[G.R. No. 152121.

July 29, 2003]

EDUARDO G. EVIOTA, petitioner, vs. THE HON. COURT OF APPEALS, THE HON. JOSE BAUTISTA, Presiding Judge of
Branch 136, Regional Trial Court of Makati, and STANDARD CHARTERED BANK, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court, of the Decision [1] of the Court of
Appeals in CA-G.R. SP No. 60141 denying the petition for certiorari filed by the petitioner praying the nullification of the Order of the
Regional Trial Court of Makati, Branch 136.[2]
Sometime on January 26, 1998, the respondent Standard Chartered Bank and petitioner Eduardo G. Eviota executed a
contract of employment under which the petitioner was employed by the respondent bank as Compensation and Benefits Manager,
VP (M21). However, the petitioner abruptly resigned from the respondent bank barely a month after his employment and rejoined his
former employer.
On June 19, 1998, the respondent bank filed a complaint against the petitioner with the RTC of Makati City. The respondent
bank alleged inter alia in its complaint that:
1.
It is a foreign banking institution authorized to do business in the Philippines, with principal offices at the 5 th Floor, Bankmer
Bldg., 6756 Ayala Avenue, Makati City.
2.
Defendant Eduardo Eviota (Eviota) is a former employee of the Bank, and may be served with summons and other court
processes at 8 Maple Street, Cottonwoods, Antipolo, Metro Manila.
3.
On December 22, 1997, Eviota began negotiating with the Bank on his possible employment with the latter. Taken up during
these negotiations were not only his compensation and benefit package, but also the nature and demands of his prospective
position. The Bank made sure that Eviota was fully aware of all the terms and conditions of his possible job with the Bank.
4.
On January 26, 1998, Eviota indicated his conformity with the Banks Offer of Employment by signing a written copy of such
offer dated January 22, 1998 (the Employment Contract). A copy of the Employment Contract between Eviota and the Bank is
hereto attached as Annex A.
5.
Acting on the Employment Contract and on Eviotas uninhibited display of interest in assuming his position, the Bank promptly
proceeded to carry out the terms of the Employment Contract as well as to facilitate his integration into the workforce. Among others,
the Bank: (a) renovated and refurbished the room which was to serve as Eviotas office; (b) purchased a 1998 Honda CR-V (Motor
No. PEWED7P101101; Chassis No. PADRD 1830WV00108) for Eviotas use; (c) purchased a desktop IBM computer for Eviotas use;
(d) arranged the takeout of Eviotas loans with Eviotas former employer; (e) released Eviotas signing bonus in the net amount of
P300,000.00; (f) booked Eviotas participation in a Singapore conference on Y2K project scheduled on March 10 and 11, 1998; and
(g) introduced Eviota to the local and regional staff and officers of the Bank via personal introductions and electronic mail.
6.
The various expenses incurred by the Bank in carrying out the above acts are itemized below, as follows:
a.
Signing Bonus
P 300,000.00
b.
1 Honda CR-V
800,000.00
c.
IBM Desktop Computer
89,995.00
d.
Office Reconfiguration
29,815.00
e.
2-Drawer Lateral File
Cabinet
13,200.00
f.
1 Officers Chair
31,539.00
g.
1 Guest Chair
2,200.00
h.
1 Hanging Shelf
2,012.00
i.
Staff Loan Processing
Title Verification
375.00
Cost of Appraisal
Housing Loan
3,500.00
TOTAL
P1,272,636.00
An itemized schedule of the above expenses incurred by the Bank is hereto attached as Annex B.
7.
On February 25, 1998, Eviota assumed his position as Compensation and Benefits Manager with the Bank and began to
discharge his duties. At one Human Resources (HR) Committee meeting held on March 3, 1998, Eviota energetically presented to
senior management his projects for the year, thus raising the latters expectations. The same day, Eviota instructed the Banks HR
Administrator to book him a flight for Singapore, where he was scheduled to participate in a Y2K project on March 10 and 11,
1998. Confident of Eviotas professed commitment to the Bank, the latter made the aforementioned airline booking for him. In
addition, the Bank allowed Eviota access to certain sensitive and confidential information and documents concerning the Banks
operations.
8.
After leading the Bank to believe that he had come to stay, Eviota suddenly resigned his employment with immediate effect to
re-join his previous employer. His resignation, which did not comply with the 30-day prior notice rule under the law and under the
Employment Contract, was so unexpected that it disrupted plans already in the pipeline (e.g., the development of a salary/matrix grid
and salary structure, and the processing of merit promotion recommendations), aborted meetings previously scheduled among Bank
officers, and forced the Bank to hire the services of a third party to perform the job he was hired to do. For the services of this third
party, the Bank had to pay a total of P208,807.50. A copy of a receipt for the above expenses is hereto attached as Annex C (See
also, Annex B).

9.
Aside from causing no small degree of chaos within the Bank by reason of his sudden resignation, Eviota made off with a
computer diskette and other papers and documents containing confidential information on employee compensation and other Bank
matters, such as the salary schedule of all Corporate and Institutional Banking officers and photocopies of schedules of benefits
provided expatriates being employed by the Bank.
10. With the benefit of hindsight, the Bank realizes that it was simply used by Eviota as a mere leverage for his selfish efforts at
negotiating better terms of employment with his previous employer. Worse, there is evidence to show that in his attempts to justify his
hasty departure from the Bank and conceal the real reason for his move, Eviota has resorted to falsehoods derogatory to the
reputation of the Bank. In particular, he has been maliciously purveying the canard that he had hurriedly left the Bank because it had
failed to provide him support. His untruthful remarks have falsely depicted the Bank as a contract violator and an undesirable
employer, thus damaging the Banks reputation and business standing in the highly competitive banking community, and undermining
its ability to recruit and retain the best personnel in the labor market.
11. On March 16, 1998, the Bank made a written demand on Eviota to return the aforementioned computer diskette and other
confidential documents and papers, reimburse the Bank for the various expenses incurred on his account as a result of his
resignation (with legal interest), and pay damages in the amount of at least P500,000.00 for the inconvenience and work/program
disruptions suffered by the Bank.
A copy of the Banks demand letter dated March 16, 1998 is hereto attached as Annex D.
12. In partial compliance with said demand, Eviota made arrangements with his previous employer to reimburse the Bank for the
expenses incurred in connection with the Banks purchase of the Honda CR-V for his use. The Bank informed Eviota that in addition
to the Honda CR-Vs purchase price of P848,000.00 (of which Eviota initially shouldered P48,000.00), incidental costs in the form of
Processing Fees (P1,000.00), FPD/MCAR/98-155684 (P1,232.53) and Fund Transfer Price (P18,646.84) were incurred, bringing the
total cost of the Honda CR-V to P868,881.38. On April 29, 1998, the Bank received two managers checks in the aggregate amount
of P868,881.38, representing costs incurred in connection with the purchase of the Honda CR-V, inclusive of processing fees and
other incidental costs. Previously, Eviota had returned his P300,000.00 signing bonus, less the P48,000.00 he had advanced for the
Honda CR-Vs purchase price.
13. Eviota never complied with the Banks demand that he reimburse the latter for the other expenses incurred on his account,
amounting to P360,562.12 (see, Annex B). [3]
The respondent bank alleged, by way of its causes of action against the petitioner, the following:
First Cause of Action
14. Eviotas actions constitute a clear violation of Articles 19, 20 and 21 of Republic Act No. 386, as amended (the Civil
Code). Assuming arguendo that Eviota had the right to terminate his employment with the Bank for no reason, the manner in and
circumstances under which he exercised the same are clearly abusive and contrary to the rules governing human relations.
14.1. By his actions and representations, Eviota had induced the Bank to believe that he was committed to fulfilling his obligations
under the Employment Contract. As a result, the Bank incurred expenses in carrying out its part of the contract (see Annexes B and
C). Less reimbursements received from Eviota, the Bank is entitled to actual damages of P360,562.12. (See, Annex C).
Second Cause of Action
15. Under Article 285 (a) of Presidential Decree No. 442, as amended (the Labor Code), an employee may terminate without just
cause the employer-employee relationship by serving written notice on the employer at least one (1) month in advance. In addition,
Section 13 of the Employment Contract specifically provides that: Your [i.e., Eviotas] employment may be terminated by either party
giving notice of at least one month. (Annex A, p. 5.)
15.1. Eviotas failure to comply with the above requirement threw a monkey wrench into the Banks operations Eviotas sudden
resignation aborted meetings previously scheduled among Bank officers and disrupted plans for a salary/merit review program and
development of a salary structure and merit grid already in the pipeline.
Hence, Eviota is liable to the Bank for damages in the amount of at least P100,000.00.
Third Cause of Action
16. Eviotas false and derogatory statements that the Bank had failed to deliver what it had purportedly promised have besmirched
the Banks reputation and depicted it as a contract violator and one which does not treat its employees properly. These derogatory
statements have injured the Banks business standing in the banking community, and have undermined the Banks ability to recruit
and retain the best personnel. Hence, plaintiff is entitled to moral damages of at least P2,000,000.00.
17. By way of example or correction for the public good, and to deter other parties from committing similar acts in the future,
defendant should be held liable for exemplary damages of at least P1,000,000.00
18. Eviotas actions have compelled plaintiff to obtain the services of undersigned counsel for a fee, in order to protect its
interests. Hence, plaintiff is entitled to attorneys fees of at least P200,000.00. [4]
The respondent bank prayed, that after due proceedings, judgment be rendered in its favor as follows:
WHEREFORE, it is respectfully prayed that judgment be rendered ordering the defendant to pay the plaintiff:

1.
As actual damages, the amount of P360,562.12, representing expenses referred to in items c to i of par. 6 and the cost of the
third-party services mentioned in par. 8;
2.
For violating the 30-day notice requirement under the Labor Code and order (sic) the Employment Contract, damages in the
amount of at least P100,000.00;
3.
As moral damages, the amount of P2,000,000.00;
4.
As exemplary damages, the amount of P1,000,000.00;
5.
As attorneys fees, the amount of P200,000.00; and
6.
Costs of the suit.
Other just and equitable reliefs are likewise prayed for.[5]
The respondent bank appended to its complaint a copy of the petitioners employment contract.
The petitioner filed a motion to dismiss the complaint on the ground that the action for damages of the respondent bank was
within the exclusive jurisdiction of the Labor Arbiter under paragraph 4, Article 217 of the Labor Code of the Philippines, as
amended. The petitioner averred that the respondent banks claim for damages arose out of or were in connection with his employeremployee relationship with the respondent bank or some aspect or incident of such relationship. The respondent bank opposed the
motion, claiming that its action for damages was within the exclusive jurisdiction of the trial court. Although its claims for damages
incidentally involved an employer-employee relationship, the said claims are actually predicated on the petitioners acts and
omissions which are separately, specifically and distinctly governed by the New Civil Code.
On November 29, 1999, the trial court issued an order denying the petitioners motion to dismiss, ratiocinating that the primary
relief prayed for by the respondent bank was grounded on the tortious manner by which the petitioner terminated his employment with
the latter, and as such is governed by the New Civil Code:
The Court holds that here, since the primary relief prayed for by the plaintiff is for damages, grounded on the tortious manner by
which the defendant terminated his employment with the company, the same are recoverable under the applicable provision of the
Civil Code, the present controversy is removed from the jurisdiction of the Labor Arbiter and brings in within the purview of the regular
courts.[6]
The petitioner filed a motion for reconsideration of the said order, but the court issued an order denying the same. The
petitioner filed a petition for certiorari with the Court of Appeals for the nullification of the orders of the trial court, alleging that the
court a quo committed grave abuse of its discretion amounting to excess or lack of jurisdiction in issuing the said orders. The
petitioner further asserted that contrary to the ruling of the court, the respondent bank claimed damages in its complaint against the
petitioner based on his employment contract, and not on tortious acts.
On November 15, 2001, the CA promulgated a decision dismissing the petition, holding that the trial court and not the Labor
Arbiter had exclusive jurisdiction over the action of the respondent bank. It held that the latters claims for damages were grounded
on the petitioners sudden and unceremonious severance of his employment with the respondent bank barely a month after assuming
office.
With his motion for reconsideration of the decision having been denied by the CA, the petitioner filed his petition with this Court
contending that:
Suffice to state immediately that on the basis of the allegations in the complaint, it is the Labor Arbiter, not the Regional Trial Court,
which has jurisdiction of the subject matter of the complaint in Civil Case No. 98-1397, the principal cause of action being the alleged
omission of petitioner in giving notice to the respondent Bank employer of termination of their relationship; whereas the claims for
other actual/moral/exemplary damages are well within the competence of the Labor Arbiter. [7]
The petition is barren of merit.
Article 217 of the Labor Code of the Philippines, as amended by Rep. Act No. 6715 which took effect on March 21, 1989 reads:
ART. 217. Jurisdiction of Labor Arbiters and the Commission.(a) Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether
agricultural or 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.
Case law has it that the nature of an action and the subject matter thereof, as well as which court has jurisdiction over the
same, are determined by the material allegations of the complaint and the reliefs prayed for in relation to the law involved.
Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of
the labor arbiter. A money claim by a worker against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter
only if there is a reasonable causal connection between the claim asserted and employee-employer relation. Absent such a link, the
complaint will be cognizable by the regular courts of justice.[8]

Actions between employees and employer where the employer-employee relationship is merely incidental and the cause of
action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court. [9] In Georg Grotjahn
GMBH & Co. v. Isnani,[10] we held that the jurisdiction of the Labor Arbiter under Article 217 of the Labor Code, as amended, is limited
to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code of the
Philippines, other labor laws or their collective bargaining agreements. In Singapore Airlines Limited v. Pao,[11] the complaint of the
employer against the employee for damages for wanton justice and refusal without just cause to report for duty, and for having
maliciously and with bad faith violated the terms and conditions of their agreement for a course of conversion training at the expense
of the employer, we ruled that jurisdiction over the action belongs to the civil court:
On appeal to this court, we held that jurisdiction over the controversy belongs to the civil courts. We stated that the action was for
breach of a contractual obligation, which is intrinsically a civil dispute. We further stated that while seemingly the cause of action
arose from employer-employee relations, the employers claim for damages is grounded on wanton failure and refusal without just
cause to report to duty coupled with the averment that the employee maliciously and with bad faith violated the terms and conditions
of the contract to the damage of the employer. Such averments removed the controversy from the coverage of the Labor Code of the
Philippines and brought it within the purview of the Civil Law.
Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter,
must have a reasonable causal connection with any of the claims provided for in that article. Only if there is such a connection with
the other claims can the claim for damages be considered as arising from employer-employee relations. [12]
The claims were the natural consequences flowing from a breach of an obligation, intrinsically civil in nature.
In Medina v. Castro-Bartolome,[13] we held that a complaint of an employee for damages against the employer for slanderous
remarks made against him was within the exclusive jurisdiction of the regular courts of justice because the cause of action of the
plaintiff was for damages for tortious acts allegedly committed by the employer. The fact that there was between the parties an
employer-employee relationship does not negate the jurisdiction of the trial court.
In Singapore Airlines Ltd. v. Pao,[14] we held that:
Stated differently, petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary relief
sought is for liquidated damages for breach of a contractual obligation. The other items demanded are not labor benefits demanded
by workers generally taken cognizance of in labor disputes, such as payment of wages, overtime compensation or separation
pay. The items claimed are the natural consequences flowing from breach of an obligation, intrinsically a civil dispute.
In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr., [15] the petitioner sued its employee Adonis Limjuco for
breach of contract which reads:
That for a period of two (2) years after termination of service from EMPLOYER, EMPLOYEE shall not in any manner be connected,
and/or employed, be a consultant and/or be an informative body directly or indirectly, with any business firm, entity or undertaking
engaged in a business similar to or in competition with that of the EMPLOYER. [16]
The petitioner alleged in its complaint with the trial court that:
Petitioner claimed that private respondent became an employee of Angel Sound Philippines Corporation, a corporation engaged in
the same line of business as that of petitioner, within two years from January 30, 1992, the date of private respondents resignation
from petitioners employ. Petitioner further alleged that private respondent is holding the position of Head of the Material
Management Control Department, the same position he held while in the employ of petitioner. [17]
The trial court dismissed the case for lack of jurisdiction over the subject matter because the cause of action for damages arose out of
the parties employer-employee relationship. We reversed the order of the trial court and held, thus:
Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages agreed upon in the
contract as redress for private respondents breach of his contractual obligation to its damage and prejudice (Rollo, p. 57). Such
cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so when we
consider that the stipulation refers to the post-employment relations of the parties. [18]
In this case, the private respondents first cause of action for damages is anchored on the petitioners employment of deceit
and of making the private respondent believe that he would fulfill his obligation under the employment contract with assiduousness
and earnestness. The petitioner volte face when, without the requisite thirty-day notice under the contract and the Labor Code of the
Philippines, as amended, he abandoned his office and rejoined his former employer; thus, forcing the private respondent to hire a
replacement. The private respondent was left in a lurch, and its corporate plans and program in jeopardy and disarray. Moreover, the
petitioner took off with the private respondents computer diskette, papers and documents containing confidential information on
employee compensation and other bank matters. On its second cause of action, the petitioner simply walked away from his
employment with the private respondent sans any written notice, to the prejudice of the private respondent, its banking operations and
the conduct of its business. Anent its third cause of action, the petitioner made false and derogatory statements that the private
respondent reneged on its obligations under their contract of employment; thus, depicting the private respondent as unworthy of trust.
It is evident that the causes of action of the private respondent against the petitioner do not involve the provisions of the Labor
Code of the Philippines and other labor laws but the New Civil Code. Thus, the said causes of action are intrinsically civil. There is
no causal relationship between the causes of action of the private respondents causes of action against the petitioner and their
employer-employee relationship. The fact that the private respondent was the erstwhile employer of the petitioner under an existing

employment contract before the latter abandoned his employment is merely incidental. In fact, the petitioner had already been
replaced by the private respondent before the action was filed against the petitioner.
IN LIGHT OF ALL THE FOREGOING, the Petition is DENIED. The Decision of the Court of Appeals dismissing the petition of
the petitioner is AFFIRMED.
SO ORDERED.
U-BIX CORPORATION and EDILBERTO B. BRAVO
Petitioners,
- versus VALERIE ANNE H. HOLLERO,
Respondent.
G.R. No. 177647
October 31, 2008
x--------------------------------------------------x
DECISION

On the second day of her absence or on December 19, 1996, Malfitano visited her during which she explained to him that she had no
way to communicate with the office except by telephone but that her neighbors telephone was out of order. When she reported back
for work on December 23, 1996, she was asked to explain why she did not advise the company of her failure to report for work on
December 18 and 19, 1996. She reiterated her explanation given to Malfitano, apologizing for the inconvenience her absence caused
the office.
On the same day that she reported for work on December 23, 1996, Malfitano advised her that he was recommending the termination
of her services and asked her to, as she did, turn over her files and office keys. And he advised her not to report for work until further
notice. She complied[8] and did not receive any word from U-Bix until the first week of March 1997 when she received a letter
informing her of her dismissal effective February 14, 1997.
NLRC-NCR Case No. 00-05-03696-97 and NLRC-NCR Case No.

00-08-05988-97 were consolidated.[9]

By Decision of February 8, 1999, Labor Arbiter Donato G. Quinto, Jr., found for U-Bix, disposing as follows:[10]
WHEREFORE, judgment is hereby rendered as follows:
A. in NLRC-NCR Case No. 00-05-03696-97

CARPIO MORALES, J.:

Petitioner U-Bix Corporation (U-Bix) hired on March 6, 1996 Valerie Anne H. Hollero (respondent) as a management trainee at its
Furniture Division, with salary and allowances totaling P10,000 monthly. On May 1, 1996, it promoted respondent to facilities
manager, with salary and allowances totaling P20,000 monthly.

1.
Declaring the dismissal of respondent Valerie Anne H. Hollero to be valid and legal, and
2.
Ordering said respondent Valerie Anne H. Hollero to pay complainant U-Bix Corporation the amount of P187,510.00 with
interest at 12% per annum, until fully paid, as discussed above.
B.

U-Bix later sent respondent and three other employees to the United States for two months of training for a newly acquired franchise,
the ServiceMaster Company. The training commenced on July 4, 1996 and ended on September 3, 1996.

in NLRC NCR Case No. 00-08-05988-97

1.
Dismissing complainant Valerie Anne H. Holleros complaint for illegal dismissal and money claims for lack of merit.[11]
(Underscoring supplied)

Before respondent left for the United States, she signed a contract with petitioner, the pertinent portion of which reads:
VALERIE ANNE H. HOLLERO shall remain in the employ of U-BIX CORPORATION for a period of five (5) years from completion of
her U.S. Training otherwise she shall reimburse U-BIX CORPORATION for all costs (prorated) and expenses which U-BIX
CORPORATION incurred for her (Hollero's) training in the U.S.[1] (Underscoring and italics supplied)
On February 14, 1997, U-Bix, citing respondent's supposed pattern of tardiness, absences, neglect of duties, and lack of interest,[2]
terminated her employment for loss of trust and confidence.[3]
U-Bix in fact filed on May 22, 1997 a complaint[4] against respondent before the Labor Arbiter for the reimbursement of training
expenses and damages. In its complaint, which was docketed as NLRC NCR Case No. 00-05-03696-97, U-Bix alleged that upon
respondents return from her training abroad, she demonstrated gross neglect of her duties as shown by her continued tardiness,
habitual absences, and failure to submit reports and/or documents on their due dates, attention to which was repeatedly called but
she persisted in such conduct; that on December 17, 1996, respondent's superiors discussed with her the duties and responsibilities
of a facilities manager and the work performance standards expected of her, following which or on December 18 and 19, 1996, she
did not report for work without prior notice; that on December 23, 1996, respondent's superior Bill Malfitano (Malfitano) handcarried to
her residence a memorandum requiring her to explain in writing her unauthorized absences, with a warning that failure to respond
within 24 hours from receipt thereof would be considered a waiver of her right to give her explanation; that respondent, however,
failed and refused to submit any explanation, constraining U-Bix to terminate her employment; and that on April 24, 1997, U-Bix's
counsel wrote respondent a letter[5] demanding the reimbursement of P187,510 training expenses but the same remained unheeded.
Subsequently or on August 25, 1997, respondent filed a complaint for illegal dismissal against petitioner U-Bix and/or its Presidentpetitioner Edilberto B. Bravo.[6] Her complaint, which was docketed as NLRC-NCR Case No. 00-08-05988-97, alleged as follows:
After her training abroad, she and her three other co-employees-trainees and an American manager who was assigned to the
Philippines as part of the franchise agreement started the set-up of the new franchise in the country. She organized the launching of
U-Bix's subsidiary company (Facilities Managers, Inc.), trained personnel on ServiceMaster methods of cleaning and customer
service, and distributed chemicals and equipment from the United States to the various U-Bix branches upon Malfitano's advice and
guidance. And during the second week of December 1996, she headed the cleaning personnel in cleaning the production plant in
Sucat, Paraaque which lasted up to midnight for three days.

On appeal before the National Labor Relations Commission (NLRC) (docketed as NLRC NCR CA No. 018999-99),[12] the NLRC
reversed the Labor Arbiter's decision. Finding that reinstatement was not feasible due to strained relations,[13] it awarded respondent
backwages and separation pay. Thus it disposed:
WHEREFORE, premises considered, the assailed decision dated February 8, 1999 is hereby REVERSED and SET ASIDE and a
new one entered as follows:
A. Dismissing the complaint of the respondent-appellee U-BIX CORPORATION, in NLRC NCR Case No. 00-05-03696-97 for lack of
jurisdiction; and,
B. Finding the dismissal of complainant-appellant Valerie Anne H. Hollero in NLRC NCR Case No. 00-08-05988-97 to be illegal
thereby ordering respondents-appellees U-BIX CORPORATION/Edilberto B. Bravo to pay the former the following:
1.
2.

Backwages
P520,000.00
Separation Pay 60,000.00; and
Total
P580,000.00

All other claims for damages are dismissed for insufficiency of evidence.[14] (Underscoring supplied)
Petitioners' Motion for Reconsideration[15] having been denied by the NLRC, they filed a Petition for Certiorari (with application for
issuance of temporary restraining order and/or writ of preliminary injunction)[16] before the Court of Appeals which, by Decision[17] of
January 8, 2007, dismissed the same, disposing as follows:
WHEREFORE, the petition is DISMISSED. The assailed NLRC Resolutions dated July 12, 1999 and March 14, 2000 in NLRC NCR
CA No. 018999-99 are hereby AFFIRMED with the clarification that NLRC-NCR Case No. 00-05-03696-97 is dismissed for lack of
merit instead of lack of jurisdiction.
SO ORDERED.[18] (Emphasis in the original)
Their Motion for Reconsideration[19] having been denied,[20] petitioners filed the present Petition for Review on Certiorari,[21]
faulting the Court of Appeals

Respondent who was made to understand that she was the contact person of U-Bix and the head of the implementation team, was
furnished a copy of her job description.[7]

I x x x IN HOLDING THAT PETITIONERS FAILED TO ESTABLISH A VALID CAUSE FOR RESPONDENT HOLLERO'S DISMISSAL.

On December 17, 1996, Malfitano met with the implementation team and discussed the various roles of each member thereof, since
setting up stage was about to end and the duties and responsibilities of each member were being streamlined.

II x x x IN RULING THAT PETITIONER U-BIX FAILED TO OBSERVE THE PROCEDURAL REQUIREMENTS OF DUE PROCESS IN
TERMINATING RESPONDENT HOLLERO.

From December 18-19, 1996, respondent suffered from loose bowel movement, preventing her from reporting for work. She,
however, failed to notify the company of her absence.

III x x x IN RULING THAT PETITIONER U-BIX IS NOT ENTITLED TO REIMBURSEMENT OF RESPONDENT HOLLERO'S
TRAINING EXPENSES.[22]

In termination cases, the employer has the burden of proving that the dismissal is for a valid and just cause.[23] While an employer
enjoys a wider latitude of discretion in terminating the employment of managerial employees,[24] managerial employees are also
entitled to security of tenure and cannot be arbitrarily dismissed at any time and without cause as reasonably established in an
appropriate investigation.[25]

I am requesting that you send me a written explanation which satisfactorily addresses the two days you abandoned your
management position without a call or any contact with the ServiceMASTER team or anyone within the U-Bix Organization.
The two days I am referring to are Wednesday, December 18, 1996 and Thursday, December 19, 1996.

In the case at bar, petitioners failed to substantiate their allegations of respondent's habitual absenteeism, habitual tardiness, neglect
of duties, and lack of interest. Daily time records, attendance records, or other documentary evidence attesting to these grounds
could have readily been presented to support the allegations but none was.
On the other hand, copies of respondent's Pay Advice Slips for September-December 1996 show no deductions for absences or
tardiness, except in the Pay Advice Slip for October 1-15, 1996 which deductions correspond to a duly approved leave of absence
without pay from September 23-24, 1996 (subject of petitioners application filed on September 21, 1996).[26]
A receipt acknowledging the turnover of keys on December 23, 1996[27] submitted by respondent substantiates her account of the
meeting that took place when she reported back for work on that day, which document belies petitioners claim that she abandoned
her work and that [o]n the evening of December 23, 1997, Mr. Bill Malfitano, one of respondent's superiors, went
out of his way to deliver to the respondent a letter requesting for a written explanation as to her errant acts.[28]
Malfitanos memorandum to respondent dated December 12, 1996, or close to two weeks before she was asked on December 23,
1996 to turn over the keys, stating that her leadership role in this implementation is critical to our success in meeting our customers
needs[29] and she had been introduced as the FMI manager responsible for our program implementation to the site coordinator at
each of the U-Bix facilities,[30] belies U-Bix's allegations of her habitual absenteeism, habitual tardiness, neglect of duty, and lack of
interest.
Petitioners go on to lay stress on respondents failure to report for work on December 18-21, 1996 without notifying the office and
without explaining her absence when she returned for work.[31]

I am requesting that you respond in writing by 5 pm on Tuesday, December 24, 1996. If we do not receive a response within the time
allotted we will have to consider this as waiving your right to provide any further explanation relating to this absence.[41]
The notice does not inform outright the employee that an investigation will be conducted on the charges particularized therein which,
if proven, will result to her dismissal. It does not contain a plain statement of the charges of malfeasance or misfeasance nor
categorically state the effect on her employment if the charges are proven to be true.[42] It does not apprise respondent of possible
dismissal should her explanation prove unsatisfactory. Besides, the petitioners did not even establish that respondent received the
memorandum.
Neither did petitioners show that they conducted a hearing or conference during which respondent, with the assistance of counsel if
she so desired, had opportunity to respond to the charge, present her evidence, or rebut the evidence presented against her.[43] The
meeting with respondent on December 23, 1996 did not satisfy the hearing requirement, for respondent was not given the opportunity
to avail herself of counsel.
Article 277(b) of the Labor Code mandates that an employer who seeks to dismiss an employee must afford the latter ample
opportunity to be heard and to defend himself with the assistance of his representative if he so desires. Expounding on this
provision, this Court held that '[a]mple opportunity' connotes every kind of assistance that management must accord the employee to
enable him to prepare adequately for his defense including legal representation.[44]
With regard to U-Bix's complaint for reimbursement of training expenses, the Court finds that the Court of Appeals erred in holding
that the Labor Arbiter has jurisdiction thereover. Consider the reason proffered for such ruling:

As the Court of Appeals observed, however,

Records likewise reveal that U-Bix failed to adduce evidence showing that Mr. Malfitano denied or corroborated [herein respondent]
Valerie's claim that he had visited her on the evening of December 19, 1996 and accepted the explanation for her absence. While its
pleadings below were silent on the matter, U-Bix admits now that Mr. Malfitano went to Valerie's house on said date[32] but skirted the
issue of whether or not he had accepted her explanation. That despite Valerie's absences from December 18 to 21, 1996 U-Bix only
made issue of her absences on December 18 and 19, indicates that her condition had already come to the latter's knowledge
thereafter, thereby excusing her absences on December 20 and 21. Thus, while the Court finds it thoughtless of Valerie not to have
exerted diligent efforts to inform the office of the reason for her absence at the earliest time possible, it, however, believes in her claim
that she informed Mr. Malfitano about it and that the latter had accepted her explanation. Indeed, the consistent rule is that if doubts
exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.[33]
(Italics in the original; underscoring supplied)
Assuming arguendo that respondent's four-day absence was not justified, absences must be habitual to be a ground for dismissal.
[34] At all events, granting that petitioners following contention is in order, viz:
In this day where over-the-counter medicines abound for common ailments such as loose bowel movement, Hollero's story of
unabated LBM to cause her to be absent for 4 consecutive days starting December 18 to December 21, 1996 is simply incredible.
Wors[e], in this day and age of high technology and modern telecommunication facilities in Metro Manila, Hollero's pitiful story that
she had no other means of communicating with petitioner U-Bix except thru her neighbor's busted phone is even more incredible.

x x x In the instant case, while the principal relief prayed for is the reimbursement of damages for breach of a contractual obligation,
the issue of whether or not Valerie should be held liable therefor necessarily includes the determination of the validity of her
termination which can only be resolved by reference to, and application of, labor laws and jurisprudence. Thus, since the alleged
breach of the Agreement is so closely intertwined with the issue of illegal dismissal, the resolution of both issues falls within the area
of competence or expertise of the labor arbiters and the NLRC.[45] (Italics in the original)
The legality of respondent's dismissal was, however, raised not by U-Bix's complaint but in respondent's Position Paper.[46]
Jurisdiction over the subject matter is determined from the allegations made in the complaint, and cannot be made to depend upon
the defenses made by a defendant in his Answer or Motion to Dismiss.[47] The jurisdiction of labor arbiters, as well as of the NLRC,
is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code,
other labor statutes, or their collective bargaining agreement.[48] U-Bix's complaint was one to collect sum of money based on civil
laws on obligations and contract, not to enforce rights under the Labor Code, other labor statutes, or the collective bargaining
agreement.
WHEREFORE, the January 8, 2007 Decision of the Court of Appeals is AFFIRMED with MODIFICATION in that NLRC-NCR Case
No. 00-05-03696-97 is dismissed, not for lack of merit but, for lack of jurisdiction.
SO ORDERED.
[G.R. No. 154448. August 15, 2003]

These bespeak of an unresourceful and indifferent manager. It breaks one's credibility to believe that respondent Hollero was
suffering for 4 consecutive days from unrelenting LBM such that she could not even request somebody to call her employer U-Bix of
her predicament. x x x [35] (Underscoring supplied),
there must be reasonable proportionality between the offense and the penalty.[36] Dismissal is the ultimate penalty that can be
meted to an employee, and where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to
be visited with so severe consequence.[37] Thus in Zagala v. Mikado Philippines Corporation,[38] this Court found dismissal too
severe a penalty on incurring of absences in excess of the allowable number.
Further, petitioners take respondent's failure to pray for reinstatement as an admission that her dismissal was valid.[39] Such position
glosses over respondents explanation that reinstatement would not be feasible due to the strained relations between her and
petitioners.[40] Besides, the merits of a complaint for illegal dismissal do not depend on its prayer but on whether the employer
discharges its burden of proving that the dismissal is valid.
In another vein, the Court finds that petitioners failed to comply with the procedural requirements for a valid dismissal. Respondent
being a manager did not excuse them from observing such procedural requirements.

DR. PEDRITO F. REYES, petitioner, vs. COURT OF APPEALS, PHIL. MALAY POULTRY BREEDERS, INC. and LEONG HUP
POULTRY FARM SDN, BHD., Mr. Francis T.N. Lau, President and Chairman of the Board and Mr. Chor Tee Lim, Director,
respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review under Rule 45 of the Revised Rules of Court are the January 28, 2002[1] and July 22, 2002[2]
Resolutions[3] of the Court of Appeals in CA-G.R. SP No. 67431, which dismissed the petition for certiorari filed by petitioner for
failure to attach to the petition the duplicate original or certified true copy of the Labor Arbiters decision as well as the relevant
pleadings.
The facts show that on August 24, 1989, respondent Leong Hup Poultry Farms SDN. BHD (Leung Hup) of Malaysia, thru its
Managing Director Francis T. Lau, appointed petitioner Pedrito F. Reyes as Technical/Sales Manager with a net salary of
US$4,500.00 a month. His duties consisted of selling parent stock day-old chicks and providing technical assistance to clients of the
company in Malaysia and other Asian countries.[4] Sometime in 1992, the company formed Philippine Malay Poultry Breeders, Inc.,
(Philmalay) in the Philippines. Petitioner was appointed General Manager thereof with a monthly salary of US$5,500.00.

Thus a first notice informing and bearing on the charge must be sent to the employee. The December 23, 1996 memorandum of
Malfitano which he handcarried to respondent's residence on even date merely reads:

In 1996-1997, respondents suffered losses which caused them to reduce production and retrench employees in Philmalay. On June
30, 1997, petitioner gave verbal notice to respondent Francis T. Lau that he will serve as General Manager of Philmalay until
December 31, 1997 only.[5] In a letter dated January 12, 1998, petitioner confirmed his verbal notice of resignation and requested
that he be given the same benefits granted to retrenched and resigned employees of the company, consisting of separation pay
equivalent to 1 month salary for every year of service and the monetary equivalent of his sick leave and vacation leave. He likewise
requested for the following:

9 years x US$5,500.00 = US$49,500.00

3. life insurance policy in the amount of US$100,000.00 from December 1, 1989 to December 31, 1997, or the premiums due
thereon;

4)
To order respondents to pay jointly and severally the complainants other claims and benefits:
a)
A brand new car (Galant super saloon) or its equivalent in the sum of P945,100.00;
b)
Office rentals for the use of his residence situated at No. 38 Don Wilfredo St., Don Enrique Heights Diliman, Quezon City,
[from] 01 December 1989 to July 1996 at the rate of US$300.00 or its peso equivalent to US$23,700.00;
c)
Life insurance policy for US$100,000.00 from December 1, 1989 to December 31, 1997, or if the same was not secured the
premiums due thereon for the above period, the same to be computed as follows:
US$2,736.50 x 9 years = US$24,628.50
d)
The services of the Law firm of Quasha Ancheta Pea and Nolasco be continued to be retained by the two (2) companies to
represent complainant in the illegal recruitment case before the Regional Trial Court of Quezon City, Branch 96, docketed as Crim.
Case No. Q-93-46421, entitled People of the Philippines vs. Dr. Antonio B. Mangahas, et al., filed against him in connection with
his employment by Leong Hup, or in default thereof to pay the attorneys fees of the new counsel, that may be hired by the
complainant to defend him in the said case estimated in the sum of P200,000.00, more or less;

4. office rentals at the rate of US$300.00 or its peso equivalent for the use of his residence as office of Philmalay for the period
December 1, 1989 to July 1996; and

5)
To order the respondents to pay jointly and severally the complainant moral damages in the sum of P2.5 million and exemplary
damages of P2.5 million;

5. retention of the services of the law firm Quasha Ancheta Pena and Nolasco Law Firm, which was hired by respondents to defend
him in the illegal recruitment case filed against him in connection with his employment with respondents.[6]

6)
To order the respondents to pay jointly and severally the complainant in the sum equivalent to ten percent (10%) of the total
claim as and for attorneys fees.

In a letter dated January 19, 1998, respondent Philmalay retrenched petitioner effective January 20, 1998 and promised to pay him
separation benefits pursuant to the provisions of the Labor Code.[7] He was, however, offered a separation pay equivalent to four
months only, or the total amount of P578,600.00 (P144,650 x 4). The offer was not accepted by petitioner and efforts to settle the
impasse proved futile.

7)

1. payment of underpaid salary for the period December 1989 December 31, 1997 together with the additional one month salary
payable in December of every year which was paid at the rate of P26.00 instead of the floating rate;
2. brand new car (Galant Super Saloon) or its equivalent;

Petitioner filed with the Arbitration Branch of the National Labor Relations Commission a complaint[8] for underpayment of wages and
non-payment of separation pay, sick leave, vacation leave and other benefits against respondents.
On December 22, 1999, the Labor Arbiter rendered a decision[9] in favor of petitioner, the dispositive portion of which reads:
PREMISES CONSIDERED, judgment is hereby rendered in favor of the complainant and against the respondents, as follows:
1.
To order respondents to pay jointly and severally the complainant, the following:
(a)
Unpaid salary from January 1, 1998 to January 19, 1998, the same to be computed in the following manner:
19 = days % 31 days of January 98
= 0.613 month x US$5,500.00
= US$3,370.00
(b)
Underpayment of salary, the same to be computed at net US$5,500.00 or its peso-equivalent from July 1, 1997 to December
31, 1997, together with the additional one (1) salary payable every year, the same to be paid at the rate of P26.30 instead of the
following rate computed as follows:
July 1997
- P27.66 P1.36 - P7, 480.00
August 1997
- 29.33 3.02 - 16, 665.00
September
- 32.39 - 6.09 - 33, 495.00
October 1997
- 34.46 - 8.16 - 44, 880.00
November 1997
- 34.51 - 8.21 - 45, 155.00
December 1997
- 37.17 - 10.57- 59, 785.00
P207,460.00
(c)

13th month pay for December 1997 computed as follows: December 1997 P37.17 P10.57 P59,785.00.

2.
To order respondents to pay jointly and severally the complainant the following:
(a)
Unused vacation and sick leaves from December 01, 1989 to December 31, 1997 based on the same salary, to be
computed as follows:
i)
Vacation Leave Fifteen (15) days for every year of services x 9 years = 135 days
135 days % 26 working days a month
= 5.2 months
= US$28,600.00
ii)
Sick Leave Fifteen (15) Days for every [year] of service x 9 years = 135 days
135 days % 26 working days a month
= 5.2 months x US$5,500.00 / month
= US$28,600.00
3)
To order respondents to pay jointly and severally the complainant his separation pay equivalent to one (1) month pay for very
year of service at the rate of US $5,500.00 or its peso equivalent from December 1, 1989 to January 19, 1998, computed as follows:

Respondents counterclaims are hereby dismissed for lack of merit.

SO ORDERED.[10]
On appeal by respondents to the National Labor Relations Commission (NLRC), the Decision of the Labor Arbiter was modified by
deleting the awards of (1) US$3,370.00 representing unpaid salary for the period January 1, 1998 to January 19, 1998; (2)
US$28,600.00 as vacation leave; (3) brand new car or its equivalent in the sum of P945,100.00; (4) US$23,700.00 as office rentals
for the period of December 1, 1989 to July 1996; (5) US$100,000.00 life insurance policy or the equivalent premium in the amount of
US$24,628.50; (6) P2.5 million as moral damages; and (7) P2.5 million as exemplary damages. The NLRC likewise reduced the
amount of petitioners separation pay to US$44,400.00 after adjusting its computation based on the length of service of petitioner
which it lowered from 9 years to 8 years; and by limiting the basis of the 10% attorneys fees to the total of the awards of
underpayment of salary (P207,460.00), 13th month pay differential (P59,785.00) and cash equivalent of sick leave (US$28,600.00)
only, and excluding therefrom the award of separation pay in the amount of US$44,400.00. The decretal portion of the said
decision[11] states:
WHEREORE, premises considered, the Decision dated December 22, 1999 is hereby MODIFIED as follows:
Respondents are hereby ordered to pay jointly and severally the complainant, the following:
(a)
underpayment of salary as computed in the appealed Decision in the amount of P207, 460.00;
(b)
13th month pay differential as computed in the appealed Decision in the amount of P59,785.00;
(c)
monetary equivalent of complainants sick leave as computed in the appealed Decision in the amount of US$28,600.00;
(d)
separation pay in the amount of US$44,000.00 as earlier computed in this Decision;
(e)
attorneys fees equivalent to ten (10%) percent of the total award based on the awards representing underpayment of salary,
13th month pay, [and] cash equivalent of sick leave.
Respondents are likewise directed to provide legal counsel to complainant as defendant in Criminal Case No. Q-93-46421.
The awards of unpaid wages from June 1-19, 1998, vacation leave in the amount of US$28,600, P945,000 for car, US23,700.00, for
office rentals, life insurance policy in the amount of US$100,000.00 and moral and exemplary damages in the amount of 2.5 million
pesos are hereby DELETED on grounds above-discussed.
SO ORDERED.[12]
Petitioner filed a motion for reconsideration, however, the same was denied.[13] Undaunted, petitioner filed a petition for certiorari
with the Court of Appeals, which was dismissed on January 28, 2002 for failure to attach to the petition the following: (1)
complainants (petitioner) Position Paper filed before the Labor Arbiter; (2) Decision dated 22 December 1992 penned by Labor
Arbiter Ariel Cadiente Santos; and (3) Memorandum of Appeal filed by the petitioner.[14]
On February 21, 2002, petitioner filed a motion for reconsideration, attaching thereto a copy of the Labor Arbiters decision and the
pleadings he failed to attach to the petition. The Court of Appeals, however, denied petitioners motion for reconsideration. Hence,
the instant petition based on the following grounds:
1.
COURT OF APPEALS COMMITTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF
JURISDICTION, IN ISSUING THE QUESTIONED RESOLUTION DISMISSING THE PETITION FOR CERTIORARI BASED ON
TECHNICALITIES, THAT PETITIONER FAILED TO COMPLY WITH SEC. 1, RULE 65, RULES OF CIVIL PROCEDURE FOR
FAILURE TO ATTACH THREE (3) DOCUMENTS CONSISTING OF:

Complainants (petitioner) Position Paper filed before the labor arbiter;

Decision dated 22 December 1999 penned by Labor Arbiter Ariel Cadiente Santos; and Memorandum of Appeal filed by the petitioner.
WHICH RESPONDENT COURT OF APPEALS CONSIDERED AS MATERIAL PORTIONS OF THE RECORD DESPITE THE FACT
THAT THE SUBJECT DOCUMENTS SOUGHT TO BE PRODUCED HAVE ACTUALLY BEEN REPRODUCED OR SUBSTANTIALLY
COVERED BY THE QUESTIONED JUDGMENT, ORDER OR RESOLUTION FILED/SUBMITTED BEFORE IT.
2.
COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN DISMISSING THE PETITION, AND IN DENYING
THE MOTION FOR RECONSIDERATION THEREOF ON THE GROUND THAT THERE IS NO COGENT REASON FOR IT TO
OVERTURN ITS DISMISSAL, DESPITE CLEAR AND CONVINCING EVIDENCE, EXTANT ON THE RECORDS SHOWING THAT
THE NATIONAL LABOR RELATIONS COMMISSIONS (NLRC) DECISION AND RESOLUTION WERE FLAWED, A PALPABLE OR
PATENT ERROR, WHICH MAY BE SUMMARIZED, TO WIT:
(A) IN DECLARING THAT PETITIONER HAD RESIGNED FROM HIS EMPLOYMENT, AND NOT RETRENCHED OR
TERMINATED DESPITE A DOCUMENTARY EVIDENCE EXTANT ON THE RECORD ISSUED BY PRIVATE RESPONDENTS
DATED JANUARY 19, 1998 GIVING FORMAL NOTICE TO YOU (PETITIONER) OF YOUR TERMINATION DUE TO
RETRENCHMENT EFFECTIVE JANUARY 20, 1998.
(B) IN HOLDING AGAIN, AND DENYING PETITIONERS VALID CLAIMS DESPITE DOCUMENTARY EVIDENCE OR THE
EXISTENCE OF A CONTRACT OF EMPLOYMENT STATING THAT:

In Jaro v. Court of Appeals,[18] we applied the rule on substantial compliance because the petitioner amended his defective petition
and attached thereto the relevant annexes certified according to the rules. Thus
There is ample jurisprudence holding that the subsequent and substantial compliance of an appellant may call for the relaxation of the
rules of procedure. In Cusi-Hernandez vs. Diaz and Piglas-Kamao vs. National Labor Relations Commission, we ruled that the
subsequent submission of the missing documents with the motion for reconsideration amounts to substantial compliance. The
reasons behind the failure of the petitioners in these two cases to comply with the required attachments were no longer scrutinized.
What we found noteworthy in each case was the fact that the petitioners therein substantially complied with the formal requirements
[19]
The same leniency should be applied to the instant case considering that petitioner subsequently submitted with his motion for
reconsideration the certified true copy of the Labor Arbiters decision, the complainants position paper and the respondents
memorandum of appeal. Clearly, petitioner had demonstrated willingness to comply with the requirements set by the rules. If we are
to apply the rules of procedure in a very rigid and technical sense, as the Court of Appeals did in this case, the ends of justice would
be defeated.
The pleadings and documents filed extensively discussed the issues raised by the parties. Such being the case, there is sufficient
basis to resolve the instant controversy.[20] Labor laws mandate the speedy disposition of cases, with the least attention to
technicalities but without sacrificing the fundamental requisites of due process.[21] Remanding the case to the Court of Appeals will
only frustrate speedy justice and, in any event, would be a futile exercise, as in all probability the case would end up with this Court.
[22] We shall thus rule on the substantial claims of the parties.
Was the termination of petitioners employment caused by retrenchment or by voluntary resignation?

(1)
EMPLOYEES (INCLUDING PETITIONER AS GENERAL MANAGER) AS A MATTER OF COMPANY POLICY AND/OR
PRACTICE) WHO ARE RETRENCHED ARE ENTITLED TO INCENTIVES INCLUDING 15-DAYS VACATION LEAVE AND 15-DAYS
SICK LEAVE WITH PAY; A FACT ADMITTED NO LESS BY PRIVATE RESPONDENTS OWN WITNESS, MS. MA. ROWENA LOPEZ
(FORMER PERSONNEL MANAGER OR PHILMALAY) WHO EXECUTED AN AFFIDAVIT ADMITTING THE SAME.
(2)
PETITIONERS ENTITLEMENT AS PER CONTRACT TO A BRAND NEW CAR (OR AT LEAST TO THE CASH EQUIVALENT
THEREOF); $100,000.00 LIFE INSURANCE POLICY (OR IN DEFAULT THEREOF AT LEAST TO THE PREMIUMS THEREIN), AND
OFFICE RENTALS FOR THE USE OF THE PETITIONERS PRIVATE RESIDENCE AS OFFICE OF RESPONDENTS.
(3)
PETITIONER IS ENTITLED, TO MORAL AND EXEMPLARY DAMAGES DUE TO PRIVATE RESPONDENTS ACTS OF BAD
FAITH IN REQUIRING PETITIONER TO EXECUTE A LETTER OF RESIGNATION, WHEN IN FACT HE WAS ADMITTEDLY
TERMINATED THRU RETRENCHMENT, AND ITS REFUSAL TO PAY HIM HIS VALID CLAIMS, DESPITE HIS CONTRACT OF
EMPLOYMENT, COMPANY POLICY, AND LETTER OF TERMINATION ISSUED BY PRIVATE RESPONDENTS.
(4)
PETITIONERS ENTITLEMENT TO 10% OF THE TOTAL AMOUNT OF THE AWARD OF ATTORNEYS FEES AS PROVIDED
FOR BY LAW AND AS PER PETITIONERS CONTRACT WITH COUNSEL, AND NOT ONLY 10% OF THE TOTAL AWARD
REPRESENTING UNDER PAYMENT OF SALARY, 13TH MONTH PAY, AND CASH EQUIVALENT OF SICK LEAVE AND IN
ORDERING PRIVATE RESPONDENT TO PROVIDE LEGAL COUNSEL TO PETITIONER IN CRIM. CASE NO. Q-93-46421, WHEN
THE SUBJECT CASE HAD ALREADY BEEN DISMISSED AT THE EXPENSE OF PETITIONER WHO HAD PREVIOUSLY HIRED
HIS OWN COUNSEL OF CHOICE FOR THE PURPOSE.
The issues for resolution are: (1) whether or not the Court of Appeals erred in dismissing the petition; and (2) whether or not the
decision of the Labor Arbiter should be reinstated.
The allowance of the petition on the ground of substantial compliance with the Rules is not a novel occurrence in our jurisdiction. As
consistently held by the Court, rules of procedure should not be applied in a very technical sense, for they are adopted to help secure,
not override, substantial justice.[15] In Ramos v. Court of Appeals,[16] the Court of Appeals dismissed a petition for review of the
decision of the Regional Trial Court because the petitioner failed to attach to the petition a certified true copy of the Metropolitan Trial
Courts decision in addition to the certified true copy of the assailed decision of the RTC. Holding that the Court of Appeals should
have given due course to the petition considering that petitioner subsequently submitted a certified true copy of the decision of the
MeTC, we held:
Petitioner is right that the MeTCs decision cannot be considered a disputed decision. The phrase is the equivalent of ruling, order
or decision appealed from in Rule 32, 2 of the 1964 Rules made applicable to appeals from decisions of the then Courts of First
Instance to the Court of Appeals by R.A. No. 296, as amended by R.A. No. 5433. Since petitioner was not appealing from the
decision of the MeTC in her favor, she was not required to attach a certified true copy but only a true or plain copy of the aforesaid
decision of the MeTC. The reason is that inclusion of the decision is part of the requirement to attach to the petition for review other
material portion of the record as would support the allegations of the petition. Indeed, petitioner referred to the MeTC decision in
many parts of her petition for review in the Court of Appeals for support of her theory.
Nonetheless, the Court of Appeals should have reconsidered its dismissal of petitioners appeal after petitioner submitted a certified
true copy of the MeTCs decision. It was clear from the petition for review that the RTC incurred serious errors in awarding damages
to private respondents which were made without evidence to support the award and without any explanation[17]

The Court finds that petitioners dismissal from service was due to retrenchment. This is evident from the termination letter sent by
Philmalay to petitioner, to wit
We regret to inform you that in view of the prevailing market conditions and the continuous losses being incurred by the company, the
management has decided to cut down on expenses and prevent further losses through retrenchment of some of our personnel
effective January 19, 1998.
In compliance with the requirement of the law, this will serve as a formal notice to you of your termination due to retrenchment
effective January 20, 1998. To provide you with sufficient time to seek alternative employment, you need not report for work (unless
otherwise requested) starting January 20, 1998. Notwithstanding the above mentioned affectivity date, you may come down to the
office and receive your separation benefits pursuant to the Labor Code[23]
While it is true that petitioner tendered his resignation letter to respondents requesting that he be given the same benefits granted by
the company to resigned/retrenched employees, there is no showing that respondents accepted his resignation. Acceptance of a
resignation tendered by an employee is necessary to make the resignation effective.[24] No such acceptance, however, was shown
in the instant case. What appears in the record is a letter terminating the services of petitioner due to retrenchment effective January
20, 1998. Verily, said letter should be interpreted as a non-acceptance of petitioners resignation effective December 31, 1997. As
correctly pointed out by the Labor Arbiter, if respondents considered petitioner resigned as of December 31, 1997, then there would
be no need to retrench him.
The length of service of petitioner, which the NLRC correctly reduced to 8 years, as well as the solidary liability of respondent
corporations are no longer assailed here. Whether petitioner is considered resigned on December 31, 1997 or retrenched on January
20, 1998, his length of employment reckoned from August 24, 1989 would still be 8 years. Moreover, respondents did not appeal
from the decision of the NLRC and in fact sought its affirmance in their Opposition to the motion for reconsideration[25] and Comment
to the motion for reconsideration[26] filed before the NLRC and the Court of Appeals, respectively. So also, petitioner is estopped
from claiming that he was illegally dismissed and that his retrenchment was without basis. His request for benefits granted to
retrenched employees during such time when respondent was in the process of retrenching its employees is tantamount to a
recognition of the existence of a valid cause for retrenchment. What remains to be resolved by the Court is the validity of the NLRCs
deletion/modification of the awards of (1) unpaid salary; (2) vacation leave; (3) car and insurance policy/premiums; (4) moral and
exemplary damages; (5) reimbursement for expenses for legal services; (6) rental payment; and (7) attorneys fees.
As regards the award of unpaid salary, the NLRC was correct in holding that petitioner is not entitled to compensation from January
1, 1998 to January 19, 1998, because he was not able to prove that he rendered services during said period. In the same vein, there
is no basis in awarding moral and exemplary damages, inasmuch as respondents were not shown to have acted in bad faith in initially
refusing to award separation pay equivalent to 1 month salary for every year of service. Respondents even offered to pay petitioner
separation pay, albeit in an amount not acceptable to petitioner. Moral damages are recoverable only where the act complained of is
tainted by bad faith or fraud, or where it is oppressive to labor, and done in a manner contrary to morals, good customs, or public
policy. Exemplary damages may be awarded only if the act was done in a wanton, oppressive, or malevolent manner.[27] None of
these circumstances exist in the present case.
The NLRC also correctly ruled that the car and insurance benefits are granted only during the course of employment; hence, they
should not be part of petitioners separation package. Likewise, petitioners claim for payment of rental for the use of his house as
office of Philmalay should be denied for having been ventilated in the wrong forum. Not all money claims that may be asserted by an

employee against his employer are within the jurisdiction of the NLRC. Money claims of workers which fall within the jurisdiction of
Labor Arbiters are those which arise out of employer-employee relationship. Obviously, the demand for rental payment is not a labor
dispute; rather, it is based on contractual relations independent of employer-employee relationship. Hence, the jurisdiction thereon is
with the regular courts.[28]
Since respondents did not appeal from the decision of the NLRC, it is presumed that they are satisfied with the adjudications therein,
including the order of NLRC directing them to provide legal services to petitioner in the illegal recruitment case filed against the latter
while he was still employed by respondents. This is in accord with the doctrine that a party who has not appealed cannot obtain from
the appellate court any affirmative relief other than the ones granted in the appealed decision.[29] Nonetheless, respondents cannot
be ordered to reimburse the amount of P200,000.00 for the legal services of the law firm allegedly hired by petitioner because he
failed to establish that he indeed hired the services of a law firm and that he spent P200,000.00 as a consequence thereof.
Petitioner is, however, entitled to the award of vacation leave as part of respondents retrenchment incentives. In granting sick leave
but deleting vacation leave benefits, the NLRC based its ruling on the affidavit of one Ms. Rowena Lopez, a former personnel of
Philmalay, viz:
3.
That based on company policy and/or practice the rank-and-file employees are entitled to 15-days vacation leave and 15-days
sick leaves. However, the vacation leave must be availed of within the year or applied to the remaining period of employment for
those who resigned or go on terminal leave. In case of sick leaves all unused sick leaves are also commutable to cash;
4.
(a)
(b)
(c)

That employees who were retrenched are entitled to the following incentives:
One (1) month additional leave with pay effective after their last day of employment to enable them to look for a new job;
Plus one (1) month separation pay for every year of service; and
15-days vacation leave and 15-days sick leave with pay as stated in paragraph 3 hereof.[30]

The foregoing expressly states that a retrenched employee is entitled to 15-day vacation leave. Paragraph 4 is the retrenchment
package granted to retrenched employees, whereas paragraph 3 refers to the feasibility of commutation of unused sick and vacation
leaves. Except for the sentence entitling employees to vacation and sick leaves, the last 2 sentences in paragraph 3 have nothing to
do with the retrenchment benefits in paragraph 4. Note that the 15-day vacation and sick leave with pay in paragraph 4(c) are not
qualified by the word unused. The 15-day vacation and sick leaves are granted to retrenched employees as part of the
retrenchment benefits regardless of whether or not they have unused sick and vacation leaves at the time of the retrenchment.
Moreover, the applicability of the said provisions to petitioner was not disputed by respondents. They even invoked the same in
manifesting conformity to the deletion by the NLRC of the award of 15-day vacation leave for every year of service. At any rate, any
ambiguity therein must be resolved strictly against the respondents, who drafted these provisions.[31] Hence, petitioner is entitled not
only to 15 days sick leave but also to 15 days vacation leave with pay
The Labor Arbiters computation of petitioners 15-day sick leave pay must be modified. The NLRC, which affirmed the Labor
Arbiters decision, reduced petitioners number of years of service from 9 to 8 years but it did not make the corresponding adjustment
in the determination of petitioners sick leave pay which used 9 years as the basis in the computation thereof. Accordingly, the
awards of 15-day sick leave and 15-day vacation leave for every year of service must be computed using 8 years as its basis.
Finally, the award of attorneys fees must also be modified. In Traders Royal Bank Employees Union-Independent v. National Labor
Relations Commission,[32] it was held that there are two commonly accepted concepts of attorney's fees, the so-called ordinary and
extraordinary. In its ordinary concept, an attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal
services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the
client. In its extraordinary concept, attorneys fees are deemed indemnity for damages ordered by the court to be paid by the losing
party in a litigation. The instances where these may be awarded are those enumerated in Article 2208 of the Civil Code, specifically
par. 7 thereof which pertains to actions for recovery of wages, and is payable not to the lawyer but to the client, unless they have
agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. The extraordinary concept of
attorneys fees is the one contemplated in Article 111 of the Labor Code, which provides:

In the case at bar, what was withheld from petitioner was not only his salary, vacation and sick leave pay, and 13th month pay
differential, but also his separation pay. Hence, pursuant to current jurisprudence, separation pay must be included in the basis for
the computation of attorneys fees. Petitioner is entitled to attorneys fees equivalent to 10% of his total monetary award.[35]
WHEREFORE, in view of all the foregoing, the instant petition is GRANTED. The assailed Resolutions dated January 28, 2002 and
July 22, 2002 of the Court of Appeals in CA-G.R. SP No. 67431, are REVERSED and SET ASIDE. The Decision of the National
Labor Relations Commission in NLRC NCR CA 023679-2000, is MODIFIED. In addition to the awards of underpayment of salary,
13th month pay differential, sick leave pay and separation pay, respondents are ordered to pay petitioner vacation leave pay and 10%
attorneys fees, the basis of which shall be the total monetary award. Petitioners vacation leave and sick leave pay shall be
computed on the basis of his 8 years of service with respondents. For this purpose, the case is ordered REMANDED to the Labor
Arbiter for the computation of the amounts due petitioner.
SO ORDERED.
PATRICIA HALAGUEA, MA. ANGELITA L. PULIDO, MA. TERESITA
P.
SANTIAGO,
MARIANNE
V.
KATINDIG,
BERNADETTE A. CABALQUINTO,
LORNA B. TUGAS, MARY CHRISTINE A. VILLARETE, CYNTHIA A. STEHMEIER, ROSE ANNA G. VICTA, NOEMI R.
CRESENCIO, and other flight attendants of PHILIPPINE AIRLINES,
Petitioners,
- versus PHILIPPINE AIRLINES INCORPORATED,
Respondent.
G.R. No. 172013
October 2, 2009
x--------------------------------------------------x
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision[1] and the Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP. No. 86813.
Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) on different dates prior to
November 22, 1996. They are members of the Flight Attendants and Stewards Association of the Philippines (FASAP), a labor
organization certified as the sole and exclusive certified as the sole and exclusive bargaining representative of the flight attendants,
flight stewards and pursers of respondent.
On July 11, 2001, respondent and FASAP entered into a Collective Bargaining Agreement[3] incorporating the terms and
conditions of their agreement for the years 2000 to 2005, hereinafter referred to as PAL-FASAP CBA.
Section 144, Part A of the PAL-FASAP CBA, provides that:
A. For the Cabin Attendants hired before 22 November
xxxx
3.
Compulsory Retirement
Subject to the grooming standards provisions of this Agreement,
for females and sixty
(60) for males. x x x.

1996:
compulsory retirement shall be fifty-five (55)

In a letter dated July 22, 2003,[4] petitioners and several female cabin crews manifested that the aforementioned CBA provision
on compulsory retirement is discriminatory, and demanded for an equal treatment with their male counterparts. This demand was
reiterated in a letter[5] by petitioners' counsel addressed to respondent demanding the removal of gender discrimination provisions in
the coming re-negotiations of the PAL-FASAP CBA.

Art. 111. Attorneys fees. (a) In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages recovered

On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their 2004-2005 CBA proposals[6] and manifested their
willingness to commence the collective bargaining negotiations between the management and the association, at the soonest
possible time.

The afore-quoted Article 111 is an exception to the declared policy of strict construction in the awarding of attorneys fees. Although
an express finding of facts and law is still necessary to prove the merit of the award, there need not be any showing that the employer
acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid
accordingly, as in this case.[33]

On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary
Restraining Order and Writ of Preliminary Injunction[7] with the Regional Trial Court (RTC) of Makati City, Branch 147, docketed as
Civil Case No. 04-886, against respondent for the invalidity of Section 144, Part A of the PAL-FASAP CBA. The RTC set a hearing on
petitioners' application for a TRO and, thereafter, required the parties to submit their respective memoranda.

In carrying out and interpreting the Labor Code's provisions and its implementing regulations, the employees welfare should be the
primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate
spirit of the law as provided in Article 4 of the Labor Code which states that [a]ll doubts in the implementation and interpretation of the
provisions of [the Labor] Code including its implementing rules and regulations, shall be resolved in favor of labor, and Article 1702 of
the Civil Code which provides that [i]n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.[34]

On August 9, 2004, the RTC issued an Order[8] upholding its jurisdiction over the present case. The RTC reasoned that:
In the instant case, the thrust of the Petition is Sec. 144 of the subject CBA which is allegedly discriminatory as it
discriminates against female flight attendants, in violation of the Constitution, the Labor Code, and the CEDAW. The allegations in the
Petition do not make out a labor dispute arising from employer-employee relationship as none is shown to exist. This case is not
directed specifically against respondent arising from any act of the latter, nor does it involve a claim against the respondent. Rather,

this case seeks a declaration of the nullity of the questioned provision of the CBA, which is within the Court's competence, with the
allegations in the Petition constituting the bases for such relief sought.
The RTC issued a TRO on August 10, 2004,[9] enjoining the respondent for implementing Section 144, Part A of the PALFASAP CBA.
The respondent filed an omnibus motion[10] seeking reconsideration of the order overruling its objection to the jurisdiction of
the RTC the lifting of the TRO. It further prayed that the (1) petitioners' application for the issuance of a writ of preliminary injunction
be denied; and (2) the petition be dismissed or the proceedings in this case be suspended.
On September 27, 2004, the RTC issued an Order[11] directing the issuance of a writ of preliminary injunction enjoining the
respondent or any of its agents and representatives from further implementing Sec. 144, Part A of the PAL-FASAP CBA pending the
resolution of the case.
Aggrieved, respondent, on October 8, 2004, filed a Petition for Certiorari and Prohibition with Prayer for a Temporary
Restraining Order and Writ of Preliminary Injunction[12] with the Court of Appeals (CA) praying that the order of the RTC, which
denied its objection to its jurisdiction, be annuled and set aside for having been issued without and/or with grave abuse of discretion
amounting to lack of jurisdiction.
The CA rendered a Decision, dated August 31, 2005, granting the respondent's petition, and ruled that:
WHEREFORE, the respondent court is by us declared to have NO JURISDICTION OVER THE CASE BELOW and,
consequently, all the proceedings, orders and processes it has so far issued therein are ANNULED and SET ASIDE. Respondent
court is ordered to DISMISS its Civil Case No. 04-886.
SO ORDERED.

27. It is unlawful, even criminal, for an employer to discriminate against women employees with respect to terms and conditions of
employment solely on account of their sex under Article 135 of the Labor Code as amended by Republic Act No. 6725 or the Act
Strengthening Prohibition on Discrimination Against Women.
28. This discrimination against Petitioners is likewise against the Convention on the Elimination of All Forms of Discrimination Against
Women (hereafter, CEDAW), a multilateral convention that the Philippines ratified in 1981. The Government and its agents,
including our courts, not only must condemn all forms of discrimination against women, but must also implement measures towards
its elimination.
29. This case is a matter of public interest not only because of Philippine Airlines' violation of the Constitution and existing laws, but
also because it highlights the fact that twenty-three years after the Philippine Senate ratified the CEDAW, discrimination against
women continues.
31. Section 114, Part A of the PAL-FASAP 2000-20005 CBA on compulsory retirement from service is invidiously discriminatory
against and manifestly prejudicial to Petitioners because, they are compelled to retire at a lower age (fifty-five (55) relative to their
male counterparts (sixty (60).
33. There is no reasonable, much less lawful, basis for Philippine Airlines to distinguish, differentiate or classify cabin attendants on
the basis of sex and thereby arbitrarily set a lower compulsory retirement age of 55 for Petitioners for the sole reason that they are
women.
37. For being patently unconstitutional and unlawful, Section 114, Part A of the PAL-FASAP 2000-2005 CBA must be declared invalid
and stricken down to the extent that it discriminates against petitioner.
38. Accordingly, consistent with the constitutional and statutory guarantee of equality between men and women, Petitioners should be
adjudged and declared entitled, like their male counterparts, to work until they are sixty (60) years old.

Petitioner filed a motion for reconsideration,[13] which was denied by the CA in its Resolution dated March 7, 2006.
PRAYER
Hence, the instant petition assigning the following error:
WHEREFORE, it is most respectfully prayed that the Honorable Court:
THE COURT OF APPEALS' CONCLUSION THAT THE SUBJECT MATTER IS A LABOR DISPUTE OR GRIEVANCE IS CONTRARY
TO LAW AND JURISPRUDENCE.

c. after trial on the merits:

The main issue in this case is whether the RTC has jurisdiction over the petitioners' action challenging the legality or
constitutionality of the provisions on the compulsory retirement age contained in the CBA between respondent PAL and FASAP.

(I)
declare Section 114, Part A of the PAL-FASAP 2000-2005 CBA INVALID, NULL and VOID to the extent that it
discriminates against Petitioners; x x x x

Petitioners submit that the RTC has jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary
estimation and in all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasijudicial functions. The RTC has the power to adjudicate all controversies except those expressly witheld from the plenary powers of
the court. Accordingly, it has the power to decide issues of constitutionality or legality of the provisions of Section 144, Part A of the
PAL-FASAP CBA. As the issue involved is constitutional in character, the labor arbiter or the National Labor Relations Commission
(NLRC) has no jurisdiction over the case and, thus, the petitioners pray that judgment be rendered on the merits declaring Section
144, Part A of the PAL-FASAP CBA null and void.

From the petitioners' allegations and relief prayed for in its petition, it is clear that the issue raised is whether Section 144, Part
A of the PAL-FASAP CBA is unlawful and unconstitutional. Here, the petitioners' primary relief in Civil Case No. 04-886 is the
annulment of Section 144, Part A of the PAL-FASAP CBA, which allegedly discriminates against them for being female flight
attendants. The subject of litigation is incapable of pecuniary estimation, exclusively cognizable by the RTC, pursuant to Section 19
(1) of Batas Pambansa Blg. 129, as amended.[15] Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals.

Respondent, on the other hand, alleges that the labor tribunals have jurisdiction over the present case, as the controversy
partakes of a labor dispute. The dispute concerns the terms and conditions of petitioners' employment in PAL, specifically their
retirement age. The RTC has no jurisdiction over the subject matter of petitioners' petition for declaratory relief because the Voluntary
Arbitrator or panel of Voluntary Arbitrators have original and exclusive jurisdiction to hear and decide all unresolved grievances arising
from the interpretation or implementation of the CBA. Regular courts have no power to set and fix the terms and conditions of
employment. Finally, respondent alleged that petitioners' prayer before this Court to resolve their petition for declaratory relief on the
merits is procedurally improper and baseless.
The petition is meritorious.
Jurisdiction of the court is determined on the basis of the material allegations of the complaint and the character of the relief
prayed for irrespective of whether plaintiff is entitled to such relief.[14]
In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners' cause of action is the
annulment of Section 144, Part A of the PAL-FASAP CBA. The pertinent portion of the petition recites:
CAUSE OF ACTION
24. Petitioners have the constitutional right to fundamental equality with men under Section 14, Article II, 1987 of the Constitution and,
within the specific context of this case, with the male cabin attendants of Philippine Airlines.
26. Petitioners have the statutory right to equal work and employment opportunities with men under Article 3, Presidential Decree No.
442, The Labor Code and, within the specific context of this case, with the male cabin attendants of Philippine Airlines.

The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of the Constitution,
labor statutes, law on contracts and the Convention on the Elimination of All Forms of Discrimination Against Women,[16] and the
power to apply and interpret the constitution and CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction. In
Georg Grotjahn GMBH & Co. v. Isnani,[17] this Court held that not every dispute between an employer and employee involves
matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The
jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employeremployee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining
agreement.
Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive jurisdiction of
the labor arbiter. Actions between employees and employer where the employer-employee relationship is merely incidental and the
cause of action precedes from a different source of obligation is within the exclusive jurisdiction of the regular court.[18] Here, the
employer-employee relationship between the parties is merely incidental and the cause of action ultimately arose from different
sources of obligation, i.e., the Constitution and CEDAW.
Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a
collective bargaining agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice
and not to the labor arbiter and the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management
relations nor in wage structures and other terms and conditions of employment, but rather in the application of the general civil law.
Clearly, such claims fall outside the area of competence or expertise ordinarily ascribed to labor arbiters and the NLRC and the
rationale for granting jurisdiction over such claims to these agencies disappears.[19]
If We divest the regular courts of jurisdiction over the case, then which tribunal or forum shall determine the constitutionality or
legality of the assailed CBA provision?

This Court holds that the grievance machinery and voluntary arbitrators do not have the power to determine and settle the
issues at hand. They have no jurisdiction and competence to decide constitutional issues relative to the questioned compulsory
retirement age. Their exercise of jurisdiction is futile, as it is like vesting power to someone who cannot wield it.

Besides, a referral of the case to the grievance machinery and to the voluntary arbitrator under the CBA would be futile
because respondent already implemented Section 114, Part A of PAL-FASAP CBA when several of its female flight attendants
reached the compulsory retirement age of 55.

In Gonzales v. Climax Mining Ltd.,[20] this Court affirmed the jurisdiction of courts over questions on constitutionality of
contracts, as the same involves the exercise of judicial power. The Court said:

Further, FASAP, in a letter dated July 12, 2004, addressed to PAL, submitted its association's bargaining proposal for the
remaining period of 2004-2005 of the PAL-FASAP CBA, which includes the renegotiation of the subject Section 144. However,
FASAP's attempt to change the questioned provision was shallow and superficial, to say the least, because it exerted no further
efforts to pursue its proposal. When petitioners in their individual capacities questioned the legality of the compulsory retirement in the
CBA before the trial court, there was no showing that FASAP, as their representative, endeavored to adjust, settle or negotiate with
PAL for the removal of the difference in compulsory age retirement between its female and male flight attendants, particularly those
employed before November 22, 1996. Without FASAP's active participation on behalf of its female flight attendants, the utilization of
the grievance machinery or voluntary arbitration would be pointless.

Whether the case involves void or voidable contracts is still a judicial question. It may, in some instances, involve questions of
fact especially with regard to the determination of the circumstances of the execution of the contracts. But the resolution of the
validity or voidness of the contracts remains a legal or judicial question as it requires the exercise of judicial function. It requires the
ascertainment of what laws are applicable to the dispute, the interpretation and application of those laws, and the rendering of a
judgment based thereon. Clearly, the dispute is not a mining conflict. It is essentially judicial. The complaint was not merely for the
determination of rights under the mining contracts since the very validity of those contracts is put in issue.
In Saura v. Saura, Jr.,[21] this Court emphasized the primacy of the regular court's judicial power enshrined in the Constitution
that is true that the trend is towards vesting administrative bodies like the SEC with the power to adjudicate matters coming under
their particular specialization, to insure a more knowledgeable solution of the problems submitted to them. This would also relieve the
regular courts of a substantial number of cases that would otherwise swell their already clogged dockets. But as expedient as this
policy may be, it should not deprive the courts of justice of their power to decide ordinary cases in accordance with the general laws
that do not require any particular expertise or training to interpret and apply. Otherwise, the creeping take-over by the administrative
agencies of the judicial power vested in the courts would render the judiciary virtually impotent in the discharge of the duties assigned
to it by the Constitution.

The trial court in this case is not asked to interpret Section 144, Part A of the PAL-FASAP CBA. Interpretation, as defined in
Black's Law Dictionary, is the art of or process of discovering and ascertaining the meaning of a statute, will, contract, or other written
document.[24] The provision regarding the compulsory retirement of flight attendants is not ambiguous and does not require
interpretation. Neither is there any question regarding the implementation of the subject CBA provision, because the manner of
implementing the same is clear in itself. The only controversy lies in its intrinsic validity.
Although it is a rule that a contract freely entered between the parties should be respected, since a contract is the law between
the parties, said rule is not absolute.
In Pakistan International Airlines Corporation v. Ople,[25] this Court held that:

To be sure, in Rivera v. Espiritu,[22] after Philippine Airlines (PAL) and PAL Employees Association (PALEA) entered into an
agreement, which includes the provision to suspend the PAL-PALEA CBA for 10 years, several employees questioned its validity via a
petition for certiorari directly to the Supreme Court. They said that the suspension was unconstitutional and contrary to public policy.
Petitioners submit that the suspension was inordinately long, way beyond the maximum statutory life of 5 years for a CBA provided
for in Article 253-A of the Labor Code. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers' constitutional
right to bargain for another CBA at the mandated time.
In that case, this Court denied the petition for certiorari, ruling that there is available to petitioners a plain, speedy, and
adequate remedy in the ordinary course of law. The Court said that while the petition was denominated as one for certiorari and
prohibition, its object was actually the nullification of the PAL-PALEA agreement. As such, petitioners' proper remedy is an ordinary
civil action for annulment of contract, an action which properly falls under the jurisdiction of the regional trial courts.
The change in the terms and conditions of employment, should Section 144 of the CBA be held invalid, is but a necessary and
unavoidable consequence of the principal relief sought, i.e., nullification of the alleged discriminatory provision in the CBA. Thus, it
does not necessarily follow that a resolution of controversy that would bring about a change in the terms and conditions of
employment is a labor dispute, cognizable by labor tribunals. It is unfair to preclude petitioners from invoking the trial court's
jurisdiction merely because it may eventually result into a change of the terms and conditions of employment. Along that line, the trial
court is not asked to set and fix the terms and conditions of employment, but is called upon to determine whether CBA is consistent
with the laws.
Although the CBA provides for a procedure for the adjustment of grievances, such referral to the grievance machinery and
thereafter to voluntary arbitration would be inappropriate to the petitioners, because the union and the management have
unanimously agreed to the terms of the CBA and their interest is unified.
In Pantranco North Express, Inc., v. NLRC,[23] this Court held that:
x x x Hence, only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an agreement regarding the dismissal of private
respondents. No grievance between them exists which could be brought to a grievance machinery. The problem or dispute in the
present case is between the union and the company on the one hand and some union and non-union members who were dismissed,
on the other hand. The dispute has to be settled before an impartial body. The grievance machinery with members designated by the
union and the company cannot be expected to be impartial against the dismissed employees. Due process demands that the
dismissed workers grievances be ventilated before an impartial body. x x x .
Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between the union and petitioner company
because both have previously agreed upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was only
private respondent on his own who questioned the compulsory retirement. x x x.
In the same vein, the dispute in the case at bar is not between FASAP and respondent PAL, who have both previously agreed
upon the provision on the compulsory retirement of female flight attendants as embodied in the CBA. The dispute is between
respondent PAL and several female flight attendants who questioned the provision on compulsory retirement of female flight
attendants. Thus, applying the principle in the aforementioned case cited, referral to the grievance machinery and voluntary arbitration
would not serve the interest of the petitioners.

The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that
the contracting parties may establish such stipulations as they may deem convenient, provided they are not contrary to law, morals,
good customs, public order or public policy. Thus, counter-balancing the principle of autonomy of contracting parties is the equally
general rule that provisions of applicable law, especially provisions relating to matters affected with public policy, are deemed written
into the contract. Put a little differently, the governing principle is that parties may not contract away applicable provisions of law
especially peremptory provisions dealing with matters heavily impressed with public interest. The law relating to labor and
employment is clearly such an area and parties are not at liberty to insulate themselves and their relationships from the impact of
labor laws and regulations by simply contracting with each other.
Moreover, the relations between capital and labor are not merely contractual. They are so impressed with public interest that
labor contracts must yield to the common good.x x x [26] The supremacy of the law over contracts is explained by the fact that labor
contracts are not ordinary contracts; these are imbued with public interest and therefore are subject to the police power of the state.
[27] It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of judicial
review and nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public interest. If the
retirement provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided.[28]
Finally, the issue in the petition for certiorari brought before the CA by the respondent was the alleged exercise of grave abuse
of discretion of the RTC in taking cognizance of the case for declaratory relief. When the CA annuled and set aside the RTC's order,
petitioners sought relief before this Court through the instant petition for review under Rule 45. A perusal of the petition before Us,
petitioners pray for the declaration of the alleged discriminatory provision in the CBA against its female flight attendants.
This Court is not persuaded. The rule is settled that pure questions of fact may not be the proper subject of an appeal by
certiorari under Rule 45 of the Revised Rules of Court. This mode of appeal is generally limited only to questions of law which must
be distinctly set forth in the petition. The Supreme Court is not a trier of facts.[29]
The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory or not is a question of fact. This
would require the presentation and reception of evidence by the parties in order for the trial court to ascertain the facts of the case
and whether said provision violates the Constitution, statutes and treaties. A full-blown trial is necessary, which jurisdiction to hear the
same is properly lodged with the the RTC. Therefore, a remand of this case to the RTC for the proper determination of the merits of
the petition for declaratory relief is just and proper.
WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of the Court of Appeals, dated August 31,
2005 and March 7, 2006, respectively, in CA-G.R. SP. No. 86813 are REVERSED and SET ASIDE. The Regional Trial Court of
Makati City, Branch 147 is DIRECTED to continue the proceedings in Civil Case No. 04-886 with deliberate dispatch.
SO ORDERED.
G.R. No. 112940

November 21, 199

DAI-CHI ELECTRONICS MANUFACTURING CORPORATION, petitioner,

vs.
HON. MARTIN S. VILLARAMA, JR., Presiding Judge, Regional Trial Court, Branch 156, Pasig, Metro Manila and ADONIS C.
LIMJUCO, respondents.

QUIASON, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court in relation to R.A. No. 5440 and Circular No. 290 of the following orders of the Regional Trial Court, Branch 156, Pasig, Metro Manila, in Civil Case No. 63448: 1) Order dated
September 20, 1993, dismissing the complaint of petitioner on the ground of lack of jurisdiction over the subject matter of the
controversy; and 2) Order dated November 29, 1993, denying petitioner's motion for reconsideration.
I
On July 29, 1993, petitioner filed a complaint for damages with the Regional Trial Court, Branch 156, Pasig, Metro Manila, against
private respondent, a former employee.

the commencement of the training program. The trial court dismissed the complaint on the grounds that it did not have jurisdiction
over the subject matter of the controversy.
On appeal to this court, we held that jurisdiction over the controversy belongs to the civil courts. We stated that the action was for
breach of a contractual obligation, which is intrinsically a civil dispute. We further stated that while seemingly the cause of action
arose from employer-employee relations, the employer's claim for damages is grounded on "wanton failure and refusal" without just
cause to report to duty coupled with the averment that the employee "maliciously and with bad faith" violated the terms and conditions
of the contract to the damage of the employer. Such averments removed the controversy from the coverage of the Labor Code of the
Philippines and brought it within the purview of Civil Law.

Petitioner alleged that private respondent violated paragraph five of their Contract of Employment dated August 27, 1990, which
provides:

Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter,
must have a reasonable causal connection with any of the claims provided for in that article. Only if there is such a connection with
the other claims can the claim for damages be considered as arising from employer-employee relations.

That for a period of two (2) years after termination of service from EMPLOYER, EMPLOYEE shall not in any manner be connected,
and/or employed, be a consultant and/or be an informative body directly or indirectly, with any business firm, entity or undertaking
engaged in a business similar to or in competition with that of the EMPLOYER (Rollo, p. 24).

In San Miguel Corporation v. National Labor Relations Commission, 161 SCRA 719 (1988), we had occasion to construe Article 217,
as amended by B.P. Blg. 227. Article 217 then provided that the Labor Arbiter had jurisdiction over all money claims of workers, but
the phrase "arising from employer-employee relation" was deleted. We ruled thus:

Petitioner claimed that private respondent became an employee of Angel Sound Philippines Corporation, a corporation engaged in
the same line of business as that of petitioner, within two years from January 30, 1992, the date of private respondent's resignation
from petitioner's employ. Petitioner further alleged that private respondent is holding the position of Head of the Material Management
Control Department, the same position he held while in the employ of petitioner.

Respondent court, in its Order dated September 20, 1993, ruled that it had no jurisdiction over the subject matter of the controversy
because the complaint was for damages arising from employer-employee relations. Citing Article 217(4) of the Labor Code of the
Philippines, as amended by R.A.
No. 6715, respondent court stated that it is the Labor Arbiter which had original and exclusive jurisdiction over the subject matter of
the case (Rollo, pp. 28-32).

While paragraph 3 above refers to "all money claims of workers," it is not necessary to suppose that the entire universe of money
claims that might be asserted by workers against their employers has been absorbed into the original and exclusive jurisdiction of
Labor Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather within the context formed by paragraph 1
(relating to unfair labor practices), paragraph 2 (relating to claims concerning terms and conditions of employment), paragraph 4
(claims relating to household services, a particular species of employer-employee relations), and paragraph 5 (relating to certain
activities prohibited to employees or to employers). It is evident that there is a unifying element which runs through paragraphs 1 to 5
and that is, that they all refer to cases or disputes arising out of or in connection with an employer-employee relationship. This is, in
other words, a situation where the rule of noscitur a sociis may be usefully invoked in clarifying the scope of paragraph 3, and any
other paragraph of Article 217 of the Labor Code, as amended. We reach the above conclusion from an examination of the terms
themselves of Article 217, as last amended by B.P Blg. 227, and even though earlier versions of Article 217 of the Labor Code
expressly brought within the jurisdiction of the Labor Arbiters and the NLRC "cases arising from employer-employee relations," which
clause was not expressly carried over, in printer's ink, in Article 217 as it exists today. For it cannot be presumed that money claims of
workers which do not arise out of or in connection with their employer-employee relationship, and which would therefore fall within the
general jurisdiction of regular courts of justice, were intended by the legislative authority to be taken away from the jurisdiction of the
courts and lodged with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the "money claims of
workers" referred to in paragraph 3 of Article 217 embraces money claims which arise out of or in connection with the employeremployee relationship or some aspect or incident of some relationship. Put a little differently, that money claims of workers which now
fall within the original and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal
connection with the employer-employee relationship (Emphasis supplied).

In this petition, petitioner asks for the reversal of respondent court's dismissal of the civil case, contending that the case is cognizable
by the regular courts. It argues that the cause of action did not arise from employer-employee relations, even though the claim is
based on a provision in the employment contract.

San Miguel was cited in Ocheda v. Court of Appeals, 214 SCRA 629 (1992), where we held that when the cause of action is based on
a quasi-delict or tort, which has no reasonable causal connection with any of the claims provided for in Article 217, jurisdiction over
the action is with the regular courts.

II
This issue is: Is petitioner's claim for damages one arising from employer-employee relations?

We also applied the "reasonable causal connection rule" in Pepsi-Cola Distributors of the Philippines, Inc. v. Gallang, 201 SCRA 695
(1991), where we held that an action filed by employees against an employer for damages for the latter's malicious filing of a criminal
complaint for falsification of private documents against them came under the jurisdiction of the regular courts (See also Honiron
Philippines, Inc. v. Intermediate Appellate Court, G.R. No. 66929, August 13, 1990 and Abejaron v. Court of Appeals, 208 SCRA 899
[1992]).

Petitioner sought to recover liquidated damages in the amount of One Hundred Thousand Pesos (P100,000.00), as provided for in
paragraph seven of the contract, which provides:
That a violation of the conditions set forth in provisions Nos. (2) and (5) of this contract shall entitle the EMPLOYER to collect from the
EMPLOYEE the sum of ONE HUNDRED THOUSAND PESOS (P100,000.00) by way of liquidated damages and likewise to adopt
appropriate legal measures to prevent the EMPLOYEE from accepting employment and/or engaging, directly or indirectly, in a
business similar to or in competition with that of the EMPLOYER, before the lapse of the aforesaid period of TWO (2) YEARS from
date of termination of service from EMPLOYER (Rollo, p. 25).

We answer in the negative.

Article 217, as amended by Section 9 of R.A. No. 6715, provides as follows:
Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties
for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
xxx
xxx
xxx
4.
Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
(Emphasis supplied)
xxx
xxx
xxx
Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages agreed upon in the
contract as redress for private respondent's breach of his contractual obligation to its "damage and prejudice" (Rollo, p. 57). Such
cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so when we
consider that the stipulation refers to the post-employment relations of the parties.
A case in point is Singapore Airlines Limited v. Pao, 122 SCRA 671 (1983), which also dealt with the employee's breach of an
obligation embodied in a written employment agreement. Singapore Airlines filed a complaint in the trial court for damages against its
employee for "wanton failure and refusal" without just cause to report to duty and for having "maliciously and with bad faith" violated
the terms and conditions of its "Agreement for a Course of Conversion Training at the Expense of Singapore Airlines Limited." This
agreement provided that the employee shall agree to remain in the service of the employer for a period of five years from the date of

The rationale behind the holdings in these cases is that the complaint for damages was anchored not on the termination of the
employee's services per se, but rather on the manner and consequent effects of such termination.
Cases decided under earlier versions of Article 217 were consistent also in that intrinsically civil disputes, even if these involve an
employer and his employee, are cognizable by the regular courts. In Medina vs. Castro-Bartolome, 116 SCRA 597 (1982), a civil
complaint for damages against the employer for slanderous remarks made against them, we upheld the regular court's jurisdiction
after finding that the plaintiffs did not allege any unfair labor practice, their complaint being a simple action for damages for tortious
acts allegedly committed by the defendants. In Molave Sales, Inc. v. Laron, 129 SCRA 485 (1984), we held that the claim of the
plaintiff against its sales manager for payment of certain accounts and cash advances was properly cognizable by the regular courts
because "although a controversy is between an employer and an employee, the Labor Arbiters have no jurisdiction if the Labor Code
is not involved."
Private respondent also raises the issue of forum shopping. He asserts that the petition should be dismissed pursuant to Circular No.
28-91 because petitioner merely "mentioned in passing a labor case between petitioner and private respondent which is being
handled by petitioner's other counsel" (Rollo, p. 42). Private respondent is referring to NLRC NCR Case No. 00-11-0689493 filed by
him on November 8, 1993.
Petitioner asserts that the case before the Labor Arbiter was filed by private respondent against petitioner for alleged illegal dismissal,
underpayment of wages and non-payment of overtime and premium pay with prayer for moral and exemplary damages, to which

10

petitioner, through its other counsel, "logically raised as one of its several counterclaims against private respondent the liquidated
damages mentioned in the contract of employment between the parties" (Rollo, p. 69).
Petitioner did not fail to disclose the pending labor case in the certification required under Circular No. 28-91. Thus, petitioner cannot
be considered to have submitted a false certification warranting summary dismissal of the petition (Par. 3[a] of Circular No. 28-91).
Petitioner did not commit forum shopping. It set up its counterclaim for liquidated damages merely as a defense against private
respondent's complaint before the Labor Arbiter.
ACCORDINGLY, the Orders of the Regional Trial Court dated September 20, 1993 and November 29, 1993 are SET ASIDE. The trial
court is ORDERED to continue with the proceedings in Civil Case No. 63448.
SO ORDERED.
MATLING INDUSTRIAL
AND COMMERCIAL CORPORATION,
RICHARD K. SPENCER,
CATHERINE SPENCER,
AND ALEX MANCILLA,
Petitioners,
-versus RICARDO R. COROS,
Respondent.
G.R. No. 157802
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, 2002[1] and the
resolution dated April 2, 2003,[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, SubRegional Arbitration Branch XII, Iligan City.[3]
The petitioners moved to dismiss the complaint,[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,[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.

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.[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,[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.[10]
Nonetheless, on April 30, 2001, the NLRC denied the petitioners motion for reconsideration.[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,[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.

On October 16, 2000, the LA granted the petitioners motion to dismiss,[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.

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.

Ruling of the NLRC

Coros alleged illegal dismissal therefrom is, therefore, within the jurisdiction of the labor arbiter.

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

I

WHEREFORE, the petition for certiorari is hereby DISMISSED.

SO ORDERED.

11

The CA denied the petitioners motion for reconsideration on April 2, 2003.[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.

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.

Ruling
The appeal fails.
I
The Law on Jurisdiction in Dismissal Cases

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,[16] to wit:
BY LAW NO. V
Officers

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:

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.

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.[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,[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.

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,[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; [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 noncorporate 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,[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:[20]

12

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.

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:

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).

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.[26]

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.

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 intra-corporate 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:[27]

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 By-Laws of an enabling clause on the creation of just any
corporate officer position.

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.

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,[21] to wit:
Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate officers enumerated in the bylaws 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.[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,[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.

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,[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.[29]

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.

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.

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

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:

Yet, the petitioners insist that because the respondent was a Director/stockholder of Matling, and relying on Paguio v. National
Labor Relations Commission[24] and Ongkingko v. National Labor Relations Commission,[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 intracorporate matter that must fall under the jurisdiction of the SEC conformably with the context of PD No. 902-A.

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

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

13

Kindly advise.3
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,[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.
G.R. No. 162419

July 10, 2007

PAUL V. SANTIAGO, petitioner,

vs.
CF SHARP CREW MANAGEMENT, INC., respondent.
DECISION
TINGA, J.:

To this message the captain of "MSV Seaspread" replied:

Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for him to return to Seaspread.4
On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore, but he was reassured that he might
be considered for deployment at some future date.
Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent and its foreign principal, Cable and
Wireless (Marine) Ltd.5 The case was raffled to Labor Arbiter Teresita Castillon-Lora, who ruled that the employment contract
remained valid but had not commenced since petitioner was not deployed. According to her, respondent violated the rules and
regulations governing overseas employment when it did not deploy petitioner, causing petitioner to suffer actual damages
representing lost salary income for nine (9) months and fixed overtime fee, all amounting to US$7, 209.00.
The labor arbiter held respondent liable. The dispositive portion of her Decision dated 29 January 1999 reads:
WHEREFORE, premises considered, respondent is hereby Ordered to pay complainant actual damages in the amount of
US$7,209.00 plus 10% attorney's fees, payable in Philippine peso at the rate of exchange prevailing at the time of payment.
All the other claims are hereby DISMISSED for lack of merit.
SO ORDERED.6
On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is no employer-employee relationship
between petitioner and respondent because under the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean Going Vessels (POEA Standard Contract), the employment contract shall commence upon actual
departure of the seafarer from the airport or seaport at the point of hire and with a POEA-approved contract. In the absence of an
employer-employee relationship between the parties, the claims for illegal dismissal, actual damages, and attorneys fees should be
dismissed.7 On the other hand, the NLRC found respondents decision not to deploy petitioner to be a valid exercise of its
management prerogative.8 The NLRC disposed of the appeal in this wise:
WHEREFORE, in the light of the foregoing, the assailed Decision dated January 29, 1999 is hereby AFFIRMED in so far as other
claims are concerned and with MODIFICATION by VACATING the award of actual damages and attorneys fees as well as excluding
Pacifico Fernandez as party respondent.
SO ORDERED.9
Petitioner moved for the reconsideration of the NLRCs Decision but his motion was denied for lack of merit.10 He elevated the case
to the Court of Appeals through a petition for certiorari.

At the heart of this case involving a contract between a seafarer, on one hand, and the manning agent and the foreign principal, on
the other, is this erstwhile unsettled legal quandary: whether the seafarer, who was prevented from leaving the port of Manila and
refused deployment without valid reason but whose POEA-approved employment contract provides that the employer-employee
relationship shall commence only upon the seafarers actual departure from the port in the point of hire, is entitled to relief

In its Decision11 dated 16 October 2003, the Court of Appeals noted that there is an ambiguity in the NLRCs Decision when it
affirmed with modification the labor arbiters Decision, because by the very modification introduced by the Commission (vacating the
award of actual damages and attorneys fees), there is nothing more left in the labor arbiters Decision to affirm.12

This treats of the petition for review filed by Paul V. Santiago (petitioner) assailing the Decision and Resolution of the Court of Appeals
dated 16 October 2003 and 19 February 2004, respectively, in CA-G.R. SP No. 68404.1

According to the appellate court, petitioner is not entitled to actual damages because damages are not recoverable by a worker who
was not deployed by his agency within the period prescribed in

Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five (5) years.2 On 3 February
1998, petitioner signed a new contract of employment with respondent, with the duration of nine (9) months. He was assured of a
monthly salary of US$515.00, overtime pay and other benefits. The following day or on 4 February 1998, the contract was approved
by the Philippine Overseas Employment Administration (POEA). Petitioner was to be deployed on board the "MSV Seaspread" which
was scheduled to leave the port of Manila for Canada on 13 February 1998.

the POEA Rules.13 It agreed with the NLRCs finding that petitioners non-deployment was a valid exercise of respondents
management prerogative.14 It added that since petitioner had not departed from the Port of Manila, no employer-employee
relationship between the parties arose and any claim for damages against the so-called employer could have no leg to stand on.15

A week before the scheduled date of departure, Capt. Pacifico Fernandez, respondents Vice President, sent a facsimile message to
the captain of "MSV Seaspread," which reads:

The present petition is anchored on two grounds, to wit:

I received a phone call today from the wife of Paul Santiago in Masbate asking me not to send her husband to MSV Seaspread
anymore. Other callers who did not reveal their identity gave me some feedbacks that Paul Santiago this time if allowed to depart will
jump ship in Canada like his brother Christopher Santiago, O/S who jumped ship from the C.S. Nexus in Kita-kyushu, Japan last
December, 1997.
We do not want this to happen again and have the vessel penalized like the C.S. Nexus in Japan.

Petitioners subsequent motion for reconsideration was denied on 19 February 2004.16

A. The Honorable Court of Appeals committed a serious error of law when it ignored [S]ection 10 of Republic Act [R.A.] No. 8042
otherwise known as the Migrant Workers Act of 1995 as well as Section 29 of the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers On-Board Ocean-Going Vessels (which is deemed incorporated under the petitioners POEA
approved Employment Contract) that the claims or disputes of the Overseas Filipino Worker by virtue of a contract fall within the
jurisdiction of the Labor Arbiter of the NLRC.
B. The Honorable Court of Appeals committed a serious error when it disregarded the required quantum of proof in labor cases, which
is substantial evidence, thus a total departure from established jurisprudence on the matter.17

Forewarned is forearmed like his brother when his brother when he was applying he behaved like a Saint but in his heart he was a
serpent. If you agree with me then we will send his replacement.

14

Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules when it failed to deploy him within thirty
(30) calendar days without a valid reason. In doing so, it had unilaterally and arbitrarily prevented the consummation of the POEAapproved contract. Since it prevented his deployment without valid basis, said deployment being a condition to the consummation of
the POEA contract, the contract is deemed consummated, and therefore he should be awarded actual damages, consisting of the
stipulated salary and fixed overtime pay.18 Petitioner adds that since the contract is deemed consummated, he should be considered
an employee for all intents and purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take cognizance of his
claims.19
Petitioner additionally claims that he should be considered a regular employee, having worked for five (5) years on board the same
vessel owned by the same principal and manned by the same local agent. He argues that respondents act of not deploying him was
a scheme designed to prevent him from attaining the status of a regular employee.20
Petitioner submits that respondent had no valid and sufficient cause to abandon the employment contract, as it merely relied upon
alleged phone calls from his wife and other unnamed callers in arriving at the conclusion that he would jump ship like his brother. He
points out that his wife had executed an affidavit21 strongly denying having called respondent, and that the other alleged callers did
not even disclose their identities to respondent.22 Thus, it was error for the Court of Appeals to adopt the unfounded conclusion of the
NLRC, as the same was not based on substantial evidence.23
On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award petitioners monetary claims. His
employment with respondent did not commence because his deployment was withheld for a valid reason. Consequently, the labor
arbiter and/or the NLRC cannot entertain adjudication of petitioners case much less award damages to him. The controversy involves
a breach of contractual obligations and as such is cognizable by civil courts.24 On another matter, respondent claims that the second
issue posed by petitioner involves a recalibration of facts which is outside the jurisdiction of this Court.25
There is some merit in the petition.
There is no question that the parties entered into an employment contract on 3 February 1998, whereby petitioner was contracted by
respondent to render services on board "MSV Seaspread" for the consideration of US$515.00 per month for nine (9) months, plus
overtime pay. However, respondent failed to deploy petitioner from the port of Manila to Canada. Considering that petitioner was not
able to depart from the airport or seaport in the point of hire, the employment contract did not commence, and no employer-employee
relationship was created between the parties.26
However, a distinction must be made between the perfection of the employment contract and the commencement of the employeremployee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when
petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The
commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner been actually
deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the
perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of
action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed
upon, he would be liable for damages.
Moreover, while the POEA Standard Contract must be recognized and respected, neither the manning agent nor the employer can
simply prevent a seafarer from being deployed without a valid reason.
Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread" constitutes a breach of
contract, giving rise to petitioners cause of action. Respondent unilaterally and unreasonably reneged on its obligation to deploy
petitioner and must therefore answer for the actual damages he suffered.
We take exception to the Court of Appeals conclusion that damages are not recoverable by a worker who was not deployed by his
agency. The fact that the POEA Rules27 are silent as to the payment of damages to the affected seafarer does not mean that the
seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or
cancellation of license or fine and the return of all documents at no cost to the worker. They do not forfend a seafarer from instituting
an action for damages against the employer or agency which has failed to deploy him.
The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not provide for damages and money
claims recoverable by aggrieved employees because it is not the POEA, but the NLRC, which has jurisdiction over such matters.
Despite the absence of an employer-employee relationship between petitioner and respondent, the Court rules that the NLRC has
jurisdiction over petitioners complaint. The jurisdiction of labor arbiters is not limited to claims arising from employer-employee
relationships. Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the
filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x [Emphasis
supplied]

Since the present petition involves the employment contract entered into by petitioner for overseas employment, his claims are
cognizable by the labor arbiters of the NLRC.
Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him
as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months worth of
salary as provided in the contract. He is not, however, entitled to overtime pay. While the contract indicated a fixed overtime pay, it is
not a guarantee that he would receive said amount regardless of whether or not he rendered overtime work. Even though petitioner
was "prevented without valid reason from rendering regular much less overtime service,"28 the fact remains that there is no certainty
that petitioner will perform overtime work had he been allowed to board the vessel. The amount of US$286.00 stipulated in the
contract will be paid only if and when the employee rendered overtime work. This has been the tenor of our rulings in the case of
Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission29 where we discussed the matter in this light:
The contract provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when
overtime work would be rendered. Simply stated, the rendition of overtime work and the submission of sufficient proof that said work
was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed
on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the
entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a
ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he
might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and
unreasonable.30
The Court also holds that petitioner is entitled to attorneys fees in the concept of damages and expenses of litigation. Attorney's fees
are recoverable when the defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest.31 We note
that respondents basis for not deploying petitioner is the belief that he will jump ship just like his brother, a mere suspicion that is
based on alleged phone calls of several persons whose identities were not even confirmed. Time and again, this Court has upheld
management prerogatives so long as they are exercised in good faith for the advancement of the employers interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.32 Respondents
failure to deploy petitioner is unfounded and unreasonable, forcing petitioner to institute the suit below. The award of attorneys fees is
thus warranted.
However, moral damages cannot be awarded in this case. While respondents failure to deploy petitioner seems baseless and
unreasonable, we cannot qualify such action as being tainted with bad faith, or done deliberately to defeat petitioners rights, as to
justify the award of moral damages. At most, respondent was being overzealous in protecting its interest when it became too hasty in
making its conclusion that petitioner will jump ship like his brother.
We likewise do not see respondents failure to deploy petitioner as an act designed to prevent the latter from attaining the status of a
regular employee. Even if petitioner was able to depart the port of Manila, he still cannot be considered a regular employee,
regardless of his previous contracts of employment with respondent. In Millares v. National Labor Relations Commission,33 the Court
ruled that seafarers are considered contractual employees and cannot be considered as regular employees under the Labor Code.
Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the
contract expires. The exigencies of their work necessitates that they be employed on a contractual basis.34
WHEREFORE, petition is GRANTED IN PART. The Decision dated 16 October 2003 and the Resolution dated 19 February 2004 of
the Court of Appeals are REVERSED and SET ASIDE. The Decision of Labor Arbiter Teresita D. Castillon-Lora dated 29 January
1999 is REINSTATED with the MODIFICATION that respondent CF Sharp Crew Management, Inc. is ordered to pay actual or
compensatory damages in the amount of US$4,635.00
representing salary for nine (9) months as stated in the contract, and attorneys fees at the reasonable rate of 10% of the recoverable
amount.
SO ORDERED.
G.R. No. 81490

August 31, 1988

HAGONOY WATER DISTRICT represented by its General Manager CELESTINO S. VENGCO, petitioner,
vs.
THE HON. NATIONAL LABOR RELATIONS COMMISSION, EXECUTIVE LABOR ARBITER VLADIMIR P.L. SAMPANG, DEPUTY
SHERIFF JOSE A. CRUZ and DANTE VILLANUEVA, respondents.
FELICIANO, J.:
The present petition for certiorari seeks to annul and set aside: a) the decision of the Labor Arbiter dated 17 March 1987 in NLRC
Case No. RAB-III-8-2354-85, entitled "Dante Villanueva versus LWA-Hagonoy Waterworks District/Miguel Santos;" and b) the
Resolution of the National Labor Relations Commission dated 20 August 1987 affirming the mentioned decision.
Private respondent Dante Villanueva was employed as service foreman by petitioner Hagonoy Water District ("Hagonoy") from 3
January 1977 until 16 May 1985, when he was indefinitely suspended and thereafter dismissed on 12 July 1985 for abandonment of
work and conflict of interest.

15

On 14 August 1985, private respondent filed a complaint for illegal dismissal, illegal suspension and underpayment of wages and
emergency cost of living allowance against petitioner Hagonoy with the then Ministry of Labor and Employment, Regional Arbitration
Branch III, San Fernando, Pampanga.
Petitioner immediately moved for outright dismissal of the complaint on the ground of lack of jurisdiction. Being a government entity,
petitioner claimed, its personnel are governed by the provisions of the Civil Service Law, not by the Labor Code, and protests
concerning the lawfulness of dismissals from the service fall within the jurisdiction of the Civil Service Commission, not the Ministry of
Labor and Employment. Petitioner cited Resolution No. 1540 of the Social Security Commission cancelling petitioner's compulsory
coverage from the system effective 16 May 1979 "considering the rulings that local water districts are instrumentalities owned and
controlled by the government and that their officers and employees are government employees." In opposing the motion, private
respondent Villanueva contended that local water districts, like petitioner Hagonoy, though quasi-public corporations, are in the nature
of private corporations since they perform proprietary functions for the government.
The Labor Arbiter proceeded to hear and try the case and, on 17 March 1986, rendered a Decision in favor of the private respondent
and against petitioner Hagonoy. The dispositive part of the decision read:
WHEREFORE, premises considered, respondents are hereby ordered to reinstate petitioner immediately to his former position as
Service Foreman, without loss of seniority rights and privileges, with full backwages, including all benefits provided by law, from the
date he was terminated up to his actual date of reinstatement.

the Bureau of Labor Relations which affirmed that of a Med-Arbiter calling for a certification election among the regular rank-and-file
employees of the Baguio Water District (BWD). In granting the petition, the Court said:
The Baguio Water District was formed pursuant to Title II-Local Water District Law of P.D. No. 198, as amended, The BWD is by Sec.
6 of that decree 'a quasi-public corporation performing public service and supplying public wants.
A part of the public respondent's decision rendered in September, 1983, reads in part:
We find the appeal [of the BWD] to be devoid of merit. The records show that the operation and administration of BWD is governed
and regulated by special laws, that is, Presidential Decrees Nos. 198 and 1479 which created local water districts throughout the
country. Section 25 of Presidential Decree (PD) 198 clearly provides that the district and its employees shall be exempt from the
provisions of the Civil Service Law and that its personnel below supervisory level shall have the right to collectively bargain. Contrary
to appellant's claim, said provision has not been amended much more abrogated expressly or impliedly by PD 1479 which does not
make mention of any matter on Civil Service Law or collective bargaining. (Rollo, p. 590.)
We grant the petition for the following reasons:
1.
Section 25 of P.D. No. 198 was repealed by Sec. 3 of P.D. No. 1479; Sec. 26 of P.D. No. 198 was amended to read as
Sec. 25 by Sec. 4 of P.D. No. 1479. The amendatory decree took effect on June 11, 1978.
xxx

In addition, respondents are hereby ordered to pay the petitioner the amount of P4,927.50 representing the underpayments of wages
from July 1983 to May 16, 1985.

xxx

xxx

3. The BWD is a corporation created pursuant to a special law P.D. No. 198, as amended. As such its officers and employees are
part of the Civil Service. (Sec. 1, Art. XII-B, [1973] Constitution; P.D. No. 686.)

SO ORDERED.
On appeal, the National Labor Relations Commission affirmed the decision of the Labor Arbiter in a Resolution dated 20 August 1987.
The petitioner moved for reconsideration, insisting that public respondents had no jurisdiction over the case. Meanwhile, a Writ of
Execution was issued by the Labor Arbiter on 16 November 1987. The writ was enforced by garnishing petitioner Hagonoy's deposits
with the Planters Development Bank of Hagonoy.
Petitioner then filed a Motion to Quash the Writ of Execution with Application for Writ of Preliminary Injunction arguing that the writ
was prematurely issued as its motion for reconsideration had not yet been resolved. By Resolution dated 10 December 1987, public
respondent Commission denied the application for a preliminary injunction. The motion to quash was similarly denied by the
Commission which directed petitioner to reinstate immediately private respondent and to pay him the amount of P63,577.75 out of
petitioner's garnished deposits.

The broader question of whether employees of government owned or controlled corporations are governed by the Civil Service Law
and Civil Service Rules and Regulations was addressed by this Court in 1985 in National Housing Corporation vs. Juco. 2 After a
review of constitutional, statutory and case law on the matter, the Court, through Mr. Justice Gutierrez, held:
There should no longer be any question at this time that employees of government-owned or controlled corporations are governed by
the civil service law and civil service rules and regulations.
Section 1. Article XII-B of the [1973] Constitution specifically provides:
The Civil Service embraces every branch, agency, subdivision, and instrumentality of the Government, including every governmentowned or controlled corporation. ...
The 1935 Constitution had a similar provision in its Section 1, Article XII which stated:

Hence, the instant petition.

A Civil Service embracing all branches and subdivisions of the Government shall be provided by law.
The only question here in whether or not local water districts are government owned or controlled corporations whose employees are
subject to the provisions of the Civil Service Law. The Labor Arbiter asserted jurisdiction over the alleged illegal dismissal of private
respondent Villanueva by relying on Section 25 of Presidential Decree No. 198, known as the "Provincial Water Utilities Act of 1973"
which went into effect on 25 May 1973, and which provides as follows:
Exemption from Civil Service. The district and its employees, being engaged in a proprietary function, are hereby exempt from the
provisions of the Civil Service Law. Collective Bargaining shall be available only to personnel below supervisory levels: Provided,
however, That the total of all salaries, wages, emoluments, benefits or other compensation paid to all employees in any month shall
not exceed fifty percent (50%) of average net monthly revenue, said net revenue representing income from water sales and sewerage
service charges, lease pro-rata share of debt service and expenses for fuel or energy for pumping during the preceding fiscal year.

The inclusion of "government-owned or controlled corporations" within the embrace of the civil service shows a deliberate effort of the
framers to plug an earlier loophole which allowed government-owned or controlled corporations to avoid the full consequences of the
all encompassing coverage of the, civil service system. The same explicit intent is shown by the addition of "agency" and
"instrumentality" to branches and subdivisions of the Government. All offices and firms of the government are covered.
The amendments introduced in 1973 are not Idle exercises or meaningless gestures. They carry the strong message that civil service
coverage is broad and all-embracing insofar as employment in the government in any of its governmental. or corporate arms is
concerned.
xxx

The Labor Arbiter however failed to take into account the provisions of Presidential Decree No. 1479, which went into effect on 11
June 1978. P.D. No. 1479 wiped away Section 25 of P.D. 198 quoted above, and Section 26 of P.D. 198 was renumbered as Section
25 in the following manner:
Section 26 of the same decree [P.D. 198] is hereby amended to read as Section 25 as follows:
Section 25. Authorization. The district may exercise all the powers which are expressly granted by this Title or which are
necessarily implied from or incidental to the powers and purposes herein stated. For the purpose of carrying out the objectives of this
Act, a district is hereby granted the power of eminent domain, the exercise thereof shall, however, be subject to review by the
Administration.
Thus, Section 25 of P.D. 198 exempting the employees of water districts from the application of the Civil Service Law was removed
from the statute books.
This is not the first time that officials of the Department of Labor and Employment have taken the position that the Labor Arbiter here
adopted. In Baguio Water District vs. Cresenciano B. Trajano, etc. et al., 1 the petitioner Water District sought review of a decision of

xxx

xxx

Section I of Article XII-B, [1973] Constitution uses the word "every" to modify the phrase "government-owned or controlled
corporation."
"Every" means each one of a group, without exception. It means all possible and all, taken one by one. Of course, our decision in this
case refers to a corporation created as a government-owned or controlled entity. It does not cover cases involving private firms taken
over by the government in foreclosure or similar proceedings. We reserve judgment on these latter cases when the appropriate
controversy is brought to this Court. 3
In Juco, the Court spelled out the law on the issue at bar as such law existed under the 1973 Constitution and the Provisional
Constitution of 1984, 4 until just before the effectivity of the 1987 Constitution. Public respondent Commission, in confirming the Labor
Arbiter's assumption of jurisdiction over this case, apparently relied upon Article IX (B), Section 2 (1) of the 1987 Constitution, which
provides that:
[T]he Civil Service embraces ... government owned or controlled corporations with original charters. (Emphasis supplied)

16

The NLRC took the position that although petitioner Hagonoy is a government owned or controlled corporation, it had no original
charter having been created simply by resolution of a local legislative council. The NLRC concluded that therefore petitioner Hagonoy
fell outside the scope of the civil service.
At the time the dispute in the case at bar arose, and at the time the Labor Arbiter rendered his decision (i.e., 17 March 1986), there is
no question that the applicable law was that spelled out in National Housing Corporation vs. Juco (supra) and Baguio Water District
vs. Cresenciano B. Trajano (supra) and that under such applicable law, the Labor Arbiter had no jurisdiction to render the decision
that he in fact rendered. By the time the public respondent Commission rendered its decision of 20 August 1987 which is here
assailed, the 1987 Constitution had already come into effect. 5 There is, nonetheless, no necessity for this Court at the present time
and in the present case to pass upon the question of the effect of the provisions of Article DC (B), Section 2 (1) of the 1987
Constitution upon the pre-existing statutory and case law. For whatever that effect might be, and we will deal with that when an
appropriate case comes before the Court we believe and so hold that the 1987 Constitution did not operate retrospectively so as to
confer jurisdiction upon the Labor Arbiter to render a decision which, under the law applicable at the time of the rendition of such
decision, was clearly outside the scope of competence of the Labor Arbiter. Thus, the respondent Commission had nothing before it
which it could pass upon in the exercise of its appellate jurisdiction. For it is self-evident that a decision rendered by the Labor Arbiter
without jurisdiction over the case is a complete nullity, vesting no rights and imposing no liabilities.
ACCORDINGLY, the Petition for certiorari is GRANTED. The decision of the Labor Arbiter dated 17 March 1986, and public
respondent Commission's Resolution dated 20 August 1987 and all other Resolutions and Orders issued by the Commission in this
case subsequent thereto, are hereby SET ASIDE. This decision is, however, without prejudice to the right of private respondent
Villanueva to refile, if he so wishes, this complaint in an appropriate forum. No pronouncement as to costs.
SO ORDERED.
EVELYN TOLOSA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, QWANA KAIUN (through its resident-agent,
FUMIO NAKAGAWA), ASIA BULK TRANSPORT PHILS. INC., PEDRO GARATE and MARIO ASIS, respondents.
DECISION
PANGANIBAN, J.:

its officers and crew. Contact with the U.S. Coast Guard in Honolulu, Hawaii (USCGHH) was likewise initiated to seek medical
advice.
On November 17, 1992, CAPT. TOLOSA was losing resistance and his condition was getting serious. At 2215 GMT, a telex was
sent to ASIA BULK requesting for the immediate evacuation of CAPT. TOLOSA and thereafter an airlift was set on November 19,
1992. However, on November 18, 1992, at 0753 GMT, CAPT. TOLOSA was officially recorded as having breathed his last.
Because of the death of CAPT. TOLOSA, his wife, EVELYN, as petitioner, filed a Complaint/Position Paper before the POEA (POEA
Case No. 93-06-1080) against Qwana-Kaiun, thru its resident-agent, Mr. Fumio Nakagawa, ASIA BULK, Pedro Garate and Mario
Asis, as respondents.
After initial hearings and submissions of pleadings, the case was however transferred to the Department of Labor and Employment,
National Labor Relations Commission (NLRC), when the amendatory legislation expanding its jurisdiction, and removing overseas
employment related claims from the ambit of POEA jurisdiction. The case was then raffled to Labor Arbiter, Vladimir Sampang.
xxx
xxx
xxx
After considering the pleadings and evidences, on July 8, 1997, the Labor Arbiter Vladimir P. L. Sampang, in conformity with
petitioners plea to hold respondents solidarily liable, granted all the damages, (plus legal interest), as prayed for by the petitioner.
The dispositive portion of his Decision reads:
WHEREFORE, premises considered, the respondents are hereby ordered to jointly and solidarily pay complainants the following:
1. US$176,400.00 (US$2,100.00 x 12 months x 7 years) or P4,586,400.00 (at P26.00 per US$1.00) by way of lost income;
2. interest at the legal rate of six percent (6%) per annum or P1,238,328.00 (from November 1992 to May 1997 or 4 years);
3. moral damages of P200,000.00;
4. exemplary damages of P100,000.00; and
5. 10% of the total award, or P612,472.80, as attorneys fees.
xxx
xxx
xxx
On appeal, private respondents raised before the National Labor Relations Commission (NLRC) the following grounds:

As a rule, labor arbiters and the National Labor Relations Commission have no power or authority to grant reliefs from claims that do
not arise from employer-employee relations. They have no jurisdiction over torts that have no reasonable causal connection to any of
the claims provided for in the Labor Code, other labor statutes, or collective bargaining agreements.
The Case
The Petition for Review before us assails the April 18, 2001 Decision[1] of the Court of Appeals (CA) in CA-GR SP No. 57660, as well
as the April 17, 2001 CA Resolution[2] denying petitioners Motion for Reconsideration. The dispositive portion of the challenged
Decision reads as follows:

(a) the action before the Arbiter, as he himself concedes, is a complaint based on torts due to negligence. It is the regular courts of
law which have jurisdiction over the action;
(b) Labor Arbiters have jurisdiction over claims for damages arising from employer-employee relationship (Art. 217, Section (a) (3));
(c) In this case, gross negligence is imputed to respondents Garate and Asis, who have no employer-employee relationship with the
late Capt. Virgilio Tolosa;
(d) The labor arbiter has no jurisdiction over the controversy;
xxx
xxx
xxx

WHEREFORE, premises considered, the instant petition for certiorari is hereby DENIED and accordingly DISMISSED, without
prejudice to the right of herein petitioner to file a suit before the proper court, if she so desires. No pronouncement as to costs.[3]

Despite other peripheral issues raised by the parties in their respective pleadings, the NLRC on September 10, 1998, vacated the
appealed decision dated July 8, 1997 of the Labor Arbiter and dismissed petitioners case for lack of jurisdiction over the subject
matter of the action pursuant to the provisions of the Labor Code, as amended.[4] (Citations omitted)

The Facts

Ruling of the Court of Appeals

The appellate court narrated the facts of the case in this manner:

Sustaining the NLRC, the CA ruled that the labor commission had no jurisdiction over the subject matter of the action filed by
petitioner. Her cause did not arise from an employer-employee relation, but from a quasi delict or tort. Further, there is no reasonable
causal connection between her suit for damages and her claim under Article 217 (a)(4) of the Labor Code, which allows an award of
damages incident to an employer-employee relation.

Evelyn Tolosa (hereafter EVELYN), was the widow of Captain Virgilio Tolosa (hereafter CAPT. TOLOSA) who was hired by QwanaKaiun, through its manning agent, Asia Bulk Transport Phils. Inc., (ASIA BULK for brevity), to be the master of the Vessel named M/V
Lady Dona. CAPT. TOLOSA had a monthly compensation of US$1700, plus US$400.00 monthly overtime allowance. His contract
officially began on November 1, 1992, as supported by his contract of employment when he assumed command of the vessel in
Yokohama, Japan. The vessel departed for Long Beach California, passing by Hawaii in the middle of the voyage. At the time of
embarkation, CAPT. TOLOSA was allegedly shown to be in good health.

Hence, this Petition.[5]

Issues

During channeling activities upon the vessels departure from Yokohama sometime on November 6, 1992, CAPT. TOLOSA was
drenched with rainwater. The following day, November 7, 1992, he had a slight fever and in the succeeding twelve (12) days, his
health rapidly deteriorated resulting in his death on November 18, 1992.

Petitioner raises the following issues for our consideration:

According to Pedro Garate, Chief Mate of the Vessel, in his statement submitted to the U.S. Coast Guard on November 23, 1992
upon arrival in Long Beach, California CAPT. TOLOSA experienced high fever between November 11-15, 1992 and suffered from
loose bowel movement (LBM) beginning November 9, 1992. By November 11, 1992, his temperature was 39.5 although his LBM had
slightly stopped. The next day, his temperature rose to 39.8 and had lost his appetite. In the evening of that day, November 13,
1992, he slipped in the toilet and suffered scratches at the back of his waist. First aid was applied and CAPT. TOLOSA was
henceforth confined to his quarters with an able seaman to watch him 24 hours a day until November 15, 1992, when his conditioned
worsened.

II Whether or not Evelyn is entitled to the monetary awards granted by the labor arbiter.[6]

On the same day, November 15, 1992, the Chief Engineer initiated the move and contacted ASIA BULK which left CAPT. TOLOSAs
fate in the hands of Pedro Garate and Mario Asis, Second Mate of the same vessel who was in-charge of the primary medical care of

I Whether or not the NLRC has jurisdiction over the case.

After reviewing petitioners Memorandum, we find that we are specifically being asked to determine 1) whether the labor arbiter and
the NLRC had jurisdiction over petitioners action, and 2) whether the monetary award granted by the labor arbiter has already
reached finality.
The Courts Ruling
The Petition has no merit.
First Issue:

17

Jurisdiction over the Action

Petitioner argues that her cause of action is not predicated on a quasi delict or tort, but on the failure of private respondents -- as
employers of her husband (Captain Tolosa) -- to provide him with timely, adequate and competent medical services under Article 161
of the Labor Code:
ART 161. Assistance of employer. -- It shall be the duty of any employer to provide all the necessary assistance to ensure the
adequate and immediate medical and dental attendance and treatment to an injured or sick employee in case of emergency.
Likewise, she contends that Article 217 (a) (4)[7] of the Labor Code vests labor arbiters and the NLRC with jurisdiction to award all
kinds of damages in cases arising from employer-employee relations.
Petitioner also alleges that the reasonable causal connection rule should be applied in her favor. Citing San Miguel Corporation v.
Etcuban,[8] she insists that a reasonable causal connection between the claim asserted and the employer-employee relation confers
jurisdiction upon labor tribunals. She adds that she has satisfied the required conditions: 1) the dispute arose from an employeremployee relation, considering that the claim was for damages based on the failure of private respondents to comply with their
obligation under Article 161 of the Labor Code; and 2) the dispute can be resolved by reference to the Labor Code, because the
material issue is whether private respondents complied with their legal obligation to provide timely, adequate and competent medical
services to guarantee Captain Tolosas occupational safety.[9]
We disagree. We affirm the CAs ruling that the NLRC and the labor arbiter had no jurisdiction over petitioners claim for damages,
because that ruling was based on a quasi delict or tort per Article 2176 of the Civil Code.[10]
Time and time again, we have held that the allegations in the complaint determine the nature of the action and, consequently, the
jurisdiction of the courts.[11] After carefully examining the complaint/position paper of petitioner, we are convinced that the allegations
therein are in the nature of an action based on a quasi delict or tort. It is evident that she sued Pedro Garate and Mario Asis for
gross negligence.
Petitioners complaint/position paper refers to and extensively discusses the negligent acts of shipmates Garate and Asis, who had no
employer-employee relation with Captain Tolosa. Specifically, the paper alleges the following tortious acts:
x x x [R]espondent Asis was the medical officer of the Vessel, who failed to regularly monitor Capt. Tolosas condition, and who
needed the USCG to prod him to take the latters vital signs. In fact, he failed to keep a medical record, like a patients card or folder,
of Capt. Tolosas illness.[12]
Respondents, however, failed Capt. Tolosa because Garate never initiated actions to save him. x x x In fact, Garate rarely checked
personally on Capt. Tolosas condition, to wit:[13]
x x x Noticeably, the History (Annex D) fails to mention any instance when Garate consulted the other officers, much less Capt.
Tolosa, regarding the possibility of deviation. To save Capt. Tolosas life was surely a just cause for the change in course, which the
other officers would have concurred in had they been consulted by respondent Garate which he grossly neglected to do.
Garates poor judgement, since he was the officer effectively in command of the vessel, prevented him from undertaking these
emergency measures, the neglect of which resulted in Capt. Tolosas untimely demise.[14]
The labor arbiter himself classified petitioners case as a complaint for damages, blacklisting and watchlisting (pending inquiry) for
gross negligence resulting in the death of complainants husband, Capt. Virgilio Tolosa.[15]

The central issue is determined essentially from the relief sought in the complaint. In San Miguel Corporation v. NLRC,[21] this Court
held:
It is the character of the principal relief sought that appears essential in this connection. Where such principal relief is to be granted
under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of the Labor Arbiter and the
NLRC, even though a claim for damages might be asserted as an incident to such claim.[22]
The labor arbiter found private respondents to be grossly negligent. He ruled that Captain Tolosa, who died at age 58, could expect
to live up to 65 years and to have an earning capacity of US$176,400.
It must be noted that a workers loss of earning capacity and blacklisting are not to be equated with wages, overtime compensation or
separation pay, and other labor benefits that are generally cognized in labor disputes. The loss of earning capacity is a relief or claim
resulting from a quasi delict or a similar cause within the realm of civil law.
Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for
in the article in order to be cognizable by the labor arbiter. Only if there is such a connection with the other claims can the claim for
damages be considered as arising from employer-employee relations.[23] In the present case, petitioners claim for damages is not
related to any other claim under Article 217, other labor statutes, or collective bargaining agreements.
Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does not grant or specify a claim or relief.
This provision is only a safety and health standard under Book IV of the same Code. The enforcement of this labor standard rests
with the labor secretary.[24] Thus, claims for an employers violation thereof are beyond the jurisdiction of the labor arbiter. In other
words, petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages before the labor arbiter.
It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in which the employer-employee relation is
merely incidental, and in which the cause of action proceeds from a different source of obligation such as a tort. [25] Since petitioners
claim for damages is predicated on a quasi delict or tort that has no reasonable causal connection with any of the claims provided for
in Article 217, other labor statutes, or collective bargaining agreements, jurisdiction over the action lies with the regular courts[26] -not with the NLRC or the labor arbiters.
Second Issue:
Finality of the Monetary Award
Petitioner contends that the labor arbiters monetary award has already reached finality, since private respondents were not able to
file a timely appeal before the NLRC.
This argument cannot be passed upon in this appeal, because it was not raised in the tribunals a quo. Well-settled is the rule that
issues not raised below cannot be raised for the first time on appeal. Thus, points of law, theories, and arguments not brought to the
attention of the Court of Appeals need not -- and ordinarily will not -- be considered by this Court.[27] Petitioners allegation cannot
be accepted by this Court on its face; to do so would be tantamount to a denial of respondents right to due process.[28]
Furthermore, whether respondents were able to appeal on time is a question of fact that cannot be entertained in a petition for review
under Rule 45 of the Rules of Court. In general, the jurisdiction of this Court in cases brought before it from the Court of Appeals is
limited to a review of errors of law allegedly committed by the court a quo.[29]
WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against petitioner.
SO ORDERED.

We stress that the case does not involve the adjudication of a labor dispute, but the recovery of damages based on a quasi delict.
The jurisdiction of labor tribunals is limited to disputes arising from employer-employee relations, as we ruled in Georg Grotjahn
GMBH & Co. v. Isnani:[16]
Not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor
Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor
Code, other labor statutes, or their collective bargaining agreement.[17]
The pivotal question is whether the Labor Code has any relevance to the relief sought by petitioner. From her paper, it is evident that
the primary reliefs she seeks are as follows: (a) loss of earning capacity denominated therein as actual damages or lost income
and (b) blacklisting. The loss she claims does not refer to the actual earnings of the deceased, but to his earning capacity based on a
life expectancy of 65 years. This amount is recoverable if the action is based on a quasi delict as provided for in Article 2206 of the
Civil Code,[18] but not in the Labor Code.
While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor laws, but also damages
governed by the Civil Code,[19] these reliefs must still be based on an action that has a reasonable causal connection with the Labor
Code, other labor statutes, or collective bargaining agreements.[20]

18