G.R. No.

172013

October 2, 2009

PATRICIA HALAGUEA, MA. ANGELITA L. PULIDO, MA. TERESITA P. SANTIAGO, MARIANNE

V. KATINDIG, BERNADETTE A. CABALQUINTO, LORNA B. TUGAS, MARY CHRISTINE A.
VILLARETE, CYNTHIA A. STEHMEIER, ROSE ANNA G. VICTA, NOEMI R. CRESENCIO, and
other flight attendants of PHILIPPINE AIRLINES, Petitioners,
vs.
PHILIPPINE AIRLINES INCORPORATED, Respondent.
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision1 and the Resolution2 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
Agreement3 incorporating the terms and conditions of their agreement for the years 2000 to 2005,
hereinafter referred to as PAL-FASAP CBA.
Section 144, Part A of the PAL-FASAP CBA, provides that:
A. For the Cabin Attendants hired before 22 November 1996:
xxxx
3. Compulsory Retirement
Subject to the grooming standards provisions of this Agreement, compulsory retirement shall be fiftyfive (55) for females and sixty (60) for males. x x x.
In a letter dated July 22, 2003,4 petitioners and several female cabin crews manifested that the
aforementioned CBA provision on compulsory retirement is discriminatory, and demanded for an
equal treatment with their male counterparts. This demand was reiterated in a letter 5 by petitioners'
counsel addressed to respondent demanding the removal of gender discrimination provisions in the
coming re-negotiations of the PAL-FASAP CBA.
On July 12, 2004, Robert D. Anduiza, President of FASAP submitted their 2004-2005 CBA
proposals6 and manifested their willingness to commence the collective bargaining negotiations
between the management and the association, at the soonest possible time.
On July 29, 2004, petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the
Issuance of Temporary Restraining Order and Writ of Preliminary Injunction 7 with the Regional Trial
Court (RTC) of Makati City, Branch 147, docketed as Civil Case No. 04-886, against respondent for
the invalidity of Section 144, Part A of the PAL-FASAP CBA. The RTC set a hearing on petitioners'
application for a TRO and, thereafter, required the parties to submit their respective memoranda.
On August 9, 2004, the RTC issued an Order8 upholding its jurisdiction over the present case. The
RTC reasoned that:
In the instant case, the thrust of the Petition is Sec. 144 of the subject CBA which is allegedly
discriminatory as it discriminates against female flight attendants, in violation of the Constitution, the
Labor Code, and the CEDAW. The allegations in the Petition do not make out a labor dispute arising
from employer-employee relationship as none is shown to exist. This case is not directed specifically

against respondent arising from any act of the latter, nor does it involve a claim against the
respondent. Rather, this case seeks a declaration of the nullity of the questioned provision of the
CBA, which is within the Court's competence, with the allegations in the Petition constituting the
bases for such relief sought.
The RTC issued a TRO on August 10, 2004,9 enjoining the respondent for implementing Section
144, Part A of the PAL-FASAP CBA.
The respondent filed an omnibus motion10 seeking reconsideration of the order overruling its
objection to the jurisdiction of the RTC the lifting of the TRO. It further prayed that the (1) petitioners'
application for the issuance of a writ of preliminary injunction be denied; and (2) the petition be
dismissed or the proceedings in this case be suspended.
On September 27, 2004, the RTC issued an Order 11 directing the issuance of a writ of preliminary
injunction enjoining the respondent or any of its agents and representatives from further
implementing Sec. 144, Part A of the PAL-FASAP CBA pending the resolution of the case.
Aggrieved, respondent, on October 8, 2004, filed a Petition for Certiorari and Prohibition with Prayer
for a Temporary Restraining Order and Writ of Preliminary Injunction 12 with the Court of Appeals (CA)
praying that the order of the RTC, which denied its objection to its jurisdiction, be annuled and set
aside for having been issued without and/or with grave abuse of discretion amounting to lack of
jurisdiction.
The CA rendered a Decision, dated August 31, 2005, granting the respondent's petition, and ruled
that:
WHEREFORE, the respondent court is by us declared to have NO JURISDICTION OVER THE
CASE BELOW and, consequently, all the proceedings, orders and processes it has so far issued
therein are ANNULED and SET ASIDE. Respondent court is ordered to DISMISS its Civil Case No.
04-886.
SO ORDERED.
Petitioner filed a motion for reconsideration,13 which was denied by the CA in its Resolution dated
March 7, 2006.
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.
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.
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 quasi-judicial 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.
Respondent, on the other hand, alleges that the labor tribunals have jurisdiction over the present
case, as the controversy partakes of a labor dispute. The dispute concerns the terms and conditions
of petitioners' employment in PAL, specifically their retirement age. The RTC has no jurisdiction over
the subject matter of petitioners' petition for declaratory relief because the Voluntary Arbitrator or
panel of Voluntary Arbitrators have original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of the CBA. Regular courts
have no power to set and fix the terms and conditions of employment. Finally, respondent alleged

that petitioners' prayer before this Court to resolve their petition for declaratory relief on the merits is
procedurally improper and baseless.
The petition is meritorious.
Jurisdiction of the court is determined on the basis of the material allegations of the complaint and
the character of the relief prayed for irrespective of whether plaintiff is entitled to such relief. 14
In the case at bar, the allegations in the petition for declaratory relief plainly show that petitioners'
cause of action is the annulment of Section 144, Part A of the PAL-FASAP CBA. The pertinent
portion of the petition recites:
CAUSE OF ACTION
24. Petitioners have the constitutional right to fundamental equality with men under Section
14, Article II, 1987 of the Constitution and, within the specific context of this case, with the
male cabin attendants of Philippine Airlines.
26. Petitioners have the statutory right to equal work and employment opportunities with men
under Article 3, Presidential Decree No. 442, The Labor Code and, within the specific context
of this case, with the male cabin attendants of Philippine Airlines.
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:
c. after trial on the merits:

(I) declare Section 114, Part A of the PAL-FASAP 2000-2005 CBA INVALID, NULL and VOID to the
extent that it discriminates against Petitioners; x x x x
From the petitioners' allegations and relief prayed for in its petition, it is clear that the issue raised is
whether Section 144, Part A of the PAL-FASAP CBA is unlawful and unconstitutional. Here, the
petitioners' primary relief in Civil Case No. 04-886 is the annulment of Section 144, Part A of the
PAL-FASAP CBA, which allegedly discriminates against them for being female flight attendants. The
subject of litigation is incapable of pecuniary estimation, exclusively cognizable by the RTC,
pursuant to Section 19 (1) of Batas Pambansa Blg. 129, as amended. 15 Being an ordinary civil
action, the same is beyond the jurisdiction of labor tribunals.
The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the
application of the Constitution, labor statutes, law on contracts and the Convention on the
Elimination of All Forms of Discrimination Against Women, 16 and the power to apply and interpret the
constitution and CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction.
In Georg Grotjahn GMBH & Co. v. Isnani,17 this Court held that not every dispute between an
employer and employee involves matters that only labor arbiters and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the
NLRC under Article 217 of the Labor Code is limited to disputes arising from an 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. 18 Here, the
employer-employee relationship between the parties is merely incidental and the cause of action
ultimately arose from different sources of obligation, i.e., the Constitution and CEDAW.
Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or other
labor relations statute or a collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice and not to the labor arbiter and
the NLRC. In such situations, resolution of the dispute requires expertise, not in labor management
relations nor in wage structures and other terms and conditions of employment, but rather in the
application of the general civil law. Clearly, such claims fall outside the area of competence or
expertise ordinarily ascribed to labor arbiters and the NLRC and the rationale for granting jurisdiction
over such claims to these agencies disappears.19
If We divest the regular courts of jurisdiction over the case, then which tribunal or forum shall
determine the constitutionality or legality of the assailed CBA provision?
This Court holds that the grievance machinery and voluntary arbitrators do not have the power to
determine and settle the issues at hand. They have no jurisdiction and competence to decide
constitutional issues relative to the questioned compulsory retirement age. Their exercise of
jurisdiction is futile, as it is like vesting power to someone who cannot wield it.
In Gonzales v. Climax Mining Ltd.,20 this Court affirmed the jurisdiction of courts over questions on
constitutionality of contracts, as the same involves the exercise of judicial power. The Court said:
Whether the case involves void or voidable contracts is still a judicial question. It may, in some
instances, involve questions of fact especially with regard to the determination of the circumstances
of the execution of the contracts. But the resolution of the validity or voidness of the contracts
remains a legal or judicial question as it requires the exercise of judicial function. It requires the
ascertainment of what laws are applicable to the dispute, the interpretation and application of those
laws, and the rendering of a judgment based thereon. Clearly, the dispute is not a mining conflict. It
is essentially judicial. The complaint was not merely for the determination of rights under the mining
contracts since the very validity of those contracts is put in issue.
In Saura v. Saura, Jr.,21 this Court emphasized the primacy of the regular court's judicial power
enshrined in the Constitution that is true that the trend is towards vesting administrative bodies like
the SEC with the power to adjudicate matters coming under their particular specialization, to insure a
more knowledgeable solution of the problems submitted to them. This would also relieve the regular

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

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 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. 24 The provision
regarding the compulsory retirement of flight attendants is not ambiguous and does not require
interpretation. Neither is there any question regarding the implementation of the subject CBA
provision, because the manner of implementing the same is clear in itself. The only controversy lies
in its intrinsic validity.
Although it is a rule that a contract freely entered between the parties should be respected, since a
contract is the law between the parties, said rule is not absolute.
In Pakistan International Airlines Corporation v. Ople, 25 this Court held that:
The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article
1306, of our Civil Code is that the contracting parties may establish such stipulations as they may
deem convenient, "provided they are not contrary to law, morals, good customs, public order or
public policy." Thus, counter-balancing the principle of autonomy of contracting parties is the equally
general rule that provisions of applicable law, especially provisions relating to matters affected with
public policy, are deemed written into the contract. Put a little differently, the governing principle is
that parties may not contract away applicable provisions of law especially peremptory provisions
dealing with matters heavily impressed with public interest. The law relating to labor and
employment is clearly such an area and parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each other.
Moreover, the relations between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good.x x x 26 The supremacy of the
law over contracts is explained by the fact that labor contracts are not ordinary contracts; these are
imbued with public interest and therefore are subject to the police power of the state. 27 It should not
be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the
ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in
nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law,
public morals, or public policy, such provisions may very well be voided. 28
Finally, the issue in the petition for certiorari brought before the CA by the respondent was the
alleged exercise of grave abuse of discretion of the RTC in taking cognizance of the case for
declaratory relief. When the CA annuled and set aside the RTC's order, petitioners sought relief
before this Court through the instant petition for review under Rule 45. A perusal of the petition
before Us, petitioners pray for the declaration of the alleged discriminatory provision in the CBA
against its female flight attendants.
This Court is not persuaded. The rule is settled that pure questions of fact may not be the proper
subject of an appeal by certiorari under Rule 45 of the Revised Rules of Court. This mode of appeal
is generally limited only to questions of law which must be distinctly set forth in the petition. The
Supreme Court is not a trier of facts.29

The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory or not
is a question of fact. This would require the presentation and reception of evidence by the parties in
order for the trial court to ascertain the facts of the case and whether said provision violates the
Constitution, statutes and treaties. A full-blown trial is necessary, which jurisdiction to hear the same
is properly lodged with the the RTC. Therefore, a remand of this case to the RTC for the proper
determination of the merits of the petition for declaratory relief is just and proper.1avvphi1
WHEREFORE, the petition is PARTLY GRANTED. The Decision and Resolution of the Court of
Appeals, dated August 31, 2005 and March 7, 2006, respectively, in CA-G.R. SP. No. 86813
are REVERSED and SET ASIDE. The Regional Trial Court of Makati City, Branch 147 is DIRECTED
to continue the proceedings in Civil Case No. 04-886 with deliberate dispatch.
SO ORDERED.

G.R. No. 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.
GONZAGA-REYES, J.:
Before us is a Petition for Review on Certiorari of the decision1 of the Court of Appeals2 in CA-G.R.
CV No. 33893 entitled COMMANDO SECURITY SERVICE AGENCY, INCORPORATED
vs. LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION which affirmed the decision3 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 defendant's 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 plaintiff's 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

xxx

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).1wphi1.nt
The Wage Orders require the amendment of the contract as to the consideration to cover the
service contractor's 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).
Petitioner's motion for reconsideration was denied; 4 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 ATTORNEY'S 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 6.5
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 respondent's 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 attorney's 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 respondent's security guards
mandated under Wage Order Nos. 5 and 6. Considering that the RTC has no jurisdiction, its
decision is without force and effect.6
On the other hand, private respondent contends that the basis of its action against petitionerappellant 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 attorney's 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.7
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. 8 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 petitioner's 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. 9 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 form of damages arising from employeremployee 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;10 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
attorney's fees.
Private respondent admits that there is no employer-employee relationship between it and the
petitioner. The private respondent is an independent/job contractor 11 who assigned security guards
at the petitioner's 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.12 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 sub contractor. Whenever an employer enters into a contract with
another person for the performance of the former's work, the employees of the contractor and
of the latter's 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

xxx

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 13 and Spartan Security and Detective Agency, Inc. vs. NLRC 14 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 contractor's employees to secure payment of their wages should the contractor be
unable to pay them.15 Even in the absence of an employer-employee 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 6.16 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, supraand 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. 17
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 codebtors 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. . . .
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,18 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
Decision19 dated October 17, 1986 (NLRC Case No. 2849-MC-XI-86). 20 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 attorney's fees.1wphi1.nt
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.
DECISION
SERENO, CJ.:
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
Decision1 dated 18 September 2007 and the Resolution 2dated 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.4Because 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 countermanifestation 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 non-membership 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.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

PEOPLES BROADCASTING SERVICE (BOMBO

RADYO PHILS., INC.),
Petitioner,

G.R. No. 179652

Present:

CORONA, C.J.,
CARPIO,
- versus -

VELASCO, JR.,
LEONARDO-DE CASTRO,
BRION,
PERALTA,

THE SECRETARY OF THE DEPARTMENT OF

LABOR AND EMPLOYMENT, THE REGIONAL
DIRECTOR, DOLE REGION VII, and
JANDELEON JUEZAN,

BERSAMIN,
DEL CASTILLO,*
ABAD,

Respondents.

VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.

Promulgated:
March 6, 2012
x-----------------------------------------------------------------------------------------x

RESOLUTION

VELASCO, JR., J.:

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.[1] 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. [2] 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. [3]

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.[4]
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 employer-employee 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). [5]

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.[6] In its Comment,[7] 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. [8] 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 employeremployee 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 employeremployee 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 employeremployee relationship, the Court held that the determination of the existence of an employeremployee 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 employer-employee 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.[9] 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 facieshowing 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 employer-employee relationship, it takes
cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if
the employer-employee 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 employer-employee 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 employeremployee relationship has been subjected to review by this Court, with the finding being that there
was no employer-employee relationship between petitioner and private respondent, based on the
evidence presented. Private respondent presented self-serving allegations as well as self-defeating
evidence.[10] 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 herebyAFFIRMED, 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.

G.R. Nos. 178034 & 178117 G R. Nos. 186984-85

October 17, 2013

ANDREW JAMES MCBURNIE, Petitioner,

vs.
EULALIO GANZON, EGI-MANAGERS, INC. and E. GANZON, INC., Respondents.
RESOLUTION
REYES, J.:
For resolution are the
(1) third motion for reconsideration1 filed by Eulalio Ganzon (Ganzon), EGI-Managers, Inc.
(EGI) and E. Ganzon, Inc. (respondents) on March 27, 2012, seeking a reconsideration of the
Courts Decision2 dated September 18, 2009 that ordered the dismissal of their appeal to the
National Labor Relations Commission (NLRC) for failure to post additional appeal bond in the
amount of P54,083,910.00; and
(2) motion for reconsideration3 filed by petitioner Andrew James McBurnie (McBurnie) on
September 26, 2012, assailing the Court en bancs Resolution 4 dated September 4, 2012 that
(1) accepted the case from the Courts Third Division and (2) enjoined the implementation of
the Labor Arbiters (LA) decision finding him to be illegally dismissed by the respondents.
Antecedent Facts
The Decision dated September 18, 2009 provides the following antecedent facts and proceedings
On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal and
other monetary claims against the respondents. McBurnie claimed that on May 11, 1999, he signed
a five-year employment agreement5 with the company EGI as an Executive Vice-President who shall
oversee the management of the companys hotels and resorts within the Philippines. He performed
work for the company until sometime in November 1999, when he figured in an accident that
compelled him to go back to Australia while recuperating from his injuries. While in Australia, he was
informed by respondent Ganzon that his services were no longer needed because their intended
project would no longer push through.
The respondents opposed the complaint, contending that their agreement with McBurnie was to
jointly invest in and establish a company for the management of hotels. They did not intend to create
an employer-employee relationship, and the execution of the employment contract that was being
invoked by McBurnie was solely for the purpose of allowing McBurnie to obtain an alien work permit
in the Philippines. At the time McBurnie left for Australia for his medical treatment, he had not yet
obtained a work permit.
In a Decision6 dated September 30, 2004, the LA declared McBurnie as having been illegally
dismissed from employment, and thus entitled to receive from the respondents the following
amounts: (a) US$985,162.00 as salary and benefits for the unexpired term of their employment
contract, (b) P2,000,000.00 as moral and exemplary damages, and (c) attorneys fees equivalent to
10% of the total monetary award.
Feeling aggrieved, the respondents appealed the LAs Decision to the NLRC. 7 On November 5,
2004, they filed their Memorandum of Appeal 8 and Motion to Reduce Bond9, and posted an appeal
bond in the amount of P100,000.00. The respondents contended in their Motion to Reduce Bond,
inter alia, that the monetary awards of the LA were null and excessive, allegedly with the intention of
rendering them incapable of posting the necessary appeal bond. They claimed that an award of
"more than P60 Million Pesos to a single foreigner who had no work permit and who left the country
for good one month after the purported commencement of his employment" was a patent
nullity.10Furthermore, they claimed that because of their business losses that may be attributed to an
economic crisis, they lacked the capacity to pay the bond of almost P60 Million, or even the millions
of pesos in premium required for such bond.
On March 31, 2005, the NLRC denied11 the motion to reduce bond, explaining that "in cases
involving monetary award, an employer seeking to appeal the [LAs] decision to the Commission is
unconditionally required by Art. 223, Labor Code to post bond in the amount equivalent to the

monetary award x x x."12 Thus, the NLRC required from the respondents the posting of an additional
bond in the amount of P54,083,910.00.
When their motion for reconsideration was denied, 13 the respondents decided to elevate the matter
to the Court of Appeals (CA) via the Petition for Certiorari and Prohibition (With Extremely Urgent
Prayer for the Issuance of a Preliminary Injunction and/or Temporary Restraining Order) 14 docketed
as CA-G.R. SP No. 90845.
In the meantime, in view of the respondents failure to post the required additional bond, the NLRC
dismissed their appeal in a Resolution15 dated March 8, 2006. The respondents motion for
reconsideration was denied on June 30, 2006. 16 This prompted the respondents to file with the CA
the Petition for Certiorari (With Urgent Prayers for the Immediate Issuance of a Temporary
Restraining Order and a Writ of Preliminary Injunction) 17 docketed as CA-G.R. SP No. 95916, which
was later consolidated with CA-G.R. SP No. 90845.
CA-G.R. SP Nos. 90845 and 95916
On February 16, 2007, the CA issued a Resolution 18 granting the respondents application for a writ
of preliminary injunction. It directed the NLRC, McBurnie, and all persons acting for and under their
authority to refrain from causing the execution and enforcement of the LAs decision in favor of
McBurnie, conditioned upon the respondents posting of a bond in the amount of P10,000,000.00.
McBurnie sought reconsideration of the issuance of the writ of preliminary injunction, but this was
denied by the CA in its Resolution19 dated May 29, 2007.
McBurnie then filed with the Court a Petition for Review on Certiorari 20 docketed as G.R. Nos.
178034 and 178117, assailing the CA Resolutions that granted the respondents application for the
injunctive writ. On July 4, 2007, the Court denied the petition on the ground of McBurnies failure to
comply with the 2004 Rules on Notarial Practice and to sufficiently show that the CA committed any
reversible error.21 A motion for reconsideration was denied with finality in a Resolution 22 dated
October 8, 2007.
Unyielding, McBurnie filed a Motion for Leave (1) To File Supplemental Motion for Reconsideration
and (2) To Admit the Attached Supplemental Motion for Reconsideration, 23 which was treated by the
Court as a second motion for reconsideration, a prohibited pleading under Section 2, Rule 56 of the
Rules of Court. Thus, the motion for leave was denied by the Court in a Resolution 24 dated
November 26, 2007. The Courts Resolution dated July 4, 2007 then became final and executory on
November 13, 2007; accordingly, entry of judgment was made in G.R. Nos. 178034 and 178117. 25
In the meantime, the CA ruled on the merits of CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916
and rendered its Decision26 dated October 27, 2008, allowing the respondents motion to reduce
appeal bond and directing the NLRC to give due course to their appeal. The dispositive portion of
the CA Decision reads:
WHEREFORE, in view of the foregoing, the petition for certiorari and prohibition docketed as CA GR
SP No. 90845 and the petition for certiorari docketed as CA GR SP No. 95916 are GRANTED.
Petitioners Motion to Reduce Appeal Bond is GRANTED. Petitioners are hereby DIRECTED to post
appeal bond in the amount ofP10,000,000.00. The NLRC is hereby DIRECTED to give due course
to petitioners appeal in CA GR SP No. 95916 which is ordered remanded to the NLRC for further
proceedings.
SO ORDERED.27
On the issue28 of the NLRCs denial of the respondents motion to reduce appeal bond, the CA ruled
that the NLRC committed grave abuse of discretion in immediately denying the motion without fixing
an appeal bond in an amount that was reasonable, as it denied the respondents of their right to
appeal from the decision of the LA.29 The CA explained that "(w)hile Art. 223 of the Labor Code
requiring bond equivalent to the monetary award is explicit, Section 6, Rule VI of the NLRC Rules of
Procedure, as amended, recognized as exception a motion to reduce bond upon meritorious
grounds and upon posting of a bond in a reasonable amount in relation to the monetary award." 30
On the issue31 of the NLRCs dismissal of the appeal on the ground of the respondents failure to
post the additional appeal bond, the CA also found grave abuse of discretion on the part of the
NLRC, explaining that an appeal bond in the amount of P54,083,910.00 was prohibitive and
excessive. Moreover, the appellate court cited the pendency of the petition for certiorari over the

denial of the motion to reduce bond, which should have prevented the NLRC from immediately
dismissing the respondents appeal.32
Undeterred, McBurnie filed a motion for reconsideration. At the same time, the respondents moved
that the appeal be resolved on the merits by the CA. On March 3, 2009, the CA issued a
Resolution33 denying both motions. McBurnie then filed with the Court the Petition for Review on
Certiorari34 docketed as G.R. Nos. 186984-85.
In the meantime, the NLRC, acting on the CAs order of remand, accepted the appeal from the LAs
decision, and in its Decision35 dated November 17, 2009, reversed and set aside the Decision of the
LA, and entered a new one dismissing McBurnies complaint. It explained that based on records,
McBurnie was never an employee of any of the respondents, but a potential investor in a project that
included said respondents, barring a claim of dismissal, much less, an illegal dismissal. Granting
that there was a contract of employment executed by the parties, McBurnie failed to obtain a work
permit which would have allowed him to work for any of the respondents. 36 In the absence of such
permit, the employment agreement was void and thus, could not be the source of any right or
obligation.
Court Decision dated September 18, 2009
On September 18, 2009, the Third Division of this Court rendered its Decision 37 which reversed the
CA Decision dated October 27, 2008 and Resolution dated March 3, 2009. The dispositive portion
reads:
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP Nos.
90845 and 95916 dated October 27, 2008 granting respondents Motion to Reduce Appeal Bond and
ordering the National Labor Relations Commission to give due course to respondents appeal, and
its March 3, 2009 Resolution denying petitioners motion for reconsideration, are REVERSED and
SET ASIDE. The March 8, 2006 and June 30, 2006 Resolutions of the National Labor Relations
Commission in NLRC NCR CA NO. 042913-05 dismissing respondents appeal for failure to perfect
an appeal and denying their motion for reconsideration, respectively, are REINSTATED and
AFFIRMED.
SO ORDERED.38
The Court explained that the respondents failure to post a bond equivalent in amount to the LAs
monetary award was fatal to the appeal.39 Although an appeal bond may be reduced upon motion by
an employer, the following conditions must first be satisfied: (1) the motion to reduce bond shall be
based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is
posted by the appellant. Unless the NLRC grants the motion to reduce the cash bond within the 10day reglementary period to perfect an appeal from a judgment of the LA, the employer is mandated
to post the cash or surety bond securing the full amount within the said 10-day period. 40 The
respondents initial appeal bond of P100,000.00 was grossly inadequate compared to the LAs
monetary award.
The respondents first motion for reconsideration 41 was denied by the Court for lack of merit via a
Resolution42dated December 14, 2009.
Meanwhile, on the basis of the Courts Decision, McBurnie filed with the NLRC a motion for
reconsideration with motion to recall and expunge from the records the NLRC Decision dated
November 17, 2009.43 The motion was granted by the NLRC in its Decision 44 dated January 14,
2010.45
Undaunted by the denial of their first motion for reconsideration of the Decision dated September 18,
2009, the respondents filed with the Court a Motion for Leave to Submit Attached Second Motion for
Reconsideration46 and Second Motion for Reconsideration,47 which motion for leave was granted in a
Resolution48 dated March 15, 2010. McBurnie was allowed to submit his comment on the second
motion, and the respondents, their reply to the comment. On January 25, 2012, however, the Court
issued a Resolution49 denying the second motion "for lack of merit," "considering that a second
motion for reconsideration is a prohibited pleading x x x." 50
The Courts Decision dated September 18, 2009 became final and executory on March 14, 2012.
Thus, entry of judgment51 was made in due course, as follows:

ENTRY OF JUDGMENT
This is to certify that on September 18, 2009 a decision rendered in the above-entitled cases was
filed in this Office, the dispositive part of which reads as follows:
xxxx
and that the same has, on March 14, 2012 become final and executory and is hereby recorded in
the Book of Entries of Judgments.52
The Entry of Judgment indicated that the same was made for the Courts Decision rendered in G.R.
Nos. 186984-85.
On March 27, 2012, the respondents filed a Motion for Leave to File Attached Third Motion for
Reconsideration, with an attached Motion for Reconsideration (on the Honorable Courts 25 January
2012 Resolution) with Motion to Refer These Cases to the Honorable Court En Banc. 53 The third
motion for reconsideration is founded on the following grounds:
I.
THE PREVIOUS 15 MARCH 2010 RESOLUTION OF THE HONORABLE COURT ACTUALLY
GRANTED RESPONDENTS "MOTION FOR LEAVE TO SUBMIT A SECOND MOTION FOR
RECONSIDERATION."
HENCE, RESPONDENTS RESPECTFULLY CONTEND THAT THE SUBSEQUENT 25 JANUARY
2012 RESOLUTION CANNOT DENY THE " SECOND MOTION FOR RECONSIDERATION " ON
THE GROUND THAT IT IS A PROHIBITED PLEADING. MOREOVER, IT IS RESPECTFULLY
CONTENDED THAT THERE ARE VERY PECULIAR CIRCUMSTANCES AND NUMEROUS
IMPORTANT ISSUES IN THESE CASES THAT CLEARLY JUSTIFY GIVING DUE COURSE TO
RESPONDENTS "SECOND MOTION FOR RECONSIDERATION," WHICH ARE:
II.
THE 10 MILLION PESOS BOND WHICH WAS POSTED IN COMPLIANCE WITH THE OCTOBER
27, 2008 DECISION OF THE COURT OF APPEALS IS A SUBSTANTIAL AND SPECIAL
MERITORIOUS CIRCUMSTANCE TO MERIT RECONSIDERATION OF THIS APPEAL.
III.
THE HONORABLE COURT HAS HELD IN NUMEROUS LABOR CASES THAT WITH RESPECT
TO ARTICLE 223 OF THE LABOR CODE, THE REQUIREMENTS OF THE LAW SHOULD BE
GIVEN A LIBERAL INTERPRETATION, ESPECIALLY IF THERE ARE SPECIAL MERITORIOUS
CIRCUMSTANCES AND ISSUES.
IV. THE LAS JUDGMENT WAS PATENTLY VOID SINCE IT AWARDS MORE THAN P60 MILLION
PESOS TO A SINGLE FOREIGNER WHO HAD NO WORK PERMIT, AND NO WORKING VISA.
V.
PETITIONER MCBURNIE DID NOT IMPLEAD THE NATIONAL LABOR RELATIONS COMMISSION
(NLRC) IN HIS APPEAL HEREIN, MAKING THE APPEAL INEFFECTIVE AGAINST THE NLRC.
VI.
NLRC HAS DISMISSED THE COMPLAINT OF PETITIONER MCBURNIE IN ITS NOVEMBER 17,
2009 DECISION.
VII.
THE HONORABLE COURTS 18 SEPTEMBER 2009 DECISION WAS TAINTED WITH VERY
SERIOUS IRREGULARITIES.
VIII.
GR NOS. 178034 AND 178117 HAVE BEEN INADVERTENTLY INCLUDED IN THIS CASE.

IX.
THE HONORABLE COURT DID NOT DULY RULE UPON THE OTHER VERY MERITORIOUS
ARGUMENTS OF THE RESPONDENTS WHICH ARE AS FOLLOWS:
(A) PETITIONER NEVER ATTENDED ANY OF ALL 14 HEARINGS BEFORE THE [LA]
(WHEN 2 MISSED HEARINGS MEAN DISMISSAL).
(B) PETITIONER REFERRED TO HIMSELF AS A "VICTIM" OF LEISURE EXPERTS,
INC., BUT NOT OF ANY OF THE RESPONDENTS.
(C) PETITIONERS POSITIVE LETTER TO RESPONDENT MR. EULALIO GANZON
CLEARLY SHOWS THAT HE WAS NOT ILLEGALLY DISMISSED NOR EVEN
DISMISSED BY ANY OF THE RESPONDENTS AND PETITIONER EVEN PROMISED
TO PAY HIS DEBTS FOR ADVANCES MADE BY RESPONDENTS.
(D) PETITIONER WAS NEVER EMPLOYED BY ANY OF THE RESPONDENTS.
PETITIONER PRESENTED WORK FOR CORONADO BEACH RESORT WHICH IS
[NEITHER] OWNED NOR CONNECTED WITH ANY OF THE RESPONDENTS.
(E) THE [LA] CONCLUDED THAT PETITIONER WAS DISMISSED EVEN IF THERE
WAS ABSOLUTELY NO EVIDENCE AT ALL PRESENTED THAT PETITIONER WAS
DISMISSED BY THE RESPONDENTS.
(F) PETITIONER LEFT THE PHILIPPINES FOR AUSTRALIA JUST 2 MONTHS
AFTER THE START OF THE ALLEGED EMPLOYMENT AGREEMENT, AND HAS
STILL NOT RETURNED TO THE PHILIPPINES AS CONFIRMED BY THE BUREAU
OF IMMIGRATION.
(G) PETITIONER COULD NOT HAVE SIGNED AND PERSONALLY APPEARED
BEFORE THE NLRC ADMINISTERING OFFICER AS INDICATED IN THE
COMPLAINT SHEET SINCE HE LEFT THE COUNTRY 3 YEARS BEFORE THE
COMPLAINT WAS FILED AND HE NEVER CAME BACK. 54
On September 4, 2012, the Court en banc55 issued a Resolution56 accepting the case from the Third
Division. It also issued a temporary restraining order (TRO) enjoining the implementation of the LAs
Decision dated September 30, 2004. This prompted McBurnies filing of a Motion for
Reconsideration,57 where he invoked the fact that the Courts Decision dated September 18, 2009
had become final and executory, with an entry of judgment already made by the Court.
Our Ruling
In light of pertinent law and jurisprudence, and upon taking a second hard look of the parties
arguments and the records of the case, the Court has ascertained that a reconsideration of this
Courts Decision dated September 18, 2009 and Resolutions dated December 14, 2009 and January
25, 2012, along with the lifting of the entry of judgment in G.R. No. 186984-85, is in order.
The Courts acceptance of the
third motion for reconsideration
At the outset, the Court emphasizes that second and subsequent motions for reconsideration are, as
a general rule, prohibited. Section 2, Rule 52 of the Rules of Court provides that "no second motion
for reconsideration of a judgment or final resolution by the same party shall be entertained." The rule
rests on the basic tenet of immutability of judgments. "At some point, a decision becomes final and
executory and, consequently, all litigations must come to an end." 58
The general rule, however, against second and subsequent motions for reconsideration admits of
settled exceptions. For one, the present Internal Rules of the Supreme Court, particularly Section 3,
Rule 15 thereof, provides:
Sec. 3. Second motion for reconsideration. The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of justice by
the Court en banc upon a vote of at least two-thirds of its actual membership. There is

reconsideration "in the higher interest of justice" when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by operation of law or by the
Courts declaration.
x x x x (Emphasis ours)
In a line of cases, the Court has then entertained and granted second motions for reconsideration "in
the higher interest of substantial justice," as allowed under the Internal Rules when the assailed
decision is "legally erroneous," "patently unjust" and "potentially capable of causing unwarranted and
irremediable injury or damage to the parties." In Tirazona v. Philippine EDS Techno-Service, Inc.
(PET, Inc.),59 we also explained that a second motion for reconsideration may be allowed in
instances of "extraordinarily persuasive reasons and only after an express leave shall have been
obtained."60 In Apo Fruits Corporation v. Land Bank of the Philippines, 61 we allowed a second motion
for reconsideration as the issue involved therein was a matter of public interest, as it pertained to the
proper application of a basic constitutionally-guaranteed right in the governments implementation of
its agrarian reform program. In San Miguel Corporation v. NLRC, 62 the Court set aside the decisions
of the LA and the NLRC that favored claimants-security guards upon the Courts review of San
Miguel Corporations second motion for reconsideration. In Vir-Jen Shipping and Marine Services,
Inc. v. NLRC, et al.,63 the Court en banc reversed on a third motion for reconsideration the ruling of
the Courts Division on therein private respondents claim for wages and monetary benefits.
It is also recognized that in some instances, the prudent action towards a just resolution of a case is
for the Court to suspend rules of procedure, for "the power of this Court to suspend its own rules or
to except a particular case from its operations whenever the purposes of justice require it, cannot be
questioned."64 In De Guzman v. Sandiganbayan,65 the Court, thus, explained:
The rules of procedure should be viewed as mere tools designed to facilitate the attainment of
justice. Their strict and rigid application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be avoided. Even the Rules of Court envision
this liberality. This power to suspend or even disregard the rules can be so pervasive and
encompassing so as to alter even that which this Court itself has already declared to be final, as we
are now compelled to do in this case. x x x.
xxxx
The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of
justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves
to or robots of technical rules, shorn of judicial discretion. That is precisely why courts in rendering
real justice have always been, as they in fact ought to be, conscientiously guided by the norm that
when on the balance, technicalities take a backseat against substantive rights, and not the other
way around. Truly then, technicalities, in the appropriate language of Justice Makalintal, "should give
way to the realities of the situation." x x x. 66 (Citations omitted)
Consistent with the foregoing precepts, the Court has then reconsidered even decisions that have
attained finality, finding it more appropriate to lift entries of judgments already made in these cases.
In Navarro v. Executive Secretary,67 we reiterated the pronouncement in De Guzman that the power
to suspend or even disregard rules of procedure can be so pervasive and compelling as to alter
even that which this Court itself has already declared final. The Court then recalled in Navarro an
entry of judgment after it had determined the validity and constitutionality of Republic Act No. 9355,
explaining that:
Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment in light of
attendant extraordinary circumstances. The power to suspend or even disregard rules of procedure
can be so pervasive and compelling as to alter even that which this Court itself had already declared
final. In this case, the compelling concern is not only to afford the movants-intervenors the right to be
heard since they would be adversely affected by the judgment in this case despite not being original
parties thereto, but also to arrive at the correct interpretation of the provisions of the [Local
Government Code (LGC)] with respect to the creation of local government units. x x x. 68(Citations
omitted)

In Munoz v. CA,69 the Court resolved to recall an entry of judgment to prevent a miscarriage of
justice. This justification was likewise applied in Tan Tiac Chiong v. Hon. Cosico, 70 wherein the Court
held that:
The recall of entries of judgments, albeit rare, is not a novelty. In Muoz v. CA , where the case was
elevated to this Court and a first and second motion for reconsideration had been denied with finality
, the Court, in the interest of substantial justice, recalled the Entry of Judgment as well as the letter
of transmittal of the records to the Court of Appeals. 71 (Citation omitted)
In Barnes v. Judge Padilla,72 we ruled:
A final and executory judgment can no longer be attacked by any of the parties or be modified,
directly or indirectly, even by the highest court of the land.
However, this Court has relaxed this rule in order to serve substantial justice considering (a) matters
of life, liberty, honor or property, (b) the existence of special or compelling circumstances, (c) the
merits of the case, (d) a cause not entirely attributable to the fault or negligence of the party favored
by the suspension of the rules, (e) a lack of any showing that the review sought is merely frivolous
and dilatory, and (f) the other party will not be unjustly prejudiced thereby.73 (Citations omitted)
As we shall explain, the instant case also qualifies as an exception to, first, the proscription against
second and subsequent motions for reconsideration, and second, the rule on immutability of
judgments; a reconsideration of the Decision dated September 18, 2009, along with the Resolutions
dated December 14, 2009 and January 25, 2012, is justified by the higher interest of substantial
justice.
To begin with, the Court agrees with the respondents that the Courts prior resolve to grant , and not
just merely note, in a Resolution dated March 15, 2010 the respondents motion for leave to submit
their second motion for reconsideration already warranted a resolution and discussion of the motion
for reconsideration on its merits. Instead of doing this, however, the Court issued on January 25,
2012 a Resolution74 denying the motion to reconsider for lack of merit, merely citing that it was a
"prohibited pleading under Section 2, Rule 52 in relation to Section 4, Rule 56 of the 1997 Rules of
Civil Procedure, as amended."75 In League of Cities of the Philippines (LCP) v. Commission on
Elections,76 we reiterated a ruling that when a motion for leave to file and admit a second motion for
reconsideration is granted by the Court, the Court therefore allows the filing of the second motion for
reconsideration. In such a case, the second motion for reconsideration is no longer a prohibited
pleading. Similarly in this case, there was then no reason for the Court to still consider the
respondents second motion for reconsideration as a prohibited pleading, and deny it plainly on such
ground. The Court intends to remedy such error through this resolution.
More importantly, the Court finds it appropriate to accept the pending motion for reconsideration and
resolve it on the merits in order to rectify its prior disposition of the main issues in the petition. Upon
review, the Court is constrained to rule differently on the petitions. We have determined the grave
error in affirming the NLRCs rulings, promoting results that are patently unjust for the respondents,
as we consider the facts of the case, pertinent law, jurisprudence, and the degree of the injury and
damage to the respondents that will inevitably result from the implementation of the Courts Decision
dated September 18, 2009.
The rule on appeal bonds
We emphasize that the crucial issue in this case concerns the sufficiency of the appeal bond that
was posted by the respondents. The present rule on the matter is Section 6, Rule VI of the 2011
NLRC Rules of Procedure, which was substantially the same provision in effect at the time of the
respondents appeal to the NLRC, and which reads:
RULE VI
APPEALS
Sec. 6. BOND. In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the
monetary award, exclusive of damages and attorneys fees.
xxxx

No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting
of a bond in a reasonable amount in relation to the monetary award.
The filing of the motion to reduce bond without compliance with the requisites in the preceding
paragraph shall not stop the running of the period to perfect an appeal. (Emphasis supplied)
While the CA, in this case, allowed an appeal bond in the reduced amount of P10,000,000.00 and
then ordered the cases remand to the NLRC, this Courts Decision dated September 18, 2009
provides otherwise, as it reads in part:
The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary
awards from the decision of the Labor Arbiter. The lawmakers clearly intended to make the bond a
mandatory requisite for the perfection of an appeal by the employer as inferred from 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 clear that the posting of a cash or surety bond by the employer is the
essential and exclusive means by which an employers appeal may be perfected. x x x.
Moreover, the filing of the bond is not only mandatory but a jurisdictional requirement as well, that
must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance therewith
renders the decision of the Labor Arbiter final and executory. This requirement is intended to assure
the workers that if they prevail in the case, they will receive the money judgment in their favor upon
the dismissal of the employers appeal. It is intended to discourage employers from using an appeal
to delay or evade their obligation to satisfy their employees just and lawful claims.
xxxx
Thus, it behooves the Court to give utmost regard to the legislative and administrative intent to
strictly require the employer to post a cash or surety bond securing the full amount of the monetary
award within the 10[-]day reglementary period. Nothing in the Labor Code or the NLRC Rules of
Procedure authorizes the posting of a bond that is less than the monetary award in the judgment, or
would deem such insufficient posting as sufficient to perfect the appeal.
While the bond may be reduced upon motion by the employer, this is subject to the conditions that
(1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable
amount in relation to the monetary award is posted by the appellant, otherwise the filing of the
motion to reduce bond shall not stop the running of the period to perfect an appeal. The qualification
effectively requires that unless the NLRC grants the reduction of the cash bond within the 10-day
reglementary period, the employer is still expected to post the cash or surety bond securing the full
amount within the said 10-day period. If the NLRC does eventually grant the motion for reduction
after the reglementary period has elapsed, the correct relief would be to reduce the cash or surety
bond already posted by the employer within the 10-day period. 77 (Emphasis supplied; underscoring
ours)
To begin with, the Court rectifies its prior pronouncement the unqualified statement that even an
appellant who seeks a reduction of an appeal bond before the NLRC is expected to post a cash or
surety bond securing the full amount of the judgment award within the 10-day reglementary period to
perfect the appeal.
The suspension of the period to
perfect the appeal upon the filing of
a motion to reduce bond
To clarify, the prevailing jurisprudence on the matter provides that the filing of a motion to reduce
bond, coupled with compliance with the two conditions emphasized in Garcia v. KJ Commercial 78 for
the grant of such motion, namely, (1) a meritorious ground, and (2) posting of a bond in a reasonable
amount, shall suffice to suspend the running of the period to perfect an appeal from the labor
arbiters decision to the NLRC.79 To require the full amount of the bond within the 10-day
reglementary period would only render nugatory the legal provisions which allow an appellant to
seek a reduction of the bond. Thus, we explained in Garcia:
The filing of a motion to reduce bond and compliance with the two conditions stop the running of the
period to perfect an appeal. x x x
xxxx

The NLRC has full discretion to grant or deny the motion to reduce bond, and it may rule on the
motion beyond the 10-day period within which to perfect an appeal. Obviously, at the time of the
filing of the motion to reduce bond and posting of a bond in a reasonable amount, there is no
assurance whether the appellants motion is indeed based on "meritorious ground" and whether the
bond he or she posted is of a "reasonable amount." Thus, the appellant always runs the risk of
failing to perfect an appeal.
x x x In order to give full effect to the provisions on motion to reduce bond, the appellant must be
allowed to wait for the ruling of the NLRC on the motion even beyond the 10-day period to perfect an
appeal. If the NLRC grants the motion and rules that there is indeed meritorious ground and that the
amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the
motion, the appellant may still file a motion for reconsideration as provided under Section 15, Rule
VII of the Rules. If the NLRC grants the motion for reconsideration and rules that there is indeed
meritorious ground and that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, then the decision of the labor arbiter becomes final and
executory.
xxxx
In any case, the rule that the filing of a motion to reduce bond shall not stop the running of the period
to perfect an appeal is not absolute. The Court may relax the rule. In Intertranz Container Lines, Inc.
v. Bautista, the Court held:
"Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary award
may be perfected only upon the posting of cash or surety bond. The Court, however, has relaxed
this requirement under certain exceptional circumstances in order to resolve controversies on their
merits. These circumstances include: (1) fundamental consideration of substantial justice; (2)
prevention of miscarriage of justice or of unjust enrichment; and (3) special circumstances of the
case combined with its legal merits, and the amount and the issue involved." 80(Citations omitted and
emphasis ours)
A serious error of the NLRC was its outright denial of the motion to reduce the bond, without even
considering the respondents arguments and totally unmindful of the rules and jurisprudence that
allow the bonds reduction. Instead of resolving the motion to reduce the bond on its merits, the
NLRC insisted on an amount that was equivalent to the monetary award, merely explaining:
We are constrained to deny respondents motion for reduction. As held by the Supreme Court in a
recent case, in cases involving monetary award, an employer seeking to appeal the Labor Arbiters
decision to the Commission is unconditionally required by Art. 223, Labor Code to post bond in the
amount equivalent to the monetary award (Calabash Garments vs. NLRC, G.R. No. 110827, August
8, 1996). x x x81 (Emphasis ours)
When the respondents sought to reconsider, the NLRC still refused to fully decide on the motion. It
refused to at least make a preliminary determination of the merits of the appeal, as it held:
We are constrained to dismiss respondents Motion for Reconsideration. Respondents contention
that the appeal bond is excessive and based on a decision which is a patent nullity involves the
merits of the case. x x x82
Prevailing rules and jurisprudence
allow the reduction of appeal bonds.
By such haste of the NLRC in peremptorily denying the respondents motion without considering the
respondents arguments, it effectively denied the respondents of their opportunity to seek a reduction
of the bond even when the same is allowed under the rules and settled jurisprudence. It was
equivalent to the NLRCs refusal to exercise its discretion, as it refused to determine and rule on a
showing of meritorious grounds and the reasonableness of the bond tendered under the
circumstances.83 Time and again, the Court has cautioned the NLRC to give Article 223 of the Labor
Code, particularly the provisions requiring bonds in appeals involving monetary awards, a liberal
interpretation in line with the desired objective of resolving controversies on the merits. 84 The
NLRCs failure to take action on the motion to reduce the bond in the manner prescribed by law and
jurisprudence then cannot be countenanced. Although an appeal by parties from decisions that are
adverse to their interests is neither a natural right nor a part of due process, it is an essential part of

our judicial system. Courts should proceed with caution so as not to deprive a party of the right to
appeal, but rather, ensure that every party has the amplest opportunity for the proper and just
disposition of their cause, free from the constraints of technicalities. 85 Considering the mandate of
labor tribunals, the principle equally applies to them.
Given the circumstances of the case, the Courts affirmance in the Decision dated September 18,
2009 of the NLRCs strict application of the rule on appeal bonds then demands a re-examination.
Again, the emerging trend in our jurisprudence is to afford every party-litigant the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities.86 Section 2, Rule I of the NLRC Rules of Procedure also provides the policy that "the
Rules shall be liberally construed to carry out the objectives of the Constitution, the Labor Code of
the Philippines and other relevant legislations, and to assist the parties in obtaining just, expeditious
and inexpensive resolution and settlement of labor disputes." 87
In accordance with the foregoing, although the general rule provides that an appeal in labor cases
from a decision involving a monetary award may be perfected only upon the posting of a cash or
surety bond, the Court has relaxed this requirement under certain exceptional circumstances in
order to resolve controversies on their merits. These circumstances include: (1) the fundamental
consideration of substantial justice; (2) the prevention of miscarriage of justice or of unjust
enrichment; and (3) special circumstances of the case combined with its legal merits, and the
amount and the issue involved.88 Guidelines that are applicable in the reduction of appeal bonds
were also explained in Nicol v. Footjoy Industrial Corporation. 89 The bond requirement in appeals
involving monetary awards has been and may be relaxed in meritorious cases, including instances
in which (1) there was substantial compliance with the Rules, (2) surrounding facts and
circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the
requirement of an appeal bond would serve the desired objective of resolving controversies on the
merits, or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting
a partial bond during the reglementary period. 90
In Blancaflor v. NLRC,91 the Court also emphasized that while Article 223 92 of the Labor Code, as
amended by Republic Act No. 6715, which requires a cash or surety bond in an amount equivalent
to the monetary award in the judgment appealed from may be considered a jurisdictional
requirement for the perfection of an appeal, nevertheless, adhering to the principle that substantial
justice is better served by allowing the appeal on the merits to be threshed out by the NLRC, the
foregoing requirement of the law should be given a liberal interpretation.
As the Court, nonetheless, remains firm on the importance of appeal bonds in appeals from
monetary awards of LAs, we stress that the NLRC, pursuant to Section 6, Rule VI of the NLRC
Rules of Procedure, shall only accept motions to reduce bond that are coupled with the posting of a
bond in a reasonable amount. Time and again, we have explained that the bond requirement
imposed upon appellants in labor cases is intended to ensure the satisfaction of awards that are
made in favor of appellees, in the event that their claims are eventually sustained by the courts. 93 On
the part of the appellants, its posting may also signify their good faith and willingness to recognize
the final outcome of their appeal.
At the time of a motion to reduce appeal bonds filing, the question of what constitutes "a reasonable
amount of bond" that must accompany the motion may be subject to differing interpretations of
litigants. The judgment of the NLRC which has the discretion under the law to determine such
amount cannot as yet be invoked by litigants until after their motions to reduce appeal bond are
accepted.
Given these limitations, it is not uncommon for a party to unduly forfeit his opportunity to seek a
reduction of the required bond and thus, to appeal, when the NLRC eventually disagrees with the
partys assessment. These have also resulted in the filing of numerous petitions against the NLRC,
citing an alleged grave abuse of discretion on the part of the labor tribunal for its finding on the
sufficiency or insufficiency of posted appeal bonds.
It is in this light that the Court finds it necessary to set a parameter for the litigants and the NLRCs
guidance on the amount of bond that shall hereafter be filed with a motion for a bonds reduction. To
ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the
chance to seek a reduction of the appeal bond are effectively carried out, without however defeating
the benefits of the bond requirement in favor of a winning litigant, all motions to reduce bond that are
to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond equivalent to

10% of the monetary award that is subject of the appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that an appellants motion is pending resolution by
the Commission. In conformity with the NLRC Rules, the monetary award, for the purpose of
computing the necessary appeal bond, shall exclude damages and attorneys fees. 94 Only after the
posting of a bond in the required percentage shall an appellants period to perfect an appeal under
the NLRC Rules be deemed suspended.
The foregoing shall not be misconstrued to unduly hinder the NLRCs exercise of its discretion, given
that the percentage of bond that is set by this guideline shall be merely provisional. The NLRC
retains its authority and duty to resolve the motion and determine the final amount of bond that shall
be posted by the appellant, still in accordance with the standards of "meritorious grounds" and
"reasonable amount". Should the NLRC, after considering the motions merit, determine that a
greater amount or the full amount of the bond needs to be posted by the appellant, then the party
shall comply accordingly. The appellant shall be given a period of 10 days from notice of the NLRC
order within which to perfect the appeal by posting the required appeal bond.
Meritorious ground as a condition
for the reduction of the appeal bond
In all cases, the reduction of the appeal bond shall be justified by meritorious grounds and
accompanied by the posting of the required appeal bond in a reasonable amount.
The requirement on the existence of a "meritorious ground" delves on the worth of the parties
arguments, taking into account their respective rights and the circumstances that attend the case.
The condition was emphasized in University Plans Incorporated v. Solano, 95 wherein the Court held
that while the NLRCs Revised Rules of Procedure "allows the [NLRC] 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 a showing of meritorious grounds." 96 By jurisprudence, the
merit referred to may pertain to an appellants lack of financial capability to pay the full amount of the
bond,97 the merits of the main appeal such as when there is a valid claim that there was no illegal
dismissal to justify the award,98 the absence of an employer-employee relationship, 99 prescription of
claims,100 and other similarly valid issues that are raised in the appeal. 101 For the purpose of
determining a "meritorious ground", the NLRC is not precluded from receiving evidence, or from
making a preliminary determination of the merits of the appellants contentions. 102
In this case, the NLRC then should have considered the respondents arguments in the
memorandum on appeal that was filed with the motion to reduce the requisite appeal bond. Although
a consideration of said arguments at that point would have been merely preliminary and should not
in any way bind the eventual outcome of the appeal, it was apparent that the respondents defenses
came with an indication of merit that deserved a full review of the decision of the LA. The CA, by its
Resolution dated February 16, 2007, even found justified the issuance of a preliminary injunction to
enjoin the immediate execution of the LAs decision, and this Court, a temporary restraining order on
September 4, 2012.
Significantly, following the CAs remand of the case to the NLRC, the latter even rendered a Decision
that contained findings that are inconsistent with McBurnies claims. The NLRC reversed and set
aside the decision of the LA, and entered a new one dismissing McBurnies complaint. It explained
that McBurnie was not an employee of the respondents; thus, they could not have dismissed him
from employment. The purported employment contract of the respondents with the petitioner was
qualified by the conditions set forth in a letter dated May 11, 1999, which reads:
May 11, 1999
MR. ANDREW MCBURNIE
Re: Employment Contract
Dear Andrew,
It is understood that this Contract is made subject to the understanding that it is effective only when
the project financing for our Baguio Hotel project pushed through.
The agreement with EGI Managers, Inc. is made now to support your need to facilitate your work
permit with the Department of Labor in view of the expiration of your contract with Pan Pacific.

Regards,
Sgd. Eulalio Ganzon (p. 203, Records)103
For the NLRC, the employment agreement could not have given rise to an employer-employee
relationship by reason of legal impossibility. The two conditions that form part of their agreement,
namely, the successful completion of the project financing for the hotel project in Baguio City and
McBurnies acquisition of an Alien Employment Permit, remained unsatisfied. 104 The NLRC
concluded that McBurnie was instead a potential investor in a project that included Ganzon, but the
said project failed to pursue due to lack of funds. Any work performed by McBurnie in relation to the
project was merely preliminary to the business venture and part of his "due diligence" study before
pursuing the project, "done at his own instance, not in furtherance of the employment contract but for
his own investment purposes."105 Lastly, the alleged employment of the petitioner would have been
void for being contrary to law, since it is undisputed that McBurnie did not have any work permit. The
NLRC declared:
Absent an employment permit, any employment relationship that McBurnie contemplated with the
respondents was void for being contrary to law. A void or inexistent contract, in turn, has no force
and effect from the beginning as if it had never been entered into. Thus, without an Alien
Employment Permit, the "Employment Agreement" is void and could not be the source of a right or
obligation. In support thereof, the DOLE issued a certification that McBurnie has neither applied nor
been issued an Alien Employment Permit (p. 204, Records). 106
McBurnie moved to reconsider, citing the Courts Decision of September 18, 2009 that reversed and
set aside the CAs Decision authorizing the remand. Although the NLRC granted the motion on the
said ground via a Decision107that set aside the NLRCs Decision dated November 17, 2009, the
findings of the NLRC in the November 17, 2009 decision merit consideration, especially since the
findings made therein are supported by the case records.
In addition to the apparent merit of the respondents appeal, the Court finds the reduction of the
appeal bond justified by the substantial amount of the LAs monetary award. Given its considerable
amount, we find reason in the respondents claim that to require an appeal bond in such amount
could only deprive them of the right to appeal, even force them out of business and affect the
livelihood of their employees.108 In Rosewood Processing, Inc. v. NLRC,109 we emphasized: "Where
a decision may be made to rest on informed judgment rather than rigid rules, the equities of the case
must be accorded their due weight because labor determinations should not be secundum rationem
but also secundum caritatem."110
What constitutes a reasonable
amount in the determination of the
final amount of appeal bond
As regards the requirement on the posting of a bond in a "reasonable amount," the Court holds that
the final determination thereof by the NLRC shall be based primarily on the merits of the motion and
the main appeal.
Although the NLRC Rules of Procedure, particularly Section 6 of Rule VI thereof, provides that the
bond to be posted shall be "in a reasonable amount in relation to the monetary award ," the merit of
the motion shall always take precedence in the determination. Settled is the rule that procedural
rules were conceived, and should thus be applied in a manner that would only aid the attainment of
justice. If a stringent application of the rules would hinder rather than serve the demands of
substantial justice, the former must yield to the latter.111
Thus, in Nicol where the appellant posted a bond of P10,000,000.00 upon an appeal from the LAs
award ofP51,956,314.00, the Court, instead of ruling right away on the reasonableness of the bonds
amount solely on the basis of the judgment award, found it appropriate to remand the case to the
NLRC, which should first determine the merits of the motion. In University Plans, 112 the Court also
reversed the outright dismissal of an appeal where the bond posted in a judgment award of more
than P30,000,000.00 was P30,000.00. The Court then directed the NLRC to first determine the
merit, or lack of merit, of the motion to reduce the bond, after the appellant therein claimed that it
was under receivership and thus, could not dispose of its assets within a short notice. Clearly, the
rule on the posting of an appeal bond should not be allowed to defeat the substantive rights of the
parties.113

Notably, in the present case, following the CAs rendition of its Decision which allowed a reduced
appeal bond, the respondents have posted a bond in the amount of P10,000,000.00. In Rosewood,
the Court deemed the posting of a surety bond of P50,000.00, coupled with a motion to reduce the
appeal bond, as substantial compliance with the legal requirements for an appeal from
a P789,154.39 monetary award "considering the clear merits which appear, res ipsa loquitor, in the
appeal from the LAs Decision, and the petitioners substantial compliance with rules governing
appeals."114 The foregoing jurisprudence strongly indicate that in determining the reasonable amount
of appeal bonds, the Court primarily considers the merits of the motions and appeals.
Given the circumstances in this case and the merits of the respondents arguments before the
NLRC, the Court holds that the respondents had posted a bond in a "reasonable amount", and had
thus complied with the requirements for the perfection of an appeal from the LAs decision. The CA
was correct in ruling that:
In the case of Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association, President
Rodolfo Jimenez, and members, Reynaldo Fajardo, et al. vs. NLRC, Nueva Ecija I Electric
Cooperative, Inc. (NEECO I) and Patricio de la Pea (GR No. 116066, January 24, 2000), the
Supreme Court recognized that: "the NLRC, in its Resolution No. 11-01-91 dated November 7, 1991
deleted the phrase "exclusive of moral and exemplary damages as well as attorneys fees in the
determination of the amount of bond, and provided a safeguard against the imposition of excessive
bonds by providing that "(T)he Commission may in meritorious cases and upon motion of the
appellant, reduce the amount of the bond."
In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583, it was held:
"The unreasonable and excessive amount of bond would be oppressive and unjust and would have
the effect of depriving a party of his right to appeal."
xxxx
In dismissing outright the motion to reduce bond filed by petitioners, NLRC abused its discretion. It
should have fixed an appeal bond in a reasonable amount. Said dismissal deprived petitioners of
their right to appeal the Labor Arbiters decision.
xxxx
NLRC Rules allow reduction of appeal bond on meritorious grounds (Sec. 6, Rule VI, NLRC Rules of
Procedure). This Court finds the appeal bond in the amount of P54,083,910.00 prohibitive and
excessive, which constitutes a meritorious ground to allow a motion for reduction thereof. 115
The foregoing declaration of the Court requiring a bond in a reasonable amount, taking into account
the merits of the motion and the appeal, is consistent with the oft-repeated principle that letterperfect rules must yield to the broader interest of substantial justice. 116
The effect of a denial of the appeal
to the NLRC
In finding merit in the respondents motion for reconsideration, we also take into account the
unwarranted results that will arise from an implementation of the Courts Decision dated September
18, 2009. We emphasize, moreover, that although a remand and an order upon the NLRC to give
due course to the appeal would have been the usual course after a finding that the conditions for the
reduction of an appeal bond were duly satisfied by the respondents, given such results, the Court
finds it necessary to modify the CAs order of remand, and instead rule on the dismissal of the
complaint against the respondents.
Without the reversal of the Courts Decision and the dismissal of the complaint against the
respondents, McBurnie would be allowed to claim benefits under our labor laws despite his failure to
comply with a settled requirement for foreign nationals.
Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under our
labor laws, it was necessary for him to establish, first and foremost, that he was qualified and duly
authorized to obtain employment within our jurisdiction. A requirement for foreigners who intend to

work within the country is an employment permit, as provided under Article 40, Title II of the Labor
Code which reads:
Art. 40. Employment permit for non-resident aliens. Any alien seeking admission to the Philippines
for employment purposes and any domestic or foreign employer who desires to engage an alien for
employment in the Philippines shall obtain an employment permit from the Department of Labor.
In WPP Marketing Communications, Inc. v. Galera,117 we held that a foreign nationals failure to seek
an employment permit prior to employment poses a serious problem in seeking relief from the
Court.118 Thus, although the respondent therein appeared to have been illegally dismissed from
employment, we explained:
This is Galeras dilemma: Galera worked in the Philippines without proper work permit but now
wants to claim employees benefits under Philippine labor laws.
xxxx
The law and the rules are consistent in stating that the employment permit must be acquired prior to
employment. The Labor Code states: "Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who desires to engage an alien for
employment in the Philippines shall obtain an employment permit from the Department of Labor."
Section 4, Rule XIV, Book I of the Implementing Rules and Regulations provides:
"Employment permit required for entry. No alien seeking employment, whether as a resident or
non-resident, may enter the Philippines without first securing an employment permit from the
Ministry. If an alien enters the country under a non-working visa and wishes to be employed
thereafter, he may be allowed to be employed upon presentation of a duly approved employment
permit."
Galera cannot come to this Court with unclean hands. To grant Galeras prayer is to sanction the
violation of the Philippine labor laws requiring aliens to secure work permits before their
employment. We hold that the status quo must prevail in the present case and we leave the parties
where they are. This ruling, however, does not bar Galera from seeking relief from other
jurisdictions.119 (Citations omitted and underscoring ours)
Clearly, this circumstance on the failure of McBurnie to obtain an employment permit, by itself,
necessitates the dismissal of his labor complaint.
Furthermore, as has been previously discussed, the NLRC has ruled in its Decision dated November
17, 2009 on the issue of illegal dismissal. It declared that McBurnie was never an employee of any
of the respondents.120 It explained:
All these facts and circumstances prove that McBurnie was never an employee of Eulalio Ganzon or
the respondent companies, but a potential investor in a project with a group including Eulalio
Ganzon and Martinez but said project did not take off because of lack of funds.
McBurnie further claims that in conformity with the provision of the employment contract pertaining
to the obligation of the respondents to provide housing, respondents assigned him Condo Unit # 812
of the Makati Cinema Square Condominium owned by the respondents. He was also allowed to use
a Hyundai car. If it were true that the contract of employment was for working visa purposes only,
why did the respondents perform their obligations to him?
There is no question that respondents assigned him Condo Unit # 812 of the MCS, but this was not
free of charge. If it were true that it is part of the compensation package as employee, then
McBurnie would not be obligated to pay anything, but clearly, he admitted in his letter that he had to
pay all the expenses incurred in the apartment.
Assuming for the sake of argument that the employment contract is valid between them, record
shows that McBurnie worked from September 1, 1999 until he met an accident on the last week of
October. During the period of employment, the respondents must have paid his salaries in the sum
of US$26,000.00, more or less.
However, McBurnie failed to present a single evidence that [the respondents] paid his salaries like
payslip, check or cash vouchers duly signed by him or any document showing proof of receipt of his

compensation from the respondents or activity in furtherance of the employment contract. Granting
again that there was a valid contract of employment, it is undisputed that on November 1, 1999,
McBurnie left for Australia and never came back. x x x. 121(Emphasis supplied)
Although the NLRCs Decision dated November 17, 2009 was set aside in a Decision dated January
14, 2010, the Courts resolve to now reconsider its Decision dated September 18, 2009 and to affirm
the CAs Decision and Resolution in the respondents favor effectively restores the NLRCs basis for
rendering the Decision dated November 17, 2009.
More importantly, the NLRCs findings on the contractual relations between McBurnie and the
respondents are supported by the records.
First, before a case for illegal dismissal can prosper, an employer-employee relationship must first
be established.122 Although an employment agreement forms part of the case records, respondent
Ganzon signed it with the notation "per my note." 123 The respondents have sufficiently explained that
the note refers to the letter124dated May 11, 1999 which embodied certain conditions for the
employments effectivity. As we have previously explained, however, the said conditions, particularly
on the successful completion of the project financing for the hotel project in Baguio City and
McBurnies acquisition of an Alien Employment Permit, failed to materialize. Such defense of the
respondents, which was duly considered by the NLRC in its Decision dated November 17, 2009,
was not sufficiently rebutted by McBurnie.
Second, McBurnie failed to present any employment permit which would have authorized him to
obtain employment in the Philippines. This circumstance negates McBurnies claim that he had been
performing work for the respondents by virtue of an employer-employee relationship. The absence
of the employment permit instead bolsters the claim that the supposed employment of McBurnie was
merely simulated, or did not ensue due to the non-fulfillment of the conditions that were set forth in
the letter of May 11, 1999.
Third, besides the employment agreement, McBurnie failed to present other competent evidence to
prove his claim of an employer-employee relationship. Given the parties conflicting claims on their
true intention in executing the agreement, it was necessary to resort to the established criteria for
the determination of an employer-employee relationship, namely: (1) the selection and engagement
of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control
the employees conduct.125 The rule of thumb remains: the onus probandi falls on the claimant to
establish or substantiate the claim by the requisite quantum of evidence. Whoever claims
entitlement to the benefits provided by law should establish his or her right thereto. 126 McBurnie
failed in this regard.1wphi1 As previously observed by the NLRC, McBurnie even failed to show
through any document such as payslips or vouchers that his salaries during the time that he
allegedly worked for the respondents were paid by the company. In the absence of an employeremployee relationship between McBurnie and the respondents, McBurnie could not successfully
claim that he was dismissed, much less illegally dismissed, by the latter. Even granting that there
was such an employer-employee relationship, the records are barren of any document showing that
its termination was by the respondents dismissal of McBurnie.
Given these circumstances, it would be a circuitous exercise for the Court to remand the case to the
NLRC, more so in the absence of any showing that the NLRC should now rule differently on the
cases merits. In Medline Management, Inc. v. Roslinda,127 the Court ruled that when there is enough
basis on which the Court may render a proper evaluation of the merits of the case, the Court may
dispense with the time-consuming procedure of remanding a case to a labor tribunal in order "to
prevent delays in the disposition of the case," "to serve the ends of justice" and when a remand
"would serve no purpose save to further delay its disposition contrary to the spirit of fair play." 128 In
Real v. Sangu Philippines, Inc.,129 we again ruled:
With the foregoing, it is clear that the CA erred in affirming the decision of the NLRC which
dismissed petitioners complaint for lack of jurisdiction. In cases such as this, the Court normally
remands the case to the NLRC and directs it to properly dispose of the case on the merits.
"However, when there is enough basis on which a proper evaluation of the merits of petitioners case
may be had, the Court may dispense with the time-consuming procedure of remand in order to
prevent further delays in the disposition of the case." "It is already an accepted rule of procedure for
us to strive to settle the entire controversy in a single proceeding, leaving no root or branch to bear
the seeds of litigation. If, based on the records, the pleadings, and other evidence, the dispute can

be resolved by us, we will do so to serve the ends of justice instead of remanding the case to the
lower court for further proceedings." x x x.130 (Citations omitted)
It bears mentioning that although the Court resolves to grant the respondents motion for
reconsideration, the other grounds raised in the motion, especially as they pertain to insinuations on
irregularities in the Court, deserve no merit for being founded on baseless conclusions. Furthermore,
the Court finds it unnecessary to discuss the other grounds that are raised in the motion, considering
the grounds that already justify the dismissal of McBurnies complaint.
All these considered, the Court also affirms its Resolution dated September 4, 2012; accordingly,
McBurnies motion for reconsideration thereof is denied.
WHEREFORE, in light of the foregoing, the Court rules as follows:
(a) The motion for reconsideration filed on September 26, 2012 by petitioner Andrew James
McBurnie is DENIED;
(b) The motion for reconsideration filed on March 27, 2012 by respondents Eulalio Ganzon,
EGI-Managers, Inc. and E. Ganzon, Inc. is GRANTED.
(c) The Entry of Judgment issued in G.R. Nos. 186984-85 is LIFTED. This Courts Decision
dated September 18, 2009 and Resolutions dated December 14, 2009 and January 25, 2012
are SET ASIDE. The Court of Appeals Decision dated October 27, 2008 and Resolution dated
March 3, 2009 in CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916 are AFFIRMED WITH
MODIFICATION. In lieu of a remand of the case to the National Labor Relations Commission,
the complaint for illegal dismissal filed by petitioner Andrew James McBurnie against
respondents Eulalio Ganzon, EGI-Managers, Inc. and E. Ganzon, Inc. is DISMISSED.
Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as
provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES
that henceforth, the following guidelines shall be observed:
(a) The filing o a motion to reduce appeal bond shall be entertained by the NLRC subject to
the following conditions: (1) there is meritorious ground; and (2) a bond in a reasonable
amount is posted;
(b) For purposes o compliance with condition no. (2), a motion shall be accompanied by the
posting o a provisional cash or surety bond equivalent to ten percent (10,) of the monetary
award subject o the appeal, exclusive o damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to suspend the running o the 1 0day reglementary period to perfect an appeal from the labor arbiter's decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and
determine the final amount o bond that shall be posted by the appellant, still in accordance
with the standards o meritorious grounds and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that
exceeds the amount o the provisional bond, the appellant shall be given a fresh period o ten 1
0) days from notice o the NLRC order within which to perfect the appeal by posting the
required appeal bond.
SO ORDERED.

[G.R. No. 152494. September 22, 2004]

MARIANO ONG, doing business under the name and style MILESTONE METAL
MANUFACTURING, petitioner, vs. THE COURT OF APPEALS, CONRADO DABAC,
BERNABE TAYACTAC, MANUEL ABEJUELLA, LOLITO ABELONG, RONNIE HERRERO,
APOLLO PAMIAS, JAIME ONGUTAN, NOEL ATENDIDO, CARLOS TABBAL, JOEL
ATENDIDO, BIENVENIDO EBBER, RENATO ABEJUELLA, LEONILO ATENDIDO, JR.,
LODULADO FAA and JAIME LOZADA, respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari assailing the decision[1] of the Court of Appeals in CAG.R. SP No. 62129, dated October 10, 2001, which dismissed the petition for certiorari for lack of
merit, as well as the resolution,[2] 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. [3] 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.[4]
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, 13 th 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, 13 thmonth pay, holiday pay, and contributions to
the SSS, Medicare, and Pag-Ibig Funds.[5]
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.[6]
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.[7] Petitioners motion for reconsideration was likewise denied. [8]
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. [9]
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 SELF-SERVING,
IRRELEVANT AND IMMATERIAL TO THE FACTS AND LAW IN ISSUE IN THIS CASE.[10]
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. [11]
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 onlyupon 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, [12] 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.
[13]
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.[14]
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.[15]

In Calabash Garments, Inc. v. NLRC,[16] it was held that a substantial monetary award, even if it
runs into millions, does not necessarily give the employer-appellant 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.[17] 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.[18] 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. [19]
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 onlymakes 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. [20]
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 tenday 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,[21] 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. [22] Petitioners
reliance on the case of Rosewood Processing, Inc. v. NLRC[23] 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.[24]
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.

[G.R. No. 126322. January 16, 2002]

YUPANGCO COTTON MILLS, INC., petitioner, vs. COURT OF APPEALS, HON. URBANO C.
VICTORIO, SR., Presiding Judge, RTC Branch 50, Manila, RODRIGO SY MENDOZA,
SAMAHANG MANGGAGAWA NG ARTEX (SAMAR-ANGLO) represented by its Local
President
RUSTICO
CORTEZ,
and
WESTERN
GUARANTY
CORPORATION,respondents.
DECISION
PARDO, J.:
The Case
The case is a petition for review on certiorari of the decision of the Court of Appeals [1]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. 9576395. 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. 00-05-02960-90. [2]
On March 29, 1996, the Court of Appeals promulgated a decision [3] 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.[4] 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,[5] Santos v. Bayhon[6] and Manliguez v. Court of Appeals.[7]
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. [8]
Hence, this appeal.[9]
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,[10] 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.[11]
In Chemphil Export & Import Corporation v. Court of Appeals,[12] 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. [13]
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,[14] 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
orpossession 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.[15]
In Santos v. Bayhon,[16] 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 byrespondent 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
saleunless 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
parties to the action, he could not, strictly speaking, appeal from the order denying his claim,
should file a separate reinvindicatory action against the execution creditor or the purchaser of
property after the sale at public auction, or a complaint for damages against the bond filed by
judgment creditor in favor of the sheriff. [17]

the
but
the
the

And in Lorenzana v. Cayetano,[18] 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 andprima-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.[19] 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.

[G.R. No. 120567. March 20, 1998]

PHILIPPINE AIRLINES, INC., petitioner, vs., NATIONAL LABOR RELATIONS COMMISSION,
FERDINAND PINEDA and GODOFREDO CABLING,respondents.
DECISION
MARTINEZ, J.:
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 [1] 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 injunction [2] 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 coconspirators; 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 coconspirator, 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 wasone 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 [3] 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 anddivesting 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 xempowered
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. Chemo-Technishe 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 plainavailability 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 dismissingpetitioners '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 " [4]
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. [5] Injunction is also a special equitable relief granted only
in cases where there is no plain, adequate and complete remedy at law.[6]
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. [7](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." [8]
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."[9]
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."[10]
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 nonagricultural:
(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. [11]
The jurisdiction conferred by the foregoing legal provision to the labor arbiter is
bothoriginal 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" [12]
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."[13] 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. [14]
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.[15] In the case at bar, private
respondents disregarded
this
rule
and
directly
went
to
the
NLRC through a petition forinjunction praying that petitioner be enjoined from enforcing its dismissal
orders. In Lamb vs. Phipps,[16] 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.[17]
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, [18] 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. [19]
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 toother 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 Chemo-Technische 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. [20] 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.[21] 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.