Case

Facts

Issue

Held

1. Citibank v. CA,
November27,1998

Citibank and El Toro SecurityAgency,Inc.Entered intoacontractfortheformertoprovidesecurity

and protective services tosafeguard and protect the bank's premises. Under thecontract,ElToro
obligated itself toprovidetheservicesofsecurity guardsto safeguardandprotectthepremises and
property of Citibank against theft, robbery or any other unlawful actscommitted by any personor
persons, and assumed responsibility for losses and/or damages that may be incurred byCitibank
due to or asaresultofthenegligenceofElToroorany ofitsassignedpersonnel.Citibankrenewed
the security contract with El Toro yearly until it expired. Then, Citibank IntegratedGuards Labor
AllianceSEGATUPAS/FSM (CIGLA) filed with the National Conciliation and Mediation Board
(NCMB) a request for preventive mediation based on Unfair labor practice;
Dismissal of union
officers/members;
and Unionbusting. CIGLA converted its request for preventivemediationintoa
notice of strike for failure ofthe parties to reach a mutually acceptablesettlement of the issues,
which it followed with a supplemental notice of strike alleging as supplementalissue the mass
dismissal of all unionofficersand members. Citibank filed with the RegionalTrialCourt,Makati,a
complaint for injunction and damages. CIGLA filed with the trial court a motion to dismiss the
complaintallegingamongothersthattheCourthadnojurisdiction,thisbeinglabordispute.

WON the
involves a
dispute

case
labor

No. Article 212, paragraphlof the Labor Code provides the definition ofa
"labor dispute". It "includes any controversy or matter concerning termsor
conditions of employment or the association orrepresentation ofpersonsin
negotiating, fixing, maintaining, changing or arranging the terms and
conditions of employment,regardless of whether thedisputantsstandinthe
proximate relation ofemployerand employee. El Toro was anindependent
contractor. Thus, no EE and ERexisted between Citibank and thesecurity
guard members of theunioninthe security agency who were assignedto
secure the bank'spremisesandproperty. Hence,therewasnolabordispute
and no right to strikeagainstthe bank. The dispute involved is acivilone
and the jurisdiction over the subject matter of the complaint lies withthe
regionaltrialcourt

2. PAL v. NLRC, March

20,1998

Ferdinand PinedaandGodofredoCablingareflightstewardsofthepetitioner.Bothweredismissed
from the servicefortheirallegedinvolvementintheApril3, 1993 currencysmugglinginHongKong.
One person in the nameof Joseph Abaca was intercepted attheairportcarryingabagcontaining
2.5 million pesos that allegedly found said plastic bag at the Skybed section of arrival flight
PR300/03whereprivaterespondentsservedasflightattendants.
After having beenimplicated by Abaca in theincidentbefore therespondentsdisciplinaryboard,it
is was Abaca himselfwho gaveexculpating statements to the sameboardanddeclared that the
private respondentswerenottheownersofthesaidcurrencies,thatjustaspetitionersthought that
they were already fully clearedofthecharges,astheynolongerreceivedanysummons/noticeson
the intended additionalhearings mandated by the DisciplinaryBoard,thattheywerealreadyfully
cleared ofthe charges,astheynolongerreceivedany summons/noticesontheintendedadditional
hearings mandated by the Disciplinary Board, they were surprised to find out that they were
terminatedbyPAL.
Aggrieved by said dismissal, private respondents filed with the NLRC a petition for injunction
prayingthat:
"I. Upon filing of this Petition, a temporary restraining order be issued, prohibiting respondents
(petitioner herein) from effecting or enforcing the Decision dated Feb. 22, 1995, or to reinstate
petitioners temporarily while a hearing on the propriety of the issuance of awritof preliminary
injunctionisbeingundertaken;

"II. After hearing, a writ of preliminary mandatory injunction be issued ordering respondent to
reinstate petitioners to their former positions pending the hearing of this case, or, prohibiting
respondent from enforcing its Decision dated February 22,1995 while this case is pending
adjudication;

"III. After hearing, that the writ of preliminary injunction as to the reliefs sought for be made
permanent, thatpetitioners be awarded full back wages, moral damagesofPHP500,000.00each
and exemplary damages of PHP 500,000.00 each, attorneys fees equivalent to ten percent of
whateveramountisawarded,andthecostsofsuit."

W/N the NLRC acted

with grave abuse of
discretion on issuing
thewritofinjunction

Yes. In labor cases,Article218oftheLaborCode empowersthe NLRC"(e)

To enjoin or restrain any actual or threatened commission of any or all
prohibited or unlawfulactsortorequiretheperformanceof a particularactin
any labor disputewhich, ifnot restrainedorperformed forthwith,maycause
grave or irreparabledamage toany party or render ineffectual anydecision
infavorofsuchparty.

Complementing the abovequoted provision, Sec. 1, Rule XI of the New

RulesofProcedureoftheNLRC,pertinentlyprovidesasfollows:
"Section1.InjunctioninOrdinaryLaborDispute.Apreliminaryinjunctionora
restraining order may be granted by the Commission through its divisions
pursuant to the provisionsofparagraph(e)ofArticle218of theLaborCode,
as amended, when itis establishedonthebases ofthe sworn allegationsin
the petition thatthe actscomplained of, involving or arising from any labor
dispute before the Commission, which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party or render
ineffectualanydecisioninfavorofsuchparty.
From the foregoing provisions of law, the power of the NLRC to issuean
injunctive writ originatesfrom"any labor dispute"uponapplicationby a party
thereof, which application if not granted "may cause grave or irreparable
damage to any party or render ineffectual any decision in favor of such
party." The term "labor dispute" is defined as "any controversy or matter
concerning terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining, changing, or
arranging the terms and conditions of employment regardless ofwhetheror
not the disputants stand in the proximate relation of employers and
employees."

The NLRC issued thewritof injunction. PAL moved for reconsideration onthegroundthathasno
jurisdiction toissueaninjunctionorrestrainingorder since this maybeissuedonlyunderArticle218
of the Labor Codeif thecaseinvolvesorarisesfrom labor disputesandtherebydivestingthelabor
arbiterofitsoriginalandexclusivejurisdictionoverillegaldismissalcases.

3. Penaranda v.
Bagang Plywood Corp,
May3,2006

SYNOPSIS: Managerial employees and members of the managerial staff are exempted from the
provisions of the Labor Code on labor standards. Since petitioner belongs to this class of
employees,heisnotentitledtoovertimepayandpremiumpayforworkingonrestdays.
FACTS:
PetitionerCharlitoPearandawashiredasanemployeeofBagangaPlywoodCorporation
(BPC) to take charge of the operations and maintenance of its steamplant boiler. Respondent
(BPC) is a domestic corporation duly organized and existing under Philippine laws and is
representedhereinbyitsGeneralManagerHUDSONCHUA,theindividualrespondent.
Pearanda through counsel in his position paper alleges that he was employed by respondent
Baganga on March 15, 1999 with a monthly salary of P5,000.00 asForeman/Boiler Head/Shift
Engineeruntil hewasallegedlyillegallyterminated on December19,2000.Further,hewasnotpaid
his overtime pay, premium payfor working during holidays/rest days,night shiftdifferentials. The

The petition forinjunctiondirectlyfiledbeforethe NLRCis in reality anaction

for illegal dismissal. This isclear from the allegations in the petition which
prays for: reinstatement of private respondents;
award of full back wages,
moral and exemplary damages;
and attorney's fees.As such,the petition
should have been filed with the labor arbiter who has the original and
exclusive jurisdiction to hear and decide the following cases involving all
workers,whetheragriculturalornonagricultural:(1)Unfairlaborpractice;
(2)
Termination disputes;
(3) If accompanied with a claim for reinstatement,
those cases that workers may fileinvolving wages, rates of pay, hoursof
work and other terms and conditions of employment;
(4) Claims for actual,
moral, exemplary and other forms of damages arising from the
employeremployee relations;
(5) Casesarising from anyviolationof Article
264 of this Code, including questions involving the legality of strikes and
lockouts;
and (6) Except claims for employees compensation, social
security, medicare and maternity benefits, all other claims arising from
employeremployee relations, including those of persons in domestic or
household service, involvingan amount exceeding five thousand pesos (P
5,000.00), whetherornot accompanied with a claim for reinstatement.The
jurisdiction conferredby theforegoing legal provision to the laborarbiter is
both original and exclusive, meaning, no other officer or tribunal cantake
cognizance of,hearanddecide any of the cases therein enumerated.The
only exceptions are where theSecretary of Labor and Employment or the
NLRC exercises the powerof compulsoryarbitration,orthe parties agreeto
submit the matterto voluntaryarbitration pursuant to Article 263 (g)of the
Labor Code. On the other hand, the NLRC shall have exclusive appellate
jurisdiction over all cases decided by labor arbiters as provided in Article
217(b)oftheLaborCode.
In short, the jurisdictionoftheNLRCinillegaldismissalcases isappellatein
nature and, therefore,itcannotentertaintheprivaterespondents'petition for
injunction, whichchallengesthe dismissalordersof petitioner.Article218(e)
of the Labor Codedoes notprovide blanketauthorityto theNLRCoranyof
its divisions to issue writsofinjunction,consideringthatSection1ofRuleXI
of the New Rules of Procedure of the NLRC makes injunction only an
ancillaryremedyinordinarylabordisputes.
WON Penaranda is
entitled to monetary
benefits under art.82
oftheLaborCode.

HELD:
No.Article82of theLaborCodeexemptsmanagerial employees
from the coverageof labor standards. Labor standards provide theworking
conditions of employees, includingentitlementto overtimepayandpremium
pay for working on rest days.Under this provision, managerial employees
are "those whose primary duty consists of the management of the
establishment in which they are employed or of a department or
subdivision."
The Court disagrees with the NLRCs finding that petitioner was a
managerial employee. However, petitioner wasamember ofthe managerial
staff, which also takes him out of the coverage of labor standards. Like
managerial employees,officersandmembersofthe managerialstaffarenot

respondent [BPC]wasontemporary closure due to repairandgeneralmaintenanceanditapplied

for clearance with the DOLE, and due to the insistence of herein complainanthe was paid his
separationbenefits.Hence,hewasnotterminatedfromemploymentmuchlessillegally.
Being a managerialemployeehe is not entitled to overtime pay andif everherenderedservices
beyondthenormalhoursofwork,therewasnoofficeorder/orauthorizationforhimtodoso.
Labor Arbiter ruled that there was no illegal dismissal because Penarandas complaint was
premature because he was still employed with Baganga. The petitioneris alsoentitledtoOTpay,
premiumpay,andattorneysfees.
Onappeal,NLRCdeletedtheawardofOTpay,premiumpayandattorneysfees.
CAdismissedPenarandaspetitionbasedonproceduralfailures.

4. SMCC v. Charter
Chemical and Coating
Corp.,March16,2011

On February 19,1999, Samahang Manggagawa sa Charter ChemicalSolidarityofUnionsinthe

Philippines for Empowerment and Reforms(petitioner union) filedapetitionforcertificationelection
among the regular rankandfile employees of Charter Chemical and Coating Corporation
(respondentcompany)withtheMediationArbitrationUnitoftheDOLE,NationalCapitalRegion.
On April 14, 1999,respondentcompanyfiledan Answer with MotiontoDismiss4onthegroundthat
petitioner union is not a legitimate labor organization because of (1) failure to comply with the
documentation requirements set by law, and (2) the inclusion of supervisory employees within
petitionerunion.
MedArbs ruling: the petition was denied on the grounds ofthe petitionernotbeingabletocomply
with the statutory requirements and that several members of the petitioner were supervisory
employees who were supposedly banned from joining the same which seeked to represent
rankandfileemployees.
DOLEs ruling: the M.R.,oftheoriginallydeniedpetition,wasgranted.Therewerenoevidencethat
substantiated the findings of the medarb that some of the members were actually supervisory
employees.
CAsruling:
themedarbsdecisionwasupheld.

entitledtotheprovisionsoflawonlaborstandards.
The ImplementingRulesoftheLaborCodedefinemembers ofamanagerial
staffasthosewiththefollowingdutiesandresponsibilities:
"(1) Theprimaryduty consists of the performanceofworkdirectlyrelatedto
managementpoliciesoftheemployer;

"(2) Customarily and regularly exercise discretion and independent

judgment;

"(3) (i) Regularly and directly assist a proprietor or a managerial employee

whose primary duty consists of the management of the establishment in
which he is employedorsubdivision thereof;
or (ii) execute under general
supervision work along specialized or technical lines requiring special
training, experience,orknowledge;
or(iii)executeundergeneral supervision
specialassignmentsandtasks;
and
"(4) who do not devote more than 20 percent of theirhours worked in a
workweek to activities which are not directly and closely related to the
performanceoftheworkdescribedinparagraphs(1),(2),and(3)above."
Petitioner supervisedthe engineering section of the steam plant boiler.His
work involved overseeing the operation of the machines and the
performance oftheworkersintheengineeringsection.Thisworknecessarily
required the use of discretion and independent judgment to ensure the
proper functioning of the steam plant boiler. As supervisor, petitioner is
deemedamemberofthemanagerialstaff.

WON CA committed
grave abuse of
discretion in holding
that the alleged
mixture
of
rankandfile
and
supervisory
employee[s]
of
petitioner [unions]
membership is [a]
ground for the
cancellation
of
petitioner [unions]
legal personality and
dismissal of [the]
petition
for
certificationelection.

The mixture of rankandfileandsupervisory employees in petitionerunion

doesnotnullifyitslegalpersonalityasalegitimatelabororganization.
The CA found thatpetitionerunionhasforitsmembership bothrankandfile
and supervisory employees. However, petitioner union sought to represent
the bargaining unit consisting of rankandfile employees.
UnderArticle
245 of the Labor Code,supervisory employeesare not eligible
for membership in a labor organization of rankandfile
employees. T
hus, the appellate courtruledthatpetitioner union cannot
be considered a legitimate labor organization pursuant to Toyota Motor
Philippines v. Toyota Motor Philippines Corporation Labor Union28
(hereinafterToyota).
Preliminarily, we notethatpetitioner union questions the factualfindingsof
the MedArbiter, asupheldbytheappellatecourt,that12of its membersare
supervisory employees. However, petitioner union failed to present any
rebuttal evidence in the proceedings below after respondent company
submitted in evidence thejobdescriptions of the aforesaidemployees.The
job descriptions indicate that the aforesaid employees exercise
recommendatory managerial actions which are not merely routinary but
require the use ofindependent judgment, hence, falling withinthedefinition
of supervisory employees under Article 212 of the Labor Code. For this
reason, we are constrained toagree with the MedArbiter,as upheldbythe
appellate court, that petitioner union consisted of both rankandfile and

supervisoryemployees.
Nonetheless, the inclusion of the aforesaid supervisory
employees inpetitioner uniondoesnot divestitofitsstatusasa
legitimate labor organization. R.A. No. 6715 omitted specifying the
exact effect anyviolationoftheprohibition[on thecominglingofsupervisory
and rankandfile employees] would bring about on thelegitimacyofalabor
organization.

5. Jumuad v. HiFlyer
Food Inc., September7,
2011

Pamela Florentina P. Jumuad (Jumuad) is the area manager for the entire VisayasMindanao
region, comprisingtheprovincesofCebu,Bacolod,Iloilo and Bohol.Amongthebranchesunder her
supervision were theKFCbranchesinGaisanoMall, CebuCity (KFCGaisano);
inCocomall,Cebu
City (KFCCocomall);
and in Island CityMall,Bohol(KFCBohol).HiFlyerconductedafoodsafety,
service and sanitation auditat KFCGaisano.Theaudit revealedseveralsanitationviolations,such
as the presence ofrodentsandtheuseofadefective chillerfor thestorageoffood. Then,HiFlyer
audited the accounts of KFCBohol amid reports that certain employees werecovering up cash
shortages.Asaresult,thefollowingirregularitieswerediscovered:
1)cashshortageamountingto62,290.85;

2)delayinthedepositsofcashsalesbyanaverageofthreedays;

3) the presence of two sealedcashfordeposit envelopes containingpapercutouts instead of

cash;

4)falsifiedentriesinthedepositlogbook;

5)lapsesininventorycontrol;
and
6)materialproductspoilage.

HiFlyer conducted another review at its KFCCocomall branch. Groutandleaksat the branchs
kitchen wall, dried upspillsfromthe marinator, as well as a live rat underpostmix, and signs of
rodentgnawing/infestationwerefound.
HiFlyer sent JumuadanIrregularitiesReportandNoticeof Charges.Jumuadsubmittedherwritten
explanation. HiFlyer held an administrative hearing where Jumuad appearedwith counsel. Not
satisfied with her explanations, HiFlyer served her a Notice of DismissaldatedOctober14,2005,
effectingherterminationonOctober17,2005.

Jumuad filed a complaint against HiFlyer and/or Jesus R. Montemayor (Montemayor) for illegal
dismissalbeforetheNLRC.TheLA(laborarbiter)ruledthatJumuadwasillegallydismissed.
Both Jumuad and HiFlyer appealed to the NLRC. Jumuad faulted the LA for not awarding
backwages and damages despite its finding that she was illegally dismissed. HiFlyer and
Montemayor, onthe otherhand, assailed the finding that Jumuadwasillegallydismissedandthat
they were solidarilyliabletherefor. NLRC affirmed in toto theLAdecision.AccordingtotheNLRC,
there are emails thatwere proofthat Jumuad was denieddueprocessconsideringthatnomatter
how shewould refutethechargeshurledagainst her,the decisionofHiFlyertoterminateherwould
notchange.

HiFlyer appealedthe case before the CA in Cebu City alleging graveabuse ofdiscretion on the
part of the NLRC. CArenderedthesubjectdecision reversing thedecisionofthelabortribunal.The
CA was of the opinion that the requirements of substantive and procedural due process were

Whether or not
Jumuad was illegally
dismissed

No, Article 282 of the Labor Code provides: Termination by Employer. An

employermayterminateanemploymentforanyofthefollowingcauses:
(a) Serious misconduct or willful disobedience by the employee of the
lawfulordersofhisemployerorrepresentativeinconnectionwithhiswork;

(b)Grossandhabitualneglectbytheemployeeofhisduties;

(c) Fraud or willful breachby theemployee of the trust reposedinhimby

hisemployerordulyauthorizedrepresentative;

(d) Commission of a crime or offensebytheemployeeagainstthe person

of hisemployeroranyimmediatememberofhisfamilyorhis dulyauthorized
representative;
and
(e)Othercausesanalogoustotheforegoing.

In this case, Jumuad willfullybreached her duties as to be unworthy ofthe

trust and confidence of HiFlyer. Jumuad was a managerial employee.
Jumuad executedmanagement policies and had thepower todisciplinethe
employees of KFC.Article212(m) of the LaborCodedefinesamanagerial
employee as onewhoisvestedwithpowersorprerogativesto laydownand
execute management policies and/or hire, transfer, suspend, layoff, recall,
discharge,assignordisciplineemployees.

As long asthere issomebasisforsuchlossofconfidence, such aswhenthe

employer has reasonable ground to believe that theemployeeconcernedis
responsible for the purportedmisconduct, andthe natureof hisparticipation
therein renders himunworthy ofthe trust and confidence demanded ofhis
position,amanagerialemployeemaybedismissed.

Reports of HiFlyer show that there were anomalies committed in the

branches managedby Jumuad. On the principle of respondeatsuperior or
command responsibilityalone, Jumuad may be held liable fornegligencein
the performance ofhermanagerial duties. She may not have beendirectly
involved in causingthecashshortagesinKFCBohol,but her involvementin
not performing herdutymonitoringandsupportingthe dayto dayoperations
of the branches and ensure that all the facilities and equipment at the
restaurant were properly maintained and serviced, could have truly
prevented the whole debacle from ever occurring. Management has the
prerogative to disciplineitsemployees and to impose appropriatepenalties
onerringworkerspursuanttocompanyrulesandregulations.

complied with affording Jumuad an opportunity to be heard first,when shesubmitted her written
explanation and then, whenshe was informed of the decision andthebasisofhertermination.As
for the email exchangesbetweenMontemayorand theofficersofHiFlyer,theCAopinedthatthey
did not equate to a predetermination of Jumuads termination. Itwasof theviewthat the email
exchanges were merediscussions between Montemayor and other officersofHiFlyeronwhether
grounds for disciplinary action or termination existed. The emails just showed that HiFlyer
extensively deliberated thenature and cause of the charges againstJumuad. CA considered the
deplorable sanitary conditions and the cash shortages uncovered at three of the seven KFC
branches supervisedby Jumuad as enough bases for HiFlyer to lose its trustandconfidence in
her.
ThusthisPetitionforReviewonCertioarari

6.
Peoples
Broadcasting Servicev.
Sec of Labor, March6,
2012 (DOLE can
determine existence of
EE Rel and summary
on128,129and217)

In this case, HiFlyerexercised ingoodfaithitsmanagementprerogativeas

there is no dispute that it has lost trust and confidence in her and her
managerial abilities, to its damage and prejudice. Her dismissal, was
therefore,justified.

Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department of

Whether or not the

Yes. No limitation in the law was placed upon the power of the DOLEto

Labor and Employment (DOLE) Regional Office No. VII, Cebu City, for illegal deduction,

DOLE can make a

determine the existence of an employeremployee relationship. No

nonpayment of serviceincentive leave, 13th month pay,premiumpayforholidayandrestdayand

determination

of

procedure was laid down wherethe DOLE would only make a preliminary

illegal diminution ofbenefits,delayed payment of wages and noncoverageofSSS,PAGIBIGand

whether or not an

finding, that thepower was primarily heldbytheNLRC. Thelaw did notsay

Philhealth. After the conduct of summary investigations, and after the parties submitted their

employeremployee

that the DOLE wouldfirst seektheNLRCsdetermination ofthe existenceof

position papers, the DOLE Regional Director found that private respondent was an employee of

relationshipexist.

an employeremployee relationship, or that should the existence of the

petitioner, and wasentitledto his moneyclaims.The Acting DOLESecretarydismissedpetitioners

employeremployee relationship be disputed, the DOLE would refer the

appeal. When the matter was brought before the CA, where petitionerclaimedthat it had been

matter to the NLRC.The DOLEmust have thepowerto determine whether

denied due process, itwasheldthat petitionerwasaccordeddueprocessasithadbeengiventhe

or not an employeremployeerelationship exists, and from there todecide

opportunity to be heard, and that the DOLE Secretary had jurisdiction over the matter, as the

whether or not to issue compliance orders inaccordancewithArt.128(b)of

jurisdictional limitation imposed by Article 129 of the Labor Code on the power of the DOLE

theLaborCode,asamendedbyRA7730.

SecretaryunderArt.128(b)oftheCodehadbeenrepealedbyRepublicActNo.(RA)7730.

In the prior decision ofthe Supreme Court, the CA Decision was reversed and setaside,andthe

complaint againstpetitionerwas dismissed.TheCourtfound thattherewasnoemployeremployee

relationship between petitioner and private respondent. ItwasheldthatwhiletheDOLEmaymake
a determinationof theexistence of an employeremployee relationship, this function could not be
coextensive withthe visitorialandenforcementpower.NLRC was heldtobetheprimaryagencyin
determiningtheexistenceofanemployeremployeerelationship.
Fromthe decision,thePublicAttorneysOffice(PAO)filed a MotionforClarificationofDecision(with
Leave of Court). The PAO sought to clarify as to whenthe visitorialandenforcementpowerofthe

DOLE be not considered as coextensive with the power to determine the existence of an
employeremployeerelationship.

7. ExBataan Veterans
Security Agencyv.Sec.
Laguesma, November
20,2007

:
ExBataan Veterans Security Agency, Inc. (EBVSAI) is in the business of providing security
services while private respondents are EBVSAI's employees assigned to the National Power
CorporationatAmbuklaoHydroElectricPlant,Bokod,Benguet(AmbuklaoPlant).
On 20 February 1996, private respondents led by Alexander Pocding (Pocding) instituted a
complaint4 for underpayment of wages against EBVSAI before the Regional Office of the
DepartmentofLaborandEmployment(DOLE).
On 7 March 1996, the Regional Office conducted a complaint inspection atthe Ambuklao Plant
where the following violations were noted: (1) nonpresentation of records;
(2) nonpayment of
holiday pay;
(3) nonpaymentof rest daypremium;
(4)underpayment ofnight shiftdifferentialpay;

(5) nonpayment of service incentive leave;

(6) underpayment of 13th month pay;
(7) no
registration;
(8) no annual medical report;
(9) no annual work accidental report;
(10) no safety
committee;
and (11) no trained firstaider.5 On the samedate,the RegionalOfficeissuedanotice
of hearing6 requiring EBVSAI and private respondents to attendthe hearing on 22 March 1996.
Otherhearingsweresetfor8May1996,27May1996and10June1996.
EBVSAI filed a motion forreconsideration and alleged that the RegionalDirector does not have
jurisdiction overthesubjectmatterofthecasebecausethe moneyclaimofeachprivaterespondent
exceeded P5, 000. EBVSAIpointed out that the RegionalDirectorshouldhaveendorsedthecase
totheLaborArbiter.
In a supplemental motion forreconsideration, EBVSAI questionedtheRegionalDirector's basisfor
thecomputationofthedeficienciesduetoeachprivaterespondent.
In an Order dated 16 January 1997, the Regional Director denied EBVSAI's motion for
reconsideration and supplemental motion for reconsideration. TheRegional Director stated that,
pursuant to RepublicActNo.7730 (RA 7730), the limitations underArticles129and217(6)ofthe
Labor Code no longerapply tothe Secretary of Labor'svisitorial and enforcement powers under
Article 128(b). TheSecretaryofLabororhisdulyauthorized representativesarenowempoweredto
hear and decide, in a summary proceeding, any matter involving the recoveryof any amount of
wages and other monetary claims arising out of employeremployeerelationsat the time of the
inspection.
EBVSAIappealedtotheSecretaryofLabor.
RulingofSec.Labor:
affirmedtheRegionalDirectorsdecision
CAruling:
affirmedtheSecretaryofLaboranddismissedallothermotions

Whether
the
Secretary of Labor or
his duly authorized
representatives have
jurisdiction over the
money claims of
private respondents
which exceed P5,
000.

EBVSAI maintains thatunderArticles129and217(6)of theLaborCode,the

Labor Arbiter, not the Regional Director, has exclusive and original
jurisdiction over thecasebecause the individual monetary claim of private
respondents exceeds P5,000. In Allied Investigation Bureau,Inc.v.Sec.of
Labor,weruledthat:
While it is true thatunderArticles129and217oftheLaborCode,theLabor
Arbiter hasjurisdictiontohearanddecidecases wherethe aggregatemoney
claims of each employeeexceeds P5,000.00, said provisions oflawdonot
contemplate nor cover the visitorial and enforcement powers of the
SecretaryofLabororhisdulyauthorizedrepresentatives.
Rather, said powers are defined and set forth in Article 128 of the Labor
Code(asamendedbyR.A.No.7730)thus:
Art.128Visitorialandenforcementpower.xxx
(b) Notwithstanding theprovisions of Article[s] 129 and 217 of thisCodeto
the contrary, andincases wheretherelationship ofemployeremployeestill
exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give
effect to [the labor standards provisions of this Code and other] labor
legislation based on the findings of labor employment and enforcement
officers or industrial safety engineers made in thecourseof inspection.The
Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by
documentaryproofswhichwerenotconsideredinthecourseofinspection.
The aforequotedprovisionexplicitly excludes from its coverage Articles129
and 217 of the Labor Codethereby retaining and further strengthening the
power of the Secretary of Labor or his duly authorized representativesto
issue compliance orders togive effect to the labor standards provisionsof
said Code and other labor legislation based on the findings of labor
employment and enforcement officer or industrial safety engineer madein
thecourseofinspection.
This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v.
Sensing, where we sustainedthe jurisdictionoftheDOLE RegionalDirector
and held that "the visitorial and enforcementpowersof theDOLERegional
Director to order and enforce compliance with labor standard laws canbe
exercisedevenwheretheindividualclaimexceedsP5,000."
However, if the labor standardscase is covered by the exceptionclausein
Article 128(b) of the Labor Code, then the Regional Director will haveto
endorse the case to the appropriate Arbitration Branch of the NLRC. In
order to divest the Regional Director or his representatives of

jurisdiction, thefollowing elementsmustbepresent:(a) thatthe

employer contests the findings of the labor regulations officer
and raises issues thereon (b) that in order to resolve such
issues, there is aneedto examineevidentiary mattersand(c)
that such matters are not verifiable in the normal course of
inspection. The rules alsoprovidethatthe employer shallraise
such objections during the hearing of the case or at any time
afterreceiptofthenoticeofinspectionresults.
In this case, the Regional Director validly assumed jurisdiction over the
money claims of private respondents even if the claims exceeded P5,000
because such jurisdictionwasexercisedinaccordancewithArticle128(b)of
theLaborCodeandthecasedoesnotfallundertheexceptionclause.
The Court notes that EBVSAI did not contest the findings of the labor
regulations officer during the hearing or after receipt of the notice of
inspection results.Itwasonly initssupplementalmotionfor reconsideration
before the Regional Director that EBVSAI questioned the findings of the
labor regulations officerandpresented documentary evidence tocontrovert
the claims of private respondents. But even if this was the case, the
Regional Director andtheSecretaryofLaborstilllooked intoandconsidered
EBVSAI's documentary evidence and found thatsuchdid not warrant the
reversal of the Regional Director's order. The Secretary of Labor also
doubted the veracity and authenticity of EBVSAI's documentary evidence.
Moreover, the pieces of evidence presented by EBVSAI were verifiablein
the normal course of inspection because all employment records of the
employees should be kept and maintained in or about the premises ofthe
workplace, which in thiscaseisinAmbuklaoPlant,the establishmentwhere
privaterespondentswereregularlyassigned.

8. Locsin v. Nissan
Lease
Philippines
October 20, 2010
(Intracorporatedispute)

: Locsin was elected Executive Vice President and Treasurer (

EVP/Treasurer
)of NCLPI. Locsin
held this position for 13 years, having been reelected every yearsince1992, until January 21,
2005,whenhewasnominatedandelectedChairmanofNCLPIsBoardofDirectors

On August 5, 2005, a little overseven (7) months after hiselectionasChairmanoftheBoard,the

NCLPI Board heldaspecialmeeting at the Manila Polo Club. One oftheitemsoftheagendawas
the election of a new set of officers. Unfortunately, Locsin was neitherreelectedChairman nor
reinstatedtohispreviouspositionasEVP/Treasurer.
Aggrieved, on June 19, 2007, Locsin filed a complaint for illegal dismissal with prayer for
reinstatement, payment of backwages, damages and attorneys fees
before the Labor Arbiter
againstNCLPIandBanson,whowasthenPresidentofNCLPI.

On July11, 2007,insteadoffilingtheirpositionpaper, NCLPIandBansonfiledaMotiontoDismiss,

on the ground that the Labor Arbiter did not have jurisdiction over the casesince the issue of
Locsins removal as EVP/Treasurer involves an intracorporate dispute.Locsinargues otherwise,
maintaininghispositionthatheisanemployeeofNCLPI.LaborArbiteragreedwithLocsin

Whether or Not the

Labor Arbiter has
jurisdiction over the
case

NO
Locsin was undeniablyChairman and President, and was electedto these
positions by the Nissan board pursuant to its Bylaws. As such, he was a
corporate officer, not an employee. The CA reached this conclusion by
relying on the submitted facts and on Presidential Decree 902A, which
defines corporate officers asthose officers of a corporation who are given
thatcharacter eitherbytheCorporationCodeorby thecorporationsbylaws.
Likewise, Section25ofBatasPambansaBlg.69,orthe CorporationCodeof
the Philippines (Corporation Code) provides that corporate officers are the
president, secretary, treasurer and such other officers as may be provided
forinthebylaws.

Given Locsinsstatusasacorporateofficer,the RTC, notthe LaborArbiteror

the NLRC, has jurisdiction to hear the legality of the termination of his
relationshipwithNissan.

NCLPI elevated the case to the CA, arguing that the Labor Arbiter commited grave abuse of
discretion. The CA Decision Locsin was a corporate officer;
the issue of his removal as
EVP/Treasurer isanintracorporatedisputeunderthe RTCs jurisdiction.crutinizingtherecords,We
hold that petitionerssuccessfully discharged their onus ofestablishingthatprivaterespondentwas
a corporate officerwho held theposition of Executive VicePresident/Treasurerasprovidedinthe
bylaws of petitioner corporation andthatheheld such position byvirtueofelectionbytheBoardof
Directors.
That private respondent is a corporate officer cannot be disputed. The position of Executive
VicePresident/Treasurer is specifically included in the roster of officers provided for by the
(Amended) ByLaws of petitioner corporation, his duties and responsibilities, as well as
compensationassuchofficerarelikewisesetforththerein
Locsins Argument: Locsin submits that he is a regular employee ofNCLPI since as he argued
beforetheLaborArbiterandtheCAhisrelationshipwiththecompanymeetsthefourfoldtest.
First,LocsincontendsthatNCLPIhadthepowertoengagehis servicesasEVP/Treasurer.Second,
he received regularwagesfromNCLPI,fromwhichhisSSSandPhilhealthcontributions,aswellas
his withholding taxes werededucted.Third,NCLPIhadthe powertoterminatehisemployment.[22]
Lastly, Nissan hadcontrolover the manner of the performanceofhisfunctionsasEVP/Treasurer,
as shown by the 13yearsof faithful execution of his job, which he carriedoutinaccordancewith
the standards and expectations set by NCLPI.[23] Further, Locsin maintainsthat even after his
election as Chairman, he essentially performed the functions of EVP/Treasurer handling the
financialandadministrativeoperationsoftheCorporationthusmakinghimaregularemployee
NissansArgument:NissanmaintainsthatLocsinisacorporateofficerandnotanemployee.

9. Reyesv.RTC Makati
Branch 42, August 11,
2008

Oscar and private respondent RodrigoC.Reyes(Rodrigo)are2of the4childrenoftheSps.Pedro

and Anastacia Reyes.Pedro, Anastacia, Oscar and RodrigoeachownedsharesofstockofZenith
Insurance Corporation(Zenith). Pedro died in 1964, while Anastacia died in 1993. Pedros estate
was judicially partitioned among his heirs but Anastacias estate had no similar settlement and
partition,

Zenith and Rodrigofiled a complaint

with the Securities andExchangeCommission(SEC)against
Oscar, a derivative suit toobtainaccountingoffunds and assetsofZenith,and(2)todetermine the
shares of stock ofdeceasedPedroandAnastaciathatwere arbitrarilyandfraudulentlyappropriated
[byOscar,andwereunaccountedfor].

Oscar denied thechargethatheillegallyacquired thesharesofAnastaciaReyes,andheasserted,

as a defense, that he purchasedthesubjectshares with hisownfundsfromtheunissuedstocksof
Zenith, and thatthe suit isnot a
bona fide derivative suit becausetherequisitesthereforhavenot
been complied with.HethusquestionedtheSECsjurisdiction toentertainthecomplaintbecause it
pertainstothesettlementoftheestateofAnastaciaReyes.

In his counterclaim,OscarfiledaMotiontoDeclareComplaint asNuisanceorHarassmentSuitand

claimed that the complaint is a mere nuisance or harassment suit andshould,according to the
Interim Rules ofProcedureforIntraCorporateControversies, be dismissedandthatitisnota
bona
fide derivative suit as it partakes of the nature of a petition for the settlement of estate of the
deceasedAnastaciathatisoutsidethejurisdictionofaspecialcommercialcourt.

Under these circumstances,wehavetogiveprecedenceto themeritsofthe

case, and primacy tothe element of jurisdiction.Jurisdictionis thepowerto
hear and rule on a case and isthethresholdelement that mustexistbefore
any quasijudicial officer can act. In the context of the present case, the
Labor Arbiter does nothave jurisdiction over the termination disputeLocsin
brought, and shouldnot be allowed to continue to act onthe caseafterthe
absence of jurisdiction hasbecome obvious, based on the recordsandthe
law. In more practical terms, a contrary ruling will only cause substantial
delay and inconvenience aswell as unnecessary expenses, tothe pointof
injustice, to the parties. This conclusion, of course, does not go intothe
merits ofterminationofrelationshipandiswithout prejudiceto thefilingofan
intracorporatedisputeonthispointbeforetheappropriateRTC.

Whether or not there

is an intracorporate
relationship between
the parties that would
characterize thecase
as an intracorporate
dispute

No. A review of relevantjurisprudenceshowsadevelopmentintheCourts

approach in classifying what constitutes an intracorporate controversy.
Initially, the main considerationin determiningwhetheradisputeconstitutes
an intracorporate controversy was limited to a consideration of the
intracorporate relationshipexistingbetweenoramongthe parties.Thetypes
of relationships embraced under Section 5(b), as declared in thecaseof
UnionGlass&ContainerCorp.v.SEC,wereasfollows:
a) between the corporation, partnership, or association and the
public;

b) between the corporation, partnership, or association and its

stockholders,partners,members,orofficers;

c) between the corporation, partnership, or association and the

State as far as its franchise, permit or license to operate is
concerned;
and
d)amongthestockholders,partners,orassociatesthemselves.
The existence of anyof theabove intracorporaterelationswassufficientto
conferjurisdictiontotheSEC,regardlessofthesubject matterof thedispute.
Thiscametobeknownastherelationshiptest.

However, in the 1984caseof DMRC Enterprises v. Esta del Sol Mountain

Reserve, Inc.,the Court introduced the nature of the controversytest.We
declared in this casethatit isnot the mere existence of an intracorporate


The RTC denied themotioninpart and declaredthe derivativesuitconsistingofthefirstcauseof
action will be takencognizance of by the RTC The appellate courtaffirmed theRTC Order and
denied the petition in its Decision dated May 26, 2004 and likewise denied Oscars motion for
reconsideration. Hence,thisappeal through a petition for review on
certiorari
underRule45ofthe
RulesofCourt.

10. Okol v. Slimmers

World December 11,
2009

Respondent Slimmers World International operating under the name BehaviorModifications, Inc.
(Slimmers World) employed petitioner Leslie Okol (Okol) as a management traineeon 15 June
1992. She roseuptherankstobecomeHeadOffice ManagerandthenDirectorandVicePresident
until her dismissalon22September 1999. Prior to Okol'sdismissal, Slimmers World preventively
suspended Okolwhicharose from the seizure by theBureauof CustomsofsevenPrecorelliptical

relationship that gives riseto an intracorporate controversy;

to rely on the
relationship testalonewilldivesttheregularcourtsof theirjurisdictionforthe
sole reason that thedisputeinvolves a corporation,itsdirectors,officers,or
stockholders. We saw that there is no legal sense in disregarding or
minimizing the valueof thenatureofthetransactionswhichgivesrisetothe
dispute.

Under the nature of the controversy test, the incidents of that relationship
must also be considered for the purpose of ascertaining whether the
controversy itself isintracorporate.Thecontroversymust notonlyberooted
in the existenceofanintracorporaterelationship, butmust aswellpertainto
the enforcement of thepartiescorrelative rights and obligationsunderthe
Corporation Codeandtheinternalandintracorporate regulatoryrulesofthe
corporation. If the relationship and its incidents are merely incidental tothe
controversy or if therewill still be conflict even if the relationship doesnot
exist,thennointracorporatecontroversyexists.

x x x This twotiertestwasadoptedintherecentcaseof Speed Distribution,

Inc.v.CourtofAppeals:
To determine whether a case involves an
intracorporate controversy, and is to be heard and
decided by the branches of the RTC specifically
designated by the Court totryanddecidesuchcases,
twoelements mustconcur:(a)thestatusorrelationship
of the parties;
and (2)the natureofthequestionthatis
thesubjectoftheircontroversy.

In sum,we findthatinsofarasthesubjectsharesof stock (i.e.,Anastacias

shares) are concerned Rodrigo cannot be considered a stockholder of
Zenith. Consequently, wecannotdeclarethatan intracorporaterelationship
exists that would serve as basis to bring this case within the special
commercial courtsjurisdictionunderSection5(b)ofPD 902A,as amended.
Rodrigoscomplaint,therefore,failstherelationshiptest.

In sum, we hold thatthe natureof the presentcontroversy isnot onewhich

may beclassifiedasanintracorporatedisputeand isbeyond thejurisdiction
of the special
commercialcourttoresolve.Inshort, Rodrigos complaintalso
failsthenatureofthecontroversytest.

Whether or not the

NLRC has jurisdiction
over the illegal
dismissal case filed
bypetitioner.

NO. The determination of the rights of a director and corporate officer

dismissed from his employment as well as the corresponding liability ofa
corporation, if any, isanintracorporate dispute subjectto thejurisdictionof
theregularcourts.

11. RuralBank ofCoron

v. Cortes, December6,
2006

machines and sevenPrecor treadmillsbelongingto or consignedtoSlimmersWorld.Theshipment

of the equipment was placedunder the names of Okol and two customs brokers for a valueless
thanUS$500.Forbeingundervalued,theequipmentwereseized.
Okol received a memorandumthathersuspensionhadbeenextendedpendingtheoutcome ofthe
investigation on thePrecor equipment importation. On 19 September1999, Okol filed her written
explanation. However,SlimmersWorldfoundOkols explanation tobeunsatisfactoryandterminated
Okols employment.OkolfiledacomplaintwiththeArbitrationbranchoftheNLRCagainstSlimmers
World for illegal suspension, illegal dismissal.Respondentsfiled aMotiontoDismissassertingthat
the NLRC had no jurisdictionoverthesubjectmatterof thecomplaint.Thelaborarbitergrantedthe
motion to dismiss. ThelaborarbiterruledthatOkolwasthe vicepresidentofSlimmersWorldatthe
time of her dismissal. Since it involved a corporate officer, the dispute was an intracorporate
controversy falling outside thejurisdiction of the Arbitration branch.Upon appeal, NLRC reversed
and set aside laborarbiter's order.The CAhoweveraffirmedthelaborarbiter'sOrder.CAruledthat
the case, being an intracorporate dispute,falls within thejurisdictionoftheregularcourtspursuant
toRepublicActNo.8799.

Section 25 of the Corporation Code enumerates corporate officersas the

president, secretary, treasurer and such other officers as may be provided
for in the bylaws. An officeis created by thecharter ofthe corporationand
the officer is electedby thedirectorsorstockholders. On theotherhand,an
employee usuallyoccupiesnoofficeandgenerallyis employednotbyaction
of the directors or stockholders but by the managing officer of the
corporation who also determines the compensation to be paid to such
employee. In the motion, respondents attached the General Information
Sheet (GIS) dated 14 April 1998, Minutes of the meeting of the Board of
Directors dated 14April1997and Secretarys Certificate,andthe Amended
ByLaws dated1August1994ofSlimmersWorldas submitted totheSECto
show that petitioner was a corporate officer whose rights do not fall within
the NLRCs jurisdiction.The GISand minutes ofthe meeting oftheboardof
directors indicated that petitioner was a member of the board of directors,
holding one subscribedshare of the capital stock,andanelectedcorporate
officer.
Clearly, from the documents submitted by respondents, petitioner was a
director and officer of SlimmersWorld. The charges of illegal suspension,
illegal dismissal, unpaid commissions, reinstatement and back wages
imputed by petitioner againstrespondents fall squarely within theambitof
intracorporate disputes.Acorporateofficer'sdismissalisalwaysacorporate
act, or an intracorporate controversy which arises between a stockholder
and a corporation.Thequestionofremunerationinvolvingastockholderand
officer, not a mere employee,isnotasimplelaborproblem butamatterthat
comes within the area of corporate affairs and management and is a
corporatecontroversyincontemplationoftheCorporationCode.

Virgilio Garcia, "founder" of petitionercorporations, hired Annalisa Cortes (respondent) asclerkof

the Rural Bank of Coron (Manila Office). Respondent later became the Financial Assistant,
Personnel Officer and Corporate Secretary of The Rural Bank of Coron,PersonnelOfficerofCDI,
and also Personnel Officer and Disbursing Officer of The Empire Cold Storage Development
Corporation(ECSDC).Shesimultaneouslyreceivedsalariesfromthesecorporations.
On examination of the financial books of the corporations by petitioner Sandra Garcia Escat, a
daughter ofVirgilioGarciawhowaspreviouslyresiding in Spain,shefoundoutthatrespondentwas
involved in several anomalies,drawing petitioners to terminaterespondentsservices.Respondent
thus demandedthe paymentof unpaid salary,separationpayequivalentto12monthssalary, 13th
month pay and otherbenefits.Asthedemandremained unheeded,respondentfiledacomplaint for
illegal dismissal and nonpayment ofsalariesand otherbenefits,withtheNLRC.Petitionersmoved
for the dismissal ofthecomplaintonthegroundoflackof jurisdiction,contendingthatthecasewas
an intracorporate controversy involving the removal of a corporateofficer,respondent being the
Corporate Secretaryof theRural Bank of Coron, Inc., hence, cognizableby theSEC. The Labor
Arbiterhoweverruledinfavorofrespondent.CAaffirmedLA'sorderhencethispetition.

Whether or not the

NLRC had jurisdiction
overthecase.

YES.TheLaborArbiterhasthusjurisdictionoverrespondentscomplaint.
While, indeed, respondentwastheCorporateSecretaryof theRuralBankof
Coron, she was also its Financial Assistantandthe PersonnelOfficerofthe
twootherpetitionercorporations.
Mainland Construction Co., Inc. v. Movilla instructs that a corporation can
engage its corporate officers to perform services under a circumstance
whichwouldmakethememployees.

12. Halguena v. PAL

October2,2009

Patricia Halaguea, et. al, (Halaguea) are flight attendants employedby Philippine Airlines Inc.
(PAL) as well as members of Flight Attendants and Stewards Association of the Philippines
(FASAP),
a labor organization certified as the sole and exclusive bargainingrepresentative ofthe
flightattendants,flightstewardsandpursersofrespondent.
Halaguea assails Sec. 144 ofthe CBA entered into by PALFASAP and FASAP,whichprovides
for a compulsory retirementageof55forfemalecabinattendantsand60formalecabinattendants,
to be unconstitutional.Due topetitioners claim,RobertD.Anduiza,PresidentofFASAPsubmitted
their 20042005 CBA proposals and manifested their willingness to commence the collective
bargaining negotiations between the management and the association, at the soonest possible
time.

Issue:
Whether or not the
regular courts has
jurisdiction over the
case?

Yes, jurisdiction of the court is determined on the basis of the material

allegations of the complaint and the character of the relief prayed for
irrespective of whetherplaintiffisentitledtosuch relief.
From thepetitioners'
allegations and reliefprayed forinitspetition,itis clearthatthe issueraised
is whether Section 144, of the PALFASAP CBA is unlawful and
unconstitutional. The petitioners' primary reliefis theannulment of Section
144.
Thesubjectoflitigationisincapableofpecuniaryestimation,exclusively
cognizableby theRTC.
Thesaidissuecannotbe resolved solely byapplying
the Labor Code.Rather, itrequires the applicationof theConstitution,labor
statutes, law on contracts and the Convention on the Elimination of All
Forms of Discrimination Against Women, and the power to apply and
interpret the constitution and CEDAW iswithinthejurisdiction oftrialcourts,
acourtofgeneraljurisdiction.
As the Court previouslyheld, notevery dispute between an employer and
employeeinvolvesmattersthatonlylaborarbiters and theNLRC canresolve
in the exercise oftheir adjudicatoryorquasijudicialpowers. Thejurisdiction
of labor arbiters andtheNLRCunderArticle217of theLaborCodeislimited
to disputes arisingfromanemployeremployee relationship which
canonly
be resolved by reference to theLabor Code, other labor statutes,ortheir
collective bargaining agreement
. Not every controversy or moneyclaimby
an employee against the employer or viceversa is within the exclusive
jurisdiction of the labor arbiter. Actions between employees and employer
where the employeremployee relationship is merely incidental and the
cause of actionprecedesfroma different source of obligation is within the
exclusive jurisdiction of the regular court. Here, the employeremployee
relationship between theparties ismerelyincidental and thecauseofaction
ultimatelyarosefromdifferentsourcesofobligation.
Thus, where the principal reliefsought is to beresolvednot byreferenceto
the Labor Code or other labor relations statute or a collective bargaining
agreement but by the general civil law, the jurisdiction over the dispute
belongs to the regularcourts ofjustice and not to the labor arbiterandthe
NLRC. In such situations, resolution ofthedispute requiresexpertise,notin
labor management relations nor in wage structures and other terms and
conditions of employment, but rather in the application of the generalcivil
law. Clearly, such claims falloutside the area of competence or expertise
ordinarily ascribed to labor arbiters and the NLRC and the rationale for
grantingjurisdictionoversuchclaimstotheseagenciesdisappears.

When does the

employeremployee
relationship involving
seafarers
commence?

A distinction must be made between the perfection of the employment

contract and the commencement of the employeremployee relationship.
The perfection ofthe contract,which in this case coincidedwiththedateof
execution thereof, occurred when petitioner and respondent agreed on the
object and the cause,aswellastherestofthetermsandconditionstherein.
The commencement of the employeremployee relationship, as earlier

Petitioners also filed before theRTC of Makati, a Special Civil Actionfor Declaratory Relief with
Prayer for the Issuanceof Temporary Restraining Order and Writ ofPreliminaryInjunctionagainst
PAL for the invalidity of the assailed provision of the CBA. The RTC eventually granted such
petition.
Aggrieved, PAL, filed a Petition for Certiorari and Prohibition with Prayer for a Temporary
Restraining OrderandWritofPreliminaryInjunctionwiththe Court ofAppealsprayingthattheorder
of the RTC, which denied its objection to itsjurisdiction,beannulledandsetasideforhavingbeen
issuedwithoutand/orwithgraveabuseofdiscretionamountingtolackofjurisdiction.
The CA granted PALs petition on thegroundthatthe RTChas nojurisdictionoveralabordispute,
hencethecaseatbar.

13. Santiago v. CF
Sharp
Crew
Management , July 10,
2007

FACTS:
Petitioner had been working asa seafarer for Smith Bell Management,Inc.(respondent)forabout
five (5) years. He signedanew contract of employment with the duration of9months on Feb 3
1998 and he was to be deployed 10 days after. This contract was approvedby POEA. A week

before the dateof departure, the respondentreceivedaphonecallfrompetitionerswifeandsome

unknowncallersaskingnottosendthelatteroffbecauseifallowed,hewilljumpshipinCanada.

Because of the said information, petitioner was told that he would not be leaving for Canada
anymore. This promptedhim tofileacomplaintforillegal dismissal againsttherespondent.TheLA
held the latter responsible. On appeal, the NLRC ruled that there is no employeremployee
relationship between petitioner and respondent, hence, the claims shouldbe dismissed. The CA
agreed with the NLRCsfinding that since petitioner had not departedfromthe Port ofManila,no
employeremployee relationship between the parties arose andanyclaimfordamagesagainstthe
socalledemployercouldhavenolegtostandon.

discussed, would have taken place had petitioner been actually deployed
from the pointof hire.Thus,evenbeforethestartof anyemployeremployee
relationship, contemporaneous with the perfection of the employment
contract was thebirth ofcertainrights and obligations, the breachofwhich
may give rise to a cause of action against the erring party. Thus, if the
reverse had happened,thatis the seafarer failed or refused tobedeployed
asagreedupon,hewouldbeliablefordamages.

Respondents act ofpreventing petitioner from departing the portof Manila

and boarding "MSV Seaspread"constitutes a breachofcontract, givingrise
to petitioners cause of action. Respondent unilaterally and unreasonably
reneged on its obligationto deploy petitioner andmust thereforeanswerfor
theactualdamageshesuffered.

14. Atlas Farms Inc.v.

NLRC November 18,
2002

Private respondentsJaimeO. dela Pea and Marcial I. Abion,bothemployedunderpetitionerAtlas

Farms Inc. were terminated on separate causes. On March 13, 1993,Peawasallegedly caught
urinating and defecatingoncompanypremises notintended forthepurposewhileAbioncausedthe
clogging of the fishpond drainage resulting in damages worth several hundred thousand pesos
when he improperlydisposedof the cut grass and other waste materialsinto thepondsdrainage
system. A formalnoticewasissueddirectingthemtoexplain within 24hourswhydisciplinaryaction
should not be taken against the for violating company rules andregulationsbut they refused to
receive the formal notice. Both were terminated on March 20, 1993 and October 27, 1992
respectively.Theyalsoacknowledgedreceiptoftheirseparationpays.
Both private respondents worked seven days a week, includingholidays,withoutholidaypay,rest
day pay, service incentiveleave pay and night shift differential pay.When terminated ,Abion was
receiving a monthly salary of P4,500 while Pea was receiving P180 pesos daily wage, or an
averagemonthlysalaryofP5,402.
Pea and Abion filed separate complaints for illegal dismissal thatwere laterconsolidated. 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 managementdominated
union.
On November 9, 1993, the labor arbiter dismissed their compla3ints on the ground that the
grievance machinery in the collective bargaining agreement (CBA) had notyetbeen exhausted.
Private respondentsavailedofthegrievanceprocess, butlateronrefiledthecasebeforetheNLRC
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, petitionerfileda
motion to dismiss, on the ground of lack of jurisdiction, alleging private respondents themselves
admitted that they were members of the employees union with whichpetitionerhad an existing
CBA. This being the case, according to petitioner, jurisdiction over the case belonged to the

Whether or not the

labor arbiter and the
NLRC had jurisdiction
to decide complaints
forillegaldismissal.*

YES.
Article 217 of the LaborCode provides that labor arbiters have
original and exclusive jurisdiction over termination disputes. A
possible exceptionis provided in Article 261ofthe Labor Code, which
providesthat
The Voluntary Arbitratororpanelof voluntary arbitrators shall haveoriginal
and exclusive jurisdiction to hear and decide all unresolved grievances
arising from the interpretationorimplementationof theCollectiveBargaining
Agreement and those arising from the interpretation or enforcement of
company personnel policies referred to intheimmediatelyprecedingarticle.
Accordingly, violations of a Collective Bargaining Agreement, exceptthose
which are gross in character, shall no longer be treated as unfair labor
practice and shallberesolvedasgrievancesunder theCollectiveBargaining
Agreement. For purposes of this article, gross violations of Collective
Bargaining Agreement shall mean flagrant and or malicious refusal to
complywiththeeconomicprovisionsofsuchagreement.
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 ofVoluntary Arbitrators and shall immediately
dispose and refer the same to the grievance Machinery or Arbitration
providedintheCollectiveBargainingAgreement.
But as held in Viverovs. CA,[14] petitioner cannot arrogateinto thepowers
of Voluntary Arbitrators the original and exclusive jurisdiction of Labor
Arbiters over unfair labor practices, termination disputes, and claims for
damages, in the absence ofan express agreement between the parties in
order for Article 262 of the Labor Code [Jurisdiction over other labor

grievancemachineryandthereafterthevoluntaryarbitrator,asprovidedintheCBA.
In a decision dated January 30, 1996, the labor arbiter dismissedthe 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 bothcomplainants did not
substantiate their claims of illegal dismissal, there was proof that private respondents voluntarily
acceptedtheirseparationpayandpetitionersfinancialassistance.
Thus, private respondents brought the case to the NLRC, which reversed the labor arbiters
decision. Dissatisfied with the NLRC ruling, petitioner went to the Courtof Appealsby way of a
petitionforreviewoncertiorariunderRule65,seekingreinstatementofthelaborarbitersdecision.

15. Perpetual Help

Credit Cooperative Inc.
v. Faburada,October8,
2001

Private respondents filed a complaint against petitioner with the Arbitration Branch,

1.)

WHETHER

1.)In determining theexistence ofanemployeremployee relationship,

Department of LaborandEmployment,DumagueteCity,for illegaldismissal,premiumpayon

OR NOT THERE

the following elements are considered: (1) the selection and

holidays and rest days, separation pay, wage differential, moral damages, andattorney's

IS ANEMPLOYEE

engagement of the worker or the power to hire;

(2) the power to

fees. Petitioner movedto dismissthecomplainton ground ofabsenceofemployeremployee

AND EMPLOYER

dismiss;
(3) the payment ofwagesby whatever means;
and (4) the

relationship between them and private respondents. Petitioner contended that private

RELATIONSHIP

power to control the worker's conduct, with the latter assuming

respondents were mere volunteer workers, not regular employees.Thus, they cannot sue
them. Petitioner also questioned the jurisdiction of the Labor Arbiter. The Labor Arbiter
dismissed the petitioner's motion to dismiss and subsequently ruled in favor of private
respondents. On appeal,the National Labor Relations Commissionaffirmed the findings of
the labor arbiter that private respondents were illegally dismissed and were entitled to
reinstatementandfullbackwages.
Hence,thispetition.

disputes]toapplyinthecaseatbar.
Coming to the meritsof thepetition, the NLRC found thatpetitionerdidnot
comply with the requirements of a valid dismissal. For a dismissal to be
valid, the employer must show that: (1) the employee was accordeddue
process, and (2) thedismissalmust be for anyofthe validcauses provided
for by law.[22] No evidencewasshownthatprivaterespondents refused,as
alleged, to receive the notices requiring them to show cause why no
disciplinary action should be taken against them. Without proof ofnotice,
private respondentswhoweresubsequentlydismissedwithout hearingwere
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 themwithinthejurisdictionofthelaborarbiter.
Where the dispute is just in the interpretation, implementation or
enforcement stage, itmaybe referred to the grievance machinery set
upinthe CBA, or broughttovoluntaryarbitration.But,where there was
already actual termination, with alleged violation of the employees
rights,itisalreadycognizablebythelaborarbiter.
*Therewere threeissuesdiscussedinthecasenamely:1. Thevalidityofthe
dismissal. 2. The Jurisdictioof the Labor Arbiter and theNLRC,andfinally,
3.) The Partyliableforthecostofthesuit.Pursuant tothe discussiononArt.
217 as set in the syllabus, theissue herein discussed pertains onlyto the
secondone.

2.)

WHETHER

OR NOT THE
CASE
UNDER

FALL
THE

JURISDICTION
OF
ARBITER

LABOR

primacy in the overall consideration. The Supreme Court found that

the said elements are present in this case. Petitioner hired private
respondents to work for it. They work regularly on regular working
hours, were assigned specific duties, were paid regular wages and
made to accomplish daily time records. They worked under the
supervision of the cooperative manager. Moreover, private
respondents were rendering services necessary to the daytoday
operations of petitioner, which qualified them as regular employees.
Hence, as regular employees, private respondents are entitled to

security of tenure and canbeterminated only for a valid cause, with

observance of due process. The Court, however, found that private
respondents'dismissalwas notfor a validcause.Theyweredismissed
because petitioner considered them to be mere voluntary workers,
being its members, and assuch, work at its pleasure. Moreover, the
Court found thatpetitionerfailedtocomplywiththetwinrequisitesofa
validnotice.
2.) With respect to the issue on jurisdiction, the Court held that
disputes about payment of wages, overtime pay, restday and
termination of employment are within the original and exclusive
jurisdiction of thelaborarbiter.Hence, the decision of theNLRC was
affirmed by the Courtwithmodification as to the computation ofback
wages.
|||

16. Austria v. NLRC,

August16,1999(priest)

The Seventh Day Adventists(SDA) is a religious corporation under Philippine law. The petitioner

1. Whether or not the

1. No. Thematter athandrelatestothechurchand its religiousministersbut

wasapastoroftheSDAfor28yearsfrom1963until1991,whenhisserviceswereterminated.

termination of the

what is involved hereis therelationship of the church as an employerand

services

On various occasions from AugusttoOctober1991, Austria receivedseveralcommunicationsform

petitioner

Ibesate, the treasurerof theNegros Mission, asking him to admit accountabilityandresponsibility

ecclesiastical affair,

invokedforpetitionersdismissalareallbasedonArt.282ofLaborCode.

for the church tithesandofferings collected by his wife, Thelma Austria,inhisdistrictandtoremit

and, assuch, involves

thesametotheNegrosMission.

the separation of

2. Yes. SDA was exercising its management prerogative (not religious

churchandstate.

prerogative) to fire an employeewhichitbelievesis unfit forthe job.Itwould

The petitioner answeredsayingthat he should notbemade accountablesinceitwasPastorBuhat

have been a different case ifAustriawasexpelled or excommunicatedfrom

and Ibesate who authorized his wife to collect the tithes and offeringssincehewas very ill to be

2. Whether or not the

theSDA.

abletodothecollecting.

Labor Arbiter/NLRC

has jurisdiction to try

A factfinding committee was created to investigate. The petitionerreceivedaletter of dismissal

and

citing:

complaint filed by

1)Misappropriationofdenominationalfunds;

petitioner against the

3)Seriousmisconduct;

2)Willfulbreachoftrust;

SDA.

of

the

the minister as an employee, which is purely secular because it has no

is

an

relationship with the practice of faith, worship or doctrines. The grounds

decide

the

4)Grossandhabitualneglectofduties;
and

5) Commission of an offenseagainst the person of employer's dulyauthorizedrepresentativeas

groundsfortheterminationofhisservices.

Petitioner filed a complaint with the Labor Arbiter for illegal dismissal, and sued the SDA for
reinstatementandbackwagesplusdamages.Decisionwasrenderedinfavorofpetitioner.

SDAappealedtotheNLRC.Decisionwasrenderedinfavorofrespondent.

17. Department of
Foreign Affairsv.NLRC
September18,1996

FACTS: On27January1993,privaterespondent, Jose Magnayi,filedacaseforillegaldismissalby

Asian Development Bank (ADB)and the latter'sviolationof the "laboronly" contracting law. Two
summonses were served, onesent directly to the ADB and the other throughthe Department of
ForeignAffairs(DFA)

ADB and the DFA notified respondent Labor Arbiter that the ADB,as wellas its President and
Officers, were covered byanimmunity from legalprocess exceptforborrowings,guarantiesorthe
saleofsecuritiespursuanttothe"Charter"inrelationtothe"HeadquartersAgreement".

Private respondent arguesthat, by entering intoservice contractswithdifferentprivatecompanies,

ADB has descended tothe level of an ordinary party to a commercialtransactiongiving rise toa
waiverofitsimmunityfromsuit

Labor Arbiter took cognizance of the complaint on the impression that theADB had waived its
diplomaticimmunityfromsuitandruledagainstADB.

The ADB did not appeal the decision. Instead, on 03 November 1993, DFA sought a "formal
vacationofthevoidjudgment."toNLRC

Chairman of NLRC allegedthat"Exceptwhere anappealisseasonablyandproperly made, neither

the Commissionnortheundersignedmayreview,oreven question,theproprietyofanydecisionby
a Labor Arbiter. However, on thepurely administrative aspect ofthedecisionmakingprocess,he
may cause that an investigation be made of any misconduct, malfeasance or misfeasance, upon
complaintproperlymade.

Dissatisfied,theDFAlodgedtheinstantpetitionforcertiorari

: Whether or Not the

Labor Arbiter has
jurisdiction over the
case.

Whether or
Not ADB and its
officers are entitledto
immunity.

Labor Arbiter has no jurisdictionin this case since ADB and it'sofficersare
entitledtoimmunity.

Article50(1)oftheCharterprovides:

The Bank shall enjoy immunity from every form of legal process, exceptin
cases arisingoutoforinconnectionwiththeexerciseof its powerstoborrow
money, to guaranteeobligations, or tobuyand sellorunderwritethesaleof
securities.

UnderArticle55thereof

All Governors, Directors, alternates, officers and employees of the Bank,

includingexpertsperformingmissionsfortheBank:

(1) shall be immune fromlegalprocess with respect of acts performed by

themintheirofficialcapacity,exceptwhentheBankwaivestheimmunity.

LikeprovisionsarefoundintheHeadquartersAgreement.

The Charter and the Headquarters Agreement granting these immunities

and privileges are treatycovenants and commitments voluntarily assumed
bythePhilippinegovernmentwhichmustberespected.

InWorldHealthOrganizationvs.Aquino,wehavedeclared:

It is a recognized principle of international law and under our system of

separation of powers that diplomatic immunity is essentially a political
question and courts should refuse to look beyond a determinationby the
executive branch of the government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive branch of the
government x x x it is then the duty of the courts to accept the claimof
immunity upon appropriate suggestion by the principal law officer of the

government, x x x or other officer acting under his direction. Hence, in

adherence to the settled principle that courts may not so exercise their
jurisdiction x x x asto embarrassthe executive arm of the governmentin
conducting foreign relations,it is accepted doctrine that `in suchcases the
judicial department ofgovernment follows the action of the politicalbranch
andwillnotembarrassthelatterbyassuminganantagonisticjurisdiction.'"

The obvious reason forthisis that thesubjection ofsuchanorganizationto

the authorityof thelocalcourtswouldaffordaconvenient mediumthruwhich
the host government may interfere in their operations or even influenceor
control its policies and decisions of the organization;
besides, such
subjection to local jurisdiction would impair the capacity of such body to
dischargeitsresponsibilitiesimpartiallyonbehalfofitsmemberstates."

InthecaseofHolySeevs.Hon.Rosario,Jr.,theCourthasheld:

There are two conflictingconcepts of sovereign immunity, each widelyheld

and firmly established. According to the classical or absolute theory, a
sovereigncannot,withoutitsconsent,bemadearespondentintheCourtsof
another sovereign. Accordingtothenewerorrestrictive theory,theimmunity
of the sovereign is recognized only with regard to public acts or actsjure
imperiiofastate,butnotwithregardtoprivateactoractsjuregestionis.

Certainly, the mere enteringinto a contract by a foreign statewithaprivate

party cannot be theultimate test. Such an act can only be the start ofthe
inquiry. The logical question iswhether the foreign state is engaged in the
activity in the regular course ofbusiness. Iftheforeignstate isnotengaged
regularly in a businessortrade,theparticularactortransactionmustthenbe
tested by its nature. If the act is in pursuit of a sovereign activity, or an
incident thereof, then it is an act jure imperii, especially when it is not
undertakenforgainorprofit.

The service contracts referred to by private respondent have not been

intended by the ADB for profit or gain but are official acts over which a
waiverofimmunitywouldnotattach.

18. PNB v. Cabansag ,

June
21,
2005
(differentiate it with
Manila Hotel v. NLRC,
October13,2000

Florence Cabansag went toSingapore as a tourist. While she was there,shelookedforajoband

eventually applied with the Singapore Branch of the Philippine National Bank. PNB is a private
banking corporation organized and existing under Philippine laws.Shewaseventually employed
and was issued an employment pass. Inherjoboffer,it was stated,amongothers,thatshewasto
be put on probation for3months and termination of her employmentmaybemadebyeitherparty
after 1 day notice while on probation, and 1 month notice or 1 monthpay in lieu of notice upon
confirmation. Sheaccepted thetermsandwasissued an OECbythePOEA.Shewascommended

W/N the arbitration

branch of the NLRC
hasjurisdiction
W/N the arbitration of
the NLRC inthe NCR
isthepropervenue
W/N Cabansag was

Labor arbiters have original and exclusive jurisdiction over claims arising
fromemployeremployeerelationsincludingtermination disputesinvolvingall
workers, includingOFWs.Here,Cabansagappliedfor and securedanOEC
from the POEA through thePhilippine Embassy. The OEC authorizedher
working status in a foreign country and entitled her to all benefits and

for her good work. However, she was informed by Ruben Tobias, the bankpresident, that she
would have to resign inlinewithsomecostcutting and realignmentmeasuresofthecompany.She
refusedbutwasinformedbyTobiasthatifshedoesnotresign,hewillterminateherinstead.

illegallydismissed

processes under our statutes. Although she may been a direct hireat the
commencement ofheremployment,shebecameanOFWwho wascovered
by Philippine laborlawsandpolicies upon certification bythe POEA.When
she was illegally terminated, shealreadypossessed thePOEAemployment
certificate.

A migrant worker refers toaperson who is to be engaged, is engaged or

has been engagedinaremunerated activity in a stateof which heorsheis
not a legal resident;
to be used interchangeably with overseas Filipino
worker. Here, CabansagwasaFilipino, not a legal resident of Singapore,
and employed bypetitionerinits branch office in Singapore. Sheisclearly
an OFW/migrant worker. Thus, she has the option where to file her
Complaint for illegal dismissal.Shecaneitherfileatthe RegionalArbitration
Branch where sheresidesortheRABwheretheemployeris situated.Thus,
in filing her ComplaintbeforetheRABofficeinQuezonCity,she hasmadea
validchoiceofpropervenue.

The appellate court was correct in holding that respondent was alreadya
regular employee at the time of her dismissal, because her threemonth
probationary period of employment had already ended. This ruling is in
accordance withArticle281oftheLaborCode:Anemployeewhoisallowed
to work after a probationaryperiodshallbeconsidered a regular employee.
Indeed, petitioner recognized respondent as such at the time itdismissed
her, by giving her one months salary in lieu of a onemonth notice,
consistentwithprovisionNo.6ofheremploymentContract.

18.
JULIUS KAWACHI and
GAYLE
KAWACHI,
Petitioners,
vs.
DOMINIE DEL QUERO
and HON. JUDGE
MANUEL R. TARO,

Virgilio Kawachi hired privaterespondentasaclerkof thepawnshopandthatoncertainoccasions,

sheworkedbeyondtheregularworkinghoursbutwasnotpaidthecorrespondingovertimepay.
Private respondent Dominie DelQuero charged A/J Raymundo Pawnshop,Inc.,Virgilio Kawachi
and petitioner Julius Kawachi with illegal dismissal, nonexecution of a contract of employment,
violation of the minimum wage law, and nonpayment of overtime pay. Thecomplaint was filed
beforethe
National Labor Relations Commission (NLRC).
He also filed an actionfor damages against petitioners Julius Kawachi andGayleKawachibefore
the
MeTC of Quezon City
,specificallysoughttherecoveryof moraldamages,exemplarydamages
andattorneysfees.

W/N the court has

Jurisdiction over the
action for damages
sought under thecivil
code

NLRChasJurisdiction.
Article 217(a) of the Labor Code, as amended, clearly bestows upon the
Labor Arbiter original and exclusive jurisdiction over claims for damages
arising from employeremployeerelationsinother words,the LaborArbiter
has jurisdiction toaward notonlythereliefsprovided bylaborlaws,butalso
damagesgovernedbytheCivilCode.

Metropolitan TrialCourt,
Branch 43, Quezon
City,Respondents.

TINGA,
J.:

Petitioners arguethatthe NLRChas jurisdiction over the action fordamagesbecausethealleged

injuryisworkrelated.

In the instant case, the NLRC has jurisdiction over private respondents
complaint for illegal dismissal and damages arising therefrom. She cannot
be allowed to fileaseparateorindependent civil action fordamageswhere
the alleged injury has a reasonable connection to her termination from
employment. Consequently, the action for damages filed beforethe MeTC
mustbedismissed.

19. Banez v. Valdevilla,

May 9, 2000 (claims of
The above provisions
are a result of the
amendment by Section
9 of Republic Act
("R.A.") No. 6715,
which took effect on
March 21, 1989, and
which put to rest the
earlier confusion as to
who between Labor
Arbiters and regular
courts had jurisdiction
over
claims
for
damages as between
employers
and
employees.

Petitioner was the salesoperations manager of private respondent in its branchin Iligan City. In
1993, private respondent "indefinitely suspended" petitioner and the latter filed a complaint for
illegal dismissal withtheNationalLaborRelationsCommission("NLRC")inIligan City.Inadecision
dated July 7, 1994,LaborArbiter Nicodemus G. Palangan foundpetitionerto have been illegally
dismissed and ordered thepayment of separation pay in lieu of reinstatement, andofbackwages
and attorney's fees. The decisionwasappealedtotheNLRC,whichdismissed thesamefor having
been filed out oftime. Elevated by petition for
certiorari before thisCourt,thecasewasdismissed
on technical grounds;
however, the Court also pointed out that even if all the procedural
requirements for the filing ofthe petition were met, it would still be dismissedfor failure to show
graveabuseofdiscretiononthepartoftheNLRC.

It will be recalled that

years prior to R.A.
6715, jurisdiction over
all money claims of
workers,
including
claims for damages,
was originally lodged
with the Labor Arbiters
andthe NLRCby Article
217 of the Labor Code.
On May 1, 1979,
however, Presidential
Decree ("P.D.") No.
1367 amended said
Article 217 to the effect

b. P119,700.00 plus 12% interest as estimated cost of supplies,

facilities,properties,space,etc.forthreeyears;

Whether or not the

regular courts have
jurisdiction over the
case

No. Article 217(a), paragraph 4 of the Labor Code, which was alreadyin
effectatthetimeofthefilingofthiscase,reads:
ART. 217.
Jurisdiction ofLaborArbitersand
the Commission.
(a)Exceptasotherwise
provided under thisCodetheLaborArbiters
shall have original and exclusivejurisdiction
to hear and decide, within thirty (30)
calendar days after the submission of the
case by the parties for decision without
extension, even in the absence of
stenographic notes, the following cases
involving all workers, whether agriculturalor
nonagricultural:

On November 13, 1995,privaterespondentfiled a complaintfordamagesbeforetheRegionalTrial

Court ("RTC") of Misamis Oriental, docketed as Civil Case No. 95554, which prayed for the
paymentofthefollowing:Slxsc
a. P709,217.97plus 12% interest as lossofprofitand/or unearned
incomeofthreeyears;

xxx
4. Claims for actual, moral, exemplary and other forms of damages arising
fromtheemployeremployeerelations;

xxx

c.P5,000.00asinitialexpensesoflitigation;
and

d.P25,000.00asattorney'sfees.
On January 30,1996, petitionerfiledamotionto dismiss theabovecomplaint.Heinterposedinthe
court below that the action fordamages, having arisen from an employeremployee relationship,
was squarelyundertheexclusiveoriginaljurisdiction ofthe NLRCunderArticle217(a),paragraph4
of the Labor Code and is barred by reason of the final judgment in thelaborcase. He accused
private respondent ofsplitting causes of action,stating that thelattercouldverywellhaveincluded
the instant claim fordamagesinits counterclaim before theLaborArbiter.Healsopointedoutthat

that "Regional Directors

shall not indorse and
Labor Arbiters shallnot
entertain claims for
moral or other formsof
damages."
This
limitation in jurisdiction,
however, lasted only
briefly since on May 1,
1980, P.D. No. 1691
nullified P.D. No. 1367
and restoredArticle217
of the Labor Code
almost to its original
form. Presently, andas
amended by R.A.6715,
the jurisdiction ofLabor
Arbiters and the NLRC
in Article 217 is
comprehensive enough
to include claimsfor all
forms of damages
"arising from the
employeremployee
relations".
WHEREFORE
,
the
Petition is GRANTED,
and the complaint in
Civil Case No. 95554
before Branch 39ofthe
Regional Trial Court of
Misamis Oriental is
hereby DISMISSED.No
pronouncement as to
costs.
employers)

the civil action of privaterespondentisanactofforumshoppingandwasmerelyresortedtoaftera

failuretoobtainafavorabledecisionwiththeNLRC.

In declaring itself as having jurisdiction over the subject matter of the instant controversy,
respondentcourtstated:

20. Santos v. Servier

Philippines
Inc.
November 28, 2008
(Taxdeduction)

As a of petitioner's termination from employment (unfit to work due to an ailment contracted in

Paris) , respondent offeredaretirementpackage. Ofthe promisedretirementbenefitsamountingto
P1,063,841.76, only P701,454,89 was released to petitioner's husband, the balancethereofwas
withheld allegedly for taxation purposes. Respondent also failed togive theother benefits listed
above. Petitioner, represented by her husband, instituted the instant case for unpaid salaries;

unpaid separation pay;

unpaidbalance of retirement package plus interest;
insurancepensionfor
permanent disability;
educational assistance for her son;
medical assistance;
reimbursement of
medicalandrehabilitationexpenses;
moral,exemplary,andactualdamages,plusattorney'sfees.

A perusal ofthe complaintwhichisfordamagesdoesnot ask foranyreliefundertheLaborCodeof

the Philippines.Itseeks torecover damages as redress for defendant's breach of his contractual
obligation to plaintiffwho was damagedandprejudiced.The Courtbelievessuchcauseofaction is
withintherealmofcivillaw,andjurisdictionoverthecontroversybelongstotheregularcourts.
Petitioner's motion for reconsideration of theabove Order was denied forlackof merit on October
16,1996.Hence,thispetition.

Whether or not the

NLRC has jurisdiction
over the deduction
claim
Whether or not
retirement benefits
aretaxable

YesNLRChasjurisdictionandretirementbenefitsaretaxable.
The issue of deduction fortaxpurposesisintertwinedwiththe mainissueof
whether or not petitioner'sbenefits havebeenfullygivenher.Itis,therefore,
a money claim arising the employeremployee relationship, which clearly
falls within the jurisdiction 41 of the Labor Arbiter and the NLRC. For the
retirement benefits to be exempt from the withholding tax, the taxpayeris
burdened to prove the concurrence of the following elements: (1) a
reasonable privatebenefitplanismaintainedbythe employer,(2)theretiring

official or employeehasbeenintheserviceofthe same employerforatleast

ten (10) years;
(3) the retiringofficial or employee is not lessthanfifty(50)
years of age at the time of his retirement;
and (4) the benefit had been
availed of only once. As discussed above was qualified for disability
retirement. At the timeofsuchretirementwasonly41yearsof age;
and has
been in the service formore or less(8)years.Assuch,the aboveprovision
is not applicable for failure to comply with the age and length of service
requirements. Therefore cannot be faulted for deducting from petitioner's
totalretirementbenefitstheamountofP362,386..87,fortaxationpurposes.
21.
Pepsi
Cola
Distributor Phils v.
Galang, September24,
1991

Private respondentswere employees of Pepsi Cola. They were dismissedby PepsiCola afteran
alleged administrative investigation. Thereafter, private respondents filed a complaint for illegal
dismissal and a separate complaint for damages for malicious prosecution.Thepetitionersmoved
to dismiss the civil case onthegroundthatthetrialcourthadnojurisdictionoverthecasebecause
it involved employeremployeerelationship, which was cognizablebytheLaborArbiter.Themotion
wasgranted.However,itwasoverturneduponitsreconsideration.Hence,thispetition.

Issue: w/n the labor

arbiter hasjurisdiction
overthecivilcase

: The petitioners invoked Art 217 of the Labor Code and a number of
decisions tosupporttheirpositionthattheprivate respondentscivilcomplaint
for damages fallsunderthejurisdictionofthelaborarbiter.However,Art217
applies only whenthere isacasual connection between theclaimasserted
and the employeremployeerelationship. Absent such a link, the complaint
shall be cognizableby theregular courts of Justice in the exercise oftheir
civilandcriminaljurisdiction.

Given that, par 3 of Art 217, although referring to "all money claims of
workers," does not suppose that the entire universeof money claims that
might be asserted by workersagainst their employers has been absorbed
into the original and exclusive jurisdiction of Labor Arbiters. The Court
believes and so holds that the 'money claims of workers" referred to in
paragraph 3 of Article217embraces money claims which arise outoforin
connection with the employer employee relationship, or some aspect or
incident of such relationship. Put a little differently, that money claims of
workers which now fallwithinthe originalandexclusive jurisdictionofLabor
Arbiters are those money claims which have some reasonable causal
connectionwiththeemployeremployeerelationship.

The case now before the Court involves a complaint for damages for
malicious prosecution. Itdoesnotappearthatthere isa"reasonablecausal
connection" between the complaint and the relations of the parties as
employer and employees. The complaint did not arise from such relations
and in fact could havearisen independently of an employment relationship
between the parties. No such relationship or any unfair labor practice is
asserted. What theemployees are alleging is thatthe petitionersactedwith
bad faith when they filed the criminal complaint which the Municipal Trial
Courtsaid was intended"toharassthe poor employees"and thedismissalof
which was affirmed by the Provincial Prosecutor "for lack of evidence to
establish even a slightest probability that all the respondents hereinhave
committed the crime imputedagainstthem."Thisisamatterwhichthelabor
arbiter has no competence toresolve as theapplicable lawis nottheLabor
Code but the Revised Penal Code. Therefore, this case is congnizableby
the.regularcourts.


22. TK Corpr. V.
Albanco,June26,2013

1.
2.
3.

4.

5.
6.
7.

Eddie Albarico (Albarico) wasaregularemployeeof7KCorporation,acompanyselling

waterpurifiers.
Albaricos employment was terminated on 5 April 1993 allegedly for his poor sales
performance.
Albarico stopped reporting for work. Submitted his money claims against 7K
Corporation for arbitration before the National Conciliation and Mediation Board
(NCMB).The issue herebeing
W/N Albarico is entitled to the payment of separation
pay and the sales commission.
While thearbitrationcasebeforeNCMBwaspending,Albarico filedaComplaintagainst
7K Corporation with theArbitrationBranchoftheNational Labor RelationsCommission
(NLRC) for illegal dismissal withmoneyclaimsforovertimepay,holiday compensation,
commission,andfoodandtravellingallowances.
The
labor arbiter (LA)
decidedinfavorofAlbarico.Awarded Albaricoseparationpayin
lieuofreinstatement,backwagesandattorneysfees.
7KCorporationappealedtotheNLRC.
The
NLRC vacated the LAs Decision for forum shopping, because the NCMB
arbitration case was still pending. The dismissal was without prejudiceto thepending
NCMBarbitrationcase.Thisbecamefinalafternoappealwastaken.

1.

2.

7K Corporation fileditsPositionPaper in the NCMB arbitrationcaseon17September

1997. Claimed thatAlbarico had voluntarilystoppedreporting forworkafterreceivinga
verbal reprimand for his sales performance. Claimed that Albarico was guilty of
abandonmentofemployment!
Albarico made an oral manifestation that he was adopting the position paper he
submittedtotheLA.

1.
2.
3.
4.
5.

On 12 January 2005,almost 12 years after the filing of the NCMB case,both parties
appearedinahearingbeforetheNCMB.
Albarico manifested that he was willing to settle the case amicably based on the
decision of the LA ordering the payment of separation pay in lieuof reinstatement,
backwagesandattorneysfees.
7K Corporation madeacountermanifestation that it was likewise amenabletosettling
the dispute. However, it was willing to pay only the
separation pay and the sales
commission according to the Submission Agreement dated 19 April 1993.
The factual findings ofthe voluntary arbitrator, as well as of the CA, are notclearon
whathappenedafterwards.Eventherecordsarebereftofsufficientinformation.
The
NCMB voluntary arbitrator rendered a Decision in favor of Albarico on 18
November 2005. Decided 7K Corporation was liable for illegal dismissal. The
promotions, increasesinsalary, and awards received by Albarico beliedtheclaimthat
the latter was performing poorly. Albarico could not have abandoned hisjob, asthe
abandonment should have been clearly shown. Mere absencewasnot sufficient, but
must have been accompanied by overt acts. The immediate filing ofacomplaint for
illegal dismissal against theemployer, with aprayerfor reinstatement,showedthatthe
employee was not abandoning his work. Also, Albarico was dismissed without due

W/N the NCMB

voluntary arbitrator
exceeded
his
jurisdiction
in
deciding issues not
specified in the
submission
agreement of the
parties. (W/N the
NCMB VA arbitrator
properly assumed
jurisdiction to decide
the issue of the
legality
of the
dismissal and the
entitlement
to
backwages, even if
neither thelegalitynor
the entitlement was
expressedly claimed
in the Submission
Agreement of the
parties.)

No. The NCMB voluntary arbitrator did not exceed his jurisdiction.
According to 7K, theCA wrongly concluded that
Albaricos entitlement to
separation pay was necessarily based on illegal dismissal, thereby
making the issue of the legality of dismissal implicitly submitted to the
voluntary arbitrator for resolution. 7K argues, this was an erroneous
conclusion, because
separation pay may in fact be awarded even in
circumstances in which there is no illegal dismissal.
Although 7K is correctinsayingthatseparationpay may in factbeawarded
for reasons other thanillegaldismissal, the
circumstances of the instant
case lead to no other conclusion than that the claim of Albarico for
separation pay was premised on his allegation of illegal dismissal.
Thus, the voluntaryarbitratorproperlyassumedjurisdiction overtheissueof
thelegalityofhisdismissal
True, under the Labor Code, separation pay may be given not only when
there is illegal dismissal. In fact, it is also given to employees who are
terminated for authorized causes, such as redundancy, retrenchment or
installation of laborsaving devices under Article 283 of the Labor Code.
Additionally, jurisprudenceholds that separation pay may also beawarded
for considerationsofsocialjustice,evenifanemployee hasbeenterminated
for a just cause other thanserious misconduct or an act reflectingonmoral
character. The Courthasalsoruledthatseparationpay may be awardedifit
has become anestablished practice of the company topay thesaidbenefit
to voluntarily resigning employees or to those validly dismissed for
nonmembershipinaunionasrequiredinaclosedshopagreement.

In this case,however,
the
other circumstances when separation pay may
be awarded are not present in this case. The issue of separation pay
emanates solely from Albaricos allegation of illegal dismissal.

Even the NLRC was of theunderstanding that the NCMB arbitration case
sought to resolve the issue of the legality of the dismissal. In fact
, the
identity of the issue of the legality of his dismissal,
which was previously
submitted to the NCMB, and latersubmitted totheNLRC,wasthe
basis of
the latters finding of forum shoppingandtheconsequentdismissalofthe
case before it. In fact,
7K also implicitly acknowledged this when it filed
before the NLRC its Motion to Dismiss Albaricos Complaint on the
ground of forum shopping.
Thus, it is now estopped from claiming that
the issue before the NCMB does not include the issue of the legality of
the dismissal of Albarico.

In
Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, a
voluntary arbitrator has plenary jurisdiction and authority to interpret

6.

7.
8.
1.

process.
7K Corporation appealed tothe CA, imputing to the NCMB voluntaryarbitratorgrave
abuse of discretionamountingto lack orexcess ofjurisdiction forawardingbackwages
and attorneys fees to Albarico based on the formers finding of illegal dismissal.
Contended that the
issue of the legality of dismissal was not explicitly included in
the Submission Agreement dated 19 April 1993 filed for voluntary arbitration and
resolution. It prayed that thesaid awards be set aside, and thatonlyseparationpayof
P8,912.00andsalescommissionofP4,787.60beawarded.
The
CA affirmed theDecision ofthe voluntary arbitrator, but eliminated theaward of
attorneysfeesforhavingbeenmadewithoutfactual,legalorequitablejustification.
7KCorporationfiledaMotionforPartialReconsideration.CAdenied.
Hence, 7K Corporationfiled this instantPetitionfor ReviewonCertiorariunderRule45
of theRevised RulesofCourt.Itarguesthat,assuming that thevoluntaryarbitrator(VA)
has jurisdiction overthe present termination dispute,
the VA should have limited his
decision to the issue contained in the Submission Agreement the issue of
whether Albarico was entitled to separation pay and to the sales commission.
Under Article 262of theLaborCode, thejurisdictionof a voluntaryarbitratoris
strictly
limited to the issues that the parties agree to submit. Thus, it contends that the
voluntary arbitrator exceeded his jurisdiction when he resolved the issues of the
legality of the dismissal of Albarico and the Albaricos entitlement to backwages
on the basis of a finding of illegal dismissal.

an agreement to arbitrate and to determine the scope of his own

authority when the said agreement is vague
subject only,inaproper
case,tothecertiorarijurisdictionofthisCourt.
Having established that the issue of the legality of dismissal of
Albarico was in fact necessarily albeit not explicitly included in the
Submission Agreement signed by the parties, this Court rules that the
voluntary arbitrator rightly assumed jurisdiction to decide the said
issue.
In Sime Darby we ruled that although the specific issue presented by
the parties to the voluntary arbitrator was only "the issue of
performance bonus," the latter had the authority to determine not only
the issue of whether or not a performance bonus was to be granted,
but also the related question of the amount of the bonus, were it to be
granted. We explained that there was no indication at all that the
parties to the arbitration agreement had regarded "the issue of
performance bonus" as a twotiered issue, of which only one aspect
was being submitted to arbitration. Thus, we held that the failure of the
parties to limit the issues specifically to that which was stated allowed
the arbitrator to assume jurisdiction over the related issue.
Similarly, in the present case, there is no indication that the issue of
illegal dismissal should be treated. as a twotiered issue whereupon
entitlement to backwages must be determined separately. Besides,
"since arbitration is a final resort for the adjudication of disputes," the
voluntary arbitrator in the present case can assume that he has the
necessary power to make a final settlement. Thus, we rule that the
voluntary arbitrator correctly assumed jurisdiction over the issue of
entitlement of Albarico to backwages on the basis of the former's
finding of illegal dismissal.
Voluntary arbitrators may, by agreement of the parties, assume
jurisdiction over a termination dispute such as the present case,
contrary to the assertion of 7K Corporation that they may not.
Petition is DENIED.

23. Kawachi et. al. v.

Del Quero, March 27,
2007
(reasonable
causalconnection)

FACTS: Private respondent Dominie Del Quero was employed as a clerk in A/J Raymundo
Pawnshop, Inc.,thepawnshopbusinessofpetitionersJuliusKawachiandGayleKawachifromMay
27, 2002 to August 10, 2002. That on August 10, 2002 at or about 11:30AM, Del Quero was
reprimanded by Julius Kawachi and Gayle Kawachi who are acting as manager and assistant
manager respectively. Del Quero was accused for having committedanactcomplained of by a

ISSUE: Whether or
not the NLRC, and
not theregularcourts,
has jurisdiction over
the
action
for
damages

HELD: The Supreme Court held in the affirmative. Article 217 (a) of the
Labor Code, as amended, clearly bestows upon the Labor Arbiter original
and exclusive jurisdiction over claims for damages arising from
employeremployee relations in other words, the Labor Arbiter has
jurisdiction to award not only reliefs provided by labor laws, but also

customer, and was scolded in front of other employees and customers.Shewasthen instantly

damages governed by the Civil Code. Jurisprudence has developed the

dismissedfromherjob.

reasonable causalconnectionrulewhichstates that ifthere isareasonable

Del Quero filed an AffidavitComplaint for illegal dismissal before theNLRC.To seek relief from
serious embarrassmentandshame, Del Queroalso filedanactionfordamagesagainstpetitioners
beforetheMeTCofQuezonCity.
At first, theMeTC grantedthepetitionersmotionand ordered thedismissalofthecomplaintforlack
of jurisdiction. However,uponDel Queros motion, theMeTC reconsideredandsetasidetheorder
of dismissal. The MeTC also rejected petitioners motion for reconsideration. Thus, petitioners
elevated the MeTCstwoorders to the RTC ofQuezoncity.The RTCupheldthejurisdictionofthe

connection between the claim asserted and the employeremployee

relations, then the case is within the jurisdiction of the labor codes. Inthe
absenceofsuchnexus,itistheregularcourtsthathavejurisdiction.
The August 10, 2002 incident alleged in the complaint for damages was
similarly narrated in private respondentssAffidavitComplaintto supporther
action for illegal dismissal before the NLRC. Clearly, the alleged injuryis
directlyrelatedtotheemployeremployeerelationsoftheparties.

MeTC over private respondents complaint for damages. The RTC likewise denied petitioners

Where the employeremployee relationship is merely incidental and the

motionforreconsideration.Hence,theinstantpetitionforreviewoncertiorari.

cause of actionproceedsfromadifferentsource ofobligation,theCourthas

not hesitated to uphold the jurisdiction of the regular courts. Thescenario

thatobtainsinthiscaseisobviouslydifferent.
The SupremeCourtREVERSEDandSETASIDEtheresolutions oftheRTC
ofQuezoncity.