SONZA vs.

ABS-CBN Case Digest The Labor Arbiter dismissed the

complaint and found that there is no
JOSE SONZA vs. ABS-CBN
employee-employer relationship. NLRC
BROADCASTING CORPORATION
affirmed the decision of the Labor
G.R. No. 138051 Arbiter. CA also affirmed the decision
of NLRC.
June 10, 2004
Issue: Whether or not there was
Facts: In May 1994, ABS-CBN signed employer-employee relationship
an agreement with the Mel and Jay between the parties.
Management and Development
Corporation (MJMDC). ABS-CBN was Ruling: Case law has consistently held
represented by its corporate officers that the elements of an employee-
while MJMDC was represented by employer relationship are selection
Sonza, as President and general and engagement of the employee, the
manager, and Tiangco as its EVP and payment of wages, the power of
treasurer. Referred to in the dismissal and the employers power to
agreement as agent, MJMDC agreed to control the employee on the means
provide Sonzas services exclusively to and methods by which the work is
ABS-CBN as talent for radio and accomplished. The last element, the
television. ABS-CBN agreed to pay so-called "control test", is the most
Sonza a monthly talent fee of P310, important element.
000 for the first year and P317, 000 for
Sonzas services to co-host its
the second and third year.
television and radio programs are
because of his peculiar talents, skills
and celebrity status. Independent
On April 1996, Sonza wrote a letter to contractors often present themselves
ABS-CBN where he irrevocably to possess unique skills, expertise or
resigned in view of the recent events talent to distinguish them from
concerning his program and career. ordinary employees. The specific
After the said letter, Sonza filed with selection and hiring of SONZA,
the Department of Labor and because of his unique skills, talent and
Employment a complaint alleging that celebrity status not possessed by
ABS-CBN did not pay his salaries, ordinary employees, is a circumstance
separation pay, service incentive indicative, but not conclusive, of an
pay,13th month pay, signing bonus, independent contractual relationship.
travel allowance and amounts under All the talent fees and benefits paid to
the Employees Stock Option Plan SONZA were the result of negotiations
(ESOP). ABS-CBN contended that no that led to the Agreement. For
employee-employer relationship violation of any provision of the
existed between the parties. However, Agreement, either party may
ABS-CBN continued to remit Sonzas terminate their relationship. Applying
monthly talent fees but opened the control test to the present case,
another account for the same purpose. we find that SONZA is not an
employee but an independent
contractor.
 employer-employee relationship under
labor laws. Individuals with special
The control test is the most important
skills, expertise or talent enjoy the
test our courts apply in distinguishing
freedom to offer their services as
an employee from an independent
independent contractors. The right to
contractor. This test is based on the
life and livelihood guarantees this
extent of control the hirer exercises
freedom to contract as independent
over a worker. The greater the
contractors. The right of labor to
supervision and control the hirer
security of tenure cannot operate to
exercises, the more likely the worker is
deprive an individual, possessed with
deemed an employee. The converse
special skills, expertise and talent, of
holds true as well the less control the
his right to contract as an independent
hirer exercises, the more likely the
contractor.
worker is considered an independent
contractor. To perform his work, MA. ISABEL T. SANTOS,
SONZA only needed his skills and represented by ANTONIO P.
talent. How SONZA delivered his lines, SANTOS,
appeared on television, and sounded
Petitioner,
on radio were outside ABS-CBNs
control. ABS-CBN did not instruct - versus -
SONZA how to perform his job. ABS-
CBN merely reserved the right to SERVIER PHILIPPINES, INC. and
modify the program format and NATIONAL LABOR RELATIONS
airtime schedule "for more effective COMMISSION,
programming." ABS-CBNs sole Respondents.
concern was the quality of the shows
and their standing in the ratings. G.R. No. 166377
NACHURA, J.:

Clearly, ABS-CBN did not exercise Before this Court is a Petition for
control over the means and methods Review on Certiorari under Rule 45 of
of performance of Sonzas work. A the Rules of Court, seeking to set
radio broadcast specialist who works aside the Court of Appeals (CA)
under minimal supervision is an Decision,[1] dated August 12, 2004
independent contractor. Sonzas work and its Resolution[2] dated December
as television and radio program host 17, 2004, in CA-G.R. SP No. 75706.
required special skills and talent,
The facts, as culled from the records,
which SONZA admittedly possesses.
are as follows:
Petitioner Ma. Isabel T. Santos was the
ABS-CBN claims that there exists a Human Resource Manager of
prevailing practice in the broadcast respondent Servier Philippines, Inc.
and entertainment industries to treat since 1991 until her termination from
talents like Sonza as independent service in 1999. On March 26 and 27,
contractors. The right of labor to 1998, petitioner attended a
security of tenure as guaranteed in the meeting[3] of all human resource
Constitution arises only if there is an managers of respondent, held in Paris,
France. Since the last day of the In a letter dated May 14, 1999,
meeting coincided with the graduation respondent informed the petitioner
of petitioners only child, she arranged that the former had requested the
for a European vacation with her latters physician to conduct a
family right after the meeting. She, thorough physical and psychological
thus, filed a vacation leave effective evaluation of her condition, to
March 30, 1998.[4] determine her fitness to resume her
work at the company. Petitioners
On March 29, 1998, petitioner,
physician concluded that the former
together with her husband Antonio P.
had not fully recovered mentally and
Santos, her son, and some friends, had
physically. Hence, respondent was
dinner at Leon des Bruxelles, a Paris
constrained to terminate petitioners
restaurant known for mussels[5] as
services effective August 31, 1999.[9]
their specialty. While having dinner,
petitioner complained of stomach
pain, then vomited. Eventually, she
As a consequence of petitioners
was brought to the hospital known as
termination from employment,
Centre Chirurgical de LQuest where
respondent offered a retirement
she fell into coma for 21 days; and
package which consists of:
later stayed at the Intensive Care Unit
(ICU) for 52 days. The hospital found
that the probable cause of her sudden
attack was alimentary allergy, as she Retirement Plan Benefits: P
had recently ingested a meal of 1,063,841.76
mussels which resulted in a Insurance Pension at
concomitant uticarial eruption.[6] P20,000.00/month
During the time that petitioner was for 60 months from company-
confined at the hospital, her husband sponsored
and son stayed with her in Paris.
Petitioners hospitalization expenses, group life policy: P 1,200,000.00
as well as those of her husband and
Educational assistance: P 465,000.00
son, were paid by respondent.[7]
Medical and Health Care: P
In June 1998, petitioners attending
200,000.00[10]
physicians gave a prognosis of the
formers condition; and, with the Of the promised retirement benefits
consent of her family, allowed her to amounting to P1,063,841.76, only
go back to the Philippines for the P701,454.89 was released to
continuation of her medical treatment. petitioners husband, the balance[11]
She was then confined at the St. Lukes thereof was withheld allegedly for
Medical Center for rehabilitation.[8] taxation purposes. Respondent also
During the period of petitioners failed to give the other benefits listed
rehabilitation, respondent continued to above.[12]
pay the formers salaries; and to assist
her in paying her hospital bills. Petitioner, represented by her
husband, instituted the instant case
for unpaid salaries; unpaid separation
pay; unpaid balance of retirement WHEREFORE, premises considered,
package plus interest; insurance Complainants appeal is partly
pension for permanent disability; GRANTED. The Labor Arbiters decision
educational assistance for her son; in the above-entitled case is hereby
medical assistance; reimbursement of SET ASIDE. Respondent is ordered to
medical and rehabilitation expenses; pay Complainants portion of her
moral, exemplary, and actual separation pay covering the following:
damages, plus attorneys fees. The 1) P200,000.00 for medical and health
case was docketed as NLRC-NCR care from September 1999 to April
(SOUTH) Case No. 30-06-02520-01. 2001; and 2) P35,000.00 per year for
her sons high school (second year to
On September 28, 2001, Labor Arbiter
fourth year) education and P45,000.00
Aliman D. Mangandog rendered a
per semester for the latters four-year
Decision[13] dismissing petitioners
college education, upon presentation
complaint. The Labor Arbiter stressed
of any applicable certificate of
that respondent had been generous in
enrollment.
giving financial assistance to the
petitioner.[14] He likewise noted that SO ORDERED.[19]
there was a retirement plan for the
The NLRC emphasized that petitioner
benefit of the employees. In denying
was not retired from the service
petitioners claim for separation pay,
pursuant to law, collective bargaining
the Labor Arbiter ratiocinated that the
agreement (CBA) or other employment
same had already been integrated in
contract; rather, she was dismissed
the retirement plan established by
from employment due to a
respondent. Thus, petitioner could no
disease/disability under Article
longer collect separation pay over and
284[20] of the Labor Code.[21] In view
above her retirement benefits.[15] The
of her non-entitlement to retirement
arbiter refused to rule on the legality
benefits, the amounts received by
of the deductions made by respondent
petitioner should then be treated as
from petitioners total retirement
her separation pay.[22] Though not
benefits for taxation purposes, as the
legally obliged to give the other
issue was beyond the jurisdiction of
benefits, i.e., educational assistance,
the NLRC.[16] On the matter of
respondent volunteered to grant them,
educational assistance, the Labor
for humanitarian consideration. The
Arbiter found that the same may be
NLRC therefore ordered the payment
granted only upon the submission of a
of the other benefits promised by the
certificate of enrollment.[17] Lastly, as
respondent.[23] Lastly, it sustained
to petitioners claim for damages and
the denial of petitioners claim for
attorneys fees, the Labor Arbiter
damages for the latters failure to
denied the same as the formers
substantiate the same.[24]
dismissal was not tainted with bad
faith.[18] Unsatisfied, petitioner elevated the
matter to the Court of Appeals which
On appeal to the National Labor
affirmed the NLRC decision.[25]
Relations Commission (NLRC), the
tribunal set aside the Labor Arbiters Hence, the instant petition.
decision, ruling that:
At the outset, the Court notes that the propriety of deducting
initially, petitioner raised the issue of P362,386.87 from her total benefits,
whether she was entitled to separation for taxation purposes. Nevertheless, in
pay, retirement benefits, and order to resolve the legality of the
damages. In support of her claim for deduction, it is imperative that we
separation pay, she cited Article 284 settle, once and for all, the ground
of the Labor Code, as amended. relied upon by respondent in
However, in coming to this Court via a terminating the services of the
petition for review on certiorari, she petitioner, as well as the nature of the
abandoned her original position and benefits given to her after such
alleged that she was, in fact, not termination. Only then can we decide
dismissed from employment based on whether the amount deducted by the
the above provision. She argued that respondent should be paid to the
her situation could not be petitioner.
characterized as a disease; rather, she
Respondent dismissed the petitioner
became disabled. In short, in her
from her employment based on Article
petition before us, she now changes
284 of the Labor Code, as amended,
her theory by saying that she is not
which reads:
entitled to separation pay but to
retirement pay pursuant to Section 4, Art. 284. DISEASE AS GROUND FOR
[26] Article V of the Retirement Plan, TERMINATION
on disability retirement. She, thus,
prayed for the full payment of her An employer may terminate the
retirement benefits by giving back to services of an employee who has been
her the amount deducted for taxation found to be suffering from any disease
purposes. and whose continued employment is
prohibited by law or is prejudicial to
In our Resolution[27] dated November his health as well as to the health of
23, 2005 requiring the parties to his co-employees: Provided, That he is
submit their respective memoranda, paid separation pay equivalent to at
we specifically stated: least one (1) month salary or to one-
half (1/2) month salary for every year
No new issues may be raised by a
of service, whichever is greater, a
party in the Memorandum and the
fraction of at least six (6) months
issues raised in the pleadings but not
being considered as one (1) whole
included in the Memorandum shall be
year.
deemed waived or abandoned.
As she was dismissed on the
Being summations of the parties
abovementioned ground, the law gives
previous pleadings, the Court may
the petitioner the right to demand
consider the Memoranda alone in
separation pay. However, respondent
deciding or resolving this petition
established a retirement plan in favor
Pursuant to the above resolution, any of all its employees which specifically
argument raised in her petition, but provides for disability retirement, to
not raised in her Memorandum,[28] is wit:
deemed abandoned.[29] Hence, the
Sec. 4. DISABILITY RETIREMENT
only issue proper for determination is
In the event that a Member is retired and/or in the Collective Bargaining
by the Company due to permanent Agreement (CBA).[35]
total incapacity or disability, as
In the instant case, the Retirement
determined by a competent physician
Plan bars the petitioner from claiming
appointed by the Company, his
additional benefits on top of that
disability retirement benefit shall be
provided for in the Plan. Section 2,
the Full Members Account Balance
Article XII of the Retirement Plan
determined as of the last valuation
provides:
date. x x x.[30]
Section 2. NO DUPLICATION OF
On the basis of the above-mentioned
BENEFITS
retirement plan, respondent offered
the petitioner a retirement package No other benefits other than those
which consists of retirement plan provided under this Plan shall be
benefits, insurance pension, and payable from the Fund. Further, in the
educational assistance.[31] The event the Member receives benefits
amount of P1,063,841.76 represented under the Plan, he shall be precluded
the disability retirement benefit from receiving any other benefits
provided for in the plan; while the under the Labor Code or under any
insurance pension was to be paid by present or future legislation under any
their insurer; and the educational other contract or Collective Bargaining
assistance was voluntarily undertaken Agreement with the Company.[36]
by the respondent as a gesture of
compassion to the petitioner.[32]

We have declared in Aquino v. National There being such a provision, as held

Labor Relations Commission[33] that in Cruz v. Philippine Global
the receipt of retirement benefits does Communications, Inc.,[37] petitioner is
not bar the retiree from receiving entitled only to either the separation
separation pay. Separation pay is a pay under the law or retirement
statutory right designed to provide the benefits under the Plan, and not both.
employee with the wherewithal during
the period that he/she is looking for
another employment. On the other Clearly, the benefits received by
hand, retirement benefits are intended petitioner from the respondent
to help the employee enjoy the represent her retirement benefits
remaining years of his life, lessening under the Plan. The question that now
the burden of worrying about his confronts us is whether these benefits
financial support, and are a form of are taxable. If so, respondent correctly
reward for his loyalty and service to made the deduction for tax purposes.
the employer.[34] Hence, they are not Otherwise, the deduction was illegal
mutually exclusive. However, this is and respondent is still liable for the
only true if there is no specific completion of petitioners retirement
prohibition against the payment of benefits.
both benefits in the retirement plan
Respondent argues that the legality of jurisdiction[41] of the Labor Arbiter
the deduction from petitioners total and the NLRC.
benefits cannot be taken cognizance
of by this Court since the issue was
not raised during the early stage of This is not the first time that the labor
the proceedings.[38] tribunal is faced with the issue of
illegal deduction. In Intercontinental
Broadcasting Corporation (IBC) v.
We do not agree. Amarilla,[42] IBC withheld the salary
differentials due its retired employees
to offset the tax due on their
Records reveal that as early as in retirement benefits. The retirees thus
petitioners position paper filed with lodged a complaint with the NLRC
the Labor Arbiter, she already raised questioning said withholding. They
the legality of said deduction, albeit averred that their retirement benefits
designated as unpaid balance of the were exempt from income tax; and IBC
retirement package. Petitioner had no authority to withhold their
specifically averred that P362,386.87 salary differentials. The Labor Arbiter
was not given to her by respondent as took cognizance of the case, and this
it was allegedly a part of the formers Court made a definitive ruling that
taxable income.[39] This is likewise retirement benefits are exempt from
evident in the Labor Arbiter and the income tax, provided that certain
NLRCs decisions although they ruled requirements are met.
that the issue was beyond the
tribunals jurisdiction. They even
suggested that petitioners claim for Nothing, therefore, prevents us from
illegal deduction could be addressed deciding this main issue of whether
by filing a tax refund with the Bureau the retirement benefits are taxable.
of Internal Revenue.[40]

We answer in the affirmative.

Contrary to the Labor Arbiter and
NLRCs conclusions, petitioners claim
for illegal deduction falls within the Section 32 (B) (6) (a) of the New
tribunals jurisdiction. It is noteworthy National Internal Revenue Code (NIRC)
that petitioner demanded the provides for the exclusion of
completion of her retirement benefits, retirement benefits from gross income,
including the amount withheld by thus:
respondent for taxation purposes. The
issue of deduction for tax purposes is
intertwined with the main issue of (6) Retirement Benefits, Pensions,
whether or not petitioners benefits Gratuities, etc.
have been fully given her. It is,
therefore, a money claim arising from
the employer-employee relationship,
a) Retirement benefits received under
which clearly falls within the
Republic Act 7641 and those received
by officials and employees of private its Resolution dated December 17,
firms, whether individual or corporate, 2004, in CA-G.R. SP No. 75706 are
in accordance with a reasonable AFFIRMED.
private benefit plan maintained by the
ALFREDO F. PRIMERO, petitioner,
employer: Provided, That the retiring
official or employee has been in the vs.
service of the same employer for at
least ten (10) years and is not less INTERMEDIATE APPELLATE COURT
than fifty (50) years of age at the time and DM TRANSIT, respondents.
of his retirement: Provided further,
That the benefits granted under this
subparagraph shall be availed of by an NARVASA, J.:
official or employee only once. x x x.
Thus, for the retirement benefits to be
The question on which the petitioner's
exempt from the withholding tax, the
success in the instant appeal depends,
taxpayer is burdened to prove the
and to which he would have us give an
concurrence of the following elements:
affirmative answer, is whether or not,
(1) a reasonable private benefit plan is
having recovered separation pay by
maintained by the employer; (2) the
judgment of the Labor Arbiter which
retiring official or employee has been
held that he had been fired by
in the service of the same employer
respondent DM Transit Corporation
for at least ten (10) years; (3) the
without just cause he may
retiring official or employee is not less
subsequently recover moral damages
than fifty (50) years of age at the time
by action in a regular court, upon the
of his retirement; and (4) the benefit
theory that the manner of his
had been availed of only once.[43]
dismissal from employment was
tortious and therefore his cause of
action was intrinsically civil in nature.
As discussed above, petitioner was
qualified for disability retirement. At
the time of such retirement, petitioner
Petitioner Primero was discharged
was only 41 years of age; and had
from his employment as bus driver of
been in the service for more or less
DM Transit Corporation (hereafter,
eight (8) years. As such, the above
simply DM) in August, 1974 after
provision is not applicable for failure to
having been employed therein for over
comply with the age and length of
6 years. The circumstances attendant
service requirements. Therefore,
upon that dismissal are recounted by
respondent cannot be faulted for
the Court of Appeals 1 as follows:
deducting from petitioners total
retirement benefits the amount of
P362,386.87, for taxation purposes.
Undisputably, since August 1, 1974,
appellee's bus dispatcher did not
assign any bus to be driven by
WHEREFORE, the petition is DENIED
appellant Primero. No reason or cause
for lack of merit. The Court of Appeals
was given by the dispatcher to
Decision dated August 12, 2004 and
appellant for not assigning a bus to reinstatement and also asked P300.00
the latter for 23 days (pp. 6-14, 21-22, as financial assistance, but the latter
tsn, May 15, 1979). told the former that he (Munoz, Jr.) will
not give him even one centavo and
that should appellant sue him in court,
Also, for 23 days, appellant was given then that will be the time President
a run-around from one management Munoz, Jr. will pay him, if Munoz, Jr.
official to another, pleading that he be loses the case x x (pp. 21-22, tsn, May
allowed to work as his family was in 15, 1979).
dire need of money and at the same
time inquiring (why) he was not
allowed to work or drive a bus of the Appellant also advised (the) President
company. Poor appellant did not only of the oppressive, anti-social and
get negative results but was given inhumane acts of subordinate
cold treatment, oftentimes evaded and officers ... (but) Munoz, Jr. did nothing
given confusing information, or to resolve appellant's predicament and
ridiculed, humiliated, or sometimes ... just told the latter to go back ...
made to wait in the offices of some to ... Briones, who insisted that
management personnel of the appellant seek employment with other
appellee (pp. 2-29, tsn, May 15, 1979). bus firms in Metro Manila ... (but)
admitted that the appellant has not
violated any company rule or
(The) General Manager and (the) Vice- regulation ... (pp. 23-26, tsn, May 15,
President and Treasurer ... wilfully and 1979).
maliciously made said appellant ...
seesaw or ... go back and forth
between them for not less than ten ... In pursuance (of) defendant's
(10) times within a period of 23 determination to oppress plaintiff and
days ... but (he) got negative results cause further loss, irreparable injury,
from both corporate officials. Worse, prejudice and damage, (D.M. Transit)
on the 23rd day of his ordeal appellant in bad faith and with malice persuaded
was suddenly told by General Manager other firms (California Transit, Pascual
Briones to seek employment with Lines, De Dios Transit, Negrita
other bus companies because he was Corporation, and MD Transit) not to
already dismissed from his job with employ (appellant) in any capacity
appellee (without having been) told of after he was already unjustly
the cause of his hasty and capricious dismissed by said defendant ...
dismissal ... (pp. 8, 11-13, 25, tsn, May (paragraph 8 of plaintiff's complaint).
15, 1979).

These companies with whom appellant

Impelled to face the harsh necessities applied for a job called up the D.M.
of life as a jobless person and worried Transit Office (which) ... told them ...
by his immediate need for money, that they should not accept (appellant)
appellant pleaded with Corporate because (he) was dismissed from that
President Demetrio Munoz, Jr. for his Office.
 2) all other cases or matters
arising from employer-employee
Primero instituted proceedings against
relations, unless otherwise expressly
DM with the Labor Arbiters of the
excluded. 5
Department of Labor, for illegal
dismissal, and for recovery of back
wages and reinstatement. It is not
And we have since held that under
clear from the record whether these
these "broad and comprehensive"
proceedings consisted of one or two
terms of the law, Labor Arbiters
actions separately filed. What is
possessed original jurisdiction over
certain is that he withdrew his claims
claims for moral and other forms of
for back wages and reinstatement,
damages in labor disputes. 6
"with the end in view of filing a
damage suit" "in a civil court which
has exclusive jurisdiction over his
complaint for damages on causes of The jurisdiction of Labor Arbiters over
action founded on tortious acts, such claims was however removed by
breach of employment contract ... and PD 1367, effective May 1, 1978, which
consequent effects (thereof ). 2 explicitly provided that "Regional
Directors shall not indorse and Labor
Arbiters shall not entertain claims for
moral or other forms of damages." 7
In any case, after due investigation,
the Labor Arbiter rendered judgment
dated January 24, 1977 ordering DM to
pay complainant Primero P2,000.00 as Some three months afterwards,
separation pay in accordance with the Primero brought suit against DM in the
Termination Pay Law. 3 The judgment Court of First Instance of Rizal seeking
was affirmed by the National Labor recovery of damages caused not only
Relations Commission and later by the by the breach of his employment
Secretary of Labor, the case having contract, but also by the oppressive
been concluded at this level on March and inhuman, and consequently
3, 1978. 4 tortious, acts of his employer and its
officers antecedent and subsequent to
his dismissal from employment
without just cause. 8
Under the provisions of the Labor Code
in force at that time, Labor Arbiters
had jurisdiction inter alia over
While this action was pending in the
CFI, the law governing the Labor
Arbiters' jurisdiction was once again
1) claims involving non-payment
revised. The amending act was PD
or underpayment of wages, overtime
1691, effective May 1, 1980. It
compensation, social security and
eliminated the restrictive clause
medicare benefits, and
placed by PD 1367, that Regional
Directors shall not indorse and Labor
Arbiters entertain claims for moral or
other forms of damages. And, as we
have had occasion to declare in by a vote of 3 to 2. The dissenters,
several cases, it restored the principle placing reliance on certain of our
that "exclusive and original jurisdiction pronouncements, opined that
for damages would once again be Primero's causes of action were
vested in labor arbiters;" eliminated cognizable by the courts, that
"the rather thorny question as to existence of employment relations was
where in labor matters the dividing not alone decisive of the issue of
line is to be drawn between the power jurisdiction, and that such relations
lodged in an administrative body and may indeed give rise to "civil" as
a court;' " and, "in the interest of distinguished from purely labor
greater promptness in the disposition disputes, as where an employer's right
of labor matters, ... spared (courts of) to dismiss his employee is exercised
the often onerous task of determining tortiously, in a manner oppressive to
what essentially is a factual matter, labor, contrary to morals, good
namely, the damages that may be customs or public policy. 11
incurred by either labor or
management as a result of disputes or
controversies arising from employer- Primero has appealed to us from this
employee relations." 9 Parenthetically, judgment of the IAC praying that we
there was still another amendment of overturn the majority view and sustain
the provision in question which, the dissent.
however, has no application to the
case at bar. The amendment was
embodied in B.P. Blg. 227, effective Going by the literal terms of the law, it
June 1, 1982. 10 would seem clear that at the time that
Primero filed his complaints for illegal
dismissal and recovery of backwages,
On August 11, 1980 the Trial Court etc. with the Labor Arbiter, the latter
rendered judgment dismissing the possessed original and exclusive
complaint on the ground of lack of jurisdiction also over claims for moral
jurisdiction, for the reason that at the and other forms of damages; this, in
time that the complaint was filed. on virtue of Article 265 12 of PD 442,
August 17, 1978, the law the Labor otherwise known as the Labor Code,
Code as amended by PD 1367, eff. effective from May 1, 1974. In other
May 1, 1978 conferred exclusive, words, in the proceedings before the
original jurisdiction over claims for Labor Arbiter, Primero plainly had the
moral or other damages, not on right to plead and prosecute a claim
ordinary courts, but on Labor Arbiters. not only for the reliefs specified by the
Labor Code itself for unlawful
termination of employment, but also
This judgment was affirmed by the for moral or other damages under the
Intermediate Appellate Court, by Civil Code arising from or connected
Decision rendered on June 29, 1984. with that termination of employment.
This is the judgment now subject of And this was the state of the law when
the present petition for review on he moved for the dismissal of his
certiorari. The decision was reached claims before the Labor Arbiter, for
reinstatement and recovery of back to receive separation pay. These are
wages, so that he might later file a reliefs explicitly prescribed by the
damage suit "in a civil court which has Labor Code. 16 But any award of
exclusive jurisdiction over his moral damages by the Labor Arbiter
complaint ... founded on tortious acts, obviously cannot be based on the
breach of employment contract ... and Labor Code but should be grounded on
consequent effects (thereof)." 13 the Civil Code. Such an award cannot
be justified solely upon the premise
(otherwise sufficient for redress under
The legislative intent appears clear to the Labor Code) that the employer
allow recovery in proceedings before fired his employee without just cause
Labor Arbiters of moral and other or due process. Additional facts must
forms of damages, in all cases or be pleaded and proven to warrant the
matters arising from employer- grant of moral damages under the
employee relations. This would no Civil Code, these being, to repeat, that
doubt include, particularly, instances the act of dismissal was attended by
where an employee has been bad faith or fraud, or was oppressive
unlawfully dismissed. In such a case to labor, or done in a manner contrary
the Labor Arbiter has jurisdiction to to morals, good customs, or public
award to the dismissed employee not policy; and, of course, that social
only the reliefs specifically provided by humiliation, wounded feelings, grave
labor laws, but also moral and other anxiety, etc., resulted therefrom. 17
forms of damages governed by the
Civil Code. Moral damages would be
recoverable, for example, where the It is clear that the question of the
dismissal of the employee was not legality of the act of dismissal is
only effected without authorized cause intimately related to the issue of the
and/or due process for which relief is legality of the manner by which that
granted by the Labor Code but was act of dismissal was performed. But
attended by bad faith or fraud, or while the Labor Code treats of the
constituted an act oppressive to labor, nature of, and the remedy available as
or was done in a manner contrary to regards the first the employee's
morals, good customs or public policy separation from employment it does
14 for which the obtainable relief is not at all deal with the second the
determined by the Civil Code 15 (not manner of that separation which is
the Labor Code). Stated otherwise, if governed exclusively by the Civil
the evidence adduced by the Code. In addressing the first issue, the
employee before the Labor Arbiter Labor Arbiter applies the Labor Code;
should establish that the employer did in addressing the second, the Civil
indeed terminate the employee's Code. And this appears to be the plain
services without just cause or without and patent intendment of the law. For
according him due process, the Labor apart from the reliefs expressly set out
Arbiter's judgment shall be for the in the Labor Code flowing from illegal
employer to reinstate the employee dismissal from employment, no other
and pay him his back wages or, damages may be awarded to an
exceptionally, for the employee simply illegally dismissed employee other
than those specified by the Civil Code. it is such duplicity which the Rules of
Hence, the fact that the issue-of Court regard as ground for abatement
whether or not moral or other or dismissal of actions, constituting
damages were suffered by an either litis pendentia (auter action
employee and in the affirmative, the pendant) or res adjudicata, as the case
amount that should properly be may be. 18 But this was precisely
awarded to him in the circumstances- what Primero's counsel did. He split
is determined under the provisions of Primero's cause of action; and he
the Civil Code and not the Labor Code, made one of the split parts the subject
obviously was not meant to create a of a cause of action before a court of
cause of action independent of that for justice. Consequently, the judgment of
illegal dismissal and thus place the the Labor Arbiter granting Primero
matter beyond the Labor Arbiter's separation pay operated as a bar to
jurisdiction. his subsequent action for the recovery
of damages before the Court of First
Thus, an employee who has been
Instance under the doctrine of res
illegally dismissed (i.e., discharged
judicata, The rule is that the prior
without just cause or being accorded
"judgment or order is, with respect to
due process), in such a manner as to
the matter directly adjudged or as to
cause him to suffer moral damages (as
any other matter that could have been
determined by the Civil Code), has a
raised in relation thereto, conclusive
cause of action for reinstatement and
between the parties and their
recovery of back wages and damages.
successors in interest by title
When he institutes proceedings before
subsequent to the commencement of
the Labor Arbiter, he should make a
the action or special proceeding,
claim for all said reliefs. He cannot, to
litigating for the same thing and under
be sure, be permitted to prosecute his
the same title and in the same
claims piecemeal. He cannot institute
capacity. 19
proceedings separately and
contemporaneously in a court of We are not unmindful of our previous
justice upon the same cause of action rulings on the matter cited in the
or a part thereof. He cannot and dissent to the decision of the Court of
should not be allowed to sue in two Appeals subject of the instant petition,
forums: one, before the Labor Arbiter 20 notably, Quisaba v. Sta Ines-Melale
for reinstatement and recovery of back Veneer & Plywood Inc., where a
wages, or for separation pay, upon the distinction was drawn between the
theory that his dismissal was illegal; right of the employer to dismiss an
and two, before a court of justice for employee, which was declared to be
recovery of moral and other damages, within the competence of labor
upon the theory that the manner of his agencies to pass upon, and the
dismissal was unduly injurious, or "manner in which the right was
tortious. This is what in procedural law exercised and the effects flowing
is known as splitting causes of action, therefrom," declared to be a matter
engendering multiplicity of actions. It cognizable only by the regular courts
is against such mischiefs that the because "intrinsically civil." 21 We
Labor Code amendments just opine that it is this very distinction
discussed are evidently directed, and which the law has sought to eradicate
as being so tenuous and so difficult to employee relations fall within the
observe, 22 and, of course, as herein original and exclusive jurisdiction of
pointed out, as giving rise to split the National Labor Relations
jurisdiction, or to multiplicity of Commission, not the regular courts.
actions, "a situation obnoxious to the Hence, in the present case, the trial
orderly administration of justice. 23 court should not have entertained the
Actually we merely reiterate in this Complaint filed by respondent for
decision the doctrine already laid damages arising from the alleged
down in other cases (Garcia v. oppressive manner of his dismissal by
Martinez, 84 SCRA 577; Ebon v. de petitioners.
Guzman, 13 SCRA 52; Bengzon v.
The Case
Inciong, 91 SCRA 248; Pepsi-Cola
Bottling Co. v. Martinez, 112 SCRA Before the Court is a Petition for
578; Aguda v. Vallejos, 113 SCRA 69; Review[1] under Rule 45 of the Rules
Getz v. C.A., 116 SCRA 86; Cardinal of Court, seeking to reverse and set
Industries v. Vallejos, 114 SCRA 471; aside the March 31, 2003 Decision[2]
Sagmit v. Sibulo, 133 SCRA 359) to the of the Court of Appeals (CA) in CA-GR
effect that the grant of jurisdiction to SP No. 74278 and its August 5, 2003
the Labor Arbiter by Article 217 of the Resolution[3] denying petitioners
Labor Code is sufficiently Motion for Reconsideration. The
comprehensive to include claims for assailed CA Decision disposed as
moral and exemplary damages sought follows:
to be recovered from an employer by
an employee upon the theory of his
illegal dismissal. Rulings to the WHEREFORE, for lack of merit, the
contrary are deemed abandoned or petition is DISMISSED.[4]
modified accordingly.
The Facts
The antecedents were summarized by
WHEREFORE, the petition is the CA as follows:
DISMISSED, without pronouncement as
to costs. Petitioners are members of the Board
of Directors of Philippine Postal
NICASIO P. RODRIGUEZ JR., Savings Bank, Inc. (PPSBI) at Liwasang
ANTONIO P. EREETA, JUANITO A. Bonifacio, Manila; private respondent
MAGNO, VICTOR C. PINEDA, Antonio L. Aguilar was employed as
BITUIN V. SALCEDO, CESAR R. SAN Vice President of its Finance and
DIEGO, VICTOR V. TANTOCO and Administrative Group from February
AMADOR C. DE LA MERCED, 14, 2000 to January 31, 2001, and
petitioners, vs. ANTONIO L. thereafter as Compliance Officer until
AGUILAR SR., respondent. September 26, 2001 when his services
DECISION were terminated.

PANGANIBAN, J.: On October 25, 2001, private

respondent filed a complaint against
Claims for moral and exemplary petitioners with the Regional Trial
damages arising from employer- Court, Branch 49, City of Manila
alleging that he was illegally dismissed dismissal (constructive and actual)
by the petitioners in an oppressive was done in a very oppressive manner.
way; that the cause of his dismissal His prayer for reinstatement was
was his principled act of exposing deleted.
anomalies in the bank; that
In an Order dated January 4, 2002,
considering the seriousness of the
public respondent Judge admitted the
violations of internal control and bank
Amended Complaint reasoning that
policies, there is a need to prohibit
amendment was a matter of right
petitioners from performing their
before defendants filed a responsive
functions as members of the Board in
pleading, the motion to dismiss not
their own personal capacity. He prayed
being a responsive pleading.
for the award of damages, the
Petitioners were ordered to file their
issuance of a temporary restraining
Answer within fifteen (15) days from
order enjoining the petitioners from
receipt thereof.
dismissing him or in the alternative, to
immediately reinstate him, and the On January 30, 2002, without filing a
prohibition of the petitioners from Motion for Reconsideration of the
performing their personal and official above Order, petitioners again filed a
acts in the bank. Motion to Dismiss, this time of the
Amended Complaint, on the ground of
On October 29, 2001, public
lack of jurisdiction over the persons of
respondent Judge motu proprio
the petitioners and over the subject
dismissed the complaint for lack of
matter of the claim.
jurisdiction stating that jurisdiction
over the case lies with the Labor In an Order dated February 8, 2002,
Arbiter of the National Labor Relations public respondent Judge ruled that
Commission. petitioners filing of the above Motion
to Dismiss was tantamount to a
Unaware of the dismissal[,]
voluntary appearance through a
petitioners, on November 9, 2001,
pleading that vested the court with
filed a Motion to Dismiss private
jurisdiction over their persons.
respondents complaint on the ground
Petitioners were given an additional
of the RTCs lack of jurisdiction over the
ten (10) days within which to submit
subject matter of the complaint.
an Answer, otherwise, said defendants
(herein petitioners), may be declared
in default.
On November 12, 2001, private
respondent filed a Motion for Petitioners then filed a Motion for
Reconsideration of the Order dated 29 Reconsideration dated February 15,
October 2001. However, on November 2002, reiterating their prayer for the
26, 2001, he filed an Ex-Parte Motion dismissal of the Amended Complaint.
to Withdraw Motion For This was denied in the Order dated
Reconsideration of the Dismissal Order March 1, 2002.
and In Lieu Thereof to Submit
Amended Complaint, which was
attached thereto. In his Amended On April 4, 2002, respondent filed a
Complaint, he emphasized that his Motion to Declare Defendants As in
Default and For Judgment On the within this Courts jurisdiction to
Pleadings grounded on petitioners inquire into.
failure to file their Answer within the
From the foregoing, confluence of
additional ten (10)-day period granted
events, which stand unrebutted the
by the court. Citing Ortigas & Co. Ltd.
defendants having been declared in
v. Velasco (254 SCRA 234), public
default, there can be no question that
respondent noted that defendants
Mr. Aguilars demotion and dismissal
were heedless and unyielding to the
from service was pursued in a highly
Orders of the Court particularly its
abusive, oppressive and clearly anti-
directive to file an Answer to the
social manner.
Amended Complaint and that the
defendants continually ignored and On August 7, 2002, petitioners filed an
refused to submit to the Orders of the Omnibus Motion contending that the
Court, and inasmuch as no responsive Order of Default did not deprive them
pleading has been filed by them within of their right to notice, which public
the period fixed by the Court in its respondent violated when private
Order dated June 7, 2002 which respondents evidence was received
granted respondents motion and without notifying them; that the
declared defendants-petitioners in presentation of evidence ex parte was
default. premature considering that they were
still entitled to question the propriety
On the 15th day from receipt thereof
of the Order of Default and that, in
on June 19, 2002, petitioners filed on
fact, they filed a motion for
July 1, 2002 an ordinary Motion for
reconsideration of the Order of default.
Reconsideration on the above Order,
Petitioners reiterated that the
(not a Motion to Set Aside the Order of
Amended Complaint was filed out of
Default under Rule 9 Sec. 3(b), Rules
time considering that the Order of
of Civil Procedure) which was denied in
Dismissal dated 29 October 2001 had
an Order dated July 19, 2002.
already became final. On August 16,
On the same date of July 19, 2002, 2002, the public respondent issued the
public respondent issued the assailed assailed Order denying the Omnibus
decision (Judgment by Default) in Motion.[5]
favor of the private respondent
Petitioners filed before the CA a
ratiocinating as follows:
Petition for Certiorari under Rule 65,
The Court shall not delve into the challenging the July 19, 2002 Decision
legality of Mr. Aguilars demotion and, and the August 16, 2002 Order of the
later on, dismissal by the PPSB Board Regional Trial Court (RTC), alleging
of Directors for to do so would intrude that it had gravely abused its
into the jurisdiction of the Labor discretion in the following ways:
Arbiters of the National Labor
1. Holding that Mr. Aguilars ex parte
Relations Commission. Rather, this
withdrawal of his Motion for
Court shall concern itself with the
Reconsideration of the Order of
manner in which the said demotion
Dismissal did not cause it to become
and dismissal were carried out and the
final and executory.
consequent effects thereof, which, as
jurisprudence teaches us, are well
2. Taking cognizance of the Amended The CA likewise ruled that the RTC had
Complaint because [private jurisdiction over the case, because of
respondent] had deleted his prayers the civil nature of the cause of action;
for the other reliefs that fall within the that is, the alleged oppressive manner
jurisdiction of the labor court. of respondents dismissal that had
resulted in damages.
3. Declaring [petitioners] in default
and in allowing the presentation of Lastly, the CA found no grave abuse of
and receiving [private respondents] discretion on the part of the RTC in
evidence ex parte in violation of the declaring petitioners in default, then
Rules.[6] afterwards receiving ex parte the
evidence presented by respondent,
and rendering a judgment of default.
Petitioners prayed that the lower The appellate court stressed that as
courts judgment by default, as well as early as the January 4, 2002 Order, the
said courts all other orders and RTC had directed petitioners to answer
findings after its Order of dismissal of the Amended Complaint. The trial
the original Complaint[,] be reversed court reiterated the directive in the
and set aside, and that the case in February 8, 2002 Order, with a
question be dismissed for lack of warning that if they failed to answer
jurisdiction and for having been within ten days, they would be
decided in violation of the Rules.[7] declared in default.

Ruling of the Court of Appeals The two Orders, which petitioners had
not challenged either by a motion for
Agreeing with the RTC, the CA held reconsideration or by a petition for
that the withdrawal of the Motion for certiorari, thus attained finality.
Reconsideration filed by respondent According to the CA, their prayer for
had not resulted in the finality of the the dismissal of the Amended
Dismissal Order dated October 29, Complaint was reiterated in both their
2001, since he had simultaneously Omnibus Motion filed after the denial
amended his Complaint. This he had on January 30, 2002, of their Motion to
every right to do, said the CA, because Dismiss the Amended Complaint, as
no responsive pleading had yet been well as in their subsequent Motions for
filed by petitioners. It opined that the Reconsideration. These amounted to
Amended Complaint superseded his multiple motions for reconsideration,
original Complaint and mooted the which are proscribed under Section 5
issue raised in his Motion for of Rule 37 of the Rules of Civil
Reconsideration. It further said that Procedure.
the rules on the amendment of
pleadings may be liberally construed As to the ex parte reception of
to avoid a multiplicity of suits; and to respondents evidence, the CA pointed
ensure that the real controversies out that under Section 3 of Rule 9, the
between the parties would be court may proceed to render judgment
presented, their rights determined, based entirely on the plaintiffs
and the case decided on the merits Complaint without need of receiving
without unnecessary delay. evidence. If so, the appellate court
said, it would be reasonable to
conclude that petitioners did not have despite pertinent rules and
any demandable right to be given jurisprudence to the contrary.[9]
notice of the ex parte reception of
In brief, the issues are as follows: (1)
respondents evidence.
What are the effects of the withdrawal
Hence, this Petition.[8] of the Motion for Reconsideration of
the RTCs dismissal of the Complaint?
Issues
(2) Did the RTC have jurisdiction over
Petitioners raise the following issues the Amended Complaint?
for our consideration:
The Courts Ruling
I.
The Petition is meritorious.
The Honorable Court of Appeals erred
First Issue:
in sustaining the finding of the trial
court that Mr. Aguilars ex parte Withdrawal of the Motion for
withdrawal of his Motion for Reconsideration
Reconsideration of the Order of
It is settled that an amendment of a
dismissal of the original Complaint did
complaint may be allowed even if an
not cause said Order to become final
order for its dismissal has been issued,
and executory.
as long as the motion to amend is filed
II. before the dismissal order becomes
final.[10] The reason for allowing the
amendment on this condition is that,
The Honorable Court of Appeals erred upon finality of the dismissal, the court
in sustaining the trial court that it loses jurisdiction and control over the
could allow the amendment of the complaint. Thus, it can no longer make
original Complaint purely as a matter any disposition on the complaint in a
of right before a responsive pleading is manner inconsistent with the
filed, despite prevailing jurisprudence dismissal.[11] After the order of
to the contrary. dismissal without prejudice becomes
final, and therefore falls outside the
III. courts power to modify, a party who
The Honorable Court of Appeals erred wishes to reinstate the case has no
in sustaining that the trial court could remedy other than to file a new
take cognizance of Mr. Aguilars complaint.[12]
Amended Complaint because it had
deleted the prayers for other reliefs
that fall within the jurisdiction of the The instant case deals with a Motion
National Labor Relations Commission. for Reconsideration[13] of the trial
courts Order dismissing the case for
IV. lack of jurisdiction. The Motion was
The Honorable Court of Appeals erred filed on November 13, 2001, within the
in sustaining the trial court that it 15-day reglementary period for
could receive Mr. Aguilars evidence ex appeal,[14] and later withdrawn and
parte without notice to petitioners substituted with a Motion to Admit
Amended Complaint. Petitioners
contention is that the withdrawal of executory. By then, there was no more
the Motion for Reconsideration would complaint that could be amended,
have a retroactive effect, such that it even for the first time as a matter of
would be as if no motion had been right.
filed at all; and, hence, the Motion for
Notably, respondent does not refute
Admission of the Amended Complaint
petitioners argument that his Motion
-- filed beyond the 15-day
for Admission of his Amended
reglementary period, after the
Complaint was filed after the lapse of
dismissal had become final -- should
the 15-day reglementary period to
no longer be entertained, much less
reconsider or set aside the dismissal.
admitted.
What he insists upon is his contention
The trial court accepted the Amended that the Order of dismissal did not
Complaint and held that the dismissal become final and executory, because
Order had not attained finality, the Motion for Reconsideration had not
because the 15-day reglementary yet been resolved at the time he filed
period under the Rules had tolled upon his Amended Complaint.
the filing of the Motion for
By way of analogy, petitioners cite
Reconsideration; and would begin to
Olympia International v. Court of
run again only after the party
Appeals,[17] in which the plaintiffs two
concerned would have received the
civil actions were dismissed by the
courts Resolution on the Motion.[15]
trial court on a joint Motion to Dismiss
As it had not yet ruled on the Motion
filed by the plaintiff and the
for Reconsideration when respondent
defendant:
filed his Amended Complaint, the trial
court opined that the Amended It is equally important to note that the
Complaint may be deemed to have right to file a new action in this case
been filed within the prescribed time. has long prescribed, for while the
commencement of a civil action stops
We rule otherwise. The trial court
the running of the statute of
erroneously admitted the Amended
prescription or limitations, its dismissal
Complaint. Upon the withdrawal by
or voluntary abandonment by the
respondent of his Motion for
plaintiff leaves the parties in exactly
Reconsideration, it was as if no motion
the same position as though no action
had been filed. Hence, the Order of the
had been commenced at all. The
trial court under question became final
commencement of an action, by
and executory 15 days from notice by
reason of its dismissal or
the party concerned.
abandonment, takes no time out of the
period of prescription.[18]
In the same manner that the
withdrawal of an appeal has the effect
In like manner, while the filing of the
of rendering the appealed decision[16]
Motion for Reconsideration interrupted
final and executory, the withdrawal of
the running of the 15-day
the Motion for Reconsideration in the
reglementary period, its withdrawal
present case had the effect of
left respondent in exactly the same
rendering the dismissal Order final and
position as though no motion had
been filed at all. The withdrawal of the Later, however, it reversed its
Motion for Reconsideration effectively dismissal Order after he subsequently
erased the tolling of the reglementary amended his Complaint by deleting his
period to amend the Complaint. prayer for reinstatement and by
stressing that his claim for damages
had resulted from the alleged
Second Issue: oppressive manner of his dismissal.

Jurisdiction
Under Article 217(a) of the Labor The trial court should have dismissed
Code, as amended by Republic Act No. the Amended Complaint. With regard
6715 which took effect on March 21, to claims for damages under
1989, labor arbiters shall have original paragraph 4 of Article 217, quoted
and exclusive jurisdiction to hear and above, jurisprudence has applied the
decide: [c]laims for actual, moral, reasonable connection rule: if there is
exemplary and other forms of a reasonable causal connection
damages arising from the employer- between the claim asserted and the
employee relations x x x. employer-employee relations, then the
case falls within the jurisdiction of the
Clearly, in the case before us, labor arbiter.[20] We do not agree with
respondents claim for damages the trial court that the case became a
against petitioners arose from a prior civil dispute simply because
employer-employee relationship. The respondent had not asked for
averments in the Complaint reinstatement in his Amended
indisputably show that his claim for Complaint. An employee need not
damages was anchored on and was a seek reinstatement in order to have a
consequence of the termination of his complaint heard by the labor arbiter.
employment with PPSBI. [21]

Indeed, the trial court initially made A comparison of the original[22] and
this observation when it dismissed the Amended Complaint[23] reveals
motu proprio respondents Complaint. that the allegations and the prayers in
[19] It ruled that the manner in which both are almost identical, except that
the dismissal was implemented was the prayer for reinstatement and the
anti-social, oppressive and in disregard claim for salary increases and
of procedural due process x x x is but allowances are no longer included in
an incident part and parcel of the main the Amended Complaint. These are
issue which is the alleged illegal telltale signs that the claim of
dismissal of [respondent]. The trial respondent for damages is intertwined
court likewise opined that the plea of with his separation from his
respondent for reinstatement made employment, allegedly without a just
his case one of illegal dismissal per se. cause. Consequently, his claim has a
reasonable causal connection with his
employer-employee relations with the
bank.
 This Court expounded on this matter
in the earlier case Primero v.
The Court is aware that the Civil Code
Intermediate Appellate Court,[27]
provisions on human relations and
which we quote:
damages may be used as bases for
justifying his claim. But, the fact
remains: the present action primarily
It is clear that the question of the
involves an employer-employee
legality of the act of dismissal is
relationship. The damages he incurred
intimately related to the issue of the
are mere consequences of the alleged
legality of the manner by which that
injury brought about by his perceived
act of dismissal was performed. But
illegal dismissal. The civil ramifications
while the Labor Code treats of the
of his actual claim cannot alter the
nature of, and the remedy available as
reality that it is primordially a labor
regards the first the employees
matter cognizable by the labor
separation from employment it does
tribunals.
not at all deal with the second the
manner of that separation which is
governed exclusively by the Civil
Under Article 217 (a) of the Labor
Code. In addressing the first issue, the
Code, the labor arbiter has the
Labor Arbiter applies the Labor Code;
jurisdiction to award to a dismissed
in addressing the second, the Civil
employee not only the reliefs provided
Code. And this appears to be the plain
by the Labor Code, but also moral and
and patent intendment of the law. For
other forms of damages governed by
apart from the reliefs expressly set out
the Civil Code.[24] Although a
in the Labor Code flowing from illegal
dismissal from employment may be a
dismissal from employment, no other
violation not only of the Labor but also
damages may be awarded to an
of the Civil Code,[25] an illegally
illegally dismissed employee other
dismissed employee has only a single
than those specified by the Civil Code.
cause of action.
Hence, the fact that the issue of
whether or not moral or other
damages were suffered by an
Moral damages are recoverable when, employee and in the affirmative, the
for example, the dismissal was amount that should properly be
effected without an authorized cause awarded to him in the circumstances
and/or due process -- for which relief is is determined under the provisions of
granted by the Labor Code -- and also the Civil Code and not the Labor Code,
when the dismissal (1) was attended obviously was not meant to create a
by bad faith or fraud; (2) constituted cause of action independent of that for
an act oppressive to labor; or (3) was illegal dismissal and thus place the
done in a manner contrary to morals, matter beyond the Labor Arbiters
good customs or public policy. For any jurisdiction.
of these, the obtainable relief is
determined by the Civil Code.[26]
Hence, for a single cause of action, the
dismissed employee cannot be
allowed to sue in two forums: one, long, because on May 1, 1980, PD
before the labor arbiter for 1691[30] nullified PD 1367 and
reinstatement and recovery of back restored Article 217 of the Labor Code
wages or for separation pay, upon the almost to its original form. PD 1691
theory that the dismissal was illegal; once again vested in the labor arbiters
and two, before a court of justice for and the NLRC the jurisdiction over all
recovery of moral and other damages, money claims of workers and all other
upon the theory that the manner of claims arising from employer-
dismissal was unduly injurious or employee relations, including moral
tortious. Suing in the manner and exemplary damages.[31] In Ebon
described is known as splitting a cause v. De Guzman,[32] this Court
of action, a practice engendering a explained:
multiplicity of actions. It is considered
procedurally unsound and obnoxious
to the orderly administration of justice. The lawmaker in divesting the Labor
Arbiters and the NLRC of jurisdiction to
award moral and other forms of
Splitting a cause of action was damages in labor cases could have
precisely what private respondent did assumed that the Labor Arbiters
in filing the Amended Complaint. He position-paper procedure of
split his cause of action, then made ascertaining the facts in dispute might
one of the split parts the subject of his not be an adequate tool for arriving at
Amended Complaint before a court of a just and accurate assessment of
justice. damages, as distinguished from
backwages and separation pay, and
that the trial procedure in the Court of
Precisely, such duplicity prodded the First Instance [now Regional Trial
lawmakers to amend the Labor Code Court] would be a more effective
by restoring to the labor arbiters the means of determining such damages.
jurisdiction over claims for damages of xxx
this nature. From 1979 to 1980,
jurisdiction over employment-
predicated actions for damages Evidently, the lawmaking authority
vacillated from labor tribunals to had second thoughts about depriving
regular courts, and back to labor the Labor Arbiters and the NLRC of the
tribunals. jurisdiction to award damages in labor
cases because that set up would mean
duplicity of suits, splitting the cause of
On May 1, 1979, Presidential Decree action and possible conflicting findings
No. 1367 amended the then existing and conclusions by two tribunals on
Article 217[28] of the Labor Code to one and the same claim.
the effect that [r]egional Directors
shall not indorse and Labor Arbiters
shall not entertain claims for moral or Presently, as amended by RA 6715,
other forms of damages.[29] But this the jurisdiction of the NLRC under
limitation of jurisdiction did not last Article 217 of the Labor Code is
comprehensive enough to include On October 30, 1990, the Board of
claims for all forms of damages arising Trustees issued a memorandum
from the employer-employee relations. appointing petitioner as Medical
Director and Hospital Administrator of
private respondents Pamana Golden
WHEREFORE, the Petition is GRANTED, Care Medical Center in Calamba,
and the assailed Decision REVERSED Laguna.
and SET ASIDE. The Amended
Complaint in Civil Case No. 01102147,
filed with the Regional Trial Court Although the memorandum was silent
(Branch 49) of the City of Manila, is as to the amount of remuneration for
hereby DISMISSED. No pronouncement the position, petitioner claims that she
as to costs. received a monthly retainer fee of five
thousand pesos (P5,000.00) from
SO ORDERED.
private respondent, but the payment
PURIFICACION G. TABANG, thereof was allegedly stopped in
petitioner, vs. NATIONAL LABOR November, 1991.
RELATIONS COMMISSION and
PAMANA GOLDEN CARE MEDICAL
CENTER FOUNDATION, INC., As medical director and hospital
respondents. administrator, petitioner was tasked to
run the affairs of the aforesaid medical
DECISION
center and perform all acts of
REGALADO, J.: administration relative to its daily
operations.
This is a petition for certiorari which
seeks to annul the resolution of the
National Labor Relations Commission
On May 1, 1993, petitioner was
(NLRC), dated June 26, 1995, affirming
allegedly informed personally by Dr.
in toto the order of the labor arbiter,
Ernesto Naval that in a special
dated April 26, 1994, which dismissed
meeting held on April 30, 1993, the
petitioners complaint for illegal
Board of Trustees passed a resolution
dismissal with money claims for lack of
relieving her of her position as Medical
jurisdiction.
Director and Hospital Administrator,
and appointing the latter and Dr.
Benjamin Donasco as acting Medical
The records show that petitioner Director and acting Hospital
Purificacion Tabang was a founding Administrator, respectively. Petitioner
member, a member of the Board of averred that she thereafter received a
Trustees, and the corporate secretary copy of said board resolution.
of private respondent Pamana Golden
Care Medical Center Foundation, Inc.,
a non-stock corporation engaged in
On June 6, 1993, petitioner filed a
extending medical and surgical
complaint for illegal dismissal and non-
services.
payment of wages, allowances and
13th month pay before the labor case to public respondent NLRC for
arbiter. appellate review. [2]

Respondent corporation moved for the On appeal, respondent NLRC affirmed

dismissal of the complaint on the the dismissal of the case on the
ground of lack of jurisdiction over the additional ground that the position of a
subject matter. It argued that Medical Director and Hospital
petitioners position as Medical Director Administrator is akin to that of an
and Hospital Administrator was executive position in a corporate
interlinked with her position as ladder structure, hence, petitioners
member of the Board of Trustees, removal from the said position was an
hence, her dismissal is an intra- intra-corporate controversy within the
corporate controversy which falls original and exclusive jurisdiction of
within the exclusive jurisdiction of the the SEC. [3]
Securities and Exchange Commission
(SEC).
Aggrieved by the decision, petitioner
filed the instant petition which we find,
Petitioner opposed the motion to however, to be without merit.
dismiss, contending that her position
as Medical Director and Hospital
Administrator was separate and We agree with the findings of the NLRC
distinct from her position as member that it is the SEC which has jurisdiction
of the Board of Trustees. She claimed over the case at bar. The charges
that there is no intra-corporate against herein private respondent
controversy involved since she filed partake of the nature of an intra-
the complaint in her capacity as corporate controversy. Similarly, the
Medical Director and Hospital determination of the rights of
Administrator, or as an employee of petitioner and the concomitant liability
private respondent. of private respondent arising from her
ouster as a medical director and/or
hospital administrator, which are
On April 26, 1994, the labor arbiter corporate offices, is an intra-corporate
issued an order dismissing the controversy subject to the jurisdiction
complaint for lack of jurisdiction. He of the SEC.
ruled that the case falls within the
jurisdiction of the SEC, pursuant to
Section 5 of Presidential Decree No. Contrary to the contention of
902-A. [1] petitioner, a medical director and a
hospital administrator are considered
as corporate officers under the by-laws
Petitioners motion for reconsideration of respondent corporation. Section
was treated as an appeal by the labor 2(i), Article I thereof states that one of
arbiter who consequently ordered the the powers of the Board of Trustees is
elevation of the entire records of the (t)o appoint a Medical Director,
Comptroller/Administrator, Chiefs of appointment of directors, trustees,
Services and such other officers as it officers or managers of corporations,
may deem necessary and prescribe partnerships or associations, applies in
their powers and duties. [4] the present dispute. Accordingly,
jurisdiction over the same is vested in
the SEC, and not in the Labor Arbiter
The president, vice-president, or the NLRC.
secretary and treasurer are commonly
regarded as the principal or executive
officers of a corporation, and modern Moreover, the allegation of petitioner
corporation statutes usually designate that her being a member of the Board
them as the officers of the corporation. of Trustees was not one of the
[5] However, other offices are considerations for her appointment is
sometimes created by the charter or belied by the tenor of the
by-laws of a corporation, or the board memorandum itself. It states: We hope
of directors may be empowered under that you will uphold and promote the
the by-laws of a corporation to create mission of our foundation,[10] and this
additional offices as may be necessary. cannot be construed other than in
[6] reference to her position or capacity
as a corporate trustee.

It has been held that an office is

created by the charter of the A corporate officers dismissal is always
corporation and the officer is elected a corporate act, or an intra-corporate
by the directors or stockholders.[7] On controversy, and the nature is not
the other hand, an employee usually altered by the reason or wisdom with
occupies no office and generally is which the Board of Directors may have
employed not by action of the in taking such action.[11] Also, an
directors or stockholders but by the intra-corporate controversy is one
managing officer of the corporation which arises between a stockholder
who also determines the and the corporation. There is no
compensation to be paid to such distinction, qualification, nor any
employee.[8] exemption whatsoever. The provision
is broad and covers all kinds of
controversies between stockholders
In the case at bar, considering that and corporations. [12]
herein petitioner, unlike an ordinary
employee, was appointed by
respondent corporations Board of With regard to the amount of
Trustees in its memorandum of P5,000.00 formerly received by herein
October 30, 1990,[9] she is deemed petitioner every month, the same
an officer of the corporation. Perforce, cannot be considered as compensation
Section 5(c) of Presidential Decree No. for her services rendered as Medical
902-A, which provides that the SEC Director and Hospital Administrator.
exercises exclusive jurisdiction over The vouchers[13] submitted by
controversies in the election or petitioner show that the said amount
was paid to her by PAMANA, Inc., a Moreover, even assuming that the
stock corporation which is separate monthly payment of P5,000.00 was a
and distinct from herein private valid claim against respondent
respondent. Although the payments corporation, this would not operate to
were considered advances to Pamana effectively remove this case from the
Golden Care, Calamba branch, there is jurisdiction of the SEC. In the case of
no evidence to show that the Pamana Cagayan de Oro Coliseum, Inc. vs.
Golden Care stated in the vouchers Office of the Minister of Labor and
refers to herein respondent Pamana Employment, etc., et al.,[17] we ruled
Golden Care Medical Center that (a)lthough the reliefs sought by
Foundation, Inc. Chavez appear to fall under the
jurisdiction of the labor arbiter as they
are claims for unpaid salaries and
Pamana Golden Care is a division of other remunerations for services
Pamana, Inc., while respondent rendered, a close scrutiny thereof
Pamana Golden Care Medical Center shows that said claims are actually
Foundation, Inc. is a non-stock, non- part of the perquisites of his position
profit corporation. It is stated in the in, and therefore interlinked with, his
memorandum of petitioner that relations with the corporation. In Dy,
Pamana, Inc. is a stock and profit et al., vs. NLRC, et al., the Court said:
corporation selling pre-need plan for (t)he question of remuneration
education, pension and health care. involving as it does, a person who is
The health care plan is called Pamana not a mere employee but a
Golden Care Plan and the holders are stockholder and officer, an integral
called Pamana Golden Care Card part, it might be said, of the
Holders or, simply, Pamana Members. corporation, is not a simple labor
[14] problem but a matter that comes
within the area of corporate affairs and
management and is in fact a corporate
It is an admitted fact that herein controversy in contemplation of the
petitioner is a retained physician of Corporation Code.
Pamana, Inc., whose patients are
holders of the Pamana Golden Care
Card. In fact, in her complaint[15] filed WHEREFORE, the questioned
before the Regional Trial Court of resolution of the NLRC is hereby
Calamba, herein petitioner is asking, AFFIRMED, without prejudice to
among others, for professional fees petitioners taking recourse to and
and/or retainer fees earned for her seeking relief through the appropriate
treatment of Pamana Golden Care card remedy in the proper forum.
holders.[16] Thus, at most, said
vouchers can only be considered as
proof of payment of retainer fees SO ORDERED.
made by Pamana, Inc. to herein
petitioner as a retained physician of
Pamana Golden Care. Romero, Puno, Mendoza, and Torres,
Jr., JJ., concur.
PAKISTAN INTERNATIONAL AIRLINES This agreement is for a period of three
CORPORATION, petitioner, (3) years, but can be extended by the
mutual consent of the parties.
vs
HON. BLAS F. OPLE, in his capacity as
Minister of Labor; HON. VICENTE xxx xxx xxx
LEOGARDO, JR., in his capacity as
Deputy Minister; ETHELYNNE B.
FARRALES and MARIA MOONYEEN 6. TERMINATION
MAMASIG, respondents.

xxx xxx xxx

Romulo, Mabanta, Buenaventura,
Sayoc & De los Angeles for petitioner.
Notwithstanding anything to contrary
as herein provided, PIA reserves the
Ledesma, Saludo & Associates for right to terminate this agreement at
private respondents. any time by giving the EMPLOYEE
notice in writing in advance one month
before the intended termination or in
lieu thereof, by paying the EMPLOYEE
wages equivalent to one month's
salary.
FELICIANO, J.:

xxx xxx xxx

On 2 December 1978, petitioner
Pakistan International Airlines
Corporation ("PIA"), a foreign 10. APPLICABLE LAW:
corporation licensed to do business in
the Philippines, executed in Manila two
(2) separate contracts of employment, This agreement shall be construed and
one with private respondent Ethelynne governed under and by the laws of
B. Farrales and the other with private Pakistan, and only the Courts of
respondent Ma. M.C. Mamasig. 1 The Karachi, Pakistan shall have the
contracts, which became effective on jurisdiction to consider any matter
9 January 1979, provided in pertinent arising out of or under this agreement.
portion as follows:

Respondents then commenced

5. DURATION OF EMPLOYMENT training in Pakistan. After their training
AND PENALTY period, they began discharging their
job functions as flight attendants, with
base station in Manila and flying
assignments to different parts of the private respondents were terminated
Middle East and Europe. pursuant to the provisions of the
employment contract.

On 2 August 1980, roughly one (1)

year and four (4) months prior to the In his Order dated 22 January 1981,
expiration of the contracts of Regional Director Francisco L. Estrella
employment, PIA through Mr. Oscar ordered the reinstatement of private
Benares, counsel for and official of the respondents with full backwages or, in
local branch of PIA, sent separate the alternative, the payment to them
letters both dated 1 August 1980 to of the amounts equivalent to their
private respondents Farrales and salaries for the remainder of the fixed
Mamasig advising both that their three-year period of their employment
services as flight stewardesses would contracts; the payment to private
be terminated "effective 1 September respondent Mamasig of an amount
1980, conformably to clause 6 (b) of equivalent to the value of a round trip
the employment agreement [they had) ticket Manila-USA Manila; and
executed with [PIA]." 2 payment of a bonus to each of the
private respondents equivalent to their
one-month salary. 4 The Order stated
On 9 September 1980, private that private respondents had attained
respondents Farrales and Mamasig the status of regular employees after
jointly instituted a complaint, docketed they had rendered more than a year of
as NCR-STF-95151-80, for illegal continued service; that the stipulation
dismissal and non-payment of limiting the period of the employment
company benefits and bonuses, contract to three (3) years was null
against PIA with the then Ministry of and void as violative of the provisions
Labor and Employment ("MOLE"). After of the Labor Code and its
several unfruitful attempts at implementing rules and regulations on
conciliation, the MOLE hearing officer regular and casual employment; and
Atty. Jose M. Pascual ordered the that the dismissal, having been carried
parties to submit their position papers out without the requisite clearance
and evidence supporting their from the MOLE, was illegal and
respective positions. The PIA entitled private respondents to
submitted its position paper, 3 but no reinstatement with full backwages.
evidence, and there claimed that both
private respondents were habitual
absentees; that both were in the habit On appeal, in an Order dated 12
of bringing in from abroad sizeable August 1982, Hon. Vicente Leogardo,
quantities of "personal effects"; and Jr., Deputy Minister, MOLE, adopted
that PIA personnel at the Manila the findings of fact and conclusions of
International Airport had been the Regional Director and affirmed the
discreetly warned by customs officials latter's award save for the portion
to advise private respondents to thereof giving PIA the option, in lieu of
discontinue that practice. PIA further reinstatement, "to pay each of the
claimed that the services of both complainants [private respondents]
their salaries corresponding to the clearance from the Department of
unexpired portion of the contract[s] [of Labor and Employment:
employment] . . .". 5

Art. 278. Miscellaneous Provisions

In the instant Petition for Certiorari, ...
petitioner PIA assails the award of the
Regional Director and the Order of the
Deputy Minister as having been (b) With or without a collective
rendered without jurisdiction; for agreement, no employer may shut
having been rendered without support down his establishment or dismiss or
in the evidence of record since, terminate the employment of
allegedly, no hearing was conducted employees with at least one year of
by the hearing officer, Atty. Jose M. service during the last two (2) years,
Pascual; and for having been issued in whether such service is continuous or
disregard and in violation of broken, without prior written authority
petitioner's rights under the issued in accordance with such rules
employment contracts with private and regulations as the Secretary may
respondents. promulgate . . . (emphasis supplied)

1. Petitioner's first contention is Rule XIV, Book No. 5 of the Rules and
that the Regional Director, MOLE, had Regulations Implementing the Labor
no jurisdiction over the subject matter Code, made clear that in case of a
of the complaint initiated by private termination without the necessary
respondents for illegal dismissal, clearance, the Regional Director was
jurisdiction over the same being authorized to order the reinstatement
lodged in the Arbitration Branch of the of the employee concerned and the
National Labor Relations Commission payment of backwages; necessarily,
("NLRC") It appears to us beyond therefore, the Regional Director must
dispute, however, that both at the have been given jurisdiction over such
time the complaint was initiated in termination cases:
September 1980 and at the time the
Orders assailed were rendered on
January 1981 (by Regional Director Sec. 2. Shutdown or dismissal
Francisco L. Estrella) and August 1982 without clearance. Any shutdown or
(by Deputy Minister Vicente Leogardo, dismissal without prior clearance shall
Jr.), the Regional Director had be conclusively presumed to be
jurisdiction over termination cases. termination of employment without a
just cause. The Regional Director shall,
in such case order the immediate
Art. 278 of the Labor Code, as it then reinstatement of the employee and
existed, forbade the termination of the the payment of his wages from the
services of employees with at least time of the shutdown or dismissal until
one (1) year of service without prior the time of reinstatement. (emphasis
supplied)
 2. The second contention of
petitioner PIA is that, even if the
Policy Instruction No. 14 issued by the
Regional Director had jurisdiction, still
Secretary of Labor, dated 23 April
his order was null and void because it
1976, was similarly very explicit about
had been issued in violation of
the jurisdiction of the Regional
petitioner's right to procedural due
Director over termination of
process . 6 This claim, however,
employment cases:
cannot be given serious consideration.
Petitioner was ordered by the Regional
Director to submit not only its position
Under PD 850, termination cases paper but also such evidence in its
with or without CBA are now placed favor as it might have. Petitioner
under the original jurisdiction of the opted to rely solely upon its position
Regional Director. Preventive paper; we must assume it had no
suspension cases, now made evidence to sustain its assertions.
cognizable for the first time, are also Thus, even if no formal or oral hearing
placed under the Regional Director. was conducted, petitioner had ample
Before PD 850, termination cases opportunity to explain its side.
where there was a CBA were under the Moreover, petitioner PIA was able to
jurisdiction of the grievance machinery appeal his case to the Ministry of
and voluntary arbitration, while Labor and Employment. 7
termination cases where there was no
CBA were under the jurisdiction of the
Conciliation Section.
There is another reason why
petitioner's claim of denial of due
process must be rejected. At the time
In more details, the major innovations the complaint was filed by private
introduced by PD 850 and its respondents on 21 September 1980
implementing rules and regulations and at the time the Regional Director
with respect to termination and issued his questioned order on 22
preventive suspension cases are: January 1981, applicable regulation, as
noted above, specified that a
"dismissal without prior clearance
1. The Regional Director is now shall be conclusively presumed to be
required to rule on every application termination of employment without a
for clearance, whether there is cause", and the Regional Director was
opposition or not, within ten days from required in such case to" order the
receipt thereof. immediate reinstatement of the
employee and the payment of his
wages from the time of the shutdown
xxx xxx xxx or dismiss until . . . reinstatement." In
other words, under the then applicable
rule, the Regional Director did not
(Emphasis supplied) even have to require submission of
position papers by the parties in view
of the conclusive (juris et de jure)
character of the presumption created such stipulations as they may deem
by such applicable law and regulation. convenient, "provided they are not
In Cebu Institute of Technology v. contrary to law, morals, good customs,
Minister of Labor and Employment, 8 public order or public policy." Thus,
the Court pointed out that "under Rule counter-balancing the principle of
14, Section 2, of the Implementing autonomy of contracting parties is the
Rules and Regulations, the termination equally general rule that provisions of
of [an employee] which was without applicable law, especially provisions
previous clearance from the Ministry of relating to matters affected with public
Labor is conclusively presumed to be policy, are deemed written into the
without [just] cause . . . [a contract. 11 Put a little differently, the
presumption which] cannot be governing principle is that parties may
overturned by any contrary proof not contract away applicable
however strong." provisions of law especially
peremptory provisions dealing with
matters heavily impressed with public
3. In its third contention, petitioner interest. The law relating to labor and
PIA invokes paragraphs 5 and 6 of its employment is clearly such an area
contract of employment with private and parties are not at liberty to
respondents Farrales and Mamasig, insulate themselves and their
arguing that its relationship with them relationships from the impact of labor
was governed by the provisions of its laws and regulations by simply
contract rather than by the general contracting with each other. It is thus
provisions of the Labor Code. 9 necessary to appraise the contractual
provisions invoked by petitioner PIA in
terms of their consistency with
Paragraph 5 of that contract set a term applicable Philippine law and
of three (3) years for that relationship, regulations.
extendible by agreement between the
parties; while paragraph 6 provided
that, notwithstanding any other As noted earlier, both the Labor
provision in the Contract, PIA had the Arbiter and the Deputy Minister, MOLE,
right to terminate the employment in effect held that paragraph 5 of that
agreement at any time by giving one- employment contract was inconsistent
month's notice to the employee or, in with Articles 280 and 281 of the Labor
lieu of such notice, one-months salary. Code as they existed at the time the
contract of employment was entered
into, and hence refused to give effect
A contract freely entered into should, to said paragraph 5. These Articles
of course, be respected, as PIA argues, read as follows:
since a contract is the law between
the parties. 10 The principle of party
autonomy in contracts is not, however, Art. 280. Security of Tenure. In
an absolute principle. The rule in cases of regular employment, the
Article 1306, of our Civil Code is that employer shall not terminate the
the contracting parties may establish services of an employee except for a
just cause or when authorized by this In Brent School, Inc., et al. v. Ronaldo
Title An employee who is unjustly Zamora, etc., et al., 12 the Court had
dismissed from work shall be entitled occasion to examine in detail the
to reinstatement without loss of question of whether employment for a
seniority rights and to his backwages fixed term has been outlawed under
computed from the time his the above quoted provisions of the
compensation was withheld from him Labor Code. After an extensive
up to the time his reinstatement. examination of the history and
development of Articles 280 and 281,
the Court reached the conclusion that
Art. 281. Regular and Casual a contract providing for employment
Employment. The provisions of written with a fixed period was not necessarily
agreement to the contrary unlawful:
notwithstanding and regardless of the
oral agreements of the parties, an
employment shall be deemed to be There can of course be no quarrel with
regular where the employee has been the proposition that where from the
engaged to perform activities which circumstances it is apparent that
are usually necessary or desirable in periods have been imposed to
the usual business or trade of the preclude acquisition of tenurial
employer, except where the security by the employee, they should
employment has been fixed for a be struck down or disregarded as
specific project or undertaking the contrary to public policy, morals, etc.
completion or termination of which has But where no such intent to
been determined at the time of the circumvent the law is shown, or stated
engagement of the employee or where otherwise, where the reason for the
the work or services to be performed law does not exist e.g. where it is
is seasonal in nature and the indeed the employee himself who
employment is for the duration of the insists upon a period or where the
season. nature of the engagement is such that,
without being seasonal or for a
specific project, a definite date of
An employment shall be deemed to be termination is a sine qua non would an
casual if it is not covered by the agreement fixing a period be
preceding paragraph: provided, that, essentially evil or illicit, therefore
any employee who has rendered at anathema Would such an agreement
least one year of service, whether come within the scope of Article 280
such service is continuous or broken, which admittedly was enacted "to
shall be considered as regular prevent the circumvention of the right
employee with respect to the activity of the employee to be secured in . . .
in which he is employed and his (his) employment?"
employment shall continue while such
actually exists. (Emphasis supplied)
As it is evident from even only the
three examples already given that
Article 280 of the Labor Code, under a
narrow and literal interpretation, not to instances where a fixed period of
only fails to exhaust the gamut of employment was agreed upon
employment contracts to which the knowingly and voluntarily by the
lack of a fixed period would be an parties, without any force, duress or
anomaly, but would also appear to improper pressure being brought to
restrict, without reasonable bear upon the employee and absent
distinctions, the right of an employee any other circumstances vitiating his
to freely stipulate with his employer consent, or where it satisfactorily
the duration of his engagement, it appears that the employer and
logically follows that such a literal employee dealt with each other on
interpretation should be eschewed or more or less equal terms with no
avoided. The law must be given moral dominance whatever being
reasonable interpretation, to preclude exercised by the former over the
absurdity in its application. Outlawing latter. Unless thus limited in its
the whole concept of term purview, the law would be made to
employment and subverting to boot apply to purposes other than those
the principle of freedom of contract to explicitly stated by its framers; it thus
remedy the evil of employers" using it becomes pointless and arbitrary,
as a means to prevent their unjust in its effects and apt to lead to
employees from obtaining security of absurd and unintended consequences.
tenure is like cutting off the nose to (emphasis supplied)
spite the face or, more relevantly,
curing a headache by lopping off the
head. It is apparent from Brent School that
the critical consideration is the
presence or absence of a substantial
xxx xxx xxx indication that the period specified in
an employment agreement was
designed to circumvent the security of
Accordingly, and since the entire tenure of regular employees which is
purpose behind the development of provided for in Articles 280 and 281 of
legislation culminating in the present the Labor Code. This indication must
Article 280 of the Labor Code clearly ordinarily rest upon some aspect of
appears to have been, as already the agreement other than the mere
observed, to prevent circumvention of specification of a fixed term of the
the employee's right to be secure in ernployment agreement, or upon
his tenure, the clause in said article evidence aliunde of the intent to
indiscriminately and completely ruling evade.
out all written or oral agreements
conflicting with the concept of regular
employment as defined therein should Examining the provisions of
be construed to refer to the paragraphs 5 and 6 of the
substantive evil that the Code itself employment agreement between
has singled out: agreements entered petitioner PIA and private respondents,
into precisely to circumvent security of we consider that those provisions
tenure. It should have no application must be read together and when so
read, the fixed period of three (3) between petitioner PIA and private
years specified in paragraph 5 will be respondents. We have already pointed
seen to have been effectively out that the relationship is much
neutralized by the provisions of affected with public interest and that
paragraph 6 of that agreement. the otherwise applicable Philippine
Paragraph 6 in effect took back from laws and regulations cannot be
the employee the fixed three (3)-year rendered illusory by the parties
period ostensibly granted by agreeing upon some other law to
paragraph 5 by rendering such period govern their relationship. Neither may
in effect a facultative one at the option petitioner invoke the second clause of
of the employer PIA. For petitioner PIA paragraph 10, specifying the Karachi
claims to be authorized to shorten that courts as the sole venue for the
term, at any time and for any cause settlement of dispute; between the
satisfactory to itself, to a one-month contracting parties. Even a cursory
period, or even less by simply paying scrutiny of the relevant circumstances
the employee a month's salary. of this case will show the multiple and
Because the net effect of paragraphs 5 substantive contacts between
and 6 of the agreement here involved Philippine law and Philippine courts, on
is to render the employment of private the one hand, and the relationship
respondents Farrales and Mamasig between the parties, upon the other:
basically employment at the pleasure the contract was not only executed in
of petitioner PIA, the Court considers the Philippines, it was also performed
that paragraphs 5 and 6 were here, at least partially; private
intended to prevent any security of respondents are Philippine citizens and
tenure from accruing in favor of respondents, while petitioner,
private respondents even during the although a foreign corporation, is
limited period of three (3) years, 13 licensed to do business (and actually
and thus to escape completely the doing business) and hence resident in
thrust of Articles 280 and 281 of the the Philippines; lastly, private
Labor Code. respondents were based in the
Philippines in between their assigned
flights to the Middle East and Europe.
Petitioner PIA cannot take refuge in All the above contacts point to the
paragraph 10 of its employment Philippine courts and administrative
agreement which specifies, firstly, the agencies as a proper forum for the
law of Pakistan as the applicable law resolution of contractual disputes
of the agreement and, secondly, lays between the parties. Under these
the venue for settlement of any circumstances, paragraph 10 of the
dispute arising out of or in connection employment agreement cannot be
with the agreement "only [in] courts of given effect so as to oust Philippine
Karachi Pakistan". The first clause of agencies and courts of the jurisdiction
paragraph 10 cannot be invoked to vested upon them by Philippine law.
prevent the application of Philippine Finally, and in any event, the
labor laws and regulations to the petitioner PIA did not undertake to
subject matter of this case, i.e., the plead and prove the contents of
employer-employee relationship Pakistan law on the matter; it must
therefore be presumed that the
applicable provisions of the law of rendered by them and for the three (3)
Pakistan are the same as the years putative service by private
applicable provisions of Philippine law. respondents. The Temporary
14 Restraining Order issued on 13
September 1982 is hereby LIFTED.
Costs against petitioner.
We conclude that private respondents
Farrales and Mamasig were illegally
dismissed and that public respondent SO ORDERED.
Deputy Minister, MOLE, had not
RUBBERWORLD (PHILS.), INC., or JULIE
committed any grave abuse of
YAP ONG, petitioner, vs. NATIONAL
discretion nor any act without or in
LABOR RELATIONS COMMISSION,
excess of jurisdiction in ordering their
MARILYN F. ARELLANO, EMILY S.
reinstatement with backwages. Private
LEGASPI, MYRNA S. GALGANA,
respondents are entitled to three (3)
MERCEDITA R. SONGCO, WILFREDO V.
years backwages without qualification
SANTOS, JOSEPHINE S. RAMOS,
or deduction. Should their
REDENTOR G. HONA, LUZ B. HONA,
reinstatement to their former or other
ROLANDO B. CRUZ, GUILLERMA R.
substantially equivalent positions not
MUZONES, CARMELITA V. HALILI,
be feasible in view of the length of
SUSAN A. REYES, EMILY A. ROBILLOS,
time which has gone by since their
PLACIDO REYES, MANOLITO DELA
services were unlawfully terminated,
CRUZ, VICTORINO C. FRANCISCO,
petitioner should be required to pay
ROGER B. MARIAS, VIOLETA ALEJO,
separation pay to private respondents
RICARDO T. TORRES, EMMA DELA
amounting to one (1) month's salary
TORRE, PERLA N. MANZANERO,
for every year of service rendered by
FRANCISCO D. SERDONCILLO, LUISITO
them, including the three (3) years
P. HERNANDEZ, RAYMOND PEREA,
service putatively rendered.
EDITHA A. SERDONCILLO, FRANCISCO
GENER, MARIO B. REYES, VALERIANO
A. HERRERA, JORGE S. SEERES, ELENA
ACCORDINGLY, the Petition for
S. IGNACIO, EMERITA S. CACHERO,
certiorari is hereby DISMISSED for lack
NERIZA G. ENRIQUEZ, LOLITA M.
of merit, and the Order dated 12
FABULAR, NORMITA M. HERNANDEZ,
August 1982 of public respondent is
DOMINADOR P. ENRIQUEZ,
hereby AFFIRMED, except that (1)
respondents.
private respondents are entitled to
three (3) years backwages, without DECISION
deduction or qualification; and (2)
PANGANIBAN, J.:
should reinstatement of private
respondents to their former positions
or to substantially equivalent positions
not be feasible, then petitioner shall, Presidential Decree 902-A, as
in lieu thereof, pay to private amended, provides that "upon the
respondents separation pay appointment of a management
amounting to one (1)-month's salary committee, rehabilitation receiver
for every year of service actually board or body pursuant to this Decree,
all actions for claims against
corporations, partnerships, or
The Facts
associations under management or
receivership pending, before any
court, tribunal, board or body shall be
suspended accordingly."[1] Such The facts are undisputed. They are
suspension is intended to give enough narrated by the Office of the Solicitor
breathing space for the management General as follows:
committee or rehabilitation receiver to
make the business viable again,
without having to divert attention and "Petitioner xxx is a domestic
resources to litigations in various fora. corporation which used to be in the
Among, the actions suspended are business of manufacturing footwear,
those for money claims before labor bags and garments. It filed with the
tribunals, like the National Labor Securities and Exchange Commission
Relation Commission (NLRC) and the on November 24, 1994 a petition for
Labor arbiters. suspension of payments praying that it
be declared in a state of suspension of
payments and that the SEC
Statement of the Case accordingly issue an order restraining
its creditors from enforcing their
claims against petitioner corporation.
It further prayed for the creation of a
The foregoing Summarizes this Court's
management committee as well as for
grant of the Petition for Certiorari
the approval of the proposed
under Rule 65 of the Rules of Court,
rehabilitation plan and memorandum
assailing the April 26, 1996
of agreement between petitioner
Resolution[2] promulgate by the
corporation and its creditors.
NLRC[3] which upheld the labor
arbiter's refusal to suspend
proceedings involving, monetary
claims of the petitioner's employees. "In an order dated December 28,
1994, the SEC favorably ruled on the
petition for suspension of payments
thusly:
Petitioner likewise assails the June 20,
1996 NLRC Resolution[4] which denied
its Motion for Reconsideration.
'Accordingly, with the creation of the
Management Committee, all actions
for claims against Rubberworld
On November 20, 1996, this Court
Philippines, Inc. pending before any
issued a temporary restraining order
court, tribunal, office, board, body
signed by then Chief Justice Andres R.
Commission of Sheriff are hereby
Narvasa, "restraining the public
deemed SUSPENDED.
respondents from further conducting
proceedings in the aforesaid cases
effective immediately xxx."
'Consequently, all pending incidents because said claims and the
for preliminary injunctions, writ of concomitant liability of petitioners still
attachments (sic), foreclosures' and had to be determined, thus carrying
the like are hereby rendered moot and no dissipation of the assets of
academic.' petitioners.

"Private respondents, who claim to be "Petitioners appealed the adverse

employees of petitioner corporation, order of the Labor Arbiter to public
filed against petitioners [from] April to respondent which, in a Resolution
July 1995 their respective complaints dated April 26, 1996, dismissed the
for illegal dismissal, unfair labor appeal for lack of merit and, instead,
practice, damages and payment of sustained the rulings of the Labor
separation pay, retirement benefits, Arbiter.
13th month pay and service incentive
pay.
"The motion for reconsideration of
petitioners fared no better and was
"Petitioners moved to suspend the denied by public respondent in a
proceedings in the above labor cases Resolution dated June 20, 1996."[5]
on the strength of the SEC Order dated
December 28, 1994. Likewise,
petitioners cited the rulings of BF Hence, this petition.[6]
Homes vs. Court of Appeals (190 SCRA
262), Alemar's Sibal & Sons, Inc. vs.
Elbinias (186 SCRA 94) and Bank of The Issue
Philippine Islands vs. Court of Appeals
(229 SCRA 223) to support their
motion to suspend the proceedings in
Petitioner raises only one issue:
the labor cases.

"Whether or not the Respondent NLRC

"In an Order dated September 25,
acted without or in excess of
1995, the Labor Arbiter denied the
Jurisdiction or with grave abuse of
aforesaid motion holding that the
discretion amounting to lack of
injunction contained in the SEC Order
jurisdiction in affirming the order of
applied only to the enforcement of
Labor Arbiter Voltaire A. Balitaan
established rights and did not include
denying petitioners' motion to suspend
the suspension of proceedings
proceedings despite the Order of the
involving claims against petitioner
Securities and Exchange Commission
which have yet to be ascertained. The
under Sec. 6 (c) of P.D. 902-A directing
Labor Arbiter further held that the
the suspension of all actions against a
order of the SEC suspending all actions
company under the first stages of
for claims against petitioners does not
insolvency proceedings."[7]
cover the claims of private
respondents in the labor cases
This Court's Ruling of Payments, as well as a propose
rehabilitation plan. On December 28,
1994, the SEC ordered the creation of
The petition is meritorious. a management committee and the
suspension of all actions for claim
against Rubberworld. Clearly, the
Sole Issue: applicable law is PD 902-A, as
amended, the relevant provision of
Suspension Proceedings which read:

Jurisprudence teaches us: "SECTION 5. In addition to the

regulatory adjudicative functions of
the Securities and Exchange
"xxx where the petition filed is one for Commission over corporations,
declaration of a state of suspension of partnerships and other forms of
payments due to a recognition of the associations registered with it as
inability to pay one's debts and expressly granted under existing laws
liabilities, and where the petitioning and decrees, it shall have original and
corporation either: (a) has sufficient exclusive jurisdiction to hear and
property to cover all its debts but decide cases involving:
foresees the impossibility of meeting
them when they fall due (solvent but
illiquid) or (b) has no sufficient xxxxxxxxx
property (insolvent) but is under the
management of a rehabilitation
receiver or a management committee, d) Petitions of corporations,
the applicable law is P.D. 902-A partnerships or associations to be
pursuant to Sec. 5 par. (d) thereof. declared in the state of suspension of
However, if the petitioning corporation payments in cases where the
has no sufficient assets to cover its corporation, partnership or association
liabilities and is not under a possesses sufficient property to cover
rehabilitation receiver or a all its debts but foresees the
management committee created impossibility of meeting them when
under P.D. 902-A and does not seek they respectively fall due or in cases
merely to have the payments of its where the corporation, partnership or
debts suspended, but seeks a association has no sufficient assets to
declaration of insolvency xxx the cover its liabilities, but is under the
applicable law is Act 1956 [The management of a rehabilitation
Insolvency Law] on voluntary receiver or management committee
insolvency, xxx."[8] created pursuant to this Decree.

In the case at bar, Petitioner SECTION 6. In order to effectively

Rubberworld filed before the SEC a exercise such jurisdiction, the
Petition for Declaration of Suspension
Commission shall possess the burden of the management committee
following powers: or rehabilitation receiver, whose time,
effort and resources would be wasted
in defending claims against the
xxxxxxxxx corporation instead of being directed
toward its restructuring and
rehabilitation."[10]
c) To appoint one or more receivers of
the property, real or personal, which is
the subject of the action pending Parenthetically, the rehabilitation of a
before the Commission in accordance financially distressed corporation
with the pertinent provisions of the benefits its employees, creditors,
Rules of Court in such other cases stockholders and, in a larger sense,
whenever necessary in order to the general public. And in considering
preserve the rights of the parties- whether to rehabilitate or not, the SEC
litigants and/or protect the interest of gives preference to the interest of
the investing public and creditors: x x creditors, including employees. The
x Provided finally, That upon reason that shareholders can recover
appointment of a management their investments only upon
committee, the rehabilitation receiver, liquidation of' the corporation, and
board or body, pursuant to this only if there are assets remaining after
Decree, all actions for claims against all corporate creditors ire paid.[11]
corporations, partnerships, or
associations under management or
receivership pending before any court, Labor Claims Included in Suspension
tribunal, board or body shall be Order
suspended accordingly."

The solicitor general, representing

It is plain from the foregoing provisions Public Respondent NLRC, argues that
of law that "upon the appointment [by, the rationale for an automatic stay will
the SEC] of a management committee not be frustrated even if the NLRC
or a rehabilitation receiver," all actions proceeds with the disposition of these
for claims against the corporation labor cases, because any favorable
pending before any court, tribunal or judgment obtained by the private
board shall ipso jure be suspended.[9] respondents would only establish their
The justification for the automatic stay rights as creditors. The solicitor
of all pending actions for claims "is to general also contends that the
enable the management committee or assailed Resolutions of the NLRC will
the rehabilitation receiver to not result in an undue preference for
effectively exercise its/his powers free the assets of Rubberworld, as the
from any judicial or extra-judicial private respondents will still present
interference that might unduly hinder their claims before the management
or prevent the 'rescue' of the debtor committee.[12]
company. To allow such other actions
to continue would only add to the
We disagree. The law is clear: upon vested public respondent with
the creation of a management jurisdiction to hear and decide these
committee or the appointment of labor cases, the NLRC did not exceed
rehabilitation receiver, all claims for its jurisdiction when it refused to
actions "shall be suspended suspend the proceedings therein.[18]
accordingly." No exception in favor of The Court is not persuaded.
labor claims is mentioned in the law.
Since the law makes no distinction or
exemptions, neither should this Court. Article 217 of the Labor Code should
Ubi lex non distinguit nec nos be construed not in isolation but in
distinguere debemos.[13] Allowing harmony with PD 902-A, according to
labor cases to proceed clearly defeats the basic rule in statutory construction
the purpose of the automatic stay and that implied repeals are not favored.
severely encumbers the management [19] Indeed, it is axiomatic that each
committee's time and resources. The and every statute must be construed
said committee would need to defend in a way that would avoid conflict with
against these suits, to the detriment of existing laws.[20] True, the NLRC has
its primary and urgent duty to work the power to hear and decide labor
towards rehabilitating the corporation disputes, but such authority is deemed
and making it viable again. To rule suspended when PD 902-A is put into
otherwise would open the floodgates effect by the Securities and Exchange
to other similarly situated claimants Commission.
and forestall if not defeat the rescue
efforts. Besides, even if the NLRC
awards the claims of private Preference in Favor of Workers in Case
respondents, as it did, its ruling could of Bankruptcy or Liquidation
not be enforced as long as the
petitioner is under the management
committee.[14]
The private respondents contend that
automatic stay under PD 902-A is not
applicable to the instant case;
In Chua v. National Labor Relation otherwise, the preference granted to
Commission,[15] we ruled that labor workers by Article 110 of the Labor
claims cannot proceed independently Code would be rendered ineffective.
of a bankruptcy liquidation [21] This contention is misleading.
proceeding, since these claims "would
spawn needless controversy, delays,
and confusion."[16] With more reason,
The preferential right of workers and
allowing labor claims to continue in
employees under Article 110 of the
spite of a SEC suspension order in
Labor Code may be invoked only upon
rehabilitation case would merely lead
the institution of insolvency or judicial
to such results.
liquidation proceeding.[22] Indeed, it
is well-settled that "a declaration of
bankruptcy or a judicial liquidation
The solicitor general insists that since must be present before preferences
Article 217 of the Labor Code[17] over various money claims may be
enforced."[23] But debtors resort to This Court notes that PD 902-A itself
preference of credit -- giving preferred does not provide for the duration of
creditors the right to have their claims the automatic stay. Neither does the
paid ahead of those of other claimants Order[28] of the SEC. Hence, the
-- only when their assets are suspensive effect has no time limit
insufficient to pay their debts fully.[24] and remains in force as long as
The purpose of rehabilitation reasonably necessary to accomplish
proceedings is precisely to enable the the purpose of the Order.[29] On the
company to gain a new lease on life other hand, the attack against the
and thereby allow creditors to be paid SEC's alleged "abuse of power" is
their claims from its earnings. In misplaced. Under review in this
insolvency proceedings, on the other Petition for Certiorari are Resolutions
hand, the company stops operating, of the NLRC, not of the SEC. The scope
and the claims of creditors are of this review is thus limited to
satisfied from the assets of the whether the NLRC gravely abused or
insolvent corporation. The present exceeded its jurisdiction in refusing to
case involves the rehabilitation, not heed the SEC Order of Suspension and
the liquidation, of petitioner- in issuing its challenged Resolutions.
corporation. Hence, the preference of In any event, the bare allegation of
credit granted to workers or inaction is insufficient to condemn the
employees under Article 110 of the Securities and Exchange Commission
Labor Code is not applicable. and the management committee
where, it should be noted, all affected
parties, including, the labor union in
Duration of Automatic Stay Under PD the company, are represented.
902-A
WHEREFORE, the petition is hereby
GRANTED. The assailed Resolutions of
the NLRC dated April 26, 1996, and
Finally, private respondents posit that June 20, 1996, are REVERSED and SET
under Section 6 of the Insolvency Law, ASIDE. No costs.
the December 28, 1994 Order of the
SEC suspending all actions for claims
against Rubberworld should have
SO ORDERED.
expired after three months, in the
absence of an agreement between the PERPETUAL HELP CREDIT
company and the corporate creditors. COOPERATIVE, INC., petitioner, vs.
[25] Private respondents also accuse BENEDICTO FABURADA, SISINITA
the SEC of abusing its power by VILLAR, IMELDA TAMAYO, HAROLD
"allowing said suspension order to CATIPAY, and the NATIONAL LABOR
remain pending for many years RELATIONS COMMISSION, Fourth
without resolving and approving any Division, Cebu City, respondents.
rehabilitation plan."[26] They contend
DECISION
that "[t]his is fatal to the instant
petition for it had been a party to the SANDOVAL-GUTIERREZ, J.:
abuse by the SEC of its suspension
order."[27]
On January 3, 1990, Benedicto respondent is directed to pay
Faburada, Sisinita Vilar, Imelda Complainants backwages computed
Tamayo and Harold Catipay, private from the time they were illegally
respondents, filed a complaint against dismissed up to the actual
the Perpetual Help Credit Cooperative, reinstatement but subject to the three
Inc. (PHCCI), petitioner, with the year backwages rule, separation pay
Arbitration Branch, Department of for one month for every year of
Labor and Employment (DOLE), service since reinstatement is
Dumaguete City, for illegal dismissal, evidently not feasible anymore, to pay
premium pay on holidays and rest complainants 13th month pay, wage
days, separation pay, wage differentials and Ten Percent (10%)
differential, moral damages, and attorneys fees from the aggregate
attorneys fees. monetary award. However,
complainant Benedicto Faburada shall
Forthwith, petitioner PHCCI filed a
only be awarded what are due him in
motion to dismiss the complaint on the
proportion to the nine and a half
ground that there is no employer-
months that he had served the
employee relationship between them
respondent, he being a part-time
as private respondents are all
employee.
members and co-owners of the
cooperative. Furthermore, private All other claims are hereby dismissed
respondents have not exhausted the for lack of merit.
remedies provided in the cooperative
The computation of the foregoing
by-laws.
awards is hereto attached and forms
On September 3, 1990, petitioner filed an integral part of this decision.
a supplemental motion to dismiss
On appeal[1], the NLRC affirmed the
alleging that Article 121 of R.A. No.
Labor Arbiter's decision.
6939, otherwise known as the
Cooperative Development Authority Hence, this petition by the PHCCI.
Law which took effect on March 26,
1990, requires conciliation or The issue for our resolution is whether
mediation within the cooperative or not respondent judge committed
before a resort to judicial proceeding. grave abuse of discretion in ruling that
there is an employer-employee
On the same date, the Labor Arbiter relationship between the parties and
denied petitioner's motion to dismiss, that private respondents were illegally
holding that the case is impressed dismissed.
with employer-employee relationship
and that the law on cooperatives is Petitioner PHCCI contends that private
subservient to the Labor Code. respondents are its members and are
working for it as volunteers. Not being
On November 23, 1993, the Labor regular employees, they cannot sue
Arbiter rendered a decision, the petitioner.
dispositive portion of which reads:
In determining the existence of an
WHEREFORE, premises considered, employer-employee relationship, the
judgment is hereby rendered declaring following elements are considered: (1)
complainants illegally dismissed, thus
the selection and engagement of the data into the computer; compute
worker or the power to hire; (2) the interests on savings deposits, effect
power to dismiss; (3) the payment of mortuary deductions and dividends on
wages by whatever means; and (4) the fixed deposits; maintain the masterlist
power to control the workers conduct, of the cooperative members; perform
with the latter assuming primacy in various forms for mimeographing; and
the overall consideration. No particular perform such other duties as may be
form of proof is required to prove the assigned from time to time.
existence of an employer-employee
Sisinita Vilar -Clerk. Worked with the
relationship. Any competent and
Cooperative since December 1, 1987
relevant evidence may show the
up to December 29, 1989. Work
relationship.[2]
schedule: Regular working hours.
The above elements are present here. Monthly salary: P500.00 - from
Petitioner PHCCI, through Mr. Edilberto December 1, 1987 to December 31,
Lantaca, Jr., its Manager, hired private 1988; P1,000.00 - from January 1,
respondents to work for it. They 1989 to June 30, 1989; and P1,150.00
worked regularly on regular working - from July 1, 1989 to December 31,
hours, were assigned specific duties, 1989. Duties: Among others, Prepare
were paid regular wages and made to summary of salary advances, journal
accomplish daily time records just like vouchers, daily summary of
any other regular employee. They disbursements to respective
worked under the supervision of the classifications; schedule loans; prepare
cooperative manager. But checks and cash vouchers for regular
unfortunately, they were dismissed. and emergency loans; reconcile bank
statements to the daily summary of
That an employer-employee exists
disbursements; post the monthly
between the parties is shown by the
balance of fixed and savings deposits
averments of private respondents in
in preparation for the computation of
their respective affidavits, carefully
interests, dividends, mortuary and
considered by respondent NLRC in
patronage funds; disburse checks
affirming the Labor Arbiter's decision,
during regular and emergency loans;
thus:
and perform such other bookkeeping
Benedicto Faburada -Regular part-time and accounting duties as may be
Computer programmer/ operator. assigned to her from time to time.
Worked with the Cooperative since
June 1, 1988 up to December 29,
1989. Work schedule: Tuesdays and Imelda C. Tamayo - Clerk. Worked with
Thursdays, from 1:00 p.m. to 5:30 the Cooperative since October 19,
p.m. and every Saturday from 8:00 to 1987 up to December 29, 1989. Work
11:30 a.m. and 1:00 to 4:00 p.m. and schedule: Monday to Friday - 8:00 to
for at least three (3 ) hours during 11:30 a.m and 2:00 to 5:30 p.m.;
Sundays. Monthly salary: P1,000.00 every Saturday - 8:00 to 11:30 a.m
-from June to December 1988; and 1:00 to 4:00 p.m; and for one
P1,350.00 - from January to June 1989; Sunday each month - for at least three
and P1,500.00 from July to December (3) hours. Monthly salary: P60.00 -
1989. Duties: Among others, Enter from October to November 1987;
P250.00 for December 1987; P500.00 - We are not prepared to disregard the
from January to December 1988; P950 findings of both the Labor Arbiter and
- from January to June 1989; and respondent NLRC, the same being
P1,000.00 from July to December supported by substantial evidence,
1989. Duties: Among others, pick up that quantum of evidence required in
balances for the computation of quasi-judicial proceedings, like this
interests on savings deposit, mortuary, one..
dividends and patronage funds;
Necessarily, this leads us to the issue
prepare cash vouchers; check petty
of whether or not private respondents
cash vouchers; take charge of the
are regular employees. Article 280 of
preparation of new passbooks and
the Labor Code provides for three
ledgers for new applicants; fill up
kinds of employees: (1) regular
members logbook of regular
employees or those who have been
depositors, junior depositors and
engaged to perform activities which
special accounts; take charge of loan
are usually necessary or desirable in
releases every Monday morning; assist
the usual business or trade of the
in the posting and preparation of
employer; (2) project employees or
deposit slips; receive deposits from
those whose employment has been
members; and perform such other
fixed for a specific project or
bookkeeping and accounting duties as
undertaking, the completion or
may be assigned her from time to
termination of which has been
time.
determined at the time of the
Harold D. Catipay - Clerk. Worked with engagement of the employee or where
the Cooperative since March 3 to the work or service to be performed is
December 29, 1989. Work schedule: - seasonal in nature and the
Monday to Friday - 8:00 to 11:30 a.m. employment is for the duration of the
and 2:00 to 5:30 p.m.; Saturday - 8:00 season; and (3) casual employees or
to 11:30 a.m. and 1:00 to 4:00 p.m.; those who are neither regular nor
and one Sunday each month - for at project employees.[3] The employees
least three (3) hours. Monthly salary: who are deemed regular are: (a) those
P900.00 - from March to June 1989; who have been engaged to perform
P1,050.00 - from July to December activities which are usually necessary
1989. Duties: Among others, or desirable in the usual trade or
Bookkeeping, accounting and business of the employer; and (b)
collecting duties, such as, post daily those casual employees who have
collections from the two (2) collectors rendered at least one (1) year of
in the market; reconcile passbooks service, whether such service is
and ledgers of members in the market; continuous or broken, with respect to
and assist the other clerks in their the activity in which they are
duties. employed.[4] Undeniably, private
respondents were rendering services
All of them were given a memorandum
necessary to the day-to-day
of termination on January 2, 1990,
operations of petitioner PHCCI. This
effective December 29, 1989.
fact alone qualified them as regular
employees.
All of them, except Harold D. Catipay, against the person of the employer or
worked with petitioner for more than his immediate family member or
one (1) year: Benedicto Faburada, for representative; and, analogous cases.
one and a half (1 1/2) years; Sisinita The authorized causes are: (1) the
Vilar, for two (2) years; and Imelda C. installation of labor-saving devices; (2)
Tamayo, for two (2) years and two (2) redundancy; (3) retrenchment to
months. That Benedicto Faburada prevent losses; and (4) closing or
worked only on a part-time basis, does cessation of operations of the
not mean that he is not a regular establishment or undertaking, unless
employee. Ones regularity of the closing is for the purpose of
employment is not determined by the circumventing the provisions of law.
number of hours one works but by the Article 284 provides that an employer
nature and by the length of time one would be authorized to terminate the
has been in that particular job.[5] services of an employee found to be
Petitioner's contention that private suffering from any disease if the
respondents are mere volunteer employees continued employment is
workers, not regular employees, must prohibited by law or is prejudicial to
necessarily fail. Its invocation of San his health or to the health of his fellow
Jose City Electric Cooperative vs. employees[6]
Ministry of Labor and Employment
Private respondents were dismissed
(173 SCRA 697, 703 (1989 ) is
not for any of the above causes. They
misplaced. The issue in this case is
were dismissed because petitioner
whether or not the employees-
considered them to be mere voluntary
members of a cooperative can
workers, being its members, and as
organize themselves for purposes of
such work at its pleasure. Petitioner
collective bargaining, not whether or
thus vehemently insists that their
not the members can be employees.
dismissal is not against the law.
Petitioner missed the point.
Procedural due process requires that
As regular employees or workers,
the employer serve the employees to
private respondents are entitled to
be dismissed two (2) written notices
security of tenure. Thus, their services
before the termination of their
may be terminated only for a valid
employment is effected: (a) the first,
cause, with observance of due
to apprise them of the particular acts
process.
or omissions for which their dismissal
The valid causes are categorized into is sought and (b) the second, to inform
two groups: the just causes under them of the decision of the employer
Articles 282 of the Labor Code and the that they are being dismissed.[7] In
authorized causes under Articles 283 this case, only one notice was served
and 284 of the same Code. The just upon private respondents by
causes are: (1) serious misconduct or petitioner. It was in the form of a
willful disobedience of lawful orders in Memorandum signed by the Manager
connection with the employees work; of the Cooperative dated January 2,
(2) gross or habitual neglect of duties; 1990 terminating their services
(3) fraud or willful breach of trust; (4) effective December 29, 1989. Clearly,
commission of a crime or an offense
petitioner failed to comply with the ART. 121. Settlement of Disputes.-
twin requisites of a valid notice. Disputes among members, officers,
directors, and committee members,
and intra-cooperative disputes shall,
We hold that private respondents have as far as practicable, be settled
been illegally dismissed. amicably in accordance with the
conciliation or mediation mechanisms
embodied in the bylaws of the
Petitioner contends that the labor cooperative, and in applicable laws.
arbiter has no jurisdiction to take
cognizance of the complaint of private
respondents considering that they Should such a conciliation/mediation
failed to submit their dispute to the proceeding fail, the matter shall be
grievance machinery as required by settled in a court of competent
P.D 175 (strengthening the jurisdiction.
Cooperative Movement)[8] and its
implementing rules and regulations
under LOI 23. Likewise, the Complementing this Article is Section
Cooperative Development Authority 8 of R.A. No. 6939 (Cooperative
did not issue a Certificate of Non- Development Authority Law) which
Resolution pursuant to Section 8 of reads:
R.A. 6939 or the Cooperative
Development Authority Law.
SEC. 8 Mediation and Conciliation.-
Upon request of either or both parties,
As aptly stated by the Solicitor General the Authority shall mediate and
in his comment, P.D. 175 does not conciliate disputes within a
provide for a grievance machinery cooperative or between cooperatives:
where a dispute or claim may first be Provided, That if no mediation or
submitted. LOI 23 refers to instructions conciliation succeeds within three (3)
to the Secretary of Public Works and months from request thereof, a
Communications to implement certificate of non-resolution shall be
immediately the recommendation of issued by the Commission prior to the
the Postmaster General for the filing of appropriate action before the
dismissal of some employees of the proper courts.
Bureau of Post. Obviously, this LOI has
no relevance to the instant case.
The above provisions apply to
members, officers and directors of the
Article 121 of Republic Act No. 6938 cooperative involved in disputes within
(Cooperative Code of the Philippines) a cooperative or between
provides the procedure how cooperatives.
cooperative disputes are to be
resolved, thus:
There is no evidence that private
respondents are members of
petitioner PHCCI and even if they are, SMART COMMUNICATIONS, INC.,
the dispute is about payment of NAPOLEON L. NAZARENO, and
wages, overtime pay, rest day and RICARDO P. ISLA,* Petitioners,
termination of employment. Under Art.
vs.
217 of the Labor Code, these disputes
are within the original and exclusive JOSE LENI Z. SOLIDUM,
jurisdiction of the Labor Arbiter. Respondent.
CARPIO, J.:
As illegally dismissed employees,
private respondents are therefore
entitled to reinstatement without loss The Case
of seniority rights and other privileges This is a petition1 for review on
and to full backwages, inclusive of certiorari under Rule 45 of the Rules of
allowances, plus other benefits or their Court. Petitioners Smart
monetary equivalent computed from Communications, Inc. (Smart),
the time their compensation was Napoleon L. Nazareno and Ricardo P.
witheld from them up to the time of Isla (Isla) challenge the Court of
their actual reinstatement.[9] Since Appeals' 3 July 2012 Amended
they were dismissed after March 21, Decision2 and 23 November 2012
1989, the effectivity date of R.A. Resolution3 in CA-G.R. SP No. 115794,
6715[10] they are granted full affirming the National Labor Relations
backwages, meaning, without Commission's (NLRC) 30 July 2010
deducting from their backwages the Resolution.4
earnings derived by them elsewhere
during the period of their illegal
dismissal.[11] If reinstatement is no
The Facts
longer feasible, as when the
relationship between petitioner and
private respondents has become
strained, payment of their separation On 26 April 2004, Smart hired
pay in lieu of reinstatement is in order. respondent Jose Leni Z. Solidum
[12] (Solidum) as Department Head for
Smart Buddy Activation. Smart Buddy
Activation is under the Product
Marketing Group which is headed by
WHEREFORE, the petition is hereby
Isla. On 21 September 2005, Islagave
DENIED. The decision of respondent
Solidum a memorandum5 informing
NLRC is AFFIRMED, with modification
him of alleged acts of dishonesty,
in the sense that the backwages due
directing him to explain why his
private respondents shall be paid in
employment should not be terminated,
full, computed from the time they
and placing him under preventive
were illegally dismissed up to the time
suspension without pay for 30 days.
of the finality of this Decision.[13]
On 28 September 2005, Solidum
submitted his written explanation6 in
response to the 21 September 2005
SO ORDERED. notice.
 1. Declaring the 20-day extended
preventive suspension of complainant
On 22 October 2005, Isla gave
from October 22, 2005 to November
Solidum a memorandum7 dated 21
10, 2005 illegal and tantamount to
October 2005 informing him of a
constructive dismissal, and ordering
modified set of alleged acts of
respondents to jointly and severally
dishonesty, directing him to explain
pay complainant his corresponding
why his employment should not be
salaries, benefits, privileges,
terminated, extending his preventive
allowances and other
suspension by 10 days, and inviting
incentives/bonuses during the period
him to the administrative investigation
from October 22 to November 10,
scheduled on 26 October 2005.
2005, in the amount of P236,061.94;

On 11 November 2005, Isla gave

2. Ordering respondents to jointly and
Solidum a memorandum8 dated 9
severally pay the complainants
November 2005 terminating his
unpaid salaries, benefits, privileges,
employment "for fraud or willful
allowances, and other
breach of trust, falsification,
benefits/bonuses during the 30-day
misrepresentation, conflict of interest,
preventive suspension, in the amount
serious misconduct and dishonesty-
of P365,896.00;
related offenses."9

3. Declaring the dismissal of

Solidum filed against Smart a
complainant effective November 11,
complaint10 for illegal dismissal,
2005 as illegal, and ordering
illegal suspension, non-payment of
respondents to reinstate the
salaries, actual, moral and exemplary
complainant to his former position,
damages, and attorneys fees.
immediately upon receipt of this
decision, either physically or in the
payroll, at the option of the former,
In his 3 July 2006 Decision,11 the and failure to exercise their option
Labor Arbiter found that Solidums within ten (10) days hereof, shall place
preventive suspension and dismissal the complainant on payroll
were illegal and that he was entitled to reinstatement, with payment of
full back wages, moral and exemplary accrued salaries, allowances,
damages, and attorneys fees. The benefits/incentives and bonuses;
dispositive portion of the Decision
stated:
4. Ordering respondents to jointly and
severally pay complainant his full
WHEREFORE, premises all considered, backwages, inclusive of all benefits
judgment is hereby rendered in favor bonuses, privileges, incentives,
of complainant and against allowances or their money
respondents, as follows: equivalents, from date of dismissal on
November 11, 2005 until actual
reinstatement, partially computed as damages in the amount of P2 million,
follows: exemplary damages in the amount of
P2 million, and attorneys fees
equivalent to 10% of the judgment
a. Backwages and benefits - award.
P2,903,561.79

SO ORDERED.12
b. Quarterly performance bonus -
P935,640.00
On 25 July 2006, Smart appealed to
the NLRC. On 13 November 2006, the
c. Monthly Gas allowance - P90,693.00 Labor Arbiter issued a writ of
execution ordering the sheriff to
collect from petitioners P1,440,667.93,
d. Monthly Rice allowance - P9,000.00 representing Solidums accrued
salaries, allowances, benefits,
incentives and bonuses from 21 July to
20 October 2006. On 15 August and
e. Monthly drivers allowance -
25 October 2007, 11 February, 28
P68,175.00
April, 23 July and 11 November2008,
and 22 January 2009, the Labor Arbiter
issued seven other alias writs of
f. 13th month pay (pro-rata) - execution ordering the sheriff to
P265,569.68 collect from petitioners Solidums
accrued salaries, allowances, benefits,
incentives and bonuses.
g. Unpaid accumulated leaves 2004 &
2005 - P472,123.87
In its 26 January 2009 Resolution,13
the NLRC reversed the Labor Arbiters
h. Smart incentive entitlement - 3 July 2006 Decision and dismissed for
P7,370,250.00[;] lack of merit Solidums complaint.
Solidum filed a motion14 for
reconsideration dated 9 February
5. Ordering respondents to jointly and 2009.
severally pay complainant for the
foregone opportunity of pursuing
studies in the United Kingdom under On 4 May 2009, Solidum filed with the
the British Chevening Scholarship Labor Arbiter an ex-parte Motion15
Award, in the sum of 20,189.00 British praying that an alias writ of execution
pounds or Peso 1,982,727.37[; and] be issued directing the sheriff to
collect from petitioners P1,440,667.93,
representing Solidums accrued
6. Ordering respondents to jointly and salaries, allowances, benefits,
severally pay complainant moral
incentives and bonuses from 21 aspect in line with Gracia, et al. vs.
January to 20 April 2009. Philippine Airlines, Inc. and
International Container Terminal
Services vs. NLRC.18
In its 29 May 2009 Decision,16 the
NLRC denied for lack of merit
Solidums 9 February 2009 motion for Solidum appealed to the NLRC.
reconsideration.

The NLRCs Ruling

The Labor Arbiters Ruling

In its 31 May 2010 Decision,19 the

In his 29 July 2009 Order,17 the Labor NLRC reversed the Labor Arbiters 29
Arbiter denied for lack of merit July 2009 Order. The NLRC held that:
Solidums ex-parte motion praying
that an alias writ of execution be
issued directing the sheriff to collect In the case at bar, records show that
from petitioners P1,440,667.93, respondents appealed from the Labor
representing Solidums accrued Arbiters Decision to the Commission
salaries, allowances, benefits, on July 25, 2006. The Commission
incentives and bonuses from 21 resolved respondents appeal on
January to 20April 2009. The Labor January 26, 2009, reversing the
Arbiter held that: Decision of the Labor Arbiter dated
July 3, 2006. Notably, there is no
showing in the records that
In the instant case, the NLRC respondents reinstated complainant to
promulgated its Decision dated his former position. Hence, pursuant to
January 26, 2009 reversing this Article 223 of the Labor Code, as
Offices Decision dated July 03, 2006. amended, relative to the
Also, the NLRC in its Decision dated reinstatement aspect of the Labor
May 29, 2009 denied the Arbiters Decision, respondents are
complainants motion for obligated to pay complainants
reconsideration of its Decision dated salaries and benefits, computed from
January 26, 2009. This Office is July 13, 2006, when respondents
mindful of the fact that the NLRC is received a copy of the Labor Arbiters
tasked with the review of decisions Decision which, among others, ordered
promulgated by this Office, as such, it the reinstatement of complainant, up
is a higher tribunal as contemplated to the date of finality of the
by law. Commissions resolution reversing the
Labor Arbiters Decision, which, for
this purpose, is reckoned on May 29,
Verily, the recent decision of the NLRC 2009, when the Commission denied
reversing the Decision of this Office complainants Motion for
prevents any future issuance of any Reconsideration.
writ of execution on the reinstatement
Indeed, common sense dictates that Our Entry of Judgment dated June 01,
complainants entitlement to 2010 clearly states that the Decision
reinstatement salaries/wages and promulgated by this Commission on
benefits, emanating from the Labor May 29, 2009 had become final and
Arbiters order of reinstatement, executory on August 10, 2009. Thus,
presupposes that said order of We so hold that the date of finality of
reinstatement is still enforceable. Our Decision reversing the Labor
Here, the Labor Arbiters order of Arbiters Decision dated July 3, 2006 is
reinstatement dated July 3, 2006 was August 10, 2009, and the computation
no longer enforceable as of May 29, of complainants reinstatement or
2009 when the Commissions accrued salaries/wages and other
resolution reversing the Labor benefits should be up to August 10,
Arbiters order of reinstatement is 2009.
deemed to have become final as
hereinabove discussed. Patently then,
complainant is no longer entitled to Anent respondents Motion for
reinstatement salaries/wages and Reconsideration, We find the same
benefits after May 29, 2009. unmeritorious.23

Significantly, the Order of the Labor Petitoners appealed to the Court of

Arbiter being appealed from by Appeals.
complainant, denied the latters
motion for issuance of alias writ of
execution for the collection of his In his alias writ24 of execution dated
reinstatement salaries and benefits for 22 October 2010, the Labor Arbiter
the period covering January 21, 2009 ordered the sheriff to collect from
to April 20, 2009. The Labor Arbiter petitioners P1,440,667.93,
thus committed serious error in representing Solidums accrued
denying complainants motion with salaries, allowances, benefits,
respect to his reinstatement salaries incentives and bonuses from 21
and benefits as he is entitled to the January to 20 April 2009.
same for the period starting July 13,
2006 to May 29, 2009.20
The Court of Appeals Ruling

Solidum filed a motion21 for partial

reconsideration. Petitioners filed a
In its 25 January 2011 Decision,25 the
motion22 for reconsideration. In its
Court of Appeals granted petitioners
30July 2010 Resolution, the NLRC
petition for certiorari, prohibition and
granted Solidums motion for partial
mandamus with prayer for the
reconsideration and denied for lack of
issuance of a writ of preliminary
merit petitioners motion for
injunction and/or temporary
reconsideration. The NLRC held that:
restraining order and set aside the
NLRCs 31 May 2010 Decision and 30 2009, of the NLRC in the Illegal
July 2010 Resolution. The Court of Dismissal Case which effectively
Appeals held that: denied Private Respondents
Complaint for Illegal Dismissal against
Petitioners already attained finality on
The order of the Labor Arbiter denying June 1, 2010. Indeed, an Entry of
Private Respondents ex-parte motion Judgment was accordingly made.
for issuance of Alias Writ of Execution Clearly, Private Respondent can
is not a final order as there was neither pray nor cause this Court to
something else to be done, namely, grant his Ex-parte Motion for Issuance
the resolution of his Complaint for of Writ of Execution to reinstate him
Illegal Dismissal against Petitioners on since his dismissal by Petitioners was
the merits. The subject Order of the finally ruled to be legal; hence, the
Labor Arbiter did not put an end to the denial of his complaint for lack of
issues of illegal suspension and illegal merit. Ruling on Private Respondents
dismissal, and, thus, partakes the Ex-parte motion shall also have an
nature of an interlocutory order. It is effect of reviewing a final judgment
jurisprudential that an interlocutory which the law and the court abhor. It
order is not appealable until after the bears to stress that when a final
rendition of the judgment on the judgment becomes executory, it
merits for a contrary rule would delay thereby becomes immutable and
the administration of justice and unalterable.26
unduly burden the courts. Being
interlocutory in nature, the subject
Order could not have been validly Solidum filed a motion27 for
appealed. reconsideration.

Moreover, as correctly argued by the In his alias writ28 of execution dated

Petitioners, an appeal from an 18 May 2011, the Labor Arbiter
interlocutory order is a prohibited ordered the sheriff to collect from
pleading under Section 4 of the 2005 petitioners P1,440,667.93,
Revised Rules of Procedure of the representing Solidums accrued
NLRC. Consequently, the Labor salaries, allowances, benefits,
Arbiters order being interlocutory and incentives and bonuses from 21 April
unappealable, Public Respondent NLRC to 20 July 2009. Petitioners filed with
has no jurisdiction to rule on the the Court of Appeals a motion29 to
appeal except to dismiss the same. order Solidum to return P2,881,335.86,
The assailed Decision and the representing the total amount under
Resolution, rendered in excess of the the 22 October 2010 and 18 May 2011
Public Respondent NLRCs jurisdiction, alias writs of execution.
are therefore null.

In its 3 July 2012 Amended Decision,

Besides and more importantly, records the Court of Appeals partly granted
show that the Decision, dated May 29, Solidums motion for reconsideration
and denied petitioners motion to November 2012 Resolution, the Court
order the return of P2,881,335.86. The of Appeals held that:
Court of Appeals held that:

The move to reconsider the January

[T]here was a wrong appreciation of 26, 2009 decision of the NLRC was
fact relative to the date of finality of denied on May 29, 2009. Thereafter,
judgment. The true date when the May an Entry of Judgment was issued
29, 2009 NLRC decision became final which provides in particular the
and executory was on August10, 2009 following: "this is to certify that on
and not on June 1, 2010. (Rollo, page May 29, 2009, a DECISION was
1895) Conformably with the foregoing, rendered x x x and that the same has,
the involved portion of our ruling pursuant to Rules of the Commission,
which is the subject of the discussion became [sic] final and executory on
at hand is hereby modified by Aug. 10, 2009". (Rollo, p. 1895) It
changing the stated date therein from appears therefore that the situation
June 1, 2010 to August 10, 2009. contemplated in the last paragraph of
the Section 14 had been the case
here. In view of this, We find no cogent
On the last issue for consideration reason to reverse our earlier ruling
refund of monetary award, We find that August 10, 2009 is the true date
necessary to quote the following of finality of subject decision.
pronouncement of the High Court:
In the light, however, of our earlier
discussion on the true date of finality
of judgment, we cannot order the
The Court reaffirms the prevailing return of the amounts released by way
principle that even if the order of of the 8th and 9th Alias Writ of
reinstatement of the Labor Arbiter is Execution. The wages, allowances,
reversed on appeal, it is obligatory on incentives/benefits and bonuses
the part of the employer to reinstate received through the said writs
and pay the wages of the dismissed covered the period from January21,
employee during the period of appeal 2009 to July 20, 2009, thus, the latter
until reversal by the higher court. is not required to reimburse the same
(Juanito A. Garcia vs. Philippine due to the fact that one is entitled to
Airlines, Inc., G.R. No. 164856, January such amounts until the day that the
20, 2009) reinstatement order was reversed with
finality (which in this case falls on
August 10, 2009). (See Juanito A.
In view thereof, no refund will thus be Garcia vs. Philippine Airlines, Inc. G.R.
permitted by this Court.30 No. 164856, January 20, 2009)32

Petitioners filed a motion31 for partial Hence, the present petition.

reconsideration with motion to order
the return of P2,881,335.86. In its 23
The Issues and that the same has pursuant to the
Rules of the Commission, become final
and executory on Aug. 10, 2009and is
Petitioners raised as issues that the hereby recorded in the Book of Entries
Court of Appeals erred in ruling that of Judgments.
(1) the NLRCs 29 May 2009 Decision
became final and executory on 10
August 2009, and (2) Solidum was Quezon City, Philippines, June 01,
entitled to P2,881,335.86, 2010.34 (Boldfacing supplied)
representing the total amount under
the 22 October 2010 and 18 May 2011
alias writs of execution. Moreover, the certification35 issued by
the NLRC states that the NLRCs 29
May 2009 Decision becamefinal and
The Courts Ruling executory on 10 August 2009:

The petition is unmeritorious. This is to certify that the Decision in

NLRC Case No. 00-11-09564-05/NLRC
CA No. 049875-06, entitled: Jose Leni
The NLRCs 29 May 2009 Decision Z. Solidum vs. Smart Communications,
became final and executory on 10 Inc., Napoleon L.Nazareno, and/or
August 2009 as shown on the entry of Ricky P. Isla, was promulgated on 29
judgment.33 The entry of judgment May 2009; the same was mailed on 11
states: June 2009 and in the absence of return
cards, the decision had become final
and executory on 10 August 2009,
This is to certify that on May 29, 2009, (after sixty (60) calendar days from
a DECISION was rendered in the the date of mailing), and had been
above-entitled case, the dispositive recorded in the Book of Entries of
portion of which reads as follows: Judgment, pursuant to Rule VII Section
14 of the 2005 Revised Rules of
Procedure of the NLRC which provides:
"The Executive Clerk or Deputy
"WHERFORE, premises considered,
Executive Clerk shall consider the
complainants motion for
decision, resolution or order as final
reconsideration, as well as
and executory after sixty (60) calendar
respondents motion for injunction are
days from date of mailing in the
hereby both DENIED for lack of merit.
absence of return cards, certifications
Accordingly, Our January 26,2009
from the post office, or other proof of
Resolution is hereby REITERATED.
service to parties.36 (Boldfacing
supplied)

SO ORDERED."
Since the NLRCs 29 May 2009
Decision became final and executory
on 10 August 2009, Solidum is entitled
to P2,881,335.86, representing his
(b) Entry of Judgment. Upon the
accrued salaries, allowances, benefits,
expiration of the ten (10) calendar day
incentives and bonuses for the period
period provided in paragraph (a) of
21 January to 20 July 2009.
this section, the
decision/resolution/order shall, as far
as practicable, be entered in a book of
In Bago v. NLRC,37 the Court held that
entries of judgment.
employees are entitled to their
accrued salaries, allowances, benefits,
incentives and bonuses until the
(c) Allowance for Delay of Mail in the
NLRCs reversal of the labor arbiters
Issuance of Entries of Judgment. In
order of reinstatement becomes final
issuing entries of judgment, the
and executory, as shown on the entry
Executive Clerk of Court or the Deputy
of judgment. The Court held that:
Executive Clerk, in the absence of a
return card or certification from the
post office concerned, shall determine
Finally, on Arlyns claim that
the finality of the decision by making
respondents "unilaterally withheld her
allowance for delay of mail, computed
payroll reinstatement" after the NLRC
sixty (60) calendar days from the date
reversed on September 27, 2004 the
of mailing of the decision, resolution or
Labor Arbiters decision, Article 223,
order.
paragraph 6 of the Labor Code
provides that the decision of the NLRC
on appeals from decisions of the Labor
That the Court of Appeals may take
Arbiter "shall become final and
cognizance of and resolve a petition
executory after ten (10) calendar days
for certiorari for the nullification of the
from receipt thereof by the parties."
decisions of the NLRC on jurisdictional
The 2002 New Rules of Procedure of
and due process considerations does
the NLRC provided:
not affect the statutory finality of the
NLRC Decision. The 2002 New Rules of
Procedure of the NLRC so provided:
RULE VII

RULE VIII
SECTION 14. FINALITY OF DECISION OF
THE COMMISSION AND ENTRY OF SECTION 6. EFFECT OF FILING OF
JUDGMENT. (a) Finality of the PETITION FOR CERTIORARI ON
Decisions, Resolutions or Orders of the EXECUTION. - A petition for certiorari
Commission. Except as provided in with the Court of Appeals or the
Rule XI, Section 9, the decisions, Supreme Court shall not stay the
resolutions or orders of the execution of the assailed decision
Commission/Division shall become unless a temporary restraining order is
executory after ten (10) calendar days issued by the Court of Appeals or the
from receipt of the same. Supreme Court.
 finality of the NLRC January 31, 2005
Resolution, Arlyn's payroll
In the case at bar, Arlyn received the
reinstatement ended on April 16,
September 27, 2004 NLRC decision on
2005. x x x
October 25, 2004, and the January 31,
2005 NLRC Resolution denying her
Motion for Reconsideration on
WHEREFORE, the petition is, in light of
February 23, 2005. There is no
the foregoing discussions, DENIED and
showing that the Court of Appeals
the questioned decision of the court a
issued a temporary restraining order
quo is AFFIRMED with MODIFICATION
to enjoin the execution of the NLRC
in that respondent Standard
decision, as affirmed by its Resolution
Insurance, Co., Inc. is ordered to pay
of January 31, 2005. If above-quoted
the salaries due petitioner, Arlyn Bago,
paragraph (a) of Section 14 of Rule VII
from the time her payroll
of the 2002 NLRC New Rules of
reinstatement was withheld after the
Procedure were followed, the decision
promulgation on September 27, 2004
of the NLRC would have become final
of the decision of the National Labor
and executory on March 7, 2005, ten
Relations Commission until April 16,
(10) calendar days from February 25,
2005 when it became final and
2005. The NLRC, however, issued on
executory.38 (Boldfacing supplied)
June 16, 2005 a Notice of Entry of
Judgment stating that the NLRC
Resolution of January 31, 2005
became final and executory on April WHEREFORE, the petition is DENIED.
16, 2005, apparently following the The Court of Appeals' 3 July 2012
above-quoted last paragraph of Amended Decision and 23 November
Section 14 of Rule VII. No objection 2012 Resolution in CAG.R. SP No.
having been raised by any of the 115794 are AFFIRMED.
parties to the declaration in the Notice
of Entry of Judgment of the date of
SO ORDERED.