LABOR 26-36

26. ART 217 (A) (4), LABOR ARBITER V REGULAR COURTS

INDOPHIL TEXTILE MILLS V ADVIENTO
THIRD DIVISION
[G.R. No. 171212. August 4, 2014.]
INDOPHIL TEXTILE MILLS, INC., petitioner, vs. ENGR. SALVADOR
ADVIENTO, respondent.
DECISION
PERALTA, J p:
Before the Court is a petition for review on certiorari under Rule 45 of the Revised
Rules of Court which seeks to review, reverse and set-aside the Decision 1 of the Court
of Appeals (CA), dated May 30, 2005, and its Resolution 2 dated January 10, 2006 in
the case entitled Indophil Textile Mills, Inc. v. Hon. Rolando R. Velasco and Engr.
Salvador Adviento, docketed as CA-G.R. SP No. 83099.
The facts are not disputed.
Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the business
of manufacturing thread for weaving. 3 On August 21, 1990, petitioner hired
respondent Engr. Salvador Adviento as Civil Engineer to maintain its facilities in
Lambakin, Marilao, Bulacan. 4
On August 7, 2002, respondent consulted a physician due to recurring weakness and
dizziness. 5 Few days later, he was diagnosed with Chronic Poly Sinusitis, and
thereafter, with moderate, severe and persistent Allergic Rhinitis. 6 Accordingly,
respondent was advised by his doctor to totally avoid house dust mite and textile dust
as it will transmute into health problems. 7
Distressed, respondent filed a complaint against petitioner with the National
Labor Relations Commission (NLRC), San Fernando, Pampanga, for alleged illegal
dismissal and for the payment of backwages, separation pay, actual damages and
attorney's fees. The said case, docketed as NLRC Case No. RAB-III-05-5834-03, is still
pending resolution with the NLRC at the time the instant petition was filed. 8
Subsequently, respondent filed another Complaint 9 with the Regional Trial Court (RTC)
of Aparri, Cagayan, alleging that he contracted such occupational disease by reason of

the gross negligence of petitioner to provide him with a safe, healthy and workable
environment.
In his Complaint, respondent alleged that as part of his job description, he conducts
regular maintenance check on petitioner's facilities including its dye house area, which
is very hot and emits foul chemical odor with no adequate safety measures introduced
by petitioner. 10 According to respondent, the air washer dampers and all roof exhaust
vests are blown into open air, carrying dust thereto. 11 Concerned, respondent
recommended to management to place roof insulation to minimize, if not, eradicate
the health hazards attendant in the work place. 12 However, said recommendation
was turned down by management due to high cost. 13 IDCScA
Respondent further suggested to petitioner's management that the engineering office
be relocated because of its dent prone location, such that even if the door of the office
is sealed, accumulated dust creeps in outside the office. 14 This was further aggravated
by the installation of new filters fronting the office. 15 However, no action was taken
by management. 16
According to respondent, these health hazards have been the persistent complaints of
most, if not all, workers of petitioner. 17 Nevertheless, said complaints fell on deaf ears
as petitioner callously ignored the health problems of its workers and even tended to
be apathetic to their plight, including respondent. 18
Respondent averred that, being the only breadwinner in the family, he made several
attempts to apply for a new job, but to his dismay and frustration, employers who knew
of his present health condition discriminated against him and turned down his
application. 19 By reason thereof, respondent suffered intense moral suffering, mental
anguish, serious anxiety and wounded feelings, praying for the recovery of the
following: (1) Five Million Pesos (P5,000,000.00) as moral damages; (2) Two Million
Pesos (P2,000,000.00) as exemplary damages; and (3) Seven Million Three Thousand
and Eight Pesos (P7,003,008.00) as compensatory damages. 20 Claiming to be a pauper
litigant, respondent was not required to pay any filing fee. 21 cCTaSH
In reply, petitioner filed a Motion to Dismiss 22 on the ground that: (1) the RTC has no
jurisdiction over the subject matter of the complaint because the same falls under the
original and exclusive jurisdiction of the Labor Arbiter (LA) under Article 217 (a) (4) of
the Labor Code; and (2) there is another action pending with the Regional Arbitration
Branch III of the NLRC in San Fernando City, Pampanga, involving the same parties for
the same cause.
On December 29, 2003, the RTC issued a Resolution 23 denying the aforesaid Motion
and sustaining its jurisdiction over the instant case. It held that petitioner's alleged
failure to provide its employees with a safe, healthy and workable environment is an
act of negligence, a case of quasi-delict. As such, it is not within the jurisdiction of the
LA under Article 217 of the Labor Code.On the matter of dismissal based on lis

pendencia, the RTC ruled that the complaint before the NLRC has a different cause of
action which is for illegal dismissal and prayer for backwages, actual damages,
attorney's fees and separation pay due to illegal dismissal while in the present case,
the cause of action is for quasi-delict. 24 The fallo of the Resolution is quoted below:
WHEREFORE, finding the motion to dismiss to be without merit, the
Court denies the motion to dismiss.
SO ORDERED. 25
On February 9, 2004, petitioner filed a motion for reconsideration thereto, which was
likewise denied in an Order issued on even date.
Expectedly, petitioner then filed a Petition for Certiorari with the CA on the ground that
the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction
in upholding that it has jurisdiction over the subject matter of the complaint despite
the broad and clear terms of Article 217 of the Labor Code,as amended. 26
After the submission by the parties of their respective Memoranda, the CA rendered a
Decision 27 dated May 30, 2005 dismissing petitioner's Petition for lack of merit, the
dispositive portion of which states: HAaScT
WHEREFORE, premises considered, petition for certiorari is hereby
DISMISSED for lack of merit.
SO ORDERED. 28
From the aforesaid Decision, petitioner filed a Motion for Reconsideration which was
nevertheless denied for lack of merit in the CA's Resolution 29 dated January 10, 2006.
Hence, petitioner interposed the instant petition upon the solitary ground that "THE
HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY
NOT IN ACCORD WITH LAW AND WITH APPLICABLE DECISIONS OF THE HONORABLE
SUPREME COURT". 30 Simply, the issue presented before us is whether or not the RTC
has jurisdiction over the subject matter of respondent's complaint praying for moral
damages, exemplary damages, compensatory damages, anchored on petitioner's
alleged gross negligence in failing to provide a safe and healthy working environment
for respondent.
The delineation between the jurisdiction of regular courts and labor courts over cases
involving workers and their employers has always been a matter of dispute. 31 It is up
to the Courts to lay the line after careful scrutiny of the factual milieu of each case.
Here, we find that jurisdiction rests on the regular courts.
In its attempt to overturn the assailed Decision and Resolution of the CA, petitioner
argues that respondent's claim for damages is anchored on the alleged gross
negligence of petitioner as an employer to provide its employees, including herein
respondent, with a safe, healthy and workable environment; hence, it arose from an

employer-employee relationship. 32 The fact of respondent's employment with

petitioner as a civil engineer is a necessary element of his cause of action because
without the same, respondent cannot claim to have a right to a safe, healthy and
workable environment. 33 Thus, exclusive jurisdiction over the same should be vested
in the Labor Arbiter and the NLRC pursuant to Article 217 (a) (4) of the Labor Code of
the Philippines (Labor Code), as amended. 34 HaAIES
We are not convinced.
The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code,as
amended by Section 9 of Republic Act (R.A.) No. 6715, to wit:
ART. 217. Jurisdiction of Labor Arbiters and the Commission (a) Except
as otherwise provided under this Code the Labor Arbiter 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 nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work
and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code
including questions involving the legality of strikes and
lockouts; and
6. Except claims for Employees Compensation, Social Security,
Medicare 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.
xxx xxx xxx. 35
While we have upheld the present trend to refer worker-employer controversies to
labor courts in light of the aforequoted provision, we have also recognized that not all
claims involving employees can be resolved solely by our labor courts, specifically when

the law provides otherwise. 36 For this reason, we have formulated the "reasonable
causal connection rule", wherein if there is a reasonable causal connection between
the claim asserted and the employer-employee relations, then the case is within the
jurisdiction of the labor courts; and in the absence thereof, it is the regular courts that
have jurisdiction. 37 Such distinction is apt since it cannot be presumed that money
claims of workers which do not arise out of or in connection with their employeremployee 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. 38 DaTHAc
In fact, as early as Medina vs. Hon. Castro-Bartolome, 39 in negating the jurisdiction of
the LA, although the parties involved were an employer and two employees, the Court
succinctly held that:
The pivotal question to Our mind is whether or not the Labor Code has
any relevance to the reliefs sought by the plaintiffs. For if the Labor Code
has no relevance, any discussion concerning the statutes amending it
and whether or not they have retroactive effect is unnecessary.
It is obvious from the complaint that the plaintiffs have not alleged any
unfair labor practice. Theirs is a simple action for damages for tortious
acts allegedly committed by the defendants. Such being the case, the
governing statute is the Civil Code and not the Labor Code. It results that
the orders under review are based on a wrong premise. 40
Similarly, we ruled in the recent case of Portillo v. Rudolf Lietz, Inc. 41 that not all
disputes between an employer and his employees fall within the jurisdiction of the
labor tribunals such that when the claim for damages is grounded on the "wanton
failure and refusal" without just cause of an employee to report for duty despite
repeated notices served upon him of the disapproval of his application for leave of
absence, the same falls within the purview of Civil Law, to wit:
As early as Singapore Airlines Limited v. Pao, we established that not all
disputes between an employer and his employee(s) fall within the
jurisdiction of the labor tribunals. We differentiated between
abandonment per se and the manner and consequent effects of such
abandonment and ruled that the first, is a labor case, while the second,
is a civil law case. HSacEI
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 [citation

omitted], 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. . . . . 42
Indeed, jurisprudence has evolved the rule that claims for damages under Article 217
(a) (4) of the Labor Code,to be cognizable by the LA, must have a reasonable causal
connection with any of the claims provided for in that article. 43 Only if there is such a
connection with the other claims can a claim for damages be considered as arising from
employer-employee relations. 44
In the case at bench, we find that such connection is nil.
True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor
cases. More, the acts complained of appear to constitute matters involving employeeemployer relations since respondent used to be the Civil Engineer of petitioner.
However, it should be stressed that respondent's claim for damages is specifically
grounded on petitioner's gross negligence to provide a safe, healthy and workable
environment for its employees a case of quasi-delict. This is easily ascertained from
a plain and cursory reading of the Complaint, 45 which enumerates the acts and/or
omissions of petitioner relative to the conditions in the workplace, to wit: IaHDcT
1. Petitioner's textile mills have excessive flying textile dust and waste in
its operations and no effort was exerted by petitioner to minimize
or totally eradicate it;
2. Petitioner failed to provide adequate and sufficient dust suction
facilities;
3. Textile machines are cleaned with air compressors aggravating the
dusty work place;
4. Petitioner has no physician specializing in respiratory-related illness
considering it is a textile company;

5. Petitioner has no device to detect the presence or density of dust

which is airborne;
6. The chemical and color room are not equipped with proper safety
chemical nose mask; and SHacCD
7. The power and boiler plant emit too much smoke with solid particles
blown to the air from the smoke stack of the power plant emitting
a brown rust color which engulfs the entire compound. 46
In addition, respondent alleged that despite his earnest efforts to suggest to
management to place roof insulation to minimize, if not, eradicate the health hazards
attendant in the workplace, the same was not heeded. 47
It is a basic tenet that jurisdiction over the subject matter is determined upon the
allegations made in the complaint, irrespective of whether or not the plaintiff is
entitled to recover upon the claim asserted therein, which is a matter resolved only
after and as a result of a trial. 48 Neither can jurisdiction of a court be made to depend
upon the defenses made by a defendant in his answer or motion to dismiss. 49 In this
case, a perusal of the complaint would reveal that the subject matter is one of claim
for damages arising from quasi-delict, which is within the ambit of the regular court's
jurisdiction.
The pertinent provision of Article 2176 of the Civil Code which governs quasi-delict
provides that: cHESAD
Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties, is called quasi-delict. 50
Thus, to sustain a claim liability under quasi-delict, the following requisites must
concur: (a) damages suffered by the plaintiff; (b) fault or negligence of the defendant,
or some other person for whose acts he must respond; and (c) the connection of cause
and effect between the fault or negligence of the defendant and the damages incurred
by the plaintiff. 51
In the case at bar, respondent alleges that due to the continued and prolonged
exposure to textile dust seriously inimical to his health, he suffered work-contracted
disease which is now irreversible and incurable, and deprived him of job opportunities.
52 Clearly, injury and damages were allegedly suffered by respondent, an element of
quasi-delict. Secondly, the previous contract of employment between petitioner and
respondent cannot be used to counter the element of "no pre-existing contractual
relation" since petitioner's alleged gross negligence in maintaining a hazardous work
environment cannot be considered a mere breach of such contract of employment,
but falls squarely within the elements of quasi-delict under Article 2176 of the Civil

Code since the negligence is direct, substantive and independent. 53 Hence, we ruled
in Yusen Air and Sea Services Phils., Inc. v. Villamor 54 that: TSADaI
When, as here, 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. 55
It also bears stressing that respondent is not praying for any relief under the Labor
Code of the Philippines. He neither claims for reinstatement nor backwages or
separation pay resulting from an illegal termination. The cause of action herein
pertains to the consequence of petitioner's omission which led to a work-related
disease suffered by respondent, causing harm or damage to his person. Such cause of
action is within the realm of Civil Law, and jurisdiction over the controversy belongs to
the regular courts. 56
Our ruling in Portillo, is instructive, thus:
There is no causal connection between private respondent's claim for
damages and the respondent employers' claim for damages for the
alleged "Goodwill Clause" violation. Portillo's claim for unpaid salaries did
not have anything to do with her alleged violation of the employment
contract as, in fact, her separation from employment is not "rooted" in
the alleged contractual violation. She resigned from her employment. She
was not dismissed. Portillo's entitlement to the unpaid salaries is not even
contested. Indeed, Lietz Inc.'s argument about legal compensation
necessarily admits that it owes the money claimed by Portillo. 57 HEIcDT
Further, it cannot be gainsaid that the claim for damages occurred after the employeremployee relationship of petitioner and respondent has ceased. Given that respondent
no longer demands for any relief under the Labor Code as well as the rules and
regulations pertinent thereto, Article 217 (a) (4) of the Labor Code is inapplicable to
the instant case, as emphatically held in Portillo, to wit:
It is clear, therefore, that while Portillo's claim for unpaid salaries is a
money claim that arises out of or in connection with an employeremployee relationship, Lietz Inc.'s claim against Portillo for violation of
the goodwill clause is a money claim based on an act done after the
cessation of the employment relationship. And, while the jurisdiction
over Portillo's claim is vested in the labor arbiter, the jurisdiction over
Lietz Inc.'s claim rests on the regular courts. Thus: DaACIH
As it is, petitioner does not ask for any relief under the Labor Code.
It merely seeks to recover damages based on the parties' contract
of employment as redress for respondent's breach thereof. Such
cause of action is within the realm of Civil Law, and jurisdiction

over the controversy belongs to the regular courts. More so must

this be in the present case, what with the reality that the
stipulation refers to the post-employment relations of the parties.
58
Where the 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, such claim falls outside the area of
competence of expertise ordinarily ascribed to the LA and the NLRC. 59 ICcDaA
Guided by the aforequoted doctrines, we find no reason to reverse the findings of the
CA. The RTC has jurisdiction over the subject matter of respondent's complaint praying
for moral damages, exemplary damages, compensatory damages, anchored on
petitioner's alleged gross negligence in failing to provide a safe and healthy working
environment for respondent.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals, dated May
30, 2005, and its Resolution dated January 10, 2006 in CA-G.R. SP No. 83099 are hereby
AFFIRMED.
SO ORDERED.
Velasco, Jr., Villarama, Jr., * Mendoza and Leonen, JJ., concur.
||| (Indophil Textile Mills, Inc. v. Adviento, G.R. No. 171212, [August 4, 2014])

Labor Arbiter has no jurisdiction over the case, there being no reasobale connection with the
claim and the employer-employee realationship. The cause of action arose from quasi-delict.
The gross negligence of the employer to provide safety in the place of work of the
employees

27. Art 217

PAREDES V FEED THE CHILDREN PHILS
THIRD DIVISION
[G.R. No. 184397. September 9, 2015.]
ROSALINDA G. PAREDES, petitioner, vs. FEED THE CHILDREN
PHILIPPINES, INC. and/or DR. VIRGINIA LAO, HERCULES PARADIANG
and BENJAMIN ESCOBIA, respondents.
DECISION
PERALTA, J p:
For this Court's resolution is a petition for review on certiorari, dated October
23, 2008, of petitioner Rosalinda G. Paredes, seeking to reverse and set aside the
Decision 1 dated March 25, 2008 and Resolution 2 dated August 28, 2008 of the
Court of Appeals (CA). The assailed Decision annulled and set aside the rulings of
the National Labor Relations Commission (NLRC) Fourth Division, Cebu City and
affirmed the rulings of the Labor Arbiter (LA), which held that petitioner voluntarily
resigned and was not constructively dismissed.
The antecedents are as follows:
Respondent Feed the Children Philippines, Inc. (FTCP) is a non-stock, nonprofit, and non-government organization duly incorporated under the Philippine
laws in 1989. Its objective is to provide food, clothing, educational supplies and
other necessities of indigent children worldwide. 3 Respondents Dr. Virginia Lao,
Hercules Paradiang and Benjamin Escobia were members of the FTCP Board of
Trustees (Board) and Executive Committee (Execom) of FTCP. 4
Petitioner Rosalinda Paredes was FTCP's National Director. Her functions and
duties include project management, fund accessing, income generation, financial
management, and administration of the organization. She also signed all the FTCP
checks and approved all requisitions and disbursements of FTCP funds. 5 As per
FTCP's By-laws, it was also her duty to execute all resolutions and/or decisions of
the Board. 6
Petitioner was first hired by FTCP in 1999 as Country Director. Her contract
was renewed several times until her last contract for the period from October 1,
2004 to September 30, 2007. Her initial salary was US$1000.00 and then later, she
was paid P70,000.00 aside from other benefits and allowances. 7

On August 12, 2005, forty-two (42) FTCP employees signed a petition letter
addressed to the Board expressing their complaints against alleged detestable
practices of petitioner, to wit: seeking exemption from policies which she herself
had approved; withholding organization funds despite approval of its release;
procuring health insurance for herself without paying her share of the premium;
and receiving additional fees contrary to the terms of her contract. 8
The next day, August 13, 2005, the staff of FTCP called Lao to a meeting to
submit their petition. They included Atty. Edgar Chatto, then Chairman of the Board,
in the meeting when they realized that it was only her and Escobia who were
present. The group was edgy and demanded for outright solution. However, the
three Board members told them that they should follow a process. 9
Petitioner learned from Atty. Chatto that Program Manager Primitivo
Fostanes and his co-employees prepared a petition questioning her leadership and
management of FTCP. She filed an administrative complaint against Fostanes on
August 24, 2005, but the same was not acted upon. 10
When the Board convened for a meeting on August 28, 2005, petitioner was
not allowed to participate. She was only allowed to join the meeting after three
hours. As ex officio member of the Board and as head of the secretariat, she was
always present in every meeting to discuss her reports, programs and proposals. 11
During the meeting, the Board discussed the animosity between the
petitioner and the staff of FTCP and how they would address the issue since they
have inadequate grievance mechanism for issues involving top management. 12
According to Lao, petitioner became combative in issuing memos and filing of
administrative charges. 13 Atty. Chatto recounted that when petitioner heard about
the protesting senior management and staff, her initial reaction was to resign but
then she asked that the complaints be put in writing. 14 After their discussion, they
called the representatives of the complaining staff and petitioner to air their side.
Consequently, the Board decided that: Acting Board Chair Lao will issue a
back-to-work memorandum and status quo to ensure that all the scheduled tasks
be accomplished; there will be a Supervisory Team, composing of Lao and Escobia,
that will draw a definite work plan and be compensated; the Supervisory Team will
not replace the functions of the National Director; and FTCP will hire an
independent professional management and financial auditor. 15 CAIHTE
Petitioner sent letters to the Board inquiring about the scope of audit. When
the Board did not respond, her lawyers demanded Lao to address petitioner's
concerns regarding the management and financial audit and that the manual of
operations be strictly followed. 16 In another letter, her lawyers informed individual
respondents that petitioner raised the legality and propriety of the conduct of the
audit, thus, they requested that they desist from conducting the audit. The letter

also indicated that failure to do so would implead them as respondents in a

preliminary injunction case that they would file. 17
While she was at an orientation for local government officials of Surigao del
Norte at the Bohol Tropics Resort on October 24, 2005, petitioner received a phone
call from her staff at FTCP that the auditors from SRD & Co. were already at their
office. Lao also called to instruct her that she should meet the auditors and
accommodate them. She refrained from obeying the order and was adamant that
she should receive her requested information first. 18
On October 26, 2005, the FTCP management executive committee, headed by
petitioner, informed the Board that they were not afraid of the audit. They wanted
due process as provided by the by-laws, manual of operations, and manual of
financial policies and accounting procedures approved by the Board itself. They also
inquired about the meetings and processes of the Execom that they were not aware
of. Lastly, they asked for a dialogue to settle their differences. 19
On the same date, petitioner wrote an electronic mail (e-mail) to Dr. Larry
Jones, the founder of feed the Children International, Inc. and reported that
Paradiang and two members of the Board initiated a surprise and secret audit. She
expressed that the management was upset to the manner of conducting the audit.
She also insinuated that Paradiang was always after her despite steering the
organization to development. She intimated that she would legally protect herself
should she be illegally dismissed and that they would seek relief from the
harassment by Paradiang. 20
The Board resolved to suspend petitioner because of her indifferent attitude
and unjustified refusal to submit to an audit. 21 Before it could be implemented,
respondent FTCP received her resignation letter. 22 In her resignation letter, she
wrote that she can only serve the organization up to December 31, 2005. She found
it no longer tenable to work with the Board since she had differences with majority
of the members regarding resolutions, policies and procedures. 23 aScITE
On October 29, 2005, the Board accepted her resignation with the condition
that its effectivity be moved to November 30, 2005. She was not obliged to report
for work and FTCP was willing to pay her salary for the month of November to aid
her while she looked for other employment. 24
Petitioner wrote to the members of management and foreign funders
informing them that she was no longer connected with FTCP. She moved out all her
belongings and even brought FTCP's documents. 25
On November 2, 2005, petitioner filed a Complaint for illegal dismissal,
claiming that she was forced to resign, thus, was constructively dismissed, and
impleaded Lao, Paradiang and Escobia in their personal capacities. 26

Upon failure of the parties to settle amicably, the mandatory conference was
terminated.
In her position paper, petitioner alleged that she was not included in the
Supervisory Team which performed her functions and issued memorandum directly
to her subordinates. She also alleged that she was excluded from Execom meetings.
27
Respondents, on the other hand, claimed that petitioner was signatory to all
the bank checks of respondent FTCP and approved all requisitions and
disbursements. She received an excess of US$1,000.00 for her salary and did not
return the same. They alleged that petitioner voluntarily resigned from her position
and removed all her belongings from the FTCP. 28
The LA ruled in favor of the respondents, the dispositive portion of the
Decision 29 reads:
LA ruled in favor of respondents
WHEREFORE, foregoing considered, the case is hereby DISMISSED
for lack of merit and judgment is hereby rendered ordering complainant
Rosalinda G. Paredes to pay the following:
1. One Hundred Forty-Three Thousand Six Hundred [F]ortySix and 73/100 (P143,646.73) representing her
accountabilities to respondent FTCP in Philippine Currency;
2. One Thousand Dollars ($1,000.00) to respondent FTCP
representing complainant's accountability in US Currency;
3. Five Hundred Thousand Pesos (P500,000.00) each to
respondents Dr. Virginia Lao, Benjamin Escobia and
Hercules Paradiang for moral damages;
4. One Million Pesos (P1,000,000.00) to respondent FTCP
for damages incurred;
5. One Hundred Thousand Pesos (P100,000.00)
respondents collectively for exemplary damages; and

to

6. Attorney's Fees to 10% of the total award.

SO ORDERED. 30
Undaunted, petitioner appealed the decision to the NLRC. In its Decision 31
dated March 28, 2007, the NLRC reversed and set aside the decision of the LA and
ruled in her favor, the dispositive portion of which states:
WHEREFORE, premises considered, the decision of the Labor
Arbiter dated 08 November 2006 is REVERSED and SET aside and a new
one is entered, to wit:

1. Ordering respondent Feed the Children Philippines, Inc. to pay the

complainant of her salaries and allowances corresponding to the
unexpired portion of her contract in the aggregate amount of One
Million Six Hundred Eighty-Five Thousand Nine hundred and 00/100
(P1,685,900.00), broken down as follows:
a. Salaries corresponding to the unexpired portion
of the contract
P1,610,000.00
b. Transportation allowances 29,900.00
c. Representation allowances 46,000.00

Total
P1,685,900.00;
===========
and
2. Ordering respondent Feed the Children Philippines, Inc. to pay
complainant of moral damages in the amount of One Hundred
Thousand Pesos (P100,000.00); and exemplary damages in the amount
of One Hundred Thousand Pesos (P100,000.00).
Respondents Dr. Virginia Lao, Hercules Paradiang and Benjamin
Escobia are absolved from any liability for lack of legal basis.
SO ORDERED. 32 HEITAD
In a Resolution 33 dated June 14, 2007, the NLRC dismissed the motion for
reconsideration of the respondents. Thus, respondents filed before the CA a
petition for certiorari. The CA ruled for the respondents. The fallo of said decision
reads:
WHEREFORE, the Decision dated March 28, 2007 and the
Resolution dated June 14, 2007, of the National Labor Relations
Commission (NLRC), Fourth Division, Cebu City, in NLRC Case No. V000074-2007, are NULLIFIED and a new one rendered as follows:
1. Declaring private respondent to have voluntarily resigned
from her employment/consultancy with FTCP;
2. Directing private respondent to pay FTCP
a. Thirty-four thousand four hundred thirty-eight
pesos and 37/100 (P34,438.37) for her unpaid loans;
b. One hundred nine thousand two hundred eight
pesos and 36/100 (P109,208.36) respecting her

disbursement and withdrawals from the FTCP Provident

Fund.
Costs against private respondent.
SO ORDERED. 34
The CA did not find any valid reason to disturb its decision, hence, it denied
petitioner's Motion for Reconsideration. 35
In this recourse, petitioner raises the following issues for this Court's
consideration:
I. The CA contravenes the law and jurisprudence when it granted the
petition for certiorari that raised questions factual in nature and when
it sweepingly applied the ruling in St. Martin Funeral Homes to justify its
act of delving into the findings of the NLRC which were outside the
scope of extraordinary remedy of certiorari.
II. The CA grossly contradicts the law and jurisprudence on constructive
dismissal and ignored, misunderstood or misinterpreted cogent facts
and circumstances which, if considered, would change the outcome of
the case when it ruled that petitioner voluntarily resigned and was not
constructively dismissed.
III. The CA effectively reverses the law and jurisprudence on damages
and recognized money claims in labor cases when it condemned
petitioner to pay respondents' claims for damages that were not duly
proven by the latter and that clearly did not arise from an employeremployee relationship.
IV. The CA violates the Constitution, the law and the prevailing
jurisprudence when it resolved the lingering doubts that remain in the
present case, as those arising from evidence and from interpretation of
agreements and writings, against labor.
The present petition is partly meritorious.
It is elementary that this Court is not a trier of facts, and only errors of law are
generally reviewed in petitions for review on certiorari. Judicial review of labor cases
does not go beyond the evaluation of the sufficiency of the evidence upon which its
labor officials' findings rest. As such, the findings of facts and conclusion of the NLRC
are generally accorded not only great weight and respect but even clothed with
finality and deemed binding on this Court as long as they are supported by
substantial evidence. 36
However, if the factual findings of the LA and the NLRC are conflicting, as in
this case, the reviewing court may delve into the records and examine for itself the
questioned findings. 37 The exception, rather than the general rule, applies in the

present case since the LA and the CA found facts supporting the conclusion that
petitioner was not constructively dismissed, while the NLRC's factual findings
contradicted the LA's findings. Under this situation, such conflicting factual findings
are not binding on us, and we retain the authority to pass on the evidence presented
and draw conclusions therefrom.
After judicious review on the records of the case, this Court deems it proper
to disregard the findings of fact of the NLRC. This Court finds that the NLRC
committed grave abuse of discretion when it ruled for the petitioner without
substantial evidence to support its findings of facts and conclusion.
Petitioner, relying in the principle of finality and conclusiveness of the
decisions of labor tribunals, faults the CA for reversing the findings of the NLRC and
affirming the factual findings of the LA that she voluntarily resigned. She averred
that the CA erred when it applied the ruling in the case of St. Martin Funeral Homes
v. NLRC 38 to justify its inquiring into the findings of the NLRC which was outside
the scope of extraordinary remedy of certiorari. She posited that NLRC's findings
cannot be delved into without first declaring the decision itself to have been issued
with grave abuse of discretion. 39
Courts generally accord great respect and finality to factual findings of
administrative agencies, like labor tribunals, in the exercise of their quasi-judicial
function. However, this doctrine espousing comity to administrative findings of facts
are not infallible and cannot preclude the courts from reviewing and, when proper,
disregarding these findings of facts when shown that the administrative body
committed grave abuse of discretion. 40
It is settled that in a special civil action for certiorari under Rule 65, the issues
are limited to errors of jurisdiction or grave abuse of discretion. However, in labor
cases elevated to it via petition for certiorari, the CA is empowered to evaluate the
materiality and significance of the evidence alleged to have been capriciously,
whimsically, or arbitrarily disregarded by the NLRC in relation to all other evidence
on record. 41 ATICcS
The CA can grant this prerogative writ when the factual findings complained
of are not supported by the evidence on record; when it is necessary to prevent a
substantial wrong or to do substantial justice; when the findings of the NLRC
contradict those of the LA; and when necessary to arrive at a just decision of the
case. 42 To make this finding, the CA necessarily has to view the evidence if only to
determine if the NLRC ruling had basis in evidence. 43
Contrary to petitioner's contention, the CA, by express legal mandate and
pursuant to its equity jurisdiction, may review factual findings and evidence of the
parties to determine whether the NLRC gravely abused its discretion in its findings.
44 Since this Court finds that the findings of the LA and NLRC contradicting and that
the findings of NLRC are not supported by the evidence on record, we rule that it is

within the CA's power to review the factual findings of the NLRC. Accordingly, this
Court does not find erroneous the course that the CA took in resolving that
petitioner was not constructively dismissed.
This Court, in turn, has the same authority to sift through the factual findings
of both the CA and the NLRC in the event of their conflict. 45 This Court, therefore,
is not precluded from reviewing the factual issues when there are conflicting
findings by the Labor Arbiter, the NLRC and the Court of Appeals. 46
Since petitioner admittedly resigned, it is incumbent upon her to prove that
her resignation was involuntary and that it was actually a case of constructive
dismissal with clear, positive and convincing evidence. 47
Petitioner alleged that she was forced to resign by Lao, Paradiang and Escobia.
For her, it was the overbearing and prejudiced attitude towards her by individual
respondents that rendered her continued employment impossible, unreasonable or
unlikely. She maintained that the prevailing working environment compelled her to
disassociate with FTCP. She recounted that the individual respondents deliberately
excluded her from important meetings despite being the chief executive officer and
a fixture to all Board meetings.
Petitioner cited the August 28, 2005 Board meeting and a subsequent Execom
meeting where she was apparently banished as proof of respondents'
discrimination. She emphasized in all her pleadings that, aside from it being
provided by the by-laws, she believed that her presence at all Board meetings
cannot be dispensed with since it was through her effort that the Board of Trustees
became functional. For her, she was isolated and singled out. She claimed that these
circumstances clearly denoted that the actions of the respondents were motivated
by discrimination and made in bad faith.
Case law holds that constructive dismissal occurs when there is cessation of
work because continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank or diminution in pay or both; or when a
clear discrimination, insensibility, or disdain by an employer becomes unbearable
to the employee. 48 The test is whether a reasonable person in the employee's
position would have felt compelled to give up his position under the circumstances.
49
NO CONSTRUCTIVE DISMISSAL
In this case, petitioner cannot be deemed constructively dismissed. She failed
to present clear and positive evidence that respondent FTCP, through its Board of
Trustees, committed acts of discrimination, insensibility, or disdain towards her
which rendered her continued employment unbearable or forced her to terminate
her employment from the respondent. As settled, bare allegations of constructive
dismissal, when uncorroborated by the evidence on record, cannot be given
credence. 50

It is highly unlikely and incredible for someone of petitioner's position and

educational attainment to so easily succumb to individual respondents' alleged
harassment without defending herself. In fact, records reveal that she wrote directly
to Jones when her contract was not to be renewed and whenever she felt
threatened. She vehemently opposed the audit and openly disobeyed the Board
when she was not informed of the scope. She, along with other management staff,
questioned the meetings of the Execom that they were not informed. 51 It is also
noted that her husband is a lawyer and that she employed lawyers who sent a series
of demand letters to the Board to provide her the details of the audit and even
ordered the Board to desist from pursuing the audit.
There was no urgency for petitioner to submit her resignation letter. In fact,
the day before it was given, she and other management staff requested for a
dialogue with the Board to address the issue regarding the management and
financial audit. 52 It is, therefore, improbable that her continued employment is
rendered impossible or unreasonable.
Records do not show any demotion in rank or a diminution in pay made
against her. Petitioner claimed that the fact that the Supervisory Team performed
her functions and issued memorandum directly to her subordinates, and her being
barred from subsequent Execom meetings constituted constructive dismissal.
However, there was no evidence to corroborate her claim of usurpation. She did
not present evidence of the supposed direct memorandum issued by the
Supervisory Team to the staff. Aside from the minutes of the September 29, 2005
meeting of the Execom, there was no other proof of petitioner's exclusion from
other subsequent Execom meetings. TIADCc
We find that, apart from her self-serving and uncorroborated allegations,
petitioner did not present any substantial evidence of constructive dismissal. She
was not able to present a single witness to corroborate her claims of harassment by
Lao, Paradiang and Escobia.
Petitioner supported her claim with the minutes of the August 28, 2005
meeting and another minutes of the meeting of the Execom that she was excluded.
She argued that her sudden exclusion from board meetings despite established
practice constituted grave abuse of managerial rights of the respondent FTCP.
We are not persuaded that her exclusion to the meeting constituted
discrimination or harassment. A careful perusal of the minutes would reveal that
the Board convened to deliberate on the solution to the apparent conflict between
petitioner and the staff since they have insufficient grievance mechanism for issues
involving top management. She could not fault the Board to not include her in that
particular meeting since she was a party involved and to avoid possible influence
that she could have exerted.

Petitioner presented documents like e-mail correspondences with Paradiang

about the non-renewal of her contract earlier in her employment, e-mail
correspondences to Jones about harassment towards her and specifically
mentioning Paradiang, demand letters from her and her lawyers, her resignation
letter, and the board resolution accepting her resignation. These do not verify that
respondents committed discrimination or disdain towards her. Hence, her
allegations are self-serving and uncorroborated and should not be given evidentiary
weight.
On the other hand, respondent FTCP presented a letter 53 dated August 28,
2005 written by petitioner addressed to the Board wherein she presented her side
about the petition of the employees against her. She also praised the Board for
strengthening the organization, for putting valuable policies in the organization, and
for opening the organization to new partnerships.
In another letter 54 dated September 6, 2005, she reported that on the same
date as the August 28 Board meeting, she and Fostanes met to discuss concerns and
apologized for what happened and other members of management also apologized
and accepted the reconciliation that she extended to them. She also reported that
during the September 5, 2005 General Staff meeting, the issues were discussed,
feelings and sentiments were shared, and concluded with a firm commitment from
everyone to rebuild the good name of FTCP and work together to enhance its
system and maintain its integrity.
The letters did not mention nor hinted that petitioner protested about being
excluded from the meeting which she has considered as a hearing against her. It did
not even reveal that there was undue prejudice from individual respondents.
Records are bereft of proof that she even attempted to address the Board about
the supposed discrimination or disdain by individual respondents. It is only upon
filing of the illegal dismissal case that she alleged that she felt that she was
discriminated against and treated with disdain by respondents. cSEDTC
Respondents presented an affidavit and a police blotter 55 attesting that
some employees who signed in the August 12 letter-petition were intimidated by
the secretary of petitioner's lawyer-husband to sign a recantation. She refuted the
same by alleging that they could have not known that it was recantation when it
appeared in the blotter that they only saw the page they were made to sign.
Respondents also presented an affidavit 56 attesting that petitioner intimidated an
employee by telling her that she would file suits against those who defamed her
when the employee refused to recant her signature in the petition against her.
For petitioner, the fact that the effectivity of her resignation was moved to
November showed the eagerness of Lao, Paradiang and Escobia to get rid of her. 57
We held that the act of the employer moving the effectivity of the resignation
is not an act of harassment. The 30-day notice requirement for an employee's

resignation is actually for the benefit of the employer who has the discretion to
waive such period. Its purpose is to afford the employer enough time to hire another
employee if needed and to see to it that there is proper turn-over of the tasks which
the resigning employee may be handling. 58
Such rule requiring an employee to stay or complete the 30-day period prior
to the effectivity of his resignation becomes discretionary on the part of
management as an employee who intends to resign may be allowed a shorter
period before his resignation becomes effective. 59
Thus, the act of respondents moving the effectivity date of petitioner's
resignation to a date earlier than what she had stated cannot be deemed malicious.
This cannot be viewed as an act of harassment but merely the exercise of
respondent's management prerogative. We cannot expect employers to maintain
in their employ employees who intend to resign, just so the latter can have
continuous work as they look for a new source of income.
Petitioner alleged that the CA erred when it ruled that she should pay
respondents' claims for damages. She maintained that they were not duly proven
and that they clearly did not arise from an employer-employee relationship.
This Court held that the "money claims of workers" referred to in Article 217
60 of the Labor Code embraces money claims which arise out of or in connection
with the employer-employee relationship, or some aspect or incident of such
relationship. 61
Applying the rule of noscitur a sociis in clarifying the scope of Article 217, it is
evident that paragraphs 1 to 5 refer to cases or disputes arising out of or in
connection with an employer-employee relationship. In other words, the money
claims within the original and exclusive jurisdiction of labor arbiters are those which
have some reasonable causal connection with the employer-employee relationship.
62
This claim is distinguished from cases of actions for damages where the
employer-employee relationship is merely incidental and the cause of action
proceeds from a different source of obligation. Thus, the regular courts have
jurisdiction where the damages claimed for were based on: tort, malicious
prosecution, or breach of contract, as when the claimant seeks to recover a debt
from a former employee or seeks liquidated damages in the enforcement of a prior
employment contract. 63
By the designating clause "arising from the employer-employee relations,"
Article 217 applies with equal force to the claim of an employer for actual damages
against its dismissed employee, where the basis for the claim arises from or is
necessarily connected with the fact of termination, and should be entered as a
counterclaim in the illegal dismissal case. 64

In this case, the CA erred in awarding P34,438.37 for petitioner's unpaid debt
to respondents. The claim for recovery of a debt has no reasonable causal
connection with any of the claims provided for in Article 217. The fact that the
transaction happened at the time they were employer and employee did not negate
the civil jurisdiction of trial court. Hence, it is erroneous for the LA and the CA to
rule on such claim arising from a different source of obligation and where the
employer-employee relationship was merely incidental.
Likewise, the CA erred in awarding P109,208.36 for the reimbursement of the
FTCP Provident Fund allegedly withdrawn by petitioner. Although it was entered by
the respondents in its counterclaim, this claim does not arise from or is necessarily
connected with the fact of termination. It also had no reasonable causal connection
with employer-employee relationship.
Lastly, petitioner maintained that the CA erred when it resolved the lingering
doubt in the present case against labor. She alleged that the CA violated the
Constitution, the law, and jurisprudence.
We held that the law and jurisprudence guarantee security of tenure to every
employee. However, in protecting the rights of the workers, the law does not
authorize the oppression or self-destruction of the employer. Social justice does not
mean that every labor dispute shall automatically be decided in favor of labor. Thus,
the Constitution and the law equally recognize the employer's right and prerogative
to manage its operation according to reasonable standards and norms of fair play.
65
It is settled that the law serves to equalize the unequal. The labor force is a
special class that is constitutionally protected because of the inequality between
capital and labor. This constitutional protection presupposes that the labor force is
weak. However, the level of protection to labor should vary from case to case;
otherwise, the state might appear to be too paternalistic in affording protection to
labor. 66 Petitioner could not expect to have the same level of ardent protection
that the laws bestow upon a lowly laborer be given to her, a high ranking officer of
respondent FTCP. As proven, she was considered on equal footing with her
employer and even had the occasion to demand the renewal of her contract by
sending an e-mail to the organization's founder. 67 SDAaTC
We cannot subscribe to petitioner's allegation that the CA ruled against labor
when it resolved the factual issues of the case. As discussed, it is well within the
powers and jurisdiction of the CA to evaluate the evidence alleged to have been
capriciously, whimsically, or arbitrarily disregarded by the NLRC, or as in the present
case, for considering petitioner's bare allegations without support of substantial
evidence. This Court finds that the CA did not violate the Constitution, the law and
jurisprudence. Hence, the resolution of the doubt as to whether petitioner

voluntarily resigned or was constructively dismissed based on the evidence on

record was proper and was not against labor.
WHEREFORE, the petition for review on certiorari, dated October 23, 2008, of
petitioner Rosalinda G. Paredes is hereby PARTLY GRANTED. Accordingly, the ruling
of the Court of Appeals in its Decision dated March 25, 2008, that petitioner was
not constructively dismissed, is hereby AFFIRMED. However, the awards of
P34,438.37 and P109,208.36 for the unpaid debt of petitioner and reimbursement
of the FTCP Provident Fund, respectively, are hereby SET ASIDE.
SO ORDERED.
Velasco, Jr., Villarama, Jr., Perez * and Jardeleza, JJ., concur.
||| (Paredes v. Feed the Children Phils., Inc., G.R. No. 184397 , [September 9, 2015])

MONEY CLAIMS
For LA or NLRC to have jurisdiction on money claims, the claim should have
a reasonable connection with EE relationship and not merely an incident
thereof. In this case the money claim arose from debt, so the ordinary civil
courts have jurisdiction over the case
-there is no constructive dismissal. Based on the evidence, the petitioner
voluntary resigned. changing the effectivity period of the resignation does not
amount to constructive dismissal.
-there was no harassment. she was not purposely excluded from meetings.

28. Art 217

WORLD'S BEST GAS INC. V HENRY VITAL
FIRST DIVISION
[G.R. No. 211588. September 9, 2015.]
WORLD'S BEST GAS, INC., petitioner, vs. HENRY VITAL, joined by his wife
FLOSERFINA VITAL, respondents.
DECISION
PERLAS-BERNABE, J p:
Before the Court is a petition for review on certiorari 1 filed by petitioner
World's Best Gas, Inc. (WBGI) assailing the Decision 2 dated September 30, 2013
and the Resolution 3 dated March 4, 2014 of the Court of Appeals (CA) in CA-G.R.
SP No. 123497, which affirmed the Decision 4 dated December 12, 2011 of the
Regional Trial Court of Bataan, Branch 2 (RTC) in Civil Case No. 8694 finding WBGI
liable to respondent Henry Vital (Vital) for his unpaid salaries and separation pay.
The Facts
Vital was one of the incorporators of WBGI, holding P500,000.00 worth of
shares of stocks therein. 5 As a separate business venture, Vital and his wife,
respondent Floserfina Vital (respondents), sourced Liquefied Petroleum Gas (LPG)
from WBGI and distributed the same through ERJ Enterprises owned by them. 6 As
of respondents' last statement of account, their outstanding balance with WBGI
for unpaid LPG amounted to P923,843.59. 7
On January 6, 1999, Vital was appointed as Internal Auditor and Personnel
Manager by WBGI's President/CEO and continued to serve as such until his
mandatory retirement on September 25, 2003. 8 Upon his retirement, WBGI's
Board of Directors computed Vital's retirement benefits at P82,500.00 by
multiplying his P15,000.00 monthly pay by 5.5 years, which was the number of years
he served as Internal Auditor and Personnel Manager. WBGI also agreed to acquire
Vital's P500,000.00 shares of stocks at par value. 9
After offsetting the P500,000.00 due from WBGI's acquisition of his shares of
stocks against ERJ Enterprises' P923,843.59 outstanding balance to WBGI, Vital
claimed that the unpaid salaries and separation pay due him amounted to
P845,000.00 and P250,000.00, respectively, leaving a net amount of P671,156.41

payable to him. WBGI rejected Vital's claim and contended that after offsetting,
Vital actually owed it P369,156.19. 10
On January 4, 2006, Vital filed a complaint before the National Labor Relations
Commission (NLRC) Regional Arbitration Branch III (RAB), docketed as NLRC Case
No. RAB-III-01-9671-06, for non-payment of separation and retirement benefits,
underpayment of salaries/wages and 13th month pay, illegal reduction of salary
and benefits, and damages. 11
For its part, WBGI averred that the Labor Arbiter (LA) had no jurisdiction over
the complaint because Vital is not an employee, but a mere incorporator and
stockholder of WBGI, hence, no employer-employee relationship exists between
them. 12 AIDSTE
The LA Ruling
In a Decision 13 dated May 3, 2006, the LA found that the issues between Vital
and WBGI are intra-corporate in nature as they arose between the relations of a
stockholder and the corporation, and not from an employee and employer
relationship. 14 Thus, the LA dismissed the case for lack of jurisdiction, 15 prompting
Vital to file his complaint 16 for payment of unpaid salaries, separation and
retirement benefits, and damages on July 19, 2007 before the RTC, docketed as Civil
Case No. 8694. 17
The RTC Ruling
In a Decision 18 dated December 12, 2011, the RTC, acting as a special
commercial court, oppositely found that Vital was an employee of WBGI and
thereby, upheld his claim of P845,000.00 and P250,000.00 in unpaid salaries and
separation pay. However, the RTC offset these amounts, including the P500,000.00
due from WBGI's acquisition of Vital's shares of stocks, against the P923,843.59
payable to WBGI from ERJ Enterprises, thus, awarding Vital the net amount of
P671,156.41, with legal interest from date of demand until full payment, P50,000.00
as attorney's fees and costs of suit plus litigation expenses. 19
The RTC ratiocinated that since the positions of Internal Auditor and
Personnel Manager were not provided for in WBGI's By-Laws, Vital was not a
corporate officer but an employee entitled to employment benefits. It also
maintained that it had jurisdiction to rule on the main intra-corporate controversy,
together with the question of damages and employment benefits. 20
Aggrieved, WBGI elevated the case to the CA on appeal. 21
The CA Ruling
In a Decision 22 dated September 30, 2013, the CA dismissed the appeal,
agreeing with the RTC's finding that Vital was an employee of WGBI. While the CA
observed that the RTC's award of employment benefits to Vital was improper, as

the same was under the exclusive jurisdiction of the labor arbiters, it still ruled on
said claim, reasoning that it has the eventual authority to review the labor courts'
decision on the matter. 23
WBGI filed a motion for reconsideration 24 which was, however, denied in a
Resolution 25 dated March 4, 2014; hence, the present petition.
The Issue before the Court
The main issue to be resolved is whether or not the CA erred in ruling upon
Vital's claim of P845,000.00 and P250,000.00 in unpaid salaries and separation pay.
The Court's Ruling
The petition is partly meritorious.
At the outset, it should be pointed out that the instant case actually involves
three (3) distinct causes of action, namely, (1) Vital's claim for P845,000.00 and
P250,000.00 in unpaid salaries and separation pay; (2) the P923,843.59 in
arrearages payable to WBGI from ERJ Enterprises, which was admitted by Vital but
not claimed by WBGI; and (3) Vital's claim of P500,000.00 due from WBGI's
acquisition of Vital's shares of stocks. All of the foregoing were threshed out by the
RTC in its December 12, 2011 Decision, and effectively upheld by the CA on appeal.
AaCTcI
However, the RTC's adjudication of the first cause of action was improper
since the same is one which arose from Vital and WBGI's employer-employee
relations, involving an amount exceeding P5,000.00, hence, belonging to the
jurisdiction of the labor arbiters pursuant to Article 217 of the Labor Code:
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,
within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;

5. Cases arising from any violation of Article 264 of this

Code, including questions involving the legality of strikes
and lockouts; and acEHCD
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.
xxx xxx xxx
Having no subject matter jurisdiction to resolve claims arising from employeremployee relations, the RTC's ruling on Vital's claim of P845,000.00 and
P250,000.00 in unpaid salaries and separation pay is, thus, null and void, and
therefore, cannot perpetuate even if affirmed on appeal, 26 rendering the CA's
ratiocination that it "has the eventual authority to review the labor courts' decision
on the matter" 27 direly infirm. As a result, WBGI's petition is meritorious on this
score. However, since the dismissal is grounded on lack of jurisdiction, then the
same should be considered as a dismissal without prejudice. 28 As such, Vital may
re-file 29 the same claim, including those related thereto (e.g., moral and
exemplary damages, and, attorney's fees) before the proper labor tribunal.
Contrary to its lack of jurisdiction over claims arising from employer-employee
relations, the RTC has: (a) general jurisdiction to adjudicate on the P923,843.59 in
arrearages payable to WBGI from ERJ Enterprises, which was admitted by Vital
but not claimed by WBGI; 30 and (b) special jurisdiction, as a special commercial
court, to adjudicate on Vital's claim of P500,000.00 from WBGI's acquisition of his
shares of stocks. 31 Indeed, even acting as a special commercial court, the RTC's
general jurisdiction to adjudicate on the first-mentioned claim is retained.
With the RTC's jurisdiction established over the above-mentioned causes of
action, Vital's claim of P500,000.00 due from WBGI's acquisition of his shares of
stocks should therefore be offset against the P923,843.59 in arrearages payable to
WBGI by ERJ Enterprises owned by respondents, as prayed for by him. Hence, no
amount can be adjudicated in Vital's favor, since it is the respondents who, after
due computation, would be left liable to WBGI in the net amount of P423,843.59.
This notwithstanding, WBGI cannot recover this latter amount in this case since it
never interposed a permissive counterclaim therefor in its answer. 32 It is wellsettled that courts cannot grant a relief not prayed for in the pleadings or in excess
of what is being sought by the party. 33 WBGI may, however, opt to file a separate
collection suit, including those related thereto (e.g., moral and exemplary
damages, and attorney's fees), to recover such sum.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated

September 30, 2013 and the Resolution dated March 4, 2014 of the Court of Appeals
in CA-G.R. SP No. 123497 are hereby SET ASIDE. A new one is entered:
(a) DISMISSING respondent Henry Vital's (Vital) labor claims of P845,000.00
and P250,000.00 in unpaid salaries and separation pay against petitioner World's
Best Gas, Inc.'s (WBGI), WITHOUT PREJUDICE as stated in this Decision; and HSAcaE
(b) RECOGNIZING WBGI's liability to Vital in the amount of P500,000.00 due
from the acquisition of his shares of stocks. This amount is, however, OFFSET against
the P923,843.59 in arrearages payable to WBGI by ERJ Enterprises owned by Vital
and his wife, respondent Floserfina Vital, leaving a net amount of P423,843.59,
which WBGI may claim in a separate case as stated in this Decision.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Bersamin and Perez, JJ., concur.
||| (World's Best Gas, Inc. v. Vital, G.R. No. 211588, [September 9, 2015])
RTC has jurisdiction over the case.

29. Art 217 Conflict of Laws

CONTINENTAL MICRONESIA V BASSO
THIRD DIVISION
[G.R. Nos. 178382-83. September 23, 2015.]
CONTINENTAL MICRONESIA, INC., petitioner, vs. JOSEPH BASSO,
respondent.
DECISION
JARDELEZA, J p:
This is a Petition for Review on Certiorari 1 under Rule 45 of the Revised Rules
of Court assailing the Decision 2 dated May 23, 2006 and Resolution 3 dated June
19, 2007 of the Court of Appeals in the consolidated cases CA-G.R. SP No. 83938 and
CA-G.R. SP No. 84281. These assailed Decision and Resolution set aside the Decision
4 dated November 28, 2003 of the National Labor Relations Commission (NLRC)
declaring Joseph Basso's (Basso) dismissal illegal, and ordering the payment of
separation pay as alternative to reinstatement and full backwages until the date of
the Decision. HTcADC
The Facts
Petitioner Continental Micronesia, Inc. (CMI) is a foreign corporation
organized and existing under the laws of and domiciled in the United States of
America (US). It is licensed to do business in the Philippines. 5 Basso, a US citizen,
resided in the Philippines prior to his death. 6
During his visit to Manila in 1990, Mr. Keith R. Braden (Mr. Braden), Managing
Director-Asia of Continental Airlines, Inc. (Continental), offered Basso the position
of General Manager of the Philippine Branch of Continental. Basso accepted the
offer. 7
It was not until much later that Mr. Braden, who had since returned to the US,
sent Basso the employment contract 8 dated February 1, 1991, which Mr. Braden
had already signed. Basso then signed the employment contract and returned it to
Mr. Braden as instructed.
On November 7, 1992, CMI took over the Philippine operations of Continental,
with Basso retaining his position as General Manager. 9

On December 20, 1995, Basso received a letter from Mr. Ralph Schulz (Mr.
Schulz), who was then CMI's Vice President of Marketing and Sales, informing Basso
that he has agreed to work in CMI as a consultant on an "as needed basis" effective
February 1, 1996 to July 31, 1996. The letter also informed Basso that: (1) he will
not receive any monetary compensation but will continue being covered by the
insurance provided by CMI; (2) he will enjoy travel privileges; and (3) CMI will
advance Php1,140,000.00 for the payment of housing lease for 12 months. 10
On January 11, 1996, Basso wrote a counter-proposal 11 to Mr. Schulz
regarding his employment status in CMI. On March 14, 1996, Basso wrote another
letter addressed to Ms. Marty Woodward (Ms. Woodward) of CMI's Human
Resources Department inquiring about the status of his employment. 12 On the
same day, Ms. Woodward responded that pursuant to the employment contract
dated February 1, 1991, Basso could be terminated at will upon a thirty-day notice.
This notice was allegedly the letter Basso received from Mr. Schulz on December
20, 1995. Ms. Woodward also reminded Basso of the telephone conversation
between him, Mr. Schulz and Ms. Woodward on December 19, 1995, where they
informed him of the company's decision to relieve him as General Manager. Basso,
instead, was offered the position of consultant to CMI. Ms. Woodward also
informed Basso that CMI rejected his counter-proposal and, thus, terminated his
employment effective January 31, 1996. CMI offered Basso a severance pay, in
consideration of the Php1,140,000.00 housing advance that CMI promised him. 13
Basso filed a Complaint for Illegal Dismissal with Moral and Exemplary
Damages against CMI on December 19, 1996. 14 Alleging the presence of foreign
elements, CMI filed a Motion to Dismiss 15 dated February 10, 1997 on the ground
of lack of jurisdiction over the person of CMI and the subject matter of the
controversy. In an Order 16 dated August 27, 1997, the Labor Arbiter granted the
Motion to Dismiss. Applying the doctrine of lex loci contractus, the Labor Arbiter
held that the terms and provisions of the employment contract show that the
parties did not intend to apply our Labor Code (Presidential Decree No. 442). The
Labor Arbiter also held that no employer-employee relationship existed between
Basso and the branch office of CMI in the Philippines, but between Basso and the
foreign corporation itself.
On appeal, the NLRC remanded the case to the Labor Arbiter for the
determination of certain facts to settle the issue on jurisdiction. NLRC ruled that the
issue on whether the principle of lex loci contractus or lex loci celebrationis should
apply has to be further threshed out. 17
Labor Arbiter's Ruling
Labor Arbiter Madjayran H. Ajan in his Decision 18 dated September 24, 1999
dismissed the case for lack of merit and jurisdiction.

The Labor Arbiter agreed with CMI that the employment contract was
executed in the US "since the letter-offer was under the Texas letterhead and the
acceptance of Complainant was returned there." 19 Thus, applying the doctrine of
lex loci celebrationis, US laws apply. Also, applying lex loci contractus, the Labor
Arbiter ruled that the parties did not intend to apply Philippine laws, thus:
Although the contract does not state what law shall apply, it is
obvious that Philippine laws were not written into it. More specifically,
the Philippine law on taxes and the Labor Code were not intended by
the parties to apply, otherwise Par. 7 on the payment by Complainant
U.S. Federal and Home State income taxes, and Pars. 22/23 on
termination by 30-day prior notice, will not be there. The contract was
prepared in contemplation of Texas or U.S. laws where Par. 7 is required
and Pars. 22/23 is allowed. 20
The Labor Arbiter also ruled that Basso was terminated for a valid cause based
on the allegations of CMI that Basso committed a series of acts that constitute
breach of trust and loss of confidence. 21
The Labor Arbiter, however, found CMI to have voluntarily submitted to his
office's jurisdiction. CMI participated in the proceedings, submitted evidence on the
merits of the case, and sought affirmative relief through a motion to dismiss. 22
NLRC's Ruling

SET ASIDE LA. LA has juridiction

On appeal, the NLRC Third Division promulgated its Decision 23 dated

November 28, 2003, the decretal portion of which reads:
WHEREFORE, the decision dated 24 September 1999 is VACATED
and SET ASIDE. Respondent CMI is ordered to pay complainant the
amount of US$5,416.00 for failure to comply with the due notice
requirement. The other claims are dismissed.
SO ORDERED. 24
The NLRC did not agree with the pronouncement of the Labor Arbiter that his
office has no jurisdiction over the controversy. It ruled that the Labor Arbiter
acquired jurisdiction over the case when CMI voluntarily submitted to his office's
jurisdiction by presenting evidence, advancing arguments in support of the legality
of its acts, and praying for reliefs on the merits of the case. 25
On the merits, the NLRC agreed with the Labor Arbiter that Basso was
dismissed for just and valid causes on the ground of breach of trust and loss of
confidence. The NLRC ruled that under the applicable rules on loss of trust and
confidence of a managerial employee, such as Basso, mere existence of a basis for
believing that such employee has breached the trust of his employer suffices.
However, the NLRC found that CMI denied Basso the required due process notice in
his dismissal. 26

Both CMI and Basso filed their respective Motions for Reconsideration dated
January 15, 2004 27 and January 8, 2004. 28 Both motions were dismissed in
separate Resolutions dated March 15, 2004 29 and February 27, 2004, 30
respectively.
Basso filed a Petition for Certiorari dated April 16, 2004 with the Court of
Appeals docketed as CA-G.R. SP No. 83938. 31 Basso imputed grave abuse of
discretion on the part of the NLRC in ruling that he was validly dismissed. CMI filed
its own Petition for Certiorari dated May 13, 2004 docketed as CA-G.R. SP No.
84281, 32 alleging that the NLRC gravely abused its discretion when it assumed
jurisdiction over the person of CMI and the subject matter of the case.
In its Resolution dated October 7, 2004, the Court of Appeals consolidated the
two cases 33 and ordered the parties to file their respective Memoranda.
The Court of Appeal's Decision

illegal dismissal

The Court of Appeals promulgated the now assailed Decision 34 dated May
23, 2006, the relevant dispositive portion of which reads:
WHEREFORE, the petition of Continental docketed as CA-G.R. SP
No. 84281 is DENIED DUE COURSE and DISMISSED.
On the other hand the petition of Basso docketed as CA-G.R. SP
No. 83938 is GIVEN DUE COURSE and GRANTED, and accordingly, the
assailed Decision dated November 28, 2003 and Resolution dated
February 27, 2004 of the NLRC are SET ASIDE and VACATED. Instead
judgment is rendered hereby declaring the dismissal of Basso illegal and
ordering Continental to pay him separation pay equivalent to one (1)
month pay for every year of service as an alternative to reinstatement.
Further, ordering Continental to pay Basso his full backwages from the
date of his said illegal dismissal until date of this decision. The claim for
moral and exemplary damages as well as attorney's fees are dismissed.
35
The Court of Appeals ruled that the Labor Arbiter and the NLRC had
jurisdiction over the subject matter of the case and over the parties. The Court of
Appeals explained that jurisdiction over the subject matter of the action is
determined by the allegations of the complaint and the law. Since the case filed by
Basso is a termination dispute that is "undoubtedly cognizable by the labor
tribunals", the Labor Arbiter and the NLRC had jurisdiction to rule on the merits of
the case. On the issue of jurisdiction over the person of the parties, who are
foreigners, the Court of Appeals ruled that jurisdiction over the person of Basso was
acquired when he filed the complaint for illegal dismissal, while jurisdiction over the
person of CMI was acquired through coercive process of service of summons to its

agent in the Philippines. The Court of Appeals also agreed that the active
participation of CMI in the case rendered moot the issue on jurisdiction. aScITE
On the merits of the case, the Court of Appeals declared that CMI illegally
dismissed Basso. The Court of Appeals found that CMI's allegations of loss of trust
and confidence were not established. CMI "failed to prove its claim of the incidents
which were its alleged bases for loss of trust or confidence." 36 While managerial
employees can be dismissed for loss of trust and confidence, there must be a basis
for such loss, beyond mere whim or caprice.
After the parties filed their Motions for Reconsideration, 37 the Court of
Appeals promulgated Resolution 38 dated June 19, 2007 denying CMI's motion,
while partially granting Basso's as to the computation of backwages.
Hence, this petition, which raises the following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN REVIEWING THE
FACTUAL FINDINGS OF THE NLRC INSTEAD OF LIMITING ITS INQUIRY
INTO WHETHER OR NOT THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION.
II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE
LABOR ARBITER AND THE NLRC HAD JURISDICTION TO HEAR AND TRY
THE ILLEGAL DISMISSAL CASE.
III.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT
BASSO WAS NOT VALIDLY DISMISSED ON THE GROUND OF LOSS OF
TRUST OR CONFIDENCE.
We begin with the second issue on the jurisdiction of the Labor Arbiter and
the NLRC in the illegal dismissal case. The first and third issues will be discussed
jointly.
The labor tribunals had jurisdiction
over the parties and the subject
matter of the case.
CMI maintains that there is a conflict-of-laws issue that must be settled to
determine proper jurisdiction over the parties and the subject matter of the case. It
also alleges that the existence of foreign elements calls for the application of US
laws and the doctrines of lex loci celebrationis (the law of the place of the
ceremony), lex loci contractus (law of the place where a contract is executed), and
lex loci intentionis (the intention of the parties as to the law that should govern their

agreement). CMI also invokes the application of the rule of forum non conveniens
to determine the propriety of the assumption of jurisdiction by the labor tribunals.
We agree with CMI that there is a conflict-of-laws issue that needs to be
resolved first. Where the facts establish the existence of foreign elements, the case
presents a conflict-of-laws issue. 39 The foreign element in a case may appear in
different forms, such as in this case, where one of the parties is an alien and the
other is domiciled in another state. three consecutive phases in conflict-of-laws problems
In Hasegawa v. Kitamura, 40 we stated that in the judicial resolution of
conflict-of-laws problems, three consecutive phases are involved: jurisdiction,
choice of law, and recognition and enforcement of judgments. In resolving the
conflicts problem, courts should ask the following questions:
1. "Under the law, do I have jurisdiction over the subject matter and the
parties to this case?
2. "If the answer is yes, is this a convenient forum to the parties, in light
of the facts?
3. "If the answer is yes, what is the conflicts rule for this particular
problem?
4. "If the conflicts rule points to a foreign law, has said law been
properly pleaded and proved by the one invoking it?
5. "If so, is the application or enforcement of the foreign law in the
forum one of the basic exceptions to the application of foreign law? In
short, is there any strong policy or vital interest of the forum that is at
stake in this case and which should preclude the application of foreign
law? 41
Jurisdiction is defined as the power and authority of the courts to hear, try
and decide cases. Jurisdiction over the subject matter is conferred by the
Constitution or by law and by the material allegations in the complaint, regardless
of whether or not the plaintiff is entitled to recover all or some of the claims or
reliefs sought therein. 42 It cannot be acquired through a waiver or enlarged by the
omission of the parties or conferred by the acquiescence of the court. 43 That the
employment contract of Basso was replete with references to US laws, and that it
originated from and was returned to the US, do not automatically preclude our labor
tribunals from exercising jurisdiction to hear and try this case.
This case stemmed from an illegal dismissal complaint. The Labor Code, under
Article 217, clearly vests original and exclusive jurisdiction to hear and decide cases
involving termination disputes to the Labor Arbiter. Hence, the Labor Arbiter and
the NLRC have jurisdiction over the subject matter of the case.

As regards jurisdiction over the parties, we agree with the Court of Appeals
that the Labor Arbiter acquired jurisdiction over the person of Basso,
notwithstanding his citizenship, when he filed his complaint against CMI. On the
other hand, jurisdiction over the person of CMI was acquired through the coercive
process of service of summons. We note that CMI never denied that it was served
with summons. CMI has, in fact, voluntarily appeared and participated in the
proceedings before the courts. Though a foreign corporation, CMI is licensed to do
business in the Philippines and has a local business address here. The purpose of
the law in requiring that foreign corporations doing business in the country be
licensed to do so, is to subject the foreign corporations to the jurisdiction of our
courts. 44
Considering that the Labor Arbiter and the NLRC have jurisdiction over the
parties and the subject matter of this case, these tribunals may proceed to try the
case even if the rules of conflict-of-laws or the convenience of the parties point to
a foreign forum, this being an exercise of sovereign prerogative of the country
where the case is filed. 45
The next question is whether the local forum is the convenient forum in light
of the facts of the case. CMI contends that a Philippine court is an inconvenient
forum.
We disagree.

PHILIPPINE COURT IS AN INCONVENIENT FORUM

Under the doctrine of forum non conveniens, a Philippine court in a conflictof-laws case may assume jurisdiction if it chooses to do so, provided, that the
following requisites are met: (1) that the Philippine Court is one to which the parties
may conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and (3) that the Philippine Court has
or is likely to have power to enforce its decision. 46 All these requisites are present
here.
Basso may conveniently resort to our labor tribunals as he and CMI had
physical presence in the Philippines during the duration of the trial. CMI has a
Philippine branch, while Basso, before his death, was residing here. Thus, it could
be reasonably expected that no extraordinary measures were needed for the
parties to make arrangements in advocating their respective cases.

1.

The labor tribunals can make an intelligent decision as to the law and facts.
The incident subject of this case (i.e., dismissal of Basso) happened in the
Philippines, the surrounding circumstances of which can be ascertained without
having to leave the Philippines. The acts that allegedly led to loss of trust and
confidence and Basso's eventual dismissal were committed in the Philippines. As to
the law, we hold that Philippine law is the proper law of the forum, as we shall
discuss shortly. Also, the labor tribunals have the power to enforce their judgments
because they acquired jurisdiction over the persons of both parties. HEITAD

2.

3.

Our labor tribunals being the convenient fora, the next question is what law
should apply in resolving this case.
The choice-of-law issue in a conflict-of-laws case seeks to answer the
following important questions: (1) What legal system should control a given
situation where some of the significant facts occurred in two or more states; and (2)
to what extent should the chosen legal system regulate the situation. 47 These
questions are entirely different from the question of jurisdiction that only seeks to
answer whether the courts of a state where the case is initiated have jurisdiction to
enter a judgment. 48 As such, the power to exercise jurisdiction does not
automatically give a state constitutional authority to apply forum law. 49
CMI insists that US law is the applicable choice-of-law under the principles of
lex loci celebrationis and lex loci contractus. It argues that the contract of
employment originated from and was returned to the US after Basso signed it, and
hence, was perfected there. CMI further claims that the references to US law in the
employment contract show the parties' intention to apply US law and not ours.
These references are:
a. Foreign station allowance of forty percent (40%) using the "U.S. State
Department Index, the base being Washington, D.C."
b. Tax equalization that made Basso responsible for "federal and any home
state income taxes."
c. Hardship allowance of fifteen percent (15%) of base pay based upon the
"U.S. Department of State Indexes of living costs abroad."
d. The employment arrangement is "one at will, terminable by either party
without any further liability on thirty days prior written notice." 50
CMI asserts that the US law on labor relations particularly, the US Railway
Labor Act sanctions termination-at-will provisions in an employment contract. Thus,
CMI concludes that if such laws were applied, there would have been no illegal
dismissal to speak of because the termination-at-will provision in Basso's
employment contract would have been perfectly valid.
We disagree.

Point of contact prevails. no express intention to make the US law govern, only references.

In Saudi Arabian Airlines v. Court of Appeals, 51 we emphasized that an

essential element of conflict rules is the indication of a "test" or "connecting factor"
or "point of contact". Choice-of-law rules invariably consist of a factual relationship
(such as property right, contract claim) and a connecting fact or point of contact,
such as the situs of the res, the place of celebration, the place of performance, or
the place of wrongdoing. Pursuant to Saudi Arabian Airlines, we hold that the "test
factors," "points of contact" or "connecting factors" in this case are the following:
(1) The nationality, domicile or residence of Basso;

(2) The seat of CMI;

(3) The place where the employment contract has been made, the locus actus;
(4) The place where the act is intended to come into effect, e.g., the place of
performance of contractual duties;
(5) The intention of the contracting parties as to the law that should govern
their agreement, the lex loci intentionis; and
(6) The place where judicial or administrative proceedings are instituted or
done. 52
Applying the foregoing in this case, we conclude that Philippine law is the
applicable law. Basso, though a US citizen, was a resident here from the time he was
hired by CMI until his death during the pendency of the case. CMI, while a foreign
corporation, has a license to do business in the Philippines and maintains a branch
here, where Basso was hired to work. The contract of employment was negotiated
in the Philippines. A purely consensual contract, it was also perfected in the
Philippines when Basso accepted the terms and conditions of his employment as
offered by CMI. The place of performance relative to Basso's contractual duties was
in the Philippines. The alleged prohibited acts of Basso that warranted his dismissal
were committed in the Philippines.
Clearly, the Philippines is the state with the most significant relationship to
the problem. Thus, we hold that CMI and Basso intended Philippine law to govern,
notwithstanding some references made to US laws and the fact that this intention
was not expressly stated in the contract. We explained in Philippine Export and
Foreign Loan Guarantee Corporation v. V. P. Eusebio Construction, Inc. 53 that the
law selected may be implied from such factors as substantial connection with the
transaction, or the nationality or domicile of the parties. 54 We cautioned, however,
that while Philippine courts would do well to adopt the first and most basic rule in
most legal systems, namely, to allow the parties to select the law applicable to their
contract, the selection is subject to the limitation that it is not against the law,
morals, or public policy of the forum. 55
Similarly, in Bank of America, NT & SA v. American Realty Corporation, 56 we
ruled that a foreign law, judgment or contract contrary to a sound and established
public policy of the forum shall not be applied. Thus:
Moreover, foreign law should not be applied when its application
would work undeniable injustice to the citizens or residents of the
forum. To give justice is the most important function of law; hence, a
law, or judgment or contract that is obviously unjust negates the
fundamental principles of Conflict of Laws. 57
Termination-at-will is anathema to the public policies on labor protection
espoused by our laws and Constitution, which dictates that no worker shall be

dismissed except for just and authorized causes provided by law and after due
process having been complied with. 58 Hence, the US Railway Labor Act, which
sanctions termination-at-will, should not be applied in this case.
Additionally, the rule is that there is no judicial notice of any foreign law. As
any other fact, it must be alleged and proved. 59 If the foreign law is not properly
pleaded or proved, the presumption of identity or similarity of the foreign law to
our own laws, otherwise known as processual presumption, applies. Here, US law
may have been properly pleaded but it was not proved in the labor tribunals.
Having disposed of the issue on jurisdiction, we now rule on the first and third
issues.
The Court of Appeals may review the
factual findings of the NLRC in a
Rule 65 petition.
CMI submits that the Court of Appeals overstepped the boundaries of the
limited scope of its certiorari jurisdiction when instead of ruling on the existence of
grave abuse of discretion, it proceeded to pass upon the legality and propriety of
Basso's dismissal. Moreover, CMI asserts that it was error on the part of the Court
of Appeals to re-evaluate the evidence and circumstances surrounding the dismissal
of Basso.
We disagree.
The power of the Court of Appeals to review NLRC decisions via a Petition for
Certiorari under Rule 65 of the Revised Rules of Court was settled in our decision in
St. Martin Funeral Home v. NLRC. 60 The general rule is that certiorari does not lie
to review errors of judgment of the trial court, as well as that of a quasi-judicial
tribunal. In certiorari proceedings, judicial review does not go as far as to examine
and assess the evidence of the parties and to weigh their probative value. 61
However, this rule admits of exceptions. In Globe Telecom, Inc. v. Florendo-Flores,
62 we stated:
In the review of an NLRC decision through a special civil action for
certiorari, resolution is confined only to issues of jurisdiction and grave
abuse of discretion on the part of the labor tribunal. Hence, the Court
refrains from reviewing factual assessments of lower courts and
agencies exercising adjudicative functions, such as the NLRC.
Occasionally, however, the Court is constrained to delve into factual
matters where, as in the instant case, the findings of the NLRC
contradict those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction
may look into the records of the case and re-examine the questioned
findings. As a corollary, this Court is clothed with ample authority to

review matters, even if they are not assigned as errors in their appeal,
if it finds that their consideration is necessary to arrive at a just decision
of the case. The same principles are now necessarily adhered to and are
applied by the Court of Appeals in its expanded jurisdiction over labor
cases elevated through a petition for certiorari; thus, we see no error
on its part when it made anew a factual determination of the matters
and on that basis reversed the ruling of the NLRC. 63 (Citations omitted.)
Thus, the Court of Appeals may grant the petition when the factual findings
complained of are not supported by the evidence on record; when it is necessary to
prevent a substantial wrong or to do substantial justice; when the findings of the
NLRC contradict those of the Labor Arbiter; and when necessary to arrive at a just
decision of the case. 64 To make these findings, the Court of Appeals necessarily has
to look at the evidence and make its own factual determination. 65
Since the findings of the Labor Arbiter differ with that of the NLRC, we find
that the Court of Appeals correctly exercised its power to review the evidence and
the records of the illegal dismissal case.
Basso was illegally dismissed.
It is of no moment that Basso was a managerial employee of CMI. Managerial
employees enjoy security of tenure and the right of the management to dismiss
must be balanced against the managerial employee's right to security of tenure,
which is not one of the guaranties he gives up. 66
In Apo Cement Corporation v. Baptisma, 67 we ruled that for an employer to
validly dismiss an employee on the ground of loss of trust and confidence under
Article 282 (c) of the Labor Code, the employer must observe the following
guidelines: 1) loss of confidence should not be simulated; 2) it should not be used
as subterfuge for causes which are improper, illegal or unjustified; 3) it may not be
arbitrarily asserted in the face of overwhelming evidence to the contrary; and 4) it
must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
More importantly, it must be based on a willful breach of trust and founded on
clearly established facts.
We agree with the Court of Appeals that the dismissal of Basso was not
founded on clearly established facts and evidence sufficient to warrant dismissal
from employment. While proof beyond reasonable doubt is not required to
establish loss of trust and confidence, substantial evidence is required and on the
employer rests the burden to establish it. 68 There must be some basis for the loss
of trust, or that the employer has reasonable ground to believe that the employee
is responsible for misconduct, which renders him unworthy of the trust and
confidence demanded by his position. 69
CMI alleges that Basso committed the following:

(1) Basso delegated too much responsibility to the General Sales Agent and
relied heavily on its judgments. 70
(2) Basso excessively issued promotional tickets to his friends who had no
direct business with CMI. 71
(3) The advertising agency that CMI contracted had to deal directly with Guam
because Basso was hardly available. 72 Mr. Schulz discovered that Basso
exceeded the advertising budget by $76,000.00 in 1994 and by
$20,000.00 in 1995. 73
(4) Basso spent more time and attention to his personal businesses and was
reputed to own nightclubs in the Philippines. 74
(5) Basso used free tickets and advertising money to promote his personal
business, 75 such as a brochure that jointly advertised one of Basso's
nightclubs with CMI.
We find that CMI failed to discharge its burden to prove the above acts. CMI
merely submitted affidavits of its officers, without any other corroborating
evidence. Basso, on the other hand, had adequately explained his side. On the
advertising agency and budget issues raised by CMI, he explained that these were
blatant lies as the advertising needs of CMI were centralized in its Guam office and
the Philippine office was not authorized to deal with CMI's advertising agency,
except on minor issues. 76 Basso further stated that under CMI's existing policy,
ninety percent (90%) of the advertising decisions were delegated to the advertising
firm of McCann-Ericsson in Japan and only ten percent (10%) were left to the
Philippine office. 77 Basso also denied the allegations of owning nightclubs and
promoting his personal businesses and explained that it was illegal for foreigners in
the Philippines to engage in retail trade in the first place. TIADCc
Apart from these accusations, CMI likewise presented the findings of the audit
team headed by Mr. Stephen D. Goepfert, showing that "for the period of 1995 and
1996, personal passes for Continental and other airline employees were noted (sic)
to be issued for which no service charge was collected." 78 The audit cited the trip
pass log of a total of 10 months. The trip log does not show, however, that Basso
caused all the ticket issuances. More, half of the trips in the log occurred from March
to July of 1996, 79 a period beyond the tenure of Basso. Basso was terminated
effectively on January 31, 1996 as indicated in the letter of Ms. Woodward. 80
CMI also accused Basso of making "questionable overseas phone calls". Basso,
however, adequately explained in his Reply 81 that the phone calls to Italy and
Portland, USA were made for the purpose of looking for a technical maintenance
personnel with US Federal Aviation Authority qualifications, which CMI needed at
that time. The calls to the US were also made in connection with his functions as
General Manager, such as inquiries on his tax returns filed in Nevada. Basso also

explained that the phone lines 82 were open direct lines that all personnel were
free to use to make direct long distance calls. 83
Finally, CMI alleged that Basso approved the disbursement of Php80,000.00
to cover the transfer fee of the Manila Polo Club share from Mr. Kenneth Glover,
the previous General Manager, to him. CMI claimed that "nowhere in the said
contract was it likewise indicated that the Manila Polo Club share was part of the
compensation package given by CMI to Basso." 84 CMI's claims are not credible.
Basso explained that the Manila Polo Club share was offered to him as a bonus to
entice him to leave his then employer, United Airlines. A letter from Mr. Paul J.
Casey, former president of Continental, supports Basso. 85 In the letter, Mr. Casey
explained:
As a signing bonus, and a perk to attract Mr. Basso to join
Continental Airlines, he was given the Manila Polo Club share and
authorized to have the share re-issued in his name. In addition to giving
Mr. Basso the Manila Polo Club share, Continental agreed to pay the
dues for a period of three years and this was embodied in his contract
with Continental. This was all done with my knowledge and approval.
86
Clause 14 of the employment contract also states:
Club Memberships: The Company will locally pay annual dues for
membership in a club in Manila that your immediate supervisor and I
agree is of at least that value to Continental through you in your role as
our General Manager for the Philippines. 87
Taken together, the above pieces of evidence suggest that the Manila Polo
Club share was part of Basso's compensation package and thus he validly used
company funds to pay for the transfer fees. If doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be tilted in
favor of the latter. 88
Finally, CMI violated procedural due process in terminating Basso. In King of
Kings Transport, Inc. v. Mamac 89 we detailed the procedural due process steps in
termination of employment:
To clarify, the following should be considered in terminating the
services of employees:
(1) The first written notice to be served on the employees should
contain the specific causes or grounds for termination against them, and
a directive that the employees are given the opportunity to submit their
written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance
that management must accord to the employees to enable them to

prepare adequately for their defense. This should be construed as a

period of at least five (5) calendar days from receipt of the notice to give
the employees an opportunity to study the accusation against them,
consult a union official or lawyer, gather data and evidence, and decide
on the defenses they will raise against the complaint. Moreover, in
order to enable the employees to intelligently prepare their explanation
and defenses, the notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly,
the notice should specifically mention which company rules, if any, are
violated and/or which among the grounds under Art. 282 is being
charged against the employees.
(2) After serving the first notice, the employers should schedule
and conduct a hearing or conference wherein the employees will be
given the opportunity to: (1) explain and clarify their defenses to the
charge against them; (2) present evidence in support of their defenses;
and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an
amicable settlement.
(3) After determining that termination of employment is justified,
the employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment.
(Emphasis in original.)
Here, Mr. Schulz's and Ms. Woodward's letters dated December 19, 1995 and
March 14, 1996, respectively, are not one of the valid twin notices. Neither
identified the alleged acts that CMI now claims as bases for Basso's termination. Ms.
Woodward's letter even stressed that the original plan was to remove Basso as
General Manager but with an offer to make him consultant. It was inconsistent of
CMI to declare Basso as unworthy of its trust and confidence and, in the same
breath, offer him the position of consultant. As the Court of Appeals pointed out:
AIDSTE
But mark well that Basso was clearly notified that the sole ground
for his dismissal was the exercise of the termination at will clause in the
employment contract. The alleged loss of trust and confidence claimed

by Continental appears to be a mere afterthought belatedly trotted out

to save the day. 90
Basso is entitled to separation pay and full backwages.
Under Article 279 of the Labor Code, an employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and
other privileges, and to his full backwages, inclusive of allowances and to his other
benefits or their monetary equivalent computed from the time his compensation
was withheld up to the time of actual reinstatement.
Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded as
an alternative. The payment of separation pay is in addition to payment of
backwages. 91 In the case of Basso, reinstatement is no longer possible since he has
already passed away. Thus, Basso's separation pay with full backwages shall be paid
to his heirs.
As to the computation of backwages, we agree with CMI that Basso was
entitled to backwages only up to the time he reached 65 years old, the compulsory
retirement age under the law. 92 This is our consistent ruling. 93 When Basso was
illegally dismissed on January 31, 1996, he was already 58 years old. 94 He turned
65 years old on October 2, 2002. Since backwages are granted on grounds of equity
for earnings lost by an employee due to his illegal dismissal, 95 Basso was entitled
to backwages only for the period he could have worked had he not been illegally
dismissed, i.e., from January 31, 1996 to October 2, 2002.
WHEREFORE, premises considered, the Decision of the Court of Appeals
dated May 23, 2006 and Resolution dated June 19, 2007 in the consolidated cases
CA-G.R. SP No. 83938 and CA-G.R. SP No. 84281 are AFFIRMED, with
MODIFICATION as to the award of backwages. Petitioner Continental Micronesia,
Inc. is hereby ordered to pay Respondent Joseph Basso's heirs: 1) separation pay
equivalent to one (1) month pay for every year of service, and 2) full backwages
from January 31, 1996, the date of his illegal dismissal, to October 2, 2002, the date
of his compulsory retirement age.
SO ORDERED.
Velasco, Jr., Peralta, Villarama, Jr. and Perez, * JJ., concur.
||| (Continental Micronesia, Inc. v. Basso, G.R. Nos. 178382-83, [September 23,
2015])
LA and NLRC has jurisdiction.; Philippine law should apply based on the point of contacts.; US laws not expressly intended to
govern the contract.
Basso was illegally dismissed - no evidence of the causes for loss of trust and confidence
no due process- no twin notice (procedure was laid down)
entitled to separation pay and reinstatement, since reinstatement is no longer possible pat separation pay in lieu of
reinstatement up to 65 years old.

30. Art 217, Arts. 261-262 (1), Jurisdiction; Art 290, Prescription of ULP
UST FACULTY UNION V UST
SECOND DIVISION
[G.R. No. 203957. July 30, 2014.]
UNIVERSITY OF SANTO TOMAS FACULTY UNION, petitioner, vs.
UNIVERSITY OF SANTO TOMAS, respondent.
DECISION
CARPIO, J p:
The Case
G.R. No. 203957 is a petition for review 1 assailing the Decision 2 promulgated on 13
July 2012 as well as the Resolution 3 promulgated on 19 October 2012 by the Court of
Appeals (CA) in CA-G.R. SP No. 120970. The CA set aside the 8 June 2011 Decision 4
and 29 July 2011 Resolution 5 of the Fourth Division of the National Labor Relations
Commission (NLRC) in NLRC LAC No. 10-003370-08, as well as the 24 September 2010
Decision 6 of the Labor Arbiter (LA) in NLRC-NCR Case No. 09-09745-07.
In its 24 September 2010 decision, the LA ordered the University of Santo Tomas (UST)
to remit P18,000,000.00 to the hospitalization and medical benefits fund (fund)
pursuant to the mandate of the 1996-2001 Collective Bargaining Agreement (CBA). The
LA also ordered UST to pay 10% of the total monetary award as attorney's fees. The
other claims were dismissed for lack of merit.
In its 8 June 2011 decision, the NLRC ordered UST to remit to the University of Santo
Tomas Faculty Union (USTFU) the amounts of P80,000,000.00 for the fund pursuant to
the CBA and P8,000,000.00 as attorney's fees equivalent to 10% of the monetary
award. The NLRC denied. UST's motion for reconsideration for lack of merit.
In its 13 July 2012 decision, the CA found grave abuse of discretion on the part of NLRC
and granted UST's petition. The CA set aside the decisions of the NLRC and the LA,
without prejudice to the refiling of USTFU's complaint in the proper forum. The CA
denied USTFU's motion for reconsideration for lack of merit.
The Facts
The CA recited the facts as follows: cAIDEa

In a letter dated February 6, 2007, [USTFU] demanded from [UST],

through its Rector, Fr. Ernesto M. Arceo, O.P. ("Fr. Arceo"), remittance of
the total amount of P65,000,000.00 plus legal interest thereon,
representing deficiency in its contribution to the medical and
hospitalization fund ("fund") of [UST's] faculty members. [USTFU] also
sent [UST] a letter dated February 26, 2007, accompanied by a summary
of its claims pursuant to their 1996-2001 CBA.
On March 2, 2007, Fr. Arceo informed [USTFU] that the aforesaid benefits
were not meant to be given annually but rather as a one-time allocation
or contribution to the fund. [USTFU] then sent [UST] another demand
letter dated June 24, 2007 reiterating its position that [UST] is obliged to
remit to the fund, its contributions not only for the years 1996-1997 but
also for the subsequent years, but to no avail.
Thus, on September 5, 2007 [USTFU] filed against [UST], a complaint for
unfair labor practice, as well as for moral and exemplary damages plus
attorney's fees before the arbitration branch of the NLRC.
[UST] sought the dismissal of the complaint on the ground of lack of
jurisdiction. It contended that the case falls within the exclusive
jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators
because it involves the interpretation and implementation of the
provisions of the CBA; and the conflict between the herein parties must
be resolved as grievance under the CBA and not as unfair labor practice.
[UST's] motion to dismiss was denied by the LA in its August 8, 2008
order. [UST] appealed the Order to the NLRC. The NLRC Seventh Division,
however, dismissed the appeal on May 12, 2009 and remanded the case
to the LA for further proceedings.
The NLRC, in its assailed decision, correctly summarized the issues and
submissions of the herein parties in their respective position papers, as
follows: ECcDAH
According to [UST], the parties had, in the past, concluded several
Collective Bargaining Agreements for the mutual benefit of the
union members and [UST], and one of these agreements was the
1996-2001 CBA. It is undisputed that one of the economic benefits
granted by [UST] under the said CBA was the "Hospitalization
Fund," provided under Section 1-A(4) of the Article XIII thereof, the
pertinent provisions of which state:
ARTICLE XIII
ECONOMIC BENEFITS

Section 1. ECONOMIC BENEFIT. Upon ratification and

approval and for the term of this Agreement, the economic
benefits to be granted by the UNIVERSITY and the schedule
of such releases are as follows:
A. School Year 1996-97 (June 1, 1996 to May 31, 1997):
xxx xxx xxx
4. Hospitalization Fund: Upon ratification and approval
hereof, the UNIVERSITY shall establish a perpetual
hospitalization and medical benefits fund in the sum of TWO
MILLION PESOS (P2,000,000) to be managed conjointly by a
hospitalization and medical benefits committee where both
management and union are equally represented.
xxx xxx xxx
B. School Year 1997-98 (June 1, 1997-May 31, 1998); cTCaEA
xxx xxx xxx
2. Hospitalization Fund: The UNIVERSITY shall contribute the
sum of ONE MILLION PESOS (P1,000,000) to augment the
Hospitalization and Medical Benefits fund. The said sum
shall be added to the remaining balance of the
aforementioned fund;
xxx xxx xxx
C. School Year 1998-99 (June 1, 1998-May 31, 1999);
xxx xxx xxx
2. Hospitalization Fund: The UNIVERSITY shall contribute the
sum of ONE MILLION PESOS (P1,000,000) to augment the
Hospitalization and Medical Benefits Fund. The said sum
shall be added to the remaining balance of the
aforementioned fund;
D. Miscellaneous Provisions:
xxx xxx xxx
2. All the economic benefits herein given and those
elsewhere provided under this agreement, other than
retirement benefits and one-half of the signing bonus, are
chargeable to the tuition fee share, if any, of the faculty
members;

xxx xxx xxx

[USTFU] added that the amount of four (4) million pesos was agreed to
be paid by the University to the Hospitalization Fund annually for the
fourth and fifth year of their CBA, pursuant to the parties' Memorandum
of Agreement (MOA) which embodied the renegotiated economic
provisions of the said CBA for the years 1999-2000 and 2000-2001. aEcTDI
According to [USTFU], Section D(2) of the 1996-2001 CBA provides that:
'All the economic benefits herein given and those elsewhere
provided under this agreement, other than retirement benefits and
one-half of the signing bonus, are chargeable to the tuition fee
share, if any, of the faculty members.'
[USTFU] explained that the rationale for the above-quoted provision is
that the economic benefits under the said CBA like the Hospitalization
and Medical Benefits Fund, are sourced from the tuition fee increases and
pursuant thereto, [UST] is obligated to remit the amount of
P2,000,000.00 not only in the first year of the CBA (1996-1997) but also
in the subsequent years because the said amount became an integral part
of the current or existing tuition fee. Furthermore, [UST] is likewise
obligated to slide in the amounts allocated for the Hospitalization and
Medical Benefits Fund for the succeeding years to the next CBA year and
so on and so forth. [USTFU] claimed that the tuition fee increase once
integrated to the old amount of tuition fee becomes and remains an
integral part of the existing tuition fee. cTDIaC
[USTFU] averred that while [UST] remitted the amount of P2,000,000.00
during the first year of the 1996-2001 CBA, [UST] did not slide-in or remit
the said amount in the succeeding year (1997-1998). [UST] only remitted
the amount of P1,000.000,000.00 [sic]for the CBA year 1998-1999.
Moreover, [UST] remitted only the amount of P1,000,000.00 on the third
year of the CBA instead of P4,000,000.00 (2 Million + 1 Million + 1
Million). And though [UST] remitted the amount of P4,000,000 during the
fourth year (2) [sic] of the 1996-2001 CBA, it did not remit any amount at
all during the fifth year of the said Agreement.
[USTFU] claimed that during the period of the 1996-2001 CBA, [UST]
should have remitted the total amount of P25,000,000.00 instead of
P8,000,000.00 only. Thus, a deficiency of P17,000,000.00. [USTFU's]
assertion is based on the following illustration:
Year 1 Year 2 Year 3
Year 4
Year 5 Actual
Total
1996-97 1997-98 1998-99 1999-00 2000-01 amount amount to
remitted
[be]

remitted
2M
2M did
remitted not slide
1M
remitted

2M did
not slide
1M did
not slide
1M
remitted

2M did
not slide
1M did
not slide
1M did
not slide
4M
remitted

2M did
not slide
1M did
not slide
1M did
not slide
4M did
not slide
Total

2M

10M

1M

4M

1M

3M

4M

8M

8M
=====

25M
======

[USTFU] added that after the fifth year of the CBA, i.e. 2001 onwards,
[UST] ought to remit the amount of P8,000,000.00 ([2]M+1M+1M+4M)
annually to the Hospitalization and Medical Benefits Fund. Hence, for the
school year 2001-2002 up to the school year 2005-2006, an additional
amount of P24,000,000.00 (8M x 3) should have been remitted by [UST]
to the aforesaid fund. All in all, the total amount yet to be remitted had
ballooned to P81,000,000.00. prLL
Furthermore, [USTFU] averred that [UST] likewise failed and refused to
render a proper accounting of the monies it paid or released to the
covered faculty as well as the money it received as tuition fee increase
starting from school year 1997-1998 onwards thereby violating Section D
(1), Article XIII of the 1996-2001 CBA which provides that:
'At the end of this agreement, and within three (3) months
therefrom, the UNIVERSITY shall render an accounting of the
monies it paid or released to the covered faculty in consequence
hereof.' IEAacS
On the other hand, [UST] claimed that it religiously complied with the
economic provisions of the 1996-2001 CBA particularly its obligation to
remit to the Hospitalization and Medical Benefits Fund as the
renegotiated economic provisions under the MOA by remitting the total
amount of P8,000,000.00. [UST] claimed that it was never the intention
of the parties to the CBA that the amounts deposited to the
Hospitalization fund for each year shall be carried over to the succeeding
years. UST added that the MOA likewise made no mention that the
amount of P4,000,000.00 corresponding to the school year 1999-2000
should be carried over to the next school year. Thus, it was safe to

conclude that the clear intention of the parties was that the amounts
indicated on the CBA should only be remitted once on the scheduled
school year. Accordingly, [UST] averred that it was not guilty of unfair
labor practice.
[UST] further argued that the claim of [USTFU] had already been barred
by prescription since under Article 290 of the Labor Code all unfair labor
practice [cases] should be filed within one (1) year from the accrual
thereof otherwise they shall forever be barred. And assuming that the
instance [sic] case may be considered as a money claim, the same already
prescribed after three (3) years from the time the cause of action
accrued.
Finally, [UST] maintained that the present dispute should not be treated
as unfair labor practice but should be resolved as a grievance under the
CBA and referred to a Voluntary Arbitrator.
The parties thereafter submitted their respective Replies and Rejoinders
amplifying their arguments while refuting those made by the other. 7
The Labor Arbiter's Ruling

NO ULP despite non-compliance with CBA

The LA ruled in favor of USTFU. The LA classified USTFU's complaint as one for "unfair
labor practice, claims for sliding in of funds to hospitalization and medical benefits
under the CBA, damages and attorney's fee with prayer for slide-in and restoration of
medical benefits under the CBA." 8 The LA ruled that UST was not able to comply with
Article XIII, Section 1A-(4) of the 1996-2001 CBA. However, despite UST's alleged noncompliance, the LA ruled that UST did not commit unfair labor practice.
The LA interpreted the pertinent CBA provisions to mean that UST bound itself to
contribute to the fund P2,000,000.00 every school year, regardless of the appropriated
augmentation amount. The LA computed UST's liability in this manner:
Considering that the pertinent provision of the [1996-2001] CBA Article
XIII, Section 1A(4) stated that "The University shall establish a perpetual
hospitalization and medical benefits fund in the sum of two million pesos
(P2,000,000.00) . . ." it follows that the amount of P2M every school year
must be slided in regardless of the augmentation amount as may be
appropriated. The word shall is mandatory and the word perpetual [is]
continuous thus, [UST] is obligated to remit the actual amount to wit:
SY 1996-1997 - P2M
SY 1997-1998 - P2M + P1M
SY 1998-1999 - P2M + P1M
SY 1999-2000 - P4M (Renegotiated)
SY 2000-2001 - P4M

=
=
=
=
=

P2M
P3M
P3M
P4M
P4M

TOTAL REMITTANCE

P16M
=======

Thus, [UST] therefore has an unremitted fund of Eight Million

(P8,000,000.00) pesos.
Corollarily, the CBA covering the period SY 2001-2006 [UST] is under
obligation to remit two (2) million (P2,000,000.00) [sic] pesos every year
or a total of ten million (P10,000,000.00) pesos in addition to whatever
augmented amount stipulated in the CBA. SECcAI
In fine, the total unremitted amount to the [hospitalization and medical
benefits] fund is eighteen million (P18,000,000.00) pesos. P8M for SY
1996-2001 and P10M for SY 2001-2006. 9
The LA did not find UST's non-compliance with the 1996-2001 CBA as acts that
constitute unfair labor practice.
The failure of [UST] to slide in yearly the P2M hospitalization fund is not
violation of the CBA but an error in the interpretation of the provision of
the CBA. It could not be said either that [UST] acted with malice and bad
faith in view of the compliance with the other economic provision[s] of
the CBA. An error in the interpretation of a provision in the CBA, absent
any malice or bad faith could not be considered as unfair labor practice
as held in the case of Singapore Airlines Local Employees Association vs.
NLRC, et al., 130 SCRA 472. 10
The dispositive portion of the LA's Decision reads:
WHEREFORE, premised on the foregoing considerations, judgment is
hereby rendered ordering [UST] to remit the amount of eighteen million
(P18,000,000.00) pesos to [the] hospitalization and medical benefits fund
pursuant to the mandate of the Collective Bargaining Agreement on
economic benefits.
[UST is] likewise directed to pay attorney's fee[s] equivalent to ten (10)
percent of the total monetary award in this case.
Other claims dismissed for lack of merit.
SO ORDERED. 11
USTFU filed a Memorandum of Partial Appeal 12 from the LA's Decision. USTFU claimed
that the LA erred in holding that UST is liable to USTFU in the amount of P18 million
only, and in not holding that the amounts claimed by USTFU should be remitted by UST
to USTFU. USTFU claimed that, as of 2011, UST's total liability to the fund is P97 million:

P17 million for CBA years 1996 to 2001, P40 million for CBA years 2001 to 2006, and
P40 million for CBA years 2006 to 2011. USTFU also claimed that the amount should
be remitted by UST to USTFU for proper turnover to the fund. DAESTI
UST, on the other hand, filed an Appeal Memorandum. 13 UST claimed that the LA
committed grave abuse of discretion in taking cognizance over the case because the
issue is within the jurisdiction of the voluntary arbitrator. UST further claimed that the
LA committed grave abuse of discretion in finding that UST erred in its interpretation
of the CBA and in not finding that USTFU's claims are already barred by prescription.
The NLRC's Ruling
The NLRC granted USTFU's appeal and denied UST's appeal for lack of merit. The NLRC
ordered UST to pay USTFU P80,000,000.00 and attorney's fees equivalent to ten
percent of the monetary award.
The NLRC pointed out that UST's refusal to comply, despite repeated demands, with
the CBA's economic provisions is tantamount to a gross and flagrant violation. Thus,
the present case properly falls under the LA's original jurisdiction as well as the NLRC's
appellate jurisdiction. The issue of prescription also cannot be held against USTFU
because the cause of action accrued only when UST refused to comply with USTFU's 6
February 2007 demand letter. The demand letter was sent only after the conduct of
proceedings in the Permanent Union-University Committee (PUUC).
The NLRC noted that the subsequent CBAs between UST and USTFU show that the
parties intended that the amount appropriated each year to augment the fund shall be
carried over to the succeeding years and is chargeable to the tuition fee increment.
The NLRC ruled that the amounts appropriated for each year during the effectivity of
the 1996-2001 CBA should still be appropriated to the succeeding years. From school
year 1997-1998 and onwards, the basis for such carry over is that the amounts were
sourced from tuition increases corresponding to a given school year. Since any increase
in tuition is integrated into the subsequent tuition, the amount allocated to the fund
because of the tuition increase should be remitted to the fund. The 2001-2006 and
2006-2011 CBAs have express provisions on the carry over. The NLRC computed UST's
deficiency 14 as follows: HSTCcD
For the 1996-2001 CBA:
Year 1

Year 2

Year 3

Year 4

Year 5 Total amount

that should
1996-97 1997-98 1998-99 1999-00 2000-01
be
submitted
2M

2M
1M

2M
1M
1M

2M
1M
1M

2M
1M
1M

4M
4M

2M +
3M +
4M +
8M +
8M =
25M
======= ======= ======== ======= ======= =========
Since it is undisputed that [UST] remitted the amount of
PhP8,000,000.00 only, there is still a deficiency of PhP17,000,000.00
corresponding to the 1996-2001 CBA. cICHTD
xxx xxx xxx
For the 2001-2006 CBA:
Year 1

Year 2

Year 3

2001-02

2002-03

2003-04

2M

2M
3M

Total
amount
2005-06 that should
be
submitted
Year 4

2M
2M
3M
3M
3M
3M

2M +
5M +
8M +
8M =
23M
======= ======= ======= ======= ========
For the 2006-2011 CBA:
Year 1 Year 2 Year 3 Year 4 Year 5 Total amount
2006-07 2007-08 2008-09 2009-10 2010-11 that should be
submitted
8M +

8M +

8M +

8M +

8M =

40M

The NLRC computed UST's total liability for school years 1996-1997 up to 2010-2011 at
P80,000,000.00. The records show that UST remitted P8,000,000.00 for 1996-2001
CBA, and there is absence of proof that the additional contributions to the fund were
made for the 2001-2006 and 2006-2011 CBAs. The NLRC also ordered UST to pay
USTFU attorney's fees at 10% of the monetary award. CacISA
UST filed a motion for reconsideration of the NLRC decision. UST again claimed that
the Voluntary Arbitrator, and not LA, had jurisdiction over the interpretation of the

CBA; the P80,000,000.00 award had no basis; and the fund should be remitted to the
Hospital and Medical Benefits Committee, not to USTFU, as stated in the CBA.
In a Resolution promulgated on 29 July 2011, the NLRC denied UST's motion for
reconsideration for lack of merit.
UST filed a petition for certiorari and prohibition under Rule 65 of the Rules of Court
before the CA. UST still questioned the jurisdiction of the LA, as well as the award of
P80,000,000.00. UST also claimed that USTFU's money claims are barred by
prescription, and that the proper recipient of the award should be the Hospital and
Medical Benefits Committee. Finally, UST also questioned the award for attorney's
fees. 15 DTcASE
On 8 November 2011, USTFU filed a comment before the CA. USTFU claimed that the
NLRC did not commit grave abuse of discretion in finding that USTFU is entitled to its
claims for payment of the unremitted benefits. USTFU also claimed that certiorari is
not a proper remedy for UST because the NLRC did not commit any grave abuse of
discretion. 16
The Court of Appeals' Ruling

LA and NLRC has no Jurisdiction

The CA, in its decision promulgated on 13 July 2012, disposed of the present case by
agreeing with UST's argument that the LA and the NLRC did not have jurisdiction to
hear and decide the present case. The CA stated that since USTFU's ultimate objective
is to clarify the relevant items in the CBA, then USTFU's complaint should have been
filed with the voluntary arbitrator or panel of voluntary arbitrators.
The dispositive portion of the CA's decision reads:
WHEREFORE, finding grave abuse of discretion on the part of public
respondent NLRC, the petition is GRANTED. Without prejudice to the refiling of private respondent's complaint with the proper forum, the
assailed NLRC decision dated June 8, 2011 and resolution dated July 29,
2011 in NLRC LAC No. 10-003370-08, as well as the decision dated
September 24, 2010 of the Labor Arbiter in NLRC-NCR Case No. 09-0974507 are hereby SET ASIDE.
SO ORDERED. 17
USTFU filed its motion for reconsideration 18 before the CA. USTFU maintained that
the LA and the NLRC had jurisdiction over the subject matter of the complaint.
In a resolution 19 promulgated on 19 October 2012, the CA denied USTFU's motion for
reconsideration for lack of merit. HaIATC
USTFU filed the present petition for review 20 before this Court on 7 December 2012.
The Issues

USTFU enumerated the following grounds warranting allowance of its petition:

1. The Honorable Court of Appeals departed from the usual course of
judicial proceedings in holding that the Labor Arbiter and the NLRC
have no jurisdiction over the complaint for unfair labor practice
(ULP) filed by USTFU.
2. The Court of Appeals acted in a way not in accord with the applicable
decisions of the Supreme Court in holding that the voluntary
arbitrator has jurisdiction over the instant case despite the fact that
Article XIII ("Grievance Machinery") of the CBA is not applicable.
3. The Court of Appeals committed grave abuse of discretion in the
appreciation of facts in not finding that under Art. XXII of the CBA,
the Permanent University-Union Committee (PUUC) is the proper
forum to resolve the dispute between UST and USTFU. However,
Art. XXII does not provide for a "voluntary arbitration" clause and
therefore, USTFU validly filed the complaint for ULP before the
Labor Arbiter.
4. The Honorable Court of Appeals committed grave abuse of discretion
in its appreciation of evidence in not finding that the parties agreed
to have the dispute resolved by the labor tribunals and UST had
actively participated in the proceedings before the Labor Arbiter
and the NLRC which is tantamount to a recognition of the
jurisdiction of the said bodies.
5. The Court of Appeals departed from the usual course of proceedings in
referring back the case to voluntary arbitration despite the fact that
the parties already fully and exhaustively litigated the case before
the Labor Arbiter and the NLRC which both correctly found in favor
of USTFU. Moreover, referral to voluntary arbitration would result
in waste of precious time in relitigating the case all over again. 21
aTcSID
UST, for its part, enumerated the following grounds for opposing USTFU's petition:
1. The Court of Appeals correctly ruled that it is the Voluntary Arbitrator
which has jurisdiction over the instant case.
2. Assuming arguendo that NLRC has jurisdiction over the instant case, it
clearly erred when it made an award not prayed for in petitioner
USTFU's complaint, in effect mandating double payment.
3. Assuming arguendo that NLRC has jurisdiction over the instant case, it
erred in ruling that respondent UST is still liable to pay the amount

of P17,000,000.00 for the period 1996-2001 under the 1996-2001

CBA considering that:
a. There is no slide-in provision in the 1996-2001 CBA.
b. The amounts allocated for the Hospitalization Fund during SYs
1996-2001 were not sourced from the 70% share of the teaching
and non-teaching personnel in the tuition fee increases.
4. The complaint for money claims of petitioner USTFU arising from the
interpretation of the 1996-2001 CBA is already barred by
prescription.
5. Assuming arguendo that NLRC has jurisdiction over the instant case, it
unjustly and erroneously ordered respondent UST to pay the
subject amount to petitioner USTFU and not to the Hospital and
Medical Benefits Committee under the CBA. 22
The Court's Ruling
The petition has no merit. We shall address the issues raised by the parties one by
one.
Jurisdiction over the Present Case
On the issue of jurisdiction, we affirm with modification the ruling of the CA. The Labor
Arbiter has no jurisdiction over the present case; however, despite the lack of
jurisdiction, we rule on the issues presented. We recognize that a remand to the
voluntary arbitration stage will give rise to the possibility that this case will still reach
this Court through the parties' appeals. Furthermore, it does not serve the cause of
justice if we allow this case to go unresolved for an inordinate amount of time.
We quote the pertinent Articles of the Labor Code of the Philippines below: DAcSIC
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, . . .:
1. Unfair labor practices cases;
xxx xxx xxx
(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. TADCSE
Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary
Arbitrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators
shall have original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation
of the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies referred to
in the immediately preceding article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to comply with
the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or
Voluntary Arbitration provided in the Collective Bargaining Agreement.
Art. 262. Jurisdiction over other labor disputes. The Voluntary
Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair
labor practices and bargaining deadlocks.
Art. 262-A. Procedures. The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have the power to hold hearings, receive evidences and
take whatever action is necessary to resolve the issue or issues subject to
the dispute, including efforts to effect a voluntary settlement between
the parties. TAIDHa
All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party to the exclusion of any
witness from the proceedings shall be determined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned
for cause or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the
Voluntary Arbitrator or panel of Voluntary Arbitrators to render an award
or decision within twenty (20) calendar days from the date of submission
of the dispute to voluntary arbitration.

The award or decision of the Voluntary Arbitrator or panel of Voluntary

Arbitrators shall contain the facts and the law on which it is based. It shall
be final and executory after ten (10) calendar days from receipt of the
copy of the award or decision by the parties. EHaCID
Upon motion of any interested party, the Voluntary Arbitrator or panel
of Voluntary Arbitrators or the Labor Arbiter in the region where the
movant resides, in case of the absence or incapacity of the Voluntary
Arbitrator or panel of Voluntary Arbitrators for any reason, may issue a
writ of execution requiring either the sheriff of the Commission or regular
courts or any public official whom the parties may designate in the
submission agreement to execute the final decision, order or award.
On the other hand, the pertinent provisions in the 1996-2001 CBA between UST and
USTFU provide: HESCcA
ARTICLE X
GRIEVANCE MACHINERY
Section 1. Grievance. Any misunderstanding concerning policies and
practices directly affecting faculty members covered by this [collective
bargaining] agreement or their working conditions in the UNIVERSITY or
any dispute arising as to the meaning, application or violation of any
provisions of this Agreement or any complaint that a covered faculty
member may have against the UNIVERSITY shall be considered a
grievance.
Section 2. Exclusion. Termination of employment and preventive
suspension shall be exempted from the provisions of this Article as the
same shall be governed by the procedure in the Labor Code and its
Implementing Rules.
Section 3. Procedure. A grievance shall be settled as expeditiously as
possible in accordance with the following procedure:
STEP I. Upon presentation of a grievance in writing by the
aggrieved faculty member, to the FACULTY UNION Grievance
Officer, the said officer shall present the same to the Dean or
school/department head concerned who shall render his decision
on the matter within five (5) school days from the date of the
presentation. If the aggrieved party is not satisfied with the
decision, or if the Dean or school/department head fails to act
within the five-school-day period, appeal may be made to Step II
within five (5) school days from receipt of the decision or, in the
absence of a decision, the expiration of the period for its rendition.

If no appeal is made within the period of appeal, the grievance shall

be deemed settled on the basis of Step I. aCITEH
STEP II. All appeals from Step I shall be presented to and considered
by an Adjudication Committee which shall be composed of two (2)
representatives chosen by the UNIVERSITY and two (2)
representatives chosen by the FACULTY UNION. The Committee
shall meet within ten (10) school days after the elevation to this
step and and try to settle the grievance to the satisfaction of all
concerned. It shall render its decision within twenty (20) school
days following the presentation of the grievance to the
Adjudication Committee. A quorum for any meeting of the
Committee shall consist of a majority of its entire membership. The
affirmative vote of at least three (3) members of the Committee
shall be necessary to reach a decision. If the Committee renders a
decision, the grievance shall be deemed settled accordingly. If the
Committee fails to make a decision within the period of twenty (20)
days above stated, the FACULTY UNION President may, within ten
(10) days thereafter elevate the grievance to Step III.
STEP III. The grievance appealed to this step shall be handled by the
FACULTY UNION President who shall take it up with the Rector of
the UNIVERSITY who, in turn, shall settle the grievance within ten
(10) days. If no settlement is arrived at within the aforementioned
period, the grievance will automatically be referred to voluntary
arbitration.
STEP IV. The mechanics of arbitration shall be as follows:
(a) The UNIVERSITY and the FACULTY UNION shall select
within three (3) days, by raffle or process of elimination, an
arbitrator mutually agreeable to them preferably from the list
provided by the Bureau of Labor Relations.
(b) The voluntary arbitrator shall render an award within ten
(10) days after the issue in dispute is submitted for decision
and his award shall be final and binding upon all parties to the
grievance. CTIDcA
(c) Arbitration costs shall be shared equally by the
UNIVERSITY and the FACULTY UNION. 23
ARTICLE XXII
PERMANENT UNIVERSITY-UNION COMMITTEE (PUUC)

Permanent UNION-UNIVERSITY Committee (PUUC). The UNIVERSITY

and the FACULTY UNION realize that notwithstanding this CBA, there
will remain problems and irritants which will require the continuing
attention of both parties. Symbolic of the mutual good faith of the
parties, they have agreed to establish a permanent committee, where
the UNIVERSITY and the FACULTY UNION are equally represented, to
address these problems as they arise.
a. Within thirty (30) days from signing of this Agreement, the
Committee shall meet. The members of the Committee are the
following:
1) For the ADMINISTRATION:
a) Rector or his representative;
b) Vice Rector for Academic Affairs or his representative;
c) Vice Rector for Finance or his representative; and
d) Appointee of the Rector.
2) For the FACULTY UNION:
a) President of the UNION;
b) Executive Vice President of the UNION or his
representative;
c) Secretary General or his representative; and
d) Appointee of the UNION President.
b. The regular meetings of this Committee shall be held at least bimonthly or as the need arises.
c. The decision reached in the PUUC Meetings shall be binding to all
UNIVERSITY functionaries. 24
Jurisdiction is determined by the allegations of the complaint. In the present case,
USTFU alleged that UST committed unfair labor practice in its blatant violation of the
economic provisions of the 1996-2001 CBA, and subsequently, the 2001-2006 and
2006-2011 CBAs. UST, meanwhile, has consistently questioned USTFU's act of bringing
the case before the LA, and of not submitting the present case to voluntary arbitration.
The LA assumed jurisdiction, but ruled that UST did not commit any unfair labor
practice in UST's interpretation of the economic provisions of the 1996-2001 CBA. The
NLRC, on the other hand, ruled that there was indeed unfair labor practice. The CA
ruled that the LA and the NLRC did not have jurisdiction as there was no unfair labor
practice. acHETI

Reading the pertinent portions of the 1996-2001 CBA along with those of the Labor
Code,we see that UST and USTFU's misunderstanding arose solely from their differing
interpretations of the CBA's provisions on economic benefits, specifically those
concerning the fund. Therefore, it was clearly error for the LA to assume jurisdiction
over the present case. The case should have been resolved through the voluntary
arbitrator or panel of voluntary arbitrators.
Article 217 (c) of the Labor Code provides that the Labor Arbiter shall refer to the
grievance machinery and voluntary arbitration as provided in the CBA those cases that
involve the interpretation of said agreements. Article 261 of the Labor Code further
provides that all unresolved grievances arising from the interpretation or
implementation of the CBA, including violations of said agreement, are under the
original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary
arbitrators. Excluded from this original and exclusive jurisdiction is gross violation of
the CBA, which is defined in Article 261 as "flagrant and/or malicious refusal to comply
with the economic provisions" of the CBA. San Jose v. NLRC 25 provides guidelines for
understanding Articles 217, 261, and 262: HAEDCT
1. The jurisdiction of the Labor Arbiter and Voluntary Arbitrator or Panel
of Voluntary Arbitrators over the cases enumerated in Articles 217, 261,
and 262 can possibly include money claims in one form or another.
2. The cases where the Labor Arbiters have original and exclusive
jurisdiction are enumerated in Article 217, and that of the Voluntary
Arbitrator or Panel of Voluntary Arbitrators in Article 261.
3. The original and exclusive jurisdiction of Labor Arbiters is qualified by
an exception as indicated in the introductory sentence of Article 217 (a),
to wit:
"Art. 217. Jurisdiction of Labor Arbiters . . . (a) Except as otherwise
provided under this Code the Labor Arbiter shall have original and
exclusive jurisdiction to hear and decide . . . the following cases involving
all workers. . ."
The phrase "Except as otherwise provided under this Code" refers to the
following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . .
xxx xxx xxx
(c) Cases arising from the interpretation or implementation of collective
bargaining agreement and those arising from the interpretation or
enforcement of company procedure/policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitrator as may be provided in said agreement. aETASc

B. Art. 262. Jurisdiction over other labor disputes. The Voluntary

Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair
labor practices and bargaining deadlocks.
Parenthetically, the original and exclusive jurisdiction of the Labor Arbiter
under Article 217 (c), for money claims is limited only to those arising
from statutes or contracts other than a Collective Bargaining Agreement.
The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have
original and exclusive jurisdiction over money claims "arising from the
interpretation or implementation of the Collective Bargaining Agreement
and, those arising from the interpretation or enforcement of company
personnel policies," under Article 261.
4. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary
Arbitrators is provided for in Arts. 261 and 262 of the Labor Code as
indicated above.
1. A close reading of Article 261 indicates that the original and exclusive
jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is
limited only to:
". . . 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. .
. Accordingly, violations of a collective bargaining agreement, except
those which are gross in character, shall no longer be treated as unfair
labor practice and shall be resolved as grievances under the Collective
Bargaining Agreement. . . . ."
2. Voluntary Arbitrators or Panel of Voluntary Arbitrators, however, can
exercise jurisdiction over any and all disputes between an employer and
a union and/or individual worker as provided for in Article 262. CDAcIT
"Art. 262. Jurisdiction over other labor disputes. The voluntary
arbitrator or panel of voluntary arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair
labor practices and bargaining deadlocks."
It must be emphasized that the jurisdiction of the Voluntary Arbitrator or
Panel of Voluntary Arbitrators under Article 262 must be voluntarily
conferred upon by both labor and management. The labor disputes
referred to in the same Article 262 can include all those disputes
mentioned in Article 217 over which the Labor Arbiter has original and
exclusive jurisdiction.

As shown in the above contextual and wholistic analysis of Articles 217,

261, and 262 of the Labor Code,the National Labor Relations Commission
correctly ruled that the Labor Arbiter had no jurisdiction to hear and
decide petitioner's money-claim underpayment of retirement benefits, as
the controversy between the parties involved an issue "arising from the
interpretation or implementation" of a provision of the collective
bargaining agreement. The Voluntary Arbitrator or Panel of Voluntary
Arbitrators has original and exclusive jurisdiction over the controversy
under Article 261 of the Labor Code,and not the Labor Arbiter.
Despite the allegation that UST refused to comply with the economic provisions of the
1996-2001 CBA, we cannot characterize UST's refusal as "flagrant and/or malicious."
Indeed, UST's literal interpretation of the CBA was, in fact, what led USTFU to file its
complaint. To our mind, USTFU actually went beyond the text of the 1996-2001 CBA
when it claimed that the integrated tuition fee increase as described in Section 1D (2)
is the basis for UST's alleged deficiency.
We cannot subscribe to USTFU's view that the 1996-2001 CBA's Article X: Grievance
Machinery is not applicable to the present case. When the issue is about the grievance
procedure, USTFU insists on a literal interpretation of the 1996-2001 CBA. Indeed, the
present case falls under Section 1's definition of grievance: "[a]ny misunderstanding
concerning policies and practices directly affecting faculty members covered by this
[collective bargaining] agreement or their working conditions in the UNIVERSITY or any
dispute arising as to the meaning, application or violation of any provisions of this
Agreement or any complaint that a covered faculty member may have against the
UNIVERSITY." Section 2 excludes only termination and preventive suspension from the
grievance procedure. TcHCDI
USTFU's focus is on the 1996-2001 CBA's provisions about the grievance process rather
than the provision about the subject matters covered by the grievance process. Despite
UST's alleged violation of the economic provisions of the CBA by its insufficient
remittances to the fund, a dispute arising as to the meaning, application or violation of
the CBA, USTFU used Step I in Section 3, and ignored Steps III and IV, to rule out any
referral to voluntary arbitration. USTFU concludes that the 1996-2001 CBA's provisions
on grievance machinery only refer to a grievance of a faculty member against UST, and
that said provisions do not contemplate a situation where USTFU itself has a grievance
against UST.
USTFU argues that the PUUC is the proper forum to resolve the issue, and that the filing
of a complaint before the LA is proper in the absence of a voluntary arbitration clause
in the 1996-2001 CBA's Article XXII: Permanent University-Union Committee. However,
as provided in the 1996-2001 CBA, PUUC is established for "continuing problems and
irritants which will require the continuing attention" of UST and USTFU. Clearly, the
PUUC addresses matters not covered by the CBA.

USTFU's adamant refusal to consider voluntary arbitration ignores Articles 261 to 262A of the Labor Code,as well as Steps III and IV of Section 3 of the 1996-2001 CBA.
Accrual of Cause of Action and
Prescription of Claims
USTFU's claims arose from UST's alleged failure to contribute the correct amounts to
the fund during the 1996-2001 CBA. However, USTFU did not complain of any violation
by UST during the lifetime of the 1996-2001 CBA. Neither did USTFU complain of any
violation by UST during the lifetime of the succeeding 2001-2006 CBA. It was only on 6
February 2007 that USTFU sent a demand letter to UST Rector Fr. Ernesto M. Arceo,
O.P., for the claimed hospitalization and medical benefits under the 1996-2001 CBA.
On 2 March 2007, UST, through its Rector, Fr. Ernesto M. Arceo, O.P., informed USTFU,
through its President, Dr. Gil Gamilla, that "the hospitalization and medical benefits
contained in [the 1996-2001 CBA] were a one-time give, and therefore not meant to
slide." USTFU notified UST on 24 June 2007 about its intent to file the necessary
complaint. On 6 September 2007, USTFU filed a complaint against UST before the LA.
The 1996-2001 CBA, as well as the applicable laws, is silent as to when UST's alleged
violation becomes actionable. Thus, we apply Article 1150 of the Civil Code of the
Philippines: "The time for prescription for all kinds of actions, when there is no special
provision which ordains otherwise, shall be counted from the day they may be
brought." 26 Prescription of an action is counted from the time the action may be
brought. 27
It is error to state that USTFU's cause of action accrued only upon UST's categorical
denial of its claims on 2 March 2007. USTFU's cause of action accrued when UST
allegedly failed to comply with the economic provisions of the 1996-2001 CBA. Upon
such failure by UST, USTFU could have brought an action against UST.
Article 290 of the Labor Code provides that unfair labor practices prescribe within one
year "from accrual of such unfair labor practice; otherwise, they shall be forever
barred." Article 291 of the same Code provides that money claims arising from
employer-employee relations prescribe "within three (3) years from the time the cause
of action accrued; otherwise they shall be forever barred." USTFU's claims under the
1996-2001 CBA, whether characterized as one for unfair labor practice or for money
claims from employer-employee relations, have already prescribed when USTFU filed
a complaint before the LA.
USTFU filed its complaint under the theory of unfair labor practice. Thus, USTFU had
one year from UST's alleged failure to contribute, or "slide in," the correct amount to
the fund to file its complaint. USTFU had one year for every alleged breach by UST:
school year (SY) 1997-1998, SY 1998-1999, SY 1999-2000, SY 2000-2001, SY 2001-2002,
and SY 2002-2003. USTFU did not file any complaint within the respective one-year
prescriptive periods. USTFU decided to file its complaint only in 2007, several years

after the accrual of its several possible causes of action. Even if USTFU filed its
complaint under the theory of money claims from employer-employee relations, its
cause of action still has prescribed. caITAC
Determination of the Benefits Due
We consolidate USTFU's claims, UST's remittances, and UST's alleged balances in the
table below:
USTFU's claims UST's remittances
28
29

UST's alleged
balances

1996 to 2001 CBA

SY 1996-1997
SY 1997-1998
SY 1998-1999
1999 Memorandum
of Agreement
SY 1999-2000
SY 2000-2001
2001 to 2006 CBA
SY 2001-2002
SY 2002-2003
SY 2003-2004
SY 2004-2005
SY 2005-2006
2006-2011 CBA
SY 2006-2007
SY 2007-2008
SY 2008-2009
SY 2009-2010
SY 2010-2011
Total

P2,000,000.00
P3,000,000.00
P4,000,000.00

P2,000,000.00
P1,000,000.00
P1,000,000.00

0
P2,000,000.00
P3,000,000.00

P8,000,000.00
P8,000,000.00

P4,000,000.00
-

P4,000,000.00
P8,000,000.00

P8,000,000.00
P8,000,000.00
P8,000,000.00
P8,000,000.00
P8,000,000.00

P2,000,000.00
P5,000,000.00
P8,000,000.00
P8,000,000.00
P8,000,000.00

P6,000,000.00
P3,000,000.00
0
0
0

P8,000,000.00
P8,000,000.00
0
P8,000,000.00
P8,000,000.00
0
P8,000,000.00
P8,000,000.00
0
P8,000,000.00
P8,000,000.00
0
P8,000,000.00
P8,000,000.00
0

P105,000,000.00
P79,000,000.00
P26,000,000.00
=============
=============
=============

We restate the following provisions in the pertinent CBAs to establish what USTFU
claims as its bases for additional funds: SEDIaH
1996-2001 CBA
ARTICLE XIII
ECONOMIC BENEFITS

Section 1. ECONOMIC BENEFIT. Upon ratification and approval and for

the term of this Agreement, the economic benefits to be granted by the
UNIVERSITY and the schedule of such releases are as follows:
A. School Year 1996-97 (June 1, 1996 to May 31, 1997):
xxx xxx xxx
4. Hospitalization Fund: Upon ratification and approval
hereof, the UNIVERSITY shall establish a perpetual
hospitalization and medical benefits fund in the sum of TWO
MILLION PESOS (P2,000,000) to be managed conjointly by a
hospitalization and medical benefits committee where both
management and union are equally represented.
The joint committee shall promulgate its internal rules and regulations,
and on the second year of this agreement, i.e., SY 1997-98, may allocate
such amount as required, but not to exceed ten per cent (10%) of the
gross income of the fund, for administrative expenses. For the duration
of the first year of operation of the fund, the UNIVERSITY and the
FACULTY UNION shall equally subsidize the operations of the fund.
The hospitalization costs and medical benefits of the members of the
faculty as provided in Article XVI of this agreement shall be taken from
this fund.
This Fund is independently managed by the aforementioned joint
committee, subject to independent audit. The yearly state of finances of
the fund shall be reported, appended to the FACULTY UNION's own
annual report, to all members of the university faculty.
B. School Year 1997-98 (June 1, 1997-May 31, 1998):
xxx xxx xxx
2. Hospitalization Fund: The UNIVERSITY shall contribute
the sum of ONE MILLION PESOS (P1,000,000) to augment
the Hospitalization and Medical Benefits fund. The said
sum shall be added to the remaining balance of the
aforementioned fund;
xxx xxx xxx
C. School Year 1998-99 (June 1, 1998-May 31, 1999):
xxx xxx xxx
2. Hospitalization Fund: The UNIVERSITY shall contribute the
sum of ONE MILLION PESOS (P1,000,000) to augment the

Hospitalization and Medical Benefits fund. The said sum

shall be added to the remaining balance of the
aforementioned fund;
D. Miscellaneous Provisions:
1. At the end of this agreement, and within three months
therefrom, the UNIVERSITY shall render an accounting of the
monies it paid or released to the covered faculty in
consequence thereof;
2. All the
elsewhere
retirement
chargeable
members;

economic benefits herein given and those

provided under this agreement, other than
benefits and one-half of the signing bonus, are
to the tuition fee share, if any, of the faculty

3. In the event that the tuition fee benefits of the faculty for
any of the three years covered by this part of this agreement
i.e., the University decides to raise tuition fees in the coming
two school years, exceed those provided herein, the same
may be allocated for salaries and other benefits as
determined by the FACULTY UNION and the matter duly
communicated to the UNIVERSITY; and, cDAISC
4. None of the benefits provided herein, both distributable
immediately after ratification and those to be given during
the term hereof, other than the amounts checked-off and the
Hospitalization and Medical Benefits are to be directly
distributed to the faculty members by the University. 30
1999 Memorandum of Agreement
1.0 The University hereby agrees to grant increase in salary and fringe
benefits as provided for by the tuition fee increase of school year
1999-2000 according to the following scheme:
xxx xxx xxx
6.0 If there is any tuition fee increase for school year 2000-2001, there
will be an additional increase in salary/fringe benefits to be agreed
upon by both parties.
7.0 An additional amount of four million pesos will be deposited in
the hospitalization fund of the faculty. 31
2001-2006 CBA
Article XX

HOSPITALIZATION AND MEDICAL BENEFITS

Section 1. Hospitalization and Medical Benefits Fund. The UNION and
the UNIVERSITY shall build up and maintain the perpetual Hospitalization
and Medical Benefits Fund. For this purpose, the UNIVERSITY agrees to
appropriate for AY 2001-2002 two million pesos (PhP2,000,000.00); for
AY 2002-2003 three million pesos (PhP3,000,000.00); and for AY 20032004 another three million pesos (PhP3,000,000.00). It is understood
that the amount appropriated for each year is carried over to the
succeeding years and is chargeable to the tuition fee increment. . . . 32
ECcTaH
2006-2011 CBA
Article XX
HOSPITALIZATION AND MEDICAL BENEFITS
Section 5. Miscellaneous Provisions. a. The UNIVERSITY will continue
to slide in the amounts set aside in the 2001-2006 CBA to augment the
fund. Fifty percent of the amount due shall be remitted within a month
from the start of the first semester and the other fifty percent within a
month from the start of the second semester of the academic year. These
sums of money shall be remitted without necessity of demand on the part
of the union and may not be garnished or held by the university on
account of disputes in hospital billings between the University and the
Union.
xxx xxx xxx 33
USTFU claims that UST's contributions should have been cumulative, with the amount
appropriated for each year carried over to the succeeding years and is chargeable to
the tuition fee increment. However, USTFU's claims are not supported by the economic
provisions of the 1996-2001 CBA and the 1999 Memorandum of Agreement
reproduced above.
We wholly agree with UST's interpretation of the economic provisions of the 19962001 CBA, the 1999 Memorandum of Agreement, and the 2001-2006 and 2006-2011
CBAs, as well as its remittances to the fund for the covered periods. UST faithfully
followed the clear provisions of these agreements.
The 1996-2001 CBA established the fund, with an initial remittance of P2,000,000.00
for school year 1996-1997. UST bound itself to augment the fund by contributing
P1,000,000.00 per year for school years 1997-1998 and 1998-1999. The 1999
Memorandum of Agreement merely stated that UST will deposit P4,000,000.00 to the
fund. Express mention of the carry-over is found only in Section 1, Article XX of the
2001-2006 CBA: "It is understood that the amount appropriated for each year is carried

over to the succeeding years . . . ." The 1996-2001 CBA does not have this carry-over
provision. During the lifetime of the 1996-2001 CBA, the 1999 Memorandum of
Agreement, and the 2001-2006 CBA, USTFU never questioned the non-compliance by
UST with an alleged carry-over agreement applicable to the 1996-2001 CBA. AcIaST
This Court is well aware of Article 1702 of the Civil Code,which provides that "[i]n case
of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer." This Court is also well aware that when the
provisions of the CBA are clear and unambiguous, the literal meaning of the
stipulations shall govern. 34 In the present case, the CBA provisions pertaining to the
fund are clear and should be interpreted according to their literal meaning.
WHEREFORE, we DENY the petition. We DECLARE that the claims of the University of
Santo Tomas Faculty Union have prescribed and that there is no carry-over provision
for the Hospitalization and Medical Benefits Fund in the 1996-2001 Collective
Bargaining Agreement and in the 1999 Memorandum of Agreement. The carry-over
provision for the Hospitalization and Medical Benefits Fund is found only in the 20012006 and 2006-2011 Collective Bargaining Agreements.
No costs.
SO ORDERED.
Leonardo-de Castro, * Del Castillo, Perez and Perlas-Bernabe, JJ., concur.
||| (UST Faculty Union v. UST, G.R. No. 203957, [July 30, 2014])

SC ruled in favor of UST.

no provision for carry-over; action has prescribed.

31. Art 223 (now Art 229), Appeal requirements

DIAMOND TAXI V LLAMAS
SECOND DIVISION
[G.R. No. 190724. March 12, 2014.]
DIAMOND TAXI and/or BRYAN ONG, petitioners, vs. FELIPE LLAMAS,
JR., respondent.
DECISION
BRION, J p:
In this petition for review on certiorari, 1 we resolve the challenge to the August 13,
2008 decision 2 and the November 27, 2009 resolution 3 of the Court of Appeals (CA)
in CA-G.R. CEB-S.P. No. 02623. This CA decision reversed and set aside the May 30,
2006 resolution 4 of the National Labor Relations Commission (NLRC) in NLRC Case
No. V-000294-06 (RAB VII-07-1574-05) that dismissed respondent Felipe Llamas, Jr.'s
appeal for non-perfection.
The Factual Antecedents
Llamas worked as a taxi driver for petitioner Diamond Taxi, owned and operated by
petitioner Bryan Ong. On July 18, 2005, Llamas filed before the Labor Arbiter (LA) a
complaint for illegal dismissal against the petitioners.
In their position paper, the petitioners denied dismissing Llamas. They claimed that
Llamas had been absent without official leave for several days, beginning July 14, 2005
until August 1, 2005. The petitioners submitted a copy of the attendance logbook to
prove that Llamas had been absent on these cited dates. They also pointed out that
Llamas committed several traffic violations in the years 2000-2005 and that they had
issued him several memoranda for acts of insubordination and refusal to heed
management instructions. They argued that these acts traffic violations,
insubordination and refusal to heed management instructions constitute grounds
for the termination of Llamas' employment.
Llamas failed to seasonably file his position paper. IDaEHC
On November 29, 2005, the LA rendered a decision 5 dismissing Llamas' complaint for
lack of merit. The LA held that Llamas was not dismissed, legally or illegally. Rather, the
LA declared that Llamas left his job and had been absent for several days without leave.
LA no ID; Llamas left his job and was Absent without leave

Llamas received a copy of this LA decision on January 5, 2006. Meanwhile, he filed his
position paper 6 on December 20, 2005.
In his position paper, Llamas claimed that he failed to seasonably file his position paper
because his previous counsel, despite his repeated pleas, had continuously deferred
compliance with the LA's orders for its submission. Hence, he was forced to secure the
services of another counsel on December 19, 2005 in order to comply with the LA's
directive.
On the merits of his complaint, Llamas alleged that he had a misunderstanding with
Aljuver Ong, Bryan's brother and operations manager of Diamond Taxi, on July 13, 2005
(July 13, 2005 incident). When he reported for work on July 14, 2005, Bryan refused to
give him the key to his assigned taxi cab unless he would sign a prepared resignation
letter. He did not sign the resignation letter. He reported for work again on July 15 and
16, 2005, but Bryan insisted that he sign the resignation letter prior to the release of
the key to his assigned taxi cab. Thus, he filed the illegal dismissal complaint.
On January 16, 2006, Llamas filed before the LA a motion for reconsideration of its
November 29, 2005 decision. The LA treated Llamas' motion as an appeal per Section
15, Rule V of the 2005 Revised Rules of Procedure of the NLRC (2005 NLRC Rules) (the
governing NLRC Rules of Procedure at the time Llamas filed his complaint before the
LA).
In its May 30, 2006 resolution, 7 the NLRC dismissed for non-perfection Llamas' motion
for reconsideration treated as an appeal. The NLRC pointed out that Llamas failed to
attach the required certification of non-forum shopping per Section 4, Rule VI of the
2005 NLRC Rules.
Llamas moved to reconsider the May 30, 2006 NLRC resolution; he attached the
required certification of non-forum shopping.
When the NLRC denied his motion for reconsideration 8 in its August 31, 2006
resolution, 9 Llamas filed before the CA a petition for certiorari. 10
The CA's ruling

Constructive dismissal

In its August 13, 2008 decision, 11 the CA reversed and set aside the assailed NLRC
resolution. Citing jurisprudence, the CA pointed out that non-compliance with the
requirement on the filing of a certificate of non-forum shopping, while mandatory, may
nonetheless be excused upon showing of manifest equitable grounds proving
substantial compliance. Additionally, in order to determine if cogent reasons exist to
suspend the rules of procedure, the court must first examine the substantive aspect of
the case.
The CA pointed out that the petitioners failed to prove overt acts showing Llamas' clear
intention to abandon his job. On the contrary, the petitioners placed Llamas in a
situation where he was forced to quit as his continued employment has been rendered

impossible, unreasonable or unlikely, i.e., making him sign a resignation letter as a

precondition for giving him the key to his assigned taxi cab. To the CA, the petitioners'
act amounted to constructive dismissal. The CA additionally noted that Llamas
immediately filed the illegal dismissal case that proved his desire to return to work and
negates the charge of abandonment.
Further, the CA brushed aside the petitioners' claim that Llamas committed several
infractions that warranted his dismissal. The CA declared that the petitioners should
have charged Llamas for these infractions to give the latter an opportunity to explain
his side. As matters then stood, they did not charge him for these infractions; hence,
the petitioners could not have successfully used these as supporting grounds to justify
Llamas' dismissal on the ground of abandonment.
As the CA found equitable grounds to take exception from the rule on certificate of
non-forum shopping, it declared that the NLRC had acted with grave abuse of
discretion when it dismissed Llamas' appeal purely on a technicality. To the CA, the
NLRC should have considered as substantially compliant with this rule Llamas'
subsequent submission of the required certificate with his motion for reconsideration
(of the NLRC's May 30, 2006 resolution).
Accordingly, the CA ordered the petitioners to pay Llamas separation pay, full
backwages and other benefits due the latter from the time of the dismissal up to the
finality of the decision. The CA awarded separation pay in lieu of reinstatement
because of the resulting strained work relationship between Llamas and Bryan
following the altercation between the former and the latter's brother.
The petitioners filed the present petition after the CA denied their motion for
reconsideration 12 in the CA's November 27, 2009 resolution. 13 HICcSA
The Petition
The petitioners argue that the CA erred when it encroached on the NLRC's exclusive
jurisdiction to review the merits of the LA's decision. To the petitioners, the CA should
have limited its action in determining whether grave abuse of discretion attended the
NLRC's dismissal of Llamas' appeal; finding that it did, the CA should have remanded
the case to the NLRC for further proceedings.
Moreover, the petitioners point out that the NLRC did not gravely abuse its discretion
when it rejected Llamas' appeal. They argue that the NLRC's action conformed with its
rules and with this Court's decisions that upheld the dismissal of an appeal for failure
to file a certificate of non-forum shopping.
Directly addressing the CA's findings on the dismissal issue, the petitioners argue that
they did not constructively dismiss Llamas. They maintain that Llamas no longer
reported for work because of the several liabilities he incurred that would certainly
have, in any case, warranted his dismissal.

The Case for the Respondent

Llamas argues in his comment 14 that the CA correctly found that the NLRC acted with
grave abuse of discretion when it maintained its dismissal of his appeal despite his
subsequent filing of the certificate of non-forum shopping. Quoting the CA's ruling,
Llamas argues that the NLRC should have given due course to his appeal to avoid
miscarriage of substantial justice.
On the issue of dismissal, Llamas argues that the CA correctly reversed the LA's ruling
that found him not dismissed, legally or illegally. Relying on the CA's ruling, Llamas
points out that the petitioners bore the burden of proving the abandonment charge.
In this case, the petitioners failed to discharge their burden; hence, his dismissal was
illegal.
The Court's Ruling
We do not find the petition meritorious.
Preliminary considerations:
factual-issue-bar-rule
In this Rule 45 petition for review on certiorari, we review the legal errors that the CA
may have committed in the assailed decision, in contrast with the review for
jurisdictional error undertaken in an original certiorari action. In reviewing the Legal
correctness of the CA decision in a labor case made under Rule 65 of the Rules of Court,
we examine the CA decision in the context that it determined the presence or the
absence of grave abuse of discretion in the NLRC decision before it and not on the basis
of whether the NLRC decision, on the merits of the case, was correct. In other words,
we have to be keenly aware that the CA undertook a Rule 65 review, not a review on
appeal, of the challenged NLRC decision. In question form, the question that we ask is:
Did the CA correctly determine whether the NLRC committed grave abuse of discretion
in ruling on the case? 15
In addition, the Court's jurisdiction in a Rule 45 petition for review on certiorari is
limited to resolving only questions of law. A question of law arises when the doubt or
controversy concerns the correct application of law or jurisprudence to a certain set of
facts. In contrast, a question of fact exists when the doubt or controversy concerns the
truth or falsehood of facts. 16
As presented by the petitioners, the petition before us involves mixed questions of fact
and law, with the core issue being one of fact. Whether the CA, in ruling on the labor
case before it under an original certiorari action, can make its own factual
determination requires the consideration and application of law and jurisprudence; it
is essentially a question of law that a Rule 45 petition properly addresses.
In the context of this case, however, this legal issue is inextricably linked with and
cannot be resolved without the definitive resolution of the core factual issue

whether Llamas abandoned his work or had been constructively dismissed. As a

proscribed question of fact, we generally cannot address this issue, except to the
extent necessary to determine whether the CA correctly found that the NLRC acted with
grave abuse of discretion in dismissing Llamas' appeal on purely technical grounds.
HcTEaA
For raising mixed questions of fact and law, we deny the petition outright. Even if this
error were to be disregarded, however, we would still deny the petition as we find the
CA legally correct in reversing the NLRC's resolution on the ground of grave abuse of
discretion.
The CA has ample authority to make its
own factual determination

NLRC grave abused its discretion when it dismissed the

appeal on purely technical matter; there was substantial
compliance with the filing of CNFS

We agree that remanding the case to the NLRC for factual determination and decision
of the case on the merits would have been, ordinarily, a prudent approach.
Nevertheless, the CA's action on this case was not procedurally wrong and was not
without legal and jurisprudential basis.
In this jurisdiction, courts generally accord great respect and finality to factual findings
of administrative agencies, i.e., labor tribunals, in the exercise of their quasi-judicial
function. 17 These findings, however, are not infallible. This doctrine espousing comity
to administrative findings of facts cannot preclude the courts from reviewing and,
when proper, disregarding these findings of facts when shown that the administrative
body committed grave abuse of discretion by capriciously, whimsically or arbitrarily
disregarding evidence or circumstances of considerable importance that are crucial or
decisive of the controversy. 18
Hence, in labor cases elevated to it via petition for certiorari, the CA can grant this
prerogative writ when it finds that the NLRC acted with grave abuse of discretion in
arriving at its factual conclusions. To make this finding, the CA necessarily has to view
the evidence if only to determine if the NLRC ruling had basis in evidence. It is in the
sense and manner that the CA, in a Rule 65 certiorari petition before it, had to
determine whether grave abuse of discretion on factual issues attended the NLRC's
dismissal of Llamas' appeal. Accordingly, we do not find erroneous the course that the
CA took in resolving Llamas' certiorari petition. The CA may resolve factual issues by
express legal mandate and pursuant to its equity jurisdiction.
The NLRC committed grave abuse of
discretion in dismissing Llamas' appeal on
mere technicality
Article 223 (now Article 229) 19 of the Labor Code states that decisions (or awards or
orders) of the LA shall become final and executory unless appealed to the NLRC within
ten (10) calendar days from receipt of the decision. Consistent with Article 223, Section
1, Rule VI of the 2005 NLRC Rules also provides for a ten (10)-day period for appealing
10 days

the LA's decision. Under Section 4 (a), Rule VI 20 of the 2005 NLRC Rules, the appeal
shall be in the form of a verified memorandum of appeal and accompanied by proof of
payment of the appeal fee, posting of cash or surety bond (when necessary), certificate
of non-forum shopping, and proof of service upon the other parties. Failure of the
appealing party to comply with any or all of these requisites within the reglementary
period will render the LA's decision final and executory.
Indisputably, Llamas did not file a memorandum of appeal from the LA's decision.
Instead, he filed, within the ten (10)-day appeal period, a motion for reconsideration.
Under Section 15, Rule V of the 2005 NLRC Rules, motions for reconsideration from the
LA's decision are not allowed; they may, however, be treated as an appeal provided
they comply with the requirements for perfecting an appeal. The NLRC dismissed
Llamas' motion for reconsideration treated as an appeal for failure to attach the
required certificate of non-forum shopping per Section 4 (a), Rule VI of the 2005 NLRC
Rules.
The requirement for a sworn certification of non-forum shopping was prescribed by
the Court under Revised Circular 28-91, 21 as amended by Administrative Circular No.
04-94, 22 to prohibit and penalize the evils of forum shopping. Revised Circular 28-91,
as amended by Administrative Circular No. 04-94, requires a sworn certificate of nonforum shopping to be filed with every petition, complaint, application or other
initiatory pleading filed before the Court, the CA, or the different divisions thereof, or
any other court, tribunal or agency. HIaTCc
Ordinarily, the infirmity in Llamas' appeal would have been fatal and would have
justified an end to the case. A careful consideration of the circumstances of the case,
however, convinces us that the NLRC should, indeed, have given due course to Llamas'
appeal despite the initial absence of the required certificate. We note that in his
motion for reconsideration of the NLRC's May 30, 2006 resolution, Llamas attached the
required certificate of non-forum shopping.
Moreover, Llamas adequately explained, in his motion for reconsideration, the
inadvertence and presented a clear justifiable ground to warrant the relaxation of the
rules. To recall, Llamas was able to file his position paper, through his new counsel,
only on December 20, 2005. He hired the new counsel on December 19, 2005 after
several repeated, albeit failed, pleas to his former counsel to submit, on or before
October 25, 2005 per the LA's order, the required position paper. On November 29,
2005, however, the LA rendered a decision that Llamas and his new counsel learned
and received a copy of only on January 5, 2006. Evidently, the LA's findings and
conclusions were premised solely on the petitioners' pleadings and evidence. And,
while not the fault of the LA, Llamas, nevertheless, did not have a meaningful
opportunity to present his case, refute the contents and allegations in the petitioners'
position paper and submit controverting evidence.

Faced with these circumstances, i.e., Llamas' subsequent compliance with the
certification-against-forum-shopping requirement; the utter negligence and
inattention of Llamas' former counsel to his pleas and cause, and his vigilance in
immediately securing the services of a new counsel; Llamas' filing of his position paper
before he learned and received a copy of the LA's decision; the absence of a meaningful
opportunity for Llamas to present his case before the LA; and the clear merits of his
case (that our subsequent discussion will show), the NLRC should have relaxed the
application of procedural rules in the broader interests of substantial justice. Indeed,
while the requirement as to the certificate of non-forum shopping is mandatory, this
requirement should not, however, be interpreted too literally and thus defeat the
objective of preventing the undesirable practice of forum-shopping. 23
Under Article 221 (now Article 227) 24 of the Labor Code,"the Commission and its
members and the Labor Arbiters shall use every and all reasonable means to ascertain
the facts in each case speedily and objectively and without regard to technicalities of
law or procedure, all in the interest of due process." 25 Consistently, we have
emphasized that "rules of procedure are mere tools designed to facilitate the
attainment of justice. A strict and rigid application which would result in technicalities
that tend to frustrate rather than promote substantial justice should not be allowed . .
. . No procedural rule is sacrosanct if such shall result in subverting justice." 26
Ultimately, what should guide judicial action is that a party is given the fullest
opportunity to establish the merits of his action or defense rather than for him to lose
life, honor, or property on mere technicalities. 27
Then, too, we should remember that "the dismissal of an employee's appeal on purely
technical ground is inconsistent with the constitutional mandate on protection to
labor." 28 Under the Constitution 29 and the Labor Code, 30 the State is bound to
protect labor and assure the rights of workers to security of tenure tenurial security
being a preferred constitutional right that, under these fundamental guidelines,
technical infirmities in labor pleadings cannot defeat. 31
In this case, Llamas' action against the petitioners concerned his job, his security of
tenure. This is a property right of which he could not and should not be deprived of
without due process. 32 But, more importantly, it is a right that assumes a preferred
position in our legal hierarchy. 33
Under these considerations, we agree that the NLRC committed grave abuse of
discretion when, in dismissing Llamas' appeal, it allowed purely technical infirmities
to defeat Llamas' tenurial security without full opportunity to establish his case's
merits.
Llamas did not abandon his work; he was
constructively dismissed

NO ABANDONMENT

"Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment." 34 It is a form of neglect of duty that constitutes just cause for the
employer to dismiss the employee. 35
To constitute abandonment of work, two elements must concur: "(1) . . . the employee
must have failed to report for work or must have been absent without valid or
justifiable reason; and (2) . . . there must have been a clear intention [on the part of
the employee] to sever the employer-employee relationship manifested by some overt
act." 36 The employee's absence must be accompanied by overt acts that unerringly
point to the employee's clear intention to sever the employment relationship. 37 And,
to successfully invoke abandonment, whether as a ground for dismissing an employee
or as a defense, the employer bears the burden of proving the employee's unjustified
refusal to resume his employment. 38 Mere absence of the employee is not enough.
39 TADcCS
Guided by these parameters, we agree that the petitioners unerringly failed to prove
the alleged abandonment. They did not present proof of some overt act of Llamas that
clearly and unequivocally shows his intention to abandon his job. We note that, aside
from their bare allegation, the only evidence that the petitioners submitted to prove
abandonment were the photocopy of their attendance logbook and the July 15, 2005
memorandum 40 that they served on Llamas regarding the July 13, 2005 incident.
These pieces of evidence, even when considered collectively, indeed failed to prove
the clear and unequivocal intention, on Llamas' part, that the law requires to deem as
abandonment Llamas' absence from work. Quite the contrary, the petitioners' July 15,
2005 memorandum, in fact, supports, if not strengthens, Llamas' version of the events
that led to his filing of the complaint, i.e., that as a result of the July 13, 2005 incident,
the petitioners refused to give him the key to his assigned taxi cab unless he would sign
the resignation letter.
Moreover, and as the CA pointed out, Llamas lost no time in filing the illegal dismissal
case against them. To recall, he filed the complaint on July 18, 2005 or only two days
from the third time he was refused access to his assigned taxi cab on July 16, 2005.
Clearly, Llamas could not be deemed to have abandoned his work for, as we have
previously held, the immediate filing by the employee of an illegal dismissal complaint
is proof enough of his intention to return to work and negates the employer's charge
of abandonment. 41 To reiterate and emphasize, abandonment is a matter of intention
that cannot lightly be presumed from certain equivocal acts of the employee. 42
The CA, therefore, correctly regarded Llamas as constructively dismissed for the
petitioners' failure to prove the alleged just cause abandonment for his dismissal.
Constructive dismissal exists when there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely. Constructive dismissal
is a dismissal in disguise or an act amounting to dismissal but made to appear as if it
were not. In constructive dismissal cases, the employer is, concededly, charged with

the burden of proving that its conduct and action were for valid and legitimate
grounds. 43 The petitioners' persistent refusal to give Llamas the key to his assigned
taxi cab, on the condition that he should first sign the resignation letter, rendered,
without doubt, his continued employment impossible, unreasonable and unlikely; it,
thus, constituted constructive dismissal.
In sum, the CA correctly found equitable grounds to warrant relaxation of the rule on
perfection of appeal (filing of the certificate of non-forum shopping) as there was
patently absent sufficient proof for the charge of abandonment. Accordingly, we find
the CA legally correct in reversing and setting aside the NLRC's resolution rendered in
grave abuse of discretion.
WHEREFORE, in light of these considerations, we hereby DENY the petition. We
AFFIRM the decision dated August 13, 2008 and the resolution dated November 27,
2009 of the Court of Appeals in CA-G.R. CEB-S.P. No. 02623.
SO ORDERED.
Carpio, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.
||| (Diamond Taxi v. Llamas, Jr., G.R. No. 190724, [March 12, 2014])
NO ABANDOMENT; he was constructively dismissed when the pet persistently refused to give him the key.
His immediate filing of the case is a proof of his intention to return to work and negates the employer's
charge of abandonment.

32. Art. 223, Execution pending appeal

Seacrest Maritime Management, Inc. v. Picar
SECOND DIVISION
[G.R. No. 209383. March 11, 2015.]
SEACREST MARITIME MANAGEMENT, INC., ROLANDO B. MAGCALE,
AND SEALION SHIPPING LIMITED-UNITED KINGDOM, petitioners, vs.
MAURICIO G. PICAR, JR., respondent.
DECISION
MENDOZA, J p:
This is a petition for review under Rule 45 of the Rules of Court assailing the May 2,
2013 Decision 1 and the September 9, 2013 Resolution 2 of the Court of Appeals (CA)
in CA-G.R. SP No. 124763, which dismissed, for being moot and academic, the petition
for certiorari filed under Rule 65 questioning the decision of the National Labor
Relations Commission (NLRC), in a case for disability benefits.
The Antecedents
Respondent Mauricio Picar, Jr. (Picar) was employed by petitioner Sealion Shipping
Limited-United Kingdom through its local manning agent Seacrest Maritime
Management, Inc. (petitioners), as Chief Cook continuously for several contracts from
April 2005 until his last employment contract in 2010, on board the vessel, "MV Toisa
Paladin." The last contract was for a fixed duration of three (3) months which
commenced on September 5, 2010 with a basic salary of US$630.00 exclusive of
overtime pay and other benefits. 3
On September 24, 2010, Picar experienced high fever, chilling, lumbar back pain, and
difficulty in urinating accompanied with blood. He was referred for medical treatment
to the Maritime Medical Center PTE, Ltd. in Singapore (MMC). He was diagnosed with
Urinary Tract Infection (UTI) and Renal Calculus. After his check-up, he was required to
go back to the vessel and take a rest. On September 28, 2010, he was brought back to
MMC where he was confined until October 1, 2010. On October 2, 2010, he was
repatriated. 4
Upon his arrival in Manila, Picar was referred to Dr. Natalio G. Alegre (Dr. Alegre) at St.
Luke's Medical Center (SLMC). On October 21, 2010, he underwent sonography of his
kidneys and urinary bladder, which showed "renal cyst on his right kidney; calyceal

lithiasis, right; and normal urinary bladder; slightly enlarged prostate gland was
noted." Dr. Alegre repeatedly recommended that he undergo extracorporeal
shockwave lithotripsy for the dissolution of his right kidney stone. 5
On February 23, 2011, Picar consulted Dr. Efren R. Vicaldo (Dr. Vicaldo) who also
diagnosed him to be suffering from Right Renal Calculus, Essential Hypertension. Dr.
Vicaldo considered his illness as work aggravated/related and declared him unfit to
resume work as a seafarer in any capacity. 6
Picar then filed a complaint for permanent disability compensation, balance of sick
wages, reimbursement of medical expenses, moral and exemplary damages, and
attorney's fees.
On June 22, 2011, the Labor Arbiter (LA) rendered judgment 7 in favor of Picar. The LA
found that his illness was work-related and that the nature of his work as a chief cook
contributed to the aggravation of his condition. The dispositive portion of the decision
reads:
WHEREFORE, premises considered, judgment is hereby rendered
ordering respondents to pay jointly and severally the complainant his
permanent disability compensation in the sum of US$60,000.00, balance
of sick wages in the sum of US$1,890.00, moral damages in the sum of
P200,000.00, exemplary damages in the sum of P200,000.00, and ten
percent (10%) of the judgment award as attorney's fees. ETDaIC
All other claims are dismissed for lack of merit.
SO ORDERED. 8
On appeal, the NLRC affirmed in toto the decision of the LA. 9 The NLRC ruled that
Picar's disability was permanent as he was totally unable to perform his job for more
than 120 days from his repatriation. In support of its ruling, it cited the case of Remigio
v. NLRC 10 where it was held that if an employee was unable to perform his customary
job for more than 120 days and did not come within the coverage of Rule X of the
Amended Rules on Employees Compensability (which, in more detailed manner,
describes what constitutes temporary total disability), then the said employee
undoubtedly suffered from permanent total disability regardless of whether or not he
lost the use of any part of his body.
Aggrieved, petitioners elevated the matter to the CA.
In the meantime, Picar moved for the execution of the LA decision. On July 3, 2012, the
LA issued a Writ of Execution for the enforcement and full satisfaction of its decision.
Consequently, petitioners paid the judgment award as evidenced by the Satisfaction of
Judgment pursuant to a Writ of Execution with Acknowledgment Receipt executed by
the NLRC-NCR Sheriff on August 13, 2012. 11

In its assailed Decision, dated May 2, 2013, the CA dismissed the petition. Citing the
case of Career Philippines Ship Management, Inc. v. Madjus, 12 the CA ruled that the
payment by petitioners of the judgment award constituted an amicable settlement
that had rendered the petition moot and academic. The dispositive portion of the
decision reads:
WHEREFORE, in light of the foregoing considerations, the instant petition
is DISMISSED for having become MOOT AND ACADEMIC. 13
Petitioners filed a motion for reconsideration of the said decision, but it was denied in
the CA Resolution, dated September 9, 2013.
Hence, this petition.
Issues and Arguments
For resolution is the sole issue of whether the CA committed reversible error in
dismissing the petition for having become moot and academic.
Petitioners contend that the settlement of the judgment award was by virtue of a writ
of execution duly issued and was effected specifically without prejudice to further
recourse before the CA. There was nothing voluntary about the satisfaction of the
judgment award made in strict and compulsory compliance with Rule XI, Section 8 of
the 2011 NLRC Rules of Procedure. The terms of the settlement were fair to both the
employer and the employee. Hence, the ruling in Career Philippines, relied upon by the
CA, was inapplicable.
On April 14, 2014, Picar filed his Comment 14 wherein he stresses that the CA
committed no error in dismissing the petition. He asserts that the voluntary
satisfaction by petitioners of the full judgment award rendered the said petition moot
and was a clear indication that petitioners believed on the merits and judiciousness of
the award for disability compensation.
Petitioners fault the CA for dismissing outright the petition for being moot and
academic instead of resolving the same on its merits.
The Court's Ruling
As correctly argued by petitioners, the petition for certiorari before the CA was not
rendered moot and academic by their satisfaction of the judgment award in
compliance with the writ of execution issued by the LA. The CA cited Career Philippines,
but it finds no application here. Career Philippines was resolved on equitable
considerations. In the said case, while petitioner employer had the luxury of having
other remedies available to it such as its petition for certiorari pending before the CA
and an eventual appeal to this Court, respondent seafarer could no longer pursue other
claims, including for interests that may accrue during the pendency of the case. Thus,
it was held that the LA and the CA could not be faulted for interpreting petitioner's

"conditional settlement" to be tantamount to an amicable settlement of the case

resulting in the mootness of the petition for certiorari.
In this case, no such document was executed between the parties. The payment of the
judgment award without prejudice by petitioners required no obligations whatsoever
on the part of Picar.
The case of Leonis Navigation v. Villamater (Leonis Navigation) 15 is more in point,
where the Court explained:
Petitioners never moved for a reconsideration of this Order regarding the
voluntariness of their payment to Sonia, as well as the dismissal with
prejudice and the concomitant termination of the case.
However, petitioners argued that the finality of the case did not render
the petition for certiorari before the CA moot and academic. On this
point, we agree with petitioners.
In the landmark case of St. Martin Funeral Home v. NLRC, 16 we ruled that
judicial review of decisions of the NLRC is sought via a petition for
certiorari under Rule 65 of the Rules of Court, and the petition should be
filed before the CA, following the strict observance of the hierarchy of
courts. Under Rule 65, Section 4, 17 petitioners are allowed sixty (60) days
from notice of the assailed order or resolution within which to file the
petition. Thus, although the petition was not filed within the 10-day
period, petitioners seasonably filed their petition for certiorari before the
CA within the 60-day reglementary period under Rule 65. AHEDaI
Further, a petition for certiorari does not normally include an inquiry into
the correctness of its evaluation of the evidence. Errors of judgment, as
distinguished from errors of jurisdiction, are not within the province of a
special civil action for certiorari, which is merely confined to issues of
jurisdiction or grave abuse of discretion. It is, thus, incumbent upon
petitioners to satisfactorily establish that the NLRC acted capriciously and
whimsically in order that the extraordinary writ of certiorari will lie. By
grave abuse of discretion is meant such capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction, and it must be shown
that the discretion was exercised arbitrarily or despotically. 18 (Emphasis
supplied)
Adhering to the pronouncement in Leonis Navigation, the Court, in Philippine
Transmarine Carriers, Inc. v. Legaspi (Transmarine), 19 held that the satisfaction of the
monetary award by the employer did not render the petition for certiorari moot before
the CA. In Transmarine, pursuant to a writ of execution issued, the employer shipowner/manning agency and the complaining seafarer agreed to a settlement of the
judgment award. It was, however, stipulated that the settlement shall be without

prejudice to the pending petition for certiorari filed by the employer before the CA. It
was further agreed that, in the event that the petition would be granted and the
judgment award would be eventually reversed, whether in full or partially, the seafarer
shall return all amounts in excess of what he would be entitled to and the employer
shall be allowed to file the necessary motion for the return or restitution of the amount
unjustly paid. The parties' covenants, as well as the acknowledgment by the seafarer
of receipt in full of the judgment award, were embodied in a receipt of the judgment
award with undertaking. The CA, upon being informed of the settlement, dismissed the
petition for certiorari for being moot and academic. In support of the dismissal, the CA
also relied on Career Philippines. In reversing and setting aside the order of dismissal
issued by the CA, the Court in Transmarine wrote:
In Career Philippines, believing that the execution of the LA Decision was
imminent after its petition for injunctive relief was denied, the employer
filed before the LA a pleading embodying a conditional satisfaction of
judgment before the CA and, accordingly, paid the employee the
monetary award in the LA decision. In the said pleading, the employer
stated that the conditional satisfaction of the judgment award was
without prejudice to its pending appeal before the CA and that it was
being made only to prevent the imminent execution.
The CA later dismissed the employer's petition for being moot and
academic, noting that the decision of the LA had attained finality with the
satisfaction of the judgment award. This Court affirmed the ruling of the
CA, interpreting the "conditional settlement" to be tantamount to an
amicable settlement of the case resulting in the mootness of the petition
for certiorari, considering (i) that the employee could no longer pursue
other claims, and (ii) that the employer could not have been compelled
to immediately pay because it had filed an appeal bond to ensure
payment to the employee.
Stated differently, the Court ruled against the employer because the
conditional satisfaction of judgment signed by the parties was highly
prejudicial to the employee. The agreement stated that the payment of
the monetary award was without prejudice to the right of the employer
to file a petition for certiorari and appeal, while the employee agreed that
she would no longer file any complaint or prosecute any suit of action
against the employer after receiving the payment.
xxx xxx xxx
In the present case, the Receipt of the Judgment Award with Undertaking
was fair to both the employer and the employee. As in Leonis Navigation,
the said agreement stipulated that respondent should return the amount
to petitioner if the petition for certiorari would be granted but without

prejudice to respondent's right to appeal. The agreement, thus, provided

available remedies to both parties.
It is clear that petitioner paid respondent subject to the terms and
conditions stated in the Receipt of the Judgment Award with
Undertaking. Both parties signed the agreement. Respondent neither
refuted the agreement nor claimed that he was forced to sign it against
his will. Therefore, the petition for certiorari was not rendered moot
despite petitioner's satisfaction of the judgment award, as the
respondent had obliged himself to return the payment if the petition
would be granted. 20
Verily in this case, petitioners satisfied the judgment award in strict compliance with a
duly issued writ of execution and pursuant to terms fair to both parties. Thus, the
equitable ruling in Career Philippines would certainly be unfair to petitioners in this
case as they still have a remedy under the rules. The CA, therefore, was in error in
dismissing the petition for being moot and academic. SDaHEc
WHEREFORE, the petition is GRANTED. The May 2, 2013 Decision and the September
9, 2013 Resolution of the Court of Appeals in CA-G.R. SP No. 124763 are REVERSED and
SET ASIDE. The case is ordered REMANDED to the Court of Appeals for decision on the
merits.
SO ORDERED.
||| (Seacrest Maritime Management, Inc. v. Picar, Jr., G.R. No. 209383, [March 11,
2015])

The settlement of judgment by virtue of the writ of execution does not

render the petition for certiorari filed in the CA as moot and academic.

FACTS: Picar filed for permanent disability compensation

LA: granted
filed writ of execution with LA pending appeal, granted.

33. Art 261, 262 and 262 (a), Voluntary Arbitrator

PHILEC V CA
Gr no. 168612
SECOND DIVISION
[G.R. No. 168612. December 10, 2014.]
PHILIPPINE ELECTRIC CORPORATION (PHILEC), petitioner, vs. COURT OF
APPEALS, NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB),
Department of Labor and Employment, RAMON T. JIMENEZ, in his
capacity as Voluntary Arbitrator, PHILEC WORKERS' UNION (PWU),
ELEODORO V. LIPIO, and EMERLITO C. IGNACIO, respondents.
DECISION
LEONEN, J p:
An appeal to reverse or modify a Voluntary Arbitrator's award or decision must be filed
before the Court of Appeals within 10 calendar days from receipt of the award or
decision.
This is a petition 1 for review on certiorari of the Court of Appeals' decision 2 dated
May 25, 2004, dismissing the Philippine Electric Corporation's petition for certiorari for
lack of merit.
Philippine Electric Corporation (PHILEC) is a domestic corporation "engaged in the
manufacture and repairs of high voltage transformers." 3 Among its rank-and-file
employees were Eleodoro V. Lipio (Lipio) and Emerlito C. Ignacio, Sr. (Ignacio, Sr.),
former members of the PHILEC Workers' Union (PWU). 4 PWU is a legitimate labor
organization and the exclusive bargaining representative of PHILEC's rank-and-file
employees. 5
From June 1, 1989 to May 31, 1997, PHILEC and its rank-and-file employees were
governed by collective bargaining agreements providing for the following step
increases in an employee's basic salary in case of promotion: 6
Pay
Rank-and-File (PWU)
Grade June 1, 1989 to June 1, 1992 to June 1, 1994 to
May 31, 1992
May 31, 1994
May 31, 1997

I-II
II-III
III-IV
IV-V
V-VI
VI-VII
VII-VIII
VIII-IX
IX-X

50
60
70
80
100
120
170
220
260

60
70
80
110
140
170
230
290
350

65
78
95
120
150
195
255
340
455

On August 18, 1997 and with the previous collective bargaining agreements already
expired, PHILEC selected Lipio for promotion from Machinist under Pay Grade VIII 7 to
Foreman I under Pay Grade B. 8 PHILEC served Lipio a memorandum, 9 instructing him
to undergo training for the position of Foreman I beginning on August 25, 1997. PHILEC
undertook to pay Lipio training allowance as provided in the memorandum:
This will confirm your selection and that you will undergo training for the
position of Foreman I (PG B) of the Tank Finishing Section, Distribution
Transformer Manufacturing and Repair effective August 25, 1997.
TaDSHC
You will be trained as a Foreman I, and shall receive the following training
allowance until you have completed the training/observation period
which shall not exceed four (4) months.
First Month
Second Month
Third Month
Fourth Month

P350.00
P815.00
P815.00
P815.00

Please be guided accordingly. 10

Ignacio, Sr., then DT-Assembler with Pay Grade VII, 11 was likewise selected for training
for the position of Foreman I. 12 On August 21, 1997, PHILEC served Ignacio, Sr. a
memorandum, 13 instructing him to undergo training with the following schedule of
allowance:
This will confirm your selection and that you will undergo training for the
position of Foreman I (PG B) of the Assembly Section, Distribution
Transformer Manufacturing and Repair effective August 25, 1997.
You will be trained as a Foreman I, and shall receive the following training
allowance until you have completed the training/observation period
which shall not exceed four (4) months:

First Month
Second Month
Third Month
Fourth Month

P255.00
P605.00
P1,070.00
P1,070.00

Please be guided accordingly. 14

On September 17, 1997, PHILEC and PWU entered into a new collective bargaining
agreement, effective retroactively on June 1, 1997 and expiring on May 31, 1999. 15
Under Article X, Section 4 of the June 1, 1997 collective bargaining agreement, a rankand-file employee promoted shall be entitled to the following step increases in his or
her basic salary: 16
Section 4. STEP INCREASES. [Philippine Electric Corporation] shall
adopt the following step increases on the basic salary in case of
promotion effective June 1, 1997. Such increases shall be based on the
scale below or upon the minimum of the new pay grade to which the
employee is promoted, whichever is higher:
Pay Grade

Step Increase

I-II
II-III
III-IV
IV-V
V-VI
VI-VII
VII-VIII
VIII-IX
IX-X

P80.00
P105.00
P136.00
P175.00
P224.00
P285.00
P361.00
P456.00
P575.00

To be promoted, a rank-and-file employee shall undergo training or observation and

shall receive training allowance as provided in Article IX, Section 1 (f) of the June 1,
1997 collective bargaining agreement: 17
Section 1. JOB POSTING AND BIDDING:
xxx xxx xxx
(f) Allowance for employees under Training or Observation shall be on a
graduated basis as follows:
For the first month of training, the allowance should be equivalent to one
step increase of the next higher grade. Every month thereafter the

corresponding increase shall be equivalent to the next higher grade until

the allowance for the grade applied for is attained.
As an example, if a Grade I employee qualifies for a Grade III position, he
will receive the training allowance for Grade I to Grade II for the first
month. On the second month, he will receive the training allowance for
Grade I to Grade II plus the allowance for Grade II to Grade III. He will
then continue to receive this amount until he finishes his training or
observation period. 18
Claiming that the schedule of training allowance stated in the memoranda served on
Lipio and Ignacio, Sr. did not conform to Article X, Section 4 of the June 1, 1997
collective bargaining agreement, PWU submitted the grievance to the grievance
machinery. 19
PWU and PHILEC failed to amicably settle their grievance. Thus, on December 21, 1998,
the parties filed a submission agreement 20 with the National Conciliation and
Mediation Board, submitting the following issues to voluntary arbitration: cDAEIH
I
WHETHER OR NOT PHILEC VIOLATED SECTION 4 (Step Increases) ARTICLE
X (Wage and Position Standardization) OF THE EXISTING COLLECTIVE
BARGAINING AGREEMENT (CBA) IN IMPLEMENTING THE STEP INCREASES
RELATIVE TO THE PROMOTION OF INDIVIDUAL COMPLAINANTS.
II
WHETHER OR NOT PHILEC's MANNER OF IMPLEMENTING THE STEP
INCREASES IN CONNECTION WITH THE PROMOTION OF INDIVIDUAL
COMPLAINANTS IN RELATION TO THE PROVISIONS OF SECTION 4,
ARTICLE X OF THE CBA CONSTITUTES UNFAIR LABOR PRACTICE. 21
In their submission agreement, PWU and PHILEC designated Hon. Ramon T. Jimenez as
Voluntary Arbitrator (Voluntary Arbitrator Jimenez). 22
Voluntary Arbitrator Jimenez, in the order 23 dated January 4, 1999, directed the
parties to file their respective position papers.
In its position paper, 24 PWU maintained that PHILEC failed to follow the schedule of
step increases under Article X, Section 4 of the June 1, 1997 collective bargaining
agreement. Machinist I, Lipio's position before he underwent training for Foreman I,
fell under Pay Grade VIII, while Foreman I fell under Pay Grade X. Following the
schedule under Article X, Section 4 of the June 1, 1997 collective bargaining agreement
and the formula under Article IX, Section 1 (f), Lipio should be paid training allowance
equal to the step increase for pay grade bracket VIII-IX for the first month of training.
For the succeeding months, Lipio should be paid an allowance equal to the step

increase for pay grade bracket VIII-IX plus the step increase for pay grade bracket IX-X,
thus: 25
First month
Second month
Third month
Fourth month

P456.00
P1,031.00
P1,031.00
P1,031.00

With respect to Ignacio, Sr., he was holding the position of DT-Assembler under Pay
Grade VII when he was selected to train for the position of Foreman I under Pay Grade
X. Thus, for his first month of training, Ignacio, Sr. should be paid training allowance
equal to the step increase under pay grade bracket VII-VIII. For the second month, he
should be paid an allowance equal to the step increase under pay grade bracket VIIVIII plus the step increase under pay grade bracket VIII-IX. For the third and fourth
months, Ignacio, Sr. should receive an allowance equal to the amount he received for
the second month plus the amount equal to the step increase under pay grade bracket
IX-X, thus: 26
First month
Second month
Third month
Fourth month

P361.00
P817.00
P1,392.00
P1,392.00

For PHILEC's failure to apply the schedule of step increases under Article X of the June
1, 1997 collective bargaining agreement, PWU argued that PHILEC committed an unfair
labor practice under Article 248 27 of the Labor Code.28
In its position paper, 29 PHILEC emphasized that it promoted Lipio and Ignacio, Sr.
while it was still negotiating a new collective bargaining agreement with PWU. Since
PHILEC and PWU had not yet negotiated a new collective bargaining agreement when
PHILEC selected Lipio and Ignacio, Sr. for training, PHILEC applied the "Modified SGV"
pay grade scale in computing Lipio's and Ignacio, Sr.'s training allowance. 30
This "Modified SGV" pay grade scale, which PHILEC and PWU allegedly agreed to
implement beginning on May 9, 1997, covered both rank-and-file and supervisory
employees. 31 According to PHILEC, its past collective bargaining agreements with the
rank-and-file and supervisory unions resulted in an overlap of union membership in
Pay Grade IX of the rank-and-file employees and Pay Grade A of the supervisory
employees. 32 Worse, past collective bargaining agreements resulted in rank-and-file
employees under Pay Grades IX and X enjoying higher step increases than supervisory
employees under Pay Grades A and B: 33 CHDaAE

Pay Grade
Scale under the
Rank-and-File
CBA

Step Increase

Pay Grade Scale

under the
Supervisory CBA

Step Increase

VIII-IX
P340.00
A
P290.00
IX-X
P455.00
A-B
P350.00
To preserve the hierarchical wage structure within PHILEC's enterprise, PHILEC and
PWU allegedly agreed to implement the uniform pay grade scale under the "Modified
SGV" pay grade system, thus: 34
Pay Grade
Step Increase
Rank-and-File Supervisory
I-II
P65.00
II-III
P78.00
III-IV
P95.00
IV-V
P120.00
V-VI
P150.00
VI-VII
P195.00
VII-VIII
P255.00
VIII-IX
A
P350.00
IX-X
A-B
P465.00
X-XI
B-C
P570.00
XI-XII
C-D
P710.00
D-E
P870.00
E-F
P1,055.00
Pay grade bracket I-IX covered rank-and-file employees, while pay grade bracket A-F
covered supervisory employees. 35
Under the "Modified SGV" pay grade scale, the position of Foreman I fell under Pay
Grade B. PHILEC then computed Lipio's and Ignacio, Sr.'s training allowance
accordingly. 36
PHILEC disputed PWU's claim of unfair labor practice. According to PHILEC, it did not
violate its collective bargaining agreement with PWU when it implemented the
"Modified SGV" scale. Even assuming that it violated the collective bargaining
agreement, PHILEC argued that its violation was not "gross" or a "flagrant and/or
malicious refusal to comply with the economic provisions of [the collective bargaining
agreement]." 37 PHILEC, therefore, was not guilty of unfair labor practice. 38
Voluntary Arbitrator Jimenez held in the decision 39 dated August 13, 1999, that
PHILEC violated its collective bargaining agreement with PWU. 40 According to
Voluntary Arbitrator Jimenez, the June 1, 1997 collective bargaining agreement

governed when PHILEC selected Lipio and Ignacio, Sr. for promotion on August 18 and
21, 1997. 41 The provisions of the collective bargaining agreement being the law
between the parties, PHILEC should have computed Lipio's and Ignacio, Sr.'s training
allowance based on Article X, Section 4 of the June 1, 1997 collective bargaining
agreement. 42
As to PHILEC's claim that applying Article X, Section 4 would result in salary distortion
within PHILEC's enterprise, Voluntary Arbitrator Jimenez ruled that this was "a concern
that PHILEC could have anticipated and could have taken corrective action" 43 before
signing the collective bargaining agreement.
Voluntary Arbitrator Jimenez dismissed PWU's claim of unfair labor practice. 44
According to him, PHILEC's acts "cannot be considered a gross violation of the
[collective bargaining agreement] nor . . . [a] flagrant and/or malicious refusal to
comply with the economic provisions of the [agreement]." 45
Thus, Voluntary Arbitrator Jimenez ordered PHILEC to pay Lipio and Ignacio, Sr. training
allowance based on Article X, Section 4 and Article IX, Section 1 of the June 1, 1997
collective bargaining agreement. 46
PHILEC received a copy of Voluntary Arbitrator Jimenez's decision on August 16, 1999.
47 On August 26, 1999, PHILEC filed a motion for partial reconsideration 48 of
Voluntary Arbitrator Jimenez's decision.
In the resolution 49 dated July 7, 2000, Voluntary Arbitrator Jimenez denied PHILEC's
motion for partial reconsideration for lack of merit. PHILEC received a copy of the July
7, 2000 resolution on August 11, 2000. 50
On August 29, 2000, PHILEC filed a petition 51 for certiorari before the Court of
Appeals, alleging that Voluntary Arbitrator Jimenez gravely abused his discretion in
rendering his decision. 52 PHILEC maintained that it did not violate the June 1, 1997
collective bargaining agreement. 53 It applied the "Modified SGV" pay grade rates to
avoid salary distortion within its enterprise. 54 acTDCI
In addition, PHILEC argued that Article X, Section 4 of the collective bargaining
agreement did not apply to Lipio and Ignacio, Sr. Considering that Lipio and Ignacio, Sr.
were promoted to a supervisory position, their training allowance should be computed
based on the provisions of PHILEC's collective bargaining agreement with ASSET, the
exclusive bargaining representative of PHILEC's supervisory employees. 55
The Court of Appeals affirmed Voluntary Arbitrator Jimenez's decision. 56 It agreed
that PHILEC was bound to apply Article X, Section 4 of its June 1, 1997 collective
bargaining agreement with PWU in computing Lipio's and Ignacio, Sr.'s training
allowance. 57 In its decision, the Court of Appeals denied due course and dismissed
PHILEC's petition for certiorari for lack of merit. 58

PHILEC filed a motion for reconsideration, which the Court of Appeals denied in the
resolution 59 dated June 23, 2005.
On August 3, 2005, PHILEC filed its petition for review on certiorari before this court,
60 insisting that it did not violate its collective bargaining agreement with PWU. 61
PHILEC maintains that Lipio and Ignacio, Sr. were promoted to a position covered by
the pay grade scale for supervisory employees. 62 Consequently, the provisions of
PHILEC's collective bargaining agreement with its supervisory employees should apply,
not its collective bargaining agreement with PWU. 63 To insist on applying the pay
grade scale in Article X, Section 4, PHILEC argues, would result in a salary distortion
within PHILEC. 64
In the resolution 65 dated September 21, 2005, this court ordered PWU to comment
on PHILEC's petition for review on certiorari.
In its comment, 66 PWU argues that Voluntary Arbitrator Jimenez did not gravely abuse
his discretion in rendering his decision. He correctly applied the provisions of the PWU
collective bargaining agreement, the law between PHILEC and its rank-and-file
employees, in computing Lipio's and Ignacio, Sr.'s training allowance. 67
On September 27, 2006, PHILEC filed its reply, 68 reiterating its arguments in its
petition for review on certiorari.
The issue for our resolution is whether Voluntary Arbitrator Jimenez gravely abused his
discretion in directing PHILEC to pay Lipio's and Ignacio, Sr.'s training allowance based
on Article X, Section 4 of the June 1, 1997 rank-and-file collective bargaining
agreement.
This petition should be denied.
I
The Voluntary Arbitrator's decision
dated August 13, 1999 is already final and
executory
We note that PHILEC filed before the Court of Appeals a petition for certiorari under
Rule 65 of the Rules of Court against Voluntary Arbitrator Jimenez's decision. 69
This was not the proper remedy.
Instead, the proper remedy to reverse or modify a Voluntary Arbitrator's or a panel of
Voluntary Arbitrators' decision or award is to appeal the award or decision before the
Court of Appeals. Rule 43, Sections 1 and 3 of the Rules of Court provide:
Section 1. Scope.
This Rule shall apply to appeals from judgments or final orders of the
Court of Tax Appeals and from awards, judgments, final orders or

resolutions of or authorized by any quasi-judicial agency in the exercise

of its quasi-judicial functions. Among these agencies are the Civil Service
Commission, Central Board of Assessment Appeals, Securities and
Exchange Commission, Office of the President, Land Registration
Authority, Social Security Commission, Civil Aeronautics Board, Bureau of
Patents, Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunications
Commission, Department of Agrarian Reform under Republic Act No.
6657, Government Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance Commission,
Philippine Atomic Energy Commission, Board of Investments,
Construction Industry Arbitration Commission, and voluntary arbitrators
authorized by law. DSAacC
xxx xxx xxx
Sec. 3. Where to appeal.
An appeal under this Rule may be taken to the Court of Appeals within
the period and in the manner herein provided, whether the appeal
involves questions of fact, of law, or mixed questions of fact and law.
(Emphasis supplied)
A Voluntary Arbitrator or a panel of Voluntary Arbitrators has the exclusive original
jurisdiction over grievances arising from the interpretation or implementation of
collective bargaining agreements. Should the parties agree, a Voluntary Arbitrator or a
panel of Voluntary Arbitrators shall also resolve the parties' other labor disputes,
including unfair labor practices and bargaining deadlocks. Articles 261 and 262 of the
Labor Code provide:
ART. 261. JURISDICTION OF VOLUNTARY ARBITRATORS OR PANEL OF
VOLUNTARY ARBITRATORS.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies referred to
in the immediately preceding article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to comply with
the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes,
grievances, or matters under the exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or
Voluntary Arbitration provided in the Collective Bargaining Agreement.
ART. 262. JURISDICTION OVER OTHER LABOR DISPUTES.
The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other labor
disputes including unfair labor practices and bargaining deadlocks.
In Luzon Development Bank v. Association of Luzon Development Bank Employees, 70
this court ruled that the proper remedy against the award or decision of the Voluntary
Arbitrator is an appeal before the Court of Appeals. This court first characterized the
office of a Voluntary Arbitrator or a panel of Voluntary Arbitrators as a quasi-judicial
agency, citing Volkschel Labor Union, et al. v. NLRC 71 and Oceanic Bic Division (FFW)
v. Romero: 72
In Volkschel Labor Union, et al. v. NLRC, et al., on the settled premise that
the judgments of courts and awards of quasi-judicial agencies must
become final at some definite time, this Court ruled that the awards of
voluntary arbitrators determine the rights of parties; hence, their
decisions have the same legal effect as judgments of a court. In Oceanic
Bic Division (FFW), et al. v. Romero, et al., this Court ruled that "a
voluntary arbitrator by the nature of her functions acts in a quasi-judicial
capacity." Under these rulings, it follows that the voluntary arbitrator,
whether acting solely or in a panel, enjoys in law the status of a quasijudicial agency but independent of; and apart from, the NLRC since his
decisions are not appealable to the latter. 73 (Citations omitted)
This court then stated that the office of a Voluntary Arbitrator or a panel of Voluntary
Arbitrators, even assuming that the office is not strictly a quasi-judicial agency, may be
considered an instrumentality, thus:
Assuming arguendo that the voluntary arbitrator or the panel of
voluntary arbitrators may not strictly be considered as a quasi-judicial
agency, board or commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial instrumentality." It
may even be stated that it was to meet the very situation presented by
the quasi-judicial functions of the voluntary arbitrators here, as well as
the subsequent arbitrator/arbitral tribunal operating under the
Construction Industry Arbitration Commission, that the broader term

"instrumentalities" was purposely included in the above-quoted

provision. cAECST
An "instrumentality" is anything used as a means or agency. Thus, the
terms governmental "agency" or "instrumentality" are synonymous in
the sense that either of them is a means by which a government acts, or
by which a certain government act or function is performed. The word
"instrumentality," with respect to a state, contemplates an authority to
which the state delegates governmental power for the performance of a
state function. An individual person, like an administrator or executor, is
a judicial instrumentality in the settling of an estate, in the same manner
that a sub-agent appointed by a bankruptcy court is an instrumentality of
the court, and a trustee in bankruptcy of a defunct corporation is an
instrumentality of the state.
The voluntary arbitrator no less performs a state function pursuant to a
governmental power delegated to him under the provisions therefor in
the Labor Code and he falls, therefore, within the contemplation of the
term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. 74 (Citations
omitted)
Since the office of a Voluntary Arbitrator or a panel of Voluntary Arbitrators is
considered a quasi-judicial agency, this court concluded that a decision or award
rendered by a Voluntary Arbitrator is appealable before the Court of Appeals. Under
Section 9 of the Judiciary Reorganization Act of 1980, the Court of Appeals has the
exclusive original jurisdiction over decisions or awards of quasi-judicial agencies and
instrumentalities:
Section 9. Jurisdiction. The Court of Appeals shall exercise:
xxx xxx xxx
3. Exclusive appellate jurisdiction over all final judgements, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commission, including the Securities and
Exchange Commission, the Social Security Commission, the Employees
Compensation Commission and the Civil Service Commission, except
those falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of the Philippines
under Presidential Decree No. 442, as amended, the provisions of this
Act, and of subparagraph (1) of the third paragraph and subparagraph 4
of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
(Emphasis supplied)
Luzon Development Bank was decided in 1995 but remains "good law." 75 In the 2002
case of Alcantara, Jr. v. Court of Appeals, 76 this court rejected petitioner Santiago

Alcantara, Jr.'s argument that the Rules of Court,specifically Rule 43, Section 2,
superseded the Luzon Development Bank ruling:
Petitioner argues, however, that Luzon Development Bank is no longer
good law because of Section 2, Rule 43 of the Rules of Court, a new
provision introduced by the 1997 revision. The provision reads:
SEC. 2. Cases not covered. This Rule shall not apply to judgments
or final orders issued under the Labor Code of the Philippines.
The provisions may be new to the Rules of Court but it is far from being a
new law. Section 2, Rule 42 of the 1997 Rules of Civil Procedure, as
presently worded, is nothing more but a reiteration of the exception to
the exclusive appellate jurisdiction of the Court of Appeals, as provided
for in Section 9, Batas Pambansa Blg. 129, 7 as amended by Republic Act
No. 7902: 8
(3) Exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial Courts and
quasi-judicial agencies, instrumentalities, boards or commissions,
including the Securities and Exchange Commission, the Employees'
Compensation Commission and the Civil Service Commission,
except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the
Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section
17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development Bank
but, nevertheless, held that the decisions of voluntary arbitrators issued
pursuant to the Labor Code do not come within its ambit: HcaATE
. . . . The fact that [the voluntary arbitrator's] functions and powers
are provided for in the Labor Code does not place him within the
exceptions to said Sec. 9 since he is a quasi-judicial instrumentality
as contemplated therein. It will be noted that, although the
Employees' Compensation Commission is also provided for in the
Labor Code, Circular No. 1-91, which is the forerunner of the
present Revised Administrative Circular No. 1-95, laid down the
procedure for the appealability of its decisions to the Court of
Appeals under the foregoing rationalization, and this was later
adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel
of arbitrators should likewise be appealable to the Court of

Appeals, in line with the procedure outlined in Revised

Administrative Circular No. 1-95, just like those of the quasi-judicial
agencies, boards and commissions enumerated therein. 77
(Emphases in the original)
This court has since reiterated the Luzon Development Bank ruling in its decisions: 78
Article 262-A of the Labor Code provides that the award or decision of the Voluntary
Arbitrator "shall be final and executory after ten (10) calendar days from receipt of the
copy of the award or decision by the parties":
Art. 262-A. PROCEDURES. The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have the power to hold hearings, receive
evidences and take whatever action is necessary to resolve the issue or
issues subject of the dispute, including efforts to effect a voluntary
settlement between parties.
All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party or the exclusion of any
witness from the proceedings shall be determined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned
for cause or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the
Voluntary Arbitrator or panel of Voluntary Arbitrators to render an award
or decision within twenty (20) calendar days from the date of submission
of the dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel of Voluntary
Arbitrators shall contain the facts and the law on which it is based. It shall
be final and executory after ten (10) calendar days from receipt of the
copy of the award or decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or panel
of Voluntary Arbitrators or the Labor Arbiter in the region where the
movant resides, in case of the absence or incapacity of the Voluntary
Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue a
writ of execution requiring either the sheriff of the Commission or regular
courts or any public official whom the parties may designate in the
submission agreement to execute the final decision, order or award.
(Emphasis supplied)
Thus, in Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO-BALAIS v. Coca
Cola-Bottlers Philippines, Inc., 79 this court declared that the decision of the Voluntary
Arbitrator had become final and executory because it was appealed beyond the 10-day
reglementary period under Article 262-A of the Labor Code.

It is true that Rule 43, Section 4 of the Rules of Court provides for a 15-day
reglementary period for filing an appeal:
Section 4. Period of appeal. The appeal shall be taken within fifteen
(15) days from notice or the award, judgment, final order or resolution, or
from the date of its last publication, if publication is required by law for
its effectivity, or of the denial of petitioner's motion for new trial or
reconsideration duly filed in accordance with the governing law of the
court or agency a quo. Only one (1) motion for reconsideration shall be
allowed. Upon proper motion and the payment of the full amount of the
docket fee before the expiration of the reglementary period, the Court of
Appeals may grant an additional period of fifteen (15) days only within
which to file the petition for review. No further extension shall be granted
except for the most compelling reason and in no case to exceed fifteen
(15) days. (Emphasis supplied) cISDHE
The 15-day reglementary period has been upheld by this court in a long line of cases.
80 In AMA Computer College-Santiago City, Inc. v. Nacino, 81 Nippon Paint Employees
Union-OLALIA v. Court of Appeals, 82 Manila Midtown Hotel v. Borromeo, 83 and Sevilla
Trading Company v. Semana, 84 this court denied petitioners' petitions for review on
certiorari since petitioners failed to appeal the Voluntary Arbitrator's decision within
the 15-day reglementary period under Rule 43. In these cases, the Court of Appeals
had no jurisdiction to entertain the appeal assailing the Voluntary Arbitrator's decision.
Despite Rule 43 providing for a 15-day period to appeal, we rule that the Voluntary
Arbitrator's decision must be appealed before the Court of Appeals within 10 calendar
days from receipt of the decision as provided in the Labor Code.
Appeal is a "statutory privilege," 85 which may be exercised "only in the manner and
in accordance with the provisions of the law." 86 "Perfection of an appeal within the
reglementary period is not only mandatory but also jurisdictional so that failure to do
so rendered the decision final and executory, and deprives the appellate court of
jurisdiction to alter the final judgment much less to entertain the appeal." 87
We ruled that Article 262-A of the Labor Code allows the appeal of decisions rendered
by Voluntary Arbitrators. 88 Statute provides that the Voluntary Arbitrator's decision
"shall be final and executory after ten (10) calendar days from receipt of the copy of
the award or decision by the parties." Being provided in the statute, this 10-day period
must be complied with; otherwise, no appellate court will have jurisdiction over the
appeal. This absurd situation occurs when the decision is appealed on the 11th to 15th
day from receipt as allowed under the Rules, but which decision, under the law, has
already become final and executory.
Furthermore, under Article VIII, Section 5 (5) of the Constitution, this court "shall not
diminish, increase, or modify substantive rights" in promulgating rules of procedure in

courts. 89 The 10-day period to appeal under the Labor Code being a substantive right,
this period cannot be diminished, increased, or modified through the Rules of Court.
90
In Shioji v. Harvey, 91 this court held that the "rules of court,promulgated by authority
of law, have the force and effect of law, if not in conflict with positive law." 92 Rules of
Court are "subordinate to the statute." 93 In case of conflict between the law and the
Rules of Court,"the statute will prevail." 94
The rule, therefore, is that a Voluntary Arbitrator's award or decision shall be appealed
before the Court of Appeals within 10 days from receipt of the award or decision.
Should the aggrieved party choose to file a motion for reconsideration with the
Voluntary Arbitrator, 95 the motion must be filed within the same 10-day period since
a motion for reconsideration is filed "within the period for taking an appeal." 96
A petition for certiorari is a special civil action "adopted to correct errors of jurisdiction
committed by the lower court or quasi-judicial agency, or when there is grave abuse of
discretion on the part of such court or agency amounting to lack or excess of
jurisdiction." 97 An extraordinary remedy, 98 a petition for certiorari may be filed only
if appeal is not available. 99 If appeal is available, an appeal must be taken even if the
ground relied upon is grave abuse of discretion. 100
As an exception to the rule, this court has allowed petitions for certiorari to be filed in
lieu of an appeal "(a) when the public welfare and the advancement of public policy
dictate; (b) when the broader interests of justice so require; (c) when the writs issued
are null; and (d) when the questioned order amounts to an oppressive exercise of
judicial authority." 101
In Unicraft Industries International Corporation, et al. v. The Hon. Court of Appeals, 102
petitioners filed a petition for certiorari against the Voluntary Arbitrator's decision.
Finding that the Voluntary Arbitrator rendered an award without giving petitioners an
opportunity to present evidence, this court allowed petitioners' petition for certiorari
despite being the wrong remedy. The Voluntary Arbitrator's award, this court said, was
null and void for violation of petitioners' right to due process. This court decided the
case on the merits.
In Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees Union-ALU, 103 petitioner
likewise filed a petition for certiorari against the Voluntary Arbitrator's decision,
alleging that the decision lacked basis in fact and in law. Ruling that the petition for
certiorari was filed within the reglementary period for filing an appeal, this court
allowed petitioner's petition for certiorari in "the broader interests of justice." 104
AEaSTC
In Mora v. Avesco Marketing Corporation, 105 this court held that petitioner Noel E.
Mora erred in filing a petition for certiorari against the Voluntary Arbitrator's decision.
Nevertheless, this court decided the case on the merits "in the interest of substantial

justice to arrive at the proper conclusion that is conformable to the evidentiary facts."
106
None of the circumstances similar to Unicraft, Leyte IV Electric Cooperative, and Mora
are present in this case. PHILEC received Voluntary Arbitrator Jimenez's resolution
denying its motion for partial reconsideration on August 11, 2000. 107 PHILEC filed its
petition for certiorari before the Court of Appeals on August 29, 2000, 108 which was
18 days after its receipt of Voluntary Arbitrator Jimenez's resolution. The petition for
certiorari was filed beyond the 10-day reglementary period for filing an appeal. We
cannot consider PHILEC's petition for certiorari as an appeal.
There being no appeal seasonably filed in this case, Voluntary Arbitrator Jimenez's
decision became final and executory after 10 calendar days from PHILEC's receipt of
the resolution denying its motion for partial reconsideration. 109 Voluntary Arbitrator
Jimenez's decision is already "beyond the purview of this Court to act upon." 110
II
PHILEC must pay training allowance
based on the step increases provided in
the June 1, 1997 collective bargaining
agreement
The insurmountable procedural issue notwithstanding, the case will also fail on its
merits. Voluntary Arbitrator Jimenez correctly awarded both Lipio and Ignacio, Sr.
training allowances based on the amounts and formula provided in the June 1, 1997
collective bargaining agreement.
A collective bargaining agreement is "a contract executed upon the request of either
the employer or the exclusive bargaining representative of the employees
incorporating the agreement reached after negotiations with respect to wages, hours
of work and all other terms and conditions of employment, including proposals for
adjusting any grievances or questions arising under such agreement." 111 A collective
bargaining agreement being a contract, its provisions "constitute the law between the
parties" 112 and must be complied with in good faith. 113
PHILEC, as employer, and PWU, as the exclusive bargaining representative of PHILEC's
rank-and-file employees, entered into a collective bargaining agreement, which the
parties agreed to make effective from June 1, 1997 to May 31, 1999. Being the law
between the parties, the June 1, 1997 collective bargaining agreement must govern
PHILEC and its rank-and-file employees within the agreed period.
Lipio and Ignacio, Sr. were rank-and-file employees when PHILEC selected them for
training for the position of Foreman I beginning August 25, 1997. Lipio and Ignacio, Sr.
were selected for training during the effectivity of the June 1, 1997 rank-and-file
collective bargaining agreement. Therefore, Lipio's and Ignacio, Sr.'s training allowance

must be computed based on Article X, Section 4 and Article IX, Section 1 (f) of the June
1, 1997 collective bargaining agreement.
Contrary to PHILEC's claim, Lipio and Ignacio, Sr. were not transferred out of the
bargaining unit when they were selected for training. Lipio and Ignacio, Sr. remained
rank-and-file employees while they trained for the position of Foreman I. Under Article
IX, Section 1 (e) of the June 1, 1997 collective bargaining agreement, 114 a trainee who
is "unable to demonstrate his ability to perform the work . . . shall be reverted to his
previous assignment. . . ." 115 According to the same provision, the trainee "shall hold
that job on a trial or observation basis and . . . subject to prior approval of the
authorized management official, be appointed to the position in a regular capacity."
116
Thus, training is a condition precedent for promotion. Selection for training does not
mean automatic transfer out of the bargaining unit of rank-and-file employees. DCHaTc
Moreover, the June 1, 1997 collective bargaining agreement states that the training
allowance of a rank-and-file employee "whose application for a posted job is accepted
shall [be computed] in accordance with Section (f) of [Article IX]." 117 Since Lipio and
Ignacio, Sr. were rank-and-file employees when they applied for training for the
position of Foreman I, Lipio's and Ignacio, Sr.'s training allowance must be computed
based on Article IX, Section 1 (f) of the June 1, 1997 rank-and-file collective bargaining
agreement.
PHILEC allegedly applied the "Modified SGV" pay grade scale to prevent any salary
distortion within PHILEC's enterprise. This, however, does not justify PHILEC's noncompliance with the June 1, 1997 collective bargaining agreement. This pay grade scale
is not provided in the collective bargaining agreement. In Samahang Manggagawa sa
Top Form Manufacturing United Workers of the Philippines (SMTFM-UWP) v. NLRC, 118
this court ruled that "only provisions embodied in the [collective bargaining
agreement] should be so interpreted and complied with. Where a proposal raised by a
contracting party does not find print in the [collective bargaining agreement], it is not
part thereof and the proponent has no claim whatsoever to its implementation." 119
Had PHILEC wanted the "Modified SGV" pay grade scale applied within its enterprise,
"it could have requested or demanded that [the 'Modified SGV' scale] be incorporated
in the [collective bargaining agreement]." 120 PHILEC had "the means under the law
to compel [PWU] to incorporate this specific economic proposal in the [collective
bargaining agreement]." 121 It "could have invoked Article 252 of the Labor Code" 122
to incorporate the "Modified SGV" pay grade scale in its collective bargaining
agreement with PWU. But it did not. Since this "Modified SGV" pay grade scale does
not appear in PHILEC's collective bargaining agreement with PWU, PHILEC cannot insist
on the "Modified SGV" pay grade scale's application. We reiterate Voluntary Arbitrator
Jimenez's decision dated August 13, 1999 where he said that:

. . . since the signing of the current CBA took place on September 27,
1997, PHILEC, by oversight, may have overlooked the possibility of a wage
distortion occurring among ASSET-occupied positions. It is surmised that
this matter could have been negotiated and settled with PWU before the
actual signing of the CBA on September 27. Instead, PHILEC, again,
allowed the provisions of Art. X, Sec. 4 of the CBA to remain the way it is
and is now suffering the consequences of its laches. 123 (Emphasis in the
original)
We note that PHILEC did not dispute PWU's contention that it selected several rankand-file employees for training and paid them training allowance based on the
schedule provided in the collective bargaining agreement effective at the time of the
trainees' selection. 124 PHILEC cannot choose when and to whom to apply the
provisions of its collective bargaining agreement. The provisions of a collective
bargaining agreement must be applied uniformly and complied with in good faith.
Given the foregoing, Lipio's and Ignacio, Sr.'s training allowance should be computed
based on Article X, Section 4 in relation to Article IX, Section 1 (f) of the June 1, 1997
rank-and-file collective bargaining agreement. Lipio, who held the position of
Machinist before selection for training as Foreman I, should receive training allowance
based on the following schedule:
First month
Second month
Third month
Fourth month

P456.00
P1,031.00
P1,031.00
P1,031.00

Ignacio, Sr., who held the position of DT-Assembler before selection for training as
Foreman I, should receive training allowance based on the following schedule:
First month
Second month
Third month
Fourth month

P361.00
P817.00
P1,392.00
P1,392.00

Considering that Voluntary Arbitrator Jimenez's decision awarded sums of money,

Lipio and Ignacio, Sr. are entitled to legal interest on their training allowances.
Voluntary Arbitrator Jimenez's decision having become final and executory on August
22, 2000, PHILEC is liable for legal interest equal to 12% per annum from finality of the
decision until full payment as this court ruled in Eastern Shipping Lines, Inc. v. Court of
Appeals: 125

When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest . . . shall be 12% per annum from
such finality until its satisfaction, this interim period being deemed to be
by then as equivalent to a forbearance of credit. 126
The 6% legal interest under Circular No. 799, Series of 2013, of the Bangko Sentral ng
Pilipinas Monetary Board shall not apply, Voluntary Arbitrator Jimenez's decision
having become final and executory prior to the effectivity of the circular on July 1,
2013. In Nacar v. Gallery Frames, 127 we held that: TCIDSa
. . . with regard to those judgments that have become final and executory
prior to July 1, 2013, said judgments shall not be disturbed and shall
continue to be implemented applying the rate of interest fixed therein.
128
WHEREFORE, the petition for review on certiorari is DENIED. The Court of Appeals'
decision dated May 25, 2004 is AFFIRMED.
Petitioner Philippine Electric Corporation is ORDERED to PAY respondent Eleodoro V.
Lipio a total of P3,549.00 for a four (4)-month training for the position of Foreman I
with legal interest of 12% per annum from August 22, 2000 until the amount's full
satisfaction.
For respondent Emerlito C. Ignacio, Sr., Philippine Electric Corporation is ORDERED to
PAY a total of P3,962.00 for a four (4)-month training for the position of Foreman I with
legal interest of 12% per annum from August 22, 2000 until the amount's full
satisfaction.
SO ORDERED.
Carpio, Del Castillo, Villarama, Jr. * and Mendoza, JJ., concur.
||| (Phil. Electric Corp. v. Court of Appeals, G.R. No. 168612, [December 10, 2014])

34. Execution of Judgment

ILAW BUKLOD NG MANGGAGAWA V NESTLE PHILS
THIRD DIVISION
[G.R. No. 198675. September 23, 2015.]
ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE PHILIPPINES, INC.
CHAPTER (ICE CREAM AND CHILLED PRODUCTS DIVISION), ITS
OFFICERS, MEMBERS BONIFACIO T. FLORENDO, EMILIANO B. PALANAS
and GENEROSO P. LAXAMANA, petitioners, vs. NESTLE PHILIPPINES,
INC., respondent.
DECISION
PERALTA, J p:
Assailed in the instant petition for review on certiorari under Rule 45 of the
Rules of Court are the Resolutions 1 of the Court of Appeals (CA), dated June 30,
2011 2 and September 28, 2011, 3 respectively, in CA-G.R. SP No. 118459. The June
30, 2011 Resolution dismissed herein petitioners' petition for review, while the
September 28, 2011 Resolution denied petitioners' Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
On January 13, 1997, herein petitioner union staged a strike against herein
respondent company's Ice Cream and Chilled Products Division, citing, as grounds,
respondent's alleged violation of the collective bargaining agreement (CBA),
dismissal of union officers and members, discrimination and other unfair labor
practice (ULP) acts.
As a consequence, respondent filed with the National Labor Relations
Commission (NLRC) a Petition for Injunction with Prayer for Issuance of Temporary
Restraining Order, Free Ingress and Egress Order, and Deputization Order.
On January 20, 1997, a temporary restraining order was issued by the NLRC.
Thereafter, on February 7, 1997, the NLRC issued a preliminary injunction.
On February 26, 1997, respondent filed a Petition to Declare Strike Illegal.
Subsequently, on April 2, 1997, then Department of Labor and Employment
(DOLE) Acting Secretary, issued an Order assuming jurisdiction over the strike and
certifying the same to the NLRC.
On June 2, 1997, petitioner union filed a petition for certiorari with this Court,
questioning the above order of the Acting DOLE Secretary.
However, after a series of conciliation meetings and discussions between the
parties, they agreed to resolve their differences and came up with a compromise

which was embodied in a Memorandum of Agreement (MOA) dated August 4, 1998,

pertinent portions of which are as follows:
xxx xxx xxx

they came up with a MOA

1. The COMPANY [herein respondent] shall cause the dismissal of all

criminal cases against dismissed employees arising out of or as
consequences of the strike that started on January 13, 1997.
Future illegal acts of the UNION [herein petitioner] shall not be
covered by this agreement.
2. The UNION shall unqualifiedly withdraw its Petition for Certiorari
pending with the Supreme Court.
3. The COMPANY and the UNION shall jointly file a motion to withdraw
any and all actions pending with the NLRC including the Certified Case,
arising out of or as consequences of the strike that started on Jan. 13,
1997.
4. As a consequence of the strike leading to the execution of this
Memorandum of Agreement, the UNION shall cease and desist from
picketing any office or factory of the COMPANY as well as any
government agency or office of the Courts. It shall likewise remove
streamers, barricades and structures that it had put up around the
COMPANY's Aurora Plant in Quezon City upon the execution of this
Agreement and shall forever cease and desist from re-establishing the
same.
5. The COMPANY shall issue the corresponding Certificates of Past
Employment to all dismissed employees.
6. The COMPANY shall continue to recognize the UNION as the certified
bargaining agent of all rank-and-file daily-paid employees of its Ice
Cream and Chilled Products Division up to the life of the existing
Collective Bargaining Agreement.
7. The UNION shall immediately elect a new set of officers who will
replace its dismissed officers. The newly-elected officers shall
exclusively come from the UNION membership who are active
employees of the COMPANY. The UNION shall inform the COMPANY of
the said newly-elected officers.
8. The COMPANY shall pay dismissed employees their accrued benefits
(i.e., Unpaid wages, proportionate 13th and 14th months pay and
vacation leave (VL) commutation), if any, up to the date of their actual
work in accordance with the existing CBA and COMPANY programs and
policies and consistent with the COMPANY's existing guidelines. Their

respective accountabilities shall be deducted from the said accrued

benefits and that the payment of the same shall furthermore be subject
to the execution and submission to the COMPANY by the dismissed
employees of the corresponding individual releases and quitclaims.
9. The COMPANY and the UNION agree that this Agreement shall
constitute a final resolution of all issues related to or arising from the
strike that started on January 13, 1997, including the dismissal of a total
of one-hundred thirty (132) (sic) UNION officers and members, who are
all represented by Atty. Potenciano A. Flores, Jr., as herein provided.
xxx xxx xxx 4
On August 6, 1998, the parties filed a Joint Motion to Dismiss stating that they
are no longer interested in pursuing the petition for injunction filed by respondent
as a consequence of the settlement of their dispute.
On October 12, 1998, the NLRC issued its Decision approving the parties'
compromise agreement and granting their Joint Motion to Dismiss.
On January 25, 2010, or after a lapse of more than eleven (11) years from the
time of execution of the subject MOA, petitioners filed with the NLRC a Motion for
Writ of Execution contending that they have not been paid the amounts they are
entitled to in accordance with the MOA.
Respondent filed its Opposition to the Motion for Writ of Execution
contending that petitioners' remedy is already barred by prescription because,
under the 2005 Revised Rules of the NLRC, a decision or order may be executed on
motion within five (5) years from the date it becomes final and executory and that
the same decision or order may only be enforced by independent action within a
period of ten (10) years from the date of its finality.
On November 18, 2010, the NLRC promulgated its Resolution denying
petitioners' application for the issuance of a writ of execution on the ground of
prescription. NLRC denied, prescribed
Petitioners filed a Motion for Reconsideration but the NLRC, in its Resolution
dated February 14, 2011, dismissed it for lack of merit.
Petitioners then filed a petition for certiorari with the CA questioning the
above Resolutions of the NLRC. The basic issue raised before the CA was whether
or not petitioners' claim for payment is barred by prescription. ISSUE:
On June 30, 2011, the CA issued the first of its questioned Resolutions
dismissing petitioners' certiorari petition on the ground that it is a wrong mode of
appeal. The CA held that petitioners' appeal involves a pure question of law which
should have been taken directly to this Court via a petition for review on certiorari
under Rule 45 of the Rules of Court.

Petitioners filed a Motion for Reconsideration, but the CA denied it in its

second questioned Resolution.
Hence, the instant petition for review on certiorari raising the following
Assignment of Errors, to wit:
Reversible Error No. 1
The Court of Appeals erred in misappreciating the facts of the
case.
Reversible Error No. 2
The Court of Appeals erred in sustaining that the Petitioners'
demand to be paid has prescribed. 5
Like petitioners' petition for certiorari filed with the CA, the main issue raised
in the present petition is whether petitioners' claim is already barred by
prescription.
Petitioners' basic contention is that respondent cannot invoke the defense of
prescription because it is guilty of deliberately causing delay in paying petitioners'
claims and that petitioners, on the other hand, are entitled to protection under the
law because they had been vigilant in exercising their right as provided for under
the subject MOA.
The Court is not persuaded.
There is no dispute that the compromise agreement between herein
petitioner union, representing its officers and members, and respondent company
was executed on August 4, 1998 and was subsequently approved via the NLRC
Decision dated October 12, 1998. However, considering petitioners' allegation that
the terms and conditions of the agreement have not been complied with by
respondent, petitioners should have moved for the issuance of a writ of execution.
It is wrong for petitioners' counsel to argue that since the NLRC Decision
approving the parties' compromise agreement was immediately executory, there
was no need to file a motion for execution. It is settled that when a compromise
agreement is given judicial approval, it becomes more than a contract binding upon
the parties. 6 Having been sanctioned by the court, it is entered as a determination
of a controversy and has the force and effect of a judgment. 7 It is immediately
executory and not appealable, except for vices of consent or forgery. 8 The nonfulfillment of its terms and conditions justifies the issuance of a writ of execution;
in such an instance, execution becomes a ministerial duty of the court. 9 Stated
differently, a decision on a compromise agreement is final and executory. 10 Such
agreement has the force of law and is conclusive between the parties. 11 It
transcends its identity as a mere contract binding only upon the parties thereto, as

it becomes a judgment that is subject to execution in accordance with the Rules.

12
In this respect, the law and the rules provide the mode and the periods within
which a party may enforce his right.
The most relevant rule in the instant case is Section 8, Rule XI, 2005 Revised
Rules of Procedure of the NLRC which states that:
Section 8. Execution by Motion or by Independent Action. A
decision or order may be executed on motion within five (5) years from
the date it becomes final and executory. After the lapse of such period,
the judgment shall become dormant, and may only be enforced by an
independent action within a period of ten (10) years from date of its
finality.
In the same manner, pertinent portions of Sections 4 (a) and 6, Rule III, of the
NLRC Manual on Execution of Judgment, provide as follows:
Section 4. Issuance of a Writ. Execution shall issue upon an
order, resolution or decision that finally disposes of the actions or
proceedings and after the counsel of record and the parties have been
duly furnished with the copies of the same in accordance with the NLRC
Rules of Procedure, provided:
a) The Commission or Labor Arbiter shall, motu
proprio or upon motion of any interested party, issue a writ
of execution on a judgment only within five (5) years from
the date it becomes final and executory. . . .
xxx xxx xxx
Section 6. Execution by Independent Action. A judgment after
the lapse of five (5) years from the date it becomes final and executory
and before it is barred by prescription, may only be enforced by an
independent action.
Similarly, Section 6, Rule 39 of the Rules of Court, which can be applied in a
suppletory manner, provides:
Sec. 6. Execution by motion or by independent action. A final
and executory judgment or order may be executed on motion within
five (5) years from the date of its entry. After the lapse of such time, and
before it is barred by the statute of limitations, a judgment may be
enforced by action. The revived judgment may also be enforced by
motion within five years from the date of its entry and, thereafter, by
action before it is barred by the statute of limitations.

Article 1144 of the Civil Code may, likewise be applied, as it provides that an
action upon a written contract must be brought within ten years from the time the
right of action accrues.
It is clear from the above law and rules that a judgment may be executed on
motion within five years from the date of its entry or from the date it becomes final
and executory. After the lapse of such time, and before it is barred by the statute of
limitations, a judgment may be enforced by action. If the prevailing party fails to
have the decision enforced by a mere motion after the lapse of five years from the
date of its entry (or from the date it becomes final and executory), the said
judgment is reduced to a mere right of action in favor of the person whom it favors
and must be enforced, as are all ordinary actions, by the institution of a complaint
in a regular form. 13
In the present case, the five-and ten-year periods provided by law and the
rules are more than sufficient to enable petitioners to enforce their right under the
subject MOA. In this case, it is clear that the judgment of the NLRC, having been
based on a compromise embodied in a written contract, was immediately executory
upon its issuance on October 12, 1998. Thus, it could have been executed by motion
within five (5) years. It was not. Nonetheless, it could have been enforced by an
independent action within the next five (5) years, or within ten (10) years from the
time the NLRC Decision was promulgated. It was not. Therefore, petitioners' right
to have the NLRC judgment executed by mere motion as well as their right of action
to enforce the same judgment had prescribed by the time they filed their Motion
for Writ of Execution on January 25, 2010.
It is true that there are instances in which this Court allowed execution by
motion even after the lapse of five years upon meritorious grounds. However, in
instances when this Court allowed execution by motion even after the lapse of five
years, there is, invariably, only one recognized exception, i.e., when the delay is
caused or occasioned by actions of the judgment debtor and/or is incurred for his
benefit or advantage. 14 In the present case, there is no indication that the delay in
the execution of the MOA, as claimed by petitioners, was caused by respondent nor
was it incurred at its instance or for its benefit or advantage.
It is settled that the purpose of the law (or rule) in prescribing time limitations
for enforcing judgments or actions is to prevent obligors from sleeping on their
rights. 15 In this regard, petitioners insist that they are vigilant in exercising their
right to pursue payment of the monetary awards in their favor. However, a careful
review of the records at hand would show that petitioners failed to prove their
allegation. The only evidence presented to show that petitioners ever demanded
payment was a letter dated May 22, 2008, signed by one Atty. Calderon,
representing herein individual petitioners, addressed to respondent company and
seeking proof that the company has indeed complied with the provisions of the

subject MOA. 16 Considering that the NLRC Decision approving the MOA was issued
as early as October 12, 1998, the letter from petitioners' counsel, which was dated
almost ten years after the issuance of the NLRC Decision, can hardly be considered
as evidence of vigilance on the part of petitioners. No proof was ever presented
showing that petitioners did not sleep on their rights. Despite their claims to the
contrary, the records at hand are bereft of any evidence to establish that petitioners
exerted any effort to enforce their rights under the subject MOA, either individually,
through their union or their counsel. It is a basic rule in evidence that each party
must prove his affirmative allegation, that mere allegation is not evidence. 17
Indeed, as allegation is not evidence, the rule has always been to the effect that a
party alleging a critical fact must support his allegation with substantial evidence
which has been construed to mean such relevant evidence as a reasonable mind
will accept as adequate to support a conclusion. 18 Unfortunately, petitioners failed
in this respect.
Even granting, for the sake of argument, that the records of the case were
lost, as alleged by petitioners, leading to the delay in the enforcement of petitioners'
rights, such loss of the records cannot be regarded as having interrupted the
prescriptive periods for filing a motion or an action to enforce the NLRC Decision
because such alleged loss could not have prevented petitioners from attempting to
reconstitute the records and, thereafter, filing the required motion or action on
time. 19
As a final note, it bears to reiterate that while the scales of justice usually tilt
in favor of labor, the present circumstances prevent this Court from applying the
same in the instant petition. Even if our laws endeavor to give life to the
constitutional policy on social justice and on the protection of labor, it does not
mean that every labor dispute will be decided in favor of the workers. 20 The law
also recognizes that management has rights which are also entitled to respect and
enforcement in the interest of fair play. 21 Stated otherwise, while the Court fully
recognizes the special protection which the Constitution, labor laws, and social
legislation accord the workingman, the Court cannot, however, alter or amend the
law on prescription to relieve petitioners of the consequences of their inaction.
Vigilantibus, non dormientibus, jura subveniunt Laws come to the assistance of
the vigilant, not of the sleeping. 22
WHEREFORE, the instant petition is DENIED. The Resolutions of the Court of
Appeals, dated June 30, 2011 and September 28, 2011, respectively, in CA-G.R. SP
No. 118459, are AFFIRMED.
SO ORDERED.
Velasco, Jr., Villamar, Jr., Perez * and Jardeleza, JJ., concur.
||| (Ilaw Buklod ng Manggagawa (IBM) Nestle Phils., Inc. Chapter v. Nestle Phils.,
Inc., G.R. No. 198675, [September 23, 2015])
PRESCRIBED!

35. Art 223, Appeal from the Labor Arbiter;s monetary award/allowable reduction of
appeal bond
BALITE, ET AL V SS VENTURES INTERNATIONAL
FIRST DIVISION
[G.R. No. 195109. February 4, 2015.]
ANDY D. BALITE, DELFIN M. ANZALDO AND MONALIZA DL. BIHASA,
petitioners, vs. SS VENTURES INTERNATIONAL, INC., SUNG SIK LEE AND
EVELYN RAYALA, respondents.

the Court holds that the appeal bond posted by the respondent in the amount of P100,000.00
which is equivalent to around 20% of the total amount of monetary bond is sufficient to perfect an
appeal. With the employer's demonstrated good faith in filing the motion to reduce the bond on
DECISION
demonstrable grounds coupled with the posting of the appeal bond in the requested amount, as
well as the filing of the memorandum of appeal, the right of the employer to appeal must be upheld.

PEREZ, J p:
This is a Petition for Review on Certiorari pursuant to Rule 45 of the Revised Rules of
Court, assailing the 18 June 2010 Decision 1 rendered by the Tenth Division of the Court
of Appeals in CA-G.R. SP No. 109589. In its assailed decision, the appellate court
reversed the Resolution of the National Labor Relations Commission (NLRC) which
denied the Motion to Reduce Appeal Bond filed by respondents SS Ventures
International, Inc., Sung Sik Lee and Evelyn Rayala.
In a Resolution 2 dated 30 December 2010, the appellate court refused to reconsider
its earlier decision.
The Facts
Respondent SS Ventures International, Inc. is a domestic corporation duly engaged in
the business of manufacturing footwear products for local sales and export abroad. It
is represented in this action by respondents Sung Sik Lee and Evelyn Rayala. Petitioners
Andy Balite (Balite), Monaliza Bihasa (Bihasa) and Delfin Anzaldo (Anzaldo) were
regular employees of the respondent company until their employments were severed
for violation of various company policies.
For his part, Balite was issued a Show Cause Memorandum by the respondent company
on 4 August 2005 charging him with the following infractions: (1) making false reports,
malicious and fraudulent statements and rumor-mongering against the company; (2)
threatening and intimidating co-workers; (3) refusing to cooperate in the conduct of
investigation; and (4) gross negligence in the care and use of the company property
resulting in the damage of the finished products. After respondent found Balite's
explanation insufficient, he was dismissed from employment, through a Notice of
Termination on 6 September 2005.
Bihasa, on the other hand, was charged with absence without leave on two occasions
and with improper behavior, stubbornness, arrogance and uncooperative attitude

towards superiors and employees. Bihasa was likewise terminated from the service on
5 May 2006 after her explanation in an administrative investigation was found
unsatisfactory by the respondent company.
Anzaldo was also dismissed from employment after purportedly giving him due
process. The records of the infractions he committed as well as the date of his
termination, however, are not borne by the records.
Consequently, the three employees charged respondents with illegal dismissal and
recovery of backwages, 13th month pay and attorney's fees before the Labor Arbiter.
In refuting the allegations of the petitioners, respondents averred that petitioners
were separated from employment for just causes and after affording them procedural
due process of law.
On 30 December 2007, the Labor Arbiter rendered a Decision 3 in favor of petitioners
and held that respondents are liable for illegal dismissal for failing to comply with the
procedural and substantive requirements in terminating employment. The decretal
portion of the Labor Arbiter Decision reads:
WHEREFORE, premises considered, [petitioners] are hereby found to
have been illegally dismissed even as respondents are held liable
therefore.
Consequently, respondent corporation is hereby ordered to reinstate
[petitioners] to their former positions without loss of seniority rights and
other privileges with backwages initially computed at this time and
reflected below.
The reinstatement aspect of this decision is immediately executory and
thus respondents are hereby required to submit a report of compliance
therewith within ten (10) days from receipt thereof.
Respondent corporation is likewise ordered to pay [petitioners] their
13th month pay and 10% attorney's fees.
Backwages
1.
2.
3.

Andy Balite
P162,969.04
Delfin Anzaldo
158,299.44
Monaliza Bihasa 116,506.62

13th month pay Attorney's fees

P17,511.00
17,511.00
17,511.00

P18,048.00
17,511.00
13,401.75

All other claims are dismissed for lack of factual or legal basis. 4 CIAcSa
Aggrieved, respondents interposed an appeal by filing a Notice of Appeal and paying
the corresponding appeal fee. However, instead of filing the required appeal bond
equivalent to the total amount of the monetary award which is P490,308.00,

respondents filed a Motion to Reduce the Appeal Bond to P100,000.00 and appended
therein a manager's check bearing the said amount. Respondents cited financial
difficulty as justification for their inability to post the appeal bond in full owing to the
partial shutdown of respondent company's operations.
In a Resolution 5 dated 27 November 2008, the NLRC dismissed the appeal filed by the
respondents for non-perfection. The NLRC ruled that posting of an appeal bond
equivalent to the monetary award is indispensable for the perfection of the appeal and
the reduction of the appeal bond, absent any showing of meritorious ground to justify
the same, is not warranted in the instant case.
Similarly ill-fated was respondents' Motion for Reconsideration which was denied by
the NLRC in a Resolution 6 dated 30 April 2009.
On certiorari, the Court of Appeals reversed the NLRC Decision and allowed the
relaxation of the rule on posting of the appeal bond. According to the appellate court,
there was substantial compliance with the rules for the perfection of an appeal
because respondents seasonably filed their Memorandum of Appeal and posted an
appeal bond in the amount of P100,000.00. While the amount of the appeal bond
posted was not equivalent to the monetary award, the Court of Appeals ruled that
respondents were able to sufficiently prove their incapability to post the required
amount of bond. 7 The Court of Appeals disposed in this wise:
WHEREFORE, premises considered, finding grave abuse of discretion on
the part of the [NLRC], the instant petition is GRANTED. The [NLRC's]
Resolutions dated November 27, 2008 and April 30, 2009, respectively,
are hereby SET ASIDE. [The NLRC] is hereby directed to decide
petitioners' appeal on the merits. 8 CA reverser NLRC. allowed relaxation of rules in posting bond
In a Resolution 9 dated 30 December 2010, the Court of Appeals refused to reconsider
its earlier decision.
Petitioners are now before this Court via this instant Petition for Review on Certiorari
10 praying that the Court of Appeals Decision and Resolution be reversed and set aside
on the ground that:
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED
A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION WHEN IT REVERSED THE RESOLUTION OF THE NLRC
DISMISSING RESPONDENTS' APPEAL FOR NON-PERFECTION THEREOF. 11
The Court's Ruling
Petitioners, in assailing the appellate court's decision, argue that posting of an appeal
bond in full is not only mandatory but a jurisdictional requirement that must be
complied with in order to confer jurisdiction upon the NLRC. They posit that the posting

of an insufficient amount of appeal bond, as in this case, resulted to the non-perfection

of the appeal rendering the decision of the Labor Arbiter final and executory.
Banking on the appellate court's decision, respondents, for their part, urge the Court
to relax the rules on appeal underscoring on the so-called "utmost good faith" they
demonstrated in filing a Motion to Reduce Appeal Bond and in posting a cash bond in
the amount of P100,000.00. In justifying their inability to post the required appeal
bond, respondents reasoned that respondent company is in dire financial condition
due to lack of orders from customers constraining it to temporarily shut down its
operations resulting in significant loss of revenues. Respondents now plea for the
liberal interpretation of the rules so that the case can be threshed out on the merits,
and not on technicality.
Time and again we reiterate the established rule that in the exercise of the Supreme
Court's power of review, the Court is not a trier of facts 12 and does not routinely
undertake the re-examination of the evidence presented by the contending parties
during the trial of the case considering that the findings of facts of labor officials who
are deemed to have acquired expertise in matters within their respective jurisdiction
are generally accorded not only respect, but even finality, and are binding upon this
Court, when supported by substantial evidence. 13
The NLRC ruled that no appeal had been perfected on time because of respondents'
failure to post the required amount of appeal bond. As a result of which, the decision
of the Labor Arbiter has attained finality. The Court of Appeals, on the contrary,
allowed the relaxation of the rules and held that respondents were justified in failing
to pay the required appeal bond. Despite the non-posting of the appeal bond in full,
however, the appellate court deemed that respondents were able to seasonably
perfect their appeal before the NLRC, thereby directing the NLRC to resolve the case
on the merits. ICAcHE
The pertinent rule on the matter is Article 223 of the Labor Code,as amended, which
sets forth the rules on appeal from the Labor Arbiter's monetary award:
ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are
final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt of such decisions,
awards, or orders. . . . .
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from. (Emphases ours).

Implementing the aforestated provisions of the Labor Code are the provisions of Rule
VI of the 2011 Rules of Procedure of the NLRC on perfection of appeals which read:
Section 1. Periods of Appeal. Decisions, awards or orders of the Labor
Arbiter shall be final and executory unless appealed to the Commission
by any or both parties within ten (10) calendar days from receipt thereof.
. . . If the 10th day or the 5th day, as the case may be, falls on a Saturday,
Sunday or holiday, the last day to perfect the appeal shall be the first
working day following such Saturday, Sunday or holiday.
xxx xxx xxx
Section 4. Requisites for Perfection of Appeal. (a) The appeal shall be:
(1) filed within the reglementary period as provided in Section 1 of
this Rule;
(2) verified by the appellant himself/herself in accordance with
Section 4, Rule 7 of the Rules of Court, as amended;
(3) in the form a of a memorandum of appeal which shall state the
grounds relied upon and the arguments in support thereof;
the relief prayed for; and with a statement of the date when
the appellant received the appealed decision, award or order;
(4) in three (3) legibly typewritten or printed copies; and
(5) accompanied by:
i) proof of payment of the required appeal fee and legal
research fee;
ii) posting of cash or surety bond as provided in Section 6 of
this Rule; and
iii) proof of service upon the other parties.
xxx xxx xxx
(b) A mere notice of appeal without complying with the other requisites
aforestated shall not stop the running of the period for perfecting an
appeal.
xxx xxx xxx
Section 5. Appeal Fee. The appellant shall pay the prevailing appeal fee
and legal research fee to the Regional Arbitration Branch or Regional
Office of origin, and the official receipt of such payment shall form part
of the records of the case.

Section 6. Bond. In case the decision of the Labor Arbiter, or the

Regional Director involves a monetary award, an appeal by the employer
shall be perfected only upon the posting of a bond, which shall either be
in the form of cash deposit or surety bond equivalent in amount to the
monetary award, exclusive of damages and attorney's fees.
xxx xxx xxx
The Commission through the Chairman may on justifiable grounds
blacklist a bonding company, notwithstanding its accreditation by the
Supreme Court.
These statutory and regulatory provisions explicitly provide that an appeal from the
Labor Arbiter to the NLRC must be perfected within ten calendar days from receipt of
such decisions, awards or orders of the Labor Arbiter. In a judgment involving a
monetary award, the appeal shall be perfected only upon (1) proof of payment of the
required appeal fee; (2) posting of a cash or surety bond issued by a reputable
bonding company; and (3) filing of a memorandum of appeal. 14
In McBurnie v. Ganzon, 15 we harmonized the provision on appeal that its procedures
are fairly applied to both the petitioner and the respondent, assuring by such
application that neither one or the other party is unfairly favored. We pronounced that
the posting of a cash or surety bond in an amount equivalent to 10% of the monetary
award pending resolution of the motion to reduce appeal bond shall be deemed
sufficient to perfect an appeal, to wit: DEICaA
It is in this light that the Court finds it necessary to set a parameter for
the litigants' and the NLRC's guidance on the amount of bond that shall
hereafter be filed with a motion for a bond's reduction. To ensure that
the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that
give parties the chance to seek a reduction of the appeal bond are
effectively carried out, without however defeating the benefits of the
bond requirement in favor of a winning litigant, all motions to reduce
bond that are to be filed with the NLRC shall be accompanied by the
posting of a cash or surety bond equivalent to 10% of the monetary award
that is subject of the appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that an appellant's
motion is pending resolution by the Commission. In conformity with the
NLRC Rules, the monetary award, for the purpose of computing the
necessary appeal bond, shall exclude damages and attorney's fees. Only
after the posting of a bond in the required percentage shall an appellant's
period to perfect an appeal under the NLRC Rules be deemed suspended.
The rule We set in McBurnie was clarified by the Court in Sara Lee Philippines v.
Ermilinda Macatlang. 16 Considering the peculiar circumstances in Sara Lee, We

determined what is the reasonable amount of appeal bond. We underscored the fact
that the amount of 10% of the award is not a permissible bond but is only such amount
that shall be deemed reasonable in the meantime that the appellant's motion is
pending resolution by the Commission. The actual reasonable amount yet to be
determined is necessarily a bigger amount. In an effort to strike a balance between the
constitutional obligation of the state to afford protection to labor on the one hand, and
the opportunity afforded to the employer to appeal on the other, We considered the
appeal bond in the amount of P725M which is equivalent to 25% of the monetary
award sufficient to perfect the appeal, viz.:
We sustain the Court of Appeals in so far as it increases the amount of
the required appeal bond. But we deem it reasonable to reduce the
amount of the appeal bond to P725 Million. This directive already
considers that the award if not illegal, is extraordinarily huge and that no
insurance company would be willing to issue a bond for such big money.
The amount of P725 Million is approximately 25% of the basis above
calculated. It is a balancing of the constitutional obligation of the state to
afford protection to labor which, specific to this case, is assurance that in
case of affirmance of the award, recovery is not negated; and on the
other end of the spectrum, the opportunity of the employer to appeal.
By reducing the amount of the appeal bond in this case, the employees
would still be assured of at least substantial compensation, in case a
judgment award is affirmed. On the other hand, management will not be
effectively denied of its statutory privilege of appeal.
In line with Sara Lee and the objective that the appeal on the merits to be threshed out
soonest by the NLRC, the Court holds that the appeal bond posted by the respondent
in the amount of P100,000.00 which is equivalent to around 20% of the total amount
of monetary bond is sufficient to perfect an appeal. With the employer's demonstrated
good faith in filing the motion to reduce the bond on demonstrable grounds coupled
with the posting of the appeal bond in the requested amount, as well as the filing of
the memorandum of appeal, the right of the employer to appeal must be upheld. This
is in recognition of the importance of the remedy of appeal, which is an essential part
of our judicial system and the need to ensure that every party litigant is given the
amplest opportunity for the proper and just disposition of his cause freed from the
constraints of technicalities. 17
WHEREFORE, premises considered, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals are hereby AFFIRMED.
SO ORDERED.
Sereno, C.J., Leonardo-de Castro, Bersamin and Perlas-Bernabe, JJ., concur.
||| (Balite v. SS Ventures International, Inc., G.R. No. 195109, [February 4, 2015])

36. Art 223(now Art 229), Computaiton of accrued wages

BERGONIO V SOUTHEAST ASIAN AIRLINES
SECOND DIVISION
[G.R. No. 195227. April 21, 2014.]
FROILAN M. BERGONIO, JR., DEAN G. PELAEZ, CRISANTO O. GEONGO,
WARLITO O. JANAYA, SALVADOR VILLAR, JR., RONALDO CAFIRMA,
RANDY LUCAR, ALBERTO ALBUERA, DENNIS NOPUENTE and ALLAN
SALVACION, petitioners, vs. SOUTH EAST ASIAN AIRLINES and IRENE
DORNIER, respondents.
DECISION
BRION, J p:
We resolve in this petition for review on certiorari 1 the challenge to the September
30, 2010 decision 2 and the January 13, 2011 resolution 3 of the Court of Appeals (CA)
in CA-G.R. SP No. 112011.
This CA decision reversed the July 16, 2008 decision 4 of the National Labor Relations
Commission (NLRC), which, in turn, affirmed the March 13, 2008 order 5 of the Labor
Arbiter (LA) in NLRC Case No. 00-04-05469-2004. The LA granted the Motion filed by
petitioners Froilan M. Bergonio, Jr., Dean G. Pelaez, et al., (collectively, the petitioners)
for the release of the garnished amount to satisfy the petitioners' accrued wages.
The Factual Antecedents
On April 30, 2004, the petitioners filed before the LA a complaint for illegal dismissal
and illegal suspension with prayer for reinstatement against respondents South East
Asian Airlines (SEAIR) and Irene Dornier as SEAIR's President (collectively, the
respondents).
In a decision dated May 31, 2005, the LA found the petitioners illegally dismissed and
ordered the respondents, among others, to immediately reinstate the petitioners with
full backwages. The respondents received their copy of this decision on July 8, 2005. 6
On August 20, 2005, the petitioners filed before the LA a Motion for issuance of Writ
of Execution for their immediate reinstatement.
During the scheduled pre-execution conference held on September 14, 2005, the
respondents manifested their option to reinstate the petitioners in the payroll. The

payroll reinstatement, however, did not materialize. Thus, on September 22, 2005, the
petitioners filed before the LA a manifestation for their immediate reinstatement.
On October 3, 2005, the respondents filed an opposition to the petitioners' motion for
execution. 7 They claimed that the relationship between them and the petitioners had
already been strained because of the petitioners' threatening text messages, thus
precluding the latter's reinstatement. IAEcCT
On October 7, 2005, the LA granted the petitioners' motion and issued a writ of
execution. 8
The respondents moved to quash the writ of execution with a prayer to hold in
abeyance the implementation of the reinstatement order. 9 They maintained that the
relationship between them and the petitioners had been so strained that
reinstatement was no longer possible.
The October 7, 2005 writ of execution was returned unsatisfied. In response, the
petitioners filed a motion for re-computation of accrued wages, and, on January 25,
2006, a motion for execution of the re-computed amount. On February 16, 2006, the
LA granted this motion and issued an alias writ of execution. 10
On February 21, 2006, the respondents issued a Memorandum 11 directing the
petitioners to report for work on February 24, 2006. The petitioners failed to report
for work on the appointed date. On February 28, 2006, the respondents moved before
the LA to suspend the order for the petitioners' reinstatement. 12
Meanwhile, the respondents appealed with the NLRC the May 31, 2005 illegal dismissal
ruling of the LA.
In an order dated August 15, 2006, 13 the NLRC dismissed the respondents' appeal for
non-perfection. The NLRC likewise denied the respondents' motion for reconsideration
in its November 29, 2006 resolution, prompting the respondents to file before the CA
a petition for certiorari.
The NLRC issued an Entry of Judgment on February 6, 2007 declaring its November 29,
2006 resolution final and executory. The petitioners forthwith filed with the LA another
motion for the issuance of a writ of execution, which the LA granted on April 24, 2007.
The LA also issued another writ of execution. 14 A Notice of Garnishment was
thereafter issued to the respondents' depositary bank Metrobank-San Lorenzo
Village Branch, Makati City in the amount of P1,900,000.00 on June 6, 2007.
On December 18, 2007, the CA rendered its decision (on the illegal dismissal ruling of
the LA) partly granting the respondents' petition. The CA declared the petitioners'
dismissal valid and awarded them P30,000.00 as nominal damages for the
respondents' failure to observe due process.

The records show that the petitioners appealed the December 18, 2007 CA decision
with this Court. In a resolution dated August 4, 2008, the Court denied the petition.
The Court likewise denied the petitioners' subsequent motion for reconsideration, and
thereafter issued an Entry of Judgment certifying that its August 4, 2008 resolution had
become final and executory on March 9, 2009.
On January 31, 2008, the petitioners filed with the LA an Urgent Ex-Parte Motion for
the Immediate Release of the Garnished Amount.
In its March 13, 2008 order, 15 the LA granted the petitioners' motion; it directed
Metrobank-San Lorenzo to release the P1,900,000.00 garnished amount. The LA found
valid and meritorious the respondents' claim for accrued wages in view of the
respondents' refusal to reinstate the petitioners despite the final and executory nature
of the reinstatement aspect of its (LA's) May 31, 2005 decision. The LA noted that as of
the December 18, 2007 CA decision (that reversed the illegal dismissal findings of the
LA), the petitioners' accrued wages amounted to P3,078,366.33.
In its July 16, 2008 resolution, 16 the NLRC affirmed in toto the LA's March 13, 2008
order. The NLRC afterwards denied the respondents' motion for reconsideration for
lack of merit. 17
The respondents assailed the July 16, 2008 decision and September 29, 2009 resolution
of the NLRC via a petition for certiorari filed with the CA. DIETcH
The CA's ruling
The CA granted the respondents' petition. 18 It reversed and set aside the July 16, 2008
decision and the September 29, 2009 resolution of the NLRC and remanded the case
to the Computation and Examination Unit of the NLRC for the proper computation of
the petitioners' accrued wages, computed up to February 24, 2006.
The CA agreed that the reinstatement aspect of the LA's decision is immediately
executory even pending appeal, such that the employer is obliged to reinstate and pay
the wages of the dismissed employee during the period of appeal until the decision
(finding the employee illegally dismissed including the reinstatement order) is reversed
by a higher court. Applying this principle, the CA noted that the petitioners' accrued
wages could have been properly computed until December 18, 2007, the date of the
CA's decision finding the petitioners validly dismissed.
The CA, however, pointed out that when the LA's decision is "reversed by a higher
tribunal, an employee may be barred from collecting the accrued wages if shown that
the delay in enforcing the reinstatement pending appeal was without fault" on the
employer's part. In this case, the CA declared that the delay in the execution of the
reinstatement order was not due to the respondents' unjustified act or omission.
Rather, the petitioners' refusal to comply with the February 21, 2006 return-to-work

Memorandum that the respondents issued and personally delivered to them (the
petitioners) prevented the enforcement of the reinstatement order.
Thus, the CA declared that, given this peculiar circumstance (of the petitioners' failure
to report for work), the petitioners' accrued wages should only be computed until
February 24, 2006 when they were supposed to report for work per the return-to-work
Memorandum. Accordingly, the CA reversed, for grave abuse of discretion, the NLRC's
July 16, 2008 decision that affirmed the LA's order to release the garnished amount.
The Petition
The petitioners argue that the CA gravely erred when it ruled, contrary to Article 223,
paragraph 3 of the Labor Code,that the computation of their accrued wages stopped
when they failed to report for work on February 24, 2006. They maintain that the
February 21, 2006 Memorandum was merely an afterthought on the respondents' part
to make it appear that they complied with the LA's October 7, 2005 writ of execution.
They likewise argue that had the respondents really intended to have them report for
work to comply with the writ of execution, the respondents could and should have
issued the Memorandum immediately after the LA issued the first writ of execution.
As matters stand, the respondents issued the Memorandum more than four months
after the issuance of this writ and only after the LA issued the alias writ of execution
on February 16, 2006.
Additionally, the petitioners direct the Court's attention to the several pleadings that
the respondents filed to prevent the execution of the reinstatement aspect of the LA's
May 31, 2005 decision, i.e., the Opposition to the Issuance of the Writ of Execution,
the Motion to Quash the Writ of Execution and the Motion to Suspend the Order of
Reinstatement. They also point out that in all these pleadings, the respondents claimed
that strained relationship barred their (the petitioners') reinstatement, evidently
confirming the respondents' lack of intention to reinstate them.
Finally, the petitioners point out that the February 21, 2006 Memorandum directed
them to report for work at Clark Field, Angeles, Pampanga instead of at the NAIADomestic Airport in Pasay City where they had been assigned. They argue that this
directive to report for work at Clark Field violates Article 223, paragraph 3 of the Labor
Code that requires the employee's reinstatement to be under the same terms and
conditions prevailing prior to the dismissal. Moreover, they point out that the
respondents handed the Memorandum only to Pelaez, who did not act in
representation of the other petitioners, and only in the afternoon of February 23, 2006.
Thus, the petitioners claim that the delay in their reinstatement was in fact due to the
respondents' unjustified acts and that the respondents never really complied with the
LA's reinstatement order. CIHTac
The Case for the Respondents

The respondents counter, in their comment, 19 that the issues that the petitioners
raise in this petition are all factual in nature and had already considered and explained
in the CA decision. In any case, the respondents maintain that the petitioners were
validly dismissed and that they complied with the LA's reinstatement order when it
directed the petitioners to report back to work, which directive the petitioners did not
heed.
The respondents add that while the reinstatement of an employee found illegally
dismissed is immediately executory, the employer is nevertheless not prohibited from
questioning this rule especially when the latter has valid and legal reasons to oppose
the employee's reinstatement. In the petitioners' case, the respondents point out that
their relationship had been so strained that reinstatement was no longer possible.
Despite this strained relationship, the respondents point out that they still required the
petitioners to report back to work if only to comply with the LA's reinstatement order.
Instead of reporting for work as directed, the petitioners, however, insisted for a
payroll reinstatement, which option the law grants to them (the respondents) as
employer. Also, contrary to the petitioners' claim, the Memorandum directed them to
report at Clark Field, Pampanga only for a re-orientation of their respective duties and
responsibilities.
Thus, relying on the CA's ruling, the respondents claim that the delay in the petitioners'
reinstatement was in fact due to the latter's refusal to report for work after the
issuance of the February 21, 2006 Memorandum in addition to their strained
relationship.
The Court's Ruling
We GRANT the petition.
Preliminary considerations: jurisdictional
limitations of the Court's Rule 45 review of
the CA's Rule 65 decision in labor cases
In a Rule 45 petition for review on certiorari, what we review are the legal errors that
the CA may have committed in the assailed decision, in contrast with the review for
jurisdictional errors that we undertake in an original certiorari action. In reviewing the
legal correctness of the CA decision in a labor case taken under Rule 65 of the Rules of
Court, we examine the CA decision in the context that it determined the presence or
the absence of grave abuse of discretion in the NLRC decision before it and not on the
basis of whether the NLRC decision, on the merits of the case, was correct. Otherwise
stated, we proceed from the premise that the CA undertook a Rule 65 review, not a
review on appeal, of the NLRC decision challenged before it. Within this narrow scope
of our Rule 45 review, the question that we ask is: Did the CA correctly determine
whether the NLRC committed grave abuse of discretion in ruling on the case? 20

In addition, the Court's jurisdiction in a Rule 45 petition for review on certiorari is

limited to resolving only questions of law.
The present petition essentially raises the question whether the petitioners may
recover the accrued wages prior to the CA's reversal of the LA's May 31, 2005 decision.
This is a question of law that falls well within the Court's power in a Rule 45 petition.
Resolution of this question of law, however, is inextricably linked with the largely
factual issue of whether the accrued wages should be computed until December 17,
2008 when the CA reversed the illegal dismissal findings of the LA or only until February
24, 2006 when the petitioners were supposed to report for work per the February 21,
2006 Memorandum. In either case, the determination of this factual issue presupposes
another factual issue, i.e., whether the delay in the execution of the reinstatement
order was due to the respondents' fault. As questions of fact, they are proscribed by
our Rule 45 jurisdiction; we generally cannot address these factual issues except to the
extent necessary to determine whether the CA correctly found the NLRC in grave abuse
of discretion in affirming the release of the garnished amount despite the respondents'
issuance of and the petitioners' failure to comply with the February 21, 2006 return-towork Memorandum.
The jurisdictional limitations of our Rule 45 review of the CA's Rule 65 decision in labor
cases, notwithstanding, we resolve this petition's factual issues for we find legal errors
in the CA's decision. Our consideration of the facts taken within this narrow scope of
our factual review power convinced us, as our subsequent discussion will show, that
no grave abuse of discretion attended the NLRC decision. DSHTaC
Nature
LA's
dismissal

of
decision

the

reinstatement
aspect
on
a
finding

of
of

the
illegal

Article 223 (now Article 229) 21 of the Labor Code governs appeals from, and the
execution of, the LA's decision. Pertinently, paragraph 3, Article 223 of the Labor Code
provides:
Article 223. APPEAL.
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned,
shall immediately be executory, pending appeal. The employee shall
either be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided herein.
[Emphasis and underscoring supplied]

Under paragraph 3, Article 223 of the Labor Code,the LA's order for the reinstatement
of an employee found illegally dismissed is immediately executory even during
pendency of the employer's appeal from the decision. Under this provision, the
employer must reinstate the employee either by physically admitting him under the
conditions prevailing prior to his dismissal, and paying his wages; or, at the employer's
option, merely reinstating the employee in the payroll until the decision is reversed by
the higher court. 22 Failure of the employer to comply with the reinstatement order,
by exercising the options in the alternative, renders him liable to pay the employee's
salaries. 23
Otherwise stated, a dismissed employee whose case was favorably decided by the LA
is entitled to receive wages pending appeal upon reinstatement, which
reinstatement is immediately executory. 24 Unless the appellate tribunal issues a
restraining order, the LA is duty bound to implement the order of reinstatement and
the employer has no option but to comply with it. 25
Moreover, and equally worth emphasizing, is that an order of reinstatement issued by
the LA is self-executory, i.e., the dismissed employee need not even apply for and the
LA need not even issue a writ of execution to trigger the employer's duty to reinstate
the dismissed employee. In Pioneer Texturizing Corp. v. NLRC, et al., 26 decided in 1997,
the Court clarified once and for all this self-executory nature of a reinstatement order.
After tracing back the various Court rulings interpreting the amendments introduced
by Republic Act No. 6715 27 on the reinstatement aspect of a labor decision under
Article 223 of the Labor Code,the Court concluded that to otherwise "require the
application for and issuance of a writ of execution as prerequisites for the execution of
a reinstatement award would certainly betray and run counter to the very object and
intent of Article 223, i.e., the immediate execution of a reinstatement order." 28
In short, therefore, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its immediate and automatic
execution even pending appeal. 29 The employer is duty-bound to reinstate the
employee, failing which, the employer is liable instead to pay the dismissed employee's
salary. The Court's consistent and prevailing treatment and interpretation of the
reinstatement order as immediately enforceable, in fact, merely underscores the right
to security of tenure of employees that the Constitution 30 protects.
The employer is obliged to pay the
dismissed employee's salary if he
refuses to reinstate until actual
reinstatement or reversal by a higher
tribunal; circumstances that may bar an
employee from receiving the accrued wages
As we amply discussed above, an employer is obliged to immediately reinstate the
employee upon the LA's finding of illegal dismissal; if the employer fails, it is liable to

pay the salary of the dismissed employee. Of course, it is not always the case that the
LA's finding of illegal dismissal is, on appeal by the employer, upheld by the appellate
court. After the LA's decision is reversed by a higher tribunal, the employer's duty to
reinstate the dismissed employee is effectively terminated. This means that an
employer is no longer obliged to keep the employee in the actual service or in the
payroll. The employee, in turn, is not required to return the wages that he had received
prior to the reversal of the LA's decision. 31
The reversal by a higher tribunal of the LA's finding (of illegal dismissal),
notwithstanding, an employer, who, despite the LA's order of reinstatement, did not
reinstate the employee during the pendency of the appeal up to the reversal by a
higher tribunal may still be held liable for the accrued wages of the employee, i.e., the
unpaid salary accruing up to the time the higher tribunal reverses the decision. 32 The
rule, therefore, is that an employee may still recover the accrued wages up to and
despite the reversal by the higher tribunal. This entitlement of the employee to the
accrued wages proceeds from the immediate and self-executory nature of the
reinstatement aspect of the LA's decision. TEHIaA
By way of exception to the above rule, an employee may be barred from collecting the
accrued wages if shown that the delay in enforcing the reinstatement pending appeal
was without fault on the part of the employer. To determine whether an employee is
thus barred, two tests must be satisfied: (1) actual delay or the fact that the order of
reinstatement pending appeal was not executed prior to its reversal; and (2) the delay
must not be due to the employer's unjustified act or omission. Note that under the
second test, the delay must be without the employer's fault. If the delay is due to the
employer's unjustified refusal, the employer may still be required to pay the salaries
notwithstanding the reversal of the LA's decision. 33
Application of the two-fold test; the
petitioners are entitled to receive their
accrued salaries until December 18, 2007
As we earlier pointed out, the core issue to be resolved is whether the petitioners may
recover the accrued wages until the CA's reversal of the LA's decision. An affirmative
answer to this question will lead us to reverse the assailed CA decision for legal errors
and reinstate the NLRC's decision affirming the release of the garnished amount.
Otherwise, we uphold the CA's decision to be legally correct. To resolve this question,
we apply the two-fold test.
First, the existence of delay whether there was actual delay or whether the order of
reinstatement pending appeal was not executed prior to its reversal? We answer this
test in the affirmative.
To recall, on May 31, 2005, the LA rendered the decision finding the petitioners illegally
dismissed and ordering their immediate reinstatement. Per the records, the

respondents received copy of this decision on July 8, 2005. On August 20, 2005, the
petitioners filed before the LA a Motion for Issuance of Writ of Execution for their
immediate reinstatement. The LA issued the Writ of Execution on October 7, 2005.
From the time the respondents received copy of the LA's decision, and the issuance of
the writ of execution, until the CA reversed this decision on December 17, 2008, the
respondents had not reinstated the petitioners, either by actual reinstatement or in
the payroll. This continued non-execution of the reinstatement order in fact moved the
LA to issue an alias writ of execution on February 16, 2006 and another writ of
execution on April 24, 2007.
From these facts and without doubt, there was actual delay in the execution of the
reinstatement aspect of the LA's May 31, 2005 decision before it was reversed in the
CA's decision.
Second, the cause of the delay whether the delay was not due to the employer's
unjustified act or omission. We answer this test in the negative; we find that the delay
in the execution of the reinstatement pending appeal was due to the respondents'
unjustified acts.
In reversing, for grave abuse of discretion, the NLRC's order affirming the release of
the garnished amount, the CA relied on the fact of the issuance of the February 21,
2006 Memorandum and of the petitioners' failure to comply with its return-to-work
directive. In other words, with the issuance of this Memorandum, the CA considered
the respondents as having sufficiently complied with their obligation to reinstate the
petitioners. And, the subsequent delay in or the non-execution of the reinstatement
order was no longer the respondents' fault, but rather of the petitioners who refused
to report back to work despite the directive.
Our careful consideration of the facts and the circumstances that surrounded the case
convinced us that the delay in the reinstatement pending appeal was due to the
respondents' fault. For one, the respondents filed several pleadings to suspend the
execution of the LA's reinstatement order, i.e., the opposition to the petitioners'
motion for execution filed on October 3, 2005; the motion to quash the October 7,
2005 writ of execution with prayer to hold in abeyance the implementation of the
reinstatement order; and the motion to suspend the order for the petitioners'
reinstatement filed on February 28, 2006 after the LA issued the February 16, 2006
alias writ of execution. These pleadings, to our mind, show a determined effort on the
respondents' part to prevent or suspend the execution of the reinstatement pending
appeal. EaCSTc
Another reason is that the respondents, contrary to the CA's conclusion, did not
sufficiently notify the petitioners of their intent to actually reinstate them; neither did
the respondents give them ample opportunity to comply with the return-to-work
directive. We note that the respondents delivered the February 21, 2006
Memorandum (requiring the petitioners to report for work on February 24, 2006) only

in the afternoon of February 23, 2006. Worse, the respondents handed the notice to
only one of the petitioners Pelaez who did not act in representation of the others.
Evidently, the petitioners could not reasonably be expected to comply with a directive
that they had no or insufficient notice of.
Lastly, the petitioners continuously and actively pursued the execution of the
reinstatement aspect of the LA's decision, i.e., by filing several motions for execution
of the reinstatement order, and motion to cite the respondents in contempt and recomputation of the accrued wages for the respondents' continued failure to reinstate
them.
These facts altogether show that the respondents were not at all sincere in reinstating
the petitioners. These facts when taken together with the fact of delay reveal the
respondents' obstinate resolve and willful disregard of the immediate and selfexecutory nature of the reinstatement aspect of the LA's decision.
A further and final point that we considered in concluding that the delay was due to
the respondents' fault is the fact that per the 2005 Revised Rules of Procedure of the
NLRC (2005 NLRC Rules), 34 employers are required to submit a report of compliance
within ten (10) calendar days from receipt of the LA's decision, noncompliance with
which signifies a clear refusal to reinstate. Arguably, the 2005 NLRC Rules took effect
only on January 7, 2006; hence, the respondents could not have been reasonably
expected to comply with this duty that was not yet in effect when the LA rendered its
decision (finding illegal dismissal) and issued the writ of execution in 2005.
Nevertheless, when the LA issued the February 16, 2006 alias writ of execution and the
April 24, 2007 writ of execution, the 2005 NLRC Rules was already in place such that
the respondents had become duty-bound to submit the required compliance report;
their noncompliance with this rule all the more showed a clear and determined refusal
to reinstate.
All told, under the facts and the surrounding circumstances, the delay was due to the
acts of the respondents that we find were unjustified. We reiterate and emphasize,
Article 223, paragraph 3, of the Labor Code mandates the employer to immediately
reinstate the dismissed employee, either by actually reinstating him/her under the
conditions prevailing prior to the dismissal or, at the option of the employer, in the
payroll. The respondents' failure in this case to exercise either option rendered them
liable for the petitioners' accrued salary until the LA decision was reversed by the CA
on December 17, 2008. We, therefore, find that the NLRC, in affirming the release of
the garnished amount, merely implemented the mandate of Article 223; it simply
recognized as immediate and self-executory the reinstatement aspect of the LA's
decision.
Accordingly, we reverse for legal errors the CA decision. We find no grave abuse of
discretion attended the NLRC's July 16, 2008 resolution that affirmed the March 13,
2008 decision of the LA granting the release of the garnished amount.

WHEREFORE, in light of these considerations, we hereby GRANT the petition. We

REVERSE and SET ASIDE the September 30, 2010 decision and the January 13, 2011
resolution of the Court of Appeals (CA) in CA-G.R. Sp No. 112011. Accordingly, we
REINSTATE the July 16, 2008 decision of the National Labor Relations Commission
(NLRC) affirming the March 13, 2008 order of the Labor Arbiter in NLRC Case No. 0004-05469-2004.
Costs against the respondents South East Asian Airlines and Irene Dornier. THIASE
SO ORDERED.
Carpio, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.
||| (Bergonio, Jr., v. South East Asian Airlines, G.R. No. 195227, [April 21, 2014])