Page 1
G.R. No. 89621 September 24, 1991
PEPSI COLA DISTRIBUTORS OF THE PHILIPPINES, INC., represented by its Plant General Manager ANTHONY B.
SIAN, ELEAZAR LIMBAB, IRENEO BALTAZAR & JORGE HERAYA, petitioners, 
vs.
HON. LOLITA O. GAL-LANG, SALVADOR NOVILLA, ALEJANDRO OLIVA, WILFREDO CABAÑAS &
FULGENCIO LEGO, respondents.
Aurelio D. Menzon for petitioners.
Mario P. Nicolasora co-counsel for petitioners.
Papiano L. Santo for private respondents.
CRUZ, J.:
The question now before us has been categorically resolved in earlier decisions of the Court that a little more diligent research
would have disclosed to the petitioners. On the basis of those cases and the facts now before us, the petition must be denied.
The private respondents were employees of the petitioner who were suspected of complicity in the irregular disposition of empty
Pepsi Cola bottles. On July 16, 1987, the petitioners filed a criminal complaint for theft against them but this was later withdrawn
and substituted with a criminal complaint for falsification of private documents. On November 26, 1987, after a preliminary
investigation conducted by the Municipal Trial Court of Tanauan, Leyte, the complaint was dismissed. The dismissal was affirmed
on April 8, 1988, by the Office of the Provincial Prosecutor.
Meantime, allegedly after an administrative investigation, the private respondents were dismissed by the petitioner company on
November 23, 1987. As a result, they lodged a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC in
Tacloban City on December 1, 1987, and decisions manded reinstatement with damages. In addition, they instituted in the Regional
Trial Court of Leyte, on April 4, 1988, a separate civil complaint against the petitioners for damages arising from what they
claimed to be their malicious prosecution.
The petitioners moved to dismiss the civil complaint on the ground that the trial court had no jurisdiction over the case because it
involved employee-employer relations that were exclusively cognizable by the labor arbiter. The motion was granted on February
6, 1989. On July 6, 1989, however, the respondent judge, acting on the motion for reconsideration, reinstated the complaint, saying
it was "distinct from the labor case for damages now pending before the labor courts." The petitioners then came to this Court for
relief.
The petitioners invoke Article 217 of the Labor Code and a number of decisions of this Court to support their position that the
private respondents civil complaint for damages falls under the jurisdiction of the labor arbiter. They particularly cite the case
of Getz Corporation v. Court of Appeals,1 where it was held that a court of first instance had no jurisdiction over the complaint
filed by a dismissed employee "for unpaid salary and other employment benefits, termination pay and moral and exemplary
damages."
We hold at the outset that the case is not in point because what was involved there was a claim arising from the alleged illegal
dismissal of an employee, who chose to complain to the regular court and not to the labor arbiter. Obviously, the claim arose from
employee-employer relations and so came under Article 217 of the Labor Code which then provided as follows:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) The Labor Arbiters shall have the original and
exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties for
decision, the following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Those that workers may file involving wages, hours of work and other terms and conditions of employment;
3. All money claims of workers, including those based on non-payment or underpayment of wages, overtime
compensation, separation pay and other benefits provided by law or appropriate agreement, except claims for
employees' compensation, social security, medicare and maternity benefits;
4. Cases involving household services; and
5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and
lockouts.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by labor Arbiters. 2
It must be stressed that not every controversy involving workers and their employers can be resolved only by the labor arbiters.
This will be so only if there is a "reasonable causal connection" between the claim asserted and employee-employer relations to put
the case under the provisions of Article 217. Absent such a link, the complaint will be cognizable by the regular courts of justice in
the exercise of their civil and criminal jurisdiction.
In Medina v. Castro-Bartolome,3 two employees filed in the Court of First Instance of Rizal a civil complaint for damages against
their employer for slanderous remarks made against them by the company president. On the order dismissing the case because it
came under the jurisdiction of the labor arbiters, Justice Vicente Abad Santos said for the Court:
It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a simple action
for damages for tortious acts allegedly committed by the defendants. Such being the case, the governing statute is the
Civil Code and not the Labor Code. It results that the orders under review are based on a wrong premise.
In Singapore Airlines Ltd. v. Paño,4 where the plaintiff was suing for damages for alleged violation by the defendant of an
"Agreement for a Course of Conversion Training at the Expense of Singapore Airlines Limited," the jurisdiction of the Court of
First Instance of Rizal over the case was questioned. The Court, citing the earlier case of Quisaba v. Sta. Ines Melale Veneer and
Plywood, Inc.,5 declared through Justice Herrera:
Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The
primary relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not
labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment of wages,
overtime compensation or separation pay. The items claimed are the natural consequences flowing from breach of an
obligation, intrinsically a civil dispute.
In Molave Sales, Inc. v. Laron,6 the same Justice held for the Court that the claim of the plaintiff against its sales manager for
payment of certain accounts pertaining to his purchase of vehicles and automotive parts, repairs of such vehicles, and cash
advances from the corporation was properly cognizable by the Regional Trial Court of Dagupan City and not the labor arbiter,
because "although a controversy is between an employer and an employee, the Labor Arbiters have nojurisdiction if the Labor
Code is not involved."
The latest ruling on this issue is found in San Miguel Corporation v. NLRC,7 where the above cases are cited and the changes in
Article 217 are recounted. That case involved a claim of an employee for a P60,000.00 prize for a proposal made by him which he
alleged had been accepted and implemented by the defendant corporation in the processing of one of its beer products. The claim
was filed with the labor arbiter, who dismissed it for lack of jurisdiction but was reversed by the NLRC on appeal. In setting aside
the appealed decision and dismissing the complaint, the Court observed through Justice Feliciano:
 Page 2

It is the character of the principal relief sought that appears essential, in this connection. Where such principal relief is
to be granted under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of
the Labor Arbiter and the NLRC, even though a claim for damages might be asserted as an incident to such claim.

x x x           x x x          x x x

Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code or other labor
relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the dispute
belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situations, resolution of the
dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of
employment, but rather in the application of the general civil law. Clearly, such claims fall outside the area of
competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the rationale for granting jurisdiction
over such claims to these agencies disappears.

x x x           x x x          x x x

While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe
of money claims that might be asserted by workers against their employers has been absorbed into the original and
exclusive jurisdiction of Labor Arbiters.

x x x           x x x          x x x

For it cannot be presumed that money claims of workers which do not arise out of or in connection with their employer-
employee relationship, and which would therefore fall within the general jurisdiction of the regular courts of justice,
were intended by the legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor
Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the 'money claims of workers" referred
to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employer-
employee relationship, or some aspect or incident of such relationship. Put a little differently, that money claims of
workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which
have some reasonable causal connection with the employer-employee relationship (Ibid.).

The case now before the Court involves a complaint for damages for malicious prosecution which was filed with the Regional Trial
Court of Leyte by the employees of the defendant company. It does not appear that there is a "reasonable causal connection"
between the complaint and the relations of the parties as employer and employees. The complaint did not arise from such relations
and in fact could have arisen independently of an employment relationship between the parties. No such relationship or any unfair
labor practice is asserted. What the employees are alleging is that the petitioners acted with bad faith when they filed the criminal
complaint which the Municipal Trial Court said was intended "to harass the poor employees" and the dismissal of which was
affirmed by the Provincial Prosecutor "for lack of evidence to establish even a slightest probability that all the respondents herein
have committed the crime imputed against them." This is a matter which the labor arbiter has no competence to resolve as the
applicable law is not the Labor Code but the Revised Penal Code.

"Talents differ, all is well and wisely put," so observed the philosopher-poet.8 So it must be in the case we here decide.

WHEREFORE, the order dated July 6, 1989, is AFFIRMED and the petition DENIED, with costs against the petitioner.

SO ORDERED.
 Page 3

G.R. No. L-65377 May 28, 1984 specifically denies under oath that the annexed Vehicle Invoice, Debits Memos Deed of Absolute Sale,
Repair Orders, Charge Invoices, Vouchers, Promissory Notes, Acknowledgement Letter and Statement of
Account
MOLAVE MOTOR SALES, INC., petitioner, 
vs.
HON. CRISPIN C. LARON, Presiding Judge of the Regional Trial Court of Pangasinan, Branch XLIV and PEDRO have remained unpaid as in fact the truth of the matter is as follows, to wit: (Emphasis supplied)
GEMENIANO, respondents.
DEFENDANT further alleged in a counterclaim that he should still be considered an employee of PLAINTIFF inasmuch as there
Nuelino B. Ranchez for petitioner. has been no application for clearance in regards to his separation.

Santos Areola for private respondent. At the pre-trial conference, the DEFENDANT raised the question of jurisdiction of the Court stating that PLAINTIFF's complaint
arose out of employer-employee relationship, and he subsequently moved for dismissal. It was then when respondent Judge
dismissed the case finding that the sum of money and damages sued upon arose from employer-employee relationship and that
jurisdiction belonged to the Labor Arbiter and the NLRC.

MELENCIO-HERRERA, J.:
Respondent Judge, presiding Branch XLIV of the Regional Trial Court in Dagupan City, had dismissed the case below for lack of
jurisdiction and had denied reconsideration for lack of merit.
Petitioner, PLAINTIFF in the case below, is a corporation engaged in the sale and repair of motor vehicles in Dagupan City.
Private respondent, the DEFENDANT in the case below, was, or is, the sales manager of PLAINTIFF. Whether or not there was
still a relationship of employer and employee between the parties when the complaint was filed is an unsettled question which need
not be resolved in this instance.
Before the enactment of BP Blg. 227 on June 1, 1982, Labor Arbiters, under paragraph 5 of Article 217 of the Labor Code had
jurisdiction over "all other cases arising from employer-employee relation, unless expressly excluded by this Code." Even then, the
principle followed by this Court was that, although a controversy is between an employer and an employee, the Labor Arbiters
have no jurisdiction if the Labor Code is not involved. In Medina vs. Castro-Bartolome, 116 SCRA 597, 604, in negating
jurisdiction of the Labor Arbiter, although the parties were an employer and two employees, Mr. Justice Abad Santos stated:
The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by
the plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and
whether or not they have retroactive effect is unnecessary.

Alleging that DEFENDANT was a former employee, PLAINTIFF had sued him, on March 22, 1983, for payment of accounts It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a
pleaded as follows: simple action for damages for tortious acts allegedly committed by the defendants. Such being the case, the
governing statute is the Civil Code and not the Labor Code. It results that the orders under review are based
on a wrong premise.
That during his incumbency as such the defendant caused and without authority from the plaintiff incurred
accounts with the remaining balances in the total sum of P33,890.38 excluding interests, arising from
And in Singapore Airlines Limited vs. Paño, 122 SCRA 671, 677, the following was said:
the purchases of vehicles and parts,
Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor
Code. The primary relief sought is for liquidated damages for breach of a contractual obligation. The other
repair jobs of his personal cars and items demanded are not labor benefits demanded by workers generally taken cognizance of in labor disputes,
such as payment of wages, overtime compensation or separation pay. The items claimed are the natural
cash advances, consequences flowing from breach of an obligation, intrinsically a civil dispute.

faithful reproductions of the Vehicle Invoice, Debit Memos, Deed of Absolute Sale, Repair Orders, Charge
Invoices, Vouchers, Promissory Notes, Acknowledgement Letter and Statement of Account, hereto attached
and marked as Annexes "A", "B", "C", "D", "E", "F", "G", "H", "I", "J", "K", "L", "M", and "N" respectively
and the contents of which being herein additionally pleaded and made integral parts hereof; (Emphasis
supplied)
In his Answer, DEFENDANT denied
... that he incurred any unpaid unauthorized accounts with the plaintiff in the total sum of P33,890.38
excluding interests therefor, and,
In the case below, PLAINTIFF had sued for monies loaned to DEFENDANT, the cost of repair jobs made on his personal cars, and
for the purchase price of vehicles and parts sold to him. Those accounts have no relevance to the Labor Code. The cause of action
was one under the civil laws, and it does not breach any provision of the Labor Code or the contract of employment of
DEFENDANT. Hence, the civil courts, not the Labor Arbiters and the NLRC, should have jurisdiction.
BP Blg. 227 has amended Article 217 of the Labor Code to read as follows:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) The Labor Arbiters shall have the
original and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the
case by the parties for decision, the following cases involving all workers, whether agricultural or non-
agricultural:

1. Unfair labor practice cases;

 Page 4

2. Those that ( involve) WORKERS MAY FILE INVOLVING wages, hours of work and other terms and
conditions of employment;

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

4. Cases involving household services; and

5. CASES ARISING FROM ANY VIOLATION OF ARTICLE 265 OF THIS CODE, INCLUDING
QUESTIONS INVOLVING THE LEGALITY OF STRIKES AND LOCKOUTS.

6. All other claims arising from employer-employee relations, unless expressly excluded by this Code].
(Italics and bracketed portions indicate the deletions, while the amendments introduced are capitalized).

The dismissal of the case below on the ground that the sum of money and damages sued upon arose from employer-employee
relationship was erroneous. Claims arising from employer-employee relations are now limited to those mentioned in paragraphs 2
and 3 of Article 217. There is no difficulty on our part in stating that those in the case below should not be faulted for not being
aware of the last amendment to the frequently changing Labor Code.

The claim of DEFENDANT that he should still be considered an employee of PLAINTIFF, because the latter has not sought
clearance for his separation from the service, will not affect the jurisdiction of respondent Judge to resolve the complaint of
PLAINTIFF. DEFENDANT could still be liable to PLAINTIFF for payment of the accounts sued for even if he remains an
employee of PLAINTIFF.

WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to take cognizance of the case below and to render
judgment therein accordingly.

No costs.

SO ORDERED.
 Page 5

JAGUAR SECURITY and   G.R. No. 162420 MILLING INDUSTRIES, INC., to jointly and severally pay all the six complainants, namely:
INVESTIGATION AGENCY,     RODOLFO A. SALES, MELVIN R. TAMAYO, JAIME MORON and DANETH
Petitioner,     FETALVERO the following money claims for their services rendered from April 24, 1995 to April
    Present: 24, 1998:
- versus -      
    YNARES-SANTIAGO, J., a) wage differentials
RODOLFO A. SALES,   Chairperson, b) overtime pay differentials (4 hours a day)
JAIME L. MORON,   AUSTRIA-MARTINEZ, c) rest day pay
MELVIN R. TAMAYO,   CHICO-NAZARIO, d) holiday pay
JESUS B. SILVA, JR.,   NACHURA, and e) holiday premium pay
DIONISIO C. CARANYAGAN,   REYES, JJ. f) 13th month pay differentials
DANETH FETALVERO and     g) five days service incentive leave pay per year subject to the exception earlier cited.
DELTA MILLING      
INDUSTRIES, INC.,   Promulgated: The Research and Information Unit of this Commission is hereby directed to compute and quantify
Respondents.   April 22, 2008 the above awards and submit a report thereon within 15 days from receipt of this decision.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x  
  For purposes of any appeal, the appeal bond is tentatively set at P100,000.00.
   
DECISION All other claims are DISMISSED for lack of merit.
  SO ORDERED.
  On July 1, 1999, petitioner Jaguar filed a partial appeal questioning the failure of public respondent NLRC to
AUSTRIA-MARTINEZ, J.: resolve its cross-claim against Delta as the party ultimately liable for payment of the monetary award to the security guards.
   
  In its Resolution dated September 19, 2000, the NLRC dismissed the appeal, holding that it was not the proper forum to raise
the issue. It went on to say that Jaguar, being the direct employer of the security guards, is the one principally liable to the
Assailed in the present Petition for Review on Certiorari is the Court of Appeals (CA) Decision [1] dated October 21, 2002 and employees. Thus, it directed petitioner to file a separate civil action for recovery of the amount before the regular court having
jurisdiction over the subject matter, for the purpose of proving the liability of Delta.
 
Resolution[2] dated February 13, 2004, dismissing the petition filed by Jaguar Security and Investigation Agency (petitioner) and affirming the National Jaguar sought reconsideration of the dismissal, but the Commission denied the same in its Resolution dated November 9, 2001.
[3]

Labor Relations Commission (NLRC) Resolutions dated September 19, 2000 and November 9, 2001.

 
 
Petitioner filed a petition for certiorari with the CA, which, in the herein assailed Decision dated October 21, 2002[4] and Resolution dated February 13,
The facts of the case, as narrated by the CA, are undisputed:
Petitioner Jaguar Security and Investigation Agency (Jaguar) is a private corporation engaged in the business of providing 2004,[5] dismissed the petition for lack of merit.
security services to its clients, one of whom is Delta Milling Industries, Inc. (Delta).
 
Private respondents Rodolfo Sales, Melvin Tamayo, Dionisio Caranyagan, Jesus Silva, Jr., Jaime Moron In the present petition, the following error is set forth as a ground for the modification of the assailed Decision and Resolution:
and Daneth Fetalvero were hired as security guards by Jaguar. They were assigned at the premises of Delta
in Libis, Quezon City. Caranyagan and Tamayo were terminated by Jaguar on May 26, 1998 and August 21, 1998,  
respectively. Allegedly their dismissals were arbitrary and illegal. Sales, Moron, Fetalvero and Silva remained with Jaguar. All WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN NOT RESOLVING PETITIONER'S CROSS-
the guard-employees, claim for monetary benefits such as underpayment, overtime pay, rest day and holiday premium pay, CLAIM AGAINST PRIVATE RESPONDENT DELTA MILLING INDUSTRIES, INC.[6]
underpaid 13th month pay, night shift differential, five days service and incentive leave pay. In addition to these money
claims, Caranyagan and Tamayo argue that they were entitled to separation pay and back wages, for the time they were  
illegally dismissed until finality of the decision. Furthermore, all respondents claim for moral and exemplary damages.
 
Petitioner insists that its cross-claim should have been ruled upon in the labor case as the filing of a cross-claim is allowed under Section 3 of the NLRC
On September 18, 1998, respondent security guards instituted the instant labor case before the labor arbiter.
 
x x x x Rules of Procedure which provides for the suppletory application of the Rules of Court. Petitioner argues that the claim arose out of the transaction or
 
On May 25, 1999, the labor arbiter rendered a decision in favor of private respondents Sales, et al., the dispositive portion of occurrence that is the subject matter of the original action. Petitioner further argues that as principal, Delta Milling Industries, Inc. (Delta Milling) is liable
which provides:
  for the awarded wage increases, pursuant to Wage Order Nos. NCR-04, NCR-05 and NCR-06; and in line with the ruling in Eagle Security Agency, Inc.
WHEREFORE, judgment is hereby rendered dismissing the charges of illegal dismissal on the part
of the complainants MELVIN R. TAMAYO and DIONISIO C. CARANYAGAN for lack of merit
but ordering respondents JAGUAR SECURITY AND INVESTIGATION AGENCY and DELTA v. National Labor Relations Commission,[7] petitioner should be reimbursed of any payments to be made.
 Page 6

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.
There is no question as regards the respective liabilities of petitioner and Delta Milling. Under Articles 106, 107 and 109 of the Labor Code, the joint and  
In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite; and there is none in this case.
several liability of the contractor and the principal is mandated to assure compliance of the provisions therein including the statutory minimum wage. The [10]
 (Emphasis supplied)

contractor, petitioner in this case, is made liable by virtue of his status as direct employer. On the other hand, Delta Milling, as principal, is made the indirect  

employer of the contractor's employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and The jurisdiction of labor courts extends only to cases where an employer-employee relationship exists.

several liability facilitates, if not guarantees, payment of the workers' performance of any work, task, job or project, thus giving the workers ample  

protection as mandated by the 1987 Constitution. [8] In the present case, there exists no employer-employee relationship between petitioner and Delta Milling. In its cross-claim, petitioner is not

  seeking any relief under the Labor Code but merely reimbursement of the monetary benefits claims awarded and to be paid to the guard employees.  There

However, in the event that petitioner pays his obligation to the guard employees pursuant to the Decision of the Labor Arbiter, as affirmed by the NLRC is no labor dispute involved in the cross-claim against Delta Milling. Rather, the cross-claim involves a civil dispute between petitioner and Delta

and CA, petitioner has the right of reimbursement from Delta Milling under Article 1217 of the Civil Code, which provides: Milling. Petitioner's cross-claim is within the realm of civil law, and jurisdiction over it belongs to the regular courts.
 
Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to  
pay, the creditor may choose which offer to accept.
 
He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the Moreover, the liability of Delta Milling to reimburse petitioner will only arise if and when petitioner actually pays its employees the adjudged liabilities.
payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded.
[11]
   Payment, which means not only the delivery of money but also the performance, in any other manner, of the obligation, is the operative fact which will
x x x x
entitle either of the solidary debtors to seek reimbursement for the share which corresponds to each of the debtors. [12] In this case, it appears that petitioner
 
has yet to pay the guard employees. As stated in Lapanday:
The question that now arises is whether petitioner may claim reimbursement from Delta Milling through a cross-claim filed with the labor court. However, it is not disputed that the private respondent has not actually paid the security guards the wage increases granted under
the Wage Orders in question. Neither is it alleged that there is an extant claim for such wage adjustments from the security
This question has already been decisively resolved in Lapanday Agricultural Development Corporation v. Court of Appeals,[9] to wit: guards concerned, whose services have already been terminated by the contractor. Accordingly, private respondent has no cause
  of action against petitioner to recover the wage increases. Needless to stress, the increases in wages are intended for the benefit of
We resolve first the issue of jurisdiction. We agree with the respondent that the RTC has jurisdiction over the subject matter of the laborers and the contractor may not assert a claim against the principal for salary wage adjustments that it has not actually
the present case. It is well-settled in law and jurisprudence that where no employer-employee relationship exists between the paid. Otherwise, as correctly put by the respondent, the contractor would be unduly enriching itself by recovering wage
parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective increases, for its own benefit.[13]
bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not seeking any
relief under the Labor Code but seeks payment of a sum of money and damages on account of petitioners alleged breach of its Consequently, the CA did not commit any error in dismissing the petition and in affirming the NLRC Resolutions dated September 19,
obligation under their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over the case
belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference to 2000 and November 9, 2001.
the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no
employer-employee relation exists. Article 217 of the Labor Code as amended vests upon the labor arbiters exclusive
 
original jurisdiction only over the following:
 
1. Unfair labor practices; WHEREFORE, the petition is DENIED.
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,  
rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral exemplary and other forms of damages arising from employer-employee Double costs against petitioner.
relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving legality
of strikes and lockouts; and  
 Page 7

On the basis of the findings submitted by the presidential investigating panels, the Board issued separate resolutions dated January
SO ORDERED. 19, 1991 in the "Goldair," "Robelle," and Kasbah/La Primavera," cases and another dated August 9, 1991 in the "Middle East" case
wherein petitioner was considered resigned from the service effective immediately for loss of confidence and for acts inimical to
the interests of the company.
G.R. Nos. 109642-43 January 5, 1995

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

ROMERO, J.:
The controversy generated in the instant case once again calls for the resolution of the issue of whether or not the National Labor
Relations Commission (NLRC) has jurisdiction over a complaint filed by a corporate Executive Vice President-Chief Operating
Officer for illegal dismissal resulting from the termination of his services as such officer by virtue of four (4) separate resolutions
of the Board of Directors Air Lines (PAL).
The undisputed facts are as follows:
PAL justified the legality of petitioner Espino's dismissal from the service before the Labor Arbiter but questioned the jurisdiction
of the NLRC contending that, because the investigating panels were created by President Corazon C. Aquino, it became, together
with the PAL Board of Directors, a "parallel arbitration unit" which substituted the NLRC. As such, PAL argued that since the
Board resolutions of the aforesaid cases; cannot be reviewed by the NLRC, the recourse of petitioner Espino should have been
addressed, by way of an appeal, to the Office of the President of the Republic of the Philippines.
On February 20, 1992, Labor Arbiter Cresencio J. Ramos rendered a decision 2 finding that petitioner Espino was dismissed just and
valid cause and accordingly ordered his reinstatement to his former position as Executive Vice-President-Chief Operating Officer
without loss of seniority rights plus full backwages and other benefits appurtenant thereto, without qualification or deduction from
the time of his illegal dismissal up to the date of his actual reinstatement. The dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered:

Petitioner Leslie W. Espino was the Executive Vice President-Chief Operating Officer of private respondent Philippine Airlines
(PAL) when his services were terminated sometime in December 1990 by the Board of Directors of PAL as a result of the findings
of the panels created by then President Corazon C. Aquino to investigate the administrative charges filed against him and other 1. Ordering complainant's immediate reinstatement to his former position as Executive Vice President-Chief
senior officers for their purported involvement in four, denominated "Goldair," "Robelle," "Kasbah/La Primavera," and "Middle Operating Officer without loss of seniority rights plus full backwages and other benefits appurtenant thereto,
East" which allegedly prejudiced the interests of both PAL and the Philippine Government. without qualification or deduction, from the time of his illegal dismissal up to the time of his actual
reinstatement. His backwages as of February 29, 1992 as computed are in the total sum of P2,925,000.00
(P195,000.00 x 15 months, including the one month suspension).
Petitioner started his employment with PAL on February 25, 1960 as a Traffic and Sales Trainee and, for 30 years, was
successively promoted1 until he became, by virtue of an election in March 1988 conducted by the Board of Directors, Executive
Vice President and Chief Operating Officer for a term of one (1) year and who holds said office until his successor is elected and 2) Ordering respondent PAL to pay complainant Leslie Espino the following sums:
qualified, pursuant to Section 7, Article III in relation to Section 1, Article IV of the Amended By-Laws of PAL. The last time he a) Backwages as of February 1992 P2,925,000.00
was elected as such was on October 20, 1989.
b) Cash equivalent of Annual trip passes
on first class, (1 for international, 1
Sometime on July 2, 1990, petitioner and several other senior officers of PAL were administratively charged by Romeo S. David,
Senior Vice President for Corporate Services and Logistics Group, for their purported involvement in four cases, labelled as for regional, and 1 for domestic)
"Goldair," "Robelle," "Kasbah/Primavera" and "Middle East." for complainant, his spouse,
qualified dependent and parents
Except for the conflict of interest charges in the "Robelle" case, petitioner and several other senior officers of PAL were uniformly worth approximately US $45,000.00
charged in the three (3) other aforementioned cases of gross incompetence, mismanagement, inefficiency, negligence,
mismanagement, dereliction of duty, failure to observe and/or implement administrative and executive policies, and related acts or at current rate of exchange rate of
omissions resulting in the concealment or coverup and prevention of the seasonable discovery of anomalous transactions which, as exchange P26.50/dollar 1,192,000.00
a consequence, caused prejudice to the best interest of PAL and the Government. c) Midyear and Christmas bonuses
equivalent to two (2) months pay 390,000.00
Pending investigation by the panels created by then President Corazon C. Aquino, petitioner and other senior officers of PAL were 3 Awarding moral damages to complainant in
placed under suspension by the Board of Directors.
the sum of P20 million plus exemplary damages of P2.0 22,000,000.00
TOTAL P26,507,000.00
On October 19, 1990, during the organizational meeting of the PAL Board of Directors, the election or appointment of some senior
officers of the company who, like petitioner, had been charged administratively with various offenses and accordingly suspended, 4 Granting attorney's fees of 10% of the total monetary award 2,650,700
were deferred by the Board of Directors. During the said organizational meeting, Feliciano Belmonte was elected Chairman of the GRAND TOTAL P28,157,700.00
Board while Dante Santos was elected as President and Chief Executive Officer.

From the said decision, PAL filed on March 5, 1992 an appeal with the NLRC and submitted on March 13, 1992 a supplemental
memorandum on appeal. PAL argued that the Labor Arbiter's decision is null and void for lack of jurisdiction over the subject
matter as it is the Securities and Exchange Commission, and not the NLRC, which has original and exclusive jurisdiction over
cases involving dismissal or removal of corporate officers.
Earlier, or more specifically, on February 25, 1992, petitioner Espino filed a motion for issuance of writ of execution on the ground
that the decision of the Labor Arbiter ordering reinstatement is immediately executory even pending appeal pursuant to Article 223
of the Labor Code, as amended.
On February 28, 1992, the Labor Arbiter issued a writ of execution.
PAL, for its part, filed a motion to quash the writ of execution reiterating its argument that the Securities and Exchange
Commission (SEC) and not the NLRC has original and exclusive jurisdiction over the subject matter involving the dismissal or
removal of corporate officers.
On March 31, 1992, after an exchange of pleadings, Labor Arbiter Ramos denied PAL's motion to quash the writ of execution.
Thereafter, or on April 2, 1992, an alias writ of execution was issued.
PAL then filed on April 23, 1992 with the NLRC a petition for injunction, later amended to implead the Labor Arbiter, praying for
the issuance of a temporary restraining order to enjoin the enforcement of said alias writ of execution.
On April 27, 1992, the NLRC issued a temporary restraining order enjoining Espino, Sheriff Anam Timbayan, their agents and all
persons acting under them, from implementing the alias writ of execution issued on April 2, 1992 upon PAL's posting of
P400,000.00 cash or surety bond. On May 5, 1992, PAL posted the P400,000.00 surety bond.
On July 31, 1992, the NLRC promulgated a resolution3 dismissing the complaint for illegal dismissal for lack of jurisdiction and
declaring the nullity of the alias writ of execution. Petitioner Espino, Labor Arbiter Cresencio Ramos and Sheriff Anam Timbayan
were permanently enjoined from enforcing the said alias writ of execution.
Petitioner Espino filed a motion for reconsideration but the same was denied on January 8, 1993.4
Dissatisfied, petitioner filed the instant petition for certiorari contending mainly that it is the NLRC which has jurisdiction under
Article 217, par. (2) of the Labor Code, as amended, to hear the illegal dismissal case he filed against PAL as it involves the
termination of a regular and permanent employee and the issues in the dispute involved, not only his removal from office, but also
his claim for backwages and other benefits and damages; that PAL is estopped from questioning the jurisdiction of the NLRC.
We rule that the petition lacks merit.
The Court, citing Presidential Decree No. 902-A, laid down the rule in the case of Philippine School of Business Administration
v. Leano,5 and consequently reiterated in three (3) other cases 6 that it is the Securities and Exchange Commission (SEC) and not
the NLRC which has original and exclusive jurisdiction over cases involving the removal from employment of corporate officers.
Sec. 5. of Presidential Decree No. 902-A regarding the jurisdiction of the Securities and Exchange Commission provides, as
follows:
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:
Page 8
(a) Devices or schemes employed by or any acts of the board of directors, business
associates, its officers or partners, amounting to fraud and misrepresentation which
may be detrimental to the interest of the public and/or of the stockholders, partners,
members of associations or organizations registered with the Commission.
(b) Controversies arising out of intracorporate or partnership relations, between and
among stockholders, members, or associates; between any or all of them and the
corporation, partnership or association of which they are stockholders, members, or
associates, respectively; and between such corporation, partnership or association and
the state insofar as it concerns their individual franchise or right to exist as such entity.
(c) Controversies in the election or appointments of directors, trustees, officers or
managers of such corporations, partnerships or associations.
(d) Petitions of corporations, partnerships or associations to be declared in the state of
suspension of payments in cases where the corporation, partnership or association
possesses sufficient property to cover all its debts but foresees the impossibility of
meeting them when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its liabilities, but is under
the management of a Rehabilitation Receiver or Management Committee created
pursuant to this Decree.
In intra-corporate concerning the election or appointment of officers of a corporation, Section 5, PD 902-A specifically provides:
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of associations registered with it as expressly granted under
existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:
xxx xxx xxx
(c) Controversies in the election or appointments of directors, trustees, officers or managers of such
corporations, partnerships or associations.
Indisputably, the position of Executive Vice President-Chief Operating Officer from which petitioner Espino claims to have been
illegally dismissed, is an elective office under Section 7, Article III is an elective corporate office under Section 1, Article IV of the
Amended by-Laws of PAL. The said corporate office has a fixed term of one (1) year and the one elected shall hold office until a
successor shall have been elected and qualified. He lost that position when his appointment or election as Executive Vice
President-Chief Operating Officer, together with other senior officers who were similarly charged administratively, were deferred
by the Board of Directors in its organizational meeting on October 19, 1990. He was later considered by the Board as resigned
from the service, for reasons earlier stated, and the said position was later abolished.
The matter of petitioner's not being elected to the office of Executive 
Vice-President-Chief Operating Officer thus falls squarely within the purview of Section 5 par. (c) of P.D. 902-A. In the case
of PSBA v.  Leano, supra, which involved an Executive Vice President who was not re-elected to the said position during the
election of officers on September 5, 1981 by the PSBA's newly elected Board of Directors, the Court emphatically stated:
This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and
that of TAN's not having been elected thereafter. The matter of whom to elect is a prerogative that belongs to
the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection.
Generally speaking, the relationship of a person to a corporation, whether as officer or as agent or employee,
is not determined by the nature of the services performed, but by the incidents of the relationship as they
actually exists.
 Page 9

A corporate officer's dismissal is always a corporate act and/or an intra-corporate controversy and that nature is not altered by the An error of this nature, under the circumstances, could not justify petitioner's insistence that PAL did not raise the issue of
reason or wisdom which the Board of Directors may have in taking such action.7 jurisdiction at the outset, but only before the NLRC.

Furthermore, it must be noted that the reason behind the non-election of petitioner to the position of Executive Vice President-
Chief Operating Officer arose from, or is closely connected with, his involvement in the alleged irregularities in the
aforementioned cases which, upon investigation and recommendation, were resolved by the PAL Board of Directors against him
and other senior officers. Evidently, this intra-corporate ruling places the instant case under the specialized competence and
expertise of the SEC.
The jurisdiction of the SEC has likewise been clarified by this Court in the case of Union Glass and Container Corporation, et
al. v. SEC, et al.,8 thus:
It is well-settled that jurisdiction over the subject matter is conferred by law and the question of lack of jurisdiction may be raised
at anytime even on appeal. 11 The principle of estoppel cannot be invoked to prevent this Court from taking up the question, which
has been apparent on the face of the pleadings since the start of the litigation before the Labor Arbiter. In the case of  Dy v. NLRC,
supra, the Court, citing the case of Calimlim v. Ramirez 12 reiterated that the decision of a tribunal not vested with appropriate
jurisdiction is null and void. Again, the Court in Southeast Asian Fisheries Development Center-Aquaculture Department
v. NLRC 13 restated the rule that the invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel
does not apply to confer jurisdiction upon a tribunal that has none over the cause of action. The instant case does not provide an
exception to the said rule.

This grant of jurisdiction must be viewed in the light of the nature and function of the SEC under the law.
Section 3 of PD No. 902-A confers upon the latter "absolute jurisdiction, supervision, and control over all
corporations, partnerships or associations, who are grantees of primary franchise and/or license or permit
issued by the government to operate in the Philippines . . . ." The principal function of the SEC is the
supervision and control over corporations, partnerships and associations with the end in view that investment
in these entities may be encouraged and protected, and their activities pursued for the promotion of economic
development.
In fine, the issue of the SEC's jurisdiction is settled and the Court finds it unnecessary to dwell further on other questions raised by
petitioner. Thus, finding no grave abuse of discretion on the part of NLRC in dismissing the complaint for illegal dismissal, the
instant petition must be dismissed.
WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit. The resolution of the National Labor Relations
Commission dated July 31, 1992 dismissing the complaint for illegal dismissal for lack of jurisdiction is AFFIRMED, without
prejudice to petitioner's seeking relief, if so minded, in the proper forum.

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

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

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

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

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

Petitioner's reliance on the principle of estoppel to justify the exercise or jurisdiction by the NLRC over the instant complaint is
misplaced. it is not accurate for petitioner to conclude that PAL did not raise the issue of jurisdiction at the initial stages of the case,
for, while it may be predicated on a different ground, i.e., that appeal from the resolution of the Board of Directors of PAL as
regards termination of his services, is to the Office of the President, PAL did in fact question the jurisdiction of the Labor Arbiter.
 Page 10

G.R. No. 124013 June 5, 1998 On October 2, 1990, petitioner filed a complaint for illegal dismissal against private respondent before the Labor Arbiter. The
complaint was later amended to include a claim for unpaid wages, unpaid vacation leave conversion and moral damages.
ROSARIO MANEJA, petitioner, 
vs. Position papers were filed by the parties. Thereafter, the motion to set the case for hearing filed by private respondent was granted
NATIONAL LABOR RELATIONS COMMISSION and MANILA MIDTOWN HOTEL, respondents. by the Labor Arbiter and trial on the merits ensued.

In his decision 8 dated May 29, 1992, Labor Arbiter Oswald Lorenzo found that the petitioner was illegally dismiised. However, in
the decision, the Labor Arbiter stated that:
MARTINEZ, J.:
Preliminary, we hereby state that on the face of the instant complaint, it is one that revolves on the matter of
the implementation and interpretation of existing company policies, which per the last par. of Art. 217 of the
Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court are the Resolution 1 dated June 3, 1994 of the
Labor Code, as amended, is one within the jurisdictional ambit of the grievance procedure under the CBA
respondent National Labor Relations Commission in NLRC NCR-00-10-05297-90, entitled "Rosario Maneja, Complainant, vs.
and thereafter, if unresolved, one proper for voluntary arbitration. This observation is re-entrenched by the
Manila Midtown Hotel, Respondent," which dismissed the illegal dismissal case filed by petitioner against private respondent
fact, that complainant claims she is a member of NUWRAIN with an existing CBA with respondent hotel.
company for lack of jurisdiction of the Labor Arbiter over the case; and its Resolution 2 dated October 20, 1995 denying petitioner's
motion for reconsideration.
On this score alone, this case should have dismissed outright. 9
Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel beginning January, 1985 as a telephone
operator. She was a member of the National Union of Workers in Hotels, Restaurants and Allied Industries (NUWHRAIN) with an Despite the aforequoted preliminary statement, the Labor Arbiter still assumed jurisdiction "since Labor Arbiters under Article 217
existing Collective Bargaining Agreement (CBA) with private respondent. of the same Labor Code, are conferred original and exclusive jurisdiction of all termination case( sic.)." The dispositive portion of
the decision states that:
In the afternoon of February 13, 1990, a fellow telephone operator, Rowena Loleng received a Request for Long Distance Call
(RLDC) form and a deposit of P500.00 from a page boy of the hotel for a call by a Japanese guest named Hirota Ieda. The call was WHEREFORE, premises considered, judgment is hereby renrdered as follows:
unanswered. The P500.00 deposit was forwarded to the cashier. In the evening, Ieda again made an RLDC and the page boy
collected another P500.00 which was also given to the operator Loleng. The second call was also unanswered. Loleng passed on
(1) Declaring complainant's dismissal by respondent hotel as illegally effected;
the RLDC to petitioner for follow-up. Petitioner monitored the call.

(2) Ordering respondent to immediately reinstate complainant to her previous position without loss of
On February 15, 1990, a hotel cashier inquired about the P1,000.00 deposit made by Ieda. After a search, Loleng found the first
seniority rights;
deposit of P500.00 inserted in the guest folio while the second deposit was eventually discovered inside the folder for cancelled
calls with deposit and official receipts.
(3) Ordering further respondent to pay complainant the full backwages due her, which is computed as
follows:
When petitioner saw that the second RLDC form was not time-stamped, she immediately placed it inside the machine which
stamped the date "February 15, 1990." Realizing that the RLDC was filed 2 days earlier, she wrote and changed the date to
February 13, 1990. Loleng then delivered the RLDC and the money to the cashier. The second deposit of P500.00 by Ieda was later  
returned to him.
3/23/90 - 10/31/90 = 7.26/mos.
On March 7, 1990, the chief telephone operator issued a memorandum 3 to petitioner and Loleng directing the two to explain the
February 15 incident. Petitioner and Loleng thereafter submitted their written explanation. 4
P2.540 x 7.26/mos. P18,440.40

On March 20, 1990, a written report 5 was submitted by the chief telephone operator, with the recommendation that the offenses
11/1/90 - 1/7/91 = 2.23/mos.
committed by the operators concerned covered violations of the Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA 2.01:
forging, falsifying official document(s), and (2) OSDA 1.11: culpable carelessness — negligence or failure to follow specific
instruction(s) or established procedure(s). P3,224.16 x 2.23/mos. 7,189.87

On March 23, 1990, petitioner was served a notice of dismissal 6 effective April 1, 1990. Petitioner refused to sign the notice and 1/8/91 - 4/29/92 = 15.7/mos.
wrote therein "under protest."
P3,589.16 x 15.7/mos. 56,349.89
Meanwhile, a criminal case 7 for Falsification of Private Documents and Qualified Theft was filed before the Office of the City
Prosecutor of Manila by private respondent againts Loleng and petitioner. However, the resolution recommending the filing of a
case for estafa was reversed by 2nd Asst. City Prosecutor Virgilio M. Patag. P81,980.08
 Page 11

(4) Moreover, respondent is ordered to pay the 13th month pay due the complainant in the amount of The procedure introduced in RA 6715 of referring certain grievances originally and exclusively to the
P6,831.67 including moral and exemplary damages of P15,000.00 and P10,000.00 respectively, as well as grievance machinery, and when not settled at this level, to a panel of voluntary arbitrators outlined in CBAs
attorney's fees equivalent to ten (10) percent of the total award herein in the amount of P11,381.17; does not only include grievances arising from the interpretation or implementation of the CBA but applies as
well to those arising from the implementation of company personnel policies. No other body shall take
cognizance of these cases. . . . (Sanyo vs. Cañizares, 211 SCRA 361,
(5) Finally, all other claims are hereby dismissed for lack of merit.
372) 16

SO ORDERED.
We Find that the respondent Commission has erroneously interpreted the aforequoted portion of our ruling in the case of  Sanyo, as
divesting the Labor Arbiter of jurisdiction in a termination dispute.
Private respondent appealed the decision to the respondent commission on the ground inter alia that the Laber Arbiter erred in
"assuming jurisdiction over the illegal dismissal case after finding that the case falls within the jurisdictional ambit of the grievance
Art. 217 of the Labor Code gives us the clue as to the jurisdiction of the Labor Arbiter, to wit:
procedure under the CBA, and if unresolved, proper for voluntary arbitration." 10 An Opposition 11 was filed by petitioner.

In the assailed Resolution 12 dated June 3, 1994, respondent NLRC dismissed the illegal dismissal case for lack of Jurisdiction of
the Labor Arbiter because the same should have instead been subjected to voluntary arbitration.
Petitioner's motion for reconsideration 13 was denied by respondent NLRC for lack of merit.
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise provided under this
Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decided within thirty (30)
calendar days after the submission of the case by the parties for decision without extension even in the
absence of stenographic notes, the following cases involving all workers, whether agricultural or non-
agricultural:

In this petition for certiorari, petitioner ascribes to respondent NLRC grave abuse of discretion in — 1. Unfair labor practice cases;

1. Ruling that the Labor Arbiter was without jurisdiction over the illegal dismissal case; 2. Termination disputes;

2. Not ruling that private respondent is estopped by laches from questioning the ju risdiction of the illegal 3. If accompanied with a claim for reinstatement, those cases
dismissal case; that workers may file involving wages, rates of pay, hours of
work and other terms and conditions of employment;
3. Reversing the decision of the Labor Arbiter based on a technicality notwithstanding the merits of the case.
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
Petitioner contents that Article 217(a)(2) and (c) relied upon by respondent NLRC in divesting the labor arbiter of jurisdiction over
the illegal dismissal case, should be read in conjunction with Article 261 14 of the Labor Code. It is the view of petitioner that
termination cases arising from the interpretation or enforcement policies pertaining to violations of Offenses Subject to 5. Cases arising from any violation of Article 264 of this Code,
Disciplinary Actions (OSDA), are under the jurisdiction of the voluntary arbitrator only if these are unresolved in the plant-level including questions involving the legality of strikes and
grievance machinery. Petitioner insists that her termination is not an unresolved grievance as there has been no grievance meeting lockouts;
between the NUWHRAIN union and the management. The reason for this, petitioner adds, is that it has been a company practice
that termination cases are not anymore referred to the grievance machinery but directly to the labor arbiter.
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
In its comment, private respondent argues that the Labor Arbiter should have dismissed the illegal dismissal case outright after employer-employee relations, including those of persons in
finding that it is within the jurisdictional ambit of the grievance procedure. Moreover, private respondent states that the issue of domestic or household service, involving an amount exceeding
jurisdiction may be raised at any time and at any stage of the proceedings even on appeal, and is not in estoppel by laches as five thousand pesos (P5,000.00) regardless of whether
contended by the petitioner. accompanied with a claim for reinstatement.

For its part, public respondent, through the Office of the Solicitor General, cited the ruling of this Court in Sanyo Philippines
Workers Union- PSSLU vs. Cañizares 15 in dismissing the case for lack of jurisdiction of the Labor Arbiter.
The legal issue in this case is whether or not the Labor Arbiter has jurisdiction over the illegal dismissal case.
The respondent Commission, in holding that the Labor Arbiter lacks jurisdiction to hear the illegal dismissal case, cited as basis
therefor Article 217 of the Labor Code, as amended by Republic Act No. 6715. It said:
White it is conceded that under Article 217(a), Labor Arbiters shall have original and exclusive jurisdiction
over cases involving "termination disputes," the Supreme Court, in a fairy recent case ruled:
b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
c) Cases arising from the interpretation or implementation of collective bargaining agreements and those
arising from the interpretation or enforcement of company personel policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided
in said agreements.
As can be seen from the aforequoted Article, termination cases fall under the original and exclusive jurisdiction of the Labor
Arbiter. It should be noted, however, that in the opening there appears the phrase: "Except as otherwise provided under this Code . .
. ." It is paragraph (c) of the same Article which respondent Commission has erroneously interpreted as giving the voluntary
arbitrator jurisdiction over the illegal dismissal case.

However, Article 217 (c) should be read in conjunction with Article 261 of the Labor Code which grants to voluntary arbitrators
original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of
the collective bargaining agreement and those arising from the interpretation or enforcement of company personel policies. Note
the phrase "unresolved grievances." In the case at bar, the termination of petitioner is not an unresolved grievance.
The stance of the Solicitor General in the Sanyo case is totally the reverse of its posture in the case at bar. In Sanyo, the Solicitor
General was of the view that a distinction should be made between a case involving "interpretation or implementation of Collective
Bargaining Agreement" or interpretation or "enforcement" of company personel policies, on the one hand and a case involving
termination, on the other hand. It argued that the dismissal of the private respondents does not involve an "interpretation or
implementation" of a Collective Bargaining Agreement or "interpretation or enforcement" of company personel policies but
involves "termination." The Solicitor General further said that where the dispute is just in the interpretation, implementation or
enforcement stage, it may be referred to the grievance machinery set up the Collective Bargaining Agreement or by voluntary
arbitration. Where there was already actual termination, i.e., violation of rights, it is already cognizable by the Labor Arbiter. 17 We
fully agree with the theory of the Solicitor General in the Sanyo case, which is radically apposite to its position in this case.
Moreover, the dismissal of petitioner does not fall within the phrase "grievance arising from the interpretation or implementation of
collective bargaining agreement and those arising from the interpretation or enforcement of company personel policies," the
jurisdiction of which pertains to the grievance machinery or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators. It
is to be stressed that under Article 260 of the Labor Code, which explains the function of the grievance machinery and voluntary
arbitrator. "(T)he parties to a Collective Bargaining Agreement shall include therein provisions that will ensure the mutual
observance of its terms and conditions. They shall establish a machinery for the adjustment and resolution of grievances arising
from the interpretation or implementation of their Collective Bargaining Agreement and those arising from the interpretation or
enforcement of company personel policies." Article 260 further provides that the parties to a CBA shall name or designate their
respective representative to the grievance machinery and if the grievance is unsettled in that level, it shall automatically be refered
to the voluntary arbitrators designated in advance by the parties to a CBA of the union and the company. It can thus be deduced
that only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. 18
In the case at bar, the union does not come into the picture, not having objected or voiced any dissent to the dismissal of the herein
petitioner. The reason for this, according to petitioner is that "the practice in said Hotel in cases of termination is that the latter
cases are not referred anymore to the grievance committee;" and that "the terminated employee who wishes to question the legality
of his termination usually goes to the Labor Arbiter for arbitration, whether the termination arose from the interpretation or
enforcement of the company personnel policies or otherwise." 19
As we ruled in Sanyo, "Since there has been an actual termination, the matter falls within the jurisdiction of the labor Arbiter." The
aforequoted doctrine is applicable foursquare in petitioner's case. The dismissal of the petitioner does not call for the interpretation
or enforcement of company personnel policies but is a termination dispute which comes under the jurisdiction of the Labor Arbiter.
It should be explained that "company personel policies" are guiding priciples stated in broad, long-range terms that express the
philosophy or beliefs of an organization's top authority regarding personnel matters. They deal with matters affecting efficiency
and well-being of employees and include, among others, the procedure in the administration of wages, benefits, promotions,
transfer and other personnel movements which are usually not spelled out in the collective agreement. The usual source of
grievances, however, are the rules and regulations governing disciplinary actions. 20
The case of Pantranco North Express, Inc. vs. NLRC 21 sheds further light on the issue of jurisdiction where the Court cited
the Sanyo case and quoted the decision of therein Labor Arbiter Olairez in this manner:
In our honest opinion we have jurisdiction over the complaint on the following grounds:
First, this is a complaint of illegal dismissal of which original and exclusive jurisdiction under Article 217
has been conferred to the labor Arbiters. The interpretation of the CBA or enforcement of the company
policy is only corollary to the complaint of illegal dismissal. Otherwise, an employee who was on AWOL, or
who committed offenses contrary to the personnel policies(sic) can no longer file a case of illegal discharge
is premised on the interpretation or enforcement of the company policies(sic).
Page 12
Second. Respondent voluntarily submitted tha case to the jurisdiction of this labor tribunal. It adduced
arguments to the legality of its act, whether such act may be retirement and/or dismissal, and prayed for
reliefs on the merits of the case. A litigant cannot pray for reliefs on the merits and at the same time
attacks(sic) the jurisdiction of the tribunal. A person cannot have one's cake and eat it too. . . . .
As to the second ground, petitioner correctly points out that respondent NLRC should have ruled that private respondent is
estopped by laches in questioning the jurisdiction of the Labor Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was mooted by herein private respondent's active participation in the proceedings
below. In Marquez vs. Secretary of Labor, 22 the Court said:
. . . . The active participation of the against whom the action was brought, coupled with his failure to object
to the jurisdiction of the court or quasi-judicial body where the action is pending, is tantamount to an
invocation of that jurisdiction and a willingness to abide the resolution of the case and will bar said party
from later on impugning the court or body's jurisdiction.
In the assailed Resolution, 23 respondent NLRC cited La Naval Drug Corporation vs. Court of Appeals  24 in holding that private
respondent is not in estopel. Thus,
The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether
the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided
upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction,
for the same "must exist as a matter of law, and may not be conferred by consent of the parties or by
estoppel" (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case was heard and
decided upon a given theory,such, for instance, as that the court had no jurisdiction, the party who induced
it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position — that the lower
court had jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction is conferred by law,
and does not depend upon the will of the parties, has no bearing thereon. (Emphasis ours)
Again, the respondent NLRC has erroneously interpreted our ruling in the La Naval case. Under the said ruling, estoppel lies in
this case. Private respondent is stopped from questioning the jurisdiction of the Labor Arbiter before the respondent NLRC having
actively participated in the proceedings before the former. At no time before or during the trial on the merits did private respondent
assail the jurisdiction of the Labor Arbiter. Private respondent took the cue only from the preliminary statement in the decision of
the Labor Arbiter, which was a mere obiter, and raised the issue of jurisdiction before the Commission. It was then too late.
Estoppel had set in.
Turning now to the merits of the case, We uphold the ruling of the Labor Arbiter that petitioner was illegally dismissed.
The requisites of a valid dismissal are (1) the dismissal must be for any of the causes expressed in the Article 282 of the Labor
Code, 25 and (2) the employee must be given an opportunity to be heard and to defend himself. 26 The substantive and procedural
laws must be strictly complied with before a worker can be dismissed from his employment because what is at stake is not only the
employee's position but his livelihood. 27
Petitioner's dismissal was grounded on culpade carelessness, negligence and failure to follow specific instruction(s) or established
procedure(s) under OSDA 1.11; and, having forged or falsified official document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to follow established procedure in the hotel on a guest's request for long distance
calls. Petitioner, however, explained that the usual or established procedures are not followed by the operators and hotel employees
when circumstances warrant. For instance, the RLDC forms and the deposits are brought by the page boy directly to the operators
instead of the cashiers if the latter are busy and cannot attend to the same. Furthermore, she avers that the telephone operators are
not concious of the serial numbers in the RLDCs and at times, the used RLDCs are recycled. Even the page boys do not actually
check the serial numbers of all RLDCs in one batch, except for the first and the last.

On the charge of taking of the money by petitioner, it is to be noted that the second P500.00 deposit made by the Japanese guest
Ieda was later discovered to be inserted in the folder for cancelled calls with deposit and official receipts. Thus, there exists no
basis for personal appropriation by the petitioner of the money involved. Another reason is the alleged tampering of RLDC No.
862406. 28 While petitioner and her co-operator Loleng admitted that they indeed altered the date appearing therein from February
15, 1990 to February 13, the same was purposely made to reflect the true date of the transaction without any malice whatsoever on
their part.
As pointed out by Labor Arbiter Oswald b. Lorenzo, thus:
The specifics of the grounds relied by respondent hotel's dismissal of complainant are those stated in Annex
"F" of the latter's POSITION PAPER, which is the Notice of Dismissal, notably:
1. OSDA 2.01 — Forging, falsifying official documents(s)
2. OSDA 1.11 — Culpable negligence or failure to follow specific instruction(s) or established procedure(s)
On this score, we are persuated by the complainant's arguments that under OSDA 1.11, infractions of this
sort is not without qualifications, which is, that the alleged culpable carelessness, negligence or failure to
follow instruction(s) or established procedure(s), RESULTING IN LOSS OR DAMAGE TO COMPANY
PROPERTY. From the facts obtaining in this case, there is no quantum of proof whatsoever, except the
general allegations in respondent's POSITION PAPER and other pleadings that loss or damage to company
property resulted from the charged infraction. To our mind, this is where labor tribunals should come in and
help correct interpretation of company policies which in the enforcement thereof wreaks havoc to the
constitutional guarantee of security of tenure. Apparently, the exercise of little flexibility by complainant and
co-employees which is predicated on good faith should not be taken against them and more particularly
against the complainant herein. In this case, to sustain the generalized charge of respondent hotel under
OSDA 1.11 would unduly be sanctioning the imposition of too harsh a penalty — which is dismissal.
In the same tenor, the respondent's charge under OSDA 1.11 on the alleged falsification of private document
is also with a qualification, in that the alleged act of falsification must have been done "IN SUCH A WAY
AS TO MISLEAD THE USER(S) THEREOF." Again, based on the facts of the complained act, there
appeared no one to have been misled on the change of date from RLDC #862406 FROM 15 TO 13 February
1990.
As a matter of fact, we are in agreement with the jurisprudence cited by VIRGILIO M. PATAG, the 2nd
Asst. City Prosecutor of the City of Manila, who exculpated complainant MANEJA from the charges of
falsification of private documents and qualified theft under IS No. 90-11083 and marked Annex. "H" of
complainant's POSITION PAPER, when he ruled that an altercation which makes the document speak the
truth cannot be the foundation of a criminal action. As to the charge of qualified theft, we too are of the
finding, like the city prosecutor above-mentioned that there was no evidence on the part of MANEJA to have
unlawfully taken the P500.00 either from the hotel or from guest IEDA on 13 February 1990 and moreover,
we too, find no evidence that complainant MANEJA had intention to profit thereby nor had misappropriated
the P500.00 in question. 29
Given the factual circumstances of the case, we cannot deduce dishonesty from the act and omission of petitioner. Our norms of
social justice demand that we credit employees with the presumption of good faith in the performance of their duties, 30 especially
petitioner who has served private respondent since 1985 up to 1990 without any tinge of dishonesty and was even named "Model
Employee" for the month of April, 1989. 31
Petitioner has been charged with a very serious offense — dishonesty. This can irreparably wreck her life as an employee for no
employer will take to its bosom a dishonest employee. Dismissal is the supreme penalty that can be meted to an employee and its
imposition cannot be justified where the evidence is ambivalent. 32It must, therefore, be based on a clear and not on an ambiguous
Page 13
or ambivalent ground. Any ambiguity or ambivalence on the ground relied upon by an employer in terminating the services of an
employee denies the latter his full right to contest its legality. Fairness cannot countenance such ambiguity or ambivalence. 33
An employer can terminate the services of an employee only for valid and just causes which must be supported by clear and
convincing evidence. The employer has the burden of proving that the dismissal was indeed for a valid and just cause.  34 Failure to
do so result in a finding that the dismissal was
unjustified. 35
Finding that there was no just cause for dismissal of petitioner, we now determine if the rudiments of due process have duly
accorded to her.
Well-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the
dismissal of employees. It is a cardinal rule in our jurisdiction that the employer must furnish the employee with two written notice
before the termination of employment can be effected: (a) the first apprises the employee of the particular acts or omissions for
which his dismissal is sought; and, (b) the second informs the employee of the employer's decision to dismiss him. The requirement
of a hearing, on the other hand, is complied with as long as there was an opportunity  to be heard, and not necessarily that an actual
hearing was conducted. 36
In the case at bar, petitioner and her co-operator Loleng were issued a memorandum on March 7, 1990. On March 11, 1990, they
submitted their written explanation thereto. On March 20, 1990, a written report was made with a recommendation that the
offences committed by them were covered by OSDA 1.11 and 2.01. Thereafter, on March 23, 1990, petitioner was served with a
notice of dismissal for said violations effective April 1, 1990.
An examination of the record reveals that no hearing was ever conducted by private respondent before petitioner was dismissed.
While it may be true that petitioner submitted a written explanation, no hearing was actually conducted before her employment was
terminated. She was not accorded the opportunity to fully defend herself.
Consultations or conferences may not be a substitute for the actual holding of a hearing. Every opportunity and assistance must be
accorded to the employee by the management to enable hom to prepare adequately for his defense, including legal
representation. 37 Considering that petitioner denied having allegedly taken the second P500.00 deposit of the Japanese guest which
was eventually found; and, having made the alteration of the date on the second RLDC merely to reflect the true date of the
transaction, these circumstances should have at least warranted a separate hearing to enable petitioner to fully ventilate her side.
Absent such hearing, petitioner's right to due process was clearly violated. 38
It bears stressing that a worker's employment is properly in the constitutional sense. He cannot be deprived of his work without due
process of law. Substantive due process mandates that an employee can only be dismissed based on just or authorized
causes. Procedural due process requires further that he can only be dismissed after he has been given an opportunity to be heard.
The import of due process necessitates the compliance of these two aspects.
Accordingly, we hold that the labor arbiter did not err in awarding full backwages in view of this finding that petitioner was
dismissed without just cause and without due process.
We ruled in the case of Bustamante vs.  NLRC  39 that the amount of backwages to be awarded to an illegally dismissed employee
must be computed from the time he was dismissed to the time he is actually reinstated, without deducting the earnings he derived
elsewhere pending the resolution of the case.
Petitioner is likewise entitled to the thirteenth-month pay. Presidential Decree No.851, as amended by Memorandum Order No. 28,
provides that employees are entitled to the thirteenth-month pay benefit regardless of their designation and irrespective of the
method by which their wages are paid. 40
The award of moral and exemplary damages to petitioner is also warranted where there is lack of due process in effecting the
dismissal.
 Page 14

Where the termination of the services of an employee is attended by fraud or bad faith on the part of the employer, as when the
latter knowingly made false allegations of a supposed valid cause when none existed, moral and exemplary damages may be
awarded in favor of the former. 41

The anti-social and oppressive abuse of its right to investigate and dismiss its employees constitute a violation of Article 1701 of
the New Civil Code which prohibits acts of oppression by either capital or labor against the other, and Article 21 on human
relations. The grant of moral damages to the employees by reason of such conduct on the part of the company is sanctioned by
Article 2219, No. 10 of the Civil Code, which allows recovery of such damages in actions reffered to in Article 21. 42

The award of attorney's fees amounting to ten percent (10%) of the total award by the labor arbiter is justified under Article 111 of
the Labor Code.

WHEREFORE, premises considered, the petition is GRANTED and the assailed resolutions of the respondent National Labor
Relations Commission dated June 3, 1994 and October 20, 1995 are hereby REVERSED AND SET ASIDE. The decision dated
May 29, 1992 of the Labor Arbiter is therefore REINSTATED.

SO ORDERED.
 Page 15

G.R. No. 101619 July 8, 1992 3. That we collectively accept, honor, and respect the Collective Bargaining Agreement entered into between
Sanyo Phil. Inc. and Sanyo Phil. Workers Union-PSSLU dated February 7, 1990;
SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109 AND/OR ANTONIO DIAZ, PSSLU
NATIONAL PRESIDENT, petitioners,  4 That we collectively promise not to engage in any activities inside company premises contrary to law, the
vs. CBA and existing policies;
HON. POTENCIANO S. CANIZARES, in his capacity as Labor Arbiter, BERNARDO YAP, RENATO BAYBON,
SALVADOR SOLIBEL, ALLAN MISTERIO, EDGARDO TANGKAY, LEONARDO DIONISIO, ARNEL SALVO,
5 That we are willing to pay our individual agency fee in accordance with the provision of the Labor Code,
REYNALDO RICOHERMOSO, BENITO VALENCIA, GERARDO LASALA AND ALEXANDER
as amended;
ATANASIO, respondents.

6 That we collectively promise not to violate this pledge of cooperation. (p. 55, Rollo)
 

On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to Sanyo recommending the dismissal of
MEDIALDEA, J.:
the following non-union workers: Bernardo Yap, Arnel Salvo, Renato Baybon, Reynaldo Ricohermoso, Salvador Solibel, Benito
Valencia, and Allan Misterio, allegedly because: 1) they were engaged and were still engaging in anti-union activities; 2) they
This petition seeks to nullify: 1) the order of respondent Labor Arbiter Potenciano Cañizares dated August 6, 1991 deferring the willfully violated the pledge of cooperation with PSSLU which they signed and executed on February 14, 1990; and 3) they
resolution of the motion to dismiss the complaint of private respondents filed by petitioner Sanyo Philippines Workers Union- threatened and were still threatening with bodily harm and even death the officers of the union (pp. 37-38, Rollo).
PSSLU Local Chapter No. 109 (PSSLU, for brevity) on the ground that the labor arbiter had no jurisdiction over said complaint
and 2) the order of the same respondent clarifying its previous order and ruling that it had jurisdiction over the case.
Also recommended for dismissal were the following union members who allegedly joined, supported and sympathized with a
minority union, KAMAO: Gerardo Lasala, Legardo Tangkay, Alexander Atanacio, and Leonardo Dionisio.
The facts of the case are as follows:
The last part of the said letter provided:
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective July 1, 1989 to June 30, 1994. The same CBA
contained a union security clause which provided:
The dismissal of the above-named union members is without prejudice to receive (sic) their termination pay
if management decide (sic) to grant them benefits in accordance with law. The union hereby holds the
Sec. 2. All members of the union covered by this agreement must retain their membership in good standing company free and harmless from any liability that may arise consequent to the implementation by the
in the union as condition of his/her continued employment with the company. The union shall have the right company of our recommendations for the dismissal of the above-mentioned workers.
to demand from the company the dismissal of the members of the union by reason of their voluntary
resignation from membership or willful refusal to pay the Union Dues or by reasons of their having formed,
It is however suggested that the Grievance Machinery be convened pursuant to Section 3, Article XV of the
organized, joined, affiliated, supported and/or aided directly or indirectly another labor organization, and the
Collective Bargaining Agreement (CBA) before their actual dismissal from the company. (p. 38, Rollo)
union thus hereby guarantees and holds the company free and harmless from any liability whatsoever that
may arise consequent to the implementation of the provision of this article. (pp. 5-6, Rollo)
Pursuant to the above letter of the union, the company sent a memorandum to the same workers advising them that:
In a letter dated February 7, 1990, PSSLU, through its national president, informed the management of Sanyo that the following
employees were notified that their membership with PSSLU were cancelled for anti-union, activities, economic sabotage, threats, As per the attached letter from the local union President SPWU and the federation President, PSSLU,
coercion and intimidation, disloyalty and for joining another union: Benito Valencia, Bernardo Yap, Arnel Salvo, Renato Baybon, requesting management to put the herein mentioned employees on preventive suspension, effective
Eduardo Porlaje, Salvador Solibel, Conrado Sarol, Angelito Manzano, Allan Misterio, Reynaldo Ricohermoso, Mario Ensay and immediately, preliminary to their subsequent dismissal, please be informed that the following employees are
Froilan Plamenco. The same letter informed Sanyo that the same employees refused to submit themselves to the union's grievance under preventive suspension effective March 13, 1991 to wit:
investigation committee (p. 53, Rollo). It appears that many of these employees were not members of PSSLU but of another union,
KAMAO.
1. Bernardo Yap

On February 14, 1990, some officers of KAMAO, which included Yap, Salvo, Baybon, Solibel, Valencia, Misterio and
2. Renato Baybon
Ricohermoso, executed a pledged of cooperation with PSSLU promising cooperation with the latter union and among others,
respecting, accepting and honoring the CBA between Sanyo and specifically:
3. Salvador Solibel
1. That we shall remain officers and members of KAMAO until we finally decide to rejoin Sanyo Phil.
Workers Union-PSSLU; 4. Allan Misterio

2. That henceforth, we support and cooperate with the duly elected union officers of Sanyo Phil. Workers 5. Edgardo Tangkay
Union-PSSLU in any and all its activities and programs to insure industrial peace and harmony;
6. Leonardo Dionisio

7. Arnel Salvo
8. Reynaldo Ricohermoso
9. Benito Valencia
10. Gerardo Lasala
11. Alexander Atanacio
The above listed employees shall not be allowed within company premises without the permission of
management.
As per request of the union's letter to management, should the listed employees fail to appeal the decision of
the union for dismissal, then effective March 23, 1991, said listed employees shall be considered dismissed
from the company. (p 39, Rollo)
The company received no information on whether or not said employees appealed to PSSLU. Hence, it considered them dismissed
as of March 23, 1991 (p. 40, Rollo).
On May 20, 1991, the dismissed employees filed a complaint (pp. 32-35, Rollo) with the NLRC for illegal dismissal. Named
respondent were PSSLU and Sanyo.
On June 20, 1991, PSSLU filed a motion to dismiss the complaint alleging that the Labor Arbiter was without jurisdiction over the
case, relying on Article 217 (c) of P.D. 442, as amended by Section 9 of Republic Act No. 6715 which provides that cases arising
from the interpretation or implementation of the collective bargaining agreements shall be disposed of by the labor arbiter by
referring the same to the grievance machinery and voluntary arbitration.
The complainants opposed the motion to dismiss complaint on these grounds: 1) the series of conferences before the National
Conciliation and Mediation Board had been terminated; 2) the NLRC Labor Arbiter had jurisdiction over the case which was a
termination dispute pursuant to Article 217 (2) of the Labor Code; and 3) there was nothing in the CBA which needs interpretation
or implementation (pp. 44-46, Rollo).
On August 7, 1991, the respondent Labor Arbiter issued the first questioned order. It held that:
xxx xxx xxx
While there are seemingly contradictory provisions in the aforecited article of the Labor Code, the better
interpretation will be to give effect to both, and termination dispute being clearly spelled as falling under the
jurisdiction of the Labor Arbiter, the same shall be respected. The jurisdiction of the grievance machinery
and voluntary arbitration shall cover other controversies.
However, the resolution of the instant issue shall be suspended until both parties have fully presented their
respective positions and the said issue shall be included in the final determination of the above-captioned
case.
WHEREFORE, the instant Motions to Dismiss are hereby held pending.
Page 16
Consequently, the parties are hereby directed to submit their position papers and supporting documents
pursuant to Section 2, Rule VII of the Rules of the Commission on or before the hearing on the merit of this
case scheduled on August 29, 1991 at 11:00 a.m. (p. 23, Rollo)
On August 27, 1991, PSSLU filed another motion to resolve motion to dismiss complaint with a prayer that the Labor Arbiter
resolve the issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the second questioned order which held that it was assuming
jurisdiction over the complaint of private respondents, in effect, holding that it had jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public respondent Labor Arbiter cannot assume jurisdiction over
the complaint of public respondents because it had no jurisdiction over the dispute subject of said complaint. It is their submission
that under Article 217 (c) of the Labor Code, in relation to Article 261 thereof, as well as Policy Instruction No. 6 of the Secretary
of Labor, respondent Arbiter has no jurisdiction and authority to take cognizance of the complaint brought by private respondents
which involves the implementation of the union security clause of the CBA. The function of the Labor Arbiter under the same law
and rule is to refer this case to the grievance machinery and voluntary arbitration.
In its comment, private respondents argue that Article 217(a) 2 and 4 of the Labor Code is explicit, to wit:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide . . . the following cases involving all workers, . . . :
xxx xxx xxx
2) Termination disputes,
xxx xxx xxx
4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations.
The private respondents also claimed that insofar as Salvo, Baybon, Ricohermoso, Solibel, Valencia, Misterio and Lasala were
concerned, they joined another union, KAMAO during the freedom period which commenced on May 1, 1989 up to June 30, 1989
or before the effectivity of the July 1, 1989 CBA. Hence, they are not covered by the provisions of the CBA between Sanyo and
PSSLU. Private respondents Tangkay, Atanacio and Dionisio admit that in September 1989, they resigned from KAMAO and
rejoined PSSLU (pp.
66(a)-68, Rollo).
For its part, public respondent, through the Office of the Solicitor General, is of the view that a distinction should be made between
a case involving "interpretation or implementation of collective bargaining agreement or "interpretation" or "enforcement" of
company personnel policies, on the one hand and a case involving termination, on the other hand. It argued that the case at bar does
not involve an "interpretation or implementation" of a collective bargaining agreement or "interpretation or enforcement" of
company policies but involves a "termination." 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 by voluntary arbitration. Where there was already actual
termination, i.e., violation of rights, it is already cognizable by the Labor Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor Arbiter.

Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise provided under this
Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide within thirty (30)
calendar days after the submission of the case by the parties for decision without extension even in the
absence of stenographic notes, the following cases involving all workers, whether agricultural or non-
agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of
pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of
strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations, including those of persons in domestic or household
service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining agreements and those
arising from the interpretation or enforcement of company personnel policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided
in said agreements.
It is clear from the above article that termination cases fall under the jurisdiction of the Labor Arbiter. It should be noted however
that said article at the outset excepted from the said provision cases otherwise provided for in other provisions of the same Code,
thus the phrase "Except as otherwise provided under this Code . . . ." Under paragraph (c) of the same article, it is expressly
provided that "cases arising from the interpretation or implementation of collective bargaining agreements and those arising from
the interpretation and enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same
to the grievance machinery and voluntary arbitration as may be provided in said agreements.
It was provided in the CBA executed between PSSLU and Sanyo that a member's voluntary resignation from membership, willful
refusal to pay union dues and his/her forming, organizing, joining, supporting, affiliating or aiding directly or indirectly another
labor union shall be a cause for it to demand his/her dismissal from the company. The demand for the dismissal and the actual
dismissal by the company on any of these grounds is an enforcement of the union security clause in the CBA. This act is authorized
by law provided that enforcement should not be characterized by arbitrariness (Manila Mandarin Employee Union v. NLRC, G.R.
No. 76989, 29 Sept. 1987, 154 SCRA 368) and always with due process (Tropical Hut Employees Union v. Tropical Food Market,
Inc., L-43495-99, Jan. 20, 1990).
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or resolution of grievances arising from the
interpretation or implementation of their CBA and those arising from the interpretation or enforcement of company personnel
policies is mandatory. The law grants to voluntary arbitrators original  and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies (Art. 261, Labor Code).
Page 17
In its order of September 4, 1991, respondent Labor Arbiter explained its decision to assume jurisdiction over the complaint, thus:
The movants failed to show (1) the provisions of the CBA to be implemented, and (2) the grievance
machinery and voluntary arbitrator already formed and properly named. What self-respecting judge would
refer a case from his responsibility to a shadow? To whom really and specifically shall the case be indorsed
or referred? In brief, they could have shown the (1) existence of the grievance machinery and (2) its being
effective.
Furthermore, the aforecited law merely directs the "referral" cases. It does not expressly confer jurisdiction
on the grievance machinery or voluntary arbitration panel, created or to be created. Article 260 of the Labor
Code describes the formation of the grievance and voluntary arbitration. All this of course shall be on
voluntary basis. Is there another meaning of voluntary arbitration? (The herein complainant have strongly
opposed the motion to dismiss. Would they go willingly to the grievance machinery and voluntary
arbitration which are installed by their opponents if directed to do so?) (p. 26, Rollo)
The failure of the parties to the CBA to establish the grievance machinery and its unavailability is not an excuse for the Labor
Arbiter to assume jurisdiction over disputes arising from the implementation and enforcement of a provision in the CBA. In the
existing CBA between PSSLU and Sanyo, the procedure and mechanics of its establishment had been clearly laid out as follows:
ARTICLE XV — GRIEVANCE MACHINERY
Sec. 1. Whenever any controversy should arise between the company and the union as to the interpretation or
application of the provision of this agreement, or whenever any difference shall exist between said parties
relative to the terms and conditions of employment, an earnest effort shall be made to settle such controversy
in substantially the following manner:
First step. (Thru Grievance) The dispute shall initially be resolved by conference between the management
to be represented by the Management's authorized representatives on the one hand, and the Union to be
represented by a committee composed of the local union president and one of the local union officer
appointed by the local union president, on the other hand within three days from date of concurrence of
grievance action. In the absence of the local union president, he (shall) appoint another local union officer to
take over in his behalf. Where a controversy personally affects an employee, he shall not be allowed to be a
member of the committee represented by the union.
Second step. (Thru Arbitrator mutually chosen) Should such dispute remain unsettled after twenty (20) days
from the first conference or after such period as the parties may agree upon in specified cases, it shall be
referred to an arbitrator chosen by the consent of the company and the union. In the event of failure to agree
on the choice of voluntary arbitrator, the National Conciliation and Mediation Board, Department of Labor
and Employment shall be requested to choose an Arbitrator in accordance with voluntary arbitration
procedures.
Sec. 2. The voluntary Arbitrator shall have thirty (30) days to decide the issue presented to him and his
decision shall be final, binding and executory upon the parties. He shall have no authority to add or subtract
from and alter any provision of this agreement. The expenses of voluntary arbitration including the fee of the
arbitrator shall be shared equally by the company and the union. In the event the arbitrator chosen either by
the mutual agreement of the company and the union by (the) way of voluntary arbitration or by the National
Conciliation and Mediation Board (NCMB) failed to assume his position, died, become disabled or any other
manner failed to function and or reach a decision, the company and the union shall by mutual agreement
choose another arbitrator; in the event of failure to agree on the choice of a new voluntary arbitrator, the
matter shall again be referred back to the NCMB who shall be requested again to choose a new arbitrator as
above provided. Any grievance not elevated or processed as above provided within the stipulated period
shall be deemed settled and terminated.
 Page 18

Sec. 3. It is hereby agreed that decisions of the union relative to their members, for implementation by the
COMPANY, should be resolved for review thru the Grievance Machinery; and management be invited to
participate in the Grievance procedure to be undertaken by the union relative to (the) case of the union
against members. (pp. 134-135, Rollo)

All that needs to be done to set the machinery into motion is to call for the convening thereof. If the parties to the CBA had not
designated their representatives yet, they should be ordered to do so.

The procedure introduced in RA 6715 of referring certain grievances originally and exclusively to the grievance machinery and
when not settled at this level, to a panel of voluntary arbitrators outlined in CBA's does not only include grievances arising from
the interpretation or implementation of the CBA but applies as well to those arising from the implementation of company personnel
policies. No other body shall take cognizance of these cases. The last paragraph of Article 261 enjoins other bodies from assuming
jurisdiction thereof:

The commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction
of the Voluntary Arbitrator or panel of voluntary arbitrators and shall immediately dispose and refer the
same to the grievance machinery or voluntary arbitration provided in the Collective Bargaining Agreement.

In the instant case, however, We hold that the Labor Arbiter and not the Grievance Machinery provided for in the CBA has the
jurisdiction to hear and decide the complaints of the private respondents. While it appears that the dismissal of the private
respondents was made upon the recommendation of PSSLU pursuant to the union security clause provided in the CBA, We are of
the opinion that these facts do not come within the phrase "grievances arising from the interpretation or implementation of (their)
Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies," the
jurisdiction of which pertains to the Grievance Machinery or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators.
Article 260 of the Labor Code on grievance machinery and voluntary arbitrator states that "(t)he  partiesto a Collective Bargaining
Agreement shall include therein provisions that will ensure the mutual observance of its terms and conditions. They shall establish
a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their Collective
Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies." It is further
provided in said article that the parties to a CBA shall name or designate their respective representatives to the grievance
machinery and if the grievance is not settled in that level, it shall automatically be referred to voluntary arbitrators (or panel of
voluntary arbitrators) designated in advance by the parties. It need not be mentioned that the parties to a CBA are the union and the
company. Hence, only disputes involving the union and the company shall be referred to the grievance machinery or voluntary
arbitrators.

In the instant case, both the union and the company are united or have come to an agreement regarding the dismissal of private
respondents. No grievance between them exists which could be brought to a grievance machinery. The problem or dispute in the
present case is between the union and the company on the one hand and some union and non-union members who were dismissed,
on the other hand. The dispute has to be settled before an impartial body. The grievance machinery with members designated by
the union and the company cannot be expected to be impartial against the dismissed employees. Due process demands that the
dismissed workers grievances be ventilated before an impartial body. Since there has already been an actual termination, the matter
falls within the jurisdiction of the Labor Arbiter.

ACCORDINGLY, the petition is DISMISSED. Public respondent Labor Arbiter is directed to resolve the complaints of private
respondents immediately.

SO ORDERED.
 Page 19

G.R. No. 95940 July 24, 1996 2,874.37 — 10% attorney's fees
——————
P 31,618.12 — Total as of March 31/90 plus
PANTRANCO NORTH EXPRESS, INC., petitioner, 
additional backwages and
vs.
other benefits but not to
NATIONAL LABOR RELATIONS COMMISSION and URBANO SUÑIGA, respondents.
exceed 3 years and the
corresponding attorney's fees.
 
The amounts already received by complainants shall be considered as advanced payment of their retirement
PANGANIBAN, J.:p pay which shall be deducted when they shall actually retire or (be) separated from the service.

Is a Collective Bargaining Agreement provision allowing compulsory retirement before age 60 but after twenty five years of The order of reinstatement is immediately executory even pending appeal.
service legal and enforceable? Who has jurisdiction over a case involving such a question — the labor arbiter or arbitrators
authorized by such CBA?
Petitioner appealed to public respondent, which issued the questioned Resolution affirming the labor arbiter's decision in toto.
Hence, this petition.
The foregoing questions are presented in the instant petition for Certiorari seeking the nullification of the Resolution 1promulgated
September 28, 1990 by the National Labor Relations Commission 2 in an illegal dismissal case brought by private respondent. In its
The Issues
assailed Resolution, the public respondent affirmed the decision of the Labor Arbiter Ricardo N. Olairez dated March 26,
19903 declaring that the compulsory retirement of private respondent constituted illegal dismissal, ordering his reinstatement and
granting him backwages. Petitioner raises the following issues for decision:

The Antecedent Facts
Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the Pantranco Employees Association-
PTGWO. He continued the petitioner's employ until August 12, 1989, when he was retired at the age of fifty-two (52) after having
rendered twenty five years' service. The basis of his retirement was the compulsory retirement provision of the collective
bargaining agreement between the petitioner and the aforenamed union. Private respondent received P49,300.00 as retirement pay.
I. The National Labor Relations Commission gravely abused its discretion in holding that the Labor Arbiter
has jurisdiction over the case.
II. Assuming that the Labor Arbiter has jurisdiction over the case, the National Labor Relations Commission
gravely abused its discretion in affirming the Labor Arbiter's decision that private respondent Urbano Zuniga
(sic) was illegally dismissed.

On February 15, 1990, private respondent filed a complaint 4 for illegal dismissal against petitioner with the Sub-
Regional Arbitration Branch of the respondent Commission in Dagupan City. The complaint was consolidated with two
other cases of illegal dismissal5 having similar facts and issues, filed by the other employees, non-union members.
After hearings were held and position papers submitted, on March 26, 1990, Labor Arbiter Olairez rendered his
decision, the dispositive portion of which reads:
Of course, it is obvious that the underlying and pivotal issue is whether the CBA stipulation on compulsory retirement after twenty-
five years of service is legal and enforceable. If it is, private respondent has been validly retired. Otherwise, petitioner is guilty of
illegal dismissal. The answer to said question will settle the issue of the validity of the questioned resolution of the public
respondent.
The Court's Ruling

WHEREFORE, with all the foregoing considerations, we find the three complainants illegally and unjustly On the key issue, the Court finds the petition meritorious, thus warranting reversal of the questioned Resolution.
dismissed and we hereby order the respondent to reinstate them to their former or substantially equivalent
positions without loss of seniority rights with full backwages and other benefits, computed as follows:
First Issue: Jurisdiction of Labor Arbiter

x x x           x x x          x x x
Petitioner contends that the labor arbiter had no jurisdiction because the dispute concerns a provision of the CBA and its
interpretation. It claims that the case falls under the jurisdiction of the voluntary arbitrator or panel of arbitrators under Article 261
3. Urbano Suñiga of the Labor Code, which provides:

P 27,375.00 — Backwages, Aug. 16/89 to Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. — The Voluntary
March 31/90 (P3,650.00 x 7.5 mos.) Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide
all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company personnel policies referred
1,368.75 — 13th month pay for 1989
to in the immediately preceding Article. Accordingly, violations of a Collective Bargaining Agreement,
(P16,425.00 over 12)
except those which are gross in character, shall no longer be treated as unfair labor practice and shall be
——————
resolved as grievances under the Collective Bargaining Agreement. For purposes of this Article, gross
P 28,743.75
 Page 20

violations of a Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with Second Issue: Private Respondent's
the economic provisions of such agreement. Compulsory Retirement Is
Not Illegal Dismissal
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction The bone of contention in this case is the provision on compulsory retirement after 25 years of service. Article XI, Section 1(e)(5)
of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the of the May 2, 1989 Collective Bargaining Agreement8 between petitioner company and the union states:
same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining
Agreement.
Sec. 1. The COMPANY shall formulate a retirement plan with the following main features:

The Labor Arbiter believed otherwise. In his decision6 , he stated,:

xxx xxx xxx

In our honest opinion we have jurisdiction over the complaint on the following grounds:
(e) The COMPANY agrees to grant the retirement benefits herein provided to regular employees who may
be separated from the COMPANY for any of the following reasons:
First, this is a complaint of illegal dismissal of which original and exclusive jurisdiction under Article 217
has been conferred to the Labor Arbiters. The interpretation has been conferred to the Labor Arbiters. The
xxx xxx xxx
interpretation of the CBA or enforcement of the company policy is only corollary to the complaint of illegal
dismissal. Otherwise, an employee who was on AWOL, or who committed offenses contrary to the
personnel policies (sic) can no longer file a case of illegal dismissal because the discharge is premised on the (5) Upon reaching the age of sixty (60) years or upon the completing twenty-five (25) years of service to the
interpretation or enforcement of the company policies (sic). COMPANY, whichever comes first, and the employee shall be compulsorily retired and paid the retirement
benefits herein provided.
Second, Respondent voluntarily submitted the case to the jurisdiction of this labor tribunal. It adduced
arguments to the legality of its act, whether such act may be retirement and/or dismissal, and prayed for Petitioner contends that the aforequoted provision is valid an in consonance with Article 287 of the Labor Code. The respondent
reliefs on the merits of the case. A litigant cannot pray for reliefs on the merits and at the same time attacks Commission holds otherwise.
(sic) the jurisdiction of the tribunal. A person cannot have one's cake and eat it too. . . .
The said Code provides:
The Court agrees with the public respondent's affirmance of the arbiter's decision in respect of the question of jurisdiction.
Art. 287. Retirement — Any employee may be retired upon reaching the retirement age established in the
In Sanyo Philippines Workers Union — psslU vs.  Cañizares,7 a case cited by the petitioner, this Court ruled: Collective Bargaining Agreement or other applicable employment contract.

. . . Hence, only disputes involving the union and the company shall be referred to the grievance machinery In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
or voluntary arbitrators. earned under existing laws and any collective bargaining or other agreement.

In the instant case, both the union and the company are united or have come to an agreement regarding the The Solicitor General, in his Manifestation in Lieu of Comment, 9 agrees with petitioner's contention that the law leaves to the
dismissal of private respondents. No grievance between them exists which could be brought to a grievance employer and employees the fixing of the age of retirement. He cites Section 13, Rule I, Book VI of the Omnibus Rules
machinery. The problem or dispute in the present case is between the union and the company on the one Implementing the Labor Code, which reads:
hand and some union and non-union members who were dismissed, on the other hand. The dispute has to be
settled before an impartial body. The grievance machinery with members designated by the union and the
Retirement — In the absence of any collective bargaining agreement or other applicable agreement
company cannot be expected to be impartial against the dismissed employees. Due process demands that the
concerning terms and conditions of employment which provides for retirement at an older age, an employee
dismissed workers grievances be ventilated before an impartial body. Since there has already been an actual
may be retired upon reaching the age of sixty (60) years.
termination, the matter falls within the jurisdiction of the Labor Arbiter.

Arguing that the law on compulsory retirement age is open-ended, as indicated by the use of the word "may", the Solicitor General
Applying the same rationale to the case at the bar, it cannot be said that the "dispute" is between the union and petitioner company
maintains that there is no prohibition against parties fixing a lower age for retirement. 10
because both have previously agreed upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was only
private respondent on his own who questioned the compulsory retirement. Thus, the case is properly denominated as a "termination
dispute" which comes under the jurisdiction of labor arbiters. Additionally, the Solicitor General and the petitioner contend that a CBA provision lowering compulsory retirement age to less
than sixty (60) is not contrary to law because it does not diminish the employee's benefits. Rather, they argue that early retirement
constitutes a reward of employment, and therefore, retirement pursuant to the CBA provision in question cannot be considered a
Therefore, public respondent did not commit a grave abuse of discretion in upholding the jurisdiction of the labor arbiter over this
dismissal following this Court's ruling in Soberano vs. Clave,10a the relevant portions of which read as follows:
case.

Retirement and dismissal are entirely different from each other. Retirement is the result of a bilateral act of
the parties, a voluntary agreement between the employer and the employees whereby the latter after reaching
a certain age agrees and/or consents to severe his employment with the former. On the other hand, dismissal
 Page 21

refers to the unilateral act of the employer in terminating services of an employee with or without cause. In In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
fine, in the case of dismissal, it is only the employer who decides when to terminate the services of an establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
employee. . . . Moreover, concomitant with the provisions on retirement in a Labor Agreement is a years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the
stipulation regarding retirement benefits pertaining to a retired employee. Here again, the retirement benefits said establishment may retire . . . .
are subject to stipulation by the parties unlike in dismissals where separation pay is fixed by law in cases of
dismissals without just cause. Evident, therefore, from the foregoing is that retirements which are agreed
The aforequoted provision makes clear the intention of spirit of the law to give employers and employees a free hand to determine
upon by the employer and the employee in their collective bargaining agreement are not dismissals. . . . To
and agree upon the terms and conditions of retirement. Providing in a CBA for compulsory retirement of employees after twenty-
further fortify the aforesaid conclusion, it is noteworthy that even the New Labor Code recognizes this
five (25) years of service is legal and enforceable so long as the parties agree to be governed by such CBA. The law presumes that
distinction when it treats retirement from service under a separate title from that of a dismissal or termination
employees know what they want and what is good for them absent any showing that fraud or intimidation was employed to secure
of employment, aside from expressly recognizing the right of the employer to retire any employee who has
their consent thereto.
reached the retirement age established in the collective bargaining agreement or other applicable
employment contract and the latter to receive such retirement benefits as he may have earned under existing
laws and any collective bargaining or other agreement (Art. 277, New Labor Code). On this point then, public respondent committed a grave abuse of discretion in affirming the decision of the labor arbiter. The
compulsory retirement of private respondent effected in accordance with the CBA is legal and binding.
We agree with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded permits employers and employees to fix
the applicable retirement age at below 60 years. Moreover, providing for early retirement does not constitute diminution of WHEREFORE, premises considered, the petition is granted and the questioned Resolution is hereby set aside. No costs.
benefits. In almost all countries today, early retirement, i.e., before age 60, is considered a reward for services rendered since it
enables an employee to reap the fruits of his labor — particularly retirement benefits, whether lump-sum or otherwise — at an
SO ORDERED.
earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer. As a matter
of fact, one of the advantages of early retirement is that the corresponding retirement benefits, usually consisting of a substantial
cash windfall, can early on be put to productive and profitable uses by way of income-generating investments, thereby affording a
more significant measure of financial security and independence for the retiree who, up till then, had to contend with life's
vicissitudes within the parameters of his fortnightly or weekly wages. Thus we are now seeing many CBA's with such early
retirement provisions. And the same cannot be considered a diminution of employment benefits.

It is also further argued that, being a union member, private respondent is bound by the CBA because its terms and conditions
constitute the law between the parties. 11 The parties are bound not only to the fulfillment of what has been expressly stipulated but
also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.  12 It binds not only
the union but also its members. 13 Thus, the Solicitor General 14 said:

Private respondent cannot therefore claim illegal dismissal when he was compulsorily retired after rendering
twenty-five (25) years of service since his retirement is in accordance with the CBA.

We again concur with the Solicitor General's position. A CBA incorporates the agreement reached after negotiations between
employer and bargaining agent with respect to terms and conditions of employment. A CBA is not an ordinary contract. "(A)s a
labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between
labor and capital, (it) is not merely contractual in nature but impressed with public interest, thus it must yield to the common good.
As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. 15

Being a product of negotiation, the CBA between the petitioner and the union intended the provision on compulsory retirement to
be beneficial to the employees-union members, including herein private respondent. When private respondent ratified the CBA
with the union, he not only agreed to the CBA but also agreed to conform to and abide by its provisions. Thus, it cannot be said
that he was illegally dismissed when the CBA provision on compulsory retirement was applied to his case.

Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law", which went into effect on January
7, 1993. Although passed many years after the compulsory retirement of herein private respondent, nevertheless, the said statute
sheds light on the present discussion when it amended Art. 287 of the Labor Code, to make it read as follows:

Art. 287. Retirement — Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.

xxx xxx xxx

 Page 22

MA. ISABEL T. SANTOS, represented by ANTONIO P. SANTOS, G.R. No. 166377

Petitioner,   into coma for 21 days; and later stayed at the Intensive Care Unit (ICU) for 52 days. The hospital found that the probable cause of
  Present:
    her sudden attack was alimentary allergy, as she had recently ingested a meal of mussels which resulted in a concomitant uticarial
  YNARES-SANTIAGO, J.,
- versus - Chairperson, eruption.[6]
  AUSTRIA-MARTINEZ,
  CHICO-NAZARIO,  
  NACHURA, and
SERVIER PHILIPPINES, INC. and NATIONAL LABOR RELATIONS REYES, JJ. During the time that petitioner was confined at the hospital, her husband and son stayed with her in  Paris. Petitioners
COMMISSION,  
Respondents. Promulgated: hospitalization expenses, as well as those of her husband and son, were paid by respondent. [7]
   
November 28, 2008  
 
x------------------------------------------------------------------------------------x In June 1998, petitioners attending physicians gave a prognosis of the formers condition; and, with the consent of her
 
  family, allowed her to go back to the Philippines for the continuation of her medical treatment. She was then confined at the St.
DECISION
Lukes Medical Center for rehabilitation.[8] During the period of petitioners rehabilitation, respondent continued to pay the formers
 
NACHURA, J.:
salaries; and to assist her in paying her hospital bills.
 
 
 
In a letter dated May 14, 1999, respondent informed the petitioner that the former had requested the latters physician to
 
conduct a thorough physical and psychological evaluation of her condition, to determine her fitness to resume her work at the
 
company. Petitioners physician concluded that the former had not fully recovered mentally and physically. Hence, respondent was
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside the
constrained to terminate petitioners services effective August 31, 1999.[9]
Court of Appeals (CA) Decision,[1] dated August 12, 2004 and its Resolution[2] dated December 17, 2004, in CA-G.R. SP No.
 
75706.
As a consequence of petitioners termination from employment, respondent offered a retirement package which consists
 
of:
The fa cts, as culled from the records, are as follows:
 
 
Retirement Plan Benefits: P 1,063,841.76
Insurance Pension at P20,000.00/month
Petitioner Ma. Isabel T. Santos was the Human Resource Manager of respondent Servier Philippines, Inc. since 1991
for 60 months from company-sponsored
until her termination from service in 1999. On March 26 and 27, 1998, petitioner attended a meeting [3] of all human resource group life policy: P 1,200,000.00
Educational assistance: P 465,000.00
managers of respondent, held in Paris, France. Since the last day of the meeting coincided with the graduation of petitioners only Medical and Health Care: P 200,000.00[10]
 
child, she arranged for a European vacation with her family right after the meeting. She, thus, filed a vacation leave  

effective March 30, 1998.[4] Of the promised retirement benefits amounting to P1,063,841.76, only P701,454.89 was released to petitioners husband,

  the balance[11] thereof was withheld allegedly for taxation purposes. Respondent also failed to give the other benefits listed above.
[12]
On March 29, 1998, petitioner, together with her husband Antonio P. Santos, her son, and some friends, had dinner

at Leon des Bruxelles, a Paris restaurant known for mussels[5] as their specialty. While having dinner, petitioner complained of Petitioner, represented by her husband, instituted the instant case for unpaid salaries; unpaid separation pay; unpaid

stomach pain, then vomited. Eventually, she was brought to the hospital known as Centre Chirurgical de LQuest where she fell balance of retirement package plus interest; insurance pension for permanent disability; educational assistance for her son; medical
 Page 23

assistance; reimbursement of medical and rehabilitation expenses; moral, exemplary, and actual damages, plus attorneys fees.  The  

case was docketed as NLRC-NCR (SOUTH) Case No. 30-06-02520-01. Hence, the instant petition.

   

On September 28, 2001, Labor Arbiter Aliman D. Mangandog rendered a Decision [13] dismissing petitioners complaint. At the outset, the Court notes that initially, petitioner raised the issue of whether she was entitled to separation pay, retirement
[14]
The Labor Arbiter stressed that respondent had been generous in giving financial assistance to the petitioner.  He likewise noted benefits, and damages. In support of her claim for separation pay, she cited Article 284 of the Labor Code, as amended. However,

that there was a retirement plan for the benefit of the employees. In denying petitioners claim for separation pay, the Labor Arbiter in coming to this Court via a petition for review on certiorari, she abandoned her original position and alleged that she was, in fact,

ratiocinated that the same had already been integrated in the retirement plan established by respondent.  Thus, petitioner could no not dismissed from employment based on the above provision. She argued that her situation could not be characterized as a

longer collect separation pay over and above her retirement benefits. [15] The arbiter refused to rule on the legality of the deductions disease; rather, she became disabled. In short, in her petition before us, she now changes her theory by saying that she is not

made by respondent from petitioners total retirement benefits for taxation purposes, as the issue was beyond the jurisdiction of the entitled to separation pay but to retirement pay pursuant to Section 4, [26] Article V of the Retirement Plan, on disability

NLRC.[16] On the matter of educational assistance, the Labor Arbiter found that the same may be granted only upon the submission retirement. She, thus, prayed for the full payment of her retirement benefits by giving back to her the amount deducted for taxation
[17]
of a certificate of enrollment.  Lastly, as to petitioners claim for damages and attorneys fees, the Labor Arbiter denied the same as purposes.

the formers dismissal was not tainted with bad faith.[18]  

  In our Resolution[27] dated November 23, 2005 requiring the parties to submit their respective memoranda, we specifically stated:

On appeal to the National Labor Relations Commission (NLRC), the tribunal set aside the Labor Arbiters decision,  
No new issues may be raised by a party in the Memorandum and the issues raised in the pleadings but not
ruling that: included in the Memorandum shall be deemed waived or abandoned.
 
  Being summations of the parties previous pleadings, the Court may consider the Memoranda alone in
WHEREFORE, premises considered, Complainants appeal is partly GRANTED. The Labor deciding or resolving this petition.
Arbiters decision in the above-entitled case is hereby SET ASIDE. Respondent is ordered to pay  
Complainants portion of her separation pay covering the following: 1) P200,000.00 for medical and health  
care from September 1999 to April 2001; and 2) P35,000.00 per year for her sons high school (second year
to fourth year) education and P45,000.00 per semester for the latters four-year college education, upon
presentation of any applicable certificate of enrollment.
 
Pursuant to the above resolution, any argument raised in her petition, but not raised in her Memorandum, [28] is deemed abandoned.
SO ORDERED.[19]
  [29]
 Hence, the only issue proper for determination is the propriety of deducting P362,386.87 from her total benefits, for taxation
 
purposes. Nevertheless, in order to resolve the legality of the deduction, it is imperative that we settle, once and for all, the ground
The NLRC emphasized that petitioner was not retired from the service pursuant to law, collective bargaining agreement (CBA) or
relied upon by respondent in terminating the services of the petitioner, as well as the nature of the benefits given to her after such
other employment contract; rather, she was dismissed from employment due to a disease/disability under Article 284 [20] of the
termination. Only then can we decide whether the amount deducted by the respondent should be paid to the petitioner.
Labor Code.[21] In view of her non-entitlement to retirement benefits, the amounts received by petitioner should then be treated as
 
her separation pay.[22] Though not legally obliged to give the other benefits, i.e., educational assistance, respondent volunteered to
Respondent dismissed the petitioner from her employment based on Article 284 of the Labor Code, as amended, which
grant them, for humanitarian consideration. The NLRC therefore ordered the payment of the other benefits promised by the
reads:
respondent.[23] Lastly, it sustained the denial of petitioners claim for damages for the latters failure to substantiate the same. [24]
 
 
Art. 284. DISEASE AS GROUND FOR TERMINATION
 
Unsatisfied, petitioner elevated the matter to the Court of Appeals which affirmed the NLRC decision.[25]
 Page 24

An employer may terminate the services of an employee who has been found to be suffering from any  
disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the  
health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month
salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least There being such a provision, as held in Cruz v. Philippine Global Communications, Inc., [37] petitioner is entitled only to either the
six (6) months being considered as one (1) whole year.
  separation pay under the law or retirement benefits under the Plan, and not both.
 
 
As she was dismissed on the abovementioned ground, the law gives the petitioner the right to demand separation pay.  However,
Clearly, the benefits received by petitioner from the respondent represent her retirement benefits under the Plan.  The question that
respondent established a retirement plan in favor of all its employees which specifically provides for disability retirement, to wit:
now confronts us is whether these benefits are taxable. If so, respondent correctly made the deduction for tax purposes. Otherwise,
 
Sec. 4. DISABILITY RETIREMENT the deduction was illegal and respondent is still liable for the completion of petitioners retirement benefits.
 
In the event that a Member is retired by the Company due to permanent total incapacity or disability, as  
determined by a competent physician appointed by the Company, his disability retirement benefit shall be
the Full Members Account Balance determined as of the last valuation date. x x x.[30] Respondent argues that the legality of the deduction from petitioners total benefits cannot be taken cognizance of by this Court
 
  since the issue was not raised during the early stage of the proceedings.[38]

On the basis of the above-mentioned retirement plan, respondent offered the petitioner a retirement package which consists of  

retirement plan benefits, insurance pension, and educational assistance. [31] The amount of P1,063,841.76 represented the disability We do not agree.

retirement benefit provided for in the plan; while the insurance pension was to be paid by their insurer; and the educational  

assistance was voluntarily undertaken by the respondent as a gesture of compassion to the petitioner. [32] Records reveal that as early as in petitioners position paper filed with the Labor Arbiter, she already raised the legality of said

  deduction, albeit designated as unpaid balance of the retirement package. Petitioner specifically averred that P362,386.87 was not

We have declared in Aquino v. National Labor Relations Commission [33] that the receipt of retirement benefits does not bar the given to her by respondent as it was allegedly a part of the formers taxable income. [39] This is likewise evident in the Labor Arbiter

retiree from receiving separation pay.Separation pay is a statutory right designed to provide the employee with the wherewithal and the NLRCs decisions although they ruled that the issue was beyond the tribunals jurisdiction.  They even suggested that

during the period that he/she is looking for another employment. On the other hand, retirement benefits are intended to help the petitioners claim for illegal deduction could be addressed by filing a tax refund with the Bureau of Internal Revenue. [40]

employee enjoy the remaining years of his life, lessening the burden of worrying about his financial support, and are a form of  

reward for his loyalty and service to the employer. [34] Hence, they are not mutually exclusive. However, this is only true if there is Contrary to the Labor Arbiter and NLRCs conclusions, petitioners claim for illegal deduction falls within the tribunals

no specific prohibition against the payment of both benefits in the retirement plan and/or in the Collective Bargaining Agreement jurisdiction. It is noteworthy that petitioner demanded the completion of her retirement benefits, including the amount withheld by

(CBA).[35] respondent for taxation purposes. The issue of deduction for tax purposes is intertwined with the main issue of whether or not

  petitioners benefits have been fully given her. It is, therefore, a money claim arising from the employer-employee relationship,

In the instant case, the Retirement Plan bars the petitioner from claiming additional benefits on top of that provided for in the which clearly falls within the jurisdiction[41] of the Labor Arbiter and the NLRC.

Plan. Section 2, Article XII of the Retirement Plan provides:  

  This is not the first time that the labor tribunal is faced with the issue of illegal deduction.  In Intercontinental
Section 2. NO DUPLICATION OF BENEFITS
  Broadcasting Corporation (IBC) v. Amarilla, [42] IBC withheld the salary differentials due its retired employees to offset the tax due
No other benefits other than those provided under this Plan shall be payable from the Fund.  Further, in the
event the Member receives benefits under the Plan, he shall be precluded from receiving any other benefits on their retirement benefits. The retirees thus lodged a complaint with the NLRC questioning said withholding. They averred that
under the Labor Code or under any present or future legislation under any other contract or Collective
Bargaining Agreement with the Company.[36] their retirement benefits were exempt from income tax; and IBC had no authority to withhold their salary differentials.  The Labor

Arbiter took cognizance of the case, and this Court made a definitive ruling that retirement benefits are exempt from income tax,
provided that certain requirements are met.
 
Nothing, therefore, prevents us from deciding this main issue of whether the retirement benefits are taxable.
We answer in the affirmative.
Section 32 (B) (6) (a) of the New National Internal Revenue Code (NIRC) provides for the exclusion of retirement
benefits from gross income, thus:
 
(6) Retirement Benefits, Pensions, Gratuities, etc.
 
a) Retirement benefits received under Republic Act 7641 and those received by officials and
employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit
plan maintained by the employer: Provided, That the retiring official or employee has been in the service of
the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of his
retirement: Provided further, That the benefits granted under this subparagraph shall be availed of by an
official or employee only once. x x x.
 
 
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the
concurrence of the following elements: (1) a reasonable private benefit plan is maintained by the employer; (2) the retiring official
or employee has been in the service of the same employer for at least ten (10) years; (3) the retiring official or employee is not less
than fifty (50) years of age at the time of his retirement; and (4) the benefit had been availed of only once. [43]
 
As discussed above, petitioner was qualified for disability retirement. At the time of such retirement, petitioner was only
41 years of age; and had been in the service for more or less eight (8) years.  As such, the above provision is not applicable for
failure to comply with the age and length of service requirements. Therefore, respondent cannot be faulted for deducting from
petitioners total retirement benefits the amount of P362,386.87, for taxation purposes.
WHEREFORE, the petition is DENIED for lack of merit. The Court of Appeals Decision dated August 12, 2004 and
its Resolution dated December 17, 2004, in CA-G.R. SP No. 75706 are AFFIRMED.
SO ORDERED.
Page 25
[G.R. No. L-55774. February 20, 1984.]
SENTINEL INSURANCE COMPANY, INC., Petitioner, v. PORFIRIO M. BAUTISTA and THE NATIONAL LABOR
RELATIONS COMMISSION, Respondents.
Jesus I. Santos Law Office for Petitioner.
The Solicitor General for Respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; DISPUTE ARISING FROM EMPLOYER-
EMPLOYEE RELATIONSHIP; CASE AT BAR. — It is alleged that at the time Bautista instituted his money claim by way of
opposition, the employer-employee relationship has ceased. The allegation is without basis. Bautista filed a timely opposition to the
application for authority to terminate his employment. The employer-employee tie certainly existed at that point of time. Although
Bautista did not seek reinstatement, he demanded compliance with one of the express terms of his employment, thus the dispute is
one arising from employer-employee relationship.
2. ID.; ID.; ID.; ID.; JURISDICTION OF LABOR ARBITER. — The main argument of petitioner is that the money claim is civil
in character cognizable only by regular courts and therefore beyond the jurisdiction and competence of the Labor Arbiter.
Petitioner invoked the ruling in Jose D. Calderon, Sr. v. CA promulgated on October 28, 1980 where this Court held that an alleged
oppressive act of non-payment of salaries, allowances and other reimbursable expenses is intrinsically a civil dispute within the
jurisdiction of regular courts to resolve and beyond that of Labor Arbiters. The Calderon case was based on PD No. 1367 enacted
May 1, 1978 and which removed from the exclusive jurisdiction of Labor Arbiters money claims arising from employer-employee
relations, the jurisdiction of said Labor Arbiters over said cases being expressly limited to those which are duly endorsed by the
Regional Directors in accordance with the provisions of the Labor Code and which in no case shall include claims for moral or
other forms of damages. The Calderon case, however, is no longer controlling because the law upon which said decision was
based, Article 217 of the Labor Code as amended by PD No. 1367, has been superseded by PD NO. 1691 which took effect May 1,
1980 and which restored to the Labor Arbiters original and exclusive jurisdiction over claims, monetary or otherwise, provided by
law or by appropriate agreement, arising from employer-employee relations, except those expressly excluded therefrom. Although
the cause of action arose when PD No. 1367 was then the prevailing law and upon which the Calderon case was premised, said
Decree was no longer applicable when the case was resolved by the National Labor Relations Commission on August 29, 1980.
The law then in force was PD No. 1691. Art. 217 as amended by PD No. 1367 and PD No. 1691 was again amended by Batas
Pambansa Bilang 130 which took effect August 21, 1981. On June 1, 1982, said Art. 217 was amended anew by Batas Pambansa
Bilang 227 vesting on Labor Arbiters jurisdiction over cases that workers may file involving wages, hours of work and other terms
and conditions of employment and all money claims of workers, except claims for employees’ compensation, social security,
medicare and maternity benefits.
3. ID.; ID.; ID.; ID.; AWARD OF DAMAGES IN LABOR CASE. — Furthermore, to state that this case involves both a labor
controversy and a civil dispute would be to sanction split jurisdiction which is obnoxious to the orderly administration of justice. In
a number of cases this Court expounded on this holding that evidently, the lawmaking authority had second thoughts about
depriving Labor Arbiters and the National Labor Relations Commission of the jurisdiction to award damages in labor cases
because that setup means duplicity of suits, splitting the cause of action and possible conflicting findings and conclusions by two
tribunals of one and the same claim.
DECISION
DE CASTRO, J.:
 Page 26

Petition for certiorari with writ of preliminary injunction seeking review of the resolution of the National Labor Relations following:jgc:chanrobles.com.ph
Commission which affirmed the decision of the Labor Arbiter awarding to private respondent the sum of P84,587.58 representing
unpaid legal fees. The pertinent portion of the decision was as follows:jgc:chanrobles.com.ph "4. Should your duties permit, you may handle recovery cases for the company for which you will be entitled fifteen (15%) per
cent legal fees for amount actually recovered." 2 
"Coming now to the money claim raised by complainant, we noted that the position paper, as well as the documentary evidence
submitted by respondent never did touch on this issue. Respondent’s silence on this point has led us to the inevitable conclusion In the course of his employment, Bautista handled a number of cases for which he was paid fifteen (15) per cent on amounts
that complainant is indeed entitled to these monetary claims. More so, in the light of the fact that the contract of employment recovered except for the four cases in question which, according to Bautista, he deferred the billing and collection of his percentage
entered into by he parties provides among others that "Should your duties permit, you may handle recovery cases for the company on said cases because of his awareness of the tight financial condition of the company.
for which you will be entitled to fifteen (15%) per cent legal fees for amount actually recovered." (par. 4)
Bautista also handled thirteen other cases which, according to petitioner, were defaulted and/or dismissed for reasons attributable to
"As computed, complainant’s legal fees for the recovery cases he handled for the company are as follows:chanrob1es virtual 1aw him. Believing that the defaults/dismissals of the thirteen cases were the results of the wanton connivance of Bautista with the
library adverse parties and/or gross negligence sufficient to warrant his dismissal for loss of trust and confidence, petitioner served private
respondent notice of termination of his services on April 2, 1979 to take effect March 31, 1979. On March 29, 1979, petitioner
1. Sentinel Insurance v. Mt. applied for clearance to terminate employment with the Ministry of Labor and Employment but which was opposed by Bautista on
May 31, 1979. In his opposition, Bautista questioned the legality of his dismissal and at the same time asserted his claim for unpaid
Ampiro Timber, et als. legal fees in the sum of P87,800.00 pursuant to the terms and conditions of his employment, particularly the provision on legal
fees.chanroblesvirtualawlibrary
(P147,583.87 x 15%) P22,137.58
No settlement having been arrived at in the conciliatory hearing, the case was referred to the National Capital Region of the
2. Sentinel Insurance v.  Ministry of Labor and Employment. In the position-paper submitted, petitioner presented its reasons for the application for
clearance but remained silent on the matter of the money claim.
Carmel Corporation
On September 28, 1979, the Labor Arbiter rendered the questioned decision. Dissatisfied with the portion awarding the money
(P240,000.00 x 15%) P36,000.00 claim, petitioner appealed to the National Labor Relations Commission and argued that the Labor Arbiter erred in assuming that
Bautista was entitled to the legal fees irrespective of the means by which he effected recoveries for the company.
3. Maritime Company of the
Considering that there was no dispute that the appointment of Bautista provided for the 15% legal fees on top of his basic salary
Phil. v. Sea Gems Fishing and finding that there appeared to be no qualification for entitlement of the disputed fees and there being no denial that Bautista
handled the four cases subjects of the controversy and succeeded in recovering for the company, the National Labor Relations
Corporation (P183,000.00 Commission on August 29, 1980 affirmed the decision of the Labor Arbiter and dismissed the appeal.

x 15%) = P27,450.00 - Sentinel Insurance sought reconsideration of the dismissal which was however denied on December 10, 1980. Hence this petition
for certiorari. On January 12, 1981, We issued a temporary restraining order enjoining the National Labor Relations Commission
P10,000.00) P17,450.00 from enforcing and/or carrying out any writ of execution issued or might be issued pursuant to its resolution and to continue until
otherwise ordered.chanrobles.com.ph : virtual law library
4. Rose Industries v. Nemesio
It is alleged that at the time Bautista instituted his money claim by way of opposition, the employer-employee relationship has
Ascuetas (P60,000.00 x 15%) P9,000.00 ceased. The allegation is without basis. Bautista filed a timely opposition to the application for authority to terminate his
employment. The employer-employee tie certainly existed at that point of time. Although Bautista did not seek reinstatement, he
————— demanded compliance with one of the express terms of his employment, thus the dispute is one arising from employer-employee
relationship.
Total P84,587.58
The main argument of petitioner is that the money claim is civil in character cognizable only by regular courts and therefore
========= beyond the jurisdiction and competence of the Labor Arbiter. Petitioner invoked the ruling in Jose D. Calderon, Sr. v. Court of
Appeals 3 promulgated on October 28, 1980 where this Court held that an alleged oppressive act of non-payment of salaries,
"WHEREFORE, in the light of the foregoing considerations, the complaint for illegal dismissal should be, as it is hereby allowances and other reimbursable expenses is intrinsically a civil dispute within the jurisdiction of regular courts to resolve and
DISMISSED for lack of merit. beyond that of Labor Arbiters. The Calderon case was based on PD No. 1367 enacted May 1, 1978 and which removed from the
exclusive jurisdiction of Labor Arbiters money claims arising from employer-employee relations, the jurisdiction of said Labor
"However, respondent is hereby ordered to pay complainant the amount indicated above." 1  Arbiters over said cases being expressly limited to those which are duly endorsed by the Regional Directors in accordance with the
provisions of the Labor Code and which in no case shall include claims for moral or other forms of damages. 4 
Petitioner, Sentinel Insurance Company, was in accord with the portion of the decision dismissing the complaint of respondent,
Porfirio Bautista; however, it disagreed with the portion which awarded P84,587.58 to Bautista because contending that the Labor The Calderon case, however, is no longer controlling because the law upon which said decision was based, Article 217 of the
Arbiter was without jurisdiction to make such award, the same being within the exclusive jurisdiction of the civil courts.chanrobles Labor Code as amended by PD No. 1367, has been superseded by PD NO. 1691 which took effect May 1, 1980 and which restored
virtual lawlibrary to the Labor Arbiters original and exclusive jurisdiction over claims, monetary or otherwise, provided by law or by appropriate
agreement, arising from employer-employee relations, except those expressly excluded therefrom. 5 
The factual background of the case is as follows:chanrob1es virtual 1aw library
Although the cause of action arose when PD No. 1367 was then the prevailing law and upon which the Calderon case was
Porfirio M. Bautista was hired as Legal Officer by Sentinel and his letter of appointment provided, among others, the premised, said Decree was no longer applicable when the case was resolved by the National Labor Relations Commission on
 Page 27

August 29, 1980. The law then in force was PD No. 1691.

Article 217 as amended by PD No. 1367 and PD No. 1691 was again amended by Batas Pambansa Bilang 130 which took effect
August 21, 1981. On June 1, 1982, said Article 217 was amended anew by Batas Pambansa Bilang 227 vesting on Labor Arbiters
jurisdiction over cases that workers may file involving wages, hours of work and other terms and conditions of employment and all
money claims of workers, except claims for employees’ compensation, social security, medicare and maternity benefits.

Undoubtedly, the claim of 15% legal fees arose out of employer-employee relationship and clearly falls within the coverage of
Article 217 as amended by PD No. 1691 and Batas Pambansa Bilang. 227.

In Garcia v. Martinez, 6 promulgated May 28, 1979, PD No. 1367 was held to be an amendatory decree in the nature of a curative
statute with retrospective application to a pending proceeding which cured the lack of jurisdiction of the Court of First Instance of
Davao City over a complaint for damages allegedly arising from the dismissal of a radio station manager which was filed on
August 2, 1976. PD No. 1691 and BP No. 227 are likewise curative statutes which cured the lack of jurisdiction of the Labor
Arbiter at the start of the proceeding and should be given retrospective application to this pending proceedings, as the precise
purpose of the amendments was to settle once and for all the conflict of jurisdiction between regular courts and labor
agencies.chanrobles.com:cralaw:red

Moreover, petitioner is estopped from questioning the jurisdiction of the Labor Arbiter to award the money claim considering that
in the position paper it submitted to the Labor Arbiter, it never objected but in fact remained silent as to the claim which was
asserted not only in the opposition for termination of employment but also raised as an issue at the conciliation hearing.

Also, as correctly argued by respondent Bautista, it was petitioner who commenced the action for dismissal, and he merely asserted
a claim expressly provided by the terms of his employment so much so that petitioner cannot pretend that the Labor Arbiter
possessed jurisdiction over issues of illegal dismissal, as in fact, it did not question the portion of the decision which sustained the
dismissal because it was in its favor, but alleged that the Labor Arbiter did not have the authority to adjudicate the claim for legal
fees although part of the express terms of the contract of employment because it is to its disadvantage. 7 

Furthermore, to state that this case involves both a labor controversy and a civil dispute would be to sanction split jurisdiction
which is obnoxious to the orderly administration of justice. 8 In a number of cases this Court expounded on this holding that
evidently, the lawmaking authority had second thoughts about depriving Labor Arbiters and the National Labor Relations
Commission of the jurisdiction to award damages in labor cases because that setup means duplicity of suits, splitting the cause of
action and possible conflicting findings and conclusions by two tribunals of one and the same claim. 9 

In view of the foregoing, We hold that the National Labor Relations Commission did not commit grave abuse of discretion in
sustaining the money claim granted by the Labor Arbiter which arose out of an employer-employee relationship and which, as we
hereby hold, was within the exclusive jurisdiction of the Labor Arbiter.

WHEREFORE, the instant petition is hereby dismissed. The temporary restraining order heretofore issued is hereby lifted. No
costs.

SO ORDERED.

[G.R. No. 120506. October 28, 1996]
PHILIPPINE AIRLINES, INC. petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR
ARBITER CORNELIO LINSANGAN, UNICORN SECURITY SERVICES, INC., and FRED BAUTISTA,  et
al., respondents.
DECISION
DAVIDE, JR., J.:
This is a petition for certiorari under Rule 65 of the Rules of Court to annul the decision of the Labor Arbiter dated 12
August 1991 in NLRC Case No. 00-11-06008-90 and the resolutions of public respondent National Labor Relations Commission
(NLRC) promulgated on 27 October 1994 and 31 May 1995 dismissing the appeal filed by the petitioner and denying the motion
for reconsideration, respectively.
The dispute arose from these antecedents:
On 23 December 1987, private respondent Unicorn Security Services, Inc. (USSI) and petitioner Philippine Airlines, Inc.
(PAL) executed a security service agreement. [1] USSI was designated therein as the CONTRACTOR. Among the pertinent terms
and conditions of the agreement are as follows:
(4) The CONTRACTOR shall assign to PAL an initial force of EIGHTY ONE (81) bodies which may be decreased
or increased by agreement in writing . It is, of course, understood that the CONTRACTOR undertakes to pay
the wages or salaries and cost of living allowance of the guards in accordance with the provisions of the Labor
Code, as amended, the different Presidential Decrees, Orders and with the rules and regulations promulgated
by competent authorities implementing said acts, assuming all responsibilities therefor .
xxx
(6) Without any expense on the part of PAL, CONTRACTOR shall see to it that the guards assigned to PAL are
provided, at the expense of CONTRACTOR, with the necessary firearms, ammunitions and facilities needed
for the rendition of the security services as aforesaid;
(7) CONTRACTOR shall select, engage and discharge the guards, employees, or agents, and shall otherwise direct
and control their services herein provided or heretofore to be set forth or prescribed. The determination of
wages, salaries and compensation of the guards or employees of the CONTRACTOR shall be within its full
control but shall in no way contravene existing laws on the matter. It is further understood that
CONTRACTOR as the employer of the security guards agrees to comply with all relevant laws and
regulations, including compulsory coverage under the Social Security Act, Labor Code, as amended and the
Medical Care Act, in its operations. Although it is understood and agreed between parties hereto that
CONTRACTOR in the performance of its obligations under this Agreement, is subject to the control and
direction of PAL merely as to the result as to be accomplished by the work or services herein specified, and
not as to the means and methods for accomplishing such result, CONTRACTOR hereby warrants that it will
perform such work or services in such manner as will achieve the result herein desired by PAL.
(8) Discipline and administration of the security guards shall be the sole responsibility of the CONTRACTOR to the
end that CONTRACTOR shall be able to render the desired security service requirements of
PAL. CONTRACTOR, therefore, shall conform to such rules and regulations that may be issued by PAL. For
this purpose, Annex A, which forms part of this Agreement, contains such rules and regulations and
CONTRACTOR is expected to comply with them. At its discretion, PAL may, however, work out with
CONTRACTOR such rules and regulations before their implementation.
Page 28
(9) Should PAL at any time have any justifiable objection to the presence in its premises of any of CONTRACTORs
officer, guard or agent under this Agreement, it shall send such objection in writing to CONTRACTOR and the
latter shall immediately take proper action.
(10) The security guards employed by CONTRACTOR in performing this Agreement shall be paid by the
CONTRACTOR and it is distinctly understood that there is no employee-employer relationship between
CONTRACTOR and/or his guards on the one hand, and PAL on the other. CONTRACTOR shall have entire
charge, control and supervision of the work and services herein agreed upon, and PAL shall in no manner be
answerable or accountable for any accident or injury of any kind which may occur to any guard or guards of
the CONTRACTOR in the course of, or as a consequence of, their performance of work and services under
this Agreement, or for any injury, loss or damage arising from the negligence of or carelessness of the guards
of the CONTRACTOR or of anyone of its employ to any person or persons or to its or their property whether
in the premises of PAL or elsewhere; and the CONTRACTOR hereby covenants and agrees to assume, as it
does hereby assume, any and all liability or on account of any such injury, loss or damage, and shall
indemnify PAL for any liability or expense it may incur by reason thereof and to hold PAL free and harmless
from any such liability.
xxx
(13) For and in consideration of the services to be rendered by CONTRACTOR under these presents, PAL shall pay
CONTRACTOR the amount of PESOS NINE & 40/100 CTVS (P9.40) PER HOUR multiplied by 905 hours
equivalent to PESOS TWO HUNDRED SEVENTY FIVE THOUSAND NINE HUNDRED NINE & 58/100
CTVS, Philippine currency, - (P275,909.58) the basis of eight (8) working hours per office/guard a day,
Sundays and Holidays included, the same to be payable on or before the 15 th of each month for services on
the first half of the month and on or before the end of the month for services for the 2nd half of the month.
Nothing herein contained shall prevent the parties from meeting for a review of the rates should
circumstances warrant.
xxx
(20) This Agreement shall take effect on 06 December 1987 an shall be in force for a period of SIX (6) MONTHS 05
JUNE 1988 thereafter it shall continue indefinitely unless sooner terminated upon thirty (30) days notice
served upon by one party to the other, except as provided for in Articles 16, 17 & 18 hereof.
Sometime in August of 1988, PAL requested 16 additional security guards. USSI provided what was requested; however,
PAL insisted that what USSI did was merely to pick out 16 guards from the 86 already assigned by it and directed them to render
overtime duty.
On 16 February 1990, PAL terminated the security service agreement with USSI without giving the latter the 30-day prior
notice required in paragraph 20 thereof. Instead, PAL paid each of the security guards actually assigned at the time of the
termination of the agreement an amount equivalent to their one-month salary to compensate for the lack of notice.
In November 1990, USSI, allegedly in its capacity as Trustee for Sixteen or so Security Guards, filed with the NLRC
Arbitration Branch, National Capital Region, a complaint [2]against PAL for the recovery of P75,600.00 representing termination
pay benefit due the alleged 16 additional security guards, which PAL failed and refused to pay despite demands. It further asked for
an award of not less than P15,000.00 for each of the 16 guards as damages for the delay in the performance of PALs obligation,
and also for attorneys fees in an amount equivalent to 10% of whatever might be recovered. Pertinent portions of the complaint
read as follows:
3. By virtue of said contract and upon its effectivity, respondent required eighty-six (86) security guards whom
complainant USSI supplied; on or sometime in August 1989, respondent asked for sixteen (16) security guards to
render twelve (12) hours each.
4. In February 1990 and for reasons of its own, respondent caused to terminate not only the contract but also the
services of the security guards; in effecting such termination, said respondent caused to pay the equivalent of one

(1) months notice unto all the security guards, except the 16 who, as aforementioned were rendering 12 hours
each from date of assignment up to and until their termination.
5. As computed, the termination pay benefits due the 16 security guards amount to P75,600.00, more or less, which,
despite demands, respondent fails, neglects or refuses to pay, as it continue refusing, failing or neglecting to so
do up to the present time.
6. Respondent has not only incurred in delay in the performance of its obligation but also contravened the tenor
thereof; hence, complainants are, by law, entitled to be indemnified with damages for no less than  P15,000.00
each for all complainants though the correct amount is left solely to the sound discretion of the Honorable Labor
Arbiter.
7. Complainants are now compelled to litigate their plainly valid, just or demandable claim on account of which
services of counsel have been required and thereby obligated themselves to pay, for and as attorneys fees, the
sum equivalent to ten percent (10%) of whatever sums or sum may be recovered in the case.
The complaint was docketed as NLRC-NCR Case No. 00-11-06008-90 and assigned to Labor Arbiter Cornelio L.
Linsangan.
PAL filed a motion to dismiss the complaint [3] on the grounds that the Labor Arbiter had no jurisdiction over the subject
matter or nature of the complaint and that USSI had no cause of action against PAL. In amplification thereof, PAL argued that the
case involved the interpretation of the security service agreement, which is purely civil in character and falls outside of the Labor
Arbiters jurisdiction. It is clear from Article 217 of the Labor Code that for claims to be within the jurisdiction of Labor Arbiters,
they must arise from an employer-employee relationship. PAL claimed that USSI did not allege the existence of an employer-
employee relationship between PAL and USSI or its guards, and that in fact, paragraph 10 of the agreement provides that there is
no employer-employee relationship between the CONTRACTOR and/or his guards on the one hand and PAL on the other.
[4]
In its Opposition,  USSI pointed out that PAL forgot or overlooked the fact that insofar as labor standards, benefits, etc.
have to be resolved or adjudicated, liability therefor is shifted to, or assumed by respondent [herein petitioners] which, in law, has
been constituted as an indirect employer.
PAL filed a supplemental motion to dismiss [5] wherein it cites the following reasons for the dismissal of the complaint: (1)
the clear stipulations in the agreement (paragraphs 4 and 10) that there exists no employer-employee relationship between PAL on
the one hand and USSI and the guards on the other; (2) there were no 16 additional guards, as the 16 guards who were required to
render 12-hour shifts were picked out from the original 86 guards already assigned and were already given a one-month salary in
lieu of the 30-day notice of termination of the agreement; (3) USSI had no legal personality to file the case as alleged trustee of the
16 security guards; and (4) the real parties in interest -- the 16 security guards -- never showed any interest in the case either by
attending any hearing or conference, or by following up the status of the case.
Attached to the supplemental motion dismiss were, among other things, xerox copies of confirmation letter of USSI to PAL
to show that no additional guards were in fact provided.[6]
Labor Arbiter Linsangan did not resolve the motion to dismiss and the supplemental motion to dismiss. On 12 August 1991,
he handed down a decision[7] ordering PAL to pay: (1) the sum of P75,600.00 representing the equivalent of one-months separation
pay due the 16 individual security guards, plus, 10% interest from the date of filing of the case until the whole obligations shall
have been fully settled; (2) the sum of P5,000.00 by way of exemplary damages due each of the 16 security guards; and (3) another
sum equivalent to 10% of the total award for and as attorneys fees.
It was in that decision that Labor Arbiter Linsangan mentioned for the first time that the resolution of the motion to dismiss
and supplemental motion to dismiss was deferred until [the] case is decided on the merits considering the ground not to be
indubitable. In holding that he had jurisdiction over the case, he stated:
As heretofore and invariably held in similar cases, the issue of whether or not Labor Arbiters have jurisdiction over money claims
affecting security guards assigned by security agencies (like complainant herein) to their client-companies such as PAL is, more or
less, settled, especially since, as the law views such as peculiar relationship, such money claims insofar as they have to be paid, are
the ultimate responsibility of the client-firms. In effect, the security guards have been constituted as indirect employees of the client
just as the client becomes the indirect employer of the guards. Art. 107 and 109 of the Labor Code expressly provide that.
To justify the awards, Labor Arbiter Linsangan opined:
Page 29
Evidence adduced clearly show that sometime in December 1987, aforementioned security service contract was executed, based on
which the required number of security guards were assigned to, or posted at, the various premises of respondent -- PAL.  Said
number of security guards may, as the contract provides, be increased or reduced at respondents request, such that the original
number of eighty-six (86) guards, an additional sixteen (16) were needed and, accordingly supplied who, pursuant to PALs
instructions, were required to render twelve (12) hours each, per day.
In February 1990, and for reasons of its own, PAL caused to terminate, as it did, the contract of security service. Unequivocably, it
caused to pay the separation pay benefits of the 86-security guards for the equivalent amount of one (1) months pay. As to the
additional 16, it failed and refused to grant similar equivalent, without any valid reasons therefor.
As earlier stated, respondent opted to rely solely on the ground set forth in its Motion to Dismiss as well as Supplement thereto. It
failed to file, despite directive made thereon, its position paper. Neither did it submit, nor adduce, evidence (documentary or
otherwise) to rebut or controvert complainants claims especially since the money equivalent of the one month separation pay due
the 16 guards has been duly quantified as amounting to Seventy Five Thousand Six Hundred (P75,600.00) Pesos. Thus established,
it is clear that there was absolutely no legal/justifiable reason why said 16 guards applied and who rendered 12 hours each per day
had to be discriminated against.
Following PALs failure or refusal to pay, demands were made by complainant, asking at the same time why that was
so. Conceivably, respondent has smarted itself on its mistaken belief that there was, as between the guards and itself, no employer-
employee relationship and, hence, there is no legal basis for it to pay.  If that was so, why did it pay separation pay unto the 86
regular employed guards.
PAL being widely known as a progressively-minded employer, it should be the first to show good example for emulation. In this
instant case, it did not; in fact, its actuations were not consistent with good faith. It should, therefore, be held liable for exemplary
damages and having required complainant to litigate a plainly valid, just or demandable claim, an award for attorneys fees must
perforce be assessed.
On 3 September 1991, PAL filed its Appeal[8] wherein it indicated that it received a copy of the decision on 26 August
1991. Attached thereto was a machine copy of the Notice of Judgment/Final Order, with the date of its receipt, i.e., 26 August
1991,[9] having been stamped on the upper right hand corner by PALs Legal Department.
USSI countered this Appeal with a motion for execution of judgment [10] on the ground that since PAL, received a copy of the
decision on the 23rd, not on the 26th, of August 1991 it had until 2 September 1991 to appeal; hence, the appeal interposed on 3
September was late by one day. The decision had then become final and executory.
In its opposition[11] to this motion, PAL insisted that it received a copy of the decision on 26 August 1991; thus, it had until 5
September 1991 to file its appeal.
On 30 September 1991, Labor Arbiter Linsangan issued a writ of execution. [12]
On 1 October 1991, PAL filed a motion to quash [13] the writ of execution. It tried to explain therein why it thought all along
that it received a copy of the decision on 26 August 1991, thus:
4. Upon investigation the undersigned counsel learned that on 23 August 1991 (Friday) a server-messenger went to
PAL Legal Department to serve said decision. The receiving clerks at that time were all out of the office so that the server
persuaded a secretary, Ms. April Rose del Rosario to receive the same, notwithstanding the fact that Ms. Del Rosario told
him (server) that she was not authorized to receive documents for an in behalf of PAL. Ms. Del Rosario then stamped the
date of receipt on the services copy without stamping (the date of receipt) PALs copy of the decision which was left by the
server. Thereafter, Ms. Del Rosario placed PALs copy of the Decision on the incoming documents rack of the receiving
clerk.
Attached herewith is the affidavit of Ms. Del Rosario and as Annex A hereof.
5. On 26 August 1991 (Monday), the receiving clerk/messenger Mr. Greg Soriano upon finding the Decision among
the documents in the incoming documents rack, immediately stamped Received 26 August 1991 thereon, on the honest and

sincere belief that the same just arrived that day (26 August 1991). He then forwarded the same to the secretary of the
undersigned counsel.
Attached herewith is the affidavit of Mr. Greg Soriano marked as Annex B hereof.
6. The undersigned counsel believing that the said decision was received on 26 August 1991 reckoned/counted the ten
(10) day period for appeal from said date.
7. Considering the foregoing circumstances, the undersigned counsels innocent reliance on the date of receipt
stamped on the copy of the Decision furnished him was clearly due to an innocent mistake and/or excusable neglect.  Hence,
justice and equity dictates that respondent PAL should be considered to have filed its Appeal within the reglementary period
for Appeal.[14]
On 8 October 1991, Labor Arbiter Linsangan issued an order[15] denying the motion to quash.
On 10 October 1991, PAL appealed[16] to the NLRC the aforesaid order of 8 October 1991 on the ground that it was issued
with grave abuse of discretion.
In its resolution of 27 October 1994, [17] the Second Division of the NLRC dismissed PALs appeal for having been filed out if
time. It sustained the labor Arbiters finding that PAL had received a copy of the decision on 23 August 1991, and hence the last
day to appeal was 2 September 1991. It ruled that whether or not the decision was received by an employee other than the receiving
clerk or messenger was of no moment, as the proper performance of employees duties was PALs concern.
On 31 May 1995, the NLRC denied the motion for reconsideration [18] for the reason that it cannot accept PALs excuse as it
may open the floodgates to abuse; and that the lapse of the period to appeal had already deprived the Commission of jurisdiction
over the case.[19]
PAL then filed this special civil action for certiorari under Rule 65 of the Rules of Court alleging that (1) public respondents
committed serious and patent error in failing to declare that the Labor Arbiter had no jurisdiction over the instant case; (2) The
Labor Arbiter gravely abused its discretion in ordering PAL to pay the separation pay of the 16 security guards assigned at PALs
premises by USSI; and (3) respondent NLRC committed grave abuse of discretion in declaring PALs appeal to have been filed out
of time.
PAL argues that since USSIs cause of action was founded on the security service agreement, and that thereunder no
employer-employee relationship existed between PAL and the security guards who were USSIs employees, the Labor Arbiter had
no jurisdiction over the complaint. Moreover, assuming arguendo that the claims of the security guards were valid, USSI had no
personality to file the complaint, for there is nothing whatsoever to show that it was expressly authorized by the security guards to
act as their trustee.
As to the second assigned error, PAL asserts that it is not liable to pay separation pay because (1) it was not the employer of
the security guards; (2) even as an indirect employer, as held by the Labor Arbiter, its liability was limited to violations of labor
standards law, and non-payment of the separation pay is not a violation of the said law; (3) the security service agreement with
USSI did not provide for payment of separation pay; (4) the payment made to the 86 security guards upon the termination of the
agreement without the prior 30-day notice was not for separation pay but a benefit in lieu of the 30-day notice required under
paragraph 20 of the agreement; and (5) since PAL was not the employer of the security guards, in no way could it terminate their
services.
In its third assigned error, PAL submits that rules of procedure ought not to be applied in a very rigid technical sense, since
they are used only to help secure and not override substantial justice, especially in this case where the appeal was
meritorious. Moreover, the delay in the perfection of the appeal, reckoned from the finding of the Labor Arbiter, was only one day;
but if reckoned from what its counsel innocently believed to be PALs date of receipt of the decision, which was 26 August 1991,
the appeal could be said to have been seasonably filed.
In its Comment, USSI points out that the grounds relied upon by PAL are based on factual a issue, namely, the
discrimination made by PAL in paying the 86 and not the 16 security guards. It argues that the case touched upon the rights of the
16 security guards as employees; thus, the same was within the jurisdiction of the Labor Arbiter.  As regards PALs plea for the
relaxation of the rule on perfection of appeals, USSI contends that the negligence of PALs counsel should not be deemed
compelling reason to warrant relaxation of the rule.
Page 30
In its Manifestation and Motion in Lieu of Comment,[20] the Office of the Solicitor General agrees with PAL that the Labor
Arbiter did not have jurisdiction over the complaint because there was no employer-employee relationship between PAL and the 16
security guards; that Articles 107 and 109 of the Labor Code which provide for joint and several liability for payment of wages by
the direct and indirect employer find no application in the present case because the 16 security guards employed by USSI were not
after unpaid wages; and that in the interest of justice and considering that the appeal was filed only one day late, the rule on
perfection of appeals should have been relaxed to prevent a miscarriage of justice.
In view of the stand of the Office of the Solicitor General, we advised public respondents to file their own comment if they
so desired.
In their Comment, the NLRC and Labor Arbiter Linsangan maintain that they had jurisdiction over the case because of
Articles 107 and 109 of the Labor Code which constitute PAL as indirect employer of the 16 security guards, there being a question
involving separation pay due the latter; that the 16 security guards were entitled to separation pay, because PAL paid the other 86
security guards when the service agreement was terminated; and that for the NLRC to excuse the delay of one day in filing the
appeal would open the floodgates of abuse.
The instant petition is impressed with merit.
We agree with petitioner PAL that the Labor Arbiter was without jurisdiction over the subject matter of NLRC-NCR Case
No. 00-11-06008-90, because no employer-employee relationship existed between PAL and the security guards provided by USSI
under the security service agreement, including the alleged 16 additional security guards.
We have pronounced in numerous cases [21] that in determining the existence of an employer-employee relationship, the
following elements are generally considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power to dismiss; and (4) the power to control the employees conduct.
In the instant case, the security service agreement between PAL and USSI provides the key to such consideration.  A careful
perusal thereof, especially the terms and conditions embodied in paragraphs 4, 6, 7, 8, 9, 10, 13 and 20 quoted earlier in
this ponencia, demonstrates beyond doubt that USSI-and not PAL was the employer of the security guards. It was USSI which (a)
selected, engaged or hired and discharged the security guards; (b) assigned them to PAL according to the number agreed upon; (c)
provided, at its own expense, the security guards with firearms and ammunitions; (d) discipline and supervised them or controlled
their conduct; and (e) determined their wages, salaries, and compensation; and (f) paid them salaries or wages. Even if we disregard
the explicit covenant in said agreement that there exist no employer-employee relationship between CONTRACTOR and/or his
guards on the one hand, and PAL on the other all other considerations confirm the fact that PAL was not the security guards
employer. Analogous to the instant case is Canlubang Security Agency Corp. vs. NLRC.[22]
Considering then that no employer-employee relationship existed between PAL and the security guards, the Labor Arbiter
had no jurisdiction over the claim in NLRC-NCR Case No. 00-11-06008-90. Article 217 of the Labor Code (P.D. No. 442), as
amended, vests upon Labor Arbiter exclusive original jurisdiction only over the following:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving 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 house hold service,
involving an amount exceeding five thousand pesos(P5,000.00) regardless of whether accompanied with a claim
for reinstatement.
In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite.
The Labor Arbiter cannot avoid the jurisdictional issue or justify his assumption of jurisdiction on the pretext that PAL was
the indirect employer of the security guards under Article 107 in relation to Articles 106 and 109 of the Labor Code and, therefore,
 Page 31

it is solidarily liable with USSI. We agree with the Solicitor General that these Articles are inapplicable to PAL under the facts of
this case. Article 107 provides:
ART. 107. Indirect employer. -- The provisions of the immediately preceding Article shall likewise apply to any person,
partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance
of any work, task, job or project.
The preceding Article referred to, which is Article 106, partly reads as follows:
ART. 106. Contractor or subcontractor. -- Whenever an employer enters into a contract with another person for the performance
of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the
provisions of this Code.
While it is an established rule that the perfection of an appeal in the manner and within the period prescribed by law is not
only mandatory but jurisdictional, and failure to perfect an appeal has the effect of rendering the judgment final and executory, it is
equally settled that the NLRC may disregard the procedural lapse where there is an acceptable reason to excuse tardiness in the
taking of the appeal.[25] Among the acceptable reasons recognized by this Court are (a) counsels reliance on the footnote of the
notice of the decision of the Labor Arbiter that the aggrieved party may appeal within ten (10) working days;[26] (b) fundamental
consideration of substantial justice;[27] (c) prevention of miscarriage of justice or of unjust enrichment, as where the tardy appeal is
from a decision granting separation pay which was already granted in an earlier final decision; [28] and (d) special circumstances of
the case combined with its legal merits [29] or the amount and the issue involved. [30] A one-day delay in the perfection of the appeal
was excused in Pacific Asia Overseas Shipping Corp. vs. NLRC, [31] Insular life Assurance Co. vs. NLRC,[32] and City Fair Corp vs.
NLRC.[33]
In the instant case, the Labor Arbiters lack of jurisdiction -- so palpably clear on the face of the complaint -- and the
perpetuation of unjust enrichment if the appeal is disallowed are enough combination of reasons that warrant a relaxation of the
rules on perfection of appeals in labor cases.

WHEREFORE, the instant petition is hereby GRANTED. The questioned decision of the Labor Arbiter dated 12 August
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer
1991 and the resolution of the Second Division of the National Labor Relations Commission promulgated on 27 October 1994 and
shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed
31 May 1995 are hereby SET ASIDE, and NLRC-NCR Case No. 00-11-06008-90 is DISMISSED.
under the contract, in the same manner and extent that he is liable to employees directly employed by him.
SO ORDERED.
While USSI is an independent contractor under the security service agreement and PAL may be considered an  indirect employer,
that status did not make PAL the employer of the security guards in every respect. As correctly posited by the Office of the
Solicitor General, PAL may be considered an indirect employer only for purposes of unpaid wages since Article 106, which is
applicable to the situation contemplated in Section 107, speaks of wages. The concept of indirect employer only relates or refers
to the liability for unpaid wages. Read together, Articles 106 and 109 simply mean that the party with whom an independent
contractor deals is solidarily liable with the latter for unpaid wages, and only to that extent and for that purpose that the latter is
considered a direct employer. The term wage is defined in Article 97(f) of the Labor Code as the remuneration of earnings,
however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the unwritten contract of employment for work done or to be done, or for services
rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging,
or other facilities customarily furnished by the employer to the employee.

No valid claim for wages or separation pay can arise from the security service agreement in question by reason of its
termination at the instance of PAL. The agreement contains no provision for separation pay. A breach thereof could only give rise
to damages under the Civil Code, which is cognizable by the appropriate regular court of justice.  Besides, there is no substantial
proof that USSI in fact provided 16 additional guards. On the contrary, PAL was able to prove in the annexes attached to its
supplemental motion to dismiss that the 16 guards were actually picked out from the original group and were just required to
render overtime service.

The Labor Arbiters lack of jurisdiction was too obvious from the allegations in the complaint and its annex (the security
service agreement) in NLRC-NCR Case No. 00-11-06008-90.The Labor Arbiter then should have forthwith resolved the motion to
dismiss and the supplemental motion to dismiss. As correctly pointed out by PAL, under Section 15 of Rule V of the New Rules of
Procedure of the NLRC, any motion to dismiss on the ground of lack of jurisdiction, improper venue,  res judicata, or
prescription shall be immediately resolved by the Labor Arbiter by a written order. Yet, the Labor Arbiter did not, and it was only
in his decision that he mentioned that the resolution of the motion to dismiss was deferred until this case is decided on the merits
because the ground thereof was not indubitable. On this score the Labor Arbiter acted with grave abuse of discretion for
disregarding the rules he was bound to observe.

We shall now turn to the issue of tardiness of the appeal. The record does indeed show that on the original copy of the
Notice of Judgment/Final Order,[23] there is stamped by the PAL Legal Department the date of its receipt of the decision, viz.,
AUG. 23 1991,

It is not also denied by respondents that on the right upper hand corner of PALs copy of the Notice of Judgment/Final
Orders,[24] there is stamped the date of receipt thereof by PAL Legal Department, viz., AUG. 26 1991. PAL explained how this
discrepancy occurred and how its counsel was misled into believing that PAL received a copy of the decision only on 26 August
1991. This belief in good faith rendered excusable any negligence it might have committed. Besides, the delay in the perfection of
the appeal was only one day. Considering that the Labor Arbiter had no jurisdiction over the subject matter of NLRC-NCR Case
No. 00-11-06008-90 and that the 16 security guards are not in fact entitled to separation pay under the security service agreement,
the higher interest of justice favors a relaxation of the rule on perfection of appeals in labor cases.
 Page 32

[G.R. No. 71589. December 17, 1990.] The corporation appealed to then Ministry of Labor and Employment (now Department of Labor and Employment) but in its order
dated December 24, 1982, the Ministry, through Deputy Minister Vicente Leogardo, Jr., affirmed the decision of the labor arbiter.
CAGAYAN DE ORO COLISEUM, INC., Petitioner, v. OFFICE OF THE MINISTER OF LABOR AND EMPLOYMENT, 9 Its motion for reconsideration of said order having been denied, the corporation filed the instant petition which we find to be
represented by Deputy Minister VICENTE LEOGARDO, JR. and ANGEL CHAVES, Respondents. impressed with merit.chanrobles.com:cralaw:red

Francisco del Castillo for Petitioner. The crucial issue in this case is which of the two, the MOLE (now DOLE) and the SEC has jurisdiction over the present
controversy.
Teogenes X. Velez for Private Respondent.
An intracorporate controversy would call for the jurisdiction of the SEC while a labor dispute, that of the NLRC or the MOLE as
the case may be. 10 But when a case is between a stockholder and the corporation of which he holds stocks, the controversy is
intracorporate and well within the jurisdiction of the SEC. 11 These rulings are in consonance with the following provisions of
DECISION
Presidential Decree No. 902-A which took effect on March 11, 1976:jgc:chanrobles.com.ph

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

In this special civil action for certiorari, petitioner Cagayan de Oro Coliseum, Inc. questions the jurisdiction of the Ministry of "(a) . . .
Labor and Employment (MOLE) over FSD Case No. R-134-77 filed by private respondent Angel Chaves for unpaid salaries, per
diems and allowances for the fiscal year 1976-1977. "(b) Controversies arising out of intracorporate or partnership relations, between and among stockholders, members, or associates;
between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates,
The undisputed facts are as follows:chanrob1es virtual 1aw library respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchise
or right to exist as such entity."cralaw virtua1aw library
Cagayan de Oro Coliseum, Inc. is a corporation duly organized and existing under Philippine laws having been issued a certificate
of registration by the Securities and Exchange Commission (SEC) on September 15, 1961. 1 Its principal line of business is the Thus, in Abejo v. De la Cruz, 12 the Court held that "an intracorporate controversy is one which arises between a stockholder and
holding of cockfights and occasional boxing matches. 2 Angel Chaves, or the other hand, is an incorporator and major stockholder the corporation. There is no distinction, qualification, nor any exemption whatsoever. The provision is broad and covers all kinds
of the corporation who, for sometime, served as its director and officer. 3  of controversies between stockholders and corporations." The SEC, being clothed with additional adjudicatory powers over
intracorporate and kindred disputes to promote dispatch arising from expertise enhanced by specialization in the settlement of said
Since its incorporation until 1977, the compensation of the corporation’s directors, as provided by Section 5 of Article IV of its By- controversies, 13 is the proper agency to settle the controversy in this case.chanrobles virtual lawlibrary
laws, was from time to time fixed by its Board of Directors. On December 17, 1963, a copy of said By-laws was returned by the
SEC to the corporation with a request that a correction be made on said Section 5 by changing the phrase "Board of Directors" to Although the reliefs sought by Chaves appear to fall under the jurisdiction of the labor arbiter as they are claims for unpaid salaries
the word "stockholders." The change, however, was effected only in 1978. 4  and other remunerations for services rendered, a close scrutiny thereof shows that said claims are actually part of the perquisites of
his position in, and therefore interlinked with his relations with the corporation. In Dy v. NLRC, 14 the Court said:" (t)he question
At the stockholders’ regular meeting on February 7, 1975, Chaves was elected member of the Board of Directors. For fiscal year of remuneration involving as it does, a person who is not a mere employee but a stockholder and officer, an integral part, it might
1975-1976, he was elected vice-president and on March 13, 1976, with the unanimous approval of the members of the Board, he be said, of the corporation, is not a simple labor problem but a matter that comes within the area of corporate affairs and
assumed the presidency following the resignation of the then incumbent president. Chaves held the position of president until the management, and is in fact a corporate controversy in contemplation of the Corporation Code."cralaw virtua1aw library
end of his term in February, 1977. 5 
Finding that the MOLE has no jurisdiction to take cognizance of the herein controversy, there is no need to resolve the other issues
Shortly after Chaves assumed the presidency, or on April 8, 1976, the Board of Directors passed a resolution fixing the monthly raised in this petition.
compensation of the president at P500.00 and his monthly allowance at P100.00. The Board also provided a P100.00 per diem for
the president’s attendance in board meetings. 6  WHEREFORE, the questioned decision of the labor arbiter and the order of the MOLE are set aside for having been rendered
without jurisdiction, but without prejudice to private respondent’s seeking recourse with the appropriate forum.chanrobles virtual
Claiming that he had not been paid for services rendered, Chaves filed on June 3, 1977 a letter complaint with the Field Services lawlibrary
Division of the then Department of Labor, Regional Office No. 10. Consequently, said office investigated the corporation and
found the following: (1) unpaid wages for officers and office personnel; (2) nonpayment of emergency cost of living allowance SO ORDERED.
(ECOLA) under P.D. No. 525; (3) nonpayment of 13th month pay under P.D. No. 851; and (4) nonpayment of special/regular
holiday pay. The investigation also disclosed that although Atty. Angel Quimpo, general manager of the corporation, had signified
his intention to pay the corporation’s obligation to its employees or officers in the amount of P79,773.72 for per diems, allowances,
13th month pay and others as duly certified to by the corporation’s bookkeeper and treasurer, no resolution was passed by its
stockholders or the Board to implement said plan. 7 

On June 20, 1977, another complaint was filed by Angel Chaves with the same division of the Department of Labor against the
corporation on the basis of the findings of said investigation. Two years later or on November 28, 1979, the labor arbiter rendered a
decision awarding Chaves P5,500.00 as salary from March 13, 1976 to February 14, 1977, P462.50 as 13th month pay, P1,700 as
monthly allowance from February 1976 to June 1977, and P3,100 as per diem compensation from February 1976 to June 19, 1977.
8 
 Page 33

G.R. No. 118088 November 23, 1995 5. Unpaid 13th month pay (remaining balance for 1990).4

MAINLAND CONSTRUCTION, CO., INC., and/or LUCITA LU CARABUENA, ROBERT L. CARABUENA, ELLEN LU On the basis of this finding, petitioner corporation was ordered by DOLE to pay to its thirteen employees, which included Movilla,
CARABUENA, and MARTIN LU, petitioners,  the total amount of P309,435.89, representing their salaries, holiday pay, service incentive leave pay differentials, unpaid wages
vs. and 13th month pay.
MILA MOVILLA, ERNESTO MOVILLA, JR., MILA JUDITH C. MOVILLA, JUDE BRIX C. MOVILLA, JONARD
ELLERY C. MOVILLA, AND MAILA JONAH M. QUIMBO, surviving heirs of ERNESTO MOVILLA, and THE
All the employees listed in the DOLE's order were paid by petitioner corporation, except Ernesto Movilla.
HONORABLE COMMISSIONER of the NATIONAL LABOR RELATIONS COMMISSION-5TH
DIVISION, respondents.
On October 8, 1991, Ernesto Movilla filed a case against petitioner corporation and/or Lucita, Robert, and Ellen, all surnamed
Carabuena, for unpaid wages, separation pay and attorney's fees, with the Department of Labor and Employment, Regional
Arbitration, Branch XI, Davao City.

HERMOSISIMA, JR., J.:
On February 29, 1992, Ernesto Movilla died while the case was being tried by the Labor Arbiter and was promptly substituted by
his heirs, private respondents herein, with the consent of the Labor Arbiter.
Petitioners urge this Court to set aside the Decision of the National Labor Relations Commission (NLRC), dated May 30, 1994, in
NLRC-CA No. 
The Labor Arbiter rendered judgment on June 26, 1992, dismissing the complaint on the ground of lack of jurisdiction.
M-000949-92 for having been rendered with grave abuse of discretion amounting to lack of jurisdiction. This reversed the decision
Specifically, the Labor Arbiter made the following ratiocination:
of the Labor Arbiter in case No. RAB-11-10-99883-91. Petitioners' motion for reconsideration of the NLRC decision was denied in
a Resolution, dated August 31, 1994.
It is clear that in the case at bar, the controversy presented by complainant is intra-corporate in nature and is
within the jurisdiction of the Securities and Exchange Commission, pursuant to P.D. 902-A (Phil. School of
Mainland Construction Co., Inc. is a domestic corporation, duly organized and existing under Philippine laws, having been issued a
Business Administration, et al. v. Leano, G.R. No. L-58468, February 24, 1984; Dy et al. v. NLRC, et al.,
certificate of registration by the Securities and Exchange Commission (SEC) on July 26, 1977, under Registry Number 74691. Its
G.R. No. L-68544, October 27, 1986). What Movilla is claiming against respondents are his alleged unpaid
principal line of business is the general construction of roads and bridges and the operation of a service shop for the maintenance of
salaries and separation pay as Administrative Manager of the corporation for which position he was
equipment. Respondents on the other hand, are the surviving heirs of complainant, Ernesto Movilla, who died during the pendency
appointed by the Board of Directors. His claims therefore fall under the jurisdiction of the Securities and
of the action with the Labor Arbiter.
Exchange Commission because this is not a simple labor problem; but a matter that comes within the area of
corporate affairs and management, and is in fact a corporate controversy in contemplation of the Corporation
Records show that Ernesto Movilla, who was a Certified Public Accountant during his lifetime, was hired as such by Mainland in Code. (Fortune Cement Corporation v. NLRC, et al., G.R. No. 79762, January 24, 1991).5
1977. Thereafter, he was promoted to the position of Administrative Officer with a monthly salary of P4,700.00. 1
Aggrieved by this decision, respondents appealed to the National Labor Relations Commission (NLRC). The NLRC ruled that the
Ernesto Movilla, recorded as receiving a fixed salary of P4,700.00 a month, was registered with the Social Security System (SSS) issue in the case was one which involved a labor dispute between an employee and petitioner corporation and, thus, the NLRC had
as an employee of petitioner Corporation. His contributions to the SSS, Medicare and Employees Compensation Commission jurisdiction to resolve the case. The dispositive portion of the NLRC decision reads:
(ECC) were deducted from his monthly earnings by his said employer.2
WHEREFORE, the assailed decision is Reversed  and Set Aside. Respondents are ordered to pay the heirs of
On April 12, 1987, during petitioner corporation's annual meeting of stockholders, the following were elected members of the complainant the following:
Board of Directors, viz.: Robert L. Carabuena, Ellen L. Carabuena, Lucita Lu Carabuena, Martin G. Lu and Ernesto L. Movilla.
1. Unpaid salaries from January 1989 to September 1991 in the sum of P155,100.00;
On the same day, an organizational meeting was held and the Board of Directors elected Ernesto Movilla as Administrative
Manager.3 He occupied the said position up to the time of his death.
2. Separation pay in the sum of P65,800.00;

On April 2, 1991, the Department of Labor and Employment (DOLE) conducted a routine inspection on petitioner corporation and
3. Moral damages in the sum of P10,000.00;
found that it committed such irregularities in the conduct of its business as:

4. Indemnity in the sum of P3,000.00; and,

1. Underpayment of wages under R.A. 6727 and RTWPB-XI-01;

5. Attorney's fees equivalent to 10% of the total award.6

2. Non-implementation of Wage Order No. RTWPB-XI-02;

The pivotal issue in this case is which of the two agencies of the government — the NLRC or the SEC — has jurisdiction over the
3. Unpaid wages for 1989 and 1990;
controversy.

4. Non-payment of holiday pay and service incentive leave pay; and

 Page 34

As we stated earlier, it is of course the contention of petitioners that the NLRC committed grave abuse of discretion when it It is pertinent to note that petitioner corporation is not prohibited from hiring its corporate officers to perform services under a
nullified the decision of the Labor Arbiter which dismissed the complaint of Movilla for unpaid wages, separation pay and circumstance which will make him an employee. 14 Moreover, although a director of a corporation is not, merely by virtue of his
attorney's fees on the ground of lack of jurisdiction. Petitioners take the position that, since Ernesto Movilla was a corporate position, its employee, said director may act as an employee or accept duties that make him also an employee. 15
officer, the controversy as to his compensation is within the jurisdiction of the SEC as mandated by P.D. 902-A and not with the
NLRC.
Since Ernesto Movilla's complaint involves a labor dispute, it is the NLRC, under Article 217 of the Labor Code of the Philippines,
which has jurisdiction over the case at bench.
We find for the respondents, it appearing that petitioners' contention is bereft of merit.
WHEREFORE, the petition is DISMISSED for lack of showing of any grave abuse of discretion on the part of public respondent
In order that the SEC can take cognizance of a case, the controversy must pertain to any of the following relationships: a) between NLRC. The assailed decision of public respondent is thus AFFIRMED.
the corporation, partnership or association and the public; b) between the corporation, partnership or association and its
stockholders, partners, members or officers; 
SO ORDERED.
c) between the corporation, partnership or association and the State as far as its franchise, permit or license to operate is concerned;
and d) among the stockholders, partners or associates themselves. 7 The fact that the parties involved in the controversy are all
stockholders or that the parties involved are the stockholders and the corporation does not necessarily place the dispute within the
ambit of the jurisdiction of SEC. The better policy to be followed in determining jurisdiction over a case should be to consider
concurrent factors such as the status or relationship of the parties or the nature of the question that is the subject of their
controversy.8 In the absence of any one of these factors, the SEC will not have jurisdiction. Furthermore, it does not necessarily
follow that every conflict between the corporation and its stockholders would involve such corporate matters as only the SEC can
resolve in the exercise of its adjudicatory or quasi-judicial  powers.9

In the case at bench, the claim for unpaid wages and separation pay filed by the complainant against petitioner corporation involves
a labor dispute. It does not involve an intra-corporate matter, even when it is between a stockholder and a corporation. It relates to
an employer-employee relationship which is distinct from the corporate relationship of one with the other. Moreover, there was no
showing of any change in the duties being performed by complainant as an Administrative Officer and as an Administrative
Manager after his election by the Board of Directors. What comes to the fore is whether there was a change in the nature of his
functions and not merely the nomenclature or title given to his job.

Indeed, Ernesto Movilla worked as an administrative officer of the company for several years and was given a fixed salary every
month. To further sustain this assertion Movilla also submitted a joint affidavit executed by Juanito S. Malubay and Delia S.
Luciano, Project Engineer and Personnel-In-Charge, respectively, of petitioner corporation, attesting that they personally knew
Movilla and that he was employed in the company. A Premium Certification issued by an authorized representative of petitioners
was also presented to show his actual monthly earnings as well as his monthly contributions to the SSS, Medicare and
ECC.10 Movilla's registration in the SSS by petitioner corporation added strength to the conclusion that he was petitioner
corporation's employee as coverage by the said law is predicated on the existence of an employer-employee
relationship. 11 Furthermore, petitioner corporation failed to present evidence which showed that, after his election as
Administrative Manager, he was excluded from the coverage of the SSS, Medicare and ECC.

He also presented, appearing to be relevant to the issue, the result of the investigation conducted by DOLE which found that
petitioner corporation has transgressed several labor standard laws against its employees.

As correctly ruled by the NLRC:

The claims for unpaid salaries/monetary benefits and separation pay, are not a corporate conflict as
respondents presented them to be. If complainant is not an employee, respondent should have contested the
DOLE inspection report, What they did was to exclude complainant from the order of payment . . . and
worse, he was not both given responsibilities and paid his salaries for the succeeding months . . . . This is a
clear case of constructive dismissal without due process . . .12

The existence of an employer-employee relationship is a factual question and public respondent's findings are accorded great
weight and respect as the same are supported by substantial evidence. 13 Hence, we uphold the conclusion of public respondent that
Ernesto Movilla was an employee of petitioner corporation.

G.R. No. 85197             March 18, 1991
NESTLÉ PHILIPPINES, INC., petitioner, 
vs.
NATIONAL LABOR RELATIONS COMMISSION, EUGENIA C. NUNEZ, LIZA T. VILLANUEVA, EMMANUEL S.
VILLENA, RUDOLPH C. ARMAS, RODOLFO M. KUA and RODOLFO A. SOLIDUM, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for private respondents.
GRIÑO-AQUINO, J.:
This petition for certiorari seeks a review of the resolutions dated May 28, 1988 and September 1, 1988 of the National Labor
Relations Commission (NLRC) in Injunction Case No. 1582 granting the injunction prayed for by the private respondents, to hold
in abeyance the cancellation of their car loans and payments of the monthly amortizations thereon pending the resolution of their
complaints for illegal dismissal.
The private respondents were employed by the petitioner either as sales representatives or medical representatives. By reason of the
nature of their work they were each allowed to avail of the company's car loan policy. Under that policy, the company advances the
purchase price of a car to be paid back by the employee through monthly deductions from his salary, the company retaining the
ownership of the motor vehicle until it shall have been fully paid for. All of the private respondents availed of the petitioner's car
loan policy.
On September 14, 1987, private respondents Nuñez, Villanueva, Villena and Armas were dismissed from the service for having
participated in an illegal strike. On December 26, 1987, respondents Kua and Solidum were also dismissed for certain
irregularities. All the private respondents filed complaints for illegal dismissal in the Arbitration Branch of the NLRC. The Labor
Arbiter dismissed their complaints and upheld the legality of their dismissal. They appealed to the NLRC where their appeals are
still pending.
In the Notices of Dismissal which they received from Nestlé, the private respondents had been directed to either settle the
remaining balance of the cost of their respective cars, or return them to the company for proper disposition.
As they failed and refused to avail of either option, the company filed in the Regional Trial Court of Makati a civil suit to recover
possession of the cars. The Court issued an Order dated March 7, 1988 directing the Deputy Sheriff to take the motor vehicles into
his custody.
The private respondents sought a temporary restraining order in the NLRC to stop the company from cancelling their car loans and
collecting their monthly amortizations pending the final resolution of their appeals in the illegal dismissal case.
On May 27, 1988, the NLRC en banc, issued a resolution granting their petition for injunction. Its order reads:
Acting on the Urgent Petition for the Issuance of a Temporary Restraining Order, the Commission sitting  en banc after
deliberation, Resolved to hold in abeyance the cancellation of the petitioners' car loans and the payment of the monthly
amortizations thereof pending resolution of their illegal dismissal cases. (p. 5, Rollo.)
The company filed a motion for reconsideration, but it was denied for tardiness. Hence, this petition for  certiorarialleging that the
NLRC acted with grave abuse of discretion amounting to lack of jurisdiction when it issued a labor injunction without legal basis
and in the absence of any labor dispute related to the same.
Page 35
The private respondents, in their comment on the petition, alleged that there is a labor dispute between the petitioner and the private
respondents and that their default in paying the amortizations for their cars was brought about by their illegal dismissal from work
by the petitioner as punishment for their participation in the illegal strike of the Union of Filipro Employees of which they are
members. If they had not participated in the strike, they would not have been dismissed from work and they would not have
defaulted in the payment of their amortizations. Private respondents admitted their civil obligation to the petitioner.
The Office of the Solicitor General filed a manifestation on June 13, 1989, stating that "after judicious scrutiny of the records, . . .
and in consonance with the applicable law and jurisprudence on the matter, the Office of the Solicitor General is convinced that it
cannot, without violating the law, sustain the findings of the National Labor Relations Commission in the case at bar. So as not to
prejudice NLRC's case, the OSG deems it best to refrain from filing its Comment, even as it begs leave of the Honorable Court to
be excused from further appearing in behalf of the NLRC in this particular case" (p. 173, Rollo).
Filing its own comment, the NLRC argued that as the illegal dismissal case is a labor dispute which is still pending resolution
before it, "it is clothed with authority to issue the contested resolutions because under the law, PD 442, otherwise known as the
Labor Code of the Philippines as amended, it is vested with the authority to resolve labor disputes" (p. 252, Rollo).
The power of the NLRC to issue writs of injunction is found in Article 218 of the Labor Code, which provides:
Art. 218 Powers of the Commission. — The Commission shall have the power and authority:
x x x           x x x          x x x
(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or
irreparable damage to any party or render ineffectual any decision in favor of such party: . . . (Emphasis ours.)
That power, as the statute provides, can only be exercised in a labor dispute. Paragraph (1) of Article 212 of the Labor Code
defines a labor dispute as follows:
(1) "Labor dispute" includes any controversy or matters concerning terms or conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and
conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and
employee.
Nestlé's demand for payment of the private respondents' amortizations on their car loans, or, in the alternative, the return of the cars
to the company, is not a labor, but a civil, dispute. It involves debtor-creditor relations, rather than employee-employer relations.
Petitioner Nestlé Philippines, Inc., correctly pointed out that:
The twin directives contained in petitioner's letters to the private respondents to either (1) settle the remaining balance
on the value of their assigned cars under the company car plan or return the cars to the company for proper disposition;
or (2) to pay all outstanding accountabilities to the company — are matters related to the enforcement of a civil
obligation founded on contract. It is not dependent on or related to any labor aspect under which a labor injunction can
be issued. Whether or not the private respondents remain as employees of the petitioner, there is no escape from their
obligation to pay their outstanding accountabilities to the petitioner; and if they cannot afford it, to return the cars
assigned to them.
As noted, the options given to the private respondents are civil in nature arising from contractual obligations. There is
no labor aspect involved in the enforcement of those obligations. (p. 7, Rollo.)
 Page 36

The NLRC gravely abused its discretion and exceeded its jurisdiction by issuing the writ of injunction to stop the company from
enforcing the civil obligation of the private respondents under the car loan agreements and from protecting its interest in the cars
which, by the terms of those agreements, belong to it (the company) until their purchase price shall have been fully paid by the
employee. The terms of the car loan agreements are not in issue in the labor case. The rights and obligations of the parties under
those contracts may be enforced by a separate civil action in the regular courts, not in the NLRC.

WHEREFORE, the petition for certiorari is granted. The questioned resolution dated May 27, 1988 of the NLRC in Injunction
Case No. 1582 (Annex A) is hereby annulled and set aside. Costs against the private respondents.

SO ORDERED.
 Page 37

G.R. No. 80039 April 18, 1989 Firstly, the NLRC has no jurisdiction to determine such intra-corporate dispute between the stockholder and the corporation as in
the matter of unpaid subscriptions. This controversy is within the exclusive jurisdiction of the Securities and Exchange
Commission. 1
ERNESTO M. APODACA, petitioner, 
vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS., INC., respondents. Secondly, assuming arguendo that the NLRC may exercise jurisdiction over the said subject matter under the circumstances of this
case, the unpaid subscriptions are not due and payable until a call is made by the corporation for payment. 2 Private respondents
have not presented a resolution of the board of directors of respondent corporation calling for the payment of the unpaid
Diego O. Untalan for petitioner.
subscriptions. It does not even appear that a notice of such call has been sent to petitioner by the respondent corporation.

The Solicitor General for public respondent.

What the records show is that the respondent corporation deducted the amount due to petitioner from the amount receivable from
him for the unpaid subscriptions. 3 No doubt such set-off was without lawful basis, if not premature. As there was no notice or call
Barcelona, Perlas, Joven & Academia Law Offices for private respondents. for the payment of unpaid subscriptions, the same is not yet due and payable.

Lastly, assuming further that there was a call for payment of the unpaid subscription, the NLRC cannot validly set it off against the
wages and other benefits due petitioner. Article 113 of the Labor Code allows such a deduction from the wages of the employees
by the employer, only in three instances, to wit:
GANCAYCO, J.:

Does the National Labor Relations Commission (NLRC) have jurisdiction to resolve a claim for non-payment of stock
subscriptions to a corporation? Assuming that it has, can an obligation arising therefrom be offset against a money claim of an
employee against the employer? These are the issues brought to this court through this petition for review of a decision of the
NLRC dated September 18, 1987.
The only remedy provided for by law from such a decision is a special civil action for certiorari under Rule 65 of the Rules of
Court based on jurisdictional grounds or on alleged grave abuse of discretion amounting to lack or excess of jurisdiction, not by
way of an appeal by certiorari. Nevertheless, in the interest of justice, this petition is treated as a special civil action for certiorari.
ART. 113. Wage Deduction. — No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by
the employer or authorized in writing by the individual worker concerned; and

Petitioner was employed in respondent corporation. On August 28, 1985, respondent Jose M. Mirasol persuaded petitioner to (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor. 4
subscribe to 1,500 shares of respondent corporation at P100.00 per share or a total of P150,000.00. He made an initial payment of
P37,500.00. On September 1, 1975, petitioner was appointed President and General Manager of the respondent corporation.
WHEREFORE, the petition is GRANTED and the questioned decision of the NLRC dated September 18, 1987 is hereby set aside
However, on January 2, 1986, he resigned.
and another judgment is hereby rendered ordering private respondents to pay petitioner the amount of P17,060.07 plus legal
interest computed from the time of the filing of the complaint on December 19, 1986, with costs against private respondents.
On December 19, 1986, petitioner instituted with the NLRC a complaint against private respondents for the payment of his unpaid
wages, his cost of living allowance, the balance of his gasoline and representation expenses and his bonus compensation for 1986.
SO ORDERED.
Petitioner and private respondents submitted their position papers to the labor arbiter. Private respondents admitted that there is due
to petitioner the amount of P17,060.07 but this was applied to the unpaid balance of his subscription in the amount of P95,439.93.
Petitioner questioned the set-off alleging that there was no call or notice for the payment of the unpaid subscription and that,
accordingly, the alleged obligation is not enforceable.

In a decision dated April 28, 1987, the labor arbiter sustained the claim of petitioner for P17,060.07 on the ground that the
employer has no right to withhold payment of wages already earned under Article 103 of the Labor Code. Upon the appeal of the
private respondents to public respondent NLRC, the decision of the labor arbiter was reversed in a decision dated September 18,
1987. The NLRC held that a stockholder who fails to pay his unpaid subscription on call becomes a debtor of the corporation and
that the set-off of said obligation against the wages and others due to petitioner is not contrary to law, morals and public policy.

Hence, the instant petition.

The petition is impressed with merit.

 Page 38

G.R. No. 85517 October 16, 1992 In due course, CECCI likewise filed its Answer with a Third-Party Complaint  3 against FUJITEC which it alleged to be liable,
being the employer of the elevator boy. FUJITEC filed its Answer to the said Third-Party Complaint 4denying the allegations made
therein and asserting that the operation of the elevator was turned over the building owner long before the fatal accident.
DOROTEO OCHEDA, petitioner, 
vs.
THE HONORABLE COURT OF APPEALS and THE HEIRS OF EDUARDO SANTOS, respondents. Pre-trial was conducted on 23 September 1983. The pre-trial order issued by the trial court embodies the respective positions of the
parties. As to herein petitioners, the Pre-trial order summarized his stand as follows:

2. Defendant Ocheda's Case:

DAVIDE, JR., J.:
Defendant Doroteo Ocheda denies liability. He claims that the complaint states no cause of action against
him; that the death of the deceased Eduardo Santos resulted from the operation of the elevator at the
The trial court's jurisdiction over an action for damages arising from a quasi-delict  which resulted in the death of an employee
construction site; that he had nothing to do with the operation, or control, or management of the elevator in
while in the performance of his duty is challenged in this case.
question, hence, the death of Eduardo Santos is not attributable to him; that his participation in the
construction of the building was limited solely to painting specific portions thereof; that he filed a cross-
The late Eduardo Santos was, at the time of his death, employed as a painter by the petitioner who was a sub-contractor for the claim against defendant C.E. Construction Corp. because the said corporation was the general contractor of
painting job on M.J. Building then being constructed along Salcedo Street, Makati, Metro Manila. The C.E. Construction the building, operator/maintainer of the elevator, and employer of the elevator boy. 5
Corporation, Inc. (CECCI) was the principal contractor thereof by virtue of a contract it entered into with M.J. Development
Corporation, the owner of the building. Another corporation, Fujitec Philippines Industrial Company, Inc. (FUJITEC), was
During the trial of the case on the merits, petitioner presented two (2) witnesses — Josefino Rivera and himself. 6
contracted by M.J. Development Corporation to install two (2) standard scenic elevator units in the building.

On 24 February 1986, the trial court rendered its decision 7 finding both the petitioner and CECCI liable for the death of Eduardo.
When the painting job was almost complete, i.e., all that remained to be painted was the wall of the shaft for the second elevator,
The dispositive portion of the decision reads as follows:
the petitioner trimmed his work forces to two (2) employees, Hernani Gozun and Eduardo Santos; these employees were tasked to
finish the painting. On 5 February 1981, they started work on the inner wall of the elevator shaft; to paint the same, they had to
stand on top of the elevator which was then on the second floor of the building. After they finished, they called on the boy WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered as follows:
operating the elevator to ask him to bring the same down to the first floor. Instead of lowering the elevator, however, the boy
brought it up to the sixth floor. The sudden upward movement caused the elevator to jerk and the two (2) painters to lose their
1. The defendant (sic) Doroteo Ocheda and C.E. Construction Corporation, Inc. are ordered to pay jointly
balance. Hernani was able to cling to the cable but Eduardo fell off the top, found himself pinned between the shaft and the elevator
and severally the plaintiffs the following amounts:
as the latter was moving upward and then fell to the ground when the elevator finally stopped on the sixth floor. Hernani rushed to
Eduardo's aid upon hearing the latter's cry for help. The former lifted Eduardo in his arms and, with the help of another man,
brought him to the Makati Medical Center where he later died. While the elevator boy was never identified, it is alleged that he a) Seven Thousand Three Hundred Fifty Pesos (P7,350.00) as burial expenses;
worked for CECCI.
b) Thirty Thousand Pesos (P30,000.00) as moral damages;
On 11 September 1981, the spouses Catalino and Ester Santos, together with Wilma Palabasan-Santos, parents and widow,
respectively, of Eduardo, filed a Complaint 1 for damages against Doroteo Ocheda and CECCI before the then Court of First
c) Five Thousand pesos (P5,000.00) as attorney's fees; and
instance (now Regional Trial Court) of Pampanga. The case was docketed as Civil Case No. 6263 and was assigned to Branch 42
thereof. The complaint alleges the foregoing facts and, in addition, specifically states that while Eduardo was employed by the
petitioner in 1979 and received a daily wage of P35.00, the petitioner did not place him within "any SSS, Medicare and Workmen's d) Costs of suit.
Compensation coverage." It is further averred that the elevator boy was inexperienced for the work assigned to him. Then they
asked for judgment ordering the defendants, jointly and severally, to pay P10,000.00 as burial expenses, P30,000.00 as moral
damages, attorney's fees and compensatory damages as may be proved at the trial and costs. 2. The third-party complaint is hereby dismissed and the third-party plaintiff C.E. Construction Corporation,
Inc. is ordered to pay the third-party defendant Fujitec the sum of Fifteen Thousand Pesos (P15,000.00) as
attorney's fees plus the cost of suit;
Petitioner filed an Answer with a Counterclaim against the plaintiff, and a Cross-Claim against CECCI. 2 He alleges therein that
Eduardo was employed by him only a week before the accident and purely on a  casual basis for the particular painting job. As
affirmative defense, he avers that Eduardo's death was due to the negligence and carelessness of the elevator boy, an employee of 3. The cross-claim and counterclaim of defendant Ocheda and the counterclaim of defendant C.E.
CECCI. Thus, the latter is solely liable for the said death and no cause of action exists against him. Moreover, it is postulated that Construction are hereby dismissed.
the trial court has no jurisdiction over the claims involving SSS, Medicare, Workmen's Compensation and insurance benefits. Such
jurisdiction is vested in other administrative or quasi-judicial bodies; furthermore, he avers that the allegation concerning such SO ORDERED. 8
claims (paragraph 8 of the complaint) is not essential to the plaintiffs' cause of action which is the negligent operation of the
elevator. In this counterclaim, petitioner asks for an award of attorney's fees in the amount of P10,000.00, and the expenses of
litigation. This determination of liability is based on the trial court's findings that:

It has been sufficiently established that it was defendant Ocheda who caused the accident to happen. It was
defendant Ocheda who ordered the late Eduardo Santos and Hernani Gozun to use the top of the elevator as

stepping board while painting the wall of the elevator shaft. And defendant Ocheda failed to exercise the
diligence of a good father of a family in the supervision of his employees.
It has likewise been shown that C.E. Construction was, at the time of the incident in question, in full control
of the building since the same was not yet accepted by the owner thereof. C.E. Construction was the general
contractor of the building, hence it was in full management and control of the elevator because the same was
already turned over to and accepted by the building owner from Fujitec. As such C.E. Construction should
have guarded against the unauthorized use of the elevator by people working in the building. At the time of
the incident, the late Eduardo Santos was an employee of defendant Ocheda, a sub-contractor of C.E.
Construction. In view of all these, C.E. Construction is equally liable with defendant Ocheda pursuant to
Article 2180, in conjunction with Article 2176 of the civil Code. The elevator which caused the injury and
subsequent death of Eduardo Santos was under the management and control of C.E. Construction.
Consequently, had C.E. Construction used proper care in the management and operation of the elevator, and
had it exercised the diligence of a good father of a family in the supervision of its employees, then the fatal
incident would not have happened. 9
Petitioner and CECCI appealed this adverse decision to the respondent Court of Appeals which docketed the case as C.A.-G.R. CV
No. 09574. In the Brief he submitted, petitioner made the following assignment of errors:
I. THE LOWER COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT HAD
JURISDICTION OVER THE COMPLAINT;
II. THE LOWER COURT ERRED IN HOLDING THAT OCHEDA WAS GUILTY OF NEGLIGENCE
FOR THE DEATH OF SANTOS;
III. THE LOWER COURT ERRED IN APPLYING ARTICLE 2180 OF THE NEW CIVIL CODE TO
OCHEDA;
IV. THE LOWER COURT ERRED IN HOLDING OCHEDA JOINTLY AND SEVERALLY LIABLE
WITH C.E. CONSTRUCTION CORP. TO THE PLAINTIFFS FOR DAMAGES. 10
On the other hand, CECCI, in its Brief, contended that the trial court gravely erred in finding it solidarily liable with the herein
petitioner for the death of Eduardo, in awarding moral damages, in dismissing the third-party complaint and in not holding the
plaintiffs therein liable for damages, attorney's fees and costs of the suit. 11
On 1 September 1988, the respondent Court promulgated its decision 12 upholding the findings of the trial court but reducing the
amount of damages; it likewise eliminated the grant of attorney's fees in favor of FUJITEC. Thus:
WHEREFORE, the decision appealed from is hereby AFFIRMED in all respects, except as modified herein
by reducing the award for actual or compensatory damages to only P5,880.00; reducing the damage caused
by death to only P24,000.00; and eliminating the award of P15,000.00 attorney's fees to third party defendant
Fujitec. No costs.
SO ORDERED. 13
The reduction in the award of damages was based on the respondent Court's finding of contributory negligence on the part of
Eduardo Santos when he failed to heed the order to tie a rope around his waist while working.
As to the issue of lack of jurisdiction on the part of the trial court, the respondent Court held:
Page 39
The case at bar is being prosecuted in behalf of a deceased, not dismissed, employee for damages arising
from the death of the employee based on quasi-delict founded on an undoubted principle of justice
recognized by all legislations that every injury, loss or damage which a person received in his right (sic), be
it by act or by omission, creates a juridical relation from which is derived the right which the aggrieved party
has to be indemnified and the consequent obligation by the other party.
In the present case of Floresca vs. Philex Mining Corporation, 136 SCRA 141, the Supreme Court ruled that
recovery under the new Civil Code for damages arising from negligence is not barred by Article 173 of the
New Labor Code. In this case, it was further held that an ordinary court has jurisdiction over complaints for
damages filed by heirs of mining employees against the mining corporation for the death of the former
allegedly caused by the negligence of their employer. 14
His motion to reconsider the decision having been denied in the resolution of the respondent Court dated 18 October
1988, 15 petitioner took this recourse under Rule 45 of the Rules of Court. He reiterates in the instant petition for review the
assignment of errors submitted before the respondent Court.
This Court grave due course to the petition and required the parties to submit their respective Memoranda 16 after the submission of
the Comment to the petition by the private respondent, the Reply thereto by the petitioner and the Rejoinder to the latter by the
private respondents.
We find no merit in the petition.
Regarding the issue of the factual findings upon which the second, third and fourth assigned errors are based. We find no cogent
reason to disturb such findings of both the trial and respondent courts. Petitioner does not even attempt to show that this case falls
under any of the accepted exceptions to the well-settled and oft-repeated rule that findings of facts of the Court of Appeals are
biding upon this Court. 17
Anent the alleged lack of jurisdiction on the part of the trial court, petitioner admits that the private respondents cause of action, as
expressed in the complaint, is based on a quasi-delict. The former submits, however, that since the monetary award is sought in
connection with the employer-employee relationship which existed between him and the late Eduardo Santos, only Labor Arbiters,
pursuant to Article 217 of the Labor Code of the Philippines as it was then worded,  18 have original and exclusive jurisdiction over
them. Under the said provision, "all money claims of workers" and "all other claims arising from employer-employee relations" are
exclusively cognizable by Labor Arbiters. We ruled in Getz Corp. vs. Court of Appeals  19 that pursuant to P.D. No. 1691, such
claims include moral and exemplary damages. Petitioner further contends that Floresca vs. Philex Mining Corp., 20 which the
respondent Court relied upon, is not applicable because the cause of action involved therein accrued on 28 June 1967, or before the
enactment of the Labor Code and P.D. No. 1691; he asserts that the decision therein constituted "judicial legislation".
Petitioner's unusual patience and tenacity on the first assigned error merits him no reward. In the first place, he did not raise in his
answer that defense with respect to the claim for damages arising from a quasi-delict. His affirmative defense of lack of jurisdiction
specifically refers to the allegation in paragraph 8 of the complaint concerning the SSS, Medicare, Workmen's Compensation and
insurance benefits the award of which, according to him, falls within the competence and jurisdiction of other administrative or
quasi-judicial bodies. In fact, he even considers such allegation to be non-essential to the complaint's cause of action — the
negligent operation of the elevator. This is how he worded that particular affirmative defense:
SECOND AFFIRMATIVE DEFENSE
12. He need not deny nor (sic) admit the allegations in paragraph 8 regarding the alleged SSS, Medicare,
Workmen's Compensation, and insurance coverage since this Honorable Court has no jurisdiction over
disputes involving cases of these sorts, jurisdiction thereof being vested in other administrative or quasi-
judicial bodies. Furthermore, the allegations in said paragraph 8 of the plaintiff's cause of action which is the
negligent operation of the elevator resulting in the death of Eduardo (sic) Santos. 21
 Page 40

Obviously, he did not even have Labor Arbiters in mind for such cases. He knew, or at least ought to have known, that expressly fall within the original and exclusive jurisdiction of labor Arbiters are those money claims which have some
excepted from the broad jurisdiction of labor Arbiters in Section 217 of the Labor Code are "claims for employees compensation, reasonable causal connection with the employer-employee relationship.
social security, medicate and maternity benefits."
Said article presently reads as follows: 25
In the second place, during the pre-trial conference, petitioner failed to raise the issue of jurisdiction. He instead harped on the lack
of a cause of action — his first affirmative defense — which was based on the theory that the proximate cause of Eduardo's death
Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise provided under this
was the negligence of the elevator boy who was an employee of CECCI; in fact, it was against the latter that he filed a cross-claim.
Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the parties for decision without extension, even in the
In the third place, petitioner openly and unqualifiedly involved and submitted to the jurisdiction of the trial court by setting up a absence of stenographic notes, the following cases involving all workers, whether agricultural or non-
counterclaim, asking for relief in the concept of attorney's fees and expenses of litigation against the private respondents and filing agricultural:
a cross-claim against CECCI, whom he alleged to be the employer of the elevator boy.
1. Unfair labor practice cases;
Finally, he presented evidence to prove that the proximate cause of the accident and resulting death of Eduardo was the negligence
of the elevator boy. He concludes that as employer of the said boy, CECCI is solely liable to the private respondents for the
2. Termination of disputes;
damages claimed by the latter.

3. If accompanied with a claim for reinstatement, those cases that workers may file
Petitioner was, therefore, effectively estopped from raising the issue of jurisdiction with respect to the damages arising from a
involving wages, rates of pay, hours of work and other terms and conditions of
quasi-delict. While it is true that jurisdiction over the subject matter of a case may be raised at any stage of the proceedings as the
employment;
same is conferred by law, 22 it is nevertheless settled that a party may be barred from arising it on the ground of estoppel. 23 The
reason for this is that after voluntarily submitting a cause and encountering an adverse decision on the merits, it would be improper
and too late, to say the least, for the lower to question the jurisdiction or power of the court. It is not correct for a party who has 4. Claims for actual, moral, exemplary and other forms of damages arising from the
invoked the jurisdiction of a court in a particular matter to secure affirmative relief, to afterwards deny that very jurisdiction to employer-employee relations;
escape penalty.
5. Cases arising from any violation of Article 264 of this Code, including questions
And even granting, for the sake of argument, that the issue of jurisdiction can still be raised in connection with its specific involving the legality of strike and lockouts; and
reference to the damages arising out of a quasi-delict, petitioner's thesis would still fail. Such damages may not be awarded in
accordance with Section 217 of the Labor Code, as amended, for there is no reasonable causal connection with the employer-
6. Except claims for Employees Compensation, Social Security, Medicare and
employee relationship. At the time the cause of action accrued, Article 217 of the Labor Code required that in order that the Labor
maternity benefits, all other claims, arising from employer-employee relations,
Arbiter may adjudicate claims not included in the other paragraphs, the same must arise out of 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
In San Miguel Corporation vs. National Labor Relations Commission, 24 this Court ruled, with respect to Article 217, as amended claim for reinstatement.
by B.P. Blg. 227:
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the
entire universe of money claims that might be asserted by workers against their employers has been absorbed
(c) Cases involving from the interpretation or implementation of collective bargaining agreement and those
into the original and exclusive jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read
arising from the interpretation or enforcement of company personnel policies shall be disposed of by the
not in isolation from but rather within the context formed by paragraph 1 (relating to unfair labor practices),
Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided
paragraph 2 (relating to claims concerning terms and conditions of employment), paragraph 4 (claims
in said agreements.
relating to household services, a particular species of employer-employee relations), and paragraph 5
(relating to certain activities prohibited to employees or to employers). It is evident that there is a unifying
element which runs through paragraphs 1 to 5 and that is, that they all refer to cases or disputes arising out of In the instant case, the source of the obligation upon which the private respondents' cause of action is based is a quasi-delict or tort
or in connection with an employer-employee relationship. This is, in other words, a situation where the rule which has no reasonable connection with any of the claims provided for in the aforesaid Article 217 of the Labor Code. It would
of noscitur a sociis may be usefully invoked in clarifying the scope of paragraph 3, and any other paragraph have been entirely different if the claim for damages arose out of, for instance, the illegal dismissal of Eduardo, in which case the
of Article 217 of the Labor Code, as amended. We reach the above conclusion from an examination of the Labor Arbiter would have exclusive jurisdiction thereon. 26
terms themselves of Article 217, as last amended by B.P. Blg. 227, and even though earlier versions of
Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor Arbiters and the NLRC
"cases arising from employer-employee relations," which clause was not expressly carried over, in printer's It would have also been different if the petitioner had grounded his claim of lack of jurisdiction on the basis of the Workmen's
ink, in Article 217 as it exists today. For it cannot be presumed that money claims of workers which do not Compensation Law. Unfortunately, he adroitly avoided this issue from the very beginning not only because of his claim that the
arise out of or in connection with their employer-employee relationships, and which would therefore fall allegation on this matter is irrelevant to the private respondents' theory but, and more importantly, he did not, as revealed by the
within the general jurisdiction of the courts of justice, were intended by the legislative authority to be taken latter, register Eduardo with the Social Security System pursuant to the Amended Rules on Employees Compensation in relation to
away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The Court, Chapter II, Title II, Book IV of the Labor Code of the Philippines (P.D. No. 442), as amended. To avoid possible liability
therefore, believes and so holds that the "money claims of workers" referred to in paragraph 3 of Article 217 thereunder, and more particularly the criminal and civil sanctions under Section 4, Rule II of said Rules which reads:
embraces money claims which arise out of or in connection with the employer-employee relationship, or
some aspect or incident of such relationship. Put a little differently, that money claims of workers which now Sec. 4. Penalty. — Any violation of this Rule shall be penalized as follows:
 Page 41

(1) In case of failure or refusal to register employees, the employer or responsible official who committed
the violation shall be punished with a fine of not less than P1,000 nor more than P10,000 and/or
imprisonment for the duration of the violation or noncompliance or until such time that rectification of the
violation has been made, at the discretion of the court.

(2) In case a compensable contingency occurs after 30 days from employment and before the System
receives any report for coverage about the employee or EC contribution on his behalf, his employer shall be
liable to the System for the lump sum equivalent to the benefits to which he or his dependents may be
entitled.

petitioner unabashedly asserted in his Answer that the late Eduardo Santos was his employee for barely a week and that
he was hired on a casual basis only for the particular painting job on the M.J. Building. Having done so, he cannot now
be heard to make a strained and tenuous analysis of Floresca vs.  Philex mining Corporation. 27

WHEREFORE, for lack of merit, the instant petition is DENIED with costs against the petitioner.

This decision is immediately executory.SO ORDERED.

 Page 42

G.R. No. L-59825 September 11, 1982 Vice President to take whatever action was necessary under the circumstances, Cosme de Aboitiz himself
went to the Muntinlupa Plant in order to publicly upbraid and dismiss the plaintiffs;
ERNESTO MEDINA and JOSE G. ONG, petitioners, 
vs. 9. That the defendants dismissed the plaintiffs because of an alleged delay in the use of promotional crowns
HON. FLORELIANA CASTRO-BARTOLOME in her capacity as Presiding Judge of the Court of First Instance Cf Rizal, when such delay was true with respect to the other Plants, which is therefore demonstrative of the fact that
Branch XV, Makati, Metro Manila, COSME DE ABOITIZ and PEPSI-COLA BOTTLING COMPANY OF THE Cosme de Aboitiz did not really have a strong reason for publicly humiliating the plaintiffs by dismissing
PHILIPPINES, INC., respondents. them on the spot;

10. That the defendants were moved by evil motives and an anti-social attitude in dismissing the plaintiffs
because the dismissal was effected on the very day that plaintiffs were awarded rings of loyalty to the
Company, five days before Christmas and on the day when the employees' Christmas party was held in the
ABAD SANTOS, J.:
Muntinlupa Plant, so that when plaintiffs went home that day and found their wives and children already
dressed up for the party, they didn't know what to do and so they cried unashamedly;
Civil Case No. 33150 of the Court of First Instance of Rizal Branch XV, was filed in May, 1979, by Ernesto Medina and Jose G.
Ong against Cosme de Aboitiz and Pepsi-Cola Bottling Co. of the Philippines, Inc. Medina was the former Plant General Manager
xxx xxx xxx
and Ong was the former Plant Comptroller of the company. Among the averments in the complaint are the following:

20. That because of the anti-social manner by which the plaintiffs were dismissed from their employment
3. That on or about 1:00 o'clock in the afternoon of December 20, 1977, defendant Cosme de Aboitiz, acting
and the embarrassment and degradation they experience in the hands of the defendants, the plaintiffs have
in his capacity as President and Chief Executive Officer of the defendant Pepsi-Cola Bottling Company of
suffered and will continue to suffer wounded feelings, sleepless nights, mental torture, besmirched reputation
the Philippines, Inc., went to the Pepsi-Cola Plant in Muntinlupa, Metro Manila, and without any
and other similar injuries, for which the sum of P150,000.00 for each plaintiff, or the total amount. of
provocation, shouted and maliciously humiliated the plaintiffs with the use of the following slanderous
P300,000.00 should be awarded as moral damages;
language and other words of similar import uttered in the presence of the plaintiffs' subordinate employees,
thus-
21. That the defendants have demonstrated their lack of concern for the rights and dignity of the Filipino
worker and their callous disregard of Philippine labor and social legislation, and to prevent other persons
GOD DAMN IT. YOU FUCKED ME UP ... YOU SHUT UP! FUCK YOU! YOU ARE BOTH SHIT TO
from following the footsteps of defendants, the amount of P50,000.00 for each plaintiff, or the total sum of
ME! YOU ARE FIRED (referring to Ernesto Medina). YOU TOO ARE FIRED! '(referring to Jose Ong )
P100,000.00, should be awarded as exemplary damages;

4. That on January 9, 1978, the herein plaintiffs filed a joint criminal complaint for oral defamation against
22. That plaintiffs likewise expect to spend no less than P5,000.00 as litigation expenses and were
the defendant Cosme de Aboitiz duly supported with respective affidavits and corroborated by the affidavits
constrained to secure the services of counsel for the protection and enforcement of their rights for which they
of two (2) witnesses: Isagani Hernandez and Jose Ganseco II, but after conducting a preliminary
agreed to pay the sum of P10,000.00 and P200.00 per appearance as and for attorney's fees.
investigation, Hon. Jose B. Castillo, dismissed the complaint

The complaint contains the following:

5. That on February 8, 1978, plaintiffs filed a Petition for Review with the office of the Secretary of Justice
(now Ministry of Justice) and on June 13, 1978, the Deputy Minister of Justice, Catalino Macaraig, Jr.,
issued a resolution sustaining the plaintiff's complaint, reversing the resolution of the Provincial Fiscal and PRAYER
directing him to file against defendant Cosme de Aboitiz an information for Grave Slander. ... ;
WHEREFORE, in view of all the foregoing. it is most respectfully that after proper notice and hearing,
6. That the employment records of plaintiffs show their track performance and impeccable qualifications, not judgment be rendered for the plaintiffs and against the defendants ordering them, jointly and solidarily, to
to mention their long years of service to the Company which undoubtedly caused their promotion to the two pay the plaintiffs the sums of:
highest positions in Muntinlupa Plant having about 700 employees under them with Ernesto Medina as the
Plant General Manager receiving a monthly salary of P6,600.00 excluding other perquisites accorded only to
1. Unrealized income in such sum as will be established during the trial;
top executives and having under his direct supervision other professionals like himself, including the
plaintiff Jose G. Ong, who was the Plant Comptroller with a basic monthly salary of P4,855.00;
2. P300,000.00 as moral damages;
7. That far from taking these matters into consideration, the defendant corporation, acting through its
President, Cosme de Aboitiz, dismissed and slandered the plaintiffs in the presence of their subordinate 3. P100,000.00 by way of exemplary damages:
employees although this could have been done in private;
4. P5,000.00 as litigation expenses;
8. That the defendants have evidently enjoyed the act of dismissing the plaintiffs and such dismissal was
planned to make it as humiliating as possible because instead of allowing a lesser official like the Regional
5. P10,000.00 and P200.00 per appearance as and for attorney's fees; and

6. Costs of this suit.
Plaintiffs also pray for such further reliefs and remedies as may be in keeping with justice and equity.
On June 4, 1979, a motion to dismiss the complaint on the ground of lack of jurisdiction was filed by the
defendants. The trial court denied the motion on September 6, 1979, in an order which reads as follows:
Up for resolution by the Court is the defendants' Motion to Dismiss dated June 4, 1979, which is basically
anchored on whether or not this Court has jurisdiction over the instant petition.
The complaint alleges that the plaintiffs' dismissal was without any provocation and that defendant Aboitiz
shouted and maliciously humiliated plaintiffs and used the words quoted in paragraph 3 thereof. The
plaintiffs further allege that they were receiving salaries of P6,600.00 and P4,855.00 a month. So the
complaint for civil damages is clearly not based on an employer-employee relationship but on the manner of
plaintiffs' dismissal and the effects flowing therefrom. (Jovito N. Quisaba vs, Sta. Ines-Melale Veneer &
Plywood Co., Inc., et al., No. L-38088, Aug. 30,1974.)
This case was filed on May 10, 1979. The amendatory decree, P.D. 1367, which took effect on May 1, 1978
and which provides that Regional Directors shall not indorse and Labor Arbiters shall not entertain claims
for moral or other forms of damages, now expressly confers jurisdiction on the courts in these cases,
specifically under the plaintiff's causes of action.
Because of the letter dated January 4, 1978 and the statement of plaintiff Medina that his receipt of the
amount from defendant company was done "under strong protest," it cannot be said that the demands set
forth in the complaint have been paid, waived or other extinguished. In fact, in defendants' Motion to
Dismiss, it is stated that 'in the absence of a showing that there was fraud, duress or violence attending said
transactions, such Release and Quitclaim Deeds are valid and binding contracts between them, which in
effect admits that plaintiffs can prove fraud, violence, duress or violence. Hence a cause of action for
plaintiffs exist.
It is noticed that the defamatory remarks standing alone per se had been made the sole cause under the first
cause of action, but it is alleged in connection with the manner in which the plaintiffs had been dismissed,
and whether the statute of limitations would apply or not would be a matter of evidence.
IT has been alreadly settled by jurisprudence that mere asking for reinstatement does not remove from the
CFI jurisdiction over the damages. The case must involve unfair labor practices to bring it within the
jurisdiction of the CIR (now NLRC).
WHEREFORE, the defendants' Motion to Dismiss dated June 4, 1979 is hereby denied.
The defendants are hereby directed to interpose their answer within ten (10) days from receipt hereof.
While the trial was underway, the defendants filed a second motion to dismiss the complaint dated January 23, 1981, because of
amendments to the Labor Code immediately prior thereto. Acting on the motion, the trial court issued on May 23, 1981, the
following order:
Up for resolution by the Court is the defendants' Motion to Dismiss dated January 23, 1981, on grounds not
existing when the first Motion to Dismiss dated June 4, 1979 was interposed. The ground relied upon is the
promulgation of P.D. No. 1691 amending Art. 217 of the Labor Code of the Philippines and Batasan
Pambansa Bldg. 70 which took effect on May 1, 1980, amending Art. 248 of the Labor Code.
Page 43
The Court agrees with defendants that the complaint alleges unfair labor practices which under Art. 217 of
the Labor Code, as amended by P.D. 1691, has vested original and exclusive jurisdiction to Labor Arbiters,
and Art. 248, thereof ... "which may include claims for damages and other affirmative reliefs." Under the
amendment, therefore, jurisdiction over employee-employer relations and claims of workers have been
removed from the Courts of First Instance. If it is argued that this case did not arise from employer-
employee relation, but it cannot be denied that this case would not have arisen if the plaintiffs had not been
employees of defendant Pepsi-Cola. Even the alleged defamatory remarks made by defendant Cosme de
Aboitiz were said to plaintiffs in the course of their employment, and the latter were dismissed from such
employment. Hence, the case arose from such employer-employee relationship which under the new
Presidential Decree 1691 are under the exclusive, original jurisdiction of the labor arbiters. The ruling of this
Court with respect to the defendants' first motion to dismiss, therefore, no longer holds as the positive law
has been subsequently issued and being a curative law, can be applied retroactively (Garcia v. Martinez, et
al., L-47629, May 28, 1979; 90 SCRA 331-333).
It will also logically follow that plaintiffs can reinterpose the same complaint with the Ministry of Labor.
WHEREFORE, let this case be, as it is hereby ordered, dismissed, without pronouncement as to costs.
A motion to reconsider the above order was filed on July 7, 1981, but it was only on February 8, 1982, or after a lapse of around
seven (7) months when the motion was denied.
Plaintiffs have filed the instant petition pursuant to R. A. No. 5440 alleging that the respondent court committed the following
errors:
IN DIVESTING ITSELF OF ITS JURISDICTION TO HEAR AND DECIDE CIVIL CASE NO. 33150
DESPITE THE FACT THAT JURISDICTION HAD ALREADY ATTACHED WHICH WAS NOT
OUSTED BY THE SUBSEQUENT ENACTMENT OF PRESIDENTIAL DECREE 1691;
IN HOLDING THAT PRESIDENTIAL DECREE 1691 SHOULD BE GIVEN A RETROSPECTIVE
EFFECT WHEN PRESIDENTIAL DECREE 1367 WHICH WAS IN FORCE WHEN CIVIL CASE NO.
33150 WAS FILED AND TRIAL THEREOF HAD COMMENCED, WAS NEVER EXPRESSLY
REPEALED BY PRESIDENTIAL DECREE 1691, AND IF EVER THERE WAS AN IMPLIED REPEAL,
THE SAME IS NOT FAVORED UNDER PREVAILED JURISPRUDENCE;
IN HOLDING THAT WITH THE REMOVAL BY PRESIDENTIAL DECREE 1691 OF THE PROVISO
INSERTED IN ARTICLE 217 OF THE LABOR CODE BY PRESIDENTIAL DECREE 1367, THE
LABOR ARBITERS HAVE ACQUIRED JURISDICTION OVER CLAIMS FOR DAMAGES ARISING
FROM EMPLOYER-EMPLOYEE RELATIONS TO THE EXCLUSION OF THE REGULAR COURTS,
WHEN A READING OF ARTICLE 217 WITHOUT THE PROVISO IN QUESTION READILY
REVEALS THAT JURISDICTION OVER D AMAGE CLAIMS IS STILL VESTED WITH THE
REGULAR COURTS;
IN DISMISSING FOR LACK OF JURISDICTION CIVIL CASE NO. 33150 THEREBY VIOLATING
THE CONSTITUTIONAL RIGHTS OF THE PETITIONERS NOTABLY THEIR RIGHT TO DUE
PROCESS.
The pivotal question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs. For if
the Labor Code has no relevance, any discussion concerning the statutes amending it and whether or not they have retroactive
effect is unnecessary.
 Page 44

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

WHEREFORE, the petition is granted; the respondent judge is hereby ordered to reinstate Civil Case No. 33150 and render a
decision on the merits. Costs against the private respondents.

SO ORDERED.
 Page 45

G.R. No. 112940 November 21, 199 Respondent court, in its Order dated September 20, 1993, ruled that it had no jurisdiction over the subject matter of the controversy
because the complaint was for damages arising from employer-employee relations. Citing Article 217(4) of the Labor Code of the
Philippines, as amended by R.A. 
DAI-CHI ELECTRONICS MANUFACTURING CORPORATION, petitioner, 
No. 6715, respondent court stated that it is the Labor Arbiter which had original and exclusive jurisdiction over the subject matter
vs.
of the case (Rollo, pp. 28-32).
HON. MARTIN S. VILLARAMA, JR., Presiding Judge, Regional Trial Court, Branch 156, Pasig, Metro Manila and
ADONIS C. LIMJUCO, respondents.
In this petition, petitioner asks for the reversal of respondent court's dismissal of the civil case, contending that the case is
cognizable by the regular courts. It argues that the cause of action did not arise from employer-employee relations, even though the
Sebastian, Liganor & Galinato for petitioner.
claim is based on a provision in the employment contract.

Jara, Baarde & Associates for private respondent.

II

This issue is: Is petitioner's claim for damages one arising from employer-employee relations?

QUIASON, J.:
We answer in the negative.

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court in relation to R.A. No. 5440 and Circular
Article 217, as amended by Section 9 of R.A. No. 6715, provides as follows:
No. 2-90 of the following orders of the Regional Trial Court, Branch 156, Pasig, Metro Manila, in Civil Case No. 63448: 1) Order
dated September 20, 1993, dismissing the complaint of petitioner on the ground of lack of jurisdiction over the subject matter of
the controversy; and 2) Order dated November 29, 1993, denying petitioner's motion for reconsideration. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise provided under this Code, the
Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar
days after the submission of the case by the parties for decision without extension, even in the absence of
I
stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:

On July 29, 1993, petitioner filed a complaint for damages with the Regional Trial Court, Branch 156, Pasig, Metro Manila, against
xxx xxx xxx
private respondent, a former employee.

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
Petitioner alleged that private respondent violated paragraph five of their Contract of Employment dated August 27, 1990, which
relations; (Emphasis supplied)
provides:

xxx xxx xxx

That for a period of two (2) years after termination of service from EMPLOYER, EMPLOYEE shall not in
any manner be connected, and/or employed, be a consultant and/or be an informative body directly or
indirectly, with any business firm, entity or undertaking engaged in a business similar to or in competition Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages agreed upon in the
with that of the EMPLOYER (Rollo, p. 24). contract as redress for private respondent's breach of his contractual obligation to its "damage and prejudice" ( Rollo, p. 57). Such
cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so when
we consider that the stipulation refers to the post-employment relations of the parties.
Petitioner claimed that private respondent became an employee of Angel Sound Philippines Corporation, a corporation engaged in
the same line of business as that of petitioner, within two years from January 30, 1992, the date of private respondent's resignation
from petitioner's employ. Petitioner further alleged that private respondent is holding the position of Head of the Material A case in point is Singapore Airlines Limited v. Paño, 122 SCRA 671 (1983), which also dealt with the employee's breach of an
Management Control Department, the same position he held while in the employ of petitioner. obligation embodied in a written employment agreement. Singapore Airlines filed a complaint in the trial court for damages against
its employee for "wanton failure and refusal" without just cause to report to duty and for having "maliciously and with bad faith"
violated the terms and conditions of its "Agreement for a Course of Conversion Training at the Expense of Singapore Airlines
Petitioner sought to recover liquidated damages in the amount of One Hundred Thousand Pesos (P100,000.00), as provided for in
Limited." This agreement provided that the employee shall agree to remain in the service of the employer for a period of five years
paragraph seven of the contract, which provides:
from the date of the commencement of the training program. The trial court dismissed the complaint on the grounds that it did not
have jurisdiction over the subject matter of the controversy.
That a violation of the conditions set forth in provisions Nos. (2) and (5) of this contract shall entitle the
EMPLOYER to collect from the EMPLOYEE the sum of ONE HUNDRED THOUSAND PESOS
On appeal to this court, we held that jurisdiction over the controversy belongs to the civil courts. We stated that the action was for
(P100,000.00) by way of liquidated damages and likewise to adopt appropriate legal measures to prevent the
breach of a contractual obligation, which is intrinsically a civil dispute. We further stated that while seemingly the cause of action
EMPLOYEE from accepting employment and/or engaging, directly or indirectly, in a business similar to or
arose from employer-employee relations, the employer's claim for damages is grounded on "wanton failure and refusal" without
in competition with that of the EMPLOYER, before the lapse of the aforesaid period of TWO (2) YEARS
just cause to report to duty coupled with the averment that the employee "maliciously and with bad faith" violated the terms and
from date of termination of service from EMPLOYER (Rollo, p. 25).
conditions of the contract to the damage of the employer. Such averments removed the controversy from the coverage of the Labor
Code of the Philippines and brought it within the purview of Civil Law.
 Page 46

Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Private respondent also raises the issue of forum shopping. He asserts that the petition should be dismissed pursuant to Circular No.
Arbiter, must have a reasonable causal connection with any of the claims provided for in that article. Only if there is such a 28-91 because petitioner merely "mentioned in passing a labor case between petitioner and private respondent which is being
connection with the other claims can the claim for damages be considered as arising from employer-employee relations. handled by petitioner's other counsel" (Rollo, p. 42). Private respondent is referring to NLRC NCR Case No. 00-11-0689493 filed
by him on November 8, 1993.
In San Miguel Corporation v. National Labor Relations Commission, 161 SCRA 719 (1988), we had occasion to construe Article
217, as amended by B.P. Blg. 227. Article 217 then provided that the Labor Arbiter had jurisdiction over all money claims of Petitioner asserts that the case before the Labor Arbiter was filed by private respondent against petitioner for alleged illegal
workers, but the phrase "arising from employer-employee relation" was deleted. We ruled thus: dismissal, underpayment of wages and non-payment of overtime and premium pay with prayer for moral and exemplary damages,
to which petitioner, through its other counsel, "logically raised as one of its several counterclaims against private respondent the
liquidated damages mentioned in the contract of employment between the parties" (Rollo, p. 69).
While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the
entire universe of money claims that might be asserted by workers against their employers has been absorbed
into the original and exclusive jurisdiction of Labor Arbiters. In the first place, paragraph 3 should be read Petitioner did not fail to disclose the pending labor case in the certification required under Circular No. 28-91. Thus, petitioner
not in isolation from but rather within the context formed by paragraph 1 (relating to unfair labor practices), cannot be considered to have submitted a false certification warranting summary dismissal of the petition (Par. 3[a] of Circular No.
paragraph 2 (relating to claims concerning terms and conditions of employment), paragraph 4 (claims 28-91).
relating to household services, a particular species of employer-employee relations), and paragraph 5
(relating to certain activities prohibited to employees or to employers). It is evident that there is a unifying
Petitioner did not commit forum shopping. It set up its counterclaim for liquidated damages merely as a defense against private
element which runs through paragraphs 1 to 5 and that is, that they all refer to cases or disputes arising out of
respondent's complaint before the Labor Arbiter.
or in connection with an employer-employee relationship. This is, in other words, a situation where the rule
of noscitur a sociis  may be usefully invoked in clarifying the scope of paragraph 3, and any other paragraph
of Article 217 of the Labor Code, as amended. We reach the above conclusion from an examination of the ACCORDINGLY, the Orders of the Regional Trial Court dated September 20, 1993 and November 29, 1993 are SET ASIDE. The
terms themselves of Article 217, as last amended by B.P Blg. 227, and even though earlier versions of trial court is ORDERED to continue with the proceedings in Civil Case No. 63448.
Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor Arbiters and the NLRC
"cases arising from employer-employee relations," which clause was not expressly carried over, in printer's
SO ORDERED.
ink, in Article 217 as it exists today. For it cannot be presumed that money claims of workers which do not
arise out of or in connection with their employer-employee relationship, and which would therefore fall
within the general jurisdiction of regular courts of justice, were intended by the legislative authority to be
taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis. The
Court, therefore, believes and so holds that the "money claims of workers" referred to in paragraph 3 of
Article 217 embraces money claims which arise out of or in connection with the employer-employee
relationship or some aspect or incident of some relationship. Put a little differently, that money claims of
workers which now fall within the original and exclusive jurisdiction of Labor Arbiters are those money
claims which have some reasonable causal connection with the employer-employee relationship (Emphasis
supplied).

San Miguel was cited in Ocheda v. Court of Appeals, 214 SCRA 629 (1992), where we held that when the cause of action is based
on a quasi-delict or tort, which has no reasonable causal connection with any of the claims provided for in Article 217, jurisdiction
over the action is with the regular courts.

We also applied the "reasonable causal connection rule" in Pepsi-Cola Distributors of the Philippines, Inc. v. Gallang, 201 SCRA
695 (1991), where we held that an action filed by employees against an employer for damages for the latter's malicious filing of a
criminal complaint for falsification of private documents against them came under the jurisdiction of the regular courts (See also
Honiron Philippines, Inc. v. Intermediate Appellate Court, G.R. No. 66929, August 13, 1990 and Abejaron v. Court of Appeals,
208 SCRA 899 [1992]).

The rationale behind the holdings in these cases is that the complaint for damages was anchored not on the termination of the
employee's services per se, but rather on the manner and consequent effects of such termination.

Cases decided under earlier versions of Article 217 were consistent also in that intrinsically civil disputes, even if these involve an
employer and his employee, are cognizable by the regular courts. In Medina vs. Castro-Bartolome, 116 SCRA 597 (1982), a civil
complaint for damages against the employer for slanderous remarks made against them, we upheld the regular court's jurisdiction
after finding that the plaintiffs did not allege any unfair labor practice, their complaint being a simple action for damages for
tortious acts allegedly committed by the defendants. In Molave Sales, Inc. v. Laron, 129 SCRA 485 (1984), we held that the claim
of the plaintiff against its sales manager for payment of certain accounts and cash advances was properly cognizable by the regular
courts because "although a controversy is between an employer and an employee, the Labor Arbiters have no jurisdiction if the
Labor Code is not involved."
 Page 47

G.R. No. L-47739 June 22, 1983 (b) during the second year of the period of five years referred to in Clause 4
above ................................................................................. $ 53,968/
SINGAPORE AIRLINES LIMITED, petitioner, 
vs. (c) during the third year of the period of five years referred to in Clause 4
HON. ERNANI CRUZ PAÑO as Presiding Judge of Branch XVIII, Court of First Instance of Rizal, CARLOS E. CRUZ above ...................................................................................... $ 40,476/
and B. E. VILLANUEVA, respondents.
(d) during the fourth year of the period of five years referred to in Clause 4
Bengzon, Zarraga, Narciso, Cudala Pecson, Azucena & Bengzon Law Offices for petitioner. above .................................................................................. $ 26,984/

Celso P. Mariano Law Office for private respondent Carlos Cruz. (e) during the fifth year of the period of five years referred to in Clause 4
above ....................................................................................... $ 13,492/
Romeo Comia for private respondent B. E. Villanueva.
6. The provisions of Clause 5 above shall not apply in a case where an Engineer Officer has his training
terminated by the Company for reasons other than misconduct or where, subsequent to the completion of
training, he -

MELENCIO-HERRERA, J.:
1. loses his license to operate as a Flight Engineer due to medical reasons which can in
no way be attributable to any act or omission on his part;
On the basic issue of lack of jurisdiction, petitioner company has elevated to us for review the two Orders of respondent Judge
dated October 28, 1977 and January 24, 1978 dismissing petitioner's complaint for damages in the first Order, and denying its
2. is unable to continue in employment with the Company because his employment
Motion for Reconsideration in the second.
pass or work permit, as the case may be, has been withdrawn or has not been renewed
due to no act or omission on his part;
On August 21, 1974, private respondent Carlos E. Cruz was offered employment by petitioner as Engineer Officer with the
opportunity to undergo a B-707 I conversion training course," which he accepted on August 30, 1974. An express stipulation in the
3. has his services terminated by the Company as a result of being replaced by a
letter-offer read:
national Flight Engineer;

3. BONDING. As you win be provided with conversion training you are required to enter into a bond with
4. has to leave the service of the Company on valid compassionate grounds stated to
SIA for a period of 5 years. For this purpose, please inform me of the names and addresses of your sureties
and accepted by the Company in writing. 1
as soon as possible.

Cruz signed the Agreement with his co-respondent, B. E. Villanueva, as surety.

Twenty six days thereafter, or on October 26, 1974, Cruz entered into an "Agreement for a Course of Conversion Training at the
Expense of Singapore Airlines Limited" wherein it was stipulated among others:
Claiming that Cruz had applied for "leave without pay" and had gone on leave without approval of the application during the
second year of the Period of five years, petitioner filed suit for damages against Cruz and his surety, Villanueva, for violation of the
4. The Engineer Officer shall agree to remain in the service of the Company for a period of five years from
terms and conditions of the aforesaid Agreement. Petitioner sought the payment of the following sums: liquidated damages of
the date of commencement of such aforesaid conversion training if so required by the Company.
$53,968.00 or its equivalent of P161,904.00 (lst cause of action); $883.91 or about P2,651.73 as overpayment in salary (2nd clause
of action); $61.00 or about P183.00 for cost of uniforms and accessories supplied by the company plus $230.00, or roughly
5. In the event of the Engineer Officer: P690.00, for the cost of a flight manual (3rd cause of action); and $1,533.71, or approximately P4,601.13 corresponding to the
vacation leave he had availed of but to which he was no longer entitled (4th cause Of action); exemplary damages attorney's fees;
and costs.
1. Leaving the service of the company during the period of five
years referred to in Clause 4 above, or
In his Answer, Cruz denied any breach of contract contending that at no time had he been required by petitioner to agree to a
straight service of five years under Clause 4 of the Agreement (supra) and that he left the service on "valid compassionate grounds
2. Being dismissed or having his services terminated by the stated to and accepted by the company so that no damages may be awarded against him. And because of petitioner-plaintiff's
company for misconduct, alleged ungrounded causes of action, Cruz counterclaimed for attorney's fees of P7,000.00.

the Engineer Officer and the Sureties hereby bind themselves jointly and severally to pay to the Company as
liquidated damages such sums of money as are set out hereunder:
(a) during the first year of the period of five years referred to in Clause 4
above ...................................................................................... $ 67,460/
The surety, Villanueva, in his own Answer, contended that his undertaking was merely that of one of two guarantors not that of
surety and claimed the benefit of excussion, if at an found liable. He then filed a cross-claim against Cruz for damages and for
whatever amount he may be held liable to petitioner-plaintiff, and a counterclaim for actual, exemplary, moral and other damages
plus attorney's fees and litigation expenses against petitioner-plaintiff.
 Page 48

The issue of jurisdiction having been raised at the pre-trial conference, the parties were directed to submit their respective Additionally, there is a secondary issue involved that is outside the pale of competence of Labor Arbiters. Is the liability of
memoranda on that question, which they complied with in due time. On October 28, 1977, respondent Judge issued the assailed Villanueva one of suretyship or one of guaranty? Unquestionably, this question is beyond the field of specialization of Labor
Order dismissing the complaint, counterclaim and cross-claim for lack of jurisdiction stating. Arbiters.

2. The present case therefore involves a money claim arising from an employer-employee relation or at the WHEREFORE, the assailed Orders of respondent Judge are hereby set aside. The records are hereby ordered remanded to the
very least a case arising from employer-employee relations, which under Art. 216 of the Labor Code is proper Branch of the Regional Trial Court of Quezon City, to which this case belongs, for further proceedings. No costs.
vested exclusively with the Labor Arbiters of the National Labor Relations Commission. 2
SO ORDERED.
Reconsideration thereof having been denied in the Order of January 24, 1978, petitioner availed of the present recourse. We gave
due course.

We are here confronted with the issue of whether or not this case is properly cognizable by Courts of justice or by the Labor
Arbiters of the National Labor Relations Commission.

Upon the facts and issues involved, jurisdiction over the present controversy must be held to belong to the civil Courts. While
seemingly petitioner's claim for damages arises from employer-employee relations, and the latest amendment to Article 217 of the
Labor Code under PD No. 1691 and BP Blg. 130 provides that all other claims arising from employer-employee relationship are
cognizable by Labor Arbiters, 3 in essence, petitioner's claim for damages is grounded on the "wanton failure and refusal" without
just cause of private respondent Cruz to report for duty despite repeated notices served upon him of the disapproval of his
application for leave of absence without pay. This, coupled with the further averment that Cruz "maliciously and with bad faith"
violated the terms and conditions of the conversion training course agreement to the damage of petitioner removes the present
controversy from the coverage of the Labor Code and brings it within the purview of Civil Law.

Clearly, the complaint was anchored not on the abandonment per se by private respondent Cruz of his job as the latter was not
required in the Complaint to report back to work but on the manner and consequent effects of such abandonment of work translated
in terms of the damages which petitioner had to suffer.

Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer & Plywood, Inc.4 the pertinent portion
of which reads:

Although the acts complied of seemingly appear to constitute "matter involving employee employer"
relations as Quisaba's dismiss was the severance of a pre-existing employee-employer relations, his
complaint is grounded not on his dismissal per se, as in fact he does not ask for reinstatement or backwages,
but on the manner of his dismiss and the consequent effects of such

Civil law consists of that 'mass of precepts that determine or regulate the relations ... that exist between
members of a society for the protection of private interest (1 Sanchez Roman 3).

The "right" of the respondents to dismiss Quisaba should not be confused with the manner in which the right
was exercised and the effects flowing therefrom. If the dismiss was done anti-socially or oppressively, as the
complaint alleges, then the respondents violated article 1701 of the Civil Code which prohibits acts of
oppression by either capital or labor against the other, and article 21, which makers a person liable for
damages if he wilfully causes loss or injury to another in a manner that is contrary to morals, good customs
or public policy, the sanction for which, by way of moral damages, is provided in article 2219, No. 10 (Cf,
Philippine Refining Co. vs. Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107).

Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the labor Code. The primary relief
sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded
by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation pay.
The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute.

G.R. No. L-32891 April 29, 1971
RUSTAN SUPERVISORY UNION, MAHADI LIMBAO, LOLITO PEPITO, ARTURO SOLIS, WINSTON BALATBAT
and ISIDRO BALCITA, JR., petitioners, 
vs.
HON. MOISES DALISAY, Presiding Judge of the Court of First Instance of Lanao del Norte, Branch II, and RUSTAN
PULP AND PAPER MILLS, INC., respondents.
F. F. Bonifacio for petitioners.
Irene D. Jurado for private respondent.
TEEHANKEE, J.:
An original action for certiorari  and prohibition challenging the jurisdiction of the Court of First Instance of Lanao del Norte to
issue the injunction orders complained of.
Petitioner union is a legitimate labor organization and individual petitioners are the union's principal officers. On September 23,
1970, the union wrote respondent company that a great number of the supervisory personnel of respondent's plant had affiliated
with it and presented a set of proposals for incorporation into a collective bargaining agreement. On October 25, 1970, after its
ultimatum letter of October 12, 1970 for union recognition had been unheeded by respondent, the union declared a strike and
picketed the company premises. Several conferences were thereafter held at the Iligan City Labor Office between the parties'
representatives to no avail. Petitioner alleges that the company refused to negotiate with it while respondent claims in its answer
that "it is petitioners who refused to negotiate in good faith."1
On November 13, 1970, respondent company as plaintiff filed with respondent court a complaint for actual, moral and exemplary
damages with preliminary injunction against the union and its principal officers as defendants (petitioners herein) alleging  inter
alia  that "defendant union, its officers, members and the defendants herein have stationed themselves in front of the gates of
plaintiff's plant in such a coercive, violent and intimidating manner as to prevent, as they have in fact, prevented, the incoming and
outgoing of plaintiff's trucks and heavy equipment as well as the delivery of some 120 tons of abaca and trim waste paper at
petitioner's plant. On the same date, respondent court issued ex parte  and without hearing any witness in open court, upon a
P5,000.00-bond, its order and writ of November 13, 1970, enjoining "defendants singly and collectively from stationing themselves
in front of the gates of plaintiff's plant and preventing the incoming and outgoing of plaintiff's truck and heavy equipment, and
from preventing plaintiff from delivering to its plant in Baloi, Lanao del Norte, the goods or materials mentioned above, and such
other goods and raw materials as may be necessary for plaintiff's business which may be delivered to plaintiff from time to time
from wharf at Iligan City to its plant in Baloi Lanao del Norte, until further orders from this Court."
On November 16, 1970, petitioners filed with respondent court an urgent motion to dissolve or lift the writ of preliminary
injunction, informing respondent court that they were engaged in an industrial dispute with respondent company, which was guilty
of unfair labor practice in refusing to negotiate with them as the duly selected bargaining unit, by virtue of which they had struck
and picketed the company's premises since October 25, 1970, and therefore impugning respondent court's jurisdiction to issue the
injunction which in effect enjoined their concerted strike and picketing activities. Petitioners further assailed the validity of the ex-
parte injunction issued without their having been given the benefit of due notice and hearing as required by section 9 of the
Industrial Peace Act (Rep. Act  allegedly refusing to, bargain in good faith and dismissing for union activities the union officials and members, which are the very
875).2
Respondent court, in its order of November 20, 1970, however, denied dissolution of the injunction, ruling that "(T)he defendant
movant maintained that there is an alleged labor dispute existing between the defendant labor union and the plaintiff corporation
but the lawyer of the movant admitted that he has not filed a case in the Court of Industrial Relations and neither has he filed a
Page 49
notice of strike in the Department of Labor regarding the matter." Respondent court further ruled out the industrial courts
jurisdiction notwithstanding the existence of picketing in the premises stating that "(I)f this is so, then a mere allegation on the
existence of a labor dispute is enough to base jurisdiction on the Court of Industrial Relations. This view is not shared by this court
for the reason that jurisdiction of the Court can not be made to depend upon the pleas or defenses by the defendant in his answer or
motion to dismiss. If such were the rule, the question of jurisdiction will depend entirely upon the defendant."
Hence, this petition filed by the union. Respondent company filed its answer, seeking to sustain the jurisdiction of respondent
court, on the principal grounds that its action was an ordinary complaint for damages with preliminary injunction and that
Petitioner union was "never engaged in legitimate labor activities." Upon the filing of a P200-00-bond by petitioners, the Court
issued its writ preliminary injunction enjoining the enforcement of the order and writ of preliminary injunction of November 13,
1970 issued by respondent court.
The Court finds merit in the petition.
1. On the very face of the complaint, for all its artful wording and meticulous avoidance of any reference to petitioner union's strike
and picketing activities, and carrying of union placards in front of the company's premises, it is quite clear, particularly from the
fact that the union and its principal officers were impleaded as principal defendants, that there existed a labor dispute between the
parties, which pertains to the exclusive jurisdiction of the Court of Industrial Relations rather than to respondent court. This is the
teaching of Phil. Communications Workers Federation vs. Nolasco,3 where the complaint in the regular court of first instance
alleged that the striking union's pickets "prevented non-striking employees from entering the compound and performing their work
therein" — whereas here, respondent company, evading any reference to the union's pickets, alleged in its complaint below
that "defendant union, its officers, members and defendants named herein have stationed themselves  in front of the gates of
plaintiff's plant" to prevent the entry and egress of the company's trucks and heavy equipment and the delivery of goods and raw
materials to its premises.
2. Respondent court should have placed itself on guard, therefore, in the face of the complaint's allegations strongly indicating the
existence of a labor dispute beyond its jurisdiction, more so, when it was informed in petitioner's urgent motion for dissolution of
injunction that the union was on strike because of the company's alleged refusal to bargain collectively which constitutes unfair
labor practice under section 4 (a) (6) of the Industrial Peace Act — and was made known to it precisely to deter its hand from
maintaining its injunction. For while in regular civil actions, the question of jurisdiction is determined by the allegations of the
complaint, the rule differs in labor disputes in that the Court has set the criterion that "whether the acts complained of in the
petition for injunction arose out of, or are connected or interwoven with, the unfair labor practice case [presents] a question of fact
that should be brought to the attention of the court a quo to enable it to pass upon the issue whether it has jurisdiction or not over
the case,"4and "the court is duty bound to find out if there really is a labor dispute by reception of evidence." 5 And such ex-
parte  injunctions, even if proper, should be automatically vacated after five days under section 9 (d) of Republic Act 875, and the
hearing for determination of the existence of a labor dispute that divests the lower court of jurisdiction, as emphasized by Mr.
Justice Reyes in his concurring opinion in the very case of ALU vs. Ramolete5 cited by respondent court, should not be deferred
beyond the statutory five-day period thereby "maintaining an injunction beyond the maximum period authorized by law even if the
court had jurisdiction to issue it  ... (and) nullifying a statutory provision expressly designed to protect labor."
3. The Court stressed the exclusive jurisdiction of the industrial court as against the regular courts over unfair labor practices
in Veterans Security Free Workers Union vs. Cloribel 6 thus: "(I)t has long been accepted as dogma that cases involving unfair labor
practice fall within the exclusive jurisdiction of the Court of Industrial Relations, by virtue of the explicit provisions of Section 5(a)
of the Industrial Peace Act that said Court 'shall have jurisdiction over the prevention of unfair labor practices and is empowered to
prevent any person from engaging in any unfair labor practice. This power shall be exclusive and shall not be affected by any other
means of adjustment or prevention that has been or may be established by an agreement, code, law or otherwise.' The strike and
picketing restrained by the questioned orders of respondent judge arose out of unfair labor practice of respondent company in
subject-matter of the unfair labor charge filed by the union in the Industrial Court. These were facts expressly alleged by petitioner
in its Urgent Motion for Reconsideration, asking respondent judge to set aside the questioned orders and raising respondent Court's
lack of jurisdiction. The very complaint of respondent in the case below, for all its artful wording, was sufficient on its face to
apprise respondent Court that the matter presented before it involved an unfair labor practice case falling within the Industrial
Court's exclusive competence and jurisdiction ... ."
 Page 50

4. Respondent court's stated reasons for denying dissolution of the injunction, to wit, that petitioner union had not filed a case in the
industrial court nor a strike notice with the Labor Department constituted grave error. As emphasized by the Court in the Veterans
Security Free Workers Union case, supra, "It is settled doctrine that labor disputes arising out of unfair labor practices committed
by any of the parties do not present a question of concurrent jurisdiction between the Court of First Instance and the Industrial
Court, but that jurisdiction over such matters is vested exclusively in the Court of Industrial Relation. As succinctly restated by Mr.
Justice Sanchez in Phil. Communications Workers vs. Nolasco, supra, 'CIR's jurisdiction stays even if no unfair labor practice case
has been filed with CIR. It is enough that unfair labor practice is involved.'" As to the lack of strike notice, it is equally settled
doctrine that in strikes arising out of and against a company's unfair labor practice, a strike notice is not necessary in view of the
strike being founded on urgent necessity and directed against practices condemned by public policy, such notice being legally
required only in cases of economic strikes.

5. Even assuming for the nonce respondent court's jurisdiction over the ease below, however, respondent court failed to heed the
controlling statute as embodied in section 9 of the Industrial Peace Act. The issuance of injunctions in connection with labor
disputes is governed by the statutory restrictions therein provided and not by the Rules of Court. 7 And injunctions in labor disputes
are not favored and may issue only after a strict and rigorous compliance with the statutory requisites. 8 It will be readily seen that
the injunction order and writ of respondent court must be overturned for the same failure to comply with the statutory restrictions
as in the Philippine Communications Workers case, viz: "For one, there is the absence of a showing that the court heard the
testimony of witnesses required in Section 9(d) to support the allegations of the complaint and testimony in opposition thereto.
Then, the court did not make any 'finding of fact' as to the existence or non-existence of the facts required to be shown under the
afore-quoted Section 9(d) and also under Section 9(f) of the Industrial Peace Act. Nor was notice given 'to the chief of those public
officials of the ... city ... charged with the duty to protect complainant's property,' also a prerequisite in said Section 9(d) heretofore
mentioned. And finally, the record is barren as to whether or not complainant exerted 'every reasonable effort to settle such dispute
by negotiation or with the aid of any available governmental machinery of mediation or by voluntary arbitration another condition
exacted by law this time Section 9 (e) of the Industrial Peace Act — before a restraining order or injunction may be granted.
Failure to comply with even one of these requirements will suffice to deny the issuance of the writ." 9

6. It has likewise long been settled that where the acts complained of by the company are directly interwoven with the unfair labor
practice charged against it by the union, "the main case does not come under the jurisdiction of the [regular] trial court, even if it
involves violence, intimidation and coercion as averred in the complaint," as in the case below, for the industrial court's jurisdiction
is exclusive. 10 If the purpose of the action is to obtain some injunctive relief against certain acts of the union members, the same
can be obtained from the industrial court which is given ample powers to act 
thereon. 11

7. The labor dispute between the parties must therefore be settled and any injunctive relief must be sought at the industrial court,
which has exclusive jurisdiction over the subject matter, and to which the case must properly be brought at the instance of either
party. This jurisdictional question has long received the Court's attention and Mr. Justice Castro, speaking for the Court in Regal
Mfg. Employees Ass'n. vs. Reyes  12 indicated that actions for damages brought by the company against the union as a result of the
union's concerted activities must await the prior resolution of the industrial court which is vested with exclusive jurisdiction over
the labor dispute. The proper course for regular courts to observe in such cases was thus stated: "(U)nder the environmental
circumstances obtaining, the respondent court should have dismissed the original petition for injunction outright, or, later,
dismissed the amended petition for injunction, without prejudice, or, in the very least, suspended action thereon in so far as the
question of damages is concerned, until the CIR shall have finally decided the two labor disputes pending before it." The fact that
in the case at bar, the labor dispute has not yet reached the industrial court at the instance of either party does not affect the cited
ruling. The company may well take the initiative, as already indicated, of seeking injunctive relief as well as the damages claimed
by it in the industrial court — as it must, if it has basis for its allegations of violence, intimidation and coercion on the union's part.

ACCORDINGLY, the writ of certiorari and prohibition prayed for is hereby granted, and the preliminary injunction heretofore
issued by the Court is hereby made permanent. Respondent court is hereby directed to dismiss the case for damages with
preliminary injunction before it, Civil Case Non 1637, without prejudice. With costs against private respondent. So ordered.