LABOR RELATIONS

JURISDICTION OF THE LABOR ARBITER Case Digests

22. Amecos Innovations, Inc. vs. Lopez

G.R. No. 178055. July 2, 2014
DEL CASTILLO, J.:

FACTS:
 Petitioner Amecos Innovations, Inc. (Amecos) is a corporation duly incorporated under
Philippine laws engaged in the business of selling assorted products created by its President and
herein co-petitioner, Antonio F. Mateo (Mateo).
 On May 30, 2003, Amecos received a Subpoena from the Office of the City Prosecutor of
Quezon City in connection with a complaint filed by the Social Security System (SSS) for alleged
delinquency in the remittance of SSS contributions and penalty liabilities in violation of
Section 22(a) and 22(d) in relation to Section 28(e) of the SSS law, as amended.
 By way of explanation, Amecos attributed its failure to remit the SSS contributions to herein
respondent Eliza R. Lopez (respondent).
 Amecos claimed that it hired respondent on January 15, 2001 as Marketing Assistant to promote
its products.
o Upon hiring, respondent refused to provide Amecos with her SSS Number and to be
deducted her contributions;
o On the basis of the foregoing, Amecos no longer enrolled respondent with the SSS and
did not deduct her corresponding contributions up to the time of her termination in
February 2002.
 Amecos eventually settled its obligations with the SSS.
 Consequently, SSS filed a Motion to Withdraw Complaint which was approved by the Office of
the City Prosecutor.
 Petitioners sent a demand letter to respondent for ₱27,791.65 representing her share in the SSS
contributions and expenses for processing, but to no avail.
 Thus, petitioners filed the instant Complaint for sum of money and damages against
respondent and raffled to Branch 51 of the Metropolitan Trial Court (MeTC) of Caloocan City.
o Petitioners claimed that because of respondent’s misrepresentation, they suffered
actual damages in the amount of ₱27,791.65 allegedly incurred by Amecos by way of
settlement and payment of its obligations with the SSS.
o Mateo (co-petitioner) also allegedly suffered extreme embarrassment and besmirched
reputation as a result of the filing of the complaint by the SSS.
 Hence they prayed for ₱50,000.00 as moral damages, ₱50,000.00 as exemplary damages,
₱50,000.00 as attorney’s fees, and costs of the suit.
 Respondent filed her Answer with Motion to Dismiss claiming that she was formerly an
employee of Amecos until her illegal dismissal in February 2002 and alleged that:
o Amecos deliberately failed to deduct and remit her SSS contributions and petitioners
filed the instant Complaint in retaliation to her filing of an illegal dismissal case.
o espondent also averred that the regular courts do not have jurisdiction over the instant
case as it arose out of their employer-employee relationship.

Ruling of the Metropolitan Trial Court

 the court hereby dismisses the complaint for lack of jurisdiction.
Ruling of the Regional Trial Court
 the instant appeal is accordingly DISMISSED for lack of merit.
 The RTC affirmed the view taken by the MeTC that under Article 217(a)(4) of the Labor
Code, claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relationship are under the jurisdiction of the Labor Arbiters or the National Labor
Relations Commission (NLRC);
 Since petitioners and respondent were in an employer-employee relationship at the time, the
matter of SSS contributions was thus an integral part of that relationship; and as a result,
petitioners’ cause of action for recovery of damages from respondent falls under the
jurisdiction of the Labor Arbiters.
 Petitioners filed a Motion for Reconsideration which the RTC denied.

Ruling of the Court of Appeals

 Petitioners thus instituted a Petition for Review21 with the CA claiming that the RTC seriously
erred in sustaining the dismissal of the Complaint by the MeTC on the ground of lack of
jurisdiction.
 The matter of whether the SSS employer’s contributive shares required of the petitioners to
be paid due to the complaint of the respondent necessarily flowed from the employer-
employee relationship between the parties.
 As such, the lower courts were correct in ruling that jurisdiction over the claim pertained to
the Labor Arbiter and the National Labor Relations Commission, not to the regular courts,
even if the claim was initiated by the employer against the employee.
 Petitioners moved to reconsider, but in the second assailed Resolution dated May 23, 2007, the
CA denied petitioners’ Motion for Reconsideration.
 Hence, the instant Petition.
Petitioners’ Arguments:
 The Complaint is one for recovery of a sum of money and damages based on Articles
19,27 22,28 and 2154 of the Civil Code;
 their cause of action is based on solutio indebitior unjust enrichment, which arose from
respondent’s misrepresentation that there was no need to enroll her with the SSS as she was
concurrently employed by another outfit, Triple A Glass and Aluminum Company, and that she
was self-employed as well.
 They argue that the employer-employee relationship between Amecos and respondent is
merely incidental, and does not necessarily place their dispute within the exclusive jurisdiction
of the labor tribunals;
o The true source of respondent’s obligation is derived from Articles 19, 22, and 2154 of
the Civil Code.
 They add that by reason of their payment of respondent’s counterpart or share in the SSS
premiums even as it was not their legal obligation to do so, respondent was unjustly enriched,
for which reason she must return what petitioners paid to the SSS.
 Petitioners cite the pronouncements of the Court to the effect that where the employer-
employee relationship is merely incidental and the cause of action proceeds from a different
source of obligation, such as tort, malicious prosecution or breach of contract, the regular
courts have jurisdiction;
  When the cause of action is based on Articles 19 and 21 of the Civil Code, the case is not
cognizable by the labor tribunals.
 Money claims of workers which fall within the original and exclusive jurisdiction of Labor
Arbiters are those money claims which have some reasonable causal connection with the
employer-employee relationship;
 And when a person unjustly retains a benefit to the loss of another, or when a person retains
money or property of another against the fundamental principles of justice, equity and good
conscience, a case of solutio indebiti arises.
Respondent’s Arguments:
 Respondent, on the other hand, maintains that jurisdiction over petitioners’ case lies with the
Labor Arbiter, as their cause of action remains necessarily connected to and arose from their
employer-employee relationship.
 At any rate, respondent insists that petitioners, as employers, have the legal duty to enroll her
with the SSS as their employee and to pay or remit the necessary contributions.

ISSUE: Whether or not the regular civil court has jurisdiction over the instant case (collection for sum
of money and damages)?
RULING:
 No, the regular civil courts do not have jurisdiction over claims for delinquency and non-
payment of SSS contribution.
 This Court holds that as between the parties, Article 217(a)(4) of the Labor Code is applicable.
(Jurisdiction of the Labor Arbiter)
o Said provision bestows upon the Labor Arbiter original and exclusive jurisdiction over
claims for damages arising from employer-employee relations.
 The observation that the matter of SSS contributions necessarily flowed from the employer-
employee relationship between the parties – shared by the lower courts and the CA – is correct;
o thus, petitioners’ claims should have been referred to the labor tribunals.
 In this connection, it is noteworthy to state that "the Labor Arbiter has jurisdiction to award
not only the reliefs provided by labor laws, but also damages governed by the Civil Code."\
 At the same time, it cannot be assumed that since the dispute concerns the payment of SSS
premiums, petitioners’ claim should be referred to the Social Security Commission (SSC)
pursuant to Republic Act No. 1161, as amended by Republic Act No. 8282.
 As far as SSS is concerned, there is no longer a dispute with respect to petitioners’ accountability
to the System; petitioners already settled their pecuniary obligations to it.
 Since there is no longer any dispute regarding coverage, benefits, contributions and penalties to
speak of, the SSC need not be unnecessarily dragged into the picture.
 Besides, it cannot be made to act as a collecting agency for petitioners’ claims against the
respondent; the Social Security Law should not be so interpreted, lest the SSC be swamped with
cases of this sort.

ISSUE: Whether or not petitioner had a cause of action against respondent?

RULING:
 At any rate, it appears that petitioners do not have a cause of action against respondent.
 In fine, petitioners alleged that respondent misrepresented that she was simultaneously
employed by another company; consequently, they did not enroll her with the SSS or pay her
SSS contributions.
  Likewise, when petitioners eventually paid respondent’s SSS contributions as a result of the
filing of a complaint by the SSS, respondent was unjustly enriched because the amount was not
deducted from her wages in Amecos.
 The evidence, however, indicates that while respondent was employed, Amecos did not remit
premium contributions – both employer and employees’ shares – to the SSS;
 the SSS demand letter sent to it covers non-payment of SSS premium contributions from
January 2001 up to April 2002, amounting to ₱85,687.84.
 The Amecos payroll covering the period from January 30 to November 29, 2001 likewise shows
that no deductions for SSS contributions were being made from respondent’s salaries.
 This can only mean that during the period, Amecos was not remitting SSS contributions –
whether the employer or employees’ shares – pertaining to respondent.
 As such, during her employment with Amecos, respondent was never covered under the System
as SSS did not know in the first instance that petitioners employed her, since the petitioners
were not remitting her contributions.
 Petitioners were forced to remit monthly SSS contributions only when SSS filed I.S. No. 03-6068
with the Quezon City Prosecutor’s Office.
 By that time, however, respondent was no longer with Amecos, as her employment was
terminated sometime in mid-February of 2002.
 Given the above facts, it is thus clear that petitioners have no cause of action against the
respondent in Civil Case No. 04-27802.
 Since Amecos did not remit respondent’s full SSS contributions, the latter was never covered by
and protected under the System.
 If she was never covered by the System, certainly there is no sense in making her answerable
for the required contributions during the period of her employment.
 And it follows as a matter of consequence that claims for other damages founded on the
foregoing non-existent cause of action should likewise fail.

DISPOSITIVE PORTION: WHEREFORE, premises considered, the Petition is DENIED. The assailed March
22, 2007 and the May 23, 2007 Resolutions of the Court of Appeals in CA-G.R. SP No. 96959 are
AFFIRMED. SO ORDERED.

23. Indophil Textile Mills Inc vs Engr. Adviento

Facts:
 Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the business of
manufacturing thread for weaving.
 On August 21, 1990, petitioner hired respondent Engr. Salvador Adviento as Civil Engineer to
maintain its facilities in Lambakin, Marilao, Bulacan
 On August 7, 2002, respondent consulted a physician due to recurring weakness and dizziness.
 Few days later, he was diagnosed with Chronic Poly Sinusitis, and thereafter, with moderate,
severe and persistent Allergic Rhinitis.
 Accordingly, respondent was advised by his doctor to totally avoid house dust mite and textile
dust as it will transmute into health problems.
 Distressed, respondent filed a complaint against petitioner with the NLRC for alleged illegal
dismissal and for the payment of backwages, separation pay, actual damages and attorney’s fees.
 The said case, docketed as NLRC Case No. RAB-III-05-5834-03, is still pending resolution with the
NLRC at the time the instant petition was filed.
 Subsequently, respondent filed another Complaint with the RTC alleging that he contracted such
occupational disease by reason of the gross negligence of petitioner to provide him with a safe,
healthy and workable environment
 In his Complaint, respondent alleged that as part of his job description, he conducts regular
maintenance check on petitioner’s facilities including its dye house area, which is very hot and
emits foul chemical odor with no adequate safety measures introduced by petitioner
o According to respondent, the air washer dampers and all roof exhaust vests are blown
into open air, carrying dust thereto.
o He recommended to management to place roof insulation to minimize, if not, eradicate
the health hazards attendant in the work place.
o He further suggested that the engineering office be relocated because of its dent prone
location, such that even if the door of the office is sealed, accumulated dust creeps in
outside the office.
o This was further aggravated by the installation of new filters fronting the office
o However, no action was taken by management.
o According to respondent, these health hazards have been the persistent complaints of
most, if not all, workers of petitioner.
 Respondent averred that, being the only breadwinner in the family, he made several attempts to
apply for a new job, but to his dismay and frustration, employers who knew of his present health
condition discriminated against him and turned down his application.
 By reason thereof, respondent suffered intense moral suffering, mental anguish, serious anxiety
and wounded feelings, praying for the recovery of the following: (1) Five Million Pesos
(₱5,000,000.00) asmoral damages; (2) Two Million Pesos (₱2,000,000.00) as exemplary damages;
and (3) Seven Million Three Thousand and Eight Pesos (₱7,003,008.00) as compensatory damages.
 In reply, petitioner filed a Motion to Dismiss on the ground that:
1. The RTC has no jurisdiction over the subject matter of the complaint because the same
falls under the original and exclusive jurisdiction of the Labor Arbiter (LA) under Article
217(a)(4) of the Labor Code; and
2. There is another action pending with the Regional Arbitration Branch III of the NLRC in
San Fernando City, Pampanga, involving the same parties for the same cause.
 On December 29, 2003, the RTC issued a Resolution denying the aforesaid Motion and sustaining
its jurisdiction over the instant case.
o It held that petitioner’s alleged failure to provide its employees with a safe, healthy and
workable environment is an act of negligence, a case of quasi-delict.
o As such, it is not within the jurisdiction of the LA under Article 217 of the Labor Code.
o On the matter of dismissal based on lis pendencia, the RTC ruled that the complaint
before the NLRC has a different cause of action which is for illegal dismissal and prayer
for backwages, actual damages, attorney’s fees and separation pay due to illegal dismissal
while in the present case, the cause of action is for quasi-delict.
 CA Decision
o Dismissed petitioner
 Petitioner’s argument
o That respondent’s claim for damages is anchored on the alleged gross negligence of
petitioner as an employer to provide its employees, including herein respondent, with a
safe, healthy and workable environment; hence, it arose from an employer-employee
relationship.
 o The fact of respondent’s employment with petitioner as a civil engineer is a necessary
element of his cause of action because without the same, respondent cannot claim to
have a right to a safe, healthy and workable environment.
o Thus, exclusive jurisdiction over the same should be vested in the Labor Arbiter and the
NLRC pursuant to Article 217(a)(4) of the Labor Code of the Philippines (Labor Code), as
amended.34

MAIN Issue: WON the RTC has jurisdiction over the subject matter of respondent’s complaint praying
for moral damages, exemplary damages, compensatory damages, anchored on petitioner’s alleged gross
negligence in failing to provide a safe and healthy working environment for respondent.

Ruling:
 Yes
 The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code, as amended
by Section 9 of Republic Act (R.A.) No. 6715, to wit:
 ART. 217. Jurisdiction of Labor Arbiters and the Commission-- (a) Except as otherwise provided
under this Code the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involvingwages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code including questions
involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or household service,involving an amount exceeding five thousand
pesos (₱5,000.00) regardless of whether accompanied with a claim for reinstatement.
 While we have upheld the present trend to refer worker-employer controversies to labor courts
in light of the aforequoted provision, we have also recognized that not all claims involving
employees can be resolved solely by our labor courts, specifically when the law provides
otherwise.
 For this reason, we have formulated the "reasonable causal connection rule," wherein if there is
a reasonable causal connection between the claim asserted and the employer-employee
relations, then the case is within the jurisdiction of the labor courts; and in the absence thereof,
it is the regular courts that have jurisdiction.
 Such distinction is apt since it cannot be presumed that money claims of workers which do not
arise out of or in connection with their employer-employee relationship, and which would
therefore fall within the general jurisdiction of the regular courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor
Arbiters on an exclusive basis.
  In fact, as early as Medina vs. Hon. Castro-Bartolome, in negating the jurisdiction of the LA,
although the parties involved were an employer and two employees, the Court succinctly held
that:
o The pivotal question to Our mind is whether or not the Labor Code has any relevance to
the reliefs sought by the plaintiffs. For if the Labor Code has no relevance, any discussion
concerning the statutes amending it and whether or not they have retroactive effect is
unnecessary.
o It is obvious from the complaint that the plaintiffs have not alleged any unfair labor
practice. Theirs is a simple action for damages for tortious acts allegedly committed by
the defendants. Such being the case, the governing statute is the Civil Code and not the
Labor Code. It results that the orders under review are based on a wrong premise.
 Similarly, we ruled in the recent case of Portillo v. Rudolf Lietz, Inc. that not all disputes between
an employer and his employees fall within the jurisdiction of the labor tribunals sucht hat when
the claim for damages is grounded on the "wanton failure and refusal" without just cause of an
employee to report for duty despite repeated notices served upon him of the disapproval of his
application for leave ofabsence, the same falls within the purview of Civil Law, to wit:
o Upon the facts and issues involved, jurisdiction over the present controversy must be held
to belong to the civil Courts.
o While seemingly petitioner's claim for damages arises from employer-employee relations,
and the latest amendment to Article 217 of the Labor Code under PD No. 1691 and BP
Blg. 130 provides that all other claimsarising from employer-employee relationship are
cognizable by Labor Arbiters [citation omitted], in essence, petitioner's claim for damages
is grounded on the "wanton failure and refusal"without just cause of private respondent
Cruz to report for duty despite repeated notices served upon him of the disapproval of
his application for leave of absence without pay.
o This, coupled with the further averment that Cruz "maliciously and with bad faith"
violated the terms and conditions of the conversion training course agreement to the
damage of petitioner removes the present controversy from the coverage of the Labor
Code and brings it within the purview of Civil Law.
o Clearly, the complaint was anchored not on the abandonment per se by private
respondent Cruz of his job—as the latter was not required in the Complaint to report back
to work—but on the manner and consequent effects of such abandonment of work
translated in terms of the damages which petitioner had to suffer. x x x.42
 Indeed, jurisprudence has evolved the rule that claims for damages under Article 217(a)(4) of the
Labor Code, to be cognizable by the LA, must have a reasonable causal connection with any of the
claims provided for in that article.
 Only if there is such a connection with the other claims can a claim for damages be considered as
arising from employer-employee relations.

Application:
 In the case at bench, we find that such connection is nil.
 True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases.
 More, the acts complained of appear to constitute matters involving employee-employer
relations since respondent used to be the Civil Engineer of petitioner.
 However, it should be stressed that respondent’s claim for damages is specifically grounded on
petitioner’s gross negligence to provide a safe, healthy and workable environment for its
employees −a case of quasi-delict.
 This is easily ascertained from a plain and cursory reading of the Complaint, which enumerates
the acts and/or omissions of petitioner relative to the conditions in the workplace, to wit:
1. Petitioner’s textile mills have excessive flying textile dust and waste in its operations
and no effort was exerted by petitioner to minimize or totally eradicate it;
2. Petitioner failed to provide adequate and sufficient dust suction facilities;
3. Textile machines are cleaned with air compressors aggravating the dusty work place;
4. Petitioner has no physician specializing in respiratoryrelated illness considering it is a
textile company;
5. Petitioner has no device to detectthe presence or density of dust which is airborne;
6. The chemical and color room are not equipped with proper safety chemical nose
mask; and
7. The power and boiler plant emit too much smoke with solid particles blown to the air
from the smoke stack of the power plant emitting a brown rust color which engulfs the
entire compound.
 In addition, respondent alleged that despite his earnest efforts to suggest to management to place
roof insulation to minimize, if not, eradicate the health hazards attendant in the workplace, the
same was not heeded.
 It is a basic tenet that jurisdiction over the subject matter is determined upon the allegations
made in the complaint, irrespective of whether or not the plaintiff is entitled to recover upon the
claim asserted therein, which is a matter resolved only after and as a result of a trial.
 Neither can jurisdiction of a court bemade to depend upon the defenses made by a defendant in
his answer or motion to dismiss.49 In this case, a perusal of the complaint would reveal that the
subject matter is one of claim for damages arising from quasi-delict, which is within the ambit of
the regular court's jurisdiction.
 The pertinent provision of Article 2176 of the Civil Code which governs quasi-delict provides that:
o Whoever by act or omissioncauses damageto another, there being fault or negligence, is
obliged to pay for the damagedone. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called quasi-delict.
 Thus, to sustain a claim liability under quasi-delict, the following requisites must concur: (a)
damages suffered by the plaintiff; (b) fault or negligence of the defendant, or someother person
for whose acts he must respond; and (c) the connection of causeand effect between the fault or
negligence of the defendant and the damages incurred by the plaintiff.
 In the case at bar, respondent alleges that due to the continued and prolonged exposure to textile
dust seriously inimical to his health, he suffered work-contracted disease which is now irreversible
and incurable, and deprived him of job opportunities.
 Clearly, injury and damages were allegedly suffered by respondent, an element of quasi-delict.
 Secondly, the previous contract of employment between petitioner and respondent cannot be
used to counter the element of "no pre-existing contractual relation" since petitioner’s alleged
gross negligence in maintaining a hazardous work environment cannot be considered a mere
breach of such contract of employment, but falls squarely within the elements of quasi-
delictunder Article 2176 of the Civil Code since the negligence is direct, substantive and
independent.
 Hence, we ruled in Yusen Air and Sea Services Phils., Inc. v. Villamor that:
o When, as here, the cause of action is based on a quasi-delictor tort, which has no
reasonable causal connection with any of the claims provided for in Article 217,
jurisdiction over the action is with the regular courts.55
  It also bears stressing that respondent is not praying for any relief under the Labor Code of the
Philippines.
 He neither claims for reinstatement nor backwages or separation pay resulting from an illegal
termination.
 The cause of action herein pertains to the consequence of petitioner’s omission which led to a
work-related disease suffered by respondent, causing harm or damage to his person.
 Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs
to the regular courts.
 Further, it cannot be gainsaid that the claim for damages occurred after the employer-employee
relationship of petitioner and respondent has ceased.
 Given that respondent no longer demands for any relief under the Labor Code as well as the rules
and regulations pertinent thereto, Article 217(a)(4) of the Labor Code is inapplicable to the instant
case, as emphatically held in Portillo, to wit:
o It is clear, therefore, that while Portillo’s claim for unpaid salaries is a money claim that
arises out of or in connection with an employeremployee relationship, Lietz Inc.’s claim
against Portillo for violation of the goodwill clause is a money claim based on an act done
after the cessation of the employment relationship. And, while the jurisdiction over
Portillo’s claim is vested in the labor arbiter, the jurisdiction over Lietz Inc.’s claim rests
on the regular courts. Thus:
o As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to
recover damages based on the parties' contract of employment as redress for
respondent's breach thereof. Such cause of action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to the regular courts. More so must this be in
the present case, what with the reality that the stipulation refers to the post-employment
relations of the parties.58

Conclusion:
 Where the resolution of the dispute requires expertise, not in labor management relations nor in
wage structures and other terms and conditions of employment, but rather in the application of
the general civil law, such claim falls outside the area of competence of expertise ordinarily
ascribed to the LA and the NLRC.

24. HONDA CARS PHILIPPINES, INC vs. HONDA CARS TECHNICAL SPECIALIST AND SUPERVISORS UNION
FACTS:
 On December 8, 2006, petitioner Honda Cars Philippines, Inc., (company) and respondent Honda
Cars Technical Specialists and Supervisory Union (union), the exclusive collective bargaining
representative of the company’s supervisors and technical specialists, entered into a collective
bargaining agreement (CBA) effective April 1, 2006 to March 31, 2011.
 Prior to April 1, 2005, the union members were receiving a transportation allowance of 3,300.00
a month.
 On September 3, 2005, the company and the union entered into a Memorandum of
Agreement (MOA) converting the transportation allowance into a monthly gasoline allowance
starting at 125 liters effective April 1,2005.
o The allowance answers for the gasoline consumed by the union members for official
business purposes and for home to office travel and vice-versa.
o The company claimed that the grant of the gasoline allowance is tied up to a similar
company policy for managers and assistant vice-presidents (AVPs), which provides that
 in the event the amount of gasoline is not fully consumed, the gasoline not used may be
converted into cash, subject to whatever tax may be applicable.
o Since the cash conversion is paid in the monthly payroll as an excess gas allowance, the
company considers the amount as part of the managers’ and AVPs’ compensation that is
subject to income tax on compensation.
 Accordingly, the company deducted from the union members’ salaries the withholding tax
corresponding to the conversion to cash of their unused gasoline allowance.
 The union, on the other hand, argued that the gasoline allowance for its members is a
"negotiated item" under Article XV, Section 15 of the new CBA on fringe benefits.
 It thus opposed the company’s practice of treating the gasoline allowance that, when converted
into cash, is considered as compensation income that is subject to withholding tax.
 The disagreement between the company and the union on the matter resulted in a grievance
which they referred to the CBA grievance procedure for resolution.
 As it remained unsettled there, they submitted the issue to a panel of voluntary arbitrators as
required by the CBA.
The Voluntary Arbitration Decision:
 On February 6, 2009, the Panel of Voluntary Arbitrators rendered a decision/award declaring
that the cash conversion of the unused gasoline allowance enjoyed by the members of the
union is a fringe benefit subject to the fringe benefit tax, not to income tax.
 The panel held that the deductions made by the company shall be considered as advances
subject to refund in future remittances of withholding taxes.
 The company moved for partial reconsideration of the decision, but the panel denied the
motion, prompting the company to appeal to the CA.
The CA Ruling:
 The CA Eight Division denied the petition and upheld with modification the voluntary arbitration
decision.
 It agreed with the panel’s ruling that the cash conversion of the unused gasoline allowance is a
fringe benefit granted under Section 15, Article XV of the CBA on "Fringe Benefits." Accordingly,
the CA held that the benefit is not compensation income subject to withholding tax.
 This conclusion notwithstanding, the CA clarified that while the gasoline allowance or the cash
conversion of its unused portion is a fringe benefit, it is "not necessarily subject to fringe benefit
tax."
 It explained that Section 33 (A) of the National Internal Revenue Code (NIRC) of 1997 imposed a
fringe benefit tax, effective January 1, 2000 and thereafter, on the grossed-up monetary value of
fringe benefit furnished or granted to the employee (except rank-and-file employees) by the
employer (unless the fringe benefit is required by the nature of, or necessary to the trade,
business or profession of the employer, or when the fringe benefit is for the convenience or
advantage of the employer).
COMPANY’S CONTENTION:
 The cash conversion of the union members’ gasoline allowance is compensation income subject
to income tax, and not to a fringe benefit tax.
 The fact that the CBA erroneously classified the gasoline allowance as a fringe benefit is
immaterial as it is the law – Section 33 of the NIRC – that provides for the legal classification of
the benefit.
 In any event, the company submits that even assuming that the cash conversion of the unused
gasoline allowance is a tax-exempt fringe benefit and that it erred in withholding the income
 taxes due, still the union members would have no cause of action against it for the refund of the
amounts withheld from them and remitted to the Bureau of Internal Revenue (BIR).
 Citing Section 204 of the NIRC, the company contends that an action for the refund of an
erroneous withholding and payment of taxes should be in the nature of a tax refund claim with
the BIR.
 It further contends that when it withheld the income tax due from the cash conversion of the
unused gasoline allowance of the union members, it was simply acting as an agent of the
government for the collection and payment of taxes due from the members.
UNION’S POSITION:
 The union argues for the denial of the petition for lack of merit.
 It posits that its members’ gasoline allowance and its unused gas equivalent are fringe benefits
under the CBA and the law [Section 33 (A) of NIRC] and is therefore not subject to withholding
tax on compensation income.
 Moreover, under that law and BIR Revenue Regulations 2-98, the same benefit is not subject to
the fringe benefit tax because it is required by the nature of, or necessary to the trade or
business of the company.
 The union further submits that in 2007, the BIR ruled that fixed and/or pre-computed
transportation allowance given to supervisory employees in pursuit of the business of the
company, shall not be taxable as compensation or fringe benefits of the employees..
ISSUE: WON the Voluntary has jurisdiction to settle tax matters.
RULING: NO. The Voluntary Arbitrator has no jurisdiction to settle tax matters
 The Labor Code vests the Voluntary Arbitrator original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies.
 Upon agreement of the parties, the Voluntary Arbitrator shall also hear and decide all other
labor disputes, including unfair labor practices and bargaining deadlocks.
 In short, the Voluntary Arbitrator’s jurisdiction is limited to labor disputes.
 Labor dispute means "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 of whether the
disputants stand in the proximate relation of employer and employee."
 The issues raised before the Panel of Voluntary Arbitrators are:
(1) whether the cash conversion of the gasoline allowance shall be subject to fringe benefit tax
or the graduated income tax rate on compensation; and
(2) whether the company wrongfully withheld income tax on the converted gas allowance.
 The Voluntary Arbitrator has NO competence to rule on the taxability of the gas allowance and
on the propriety of the withholding of tax.
 These issues are clearly tax matters, and do not involve labor disputes.
 To be exact, they involve tax issues within a labor relations setting as they pertain to questions
of law on the application of Section 33 (A) of the NIRC.
 They do not require the application of the Labor Code or the interpretation of the MOA and/or
company personnel policies.
 Furthermore, the company and the union cannot agree or compromise on the taxability of the
gas allowance.
 Taxation is the State’s inherent power; its imposition cannot be subject to the will of the parties.
ISSUE: WON the BIR has jurisdiction to interpret tax laws.
RULING: YES
 Under paragraph 1, Section 4 of the NIRC, the CIR shall have the exclusive and original
jurisdiction to interpret the provisions of the NIRC and other tax laws, subject to review by the
Secretary of Finance.
 Consequently, if the company and/or the union desire/s to seek clarification of these issues,
it/they should have requested for a tax ruling from the Bureau of Internal Revenue (BIR).
 Any revocation, modification or reversal of the CIR’s ruling shall not be given retroactive
application if the revocation, modification or reversal will be prejudicial to the taxpayers, except
in the following cases:
(a) Where the taxpayer deliberately misstates or omits material facts from his return or any
document required of him by the BIR;
(b) Where the facts subsequently gathered by the BIR are materially different from the facts on
which the ruling is based; or
(c) Where the taxpayer acted in bad faith.
 On the other hand, if the union disputes the withholding of tax and desires a refund of the
withheld tax, it should have filed an administrative claim for refund with the CIR.
 Paragraph 2, Section 4 of the NIRC expressly vests the CIR original jurisdiction over refunds of
internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other tax
matters. The union has no cause of action against the company.
 Under the withholding tax system, the employer as the withholding agent acts as both the
government and the taxpayer’s agent.
 Except in the case of a minimum wage earner, every employer has the duty to deduct and
withhold upon the employee’s wages a tax determined in accordance with the rules and
regulations to be prescribed by the Secretary of Finance, upon the CIR’s recommendation.
 As the Government’s agent, the employer collects tax and serves as the payee by fiction of law.
As the employee’s agent, the employer files the necessary income tax return and remits the tax
to the Government.
APPLICATION:
 Based on these considerations, we hold that the union has no cause of action against the
company.1âwphi1
 The company merely performed its statutory duty to withhold tax based on its interpretation of
the NIRC, albeit that interpretation may later be found to be erroneous. The employer did not
violate the employee's right by the mere act of withholding the tax that may be due the
government.
 Moreover, the NIRC only holds the withholding agent personally liable for the tax arising from
the breach of his legal duty to withhold, as distinguished from his duty to pay tax.
 Under Section 79 (B) of the NIRC, if the tax required to be deducted and withheld is not
collected from the employer, the employer shall not be relieved from liability for any penalty or
addition to the unwithheld tax.
 Thus, if the BIR illegally or erroneously collected tax, the recourse of the taxpayer, and in proper
cases, the withholding agent, is against the BIR, and not against the withholding agent.
 The union's cause of action for the refund or non-withholding of tax is against the taxing
authority, and not against the employer.
 Section 229 of the NIRC provides:
Sec. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained
in any court for the recovery of any national internal revenue tax hereafter alleged to have been
erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without
authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a
claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
SO ORDERED.

25. Montero vs Times G.R. No. 190828 March 16, 2015

Facts:
 Respondent Times Transportation Co., Inc., (TTCI) is a company engaged in the business of land
transportation for passengers and goods serving the Ilocos Region to Metro Manila route.
 TTCI employed the herein 21 petitioners as bus drivers, conductors, mechanics, welders, security
guards and utility personnel, namely: Onofre V. Montero (Montero), Edgardo N. Estrañero
(Estrañero), Rening P. Padre (Padre), Gabriel A. Madera (Madera), Herminio T. Tacla, Nelson C.
Viloria, Demetrio Q. Pajarillo (Pajarillo), Alfredo R. Aganon (Aganon), Reynaldo Avila (Avila), Albert
T. Ruiz, Nestor Y. Yago (Yago), Harty M. Tupasi (Tupasi), Agustin R. Avila, Jr. (Avila, Jr.), Bonifacio
B. Gaano (Gaano), Joselito D. Cuenta (Cuenta), Jonas P. Estilong (Estilong), Dominador C. Canaria
(Canaria), Genaro C. Rondaris (Genaro), Herardo M. Dulay (Dulay), Franklin A. Ravina, Jr. (Ravina),
and Ruben C. Cabello (Cabello) (petitioners).
 Sometime in 1995, the rank-and-file employees of TTCI formed a union named as Times
Employees Union (TEU) which was later certified as the sole and exclusive bargaining unit within
TTCI.
 March 1997, members of TEU went on strike; but when former Labor Secretary Leonardo A.
Quisimbing assumed jurisdiction over the labor dispute and certified the same for compulsory
arbitration, a return-to-work Order dated March 10, 1997 was issued which ended the strike and
enjoined the parties from committing any other act that may intensify the situation.
 August 23, 1997, TTCI Board of Directors approved a resolution confirming the authority given to
respondent Santiago Rondaris, TTCI President and Chairman of the Board of Directors, to
gradually dispose the assets of the TTCI as a result of its unabated increase of the cost of
operations and losses for the last two years. TTCI also adopted a company-wide retrenchment
program, which will take effect on October 1, 1997, where Santiago was given the authority to
determine the number of excess employees who would be the subject of retrenchment.
 The sale of 25 buses and the Certificates of Public Convenience for the operation of the buses,
were likewise approved and subsequently transferred to respondent Mencorp Transport Systems,
Inc. Thereafter, several union members received notices that they were being retrenched
effective 30 days from September 16, 1997.
 For a second time, on October 17, 1997, TEU declared a strike against TTCI, but the latter merely
reiterated the earlier return-to-work order of the Labor Secretary. For disregarding the said
return-to-work order, Santiago issued two notices of termination dated October 26,
1997 terminating some 106 workers and a revised list dated November 24, 1997 increasing the
number of dismissed employees to 119, for participating in the illegal strike.
 December 4, 1997, Santiago served to the DOLE Regional Office I a notice that TTCI would be
closing its operations due to heavy business losses.

 May 14, 1998, petitioners Estrañero, Pajarillo, Padre, Avila, Avila, Jr., Tupasi, Cuenta, Dulay, Yago,
and Aganon filed several complaints against TTCI and MENCORP before the NLRC. However, this
 case was withdrawn on March 4, 1999 upon motion by the TEU’s counsel which was given due
course on March 22, 1999.
 Four years later, several complaints for unfair labor practice, illegal dismissal with money claims,
damages and attorney’s fees were filed against TTCI, Santiago, MENCORP and its General
Manager Virginia Mendoza, including the latter’s husband Reynaldo Mendoza (collectively called
the respondents), before the LA from June to July 2002.

 TTCI asserted that the petitioners’ cause of action had already been barred by prescription
because the complaints were filed only in June 2002 or after almost five years from the date of
their dismissal. MENCORP, on the other hand, raised the defense of lack of employer-employee
relationship since it never engaged the services of the petitioners when TTCI sold to them its buses
and the Certificates of Public Convenience.

LA Decision
 June 9, 2005, dismissing the petitioners’ claim on the ground of prescription. However, with
regard to the issue of illegal dismissal, only the complaints of Montero, Ravina, Cabello, Genaro,
Madera, Gaano, Arsenio Donato and Estilong were dismissed for having been barred by
prescription.
 Found that petitioners Estrañero, Pajarillo, Aganon, Padre, Dulay, Cuenta, Canaria, Yago, Avila and
Avila, Jr. were illegally dismissed and were awarded their separation pay and backwages.
According to the LA, the complaints of these 10 petitioners were timely filed in June 2002 because
the eight-month period during which their cases were pending should be excluded from the four-
year prescriptive period.

NLRC
 appeals have both been denied for non-perfection, particularly for failure of the petitioners to
verify their appeal, and for failure of the respondent to post the required cash or surety bond.
 LA had ignored the rule on prescription, and chose to be selective in awarding relief to the 10
complainants by stating in his decision that the period during which the labor cases were pending
should be deducted from the period of prescription. According to the NLRC:
o We have thoroughly examined the records and find no justification for the LA to rule that
the pendency of the cases has worked in favor of the complainants to whom he awarded
separation pay and backwages. The [LA] has not at all indicated in his decision when the
eight-month period of pendency he alluded to commenced and when it ended. As a
matter of fact, these cases took almost three (3) years from filing of the complaints to the
rendition of the appealed decision.
 The NLRC added that the application of the principle of prescription should not be done on a
selective basis, especially when the dates of accrual of the causes of action and the filing of the
complaints readily show that prescription has set in.

 The petitioners filed a MR but it was denied. Hence, they filed a petition for certiorari before the
CA.

CA
 dismissed the petition. In sustaining the NLRC decision, the CA ratiocinated:
o Here, the illegal dismissal case was filed only in June 2002 or for more than four (4) years
and seven (7) months from the time petitioners received the notices of their dismissal in
 November and October 1997. Clearly, the four-year prescriptive period has already
elapsed
o Moreover, there is likewise no merit in petitioners’ contention that the period when they
filed a complaint on May 14, 1998 but withdrawn on March 30, 1998 should be excluded
from the computation of the four-year prescriptive [period] for illegal dismissal cases. The
prescriptive period continues even after the withdrawal of the case as though no action
has been filed at all.
 This was clarified in the case of Intercontinental Broadcasting Corporation vs.
Panganiban, where the Supreme Court held that although the commencement
of an action stops the running of the statute of prescription or limitations, its
dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the
same position as though no action had been commenced at all. x x x.

 Petitioners moved for reconsideration but it was denied by the CA. Hence, the present petition

Issue: WON the withdrawal of the complaint before the LA effectively erased the tolling of the
reglementary period?
Ruling: YES.

 "It should be emphasized at the outset that as a rule, this Court is not a trier of facts and this
applies with greater force in labor cases. Hence, factual findings of quasi-judicial bodies like the
NLRC, particularly when they coincide with those of the [LA] and if supported by substantial
evidence, are accorded respect and even finality by this Court. But where the findings of the NLRC
and the [LA] are contradictory, as in the present case, this Court may delve into the records and
examine for itself the questioned findings."
 Nevertheless, the Court has thoroughly reviewed the records in this case and finds that the NLRC
did not commit any grave abuse of its discretion amounting to lack or in excess of jurisdiction in
rendering its decision in favor of the respondents. The CA acted in accord with the evidence on
record and case law when it dismissed the petition and affirmed the assailed decision and
resolution of the NLRC.

 In the case at bar, October 26, 1997 and November 24, 1997 appear on record to be the dates
when the petitioners’ employment were terminated by TTCI. The antecedent facts that gave rise
to the petitioners’ dismissal from employment are not disputed in this case. There is no question
about the fact that the petitioners’ complaints for unfair labor practice and money claims have
already prescribed. The petitioners however argue that their complaints for illegal dismissal were
duly filed within the four-year prescriptive period since the period during which their cases were
pending should be deducted from the period of prescription.
 On the other hand, the respondents insist that said complaints have already prescribed. Hence,
the pivotal question in resolving the issues hinges on the resolution of whether the period during
which the petitioners’ cases were pending should be excluded from the period of prescription.

 Settled is the rule that when one is arbitrarily and unjustly deprived of his job or means of
livelihood, the action instituted to contest the legality of one’s dismissal from employment
constitutes, in essence, an action predicated upon an injury to the rights of the plaintiff, as
contemplated under Article 1146 of the New Civil Code, which must be brought within four years.
  The petitioners contend that the period when they filed a labor case on May 14, 1998 but
withdrawn on March 22, 1999 should be excluded from the computation of the four-year
prescriptive period for illegal dismissal cases.
 However, the Court had already ruled that the prescriptive period continues even after the
withdrawal of the case as though no action has been filed at all. The applicability of Article 115537
of the Civil Code in labor cases was upheld in the case of Intercontinental Broadcasting
Corporation v. Panganiban where the Court held that "although the commencement of a civil
action stops the running of the statute of prescription or limitations, its dismissal or voluntary
abandonment by plaintiff leaves the parties in exactly the same position as though no action had
been commenced at all."

Complaint before the LA

 In like manner, while the filing of the complaint for illegal dismissal before the LA interrupted
the running of the prescriptive period, its voluntary withdrawal left the petitioners in exactly
the same position as though no complaint had been filed at all. The withdrawal of their
complaint effectively erased the tolling of the reglementary period.

Application
 A prudent review of the antecedents of the claim reveals that it has in fact prescribed due to the
petitioners’ withdrawal of their labor case docketed as NLRC RAB-I-01-1007.
 Hence, while the filing of the said case could have interrupted the running of the four-year
prescriptive period, the voluntary withdrawal of the petitioners effectively cancelled the tolling
of the prescriptive period within which to file their illegal dismissal case, leaving them in exactly
the same position as though no labor case had been filed at all.
 The running of the four-year prescriptive period not having been interrupted by the filing of NLRC
RAB-I-01-1007, the petitioners’ cause of action had already prescribed in four years after their
cessation of employment on October 26, 1997 and November 24, 1997.
 Consequently, when the petitioners filed their complaint for illegal dismissal, separation pay,
retirement benefits, and damages in 2002, their claim, clearly, had already been barred by
prescription.
 Sadly, the petitioners have no one but themselves to blame for their own predicament. By their
own allegations in their respective complaints, they have barred their remedy and extinguished
their right of action. Although the Constitution is committed to the policy of social justice and the
protection of the working class, it does not necessary follow that every labor dispute will be
automatically decided in favor of labor. The management also has its own rights. Out of concern
for the less privileged in life, this Court, has more often than not inclined, to uphold the cause of
the worker in his conflict with the employer. Such leaning, however, does not blind the Court to
the rule that justice is in every case for the deserving, to be dispensed in the light of the
established facts and applicable law and doctrine.
 WHEREFORE, the Decision dated August 28, 2009 and Resolution dated December 11, 2009 of the
Court of Appeals in CA-G.R. SP No. 106260 are AFFIRMED. SO ORDERED.

26. Norma D. Cacho and North Star International Travel, Inc. vs. Virginia D. Balagtas, G.R. No 202974,
Feb. 7, 2018

Re Intra-corporate controversy
Ponente: Leonardo-De Castro, J.

Petitioners: President Norma D. Cacho (Cacho) and North Star International Travel, Inc. (North Star)
Respondent: Virginia D. Balagtas (Balagtas)

Nature of the case: This case is petition for review on certiorari, seeking to reverse and set aside the
decision and resolution of the CA, which affirmed the LA decision.
 This case stemmed from a Complaint for constructive dismissal filed by respondent Balagtas
against petitioners North Star and Cacho before the LA.

FACTS: (Based on Balagtas’ Position Paper)

 Virginia Balagtas (Balagtas) alleged that she was a former employee of TQ3 Travel Solutions/North
Star International Travel, Inc. (North Star)
 That she was one of the original incorporators-directors of the said corporation and,
o When it started its operations in 1990, she was the General Manager and later became
the Vice President/Chief Executive Officer

 On March 19, 2004 or after 14 years of service in the said corporation, Balagtas was placed under
30 days preventive suspension pursuant to a Board Resolution passed by the Board of Directors
of the Corporation due to her alleged questionable transactions
 On March 20, 2004, she was notified by Norma Cacho (Cacho) of her suspension and ordered to
explain in writing to the Board of Directors her alleged fraudulent transactions within 5 days
from said notice
o Balagtas promptly heeded the order on March 29, 2004.

 On April 5, 2004, while under preventive suspension, petitioner wrote a letter to Cacho informing
the latter that she was assuming her position as Executive Vice-President/Chief Executive Officer
effective on that date
o However, she was prevented from re-assuming her position.
 She also wrote a letter dated April 12, 2004 to the Audit Manager inquiring about the status of
the examination of the financial statement of corporation for the year 2003, which request was,
however, ignored.

 Consequently, Balagtas filed a complaint claiming that she was constructively and illegally
dismissed effective on April 12, 2004.

Corporation’s Defense
 Averred that, on March 19, 2004, the majority of the Board of Directors of the corporation
decided to suspend petitioner for 30 days due to the questionable documents and transactions
she entered into without authority
o The preventive suspension was meant to prevent Balagtas from influencing potential
witnesses and to protect herein the corporation's property
o Subsequently, the Board of Directors constituted an investigation committee tasked with
the duty to impartially assess the charges against petitioner.
 Balagtas violated her suspension when, on several occasions, she went to the corporation's office
and insisted on working despite Cacho's protestation
 The complaint for constructive dismissal was groundless.
 o That petitioner was not illegally dismissed but was merely placed under preventive
suspension.

LA’s Decision
 Found that respondent Balagtas was illegally dismissed from North Star

 Petitioners appealed to the NLRC

In Petitioners’ Notice of Appeal

 Prayed that Balagtas's Complaint be dismissed for lack of jurisdiction
 While they maintained that Balagtas was never dismissed, they also alleged that she was a
corporate officer, incorporator, and member of the North Star's Board of Directors (The Board)
 Thus, the NLRC cannot take cognizance of her illegal dismissal case, the same being an intra-
corporate controversy, which properly falls within the original and exclusive jurisdiction of the
ordinary courts.

NLRC’s Ruling: [An intra-corporate controversy]

 Ruled in favor of petitioners
o Reversed and set aside the LA decision, and dismissed the complaint for lack of
jurisdiction
 Findings are as follows:
o First, through a Board resolution passed on March 31, 2003, Balagtas was elected as
North Star's Executive Vice President and Chief Executive Officer, as evidenced by a
Secretary's Certificate dated April 22, 2003
o Second, in her Counter Affidavit executed sometime in 2004 in relation to the criminal
charges against her, respondent Balagtas had in fact admitted occupying these positions,
apart from being one of North Star's incorporators
o And, third, the position of "Vice President" is a corporate office provided in North Star's
by-laws.
 Based on these findings, it ruled that respondent Balagtas was a corporate officer of North Star
at the time of her dismissal and not a mere employee
 A corporate officer's dismissal is always an intra-corporate controversy, a subject matter falling
within the Regional Trial Court's (RTC) jurisdiction.
 Thus, the Labor Arbiter and the NLRC do not have jurisdiction over Balagtas's Complaint.
 Further, it held that petitioners North Star and Cacho were not estopped from raising the issue
of lack of jurisdiction
 Citing Dy v. National Labor Relations Commission, the NLRC explained that the Labor Arbiter
heard and decided the case upon the theory that he had jurisdiction over the Complaint.
o Thus, the Labor Arbiter's jurisdiction may be raised as an issue on appeal.
 Respondent Balagtas’s MR was also denied.

CA’s Ruling: [NOT an intra-corporate controversy]

 Found merit in Balagtas’s petition
o Reversed the NLRC ruling which dismissed the complaint for lack of jurisdiction, and
affirmed LA’s decision
 In ruling that the present case does not involve an intra-corporate controversy, CA applied a two-
tier test, viz.:
 (a) The relationship test, and
(b) The nature of controversy test.

 Applying the relationship test, CA explained that no intra-corporate relationship existed between
respondent Balagtas and North Star.
o While respondent Balagtas was North Star's Chief Executive Officer and Executive Vice
President, petitioners North Star and Cacho failed to establish that occupying these
positions made her a corporate officer.
o First, respondent Balagtas held the Chief Executive Officer position as a mere corporate
title for the purpose of enlarging North Star's corporate image.
 According to North Star's by-laws, the company President shall assume the
position of Chief Executive Officer.
 Thus, respondent Balagtas was not empowered to exercise the functions of a
corporate officer, which was lawfully delegated to North Star's President,
petitioner Cacho.
o And, second, petitioner North Star's By-laws only enumerate the position of Vice
President as one of its corporate officers.
 The NLRC should not have assumed that the Vice President position is the same as the Executive
Vice President position that respondent Balagtas admittedly occupied.
o In other words, that the exact and complete name of the position must appear in the by-
laws, otherwise it is an ordinary office whose occupant shall be regarded as a regular
employee rather than a corporate officer.
 Following Matling Industrial and Commercial Corporation v. Caras, the appellate court reminded
that:
o “A position must be expressly mentioned in the by-laws in order to be considered a
corporate office.”
 On the other hand, CA elucidated that based on the allegations in respondent Balagtas's
complaint filed before the LA, the present case involved labor issues.
 Thus, even using the nature of controversy test, it cannot be regarded as an intra-corporate
dispute.

 Subsequent MRs were also denied

 Hence, this petition.

Petitioners’ Arguments:
 They insist that the present case's subject matter is an intra-corporate controversy
 They maintain that respondent Balagtas, as petitioner North Star's Executive Vice President and
Chief Executive Officer, was its corporate officer
o First, under petitioner North Star's by-laws, vice-presidents are listed as corporate
officers.
 Thus, the NLRC erred when it differentiated between: (a) "vice president" as a
corporate office provided in petitioner North Star's by-laws, and (b) "Executive
Vice President," the position occupied by respondent Balagtas.
 Its interpretation unduly supplanted the Board's wisdom and authority in
handling its corporate affairs.
 Her appointment as one of petitioner North Star's vice presidents is evidenced by
the Secretary's Certificate dated April 22, 2003
  As held in Matling, if the position or office is created by the by-laws and the
appointing authority is the board of directors, then it is a corporate office.
o Second, she had already been a corporate officer of petitioner North Star for quite some
time, having been appointed as General Manager through a Board Resolution in 1997
and, subsequently, as Executive Vice President and General Manager in 2001, as
evidenced by the Secretary's Certificate dated March 23, 2001
o And third, respondent Balagtas has openly admitted her appointments to these positions.
 She even acknowledged being a member of the Board and at the same time
petitioner North Star's Executive Vice President and General Manager
 Considering all these in applying the relationship test, petitioners asserted that respondent
Balagtas is not petitioner North Star's mere employee but a corporate officer, whose dismissal is
categorize as an intra-corporate matter
 Further cited Espino v. NLRC where the Court held that a corporate officer's dismissal is always a
corporate act.
 It cannot be considered as a simple labor case.
 Thus, under the nature of the controversy test, the present case is an intra-corporate dispute
because the primary subject matter herein is the dismissal of a corporate officer.

Respondent Balagtas’s Arguments:

 First, she was not a corporate officer of petitioner North Star.
o The Board Resolution and Secretary's Certificates that purportedly support petitioners
Cacho and North Star's claims were falsified, forged, and invalid.
o Petitioners Cacho and North Star failed to show that the Executive Vice President position
she had occupied was a corporate office.
o Said position was a mere nomenclature as she was never empowered to exercise the
functions of a corporate officer
o In fact, in the 2003 General Information Sheet (GIS) of petitioner North Star, the field
"corporate position" opposite respondent Balagtas's name was filled out as "not
applicable”
 Second, she was no longer a stockholder and director of petitioner North Star.
 Third, she was merely an employee.
o Petitioner Cacho was the one who hired her, determined her compensation, directed and
controlled the manner she performed her work, and ultimately, dismissed her from
employment
 Fourth, the issue of whether or not she was a corporate officer is irrelevant because her claim for
back wages, commissions, and other monies is clearly categorized as a labor dispute, not an intra-
corporate controversy
 And fifth, petitioners Cacho and North Star are already estopped from questioning the jurisdiction
of the LA
o They actively participated in the proceedings before the LA and cannot assail the validity
of such proceedings only after obtaining an unfavorable judgment

ISSUE: Whether the present case is an intra-corporate controversy within the jurisdiction of the regular
courts or an ordinary labor dispute that the Labor Arbiter may properly take cognizance of.

RULING:
 The present case is an intra-corporate controversy within the jurisdiction of the regular courts.
 o Respondent Balagtas's dismissal is an intra-corporate controversy.
 At the onset, we agree with the CA’s ruling that a two-tier test must be employed to determine
whether an intra-corporate controversy exists in the present case, viz.:
(a) The relationship test, and
(b) The nature of the controversy test.

As to the “Relationship Test”

 A dispute is considered an intra-corporate controversy under the relationship test when the
relationship between or among the disagreeing parties is any one of the following:
(a) Between the corporation, partnership, or association and the public;
(b) Between the corporation, partnership, or association and its stockholders, partners,
members, or officers;
(c) Between the corporation, partnership, or association and the State as far as its franchise,
permit or license to operate is concerned; and
(d) Among the stockholders, partners, or associates themselves.

 In this case, petitioners Cacho and North Star allege that respondent Balagtas, as petitioner North
Star's Executive Vice President, was its corporate officer.
 On the other hand, while respondent Balagtas admits to have occupied said position, she argues
she was Executive Vice President merely by name and she did not discharge any of the
responsibilities lodged in a corporate officer.

 To establish the intra-corporate relationship between the parties, it must be determined

whether the Executive Vice President position is a corporate office.
 In Easycall Communications Phils., Inc. v. King, the Court ruled that a corporate office is created
by the charter of the corporation and the officer is elected thereto by the directors or
stockholders.
 In other words, one shall be considered a corporate officer only if two conditions are met, viz.:
(1) The position occupied was created by charter/by-laws, and
(2) The officer was elected (or appointed) by the corporation's board of directors to occupy
said position.

Application 1

FIRST: Position occupied was created by charter/by-laws

 The Executive Vice President position is one of the corporate offices provided in petitioner North
Star's By-laws.
 The rule is that corporate officers are those officers of a corporation who are given that character
either by the Corporation Code or by the corporation’s’ by-laws.
 Section 25 of the Corporation Code explicitly provides for the election of the corporation's
president, treasurer, secretary, and such other officers as may be provided for in the by-laws.
o In interpreting this provision, the Court has ruled that if the position is other than the
corporate president, treasurer, or secretary, it must be expressly mentioned in the by-
laws in order to be considered as a corporate office.
 In this regard, petitioner North Star's by-laws provides the following: (In Section 1, Article IV re
Election/ Appointment of Officers)
 o xxx the Board of Directors shall formally organize by electing the Chairman, the President,
one or more Vice-President (sic), the Treasurer, and the Secretary, at said meeting. xxx
 Clearly, there may be one or more vice president positions in petitioner North Star and, by virtue
of its by-laws, all such positions shall be corporate offices.

Re: the phrase “one or more vice president”

 Whether or not the phrase “one or more vice president” in the above-cited provision of the by-
laws includes the Executive Vice President position held by respondent Balagtas.
o CA’s interpretation of the phrase “one or more vice president” unduly restricts one of
petitioner North Star's inherent corporate powers, viz.: to adopt its own by-laws, provided
that it is not contrary to law, morals, or public policy for its internal affairs, to regulate the
conduct and prescribe the rights and duties of its members towards itself and among
themselves in reference to the management of its affairs
 The use of the phrase "one or more" in relation to the establishment of vice president positions
without particular exception indicates an intention to give petitioner North Star's Board ample
freedom to make several vice- president positions available as it may deem fit and in consonance
with sound business practice.
 To require that particular designation/variation of each vice-president (i.e., executive vice
president) be specified and enumerated is to invalidate the by-laws’ true intention and to
encroach upon petitioner North Star's inherent right and authority to adopt its own set of rules
and regulations to govern its internal affairs.
 Whether the creation of several vice-president positions in a company is reasonable is a question
of policy that courts of law should not interfere with.
 Where the reasonableness of a by-law is a mere matter of judgment, and one upon which
reasonable minds must necessarily differ, a court would not be warranted in substituting its
judgment instead of the judgment of those who are authorized to make by- laws and who have
exercised their authority.
 Thus, by name, the Executive Vice President position is embraced by the phrase “one or more
vice president” in North Star's by-laws.

SECOND: Officer was elected (or appointed) by the Corporation's BOD to occupy said position
 Respondent Balagtas was appointed by the Board as petitioner North Star's Executive Vice
President
 While a corporate office is created by an express provision either in the Corporation Code or the
By-laws, what makes one a corporate officer is his election or appointment thereto by the board
of directors.
 Thus, there must be documentary evidence to prove that the person alleged to be a corporate
officer was appointed by action or with approval of the board.

 In this case, petitioners Cacho and North Star asserted that respondent Balagtas was elected as
Executive Vice President by the Board as evidenced by the Secretary's Certificate dated April 22,
2003
 On the other hand, respondent Balagtas assails the validity of the above-cited Secretary's
Certificate for being forged and fabricated.
o However, aside from these bare allegations, the NLRC observed that she did not present
other competent proof to support her claim.
 o To the contrary, respondent Balagtas even admitted that she was elected by the Board
as petitioner North Star's Executive Vice President and argued that she could not be
removed as such without another valid board resolution to that effect.
o To support this claim, respondent Balagtas submitted the very same Secretary's
Certificate as an attachment to her Position Paper before the Labor Arbiter
o That she is now casting doubt over a document she herself has previously relied on belies
her own claim that the Secretary's Certificate is a fake.
 Thus, the Secretary's Certificate overcomes respondent Balagtas's contention that she was
merely the Executive Vice President by name and was never empowered to exercise the functions
of a corporate officer.
 Notably, she did not offer any proof to show that her duties, functions, and compensation were
all determined by petitioner Cacho as petitioner North Star's President
 In any case, that the Executive Vice President's duties and responsibilities are determined by the
President instead of the Board is irrelevant
o In determining whether a position is a corporate office, the board of directors'
appointment or election thereto is controlling.
o When Article IV, Section 4 of North Star’s By-laws is read together with Section 1 thereof,
it is clear that while petitioner North Star may have one or more vice presidents and the
President is authorized to determine each one's scope of work, their appointment or
election still devolves upon the Board.

 At this point, it is best to emphasize that the manner of creation (i.e., under the express provisions
of the Corporation Code or by-laws) and the manner by which it is filled (i.e., by election or
appointment of the board of directors) are sufficient in vesting a position the character of a
corporate office.

Re: General Information Sheet (GIS)

 The GIS neither governs nor establishes whether or not a position is an ordinary or corporate
office.
 At best, if one is listed in the GIS as an officer of a corporation, his/her position as indicated therein
could only be deemed a regular office, and not a corporate office as it is defined under the
Corporation Code.

 Hence, based on the above discussion, as Executive Vice President, respondent Balagtas was one
of petitioner North Star's corporate officers.
 Thus, there is an intra-corporate relationship existing between the parties.

As to the “Nature of the Controversy Test”

 The existence of an intra-corporate controversy does not wholly rely on the relationship of the
parties.
 The incidents of their relationship must also be considered.
 Thus, under the nature of the controversy test, the disagreement must not only be rooted in the
existence of an intra-corporate relationship, but must as well pertain to the enforcement of the
parties’ correlative rights and obligations under the Corporation Code and the internal and intra-
corporate regulatory rules of the corporation.
 If the relationship and its incidents are merely incidental to the controversy or if there will still be
conflict even if the relationship does not exist, then no intra-corporate controversy exists
  Verily, in a long line of cases, the Court consistently ruled that a corporate officer's dismissal is
always a corporate act, or an intra-corporate controversy which arises between a stockholder and
a corporation
 However, a closer look at these cases will reveal that the intra-corporate nature of the disputes
therein did not hinge solely on the fact that the subject of the dismissal was a corporate officer.

 In Philippine School of Business Administration v. Leano, the complainant questioned the validity
of his dismissal after his position was declared vacant and he was not re-elected thereto.
 On the other hand, the complainant in Espino v. NLRC also contested the failure of the board of
directors to re-elect him as a corporate officer.
o The Court found that the board of directors deferred his re-election in light of previous
administrative charges filed against the complainant.
o Later on, the board of directors deemed him resigned from service and his position was
subsequently abolished.
 Finally, in Pearson and George, (S.E. Asia), Inc. v. NLRC, the complainant lost his corporate office
primarily because he was not re-elected as a member of the corporation's board of directors.
o The Court found that the corporate office in question required the occupant to be at the
same time a director.
o Thus, he should lose his position as a corporate officer because he ceased to be a director
for any reason (e.g., he was not re-elected as such), such loss is not dismissal but failure
to qualify or to maintain a prerequisite for that position.
 The dismissals in these cases were all considered intra-corporate controversies not only because
the complainants were corporate officers, but also, and more importantly, because they were
not re-elected to their respective corporate offices and, thus, terminated from the corporation.
 The matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise
of deliberate choice and the faculty of discriminative selection.
o Generally speaking, the relationship of a person to a corporation, whether as officer or as
agent or employee, is not determined by the nature of the services performed, but by the
incidents of the relationship as they actually exist.
 In other words, the dismissal must relate to any of the circumstances and incidents surrounding
the parties’ intra-corporate relationship.
 To be considered an intra-corporate controversy, the dismissal of a corporate officer must have
something to do with the duties and responsibilities attached to his/her corporate office or
performed in his/her official capacity.

Application 2
 In this case, respondent Balagtas’s allegations mainly relate to incidents involving her capacity as
Executive Vice President, a position above-declared as a corporate office, viz.:
o First, respondent Balagtas's claim of dismissal without prior authority from the Board
reveals her understanding that the appointment and removal of a corporate officer like
the Executive Vice President could only be had through an official act by the Board.
o And, second, she sought separation pay in lieu of reinstatement to her former positions,
one of which was as Executive Vice President.
 Even her prayer for full back wages, allowances, commissions, and other
monetary benefits all relate to her corporate office
  On the other hand, petitioners Cacho and North Star terminated respondent Balagtas for the
following reasons:
(a) For allegedly appropriating company funds for her personal gain;
(b) For abandonment of work;
(c) Violation of a lawful order of the corporation; and
(d) Loss of trust and confidence
 In their Position Paper, petitioners Cacho and North Star described in detail the latter's fund
disbursement process, emphasizing respondent Balagtas's role as the one who approves payment
vouchers and the signatory on issued checks-responsibilities specifically devolved upon her as
the vice president.
 And as the vice president, respondent Balagtas actively participated in the whole process, if not
controlled it altogether.
 As a result, petitioners Cacho and North Star accused respondent Balagtas of gravely abusing the
confidence the Board has reposed in her as vice president and misappropriating company funds
for her own personal gain.
 From these, it is clear that the termination complained of is intimately and inevitably linked to
respondent Balagtas's role as petitioner North Star's Executive Vice President:
o First, the alleged misappropriations were committed by respondent Balagtas in her
capacity as vice president, one of the officers responsible for approving the disbursements
and signing the checks
o And, second, these alleged misappropriations breached petitioners Cacho's and North
Star's trust and confidence specifically reposed in respondent as vice president.

 That all these incidents are adjuncts of her corporate office lead the Court to conclude that
respondent Balagtas's dismissal is an intra-corporate controversy, not a mere labor dispute.

Sub-issue: Whether the petitioners were estopped from questioning the jurisdiction.

Ruling:
 No. The petitioners Cacho and North Star were NOT estopped from questioning the jurisdiction.
 Respondent Balagtas’s reliance on Tijam v. Sibonghanoy, that petitioners, after actively
participating in the proceedings before the LA and obtaining an unfavorable judgment, are barred
by laches from attacking the latter's jurisdiction, is unavailing.
 The Court has already held that the ruling in Tijam v. Sibonghanoy remains only as an exception
to the general rule.
 Estoppel by laches will only bar a litigant from raising the issue of lack of jurisdiction in exceptional
cases similar to the factual milieu of Tijam v. Sibonghanoy.
 To recall, the Court in Tijam v. Sibonghanoy ruled that the plea of lack o f jurisdiction may no
longer be raised for being barred by laches because it was raised for the first time in a motion to
dismiss filed almost 15 years after the questioned ruling had been rendered
 These exceptional circumstances are not present in this case.
 Thus, the general rule must apply: that the issue of jurisdiction may be raised at any stage of the
proceedings, even on appeal, and is not lost by waiver or by estoppel.
 In Espino v. NLRC, we ruled:
o “The principle of estoppel cannot be invoked to prevent this Court from taking up the
question, which has been apparent on the face of the pleadings since the start of the
 litigation before the Labor Arbiter. In the case of Dy v. NLRC, supra, the Court, citing the
case of Calimlim v. Ramirez, reiterated that the decision of a tribunal not vested with
appropriate jurisdiction is null and void. Again, the Court in Southeast Asian Fisheries
Development Center-Aquaculture Department v. NLRC restated the rule that the
invocation of estoppel with respect to the issue of jurisdiction is unavailing because
estoppel does not apply to confer jurisdiction upon a tribunal that has none over the
cause of action. The instant case does not provide an exception to the said rule. (Emphasis
supplied.)

 All told, the issue in the present case is an intra-corporate controversy, a matter outside the Labor
Arbiter's jurisdiction.

Disposition: Petition granted.

 Dismissed the case for lack of jurisdiction, without prejudice to the filing of an appropriate case
before the proper tribunal.

27. Nicanor Macalba v Pro Health Pharma Philippines

G.R. No. 209085
LEONEN, J.:

This case involves fundamental principles in labor cases.

 First, in appeals of illegal dismissal cases, employers are strictly mandated to file an appeal bond
to perfect their appeals. Substantial compliance, however, may merit liberality in its application.
 Second, before any labor tribunal takes cognizance of termination disputes, it must first have
jurisdiction over the action. The Labor Arbiter and the National Labor Relations Commission only
exercise jurisdiction over termination disputes between an employer and an employee. They do
not exercise jurisdiction over termination disputes between a corporation and a corporate
officer.
 Third, while this Court recognizes the inherent right of employers to discipline their employees,
the penalties imposed must be commensurate to the infractions committed. Dismissal of
employees for minor and negligible offenses may be considered as illegal dismissal.
FACTS:
 ProHealth Pharma Philippines, Inc. (ProHealth) is a corporation engaged in the sale of
pharmaceutical products and health food on a wholesale and retail basis.
 Generoso Del Castillo (Del Castillo) is the Chair of the Board of Directors and Chief Executive
Officer while Dante Busto (Busto) is the Executive Vice President.
 Malcaba, Tomas Adona, Jr. (Adona), Nepomuceno, and Palit-Ang were employed as its
President, Marketing Manager, Business Manager, and Finance Officer, respectively.

Contention of Malcaba:
 Malcaba had been employed with ProHealth since it started in 1997.
o He was one of its incorporators together with Del Castillo and Busto, and they were all
members of the Board of Directors in 2004.
o He held 1,000,000 shares in the corporation.
o He was initially the Vice President for Sales then became President in 2005.
 Malcaba alleged that Del Castillo did acts that made his job difficult.
 He asked to take a leave on October 23, 2007.
 o When he attempted to return on November 5, 2007, Del Castillo insisted that he had
already resigned and had his things removed from his office.
 He attested that he was paid a lower salary in December 2007 and his benefits were withheld.
 On January 7, 2008, Malcaba tendered his resignation effective February 1, 2008.
Contention of Nepomuceno:
 Nepomuceno, for his part, alleged that he was initially hired as a medical representative in 1999
but was eventually promoted to District Business Manager for South Luzon.
 On March 24, 2008, he applied for vacation leave for the dates April 24, 25, and 28, 2008, which
Busto approved.
 When he left for Malaysia on April 23, 2008, ProHealth sent him a Memorandum dated April 24,
2008 asking him to explain his absence.
o He replied through email that he tried to call ProHealth to inform them that his flight
was on April 22, 2008 at 9:00p.m. and not on April 23, 2008 but was unable to connect
on the phone.
o He tried to explain again on May 2, 2008 and requested for a personal dialogue with Del
Castillo.
 On May 7, 2008, Nepomuceno was given a notice of termination, which was effective May 5,
2008, on the ground of fraud and willful breach of trust.

Contention of Palit-Ang:
 Palit-Ang, on the other hand, was hired to join ProHealth's audit team in 2007.
 She was later promoted to Finance Officer.
 On November 26, 2007, Del Castillo instructed Palit-Ang to give P3,000.00 from the training
funds to Johnmer Gamboa (Gamboa), a District Business Manager, to serve as cash advance.
 On November 27, 2007, Busto issued a show cause memorandum for Palit-Ang's failure to
release the cash advance.
 Palit-Ang was also relieved of her duties and reassigned to the Office of the Personnel and
Administration Manager.
 In her explanation, Palit-Ang alleged that when Gamboa saw that she was busy receiving cash
sales from another District Business Manager, he told her that he would just return the next day
to collect his cash advance.
 When he told her that the cash advance was for car repairs, Palit-Ang told him to get the cash
from his revolving fund, which she would reimburse after the repairs were done.
 Del Castillo was dissatisfied with her explanation and transferred her to another office.
 On December 3, 2007, Palit-Ang was invited to a fact-finding investigation, which was held on
December 10, 2007, where Palit-Ang was again asked to explain her actions.
 On December 17, 2007, she was handed a notice of termination effective December 31, 2007,
for disobeying the order of ProHealth's highest official.
______________________________________________________________________________
________
 Malcaba, Nepomuceno, Palit-Ang, and Adona separately filed Complaints before the Labor
Arbiter for illegal dismissal, nonpayment of salaries and 13th month pay, damages, and
attorney's fees.
 The Labor Arbiter found that Malcaba was constructively dismissed.
o He found that ProHealth never controverted the allegation that Del Castillo made it
difficult for Malcaba to effectively fulfill his duties.
 o He likewise ruled that ProHealth's insistence that Malcaba's leave of absence in October
2007 was an act of resignation was false since Malcaba continued to perform his duties
as President through December 2007.
 The Labor Arbiter declared that Nepomuceno's failure to state the actual date of his flight was
an excusable mistake on his part, considering that this was his first infraction in his nine (9) years
of service.
o He noted that no administrative proceedings were conducted before Nepomuceno's
dismissal, thereby violating his right to due process.
 Palit-Ang's dismissal was also found to have been illegal as delay in complying with a lawful
order was not tantamount to disobedience.
o The Labor Arbiter further noted that delay in giving a cash advance for car maintenance
would not have affected the company's operations.
o He declared that Palit-Ang's dismissal was too harsh of a penalty.
 ProHealth appealed to the National Labor Relations Commission.
 On September 29, 2010, the National Labor Relations Commission rendered its Decision,
affirming the Labor Arbiter's April 5, 2009 Decision with modifications.
 ProHealth moved for reconsideration but was denied by the National Labor Relations
Commission in its January 31, 2011 Resolution.
 Thus, ProHealth, Del Castillo, and Busto filed a Petition for Certiorari before the Court of
Appeals.
 On February 19, 2013, the Court of Appeals rendered its Decision reversing and setting aside the
National Labor Relations Commission September 29, 2010 Decision.
o the Court of Appeals held that there was no employer-employee relationship between
Malcaba and ProHealth since he was a corporate officer.
o Thus, he should have filed his complaint with the Regional Trial Court, not with the
Labor Arbiter, since his dismissal from service was an intra-corporate dispute.
 The Court of Appeals likewise concluded that ProHealth was justified in dismissing Nepomuceno
and Palit-Ang since both were given opportunities to fully explain their sides.
o It found that Nepomuceno's failure to diligently check the true schedule of his flight
abroad and his subsequent lack of effort to inform his superiors were enough for his
employer to lose its trust and confidence in him.
o It likewise found that Palit-Ang displayed "arrogance and hostility" when she defied the
lawful orders of the company's highest ranking officer; thus, her insubordination was
just cause to terminate her services.
 While the Court of Appeals ordered the return of the amounts given to Malcaba, it allowed
Nepomuceno and Palit-Ang to keep the amounts given considering that even if the finding of
illegal dismissal were reversed on appeal, the employer was still obliged to reinstate and pay the
wages of a dismissed employee during the period of appeal.
 Malcaba, Nepomuceno, and Palit-Ang moved for reconsideration but were denied in a
Resolution dated September 10, 2013.
 Hence, this Petition was filed before this Court.
 Petitioner’s argue that Malcaba properly filed his Complaint before the Labor Arbiter since he
was an employee of respondent ProHealth, albeit a high-ranking one.
o They argue that respondents merely alleged that petitioner Malcaba is a corporate
officer but failed to substantiate this allegation. (CHECK NOTES FOR ALL THE
ARGUMENTS OF THE PETITIONER AND RESPONDENT)
  Respondents likewise insist that petitioner Malcaba was a corporate officer considering that he
was not only an incorporator and stockholder, but also an elected Director and President of
respondent ProHealth.
 From the arguments and allegations of the parties, it is clear that this case involves three (3)
different illegal dismissal complaints, with three (3) different complainants in three (3) different
factual situations during three (3) different time periods.
o The only commonality is that they involve the same respondents.
SENTIMENTS OF THE SUPREME COURT:
 While this Court commends the economy by which the National Labor Relations
Commission resolved these cases, the three (3) complaints should have been resolved
separately since the three (3) petitioners raise vastly different substantive issues.
 This leaves this Court with the predicament of having to resolve three (3) different cases
of illegal dismissal in one (1) Petition for Review.
 Thus, each petitioner's case will have to be resolved separately within this Decision.
 This Court's ruling over one (1) petitioner may not necessarily affect the other co-
petitioners.
 The National Labor Relations Commission’s zeal for economy and convenience should
never prejudice the individual rights of each party.
 The National Labor Relations Commission should know the rule that joinder of parties or
causes of action applies suppletorily in appeals and for good reason.”

MAIN ISSUE: Whether or not the Labor Arbiter has jurisdiction over the case of Macalba?
RULING:
 No, the Labor Arbiter does not have jurisdiction, contrary, it is the regional trial court that has
jurisdiction over Macalba’s case.
 Under the Labor Code, the Labor Arbiter exercises original and exclusive jurisdiction over
termination disputes between an employer and an employee while the National Labor Relations
Commission exercises exclusive appellate jurisdiction over these cases:
o Article 224. Jurisdiction of the Labor Arbiters and the Commission. — (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or
non-agricultural:
...
o (2) Termination disputes;
...
o (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by
Labor Arbiters.
 The presumption under this provision is that the parties have an employer-employee
relationship.
 Otherwise, the case would be cognizable in different tribunals even if the action involves a
termination dispute.
 At the time of his alleged dismissal, petitioner Malcaba was the President of respondent
corporation.
 Strangely, this same petitioner disputes this position as respondents' bare assertion, yet he also
insists that his name appears as President in the corporation's General Information Sheet for
2007.
 Under Section 25 of the Corporation Code, the President of a corporation is considered a
corporate officer.
 The dismissal of a corporate officer is considered an intra-corporate dispute, not a labor
dispute.
 Thus, in Tabang v. National Labor Relations Commission:
o A corporate officer's dismissal is always a corporate act, or an intra-corporate
controversy, and the nature is not altered by the reason or wisdom with which the
Board of Directors may have in taking such action.
o Also, an intra-corporate controversy is one which arises between a stockholder and the
corporation.
o There is no distinction, qualification, nor any exemption whatsoever. The provision is
broad and covers all kinds of controversies between stockholders and corporations.
 Further, in Matling Industrial and Commercial Corporation v. Coros, this Court stated that
jurisdiction over intra-corporate disputes involving the illegal dismissal of corporate officers
was with the Regional Trial Court, not with the Labor Arbiter.
o Where the complaint for illegal dismissal concerns a corporate officer, however, the
controversy falls under the jurisdiction of the Securities and Exchange Commission
(SEC), because the controversy arises out of intra-corporate or partnership relations
between and among stockholders, members, or associates, or between any or all of
them and the corporation, partnership, or association of which they are stockholders,
members, or associates, respectively; and between such corporation, partnership, or
association and the State insofar as the controversy concerns their individual franchise
or right to exist as such entity; or because the controversy involves the election or
appointment of a director, trustee, officer, or manager of such corporation, partnership,
or association.
o Such controversy, among others, is known as an intra-corporate dispute.
 Effective on August 8, 2000, upon the passage of Republic Act No. 8799, otherwise known as
The Securities Regulation Code, the SEC's jurisdiction over all intra-corporate disputes was
transferred to the RTC, pursuant to Section 5.2 of RA No. 8799 (CHECK NOTES FOR PROVISION)
 The mere designation as a high-ranking employee, however, is not enough to consider one as a
corporate officer.
 In Tabang, this Court discussed the distinction between an employee and a corporate officer,
regardless of designation:
o The president, vice-president, secretary and treasurer are commonly regarded as the
principal or executive officers of a corporation, and modern corporation statutes
usually designate them as the officers of the corporation.
o However, other offices are sometimes created by the charter or by-laws of a
corporation, or the board of directors may be empowered under the by-laws of a
corporation to create additional offices as may be necessary.
 It has been held that an "office" is created by the charter of the corporation and the officer is
elected by the directors or stockholders.
 On the other hand, an "employee" usually occupies no office and generally is employed not by
action of the directors or stockholders but by the managing officer of the corporation who
also determines the compensation to be paid to such employee.
  The clear weight of jurisprudence clarifies that to be considered a corporate officer, first, the
office must be created by the charter of the corporation, and second, the officer must be
elected by the board of directors or by the stockholders.
 Petitioner Malcaba was an incorporator of the corporation and a member of the Board of
Directors.
 Respondent corporation's By-Laws creates the office of the President.
 Finding that petitioner Malcaba is the President of respondent corporation and a corporate
officer, any issue on his alleged dismissal is beyond the jurisdiction of the Labor Arbiter or the
National Labor Relations Commission.
 Their adjudication on his money claims is void for lack of jurisdiction.
 As a matter of equity, petitioner Malcaba must, therefore, return all amounts received as
judgment award pending final adjudication of his claims.
 This Court's dismissal of petitioner Malcaba's claims, however, is without prejudice to his filing
of the appropriate case in the proper forum.
ISSUE RELATED TO THE MAIN ISSUE: Whether or not the case of Prudential Bank and Trust Company v
Reyes applies in the instant case?
RULING:
 No, the Prudential Case is not applicable in the instant case.
 Petitioners cite Prudential Bank and Trust Company v. Reyes as basis that even high-ranking
officers may be considered regular employees, not corporate officers.
 Prudential Bank, however, is not applicable to this case.
 In Prudential Bank, an employer was considered estopped from raising the argument of an intra-
corporate dispute since this was only raised when the case was filed with this Court.
 This Court also noted that an employee rose from the ranks and was regularly performing tasks
integral to the business of the employer throughout the length of her tenure
o It appears that private respondent was appointed Accounting Clerk by the Bank on July
14, 1963.
o From that position she rose to become supervisor.
o Then in 1982, she was appointed Assistant Vice-President which she occupied until her
illegal dismissal on July 19, 1991.
o The bank's contention that she merely holds an elective position and that in effect she is
not a regular employee is belied by the nature of her work and her length of service
with the Bank.
o As earlier stated, she rose from the ranks and has been employed with the Bank since
1963 until the termination of her employment in 1991.
o It has been stated that "the primary standard of determining regular employment is the
reasonable connection between the particular activity performed by the employee in
relation to the usual trade or business of the employer.["]
o Additionally, "an employee is regular because of the nature of work and the length of
service, not because of the mode or even the reason for hiring them."
o As Assistant Vice-President of the Foreign Department of the Bank she performs tasks
integral to the operations of the bank and her length of service with the bank totaling
28 years speaks volumes of her status as a regular employee of the bank.
o In fine, as a regular employee, she is entitled to security of tenure; that is, her services
may be terminated only for a just or authorized cause.
 o This being in truth a case of illegal dismissal, it is no wonder then that the Bank
endeavored to the very end to establish loss of trust and confidence and serious
misconduct on the part of private respondent but, as will be discussed later, to no avail.
 An "Assistant Vice President" is not among the officers stated in Section 25 of the Corporation
Code.
 A corporation’s President, however, is explicitly stated as a corporate officer.
 Hence, Malcaba, being the President of the respondent corporation and a corporate officer,
any issue on his alleged dismissal is beyond the jurisdiction of the Labor Arbiter or the
National Labor Relations Commission.
ISSUE: Whether or not Respondents are considered to have substantially complied with the
requirement on the posting of an appeal bond?
RULING:
 Respondents are considered to have substantially complied with the requirements on the
posting of an appeal bond.
 Appeal is not a matter of right.
 Courts and tribunals have the discretion whether to give due course to an appeal or to dismiss it
outright.
 The perfection of an appeal is, thus, jurisdictional.
o Non-compliance with the manner in which to file an appeal renders the judgment final
and executory.
 In labor cases, an appeal by an employer is perfected only by filing a bond equivalent to the
monetary award.
 Thus, Article 229 [223] of the Labor Code provides: In case of a judgment involving a monetary
award, an appeal by the employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed from.
o This requirement is again repeated m the 2011 National Labor Relations Commission
Rules of Procedure.
 The purpose of requiring an appeal bond is "to guarantee the payment of valid and legal
claims against the employer."
 It is a measure of financial security granted to an illegally dismissed employee since the
resolution of the employer's appeal may take an indeterminable amount of time.
 Procedural rules require that the appeal bond filed be "genuine."
 An appeal bond determined by the National Labor Relations Commission to be "irregular or not
genuine" shall cause the immediate dismissal of the appeal.
 In this case, petitioners allege that respondents' appeal should not have been given due course
by the National Labor Relations Commission since the appeal bond they filed "[did] not appear
in the records of [Alpha Insurance]"64 and was, therefore, not genuine.
 As evidence, they presented a certification from Alpha Insurance, which read:
o This is to certify that the bond being presented by MR. JOSEPH D. DE JESUS is allegedly a
Surety Bond filed with the NATIONAL LABOR RELATIONS COMMISSION, identified as
Bond No. G(16)00358/2009 on an alleged case NLRC NCR Case No. 08-12090-08, is a
faked and forged bond, and it was not issued by ALPHA INSURANCE & SURETY
COMPANY, INC.
 This Court in Navarro v. National Labor Relations Commission found that an employer failed to
perfect its appeal as it submitted an appeal bond that was "bogus, having been issued by an
officer no longer connected for a long time with the bonding company."
 o The mere fictitiousness of the bond, however, was not the only factor taken into
consideration.
o This Court likewise took note of the employer's failure to sufficiently explain this
irregularity and its failure to file the bond within the reglementary period.
 In Quiambao v. National Labor Relations Commission, this Court held that the mandatory and
jurisdictional requirement of the filing of an appeal bond could be relaxed if there was
substantial compliance.
o Quiambao proceeded to outline situations that could be considered as substantial
compliance, such as late payment, failure of the Labor Arbiter to state the exact
amount of money judgment due, and reliance on a notice of judgment that failed to
state that a bond must first be filed in order to appeal.
 Thus, while the procedural rules strictly require the employer to submit a genuine bond, an
appeal could still be perfected if there was substantial compliance with the requirement.
 In this instance, the National Labor Relations Commission certified that respondents filed a
security deposit in the amount of P6,512,524.84 under Security Bank check no.
0000045245, showing that the premium for the appeal bond was duly paid and that there was
willingness to post it.
 Respondents likewise attached documents proving that Alpha Insurance was a legitimate and
accredited bonding company.
 Despite their failure to collect on the appeal bond, petitioners do not deny that they were
eventually able to garnish the amount from respondents' bank deposits.
 This fulfills the purpose of the bond, that is, "to guarantee the payment of valid and legal claims
against the employer[.]"
 Respondents are considered to have substantially complied with the requirements on the
posting of an appeal bond.
ISSUE: Whether or not Nepomuceno was illegally dismissed?
RULING:
 Yes, Nepomuceno was illegally dismissed.
 Article 294 [279] of the Labor Code provides that an employer may terminate the services of an
employee only upon just or authorized causes.
 Article 297 [282] enumerates the just causes for termination, among which is "[f]raud or willful
breach by the employee of the trust reposed in him by his employer or duly authorized
representative[.]"
 Loss of trust and confidence is a just cause to terminate either managerial employees or rank-
and-file employees who regularly handle large amounts of money or property in the regular
exercise of their functions.
 For an act to be considered a loss of trust and confidence, it must be first, work-related,
and second, founded on clearly established facts
 The breach of trust must likewise be willful, that is, "it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently."
 As found by the National Labor Relations Commission, petitioner Nepomuceno had filed for
leave, which was approved, for April 24, 25, and 28, 2008 to go on vacation in Malaysia.
 However, he left for Malaysia on the evening of April 22, 2008, and thus, failed to report for
work on April 23, 2008.
 Petitioner Nepomuceno claims that he only knew that his flight was for the evening of April
22, 2008 on the day of his flight.
  Respondents, however, insist that he "deliberately concealed the actual date of departure as he
knows that he would be out of the country on a crucial period of sales generation and bookings .
. . [and] therefore knew that his application for leave would be denied."
o Otherwise stated, respondents contend that his dismissal was a valid exercise of their
management prerogative to discipline and dismiss managerial employees unworthy of
their trust and confidence.
 While an employer is free to regulate all aspects of employment, the exercise of management
prerogatives must be in good faith and must not defeat or circumvent the rights of its
employees.
 In industries that mainly rely on sales, employers are free to discipline errant employees who
deliberately fail to report for work during a crucial sales period.
 It would have been reasonable for respondents to discipline petitioner Nepomuceno had he
been a problematic employee who unceremoniously refused to do his work.
 However, as found by the Labor Arbiter and the National Labor Relations Commission,
petitioner Nepomuceno turned over all of his pending work to a reliever before he left for
Malaysia.
 He was able to reach his sales quota and surpass his sales target even before taking his
vacation leave.
 Respondents did not suffer any financial damage as a result of his absence.
 This was also petitioner Nepomuceno's first infraction in his nine (9) years of service with
respondents.
 None of these circumstances constitutes a willful breach of trust on his part. The penalty of
dismissal, thus, was too severe for this kind of infraction.
 The manner of petitioner Nepomuceno's dismissal was likewise suspicious.
 In all cases of employment termination, the employee must be granted due process.
 Here, petitioner Nepomuceno received a memorandum on April 23, 2008, asking him to explain
why no administrative investigation should be held against him.
 He submitted an explanation on the same day and another explanation on May 2, 2008. On May
7, 2008, he was given his notice of termination, which had already taken effect two (2) days
earlier, or on May 5, 2008.
 It is true that "[t]he essence of due process is simply an opportunity to be heard."
 Petitioner Nepomuceno had two (2) opportunities within which to explain his actions.
 This would have been sufficient to satisfy the requirement.
 The delay in handing him his notice of termination, however, appears to have been an
afterthought.
 While strictly not a violation of procedural due process, respondents should have been more
circumspect in complying with the due process requirements under the law.
 Considering that petitioner Nepomuceno's dismissal was done without just cause, he is
entitled to reinstatement and full backwages.
 If reinstatement is not possible due to strained relations between the parties, he shall be
awarded separation pay at the rate of one (1) month for every year of service.
ISSUE: Whether or not Palit-Ang was illegally dismissed?
RULING:
 Yes, Palit-Ang was illegally dismissed.
 Under Article 297 [282] of the Labor Code, an employer may terminate the services of an
employee who commits willful disobedience of the lawful orders of the employer
  For disobedience to be considered as just cause for termination, two (2) requisites must
concur: first, "the employee's assailed conduct must have been wilful or intentional,"
and second, "the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he [or she] had been engaged to discharge."
 For disobedience to be willful, it must be "characterized by a wrongful and perverse mental
attitude rendering the employee's act inconsistent with proper subordination."
 The conduct complained of must also constitute "harmful behavior against the business interest
or person of his [or her] employer."
 Thus, it is implied in every case of willful disobedience that "the erring employee obtains undue
advantage detrimental to the business interest of the employer."
 Petitioner Palit-Ang, as Finance Officer, was instructed by respondent Del Castillo to give a cash
advance of P3,000.00 to District Branch Manager Gamboa on November 26, 2007.
 This order was reasonable, lawful, made known to petitioner Palit-Ang, and pertains to her
duties.
 What is left to be determined, therefore, is whether petitioner Palit-Ang intentionally and
willfully violated it as to amount to insubordination.
 When Gamboa went to collect the money from petitioner Palit-Ang, he was told to return the
next day as she was still busy.
o When petitioner Palit-Ang found out that the money was to be used for a car tune-up,
she suggested to Gamboa to just get the money from his mobilization fund and that she
just would reimburse it after.
 The Court of Appeals found that these circumstances characterized petitioner Palit-Ang's
"arrogance and hostility," in failing to comply with respondent Del Castillo's order, and thus,
warranted her dismissal.
 On the contrary, there was no ill will between Gamboa and petitioner Palit-Ang.
 Petitioner Palit-Ang's failure to immediately give the money to Gamboa was not the result of
a perverse mental attitude but was merely because she was busy at the time.
 Neither did she profit from her failure to immediately give the cash advance for the car tune-
up nor did respondents suffer financial damage by her failure to comply.
 The severe penalty of dismissal was not commensurate to her infraction.
 As previously discussed, "[t]he essence of due process is simply an opportunity to be heard," not
that the employee must be accompanied by counsel at all times.
 A hearing was conducted and she was furnished a notice of termination explaining the grounds
for her dismissa1.
 She was not denied due process.
 Petitioner Palit-Ang, nonetheless, is considered to have been illegally dismissed, her penalty
not having been proportionate to the infraction committed.
 Thus, she is entitled to reinstatement and full backwages.
 If reinstatement is not possible due to strained relations between the parties, she shall be
awarded separation pay at the rate of one (1) month for every year of service.
NOTES:
PETITIONER’S ARGUMENTS:
 Petitioners argue that the Court of Appeals should have dismissed outright the Petition for
Certiorari since respondents failed to post a genuine appeal bond before the National Labor
Relations Commission.
  They allege that when Sheriff Ramon Nonato P. Dayao attempted to enforce the judgment
award against the appeal bond, he was informed that the appeal bond procured by respondents
did not appear in the records of Alpha Insurance and Surety Company, Inc. (Alpha Insurance).
 They also claim that respondents were notified by the National Labor Relations Commission four
(4) times that their appeal bond was not genuine, showing that respondents did not comply
with the requirement in good faith.
WITH RESPECT TO MACALBA:
 Petitioners contend that petitioner Malcaba properly filed his Complaint before the Labor
Arbiter since he was an employee of respondent ProHealth, albeit a high-ranking one.
o They argue that respondents merely alleged that petitioner Malcaba is a corporate
officer but failed to substantiate this allegation.
 They maintain that petitioner Malcaba did not resign on September 24, 2007 considering that
the General Information Sheet for 2007 submitted on October 11, 2007 listed him as respondent
ProHealth's President.
 They submit that respondent Del Castillo's action took a toll on petitioner Malcaba's well-being;
hence, the latter merely took a leave of absence and returned to work in November 2007.
 They claim that respondents made it difficult for petitioner Malcaba to continue his work upon
his return, resulting in his resignation in January 2008.
 Thus, they argue that petitioner Malcaba was constructively dismissed.
WITH RESPECT TO NEPOMUCENO AND PALIT-ANG
 Petitioners likewise argue that petitioners Nepomuceno and Palit-Ang were illegally dismissed.
 They claim that petitioner Nepomuceno committed an "honest and negligible mistake” that
should not have warranted dismissal considering his loyal service for nine (9) years.
 They contend that petitioner Nepomuceno's absence did not injure respondent ProHealth's
business since he turned over all pending work to a reliever before he left and even surpassed
his sales quota for the month.
 They likewise claim that his dismissal was done in violation of his right to due process since he
was not given any opportunity to explain his side and was only given a notice of termination two
(2) days after he was actually dismissed.
 Petitioners maintain that petitioner Palit-Ang believed in good faith that Gamboa would just
claim his cash advance the day after he tried to claim it and that there was nothing in her
actions that would prove that she intended to disobey or defy respondent Del Castillo's
instructions.
 They insist that delay in complying with orders is not tantamount to disobedience and would not
constitute just cause for petitioner Palit-Ang's dismissal.
 They likewise submit that while petitioner Palit-Ang was subjected to a fact-finding
investigation, respondents failed to inform her of her right to be assisted by counsel.
ARGUMENTS OF THE RESPONDENT:
 Respondents, on the other hand, counter that a liberal application of the procedural rules was
necessary in their case since they acted in good faith in posting their appeal bond.
 They likewise contend that the issue should have already been considered moot since
petitioners "were able to garnish and collect the amounts allegedly due to them."
 Respondents likewise insist that petitioner Malcaba was a corporate officer considering that he
was not only an incorporator and stockholder, but also an elected Director and President of
respondent ProHealth.
  They also point out that he filed his labor complaint seven (7) months after his resignation and
that his voluntary resignation already disproves his claim of constructive dismissal.
 Respondents argue that they were justified in dismissing petitioners Nepomuceno and Palit-Ang.
 They contend that petitioner Nepomuceno's abandonment of his duties at a critical sales period
and his failure to immediately advise his superiors of his whereabouts was ground for
respondents to lose their trust and confidence in him.
 They likewise maintain that petitioner Palit-Ang was correctly found by the Court of Appeals to
have defied the lawful instructions of respondent Del Castillo and illustrated her "grave
disrespect towards authority."
Section 5.2 of RA No. 8799:
5.2. The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential Decree No.
902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court:
Provided, that the Supreme Court in the exercise of its authority may designate the Regional Trial Court
branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over
pending cases involving intra-corporate disputes submitted for final resolution which should be resolved
within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over
pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.

28. PAL vs Airline Pilots Assoc

Facts:
 On 9 December 1997, ALPAP filed with the Department of Labor and Employment (DOLE) a notice
of strike alleging that PAL committed unfair labor practice.
 On 23 December 1997, the Secretary of DOLE (SOLE) assumed jurisdiction over the dispute and
thereafter prohibited ALPAP from staging a strike and committing any act that could exacerbate
the dispute.
 Despite the prohibition by the SOLE, ALPAP staged a strike on 5 June 1998.
 A return-to-work order was issued by the SOLE on 7 June 1998, but ALPAP defied the same and
went on with their strike.
 Consequently, on 1 June 1999, the SOLE issued a resolution which declared the illegality of the
strike staged by ALPAP and the loss of employment status of the officers who participated in the
strike
 The SOLE's resolution was upheld by the CA in CA-G.R. SP No. 54880.
 The matter was eventually elevated to this Court in G.R. No. 152306.
 In a Resolution,10 dated 10 April 2002, the Court dismissed ALPAP's petition for failure to show
that the CA committed grave abuse of discretion or a reversible error.
 The resolution attained finality on 29 August 2002
 On 22 April 2003, or almost eight (8) months from the finality of the Court's 10 April 2002
Resolution, PAL filed before the LA a complaint for damages against ALPAP, as well as some of its
officers and members.
 PAL alleged, among others, that on 6 June 1998, the second day of the illegal strike conducted by
ALPAP, its striking pilots abandoned three (3) PAL aircraft, as follows: (i) PR 730 bound for Paris,
France, at Bangkok, Thailand; (ii) PR 741 bound for Manila, at Bangkok, Thailand; and (iii) PR 104
bound for Manila, at San Francisco, California, U.S.A.
 Because of the deliberate and malicious abandonment of the said flights, its passengers were
stranded, and rendered PAL liable for violation of its contract of carriage.
 Thus, PAL was compelled to incur expenses by way of hotel accommodations, meals for the
stranded passengers, airport parking fees, and other operational expenses.
 PAL further alleged that its operation was crippled by the illegal strike resulting in several losses
from ticket refunds, extraordinary expenses to cope with the shutdown situation, and lost income
from the cancelled domestic and international flights.
 PAL claimed that, as a result of the illegal strike, it suffered actual damages in the amount of
P731,078,988.59.
 PAL further prayed that it be awarded P300,000,000.00 and P3,000,000.00 as exemplary damages
and attorney's fees, respectively.
 The LA Ruling
o LA dismissed PAL's complaint.
o It ruled that it had no jurisdiction to resolve the issue on damages.
o It noted that the SOLE did not certify the controversy for compulsory arbitration to the
NLRC nor in any occasion did the parties agree to refer the same to voluntary arbitration
under Article 263(h) of the Labor Code.
o Hence, jurisdiction to resolve all issues arising from the labor dispute, including the claim
for damages arising from the illegal strike, was left with the SOLE to the exclusion of all
other fora.
o The LA further ruled that PAL's cause of action had already been barred by prescription.
o It opined that since the complaint was premised on the illegality of the strike held by the
respondents, the accrual of PAL's cause of action should be reckoned either on 5 June
1998, the first day of the strike, or on 7 June 1998, when the respondents defied the
SOLE's return-to-work order.
o Hence, PAL's 22 April 2003 complaint was filed beyond the 3-year prescriptive period set
forth in Article 291 of the Labor Code.
o The LA suggested, however, that PAL's cause of action may be treated as an independent
civil action in another forum.
 The NLRC Ruling
o Affirmed with modification the LA's 22 April 2008 decision.
o It opined that the reliefs prayed for by PAL should have been ventilated before the regular
courts considering that they are based on the tortuous acts allegedly committed by the
respondents.
 The CA Ruling
o CA partially granted PAL's petition.
o It ruled that while the NLRC correctly sustained the LA's dismissal of the complaint for lack
of jurisdiction, it declared that the NLRC gravely abused its discretion when it affirmed
the LA's pronouncement that PAL's cause of action had already prescribed.
o The appellate court concurred with the NLRC's opinion that exclusive jurisdiction over
PAL's claim for damages lies with the regular courts and not with the SOLE.
o It ratiocinated that while Article 263(g) of the Labor Code vests in the SOLE the authority
to resolve all questions and controversies arising from a labor dispute over which it
assumed jurisdiction, said authority must be interpreted to cover only those causes of
action which are based on labor laws.
o Stated differently, causes of action based on an obligation or duty not provided under the
labor laws are beyond the SOLE's jurisdiction. It continued that only those issues that arise
from the assumed labor dispute, which has a direct causal connection to the employer-
employee relationship between the parties, will fall under the jurisdiction of the SOLE. It
pointed out that the damages caused by the wilful acts of the striking pilots in abandoning
 their aircraft are recoverable under civil law and are thus within the jurisdiction of the
regular courts.
o Further, the appellate court held that PAL's cause of action accrued only on 29 August
2002, the date when this Court's resolution sustaining the finding of the strike's illegality
had attained finality. The dispositive portion of the assailed decision reads:

MAIN Issue: WON the NLRC and the LA have jurisdiction over PAL’s claims against respondents for
daamges incurred as a consequence of the latter’s actions during the illegal strike

Ruling:
 YES
 Labor tribunals have jurisdiction over actions for damages arising from a labor strike
 Under Article 217 [now Article 224] of the Labor Code, as amended by Section 9 of R.A. No. 6715,
the LA and the NLRC have jurisdiction to resolve cases involving claims for damages arising from
employer-employee relationship, to wit:
o ART. 217. Jurisdiction of Labor Arbiters and the Commission-- (a) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction
to hear and decide, within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or nonagricultural:
o Unfair labor practice cases;
o Termination disputes;
o If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment
o Claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relations;
o Cases arising from any violation of Article 264 of this Code including questions involving
the legality of strikes and lockouts; and
o Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

 It is settled, however, that not every controversy or money claim by an employee against the
employer or vice-versa falls within the jurisdiction of the labor arbiter.
 Intrinsically, civil disputes, although involving the claim of an employer against its employees, are
cognizable by regular courts.
 To determine whether a claim for damages under paragraph 4 of Article 217 is properly cognizable
by the labor arbiter, jurisprudence has evolved the "reasonable connection rule" which essentially
states that the claim for damages must have reasonable causal connection with any of the claims
provided for in that article.
 A money claim by a worker against the employer or vice-versa is within the exclusive jurisdiction
of the labor arbiter only if there is a "reasonable causal connection" between the claim asserted
and employee-employer relations.
 Only if there is such a connection with the other claims can the claim for damages be considered
as arising from employer-employee relations.
 Absent such a link, the complaint will be cognizable by the regular courts.
Application:
 The Court agrees with PAL that its claim for damages has reasonable connection with its
employer-employee relationship with the respondents.
 Contrary to the pronouncements made by the appellate court, PAL's cause of action is not
grounded on mere acts of quasi-delict.
 The claimed damages arose from the illegal strike and acts committed during the same which
were in tum closely related and intertwined with the respondents' allegations of unfair labor
practices against PAL.
 This could not even be disputed as even the appellate court recognized this fact
 Since the loss and injury from which PAL seeks compensation have reasonable causal connection
with the alleged acts of unfair labor practice, a claim provided for in Article 217 of the Labor Code,
the question of damages becomes a labor controversy and is therefore an employment
relationship dispute.
 In Goodrich Employees Association v. Hon. Flores, the Court stressed the rule that cases involving
unfair labor practices are within the jurisdiction of the Court of Industrial Relations (CIR), the labor
tribunal at that time. The Court further emphasized that where the subject matter is within the
exclusive jurisdiction of the CIR, it must be deemed to have jurisdiction over all incidental matters
connected to the main issue.
 Thus, in Holganza v. Hon. Apostol, the Court reaffirmed the exclusive jurisdiction of the labor
tribunal over actions for damages arising from labor controversies.
o In the said case, the Social Security System (SSS) filed with the then Court of First Instance
(CFI) of Rizal a complaint for damages with writ of preliminary attachment against several
of its employees. It alleged that it sustained damages as a consequence of the picketing
carried on by its striking employees during a strike held against it. The striking employees
moved for the dismissal of the complaint on the ground of lack of jurisdiction, but the trial
court denied the same. Eventually, the issue reached this Court which opined that the
trial court is devoid of any jurisdiction to entertain the said complaint for damages. In so
ruling, the Court declared that exclusive jurisdiction over disputes of this character
belonged to the then CIR. To hold otherwise would be to sanction split jurisdiction which
is obnoxious to the orderly administration of justice.

 A similar controversy arose in Philippine Long Distance Telephone Company v. Free Telephone
Workers Union.23 The Court reiterated the rule that regular courts are devoid of any jurisdiction
over claims for damages arising from a labor strike, thus:
o It is clear from the records that the subject complaint for damages is intertwined with or
deeply rooted from the 1964 certified labor dispute between appellant and appellees. As
can be gleaned from the aforesaid complaint, appellant is claiming against appellees
damages it allegedly sustained as a consequence of the strikes declared by the appellees.
It is therefore obvious in the light of the established jurisprudence as aforestated that the
lower court, Court of First Instance of Manila, Branch XII, did not have jurisdiction over
the aforesaid complaint for damages; hence, all the proceedings taken therein are void
for lack of jurisdiction.24

 The rule stands even if the strike is illegal.

 o In Antipolo Highway Lines Employees Union v. Hon. Aquino. Francisco De Jesus, the owner
of Antipolo Highway Lines (AHL), instituted a complaint for damages with injunction
against AHL Employees Union (AHLEU) and its officers before the CFI of Rizal. De Jesus
alleged that AHLEU staged a strike and posted picket lines along AHL's compound, thereby
preventing its employees from performing their work and causing it to suffer losses and
damages from the non-operation of its buses. The Court ruled that the trial court lacked
jurisdiction over the complaints for damages and injunction because the illegal strike and
picket which allegedly caused damages to De Jesus were mere incidents of the labor
dispute between the parties, to wit:

 Although it was artfully made to appear that the suit was one for damages that did not divest the
Court of Industrial Relations of its jurisdiction. The Complaint itself, in paragraph 5, adverted to
an "illegal strike" and "picket lines," which are but mere incidents or consequences of the unfair
labor practice complained against by petitioner Union. In other words, it is clear that the cause of
action for damages "arose out of or was necessarily intertwined with" an alleged unfair labor
practice committed by DE JESUS in refusing to sit at the bargaining table. It is still the labor court:
therefore, that has jurisdiction, particularly under the principle that split jurisdiction is not to be
countenanced for being "obnoxious to the orderly administration of justice."

 Indeed, the aforecited cases were decided by this Court under R.A. No. 875 or the Industrial Peace
Act. The Court is also not unmindful of the fact that R.A. No. 875 had been completely superseded
in 1974 by Presidential Decree (P.D.) No. 442 or the Labor Code of the Philippines. Nevertheless,
it could not be denied that the underlying rationale for the rule finds application even with the
effectivity of the Labor Code. As in the Industrial Peace Act, splitting of jurisdiction is abhorred
under the Labor Code.

 A case in point is National Federation of Labor v. Hon. Eisma,28 decided by the Court under the
provisions of the Labor Code. In case, as in those cited, the employer, Zamboanga Wood Products,
Inc., filed, before the CFI of Zamboanga City, a complaint for damages against the officers and
members of the labor union. The employer alleged that it incurred damages because the union
officers and members blockaded the road leading to its manufacturing division, thus preventing
customers and suppliers free ingress to or egress from their premises. The labor union, however,
contended that jurisdiction over the controversy belongs to the labor arbiter because the acts
complained of were incidents of picketing by the defendants who were then on strike against the
employer.

 The Court ruled in favor of the labor union and nullified the proceedings before the trial court.
The Court opined that the complaint for damages is deeply rooted in the labor dispute between
the parties and thus should be dismissed by the regular court for lack of jurisdiction. The Court
stressed that the wordings of Article 217 of the Labor Code is explicit and clear enough to mean
that exclusive jurisdiction over suits for damages arising from a strike belongs to the labor arbiter,
thus:

 Article 217 is to be applied the way it is worded. The exclusive original jurisdiction of a labor arbiter
is therein provided for explicitly. It means, it can only mean, that a court of first instance judge
then, a regional trial court judge now, certainly acts beyond the scope of the authority conferred
on him by law when he entertained the suit for damages, arising from picketing that accompanied
 a strike. That was squarely within the express terms of the law. Any deviation cannot therefore
be tolerated. So it has been the constant ruling of this Court even prior to Lizarraga Hermanos v.
Yap Tico, a 1913 decision. The ringing words of the ponencia of Justice Moreland still call for
obedience. Thus, "The first and fundamental duty of courts, in our judgment, is to apply the law.
Construction and interpretation come only after it has been demonstrated that application is
impossible or inadequate without them." It is so even after the lapse of sixty years.

 Jurisprudence dictates that where the plaintiffs cause of action for damages arose out of or was
necessarily intertwined with an alleged unfair labor practice, the jurisdiction is exclusively with
the labor tribunal. Likewise, where the damages separately claimed by the employer were
allegedly incurred as a consequence of strike or picketing of the union, such complaint for
damages is deeply rooted in the labor dispute between the parties and within the exclusive
jurisdiction of the labor arbiter. Consequently, the same should be dismissed by ordinary courts
for lack of jurisdiction.

 From the foregoing, it is clear that the regular courts do not have jurisdiction over PAL's claim of
damages, the same being intertwined with its labor dispute with the respondents over which the
SOLE had assumed jurisdiction. It is erroneous, therefore, for the CA to even suggest that PAL's
complaint should have been ventilated before the trial court.

Issue 2: WON a separate complaint for damages runs counter to the rule against split jurisdiction.

Ruling: YES
 While there is merit in the contention that regular courts do not have jurisdiction over claims for
damages arising from a labor controversy, the Court opines that PAL could no longer recover the
alleged damages.

 It must be recalled that the SOLE assumed jurisdiction over the labor dispute between PAL and
the respondents on 23 December 1997. In this regard, it is settled that the authority of the SOLE
to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to national interest includes and extends to all questions and controversies
arising therefrom.31 It has also been opined that when the very reason for the SOLE's assumption
of jurisdiction is the declaration of strike, any issue regarding the strike is not merely incidental to
but is essentially involved in the labor dispute itself.

 It bears emphasis, even at the risk of being repetitious, that it is beyond question that the issue
on damages is a controversy which arose from the labor dispute between the parties herein.
Consequently, when the SOLE assumed jurisdiction over the labor dispute, the claim for damages
was deemed included therein. Thus, the issue on damages was also deemed resolved when the
SOLE decided the main controversy in its 1 June 1999 resolution declaring the illegality of the
strike and the loss of employment status of the striking officers of ALPAP, as well as when the case
was finally settled by this Court in its 10 April 2002 Resolution in G.R. No. 152306. This is true even
if the respective resolutions of the SOLE, CA, and this Court were silent with respect to the
damages.
  To insist that PAL may recover the alleged damages through its complaint before the LA would be
to sanction a relitigation of the issue of damages separately from the main issue of the legality of
the strike from which it is intertwined. This runs counter to the proscription against split
jurisdiction – the very principle invoked by PAL.

 Likewise, PAL's claim for damages is barred under the doctrine of immutability of final judgment.
Under the said doctrine, a decision that has acquired finality becomes immutable and unalterable,
and may no longer be modified in any respect, even if the modification is meant to correct
erroneous conclusions of fact and law, and whether it is made by the court that rendered it or by
the Highest Court of the land. Any act which violates this principle must immediately be struck
down.

 Whether the damages claimed by PAL are recoverable and to what extent would depend on the
evidence in the illegal strike case which had long attained finality. PAL's recovery, therefore, would
entail a relitigation of the illegal strike case. The subject claim for damages would ultimately
require the modification of a final judgment. This cannot be done. The dismissal of the present
petition as well as the complaint for damages is therefore in order.

 In any event, PAL only has itself to blame for this blunder. It was already aware that it had
sustained damages even before the SOLE issued its resolution. It must be remembered that the
damages allegedly sustained by PAL were incurred as a consequence of the acts committed by
the respondents on the second day of the strike on 6 June 1998, or almost a year prior to the
issuance of the SOLE's resolution. However, PAL did not assert its claim during the proceedings
before the SOLE and, instead, acted on it only after the decision on the main case attained finality.
This is a grave error on the part of PAL.

 The proper recourse for PAL should have been to assert its claim for damages before the SOLE
and, as aptly stated by the LA, to elevate the case to the CA when the SOLE failed to rule on the
matter of damages. The 22 April 2008 LA decision, therefore, deserves reinstatement insofar as it
dismissed PAL's 22 April 2003 complaint for lack of jurisdiction for the reason that the SOLE has
exclusive jurisdiction over the same. Thus, the Court quotes with approval the following
pronouncements by the LA:

 The respondents maintain that the complainant simply slept on its rights when it failed to elevate
the matter of damages to the Court of Appeals. In this regard, we find the argument of the
respondents availing considering that upon the assumption of jurisdiction of the Secretary of
Labor over the labor disputes at PAL, all other issues had been subsumed therein including the
claim for damages arising from the strike. This is clear from the language of Article 263(g) of the
Labor Code granting the Secretary to order the "dismissal or loss of employment status or
payment by the locking-out employer of back wages, damages and other affirmative relief even
criminal prosecution against either or both."

Notes:
 There is no quarrel regarding the jurisdiction of labor arbiters to rule on the legality of strikes and
lock-outs under Article 217(a)(4) but this refers to strikes or lock-outs in establishments that are
not indispensable to national interest. However, if in his opinion the dispute affects industries
imbued with national interest, the Secretary of Labor who has the authority, may assume
 jurisdiction over the dispute and may opt to hear the same until its final disposition as is obtaining
at bar, or to certify the same for compulsory arbitration to the NLRC, where it is the Commission
that will hear and dispose of the certified cases under Rule VIII of the Revised Rules of the NLRC.
Even in voluntary arbitration, should the disputants agree to submit the dispute to voluntary
arbitration, the Voluntary Arbitrator is not precluded from awarding damages.

 As the issue on the illegality of the strikes of June 5, 1998 has already been passed upon by the
Secretary of Labor when he assumed jurisdiction to the exclusion of all others, all incidents arising
from the main issue of the legality of the strike are presumed to have been ruled upon because
they are deemed subsumed by the assumption by the Secretary of Labor.

Conclusion:
In sum, the Court finds meritorious PAL's claim that the CA erred in its decision. Indeed, the CA erred
when it ruled that regular courts have jurisdiction to entertain claims for damages arising from strike as
the same violates the proscription against splitting of jurisdiction. The Court, however, also finds that
the LA was already divested of its jurisdiction to entertain PAL's claim for damages as such issue was
deemed included in the issue of legality of strike of which the SOLE had assumed jurisdiction, pursuant
to the rule against splitting of jurisdiction. Unfortunately, for PAL's failure to raise the claim during the
pendency of the illegal strike case before the SOLE, the same is deemed waived.
 2011 NLRC RULES OF PROCEDURE Case Digests

42. Philtranco Services Enterrproses vs Cual

At the outset, the present petition stemmed from a refiled case before the labor arbiter. The
respondents in the present case failed to sign the verification page of the earlier filed position paper and
their names were not mentioned in the board resolution authorizing the filing of the complaint, which
caused their exclusion from the case.
FACTS:
 Respondents were all members of Philtranco Workers Union - Association of Genuine Labor
Organization (PWU-AGLO).
 They were all included in a retrenchment program embarked on by Philtranco in the years 2006
to 2007, on the ground that Philtranco was suffering business losses.
 Consequently, PWU-AGLO filed a Notice of Strike with the Department of Labor and
Employment (DOLE), claiming that Philtranco engaged in unfair labor practices.
 The parties were unable to settle their differences, thus the case was eventually referred to the
Office of the Secretary of the DOLE.
 On June 13, 2007, Acting DOLE Secretary Danilo P. Cruz issued a Decision ordering Philtranco to:
1. REINSTATE to their former positions, without loss of seniority rights, the ILLEGALLY
TERMINATED 17 "union officers", xxx, and PAY them BACKWAGES
2. MAINTAIN the status quo and continue in full force and effect the terms and conditions of the
existing CBA - specifically, Article VI on Salaries and Wages (commissions) and Article XI, on
Medical and Hospitalization - until a new agreement is reached by the parties; and
3. REMIT the withheld union dues to PWU-AGLO without unnecessary delay.
 The respondents alleged that they were not absorbed by Philtranco despite the fact that the
company was hiring new employees; thus, the respondents, together with other Philtranco
employees, filed a labor complaint for illegal dismissal on October 16, 2007, and prayed for
reinstatement, backwages and wage differentials.
 Docketed as NLRC NCR Case No. 00-10-11607-07 (first NLRC case), the complaint essentially
assailed the employees' inclusion in the retrenchment program of Philtranco.
 In March 25, 2008 Decision, Labor Arbiter (LA) Antonio Macam found union president Jose
Jessie Olivar (Olivar) to have been illegally dismissed and was entitled to reinstatement,
backwages and attorney's fees.
 The present respondents' claims, however, were dismissed for their failure to sign the
verification and certification of non-forum shopping of the complaint and position paper; the
latter was signed only by Olivar without specific authority from the board.
 Respondents' appeal to the National Labor Relations Commission (NLRC), on the matter of their
exclusion, was unsuccessful. So was their subsequent petition before the CA in CA-G.R. SP No.
110410 , which attained finality on May 14, 2010. Thus, they remained excluded from the
award.
 Significantly, the LA, as affirmed by the NLRC and the CA in CAG. R. SP No. 110410, found the
retrenchment program undertaken by Philtranco in the years 2006 to 2007 as invalid for failure
to sufficiently prove its necessity, considering that the audited financial statements for those
years were not presented. On this basis, Olivar was declared to have been illegally dismissed.
 On the belief that the dismissal of their claims due to a technicality was without prejudice to
their refiling of the same complaint, the respondents filed NLRC-NCR Case No. 06-08130-10
(second NLRC case).
 This time, Philtranco submitted its audited financial statements for the years 2006 and 2007.
  On April 15, 2011, Labor Arbiter Quintin Cueto III (LA Cueto) rendered a decision finding
respondents to have been illegally dismissed.
 In so deciding, LA Cueto applied the law of the case principle, stating that the first NLRC case is
binding upon Philtranco.
 When Philtranco appealed LA Cueto's decision to the NLRC, the commission reversed and set
aside LA Cueto's decision on September 15, 2011. Unlike LA Cueto, the commission gave weight
to the audited financial statements for the years 2006 and 2007 submitted by Philtranco in the
refiled case, but which was not presented in the prior case. The NLRC also disagreed with LA
Cueto's application of the law of the case in the refiled complaint, stating that the principle
applies only to Olivar.
 Respondents' motion for reconsideration before the NLRC was DENIED.
 Hence, they assailed the reversal via a petition for certiorari before the CA, which thereafter
reinstated LA Cueto's decision.
 The CA reasoned that the supervening event is inapplicable in the present case and agreed with
LA Cueto that it is inappropriate to consider the belatedly filed audited financial statements for
the years 2006 and 2007.
ISSUE: WON the CA correctly applied the principle of the law of the case in the second NLRC complaint.
RULING: NO. We find the law of the case doctrine not applicable in the cases under consideration.
 The doctrine has been defined as "that principle under which determinations of questions of law
will generally be held to govern a case throughout all its subsequent stages where such
determination has already been made on a prior appeal to a court of last resort. It is merely a
rule of procedure and does not go to the power of the court, and will not be adhered to where
its application will result in an unjust decision. It relates entirely to questions of law, and is
confined in its operation to subsequent proceedings in the same case." (emphasis ours)
 The second NLRC case is certainly NOT a continuation of the first NLRC case from which
respondents were excluded.
o It is a separate case instituted anew by respondents because the prior case was only
given due course with respect to the parties who signed the complaint and position
paper.
 Furthermore, the matter of whether or not Philtranco sufficiently proved its alleged business
losses when it embarked on its retrenchment program is a question of fact and not a question of
law. The appellate court's finding then in CA-G.R. SP No. 110410, that the retrenchment
undertaken by Philtranco in 2006-2007 was invalid, may NOT be invoked as the law of the case.
 With respect to the DOLE Secretary's decision finding the retrenchment invalid in the NCMB
case, the issue that reached the CA via CA-G.R. SP No. 100324 and this Court in G.R. No. 180962
was confined only to the correct remedy against the DOLE Secretary's decision, i.e., whether it
should be Rule 43 or Rule 65. This Court remanded the case to the CA on February 26, 2014,
where it is still pending decision.
 While the second NLRC case is separate from the first NLRC case and the NCMB case, it is not
altogether accurate to say that the determinations made in these previously decided cases has
no bearing on the second NLRC case.
OTHERS:
RE: RES JUDICATA
 We hold that the LA's decision in the first NLRC case, finding Philtranco's retrenchment program
to be illegal, constitutes res judicata in the concept of collateral estoppel or issue preclusion. As
amply discussed in Degayo v. Magbanua-Dinglasan, et al.:
 Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing
or matter settled by judgment." It also refers to the "rule that a final judgment or decree on the
merits by a court of competent jurisdiction is conclusive of the rights of the parties or their
privies in all later suits on points and matters determined in the former suit. It rests on the
principle that parties should not to be permitted to litigate the same issue more than once; that,
when a right or fact has been judicially tried and determined by a court of competent
jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long
as it remains unreversed, should be conclusive upon the parties and those in privity with them in
law or estate.
 The doctrine of res judicata is set forth in Section 4 7 of Rule 39 of the Rules of Court, which in
its relevant part reads:
Sec. 47. Effect of judgments or final orders. - The effect of a judgment or final order rendered by
a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be
as follows:
xxxx
(b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or
as to any other matter that could have been raised in relation thereto, conclusive between the
parties and their successors in interest by title subsequent to the commencement of the action
or special proceeding, litigating for the same thing and under the same title and in the same
capacity; and
(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment or final order which appears upon its face
to have been so adjudged, or which was actually and necessarily included therein or necessary
thereto.
 This provision comprehends two distinct concepts of res judicata:
(1) bar by former judgment and (2) conclusiveness of judgment.
 The first aspect is the effect of a judgment as a bar to the prosecution of a second action upon
the same claim, demand or cause of action. In traditional terminology, this aspect is known as
merger or bar; in modem terminology, it is called claim preclusion.
 The second aspect precludes the relitigation of a particular fact of issue in another action
between the same parties on a different claim or cause of action.1âwphi1 This is traditionally
known as collateral estoppel; in modern terminology, it is called issue preclusion.
 Conclusiveness of judgment finds application when a fact or question has been squarely put in
issue, judicially passed upon, and adjudged in a former suit by a court of competent jurisdiction.
The fact or question settled by final judgment or order binds the parties to that action (and
persons in privity with them or their successors-ininterest), and continues to bind them while
the judgment or order remains standing and unreversed by proper authority on a timely motion
or petition; the conclusively settled fact or question furthermore cannot again be litigated in any
future or other action between the same parties or their privies and successors-in-interest, in
the same or in any other court of concurrent jurisdiction, either for the same or for a different
cause of action. Thus, only the identities of parties and issues are required for the operation of
the principle of conclusiveness of judgment.
 While conclusiveness of judgment does not have the same barring effect as that of a bar by
former judgment that proscribes subsequent actions, the former nonetheless estops the parties
from raising in a later case the issues or points that were raised and controverted, and were
determinative of the ruling in the earlier case.
 o In other words, the dictum laid down in the earlier final judgment or order becomes
conclusive and continues to be binding between the same parties, their privies and
successors-in-interest, as long as the facts on which that judgment was predicated
continue to be the facts of the case or incident before the court in a later case; the
binding effect and enforceability of that earlier dictum can no longer be re-litigated in a
later case since the issue has already been resolved and finally laid to rest in the earlier
case.
 It is beyond dispute that the determination on the invalidity of the retrenchment in the first
NLRC case has attained finality. Moreover, records show that the decision was adjudicated on
the merits.
RE: COMMUNITY OF INTEREST
 We likewise find that there is a community of interest among the complainants in the prior labor
case and in the present. Pertinently:
There is identity of parties where the parties in both actions are the same, or there is privity
between them, or they are successors-in-interest by title subsequent to the commencement of
the action, litigating for the same thing and under the same title and in the same capacity.
Absolute identity of parties is not required, shared identity of interest is sufficient to invoke the
coverage of this principle. Thus, it is enough that there is a community of interest between a
party in the first case and a party in the second case even if the latter was not impleaded in the
first case.
xxx One test to determine substantial identity of interest would be to see whether the success
or failure of one party materially affects the other.
 In both the first and second NLRC cases, the issue of whether or not complainants were illegally
dismissed is hinged on the validity of Philtranco's retrenchment program in 2006 and 2007.
Without a doubt, the interests of all the complainants are inextricably intertwined on that
factual question.
 The only difference between the first NLRC case and the second NLRC case is Philtranco's
submission of its audited financial statements for the years 2006 and 2007 in the second NLRC
case.
 The NLRC treated such belated submission as a "supervening event".
 We, however, agree with the CA that the supervening event principle does not apply in this
case. It correctly ratiocinated:
xxx Supervening events refer to facts which transpire after judgment has become final and
executory or to new circumstances which developed after the judgment has acquired finality,
including matters which the parties were not aware of prior to or during the trial as they were
not yet in existence at that time. In this case, the Audited Financial Statements could not be
considered as a supervening event because the existence thereof should have been established
as early as February 2007, the time when the retrenchment of petitioners was effected.
Unfortunately, respondents failed to present the same.
 Contrary to Philtranco's stance that there was no belated filing of the audited financial
statements since this is a newer and different case, the factual milieu prevailing at the time the
retrenchment was effected is still the same one under consideration.
 The CA cannot, thus, be faulted for concluding that at the time the retrenchment program was
effected in February 2007, Philtranco had no basis and was in fact unaware of the true state of
its finances.
 o This, coupled with the records annexed to the case showing that Philtranco hired new
employees for the years 2006 to 2010, were taken to belie Philtranco's claim that it
exercised the retrenchment of respondents in good faith.
RE: OFFICERS
 Finally, on the issue of whether or not the individual petitioners, Jose Pepito Alvarez, Arsenio
Yap and Centurion Solano, who are officers of Philtranco, should be jointly and severally held
liable with petitioner corporation, this Court finds merit in petitioners' arguments.
 As pronounced in Lambert Pawnbrokers and Jewelry Corporation v. Binamira the lack of
authorized or just cause to terminate one's employment and the failure to observe due process
do not ipso facto mean that the corporate officer acted with malice or bad faith. There must be
independent proof of malice or bad faith which is lacking in the present case.
WHEREFORE, in view of the foregoing, the instant petition is DENIED and the assailed decision and
resolution, respectively, dated November 9, 2012 and June 11, 2013, rendered by the Court of Appeals
in CA-G.R. SP No. 123587 are AFFIRMED with the modification that petitioner Philtranco is held solely
liable for the illegal dismissal of the respondents. SO ORDERED.

43. GENPACT SERVICES, INC., and DANILO SEBASTIAN REYES, Petitioners vs. MARIA KATRINA SANTOS-
FALCESO, JANICE ANN M. MENDOZA, and JEFFREY S. MARIANO, Respondents. G.R. No. 227695 July
31, 2017
Facts:
 Genpact is engaged in business process outsourcing, particularly servicing various multinational
clients, including Allstate Insurance Company (Allstate).
 On different dates spanning the years 2007 to 2011, Genpact hired respondents Maria Katrina
Santos-Falceso, Janice Ann M. Mendoza, and Jeffrey S. Mariano to various positions to service
its Allstate account. However, on April 19, 2012, Allstate ended its account with Genpact,
resulting in respondents being placed on floating status, and eventually, terminated from
service.

Complaint
 This prompted respondents to file a complaint before the NLRC for illegal dismissal, non-
payment of separation pay, damages, and attorney's fees against Genpact and/or its Country
Manager, Reyes. Respondents alleged that after Allstate terminated its contract with Genpact,
they were initially placed on "benching" status with pay, and after five (5) months, Genpact gave
them the option to either "voluntarily resign" or to "be involuntarily terminated on the ground
of redundancy" with severance pay of one-half (½) month basic salary for every year of service,
in either case. Left without the option to continue their employment with Genpact, respondents
chose the latter option and were made to sign quitclaims as a condition for receiving any and all
forms of monetary benefits. In this light, respondents argued that the termination of Genpact
and Allstate's agreement neither amounted to a closure of business nor justified their
retrenchment. Respondents further contended that Genpact failed to observe the requirements
of procedural due process as there was no showing that the latter served proper notice to the
DOLE thirty (30) days before they were terminated from service, and that they were not
accorded the chance to seek other employment opportunities.

Petitioners’ defense
 petitioners justified respondents' termination of employment on the ground of closure or
cessation of Allstate's account with Genpact as part of the former' s "[g]lobal [d]ownsizing due
 to heavy losses caused by declining sales in North America." Further, petitioners claimed that
they incessantly pursued efforts to retain respondents within their organization, but the same
proved futile, thus, leaving them with no other choice but to provide respondents with the
option to either resign or be separated on account of redundancy - an option which they
reported to the DOLE and resorted to in the exercise of management prerogative with utmost
good faith. Lastly, petitioners pointed out that respondents were properly given separation pay,
as well as unpaid allowances and 13th month pay, thus, rendering the latter's monetary claims
bereft of merit.

LA Ruling
 dismissed respondents' complaint for lack of merit.
 found that respondents' termination from service was due to the untimely cessation of the
operations of Genpact's client, Allstate.
 pointed out that Genpact tried to remedy respondents' situation by assigning them to other
accounts, but such efforts proved futile as respondents were hired specifically to match the
needs of Allstate. Furthermore, the LA took Genpact's act of paying respondents their
separation pay computed at one-half (½) month pay for every year of service as a sign of good
faith. Thus, the LA concluded that there was an authorized cause in terminating respondents'
services, and that Genpact complied with DOLE's reportorial requirements in doing so.

NLRC Ruling
 affirmed the LA ruling.
 held that Allstate's pullout from Genpact does not mean an automatic termination of the
employees assigned to the Allstate account, such as respondents, but purports that the
employees assigned to the withdrawing client would be "benched" or placed on floating status
as contemplated in Article 286 (now Article 301) of the Labor Code, as amended.
 NLRC pointed out that Genpact recognized the applicability of the said provision in the case of
respondents, as well as other similarly-situated employees, considering that:
o (a) it embarked on a Retention Effort Program which resulted in the redeployment of
more or less 100 of its employees affected by Allstate's pullout;
o (b) it placed respondents and the other similarly-situated employees on "benching"
status with full pay;
o (c) it only resorted to termination after alleged incessant efforts to find a suitable
position for respondents proved unsuccessful; and
o (d) such terminations were done during the six (6)-month period within which
employees were allowed to be placed on floating status.
 Thus, Genpact's acts of placing respondents on "benching" or floating status, and thereafter,
terminating their employment were made in the exercise of its management prerogative in
good faith and in accordance with internal hiring procedures. As such, it cannot be said that
respondents were illegally dismissed from service.

NLRC MR Ruling (June 30, 2014)

 Respondents moved for reconsideration, which was partly granted by the NLRC and accordingly,
increased respondents' entitlement to separation pay to one (1) month salary for every year of
service. The NLRC held that since respondents' positions were rendered superfluous by the
closure of the Allstate account, then it follows that they were terminated on account of
redundancy pursuant to Article 286 (now Article 301), in relation to Article 283 (now Article 298)
 of the Labor Code. As such, they should be paid separation pay amounting to one (1) month
salary for every year of service, instead of the one-half (½) month salary for every year of
service. Notably, the NLRC Resolution explicitly stated that "[n]o further motion of similar
import shall be entertained."

CA Ruling
 dismissed outright the petition for certiorari purely on procedural grounds.

 Petitioners moved for reconsideration which was denied; hence, this petition.

Issue: WON petitioners can still file a motion for reconsideration under the 2011 NLRC Rules of
Procedure in this case?
Ruling: YES.
 The dispositive portion of the NLRC's June 30, 2014 Resolution - which partially granted
respondents' motion for reconsideration, and accordingly, increased their entitlement to
separation pay to one (1) month salary per year of service - reads in its entirety:
o WHEREFORE, premises considered, the motion for reconsideration is partly granted. The
assailed Decision is modified in that GENPACT Services LLC is ordered to pay
complainants separation pay of one month salary per year of service. The amounts
already received by complainants shall be deducted from the amounts due. No further
motion of similar import shall be entertained. SO ORDERED. (Emphasis and
underscoring supplied)

 Otherwise worded, the highlighted portion explicitly warns the litigating parties that the NLRC
shall no longer entertain any further motions for reconsideration. Irrefragably, this circumstance
gave petitioners the impression that moving for reconsideration before the NLRC would only be
an exercise in futility in light of the tribunal's aforesaid warning.

Court Ruling
 Section 15, Rule VII of the 2011 NLRC Rules of Procedure, as amended, provides, among others,
that the remedy of filing a motion for reconsideration may be availed of once by each party.
 In this case, only respondents had filed a motion for reconsideration before the NLRC.
 Applying the foregoing provision, petitioners also had an opportunity to file such motion in this
case, should they wish to do so.
 However, the tenor of such warning effectively deprived petitioners of such opportunity, thus,
constituting a violation of their right to due process.
 All told, petitioners were completely justified in pursuing a direct recourse to the CA through a
petition for certiorari under Rule 65 of the Rules of Court. To rule otherwise would be clearly
antithetical to the tenets of fair play, not to mention the undue prejudice to petitioners'
rights. Thus, in light of the fact that the CA dismissed outright the petition for certiorari before it
solely on procedural grounds, a remand of the case for a resolution on the merits is warranted.
 WHEREFORE, the petition is GRANTED. SO ORDERED.
Note
 Given the special and extraordinary nature of a Rule 65 petition, the general rule is that a
motion for reconsideration must first be filed with the lower court prior to resorting to the
extraordinary remedy of certiorari, since a motion for reconsideration may still be considered as
 a plain, speedy, and adequate remedy in the ordinary course of law. The rationale for the
prerequisite is to grant an opportunity for the lower court or agency to correct any actual or
perceived error attributed to it by the re-examination of the legal and factual circumstances of
the case.
 This notwithstanding, the foregoing rule admits of well-defined exceptions, such
as: xxx (d) where, under the circumstances, a motion for reconsideration would be
useless; (e) where petitioner was deprived of due process and there is extreme urgency for
relief; xxx
 A judicious review of the records reveals that the exceptions in items (d) and (e) are attendant in
this case.

44. Lino Fernandez, Jr. vs. Manila Electric Co. (MERALCO), GR No. 226002, June 25, 2018

[Re Extraordinary Remedy]

Ponente: Peralta, J.

Petitioner: Lino A. Fernandez, Jr. (Fernandez)

Respondent: Manila Electric Company (MERALCO)

Nature of the case: This case is a petition for review on certiorari, assailing the decision and resolution of
CA, which affirmed the resolutions of the NLRC, denying the Verified Petition filed by petitioner Fernandez
under Rule XII (Extraordinary Remedies) of the 2011 NLRC Rules of Procedure, as amended (NLRC Rules)

FACTS:
 Petitioner Fernandez was an employee of respondent Manila Electric Company (MERALCO) from
October 3, 1978 until his termination on September 14, 2000 for allegedly participating in an
illegal strike.
 As a result, he filed a case for illegal dismissal.
 Contrary to the conclusion reached by the LA and the NLRC, the CA declared that Fernandez was
illegally dismissed.
 CA’s ruling was sustained in SC resolution dated January 16, 2008
 With the denial of the MR, the judgment became final and executory on May 26, 2008
 During the execution proceedings, both parties filed several motions regarding the inclusions
to, and computation of, the monetary awards due to Fernandez.

LA
 LA summarized the issues (based on the several motions) for its resolution as follows:
o Whether Fernandez is entitled to additional backwages despite receipt of P3,307,362.05
monetary award covering the period from September 14, 2000 up to June 26, 2008;
o Whether Fernandez is entitled to P1,950,525.53 additional backwages consisting,
among others, of CBA salary increases, covering the period from September 14, 2000 to
June 26, 2008, and whether said computation by Felix Dalisay of the Computation Unit
and adopted by LA Borbolla is correct;
o Whether Fernandez is entitled to additional backwages starting January 31, 2009 when
MERALCO in its Motion to Declare Full Satisfaction of Fernandez's Monetary Awards
 Granted by the Court of Appeals and Supreme Court dated January 13, 2009 manifested
that it was exercising its option to pay Fernandez's separation pay instead of
reinstatement; and
o Whether Fernandez should be reinstated

 On June 27, 2014, LA disposed the motions, as follows:

o MERALCO's Motion to Declare Full Satisfaction of Fernandez's Monetary Awards
granted in the. Decision of CA and the SC dated January 13, 2009 is DENIED for lack of
merit
o Fernandez's:
(1) Urgent Motion to Require MERALCO to Reinstate Fernandez dated December 16,
2008,
(2) Motion for Recomputation of Backwages from September 14, 2000 to June 26,
2008 and Computation of 14th & 15th Month Pay and Attorney's Fees dated
October 17, 2012, and
(3) Manifestation and Urgent Motion dated October 17, 2012 praying that he be
allowed to collect only P490,104;10 out of the P2,123,277.80 garnished money
per January 25, 2011 Alias Writ of Execution are DENIED for lack of merit.
o As to Fernandez's Urgent Motion to Release the Money to Fernandez dated April 4, 2011
in the sum of P2,125,277.00 representing P1,614,626.40 separation pay from October 3,
1978 to January 31, 2009, P490,104.10 accrued salaries and benefits from June 27, 2008
to January 31, 2009 and P20,547.30 execution fee, BANCO DE ORO is ordered to release
the garnished P2,125,277.00 to the NLRC Cashier, thru Sheriff Manolito Manuel.
o Fernandez is declared legally separated from employment effective January 31, 2009.
o MERALCO is further ordered to pay Fernandez the sum of PESOS: P1,950,525.53
representing additional backwages and benefits pursuant to the CBA covering the period
from September 14, 2000 to June 26, 2008, as computed by the Computation Unit.
o All other claims of the parties are DENIED for lack of merit.

 On July 4, 2014, Fernandez received a copy of the June 27, 2014 Order
 Prior to the expiration of the 10-day reglementary period, he filed a Notice of Appeal and
Memorandum on Appeal on July 11, 2014.
o The appeal is limited to the following:
 Findings of the LA that Fernandez was deemed separated from employment
effective January 31, 2009 when MERALCO manifested in its "Motion to Declare
Full Satisfaction of Fernandez's Monetary Awards Granted in the Decision of the
CA and SC" dated January 13, 2009 that they were exercising their option to pay
Fernandez separation pay in lieu of reinstatement.
 Findings of the LA that Fernandez was not entitled to any retirement
pay/benefits.
 Findings of the LA that Fernandez was not entitled to 14th month pay, 15th
month pay, rice and clothing allowance pursuant to the CBA and attorney's fee

 Realizing the procedural defect, Fernandez filed, on July 23, 2014, a Motion to Treat Remedy
Previously Filed As Verified Petition With Motion To Admit Original Copy Of The Assailed Order As
Part Thereof, alleging, among others:
o However, he entitled and treated the same as an Appeal (i.e., Notice of Appeal and
Memorandum of Appeal) instead of a Verified Petition.
 o Notably, his remedy was properly verified and certified (against non-forum shopping) and
the only technical issue/discrepancy therein is that it was entitled/treated as "Notice of
Appeal and Memorandum of Appeal" instead of a "Verified Petition."

 Despite his submissions, the appeal and motion were merely "NOTED WITHOUT ACTION" in the
July 30, 2014 Order of LA Suarez, who opined that these are prohibited pleadings under Section
5(i) and (j), Rule V of the NLRC Rules

NLRC
 After Fernandez received a copy of the Order on August 14, 2014, he filed a Verified Petition on
August 26, 2014
 On August 29, 2014, the NLRC Fifth Division resolved to deny Fernandez's Verified Petition.
 His MR was denied on October 20, 2014

 Meantime, MERALCO also filed a Verified Petition to assail the June 27, 2014 Order
 On July 31, 2014, it was dismissed by the NLRC Fifth Division for insufficiency in form and
substance
 MR was filed on October 31, 2014, the Verified Petition was reinstated, but was denied for lack
of merit

CA
 Fernandez elevated the case to the CA via a petition for certiorari, which was denied for lack of
merit.
 His MR suffered the same fate
 Hence, this petition.

ISSUE: Whether it is appropriate to consider the appeal filed by petitioner Fernandez before the NLRC as
a Verified Petition.

RULING:
 Yes.
 In the case of Velasco v. Matsushita Electric Philippines Corp., the sole issue was whether the
NLRC, in noting without action petitioner's Notice of Appeal from the Order issued by the LA
during the execution proceedings, committed grave abuse of discretion amounting to lack or
excess of jurisdiction.
 There, Velasco filed a Notice of Appeal before the NLRC after the LA denied her Manifestation and
Motion claiming that Matsushita had not complied with the judgment in her favor.
 In ruling for Velasco, this Court held:
o Petitioner is correct in asserting that she is not bereft of reliefs from adverse orders issued
by the LA in connection with the execution of the judgment in her favor.
o However, she failed to avail of the correct remedy.

 Rule 5, Section 5 of the 2011 Rules of Procedure of the National Labor Relations Commission
explicitly provides that an appeal from an order issued by a Labor Arbiter in the course of
execution proceedings is a prohibited pleading.
o SECTION 5. PROHIBITED PLEADINGS AND MOTIONS. - The following pleadings and
motions shall not be allowed and acted upon nor elevated to the Commission:
 xxx
i) Appeal from orders issued by the Labor Arbiter in the course of execution proceedings.

 This is affirmed by Rule XII, Section 15 of the same Rules:

o “Section 15. No Appeal from the Order or Resolution of the Labor Arbiter arising from
Execution Proceedings or Other Incidents. - Except by way of a petition filed in
accordance with this Rule, no appeal from the order or resolution issued by the Labor
Arbiter during the execution proceedings or in relation to incidents other than a decision
or disposition of the case on the merits, shall be allowed or acted upon by the
Commission.

 Rule 12, Section 1 provides that, instead of an appeal, the proper remedy is a verified petition
to annul or modify the assailed order or resolution:
o Section 1. Verified Petition. - A party aggrieved by any order or resolution of the Labor
Arbiter including those issued during execution proceedings may file a verified petition to
annul or modify such order or resolution. The petition may be accompanied by an
application for the issuance of a temporary restraining order and/or writ of preliminary
or permanent injunction to enjoin the Labor Arbiter, or any person acting under his/her
authority, to desist from enforcing said resolution or order.

 Nevertheless, while it was an error for petitioner to seek relief from the NLRC through an appeal,
it is in the better interest of justice that petitioner be afforded the opportunity to avail herself
of the reliefs that this Court itself, in its November 23, 2009 ruling, found to be due to her.
 It is a basic principle that the NLRC is "not bound by strict rules of evidence and of procedure."
 Between two modes of action - first, one that entails a liberal application of rules but affords full
relief to an illegally dismissed employee; and second, one that entails the strict application of
procedural rules but the possible loss of reliefs properly due to an illegally dismissed employee -
the second must be preferred.
 Thus, it is more appropriate for the NLRC to have instead considered the appeal filed before it
as a petition to modify or annul.

Application
 Similarly in the present case, the NLRC Rules of Procedure must be liberally applied so as to
prevent injustice and grave or irreparable damage or injury to an illegally dismissed employee.
 The matter should be remanded to the NLRC for determination of the inclusions to, and the
computation of, the monetary awards due to Fernandez.

Other Discussions

 Without prejudice to the factual findings of the NLRC and the power of review of the CA, we take
note of the following for guidance:
o Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to
reinstatement as a matter of right.
o The award of separation pay is a mere exception to the rule
o It is made an alternative relief in lieu of reinstatement in certain circumstances, like:
(a) When reinstatement can no longer be effected in view of the passage of a long
period of time or because of the realities of the situation;
 (b) Reinstatement is inimical to the employer's interest;
(c) Reinstatement is no longer feasible;
(d) Reinstatement does not serve the best interests of the parties involved;
(e) The employer is prejudiced by the workers' continued employment;
(f) Facts that make execution unjust or inequitable have supervened; or
(g) Strained relations between the employer and employee.

Re: Doctrine of Strained Relations

 Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or viable.
 On one hand, such payment liberates the employee from what could be a highly oppressive work
environment. On the other hand, it releases the employer from the grossly unpalatable obligation
of maintaining in its employ a worker it could no longer trust.
 Nonetheless, the doctrine of strained relations should not be used recklessly or applied loosely
nor be based on impression alone
 It cannot be applied indiscriminately since every labor dispute almost invariably results in
"strained relations;" otherwise, reinstatement can never be possible simply because some
hostility is engendered between the parties as a result of their disagreement.
 Strained relations must be demonstrated as a fact.
 It must be adequately supported by substantial evidence showing that the relationship between
the employer and the employee is indeed strained as a necessary consequence of the judicial
controversy.
o “As we have held, "strained relations must be demonstrated as a fact. The doctrine of
strained relations should not be used recklessly or applied loosely nor be based on
impression alone" so as to deprive an illegally dismissed employee of his means of
livelihood and deny him reinstatement. Since the application of this doctrine will result
in the deprivation of employment despite the absence of just cause, the implementation
of the doctrine of strained relationship must be supplemented by the rule that the
existence of a strained relationship is for the employer to clearly establish and prove in
the manner it is called upon to prove the existence of a just cause; the degree of hostility
attendant to a litigation is not, by itself, sufficient proof of the existence of strained
relations that would rule out the possibility of reinstatement.

Re: Reinstatement
 Reinstatement cannot be barred especially when the employee has not indicated an aversion to
returning to work, or does not occupy a position of trust and confidence in, or has no say in the
operation of the employer's business

 Here, Fernandez's intent and willingness to be reinstated to his former position is evident as early
as July 10, 2008 when he filed his Comment with Motion for Re-computation of Monetary Award.
 He reiterated this on December 17, 2008 in his Urgent Motion to require MERALCO to reinstate
him and on January 21, 2009 in his Comment/Opposition to MERALCO's motion to declare full
satisfaction of his monetary awards.
 On January 13, 2009, or about three months before Fernandez reached the retirement age of 60
years old in April 2009, MERALCO filed a Motion to Declare Full Satisfaction of Complainant's
Monetary Awards Granted in the Decision of the CA and the SC
  MERALCO conveniently claimed that the filing of the case, which had dragged for a long period of
time, severed the employee-employer relationship;
o Hence, Fernandez's reinstatement was no longer feasible.
 Later, it echoed the reasoning of LA Suarez by contending that his alleged participation in the
illegal strike definitely tainted the relations of the parties.
 The bare allegations of MERALCO, which later on became the basis of a mere presumption on the
part of LA Suarez, appear to be without any factual basis.
 To stress, strained relationship may be invoked only against employees whose positions
demand trust and confidence, or whose differences with their employer are of such nature or
degree as to preclude reinstatement
 Here, the confidential relationship between Fernandez, as a supervisory employee, and MERALCO
has not been established.
 For lack of evidence on record, it appears that his designation as a Leadman was not a sensitive
position as would require complete trust and confidence, and where personal ill will would
foreclose his reinstatement

Re: Backwages
 Backwages shall include the whole amount of salaries, plus all other benefits and bonuses, and
general increases, to which Fernandez would have been normally entitled had he not been
illegally dismissed.
 Unless there is/are valid ground/s for the payment of separation pay in lieu of reinstatement,
Fernandez's backwages should be computed from the date when he was illegally dismissed on
September 14, 2000, until his retirement in April 2009.
 It shall be subject to legal interest of 12% per annum from September 14, 2000 until June 30,
2013, and then to legal interest of 6% interest per annum from July 1, 2013 until full satisfaction.

Re: Retirement Benefits

 In addition, subject to proof of entitlement, Fernandez must receive the retirement benefits he
should have received if he was not illegally dismissed.
 Even if he receives a separation pay in lieu of reinstatement, he is not precluded to obtain
retirement benefits because both are not mutually exclusive:
o Retirement benefits are a form of reward for an employee's loyalty and service to an
employer and are earned under existing laws, CBAs, employment contracts and company
policies. On the other hand, separation pay is that amount which an employee receives
at the time of his severance from employment, designed to provide the employee with
the wherewithal during the period that he is looking for another employment and is
recoverable only in instances enumerated under Articles 283 and 284 [now 298 and 299]
of the Labor Code or in illegal dismissal cases when reinstatement is not feasible.

Re: Attorney’s Fees

 On the issue of attorney's fees, we agree with LA Suarez that Fernandez is not entitled thereto.
 It is an elementary principle of procedure that the resolution of the court in a given issue, as
embodied in the dispositive part of a decision or order, is the controlling factor as to settlement
of rights of the parties.
 The dispositive portion or the fallo is the decisive resolution and is the subject of execution.
  Therefore, the writ of execution must conform to the judgment to be executed, particularly with
that which is ordained or decreed in the dispositive portion of the decision, and adhere strictly to
the very essential particulars.

 In this case, the January 30, 2007 Decision of the CA, which does not grant attorney's fees to
Fernandez, already became final and executory on May 26, 2008.
 As such, it is immutable and unalterable.
 Generally, it may no longer be modified in any respect, even if the modification is meant to correct
what is perceived to be an erroneous conclusion of law or fact.
 In opting not to file a petition before the Supreme Court assailing the CA Decision, Fernandez is
deemed to have acquiesced to the entirety of the ruling.
 It cannot be convincingly argued that the petition filed by MERALCO also inured to his benefit, for
not only are their interests separate and distinct, but they are completely in conflict with each
other
 Considering that the judgment on the issue of attorney's fees is already final and executory against
Fernandez who did not appeal, then MERALCO already acquired a vested right by virtue thereof.
 Indeed, just as the losing party has the privilege to file an appeal (or petition) within the prescribed
period, so does the winner also have the correlative right to enjoy the finality of the decision.

Re: Other benefits

 Finally, as to Fernandez's alleged entitlement to longevity pay, 14th month and 15th month pay,
and other benefits and allowances, the same are subject to evidentiary support that must be
ascertained and confirmed based on the applicable CBA/s, employment contract, and company
policies and practice.

Disposition: Petition granted. The appeal filed by petitioner Fernandez before the NLRC is considered as
a Verified Petition, assailing the Order of LA.
 Case remanded to NLRC for it to resolve the petition with reasonable dispatch.