1.

JURISDICTION (THE EMPLOYER-EMPLOYEE RELATIONSHIP )

Hawaiian Phil Company Vs Gulmatico
G.R.No. 106231

Case Title /
Art. Facts Ruling/Ratio
Issue
A- 217 Hawaiian-  Laborers’ claim:  No and No.
8 Phil compensation benefits,  Ratio: The jurisdictional requisite of an
Company vs a 60:40 sharing b/n Er employer-employee relationship between
Gulmatico, et and Ee as provided in petitioner and private respondent, the
al. (1994) Sugar Act of 1952 inevitable conclusion is that public respondent
 Petitioner is a sugar is without jurisdiction to hear and decide the
(WON Labor milling company not case with respect to petitioner
Arbiter has planter - All the enumerated cases and disputes arise
jurisdiction  It has paid the price as out of or are in connection with an employer-
to hear and per their agreement employee relationship, or some aspect or
decide the  Jurisdiction over incident of such relationship
case against agricultural workers  Three parties: Er-planter, Ee-agri worker,
petitioner) has been transferred Sugar Mill
from Court of Agrarian - Case Fact: No Er-Ee relationship with respect
(WON Relations to the Labor to petitioner sugar milling company
respondent Arbiter… but with - Conclusion: Labor Arbiter has no jurisdiction
union and/or limitation, i.e., presence  As to cause of action, Rule: the claimant must
the farm of Er-Ee relationship show that he has a legal right and the
workers respondent a correlative duty in respect
represented thereof, which the latter violated by some
by it have a wrongful act or omission
cause of - Case Fact: Sugar mill has paid workers’
action share; Er-planter has not; No showing that
against milling company has exerted “conspicuous
petitioner) display of concerted conspiracy”
- Conclusion: petitioner cannot be deemed as a
party in interest since there is no privity or
legal obligation linking it to respondent
union and/or its members-worker.
2. TRANSFER OF VENUE

Dayag Vs Canizares
G.R. No. 124193

Case Title /
Art. Facts Ruling/Ratio
Issue
A- 217 Dayag vs.  Complaint: illegal  Ratio: The question of venue essentially
9 Canizares dismissal, non-payment pertains to the trial and relates more to the
(1998) of wages, overtime pay, convenience of the parties rather than upon
premium pay, holiday the substance and merits of the case (Sulpicio
(WON the pay, service incentive Lines vs. NLRC).
case should leave, 13th month pay,  GR: All cases which Labor Arbiters have
be tried in and actual, moral and authority to hear and decide may be filed in
Manila) exemplary damages The Regional Arbitration Branch having
 Petitioners are tower jurisdiction over the workplace of the
(or WON crane operators of complainant or petitioner.
NCR court respondent Young’s - Xn: Venue may be changed or transferred by
has building contractor written agreement of the parties, or when
jurisdiction) company. the Commission or LA so orders, upon
 They were hired in San motion by proper party in meritorious cases.
Juan, MM, later - Case Facts: Young did not waive his right,
transferred to Cebu for consistently moved for change of venue;
the SM Cebu project Sulpicio Lines ruling came out (i.e., The
 Petitioners left the worker, being the economically-
company due to disadvantaged party—whether as
harassment. complainant/petitioner or as respondent, as
 They all went back to the case may be, the nearest governmental
Manila machinery to settle the dispute must be
 Filed the case in Manila placed at his immediate disposal, and the
 Young moved to other party is not to be given the choice of
transfer the venue to another competent agency sitting in another
Cebu, he was granted place as this will unduly burden the former.)
 Petitioners: they were - Conclusion: The case should be tried in
residents of Manila; Manila for a
company has office in
Corinthian, QC
 Young: Corinthian is his
residence, Company is
based in Cebu, they
worked in Cebu, 2 of
petitioners have been
booked for theft in Cebu
3. Jurisdiction of Securities and Exchange Commission

Dy vs. National Labor Relations Commission

No. L-68544. October 27, 1986
Narvasa, J.

Doctrine: It is the Securities and Exchange Commission (SEC) and not the National Labor Relations
Commission (NLRC) that has jurisdiction over a dispute involving the termination of a bank manager as a
result of his non-reelection, thereto, as prescribed in the Bank’s by-laws.

It is no hindrance to SEC jurisdiction that a person raises in his complaint the issues that he was
illegally dismissed and asks for remuneration where complainant is not a mere employee but a
stockholder and officer of the corporation.

FACTS: Petitioners Lorenzo C. Dy, Zosimo Dy, Sr., William Ibero, Ricardo Garcia and Rural Bank of
Ayungon, Inc. assail in this Court the resolution of public respondent NLRC dismissing their appeal from
the decision of the Executive Labor Arbiter in Cebu City which found private respondent Carlito H.
Vailoces to have been illegally dismissed by them.
Private respondent Vailoces was the manager of the Rural Bank of Ayungon (Negros Oriental), a
banking institution duly organized under Philippine laws. He was also a director and stockholder of the
bank.
On June 4, 1983, a special stockholders’ meeting was called for the purpose of electing the
members of the bank’s Board of Directors. Immediately after the election, the new Board proceeded to
elect the bank’s executive officers.
Pursuant to Article 4 of the bank’s by-laws, providing for the election by the entire membership of
the Board of the executive officers of the bank, i.e., the president, vice president, secretary, cashier and
bank manager, in that board meeting of June 4, 1983, petitioners Lorenzo Dy, William Ibero and Ricardo
Garcia were elected president, vice president, and corporate secretary, respectively. Private respondent
Vailoces was not re-elected as bank manager. Because of this, the Board passed a Resolution relieving
him as bank manager.
Subsequently, Vailoces filed a complaint for illegal dismissal and damages with the Ministry of
Labor and Employment against herein petitioners, asserting that an illegal stockholders’ meeting was
held. In their answer, petitioners denied the charge of illegal dismissal. The Executive Labor Arbiter
found that Vailoces was illegally dismissed due to the resentment of petitioners against Vailoces and
consequently ordered the individual petitioners Lorenzo Dy and Zosimo Dy, Sr. to pay Vailoces jointly
and severally the sum of P111,480.60 and reinstate the latter to his position as bank manager, with
additional backwages.
Petitioner Lorenzo Dy appealed to the NLRC, assigning error to the decision of the Labor Arbiter,
one being that the matter of Vailoces’ relief was within the adjudicatory powers of the Securities and
Exchange Commission. The NLRC bypassed the issues and dismissed the appeal for having been filed late.
Hence, this petition.

ISSUE: Whether or not the SEC, and not respondent NLRC, has jurisdiction over the dispute.

RULING: YES. While the comment of Vailoces traverses the averments of the petition that of the Solicitor
General on behalf of public respondents perceives the matter as an intra-corporate controversy of the
class described in Section 5, par. (c) of Presidential Decree No. 902-A, namely:
 ‘Original and exclusive jurisdiction to hear and decide cases involving:
Xxxx
Xxxx

“(c) Controversies in the election or appointments of directors, trustees, officers

or managers of such corporations, partnerships or associations.”’

explicitly declared to be within the original jurisdiction of the SEC, and recommends that the questioned
resolution of the NLRC as well as the decision of the Labor Arbiter be set aside as null and void.
The judgment of the Labor Arbiter and the resolution of the NLRC are void for lack of jurisdiction.
It is of no moment that Vailoces, in his amended complaint, seeks other relief which would seemingly fall
under the jurisdiction of the Labor Arbiter, because underpayment of salary and non-payment of living
allowance show that they are actually part of the perquisites of his elective position, hence, intimately
linked with his relations with the corporation. The question of remuneration involving a person who is
not a mere employee but a stockholder and officer of a corporation is not a simple labor problem but a
matter that comes within the area of corporate affairs and management, and is in fact a corporate
controversy in contemplation of the Corporate Code.

Wherefore, the questioned decision of the Labor Arbiter and the Resolution of the NLRC
dismissing petitioners’ appeal are hereby set aside for being rendered without jurisdiction.

4. RTC (General Jurisdiction) vs. NLRC (Labor relations) – prize as a consequence of E-E Relationship

PEPSI-COLA BOTTLING COMPANY et. al., vs HON. JUDGE ANTONIO M. MARTINEZ, et. al.,
G.R. No. L-58877 March 15, 1982

FACTS:

Respondent Abraham Tumala, Jr. was salesman petitioner company in Davao City. In the annual
“Sumakwel” contest conducted by the company, he was declared the winner of the “Lapu-Lapu Award”
for his performance as top salesman of the year, an award which entitled him to a prize of a house and lot.
Petitioner company, despite demands, have unjustly refused to deliver said prize.

It was alleged that in 1980, petitioner company, in a manner oppressive to labor and without prior
clearance from the Ministry of Labor, arbitrarily and illegally terminated his employment. Hence, Tumala
filed a complaint in the CFI Davao and prayed that petitioner be ordered to deliver his prize of house and
lot or its cash equivalent, and to pay his back salaries and separation benefits.

Petitioner moved to dismiss the complaint on grounds of lack of jurisdiction. Respondent Tumala
maintains that the controversy is triable exclusively by the court of general jurisdiction

ISSUE:

Whether it is the court of general jurisdiction and not the Labor Arbiter that has exclusive jurisdiction
over the recovery of unpaid salaries, separation and damages

HELD:
NO. SC ruled that the Labor Arbiter has exclusive jurisdiction over the case. Jurisdiction over the subject
matter is conferred by the sovereign authority which organizes the court; and it is given by law.
Jurisdiction is never presumed; it must be conferred by law in words that do not admit of doubt.

Under the Labor Code, the NLRC has the exclusive jurisdiction over claims, money or otherwise, arising
from ER-EE relations, except those expressly excluded therefrom. The claim for the said prize
unquestionable arose from an ER-EE relation and, therefore, falls within the coverage of P.D. 1691, which
speaks of “all claims arising from ER-EE relations, unless expressly excluded by this Code. To hold that
Tumala’s claim for the prize should be passed upon by the regular courts of justice would be to sanction
split jurisdiction and multiplicity of suits which are prejudicial to the orderly of administration of justice.

5. The Money Claims arising from the E-E Relationship

San Miguel Corporation vs. NLRC G.R. No. 80774 May 31, 1988
Facts:
Petitioner sponsored an innovative program granting cash awards to employees who submit to the
Corporation Ideas and suggestions found to be beneficial to the Corporation. Rustico Vega submitted a
proposal but petitioner did not find the aforequoted proposal acceptable and consequently refused Mr.
Vega's subsequent demands for a cash award under the Innovation Program. Hence, a complaint was
filed against petitioner Corporation. Vega alleged that his proposal had been accepted by the methods
analyst and implemented by the Corporation, and that the same had solved the problem of the
Corporation. Thus, he was claiming for the cash prize. Petitioner, on the other hand, alleged that private
respondent had no cause of action. It denied ever having approved or adopted Mr. Vega's proposal. It was
also further alleged that the Labor Arbiter had no jurisdiction, Mr. Vega having improperly bypassed the
grievance machinery procedure prescribed under a then existing collective bargaining agreement
between management and employees, and available administrative remedies provided under the rules of
the Innovation Program.
Issue: Whether or not the Labor Arbiter has jurisdiction over money claims which arose out of or in
connection with the private respondent's employment.
Ruling: Money claims of workers which now fall within the original and exclusive jurisdiction of Labor
Arbiters are those money claims which have some reasonable causal connection with the employer-
employee relationship. The petitioner's Innovation Program is an employee incentive scheme and open
only to employees of petitioner Corporation, more specifically to employees below the rank of manager.
Without the existing employer-employee relationship between the parties here, there would have been
no occasion to consider the petitioner's Innovation Program or the submission by Mr. Vega of his
proposal; without that relationship, private respondent Vega's suit against petitioner Corporation would
never have arisen. The money claim of private respondent Vega in this case, therefore, arose out of or in
connection with his employment relationship with petitioner. However, the fact that the money claims of
private respondent Vega arose out of or in connection with his employment relation with petitioner
Corporation, is not enough to bring such money claim within the original and exclusive jurisdiction of
Labor Arbiters.

6. GOCC are outside the jurisdiction of the NLRC

HAGONOY WATER DISTRICT vs. NLRC, et al.
G.R. No. 81490
August 31, 1988

FELICIANO, J.:

FACTS:
Private respondent Dante Villanueva was employed as service foreman by petitioner Hagonoy Water
District, when he was indefinitely suspended and thereafter dismissed for abandonment of work and
conflict of interest.

Villanueva filed a complaint for illegal dismissal, illegal suspension and underpayment of wages and
emergency cost of living allowance against petitioner Hagonoy with the then Ministry of Labor and
Employment, Regional Arbitration Branch III, San Fernando, Pampanga.

Hagonoy immediately moved for outright dismissal of the complaint on the ground of lack of jurisdiction.
Being a government entity, petitioner claimed, its personnel are governed by the provisions of the Civil
Service Law, not by the Labor Code, and protests concerning the lawfulness of dismissals from the service
fall within the jurisdiction of the Civil Service Commission, not the Ministry of Labor and Employment.

The Labor Arbiter rendered a decision in favor of Villanueva and against Hagonoy. On appeal, NLRC
affirmed the decision of the Labor Arbiter. The petitioner moved for reconsideration, insisting that public
respondents had no jurisdiction over the case. Meanwhile, a Writ of Execution was issued by the Labor
garnishing petitioner Hagonoy's deposits with the Planters Development Bank of Hagonoy.

Petitioner then filed a Motion to Quash the Writ of Execution with Application for Writ of Preliminary
Injunction arguing that the writ was prematurely issued as its motion for reconsideration had not yet
been resolved. NLRC denied the application for a preliminary injunction. The motion to quash was
similarly denied.

Hence, the instant petition.

ISSUE:
Whether or not local water districts are GOCCs whose employees are subject to the provisions of the Civil
Service Law

RULING:
YES. The Labor Arbiter asserted jurisdiction over the alleged illegal dismissal of private respondent
Villanueva by relying on Section 25 of Presidential Decree No. 198, known as the "Provincial Water
Utilities Act of 1973" which exempts employees of water districts from the Civil Service Law. However,
Section 25 of P.D. 198 exempting the employees of water districts from the application of the Civil Service
Law was removed from the statute books through P.D. No. 1479.

Public respondent Commission, in confirming the Labor Arbiter's assumption of jurisdiction over this
case, apparently relied upon Article IX (B), Section 2 (1) of the 1987 Constitution, which provides that:

[T]he Civil Service embraces ... government owned or controlled corporations with original
charters.

At the time the dispute in the case at bar arose, and at the time the Labor Arbiter rendered his decision
(i.e., 17 March 1986), there is no question that the applicable law was that the Labor Arbiter had no
jurisdiction to render the decision that he in fact rendered. By the time the public respondent
Commission rendered its decision of 20 August 1987 which is here assailed, the 1987 Constitution had
already come into effect. The SC believes and so holds that the 1987 Constitution did not operate
retrospectively so as to confer jurisdiction upon the Labor Arbiter to render a decision which, under the
law applicable at the time of the rendition of such decision, was clearly outside the scope of competence
of the Labor Arbiter.
Therefore, a decision rendered by the Labor Arbiter without jurisdiction over the case is a complete
nullity, vesting no rights and imposing no liabilities.

The petition is GRANTED.

7. Estoppel to claim lack of jurisdiction

ZAMBOANGA CITY WATER DISTRICT vs. BUAT
G.R. No. 104389
May 27, 1994

QUIASON, J.:
FACTS:
The Zamboanga City Water District, petitioner herein, is a government-owned and controlled corporation
engaged in the business of supplying water in the City of Zamboanga. Private respondents are all
employees of petitioner.

A strike in March 1987 conducted and participated by herein private respondents resulted in their
separation from their employment.

Petitioner filed a complaint before the Labor Arbiter to declare the said strike illegal. The following day,
the Zamboanga Utilities Labor Union (ZULU), to which private respondents belonged, filed before the
Labor Arbiter, a complaint against petitioner for illegal dismissal and unpaid wages.
The two cases were consolidated and heard together, and, a consolidated decision was rendered by the
Executive Labor Arbiter declaring both the strike and the dismissal of private respondents illegal and
ordering the reinstatement of private respondents to their former positions, without loss of seniority
rights and privileges, but without back wages.

On appeal, NLRC affirmed the decision of the Executive Labor Arbiter, with the sole modification that the
strike leader, respondent Felix Laquio, be suspended from work without pay for a period of six months.

Three days after receipt by petitioner of NLRC decision, private respondents filed a writ of execution of
said decision with Executive Labor Arbiter, the same was granted. The SC initially issued TRO against the
writ of execution but on later affirmed the NLRC decision and lifted the TRO granted earlier.

After receipt by petitioner of SC decision, it reinstated the 27 employees and informed the Executive
Labor Arbiter that after the 6 months suspension Laquio would be reinstated.

On April 17, private respondents filed a motion to compel the immediate reinstatement of Laquio and
payment of their back wages. On May 17, the Executive Labor Arbiter issued an order denying private
respondents' motion. Private respondents then appealed to the NLRC. On October 24, the NLRC set aside
the questioned order of the Executive Labor Arbiter and ordered respondent Laquio's reinstatement, if
not yet reinstated, and granted full back wages to him. Petitioner moved for a reconsideration, which the
NLRC however denied.

Hence, this petition.

ISSUE:
Whether or not the NLRC had jurisdiction to issue the resolutions in question

RULING:
YES. There is no dispute that petitioner, a water district with an original charter, is a government-owned
and controlled corporation. The established rule is that the hiring and firing of employees of government-
owned and controlled corporations are governed by the provisions of the Civil Service Law and Civil
Service Rules and Regulations. Jurisdiction over the strike and the dismissal of private respondents is
therefore lodged not with the NLRC but with the Civil Service Commission.
Nevertheless, petitioner never raised the issue of lack of jurisdiction before the Executive Labor Arbiter,
the NLRC or even the Supreme Court. In fact, petitioner itself filed the complaint before the Executive
Labor Arbiter and sought affirmative relief therefrom and even participated actively in the proceedings
therein. It is only now in this case before the SC, after the NLRC ordered payment of back wages, that
petitioner raises the issue of lack of jurisdiction. Indeed, it is not fair for a party who has voluntarily
invoked the jurisdiction of a tribunal in a particular matter to secure an affirmative relief therefrom, to
afterwards repudiate and deny that very same jurisdiction to escape a penalty.
Petitioner Zamboanga City Water District is thus estopped from assailing the jurisdiction of the NLRC and
is bound to respect all the proceedings.
The petition is DISMISSED.

8. Regional Director has no jurisdiction but only the labor arbiter

ORESHOOT MINING COMPANY vs. ARELLANO
G.R. Nos. 75746-48
December 14, 1987

NARVASA, J.:
FACTS:
Assailed in this special civil action of certiorari is the Order of the Deputy Minister of Labor and
Employment, affirming with modification the Order of the Director of Regional Office No. IV which, in
three (3) separate but consolidated proceedings, directed the reinstatement of private respondents and
the payment to them of back wages and certain other benefits.

Oreshoot filed two motions for reconsideration. The first was denied; the second was treated as an
appeal and transmitted by the Regional Director to the Office of the Minister of Labor and Employment.
Acting thereon, the Deputy Minister rendered an Order affirming the aforesaid adjudgment made by the
Regional Director with the modification that sixteen (16) employees, who signed an affidavit of
desistance in Oreshoot's favor, were dropped as party complainants. Subsequently, the Regional director
issued a writ of execution on March 19, 1986 which the MOLE Deputy Sheriff sought to implement in July,
1986.

Oreshoot contends that all the proceedings above mentioned are void because the Regional Director had
no jurisdiction to take cognizance of and adjudicate the claims of private respondents. Additionally, it
imputes grave abuse of discretion to the Regional Director in (1) consolidating the three cases filed
against it and deciding them as one notwithstanding that the last two cases were filed after the first had
already been submitted for decision; (2) in not informing it Oreshoot of the non-indorsement of the cases
to the Labor Arbiter as required by Article 227 (now Article 228) of the Labor Code; and (3) ruling that
there were no valid grounds for its shutdown of its business on account of economic difficulties caused by
world-wide recession.
ISSUE:
Whether or not Regional Director had no jurisdiction over the cases in question
RULING:

YES. Oreshoot is correct as regards its claim of the Regional Director's lack of competence over the cases
in question. The respondent Regional Director had no jurisdiction to try and decide claims of workers
and employees of their illegal dismissal from employment, and for their reinstatement and recovery of
monetary and other benefits consequent thereto. The writ of certiorari will issue in Oreshoot's favor. The
same issue was raised in Zambales Base Metals, Inc. vs. The Minister of Labor, et al., G.R. No. 73184-88,
Nov. 26, 1986. In that case, in a substantially analogous factual context, the SC held that the applicable
provision is Article 217 of the Labor Code stating the Jurisdiction of Labor Arbiters and the Commission. It
is obvious therefrom that only the labor arbiter could decide the cases filed by the employees as they
involved 'money claims' falling under No. 3 of the enumeration. As for the regional director, the authority
he invokes under Article 128 of the Labor Code confers upon him only visitorial powers over the
employer's premises and records, including the right to require compliance with the labor standards
provisions of the Code, such as those relating to industrial safety. Nowhere in the said article is the
regional director empowered to share the original and exclusive jurisdiction' conferred on the labor
arbiters by Article 217.

In this case the SC made the same disposition as it did in Zambales. "Inasmuch as the proceedings before
the regional director were null and void ab initio for lack of jurisdiction, the complaints for (back) wages
and other benefits filed by the employees against the petitioner should be remanded to the labor arbiter
for appropriate action," with the expectation "that resolution of these cases will be effected with the least
possible delay." The other issues raised by the petitioner obviously need no longer be resolved.

WHEREFORE, the questioned Order of the public respondents dated October 6, 1981 and May 27, 1985, and
other related orders and writs, are hereby nullified and set aside. The private respondents' complaints are
remanded to the corresponding labor arbiter, with the direction that the same be heard and decided with all
deliberate disptach.

9. The power of the Secretary of Labor and Employment to visit and issue orders for the compliance to
the provisions of the labor code
CIRINEO BOWLING PLAZA, INC., vs. GERRY SENSING, et al.
G.R. No. 146572
January 14, 2005

AUSTRIA-MARTINEZ, J.:

FACTS:

On November 27, 1995, Eligio Paolo, Jr., an employee of petitioner, filed a letter complaint with the
Department of Labor and Employment, Dagupan District Office, Dagupan City, requesting for the
inspection/investigation of petitioner for various labor law violations like underpayment of wages,
13th month pay, non-payment of rest day pay, overtime pay, holiday pay and service incentive leave pay.
Pursuant to the visitorial and enforcement powers of the Secretary of Labor and Employment, his duly
authorized representative under Article 128 of the Labor Code, as amended, conducted inspections on
petitioners establishment the following day. In his inspection report, Labor and Employment Officer III,
Crisanto Rey Dingle, found that petitioner has thirteen employees and had committed the following
violations: underpayment of minimum wage, 13th month pay, holiday premiums, overtime premiums, and
non-payment of rest day.

An Order was issued by the DOLE Regional Office ordering Cirineo to pay the thirteen affected employees.

ISSUE:

Whether or not the DOLE Regional Director has jurisdiction in this case

RULING:

YES. Clearly, as the duly authorized representative of respondent Secretary of Labor, and in the lawful
exercise of the Secretarys visitorial and enforcement powers under Article 128 of the Labor Code,
respondent Regional Director had jurisdiction to issue his impugned Order.

In a recent case, the Supreme Court ruled in this wise:

Assailed in this special civil action for certiorari is the Order dated August 1, 1995 issued by public
respondent Regional Director Romeo A. Young of the Department of Labor and Employment
(DOLE) in Case No. NCROO-9503-IS-035, ordering petitioner Lord and Lady Salon to pay private
respondent Ateldo Barroga the sum of P14,099.05 representing his underpaid wages and
premium pay for work on holidays. This suit is an offshoot of the complaint for payment of salary
differentials filed by private respondent against petitioner on March 20, 1995. Upon investigation
conducted by public respondents office, petitioner was found to have committed the following
violations: (1) underpayment of wages, (2) non-implementation of premium pay for worked legal
holidays, and (3) non-availability of records at the time of inspection. Consequent to the parties
failure to reach an amicable settlement, public respondent issued the assailed resolution.
Petitioner asserts that public respondent exceeded his jurisdiction in taking cognizance of the
complaint and ordering the payment of P14,099.05 to private respondent because the award of
the latter amount goes over the jurisdictional amount of P5,000.00 for cases filed before the
Regional Director, thus, is properly cognizable by the Labor Arbiter instead.

Pursuant to Section 1 of Republic Act 7730 which amended Article 128 (b) of the Labor Code, the
Secretary of Labor and Employment or his duly authorized representative, in the exercise of their
visitorial and enforcement powers, are now authorized to issue compliance orders to give effect to
the labor standards provisions of this Code and other labor legislation based on the findings of
labor employment and enforcement officers or industrial safety engineers made in the course of
inspection, sans any restriction with respect to the jurisdictional amount of P5,000.00 provided
under Article 129 and Article 217 of the Code.
The instant case therefore falls squarely within the coverage of the aforecited amendment as the assailed
order was issued to enforce compliance with the provisions of the Code with respect to the payment of
proper wages.

The instant petition is DISMISSED for lack of merit.

10. Jurisdiction of CIR in awarding damages

GERONIMO Q. QUADRA vs. CA and PCSO

G.R. No. 147593
July 31, 2006

PUNO, J.:

FACTS:

Geronimo Quadra, member of the Association of Sweepstakes Staff Personnel and Supervisors (CUGCO),
was administratively charged before the Civil Service Commission with violation of Civil Service Law and
Rules for neglect of duty and misconduct and/or conduct prejudicial to the interest of the service. He was
found guilty and dismissed. Petitioner filed a motion for reconsideration of the decision of the Civil
Service Commission. At the same time, petitioner, together with ASSPS (CUGCO), filed with the Court of
Industrial Relations (CIR) a complaint for unfair labor practice against respondent PCSO and its officers.
CIR found respondent PCSO guilty of unfair labor practice for having committed discrimination against
the union and for having dismissed petitioner due to his union activities.

Respondent PCSO complied with the decision of the CIR. But while it reinstated petitioner to his former
position and paid his backwages, it also filed with the Supreme Court a petition for review on certiorari.
During its pendency, petitioner filed with the CIR a "Petition for Damages." He prayed for moral and
exemplary damages, citing the following grounds: (1) the CIR has no jurisdiction to award moral and
exemplary damages; (2) the cause of action is barred by prior judgment, it appearing that two complaints
are brought for different parts of a single cause of action; and (3) the petition states no valid cause of
action. LA and NLRC's decision favored petitioner, but CA reversed it, holding that there was no basis for
the grant of moral and exemplary damages to petitioner as his dismissal was not tainted with bad faith. It
was the Civil Service Commission that recommended petitioner's dismissal after conducting an
investigation. It also held that the petition claiming moral and exemplary damages filed by petitioner after
respondent PCSO had complied with the CIR decision of reinstatement and backwages amounted to
splitting of cause of action.

ISSUE:

Whether or not the CIR has jurisdiction to award moral and exemplary damages arising out of illegal
dismissal and unfair labor practice

RULING:

YES. A dismissed employee is entitled to moral damages when the dismissal is attended by bad faith or
fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good
customs or public policy. Exemplary damages may be awarded if the dismissal is effected in a wanton,
oppressive or malevolent manner. It appears from the facts that petitioner was deliberately dismissed
from the service by reason of his active involvement in the activities of the union groups of both the rank
and file and the supervisory employees of PCSO, which unions he himself organized and
headed. Respondent PCSO first charged petitioner before the Civil Service Commission for alleged neglect
of duty and conduct prejudicial to the service because of his union activities. The Civil Service
Commission recommended the dismissal of petitioner. Respondent PCSO immediately served on
petitioner a letter of dismissal even before the latter could move for a reconsideration of the decision of
the Civil Service Commission. Respondent PCSO may not impute to the Civil Service Commission the
responsibility for petitioners illegal dismissal as it was respondent PCSO that first filed the administrative
charge against him. As found by the CIR, petitioners dismissal constituted unfair labor practice. It was
done to interfere with, restrain or coerce employees in the exercise of their right to self-organization.

The prevailing rule at the time that the action for unfair labor practice and illegal dismissal was filed and
tried before the CIR was that said court had no jurisdiction over claims for damages. Hence, petitioner, at
that time, could not raise the issue of damages in the proceedings. However, on January 27, 1967, the
Supreme Court rendered its ruling in Rheem of the Philippines, Inc., et al. v. Ferrer, et al. upholding the
jurisdiction of the CIR over claims for damages incidental to an employee’s illegal dismissal. Petitioner
properly filed his claim for damages after the declaration by the Court and before the ruling on their case
became final. Such filing could not be considered as splitting of cause of action.

IN VIEW WHEREOF, the assailed decision and resolution of the Court of Appeals are REVERSED and SET
ASIDE. The decision of the NLRC in NLRC NCR Case No. 4312-ULP is REINSTATED.

11. Religious groups when having E-E relationship is not exempted from the jurisdiction of the Labor
Code
AUSTRIA v. NLRC
GR No. 124382 – 16 August 1999

PARTIES:
1. Central Philippines Union Mission Corporation of the Seventh Day Adventists (private
respondent) – a religious corporation duly organized and existing under Philippines law and is
represented in this case by the other private respondents, officers of SDA.
2. Pastor Dionisio Austria (petitioner) – pastor of SDA for 28 years from 1963 to 31 October 1991,
when his services were terminated.

FACTS:
 On various occasion from August up to October of 1991, petitioner received several
communications from Mr. Eufronio Ibesate, the treasurer of the Negros Mission, asking him to
admit accountability and responsibility for the church tithes and offering collected by his wife,
Mrs. Thelma Austria, in his district which amounted to around 15k Php, and to remit the same to
the Negros Mission.
o Petitioner reasoned out that he should not be made accountable for the unremitted
collections since it was Pastor Gideon Buhat and Mr. Eufronio Ibesate (PRs) who
authorized his wife to collect tithes and offerings since he was very sick to do the collecting
at that time.
 16 October 1991: When news reached petitioner that Pastor Rodrigo was about to file a complaint
against him with the Negros Mission, he went to the office of Pastor Buhat, the president of the
Negros Mission.
 o During said call, petitioner tried to persuade Pastor Buhat to convene the Executive
Committee for the purpose of settling the dispute between him and Pastor Rodrigo (PR).
o The dispute between petitioner and Pastor Rodrigo arose from an incident in which
petitioner assisted his friend, Danny Diamada, to collect from Pastor Rodrigo the
unpaid balance for the repair of the latter’s motor vehicle which he failed to pay to
Diamada. Due to assistance of petitioner in collecting Rodrigo’s debt, the latter
harbored ill-feelings against petitioner.
o Pastor Buhat denied the request since some committee members were out of town and
there was no quorum.
o Thereafter, the two exchanged heated arguments.
o While petitioner was on his way out of the office, Pastor Buhat said: “Pastor daw
inisog na ina iya (Pastor you are talking tough).” Irked by such remarked, petitioner
returned to the room and tried to overturn Pastor Buhat’s table, though
unsuccessfully, since it was heavy. ┬─┬ノ( º _ ºノ)
o Thereafter, Austria banged the attache case of Pastor Buhat on the table, scattered
the books in his office, and threw the phone. Fortunately, Pastors Leopoldo and
Montano (PRs) were around and they pacified both Pastor Buhat and Austria.
 17 October 1991: Petitioner received a letter inviting him and his wife to attend the Executive
Committee meeting at the Negros Mission Conference Room on 21 October 1991.
 21-21 October 1991: A fact -finding committee conducted an investigation of petitioner regarding
the non-remittance of church collection and the events that transpired on 16 October 1991.
o Sensing that the results of the investigation might be one-sided, petitioner immediately
wrote Pastor Moralde, president of the SDA and chairman of the fact-finding committee,
requesting that certain members of the fact-finding committee be excluded in the
investigation and resolution of the case.
o Out of the 6 members requested to inhibit themselves from the investigation and
decision-making, only 2 were actually excluded, namely: Pastor Buhat and Pastor
Rodrigo.
 29 October 1991: Petitioner received a letter of dismissal citing misappropriation of
denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of
duty, and commission of an offense against the person of employer’s duly authorized
representative, as ground for the termination of his services.
 31 October 1991: Petitioner’s services were terminated by SDA.
 14 November 1991: Petitioner filed a complaint before the LA for illegal dismissal against the
SDA and its officers and prayed for reinstatement with backwages and other benefits.

LA: ruled in favor of petitioner.

 The SDA, through its officers, appealed the decision of the LA to the NLRC.

NLRC: dismissed the case for illegal dismissal filed by Pastor Dionisio Austria (petitioner) against Central
Philippine Union Mission Corporation of the Seventh Day Adventists (private respondent). However,
upon MR by petitioner, the NLRC reversed its original decision.

 SDA then filed a MR invoking, for the first time on appeal, that the LA has no jurisdiction over the
complaint filed by petitioner due to the constitutional provision on the separation of church and
state since the case allegedly involved an ecclesiastical affair to which the State cannot interfere.

NLRC: Without ruling on the merits of the case, reversed itself once again, sustained the argument posed
by PRs and, accordingly dismissed the complaint of petitioner.
ISSUE:
1. W/N the LR/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the
SDA. YES
2. W/N such termination is valid. NO

HELD:
1. The LA/NLRC has jurisdiction to try and decide the complaint.

First, the principle of separation of church and state finds no application in this case. The case at bar does
not concern an ecclesiastical or purely religious affair as to bar the State from taking cognizance of the
same.

Ecclesiastical affair
– defined as purely religious affair as to bar the State from taking cognizance of the same.
– “one that concerns doctrine, creed, or form of worship of the church, or the adoption and enforcement
within a religious association of needful laws and regulations for the government of the membership, and
the power excluding from such associations those deemed unworthy of membership”
– based on this definition, an ecclesiastical affair involves the relationship between the church and its
members and relate to matters of faith, religious doctrines, worship and governance of the congregation.
– examples of which are: proceedings for excommunications, ordinations of religious ministers,
administration of sacraments, and other activities which attached religious significance.

The case at bar does not even remotely concern any of the abovecited examples. While the matter at hand
relates to the church and its religious minister it does not ipso facto give the case a religious significance.
Simply stated, what is involved here is the relationship of the church as an employer and the minister as
an employee. It is purely secular and has no relation whatsoever with the practice of faith, worship or
doctrines of the church.

Second, The grounds of petitioner’s dismissal from service and the procedure thereof is based under the
provisions of the Labor Code.
a. The grounds invoked for petitioner’s dismissal (namely: misappropriation of denominational
funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties and
commission of an offense against the person of his employer’s duly authorized representative) are
all based on Art. 282 of the Labor Code which enumerates the just causes for termination of
employment.
b. The act of SDA in furnishing NLRC with a copy of petitioner’s letter of termination is an eloquent
admission by PRs that NLRC has jurisdiction over the case.
c. SDA admitted in a certification issues by its officer that petitioner has been its employee for 28
years. SDA even registered petitioner with the SS as its employee. As a matter of fact, the worker’s
records of petitioner have been submitted by PRs as part of their exhibits.

From all of these it is clear that when the SDA terminated the services of petitioner, it was merely
exercising its management prerogative to fire an employee which it believes to be unfit for the job. As
such, the State, through the Labor Arbiter and the NLRC, has the right to take cognizance of the case and
to determine whether the SDA, as employer, rightfully exercised its management prerogative to dismiss
an employee. This is in consonance with the mandate of the Constitution to afford full protection to labor.

Third, under the Labor Code, the provision which governs the dismissal of employees, is comprehensive
enough to include religious corporations, such as the SDA, in its coverage.
Art. 278 of the Labor Code on post-employment states that “the provisions of this Title shall apply to all
establishments or undertakings, whether for profit or not.” Obviously, there would be no exception in
favor of religious corporation. This is made more evident by the fact that the Rules Implementing the
Labor Code, particularly Sec. 1, Rule 1, Book VI on the Termination of Employment and Retirement,
categorically includes religious institutions in the coverage of the law.

2. Petitioner was terminated from service without just or lawful cause. Having illegally
dismissed, petition is entitled to reinstatement to his former position without loss of
seniority rights and the payment of full back wages without any deduction corresponding
to the period from his illegal dismissal up to the actual reinstatement.

In termination cases, the settled rule is that the burden of proving that the termination was for a valid or
authorized cause rests on the employer. Thus, PRs must not merely rely on the weaknesses of petitioner’s
evidence but must stand on the merits of their own defense.

PRs failed to furnish petition with 2 written notices required under the Labor Code
 The twin requirements for a valid dismissal are as follows:
a) the employee must be afforded due process, i.e., he must be given an opportunity to be
heard and to defend himself; and
b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code.
 Art. 277(b) of the Labor Code & Sec. 2, Rul XXIII, Book V of the Rules Implementing the Labor Code
require the employer to furnish the employee with 2 written notices, to wit:
a) a written notice served on the employee specifying the grounds or grounds for termination,
and giving to said employee reasonable opportunity within which to explain his side; and
(The first notice, which may be considered as the proper charge, serves to apprise the
employee of the particular acts or omissions for which his dismissal is sought.)
b) a written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination. (The second notice, on the other hand, seeks to inform the employee of the
employer’s decision to dismiss him. This decision, however, must come only after the employee
is given a reasonable period from receipt of the first notice within which to answer the charge
and ample opportunity to be heard and defend himself with the assistance of a representative,
if he so desires.)
 Non-compliance therewith is fatal because these requirements are conditions sine quo non before
dismissal may be validly effected.
 In the case at bar, PR ailed to substantially comply with the above requirements. With regard to
the first notice, the letter, and his wife to attend the meeting on 21 October 1991, cannot be
construed as the written charge required by law.
- A perusal of the said letter reveals that it never categorically stated the particular acts or
omissions on which petitioner’s impending termination was grounded.
- The letter never even mentioned that petitioner would be subject to investigation. The
letter merely mentioned that petitioner and his wife were invited to a meeting wherein
what would be discussed were the alleged unremitted church tithes and the events that
transpired on 16 October 1991.
- For this reason, it cannot be said that petitioner was given enough opportunity to properly
prepare for his defense.
  While admittedly, private respondents complied with the second requirement, the notice of
termination, this does not cure the initial defect of lack of the proper written charge required by
law.

Breach of trust as a ground for dismissal was not proven.

 Settled is the rule that under Article 282 (c) of the Labor Code, the breach of trust must be willful.
A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse,
as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
 It must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or
suspicion; otherwise, the employee would eternally remain at the mercy of the employer. It should
be genuine and not simulated. This ground has never been intended to afford an occasion for
abuse, because of its subjective nature.
 In the present case, the PRs pin on petitioner the alleged non-remittance of the tithes collected by
his wife. However, PRs failed to demonstrate conspiracy and collusion between petitioner and his
wife. Petitioner, therefore, cannot be made accountable for the alleged infraction committed by his
wife. After all, they still have separate and distinct personalities.

The ground of serious misconduct and commission of an offense against the person of the
employer’s duly authorized representative was not established or proven by PRs. Hence, there is
no basis for the allegation that petitioner’s act constituted serious misconduct or that the same
was an offense against the person of the ER’s duly authorized representative.
 Misconduct has been defined as improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment. For misconduct to be considered
serious it must be of such grave and aggravated character and not merely trivial or unimportant.
 Based on this standard, we believe that the act of petitioner in banging the attache case on the
table, throwing the telephone and scattering the books in the office of Pastor Buhat, although
improper, cannot be considered as grave enough to be considered as serious misconduct.
 Though petitioner committed damage to property, he did not physically assaulted Pastor Buhat or
any other pastor present during the incident of 16 October 1991.

The infraction committed by petitioner does not merit the ultimate penalty of dismissal; Penalty
of dismissal not justifiable.
 While the Constitution does not condone wrongdoing by the employee, it nevertheless urges a
moderation of the sanctions that may be applied to him in light of the many disadvantages that
weigh heavily on him like an albatross on his neck.
 Where a penalty less punitive would suffice, whatever missteps may have been committed by the
worker ought not be visited with a consequence so severe such as dismissal from employment.

12. the granting of new trial

ANG TIBAY and NATIONAL WORKER’S BROTHERHOOD (NWB) v. COURT OF INDUSTRIAL
RELATIONS (CIR) and NATIONAL LABOR UNION (NLU)
Topic: Due process in Quasi-Judicial Proceedings
Facts:
Teodoro Toribio owns and operates Ang Tibay, a leather company which supplies the Philippine
Army. Due to alleged shortage of leather, Toribio caused the lay off of a number of his employees.
However, the National Labor Union, Inc. (NLU) questioned the validity of said lay off as it averred that the
said employees laid off were members of NLU while no members of the rival labor union (National
Worker’s Brotherhood) were laid off. NLU claims that NWB is a company dominated union and Toribio
was merely busting NLU.
The case reached the Court of Industrial Relations (CIR) where Toribio and NWB won. Eventually,
NLU went to the Supreme Court invoking its right for a new trial on the ground of newly discovered
evidence. The Supreme Court agreed with NLU. The Solicitor General, arguing for the CIR, filed a motion
for reconsideration.
ISSUE:
Whether or not the National Labor Union, Inc. is entitled to a new trial.
RULING:
Yes. In the case of Goseco vs. Court of Industrial Relations et al, the Supreme Court had occasion to
point out that the although the Court of Industrial Relations may be said to be free from the rigidity of
certain procedural requirements, it does not mean that it can, in justifiable cases before it, entirely ignore
or disregard the fundamental and essential requirements of due process in trials and investigations of an
administrative character. For administrative bodies, due process can be complied with by observing the
following:
(1) The right to a hearing which includes the right of the party interested or affected to present his own
case and submit evidence in support thereof.
(2) Not only must the party be given an opportunity to present his case and to adduce evidence tending
to establish the rights which he asserts but the tribunal must consider the evidence presented.
(3) While the duty to deliberate does not impose the obligation to decide right, it does imply a necessity
which cannot be disregarded, namely, that of having something to support its decision. A decision with
absolutely nothing to support it is a nullity, a place when directly attached.
(4) Not only must there be some evidence to support a finding or conclusion but the evidence must be
“substantial.” Substantial evidence is more than a mere scintilla It means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.
(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 administrative body or any of its judges, therefore, must act on its or his own independent
consideration of the law and facts of the controversy, and not simply accept the views of a subordinate in
arriving at a decision.
(7) The administrative 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 reasons for the decisions
rendered. The performance of this duty is inseparable from the authority conferred upon it.
In this case the records show that the newly discovered evidence or documents obtained by NLU,
which they attached to their petition with the SC, were evidence so inaccessible to them at the time of the
trial that even with the exercise of due diligence they could not be expected to have obtained them and
offered as evidence in the Court of Industrial Relations. Further, the attached documents and exhibits are
of such far-reaching importance and effect that their admission would necessarily mean the modification
and reversal of the judgment rendered (said newly obtained records include books of business/inventory
accounts by Ang Tibay which were not previously accessible but already existing), hence, the NLU should
be granted new trial to comply with due process.

13.
Mayon Hotel vs Adana G.R.No. 157634

Petitioner Mayon Hotel & Restaurant is a single proprietor business employed about sixteen (16)
employees. Due to the expiration and non-renewal of the lease contract for the rented space occupied by
the said hotel and restaurant at, the hotel operations of the business were suspended. The operation of
the restaurant was continued in its new location only 9 of the 16 employees continued. On various dates,
the 16 employees filed complaints for underpayment of wages and other money claims against
petitioners. Labor Arbiter rendered a Decision in favor of the employees but the NLRC reversed its
decision.

Issue: WON the employees are entitled to their money claims

Held: Yes. Entitlement to labor standard benefits is a separate and distinct concept from payment of
separation pay arising from illegal dismissal, and are governed by different provisions of the Labor Code.
Respondents have set out with particularity in their complaint, position paper, affidavits and other
documents the labor standard benefits they are entitled to, and which they alleged that petitioners have
failed to pay them. It was therefore petitioners' burden to prove that they have paid these money claims.
One who pleads payment has the burden of proving it, and even where the employees must allege
nonpayment, the general rule is that the burden rests on the defendant to prove nonpayment, rather than
on the plaintiff to prove non payment. This petitioners failed to do.

14.
Kanlaon Construction vs. NLRC Kanlaon Construction vs. NLRC
G.R. No. 126625 | September 1997

I. Recit-ready Summary Petitioner Kanlaon Construction Enterprises Co., Inc. was contracted
by the National Steel Corporation to construct residential houses in Iligan
City. Private respondents were hired as laborers for the project. They
worked under Engineers Paulino Estacio and Mario Dulatre.
Upon completion of the project, the private respondents filed separate
complaints against the petitioner before the Sub-Regional Arbitration
Branch XII, Iligan City. Numbering 41 in all, they claimed the petitioner
paid them wages below the minimum and sought payment of their salary
differentials and thirteenth-month pay.
Engineer Estacio admitted petitioner’s liability to private respondents
and agreed to pay their wage differentials and thirteenth-month pay. The
Labor Aribiter Siao ordered the employer company to pay the employees.
Petitioner appealed to respondent National Labor Relations
Commission. It alleged that
they were denied due process and that Engineers Estacio and Dulatre had no
authority to represent and bind petitioner. NLRC affirmed the decisions of
the Labor Arbiters.
The court granted the petition, ruling that the NLRC gravely abused its
discretion in affirming the decisions of the labor arbiters which were not
only based on unauthorized representations, but were also made in violation
of petitioner's right to due process
II. Facts of the Case
Petitioner Kanlaon Construction Enterprises Co., Inc. is a domestic
corporation engaged on construction business nationwide. In 1988,
petitioner was contracted by the National Steel Corporation to construct
residential houses for its plant employees in Iligan City. Private respondents
were hired as laborers for the project. They worked under Engineers
Paulino Estacio and Mario Dulatre. In 1989, petitioner statrted terminating
the services of the respondents as the project neared its completion. In 1990,
the private respondents filed separate complaints against the petitioner
before the Sub-Regional Arbitration Branch XII, Iligan City. Numbering 41
in all, they claimed the petitioner paid them wages below the minimum and
sought payment of their salary differentials and thirteenth-month pay.
Engineers Estacio and Dulatre were named co-respondents.
At the conference of June 1990, Engineer Estacio admitted petitioner’s
liability to private respondents and agreed to pay their wage differentials
and thirteenth-month pay. As a result of this agreement, Engineer Estacio
allegedly waived petitioner’s right to file its position paper. Private
respondents declared that they, too, were dispensing with their position
papers and were adopting their complaints as their position paper.
Engineer Estacio asked for another week to settle the claims.
Extension was denied by the Labor Aribiter Siao and ordered the employer
company to pay the employees.
Petitioner appealed to respondent National Labor Relations
Commission. Appeal was filed by Atty. Arthur Abudiente. It alleged that
they were denied due process and that Engineers Estacio and Dulatre had no
authority to represent and bind petitioner.
NLRC affirmed the decisions of the Labor Arbiters.
III. Issue/s
1. W/N there was a valid service of summons? YES.
2. W/N Engineers Estacio and Dulatre and Atty. Abudiente had
authority to represent petitioner in the hearings before the
arbiters and on appeal to the Commision? NO.
3. W/N, public respondent NLRC rendered their decision in grave
abuse of discretion, depriving petitioner of due process of law?
YES.
IV. Holding/s
1. YES, there was a valid service of summons.
Under the Revised Rules of Court, service upon a private domestic
corporation or partnership must be made upon its officers, such as the
president, manager, secretary, cashier, agent, or any of its directors. These
persons are deemed so integrated with the corporation that they know their
responsibilities and immediately discern what to do with any legal papers
served on them. Engineer Estacio managed and supervised the construction
project. Being a manager, the summons was therefore validly served on him.
2. NO, they did not have the authority to represent petitioner.
A non-lawyer may appear before the labor arbiters and the NLRC only if: (a)
he represents himself as a party to the case; (b) he represents an
organization or its members, with written authorization from them: or
c) he is a duly-accredited member of any legal aid office duly recognized
by the Department of Justice or the Integrated Bar of the Philippines in
cases referred to by the latter.
Engineers Estacio and Dulatre were not lawyers nor were they members of
a legal aid office. Their appearance on behalf of petitioner also required
written proof of organization. Absent this authority, whatever statements
said by declarations Engineer Estacio made me before the arbiters could not
bind petitioner.
3. YES, public respondent NLRC rendered their decision in grave
abuse of discretion, depriving petitioner of due process of law.
The decision of NLRC to affirm the decision of the arbiters were not only
based on unauthorized representations, but were also made in violation of
petitioner’s right to due process.
V. Law or Doctrine Applied
AS A GENERAL RULE, ONLY LAWYERS ARE ALLOWED TO
APPEAR BEFORE THE LABOR ARBITER
NLRC Rules of Procedure Sec. 6. Appearances. — . . . . A non-lawyer
may appear before the Commission or any Labor Arbiter only if: (a) he
represents himself as party to the case; (b) he represents the organization
or its members, provided that he shall be made to present written proof that
he is properly authorized; or (c) he is a duly-accredited member of any
legal aid office duly recognized by the Department of Justice or the
Integrated Bar of the Philippines in cases referred thereto by the latter.
Engineers Estacio and Dulatre were not lawyers nor were they
members of a legal aid office. Their appearance on behalf of petitioner also
required written proof of organization. Absent this authority, whatever
statements said by declarations Engineer Estacio made me before the
arbiters could not bind petitioner.
Sec. 7. Authority to bind party. — Attorneys and other
representatives of parties shall have authority to bind their clients in all
matters of procedure; but they cannot, without a special power of attorney
or express consent, enter into a compromise agreement with the opposing
party in full or partial discharge of a client's claim.
GRAVE ABUSE OF DISCRETION
In civil cases, an offer to compromise is not an admission of any
liability, and is not admissible in evidence against the offeror. If this rule
were otherwise, no attempt to settle litigation could safely be made.
Settlement of disputes by way of compromise is an accepted and desirable
practice in courts of law and administrative tribunals. In fact, the Labor
Code mandates the labor arbiter to exert all efforts to enable the parties to
arrive at an amicable settlement of the dispute within his jurisdiction on or
before the first hearing.
Clearly, respondent Commission gravely abused its discretion in
affirming the decisions of the labor arbiters which were not only based on
unauthorized representations, but were also made in violation of petitioner's
right to due process. Section 3 of Rule V of the NLRC Rules of Procedure
provides:
Sec. 3. Submission of Position Papers/Memorandum. — Should the
parties fail to agree upon an amicable settlement, in whole or in part,
during the conferences, the Labor Arbiter shall issue an order stating
therein the matters taken up and agreed upon during the conferences and
directing the parties to simultaneously file their respective verified position
papers
VI. Disposition
IN VIEW WHEREOF, the petition for certiorari is granted. The
decision of the National Labor Relations Commission, Fifth Division, is
annulled and set aside and the case is remanded to the Regional Arbitration
Branch, Iligan City for further proceedings.

15. CA as an appellate court for the decisions rendered by the NLRC

ST. MARTIN FUNERAL HOME, vs. NLRC

September 16, 1998

FACTS:

Private respondent alleges that he started working as Operations Manager of petitioner St. Martin
Funeral Home on February 6, 1995. However, there was no contract of employment executed between
him and petitioner nor was his name included in the semi-monthly payroll. On January 22, 1996, he was
dismissed from his employment for allegedly misappropriating P38,000.00. Petitioner on the other hand
claims that private respondent was not its employee but only the uncle of Amelita Malabed, the owner of
petitioner St.Martin’s Funeral Home and in January 1996, the mother of Amelita passed away, so the
latter took over the management of the business.

Amelita made some changes in the business operation and private respondent and his wife were no
longer allowed to participate in the management thereof. As a consequence, the latter filed a complaint
charging that petitioner had illegally terminated his employment. The labor arbiter rendered a decision
in favor of petitioner declaring that no employer-employee relationship existed between the parties and
therefore his office had no jurisdiction over the case.

ISSUE: WON the decision of the NLRC are appealable to the Court of Appeals.

RULING:

The Court is of the considered opinion that ever since appeals from the NLRC to the SC were eliminated,
the legislative intendment was that the special civil action for certiorari was and still is the proper vehicle
for judicial review of decisions of the NLRC. The use of the word appeal in relation thereto and in the
instances we have noted could have been a lapsus plumae because appeals by certiorari and the original
action for certiorari are both modes of judicial review addressed to the appellate courts. The important
distinction between them, however, and with which the Court is particularly concerned here is that the
special civil action for certiorari is within the concurrent original jurisdiction of this Court and the Court
of Appeals; whereas to indulge in the assumption that appeals by certiorari to the SC are allowed would
not subserve, but would subvert, the intention of the Congress as expressed in the sponsorship speech on
Senate Bill No. 1495.

Therefore, all references in the amended Section 9 of B.P No. 129 to supposed appeals from the NLRC to
the Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari
under Rule65. Consequently, all such petitions should henceforth be initially filed in the Court of Appeals
in strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief
desired.

16. Debt vs. Employees claims

DEVELOPMENT BANK OF THE PHILIPPINES vs. NLRC
G.R. No. 108031 March 1, 1995
FACTS:
On 21 March 1977 private respondent Leonor A. Ang started employment as Executive Secretary
with Tropical Philippines Wood Industries, Inc. (TPWII). In 1982 she was promoted to the position of
Personnel Officer. In September 1983 petitioner Development Bank of the Philippines (DBP), as
mortgagee of TPWII, foreclosed its plant facilities and equipment. Nevertheless TPWII continued its
business operations interrupted only by brief shutdowns for the purpose of servicing its plant facilities
and equipment. In January 1986 DBP took possession of the foreclosed properties. From then on the
company ceased its operations. As a consequence private respondent was on 15 April 1986 verbally
terminated from the service. On 14 December 1987, private respondent filed with the Labor Arbiter a
complaint for separation pay, 13th month pay, vacation and sick leave pay, salaries and allowances
against TPWII, its General Manager, and petitioner. After hearing the Labor Arbiter found TPWII
primarily liable to private respondent but only for her separation pay and vacation and sick leave pay
because her claims for unpaid wages and 13th month pay were later paid after the complaint was filed.
The General Manager was absolved of any liability. DBP was held subsidiarily liable in the event
the company failed to satisfy the judgment. The Labor Arbiter rationalized that the right of an employee
to be paid benefits due him from the properties of his employer is superior to the right of the latter's
mortgage. The National Labor Relations Commission affirmed the ruling of the Labor Arbiter.
ISSUE:
Whether or not the NLRC committed grave abuse of discretion in holding that Art. 110 of the
Labor Code, as amended, which refers to worker preference in case of bankruptcy or liquidation of an
employer's business is applicable to the present case notwithstanding the absence of any formal
declaration of bankruptcy or judicial liquidation of TPWII.
RULING:
SC held that NLRC gravely abused its discretion in affirming the decision of the Labor Arbiter. Art.
110 should not be treated apart from other laws but applied in conjunction with the pertinent provisions
of the Civil Code and the Insolvency Law to the extent that piece-meal distribution of the assets of the
debtor is avoided.
Worker preference will find application when, in proceedings such as insolvency, such unpaid
wages shall be paid in full before the "claims of the Government and other creditors" may be paid. All
creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences
determined. In the course of judicial proceedings which have for their object the subjection of the
property of the debtor to the payment of his debts or other lawful obligations.
Thereby, an orderly determination of preference of creditors' claims is assured; the adjudication
made will be binding on all parties-in-interest since those proceedings are proceedings in rem; and the
legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law,
and the Labor Code is preserved in harmony.
In the present case, there is as yet no declaration of bankruptcy nor judicial liquidation of TPWII.
Hence, it would be premature to enforce the worker's preference. The additional ratiocination of public
respondent that "under Article 110 of the Labor Code complainant enjoys a preference of credit over the
properties of TPWII being held in possession by DBP," is a dismal misconception of the nature of
preference of credit
A preference applies only to claims which do not attach to specific properties. A lien creates a
charge on a particular property. The right of first preference as regards unpaid wages recognized by
Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers.
It is but a preference of credit in their favor, a preference in application. It is a method adopted to
determine and specify the order in which credits should be paid in the final distribution of the proceeds
of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment
debtor
Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees
for unpaid wages either upon all of the properties or upon any particular property owned by their
employer. Claims for unpaid wages do not therefore fall at all within the category of specially preferred
claims established under Articles 2241 and 2242 of the Civil Code, except to the extent that such claims for
unpaid wages are already covered by Article 2241, number 6: "claims for laborers: wages, on the goods
manufactured or the work done;" or by Article 2242, number 3, "claims of laborers and other workers
engaged in the construction reconstruction or repair of buildings, canals and other works, upon said
buildings, canals and other works . . . . To the extent that claims for unpaid wages fall outside the scope of
Article 2241, number 6, and 22421 number 3, they would come within the ambit of the category of
ordinary preferred credits under Article 2244.
The DBP anchors its claim on a mortgage credit. A mortgage directly and immediately subjects the
property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for
whose security it was constituted (Article 2176, Civil Code). It creates a real right which is enforceable
against the whole world. It is a lien on an identified immovable property, which a preference is not.
A recorded mortgage credit is a special preferred credit under Article 2242 (5) of the Civil Code on
classification of credits. The preference given by Article 110, when not falling within Article 2241 (6) and
Article 2242 (3), of the Civil Code and not attached to any specific property, is all ordinary preferred
credit although its impact is to move it from second priority to first priority in the order of preference
established by Article 2244 of the Civil Code.
WHEREFORE, the petition is GRANTED. The decision of public respondent National Labor
Relations Commission affirming the decision of the Labor Arbiter insofar as it held petitioner
Development Bank of the Philippines liable for the monetary claims of private respondent Leonor A. Ang
is SET ASIDE.

17. third party claim

Yupangco Cotton Mills, Inc. vs. CA (2002)
G.R. No. 126322
Facts:
Petitioner contended that a sheriff of the NLRC “erroneously and unlawfully levied” certain properties
which it claims as its own. It filed a 3rd party claim with the Labor Arbiter and recovery of property and
damages with the RTC. The RTC dismissed the case. In the CA, the court dismissed the petition on the
ground of forum shopping and that the proper remedy was appeal in due course, not certiorari or
mandamus. Petitioner filed aMFR and argued that the filing of a complaint for
Accion reinvindicatoria with the RTC was proper because it is a remedy specifically granted to an owner
(whose properties were subjected to a writ of execution to enforce a decision rendered in a labor dispute
in which it was not a party). The MFR was denied. Hence, petitioner filed this appeal.
Issue:
Whether the CA has jurisdiction over the case
Held:
YES
A third party whose property has been levied upon by a sheriff to enforce a decision against a judgment
debtor is afforded with several alternative remedies to protect its interests. The third party may avail
himself of alternative remedies cumulatively, and one will not preclude the third party from availing
himself of the other alternative remedies in the event he failed in the remedy first availed of. Thus, a third
party may avail himself of the following alternative remedies: a) File a third party claim with the sheriff of
the Labor Arbiter, an db) If the third party claim is denied, the third party may appeal the denial to the
NLRC. Even if a third party claim was denied, a third party may still file a proper action with a competent
court to recover ownership of the property illegally seized by the sheriff. The filing of a third party claim
with the Labor Arbiter and the NLRC did not preclude the petitioner from filing a subsequent action for
recovery of property and damages with the Regional Trial Court. And, the institution of such complaint
will not make petitioner guilty of forum shopping.
18. dismissal due to insubordination/ refusal to be reassigned
Abbott Laboratories v. NLRC
145 SCRA 206
FACTS:
1. Complainant Bobadilla started his employment with respondent company sometime in May 1982.
After undergoing training, in September, 1982, complainant was designated professional medical
representative (PMR) and was assigned to cover the sales territory comprising of Sta. Cruz, Binondo and
a part of Quiapo and Divisoria, of the Metro Manila district. In connection with the respondent company's
marketing and sales operations, it has been its policy and established practice of undertaking
employment movements and/or reassignments from one territorial area to another as the exigencies of
its operations require and to hire only applicant salesmen, including professional medical
representatives (PMRs) who are willing to take provincial assignments, at least insofar as male applicants
were concerned. Likewise, respondent company had made reassignments or transfers of sales personnel
which included PMRs from one territorial area of responsibility to another on a more or less regular
basis.
2. In complainant's application for employment with respondent company, he agreed to the following: 1)
that if employed he win accept assignment in the provinces and/or cities anywhere in the Philippines; 2)
he is willing and can move into and live in the territory assigned to him; and (3) that should any answer
or statement in his application for employment be found false or incorrect, he will be subject to
immediate dismissal, if then employed.
3. On 22 July 1983, respondent Victa informed complainant that he was being transferred effective 1
August 1983 to the newly opened Cagayan territory comprising the provinces of Cagayan, Nueva Vizcaya
and Isabela. The transfer order was made formal in a memorandum dated 29 July 1983. Among the
reasons given for complainant's selection as PMR for the Cagayan territory were: The territory required a
veteran and seasoned PMR who can operate immediately with minimum training and supervision.
Likewise, a PMR who can immediately exploit the vast business potential of the area.
4. In a letter dated 1 August 1983, which was received by Abbott on 4 August 1983, complainant, thru his
lawyer, objected to the transfer on the grounds that it was not only a demotion but also personal and
punitive in nature without basis legally and factually.
5. On 8 August 1983, Victa issued another inter-office correspondence to complainant, giving the latter up
to 15 August 1983 within which to comply with the transfer order, otherwise his would be dropped from
the payroll for having abandoned his job. When complainant failed to report to his new assignment,
Abbott assigned thereat Fausto Antonio T. Tibi another PED PMR who was priorly covering the provinces
of Nueva Ecija and Tarlac. Meanwhile, complainant filed applications for vacation leave from 2 to 9
August 1983, and then from 10 to 13 August 1983. And on 18 August 1983, he filed the present
complaint.
6. The Labor Arbiter ruled for the respondent on the ground that the complainant is guilty of gross
insubordination. On appeal, the respondent National Labor Relations Commission reversed the Arbiter's
decision and held that herein petitioners had no valid and justifiable reason to dismiss the complainant.
The National Labor Relations Commission ordered the latter's reinstatement with backwages.
ISSUE: whether or not Albert Bobadilla could be validly dismissed from his employment on the ground of
insubordination for refusing to accept his new assignment
HELD:
1. YES. The hiring, firing, transfer, demotion, and promotion of employees has been traditionally
Identified as a management prerogative subject to limitations found in law, a collective bargaining
agreement, or general principles of fair play and justice. This is a function associated with the employer's
inherent right to control and manage effectively its enterprise. Even as the law is solicitous of the welfare
of employees, it must also protect the right of an employer to exercise what are clearly management
prerogatives. The free who of management to conduct its own business affairs to achieve its purpose
cannot be denied. (See Dangan vs. National Labor Relations Commission, 127 SCRA 706).
2. As a general rule, the right to transfer or reassign an employee is recognized as an employer's exclusive
right and the prerogative of management.
3. Settled is the rule in this regard that an employer, except when cited by special laws, has the right to
regulate, according to his own discretion and judgment, all aspects of employment, which includes,
among others, hiring, work assignments, place and manner of work, working regulations and transfer of
employees in accordance with his operational demands and requirements. This right flows from
ownership and from the established rule that labor law does not authorize the substitution of judgment
of the employer in the conduct of his business, unless it is shown to be contrary to law, morals or public
policy (NLU vs. Insular-Yebana Tobacco Corp., 2 SCRA 924, 931; and Republic Savings Bank vs. Court of
Industrial Relations, 21 SCRA 226, 235).
4. Abbott, in accordance with the demands and requirements of its marketing and sales operations,
adopted a policy to hire only sales applicants who are willing to accept assignments in the provinces
anywhere in the Philippines, and to move into and live in the territory assigned to them.
5. The existence and implementation of this policy are clearly discernible from the questions appearing in
the application form under the heading:"TO BE FILLED BY SALES APPLICANTS ONLY," and the fact that
Abbott, depending upon the needs of its marketing and sales operations, periodically made transfers or
reassignment of its sales people.
6. Complainant was precisely hired because he manifested at the outset as a job applicant his willingness
to follow the conditions of his employment. In line with the policy, as practiced, Abbott, thru Jaime Victa,
issued an inter-office correspondence transferring complainant to a newly opened sales territory-the
Cagayan Region, comprising the provinces of Cagayan, Nueva Vizcaya and Isabela. According to
respondents, complainant was selected as PMR for the region primarily because he was a veteran and
seasoned PMR who can operate immediately with minimum training and supervision.
7. It appearing, therefore, that the order to transfer complainant is based upon a judgment of his
employer Abbott, which judgment to transfer is in the with a company practice which is not contrary to
law, morals or public policy, hence, beyond the competence of this office to question, the refusal of
complainant to obey the lawful order of Abbott is gross insubordination — a valid cause for dismissal.
8. Therefore, Bobadilla had no valid reason to disobey the order of transfer. He had tacitly given his
consent thereto when he acceded to the petitioners' policy of hiring sales staff who are willing to be
assigned anywhere in the Philippines which is demanded by the petitioners' business.
9. By the very nature of his employment, a drug salesman or medical representative is expected to travel.
He should anticipate reassignment according to the demands of their business. It would be a poor drug
corporation which cannot even assign its representatives or detail men to new markets calling for
opening or expansion or to areas where the need for pushing its products is great. More so if such
reassignments are part of the employment contract.

19. Required exhaustion of administrative remedies

DIAMONON v DOLE
G.R.No. 108951 (2000)

Facts:
Petitioner served as the National Executive Vice President of the National Congress of Unions in the Sugar
Industry of the Philippines (NACUSIP) and Vice President for Luzon of the Philippine Agricultural,
Commercial and Industrial Workers Union (PACIWU).

On March 23, 1991, petitioner learned of his removal from the positions he held in both unions in a
resolution approved during a meeting of the National Executive Boards of both unions.
He initiated a complaint (first one) before the DOLE against the National President of NACUSIP and
PACIWU, private respondent Atty. Zoilo V. de la Cruz, Jr., and the members of the National Executive
Boards of NACUSIP and PACIWU questioning the validity of his removal from the positions he held in the
two unions.

Petitioner subsequently filed a second complaint against private respondent Atty. Zoilo V. de la Cruz, Jr.,
and the National Treasurer of NACUSIP and PACIWU, Sofia P. Mana-ay accusing them of three (3)
offenses, namely: (a) wanton violation of the Constitution and By-Laws of both organizations, NACUSIP
and PACIWU; (b) unauthorized and illegal disbursement of union funds of both organizations; (c) and
abuse of authority as national officers of both organizations.

On August 2, 1991, an Order was issued in the FIRST case declaring that petitioner’s removal from the
positions he held is null and void. Private respondents appealed this decision to the public respondent
DOLE.

In an Order dated November 5, 1991, the Med-Arbiter dismissed the SECOND case on the ground of lack
of personality of petitioner to file the complaint in view of his removal from the offices he held.

On December 27, 1991, public respondent Laguesma, acting as the then Undersecretary of DOLE, decided
on the FIRST case on appeal and issued a Resolution which affirmed the assailed Order dated August 2,
1991 declaring as null and void petitioner’s removal from the positions he held.

In view of the adverse Order dated November 5, 1991 dismissing the SECOND case, petitioner appealed
to the public respondent DOLE. Public respondent Laguesma, issued the assailed Order dated December
29, 1992, holding that petitioner’s failure to show in his complaint that the administrative remedies
provided for in the constitution and by-laws of both unions, have been exhausted or such remedies are
not available, was fatal to petitioner’s cause. Resultantly, he affirmed he dismissal of the complaint.

Issue:

Whether or not there is grave abuse of discretion by the secretary of DOLE in dismissing the complaint
due to "non-exhaustion of administrative remedies? NO!

Ratio:

In the instant case, not only did petitioner fail to comply with Section 2, Rule VIII, Book V of the
Implementing Rules and Regulations of the Labor Code as amended[28] but also the record reveals that
neither did he exhaust the remedies[29] set forth by the Constitution and by-laws of both unions. In the
National Convention of PACIWU and NACUSIP held on August 10 and 11, 1991, respectively, nothing was
heard of petitioner’s complaint against private respondents on the latter’s alleged unauthorized and
illegal disbursement of union funds. His failure to seek recourse before the National convention on his
complaint against private respondents taints his action with prematurity.

When the Constitution and by-laws of both unions dictated the remedy for intra-union dispute, such as
petitioner’s complaint against private respondents for unauthorized or illegal disbursement of unions
funds, this should be resorted to before recourse can be made to the appropriate administrative or
judicial body, not only to give the grievance machinery or appeals’ body of the union the opportunity to
decide the matter by itself, but also to prevent unnecessary and premature resort to administrative or
judicial bodies. Thus, a party with an administrative remedy must not merely initiate the prescribed
administrative procedure to obtain relief, but also pursue it to its appropriate conclusion before seeking
judicial intervention. Petitioner’s premature invocation of public respondent’s intervention is fatal to his
cause of action.

Evidently, when petitioner brought before the DOLE his complaint charging private respondents with
unauthorized and illegal disbursement of union funds, he overlooked or deliberately ignored the fact that
the same is clearly dismissible for non-exhaustion of administrative remedies. Thus, public respondent
Bienvenido E. Laguesma, in dismissing petitioner’s complaint, committed no grave abuse of discretion.

WHEREFORE, the petition is hereby DISMISSED

20.
Magbanua vs. Uy
G.R.No. 161003 (2005)

Facts:
A decision was promulgated awarding to the petitioners the amount of 1,487,312.69php as
backwages. Petitioners filed a Motion for Issuance of Writ of Execution. Rizalino Uy filed a manifestation
that the cases be terminated and closed, stating that the judgment award as computed has been complied
with to the satisfaction of the petitioners. The said manifestation was signed by the petitioners. Together
with the manifestation is a joint affidavit attesting to the receipt of payment from the respondent and
waiving all other benefits due them in connection with their complaint.
The respondent opposed the motion on the ground that the judgment award had been fully
satisfied. In reply, petitioners claim that they received only partial payments of the judgment award.
6 of the 8 petitioners filed a manifestation requesting that the cases be considered closed and
terminated as they are already satisfied of what they have receieved from the respondent. Together with
said manifestation is a joint affidavit on the local dialect of the 6 petitioners attesting that they have no
more collectible amount from the respondent and if there is any, they are abandoning and waiving the
same.
The Labor arbiter issued an order denying the motion for issuance of writ of execution. The NLRC
reversed, holding that a final and executor judgment can no longer be altered and that quitclaims and
releases are normally frowned upon as contrary to public policy.
CA held that compromise agreements may be entered into even after a final judgment, thus
petitioners validly released respondents from any claims.

Issue:

Whether the final and executor judgment of the Supreme Court could be subject to compromise
settlement

Whether the petitioners’ affidavit waiving their awards in the labor case executed without
assistance of their counsel and labor arbiter is valid

Held:
Both in the affirmative. A compromise agreement is a contract whereby parties make reciprocal
concessions in order to resolve their differences and thus avoid or put an end to a law suit. The Court
noted that Article 2040 impliedly allowed such agreements; there was no limitation as to when these
should be entered into. There is no justification to disallow a compromise agreement, solely because it
was entered into after final judgment. The validity of the agreement is determined by compliance with
the requisites and principles of contracts, not by when it was entered into.
As provided by the law on contracts, a valid compromise must have the following elements: (1)
the consent of the parties to the compromise, (2) an object certain that is the subject matter of the
compromise, and (3) the cause of the obligation that is established.
The principle of novation supports the validity of a compromise after final judgment. Novation, a
mode of extinguishing an obligation, is done by changing the object or principal condition of an
obligation, substituting the person of the debtor, or surrogating a third person in the exercise of the
rights of the creditor. For an obligation to be extinguished by another, the law requires either of these
two conditions: (1) the substitution is unequivocally declared, or (2) the old and the new obligations are
incompatible on every point. A compromise of a final judgment operates as a novation of the judgment
obligation, upon compliance with either requisite. In the present case, the incompatibility of the final
judgment with the compromise agreement is evident, because the latter was precisely entered into to
supersede the former.
The presence or the absence of counsel when a waiver is executed does not determine its validity.
There is no law requiring the presence of a counsel to validate a waiver. The test is whether it was
executed voluntarily, freely and intelligently; and whether the consideration for it was credible and
reasonable.