Labor-law-cases-for-final-exam.docx

Cases beyond the jurisdiction of Labor Arbiter 1. Seafdec vs nlrc

FACTS: SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development Center, organized through an agreement in 1967 by the governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring country. Juvenal Lazaga was employed as a Research Associate on a probationary basis by SEAFDECAQD. Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to Lazaga informing him that due to the financial constraints being experienced by the department, his services shall be terminated. SEAFDEC-AQD's failure to pay Lazaga his separation pay forced him to file a case with the NLRC. The Labor Arbiter and NLRC ruled in favor of Lazaga. Thus SEAFDEC-AQD appealed, claiming that the NLRC has no jurisdiction over the case since it is immune from suit owing to its international character and the complaint is in effect a suit against the State which cannot be maintained without its consent. ISSUES: 1.

Does

the

NLRC

have

jurisdiction

over

SEAFDEC-AQD?

2. Is SEAFDEC-AQD estopped for its failure to raise the issue of jurisdiction at the first instance? HELD: 1. SEAFDEC-AQD is an international agency beyond the jurisdiction of public respondent NLRC. Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in whose territory its office is located. Permanent international commissions and administrative bodies have been created by the agreement of a considerable number of States for a variety of international purposes, economic or social and mainly non-political. In so far as they are autonomous and beyond the control of any one State, they have a distinct juridical personality independent of the municipal law of the State where they are situated. As such, according to one leading authority "they must be deemed to possess a species of international personality of their own." One of the basic immunities of an international organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and processes issued by the tribunals of the country where it is found. The obvious reason for this is that the subjection of such an organization to the authority of the local courts would afford a convenient medium thru which the host government may interfere in there operations or even influence or control its policies and decisions of the

organization; besides, such subjection to local jurisdiction would impair the capacity of such body to discharge its responsibilities impartially on behalf of its member-states. 2. Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one. Settled is the rule that the decision of a tribunal not vested with appropriate jurisdiction is null and void. (SEAFDEC-AQD vs NLRC, G.R. No. 86773, February 14, 1992)

2. INTERNATIONAL CATHOLIC MIGRATION COMMISSION v. NLRC 251 Phil. 560 FERNAN, C. J.: The issue to be resolved in the instant case is whether or not an employee who was terminated during the probationary period of her employment is entitled to her salary for the unexpired portion of her six-month probationary employment. The facts of the case are undisputed. Petitioner International Catholic Migration Commission (ICMC), a nonprofit organization dedicated to refugee service at the Philippine Refugee Processing Center in Morong, Bataan, engaged the services of private respondent Bernadette Galang on January 24, 1983 as a probationary cultural orientation teacher with a monthly salary of P2,000.00. Three (3) months thereafter, or on April 22, 1983, private respondent was informed, orally and in writing, that her services were being terminated for her failure to meet the prescribed standards of petitioner as reflected in the performance evaluation of her supervisors during the teacher evaluation program she underwent along with other newly-hired personnel. Despite her termination, records show that private respondent did not leave the ICMC refugee camp at Morong, Bataan, but instead stayed thereat for a few days before leaving for Manila, during which time, she was

observed by petitioner to be allegedly acting strangely. On July 24, 1983, private respondent returned to Morong, Bataan on board the service bus of petitioner to accomplish the clearance requirements. In the evening of that same day, she was found at the Freedom Park of Morong wet and shivering from the rain and acting bizarrely. She was then taken to petitioner's hospital where she was given the necessary medical attention. Two (2) days later, or on July 26, 1983, she was taken to her residence in Manila aboard petitioner's service bus. Thru a letter, her father expressed appreciation to petitioner for taking care of her daughter. On that same day, her father received, on her behalf, the proportionate amount of her 13th month pay and the equivalent of her two-week pay. On August 22, 1983, private respondent filed a complaint[1] for illegal dismissal, unfair labor practice and unpaid wages against petitioner with the then Ministry of Labor and Employment, praying for reinstatement with backwages, exemplary and moral damages. On October 8, 1983, after the parties submitted their respective position papers and other pleadings, Labor Arbiter Pelagio A. Carpio rendered his decision dismissing the complaint for illegal dismissal as well as the complaint for moral and exemplary damages but ordering the petitioner to pay private respondent the sum of P6,000.00 as payment for the last three (3) months of the agreed employment period pursuant to her verbal contract of employment.[2] Both parties appealed the decision to the National Labor Relations Commission. In her appeal, private respondent contended that her dismissal was illegal considering that it was effected without valid cause. On the other hand, petitioner countered that private respondent who was employed for a probationary period of three (3) months could not rightfully be awarded P6,000.00 because her services were terminated for failure to qualify as a regular employee in accordance with the reasonable standards prescribed by her employer. On August 22, 1985, the NLRC, by a majority vote of Commissioners Guillermo C. Medina and Gabriel M. Gatchalian, sustained the decision of the Labor Arbiter and thus dismissed both appeals for lack of

merit. Commissioner Miguel Varela, on the other hand, dissented and voted for the reversal of the Labor Arbiter's decision for lack of legal basis considering that the termination of services of complainant, now private respondent, was effected during her probationary period on valid grounds made known to her.[3] Dissatisfied, petitioner filed the instant petition. Petitioner maintains that private respondent is not entitled to the award of salary for the unexpired three-month portion of the probationary period since her services were terminated during such period when she failed to qualify as a regular employee in accordance with the reasonable standards prescribed by petitioner; that having been terminated on valid grounds during her probationary period, or specifically on April 24, 1983, petitioner is not liable to private respondent for services not rendered during the unexpired three-month period, otherwise, unjust enrichment on her part would result; that under Article 282 (now Article 281) of the Labor Code, if the employer finds that the probationary employee does not meet the standards of employment set for the position, the probationary employee may be terminated at any time within the six-month period, without need of exhausting said entire six-month term.[4] The Solicitor General, on the other hand, contends that a probationary employment for six (6) months, as in the case of herein private respondent, is an employment for a definite period of time and, as such, the employer is duty bound to allow the probationary employee to work until the termination of the probationary employment before her reemployment could be refused; that when petitioner disrupted the probationary employment of private respondent, without giving her the opportunity to improve her method of instruction within the said period, it held itself liable to pay her salary for the unexpired portion of such employment by way of damages pursuant to the general provisions of civil law that he who in any manner contravenes the terms of his obligation without any valid cause shall be liable for damages;[5] that, as held in Madrigal v. Ogilvie et al.,[6] the damages so awarded are equivalent to her salary for the unexpired portion of her employment for a fixed period.[7] We find for petitioner. There is justifiable basis for the reversal of public respondent's award of

salary for the unexpired three-month portion of private respondent's sixmonth probationary employment in the light of its express finding that there was no illegal dismissal. There is no dispute that private respondent was terminated during her probationary period of employment for failure to qualify as a regular member of petitioner's teaching staff in accordance with its reasonable standards. Records show that private respondent was found by petitioner to be deficient in classroom management, teacherstudent relationship and teaching techniques.[8] Failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a just cause for terminating a probationary employee specifically recognized under Article 282 (now Article 281) of the Labor Code which provides thus: "ART. 281. Probationary employment. Probationary employment shall not exceed six months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee has been engaged in a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee." (Underscoring supplied.) It must be noted that notwithstanding the finding of legality of the termination of private respondent, public respondent justified the award of salary for the unexpired portion of the probationary employment on the ground that a probationary employment for six (6) months is an employment for a "definite period" which requires the employer to exhaust the entire probationary period to give the employee the opportunity to meet the required standards. The legal basis of public respondent is erroneous. A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee.[9] The word "probationary", as used to describe the period of employment, implies the purpose of the term or period, but not its length.[10]

Being in the nature of a "trial period"[11] the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each other during said period. While the employer, as stated earlier, observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment. It is well settled that the employer has the right or is at liberty to choose who will be hired and who will be denied employment. In that sense, it is within the exercise of the right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. The equality of right that exists between the employer and the employee as to the nature of the probationary employment was aptly emphasized by this Court in Grand Motor Parts Corporation v. Minister of Labor, et al., 130 SCRA 436 (1984), citing the 1939 case of Pampanga Bus Co., Inc. v. Pambusco Employees Union, Inc., 68 Phil. 541, thus: "The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have thus an equality of right guaranteed by the Constitution. If the employer can compel the employee to work against the latter's will, this is servitude. If the employee can compel the employer to give him work against the employer's will, this is oppression." As the law now stands, Article 281 of the Labor Code gives sample authority to the employer to terminate a probationary employee for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. There is nothing under Article 281 of the Labor Code that would preclude the employer from extending a regular or a permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probationary period. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, Article 281 of the Labor Code does not likewise preclude the employer from terminating the

probationary employment on justifiable causes as in the instant case. We find unmeritorious, therefore, public respondent's argument that the security of tenure of probationary employees within the period of their probation, as in the case of herein private respondent, justified the award of salary for the unexpired portion of her probationary employment. The termination of private respondent predicated on a just cause negates the application in this Case of the pronouncement in the case of Biboso v. Victorias Milling Co., Inc.,[12] on the right of security of tenure of probationary employees. Upon inquiry by the then Ministry of Labor and Employment as a consequence of the illegal dismissal case filed by private respondent before it, docketed as Case No. NLRC NCR-8-3786-83, it was found that there was no illegal dismissal involved in the case, hence, the circumvention of the rights of the probationary employees sought to be regulated as pointed out in Biboso v. Victorias Milling Co., Inc.,[13] is wanting. There was no showing, as borne out by the records, that there was circumvention of the rights of private respondent when she was informed of her termination. Her dismissal does not appear to us as arbitrary, fanciful or whimsical. Private respondent was duly notified, orally and in writing, that her services as cultural orientation teacher were terminated for failure to meet the prescribed standards of petitioner as reflected in the performance evaluation conducted by her supervisors during the teacher evaluation program. The dissatisfaction of petitioner over the performance of private respondent in this regard is a legitimate exercise of its prerogative to select whom to hire or refuse employment for the success of its program or undertaking. More importantly, private respondent failed to show that there was unlawful discrimination in the dismissal. It was thus a grave abuse of discretion on the part of public respondent to order petitioner to pay private respondent her salary for the unexpired three-month portion of her six-month probationary employment when she was validly terminated during her probationary employment. To sanction such action would not only be unjust, but oppressive on the part of the employer as emphasized in Pampanga Bus Co., Inc. v. Pambusco Employer Union, Inc.,[14] WHEREFORE, in view of the foregoing, the petition is GRANTED. The

Resolution of the National Labor Relations Commission dated August 22, 1985, is hereby REVERSED and SET ASIDE insofar as it ordered petitioner to pay private respondent her P6,000.00 salary for the unexpired portion of her six-month probationary employment. No cost.

3. Pepsi vs gal-ang The private respondents were employees of the petitioner who were suspected of complicity in the irregular disposition of empty Pepsi Cola bottles. On July 16, 1987, the petitioners filed a criminal complaint for theft against them but this was later withdrawn and substituted with a criminal complaint for falsification of private documents. On November 26, 1987, after a preliminary investigation conducted by the Municipal Trial Court, the complaint was dismissed. The dismissal was affirmed by the Office of the Provincial Prosecutor. Meantime, allegedly after an administrative investigation, the private respondents were dismissed by the petitioner company on November 23, 1987. As a result, they filed a complaint for illegal dismissal before the Labor Arbiter, and demanded reinstatement with damages. They also filed a separate civil complaint against the petitioners for damages arising from what they claimed to be their malicious prosecution before the RTC. The petitioners moved to dismiss the civil complaint on the ground that the trial court had no jurisdiction over the case because it involved employee-employer relations that were exclusively cognizable by the labor arbiter. The motion was granted. However, the respondent judge, acting on the motion for reconsideration, reinstated the complaint, saying it was “distinct from the labor case for damages now pending before the labor courts.” Issue: Whether the trial court has jurisdiction over the case. Held: Yes. The trial court has jurisdiction over the case. The petitioners invoke Article 217 of the Labor Code and a number of decisions of this Court to support their position that the private respondents’ civil complaint for damages falls under the jurisdiction of the labor arbiter. The Court held at the outset that the case is not in point because what was involved there was a claim arising from the alleged illegal dismissal of an employee, who chose to complain to the regular court and not to the labor arbiter.

It must be stressed that not every controversy involving workers and their employers can be resolved only by the labor arbiters. This will be so only if there is a “reasonable causal connection” between the claim asserted and employee-employer relations to put the case under the provisions of Article 217. Absent such a link, the complaint will be cognizable by the regular courts of justice in the exercise of their civil and criminal jurisdiction. The case at bar involves a complaint for damages for malicious prosecution which was filed with the Regional Trial Court by the employees of the defendant company. It does not appear that there is a “reasonable causal connection” between the complaint and the relations of the parties as employer and employees. The complaint did not arise from such relations. What the employees are alleging is that the petitioners acted with bad faith when they filed the criminal complaint. This is a matter which the labor arbiter has no competence to resolve as the applicable law is not the Labor Code but the Revised Penal Code. 4. Tolosa vs nlrc Evelyn Tolosa, was the widow of Captain Virgilio Tolosa who was hired by Qwana-Kaiun, through its manning agent, Asia Bulk, to be the master of the Vessel named M/V Lady Dona. CAPT. TOLOSA had a monthly compensation of US$1700, plus US$400.00 monthly overtime allowance. His contract officially began on November 1, 1992, as supported by his contract of employment when he assumed command of the vessel in Yokohama, Japan. The vessel departed for Long Beach California, passing by Hawaii in the middle of the voyage. At the time of embarkation, CAPT. TOLOSA was allegedly shown to be in good health.

“During ‘channeling activities’ upon the vessel’s departure from Yokohama sometime on November 6, 1992, CAPT. TOLOSA was drenched with rainwater. The following day, November 7, 1992, he had a slight fever and in the succeeding twelve (12) days, his health rapidly deteriorated resulting in his death on November 18, 1992. It was alleged that the request for emergency evacuation of Capt Tolosa was too late. Because of the death of CAPT. TOLOSA, his wife, EVELYN, as petitioner, filed a Complaint/Position Paper before the POEA against Qwana-Kaiun, thru its resident-agent, Mr. Fumio Nakagawa, ASIA BULK, Pedro Garate and Mario Asis, as respondents. The case was however transferred to the NLRC, when the amendatory legislation expanding its jurisdiction, and removing overseas employment related claims from the ambit of POEA jurisdiction. Petitioner argues that her cause of action is not predicated on a quasi delict or tort, but on the failure of private respondents -- as employers of her husband (Captain Tolosa) -- to provide him with timely, adequate and competent medical services under Article 161 of the Labor Code. Respondents aver that the Labor Arbiter has no jurisdiction over the subject matter, since her cause did not arise from an employer-employee relation, but from a quasi delict or tort. Further,

there is no reasonable causal connection between her suit for damages and her claim under Article 217 (a)(4) of the Labor Code, which allows an award of damages incident to an employeremployee relation. ISSUE Whether or not the Labor Arbiter has jurisdiction over the subject matter. HELD The SC held that the NLRC and the labor arbiter had no jurisdiction over petitioner’s claim for damages, because that ruling was based on a quasi delict or tort per Article 2176 of the Civil Code. After carefully examining the complaint/position paper of petitioner, we are convinced that the allegations therein are in the nature of an action based on a quasidelict or tort. It is evident that she sued Pedro Garate and Mario Asis for gross negligence. Petitioner’s complaint/position paper refers to and extensively discusses the negligent acts of shipmates Garate and Asis, who had no employer-employee relation with Captain Tolosa. The SC stressed that the case does not involve the adjudication of a labor dispute, but the recovery of damages based on a quasi delict. The jurisdiction of labor tribunals is limited to disputes arising from employer-employee relations. Not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement.” While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor laws, but also damages governed by the Civil Code, these reliefs must still be based on an action that has a reasonable causal connection with the Labor Code, other labor statutes, or collective bargaining agreements. The central issue is determined essentially from the relief sought in the complaint. “Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations.” In the present case, petitioner’s claim for damages is not related to any other claim under Article 217, other labor statutes, or collective bargaining agreements. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does not grant or specify a claim or relief. This provision is only a safety and health standard under Book IV of the same Code. The enforcement of this labor standard rests with the labor secretary. Thus,

claims for an employer’s violation thereof are beyond the jurisdiction of the labor arbiter. In other words, petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages before the labor arbiter. It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in which the employer-employee relation is merely incidental, and in which the cause of action proceeds from a different source of obligation such as a tort. Since petitioner’s claim for damages is predicated on a quasi delict or tort that has no reasonable causal connection with any of the claims provided for in Article 217, other labor statutes, or collective bargaining agreements, jurisdiction over the action lies with the regular courts -- not with the NLRC or the labor arbiters. Petition is denied. 5. Zamoras Vs. Su The issue in this petition is whether, upon the established facts, the petitioner was an employee or tenant of the private respondents.

The petitioner, Victoriano Zamoras, was hired by the respondent, Roque Su, Jr., in 1957 as overseer of his coconut land in Asenario, Dapitan City. Zamoras was charged with the task of having the land titled in Su's name, and of assigning portions to be worked by tenants, supervising the cleaning, planting, care and cultivation of the land, the harvesting of coconuts and selling of the copra. As compensation, Su paid Zamoras a salary of P2,400 per month plus one-third (1/3) of the proceeds of the sales of copra which normally occurred every two months. Another one-third of the proceeds went to the tenants and the other third to Su. This system of sharing was regularly observed up to September, 1981. As the coconut plantation yielded an average harvest of 21,000 nuts worth P18,900, based on the current market price of P3 per kilo, Zamoras' share amounted to P6,300 every two months.

In May, 1981, Su informed Zamoras in writing that he obtained a loan from the other respondent, Anita Su Hortellano, and that he authorized her to harvest the coconuts from his property "while the loan was outstanding" (p. 8, Rollo). Su sent Zamoras a letter dated May 29, 1981 informing him that he was being laid-off temporarily until Su could obtain a loan from the Development Bank of the Philippines with which to pay Anita. However, Zamoras was not allowed anymore to work as overseer of the plantation. Without his knowledge and consent, Hortellano harvested the coconuts without giving him his one-third share of the copra sales.

On August 8, 1983, Zamoras filed in the Regional Arbitration Branch of the Ministry of Labor and Employment in Zamboanga City a complaint against Roque Su, Jr. and Anita Su Hortellano for illegal termination and breach of contract with damages of not less than P75,600 as his uncollected share of the copra sales from September 15, 1981 to August 1983.

The officer-in-charge of the NLRC Sub-Regional Office in Dipolog City who investigated the case submitted the following findings which were adopted by the Labor Arbiter

The record would show that the respondent, Atty. Roque Su, Jr., is a resident of 976-A Gerardo Avenue Extension, Lahug, Cebu City and at the same time an employee in the government up to the present, while the land wherein the complainant herein was employed by the respondent as overseer of the land since 1957 up to and until his termination from the service sometime in September 1981 without just cause or causes duly authorized by law and after due process. That to prove that complainant was the overseer of the land owned by the respondent are the sworn declaration of the three witnesses, namely: Vicente Amor, Narcisa Arocha, and Wilfredo Bernaldes who are presently working as tenants of the respondent. That the three witnesses testified that they knew the complainant personally who has been working as overseer of the land because it was through him, the complainant, that they were allowed to work and/or occupy the land as tenants ever since up to the present. In fact, they further declared that they do not know personally the owner of the land and besides, they have not seen personally the said owner as their dealing were directly done thru the complainant. That they always received their share of the produce from the complainant for every two months up to 1981.

xxx

xxx

xxx

It is very clear in the evidence of record that complainant was an employee of the respondent. This fact is even admitted by the respondent in his answer by way of controverting the claim of the complainant. (pp. 44-45, Rollo.)

On July 30, 1986, the Labor Arbiter rendered a decision holding that Zamoras, as overseer of the respondent's plantation, was a regular employee whose services were necessary and desirable to the usual trade or business of his employer. The Labor Arbiter held that the dismissal of Zamoras was without just cause, hence, illegal. The private respondents were ordered to reinstate him to his former position as overseer of the plantation and to pay him backwages equivalent to P31,975.83 in the event that he opted not to be reinstated or that his reinstatement was not feasible.

The private respondents appealed to the National Labor Relations Commission, alleging that the Labor Arbiter erred:

1. in disregarding respondents' evidence (a financial report showing the yearly copra sales from 1973 to 1977), proving that complainant's one-third share of the copra sales amounted to P5,985.16 only and not P6,300 per harvest;

2.

in not holding that the complainant can no longer be reinstated for he is already dead; and

3.

in not finding that no employer-employee relationship existed between the parties.

On September 16, 1988, the NLRC rendered a decision reversing the Labor Arbiter. It held that "the right to control test used in determining the existence of an employer-employee relationship is unavailing in the instant case and that what exists between the parties is a landlord-tenant relationship" (p. 32, Rollo), because such functions as introducing permanent improvements on the land, assigning portions to tenants, supervising the cleaning, planting, care and cultivation of the plants, and deciding where and to whom to sell the copra are attributes of a landlord-tenant relationship, hence, jurisdiction over the case rests with the Court of Agrarian Relations.

Zamoras filed this petition, assailing the NLRC's decision.

There is merit in the petition.

The NLRC's conclusion that a landlord-tenant relationship existed between Su and Zamoras is not supported by the evidence which shows that Zamoras was hired by Su not as a tenant but as overseer of his coconut plantation. As overseer, Zamoras hired the tenants and assigned their respective portions which they cultivated under Zamoras' supervision. The tenants dealt directly with Zamoras and received their one-third share of the copra produce from him. The evidence also shows that Zamoras, aside from doing administrative work for Su, regularly managed the sale of copra processed by the tenants. There is no evidence that Zamoras cultivated any portion of Su's land personally or with the aid of his immediate farm household. In fact the respondents never raised the issue of tenancy in their answer.

Under Section 5 (a) of R.A. No. 1199, a tenant is "a person who by himself, or with the aid available from within his immediate household, cultivates the land belonging to or possessed by another, with the latter's consent for purposes of production, sharing the produce with the landholder or for a price certain or ascertainable in produce or in money or both, under the leasehold tenancy system" (Matienzo vs. Servidad, 107 SCRA 276). Agricultural tenancy is defined as "the physical possession by a person of land devoted to agriculture, belonging to or legally possessed by another for the purpose of production through the

labor of the former and of the members of his immediate farm household in consideration of which the former agrees to share the harvest with the latter or to pay a price certain or ascertainable, whether in produce or in money, or both" (Sec. 3, R.A. No. 1199; 50 O.G. 4655-56; Miguel Carag vs. CA, et al., 151 SCRA 44).

The essential requisites of a tenancy relationship are: (1) the parties are the landholder and the tenant; (2) the subject is the agricultural holding; (3) there is consent between the parties; (4) the purpose is agricultural production; (5) there is personal cultivation by the tenant; and (6) there is a sharing of harvests between landlord and tenant (Antonio Castro vs. CA and De la Cruz, G.R. L-34613, January 26, 1989; Tiongson vs. CA, 130 SCRA 482; Guerrero vs. CA, 142 SCRA 138).

The element of personal cultivation of the land, or with the aid of his farm household, essential in establishing a landlord-tenant or a lessor-lessee relationship, is absent in the relationship between Su and Zamoras (Co vs. IAC, 162 SCRA 390; Graza vs. CA, 163 SCRA 39), for Zamoras did not cultivate any part of Su's plantation either by himself or with the help of his household.

On the other hand, the following circumstances are indicative of an employer-employee relationship between them:

1.

Zamoras was selected and hired by Su as overseer of the coconut plantation.

2.

His duties were specified by Su.

3. Su controlled and supervised the performance of his duties. He determined to whom Zamoras should sell the copra produced from the plantation.

4. Su paid Zamoras a salary of P2,400 per month plus one-third of the copra sales every two months as compensation for managing the plantation.

Since Zamoras was an employee, not a tenant of Su, it is the NLRC, not the Court of Agrarian Relations, that has jurisdiction to try and decide Zamora's complaint for illegal dismissal (Art. 217, Labor Code; Manila Mandarin Employees Union vs. NLRC, 154 SCRA 368; Jacqueline Industries Dunhill Bags Industries, et al. vs. NLRC, et al., 69 SCRA 242).

WHEREFORE, the assailed decision is reversed and a new one is entered, declaring Zamoras to be an employee of respondent Roque Su, Jr. and that his dismissal was illegal and without lawful cause. He is entitled to reinstatement with backwages, but because he is dead and may no longer be reinstated, the private respondents are ordered to pay to his heirs the backwages due him, as well as his share of the copra sales from the plantation for a period of three (3) years from his illegal dismissal in September, 1981, plus separation pay in lieu of reinstatement. Costs against the private respondents.

SO ORDERED.

6. Fortune cement vs nlrc This is a petition for certiorari with prayer to annul the resolution dated May 29, 1987 of respondent National Labor Relations Commission (NLRC) reversing the order dated December 3, 1985 of the Labor Arbiter which dismissed private respondent Antonio M. Lagdameo's (Lagdameo for brevity) complaint for Illegal Dismissal (NLRC NCR Case No. 1-228-85) against petitioner Fortune Cement Corporation (FCC for brevity) for lack of jurisdiction.

Lagdameo is a registered stockholder of FCC.

On October 14, 1975, at the FCC Board of Directors' regular monthly meeting, he was elected Executive Vice-President of FCC effective November 1, 1975 (p. 3, Rollo).

Some eight (8) years later, or on February 10, 1983, during a regular meeting, the FCC Board resolved that all of its incumbent corporate officers, including Lagdameo, would be "deemed" retained in their respective positions without necessity of yearly reappointments, unless they resigned or were terminated by the Board (p. 4, Rollo).

At subsequent regular meetings held on June 14 and 21, 1983, the FCC Board approved and adopted a resolution dismissing Lagdameo as Executive Vice-President of the company, effective immediately, for loss of trust and confidence (p. 4, Rollo).

On June 21, 1983, Lagdameo filed with the National Labor Relations Commission (NLRC), National Capital Region, a complaint for illegal dismissal against FCC (NLRC-NCR Case No. 1-228-85)

alleging that his dismissal was done without a formal hearing and investigation and, therefore, without due process (p. 63, Rollo).

On August 5, 1985, FCC moved to dismiss Lagdameo's complaint on the ground that his dismiss as a corporate officer is a purely intra-corporate controversy over which the Securities and Exchange Commission (SEC) has original and exclusive jurisdiction.

The Labor Arbiter granted the motion to dismiss (p. 22, Rollo). On appeal, however, the NLRC set aside the Labor Arbiter's order and remanded the case to the Arbitration Branch "for appropriate proceedings" (NLRC Resolution dated April 30, 1987). The NLRC denied FCC's motion for reconsideration (p. 5, Rollo). Dissatisfied, FCC filed this petition for certiorari.

We find merit in the petition.

The sole issue to be resolved is whether or not the NLRC has jurisdiction over a complaint filed by a corporate executive vice-president for illegal dismissal, resulting from a board resolution dismissing him as such officer.

Section 5 of Presidential Decree No. 902-A vests in the SEC original and exclusive jurisdiction over this controversy:

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

a) Devices and schemes employed by or any acts, of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or stockholders, partners, members of associations or organization registered with the Commission;

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or

association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity;

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnership or associations." (Section 5, P.D. 902-A; Emphasis supplied.)

In reversing the decision of Labor Arbiter Porfirio E. Villanueva, respondent NLRC held:

. . . . It is not disputed that complainant Lagdameo was an employee of respondent Fortune Cement Corporation, being then the Executive Vice-President. For having been dismissed for alleged loss of trust and confidence, complainant questioned his dismissal on such ground and the manner in which he was dismissed, claiming that no investigation was conducted, hence, there was and is denial of due process. Predicated on the above facts, it is clear to Us that a labor dispute had arisen between the appellant and the respondent corporation, a dispute which falls within the original and exclusive jurisdiction of the NLRC. A labor dispute as defined in the Labor Code includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment regardless of whether or not the disputants stand in the proximate relations of employers and employees." (pp. 16-17, Rollo).

The Solicitor General, declining to defend public respondent in its pleading entitled "Manifestation in Lieu of Comment," aptly observed:

The position of "Executive Vice-President," from which private respondent Lagdameo claims to have been illegally dismissed, is an elective corporate office. He himself acquired that position through election by the corporation's Board of Directors, although he also lost the same as a consequence of the latter's resolution.

Indeed the election, appointment and/or removal of an executive vice-president is a prerogative vested upon a corporate board.

And it must be, not only because it is a practice observed in petitioner Fortune Cement Corporation, but more so, because of an express mandate of law. (p. 65, Rollo.)

The Solicitor General pointed out that "a corporate officer's dismissal is always a corporate act and/or intra-corporate controversy and that nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action." The dispute between petitioner and Lagdameo is of the class described in Section 5, par. (c) of Presidential Decree No. 902-A, hence, within the original and exclusive jurisdiction of the SEC. The Solicitor General recommended that the petition be granted and NLRC-NCR Case No. 1-228-85 be dismissed by respondent NLRC for lack of jurisdiction (p. 95, Rollo).

In PSBA vs. Leaño (127 SCRA 778), this Court, confronted with a similar controversy, ruled that the SEC, not the NLRC, has jurisdiction:

This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and of Tan's not having been elected thereafter. The matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a person to a corporation, whether as officer or as agent or employee is not determined by the nature of the services performed, but by the incidents of the relationship as they actually exist.

Lagdameo claims that his dismissal was wrongful, illegal, and arbitrary, because the "irregularities" charged against him were not investigated (p. 85, Rollo); that the case of PSBA vs. Leaño (supra) cited by the Labor Arbiter finds no application to his case because it is not a matter of corporate office having been declared vacant but one where a corporate officer was dismissed without legal and factual basis and without due process; that the power of dismissal should not be confused with the manner of exercising the same; that even a corporate officer enjoys security of tenure regardless of his rank (p. 97, Rollo); and that the SEC is without power to grant the reliefs prayed for in his complaint (p. 106, Rollo).

The issue of the SEC's power or jurisdiction is decisive and renders unnecessary a consideration of the other questions raised by Lagdameo. Thus did this Court rule in the case of Dy vs. National Labor Relations Commission (145 SCRA 211) which involved a similar situation:

It is of no moment that Vailoces, in his amended complaint, seeks other reliefs which would seemingly fall under the jurisdiction of the Labor Arbiter, because a closer look at these — underpayment of salary and non-payment of living allowance — shows that they are actually part of the perquisites of his elective position, hence, intimately linked with his relations with the corporation.1âwphi1 The question of remuneration, involving as it does, a person who is not a mere

employee but a stockholder and officer, an integral part, it might be said, of the corporation, is not a simple labor problem but a matter that comes within the area of corporate affairs and management, and is in fact a corporate controversy in contemplation of the Corporation Code. (Emphasis ours.)

WHEREFORE, the questioned Resolution of the NLRC reversing the decision of the Labor Arbiter, having been rendered without jurisdiction, is hereby reversed and set aside. The decision of the Labor Arbiter dated December 3, 1985 dismissing NLRC-NCR Case No. 1-228-85 is affirmed, without prejudice to private respondent Antonio M. Lagdameo's seeking recourse in the appropriate forum. No costs.

SO ORDERED. 7. Austria Vs. NLRC Relationship of the church as an employer and the minister as an employee is purely secular in nature because it has no relation with the practice of faith, worship or doctrines of the church, such affairs are governed by labor laws. The Labor Code applies to all establishments, whether religious or not.

Facts:

The Seventh Day Adventists(SDA) is a religious corporation under Philippine law. The petitioner was a pastor of the SDA for 28 years from 1963 until 1991, when his services were terminated.

On various occasions from August to October 1991, Austria received several communications form Ibesate, the treasurer of the Negros Mission, asking him to admit accountability and responsibility for the church tithes and offerings collected by his wife, Thelma Austria, in his district and to remit the same to the Negros Mission.

The petitioner answered saying that he should not be made accountable since it was Pastor Buhat and Ibesate who authorized his wife to collect the tithes and offerings since he was very ill to be able to do the collecting.

A fact-finding committee was created to investigate. The petitioner received a letter of dismissal citing: 1) Misappropriation of denominational funds; 2) Willful breach of trust; 3) Serious misconduct; 4) Gross and habitual neglect of duties; and 5) Commission of an offense against the person of 
employer's duly authorized representative as grounds for the termination of his services.

Petitioner filed a complaint with the Labor Arbiter for illegal dismissal, and sued the SDA for reinstatement and backwages plus damages. Decision was rendered in favor of petitioner.

SDA appealed to the NLRC. Decision was rendered in favor of respondent.

Issue:

1. Whether or not the termination of the services of the petitioner is an ecclesiastical affair, and, as such, involves the separation of church and state.

2. Whether or not the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the SDA.

Held/Ratio:

1. No. The matter at hand relates to the church and its religious ministers but what is involved here is the relationship of the church as an employer and the minister as an employee, which is purely secular because it has no relationship with the practice of faith, worship or doctrines. The grounds invoked for petitioner’s dismissal are all based on Art. 282 of Labor Code.

2. Yes. SDA was exercising its management prerogative (not religious prerogative) to fire an employee which it believes is unfit for the job. It would have been a different case if Austria was expelled or excommunicated from the SDA. 8. Montayo vs. escoya This petition for certiorari seeks the annullment and setting aside of the resolution 1 9dated August 20, 1987 of the National Labor Relations Commission (NLRC), Third Division, which reversed and set aside the order dated September 27, 1985 of Labor Arbiter Ethelwoldo R. Ovejera of the NLRC's Regional Arbitration Branch No. VI, Bacolod City, dismissing the complaint filed by the private respondents against the petitioner. This petition raises a singular issue, i.e., the applicability of Presidential Decree (P.D.) No. 1508, more commonly known as the Katarungang Pambarangay Law, to labor disputes.

The chronology of events leading to the present controversy is as follows:

The private respondents were all formerly employed as salesgirls in the petitioner's store, the "Terry's Dry Goods Store," in Bacolod City. On different dates, they separately filed complaints for the collection of sums of money against the petitioner for alleged unpaid overtime pay, holiday pay, 13th month pay, ECOLA, and service leave pay: for violation of the minimum wage law, illegal dismissal, and attorney's fees. The complaints, which were originally treated as separate cases, were subsequently consolidated on account of the similarity in their nature. On August 1, 1984, the petitioner-employer moved (Annex "C" of Petition) for the dismissal of the complaints, claiming that among others, the private respondents failed to refer the dispute to the Lupong Tagapayapa for possible settlement and to secure the certification required from the Lupon Chairman prior to the filing of the cases with the Labor Arbiter. These actions were allegedly violative of the provisions of P.D. No. 1508, which apply to the parties who are all residents of Bacolod City.

Acting favorably on the petitioner's motion, Labor Arbiter Ethelwoldo R. Ovejera, on September 27, 1985, ordered the dismissal of the complaints. The private respondents sought the reversal of the Labor Arbiter's order before the respondent NLRC. On August 20, 1987, the public respondent rendered the assailed resolution reversing the order of Ovejera, and remanded the case to the Labor Arbiter for further proceedings. A motion for reconsideration was filed by the petitioner but this was denied for lack of merit on October 28, 1987. Hence, this petition.

It is the petitioner's contention that the provisions of the Katarungang Pambarangay Law (P.D. No. 1508) relative to the prior amicable settlement proceedings before the Lupong Tagapayapa as a jurisdictional requirement at the trial level apply to labor cases. More particularly, the petitioner insists that the failure of the private respondents to first submit their complaints for possible

conciliation and amicable settlement in the proper barangay court in Bacolod City and to secure a certification from the Lupon Chairman prior to their filing with the Labor Arbiter, divests the Labor Arbiter, as well as the respondent Commission itself, of jurisdiction over these labor controversies and renders their judgments thereon null and void.

On the other hand, the Solicitor General, as counsel for the public respondent NLRC, in his comment, strongly argues and convincingly against the applicability of P.D. No. 1508 to labor cases.

We dismiss the petition for lack of merit, there being no satisfactory showing of any grave abuse of discretion committed by the public respondent.

The provisions of P.D. No. 1508 requiring the submission of disputes before the barangay Lupong Tagapayapa prior to their filing with the court or other government offices are not applicable to labor cases.

For a better understanding of the issue in this case, the provisions of P.D. No. 1508 invoked by the petitioner are quoted:

SEC. 6. Conciliation pre-condition to filing of complaint. No complaint, petition, action or proceeding involving any matter within the authority of the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any other government office for adjudication unless there has been a confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement has been repudiated. However, the parties may go directly to court in the following cases:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of per sonal liberty calling for habeas corpus proceedings;

(3) Actions coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property and support pendente lite; and

(4) Where the action may otherwise be barred by the Statute of Limitations.

As correctly pointed out by the Solicitor General in his comment to the petition, even from the three "WHEREAS" clauses of P.D. No. 1508 can be gleaned clearly the decree's intended applicability only to courts of justice, and not to labor relations commissions or labor arbitrators' offices. The express reference to "judicial resources", to "courts of justice", "court dockets", or simply to "courts" are significant. On the other band, there is no mention at all of labor relations or controversies and labor arbiters or commissions in the clauses involved.

These "WHEREAS" clauses state:

WHEREAS, the perpetuation and official recognition of the time-honored tradition of amicably settling disputes among family and barangay members at the barangay level without judicial resources would promote the speedy administration of justice and implement the constitutional mandate to preserve and develop Filipino culture and to strengthen the family as a basic social institution;

WHEREAS, the indiscriminate filing of cases in the courts of justice contributes heavily and unjustifiably to the congestion of court dockets, thus causing a deterioration in the quality of justice;

WHEREAS, in order to help relieve the courts of such docket congestion and thereby enhance the quality of Justice dispensed by the courts, it is deemed desirable to formally organize and institutionalize a system of amicably settling disputes at the barangay level; (Emphasis supplied.)

In addition, Letter of Instructions No. 956 and Letter of Implementation No. 105, both issued on November 12, 1979 by the former President in connection with the implementation of the Katarungang Pambarangay Law, affirm this conclusion. These Letters were addressed only to the following officials: all judges of the Courts of first Instance, Circuit Criminal Courts, Juvenile and Domestic Relations Courts, Courts of Agrarian Relations, City Courts and Municipal Courts, and all Fiscals and other Prosecuting Officers. These presidential issuances make clear that the only official directed to oversee the implementation of the provisions of the Katarungang Pambarangay Law (P.D. No. 1508) are the then Minister of Justice, the then Minister of Local Governments and Community Development, and the Chief Justice of the Supreme Court. If the contention of the petitioner were correct, the then Minister (now Secretary) of Labor and Employment would have been included in the

list, and the two presidential issuances also would have been addressed to the labor relations officers, labor arbiters, and the members of the National Labor Relations Commission. Expressio unius est exclusio alterius.

Nor can we accept the petitioner's contention that the "other government office" referred to in Section 6 of P.D. No. 1508 includes the Office of the Labor Arbiter and the Med-Arbiter. The declared concern of the Katarungan Pambarangay Law is "to help relieve the courts of such docket congestion and thereby enhance the quality of justice dispensed by the courts." Thus, the" other government office" mentioned in Section 6 of P.D. No. 1508 refers only to such offices as the Fiscal's Office or, in localities where there is no fiscal, the Municipal Trial Courts, where complaints for crimes (such as those punishable by imprisonment of not more than 30 days or a, fine of not more than P 200.00) falling under the jurisdiction of the barangay court but which are not amicably settled, are subsequently filed for proper disposition.

But, the opinion of the Honorable Minister of Justice (Opinion No. 59, s. 1983) to the contrary notwithstanding, all doubts on this score are dispelled by The Labor Code Of The Philippines (Presidential Decree No. 442, as amended) itself. Article 226 thereof grants original and exclusive jurisdiction over the conciliation and mediation of disputes, grievances, or problems in the regional offices of the Department of Labor and Employ- ment. It is the said Bureau and its divisions, and not the barangay Lupong Tagapayapa, which are vested by law with original and exclusive authority to conduct conciliation and mediation proceedings on labor controversies before their endorsement to the appropriate Labor Arbiter for adjudication. Article 226, previously adverted to is clear on this regard. It provides:

ART. 226. Bureau of Labor Relations.- The Bureau of Labor Relations and the Labor relations divisions in the regional officer of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labormanagement relations in all workplaces whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on all labor cases, subject to extension by agreement of the parties, after which the Bureau shall certify the cases to the appropriate Labor Arbiters. The 15-working day deadline, however, shall not apply to cases involving deadlocks in collective bargaining which the Bureau shall certify to the appropriate Labor Arbiters only after all possibilities of voluntary settlement shall have been tried.

Requiring conciliation of labor disputes before the barangay courts would defeat the very salutary purposes of the law. Instead of simplifying labor proceedings designed at expeditious settlement or referral to the proper court or office to decide it finally, the position taken by the petitioner would only duplicate the conciliation proceedings and unduly delay the disposition of the labor case. The fallacy of the petitioner's submission can readily be seen by following it to its logical conclusion. For then, if the procedure suggested is complied with, the private respondent would have to lodge first their complaint with the barangay court, and then if not settled there, they would have to go to the labor relations division at the Regional Office of Region VI of the Department of Labor and Employment, in Bacolod City, for another round of conciliation proceedings. Failing there, their long travail would continue to the Office of the Labor Arbiter, then to the NLRC, and finally to us. This suggested procedure would destroy the salutary purposes of P.D. 1508 and of The Labor Code Of The Philippines. And labor would then be given another unnecessary obstacle to hurdle. We reject the petitioner's submission. It does violence to the constitutionally mandated policy of the State to afford full protection to labor. 2

Finally, it is already well-settled that the ordinary rules on procedure are merely suppletory in character vis-a-vis labor disputes which are primarily governed by labor laws. 3 And "(A)ll doubts in the implementation and interpretation of this Code (Labor), including its implementing rules and regulations, shall be resolved in favor of labor. 4

WHEREFORE, the petition is DISMISSED. Costs against the petitioner.

SO ORDERED.

Melencio-Herrera, (Chairperson), Paras, Padilla and Regalado, JJ., concur.

Arbitration cases 1. Vivero vs ca 2. Atlas farms vs nlrc Petitioner seeks the reversal of the decision[1] dated January 10, 2000 of the Court of Appeals in CA-G.R. SP No. 52780, dismissing its petition for certiorari against the NLRC, as well as the resolution[2] dated February 24, 2000, denying its motion for reconsideration. The antecedent facts of the case, as found by the Court of Appeals,[3] are as follows:

Private respondent Jaime O. dela Pea was employed as a veterinary aide by petitioner in December 1975. He was among several employees terminated in July 1989. On July 8, 1989, he was re-hired by petitioner and given the additional job of feedmill operator. He was instructed to train selected workers to operate the feedmill. On March 13, 1993,[4] Pea was allegedly caught urinating and defecating on company premises not intended for the purpose. The farm manager of petitioner issued a formal notice directing him to explain within 24 hours why disciplinary action should not be taken against him for violating company rules and regulations. Pea refused, however, to receive the formal notice. He never bothered to explain, either verbally or in writing, according to petitioner. Thus, on March 20, 1993, a notice of termination with payment of his monetary benefits was sent to him. He duly acknowledged receipt of his separation pay of P13,918.67. From the start of his employment on July 8, 1989, until his termination on March 20, 1993, Pea had worked for seven days a week, including holidays, without overtime, holiday, rest day pay and service incentive leave. At the time of his dismissal from employment, he was receiving P180 pesos daily wage, or an average monthly salary of P5,402. Co-respondent Marcial I. Abion[5] was a carpenter/mason and a maintenance man whose employment by petitioner commenced on October 8, 1990. Allegedly, he caused the clogging of the fishpond drainage resulting in damages worth several hundred thousand pesos when he improperly disposed of the cut grass and other waste materials into the ponds drainage system. Petitioner sent a written notice to Abion, requiring him to explain what happened, otherwise, disciplinary action would be taken against him. He refused to receive the notice and give an explanation, according to petitioner. Consequently, the company terminated his services on October 27, 1992. He acknowledged receipt of a written notice of dismissal, with his separation pay. Like Pea, Abion worked seven days a week, including holidays, without holiday pay, rest day pay, service incentive leave pay and night shift differential pay. When terminated on October 27, 1992, Abion was receiving a monthly salary of P4,500. Pea and Abion filed separate complaints for illegal dismissal that were later consolidated. Both claimed that their termination from service was due to petitioners suspicion that they were the leaders in a plan to form a union to compete and replace the existing management-dominated union. On November 9, 1993, the labor arbiter dismissed their complaints on the ground that the grievance machinery in the collective bargaining agreement (CBA) had not yet been exhausted. Private respondents availed of the grievance process, but later on refiled the case before the NLRC in Region IV. They alleged lack of sympathy on petitioners part to engage in conciliation proceedings.

Their cases were consolidated in the NLRC. At the initial mandatory conference, petitioner filed a motion to dismiss, on the ground of lack of jurisdiction, alleging private respondents themselves admitted that they were members of the employees union with which petitioner had an existing CBA. This being the case, according to petitioner, jurisdiction over the case belonged to the grievance machinery and thereafter the voluntary arbitrator, as provided in the CBA. In a decision dated January 30, 1996, the labor arbiter dismissed the complaint for lack of merit, finding that the case was one of illegal dismissal and did not involve the interpretation or implementation of any CBA provision. He stated that Article 217 (c) of the Labor Code[6] was inapplicable to the case. Further, the labor arbiter found that although both complainants did not substantiate their claims of illegal dismissal, there was proof that private respondents voluntarily accepted their separation pay and petitioners financial assistance. Thus, private respondents brought the case to the NLRC, which reversed the labor arbiters decision. Dissatisfied with the NLRC ruling, petitioner went to the Court of Appeals by way of a petition for review on certiorari under Rule 65, seeking reinstatement of the labor arbiters decision. The appellate court denied the petition and affirmed the NLRC resolution with some modifications, thus: WHEREFORE, the petition is DENIED. The resolution in NLRC CA No. 010520-96 is AFFIRMED with the following modifications: 1) The private respondents can not be reinstated, due to their acceptance of the separation pay offered by the petitioner; 2) The private respondents are entitled to their full back wages; and, 3) The amount of the separation pay received by private respondents from petitioner shall not be deducted from their full back wages. Costs against petitioner. SO ORDERED.[7] Petitioner forthwith filed its motion for reconsideration, which was denied in a resolution dated February 24, 2000, which reads: Acting on the Motion for Reconsideration filed by petitioner[s] which drew an opposition from private respondents, the Court resolved to DENY the aforesaid motion for reconsideration, as the issues raised therein have been passed upon by the Court in its questioned decision and no substantial arguments were presented to warrant its reversal, let alone modification. SO ORDERED.[8]

In this petition now before us, petitioner alleges that the appellate court erred in: I. DENYING THE PETITION FOR CERTIORARI AND IN EFFECT AFFIRMING THE RULINGS OF THE PUBLIC RESPONDENT NLRC THAT THE PRIVATE RESPONDENTS WERE ILLEGALLY DISMISSED; II. RULING THAT THE PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY AND FULL BACKWAGES; III. RULING THAT PETITIONER IS LIABLE FOR COSTS OF SUIT.[9] Petitioner contends that the dismissal of private respondents was for a just and valid cause, pursuant to the provisions of the companys rules and regulations. It also alleges lack of jurisdiction on the part of the labor arbiter, claiming that the cases should have been resolved through the grievance machinery, and eventually referred to voluntary arbitration, as prescribed in the CBA. For their part, private respondents contend that they were illegally dismissed from employment because management discovered that they intended to form another union, and because they were vocal in asserting their rights. In any case, according to private respondents, the petition involves factual issues that cannot be properly raised in a petition for review on certiorari under Rule 45 of the Revised Rules of Court.[10] In fine, there are three issues to be resolved: 1) whether private respondents were legally and validly dismissed; 2) whether the labor arbiter and the NLRC had jurisdiction to decide complaints for illegal dismissal; and 3) whether petitioner is liable for costs of the suit. The first issue primarily involves questions of fact, which can serve as basis for the conclusion that private respondents were legally and validly dismissed. The burden of proving that the dismissal of private respondents was legal and valid falls upon petitioner. The NLRC found that petitioner failed to substantiate its claim that both private respondents committed certain acts that violated company rules and regulations,[11] hence we find no factual basis to say that private respondents dismissal was in order. We see no compelling reason to deviate from the NLRC ruling that their dismissal was illegal, absent a showing that it reached its conclusion arbitrarily.[12] Moreover, factual findings of agencies exercising quasi-judicial functions are accorded not only respect but even finality, aside from the consideration here that this Court is not a trier of facts. [13] Anent the second issue, Article 217 of the Labor Code provides that labor arbiters have original and exclusive jurisdiction over termination disputes. A possible exception is provided in Article 261 of the Labor Code, which provides thatThe Voluntary Arbitrator or panel of voluntary arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or

implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the grievance Machinery or Arbitration provided in the Collective Bargaining Agreement. But as held in Vivero vs. CA,[14] petitioner cannot arrogate into the powers of Voluntary Arbitrators the original and exclusive jurisdiction of Labor Arbiters over unfair labor practices, termination disputes, and claims for damages, in the absence of an express agreement between the parties in order for Article 262 of the Labor Code [Jurisdiction over other labor disputes] to apply in the case at bar. Moreover, per Justice Bellosillo: It may be observed that under Policy Instruction No. 56 of the Secretary of Labor, dated 6 April 1993, Clarifying the Jurisdiction Between Voluntary Arbitrators and Labor Arbiters Over Termination Cases and Providing Guidelines for the Referral of Said Cases Originally Filed with the NLRC to the NCMB, termination cases arising in or resulting from the interpretation and implementation of collective bargaining agreements and interpretation and enforcement of company personnel policies which were initially processed at the various steps of the plant-level Grievance Procedures under the parties collective bargaining agreements fall within the original and exclusive jurisdiction of the voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of the Labor Code; and, if filed before the Labor Arbiter, these cases shall be dismissed by the Labor Arbiter for lack of jurisdiction and referred to the concerned NCMB Regional Branch for appropriate action towards an expeditious selection by the parties of a Voluntary Arbitrator or Panel of Arbitrators based on the procedures agreed upon in the CBA. As earlier stated, the instant case is a termination dispute falling under the original and exclusive jurisdiction of the Labor Arbiter, and does not specifically involve the application, implementation or enforcement of company personnel policies contemplated in Policy Instruction No. 56. Consequently, Policy Instruction No. 56 does not apply in the case at bar.[15] x x x Records show, however, that private respondents sought without success to avail of the grievance procedure in their CBA.[16] On this point, petitioner maintains that by so doing, private respondents recognized that their cases still fell under the grievance machinery. According to petitioner, without having exhausted said machinery, the private respondents filed their action

before the NLRC, in a clear act of forum-shopping.[17] However, it is worth pointing out that private respondents went to the NLRC only after the labor arbiter dismissed their original complaint for illegal dismissal. Under these circumstances private respondents had to find another avenue for redress. We agree with the NLRC that it was petitioner who failed to show proof that it took steps to convene the grievance machinery after the labor arbiter first dismissed the complaints for illegal dismissal and directed the parties to avail of the grievance procedure under Article VII of the existing CBA. They could not now be faulted for attempting to find an impartial forum, after petitioner failed to listen to them and after the intercession of the labor arbiter proved futile. The NLRC had aptly concluded in part that private respondents had already exhausted the remedies under the grievance procedure.[18] It erred only in finding that their cause of action was ripe for arbitration. In the case of Maneja vs. NLRC,[19] we held that the dismissal case does not fall within the phrase grievances arising from the interpretation or implementation of the collective bargaining agreement and those arising from the interpretation or enforcement of company personnel policies. In Maneja, the hotel employee was dismissed without hearing. We ruled that her dismissal was unjustified, and her right to due process was violated, absent the twin requirements of notice and hearing. We also held that the labor arbiter had original and exclusive jurisdiction over the termination case, and that it was error to give the voluntary arbitrator jurisdiction over the illegal dismissal case. In Vivero vs. CA,[20] private respondents attempted to justify the jurisdiction of the voluntary arbitrator over a termination dispute alleging that the issue involved the interpretation and implementation of the grievance procedure in the CBA. There, we held that since what was challenged was the legality of the employees dismissal for lack of cause and lack of due process, the case was primarily a termination dispute. The issue of whether there was proper interpretation and implementation of the CBA provisions came into play only because the grievance procedure in the CBA was not observed, after he sought his unions assistance. Since the real issue then was whether there was a valid termination, there was no reason to invoke the need to interpret nor question an implementation of any CBA provision. One significant fact in the present petition also needs stressing. Pursuant to Article 260[21] of the Labor Code, the parties to a CBA shall name or designate their respective representatives to the grievance machinery and if the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators designated in advance by the parties to a CBA. Consequently only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. In these termination cases of private respondents, the union had no participation, it having failed to object to the dismissal of the employees concerned by the petitioner. It is obvious that arbitration without the unions active participation on behalf of the dismissed employees would be pointless, or even prejudicial to their cause. Coming to the merits of the petition, the NLRC found that petitioner did not comply with the requirements of a valid dismissal. For a dismissal to be valid, the employer must show that: (1) the employee was accorded due process, and (2) the dismissal must be for any of the valid causes

provided for by law.[22] No evidence was shown that private respondents refused, as alleged, to receive the notices requiring them to show cause why no disciplinary action should be taken against them. Without proof of notice, private respondents who were subsequently dismissed without hearing were also deprived of a chance to air their side at the level of the grievance machinery. Given the fact of dismissal, it can be said that the cases were effectively removed from the jurisdiction of the voluntary arbitrator, thus placing them within the jurisdiction of the labor arbiter. Where the dispute is just in the interpretation, implementation or enforcement stage, it may be referred to the grievance machinery set up in the CBA, or brought to voluntary arbitration. But, where there was already actual termination, with alleged violation of the employees rights, it is already cognizable by the labor arbiter.[23] In sum, we conclude that the labor arbiter and then the NLRC had jurisdiction over the cases involving private respondents dismissal, and no error was committed by the appellate court in upholding their assumption of jurisdiction. However, we find that a modification of the monetary awards is in order. As a consequence of their illegal dismissal, private respondents are entitled to reinstatement to their former positions. But since reinstatement is no longer feasible because petitioner had already closed its shop, separation pay in lieu of reinstatement shall be awarded.[24] A terminated employees receipt of his separation pay and other monetary benefits does not preclude reinstatement or full benefits under the law, should reinstatement be no longer possible.[25] As held in Cario vs. ACCFA:[26] Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and employee, obviously, do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of the money. Because out of job, he had to face the harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent their claim. They pressed it. They are deemed not to have waived their rights. Renuntiato non praesumitur. Conformably, private respondents are entitled to separation pay equivalent to one months salary for every year of service, in lieu of reinstatement.[27] As regards the award of damages, in order not to further delay the disposition of this case, we find it necessary to expressly set forth the extent of the backwages as awarded by the appellate court. Pursuant to R.A. 6715, as amended, private respondents shall be entitled to full backwages computed from the time of their illegal dismissal up to the date of promulgation of this decision without qualification, considering that reinstatement is no longer practicable under the circumstances.[28] Having found private respondents dismissal to be illegal, and the labor arbiter and the NLRC duly vested with jurisdiction to hear and decide their cases, we agree with the appellate court that petitioner should pay the costs of suit. WHEREFORE, the petition is DENIED for lack of merit. The decision of the Court of Appeals in CA-G.R. SP No. 52780 is AFFIRMED with the MODIFICATION that petitioner is ordered to

pay private respondents (a) separation pay, in lieu of their reinstatement, equivalent to one months salary for every year of service, (b) full backwages from the date of their dismissal up to the date of the promulgation of this decision, together with (c) the costs of suit. SO ORDERED. Reinstatement cases 1. Pioneer texturizing vs nlrc LABOR RELATIONS CASE DIGEST ---ABBH--- PIONEER TEXTURIZING CORP. and/or JULIANO LIM, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, PIONEER TEXTURIZING WORKERS UNION and LOURDES A. DE JESUS, respondents. [G.R. No. 118651. October 16, 1997] FACTS: De Jesus is petitioners’ reviser/trimmer who based her assigned work on a paper note posted by petitioners. The posted paper is identified by its P.O. Number. De Jesus worked on P.O. No. 3853 by trimming the cloths’ ribs and thereafter submitted tickets corresponding to the work done to her supervisor. Three days later, de Jesus received a memorandum requiring her to explain why no disciplinary action should be taken against her for dishonesty and tampering of official records and documents with the intention of cheating as P.O. No. 3853 allegedly required no trimming. The memorandum also placed her under preventive suspension for thirty days. In her explanation, de Jesus maintained that she merely committed a mistake in trimming P.O. No. 3853 and admitted that she may have been negligent, but not for dishonesty or tampering. Nonetheless, she was terminated from employment. De Jesus filed a complaint for illegal dismissal against petitioners. The Labor Arbiter held petitioners guilty of illegal dismissal and were ordered to reinstate de Jesus to her previous position without loss of seniority rights and with full backwages from the time of her suspension. On appeal, the National Labor Relations Commission (NLRC) declared that the status quo between them should be maintained and affirmed the Labor Arbiter’s order of reinstatement, but without backwages. The NLRC further directed petitioner to pay de Jesus her back salaries from the date she filed her motion for execution up to the date of the promulgation of the decision. Petitioners filed their partial motion for reconsideration which the NLRC denied, hence this petition. ISSUE: Whether or not an order for reinstatement needs a writ of execution? HELD: No. The provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. To 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. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. On appeal, however, the appellate tribunal concerned may enjoin or suspend the

reinstatement order in the exercise of its sound discretion. Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor. In ruling that an order or award for reinstatement does not require a writ of execution the Court is simply adhering and giving meaning to this rule. Henceforth, we rule that an award or order for reinstatement is self-executory. After receipt of the decision or resolution ordering the employee's reinstatement, the employer has the right to choose whether to readmit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll. In either instance, the employer has to inform the employee of his choice. The notification is based on practical considerations for without notice, the employee has no way of knowing if he has to report for work or not. 2. Garcia vs PAL Petitioners Alberto J. Dumago and Juanito A. Garcia were employed by respondent Philippine Airlines, Inc. (PAL) as Aircraft Furnishers Master "C" and Aircraft Inspector, respectively.

On July 24, 1995, a combined team of the PAL Security and National Bureau of Investigation (NBI) Narcotics Operatives raided the Toolroom Section - Plant Equipment Maintenance Division (PEMD) of the PAL Technical Center. They found petitioners, with four others, near the said... section at that time. When the PAL Security searched the section, they found shabu paraphernalia inside the company-issued locker of Ronaldo Broas who was also within the vicinity. The six employees were later brought to the NBI for booking and proper investigation.

On July 26, 1995, a Notice of Administrative Charge[4] was served on petitioners. They were allegedly "caught in the act of sniffing shabu inside the Toolroom Section," then placed under preventive suspension

Petitioners vehemently denied the allegations and challenged PAL to show proof that they were indeed "caught in the act of sniffing shabu." Dumago claimed that he was in the Toolroom Section to request for an allen wrench to fix the needles of the sewing and zigzagger machines.

Garcia averred he was in the Toolroom Section to inquire where he could take the Trackster's tire for vulcanizing.

On October 9, 1995, petitioners were dismissed

Both simultaneously filed... a case for illegal dismissal and damages.

In the meantime, the Securities and Exchange Commission (SEC) placed PAL under an Interim Rehabilitation Receiver due to severe financial losses.

On January 11, 1999, the Labor Arbiter rendered a decision[6] in petitioners' favor

Meanwhile, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver.

On appeal, the NLRC reversed the Labor Arbiter's decision and dismissed the case for lack of merit.

On October 5, 2000, the Labor Arbiter issued a Writ of Execution[10] commanding the sheriff to proceed:

To the Office of respondent... and cause reinstatement of complainants to their former position and to cause the collection of the amount of [P]549,309.60 from respondent PAL... representing the backwages of said complainants on the reinstatement aspect;

In case you cannot collect from respondent PAL for any reason, you shall levy on the office equipment and other movables and garnish its deposits with any bank in the Philippines

Although PAL filed an Urgent Motion to Quash Writ of Execution, the Labor Arbiter issued a Notice of Garnishment[12] addressed to the President/Manager of the Allied Bank Head Office in Makati City for the amount of P549,309.60.

PAL moved to lift the Notice of Garnishment while petitioners moved for the release of the garnished amount.

the NLRC resolved as follows:

WHEREFORE, premises considered, the Petition is partially GRANTED. Accordingly, the Writ of Execution dated October 5, 2000 and related [N]otice of Garnishment [dated October 25, 2000] are DECLARED valid. However, the instant action is SUSPENDED and REFERRED to the

Receiver of Petitioner PAL for appropriate action.

PAL appealed to the Court of Appeals

The appellate court ruled that the Labor Arbiter issued the writ of execution and the notice of garnishment without jurisdiction. Hence, the NLRC erred in upholding its validity. Since PAL was under receivership, it could not have possibly reinstated petitioners due to... retrenchment and cash-flow constraints. The appellate court declared that a stay of execution may be warranted by the fact that PAL was under rehabilitation receivership.

Issues:

(1) Are petitioners entitled to their wages during the pendency of PAL's appeal to the NLRC? and (2) In the light of new developments concerning PAL's rehabilitation, are petitioners entitled to execution of... the Labor Arbiter's order of reinstatement even if PAL is under receivership?

Ruling:

We note that during the pendency of this case, PAL was placed by the SEC first, under an Interim Rehabilitation Receiver and finally, under a Permanent Rehabilitation Receiver.

Worth stressing, upon appointment by the SEC of a rehabilitation receiver, all actions for claims against the corporation pending before any court, tribunal or board shall ipso jure be suspended.

More importantly, the suspension of all actions for claims against the corporation embraces all phases of the suit, be it before the trial court or any tribunal or before this Court.

Furthermore, the actions that are suspended cover all claims against the corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature.

Since petitioners' claim against PAL is a money claim for their wages during the pendency of PAL's appeal to the NLRC, the same should have been suspended pending the rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals should have abstained... from resolving petitioners' case for illegal dismissal and should instead have directed them to lodge their claim before PAL's receiver.

Constitutionality/Appeal 1. Aris Vs NLRC n 11 April 1988, private respondents, who were employees of petitioner, aggrieved by management’s failure to attend to their complaints concerning their working surroundings which had become detrimental and hazardous, requested for a grievance conference. Private respondents lost no time in filing a complaint for illegal dismissal against petitioner with NLRC of NCR. After due trial, Aris (Phils.), Inc. is hereby ordered to reinstate within ten (10) days from receipt private respondents to their former respective positions or any substantial equivalent positions if already filled up, without loss of seniority right and privileges but with limited backwages of six (6) months. Private respondents filed a Motion For Issuance of a Writ of Execution pursuant to Section 12 of R.A. No. 6715. Petitioner and complainants filed their own Appeals. Petitioner filed an Opposition to the motion for execution alleging that Section 12 of R.A. No. 6715 on execution pending appeal cannot be applied retroactively to cases pending at the time of its effectivity because it does not expressly provide that it shall be given retroactive effect and to give retroactive effect to Section 12 thereof to pending cases would not only result in the imposition of an additional obligation on petitioner but would also dilute its right to appeal since it would be burdened with the consequences of reinstatement without the benefit of a final judgment. ISSUE: Whether or not the provision under Section 12 of R.A. No. 6715 is constitutional. HELD: YES. Petition was dismissed for lack of merit. Costs against petitioners. RATIO:

Presumption against unconstitutionality. The validity of the questioned law is not only supported and sustained by the foregoing considerations. As contended by the Solicitor General, it is a valid exercise of the police power of the State. Certainly, if the right of an employer to freely discharge his employees is subject to regulation by the State, basically in the exercise of its permanent police power on the theory that the preservation of the lives of the citizens is a basic duty of the State, that is more vital than the preservation of corporate profits. Then, by and pursuant to the same power, the State may authorize an immediate implementation, pending appeal, of a decision reinstating a dismissed or separated employee since that saving act is designed to stop, although temporarily since the appeal may be decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the dismissed or separated employee and its family. Moreover, the questioned interim rules of the NLRC can validly be given retroactive effect. They are procedural or remedial in character, promulgated pursuant to the authority vested upon it under Article 218(a) of the Labor Code of the Philippines, as amended. Settled is the rule that procedural laws may be given retroactive effect. There are no vested rights in rules of procedure. A remedial statute may be made applicable to cases pending at the time of its enactment. 2. St. Martin funeral Homes vs nlrc Respondent (Arcayos) was summarily dismissed by St. Martin Funeral Homes for misappropriating funds worth Php 38,000 which was supposed to be taxes paid to the Bureau of Internal Revenue (BIR). Alleging that the dismissal was illegal, respondent filed a case against St. Martin Funeral Homes in the National Labor Relations Commission (NLRC). Petitioner’s (St. Martin Funeral Homes) contention is that the respondent is not an employee due to the lack of an employer-employee contract. In addition, respondent is not listed on St. Martin’s monthly payroll. The labor arbiter ruled in favor of petitioner, confirming that indeed, there was no employeremployee relationship between the two and hence, there could be no illegal dismissal in such a situation. The respondent appealed to the secretary of NLRC who set aside the decision and remanded the case to the labor arbiter. Petitioner filed a motion for reconsideration, but was denied by the NLRC. Now, petitioners appealed to the Supreme Court – alleging that the NLRC committed grave abuse of discretion. Issue: Whether or not the petitioner’s appeal/petition for certiorari was properly filed in the Supreme Court. Held: No. Historically, decisions from the NLRC were appealable to the Secretary of Labor, whose decisions are then appealable to the Office of the President. However, the new rules do not anymore provide provisions regarding appellate review for decisions rendered by the NLRC.

However in this case, the Supreme Court took it upon themselves to review such decisions from the NLRC by virtue of their role under the check and balance system and the perceived intention of the legislative body who enacted the new rules. “It held that there is an underlying power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to keep the administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications.” The petitioners rightfully filed a motion for reconsideration, but the appeal or certiorari should have been filed initially to the Court of Appeals – as consistent with the principle of hierarchy of courts. As such, the Supreme Court remanded the case to the Court of Appeals. Art 230 1. Elcee farms vs semillano This is a Petition for Certiorari, under Rule 65 of the Rules of Court, assailing the Resolution, dated 29 May 1996, promulgated by the National Labor Relations Commission (NLRC), Fourth Division,1 ordering the petitioners, Elcee Farms, Inc. (Elcee Farms) and Corazon Saguemuller, to pay each private respondent separation pay and moral damages.

Pampelo Semillano and one hundred forty-three (143) other complainants, represented by the labor union, Sugar Agricultural Industrial Labor Organization (SAILO), filed this complaint for illegal dismissal with prayer for reinstatement with back wages, or in the alternative, separation pay, with damages against Elcee Farms, Corazon Saguemuller, Hilla Corporation (HILLA), Rey Hilado, and Roberto Montaño.2 Private respondents alleged that they were all regular farm workers in Hacienda Trinidad, which was owned and operated by petitioner corporation Elcee Farms. Complainants alleged that petitioner Corazon Saguemuller was the president of Elcee Farms, but records disclosed that it was her son, Konrad Saguemuller, who was the president thereof.3 Some of the complainants allegedly worked in Hacienda Trinidad as early as 1960. 4 On 27 April 1987, Elcee Farms entered into a Lease Agreement with Garnele Aqua Culture Corporation (Garnele).5 Nevertheless, most of the private respondents continued to work in Hacienda Trinidad. On appeal, they presented payrolls and Social Security System (SSS) Forms E-4 issued during the period that Garnele leased the hacienda, naming Elcee Farms as their employer.6

On 15 November 1990, Garnele sub-leased Hacienda Trinidad to Daniel Hilado, who operated HILLA. The contract of lease executed between Garnele and Daniel Hilado stipulated the continued employment of 120 of the former’s employees by the latter, but the contract was silent as to the benefits which may accrue to the employees as a consequence of their employment with Elcee Farms.7 Thus, private respondents were allowed to continue working in Hacienda Trinidad, under the management of HILLA.8

Soon after HILLA took over, Daniel Hilado entered into a Collective Bargaining Agreement (CBA) with the United Sugar Farmers’ Organization (USFO). The CBA contained a closed shop provision stating that:

Sec. 2 – Employees/laborers, who at the time of the execution of this Agreement are not yet members of the UNION be required by the EMPLOYER to join the UNION within thirty (30) days from the signing of this Agreement, and remain members in good standing as condition of continued employment. Should these employees/laborers refuse and fail to join and affiliate with the UNION within such a period of time, said employees/laborers shall be dismissed by the EMPLOYER upon recommendation by the UNION.9

Due to their refusal to join the labor union, the private respondents were terminated by HILLA.

On 26 December 1990, SAILO and 144 complainants, including the 131 private respondents herein, filed against Elcee Farms, Corazon Saguemuller, HILLA and its officers, Ray Hilado and Roberto Montaño, a complaint for illegal dismissal with reinstatement with back wages and separation pay with damages before the Labor Arbiter.10 In a Decision, dated 20 October 1993, the Labor Arbiter noted that of the 144 complainants, only three were able to testify and only twenty-eight complainants, including the three who testified, signed the joint affidavit executed in support of their claims. Complainants who were unable to sign the said joint affidavit were dropped as party complainants for failure to adduce evidence in their favor.11 The remaining twenty-eight complainants were considered by the Labor Arbiter as regular employees of HILLA entitled to separation pay, equivalent to one month pay as they were employed by HILLA for a period less than one year.12 The Labor Arbiter dismissed their claim for damages and denied all claims made against Elcee Farms, Corazon Saguemuller, Rey Hilado and Roberto Montaño.13

Complainants appealed and argued that they had an employer-employee relationship with Elcee Farms before HILLA took possession of the hacienda in November 1990. They pointed out that Elcee Farms failed to present proof that they were employed by Garnele to substantiate the existence of a valid lease agreement between Elcee Farms and Garnele. They also pleaded that the closed shop provision of the CBA between HILLA and USFO cannot be made to apply to the complainants, who were members of another union.14

In a Decision dated 29 March 1995, the NLRC affirmed the amount awarded by the Labor Arbiter as separation pay, but modified the assailed Decision by holding Elcee Farms, Corazon Saguemuller, Rey Hilado and Roberto Montaño liable for the payment of the aforementioned separation pay, and added to their liability Five Thousand Pesos (P5,000.00) for moral damages to each of the 28 complainants.15 The dispositive portion of this Decision reads:

WHEREFORE, respondents Elcee Farms Inc., Corazon Saguemuller, Hilla Corporation, Rey Hillado & Roberto Montaño are ordered to pay the complainants separation pay as awarded.

The respondents are further ordered to pay the complainants P5,000.00 each as moral damages for all their troubles and suffering from the disturbance of their rights to labor.

Appealed decision is hereby modified.16

The three sets of parties – (1) the complainants; (2) Elcee Farms and Corazon Saguemuller; and (3) Hilla, Rey Hilado and Roberto Montaño, filed their own Motions for Reconsideration. In a Resolution, dated 29 May 1996, the NLRC admitted that it overlooked vital points in its earlier Decision and made a finding that the lease contract between Elcee Farms and Garnele was simulated and that the former continued to act as the employer of the complainants, until Hacienda Trinidad was sub-leased to HILLA in 1990. It took into account the fact that the complainants’ payrolls named Elcee Farms as the employer when the hacienda was supposed to have been leased to Garnele. During the same period, the SSS Forms E-4 used in paying the complainants’ contributions which named Elcee Farms as employer were also included in the records. The NLRC ruled that the simulation of the lease agreement between Elcee Farms and Garnele smacks of bad faith and is the basis for its award of Five Thousand Pesos in moral and exemplary damages.17

In its Resolution, the NLRC also explained that Elcee Farms should have informed its employees of the lease made in favor of HILLA. Further, Elcee Farms was obligated to pay its workers’ separation pay and other benefits due since the lease to HILLA was a virtual termination of the employer-employee relationship. Moreover, there is no showing that HILLA assumed Elcee Farms’s obligation to pay the various benefits due to the workers from their employment with Elcee Farms. Thus, Elcee Farms and Corazon Saguemueller were held liable to pay the complainants separation pay equivalent to one-half month pay for each year of service or one month pay for those who worked for only one year. 18

On the other hand, the NLRC absolved HILLA and its officers from any liability to the workers since the dismissal of the complainants was due to their failure to join USFO, in accordance with the closed shop clause found in its CBA with the USFO. The NLRC found that there was no existing labor union at the time HILLA took legal possession of Hacienda Trinidad. On the other hand, SAILO filed a petition for certification elections only on 26 December 1990, after Daniel Hilado entered into the CBA with USFO.19

Finally, the NLRC significantly modified the Decision rendered by the Labor Arbiter. The earlier Decision rendered by the Labor Arbiter granted the claims of only 28 out of the 144 complainants. The NLRC ruled that the claim of 131 employees should be granted and that only 14 of the 144 complainants were to be excluded, based on the testimony of Pampelo Semillano. Incidentally, the NLRC erroneously included Alfredo Nicor, Sr. in the list of 131 employees who were awarded separation pay and damages even when it had specifically identified him in its Resolution among the fourteen complainants who were not bona fide employees of Elcee Farms.20

As a result, petitioners filed the present Petition for Certiorari, assigning to the NLRC the following acts of grave abuse of discretion:

1. In impleading and adjudging Corazon Saguemuller as party respondent equally liable with Elcee Farms, Inc., public respondent has exercised its discretion whimsically, capriciously, arbitrarily and with grave abuse of discretion;

2. In issuing the assailed decision and resolution, public respondent has contravened its own rules and established jurisprudence that findings of facts of a labor arbiter as the trier of facts based on substantial evidence should be respected and given weight;

3. The 29 May 1996 resolution which deliberately misappreciated extraneous, incompetent and discredited evidences already passed upon by the Labor Arbiter was issued capriciously, whimsically and arbitrarily by public respondent; and

4. Public respondent gravely abused its discretion tantamount to excess of jurisdiction in awarding moral damages of P5,000.00 to each individual private respondents, without any legal and factual basis, and without regard to the individual private respondents’ length of service and employment history.21

Petitioners insist that the factual findings of the Labor Arbiter should be given preference over those made by the NLRC. However, there is no merit in the petitioners’ insistence that the findings of fact of the Labor Arbiter, which happened to favor them, are infallible. The findings of the Labor Arbiter may be overturned by the NLRC if unsupported by the records. In this case, most of the factual findings made by the NLRC are better supported by the records than those made by the Labor Arbiter.

The NLRC made a crucial modification when it overturned the findings of the Labor Arbiter and held that the lease contract between Elcee Farms and Garnele is simulated. Records show that Elcee Farms was the

employer named in the payrolls at the time when the hacienda was supposed to have been leased to Garnele. During the same period, the SSS Forms E-4 submitted before the SSS that were used in paying the complainants’ contributions also named Elcee Farms as employer. Although these pieces of evidence were submitted only during the appeal before the NLRC, the petitioners had ample opportunity to submit opposing evidence, but failed to do so. The lease agreement between Garnele and Elcee Farms was a haphazardly drafted two-page document, which only provided for a uniform minimal rent for a period of fifteen years, and had not provided for the employment status of the employees of Elcee Farms. Furthermore, the lease agreement was entered into by the corporate officers of Garnele and Elcee Farms, who are members of the same family. In addition, the employees were not informed of the lease agreement and were not paid by Elcee Farms the separation pay due at the time Garnele was supposed to have taken over and leased the hacienda.

The above findings show that even after the execution of the lease agreement between Elcee Farms and Garnele, Elcee Farms continued to act as the employer of the farm workers of Hacienda Trinidad. The employer-employee relationship between the farm workers and Elcee Farms was severed only when Garnele, acting in behalf of Elcee Farms, entered into a lease agreement with Daniel Hilado and, thereafter, Hilla took over the management of Hacienda Trinidad in November 1990. The NLRC, then, concluded that the claims of the private respondents against Elcee Farms had not yet prescribed at the time their complaint was filed on 26 December1990.

The main issue in this case is whether the private respondents are entitled to the award of separation pay and moral damages. This Court finds that the NLRC’s award of separation pay and moral damages are in accordance with law.

Moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good customs or public policy. Exemplary damages, on the other hand, are recoverable when the dismissal was done in a wanton, oppressive, or malevolent manner.22

Bad faith on the part of Elcee Farms is shown by the act of simulating a lease agreement with Garnele in order to evade paying private respondents the proper amount of separation benefits based on the number of years they worked in the hacienda, as provided by the Labor Code. Records show that Elcee Farms did not pay any separation benefits to the private respondents when they allegedly leased the hacienda to Garnele, and again when the hacienda was leased to Daniel Hilado. When the employees filed their complaint with the Labor Arbiter, Elcee Farms, using the simulated lease agreement with Garnele, tried to deny liability by claiming that their claims had already prescribed. It claimed that the lease agreement with Garnele, which was allegedly executed in 1987, effectively terminated the employer-employee relationship before the complaint was filed in 1990, or more than three years after. These unlaudable acts undermine the workers’ statutory rights for which moral damages may be awarded.

Liability for separation pay is provided under Article 283 of the Labor Code, as it existed in 1990, for the following circumstances, particularly the cessation of operations:

Article 283. Closure of establishment and reduction of personnel.—The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operations of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. x x x. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. (Emphases supplied.)

From this provision, three requirements are enumerated in cases of cessation of business operations of an employer company not due to business reverses: (1) service of a written notice to the employees and to the MOLE (now the Secretary of Labor and Employment) at least one month before the intended date thereof; (2) the cessation of or withdrawal from business operations must be bona fide in character; and (3) payment to the employees of termination pay amounting to at least one-half month pay for each year of service, or one month pay, whichever is higher.23

In the present case, Elcee Farms effectively ceased to operate and manage Hacienda Trinidad when, through Garnele, it leased the hacienda to Daniel Hilado. The validity of the aforementioned lease was not questioned by any of the parties. There is no question that the lease to Daniel Hilado effectively terminated the employer-employee relationship between Elcee Farms and the farmworkers. Private respondents Pampelo Semillano and Roel Benignos testified that HILLA took possession of the hacienda in 1990 and managed the same.24 This was corroborated by the testimony of Anonio Sidayon, the administrator of HILLA.25 After the said lease was executed, the employer-employee relationship between the farm employees and Elcee Farms was severed. The lease agreement between Garnele and Daniel Hilado identified the employees who will continue working with the new management and stipulated that workers who were not in the list, whether new or employed in the past, will not be employed by the lessee.26 The lease contract even specified that Daniel Hilado will only be liable for all future labor cases, the cause of which arose during or by virtue of the sublease.27 Clearly, there was a cessation of operations of Elcee Farms, which renders it liable for separation pay to its employees, under Section 283 of the Labor Code.

In a similar case, Abella v. National Labor Relations Commission,28 the Court ruled that an employer whose lease agreement had already expired, and therefore no longer manages and controls the hacienda, is still required to pay the separation pay due to its former employees in connection with their employment with such employer, even if the said employees were terminated by the new employer. It justified this position thus:

The purpose of Article 284 as amended is obvious – the protection of the workers whose employment is terminated because of the closure of establishment and reduction of personnel. Without said law, employees like private respondents in the case at bar will lose the benefits to which they are entitled – for the thirty three years of service in the case of Dionele and fourteen years in the case of Quitco. Although they were absorbed by the new management of the hacienda, in the absence of any showing that the latter has assumed the responsibilities of the former employer, they will be considered as new employees and the years of service behind them would amount to nothing.29

There is a conspicuous change in the number of employees who were awarded separation benefits and moral damages, but it is supported by the evidence on record. Initially the Labor Arbiter awarded separation pay only to 28 complainants, which the NLRC increased to 131 complainants. However, it should be noted that there should only be 130 complainants to whom the NLRC awarded separation pay and moral damages since one of the complainants, Alfredo Nicor, Sr., was named as one of the 14 complainants who were not bona fide workers entitled to benefits, but was inadvertently included again as one of the 131 complainants who were awarded said benefits.

As regards the big increase in the number of employees who were awarded separation pay and damages, the records, indeed, show that only 28 complainants signed the affidavit, and only three were able to testify. Thus, the Labor Arbiter considered the claims of only the 28 complainants who signed the affidavit, including the three who testified. The Labor Arbiter reasoned that the other complainants failed to adduce evidence in their favor. The NLRC, however, took critical note of the testimony of private respondent Pampelo Semillano identifying who among the complainants were bona fide employees and those who no longer worked in the hacienda.30 In addition, HILLA had submitted as its Exhibit 4 the list of 120 Hacienda Trinidad laborers that it was required to absorb,31 which is a corollary affirmation that there were other laborers employed by Elcee Farms who were not required to be absorbed by HILLA. The private respondents were also able to present payroll documents showing the names of some of the private respondents. In stark contrast, the petitioners were not able to present evidence to support the fact that the private respondents were not bona fide employees.32 Thus, the NLRC’s award to 130 employees, excluding Alfredo Nicor, Sr., is justified.

This Court, nonetheless, finds merit in the petitioners’ allegation that Corazon Saguemuller should not be subsidiarily liable with Elcee Farms for separation pay and damages. It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as

from that of any other legal entity to which it may be related. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality.33 In the case of Santos v. National Labor Relations Commission,34 a corporate officer was not held liable for the obligations incurred by the corporation, where the corporate officer was not even shown to have had a direct hand in the dismissal of the employee enough to attribute to him an unlawful act.

In the case of Malayang Samahan ng mga Manggagawa sa M. Greenfield. v. Ramos,35 the Court restated the rule that corporate directors and officers are solidarily liable with the corporation for the termination of employees done with malice or bad faith. Bad faith was defined by the Court thus: "It has been held that bad faith does not connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud."

In the aforecited Santos case, the Court discussed the attendance of exceptional facts and circumstances that could rightly sanction personal liability on the part of the company officer:

In A.C. Ransom, the corporate entity was a family corporation and execution against it could not be implemented because of the disposition post-haste of its leviable assets evidently in order to evade its just and due obligations. The doctrine of "piercing the veil of corporate fiction" was thus clearly appropriate. Chua likewise involved another family corporation, and this time the conflict was between two brothers occupying the highest ranking positions in the company. There were incontrovertible facts which pointed to extreme personal animosity that resulted, evidently in bad faith, in the easing out from the company of one of the brothers by the other.36

In the case of Naguiat v. National Labor Relations Commission,37 the Court applied the doctrine found in the case of A. C. Ransom Labor Untion- CCLU v. National Labor Relations Commission. There was a cessation of the operations of the employer-corporation and, thus, a problem as to who shall pay the employees. In holding the president solidarily liable, the Court considered that he had actively engaged in the management and operations of the corporation. Nevertheless, it absolved from liability the vicepresident, since no evidence on the extent of his participation in the management or operation of the business was proffered.

In the present case, the NLRC took into account the testimony of the witness Roel Benignos who said that they believed that petitioner Corazon Saguemuller was the president of Elcee Farms because the employees would approach her if they needed help, as well as the fact that her sons were the officers of Elcee Farms and Garnele. Beyond these bare suppositions, no evidence, oral or documentary, was

presented to prove that Corazon Saguemuller was truly the President of Elcee Farms. Nor was there even proof that she was in active management of the corporation and had dictated policies for implementation by the corporation. Extending help to private respondents certainly did not automatically vest upon her the position of President of the corporation. There, likewise, appears to be no evidence on record that she had acted maliciously or in bad faith in terminating the services of the private respondents; nor has it been shown that she has in any way consented to the simulated lease contract executed by her sons which effectively terminated the services of the private respondents.

IN VIEW OF THE FOREGOING, the instant Petition is partially granted. This Court AFFIRMS the award of separation pay and moral damages in favor of the private respondents as decreed in the assailed Resolution of the NLRC, to be paid by Elcee Farms with the modification that Corazon Saguemuller should not be held subsidiarily liable. This Court further orders that Alfredo Nicor, Sr. be excluded from the list of employees who are to be paid separation pay and moral damages, for reason that he was inadvertently included in the said list. Costs against the petitioners.

SO ORDERED. Quit claims 1. EMCO plywood vs abelgas The factual antecedents of the case are summarized by the CA as follows:

[Respondents], the retrenched employees of [petitioner] seek the review and reversal of the resolutions of the National Labor Relations Commission (NLRC), dated February 11, 1997 and March 25, 1997, respectively.

The first resolution dismissed [respondents] appeal for lack of merit and affirmed the decision of the Labor Arbiter, dated July 24, 1996, which, in turn, dismissed [respondents] complaint against EMCO and the latters general manager, [petitioner] Jimmy N. Lim (Lim), for illegal dismissal, damages and attorneys fees. The second resolution assailed by the [respondents] consists of the NLRCs denial of their motion for reconsideration of the earlier mentioned February 11, 1997 resolution.

EMCO is a domestic corporation engaged in the business of wood processing, operating through its sawmill and plymill sections where [respondents] used to be assigned as regular workers.

On January 20, 1993 and of March 2, 1993, EMCO, represented by Lim, informed the Department of Labor and Employment (DOLE) of its intention to retrench some of its workers. The intended retrenchment was grounded on purported financial difficulties occasioned by alleged lack of raw materials, frequent machinery breakdown, low market demand and expiration of permit to operate its sawmill department. A memorandum was thereafter issued by EMCO, addressed to all its foremen, section heads, supervisors and department heads, with the following instructions:

1) Retrench some of your workers based on the following guidelines:

a) Old Age (58 years and above except positions that are really skilled);

b) Performance (Attitude, Attendance, Quality/ Quantity of Work[)];

2) Schedule the unspent VL/SL of your men without necessary replacements. x x x

Per EMCOs notice to the DOLE, one hundred four (104) workers were proposed for inclusion in its retrenchment program. As it turned out, though, EMCO terminated two hundred fifty (250) workers. Among them were herein [respondents].

[Respondents] received their separation pay in the amount of four thousand eight hundred fifteen pesos (P4,815.00) each. Deductions were, nevertheless, made by EMCO purportedly for the attorneys fees payable to [respondents] lawyer, for the latters effort in purportedly renegotiating, sometime in 1993, the three peso (P3.00) increase in the wages of [respondents], as now contained in the Collective Bargaining Agreement.

Upon receipt of their separation pay, [respondents] were made to sign quitclaims, which read:

TO WHOM IT MAY CONCERN:

I, ___________ of legal age and a resident of _______________, for and in consideration of the amount of (P____), the receipt of which, in full, is hereby acknowledged, forever discharge and release x x x EMCO PLYWOOD CORPORATION and all its officers men agents and corporate

assigns from any and all forms of actions/suits, debts, sums of money, unpaid wages, overtime pay allowances, overtime pay or an other liability of any nature by reason of my employment which has ceased by this date.

Done this ______________, at Magallanes, Agusan del Norte.

About two (2) years later, [respondents], through their labor union, lodged a compliant against EMCO for illegal dismissal, damages and attorneys fees.

In the main, [respondents] questioned the validity of their retrenchment and the sufficiency of the separation pay received by them.

EMCO countered by interposing the defense of lack of cause of action, contending that [respondents], by signing the quitclaims in favor of EMCO, had, in fact, waived whatever claims they may have against the latter.

Finding for EMCO, the Labor Arbiter dismissed [respondents] complaint.

[Respondents] subsequent appeal to the NLRC was dismissed for lack of merit and the decision of the Labor Arbiter was affirmed. Notably, the NLRC glossed over the issue of whether [respondents] were validly retrenched, and anchored its dismissal of the appeal on the effect of [respondents] waivers or quitclaims, to quote:

The pivotal issue brought to fore is whether or not the quitclaims/waivers executed by [respondents] are valid and binding. The other issues raised by [respondents] are either related to mere technicality, or are merely ancillary or dependent on the main issue.

xxxxxxxxx

There is no doubt that the [respondents] voluntarily executed their quitclaims/waivers as manifested by the fact that they did not promptly question their validity within a reasonable time. It took them two (2) years to challenge and dispute the validity of the waivers by claiming belatedly that they were

either forced or misled into signing the same. Clearly, this case was instituted by [respondents] to unduly exact more payment of separation benefits from [petitioner] at the expense of fairness and justice.

In passing, the NLRC likewise affirmed EMCOs deductions of attorneys fees from the separation pay received by the [respondents].

A motion for reconsideration of the afore-quoted resolution was filed by [respondents] on March 10, 1997, but was denied by the NLRC, purportedly, for lack of merit and for having been filed out of time.[6] (Citations omitted)

Ruling of the Court of Appeals

The CA held that the evidence was insufficient to justify a ruling in favor of EMCO, which had not complied with the one-month prior notice requirement under the Labor Code. The appellate court added that the corporation had not served on the employees the required notice of termination. It opined that the Memorandum, having merely provided the guidelines on the conduct of the intended lay-off, did not constitute such notice. Furthermore, the Memorandum was not addressed to the workers, but to the foremen, the department supervisors and the section heads. Moreover, there was no proper notice to DOLE. The corporation terminated the services of 250 employees but included only 104 of them in the list it filed with DOLE. EMCOs argument that the 146 unlisted employees had voluntarily resigned was brushed aside by the appellate court.

The CA also held that before EMCO resorted to retrenchment, the latter had failed to adduce evidence of its losses and to prove that it had undertaken measures to prevent the occurrence of its alleged actual or impending losses.

Moreover, the CA ruled that the corporation had not paid the legally prescribed separation pay, which was equal to one-month pay or at least one-half month pay for every year of service, whichever was higher. Deducting attorneys fees from the supposed separation pay of the employees was held to be in clear violation of the law. Such fees should have been charged against the funds of their union.

The appellate court further held that the cause of action of the employees had not yet prescribed when the case was filed, because an action for illegal dismissal constituted an injury to their rights. The CA added that the provision applicable to the case was Article 1146 of the New Civil Code, according to

which the prescriptive period for such causes of action was four (4) years. The Complaint, having been filed by the employees only two years after their dismissal, had not prescribed.

All in all, the appellate court concluded that the retrenchment was illegal, because of EMCOs failure to comply with the legal requirements.

Hence, this Petition.[7]

Issue: Whether or not respondent Court manifestly erred in reversing the factual findings of both the Labor Arbiter and the NLRC that private respondents had voluntarily executed their respective Quitclaims?

Ruling: The Petition has no merit. Validity of the Quitclaims

Petitioners argue that the Quitclaims signed by respondents enjoy the presumption of regularity, and that the latter had the burden of proving that their consent had been vitiated.[32] They further maintain that aside from Eddie de la Cruz, the other respondents did not submit their respective supporting affidavits detailing how their individual consents had been obtained. Allegedly, such documents do not constitute the clear and convincing evidence required under the law to overturn the validity of quitclaims.[33]

We hold that the labor arbiter and the NLRC erred in concluding that respondents had voluntarily signed the Waivers and Quitclaim Deeds. Contrary to this assumption, the mere fact that respondents were not physically coerced or intimidated does not necessarily imply that they freely or voluntarily consented to the terms thereof.[34] Moreover, petitioners, not respondents, have the burden of proving that the Quitclaims were voluntarily entered into.[35]

Furthermore, in Trendline Employees Association-Southern Philippines Federation of Labor (TEASPFL) v. NLRC[36] and Philippine Carpet Employees Association v. Philippine Carpet Manufacturing Corporation,[37] similar retrenchments were found to be illegal, as the employers had

failed to prove that they were actually suffering from poor financial conditions. In these cases, the Quitclaims were deemed illegal, as the employees consents had been vitiated by mistake or fraud.

These rulings are applicable to the case at bar. Because the retrenchment was illegal and of no effect, the Quitclaims were therefore not voluntarily entered into by respondents. Their consent was similarly vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and releases by employees pressured into signing by unscrupulous employers minded to evade legal responsibilities.[38]

As a rule, deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel.[39] The amounts already received by the present respondents as consideration for signing the Quitclaims should, however, be deducted from their respective monetary awards.

Strikes and lockouts cases 1. Capitol medical center vs nlrc Petitioner is a hospital with address at Panay Avenue corner Scout Magbanua Street, Quezon City. Upon the other hand, Respondent is a duly registered labor union acting as the certified collective bargaining agent of the rank-and-file employees of petitioner hospital. Respondent sent petitioner a letter requesting a negotiation of their Collective Bargaining Agreement (CBA). Petitioner, however, challenged the union’s legitimacy and refused to bargain with respondent. Subsequently petitioner filed with the (BLR), Department of Labor and Employment, a petition for cancellation of respondent’s certificate of registration. For its part, respondent filed with the (NCMB), National Capital Region, a notice of strike. Respondent alleged that petitioner’s refusal to bargain constitutes unfair labor practice. Despite several conferences and efforts of the designated conciliator-mediator, the parties failed to reach an amicable settlement. Respondent staged a strike. Former Labor Secretary Leonardo A. Quisumbing, now Associate Justice of this Court, issued an Order assuming jurisdiction over the labor dispute and ordering all striking workers to return to work and the management to resume normal operations, thus:

xxx all striking workers are directed to return to work within twenty-four (24) hours from the receipt of this Order and the management to resume normal operations and accept back all striking workers under the same terms and conditions prevailing before the strike. Further, parties are directed to cease and desist from committing any act that may exacerbate the situation. Moreover, parties are hereby directed to submit within 10 days from receipt of this Order proposals and counter-proposals leading to the conclusion of the collective bargaining agreement in compliance with aforementioned Resolution of the Office as affirmed by the Supreme Court. xxx ISSUE: Whether or not Secretary of Labor cannot exercise his powers under Article 263 (g) of the Labor Code without observing the requirements of due process. RULING: The discretion to assume jurisdiction may be exercised by the Secretary of Labor and Employment without the necessity of prior notice or hearing given to any of the parties. The rationale for his primary assumption of jurisdiction can justifiably rest on his own consideration of the exigency of the situation in relation to the national interests. xxx In labor disputes adversely affecting the continued operation of such hospitals, clinics or medical institutions, it shall be the duty of the striking union or locking-out employer to provide and maintain an effective skeletal workforce of medical and other health personnel, whose movement and services shall be unhampered and unrestricted, as are necessary to insure the proper and adequate protection of the life and health of its patients, most especially emergency cases, for the duration of the strike or lockout. In such cases, therefore, the Secretary of Labor and Employment is mandated to immediately assume, within twenty-four (24) hours from knowledge of the occurrence of such a strike or lockout, jurisdiction over the same or certify it to the Commission for compulsory arbitration. For this purpose, the contending parties are strictly enjoined to comply with such orders, prohibitions and/or injunctions as are issued by the Secretary of Labor and Employment or the Commission, under pain of immediate disciplinary action, including dismissal or loss of employment status or payment by the locking-out employer of backwages, damages and other affirmative relief, even criminal prosecution against either or both of them. The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries that, in his opinion, are indispensable to the national interest, and from intervening at any time and assuming jurisdiction over any such labor dispute in order to settle or terminate the same. xxx 2. Lapanday workers vs nlrc

Lapanday Agricultural and Development Corporation (LADECO) and Cadeco Argo Development Phils Inc. are sister companies engaged in the production of bananas. Their agricultural establishments are located in Davao City. They agreed to a Collective Bargaining Agreement (CBA) covering the period from December 5, 1985 to November 30, 1988 with Lapanday Workers’ Union (Union). Said union is the duly certified bargaining agent of the rank and file employees and is affiliated with the KMU-ANGLO. Before the expiration of the CBA, the management policies were initiated by the sister companies which changed the relationship of the parties: Sister companies contracted with Philippine Eagle Protectors and Security Agency, Inc., to provide security services. But there was an allegation that guards intimidated and harassed the union members. Seminars on Human Development and Industrial Relations (HDIR) for their managerial and supervisory employees and the rank-and-file were conducted which the Union claimed that the ANGLO (Alliance of Nationalist and Genuine Labor Organization) was considered belonging to other outlawed labor organizations such as the National Democratic Front or other leftist groups. A labor-management meeting was held on August 2, 1988 where the labor group represented by its President Arquilao Bacolod, and its legal counsel raised unfair labor practices such as coercion of employees, intimidation of the union members and union busting. They agreed to allow its members to attend the seminar for the rank-and-file employees. But, the Union directed its members not to attend the seminars and picketed the premises of the Philippine Eagle Protectors to show their displeasure on the hiring of the guards. The Union filed on August 25, 1988, a Notice of Strike with the National Conciliation and Mediation Board (NCMB) accusing the company of the same issues raised during the August 2, 1988 labor-management meeting. A conciliation conference was called for where it was agreed that union officers would attend the HDIR seminar deleting the discussion on KMU-ANGLO and guidelines governing the guards would be established. On September 8, 1988, Danilo Martinez, a member of the Board of Directors of the Sister companies charged the Union with economic sabotage through slowdown to which they filed charges against the Union and its members for illegal strike, unfair labor practice and damages, with prayer for injunction. City Mayor Rodrigo Duterte intervened but the dialogues proved fruitless as sister companies refused to withdraw the cases earlier filed with the Union. Thereafter, a strike vote was conducted among the members of the Union and those in favor of the strike won overwhelming support from the workers. The result of the strike vote was then submitted to the NCMB on October 10, 1988. Two days later, or on October 12, 1988, the Union struck. The gunman was later identified as Eledio Samson, an alleged member of the new security forces of sister companies. This incident resulted to:

most of the members of the Union refused to report for work they did not comply with the “quota system” adopted by the management to bolster production output there were allegations that the Union instructed the workers to reduce their production to thirty per cent (30%). Tomas Basco and 25 other workers, filed a complaint for unfair labor practice and illegal suspension against LADECO. Another complaint for unfair labor practice and illegal dismissal was filed by the Union, together with Arquilao Bacolod and 58 other complainants. These cases were heard by Labor Arbiter Newton Sancho. With the case filed by the sister companies, Labor Arbiter Antonio Villanueva ruled that the Union staged an illegal strike and declared the employees listed as respondents in the complaint to have lost their employment status with Lapanday Agricultural and Development Corporation and Cadeco Agro Development Philippines, Inc.; and ordered respondents (petitioners in this case) to desist from further committing an illegal strike. Petitioners appealed the Villanueva decision to public respondent NLRC. Before the NLRC could resolve the appeal on the Villanueva decision, Labor Arbiter Sancho rendered a decision in the two (2) cases filed by the Union against private respondents LADECO and CADECO declaring LADECO and CADECO guilty of unfair labor practices and illegal dismissal and ordered the reinstatement of the dismissed employees of private respondents, with backwages and other benefits. It considered the refusal of the workers to report for work on September 9, 1988, justified by the circumstance then prevailing which is the killing of Danilo Martinez on September 8,1988. NLRC upheld the decision of Labor Arbiter Villanueva. The Union filed its MR but to no avail. Hence, this petition claiming that NLRC gravely abused its discretion in: a) declaring that their activities, from September 9, 1988 to October 12, 1988, were strike activities; and b) declaring that the strike staged on October 12, 1988 was illegal. ISSUE: Whether strike staged on October 12, 1988 illegal HELD: Yes, as it was held within the seven (7) day waiting period provided for by paragraph (f), Article 263 of the Labor Code, as amended. The haste in holding the strike prevented the Department of Labor and Employment from verifying whether it carried the approval of the majority of the union members. Hence, there was no grave abuse of discretion committed. RATIO: The applicable laws are Articles 263 and 264 of the Labor Code, as amended by E.O. No. 111, dated December 24, 1986. Paragraphs (c) and (f) of Article 263 of the Labor Code, as amended by E.O. 111, provides:

(c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file anotice of strike or the employer may file, notice of lockout with the Ministry at least 30 days before the intended date thereof. In cases of unfair labor practice, the notice shall be 15 days and in the absence of a duly certified or recognized bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting where the existence of the union is threatened, the 15daycooling-off period shall not apply and the union may take action immediately. xxx xxx xxx (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Ministry may, at its own initiative or upon the request of any affected party, supervise the conduct of secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the votingat least seven (7) days before the intended strike or lockout subject to the cooling-off period herein provided. Article 264 of the same Code reads: Art. 264. Prohibited activities. — (a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. xxx xxx xxx . . . . Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided that mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. (emphasis ours). DISPOSITIVE: The petition is dismissed for failure to show grave abuse of discretion on the part of the public respondent. Costs against the petitioners.