CELESTINO VIVIERO

SECOND DIVISION

[G.R. No. 138938. October 24, 2000]

CELESTINO VIVIERO, petitioner, vs. COURT OF APPEALS, HAMMONIA MARINE SERVICES, and HANSEATIC SHIPPING CO., LTD. respondents.

D E C I S I O N

BELLOSILLO, J.:

CELESTINO VIVERO, in this petition for review, seeks the reversal of the Decision of the Court of Appeals of 26 May 1999 setting aside the Decision of the National Labor Relations Commission of 28 May 1998 as well as its Resolution of 23 July 1998 denying his motion for its reconsideration, and reinstating the decision of the Labor Arbiter of 21 January 1997.

Petitioner Vivero, a licensed seaman, is a member of the Associated Marine Officers and Seamen's Union of the Philippines (AMOSUP). The Collective Bargaining Agreement entered into by AMOSUP and private respondents provides, among others -

ARTICLE XII

GRIEVANCE PROCEDURE

x x x x

Sec. 3. A dispute or grievance arising in connection with the terms and provisions of this Agreement shall be adjusted in accordance with the following procedure:

1. Any seaman who feels that he has been unjustly treated or even subjected to an unfair consideration shall endeavor to have said grievance adjusted by the designated representative of the unlicensed department abroad the vessel in the following manner:

A. Presentation of the complaint to his immediate superior.

B. Appeal to the head of the department in which the seaman involved shall be employed.

C. Appeal directly to the Master.

Sec. 4. If the grievance cannnot be resolved under the provision of Section 3, the decision of the Master shall govern at sea x x x x in foreign ports and until the vessel arrives at a port where the Master shall refer such dispute to either the COMPANY or the UNION in order to resolve such dispute. It is understood, however, if the dispute could not be resolved then both parties shall avail of the grievance procedure.

Sec. 5. In furtherance of the foregoing principle, there is hereby created a GRIEVANCE COMMITTEE to be composed of two COMPANY REPRESENTATIVES to be designated by the COMPANY and two LABOR REPRESENTATIVES to be designated by the UNION.

Sec. 6. Any grievance, dispute or misunderstanding concerning any ruling, practice, wages or working conditions in the COMPANY, or any breach of the Employment Contract, or any dispute arising from the meaning or the application of the provision of this Agreement or a claim of violation thereof or any complaint that any such crewmembers may have against the COMPANY, as well as complaint which the COMPANY may have against such crewmembers shall be brought to the attention of the GRIEVANCE COMMITTEE before either party takes any action, legal or otherwise.

Sec. 7. The COMMITTEE shall resolve any dispute within seven (7) days from and after the same is submitted to it for resolution and if the same cannot be settled by the COMMITTEE or if the COMMITTEE fails to act on the dispute within the 7-day period herein provided, the same shall be referred to a VOLUNTARY ARBITRATION COMMITTEE.

An "impartial arbitrator" will be appointed by mutual choice and consent of the UNION and the COMPANY who shall hear and decide the dispute or issue presented to him and his decision shall be final and unappealable x x x x[1]

As found by the Labor Arbiter -

Complainant was hired by respondent as Chief Officer of the vessel "M.V. Sunny Prince" on 10 June 1994 under the terms and conditions, to wit:

Duration of Contract - - - - 10 months

Basic Monthly Salary - - - - US $1,100.00

Hours of Work - - - - 44 hrs./week

Overtime - - - - 495 lump O.T.

Vacation leave with pay - - - - US $220.00/mo.

On grounds of very poor performance and conduct, refusal to perform his job, refusal to report to the Captain or the vessel's Engineers or cooperate with other ship officers about the problem in cleaning the cargo holds or of the shipping pump and his dismal relations with the Captain of the vessel, complainant was repatriated on 15 July 1994.

On 01 August 1994, complainant filed a complaint for illegal dismissal at Associated Marine Officers' and Seaman's Union of the Philippines (AMOSUP) of which complainant was a member. Pursuant to Article XII of the Collective Bargaining Agreement, grievance proceedings were conducted; however, parties failed to reach and settle the dispute amicably, thus, on 28 November 1994, complainant filed [a] complaint with the Philippine Overseas Employment Administration (POEA).[2]

The law in force at the time petitioner filed his Complaint with the POEA was EO No. 247.[3]

While the case was pending before the POEA, private respondents filed a Motion to Dismiss on the ground that the POEA had no jurisdiction over the case considering petitioner Vivero's failure to refer it to a Voluntary Arbitration Committee in accordance with the CBA between the parties. Upon the enactment of RA 8042, the Migrant Workers and Overseas Filipinos Act of 1995, the case was transferred to the Adjudication Branch of the National Labor Relations Commission.

On 21 January 1997 Labor Arbiter Jovencio Ll. Mayor Jr., on the basis of the pleadings and documents available on record, rendered a decision dismissing the Complaint for want of jurisdiction.[4] According to the Labor Arbiter, since the CBA of the parties provided for the referral to a Voluntary Arbitration Committee should the Grievance Committee fail to settle the dispute, and considering the mandate of Art. 261 of the Labor Code on the original and exclusive jurisdiction of Voluntary Arbitrators, the Labor Arbiter clearly had no jurisdiction over the case.[5]

Petitioner (complainant before the Labor Arbiter) appealed the dismissal of his petition to the NLRC. On 28 May 1998 the NLRC set aside the decision of the Labor Arbiter on the ground that the record was clear that petitioner had exhausted his remedy by submitting his case to the Grievance Committee of AMOSUP. Considering however that he could not obtain any settlement he had to ventilate his case before the proper forum, i.e., the Philippine Overseas Employment Administration.[6] The NLRC further held that the contested portion in the CBA providing for the intercession of a Voluntary Arbitrator was not binding upon petitioner since both petitioner and private respondents had to agree voluntarily to submit the case before a Voluntary Arbitrator or Panel of Voluntary Arbitrators. This would entail expenses as the Voluntary Arbitrator chosen by the parties had to be paid. Inasmuch however as petitioner chose to file his Complaint originally with POEA, then the Labor Arbiter to whom the case was transferred would have to take cognizance of the case.[7]

The NLRC then remanded the case to the Labor Arbiter for further proceedings. On 3 July 1998 respondents filed a Motion for Reconsideration which was denied by the NLRC on 23 July 1998.

Thus, private respondents raised the case to the Court of Appeals contending that the provision in the CBA requiring a dispute which remained unresolved by the Grievance Committee to be referred to a Voluntary Arbitration Committee, was mandatory in character in view of the CBA between the parties. They stressed that "since it is a policy of the state to promote voluntary arbitration as a mode of settling labor disputes, it is clear that the public respondent gravely abused its discretion in taking cognizance of a case which was still within the mantle of the Voluntary Arbitration Commitee's jurisdiction."[8]

On the other hand, petitioner argued -

(A)s strongly suggested by its very title, referral of cases of this nature to the Voluntary Arbitration Committee is voluntary in nature. Otherwise, the committee would not have been called Voluntary Arbitration Committee but rather, a Compulsory Arbitration Committee. Moreover, if the referral of cases of similar nature to the Voluntary Arbitration Committee would be deemed mandatory by virtue of the provisions in the CBA, the [NLRC] would then be effectively deprived of its jurisdiction to try, hear and decide termination disputes, as provided for under Article 217 of the Labor Code. Lastly, [respondents] ought to be deemed to have waived their right to question the procedure followed by [petitioner], considering that they have already filed their Position Paper before belatedly filing a Motion to Dismiss x x x x [9]

But the Court of Appeals ruled in favor of private respondents. It held that the CBA "is the law between the parties and compliance therewith is mandated by the express policy of the law."[10] Hence, petitioner should have followed the provision in the CBA requiring the submission of the dispute to the Voluntary Arbitration Committee once the Grievance Committee failed to settle the controversy.[11] According to the Court of Appeals, the parties did not have the choice to "volunteer" to refer the dispute to the Voluntary Arbitrator or a Panel of Arbitrators when there was already an agreement requiring them to do so. "Voluntary Arbitration" means that it is binding because of a prior agreement or contract, while "Compulsory Arbitration" is when the law declares the dispute subject to arbitration, regardless of the consent or desire of the parties.[12]

The Court of Appeals further held that the Labor Code itself enumerates the original and exclusive jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators, and prohibits the NLRC and the Regional Directors of the Department of Labor and Employment (DOLE) from entertaining cases falling under the same.[13] Thus, the fact that private respondents filed their Position Paper first before filing their Motion to Dismiss was immaterial and did not operate to confer jurisdiction upon the Labor Arbiter, following the well-settled rule that jurisdiction is determined by law and not by consent or agreement of the parties or by estoppel.[14]

Finally, the appellate court ruled that a case falling under the jurisdiction of the Labor Arbiter as provided under Art. 217 of the Labor Code may be lodged instead with a Voluntary Arbitrator because the law prefers, or gives primacy, to voluntary arbitration instead of compulsory arbitration.[15] Consequently, the contention that the NLRC would be deprived of its jurisdiction to try, hear and decide termination disputes under Art. 217 of the Labor Code, should the instant dispute be referred to the Voluntary Arbitration Committee, is clearly bereft of merit.[16] Besides, the Voluntary Arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency independent of, and apart from, the NLRC since his decisions are not appealable to the latter.[17]

Celestino Vivero, in his petition for review assailing the Decision of the Court of Appeals, alleges that the appellate court committed grave abuse of discretion in holding that a Voluntary Arbitrator or Panel of Voluntary Arbitrators, and not the Adjudication Branch of the NLRC, has jurisdiction over his complaint for illegal dismissal. He claims that his complaint for illegal dismissal was undeniably a termination dispute and did not, in any way, involve an "interpretation or implementation of collective bargaining agreement" or "interpretation" or "enforcement" of company personnel policies. Thus, it should fall within the original and exclusive jurisdiction of the NLRC and its Labor Arbiter, and not with a Voluntary Arbitrator, in accordance with Art. 217 of the Labor Code.

Private respondents, on the other hand, allege that the case is clearly one "involving the proper interpretation and implementation of the Grievance Procedure found in the Collective Bargaining Agreement (CBA) between the parties"[18] because of petitioner's allegation in his claim/assistance request form submitted to the Union, to wit:

NATURE OF COMPLAINT

3. Illegal Dismissal - Reason: (1) That in this case it was the master of M.V. SUNNY PRINCE Capt. Andersen who created the trouble with physical injury and stating false allegation; (2) That there was no proper procedure of grievance; (3) No proper notice of dismissal.

Is there a Notice of dismissal? _x_ Yes or ____ No

What date? 11 July 1994

Is there a Grievance Procedure observed? ____ Yes or _x_ No[19]

Private respondents further allege that the fact that petitioner sought the assistance of his Union evidently shows that he himself was convinced that his Complaint was within the ambit of the jurisdiction of the grievance machinery and subsequently by a Panel of Voluntary Arbitrators as provided for in their CBA, and as explicitly mandated by Art. 261 of the Labor Code.[20]

Thus, the issue is whether the NLRC is deprived of jurisdiction over illegal dismissal cases whenever a CBA provides for grievance machinery and voluntary arbitration proceedings. Or, phrased in another way, does the dismissal of an employee constitute a "grievance between the parties," as defined under the provisions of the CBA, and consequently, within the exclusive original jurisdiction of the Voluntary Arbitrators, thereby rendering the NLRC without jurisdiction to decide the case?

On the original and exclusive jurisdiction of Labor Arbiters, Art. 217 of the Labor Code provides -

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

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

(c) Cases arising from the interpretation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements (emphasis supplied).

However, any or all of these cases may, by agreement of the parties, be submitted to a Voluntary Arbitrator or Panel of Voluntary Arbitrators for adjudication. Articles 261 and 262 of the Labor Code provide -

Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement.

Art. 262. Jurisdiction Over Other Labor Disputes. - The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks (emphasis supplied).

Private respondents attempt to justify the conferment of jurisdiction over the case on the Voluntary Arbitrator on the ground that the issue involves the proper interpretation and implementation of the Grievance Procedure found in the CBA. They point out that when petitioner sought the assistance of his Union to avail of the grievance machinery, he in effect submitted himself to the procedure set forth in the CBA regarding submission of unresolved grievances to a Voluntary Arbitrator.

The argument is untenable. The case is primarily a termination dispute. It is clear from the claim/assistance request form submitted by petitioner to AMOSUP that he was challenging the legality of his dismissal for lack of cause and lack of due process. The issue of whether there was proper interpretation and implementation of the CBA provisions comes into play only because the grievance procedure provided for in the CBA was not observed after he sought his Union's assistance in contesting his termination. Thus, the question to be resolved necessarily springs from the primary issue of whether there was a valid termination; without this, then there would be no reason to invoke the need to interpret and implement the CBA provisions properly.

In San Miguel Corp. v. National Labor Relations Commission[21] this Court held that the phrase "all other labor disputes" may include termination disputes provided that the agreement between the Union and the Company states "in unequivocal language that [the parties] conform to the submission of termination disputes and unfair labor practices to voluntary arbitration."[22] Ergo, it is not sufficient to merely say that parties to the CBA agree on the principle that "all disputes" should first be submitted to a Voluntary Arbitrator. There is a need for an express stipulation in the CBA that illegal termination disputes should be resolved by a Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the same fall within a special class of disputes that are generally within the exclusive original jurisdiction of Labor Arbiters by express provision of law. Absent such express stipulation, the phrase "all disputes" should be construed as limited to the areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators, i.e., disputes relating to contract-interpretation, contract-implementation, or interpretation or enforcement of company personnel policies. Illegal termination disputes - not falling within any of these categories - should then be considered as a special area of interest governed by a specific provision of law.

In this case, however, while the parties did agree to make termination disputes the proper subject of voluntary arbitration, such submission remains discretionary upon the parties. A perusal of the CBA provisions shows that Sec. 6, Art. XII (Grievance Procedure) of the CBA is the general agreement of the parties to refer grievances, disputes or misunderstandings to a grievance committee, and henceforth, to a voluntary arbitration committee. The requirement of specificity is fulfilled by Art. XVII (Job Security) where the parties agreed -

Sec. 1. Promotion, demotion, suspension, dismissal or disciplinary action of the seaman shall be left to the discretion of the Master, upon consultation with the Company and notification to the Union. This notwithstanding, any and all disciplinary action taken on board the vessel shall be provided for in Appendix "B" of this Agreement x x x x [23]

Sec. 4. x x x x Transfer, lay-off or discipline of seamen for incompetence, inefficiency, neglect of work, bad behavior, perpetration of crime, drunkenness, insubordination, desertion, violation of x x x regulations of any port touched by the Company's vessel/s and other just and proper causes shall be at Master's discretion x x x in the high seas or foreign ports. The Master shall refer the case/dispute upon reaching port and if not satisfactorily settled, the case/dispute may be referred to the grievance machinery or procedure hereinafter provided (emphasis supplied).[24]

The use of the word "may" shows the intention of the parties to reserve the right to submit the illegal termination dispute to the jurisdiction of the Labor Arbiter, rather than to a Voluntary Arbitrator. Petitioner validly exercised his option to submit his case to a Labor Arbiter when he filed his Complaint before the proper government agency.

Private respondents invoke Navarro III v. Damasco[25] wherein the Court held that "it is the policy of the state to promote voluntary arbitration as a mode of settling disputes."[26] It should be noted, however, that in Navarro III all the parties voluntarily submitted to the jurisdiction of the Voluntary Arbitrator when they filed their respective position papers and submitted documentary evidence before him. Furthermore, they manifested during the initial conference that they were not questioning the authority of the Voluntary Arbitrator.[27] In the case at bar, the dispute was never brought to a Voluntary Arbitrator for resolution; in fact, petitioner precisely requested the Court to recognize the jurisdiction of the Labor Arbiter over the case. The Court had held in San Miguel Corp. v. NLRC[28] that neither officials nor tribunals can assume jurisdiction in the absence of an express legal conferment. In the same manner, petitioner cannot arrogate into the powers of Voluntary Arbitrators the original and exclusive jurisdiction of Labor Arbiters over unfair labor practices, termination disputes, and claims for damages, in the absence of an express agreement between the parties in order for Art. 262 of the Labor Code to apply in the case at bar. In other words, the Court of Appeals is correct in holding that Voluntary Arbitration is mandatory in character if there is a specific agreement between the parties to that effect. It must be stressed however that, in the case at bar, the use of the word "may" shows the intention of the parties to reserve the right of recourse to Labor Arbiters.

The CBA clarifies the proper procedure to be followed in situations where the parties expressly stipulate to submit termination disputes to the jurisdiction of a Voluntary Arbitrator or Panel of Voluntary Arbitrators. For when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration then that procedure should be strictly observed. Non-compliance therewith cannot be excused, as petitioner suggests, by the fact that he is not well-versed with the "fine prints" of the CBA. It was his responsibility to find out, through his Union, what the provisions of the CBA were and how they could affect his rights. As provided in Art. 241, par. (p), of the Labor Code -

(p) It shall be the duty of any labor organization and its officers to inform its members on the provisions of its constitution and by-laws, collective bargaining agreement, the prevailing labor relations system and all their rights and obligations under existing labor laws.

In fact, any violation of the rights and conditions of union membership is a "ground for cancellation of union registration or expulsion of officer from office, whichever is appropriate. At least thirty percent (30%) of all the members of a union or any member or members especially concerned may report such violation to the Bureau [of Labor Relations] x x x x"[29]

It may be observed that under Policy Instruction No. 56 of the Secretary of Labor, dated 6 April 1993, "Clarifying the Jurisdiction Between Voluntary Arbitrators and Labor Arbiters Over Termination Cases and Providing Guidelines for the Referral of Said Cases Originally Filed with the NLRC to the NCMB," termination cases arising in or resulting from the interpretation and implementation of collective bargaining agreements and interpretation and enforcement of company personnel policies which were initially processed at the various steps of the plant-level Grievance Procedures under the parties' collective bargaining agreements fall within the original and exclusive jurisdiction of the voluntary arbitrator pursuant to Art. 217 (c) and Art. 261 of the Labor Code; and, if filed before the Labor Arbiter, these cases shall be dismissed by the Labor Arbiter for lack of jurisdiction and referred to the concerned NCMB Regional Branch for appropriate action towards an expeditious selection by the parties of a Voluntary Arbitrator or Panel of Arbitrators based on the procedures agreed upon in the CBA.

As earlier stated, the instant case is a termination dispute falling under the original and exclusive jurisdiction of the Labor Arbiter, and does not specifically involve the application, implementation or enforcement of company personnel policies contemplated in Policy Instruction No. 56. Consequently, Policy Instruction No. 56 does not apply in the case at bar. In any case, private respondents never invoked the application of Policy Instruction No. 56 in their Position Papers, neither did they raise the question in their Motion to Dismiss which they filed nine (9) months after the filing of their Position Papers. At this late stage of the proceedings, it would not serve the ends of justice if this case is referred back to a Voluntary Arbitrator considering that both the AMOSUP and private respondents have submitted to the jurisdiction of the Labor Arbiter by filing their respective Position Papers and ignoring the grievance procedure set forth in their CBA.

After the grievance proceedings have failed to bring about a resolution, AMOSUP, as agent of petitioner, should have informed him of his option to settle the case through voluntary arbitration. Private respondents, on their part, should have timely invoked the provision of their CBA requiring the referral of their unresolved disputes to a Voluntary Arbitrator once it became apparent that the grievance machinery failed to resolve it prior to the filing of the case before the proper tribunal. The private respondents should not have waited for nine (9) months from the filing of their Position Paper with the POEA before it moved to dismiss the case purportedly for lack of jurisdiction. As it is, private respondents are deemed to have waived their right to question the procedure followed by petitioner, assuming that they have the right to do so. Under their CBA, both Union and respondent companies are responsible for selecting an impartial arbitrator or for convening an arbitration committee;[30] yet, it is apparent that neither made a move towards this end. Consequently, petitioner should not be deprived of his legitimate recourse because of the refusal of both Union and respondent companies to follow the grievance procedure.

WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and the case is remanded to the Labor Arbiter to dispose of the case with dispatch until terminated considering the undue delay already incurred.

SO ORDERED.

Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.

---

[1] Rollo, pp. 34-35.

[2] Id., pp. 49-50.

[3] Sec. 3, par. (d), of EO No. 247, the "Reorganization Act of the Philippine Overseas Employment Administration" (24 July 1987) provides -

Sec. 3. Powers and Functions. - x x x x (d) Exercise original and exclusive jurisdiction to hear and decide all claims arising out of an employee-employer relationship or by virtue of any law or contract involving Filipino workers for overseas employment including the disciplinary cases; and all pre-employment cases which are administrative in character involving or arising out of violation of requirement laws, rules and regulations including money claims arising therefrom, or violation of the conditions for issuance of license or authority to recruit workers x x x x

[4] Id., p. 53.

[5] Rollo, p. 66

[6] Id., p. 60.

[7] Id., p. 61.

[8] Rollo, p. 66.

[9] Rollo, p. 67.

[10] E. Razon, Inc. v. Secretary of Labor and Employment, G.R. No. 85867, 13 May 1993. 222 SCRA 1, 8.

[11] Rollo, p. 69.

[12] Id., p. 70, citing II Azucena, THE LABOR CODE WITH COMMENTS AND CASES 277 (1993).

[13] Id., p. 70.

[14] Tolentino v. Court of Appeals, G.R. No. 123445, 6 October 1997, 280 SCRA 226, 234.

[15] Labor Code, Art. 211, par. (a) provides that: "It is the policy of the State to promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes."

[16] Rollo, p. 70.

[17] Id., p. 70; see Luzon Development Bank v. Association of Luzon Development Bank Employees, G.R. No. 120319, 6 October 1995, 249 SCRA 162, 168-69, citing Labor Code, Art. 262-A, in relation to Labor Code, Art. 217 (b) and (c), as amended by RA 6715, Sec. 9.

[18] Id., p. 74.

[19] Id., p. 23.

[20] Id., p. 74.

[21] G.R. No. 108001, 15 March 1996, 255 SCRA 133.

[22] Id., p. 137.

[23] The aforesaid Appendix B provides for a Table of Offenses and Maximum Penalties, where the offense of insubordination, which includes "any acts of disobedience to lawful orders of a superior officer" is punished with the maximum penalty of dismissal; Rollo, p. 46.

[24] Rollo, pp. 36-37.

[25] G.R. No. 101875, 14 July 1995, 246 SCRA 260.

[26] Id., p. 264, citing Manguiat, MECHANISMS OF VOLUNTARY ARBITRATION IN LABOR DISPUTES, pp. 2-6 (1978)

[27] See Note 25, p. 264.

[28] See Note 20, pp. 143-44.

[29] Labor Code, Art. 241 (p).

[30] Rollo, p. 35.

--
Antonio L. Buensuceso Jr.

FROM ATTY. C. CARPIO ALDEGUER 'S BLOG

FRIDAY, MARCH 11, 2011

What is a quitclaim in relation to labor law?

A quitclaim, in relation to labor law, is defined as a waiver of a claim by an employee against his employer. An employer who may want to prevent an employee from filing future cases for the recovery of his monetary claims would be encouraged to prepare a quitclaim agreement in favor of the employee to prevent the latter from filing future monetary claims. In other words, a quitclaim is executed in order to settle once and for all the disputes arising from such employment relation and to close the lid on an impending litigation.

Are quitclaim agreements valid? Yes, quitclaims are valid contracts under Philippine laws. The validity of quitclaims coincides with Article 1306 of the Civil Code of the Philippines which states: "The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy."

The requisites for a valid quitclaim are: 1) that there was no fraud or deceit on the part of any of the parties; 2) that the consideration for the quitclaim is credible and reasonable; and 3) that the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. (See Francisco Soriano, Jr. vs. NLRC et al., G.R. No. 165594 April 23, 2007). In other words, employees, must not have been deceived in signing, or taken advantage of their vulnerability and ignorance of the law.

A quitclaim is a valid and binding, provided that it constitutes a credible and reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full and complete understanding of its import and consequences. (See Plastimer Industrial Corporation et al. vs. Natalia C. Gopo et al. G.R. No. 183390 February 16, 2011).

Usually, a quitclaim is prepared by the employer and is being utilized in instances where an employee files a labor dispute and subsequently agrees to a settlement, or when a resigning employee has been terminated from employment but given a substantial severance pay so that no future litigation can be filed by the employee for recovery of additional monetary claims.

Are there instances when a quitclaim has been declared void and ineffective? The answer is in the affirmative. According to jurisprudence, even if an employee has signed a satisfaction receipt for his claims, it does not necessarily result in a valid quitclaim. A quitclaim may not be considered as a valid agreement where a worker agrees to receive less compensation than what he is entitled to recover. It is well-settled that a deed of release or quitclaim cannot prevent an employee from demanding benefits to which he is legally entitled. The reason why quitclaims are commonly frowned upon as contrary to public policy, is that the employer and the employee do not obviously stand on the same footing, the tendency for the employer to drive the employee to the wall. (See Lourdes Marcos et al. vs. NLRC et al., G.R. No. 111744 September 8, 1995)

While rights may be waived under Article 6 of the Civil Code of the Philippines, the waiver must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. A quitclaim agreement is considered void where it obligates the workers concerned to forego their benefits while at the same time exempting the employer from any liability that it may choose to reject. This also runs counter to Article 22 of the Civil Code of the Philippines which provides that no one shall be unjustly enriched at the expense of another.

So how can quitclaims be validly enforced? It boils down to being transparent during negotiations. Parties must be well-informed of all the necessary data to enable each one to make a sound decision before signing a quitclaim agreement. All cards must be laid down the table with nothing to hide. This way, parties can effectively negotiate on a substantial settlement, even if it does not coincide with each other's ideal expectations.

--
Antonio L. Buensuceso Jr.

REASONS FOR HAVING A CAMERA

Reasons why you should always have a camera...(through the benevolence of the CLAYTONS from Florida.)

HAVE A TERRIFIC DAY !!!

COURTESY OF THE CLAYTONS FROM FLORIDA

YOU REAP WHAT YOU SOW

COURTESY OF THE CLAYTONS AND FRIENDS FROM FLORIDA

Subject: FW: Awesome Story

I'll be honest with you. I don't care about 95% of the pre-fab, chain e-mails that I get. But this one is awesome. Enjoy!
A VERY UPLIFTING STORY!

YOU REAP WHAT YOU SOW

Good morning said a woman as she walked up to the man sitting on ground.
The man slowly looked up.

This was a woman clearly accustomed to the finer things of life. Her coat was new.. She looked like she had never missed a meal in her life

His first thought was that she wanted to make fun of him, like so many others had done before.. "Leave me alone," he growled....

To his amazement, the woman continued standing.

She was smiling -- her even white teeth displayed in dazzling rows. "Are you hungry?" she asked.

"No," he answered sarcastically "I've just come from dining with the president. Now go away."

The woman's smile became even broader. Suddenly the man felt a gentle hand under his arm.

"What are you doing, lady?" the man asked angrily. "I said to leave me alone.

Just then a policeman came up. "Is there any problem, ma'am?" he asked...

"No problem here, officer," the woman answered. "I'm just trying to get this man to his feet. Will you help me?"

The officer scratched his head. "That's old Jack. He's been a fixture around here for a couple of years. What do you want with him?"

"See that cafeteria over there?" she asked. "I'm going to get him something to eat and get him out of the cold for awhile."

"Are you crazy, lady?" the homeless man resisted. "I don't want to go in there!" Then he felt strong hands grab his other arm and lift him up. "Let me go, officer. I didn't do anything."
" This is a good deal for you, Jack" the officer answered. "Don't blow it."

Finally, and with some difficulty, the woman and the police officer got Jack into the cafeteria and sat him at a table in a remote corner. It was the middle of the morning, so most of the breakfast crowd had already left and the lunch bunch had not yet arrived....

The manager strode across the cafeteria and stood by his table. "What's going on here, officer?" he asked. "What is all this, is this man in trouble?"

"This lady brought this man in here to be fed," the policeman answered.

"Not in here!" the manager replied angrily. "Having a person like that here is bad for business.."

Old Jack smiled a toothless grin. "See, lady. I told you so. Now if you'll let me go. I didn't want to come here in the first place."

The woman turned to the cafeteria manager and smiled.. "Sir, are you familiar with Eddy and Associates, the banking firm down the street?"

"Of course I am," the manager answered impatiently. "They hold their weekly meetings in one of my banquet rooms."

"And do you make a goodly amount of money providing food at these weekly meetings?"

"What business is that of yours?"

I, sir, am Penelope Eddy, president and CEO of the company."

"Oh."

The woman smiled again. "I thought that might make a difference." She glanced at the cop who was busy stifling a giggle. "Would you like to join us in a cup of coffee and a meal, officer?"

"No thanks, ma'am," the officer replied. "I'm on duty."

"Then, perhaps, a cup of coffee to go?"
"Yes, mam. That would be very nice."

The cafeteria manager turned on his heel, "I'll get your coffee for you right away, officer."

The officer watched him walk away. "You certainly put him in his place," he said.

"That was not my intent. Believe it or not, I have a reason for all this."

She sat down at the table across from her amazed dinner guest. She stared at him intently.. "Jack, do you remember me?"

Old Jack searched her face with his old, rheumy eyes. "I think so -- I mean you do look familiar."

"I'm a little older perhaps," she said. "Maybe I've even filled out more than in my younger days when you worked here, and I came through that very door, cold and hungry."

"Ma'am?" the officer said questioningly. He couldn't believe that such a magnificently turned out woman could ever have been hungry

"I was just out of college," the woman began. "I had come to the city looking for a job, but I couldn't find anything. Finally I was down to my last few cents and had been kicked out of my apartment. I walked the streets for days. It was February and I was cold and nearly starving. I saw this place and walked in on the off chance that I could get something to eat"

Jack lit up with a smile. "Now I remember," he said.. "I was behind the serving counter. You came up and asked me if you could work for something to eat. I said that it was against company policy."

"I know," the woman continued. "Then you made me the biggest roast beef sandwich that I had ever seen, gave me a cup of coffee, and told me to go over to a corner table and enjoy it. I was afraid that you would get into trouble... Then, when I looked over and saw you put the price of my food in the cash register, I knew then that everything would be all right"

"So you started your own business?" Old Jack said.

"I got a job that very afternoon. I worked my way up. Eventually I started my own business that, with the help of God, prospered." She opened her purse and pulled out a business card.. "When you are finished here, I want you to pay a visit to a Mr. Lyons...He's the personnel director of my company. I'll go talk to him now and I'm certain he'll find something for you to do around the office." She smiled. "I think he might even find the funds to give you a little advance so that you can buy some clothes and get a place to live until you get on your feet... If you ever need anything, my door is always opened to you."

There were tears in the old man's eyes. "How can I ever thank you?" he said.
"Don't thank me," the woman answered. "To God goes the glory. Thank Jesus... He led me to you."

Outside the cafeteria, the officer and the woman paused at the entrance before going their separate ways....

"Thank you for all your help, officer," she said.

"On the contrary, Ms. Eddy," he answered. "Thank you. I saw a miracle today, something that I will never forget. And..And thank you for the coffee.."

If you have missed knowing me, you have missed nothing.

If you have missed some of my emails, you might have missed a laugh..

But, if you have missed knowing my Lord and Savior, Jesus Christ, you have missed everything in the world.

Have a Wonderful Day. May God Bless You Always and don't forget that when you "cast your bread upon the waters," you never know how it will be returned to you..
God is so big He can cover the whole world with his Love and so small He can curl up inside your heart..

When God leads you to the edge of the cliff, trust Him fully and let go..
Only 1 of 2 things will happen, either He'll catch you when you fall, or He'll teach you how to fly!

The power of one sentence!

God is going to shift things around for you today and let things work in your favor.

If you believe, send it.
If you don't believe, delete it.

God closes doors no man can open & God opens doors no man can close..
If you need God to open some doors for you...send this on.

Have a blessed day and remember to be a blessing.

LIVE WELL, LOVE MUCH, LAUGH OFTEN

Happy New Year !!!

RATTLESNAKE THE BIGGEST EVER CAUGHT

This is exactly why you should not go looking for the golf balls hit 'Out of Bounds' in Florida !!!

THIS IS NOT A PYTHON!This is a 15 foot Eastern Diamondback rattlesnake - the
largest ever caught on record, in fact.
This snake was found Near the St. Augustine outlet, in a new KB homes subdivision just south of Jacksonville FL.

A little research revealed the following:
One bite from a snake of this size would contain enough venom to
kill over 40 full grown men.

The head of this snake alone is larger than the hand of a normal sized man.
A bite from those fangs would be comparable to being stabbed by two
curved, 1/4 inch diameter screwdrivers.

The knife being used to draw out the fangs for the middle picture has a blade around 6 inches long.
This snake is estimated to have weighed over 170 pounds.
(How much do you weigh?)

Notice the girth of this snake as compared to the cop's leg in the
first picture (and he is not a small man).
A snake of this size could easily swallow a 2 year-old child
(and dogs, pigs, etc).
A snake this size has an approximately 5 1/2 foot accurate striking
distance. (The distance for an average size rattlesnake is about 2 feet.. )
This snake has probably been alive since George Bush Sr. was President.
Now just ask yourself these questions: What has this snake been
feeding on and where are its offspring?
END OF SHARED MESSAGE
COURTESY OF THE CLAYTONS AND FRIENDS FROM FLORIDA

SIEMENS vs. DOMINGO

THIRD DIVISION

[G.R. No. 150488, July 28, 2008]

SIEMENS PHILIPPINES, INC. AND MR. ERNST H. BEHRENS, PETITIONERS, VS. ENRICO A. DOMINGO, RESPONDENT.

DECISION

NACHURA, J.:

On appeal via petition for review on certiorari under Rule 45 of the Rules of Court are the Decision^[1] and Resolution^[2] of the Court of Appeals dated March 12, 2001 and October 18, 2001, respectively, in CA-G.R. SP No. 58512 entitled Enrico A. Domingo versus National Labor Relations Commission (First Division) and Siemens Philippines, Inc., and/or Mr. E. H. Behrens.

This is an offshoot of an illegal dismissal case filed by Enrico A. Domingo (Domingo) against Siemens Philippines, Inc., Manila (Siemens Philippines) in July 1995 wherein Domingo got a favorable decision from the Labor Arbiter (LA). On appeal, however, the National Labor Relations Commission (NLRC) reversed the decision of the LA and dismissed the case. Aggrieved, Domingo filed a petition for review on certiorari^[3] with the Court of Appeals (CA). Finding merit in his petition, the CA reversed the judgment of the NLRC and reinstated the decision of the LA.

The Facts

On March 16, 1987, Domingo signed an Employment Contract with Maschinen & Technik, Inc. (MATEC) as a consultant, with a compensation package of Php8,000.00/month salary and an allowance of Php400.00/month. MATEC is a subsidiary of Siemens Philippines.^[4] Thereafter, Domingo was given additional work by MATEC, in which he was paid DM1,800.00/month on top of his original salary. The extra work was the result of a contract entered into by MATEC and Siemens Aktiengesellschaft^[5] (Siemens Germany), whereby MATEC, at the request of Siemens Germany, hired Domingo to handle the operation of OEN OEV TD.^[6] Siemens Germany is a German company which has an investment in Siemens Philippines.^[7]

On January 28, 1992, Electronic Telephone System Industries, Inc. (ETSI) availed of Domingo's services as assistant manager. ETSI, like MATEC is a subsidiary of Siemens Philippines.^[8] The Contract of Employment^[9] of Domingo with ETSI provides that the latter shall have the right to assign the said contract in favor of Siemens Philippines, which is a corporation to be incorporated under the laws of the Philippines.^[10]

On March 16, 1992, while still an assistant manager of ETSI, Domingo was hired as a consultant by Siemens Germany in the field of text and data networks for a period of twelve (12) months.^[11] As compensation, he received DM20,000.00, payable once for every twelve-month period.^[12]

On March 31, 1992, Siemens Germany sent a letter to ETSI guaranteeing the consultancy agreement between Siemens Germany and Domingo. The pertinent portion of the letter reads:

Under Item 7.1, the consultancy agreement is valid for 12 months. To give Mr. R. Domingo the necessary security, we guarantee you that we will extend the Consultancy Agreement with Mr. R. Domingo for as long as he has an employment relationship with you.

Please tell him that you (ETSI) will ensure that the [sic] Siemens AG will extend the Consultancy Agreement for as long as an employment relationship exists between ETSI and Mr. R. Domingo.^[13]

On June 1, 1992, Domingo signed a Contract of Employment with Siemens Philippines. The relevant portions of the contract read:

WITNESSETH : That

WHEREAS, the COMPANY, is taking over the greater part of the business activities, of ELECTRONIC TELEPHONE SYSTEMS INDUSTRIES, INC. (ETSI),

WHEREAS, the COMPANY has offered to engage the services of the EMPLOYEE as Assistant Manager and the EMPLOYEE has agreed to accept such employment under the terms and conditions mutually acceptable to both parties.

NOW THEREFORE, for and in consideration of the foregoing premises and the mutual covenants hereinafter contained, the parties hereto have agreed as follows:

1. The COMPANY hereby engages the services of the EMPLOYEE as Assistant Manager - Public Communications Systemsand the EMPLOYEE hereby accepts such employment, as a regular employee of the COMPANY in accordance with the terms and conditions of this contract. The term of the EMPLOYEE's employment shall begin on 01 June 1992. The EMPLOYEE shall cease from this date to be an employee of ETSI and the EMPLOYEE's contract of employment with ETSI is thereby deemed terminated and superseded by this Contract.

x x x x

3. The EMPLOYEE shall suffer no diminution in salary, benefits and privileges that he enjoyed as a former employee of ETSI. It is hereby agreed that the EMPLOYEE's length of service with ETSI shall be credited and recognized by the COMPANY. For this purpose, the COMPANY acknowledges that the EMPLOYEE's hiring date with ETSI is 01 January 1992.

6. The COMPANY shall pay the EMPLOYEE a salary of Twenty-Four Thousand One Hundred Fifty Pesos (P24,150.00) per month. The payments will be made [during] the 15 and 30 of each month.
   
   
7. During the period of his employment, the EMPLOYEE shall not be connected in any other work capacity or employments, nor be otherwise involved, directly or indirectly, with any other business or concern whatsoever without first having obtained the written consent of the COMPANY. It is the COMPANY's intention that the EMPLOYEE devote[s] all of his efforts towards the fulfillment of his obligations under this contract.^[14]
   

On March 11, 1993, while Domingo was already in the employ of Siemens Philippines, Siemens Germany extended the consultancy agreement with Domingo for another twelve (12) months. Again, on March 16, 1994, Siemens Germany renewed the consultancy agreement with Domingo for another six (6) months.^[15] Domingo's consultancy contract expired in September 1994.^[16] Complacent that the consultancy agreement would be renewed in accordance with the guarantee letter, Domingo continued to render service as a consultant despite the absence of a formal notice of renewal.^[17] He had every reason to feel secure because, in January 1995, without his contract being renewed, he was even made to accompany to Hong Kong the General Manager of Siemens Germany and the Division Manager of Siemens Philippines to seal an agreement between Siemens Philippines and Philippine Long Distance Telephone Company involving a US$1.09M Packet Switching Contract.^[18]

Earlier, on October 31, 1994, Siemens Philippines sent a letter^[19] to Domingo proposing a new incentive scheme. The letter was signed by Sepp E. Tietze, General Manager, VS Regional Manager Singapore; and by Ernst H. Behrens (Behrens), President and Chief Operating Officer of Siemens Philippines Inc., Manila. The relevant portions of the letter read:

We refer to your special arrangement with VS Munich (formally OEN VD) which expired September 1994.

It is the VS policy to let all sales-related employees contribute on the success of the group.

Consequently, an incentive scheme will shortly be introduced for all VS Divisions in South East (sic) Asia. As already discussed with you and agreed upon[,] you will receive a new contract incorporating the incentive scheme adapted to the conditions within the Philippines.^[20]

The incentive scheme was, in effect, a replacement of his consultancy contract with Siemens Germany. Under the scheme, Domingo would receive a sales compensation package of 20% of his peso salary, or a maximum of about Php70,000.00 per annum, whereas under the consultancy agreement, he was receiving a fixed salary of Php370,000.00 (DM20,000.00) per annum. Feeling humiliated by the diminution of his salary, Domingo was forced to resign. On February 27, 1995, Domingo tendered his Resignation Letter^[21] to Siemens Philippines, the pertinent portion of which reads:

Under the present circumstances and with the result of our discussions with Mr. Tietze and Mr. Behrens, I am tendering my resignation effective close of office on March 31, 1995. I regret that I have to make this decision but I hope you will understand that I am forced to do it. I wish you good luck in the VS Division and hope to see you again in the future.

On July 6, 1995, Domingo filed a complaint for illegal dismissal and prayed for the payment of salaries, 13^th month pay, backwages, damages, separation pay and attorney's fees.^[22] Domingo alleged that he was forced to resign because of the act of Siemens Philippines of not renewing the consultancy agreement.^[23] Siemens Philippines countered that Domingo's resignation was voluntary and that they were not privy to the consultancy agreement between Domingo and Siemens Germany.^[24]

On May 28, 1997, the Labor Arbiter rendered a Decision,^[25] disposing, as follows:

WHEREFORE, judgment is hereby rendered finding complainant [Domingo] to have been illegally dismissed and the respondent[s] are ordered, jointly and severally, to pay complainant his backwages and other benefits from April 1, 1995 up to October 5, 1995, consultancy fees of DM20,000.00 from October 1, 1994 to October 5, 1995 but rounded up to one year, or its peso equivalent at the time [of] payment, moral damages of Five Hundred Thousand Pesos (P500,000.00); exemplary damages of Five Hundred Thousand Pesos P500,000.00, separation pay equivalent to two months pay per year of service and attorney's fees of 10% of whatever amount complainant will recover in this case. Complainant's consultancy fee shall be included in the computation of his separation pay using the following formula: DM20,000.00 over 12 multiplied by 2 and the product multiplied by 3.

SO ORDERED.^[26]

On appeal, the NLRC reversed the ruling of the LA in a Decision^[27] dated August 25, 1999, and declared that Domingo was not illegally terminated. The fallo of the said Decision reads:

WHEREFORE, the appealed decision is set aside. The complaint below is dismissed for being without merit.

SO ORDERED.

Domingo filed a Motion for Reconsideration, but the same was denied by the NLRC in an Order^[28] dated January 26, 2000.

Hard pressed, Domingo filed a petition for certiorari^[29] before the CA assailing the NLRC for grave abuse of discretion in declaring that Domingo was not forced to resign, and for its erroneous appreciation of the evidence on record that resulted in the reversal of the Decision of the LA.^[30]

On March 12, 2001, the CA rendered a Decision^[31] declaring that Domingo was constructively dismissed. His resignation was adjudged to be involuntary, the substantial decrease in compensation having made Domingo's employment with Siemens Philippines unbearable. The decretal portion of the Decision reads:

WHEREFORE, premises considered, the petition is granted. The appealed decisions of the NLRC are hereby REVERSED and SET

ASIDE. In lieu thereof, the decision of the Labor Arbiter is hereby reinstated.

SO ORDERED.^[32]

A motion for reconsideration was filed by Siemens Philippines and Behrens, but the same was denied in a Resolution^[33] dated October 18, 2001.

On December 13, 2001, Siemens Philippines and Behrens filed the present petition for review on certiorari. They raise the following arguments:

Siemens, Inc. was not a party to the consultancy agreement, hence, it could not guarantee its extension/renewal.

The non-extension/renewal of respondent's consultancy agreement with Siemens AG may not be taken as a circumstance leaving respondent with no alternative but to resign.

Since respondent's resignation was purely voluntary, Siemens, Inc. did not commit illegal dismissal. Hence, there is absolutely no basis in holding petitioners liable to respondent for backwages, consultancy fee, separation pay, damages and attorney's fees.^[34]

The Issue

The crucial issue in this case is whether there was constructive dismissal that would entitle Domingo to his monetary claims.

The Ruling of the Court

I. On Illegal Dismissal

We believe, and so hold, that Domingo was constructively dismissed from employment.

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal.^[35] The gauge for constructive dismissal is whether a reasonable person in the employee's position would feel compelled to give up his employment under the prevailing circumstances. Constructive dismissal is defined as quitting when continued employment is rendered impossible, unreasonable or unlikely as the offer of employment involves a demotion in rank or diminution in pay.^[36] It exists when the resignation on the part of the employee was involuntary due to the harsh, hostile and unfavorable conditions set by the employer. It is brought about by the clear discrimination, insensibility or disdain shown by an employer which becomes unbearable to the employee. An employee who is forced to surrender his position through the employer's unfair or unreasonable acts is deemed to have been illegally terminated and such termination is deemed to be involuntary.^[37]

We have, under the law's mandate, consistently resolved this situation in favor of the employee in order to protect his rights and interests from the coercive acts of the employer.

In the instant case, Domingo's resignation was brought about by the decision of the management of Siemens Philippines not to renew â€" or work for the renewal of â€" his consultancy contract with Siemens Germany which clearly resulted in the substantial diminution of his salary. The situation brought about the feeling of oppression which compelled Domingo to resign. The diminution in pay created an adverse working environment that rendered it impossible for Domingo to continue working for Siemens Philippines. His resignation from the company was in reality not his choice but a situation created by the company, thereby amounting to constructive dismissal.

The argument of Siemens Philippines that it is not privy to the consultancy agreement between Domingo and Siemens Germany is unacceptable. By virtue of its employment contract with Domingo, Siemens Philippines stepped into the shoes of ETSI as Domingo's employer. The stipulation in the contract that Domingo shall suffer no diminution in salary, benefits and privileges that he enjoyed as employee of ETSI is, in effect, assumption by Siemens Philippines of ETSI's obligations and commitments. This included the guarantee that Domingo's consultancy contract with Siemens Germany would be renewed. After all, there was a commitment by Siemens Germany that the consultancy contract would continue as long as Domingo remained an employee of ETSI; and Domingo's employment with Siemens Philippines was merely a continuation of his employment with ETSI.

While admittedly, Siemens Philippines is not a party to the arrangement between Siemens Germany, ETSI and Domingo, knowledge of and acquiescence to - if not actual concurrence in - the arrangement can be imputed to Siemens Philippines as to bind it to the arrangement. This conclusion finds support in the following:

First, based on the findings of facts of the LA, NLRC and CA ― MATEC, ETSI, Siemens Philippines and Siemens Germany are related companies, the first three being subsidiaries of the parent company, and the fourth, Siemens Germany, having an investment in Siemens Philippines. Short of piercing the veil of corporate fiction, we note the intimate corporate relationship of Siemens Germany and Siemens Philippines, including the practice of the two companies of integrating their workforce.

Second, in Domingo's contract of employment with Siemens Philippines, it is provided that Domingo shall not be connected in any other work capacity or employment or be otherwise involved, directly or indirectly, with any other business or concern without first having obtained the written consent of the company. Yet, Siemens Philippines never questioned the continued consultancy work of Domingo with Siemens Germany, not even when the consultancy agreement was renewed twice during the lifetime of Domingo's contract of employment with Siemens Philippines.

Third, the guarantee letter issued by Siemens Germany in favor of Domingo was never questioned, much less revoked by Siemens Philippines when it assumed the employment of Domingo. The Guarantee Letter was a security given to Domingo by Siemens Germany assuring Domingo that Siemens Philippines would ensure that Siemens Germany would extend the consultancy agreement as long as Domingo was under its employ.

Fourth, the consultancy agreement was a form of benefit or privilege given to Domingo by ETSI, a privilege that was allowed by Siemens Philippines to continue when it took over the majority of the business activities of ETSI and, consequently, became Domingo's employer. The outright removal of the privilege contravenes the law, because it resulted in the effective diminution of Domingo's salary.

II. On Domingo's Monetary Claims

As stated above, Domingo's work as a consultant for Siemens Germany was a privilege or benefit, if not actually granted, at least acquiesced in by Siemens Philippines. However, this does not mean that the latter corporation also assumes the responsibility of compensating Domingo for his work as a consultant, even if, by stepping into the shoes of ETSI, it effectively sealed the guarantee of Siemens Germany for the renewal of Domingo's consultancy contract. In other words, what Siemens Philippines granted to Domingo was only the privilege to work in another corporation, but it did not undertake to compensate him for such work.

Before a corporation can be held accountable for the corporate liabilities of another, the veil of corporate fiction must first be pierced. Thus, before Siemens Philippines can be held answerable for the obligations of Siemens Germany to its employees, it must be sufficiently established that the two companies are actually a single corporate entity, such that the liability of one is the liability of the other. On this aspect, Domingo has failed to present the proof necessary to pierce the corporate veil between the two companies.

Ordinarily, when there is constructive dismissal, which is a form of illegal dismissal, the employer is liable for the full amount of backwages, if reinstatement is no longer possible, and separation pay. In the case at bar, we cannot hold Siemens Philippines liable for the monetary obligations of Siemens Germany. The circumstances surrounding this case necessitate a different treatment in the award of backwages and separation pay, since the companies involved are separate and distinct from each other. However, by Siemens Philippines' failure to work for the renewal of Domingo's consultancy contract with Siemens Germany, Siemens Philippines may be held answerable in damages to Domingo.

Consequently, Domingo's constructive dismissal entitles him to his monetary claims, subject to the following modifications:

First, we are not in accord with the Decision of the LA finding Behrens, the President and Chief Executive Officer of Siemens Philippines, solidarily liable with the company. A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability of the corporation they represent. As a rule, they are only solidarily liable with the corporation for the termination of employees if they acted with malice or bad faith.^[38] In the case at bar, malice or bad faith on the part of Behrens in the constructive dismissal of Domingo was not sufficiently proven to justify a ruling holding him solidarily liable with Siemens Philippines.

Second, an illegally or constructively dismissed employee is entitled to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are awarded conjunctively.^[39]

As a rule, separation pay is awarded to an illegally dismissed employee, computed at the rate of one month pay per year of service. Accordingly, the LA decision granting separation pay equivalent to two months salary per year of service must be modified. There is nothing on record that even remotely suggests that it is the company policy of Siemens Philippines to grant its employees separation pay of two months' salary for every year of service. Thus, in consonance with our previous rulings,^[40] Domingo shall be awarded separation pay in the amount of one month pay for every year of service, but consultancy fees shall not be included in the computation of his separation pay. As discussed above, the evidence presented by Domingo is not sufficient to pierce the veil of corporate fiction between Siemens Philippines and Siemens AG, which would make Siemens Philippines liable for the monetary obligations of Siemens AG.

Third, the backwages that should be awarded to Domingo shall be reckoned from the time his constructive dismissal took effect until the finality of this decision. This is in conformity with Article 279 of the Labor Code which provides that an employee who is unjustly dismissed from work shall be entitled to full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Since reinstatement of Domingo is no longer possible due to his strained relations with the management of Siemens Philippines, and considering the position he held in the company, he is lawfully entitled to receive backwages. For the same reason cited above, consultancy fees shall be excluded in the computation of Domingo's backwages.

Finally, moral damages may be recovered when the dismissal of the employee was tainted by bad faith or fraud; or when it constituted an act oppressive to labor or done in a manner contrary to morals, good customs or public policy. Exemplary damages are recoverable if the dismissal was done in a wanton, oppressive, or malevolent manner.^[41] In this case, we have found that there was bad faith in the failure or refusal of Siemens Philippines to work for the renewal of Domingo's consultancy contract with Siemens Germany. But while we affirm Domingo's entitlement to these damages, they are not intended to enrich the dismissed employee. Consequently, we find the amount of P50,000.00 for moral damages and P50,000.00 for exemplary damages sufficient to allay the sufferings experienced by Domingo and by way of example or correction for public good, respectively.

WHEREFORE, the Decision of the Court of Appeals, dated March 12, 2001, is hereby AFFIRMED WITH THE MODIFICATION that petitioner Siemens Philippines, Inc. is hereby ordered to pay respondent Enrico A. Domingo the following:

(1) separation pay equivalent to one month pay per year of service;

(2) full backwages and other benefits from the date of his constructive dismissal up to the finality of this Decision;

(3) moral damages of fifty thousand pesos (P50,000.00);

(4) exemplary damages of fifty thousand pesos (P50,000.00); and

(5) attorney's fees.

This case is REMANDED to the Labor Arbiter for computation of the separation pay, backwages, and other monetary awards due respondent.

SO ORDERED.

Ynares-Santiago, (Chairperson), Austria-Martinez, Chico-Nazario, and Reyes, JJ., concur.

---

^[1] Penned by Associate Justice Rodrigo V. Cosico, with Associate Justices Ramon A. Barcelona and Alicia L. Santos, concurring; rollo, pp. 44-55.

^[2] Rollo, p. 57.

^[3] RULES OF COURT, Rule 65.

^[4] Rollo, p. 177.

^[5] Appears in some parts of the records as Aktiengeselsschaft.

^[6] Rollo, pp. 92-94.

^[7] Id. at 44.

^[8] Id. at 178.

^[9] Id. at 100-101.

^[10] Id.

^[11] Id. at 70.

^[12] Id. at 72.

^[13] Id. at 75.

^[14] Id. at 67-68.

^[15] Id. at 180.

^[16] Id. at 403.

^[17] Id. at 181, 403.

^[18] Id. at 181.

^[19] Id. at 119.

^[20] Id.

^[21] Id. at 77.

^[22] Id. at 46.

^[23] Id. at 200.

^[24] Id. at 183.

^[25] Penned by Labor Arbiter Vladimir P. L. Sampang; rollo, pp. 177-192.

^[26] Id. at 191-192.

^[27] Penned by Commissioner Vicente S.E. Veloso, with Presiding Commissioner Rogelio I. Rayala and Commissioner Alberto R. Quimpo, concurring; rollo, pp. 255-269.

^[28] Id. at 282-283.

^[29] RULES OF COURT, Rule 65.

^[30] Rollo, p. 47.

^[31] Penned by Associate Justice Rodrigo V. Cosico, with Associate Justices Ramon A. Barcelona and Alicia L. Santos, concurring; rollo, pp. 44-55.

^[32] Id. at 54.

^[33] Id. at 57.

^[34] Rollo, pp. 23-24.

^[35] Francisco v. NLRC, G.R. No. 170087, August 31, 2006, 500 SCRA 690, 702.

^[36] New Ever Marketing, Inc. v. Court of Appeals, G.R. No. 140555, July 14, 2005, 463 SCRA 284, 297.

^[37] Aguilar v. Burger Machine Holdings Corporation, G.R. No. 172062, October 30, 2006, 506 SCRA 266, 273.

^[38] MAM Realty Development Corporation v. NLRC, 314 Phil. 838, 844 (1995).

^[39] Aurora Land Projects Corporation v. NLRC, 344 Phil. 44, 58 (1997); Torillo v. Leogardo, Jr., G.R. No. 77205, May 27, 1991, 197 SCRA 471, 477.

^[40] Rutaquio v. NLRC, 375 Phil. 405 (1999); Gaco v. NLRC, G.R. No. 104690, February 23, 1994, 230 SCRA 261, citing Pepsi-Cola Bottling Co v. NLRC, 210 SCRA 277 (1992); De Vera v. NLRC, G.R. No. 93212, November 22, 1990, 191 SCRA 632; Carandang v. Dulay, G.R. No. 90492, August 20, 1990, 188 SCRA 792; Quezon Electric Cooperative v. NLRC, G.R. Nos. 79718-22, April 12, 1989, 172 SCRA 89.

^[41] Norkis Trading Co., Inc. v. NLRC, G.R. No. 168159, August 19, 2005, 467 SCRA 461, 473; Garcia v. NLRC, G.R. No. 110518, August 1, 1994, 234 SCRA 632, 638.

E-Library Doc. ID: 12180017421451483464

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Antonio L. Buensuceso Jr.