1. University Plans, Inc. vs. Belinda P. Solano, et al., G.R. No.

170416, June 22, 2011

DECISION

DEL CASTILLO, J.:

The National Labor Relations Commission (NLRC) is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond.1[1]

This Petition for Review on Certiorari assails the Decision2[2] dated October 27, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 77397 which denied the Petition for Certiorari filed before it. Likewise assailed is the CA Resolution3[3] dated November 10, 2005 denying the Motion for Reconsideration thereto.

Factual Antecedents

Respondents Belinda P. Solano (Solano), Terry A. Lamug (Lamug), Glenda S. Belga (Belga), Melba S. Alvarez (Alvarez), Welma R. Namata (Namata), Marietta D. Bacho (Bacho) and Manolo L. Cenido (Cenido) filed before the Labor Arbiter complaints for illegal dismissal, illegal deductions,

overriding commissions, unfair labor practice, moral and exemplary damages, and actual damages against petitioner University Plans Incorporated.

Ruling of the Labor Arbiter

In a Decision4[4] dated July 31, 2000, the Labor Arbiter found petitioner guilty of illegal dismissal and ordered respondents reinstatement as well as the payment of their full backwages, proportionate 13th month pay, moral/exemplary damages, and attorneys fees, viz:

WHEREFORE, premises considered, the respondents University Plans, Inc., Ernesto D. Tuazon, Joel D. Paguio, Maribel Sto. Domingo and Renato P. Dragon are hereby ordered to reinstate the seven complainants to their former positions without loss of seniority rights and other appurtenant benefits and to pay said complainants jointly and severally the amounts computed as follows: Backwages 1. 2. 3. 4. 5. 6. 7. Belinda Solano Glenda S. Belga Welma R. Namata Melba S. Almarez Marrieta D. Bacho Terry E. Lamug Manolo L. Ceido P701,666.66 245,583.33 245,583.33 243,168.33 191,317.75 505,833.33 801,937.50 13th Month Pay P30,000.00 10,500.00 10,500.00 8,085.00 4,930.75 7,500.00 36,993.75 Moral/Exemplary Damages P10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00

Respondents are likewise ordered to pay attorneys fees equivalent to ten (10%) percent of the judgment award. All other claims are hereby dismissed for lack of merit. SO ORDERED.5[5]

Ruling of the National Labor Relations Commission

Petitioner filed before the NLRC its Memorandum on Appeal6[6] as well as a Motion to Reduce Bond.7[7] Simultaneous with the filing of said pleadings, it posted a cash bond in the amount of P30,000.00.

In its Motion to Reduce Bond, petitioner alleged that it was under receivership and that it cannot dispose of its assets at such a short notice. Because of this, it could not post the required bond. Nevertheless, it has P30,000.00 available for immediate disposition and thus prayed that said amount be deemed sufficient to satisfy the required bond for the perfection of its appeal.

In an Order8[8] dated April 25, 2001, the NLRC denied petitioners Motion to Reduce Bond and directed it to post an additional appeal bond in the amount of P3,013,599.50 within an unextendible period of 10 days from notice, otherwise the appeal shall be dismissed for non-perfection. In resolving the motion, the NLRC held that the amount of the appeal bond is fixed by law pursuant to Article 223 of the Labor Code which provides in part that:

Article 223. Appeal . - x x x

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. (Emphasis ours.) xxxx

Petitioner filed a Motion for Reconsideration9[9] insisting that the NLRC has the discretion to reduce the appeal bond upon motion of appellant and on meritorious grounds. It argued that the fact that it was under receivership and could not dispose of any or all of its assets without prior court approval are meritorious grounds justifying the reduction of the appeal bond.

The NLRC, however, denied petitioners motion for reconsideration in a Resolution10[10] dated March 21, 2003. It ruled that while it has the discretion to reduce the appeal bond, it is nevertheless not persuaded that petitioner was incapable of posting the required bond. It noted that petitioner failed to submit any financial statement or provide details anent its alleged receivership or its sources of income. Citing Rubber World (Phils.) Inc. v. National Labor Relations Commission11[11] where the Security and Exchange Commission (SEC) issued an Order of Suspension of Payments, the NLRC noted that this was not obtaining in the present case. And since the appeal was not perfected due to petitioners failure to post the required bond, the NLRC dismissed the same.

Unsatisfied, petitioner went to the CA through a Petition for Certiorari.12[12]

Ruling of the Court of Appeals

In a Decision13[13] dated October 27, 2004, the CA held that the NLRC in meritorious cases and upon motion by the appellant may reduce the amount of the bond. However, in order for the NLRC to exercise this discretion, it is imperative for the petitioner to show veritable proof that it is entitled to the same. Since petitioner failed to provide the NLRC with sufficient basis to determine its incapacity to post the required appeal bond, the CA opined that the NLRCs denial of petitioners Motion to Reduce Bond was justified. Hence, it denied the petition.

As petitioners Motion for Reconsideration14[14] was likewise denied in a Resolution15[15] dated November 10, 2005, petitioner is now before this Court through the present Petition for Review on Certiorari.16[16]

Issues

Petitioner advances the following grounds:

I. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR WHEN IT DID NOT CONSIDER THE FACT THAT PETITIONER UNIVERSITY PLANS, INC. IS UNDER RECEIVERSHIP. II. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR WHEN IT FAILED TO CONSIDER AND DISPOSE OF THE MERITS OF THE CASE. A. THERE WAS ABSENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN RESPONDENTS SOLANO, BELGA, NAMATA, LAMUG AND ALVAREZ AND UPI. RESPONDENT BACHO WAS VALIDLY RETRENCHED.

B.

C.

RESPONDENT CENIDO WAS DISMISSED FOR CAUSE.

III. THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR, WHEN IT FAILED TO APPRECIATE THE FACT [THAT] MESSRS. ERNESTO D. TUAZON AND JOEL D. PAGUIO, MS. MARIBEL STO. DOMINGO AND MR. RENATO DRAGON, WERE IMPROPERLY IMPLEADED AND CONSEQUENTLY, THE LABOR ARBITER DID NOT ACQUIRE JURISDICTION OVER THEM. IV. CONSEQUENTLY, IT IS SIMPLY GRAVE ABUSE OF DISCRETION, NOT TO MENTION GROSS AND PALPABLE ERROR FOR THE HONORABLE COURT OF APPEALS TO HAVE UPHELD THE LABOR ARBITERS ORDER OF REINSTATEMENT OF RESPONDENTS AND TO PAY THEM BACKWAGES, MORAL AND EXEMPLARY DAMAGES AND 10% ATTORNEYS FEES.17[17]

The Parties Arguments

Petitioner stresses that it is under receivership pursuant to Presidential Decree No. 902-A. As such, all pending actions for claims are automatically stayed to enable the management committee or the rehabilitation receiver to effectively exercise its powers free from any judicial or extrajudicial interference. And since such suspension is automatic, there is no need for it to submit an Order of Suspension of Payments from the SEC, contrary to the ruling of the NLRC. The Cease and Desist Order18[18] dated August 23, 1999 and the May 23, 2000 Order19[19] placing petitioner under receivership both issued by the SEC would have sufficed.

Also, since its assets could not be disposed of nor could a case be filed against its receiver without prior leave of court pursuant to Section 6, Rule 59 of the Rules of Court,20[20] petitioner argues it was difficult for it to raise the required amount of the bond. Petitioner insists that the NLRC should have considered these circumstances when it resolved its Motion to Reduce Bond and likewise by the CA when it affirmed the NLRCs denial of said motion. Besides, this Court, in several cases, has relaxed the requirement of posting an appeal bond as a condition for perfecting an appeal under Article 223 of the Labor Code in line with the desired objective of resolving the controversies on the merits.

Petitioner likewise faults the CA when it did not dispose of the case on the merits. It then insists that there is no employer-employee relationship between it and respondents Solano, Belga, Namata, Lamug and Alvarez; that respondent Bacho was validly retrenched; that respondent Cenido was dismissed for cause; and consequently, that they are all not entitled to reinstatement, backwages, moral and exemplary damages, and attorneys fees. It also asserts that its officers should not have been held jointly and severally liable to respondents.

For their part, respondents aver that the CA correctly affirmed the NLRCs denial of petitioners Motion to Reduce Bond. Aside from the very clear provisions of Article 223 of the Labor Code and of Section 6, Rule VI of the NLRC Rules of Procedure on the matter, the discretion to reduce the appeal bond rests upon the NLRC and only in justifiable and meritorious cases. And since petitioner failed to justify its claim to a reduction of the appeal bond, the NLRC properly denied its motion.

Respondents likewise assert that petitioner has already lost its right to appeal considering that same was not perfected when it failed to put up the required appeal bond within the time prescribed by the NLRC. Because of this, the Labor Arbiters Decision became final and executory and, hence, the NLRC did not err in not touching upon the merits of the appeal.

Meanwhile, in the Memorandum21[21] filed by respondent Solano, she informs this Court that upon verification from the SEC, petitioner was placed under liquidation as early as 2002. This can further be deduced from the September 1, 2003 Order22[22] of the SEC designating Atty. Francis Carlo D. Taparan as its liquidator and from the February 13, 2007 letter23[23] of SEC Secretary C.A. Gerard M.

Lukban, which quoted excerpts from the minutes of the April 13, 2005 SEC Meeting designating him as petitioners new liquidator. In view of these, respondents argue that petitioners claim of receivership has already lost significance and therefore has become moot and academic.

Our Ruling

There is merit in the petition.

Posting of bond is indispensable to the perfection of an appeal in cases involving monetary awards from the Decision of the Labor Arbiter.

Article 223 of the Labor Code provides in part: Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x x x xxxx 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. (Emphasis supplied.) x x x x.

While pertinent portions of Sections 4 and 6, Rule VI of the Revised Rules of Procedure of the NLRC read:

SECTION 4. REQUISITES FOR PERFECTION OF APPEAL a) The appeal shall be: 1) filed within the reglementary period provided in Section 1 of this Rule; 2) verified by the appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as amended; 3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in support thereof, the relief prayed for, and with a statement of the date the appellant received the appealed decision, resolution or order; 4) in three (3) legibly typewritten or printed copies; and 5) accompanied by i) proof of payment of the required appeal fee; ii) posting of a cash or surety bond as provided in Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other parties. xxxx SECTION 6. BOND. In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorneys fees. xxxx No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award. x x x (Emphasis supplied.)

The abovementioned provisions highlight the importance of posting a cash or surety bond in the perfection of an appeal to the NLRC from the Labor Arbiters judgment involving a monetary award. Thus, in Ramirez v. Court of Appeals,24[24] this Court held, viz:

Under the Rules, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond. The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter. The intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly expressed in the provision that an appeal by the employer may

be perfected only upon the posting of a cash or surety bond. The word only in Article 223 of the Labor Code makes it unmistakably plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employers appeal may be perfected. The word may refers to the perfection of an appeal as optional on the part of the defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal. The meaning and the intention of the legislature in enacting a statute must be determined from the language employed; and where there is no ambiguity in the words used, then there is no room for construction.25[25] (Emphasis supplied; citations omitted.)

When the amount of bond may be reduced.

Notably, however, under Section 6, Rule VI of the NLRCs Revised Rules of Procedure, the bond may be reduced albeit only on meritorious grounds and upon posting of a partial bond in a reasonable amount in relation to the monetary award. Suffice it to state that while said Rules allows the Commission to reduce the amount of the bond, the exercise of the authority is not a matter of right on the part of the movant, but lies within the sound discretion of the NLRC upon a showing of meritorious grounds.26[26]

In Nicol v. Footjoy Industrial Corporation,27[27] the Court reviewed the jurisprudence28[28] respecting the bond requirement for perfecting appeal and summarized the guidelines under which the NLRC must exercise its discretion in considering an appellants motion for reduction of bond, viz:

[T]he bond requirement on appeals involving monetary awards has been and may be relaxed in meritorious cases. These cases include instances in which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. Conversely the reduction of the bond is not warranted when no meritorious ground is shown to justify the same; the appellant absolutely failed to comply with the requirement of posting a bond, even if partial; or when the circumstances show the employers unwillingness to ensure the satisfaction of its workers valid claims.29[29]

The NLRC is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond.

In Nicol, the Labor Arbiter ordered the employer to pay the employees monetary award in the total amount of P51,956,314.00. When the employer appealed to the NLRC, it claimed that it was in dire financial condition and thus moved to reduce the bond to P10 million, for which it posted a surety bond.

The NLRC however denied the motion and required the employer to file an additional bond of P41,956,314.00. Failing to do so, the NLRC dismissed the employers appeal for non-perfection thereof.

On appeal, the CA held that the NLRC should have determined the merit of employers grounds for the reduction of its appeal bond through the reception of evidence instead of requiring it to put up a bond in the equivalent amount of the award without regard to its reasons and arguments, and without determining for itself what amount would be reasonable under the circumstances. Hence, it directed the NLRC to consider the employers motion to reduce bond after receiving evidence thereon, and upon a timely posting of the required reasonable supersedeas bond, to give due course to the appeal and to determine the merits of the case.

When the case reached this Court, we affirmed the CAs ruling that the NLRC gravely abused its discretion in denying the motion to reduce bond peremptorily without considering the evidence presented. We further ruled, viz::

[T]he NLRC was not precluded from making a preliminary determination of their [the employer] financial capability to post the required bond, without necessarily passing upon the merits. Since the intention is merely to give the NLRC an idea of the justification for the reduced bond, the evidence for the purpose would necessarily be less than the evidence required for a ruling on the merits. Indeed, it only bears stressing that the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases. On the contrary, the Labor Code explicitly mandates it to use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.30[30]

The NLRC erred in not considering the merit or lack of merit of petitioners Motion to Reduce Bond.

Petitioner attached to its Motion to Reduce Bond the SEC Orders dated August 23, 1999 and May 23, 2000. The Order of August 23, 1999 is a Cease and Desist Order which, among others, prohibited the officers and agents of petitioner from withdrawing from its trust funds or from making any disposition thereof and, ordered the freeze of all its assets and properties. On the other hand, the May 23, 2000 Order reads in part that:

In view of the voluntary request for receivership of the University Plans, Inc. (UPI), after being found to have a Trust Fund and Capital Deficiency, unable to pay the same despite its commitment to pay, and pursuant to Presidential Decree No. 902-A, as amended, University Plans, Inc. is therefore, placed under the management and control of a RECEIVER x x x31[31] (Emphasis supplied.)

From the said SEC Orders, it is unmistakable that petitioner was under receivership. And from the tenor and contents of said Orders, it is possible that petitioner has no liquid asset which it could use to post the required amount of bond. Also, it is quite understandable that because of petitioners financial state, it cannot raise the amount of more than P3 million within a period of 10 days from receipt of the Labor Arbiters judgment.

However, the NLRC ignored petitioners allegations and instead remained adamant that since the amount of bond is fixed by law, petitioner must post an additional bond of more than P3 million. This, to us, is an utter disregard of the provision of the Labor Code and of the NLRC Revised Rules of Procedure allowing the reduction of bond in meritorious cases. While the NLRC tried to correct this error

in its March 21, 2003 Resolution32[32] by further explaining that it was not persuaded by petitioners alleged incapability of posting the required amount of bond for failure to submit financial statement, list of sources of income and other details with respect to the alleged receivership, we still find the hasty denial of the motion to reduce bond not proper.

Notwithstanding petitioners failure to submit its financial statement and list of sources of income and to give more details relative to its receivership, it was nevertheless able to show through the abovementioned SEC Orders that it was indeed under a state of receivership. This should have been sufficient reason for the NLRC to not outrightly deny petitioners motion.

As to the lacking

documents and details on the receivership, it is true that they are needed by the NLRC in determining petitioners capacity to post the required amount of bond. However, their absence should not lead to the outright denial of the motion since as earlier discussed, the NLRC is not precluded from conducting a preliminary determination on the merit or lack of merit of a motion to reduce bond. Here, considering the clear showing of petitioners state of receivership, the NLRC should have conducted such preliminary determination and therein require the submission of said documents and other necessary evidence before proceeding to resolve the subject motion. After all, the present case falls under those cases where the bond requirement on appeal may be relaxed considering that (1) there was substantial compliance with the Rules;33[33] (2) the surrounding facts and circumstances constitute meritorious grounds to

reduce the bond; and (3) the petitioner, at the very least, exhibited its willingness and/or good faith by posting a partial bond during the reglementary period. Also, such a procedure would be in keeping with the Labor Codes mandate to use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.34[34]
We thus find error on the part of the NLRC when it denied petitioners Motion to Reduce Bond and likewise on the part of the CA when it affirmed said denial.

In view of the foregoing, a remand of this case to the NLRC for the conduct of preliminary determination of the merit or lack of merit of petitioners Motion to Reduce Bond is proper. In so doing, the NLRC is also reminded to consider respondent Solanos allegation that petitioner is now under liquidation and to receive evidence thereon so that it may judiciously resolve the Motion to Reduce Bond. As regards the issues relating to the substantial merits of the case, we shall leave the same to the NLRC. This is because should the NLRC eventually find the Motion to Reduce Bond meritorious, it shall give due course to the appeal upon the timely posting of a reasonable amount of supersedeas bond it deems appropriate under the circumstances, and shall then proceed to determine the merits of the case.

WHEREFORE, the petition is GRANTED. The assailed Decision dated October 27, 2004 and Resolution dated November 10, 2005 of the Court of Appeals in CA-G.R. SP No. 77397 are REVERSED and SET ASIDE. This case is ordered REMANDED to the National Labor Relations Commission for the conduct of preliminary determination of the merit or lack of merit of petitioners Motion to Reduce Bond. Should the National Labor Relations Commission find the Motion to Reduce Bond meritorious, it is directed to give due course to the appeal upon timely filing of a reasonable supersedeas bond in an amount it deems appropriate under the circumstances, and to hear and resolve the case with dispatch.

SO ORDERED.

2. Banahaw Broadcasting Corporation vs. Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011.

BANAHAW CORPORATION, Petitioner,

BROADCASTING

G.R. No. 171673

- versus Present:

CAYETANO PACANA III, NOE U. DACER, JOHNNY B. RACAZA, LEONARDO S. OREVILLO, ARACELI T. LIBRE, GENOVEVO E. ROMITMAN, PORFERIA M. VALMORES, MENELEO G. LACTUAN, DIONISIO G. BANGGA, FRANCISCO D. MANGA, NESTOR A. AMPLAYO, LEILANI B. GASATAYA, LORETA G. LACTUAN, RICARDO B. PIDO, RESIGOLO M. NACUA and ANACLETO C. REMEDIO, Respondents.

CORONA, C.J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, PERALTA,* and PEREZ, JJ.

Promulgated:

May 30, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision35[1] dated April 15, 2005 of the Court of Appeals in CA-G.R. SP No. 57847, and

its Resolution36[2] dated January 27, 2006 denying petitioners Motion for Reconsideration.

The factual and procedural antecedents of this case are as follows:

Respondents in the case at bar, Cayetano Pacana III, Noe U. Dacer, Johnny B. Racaza, Leonardo S. Orevillo, Araceli T. Libre, Genovevo E. Romitman, Porferia M. Valmores, Meneleo G. Lactuan, Dionisio G. Bangga, Francisco D. Manga, Nestor A. Amplayo, Leilani B. Gasataya, Loreta G. Lactuan, Ricardo B. Pido, Resigolo M. Nacua and Anacleto C. Remedio (collectively, the DXWG personnel), are supervisory and rank and file employees of the DXWG-Iligan City radio station which is owned by petitioner Banahaw Broadcasting Corporation (BBC), a corporation managed by Intercontinental Broadcasting Corporation (IBC).

On August 29, 1995, the DXWG personnel filed with the Sub-regional Arbitration Branch No. XI, Iligan City a complaint for illegal dismissal, unfair labor practice, reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits, and attorneys fees against IBC and BBC.

On June 21, 1996, Labor Arbiter Abdullah L. Alug rendered his Decision37[3] awarding the DXWG personnel a total of P12,002,157.28 as unpaid CBA benefits consisting of unpaid wages and increases, 13th month pay, longevity pay, sick leave cash conversion, rice and sugar subsidy, retirement pay, loyalty reward and separation pay.38[4] The Labor Arbiter denied the other claims of the DXWG

personnel for Christmas bonus, educational assistance, medical check-up and optical expenses. Both sets of parties appealed to the National Labor Relations Commission (NLRC).

On May 15, 1997, a Motion to Dismiss, Release, Waiver and Quitclaim,39[5] was jointly filed by IBC and the DXWG personnel based on the latters admission that IBC is not their employer as it does not own DXWG-Iligan City. On April 21, 1997, the NLRC granted the Motion and dismissed the case with respect to IBC.40[6]

BBC filed a Motion for Reconsideration alleging that (1) neither BBC nor its duly authorized representatives or officers were served with summons and/or a copy of the complaint when the case was pending before the Labor Arbiter or a copy of the Decision therein; (2) since the liability of IBC and BBC is solidary, the release and quitclaim issued by the DXWG personnel in favor of IBC totally extinguished BBCs liability; (3) it was IBC that effected the termination of the DXWG personnels employment; (4) the DXWG personnel are members of the IBC union and are not employees of BBC; and (5) the sequestered properties of BBC cannot be levied upon.

On December 12, 1997, the NLRC issued a Resolution vacating the Decision of Labor Arbiter Alug and remanding the case to the arbitration branch of origin on the ground that while the complaint was filed against both IBC and BBC, only IBC was served with summons, ordered to submit a position paper, and furnished a copy of the assailed decision.41[7]

On October 15, 1998, Labor Arbiter Nicodemus G. Palangan rendered a Decision adjudging BBC to be liable for the same amount discussed in the vacated Decision of Labor Arbiter Alug:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Banahaw Broadcasting Corporation to pay complainants the following: 1. Cayetano Pacana III 2. Noe U. Dacer 3. Johnny B. Racaza 4. Leonardo S. Orevillo 5. Araceli T. Libre 6. Genovevo E. Romitman 7. Porferia M. Valmores 8. Meneleo G. Lactuan 9. Dionisio G. Bangga 10. Francisco D. Manga 11. Nestor A. Amplayo 12. Leilani B. Gasataya 13. Loreta G. Lactuan 14. Ricardo B. Pido 15. Resigolo M. Nacua 16. Anacleto C. Remedio GRAND TOTAL P 1,730,535.75 886,776.43 1,271,739.34 1,097,752.70 543,467.22 716,455.72 562,564.78 678,995.91 580,873.78 29,286.65 583,798.51 42,669.75 757,252.52 756,835.64 887,344.75 887,345.39 ___________________________ P 12,002,157.28

Respondent is likewise ordered to pay 10% of the total award as attorneys fee.42[8]

Both BBC and respondents appealed to the NLRC anew. The appeal was docketed as NLRC CA No. M-004419-98. In their appeal, the DXWG personnel reasserted their claim for the remaining CBA benefits not awarded to them, and alleged error in the reckoning date of the computation of the monetary award. BBC, in its own Memorandum of Appeal, challenged the monetary award itself, claiming that such benefits were only due to IBC, not BBC, employees.43[9] In the same Memorandum of Appeal,

BBC incorporated a Motion for the Recomputation of the Monetary Award (of the Labor Arbiter),44[10] in order that the appeal bond may be reduced.

On September 16, 1999, the NLRC issued an Order45[11] denying the Motion for the Recomputation of the Monetary Award. According to the NLRC, such recomputation would result in the premature resolution of the issue raised on appeal. The NLRC ordered BBC to post the required bond within 10 days from receipt of said Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection.46[12] Instead of complying with the Order to post the required bond, BBC filed a Motion for Reconsideration,47[13] alleging this time that since it is wholly owned by the Republic of the Philippines, it need not post an appeal bond.

On November 22, 1999, the NLRC rendered its Decision48[14] in NLRC CA No. M-004419-98. In said Decision, the NLRC denied the Motion for Reconsideration of BBC on its September 16, 1999 Order and accordingly dismissed the appeal of BBC for non-perfection. The NLRC likewise dismissed the appeal of the DXWG personnel for lack of merit in the same Decision.

BBC filed a Motion for Reconsideration of the above Decision. On January 13, 2000, the NLRC issued a Resolution49[15] denying the Motion.

BBC filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the Rules of Court assailing the above dispositions by the NLRC. The Petition was docketed as CA-G.R. SP No. 57847.

On April 15, 2005, the Court of Appeals rendered the assailed Decision denying BBCs Petition for Certiorari. The Court of Appeals held that BBC, though owned by the government, is a corporation with a personality distinct from the Republic or any of its agencies or instrumentalities, and therefore do not partake in the latters exemption from the posting of appeal bonds. The dispositive portion of the Decision states:

WHEREFORE, finding no grave abuse of discretion on the part of public respondents, We DENY the petition. The challenged decision of public respondent dated November 22, 1999, as well as its subsequent resolution dated January 13, 2000, in NLRC Case No. M-004419-98 are hereby AFFIRMED. The decision of the Labor Arbiter dated October 15, 1998 in RAB Case No. 12-09-00309-95 is hereby declared FINAL AND EXECUTORY.50[16]

On January 27, 2006, the Court of Appeals rendered the assailed Resolution denying the Motion for Reconsideration. Hence, this Petition for Review.

As stated above, both the NLRC and the Court of Appeals dealt with only one issue whether BBC is exempt from posting an appeal bond. To recall, the NLRC issued an Order denying BBCs Motion for the Recomputation of the Monetary Award and ordered BBC to post the required bond within 10 days from receipt of said Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection.51[17] However, instead of heeding the warning, BBC filed a Motion for Reconsideration, alleging that it need not post an appeal bond since it is wholly owned by the Republic of the Philippines.

There is no dispute as regards the history of the ownership of BBC and IBC. Both BBC and IBC, together with Radio Philippines Network (RPN-9), were formerly owned by Roberto S. Benedicto (Benedicto). In the aftermath of the 1986 people power revolution, the three companies, collectively denominated as Broadcast City, were sequestered and placed under the control and management of the Board of Administrators (BOA).52[18] The BOA was tasked to operate and manage its business and affairs subject to the control and supervision of the Presidential Commission on Good Government (PCGG).53[19] In December 1986, Benedicto and PCGG allegedly executed a Management

Agreement whereby the Boards of Directors of BBC, IBC and RPN-9 were agreed to be reconstituted. Under the agreement, 2/3 of the membership of the Boards of Directors will be PCGG nominees, and 1/3 will be Benedicto nominees. A reorganized Board of Directors was thus elected for each of the three corporations. The BOA, however, refused to relinquish its function, paving for the filing by Benedicto of a Petition for Prohibition with this Court in 1989, which was docketed as G.R. No. 87710.

In the meantime, it was in 1987 when the Republic, represented by the PCGG, filed the case for recovery/reconveyance/reversion and damages against Benedicto. Following our ruling in Bataan

Shipyard & Engineering Co., Inc. (BASECO) v. Presidential Commission on Good Government,54[20] the institution of this suit necessarily placed BBC, IBC and RPN-9 under custodia legis of the Sandiganbayan.

On November 3, 1990, Benedicto and the Republic executed a Compromise Agreement whereby Benedicto, in exchange for immunity from civil and criminal actions, ceded to the government certain pieces of property listed in Annex A of the agreement and assigned or transferred whatever rights he may have, if any, to the government over all corporate assets listed in Annex B of the agreement.55[21] BBC is one of the properties listed in Annex B.56[22] Annex A, on the other hand, includes the following entry:

CESSION TO THE GOVERNMENT: I. PHILIPPINE ASSETS: xxxx 7. Inter-Continental Broadcasting Corporation (IBC), 100% of total assets estimated at P450 million, consisting of 41,000 sq.mtrs. of land, more or less, located at Broadcast City Quezon City, other land and buildings in various Provinces, and operates the following TV stations:

a. TV 13 (Manila) b. DY/TV 13 (Cebu) c. DX/TV 13 (Davao) d. DYOB/TV 12 (Iloilo) e. DWLW/TV 13 (Laoag) as well as the following Radio Stations a. DZMZ-FM Manila b. DYBQ Iloilo c. DYOO Roxas d. DYRG Kalibo e. DWLW Laoag f. DWGW Legaspi g. DWDW Dagupan h. DWNW Naga i. DXWG Iligan . . . . . . . . . . P352,455,286.0057[23] (Emphasis supplied.)

Then Senator Teofisto T. Guingona, Jr. filed a Petition for Certiorari and Prohibition seeking to invalidate the Compromise Agreement, which was docketed as G.R. No. 96087. The Petition was consolidated with G.R. No. 87710.

On March 31, 1992, this Court, in Benedicto v. Board of Administrators of Television Stations RPN, BBC and IBC,58[24] promulgated its Decision on the consolidated petitions in G.R. No. 87710 and G.R. No. 96087. Holding that the authority of the BOA had become functus oficio, we granted the Petition in G.R. No. 87710, ordering the BOA to cease and desist from further exercising management, operation and control of Broadcast City and is hereby directed to surrender the management, operation and control of Broadcast City to the reorganized Board of Directors of each of the Broadcast City television stations.59[25] We denied the Petition in G.R. No. 96087 for being premature, since the

approval of the Compromise Agreement was still pending in the Sandiganbayan.60[26]

The Sandiganbayan subsequently approved the Compromise Agreement on October 31, 1992, and the approval was affirmed by this Court on September 10, 1993 in Republic v. Sandiganbayan.61[27] Thus, both BBC and IBC were government-owned and controlled during the time the DXWG personnel filed their original complaint on August 29, 1995.

In the present Petition, BBC reiterates its argument that since it is now wholly and solely owned by the government, the posting of the appeal bond was unnecessary on account of the fact that it is presumed that the government is always solvent.62[28] Citing the 1975 case of Republic (Bureau of Forestry) v. Court of Appeals,63[29] BBC adds before us that it is not even necessary for BBC to raise its exempt status as the NLRC should have taken cognizance of the same.64[30]

When the Court of Appeals affirmed the dismissal by the NLRC of BBCs appeal for failure of

the latter to post an appeal bond, it relied to the ruling of this Court in Republic v. Presiding Judge, Branch XV, Court of First Instance of Rizal.65[31] The appellate court, noting that BBCs primary purpose as stated in its Articles of Incorporation is to engage in commercial radio and television broadcasting, held that BBC did not meet the criteria enunciated in Republic v. Presiding Judge for exemption from the appeal bond.66[32]

We pertinently held in Republic v. Presiding Judge:

The sole issue implicit in this petition is whether or not the RCA is exempt from paying the legal fees and from posting an appeal bond. We find merit in the petition. To begin with, We have to determine whether the RCA is a governmental agency of the Republic of the Philippines without a separate, distinct and independent legal personality from the latter. We maintain the affirmative. The legal character of the RCA as a governmental agency had already been passed upon in the case of Ramos vs. Court of Industrial Relations wherein this Court held: Congress, by said Republic Act 3452 approved on June 14, 1962, created RCA, in pursuance of its declared policy, viz: SECTION 1. It is hereby declared to be the policy of the Government that in order to stabilize the price of palay, rice and corn, it shall engage in the 'purchase of these basic foods directly from those tenants, farmers, growers, producers and landowners in the Philippines who wish to dispose of their produce at a price that will afford them a fair and just return for their labor and capital investment and whenever circumstances brought about by any cause, natural or artificial, should so require, shall sell and dispose of these commodities to the consumers at areas of consumption at a price that is within their reach.

RCA is, therefore, a government machinery to carry out a declared government policy just noted, and not for profit. And more. By law, RCA depends for its continuous operation on appropriations yearly set aside by the General Appropriations Act. So says Section 14 of Republic Act 3452: SECTION 14. The sum of one hundred million pesos is hereby appropriated, out of any funds in the National Treasury not otherwise appropriated, for the capitalization of the Administration: Provided, That the annual operational expenses of the Administration shall not exceed three million pesos of the said amount: Provided further, That the budget of the Rice and Corn Administration for the fiscal year nineteen hundred and sixty-three to nineteen hundred and sixty-four and the years thereafter shall be included in the General appropriations submitted to Congress. RCA is not possessed of a separate and distinct corporate existence. On the contrary, by the law of its creation, it is an office directly under the Office of the President of the Philippines. Respondent, however, contends that the RCA has been created to succeed to the corporate assets, liabilities, functions and powers of the abolished National Rice & Corn Corporation which is a government-owned and controlled corporation separate and distinct from the Government of the Republic of the Philippines. He further contends that the RCA, being a duly capitalized entity doing mercantile activity engaged in the buying and selling of palay, rice, and corn cannot be the same as the Republic of the Philippines; rather, it is an entity separate and distinct from the Republic of the Philippines. These contentions are patently erroneous. xxxx The mercantile activity of RCA in the buying and selling of palay, rice, and corn is only incident to its primary governmental function which is to carry out its declared policy of subsidizing and stabilizing the price of palay, rice, and corn in order to make it well within the reach of average consumers, an object obviously identified with the primary function of government to serve the well-being of the people. As a governmental agency under the Office of the President the RCA is thus exempt from the payment of legal fees as well as the posting of an appeal bond. Under the decisional laws which form part of the legal system of the Philippines the Republic of the Philippines is exempt from the requirement of filing an appeal bond on taking an appeal from an adverse judgment, since there could be no doubt, as to the solvency of the Government. This well-settled doctrine of the Government's exemption from the requirement of posting an appeal bond was first enunciated as early as March 7, 1916 in Government of the Philippine Island vs. Judge of the Court of First Instance of Iloilo and has since been so consistently enforced that it has become practically a matter of public

knowledge and certainly a matter of judicial notice on the part of the courts of the land.67[33]

In the subsequent case of Badillo v. Tayag,68[34] we further discussed that:

Created by virtue of PD No. 757, the NHA is a government-owned and controlled corporation with an original charter. As a general rule, however, such corporations -- with or without independent charters -- are required to pay legal fees under Section 21 of Rule 141 of the 1997 Rules of Civil Procedure: SEC. 21. Government Exempt. - The Republic of the Philippines, its agencies and instrumentalities, are exempt from paying the legal fees provided in this rule. Local governments and governmentowned or controlled corporations with or without independent charters are not exempt from paying such fees. On the other hand, the NHA contends that it is exempt from paying all kinds of fees and charges, because it performs governmental functions. It cites Public Estates Authority v. Yujuico, which holds that the Public Estates Authority (PEA), a governmentowned and controlled corporation, is exempt from paying docket fees whenever it files a suit in relation to its governmental functions. We agree. x x x.69[35]

We can infer from the foregoing jurisprudential precedents that, as a general rule, the government and all the attached agencies with no legal personality distinct from the former are exempt from posting appeal bonds, whereas government-owned and controlled corporations (GOCCs) are not similarly exempted. This distinction is brought about by the very reason of the appeal bond itself: to protect the

presumptive judgment creditor against the insolvency of the presumptive judgment debtor. When the State litigates, it is not required to put up an appeal bond because it is presumed to be always solvent.70[36] This exemption, however, does not, as a general rule, apply to GOCCs for the reason that the latter has a personality distinct from its shareholders. Thus, while a GOCCs majority stockholder, the State, will always be presumed solvent, the presumption does not necessarily extend to the GOCC itself. However, when a GOCC becomes a government machinery to carry out a declared government policy,71[37] it becomes similarly situated as its majority stockholder as there is the assurance that the government will necessarily fund its primary functions. Thus, a GOCC that is sued in relation to its governmental functions may be, under appropriate circumstances, exempted from the payment of appeal fees.

In the case at bar, BBC was organized as a private corporation, sequestered in the 1980s and the ownership of which was subsequently transferred to the government in a compromise agreement. Further, it is stated in its Amended Articles of Incorporation that BBC has the following primary function:

To engage in commercial radio and television broadcasting, and for this purpose, to establish, operate and maintain such stations, both terrestrial and satellite or interplanetary, as may be necessary for broadcasting on a network wide or international basis.72[38]

It is therefore crystal clear that BBCs function is purely commercial or proprietary and not governmental. As such, BBC cannot be deemed entitled to an exemption from the posting of an appeal bond.

Consequently, the NLRC did not commit an error, and much less grave abuse of discretion, in dismissing the appeal of BBC on account of non-perfection of the same. In doing so, the NLRC was merely applying Article 223 of the Labor Code, which provides:

ART. 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; (b) If the decision, order or award was secured through fraud or coercion, including graft and corruption; (c) If made purely on questions of law; and (d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. 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. (Italization supplied.)

The posting of the appeal bond within the period provided by law is not merely mandatory but jurisdictional. The failure on the part of BBC to perfect the appeal thus had the effect of rendering the judgment final and executory.73[39]

Neither was there an interruption of the period to perfect the appeal when BBC filed (1) its

Motion for the Recomputation of the Monetary Award in order to reduce the appeal bond, and (2) its Motion for Reconsideration of the denial of the same. In Lamzon v. National Labor Relations Commission,74[40] where the petitioner argued that the NLRC gravely abused its discretion in dismissing her appeal on the ground of non-perfection despite the fact that she filed a Motion for Extension of Time to File an Appeal Bond, we held:

The pertinent provision of Rule VI, NLRC Rules of Procedure, as amended, provides as follows: xxxx Section 6. Bond. - In case the decision of a Labor Arbiter, POEA Administrator and Regional Director or his duly authorized hearing officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of moral and exemplary damages and attorney's fees. The employer as well as counsel shall submit a joint declaration under oath attesting that the surety bond posted is genuine and that it shall be in effect until final disposition of the case. The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the bond. The filing, however, of the motion to reduce bond shall not stop the running of the period to perfect appeal. Section 7. No Extension of Period. - No motion or request for extension of the period within which to perfect an appeal shall be allowed." As correctly observed by the NLRC, petitioner is presumptuous in assuming that the 10-day period for perfecting an appeal, during which she was to post her appeal bond, could be easily extended by the mere filing of an appropriate motion for extension to file the bond and even without the said motion being granted. It bears emphasizing that an appeal is only a statutory privilege and it may only be exercised in the manner provided by law. Nevertheless, in certain cases, we had occasion to declare that while the rule treats the filing of a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from, as a jurisdictional requirement to perfect an

appeal, the bond requirement on appeals involving monetary awards is sometimes given a liberal interpretation in line with the desired objective of resolving controversies on the merits. However, we find no cogent reason to apply this same liberal interpretation in this case. Considering that the motion for extension to file appeal bond remained unacted upon, petitioner, pursuant to the NLRC rules, should have seasonably filed the appeal bond within the ten (10) day reglementary period following receipt of the order, resolution or decision of the NLRC to forestall the finality of such order, resolution or decision. Besides, the rule mandates that no motion or request for extension of the period within which to perfect an appeal shall be allowed. The motion filed by petitioner in this case is tantamount to an extension of the period for perfecting an appeal. As payment of the appeal bond is an indispensable and jurisdictional requisite and not a mere technicality of law or procedure, we find the challenged NLRC Resolution of October 26, 1993 and Order dated January 11, 1994 in accordance with law. The appeal filed by petitioner was not perfected within the reglementary period because the appeal bond was filed out of time. Consequently, the decision sought to be reconsidered became final and executory. Unless there is a clear and patent grave abuse of discretion amounting to lack or excess of jurisdiction, the NLRC's denial of the appeal and the motion for reconsideration may not be disturbed.75[41] (Underscoring supplied.)

In the case at bar, BBC already took a risk when it filed its Motion for the Recomputation of the Monetary Award without posting the bond itself. The Motion for the Recomputation of the Monetary Award filed by BBC, like the Motion for Extension to File the Appeal Bond in Lamzon, was itself tantamount to a motion for extension to perfect the appeal, which is prohibited by the rules. The NLRC already exhibited leniency when, instead of dismissing the appeal outright, it merely ordered BBC to post the required bond within 10 days from receipt of said Order, with a warning that noncompliance will cause the dismissal of the appeal for non-perfection. When BBC further demonstrated its unwillingness by completely ignoring this warning and by filing a Motion for Reconsideration on an entirely new ground, the NLRC cannot be said to have committed grave abuse of discretion by making good its warning to dismiss the appeal. Therefore, the Court of Appeals committed no error when it upheld the NLRCs dismissal of petitioners appeal.

WHEREFORE, the instant Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals dated April 15, 2005 in CA-G.R. SP No. 57847, and its Resolution dated January 27,

2006 are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

3. Rodolfo Luna vs. Allado Construction Company, Inc. and/or Ramon Allado, G.R. No. 175251, May 30, 2011.

RODOLFO LUNA, Petitioner, G.R. No. 175251

Present:

- versus -

CORONA, C.J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, PERALTA,* and

ALLADO CONSTRUCTION CO., INC., and/or RAMON ALLADO, Respondents.

PEREZ, JJ.

Promulgated:

May 30, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking to reverse and set aside the Decision76[1] dated July 28, 2006 of the Court of Appeals as well as its Resolution77[2] dated September 28, 2006 denying the motion for reconsideration filed by petitioner.

As narrated in the Court of Appeals July 28, 2006 Decision, the facts of this case are as follows:

[Respondent] Allado Construction Co., Inc. is a juridical entity engaged in the construction business; [respondent] Ramon Allado is the President of the said corporation.

[Petitioner] filed a complaint before the Executive Labor Arbiter Arturo Gamolo, RAB Branch XI, Davao City, alleging that he was an employee of herein [respondents], having been a part of *respondents+ construction pool of personnel. He had continuously rendered services as a warehouseman and a timekeeper in every construction project undertaken by [respondents]. Sometime in the afternoon of November 24, 2001, while at *respondents+ construction site in Maasim, Sarangani Province, he was given a travel order dated November 24, 2001 to proceed to *respondents+ main office in Davao City for reassignment. Upon arrival at the office of [respondents] on November 26, 2001, he was told by one Marilou Matilano, personnel manager of [respondents], to sign several sets of Contract of Project Employment. He refused to sign the said contracts. Because of his refusal, he was not given a reassignment or any other work. These incidents prompted him to file the complaint.

[Respondents], on the other hand, alleged that on November 29, 2001, [petitioner] applied for a leave of absence until December 6, 2001, which was granted. Upon expiration of his leave, *petitioner+ was advised to report to the companys project in Kablacan, Sarangani Province. However, he refused to report to his new assignment and claimed instead that he had been dismissed illegally.78[3]

Finding that petitioner should be deemed to have resigned,79[4] the Labor Arbiter dismissed petitioners complaint for illegal dismissal against respondents, but ordered the latter to pay the former

the amount of P18,000.00 by way of financial assistance. The dispositive portion of the Decision80[5] dated June 26, 2002 of the Labor Arbiter is as follows:

WHEREFORE, foregoing considered, judgment is hereby rendered dismissing the action for illegal dismissal but ordering respondent ALLADO CONSTRUCTION CO., INC. to extend complainant RODOLFO LUNA the amount of PESOS: EIGHTEEN THOUSAND PESOS (P18,000.00) by way of financial assistance to tide him over during his postemployment with the former.81[6]

Only respondents interposed an appeal with the National Labor Relations Commission (NLRC), purely for the purpose of questioning the validity of the grant of financial assistance made by the Labor Arbiter.

In its Resolution82[7] dated May 9, 2003, the NLRC reversed the June 26, 2002 Decision of the Labor Arbiter and declared respondents guilty of illegal dismissal and ordered them to pay petitioner one-month salary for every year of service as separation pay, computed at P170.00 per day and full backwages from November 21, 2001 up to the finality of the decision. The dispositive portion of the May 9, 2003 NLRC Resolution reads:

WHEREFORE, the appeal is Granted and the assailed Decision is reversed and vacated; A new judgment is rendered declaring respondents-appellant guilty of illegal dismissal and to pay complainant-appellant one (1) month salary for every year of service as separation pay, computed at P170.00 per day and full backwages from November 21, 2001 up to the finality of the decision.83[8]

Respondents moved for reconsideration but their motion was denied in the NLRC Resolution84[9] dated September 30, 2003 due to lack of merit.

Unperturbed, respondents elevated their cause to the Court of Appeals via a petition for certiorari under Rule 65 of the Rules of Court to set aside the aforementioned NLRC issuances and to reinstate the Labor Arbiters decision with the modification that the award of financial assistance be deleted. In its Decision dated July 28, 2006, the Court of Appeals granted respondents petition for certiorari and disposed of the case in this wise:

ACCORDINGLY, the assailed Orders of respondent Commission are hereby SET ASIDE. The Decision of the Labor Arbiter in NLRC Case No. RAB XI-12-01312-01 is hereby REINSTATED with the MODIFICATION that the award of financial assistance is deleted.85[10]

Relying on jurisprudence, the Court of Appeals held that it was grave abuse of discretion for the NLRC to rule on the issue of illegal dismissal when the only issue raised to it on appeal was the propriety of the award of financial assistance. The Court of Appeals further ruled that financial assistance may not be awarded in cases of voluntary resignation.

Expectedly, petitioner filed a motion for reconsideration but this was denied by the Court of Appeals in its Resolution dated September 28, 2006.

Hence, this petition for review wherein the petitioner puts forward for resolution the following issues:

(A) WHETHER OR NOT THE NLRC, IN THE EXERCISE OF ITS INHERENT POWERS, COULD STILL REVIEW ISSUES NOT BROUGHT DURING THE APPEAL;

(B) WHETHER OR NOT RESPONDENT COURT OF APPEALS EXERCISED GRAVE ABUSE OF DISCRETION IN DISREGARDING (1) THE FINDINGS OF FACT OF THE NLRC; (2) THE PRINCIPLE OF SOCIAL JUSTICE; AND (3) EXISTING JURISPRUDENCE WITH RESPECT TO AWARD OF FINANCIAL ASSISTANCE; and

(C) WHETHER OR NOT RESPONDENT COURT OF APPEALS EXHIBITED BIAS AND PARTIALITY WHEN IT RENDERED THE SUBJECT DECISION AND RESOLUTION CONSIDERING THE HASTY AND IMPROVIDENT ISSUANCE OF A WRIT OF PRELIMINARY INJUNCTION TO FRUSTRATE PETITIONER IN IMPLEMENTING THE FINAL AND EXECUTORY JUDGMENT OF THE NLRC RENDERED IN FAVOR OF PETITIONER.86[11]

Anent the first issue, petitioner argues that the NLRC has the authority to review issues not brought before it for appeal. Petitioner bases this argument on Article 218(c) of the Labor Code, which provides:

ART. 218. Powers of the Commission. The Commission shall have the power and authority:

xxxx

(c) To conduct investigation for the determination of a question, matter or controversy within its jurisdiction, proceed to hear and determine the disputes in the absence of any party thereto who has been summoned or served with notice to appear, conduct its proceedings or any part thereof in public or in private, adjourn its hearings to any time and place, refer technical matters or accounts to an expert and to accept his report as evidence after hearing of the parties upon due notice, direct parties to be joined in or excluded from the proceedings, correct, amend, or waive any error, defect or irregularity whether in substance or in form, give all such directions as it may deem necessary or expedient in the determination of the dispute before it, and dismiss any matter or refrain from further hearing or from determining the dispute or part thereof, where it is trivial or where further proceedings by the Commission are not necessary or desirable. (Emphasis supplied.)

Furthermore, petitioner attempts to reinforce his position by citing New Pacific Timber & Supply Company, Inc. v. National Labor Relations Commission,87[12] where the Court expounded on the powers of the NLRC as provided for by Article 218(c) of the Labor Code, to wit:

Moreover, under Article 218(c) of the Labor Code, the NLRC may, in the exercise of its appellate powers, correct, amend or waive any error, defect or irregularity whether in substance or in form. Further, Article 221 of the same provides that: In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. x x x.88[13] (Emphasis supplied.)

We find petitioners argument to be untenable.

Section 4(c), Rule VI of the 2002 Rules of Procedure of the NLRC, which was in effect at the time respondents appealed the Labor Arbiters decision, expressly provided that, on appeal, the NLRC shall limit itself only to the specific issues that were elevated for review, to wit:

RULE VI

Appeals

Section 4. Requisites for Perfection of Appeal. x x x.

xxxx

(c) Subject to the provisions of Article 218, once the appeal is perfected in accordance with these Rules, the Commission shall limit itself to reviewing and deciding specific issues that were elevated on appeal. (Emphasis supplied.)

As a testament to its effectivity and the NLRCs continued implementation of this procedural policy, the same provision was retained as Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC.

In the case at bar, the NLRC evidently went against its own rules of procedure when it passed upon the issue of illegal dismissal although the question raised by respondents in their appeal was concerned solely with the legality of the labor arbiters award of financial assistance despite the finding that petitioner was lawfully terminated.

To reiterate, the clear import of the aforementioned procedural rule is that the NLRC shall, in cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. As a consequence thereof, any other issues which were not included in the appeal shall become final and executory.

We are cognizant of the fact that Article 218(c) of the Labor Code grants the NLRC the authority to correct, amend or waive any error, defect or irregularity whether in substance or in form in the exercise of its appellate jurisdiction. However, a careful perusal of the body of jurisprudence wherein we upheld the validity of the NLRCs invocation of that prerogative would reveal that the said cases involved factual issues and circumstances materially dissimilar to the case at bar.

In New Pacific Timber,89[14] which petitioner cited, we ruled that there was no grave abuse of discretion on the part of the NLRC, using Article 218(c) as part basis, when it entertained the petition for relief filed by a party and treated it as an appeal, even if it was filed beyond the reglementary period for filing an appeal. Before that case, we invoked the same Labor Code provision in City Fair Corporation v. National Labor Relations Commission90[15] and Judy Philippines, Inc. v. National Labor Relations Commission91[16] to justify our ruling that the NLRC did not abuse its discretion when it allowed in both cases the appeal of a party even if it was filed a day, or even a few days, late. Similarly, we held in Industrial Timber Corporation v. Ababon,92[17] that substantial justice is best served by permitting the NLRC to allow a petition for relief filed by a party despite the earlier commission of a procedural defect of filing the motion for reconsideration three days late on the strength of Article 218(c) and other pertinent labor law provisions. In Pison-Arceo Agricultural and Development Corporation v. National

Labor Relations Commission,93[18] we held that procedural rules governing service of summons are not strictly construed in NLRC proceedings owing to the relaxation of technical rules of procedure in labor cases as well as to Article 218(c). We likewise held in Aguanza v. Asian Terminal, Inc.,94[19] that the insufficiency of a supersedeas bond is a defect in form which the NLRC may waive. Furthermore, in Independent Sagay-Escalante Planters, Inc. v. National Labor Relations Commission,95[20] we ruled that the NLRC had ample authority, under Article 218(c), to disregard the circumstance that the appeal fee had been tardily paid by one party and to order both parties to present evidence before the Labor Arbiter in support of their claims. Lastly, in Faeldonia v. Tong Yak Groceries96[21] and Mt. Carmel College v. Resuena,97[22] we used Article 218(c) to justify the NLRCs reversal of the Labor Arbiters factual conclusions. However, in both cases, there was no objection that the NLRC passed upon issues that were not raised on appeal.

On the other hand, it is already settled in jurisprudence that the NLRC may not rely on Article 218(c) of the Labor Code as basis for its act of reviewing an entire case above and beyond the sole legal question raised. In Del Monte Philippines, Inc. v. National Labor Relations Commission,98[23]

which was correctly pointed out by the Court of Appeals as a case that is on all fours with the case at bar, we held that the NLRC cannot, under the pretext of correcting serious errors of the Labor Arbiter in the interest of justice, expand its power of review beyond the issues elevated by an appellant, to wit:

The issue presented for adjudication in this petition is whether or not there was grave abuse of discretion on the part of the NLRC in reversing the labor arbiters decision.

We rule in the affirmative.

An appeal from a decision, award or order of the labor arbiter must be brought to the NLRC within ten (10) calendar days from receipt of such decision, award or order, otherwise, the same becomes final and executory [Art. 223, Labor Code; Rule VIII, Sec. 1(a), Revised Rules of the NLRC]. Moreover, the rules of the NLRC expressly provide that on appeal, the Commission shall limit itself only to the specific issues that were elevated for review, all other matters being final and executory [Rule VIII, Sec. 5(c), Revised Rules of the NLRC, italics supplied].

In the present case, petitioner, aggrieved by the labor arbiters decision ordering the extension of financial assistance to Galagar despite the finding that his termination was for just cause, specifically limited his appeal to a single legal question, i.e., the validity of the award of financial assistance to an employee dismissed for pilfering company property. On the other hand, private respondent did not appeal.

When petitioner limited the issue on appeal, necessarily the NLRC may review only that issue raised. All other matters, including the issue of the validity of private respondents dismissal, are final. If private respondent wanted to challenge the finding of a valid dismissal, he should have appealed his case seasonably to the NLRC. By raising new issues in the reply to appeal, private respondent is in effect appealing his case although he has, in fact, allowed his case to become final by not appealing within the reglementary period. A reply/opposition to appeal cannot take the place of an appeal.

Therefore, in this case, the dismissal of the complaint for illegal dismissal and the denial of the prayer for reinstatement, having become final, can no longer be reviewed.

Justifying its right to review the entire case and not just the sole legal question raised, public respondent relied on Article 218 (c) of the Labor Code. In the resolution denying the motion for reconsideration, public respondent quoted that portion which provides that the NLRC may in the exercise of its appellate power correct, amend or waive any error, defect or irregularity whether in substance or in form.

Such reliance is misplaced.

The Labor Code provision, read in its entirety, states that the NLRCs power to correct errors, whether substantial or formal, may be exercised only in the determination of a question, matter or controversy within its jurisdiction [Art. 218, Labor Code]. Therefore, by considering the arguments and issues in the reply/opposition to appeal which were not properly raised by timely appeal nor comprehended within the scope of the issue raised in petitioners appeal, public respondent committed grave abuse of discretion amounting to excess of jurisdiction.

The contention that the NLRC may nevertheless look into other issues although not raised on appeal since it is not bound by technical rules of procedure, is likewise devoid of merit.

The law does not provide that the NLRC is totally free from technical rules of procedure, but only that the rules of evidence prevailing in courts of law or equity shall not be controlling in proceedings before the NLRC [Art. 221, Labor Code]. This is hardly license for the NLRC to disregard and violate the implementing rules it has itself promulgated. Having done so, the NLRC committed grave abuse of discretion.99[24] (Emphases supplied.)

The Court reiterated the foregoing ruling in Torres v. National Labor Relations Commission100[25] and United Placement International v. National Labor Relations Commission.101[26]

With regard to the second assignment of error which essentially involves the determination of factual issues, we are reminded that, in a petition under Rule 45 of the Rules of Court, only questions of law, not of fact, may be raised before the Court.102[27] However, where the findings of the NLRC contradict those of the Labor Arbiter, the Court, in the exercise of equity jurisdiction, may look into the records of the case and reexamine the questioned findings.103[28]

In the case at bar, we are constrained to reexamine the factual findings of the Labor Arbiter and the Court of Appeals, on one side, and of the NLRC, on the other, since they have divergent appreciations of the facts of this case.

Petitioner argues that the NLRC had established that there existed serious doubt between the evidence presented by the parties and, thus, the NLRC was correct in resolving the doubt in petitioners

favor following jurisprudence which states that if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.104[29]

The argument is unmeritorious.

This is not a case where there is mere doubt between the evidence of the parties; but the question here is, whether in the first place, there was substantial evidence for petitioners claim in his complaint that he was actually dismissed from the service of respondents on November 26, 2001 (as alleged in his Complaint) or November 27, 2001 (as alleged in his Position Paper) when he purportedly refused to sign on November 26, 2001 blank project employment contracts.

It was incorrect for the NLRC to conclude that doubt exists between the evidence of both parties, thus, necessitating a ruling in favor of petitioner, because a careful examination of the records of this case would reveal that there was no adequate evidentiary support for petitioner's purported cause of action -- actual illegal dismissal.

As shown by the records, inconsistent with his claim that he was actually dismissed on November 26 or 27, 2001, petitioner applied for and was granted a week long leave from November 29 to December 6, 2001. Petitioner did not deny that he indeed filed and signed the leave application form submitted by respondents as an attachment to their position paper. He merely claimed that he went on leave since he was not given any work assignment by the Company. However, the leave application

form which bore his signature clearly stated that his reason for going on leave was to settle *his+ personal problem.105[30]

Indeed, the NLRC gravely abused its discretion in reversing the Labor Arbiters decision on mere conjectures and insubstantial grounds. In its Resolution dated May 9, 2003, the NLRC concluded that petitioner was not allowed to work in his former position because he was already replaced106[31] merely on the basis of the handwritten notation that stated Who will replace him?107[32] found on the Leave Application Form which petitioner himself filled-up and signed. The same notation could reasonably be interpreted as asking who will be substituting petitioner for the duration of his leave. It was speculative at best for the NLRC, in resolving respondents motion for reconsideration, to rule that the notation meant permanent replacement simply because the words in the meantime were lacking.108[33] Contrary to the NLRCs interpretation of this notation, it, in fact, belied petitioners contention that he was already dismissed or had no existing work assignment for, if so, there would be no need for him to file a leave application and for the employer to find someone to replace him. In any event, such notation cannot be credibly construed as substantial proof of petitioner's alleged illegal dismissal.

The NLRC further erroneously concluded that petitioner was illegally dismissed since during the several mandatory conferences between the parties, respondents purportedly never asked petitioner to go back to work without signing the alleged blank project employment contracts. From that

circumstance, the NLRC inferred that respondents were no longer in need of petitioner's services. This rationalization is difficult to accept because it goes against the pronouncement of the Labor Arbiter in his Decision dated June 26, 2002. The Labor Arbiter who presided during the mandatory preliminary conferences plainly stated in his Decision that respondent corporation, through its representative during preliminary conference, denied the contract of project employment and confirmed the availability of the same employment to petitioner without any demotion in rank or diminution of benefits.109[34] Thus, the Labor Arbiter concluded that complainants refusal to resume employment without valid cause and instead demanded separation pay and backwages is tantamount to resignation.110[35]

To reiterate, petitioner did not appeal from the foregoing findings of the Labor Arbiter and he should be deemed to have accepted those factual findings. If he had truly felt aggrieved, petitioner himself would have questioned the Labor Arbiters findings with the NLRC. Instead of pursuing all legal remedies to protect his rights, petitioner did not even file any opposition or comment to respondents Appeal Memorandum with the NLRC. He only participated in the proceedings again when the NLRC had already rendered a decision in his favor and he opposed respondents motion for reconsideration of the NLRC decision.

In petitioners Reply and Memorandum filed with this Court, petitioners counsel belatedly offered the explanation that the appeal of the Labor Arbiters decision was not filed for he failed to

contact his client in time.111[36] We find that we cannot give credence to this excuse. On record is a registry return card that showed that petitioner received his copy of the Labor Arbiters decision by mail on July 19, 2002 even before his counsel did on August 1, 2002. It is difficult to believe that petitioner, after receiving the Labor Arbiters decision, would not himself contact his lawyer regarding the same. Verily, it is settled in jurisprudence that a party that did not appeal a judgment is bound by the same and he cannot obtain from the appellate court any affirmative relief other than those granted, if any, in the decision of the lower court or administrative body.112[37]

Also in connection with the second issue, petitioner argued in his Memorandum that, assuming without admitting that there was no illegal dismissal, the award of financial assistance was in accordance with existing jurisprudence pursuant to the principle of social justice. On this point, we agree with petitioner. Eastern Shipping Lines, Inc v. Sedan113[38] bears certain parallelisms with the present controversy. In Eastern, the employer likewise questioned the grant of financial assistance on the ground that the employees refusal to report back to work, despite being duly notified of the need for his service, is tantamount to voluntary resignation. In that case, however, we ruled:

We are not unmindful of the rule that financial assistance is allowed only in instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Neither are we unmindful of this Court's pronouncements in Arc-Men Food Industries Corporation v. NLRC, and Lemery Savings and Loan Bank v. NLRC, where the Court ruled that when there is no dismissal to speak of, an award of financial assistance is not in order.

But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure of social justice and exceptional circumstances, and as an equitable concession. The instant case equally calls for balancing the interests of the employer with those of the worker, if only to approximate what Justice Laurel calls justice in its secular sense. 114[39] (Emphases supplied.)

There appears to be no reason why petitioner, who has served respondent corporation for more than eight years without committing any infraction, cannot be extended the reasonable financial assistance of P18,000.00 as awarded by the Labor Arbiter on equity considerations.

We see no merit in respondents contention that petitioner was guilty of insubordination or abandonment. Significantly, the Labor Arbiter made no finding that petitioner was guilty of

insubordination or abandonment. It would appear that a few days after the expiration of his applied for leave, petitioner filed his complaint for illegal actual dismissal. Other than their self-serving allegations, respondents offered no proof that upon the expiration of petitioners leave they directed petitioner to report to work but petitioner willfully failed to comply with said directive. On the contrary, in their own position paper, respondents prayed, aside from the dismissal of the complaint, that petitioner be directed by the Labor Arbiter to return to work and only when petitioner fails to comply with such order

did they pray that petitioner be considered to have abandoned his work.115[40] The Labor Arbiter did not grant this particular relief prayed for by respondents but instead awarded financial assistance to petitioner.

In some cases where there is neither a dismissal nor abandonment, we have previously held that separation pay may be awarded under appropriate circumstances. Thus, in Indophil Acrylic Mfg. Corp. v. National Labor Relations Commission,116[41] wherein the employer claimed that the employee had resigned/abandoned his work while the employee believed that he had been terminated, the Court held:

We have turned a heedful eye on all the pleadings and evidence submitted by the parties and have concluded that there was NO DISMISSAL. Setting aside the other arguments of the parties which we find irrelevant, attention is called to the letter dated October 2, 1989 of petitioner's Personnel Manager, Mr. Nicasio B. Gaviola, to private respondent which the latter does not dispute, the full text of which reads:

"Records show that you have not been reporting to (sic) work since September 16, 1989 up to this writing. For what reason, we are not aware. With this letter, you are required to report to this office and explain your unauthorized absences within three (3) days upon receipt hereof. Failure to report as required shall mean that we will consider you having resigned for abandonment of job." (sic)

Clearly, therefore, petitioner had disregarded private respondent's previous resignation and still considers him its employee. It follows, that at the time private respondent filed his complaint for illegal dismissal before the Labor Arbiter, on October 4, 1989, petitioner has not dismissed him.

xxxx

There being no dismissal of private respondent by petitioner to speak of, the status quo between them should be maintained as a matter of course. But there is no denying that their relationship must have been ruptured. Taking into account the misconception of private respondent that he was dismissed and the October 2, 1989 letter of petitioner, the parties could have easily settled their controversy at the inception of the proceedings before the Labor Arbiter. This they failed to do. Thus, in lieu of reinstatement, petitioner is ordered to grant separation pay to private respondent. x x x.117[42] (Emphases supplied.)

Applying the above ratiocination by analogy and in accordance with equity, we uphold the Labor Arbiters award of financial assistance as proper in this case.

Lastly, with regard to the third issue, petitioner argues that the former Special Twenty-Second Division of the Court of Appeals exhibited its bias and partiality when it issued a temporary restraining order (TRO) to stop and frustrate the enforcement of the decision rendered by the NLRC despite the fact that only one of its member associate justices granted the same without the concurrence of the two other member associate justices who merely concurred subsequently.

The argument is without merit.

In fact, the issue is hardly contentious. The granting of a TRO by a justice of the Court of Appeals who is the ponente of the case, even without the concurrence of the other associate justices assigned in the division, is allowed under Section 5, Rule VI of the 2002 Internal Rules of the Court of Appeals, to wit:

Section 5. Action by a Justice. - All members of the Division shall act upon an application for a temporary restraining order and writ of preliminary injunction. However, if the matter is of extreme urgency, and a Justice is absent, the two other justices shall act upon the application. If only the ponente is present, then he shall act alone upon the application. The action of the two Justices or of the ponente shall however be submitted on the next working day to the absent member or members of the Division for ratification, modification or recall. (Emphases supplied.)

The records of this case would attest to the urgency of the situation which necessitated the exceptionally prompt issuance of the TRO at issue. When the TRO was issued, the NLRC Regional Arbitration Branch No. XI was already in the process of enforcing the assailed Resolution of the NLRC dated May 9, 2003 as evidenced by its issuance of a Notice of Hearing118[43] for a pre-execution conference which was impelled by a motion made by petitioner.119[44] The pre-execution conference was conducted as scheduled, thus, respondents filed with the Court of Appeals an Urgent Motion for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction.120[45]

In view of the urgency of the situation and in order to prevent the petition of respondents from becoming moot and academic, Court of Appeals Associate Justice Romulo V. Borja, the Chairman of the Twenty-Second Division, issued a Resolution dated June 14, 2006, granting the TRO prayed for by respondents.121[46] Nonetheless, the grant of said TRO was subsequently concurred in by the rest of the members of the Division, namely Associate Justices Antonio L. Villamor and Ramon R. Garcia, in their separate Resolutions both dated June 19, 2006.122[47] Clearly, the issuance of the TRO at issue was in accordance with the 2002 Internal Rules of the Court of Appeals.

WHEREFORE, the petition is PARTLY GRANTED. The assailed Decision dated July 28, 2006 as well as the Resolution dated September 28, 2006 of the Court of Appeals in CA-G.R. SP No. 81703 are AFFIRMED WITH THE MODIFICATION that the award of financial assistance is REINSTATED. The Labor Arbiters Decision dated June 26, 2002 is AFFIRMED in toto.

SO ORDERED.

4. Paquito V. Ando v. Andresito Y. Campo, et al., G.R. No. 184007, February 16, 2011. PAQUITO V. ANDO, Petitioner, G.R. No. 184007

Present:

CARPIO, J., Chairperson, - versus NACHURA,

PERALTA, ABAD, and MENDOZA, JJ.

ANDRESITO Y. CAMPO, ET AL., Respondents.

Promulgated:

February 16, 2011

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DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari123[1] under Rule 45 of the Rules of Court. Petitioner Paquito V. Ando (petitioner) is assailing the Decision124[2] dated February 21, 2008 and the Resolution125[3] dated July 25, 2008 of the Court of Appeals (CA) in CA-G.R. CEB-SP. No. 02370.

Petitioner was the president of Premier Allied and Contracting Services, Inc. (PACSI), an independent labor contractor. Respondents were hired by PACSI as pilers or haulers tasked to manually carry bags of sugar from the warehouse of Victorias Milling Company and load them on trucks.126[4] In June 1998, respondents were dismissed from employment. They filed a case for illegal dismissal and some money claims with the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. VI, Bacolod City.127[5]

On June 14, 2001, Labor Arbiter Phibun D. Pura (Labor Arbiter) promulgated a decision, ruling in respondents favor.128[6] PACSI and petitioner were directed to pay a total of P422,702.28,

representing respondents separation pay and the award of attorneys fees.129[7]

Petitioner and PACSI appealed to the NLRC. In a decision130[8] dated October 20, 2004, the NLRC ruled that petitioner failed to perfect his appeal because he did not pay the supersedeas bond. It

also affirmed the Labor Arbiters decision with modification of the award for separation pay to four other employees who were similarly situated. Upon finality of the decision, respondents moved for its execution.131[9]

To answer for the monetary award, NLRC Acting Sheriff Romeo Pasustento issued a Notice of Sale on Execution of Personal Property132[10] over the property covered by Transfer Certificate of Title (TCT) No. T-140167 in the name of Paquito V. Ando x x x married to Erlinda S. Ando.

This prompted petitioner to file an action for prohibition and damages with prayer for the issuance of a temporary restraining order (TRO) before the Regional Trial Court (RTC), Branch 50, Bacolod City. Petitioner claimed that the property belonged to him and his wife, not to the corporation, and, hence, could not be subject of the execution sale. Since it is the corporation that was the judgment debtor, execution should be made on the latters properties.133[11]

On December 27, 2006, the RTC issued an Order134[12] denying the prayer for a TRO, holding that the trial court had no jurisdiction to try and decide the case. The RTC ruled that, pursuant to the

NLRC Manual on the Execution of Judgment, petitioners remedy was to file a third-party claim with the NLRC Sheriff. Despite lack of jurisdiction, however, the RTC went on to decide the merits of the case.

Petitioner did not file a motion for reconsideration of the RTC Order. Instead, he filed a petition for certiorari under Rule 65135[13] before the CA. He contended that the RTC acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the Order. Petitioner argued that the writ of execution was issued improvidently or without authority since the property to be levied belonged to him in his personal capacity and his wife. The RTC, respondent contended, could stay the execution of a judgment if the same was unjust.136[14] He also contended that, pursuant to a ruling of this Court, a third party who is not a judgment creditor may choose between filing a third-party claim with the NLRC sheriff or filing a separate action with the courts.137[15]

In the Decision now assailed before this Court, the CA affirmed the RTC Order in so far as it dismissed the complaint on the ground that it had no jurisdiction over the case, and nullified all other pronouncements in the same Order. Petitioner moved for reconsideration, but the motion was denied.

Petitioner then filed the present petition seeking the nullification of the CA Decision. He argues that he was never sued in his personal capacity, but in his representative capacity as president of PACSI. Neither was there any indication in the body of the Decision that he was solidarily liable with the corporation.138[16] He also concedes that the Labor Arbiters decision has become final. Hence, he is not seeking to stop the execution of the judgment against the properties of PACSI. He also avers, however, that there is no evidence that the sheriff ever implemented the writ of execution against the properties of PACSI.139[17]

Petitioner also raises anew his argument that he can choose between filing a third-party claim with the sheriff of the NLRC or filing a separate action.140[18] He maintains that this special civil action is purely civil in nature since it involves the manner in which the writ of execution in a labor case will be implemented against the property of petitioner which is not a corporate property of PACSI.141[19] What he is seeking to be restrained, petitioner maintains, is not the Decision itself but the manner of its execution.142[20] Further, he claims that the property levied has been constituted as a family home within the contemplation of the Family Code.143[21]

The petition is meritorious.

Initially, we must state that the CA did not, in fact, err in upholding the RTCs lack of jurisdiction to restrain the implementation of the writ of execution issued by the Labor Arbiter.

The Court has long recognized that regular courts have no jurisdiction to hear and decide questions which arise from and are incidental to the enforcement of decisions, orders, or awards rendered in labor cases by appropriate officers and tribunals of the Department of Labor and Employment. To hold otherwise is to sanction splitting of jurisdiction which is obnoxious to the orderly administration of justice.144[22]

Thus, it is, first and foremost, the NLRC Manual on the Execution of Judgment that governs any question on the execution of a judgment of that body. Petitioner need not look further than that. The Rules of Court apply only by analogy or in a suppletory character.145[23]

Consider the provision in Section 16, Rule 39 of the Rules of Court on third-party claims:

SEC. 16. Proceedings where property claimed by third person.If the property levied on is claimed by any person other than the judgment obligor or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serves the same upon the officer making the levy and a copy thereof upon the judgment obligee, the officer shall not be bound to keep the property, unless such judgment obligee, on demand of the officer, files a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of execution. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond. The officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if such bond is filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property in a separate action, or prevent the judgment obligee from claiming damages in the same or a separate action against a third-party claimant who filed a frivolous or plainly spurious claim. When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for damages as a result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for the purpose.

On the other hand, the NLRC Manual on the Execution of Judgment deals specifically with thirdparty claims in cases brought before that body. It defines a third-party claim as one where a person, not a party to the case, asserts title to or right to the possession of the property levied upon.146[24] It also sets out the procedure for the filing of a third-party claim, to wit:

SECTION 2. Proceedings. If property levied upon be claimed by any person other than the losing party or his agent, such person shall make an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title and shall file the same with the sheriff and copies thereof served upon the Labor Arbiter or proper officer issuing the writ and upon the prevailing party. Upon receipt of the third party claim, all proceedings with respect to the execution of the property subject of the third party claim shall automatically be suspended and the Labor Arbiter or proper officer issuing the writ shall conduct a hearing with due notice to all parties concerned and resolve the validity of the claim within ten (10) working days from receipt thereof and his decision is appealable to the Commission within ten (10) working days from notice, and the Commission shall resolve the appeal within same period.

There is no doubt in our mind that petitioners complaint is a third- party claim within the cognizance of the NLRC. Petitioner may indeed be considered a third party in relation to the property subject of the execution vis--vis the Labor Arbiters decision. There is no question that the property belongs to petitioner and his wife, and not to the corporation. It can be said that the property belongs to the conjugal partnership, not to petitioner alone. Thus, the property belongs to a third party, i.e., the conjugal partnership. At the very least, the Court can consider that petitioners wife is a third party within contemplation of the law.

The Courts pronouncements in Deltaventures Resources, Inc. v. Hon. Cabato147[25] are instructive:

Ostensibly the complaint before the trial court was for the recovery of possession and injunction, but in essence it was an action challenging the legality or propriety of the levy vis-a-vis the alias writ of execution, including the acts performed by the Labor Arbiter and the Deputy Sheriff implementing the writ. The complaint was in effect a motion to quash the writ of execution of a decision rendered on a case

properly within the jurisdiction of the Labor Arbiter, to wit: Illegal Dismissal and Unfair Labor Practice. Considering the factual setting, it is then logical to conclude that the subject matter of the third party claim is but an incident of the labor case, a matter beyond the jurisdiction of regional trial courts.

xxxx

x x x. Whatever irregularities attended the issuance an execution of the alias writ of execution should be referred to the same administrative tribunal which rendered the decision. This is because any court which issued a writ of execution has the inherent power, for the advancement of justice, to correct errors of its ministerial officers and to control its own processes.

The broad powers granted to the Labor Arbiter and to the National Labor Relations Commission by Articles 217, 218 and 224 of the Labor Code can only be interpreted as vesting in them jurisdiction over incidents arising from, in connection with or relating to labor disputes, as the controversy under consideration, to the exclusion of the regular courts.148[26]

There is no denying that the present controversy arose from the complaint for illegal dismissal. The subject matter of petitioners complaint is the execution of the NLRC decision. Execution is an essential part of the proceedings before the NLRC. Jurisdiction, once acquired, continues until the case is

finally terminated,149[27] and there can be no end to the controversy without the full and proper implementation of the commissions directives.

Further underscoring the RTCs lack of jurisdiction over petitioners complaint is Article 254 of the Labor Code, to wit:

ART. 254. INJUNCTION PROHIBITED. No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Articles 218 and 264 of this Code.

That said, however, we resolve to put an end to the controversy right now, considering the length of time that has passed since the levy on the property was made.

Petitioner claims that the property sought to be levied does not belong to PACSI, the judgment debtor, but to him and his wife. Since he was sued in a representative capacity, and not in his personal capacity, the property could not be made to answer for the judgment obligation of the corporation.

The TCT150[28] of the property bears out that, indeed, it belongs to petitioner and his wife. Thus, even if we consider petitioner as an agent of the corporation and, therefore, not a stranger to

the case such that the provision on third-party claims will not apply to him, the property was registered not only in the name of petitioner but also of his wife. She stands to lose the property subject of execution without ever being a party to the case. This will be tantamount to deprivation of property without due process.

Moreover, the power of the NLRC, or the courts, to execute its judgment extends only to properties unquestionably belonging to the judgment debtor alone.151[29] A sheriff, therefore, has no authority to attach the property of any person except that of the judgment debtor.152[30] Likewise, there is no showing that the sheriff ever tried to execute on the properties of the corporation.

In sum, while petitioner availed himself of the wrong remedy to vindicate his rights, nonetheless, justice demands that this Court look beyond his procedural missteps and grant the petition.

WHEREFORE, the foregoing premises considered, the petition is GRANTED. The Decision dated February 21, 2008 and the Resolution dated July 25, 2008 of the Court of Appeals in CA-G.R. CEB-SP. No. 02370 are hereby REVERSED and SET ASIDE, and a new one is entered declaring NULL and VOID (1) the Order of the Regional Trial Court of Negros Occidental dated December 27, 2006 in Civil Case No. 0612927; and (2) the Notice of Sale on Execution of Personal Property dated December 4, 2006 over the

property covered by Transfer Certificate of Title No. T-140167, issued by the Acting Sheriff of the National Labor Relations Commission.

SO ORDERED.

5. Renato Real vs. Sangu Philippines, Inc. et al., G.R. No. 168757. January 19, 2011.

RENATO REAL, Petitioner,

G.R. No. 168757 Present: CORONA, C. J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, DEL CASTILLO, and PEREZ, JJ.

- versus-

SANGU PHILIPPINES, INC. and/ or KIICHI ABE, Respondents. Promulgated: January 19, 2011

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DECISION

DEL CASTILLO, J.:

The perennial question of whether a complaint for illegal dismissal is intra-corporate and thus beyond the jurisdiction of the Labor Arbiter is the core issue up for consideration in this case.

This Petition for Review on Certiorari assails the Decision153[1] dated June 28, 2005 of the Court of Appeals (CA) in CA-G.R. SP. No. 86017 which dismissed the petition for certiorari filed before it.

Factual Antecedents

Petitioner Renato Real was the Manager of respondent corporation Sangu Philippines, Inc., a corporation engaged in the business of providing manpower for general services, like janitors, janitresses and other maintenance personnel, to various clients. In 2001, petitioner, together with 29 others who were either janitors, janitresses, leadmen and maintenance men, all employed by respondent corporation, filed their respective Complaints154[2] for illegal dismissal against the latter and respondent Kiichi Abe, the corporations Vice-President and General Manager. These complaints were later on consolidated.

With regard to petitioner, he was removed from his position as Manager through Board Resolution 200103155[3] adopted by respondent corporations Board of Directors. Petitioner complained that he was neither notified of the Board Meeting during which said board resolution was passed nor formally charged with any

infraction. He just received from respondents a letter156[4] dated March 26, 2001 stating that he has been terminated from service effective March 25, 2001 for the following reasons: (1) continuous absences at his post at Ogino Philippines Inc. for several months which was detrimental to the corporations operation; (2) loss of trust and confidence; and, (3) to cut down operational expenses to reduce further losses being experienced by respondent corporation.

Respondents, on the other hand, refuted petitioners claim of illegal dismissal by alleging that after petitioner was appointed Manager, he committed gross acts of misconduct detrimental to the company since 2000. According to them, petitioner would almost always absent himself from work without informing the corporation of his whereabouts and that he would come to the office only to collect his salaries. As he was almost always absent, petitioner neglected to supervise the employees resulting in complaints from various clients about employees performance. In one instance, petitioner together with a few others, while apparently drunk, went to the premises of one of respondents clients, Epson Precision (Phils.) Inc., and engaged in a heated argument with the employees therein. Because of this, respondent Abe allegedly received a complaint from Epsons Personnel Manager concerning petitioners conduct. Respondents likewise averred that petitioner established a company engaged in the same business as respondent corporations and even submitted proposals for janitorial services to two of the latters clients. Because of all these, the Board of Directors of respondent corporation met on March 24, 2001 and adopted Board Resolution No. 2001-03 removing petitioner as Manager. Petitioner was thereafter informed of his removal through a letter dated March 26, 2001 which he, however, refused to receive.

Further, in what respondents believed to be an act of retaliation, petitioner allegedly encouraged the employees who had been placed in the manpower pool to file a complaint for illegal dismissal against respondents. Worse, he later incited those assigned in Epson Precision (Phils.) Inc., Ogino Philippines Corporation, Hitachi Cable Philippines Inc. and Philippine TRC Inc. to stage a strike on April 10 to 16, 2001. Not satisfied, petitioner together with other employees also barricaded the premises of respondent corporation. Such acts respondents posited constitute just cause for petitioners dismissal and that same was validly effected.

Rulings of the Labor Arbiter and the National Labor Relations Commission

The Labor Arbiter in a Decision157[5] dated June 5, 2003 declared petitioner and his co-complainants as having been illegally dismissed and ordered respondents to reinstate complainants to their former positions without loss of seniority rights and other privileges and to pay their full backwages from the time of their dismissal until actually reinstated and furthermore, to pay them attorneys fees. The Labor Arbiter found no convincing proof of the causes for which petitioner was terminated and noted that there was complete absence of due process in the manner of his termination.

Respondents thus appealed to the National Labor Relations Commission (NLRC) and raised therein as one of the issues the lack of jurisdiction of the Labor Arbiter over petitioners complaint. Respondents claimed that petitioner is both a stockholder and a corporate officer of respondent corporation, hence, his action against respondents is an intra-corporate controversy over which the Labor Arbiter has no jurisdiction.

The NLRC found such contention of respondents to be meritorious. Aside from petitioners own admission in the pleadings that he is a stockholder and at the same time occupying a managerial position, the NLRC also gave weight to the corporations General Information Sheet158[6] (GIS) dated October 27, 1999 listing petitioner as one of its stockholders, consequently his termination had to be effected through a board resolution. These, the NLRC opined, clearly established petitioners status as a stockholder and as a corporate officer and hence, his action against respondent corporation is an intra-corporate controversy over which the Labor Arbiter has no jurisdiction. As to the other complainants, the NLRC ruled that there was no dismissal. The NLRC however,

modified the appealed decision of the Labor Arbiter in a Decision159[7] dated February 13, 2004, the dispositive portion of which reads:

WHEREFORE, all foregoing premises considered, the appealed Decision dated June 5, 2003 is hereby MODIFIED. Accordingly, judgment is hereby rendered DISMISSING the complaint of Renato Real for lack of jurisdiction. As to the rest of the complainants, they are hereby ordered to immediately report back to work but without the payment of backwages. All other claims against respondents including attorneys fees are DISMISSED for lack of merit. SO ORDERED.

Still joined by his co-complainants, petitioner brought the case to the CA by way of petition for certiorari. Ruling of the Court of Appeals

Before the CA, petitioner imputed upon the NLRC grave abuse of discretion amounting to lack or excess of jurisdiction in declaring him a corporate officer and in holding that his action against respondents is an intracorporate controversy and thus beyond the jurisdiction of the Labor Arbiter.

While admitting that he is indeed a stockholder of respondent corporation, petitioner nevertheless disputed the declaration of the NLRC that he is a corporate officer thereof. He posited that his being a stockholder and his being a managerial employee do not ipso facto confer upon him the status of a corporate officer. To support this contention, petitioner called the CAs attention to the same GIS relied upon by the NLRC when it declared him to be a corporate officer. He pointed out that although said information sheet clearly indicates that he is a stockholder of respondent corporation, he is not an officer thereof as shown by the entry N/A or not applicable opposite his name in the officer column. Said column requires that the particular position be indicated if the person is an officer

and if not, the entry N/A. Petitioner further argued that the fact that his dismissal was effected through a board resolution does not likewise mean that he is a corporate officer. Otherwise, all that an employer has to do in order to avoid compliance with the requisites of a valid dismissal under the Labor Code is to dismiss a managerial employee through a board resolution. Moreover, he insisted that his action for illegal dismissal is not an intra-corporate controversy as same stemmed from employee-employer relationship which is well within the jurisdiction of the Labor Arbiter. This can be deduced and is bolstered by the last paragraph of the termination letter sent to him by respondents stating that he is entitled to benefits under the Labor Code, to wit:

In this connection (his dismissal) you are entitled to separation pay and other benefits provided for under the Labor Code of the Philippines.160[8] (Emphasis supplied) In contrast, respondents stood firm that the action against them is an intra-corporate controversy. It cited Tabang v. National Labor Relations Commission161[9] wherein this Court declared that an intra-corporate controversy is one which arises between a stockholder and the corporation; that [t]here is no distinction, qualification, nor any exemption whatsoever; and that it is broad and covers all kinds of controversies between stockholders and corporations. In view of this ruling and since petitioner is undisputedly a stockholder of the corporation, respondents contended that the action instituted by petitioner against them is an intra-corporate controversy cognizable only by the appropriate regional trial court. Hence, the NLRC correctly dismissed petitioners complaint for lack of jurisdiction.

In the assailed Decision162[10] dated June 28, 2005, the CA sided with respondents and affirmed the NLRCs finding that aside from being a stockholder of respondent corporation, petitioner is also a corporate officer thereof and consequently, his complaint is an intra-corporate controversy over which the labor arbiter has no

jurisdiction. Said court opined that if it was true that petitioner is a mere employee, the respondent corporation would not have called a board meeting to pass a resolution for petitioners dismissal considering that it was very tedious for the Board of Directors to convene and to adopt a resolution every time they decide to dismiss their managerial employees. To support its finding, the CA likewise cited Tabang. As to petitioners co-complainants, the CA likewise affirmed the NLRCS finding that they were never dismissed from the service. The dispositive portion of the CA Decision reads:

WHEREFORE, the instant petition is hereby DISMISSED. Accordingly, the assailed decision and resolution of the public respondent National Labor Relations Commission in NLRC NCR CA No. 036128-03 NLRC SRAB-IV-05-6618-01-B/05-6619-02-B/05-6620-02-B/106637-01-B/10-6833-01-B, STANDS. SO ORDERED. Now alone but still undeterred, petitioner elevated the case to us through this Petition for Review on Certiorari.

The Parties Arguments

Petitioner continues to insist that he is not a corporate officer. He argues that a corporate officer is one who holds an elective position as provided in the Articles of Incorporation or one who is appointed to such other positions by the Board of Directors as specifically authorized by its By-Laws. And, since he was neither elected nor is there any showing that he was appointed by the Board of Directors to his position as Manager, petitioner maintains that he is not a corporate officer contrary to the findings of the NLRC and the CA.

Petitioner likewise contends that his complaint for illegal dismissal against respondents is not an intracorporate controversy. He avers that for an action or suit between a stockholder and a corporation to be considered an intra-corporate controversy, same must arise from intra-corporate relations, i.e., an action involving the status of a stockholder as such. He believes that his action against the respondents does not arise from intra-corporate relations

but rather from employer-employee relations. This, according to him, was even impliedly recognized by respondents as shown by the earlier quoted portion of the termination letter they sent to him.

For their part, respondents posit that what petitioner is essentially assailing before this Court is the finding of the NLRC and the CA that he is a corporate officer of respondent corporation. To the respondents, the question of whether petitioner is a corporate officer is a question of fact which, as held in a long line of jurisprudence, cannot be the subject of review under this Petition for Review on Certiorari. At any rate, respondents insist that petitioner who is undisputedly a stockholder of respondent corporation is likewise a corporate officer and that his action against them is an intra-corporate dispute beyond the jurisdiction of the labor tribunals. To support this, they cited several jurisprudence such as Pearson & George (S.E. Asia), Inc. v. National Labor Relations Commission,163[11] Philippine School of Business Administration v. Leano,164[12] Fortune Cement Corporation v. National Labor Relations Commission165[13] and again, Tabang v. National Labor Relations Commission.166[14]

Moreover, in an attempt to demolish petitioners claim that the present controversy concerns employeremployee relations, respondents enumerated the following facts and circumstances: (1) Petitioner was an incorporator, stockholder and manager of respondent company; (2) As an incorporator, he was one of only seven incorporators of respondent corporation and one of only four Filipino members of the Board of Directors; (3) As stockholder, he has One Thousand (1,000) of the Ten Thousand Eight Hundred (10,800) common shares held by Filipino stockholders, with a par-value of One Hundred Thousand Pesos (P100,000.00); (4) His appointment as manager was by virtue of Section 1, Article IV of respondent corporations By-Laws; (5) As manager, he had direct

management and authority over all of respondent corporations skilled employees; (6) Petitioner has shown himself to be an incompetent manager, unable to properly supervise the employees and even causing friction with the corporations clients by engaging in unruly behavior while in clients premises; (7) As if his incompetence was not enough, in a blatant and palpable act of disloyalty, he established another company engaged in the same line of business as respondent corporation; (8) Because of these acts of incompetence and disloyalty, respondent corporation through a Resolution adopted by its Board of Directors was finally constrained to remove petitioner as Manager and declare his office vacant; (9) After his removal, petitioner urged the employees under him to stage an unlawful strike by leading them to believe that they have been illegally dismissed from employment.167[15] Apparently, respondents intended to show from this enumeration that petitioners removal pertains to his relationship with respondent corporation, that is, his utter failure to advance its interest and the prejudice caused by his acts of disloyalty. For this reason, respondents see the action against them not as a case between an employer and an employee as what petitioner alleges, but one by an officer and at same time a major stockholder seeking to be reinstated to his former office against the corporation that declared his position vacant.

Finally, respondents state that the fact that petitioner is being given benefits under the Labor Code as stated in his termination letter does not mean that they are recognizing the employer-employee relations between them. They explain that the benefits provided under the Labor Code were merely made by respondent corporation as the basis in determining petitioners compensation package and that same are merely part of the perquisites of petitioners office as a director and manager. It does not and it cannot change the intra-corporate nature of the controversy. Hence, respondents pray that this petition be dismissed for lack of merit.

Issues

From the foregoing and as earlier mentioned, the core issue to be resolved in this case is whether petitioners complaint for illegal dismissal constitutes an intra-corporate controversy and thus, beyond the jurisdiction of the Labor Arbiter.

Our Ruling

Two-tier test in determining the existence of intra-corporate controversy

Respondents strongly rely on this Courts pronouncement in the 1997 case of Tabang v. National Labor Relations Commission, to wit:

[A]n intra-corporate controversy is one which arises between a stockholder and the corporation. There is no distinction, qualification nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between stockholders and corporations.168[16]

In view of this, respondents contend that even if petitioner challenges his being a corporate officer, the present case still constitutes an intra-corporate controversy as petitioner is undisputedly a stockholder and a director of respondent corporation.

It is worthy to note, however, that before the promulgation of the Tabang case, the Court provided in Mainland Construction Co., Inc. v. Movilla169[17] a better policy in determining which between the Securities and Exchange Commission (SEC) and the Labor Arbiter has jurisdiction over termination disputes,170[18] or similarly, whether they are intra-corporate or not, viz:

The fact that the parties involved in the controversy are all stockholders or that the parties involved are the stockholders and the corporation does not necessarily place the dispute within the ambit of the jurisdiction of the SEC (now the Regional Trial Court171[19]). The better policy to be followed in determining jurisdiction over a case should be to consider concurrent factors such as the status or relationship of the parties or the nature of the question that is subject of their controversy. In the absence of any one of these factors, the SEC will not have jurisdiction. Furthermore, it does not necessarily follow that every conflict between the corporation and its stockholders would involve such corporate matters as only SEC (now the Regional Trial Court172[20]) can resolve in the exercise of its adjudicatory or quasi-judicial powers. (Emphasis ours)

And, while Tabang was promulgated later than Mainland Construction Co., Inc., the better policy enunciated in the latter appears to have developed into a standard approach in classifying what constitutes an intracorporate controversy. This is explained lengthily in Reyes v. Regional Trial Court of Makati, Br. 142,173[21] to wit:

Intra-Corporate Controversy A review of relevant jurisprudence shows a development in the Courts approach in classifying what constitutes an intra-corporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-corporate controversy was limited to a consideration of the intra-corporate relationship existing between or among the parties. The types of relationships embraced under Section 5(b) x x x were as follows: 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. The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC (now the RTC), regardless of the subject matter of the dispute. This came to be known as the relationship test. However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc., the Court introduced the nature of the controversy test. We declared in this case that it is not the mere existence of an intra-corporate relationship that gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest the regular courts of their jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the dispute. Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra-corporate. The controversy 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. The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the status or relationship of the parties, but also the nature of the question under controversy. This two-tier test was adopted in the recent case of Speed Distribution Inc. v. Court of Appeals: To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties, and (2) the nature of the question that is the subject of their controversy. The first element requires that the controversy must arise out of intracorporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are not stockholders, members or associates, between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns the individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy. [Citations omitted.]

Guided by this recent jurisprudence, we thus find no merit in respondents contention that the fact alone that petitioner is a stockholder and director of respondent corporation automatically classifies this case as an intracorporate controversy. To reiterate, not all conflicts between the stockholders and the corporation are classified as intra-corporate. There are other factors to consider in determining whether the dispute involves corporate matters as to consider them as intra-corporate controversies.

What then is the nature of petitioners Complaint for Illegal Dismissal? Is it intra-corporate and thus beyond the jurisdiction of the Labor Arbiter? We shall answer this question by using the standards set forth in the Reyes case.

No intra-corporate relationship between the parties

As earlier stated, petitioners status as a stockholder and director of respondent corporation is not disputed. What the parties disagree on is the finding of the NLRC and the CA that petitioner is a corporate officer. An examination of the complaint for illegal dismissal, however, reveals that the root of the controversy is petitioners dismissal as Manager of respondent corporation, a position which respondents claim to be a corporate office. Hence, petitioner is involved in this case not in his capacity as a stockholder or director, but as an alleged corporate officer. In applying the relationship test, therefore, it is necessary to determine if petitioner is a corporate officer of respondent corporation so as to establish the intra-corporate relationship between the parties. And albeit respondents claim that the determination of whether petitioner is a corporate officer is a question of fact which this Court cannot pass upon in this petition for review on certiorari, we shall nonetheless proceed to consider the same because such question is not the main issue to be resolved in this case but is merely collateral to the core issue earlier mentioned.

Petitioner negates his status as a corporate officer by pointing out that although he was removed as Manager through a board resolution, he was never elected to said position nor was he appointed thereto by the Board of Directors. While the By-Laws of respondent corporation provides that the Board may from time to time appoint such officers as it may deem necessary or proper, he avers that respondents failed to present any board

resolution that he was appointed pursuant to said By-Laws. He instead alleges that he was hired as Manager of respondent corporation solely by respondent Abe. For these reasons, petitioner claims to be a mere employee of respondent corporation rather than as a corporate officer.

We find merit in petitioners contention.

Corporate officers in the context of Presidential Decree No. 902-A are those officers of the corporation who are given that character by the Corporation Code or by the corporations by-laws. There are three specific officers whom a corporation must have under Section 25 of the Corporation Code. These are the president, secretary and the treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus limited by law and by the corporations by-laws.174[22]

Respondents claim that petitioner was appointed Manager by virtue of Section 1, Article IV of respondent corporations By-Laws which provides: ARTICLE IV OFFICER Section 1. Election/Appointment Immediately after their election, the Board of Directors shall formally organize by electing the President, Vice-President, the Secretary at said meeting. The Board, may from time to time, appoint such other officers as it may determine to be necessary or proper. Any two (2) or more positions may be held concurrently by the same person, except that no one shall act as President and Treasurer or Secretary at the same time. x x x x175[23] (Emphasis ours)

We have however examined the records of this case and we find nothing to prove that petitioners appointment was made pursuant to the above-quoted provision of respondent corporations By-Laws. No copy of board resolution appointing petitioner as Manager or any other document showing that he was appointed to said position by action of the board was submitted by respondents. What we found instead were mere allegations of respondents in their various pleadings176[24] that petitioner was appointed as Manager of respondent corporation and nothing more. The Court has stressed time and again that allegations must be proven by sufficient evidence because mere allegation is definitely not evidence.177[25]

It also does not escape our attention that respondents made the following conflicting allegations in their Memorandum on Appeal178[26] filed before the NLRC which cast doubt on petitioners status as a corporate officer, to wit:

xxxx 24. Complainant-appellee Renato Real was appointed as the manager of respondentappellant Sangu on November 6, 1998. Priorly [sic], he was working at Atlas Ltd. Co. at Mitoshi, Ibaraki-ken Japan. He was staying in Japan as an illegal alien for the past eleven (11) years. He had a problem with his family here in the Philippines which prompted him to surrender himself to Japans Bureau of Immigration and was deported back to the Philippines. His former employer, Mr. Tsutomo Nogami requested Mr. Masahiko Shibata, one of respondent-appellant Sangus Board of Directors, if complainant-appellee Renato Real could work as one of its employees here in the Philippines because he had been blacklisted at Japans Immigration Office

and could no longer go back to Japan. And so it was arranged that he would serve as respondent-appellant Sangus manager, receiving a salary of P25,000.00. As such, he was tasked to oversee the operations of the company. x x x (Emphasis ours) xxxx As earlier stated, complainant-appellee Renato Real was hired as the manager of respondent-appellant Sangu. As such, his position was reposed with full trust and confidence. x x x

While respondents repeatedly claim that petitioner was appointed as Manager pursuant to the corporations By-Laws, the above-quoted inconsistencies in their allegations as to how petitioner was placed in said position, coupled by the fact that they failed to produce any documentary evidence to prove that petitioner was appointed thereto by action or with approval of the board, only leads this Court to believe otherwise. It has been consistently held that [a]n office is created by the charter of the corporation and the officer is elected (or appointed) by the directors or stockholders.179[27] Clearly here, respondents failed to prove that petitioner was appointed by the board of directors. Thus, we cannot subscribe to their claim that petitioner is a corporate officer. Having said this, we find that there is no intra-corporate relationship between the parties insofar as petitioners complaint for illegal dismissal is concerned and that same does not satisfy the relationship test.

Present controversy does not relate to intra-corporate dispute

We now go to the nature of controversy test. As earlier stated, respondents terminated the services of petitioner for the following reasons: (1) his continuous absences at his post at Ogino Philippines, Inc; (2) respondents loss of trust and confidence on petitioner; and, (3) to cut down operational expenses to reduce further losses being experienced by the corporation. Hence, petitioner filed a complaint for illegal dismissal and sought reinstatement, backwages, moral damages and attorneys fees. From these, it is not difficult to see that the reasons given by respondents for dismissing petitioner have something to do with his being a Manager of respondent

corporation and nothing with his being a director or stockholder. For one, petitioners continuous absences in his post in Ogino relates to his performance as Manager. Second, respondents loss of trust and confidence in petitioner stemmed from his alleged acts of establishing a company engaged in the same line of business as respondent corporations and submitting proposals to the latters clients while he was still serving as its Manager. While we note that respondents also claim these acts as constituting acts of disloyalty of petitioner as director and stockholder, we, however, think that same is a mere afterthought on their part to make it appear that the present case involves an element of intra-corporate controversy. This is because before the Labor Arbiter, respondents did not see such acts to be disloyal acts of a director and stockholder but rather, as constituting willful breach of the trust reposed upon petitioner as Manager.180[28] It was only after respondents invoked the Labor Arbiters lack of jurisdiction over petitioners complaint in the Supplemental Memorandum of Appeal181[29] filed before the NLRC that respondents started considering said acts as such. Third, in saying that they were dismissing petitioner to cut operational expenses, respondents actually want to save on the salaries and other remunerations being given to petitioner as its Manager. Thus, when petitioner sought for reinstatement, he wanted to recover his position as Manager, a position which we have, however, earlier declared to be not a corporate position. He is not trying to recover a seat in the board of directors or to any appointive or elective corporate position which has been declared vacant by the board. Certainly, what we have here is a case of termination of employment which is a labor controversy and not an intra-corporate dispute. In sum, we hold that petitioners complaint likewise does not satisfy the nature of controversy test.

With the elements of intra-corporate controversy being absent in this case, we thus hold that petitioners complaint for illegal dismissal against respondents is not intra-corporate. Rather, it is a termination dispute and, consequently, falls under the jurisdiction of the Labor Arbiter pursuant to Section 217182[30] of the Labor Code.

We take note of the cases cited by respondents and find them inapplicable to the case at bar. Fortune Cement Corporation v. National Labor Relations Commission183[31] involves a member of the board of directors and at the same time a corporate officer who claims he was illegally dismissed after he was stripped of his corporate position of Executive Vice-President because of loss of trust and confidence. On the other hand, Philippine School of Business Administration v. Leano184[32] and Pearson & George v. National Labor Relations Commission185[33] both concern a complaint for illegal dismissal by corporate officers who were not re-elected to their respective corporate positions. The Court declared all these cases as involving intra-corporate controversies and thus affirmed the jurisdiction of the SEC (now the RTC)186[34] over them precisely because they all relate to corporate officers and their removal or non-reelection to their respective corporate positions. Said cases are by no means similar to the present case because as discussed earlier, petitioner here is not a corporate officer.

With the foregoing, it is clear that the CA erred in affirming the decision of the NLRC which dismissed petitioners complaint for lack of jurisdiction. In cases such as this, the Court normally remands the case to the NLRC and directs it to properly dispose of the case on the merits. However, when there is enough basis on which a proper evaluation of the merits of petitioners case may be had, the Court may dispense with the time-consuming procedure of remand in order to prevent further delays in the disposition of the case.187[35] It is already an accepted rule of procedure for us to strive to settle the entire controversy in a single proceeding, leaving no root or branch to bear the seeds of litigation. If, based on the records, the pleadings, and other evidence, the dispute can be resolved by us, we will do so to serve the ends of justice instead of remanding the case to the lower court for further

proceedings.188[36] We have gone over the records before us and we are convinced that we can now altogether resolve the issue of the validity of petitioners dismissal and hence, we shall proceed to do so. Petitioners dismissal not in accordance with law In an illegal dismissal case, the onus probandi rests on the employer to prove that [the] dismissal of an employee is for a valid cause.189[37] Here, as correctly observed by the Labor Arbiter, respondents failed to produce any convincing proof to support the grounds for which they terminated petitioner. Respondents contend that petitioner has been absent for several months, yet they failed to present any proof that petitioner was indeed absent for such a long time. Also, the fact that petitioner was still able to collect his salaries after his alleged absences casts doubts on the truthfulness of such charge. Respondents likewise allege that petitioner engaged in a heated argument with the employees of Epson, one of respondents clients. But just like in the charge of absenteeism, there is no showing that an investigation on the matter was done and that disciplinary action was imposed upon petitioner. At any rate, we have reviewed the records of this case and we agree with the Labor Arbiter that under the circumstances, said charges are not sufficient bases for petitioners termination. As to the charge of breach of trust allegedly committed by petitioner when he established a new company engaged in the same line of business as respondent corporations and submitted proposals to two of the latters clients while he was still a Manager, we again observe that these are mere allegations without sufficient proof. To reiterate, allegations must be proven by sufficient evidence because mere allegation is definitely not evidence.190[38] Moreover, petitioners dismissal was effected without due process of law. The twin requirements of notice and hearing constitute the essential elements of due process. The law requires the employer to furnish the employee sought to be dismissed with two written notices before termination of employment can be legally effected: (1) a written notice apprising the employee of the particular acts or omissions for which his dismissal is sought in order to afford him an opportunity to be heard and to defend himself with the assistance of counsel, if he

desires, and (2) a subsequent notice informing the employee of the employers decision to dismiss him. This procedure is mandatory and its absence taints the dismissal with illegality.191[39] Since in this case, petitioners dismissal was effected through a board resolution and all that petitioner received was a letter informing him of the boards decision to terminate him, the abovementioned procedure was clearly not complied with. All told, we agree with the findings of the Labor Arbiter that petitioner has been illegally dismissed. And, as an illegally dismissed employee is entitled to the two reliefs of backwages and reinstatement,192[40] we affirm the Labor Arbiters judgment ordering petitioners reinstatement to his former position without loss of seniority rights and other privileges and awarding backwages from the time of his dismissal until actually reinstated. Considering that petitioner has to secure the services of counsel to protect his interest and necessarily has to incur expenses, we likewise affirm the award of attorneys fees which is equivalent to 10% of the total backwages that respondents must pay petitioner in accordance with this Decision.

WHEREFORE, the petition is hereby GRANTED. The assailed June 28, 2005 Decision of the Court of Appeals insofar as it affirmed the National Labor Relations Commissions dismissal of petitioners complaint for lack of jurisdiction, is hereby REVERSED and SET ASIDE. The June 5, 2003 Decision of the Labor Arbiter with respect to petitioner Renato Real is AFFIRMED and this case is ordered REMANDED to the National Labor Relations Commission for the computation of petitioners backwages and attorneys fees in accordance with this Decision.

SO ORDERED.

6. The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26, 2011. THE UNIVERSITY OF THE IMMACULATE CONCEPTION and MO. MARIA ASSUMPTA DAVID, RVM, Petitioners, CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and - versus MENDOZA, JJ. Present: G.R. No. 181146

NATIONAL LABOR RELATIONS COMMISSION and TEODORA AXALAN, Respondents.

Promulgated:

January 26, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari1 of the 13 December 2007 Decision2 of the Court of Appeals in CA-G.R. SP No. 00812 affirming the 15 August 2005 and the 24 October 2005 Resolutions3 of the National Labor Relations Commission in NLRC CA No. M-008333-2005, which sustained the 11 October 2004 Decision4 of the Labor Arbiter in RAB-11-12-01187-03 ordering petitioner to reinstate private respondent to her former position without loss of seniority rights and to pay her backwages, salary differentials, damages, and attorneys fees.

The Facts

Petitioner University of the Immaculate Conception is a private educational institution located in Davao City. Private respondent Teodora C. Axalan is a regular faculty member in the university holding the position of Associate Professor II. Aside from being a regular faculty member, Axalan is the elected president of the employees union.5

From 18 November to 22 November 2002, Axalan attended a seminar in Quezon City on website development. Axalan then received a memorandum6 from Dean Maria Rosa Celestial asking her to explain in writing why she should not be dismissed for having been absent without official leave.

In her letter,7 Axalan claimed that she held online classes while attending the seminar. She explained that she was under the impression that faculty members would not be marked absent even if they were not physically present in the classroom as long as they conducted online classes.

In reply,8 Dean Celestial relayed to Axalan the message of the university president that no administrative charge would be filed if Axalan would admit having been absent without official leave and write a letter of apology seeking forgiveness. Convinced that she could not be deemed absent since she held online classes, Axalan opted not to write the letter of admission and contrition the university president requested.9 The Dean wrote Axalan that the university president had created an ad hoc grievance committee to investigate the AWOL charge.10

From 28 January to 3 February 2003, Axalan attended a seminar in Baguio City on advanced paralegal training. Dean Celestial wrote Axalan informing her that her participation in the paralegal seminar in Baguio City was the subject of a second AWOL charge.11 The dean asked Axalan to explain in writing why no disciplinary action should be taken against her.12

In her letter,13 Axalan explained that before going to Baguio City for the seminar, she sought the approval of Vice-President for Academics Alicia Sayson. In a letter,14 VP Sayson denied having approved Axalans application for official leave. The VP stated in her letter that it was the university president, Maria Assumpta David, who must approve the application.

After conducting hearings and receiving evidence, the ad hoc grievance committee found Axalan to have incurred AWOL on both instances and recommended that Axalan be suspended without pay for six months on each AWOL charge.15 The university president approved the committees recommendation.

The university president then wrote Axalan informing her that she incurred absences without official leave when she attended the seminars on website development in Quezon City and on advanced paralegal training in Baguio City on 18-22 November 2002 and on 28 January-3 February 2003, respectively. In the same letter, the university president informed Axalan that the total penalty of one-year suspension without pay for both AWOL charges would be effective immediately.16

On 1 December 2003, Axalan filed a complaint17 against the university for illegal suspension, constructive dismissal, reinstatement with backwages, and unfair labor practice with prayer for damages and attorneys fees.

The university moved to dismiss the complaint on the ground that the Labor Arbiter had no jurisdiction over the subject matter of the complaint. The university maintained that jurisdiction lay in the voluntary arbitrator.18

In denying the universitys motion to dismiss, the Labor Arbiter held that there being no existing collective bargaining agreement between the parties, no grievance machinery was constituted, which barred resort to voluntary arbitration.19

Meanwhile, upon the expiration of the one-year suspension, Axalan promptly resumed teaching at the university on 1 October 2004.

The Ruling of the Labor Arbiter

On 11 October 2004, the Labor Arbiter rendered a Decision holding that the suspension of Axalan amounted to constructive dismissal entitling her to reinstatement and payment of backwages, salary differentials, damages, and attorneys fees, thus:

WHEREFORE, premises laid, judgment is hereby rendered declaring that the suspension of complainant amounted to constructive dismissal, and as such, she is entitled to reinstatement and payment of her full backwages reckoned from the time it was withheld from her up to the time of reinstatement. Accordingly, Respondent University of the Immaculate Conception acting through its President, Respondent Mo. Maria Assumpta David, RVM, is directed to reinstate the complainant to her former position without loss of seniority rights and to pay her the sum of Five Hundred Forty Three Thousand Four Hundred Fifty Two Pesos (P543,452.00) representing her backwages, salary differentials (diminution) and damages plus ten percent (10%) thereof as attorneys fees or the sum of P54,345.20. The Respondent UIC and its President are hereby directed to inform this Office of the mode of compliance it will avail itself by reason of the Order of reinstatement. SO ORDERED.20

The university appealed the Labor Arbiters Decision to the National Labor Relations Commission (NLRC). It challenged the jurisdiction of the Labor Arbiter insisting that the voluntary arbitrator had jurisdiction over the labor dispute. The university pointed out that when the Labor Arbiter rendered his Decision on 11 October 2004, Axalan had returned to work on 1 October 2004 upon the expiration of the one-year suspension.

The Ruling of the NLRC

The NLRC held that the Labor Arbiter, not the voluntary arbitrator, had jurisdiction as the controversy did not pertain to a dispute involving the union and the university. In its 15 August 2005 Resolution, the NLRC ruled:

WHEREFORE, for want of merit, the instant appeal is hereby DISMISSED. SO ORDERED.21

NLRC Commissioner Jovito C. Cagaanan, in his dissenting opinion,22 stressed that the parties previously agreed to submit the dispute to voluntary arbitration, which cast doubt on the jurisdiction of the Labor Arbiter.

The university moved for reconsideration of the NLRC Resolution. But the NLRC, in its 24 October 2005 Resolution,23 denied the motion for reconsideration for lack of merit. The university challenged both Resolutions of the NLRC before the Court of Appeals via a petition for certiorari.

The Ruling of the Court of Appeals

The Court of Appeals affirmed the findings of the Labor Arbiter and the NLRC. In its 13 December 2007 Decision, the Court of Appeals dismissed the universitys petition for certiorari, thus:

We find no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of public respondent in affirming the Labor Arbiter. Respondent Commissions ruling finds more than ample support in statutory and case law. It cannot, therefore, be characterized as whimsical, arbitrary, or oppressive.

WHEREFORE, the instant petition is hereby DISMISSED. SO ORDERED.24

Dissatisfied, the university filed in this Court the instant petition for review on certiorari.

The Issues

The issues for resolution are (1) whether the voluntary arbitrator had jurisdiction over the labor dispute; (2) whether Axalan was constructively dismissed; and (3) whether the Labor Arbiters computation of backwages, damages, and attorneys fees was correct.

The Courts Ruling

The petition is impressed with merit.

The university contends that based on the transcript of stenographic notes from the ad hoc grievance committee hearing held on 20 February 2003, the parties agreed that the voluntary arbitrator would have jurisdiction over the labor dispute. The university maintains that Axalans suspension does not constitute constructive dismissal and that the Labor Arbiters decision treating it as such is an attempt to make it appear that the voluntary arbitrator has no jurisdiction. The university points out that for constructive dismissal to exist, there must be severance of employment by the employee because of unbearable act of discrimination, insensibility, or disdain on the part of the employer leaving the employee with no choice but to forego continued employment. The university claims that on the contrary, Axalan eagerly reported

for work as soon as the one-year suspension was over. The university further argues that assuming Axalan is entitled to backwages, it should have been based on Axalans average gross monthly income at the time she was suspended in SY2003-2004, which was P14,145.00, not on her average gross monthly income in SY2002-2003, which was P18,502.00.

Private respondent Axalan counters that the university raises the same factual issues already decided unanimously by the Labor Arbiter, the NLRC, and the Court of Appeals. On the issue of jurisdiction, Axalan stresses that the present labor case, being a complaint for constructive dismissal and unfair labor practice, is within the jurisdiction of the Labor Arbiter. On the finding of constructive dismissal, Axalan points out that the Labor Arbiters factual finding of constructive dismissal, when affirmed by the NLRC and the Court of Appeals, binds this Court. Axalan claims that both AWOL charges against her were without basis and were only a form of harassment amounting to unfair labor practice. As to the computation of the award of backwages, Axalan points out that her average gross monthly income in SY2002-2003 was reduced in SY2003-2004 precisely because she was not given an overload of two extra assignments resulting in the diminution of her income. Axalan maintains that the award of damages was just proper considering that her suspension was without basis and amounted to unfair labor practice.

Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari is limited to reviewing only errors of law, not of fact, unless the factual findings being assailed are not supported by the evidence on record or the impugned judgment is based on a misapprehension of facts. Patently erroneous findings of the Labor Arbiter, even when affirmed by the NLRC and the Court of Appeals, are not binding on this Court.25 As to the first issue, Article 217 of the Labor Code states that unfair labor practices and termination disputes fall within the original and exclusive jurisdiction of the Labor Arbiter:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide x x x the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases; 2. Termination disputes; x x x x (Emphasis supplied)

Article 262 of the same Code provides the exception: ART. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. (Emphasis supplied)

In San Miguel Corp. v. NLRC,26 the Court ruled that for the exception to apply, there must be agreement between the parties clearly conferring jurisdiction to the voluntary arbitrator. Such agreement may be stipulated in a collective bargaining agreement. However, in the absence of a collective bargaining agreement, it is enough that there is evidence on record showing the parties have agreed to resort to voluntary arbitration.27

As can be gleaned from the transcript of stenographic notes of the administrative hearing held on 20 February 2003, the parties in this case clearly agreed to resort to voluntary arbitration. To quote the exact words of the parties counsels:

Atty. Dante Sandiego: x x x So, are we to understand that the decision of the President shall be without prejudice to the right of the employees to contest the validity or legality of his dismissal or of the disciplinary action imposed upon him by asking for voluntary arbitration under the Labor Code or when applicable availing himself of the grievance machinery under the Labor Code which ends in voluntary arbitration. That will be the steps that we will have to follow. Atty. Sabino Padilla, Jr.: Yes, agreed.28

Thus, the Labor Arbiter should have immediately disposed of the complaint and referred the same to the voluntary arbitrator when the university moved to dismiss the complaint for lack of jurisdiction.

No less than Section 3, Article XIII of the Constitution declares as state policy the preferential use of voluntary modes in settling disputes, to wit:

Sec. 3. x x x x The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. (Emphasis supplied)

As to the second issue, constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter with no other option but to quit.29

In this case however, there was no cessation of employment relations between the parties. It is unrefuted that Axalan promptly resumed teaching at the university right after the expiration of the suspension period. In other words, Axalan never quit. Hence, Axalan cannot claim that she was left with no choice but to quit, a crucial element in a finding of constructive dismissal. Thus, Axalan cannot be deemed to have been constructively dismissed.

Significantly, at the time the Labor Arbiter rendered his Decision on 11 October 2004, Axalan had already returned to her teaching job at the university on 1 October 2004. The Labor Arbiters Decision ordering the reinstatement of Axalan, who at the time had already returned to work, is thus absurd.

There being no constructive dismissal, there is no legal basis for the Labor Arbiters order of reinstatement as well as payment of backwages, salary differentials, damages, and attorneys fees.30 Thus, the third issue raised in the petition is now moot. Note that on the first AWOL incident, the university even offered to drop the AWOL charge against Axalan if she would only write a letter of contrition. But Axalan adamantly refused knowing fully well that the administrative case would take its course leading to possible sanctions. She cannot now be heard that the imposition of the penalty of six-month suspension without pay for each AWOL charge is unreasonable. We are convinced that Axalan was validly suspended for cause and in accord with procedural due process.

The Court recognizes the right of employers to discipline its employees for serious violations of company rules after affording the latter due process and if the evidence warrants. The university, after affording Axalan due process and finding her guilty of incurring AWOL on two separate occasions, acted well within the bounds of labor laws in imposing the penalty of six-month suspension without pay for each incidence of AWOL.

As a learning institution, the university cannot be expected to take lightly absences without official leave among its employees, more so among its faculty members even if they happen to be union officers. To do so would send the wrong signal to the studentry and the rest of its teaching staff that irresponsibility is widely tolerated in the academe.

The law protects both the welfare of employees and the prerogatives of management.31 Courts will not interfere with prerogatives of management on the discipline of employees, as long as they do not violate labor laws, collective bargaining agreements if any, and general principles of fairness and justice.32

WHEREFORE, we GRANT the petition. The 13 December 2007 Decision of the Court of Appeals in CA-G.R. SP No. 00812 affirming the 15 August 2005 and the 24 October 2005 Resolutions of the National Labor Relations Commission in NLRC CA No. M-008333-2005, which sustained the 11 October 2004 Decision of the Labor Arbiter in RAB-11-12-01187-03, is SET ASIDE.

No pronouncement as to costs.

SO ORDERED.

7. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.

PRINCE TRANSPORT, INC. and MR. RENATO CLAROS, Petitioners,

G.R. No. 167291

Present:

CARPIO, J., Chairperson,

- versus -

NACHURA, PERALTA, ABAD, and _____________,** JJ.

DIOSDADO GARCIA, LUISITO GARCIA, RODANTE ROMERO, REX BARTOLOME, FELICIANO GASCO, JR., DANILO ROJO, EDGAR SANFUEGO, AMADO GALANTO, EUTIQUIO LUGTU, JOEL GRAMATICA, MIEL CERVANTES, TERESITA CABANES, ROE DELA CRUZ, RICHELO BALIDOY, VILMA PORRAS, MIGUELITO SALCEDO, CRISTINA GARCIA, MARIO NAZARENO, DINDO TORRES, ESMAEL RAMBOYONG, ROBETO* MANO, ROGELIO BAGAWISAN, ARIEL SNACHEZ, ESTAQULO VILLAREAL, NELSON MONTERO, GLORIA ORANTE, HARRY TOCA, PABLITO MACASAET and RONALD GARCITA Respondents.

Promulgated:

January 12, 2011

x-----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court praying for the annulment of the Decision193[1] and Resolution194[2] of the Court of Appeals (CA) dated December 20, 2004 and February 24, 2005, respectively, in CA-G.R. SP No. 80953. The assailed Decision reversed and set aside the Resolutions dated May 30, 2003195[3] and September 26, 2003196[4] of the National Labor Relations Commission (NLRC) in CA No. 029059-01, while the disputed Resolution denied petitioners' Motion for Reconsideration.

The present petition arose from various complaints filed by herein respondents charging petitioners with illegal dismissal, unfair labor practice and illegal deductions and praying for the award of premium pay for holiday and rest day, holiday pay, service leave pay, 13th month pay, moral and exemplary damages and attorney's fees.

Respondents alleged in their respective position papers and other related pleadings that they were employees of Prince Transport, Inc. (PTI), a company engaged in the business of transporting passengers by land; respondents were hired either as drivers, conductors, mechanics or inspectors, except for respondent Diosdado Garcia (Garcia), who was assigned as Operations Manager; in addition to their regular monthly income, respondents also received commissions equivalent to 8 to 10% of their wages; sometime in October 1997, the said commissions were reduced to 7 to 9%; this led respondents and other employees of PTI to hold a series of meetings to discuss the protection of their interests as employees; these meetings led petitioner Renato Claros, who is the president of PTI, to suspect that respondents are about to form a union; he made known to Garcia his objection to the formation of a union; in December 1997, PTI employees requested for a cash advance, but the same was denied by management which resulted in demoralization on the employees' ranks; later, PTI acceded to the request of some, but not all, of the employees; the foregoing circumstances led respondents to form a union for their mutual aid and protection; in order to block the continued formation of the union, PTI caused the transfer of all union members and sympathizers to one of its sub-companies, Lubas Transport (Lubas); despite such transfer, the schedule of drivers and conductors, as well as their company identification cards, were issued by PTI;

the daily time records, tickets and reports of the respondents were also filed at the PTI office; and, all claims for salaries were transacted at the same office; later, the business of Lubas deteriorated because of the refusal of PTI to maintain and repair the units being used therein, which resulted in the virtual stoppage of its operations and respondents' loss of employment.

Petitioners, on the other hand, denied the material allegations of the complaints contending that herein respondents were no longer their employees, since they all transferred to Lubas at their own request; petitioners have nothing to do with the management and operations of Lubas as well as the control and supervision of the latter's employees; petitioners were not aware of the existence of any union in their company and came to know of the same only in June 1998 when they were served a copy of the summons in the petition for certification election filed by the union; that before the union was registered on April 15, 1998, the complaint subject of the present petition was already filed; that the real motive in the filing of the complaints was because PTI asked respondents to vacate the bunkhouse where they (respondents) and their respective families were staying because PTI wanted to renovate the same.

Subsequently, the complaints filed by respondents were consolidated.

On October 25, 2000, the Labor Arbiter rendered a Decision,197[5] the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby rendered: 1. Dismissing the complaints for Unfair Labor Practice, non-payment of holiday pay and holiday premium, service incentive leave pay and 13th month pay; 2. Dismissing the complaint for illegal dismissal against the respondents Prince Transport, Inc. and/or Prince Transport Phils. Corporation, Roberto Buenaventura, Rory Bayona, Ailee Avenue, Nerissa Uy, Mario Feranil and Peter Buentiempo; 3. Declaring that the complainants named below are illegally dismissed by Lubas Transport; ordering said Lubas Transport to pay backwages and separation pay in lieu of reinstatement in the following amount: Complainants (1) Diosdado Garcia (2) Feliciano Gasco, Jr. (3) Pablito Macasaet Backwages P222,348.70 203,350.00 145,250.00 Separation Pay P79,456.00 54,600.00 13,000.00

(4) Esmael Ramboyong (5) Joel Gramatica (6) Amado Galanto (7) Miel Cervantes (8) Roberto Mano (9) Roe dela Cruz (10) Richelo Balidoy (11) Vilma Porras (12) Miguelito Salcedo (13) Cristina Garcia (14) Luisito Garcia (15) Rogelio Bagawisan (16) Rodante H. Romero (17) Dindo Torres (18) Edgar Sanfuego (19) Ronald Gacita (20) Harry Toca (21) Amado Galanto (22) Teresita Cabaes (23) Rex Bartolome (24) Mario Nazareno (25) Eustaquio Villareal (26) Ariel Sanchez (27) Gloria Orante (28) Nelson Montero (29) Rizal Beato (30) Eutiquio Lugtu (31) Warlito Dickensomn (32) Edgardo Belda (33) Tita Go (34) Alex Lodor (35) Glenda Arguilles (36) Erwin Luces (37) Jesse Celle (38) Roy Adorable (39) Marlon Bangcoro (40)Edgardo Bangcoro

221,500.00 221,500.00 130,725.00 265,800.00 221,500.00 265,800.00 130,725.00 221,500.00 265,800.00 130,725.00 145,250.00 265,800.00 221,500.00 265,800.00 221,500.00 221,500.00 174,300.00 130,725.00 130,725.00 301,500.00 221,500.00 145,250.00 265,800.00 263,100.00 264,600.00 295,000.00 354,000.00 295,000.00 354,000.00 295,000.00 295,000.00 295,000.00 354,000.00 354,000.00 295,000.00 295,000.00 354,000.00

30,000.00 60,000.00 29,250.00 60,000.00 50,000.00 60,000.00 29,250.00 70,000.00 60,000.00 35,100.00 19,500.00 60,000.00 60,000.00 50,000.00 40,000.00 40,000.00 23,400.00 17,550.00 17,550.00 30,000.00 30,000.00 19,500.00 60,000.00 60,000.00 60,000.00 40,000.00 48,000.00 40,000.00 84,000.00 70,000.00 50,000.00 40,000.00 48,000.00 48,000.00 40,000.00 40,000.00 36,000.00

4. Ordering Lubas Transport to pay attorney's fees equivalent to ten (10%) of the total monetary award; and 6. Ordering the dismissal of the claim for moral and exemplary damages for lack merit. SO ORDERED.198[6]

The Labor Arbiter ruled that petitioners are not guilty of unfair labor practice in the absence of evidence to show that they violated respondents right to self-organization. The Labor Arbiter also held that Lubas is the respondents employer and that it (Lubas) is an entity which is separate, distinct and independent from PTI. Nonetheless, the Labor Arbiter found that Lubas is guilty of illegally dismissing respondents from their employment.

Respondents filed a Partial Appeal with the NLRC praying, among others, that PTI should also be held equally liable as Lubas.

In a Resolution dated May 30, 2003, the NLRC modified the Decision of the Labor Arbiter and disposed as follows:

WHEREFORE, premises considered, the appeal is hereby PARTIALLY GRANTED. Accordingly, the Decision appealed from is SUSTAINED subject to the modification that Complainant-Appellant Edgardo Belda deserves refund of his boundary-hulog in the amount of P446,862.00; and that Complainants-Appellants Danilo Rojo and Danilo Laurel should be included in the computation of ComplainantsAppellants claim as follows: Complainants Backwages Separation Pay P48,000.00 P72,000.00

41. Danilo Rojo P355,560.00 42. Danilo Laurel P357,960.00

As regards all other aspects, the Decision appealed from is SUSTAINED. SO ORDERED.199[7]

Respondents filed a Motion for Reconsideration, but the NLRC denied it in its Resolution200[8] dated September 26, 2003.

Respondents then filed a special civil action for certiorari with the CA assailing the Decision and Resolution of the NLRC.

On December 20, 2004, the CA rendered the herein assailed Decision which granted respondents' petition. The CA ruled that petitioners are guilty of unfair labor practice; that Lubas is a mere instrumentality, agent conduit or adjunct of PTI; and that petitioners act of transferring respondents employment to Lubas is indicative of their intent to frustrate the efforts of respondents to organize themselves into a union. Accordingly, the CA disposed of the case as follows:

WHEREFORE, the Petition for Certiorari is hereby GRANTED. Accordingly, the subject decision is hereby REVERSED and SET ASIDE and another one ENTERED finding the respondents guilty of unfair labor practice and ordering them to reinstate the petitioners to their former positions without loss of seniority rights and with full backwages. With respect to the portion ordering the inclusion of Danilo Rojo and Danilo Laurel in the computation of petitioner's claim for backwages and with respect to the portion ordering the refund of Edgardo Belda's boundary-hulog in the amount of P446,862.00, the NLRC decision is affirmed and maintained. SO ORDERED.201[9]

Petitioners filed a Motion for Reconsideration, but the CA denied it via its Resolution202[10] dated February 24, 2005.

Hence, the instant petition for review on certiorari based on the following grounds: A THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN GIVING DUE COURSE TO THE RESPONDENTS' PETITION FOR CERTIORARI

1. THE COURT OF APPEALS SHOULD HAVE RESPECTED THE FINDINGS OF THE LABOR ARBITER AND AFFIRMED BY THE NLRC 2. ONLY ONE PETITIONER EXECUTED AND VERIFIED THE PETITION 3. THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION WITH RESPECT TO RESPONDENTS REX BARTOLOME, FELICIANO GASCO, DANILO ROJO, EUTIQUIO LUGTU, AND NELSON MONTERO AS THEY FAILED TO FILE AN APPEAL TO THE NLRC B THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT PETITIONERS PRINCE TRANSPORT, INC. AND MR. RENATO CLAROS AND LUBAS TRANSPORT ARE ONE AND THE SAME CORPORATION AND THUS, LIABLE IN SOLIDUM TO RESPONDENTS.

C THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ORDERING THE REINSTATEMENT OF RESPONDENTS TO THEIR PREVIOUS POSITION WHEN IT IS NOT ONE OF THE ISSUES RAISED IN RESPONDENTS' PETITION FOR CERTIORARI.203[11]

Petitioners assert that factual findings of agencies exercising quasi-judicial functions like the NLRC are accorded not only respect but even finality; that the CA should have outrightly dismissed the petition filed before it because in certiorari proceedings under Rule 65 of the Rules of Court it is not within the province of the CA to evaluate the sufficiency of evidence upon which the NLRC based its determination, the inquiry being limited essentially to whether or not said tribunal has acted without or in excess of its jurisdiction or with grave abuse of discretion. Petitioners assert that the CA can only pass upon the factual findings of the NLRC if they are not supported by evidence on record, or if the impugned judgment is based on misapprehension of facts which circumstances are not present in this case. Petitioners also emphasize that the NLRC and the Labor Arbiter concurred in their factual findings which were based on substantial evidence and, therefore, should have been accorded great weight and respect by the CA.

Respondents, on the other hand, aver that the CA neither exceeded its jurisdiction nor committed error in re-evaluating the NLRCs factual findings since such findings are not in accord with the evidence on record and the applicable law or jurisprudence.

The Court agrees with respondents.

The power of the CA to review NLRC decisions via a petition for certiorari under Rule 65 of the Rules of Court has been settled as early as this Courts decision in St. Martin Funeral Homes v. NLRC.204[12] In said case, the Court held that the proper vehicle for such review is a special civil action for certiorari under Rule 65 of the said Rules, and that the case should be filed with the CA in strict observance of the doctrine of hierarchy of courts. Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902, the CA pursuant to the exercise of its original jurisdiction over petitions for certiorari is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues.205[13] Section 9 clearly states:

xxxx The Court of Appeals shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. x x x

However, equally settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.206[14] But these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts.207[15] The CA can grant the petition for certiorari if it

finds that the NLRC, in its assailed decision or resolution, made a factual finding not supported by substantial evidence.208[16] It is within the jurisdiction of the CA, whose jurisdiction over labor cases has been expanded to review the findings of the NLRC.209[17]

In this case, the NLRC sustained the factual findings of the Labor Arbiter. Thus, these findings are generally binding on the appellate court, unless there was a showing that they were arrived at arbitrarily or in disregard of the evidence on record. In respondents' petition for certiorari with the CA, these factual findings were reexamined and reversed by the appellate court on the ground that they were not in accord with credible evidence presented in this case. To determine if the CA's reexamination of factual findings and reversal of the NLRC decision are proper and with sufficient basis, it is incumbent upon this Court to make its own evaluation of the evidence on record.210[18]

After a thorough review of the records at hand, the Court finds that the CA did not commit error in arriving at its own findings and conclusions for reasons to be discussed hereunder.

Firstly, petitioners posit that the petition filed with the CA is fatally defective, because the attached verification and certificate against forum shopping was signed only by respondent Garcia.

The Court does not agree.

While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in a case and the signature of only one of them is insufficient, the Court has stressed that the rules on forum shopping, which were designed to promote and facilitate the orderly administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate and

legitimate objective.211[19] Strict compliance with the provision regarding the certificate of non-forum shopping underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded.212[20] It does not, however, prohibit substantial compliance therewith under justifiable circumstances, considering especially that although it is obligatory, it is not jurisdictional.213[21]

In a number of cases, the Court has consistently held that when all the petitioners share a common interest and invoke a common cause of action or defense, the signature of only one of them in the certification against forum shopping substantially complies with the rules.214[22] In the present case, there is no question that respondents share a common interest and invoke a common cause of action. Hence, the signature of respondent Garcia is a sufficient compliance with the rule governing certificates of non-forum shopping. In the first place, some of the respondents actually executed a Special Power of Attorney authorizing Garcia as their attorney-in-fact in filing a petition for certiorari with the CA.215[23]

The Court, likewise, does not agree with petitioners' argument that the CA should not have given due course to the petition filed before it with respect to some of the respondents, considering that these respondents did not sign the verification attached to the Memorandum of Partial Appeal earlier filed with the NLRC. Petitioners assert that the decision of the Labor Arbiter has become final and executory with respect to these respondents and, as a consequence, they are barred from filing a petition for certiorari with the CA.

With respect to the absence of some of the workers signatures in the verification, the verification requirement is deemed substantially complied with when some of the parties who undoubtedly have

sufficient knowledge and belief to swear to the truth of the allegations in the petition had signed the same. Such verification is deemed a sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct, and not merely speculative. Moreover, respondents' Partial Appeal shows that the appeal stipulated as complainants-appellants Rizal Beato, et al., meaning that there were more than one appellant who were all workers of petitioners.

In any case, the settled rule is that a pleading which is required by the Rules of Court to be verified, may be given due course even without a verification if the circumstances warrant the suspension of the rules in the interest of justice.216[24] Indeed, the absence of a verification is not jurisdictional, but only a formal defect, which does not of itself justify a court in refusing to allow and act on a case.217[25] Hence, the failure of some of the respondents to sign the verification attached to their Memorandum of Appeal filed with the NLRC is not fatal to their cause of action.

Petitioners also contend that the CA erred in applying the doctrine of piercing the corporate veil with respect to Lubas, because the said doctrine is applicable only to corporations and Lubas is not a corporation but a single proprietorship; that Lubas had been found by the Labor Arbiter and the NLRC to have a personality which is separate and distinct from that of PTI; that PTI had no hand in the management and operation as well as control and supervision of the employees of Lubas.

The Court is not persuaded.

On the contrary, the Court agrees with the CA that Lubas is a mere agent, conduit or adjunct of PTI. A settled formulation of the doctrine of piercing the corporate veil is that when two business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that these two entities are distinct and treat them as identical or as one and the same.218[26] In the present case, it may be true that Lubas is a single proprietorship and not a corporation. However, petitioners attempt to isolate themselves from and hide behind the supposed separate and distinct personality of Lubas so as to evade their liabilities is precisely what the classical doctrine of piercing the veil of corporate entity seeks to prevent and remedy.

Thus, the Court agrees with the observations of the CA, to wit:

As correctly pointed out by petitioners, if Lubas were truly a separate entity, how come that it was Prince Transport who made the decision to transfer its employees to the former? Besides, Prince Transport never regarded Lubas Transport as a separate entity. In the aforesaid letter, it referred to said entity as Lubas operations. Moreover, in said letter, it did not transfer the employees; it assigned them. Lastly, the existing funds and 201 file of the employees were turned over not to a new company but a new management.219[27]

The Court also agrees with respondents that if Lubas is indeed an entity separate and independent from PTI why is it that the latter decides which employees shall work in the former?

What is telling is the fact that in a memorandum issued by PTI, dated January 22, 1998, petitioner company admitted that Lubas is one of its sub-companies.220[28] In addition, PTI, in its letters to its employees who were transferred to Lubas, referred to the latter as its New City Operations Bus.221[29]

Moreover, petitioners failed to refute the contention of respondents that despite the latters transfer to Lubas of their daily time records, reports, daily income remittances of conductors, schedule of drivers and conductors were all made, performed, filed and kept at the office of PTI. In fact, respondents identification cards bear the name of PTI.

It may not be amiss to point out at this juncture that in two separate illegal dismissal cases involving different groups of employees transferred by PTI to other companies, the Labor Arbiter handling the cases found that these companies and PTI are one and the same entity; thus, making them

solidarily liable for the payment of backwages and other money claims awarded to the complainants therein.222[30]

Petitioners likewise aver that the CA erred and committed grave abuse of discretion when it ordered petitioners to reinstate respondents to their former positions, considering that the issue of reinstatement was never brought up before it and respondents never questioned the award of separation pay to them.

The Court is not persuaded.

It is clear from the complaints filed by respondents that they are seeking reinstatement.223[31]

In any case, Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall specify the relief sought, but may add a general prayer for such further or other reliefs as may be deemed just and equitable. Under this rule, a court can grant the relief warranted by the allegation and the proof even if it is not specifically sought by the injured party; the inclusion of a general prayer may justify the grant of a remedy different from or together with the specific remedy sought, if the facts alleged in the complaint and the evidence introduced so warrant.224[32]

Moreover, in BPI Family Bank v. Buenaventura,225[33] this Court ruled that the general prayer is broad enough to justify extension of a remedy different from or together with the specific remedy sought. Even without the prayer for a specific remedy, proper relief may be granted by the court if the facts alleged in the complaint and the evidence introduced so warrant. The court shall grant relief

warranted by the allegations and the proof even if no such relief is prayed for. The prayer in the complaint for other reliefs equitable and just in the premises justifies the grant of a relief not otherwise specifically prayed for.226[34] In the instant case, aside from their specific prayer for reinstatement, respondents, in their separate complaints, prayed for such reliefs which are deemed just and equitable.

As to whether petitioners are guilty of unfair labor practice, the Court finds no cogent reason to depart from the findings of the CA that respondents transfer of work assignments to Lubas was designed by petitioners as a subterfuge to foil the formers right to organize themselves into a union. Under Article 248 (a) and (e) of the Labor Code, an employer is guilty of unfair labor practice if it interferes with, restrains or coerces its employees in the exercise of their right to self-organization or if it discriminates in regard to wages, hours of work and other terms and conditions of employment in order to encourage or discourage membership in any labor organization.

Indeed, evidence of petitioners' unfair labor practice is shown by the established fact that, after respondents' transfer to Lubas, petitioners left them high and dry insofar as the operations of Lubas was concerned. The Court finds no error in the findings and conclusion of the CA that petitioners withheld the necessary financial and logistic support such as spare parts, and repair and maintenance of the transferred buses until only two units remained in running condition. This left respondents virtually jobless.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals, dated December 20, 2004 and February 24, 2005, respectively, in CA-G.R. SP No. 80953, are AFFIRMED.

SO ORDERED.

8. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010

G.R. No. 186091

December 15, 2010

EMMANUEL BABAS, DANILO T. BANAG, ARTURO V. VILLARIN, SR., EDWIN JAVIER, SANDI BERMEO, REX ALLESA, MAXIMO SORIANO, JR., ARSENIO ESTORQUE, and

FELIXBERTO ANAJAO, Petitioners, vs. LORENZO SHIPPING CORPORATION, Respondent. DECISION NACHURA, J.: Petitioners Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, and Felixberto Anajao appeal by certiorari under Rule 45 of the Rules of Court the October 10, 2008 Decision1 of the Court of Appeals (CA) in CA-G.R. SP. No. 103804, and the January 21, 2009 Resolution,2 denying its reconsideration. Respondent Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged in the shipping industry; it owns several equipment necessary for its business. On September 29, 1997, LSC entered into a General Equipment Maintenance Repair and Management Services Agreement3 (Agreement) with Best Manpower Services, Inc. (BMSI). Under the Agreement, BMSI undertook to provide maintenance and repair services to LSCs container vans, heavy equipment, trailer chassis, and generator sets. BMSI further undertook to provide checkers to inspect all containers received for loading to and/or unloading from its vessels. Simultaneous with the execution of the Agreement, LSC leased its equipment, tools, and tractors to BMSI.4 The period of lease was coterminous with the Agreement. BMSI then hired petitioners on various dates to work at LSC as checkers, welders, utility men, clerks, forklift operators, motor pool and machine shop workers, technicians, trailer drivers, and mechanics. Six years later, or on May 1, 2003, LSC entered into another contract with BMSI, this time, a service contract.5 In September 2003, petitioners filed with the Labor Arbiter (LA) a complaint for regularization against LSC and BMSI. On October 1, 2003, LSC terminated the Agreement, effective October 31, 2003. Consequently, petitioners lost their employment. BMSI asserted that it is an independent contractor. It averred that it was willing to regularize petitioners; however, some of them lacked the requisite qualifications for the job. BMSI was willing to reassign petitioners who were willing to accept reassignment. BMSI denied petitioners claim for underpayment of wages and non-payment of 13th month pay and other benefits. LSC, on the other hand, averred that petitioners were employees of BMSI and were assigned to LSC by virtue of the Agreement. BMSI is an independent job contractor with substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business. The Agreement between LSC and BMSI constituted legitimate job contracting. Thus, petitioners were employees of BMSI and not of LSC. After due proceedings, the LA rendered a decision6 dismissing petitioners complaint. The LA found that petitioners were employees of BMSI. It was BMSI which hired petitioners, paid their wages, and exercised control over them. Petitioners appealed to the National Labor Relations Commission (NLRC), arguing that BMSI was engaged in labor-only contracting. They insisted that their employer was LSC.

On January 16, 2008, the NLRC promulgated its decision.7 Reversing the LA, the NLRC held: We find from the records of this case that respondent BMSI is not engaged in legitimate job contracting. First, respondent BMSI has no equipment, no office premises, no capital and no investments as shown in the Agreement itself which states: xxxx VI. RENTAL OF EQUIPMENT [6.01.] That the CLIENT has several forklifts and truck tractor, and has offered to the CONTRACTOR the use of the same by way of lease, the monthly rental of which shall be deducted from the total monthly billings of the CONTRACTOR for the services covered by this Agreement. 6.02. That the CONTRACTOR has agreed to rent the CLIENTs forklifts and truck tractor. 6.03. The parties herein have agreed to execute a Contract of Lease for the forklifts and truck tractor that will be rented by the CONTRACTOR. (p. 389, Records) True enough, parties signed a Lease Contract (p. 392, Records) wherein respondent BMSI leased several excess equipment of LSC to enable it to discharge its obligation under the Agreement. So without the equipment which respondent BMSI leased from respondent LSC, the former would not be able to perform its commitments in the Agreement. In Phil. Fuji Xerox Corp. v. NLRC (254 SCRA 294) the Supreme Court held: x x x. The phrase "substantial capital and investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business," in the Implementing Rules clearly contemplates tools, equipment, etc., which are directly related to the service it is being contracted to render. One who does not have an independent business for undertaking the job contracted for is just an agent of the employer. (underscoring ours) Second, respondent BMSI has no independent business or activity or job to perform in respondent LSC free from the control of respondent LSC except as to the results thereof. In view of the absence of such independent business or activity or job to be performed by respondent BMSI in respondent LSC [petitioners] performed work that was necessary and desirable to the main business of respondent LSC. Respondents were not able to refute the allegations of [petitioners] that they performed the same work that the regular workers of LSC performed and they stood side by side with regular employees of respondent LSC performing the same work. Necessarily, the control on the manner and method of doing the work was exercised by respondent LSC and not by respondent BMSI since the latter had no business of its own to perform in respondent LSC. Lastly, respondent BMSI has no other client but respondent LSC. If respondent BMSI were a going concern, it would have other clients to which to assign [petitioners] after its Agreement with LSC expired. Since there is only one client, respondent LSC, it is easy to conclude that respondent BMSI is a mere supplier of labor.

After concluding that respondent BMSI is engaged in prohibited labor-only contracting, respondent LSC became the employer of [petitioners] pursuant to DO 18-02. [Petitioners] therefore should be reinstated to their former positions or equivalent positions in respondent LSC as regular employees with full backwages and other benefits without loss of seniority rights from October 31, 2003, when they lost their jobs, until actual reinstatement (Vinoya v. NLRC, 324 SCRA 469). If reinstatement is not feasible, [petitioners] then should be paid separation pay of one month pay for every year of service or a fraction of six months to be considered as one year, in addition to full backwages. Concerning [petitioners] prayer to be paid wage differentials and benefits under the CBA, We have no doubt that [petitioners] would be entitled to them if they are covered by the said CBA. For this purpose, [petitioners] should first enlist themselves as union members if they so desire, or pay agency fee. Furthermore, only [petitioners] who signed the appeal memorandum are covered by this Decision. As regards the other complainants who did not sign the appeal, the Decision of the Labor Arbiter dismissing this case became final and executory.8 The NLRC disposed thus: WHEREFORE, the appeal of [petitioners] is GRANTED. The Decision of the Labor Arbiter is hereby REVERSED, and a NEW ONE rendered finding respondent Best Manpower Services, Inc. is engaged in prohibited labor-only-contracting and finding respondent Lorenzo Shipping Corp. as the employer of the following [petitioners]: 1. Emmanuel B. Babas 2. Danilo Banag 3. Edwin L. Javier 4. Rex Allesa 5. Arturo Villarin, [Sr.] 6. Felixberto C. Anajao 7. Arsenio Estorque 8. Maximo N. Soriano, Jr. 9. Sandi G. Bermeo Consequently, respondent Lorenzo Shipping Corp. is ordered to reinstate [petitioners] to their former positions as regular employees and pay their wage differentials and benefits under the CBA. If reinstatement is not feasible, both respondents Lorenzo Shipping Corp. and Best Manpower Services are adjudged jointly and solidarily to pay [petitioners] separation pay of one month for every year of service, a fraction of six months to be considered as one year.

In addition, respondent LSC and BMSI are solidarily liable to pay [petitioners] full backwages from October 31, 2003 until actual reinstatement or, if reinstatement is not feasible, until finality of this Decision. Respondent LSC and respondent BMSI are likewise adjudged to be solidarily liable for attorneys fees equivalent to ten (10%) of the total monetary award. xxxx SO ORDERED.9 LSC went to the CA via certiorari. On October 10, 2008, the CA rendered the now challenged Decision,10 reversing the NLRC. In holding that BMSI was an independent contractor, the CA relied on the provisions of the Agreement, wherein BMSI warranted that it is an independent contractor, with adequate capital, expertise, knowledge, equipment, and personnel necessary for the services rendered to LSC. According to the CA, the fact that BMSI entered into a contract of lease with LSC did not ipso facto make BMSI a labor-only contractor; on the contrary, it proved that BMSI had substantial capital. The CA was of the view that the law only required substantial capital or investment. Since BMSI had substantial capital, as shown by its ability to pay rents to LSC, then it qualified as an independent contractor. It added that even under the control test, BMSI would be the real employer of petitioners, since it had assumed the entire charge and control of petitioners services. The CA further held that BMSIs Certificate of Registration as an independent contractor was sufficient proof that it was an independent contractor. Hence, the CA absolved LSC from liability and instead held BMSI as employer of petitioners. The fallo of the CA Decision reads: WHEREFORE, premises considered, the instant petition is GRANTED and the assailed decision and resolution of public respondent NLRC are REVERSED and SET ASIDE. Consequently, the decision of the Labor Arbiter dated September 29, 2004 is REINSTATED. SO ORDERED.11 Petitioners filed a motion for reconsideration, but the CA denied it on January 21, 2009.12 Hence, this appeal by petitioners, positing that: THE HONORABLE COURT OF APPEALS ERRED IN IGNORING THE CLEAR EVIDENCE OF RECORD THAT RESPONDENT WAS ENGAGED IN LABOR-ONLY CONTRACTING TO DEFEAT PETITIONERS RIGHT TO SECURITY OF TENURE.13 Before resolving the petition, we note that only seven (7) of the nine petitioners signed the Verification and Certification.14 Petitioners Maximo Soriano, Jr. (Soriano) and Felixberto Anajao (Anajao) did not sign the Verification and Certification, because they could no longer be located by their co-petitioners.15 In Toyota Motor Phils. Corp. Workers Association (TMPCWA), et al. v. National Labor Relations Commission,16 citing Loquias v. Office of the Ombudsman,17 we stated that the petition satisfies the formal requirements only with regard to the petitioner who signed the petition, but not his co-petitioner who did not sign nor authorize the other petitioner to sign it on his behalf. Thus, the petition can be given due course only as to the parties who signed it. The other petitioners who did not sign the verification and

certificate against forum shopping cannot be recognized as petitioners and have no legal standing before the Court. The petition should be dismissed outright with respect to the non-conforming petitioners. Thus, we dismiss the petition insofar as petitioners Soriano and Anajao are concerned. Petitioners vigorously insist that they were employees of LSC; and that BMSI is not an independent contractor, but a labor-only contractor. LSC, on the other hand, maintains that BMSI is an independent contractor, with adequate capital and investment. LSC capitalizes on the ratiocination made by the CA. In declaring BMSI as an independent contractor, the CA, in the challenged Decision, heavily relied on the provisions of the Agreement, wherein BMSI declared that it was an independent contractor, with substantial capital and investment. De Los Santos v. NLRC18 instructed us that the character of the business, i.e., whether as labor-only contractor or as job contractor, should be measured in terms of, and determined by, the criteria set by statute. The parties cannot dictate by the mere expedience of a unilateral declaration in a contract the character of their business. In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada, Alilgilan MultiPurpose Coop (AMPCO), and Merlyn N. Policarpio,19 this Court explained: Despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so. The language of a contract is neither determinative nor conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannot dictate, by a declaration in a contract, the character of AMPCO's business, that is, whether as labor-only contractor, or job contractor. AMPCO's character should be measured in terms of, and determined by, the criteria set by statute. Thus, in distinguishing between prohibited labor-only contracting and permissible job contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal. In labor-only contracting, the following elements are present: (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility; and (b) the employees recruited, supplied, or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal.20 On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal. 21 A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) The contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from

the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof; (b) The contractor has substantial capital or investment; and (c) The agreement between the principal and the contractor or subcontractor assures the contractual employees' entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.22 Given the above standards, we sustain the petitioners contention that BMSI is engaged in labor-only contracting. First, petitioners worked at LSCs premises, and nowhere else. Other than the provisions of the Agreement, there was no showing that it was BMSI which established petitioners working procedure and methods, which supervised petitioners in their work, or which evaluated the same. There was absolute lack of evidence that BMSI exercised control over them or their work, except for the fact that petitioners were hired by BMSI. Second, LSC was unable to present proof that BMSI had substantial capital. The record before us is bereft of any proof pertaining to the contractors capitalization, nor to its investment in tools, equipment, or implements actually used in the performance or completion of the job, work, or service that it was contracted to render. What is clear was that the equipment used by BMSI were owned by, and merely rented from, LSC. In Mandaue Galleon Trade, Inc. v. Andales,23 we held: The law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting. Third, petitioners performed activities which were directly related to the main business of LSC. The work of petitioners as checkers, welders, utility men, drivers, and mechanics could only be characterized as part of, or at least clearly related to, and in the pursuit of, LSCs business. Logically, when petitioners were assigned by BMSI to LSC, BMSI acted merely as a labor-only contractor. Lastly, as found by the NLRC, BMSI had no other client except for LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the NLRC finding that BMSI is a labor-only contractor. The CA erred in considering BMSIs Certificate of Registration as sufficient proof that it is an independent contractor. In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio,24 we held that a Certificate of Registration issued by the Department of Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising.251avvphi1 Indubitably, BMSI can only be classified as a labor-only contractor. The CA, therefore, erred when it ruled otherwise. Consequently, the workers that BMSI supplied to LSC became regular employees of the latter.26 Having gained regular status, petitioners were entitled to security of tenure and could only be dismissed for just or authorized causes and after they had been accorded due process.

Petitioners lost their employment when LSC terminated its Agreement with BMSI. However, the termination of LSCs Agreement with BMSI cannot be considered a just or an authorized cause for petitioners dismissal. In Almeda v. Asahi Glass Philippines. Inc. v. Asahi Glass Philippines, Inc.,27 this Court declared: The sole reason given for the dismissal of petitioners by SSASI was the termination of its service contract with respondent. But since SSASI was a labor-only contractor, and petitioners were to be deemed the employees of respondent, then the said reason would not constitute a just or authorized cause for petitioners dismissal. It would then appear that petitioners were summarily dismissed based on the aforecited reason, without compliance with the procedural due process for notice and hearing. Herein petitioners, having been unjustly dismissed from work, are entitled to reinstatement without loss of seniority rights and other privileges and to full back wages, inclusive of allowances, and to other benefits or their monetary equivalents computed from the time compensation was withheld up to the time of actual reinstatement. Their earnings elsewhere during the periods of their illegal dismissal shall not be deducted therefrom. Accordingly, we hold that the NLRC committed no grave abuse of discretion in its decision. Conversely, the CA committed a reversible error when it set aside the NLRC ruling. WHEREFORE, the petition is GRANTED. The Decision and the Resolution of the Court of Appeals in CA-G.R. SP. No. 103804 are REVERSED and SET ASIDE. Petitioners Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, and Arsenio Estorque are declared regular employees of Lorenzo Shipping Corporation. Further, LSC is ordered to reinstate the seven petitioners to their former position without loss of seniority rights and other privileges, and to pay full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time compensation was withheld up to the time of actual reinstatement. No pronouncement as to costs. SO ORDERED.

9. South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R. No. 173326, December 15, 2010.

SOUTH COTABATO COMMUNICATIONS CORPORATION and GAUVAIN J. BENZONAN, G.R. No. 173326

Petitioners,

- versus -

Present:

HON. PATRICIA A. STO. TOMAS, SECRETARY OF LABOR AND EMPLOYMENT, ROLANDO FABRIGAR, MERLYN VELARDE, VINCE LAMBOC, FELIPE GALINDO, LEONARDO MIGUEL, JULIUS RUBIN, EDEL RODEROS, MERLYN COLIAO and EDGAR JOPSON, Respondents.

CORONA, C.J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, DEL CASTILLO, and PEREZ, JJ.

Promulgated:

December 15, 2010 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO-DE CASTRO, J.:

This a petition for review on certiorari under Rule 45 of the Rules of Court with application for temporary restraining order and/or writ of preliminary injunction seeking to set aside the Resolution227[1] dated July 20, 2005 as well as its related Resolution228[2] dated May 22, 2006 of the Court of Appeals in CA-G.R. SP No. 00179-MIN. In essence, the same petition likewise seeks to set aside the Order229[3] dated November 8, 2004 and the Order230[4] dated February 24, 2005 of public respondent Secretary Patricia A. Sto. Tomas of the Department of Labor and Employment (DOLE) as well as the Order231[5] dated May 20, 2004 of the Regional Director, DOLE Regional XII Office.

The facts of this case, as culled from the Order dated November 8, 2004 of DOLE Secretary Sto. Tomas, are as follows:

On the basis of a complaint, an inspection was conducted at the premises of appellant DXCP Radio Station on January 13, 2004, where the following violations of labor standards laws were noted: 1. 2. 3. 4. 5. 6. 7. Underpayment of minimum wage; Underpayment of 13th month pay; Non-payment of five (5) days service incentive leave pay; Non-remittance of SSS premiums; Non-payment of rest day premium pay of some employee; Non-payment of holiday premium pay; and Some employees are paid on commission basis aside from their allowances.

A copy of the Notice of Inspection Results was explained to and received by Tony Ladorna for appellants. Later on, or on January 16, 200[4], another copy of the Notice of Inspection Results was received by Felipe S. Galindo, Technical Supervisor of appellant DXCP. The Notice of Inspection Results required the appellants to effect restitution and/or correction of the above violations within five (5) calendar days from receipt of the Notice. Likewise, appellants were informed that any questions on the findings should be submitted within five (5) working days from receipts of the Notice. A summary investigation was scheduled on March 3, 2004, where only appellees appeared, while appellants failed to appear despite due notice. Another hearing was held on April 1, 2004, where appellees appeared, while a certain Nona Gido appeared in behalf of Atty. Thomas Jacobo. Ms. Gido sought to re-schedule the hearing, which the hearing officer denied. On May 20, 2004, the Regional Director issued the assailed Order, directing appellants to pay appellees the aggregate amount of Seven Hundred Fifty Nine Thousand Seven Hundred Fifty Two Pesos (Php759,752.00).232[6]

The dispositive portion of the Order dated May 20, 2004 of the Regional Director of the DOLE Region XII Office reads as follows:

WHEREFORE, premises considered, respondent DXCP Radio Station and/or Engr. Gauvain Benzonan, President, is hereby ordered to pay the seven (7) affected workers of their Salary Differential, Underpayment of 13th Month Pay, Five (5) days Service Incentive Leave Pay, Rest Day Premium Pay and Holiday Premium Pay in the total amount of SEVEN HUNDRED FIFTY-NINE THOUSAND SEVEN HUNDRED FIFTY-TWO PESOS (P759,752.00), Philippine Currency as indicated in the Annex A hereof and to submit proof of compliance to the Department of Labor and Employment, Regional Office No. XII, Cotabato City within ten (10) calendar days from receipt of this Order.233[7]

Petitioners appealed their case to then DOLE Secretary Sto. Tomas. However, this appeal was dismissed in an Order dated November 8, 2004 wherein the Secretary ruled that, contrary to their claim, petitioners were not denied due process as they were given reasonable opportunity to present evidence in support of their defense in the administrative proceeding before the Regional Director of DOLE Region XII Office. The dispositive portion of the said Order follows:

WHEREFORE, premises considered, the appeal by DXCP Radio Station and Engr. Gauvain Benzonan is hereby DISMISSED for lack of merit. The Order dated May 24, 2004 of the Regional Director, directing appellants to pay the nine (9) appellees the aggregate amount of Seven Hundred Fifty-Nine Thousand Seven Hundred Fifty-Two Pesos (Php759,752.00), representing their claims for wage differentials, 13th month pay differentials, service incentive leave pay, holiday premium and rest day premium, is AFFIRMED.234[8]

Undeterred, petitioners filed a Motion for Reconsideration with the DOLE Secretary but this was denied in an Order dated February 24, 2005, the dispositive portion of which states:

WHEREFORE, premises considered, the Motion for Reconsideration filed by DXCP Radio Station and Engr. Gauvain Benzonan, is hereby DENIED for lack of merit. Our Order dated November 8, 2004, affirming the Order dated May 20, 2004 of the OICDirector, Regional Office No. 12, directing appellants to pay Rolando Fabrigar and eight (8) others, the aggregate amount of Seven Hundred Fifty-Nine Thousand Seven Hundred Fifty-Two Pesos (Php759,752.00), representing their claims for wage and 13th month pay differentials, service incentive leave pay, holiday pay and rest day premium, is AFFIRMED.235[9]

In light of this setback, petitioners elevated their case to the Court of Appeals but their petition was dismissed in the assailed Court of Appeals Resolution dated July 20, 2005 because of several procedural infirmities that were explicitly cited in the same, to wit:

1. The petition was not properly verified and the Certification of NonForum Shopping was not executed by the plaintiff or principal party in violation of Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure, as the affiant therein was not duly authorized to represent the corporation. Such procedural lapse renders the entire pleading of no legal effect and is dismissible. Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure provide: SEC. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit. A pleading is verified by an affidavit that the affiant has read the pleadings and that the allegations therein are true and correct of his personal knowledge or based on authentic records. A pleading required to be verified which contains a verification based on information and belief or upon knowledge, information and belief or lacks a proper verification, shall be treated as an unsigned pleading. x x x.

SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: xxxx Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. x x x. 2. Annexes A, B, C, E and its attachments and F are not certified true copies contrary to Section 1, Rule 65 of the 1997 Rules of Civil Procedure which provides: SECTION 1. Petition for Certiorari. x x x xxxx The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of section 3, Rule 46. x x x. 3. Petitioners counsel failed to indicate the date of issue of his IBP Official Receipt. As provided for under Bar Matter 287 dated September 26, 2000: All pleadings, motions and papers filed in court whether personally or by mail shall bear counsels current IBP official receipt number and date of issue otherwise, such pleadings, motions and paper may not be acted upon by the court, without prejudice to whatever disciplinary action the court may take against the erring counsel who

shall likewise be required to comply with the such (sic) requirement within five (5) days from notice. Failure to comply with such requirement shall be ground for further disciplinary sanction and for contempt of court. x x x.236[10]

Petitioners then filed a Motion for Reconsideration and the Court of Appeals ruled in its assailed Resolution dated May 22, 2006 that petitioners subsequent submission made them substantially comply with the second and third procedural errors that were mentioned in the Court of Appeals Resolution dated July 20, 2005. However, the Court of Appeals also ruled that, with regard to the first procedural error, petitioners justification does not deserve merit reasoning that *w+hile it may be true that there are two (2) petitioners and that petitioner Gauvain Benzonan signed the verification and the certificate of non-forum shopping of the petition, the records show that petitioner Gauvain Benzonan did not initiate the petition in his own capacity to protect his personal interest in the case but was, in fact, only acting for and in the corporations behalf as its president.237[11] Thus, the Court of Appeals noted that *h+aving acted in the corporations behalf, petitioner Benzonan should have been clothed with the corporations board resolution authorizing him to institute the petition.238[12]

The Court of Appeals likewise ruled that petitioners attachment of a Secretarys Certificate to their Motion for Reconsideration (purportedly to remedy the first procedural mistake in their petition for certiorari under Rule 65) was insufficient since their submission merely authorized petitioner Benzonan to represent the corporation and cause the preparation and filing of a Motion for Reconsideration before the Court of Appeals.239[13]

Consequently, petitioners filed the instant petition wherein they raised the following issues:

a.

Whether the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction when it dismissed the Petition for Certiorari and denied the Motion for Reconsideration on its finding that the petition was not properly verified and the certification of non-forum shopping was not executed by the principal party allegedly in violation of Sections 4 and 5, Rule 7 of the 1997 Rules of Civil Procedure? Whether petitioners were denied due process of law in the proceedings before the Regional Director and the Office of the Secretary, both of the Department of Labor and Employment? Whether there was sufficient basis in the Order issued by the Regional Director, DOLE, Regional Office No. XII, dated May 20, 2004?240[14]

b.

c.

Anent the first procedural issue, the Court had summarized the jurisprudential principles on the matter in Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue.241[15] In said case, we held that a President of a corporation, among other enumerated corporate officers and employees, can sign the verification and certification against of non-forum shopping in behalf of the said corporation without the benefit of a board resolution. We quote the pertinent portion of the decision here:

It must be borne in mind that Sec. 23, in relation to Sec. 25 of the Corporation Code, clearly enunciates that all corporate powers are exercised, all business conducted, and all properties controlled by the board of directors. A corporation has a separate and distinct personality from its directors and officers and can only exercise its corporate powers through the board of directors. Thus, it is clear that an individual corporate officer cannot solely exercise any corporate power pertaining to the corporation without authority from the board of directors. This has been our constant holding in cases instituted by a corporation.

In a slew of cases, however, we have recognized the authority of some corporate officers to sign the verification and certification against forum shopping. In Mactan-Cebu International Airport Authority v. CA, we recognized the authority of a general manager or acting general manager to sign the verification and certificate against forum shopping; in Pfizer v. Galan, we upheld the validity of a verification signed by an employment specialist who had not even presented any proof of her authority to represent the company; in Novelty Philippines, Inc. v. CA, we ruled that a personnel officer who signed the petition but did not attach the authority from the company is authorized to sign the verification and non-forum shopping certificate; and in Lepanto Consolidated Mining Company v. WMC Resources International Pty. Ltd. (Lepanto), we ruled that the Chairperson of the Board and President of the Company can sign the verification and certificate against non-forum shopping even without the submission of the boards authorization. In sum, we have held that the following officials or employees of the company can sign the verification and certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case. While the above cases do not provide a complete listing of authorized signatories to the verification and certification required by the rules, the determination of the sufficiency of the authority was done on a case to case basis. The rationale applied in the foregoing cases is to justify the authority of corporate officers or representatives of the corporation to sign the verification or certificate against forum shopping, being in a position to verify the truthfulness and correctness of the allegations in the petition.242[16] (Emphases supplied.)

It must be stressed, however, that the Cagayan ruling qualified that the better procedure is still to append a board resolution to the complaint or petition to obviate questions regarding the authority of the signatory of the verification and certification.243[17]

Nonetheless, under the circumstances of this case, it bears reiterating that the requirement of the certification of non-forum shopping is rooted in the principle that a party-litigant shall not be allowed to pursue simultaneous remedies in different fora, as this practice is detrimental to an orderly judicial procedure. However, the Court has relaxed, under justifiable circumstances, the rule requiring the submission of such certification considering that, although it is obligatory, it is not jurisdictional. Not being jurisdictional, it can be relaxed under the rule of substantial compliance.244[18]

In the case at bar, the Court holds that there has been substantial compliance with Sections 4 and 5, Rule 7 of the 1997 Revised Rules on Civil Procedure on the petitioners part in consonance with our ruling in the Lepanto Consolidated Mining Company v. WMC Resources International PTY LTD.245[19] that we laid down in 2003 with the rationale that the President of petitioner-corporation is in a position to verify the truthfulness and correctness of the allegations in the petition. Petitioner Benzonan clearly satisfies the aforementioned jurisprudential requirement because he is the President of petitioner South Cotabato Communications Corporation. Moreover, he is also named as corespondent of petitioner-corporation in the labor case which is the subject matter of the special civil action for certiorari filed in the Court of Appeals.

Clearly, it was error on the part of the Court of Appeals to dismiss petitioners special civil action for certiorari despite substantial compliance with the rules on procedure. For unduly upholding technicalities at the expense of a just resolution of the case, normal procedure dictates that the Court of Appeals should be tasked with properly disposing the petition, a second time around, on the merits.

The Court is mindful of previous rulings which instructs us that when there is enough basis on which a proper evaluation of the merits can be made, we may dispense with the time-consuming procedure in order to prevent further delays in the disposition of the case.246[20] However, based on

the nature of the two remaining issues propounded before the Court which involve factual issues and given the inadequacy of the records, pleadings, and other evidence available before us to properly resolve those questions, we are constrained to refrain from passing upon them.

After all, the Court has stressed that its jurisdiction in a petition for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing only errors of law, not of fact, unless the findings of fact complained of are devoid of support by the evidence on record, or the assailed judgment is based on the misapprehension of facts.247[21]

WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Resolutions of the Court of Appeals are REVERSED and SET ASIDE. The case is REMANDED to the Court of Appeals for proper disposition of CA-G.R. SP No. 00179-MIN.

10. Central Azucarera De Bais Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010

CENTRAL AZUCARERA DE BAIS EMPLOYEES UNION-NFL [CABEU-NFL], represented by its President, PABLITO SAGURAN, Petitioner,

G.R. No. 186605

Present:

CARPIO, J., Chairperson,

NACHURA, PERALTA, ABAD, and - versus MENDOZA, JJ.

CENTRAL AZUCARERA DE BAIS, INC. [CAB], represented by its President, ANTONIO STEVEN L. CHAN, Respondent.

Promulgated:

November 17, 2010

X ----------------------------------------------------------------------------------- X

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Central Azucarera De Bais Employees Union-National Federation of Labor (CABEU-NFL) seeking to reverse and set aside: (1) the September 26, 2008 Decision248[1] of the Court of Appeals (CA), in CA-G.R. SP No. 03238, which reversed the July 18, 2007 Decision249[2] and September 28, 2007 Resolution250[3] of the National Labor Relations Commission (NLRC) and reinstated the July 13, 2006 Decision251[4] of the Labor Arbiter (LA); and (2) its January 21, 2009 Resolution252[5] denying the Motion for Reconsideration of CABEU-NFL.

THE FACTS

Respondent Central Azucarera De Bais, Inc. (CAB) is a corporation duly organized and existing under the laws of the Philippines. It is represented by its President, Antonio Steven L. Chan (Chan), in this proceeding.

CABEU-NFL is a duly registered labor union and a certified bargaining agent of the CAB rankand-file employees, represented by its President, Pablito Saguran (Saguran).

On January 19, 2004, CABEU-NFL sent CAB a proposed Collective Bargaining Agreement (CBA)253[6] seeking increases in the daily wage and vacation and sick leave benefits of the monthly employees and the grant of leave benefits and 13th month pay to seasonal workers.

On March 27, 2004, CAB responded with a counter-proposal254[7] to the effect that the production bonus incentive and special production bonus and incentives be maintained. In addition, respondent CAB agreed to execute a pro-rated increase of wages every time the government would mandate an increase in the minimum wage. CAB, however, did not agree to grant additional and separate Christmas bonuses.

On May 21, 2004, CAB received an Amended Union Proposal255[8] sent by CABEU-NFL reducing its previous demand regarding wages and bonuses. CAB, however, maintained its position on the matter. Thus, the collective bargaining negotiations resulted in a deadlock.

On account of the impasse, CABEU-NFL filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB). The NCMB then assumed conciliatory-mediation jurisdiction and summoned the parties to conciliation conferences.256[9]

In its June 2, 2005 Letter sent to CAB257[10] (letter-request), CABEU-NFL requested copies of CABs annual financial statements from 2001 to 2004 and asked for the resumption of conciliation meetings.

CAB replied through its June 14, 2005 Letter258[11] (letter-response) to NCMB Regional Director of Dumaguete City Isidro Cepeda, which reads:

At the outset, it observed that the letter signed by Mr. Pablito Saguran who is no longer an employee of the Central for he was one of those lawfully terminated due to an authorized cause x x x. More importantly, the declared purpose of the requested conciliation meeting has already been rendered moot and academic because: (1) the Union which Mr. Saguran purportedly represents has already lost its majority status by reason of the disauthorization and withdrawal of support thereto by more than 90% of the rank and file employees in the bargaining unit of Central sometime in January, 2005, and (2) the workers themselves, acting as principal, after disauthorizing the previous agent CABEU-NFL have organized themselves into a new Union known as Central Azucarera de Bais Employees Labor Association (CABELA) and after obtaining their registration certificate and making due representation that it is a duly organized union representing almost all the rank

and file workers in the Central, had concluded a new collective bargaining agreement with the Central on April 21, 2005 in Dumaguete City. The aforesaid CBA had been duly ratified by the rank and file workers constituting 91% of the collective bargaining unit x x x. Clearly, therefore, the request for further conciliation conference will serve no lawful and practical purpose. In view of the foregoing, and for the sake of continued industrial peace prevailing in the Central, we beseech the Honorable Office to disregard the aforesaid request.

It appears that the NCMB failed to act on the letter-response of CAB. Neither did it convene CAB and CABEU-NFL to continue the negotiations between them.

Reacting from the letter-response of CAB, CABEU-NFL filed a Complaint for Unfair Labor Practice259[12] for the formers refusal to bargain with it.

On July 13, 2006, the LA dismissed the complaint.260[13] Pertinent portions of the LA decision read:

The procedure in the discharge of the duty to bargain collectively is provided for in Article 250 of the Labor Code: (1) the party who desires to negotiate an agreement shall serve a written notice upon the other party with a statement of proposals; (2) the other party shall make a reply thereto not later than ten (10) days from receipt of notice; (3) if the dispute is unsettled resulting in a deadlock, the NCMB shall intervene upon the request or at its own initiative and call the parties to conciliation Meeting x x x (4) if the NCMB fails to effect an agreement, the Board shall exert all efforts to settle disputes amicably and

encourage the parties to submit their case to a voluntary arbitrator; (5) the parties may also go on strike or declare a lockout as the case may be after complying with legal requirements. Subject, of course, to the plenary power of the Secretary of Labor and Employment to assume jurisdiction over the dispute or to certify the same to the NLRC for compulsory arbitration.

In the case at bar, the record shows that respondent CAB replied to the complainant Unions CBA proposals with its own set of counterproposals x x x. Likewise, respondent CAB responded to the Unions subsequent counterproposals x x x. Record further shows that respondent CAB participated in a series of CBA negotiations conducted by the parties at the plant level as well as in the conciliation/mediation proceedings conducted by the NCMB. Unfortunately, both exercises resulted in a deadlock.

At this juncture it cannot be said, therefore, that respondent CAB refused to negotiate or that it violated its duty to bargain collectively in light of its active participation in the past CBA negotiations at the plant level as well as in the NCMB. x x x xxx xxx xxx

We do not agree that respondent CAB committed an unfair labor practice act in questioning the capacity of Mr. Pablito Saguran to represent complainant union in the CBA negotiations because Mr. Pablito Saguran was no longer an employee of respondent CAB at that time having been separated from employment on the ground of redundancy and having received the corresponding separation benefits. x x x. So also, we do not find respondent CAB guilty of unfair labor practice by its act of writing the NCMB Director in a letter dated June 24, 2005, stating its legal position on complainants request for further conciliation to the effect that since almost [all] of the rank and file employees, the principals in a principalagent relationship, have withdrawn their support to the complainant union and that in fact they have already organized themselves into a DOLE-registered labor union known as CABELA, any further conciliation will serve no lawful and practical purpose. x x x. At this juncture, it was incumbent upon the NCMB to make a ruling on the request of the complainant union as well as upon the corresponding comment of respondent CAB. If the NCMB chose not to pursue further negotiation between the parties, respondent CAB should not be faulted therefor. x x x. Under the facts obtaining, when the conciliation/mediation by the NCMB has not been officially concluded, we find the instant complaint for unfair labor practice not only without merit but also premature.

WHEREFORE, foregoing considered, the case is hereby DISMISSED for lack of merit. SO ORDERED.

On appeal, the NLRC in its July 18, 2007 Decision261[14] reversed the LAs decision and found CAB guilty of unfair labor practice. The NLRC explained:

The issue to be resolved is whether or not respondent company committed an unfair labor practice for violation of its duty to bargain collectively in good faith. xxx xxx xxx

The important event to discuss in the instant case is respondents act of concluding a CBA with CABELA. As gleaned from respondents letter to NCMB dated June 14, 2005, it concluded a CBA with CABELA because they opined that complainant lost its majority status in January 2005 when 90% of the rank-andfile employees disauthorized and withdrew their support to complainant. These rank-and-file employees who withdrew their support, organized and formed CABELA. In fine, respondent believed that CABELA enjoyed the majority status of CABELA since it was supported by 90% of all employees in the bargaining unit. In resolving the issue of whether respondents act of concluding a CBA with CABELA is warranted under the circumstances is to examine the validity of such act. The mechanics of collective bargaining are set in motion only when the following jurisdictional preconditions are present, namely: 1) possession of the status of majority representation of the employees representative in accordance with any of the means of selection and designation provided for by the Labor Code, 2) proof of majority representation, and 3) a demand to bargain under Article 250, par. (a) of the Labor Code x x x.

In the instant case, it is undeniable that complainant is the certified collective bargaining agent of the regular workers and seasonal employees of respondent. Its status as such was determined in a certification election conducted by the Department of Labor and Employment (DOLE). As such, there was no reason for respondent to deal and negotiate with CABELA since the latter does not have such status of majority representation. x x x. X x x. Based on this premise, respondent violated its duty to bargain with complainant when during the pendency of the conciliation proceedings before the NCMB it concluded a CBA with another union as a consequence, it refused to resume negotiation with complainant upon the latters demand.

With respect to respondents observation that the request for conciliation meeting was signed by one who is not eligible and authorized to represent any union with the company since he is no longer an employee, suffice it to state that at the time the request was made, such employee has questioned the validity of his dismissal with then NLRC. X x x. Respondents failure to act on the request of the complainant to resume negotiation for no valid reason constitutes unfair labor practice. Consequently, the proposed CBA as amended should be imposed to respondent. WHEREFORE, premises considered, the appealed Decision is REVERSED and SET ASIDE. Another one is entered declaring that respondent Central Azucarera de Bais is guilty of unfair labor practice. As such, the proposed CBA of complainant, as amended is imposed to respondent Central Azucarera de Bais. SO ORDERED.

CAB moved for a reconsideration but the motion was denied by the NLRC in its resolution dated September 28, 2007.262[15]

Unsatisfied, CAB elevated the matter to the CA by way of a petition for certiorari under Rule 65 alleging grave abuse of discretion on the part of the NLRC in reversing the LA decision and issuing the questioned resolution.

On September 26, 2008, the CA found CABs petition meritorious and reversed the NLRC decision and resolution. The CA pointed out:

xxx

xxx

xxx

First. This Court has acquired jurisdiction over the person of private respondent CABEU-NFL. Through its counsel of record, CABEU-NFL already filed its extensive comment on the instant petition. Hence, it is now useless to contend that it was denied notice of the same and the opportunity to be heard on it. x x x. xxx xxx xxx

Second. Petitioner CAB was not shown to have violated the rule requiring parties to certify in their initiatory pleadings against forum shopping. Private respondent CABEU-NFL alleges in its comment that the two cases are pending before this Court: CA-G.R. No. 03132 and CA-G.R. No. 03017 involving the same parties as in the case at bar. Unfortunately, CABEU-NFL did not explain how the issues in those pending cases are related to or similar to those involved in this proceeding. x x x. xxx xxx xxx xxx xxx xxx

Third.

In the case at bar, private respondent CABEU-NFL failed in its burden of proof to present substantial evidence to support the allegation of unfair labor practice. The assailed Decision and Resolution of public respondent referred merely to two (2) circumstances which allegedly support the conclusion that the presumption of good faith had been rebutted and that bad faith was extant in petitioners actions. To recall, these circumstances are: (a) the execution of a supposed collective bargaining agreement with another labor union, CABELA;

and (b) CABs sending of the letter dated June 14, 2005 to NCMB seeking to call off the collective bargaining negotiations. These, however, are not enough to ascribe the very serious offense of unfair labor practice upon petitioner. x x x.

xxx

xxx

xxx

x x x petitioner CAB was not scuttling the ongoing negotiations towards a new collective bargaining agreement. It was simply propounding a position to the NCMB for the latter to rule on. That the negotiations did not push through was not the result of CAB managements intransigence because there was none at least so far as the case record confirms. There is nothing that establishes petitioners predetermined resolve not to budge from an initial position perhaps stubbornness of some ambiguous sort but not the absence of good faith to pursue collective bargaining. x x x. xxx xxx xxx

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated July 18, 2007 and Resolution dated September 28, 2007 of public respondent National Labor Relations Commission in NLRC Case No. V-00000207 are REVERSED and SET ASIDE. The Decision dated July 13, 2006 in NLRC RAB VII Case No. 07-0104-2005-D entitled Central Azucarera de Bais Employees Union-NFL (CABEU-NFL), represented by Pablito Saguran, complainant, versus, (CAB) and/or Steven Chan as Owner and Roberto de la Rosa as Manager, respondents of Labor Arbiter Fructuoso T. Villarin IV is REINSTATED and AFFIRMED IN TOTO. Costs of suit de oficio. SO ORDERED.

CABEU-NFL moved for a reconsideration but its motion was denied by the CA in its Resolution dated January 21, 2009.263[16]

Hence this petition.

In its Memorandum,264[17] CABEU-NFL raised the following:

ISSUES

I) WHETHER OF NOT THE COURT OF APPEALS VIOLATED THE CONSTITUTIONAL RIGHTS OF PETITIONER WHEN THE HONORABLE COURT OF APPEALS REVERSED THE FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) WHICH HELD RESPONDENT GUILTY OF UNFAIR LABOR PRACTICE.265[18] II) WHETHER OR NOT THE COURT OF APPEALS VIOLATED THE CONSTITUTIONAL RIGHTS OF THE PETITIONER WHEN IT GAVE DUE COURSE TO RESPONDENTS PETITION FOR CERTIORARI WITHOUT COMPLYING WITH THE JURISDICTIONAL REQUIREMENTS UNDER RULE 65, SECTION 1 AND SUPREME COURT CIRCULAR NO. 04-94, ON CERTIFICATION ON NON-FORUM SHOPPING.266[19]

In sum, the petition raises three (3) issues for the Courts consideration which are whether or not the CA erred: (1) in giving due course to the petition for certiorari despite service of the copy of the petition to CABEU-NFLs counsel and not to itself ; (2) in giving due course to the petition for certiorari despite the failure of CAB to indicate the address of CABEU-NFL in the petition; and (3) in absolving CAB of unfair labor practice.

CABEU-NFL insists that the CA erred in giving due course to the petition for certiorari because respondent CAB served a copy of its CA petition to CABEU-NFLs counsel and not to CABEU-NFL

itself. CABEU-NFL, likewise, harps on the failure of CAB to indicate CABEU-NFLs full address in the said petition as required in petitions for certiorari, citing Section 1, Rule 65267[20] in relation to Section 3, Rule 46.268[21]

Ultimately, CABEU-NFL aggressively asserts that CAB is guilty of unfair labor practice on the ground of its refusal to bargain collectively. CABEU-NFL claims to be the duly certified bargaining agent of the CAB rank-and-file employees such that it requested to bargain through a letter-request

which was subsequently turned down by CAB in its letter-response. Anchored on the admission in the CAB letter-response of a supposed CBA with CABELA, CABEU-NFL charges that such act constitutes a violation of CABs duty to bargain collectively under Article 253 of the Labor Code269[22] and consequently an act of unfair labor practice prohibited under Article 248 (g) of the Labor Code.270[23] CABEU-NFL also submits that CAB violated the prohibition against forum shopping when it that the

filed its petition in the CA. CABEU-NFL claims

failure of CABs counsel to disclose to the CA the pendency of CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 constituted forum shopping, a sufficient ground to dismiss the said petition.

In its Memorandum,271[24] CAB claims that service of the copy of the petition for certiorari to CABEU-NFLs counsel was sufficient. It vehemently denies its alleged failure to indicate CABEU-

NFLs name and address in its petition. CAB also stresses that CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 were initiated exclusively by members of CABEU and by CABEU itself, respectively, and not by CAB.272[25] CAB further argues that there was no identity of issues or causes of action between the two abovementioned cases and this case.

On the issue of unfair labor practice, CAB counters that in view of the disassociation of more than 90% of rank-and-file workers from CABEU-NFL, it was constrained to negotiate and conclude in good faith a new CBA with CABELA, the newly established union by workers who disassociated from CABEU-NFL. CAB emphasizes that it declined further negotiations with CABEU-NFL in good faith because to continue with it would serve no practical purpose. Considering that the NCMB has yet to resolve CABs query in its letter-response, CAB was left without any choice but accede to the demands of CABELA. In concluding a CBA with CABELA, CAB claims that it acted in the best interest of the rank-and-file workers which belied bad faith.

THE COURTS RULING

The petition lacks merit.

On the technical issues, CABEU-NFLs insistence that service of the copy of the CA petition should have been made to it, rather than to its counsel, is unavailing.

On the matter of service, Section 1, Rule 65 in relation to Section 3, Rule 46 of the Rules of Court, clearly provides that in a petition filed originally in the CA, the petitioner is required to serve a copy of the petition on the adverse party before its filing. If the adverse party appears by counsel, service shall be made on such counsel pursuant to Section 2, Rule 13.273[26]

With respect to the alleged failure of CAB to indicate the address of CABEU-NFL in the CA petition, it appears that CABEU-NFL is misleading the Court. A perusal of the petition274[27] filed before the CA reveals that CAB indeed indicated both the name275[28] and address276[29] of CABEUNFL. Moreover, the indication in said petition by CAB that CABEU-NFL could be served with court processes through its counsel was substantial compliance with the Rules.277[30]

The Court, likewise, cannot sustain CABEU-NFLs contention on forum shopping against CAB.

By forum shopping, a party initiates two or more actions in separate tribunals, grounded on the same cause, hoping that one or the other tribunal would favorably dispose of the matter. The elements of forum shopping are: (1) identity of parties, or at least such parties as would represent the same interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration.278[31]

In the case at bench, CABEU-NFL merely raised the fact of the pendency of CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 in its comment on the petition for certiorari279[32] filed before the CA without demonstrating any similarity in the causes of action between the said cases and the present case. The CA, citing the ruling in Tboli Agro-Industrial Development, Inc. v. Solilapsi280[33] as authority, points out that:

This Court cannot take judicial notice of what CA-G.R. No. 03132 and CA-G.R. No. 03017 involve because: As a general rule, courts are not authorized to take judicial notice in the adjudication of cases pending before them of the contents of other cases even when such cases have been tried or are pending in the same court and notwithstanding the fact that both cases may have been tried or are actually pending before the same judge. Courts may be required to take judicial notice of the decisions of the appellate courts but not of the decisions of the coordinate trial courts, or even of a decision or the facts involved in another case tried by the same court itself, unless the parties

introduce the same in evidence or the court, as a matter of convenience, decides to do so. Besides, judicial notice of matters which ought to be known to judges because of their judicial functions is only discretionary upon the court. It is not mandatory. In the absence of evidence to show that the issues involved in these cases are the same, this Court cannot give credence to private respondents claim of forum shopping.

The Court now proceeds to determine whether or not respondent CAB was guilty of acts constituting unfair labor practice by refusing to bargain collectively.

The Court rules in the negative.

CAB is being accused of violating its duty to bargain collectively supposedly because of its act in concluding a CBA with CABELA, another union in the bargaining unit, and its failure to resume negotiations with CABEU-NFL.

The concept of unfair labor practice is provided in Article 247 of the Labor Code which states:

Article 247. Concept of Unfair Labor Practice and Procedure for Prosecution thereof. -- Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations.

xxx

xxx

xxx

The Labor Code, likewise, enumerates the acts constituting unfair labor practices of the employer, thus:

Article 248. Unfair Labor Practices of Employers.It shall be unlawful for an employer to commit any of the following unfair labor practice: xxx xxx xxx

(g) To violate the duty to bargain collectively as prescribed by this Code.

For a charge of unfair labor practice to prosper, it must be shown that CAB was motivated by ill will, bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings or grave anxiety resulted x x x in suspending negotiations with CABEU-NFL. Notably, CAB believed that CABEU-

NFL was no longer the representative of the workers.281[34] It just wanted to foster industrial peace by bowing to the wishes of the overwhelming majority of its rank and file workers and by negotiating and concluding in good faith a CBA with CABELA.282[35] Such actions of CAB are nowhere tantamount to anti-unionism, the evil sought to be punished in cases of unfair labor practices.

Furthermore, basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same. By imputing bad faith to the actuations of CAB, CABEU-NFL has the burden of proof to present substantial evidence to support the allegation of unfair labor practice.283[36] Apparently, CABEU-NFL refers only to the circumstances mentioned in the letter-response, namely, the execution of the supposed CBA between CAB and CABELA and the request to suspend the negotiations, to conclude that bad faith attended CABs actions. The Court is of the view that CABEU-NFL, in simply relying on the said letter-response, failed to substantiate its claim of unfair labor practice to rebut the presumption of good faith.

Moreover, as correctly determined by the LA, the filing of the complaint for unfair labor practice was premature inasmuch as the issue of collective bargaining is still pending before the NCMB.

In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the Constitution that the rights of workers and the promotion of their welfare shall be protected. The Court is, likewise, guided by the goal of attaining industrial peace by the proper application of the law. Thus, it cannot favor one party, be it labor or management, in arriving at a just solution to a controversy if the party has no valid support to its claims. It is not within this Courts power to rule beyond the ambit of the law.284[37]

WHEREFORE, the petition is DENIED.

SO ORDERED.

11. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802, October 13, 2010.

MATLING INDUSTRIAL AND COMMERCIAL CORPORATION, RICHARD K. SPENCER, CATHERINE SPENCER, AND ALEX MANCILLA, Petitioners,

G.R. No. 157802

Present:

CARPIO MORALES, Chairperson, BRION, BERSAMIN, VILLARAMA, JR., and

-versus -

SERENO, JJ.

RICARDO R. COROS, Respondent.

Promulgated:

October 13, 2010 x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

This case reprises the jurisdictional conundrum of whether a complaint for illegal dismissal is cognizable by the Labor Arbiter (LA) or by the Regional Trial Court (RTC). The determination of whether the dismissed officer was a regular employee or a corporate officer unravels the conundrum. In the case of the regular employee, the LA has jurisdiction; otherwise, the RTC exercises the legal authority to adjudicate.

In this appeal via petition for review on certiorari, the petitioners challenge the decision dated September 13, 2002285[1] and the resolution dated April 2, 2003,286[2] both promulgated in C.A.-G.R. SP No. 65714 entitled Matling Industrial and Commercial Corporation, et al. v. Ricardo R. Coros and National Labor Relations Commission, whereby by the Court of Appeals (CA) sustained the ruling of the National Labor Relations Commission (NLRC) to the effect that the LA had jurisdiction because the respondent was not a corporate officer of petitioner Matling Industrial and Commercial Corporation (Matling).

Antecedents

After his dismissal by Matling as its Vice President for Finance and Administration, the respondent filed on August 10, 2000 a complaint for illegal suspension and illegal dismissal against Matling and some of its corporate officers (petitioners) in the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.287[3]

The petitioners moved to dismiss the complaint,288[4] raising the ground, among others, that the complaint pertained to the jurisdiction of the Securities and Exchange Commission (SEC) due to the controversy being intra-corporate inasmuch as the respondent was a member of Matlings Board of Directors aside from being its Vice-President for Finance and Administration prior to his termination.

The respondent opposed the petitioners motion to dismiss,289[5] insisting that his status as a member of Matlings Board of Directors was doubtful, considering that he had not been formally elected as such; that he did not own a single share of stock in Matling, considering that he had been made to sign in blank an undated indorsement of the certificate of stock he had been given in 1992; that Matling had taken back and retained the certificate of stock in its custody; and that even assuming that he had been a Director of Matling, he had been removed as the Vice President for Finance and Administration, not as a Director, a fact that the notice of his termination dated April 10, 2000 showed.

On October 16, 2000, the LA granted the petitioners motion to dismiss,290[6] ruling that the respondent was a corporate officer because he was occupying the position of Vice President for Finance

and Administration and at the same time was a Member of the Board of Directors of Matling; and that, consequently, his removal was a corporate act of Matling and the controversy resulting from such removal was under the jurisdiction of the SEC, pursuant to Section 5, paragraph (c) of Presidential Decree No. 902.

Ruling of the NLRC

The respondent appealed to the NLRC,291[7] urging that:

I THE HONORABLE LABOR ARBITER COMMITTED GRAVE ABUSE OF DISCRETION GRANTING APPELLEES MOTION TO DISMISS WITHOUT GIVING THE APPELLANT AN OPPORTUNITY TO FILE HIS OPPOSITION THERETO THEREBY VIOLATING THE BASIC PRINCIPLE OF DUE PROCESS. II THE HONORABLE LABOR ARBITER COMMITTED AN ERROR IN DISMISSING THE CASE FOR LACK OF JURISDICTION.

On March 13, 2001, the NLRC set aside the dismissal, concluding that the respondents complaint for illegal dismissal was properly cognizable by the LA, not by the SEC, because he was not a corporate officer by virtue of his position in Matling, albeit high ranking and managerial, not being among the positions listed in Matlings Constitution and By-Laws.292[8] The NLRC disposed thuswise:

WHEREFORE, the Order appealed from is SET ASIDE. A new one is entered declaring and holding that the case at bench does not involve any intracorporate matter. Hence, jurisdiction to hear and act on said case is vested with the Labor Arbiter, not the SEC, considering that the position of Vice-President for Finance and Administration being held by complainant-appellant is not listed as among respondent's corporate officers. Accordingly, let the records of this case be REMANDED to the Arbitration Branch of origin in order that the Labor Arbiter below could act on the case at bench, hear both parties, receive their respective evidence and position papers fully observing the requirements of due process, and resolve the same with reasonable dispatch. SO ORDERED.

The petitioners sought reconsideration,293[9] reiterating that the respondent, being a member of the Board of Directors, was a corporate officer whose removal was not within the LAs jurisdiction.

The petitioners later submitted to the NLRC in support of the motion for reconsideration the certified machine copies of Matlings Amended Articles of Incorporation and By Laws to prove that the President of Matling was thereby granted full power to create new offices and appoint the officers thereto, and the minutes of special meeting held on June 7, 1999 by Matlings Board of Directors to prove that the respondent was, indeed, a Member of the Board of Directors.294[10]

Nonetheless,

on

April

30,

2001,

the

NLRC

denied

the

petitioners

motion

for

reconsideration.295[11]

Ruling of the CA

The petitioners elevated the issue to the CA by petition for certiorari, docketed as C.A.-G.R. No. SP 65714, contending that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction in reversing the correct decision of the LA.

In its assailed decision promulgated on September 13, 2002,296[12] the CA dismissed the petition for certiorari, explaining:

For a position to be considered as a corporate office, or, for that matter, for one to be considered as a corporate officer, the position must, if not listed in the by-laws, have been created by the corporation's board of directors, and the occupant thereof appointed or elected by the same board of directors or stockholders. This is the implication of the ruling in Tabang v. National Labor Relations Commission, which reads: 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. 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. This ruling was reiterated in the subsequent cases of Ongkingco v. National Labor Relations Commission and De Rossi v. National Labor Relations Commission.

The position of vice-president for administration and finance, which Coros used to hold in the corporation, was not created by the corporations board of directors but only by its president or executive vice-president pursuant to the by-laws of the corporation. Moreover, Coros appointment to said position was not made through any act of the board of directors or stockholders of the corporation. Consequently, the position to which Coros was appointed and later on removed from, is not a corporate office despite its nomenclature, but an ordinary office in the corporation. Coros alleged illegal dismissal therefrom is, therefore, within the jurisdiction of the labor arbiter. WHEREFORE, the petition for certiorari is hereby DISMISSED. SO ORDERED. The CA denied the petitioners motion for reconsideration on April 2, 2003.297[13]

Issue

Thus, the petitioners are now before the Court for a review on certiorari, positing that the respondent was a stockholder/member of the Matlings Board of Directors as well as its Vice President for Finance and Administration; and that the CA consequently erred in holding that the LA had jurisdiction.

The decisive issue is whether the respondent was a corporate officer of Matling or not. The resolution of the issue determines whether the LA or the RTC had jurisdiction over his complaint for illegal dismissal.

Ruling

The appeal fails.

I The Law on Jurisdiction in Dismissal Cases

As a rule, the illegal dismissal of an officer or other employee of a private employer is properly cognizable by the LA. This is pursuant to Article 217 (a) 2 of the Labor Code, as amended, which provides as follows:

Article 217. Jurisdiction of the Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. (c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. (As amended by Section 9, Republic Act No. 6715, March 21, 1989).

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.298[14] Such controversy, among others, is known as an intra-corporate dispute.

Effective on August 8, 2000, upon the passage of Republic Act No. 8799,299[15] otherwise known as The Securities Regulation Code, the SECs jurisdiction over all intra-corporate disputes was transferred to the RTC, pursuant to Section 5.2 of RA No. 8799, to wit:

5.2. The Commissions 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.

Considering that the respondents complaint for illegal dismissal was commenced on August 10, 2000, it might come under the coverage of Section 5.2 of RA No. 8799, supra, should it turn out that the respondent was a corporate, not a regular, officer of Matling.

II Was the Respondents Position of Vice President for Administration and Finance a Corporate Office?

We must first resolve whether or not the respondents position as Vice President for Finance and Administration was a corporate office. If it was, his dismissal by the Board of Directors rendered the matter an intra-corporate dispute cognizable by the RTC pursuant to RA No. 8799.

The petitioners contend that the position of Vice President for Finance and Administration was a corporate office, having been created by Matlings President pursuant to By-Law No. V, as amended,300[16] to wit:

BY LAW NO. V Officers

The President shall be the executive head of the corporation; shall preside over the meetings of the stockholders and directors; shall countersign all certificates, contracts and other instruments of the corporation as authorized by the Board of Directors; shall have full power to hire and discharge any or all employees of the corporation; shall have full power to create new offices and to appoint the officers thereto as he may deem proper and necessary in the operations of the corporation and as the progress of the business and welfare of the corporation may demand; shall make reports to the directors and stockholders and perform all such other duties and functions as are incident to his office or are properly required of him by the Board of Directors. In case of the absence or disability of the President, the Executive Vice President shall have the power to exercise his functions.

The petitioners argue that the power to create corporate offices and to appoint the individuals to assume the offices was delegated by Matlings Board of Directors to its President through By-Law No. V, as amended; and that any office the President created, like the position of the respondent, was as valid and effective a creation as that made by the Board of Directors, making the office a corporate office. In justification, they cite Tabang v. National Labor Relations Commission,301[17] which held that 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 officers as may be necessary.

The respondent counters that Matlings By-Laws did not list his position as Vice President for Finance and Administration as one of the corporate offices; that Matlings By-Law No. III listed only four corporate officers, namely: President, Executive Vice President, Secretary, and Treasurer; 302[18] that the corporate offices contemplated in the phrase and such other officers as may be provided for in the by-laws found in Section 25 of the Corporation Code should be clearly and expressly stated in the By-Laws; that the fact that Matlings By-Law No. III dealt with Directors & Officers while its By-Law No. V dealt with Officers proved that there was a differentiation between the officers mentioned in the two provisions, with those classified under By-Law No. V being ordinary or non-corporate officers; and

that the officer, to be considered as a corporate officer, must be elected by the Board of Directors or the stockholders, for the President could only appoint an employee to a position pursuant to By-Law No. V.

We agree with respondent.

Section 25 of the Corporation Code provides:

Section 25. Corporate officers, quorum.--Immediately after their election, the directors of a corporation must formally organize by the election of a president, who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines, and such other officers as may be provided for in the by-laws. Any two (2) or more positions may be held concurrently by the same person, except that no one shall act as president and secretary or as president and treasurer at the same time. The directors or trustees and officers to be elected shall perform the duties enjoined on them by law and the by-laws of the corporation. Unless the articles of incorporation or the by-laws provide for a greater majority, a majority of the number of directors or trustees as fixed in the articles of incorporation shall constitute a quorum for the transaction of corporate business, and every decision of at least a majority of the directors or trustees present at a meeting at which there is a quorum shall be valid as a corporate act, except for the election of officers which shall require the vote of a majority of all the members of the board. Directors or trustees cannot attend or vote by proxy at board meetings.

Conformably with Section 25, a position must be expressly mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation of an office pursuant to or under a By-Law enabling provision is not enough to make a position a corporate office. Guerrea v. Lezama,303[19] the first ruling on the matter, held that the only officers of a corporation were those given that character either

by the Corporation Code or by the By-Laws; the rest of the corporate officers could be considered only as employees or subordinate officials. Thus, it was held in Easycall Communications Phils., Inc. v. King:304[20]

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 occupies no office and generally is employed not by the 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. In this case, respondent was appointed vice president for nationwide expansion by Malonzo, petitioner's general manager, not by the board of directors of petitioner. It was also Malonzo who determined the compensation package of respondent. Thus, respondent was an employee, not a corporate officer. The CA was therefore correct in ruling that jurisdiction over the case was properly with the NLRC, not the SEC (now the RTC).

This interpretation is the correct application of Section 25 of the Corporation Code, which plainly states that the corporate officers are the President, Secretary, Treasurer and such other officers as may be provided for in the By-Laws. Accordingly, the corporate officers in the context of PD No. 902-A are exclusively those who are given that character either by the Corporation Code or by the corporations By-Laws.

A different interpretation can easily leave the way open for the Board of Directors to circumvent the constitutionally guaranteed security of tenure of the employee by the expedient inclusion in the ByLaws of an enabling clause on the creation of just any corporate officer position.

It is relevant to state in this connection that the SEC, the primary agency administering the Corporation Code, adopted a similar interpretation of Section 25 of the Corporation Code in its Opinion dated November 25, 1993,305[21] to wit:

Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate officers enumerated in the by-laws are the exclusive Officers of the corporation and the Board has no power to create other Offices without amending first the corporate By-laws. However, the Board may create appointive positions other than the positions of corporate Officers, but the persons occupying such positions are not considered as corporate officers within the meaning of Section 25 of the Corporation Code and are not empowered to exercise the functions of the corporate Officers, except those functions lawfully delegated to them. Their functions and duties are to be determined by the Board of Directors/Trustees.

Moreover, the Board of Directors of Matling could not validly delegate the power to create a corporate office to the President, in light of Section 25 of the Corporation Code requiring the Board of Directors itself to elect the corporate officers. Verily, the power to elect the corporate officers was a discretionary power that the law exclusively vested in the Board of Directors, and could not be delegated to subordinate officers or agents.306[22] The office of Vice President for Finance and Administration created by Matlings President pursuant to By Law No. V was an ordinary, not a corporate, office.

To emphasize, the power to create new offices and the power to appoint the officers to occupy them vested by By-Law No. V merely allowed Matlings President to create non-corporate offices to be occupied by ordinary employees of Matling. Such powers were incidental to the Presidents duties as the executive head of Matling to assist him in the daily operations of the business.

The petitioners reliance on Tabang, supra, is misplaced. The statement in Tabang, to the effect that offices not expressly mentioned in the By-Laws but were created pursuant to a By-Law enabling provision were also considered corporate offices, was plainly obiter dictum due to the position subject of the controversy being mentioned in the By-Laws. Thus, the Court held therein that the position was a corporate office, and that the determination of the rights and liabilities arising from the ouster from the position was an intra-corporate controversy within the SECs jurisdiction.

In Nacpil v. Intercontinental Broadcasting Corporation,307[23] which may be the more appropriate ruling, the position subject of the controversy was not expressly mentioned in the By-Laws, but was created pursuant to a By-Law enabling provision authorizing the Board of Directors to create other offices that the Board of Directors might see fit to create. The Court held there that the position was a corporate office, relying on the obiter dictum in Tabang.

Considering that the observations earlier made herein show that the soundness of their dicta is not unassailable, Tabang and Nacpil should no longer be controlling.

III Did Respondents Status as Director and Stockholder Automatically Convert his Dismissal into an Intra-Corporate Dispute?

Yet, the petitioners insist that because the respondent was a Director/stockholder of Matling, and relying on Paguio v. National Labor Relations Commission308[24] and Ongkingko v. National Labor

Relations Commission,309[25] the NLRC had no jurisdiction over his complaint, considering that any case for illegal dismissal brought by a stockholder/officer against the corporation was an intra-corporate matter that must fall under the jurisdiction of the SEC conformably with the context of PD No. 902-A.

The petitioners insistence is bereft of basis.

To begin with, the reliance on Paguio and Ongkingko is misplaced. In both rulings, the complainants were undeniably corporate officers due to their positions being expressly mentioned in the By-Laws, aside from the fact that both of them had been duly elected by the respective Boards of Directors. But the herein respondents position of Vice President for Finance and Administration was not expressly mentioned in the By-Laws; neither was the position of Vice President for Finance and Administration created by Matlings Board of Directors. Lastly, the President, not the Board of Directors, appointed him.

True it is that the Court pronounced in Tabang as follows:

Also, an intra-corporate controversy is one which arises between a stockholder and the corporation. There is no distinction, qualification or any exemption whatsoever. The provision is broad and covers all kinds of controversies between stockholders and corporations.310[26]

However, the Tabang pronouncement is not controlling because it is too sweeping and does not accord with reason, justice, and fair play. In order to determine whether a dispute constitutes an intracorporate controversy or not, the Court considers two elements instead, namely: (a) the status or relationship of the parties; and (b) the nature of the question that is the subject of their controversy. This was our thrust in Viray v. Court of Appeals:311[27]

The establishment of any of the relationships mentioned above will not necessarily always confer jurisdiction over the dispute on the SEC to the exclusion of regular courts. The statement made in one case that the rule admits of no exceptions or distinctions is not that absolute. The better policy in determining which body has jurisdiction over a case would be to consider not only the status or relationship of the parties but also the nature of the question that is the subject of their controversy. Not every conflict between a corporation and its stockholders involves corporate matters that only the SEC can resolve in the exercise of its adjudicatory or quasi-judicial powers. If, for example, a person leases an apartment owned by a corporation of which he is a stockholder, there should be no question that a complaint for his ejectment for non-payment of rentals would still come under the jurisdiction of the regular courts and not of the SEC. By the same token, if one person injures another in a vehicular accident, the complaint for damages filed by the victim will not come under the jurisdiction of the SEC simply because of the happenstance that both parties are stockholders of the same corporation. A contrary interpretation would dissipate the powers of the regular courts and distort the meaning and intent of PD No. 902-A.

In another case, Mainland Construction Co., Inc. v. Movilla,312[28] the Court reiterated these determinants thuswise: In order that the SEC (now the regular courts) can take cognizance of a case, the controversy must pertain to any of the following relationships: a) between the corporation, partnership or association and the public;

b) between the corporation, partnership or association and its stockholders, partners, members or officers; c) between the corporation, partnership or association and the State as far as its franchise, permit or license to operate is concerned; and d) among the stockholders, partners or associates themselves. The fact that the parties involved in the controversy are all stockholders or that the parties involved are the stockholders and the corporation does not necessarily place the dispute within the ambit of the jurisdiction of SEC. The better policy to be followed in determining jurisdiction over a case should be to consider concurrent factors such as the status or relationship of the parties or the nature of the question that is the subject of their controversy. In the absence of any one of these factors, the SEC will not have jurisdiction. Furthermore, it does not necessarily follow that every conflict between the corporation and its stockholders would involve such corporate matters as only the SEC can resolve in the exercise of its adjudicatory or quasi-judicial powers.313[29]

The criteria for distinguishing between corporate officers who may be ousted from office at will, on one hand, and ordinary corporate employees who may only be terminated for just cause, on the other hand, do not depend on the nature of the services performed, but on the manner of creation of the office. In the respondents case, he was supposedly at once an employee, a stockholder, and a Director of Matling. The circumstances surrounding his appointment to office must be fully considered to determine whether the dismissal constituted an intra-corporate controversy or a labor termination dispute. We must also consider whether his status as Director and stockholder had any relation at all to his appointment and subsequent dismissal as Vice President for Finance and Administration.

Obviously enough, the respondent was not appointed as Vice President for Finance and Administration because of his being a stockholder or Director of Matling. He had started working for Matling on September 8, 1966, and had been employed continuously for 33 years until his termination on April 17, 2000, first as a bookkeeper, and his climb in 1987 to his last position as Vice President for Finance and Administration had been gradual but steady, as the following sequence indicates:

1966 Bookkeeper 1968 Senior Accountant 1969 Chief Accountant 1972 Office Supervisor 1973 Assistant Treasurer 1978 Special Assistant for Finance 1980 Assistant Comptroller 1983 Finance and Administrative Manager 1985 Asst. Vice President for Finance and Administration 1987 to April 17, 2000 Vice President for Finance and Administration

Even though he might have become a stockholder of Matling in 1992, his promotion to the position of Vice President for Finance and Administration in 1987 was by virtue of the length of quality service he had rendered as an employee of Matling. His subsequent acquisition of the status of Director/stockholder had no relation to his promotion. Besides, his status of Director/stockholder was unaffected by his dismissal from employment as Vice President for Finance and Administration.

In Prudential Bank and Trust Company v. Reyes,314[30] a case involving a lady bank manager who had risen from the ranks but was dismissed, the Court held that her complaint for illegal dismissal was correctly brought to the NLRC, because she was deemed a regular employee of the bank. The Court observed thus:

It appears that private respondent was appointed Accounting Clerk by the Bank on July 14, 1963. From that position she rose to become supervisor. Then in 1982, she was appointed Assistant Vice-President which she occupied until her illegal dismissal on July 19, 1991. The banks 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. 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. As Assistant Vice President of the Foreign Department of the Bank, she is tasked, among others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased, including the signing of transmittal letters covering the same. 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. 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. 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. 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. 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.

WHEREFORE, we deny the petition for review on certiorari, and affirm the decision of the Court of Appeals.

Costs of suit to be paid by the petitioners.

SO ORDERED.

12. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.

ARSENIO Z. LOCSIN, Petitioner,

G.R. No. 185567

Present:

versus -

CARPIO, J., NACHURA, BRION, Acting Chairperson, MENDOZA, and

NISSAN CAR LEASE PHILS., INC. and LUIS BANSON, Respondents.

SERENO, JJ.

Promulgated:

October 20, 2010 x----------------------------------------------------------------------------------------x

DECISION

BRION, J.:

Through a petition for review on certiorari,315[1] petitioner Arsenio Z. Locsin (Locsin) seeks the reversal of the Decision316[2] of the Court of Appeals (CA) dated August 28, 2008,317[3] in Arsenio Z. Locsin v. Nissan Car Lease Phils., Inc. and Luis Banson, docketed as CA-G.R. SP No. 103720 and the Resolution dated December 9, 2008,318[4] denying Locsins Motion for Reconsideration. The assailed ruling of the CA reversed and set aside the Decision319[5] of the Hon. Labor Arbiter Thelma Concepcion (Labor Arbiter Concepcion) which denied Nissan Lease Phils. Inc.s (NCLPI) and Luis T. Bansons (Banson) Motion to Dismiss.

THE FACTUAL ANTECEDENTS

On January 1, 1992, Locsin was elected Executive Vice President and Treasurer (EVP/Treasurer) of NCLPI. As EVP/Treasurer, his duties and responsibilities included: (1) the management of the finances of the company; (2) carrying out the directions of the President and/or the Board of Directors regarding financial management; and (3) the preparation of financial reports to advise the officers and directors of the financial condition of NCLPI.320[6] Locsin held this position for 13 years, having been re-elected every year since 1992, until January 21, 2005, when he was nominated and elected Chairman of NCLPIs Board of Directors.321[7]

On August 5, 2005, a little over seven (7) months after his election as Chairman of the Board, the NCLPI Board held a special meeting at the Manila Polo Club. One of the items of the agenda was the election of a new set of officers. Unfortunately, Locsin was neither re-elected Chairman nor reinstated to his previous position as EVP/Treasurer.322[8]

Aggrieved, on June 19, 2007, Locsin filed a complaint for illegal dismissal with prayer for reinstatement, payment of backwages, damages and attorneys fees before the Labor Arbiter against NCLPI and Banson, who was then President of NCLPI.323[9]

The Compulsory Arbitration Proceedings before the Labor Arbiter.

On July 11, 2007, instead of filing their position paper, NCLPI and Banson filed a Motion to Dismiss,324[10] on the ground that the Labor Arbiter did not have jurisdiction over the case since the issue of Locsins removal as EVP/Treasurer involves an intra-corporate dispute.

On August 16, 2007, Locsin submitted his opposition to the motion to dismiss, maintaining his position that he is an employee of NCLPI.

On March 10, 2008, Labor Arbiter Concepcion issued an Order denying the Motion to Dismiss, holding that her office acquired jurisdiction to arbitrate and/or decide the instant complaint finding extant in the case an employer-employee relationship.325[11]

NCLPI, on June 3, 2008, elevated the case to the CA through a Petition for Certiorari under Rule 65 of the Rules of Court.326[12] NCLPI raised the issue on whether the Labor Arbiter committed grave abuse of discretion by denying the Motion to Dismiss and holding that her office had jurisdiction over the dispute.

The CA Decision - Locsin was a corporate officer; the issue of his removal as EVP/Treasurer is an intracorporate dispute under the RTCs jurisdiction.

On August 28, 2008,327[13] the CA reversed and set aside the Labor Arbiters Order denying the Motion to Dismiss and ruled that Locsin was a corporate officer. Citing PD 902-A, the CA defined corporate officers as those officers of a corporation who are given that character either by the Corporation Code or by the corporations by-laws. In this regard, the CA held:

Scrutinizing the records, We hold that petitioners successfully discharged their onus of establishing that private respondent was a corporate officer who held the position of Executive Vice-President/Treasurer as provided in the by-laws of petitioner corporation and that he held such position by virtue of election by the Board of Directors.

That private respondent is a corporate officer cannot be disputed. The position of Executive Vice-President/Treasurer is specifically included in the roster of officers provided for by the (Amended) By-Laws of petitioner corporation, his duties and responsibilities, as well as compensation as such officer are likewise set forth therein.328[14]

Article 280 of the Labor Code, the receipt of salaries by Locsin, SSS deductions on that salary, and the element of control in the performance of work duties indicia used by the Labor Arbiter to conclude that Locsin was a regular employee were held inapplicable by the CA.329[15] The CA noted the Labor

Arbiters failure to address the fact that the position of EVP/Treasurer is specifically enumerated as an office in the corporations by-laws.330[16]

Further, the CA pointed out Locsins failure to state any circumstance by which NCLPI engaged his services as a corporate officer that would make him an employee. The CA found, in this regard, that Locsins assumption and retention as EVP/Treasurer was based on his election and subsequent reelections from 1992 until 2005. Further, he performed only those functions that were specifically set forth in the By-Laws or required of him by the Board of Directors.331[17]

With respect to the suit Locsin filed with the Labor Arbiter, the CA held that:

Private respondent, in belatedly filing this suit before the Labor Arbiter, questioned the legality of his dismissal but in essence, he raises the issue of whether or not the Board of Directors had the authority to remove him from the corporate office to which he was elected pursuant to the By-Laws of the petitioner corporation. Indeed, had private respondent been an ordinary employee, an election conducted by the Board of Directors would not have been necessary to remove him as Executive VicePresident/Treasurer. However, in an obvious attempt to preclude the application of settled jurisprudence that corporate officers whose position is provided in the by-laws, their election, removal or dismissal is subject to Section 5 of P.D. No. 902-A (now R.A. No. 8799), private respondent would even claim in his Position Paper, that since his responsibilities were akin to that of the companys Executive Vice-President/Treasurer, he was hired under the pretext that he was being elected into said post.332[18] [Emphasis supplied.]

As a consequence, the CA concluded that Locsin does not have any recourse with the Labor Arbiter or the NLRC since the removal of a corporate officer, whether elected or appointed, is an intracorporate controversy over which the NLRC has no jurisdiction.333[19] Instead, according to the CA, Locsins complaint for illegal dismissal should have been filed in the Regional Trial Court (RTC), pursuant to Rule 6 of the Interim Rules of Procedure Governing Intra-Corporate Controversies.334[20]

Finally, the CA addressed Locsins invocation of Article 4 of the Labor Code. Dismissing the application of the provision, the CA cited Dean Cesar Villanueva of the Ateneo School of Law, as follows:

x x x the non-coverage of corporate officers from the security of tenure clause under the Constitution is now well-established principle by numerous decisions upholding such doctrine under the aegis of the 1987 Constitution in the face of contemporary decisions of the same Supreme Court likewise confirming that security of tenure covers all employees or workers including managerial employees.335[21]

THE PETITIONERS ARGUMENTS

Failing to obtain a reconsideration of the CAs decision, Locsin filed the present petition on January 28, 2009, raising the following procedural and substantive issues:

(1) Rule 65? (2) Labor Code? and (3)

Whether the CA has original jurisdiction to review decision of the Labor Arbiter under

Whether he is a regular employee of NCLPI under the definition of Article 280 of the

Whether Locsins position as Executive Vice-President/Treasurer makes him a

corporate officer thereby excluding him from the coverage of the Labor Code?

Procedurally, Locsin essentially submits that NCLPI wrongfully filed a petition for certiorari before the CA, as the latters remedy is to proceed with the arbitration, and to appeal to the NLRC after the Labor Arbiter shall have ruled on the merits of the case. Locsin cites, in this regard, Rule V, Section 6 of the Revised Rules of the National Labor Relations Commission (NLRC Rules), which provides that a denial of a motion to dismiss by the Labor Arbiter is not subject to an appeal. Locsin also argues that even if the Labor Arbiter committed grave abuse of discretion in denying the NCLPI motion, a special civil action for certiorari, filed with the CA was not the appropriate remedy, since this was a breach of the doctrine of exhaustion of administrative remedies.

Substantively, Locsin submits that he is a regular employee of NCLPI since - as he argued before the Labor Arbiter and the CA - his relationship with the company meets the four-fold test.

First, Locsin contends that NCLPI had the power to engage his services as EVP/Treasurer. Second, he received regular wages from NCLPI, from which his SSS and Philhealth contributions, as well as his withholding taxes were deducted. Third, NCLPI had the power to terminate his

employment.336[22] Lastly, Nissan had control over the manner of the performance of his functions as EVP/Treasurer, as shown by the 13 years of faithful execution of his job, which he carried out in accordance with the standards and expectations set by NCLPI.337[23] Further, Locsin maintains that even after his election as Chairman, he essentially performed the functions of EVP/Treasurer handling the financial and administrative operations of the Corporation thus making him a regular employee.338[24]

Under these claimed facts, Locsin concludes that the Labor Arbiter and the NLRC not the RTC (as NCLPI posits) has jurisdiction to decide the controversy. Parenthetically, Locsin clarifies that he does not dispute the validity of his election as Chairman of the Board on January 1, 2005. Instead, he theorizes that he never lost his position as EVP/Treasurer having continuously performed the functions appurtenant thereto.339[25] Thus, he questions his unceremonious removal as EVP/Treasurer during the August 5, 2005 special Board meeting.

THE RESPONDENTS ARGUMENTS

It its April 17, 2009 Comment,340[26] Nissan prays for the denial of the petition for lack of merit. Nissan submits that the CA correctly ruled that the Labor Arbiter does not have jurisdiction over Locsins complaint for illegal dismissal. In support, Nissan maintains that Locsin is a corporate officer and not an employee. In addressing the procedural defect Locsin raised, Nissan brushes the issue aside, stating that (1) this issue was belatedly raised in the Motion for Reconsideration, and that (2) in any case, Rule VI, Section 2(1) of the NLRC does not apply since only appealable decisions, resolutions and orders are covered under the rule.

THE COURTS RULING

We resolve to deny the petition for lack of merit.

At the outset, we stress that there are two (2) important considerations in the final determination of this case. On the one hand, Locsin raises a procedural issue that, if proven correct, will require the Court to dismiss the instant petition for using an improper remedy. On the other hand, there is the substantive issue that will be disregarded if a strict implementation of the rules of procedure is upheld.

Prefatorily, we agree with Locsins submission that the NCLPI incorrectly elevated the Labor Arbiters denial of the Motion to Dismiss to the CA. Locsin is correct in positing that the denial of a motion to dismiss is unappealable. As a general rule, an aggrieved partys proper recourse to the denial is to file his position paper, interpose the grounds relied upon in the motion to dismiss before the labor arbiter, and actively participate in the proceedings. Thereafter, the labor arbiters decision can be appealed to the NLRC, not to the CA.

As a rule, we strictly adhere to the rules of procedure and do everything we can, to the point of penalizing violators, to encourage respect for these rules. We take exception to this general rule, however, when a strict implementation of these rules would cause substantial injustice to the parties.

We see it appropriate to apply the exception to this case for the reasons discussed below; hence, we are compelled to go beyond procedure and rule on the merits of the case. In the context of this case, we see sufficient justification to rule on the employer-employee relationship issue raised by NCLPI, even though the Labor Arbiters interlocutory order was incorrectly brought to the CA under Rule 65.

The NLRC Rules are clear: the denial by the labor arbiter of the motion to dismiss is not appealable because the denial is merely an interlocutory order.

In Metro Drug v. Metro Drug Employees,341[27] we definitively stated that the denial of a motion to dismiss by a labor arbiter is not immediately appealable.342[28]

We similarly ruled in Texon Manufacturing v. Millena,343[29] in Sime Darby Employees Association v. National Labor Relations Commission344[30] and in Westmont Pharmaceuticals v. Samaniego.345[31] In Texon, we specifically said:

The Order of the Labor Arbiter denying petitioners motion to dismiss is interlocutory. It is well-settled that a denial of a motion to dismiss a complaint is an interlocutory order and hence, cannot be appealed, until a final judgment on the merits of the case is rendered. [Emphasis supplied.]346[32]

and indicated the appropriate recourse in Metro Drug, as follows:347[33]

x x x The NLRC rule proscribing appeal from a denial of a motion to dismiss is similar to the general rule observed in civil procedure that an order denying a motion to dismiss is interlocutory and, hence, not appealable until final judgment or order is rendered [1 Feria and Noche, Civil Procedure Annotated 453 (2001 ed.)]. The remedy of the aggrieved party in case of denial of the motion to dismiss is to file an answer and interpose, as a defense or defenses, the ground or grounds relied upon in the motion to dismiss, proceed to trial and, in case of adverse judgment, to elevate the entire case by appeal in due course [Mendoza v. Court of Appeals, G.R. No. 81909, September 5, 1991, 201 SCRA 343]. In order to avail of the extraordinary writ of certiorari, it is incumbent upon petitioner to establish that the denial of the motion to dismiss was tainted with grave abuse of discretion. [Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals, G.R. No. 115104, October 12, 1998, 297 SCRA 602]

In so citing Feria and Noche, the Court was referring to Sec. 1 (b), Rule 41 of the Rules of Court, which specifically enumerates interlocutory orders as one of the court actions that cannot be appealed. In the same rule, as amended by A.M. No. 07-7-12-SC, the aggrieved party is allowed to file an appropriate special civil action under Rule 65. The latter rule, however, also contains limitations for its application, clearly outlined in its Section 1 which provides:

Section 1. Petition for certiorari.

When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

In the labor law setting, a plain, speedy and adequate remedy is still open to the aggrieved party when a labor arbiter denies a motion to dismiss. This is Article 223 of Presidential Decree No. 442, as amended (Labor Code), 348[34] which states: ART. 223. APPEAL Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; x x x [Emphasis supplied.]

Pursuant to this Article, we held in Metro Drug (citing Air Services Cooperative, et al. v. Court of Appeals349[35]) that the NLRC is clothed with sufficient authority to correct any claimed erroneous assumption of jurisdiction by labor arbiters:

In Air Services Cooperative, et al. v. The Court of Appeals, et al., a case where the jurisdiction of the labor arbiter was put in issue and was assailed through a petition for certiorari, prohibition and annulment of judgment before a regional trial court, this Court had the opportunity to expound on the nature of appeal as embodied in Article 223 of the Labor Code, thus: x x x Also, while the title of the Article 223 seems to provide only for the remedy of appeal as that term is understood in procedural law and as distinguished from the office of certiorari, nonetheless, a closer reading thereof reveals that it is not as limited as understood by the petitioners x x x. Abuse of discretion is admittedly within the ambit of certiorari and its grant of review thereof to the NLRC indicates the lawmakers intention to broaden the meaning of appeal as that term is used in the Code. For this reason, petitioners cannot argue now that the NLRC is devoid of any corrective power to rectify a supposed erroneous assumption of jurisdiction by the Labor Arbiter x x x. [Air Services Cooperative, et al. v. The Court of Appeals, et al. G.R. No. 118693, 23 July 1998, 293 SCRA 101] Since the legislature had clothed the NLRC with the appellate authority to correct a claimed erroneous assumption of jurisdiction on the part of the labor arbiter a case of grave abuse of discretion - the remedy availed of by petitioner in this case is patently erroneous as recourse in this case is lodged, under the law, with the NLRC.

In Metro Drug, as in the present case, the defect imputed through the NCLPI Motion to Dismiss is the labor arbiters lack of jurisdiction since Locsin is alleged to be a corporate officer, not an employee. Parallelisms between the two cases is undeniable, as they are similar on the following points: (1) in Metro Drug, as in this case, the Labor Arbiter issued an Order denying the Motion to Dismiss by one of the parties; (2) the basis of the Motion to Dismiss is also the alleged lack of jurisdiction by the

Labor Arbiter to settle the dispute; and (3) dissatisfied with the Order of the Labor Arbiter, the aggrieved party likewise elevated the case to the CA via Rule 65.

The similarities end there, however. Unlike in the present case, the CA denied the petition for certiorari and the subsequent Motion for Reconsideration in Metro Drug; the CA correctly found that the proper appellate mechanism was an appeal to the NLRC and not a petition for certiorari under Rule 65. In the present case, the CA took a different position despite our clear ruling in Metro Drug, and allowed, not only the use of Rule 65, but also ruled on the merits.

From this perspective, the CA clearly erred in the application of the procedural rules by disregarding the relevant provisions of the NLRC Rules, as well as the requirements for a petition for certiorari under the Rules of Court. To reiterate, the proper action of an aggrieved party faced with the labor arbiters denial of his motion to dismiss is to submit his position paper and raise therein the supposed lack of jurisdiction. The aggrieved party cannot immediately appeal the denial since it is an interlocutory order; the appropriate remedial recourse is the procedure outlined in Article 223 of the Labor Code, not a petition for certiorari under Rule 65.

A strict implementation of the NLRC Rules and the Rules of Court would cause injustice to the parties because the Labor Arbiter clearly has no jurisdiction over the present intra-corporate dispute.

Our ruling in Mejillano v. Lucillo350[36] stands for the proposition that we should strictly apply the rules of procedure. We said:

Time and again, we have ruled that procedural rules do not exist for the convenience of the litigants. Rules of Procedure exist for a purpose, and to disregard such rules in the guise of liberal construction would be to defeat such purpose. Procedural rules were established primarily to provide order to and enhance the efficiency of our judicial system. [Emphasis supplied.]

An exception to this rule is our ruling in Lazaro v. Court of Appeals351[37] where we held that the strict enforcement of the rules of procedure may be relaxed in exceptionally meritorious cases: x x x Procedural rules are not to be belittled or dismissed simply because their nonobservance may have resulted in prejudice to a party's substantive rights. Like all rules, they are required to be followed except only for the most persuasive of reasons when they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. The Court reiterates that rules of procedure, especially those prescribing the time within which certain acts must be done, "have oft been held as absolutely indispensable to the prevention of needless delays and to the orderly and speedy discharge of business. x x x The reason for rules of this nature is because the dispatch of business by courts would be impossible, and intolerable delays would result, without rules governing practice x x x. Such rules are a necessary incident to the proper, efficient and orderly discharge of judicial functions." Indeed, in no uncertain terms, the Court held that the said rules may be relaxed only in exceptionally meritorious cases. [Emphasis supplied.]

Whether a case involves an exceptionally meritorious circumstance can be tested under the guidelines we established in Sanchez v. Court of Appeals,352[38] as follows: Aside from matters of life, liberty, honor or property which would warrant the suspension of the Rules of the most mandatory character and an examination and review by the appellate court of the lower courts findings of fact, the other elements that should be considered are the following: (a) the existence of special or compelling

circumstances, (b) the merits of the case, (c) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (d) a lack of any showing that the review sought is merely frivolous and dilatory, and (e) the other party will not be unjustly prejudiced thereby. [Emphasis supplied.]

Under these standards, we hold that exceptional circumstances exist in the present case to merit the relaxation of the applicable rules of procedure.

Due to existing exceptional circumstances, the ruling on the merits that Locsin is an officer and not an employee of Nissan must take precedence over procedural considerations.

We arrived at the conclusion that we should go beyond the procedural rules and immediately take a look at the intrinsic merits of the case based on several considerations.

First, the parties have sufficiently ventilated their positions on the disputed employer-employee relationship and have, in fact, submitted the matter for the CAs consideration.

Second, the CA correctly ruled that no employer-employee relationship exists between Locsin and Nissan.

Locsin was undeniably Chairman and President, and was elected to these positions by the Nissan board pursuant to its By-laws.353[39] As such, he was a corporate officer, not an employee. The CA

reached this conclusion by relying on the submitted facts and on Presidential Decree 902-A, which defines corporate officers as those officers of a corporation who are given that character either by the Corporation Code or by the corporations by-laws. Likewise, Section 25 of Batas Pambansa Blg. 69, or the Corporation Code of the Philippines (Corporation Code) provides that corporate officers are the president, secretary, treasurer and such other officers as may be provided for in the by-laws.

Third. Even as Executive Vice-President/Treasurer, Locsin already acted as a corporate officer because the position of Executive Vice-President/Treasurer is provided for in Nissans By-Laws. Article IV, Section 4 of these By-Laws specifically provides for this position, as follows: ARTICLE IV Officers Section 1. Election and Appointment The Board of Directors at their first meeting, annually thereafter, shall elect as officers of the Corporation a Chairman of the Board, a President, an Executive Vice-President/Treasurer, a Vice-President/General Manager and a Corporate Secretary. The other Senior Operating Officers of the Corporation shall be appointed by the Board upon the recommendation of the President. x x x x Section 4. Executive Vice-President/Treasurer The Executive Vice-President/Treasurer shall have such powers and perform such duties as are prescribed by these By-Laws, and as may be required of him by the Board of Directors. As the concurrent Treasurer of the Corporation, he shall have the charge of the funds, securities, receipts, and disbursements of the Corporation. He shall deposit, or cause to be deposited, the credit of the Corporation in such banks or trust companies, or with such banks of other depositories, as the Board of Directors may from time to time designate. He shall tender to the President or to the Board of Directors whenever required an account of the financial condition of the corporation and of all his transactions as Treasurer. As soon as practicable after the close of each fiscal year, he shall make and submit to the Board of Directors a like report of such fiscal year. He shall keep correct books of account of all the business and transactions of the Corporation.

In Okol v. Slimmers World International,354[40] citing Tabang v. National Labor Relations Commission,355[41] we held that x x x 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. [Emphasis supplied.]

In this case, Locsin was elected by the NCLPI Board, in accordance with the Amended By-Laws of the corporation. The following factual determination by the CA is elucidating: More important, private respondent failed to state any such circumstance by which the petitioner corporation engaged his services as corporate officer that would make him an employee. In the first place, the Vice-President/Treasurer was elected on an annual basis as provided in the By-Laws, and no duties and responsibilities were stated by private respondent which he discharged while occupying said position other than those specifically set forth in the By-Laws or required of him by the Board of Directors. The unrebutted fact remains that private respondent held the position of Executive Vice-President/Treasurer of petitioner corporation, a position provided for in the latters by-laws, by virtue of election by the Board of Directors, and has functioned as such Executive Vice-President/Treasurer pursuant to the provisions of the said By-Laws. Private respondent knew very well that he was simply not re-elected to the said position during the August 5, 2005 board meeting, but he had objected to the election of a new set of officers held at the time upon the advice of his lawyer that he cannot be terminated or replaced as Executive Vice-President/Treasurer as he had attained tenurial security.356[42]

We fully agree with this factual determination which we find to be sufficiently supported by evidence. We likewise rule, based on law and established jurisprudence, that Locsin, at the time of his severance from NCLPI, was the latters corporate officer.

a. The Question of Jurisdiction

Given Locsins status as a corporate officer, the RTC, not the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of his relationship with Nissan. As we also held in Okol, a corporate officers dismissal from service is an intra-corporate dispute:

In a number of cases [Estrada v. National Labor Relations Commission, G.R. No. 106722, 4 October 1996, 262 SCRA 709; Lozon v. National Labor Relations Commission, 310 Phil. 1 (1995); Espino v. National Labor Relations Commission, 310 Phil. 61 (1995); Fortune Cement Corporation v. National Labor Relations Commission, G.R. No. 79762, 24 January 1991, 193 SCRA 258], we have held that a corporate officers dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation.357[43] [Emphasis supplied.]

so that the RTC should exercise jurisdiction based on the following legal reasoning:

Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A (PD 902A) provided that intra-corporate disputes fall within the jurisdiction of the Securities and Exchange Commission (SEC):

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

x x x x

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts the SECs jurisdiction over all cases listed in Section 5 of PD 902-A:

5.2. The Commissions 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. [Emphasis supplied.]

b.

Precedence of Substantive Merits; Primacy of Element of Jurisdiction

Based on the above jurisdictional considerations, we would be forced to remand the case to the Labor Arbiter for further proceedings if we were to dismiss the petition outright due to the wrongful use

of Rule 65.358[44] We cannot close our eyes, however, to the factual and legal reality, established by evidence already on record, that Locsin is a corporate officer whose termination of relationship is outside a labor arbiters jurisdiction to rule upon.

Under these circumstances, we have to give precedence to the merits of the case, and primacy to the element of jurisdiction. Jurisdiction is the power to hear and rule on a case and is the threshold element that must exist before any quasi-judicial officer can act. In the context of the present case, the Labor Arbiter does not have jurisdiction over the termination dispute Locsin brought, and should not be allowed to continue to act on the case after the absence of jurisdiction has become obvious, based on the records and the law. In more practical terms, a contrary ruling will only cause substantial delay and inconvenience as well as unnecessary expenses, to the point of injustice, to the parties. This conclusion, of course, does not go into the merits of termination of relationship and is without prejudice to the filing of an intra-corporate dispute on this point before the appropriate RTC.

WHEREFORE, we DISMISS the petitioners petition for review on certiorari, and AFFIRM the Decision of the Court of Appeals, in CA-G.R. SP No. 103720, promulgated on August 28, 2008, as well as its Resolution of December 9, 2008, which reversed and set aside the March 10, 2008 Order of Labor Arbiter Concepcion in NLRC NCR Case No. 00-06-06165-07. This Decision is without prejudice to petitioner Locsins available recourse for relief through the appropriate remedy in the proper forum.

No pronouncement as to costs.

SO ORDERED.

13. P/Chief Superintendent Roberto L. Calinisan, etc., et al. vs. SPO2 Reynaldo L. Roaquin, G.R. No. 159588, September 15, 2010. G.R. No. 159588 September 15, 2010 P/CHIEF SUPERINTENDENT ROBERTO L. CALINISAN, Regional Director, Police Regional Office III, Camp Olivas, San Fernando, Pampanga, and P/CHIEF SUPERINTENDENT REYNALDO M. ACOP, Directorate For Personnel and Records Management, National Headquarters, Philippine National Police, Camp Crame, Quezon City, Petitioners, vs. SPO2 REYNALDO ROAQUIN y LADERAS, Respondent. DECISION ABAD, J.: This case is about the right of a discharged police officer to reinstatement, back salaries, allowances, and other benefits after being absolved of a serious crime filed against him before a regular court. The Facts and the Case Respondent Reynaldo Roaquin served 16 years with the Philippine Constabulary at Camp Olivas, San Fernando, Pampanga before the Philippine National Police (PNP) absorbed him on January 2, 1991 in line with Republic Act (R.A.) 69751 and gave him the rank of a Senior Police Officer II (SPO2).2 On April 11, 1991 the government charged Roaquin with murder before the Regional Trial Court (RTC) of Olongapo City, Branch 72, in Criminal Case 216-91 for killing Alfredo Taluyo in a nightclub squabble. Consequently, the PNP detained him at his assigned station in Camp Lt. General Manuel Cabal in Olongapo City and later at the Olongapo City jail. On June 20, 1991, while Roaquin was under detention, the PNP Headquarters of Regional Command 3 issued Special Order 74,3 discharging him from the service based on Circular 17 of the Armed Forces of the Philippines dated October 2, 1987.4 They discharged him notwithstanding that he had not been administratively charged in connection with the offense of which he was charged in court. On June 8, 1994 the RTC of Olongapo City approved Roaquins motion for admission to bail and granted him provisional liberty. Seven years later or on August 11, 1998 the RTC acquitted him of the crime of which he was charged upon a finding that he acted in complete self-defense.5 Following this development, Roaquin asked the PNP to reinstate him into the police service. Acting on the request, on November 23, 1998 P/Chief Superintendent Roberto Calinisan, Director of the PNP Regional Office III, reinstated Roaquin into service, citing Section 48 of R.A. 6975.6 From then on, Roaquin served at the Olongapo City Police Force. On January 18, 2000, however, P/Chief Superintendent Reynaldo Acop, Head of the PNP Directorate for Personnel and Records Management, issued a memorandum,7 directing Calinisan to nullify Roaquins reinstatement. Acop said that what applied to Roaquin was Section 45 of R.A. 69758 as implemented by National Police Commission Memorandum Circular 96-010.9 Roaquin could not be entitled to reinstatement since he failed to file a motion for reconsideration within 10 days of being notified of his discharge. Acting on his superiors order, Calinisan issued Special Orders 102,10 nullifying Roaquins reinstatement. Roaquin sought reconsideration, but this was denied with an advice that he seek redress in court.11

On March 31, 2000 Roaquin filed a petition for certiorari and mandamus against his superior officers before the RTC of Olongapo City. The parties agreed to submit the case for decision on the basis of their respective memoranda. On November 20, 2000, the RTC rendered a decision,12 ordering Roaquins reinstatement. On appeal by Roaquins superior officers, the Court of Appeals (CA) rendered judgment on August 14, 2003,13 dismissing their appeal for lack of jurisdiction as the issues involved were purely legal, hence, this petition. The Issues Presented The issues presented in this case are: 1. Whether or not the CA correctly dismissed the appeal on the ground of lack of jurisdiction; and 2. Whether or not respondent Roaquin is entitled to reinstatement in the police service with back salaries, allowances, and other benefits. The Courts Rulings One. An issue of fact exists when what is in question is the truth or falsity of the alleged facts, whereas an issue of law exists when what is in question is what the law is on a certain state of facts.14 The test, therefore, for determining whether an issue is one of law or of fact, is whether the CA could adjudicate it without reviewing or evaluating the evidence, in which case, it is an issue of law; otherwise, it is an issue of fact.15 Here the CA needed only to review the records, more particularly, the pleadings of the parties and their annexes to determine what law applied to Roaquin, Section 45 or Section 48 of R.A. 6975. Such question does not call for an examination of the probative value of the evidence of the parties since the essential facts of the case are not in dispute. As Roaquins superior officers appeal involves only questions of law, they erred in taking recourse to the CA by notice of appeal. Hence, the CA correctly dismissed their appeal.16 Two. Besides, the petition has no merit. R.A. 6975,17 which took effect on January 1, 1991, provides the procedural framework for administrative actions against erring police officers. Sections 41 and 42 grant concurrent jurisdiction to the Peoples Law Enforcement Board, on the one hand, and the PNP Chief and regional directors, on the other, over administrative charges against police officers that are subject to dismissal.18 But Section 45 that Roaquins superior officers invoked cannot apply to him since no one filed an administrative action against him in connection with the crime of which he was charged in court. His superiors did not adduce evidence during the trial before the RTC that such action had been filed. They subsequently alleged in their pleadings the filing of some administrative case against him but they provided neither the specifics of that case nor a document evidencing its existence. At any rate, assuming that someone filed an administrative charge against Roaquin, still the law required the PNP to give him notice of such charge and the right to answer the same. This does not appear in the record. Additionally, Special Order 74 provided that Roaquins mode of discharge was to be determined by higher headquarters.19 Again, nothing in the record of this case indicates that the PNP investigated Roaquin or conducted a summary proceeding to determine his liability in connection with the murder of which he was charged in court. The PNP gave him no chance to show why he should not be discharged.1avvphi1

What the Court found in the record is police officer Calinisans Resolution,20 stating that Roaquins dismissal from the service was done without administrative due process, thus his recommendation that Roaquin be reinstated. Indeed, the RTC observed that: The PNP however did not file any administrative charge against the accused preparatory to his dismissal and therefore the dismissal effected without any administrative complaint violated the right of the accused to substantive and procedural due process. x x x xxxx The Rules and Regulations in the Disposition of Administrative cases involving PNP members before the PNP Disciplinary Authorities pursuant to Sections 41 and 42 of Republic Act 6975 cannot be applied to case of the petitioner simply because he was not charged of any administrative case in accordance with Section 42 of Republic Act 6975 x x x which provides the requirements of notice and hearing as part of the right of the petitioner to due process is not complied with.21 The National Police Commission Memorandum Circular 96-010 cannot also be applied to Roaquin since it refers to rules and regulations governing the disposition of administrative cases involving PNP members. There had been no administrative case against him. What apply to Roaquin are Sections 46, 47, and 48 of R.A. 6975 which direct his reinstatement after he was absolved of the crime of which he was charged in court. These sections provide: Section 46. Jurisdiction in Criminal Cases. Any provision of law to the contrary notwithstanding, criminal cases involving PNP members shall within the exclusive jurisdiction of the regular courts x x x. Section 47. Preventive Suspension Pending Criminal Case. Upon the filing of a complaint or information sufficient in form and substance against a member of the PNP for grave felonies where the penalty imposed by law is six (6) years and one (1) day or more, the court shall immediately suspend the accused from office until the case is terminated. Such case shall be subject to continuous trial and shall be terminated within ninety (90) days from arraignment of the accused. Section 48. Entitlement to Reinstatement and Salary. A member of the PNP who may have been suspended from office in accordance with the provisions of this Act or who shall have been terminated or separated from office shall, upon acquittal from the charges against him, be entitled to reinstatement and to prompt payment of salary, allowances and other benefits withheld from him by reason of such suspension or termination. While the PNP may have validly suspended Roaquin from the service pending the adjudication of the criminal case against him, he was entitled after his acquittal not only to reinstatement but also to payment of the salaries, allowances, and other benefits withheld from him by reason of his discharge from the service. WHEREFORE, the Court DENIES the petition and AFFIRMS the decisions of the CA in CA-G.R. SP 63355 and the RTC in Special Civil Action 133-0-2000, reinstating SPO2 Reynaldo Roaquin into the service and ordering the Philippine National Police to pay him his back salaries, allowances, and other benefits during the time he was out of service. If reinstatement is no longer possible because police officer Roaquin has been assumed to have retired in due course, he is to be paid the back salaries, allowances,

and other benefits, including retirement, to which he is entitled from the time of his discharge to the time of his assumed retirement. SO ORDERED.

14. Pasig Cylinder Manufacturing Corp. vs. Danilo Rollo, et al., G.R. No. 173631, September 8, 2010. G.R. No. 173631 September 8, 2010

PASIG CYLINDER MFG., CORP., A.G. & E ALLIED SERVICES, MANUEL ESTEVANEZ, SR., and VIRGILIO GERONIMO, SR., Petitioners, vs. DANILO ROLLO, REYNALDO ORANDE, RONIE JOHN ESPINAS, ROGELIO JUAREZ, FELICIANO BERMUDEZ, DAVID OCLARINO, RODRIGO ANDICO, DANTE CALA-OD, JOSE RONNIE SERENIO, CHARLIE AGNO, EDWIN BEDES, JOSEPH RIVERA, FERNANDO SAN PEDRO, JESUS CABRERA, ANASTICO ALINGAS, EDUARDO GUBAN, ROLANDO DEMANO, ROBERTO PINUELA, and EMELITO LOBO, Respondents. DECISION CARPIO, J.: The Case For review1 are the rulings2 of the Court of Appeals affirming the dismissal of a labor case for late filing and payment of the appeal bond. The Facts Petitioners Pasig Cylinder Manufacturing Corporation and A.G. & E Allied Services are cylinder gas tank manufacturers and repairers commonly operated by their officers, petitioners Manuel Estevanez, Sr. and Virgilio Geronimo, Sr. (Geronimo). Respondents, numbering 19, sued3 petitioners before the National Labor Relations Commission (NLRC) for constructive dismissal and payment of employment benefits and damages. Respondents alleged that they were employees of petitioners whom petitioners arbitrarily denied regular work since December 1999 and, in May 2000, were altogether refused entry to their workplace. Respondents also claimed underpayment of wages and non-payment of 13th month pay, service incentive leave pay, and holiday pay. Petitioners denied respondents claims, contending that the loss of a major client constrained them to reduce the volume of work and shorten respondents workweek to three days. Respondents reacted adversely to the downscaling and refused to follow shift assignments, disrupting what remains of petitioners business. As a compromise, petitioners offered respondents separation benefits equivalent to a portion of their total years of service but respondents rejected the offer.4 The Ruling of the Labor Arbiter The labor arbiter5 ruled for respondents,6 found petitioners liable for constructive dismissal with the ancillary obligation to pay backwages and separation pay in lieu of reinstatement. Further, the arbiter held petitioners liable for wage differential, holiday pay, 13th month pay, and service incentive leave pay, save for respondents Danilo Rollo, Emelito Lobo, Ronnie John Espinas, Jose Ronnie Serenio, Roberto Pinuela, Reynaldo Orande, and David Oclarino whom the arbiter found to have received payment for these benefits. In sum, the arbiter found petitioners liable for P3,132,335.57. The arbiter refused to award damages for lack of basis.7

On 24 September 2001, a copy of the arbiters ruling, sent through mail, was received by one Arnel Naronio (Naronio), the security guard manning the compound where several businesses, including petitioners, operated. The document was given to petitioners the following day, 25 September 2001. Ten days later, on 5 October 2001, petitioners filed their appeal with the NLRC with a motion to reduce the amount of the appeal bond to P100,000, enclosing a bond in that amount. Petitioners attached to their appeal copies of payrolls, payment ledgers, leave applications, and other documents allegedly indicating payment to respondents of 13th month pay, service incentive leave pay, and holiday pay. The Ruling of the NLRC The NLRC found the appeal barred by prescription and dismissed it. The NLRC reckoned the 10-day appeal period under Article 223 of the Labor Code, as amended, from Naronios receipt of the arbiters ruling on 24 September 2001. Consequently, the NLRC deemed petitioners appeal bond similarly barred by prescription, not to mention that its amount was less than the monetary award adjudged in the appealed ruling.8 After unsuccessfully seeking reconsideration,9 petitioners appealed to the Court of Appeals in a petition for certiorari. On the issue of prescription, petitioners contended that instead of counting the appeal period from 24 September 2001, the NLRC should have done so from their receipt of the arbiters ruling on 25 September 2001, consistent with relevant jurisprudence. Thus reckoned, their appeal and appeal bond, filed on 5 October 2001, were filed within the 10-day appeal period. On the validity of their reduced appeal bond, petitioners cited precedents allowing such practice for valid reasons. Petitioners submitted that the large amount of the monetary award and their downscaled operations constrained them to seek a reduction of the appeal bonds amount. On the merits, petitioners reiterated their non-liability, maintaining that respondents reacted adversely to the downscaled operations by going on unauthorized leaves and making known their intention to cease reporting for work. Petitioners also claimed that there is no basis to hold them liable for non-payment of employment benefits because they were not remiss in their obligations under the Labor Code as borne out by the company records they submitted to the NLRC. The Ruling of the Court of Appeals The Court of Appeals sustained the NLRC and dismissed the petition. The appellate court saw no reason to disturb the NLRCs ruling, invoking the mandatory nature of appellate prescriptive periods, and, in labor cases, of the timely filing of the proper amount of appeal bond. Petitioners motion for reconsideration was similarly denied.10 Hence, this petition. Aside from reiterating the contentions raised before the Court of Appeals, petitioners call the Courts attention to an alleged clerical error in the dispositive portion of the arbiters ruling awarding 13th month pay to the seven respondents whom the arbiter had excluded from such benefit. The Issues The petition raises the following issues:

(1) Whether petitioners appeal and appeal bond filed with the NLRC were barred by prescription; and (2) If in the negative, whether petitioners are liable (a) for constructive dismissal; and (b) nonpayment of 13th month pay, service incentive leave pay, and holiday pay.11 The Ruling of the Court We hold that (1) petitioners appeal with the NLRC was seasonably filed and their submission of a reduced appeal bond was justified; (2) petitioners are liable for illegal dismissal; and (3) the questions on respondents receipt of 13th month pay, service incentive leave pay, and holiday pay and the arbiters erroneous award of 13th month pay to seven of the respondents are factual issues properly resolved by the NLRC on remand. On the Threshold Issues of Timeliness of Appeal and Filing of Appeal Bond Petitioners Appeal Seasonably Filed The resolution of the question on the timeliness of petitioners appeal with the NLRC hinges on the reckoning of the 10-day appeal period under Article 223 of the Labor Code, as amended. Petitioners submit that the reckoning point is their receipt on 25 September 2001 of the mailed copy of the arbiters ruling; respondents counter that it is Naronios receipt of the ruling on 24 September 2001. The one day difference is pivotal because petitioners filed their appeal on the 10th day from their receipt of the arbiters ruling, and, accordingly, on the 11th from the receipt by Naronio. The NLRC and the Court of Appeals found merit in respondents submission. We find merit in petitioners and thus, reverse. Sections 5 and 6, Rule III of the NLRCs new rules of procedure (NLRC rules), as amended in 1999,12 on the service of notices and resolutions and proof of completeness of service, provide: SECTION 5. SERVICE OF NOTICES AND RESOLUTIONS. (a) x x x in cases of decision[s] and final awards, copies thereof shall be served on both parties and their counsel/representative by registered mail; x x x For purposes of computing the period of appeal, the same shall be counted from receipt of such decisions, awards, or orders by the counsel of record. SECTION 6. PROOF AND COMPLETENESS OF SERVICE. - The return is prima facie proof of the facts indicated therein. Service by registered mail is complete upon receipt by the addressee or his agent; but if the addressee fails to claim his mail from the post office within five (5) days from the date of first notice of the postmaster, service shall take effect after such time. (Emphasis supplied) It appears that petitioners were not represented by counsel before the arbiter.13 Thus, the arbiters ruling was mailed to Geronimo and two other individuals14 with a common address at "#98 San Guillermo St., Buting, 1601 Pasig City."15 Following the NLRC rules, service of the ruling is completed upon its receipt by Geronimo or his agent from which the 10-day period for appeal will be counted. It is not disputed that Geronimo received a copy of the arbiters ruling on 25 September 2001. The question then is whether the receipt the day before, 24 September 2001, of the same document by Naronio constitutes receipt by petitioners "agent" within the contemplation of Section 6, Rule III of the NLRC rules. We hold that it does not.1avvphi1

Under the Rules of Court and Section 6 (formerly Section 516), Rule III of the NLRC rules, the word "agent" for purposes of serving court processes on juridical persons refers to [a] representative so integrated with the corporation sued as to make it a priori supposable that he will realize his responsibilities and know what he should do with any legal papers served on him. x x x xxxx [I]t does not necessarily connote an officer of the corporation. However, though this may include employees other than officers of a corporation, this does not include employees whose duties are not so integrated to the business that their absence or presence will not toll the entire operation of the business.17 (Emphasis supplied) It cannot be determined from the records who hired Naronio; but it is also undisputed that petitioners are not his employers. Indeed, Naronio serviced all the businesses operating within the compound where the arbiters ruling was mailed. Thus, it is not even necessary to determine whether Naronios "duties are not so integrated to the business that [his] absence or presence will not toll the entire operation" of petitioners business. This test presupposes that the recipient of the legal document is employed by the addressee. For remedial law purposes, Naronios receipt of any processes intended for petitioners was receipt by a stranger, without legal significance to petitioners.18 Hence, there is merit in petitioners submission that they seasonably filed their appeal on 5 October 2001, the 10th day from their receipt of the arbiters ruling on 25 September 2001, or within the appeal period in Article 223 of the Labor Code. For ruling to the contrary, thus denying due course to petitioners appeal, the appellate court committed reversible error of law.19 Reduced Appeal Bond not Fatal to Petitioners Appeal Nor was petitioners filing of a reduced appeal bond fatal to their appeal. True, Article 223 of the Labor Code requires the filing of appeal bond "in the amount equivalent to the monetary award in the judgment appealed from." However, both the Labor Code20 and this Courts jurisprudence21 abhor rigid application of procedural rules at the expense of delivering just settlement of labor cases. Petitioners reasons for their filing of the reduced appeal bond the downscaling of their operations coupled with the amount of the monetary award appealed are not unreasonable. Thus, the recourse petitioners adopted constitutes substantial compliance with Article 223 consistent with our ruling in Rosewood Processing, Inc. v. NLRC,22 where we allowed the appellant to file a reduced bond of P50,000 (accompanied by the corresponding motion) in its appeal of an arbiters ruling in an illegal termination case awarding P789,154.39 to the private respondents. Petitioners Liability for Illegal Dismissal and Non-payment of Benefits No Reversible Error in the Arbiters Finding of Illegal Dismissal We find no error in the labor arbiters ruling on the question of petitioners liability for constructive dismissal.1avvphi1 It seems petitioners rested their case on the defense of respondents abandonment of work.23 For this cause to prosper, petitioners should have proved (1) that the failure to report for work was without justifiable reason, and (2) respondents intention to sever the employer-employee relationship as shown by some overt acts.24 Petitioners failed to discharge their burden of proof. On respondents nonreporting for work, petitioners failed to rebut respondents claim that they were denied entry to their work

area and the records substantially support the arbiters finding that respondents were placed on shifts "not by weeks but almost by month."25 Further, petitioners fail to bring to our attention any overt acts of respondents showing clear intention to sever their employment relationship with petitioners. On the contrary, respondents act of filing complaints before the NLRC for illegal dismissal shows intent to continue their employment and hold petitioners liable for their constructive dismissal and for noncompliance with labor laws on payment of benefits. We have consistently treated this fact as belying intent to abandon work.26 Accordingly, petitioners are liable for constructive dismissal for placing respondents on shifts of a few days per month and in eventually denying them workplace access, rendering respondents employment impossible, unreasonable or unlikely, leaving them no choice but to quit. Resolution of the Issues of Payment of Benefits and Double Payment of 13th Month Pay to Seven Respondents Properly Pertains to the NLRC Petitioners further claim that the documents they submitted to the NLRC prove payment to respondents of the labor benefits the arbiter awarded to them. The task of resolving this issue, purely factual, properly pertains to the NLRC as the quasi-judicial appellate body to which these documents were presented to review the arbiters ruling. True, the labor arbiter was the ideal forum to receive and evaluate these pieces of evidence but the NLRC is not precluded from considering them in light of their apparent merit, consistent with equity and the basic notions of fairness.27 In discharging this task, the NLRC is to take into account all the documents petitioners attached to their memorandum of appeal, particularly Annexes "GGGGGG" to "IIIIII," "KKKKKK" and "LLLLLL"28 which are payment ledgers indicating acknowledgment by some respondents of their receipt of 13th month pay for 1998 and 1999. The NLRC should also pass upon petitioners claim of erroneous award of 13th month pay to respondents Danilo Rollo, Emelito Lobo, Ronnie John Espinas, Jose Ronnie Serenio, Roberto Pinuela, Reynaldo Orande, and David Oclarino whom the arbiter found to have been paid such benefit.29 WHEREFORE, we GRANT the petition in part. We REVERSE the Decision dated 20 March 2006 and Resolution dated 19 July 2006 of the Court of Appeals and REMAND the case to the National Labor Relations Commission for resolution of the question on the liability of petitioners Pasig Cylinder Manufacturing Corporation, A.G. & E Allied Services, Manuel Estevanez, Sr., and Virgilio Geronimo, Sr. to respondents for payment of 13th month pay, service incentive leave pay, and holiday pay. SO ORDERED.

15. Shimizu Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.

G.R. No. 165923

September 29, 2010

SHIMIZU PHILS. CONTRACTORS, INC.,* Petitioner, vs. VIRGILIO P. CALLANTA, Respondent. DECISION DEL CASTILLO, J.: By this Petition for Review on Certiorari,1 Shimizu Phils. Contractors, Inc. (petitioner) assails the Decision2 dated June 10, 2004 and Resolution3 dated October 5, 2004 of the Court of Appeals (CA) in CA-G.R. SP. No. 66888, which reversed the Decision4 dated December 14, 2000 of the National Labor Relations Commission (NLRC) and ordered petitioner to reinstate Virgilio P. Callanta (respondent) and pay him his backwages for not having been validly dismissed. Antecedent Facts Petitioner, a corporation engaged in the construction business, employed respondent on August 23, 1994 as Safety Officer assigned at petitioners Yutaka-Giken Project and eventually as Project Administrator of petitioners Structural Steel Division (SSD) in 1995. In a Memorandum dated June 7, 1997,5 respondent was informed that his services will be terminated effective July 9, 1997 due to the lack of any vacancy in other projects and the need to re-align the companys personnel requirements brought about by the imperatives of maximum financial commitments. Respondent then filed an illegal dismissal complaint against petitioner assailing his dismissal as without any valid cause. Petitioner advanced that respondents services was terminated in accordance with a valid retrenchment program being implemented by the company since 1996 due to financial crisis that plague the construction industry. To prove its financial deficit, petitioner presented financial statements for the years 1995 to 1997 as well as the Securities and Exchange Commissions approval of petitioners application for a new paid-in capital amounting to P330,000,000. Petitioner alleged that in order not to jeopardize the completion of its projects, the abolition of several departments and the concomitant termination of some employees were implemented as each project is completed. When respondents Honda Project was completed, petitioner offered respondent his separation pay which the latter refused to accept and instead filed an illegal dismissal complaint. Respondent claimed that petitioner failed to comply with the requirements called for by law before implementing a retrenchment program thereby rendering it legally infirmed. First, it did not comply with the provision of the Labor Code mandating the service of notice of retrenchment. He pointed out that the notice sent to him never mentioned retrenchment but only project completion as the cause of termination. Also, the notice sent to the Department of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second, petitioner failed to use fair and reasonable criteria in determining which employees shall be retrenched or retained. As shown in the termination report6 submitted to DOLE, he

was the only one dismissed out of 333 employees. Worse, junior and inexperienced employees were appointed/assigned in his stead to new projects thus also ignoring seniority in hiring and firing employees. In reply, petitioner reiterated its progressive implementation of the retrenchment program and finds this as basis why respondents termination coincided with project completion. Petitioner argued that when it submitted the retrenchment notice/termination report to DOLE, there was already substantial compliance with the requirement. It explained that such termination report reflects only the number of employees retrenched for the particular month of July of 1997 and cannot be deemed as evidence of the total number of employees affected by the retrenchment program. Petitioner also accused respondent of giving false narration of facts about his employment position and further disclosed that respondent has been saddled with complaints subject of administrative investigations for violations of several company rules, i.e., cited for discrepancies in his time sheet,7 unauthorized use of company vehicle,8 stealing of company property9 and abandonment of work,10 so much so that petitioners decision to appoint more competent and more senior employees in his stead cannot be questioned. Ruling of the Labor Arbiter On April 14, 2000, the Labor Arbiter rendered a Decision11 holding that respondent was validly retrenched. He found that sufficient evidence was presented to establish company losses; that petitioner offered respondent his separation pay; and that petitioner duly notified DOLE about the retrenchment. The Labor Arbiter further relied on petitioners factual version relating to respondents employment background with regard to his position and behavioral conduct. Pertinent portions of the Labor Arbiters Decision read: In terminating the services of complainant, respondent Shimizu had complied with the requirements of law on retrenchment. It had prepared a check for the amount of P 29,320.30 as payment for his separation pay and other entitlements. However, as afore-stated, complainant refused to receive the amount, for reasons known only to him. Also, respondent company had duly notified the Department of Labor and Employment (DOLE) about the retrenchment of the complainant. WHEREFORE, in view of the foregoing premises, judgment is hereby rendered dismissing the instant complaint for lack of merit. SO ORDERED.12 Ruling of the National Labor Relations Commission Upon appeal, the NLRC upheld the ruling that there was valid ground for respondents termination but modified the Labor Arbiters Decision by holding that petitioner violated respondents right to procedural due process. The NLRC found that petitioner failed to comply with the 30-day prior notice to the DOLE and that there is no proof that petitioner used fair and reasonable criteria in the selection of employees to be retrenched. The dispositive portion of the NLRC Decision reads: WHEREFORE, in view of the foregoing, the finding of the Labor Arbiter a quo is MODIFIED. Respondent Shimizu Philippine Contractor, Inc., is ordered to pay complainant-appellant Virgilio P. Callanta his separation pay equivalent to one (1) month pay for every year of service. For want of due notice, respondent is further directed to pay complainant an indemnity equivalent to one (1) month salary.

SO ORDERED.13 Both parties sought reconsideration of the NLRCs Decision. Respondent, in his Motion for Reconsideration,14 attributed grave error upon the NLRC in ruling that the absence of fair and reasonable criteria in effecting the retrenchment affected only the requirements of due process, arguing that such failure should have invalidated the entire retrenchment program. Petitioner, for its part, filed a Motion for Partial Reconsideration15 questioning the amount of separation pay awarded to respondent. The NLRC, in its Resolution16 dated June 29, 2001, denied respondents motion and found merit in petitioners motion by modifying the amount of separation pay to an amount equivalent to one month or one-half month pay for every year of service, whichever is higher, in consonance with Article 283 of the Labor Code. Thus: WHEREFORE, premises considered, the complainants Motion for Reconsideration is hereby DENIED for lack of merit. The respondents partial motion for reconsideration is hereby GRANTED. Consequently, our Decision promulgated on December 14, 2000 is hereby MODIFIED in that the separation pay granted to complainant should be one (1) month pay or one-half (1/2) month pay for every year of service, whichever is higher, a fraction of at least six months to be considered one (1) whole year. Other dispositions in our said Decision stand Affirmed. SO ORDERED.17 Ruling of the Court of Appeals Undaunted, respondent filed a petition for certiorari with the CA. On June 10, 2004, the CA reversed and set aside the NLRCs ruling. The CA opined that petitioner failed to prove that there were employees other than respondent who were similarly dismissed due to retrenchment and that respondents alleged replacements held much higher ranks and were more deserving employees. Moreover, there were no proofs to sustain that petitioner used fair and reasonable criteria in determining which employees to retrench. According to the CA, petitioners failure to produce evidence raises the presumption that such evidence will be adverse to it. Consequently, the CA invalidated the retrenchment, held respondent to have been illegally dismissed, and ordered respondents reinstatement and payment of backwages. The dispositive portion of the Decision reads: WHEREFORE, the assailed Decision dated December 14, 2000 and the Resolution dated June 29, 2001 both of the National Labor Relations Commission, Third Division in NLRC Case No. CA 024643-00 are REVERSED and SET ASIDE. Private Respondent Shimizu Philippine Contractors, Inc. is hereby ORDERED to reinstate Petitioner VIRGILIO P. CALLANTA with backwages computed from the date of his dismissal on July 9, 1997 up to the finality of this Decision without loss of seniority rights and benefits appurtenant to his position. SO ORDERED.18 The CA denied petitioners Motion for Reconsideration19 and reiterated that petitioner offered no proof of any standard or program intended to implement the retrenchment program.

Issues Thus, the instant petition raising the following issues: A. WHETHER X X X THE HONORABLE COURT OF APPEALS EXCEEDED ITS JURISDICTION WHEN IT REVERSED THE FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC BY RE-EVALUATING THE EVIDENCE ON RECORD. B. WHETHER X X X THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT PETITIONER FAILED TO OBSERVE FAIR AND REASONABLE STANDARDS OR CRITERIA IN EFFECTING THE DISMISSAL OF [RESPONDENT].20 Petitioner contends that the CAs corrective power in petitions for certiorari is confined only to jurisdictional issues and a determination of whether there is grave abuse of discretion amounting to lack or excess of jurisdiction. It does not encompass the reevaluation and reassessment of factual findings and conclusions of the Labor Arbiter which should be accorded great weight and respect when affirmed by the NLRC. According to petitioner, the CA gravely erred in finding that no valid retrenchment exists contrary to the prior findings of the Labor Arbiter and NLRC. Petitioner also insists that all the requisites for a valid retrenchment have been established by substantial evidence and that it observed fair and reasonable standards in implementing its retrenchment program, to wit: ability to perform work efficiently and seniority. As succinctly found by the Labor Arbiter, respondent is notorious for violating company rules which adversely reflected on his ability to perform work effectively. Petitioner further denies that junior officers/employees were retained and that respondent was singled out for termination. Our Ruling We find the petition meritorious. At the outset, the power of the CA to review a decision of the NLRC "in a petition for certiorari under Rule 65 of the Rules of Court does not normally include an inquiry into the correctness of the NLRCs evaluation of the evidence."21 However, under certain circumstances, the CA is allowed to review the factual findings or the legal conclusions of the NLRC in order to determine whether these findings are supported by the evidence presented and the conclusions derived therefrom are accurately ascertained.22 It has been held that "[i]t is within the jurisdiction of the CA x x x to review the findings of the NLRC." 23 From the foregoing, the CA, in the present case, cannot be faulted in re-evaluating the NLRCs findings as it can undoubtedly affirm, modify or reverse the same if the evidence warrants. Having settled thus, we shall now proceed to review whether the CA correctly appreciated the NLRCs finding and if the CAs resultant decision was in accord with law and evidentiary facts. There was substantial compliance for a valid retrenchment; petitioner used fair and reasonable criteria in effecting retrenchment.

As an authorized cause for separation from service under Article 283 of the Labor Code,24 retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence: (1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least month pay for every year of service, whichever is higher; (4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees right to security of tenure; and (5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain workers.25 In the present case, both the Labor Arbiter and the NLRC found sufficient compliance with these substantive requirements, there being enough evidence to prove that petitioner was sustaining business losses, that separation pay was offered to respondent, and that notices of termination of service were furnished respondent and DOLE. However, the NLRC modified the Decision of the Labor Arbiter by granting respondent indemnity since the notice to DOLE was served short of the 30-day notice requirement and that there is no proof of the use of fair and reasonable criteria in the selection of employees to be retrenched or retained. The CA, then, reversed the Decision of the NLRC by ruling that the absence of fair and reasonable criteria in implementing the retrenchment invalidates altogether the retrenchment. Petitioner presented proof that it incurred substantial losses as shown by its financial statements and that it substantially complied with the requirements of serving written notices of retrenchment. It was also shown that it offered to pay respondents separation pay. The CA, however, ruled that petitioner failed to show that it implemented its retrenchment program in a just and proper manner in the absence of reasonable criteria in effecting such. We disagree. In implementing its retrenchment scheme, petitioner was constrained to streamline its operations and to downsize its complements in a progressive manner in order not to jeopardize the completion of its projects. Thus, several departments like the Civil Works Division, Electro-mechanical Works Division and the Territorial Project Management Offices, among others, were abolished in the early part of 1996 and thereafter the Structural Steel Division, of which respondent was an Administrator. Respondent was among the last batch of employees who were retrenched and by the end of year 1997, all of the employees of the Structural Steel Division were severed from employment. Respondent, in any of the pleadings filed by him, never refuted the foregoing facts. Respondents argument that he was singled out for termination as allegedly shown in petitioners monthly termination report for the month of July 1997 filed with the DOLE does not persuade this Court. Standing alone, this document is not proof of the total number of retrenched employees or that respondent was the only one retrenched. It merely serves as notice to DOLE of the names of employees terminated/ retrenched only for

the month of July. In other words, it cannot be deemed as an evidence of the number of employees affected by the retrenchment program. Thus we cannot conclude that no other employees were previously retrenched. Respondent then claimed that petitioner did not observe seniority in retrenching him. He further alleged that he is more qualified and efficient than those retained by petitioner. Notably, however, the records do not bear any proof that these allegations were substantiated. On the contrary, the Labor Arbiter found respondents notoriety due to pieces of evidence showing numerous company violations imputed against respondent. This fact of being subject of several administrative investigations, respondent failed to refute. Moreover, the Labor Arbiter likewise found respondent guilty of several misrepresentations in the pleadings filed before the tribunal with regard to the latters employment position. By advancing that other employees were less efficient, qualified and senior than him, respondent has the burden of proving these allegations which he failed to discharge. On the contrary, we find that petitioner implemented its retrenchment program in good faith because it undertook several measures in cutting down its costs, to wit, withdrawing certain privileges of petitioners executives and expatriates; limiting the grant of additional monetary benefits to managerial employees and cutting down expenses; selling of company vehicles; and infusing fresh capital into the company. Respondent did not attempt to refute that petitioner adopted these measures before implementing its retrenchment program. In fine, we hold that petitioner was able to prove that it incurred substantial business losses, that it offered to pay respondent his separation pay, that the retrenchment scheme was arrived at in good faith, and lastly, that the criteria or standard used in selecting the employees to be retrenched was work efficiency which passed the test of fairness and reasonableness. The termination notice sent to DOLE did not comply with the 30-day notice requirement, thus, respondent is entitled to indemnity for violation of due process. However, although there was authorized cause to dismiss respondent from the service, we find that petitioner did not comply with the 30-day notice requirement. Petitioner maintains that it substantially complied with the requirement of the law in that it, in fact, submitted two notices or reports with the DOLE. However, petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the second notice, before the intended date of respondents dismissal. The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of termination.26 Non-compliance with this rule clearly violates the employees right to statutory due process. Consequently, we affirm the NLRCs award of indemnity to respondent for want of sufficient due notice. But to be consistent with our ruling in Jaka Food Processing Corporation v. Pacot,27 the indemnity in the form of nominal damages should be fixed in the amount of P50,000.00. WHERFORE, the petition is GRANTED. The challenged June 10, 2004 Decision and October 5, 2004 Resolution of the Court of Appeals in CA- G.R. SP. No. 66888 are REVERSED and SET ASIDE. The Decision and Resolution of the National Labor Relations Commission dated December 14, 2000 and June 29, 2001, respectively, upholding the legality of respondents dismissal and awarding him separation pay equivalent to one (1) month pay or one-half (1/2) month pay for every year of service, whichever is higher, are REINSTATED and AFFIRMED with MODIFICATION that the indemnity to be awarded to respondent is fixed in the amount of P50,000.00 as nominal damages.