G.R. No.

L-48645 January 7, 1987 "BROTHERHOOD" LABOR UNITY MOVEMENT OF THE PHILIPPINES, ANTONIO CASBADILLO, PROSPERO TABLADA, ERNESTO BENGSON, PATRICIO SERRANO, ANTONIO B. BOBIAS, VIRGILIO ECHAS, DOMINGO PARINAS, NORBERTO GALANG, JUANITO NAVARRO, NESTORIO MARCELLANA, TEOFILO B. CACATIAN, RUFO L. EGUIA, CARLOS SUMOYAN, LAMBERTO RONQUILLO, ANGELITO AMANCIO, DANILO B. MATIAR, ET AL., petitioners, vs. HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT, HON. AMADO G. INCIONG, UNDERSECRETARY OF LABOR, SAN MIGUEL CORPORATION, GENARO OLIVES, ENRIQUE CAMAHORT, FEDERICO OATE, ERNESTO VILLANUEVA, ANTONIO BOCALING and GODOFREDO CUETO, respondents. Armando V. Ampil for petitioners. Siguion Reyna, Montecillo and Ongsiako Law Office for private respondents.

GUTIERREZ, JR., J.: The elemental question in labor law of whether or not an employer-employee relationship exists between petitioners-members of the "Brotherhood Labor Unit Movement of the Philippines" (BLUM) and respondent San Miguel Corporation, is the main issue in this petition. The disputed decision of public respondent Ronaldo Zamora, Presidential Assistant for legal Affairs, contains a brief summary of the facts involved: 1. The records disclose that on July 11, 1969, BLUM filed a complaint with the now defunct Court of Industrial Relations, charging San Miguel Corporation, and the following officers: Enrique Camahort, Federico Ofiate Feliciano Arceo, Melencio Eugenia Jr., Ernesto Villanueva, Antonio Bocaling and Godofredo Cueto of unfair labor practice as set forth in Section 4 (a), sub-sections (1) and (4) of Republic Act No. 875 and of Legal dismissal. It was alleged that respondents ordered the individual complainants to disaffiliate from the complainant union; and that management dismissed the individual complainants when they insisted on their union membership. On their part, respondents moved for the dismissal of the complaint on the grounds that the complainants are not and have never been employees of respondent company but employees of the independent contractor; that respondent company has never had control over the means and methods followed by the independent contractor who enjoyed full authority to hire and control said employees; and that the individual complainants are barred by estoppel from asserting that they are employees of respondent company. While pending with the Court of Industrial Relations CIR pleadings and testimonial and documentary evidences were duly presented, although the actual hearing was delayed by several postponements. The dispute was taken over by the National Labor Relations Commission (NLRC) with the decreed abolition of the CIR and the hearing of the case intransferably commenced on September 8, 1975.

On February 9, 1976, Labor Arbiter Nestor C. Lim found for complainants which was concurred in by the NLRC in a decision dated June 28, 1976. The amount of backwages awarded, however, was reduced by NLRC to the equivalent of one (1) year salary. On appeal, the Secretary in a decision dated June 1, 1977, set aside the NLRC ruling, stressing the absence of an employer-mployee relationship as borne out by the records of the case. ... The petitioners strongly argue that there exists an employer-employee relationship between them and the respondent company and that they were dismissed for unionism, an act constituting unfair labor practice "for which respondents must be made to answer." Unrebutted evidence and testimony on record establish that the petitioners are workers who have been employed at the San Miguel Parola Glass Factory since 1961, averaging about seven (7) years of service at the time of their termination. They worked as "cargadores" or "pahinante" at the SMC Plant loading, unloading, piling or palleting empty bottles and woosen shells to and from company trucks and warehouses. At times, they accompanied the company trucks on their delivery routes. The petitioners first reported for work to Superintendent-in-Charge Camahort. They were issued gate passes signed by Camahort and were provided by the respondent company with the tools, equipment and paraphernalia used in the loading, unloading, piling and hauling operation. Job orders emanated from Camahort. The orders are then transmitted to an assistant-officer-incharge. In turn, the assistant informs the warehousemen and checkers regarding the same. The latter, thereafter, relays said orders to the capatazes or group leaders who then give orders to the workers as to where, when and what to load, unload, pile, pallet or clean. Work in the glass factory was neither regular nor continuous, depending wholly on the volume of bottles manufactured to be loaded and unloaded, as well as the business activity of the company. Work did not necessarily mean a full eight (8) hour day for the petitioners. However, work,at times, exceeded the eight (8) hour day and necessitated work on Sundays and holidays. For this, they were neither paid overtime nor compensation for work on Sundays and holidays. Petitioners were paid every ten (10) days on a piece rate basis, that is, according to the number of cartons and wooden shells they were able to load, unload, or pile. The group leader notes down the number or volume of work that each individual worker has accomplished. This is then made the basis of a report or statement which is compared with the notes of the checker and warehousemen as to whether or not they tally. Final approval of report is by officer-in-charge Camahort. The pay check is given to the group leaders for encashment, distribution, and payment to the petitioners in accordance with payrolls prepared by said leaders. From the total earnings of the group, the group leader gets a participation or share of ten (10%) percent plus an additional amount from the earnings of each individual. The petitioners worked exclusive at the SMC plant, never having been assigned to other companies or departments of SMC plant, even when the volume of work was at its minimum. When any of the glass furnaces suffered a breakdown, making a shutdown necessary, the petitioners work was temporarily suspended. Thereafter, the petitioners would return to work at the glass plant. Sometime in January, 1969, the petitioner workers numbering one hundred and forty (140) organized and affiliated themselves with the petitioner union and engaged in union activities. Believing themselves entitled to overtime and holiday pay, the petitioners pressed management,

airing other grievances such as being paid below the minimum wage law, inhuman treatment, being forced to borrow at usurious rates of interest and to buy raffle tickets, coerced by withholding their salaries, and salary deductions made without their consent. However, their gripes and grievances were not heeded by the respondents. On February 6, 1969, the petitioner union filed a notice of strike with the Bureau of Labor Relations in connection with the dismissal of some of its members who were allegedly castigated for their union membership and warned that should they persist in continuing with their union activities they would be dismissed from their jobs. Several conciliation conferences were scheduled in order to thresh out their differences, On February 12, 1969, union member Rogelio Dipad was dismissed from work. At the scheduled conference on February 19, 1969, the complainant union through its officers headed by National President Artemio Portugal Sr., presented a letter to the respondent company containing proposals and/or labor demands together with a request for recognition and collective bargaining. San Miguel refused to bargain with the petitioner union alleging that the workers are not their employees. On February 20, 1969, all the petitioners were dismissed from their jobs and, thereafter, denied entrance to respondent company's glass factory despite their regularly reporting for work. A complaint for illegal dismissal and unfair labor practice was filed by the petitioners. The case reaches us now with the same issues to be resolved as when it had begun. The question of whether an employer-employee relationship exists in a certain situation continues to bedevil the courts. Some businessmen try to avoid the bringing about of an employer-employee relationship in their enterprises because that judicial relation spawns obligations connected with workmen's compensation, social security, medicare, minimum wage, termination pay, and unionism. (Mafinco Trading Corporation v. Ople, 70 SCRA 139). 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 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). Applying the above criteria, the evidence strongly indicates the existence of an employer-employee relationship between petitioner workers and respondent San Miguel Corporation. The respondent asserts that the petitioners are employees of the Guaranteed Labor Contractor, an independent labor contracting firm. The facts and evidence on record negate respondent SMC's claim. The existence of an independent contractor relationship is generally established by the following criteria: "whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises tools, appliances, materials and labor; and

the mode, manner and terms of payment" (56 CJS Master and Servant, Sec. 3(2), 46; See also 27 AM. Jur. Independent Contractor, Sec. 5, 485 and Annex 75 ALR 7260727) None of the above criteria exists in the case at bar. Highly unusual and suspect is the absence of a written contract to specify the performance of a specified piece of work, the nature and extent of the work and the term and duration of the relationship. The records fail to show that a large commercial outfit, such as the San Miguel Corporation, entered into mere oral agreements of employment or labor contracting where the same would involve considerable expenses and dealings with a large number of workers over a long period of time. Despite respondent company's allegations not an iota of evidence was offered to prove the same or its particulars. Such failure makes respondent SMC's stand subject to serious doubts. Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had worked continuously and exclusively for the respondent company's shipping and warehousing department. Considering the length of time that the petitioners have worked with the respondent company, there is justification to conclude that they were engaged to perform activities necessary or desirable in the usual business or trade of the respondent, and the petitioners are, therefore regular employees (Phil. Fishing Boat Officers and Engineers Union v. Court of Industrial Relations, 112 SCRA 159 and RJL Martinez Fishing Corporation v. National Labor Relations Commission, 127 SCRA 454). As we have found in RJL Martinez Fishing Corporation v. National Labor Relations Commission (supra): ... [T]he employer-employee relationship between the parties herein is not coterminous with each loading and unloading job. As earlier shown, respondents are engaged in the business of fishing. For this purpose, they have a fleet of fishing vessels. Under this situation, respondents' activity of catching fish is a continuous process and could hardly be considered as seasonal in nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish from respondents' vessels and then loading the same to refrigerated vans, are necessary or desirable in the business of respondents. This circumstance makes the employment of complainants a regular one, in the sense that it does not depend on any specific project or seasonable activity. (NLRC Decision, p. 94, Rollo).
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so as it with petitioners in the case at bar. In fact, despite past shutdowns of the glass plant for repairs, the petitioners, thereafter, promptly returned to their jobs, never having been replaced, or assigned elsewhere until the present controversy arose. The term of the petitioners' employment appears indefinite. The continuity and habituality of petitioners' work bolsters their claim of employee status vis-a-vis respondent company, Even under the assumption that a contract of employment had indeed been executed between respondent SMC and the alleged labor contractor, respondent's case will, nevertheless, fail. Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code provides: Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner

and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. We find that Guaranteed and Reliable Labor contractors have neither substantial capital nor investment to qualify as an independent contractor under the law. The premises, tools, equipment and paraphernalia used by the petitioners in their jobs are admittedly all supplied by respondent company. It is only the manpower or labor force which the alleged contractors supply, suggesting the existence of a "labor only" contracting scheme prohibited by law (Article 106, 109 of the Labor Code; Section 9(b), Rule VIII, Book III, Implementing Rules and Regulations of the Labor Code). In fact, even the alleged contractor's office, which consists of a space at respondent company's warehouse, table, chair, typewriter and cabinet, are provided for by respondent SMC. It is therefore clear that the alleged contractors have no capital outlay involved in the conduct of its business, in the maintenance thereof or in the payment of its workers' salaries. The payment of the workers' wages is a critical factor in determining the actuality of an employeremployee relationship whether between respondent company and petitioners or between the alleged independent contractor and petitioners. It is important to emphasize that in a truly independent contractor-contractee relationship, the fees are paid directly to the manpower agency in lump sum without indicating or implying that the basis of such lump sum is the salary per worker multiplied by the number of workers assigned to the company. This is the rule inSocial Security System v. Court of Appeals (39 SCRA 629, 635). The alleged independent contractors in the case at bar were paid a lump sum representing only the salaries the workers were entitled to, arrived at by adding the salaries of each worker which depend on the volume of work they. had accomplished individually. These are based on payrolls, reports or statements prepared by the workers' group leader, warehousemen and checkers, where they note down the number of cartons, wooden shells and bottles each worker was able to load, unload, pile or pallet and see whether they tally. The amount paid by respondent company to the alleged independent contractor considers no business expenses or capital outlay of the latter. Nor is the profit or gain of the alleged contractor in the conduct of its business provided for as an amount over and above the workers' wages. Instead, the alleged contractor receives a percentage from the total earnings of all the workers plus an additional amount corresponding to a percentage of the earnings of each individual worker, which, perhaps, accounts for the petitioners' charge of unauthorized deductions from their salaries by the respondents. Anent the argument that the petitioners are not employees as they worked on piece basis, we merely have to cite our rulings in Dy Keh Beng v. International Labor and Marine Union of the Philippines (90 SCRA 161), as follows: "[C]ircumstances must be construed to determine indeed if payment by the piece is just a method of compensation and does not define the essence of the relation. Units of time . . . and units of work are in establishments like respondent (sic) just yardsticks whereby to determine rate of compensation, to be applied whenever agreed upon. We cannot construe payment by the piece where work is done in such an establishment so as to put the worker completely at liberty to turn him out and take in another at pleasure."

Article 106 of the Labor Code provides the legal effect of a labor only contracting scheme, to wit: ... the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Firmly establishing respondent SMC's role as employer is the control exercised by it over the petitioners that is, control in the means and methods/manner by which petitioners are to go about their work, as well as in disciplinary measures imposed by it. Because of the nature of the petitioners' work as cargadores or pahinantes, supervision as to the means and manner of performing the same is practically nil. For, how many ways are there to load and unload bottles and wooden shells? The mere concern of both respondent SMC and the alleged contractor is that the job of having the bottles and wooden shells brought to and from the warehouse be done. More evident and pronounced is respondent company's right to control in the discipline of petitioners. Documentary evidence presented by the petitioners establish respondent SMC's right to impose disciplinary measures for violations or infractions of its rules and regulations as well as its right to recommend transfers and dismissals of the piece workers. The inter-office memoranda submitted in evidence prove the company's control over the petitioners. That respondent SMC has the power to recommend penalties or dismissal of the piece workers, even as to Abner Bungay who is alleged by SMC to be a representative of the alleged labor contractor, is the strongest indication of respondent company's right of control over the petitioners as direct employer. There is no evidence to show that the alleged labor contractor had such right of control or much less had been there to supervise or deal with the petitioners. The petitioners were dismissed allegedly because of the shutdown of the glass manufacturing plant. Respondent company would have us believe that this was a case of retrenchment due to the closure or cessation of operations of the establishment or undertaking. But such is not the case here. The respondent's shutdown was merely temporary, one of its furnaces needing repair. Operations continued after such repairs, but the petitioners had already been refused entry to the premises and dismissed from respondent's service. New workers manned their positions. It is apparent that the closure of respondent's warehouse was merely a ploy to get rid of the petitioners, who were then agitating the respondent company for benefits, reforms and collective bargaining as a union. There is no showing that petitioners had been remiss in their obligations and inefficient in their jobs to warrant their separation. As to the charge of unfair labor practice because of SMC's refusal to bargain with the petitioners, it is clear that the respondent company had an existing collective bargaining agreement with the IBM union which is the recognized collective bargaining representative at the respondent's glass plant. There being a recognized bargaining representative of all employees at the company's glass plant, the petitioners cannot merely form a union and demand bargaining. The Labor Code provides the proper procedure for the recognition of unions as sole bargaining representatives. This must be followed. WHEREFORE, IN VIEW OF THE FOREGOING, the petition is GRANTED. The San Miguel Corporation is hereby ordered to REINSTATE petitioners, with three (3) years backwages. However, where reinstatement is no longer possible, the respondent SMC is ordered to pay the petitioners separation pay equivalent to one (1) month pay for every year of service. SO ORDERED.

G.R. No. 87700 June 13, 1990 SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL S.L. BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET AL., petitioners, vs. HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE OF BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION, respondents. Romeo C. Lagman for petitioners. Jardeleza, Sobrevinas, Diaz, Mayudini & Bodegon for respondents.

MELENCIO-HERRERA, J.: Respondent Judge of the Regional Trial Court of Pasig, Branch 166, is taken to task by petitioners in this special civil action for certiorari and Prohibition for having issued the challenged Writ of Preliminary Injunction on 29 March 1989 in Civil Case No. 57055 of his Court entitled "San Miguel Corporation vs. SMCEU-PTGWO, et als." Petitioners' plea is that said Writ was issued without or in excess of jurisdiction and with grave abuse of discretion, a labor dispute being involved. Private respondent San Miguel Corporation (SanMig. for short), for its part, defends the Writ on the ground of absence of any employer-employee relationship between it and the contractual workers employed by the companies Lipercon Services, Inc. (Lipercon) and D'Rite Service Enterprises (D'Rite), besides the fact that the Union is bereft of personality to represent said workers for purposes of collective bargaining. The Solicitor General agrees with the position of SanMig. The antecedents of the controversy reveal that: Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services with Lipercon and D'Rite (Annexes K and I, SanMig's Comment, respectively). These companies are independent contractors duly licensed by the Department of Labor and Employment (DOLE). SanMig entered into those contracts to maintain its competitive position and in keeping with the imperatives of efficiency, business expansion and diversity of its operation. In said contracts, it was expressly understood and agreed that the workers employed by the contractors were to be paid by the latter and that none of them were to be deemed employees or agents of SanMig. There was to be no employer-employee relation between the contractors and/or its workers, on the one hand, and SanMig on the other. Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for brevity) is the duly authorized representative of the monthly paid rank-and-file employees of SanMig with whom the latter executed a Collective Bargaining Agreement (CBA) effective 1 July 1986 to 30 June 1989 (Annex A, SanMig's Comment). Section 1 of their CBA specifically provides that "temporary, probationary, or contract employees and workers are excluded from the bargaining unit and, therefore, outside the scope of this Agreement." In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig that some Lipercon and D'Rite workers had signed up for union membership and sought the regularization of their employment with SMC. The Union alleged that this group of employees, while appearing to be

contractual workers supposedly independent contractors, have been continuously working for SanMig for a period ranging from six (6) months to fifteen (15) years and that their work is neither casual nor seasonal as they are performing work or activities necessary or desirable in the usual business or trade of SanMig. Thus, it was contended that there exists a "labor-only" contracting situation. It was then demanded that the employment status of these workers be regularized. On 12 January 1989 on the ground that it had failed to receive any favorable response from SanMig, the Union filed a notice of strike for unfair labor practice, CBA violations, and union busting (Annex D, Petition). On 30 January 1989, the Union again filed a second notice of strike for unfair labor practice (Annex F, Petition). As in the first notice of strike. Conciliatory meetings were held on the second notice. Subsequently, the two (2) notices of strike were consolidated and several conciliation conferences were held to settle the dispute before the National Conciliation and Mediation Board (NCMB) of DOLE (Annex G, Petition). Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by Lipercon and D'Rite workers in various SMC plants and offices. On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages before respondent Court to enjoin the Union from: a. representing and/or acting for and in behalf of the employees of LIPERCON and/or D'RITE for the purposes of collective bargaining; b. calling for and holding a strike vote, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; c. inciting, instigating and/or inducing the employees or workers of LIPERCON and D'RITE to demonstrate and/or picket at the plants and offices of plaintiff within the bargaining unit referred to in the CBA,...; d. staging a strike to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; e. using the employees or workers of LIPERCON AND D'RITE to man the strike area and/or picket lines and/or barricades which the defendants may set up at the plants and offices of plaintiff within the bargaining unit referred to in the CBA ...; f. intimidating, threatening with bodily harm and/or molesting the other employees and/or contract workers of plaintiff, as well as those persons lawfully transacting business with plaintiff at the work places within the bargaining unit referred to in the CBA, ..., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE; g. blocking, preventing, prohibiting, obstructing and/or impeding the free ingress to, and egress from, the work places within the bargaining unit referred to in the CBA .., to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE;

h. preventing and/or disrupting the peaceful and normal operation of plaintiff at the work places within the bargaining unit referred to in the CBA, Annex 'C' hereof, to compel plaintiff to hire the employees or workers of LIPERCON and D'RITE. (Annex H, Petition) Respondent Court found the Complaint sufficient in form and substance and issued a Temporary Restraining Order for the purpose of maintaining the status quo, and set the application for Injunction for hearing. In the meantime, on 13 March 1989, the Union filed a Motion to Dismiss SanMig's Complaint on the ground of lack of jurisdiction over the case/nature of the action, which motion was opposed by SanMig. That Motion was denied by respondent Judge in an Order dated 11 April 1989. After several hearings on SanMig's application for injunctive relief, where the parties presented both testimonial and documentary evidence on 25 March 1989, respondent Court issued the questioned Order (Annex A, Petition) granting the application and enjoining the Union from Committing the acts complained of, supra. Accordingly, on 29 March 1989, respondent Court issued the corresponding Writ of Preliminary Injunction after SanMig had posted the required bond of P100,000.00 to answer for whatever damages petitioners may sustain by reason thereof. In issuing the Injunction, respondent Court rationalized: The absence of employer-employee relationship negates the existence of labor dispute. Verily, this court has jurisdiction to take cognizance of plaintiff's grievance. The evidence so far presented indicates that plaintiff has contracts for services with Lipercon and D'Rite. The application and contract for employment of the defendants' witnesses are either with Lipercon or D'Rite. What could be discerned is that there is no employer-employee relationship between plaintiff and the contractual workers employed by Lipercon and D'Rite. This, however, does not mean that a final determination regarding the question of the existence of employer-employee relationship has already been made. To finally resolve this dispute, the court must extensively consider and delve into the manner of selection and engagement of the putative employee; the mode of payment of wages; the presence or absence of a power of dismissal; and the Presence or absence of a power to control the putative employee's conduct. This necessitates a full-blown trial. If the acts complained of are not restrained, plaintiff would, undoubtedly, suffer irreparable damages. Upon the other hand, a writ of injunction does not necessarily expose defendants to irreparable damages. Evidently, plaintiff has established its right to the relief demanded. (p. 21, Rollo) Anchored on grave abuse of discretion, petitioners are now before us seeking nullification of the challenged Writ. On 24 April 1989, we issued a Temporary Restraining Order enjoining the implementation of the Injunction issued by respondent Court. The Union construed this to mean that "we can now strike," which it superimposed on the Order and widely circulated to entice the Union membership to go on strike. Upon being apprised thereof, in a Resolution of 24 May 1989, we required the parties to "RESTORE the status quo ante declaration of strike" (p. 2,62 Rollo). In the meantime, however, or on 2 May 1989, the Union went on strike. Apparently, some of the contractual workers of Lipercon and D'Rite had been laid off. The strike adversely affected thirteen (13) of the latter's plants and offices.

On 3 May 1989, the National Conciliation and Mediation Board (NCMB) called the parties to conciliation. The Union stated that it would lift the strike if the thirty (30) Lipercon and D'Rite employees were recalled, and discussion on their other demands, such as wage distortion and appointment of coordinators, were made. Effected eventually was a Memorandum of Agreement between SanMig and the Union that "without prejudice to the outcome of G.R. No. 87700 (this case) and Civil Case No. 57055 (the case below), the laid-off individuals ... shall be recalled effective 8 May 1989 to their former jobs or equivalent positions under the same terms and conditions prior to "lay-off" (Annex 15, SanMig Comment). In turn, the Union would immediately lift the pickets and return to work. After an exchange of pleadings, this Court, on 12 October 1989, gave due course to the Petition and required the parties to submit their memoranda simultaneously, the last of which was filed on 9 January 1990. The focal issue for determination is whether or not respondent Court correctly assumed jurisdiction over the present controversy and properly issued the Writ of Preliminary Injunction to the resolution of that question, is the matter of whether, or not the case at bar involves, or is in connection with, or relates to a labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts. Petitioners take the position that 'it is beyond dispute that the controversy in the court a quo involves or arose out of a labor dispute and is directly connected or interwoven with the cases pending with the NCMB-DOLE, and is thus beyond the ambit of the public respondent's jurisdiction. That the acts complained of (i.e., the mass concerted action of picketing and the reliefs prayed for by the private respondent) are within the competence of labor tribunals, is beyond question" (pp. 6-7, Petitioners' Memo). On the other hand, SanMig denies the existence of any employer-employee relationship and consequently of any labor dispute between itself and the Union. SanMig submits, in particular, that "respondent Court is vested with jurisdiction and judicial competence to enjoin the specific type of strike staged by petitioner union and its officers herein complained of," for the reasons that: A. The exclusive bargaining representative of an employer unit cannot strike to compel the employer to hire and thereby create an employment relationship with contractual workers, especially were the contractual workers were recognized by the union, under the governing collective bargaining agreement, as excluded from, and therefore strangers to, the bargaining unit. B. A strike is a coercive economic weapon granted the bargaining representative only in the event of a deadlock in a labor dispute over 'wages, hours of work and all other and of the employment' of the employees in the unit. The union leaders cannot instigate a strike to compel the employer, especially on the eve of certification elections, to hire strangers or workers outside the unit, in the hope the latter will help re-elect them. C. Civil courts have the jurisdiction to enjoin the above because this specie of strike does not arise out of a labor dispute, is an abuse of right, and violates the employer's constitutional liberty to hire or not to hire. (SanMig's Memorandum, pp. 475-476, Rollo). We find the Petition of a meritorious character.

A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and employee." While it is SanMig's submission that no employer-employee relationship exists between itself, on the one hand, and the contractual workers of Lipercon and D'Rite on the other, a labor dispute can nevertheless exist "regardless of whether the disputants stand in the proximate relationship of employer and employee" (Article 212 [1], Labor Code, supra) provided the controversy concerns, among others, the terms and conditions of employment or a "change" or "arrangement" thereof (ibid). Put differently, and as defined by law, the existence of a labor dispute is not negative by the fact that the plaintiffs and defendants do not stand in the proximate relation of employer and employee. That a labor dispute, as defined by the law, does exist herein is evident. At bottom, what the Union seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig. This matter definitely dwells on the working relationship between said employees vis-a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement of those terms are thus involved bringing the matter within the purview of a labor dispute. Further, the Union also seeks to represent those workers, who have signed up for Union membership, for the purpose of collective bargaining. SanMig, for its part, resists that Union demand on the ground that there is no employer-employee relationship between it and those workers and because the demand violates the terms of their CBA. Obvious then is that representation and association, for the purpose of negotiating the conditions of employment are also involved. In fact, the injunction sought by SanMig was precisely also to prevent such representation. Again, the matter of representation falls within the scope of a labor dispute. Neither can it be denied that the controversy below is directly connected with the labor dispute already taken cognizance of by the NCMB-DOLE (NCMB-NCR- NS-01- 021-89; NCMB NCR NS-01-093-83). Whether or not the Union demands are valid; whether or not SanMig's contracts with Lipercon and D'Rite constitute "labor-only" contracting and, therefore, a regular employer-employee relationship may, in fact, be said to exist; whether or not the Union can lawfully represent the workers of Lipercon and D'Rite in their demands against SanMig in the light of the existing CBA; whether or not the notice of strike was valid and the strike itself legal when it was allegedly instigated to compel the employer to hire strangers outside the working unit; those are issues the resolution of which call for the application of labor laws, and SanMig's cause's of action in the Court below are inextricably linked with those issues. The precedent in Layno vs. de la Cruz (G.R. No. L-29636, 30 April 1965, 13 SCRA 738) relied upon by SanMig is not controlling as in that case there was no controversy over terms, tenure or conditions, of employment or the representation of employees that called for the application of labor laws. In that case, what the petitioning union demanded was not a change in working terms and conditions, or the representation of the employees, but that its members be hired as stevedores in the place of the members of a rival union, which petitioners wanted discharged notwithstanding the existing contract of the arrastre company with the latter union. Hence, the ruling therein, on the basis of those facts unique to that case, that such a demand could hardly be considered a labor dispute. As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. As explicitly provided for in Article 217 of the Labor Code, prior to its amendment by R.A. No. 6715 on 21 March 1989, since the suit below was instituted on 6 March 1989, Labor Arbiters have original and exclusive jurisdiction to hear and decide the following cases involving all workers including "1. unfair labor practice cases; 2. those that workers may file involving wages, hours of work and other

terms and conditions of employment; ... and 5. cases arising from any violation of Article 265 of this Code, including questions involving the legality of striker and lockouts. ..." Article 217 lays down the plain command of the law. The claim of SanMig that the action below is for damages under Articles 19, 20 and 21 of the Civil Code would not suffice to keep the case within the jurisdictional boundaries of regular Courts. That claim for damages is interwoven with a labor dispute existing between the parties and would have to be ventilated before the administrative machinery established for the expeditious settlement of those disputes. To allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the orderly administration of justice (Philippine Communications, Electronics and Electricity Workers Federation vs. Hon. Nolasco, L-24984, 29 July 1968, 24 SCRA 321). We recognize the proprietary right of SanMig to exercise an inherent management prerogative and its best business judgment to determine whether it should contract out the performance of some of its work to independent contractors. However, the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law (Section 3, Article XIII, 1987 Constitution) equally call for recognition and protection. Those contending interests must be placed in proper perspective and equilibrium. WHEREFORE, the Writ of certiorari is GRANTED and the Orders of respondent Judge of 25 March 1989 and 29 March 1989 are SET ASIDE. The Writ of Prohibition is GRANTED and respondent Judge is enjoined from taking any further action in Civil Case No. 57055 except for the purpose of dismissing it. The status quo ante declaration of strike ordered by the Court on 24 May 1989 shall be observed pending the proceedings in the National Conciliation Mediation Board-Department of Labor and Employment, docketed as NCMB-NCR-NS-01-02189 and NCMB-NCR-NS-01-093-83. No costs. SO ORDERED. G.R. No. 106231 November 16, 1994 HAWAIIAN-PHILIPPINE COMPANY, petitioner, vs. REYNALDO J. GULMATICO, Labor Arbiter, Regional Arbitration Branch No. VI, AND NATIONAL FEDERATION OF SUGAR WORKERS-FOOD AND GENERAL TRADES representing all the sugar farm workers of the HAWAIIAN PHILIPPINE MILLING DISTRICT, respondents. Angara, Abella, Concepcion, Regala & Cruz for petitioner. Manlapao, Ymballa and Chaves for private respondent.

BIDIN, J.: This petition for certiorari and prohibition with preliminary injunction seeks to annul the Order dated June 29, 1992 issued by public respondent Labor Arbiter Reynaldo J. Gulmatico denying petitioner's motion for "Claims on R.A. 809" in RAB VI Case No. 06-07-10256-89, the dispositive portion of which reads, in part: WHEREFORE, premises considered, the motion to dismiss dated July 31, 1989 and the supplement thereto dated September 19, 1989 filed by respondent company

together with the motion to dismiss filed by respondent Ramon Jison dated August 27, 1990 and Francisco Jison dated September 20, 1990, respectively, are hereby DENIED. xxx xxx xxx (Rollo, p. 59) The antecedent facts are as follows: On July 4, 1989, respondent union, the National Federation of Sugar Workers-Food and General Trades (NFSW-FGT) filed RAB VI Case No. 06-07-10256-89 against herein petitioner HawaiianPhilippine Company for claims under Republic Act 809 (The Sugar Act of 1952). Respondent union claimed that the sugar farm workers within petitioner's milling district have never availed of the benefits due them under the law. Under Section 9 of R.A 809, otherwise known as the Sugar Act of 1952, it is provided, to wit: Sec. 9. In addition to the benefits granted by the Minimum Wage Law, the proceeds of any increase in participation granted to planters under this Act and above their present share shall be divided between the planter and his laborers in the following proportions; Sixty per centum of the increase participation for the laborers and forty per centum for the planters. The distribution of the share corresponding to the laborers shall be made under the supervision of the Department of Labor. xxx xxx xxx (Emphasis supplied.) On July 31, 1989, petitioner filed a "Motion to Dismiss," followed by a "Supplemental Motion to Dismiss" on September 19, 1989. Petitioner contended that public respondent Labor Arbiter has no jurisdiction to entertain and resolve the case, and that respondent union has no cause of action against petitioner. On August 23, 1989, respondent union filed an "Opposition to Motion to Dismiss." On October 3,1989, petitioner applied a "Reply to Opposition" followed by a "Citation of Authorities in Support of Motion to Dismiss." On December 20, 1989, respondent union filed an amended complaint additionally impleading as complainants Efren Elaco, Bienvenido Gulmatico, Alberto Amacio, Narciso Vasquez, Mario Casociano and all the other farm workers of the sugar planters milling with petitioner from 1979 up to the present, and as respondents, Jose Maria Regalado, Ramon Jison, Rolly Hernaez, Rodolfo Gamboa, Francisco Jison and all other sugar planters milling their canes with petitioner from 1979 up to the present. On August 27, 1990, Ramon Jison, one of the respondents impleaded in the amended complaint, filed a "Motion to Dismiss and/or to Include Necessary Parties," praying for the inclusion as co-

respondents of the Asociacion de Hacenderos de Silan-Saravia, Inc. and the Associate Planters of Silay-Saravia, Inc. On June 29, 1992, public respondent promulgated the assailed Order denying petitioner's Motion to Dismiss and Supplemental Motion to Dismiss. Hence, this petition filed by Hawaiian-Philippine Company. Petitioner reasserts the two lesson earlier raised in its Motion to Dismiss which public respondent unfavorably resolved in the assailed Order. These two issues are first, whether public respondent Labor Arbiter has jurisdiction to hear and decide the case against petitioner; and the second, whether respondent union and/or the farm workers represented by it have a cause of action against petitioner. Petitioner contends that the complaint filed against it cannot be categorized under any of the cases falling within the jurisdiction of the Labor Arbiter as enumerated in Article 217 of the Labor Code, as amended, considering that no employer-employee relationship exists between petitioner milling company and the farm workers represented by respondent union. Article 217 of the Labor Code provides: 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: 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 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 from 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. (Emphasis supplies) In support of the contention that the Labor Arbiter has no jurisdiction to hear and decide the case against petitioner, the latter cites the ruling in San Miguel Corporation vs. NLRC, 161 SCRA 719 [1988], wherein it was held that a single unifying element runs through the cases and disputes falling

under the jurisdiction of the Labor Arbiter and that is that all the enumerated cases and disputes arise out of or are in connection with an employer-employee relationship, or some aspect or incident of such relationship. Likewise, in Federation of Free Farmers vs. Court of Appeals, 107 SCRA 411 [1981], this Court held that: . . . . From the beginning of the sugar industry, the centrals have never had any privity with the plantation laborers, since they had their own laborers to take care of. . . . Nowhere in Republic Act 809 (the Sugar Act of 1952) can we find anything that creates any relationship between the laborers of the planters and the centrals. . . . . . . Under no principle of law or equity can we impose on the central . . . any liability to the plantation laborers. . . . (Emphasis supplied) On the strength of the aforecited authorities, petitioner contends that it is not a proper party and has no involvement in the case filed by respondent union as it is not the employer of the respondent sugar workers. Furthermore, to bolster its contention, petitioner cites the Rules and Regulations Implementing RA 809 issued by the then Wage Administration Service pursuant to the Administrative Order of the Labor Secretary dated October 1, 1952. Section 1 thereof states: Sec. 1. The payment of the proceeds derived from the sixty per centum of any increase in the participation due the laborers shall be directly paid to the individual laborer concerned at the end of each milling season by his respective planter under the Supervision of the Secretary of Labor or his duly authorized representative by means of payrolls prepared by said planter. (Emphasis supplied) In addition, under Letter of Instruction No. 854 dated May 1, 1979, it is provided: 1. Payment subject to supervision. The workers' share shall be paid directly by the planter concerned to the workers or claimants entitled thereto subject to the supervision of the Minister of Labor or his duly designated representative. The responsibility for the payment of the sugar workers' benefits under R.A. 809 was categorically ruled upon in the Federation of Free Farmers case, supra., to wit: . . . the matter of paying the plantation laborers of the respective planters becomes exclusively the concern of the planters, the laborers and the Department of Labor. Under no principle of law or equity can we impose on the Central here VICTORIAS any liability to the respective plantation laborers, should any of their respective planters-employers fail to pay their legal share. After all, since under the law it is the Department of Labor which is the office directly called upon to supervise such payment, it is but reasonable to maintain that if any blame is to be fixed for the unfortunate situation of the unpaid laborers, the same should principally be laid on the planters and secondarily on the Department of Labor, but surely never on the central. Whatever liability there exists between favor of the plantation laborers should be pinned on the PLANTERS, their respective employers. (Emphasis supplied)

On the other hand, public respondent and respondent union maintain the position that privity exists between petitioner and the sugar workers. Actually, public respondent, in resolving petitioner's Motion to Dismiss, skirted the issue of whether an employer-employee relationship indeed exists between petitioner milling company and the sugar workers. He did not categorically rule thereon but instead relied on the observation that when petitioner delivered to its planters the quedans representing its share, petitioner did not first ascertain whether the shares of all workers or claimants were fully paid/covered pursuant to LOI No. 854, and that petitioner did not have the necessary certification from the Department of Labor attesting to such fact of delivery. In view of these observations, public respondent subscribed to the possibility that petitioner may still have a liability vis-a-vis the workers' share. Consequently, in order that the workers would not have to litigate their claim separately, which would be tantamount to tolerating the splitting of a cause of action, public respondent held that petitioner should still be included in this case as an indispensable party without which a full determination of this case would not be obtained. We find for petitioner. The Solicitor General, in its adverse Comment, correctly agreed with petitioner's contention that while the jurisdiction over controversies involving agricultural workers has been transferred from the Court of Agrarian Relations to the Labor Arbiters under the Labor Code as amended, the said transferred jurisdiction is however, not without limitations. The dispute or controversy must still fall under one of the cases enumerated under Article 217 of the Labor Code, which cases, as ruled in San Miguel, supra., arise out of or are in connection with an employer-employee relationship. In the case at bar, it is clear that there is no employer-employee relationship between petitioner milling company and respondent union and/or its members-workers, a fact which, the Solicitor General notes, public respondent did not dispute or was silent about. Absent the jurisdictional requisite of an employer-employee relationship between petitioner and private respondent, the inevitable conclusion is that public respondent is without jurisdiction to hear and decide the case with respect to petitioner. Anent the issue of whether respondent union and/or its members-workers have a cause of action against petitioner, the same must be resolved in the negative. To have a cause of action, the claimant must show that he has a legal right and the respondent a correlative duty in respect thereof, which the latter violated by some wrongful act or omission (Marquez vs. Varela, 92 Phil. 373 [1952]). In the instant case, a simple reading of Section 9 of R.A. 809 and Section 1 of LOI 845 as aforequoted, would show that the payment of the workers' share is a liability of the plantersemployers, and not of the milling company/sugar central. We thus reiterate Our ruling on this matter, as enunciated in Federation of Free Farmers, supra., to wit: . . . . Nowhere in Republic Act No. 809 can we find anything that creates any relationship between the laborers of the planters and the centrals. Under the terms of said Act, the old practice of the centrals issuing the quedans to the respective PLANTERS for their share of the proceeds of milled sugar per their milling contracts has not been altered or modified. In other words, the language of the Act does not in any manner make the central the insurer on behalf of the plantation laborers that the latter's respective employers-planters would pay them their share. . . . . . . . Accordingly, the only obligation of the centrals (under Section 9 of the Act), like VICTORIAS, is to give to the respective planters, like PLANTERS herein, the planters' share in the proportion stipulated in the milling contract which would necessarily include the portion of 60% pertaining to the laborers. Once this has been done, the central is already out of the picture. . . . (Emphasis supplied)

In the case at bar, it is disputed that petitioner milling company has already distributed to its planters their respective shares. Consequently, petitioner has fulfilled its part and has nothing more to do with the subsequent distribution by the planters of the workers' share. Public respondent's contention that petitioner is an indispensable party is not supported by the applicable provisions of the Rules of Court. Under Section 7, Rule 3 thereof, indispensable parties are "parties in interest" without whom no final determination of the action can be obtained. In this case, petitioner cannot be deemed as a party in interest since there is no privity or legal obligation linking it to respondent union and/or its members-workers. In order to further justify petitioner's compulsory joinder as a party to this case, public respondent relies on petitioners' lack of certification from the Department of Labor of its delivery of the planters' shares as evidence of an alleged "conspicuous display of concerted conspiracy between the respondent sugar central (petitioner) and its adherent planters to deprive the workers or claimants of their shares in the increase in participation of the adherent planters." (Rollo, p. 56) The assertion is based on factual conclusions which have yet to be proved. And even assuming for the sake of argument that public respondent's conclusions are true, respondent union's and/or its workers' recourse lies with the Secretary of Labor, upon whom authority is vested under RA 809 to supervise the payment of the workers' shares. Any act or omission involving the legal right of the workers to said shares may be acted upon by the Labor Secretary either motu proprio or at the instance of the workers. In this case however, no such action has been brought by the subject workers, thereby raising the presumption that no actionable violation has been committed. Public respondent is concerned that the respondent planters may easily put up the defense that the workers' share is with petitioner milling company, giving rise to multiplicity of suits. The Solicitor General correctly postulates that the planters cannot legally set up the said defense since the payment of the workers' share is a direct obligation of the planters to their workers that cannot be shifted to the miller/central. Furthermore, the Solicitor General notes that there is nothing in RA 809 which suggests directly or indirectly that the obligation of the planter to pay the workers' share is dependent upon his receipt from the miller of his own share. If indeed the planter did not receive his just and due share from the miller, he is not without legal remedies to enforce his rights. The proper recourse against a reneging miller or central is for the planter to implead the former not as an indispensable party but as a third party defendant under Section 12, Rule 6 of the Rules of Court. In such case, herein petitioner milling company would be a proper third party dependent because it is directly liable to the planters (the original defendants) for all or part of the workers' claim. However, the planters involved in this controversy have not filed any complaint of such a nature against petitioner, thereby lending credence to the conclusion that petitioner has fulfilled its part vis-a-vis its obligation under RA 809. WHEREFORE, premises considered, the petition is GRANTED. Public respondent Reynaldo J. Gulmatico is hereby ORDERED to DISMISS RAB VI Case No. 06-07-10256-89 with respect to herein petitioner Hawaiian-Philippine Company and to PROCEED WITH DISPATCH in resolving the said case. SO ORDERED. G.R. No. L-56431 January 19, 1988 NATIONAL UNION OF BANK EMPLOYEES, In Its Own Right And In Behalf Of CBTC EMPLOYEES Affiliated With It; CBTC EMPLOYEES UNION, In Its Own Right And Interest And In Behalf Of All CBTC Rank And File Employees Including Its Members, BENJAMIN GABAT,

BIENVENIDO MORALEDA, ELICITA GAMBOA, FAUSTINO TEVES, SALVADOR LISING, and NESTOR DE LOS SANTOS, petitioners, vs. THE HON. JUDGE ALFREDO M. LAZARO, CFI-MANILA BRANCH XXXV; COMMERCLKL BANK AND TRUST COMPANY OF THE PHILIPPINES; BANK OF THE PHILIPPINE ISLANDS; AYALA CORPORATION; MANUEL J. MARQUEZ; ENRIQUE ZOBEL; ALBERTO VILLA-ABRILLE; VICENTE A. PACIS, JR.; and DEOGRACIAS A. FERNANDO, respondents.

SARMIENTO, J.: The sole issue in this special civil action for certiorari is whether or not the courts may take cognizance of claims for damages arising from a labor controversy. The antecedent facts are not disputed. On July 1, 1977, the Commercial Bank and Trust Company, a Philippine banking institution, entered into a collective bargaining agreement with the Commercial Bank and Trust Company Union, representing the rank and file of the bank with a membership of over one thousand employees, and an affiliated local of the National Union of Bank Employees, a national labor organization. The agreement was effective until June 30, 1980, with an automatic renewal clause until the parties execute a new agreement. On May 20, 1980, the union, together with the National Union of Bank Employees, submitted to the bank management proposals for the renegotiation of a new collective bargaining agreement. The following day, however, the bank suspended negotiations with the union. The bank had meanwhile entered into a merger with the Bank of the Philippine Islands, another Philippine banking institution, which assumed all assets and liabilities thereof. As a consequence, the union went to the then Court of First Instance of Manila, presided over by the respondent Judge, on a complaint for specific performance, damages, and preliminary injunction against the private respondents. Among other things, the complaint charged: xxx xxx xxx 51. In entering in to such arrangement for the termination of the CURRENT CBA, and the consequent destruction to existing rights, interests and benefits thereunder,CBTC is liable for wilful injury to the contract and property rights thereunder as provided in Article 2220 of the Civil Code of the Philippines; 52. By arranging for the termination of the CURRENT CBA in the manner above described, CBTC committed breach of said contract in bad faith, in that CBTC had taken undue advantage of its own employees, by concealing and hiding the negotiations towards an agreement on the sales and merger, when it was under a statutory duty to disclose and bargain on the effects thereof, according to law; xxx xxx xxx

54. In virtually suppressing the collective bargaining rights of plaintiffs under the law and as provided in the CURRENT CBA, through shadow bargaining, calculated delay, suspension of negotiations, concealment of bargainable issues and highhanded dictation, the CBTC and its defendant officials, as well as the BANK OF P.I. and its defendant officials, were all actuated by a dishonest purpose to secure an undue advantage; on the part of the CBTC it was to avoid fresh and additional contractual commitments, which would substantially lessen and diminish the profitability of the sale; and on the part of the BANKOF P.I., it was to avoid having to face higher compensation rates of CBTC employees in the course of integration and merger which could force the upgrading of the benefit package for the personnel of the merged operations, and thereby pushed personnel costs upwards; substantial outlays and costs thereby entailed were all deftly avoided and evaded, through the expedient of deliberate curtailment and suppression of contractual bargaining rights;
55. All the other defendants have actively cooperated with and abetted the CBTC and its defendant officers in negotiating, contriving and effecting the above arrangements for the attainment of its dishonest purpose, for abuse of its rights, and for taking undue advantage of its very own employees, through the secret sale and scheduled merger; the collective participation therein evinces machination, deceit, wanton attitude, bad faith, and oppressive intent, wilfully causing loss or injury to plaintiffs in a manner that is contrary to law, morals, good customs and public policy, in violation of Articles 21 and 28 of the Civil Code; 1

xxx xxx xxx Predictably, the private respondents moved for the dismissal of the case on the ground, essentially, of lack of jurisdiction of the court. On November 26, 1980, the respondent Judge issued an order, dismissing the case for lack of jurisdiction. According to the court, the complaint partook of an unfair labor practice dispute notwithstanding the incidental claim for damages, jurisdiction over which is vested in the labor arbiter. This order, as well as a subsequent one denying reconsideration, is now alleged as having been issued 'in excess of his jurisdiction amounting to a grave abuse of discretion." We sustain the dismissal of the case, which is, as correctly held by the respondent court, an unfair labor practice controversy within the original and exclusive jurisdiction of the labor arbiters and the exclusive appellate jurisdiction of the National Labor Relations Commission. The claim against the Bank of Philippine Islands the principal respondent according to the petitioners for allegedly inducing the Commercial Bank and Trust Company to violate the existing collective bargaining agreement in the process of re-negotiation, consists mainly of the civil aspect of the unfair labor practice charge referred to under Article 247 2 of the Labor Code. Under Article 248 3 of the Labor Code, it shall be an unfair labor practice: (a) To interfere with, restrain or coerce employees in the exercise of their right to selforganization; xxx xxx xxx (g) To violate the duty to bargain collectively as prescribed by this Code; xxx xxx xxx

The act complained of is broad enough to embrace either provision. Since it involves collective bargaining whether or not it involved an accompanying violation of the Civil Code it may rightly be categorized as an unfair labor practice. The civil implications thereof do not defeat its nature as a fundamental labor offense. 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. 4 The petitioners' claimed injury as a consequence of the tort allegedly committed by the private respondents, specifically, the Bank of the Philippine Islands, under Article 1314 of the Civil Code, 5 does not necessarily give the courts jurisdiction to try the damage suit. Jurisdiction is conferred by law 6 and not necessarily by the nature of the action. Civil controversies are not the exclusive domain of the courts. In the case at bar, Presidential Decree No. 442, as amended by Batas Blg. 70, has vested such a jurisdiction upon the labor arbiters, a jurisdiction the courts may not assume. Jurisdiction over unfair labor practice cases, moreover, belongs generally to the labor department of the government, never the courts. In Associated Labor Union v. Gomez, 7 we said: A rule buttressed upon statute and reason that is frequently reiterated in jurisprudence is that labor cases involving unfair practice are within the exclusive jurisdiction of the CIR. By now, this rule has ripened into dogma. It thus commands adherence, not breach. The fact that the Bank of the Philippine Islands is not a party to the collective bargaining agreement, for which it "cannot be sued for unfair labor practice at the time of the action," 8 cannot bestow on the respondent court the jurisdiction it does not have. In Cebu Portland Cement Co. v. Cement Workers' Union, 9 we held: xxx xxx xxx
There is no merit in the allegation. In the first place, it must be remembered that jurisdiction is conferred by law; it is not determined by the existence of an action in another tribunal. In other words, it is not filing of an unfair labor case in the Industrial Court that divests the court of first instance jurisdiction over actions properly belonging to the former. It is the existence of a controversy that properly falls within the exclusive jurisdiction of the Industrial Court and to which the civil action is linked or connected that removes said civil case from the competence of the regular courts. It is for this reason that civil actions found to be intertwined with or arising out of, a dispute exclusively cognizable by the Court of Industrial Relations were dismissed, even if the cases were commenced ahead of the unfair labor practice proceeding, and jurisdiction to restrain picketing was decreed to belong to the Court of Industrial Relations although no unfair labor practice case has as yet been instituted. For the court of first instance to lose authority to pass upon a case, therefore, it is enough that unfair labor practice case is in fact involved in or attached to the action, such fact of course being established by sufficient proof. 10

xxx xxx xxx

Furthermore, to hold that the alleged tortious act now attributed to the Bank of the Philippine Islands may be the subject of a separate suit is to sanction split jurisdiction long recognized to be an offense against the orderly administration of justice. As stated in Nolganza v. Apostol: 11 xxx xxx xxx As far back as Associated Labor Union vs. Gomez [L-25999, February 9, 1967, 19 SCRA 304] the exclusive jurisdiction of the Court of Industrial Relations in disputes of this character was upheld. "To hold otherwise," as succinctly stated by the ponente, Justice Sanchez, "is to sanction split jurisdiction-which is obnoxious to the orderly administration of justice." Then, in Progressive Labor Association vs. Atlas Consolidated Mining and Development Corporation [L-27585, May 29, 1970, 33 SCRA 349] decided three years later, Justice J.B.L. Reyes, speaking for the Court, stressed that to rule that such demand for damages is to be passed upon by the regular courts of justice, instead of leaving the matter to the Court of Industrial Relations, 'would be to sanction split jurisdiction, which is prejudicial to the orderly administration of justice'. Thereafter, this Court, in the cases of Leoquinco vs. Canada Dry Bottling Co. [L-28621, February 22, 1971, 37 SCRA 535] and Associated Labor Union v. Cruz ([L-28978, September 22, 1971, 41 SCRA 12], with the opinions coming from the same distinguished jurist, adhered to such a doctrine. The latest case in point, as noted at the outset, is the Goodrich Employees Association decision [L-30211, October 5, 1976, 73 SCRA 297]. xxx xxx xxx The petitioners' reliance upon Calderon v. Court of Appeals 12 is not well-taken. Calderon has since lost its persuasive force, beginning with our ruling in PEPSI-COLA BOTTLING COMPANY v. MARTINEZ, 13 EBON v. DE GUZMAN, 14 and AGUSAN DEL NORTE ELECTRIC COOP., INC. v. SUAREZ, 15 and following the promulgation of Presidential Decree No. 1691, restoring the jurisdiction to decide money claims unto the labor arbiters. Neither does the fact that the Bank of the Philippine Islands "was not an employer at the time the act was committed' abate a recourse to the labor arbiter. It should be noted indeed that the Bank of the Philippine Islands assumed "all the assets and liabilities" 16 of the Commercial Bank and Trust Company. Moreover, under the Corporation Code: xxx xxx xxx
5. The surviving or consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the constituent corporations in the same manner as if such surviving or consolidated corporation had itself incurred such liabilities or obligations; and any claim, action or proceeding pending by or against any of such constituent corporations may be prosecuted by or against the surviving or consolidated corporation, as the case may be. Neither the rights of creditors nor any lien upon the property of any of such constituent corporations shall be impaired by such merger or consolidation. 17

xxx xxx xxx In sum, the public respondent has not acted with grave abuse of discretion. WHEREFORE, the petition is DISMISSED. No costs.

G.R. No. L-68544 October 27, 1986 LORENZO C. DY, ZOSIMO DY, SR., WILLIAM IBERO, RICARDO GARCIA AND RURAL BANK OF AYUNGON, INC., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND EXECUTIVE LABOR ARBITER ALBERTO L. DALMACION, AND CARLITO H. VAILOCES, respondents. Marcelino C. Maximo and Ramon Barrameda for petitioners. Carlito H. Vailoces for private respondent.

NARVASA, J.: Petitioners assail in this Court the resolution of the National Labor Relations Commission (NLRC) dismissing their appeal from the decision of 1 the Executive Labor Arbiter in Cebu City which found private respondent to have been illegally dismissed by them.

Said private respondent, Carlito H. Vailoces, was the manager of the Rural Bank of Ayungon (Negros Oriental), a banking institution duly organized under Philippine laws. He was also a director and stockholder of the bank. On June 4, 1983, a special stockholders' meeting was called for the purpose of electing the members of the bank's Board of Directors. Immediately after the election the new Board proceeded to elect the bank's executive officers.
Pursuant to Article IV of the bank's by-laws, providing for the election by the entire membership of the Board of the executive officers of the bank, i.e., the president, vice-president, secretary, cashier and bank manager, in that board meeting of June 4, 1983, petitioners Lorenzo Dy, William Ibero and Ricardo Garcia were elected president, vice-president and corporate secretary, respectively. Vailoces was not re-elected 3 as bank manager, Because of this development, the Board, on July 2, 1983, passed Resolution No. 5, series of 1983, relieving him as bank manager.
2

On August 3, 1983, Vailoces filed a complaint for illegal dismissal and damages with the Ministry of Labor and Employment against Lorenzo Dy and Zosimo Dy, Sr. The complaint was amended on September 22, 1983 to include additional respondents-William Ibero, Ricardo Garcia and the Rural Bank of Ayungon, and additional causes of action for underpayment of salary and non-payment of living allowance.
In his complaint and position paper, Vailoces asserted that Lorenzo Dy, after obtaining control of the majority stock of the bank by buying the shares of Marcelino Maximo, called an illegal stockholders' meeting and elected a Board of Directors controlled by him; that after its illegal constitution, said Board convened on July 2, 1983 and passed a resolution dismissing him as manager, without giving him the opportunity to be heard first; that his dismissal was motivated by Lorenzo Dy's desire to take over the management and control of the bank, not to mention the fact that he (Dy) harbored ill feelings against Vailoces on account of the latter's filing of a complaint for violation of the corporation code 4 against him and another complaint for compulsory recognition of natural child with damages against Zosimo Dy, Sr. In their answer, Lorenzo Dy, et al. denied the charge of illegal dismissal. They pointed out that Vailoces' position was an elective one, and he was not re-elected as bank manager because of the Board's loss of confidence in him brought about by his absenteeism and negligence in the performance of his duties; and that the Board's action was taken to protect the interest of the bank and was "designed as an internal 5 control measure to secure the check and balance of authority within the organization."

The Executive Labor Arbiter found that Vailoces was: (a) Illegally dismissed, first not because of absenteeism and negligence, but of the resentment of petitioners against Vailoces which arose from the latter's filing of the

cases for recognition as natural child against Zosimo Dy, Sr. and for violation of the corporation code against Lorenzo Dy; and second, because he was not afforded the due process of law when he was dismissed during the Board meeting of July 2, 1983 the validity of which is seriously doubted; (b) Not paid his cost of living allowance; and (c) Underpaid with only P500 monthly salary, and consequently ordered the individual petitioners Lorenzo Dy and Zosimo Dy-but not the Bank itself, to: (a) Pay Vailoces jointly and severally, the sum of P111,480.60 representing his salary differentials, cost of living allowances, back wages from date of dismissal up to the date of the decision (November 29, 1983), moral and exemplary damages, and attorney's fees; and (b) Reinstate Vailoces to his position as bank manager, with additional backwages from December 1, 1983 on the adjusted salary rate of P620.00 r month until he is actually reinstated, plus cost-of-living allowance. 6
Lorenzo Dy, et al. appealed to the NLRC, assigning error to the decision of the Labor Arbiter on various grounds, among them: that Vailoces was not entitled to notice of the Board meeting of July 2, 1983 which decreed his relief because he was no longer a member of the Board on said date; that he nonetheless had the opportunity to refute the charges against him and seek a formal investigation because he received a copy of the minutes of said meeting while he was still the bank manager (his removal was to take effect only on August 15, 1983), instead of which he simply abandoned the work he was supposed to perform up to the effective date of his relief; and that the matter of his relief was 7 within the adjudicatory powers of the Securities and Exchange Commission.

The NLRC, however bypassed the issues raised and simply dismissed the appeal for having been filed late. It ruled that: The record shows that a copy of the decision sent by registered mail to respondents' counsel, Atty. Edmund Tubio, was received on January 11, 1984 by a certain Atty. Ramon Elesteria, a law office partner of Atty. Tubio. ... This fact is corroborated by the certification issued by the Postmaster of Dumaguete City... Moreover, the same is admitted by no less than Atty. Ramon Elesteria himself in his affidavit. It further appears in the record that on January 30, 1984 a certain Atty. Francisco Zerna, a new lawyer engaged by the respondents for the appeal, received a copy of the decision in this case as certified by Julia Pepito in an affidavit subscribed before the Senior Labor Arbitration Specialist. The appeal was filed only on February 17, 1984. Considering that it was a law partner of the respondents' counsel who received on January 11, 1984 the registered letter, his actual receipt thereof completes the service. ... And even assuming that such was not a valid service, since the respondents received another copy of the decision on January 30, 1984, through their newly engaged counsel, it is therefore our opinion that the appeal herein was filed out of time, whether the time is reckoned from the receipt by Atty. Elesteria or Atty. Zerna, and, for this reason, we can not give due course to his appeal. 8 In this Court, petitioners assail said ruling as an arbitrary deprivation of their right to appeal through unreasonable adherence to procedural technicality. They argue that they should not be bound by the service of the Labor Arbiter's decision by Atty. Elesteria on January 11, 1984 or by Atty. Zerna on January 30, 1984, because neither lawyer was authorized to accept service for their counsel Atty.

Tubio, and that their 10 day period of appeal should be counted from February 10, 1984 when they actually received the copy of the decision from Atty. Zerna. On the merits, they assert that the Arbiter's finding of illegal dismissal was without evidentiary basis, that it was error to impose the obligation to pay damages upon the individual petitioners, instead of the Rural Bank of Ayungon, which was Vailoces' real employer, and that the damages awarded are exorbitant and oppressive. While the comment of Vailoces traverses the averments of the petition, that of the Solicitor General on behalf of public respondents perceives the matter as an intracorporate controversy of the class described in Section 5, par. (c), of Presidential Decree No. 902-A, namely: (c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.
explicitly declared to be within the original and exclusive jurisdiction of the Securities and Exchange Commission, and recommends that the 9 questioned resolution of the NLRC as well as the decision of the Labor Arbiter be set aside as null and void.

In truth, the issue of jurisdiction is decisive and renders unnecessary consideration of the other questions raised.
There is no dispute that the position from which private respondent Vailoces claims to have been illegally dismissed is an elective corporate office. He himself acquired that position through election by the bank's Board of Directors at the organizational meeting of November 17, 10 1979. He lost that position because the Board that was elected in the special stockholders' meeting of June 4, 1983 did not re-elect him. And when Vailoces, in his position paper submitted to the Labor Arbiter, impugned said stockholders' meeting as illegally convoked and the 11 Board of Directors thereby elected as illegally constituted, he made it clear that at the heart of the matter was the validity of the directors' meeting of June 4, 1983 which, by not re-electing him to the position of manager, in effect caused termination of his services. The case thus falls squarely within the purview of Section 5, par. (c), No. 902-A just cited. In PSBA vs. Leao, similar controversy, ruled that the Securities and Exchange Commission, not the NLRC, has jurisdiction:
12

this Court, confronted with a

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 reelected 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. The correctness of d 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 intracorporate 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: ... 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 of 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. 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 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.
Respondent Vailoces' invocation of estoppel as against petitioners with respect to the issue of jurisdiction is unavailing. In the first place, it is not quite correct to state that petitioners did not raise the point in the lower tribunal. Although rather off handedly, in their appeal to the NLRC they called attention to the Labor Arbiter's lack of jurisdiction to rule on the validity of the meeting of July 2, 1983, but the dismissal of the appeal for alleged tardiness effectively precluded consideration of that or any other question raised in the appeal. More importantly, 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 litigation before the Labor Arbiter. It is well settled that the decision of a tribunal not vested with appropriate jurisdiction is 13 null and void. Thus, in Calimlim vs. Ramirez, this Court held:

A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the subject matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstances involved in Sibonghanoy which justified the departure from the accepted concept of nonwaivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling

in Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing altogether the time-honored principle that the issue of jurisdiction is not lost by waiver or by estoppel. xxx xxx xxx It is neither fair nor legal to bind a party by the result of a suit or proceeding which was taken cognizance of in a court which lacks jurisdiction over the same irrespective of the attendant circumstances. The equitable defense of estoppel requires knowledge or consciousness of the facts upon which it is based . The same thing is true with estoppel by conduct which may be asserted only when it is shown, among others, that the representation must have been made with knowledge of the facts and that the party to whom it was made is ignorant of the truth of the matter (De Castro vs. Gineta, 27 SCRA 623). The filing of an action or suit in a court that does not possess jurisdiction to entertain the same may not be presumed to be deliberate and intended to secure a ruling which could later be annulled if not favorable to the party who filed such suit or proceeding in a court that lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of estoppel. It could have been the result of an honest mistake or of divergent interpretation of doubtful legal provisions. If any fault is to be imputed to a party taking such course of action, part of the blame should be placed on the court which shall entertain the suit, thereby lulling the parties into believing that they pursued their remedies in the correct forum. Under the rules, it is the duty of the court to dismiss an action 'whenever it appears that court has no jurisdiction over the subject matter.' (Section 2, Rule 9, Rules of Court) Should the Court render a judgment without jurisdiction, such judgment may be impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the finality of the same (Art. 1144, par. 3, Civil Code). To be sure, petitioners failed to raise the issue of jurisdiction in their petition before this Court. But this, too, is no hindrance to the Court's considering said issue.
The failure of the appellees to invoke anew the aforementioned solid ground of want of jurisdiction of the lower court in this appeal should not prevent this Tribunal to take up that issue as the lack of jurisdiction of the lower court is apparent upon the face of the record and it is fundamental that a court of justice could only validly act upon a cause of action or subject matter of a case over which it has jurisdiction and said jurisdiction is one conferred only by law; and cannot be acquired through, or waived by, any act or omission of the parties (Lagman vs. 14 CA, 44 SCRA 234 [1972]); hence may be considered by this court motu proprio (Gov't. vs. American Surety Co., 11 Phil. 203 [1908])...

These considerations make inevitable the conclusion that the judgment of the Labor Arbiter and the resolution of the NLRC are void for lack of cause of jurisdiction, and this Court must set matters aright in the exercise of its judicial power. It is of no moment that Vailoces, in his amended complaint, seeks other relief which would seemingly fan 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. WHEREFORE, the questioned decision of the Labor Arbiter and the Resolution of the NLRC dismissing petitioners' appeal from said decision are hereby set aside because rendered without jurisdiction. The amended complaint for illegal dismissal, etc., basis of said decision and Resolution,

is ordered dismissed, without prejudice to private respondent's seeking recourse in the appropriate forum. SO ORDERED. G.R. No. 118088 November 23, 1995 MAINLAND CONSTRUCTION, CO., INC., and/or LUCITA LU CARABUENA, ROBERT L. CARABUENA, ELLEN LU CARABUENA, and MARTIN LU, petitioners, vs. MILA MOVILLA, ERNESTO MOVILLA, JR., MILA JUDITH C. MOVILLA, JUDE BRIX C. MOVILLA, JONARD ELLERY C. MOVILLA, AND MAILA JONAH M. QUIMBO, surviving heirs of ERNESTO MOVILLA, and THE HONORABLE COMMISSIONER of the NATIONAL LABOR RELATIONS COMMISSION-5TH DIVISION,respondents.

HERMOSISIMA, JR., J.: Petitioners urge this Court to set aside the Decision of the National Labor Relations Commission (NLRC), dated May 30, 1994, in NLRC-CA No. M-000949-92 for having been rendered with grave abuse of discretion amounting to lack of jurisdiction. This reversed the decision of the Labor Arbiter in case No. RAB-11-10-99883-91. Petitioners' motion for reconsideration of the NLRC decision was denied in a Resolution, dated August 31, 1994. Mainland Construction Co., Inc. is a domestic corporation, duly organized and existing under Philippine laws, having been issued a certificate of registration by the Securities and Exchange Commission (SEC) on July 26, 1977, under Registry Number 74691. Its principal line of business is the general construction of roads and bridges and the operation of a service shop for the maintenance of equipment. Respondents on the other hand, are the surviving heirs of complainant, Ernesto Movilla, who died during the pendency of the action with the Labor Arbiter. Records show that Ernesto Movilla, who was a Certified Public Accountant during his lifetime, was hired as such by Mainland in 1977. Thereafter, he was promoted to the position of Administrative Officer with a monthly salary of P4,700.00. 1 Ernesto Movilla, recorded as receiving a fixed salary of P4,700.00 a month, was registered with the Social Security System (SSS) as an employee of petitioner Corporation. His contributions to the SSS, Medicare and Employees Compensation Commission (ECC) were deducted from his monthly earnings by his said employer. 2 On April 12, 1987, during petitioner corporation's annual meeting of stockholders, the following were elected members of the Board of Directors, viz.: Robert L. Carabuena, Ellen L. Carabuena, Lucita Lu Carabuena, Martin G. Lu and Ernesto L. Movilla. On the same day, an organizational meeting was held and the Board of Directors elected Ernesto Movilla as Administrative Manager. 3 He occupied the said position up to the time of his death.

On April 2, 1991, the Department of Labor and Employment (DOLE) conducted a routine inspection on petitioner corporation and found that it committed such irregularities in the conduct of its business as: 1. Underpayment of wages under R.A. 6727 and RTWPB-XI-01; 2. Non-implementation of Wage Order No. RTWPB-XI-02; 3. Unpaid wages for 1989 and 1990; 4. Non-payment of holiday pay and service incentive leave pay; and
5. Unpaid 13th month pay (remaining balance for 1990). 4

On the basis of this finding, petitioner corporation was ordered by DOLE to pay to its thirteen employees, which included Movilla, the total amount of P309,435.89, representing their salaries, holiday pay, service incentive leave pay differentials, unpaid wages and 13th month pay. All the employees listed in the DOLE's order were paid by petitioner corporation, except Ernesto Movilla. On October 8, 1991, Ernesto Movilla filed a case against petitioner corporation and/or Lucita, Robert, and Ellen, all surnamed Carabuena, for unpaid wages, separation pay and attorney's fees, with the Department of Labor and Employment, Regional Arbitration, Branch XI, Davao City. On February 29, 1992, Ernesto Movilla died while the case was being tried by the Labor Arbiter and was promptly substituted by his heirs, private respondents herein, with the consent of the Labor Arbiter. The Labor Arbiter rendered judgment on June 26, 1992, dismissing the complaint on the ground of lack of jurisdiction. Specifically, the Labor Arbiter made the following ratiocination:
It is clear that in the case at bar, the controversy presented by complainant is intracorporate in nature and is within the jurisdiction of the Securities and Exchange Commission, pursuant to P.D. 902-A (Phil. School of Business Administration, et al. v. Leano, G.R. No. L-58468, February 24, 1984; Dy et al. v. NLRC, et al., G.R. No. L-68544, October 27, 1986). What Movilla is claiming against respondents are his alleged unpaid salaries and separation pay as Administrative Manager of the corporation for which position he was appointed by the Board of Directors. His claims therefore fall under the jurisdiction of the Securities and Exchange Commission because this 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. (Fortune Cement Corporation v. NLRC, et al., G.R. No. 79762, January 24, 1991). 5

Aggrieved by this decision, respondents appealed to the National Labor Relations Commission (NLRC). The NLRC ruled that the issue in the case was one which involved a labor dispute between an employee and petitioner corporation and, thus, the NLRC had jurisdiction to resolve the case. The dispositive portion of the NLRC decision reads: WHEREFORE, the assailed decision is Reversed and Set Aside. Respondents are ordered to pay the heirs of complainant the following:

1. Unpaid salaries from January 1989 to September 1991 in the sum of P155,100.00; 2. Separation pay in the sum of P65,800.00; 3. Moral damages in the sum of P10,000.00; 4. Indemnity in the sum of P3,000.00; and,
5. Attorney's fees equivalent to 10% of the total award. 6

The pivotal issue in this case is which of the two agencies of the government the NLRC or the SEC has jurisdiction over the controversy. As we stated earlier, it is of course the contention of petitioners that the NLRC committed grave abuse of discretion when it nullified the decision of the Labor Arbiter which dismissed the complaint of Movilla for unpaid wages, separation pay and attorney's fees on the ground of lack of jurisdiction. Petitioners take the position that, since Ernesto Movilla was a corporate officer, the controversy as to his compensation is within the jurisdiction of the SEC as mandated by P.D. 902-A and not with the NLRC. We find for the respondents, it appearing that petitioners' contention is bereft of merit. 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; b) between the corporation, partnership or association and its stockholders, partners, members or officers; c) between the corporation, partnership or association and the State as far as its franchise, permit or license to operate is concerned; and d) among the stockholders, partners or associates themselves. 7 The fact that the parties involved in the controversy are all stockholders or that the parties involved are the stockholders and the corporation does not necessarily place the dispute within the ambit of the jurisdiction of SEC. The better policy to be followed in determining jurisdiction over a case should be to consider concurrent factors such as the status or relationship of the parties or the nature of the question that is the subject of their controversy. 8 In the absence of any one of these factors, the SEC will not have jurisdiction. Furthermore, it does not necessarily follow that every conflict between the corporation and its stockholders would involve such corporate matters as only the SEC can resolve in the exercise of its adjudicatory or quasi-judicial powers. 9 In the case at bench, the claim for unpaid wages and separation pay filed by the complainant against petitioner corporation involves a labor dispute. It does not involve an intra-corporate matter, even when it is between a stockholder and a corporation. It relates to an employer-employee relationship which is distinct from the corporate relationship of one with the other. Moreover, there was no showing of any change in the duties being performed by complainant as an Administrative Officer and as an Administrative Manager after his election by the Board of Directors. What comes to the fore is whether there was a change in the nature of his functions and not merely the nomenclature or title given to his job. Indeed, Ernesto Movilla worked as an administrative officer of the company for several years and was given a fixed salary every month. To further sustain this assertion Movilla also submitted a joint affidavit executed by Juanito S. Malubay and Delia S. Luciano, Project Engineer and Personnel-InCharge, respectively, of petitioner corporation, attesting that they personally knew Movilla and that he was employed in the company. A Premium Certification issued by an authorized representative of petitioners was also presented to show his actual monthly earnings as well as his monthly

contributions to the SSS, Medicare and ECC. 10 Movilla's registration in the SSS by petitioner corporation added strength to the conclusion that he was petitioner corporation's employee as coverage by the said law is predicated on the existence of an employer-employee relationship. 11 Furthermore, petitioner corporation failed to present evidence which showed that, after his election as Administrative Manager, he was excluded from the coverage of the SSS, Medicare and ECC. He also presented, appearing to be relevant to the issue, the result of the investigation conducted by DOLE which found that petitioner corporation has transgressed several labor standard laws against its employees. As correctly ruled by the NLRC:
The claims for unpaid salaries/monetary benefits and separation pay, are not a corporate conflict as respondents presented them to be. If complainant is not an employee, respondent should have contested the DOLE inspection report, What they did was to exclude complainant from the order of payment . . . and worse, he was not both given responsibilities and paid his salaries for the succeeding months . . . . This is a clear case of constructive dismissal without due process . . . 12

The existence of an employer-employee relationship is a factual question and public respondent's findings are accorded great weight and respect as the same are supported by substantial evidence. 13 Hence, we uphold the conclusion of public respondent that Ernesto Movilla was an employee of petitioner corporation. It is pertinent to note that petitioner corporation is not prohibited from hiring its corporate officers to perform services under a circumstance which will make him an employee. 14 Moreover, although a director of a corporation is not, merely by virtue of his position, its employee, said director may act as an employee or accept duties that make him also an employee. 15 Since Ernesto Movilla's complaint involves a labor dispute, it is the NLRC, under Article 217 of the Labor Code of the Philippines, which has jurisdiction over the case at bench. WHEREFORE, the petition is DISMISSED for lack of showing of any grave abuse of discretion on the part of public respondent NLRC. The assailed decision of public respondent is thus AFFIRMED. SO ORDERED.

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

PRUDENTIAL BANK and TRUST COMPANY, petitioner, vs. CLARITA T. REYES, respondent. DECISION
GONZAGA-REYES, J.:

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 petitioners motion for re consideration 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 respondents 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 attorneys 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. Attorneys 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 Arbiters 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 Reyess 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 Committees 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 complainants 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 complainants 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 Banks auditors. Atty. Pablo Magno, the Banks legal counsel, advised complainant to send the checks for collection despite the lapse of fifteen (15) months. g) Complainant, however, deliberately withheld Atty. Magnos 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 Committees 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 Banks 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 Banks legal counsel to send the checks for collection. These findings have given rise to the Banks 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 respondents officers, complainant is liable to pay moral and exemplary damages and attorneys 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 attorneys fee equivalent to ten (10%) percent of the total award.

SO ORDERED.[8] Hence, the Banks 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 RESPONDENTS MISCONDUCT JUSTIFYING THE BANKS 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 ARBITERS 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. 902A. More specifically, petitioner contends that complainant is a corporate officer, an elective position under the corporate by-laws and her non-election is an intracorporate controversy cognizable by the SEC invoking lengthily a number of this Courts 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, Baaga 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 Cour t 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 respondents tenure was subject to the discretion of the Bo ard 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 banks 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, Jovens 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 petitioners dismissal. Except for Jovens bare assertion to withhold the dollar checks per petitioners instruction, respondent Bank failed to adduce convincing evidence to prove bad faith and malice. It bears emphasizing that respondent Banks witnesses merely corroborate Jovens 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 employees dismissal, it must be substantial and not arbitrary, and must be founded on clearly established facts sufficient to warrant the employees separation from work (Labor vs. NLRC, 248 SCRA 183). SECOND. Respondent Banks 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 banks witnesses. One thing was clearly established: that the legality of complainants dismissal based on the first ground stated in respondents 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 banks 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 respondents other witnesses this Office finds the evidence still wanting in proof of complainants 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 banks 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. Jovens 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, complainants driver, stated in his affidavit, thus: 1. Sometime on November 15, 1989 at about 7:00 oclock 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 complainants 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 banks 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 auditors 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 attorneys 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 arbiters 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 respondents 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 attorneys 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. SO ORDERED.
G.R. No. L-58877 March 15, 1982 PEPSI-COLA BOTTLING COMPANY, COSME DE ABOITIZ, and ALBERTO M. DACUYCUY, petitioners, vs. HON. JUDGE ANTONIO M. MARTINEZ, in his official capacity, and ABRAHAM TUMALA, JR., respondents.

ESCOLIN, J.: This petition for certiorari, prohibition and mandamus raises anew the legal question often brought to this Court: Which tribunal has exclusive jurisdiction over an action filed by an employee against his employer for recovery of unpaid salaries, separation benefits and damages the court of general jurisdiction or the Labor Arbiter of the National Labor Relations Commission [NLRC]? The facts that gave rise to this petition are as follows: On September 19, 1980, respondent Abraham Tumala, Jr. filed a complaint in the Court of First Instance of Davao, docketed as Civil Case No. 13494, against petitioners Pepsi-Cola Bottling Co., Inc., its president Cosme de Aboitiz and other company officers. Under the first cause of action, the complaint averred inter alia that Tumala was a salesman of the company in Davao City from 1977 up to August 21, 1980; that in the annual "Sumakwel" contest conducted by the company in 1979, Tumala was declared winner of the "Lapu-Lapu Award" for his performance as top salesman of the year, an award which entitled him to a prize of a house and lot; and that petitioners, despite demands, have unjustly refused to deliver said prize Under the second cause of action, it was alleged that on August 21, 1980, petitioners, "in a manner oppressive to labor" and "without prior clearance from the Ministry of Labor", "arbitrarily and ilegally" terminated his employment. He prayed that petitioners be ordered, jointly and severally, to deliver his prize of house and lot or its cash equivalent, and to pay his back salaries and separation benefits, plus moral and exemplary damages, attorney's fees and litigation expenses. He did not ask for reinstatement. Petitioners moved to dismiss the complaint on grounds of lack of jurisdiction and cause of action. Petitioners further alleged that Tumala was not entitled to the "Sumakwel" prize for having misled the company into declaring him top salesman for 1979 through various deceitful and fraudulent manipulations and machinations in the performance of his duties as salesman and depot in-charge

of the bottling company in Davao City, which manipulations consisted of "unremitted cash collections, fictitious collections of trade accounts, fictitious loaned empties, fictitious product deals, uncollected loaned empties, advance sales confirmed as fictitious, and route shortages which resulted to the damage and prejudice of the bottling company in the amount of P381,851.76." The alleged commission of these fraudulent acts was also advanced by petitioners to justify Tumala's dismissal. The court below, sustaining its jurisdiction over the case, denied the motion for reconsideration. Hence the present recourse. We rule that the Labor Arbiter has exclusive jurisdiction over the case. Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which organizes the court; and it is given only by law. 1 Jurisdiction is never presumed; it must be conferred by law in words that do not admit of doubt. 2 Since the jurisdiction of courts and judicial tribunals is derived exclusively from the statutes of the forum, the issue efore Us should be resolved on the basis of the law or statute now in force. We find that law in Presidential Decree 1691 which took effect on May 1, 1980, Section 3 of which reads as follows: SEC. 3. Article 217, 222 and 262 of Book V of the Labor Code are hereby amended to read as follows: Article 217. Jurisdiction of Labor Arbiters and the Commission. The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Unresolved issues in collective bargaining, including those that involve waged 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. All other claims arising from employer-employee relations, unless expressly excluded by this Code. Under paragraphs 3 and 5 of the above Presidential Decree, the case is exclusively cognizable by the Labor Arbiters of the National Labor Relations Commission. It is to be noted that P.D. 1691 is an exact reproduction of Article 217 of the Labor Code (P.D. 442), which took effect on May 1, 1974. In Garcia vs. Martinez 3, an action filed on August 2, 1976 in the Court of First Instance of Davao by a dismissed employee against his employer for actual, moral and exemplary damages, We held that under Article 217 of the Labor Code, the law then in force, the

case was within the exclusive jurisdiction of the Labor Arbiters and the National Labor Relations Commission [NLRC]. This Court, per Justice Aquino, rational this holding thus: The provisions of paragraph 3 and 5 of Article 217 are broad and comprehensive enough to cover Velasco's [employee's] claim for damages allegedly arising from his unjustified dismissal by Garcia [employer]. His claim was a consequence of the termination of their employer-employee relations [Compare with Ruby Industrial Corporation vs. Court of First Instance of Manila, L- 38893, August 31, 1977, 78 SCRA 499]. Article 217 of the Labor Code words amended by P.D. 1367, which was promulgated on May 1, 1978, the full text of which is quoted as follows: SECTION 1. Paragraph [a] of Art, 217 of the Labor Code as amended is hereby further amended to read as follows: [a] The Labor Arbiters shall have exclusive jurisdiction hear and decide the following cases involving all workers, whether agricultural or non-agricultural: 1] Unfair labor practice cases; 2] Unresolved issues in collective bargaining, including those which involve wages, hours of work, and other terms conditions of employment; and 3] All other cases arising from employer-employee relations duly indorsed by the Regional Directors in accordance with the provisions of this Code. Provided, that the Regional Directors shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages. It will be noted that paragraphs 3 and 5 of Article 217 were deleted from the text of the above decree and a new provision incorporated therein, to wit: "Provided that the Regional Directors shall not indorse and Labor Arbiters shall not en certain claims for moral or other forms of damages." This amendatory act thus divested the Labor Arbiters of their competence to pass upon claims for damages by employees against their employers. However, on May 1, 1980, Article 217, as amended by P.D. 1367, was amended anew by P.D. 1691. This last decree, which is a verbatim reproduction of the original test of Article 217 of the Labor Code, restored to the Labor Arbiters of the NLRC exclusive jurisdiction over claims, money or otherwise, arising from employer-employee relations, except those expressly excluded therefrom. In sustaining its jurisdiction over the case at bar, the respondent court relied on Calderon vs. Court of Appeals 4 , where We ruled that an employee's action for unpaid salaries, alowances and other reimbursable expenses and damages was beyond the periphery of the jurisdictional competence of the Labor Arbiters. Our ruling in Calderon, however, no longer applaies to this case because P.D. 1367, upon which said decision was based, had already been superceded by P.D. 1691. As heretofore stated, P.D. 1691 restored to the Labor Arbiters their exlcusive jurisdiction over said classes of claims.

Respondent Tumala maintains that his action for delivery of the house and lot, his prize as top salesman of the company for 1979, is a civil controversy triable exclusively by the court of the general jurisdiction. We do not share this view. The claim for said prize unquestionably arose from an employer-employee relation and, therefore, falls within the coverage of par. 5 of P.D. 1691, which speaks of "all claims arising from employer-employee relations, unless expressly excluded by this Code." Indeed, Tumala would not have qualitfied for the content, much less won the prize, if he was not an employee of the company at the time of the holding of the contest. Besides, the cause advanced by petitioners to justify their refusal to deliver the prizethe alleged fraudulent manipulations committed by Tumala in connection with his duties as salesman of the company involves an inquiry into his actuations as an employee. Besides, to hold that Tumala's claim for the prize should be passed upon by the regular court of justice, independently and separately from his claim for back salaries, retirement benefits and damages, would be to sanction split juridiction and multiplicity of suits which are prejudicial to the orderly administration of justice. One last point. Petitioners content that Tumala has no cause of action to as for back salaries and damages because his dimissal was authorized by the Regional Director of the MInistry of Labor. This question calls for the presentaiton of evidence and the same may well be entilated before the labor Arbiter who has jurisdiction over the case. Besides, the issue raised is not for Us to determine in this certiorari proceeding. The extraordinary remedy of certiorari proceeding. The extraordinary remedy of certiorari offers only a limited form of review and its principal function is to keep an inferior tribunal within its jurisdiction. 5 WHEREFORE, the petition is granted, and respondent judge is hereby directed to dismiss Civil Case No. 13494, without prejudice to the right of respondent Tumala to refile the same with the Labor Arbiter. No costs. SO ORDERED. G.R. No. 80774 May 31, 1988 SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and RUSTICO VEGA, respondents. Siguion Reyna, Montecillo & Ongsiako Law Offices for petitioner. The Solicitor General for public respondent.

FELICIANO, J.: 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 Complaint2 (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 theoriginal 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 nonpayment 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). 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 employeremployee 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.
<re|| an1w>

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. Pao, 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. Pao, 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. SO ORDERED.

[G.R. No. 157010. June 21, 2005]

PHILIPPINE NATIONAL BANK, petitioner, CABANSAG, respondent. DECISION

PANGANIBAN, J.:

vs.

FLORENCE

O.

The Court reiterates the basic policy that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations. Our labor statutes may not be rendered ineffective by laws or judgments promulgated, or stipulations agreed upon, in a foreign country. The Case Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, seeking to reverse and set aside the July 16, 2002 Decision[2] and the January 29, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 68403. The assailed Decision dismissed the CA Petition

(filed by herein petitioner), which had sought to reverse the National Labor Relations Commission (NLRC)s June 29, 2001 Resolution,[4] affirming Labor Arbiter Joel S. Lustrias January 18, 2000 Decision.[5] The assailed CA Resolution denied herein petitioners Motion for Reconsideration. The Facts The facts are narrated by the Court of Appeals as follows: In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a tourist. She applied for employment, with the Singapore Branch of the Philippine National Bank, a private banking corporation organized and existing under the laws of the Philippines, with principal offices at the PNB Financial Center, Roxas Boulevard, Manila. At the time, the Singapore PNB Branch was under the helm of Ruben C. Tobias, a lawyer, as General Manager, with the rank of Vice-President of the Bank. At the time, too, the Branch Office had two (2) types of employees: (a) expatriates or the regular employees, hired in Manila and assigned abroad including Singapore, and (b) locally (direct) hired. She applied for employment as Branch Credit Officer, at a total monthly package of $SG4,500.00, effective upon assumption of duties after approval. Ruben C. Tobias found her eminently qualified and wrote on October 26, 1998, a letter to the President of the Bank in Manila, recommending the appointment of Florence O. Cabansag, for the position. xxx xxx xxx

The President of the Bank was impressed with the credentials of Florence O. Cabansag that he approved the recommendation of Ruben C. Tobias. She then filed an Application, with the Ministry of Manpower of the Government of Singapore, for the issuance of an Employment Pass as an employee of the Singapore PNB Branch. Her application was approved for a period of two (2) years. On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her a temporary appointment, as Credit Officer, at a basic salary of Singapore Dollars 4,500.00, a month and, upon her successful completion of her probation to be determined solely, by the Bank, she may be extended at the discretion of the Bank, a permanent appointment and that her temporary appointment was subject to the following terms and conditions:

1. You will be on probation for a period of three (3) consecutive months from the date of your assumption of duty. 2. You will observe the Banks rules and regulations and those that may be adopted from time to time. 3. You will keep in strictest confidence all matters related to transactions between the Bank and its clients. 4. You will devote your full time during business hours in promoting the business and interest of the Bank. 5. You will not, without prior written consent of the Bank, be employed in anyway for any purpose whatsoever outside business hours by any person, firm or company. 6. Termination of your employment with the Bank may be made by either party after notice of one (1) day in writing during probation, one month notice upon confirmation or the equivalent of one (1) days or months salary in lieu of notice. Florence O. Cabansag accepted the position and assumed office. In the meantime, the Philippine Embassy in Singapore processed the employment contract of Florence O. Cabansag and, on March 8, 1999, she was issued by the Philippine Overseas Employment Administration, an Overseas Employment Certificate, certifying that she was a bona fide contract worker for Singapore. xxx xxx xxx

Barely three (3) months in office, Florence O. Cabansag submitted to Ruben C. Tobias, on March 9, 1999, her initial Performance Report. Ruben C. Tobias was so impressed with the Report that he made a notation and, on said Report: GOOD WORK. However, in the evening of April 14, 1999, while Florence O. Cabansag was in the flat, which she and Cecilia Aquino, the Assistant Vice-President and Deputy General Manager of the Branch and Rosanna Sarmiento, the Chief Dealer of the said Branch, rented, she was told by the two (2) that Ruben C. Tobias has asked them to tell Florence O. Cabansag to resign from her job. Florence O. Cabansag was perplexed at the sudden turn of events and the runabout way Ruben C. Tobias procured her resignation from the Bank. The next day, Florence O. Cabansag talked to Ruben C. Tobias and inquired if what Cecilia Aquino and Rosanna Sarmiento had told her was true. Ruben C. Tobias confirmed the veracity of the information, with the explanation that her resignation was imperative as a cost-cutting measure of the Bank. Ruben C. Tobias, likewise, told Florence O. Cabansag that the PNB Singapore

Branch will be sold or transformed into a remittance office and that, in either way, Florence O. Cabansag had to resign from her employment. The more Florence O. Cabansag was perplexed. She then asked Ruben C. Tobias that she be furnished with a Formal Advice from the PNB Head Office in Manila. However, Ruben C. Tobias flatly refused. Florence O. Cabansag did not submit any letter of resignation. On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his office and demanded that she submit her letter of resignation, with the pretext that he needed a Chinese-speaking Credit Officer to penetrate the local market, with the information that a Chinese-speaking Credit Officer had already been hired and will be reporting for work soon. She was warned that, unless she submitted her letter of resignation, her employment record will be blemished with the notation DISMISSED spread thereon. Without giving any definitive answer, Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient time to look for another job. Ruben C. Tobias told her that she should be out of her employment by May 15, 1999. However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and adamantly ordered her to submit her letter of resignation. She refused. On April 20, 1999, she received a letter from Ruben C. Tobias terminating her employment with the Bank. xxx xxx xxx

On January 18, 2000, the Labor Arbiter rendered judgment in favor of the Complainant and against the Respondents, the decretal portion of which reads as follows: WHEREFORE, considering the foregoing premises, judgment is hereby rendered finding respondents guilty of Illegal dismissal and devoid of due process, and are hereby ordered: 1. To reinstate complainant to her former or substantially equivalent position without loss of seniority rights, benefits and privileges; 2. Solidarily liable to pay complainant as follows: a) To pay complainant her backwages from 16 April 1999 up to her actual reinstatement. Her backwages as of the date of the promulgation of this decision amounted to SGD 40,500.00 or its equivalent in Philippine Currency at the time of payment;

b) c) d)

Mid-year bonus in the amount of SGD 2,250.00 or its equivalent in Philippine Currency at the time of payment; Allowance for Sunday banking in the amount of SGD 120.00 or its equivalent in Philippine Currency at the time of payment; Monetary equivalent of leave credits earned on Sunday banking in the amount of SGD 1,557.67 or its equivalent in Philippine Currency at the time of payment; Monetary equivalent of unused sick leave benefits in the amount of SGD 1,150.60 or its equivalent in Philippine Currency at the time of payment. Monetary equivalent of unused vacation leave benefits in the amount of SGD 319.85 or its equivalent in Philippine Currency at the time of payment. 13th month pay in the amount of SGD 4,500.00 or its equivalent in Philippine Currency at the time of payment;

e)

f)

g)

3. Solidarily to pay complainant actual damages in the amount of SGD 1,978.00 or its equivalent in Philippine Currency at the time of payment, and moral damages in the amount of PhP 200,000.00, exemplary damages in the amount of PhP 100,000.00; 4. To pay complainant the amount of SGD 5,039.81 or its equivalent in Philippine Currency at the time of payment, representing attorneys fees. SO ORDERED. [6] [Emphasis in the original.] PNB appealed the labor arbiters Decision to the NLRC. In a Resolution dated June 29, 2001, the Commission affirmed that Decision, but reduced the moral damages to P100,000 and the exemplary damages to P50,000. In a subsequent Resolution, the NLRC denied PNBs Motion for Reconsideration. Ruling of the Court of Appeals In disposing of the Petition for Certiorari, the CA noted that petitioner bank had failed to adduce in evidence the Singaporean law supposedly governing the latters employment Contract with respondent. The appellate court found

that the Contract had actually been processed by the Philippine Embassy in Singapore and approved by the Philippine Overseas Employment Administration (POEA), which then used that Contract as a basis for issuing an Overseas Employment Certificate in favor of respondent. According to the CA, even though respondent secured an employment pass from the Singapore Ministry of Employment, she did not thereby waive Philippine labor laws, or the jurisdiction of the labor arbiter or the NLRC over her Complaint for illegal dismissal. In so doing, neither did she submit herself solely to the Ministry of Manpower of Singapores jurisdiction over disputes arising from her employment. The appellate court further noted that a cursory reading of the Ministrys letter will readily show that no such waiver or submission is stated or implied. Finally, the CA held that petitioner had failed to establish a just cause for the dismissal of respondent. The bank had also failed to give her sufficient notice and an opportunity to be heard and to defend herself. The CA ruled that she was consequently entitled to reinstatement and back wages, computed from the time of her dismissal up to the time of her reinstatement. Hence, this Petition.[7] Issues Petitioner submits the following issues for our consideration: 1. Whether or not the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant controversy; 2. Whether or not the arbitration of the NLRC in the National Capital Region is the most convenient venue or forum to hear and decide the instant controversy; and 3. Whether or not the respondent was illegally dismissed, and therefore, entitled to recover moral and exemplary damages and attorneys fees.[8] In addition, respondent assails, in her Comment,[9] the propriety of Rule 45 as the procedural mode for seeking a review of the CA Decision affirming the NLRC Resolution. Such issue deserves scant consideration. Respondent miscomprehends the Courts discourse in St. Martin Funeral Home v. NLRC,[10] which has indeed affirmed that the proper mode of review of NLRC decisions, resolutions or orders is by a special civil action for certiorari under

Rule 65 of the Rules of Court. The Supreme Court and the Court of Appeals have concurrent original jurisdiction over such petitions for certiorari. Thus, in observance of the doctrine on the hierarchy of courts, these petitions should be initially filed with the CA.[11] Rightly, the bank elevated the NLRC Resolution to the CA by way of a Petition for Certiorari. In seeking a review by this Court of the CA Decision -on questions of jurisdiction, venue and validity of employment termination -petitioner is likewise correct in invoking Rule 45.[12] It is true, however, that in a petition for review on certiorari, the scope of the Supreme Courts judicial review of decisions of the Court of Appeals is generally confined only to errors of law. It does not extend to questions of fact. This doctrine applies with greater force in labor cases. Factual questions are for the labor tribunals to resolve. [13] In the present case, the labor arbiter and the NLRC have already determined the factual issues. Their findings, which are supported by substantial evidence, were affirmed by the CA. Thus, they are entitled to great respect and are rendered conclusive upon this Court, absent a clear showing of palpable error or arbitrary disregard of evidence.[14] The Courts Ruling The Petition has no merit. First Issue: Jurisdiction The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code as follows: 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: 1. Unfair labor practice cases;

2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage, 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 of exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. xxx xxx x x x.

More specifically, Section 10 of RA 8042 reads in part: SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employeremployee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. xxx xxx x x x

Based on the foregoing provisions, labor arbiters clearly have original and exclusive jurisdiction over claims arising from employer-employee relations, including termination disputes involving all workers, among whom are overseas Filipino workers (OFW).[15] We are not unmindful of the fact that respondent was directly hired, while on a tourist status in Singapore, by the PNB branch in that city state. Prior to employing respondent, petitioner had to obtain an employment pass for her from the Singapore Ministry of Manpower. Securing the pass was a

regulatory requirement pursuant to the immigration regulations of that country.[16] Similarly, the Philippine government requires non-Filipinos working in the country to first obtain a local work permit in order to be legally employed here. That permit, however, does not automatically mean that the non-citizen is thereby bound by local laws only, as averred by petitioner. It does not at all imply a waiver of ones national laws on labor. Absent any clear and convincing evidence to the contrary, such permit simply means that its holder has a legal status as a worker in the issuing country. Noteworthy is the fact that respondent likewise applied for and secured an Overseas Employment Certificate from the POEA through the Philippine Embassy in Singapore. The Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore. Under Philippine law, this document authorized her working status in a foreign country and entitled her to all benefits and processes under our statutes. Thus, even assuming arguendo that she was considered at the start of her employment as a direct hire governed by and subject to the laws, common practices and customs prevailing in Singapore[17] she subsequently became a contract worker or an OFW who was covered by Philippine labor laws and policies upon certification by the POEA. At the time her employment was illegally terminated, she already possessed the POEA employment Certificate. Moreover, petitioner admits that it is a Philippine corporation doing business through a branch office in Singapore.[18] Significantly, respondents employment by the Singapore branch office had to be approved by Benjamin P. Palma Gil,[19] the president of the bank whose principal offices were in Manila. This circumstance militates against petitioners contention that respondent was locally hired; and totally governed by and subject to the laws, common practices and customs of Singapore, not of the Philippines. Instead, with more reason does this fact reinforce the presumption that respondent falls under the legal definition of migrant worker, in this case one deployed in Singapore. Hence, petitioner cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the labor arbiter. In any event, we recall the following policy pronouncement of the Court in Royal Crown Internationale v. NLRC:[20] x x x. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure

equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed upon in a foreign country. Second Issue: Proper Venue Section 1(a) of Rule IV of the NLRC Rules of Procedure reads: Section 1. Venue (a) All cases which Labor Arbiters have authority to hear and decide may be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the complainant/petitioner; Provided, however that cases of Overseas Filipino Worker (OFW) shall be filed before the Regional Arbitration Branch where the complainant resides or where the principal office of the respondent/employer is situated, at the option of the complainant. 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. It shall include the place where the employee is supposed to report back after a temporary detail, assignment or travel. In the case of field employees, as well as ambulant or itinerant workers, their workplace is where they are regularly assigned, or where they are supposed to regularly receive their salaries/wages or work instructions from, and report the results of their assignment to their employers. Under the Migrant Workers and Overseas Filipinos Act of 1995 (RA 8042), a migrant worker refers to a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state of which he or she is not a legal resident; to be used interchangeably with overseas Filipino worker.[21] Undeniably, respondent was employed by petitioner in its branch office in Singapore. Admittedly, she is a Filipino and not a legal resident of that state. She thus falls within the category of migrant worker or overseas Filipino worker. As such, it is her option to choose the venue of her Complaint against petitioner for illegal dismissal. The law gives her two choices: (1) at the

Regional Arbitration Branch (RAB) where she resides or (2) at the RAB where the principal office of her employer is situated. Since her dismissal by petitioner, respondent has returned to the Philippines -- specifically to her residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the RAB office in Quezon City, she has made a valid choice of proper venue. Third Issue: Illegal Dismissal The appellate court was correct in holding that respondent was already a regular employee at the time of her dismissal, because her three-month probationary period of employment had already ended. This ruling is in accordance with Article 281 of the Labor Code: An employee who is allowed to work after a probationary period shall be considered a regular employee. Indeed, petitioner recognized respondent as such at the time it dismissed her, by giving her one months salary in lieu of a one-month notice, consistent with provision No. 6 of her employment Contract. Notice and Hearing Not Complied With As a regular employee, respondent was entitled to all rights, benefits and privileges provided under our labor laws. One of her fundamental rights is that she may not be dismissed without due process of law. The twin requirements of notice and hearing constitute the essential elements of procedural due process, and neither of these elements can be eliminated without running afoul of the constitutional guarantee.[22] In dismissing employees, the employer must furnish them two written notices: 1) one to apprise them of the particular acts or omissions for which their dismissal is sought; and 2) the other to inform them of the decision to dismiss them. As to the requirement of a hearing, its essence lies simply in the opportunity to be heard.[23] The evidence in this case is crystal-clear. Respondent was not notified of the specific act or omission for which her dismissal was being sought. Neither was she given any chance to be heard, as required by law. At any rate, even if she were given the opportunity to be heard, she could not have defended herself effectively, for she knew no cause to answer to.

All that petitioner tendered to respondent was a notice of her employment termination effective the very same day, together with the equivalent of a onemonth pay. This Court has already held that nothing in the law gives an employer the option to substitute the required prior notice and opportunity to be heard with the mere payment of 30 days salary.[24] Well-settled is the rule that the employer shall be sanctioned for noncompliance with the requirements of, or for failure to observe, due process that must be observed in dismissing an employee.[25] No Valid Cause for Dismissal Moreover, Articles 282,[26] 283[27] and 284[28] of the Labor Code provide the valid grounds or causes for an employees dismissal. The employer has the burden of proving that it was done for any of those just or authorized causes. The failure to discharge this burden means that the dismissal was not justified, and that the employee is entitled to reinstatement and back wages.[29] Notably, petitioner has not asserted any of the grounds provided by law as a valid reason for terminating the employment of respondent. It merely insists that her dismissal was validly effected pursuant to the provisions of her employment Contract, which she had voluntarily agreed to be bound to. Truly, the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their agreement would have the force of law between them. However, petitioner overlooks the qualification that those terms and conditions agreed upon must not be contrary to law, morals, customs, public policy or public order.[30] As explained earlier, the employment Contract between petitioner and respondent is governed by Philippine labor laws. Hence, the stipulations, clauses, and terms and conditions of the Contract must not contravene our labor law provisions. Moreover, a contract of employment is imbued with public interest. The Court has time and time again reminded parties that they are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.[31]Also, while a contract is the law between the parties, the provisions of positive law that regulate such contracts are deemed included and shall limit and govern the relations between the parties.[32]

Basic in our jurisprudence is the principle that when there is no showing of any clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal.[33] Awards for Damages Justified Finally, moral damages are recoverable when the dismissal of an employee is attended by bad faith or constitutes an act oppressive to labor or is done in a manner contrary to morals, good customs or public policy.[34] Awards for moral and exemplary damages would be proper if the employee was harassed and arbitrarily dismissed by the employer.[35] In affirming the awards of moral and exemplary damages, we quote with approval the following ratiocination of the labor arbiter: The records also show that [respondents] dismissal was effected by [petitioners] capricious and high-handed manner, anti-social and oppressive, fraudulent and in bad faith, and contrary to morals, good customs and public policy. Bad faith and fraud are shown in the acts committed by [petitioners] before, during and after [respondents] dismissal in addition to the manner by which she was dismissed. First, [respondent] was pressured to resign for two different and contradictory reasons, namely, costcutting and the need for a Chinese[-]speaking credit officer, for which no written advice was given despite complainants request. Such wavering stance or vacillating position indicates bad faith and a dishonest purpose. Second, she was employed on account of her qualifications, experience and readiness for the position of credit officer and pressured to resign a month after she was commended for her good work. Third, the demand for [respondents] instant resignation on 19 April 1999 to give way to her replacement who was allegedly reporting soonest, is whimsical, fraudulent and in bad faith, because on 16 April 1999 she was given a period of [sic] until 15 May 1999 within which to leave. Fourth, the pressures made on her to resign were highly oppressive, anti-social and caused her absolute torture, as [petitioners] disregarded her situation as an overseas worker away from home and family, with no prospect for another job. She was not even provided with a return trip fare. Fifth, the notice of termination is an utter manifestation of bad faith and whim as it totally disregards [respondents] right to security of tenure and due process. Such notice together with the demands for [respondents] resignation contravenes the fundamental guarantee and public policy of the Philippine government on security of tenure. [Respondent] likewise established that as a proximate result of her dismissal and prior demands for resignation, she suffered and continues to suffer mental anguish,

fright, serious anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation. Her standing in the social and business community as well as prospects for employment with other entities have been adversely affected by her dismissal. [Petitioners] are thus liable for moral damages under Article 2217 of the Civil Code. xxx xxx xxx

[Petitioners] likewise acted in a wanton, oppressive or malevolent manner in terminating [respondents] employment and are therefore liable for exemplary damages. This should served [sic] as protection to other employees of [petitioner] company, and by way of example or correction for the public good so that persons similarly minded as [petitioners] would be deterred from committing the same acts.[36] The Court also affirms the award of attorneys fees. It is settled that when an action is instituted for the recovery of wages, or when employees are forced to litigate and consequently incur expenses to protect their rights and interests, the grant of attorneys fees is legally justifiable.[37] WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioner. SO ORDERED.
G.R. No. 91980 June 27, 1991 ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (First Division), HON. CARMEN TALUSAN and SAN MIGUEL CORPORATION, respondents. Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for petitioner. Jardeleza Law Offices for private respondents.

NARVASA, J.:p The controversy at bar had its origin in the "wage distortions" affecting the employees of respondent San Miguel Corporation allegedly caused by Republic Act No. 6727, otherwise known as the Wage Rationalization Act. Upon the effectivity of the Act on June 5, 1989, the union known as "Ilaw at Buklod Ng Manggagawa (IBM)" said to represent 4,500 employees of San Miguel Corporation, more or less, "working at the various plants, offices, and warehouses located at the National Capital Region" presented to

the company a "demand" for correction of the "significant distortion in . . . (the workers') wages." In that "demand," the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows: xxx xxx xxx (d) . . . Where the application of the increases in the wage rates under this Section results in distortions as defined under existing laws in the wage structure within an establishment and gives rise to a dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of the National Labor Relations Commission (NLRC) having jurisdiction over the workplace. It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under this Section within twenty (20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of the increase in the wage rates prescribed under this Section. But the Union claims that "demand was ignored: 1 The . . . COMPANY ignored said demand by offering a measly across-the-board wage increase of P7.00 per day, per employee, as against the proposal of the UNION of P25.00 per day, per employee. Later, the UNION reduced its proposal to P15.00 per day, per employee by way of amicable settlement. When the . . . COMPANY rejected the reduced proposal of the UNION the members thereof, on their own accord, refused to render overtime services, most especially at the Beer Bottling Plants at Polo, starting October 16, 1989. In this connection, the workers involved issues a joint notice reading as follows: 2 SAMA-SAMANG PAHAYAG: KAMING ARAWANG MANGGAGAWA NG POLO BREWERY PAWANG KASAPI NG ILAW AT BUKLOD NG MANGGAGAWA (IBM) AY NAGKAISANG NAGPASYA NA IPATUPAD MUNA ANG EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI IPINATUTUPAD NG SMC MANAGEMENT ANG TAMANG WAGE DISTORTION. The Union's position (set out in the petition subsequently filed in this Court, infra) was that the workers' refuse "to work beyond eight (8) hours everyday starting October 16, 1989" as a legitimate means of compelling SMC to correct "the distortion in their wages brought about by the implementation of the said laws (R.A. 6640 and R.A. 6727) to newly-hired employees. 3 That decision to observe the "eight hours work shift" was implemented on October 16, 1989 by "some 800 daily-paid workers at the Polo Plant's production line (of San Miguel Corporation [hereafter, simply SMC]) joined by others at statistical quality control and warehouse, all members of . . . IBM . . . "4 There ensued thereby a change in the work schedule which had been observed by daily-paid workers at the Polo Plant for the past five (5) years, i.e., "ten (10) hours for the first shift and ten (10) to fourteen (14) hours for the second shift, from Mondays to Fridays . . ; (and on) Saturdays, . . eight (8) hours for both shifts" a work schedule which, SMC says, the workers had "welcomed, and encouraged" because the automatic overtime built into the schedule "gave them a steady source of extra-income," and pursuant to which it (SMC) "planned its production targets and budgets. 5

This abandonment of the long-standing schedule of work and the reversion to the eight-hour shift apparently caused substantial losses to SMC. Its claim is that there ensued "from 16 October 1989 to 30 November 1989 alone . . work disruption and lower efficiency . . (resulting in turn, in) lost production of 2,004,105 cases of beer . . ; that (i)n "money terms, SMC lost P174,657,598 in sales and P48,904,311 in revenues . . (and the) Government lost excise tax revenue of P42 million, computed at the rate of P21 per case collectible at the plant. 6 These losses occurred despite such measures taken by SMC as organizing "a third shift composed of regular employees and some contractuals," and appeals "to the Union members, through letters and memoranda and dialogues with their plant delegates and shop stewards," to adhere to the existing work schedule. Thereafter, on October 18, 1989, SMC filed with the Arbitration Branch of the National Labor Relations Commission a complaint against the Union and its members "to declare the strike or slowdown illegal" and to terminate the employment of the union officers and shop stewards. The complaint was docketed as NLRC-NCR Case No. 00-10-04917. 7 Then on December 8, 1989, on the claim that its action in the Arbitration Branch had as yet "yielded no relief," SMC filed another complaint against the Union and members thereof, this time directly with the National labor Relations Commission, "to enjoin and restrain illegal slowdown and for damages, with prayer for the issuance of a cease-and-desist and temporary restraining order. 8 Before acting on the application for restraining order, the NLRC's First Division first directed SMC to present evidence in support of the application before a commissioner, Labor Arbiter Carmen Talusan. On December 19, 1989, said First Division promulgated a Resolution on the basis of "the allegations of the petitioner (SMC) and the evidence adduced ex parte in support of their petition." The Resolution 1) authorized the issuance of "a Temporary Restraining Order for a period of twenty (20) days . . upon . . a cash or surety bond in the amount of P50,000.00 . . . DIRECTING the respondents to CEASE and DESIST from further committing the acts complained about particularly their not complying with the work schedule established and implemented by the company through the years or at the least since 1984, which schedule appears to have been adhered to by the respondents until October 16, 1989 . . .; 2) set the incident on injunction for hearing before Labor Arbiter Carmen Talusan on 27 December 1989 . . . The Labor Arbiter accordingly scheduled the incident for hearing on various dates: December 27 and 29,1989, January 8, 11, 16, and 19, 1990. The first two settings were cancelled on account of the unavailability of the Union's counsel. The hearing on January 8, 1990 was postponed also at the instance of said counsel who declared that the Union refused to recognize the NLRC's jurisdiction. The hearings set on January 11, 16 and 19, 1990 were taken up with the cross-examination of SMC's witness on the basis of his affidavit and supplemental affidavits. The Union thereafter asked the Hearing Officer to schedule other hearings. SMC objected. The Hearing Officer announced she would submit a report to the Commission relative to the extension of the temporary restraining order of December 9, 1989, supra, prayed for by SMC. Here the matter rested until February 14, 1990, when the Union filed the petition which commenced the special civil action of certiorari and prohibition at bar. 9 In its petition, the Union asserted that: 1) the "central issue . . is the application of the Eight-Hour Labor Law . . . (i.e.) (m)ay an employer force an employee to work everyday beyond eight hours a day?

2) although the work schedule adopted by SMC with built-in automatic overtime, 10 "tremendously increased its production of beer at lesser cost," SMC had been paying its workers "wages far below the productivity per employee," and turning a deaf ear to the Union's demands for wage increases;

3) the NLRC had issued the temporary restraining order of December 19, 1989 "with indecent haste, based on ex parte evidence of SMC and such an order had the effect of "forcing the workers to work beyond eight (8) hours a day, everyday!! 4) the members of the NLRC had no authority to act as Commissioners because their appointments had not been confirmed by the Commission on Appointment; and 5) even assuming the contrary, the NLRC, as an essentially appellate body, had no jurisdiction to act on the plea for injunction in the first instance. The petition thus prayed: 1) for judgment (a) annulling the Resolution of December 19, 1990; (b) declaring mandatory the confirmation by the Commission on Appointments of the appointments of National Labor Relations Commissioners; and (c) ordering the removal "from the 201 files of employees any and all memoranda or disciplinary action issued/imposed to the latter by reason of their refusal to render overtime work;" and 2) pending such judgment restraining(a) the NLR Commissioners "from discharging their power and authority under R.A. 6715 prior to their re-appointment and/or confirmation;" as well as (b) Arbiter Talusan and the Commission from acting on the matter or rendering a decision or issuing a permanent injunction therein, or otherwise implementing said Resolution of December 19, 1989. In traverse of the petition, SMC filed a pleading entitled "Comment with Motion to Admit Comment as Counter-Petition," in which it contended that: 1) the workers' abandonment of the regular work schedule and their deliberate and wilful reduction of the Polo plant's production efficiency is a slowdown, which is an illegal and unprotected concerted activity; 2) against such a slowdown, the NLRC has jurisdiction to issue injunctive relief in the first instance; 3) indeed, the NLRC has "the positive legal duty and statutory obligation to enjoin the slowdown complained of and to compel the parties to arbitrate . ., (and) to effectuate the important national policy of peaceful settlement of labor disputes through arbitration;" accordingly, said NLRC "had no legal choice but to issue injunction to enforce the reciprocal no lockout-no slowdown and mandatory arbitration agreement of the parties;" and 4) the NLRC "gravely abused its discretion when it refused to decide the application for injunction within the twenty day period of its temporary restraining order, in violation of its own rules and the repeated decisions of this . . . Court.

It is SMC's submittal that the coordinated reduction by the Union's members of the work time theretofore willingly and consistently observed by them, thereby causing financial losses to the employer in order to compel it to yield to the demand for correction of "wage distortions," is an illegal and "unprotected" activity. It is, SMC argues, contrary to the law and to the collective bargaining agreement between it and the Union. The argument is correct and will be sustained. Among the rights guaranteed to employees by the Labor Code is that of engaging in concerted activities in order to attain their legitimate objectives. Article 263 of the Labor Code, as amended, declares that in line with "the policy of the State to encourage free trade unionism and free collective bargaining, . . (w)orkers shall have the right to engage in concerted activities for purposes of collective bargaining or for their mutual benefit and protection." A similar right to engage in concerted activities for mutual benefit and protection is tacitly and traditionally recognized in respect of employers. The more common of these concerted activities as far as employees are concerned are: strikes the temporary stoppage of work as a result of an industrial or labor dispute; picketing the marching to and fro at the employer's premises, usually accompanied by the display of placards and other signs making known the facts involved in a labor dispute; and boycotts the concerted refusal to patronize an employer's goods or services and to persuade others to a like refusal. On the other hand, the counterpart activity that management may licitly undertake is the lockout the temporary refusal to furnish work on account of a labor dispute, In this connection, the same Article 263 provides that the "right of legitimate labor organizations to strike and picket and of employer to lockout, consistent with the national interest, shall continue to be recognized and respected." The legality of these activities is usually dependent on the legality of the purposes sought to be attained and the means employed therefor. It goes without saying that these joint or coordinated activities may be forbidden or restricted by law or contract. In the particular instance of "distortions of the wage structure within an establishment" resulting from "the application of any prescribed wage increase by virtue of a law or wage order," Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the correction thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as modes of settlement of the issue. The provision 11 states that . . . the employer and the union shall negotiate to correct the distort-ions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration. In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of law or Wage Order. xxx xxx xxx The legislative intent that solution of the problem of wage distortions shall be sought by voluntary negotiation or abitration, and not by strikes, lockouts, or other concerted activities of the employees or management, is made clear in the rules implementing RA 6727 issued by the Secretary of Labor and Employment 12 pursuant to the authority granted by Section 13 of the Act. 13 Section 16, Chapter I of these implementing rules, after reiterating the policy that wage distortions be first settled voluntarily by the parties and eventually by compulsory arbitration, declares that, "Any issue involving wage distortion shall not be a ground for a strike/lockout." Moreover, the collective bargaining agreement between the SMC and the Union, relevant provisions of which are quoted by the former without the latter's demurring to the accuracy of the quotation, 14 also prescribes a similar eschewal of strikes or other similar or related concerted activities as a mode of resolving disputes or controversies, generally, said agreement clearly stating that settlement of "all disputes, disagreements or controversies of any kind" should be achieved by the stipulated grievance procedure and ultimately by arbitration. The provisions are as follows: Section 1. Any and all disputes, disagreements and controversies of any kind between the COMPANY and the UNION and/or the workers involving or relating to wages, hours of work, conditions of employment and/or employer-employee relations arising during the effectivity of this Agreement or any renewal thereof, shall be settled by arbitration in accordance with the procedure set out in this Article. No dispute, disagreement or controversy which may be submitted to the grievance procedure in Article IX shall be presented for arbitration unless all the steps of the grievance procedure are exhausted (Article V Arbitration). Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the terms of this agreement (Article VI). The Union was thus prohibited to declare and hold a strike or otherwise engage in non-peaceful concerted activities for the settlement of its controversy with SMC in respect of wage distortions, or for that matter; any other issue "involving or relating to wages, hours of work, conditions of employment and/or employer-employee relations." The partial strike or concerted refusal by the Union members to follow the five-year-old work schedule which they had therefore been observing, resorted to as a means of coercing correction of "wage distortions," was therefore forbidden by law and contract and, on this account, illegal. Awareness by the Union of the proscribed character of its members' collective activities, is clearly connoted by its attempt to justify those activities as a means of protesting and obtaining redress against said members working overtime every day from Monday to Friday (on an average of 12 hours), and every Saturday (on 8 hour shifts), 15rather than as a measure to bring about rectification of the wage distortions caused by RA 6727 which was the real cause of its differences with SMC. By concealing the real cause of their dispute with management (alleged failure of correction of wage distortion), and trying to make it appear that the controversy involved application of the eight-hour labor law, they obviously hoped to remove their case from the operation of the rules implementing

RA 6727 that "Any issue involving wage distortion shall not be a ground for a strike/lockout." The stratagem cannot succeed. In the first place, that it was indeed the wage distortion issue that principally motivated the Union's partial or limited strike is clear from the facts, The work schedule (with "built-in overtime") had not been forced upon the workers; it had been agreed upon between SMC and its workers at the Polo Plant and indeed, had been religiously followed with mutually beneficial results for the past five (5) years. Hence, it could not be considered a matter of such great prejudice to the workers as to give rise to a controversy between them and management. Furthermore, the workers never asked, nor were there ever any negotiations at their instance, for a change in that work schedule prior to the strike. What really bothered them, and was in fact the subject of talks between their representatives and management, was the "wage distortion" question, a fact made even more apparent by the joint notice circulated by them prior to the strike, i.e., that they would adopt the eight-hour work shift in the meantime pending correction by management of the wage distortion (IPATUPAD MUNA ANG EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI IPINATUTUPAD NG SMC MANAGEMENT ANG TAMANG WAGE DISTORTION). In the second place, even if there were no such legal prohibition, and even assuming the controversy really did not involve the wage distortions caused by RA 6727, the concerted activity in question would still be illicit because contrary to the workers' explicit contractual commitment "that there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general strikes, or any other interference with any of the operations of the COMPANY during the term of . . . (their collective bargaining) agreement. 16 What has just been said makes unnecessary resolution of SMC's argument that the workers' concerted refusal to adhere to the work schedule in force for the last several years, is a slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike clause in a collective bargaining contract, or statute or rule. The Court is in substantial agreement with the petitioner's concept of a slowdown as a "strike on the installment plan;" as a wilfull reduction in the rate of work by concerted action of workers for the purpose of restricting the output of the employer, in relation to a labor dispute; as an activity by which workers, without a complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands. 17 The Court also agrees that such a slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees "continue to work and remain at their positions and accept the wages paid to them," they at the same time "select what part of their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the employer's damage, to do other work;" in other words, they "work on their own terms. 18 But whether or not the workers' activity in question their concerted adoption of a different work schedule than that prescribed by management and adhered to for several years constitutes a slowdown need not, as already stated, be gone into. Suffice it to say that activity is contrary to the law, RA 6727, and the parties' collective bargaining agreement. The Union's claim that the restraining order is void because issued by Commissioners whose appointments had not been duly confirmed by the Commission on Appointments should be as it is hereby given short shift, for, as the Solicitor General points out, it is an admitted fact that the members of the respondent Commission were actually appointed by the President of the Philippines on November 18, 1989; there is no evidence whatever in support of the Union's bare allegation that the appointments of said members had not been confirmed; and the familiar presumption of regularity in appointment and in performance of official duty exists in their favor. 19

Also untenable is the Union's other argument that the respondent NLRC Division had no jurisdiction to issue the temporary restraining order or otherwise grant the preliminary injunction prayed for by SMC and that, even assuming the contrary, the restraining order had been improperly issued. The Court finds that the respondent Commission had acted entirely in accord with applicable provisions of the Labor Code. Article 254 of the Code provides that "No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Articles 218 and 264 . . ." Article 264 lists down specific "prohibited activities" which may be forbidden or stopped by a restraining order or injunction. Article 218 inter alia enumerates the powers of the National Labor Relations Commission and lays down the conditions under which a restraining order or preliminary injunction may issue, and the procedure to be followed in issuing the same. Among the powers expressly conferred on the Commission by Article 218 is the power to "enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party . . ." As a rule such restraining orders or injunctions do not issue ex parte, but only after compliance with the following requisites, to wit: a) a hearing held "after due and personal notice thereof has been served, in such manner as the Commission shall direct, to all known persons against whom relief is sought, and also to the Chief Executive and other public officials of the province or city within which the unlawful acts have been threatened or committed charged with the duty to protect complainant's property;" b) reception at the hearing of "testimony of witnesses, with opportunity for crossexamination, in support of the allegations of a complaint made under oath," as well as "testimony in opposition thereto, if offered . . .; c) a finding of fact by the Commission, to the effect: (1) That prohibited or unlawful acts have been threatened and will be committed and will be continued unless restrained, but no injunction or temporary restraining order shall be issued on account of any threat, prohibited or unlawful act, except against the person or persons, association or organization making the threat or committing the prohibited or unlawful act or actually authorizing or ratifying the same after actual knowledge thereof; (2) That substantial and irreparable injury to complainant's property will follow; (3) That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the granting of relief; (4) That complainant has no adequate remedy at law; and

(5) That the public officers charged with the duty to protect complainant's property are unable or unwilling to furnish adequate protection. However, a temporary restraining order may be issued ex parte under the following conditions: a) the complainant "shall also allege that, unless a temporary restraining order shall be issued without notice, a substantial and irreparable injury to complainant's property will be unavoidable; b) there is "testimony under oath, sufficient, if sustained, to justify the Commission in issuing a temporary injunction upon hearing after notice;" c) the "complainant shall first file an undertaking with adequate security in an amount to be fixed by the Commission sufficient to recompense those enjoined for any loss, expense or damage caused by the improvident or erroneous issuance of such order or injunction, including all reasonable costs, together with a reasonable attorney's fee, and expense of defense against the order or against the granting of any injunctive relief sought in the same proceeding and subsequently denied by the Commission;" and d) the "temporary restraining order shall be effective for no longer than twenty (20) days and shall become void at the expiration of said twenty (20) days. The reception of evidence "for the application of a writ of injunction may be delegated by the Commission to any of its Labor Arbiters who shall conduct such hearings in such places as he may determine to be accessible to the parties and their witnesses and shall submit thereafter his recommendation to the Commission." The record reveals that the Commission exercised the power directly and plainly granted to it by sub-paragraph (e) Article 217 in relation to Article 254 of the Code, and that it faithfully observed the procedure and complied with the conditions for the exercise of that power prescribed in said subparagraph (e) It acted on SMC's application for immediate issuance of a temporary restraining order ex parte on the ground that substantial and irreparable injury to its property would transpire before the matter could be heard on notice; it, however, first direct SMC Labor Arbiter Carmen Talusan to receive SMC's testimonial evidence in support of the application and thereafter submit her recommendation thereon; it found SMC's evidence adequate and issued the temporary restraining order upon bond. No irregularity may thus be imputed to the respondent Commission in the issuance of that order. In any event, the temporary restraining order had a lifetime of only twenty (20) days and became void ipso facto at the expired ration of that period. In view of the foregoing factual and legal considerations, all irresistibly leading to the basic conclusion that the concerted acts of the members of petitioner Union in question are violative of the law and their formal agreement with the employer, the latter's submittal, in its counter-petition that there was, in the premises, a "legal duty and obligation" on the part of the respondent Commission "to enjoin the unlawful and prohibited acts and omissions of petitioner IBM and the workers complained of, 20 a proposition with which, it must be said, the Office of the Solicitor General concurs, asserting that the "failure of the respondent commission to resolve the application for a writ of injunction is an abuse of discretion especially in the light of the fact that the restraining order it earlier issued had already expired" 21 must perforce be conceded.

WHEREFORE, the petition is DENIED, the counter-petition is GRANTED, and the case is REMANDED to the respondent Commission (First Division) with instructions to immediately take such action thereon as is indicated by and is otherwise in accord with, the findings and conclusions herein set forth. Costs against petitioner. IT IS SO ORDERED.

[G.R. No. 120567. March 20, 1998]

PHILIPPINE AIRLINES, INC., petitioner, vs., NATIONAL LABOR RELATIONS COMMISSION, FERDINAND PINEDA and GODOFREDO CABLING, respondents. DECISION
MARTINEZ, J.: Can the National Labor Relations Commission (NLRC), even without a complaint for illegal dismissal filed before the labor arbiter, entertain an action for injunction and issue such writ enjoining petitioner Philippine Airlines, Inc. from enforcing its Orders of dismissal against private respondents, and ordering petitioner to reinstate the private respondents to their previous positions? This is the pivotal issue presented before us in this petition for certiorari under Rule 65 of the Revised Rules of Court which seeks the nullification of the injunctive writ dated April 3,1995 issued by the NLRC and the Order denying petitioner's motion for reconsideration on the ground that the said Orders were issued in excess of jurisdiction. Private respondents are flight stewards of the petitioner. Both were dismissed from the service for their alleged involvement in the April 3, 1993 currency smuggling in Hong Kong. Aggrieved by said dismissal, private respondents filed with the NLRC a petition [1] for injunction praying that:

"I. Upon filing of this Petition, a temporary restraining order be issued, prohibiting respondents (petitioner herein) from effecting or enforcing the Decision dated Feb. 22, 1995, or to reinstate petitioners temporarily while a hearing on the propriety of the issuance of a writ of preliminary injunction is being undertaken; "II. After hearing, a writ of preliminary mandatory injunction be issued ordering respondent to reinstate petitioners to their former positions pending the

hearing of this case, or, prohibiting respondent from enforcing its Decision dated February 22,1995 while this case is pending adjudication; "III. After hearing, that the writ of preliminary injunction as to the reliefs sought for be made permanent, that petitioners be awarded full backwages, moral damages of PHP 500,000.00 each and exemplary damages of PHP 500,000.00 each, attorneys fees equivalent to ten percent of whatever amount is awarded, and the costs of suit."
On April 3, 1995, the NLRC issued a temporary mandatory injunction [2] enjoining petitioner to cease and desist from enforcing its February 22, 1995 Memorandum of dismissal. In granting the writ, the NLRC considered the following facts, to wit:

x x x that almost two (2) years ago, i.e. on April 15, 1993, the petitioners were instructed to attend an investigation by respondents Security and Fraud Prevention Sub-Department regarding an April 3, 1993 incident in Hongkong at which Joseph Abaca, respondents Avionics Mechanic in Hongkong was intercepted by the Hongkong Airport Police at Gate 05 xxx the ramp area of the Kai Tak International Airport while xxx about to exit said gate carrying a xxx bag said to contain some 2.5 million pesos in Philippine Currencies. That at the Police Station, Mr. Abaca claimed that he just found said plastic bag at the Skybed Section of the arrival flight PR300/03 April 93, where petitioners served as flight stewards of said flight PR300; x x the petitioners sought a more detailed account of what this HKG incident is all about; but instead, the petitioners were administratively charged, a hearing on which did not push through until almost two (2) years after, i.e. on January 20, 1995 xxx where a confrontation between Mr. Abaca and petitioners herein was compulsorily arranged by the respondents disciplinary board at which hearing, Abaca was made to identify petitioners as co-conspirators; that despite the fact that the procedure of identification adopted by respondents Disciplinary Board was anomalous as there was no one else in the line-up (which could not be called one) but petitioners xxx Joseph Abaca still had difficulty in identifying petitioner Pineda as his co-conspirator, and as to petitioner Cabling, he was implicated and pointed by Abaca only after respondents Atty. Cabatuando pressed the former to identify petitioner Cabling as co-conspirator; that with the hearing reset to January 25, 1995, Mr. Joseph Abaca finally gave exculpating statements to the board in that he cleared petitioners from any participation or from being the owners of the currencies, and at which hearing Mr. Joseph Abaca volunteered the information that the real owner of said money was one who frequented his headquarters in Hongkong to which information, the Disciplinary Board Chairman, Mr. Ismael Khan, opined for the need for another hearing to go to the bottom of the incident; that from

said statement, it appeared that Mr. Joseph Abaca was the courier, and had another mechanic in Manila who hid the currency at the planes skybed for Abaca to retrieve in Hongkong, which findings of how the money was found was previously confirmed by Mr. Joseph Abaca himself when he was first investigated by the Hongkong authorities; that just as petitioners thought that they were already fully cleared of the charges, as they no longer received any summons/notices on the intended additional hearings mandated by the Disciplinary Board, they were surprised to receive on February 23, 1995 xxx a Memorandum dated February 22, 1995 terminating their services for alleged violation of respondents Code of Discipline effective immediately; that sometime xxx first week of March, 1995, petitioner Pineda received another Memorandum from respondent Mr. Juan Paraiso, advising him of his termination effective February 3, 1995, likewise for violation of respondents Code of Discipline; x x x"
In support of the issuance of the writ of temporary injunction, the NLRC adopted the view that: (1) private respondents cannot be validly dismissed on the strength of petitioner's Code of Discipline which was declared illegal by this Court in the case of PAL, Inc. vs. NLRC, (G.R. No. 85985), promulgated August 13, 1993, for the reason that it was formulated by the petitioner without the participation of its employees as required in R.A. 6715, amending Article 211 of the Labor Code; (2) the whimsical, baseless and premature dismissals of private respondents which "caused them grave and irreparable injury" is enjoinable as private respondents are left "with no speedy and adequate remedy at law'"except the issuance of a temporary mandatory injunction; (3) the NLRC is empowered under Article 218 (e) of the Labor Code not only to restrain any actual or threatened commission of any or all prohibited or unlawful acts but also to require the performance of a particular act in any labor dispute, which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party; and (4) the temporary mandatory power of the NLRC was recognized by this Court in the case of Chemo-Technicshe Mfg., Inc. Employees Union,DFA, et.al. vs. Chemo-Technische Mfg., Inc. [G.R. No. 107031, January 25,1993]. On May 4,1995, petitioner moved for reconsideration[3] arguing that the NLRC erred:

1. in granting a temporary injunction order when it has no jurisdiction to issue an injunction or restraining order since this may be issued only under Article 218 of the Labor Code if the case involves or arises from labor disputes; 2. in granting a temporary injunction order when the termination of private respondents have long been carried out; 3. ..in ordering the reinstatement of private respondents on the basis of their mere allegations, in violation of PAL's right to due process;

4. ..in arrogating unto itself management prerogative to discipline its employees and divesting the labor arbiter of its original and exclusive jurisdiction over illegal dismissal cases; 5. ..in suspending the effects of termination when such action is exclusively within the jurisdiction of the Secretary of Labor; 6. ..in issuing the temporary injunction in the absence of any irreparable or substantial injury to both private respondents.
On May 31,1995, the NLRC denied petitioner's motion for reconsideration, ruling:

The respondent (now petitioner), for one, cannot validly claim that we cannot exercise our injunctive power under Article 218 (e) of the Labor Code on the pretext that what we have here is not a labor dispute as long as it concedes that as defined by law, a(l) Labor Dispute includes any controversy or matter concerning terms or conditions of employment. . If security of tenure, which has been breached by respondent and which, precisely, is sought to be protected by our temporary mandatory injunction (the core of controversy in this case) is not a term or condition of employment, what then is? xxx xxx xxx Anent respondents second argument x x x, Article 218 (e) of the Labor Code x x x empowered the Commission not only to issue a prohibitory injunction, but a mandatory (to require the performance) one as well. Besides, as earlier discussed, we already exercised (on August 23,1991) this temporary mandatory injunctive power in the case of ChemoTechnische Mfg., Inc. Employees Union-DFA et.al. vs. Chemo-Technishe Mfg., Inc., et. al. (supra) and effectively enjoined one (1) month old dismissals by Chemo-Technische and that our aforesaid mandatory exercise of injunctive power, when questioned through a petition for certiorari, was sustained by the Third Division of the Supreme court per its Resolution dated January 25,1993. xxx xxx xxx Respondents fourth argument that petitioner's remedy for their dismissals is 'to file an illegal dismissal case against PAL which cases are within the original and exclusive jurisdiction of the Labor Arbiter' is ignorant. In requiring as a condition for the issuance of a 'temporary or

permanent injunction'- '(4) That complainant has no adequate remedy at law;' Article 218 (e) of the Labor Code clearly envisioned adequacy , and not plain availability of a remedy at law as an alternative bar to the issuance of an injunction. An illegal dismissal suit (which takes, on its expeditious side, three (3) years before it can be disposed of) while available as a remedy under Article 217 (a) of the Labor Code, is certainly not an 'adequate; remedy at law. Ergo, it cannot, as an alternative remedy, bar our exercise of that injunctive power given us by Article 218 (e) of the Code. xxx xxx xxx

Thus, Article 218 (e), as earlier discussed [which empowers this Commission 'to require the performance of a particular act' (such as our requiring respondent 'to cease and desist from enforcing' its whimsical memoranda of dismissals and 'instead to reinstate petitioners to their respective position held prior to their subject dismissals') in 'any labor dispute which, if not xxx performed forthwith, may cause grave and irreparable damage to any party'] stands as the sole 'adequate remedy at law' for petitioners here. Finally, the respondent, in its sixth argument claims that even if its acts of dismissing petitioners 'may be great, still the same is capable of compensation', and that consequently, 'injunction need not be issued where adequate compensation at law could be obtained'. Actually, what respondent PAL argues here is that we need not interfere in its whimsical dismissals of petitioners as, after all, it can pay the latter its backwages. x x x
But just the same, we have to stress that Article 279 does not speak alone of backwages as an obtainable relief for illegal dismissal; that reinstatement as well is the concern of said law, enforceable when necessary, through Article 218 (e) of the Labor Code (without need of an illegal dismissal suit under Article 217 (a) of the Code) if such whimsical and capricious act of illegal dismissal will 'cause grave or irreparable injury to a party'. x x x " [4] Hence, the present recourse. Generally, injunction is a preservative remedy for the protection of one's substantive rights or interest. It is not a cause of action in itself but merely a provisional remedy, an adjunct to a main suit. It is resorted to only when there is a pressing necessity to avoid injurious consequences which cannot be remedied under any standard of compensation. The application of the injunctive writ rests upon the existence of an emergency or of a special reason before the main case be regularly heard. The essential conditions for granting such temporary injunctive relief are that the complaint alleges facts which appear to be sufficient to constitute a proper basis for injunction and

that on the entire showing from the contending parties, the injunction is reasonably necessary to protect the legal rights of the plaintiff pending the litigation. [5] Injunction is also a special equitable relief granted only in cases where there is no plain, adequate and complete remedy at law.[6] In labor cases, Article 218 of the Labor Code empowers the NLRC-

"(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party; x x x." (Emphasis Ours)
Complementing the above-quoted provision, Sec. 1, Rule XI of the New Rules of Procedure of the NLRC, pertinently provides as follows:

"Section 1. Injunction in Ordinary Labor Dispute.-A preliminary injunction or a restraining order may be granted by the Commission through its divisions pursuant to the provisions of paragraph (e) of Article 218 of the Labor Code, as amended, when it is established on the bases of the sworn allegations in the
petition that the acts complained of, involving or arising from any labor dispute before the Commission, which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party.

xxx

xxx

xxx

The foregoing ancillary power may be exercised by the Labor Arbiters only as an incident to the cases pending before them in order to preserve the rights of the parties during the pendency of the case, but excluding labor disputes involving strikes or lockout. [7] (Emphasis Ours) From the foregoing provisions of law, the power of the NLRC to issue an injunctive writ originates from "any labor dispute" upon application by a party thereof, which application if not granted "may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party." The term "labor dispute" is defined as "any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment regardless of whether or not the disputants stand in the proximate relation of employers and employees."[8] The term "controversy" is likewise defined as "a litigated question; adversary proceeding in a court of law; a civil action or suit, either at law or in equity; a justiciable dispute."[9]

A "justiciable controversy" is "one involving an active antagonistic assertion of a legal right on one side and a denial thereof on the other concerning a real, and not a mere theoretical question or issue."[10] Taking into account the foregoing definitions, it is an essential requirement that there must first be a labor dispute between the contending parties before the labor arbiter. In the present case, there is no labor dispute between the petitioner and private respondents as there has yet been no complaint for illegal dismissal filed with the labor arbiter by the private respondents against the petitioner. The petition for injunction directly filed before the NLRC is in reality an action for illegal dismissal. This is clear from the allegations in the petition which prays for: reinstatement of private respondents; award of full backwages, moral and exemplary damages; and attorney's fees. As such, the petition should have been filed with the labor arbiter who has the original and exclusive jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural:

(1) Unfair labor practice; (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 (P 5,000.00), whether or not accompanied with a claim for reinstatement. [11] The jurisdiction conferred by the foregoing legal provision to the labor arbiter is both original and exclusive, meaning, no other officer or tribunal can take cognizance of, hear and decide any of the cases therein enumerated. The only exceptions are where the Secretary of Labor and Employment or the NLRC exercises the power of compulsory arbitration, or the parties agree to submit the matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code, the pertinent portions of which reads:

"(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest,

the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately 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. xxx xxx xxx"

On the other hand, the NLRC shall have exclusive appellate jurisdiction over all cases decided by labor arbiters as provided in Article 217(b) of the Labor Code. In short, the jurisdiction of the NLRC in illegal dismissal cases is appellate in nature and, therefore, it cannot entertain the private respondents' petition for injunction which challenges the dismissal orders of petitioner. Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its divisions to issue writs of injunction, considering that Section 1 of Rule XI of the New Rules of Procedure of the NLRC makes injunction only an ancillary remedy in ordinary labor disputes" [12] Thus, the NLRC exceeded its jurisdiction when it issued the assailed Order granting private respondents' petition for injunction and ordering the petitioner to reinstate private respondents. The argument of the NLRC in its assailed Order that to file an illegal dismissal suit with the labor arbiter is not an "adequate" remedy since it takes three (3) years before it can be disposed of, is patently erroneous. An "adequate" remedy at law has been defined as one "that affords relief with reference to the matter in controversy, and which is appropriate to the particular circumstances of the case." [13] It is a remedy which is equally beneficial, speedy and sufficient which will promptly relieve the petitioner from the injurious effects of the acts complained of.[14] Under the Labor Code, the ordinary and proper recourse of an illegally dismissed employee is to file a complaint for illegal dismissal with the labor arbiter. [15] In the case at bar, private respondents disregarded this rule and directly went to the NLRC through a petition for injunction praying that petitioner be enjoined from enforcing its dismissal orders. In Lamb vs. Phipps,[16] we ruled that if the remedy is specifically provided by law, it is presumed to be adequate. Moreover, the preliminary mandatory injunction prayed for by the private respondents in their petition before the NLRC can also be entertained by the labor arbiter who, as shown earlier, has the ancillary power to issue preliminary injunctions or restraining orders as an incident in the cases pending before him in order to preserve the rights of the parties during the pendency of the case.[17]

Furthermore, an examination of private respondents' petition for injunction reveals that it has no basis since there is no showing of any urgency or irreparable injury which the private respondents might suffer. An injury is considered irreparable if it is of such constant and frequent recurrence that no fair and reasonable redress can be had therefor in a court of law,[18] or where there is no standard by which their amount can be measured with reasonable accuracy, that is, it is not susceptible of mathematical computation. It is considered irreparable injury when it cannot be adequately compensated in damages due to the nature of the injury itself or the nature of the right or property injured or when there exists no certain pecuniary standard for the measurement of damages.[19] In the case at bar, the alleged injury which private respondents stand to suffer by reason of their alleged illegal dismissal can be adequately compensated and therefore, there exists no "irreparable injury," as defined above which would necessitate the issuance of the injunction sought for. Article 279 of the Labor Code provides that an employee who is unjustly dismissed from employment shall be entitled to reinstatement, without loss of seniority rights and other privileges, and to the payment of full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. The ruling of the NLRC that the Supreme Court upheld its power to issue temporary mandatory injunction orders in the case of Chemo-Technische Mfg., Inc. Employees Union-DFA, et.al. vs. Chemo-Technische Mfg., Inc. et.al., docketed as G.R. No. 107031, is misleading. As correctly argued by the petitioner, no such pronouncement was made by this Court in said case. On January 25,1993, we issued a Minute Resolution in the subject case stating as follows:

"Considering the allegations contained, the issues raised and the arguments adduced in the petition for certiorari , as well as the comments of both public and private respondents thereon, and the reply of the petitioners to private respondent's motion to dismiss the petition, the Court Resolved to DENY the same for being premature."
It is clear from the above resolution that we did not in anyway sustain the action of the NLRC in issuing such temporary mandatory injunction but rather we dismissed the petition as the NLRC had yet to rule upon the motion for reconsideration filed by peitioner. Thus, the minute resolution denying the petition for being prematurely filed. Finally, an injunction, as an extraordinary remedy, is not favored in labor law considering that it generally has not proved to be an effective means of settling labor disputes.[20] It has been the policy of the State to encourage the parties to use the nonjudicial process of negotiation and compromise, mediation and arbitration. [21] Thus, injunctions may be issued only in cases of extreme necessity based on legal grounds clearly established, after due consultations or hearing and when all efforts at conciliation are exhausted which factors, however, are clearly absent in the present case.

WHEREFORE, the petition is hereby GRANTED. The assailed Orders dated April 3,1995 and May 31,1995, issued by the National Labor Relations Commission (First Division), in NLRC NCR IC No. 000563-95, are hereby REVERSED and SET ASIDE. SO ORDERED.