Pondoc vs.

NLRC
G.R. No. 116347 | October 3, 1996
Davide, Jr., J.
Topic: Jurisdiction of LA
Case Doctrine/s:
The LA does not have jurisdiction over claims of indebtedness by a party where there is complete want of
evidence that such indebtedness arose out of or was incurred in connection with the employer-employee
relationship between them.
Facts:
Private respondent (PR) Eulalio Pondoc is the owner-proprietor Melleonor General Merchandise and
Hardware Supply. Respondent is engaged, among others, in the business of buying and selling copra, rice,
corn, “binangkol,” junk iron and empty bottles.

Records disclose that complainant Andres Pondoc was employed by Eulalio Pondoc as a laborer from
October 1990 up to December 1991, receiving a wage rate of P20.00 per day. He was required to work
twelve (12) hours a day from 7:00 AM to 8:00 PM, Monday to Sunday. Despite working on his rest days and
holidays, he was not paid his premium pay as required by law. Consequently, Natividad Pondoc, on behalf of
her late husband Andres, filed a complaint for salary differential, overtime pay, 13th month pay, holiday pay
and other money claims before the NLRC.

Private respondent questioned, amongvothers, the existence of [an] employer-employee relationship between
them. He further averred that Melleonor General Merchandise and Hardware Supply is a fictitious
establishment.
LA/RTC/NLRC/CA Ruling/s:
LA: rendered a Decision finding the existence of [an] employer-employee relationship between the parties,
ordering PR to pay complainant salary differential, regular holiday and premium pay for holiday services,
premium pay for rest day services, 13th month pay. Moreover, LA denied the prayer of PR to set-off
petitioner’s alleged indebtedness.

NLRC: Allowed compensation between petitioner’s monetary award and her alleged indebtedness to PR.
Petitioner filed MR but it was denied.

Hence, the petitioner instituted this special civil action for certiorari under Rule 65 of the Rules of Court
wherein she prays this Court annul the challenged decision of the NLRC. The petitioner asserts that the
decision of the LA was already final and executory when the private respondent tried to defeat the judgment
by asserting an alleged indebtedness of Andres Pondoc as a set-off, a claim not pleaded before the LA at any
time before judgment, hence deemed waived. Moreover the indebtedness "did not evolve out employer-
employee relationship, hence, purely civil in aspect. The OSG agreed with the petitioner and stressed further
that the asserted indebtedness was never proven to have arisen out of or in connection with the employer-
employee relationship. Accordingly, both the Labor Arbiter and the NLRC did not have jurisdiction over the
private respondent’s claim.
Issue/s:
WON LA had jurisdiction to rule on the claim for alleged indebtedness
SC Ruling/s:
No.

As correctly contended by the Office of the Solicitor General, there is a complete want of evidence that the
indebtedness asserted by the private respondent against Andres Pondoc arose out of or was incurred in
connection with the employer-employee relationship between them.

The Labor Arbiter did not then have jurisdiction over the claim as under paragraph (a) of Article 217 [now 224]
of the Labor Code, Labor Arbiters have exclusive and original jurisdiction only in the following cases:

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. Claim for actual, moral, exemplary and other forms of damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of
strikes and lockouts; and
6. Except claims for Employees’ Compensation, Social Security, Medicare 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.

Even assuming arguendo that the claim for the alleged indebtedness fell within the exclusive original
jurisdiction of the Labor Arbiter, it was deemed waived for not having been pleaded as an affirmative
defense or barred for not having been set up as a counterclaim before the Labor Arbiter at any appropriate
time prior to the rendition of the decision in NLRC Case. Under the Rules of Court, which is applicable in a
suppletory character in labor cases before the Labor Arbiters or the NLRC pursuant to Section 3, Rule I of
the New Rules of Procedure of the NLRC, defenses which are not raised either in a motion to dismiss or in
the answer are deemed waived and counterclaims not set up in the answer are barred. Set-off or
compensation is one of the modes of extinguishing obligations and extinguishment is an affirmative defense
and a ground for a motion to dismiss.
 Villamaria vs. CA
G.R. No. 165881 | April 19, 2006
Callejo, Sr., J.
Topic: Jurisdiction of LA
Case Doctrine/s:
An employer-employee relationship is an indispensable jurisdictional requisite. The jurisdiction of Labor
Arbiters and the NLRC under Article 217 [now 224] 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. Under the boundary-hulog scheme incorporated in the
Kasunduan, a dual juridical relationship was created between petitioner and respondent: that of employer-
employee and vendor-vendee. The Kasunduan did not extinguish the employer-employee relationship of the
parties extant before the execution of said deed.
Facts:
Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole proprietorship engaged in
assembling passenger jeepneys with a public utility franchise. Villamaria stopped assembling jeepneys and
retained only nine, four of which he operated by employing drivers on a “boundary basis.” One of those
drivers was private respondent (PR) Bustamante. Bustamante remitted P450.00 a day to Villamaria as
boundary and kept the residue of his daily earnings as compensation for driving the vehicle. Later, Villamaria
verbally agreed to sell the jeepney to Bustamante under the “boundary-hulog scheme,” where Bustamante
would remit to Villarama P550.00 a day for a period of four years; Bustamante would then become the owner
of the vehicle and continue to drive the same under Villamaria’s franchise. It was also agreed that
Bustamante would make a downpayment of P10,000.00.

Villamaria executed a contract/Kasunduan. The parties agreed, inter alia, that if Bustamante failed to pay the
boundary-hulog for three days, Villamaria Motors would hold on to the vehicle until Bustamante paid his
arrears, including a penalty of P50.00 a day; in case Bustamante failed to remit the daily boundary-hulog for a
period of one week, the Kasunduan would cease to have legal effect and Bustamante would have to return
the vehicle to Villamaria Motors. Moreover, under the Kasunduan, Bustamante was prohibited from driving
the vehicle without prior authority from Villamaria Motors. Thus, Bustamante was authorized to operate the
vehicle to transport passengers only and not for other purposes. He was also required to display an
identification card in front of the windshield of the vehicle; in case of failure to do so, any fine that may be
imposed by government authorities would be charged against his account.

Bustamante and other drivers who also had the same arrangement with Villamaria Motors failed to pay their
respective boundary-hulog. This prompted Villamaria to serve a “Paalala,” reminding them that under the
Kasunduan, failure to pay the daily boundary-hulog for one week, would mean their respective jeepneys
would be returned to him without any complaints. Villamaria then took back the jeepney and barred PR from
driving the same. PR now filed a complaint for illegal dismissal before the LA.
LA/RTC/NLRC/CA Ruling/s:
LA: rendered judgment in favor of the spouses Villamaria and ordered the complaint dismissed on the
following racination: “Respondents presented the contract of Boundary-Hulog, as well as the PAALALA, to
prove their claim that complainant violated the terms of their contract and afterwards abandoned the vehicle
assigned to him. As against the foregoing, [the] complaint’s (sic) mere allegations to the contrary cannot
prevail. Not having been illegally dismissed, complainant is not entitled to damages and attorney’s fees.”

NLRC: dismissed the appeal for lack of merit. The NLRC ruled that under the Kasunduan, the juridical
relationship between Bustamante and Villamaria was that of vendor and vendee, hence, the Labor Arbiter
had no jurisdiction over the complaint.

CA: reversed and set aside the NLRC decision. The appellate court ruled that the Labor Arbiter had
jurisdiction over Bustamante’s complaint. Under the Kasunduan, the relationship between him and Villamaria
was dual: that of vendor-vendee and employer-employee. The CA ratiocinated that Villamaria’s exercise of
control over Bustamante’s conduct in operating the jeepney is inconsistent with the former’s claim that he was
not engaged in the transportation business.

Hence, this petition.

 Issue/s:
WON LA had jurisdiction over the case
SC Ruling/s:
Yes.

An employer-employee relationship is an indispensable jurisdictional requisite. The jurisdiction of Labor

Arbiters and the NLRC under Article 217 [now 224] 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. We agree with the ruling of the CA that, under the
boundary-hulog scheme incorporated in the Kasunduan, a dual juridical relationship was created between
petitioner and respondent: that of employer-employee and vendor-vendee. The Kasunduan did not extinguish
the employer-employee relationship of the parties extant before the execution of said deed. What is primordial
is that petitioner retained control over the conduct of the respondent as driver of the jeepney.

Petition denied, [CA’s] judgment affirmed.

 Mendoza vs. Officers of Manila Water Employee’s Union
G.R. No. 201595 | January 25, 2016
Del Castillo, J.
Topic: Jurisdiction of LA
Case Doctrine/s:
Unfair labor practices (ULPs) under Article 249 (a) and (b) — that is, violation of petitioner's right to self-
organization, unlawful discrimination, and illegal termination of his union membership — fall within the original
and exclusive jurisdiction of the Labor Arbiters, in accordance with Article 217 of the Labor Code.
Facts:
Petitioner was a member of the Manila Water Employees Union (MWEU). Among the respondents are Borela
(President and Chairman of MWEU Executive Board), Quebral (First Vice-President and Treasurer), and
Cometa (Secretary). MWEU through Cometa informed petitioner that the union was unable to fully deduct the
increased P200.00 union dues from his salary due to lack of the required December 2006 check-off
authorization from him. Petitioner was warned that his failure to pay the union dues would result in sanctions
upon him. MWEU grievance committee recommended that petitioner be suspended for 30 days. In an letter to
Borela, petitioner and his co-respondents took exception to the imposition and indicated their intention to
appeal the same to the General Membership Assembly in accordance with their union's Constitution and By-
Laws. Borela denied petitioner's appeal.

Thereafter, petitioner was charged with non-payment of union dues for the third time. He did not attend the
scheduled hearing. This time, he was meted the penalty of expulsion from the union, per "unanimous
approval" of the members of the Executive Board. His pleas for an appeal to the General Membership
Assembly were once more unheeded. Petitioner joined another union, the Workers
Association for Transparency, Empowerment and Reform, All-Filipino Workers Confederation (WATER-
AFWC). He was elected union President. Other MWEU members were inclined to join WATER-AFWC, but
MWEU director Torres threatened that they would not get benefits from the new CBA. The MWEU leadership
submitted a proposed CBA which contained provisions to the effect that in the event of retrenchment, non-
MWEU members shall be removed first, and that upon the signing of the CBA, only MWEU members shall
receive a signing bonus.

Petitioner filed a Complaint against respondents for unfair labor practices, damages, and attorney's fees
before the NLRC.
LA/RTC/NLRC/CA Ruling/s:
LA: decreed that the filing of the case is still premature. The parties shall exhaust first all the administrative
remedies before resorting to compulsory arbitration. Thus, instant case is referred back to the Union for the
General Assembly.

NLRC: ruled that it does not have jurisdiction over the matter. Pursuant to DOLE Department Order No. 40-
03, inter-intra-union disputes fall under the jurisdiction of the Bureau of Labor Relations (BLR).

CA: dismissed the Petition for Certiorari and ruled that a determination of validity or illegality of the alleged
acts necessarily touches on union matters, not ULPs, and are outside the scope of the labor arbiter's
jurisdiction.
Issue/s:
WON LA has jurisdiction over the case
SC Ruling/s:
Yes.

It is true that some of petitioner’s causes of action constitute intra-union cases cognizable by the BLR under
Article 226 of the Labor Code. 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 union’s constitution and bylaws, 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 x x x. However,
petitioner’s charge of unfair labor practices falls within the original and exclusive jurisdiction of the Labor
Arbiters, pursuant to Article 217 of the Labor Code. In addition, Article 247 of the same Code provides that
“the civil aspects of all cases involving unfair labor practices, which may include claims for actual, moral,
exemplary and other forms of damages, attorney’s fees and other affirmative relief, shall be under the
jurisdiction of the Labor Arbiters.”
 Atlas Farms vs. NLRC
G.R. No. 142244 | November 18, 2002
Quisumbing, J.
Topic: Jurisdiction of LA
Case Doctrine/s:
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 employee's rights, it is already cognizable by the labor arbiter.
Facts:
Private respondent Jaime O. dela Peña was employed as a veterinary aide by petitioner Atlas Farms, Inc., i n
December 1975. On March 3, 1993, Peña 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. Peña refused, however, to receive the formal notice. 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. Co-respondent Martial I. Abion was a carpenter/mason and a maintenance
man whose employment by petitioner commenced on October 8, 1990. He allegedly 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 pond's 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. The company terminated his services on
October 27, 1992. He acknowledged receipt of a written notice of dismissal, with his separation pay.
Thereafter, Peña and Abion filed separate complaints for illegal dismissal that were later consolidated. Both
claimed that their termination from the service was due to petitioner's suspicion that they were the leaders in
a plan to form a union to compete and replace the existing management-dominated union.
LA/RTC/NLRC/CA Ruling/s:
LA (before GM): 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
petitioner's 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. According to petitioner, jurisdiction over the case belonged to the grievance
machinery and thereafter the voluntary arbitrator, as provided in the CBA.

LA (after GM): 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.

NLRC: reversed the labor arbiter's decision.

CA: denied the petition and affirmed the NLRC resolution.

Issue/s:
WON LA and NLRC had jurisdiction to decide complaints for illegal dismissal
SC Ruling/s:
Yes.

The Court pointed out that private respondents went to the NLRC only after the labor arbiter dismissed their
original complaint for illegal dismissal. Given the circumstances, private respondents acted within their legal
rights in finding another avenue for the redress of their grievances. The Court also upheld the NLRC in
concluding that private respondents had already exhausted the remedies under the grievance procedure and
in ruling 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 complaint for illegal dismissal and directed the parties to avail of the
grievance procedure under Article VII of the existing CBA. Private respondents could not 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. Petitioner also did not comply with the requirements of a valid dismissal.
Considering the illegality of the dismissal, the cases were then effectively removed from the jurisdiction of the
voluntary arbitrator, thus placing them within the jurisdiction of the labor arbiter. The Court emphasized that
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 employee's rights, it is already cognizable by the labor arbiter.
 Negros Metal vs. Lamayo
G.R. No. 186557 | August 25, 2010
Carpio-Morales, J.
Topic: Jurisdiction of LA
Case Doctrine/s:
As a general rule, termination disputes should be brought before a labor arbiter, except when the parties,
under Art. 262, unmistakably express that they agree to submit the same to voluntary arbitration.
Facts:
Armelo J. Lamayo (respondent) began working for Negros Metal Corporation (petitioner or the company) in
September 1999 as a machinist. Sometime in May 2002, while respondent was at the company’s foundry
grinding some tools he was using, William Uy, Sr. (Uy), company manager, called his attention why he was
using the grinder there to which he replied that since the machine there was bigger, he would finish his work
faster.

Respondent’s explanation was found unsatisfactory, hence, he was, via memorandum, charged of loitering
and warned. Taking the warning as a three-day suspension as penalized under company rules, respondent
reported for work after three days, only to be meted with another 10-day suspension ─ from May 30 to June
10, 2002, for allegedly failing to sign the memorandum suspending him earlier.

After serving the second suspension, respondent reported for work on June 11, 2002 but was informed by Uy
that his services had been terminated and that he should draft his resignation letter, drawing respondent to
file on June 17, 2002 a complaint for illegal dismissal.

In lieu of a position paper, petitioner submitted a Manifestation contending that the complaint should be
dismissed because the Labor Arbiter had no jurisdiction over it since, under their Collective Bargaining
Agreement (CBA), such matters must first be brought before the company’s grievance machinery.
LA/RTC/NLRC/CA Ruling/s:
LA: held that respondent was illegally dismissed.

NLRC: set aside the ruling of, and remanded the case to, the LA for disposition based on the company’s
grievance procedure.

CA: set aside the NLRC Resolutions and reinstated the LA’s Decision. It held that the LA had jurisdiction to
hear the complaint.
Issue/s:
WON the grievance machinery procedure should have been followed first before respondent’s complaint for
illegal dismissal could be given due course.
SC Ruling/s:
No.

Under Art. 217, it is clear that a labor arbiter has original and exclusive jurisdiction over termination
disputes. On the other hand, under Article 261, a voluntary arbitrator has original and exclusive jurisdiction
over grievances arising from the interpretation or enforcement of company policies. As a general rule
then, termination disputes should be brought before a labor arbiter, except when the parties, under Art. 262,
unmistakably express that they agree to submit the same to voluntary arbitration.

In the present case, the CBA provision on grievance machinery being invoked by petitioner does not
expressly state that termination disputes are included in the ambit of what may be brought before the
company’s grievance machinery.

The pertinent provision in the parties’ CBA reads:

“For this purpose, a grievance is defined as any disagreement between the UNION and the EMPLOYER or
between a worker or group of workers on one hand and the EMPLOYER on the one hand as to the
application and interpretation of any of the provisions of this contract.” (emphasis and underscoring
supplied)
Even assuming, however, that the suspension of an employee may be considered as a “disagreement” which
bears on the “application and interpretation of any of the provisions” of the CBA, respondent could not have
bound himself to bring the matter of his suspension to grievance procedure or voluntary arbitration in light of
the documented fact that he had resigned from the union more than a year before his suspension, not to
mention the fact that he denied having a hand in the preparation of the union president Ronquillo’s letter
invoking the grievance procedure. In fine, the labor tribunal had original and exclusive jurisdiction over
respondent’s complaint for illegal dismissal.