the order of dismissal and requiring respondent Judge to take cognizance of the case below, this Court, speaking through Mme. Justice Melencio-Herrera, said:

Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under paragraph 5 of Article 217 of the Labor Code had jurisdiction over" all other cases arising from employer-employee relation, unless, expressly excluded by this Code." Even then, the principle followed by this Court was that, although a controversy is between an employer and an employee, the Labor Arbiters have no jurisdiction if the Labor Code is not involved. In Medina vs. Castro-Bartolome, 11 SCRA 597, 604, in negating jurisdiction of the Labor Arbiter, although the parties were an employer and two employees, Mr. Justice Abad Santos stated:

The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or not they have retroactive effect is unnecessary.

It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise.

And in Singapore Airlines Limited v. Paño, 122 SCRA 671, 677, the following was said:

Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute.

In the case below, PLAINTIFF had sued for monies loaned to DEFENDANT, the cost of repair jobs made on his personal cars, and for the purchase price of vehicles and parts sold to him. Those accounts have no relevance to the Labor Code. The cause of action was one under the civil laws, and it does not breach any provision of the Labor Code or the contract of employment of DEFENDANT. Hence the civil courts, not the Labor Arbiters and the NLRC should have jurisdiction. 8

It seems worth noting that Medina v. Castro-Bartolome, referred to in the above excerpt, involved a claim for damages by two (2) employees against the employer company and the General Manager thereof, arising from the use of slanderous language on the occasion when the General Manager fired the two (2) employees (the Plant General Manager and the Plant Comptroller). The Court treated the claim for damages as "a simple action for damages for tortious acts" allegedly committed by private respondents, clearly if impliedly suggesting that the claim for damages did not necessarily arise out of or in connection with the employer-employee relationship. Singapore Airlines Limited v. Paño, also cited in Molave, involved a claim for liquidated damages not by a worker but by the employer company, unlike Medina. The important principle that runs through these three (3) cases is that where the claim to the principal relief sought 9 is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears.

Applying the foregoing to the instant case, the Court notes that the SMC Innovation Program was essentially an invitation from petitioner Corporation to its employees to submit innovation proposals, and that petitioner Corporation undertook to grant cash awards to employees who accept such invitation and whose innovation suggestions, in the judgment of the Corporation's officials, satisfied the standards and requirements of the Innovation Program 10 and which, therefore, could be translated into some substantial benefit to the Corporation. Such undertaking, though unilateral in origin, could nonetheless ripen into an enforceable contractual (facio ut des) 11 obligation on the part of petitioner Corporation under certain circumstances. Thus, whether or not an enforceable contract, albeit implied arid innominate, had arisen between petitioner Corporation and private respondent Vega in the circumstances of this case, and if so, whether or not it had been breached, are preeminently legal questions, questions not to be resolved by referring to labor legislation and having nothing to do with wages or other terms and conditions of employment, but rather having recourse to our law on contracts.

WEREFORE, the Petition for certiorari is GRANTED. The decision dated 4 September 1987 of public respondent National Labor Relations Commission is SET ASIDE and the complaint in Case No. RAB-VII-0170-83 is hereby DISMISSED, without prejudice to the right of private respondent Vega to file a suit before the proper court, if he so desires. No pronouncement as to costs.

[ G.R. No. 121948, October 08, 2001 ]PERPETUAL HELP CREDIT COOPERATIVE VS. BENEDICTO FABURADA

On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo and Harold Catipay, private respondents, filed a complaint against the Perpetual Help Credit Cooperative, Inc. (PHCCI), petitioner, with the Arbitration Branch, Department of Labor and Employment (DOLE), Dumaguete City, for illegal dismissal, premium pay on holidays and rest days, separation pay, wage differential, moral damages, and attorney's fees.

Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no employer-employee relationship between them as private respondents are all members and co-owners of the cooperative. Furthermore, private respondents have not exhausted the remedies provided in the cooperative by-laws.

On September 3, 1990, petitioner filed a supplemental motion to dismiss alleging that Article 121 of R.A. No. 6939, otherwise known as the Cooperative Development Authority Law which took effect on March 26, 1990, requires conciliation or mediation within the cooperative before a resort to judicial proceeding.

On the same date, the Labor Arbiter denied petitioner's motion to dismiss, holding that the case is impressed with employer-employee relationship and that the law on cooperatives is subservient to the Labor Code.

On November 23, 1993, the Labor Arbiter rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring complainants illegally dismissed, thus respondent is directed to pay Complainants backwages computed from the time they were illegally dismissed up to the actual reinstatement but subject to the three year backwages rule, separation pay for one month for every year of service since reinstatement is evidently not feasible anymore, to pay complainants 13th month pay, wage differentials and Ten Percent (10%) attorney's fees from the aggregate monetary award. However, complainant Benedicto Faburada shall only be awarded what are due him in proportion to the nine and a half months that he had served the respondent, he being a part-time employee.

All other claims are hereby dismissed for lack of merit. The computation of the foregoing awards is hereto attached and forms an integral part of this decision." On appeal[1], the NLRC affirmed the Labor Arbiter's decision. Hence, this petition by the PHCCI.

The issue for our resolution is whether or not respondent judge committed grave abuse of discretion in ruling that there is an employer-employee relationship between the parties and that private respondents were illegally dismissed.

Petitioner PHCCI contends that private respondents are its members and are working for it as volunteers. Not being regular employees, they cannot sue petitioner.

In determining the existence of an employer-employee relationship, the following elements are considered: (1) the selection and engagement of the worker or the power to hire; (2) the power to dismiss; (3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration. No particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may show the relationship.[2]

The above elements are present here. Petitioner PHCCI, through Mr. Edilberto Lantaca, Jr., its Manager, hired private respondents to work for it. They worked regularly on regular working hours, were assigned specific duties, were paid regular wages and made to accomplish daily time records just like any other regular employee. They worked under the supervision of the cooperative manager. But unfortunately, they were dismissed.

That an employer-employee exists between the parties is shown by the averments of private respondents in their respective affidavits, carefully considered by respondent NLRC in affirming the Labor Arbiter's decision, thus:Benedicto Faburada -Regular part-time Computer programmer/ operator. Worked with the Cooperative since June 1, 1988 up to December 29, 1989. Work schedule: Tuesdays and Thursdays, from 1:00 p.m. to 5:30 p.m. and every Saturday from 8:00 to 11:30 a.m. and 1:00 to 4:00 p.m. and for at least three (3 ) hours during Sundays. Monthly salary: P1,000.00 -from June to December 1988; P1,350.00 - from January to June 1989; and P1,500.00 from July to December 1989. Duties: Among others, Enter data into the computer; compute interests on savings deposits, effect mortuary deductions and dividends on fixed deposits; maintain the masterlist of the cooperative members; perform various forms for mimeographing; and perform such other duties as may be assigned from time to time.

Sisinita Vilar -Clerk. Worked with the Cooperative since December 1, 1987 up to December 29, 1989. Work schedule: Regular working hours. Monthly salary: P500.00 - from December 1, 1987 to December 31, 1988; P1,000.00 - from January 1, 1989 to June 30, 1989; and P1,150.00 - from July 1, 1989 to December 31, 1989. Duties: Among others, Prepare summary of salary advances, journal vouchers, daily summary of disbursements to respective classifications; schedule loans; prepare checks and cash vouchers for regular and emergency loans; reconcile bank statements to the daily summary of disbursements; post the monthly balance of fixed and savings deposits in preparation for the computation of interests, dividends, mortuary and patronage funds; disburse checks during regular and emergency loans; and perform such other bookkeeping and accounting duties as may be assigned to her from time to time.

Imelda C. Tamayo - Clerk. Worked with the Cooperative since October 19, 1987 up to December 29, 1989. Work schedule: Monday to Friday - 8:00 to 11:30 a.m and 2:00 to 5:30 p.m.; every Saturday - 8:00 to 11:30 a.m and 1:00 to 4:00 p.m; and for one Sunday each month - for at least three (3) hours. Monthly salary: P60.00 - from October to November 1987; P250.00 for December 1987; P500.00 - from January to December 1988; P950 - from January to June 1989; and P1,000.00 from July to December 1989. Duties: Among others, pick up balances for the computation of interests on savings deposit, mortuary, dividends and patronage funds; prepare cash vouchers; check petty cash vouchers; take charge of the preparation of new passbooks and ledgers for new applicants; fill up members logbook of regular depositors, junior depositors and special

accounts; take charge of loan releases every Monday morning; assist in the posting and preparation of deposit slips; receive deposits from members; and perform such other bookkeeping and accounting duties as may be assigned her from time to time.

Harold D. Catipay - Clerk. Worked with the Cooperative since March 3 to December 29, 1989. Work schedule: - Monday to Friday - 8:00 to 11:30 a.m. and 2:00 to 5:30 p.m.; Saturday - 8:00 to 11:30 a.m. and 1:00 to 4:00 p.m.; and one Sunday each month - for at least three (3) hours. Monthly salary: P900.00 - from March to June 1989; P1,050.00 - from July to December 1989. Duties: Among others, Bookkeeping, accounting and collecting duties, such as, post daily collections from the two (2) collectors in the market; reconcile passbooks and ledgers of members in the market; and assist the other clerks in their duties.

All of them were given a memorandum of termination on January 2, 1990, effective December 29, 1989.We are not prepared to disregard the findings of both the Labor Arbiter and respondent NLRC, the same being supported by substantial evidence, that quantum of evidence required in quasi-judicial proceedings, like this one..

Necessarily, this leads us to the issue of whether or not private respondents are regular employees. Article 280 of the Labor Code provides for three kinds of employees: (1) regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; (2) project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees.[3]

The employees who are deemed regular are: (a) those who have been engaged to perform activities which are usually necessary or desirable in the usual trade or business of the employer; and (b) those casual employees who have rendered at least one (1) year of service, whether such service is continuous or broken, with respect to the activity in which they are employed.[4] Undeniably, private respondents were rendering services necessary to the day-to-day operations of petitioner PHCCI. This fact alone qualified them as regular employees.

All of them, except Harold D. Catipay, worked with petitioner for more than one (1) year: Benedicto Faburada, for one and a half (1 1/2) years; Sisinita Vilar, for two (2) years; and Imelda C. Tamayo, for two (2) years and two (2) months. That Benedicto Faburada worked only on a part-time basis, does not mean that he is not a regular employee. One's regularity of employment is not determined by the number of hours one works but by the nature and by the length of time one has been in that particular job.[5] Petitioner's contention that private respondents are mere volunteer workers, not regular employees, must necessarily fail. Its invocation of San Jose City Electric Cooperative vs. Ministry of Labor and Employment (173 SCRA 697, 703 (1989 ) is misplaced. The issue in this case is whether or not the employees-members of a cooperative can organize themselves for purposes of collective bargaining, not whether or not the members can be employees. Petitioner missed the point.

As regular employees or workers, private respondents are entitled to security of tenure. Thus, their services may be terminated only for a valid cause, with observance of due process.

The valid causes are categorized into two groups: the just causes under Articles 282 of the Labor Code and the authorized causes under Articles 283 and 284 of the same Code. The just causes are: (1) serious misconduct or willful disobedience of lawful orders in connection with the employee's work; (2) gross or habitual neglect of duties; (3) fraud or willful breach of trust; (4) commission of a crime or an offense against the person of the employer or his immediate family member or representative; and, analogous cases. The authorized causes are: (1) the installation of labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and (4) closing or cessation of operations of the establishment or undertaking, unless the closing is for the purpose of circumventing the provisions of law. Article 284 provides that an employer would be authorized to terminate the services of an employee found to be suffering from any disease if the employee's continued employment is prohibited by law or is prejudicial to his health or to the health of his fellow employees[6]

Private respondents were dismissed not for any of the above causes. They were dismissed because petitioner considered them to be mere voluntary workers, being its members, and as such work at its pleasure. Petitioner thus vehemently insists that their dismissal is not against the law.

Procedural due process requires that the employer serve the employees to be dismissed two (2) written notices before the termination of their employment is effected: (a) the first, to apprise them of the particular acts or omissions for which their dismissal is sought and (b) the second, to inform them of the decision of the employer that they are being dismissed.[7] In this case, only one notice was served upon private respondents by petitioner. It was in the form of a Memorandum signed by the Manager of the Cooperative dated January 2, 1990 terminating their services effective December 29, 1989. Clearly, petitioner failed to comply with the twin requisites of a valid notice.

We hold that private respondents have been illegally dismissed.Petitioner contends that the labor arbiter has no jurisdiction to take cognizance of the complaint of private respondents considering that they failed to submit their dispute to the grievance machinery as required by P.D 175 (strengthening the Cooperative Movement)[8] and its implementing rules and regulations under LOI 23. Likewise, the Cooperative Development Authority did not issue a Certificate of Non-Resolution pursuant to Section 8 of R.A. 6939 or the Cooperative Development Authority Law.

As aptly stated by the Solicitor General in his comment, P.D. 175 does not provide for a grievance machinery where a dispute or claim may first be submitted. LOI 23 refers to instructions to the Secretary of Public Works and Communications to implement immediately the recommendation of the Postmaster General for the dismissal of some employees of the Bureau of Post. Obviously, this LOI has no relevance to the instant case.

Article 121 of Republic Act No. 6938 (Cooperative Code of the Philippines) provides the procedure how cooperative disputes are to be resolved, thus:

"ART. 121. Settlement of Disputes.- Disputes among members, officers, directors, and committee members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the bylaws of the cooperative, and in applicable laws.

Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of competent jurisdiction."

Complementing this Article is Section 8 of R.A. No. 6939 (Cooperative Development Authority Law) which reads:

SEC. 8 Mediation and Conciliation.- Upon request of either or both parties, the Authority shall mediate and conciliate disputes within a cooperative or between cooperatives: Provided, That if no mediation or conciliation succeeds within three (3) months from request thereof, a certificate of non-resolution shall be issued by the Commission prior to the filing of appropriate action before the proper courts.

The above provisions apply to members, officers and directors of the cooperative involved in disputes within a cooperative or between cooperatives.

There is no evidence that private respondents are members of petitioner PHCCI and even if they are, the dispute is about payment of wages, overtime pay, rest day and termination of employment. Under Art. 217 of the Labor Code, these disputes are within the original and exclusive jurisdiction of the Labor Arbiter.

As illegally dismissed employees, private respondents are therefore entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, plus other benefits or their monetary equivalent computed from the time their compensation was witheld from them up to the time of their actual reinstatement.[9] Since they were dismissed after March 21, 1989, the effectivity date of R.A. 6715[10] they are granted full backwages, meaning, without deducting from their backwages the earnings derived by them elsewhere during the period of their illegal dismissal.[11] If reinstatement is no longer feasible, as when the relationship between petitioner and private respondents has become strained, payment of their separation pay in lieu of reinstatement is in order.[12]

WHEREFORE, the petition is hereby DENIED. The decision of respondent NLRC is AFFIRMED, with modification in the sense that the backwages due private respondents shall be paid in full, computed from the time they were illegally dismissed up to the time of the finality of this Decision.

[ G.R. No. 79907, March 16, 1989 ]

SAMUEL CASAS LIM VS. NLRC

[G.R. NO. 79975.  MARCH 16, 1989]

SWEET LINES VS. NATIONAL LABOR RELATIONS COMMISSION

These two cases have been consolidated because they relate to the same factual antecedents and the same private respondent. The issues are:

1. In G.R. No. 79975, whether or not the private respondent was an employee of the petitioner and, if so, had been illegally dimissed; and corollarily, whether or not the NLRC had jurisdiction over their dispute.

2. In G.R. No. 79907, whether or not the petitioner could be held solidarily liable with Sweet Lines, Inc. to the private respondent.

The record shows that private respondent Victoria Calsado was hired by Sweet Lines, Inc. on March 5, 1981, as Senior Branch Officer of its International Accounts Department for a fixed salary and a stipulated 5% commission on sales production. On December 1, 1983, after tendering her resignation to accept another offer of employment, she was persuaded to remain with an offer of her promotion to Manager of the Department with corresponding increase in compensation, which she accepted. She was also allowed to buy a second-hand Colt Lancer pursuant to a liberal car plan under which one-half of the cost was to be paid by the company and the other half was to be deducted from her salary. Relations began to sour later, however, when she repeatedly asked for payment of her commissions, which had accumulated and were long overdue. She also complained of the inordinate demands on her time even when she was sick and in the hospital. Finally, on July 16, 1985, she was served with a letter from Samuel Casas Lim, the other petitioner, informing her that her "employment with Sweet Lines" would terminate on August 5, 1985. Efforts were also taken by Sweet Lines to forcibly take the car from her, culminating in an action for replevin against her in the regional trial court of Manila.

On August 14, 1985, Calsado filed a complaint against both petitioners for illegal dismissal, illegal deduction, and unpaid wages and commissions plus moral and exemplary damages, among other claims.[1] There followed an extended hearing where she testified on the details of her employment, emphasizing her unsatisfactory treatment by the management of Sweet Lines and especially the termination of her services without the required notice and hearing and without valid cause. She also presented four other witnesses to corroborate her charges.

The respondents' defenses were based mainly on the claim that Calsado was not an employee of Sweet Lines but an independent contractor and that therefore their dispute with her came under the jurisdiction of the civil courts and not of the Labor Arbiter.[2] On this matter the private respondent pointedly comments:

At this point, private respondent would like to underscore the fact that while private respondent in the proceedings before the Labor Arbiter presented five witnesses including herself, all of whom were cross-examined by petitioners, and numerous documents which were marked as Exhs. "A" to "GG-8d" and 858 receipts and bills, all of which were duly identified and testified to by private respondent and her witnesses and examined by petitioners, petitioners failed to present any single evidence, testimonial or documentary, to controvert private respondent's evidence. All that they presented were their unsubstantiated pleadings not one of which was under oath, not even their position paper which, under the NLRC rules (Sec. 2, Rule 7, Revised Rules of the NLRC), have to be verified.[3]

On December 29, 1986, decision was rendered against the two petitioners by the Labor Arbiter,[4] who held them liable in solidum to the complainant for the following amounts:

(a) Separation pay equivalent to one month pay for every year of service based on her latest basic salary of P2,500.00 plus allowance of P500.00, or a total monthly pay of P3,000.00;(b) Backwages based on her last monthly pay rate of P3,000.00 to be computed from the time of her dismissal to the actual payment of her separation pay;(c) Proportionate 13th month pay for the year 1985;(d) Sales commission in the sum of P432,656.68;(e) Moral damages of P100,000.00;(f) Exemplary damages of P10,000.00; and(g) Attorney's fees of P10,000.00 plus 25% of the total monetary awards in favor of the complainant.

The decision was appealed to the National Labor Relations Commission and affirmed in toto except as to the attorney's fees, which were reduced to 10% of the total award.[5] Both Sweet Lines and Lim then came to us in separate petitions to raise the above-stated issues. On October 14, 1987, we issued a temporary restraining order against the enforcement of the decision of the public respondent dated September 11, 1987.[6] The petitions were consolidated on December 7, 1987, and given due course on May 16, 1987, with the parties being required to submit their respective memoranda.

On the first question, we hold that the employe-employer relations between Calsado and Sweet Lines have been sufficiently established. The following documents submitted by the former and not controverted by the latter should belie the claim that Calsado was only an independent contractor over whom Sweet Lines had no control.

1. Certification issued by Sweet Lines, Inc. dated May 21, 1984, stating that private respondent “is employed with this company since March 5, 1982 up to the present, presently designated as International Accounts Manager of the Sweet Lines, Inc., Manila Branch." (Exh. ”W")

2. Termination letter issued by Samuel Casas Lim to private respondent reading: "Your employment with Sweet Lines, Inc. will cease effective August 15, 1985. In connection with the foregoing, you are entitled to (1) separation pay equivalent to one half month for every year of service x x x; (2) The computed money value of unused vacation leave x x x; (3) Thirteenth month pay x x x;" (Exh. "V')

3. Notice of private respondent's promotion effective December 1, 1982 from Senior Branch Officer to Manager, International Accounts, with an increase in basic salary from P1,250 to P2,500 a month; (Exh. "D")

4. Computation of her salary, allowance and 13th month pay differentials on account of her promotion, prepared and approved by the proper officials of petitioner Sweet Lines, Inc. whose signatures appear thereon; (Exh. "E")

5. Certification dated September 6, 1983 issued by the petitioner company, subscribed and sworn to before a notary public declaring that private respondent was then an Account Executive of Sweet Lines, Inc.; (Exh. "E")

6. Certification, notarized on January 10, 1985, by Atty. Gregorio Francisco, counsel for petitioner company, that private respondent “is a bona fide employee of Sweet Lines, Inc. and presently holding the position of Manager, International Account.” (Exh. "Y")

7. Approved application for sick leave of private respondent for 15 days from March 7, 1985 to April 3, 1985. (Exh. "I")

There is in the above exhibits a consistent and categorical recognition of Calsado as an employee of petitioner Sweet Lines. Indeed, its notarized certification that Calsado was its bona fide employee is irrefutable. The petitioner cannot now argue that the grant to her of the 13th month pay and even the differential pay was a mere accommodation like the car plan (which, for that matter, is a benefit usually extended only to employees). If it is true that Sweet Lines had no control over her and left her free to determine her work schedule, there would have been no reason at all for its approval of her application for sick leave from March 7, 1985 to April 3, 1985. The termination letter itself, which was signed by the other petitioner as Vice President of Sweet Lines, said she was "entitled" to certain payments as a result of the cessation of her "employment with Sweet Lines, Inc."

Sweet Lines has also failed to substantiate its allegation that Calsado was an independent contractor, as it should have, with evidence showing inter alia that she had the financial resources and other means or equipment to operate as such. One must prove what one alleges, but Sweet Lines confined itself to mere denials.

At any rate, the determination of the existence of employee-employer relations is a factual finding which this Court will not disturb or reverse in the absence of a showing of grave abuse of discretion. We do not see such justification here. On the contrary, the ascertainment of the employment status of the private respondent was made on the basis of the criteria consistently employed by the Court in the determination of the employee-employer relationship.[7] We find from the record that all these tests have been satisfied.

Such relationship having been established, the third issue is automatically resolved and requires not much elaboration. Suffice it only to stress that the damages claimed by private respondent as a result of her illegal dismissal and the violation of the terms and conditions of her employment also come within the jurisdiction of the Labor Arbiter as a contrary rule would result in the splitting of actions and the consequent multiplication of suits. So we recently affirmed in Limquiaco v. Ramolete[8] and more positively in National Union of Bank Employees v. Lazaro,[9] where we declared:

As we stated, the damages (allegedly) suffered by the petitioners only form part of the civil component of the injury arising from the unfair labor practice. Under Article 247 of the Code, "the civil aspects of all cases involving unfair labor practices which may include claims for damages and other affirmative relief, shall be under the jurisdiction of the labor arbiters."

On the fourth issue, we agree with petitioner Lim that he cannot be held personally liable with Sweet Lines for merely having signed the letter informing Calsado of her separation. There is no evidence that he acted with malice or bad faith. The letter, in fact, informed her not only of her separation but also of the benefits due her as a result of the termination of her services.

It is true that Lim has raised this matter rather tardily and also that he belongs to a closed corporation controlled by the members of one family only. But these circumstances should not be allowed to operate against him if he is to be accorded substantial justice in the resolution of the private respondent's claim. As we said in Ortigas vs. Lufthansa German Airlines,[10] the Court is "clothed with ample authority to review matters, even if they are not assigned as errors in the appeal, if it finds that its consideration is necessary in arriving at a just decision of the case." As for the second charge, the mere fact that Lim is part of the family corporation does not mean that all its acts are imputable to him directly and personally. His acts were official acts, done in his capacity as Vice President of Sweet Lines and on its behalf. There is no showing that he acted without or in excess of his authority or was motivated by personal ill-will toward Calsado. The applicable decision is Sunio v. NLRC,[11] where it was held:

Petitioner Sunio was impleaded in the Complaint in his capacity as General Manager of petitioner corporation. There appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of private respondents. His act, therefore, was within the scope of his authority and was a corporate act.

It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other entity to which it may be related. Mere ownership by a

single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality. Petitioner Sunio, therefore, should not have been made personally answerable for the payment of private respondents' back salaries.

The case of Ransom v. NLRC[12] is not in point because there the debtor corporation actually ceased operations after the decision of the Court of Industrial Relations was promulgated against it, making it necessary to enforce it against its former president. Sweet Lines is still existing and able to satisfy the judgment in favor of the private respondent

The Solicitor General, invoking equity rather than law, observes that making Lim solidarily liable with Sweet Lines will ensure payment of Calsado's claim. But this precaution, even assuming it to be valid, is really unnecessary. In fact, as a condition for the issuance of our temporary restraining order of October 14, 1987, Sweet Lines posted as required a bond in the amount of P850,000.00, which should cover the amounts awarded to the private respondent.[13]

We especially uphold the award of moral and exemplary damages in view of the acts of harassment and bad faith testified to by the private respondent and not refuted by Sweet Lines. Her treatment during her employment, the delays in the payment of her commissions, the pressures exerted upon her even when she was sick in the hospital, the suggestion of one of the company officers that she discuss her complaints with him alone in a private place, her arbitrary separation, the questionable attempts to get the vehicle from her after her dismissal, among other aggravations, clearly demonstrate the validity of the private respondent's complaints.

Finally, we hold that the contention of Sweet Lines that separation pay and back wages are inconsistent with each other is not well-taken. Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Back wages represent compensation that should have been earned but were not collected because of the unjust dismissal. The bases for computing the two are different, the first being usually the length of the employee’s service and the second the actual period when he was unlawfully prevented from working.

We have ordered the payment of both in proper cases[14] as otherwise the employee might be deprived of benefits justly due him. Thus, if an employee who has worked only one year is sustained by the labor court after three years from his unjust dismissal, granting him separation pay only would entitle him to only one month salary. There is no reason why he should not also be paid three years back wages corresponding to the period when he could not return to his work or could not find employment elsewhere.

WHEREFORE, subject to the modification that the award of back wages shall be limited to only three years, in accordance with existing policy, G.R. No. 79975 is DISMISSED, with costs against the petitioner. G.R. No. 79907 is GRANTED and petitioner Samuel Casas Lim is hereby absolved of liability in his personal capacity. The temporary restraining order dated October 14, 1987, is LIFTED. It is so ordered.

[ G.R. No. 128024, May 09, 2000 ]

BEBIANO M. BAÑEZ, PETITIONER, VS. HON. DOWNEY C. VALDEVILLA AND ORO MARKETING, INC., RESPONDENTS.

The orders of respondent judge[1] dated June 20, 1996 and October 16, 1996, taking jurisdiction over an action for damages filed by an employer against its dismissed employee, are assailed in this petition for certiorari under Rule 65 of the Rules of Court for having been issued in grave abuse of discretion.

Petitioner was the sales operations manager of private respondent in its branch in Iligan City. In 1993, private respondent "indefinitely suspended" petitioner and the latter filed a complaint for illegal dismissal with the National Labor Relations Commission ("NLRC") in Iligan City. In a decision dated July 7, 1994, Labor Arbiter Nicodemus G. Palangan found petitioner to have been illegally dismissed and ordered the payment of separation pay in lieu of reinstatement, and of backwages and attorney's fees. The decision was appealed to the NLRC, which dismissed the same for having been filed out of time.[2] Elevated by petition for certiorari before this Court, the case was dismissed on technical grounds[3]; however, the Court also pointed out that even if all the procedural requirements for the filing of the petition were met, it would still be dismissed for failure to show grave abuse of discretion on the part of the NLRC.

On November 13, 1995, private respondent filed a complaint for damages before the Regional Trial Court ("RTC") of Misamis Oriental, docketed as Civil Case No. 95-554, which prayed for the payment of the following:

a. P709,217.97 plus 12% interest as loss of profit and/or unearned income of three years;

b. P119,700.00 plus 12% interest as estimated cost of supplies, facilities, properties, space, etc. for three years;

c. P5,000.00 as initial expenses of litigation; and

d. P25,000.00 as attorney's fees.[4]

On January 30, 1996, petitioner filed a motion to dismiss the above complaint. He interposed in the court below that the action for damages, having arisen from an employer-employee relationship, was squarely under the exclusive original jurisdiction of the NLRC under Article 217(a), paragraph 4 of the Labor Code and is barred by reason of the final judgment in the labor case. He accused private respondent of splitting causes of action, stating that the latter could very well have included the instant claim for damages in its counterclaim before the Labor Arbiter. He also pointed out that the civil action of private respondent is an act of forum-shopping and was merely resorted to after a failure to obtain a favorable decision with the NLRC.

Ruling upon the motion to dismiss, respondent judge issued the herein questioned Order, which summarized the basis for private respondent's action for damages in this manner:

Paragraph 5 of the complaint alleged that the defendant violated the plaintiff’s policy re: His business in his branch at Iligan City wherein defendant was the Sales Operations Manager, and paragraph 7 of the same complaint briefly narrated the modus operandi of defendant, quoted herein: Defendant canvassed customers personally or through salesmen of plaintiff which were hired or recruited by him. If said customer decided to

buy items from plaintiff on installment basis, defendant, without the knowledge of said customer and plaintiff, would buy the items on cash basis at ex-factory price, a privilege not given to customers, and thereafter required the customer to sign promissory notes and other documents using the name and property of plaintiff, purporting that said customer purchased the items from plaintiff on installment basis. Thereafter, defendant collected the installment payments either personally or through Venus Lozano, a Group Sales Manager of plaintiff but also utilized by him as secretary in his own business for collecting and receiving of installments, purportedly for the plaintiff but in reality on his own account or business. The collection and receipt of payments were made inside the Iligan City branch using plaintiff’s facilities, property and manpower. That accordingly plaintiff’s sales decreased and reduced to a considerable extent the profits which it would have earned.[5]

In declaring itself as having jurisdiction over the subject matter of the instant controversy, respondent court stated:

A perusal of the complaint which is for damages does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages as redress for defendant's breach of his contractual obligation to plaintiff who was damaged and prejudiced. The Court believes such cause of action is within the realm of civil law, and jurisdiction over the controversy belongs to the regular courts.

While seemingly the cause of action arose from employer- employee relations, the employer's claim for damages is grounded on the nefarious activities of defendant causing damage and prejudice to plaintiff as alleged in paragraph 7 of the complaint. The Court believes that there was a breach of a contractual obligation, which is intrinsically a civil dispute. The averments in the complaint removed the controversy from the coverage of the Labor Code of the Philippines and brought it within the purview of civil law. (Singapore Airlines, Ltd. Vs. Paño, 122 SCRA 671.) xxx[6]

Petitioner's motion for reconsideration of the above Order was denied for lack of merit on October 16, 1996. Hence, this petition.

Acting on petitioner's prayer, the Second Division of this Court issued a Temporary Restraining Order ("TRO ") on March 5, 1997, enjoining respondents from further proceeding with Civil Case No. 95-554 until further orders from the Court.

By way of assignment of errors, the petition reiterates the grounds raised in the Motion to Dismiss dated January 30, 1996, namely, lack of jurisdiction over the subject matter of the action, res judicata, splitting of causes of action, and forum-shopping. The determining issue, however, is the issue of jurisdiction.

Article 217(a), paragraph 4 of the Labor Code, which was already in effect at the time of the filing of this case, reads:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. --- (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-

agricultural:

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;

The above provisions are a result of the amendment by Section 9 of Republic Act ("R.A.") No. 6715, which took effect on March 21, 1989, and which put to rest the earlier confusion as to who between Labor Arbiters and regular courts had jurisdiction over claims for damages as between employers and employees.

It will be recalled that years prior to R.A. 6715, jurisdiction over all money claims of workers, including claims for damages, was originally lodged with the Labor Arbiters and the NLRC by Article 217 of the Labor Code.[7] On May 1, 1979, however, Presidential Decree ("P.D.") No. 1367 amended said Article 217 to the effect that "Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages."[8] This limitation in jurisdiction, however, lasted only briefly since on May 1, 1980, P.D. No. 1691 nullified P.D. No. 1367 and restored Article 217 of the Labor Code almost to its original form. Presently, and as amended by R.A. 6715, the jurisdiction of Labor Arbiters and the NLRC in Article 217 is comprehensive enough to include claims for all forms of damages "arising from the employer-employee relations".

Whereas this Court in a number of occasions had applied the jurisdictional provisions of Article 217 to claims for damages filed by employees,[9] we hold that by the designating clause "arising from the employer-employee relations" Article 217 should apply with equal force to the claim of an employer for actual damages against its dismissed employee, 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.

Even under Republic Act No. 875 (the "Industrial Peace Act", now completely superseded by the Labor Code), jurisprudence was settled that where the plaintiff's 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.[10] To allow otherwise would be "to sanction split jurisdiction, which is prejudicial to the orderly administration of justice."[11] 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:

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.

There is no mistaking the fact that in the case before us, private respondent's claim against petitioner for actual damages arose from a prior employer-employee relationship. In the first place, private respondent would not have taken issue with petitioner's "doing business of his own" had the latter not been concurrently its employee. Thus, the damages alleged in the complaint below are: first, those amounting to lost profits and earnings due to petitioner's abandonment or neglect of his duties as sales manager, having been otherwise

preoccupied by his unauthorized installment sale scheme; and second, those equivalent to the value of private respondent's property and supplies which petitioner used in conducting his "business ".

Second, and more importantly, to allow respondent court to proceed with the instant action for damages would be to open anew the factual issue of whether petitioner's installment sale scheme resulted in business losses and the dissipation of private respondent's property. This issue has been duly raised and ruled upon in the illegal dismissal case, where private respondent brought up as a defense the same allegations now embodied in his complaint, and presented evidence in support thereof. The Labor Arbiter, however, found to the contrary ---that no business losses may be attributed to petitioner as in fact, it was by reason of petitioner's installment plan that the sales of the Iligan branch of private respondent (where petitioner was employed) reached its highest record level to the extent that petitioner was awarded the 1989 Field Sales Achievement Award in recognition of his exceptional sales performance, and that the installment scheme was in fact with the knowledge of the management of the Iligan branch of private respondent.[12] In other words, the issue of actual damages has been settled in the labor case, which is now final and executory.

Still on the prospect of re-opening factual issues already resolved by the labor court, it may help to refer to that period from 1979 to 1980 when jurisdiction over employment-predicated actions for damages vacillated from labor tribunals to regular courts, and back to labor tribunals. In Ebon vs. de Guzman, 113 SCRA 52,[13] this Court discussed:

The lawmakers in divesting the Labor Arbiters and the NLRC of jurisdiction to award moral and other forms of damages in labor cases could have assumed that the Labor Arbiters' position-paper procedure of ascertaining the facts in dispute might not be an adequate tool for arriving at a just and accurate assessment of damages, as distinguished from backwages and separation pay, and that the trial procedure in the Court of First Instance would be a more effective means of determining such damages. xxx

Evidently, the lawmaking authority had second thoughts about depriving the Labor Arbiters and the NLRC of the jurisdiction to award damages in labor cases because that setup would mean duplicity of suits, splitting the cause of action and possible conflicting findings and conclusions by two tribunals on one and the same claim.

So, on May 1, 1980, Presidential Decree No. 1691 (which substantially reenacted Article 217 in its original form) nullified Presidential Decree No. 1367 and restored to the Labor Arbiter and the NLRC their jurisdiction to award all kinds of damages in cases arising from employer-employee relations. xxx (Underscoring supplied)

Clearly, respondent court's taking jurisdiction over the instant case would bring about precisely the harm that the lawmakers sought to avoid in amending the Labor Code to restore jurisdiction over claims for damages of this nature to the NLRC.

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[14], malicious prosecution[15], or breach of contract, as when the claimant seeks to recover a debt from a former employee[16] or seeks liquidated damages in enforcement of a prior employment contract. [17]

Neither can we uphold the reasoning of respondent court that because the resolution of the issues presented by the complaint does not entail application of the Labor Code or other labor laws, 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 relations ---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.[18]

Thus, it is obvious that private respondent's remedy is not in the filing of this separate action for damages, but in properly perfecting an appeal from the Labor Arbiter's decision. Having lost the right to appeal on grounds of untimeliness, the decision in the labor case stands as a final judgment on the merits, and the instant action for damages cannot take the place of such lost appeal.

Respondent court clearly having no jurisdiction over private respondent's complaint for damages, we will no longer pass upon petitioner's other assignments of error.

WHEREFORE, the Petition is GRANTED, and the complaint in Civil Case No. 95-554 before Branch 39 of the Regional Trial Court of Misamis Oriental is hereby DISMISSED. No pronouncement as to costs.

Applying the foregoing reading to the present case, we note that petitioner's Innovation Program is an employee incentive scheme offered and open only to employees of petitioner Corporation, more specifically to employees below the rank of manager. Without the existing employer-employee relationship between the parties here, there would have been no occasion to consider the petitioner's Innovation Program or the submission by Mr. Vega of his proposal concerning beer grande; without that relationship, private respondent Vega's suit against petitioner Corporation would never have arisen. The money claim of private respondent Vega in this case, therefore, arose out of or in connection with his employment relationship with petitioner.

The next issue that must logically be confronted is whether the fact that the money claim of private respondent Vega arose out of or in connection with his employment relation" with petitioner Corporation, is enough to bring such money claim within the original and exclusive jurisdiction of Labor Arbiters.

In Molave Motor Sales, Inc. v. Laron, 7 the petitioner was a corporation engaged in the sale and repair of motor vehicles, while private respondent was the sales Manager of petitioner. Petitioner had sued private respondent for non-payment of accounts which had arisen from private respondent's own purchases of vehicles and parts, repair jobs on cars personally owned by him, and cash advances from the corporation. At the pre-trial in the lower court, private respondent raised the question of lack of jurisdiction of the court, stating that because petitioner's complaint arose out of the employer-employee relationship, it fell outside the jurisdiction of the court and consequently should be dismissed. Respondent Judge did dismiss the case, holding that the sum of money and damages sued for by the employer arose from the employer-employee relationship and, hence, fell within the jurisdiction of the Labor Arbiter and the NLRC. In reversing the order of dismissal and requiring respondent Judge to take cognizance of the case below, this Court, speaking through Mme. Justice Melencio-Herrera, said:

Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under paragraph 5 of Article 217 of the Labor Code had jurisdiction over" all other cases arising from employer-employee relation, unless, expressly excluded by this Code." Even then, the principle followed by this Court was that, although a controversy is between an employer and an employee, the Labor Arbiters have no jurisdiction if the Labor Code is not involved. In Medina vs. Castro-Bartolome, 11 SCRA 597, 604, in negating jurisdiction of the Labor Arbiter, although the parties were an employer and two employees, Mr. Justice Abad Santos stated:

The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or not they have retroactive effect is unnecessary.

It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise.

And in Singapore Airlines Limited v. Paño, 122 SCRA 671, 677, the following was said:

Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded by workers generally taken

cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute.

In the case below, PLAINTIFF had sued for monies loaned to DEFENDANT, the cost of repair jobs made on his personal cars, and for the purchase price of vehicles and parts sold to him. Those accounts have no relevance to the Labor Code. The cause of action was one under the civil laws, and it does not breach any provision of the Labor Code or the contract of employment of DEFENDANT. Hence the civil courts, not the Labor Arbiters and the NLRC should have jurisdiction. 8

It seems worth noting that Medina v. Castro-Bartolome, referred to in the above excerpt, involved a claim for damages by two (2) employees against the employer company and the General Manager thereof, arising from the use of slanderous language on the occasion when the General Manager fired the two (2) employees (the Plant General Manager and the Plant Comptroller). The Court treated the claim for damages as "a simple action for damages for tortious acts" allegedly committed by private respondents, clearly if impliedly suggesting that the claim for damages did not necessarily arise out of or in connection with the employer-employee relationship. Singapore Airlines Limited v. Paño, also cited in Molave, involved a claim for liquidated damages not by a worker but by the employer company, unlike Medina. The important principle that runs through these three (3) cases is that where the claim to the principal relief sought 9 is to be resolved not by reference to the Labor Code or other labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management relations or in wage structures and other terms and conditions of employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction over such claims to these agencies disappears.

Applying the foregoing to the instant case, the Court notes that the SMC Innovation Program was essentially an invitation from petitioner Corporation to its employees to submit innovation proposals, and that petitioner Corporation undertook to grant cash awards to employees who accept such invitation and whose innovation suggestions, in the judgment of the Corporation's officials, satisfied the standards and requirements of the Innovation Program 10 and which, therefore, could be translated into some substantial benefit to the Corporation. Such undertaking, though unilateral in origin, could nonetheless ripen into an enforceable contractual (facio ut des) 11 obligation on the part of petitioner Corporation under certain circumstances. Thus, whether or not an enforceable contract, albeit implied arid innominate, had arisen between petitioner Corporation and private respondent Vega in the circumstances of this case, and if so, whether or not it had been breached, are preeminently legal questions, questions not to be resolved by referring to labor legislation and having nothing to do with wages or other terms and conditions of employment, but rather having recourse to our law on contracts.

WEREFORE, the Petition for certiorari is GRANTED. The decision dated 4 September 1987 of public respondent National Labor Relations Commission is SET ASIDE and the complaint in Case No. RAB-VII-0170-83 is hereby DISMISSED, without prejudice to the right of private respondent Vega to file a suit before the proper court, if he so desires. No pronouncement as to costs.