Luna vs. Allado Construction Co., Inc.

G.R. No. 175251. May 30, 2011


Luna filed a complaint before the Executive Labor Arbiter, alleging that he continuously rendered services as a warehouseman and a timekeeper in every construction project undertaken by Allado Construction. Sometime in 2001, he was given a travel order to proceed to [respondents’] main office in Davao City for reassignment. Upon arrival at the office,  he was ordered to sign several sets of “Contract of Project Employment”. He refused to sign the said contracts. Because of his refusal, he was not given a reassignment or any other work.

Respondents, on the other hand, alleged that petitioner applied for a leave of absence which was granted. Upon expiration of his leave, he was advised to report to the company’s project in Sarangani Province. However, he refused and claimed instead that he had been dismissed illegally.

Labor Arbiter dismissed petitioner’s complaint finding that he was deemed to have resigned but ordered Allado Construction to pay him the amount of P18,000.00 by way of financial assistance. Only respondents interposed an appeal with the NLRC,  purely for the purpose of questioning the validity of the grant of financial assistance made by the Labor Arbiter.

NLRC reversed the decision of LA and declared respondents guilty of illegal dismissal and ordered them to pay petitioner one-month salary for every year of service as separation pay.

The Court of Appeals held that it was grave abuse of discretion for the NLRC to rule on the issue of illegal dismissal when the only issue raised to it on appeal was the propriety of the award of financial assistance.


(1) Whether the NLRC could still review issues not brought during the appeal

(2) Whether Luna is illegally dismissed

(3) Whether the award of financial assistance on the ground of principle of social justice shall be upheld


(1) No, the NLRC evidently went against its own rules of procedure when it passed upon the issue of illegal dismissal although the question raised by respondents in their appeal was concerned solely with the legality of the labor arbiter’s award of financial assistance despite the finding that the petitioner was lawfully terminated. NLRC shall, in cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. As a consequence thereof, any other issues which were not included in the appeal shall become final and executory.

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

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

Petitioner did not appeal from the foregoing findings of the Labor Arbiter and he should be deemed to have accepted those factual findings. If he had truly felt aggrieved, petitioner himself would have questioned the Labor Arbiter’s findings with the NLRC. He only participated in the proceedings again when the NLRC had already rendered a decision in his favor and he opposed respondents’ motion for reconsideration of the NLRC decision.

(3) Yes, the award of financial assistance was in accordance with existing jurisprudence pursuant to the principle of social justice. In Eastern Shipping Lines, Inc v. Sedan,  financial assistance may be allowed as a measure of social justice and exceptional circumstances, and as an equitable concession.  There appears to be no reason why petitioner, who has served respondent corporation for more than eight years without committing any infraction, cannot be extended the reasonable financial assistance of P18,000.00 as awarded by the Labor Arbiter on equity considerations.

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