G.R. Nos.

178382-83, September 23, 2015 informed him of the company's decision to relieve him as General
Manager. Basso, instead, was offered the position of consultant to
CONTINENTAL MICRONESIA, INC., Petitioner, v. JOSEPH CMI. Ms. Woodward also informed Basso that CMI rejected his
BASSO, Respondent. counter-proposal and, thus, terminated his employment effective
January 31, 1996. CMI offered Basso a severance pay, in
DECISION consideration of the Php1,140,000.00 housing advance that CMI
promised him.13
JARDELEZA, J.:
Basso filed a Complaint for Illegal Dismissal with Moral and
Exemplary Damages against CMI on December 19, 1996.14 Alleging
This is a Petition for Review on Certiorari1 under Rule 45 of the
the presence of foreign elements, CMI filed a Motion to
levised Rules of Court assailing the Decision2 dated May 23, 2006
Dismiss15 dated February 10, 1997 on the ground of lack of
and Resolution3 dated June 19, 2007 of the Court of Appeals in the
jurisdiction over the person of CMI and the subject matter of the
consolidated cases CA-G.R. SP No. 83938 and CA-G.R. SP No. 84281.
controversy. In an Order16 dated August 27, 1997, the Labor Arbiter
These assailed Decision and Resolution set aside the
granted the Motion to Dismiss. Applying the doctrine of lex loci
Decision4 dated November 28, 2003 of the National Labor Relations
contractus, the Labor Arbiter held that the terms and provisions of
Commission (NLRC) declaring Joseph Basso's (Basso) dismissal
the employment contract show that the parties did not intend to
illegal, and ordering the payment of separation pay as alternative
apply our Labor Code (Presidential Decree No. 442). The Labor
to reinstatement and full backwages until the date of the Decision.
Arbiter also held that no employer-employee relationship existed
between Basso and the branch office of CMI in the Philippines, but
The Facts
between Basso and the foreign corporation itself.
Petitioner Continental Micronesia, Inc. (CMI) is a foreign
On appeal, the NLRC remanded the case to the Labor Arbiter for
corporation organized and existing under the laws of and domiciled
the determination of certain facts to settle the issue on jurisdiction.
in the United States of America (US). It is licensed to do business in
NLRC ruled that the issue on whether the principle of lex loci
the Philippines.5 Basso, a US citizen, resided in the Philippines prior
contractus or lex loci celebrationis should apply has to be further
to his death.6
threshed out.17
During his visit to Manila in 1990, Mr. Keith R. Braden (Mr. Braden),
Labor Arbiter's Ruling
Managing Director-Asia of Continental Airlines, Inc. (Continental),
offered Basso the position of General Manager of the Philippine
Labor Arbiter Madjayran H. Ajan in his Decision 18 dated September
Branch of Continental. Basso accepted the offer.7
24, 1999 dismissed the case for lack of merit and jurisdiction.
It was not until much later that Mr. Braden, who had since returned
The Labor Arbiter agreed with CMI that the employment contract
to the US, sent Basso the employment contract8 dated February 1,
was xecuted in the US "since the letter-offer was under the Texas
1991, which Mr. Braden had already signed. Basso then signed the
letterhead and the acceptance of Complainant was returned
employment contract and returned it to Mr. Braden as instructed.
there."19 Thus, applying the doctrine of lex loci celebrationis, US
laws apply. Also, applying lex loci contractus, the Labor Arbiter
On November 7, 1992, CMI took over the Philippine operations of
ruled that the parties did not intend to apply Philippine laws, thus:
Continental, with Basso retaining his position as General Manager.9
Although the contract does not state what law shall apply, it is
obvious that Philippine laws were not written into it. More
On December 20, 1995, Basso received a letter from Mr. Ralph
specifically, the Philippine law on taxes and the Labor Code were
Schulz (Mr. Schulz), who was then CMI's Vice President of
not intended by the parties to apply, otherwise Par. 7 on the
Marketing and Sales, informing Basso that he has agreed to work payment by Complainant U.S. Federal and Home State income
in CMI as a consultant on an "as needed basis" effective February
taxes, and Pars. 22/23 on termination by 30-day prior notice, will
1, 1996 to July 31, 1996. The letter also informed Basso that: (1) he
not be there. The contract was prepared in contemplation of Texas
will not receive any monetary compensation but will continue
or U.S. laws where Par. 7 is required and Pars. 22/23 is allowed.20
being covered by the insurance provided by CMI; (2) he will enjoy
travel privileges; and (3) CMI will advance Php1,140,000.00 for the The Labor Arbiter also ruled that Basso was terminated for a valid
payment of housing lease for 12 months.10 cause based on the allegations of CMI that Basso committed a
series of acts that constitute breach of trust and loss of
On January 11, 1996, Basso wrote a counter-proposal11 to Mr. confidence.21
Schulz regarding his employment status in CMI. On March 14, 1996,
Basso wrote another letter addressed to Ms. Marty Woodward The Labor Arbiter, however, found CMI to have voluntarily
(Ms. Woodward) of CMI's Human Resources Department inquiring submitted to his office's jurisdiction. CMI participated in the
about the status of his employment.12 On the same day, Ms. proceedings, submitted evidence on the merits of the case, and
Woodward responded that pursuant to the employment contract sought affirmative relief through a motion to dismiss.22
dated February 1, 1991, Basso could be terminated at will upon a
thirty-day notice. This notice was allegedly the letter Basso NLRC's Ruling
received from Mr. Schulz on December 20, 1995. Ms. Woodward
also reminded Basso of the telephone conversation between him, On appeal, the NLRC Third Division promulgated its
Mr. Schulz and Ms. Woodward on December 19, 1995, where they
Decision23 dated November 28, 2003, the decretal portion of which
reads:
WHEREFORE, the decision dated 24 September 1999 is VACATED
and SET ASIDE. Respondent CMI is ordered to pay complainant the
amount of US$5,416.00 for failure to comply with the due notice
requirement. The other claims are dismissed.
SO ORDERED.24
The NLRC did not agree with the pronouncement of the Labor
Arbiter that his office has no jurisdiction over the controversy. It
ruled that the Labor Arbiter acquired jurisdiction over the case
when CMI voluntarily submitted to his office's jurisdiction by
presenting evidence, advancing arguments in support of the
legality of its acts, and praying for reliefs on the merits of the
case.25cralawred
On the merits, the NLRC agreed with the Labor Arbiter that Basso
was dismissed for just and valid causes on the ground of breach of
trust and loss of confidence. The NLRC ruled that under the
applicable rules on loss of trust and confidence of a managerial
employee, such as Basso, mere existence of a basis for believing
that such employee has breached the trust of his employer suffices.
However, the NLRC found that CMI denied Basso the required due
process notice in his dismissal.26
Both CMI and Basso filed their respective Motions for
Reconsideration dated January 15, 200427 and January 8,
2004.28 Both motions were dismissed in separate Resolutions
dated March 15, 200429 and February 27, 2004,30 respectively.
Basso filed a Petition for Certiorari dated April 16, 2004 with the
Court of Appeals docketed as CA-G.R. SP No. 83938.31 Basso
imputed grave abuse of discretion on the part of the NLRC in ruling
that he was validiy dismissed. CMI filed its own Petition
for Certiorari dated May 13, 2004 docketed as CA-G.R. SP No.
84281,32 alleging that the NLRC gravely abused its discretion when
it assumed jurisdiction over the person of CMI and the subject
matter of the case.
In its Resolution dated October 7, 2004, the Court of Appeals
consolidated the two cases33 and ordered the parties to file their
respective Memoranda.
The Court of Appeal's Decision
The Court of Appeals promulgated the now assailed
Decision34 dated May 23, 2006, the relevant dispositive portion of
which reads:
WHEREFORE, the petition of Continental docketed as CA-G.R. SP
No. 84281 is DENIED DUE COURSE and DISMISSED.
On the other hand the petition of Basso docketed as CA-G.R. SP No.
83938 is GIVEN DUE COURSE and GRANTED, and accordingly, the
assailed Decision dated November 28, 2003 and Resolution dated
February 27, 2004 of the NLRC are SET ASIDE and VACATED.
Instead judgment is rendered hereby declaring the dismissal of
Basso illegal and ordering Continental to pay him separation pay
equivalent to one (1) month pay for every year of service as an
alternative to reinstatement. Further, ordering Continental to pay
Basso his full backwages from the date of his said illegal dismissal
until date of this decision. The claim for moral and exemplary
damages as well as attorney's fees are dismissed.35
The Court of Appeals ruled that the Labor Arbiter and the NLRC had
jurisdiction over the subject matter of the case and over the
parties. The Court of Appeals explained that jurisdiction over the
subject matter of the action is determined by the allegations of the
complaint and the law. Since the case filed by Basso is a termination
dispute that is "undoubtedly cognizable by the labor tribunals", the
Labor Arbiter and the NLRC had jurisdiction to rule on the merits of
the case. On the issue of jurisdiction over he person of the parties,
who are foreigners, the Court of Appeals ruled that jurisdiction over
the person of Basso was acquired when he filed the complaint for
illegal dismissal, while jurisdiction over the person of CMI was
acquired through coercive process of service of summons to its
agent in the Philippines. The Court of Appeals also agreed that the
active participation of CMI in the case rendered moot the issue on
jurisdiction.
On the merits of the case, the Court of Appeals declared that CMI
illegally dismissed Basso. The Court of Appeals found that CMI's
allegations of loss of trust and confidence were not established.
CMI "failed to prove its claim of the incidents which were its alleged
bases for loss of trust or confidence."36 While managerial
employees can be dismissed for loss of trust and confidence, there
must be a basis for such loss, beyond mere whim or caprice.
After the parties filed their Motions for Reconsideration, 37 the
Court of Appeals promulgated Resolution38dated June 19, 2007
denying CMI's motion, while partially granting Basso's as to the
computation of backwages.
Hence, this petition, which raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REVIEWING
THE FACTUAL FINDINGS OF THE NLRC INSTEAD OF LIMITING ITS
INQUIRY INTO WHETHER OR NOT THE NLRC COMMITTED GRAVE
ABUSE OF DISCRETION.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT
THE LABOR ARBITER AND THE NLRC HAD JURISDICTION TO HEAR
AND TRY THE ILLEGAL DISMISSAL CASE.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING
THAT BASSO WAS NOT VALIDLY DISMISSED ON THE GROUND OF
LOSS OF TRUST OR CONFIDENCE.
We begin with the second issue on the jurisdiction of the Labor
Arbiter and the NLRC in the illegal dismissal case. The first and third
issues will be discussed jointly.
The labor tribunals had jurisdiction over the parties and the
subject matter of the case.
CMI maintains that there is a conflict-of-laws issue that must be
settled to determine proper jurisdiction over the parties and the
subject matter of the case. It also alleges that the existence of
foreign elements calls or the application of US laws and the
doctrines of lex loci celebrationis (the law of the place of the with summons. CMI has, in fact, voluntarily appeared and
ceremony), lex loci contractus (law of the place where a contract is participated in the proceedings before the courts. Though a foreign
executed), and lex loci intentionis(the intention of the parties as to corporation, CMI is licensed to do business in the Philippines and
the law that should govern their agreement). CMI also invokes the has a local business address here. The purpose of the law in
application of the rule of forum non conveniens to determine the requiring that foreign corporations doing business in the country
propriety of the assumption of jurisdiction by the labor tribunals. be licensed to do so, is to subject the foreign corporations to the
jurisdiction of our courts.44
We agree with CMI that there is a conflict-of-laws issue that needs
to be resolved first. Where the facts establish the existence of Considering that the Labor Arbiter and the NLRC have jurisdiction
foreign elements, he case presents a conflict-of-laws issue.39 The over the parties and the subject matter of this case, these tribunals
foreign element in a case nay appear in different forms, such as in may proceed to try the case even if the rules of conflict-of-laws or
this case, where one of the parties s an alien and the other is the convenience of the parties point to a foreign forum, this being
domiciled in another state. an exercise of sovereign prerogative of the country where the case
is filed.45
In Hasegawa v. Kitamura,40 we stated that in the judicial resolution
of conflict-of-laws problems, three consecutive phases are The next question is whether the local forum is the convenient
involved: jurisdiction, choice of law, and recognition and forum in light of the facts of the case. CMI contends that a
enforcement of judgments. In resolving the conflicts problem, Philippine court is an inconvenient forum.
courts should ask the following questions:
1. "Under the law, do I have jurisdiction over the subject matter We disagree.
and the parties to this case?
Under the doctrine of forum non conveniens, a Philippine court in a
2. "If the answer is yes, is this a convenient forum to the parties, in conflict-of-laws case may assume jurisdiction if it chooses to do so,
light of the facts? provided, that the following requisites are met: (1) that the
Philippine Court is one to which the parties may conveniently resort
3. "If the answer is yes, what is the conflicts rule for this particular to; (2) that the Philippine Court is in a position to make an
problem? intelligent decision as to the law and the facts; and (3) that the
Philippine Court has or is likely to have power to enforce its
4. "If the conflicts rule points to a foreign law, has said law been decision.46 All these requisites are present here.
properly pleaded and proved by the one invoking it?
Basso may conveniently resort to our labor tribunals as he and CMI
5. "If so, is the application or enforcement of the foreign law in the lad physical presence in the Philippines during the duration of the
forum one of the basic exceptions to the application of foreign law? trial. CMI has a Philippine branch, while Basso, before his death,
In short, is there any strong policy or vital interest of the forum that was residing here. Thus, it could be reasonably expected that no
is at stake in this case and which should preclude the application of extraordinary measures were needed for the parties to make
foreign law?41 arrangements in advocating their respective cases.
Jurisdiction is defined as the power and authority of the courts to
The labor tribunals can make an intelligent decision as to the law
hear, try and decide cases. Jurisdiction over the subject matter is
conferred by the Constitution or by law and by the material and facts. The incident subject of this case (i.e. dismissal of Basso)
happened in the Philippines, the surrounding circumstances of
allegations in the complaint, regardless of whether or not the
which can be ascertained without having to leave the Philippines.
plaintiff is entitled to recover all or some of the claims or reliefs
sought therein.42 It cannot be acquired through a waiver or The acts that allegedly led to loss of trust and confidence and
Basso's eventual dismissal were committed in the Philippines. As to
enlarged by the omission of the parties or conferred by the
the law, we hold that Philippine law is the proper law of he forum,
acquiescence of the court.43 That the employment contract of
as we shall discuss shortly. Also, the labor tribunals have the power
Basso was replete with references to US laws, and that it originated
from and was returned to the US, do not automatically preclude to enforce their judgments because they acquired jurisdiction over
the persons of both parties.
our labor tribunals from exercising jurisdiction to hear and try this
case.
Our labor tribunals being the convenient fora, the next question is
This case stemmed from an illegal dismissal complaint. The Labor what law should apply in resolving this case.
Code, under Article 217, clearly vests original and exclusive
The choice-of-law issue in a conflict-of-laws case seeks to answer
jurisdiction to hear and decide cases involving termination disputes
to the Labor Arbiter. Hence, the Labor Arbiter and the NLRC have the following important questions: (1) What legal system should
control a given situation where some of the significant facts
jurisdiction over the subject matter of the case.
occurred in two or more states; and (2) to what extent should the
chosen legal system regulate the situation.47 These questions are
As regards jurisdiction over the parties, we agree with the Court of
Appeals that the Labor Arbiter acquired jurisdiction over the person entirely different from the question of jurisdiction that only seeks
to answer whether the courts of a state where the case is initiated
of Basso, notwithstanding his citizenship, when he filed his
have jurisdiction to enter a judgment.48 As such, the power to
complaint against CMI. On the other hand, jurisdiction over the
person of CMI was acquired through the coercive process of service exercise jurisdiction does not automatically give a state
of summons. We note that CMI never denied that it was served constitutional authority to apply forum law.49
CMI insists that US law is the applicable choice-of-law under the Applying the foregoing in this case, we conclude that Philippine law
principles of lex loci celebrationis and lex loci contractus. It argues the applicable law. Basso, though a US citizen, was a resident here
that the contract of employment originated from and was returned from he time he was hired by CMI until his death during the
to the US after Basso signed it, and hence, was perfected there. CMI pendency of the case. CMI, while a foreign corporation, has a
further claims that the references to US law in the employment license to do business in the Philippines and maintains a branch
contract show the parties' intention to apply US law and not ours. here, where Basso was hired to work. The contract of employment
These references are: was negotiated in the Philippines. A purely consensual contract, it
was also perfected in the Philippines when Basso accepted the
a. Foreign station allowance of forty percent (40%) using the terms and conditions of his employment as offered by CMI. The
"U.S. State Department Index, the base being Washington, place of performance relative to Biasso's contractual duties was in
D.C." the Philippines. The alleged prohibited acts of Basso that warranted
his dismissal were committed in the Philippines.
b. Tax equalization that made Basso responsible for "federal
and any home state income taxes." Clearly, the Philippines is the state with the most significant
relationship to the problem. Thus, we hold that CMI and Basso
c. Hardship allowance of fifteen percent (15%) of base pay intended Philippine law to govern, notwithstanding some
based upon the "U.S. Department of State Indexes of living references made to US laws and the fact that this intention was not
costs abroad." expressly stated in the contract. We explained in Philippine Export
and Foreign Loan Guarantee Corporation v. V. P. Eusebio
d. The employment arrangement is "one at will, terminable Construction, Inc.53 that the law selected may be implied from such
by either party without any further liability on thirty days factors as substantial connection with the transaction, or the
prior written notice."50 nationality or domicile of the parties. 54 We cautioned, however,
that while Philippine courts would do well to adopt the first and
CMI asserts that the US law on labor relations particularly, the US most basic rule in most legal systems, namely, to allow the parties
Railway Labor Act sanctions termination-at-will provisions in an to select the law applicable to their contract, the selection is
employment contract. Thus, CMI concludes that if such laws were subject to the limitation that it is not against the law, morals, or
applied, there would have been no illegal dismissal to speak of public policy of the forum.55
because the termination-at-will provision in Basso's employment
contract would have been perfectly valid. Similarly, in Bank of America, NT&SA v. American Realty
Corporation,56 we ruled that a foreign law, judgment or contract
We disagree. contrary to a sound and established public policy of the forum shall
not be applied. Thus:
In Saudi Arabian Airlines v. Court of Appeals,51 we emphasized that Moreover, foreign law should not be applied when its application
an essential element of conflict rules is the indication of a "test" or would work undeniable injustice to the citizens or residents of the
"connecting factor" or "point of contact". Choice-of-law rules forum. To give justice is the most important function of law; hence,
invariably consist of a factual relationship (such as property right, a law, or judgment or contract that is obviously unjust negates the
contract claim) and a connecting fact or point of contact, such as fundamental principles of Conflict of Laws. 57
the situs of the res, the place of celebration, the place of Termination-at-will is anathema to the public policies on labor
performance, or the place of wrongdoing. Pursuant to Saudi protection espoused by our laws and Constitution, which dictates
Arabian Airlines, we hold that the "test factors," "points of contact" that no worker shall be dismissed except for just and authorized
or "connecting factors" in this case are the causes provided by law and after due process having been
following:chanRoblesvirtualLawlibrary complied with.58 Hence, the US Railway Labor Act, which sanctions
termination-at-will, should not be applied in this case.
(1) The nationality, domicile or residence of
Basso;ChanRoblesVirtualawlibrary Additionally, the rule is that there is no judicial notice of any foreign
law. As any other fact, it must be alleged and proved.59 If the
(2) The seat of CMI;ChanRoblesVirtualawlibrary foreign law is not properly pleaded or proved, the presumption of
identity or similarity of the foreign law to our own laws, otherwise
(3) The place where the employment contract has been made, known as processual presumption, applies. Here, US law may have
the locus actus;ChanRoblesVirtualawlibrary been properly pleaded but it was not proved in the labor tribunals.

(4) The place where the act is intended to come into effect, e.g., Having disposed of the issue on jurisdiction, we now rule on the
the place of performance of contractual first and third issues.
duties;ChanRoblesVirtualawlibrary
The Court of Appeals may review the factual findings of the NLRC
(5) The intention of the contracting parties as to the law that should in a Rule 65 petition.
govern their agreement, the lex loci intentionis; and
CMI submits that the Court of Appeals overstepped the boundaries
(6) The place where judicial or administrative proceedings are of the limited scope of its certiorarijurisdiction when instead of
instituted or done.52 ruling on the existence of grave abuse of discretion, it proceeded
to pass upon the legality and propriety of Basso's dismissal.
Moreover, CMI asserts that it was error on the part of the Court of
Appeals to re-evaluate the evidence and circumstances
surrounding the dismissal of Basso.
We disagree.
The power of the Court of Appeals to review NLRC decisions via a
Petition for Certiorari under Rule 65 of the Revised Rules of Court
was settled in our decision in St. Martin Funeral Home v.
NLRC.60 The general rule is that certiorari does not lie to review
errors of judgment of the trial court, as well as that of a quasi-
judicial tribunal. In certiorari proceedings, judicial review does not
go as far as to examine and assess the evidence of the parties and
to weigh their probative value.61 However, this rule admits of
exceptions. In Globe Telecom, Inc. v. Florendo-Flores,62 we stated:
In the review of an NLRC decision through a special civil action
for certiorari, resolution is confined only to issues of jurisdiction
and grave abuse of discretion on the part of the labor tribunal.
Hence, the Court refrains from reviewing factual assessments of
lower courts and agencies exercising adjudicative functions, such
as the NLRC. Occasionally, however, the Court is constrained to
delve into factual matters where, as in the instant case, the findings
of the NLRC contradict those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction
may look into the records of the case and re-examine the
questioned findings. As a corollary, this Court is clothed with ample
authority to review matters, even if they are not assigned as errors
in their appeal, if it finds that their consideration is necessary to
arrive at a just decision of the case. The same principles are now
necessarily adhered to and are applied by the Court of Appeals in
its expanded jurisdiction over labor cases elevated through a
petition for certiorari; thus, we see no error on its part when it
made anew a factual determination of the matters and on that
basis reversed the ruling of the NLRC.63 (Citations omitted.)
Thus, the Court of Appeals may grant the petition when the factual
hidings complained of are not supported by the evidence on
record; when its necessary to prevent a substantial wrong or to do
substantial justice; when the findings of the NLRC contradict those
of the Labor Arbiter; and when necessary to arrive at a just decision
of the case.64 To make these findings, the Court of Appeals
necessarily has to look at the evidence and make its own factual
determination.65
Since the findings of the Labor Arbiter differ with that of the NLRC,
we find that the Court of Appeals correctly exercised its power to
review the evidence and the records of the illegal dismissal case.
Basso was illegally dismissed.
It is of no moment that Basso was a managerial employee of CMI
Managerial employees enjoy security of tenure and the right of the
management to dismiss must be balanced against the managerial
employee's right to security of tenure, which is not one of the
guaranties he gives up.66
In Apo Cement Corporation v. Baptisma,67 we ruled that for an
employer to validly dismiss an employee on the ground of loss of
trust and confidence under Article 282 (c) of the Labor Code, the
employer must observe the following guidelines: 1) loss of
confidence should not be simulated; 2) it should not be used as
subterfuge for causes which are improper, illegal or unjustified; 3)
it may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and 4) it must be genuine, not a mere
afterthought to justify earlier action taken in bad faith. More
importantly, it must be based on a willful breach of trust and
founded on clearly established facts.
We agree with the Court of Appeals that the dismissal of Basso was
not founded on clearly established facts and evidence sufficient to
warrant dismissal from employment. While proof beyond
reasonable doubt is not required to establish loss of trust and
confidence, substantial evidence is required and on the employer
rests the burden to establish it.68 There must be some basis for the
loss of trust, or that the employer has reasonable ground to believe
that the employee is responsible for misconduct, which renders
him unworthy of the trust and confidence demanded by his
position.69
CMI alleges that Basso committed the
following:chanRoblesvirtualLawlibrary
(1) Basso delegated too much responsibility to the General Sales
Agent and relied heavily on its judgments.70
(2) Basso excessively issued promotional tickets to his friends who
had no direct business with CMI.71
(3) The advertising agency that CMI contracted had to deal directly
with Guam because Basso was hardly available. 72 Mr. Schulz
discovered that Basso exceeded the advertising budget by
$76,000.00 in 1994 and by $20,000.00 in 1995.73
(4) Basso spent more time and attention to his personal businesses
and was reputed to own nightclubs in the Philippines.74
(5) Basso used free tickets and advertising money to promote his
personal business,75 such as a brochure that jointly advertised
one of Basso's nightclubs with CMI.
We find that CMI failed to discharge its burden to prove the above
acts. CMI merely submitted affidavits of its officers, without any
other corroborating evidence. Basso, on the other hand, had
adequately explained his side. On the advertising agency and
budget issues raised by CMI, he explained that these were blatant
lies as the advertising needs of CMI were centralized in its Guam
office and the Philippine office was not authorized to deal with
CMI's advertising agency, except on minor issues.76 Basso further
stated that under CMI's existing policy, ninety percent (90%) of the
advertising decisions were delegated to the advertising firm of
McCann-Ericsson in Japan and only ten percent (10%) were left to
the Philippine office.77 Basso also denied the allegations of owning
nightclubs and promoting his personal businesses and explained
that it was illegal for foreigners in the Philippines to engage in retail
trade in the first place.
Apart from these accusations, CMI likewise presented the findings
of the audit team headed by Mr. Stephen D. Goepfert, showing that
"for the period of 1995 and 1996, personal passes for Continental
and other airline employees were noted (sic) to be issued for which
no service charge was collected."78 The audit cited the trip pass log
of a total of 10 months. The trip log does not show, however, that
Basso caused all the ticket issuances. More, half of the trips in the
log occurred from March to July of 1996, 79 a period beyond the
tenure of Basso. Basso was terminated effectively on January 31,
1996 as indicated in the letter of Ms. Woodward.80
CMI also accused Basso of making "questionable overseas phone
calls". Basso, however, adequately explained in his Reply81 that the
phone calls to Italy and Portland, USA were made for the purpose
of looking for a technical maintenance personnel with US Federal
Aviation Authority qualifications, which CMI needed at that time.
The calls to the US were also made in connection with his functions
as General Manager, such as inquiries on his tax returns filed in
Nevada. Biasso also explained that the phone lines82were open
direct lines that all personnel were free to use to make direct long
distance calls.83
Finally, CMI alleged that Basso approved the disbursement of
Php80,000.00 to cover the transfer fee of the Manila Polo
Club share from Mr. Kenneth Glover, the previous General
Manager, to him. CMI claimed that "nowhere in the said contract
was it likewise indicated that the Manila Polo Club share was part
of the compensation package given by CMI to Basso." 84 CMI's
claims are not credible. Basso explained that the Manila Polo
Club share was offered to him as a bonus to entice him to leave his
then employer, United Airlines. A letter from Mr. Paul J. Casey,
former president of Continental, supports Basso.85 In the letter, Mr.
Casey explained:
As a signing bonus, and a perk to attract Mr. Basso to join
Continental Airlines, he was given the Manila Polo Club share and
authorized to have the share re-issued in his name. In addition to
giving Mr. Basso the Manila Polo Club share, Continental agreed to
pay the dues for a period of three years and this was embodied in
his contract with Continental. This was all clone with my knowledge
and approval.86
Clause 14 of the employment contract also states:
Club Memberships: The Company will locally pay annual dues for
membership in a club in Manila that your immediate supervisor and
I agree is of at least that value to Continental through you in your
role as our General Manager for the Philippines.87
Taken together, the above pieces of evidence suggest that
the Manila Polo Club share was part of Basso's compensation
package and thus he validly used company funds to pay for the
transfer fees. If doubts exist between the evidence presented by
the employer and the employee, the scales of justice must be tilted
in favor of the latter.88
Finally, CMI violated procedural due process in terminating Basso.
In King of Kings Transport, Inc. v. Mamac 89 we detailed the
procedural due process steps in termination of employment:
To clarify, the following should be considered in terminating the
services of employees:chanRoblesvirtualLawlibrary
(1) The first written notice to be served on the employees should
contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity
to submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every
kind of assistance that management must accord to the employees
to enable them to prepare adequately for their defense. This
should be construed as a period of at least five (5) calendar days
from receipt of the notice to give the employees an opportunity to
study the accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the defenses they
will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses,
the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule
and conduct a hearing or conference wherein the employees will
be given the opportunity to: (1) explain and clarify their defenses
to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are
given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover,
this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified,
the employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2)
grounds have been established to justify the severance of their
employment. (Emphasis in original.)
Here, Mr. Schulz's and Ms. Woodward's letters dated December 19,
1995 and March 14, 1996, respectively, are not one of the valid
twin notices. Neither identified the alleged acts that CMI now
claims as bases for Basso's termination. Ms. Woodward's letter
even stressed that the original plan was to remove Basso as General
Manager but with an offer to make him consultant. It was
inconsistent of CMI to declare Basso as unworthy of its trust and
confidence and, in the same breath, offer him the position of
consultant. As the Court of Appeals pointed out:
But mark well that Basso was clearly notified that the sole ground
for his dismissal was the exercise of the termination at will clause
in the employment contract. The alleged loss of trust and
confidence claimed by Continental appears to be a mere
afterthought belatedly trotted out to save the day.90
Basso is entitled to separation pay and full backwages.
Under Article 279 of the Labor Code, an employee who is unjustly
dismissed from work shall be entitled to reinstatement without
loss of eniority rights and other privileges, and to his full
backwages, inclusive of allowances and to his other benefits or
their monetary equivalent omputed from the time his
compensation was withheld up to the time of actual reinstatement.
Where reinstatement is no longer viable as an option, separation
pay equivalent to one (1) month salary for every year of service
should be awarded as an alternative. The payment of separation
pay is in addition to payment of backwages.91 In the case of Basso,
reinstatement is no longer possible since he has already passed
away. Thus, Basso's separation pay with full backwages shall be
paid to his heirs.
As to the computation of backwages, we agree with CMI that Basso
was entitled to backwages only up to the time he reached 65 years
old, the compulsory retirement age under the law.92 This is our
consistent ruling.93 When Basso was illegally dismissed on January
31, 1996, he was already 58 years old.94 He turned 65 years old on
October 2, 2002. Since backwages are granted on grounds of equity
for earnings lost by an employee due to his illegal dismissal, 95 Basso
was entitled to backwages only for the period he could have
worked had he not been illegally dismissed, i.e. from January 31,
1996 to October 2, 2002.
WHEREFORE, premises considered, the Decision of the Court of
Appeals dated May 23, 2006 and Resolution dated June 19, 2007 in
the consolidated cases CA-G.R. SP No. 83938 and CA-G.R. SP No.
84281 are AFFIRMED, with MODIFICATION as to the award of
backwages. Petitioner Continental Micronesia, Inc. is hereby
ordered to pay Respondent Joseph Basso's heirs: 1) separation pay
equivalent to one (1) month pay for every year of service, and 2)
full backwages from January 31, 1996, the date of his illegal
dismissal, to October 2, 2002, the date of his compulsory
retirement age.
SO ORDERED.chanroblesvirtuallawlibrary
[G.R. No. 142244. November 18, 2002]
ATLAS FARMS, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, JAIME O. DELA PEA and MARCIAL I.
ABION, respondents.
DECISION
QUISUMBING, J.:
Petitioner seeks the reversal of the decision[1] dated January 10,
2000 of the Court of Appeals in CA-G.R. SP No. 52780, dismissing its
petition for certiorari against the NLRC, as well as the
resolution[2] dated February 24, 2000, denying its motion for
reconsideration.
The antecedent facts of the case, as found by the Court of
Appeals,[3] are as follows:
Private respondent Jaime O. dela Pea was employed as a veterinary
aide by petitioner in December 1975. He was among several
employees terminated in July 1989. On July 8, 1989, he was re-
hired by petitioner and given the additional job of feedmill
operator.He was instructed to train selected workers to operate
the feedmill.
[4]
On March 13, 1993, Pea was allegedly caught urinating and
defecating on company premises not intended for the purpose. The
farm manager of petitioner issued a formal notice directing him to
explain within 24 hours why disciplinary action should not be taken
against him for violating company rules and regulations. Pea
refused, however, to receive the formal notice. He never bothered
to explain, either verbally or in writing, according to
petitioner. Thus, on March 20, 1993, a notice of termination with
payment of his monetary benefits was sent to him. He duly
acknowledged receipt of his separation pay of P13,918.67.
From the start of his employment on July 8, 1989, until his
termination on March 20, 1993, Pea had worked for seven days a
week, including holidays, without overtime, holiday, rest day pay
and service incentive leave. At the time of his dismissal from
employment, he was receiving P180 pesos daily wage, or an
average monthly salary of P5,402.
Co-respondent Marcial I. Abion[5] was a carpenter/mason and a
maintenance man whose employment by petitioner commenced
on October 8, 1990. Allegedly, he caused the clogging of the
fishpond drainage resulting in damages worth several hundred
thousand pesos when he improperly disposed of the cut grass and
other waste materials into the ponds drainage system. Petitioner
sent a written notice to Abion, requiring him to explain what
happened, otherwise, disciplinary action would be taken against
him. He refused to receive the notice and give an explanation,
according to petitioner. Consequently, the company terminated his
services on October 27, 1992. He acknowledged receipt of a
written notice of dismissal, with his separation pay.
Like Pea, Abion worked seven days a week, including holidays,
without holiday pay, rest day pay, service incentive leave pay and
night shift differential pay. When terminated on October 27, 1992,
Abion was receiving a monthly salary of P4,500.
Pea and Abion filed separate complaints for illegal dismissal that
were later consolidated. Both claimed that their termination from
service was due to petitioners suspicion that they were the leaders
in a plan to form a union to compete and replace the existing
management-dominated union.
On November 9, 1993, the labor arbiter dismissed their complaints
on the ground that the grievance machinery in the collective
bargaining agreement (CBA) had not yet been exhausted. Private
respondents availed of the grievance process, but later on refiled
the case before the NLRC in Region IV. They alleged lack of
sympathy on petitioners part to engage in conciliation proceedings.
Their cases were consolidated in the NLRC. At the initial mandatory
conference, petitioner filed a motion to dismiss, on the ground of
lack of jurisdiction, alleging private respondents themselves
admitted that they were members of the employees union with
which petitioner had an existing CBA. This being the case, according
to petitioner, jurisdiction over the case belonged to the grievance
machinery and thereafter the voluntary arbitrator, as provided in
the CBA.
In a decision dated January 30, 1996, the labor arbiter dismissed
the complaint for lack of merit, finding that the case was one of
illegal dismissal and did not involve the interpretation or
implementation of any CBA provision. He stated that Article 217 (c)
of the Labor Code[6] was inapplicable to the case. Further, the labor
arbiter found that although both complainants did not substantiate
their claims of illegal dismissal, there was proof that private
respondents voluntarily accepted their separation pay and
petitioners financial assistance.
Thus, private respondents brought the case to the NLRC, which
reversed the labor arbiters decision. Dissatisfied with the NLRC
ruling, petitioner went to the Court of Appeals by way of a petition
for review on certiorari under Rule 65, seeking reinstatement of the
labor arbiters decision. The appellate court denied the petition and
affirmed the NLRC resolution with some modifications, thus:
WHEREFORE, the petition is DENIED. The resolution in NLRC CA No.
010520-96 is AFFIRMED with the following modifications:
1) The private respondents can not be reinstated, due to their
acceptance of the separation pay offered by the petitioner;
2) The private respondents are entitled to their full back wages;
and,
3) The amount of the separation pay received by private
respondents from petitioner shall not be deducted from their full
back wages.
Costs against petitioner.
SO ORDERED.[7]
Petitioner forthwith filed its motion for reconsideration, which was
denied in a resolution dated February 24, 2000, which reads:
Acting on the Motion for Reconsideration filed by petitioner[s]
which drew an opposition from private respondents, the Court
resolved to DENY the aforesaid motion for reconsideration, as the
issues raised therein have been passed upon by the Court in its
questioned decision and no substantial arguments were presented
to warrant its reversal, let alone modification.
SO ORDERED.[8]
In this petition now before us, petitioner alleges that the appellate
court erred in:
I. DENYING THE PETITION FOR CERTIORARI AND IN EFFECT
AFFIRMING THE RULINGS OF THE PUBLIC RESPONDENT NLRC THAT
THE PRIVATE RESPONDENTS WERE ILLEGALLY DISMISSED;
II. RULING THAT THE PRIVATE RESPONDENTS ARE ENTITLED TO
SEPARATION PAY AND FULL BACKWAGES;
III. RULING THAT PETITIONER IS LIABLE FOR COSTS OF SUIT.[9]
Petitioner contends that the dismissal of private respondents was
for a just and valid cause, pursuant to the provisions of the
companys rules and regulations. It also alleges lack of jurisdiction
on the part of the labor arbiter, claiming that the cases should have
been resolved through the grievance machinery, and eventually
referred to voluntary arbitration, as prescribed in the CBA.
For their part, private respondents contend that they were illegally
dismissed from employment because management discovered that
they intended to form another union, and because they were vocal
in asserting their rights. In any case, according to private
respondents, the petition involves factual issues that cannot be
properly raised in a petition for review on certiorari under Rule 45
of the Revised Rules of Court.[10]
In fine, there are three issues to be resolved: 1) whether private
respondents were legally and validly dismissed; 2) whether the
labor arbiter and the NLRC had jurisdiction to decide complaints for
illegal dismissal; and 3) whether petitioner is liable for costs of the
suit.
The first issue primarily involves questions of fact, which can serve
as basis for the conclusion that private respondents were legally
and validly dismissed. The burden of proving that the dismissal of
private respondents was legal and valid falls upon petitioner.The
NLRC found that petitioner failed to substantiate its claim that both
private respondents committed certain acts that violated company
rules and regulations,[11] hence we find no factual basis to say that
private respondents dismissal was in order. We see no compelling
reason to deviate from the NLRC ruling that their dismissal was
illegal, absent a showing that it reached its conclusion
arbitrarily.[12] Moreover, factual findings of agencies exercising
quasi-judicial functions are accorded not only respect but even
finality, aside from the consideration here that this Court is not a
trier of facts. [13]
Anent the second issue, Article 217 of the Labor Code provides that
labor arbiters have original and exclusive jurisdiction over
termination disputes. A possible exception is provided in Article
261 of the Labor Code, which provides that-
The Voluntary Arbitrator or panel of voluntary arbitrators shall
have original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company
personnel policies referred to in the immediately preceding
article. Accordingly, violations of a Collective Bargaining
Agreement, except those which are gross in character, shall no
longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and or malicious refusal to comply
with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of
the Department of Labor and Employment shall not entertain
disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and refer the same to the
grievance Machinery or Arbitration provided in the Collective
Bargaining Agreement.
But as held in Vivero vs. CA,[14] petitioner cannot arrogate into the
powers of Voluntary Arbitrators the original and exclusive
jurisdiction of Labor Arbiters over unfair labor practices,
termination disputes, and claims for damages, in the absence of an
express agreement between the parties in order for Article 262 of
the Labor Code [Jurisdiction over other labor disputes] to apply in
the case at bar.
Moreover, per Justice Bellosillo:
It may be observed that under Policy Instruction No. 56 of the
Secretary of Labor, dated 6 April 1993, Clarifying the Jurisdiction
Between Voluntary Arbitrators and Labor Arbiters Over
Termination Cases and Providing Guidelines for the Referral of Said
Cases Originally Filed with the NLRC to the NCMB, termination
cases arising in or resulting from the interpretation and
implementation of collective bargaining agreements and
interpretation and enforcement of company personnel policies
which were initially processed at the various steps of the plant-level
Grievance Procedures under the parties collective bargaining
agreements fall within the original and exclusive jurisdiction of the
voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of the
Labor Code; and, if filed before the Labor Arbiter, these cases shall
be dismissed by the Labor Arbiter for lack of jurisdiction and
referred to the concerned NCMB Regional Branch for appropriate
action towards an expeditious selection by the parties of a
Voluntary Arbitrator or Panel of Arbitrators based on the
procedures agreed upon in the CBA.
As earlier stated, the instant case is a termination dispute falling
under the original and exclusive jurisdiction of the Labor Arbiter,
and does not specifically involve the application, implementation
or enforcement of company personnel policies contemplated in
Policy Instruction No. 56.Consequently, Policy Instruction No. 56
does not apply in the case at bar.[15] x x x
Records show, however, that private respondents sought without
success to avail of the grievance procedure in their CBA.[16] On this
point, petitioner maintains that by so doing, private respondents
recognized that their cases still fell under the grievance machinery.
According to petitioner, without having exhausted said machinery,
the private respondents filed their action before the NLRC, in a
clear act of forum-shopping.[17] However, it is worth pointing out
that private respondents went to the NLRC only after the labor
arbiter dismissed their original complaint for illegal
dismissal. Under these circumstances private respondents had to
find another avenue for redress. We agree with the NLRC that it
was petitioner who failed to show proof that it took steps to
convene the grievance machinery after the labor arbiter first
dismissed the complaints for illegal dismissal and directed the
parties to avail of the grievance procedure under Article VII of the
existing CBA. They could not now be faulted for attempting to find
an impartial forum, after petitioner failed to listen to them and
after the intercession of the labor arbiter proved futile. The NLRC
had aptly concluded in part that private respondents had already
exhausted the remedies under the grievance procedure.[18] It erred
only in finding that their cause of action was ripe for arbitration.
In the case of Maneja vs. NLRC,[19] we held that the dismissal case
does not fall within the phrase grievances arising from the
interpretation or implementation of the collective bargaining
agreement and those arising from the interpretation or
enforcement of company personnel policies. In Maneja, the hotel
employee was dismissed without hearing. We ruled that her
dismissal was unjustified, and her right to due process was violated,
absent the twin requirements of notice and hearing. We also held
that the labor arbiter had original and exclusive jurisdiction over
the termination case, and that it was error to give the voluntary
arbitrator jurisdiction over the illegal dismissal case.
In Vivero vs. CA,[20] private respondents attempted to justify the
jurisdiction of the voluntary arbitrator over a termination dispute
alleging that the issue involved the interpretation and
implementation of the grievance procedure in the CBA. There, we
held that since what was challenged was the legality of the
employees dismissal for lack of cause and lack of due process, the
case was primarily a termination dispute. The issue of whether
there was proper interpretation and implementation of the CBA
provisions came into play only because the grievance procedure in
the CBA was not observed, after he sought his unions
assistance. Since the real issue then was whether there was a valid
termination, there was no reason to invoke the need to interpret
nor question an implementation of any CBA provision.
One significant fact in the present petition also needs
stressing. Pursuant to Article 260[21] of the Labor Code, the parties
to a CBA shall name or designate their respective representatives
to the grievance machinery and if the grievance is unsettled in that
level, it shall automatically be referred to the voluntary arbitrators
designated in advance by the parties to a CBA. Consequently only
disputes involving the union and the company shall be referred to
the grievance machinery or voluntary arbitrators. In these
termination cases of private respondents, the union had no
participation, it having failed to object to the dismissal of the
employees concerned by the petitioner. It is obvious that
arbitration without the unions active participation on behalf of the
dismissed employees would be pointless, or even prejudicial to
their cause.
Coming to the merits of the petition, the NLRC found that
petitioner did not comply with the requirements of a valid
dismissal. For a dismissal to be valid, the employer must show that:
(1) the employee was accorded due process, and (2) the dismissal
must be for any of the valid causes provided for by law.[22] No
evidence was shown that private respondents refused, as alleged,
to receive the notices requiring them to show cause why no
disciplinary action should be taken against them. Without proof of
notice, private respondents who were subsequently dismissed
without hearing were also deprived of a chance to air their side at
the level of the grievance machinery. Given the fact of dismissal, it
can be said that the cases were effectively removed from the
jurisdiction of the voluntary arbitrator, thus placing them within
the jurisdiction of the labor arbiter. Where the dispute is just in the
interpretation, implementation or enforcement stage, it may be
referred to the grievance machinery set up in the CBA, or brought
to voluntary arbitration.But, where there was already actual
termination, with alleged violation of the employees rights, it is
already cognizable by the labor arbiter.[23]
In sum, we conclude that the labor arbiter and then the NLRC had
jurisdiction over the cases involving private respondents dismissal,
and no error was committed by the appellate court in upholding
their assumption of jurisdiction.
However, we find that a modification of the monetary awards is in
order. As a consequence of their illegal dismissal, private
respondents are entitled to reinstatement to their former
positions. But since reinstatement is no longer feasible because
petitioner had already closed its shop, separation pay in lieu of
reinstatement shall be awarded.[24] A terminated employees
receipt of his separation pay and other monetary benefits does not
preclude reinstatement or full benefits under the law, should
reinstatement be no longer possible.[25] As held in Cario vs.
ACCFA:[26]
Acceptance of those benefits would not amount to estoppel. The
reason is plain. Employer and employee, obviously, do not stand on
the same footing. The employer drove the employee to the
wall. The latter must have to get hold of the money. Because out of
job, he had to face the harsh necessities of life. He thus found
himself in no position to resist money proffered. His, then, is a case
of adherence, not of choice. One thing sure, however, is that
petitioners did not relent their claim. They pressed it. They are
deemed not to have waived their rights. Renuntiato non
praesumitur.
Conformably, private respondents are entitled to separation pay
equivalent to one months salary for every year of service, in lieu of
reinstatement.[27] As regards the award of damages, in order not to
further delay the disposition of this case, we find it necessary to
expressly set forth the extent of the backwages as awarded by the
appellate court. Pursuant to R.A. 6715, as amended, private
respondents shall be entitled to full backwages computed from the
time of their illegal dismissal up to the date of promulgation of this
decision without qualification, considering that reinstatement is no
longer practicable under the circumstances.[28]
Having found private respondents dismissal to be illegal, and the
labor arbiter and the NLRC duly vested with jurisdiction to hear and
decide their cases, we agree with the appellate court that
petitioner should pay the costs of suit.
WHEREFORE, the petition is DENIED for lack of merit. The decision
of the Court of Appeals in CA-G.R. SP No. 52780 is AFFIRMED with
the MODIFICATION that petitioner is ordered to pay private
respondents (a) separation pay, in lieu of their reinstatement,
equivalent to one months salary for every year of service, (b) full
backwages from the date of their dismissal up to the date of the
promulgation of this decision, together with (c) the costs of suit.
SO ORDERED.
[G.R. No. 121948. October 8, 2001]
PERPETUAL HELP CREDIT COOPERATIVE,
INC., petitioner, vs. BENEDICTO FABURADA, SISINITA VILLAR,
IMELDA TAMAYO, HAROLD CATIPAY, and the NATIONAL LABOR
RELATIONS COMMISSION, Fourth Division, Cebu
City, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda
Tamayo and Harold Catipay, private respondents, filed a complaint
against the Perpetual Help Credit Cooperative, Inc. (PHCCI),
petitioner, with the Arbitration Branch, Department of Labor and
Employment (DOLE), Dumaguete City, for illegal dismissal,
premium pay on holidays and rest days, separation pay, wage
differential, moral damages, and attorneys fees.
Forthwith, petitioner PHCCI filed a motion to dismiss the complaint
on the ground that there is no employer-employee relationship
between them as private respondents are all members and co-
owners of the cooperative. Furthermore, private respondents have
not exhausted the remedies provided in the cooperative by-laws.
On September 3, 1990, petitioner filed a supplemental motion to
dismiss alleging that Article 121 of R.A. No. 6939, otherwise known
as the Cooperative Development Authority Law which took effect
on March 26, 1990, requires conciliation or mediation within the
cooperative before a resort to judicial proceeding.
On the same date, the Labor Arbiter denied petitioner's motion to
dismiss, holding that the case is impressed with employer-
employee relationship and that the law on cooperatives is
subservient to the Labor Code.
On November 23, 1993, the Labor Arbiter rendered a decision, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered
declaring complainants illegally dismissed, thus respondent is
directed to pay Complainants backwages computed from the time
they were illegally dismissed up to the actual reinstatement but
subject to the three year backwages rule, separation pay for one
month for every year of service since reinstatement is evidently not
feasible anymore, to pay complainants 13th month pay, wage
differentials and Ten Percent (10%) attorneys fees from the
aggregate monetary award. However, complainant Benedicto
Faburada shall only be awarded what are due him in proportion to
the nine and a half months that he had served the respondent, he
being a part-time employee.
All other claims are hereby dismissed for lack of merit.
The computation of the foregoing awards is hereto attached and
forms an integral part of this decision.
On appeal[1], the NLRC affirmed the Labor Arbiter's decision.
Hence, this petition by the PHCCI.
The issue for our resolution is whether or not respondent judge
committed grave abuse of discretion in ruling that there is an
employer-employee relationship between the parties and that
private respondents were illegally dismissed.
Petitioner PHCCI contends that private respondents are its
members and are working for it as volunteers. Not being regular
employees, they cannot sue petitioner.
In determining the existence of an employer-employee
relationship, the following elements are considered: (1) the
selection and engagement of the worker or the power to hire; (2)
the power to dismiss; (3) the payment of wages by whatever
means; and (4) the power to control the workers conduct, with the
latter assuming primacy in the overall consideration. No particular
form of proof is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence may
show the relationship.[2]
The above elements are present here. Petitioner PHCCI, through bookkeeping and accounting duties as may be assigned her from
Mr. Edilberto Lantaca, Jr., its Manager, hired private respondents time to time.
to work for it. They worked regularly on regular working hours,
Harold D. Catipay - Clerk. Worked with the Cooperative since
were assigned specific duties, were paid regular wages and made
March 3 to December 29, 1989. Work schedule: - Monday to Friday
to accomplish daily time records just like any other regular
- 8:00 to 11:30 a.m. and 2:00 to 5:30 p.m.; Saturday - 8:00 to 11:30
employee. They worked under the supervision of the cooperative
a.m. and 1:00 to 4:00 p.m.; and one Sunday each month - for at
manager. But unfortunately, they were dismissed.
least three (3) hours. Monthly salary: P900.00 - from March to June
That an employer-employee exists between the parties is shown by 1989; P1,050.00 - from July to December 1989. Duties: Among
the averments of private respondents in their respective affidavits, others, Bookkeeping, accounting and collecting duties, such as,
carefully considered by respondent NLRC in affirming the Labor post daily collections from the two (2) collectors in the market;
Arbiter's decision, thus: reconcile passbooks and ledgers of members in the market; and
assist the other clerks in their duties.
Benedicto Faburada -Regular part-time Computer programmer/
operator. Worked with the Cooperative since June 1, 1988 up to All of them were given a memorandum of termination on January
December 29, 1989. Work schedule: Tuesdays and Thursdays, from 2, 1990, effective December 29, 1989.
1:00 p.m. to 5:30 p.m. and every Saturday from 8:00 to 11:30 a.m.
We are not prepared to disregard the findings of both the Labor
and 1:00 to 4:00 p.m. and for at least three (3 ) hours during
Arbiter and respondent NLRC, the same being supported by
Sundays. Monthly salary: P1,000.00 -from June to December 1988;
substantial evidence, that quantum of evidence required in quasi-
P1,350.00 - from January to June 1989; and P1,500.00 from July to
judicial proceedings, like this one..
December 1989. Duties: Among others, Enter data into the
computer; compute interests on savings deposits, effect mortuary Necessarily, this leads us to the issue of whether or not private
deductions and dividends on fixed deposits; maintain the masterlist respondents are regular employees. Article 280 of the Labor Code
of the cooperative members; perform various forms for provides for three kinds of employees: (1) regular employees or
mimeographing; and perform such other duties as may be assigned those who have been engaged to perform activities which are
from time to time. usually necessary or desirable in the usual business or trade of the
employer; (2) project employees or those whose employment has
Sisinita Vilar -Clerk. Worked with the Cooperative since December
been fixed for a specific project or undertaking, the completion or
1, 1987 up to December 29, 1989. Work schedule: Regular working
termination of which has been determined at the time of the
hours. Monthly salary: P500.00 - from December 1, 1987 to
engagement of the employee or where the work or service to be
December 31, 1988; P1,000.00 - from January 1, 1989 to June 30,
performed is seasonal in nature and the employment is for the
1989; and P1,150.00 - from July 1, 1989 to December 31,
duration of the season; and (3) casual employees or those who are
1989. Duties: Among others, Prepare summary of salary advances,
neither regular nor project employees.[3] The employees who are
journal vouchers, daily summary of disbursements to respective
deemed regular are: (a) those who have been engaged to perform
classifications; schedule loans; prepare checks and cash vouchers
activities which are usually necessary or desirable in the usual trade
for regular and emergency loans; reconcile bank statements to the
or business of the employer; and (b) those casual employees who
daily summary of disbursements; post the monthly balance of fixed
have rendered at least one (1) year of service, whether such service
and savings deposits in preparation for the computation of
is continuous or broken, with respect to the activity in which they
interests, dividends, mortuary and patronage funds; disburse
are employed.[4] Undeniably, private respondents were rendering
checks during regular and emergency loans; and perform such
services necessary to the day-to-day operations of petitioner
other bookkeeping and accounting duties as may be assigned to her
PHCCI. This fact alone qualified them as regular employees.
from time to time.
All of them, except Harold D. Catipay, worked with petitioner for
Imelda C. Tamayo - Clerk. Worked with the Cooperative since
more than one (1) year: Benedicto Faburada, for one and a half (1
October 19, 1987 up to December 29, 1989. Work schedule:
1/2) years; Sisinita Vilar, for two (2) years; and Imelda C. Tamayo,
Monday to Friday - 8:00 to 11:30 a.m and 2:00 to 5:30 p.m.; every
for two (2) years and two (2) months. That Benedicto Faburada
Saturday - 8:00 to 11:30 a.m and 1:00 to 4:00 p.m; and for one
worked only on a part-time basis, does not mean that he is not a
Sunday each month - for at least three (3) hours. Monthly salary:
regular employee. Ones regularity of employment is not
P60.00 - from October to November 1987; P250.00 for December
determined by the number of hours one works but by the nature
1987; P500.00 - from January to December 1988; P950 -
and by the length of time one has been in that particular
from January to June 1989; and P1,000.00 from July to December
job.[5] Petitioner's contention that private respondents are mere
1989. Duties: Among others, pick up balances for the computation
volunteer workers, not regular employees, must necessarily fail. Its
of interests on savings deposit, mortuary, dividends and patronage
invocation of San Jose City Electric Cooperative vs. Ministry of Labor
funds; prepare cash vouchers; check petty cash vouchers; take
and Employment (173 SCRA 697, 703 (1989 ) is misplaced. The issue
charge of the preparation of new passbooks and ledgers for new
in this case is whether or not the employees-members of a
applicants; fill up members logbook of regular depositors, junior
cooperative can organize themselves for purposes of collective
depositors and special accounts; take charge of loan releases every
bargaining, not whether or not the members can be
Monday morning; assist in the posting and preparation of deposit
employees. Petitioner missed the point.
slips; receive deposits from members; and perform such other
As regular employees or workers, private respondents are entitled
to security of tenure. Thus, their services may be terminated only
for a valid cause, with observance of due process.
The valid causes are categorized into two groups: the just causes
under Articles 282 of the Labor Code and the authorized causes
under Articles 283 and 284 of the same Code. The just causes are:
(1) serious misconduct or willful disobedience of lawful orders in
connection with the employees work; (2) gross or habitual neglect
of duties; (3) fraud or willful breach of trust; (4) commission of a
crime or an offense against the person of the employer or his
immediate family member or representative; and, analogous cases.
The authorized causes are: (1) the installation of labor-saving
devices; (2) redundancy; (3) retrenchment to prevent losses; and
(4) closing or cessation of operations of the establishment or
undertaking, unless the closing is for the purpose of circumventing
the provisions of law. Article 284 provides that an employer would
be authorized to terminate the services of an employee found to
be suffering from any disease if the employees continued
employment is prohibited by law or is prejudicial to his health or to
the health of his fellow employees[6]
Private respondents were dismissed not for any of the above
causes. They were dismissed because petitioner considered them
to be mere voluntary workers, being its members, and as such work
at its pleasure. Petitioner thus vehemently insists that their
dismissal is not against the law.
Procedural due process requires that the employer serve the
employees to be dismissed two (2) written notices before the
termination of their employment is effected: (a) the first, to apprise
them of the particular acts or omissions for which their dismissal is
sought and (b) the second, to inform them of the decision of the
employer that they are being dismissed.[7] In this case, only one
notice was served upon private respondents by petitioner. It was in
the form of a Memorandum signed by the Manager of the
Cooperative dated January 2, 1990 terminating their services
effective December 29, 1989. Clearly, petitioner failed to comply
with the twin requisites of a valid notice.
We hold that private respondents have been illegally dismissed.
Petitioner contends that the labor arbiter has no jurisdiction to take
cognizance of the complaint of private respondents considering
that they failed to submit their dispute to the grievance machinery
as required by P.D 175 (strengthening the Cooperative
Movement)[8] and its implementing rules and regulations under LOI
23. Likewise, the Cooperative Development Authority did not issue
a Certificate of Non-Resolution pursuant to Section 8 of R.A. 6939
or the Cooperative Development Authority Law.
As aptly stated by the Solicitor General in his comment, P.D. 175
does not provide for a grievance machinery where a dispute or
claim may first be submitted. LOI 23 refers to instructions to the
Secretary of Public Works and Communications to implement
immediately the recommendation of the Postmaster General for
the dismissal of some employees of the Bureau of Post. Obviously,
this LOI has no relevance to the instant case.
Article 121 of Republic Act No. 6938 (Cooperative Code of the
Philippines) provides the procedure how cooperative disputes are
to be resolved, thus:
ART. 121. Settlement of Disputes.- Disputes among members,
officers, directors, and committee members, and intra-cooperative
disputes shall, as far as practicable, be settled amicably in
accordance with the conciliation or mediation mechanisms
embodied in the bylaws of the cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter
shall be settled in a court of competent jurisdiction.
Complementing this Article is Section 8 of R.A. No. 6939
(Cooperative Development Authority Law) which reads:
SEC. 8 Mediation and Conciliation.- Upon request of either or both
parties, the Authority shall mediate and conciliate disputes within
a cooperative or between cooperatives: Provided, That if no
mediation or conciliation succeeds within three (3) months from
request thereof, a certificate of non-resolution shall be issued by
the Commission prior to the filing of appropriate action before the
proper courts.
The above provisions apply to members, officers and directors of
the cooperative involved in disputes within a cooperative or
between cooperatives.
There is no evidence that private respondents are members of
petitioner PHCCI and even if they are, the dispute is about payment
of wages, overtime pay, rest day and termination of
employment. Under Art. 217 of the Labor Code, these disputes are
within the original and exclusive jurisdiction of the Labor Arbiter.
As illegally dismissed employees, private respondents are therefore
entitled to reinstatement without loss of seniority rights and other
privileges and to full backwages, inclusive of allowances, plus other
benefits or their monetary equivalent computed from the time
their compensation was witheld from them up to the time of their
actual reinstatement.[9] Since they were dismissed after March 21,
1989, the effectivity date of R.A. 6715[10] they are granted full
backwages, meaning, without deducting from their backwages the
earnings derived by them elsewhere during the period of their
illegal dismissal.[11] If reinstatement is no longer feasible, as when
the relationship between petitioner and private respondents has
become strained, payment of their separation pay in lieu of
reinstatement is in order.[12]
WHEREFORE, the petition is hereby DENIED. The decision of
respondent NLRC is AFFIRMED, with modification in the sense that
the backwages due private respondents shall be paid in full,
computed from the time they were illegally dismissed up to the
time of the finality of this Decision.[13]
SO ORDERED.
[G.R. No. 144767. March 21, 2002]
DILY DANY NACPIL, petitioner, vs. INTERNATIONAL
BROADCASTING CORPORATION, respondent.
DECISION
KAPUNAN, J.:
This is a petition for review on certiorari under Rule 45, assailing
the Decision of the Court of Appeals dated November 23, 1999 in
CA-G.R. SP No. 52755[1] and the Resolution dated August 31, 2000
denying petitioner Dily Dany Nacpil's motion for reconsideration.
The Court of Appeals reversed the decisions promulgated by the
Labor Arbiter and the National Labor Relations Commission (NLRC),
which consistently ruled in favor of petitioner.
Petitioner states that he was Assistant General Manager for
Finance/Administration and Comptroller of private respondent
Intercontinental Broadcasting Corporation (IBC) from 1996 until
April 1997. According to petitioner, when Emiliano Templo was
appointed to replace IBC President Tomas Gomez III sometime in
March 1997, the former told the Board of Directors that as soon as
he assumes the IBC presidency, he would terminate the services
of petitioner. Apparently, Templo blamed petitioner, along with a
certain Mr. Basilio and Mr. Gomez, for the prior mismanagement
of IBC. Upon his assumption of the IBC presidency, Templo
allegedly harassed, insulted, humiliated and pressured petitioner
into resigning until the latter was forced to retire. However, Templo
refused to pay him his retirement benefits, allegedly because he
had not yet secured the clearances from the Presidential
Commission on Good Government and the Commission on Audit.
Furthermore, Templo allegedly refused to recognize petitioners
employment, claiming that petitioner was not the Assistant
General Manager/Comptroller of IBC but merely usurped the
powers of the Comptroller. Hence, in 1997, petitioner filed with the
Labor Arbiter a complaint for illegal dismissal and non-payment of
benefits.
Instead of filing its position paper, IBC filed a motion to dismiss
alleging that the Labor Arbiter had no jurisdiction over the case. IBC
contended that petitioner was a corporate officer who was duly
elected by the Board of Directors of IBC; hence, the case qualifies
as an intra-corporate dispute falling within the jurisdiction of
the Securities and Exchange Commission (SEC). However, the
motion was denied by the Labor Arbiter in an Order dated April 22,
1998.[2]
On August 21, 1998, the Labor Arbiter rendered a Decision stating
that petitioner had been illegally dismissed. The dispositive portion
thereof reads:
WHEREFORE, in view of all the foregoing, judgment is hereby
rendered in favor of the complainant and against all the
respondents, jointly and severally, ordering the latter:
1. To reinstate complainant to his former position without
diminution of salary or loss of seniority rights, and with full
backwages computed from the time of his illegal dismissal on May
16, 1997 up to the time of his actual reinstatement which is
tentatively computed as of the date of this decision on August 21,
1998 in the amount of P1,231,750.00 (i.e., P75,000.00 a month x
15.16 months = P1,137,000.00 plus 13th month pay equivalent to
1/12 of P 1,137,000.00 = P94,750.00 or the total amount of P
1,231,750.00). Should complainant be not reinstated within ten
(10) days from receipt of this decision, he shall be entitled to
additional backwages until actually reinstated.
2. Likewise, to pay complainant the following:
a) P 2 Million as and for moral damages;
b) P500,000.00 as and for exemplary damages; plus and (sic)
c) Ten (10%) percent thereof as and for attorneys fees.
SO ORDERED.[3]
IBC appealed to the NLRC, but the same was dismissed in a
Resolution dated March 2, 1999, for its failure to file the required
appeal bond in accordance with Article 223 of the Labor Code.[4] IBC
then filed a motion for reconsideration that was likewise denied in
a Resolution dated April 26, 1999.[5]
IBC then filed with the Court of Appeals a petition for certiorari
under Rule 65, which petition was granted by the appellate court
in its Decision dated November 23, 1999. The dispositive portion of
said decision states:
WHEREFORE, premises considered, the petition for Certiorari is
GRANTED. The assailed decisions of the Labor Arbiter and the NLRC
are REVERSED and SET ASIDE and the complaint is DISMISSED
without prejudice.
SO ORDERED.[6]
Petitioner then filed a motion for reconsideration, which was
denied by the appellate court in a Resolution dated August 31,
2000.
Hence, this petition.
Petitioner Nacpil submits that:
I.
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER WAS
APPOINTED BY RESPONDENTS BOARD OF DIRECTORS AS
COMPTROLLER. THIS FINDING IS CONTRARY TO THE COMMON,
CONSISTENT POSITION AND ADMISSION OF BOTH PARTIES.
FURTHER, RESPONDENTS BY-LAWS DOES NOT INCLUDE
COMPTROLLER AS ONE OF ITS CORPORATE OFFICERS.
II.
THE COURT OF APPEALS WENT BEYOND THE ISSUE OF THE CASE
WHEN IT SUBSTITUTED THE NATIONAL LABOR RELATIONS
COMMISSIONS DECISION TO APPLY THE APPEAL BOND
REQUIREMENT STRICTLY IN THE INSTANT CASE. THE ONLY ISSUE
FOR ITS DETERMINATION IS WHETHER NLRC COMMITTED GRAVE
ABUSE OF DISCRETION IN DOING THE SAME.[7]
The issue to be resolved is whether the Labor Arbiter had
jurisdiction over the case for illegal dismissal and non-payment of
benefits filed by petitioner. The Court finds that the Labor Arbiter
had no jurisdiction over the same.
Under Presidential Decree No. 902-A (the Revised Securities Act),
the law in force when the complaint for illegal dismissal was
instituted by petitioner in 1997, the following cases fall under
the exclusive of the SEC:
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 intra-corporate or partnership
relations, between and among stockholders, members or
associates; between any or all of them and the corporation,
partnership or association of which they are stockholders,
members or associates, respectively; and between such
corporation, partnership or association and the State insofar as it
concerns their individual franchise or right to exist as such entity;
c) Controversies in the election or appointment of directors,
trustees, officers, or managers of such corporations, partnerships
or associations;
d) Petitions of corporations, partnerships, or associations to be
declared in the state of suspension of payments in cases where the
corporation, partnership or association possesses property to
cover all of its debts but foresees the impossibility of meeting them
when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its
liabilities, but is under the Management Committee created
pursuant to this decree. (Emphasis supplied.)
The Court has consistently held that there are two elements to be
considered in determining whether the SEC has jurisdiction over
the controversy, to wit: (1) the status or relationship of the parties;
and (2) the nature of the question that is the subject of their
controversy.[8]
Petitioner argues that he is not a corporate officer of the IBC but an
employee thereof since he had not been elected nor appointed as
Comptroller and Assistant Manager by the IBCs Board of
Directors. He points out that he had actually been appointed as
such on January 11, 1995 by the IBCs General Manager, Ceferino
Basilio. In support of his argument, petitioner underscores the fact
that the IBCs By-Laws does not even include the position of
comptroller in its roster of corporate officers.[9] He therefore
contends that his dismissal is a controversy falling within the
jurisdiction of the labor courts.[10]
Petitioners argument is untenable. Even assuming that he was in
fact appointed by the General Manager, such appointment was
subsequently approved by the Board of Directors of the
IBC.[11] That the position of Comptroller is not expressly mentioned
among the officers of the IBC in the By-Laws is of no moment,
because the IBCs Board of Directors is empowered under Section
25 of the Corporation Code[12] and under the corporations By-Laws
to appoint such other officers as it may deem necessary. The By-
Laws of the IBC categorically provides:
XII. OFFICERS
The officers of the corporation shall consist of a President, a Vice-
President, a Secretary-Treasurer, a General Manager, and such
other officers as the Board of Directors may from time to time
does fit to provide for. Said officers shall be elected by majority
vote of the Board of Directors and shall have such powers and
duties as shall hereinafter provide (Emphasis supplied).[13]
The Court has held that in most cases the by-laws may and usually
do provide for such other officers,[14] and that where a corporate
office is not specifically indicated in the roster of corporate offices
in the by-laws of a corporation, the board of directors may also be
empowered under the by-laws to create additional officers as may
be necessary.[15]
An office has been defined as a creation of the charter of a
corporation, while an officer as a person elected by the directors or
stockholders. On the other hand, an employee occupies no office
and is generally employed not by action of the directors and
stockholders but by the managing officer of the corporation who
also determines the compensation to be paid to such employee.[16]
As petitioners appointment as comptroller required the approval
and formal action of the IBCs Board of Directors to become
valid,[17] it is clear therefore holds that petitioner is a corporate
officer whose dismissal may be the subject of a controversy
cognizable by the SEC under Section 5(c) of P.D. 902-A which
includes controversies involving both election and appointment of
corporate directors, trustees, officers, and managers.[18] Had
petitioner been an ordinary employee, such board action would
not have been required.
Thus, the Court of Appeals correctly held that:
Since complainants appointment was approved unanimously by
the Board of Directors of the corporation, he is therefore
considered a corporate officer and his claim of illegal dismissal is a
controversy that falls under the jurisdiction of the SEC as
contemplated by Section 5 of P.D. 902-A. The rule is that dismissal
or non-appointment of a corporate officer is clearly an intra-
corporate matter and jurisdiction over the case properly belongs to
the SEC, not to the NLRC.[19]
As to petitioners argument that the nature of his functions is
recommendatory thereby making him a mere managerial officer,
the Court has previously held that the relationship of a person to a
corporation, whether as officer or agent or employee is not
determined by the nature of the services performed, but instead
by the incidents of the relationship as they actually exist.[20]
It is likewise of no consequence that petitioner's complaint for
illegal dismissal includes money claims, for such claims are actually
part of the perquisites of his position in, and therefore linked with
his relations with, the corporation. The inclusion of such money
claims does not convert the issue into a simple labor
problem. Clearly, the issues raised by petitioner against the IBC are
matters that come within the area of corporate affairs and
management, and constitute a corporate controversy in
contemplation of the Corporation Code.[21]
Petitioner further argues that the IBC failed to perfect its
appeal from the Labor Arbiters Decision for its non-payment of the
appeal bond as required under Article 223 of the Labor Code, since
compliance with the requirement of posting of a cash or surety
bond in an amount equivalent to the monetary award in the
judgment appealed from has been held to be both mandatory and
jurisdictional.[22] Hence, the Decision of the Labor Arbiter had long
become final and executory and thus, the Court of Appeals acted
with grave abuse of discretion amounting to lack or excess of
jurisdiction in giving due course to the IBCs petition for certiorari,
and in deciding the case on the merits.
The IBCs failure to post an appeal bond within the period mandated
under Article 223 of the Labor Code has been rendered immaterial
by the fact that the Labor Arbiter did not have jurisdiction over the
case since as stated earlier, the same is in the nature of an intra-
corporate controversy. The Court has consistently held that where
there is a finding that any decision was rendered without
jurisdiction, the action shall be dismissed. Such defense can be
interposed at any time, during appeal or even after final
judgment.[23] It is a well-settled rule that jurisdiction is conferred
only by the Constitution or by law. It cannot be fixed by the will of
the parties; it cannot be acquired through, enlarged or diminished
by, any act or omission of the parties.[24]
Considering the foregoing, the Court holds that no error was
committed by the Court of Appeals in dismissing the case filed
before the Labor Arbiter, without prejudice to the filing of an
appropriate action in the proper court.
It must be noted that under Section 5.2 of the Securities Regulation
Code (Republic Act No. 8799) which was signed into law by then
President Joseph Ejercito Estrada on July 19, 2000, the SECs
jurisdiction over all cases enumerated in Section 5 of P.D. 902-Ahas
been transferred to the Regional Trial Courts.[25]
WHEREFORE, the petition is hereby DISMISSED and the Decision of
the Court of Appeals in CA-G.R. SP No. 52755 is 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 reconsideration of said
decision. The Court of Appeals reversed and set aside the
resolution[2] of the National Labor Relations Commission (NLRC) in
NLRC NCR CA No. 009364-95, reversing and setting aside the labor
arbiters 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. 902-A. More specifically, petitioner contends that
complainant is a corporate officer, an elective position under the
corporate by-laws and her non-election is an intra-corporate
controversy cognizable by the SEC invoking lengthily a number of
this 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 Court reveal however, such an assertion was
made only in the appeal to the NLRC and raised again before the
Court of Appeals, not for purposes of questioning jurisdiction but
to establish that private respondents tenure was subject to the
discretion of the Board of Directors and that her non-reelection
was a mere expiration of her term. The Bank insists that private
respondent was elected Assistant Vice President sometime in 1990
to serve as such for only one year. This argument will not do either
and must be rejected.
It appears that private respondent was appointed Accounting Clerk
by the Bank on July 14, 1963. From that position she rose to
become supervisor. Then in 1982, she was appointed Assistant
Vice-President which she occupied until her illegal dismissal on July
19, 1991. The 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. 149578. April 10, 2003]
EVELYN TOLOSA, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, QWANA KAIUN (through its resident-agent,
FUMIO NAKAGAWA), ASIA BULK TRANSPORT PHILS. INC., PEDRO
GARATE and MARIO ASIS, respondents.
DECISION
PANGANIBAN, J.:
As a rule, labor arbiters and the National Labor Relations
Commission have no power or authority to grant reliefs from claims
that do not arise from employer-employee relations. They have no
jurisdiction over torts that have no reasonable causal connection
to any of the claims provided for in the Labor Code, other labor
statutes, or collective bargaining agreements.
The Case
The Petition for Review before us assails the April 18, 2001
Decision[1] of the Court of Appeals (CA) in CA-GR SP No. 57660, as
well as the April 17, 2001 CA Resolution[2] denying petitioners
Motion for Reconsideration. The dispositive portion of the
challenged Decision reads as follows:
WHEREFORE, premises considered, the instant petition for
certiorari is hereby DENIED and accordingly DISMISSED, without
prejudice to the right of herein petitioner to file a suit before the
proper court, if she so desires. No pronouncement as to costs.[3]
The Facts
The appellate court narrated the facts of the case in this manner:
Evelyn Tolosa (hereafter EVELYN), was the widow of Captain Virgilio
Tolosa (hereafter CAPT. TOLOSA) who was hired by Qwana-Kaiun,
through its manning agent, Asia Bulk Transport Phils. Inc., (ASIA
BULK for brevity), to be the master of the Vessel named M/V Lady
Dona. CAPT. TOLOSA had a monthly compensation of US$1700,
plus US$400.00 monthly overtime allowance. His contract officially
began on November 1, 1992, as supported by his contract of
employment when he assumed command of the vessel in
Yokohama, Japan. The vessel departed for Long Beach California,
passing by Hawaii in the middle of the voyage. At the time of
embarkation, CAPT. TOLOSA was allegedly shown to be in good
health.
During channeling activities upon the vessels departure from
Yokohama sometime on November 6, 1992, CAPT. TOLOSA was
drenched with rainwater. The following day, November 7, 1992, he
had a slight fever and in the succeeding twelve (12) days, his health
rapidly deteriorated resulting in his death on November 18, 1992.
According to Pedro Garate, Chief Mate of the Vessel, in his
statement submitted to the U.S. Coast Guard on November 23,
1992 upon arrival in Long Beach, California CAPT. TOLOSA
experienced high fever between November 11-15, 1992 and
suffered from loose bowel movement (LBM) beginning November
9, 1992. By November 11, 1992, his temperature was 39.5 although
his LBM had slightly stopped. The next day, his temperature rose to
39.8 and had lost his appetite. In the evening of that day,
November 13, 1992, he slipped in the toilet and suffered scratches
at the back of his waist. First aid was applied and CAPT. TOLOSA
was henceforth confined to his quarters with an able seaman to
watch him 24 hours a day until November 15, 1992, when his
conditioned worsened.
On the same day, November 15, 1992, the Chief Engineer initiated
the move and contacted ASIA BULK which left CAPT. TOLOSAs fate
in the hands of Pedro Garate and Mario Asis, Second Mate of the
same vessel who was in-charge of the primary medical care of its
officers and crew.Contact with the U.S. Coast Guard in Honolulu,
Hawaii (USCGHH) was likewise initiated to seek medical advice.
On November 17, 1992, CAPT. TOLOSA was losing resistance and
his condition was getting serious. At 2215 GMT, a telex was sent to
ASIA BULK requesting for the immediate evacuation of CAPT.
TOLOSA and thereafter an airlift was set on November 19,
1992. However, on November 18, 1992, at 0753 GMT, CAPT.
TOLOSA was officially recorded as having breathed his last.
Because of the death of CAPT. TOLOSA, his wife, EVELYN, as
petitioner, filed a Complaint/Position Paper before the POEA (POEA
Case No. 93-06-1080) against Qwana-Kaiun, thru its resident-agent,
Mr. Fumio Nakagawa, ASIA BULK, Pedro Garate and Mario Asis, as
respondents.
After initial hearings and submissions of pleadings, the case was
however transferred to the Department of Labor and Employment,
National Labor Relations Commission (NLRC), when the
amendatory legislation expanding its jurisdiction, and removing
overseas employment related claims from the ambit of POEA
jurisdiction. The case was then raffled to Labor Arbiter, Vladimir
Sampang.
xxxxxxxxx
After considering the pleadings and evidences, on July 8, 1997, the
Labor Arbiter Vladimir P. L. Sampang, in conformity with petitioners
plea to hold respondents solidarily liable, granted all the damages,
(plus legal interest), as prayed for by the petitioner. The dispositive
portion of his Decision reads:
WHEREFORE, premises considered, the respondents are hereby
ordered to jointly and solidarily pay complainants the following:
1. US$176,400.00 (US$2,100.00 x 12 months x 7 years)
or P4,586,400.00 (at P26.00 per US$1.00) by way of lost income;
2. interest at the legal rate of six percent (6%) per annum
or P1,238,328.00 (from November 1992 to May 1997 or 4 years);
3. moral damages of P200,000.00;
4. exemplary damages of P100,000.00; and
5. 10% of the total award, or P612,472.80, as attorneys fees.
xxxxxxxxx
On appeal, private respondents raised before the National Labor
Relations Commission (NLRC) the following grounds:
(a) the action before the Arbiter, as he himself concedes, is a
complaint based on torts due to negligence. It is the regular courts
of law which have jurisdiction over the action;
(b) Labor Arbiters have jurisdiction over claims for damages arising
from employer-employee relationship (Art. 217, Section (a) (3));
(c) In this case, gross negligence is imputed to respondents Garate
and Asis, who have no employer-employee relationship with the
late Capt. Virgilio Tolosa;
(d) The labor arbiter has no jurisdiction over the controversy;
xxxxxxxxx
Despite other peripheral issues raised by the parties in their
respective pleadings, the NLRC on September 10, 1998, vacated the
appealed decision dated July 8, 1997 of the Labor Arbiter and
dismissed petitioners case for lack of jurisdiction over the subject
matter of the action pursuant to the provisions of the Labor Code,
as amended.[4] (Citations omitted)
Ruling of the Court of Appeals
Sustaining the NLRC, the CA ruled that the labor commission had
no jurisdiction over the subject matter of the action filed by
petitioner. Her cause did not arise from an employer-employee
relation, but from a quasi delict or tort. Further, there is no
reasonable causal connection between her suit for damages and
her claim under Article 217 (a)(4) of the Labor Code, which allows
an award of damages incident to an employer-employee relation.
Hence, this Petition.[5]
Issues
Petitioner raises the following issues for our consideration:
I
Whether or not the NLRC has jurisdiction over the case.
II
Whether or not Evelyn is entitled to the monetary awards granted
by the labor arbiter.[6]
After reviewing petitioners Memorandum, we find that we are
specifically being asked to determine 1) whether the labor arbiter
and the NLRC had jurisdiction over petitioners action, and 2)
whether the monetary award granted by the labor arbiter has
already reached finality.
The Courts Ruling
The Petition has no merit.
First Issue:
Jurisdiction over the Action
Petitioner argues that her cause of action is not predicated on a
quasi delict or tort, but on the failure of private respondents -- as
employers of her husband (Captain Tolosa) -- to provide him with
timely, adequate and competent medical services under Article 161
of the Labor Code:
ART 161. Assistance of employer. -- It shall be the duty of any
employer to provide all the necessary assistance to ensure the
adequate and immediate medical and dental attendance and
treatment to an injured or sick employee in case of emergency.
Likewise, she contends that Article 217 (a) (4)[7] of the Labor Code
vests labor arbiters and the NLRC with jurisdiction to award all
kinds of damages in cases arising from employer-employee
relations.
Petitioner also alleges that the reasonable causal connection rule
should be applied in her favor. Citing San Miguel Corporation v.
Etcuban,[8] she insists that a reasonable causal connection between
the claim asserted and the employer-employee relation confers
jurisdiction upon labor tribunals. She adds that she has satisfied the
required conditions: 1) the dispute arose from an employer-
employee relation, considering that the claim was for damages
based on the failure of private respondents to comply with their
obligation under Article 161 of the Labor Code; and 2) the dispute
can be resolved by reference to the Labor Code, because the
material issue is whether private respondents complied with their
legal obligation to provide timely, adequate and competent
medical services to guarantee Captain Tolosas occupational
safety.[9]
We disagree. We affirm the CAs ruling that the NLRC and the labor
arbiter had no jurisdiction over petitioners claim for damages,
because that ruling was based on a quasi delict or tort per Article
2176 of the Civil Code.[10]
Time and time again, we have held that the allegations in the
complaint determine the nature of the action and, consequently,
the jurisdiction of the courts.[11] After carefully examining the
complaint/position paper of petitioner, we are convinced that the
allegations therein are in the nature of an action based on a
quasi delict or tort. It is evident that she sued Pedro Garate and
Mario Asis for gross negligence.
Petitioners complaint/position paper refers to and extensively
discusses the negligent acts of shipmates Garate and Asis, who had
no employer-employee relation with Captain Tolosa. Specifically,
the paper alleges the following tortious acts:
x x x [R]espondent Asis was the medical officer of the Vessel, who
failed to regularly monitor Capt. Tolosas condition, and who
needed the USCG to prod him to take the latters vital signs. In fact,
he failed to keep a medical record, like a patients card or folder, of
Capt. Tolosas illness.[12]
Respondents, however, failed Capt. Tolosa because
Garate never initiated actions to save him. x x x In fact, Garate
rarely checked personally on Capt. Tolosas condition, to wit:[13]
x x x Noticeably, the History (Annex D) fails to mention any instance
when Garate consulted the other officers, much less Capt. Tolosa,
regarding the possibility of deviation. To save Capt. Tolosas life was
surely a just cause for the change in course, which the other officers
would have concurred in had they been consulted by respondent
Garate which he grossly neglected to do.
Garates poor judgement, since he was the officer effectively in
command of the vessel, prevented him from undertaking these
emergency measures, the neglect of which resulted in Capt.
Tolosas untimely demise.[14]
The labor arbiter himself classified petitioners case as a complaint
for damages, blacklisting and watchlisting (pending inquiry) for
gross negligence resulting in the death of complainants husband,
Capt. Virgilio Tolosa.[15]
We stress that the case does not involve the adjudication of a labor
dispute, but the recovery of damages based on a quasi delict. The
jurisdiction of labor tribunals is limited to disputes arising from
employer-employee relations, as we ruled in Georg Grotjahn
GMBH & Co. v. Isnani:[16]
Not every dispute between an employer and employee involves
matters that only labor arbiters and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. The
jurisdiction of labor arbiters and the NLRC under Article 217 of the
Labor Code is limited to disputes arising from an employer-
employee relationship which can only be resolved by reference to
the Labor Code, other labor statutes, or their collective bargaining
agreement.[17]
The pivotal question is whether the Labor Code has any relevance
to the relief sought by petitioner. From her paper, it is evident that
the primary reliefs she seeks are as follows: (a) loss of earning
capacity denominated therein as actual damages or lost income
and (b) blacklisting. The loss she claims does not refer to the actual
earnings of the deceased, but to his earning capacity based on a life
expectancy of 65 years. This amount is recoverable if the action is
based on a quasi delict as provided for in Article 2206 of the Civil
Code,[18] but not in the Labor Code.
While it is true that labor arbiters and the NLRC have jurisdiction to
award not only reliefs provided by labor laws, but also damages
governed by the Civil Code,[19] these reliefs must still be based on
an action that has a reasonable causal connection with the Labor
Code, other labor statutes, or collective bargaining agreements. [20]
The central issue is determined essentially from the relief sought in
the complaint. In San Miguel Corporation v. NLRC,[21] this Court
held:
It is the character of the principal relief sought that appears
essential in this connection. Where such principal relief is to be
granted under labor legislation or a collective bargaining
agreement, the case should fall within the jurisdiction of the Labor
Arbiter and the NLRC, even though a claim for damages might be
asserted as an incident to such claim.[22]
The labor arbiter found private respondents to be grossly
negligent. He ruled that Captain Tolosa, who died at age 58, could
expect to live up to 65 years and to have an earning capacity of
US$176,400.
It must be noted that a workers loss of earning capacity and
blacklisting are not to be equated with wages, overtime
compensation or separation pay, and other labor benefits that are
generally cognized in labor disputes. The loss of earning capacity is
a relief or claim resulting from a quasi delict or a similar cause
within the realm of civil law.
Claims for damages under paragraph 4 of Article 217 must have a
reasonable causal connection with any of the claims provided for
in the article in order to be cognizable by the labor arbiter. Only if
there is such a connection with the other claims can the claim for
damages be considered as arising from employer-employee
relations.[23] In the present case, petitioners claim for damages is
not related to any other claim under Article 217, other labor
statutes, or collective bargaining agreements.
Petitioner cannot anchor her claim for damages to Article 161 of
the Labor Code, which does not grant or specify a claim or
relief. This provision is only a safety and health standard under
Book IV of the same Code. The enforcement of this labor standard
rests with the labor secretary.[24] Thus, claims for an employers
violation thereof are beyond the jurisdiction of the labor arbiter. In
other words, petitioner cannot enforce the labor standard
provided for in Article 161 by suing for damages before the labor Jalgalado-Barcelona v. Hon. Fructuoso T. Aurellano, Et. Al.",
arbiter. restraining NLRC Sheriff Norberto B. Meteoro from conducting the
scheduled public auction of real property of Vilma J. Barcelona
It is not the NLRC but the regular courts that have jurisdiction over
levied on execution pursuant to a final decision of the NLRC in NLRC
actions for damages, in which the employer-employee relation is
RAB V Case No. 05-12-00141-95, entitled Gorgonio C.
merely incidental, and in which the cause of action proceeds from
Nova, Complainant, v. R. A. Broadcasting Corporation, Vilma
a different source of obligation such as a tort. [25] Since petitioners
Jalgalado-Barcelona and Deo N. Trinidad, Respondents.
claim for damages is predicated on a quasi delict or tort that has no
reasonable causal connection with any of the claims provided for
The complaint alleged that, in issuing the temporary restraining
in Article 217, other labor statutes, or collective bargaining
order, respondent judge acted with gross ignorance of the law
agreements, jurisdiction over the action lies with the regular
because regular courts had no jurisdiction to hear and decide
courts[26] -- not with the NLRC or the labor arbiters.
questions which arose and were incidental to decisions, orders or
Second Issue: awards rendered in labor cases.

Finality of the Monetary Award The facts are as follows:chanrob1es virtual 1aw library
Petitioner contends that the labor arbiters monetary award has
In 1995, complainant Gregorio S. Nova filed with the NLRC Regional
already reached finality, since private respondents were not able
Arbitration, Branch V, Legaspi City, a complaint for illegal dismissal,
to file a timely appeal before the NLRC.
underpayment of wages, non-payment of holiday pay, rest day,
This argument cannot be passed upon in this appeal, because it was overtime pay, 13th month pay and other allowances, backwages,
not raised in the tribunals a quo. Well-settled is the rule that issues separation pay and damages against the R.A. Broadcasting
not raised below cannot be raised for the first time on appeal. Thus, Corporation/Station DZRM, represented by its Vice President for
points of law, theories, and arguments not brought to the attention Operations Vilma J. Barcelona and Station Manager Deo Trinidad.
of the Court of Appeals need not -- and ordinarily will not -- be 2
considered by this Court.[27] Petitioners allegation cannot be
accepted by this Court on its face; to do so would be tantamount On July 31, 1996, Labor Arbiter Fructuoso T. Aurellano rendered a
to a denial of respondents right to due process.[28] judgment, the dispositive portion of which
reads:jgc:chanrobles.com.ph
Furthermore, whether respondents were able to appeal on time is
a question of fact that cannot be entertained in a petition for "WHEREFORE, premises considered, judgment is hereby rendered
review under Rule 45 of the Rules of Court. In general, the ordering R. A. BROADCASTING CORP./DZRM, VILMA J. BARCELONA
jurisdiction of this Court in cases brought before it from the Court and DEO TRINIDAD to solidarily pay the complainant the total sum
of Appeals is limited to a review of errors of law allegedly of ONE HUNDRED ELEVEN THOUSAND SIX HUNDRED SIXTY-NINE
committed by the court a quo.[29] PESOS and 60/100 (P111,669.60).
WHEREFORE, the Petition is hereby DENIED, and the assailed
Decision and Resolution AFFIRMED. Costs against petitioner. "SO ORDERED."cralaw virtua1aw library

SO ORDERED. In time, respondent appealed the decision to the NLRC in Quezon

City.
[A.M. No. RTJ-00-1574. March 28, 2001.]

On October 7, 1996, the NLRC dismissed the appeal. Respondent

GORGONIO S. NOVA, Complainant, v. JUDGE SANCHO DAMES II,
moved for reconsideration but the NLRC denied the motion as it
Regional Trial Court, Branch 38, Daet, Camarines
was filed out of time. Aggrieved by the resolution, on March 12,
Norte, Respondent.
1997, respondent filed with this Court a petition for certiorari. 3 On
March 17, 1997, the Court dismissed the petition and also denied
RESOLUTION
the motion for reconsideration thereafter filed.

The decision having become final, on January 7, 1998, the NLRC

issued an alias writ of execution. Pursuant thereto, on February 3,
PARDO, J.: 1998, Labor Sheriff Norberto B. Meteoro levied on real property
belonging to Sps. Cesar and Vilma Barcelona and scheduled the
auction sale on June 16, 1998, at 10:00 a. m.

The case is a complaint 1 against Judge Sancho Dames II, presiding On June 9, 1998, Vilma J. Barcelona and her husband Cesar
judge, Regional Trial Court, Camarines Norte, Branch 38, Daet, in Barcelona filed with the Regional Trial Court, Camarines Norte,
connection with his issuance of a temporary restraining order in Daet a civil action for damages with temporary restraining order
Civil Case No. 6859, entitled "Sps. Cesar Barcelona and Vilma due to the wrongful attachment of their property. 4 This was raffled
to Branch 38, presided over by respondent Judge
On June 15, 1998, respondent Judge finding that there was extreme
urgency and that irreparable injury would result to the plaintiff
before the matter can be heard on notice, issued a temporary
restraining order, restraining the NLRC Sheriff from conducting the
scheduled public auction on June 16, 1998.
Hence, on January 5, 1999, complainant filed this administrative
charge against Judge Sancho Dames II, alleging that the issuance of
the temporary restraining order constituted a violation of Article
254 of the Labor Code which prohibited the issuance of temporary
restraining order or preliminary injunction in a case arising from a
labor dispute. He further submitted that the regular courts had no
jurisdiction to hear and decide questions which arose and were
incidental to the decisions, orders or awards rendered in labor
cases. 5 the office undeterred by outside influence, and who are
On April 28, 1999, the Court Administrator referred the complaint
to respondent judge for comment. 6 government." 13 Those who wield the judicial gavel have the duty
In his answer filed on June 2, 1999, respondent judge claimed that
he issued the temporary restraining order to maintain the subject
of controversy in status quo until the hearing of the application for
permanent injunction; that Vilma Jalgalado-Barcelona, Vice-
President for Operations, and Deo Trinidad, the Station Manager,
were ordered to solidarily pay with the defendant corporation
despite the fact that the corporation had a distinct personality from
its officers; that Cesar Barcelona, not being a judgment debtor,
would lose his property via public auction for an alleged labor
dispute he had nothing to do with; that injunction will lie to prevent
alienation of conjugal property; that all properties acquired during
the marriage are presumed to belong to the conjugal partnership
property, thus the subject property belonged to the conjugal
partnership of spouses Cesar Barcelona and Vilma Jalgalado-
Barcelona and could not be alienated via public auction; that
injunction to prevent a wrong would be favored than a course
requiring plaintiffs to wait and seek damages after the wrong had
been done; and that the instant case involved a judicial question
and thus, should be dismissed. 7
We referred the case to Court of Appeals Associate Justice
Remedios A. Salazar-Fernando, for investigation. 8 Revised Rules of Court assailing the June 22, 1995 Order of the
In her report and recommendation, Justice Fernando found that
respondent Judge was guilty of gross ignorance of the law because
the regular courts in that level had no jurisdiction or authority to
issue injunction or temporary restraining order in labor cases. She
recommended that respondent Judge be fined P10,000.00, with a
stern warning that repetition of the same or similar acts in the
future would be dealt with more severely.
We find the recommendation of Justice Salazar-Fernando to be
supported by the record and we accept the same.
Regular courts have no jurisdiction to hear and decide questions
which arise and are incidental to the enforcement of decisions,
orders or awards rendered in labor cases by appropriate officers
and tribunals of the Department of Labor and Employment. 9
Corollarily, any controversy in the execution of the judgment shall
be referred to the tribunal which issued the writ of execution since
it has the inherent power to control its own processes in order to
enforce its judgments and orders. 10
True, an action for damages lies within the jurisdiction 11 of a
regional trial court. 12 However, the regional trial court has no
jurisdiction to issue a temporary restraining order in labor cases.
Indeed, the respondent Judge restrained the execution of a final
decision of the labor arbiter, which he can not lawfully do.
Justice Malcolm aptly described ideal judges as "men who have a
mastery of the principles of law, who discharge their duties in
accordance with law, who are permitted to perform the duties of
independent and self-respecting human units in a judicial system
equal and coordinate to the other two departments of
to study the laws and their latest wrinkles. They owe it to the public
to be legally knowledgeable with basic laws and principles, for
ignorance of the law is the bane of injustice.
WHEREFORE, the Court finds respondent Judge Sancho Dames II
GUILTY of gross ignorance of the law and imposes on him a FINE of
Ten Thousand Pesos (P10,000.00), payable within thirty (30) days
from notice, with WARNING that a repetition of similar acts shall
be dealt with more severely.
SO ORDERED.
[G.R. No. 122791. February 19, 2003]
PLACIDO O. URBANES, JR., doing business under the name & style
of CATALINA SECURITY AGENCY, petitioner, vs. THE HONORABLE
SECRETARY OF LABOR AND EMPLOYMENT and SOCIAL SECURITY
SYSTEM, respondents.
DECISION
CARPIO-MORALES, J.:
Before this Court is a Petition for Certiorari under Rule 65 of the
Department of Labor and Employment (DOLE) Secretary which set
aside the September 16, 1994 Order of the Regional Director,
National Capital Region (NCR).
The antecedent facts of the case are as follows:
Petitioner Placido O. Urbanes, Jr., doing business under the name
and style of Catalina Security Agency, entered into an
agreement[1] to provide security services to respondent Social
Security System (SSS).
During the effectivity of the agreement, petitioner, by letter of May
16, 1994,[2] requested the SSS for the upward adjustment of their
contract rate in view of Wage Order No. NCR-03 which was issued
by the Regional Tripartite Wages and Productivity Board-NCR
pursuant to Republic Act 6727 otherwise known as the Wage
Rationalization Act, the pertinent provision of which wage order
reads:
Section 9. In the case of contracts for construction projects and for
security, janitorial and similar services, the prescribed amount set
forth herein for covered workers shall be borne by the principals
or the clients of the construction/service contractors and the
contract shall be deemed amended accordingly. In the event,
however, that the principal or client failed to pay the prescribed
increase, the construction/service contractors shall be jointly and
severally liable with the principal or client. (Emphasis and
underscoring supplied.)
As his May 16, 1994 letter to the SSS remained unheeded,
petitioner sent another letter,[3] dated June 7, 1994, reiterating the
request, which was followed by still another letter,[4] dated June 8,
1994.
On June 24, 1994, petitioner pulled out his agencys services from
the premises of the SSS and another security agency, Jaguar, took
over.[5]
On June 29, 1994, petitioner filed a complaint[6] with the DOLE-NCR
against the SSS seeking the implementation of Wage Order No.
NCR-03.
In its position paper,[7] the SSS prayed for the dismissal of the
complaint on the ground that petitioner is not the real party in
interest and has no legal capacity to file the same. In any event, it
argued that if it had any obligation, it was to the security guards.
On the other hand, petitioner in his position paper, [8] citing Eagle
Security Agency, Inc. v. NLRC,[9] contended that the security guards
assigned to the SSS do not have any legal basis to file a complaint
against it for lack of contractual privity.
Finding for petitioner, the Regional Director of the DOLE-NCR
issued an Order[10] of September 16, 1994, the dispositive portion
of which reads, quoted verbatim:
WHEREFORE, premises considered, the respondent Social Security
System (SSS) is hereby Ordered to pay Complainant the total sum
of ONE MILLION SIX HUNDRED THOUSAND EIGHT HUNDRED FIFTY
EIGHT AND 46/100 (P 1,600,858.46) representing the wage
differentials under Wage Order No. NCR-03 of the ONE HUNDRED
SIXTY EIGHT (168) Security Guards of Catalina Security Agency
covering the period from December 16, 1993 to June 24, 1994,
inclusive within ten (10) days from receipt hereof, otherwise a writ
of execution shall be issued to enforce this Order.
The claims for the payment of interest and Attorneys fees are
hereby ordered dismissed for want of jurisdiction.
SO ORDERED.
The SSS moved to reconsider the September 16, 1994 Order of the
Regional Director, praying that the computation be revised. [11]
By Order[12] of December 9, 1994, the Regional Director modified
his September 16, 1994 Order by reducing the amount payable by
the SSS to petitioner. The dispositive portion of the Regional
Directors Order of December 9, 1994 reads:
WHEREFORE, premises considered, the Order of this Office dated
September 16, 1994 is hereby modified. Respondent Social Security
System is hereby ordered to pay complainant the amount of ONE
MILLION TWO HUNDRED THIRTY SEVEN THOUSAND SEVEN
HUNDRED FORTY PESOS (P 1,237,740.00) representing the wage
differentials under Wage Order No. NCR-03 of the one hundred
sixty-eight (168) security guards of Catalina Security Agency
covering the period from December 16, 1993 to June 20, 1994,
inclusive, within ten (10) days from receipt of this Order, otherwise,
execution shall issue.
The SSS appealed[13] to the Secretary of Labor upon the following
assigned errors, quoted verbatim:
A. THE REGIONAL DIRECTOR HAS NO JURISDICTION OF THE CASE
AT BAR.
B. THE HONORABLE REGIONAL DIRECTOR ERRED IN FINDING THAT
COMPLAINANT IS THE REAL PARTY IN INTEREST AND HAS LEGAL
CAPACITY TO FILE THE CASE.
C. THE HONORABLE REGIONAL DIRECTOR ERRED IN ADOPTING
COMPLAINANTS COMPUTATION FOR WAGE ADJUSTMENT UNDER
WAGE ORDER NO. NCR-03 AS BASIS OF RESPONDENTS LIABILITY.[14]
The Secretary of Labor, by Order[15] of June 22, 1995, set aside the
order of the Regional Director and remanded the records of the
case for recomputation of the wage differentials using P 5,281.00
as the basis of the wage adjustment. And the Secretary held
petitioners security agency JOINTLY AND SEVERALLY liable for wage
differentials, the amount of which should be paid DIRECTLY to the
security guards concerned.
Petitioners Motion for Reconsideration of the DOLE Secretarys
Order of June 22, 1995 having been denied by Order[16] of October
10, 1995, the present petition was filed, petitioner contending that
the DOLE Secretary committed grave abuse of discretion when he:
1. . . . TOTALLY IGNORED THE PROVISION OF ARTICLE 129 OF THE
LABOR CODE FOR PERFECTING AN APPEAL FROM THE DECISION OF
THE REGIONAL DIRECTOR UNDER ARTICLE 129 INVOKED BY
RESPONDENT SSS;
2. . . . DISREGARDED THE PROVISION ON APPEALS FROM THE
DECISIONS OR RESOLUTIONS OF THE REGIONAL DIRECTOR, DOLE,
UNDER ARTICLE 129 OF THE LABOR CODE, AS AMENDED BY
REPUBLIC ACT NO. 6715;
3. . . . TOTALLY OVERLOOKED THE LAW AND PREVAILING
JURISPRUDENCE WHEN IT ACTED ON THE APPEAL OF RESPONDENT
SSS.[17]
Petitioner asserts that the Secretary of Labor does not have
jurisdiction to review appeals from decisions of the Regional
Directors in complaints filed under Article 129 of the Labor
Code[18] which provides:
ART. 129. RECOVERY OF WAGES, SIMPLE MONEY CLAIMS AND
OTHER BENEFITS. Upon complaint of any interested party, the
regional director of the Department of Labor and Employment or
any duly authorized hearing officers of the Department is
empowered, through summary proceeding and after due notice, to
hear and decide any matter involving the recovery of wages and
other monetary claims and benefits, including legal interest, owing
to an employee or person employed in domestic or household
service or househelper under this Code, arising from employer-
employee relations: Provided, That such complaint does not
include a claim for reinstatement; Provided, further, That the
aggregate money claim of each employee or househelper does not
exceed Five Thousand pesos (P5,000.00). The regional director or
hearing officer shall decide or resolve the complaint within thirty
(30) calendar days from the date of the filing of the same. Any sum
thus recovered on behalf of any employee or househelper pursuant
to this Article shall be held in a special deposit account by, and shall
be paid on order of, the Secretary of Labor and Employment or the
regional director directly to the employee or househelper
concerned. Any such sum not paid to the employee or househelper,
because he cannot be located after diligent and reasonable effort
to locate him within a period of three (3) years, shall be held as a
special fund of the Department of Labor and Employment to be
used exclusively for the amelioration and benefit of workers.
Any decision or resolution of the regional director or officer
pursuant to this provision may be appealed on the same grounds
provided in Article 223 of this Code, within five (5) calendar days
from receipt of a copy of said decision or resolution, to the
National Labor Relations Commission which shall resolve the
appeal within ten (10) calendar days from submission of the last
pleading required or allowed under its rules.
x x x (Emphasis supplied).
Petitioner thus contends that as the appeal of SSS was filed with
the wrong forum, it should have been dismissed.[19]
The SSS, on the other hand, contends that Article 128, not Article
129, is applicable to the case. Article 128 provides:
ART. 128. VISITORIAL AND ENFORCEMENT POWERS
xxx
(b) Notwithstanding the provisions of Article 129 and 217 of this
Code to the contrary, and in cases where the relationship of
employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to labor
legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the
course of inspection.
xxx
An order issued by the duly authorized representative of the
Secretary of Labor and Employment under this article may be
appealed to the latter.
x x x (Emphasis supplied).
Neither the petitioners contention nor the SSSs is impressed with
merit. Lapanday Agricultural Development Corporation v. Court of
Appeals[20] instructs so. In that case, the security agency filed a
complaint before the Regional Trial Court (RTC) against the
principal or client Lapanday for the upward adjustment of the
contract rate in accordance with Wage Order Nos. 5 and 6.
Lapanday argued that it is the National Labor Relations
Commission, not the civil courts, which has jurisdiction to resolve
the issue in the case, it involving the enforcement of wage
adjustment and other benefits due the agencys security guards as
mandated by several wage orders. Holding that the RTC has
jurisdiction over the controversy, this Court ruled:
We agree with the respondent that the RTC has jurisdiction over
the subject matter of the present case. It is well settled in law and
jurisprudence that where no employer-employee relationship
exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or
any collective bargaining agreement, it is the Regional Trial Court
that has jurisdiction. In its complaint, private respondent is not
seeking any relief under the Labor Code but seeks payment of a
sum of money and damages on account of petitioner's alleged
breach of its obligation under their Guard Service Contract. The
action is within the realm of civil law hence jurisdiction over the
case belongs to the regular courts. While the resolution of the
issue involves the application of labor laws, reference to the labor
code was only for the determination of the solidary liability of the
petitioner to the respondent where no employer-employee
relation exists.[21]
x x x (Emphasis and underscoring supplied).
In the case at bar, even if petitioner filed the complaint on his and
also on behalf of the security guards,[22] the relief sought has to do
with the enforcement of the contract between him and the SSS
which was deemed amended by virtue of Wage Order No. NCR-03.
The controversy subject of the case at bar is thus a civil dispute, the
proper forum for the resolution of which is the civil courts.
But even assuming arguendo that petitioners complaint were filed
with the proper forum, for lack of cause of action it must be
dismissed.
Articles 106, 107 and 109 of the Labor Code provide:
ART. 106. CONTRACTOR OR SUBCONTRACTOR. Whenever an
employer enters into contract with another person for the
performance of the formers work, the employees of the contractor
and of the latters subcontractor, if any, shall be paid in accordance
with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the
wage of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
xxx (Emphasis and underscoring supplied)
ART. 107 INDIRECT EMPLOYER. The provisions of the immediately
preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer, contracts
with an independent contractor for the performance of any work,
task, job or project.
ART. 109. SOLIDARY LIABILTY. The provisions of existing laws to the
contrary notwithstanding, every employer or indirect employer
shall be held responsible with his contractor or subcontractor for
any violation of any provision of this Code. For purposes of
determining the extent of their civil liability under this Chapter,
they shall be considered as direct employers.(Emphasis supplied.)
[23]
In the case of Eagle Security Agency, Inc. v. NLRC, this Court held:
The Wage Orders are explicit that payment of the increases are
"to be borne" by the principal or client. "To be borne", however,
does not mean that the principal, PTSI in this case, would directly
pay the security guards the wage and allowance increases because
there is no privity of contract between them. The security guards'
contractual relationship is with their immediate employer,
EAGLE. As an employer, EAGLE is tasked, among others, with the
payment of their wages [See Article VII Sec. 3 of the Contract for
Security Services, supra and Bautista v. Inciong, G.R. No. 52824,
March 16, 1988, 158 SCRA 665].
On the other hand, there existed a contractual agreement between
PTSI and EAGLE wherein the former availed of the security services
provided by the latter. In return, the security agency collects from
its client payment for its security services. This payment covers the
wages for the security guards and also expenses for their
supervision and training, the guards' bonds, firearms with
ammunitions, uniforms and other equipments, accessories, tools,
materials and supplies necessary for the maintenance of a security
force.
Passing on the foregoing disquisition in Eagle, this Court,
in Lapanday,[24] held:
It is clear also from the foregoing that it is only when [the]
contractor pays the increases mandated that it can claim an
adjustment from the principal to cover the increases payable to the
security guards. The conclusion that the right of the contractor (as
principal debtor) to recover from the principal (as solidary co-
debtor) arises only if he has paid the amounts for which both of
them are jointly and severally liable is in line with Article 1217 of
the Civil Code which provides:
Art. 1217. Payment made by one the solidary debtors extinguishes
the obligation. If two or more solidary debtors offer to pay, the
creditor may choose which offer to accept.
He who made payment make claim from his co-debtors only the
share which corresponds to each, with interest for the payment
already made. If the payment is made before the debt is due, no
interest for the intervening period may be demanded. x x
x[25] (Emphasis and underscoring supplied).
In fine, the liability of the SSS to reimburse petitioner arises only if
and when petitioner pays his employee-security guards the
increases mandated by Wage Order No. NCR-03.
The records do not show that petitioner has paid the mandated
increases to the security guards. The security guards in fact have
filed a complaint[26] with the NLRC against petitioner relative to,
among other things, underpayment of wages.
WHEREFORE, the present petition is hereby DISMISSED, and
petitioners complaint before the Regional Director is dismissed for
lack of jurisdiction and cause of action.
SO ORDERED.

Premises considered, the security guards' immediate recourse for

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

In view of the foregoing, the security guards should claim the

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

x x x (Emphasis and underscoring supplied).

 BAGONG PAGKAKAISA NG MANGGAGAWA NG
TRIUMPH INTERNATIONAL, represented by
G.R. No. 167401 Before the Court are two separate petitions[1] which were
SABINO F. GRAGANZA, Union President, and
consolidated pursuant to our Resolution dated June 8,
REYVILOSA TRINIDAD,
2005.[2] The first,[3] filed by the Bagong Pagkakaisa ng Manggagawa
Petitioners, ng Triumph International (union), seeks to set aside the
decision[4]of the Court of Appeals (CA) in CA-G.R. SP No. 60516, and
the subsequent resolution[5] of March 10, 2005, on the parties
- versus - motion for reconsideration. The second,[6] filed by Triumph
International (Phils.), Inc. (company), prays for the annulment of
the same decision and resolution with respect to the illegal
dismissal issue.
SECRETARY OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT and TRIUMPH INTERNATIONAL
(PHILS.), INC.,
THE ANTECEDENTS
Respondents.

x ---------------------------------------- x
The relevant facts, clearly laid out in the challenged CA decision,
TRIUMPH INTERNATIONAL (PHILS.), INC., are summarized below.
Petitioner,

- versus - The union and the company had a collective bargaining agreement
(CBA) that expired on July 18, 1999. The union seasonably
submitted proposals to the company for its renegotiation. Among
BAGONG PAGKAKAISA NG MANGGAGAWA NG these proposals were economic demands for a wage increase
TRIUMPH INTERNATIONAL, ELOISA FIGURA, JERRY of P180.00 a day, spread over three (3) years, as
JAICTEN, ROWELL FRIAS, MARGARITA PATINGO follows: P70.00/day from July 19, 1999; P60.00/day from July 19,
and ROSALINDA OLANGAR, G.R. No. 167407 2000, and P50.00/day from July 19, 2001. The company countered
with a wage increase offer, initially at P42.00 for three years, then
Respondents. Present: increased it to P45.00, also for three years.

CARPIO MORALES, J.,

The Chairperson,
negotiations reached a deadlock, leading to a Notice of Strike
BRION, the union filed on October 15, 1999.[7] The National Conciliation
and Mediation Board (NCMB) exerted efforts but failed to resolve
BERSAMIN, the deadlock.
*
ABAD, and

VILLARAMA, JR., JJ. On November 15, 1999, the company filed a Notice of Lock-
out[8] for unfair labor practice due to the unions alleged work
slowdown. The union went on strike three days later, or
Promulgated: on November 18, 1999.

July 5, 2010 On January 27, 2000, Secretary Bienvenido E. Laguesma (Labor

x----------------------------------------------------------------------------------------x
DECISION
Secretary) of the Department of Labor and Employment (DOLE)
assumed jurisdiction over the labor dispute, pursuant to Article
263(g) of the Labor Code.[9] The Labor Secretary directed all striking
workers to return to work within twenty-four (24) hours from
receipt of the assumption order, while the company was directed
to accept them back to work under the same terms and conditions
existing before the strike. The Labor Secretary also required the
parties to submit their respective position papers.

BRION, J.:
On February 2 and 3, 2000, several employees attempted to report
for work, but the striking employees prevented them from entering
the company premises.
In a petition dated February 8, 2000,[10] the company asked the
Labor Secretary to issue an order directing the union to allow free
ingress to and egress from the company premises; to dismantle all
structures obstructing free ingress and egress; and, to deputize the
Philippine National Police to assist the DOLE in the peaceful
implementation of the Labor Secretary's January 27, 2000 order.
The Labor Secretary reiterated his directives in another order
dated February 22, 2000,[11] and deputized Senior Superintendent
Manuel A. Cabigon, Director of the Southern Police District, to
assist in the peaceful and orderly implementation of this Order.
At a conciliation meeting held on February 29, 2000, the company
agreed to extend the implementation of the return-to-work order
until March 6, 2000.[12] The union, through a letter dated March 2,
2000,[13] advised the NCMB Administrator of the union executive
boards decision to return to work the following day. In a letter also
dated March 2, 2000,[14] the company advised the NCMB
Administrator that it was willing to accept all returning employees,
without prejudice to whatever legal action it may take against
those who committed illegal acts. The company also stated that all
the union officers and members and the union board members
would be placed under preventive suspension, pending
investigation of their alleged illegal acts.
The striking employees returned to work on March 3 and 4, 2000
but twenty (20) union officers and a shop steward were not allowed
entry into the company premises. The excluded union leaders were
each served identical letters[15] directing them to explain in writing
why their employment should not be terminated or why no
disciplinary action should be imposed on them for defying and
violating the Labor Secretarys assumption order of January 27,
2000 and the second return-to-work order of February 22, 2000;
for blocking and resisting the entry of returning employees on
February 2, 3, and 8, 2000; for acts of violence committed on
February 24 and 25, 2000; and for defying the company's return-
to-work order of all employees on February 8, 2000.[16]
On March 6, 2000, the twenty-one (21) union officers, by motion,
asked the Labor Secretary to issue a reinstatement order and to cite
the company for contempt. On March 9, 2000, the Labor Secretary
directed the company to accept the union officers and the shop
steward back to work, without prejudice to the continuation of the
investigation.[17]
At the conciliation meeting of March 15, 2000, the company agreed
to reinstate the union officers in the payroll effective March 13,
2000[18] and withdrew its notice of lockout.[19]
On March 21, 2000, the union officers again received identically
worded letters requiring them to explain in writing within twenty-
four (24) hours why no disciplinary action, including dismissal,
should be taken against them for leading, instigating, and
participating in a deliberate work slowdown during the CBA
negotiations.[20]
The union officers explained, as required, through their respective
affidavits,[21] and a hearing followed on May 5, 2000. Thereafter,
the union officers were each served a notice of termination of
employment effective at the close of office hours on May 11,
2000.[22]
On June 8, 2000, the union and the officers filed a petition to cite
the company and its responsible officers for contempt, and moved
that a reinstatement order be issued.[23] They claimed that: (1) the
company officials violated the Labor Secretarys return-to-work
order when these officials placed them under preventive
suspension and refused them entry into the company premises; (2)
the company also violated the March 9, 2000 order of the Labor
Secretary when they were reinstated only in the payroll; and (3) the
company committed unfair labor practice and dismissed them
without basis.
THE LABOR SECRETARYS DECISION
The Labor Secretary resolved the bargaining deadlock [24] and
awarded a wage increase of P48.00 distributed over three years, as
follows:[25]
Effective July 19, 1999 P15.00/day
Effective July 19, 2000 P16.00/day
Effective July 19, 2001 - P17.00/day
The unions other economic demands and non-economic proposals
were all denied.
The union moved for the reconsideration[26] of the Labor Secretarys
decision, while the company moved for its own partial
reconsideration.[27] The Labor Secretary denied both motions,
declaring that the petition to cite the company and its responsible
officers for contempt had already been rendered moot and
academic.[28] He also ruled that the legality of the union officers
dismissal properly falls within the original and exclusive jurisdiction
In light of these developments and the workers acceptance of the
of the labor arbiter under Article 217 of the Labor Code.
wage award (except for the union officers), the company moved for
the dismissal of the petition.[31] The union and the remaining union
officers opposed the motion, contending that the workers
The union elevated the case to the CA, through a petition
acceptance of the awarded wage increase cannot be considered a
for certiorari under Rule 65 of the Rules of Court,[29] on the
waiver of their demand; the receipt of the P48.00 award was
following grounds:
merely an advance on their demand. The Release, Waiver and
Quitclaim executed by the 13 officers, on the other hand, cannot
bind the officers who opted to maintain the petition.
1. The Labor Secretary committed grave abuse of discretion
amounting to lack or excess of jurisdiction when he denied the
proposals of the 1,130 union members to improve the existing CBA.
On December 17, 2001, two more officers Juliana D. Galo and
Remedios C. Barque also executed their respective Release, Waiver
and Quitclaim.[32]
2. The Labor Secretary committed grave abuse of discretion
when he declared that the issue of reinstatement of the officers of
the union and the petition to cite the company and its responsible
THE CA DECISION
officers for contempt had become academic.

The CA found the petition partly meritorious. It affirmed the Labor

The union insisted on its demanded P180.00 daily wage increase
Secretary's wage increase award, but modified his ruling on the
distributed over three years (1999 to 2001), arguing that the
dismissal of the union officers.[33]
demand is just, fair and reasonable based on the company's
capacity to pay and the companys bargaining history. It noted that
the company gave a P55.00 increase for the years 1993-1995,
On the wage issue and related matters, the CA found the Labor
and P64.00 for the years 1996 to 1998. It also objected the
Secretarys award legally in order. It noted the following factors
rejection of its other economic demands and non-economic
supportive of the award:
proposals.

The union also contended that the company and its responsible
officers should have been held in contempt for violating the Labor 1. The average daily salary of an employee of P310.00 is more
Secretarys return-to-work order. It argued that the officers should than the statutory minimum wage as admitted by the union itself.
have been reinstated in the absence of substantial evidence
supporting the charges against them.
2. The company grants to its employees forty-two (42) other
monetary and welfare benefits.
The company responded by praying for the dismissal of the petition
for lack of abuse of discretion on the part of the Labor Secretary. It
posited that the P48.00 wage increase award is more than
3. The increase in the wages of the employees carries with it a
reasonable, and that the Labor Secretary properly stayed his hand
corresponding increase in their salary-based benefits.
on the issue of illegal dismissal as the matter was beyond his
jurisdiction. The company likewise argued that any question on the
award had been mooted by the workers acceptance of the wage
increase. 4. The wage increase granted to workers employed in the
industry is less than the increase proposed by the company.

While the petition was pending, individual settlements were

reached between certain individual petitioners (Cenon N. Dionisio, 5. The Asian financial crisis.
Catalina N. Velasquez, Nila P. Tresvalles, Vivian A. Arcos, Delia N.
Soliven, Leticia S. Santos, Emerita D. Maniebo, Conchita R. Encinas,
Elpidia C. Cancino, Consolacion S. Umalia, Nenette N. Gonzales, The CA also noted that, in the meantime, the parties had executed
Creselita D. Rivera, and Rolando O. Madera) and the a new CBA for the years 2002 to 2005 where they freely agreed on
company. These petitioners executed their respective Release, a total P45.00/day wage increase distributed over three years.
Waiver and Quitclaim after receiving their separation pay and other
benefits from the company.[30]
On the other hand, the CA faulted the Labor Secretary for not ruling
on the dismissal of the union officers. It took exception to the Labor
Secretary's view that the dismissal question is within the exclusive
jurisdiction of the labor arbiter pursuant to Article 217 of the Labor
Code. It invoked the ruling of this Court in Interphil Laboratories
Employees Union-FFW v. Interphil Laboratories, Inc.,[34] which, in
turn, cited International Pharmaceuticals, Inc. v. Secretary of
Labor,[35] where we held that the Labor Secretary has jurisdiction
over all questions and controversies arising from an assumed
dispute, including cases over which the labor arbiter has exclusive
jurisdiction.
employment was terminated without valid and just cause, making
their dismissal illegal.
With respect to Trinidad, the CA found that her presence in the
picket line and participation in an illegal act obstructing the ingress
to and egress from the company's premises were duly established
by the affidavit of Bayon.[40] For this reason, the CA found Trinidad's
dismissal valid.
The appellate court thus affirmed the May 31, 2000[41] order of the
Labor Secretary and modified the resolution dated July 14, 2000.[42]

The CA pointed out that while the labor dispute before the Labor
Secretary initially involved a bargaining deadlock, a related strike The CA denied the motions for reconsideration that the union and
ensued and charges were brought against the union officers (for its officers, and the company filed.[43] Hence, the present petitions.
defiance of the return-to-work order of the Labor Secretary, and
leading, instigating, and participating in a deliberate work
slowdown during the CBA negotiations) resulting in their dismissal THE PETITIONS
from employment; thus, the dismissal is intertwined with the strike
that was the subject of the Labor Secretarys assumption of
jurisdiction. G.R. No. 167401

The CA, however, avoided a remand of the illegal dismissal aspect The petition is anchored on the following grounds
of the case to the Labor Secretary on the ground that it would
compel the remaining six officers, lowly workers who had been out
of work for four (4) years, to go through the calvary of a protracted
1. The CA erred in sustaining the Labor Secretary's wage increase
litigation. In the CAs view, it was in keeping with justice and equity
award of P48.00/day spread over three years.
for it to proceed to resolve the dismissal issue itself.

2. The CA erred in finding the dismissal of Trinidad valid.

The six remaining officers of the union Reyvilosa Trinidad, Eloisa
Figura, Jerry Jaicten, Rowell Frias, Margarita Patingo, and Rosalinda
Olangar (shop steward) all stood charged with defying (1) the Labor
Secretarys return-to-work order of January 27, 2000,[36] and (2) the The union presents the following arguments
companys general notice for the return of all employees
on February 8, 2000.[37] Later, they were also charged with leading,
instigating, and participating in a deliberate slowdown during the
CBA negotiations.

The charges were supported by the affidavits of Ernesto P.

Dayag, Salvio Bayon, Victoria Sanchez, Lyndon Dinglasan, Teresita
Nacion, Herman Vinoya, and Leonardo Gomez.[38] The CA noted
that in all these affidavits, no mention was ever made of [anyone]
of the six (6) remaining individual petitioners, save for Reyvilosa
Trinidad. Also, none of the said affidavits even hinted at the
culpabilities of petitioners Eloisa Figura, Jerry Jaicten, Rowell Frias,
Margarita Patingo, and Rosalinda Olangar for the alleged illegal acts
imputed to them.[39]
For failure of the company to prove by substantial evidence the
charges against the remaining officers, the CA concluded that their
On the CBA Award
The union contends that the CBA wage increases from 1994 to 1998
ranged from P16.00/day to P27.00/day for every year of the CBA
period; the arguments behind the companys decreased wage offer
were the same arguments it raised in previous CBA negotiations;
the alleged financial crisis in the region on which the CBA award
was based actually did not affect the company because it sourced
its raw materials from its mother company, thereby avoiding
losses; the companys leading status in the industry in terms of
wages should not be used in the determination of the award;
rather, it should be based on the companys financial condition and
its number one rank among 7,000 corporations in the country
manufacturing ladies, girls, and babies garments, and number 46 in
revenues with gross revenues of P1.08B, assets of P525.5M and
stockholders equity of P232.1M; in granting only a wage increase
out of 44 items in its proposal, the award disregarded the factors
on which its demands were based such as the peso devaluation and
the daily expenditure of P1,400.00/day for a family of six (6) as
found by the National Economic and Development Authority.
On the Dismissal of Reyvilosa Trinidad
The union seeks a reversal of the dismissal of Trinidad. It argues
that she was dismissed for alleged illegal acts based solely on the
self-serving affidavits executed by officers of the company; the
strike had not been declared illegal for the company had not
initiated an action to have it declared illegal; Trinidad was
discriminated against because of the four union officers mentioned
in the affidavits, three were granted one month separation pay plus
other benefits to settle the dispute in regard to the three; also the
same arrangement was entered into with the other officers, which
resulted in the signing of the waiver, quitclaim and release; the only
statement in the affidavits against Trinidad was her alleged
megaphone message to the striking employees not to return to
work.
The union thus asks this Court to modify the assailed CA ruling
through an order improving the CBA wage award and the grant of
the non-wage proposals. It also asks that the dismissal
of Trinidad be declared illegal, and that the company be ordered to
pay the union moral and exemplary damages, litigation expenses,
and attorney's fees.
G.R. No. 167407
For its part, the company seeks to annul the CA rulings on the
dismissal issue, on the following grounds
1. The CA erred in ruling that the Labor Secretary abused his
discretion in not resolving the issue of the validity of the dismissal
of the officers of the union.
2. The CA erred in resolving the factual issue of dismissal instead
of remanding the case for further proceedings.
3. In resolving the issue, the company was deprived of its right to
present evidence and, therefore, to due process of law.
The company submits that the Labor Secretary has no authority to
decide the legality or illegality of strikes or lockouts, jurisdiction
over such issue having been vested on the labor arbiters pursuant
to Article 217 of the Labor Code; under Article 263 of the Code, the
Labor Secretarys authority over a labor dispute encompasses only
the issues, not the legality or illegality of any strike that may have
occurred in the meantime.[44] It points out that before the Labor
Secretary can take cognizance of an incidental issue such as a
dismissal question, it must first be properly submitted to him, as in
the case of International Pharmaceuticals, Inc. v. Secretary of
Labor[45] where the Labor Secretary was adjudged to have the
power to assume jurisdiction over a labor dispute and its incidental
issues such as unfair labor practices subject of cases already
ongoing before the National Labor Relations Commission (NLRC).
The company takes exception to the CA ruling that it submitted the
dismissal issue to the Labor Secretary claiming that it can be seen
from its opposition to the unions petition to cite the company for
contempt;[46] that it consistently maintained that the Labor
Secretary has no jurisdiction over the dismissal issue; that the
affidavits it submitted to the Labor Secretary were only intended to
establish the unions violation of the return-to-work orders and, to
support its petition, on February 8, 2000,[47] for the issuance of a
return-to-work order; and, that the CA overstepped its jurisdiction
when it ruled on a factual issue, the sole office of certiorari being
the corrections of errors of jurisdiction, including the commission
of grave abuse of discretion.
The company likewise disputes the CAs declaration that it took into
consideration all the evidence on the dismissal issue, claiming that
the evidence on record is deficient, for it did not have the
opportunity to adduce evidence to prove the involvement of the
union officers in the individual acts for which they were dismissed;
had it been given the opportunity to present evidence, it could have
done so. To prove its point, it included in its motion for partial
reconsideration[48] a copy of the information,[49] charging union
officers Nenette Gonzales and Margarita Patingo of malicious
mischief for stoning a company vehicle on February 25, 2000, while
the strike was ongoing.
Even assuming that it could no longer submit evidence on the
dismissal of the union officers, the company posits that sufficient
grounds exist to uphold the dismissals. It maintains that the officers
are liable to lose their employment status for knowingly staging a
strike after the assumption of jurisdiction by the Labor Secretary
and in defying the return-to-work mandated by the assumption,
which are considered prohibited activities under Article 264(a) of
the Labor Code, not to mention that without first having filed a
notice, when the union officers and members engaged in and
instigated a work slowdown, a form of strike, without complying
with the procedural requirements for staging a strike, the union
officers had engaged in an illegal strike.
The parties practically reiterated these positions and the positions
taken below in their respective comments to each others petition.
THE COURT'S RULING
The CBA Award
We affirm the CA's disposition, upholding the Labor Secretarys
award in resolving the bargaining deadlock between the union and
the company for their 1999-2001 CBA.
We find no compelling justification to disturb the award. We are
convinced, as the appellate court was, of the reasonableness of the
award. It was based on the prevailing economic indicators in the
workplace, in the industry, and in the local and regional
economy. As well, it took into account the comparative standing of
the company in terms of employees' wages and other economic
benefits. We find the following factors as sufficient justification for
the award:
1. The regional financial crisis and the downturn in the economy
at the time, impacting on the performance of the company as
indicated in its negative financial picture in 1999.
2. The companys favorable comparison with industry standards
in terms of employee benefits, especially wages. Its average daily
basic wage of P310.00 is 40% higher than the statutory minimum
wage of P223.50, and superior to the industrys average of P258.00.
For the years prior to the 1999 negotiations, its aggregate daily
wage increase of P64.00 surpassed the statutory minimum
increase of P33.00.
3. The forty-two (42) non-wage benefit programs of the company
which undeniably extend the reach of the employees' cash wage in
enhancing the well-being of the employees and their families.
The Labor Secretary's Order of May 31, 2000 fully explained these
considerations as follows:[50]
We fully agree with the Union that relations between management
and labor ought to be governed by the higher precepts of social
justice as enshrined in the Constitution and in the laws. We further
agree with it that the worker's over-all well-being is as much
affected by his wages as by other macro-economic factors as the
CPI, cost of living, the varied needs of the family. Yet, the other
macro-economic factors cited by the company such as the after-
effects of the regional financial crisis, the existing unemployment
rate, and the need to correlate the rate of wage increase with the
CPI are equally important. Of course[,] other macro-economic
factors such as the contraction of sales and production as well as
the growing lack of direct investors, are also important
considerations. It is noteworthy that both the Union and
Management recognize that the entire gamut of macro-economic
factors necessarily impact on the micro-economic conditions of an
individual company even in terms of wage increases.
The Union also makes mention of the need to factor in the industry
where the employer belongs x x x. This is affirmed by the Company
when it provides a comparison with the other key players in the
industry. It has been properly shown that its prevailing levels of
wages and other benefits are, generally, superior to its
counterparts in the local garments industry. x x x
But even as we agree with the Union that the Company's negative
financial picture for 1999 should not be an overriding consideration
in coming up with an adjudicated wage increase, We cannot make
the historical wage increases as our starting point in determining
the appropriate wage adjustment. The Companys losses for 1999
which, even the Union recognizes, amounts to millions of pesos,
coupled with the current economic tailspin warrant a more
circumspect view[.]
Cognizance is likewise made of the Company's 42 non-wage
benefits programs which substantially [answer] the Union's
concerns with respect to the living wage and the needs of a
family. It would not be amiss to mention that said benefits have
their corresponding monetary valuations that in effect increase a
worker's daily pay. Likewise, the needed family expenditure is
answered for not solely by an individual family member's income
alone, but also from other incomes derived by the entire family
from all possible sources.
Considering the foregoing circumstances, We deem it reasonable
and fair to balance our award on wages.
The conclusions of the Labor Secretary, drawn as they were from a
close examination of the submissions of the parties, do not indicate
any legal error, much less any grave abuse of discretion. We accord
respect to these conclusions as they were made by a public official
especially trained in the delicate task of resolving collective
bargaining disputes, and are on their face just and
reasonable. [U]nless there is a clear showing of grave abuse of
discretion, this Court cannot, and will not, interfere with the labor
expertise of the public respondent Secretary of Labor, as the Court
held in Pier Arrastre and Stevedoring Services v. Ma. Nieves Roldan-
Confesor, et al.[51]
We also note that during the pendency of the present dispute, the
parties entered into a new CBA for the years 2000-2005, providing
for a P45.00/day wage increase for the workers. The CA cited this
agreed wage adjustment as an indication of the reasonableness of
the disputed award. The Labor Secretary himself alluded to the
letter-manifestation received by this Office on 15 June
2000 containing the signatures of some 700 employees of the
Company indicating the acceptance of the award rendered in the 31
May 2000 Order.[52] There was also the manifestation of the
company dated February 7, 2006, advising the Court that it
concluded another CBA with the union providing for a wage
increase of P22.00/day effective July 19, 2005; P20.00/day for July
19, 2006; and P20.00/day for July 19, 2007.[53] The successful
negotiation of two collective agreements even before the parties
could sit down and formalize the 1999-2001 CBA highlights the
need for the parties to abide by the decision of the Labor Secretary
and move on to the next phase of their collective bargaining
relationship.
The Illegal Dismissal Issue
Before we rule on the substantive aspect of this issue, we deem it
proper to resolve first the companys submission that the CA
erred: (1) in ruling that the Labor Secretary gravely abused his
discretion in not deciding the dismissal issue; and, (2) in deciding
the factual issue itself, instead of remanding the case, thereby
depriving it of the right to present evidence on the matter.
We agree with the CA's conclusion that the Labor Secretary erred,
to the point of abusing his discretion, when he did not resolve the
dismissal issue on the mistaken reading that this issue falls within
the jurisdiction of the labor arbiter. This was an egregious error and
an abdication of authority on the matter of strikes the ultimate
weapon in labor disputes that the law specifically singled out under
Article 263 of the Labor Code by granting the Labor Secretary
assumption of jurisdiction powers. Article 263(g) is both an
extraordinary and a preemptive power to address an extraordinary
situation a strike or lockout in an industry indispensable to the
national interest. This grant is not limited to the grounds cited in
the notice of strike or lockout that may have preceded the strike or
lockout; nor is it limited to the incidents of the strike or lockout that
in the meanwhile may have taken place. As the term assume
jurisdiction connotes, the intent of the law is to give the Labor
Secretary full authority to resolve all matters within the dispute
that gave rise to or which arose out of the strike or lockout; it
includes and extends to all questions and controversies arising
from or related to the dispute, including cases over which the labor
arbiter has exclusive jurisdiction.[54]
In the present case, what the Labor Secretary refused to rule upon
was the dismissal from employment that resulted from the
strike. Article 264 significantly dwells on this exact subject matter
by defining the circumstances when a union officer or member may
be declared to have lost his employment. We find from the records
that this was an issue that arose from the strike and was, in fact,
submitted to the Labor Secretary, through the unions motion for
the issuance of an order for immediate reinstatement of the
dismissed officers and the companys opposition to the
motion. Thus, the dismissal issue was properly brought before the
Labor Secretary and this development in fact gave rise to his
mistaken ruling that the matter is legally within the jurisdiction of
the labor arbiter to decide.
We cannot disagree with the CAs sympathies when it stated that a
remand of the case would only compel the
individual petitioners, x x x lowly workers who have been out of
work for more than four (4) years, to tread once again the [calvary]
of a protracted litigation.[55] The dismissal issue and its resolution,
however, go beyond the realm of sympathy as they are governed
by law and procedural rules. The recourse to the CA was through
the medium of a petition for certiorari under Rule 65 an
extraordinary but limited remedy. The CA was correct in declaring
that the Labor Secretary had seriously erred in not ruling on the
dismissal issue, but was totally out of place in proceeding to resolve
the dismissal issue; its action required the prior and implied act of
suspending the Rules of Court a prerogative that belongs to this
Court alone. In the recent case of Marcos-Araneta v. Court of
Appeals,[56] we categorically ruled that the CA cannot resolve the
merits of the case on a petition for certiorari under Rule 65 and
must confine itself to the jurisdictional issues raised. Let this case
be another reminder to the CA of the limits of
its certiorari jurisdiction.
But as the CA did, we similarly recognize that undue hardship, to
the point of injustice, would result if a remand would be ordered
under a situation where we are in the position to resolve the case
based on the records before us. As we said in Roman Catholic
Archbishop of Manila v. Court of Appeals:[57]
[w]e have laid down the rule that the remand of the case to the
lower court for further reception of evidence is not necessary
where the Court is in a position to resolve the dispute based on the
records before it. On many occasions, the Court, in the public
interest and for the expeditious administration of justice, has
resolved actions on the merits instead of remanding them to the
trial court for further proceedings, such as where the ends of
justice, would not be subserved by the remand of the case. [58]
Thus, we shall directly rule on the dismissal issue. And while we rule
that the CA could not validly rule on the merits of this issue, we
shall not hesitate to refer back to its dismissal ruling, where
appropriate.
The first question to resolve is the sufficiency of the evidence and
records before us to support a ruling on the merits. We find that
the union fully expounded on the merits of the dismissal issue while
the companys positions find principal support from the affidavits of
Dayag, Bayon, Sanchez, Dinglasan, Nacion, Vinoya, and Gomez. The
affidavits became the bases of the individual notices of termination
of employment sent to the union officers. The parties affidavits and
their submitted positions constitute sufficient bases to support a
decision on the merits of the dismissal issue.
The dismissed union officers of the union originally numbered
twenty-one (21), twenty (20) of whom led by union President
Cenon Dionisio were executive officers and members of
the union board. Completing the list was shop steward
Olangar. Asmentioned earlier, fifteen (15) of
the dismissed officers, including Dionisio, executed
a Release, Waiver and Quitclaim and readily accepted their
dismissal.[59] Those who remained to contest their dismissal were
Reyvilosa N. Trinidad, 2nd Vice-President; Eloisa Figura, Asst.
Secretary; Jerry Jaicten, PRO; Rowell Frias, Board Member;
Margarita Patingo, Board Member; and
Rosalinda Olangar, Shop Steward.
The officers of the union subject of the
petition were dismissed from the service for allegedly committing
illegal acts (1) during the CBA negotiations and (2) during the strike
declared by the union, shortly after the negotiations reached a
deadlock. The acts alluded to under the first category [60] involved
leading, instigating, participating in a deliberate slowdown during
the CBA negotiations and, under the second,[61] the alleged
defiance and violation by the union officers of the assumption of
jurisdiction and the return-to-work order of the Labor Secretary
dated January 27, 2000, as well as the second return-to-work order
dated February 22, 2000. More specifically, in the course of the
strike, the officers were charged with blocking andpreventing the
entry of returning employees on February 2, 3, and 8, 2000; and on
February 24 and 25, 2000, when acts of violence were
committed. They likewise allegedly defied the company's general
return-to-work notice for the return of all employees on February
8, 2000.[62]
The CA erred in declaring that except for Trinidad, the company
failed to prove by substantial evidence the charges against the
remaining union officers, thus making this dismissal illegal. The
appellate court noted that in all the affidavits the company
submitted as evidence no mention was ever made of [anyone] of
the six (6) remaining individual petitioners, save for Reyvilosa
Trinidad. Also, none of the said affidavits even hinted at the
culpabilities of petitioners Eloisa Figuna, Jerry Jaicten, Rowell Frias,
Margarita Patingo and Rosalinda Olangar for the alleged illegal acts
imputed to them.[63]
The charges on which the company based its decision to dismiss the
union officers and the shop steward may be grouped into the
following three categories: (1) defiance of the return-to-work order
of the Labor Secretary, (2) commission of illegal acts during the
strike, and (3) leading, instigating and participating in a deliberate
work slowdown during the CBA negotiations.
While it may be true that the affidavits the company submitted to
the Labor Secretary did not specifically identify Figuna, Jaiden,
Frias, Patingo and Olangar to have committed individual illegal acts
during the strike, there is no dispute that the union defied the
return-to-work orders the Labor Secretary handed down on two
occasions, first on January 27, 2000 (more than two months after
the union struck on November 18, 1999) and on February 22, 2000.
In decreeing a return-to-work for the second time, the Labor
Secretary noted:
To date, despite the lapse of the return-to-work period indicated in
the Order, the Union continues with its strike. A report submitted
by NCMB-NCR even indicated that all gates of the Company are
blocked thereby preventing free ingress and egress to the
premises.[64]
Under the law,[65] the Labor Secretary's assumption of jurisdiction
over the dispute or its certification to the National Labor Relations
Commission for compulsory arbitration shall have the effect of
automatically enjoining the intended or impending strike or lockout
and all striking or locked out employees shall immediately return
to work and the employer shall immediately resume operations
and readmit all workers under the same terms and conditions
before the strike or lockout. The union and its officers, as well as
the workers, defied the Labor Secretary's assumption of
jurisdiction, especially the accompanying return-to-work order
within twenty-four (24) hours; their defiance made the strike illegal
under the law[66] and applicable jurisprudence.[67] Consequently, it
constitutes a valid ground for dismissal.[68] Article 264(a),
paragraph 3 of the Labor Code provides that Any union officer who
knowingly participates in an illegal strike and any worker or union
officer who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost his employment status.
The union officers were answerable not only for resisting the Labor
Secretary's assumption of jurisdiction and return-to-work orders;
they were also liable for leading and instigating and, in the case of
Figura, for participating in a work slowdown (during the CBA
negotiations), a form of strike[69] undertaken by the union without
complying with the mandatory legal requirements of a strike notice
and strike vote. These acts are similarly prohibited activities.[70]
There is sufficient indication in the case record that the union
officers, collectively, save for shop steward Olangar, were
responsible for the work slowdown, the illegal strike, and the
violation of the Labor Secretary's assumption order, that started
with the slowdown in July 1999 and lasted up to March 2000 (or for
about ten (10) months).[71] These illegal concerted actions could
not have happened at the spur of the moment and could not have
been sustained for several months without the sanction and
encouragement of the union and its officers; undoubtedly, they
resulted from a collective decision of the entire union leadership
and constituted a major component of the unions strategy to
obtain concessions from the company management during the CBA
negotiations.
That the work slowdown happened is confirmed by the
affidavits[72] and the documentary evidence submitted by the
company. Thus, Ernesto P. Dayag, a security officer of the agency
servicing the company (Tamaraw Security Service, Inc.) stated
under oath that in October 1999, the union members were
engaging in a noise-barrage everyday and when it was time to go
back to work at noontime, they would mill around the production
area or were at the toilet discussing the ongoing CBA negotiations
(among others), and were slow in their movements; in late October
(October 27, 1999), they did the same thing at about seven oclock
in the morning which was already time for work; even those who
were already working were deliberately slow in their movements.
On November 12, 1999, when union officer Lisa Velasquez talked
to the union members at lunchtime regarding the CBA
negotiations, only about 50% of the union members returned to
their work stations.
Victoria P. Sanchez, a sewer in the company's production
department, deposed that sometime in the middle of September
1999, the sewers were told by the shop stewards to reduce their
efficiency below 75%. They followed the order as it came from a
decision of the union officers at a meeting. It was not difficult to
comply with the order because they only had to slow down at the
pre-production and early segments of the production line so that
the rest of the line would suffer.
Teresita T. Nacion, another sewer, corroborated Sanchez's
deposition stating that in mid-September 1999, during the CBA
negotiations, the sewers were told by the shop stewards to reduce
their efficiency below 75% pursuant to the union decision to slow
down production so that the company would suffer losses.
The work slowdown resulted in production losses to the company
which it documented and submitted in evidence[73] before the
Labor Secretary and was summarized in the affidavit[74] of Leonardo
T. Gomez, who testified on the impact of the decrease of the
workers production efficiency that peaked in September, October,
and November 1999, resulting in a financial loss to the company
of P69.277M. Specifically, the companys efficiency record for the
year 1999[75] posted Eloisa C. Figuras[76] work performance from
April to June 1999 at 77.19% and from July to November 1999 at
51.77%, a substantial drop in her efficiency.
The unions two-pronged strategy to soften the companys stance in
the CBA negotiations culminated in its declaration of a strike on
November 18, 1999, which prompted the Labor Secretarys
intervention through an assumption of jurisdiction. Judging from
the manner the union staged the strike, it is readily apparent that
the unions objective was to paralyze the company and to maintain
the work stoppage for as long as possible.
This is the economic war that underlies the Labor Codes strike
provisions, and which the same Code also tries to temper by
regulation. Thus, even with the assumption of jurisdiction and its
accompanying return-to-work order, the union persisted with the
strike and prevented the entry to the company premises of workers
who wanted to report back for work. In particular, Salvio Bayon, a
company building technician and a member of the union, deposed
that at about seven o'clock in the morning of February 3, 2000, he
and ten (10) of his co-employees attempted to enter the company
premises, but they were prevented by a member of the strikers, led
by union President Cenon Dionisio and other officers of the union;
the same thing happened on February 8, 24 and 28, 2000.[77]
In the face of the union's defiance of his first return-to-work order,
the Labor Secretary issued a second return-to-work directive on
February 22, 2000 where the labor official noted that despite the
lapse of the return-to-work period indicated in the order, the union
continued with its strike.[78] At a conciliation meeting on February
29, 2000, the company agreed to extend the implementation of the
return-to-work order to March 6, 2000.[79] The union, through a
letter dated March 2, 2000,[80] advised the NCMB administrator of
the decision of the union executive board for the return to work of
all striking workers the following day. In a letter also dated March
2, 2000,[81] the company also advised the NCMB Administrator that
it was willing to accept all returning employees, without prejudice
to whatever legal action it may take against those who committed
illegal acts.
The above union letter clearly shows the involvement of the entire
union leadership in defying the Labor Secretary's assumption of
jurisdiction order as well as return-to-work orders. From the illegal
work slowdown to the filing of the strike notice, the declaration of
the strike, and the defiance of the Labor Secretary's orders, it was
the union officers who were behind the every move of the striking
workers; and collectively deciding the twists and turns of the strike
which even became violent as the striking members prevented and
coerced returning workers from gaining entry into the company
premises. To our mind, all the union officers who knowingly
participated in the illegal strike knowingly placed their employment
status at risk.
In a different vein, the union faulted the company for having
dismissed the officers, there being no case filed on the legality or
illegality of the strike. We see no merit in this argument. In Gold
City Integrated Port Service, Inc. v. NLRC,[82] we held that [t]he law,
in using the word may, grants the employer the option of declaring
a union officer who participated in an illegal strike as having lost his
employment. We reiterated this principle in San Juan De Dios
Educational Foundation Employees Union-Alliance of Filipino
Workers v. San Juan De Dios Educational Foundation, Inc.,[83] where
we stated that Despite the receipt of an order from the SOLE to
return to their respective jobs, the Union officers and members
refused to do so and defied the same. Consequently, then, the
strike staged by the Union is a prohibited activity under Article 264
of the Labor Code. Hence, the dismissal of its officers is in
order. The respondent Foundation was, thus, justified in
terminating the employment of the petitioner Union's officers.
The union attempted to divert attention from its defiance of the
return-to-work orders with the specious submission that it was the
company which violated the Labor Secretary's January 27, 2000
order, by not withdrawing its notice of lockout.[84]
The evidence indicates otherwise. The Labor Secretary himself, in
his order of February 22, 2000,[85] noted that the union continued
its strike despite the lapse of the return-to-work period specified in
his January 27, 2000 order. There is also the report of the NCMB-
NCR clearly indicating that all gates of the company were blocked,
thereby preventing free ingress to and egress from the company
premises. There, too, was the letter of the company personnel
manager, Ralph Funtila, advising the union that the company will
comply with the Labor Secretary's January 27, 2000 order; Funtila
appealed to the striking employees and the officers to remove all
the obstacles and to lift their picket line to ensure free ingress and
egress.[86] Further, as we earlier noted, the union itself, in its letter
of March 2, 2000, advised the NCMB that the union board of
directors had decided to return to work on March 3, 2000
indicating that they had been on strike since November 18, 1999
and were defiant of the return-to-work orders since January 28,
2000.
As a final point, the extension of the return-to-work order and the
submission of all striking workers, by the company, cannot in any
way be considered a waiver that the union officers can use to
negate liability for their actions, as the CA opined in its assailed
decision.[87] In the first place, as clarified by Funtila's letter to the
NCMB dated March 2, 2000,[88] the company will accept all
employees who will report for work up to March 6, 2000, without
prejudice to whatever legal action it may take against those who
committed illegal acts. He also clarified that it extended the return-
to-work, upon request of the union and the DOLE to accommodate
employees who were in the provinces, who were not notified, and
those who were sick.
As a point of law, we find that the company did not waive the right
to take action against the erring officers, and this was
acknowledged by the Labor Secretary himself in his order of March
9, 2000,[89] when he directed the company to accept back to work
the twenty (20) union officers and one (1) shop steward[,] without
prejudice to the Company's exercise of its prerogative to continue
its investigation. The order was issued upon complaint of the union
that the officers were placed under preventive suspension.
For having participated in a prohibited activity not once, but twice,
the union officers, except those our Decision can no longer reach
because of the amicable settlement they entered into with the
company, legally deserve to be dismissed from the service. For
failure of the company, however, to prove by substantial evidence
the illegal acts allegedly committed by Rosalinda Olangar, who is a
shop steward but not a union officer, we find her dismissal without
a valid cause.
WHEREFORE, premises considered, judgment is hereby
rendered AFFIRMING with MODIFICATION the challenged
decision and
resolution of the Court of Appeals in CA-G.R. SP No. 60516, as
follows:
1. The collective bargaining award of DOLE Secretary Bienvenido
E. Laguesma, contained in his order dated May 31, 2000, is
fully AFFIRMED;
2. The dismissal of REYVILOSA TRINIDAD, union 2nd Vice-
President, is likewise AFFIRMED;
3. The dismissal of ELOISA FIGURA, Assistant Secretary; JERRY
JAICTEN, Press Relations Officer; and ROWELL FRIAS, Board
Member, is declared VALID and for a just cause; and
4. The dismissal of ROSALINDA OLANGAR is declared illegal. The
CA award is SUSTAINED in her case.
SO ORDERED.
THIRD DIVISION
CIRTEK EMPLOYEES LABOR UNION- G.R. No. 190515
FEDERATION OF FREE WORKERS
Petitioner,
Present:
 CARPIO MORALES, J., Chairperson,
LEONARDO-DE CASTRO,
- versus - BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.
CIRTEK ELECTRONICS, INC.,
Respondent. Promulgated:
June 6, 2011
x--------------------------------------------------
x mistakes. However, like most rules, it carries certain exceptions.
RESOLUTION
CARPIO MORALES, J.:
This resolves the motion for reconsideration and supplemental
motion for reconsideration filed by respondent, Cirtek Electronics,
Inc., of the Courts Decision dated November 15, 2010.
Respondent-movant avers that petitioner, in filing the petition for
certiorari under Rule 65, availed of the wrong remedy, hence, the
Court should have dismissed the petition outright. It goes on to
aver that the Court erred in resolving a factual issue whether the
August 24, 2005 Memorandum of Agreement (MOA) was validly
entered into , which is not the office of a petition for certiorari.
Respondent-movant further avers that the MOA[1] signed by the
remaining officers of petitioner Union and allegedly ratified by its
members should have been given credence by the Court.
Furthermore, respondent-movant maintains that the Secretary of
Labor cannot insist on a ruling beyond the compromise agreement
entered into by the parties; and that, as early as February 5, 2010,
petitioner Union had already filed with the Department of Labor
and Employment (DOLE) a resolution of disaffiliation from the
Federation of Free Workers resulting in the latters lack of
personality to represent the workers in the present case.
The motion is bereft of merit.
Respondent indeed availed of the wrong remedy of certiorari
under Rule 65. Due, however, to the nature of the case, one
involving workers wages and benefits, and the fact that whether
the petition was filed under Rule 65 or appeal by certiorari under
Rule 45 it was filed within 15 days (the reglementary period under
Rule 45) from petitioners receipt of the resolution of the Court of
Appeals Resolution denying its motion for reconsideration, the
Court resolved to give it due course. As Almelor v. RTC of Las Pias,
et al. [2] restates:
Generally, an appeal taken either to the Supreme Court or the CA
by the wrong or inappropriate mode shall be dismissed. This is to
prevent the party from benefiting from ones neglect and
After all, the ultimate purpose of all rules of procedures is to
achieve substantial justice as expeditiously as possible. (emphasis
and underscoring supplied)
Respecting the attribution of error to the Court in ruling on a
question of fact, it bears recalling that a QUESTION OF FACT arises
when the doubt or difference arises as to the truth or falsehood of
alleged facts,[3] while a QUESTION OF LAW exists when the doubt
or difference arises as to what the law is on a certain set of facts.
The present case presents the primordial issue of whether the
Secretary of Labor is empowered to give arbitral awards in the
exercise of his authority to assume jurisdiction over labor disputes.
Ineluctably, the issue involves a determination and application of
existing law, the provisions of the Labor Code, and prevailing
jurisprudence. Intertwined with the issue, however, is the question
of validity of the MOA and its ratification which, as movant
correctly points out, is a question of fact and one which is not
appropriate for a petition for review on certiorari under Rule
45. The rule, however, is not without exceptions, viz:
This rule provides that the parties may raise only questions of law,
because the Supreme Court is not a trier of facts. Generally, we are
not duty-bound to analyze again and weigh the evidence
introduced in and considered by the tribunals below. When
supported by substantial evidence, the findings of fact of the CA
are conclusive and binding on the parties and are not reviewable
by this Court, unless the case falls under any of the
following recognized exceptions:
(1) When the conclusion is a finding grounded entirely on
speculation, surmises and conjectures;
 (2) When the inference made is manifestly mistaken, absurd or
impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went
beyond the issues of the case and the same is contrary to the
admissions of both appellant and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of
specific evidence on which they are based;
(9) When the facts set forth in the petition as well as in the
petitioners' main and reply briefs are not disputed by the
respondents; and
(10) When the findings of fact of the Court of Appeals are
premised on the supposed absence of evidence and contradicted
by the evidence on record. (emphasis and underscoring supplied)
In the present case, the findings of the Secretary of Labor and the
appellate court on whether the MOA is valid and binding are
conflicting, the former giving scant consideration thereon, and the
latter affording it more weight.
As found by the Secretary of Labor, the MOA came about as a result
of the constitution, at respondents behest, of the Labor-
Management Council (LMC) which, he reminded the parties, should
not be used as an avenue for bargaining but for the purpose
of affording workers to participate in policy and decision-
making. Hence, the agreements embodied in the MOA were not
the proper subject of the LMC deliberation or procedure but of CBA
negotiations and, therefore, deserving little weight.
The appellate court, held, however, that the Secretary did not have
the authority to give an arbitral award higher than what was stated
in the MOA. The conflicting views drew the Court to re-evaluate the
facts as borne by the records, an exception to the rule that only
questions of law may be dealt with in an appeal by certiorari under
Rule 45.
As discussed in the Decision under reconsideration, the then Acting
Secretary of Labor Manuel G. Imson acted well within his
jurisdiction in ruling that the wage increases to be given are P10 per
day effective January 1, 2004 and P15 per day effective January 1,
2005, pursuant to his power to assume jurisdiction under Art. 263
(g)[4] of the Labor Code.
While an arbitral award cannot per se be categorized as an
agreement voluntarily entered into by the parties because it
requires the interference and imposing power of the State thru the
Secretary of Labor when he assumes jurisdiction, the award can be
considered as an approximation of a collective bargaining
agreement which would otherwise have been entered into by the
parties. Hence, it has the force and effect of a valid contract
obligation between the parties.[5]
In determining arbitral awards then, aside from the MOA, courts
considered other factors and documents including, as in this case,
the financial documents[6] submitted by respondent as well as its
previous bargaining history and financial outlook and
improvements as stated in its own website.[7]
The appellate courts ruling that giving credence to
the Pahayag and the minutes of the meeting which were not
verified and notarized would violate the rule on parol evidence is
erroneous. The parol evidence rule, like other rules on evidence,
should not be strictly applied in labor cases. Interphil Laboratories
Employees Union-FFW v. Interphil Laboratories, Inc. [8] teaches:
[R]eliance on the parol evidence rule is misplaced. In labor
cases pending before the Commission or the Labor Arbiter, the
rules of evidence prevailing in courts of law or equity
are not controlling. Rules of procedure and evidence are not
applied in a very rigid and technical sense in labor cases. Hence, the
Labor Arbiter is not precluded from accepting and evaluating
evidence other than, and even contrary to, what is stated in the
CBA. (emphasis and underscoring supplied)
On the contention that the MOA should have been given credence
because it was validly entered into by the parties, the Court notes
that even those who signed it expressed reservations thereto. A
CBA (assuming in this case that the MOA can be treated as one) is
a contract imbued with public interest. It must thus be given a
liberal, practical and realistic, rather than a narrow and technical
construction, with due consideration to the context in which it is
negotiated and the purpose for which it is intended.[9]

As for the contention that the alleged disaffiliation of the Union
from the FFW during the pendency of the case resulted in the FFW
losing its personality to represent the Union, the same does not
affect the Courts upholding of the authority of the Secretary of
Labor to impose arbitral awards higher than what was supposedly
agreed upon in the MOA. Contrary to respondents assertion, the
unavoidable issue of disaffiliation bears no significant legal
repercussions to warrant the reversal of the Courts Decision.
En passant, whether there was a valid disaffiliation is a factual
issue. Besides, the alleged disaffiliation of the Union from the FFW
was by virtue of a Resolution signed on February 23, 2010 and
submitted to the DOLE Laguna Field Office on March 5, 2010 two
months after the present petition was filed on December 22, 2009,
hence, it did not affect FFW and its Legal Centers standing to file
the petition nor this Courts jurisdiction to resolve the same.
At all events, the issue of disaffiliation is an intra-union dispute
which must be resolved in a different forum in an action at the
instance of either or both the FFW and the Union or a rival labor
organization, not the employer.
An intra-union dispute refers to any conflict between and among
union members, including grievances arising from any violation of
the rights and conditions of membership, violation of or
disagreement over any provision of the unions constitution and
by-laws, or disputes arising from chartering or disaffiliation of the
union. Sections 1 and 2, Rule XI of Department Order No. 40-03,
Series of 2003 of the DOLE enumerate the following circumstances
as inter/intra-union disputes, viz:
RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES
SECTION 1. Coverage. - Inter/intra-union disputes shall include:
(a) cancellation of registration of a labor organization filed by its
members or by another labor organization;
(b) conduct of election of union and workers association
officers/nullification of election of union and workers association
officers;
(c) audit/accounts examination of union or workers association
funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for union
membership;
(g) validity/invalidity of impeachment/expulsion of union and
workers association officers and members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a union
or workers association constitution and by-laws;
(k) disagreements over chartering or registration of labor
organizations and collective bargaining agreements;
(l) violations of the rights and conditions of union or workers
association membership;
(m) violations of the rights of legitimate labor organizations,
except interpretation of collective bargaining agreements;
(n) such other disputes or conflicts involving the rights to self-
organization, union membership and collective bargaining
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers
association.
SECTION 2. Coverage. Other related labor relations disputes shall
include any conflict between a labor union and the employer or any
individual, entity or group that is not a labor organization or
workers association. This includes: (1) cancellation of registration
of unions and workers associations; and (2) a petition for
interpleader.[10] (emphasis supplied)
Indeed, as respondent-movant itself argues, a local union may
disaffiliate at any time from its mother federation, absent any
showing that the same is prohibited under its constitution or
rule. Such, however, does not result in it losing its legal
personality altogether. Verily, Anglo-KMU v. Samahan Ng Mga
Manggagawang Nagkakaisa Sa Manila Bay Spinning Mills At J.P.
Coats[11] enlightens:
A local labor union is a separate and distinct unit primarily
designed to secure and maintain an equality of bargaining power
between the employer and their employee-members. A local
union does not owe its existence to the federation with which it
is affiliated. It is a separate and distinct voluntary association
owing its creation to the will of its members. The mere act of
affiliation does not divest the local union of its own personality,
neither does it give the mother federation the license to act
independently of the local union. It only gives rise to a contract of
agency where the former acts in representation of the latter.
(emphasis and underscoring supplied)
Whether then, as respondent claims, FFW went against the will and
wishes of its principal (the member-employees) by pursuing the
case despite the signing of the MOA, is not for the Court, nor for
respondent to determine, but for the Union and FFW to resolve on
their own pursuant to their principal-agent relationship.

WHEREFORE, the motion for reconsideration of this Courts
Decision of November 15, 2010 is DENIED.
SO ORDERED.
[G.R. No. 172960 : March 26, 2010]
MACTAN ELECTRIC COMPANY, INC., PETITIONER, VS. NATIONAL
POWER CORPORATION, MACTAN CEBU INTERNATIONAL
AIRPORT AUTHORITY AND NATIONAL TRANSMISSION
CORPORATION, RESPONDENTS.
DECISION
CORONA, J.:
Mactan Electric Company, Inc. (MECO) posed the purely legal
question of whether paragraph (v), Section 43 of RA 9136:[1]
Sec. 43. Functions of the ERC. - The ERC shall promote competition,
encourage market development, ensure customer choice and
discourage/penalize abuse of market power in the restructured
electricity industry. Towards this end, it shall be responsible for the
following key functions in the restructured industry:
xxx xxx xxx
(v) The ERC shall have the original and exclusive jurisdiction over
all cases contesting rates, fees, fines and penalties imposed by the
ERC in the exercise of the abovementioned powers, functions and
responsibilities and over all cases involving disputes between and
among participants or players in the energy sector. All notices of
hearings to be conducted by the ERC for the purpose of fixing rates
or fees shall be published at least twice for two successive weeks in
two (2) newspapers of nationwide circulation.(emphasis supplied)
clothed the Energy Regulatory Commission (ERC) with jurisdiction
to resolve disputes involving MECO as an energy distribution
company with a public franchise, National Power Corporation
(NPC) as an energy generation company, National Transmission
Corporation (TRANSCO) as a transmission and sub-transmission
company and Mactan Cebu International Airport Authority
(MCIAA) as an energy end-user.
The facts are not disputed.
MECO holds a franchise to operate an electric light and power
service in the areas comprising Lapu-Lapu City and the Municipality
of Cordova.[2] It has a contract with NPC for the supply of "contract
energy"[3]from September 26, 2005 to September 25, 2015.[4] It is
charged a minimum rate based on the contract energy per billing
period, regardless of whether it fails to consume the contract
energy allocated to it.[5]However, it may apply for reduction of its
contract energy upon payment of a buy-out fee[6] except under the
following circumstances:
4.7.1. The reduction is caused by the transfer by a consumer of its
power and energy source from [MECO] to [NPC] or, to another
customer of [NPC] located within the same grid prompting the
other customer to correspondingly increase its electric supply
requirement with [NPC], notwithstanding that [MECO] may have
itself imposed penalties or buy-out provisions to such transferring
consumer. [MECO] shall have sixty (60) days from transfer within
which to request the appropriate reduction and the decrease shall
be deemed effective from such date of transfer. Provided further
that [MECO] and [NPC] shall ensure that the transfer shall not
disadvantage any assignee(s) of [NPC].
4.7.2. Expected reduction in the Contracted Energy by the [MECO]
with the [NPC] caused or initiated by the industrial customers of
the [MECO] as listed in Annex 1a shall be excused by the SUPPLIER.
To be able to avail of this exemption, [MECO] must inform [NPC] in
writing sixty (60) days prior to the effectivity of the reduction in the
Contracted Energy. It is understood that the expected reduction is
neither due to self-generation nor transfer to another power
SUPPLIER.[7]
MCIAA was listed as an industrial costumer of MECO in Annex 1a of
the supply contract.[8] MCIAA and MECO had a contract for electric
power service connection[9] for a period of one year, subject to
automatic renewal, unless either party desired to terminate the
contract, in which case said party must serve a 30-day written
notice upon the other for the termination or amendment to take
effect.[10] Their contract began on September 19, 1995 and was
renewed every year thereafter. On April 24, 2006, MECO received
notice from MCIAA that it was terminating their contract effective
May 24, 2006.[11]
MECO filed with the Regional Trial Court (RTC), Branch 54, Lapu-
Lapu City, a complaint for damages with prayer for temporary
restraining order and/or writ of preliminary injunction against
MCIAA, NPC and TRANSCO.[12] The material allegations in the
complaint are reproduced below, for they are determinative of the
question of law raised herein:
2.19 Although the MCIAA letter of termination does not indicate
from whom MCIAA will get its electric power supply after May 24,
2006, there are strong indications as shown by the following
circumstances recently validated, and thus reasonable grounds to
believe that NPC will directly supply electric power to MCIAA and
the latter will directly source and buy such electric power from the
NPC without passing through the distribution system of MECO x x
x.
xxx xxx xxx
All these were done notwithstanding the validity, enforceablity and
existence of the "MECO-MCIAA Connection Contract" on one hand,
and the validity, enforceability and existence of the "NPC-MECO seriously impair the franchise of MECO to exclusively operate a
Supply Contract" on the one hand. distribution system in the whole Island of Mactan and to directly
convey electric power to end-users in that area of coverage.
2.20 It must be stressed that with the advent of the EPIRA of 2001,
NPC is now without authority to sell electric energy directly to end- 3.7 The acts complained of against NPC will result in MECO
users including MCIAA. breaching the NPC-MECO Supply Contract and be penalized by NPC
under the said contract MECO will not be able to fully consume or
xxx xxx xxx
take out the level of electrical energy contracted for a particular
period.
CAUSES OF ACTION
FIRST CAUSE OF ACTION AGAINST DEFENDANT NPC
3.8 The acts complained of against NPC also constitute an unlawful
(For Injunctive Relief)
contractual interference by NPC with the contractual obligation of
MCIAA to MECO as evidenced by the existing MECO-MCIAA
xxx xxx xxx
Connection Contract which is valid until September 19, 2006.

xxx xxx xxx

3.1 NPC is now without authority in law to directly sell electric
energy to end users including MCIAA. Such being the case, MECO
has a clear and unmistakable right to secure an injunctive relief 3.11 As a matter of law, MECO is therefore entitled to a writ of
against NPC to enjoin the latter from committing an illegal act. prohibitory injunction against NPC, enjoining the latter from
directly supplying electric energy to MCIAA.
FIRST ALTERNATIVE CAUSE OF ACTION TO THE FIRST
CAUSE OF ACTION
In the event, however, that NPC is now directly supplying electric
energy to MCIAA, MECO is as a matter of law entitled to a writ of
3.2 Granting without conceding that NPC has authority to directly mandatory injunction against NPC, directing the latter to
sell electric energy to end-users, NPC cannot lawfully do so to discontinue directly supplying electric energy to MCIAA.
MCIAA without prior approval from the appropriate government
FIRST CAUSE OF ACTION AGAINST DEFENDANT MCIAA
regulatory agencies such as the ERC and DOE. The intended sale of
(For Specific Performance & Injunctive Relief)
electric energy by NPC to MCIAA [not] having [the approval of] ERC
and DOE, plaintiff has a clear and unmistakable right to an
xxx xxx xxx
injunctive relief to enjoin NPC from committing such unauthorized
act.
4.1 MECO has a clear and unmistakable right to demand from
SECOND ALTERNATIVE CAUSE OF ACTION TO THE FIRST
MCIAA to honor and faithfully comply with the terms and
CAUSE OF ACTION
conditions of the MECO-MCIAA Connection Contract which is valid,
enforceable and existing until September 19, 2006.

xxx xxx xxx

3.3 Granting without conceding that NPC has authority to directly
sell electric energy to end-users MECO has a clear, positive and
unmistakable property right as a franchise holder, guaranteed by
the due process protection of the constitution, to be heard first
before the NPC can directly supply electric energy to any end user
within MECO's franchise area.
3.4 MECO likewise enjoys the priority in right to distribute
electricity to any existing or prospective enterprises within its
franchise area to the exclusion of any person or entity including the
NPC.
4.3 Even assuming without conceding that MCIAA is given the right
to terminate the said contract, the circumstances would show that
such exercise of right by MCIAA was arbitrary amounting to bad
faith, and grossly abused by MCIAA to the prejudice and damage of
MECO, aware as it was that such termination would expose MECO
to liability under the latter's "NPC-MECO Supply Contract" which is
valid until September 25, 2015.
xxx xxx xxx

CAUSE OF ACTION AGAINST DEFENDANT TRANSCO

3.5 MECO furthermore enjoys the constitutional right to free
(For Injunctive Relief)
enterprise as well as the protective mantle of P.D. 2029 from
competition with government-owned or controlled corporation
xxx xxx xxx
including the NPC in various economic activities like the distribution
of services in which MECO is primarily engaged.
5.1 In the commission or performance of the acts complained of by
3.6 The acts of NPC in directly supplying electric energy to MCIAA NPC and MCIAA, NPC and MCIAA will unavoidably and
grossly violate the foregoing constitutional rights of MECO and consequently use the electrical transmission and sub-transmission
facilities of TRANSCO and all other assets related to transmission
operations.
5.2 In order not to allow the commission by NPC and MCIAA of
illegal acts, TRANSCO should be enjoined from allowing the use of
its electrical transmission and sub-transmission facilities
COMMON CAUSES OF ACTION AGAINST DEFENDANTS NPC and
MCIAA
(For Damages)
xxx xxx xxx
6.2 These acts likewise constitute an abuse of right under Articles
19 and 20 of the Civil Code which requires every person to act with
justice, give everyone his due and observe honesty and good faith
in the exercise of his rights and in the performance of his duties.
Furthermore, the commission of the acts complained of will
willfully cause loss or injury to MECO in a manner that is contrary
to morals, good customs or public policy in violation of Article 21 of
the Civil Code.
6.3 More importantly, the acts complained of against NPC
constitute an inducement by a third party to MCIAA to violate its
existing contract with MECO which contract is valid until
September 19, 2006 amounting to contract interference which is
prohibited by Article 1311 of the Civil Code.[13]
The RTC issued a 72-hour temporary restraining order[14] and later,
a status quo order effective until June 11, 2006. [15]
MCIAA,[16] NPC[17] and TRANSCO[18] each filed a motion to dismiss
on the grounds of lack of jurisdiction and improper venue. They
argued that, under Section 43 of RA 9136, ERC had the primary
administrative jurisdiction over the dispute as it involved players in
the energy sector. MCIAA further pointed out a stipulation in its
contract with MECO that in case of suit, the same should be filed in
Cebu City, not Lapu-Lapu City.[19]
NPC[20] and MCIAA[21] filed oppositions to the application of MECO
for preliminary injunction. They disclosed that, in compliance with
the requirements set forth in Cagayan Electric Power and Light
Company v. National Power Corporation[22] (i.e., that an electric
franchisee must be given the opportunity to be heard before NPC
may provide direct service to enterprises within the franchise area),
NPC and MCIAA disclosed to MECO on February 3, 2001,[23] August
20, 2001[24] and October 2, 2001[25]their planned direct sale of bulk
power and invited it to make a better offer, but MECO did not heed
the invitation.
The RTC dismissed the case on the following ground:
After a judicious review of the records and on the basis of the
hearings conducted on June 05 and 08, 2006 the court is convinced
and hereby concludes that the ERC, the government regulatory
agency that has original and exclusive jurisdiction to try disputes
between and among players in the energy sector. This is clear
under Sec. 43 (u) of Republic Act No. 9136, x x x.
xxx xxx xxx
While it is true that the plaintiff and defendants MCIAA, NPC and
NTC had forged contractual relations with each other involving or
affecting electricity and that disputes arising therefrom may
involve provisions in the Civil Code of the Philippines and may even
involve contractual interference, yet the indubitable fact remains
that the controversy in its entirety necessarily involves, affects
and/or pertains to the generation, transmission, distribution, and
consumption of electricity - matters that are within the jurisdiction
and competence of the ERC to adjudicate as an independent, quasi-
judicial regulatory body. Notably, as admitted by the plaintiff,
technical words and phrases will be utilized in the course of the
proceedings; this is precisely the reason why the ERC has been
tasked to hear and adjudicate disputes involving participants in the
energy sector, it has the technical expertise and experience to deal
with technical matters.
The doctrine of primary jurisdiction also comes into play in that
courts will not resolve a controversy involving a question which is
within the jurisdiction of an administrative tribunal, especially
where the question demands the exercise of sound administrative
discretion requiring the special knowledge and experience of the
said tribunal in determining technical and intricate matters of fact.
x x x[26]
MECO filed the instant petition for this Court to declare that the
RTC and not ERC had jurisdiction over its dispute with NPC, MCIAA
and TRANSCO because the dispute was purely civil in nature. It
arose from a mere violation of its (MECO's) rights under the
Constitution and the Civil Code, and required for the resolution
thereof an interpretation and application of said laws. No technical
matter was involved and no expertise of ERC was needed. [27]
MECO further argued that not all the parties to the dispute were
players in the energy sector. MCIAA was neither a generation
company, nor a transmission utility, nor a supplier of energy, nor a
distributor thereof, but a mere end-user. Thus, the dispute was not
"between and among participants or players in the energy sector"
which would have brought it within the ambit of Section 43 (v) of
RA 9136.[28]
In their respective memoranda, NPC, MCIAA and TRANSCO
maintain that the case arose from a dispute among energy players
over electric power connection and distribution; hence, it fell
within the primary administrative jurisdiction of ERC under Section
43 (v) of RA 9136.
On July 11, 2007, MCIAA filed a manifestation with motion to
dismiss, informing the Court that, pursuant to RA 6395, [29] it filed
with ERC an application for direct electric connection [30] with NPC
and TRANSCO under Section 3 (g)[31] of said law. MCIAA urges the
Court to dismiss the instant petition for having been rendered
moot and academic by the filing of its application with ERC. [32]
The question of law before the Court is: was it the RTC or the ERC
which had jurisdiction over the dispute involving MECO, on one
hand, and MCIAA, NPC and TRANSCO, on the other? The issue is
not hypothetical even as MCIAA has filed a petition with ERC for
direct electrical connection with NPC and TRANSCO. Jurisdiction is
not conferred on ERC by the mere filing of a petition with it. Its
jurisdiction is bestowed by law, specifically RA 9136.
There is, however, nothing in either RA 9136 or its implementing
rules which grants ERC jurisdiction over the dispute.
Section 43 (v) confers on ERC original and exclusive jurisdiction over
two kinds of cases:
1) all cases contesting rates, fees, fines and penalties imposed by
ERC in the exercise of its powers, functions and responsibilities
under Section 43 (a) through (u); and
2) all cases involving disputes between and among participants or
players in the energy sector.
Section 4 (n), Rule 3 of the Rules and Regulations to Implement RA
9136 (implementing rules) provides an administrative
interpretation of the scope of Section 43 (v) of RA 9136, to wit:
Section 4. Responsibilities of the ERC.
xx xx xx
(n) The ERC shall have the original and exclusive jurisdiction over all
cases contesting rates, fees, fines and penalties imposed in the
exercise of its powers, functions and responsibilities and over all
cases involving disputes between and among participants or
players in the energy sector relating to the foregoing powers,
functions and responsibilities. (emphasis supplied)
Disputes between and among participants or players in the energy
sector which may possibly be related to the powers, functions and
responsibilities of ERC are those arising from cross-ownership,
abuse of market power, cartelization and anti-competitive or
discriminatory behavior by any electric power industry participant
as defined and penalized under Section 45 of RA 9136 and Sections
3, 4, 5 and 8, Rule 11 of the implementing rules. It is ERC which is
authorized to monitor and penalize these prohibited acts and to
stop and redress the same through such remedial measures as the
issuance of injunction.[33]
The subject matter of the dispute between the parties is neither
cross-ownership, nor abuse of market power, nor cartelization, nor
anti-competitive or discriminatory behavior. Based on the
allegations of MECO in its complaint and the essence of the relief it
sought, the subject matter of its dispute with MCIAA, NPC and
TRANSCO involved the distribution of energy resource, specifically
the direct supply of electricity by NPC through TRANSCO to MCIAA,
without passing through the distribution system of MECO as the
franchise holder in the area. Therefore, their dispute was not within
the authority of ERC to resolve.
But neither did the RTC have jurisdiction over the dispute. That
power belonged to the Department of Energy (DOE).
In Energy Regulatory Board and Iligan Light & Power, Inc. v. Court
of Appeals, et al.,[34] we declared that jurisdiction over the
regulation of the marketing and distribution of energy resources is
vested in the DOE. In the consolidated cases National Power Corp.
v. Court of Appeals and Cagayan Electric Power and Light
Co.[35] and Phividec Industrial Authority v. Court of Appeals and
Cagayan Electric Power and Light Co.,[36] the Court traced the
history of this regulatory function of DOE:
The ERB, which used to be the Board of Energy, is tasked with the
following powers and functions by Executive Order No. 172 which
took effect immediately after its issuance on May 8, 1987:
"SEC. 3. Jurisdiction, Powers and Functions of the Board. - When
warranted and only when public necessity requires, the Board may
regulate the business of importing, exporting, re-exporting,
shipping, transporting, processing, refining, marketing
and distributing energy resources. x x x.
xx xx xx
As may be gleaned from said provisions, the ERB is basically a price
or rate-fixing agency.Apparently recognizing this basic function,
Republic Act No. 7638 (An Act Creating the Department of Energy,
Rationalizing the Organization and Functions of Government
Agencies Related to Energy, and for Other Purposes), which was
approved on December 9, 1992 and which took effect fifteen days
after its complete publication in at least two (2) national
newspapers of general circulation, specifically provides as follows:
"SEC. 18. Rationalization or Transfer of Functions of Attached or
Related Agencies.- The non-price regulatory jurisdiction, powers,
and functions of the Energy Regulatory Board as provided for in
Section 3 of Executive Order No. 172 are hereby transferred to the
Department.
In Batelec II Electric Cooperative Inc. v. Energy Industry
Administration Bureau (EIAB), et al.,[37] the Court further reiterated
that the DOE had regulatory authority over matters involving the
marketing and distribution of energy resources.
DOE has retained such regulatory authority even with the
enactment of RA 9136. Section 80 thereof provides that "[t]he
applicable provisions of x x x Republic Act 7638, otherwise known
as the `Department of Energy Act of 1992' x x x shall continue to
have full force and effect except in so far as inconsistent" with RA
9136. Corollary to Section 80, Section 37 assigned to DOE certain
powers and functions in the supervision of the restructuring of the
electricity industry, but these are "[i]n addition to its existing
powers and functions." Among the existing powers and functions shall refer such dispute to either the COMPANY or the UNION in
of DOE is the regulation of the marketing and distribution of energy order to resolve such dispute. It is understood, however, if the
resource as provided in Section 18 of RA 7638, amending Section 3 dispute could not be resolved then both parties shall avail of the
of EO 172. grievance procedure.

Sec. 5. In furtherance of the foregoing principle, there is hereby

In fine, the RTC was correct when it dismissed the complaint of
created a GRIEVANCE COMMITTEE to be composed of two
MECO for lack of jurisdiction. However, it erred in referring the
COMPANY REPRESENTATIVES to be designated by the COMPANY
parties to ERC because the agency with authority to resolve the
and two LABOR REPRESENTATIVES to be designated by the UNION.
dispute was the Department of Energy.
Sec. 6. Any grievance, dispute or misunderstanding concerning any
WHEREFORE, the petition is hereby DENIED. ruling, practice, wages or working conditions in the COMPANY, or
any breach of the Employment Contract, or any dispute arising
Costs against petitioner. from the meaning or the application of the provision of this
Agreement or a claim of violation thereof or any complaint that any
SO ORDERED. such crewmembers may have against the COMPANY, as well as
complaint which the COMPANY may have against such
[G.R. No. 138938. October 24, 2000]
crewmembers shall be brought to the attention of the GRIEVANCE
CELESTINO VIVIERO, petitioner, vs. COURT OF APPEALS, COMMITTEE before either party takes any action, legal or
HAMMONIA MARINE SERVICES, and HANSEATIC SHIPPING CO., otherwise.
LTD. respondents.
Sec. 7. The COMMITTEE shall resolve any dispute within seven (7)
DECISION days from and after the same is submitted to it for resolution and
if the same cannot be settled by the COMMITTEE or if the
BELLOSILLO, J.:
COMMITTEE fails to act on the dispute within the 7-day period
CELESTINO VIVERO, in this petition for review, seeks the reversal of herein provided, the same shall be referred to a VOLUNTARY
the Decision of the Court of Appeals of 26 May 1999 setting aside ARBITRATION COMMITTEE.
the Decision of the National Labor Relations Commission of 28 May
An "impartial arbitrator" will be appointed by mutual choice and
1998 as well as its Resolution of 23 July 1998 denying his motion
consent of the UNION and the COMPANY who shall hear and decide
for its reconsideration, and reinstating the decision of the Labor
the dispute or issue presented to him and his decision shall be final
Arbiter of 21 January 1997.
and unappealable x x x x[1]
Petitioner Vivero, a licensed seaman, is a member of the Associated
As found by the Labor Arbiter -
Marine Officers and Seamen's Union of the Philippines
(AMOSUP). The Collective Bargaining Agreement entered into by Complainant was hired by respondent as Chief Officer of the
AMOSUP and private respondents provides, among others - vessel "M.V. Sunny Prince" on 10 June 1994 under the terms and
conditions, to wit:
ARTICLE XII
Duration of Contract - - - - 10 months
GRIEVANCE PROCEDURE
Basic Monthly Salary - - - - US $1,100.00
xxxx
Hours of Work - - - - 44 hrs./week
Sec. 3. A dispute or grievance arising in connection with the terms
and provisions of this Agreement shall be adjusted in accordance Overtime - - - - 495 lump O.T.
with the following procedure:
Vacation leave with pay - - - - US $220.00/mo.
1. Any seaman who feels that he has been unjustly treated or even
On grounds of very poor performance and conduct, refusal to
subjected to an unfair consideration shall endeavor to have said
perform his job, refusal to report to the Captain or the vessels
grievance adjusted by the designated representative of the
Engineers or cooperate with other ship officers about the problem
unlicensed department abroad the vessel in the following manner:
in cleaning the cargo holds or of the shipping pump and his dismal
A. Presentation of the complaint to his immediate superior. relations with the Captain of the vessel, complainant was
repatriated on 15 July 1994.
B. Appeal to the head of the department in which the seaman
involved shall be employed. On 01 August 1994, complainant filed a complaint for illegal
dismissal at Associated Marine Officers and Seamans Union of the
C. Appeal directly to the Master.
Philippines (AMOSUP) of which complainant was a
Sec. 4. If the grievance cannnot be resolved under the provision of member. Pursuant to Article XII of the Collective Bargaining
Section 3, the decision of the Master shall govern at sea x x x x in Agreement, grievance proceedings were conducted; however,
foreign ports and until the vessel arrives at a port where the Master parties failed to reach and settle the dispute amicably, thus, on 28
November 1994, complainant filed [a] complaint with the
Philippine Overseas Employment Administration (POEA).[2]
The law in force at the time petitioner filed his Complaint with the
POEA was EO No. 247.[3]
While the case was pending before the POEA, private respondents
filed a Motion to Dismiss on the ground that the POEA
had no jurisdiction over the case considering petitioner Vivero's
failure to refer it to a Voluntary Arbitration Committee in
accordance with the CBA between the parties. Upon the
enactment of RA 8042, the Migrant Workers and Overseas Filipinos
Act of 1995, the case was transferred to the Adjudication Branch of
the National Labor Relations Commission.
On 21 January 1997 Labor Arbiter Jovencio Ll. Mayor Jr., on the
basis of the pleadings and documents available on record, rendered
a decision dismissing the Complaint for want of
[4]
jurisdiction. According to the Labor Arbiter, since the CBA of the
parties provided for the referral to a Voluntary Arbitration
Committee should the Grievance Committee fail to settle the
dispute, and considering the mandate of Art. 261 of the Labor Code
on the original and exclusive jurisdiction of Voluntary Arbitrators,
the Labor Arbiter clearly had no jurisdiction over the case.[5]
Petitioner (complainant before the Labor Arbiter) appealed the
dismissal of his petition to the NLRC. On 28 May 1998 the NLRC set
aside the decision of the Labor Arbiter on the ground that the
record was clear that petitioner had exhausted his remedy by
submitting his case to the Grievance Committee of
AMOSUP. Considering however that he could not obtain any
settlement he had to ventilate his case before the proper
forum, i.e., the Philippine Overseas Employment
Administration.[6] The NLRC further held that the contested portion
in the CBA providing for the intercession of a Voluntary Arbitrator
was not binding upon petitioner since both petitioner and private
respondents had to agree voluntarily to submit the case before a
Voluntary Arbitrator or Panel of Voluntary Arbitrators.This would
entail expenses as the Voluntary Arbitrator chosen by the parties
had to be paid. Inasmuch however as petitioner chose to file
his Complaint originally with POEA, then the Labor Arbiter to whom
the case was transferred would have to take cognizance of the
case.[7]
The NLRC then remanded the case to the Labor Arbiter for further
proceedings. On 3 July 1998 respondents filed a Motion for
Reconsideration which was denied by the NLRC on 23 July 1998.
Thus, private respondents raised the case to the Court of Appeals
contending that the provision in the CBA requiring a dispute which
remained unresolved by the Grievance Committee to be referred
to a Voluntary Arbitration Committee, was mandatory in character
in view of the CBA between the parties. They stressed that "since it
is a policy of the state to promote voluntary arbitration as a mode
of settling labor disputes, it is clear that the public respondent
gravely abused its discretion in taking cognizance of a case which
was still within the mantle of the Voluntary Arbitration Commitees
jurisdiction."[8]
On the other hand, petitioner argued -
(A)s strongly suggested by its very title, referral of cases of this
nature to the Voluntary Arbitration Committee is voluntary in
nature. Otherwise, the committee would not have been called
Voluntary Arbitration Committee but rather, a Compulsory
Arbitration Committee. Moreover, if the referral of cases of similar
nature to the Voluntary Arbitration Committee would be deemed
mandatory by virtue of the provisions in the CBA, the [NLRC] would
then be effectively deprived of its jurisdiction to try, hear and
decide termination disputes, as provided for under Article 217 of
the Labor Code. Lastly, [respondents] ought to be deemed to have
waived their right to question the procedure followed by
[petitioner], considering that they have already filed
their Position Paper before belatedly filing a Motion to Dismiss x x
x x [9]
But the Court of Appeals ruled in favor of private respondents. It
held that the CBA "is the law between the parties and compliance
therewith is mandated by the express policy of the law."[10] Hence,
petitioner should have followed the provision in the CBA requiring
the submission of the dispute to the Voluntary Arbitration
Committee once the Grievance Committee failed to settle the
controversy.[11] According to the Court of Appeals, the parties did
not have the choice to "volunteer" to refer the dispute to the
Voluntary Arbitrator or a Panel of Arbitrators when there was
already an agreement requiring them to do so. "Voluntary
Arbitration" means that it is binding because of a prior agreement
or contract, while "Compulsory Arbitration" is when the law
declares the dispute subject to arbitration, regardless of the
consent or desire of the parties.[12]
The Court of Appeals further held that the Labor Code itself
enumerates the original and exclusive jurisdiction of the Voluntary
Arbitrator or Panel of Voluntary Arbitrators, and prohibits the NLRC
and the Regional Directors of the Department of Labor and
Employment (DOLE) from entertaining cases falling under the
same.[13] Thus, the fact that private respondents filed their Position
Paper first before filing their Motion to Dismiss was immaterial and
did not operate to confer jurisdiction upon the Labor Arbiter,
following the well-settled rule that jurisdiction is determined by
law and not by consent or agreement of the parties or by
estoppel.[14]
Finally, the appellate court ruled that a case falling under the
jurisdiction of the Labor Arbiter as provided under Art. 217 of the
Labor Code may be lodged instead with a Voluntary Arbitrator
because the law prefers, or gives primacy, to voluntary arbitration
insteadof compulsory arbitration.[15] Consequently, the contention
that the NLRC would be deprived of its jurisdiction to try, hear and
decide termination disputes under Art. 217 of the Labor Code,
should the instant dispute be referred to the Voluntary Arbitration
Committee, is clearly bereft of merit.[16] Besides, the Voluntary
Arbitrator, whether acting solely or in a panel, enjoys in law the
status of a quasi-judicial agency independent of, and apart from,
the NLRC since his decisions are not appealable to the latter.[17]
Celestino Vivero, in his petition for review assailing the Decision of
the Court of Appeals, alleges that the appellate court committed
grave abuse of discretion in holding that a Voluntary Arbitrator or
Panel of Voluntary Arbitrators, and not the Adjudication Branch of
the NLRC, has jurisdiction over his
complaint for illegal dismissal. He claims that his complaint for
illegal dismissal was undeniably a termination dispute and did not,
in any way, involve an "interpretation or implementation of
collective bargaining agreement" or "interpretation" or
"enforcement" of company personnel policies. Thus, it should fall
within the original and exclusive jurisdiction of the NLRC and its
Labor Arbiter, and not with a Voluntary Arbitrator, in accordance
with Art. 217 of the Labor Code.
Private respondents, on the other hand, allege that the case is
clearly one "involving the
proper interpretation and implementation of the Grievance
Procedure found in the Collective Bargaining Agreement (CBA)
between the parties"[18] because of petitioners allegation in his
claim/assistance request form submitted to the Union, to wit:
NATURE OF COMPLAINT
3. Illegal Dismissal - Reason: (1) That in this case it was the master
of M.V. SUNNY PRINCE Capt. Andersen who created the trouble
with physical injury and stating false allegation; (2) That there was
no proper procedure of grievance; (3) No proper notice of
dismissal.
Is there a Notice of dismissal? _x_ Yes or ____ No
What date? 11 July 1994
Is there a Grievance Procedure observed? ____ Yes or _x_ No[19]
Private respondents further allege that the fact that petitioner
sought the assistance of his Union evidently shows that he himself
was convinced that his Complaint was within the ambit of the
jurisdiction of the grievance machinery and subsequently by a
Panel of Voluntary Arbitrators as provided for in their CBA, and as
explicitly mandated by Art. 261 of the Labor Code.[20]
Thus, the issue is whether the NLRC is deprived of jurisdiction over
illegal dismissal cases whenever a CBA provides for grievance
machinery and voluntary arbitration proceedings. Or, phrased in
another way, does the dismissal of an employee constitute a
"grievance between the parties," as defined under the provisions
of the CBA, and consequently, within the exclusive original
jurisdiction of the Voluntary Arbitrators, thereby rendering the
NLRC without jurisdiction to decide the case?
On the original and exclusive jurisdiction of Labor Arbiters, Art. 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 the employer-employee relations;
(5) Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
and, (6) Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other claims arising
from employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over
all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation of collective bargaining
agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by
the Labor Arbiter by referring the same to the grievance machinery
and voluntary arbitration as may be provided in said agreements
(emphasis supplied).
However, any or all of these cases may, by agreement of the
parties, be submitted to a Voluntary Arbitrator or Panel of
Voluntary Arbitrators for adjudication. Articles 261 and 262 of the
Labor Code provide -
Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary
Arbitrators. - The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company
personnel policies referred to in the immediately preceding
article. Accordingly, violations of a Collective Bargaining
Agreement, except those which are gross in character, shall no
longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to comply
with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of
the Department of Labor and Employment shall not entertain
disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and refer the same to the
Grievance Machinery or Voluntary Arbitration provided in the
Collective Bargaining Agreement.
Art. 262. Jurisdiction Over Other Labor Disputes. - The Voluntary
Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including
unfair labor practices and bargaining deadlocks (emphasis
supplied).
Private respondents attempt to justify the conferment of
jurisdiction over the case on the Voluntary Arbitrator on the ground
that the issue involves the proper interpretation and
implementation of the Grievance Procedure found in the CBA. They
point out that when petitioner sought the assistance of his Union
to avail of the grievance machinery, he in effect submitted himself
to the procedure set forth in the CBA regarding submission of
unresolved grievances to a Voluntary Arbitrator.
The argument is untenable. The case is primarily a termination
dispute. It is clear from the claim/assistance request form
submitted by petitioner to AMOSUP that he was challenging the
legality of his dismissal for lack of cause and lack of due
process. The issue of whether there was proper interpretation and
implementation of the CBA provisions comes into play only
because the grievance procedure provided for in the CBA was not
observed after he sought his Unions assistance in contesting his
termination. Thus, the question to be resolved necessarily springs
from the primary issue of whether there was a valid termination;
without this, then there would be no reason to invoke the need to
interpret and implement the CBA provisions properly.
In San Miguel Corp. v. National Labor Relations Commission [21] this
Court held that the phrase "all other labor disputes" may include
termination disputes provided that the agreement between the
Union and the Company states "in unequivocal language that [the
parties] conform to the submission of termination disputes and
unfair labor practices to voluntary arbitration."[22] Ergo, it is not
sufficient to merely say that parties to the CBA agree on the
principle that "all disputes" should first be submitted to a Voluntary
Arbitrator.There is a need for an express stipulation in the CBA that
illegal termination disputes should be resolved by a Voluntary
Arbitrator or Panel of Voluntary Arbitrators, since the same fall
within a special class of disputes that are generally within the
exclusive original jurisdiction of Labor Arbiters by express provision
of law. Absent such express stipulation, the phrase "all disputes"
should be construed as limited to the areas of conflict traditionally
within the jurisdiction of Voluntary Arbitrators, i.e., disputes
relating to contract-interpretation, contract-implementation, or
interpretation or enforcement of company personnel
policies. Illegal termination disputes - not falling within any of these
categories - should then be considered as a special area of interest
governed by a specific provision of law.
In this case, however, while the parties did agree to make
termination disputes the proper subject of voluntary arbitration,
such submission remains discretionary upon the parties. A perusal
of the CBA provisions shows that Sec. 6, Art. XII (Grievance
Procedure) of the CBA is the general agreement of the parties to
refer grievances, disputes or misunderstandings to a grievance
committee, and henceforth, to a voluntary arbitration
committee. The requirement of specificity is fulfilled by Art. XVII
(Job Security) where the parties agreed -
Sec. 1. Promotion, demotion, suspension, dismissal or disciplinary
action of the seaman shall be left to the discretion of the Master,
upon consultation with the Company and notification to the
Union. This notwithstanding, any and all disciplinary action taken
on board the vessel shall be provided for in Appendix B of this
Agreement x x x x [23]
Sec. 4. x x x x Transfer, lay-off or discipline of seamen for
incompetence, inefficiency, neglect of work, bad behavior,
perpetration of crime, drunkenness, insubordination, desertion,
violation of x x x regulations of any port touched by the Companys
vessel/s and other just and proper causes shall be at Masters
discretion x x x in the high seas or foreign ports. The Master shall
refer the case/dispute upon reaching port and if not satisfactorily
settled, the case/dispute may be referred to the grievance
machinery or procedure hereinafter provided (emphasis
supplied).[24]
The use of the word "may" shows the intention of the parties to
reserve the right to submit the illegal termination dispute to the
jurisdiction of the Labor Arbiter, rather than to a Voluntary
Arbitrator. Petitioner validly exercised his option to submit his case
to a Labor Arbiter when he filed his Complaint before the proper
government agency.
Private respondents invoke Navarro III v. Damasco[25] wherein the
Court held that "it is the policy of the state to promote voluntary
arbitration as a mode of settling disputes."[26] It should be noted,
however, that in Navarro III all the parties voluntarily submitted to
the jurisdiction of the Voluntary Arbitrator when they filed their
respective position papers and submitted documentary evidence
before him. Furthermore, they manifested during the initial
conference that they were not questioning the authority of the
Voluntary Arbitrator.[27] In the case at bar, the dispute was never
brought to a Voluntary Arbitrator for resolution; in fact, petitioner
precisely requested the Court to recognize the jurisdiction of the
Labor Arbiter over the case. The Court had held in San Miguel Corp.
v. NLRC[28]that neither officials nor tribunals can assume jurisdiction
in the absence of an express legal conferment. In the same manner,
petitioner cannot arrogate into the powers of Voluntary Arbitrators
the original and exclusive jurisdiction of Labor Arbiters over unfair
labor practices, termination disputes, and claims for damages, in
the absence of an express agreement between the parties in order
for Art. 262 of the Labor Code to apply in the case at bar. In other
words, the Court of Appeals is correct in holding that Voluntary
Arbitration is mandatory in character if there is a specific
agreement between the parties to that effect. It must be stressed
however that, in the case at bar, the use of the word "may" shows
the intention of the parties to reserve the right of recourse to Labor
Arbiters.
The CBA clarifies the proper procedure to be followed in situations
where the parties expressly stipulate to submit termination
disputes to the jurisdiction of a Voluntary Arbitrator or Panel of
Voluntary Arbitrators. For when the parties have validly agreed on
a procedure for resolving grievances and to submit a dispute to
voluntary arbitration then that procedure should be strictly
observed. Non-compliance therewith cannot be excused, as
petitioner suggests, by the fact that he is not well-versed with the
"fine prints" of the CBA. It was his responsibility to find out,
through his Union, what the provisions of the CBA were and how
they could affect his rights. As provided in Art. 241, par. (p), of the
Labor Code -
(p) It shall be the duty of any labor organization and its officers to
inform its members on the provisions of its constitution and by-
laws, collective bargaining agreement, the prevailing labor
relations system and all their rights and obligations under existing
labor laws.
In fact, any violation of the rights and conditions of union
membership is a "ground for cancellation of union registration or
expulsion of officer from office, whichever is appropriate. At least
thirty percent (30%) of all the members of a union or any member
or members especially concerned may report such violation to the
Bureau [of Labor Relations] x x x x"[29]
It may be observed that under Policy Instruction No. 56 of the
Secretary of Labor, dated 6 April 1993, "Clarifying the Jurisdiction
Between Voluntary Arbitrators and Labor Arbiters Over
Termination Cases and Providing Guidelines for the Referral of Said
Cases Originally Filed with the NLRC to the NCMB," termination
cases arising in or resulting from the interpretation and
implementation of collective bargaining agreements and
interpretation and enforcement of company personnel policies
which were initially processed at the various steps of the plant-level
Grievance Procedures under the parties' collective bargaining
agreements fall within the original and exclusive jurisdiction of the
voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of the
Labor Code; and, if filed before the Labor Arbiter, these cases shall
be dismissed by the Labor Arbiter for lack of jurisdiction and
referred to the concerned NCMB Regional Branch for appropriate
action towards an expeditious selection by the parties of a
Voluntary Arbitrator or Panel of Arbitrators based on the
procedures agreed upon in the CBA.
As earlier stated, the instant case is a termination dispute falling
under the original and exclusive jurisdiction of the Labor Arbiter,
and does not specifically involve the application, implementation
or enforcement of company personnel policies contemplated
in Policy Instruction No. 56. Consequently, Policy Instruction No.
56 does not apply in the case at bar. In any case, private
respondents never invoked the application of Policy Instruction No.
56 in their Position Papers, neither did they raise the question in
their Motion to Dismiss which they filed nine (9) months after the
filing of their Position Papers. At this late stage of the proceedings,
it would not serve the ends of justice if this case is referred back to
a Voluntary Arbitrator considering that both the AMOSUP and
private respondents have submitted to the jurisdiction of the Labor
Arbiter by filing their respective Position Papers and ignoring the
grievance procedure set forth in their CBA.
After the grievance proceedings have failed to bring about a
resolution, AMOSUP, as agent of petitioner, should have informed
him of his option to settle the case through voluntary arbitration.
Private respondents, on their part, should have timely invoked the
provision of their CBA requiring the referral of their unresolved
disputes to a Voluntary Arbitrator once it became apparent that the
grievance machinery failed to resolve it prior to the filing of the
case before the proper tribunal. The private respondents should
not have waited for nine (9) months from the filing of their Position
Paper with the POEA before it moved to dismiss the case
purportedly for lack of jurisdiction. As it is, private respondents are
deemed to have waived their right to question the procedure
followed by petitioner, assuming that they have the right to do
so. Under their CBA, both Union and respondent companies are
responsible for selecting an impartial arbitrator or for convening an
arbitration committee;[30] yet, it is apparent that neither made a
move towards this end.Consequently, petitioner should not be
deprived of his legitimate recourse because of the refusal of both
Union and respondent companies to follow the grievance
procedure.
WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and
the case is remanded to the Labor Arbiter to dispose of the case
with dispatch until terminated considering the undue delay already
incurred.
SO ORDERED.
G.R. No. 134903. March 26, 2001]
UNICRAFT INDUSTRIES INTERNATIONAL CORPORATION, ROBERT
DINO, CRISTINA DINO and MICHAEL LLOYD DINO, petitioners,
vs. THE HON. COURT OF APPEALS, VOLUNTARY ARBITRATOR
FLORANTE V. CALIPAY, DANILO ABARAO, ROGIETO ABARAO,
BENJAMIN AVENTURADO, BENIGNO BELARMINO, FELIX BRAZIL,
RENATO BRIONES, RECCIL ELCANA, ROLAND GERON, RICKY
GIMENA, ROMEO INOC, NILIA MANDAWE, ANTONIO
MANGABON, AMELITO MONTELIN, MATIAS ONGOS, ARTURO
ORTEGA, ADRIANO PALO, JR., BERNARDO RAMOS, WILMA
RANILE, EDGAR RIVERA, RAFAEL RONDINA, ANILO ROSALES,
DIVINA ROSALES, ALONA SORTOES, VINCH TRUZ, WILSON
VILLARTA, EMETERIO YBAS, ROMEO ABARAO, WILFREDO
ABARAO, EUGENIO ABING, JAIME AGUSTIN, RUBEN RONDINA,
LORENA SORTOES, respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for certiorari with prayer for the issuance
of a writ of preliminary injunction and/or temporary restraining
order are the Resolutions of the Court of Appeals[1] in CA-G.R. SP
No. 43763, dated June 18, 1998 and July 31, 1998.
The undisputed facts are as follows:
Petitioner Unicraft Industries International Corporation is a
domestic corporation with principal office at Apao, Mandaue
City. Private respondents were employees of petitioner
corporation for at least over a year, performing work necessary and
desirable to the business operation of petitioner
corporation. When it expanded its business operations, petitioner
corporation opened a branch in Lapulapu City and transferred
private respondents from the Mandaue office to the Lapulapu City
branch. It appears that petitioner corporation failed to comply with
some legal requirements for its business operations in Lapulapu
City. Thus, on July 3, 1995, the city government of Lapulapu
ordered the closure of petitioners business due to lack of business
and building permit. Consequently, petitioner corporation effected
the mass dismissal of private respondents eight (8) days after their
transfer to the Lapulapu City branch. Hence, the thirty-two private
respondents herein filed with the National Labor Relations
Commission, Regional Arbitration Branch No. VII, Cebu City, their
individual and separate complaints (consolidated as NLRC Case No.
RAB-VII 07-0705-95) for illegal dismissal, underpayment/non-
payment of wages, overtime pay, holiday pay, 13th month pay, and
service incentive leave. Named respondents were petitioner
corporation, Robert Dino, Michael Lloyd Dino, and Cristina Dino, as
owners/president/managers of the corporation.
Private respondents, complainants in the labor case, contended
that petitioners dismissed them because of their union
activities. Petitioners, on the other hand, countered that private
respondents were not illegally dismissed and argued that the
closure of the branch office was effected by virtue of a lawful order
of the city government of Lapulapu. Moreover, petitioners alleged
that they offered to pay separation pay to the private respondents
who, in fact, have already executed quitclaims in favor of petitioner
corporation. After a summary trial, the case was submitted for
decision on February 14, 1996.
On December 19, 1996, pursuant to Policy Instruction No. 56 of the
Secretary of Labor, dated April 6, 1996, and by virtue of the
agreement of the parties, the case was submitted for voluntary
arbitration to Florante V. Calipay, the voluntary arbitrator chosen
by the petitioners and private respondents.[2]
On January 9, 1997, petitioners filed a motion for re-selection of
voluntary arbitrator. In its order dated January 21, 1997, the
voluntary arbitrator denied petitioners motion and defined the
issues to be resolved in the arbitration proceedings, thus:
WHEREFORE, by virtue of the powers and duties vested upon me
as the selected voluntary arbitrator, I hereby order both parties to
submit their respective position papers and evidence, within
fifteen (15) days from today, treating the following issues:
a) whether or not the voluntary arbitrator had been validly selected
by the parties and/or whether the same arbitrator had validly
assumed jurisdiction over the case.
b) whether or not the complaining workers were legally
dismissed. If not, what are their rights and remedies under the law?
Failure of any party to submit their position paper and/or evidence
within the set period would be tantamount to waiver of such party
to present the same. The case shall then be considered submitted
for immediate resolution based on what would thus far be
submitted.[3]
On March 15, 1997, for failure of petitioners and their counsel to
appear and present evidence at the hearing on March 3, 1997, the
voluntary arbitrator rendered a decision in favor of private
respondents on the basis of the position papers submitted in the
voluntary arbitration proceedings as well as the documents and
pleadings submitted in NLRC Case No. RAB-VII 07-0705-95 before
the NLRC RAB VII, Cebu City. The decretal portion of said decision
reads:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the complainants, to wit:
a) The dismissal of the complainants are (sic) hereby
declared illegal. The respondents are ordered to pay the
complainants back wages from the date of termination until the
date (sic) promulgation of this judgment (15 March 1997).
b) The respondents are further ordered, in view of imputations of
bad faith and the strained relations of the parties, to pay the
complainants separation pay at one (1) month pay for every year
of service from the first day of service until the date of
promulgation of this judgment on 15 March 1997, less the amounts
the complainants acknowledged to have received before officials
at the Department of Labor and Employment Region VII, Cebu
City. The total separation pay is SIX HUNDRED ELEVEN THOUSAND
SEVEN HUNDRED SIXTY NINE PESOS AND FIFTY CENTAVOS
(P611,769.50).
c) The respondents are also declared guilty for violating labor
standard law and are hereby ordered to pay the
complainants money claims for differentials in wage and other
benefits in the amount of FOUR MILLION EIGHT HUNDRED FIFTY
SEVEN THOUSAND EIGHT HUNDRED SIXTY NINE PESOS AND FORTY
CENTAVOS (P4,857,869.40).
d) The claims for moral damages are DISMISSED for lack of
convincing evidence.
e) The respondents are ordered to pay Attorneys Fees in the
amount equivalent to ten (10) percent of the total award or the
amount of FIVE HUNDRED FORTY SIX THOUSAND NINE HUNDRED
SIXTY THREE PESOS AND EIGHTY NINE CENTAVOS
(P546,963.89). Litigation costs of TEN THOUSAND PESOS
(P10,000.00) is likewise awarded to the complainants.
In Summation
Judgment is rendered in favor of the complainants awarding them
SIX MILLION TWENTY SIX THOUSAND SIX HUNDRED TWO PESOS
AND SEVENTY-NINE CENTAVOS (P6,026,602.79) divided as follows:
a) Total Separation Pay -------------------- P 611,796.50
b) Total Money claims ------------------------- P 4,857, 869.40
Sub-total ------ P 5,469, 638.90
c) Attorneys Fees (10% of sub-total) --------- P 546,963.89
d) Litigation Costs -------------------------------- P 10,000.00
---------------------
TOTAL P 6,026, 602.79
The respondents are therefore mandated to comply with this
judgment.
SO ORDERED.[4]
Petitioners filed a petition for certiorari with the Court of Appeals
contending that they were denied opportunity to be heard in the
proceedings before the voluntary arbitrator.
On April 22, 1997, the Court of Appeals approved a stipulation of
the parties to remand the case to the voluntary arbitrator so that
the petitioners will be granted their day in court to prove their
case. The stipulation recites:
STIPULATION
PARTIES, through their respective counsel, unto this Honorable 3. In order to help this Court determine the necessity of remanding
Court, most respectfully stipulate: the award for money claims for further hearing or whether the
award could be affirmed on the basis of the payrolls, pleadings,
1. Both parties desire to put an end to the litigation before this
evidence and position papers submitted in support of the award,
Honorable Court, and instead refer the above-entitled case back to
parties are required to file their respective comment on the award
Voluntary Arbitrator Florante V. Calipay for further hearing under
within fifteen (15) days from receipt of this resolution; and
the following terms and conditions:
4. Within the same period of fifteen (15) days, parties are required
a) The petitioners will put up a bond in the amount of P6.5 Million
to submit their comment on the issue of whether petitioners
to be issued by the Visayan Surety & Insurance Company or any
Michael Dino, Robert Dino and Cristina Dino could be held liable for
other accredited bonding company acceptable to private
the claims of complainants and whether complainants are entitled
respondents to secure payment of the decision dated March 15,
to litigation expenses apart from the ten (10%) percent attorneys
1997 (Annex A of the Petition) rendered by Voluntary Arbitrator
fees.
Calipay.
SO ORDERED.[7]
b) The case will be referred back to Voluntary Arbitrator Calipay so
that the petitioners will be granted their day in court to prove their A motion for reconsideration of the foregoing resolution was
case, the hearing thereat to treat the following issues: denied by the Court of Appeals on July 31, 1998. Hence, the instant
petition anchored on the following grounds:
1. Whether or not the complainants mentioned in Exhibit J of the
Decision really filed their complaints before the NLRC; I.

2. Whether or not complainants were dismissed; if so, whether or
not their dismissals were valid;
3. Whether or not complainants are entitled to separation pay,
money claims, attorneys fees and litigation costs specified in the
decision, Annex A of the petition; and
4. Whether or not Robert Dino, Cristina Dino and Michael Dino can
be held liable for the claims of complainants.
WHEREFORE, premises considered, it is most respectfully prayed of
this Honorable Court to approve the foregoing Stipulation and to
render a resolution in accordance therewith.[5]
Instead of conducting further proceedings, however, the voluntary
arbitrator filed a comment praying, inter alia, that he be declared
to have lost jurisdiction over the case upon rendition of the
judgment.[6]
On June 18, 1998, upon motion of private respondents, the Court
of Appeals re-examined the stipulation of the parties and
thereafter rendered the assailed resolution allowing, among
others, the partial execution of the decision of the voluntary
arbitrator with respect to the award of separation pay and
attorneys fees. The dispositive portion thereof states:
WHEREFORE, pending decision on all other issues and solely to
alleviate the needs of complainants who complain that they are
starving:
1. The IMMEDIATE EXECUTION, pending this petition, of the award
of P611,769.50 as total separation pay plus ten (10%) percent of
said amount as attorneys fees is hereby ALLOWED and
AUTHORIZED.
2. The voluntary arbitrator Mr. Florante Villanueva Calipay, is
ordered to elevate to this Court within ten (10) days from receipt
of this resolution, all payrolls, pleadings, evidence and position
papers submitted in support of the Money Claims, together with
the computation made by him.Exhibits K to K-5;
THE HONORABLE COURT OF APPEALS VIOLATED PETITIONERS
CONSTITUTIONAL RIGHT TO DUE PROCESS WHEN IT AFFIRMED THE
VOLUNTARY ARBITRATORS AWARD FOR SEPARATION PAY
NOTWITHSTANDING THAT THE FORMER, AS CAN READILY BE
GLEANED FROM THE QUESTIONED RESOLUTIONS, DID NOT HAVE
IN ITS POSSESSION THE RECORDS OF THE CASE SUBMITTED TO IT
FOR REVIEW.
II.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
WHEN IT AFFIRMED THE AWARD OF THE VOLUNTARY ARBITRATOR
NOTWITHSTANDING THAT IT HAD ALREADY BEEN CONCEDED THAT
PETITIONERS WERE DENIED DUE PROCESS DURING THE
ARBITRATION STAGE.
III.
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
ISSUING THE QUESTIONED RESOLUTIONS NOTWITHSTANDING
THAT THERE IS A VALID AND SUBSISTING APPROVED STIPULATION
WHICH HAS THE FORCE AND EFFECT OF A JUDGMENT BY
COMPROMISE.
More specifically, petitioners contend that the Court of Appeals
committed grave abuse of discretion in affirming the award of
separation pay in favor of private respondent workers, considering
that the respondent court was not in possession of the records and
evidence that would support its ruling.[8]
It is at once clear from the records that petitioners were not able
to present evidence before the Voluntary Arbitrator. This is plainly
evident from the Stipulation entered into by the parties and
submitted to the Court of Appeals, which pertinently states:
b) The case will be referred back to Voluntary Arbitrator Calipay so
that petitioners will be granted their day in court to prove their
case, the hearing thereat to treat the following issues:
1. Whether or not the complainants mentioned in Exhibit J of the
Decision really filed their complaints before the NLRC;
2. Whether or not complainants were dismissed; if so, whether or
not their dismissals were valid;
3. Whether or not complainants are entitled to separation pay,
money claims, attorneys fees and litigation costs specified in the
decision, Annex A of the petition; amd
4. Whether or not Robert Dino, Cristina Dino and Michael Dino can
be held liable for the claims of complainants.
The foregoing is an acknowledgment by both parties that the
proceedings before the Voluntary Arbitrator have not been
completed. Despite this, the Court of Appeals rendered the
assailed resolution ordering the immediate execution of the award
of separation pay and attorneys fees. Prior to that, Voluntary
Arbitrator Calipay filed a comment contending that he had lost
jurisdiction over the case after he rendered judgment. While under
the law decisions of voluntary arbitrators are accorded finality, the
same may still be subject to review, such as here where there was
a violation of petitioners right to due process and to be heard.
Inspite of statutory provisions making final the decisions of certain
administrative agencies, we have taken cognizance of petitions
questioning these decisions where want of jurisdiction, grave
abuse of discretion, violation of due process, denial of substantive
justice, or erroneous interpretation of the law where brought to
our attention.[9]
Petitioners decry the Voluntary Arbitrators rendition of judgment
against petitioners, after the latter failed to appear at the hearing
scheduled on March 3, 1997 at 3:00 oclock in the
afternoon. Subsequently, however, in a motion for the calling of
another hearing, which was denied, petitioners manifested to the
Voluntary Arbitrator that the reason why they failed to appear on
March 3, 1997 was because they received notice of the said hearing
only at 4:00 oclock in the afternoon of that day. Indeed, this
omission to afford petitioners a chance to present evidence on
their behalf is a clear violation of a partys constitutional right and
has the effect of rendering its judgment null and void. It is a cardinal
rule in law that a decision or judgment is fatally defective if
rendered in violation of a party-litigants right to due process.[10]
The right of due process is fundamental in our legal system and we
adhere to this principle not for reasons of convenience or merely
to comply with technical formalities but because of a strong
conviction that every man must have his day in court.
In its most basic sense, the right to due process is simply that every
man is accorded a reasonable opportunity to be heard. Its very
concept contemplates freedom from arbitrariness, as what is
required is fairness or justice. It abhors all attempts to make an
accusation synonymous with liability.[11]
The right to be heard is among the so-called cardinal primary rights
which should be observed and respected in administrative
adjudications in order to comply with the imperatives of due
process.[12] These cardinal primary rights are:
(1) The right to a hearing, which includes the right to present ones
case and submit evidence in support thereof.
(2) The tribunal must consider the evidence presented.
(3) The decision must have something to support itself.
(4) The evidence must be substantial.
(5) The decision must be rendered on the evidence presented at
the hearing, or at least contained in the record and disclosed to the
parties affected.
(6) The tribunal or body or any of its judges must act on its or his
own independent consideration of the law and facts of the
controversy and not simply accept the view of a subordinate in
arriving at a decision.
(7) The board or body should, in all controversial questions, render
its decision in such a manner that the parties to the proceeding can
know the various issues involved, and the reason for the decision
rendered.[13]
Even the Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings, in Rule VI, Section 6 thereof, explicitly
mandates voluntary arbitrators to observe the requirements of
procedural due process:
Section 6. Arbitration Hearing. --- In the conduct of hearing, the
arbitrator shall provide the parties adequate opportunities to be
heard. He shall control the proceedings and see to it that proper
decorum is observed. He must render a ruling of the issue/s raised
in the course of the proceedings. He must treat all significant
aspects of the proceedings as confidential in nature unless
confidentiality is waived by the parties. (emphasis provided)
At this juncture, it may not be amiss to restate our previous
reminder to labor tribunals in the weighing of the rights and
interest of employers and employees, viz:
While the intendment of our laws is to favor the employee, it in no
way implies that the employer is not entitled to due process. For a
tribunal such as the NLRC to wantonly disregard the employers
constitutional right to be heard is a matter that cause great concern
to the Court. Such an action can only result in public mistrust of our
entire legal system, and we strongly remind the NLRC of their duty
to uphold an inspire confidence in the same.[14]
It bears stressing that the award of separation pay carries with it
the inevitable conclusion that complainants were illegally
dismissed. That finding of the Voluntary Arbitrator, however, was
premature and null and void for the reasons above-
stated. Therefore, there is a need to remand the case to the
Voluntary Arbitrator, as originally stipulated by the parties, to allow
petitioners to present evidence in their behalf.
The Court of Appeals, thus, committed grave abuse of discretion
amounting to lack of jurisdiction when it ordered the immediate
execution of the Voluntary Arbitrators award of separation pay and
attorneys fees, notwithstanding that the same was null and void for
violation of petitioners right to due process of law.
Grave abuse of discretion implies such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction, or in
other words where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and it
must be so patent and gross as to amount to an evasion of positive
duty or to a virtual refusal to perform the duty enjoined or to act at
all in contemplation of law.[15]

WHEREFORE, the petition is GRANTED. The assailed resolutions of

the Court of Appeals dated June 18, 1998 and July 31, 1998 are
ANNULLED and SET ASIDE. The decision of Voluntary Arbitrator
Florante V. Calipay dated March 15, 1987 is likewise ANNULLED and
SET ASIDE. The case is REMANDED to Voluntary Arbitrator Calipay,
who is DIRECTED to receive evidence for the petitioners and
conduct further proceedings therein.

SO ORDERED.