HALAGUENA VS.

PAL
Before this Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to annul and set aside the Decision and the
Resolution of the Court of Appeals (CA) in CA-G.R. SP. No. 86813.
Petitioners were employed as female flight attendants of respondent
Philippine Airlines (PAL) on different dates prior to November 22, 1996. They
are members of the Flight Attendants and Stewards Association of the
Philippines (FASAP), a labor organization certified as the sole and exclusive
certified as the sole and exclusive bargaining representative of the flight
attendants, flight stewards and pursers of respondent.
On July 11, 2001, respondent and FASAP entered into a Collective
Bargaining Agreement incorporating the terms and conditions of their
agreement for the years 2000 to 2005, hereinafter referred to as PAL-FASAP
CBA.
Section 144, Part A of the PAL-FASAP CBA, provides that:

invalidity of Section 144, Part A of the PAL-FASAP CBA. The RTC set a
hearing on petitioners' application for a TRO and, thereafter, required the
parties to submit their respective memoranda.
On August 9, 2004, the RTC issued an Order upholding its jurisdiction over
the present case. The RTC reasoned that:
In the instant case, the thrust of the Petition is Sec. 144 of the
subject CBA which is allegedly discriminatory as it
discriminates against female flight attendants, in violation of the
Constitution, the Labor Code, and the CEDAW. The allegations
in the Petition do not make out a labor dispute arising from
employer-employee relationship as none is shown to exist. This
case is not directed specifically against respondent arising from
any act of the latter, nor does it involve a claim against the
respondent. Rather, this case seeks a declaration of the nullity
of the questioned provision of the CBA, which is within the
Court's competence, with the allegations in the Petition
constituting the bases for such relief sought.

A. For the Cabin Attendants hired before 22 November 1996:

xxxx
3. Compulsory Retirement
Subject to the grooming standards provisions of this Agreement,
compulsory retirement shall be fifty-five (55) for
females and sixty (60) for males. x x x.

The RTC issued a TRO on August 10, 2004, enjoining the respondent for
implementing Section 144, Part A of the PAL-FASAP CBA.
The respondent filed an omnibus motion[if !supportFootnotes][10][endif] seeking
reconsideration of the order overruling its objection to the jurisdiction of the
RTC the lifting of the TRO. It further prayed that the (1) petitioners'
application for the issuance of a writ of preliminary injunction be denied; and
(2) the petition be dismissed or the proceedings in this case be suspended.

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

On September 27, 2004, the RTC issued an Order directing the issuance of
a writ of preliminary injunction enjoining the respondent or any of its agents
and representatives from further implementing Sec. 144, Part A of the PALFASAP CBA pending the resolution of the case.

On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their

2004-2005 CBA proposalsand manifested their willingness to commence the
collective bargaining negotiations between the management and the
association, at the soonest possible time.

Aggrieved, respondent, on October 8, 2004, filed a Petition for Certiorari and

Prohibition with Prayer for a Temporary Restraining Order and Writ of
Preliminary Injunction with the Court of Appeals (CA) praying that the order
of the RTC, which denied its objection to its jurisdiction, be annuled and set
aside for having been issued without and/or with grave abuse of discretion
amounting to lack of jurisdiction.

On July 29, 2004, petitioners filed a Special Civil Action for Declaratory
Relief with Prayer for the Issuance of Temporary Restraining Order and Writ
of Preliminary Injunction with the Regional Trial Court (RTC) of Makati City,
Branch 147, docketed as Civil Case No. 04-886, against respondent for the

The CA rendered a Decision, dated August 31, 2005, granting the

respondent's petition, and ruled that:

WHEREFORE, the respondent court is by us declared to have

NO JURISDICTION OVER THE CASE BELOW and,
consequently, all the proceedings, orders and processes it has
so far issued therein are ANNULED and SET ASIDE.
Respondent court is ordered to DISMISS its Civil Case No. 04886.

original and exclusive jurisdiction to hear and decide all unresolved

grievances arising from the interpretation or implementation of the CBA.
Regular courts have no power to set and fix the terms and conditions of
employment. Finally, respondent alleged that petitioners' prayer before this
Court to resolve their petition for declaratory relief on the merits is
procedurally improper and baseless.

SO ORDERED.

The petition is meritorious.

Petitioner filed a motion for reconsideration which was denied by the CA in

its Resolution dated March 7, 2006.

Jurisdiction of the court is determined on the basis of the material allegations

of the complaint and the character of the relief prayed for irrespective of
whether plaintiff is entitled to such relief.

Hence, the instant petition assigning the following error:

THE COURT OF APPEALS' CONCLUSION THAT THE
SUBJECT MATTER IS A LABOR DISPUTE OR GRIEVANCE IS
CONTRARY TO LAW AND JURISPRUDENCE.

In the case at bar, the allegations in the petition for declaratory relief plainly
show that petitioners' cause of action is the annulment of Section 144, Part A
of the PAL-FASAP CBA. The pertinent portion of the petition recites:
CAUSE OF ACTION

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

24. Petitioners have the constitutional right to fundamental

equality with men under Section 14, Article II, 1987 of the
Constitution and, within the specific context of this case, with
the male cabin attendants of Philippine Airlines.

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

26. Petitioners have the statutory right to equal work and

employment opportunities with men under Article 3, Presidential
Decree No. 442, The Labor Code and, within the specific
context of this case, with the male cabin attendants of Philippine
Airlines.

Respondent, on the other hand, alleges that the labor tribunals have
jurisdiction over the present case, as the controversy partakes of a labor
dispute. The dispute concerns the terms and conditions of petitioners'
employment in PAL, specifically their retirement age. The RTC has no
jurisdiction over the subject matter of petitioners' petition for declaratory relief
because the Voluntary Arbitrator or panel of Voluntary Arbitrators have

27. It is unlawful, even criminal, for an employer to discriminate

against women employees with respect to terms and conditions
of employment solely on account of their sex under Article 135
of the Labor Code as amended by Republic Act No. 6725 or the
Act Strengthening Prohibition on Discrimination Against
Women.
28. This discrimination against Petitioners is likewise against
the Convention on the Elimination of All Forms of Discrimination
Against Women (hereafter, CEDAW), a multilateral convention
that the Philippines ratified in 1981. The Government and its
agents, including our courts, not only must condemn all forms of
discrimination against women, but must also implement
measures towards its elimination.

29. This case is a matter of public interest not only because of

Philippine Airlines' violation of the Constitution and existing
laws, but also because it highlights the fact that twenty-three
years after the Philippine Senate ratified the CEDAW,
discrimination against women continues.
31. Section 114, Part A of the PAL-FASAP 2000-20005 CBA on
compulsory retirement from service is invidiously discriminatory
against and manifestly prejudicial to Petitioners because, they
are compelled to retire at a lower age (fifty-five (55) relative to
their male counterparts (sixty (60).
33. There is no reasonable, much less lawful, basis for
Philippine Airlines to distinguish, differentiate or classify cabin
attendants on the basis of sex and thereby arbitrarily set a lower
compulsory retirement age of 55 for Petitioners for the sole
reason that they are women.
37. For being patently unconstitutional and unlawful, Section
114, Part A of the PAL-FASAP 2000-2005 CBA must be
declared invalid and stricken down to the extent that it
discriminates against petitioner.
38. Accordingly, consistent with the constitutional and statutory
guarantee of equality between men and women, Petitioners
should be adjudged and declared entitled, like their male
counterparts, to work until they are sixty (60) years old.
PRAYER
WHEREFORE, it is most respectfully prayed that the Honorable
Court:
after trial on the merits:
declare Section 114, Part A of the PAL-FASAP 2000-2005 CBA
INVALID, NULL and VOID to the extent that it discriminates
against Petitioners; x x x x

From the petitioners' allegations and relief prayed for in its petition, it is clear
that the issue raised is whether Section 144, Part A of the PAL-FASAP CBA

is unlawful and unconstitutional. Here, the petitioners' primary relief in Civil

Case No. 04-886 is the annulment of Section 144, Part A of the PAL-FASAP
CBA, which allegedly discriminates against them for being female flight
attendants. The subject of litigation is incapable of pecuniary estimation,
exclusively cognizable by the RTC, pursuant to Section 19 (1) of Batas
Pambansa Blg. 129, as amended. Being an ordinary civil action, the same
is beyond the jurisdiction of labor tribunals.
The said issue cannot be resolved solely by applying the Labor Code.
Rather, it requires the application of the Constitution, labor statutes, law on
contracts and the Convention on the Elimination of All Forms of
Discrimination Against Women and the power to apply and interpret the
constitution and CEDAW is within the jurisdiction of trial courts, a court of
general jurisdiction. In Georg Grotjahn GMBH & Co. v. Isnani this Court held
that not every dispute between an employer and employee involves matters
that only labor arbiters and the NLRC can resolve in the exercise of their
adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and
the NLRC under Article 217 of the Labor Code is limited to disputes arising
from an employer-employee relationship which can only be resolved by
reference to the Labor Code, other labor statutes, or their collective
bargaining agreement.
Not every controversy or money claim by an employee against the employer
or vice-versa is within the exclusive jurisdiction of the labor arbiter. Actions
between employees and employer where the employer-employee
relationship is merely incidental and the cause of action precedes from a
different source of obligation is within the exclusive jurisdiction of the regular
court. Here, the employer-employee relationship between the parties is
merely incidental and the cause of action ultimately arose from different
sources of obligation, i.e., the Constitution and CEDAW.
Thus, where the principal relief sought is to be resolved not by reference to
the Labor Code or other labor relations statute or a collective bargaining
agreement but by the general civil law, the jurisdiction over the dispute
belongs to the regular courts of justice and not to the labor arbiter and the
NLRC. In such situations, resolution of the dispute requires expertise, not in
labor management relations nor in wage structures and other terms and
conditions of employment, but rather in the application of the general civil
law. Clearly, such claims fall outside the area of competence or expertise
ordinarily ascribed to labor arbiters and the NLRC and the rationale for
granting jurisdiction over such claims to these agencies disappears.
If We divest the regular courts of jurisdiction over the case, then which
tribunal or forum shall determine the constitutionality or legality of the
assailed CBA provision?

This Court holds that the grievance machinery and voluntary arbitrators do
not have the power to determine and settle the issues at hand. They have no
jurisdiction and competence to decide constitutional issues relative to the
questioned compulsory retirement age. Their exercise of jurisdiction is futile,
as it is like vesting power to someone who cannot wield it.
In Gonzales v. Climax Mining Ltd. this Court affirmed the jurisdiction of
courts over questions on constitutionality of contracts, as the same involves
the exercise of judicial power. The Court said:
Whether the case involves void or voidable contracts is
still a judicial question. It may, in some instances, involve
questions of fact especially with regard to the determination of
the circumstances of the execution of the contracts. But the
resolution of the validity or voidness of the contracts remains a
legal or judicial question as it requires the exercise of judicial
function. It requires the ascertainment of what laws are
applicable to the dispute, the interpretation and application of
those laws, and the rendering of a judgment based thereon.
Clearly, the dispute is not a mining conflict. It is essentially
judicial. The complaint was not merely for the determination of
rights under the mining contracts since the very validity of those
contracts is put in issue.

In Saura v. Saura, Jr. this Court emphasized the primacy of the regular
court's judicial power enshrined in the Constitution that is true that the trend
is towards vesting administrative bodies like the SEC with the power to
adjudicate matters coming under their particular specialization, to insure a
more knowledgeable solution of the problems submitted to them. This would
also relieve the regular courts of a substantial number of cases that would
otherwise swell their already clogged dockets. But as expedient as this
policy may be, it should not deprive the courts of justice of their power
to decide ordinary cases in accordance with the general laws that do
not require any particular expertise or training to interpret and apply.
Otherwise, the creeping take-over by the administrative agencies of the
judicial power vested in the courts would render the judiciary virtually
impotent in the discharge of the duties assigned to it by the
Constitution.

To be sure, in Rivera v. Espiritu, after Philippine Airlines (PAL) and PAL

Employees Association (PALEA) entered into an agreement, which includes
the provision to suspend the PAL-PALEA CBA for 10 years, several
employees questioned its validity via a petition for certiorari directly to the
Supreme Court. They said that the suspension was unconstitutional and
contrary to public policy. Petitioners submit that the suspension was
inordinately long, way beyond the maximum statutory life of 5 years for a
CBA provided for in Article 253-A of the Labor Code. By agreeing to a 10year suspension, PALEA, in effect, abdicated the workers' constitutional right
to bargain for another CBA at the mandated time.
In that case, this Court denied the petition for certiorari, ruling that there is
available to petitioners a plain, speedy, and adequate remedy in the ordinary
course of law. The Court said that while the petition was denominated as one
for certiorari and prohibition, its object was actually the nullification of the
PAL-PALEA agreement. As such, petitioners' proper remedy is an ordinary
civil action for annulment of contract, an action which properly falls under the
jurisdiction of the regional trial courts.
The change in the terms and conditions of employment, should Section 144
of the CBA be held invalid, is but a necessary and unavoidable consequence
of the principal relief sought, i.e., nullification of the alleged discriminatory
provision in the CBA. Thus, it does not necessarily follow that a resolution of
controversy that would bring about a change in the terms and conditions of
employment is a labor dispute, cognizable by labor tribunals. It is unfair to
preclude petitioners from invoking the trial court's jurisdiction merely
because it may eventually result into a change of the terms and conditions of
employment. Along that line, the trial court is not asked to set and fix the
terms and conditions of employment, but is called upon to determine
whether CBA is consistent with the laws.
Although the CBA provides for a procedure for the adjustment of grievances,
such referral to the grievance machinery and thereafter to voluntary
arbitration would be inappropriate to the petitioners, because the union and
the management have unanimously agreed to the terms of the CBA and
their interest is unified.
In Pantranco North Express, Inc., v. NLRC this Court held that:
x x x Hence, only disputes involving the union and the company
shall be referred to the grievance machinery or voluntary
arbitrators.
In the instant case, both the union and the company are united
or have come to an agreement regarding the dismissal of
private respondents. No grievance between them exists which

could be brought to a grievance machinery. The problem or

dispute in the present case is between the union and the
company on the one hand and some union and non-union
members who were dismissed, on the other hand. The dispute
has to be settled before an impartial body. The grievance
machinery with members designated by the union and the
company cannot be expected to be impartial against the
dismissed employees. Due process demands that the
dismissed workers grievances be ventilated before an impartial
body. x x x .
Applying the same rationale to the case at bar, it cannot be said
that the "dispute" is between the union and petitioner company
because both have previously agreed upon the provision on
"compulsory retirement" as embodied in the CBA. Also, it was
only private respondent on his own who questioned the
compulsory retirement. x x

difference in compulsory age retirement between its female and male flight
attendants, particularly those employed before November 22, 1996. Without
FASAP's active participation on behalf of its female flight attendants, the
utilization of the grievance machinery or voluntary arbitration would be
pointless.
The trial court in this case is not asked to interpret Section 144, Part A of the
PAL-FASAP CBA. Interpretation, as defined in Black's Law Dictionary, is the
art of or process of discovering and ascertaining the meaning of a statute,
will, contract, or other written document. The provision regarding the
compulsory retirement of flight attendants is not ambiguous and does not
require interpretation. Neither is there any question regarding the
implementation of the subject CBA provision, because the manner of
implementing the same is clear in itself. The only controversy lies in its
intrinsic validity.
Although it is a rule that a contract freely entered between the parties should
be respected, since a contract is the law between the parties, said rule is not
absolute.
In Pakistan International Airlines Corporation v. Ople this Court held that:

In the same vein, the dispute in the case at bar is not between FASAP and
respondent PAL, who have both previously agreed upon the provision on the
compulsory retirement of female flight attendants as embodied in the CBA.
The dispute is between respondent PAL and several female flight attendants
who questioned the provision on compulsory retirement of female flight
attendants. Thus, applying the principle in the aforementioned case cited,
referral to the grievance machinery and voluntary arbitration would not serve
the interest of the petitioners.
Besides, a referral of the case to the grievance machinery and to the
voluntary arbitrator under the CBA would be futile because respondent
already implemented Section 114, Part A of PAL-FASAP CBA when several
of its female flight attendants reached the compulsory retirement age of 55.
Further, FASAP, in a letter dated July 12, 2004, addressed to PAL, submitted
its association's bargaining proposal for the remaining period of 2004-2005
of the PAL-FASAP CBA, which includes the renegotiation of the subject
Section 144. However, FASAP's attempt to change the questioned provision
was shallow and superficial, to say the least, because it exerted no further
efforts to pursue its proposal. When petitioners in their individual capacities
questioned the legality of the compulsory retirement in the CBA before the
trial court, there was no showing that FASAP, as their representative,
endeavored to adjust, settle or negotiate with PAL for the removal of the

The principle of party autonomy in contracts is not, however, an

absolute principle. The rule in Article 1306, of our Civil Code is
that the contracting parties may establish such stipulations as
they may deem convenient, provided they are not contrary to
law, morals, good customs, public order or public policy. Thus,
counter-balancing the principle of autonomy of contracting
parties is the equally general rule that provisions of applicable
law, especially provisions relating to matters affected with public
policy, are deemed written into the contract. Put a little
differently, the governing principle is that parties may not
contract away applicable provisions of law especially
peremptory provisions dealing with matters heavily impressed
with public interest. The law relating to labor and employment is
clearly such an area and parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other.
Moreover, the relations between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts
must yield to the common good.x x The supremacy of the law over contracts
is explained by the fact that labor contracts are not ordinary contracts; these
are imbued with public interest and therefore are subject to the police power
of the state. It should not be taken to mean that retirement provisions agreed

upon in the CBA are absolutely beyond the ambit of judicial review and
nullification. A CBA, as a labor contract, is not merely contractual in nature
but impressed with public interest. If the retirement provisions in the CBA run
contrary to law, public morals, or public policy, such provisions may very well
be voided.
Finally, the issue in the petition for certiorari brought before the CA by the
respondent was the alleged exercise of grave abuse of discretion of the RTC
in taking cognizance of the case for declaratory relief. When the CA annuled
and set aside the RTC's order, petitioners sought relief before this Court
through the instant petition for review under Rule 45. A perusal of the petition
before Us, petitioners pray for the declaration of the alleged discriminatory
provision in the CBA against its female flight attendants.
This Court is not persuaded. The rule is settled that pure questions of fact
may not be the proper subject of an appeal by certiorari under Rule 45 of the
Revised Rules of Court. This mode of appeal is generally limited only to
questions of law which must be distinctly set forth in the petition. The
Supreme Court is not a trier of facts.
The question as to whether said Section 114, Part A of the PAL-FASAP CBA
is discriminatory or not is a question of fact. This would require the
presentation and reception of evidence by the parties in order for the trial
court to ascertain the facts of the case and whether said provision violates
the Constitution, statutes and treaties. A full-blown trial is necessary, which
jurisdiction to hear the same is properly lodged with the the RTC. Therefore,
a remand of this case to the RTC for the proper determination of the merits
of the petition for declaratory relief is just and proper.
WHEREFORE, the petition is PARTLY GRANTED. The Decision and
Resolution of the Court of Appeals, dated August 31, 2005 and March 7,
2006, respectively, in CA-G.R. SP. No. 86813 are REVERSED and SET
ASIDE. The Regional Trial Court of Makati City, Branch 147 is DIRECTED to
continue the proceedings in Civil Case No. 04-886 with deliberate dispatch.
SO ORDERED.
THIRD DIVISION
[G.R. No. 112139. January 31, 2000]
LAPANDAY
AGRICULTURAL
DEVELOPMENT
CORPORATION,
petitioner, vs. THE HONORABLE COURT OF APPEALS (Former Eighth
Division) and COMMANDO SECURITY SERVICE AGENCY, INC.,
respondents.
Before us is a Petition for Review on Certiorari of the decision of the Court of

Appeals in CA-G.R. CV No. 33893 entitled COMMANDO SECURITY

SERVICE AGENCY, INCORPORATED vs. LAPANDAY AGRICULTURAL
DEVELOPMENT CORPORATION which affirmed the decision of the
Regional Trial Court, 11th Judicial Region, Branch 9, Davao City in Civil
Case No. 19203-88.
The pertinent facts as found by the Court of Appeals are as follows:
"The evidence shows that in June 1986, plaintiff Commando Security
Service Agency, Inc., and defendant Lapanday Agricultural Development
Corporation entered into a Guard Service Contract. Plaintiff provided security
guards in defendants banana plantation. The contract called for the payment
to a guard of P754.28 on a daily 8-hour basis and an additional P565.72 for
a four hour overtime while the shift-in-charge was to be paid P811.40 on a
daily 8-hour basis and P808.60 for the 4-hour overtime.
Wage Orders increasing the minimum wage in 1983 were complied with by
the defendant. On June 16, 1984, Wage Order No. 5 was promulgated
directing an increase of P3.00 per day on the minimum wage of workers in
the private sector and a P5.00 increase on the ECOLA. This was followed on
November 1, 1984 by Wage Order No. 6 which further increased said
minimum wage by P3.00 on the ECOLA. Both Wage Orders contain the
following provision:
"In the case of contract for construction projects and for security, janitorial
and similar services, the increase in the minimum wage and allowances
rates of the workers shall be borne by the principal or client of the
construction/service contractor and the contracts shall be deemed amended
accordingly, subject to the provisions of Sec. 3 (b) of this order" (Sec. 6 and
Sec. 9, Wage Orders No. 5 and 6, respectively)."
Plaintiff demanded that its Guard Service Contract with defendant be
upgraded in compliance with Wage Order Nos. 5 and 6. Defendant refused.
Their Contract expired on June 6, 1986 without the rate adjustment called for
Wage Order Nos. 5 and 6 being implemented. By the time of the filing of
plaintiffs Complaint, the rate adjustment payable by defendant amounted to
P462,346.25. Defendant opposed the Complaint by raising the following
defenses: (1) the rate adjustment is the obligation of the plaintiff as employer
of the security guards; (2) assuming its liability, the sum it should pay is less
in amount; and (3) the Wage Orders violate the impairment clause of the
Constitution.
The trial court decided in favor of the plaintiff. It held:
xxx
"However, in order for the security agency to pay the security guards, the
Wage Orders made specific provisions to amend existing contracts for
security services by allowing the adjustment of the consideration paid by the
principal to the security agency concerned. (Eagle Security Agency, Inc. vs.
NLRC, Phil. Tuberculosis Society, Inc. vs. NLRC, et al., May 18, 1989).
The Wage Orders require the amendment of the contract as to the
consideration to cover the service contractors payment of the increases

mandated. However, in the case at bar, the contract for security services had
earlier been terminated without the corresponding amendment. Plaintiff now
demands adjustment in the contract price as the same was deemed
amended by Wage Order Nos. 5 and 6.
Before the plaintiff could pay the minimum wage as mandated by law,
adjustments must be paid by the principal to the security agency concerned.
"Given these circumstances, if PTS pays the security guards, it cannot claim
reimbursements from Eagle. But if its Eagle that pays them, the latter can
claim reimbursement from PTS in lieu of an adjustment, considering that the
contract had expired and had not been renewed. (Eagle Security Agency vs.
NLRC and Phil. Tuberculosis Society, Inc. vs. NLRC, et al., 18 May 1989).
"As to the issue that Wage Orders Nos. 5 and 6 constitute impairments of
contracts in violation of constitutional guarantees, the High Court ruled" The
Supreme Court has rejected the impairment of contract argument in
sustaining the validity and constitutionality of labor and social legislation like
the Blue Sunday Law, compulsory coverage of private sector employees in
the Social Security System, and the abolition of share tenancy enacted
pursuant to the police power of the state (Eagle Security Agency, Inc. vs.
National Labor Relation Commission and Phil. Tuberculosis Society, Inc. vs.
NLRC, et al., May 18, 1989)."
Petitioners motion for reconsideration was denied. hence this petition where
petitioner cites the following grounds to support the instant petition for
review:
"1. THE WAGE INCREASES PROVIDED FOR IN THE WAGE ORDERS
WERE DUE TO THE GUARDS AND NOT THE SECURITY AGENCY;
2. A SECURITY AGENCY WHO DID NOT PAY WAGE INCREASE TO ITS
GUARDS IT HAD ALREADY TERMINATED AND WITHOUT THEIR
AUTHORIZATION CANNOT INSTITUTE AN ACTION TO RECOVER SAID
WAGE INCREASE FOR ITS BENEFIT;
3. IN THE ABSENCE OF BAD FAITH AND WITHOUT THE TRIAL COURT
CORRECTLY ESTABLISHING THE BASIS FOR ATTORNEYS FEES, THE
SAME MAY NOT BE AWARDED.
4. THE NATIONAL LABOR RELATIONS (SIC) IS THE PROPER FORUM
THAT HAS THE JURISDICTION TO RESOLVE THE ISSUE OF WHETHER
OR NOT THE PETITIONER IS LIABLE TO PAY THE PRIVATE
RESPONDENT THE WAGE AND ALLOWANCE INCREASES MANDATED
UNDER WAGE ORDER NOS. 5 AND 6."
Reiterating its position below, petitioner asserts that private respondent has
no factual and legal basis to collect the benefits under subject Wage Order
Nos. 5 and 6 intended for the security guards without the authorization of the
security guards concerned. Inasmuch as the services of the forty-two (42)
security guards were already terminated at the time the complaint was filed
on August 15, 1988, private respondents complaint partakes of the nature of
an action for recovery of what was supposedly due the guards under said
Wage Orders, amounts that they claim were never paid by private

respondent and therefore not collectible by the latter from the petitioner.
Petitioner also assails the award of attorneys fees in the amount of
P115,585.31 or 25% of the total adjustment claim of P462,341.25 for lack of
basis and for being unconscionable.
Moreover, petitioner submits that it is the National Labor Relations
Commission (NLRC) and not the civil courts that has jurisdiction to resolve
the issue involved in this case for it refers to the enforcement of wage
adjustment and other benefits due to private respondents security guards
mandated under Wage Order Nos. 5 and 6. Considering that the RTC has no
jurisdiction, its decision is without force and effect
On the other hand, private respondent contends that the basis of its action
against petitioner-appellant is the enforcement of the Guard Service
Contract entered into by them, which is deemed amended by Section 6 of
Wage Order No. 5 and Section 9 of Wage Order No. 6; that pursuant to their
amended Guard Service Contract, the increases/adjustments in wages and
ECOLA are due to private respondent and not to the security guards who are
not parties to the said contract. It is therefore immaterial whether or not
private respondent paid its security guards their wages as adjusted by said
Wage Orders and that since the forty-two (42) security guards are not parties
to the Guard Service Contract, there is no need for them to authorize the
filing of, or be joined in, this suit.
As regards the award to private respondent of the amount of P115,585.31 as
attorneys fees, private respondent maintains that there is enough evidence
and/or basis for the grant thereof, considering that the adamant attitude of
the petitioner (in implementing the questioned Wage Orders) compelled the
herein private respondent, to litigate in court. Furthermore, since the legal
fee payable by private respondent to its counsel is essentially on contingent
basis, the amount of P115,583.31 granted by the trial court which is 25% of
the total claim is not unconscionable.
As regards the jurisdiction of the RTC, private respondent alleges that the
suit filed before the trial court is for the purpose of securing the upgrading of
the Guard Service Contract entered into by herein petitioner and private
respondent in June 1983. The enforcement of this written contract does not
fall under the jurisdiction of the NLRC because the money claims involved
therein did not arise from employer-employee relations between the parties
and is intrinsically a civil dispute. Thus, jurisdiction lies with the regular
courts. Private respondent further contends that petitioner is estopped or
barred from raising the question of jurisdiction for the first time before the
Supreme Court after having voluntarily submitted to the jurisdiction of the
regular courts below and having lost its case therein.
We resolve to grant the petition.

We resolve first the issue of jurisdiction. We agree with the respondent that
the RTC has jurisdiction over the subject matter of the present case. It is well
settled in law and jurisprudence that where no employer-employee
relationship exists between the parties and no issue is involved which may
be resolved by reference to the Labor Code, other labor statutes or any
collective bargaining agreement, it is the Regional Trial Court that has
jurisdiction. In its complaint, private respondent is not seeking any relief
under the Labor Code but seeks payment of a sum of money and damages
on account of petitioners alleged breach of its obligation under their Guard
Service Contract. The action is within the realm of civil law hence jurisdiction
over the case belongs to the regular courts. While the resolution of the issue
involves the application of labor laws, reference to the labor code was only
for the determination of the solidary liability of the petitioner to the
respondent where no employer-employee relation exists. Article 217 of the
Labor Code as amended vests upon the labor arbiters exclusive original
jurisdiction only over the following:
1. Unfair labor practices;
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 employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving 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.
In all these cases, an employer-employee relationship is an indispensable
jurisdictional requisite and there is none in this case.
On the merits, the core issue involved in the present petition is whether or
not petitioner is liable to the private respondent for the wage adjustments
provided under Wage Order Nos. 5 and 6 and for attorneys fees.
Private respondent admits that there is no employer-employee relationship
between it and the petitioner. The private respondent is an independent/job
contractor who assigned security guards at the petitioners premises for a
stipulated amount per guard per month. The Contract of Security Services
expressly stipulated that the security guards are employees of the Agency
and not of the petitioner. Articles 106 and 107 of the Labor Code provides
the rule governing the payment of wages of employees in the event that the
contractor fails to pay such wages as follows:

"Art. 106. Contractor or subcontractor. Whenever an employer enters into a

contract with another person for the performance of the formers work, the
employees of the contractor and of the latters subcontractor, if any, shall be
paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.
xxx
ART. 107. Indirect employer. The provisions of the immediately preceding
Article shall likewise apply to any person, partnership, association or
corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project."
It will be seen from the above provisions that the principal (petitioner) and
the contractor (respondent) are jointly and severally liable to the employees
for their wages. This Court held in Eagle Security, Inc. vs. NLRC and
Spartan Security and Detective Agency, Inc. vs. NLRC that the joint and
several liability of the contractor and the principal is mandated by the Labor
Code to assure compliance with the provisions therein including the
minimum wage. The contractor is made liable by virtue of his status as direct
employer. The principal, on the other hand, is made the indirect employer of
the contractors employees to secure payment of their wages should the
contractor be unable to pay them. Even in the absence of an employeremployee relationship, the law itself establishes one between the principal
and the employees of the agency for a limited purpose i.e. in order to ensure
that the employees are paid the wages due them. In the above-mentioned
cases, the solidary liability of the principal and contractor was held to apply
to the aforementioned Wage Order Nos. 5 and 6. In ruling that under the
Wage Orders, existing security guard services contracts are amended to
allow adjustment of the consideration in order to cover payment of mandated
increases, and that the principal is ultimately liable for the said increases,
this Court stated:
"The Wage Orders are explicit that payment of the increases are to be borne
by the principal or client. To be borne, however, does not mean that the
principal, PTSI in this case, would directly pay the security guards the wage
and allowance increases because there is no privity of contract between
them. The security guards contractual relationship is with their immediate
employer, EAGLE. As an employer, EAGLE is tasked, among others, with
the payment of their wages [See Article VII Sec. 3 of the Contract for
Security Services, supra and Bautista vs. Inciong, G. R. No. 52824, March
16, 1988, 158 SCRA 665].

On the other hand, there existed a contractual agreement between PTSI and
EAGLE wherein the former availed of the security services provided by the
latter. In return, the security agency collects from its client payment for its
security services. This payment covers the wages for the security guards
and also expenses for their supervision and training, the guards bonds,
firearms with ammunitions, uniforms and other equipments, accessories,
tools, materials and supplies necessary for the maintenance of a security
force
.
Premises considered, the security guards immediate recourse for the
payment of the increases is with their direct employer, EAGLE. However, in
order for the security agency to comply with the new wage and allowance
rates it has to pay the security guards, the Wage Orders made specific
provision to amend existing contracts for security services by allowing the
adjustment of the consideration paid by the principal to the security agency
concerned. What the Wage Orders require, therefore, is the amendment of
the contracts as to the consideration to cover the service contractors
payment of the increases mandated. In the end, therefore, ultimate liability
for the payment of the increases rests with the principal.
In view of the foregoing, the security guards should claim the amount of the
increases from EAGLE. Under the Labor Code, in case the agency fails to
pay them the amounts claimed, PTSI should be held solidarily liable with
EAGLE [Articles 106, 107 and 109]. Should EAGLE pay, it can claim an
adjustment from PTSI for an increase in consideration to cover the increases
payable to the security guards.
It is clear also from the foregoing that it is only when contractor pays the
increases mandated that it can claim an adjustment from the principal to
cover the increases payable to the security guards. The conclusion that
the right of the contractor (as principal debtor) to recover from the
principal as solidary co-debtor) arises only if he has paid the amounts for
which both of them are jointly and severally liable is in line with Article
1217 of the Civil Code which provides:
"Art. 1217. Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor may
choose which offer to accept.
He who made payment may claim from his co debtors only the share which
corresponds to each, with interest for the payment already made. If the
payment is made before the debt is due, no interest for the intervening
period may be demanded. xxx"

Pursuant to the above provision, the right of reimbursement from a co-debtor

is recognized in favor of the one who paid.
It will be seen that the liability of the petitioner to reimburse the respondent
only arises if and when respondent actually pays its employees the
increases granted by Wage Order Nos. 5 and 6. Payment, which means not
only the delivery of money but also the performance, in any other manner, of
the obligation, is the operative fact which will entitle either of the solidary
debtors to seek reimbursement for the share which corresponds to each of
the debtors.
The records show that judgment was rendered by Labor Arbiter Newton R.
Sancho holding both petitioner and private respondent jointly and solidarily
liable to the security guards in a Decision dated October 17, 1986 (NLRC
Case No. 2849-MC-XI-86). However, it is not disputed that the private
respondent has not actually paid the security guards the wage increases
granted under the Wage Orders in question. Neither is it alleged that there is
an extant claim for such wage adjustments from the security guards
concerned, whose services have already been terminated by the contractor.
Accordingly, private respondent has no cause of action against petitioner to
recover the wage increases. Needless to stress, the increases in wages are
intended for the benefit of the laborers and the contractor may not assert a
claim against the principal for salary wage adjustments that it has not
actually paid. Otherwise, as correctly put by the respondent, the contractor
would be unduly enriching itself by recovering wage increases, for its own
benefit.
Finally, considering that the private respondent has no cause of action
against the petitioner, private respondent is not entitled to attorneys fees.
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals dated May 24, 1993 is REVERSED and SET ASIDE. The complaint
of private respondent COMMANDO SECURITY SERVICE AGENCY, INC. is
hereby DISMISSED.
SO ORDERED.
G.R. No. 182295
June 26, 2013
7K CORPORATION, Petitioner, vs. EDDIE ALBARICO, Respondent.
This is a Petition for Review on Certiorari filed under Rule 45 of the Revised
Rules of Court, asking the Court to determine whether a voluntary arbitrator
in a labor dispute exceeded his jurisdiction in deciding issues not specified in
the submission agreement of the parties. It assails the Decision 1 dated 18
September 2007 and the Resolution2 dated 17 March 2008 of the Court of
Appeals (CA).3
FACTS

When he was dismissed on 5 April 1993, respondent Eddie Albarico

(Albarico) was a regular employee of petitioner 7K Corporation, a company
selling water purifiers. He started working for the company in 1990 as a
salesman.4 Because of his good performance, his employment was
regularized. He was also promoted several times: from salesman, he was
promoted to senior sales representative and then to acting team field
supervisor. In 1992, he was awarded the Presidents Trophy for being one of
the companys top water purifier specialist distributors.
In April of 1993, the chief operating officer of petitioner 7K Corporation
terminated Albaricos employment allegedly for his poor sales performance. 5
Respondent had to stop reporting for work, and he subsequently submitted
his money claims against petitioner for arbitration before the National
Conciliation and Mediation Board (NCMB). The issue for voluntary arbitration
before the NCMB, according to the parties Submission Agreement dated 19
April 1993, was whether respondent Albarico was entitled to the payment of
separation pay and the sales commission reserved for him by the
corporation.6
While the NCMB arbitration case was pending, respondent Albarico filed a
Complaint against petitioner corporation with the Arbitration Branch of the
National Labor Relations Commission (NLRC) for illegal dismissal with
money claims for overtime pay, holiday compensation, commission, and food
and travelling allowances.7 The Complaint was decided by the labor arbiter
in favor of respondent Albarico, who was awarded separation pay in lieu of
reinstatement, backwages and attorneys fees.8
On appeal by petitioner, the labor arbiters Decision was vacated by the
NLRC for forum shopping on the part of respondent Albarico, because the
NCMB arbitration case was still pending.9 The NLRC Decision, which
explicitly stated that the dismissal was without prejudice to the pending
NCMB arbitration case,10 became final after no appeal was taken.
On 17 September 1997, petitioner corporation filed its Position Paper in the
NCMB arbitration case.11 It denied that respondent was terminated from
work, much less illegally dismissed. The corporation claimed that he had
voluntarily stopped reporting for work after receiving a verbal reprimand for
his sales performance; hence, it was he who was guilty of abandonment of
employment. Respondent made an oral manifestation that he was adopting
the position paper he submitted to the labor arbiter, a position paper in which
the former claimed that he had been illegally dismissed.12
On 12 January 2005, almost 12 years after the filing of the NCMB case, both
parties appeared in a hearing before the NCMB.13 Respondent manifested
that he was willing to settle the case amicably with petitioner based on the
decision of the labor arbiter ordering the payment of separation pay in lieu of
reinstatement, backwages and attorneys fees. On its part, petitioner made a
counter-manifestation that it was likewise amenable to settling the dispute.
However, it was willing to pay only the separation pay and the sales
commission according to the Submission Agreement dated 19 April 1993.14

The factual findings of the voluntary arbitrator, as well as of the CA, are not
clear on what happened afterwards. Even the records are bereft of sufficient
information.
On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision
finding petitioner corporation liable for illegal dismissal. 15 The termination of
respondent Albarico, by reason of alleged poor performance, was found
invalid.16 The arbitrator explained that the promotions, increases in salary,
and awards received by respondent belied the claim that the latter was
performing poorly.17 It was also found that Albarico could not have
abandoned his job, as the abandonment should have been clearly shown.
Mere absence was not sufficient, according to the arbitrator, but must have
been accompanied by overt acts pointing to the fact that the employee did
not want to work anymore. It was noted that, in the present case, the
immediate filing of a complaint for illegal dismissal against the employer, with
a prayer for reinstatement, showed that the employee was not abandoning
his work. The voluntary arbitrator also found that Albarico was dismissed
from his work without due process.
However, it was found that reinstatement was no longer possible because of
the strained relationship of the parties.18 Thus, in lieu of reinstatement, the
voluntary arbitrator ordered the corporation to pay separation pay for two
years at P4,456 for each year, or a total amount of P8,912.
Additionally, in view of the finding that Albarico had been illegally dismissed,
the voluntary arbitrator also ruled that the former was entitled to backwages
in the amount of P90,804.19 Finally, the arbitrator awarded attorneys fees in
respondents favor, because he had been compelled to file an action for
illegal dismissal.20
Petitioner corporation subsequently appealed to the CA, imputing to the
voluntary arbitrator grave abuse of discretion amounting to lack or excess of
jurisdiction for awarding backwages and attorneys fees to respondent
Albarico based on the formers finding of illegal dismissal. 21 The arbitrator
contended that the issue of the legality of dismissal was not explicitly
included in the Submission Agreement dated 19 April 1993 filed for voluntary
arbitration and resolution. It prayed that the said awards be set aside, and
that only separation pay of P8,912.00 and sales commission of P4,787.60
be awarded.
The CA affirmed the Decision of the voluntary arbitrator, but eliminated the
award of attorneys fees for having been made without factual, legal or
equitable justification.22 Petitioners Motion for Partial Reconsideration was
denied as well.23
Hence, this Petition.
ISSUE
The issue before the Court is whether the CA committed reversible error in
finding that the voluntary arbitrator properly assumed jurisdiction to decide
the issue of the legality of the dismissal of respondent as well as the latters
entitlement to backwages, even if neither the legality nor the entitlement was

expressedly claimed in the Submission Agreement of the parties.

The Petition is denied for being devoid of merit.
DISCUSSION
Preliminarily, we address petitioners claim that under Article 217 of the
Labor Code, original and exclusive jurisdiction over termination disputes,
such as the present case, is lodged only with the labor arbiter of the NLRC.24
Petitioner overlooks the proviso in the said article, thus:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a. Except as otherwise provided under this Code, the Labor Arbiters shall
have original and exclusive jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the parties for decision
without extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or nonagricultural:
xxxx
2. Termination disputes;
xxxx
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. (Emphases
supplied)
Thus, although the general rule under the Labor Code gives the labor arbiter
exclusive and original jurisdiction over termination disputes, it also
recognizes exceptions. One of the exceptions is provided in Article 262 of
the Labor Code. In San Jose v. NLRC,25 we said:
The phrase "Except as otherwise provided under this Code" refers to the
following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . .
xxxx
(c) Cases arising from the interpretation or implementation of collective
bargaining agreement and those arising from the interpretation or
enforcement of company procedure/policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitrator as may be provided in said agreement.
B. 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)
We also said in the same case that "the labor disputes referred to in the

same Article 262 of the Labor Code can include all those disputes mentioned
in Article 217 over which the Labor Arbiter has original and exclusive
jurisdiction."26
From the above discussion, it is clear that voluntary arbitrators may, by
agreement of the parties, assume jurisdiction over a termination dispute
such as the present case, contrary to the assertion of petitioner that they
may not.
We now resolve the main issue. Petitioner argues that, assuming that the
voluntary arbitrator has jurisdiction over the present termination dispute, the
latter should have limited his decision to the issue contained in the
Submission Agreement of the parties the issue of whether respondent
Albarico was entitled to separation pay and to the sales commission the
latter earned before being terminated.27 Petitioner asserts that under Article
262 of the Labor Code, the jurisdiction of a voluntary arbitrator is strictly
limited to the issues that the parties agree to submit. Thus, it contends that
the voluntary arbitrator exceeded his jurisdiction when he resolved the
issues of the legality of the dismissal of respondent and the latters
entitlement to backwages on the basis of a finding of illegal dismissal.
According to petitioner, the CA wrongly concluded that the issue of
respondents entitlement to separation pay was necessarily based on his
allegation of illegal dismissal, thereby making the issue of the legality of his
dismissal implicitly submitted to the voluntary arbitrator for resolution. 28
Petitioner argues that this was an erroneous conclusion, because separation
pay may in fact be awarded even in circumstances in which there is no
illegal dismissal.
We rule that although petitioner correctly contends that separation pay may
in fact be awarded for reasons other than illegal dismissal, the
circumstances of the instant case lead to no other conclusion than that the
claim of respondent Albarico for separation pay was premised on his
allegation of illegal dismissal. Thus, the voluntary arbitrator properly
assumed jurisdiction over the issue of the legality of his dismissal.
True, under the Labor Code, separation pay may be given not only when
there is illegal dismissal. In fact, it is also given to employees who are
terminated for authorized causes, such as redundancy, retrenchment or
installation of labor-saving devices under Article 283 29 of the Labor Code.
Additionally, jurisprudence holds that separation pay may also be awarded
for considerations of social justice, even if an employee has been terminated
for a just cause other than serious misconduct or an act reflecting on moral
character.30 The Court has also ruled that separation pay may be awarded if
it has become an established practice of the company to pay the said benefit
to voluntarily resigning employees31 or to those validly dismissed for nonmembership in a union as required in a closed-shop agreement.32

The above circumstances, however, do not obtain in the present

case.1wphi1 There is no claim that the issue of entitlement to separation
pay is being resolved in the context of any authorized cause of termination
undertaken by petitioner corporation. Neither is there any allegation that a
consideration of social justice is being resolved here. In fact, even in
instances in which separation pay is awarded in consideration of social
justice, the issue of the validity of the dismissal still needs to be resolved
first. Only when there is already a finding of a valid dismissal for a just cause
does the court then award separation pay for reason of social justice. The
other circumstances when separation pay may be awarded are not present
in this case.
The foregoing findings indisputably prove that the issue of separation pay
emanates solely from respondents allegation of illegal dismissal. In fact,
petitioner itself acknowledged the issue of illegal dismissal in its position
paper submitted to the NCMB.
Moreover, we note that even the NLRC was of the understanding that the
NCMB arbitration case sought to resolve the issue of the legality of the
dismissal of the respondent. In fact, the identity of the issue of the legality of
his dismissal, which was previously submitted to the NCMB, and later
submitted to the NLRC, was the basis of the latters finding of forum
shopping and the consequent dismissal of the case before it. In fact,
petitioner also implicitly acknowledged this when it filed before the NLRC its
Motion to Dismiss respondents Complaint on the ground of forum shopping.
Thus, it is now estopped from claiming that the issue before the NCMB does
not include the issue of the legality of the dismissal of respondent. Besides,
there has to be a reason for deciding the issue of respondents entitlement to
separation pay. To think otherwise would lead to absurdity, because the
voluntary arbitrator would then be deciding that issue in a vacuum. The
arbitrator would have no basis whatsoever for saying that Albarico was
entitled to separation pay or not if the issue of the legality of respondents
dismissal was not resolve first.
Hence, the voluntary arbitrator correctly assumed that the core issue behind
the issue of separation pay is the legality of the dismissal of respondent.
Moreover, we have ruled in Sime Darby Pilipinas, Inc. v. Deputy
Administrator Magsalin33 that a voluntary arbitrator has plenary jurisdiction
and authority to interpret an agreement to arbitrate and to determine the
scope of his own authority when the said agreement is vague subject
only, in a proper case, to the certiorari jurisdiction of this Court.
Having established that the issue of the legality of dismissal of Albarico was
in fact necessarily albeit not explicitly included in the Submission
Agreement signed by the parties, this Court rules that the voluntary arbitrator
rightly assumed jurisdiction to decide the said issue.
Consequently, we also rule that the voluntary arbitrator may award

backwages upon a finding of illegal dismissal, even though the issue of

entitlement thereto is not explicitly claimed in the Submission Agreement.
Backwages, in general, are awarded on the ground of equity as a form of
relief that restores the income lost by the terminated employee by reason of
his illegal dismissal.34
In Sime Darby we ruled that although the specific issue presented by the
parties to the voluntary arbitrator was only "the issue of performance bonus,"
the latter had the authority to determine not only the issue of whether or not
a performance bonus was to be granted, but also the related question of the
amount of the bonus, were it to be granted. We explained that there was no
indication at all that the parties to the arbitration agreement had regarded
"the issue of performance bonus" as a two-tiered issue, of which only one
aspect was being submitted to arbitration. Thus, we held that the failure of
the parties to limit the issues specifically to that which was stated allowed the
arbitrator to assume jurisdiction over the related issue.
Similarly, in the present case, there is no indication that the issue of illegal
dismissal should be treated. as a two-tiered issue whereupon entitlement to
backwages must be determined separately. Besides, "since arbitration is a
final resort for the adjudication of disputes," the voluntary arbitrator in the
present case can assume that he has the necessary power to make a final
settlement.35 Thus, we rule that the voluntary arbitrator correctly assumed
jurisdiction over the issue of entitlement of respondent Albarico to
backwages on the basis of the former's finding of illegal dismissal.
WHEREFORE, premises considered, the instant Petition is DENIED. The 18
September 2007 Decision and 17 March 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 92526, are hereby AFFIRMED.
SO ORDERED.
PEOPLES BROADCASTING VS. SEC OF LABOR
In a Petition for Certiorari under Rule 65, petitioner Peoples Broadcasting
Service, Inc. (Bombo Radyo Phils., Inc.) questioned the Decision and
Resolution of the Court of Appeals (CA) dated October 26, 2006 and June
26, 2007, respectively, in C.A. G.R. CEB-SP No. 00855.
Private respondent Jandeleon Juezan filed a complaint against
petitioner with the Department of Labor and Employment (DOLE) Regional
Office No. VII, Cebu City, for illegal deduction, nonpayment of service
incentive leave, 13th month pay, premium pay for holiday and rest day and
illegal diminution of benefits, delayed payment of wages and noncoverage of
SSS, PAG-IBIG and Philhealth. After the conduct of summary investigations,
and after the parties submitted their position papers, the DOLE Regional
Director found that private respondent was an employee of petitioner, and
was entitled to his money claims. Petitioner sought reconsideration of the
Directors Order, but failed. The Acting DOLE Secretary dismissed petitioners

appeal on the ground that petitioner submitted a Deed of Assignment of

Bank Deposit instead of posting a cash or surety bond. When the matter was
brought before the CA, where petitioner claimed that it had been denied due
process, it was held that petitioner was accorded due process as it had been
given the opportunity to be heard, and that the DOLE Secretary had
jurisdiction over the matter, as the jurisdictional limitation imposed by Article
129 of the Labor Code on the power of the DOLE Secretary under Art.
128(b) of the Code had been repealed by Republic Act No. (RA) 7730.
In the Decision of this Court, the CA Decision was reversed and set aside,
and the complaint against petitioner was dismissed. The dispositive portion
of the Decision reads as follows:
WHEREFORE, the petition is GRANTED. The Decision dated 26 October
2006 and the Resolution dated 26 June 2007 of the Court of Appeals in C.A.
G.R. CEB-SP No. 00855 are REVERSED and SET ASIDE. The Order of the
then Acting Secretary of the Department of Labor and Employment dated 27
January 2005 denying petitioners appeal, and the Orders of the Director,
DOLE Regional Office No. VII, dated 24 May 2004 and 27 February 2004,
respectively, are ANNULLED. The complaint against petitioner is
DISMISSED.
The Court found that there was no employer-employee
relationship between petitioner and private respondent. It was held that while
the DOLE may make a determination of the existence of an employeremployee relationship, this function could not be co-extensive with the
visitorial and enforcement power provided in Art. 128(b) of the Labor Code,
as amended by RA 7730. The National Labor Relations Commission (NLRC)
was held to be the primary agency in determining the existence of an
employer-employee relationship. This was the interpretation of the Court of
the clause in cases where the relationship of employer-employee still exists
in Art. 128(b.
From this Decision, the Public Attorneys Office (PAO) filed a
Motion for Clarification of Decision (with Leave of Court). The PAO sought to
clarify as to when the visitorial and enforcement power of the DOLE be not
considered as co-extensive with the power to determine the existence of an
employer-employee relationship. In its Comment, the DOLE sought
clarification as well, as to the extent of its visitorial and enforcement power
under the Labor Code, as amended.
The Court treated the Motion for Clarification as a second motion
for reconsideration, granting said motion and reinstating the petition. It is
apparent that there is a need to delineate the jurisdiction of the DOLE
Secretary vis--vis that of the NLRC.

Under Art. 129 of the Labor Code, the power of the DOLE and its
duly authorized hearing officers to hear and decide any matter involving the
recovery of wages and other monetary claims and benefits was qualified by
the proviso that the complaint not include a claim for reinstatement, or that
the aggregate money claims not exceed PhP 5,000. RA 7730, or an Act
Further Strengthening the Visitorial and Enforcement Powers of the
Secretary of Labor, did away with the PhP 5,000 limitation, allowing the
DOLE Secretary to exercise its visitorial and enforcement power for claims
beyond PhP 5,000. The only qualification to this expanded power of the
DOLE was only that there still be an existing employer-employee
relationship.
It is conceded that if there is no employer-employee relationship,
whether it has been terminated or it has not existed from the start, the DOLE
has no jurisdiction. Under Art. 128(b) of the Labor Code, as amended by RA
7730, the first sentence reads, Notwithstanding the provisions of Articles 129
and 217 of this Code to the contrary, and in cases where the relationship of
employer-employee still exists, the Secretary of Labor and Employment or
his duly authorized representatives shall have the power to issue compliance
orders to give effect to the labor standards provisions of this Code and other
labor legislation based on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course of inspection. It is
clear and beyond debate that an employer-employee relationship must exist
for the exercise of the visitorial and enforcement power of the DOLE. The
question now arises, may the DOLE make a determination of whether or not
an employer-employee relationship exists, and if so, to what extent?
The first portion of the question must be answered in the
affirmative.
The prior decision of this Court in the present case accepts such
answer, but places a limitation upon the power of the DOLE, that is, the
determination of the existence of an employer-employee relationship cannot
be co-extensive with the visitorial and enforcement power of the DOLE. But
even in conceding the power of the DOLE to determine the existence of an
employer-employee relationship, the Court held that the determination of the
existence of an employer-employee relationship is still primarily within the
power of the NLRC, that any finding by the DOLE is merely preliminary.
This conclusion must be revisited.
No limitation in the law was placed upon the power of the DOLE
to determine the existence of an employer-employee relationship. No
procedure was laid down where the DOLE would only make a preliminary
finding, that the power was primarily held by the NLRC. The law did not say
that the DOLE would first seek the NLRCs determination of the existence of

an employer-employee relationship, or that should the existence of the

employer-employee relationship be disputed, the DOLE would refer the
matter to the NLRC. The DOLE must have the power to determine whether
or not an employer-employee relationship exists, and from there to decide
whether or not to issue compliance orders in accordance with Art. 128(b) of
the Labor Code, as amended by RA 7730.
The DOLE, in determining the existence of an employeremployee relationship, has a ready set of guidelines to follow, the same
guide the courts themselves use. The elements to determine the existence
of an employment relationship are: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; (4) the
employers power to control the employees conduct. The use of this test is
not solely limited to the NLRC. The DOLE Secretary, or his or her
representatives, can utilize the same test, even in the course of inspection,
making use of the same evidence that would have been presented before
the NLRC.
The determination of the existence of an employer-employee
relationship by the DOLE must be respected. The expanded visitorial and
enforcement power of the DOLE granted by RA 7730 would be rendered
nugatory if the alleged employer could, by the simple expedient of disputing
the employer-employee relationship, force the referral of the matter to the
NLRC. The Court issued the declaration that at least a prima facie showing
of the absence of an employer-employee relationship be made to oust the
DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that
evidence, and it is the DOLE that will weigh it, to see if the same does
successfully refute the existence of an employer-employee relationship.
If the DOLE makes a finding that there is an existing employeremployee relationship, it takes cognizance of the matter, to the exclusion of
the NLRC. The DOLE would have no jurisdiction only if the employeremployee relationship has already been terminated, or it appears, upon
review, that no employer-employee relationship existed in the first place.
The Court, in limiting the power of the DOLE, gave the rationale
that such limitation would eliminate the prospect of competing conclusions
between the DOLE and the NLRC. The prospect of competing conclusions
could just as well have been eliminated by according respect to the DOLE
findings, to the exclusion of the NLRC, and this We believe is the more
prudent course of action to take.
This is not to say that the determination by the DOLE is beyond
question or review. Suffice it to say, there are judicial remedies such as a
petition for certiorari under Rule 65 that may be availed of, should a party

wish to dispute the findings of the DOLE.

It must also be remembered that the power of the DOLE to
determine the existence of an employer-employee relationship need not
necessarily result in an affirmative finding. The DOLE may well make the
determination that no employer-employee relationship exists, thus divesting
itself of jurisdiction over the case. It must not be precluded from being able
to reach its own conclusions, not by the parties, and certainly not by this
Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730,
the DOLE is fully empowered to make a determination as to the existence of
an employer-employee relationship in the exercise of its visitorial and
enforcement power, subject to judicial review, not review by the NLRC.
There is a view that despite Art. 128(b) of the Labor Code, as
amended by RA 7730, there is still a threshold amount set by Arts. 129 and
217 of the Labor Code when money claims are involved, i.e., that if it is for
PhP 5,000 and below, the jurisdiction is with the regional director of the
DOLE, under Art. 129, and if the amount involved exceeds PhP 5,000, the
jurisdiction is with the labor arbiter, under Art. 217. The view states that
despite the wording of Art. 128(b), this would only apply in the course of
regular inspections undertaken by the DOLE, as differentiated from cases
under Arts. 129 and 217, which originate from complaints. There are several
cases, however, where the Court has ruled that Art. 128(b) has been
amended to expand the powers of the DOLE Secretary and his duly
authorized representatives by RA 7730. In these cases, the Court resolved
that the DOLE had the jurisdiction, despite the amount of the money claims
involved. Furthermore, in these cases, the inspection held by the DOLE
regional director was prompted specifically by a complaint. Therefore, the
initiation of a case through a complaint does not divest the DOLE Secretary
or his duly authorized representative of jurisdiction under Art. 128(b).
To recapitulate, if a complaint is brought before the DOLE to give
effect to the labor standards provisions of the Labor Code or other labor
legislation, and there is a finding by the DOLE that there is an existing
employer-employee relationship, the DOLE exercises jurisdiction to the
exclusion of the NLRC. If the DOLE finds that there is no employeremployee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for
reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art.
217(3) of the Labor Code, which provides that the Labor Arbiter has original
and exclusive jurisdiction over those cases involving wages, rates of pay,
hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement. If a complaint is filed with the

NLRC, and there is still an existing employer-employee relationship, the

jurisdiction is properly with the DOLE. The findings of the DOLE, however,
may still be questioned through a petition for certiorari under Rule 65 of the
Rules of Court.
In the present case, the finding of the DOLE Regional Director
that there was an employer-employee relationship has been subjected to
review by this Court, with the finding being that there was no employeremployee relationship between petitioner and private respondent, based on
the evidence presented. Private respondent presented self-serving
allegations as well as self-defeating evidence. The findings of the Regional
Director were not based on substantial evidence, and private respondent
failed to prove the existence of an employer-employee relationship. The
DOLE had no jurisdiction over the case, as there was no employer-employee
relationship present. Thus, the dismissal of the complaint against petitioner
is proper.
WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby
AFFIRMED, with the MODIFICATION that in the exercise of the DOLEs
visitorial and enforcement power, the Labor Secretary or the latters
authorized representative shall have the power to determine the existence of
an employer-employee relationship, to the exclusion of the NLRC.
SO ORDERED.
MARIANO ONG, doing business under the name and style MILESTONE
METAL MANUFACTURING, petitioner, vs. THE COURT OF APPEALS,
This is a petition for review on certiorari assailing the decision of the Court of
Appeals in CA-G.R. SP No. 62129, dated October 10, 2001, which
dismissed the petition for certiorari for lack of merit, as well as the resolution,
dated March 7, 2002, denying the motion for reconsideration.
Petitioner is the sole proprietor of Milestone Metal Manufacturing
(Milestone), which manufactures, among others, wearing apparels, belts,
and umbrellas. Sometime in May 1998, the business suffered very low sales
and productivity because of the economic crisis in the country. Hence, it
adopted a rotation scheme by reducing the workdays of its employees to
three days a week or less for an indefinite period.
On separate dates, the 15 respondents filed before the National Labor
Relations Commission (NLRC) complaints for illegal dismissal,
underpayment of wages, non-payment of overtime pay, holiday pay, service
incentive leave pay, 13th month pay, damages, and attorneys fees against
petitioner. These were consolidated and assigned to Labor Arbiter Manuel
Manasala.
Petitioner claimed that 9 of the 15 respondents were not employees of

Milestone but of Protone Industrial Corporation which, however, stopped its

operation due to business losses. Further, he claims that respondents
Manuel Abuela, Lolita Abelong, Ronnie Herrero, Carlos Tabbal, Conrado
Dabac, and Lodualdo Faa were not dismissed from employment; rather, they
refused to work after the rotation scheme was adopted. Anent their monetary
claims, petitioner presented documents showing that he paid respondents
minimum wage, 13th month pay, holiday pay, and contributions to the SSS,
Medicare, and Pag-Ibig Funds.
On November 25, 1999, the Labor Arbiter rendered a decision awarding to
the respondents the aggregate amount of P1,111,200.40 representing their
wage differential, holiday pay, service incentive leave pay and 13th month
pay, plus 10% thereof as attorneys fees. Further, petitioner was ordered to
pay the respondents separation pay equivalent to month salary for every
year of service due to the indefiniteness of the rotation scheme and strained
relations caused by the filing of the complaints.
Petitioner filed with the NLRC a notice of appeal with a memorandum of
appeal and paid the docket fees therefor. However, instead of posting the
required cash or surety bond, he filed a motion to reduce the appeal bond.
The NLRC, in a resolution dated April 28, 2000, denied the motion to reduce
bond and dismissed the appeal for failure to post cash or surety bond within
the reglementary period. Petitioners motion for reconsideration was likewise
denied.
Petitioner filed a petition for certiorari with the Court of Appeals alleging that
the NLRC acted with grave abuse of discretion in dismissing the appeal for
non-perfection of appeal although a motion to reduce appeal bond was
seasonably filed. However, the petition was dismissed and thereafter the
motion for reconsideration was likewise dismissed for lack of merit.
Hence, this petition for review on the following assignment of errors:
I.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS
ERROR AND GRAVE ABUSE OF DISCRETION IN AFFIRMING THE
DECISION OF THE NLRC DISMISSING THE APPEAL OF PETITIONERS
(sic) FOR NON-PERFECTION WHEN A MOTION TO REDUCE APPEAL
BOND WAS SEASONABLY FILED WHICH IS ALLOWED BY THE RULES
OF PROCEDURE OF THE NLRC.
II.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS
ERROR AND GRAVE ABUSE OF DISCRETION IN AFFIRMING THE
DISMISSAL BY NLRC OF PETITIONERS APPEAL AND IN EFFECT
UPHOLDING THE ERRONEOUS DECISION OF THE LABOR ARBITER
AWARDING SEPARATION PAY TO PRIVATE RESPONDENTS DESPITE
THE FINDING THAT THERE WAS NO ILLEGAL DISMISSAL MADE BY
MILESTONE.
III.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS

ERROR IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS

APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF
THE LABOR ARBITER THAT PETITIONER MILESTONE HAS VIOLATED
THE MINIMUM WAGE LAW AND THAT PRIVATE RESPONDENTS WERE
UNDERPAID.
IV.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS
ERROR IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS
APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF
THE LABOR ARBITER THAT PETITIONER MILESTONE HAS NOT PAID
PRIVATE RESPONDENTS THEIR SERVICE INCENTIVE LEAVE PAY, 13 TH
MONTH PAY, AND HOLIDAY PAY.
V.
PUBLIC RESPONDENT COURT OF APPEALS COMMITTED SERIOUS
ERROR IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS
APPEAL AND IN EFFECT UPHOLDING THE ERRONEOUS DECISION OF
THE LABOR ARBITER THAT THE EVIDENCE SUBMITTED BY PRIVATE
RESPONDENTS IN SUPPORT OF THEIR CLAIMS ARE NOT SELFSERVING, IRRELEVANT AND IMMATERIAL TO THE FACTS AND LAW IN
ISSUE IN THIS CASE.
The petition lacks merit.
Time and again it has been held that the right to appeal is not a natural right
or a part of due process, it is merely a statutory privilege, and may be
exercised only in the manner and in accordance with the provisions of law.
The party who seeks to avail of the same must comply with the requirements
of the rules. Failing to do so, the right to appeal is lost.
Article 223 of the Labor Code, as amended, sets forth the rules on appeal
from the Labor Arbiters monetary award:
ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such decisions, awards, or
orders. x x x.
xxxxxxxxx
In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from. (Emphasis ours)
The pertinent provisions of Rule VI of the New Rules of Procedure of the
NLRC which were in effect when petitioner filed his appeal, provide:
Section 1. Periods of Appeal. Decisions, awards or orders of the Labor
Arbiter and the POEA Administrator shall be final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar
days from receipt of such decisions, awards or orders of the Labor Arbiter x x

x.
xxxxxxxxx
Section 3. Requisites for Perfection of Appeal. (a) The appeal shall be filed
within the reglementary period as provided in Section 1 of this Rule; shall be
under oath with proof of payment of the required appeal fee and the posting
of a cash or surety bond as provided in Section 5 of this Rule; shall be
accompanied by a memorandum of appeal which shall state the grounds
relied upon and the arguments in support thereof; the relief prayed for; and a
statement of the date when the appellant received the appealed decision,
order or award and proof of service on the other party of such appeal.
A mere notice of appeal without complying with the other requisite
aforestated shall not stop the running of the period for perfecting an appeal.
xxxxxxxxx
Section 6. Bond. In case the decision of the Labor Arbiter, the Regional
Director or his duly authorized Hearing Officer involves a monetary award,
an appeal by the employer shall be perfected only upon the posting of
a cash or surety bond, which shall be in effect until final disposition of the
case, issued by a reputable bonding company duly accredited by the
Commission or the Supreme Court in an amount equivalent to the monetary
award, exclusive of damages and attorneys fees.
The employer, his counsel, as well as the bonding company, shall submit a
joint declaration under oath attesting that the surety bond posted is genuine.
The Commission may, in justifiable cases and upon Motion of the Appellant,
reduce the amount of the bond. The filing of the motion to reduce bond shall
not stop the running of the period to perfect appeal. (Emphasis ours)
In the case at bar, petitioner received the decision of the Labor Arbiter on
January 6, 2000. He filed his notice of appeal with memorandum of appeal
and paid the corresponding appeal fees on January 17, 2000, the last day of
filing the appeal. However, in lieu of the required cash or surety bond, he
filed a motion to reduce bond alleging that the amount of P1,427,802,04 as
bond is unjustified and prohibitive and prayed that the same be reduced to a
reasonable level. The NLRC denied the motion and consequently dismissed
the appeal for non-perfection. Petitioner now contends that he was deprived
of the chance to post bond because the NLRC took 102 days to decide his
motion.
Petitioners argument is unavailing.
While, Section 6, Rule VI of the NLRCs New Rules of Procedure allows the
Commission to reduce the amount of the bond, the exercise of the authority
is not a matter of right on the part of the movant but lies within the sound
discretion of the NLRC upon showing of meritorious grounds. Petitioners
motion reads:
1. The appeal bond which respondents-appellants will post in this case is
P1,427,802.04. They are precisely questioning this amount as being
unjustified and prohibitive under the premises.
2. The amount of this appeal bond must be reduced to a reasonable level by

this Honorable Office.

WHEREFORE, in view thereof, it is respectfully prayed of this Honorable
Office that the appeal bond of P1,427,802.04 be reduced. After careful
scrutiny of the motion to reduce appeal bond, we agree with the Court of
Appeals that the NLRC did not act with grave abuse of discretion when it
denied petitioners motion for the same failed to either elucidate why the
amount of the bond was unjustified and prohibitive or to indicate what would
be a reasonable level.
In Calabash Garments, Inc. v. NLRC it was held that a substantial monetary
award, even if it runs into millions, does not necessarily give the employerappellant a meritorious case and does not automatically warrant a reduction
of the appeal bond.
Even granting arguendo that petitioner has meritorious grounds to reduce
the appeal bond, the result would have been the same since he failed to
post cash or surety bond within the prescribed period.
The above-cited provisions explicitly provide that an appeal from the Labor
Arbiter to the NLRC must be perfected within ten calendar days from receipt
of such decisions, awards or orders of the Labor Arbiter. In a judgment
involving a monetary award, the appeal shall be perfected only upon (1)
proof of payment of the required appeal fee; (2) posting of a cash or surety
bond issued by a reputable bonding company; and (3) filing of a
memorandum of appeal. A mere notice of appeal without complying with the
other requisites mentioned shall not stop the running of the period for
perfection of appeal. The posting of cash or surety bond is not only
mandatory but jurisdictional as well, and non-compliance therewith is fatal
and has the effect of rendering the judgment final and executory This
requirement is intended to discourage employers from using the appeal to
delay, or even evade, their obligation to satisfy their employees just and
lawful claims.
The intention of the lawmakers to make the bond an indispensable requisite
for the perfection of an appeal by the employer is underscored by the
provision that an appeal by the employer may be perfected only upon the
posting of a cash or surety bond. The word only makes it perfectly clear that
the lawmakers intended the posting of a cash or surety bond by the
employer to be the exclusive means by which an employers appeal may be
perfected.
The fact that the NLRC took 102 days to resolve the motion will not help
petitioners case. The NLRC Rules clearly provide that the filing of the motion
to reduce bond shall not stop the running of the period to perfect appeal.
Petitioner should have seasonably filed the appeal bond within the ten-day
reglementary period following the receipt of the order, resolution or decision
of the NLRC to forestall the finality of such order, resolution or decision. In
the alternative, he should have paid only a moderate and reasonable sum

for the premium, as was held in Biogenerics Marketing and Research

Corporation v. NLRC to wit:
x x x The mandatory filing of a bond for the perfection of an appeal is evident
from the aforequoted provision that the appeal may be perfected only upon
the posting of cash or surety bond. It is not an excuse that the over P2
million award is too much for a small business enterprise, like the petitioner
company, to shoulder. The law does not require its outright payment, but
only the posting of a bond to ensure that the award will be eventually
paid should the appeal fail. What petitioners have to pay is a moderate
and reasonable sum for the premium for such bond. (Emphasis ours)
While the bond requirement on appeals involving monetary awards has been
relaxed in certain cases, this can only be done where there was substantial
compliance of the Rules or where the appellants, at the very least, exhibited
willingness to pay by posting a partial bond. Petitioners reliance on the case
of Rosewood Processing, Inc. v. NLRC is misplaced. Petitioner in the said
case substantially complied with the rules by posting a partial surety bond of
fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc.
while his motion to reduce appeal bond was pending before the NLRC.
In the case at bar, petitioner did not post a full or partial appeal bond within
the prescribed period, thus, no appeal was perfected from the decision of the
Labor Arbiter. For this reason, the decision sought to be appealed to the
NLRC had become final and executory and therefore immutable. Clearly,
then, the NLRC has no authority to entertain the appeal, much less to
reverse the decision of the Labor Arbiter. Any amendment or alteration made
which substantially affects the final and executory judgment is null and void
for lack of jurisdiction, including the entire proceeding held for that purpose.
WHEREFORE, in view of the foregoing, the petition is DENIED. The
assailed decision of the Court of Appeals in CA-G.R. SP No. 62129, dated
October 10, 2001, dismissing the petition for certiorari for lack of merit, is
AFFIRMED.
No pronouncement as to costs.
SO ORDERED.
YUPANGCO COTTON MILLS, INC., petitioner, vs. COURT OF APPEALS
The Case
The case is a petition for review on certiorari of the decision of the Court of
Appeals dismissing the petition ruling that petitioner was guilty of forum
shopping and that the proper remedy was appeal in due course, not
certiorari or mandamus.
In its decision, the Court of Appeals sustained the trial courts ruling that the
remedies granted under Section 17, Rule 39 of the Rules of Court are not
available to the petitioner because the Manual of Instructions for Sheriffs of
the NLRC does not include the remedy of an independent action by the

owner to establish his right to his property.

The Facts
The facts, as found by the Court of Appeals, are as follows:
From the records before us and by petitioners own allegations and
admission, it has taken the following actions in connection with its claim that
a sheriff of the National Labor Relations Commission erroneously and
unlawfully levied upon certain properties which it claims as its own.
1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995.
2. It filed an Affidavit of Adverse Claim with the National Labor Relations
Commission (NLRC) on July 4, 1995, which was dismissed on August 30,
1995, by the Labor Arbiter.
3. It filed a petition for certiorari and prohibition with the Regional Trial Court
of Manila, Branch 49, docketed as Civil Case No. 95-75628 on October 6,
1995. The Regional Trial Court dismissed the case on October 11, 1995 for
lack of merit.
4. It appealed to the NLRC the order of the Labor Arbiter dated August 13,
1995 which dismissed the appeal for lack of merit on December 8, 1995.
5. It filed an original petition for mandatory injunction with the NLRC on
November 16, 1995. This was docketed as Case No. NLRC-NCR-IC.
0000602-95. This case is still pending with that Commission.
6. It filed a complaint in the Regional Trial Court in Manila which was
docketed as Civil Case No. 95-76395. The dismissal of this case by public
respondent triggered the filing of the instant petition.
In all of the foregoing actions, petitioner raised a common issue, which is
that it is the owner of the properties located in the compound and buildings
of Artex Development Corporation, which were erroneously levied upon by
the sheriff of the NLRC as a consequence of the decision rendered by the
said Commission in a labor case docketed as NLRC-NCR Case No. 00-0502960-90.
On March 29, 1996, the Court of Appeals promulgated a decision dismissing
the petition on the ground of forum shopping and that petitioners remedy
was to seek relief from this Court.
On April 18, 1996, petitioner filed with the Court of Appeals a motion for
reconsideration of the decision. Petitioner argued that the filing of a
complaint for accion reinvindicatoria with the Regional Trial Court was proper
because it is a remedy specifically granted to an owner (whose properties
were subjected to a writ of execution to enforce a decision rendered in a
labor dispute in which it was not a party) by Section 17 (now 16), Rule 39,
Revised Rules of Court and by the doctrines laid down in Sy v. Discaya, ]
Santos v. Bayhon and Manliguez v. Court of Appeals.
In addition, petitioner argued that the reliefs sought and the issues involved
in the complaint for recovery of property and damages filed with the
Regional Trial Court of Manila, presided over by respondent judge, were
entirely distinct and separate from the reliefs sought and the issues involved
in the proceedings before the Labor Arbiter and the NLRC. Besides,

petitioner pointed out that neither the NLRC nor the Labor Arbiter is
empowered to adjudicate matters involving ownership of properties.
On August 27, 1996, the Court of Appeals denied petitioners motion for
reconsideration.
Hence, this appeal.
The Issues
The issues raised are (1) whether the Court of Appeals erred in ruling that
petitioner was guilty of forum shopping, and (2) whether the Court of Appeals
erred in dismissing the petitioners accion reinvindicatoria on the ground of
lack of jurisdiction of the trial court.
The Courts Ruling
On the first issue raised, we rule that there was no forum shopping.
In Golangco v. Court of Appeals we held:
What is truly important to consider in determining whether forum shopping
exists or not is the vexation caused the courts and parties-litigant by a party
who asks different courts and/or administrative agencies to rule on the same
or related causes and/or grant the same or substantially the same reliefs, in
the process creating possibility of conflicting decisions being rendered by the
different for a upon the same issues.
xxx xxx xxx
There is no forum-shopping where two different orders were questioned, two
distinct causes of action and issues were raised, and two objectives were
sought. (Underscoring ours)
In the case at bar, there was no identity of parties, rights and causes of
action and reliefs sought.
The case before the NLRC where Labor Arbiter Reyes issued a writ of
execution on the property of petitioner was a labor dispute between Artex
and Samar-Anglo. Petitioner was not a party to the case. The only issue
petitioner raised before the NLRC was whether or not the writ of execution
issued by the labor arbiter could be satisfied against the property of
petitioner, not a party to the labor case.
On the other hand, the accion reinvindicatoria filed by petitioner in the trial
court was to recover the property illegally levied upon and sold at auction.
Hence, the causes of action in these cases were different.
The rule is that for forum-shopping to exist both actions must involve the
same transactions, the same circumstances. The actions must also raise
identical causes of action, subject matter and issues.
In Chemphil Export & Import Corporation v. Court of Appeals we ruled that:
Forum-shopping or the act of a party against whom an adverse judgment
has been rendered in one forum, of seeking another (and possible) opinion
in another forum (other than by appeal or the special civil action of certiorari),
or the institution of two (2) or more actions or proceedings grounded on the
same cause on the supposition that one or the other would make a favorable
disposition.
On the second issue, a third party whose property has been levied upon by a

sheriff to enforce a decision against a judgment debtor is afforded with

several alternative remedies to protect its interests. The third party may avail
himself of alternative remedies cumulatively, and one will not preclude the
third party from availing himself of the other alternative remedies in the event
he failed in the remedy first availed of.
Thus, a third party may avail himself of the following alternative remedies:
a) File a third party claim with the sheriff of the Labor Arbiter, and
b) If the third party claim is denied, the third party may appeal the denial to
the NLRC.
Even if a third party claim was denied, a third party may still file a proper
action with a competent court to recover ownership of the property illegally
seized by the sheriff. This finds support in Section 17 (now 16), Rule 39,
Revised Rules of Court, to wit:
SEC. 17 (now 16). Proceedings where property claimed by third person. -If
property claimed by any other person than the judgment debtor or his agent,
and such person makes an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or title, and serve the
same upon the officer making the levy, and a copy thereof upon the
judgment creditor, the officer shall not be bound to keep the property, unless
such judgment creditor or his agent, on demand of the officer, indemnify the
officer against such claim by a bond in a sum not greater than the value of
the property levied on. In case of disagreement as to such value, the same
shall be determined by the court issuing the writ of execution.
The officer is not liable for damages, for the taking or keeping of the
property, to any third-party claimant unless a claim is made by the latter and
unless an action for damages is brought by him against the officer within one
hundred twenty (120) days from the date of the filing of the bond. But nothing
herein contained shall prevent such claimant or any third person from
vindicating his claim to the property by any proper action.
When the party in whose favor the writ of execution runs, is the Republic of
the Philippines, or any officer duly representing it, the filing of such bond
shall not be required, and in case the sheriff or levying officer is sued for
damages as a result of the levy, he shall be represented by the Solicitor
General and if held liable therefor, the actual damages adjudged by the court
shall be paid by the National Treasurer out of such funds as may be
appropriated for the purpose. (Underscoring ours)
In Sy v. Discaya we ruled that:
The right of a third-party claimant to file an independent action to vindicate
his claim of ownership over the properties seized is reserved by Section 17
(now 16), Rule 39 of the Rules of Court, x x x:
xxxxxxxxx
As held in the case of Ong v. Tating, et. al., construing the aforecited rule, a
third person whose property was seized by a sheriff to answer for the
obligation of a judgment debtor may invoke the supervisory power of the
court which authorized such execution. Upon due application by the third

person and after summary hearing, the court may command that the
property be released from the mistaken levy and restored to the rightful
owner or possessor. What said court do in these instances, however, is
limited to a determination of whether the sheriff has acted rightly or wrongly
in the performance of his duties in the execution of judgment, more
specifically, if he has indeed taken hold of property not belonging to the
judgment debtor. The court does not and cannot pass upon the question of
title to the property, with any character of finality. It can treat of the matter
only insofar as may be necessary to decide if the sheriff has acted correctly
or not. It can require the sheriff to restore the property to the claimants
possession if warranted by the evidence. However, if the claimants proof do
not persuade the court of the validity of his title or right of possession
thereto, the claim will be denied.
Independent of the above-stated recourse, a third-party claimant may also
avail of the remedy known as terceria, provided in Section 17 (now 16), Rule
39, by serving on the officer making the levy an affidavit of his title and a
copy thereof upon the judgment creditor. The officer shall not be bound to
keep the property, unless such judgment creditor or his agent, on demand of
the officer, indemnifies the officer against such claim by a bond in a sum not
greater than the value of the property levied on. An action for damages may
be brought against the sheriff within one hundred twenty (120) days from the
filing of the bond.
The aforesaid remedies are nevertheless without prejudice to any proper
action that a third-party claimant may deem suitable to vindicate his claim to
the property. Such a proper action is, obviously, entirely distinct from that
explicitly prescribed in Section 17 of Rule 39, which is an action for damages
brought by a third-party claimant against the officer within one hundred
twenty (120) days from the date of the filing of the bond for the taking or
keeping of the property subject of the terceria.
Quite obviously, too, this proper action would have for its object the recovery
of ownership or possession of the property seized by the sheriff, as well as
damages resulting from the allegedly wrongful seizure and detention thereof
despite the third-party claim; and it may be brought against the sheriff and
such other parties as may be alleged to have colluded with him in the
supposedly wrongful execution proceedings, such as the judgment creditor
himself. Such proper action, as above pointed out, is and should be an
entirely separate and distinct action from that in which execution has issued,
if instituted by a stranger to the latter suit.
The remedies above mentioned are cumulative and may be resorted to
by a third-party claimant independent of or separately from and without
need of availing of the others. If a third-party claimant opted to file a
proper action to vindicate his claim of ownership, he must institute an action,
distinct and separate from that in which the judgment is being enforced, with
the court of competent jurisdiction even before or without need of filing a
claim in the court which issued the writ, the latter not being a condition sine

qua non for the former. In such proper action, the validity and sufficiency of
the title of the third-party claimant will be resolved and a writ of preliminary
injunction against the sheriff may be issued. (Emphasis and underscoring
ours)
In light of the above, the filing of a third party claim with the Labor Arbiter and
the NLRC did not preclude the petitioner from filing a subsequent action for
recovery of property and damages with the Regional Trial Court. And, the
institution of such complaint will not make petitioner guilty of forum shopping.
In Santos v. Bayhon wherein Labor Arbiter Ceferina Diosana rendered a
decision in NLRC NCR Case No. 1-313-85 in favor of Kamapi, the NLRC
affirmed the decision. Thereafter, Kamapi obtained a writ of execution
against the properties of Poly-Plastic Products or Anthony Ching. However,
respondent Priscilla Carrera filed a third-party claim alleging that Anthony
Ching had sold the property to her. Nevertheless, upon posting by the
judgment creditor of an indemnity bond, the NLRC Sheriff proceeded with
the public auction sale. Consequently, respondent Carrera filed with
Regional Trial Court, Manila an action to recover the levied property and
obtained a temporary restraining order against Labor Arbiter Diosana and
the NLRC Sheriff from issuing a certificate of sale over the levied property.
Eventually, Labor Arbiter Santos issued an order allowing the execution to
proceed against the property of Poly-Plastic Products. Also, Labor Arbiter
Santos and the NLRC Sheriff filed a motion to dismiss the civil case
instituted by respondent Carrera on the ground that the Regional Trial Court
did not have jurisdiction over the labor case. The trial court issued an order
enjoining the enforcement of the writ of execution over the properties
claimed by respondent Carrera pending the determination of the validity of
the sale made in her favor by the judgment debtor Poly-Plastic Products and
Anthony Ching.
In dismissing the petition for certiorari filed by Labor Arbiter Santos, we ruled
that:
x x x. The power of the NLRC to execute its judgments extends only to
properties unquestionably belonging to the judgment debtor (Special
Servicing Corp. v. Centro La Paz, 121 SCRA 748).
The general rule that no court has the power to interfere by injunction with
the judgments or decrees of another court with concurrent or coordinate
jurisdiction possessing equal power to grant injunctive relief, applies only
when no third-party claimant is involved (Traders Royal Bank v. Intermediate
Appellate Court, 133 SCRA 141 [1984]). When a third-party, or a stranger to
the action, asserts a claim over the property levied upon, the claimant may
vindicate his claim by an independent action in the proper civil court which
may stop the execution of the judgment on property not belonging to the
judgment debtor. (Underscoring ours)
In Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158
[1991], we ruled that:
The well-settled doctrine is that a proper levy is indispensable to a valid sale

on execution. A sale unless preceded by a valid levy is void. Therefore, since

there was no sufficient levy on the execution in question, the private
respondent did not take any title to the properties sold thereunder x x x.
A person other than the judgment debtor who claims ownership or right over
the levied properties is not precluded, however, from taking other legal
remedies. (Underscoring ours)
Jurisprudence is likewise replete with rulings that since the third-party
claimant is not one of the parties to the action, he could not, strictly
speaking, appeal from the order denying his claim, but should file a separate
reinvindicatory action against the execution creditor or the purchaser of the
property after the sale at public auction, or a complaint for damages against
the bond filed by the judgment creditor in favor of the sheriff.
And in Lorenzana v. Cayetano, we ruled that:
The rights of a third-party claimant should not be decided in the action where
the third-party claim has been presented, but in a separate action to be
instituted by the third person. The appeal that should be interposed if the
term appeal may properly be employed, is a separate reinvindicatory action
against the execution creditor or the purchaser of the property after the sale
at public auction, or complaint for damages to be charged against the bond
filed by the judgment creditor in favor of the sheriff. Such reinvindicatory
action is reserved to the third-party claimant.
A separate civil action for recovery of ownership of the property would not
constitute interference with the powers or processes of the Arbiter and the
NLRC which rendered the judgment to enforce and execute upon the levied
properties. The property levied upon being that of a stranger is not subject to
levy. Thus, a separate action for recovery, upon a claim and prima-facie
showing of ownership by the petitioner, cannot be considered as
interference.
The Fallo
WHEREFORE, the Court REVERSES the decision of the Court of
Appeals and the resolution denying reconsideration.[if !supportFootnotes][19][endif] In lieu
thereof, the Court renders judgment ANNULLING the sale on execution of
the subject property conducted by NLRC Sheriff Anam Timbayan in favor of
respondent SAMAR-ANGLO and the subsequent sale of the same to
Rodrigo Sy Mendoza. The Court declares the petitioner to be the rightful
owner of the property involved and remands the case to the trial court to
determine the liability of respondents SAMAR-ANGLO, Rodrigo Sy
Mendoza, and WESTERN GUARANTY CORPORATION to pay actual
damages that petitioner claimed.
Costs against respondents, except the Court of Appeals.
SO ORDERED.
PHILIPPINE AIRLINES, INC., petitioner, vs., NATIONAL LABOR
RELATIONS COMMISSION, FERDINAND PINEDA and GODOFREDO
CABLING, respondents.

Can the National Labor Relations Commission (NLRC), even without

a complaint for illegal dismissal filed before the labor arbiter, entertain an
action for injunction and issue such writ enjoining petitioner Philippine
Airlines, Inc. from enforcing its Orders of dismissal against private
respondents, and ordering petitioner to reinstate the private respondents to
their previous positions?
This is the pivotal issue presented before us in this petition for
certiorari under Rule 65 of the Revised Rules of Court which seeks the
nullification of the injunctive writ dated April 3,1995 issued by the NLRC and
the Order denying petitioner's motion for reconsideration on the ground that
the said Orders were issued in excess of jurisdiction.
Private respondents are flight stewards of the petitioner. Both were
dismissed from the service for their alleged involvement in the April 3, 1993
currency smuggling in Hong Kong.
Aggrieved by said dismissal, private respondents filed with the NLRC
a petition for injunction praying that:
"I. Upon filing of this Petition, a temporary restraining order be issued,
prohibiting respondents (petitioner herein) from effecting or enforcing the
Decision dated Feb. 22, 1995, or to reinstate petitioners temporarily while a
hearing on the propriety of the issuance of a writ of preliminary injunction is
being undertaken;
"II. After hearing, a writ of preliminary mandatory injunction be issued
ordering respondent to reinstate petitioners to their former positions pending
the hearing of this case, or, prohibiting respondent from enforcing its
Decision dated February 22,1995 while this case is pending adjudication;
"III. After hearing, that the writ of preliminary injunction as to the reliefs
sought for be made permanent, that petitioners be awarded full backwages,
moral damages of PHP 500,000.00 each and exemplary damages of PHP
500,000.00 each, attorneys fees equivalent to ten percent of whatever
amount is awarded, and the costs of suit."
On April 3, 1995, the NLRC issued a temporary mandatory injunctiog
enjoining petitioner to cease and desist from enforcing its February 22, 1995
Memorandum of dismissal. In granting the writ, the NLRC considered the
following facts, to wit:
x x x that almost two (2) years ago, i.e. on April 15, 1993, the petitioners
were instructed to attend an investigation by respondents Security and Fraud
Prevention Sub-Department regarding an April 3, 1993 incident in Hongkong
at which Joseph Abaca, respondents Avionics Mechanic in Hongkong was
intercepted by the Hongkong Airport Police at Gate 05 xxx the ramp area of
the Kai Tak International Airport while xxx about to exit said gate carrying a
xxx bag said to contain some 2.5 million pesos in Philippine Currencies. That
at the Police Station, Mr. Abaca claimed that he just found said plastic bag at
the Skybed Section of the arrival flight PR300/03 April 93, where petitioners
served as flight stewards of said flight PR300; x x the petitioners sought a

more detailed account of what this HKG incident is all about; but instead, the
petitioners were administratively charged, a hearing on which did not push
through until almost two (2) years after, i.e. on January 20, 1995 xxx where a
confrontation between Mr. Abaca and petitioners herein was compulsorily
arranged by the respondents disciplinary board at which hearing, Abaca was
made to identify petitioners as co-conspirators; that despite the fact that the
procedure of identification adopted by respondents Disciplinary Board was
anomalous as there was no one else in the line-up (which could not be
called one) but petitioners xxx Joseph Abaca still had difficulty in identifying
petitioner Pineda as his co-conspirator, and as to petitioner Cabling, he was
implicated and pointed by Abaca only after respondents Atty. Cabatuando
pressed the former to identify petitioner Cabling as co-conspirator; that with
the hearing reset to January 25, 1995, Mr. Joseph Abaca finally gave
exculpating statements to the board in that he cleared petitioners from any
participation or from being the owners of the currencies, and at which
hearing Mr. Joseph Abaca volunteered the information that the real owner of
said money was one who frequented his headquarters in Hongkong to which
information, the Disciplinary Board Chairman, Mr. Ismael Khan, opined for
the need for another hearing to go to the bottom of the incident; that from
said statement, it appeared that Mr. Joseph Abaca was the courier, and had
another mechanic in Manila who hid the currency at the planes skybed for
Abaca to retrieve in Hongkong, which findings of how the money was found
was previously confirmed by Mr. Joseph Abaca himself when he was first
investigated by the Hongkong authorities; that just as petitioners thought that
they were already fully cleared of the charges, as they no longer received
any summons/notices on the intended additional hearings mandated by the
Disciplinary Board, they were surprised to receive on February 23, 1995 xxx
a Memorandum dated February 22, 1995 terminating their services for
alleged violation of respondents Code of Discipline effective immediately;
that sometime xxx first week of March, 1995, petitioner Pineda received
another Memorandum from respondent Mr. Juan Paraiso, advising him of his
termination effective February 3, 1995, likewise for violation of respondents
Code of Discipline; x x x"
In support of the issuance of the writ of temporary injunction, the
NLRC adopted the view that: (1) private respondents cannot be validly
dismissed on the strength of petitioner's Code of Discipline which was
declared illegal by this Court in the case of PAL, Inc. vs. NLRC, (G.R. No.
85985), promulgated August 13, 1993, for the reason that it was formulated
by the petitioner without the participation of its employees as required in R.A.
6715, amending Article 211 of the Labor Code; (2) the whimsical, baseless
and premature dismissals of private respondents which "caused them grave
and irreparable injury" is enjoinable as private respondents are left "with no
speedy and adequate remedy at law'"except the issuance of a temporary
mandatory injunction; (3) the NLRC is empowered under Article 218 (e) of
the Labor Code not only to restrain any actual or threatened commission of

any or all prohibited or unlawful acts but also to require the performance of a
particular act in any labor dispute, which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party; and (4) the
temporary mandatory power of the NLRC was recognized by this Court in
the case of Chemo-Technicshe Mfg., Inc. Employees Union,DFA, et.al. vs.
Chemo-Technische Mfg., Inc. [G.R. No. 107031, January 25,1993].
On May 4,1995, petitioner moved for reconsideration arguing that the
NLRC erred:
1. in granting a temporary injunction order when it has no jurisdiction to
issue an injunction or restraining order since this may be issued only
under Article 218 of the Labor Code if the case involves or arises from
labor disputes;
2. in granting a temporary injunction order when the termination of private
respondents have long been carried out;
3. ..in ordering the reinstatement of private respondents on the basis of their
mere allegations, in violation of PAL's right to due process;
4. ..in arrogating unto itself management prerogative to discipline its
employees and divesting the labor arbiter of its original and exclusive
jurisdiction over illegal dismissal cases;
5. ..in suspending the effects of termination when such action is exclusively
within the jurisdiction of the Secretary of Labor;
6. ..in issuing the temporary injunction in the absence of any
irreparable or substantial injury to both private respondents.
On May 31,1995, the NLRC denied petitioner's motion for
reconsideration, ruling:
The respondent (now petitioner), for one, cannot validly claim that we
cannot exercise our injunctive power under Article 218 (e) of the Labor
Code on the pretext that what we have here is not a labor dispute as
long as it concedes that as defined by law, a(l) Labor Dispute includes
any controversy or matter concerning terms or conditions of
employment. . If security of tenure, which has been breached by
respondent and which, precisely, is sought to be protected by our temporary
mandatory injunction (the core of controversy in this case) is not a term or
condition of employment, what then is?
xxxxxxxxx
Anent respondents second argument x x x, Article 218 (e) of the Labor
Code x x x empowered the Commission not only to issue a prohibitory
injunction, but a mandatory (to require the performance) one as well.
Besides, as earlier discussed, we already exercised (on August
23,1991) this temporary mandatory injunctive power in the case of
Chemo-Technische Mfg., Inc. Employees Union-DFA et.al. vs. ChemoTechnishe Mfg., Inc., et. al. (supra) and effectively enjoined one (1)
month old dismissals by Chemo-Technische and that our aforesaid
mandatory exercise of injunctive power, when questioned through a
petition for certiorari, was sustained by the Third Division of the

Supreme court per its Resolution dated January 25,1993.

xxxxxxxxx
Respondents fourth argument that petitioner's remedy for their
dismissals is 'to file an illegal dismissal case against PAL which cases
are within the original and exclusive jurisdiction of the Labor Arbiter' is
ignorant. In requiring as a condition for the issuance of a 'temporary or
permanent injunction'- '(4) That complainant has no adequate remedy at
law;' Article 218 (e) of the Labor Code clearly envisioned adequacy ,
and not plain availability of a remedy at law as an alternative bar to the
issuance of an injunction. An illegal dismissal suit (which takes, on its
expeditious side, three (3) years before it can be disposed of) while
available as a remedy under Article 217 (a) of the Labor Code, is
certainly not an 'adequate; remedy at law. Ergo, it cannot, as an
alternative remedy, bar our exercise of that injunctive power given us
by Article 218 (e) of the Code.
xxx xxx xxx
Thus, Article 218 (e), as earlier discussed [which empowers this Commission
'to require the performance of a particular act' (such as our requiring
respondent 'to cease and desist from enforcing' its whimsical memoranda of
dismissals and 'instead to reinstate petitioners to their respective position
held prior to their subject dismissals') in 'any labor dispute which, if not xxx
performed forthwith, may cause grave and irreparable damage to any party']
stands as the sole 'adequate remedy at law' for petitioners here.
Finally, the respondent, in its sixth argument claims that even if its acts of
dismissing petitioners 'may be great, still the same is capable of
compensation', and that consequently, 'injunction need not be issued where
adequate compensation at law could be obtained'. Actually, what respondent
PAL argues here is that we need not interfere in its whimsical dismissals of
petitioners as, after all, it can pay the latter its backwages. x x x
But just the same, we have to stress that Article 279 does not speak alone of
backwages as an obtainable relief for illegal dismissal; that reinstatement as
well is the concern of said law, enforceable when necessary, through Article
218 (e) of the Labor Code (without need of an illegal dismissal suit under
Article 217 (a) of the Code) if such whimsical and capricious act of illegal
dismissal will 'cause grave or irreparable injury to a party'. x x x "
Hence, the present recourse.
Generally, injunction is a preservative remedy for the protection of
one's substantive rights or interest. It is not a cause of action in itself but
merely a provisional remedy, an adjunct to a main suit. It is resorted to
only when there is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard of compensation. The
application of the injunctive writ rests upon the existence of an emergency or
of a special reason before the main case be regularly heard. The essential
conditions for granting such temporary injunctive relief are that the complaint
alleges facts which appear to be sufficient to constitute a proper basis for

injunction and that on the entire showing from the contending parties, the
injunction is reasonably necessary to protect the legal rights of the plaintiff
pending the litigation. Injunction is also a special equitable relief granted only
in cases where there is no plain, adequate and complete remedy at law.
In labor cases, Article 218 of the Labor Code empowers the NLRC"(e) To enjoin or restrain any actual or threatened commission of any or all
prohibited or unlawful acts or to require the performance of a particular act in
any labor dispute which, if not restrained or performed forthwith, may cause
grave or irreparable damage to any party or render ineffectual any
decision in favor of such party; x x x." (Emphasis Ours)
Complementing the above-quoted provision, Sec. 1, Rule XI of the
New Rules of Procedure of the NLRC, pertinently provides as follows:
"Section 1. Injunction in Ordinary Labor Dispute.-A preliminary injunction or a
restraining order may be granted by the Commission through its divisions
pursuant to the provisions of paragraph (e) of Article 218 of the Labor Code,
as amended, when it is established on the bases of the sworn allegations in
the petition that the acts complained of, involving or arising from any
labor dispute before the Commission, which, if not restrained or
performed forthwith, may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party.
xxx xxx xxx
The foregoing ancillary power may be exercised by the Labor
Arbiters only as an incident to the cases pending before them in order to
preserve the rights of the parties during the pendency of the case, but
excluding labor disputes involving strikes or lockout. (Emphasis Ours)
From the foregoing provisions of law, the power of the NLRC to issue
an injunctive writ originates from "any labor dispute" upon application by a
party thereof, which application if not granted "may cause grave or
irreparable damage to any party or render ineffectual any decision in favor of
such party."
The term "labor dispute" is defined as "any controversy or matter
concerning terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining, changing, or
arranging the terms and conditions of employment regardless of whether or
not the disputants stand in the proximate relation of employers and
employees."
The term "controversy" is likewise defined as "a litigated question;
adversary proceeding in a court of law; a civil action or suit, either at
law or in equity; a justiciable dispute.
A "justiciable controversy" is "one involving an active antagonistic
assertion of a legal right on one side and a denial thereof on the other
concerning a real, and not a mere theoretical question or issue."
Taking into account the foregoing definitions, it is an essential
requirement that there must first be a labor dispute between the contending

parties before the labor arbiter. In the present case, there is no labor dispute
between the petitioner and private respondents as there has yet been no
complaint for illegal dismissal filed with the labor arbiter by the private
respondents against the petitioner.
The petition for injunction directly filed before the NLRC is in reality
an action for illegal dismissal. This is clear from the allegations in the petition
which prays for: reinstatement of private respondents; award of full
backwages, moral and exemplary damages; and attorney's fees. As such,
the petition should have been filed with the labor arbiter who has the original
and exclusive jurisdiction to hear and decide the following cases involving all
workers, whether agricultural or non-agricultural:
(1) Unfair labor practice;
(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 (P 5,000.00), whether or
not accompanied with a claim for reinstatement.
The jurisdiction conferred by the foregoing legal provision to the labor
arbiter is both original and exclusive, meaning, no other officer or tribunal
can take cognizance of, hear and decide any of the cases therein
enumerated. The only exceptions are where the Secretary of Labor and
Employment or the NLRC exercises the power of compulsory arbitration, or
the parties agree to submit the matter to voluntary arbitration pursuant to
Article 263 (g) of the Labor Code, the pertinent portions of which reads:
"(g) When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national interest,
the Secretary of Labor and Employment may assume jurisdiction over the
dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one has already taken
place at the time of assumption or certification, all striking or locked out
employees shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the strike or lockout.
The Secretary of Labor and Employment or the Commission may seek the
assistance of law enforcement agencies to ensure compliance with this
provision as well as with such orders as he may issue to enforce the same.

xxxxxxxxx"
On the other hand, the NLRC shall have exclusive appellate
jurisdiction over all cases decided by labor arbiters as provided in Article
217(b) of the Labor Code. In short, the jurisdiction of the NLRC in illegal
dismissal cases is appellate in nature and, therefore, it cannot entertain the
private respondents' petition for injunction which challenges the dismissal
orders of petitioner. Article 218(e) of the Labor Code does not provide
blanket authority to the NLRC or any of its divisions to issue writs of
injunction, considering that Section 1 of Rule XI of the New Rules of
Procedure of the NLRC makes injunction only an ancillary remedy in
ordinary labor disputes"[
Thus, the NLRC exceeded its jurisdiction when it issued the assailed
Order granting private respondents' petition for injunction and ordering the
petitioner to reinstate private respondents.
The argument of the NLRC in its assailed Order that to file an illegal
dismissal suit with the labor arbiter is not an "adequate" remedy since it
takes three (3) years before it can be disposed of, is patently erroneous. An
"adequate" remedy at law has been defined as one "that affords relief with
reference to the matter in controversy, and which is appropriate to the
particular circumstances of the case.] It is a remedy which is equally
beneficial, speedy and sufficient which will promptly relieve the petitioner
from the injurious effects of the acts complained of.
Under the Labor Code, the ordinary and proper recourse of an
illegally dismissed employee is to file a complaint for illegal dismissal with
the labor arbiter. In the case at bar, private respondents disregarded this rule
and directly went to the NLRC through a petition for injunction praying that
petitioner be enjoined from enforcing its dismissal orders. In Lamb vs.
Phipps, we ruled that if the remedy is specifically provided by law, it is
presumed to be adequate. Moreover, the preliminary mandatory injunction
prayed for by the private respondents in their petition before the NLRC can
also be entertained by the labor arbiter who, as shown earlier, has the
ancillary power to issue preliminary injunctions or restraining orders as an
incident in the cases pending before him in order to preserve the rights of
the parties during the pendency of the case.
Furthermore, an examination of private respondents' petition for
injunction reveals that it has no basis since there is no showing of any
urgency or irreparable injury which the private respondents might suffer. An
injury is considered irreparable if it is of such constant and frequent
recurrence that no fair and reasonable redress can be had therefor in a court
of law or where there is no standard by which their amount can be measured
with reasonable accuracy, that is, it is not susceptible of mathematical
computation. It is considered irreparable injury when it cannot be adequately
compensated in damages due to the nature of the injury itself or the nature

of the right or property injured or when there exists no certain pecuniary

standard for the measurement of damages.[
In the case at bar, the alleged injury which private respondents stand
to suffer by reason of their alleged illegal dismissal can be adequately
compensated and therefore, there exists no "irreparable injury," as defined
above which would necessitate the issuance of the injunction sought for.
Article 279 of the Labor Code provides that an employee who is unjustly
dismissed from employment shall be entitled to reinstatement, without loss
of seniority rights and other privileges, and to the payment of full backwages,
inclusive of allowances, and to other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.
The ruling of the NLRC that the Supreme Court upheld its power to
issue temporary mandatory injunction orders in the case of ChemoTechnische Mfg., Inc. Employees Union-DFA, et.al. vs. Chemo-Technische
Mfg., Inc. et.al., docketed as G.R. No. 107031, is misleading. As correctly
argued by the petitioner, no such pronouncement was made by this Court in
said case. On January 25,1993, we issued a Minute Resolution in the
subject case stating as follows:
"Considering the allegations contained, the issues raised and the arguments
adduced in the petition for certiorari , as well as the comments of both public
and private respondents thereon, and the reply of the petitioners to private
respondent's motion to dismiss the petition, the Court Resolved to DENY the
same for being premature."
It is clear from the above resolution that we did not in anyway sustain
the action of the NLRC in issuing such temporary mandatory injunction but
rather we dismissed the petition as the NLRC had yet to rule upon the
motion for reconsideration filed by peitioner. Thus, the minute resolution
denying the petition for being prematurely filed.
Finally, an injunction, as an extraordinary remedy, is not favored in
labor law considering that it generally has not proved to be an effective
means of settling labor disputes. It has been the policy of the State to
encourage the parties to use the non-judicial process of negotiation and
compromise, mediation and arbitration. Thus, injunctions may be issued only
in cases of extreme necessity based on legal grounds clearly established,
after due consultations or hearing and when all efforts at conciliation are
exhausted which factors, however, are clearly absent in the present case.
WHEREFORE, the petition is hereby GRANTED. The assailed Orders dated
April 3,1995 and May 31,1995, issued by the National Labor Relations
Commission (First Division), in NLRC NCR IC No. 000563-95, are hereby
REVERSED and SET ASIDE.
SO ORDERED.