1

HALAGUEÑA v. PAL
G.R. No. 172013; October 2, 2009
Ponente: J. Peralta
FACTS:
Petitioners were employed as female flight attendants of respondent Philippine
Airlines (PAL) on different dates prior to November 22, 1996. They are members of
the Flight Attendants and Stewards Association of the Philippines (FASAP), a labor
organization certified as the sole and exclusive certified as the sole and exclusive
bargaining representative of the flight attendants, flight stewards and pursers of
respondent.
On July 11, 2001, respondent and FASAP entered into a Collective Bargaining
Agreement incorporating the terms and conditions of their agreement for the years
2000 to 2005, hereinafter referred to as PAL-FASAP CBA.
Section 144, Part A of the PAL-FASAP CBA, provides that:
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.
The said issue cannot be resolved solely by applying the Labor Code. Rather,
it requires the application of the Constitution, labor statutes, law on contracts and the
Convention on the Elimination of All Forms of Discrimination Against Women, and
the power to apply and interpret the constitution and CEDAW is within the
jurisdiction of trial courts, a court of general jurisdiction.
In Georg Grotjahn GMBH & Co. v. Isnani, this Court held that not every dispute
between an employer and employee involves matters that only labor arbiters and the
NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The
jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is
limited to disputes arising from an employer-employee relationship which can only
be resolved by reference to the Labor Code, other labor statutes, or their collective
bargaining agreement.

A. For the Cabin Attendants hired before 22 November 1996:
xxxx
3. Compulsory Retirement
Subject to the grooming standards provisions of this Agreement, compulsory
retirement shall be fifty-five (55) for females and sixty (60) for males. x x x.
In a letter dated July 22, 2003, petitioners and several female cabin crews manifested
that the aforementioned CBA provision on compulsory retirement is discriminatory,
and demanded for an equal treatment with their male counterparts. This demand was
reiterated in a letter by petitioners' counsel addressed to respondent demanding the
removal of gender discrimination provisions in the coming re-negotiations of the
PAL-FASAP CBA.
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 or 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

On July 29, 2004, petitioners filed a Special Civil Action for Declaratory
Relief with Prayer for the Issuance of Temporary Restraining Order and Writ of
Preliminary Injunction with the Regional Trial Court (RTC) of Makati City, Branch
147

ISSUE:
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.

HELD:
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Dispute Settlement (Jurisdiction; Procedure) but seeks payment of sum of money and damages on account of breach of obligation
LAPANDAY AGRICULTURAL DEV’T. CORP. vs. CA under their Guard
G.R. No. 112139, January 31, 2000 Service Agreement.
GONZAGA-REYES, J. 2. No, the petitioner is not liable. It is only when contractor pays the increases
FACTS: mandated that it can claim an
This is a petition for review on Certiorari of the decision of the CA which affirmed adjustment from the principal to cover the increases payable to the security guards.
the decision of RTC on the case The liability of the
entitled Commando Security Service Agency vs. Lapanday Dev. Corp. petitioner to reimburse the respondent only arises if and when respondent actually
On June 1986, plaintiff Commando Security Service Agency, Inc., and defendant pays its employees the
Lapanday Agricultural increases granted by wage orders.
Development Corporation entered into a Guard Service Contract. Plaintiff provided WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals
security guards in defendant's dated May 24, 1993 is
banana plantation. REVERSED and SET ASIDE. The complaint of private respondent COMMANDO
On June 16, 1984, Wage Order No. 5 was promulgated directing an increase of SECURITY SERVICE
P3.00 per day on the minimum AGENCY, INC. is hereby DISMISSED
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.
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. 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.
RTC decided in favor of the plaintiff. Petitioner filed a motion for reconsideration
which was denied.
ISSUE:
1. Whether or not the money claims fall under the jurisdiction of NLRC.
2. Whether or not the petitioner is liable to the for the wage adjustment provided
under Wage Order No. 5
and 6.
HELD:
1. RTC has jurisdiction over the subject matter of the present case. It is well settled
in the law and
jurisprudence that where no employer-employee relationship exists between the
parties and no issue
involved which may be resolved by reference to the Labor Code, other labor statutes
or any CBA, it is the
RTC that has jurisdiction. In its complaint private respondent is not seeking relief
under the Labor Code

THIRD DIVISION
[G.R. No. 112139. January 31, 2000]
LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION,
petitioner, vs. THE HONORABLE COURT OF APPEALS (Former Eighth
Division) and COMMANDO SECURITY SERVICE AGENCY, INC.,
respondents.
DECISION
GONZAGA-REYES, J.:
Before us is a Petition for Review on Certiorari of the decision1[1] of the Court of
Appeals2[2] in CA-G.R. CV No. 33893 entitled COMMANDO SECURITY
SERVICE AGENCY, INCORPORATED vs. LAPANDAY AGRICULTURAL
DEVELOPMENT CORPORATION which affirmed the decision3[3] of the
Regional Trial Court, 11th Judicial Region, Branch 9, Davao City in Civil Case No.
19203-88.
The pertinent facts as found by the Court of Appeals are as follows:
"The evidence shows that in June 1986, plaintiff Commando
Security Service Agency, Inc., and defendant Lapanday
Agricultural Development Corporation entered into a Guard
Service Contract. Plaintiff provided security guards in defendants
banana plantation. The contract called for the payment to a guard
of P754.28 on a daily 8-hour basis and an additional P565.72 for a
four hour overtime while the shift-in-charge was to be paid
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P811.40 on a daily 8-hour basis and P808.60 for the 4-hour
overtime.
Wage Orders increasing the minimum wage in 1983 were
complied with by the defendant. On June 16, 1984, Wage Order
No. 5 was promulgated directing an increase of P3.00 per day on
the minimum wage of workers in the private sector and a P5.00
increase on the ECOLA. This was followed on November 1, 1984
by Wage Order No. 6 which further increased said minimum wage
by P3.00 on the ECOLA. Both Wage Orders contain the following
provision:
"In the case of contract for construction projects
and for security, janitorial and similar services,
the increase in the minimum wage and
allowances rates of the workers shall be borne by
the principal or client of the construction/service
contractor and the contracts shall be deemed
amended accordingly, subject to the provisions
of Sec. 3 (b) of this order" (Sec. 6 and Sec. 9,
Wage Orders No. 5 and 6, respectively)."
Plaintiff demanded that its Guard Service Contract with defendant
be upgraded in compliance with Wage Order Nos. 5 and 6.
Defendant refused. Their Contract expired on June 6, 1986 without
the rate adjustment called for Wage Order Nos. 5 and 6 being
implemented. By the time of the filing of plaintiffs Complaint, the
rate adjustment payable by defendant amounted to P462,346.25.
Defendant opposed the Complaint by raising the following
defenses: (1) the rate adjustment is the obligation of the plaintiff as
employer of the security guards; (2) assuming its liability, the sum
it should pay is less in amount; and (3) the Wage Orders violate the
impairment clause of the Constitution.
The trial court decided in favor of the plaintiff. It held:
xxx
"However, in order for the security agency to
pay the security guards, the Wage Orders made
specific provisions to amend existing contracts
for security services by allowing the adjustment
of the consideration paid by the principal to the
security agency concerned. (Eagle Security

Agency, Inc. vs. NLRC, Phil. Tuberculosis
Society, Inc. vs. NLRC, et al., May 18, 1989).
The Wage Orders require the amendment of the
contract as to the consideration to cover the
service contractors payment of the increases
mandated. However, in the case at bar, the
contract for security services had earlier been
terminated without the corresponding
amendment. Plaintiff now demands adjustment
in the contract price as the same was deemed
amended by Wage Order Nos. 5 and 6.
Before the plaintiff could pay the minimum wage
as mandated by law, adjustments must be paid
by the principal to the security agency
concerned.
"Given these circumstances, if
PTS pays the security guards,
it cannot claim reimbursements
from Eagle. But if its Eagle
that pays them, the latter can
claim reimbursement from
PTS in lieu of an adjustment,
considering that the contract
had expired and had not been
renewed. (Eagle Security
Agency vs. NLRC and Phil.
Tuberculosis Society, Inc. vs.
NLRC, et al., 18 May 1989).
"As to the issue that Wage Orders Nos. 5 and 6
constitute impairments of contracts in violation
of constitutional guarantees, the High Court
ruled" The Supreme Court has rejected the
impairment of contract argument in sustaining
the validity and constitutionality of labor and
social legislation like the Blue Sunday Law,
compulsory coverage of private sector
employees in the Social Security System, and the
abolition of share tenancy enacted pursuant to
the police power of the state (Eagle Security
Agency, Inc. vs. National Labor Relation
Commission and Phil. Tuberculosis Society, Inc.
vs. NLRC, et al., May 18, 1989)."
4
Petitioners motion for reconsideration was denied;4[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 ATTORNEYS FEES, THE SAME MAY NOT BE
AWARDED.
4. THE NATIONAL LABOR RELATIONS (SIC) IS THE
PROPER FORUM THAT HAS THE JURISDICTION TO
RESOLVE THE ISSUE OF WHETHER OR NOT THE
PETITIONER IS LIABLE TO PAY THE PRIVATE
RESPONDENT THE WAGE AND ALLOWANCE
INCREASES MANDATED UNDER WAGE ORDER NOS. 5
AND 6."5[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
respondents complaint partakes of the nature of an action for recovery of what was
supposedly due the guards under said Wage Orders, amounts that they claim were
never paid by private respondent and therefore not collectible by the latter from the
petitioner. Petitioner also assails the award of attorneys fees in the amount of
 5

P115,585.31 or 25% of the total adjustment claim of P462,341.25 for lack of basis time before the Supreme Court after having voluntarily submitted to the jurisdiction
and for being unconscionable. of the regular courts below and having lost its case therein.7[7]

Moreover, petitioner submits that it is the National Labor Relations Commission We resolve to grant the petition.
(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 We resolve first the issue of jurisdiction. We agree with the respondent that the RTC
private respondents security guards mandated under Wage Order Nos. 5 and 6. has jurisdiction over the subject matter of the present case. It is well settled in law
Considering that the RTC has no jurisdiction, its decision is without force and and jurisprudence that where no employer-employee relationship exists between the
effect.6[6] 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
On the other hand, private respondent contends that the basis of its action against Trial Court that has jurisdiction.8[8] In its complaint, private respondent is not
petitioner-appellant is the enforcement of the Guard Service Contract entered into by seeking any relief under the Labor Code but seeks payment of a sum of money and
them, which is deemed amended by Section 6 of Wage Order No. 5 and Section 9 of damages on account of petitioners alleged breach of its obligation under their Guard
Wage Order No. 6; that pursuant to their amended Guard Service Contract, the Service Contract. The action is within the realm of civil law hence jurisdiction over
increases/adjustments in wages and ECOLA are due to private respondent and not to the case belongs to the regular courts.9[9] While the resolution of the issue involves
the security guards who are not parties to the said contract. It is therefore immaterial the application of labor laws, reference to the labor code was only for the
whether or not private respondent paid its security guards their wages as adjusted by determination of the solidary liability of the petitioner to the respondent where no
said Wage Orders and that since the forty-two (42) security guards are not parties to employer-employee relation exists. Article 217 of the Labor Code as amended vests
the Guard Service Contract, there is no need for them to authorize the filing of, or be upon the labor arbiters exclusive original jurisdiction only over the following:
joined in, this suit.
1. Unfair labor practices;
As regards the award to private respondent of the amount of P115,585.31 as
attorneys fees, private respondent maintains that there is enough evidence and/or 2. Termination disputes;
basis for the grant thereof, considering that the adamant attitude of the petitioner (in
implementing the questioned Wage Orders) compelled the herein private respondent,
3. If accompanied with a claim for reinstatement, those
to litigate in court. Furthermore, since the legal fee payable by private respondent to
cases that workers may file involving wages, rates of pay, hours of
its counsel is essentially on contingent basis, the amount of P115,583.31 granted by
work and other terms and conditions of employment;
the trial court which is 25% of the total claim is not unconscionable.
4. Claims for actual, moral exemplary and other forms of
As regards the jurisdiction of the RTC, private respondent alleges that the suit filed
damages arising from employer-employee relations;
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

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[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 attorneys fees.
Private respondent admits that there is no employer-employee relationship between it
and the petitioner. The private respondent is an independent/job contractor11[11]
who assigned security guards at the petitioners premises for a stipulated amount per
guard per month. The Contract of Security Services expressly stipulated that the
security guards are employees of the Agency and not of the petitioner.12[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 subcontractor. Whenever an employer
enters into a contract with another person for the performance of
the formers work, the employees of the contractor and of the latters
subcontractor, if any, shall be paid in accordance with the
provisions of this Code.
6
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that
he is liable to employees directly employed by him.
xxx
ART. 107. Indirect employer. The provisions of the immediately
preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer, contracts
with an independent contractor for the performance of any work,
task, job or project."
It will be seen from the above provisions that the principal (petitioner) and the
contractor (respondent) are jointly and severally liable to the employees for their
wages. This Court held in Eagle Security, Inc. vs. NLRC13[13] and Spartan Security
and Detective Agency, Inc. vs. NLRC14[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 contractors employees to secure payment of their
wages should the contractor be unable to pay them.15[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[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, supra and Bautista vs. Inciong, G. R. No.
52824, March 16, 1988, 158 SCRA 665].
On the other hand, there existed a contractual agreement between
PTSI and EAGLE wherein the former availed of the security
services provided by the latter. In return, the security agency
collects from its client payment for its security services. This
payment covers the wages for the security guards and also
expenses for their supervision and training, the guards bonds,
firearms with ammunitions, uniforms and other equipments,
accessories, tools, materials and supplies necessary for the
maintenance of a security force.
Premises considered, the security guards immediate recourse for
the payment of the increases is with their direct employer, EAGLE.
However, in order for the security agency to comply with the new
wage and allowance rates it has to pay the security guards, the
Wage Orders made specific provision to amend existing contracts
for security services by allowing the adjustment of the
consideration paid by the principal to the security agency
concerned. What the Wage Orders require, therefore, is the
amendment of the contracts as to the consideration to cover the
service contractors payment of the increases mandated. In the end,
therefore, ultimate liability for the payment of the increases rests
with the principal.
In view of the foregoing, the security guards should claim the
amount of the increases from EAGLE. Under the Labor Code, in
case the agency fails to pay them the amounts claimed, PTSI
should be held solidarily liable with EAGLE [Articles 106, 107
7
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[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. xxx"
Pursuant to the above provision, the right of reimbursement from a co-debtor is
recognized in favor of the one who paid.
It will be seen that the liability of the petitioner to reimburse the respondent only
arises if and when respondent actually pays its employees the increases granted by
Wage Order Nos. 5 and 6. Payment, which means not only the delivery of money but
also the performance, in any other manner, of the obligation,18[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[19] dated October 17, 1986 (NLRC Case No. 2849-

MC-XI-86).20[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 attorneys fees.
WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals
dated May 24, 1993 is REVERSED and SET ASIDE. The complaint of private
respondent COMMANDO SECURITY SERVICE AGENCY, INC. is hereby
DISMISSED.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.
7K Corporation v. Albarico
GR No. 188295
Labor Relations: Jurisdiction
Facts:
Respondent was a regular employee of petitioner corporation, a company selling
8
water purifiers. He started as a salesman and was promoted several times. In 1992,
he was awarded the President’s Trophy for being one of the company’s top water
purifier specialist distributors.
In April 1993, petitioner corporation terminated respondent’s employment as acting
team field supervisor, allegedly for his poor sales performance. 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).
While the NCMB arbitration case was pending, respondent filed a Complaint against
petitioner corporation with the Labor Arbiter for illegal dismissal with money claims
for overtime pay, holiday compensation, commission, and food and travelling
allowances.
The Labor Arbiter decided the case in favor of respondent.
The LA’s Decision was vacated by the NLRC for forum shopping on the part of
respondent, because the NCMB arbitration case was still pending. The NLRC
Decision, which explicitly stated that the dismissal was without prejudice to the
pending NCMB arbitration case, became final after no appeal was taken.
The voluntary arbitrator rendered a Decision finding petitioner corporation liable for
illegal dismissal. The voluntary arbitrator ordered the corporation to pay separation
pay for two years, back wages, and attorney’s fees.
The CA affirmed the Decision of the voluntary arbitrator, but eliminated the award
of attorney’s fees for having been made without factual, legal or equitable
justification.
Issue:
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 latter’s entitlement to back wages, even if neither the
legality nor the entitlement was expressly claimed in the Submission Agreement of
the parties.
Held:
No. The petition is denied for being devoid of merit.
The Court ruled that although the general rule under the Labor Code gives the labor
arbiter exclusive and original jurisdiction over termination disputes, it also
recognizes exceptions. Under Article 262, 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.

On the issue of whether respondent was entitled to separation pay and to the sales
commission the latter earned before being terminated, the Court ruled 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 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.
& for illegal deduction, non-payment of service incentive leave, 13th month pay,
PEOPLE’S BROADCASTING (BOMBO RADYO PHILS., INC.), Petitioner,
vs.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND
9
EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION VII, and
JANDELEON JUEZAN, Respondents.
FACTS: The instant petition for certiorari under Rule 65 assails the decision and the
resolution of the Court of Appeals.
The petition traces its origins to a complaint filed by Jandeleon Juezan (respondent)
against People’s Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner)
premium pay for holiday and rest day and illegal diminution of benefits, delayed
payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth (non-
diminution of benefits in the amount allegedly 6K) before the Department of
Labor and Employment (DOLE) Regional Office No. VII, Cebu City.2 On the
basis of the complaint, the DOLE conducted a plant level inspection on 23
September 2003. Labor Inspector wrote under the heading
“Findings/Recommendations” “non-diminution of benefits” and “Note: Respondent
deny employer-employee relationship with the complainant- see Notice of Inspection
results.”
PETITIONER’S POSITION: Management representative informed that complainant
is a drama talent hired on a per drama ” participation basis” hence no employer-
employeeship [sic] existed between them. As proof of this, management presented
photocopies of cash vouchers, billing statement, employments of specific
undertaking (a contract between the talent director & the complainant), summary of
billing of drama production etc. They (mgt.) has [sic] not control of the talent if he
ventures into another contract w/ other broadcasting industries.
RULING OF DOLE REGIONAL DIRECTOR: respondent is an employee of
petitioner, and that the former is entitled to his money claims amounting
toP203,726.30. MR denied; Appeal with the DOLE Secretary, dismissed the appeal
on the ground that petitioner did not post a cash or surety bond and instead submitted
a Deed of Assignment of Bank Deposit.
APPEAL WITH THE CA: claiming that it was denied due process when the DOLE
Secretary disregarded the evidence it presented and failed to give it the opportunity
to refute the claims of respondent. Petitioner maintained that there is no employer-
employee relationship had ever existed between it and respondent because it was the
drama directors and producers who paid, supervised and disciplined respondent. It
also added that the case was beyond the jurisdiction of the DOLE and should have
been considered by the labor arbiter because respondent’s claim exceeded P5,000.00.
CA denied.
WITH THE SC: petitioner argues that the National Labor Relations Commission
(NLRC), and not the DOLE Secretary, has jurisdiction over respondent’s claim, in
view of Articles 217 and 128 of the Labor Code.

RESPONDENT’S POSITION: respondent posits that the Court of Appeals did not
abuse its discretion. He invokes Republic Act No. 7730, which “removes the
jurisdiction of the Secretary of Labor and Employment or his duly authorized
representatives, from the effects of the restrictive provisions of Article 129 and 217
of the Labor Code, regarding the confinement of jurisdiction based on the amount of
claims.”; and wrong mode of appeal.
ISSUE: WON the Secretary of Labor have the power to determine the existence of
an employer-employee relationship.
HELD: No
To resolve this pivotal issue, one must look into the extent of the visitorial and
enforcement power of the DOLE found in Article 128 (b) of the Labor Code, as
amended by Republic Act 7730. It reads:
Article 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code
to the contrary, and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the
course of inspection xxx
The provision is quite explicit that the visitorial and enforcement power of the
DOLE comes into play only “in cases when the relationship of employer-
employee still exists.” Of course, a person’s entitlement to labor standard benefits
under the labor laws presupposes the existence of employer-employee relationship in
the first place.The clause signifies that the employer-employee relationship must
have existed even before the emergence of the controversy. Necessarily, the
DOLE’s power does not apply in two instances, namely: (a) where the
employer-employee relationship has ceased; and (b) where no such relationship
has ever existed.
The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the
Disposition of Labor Standards Cases15 issued by the DOLE Secretary. It reads:
Rule II MONEY CLAIMS ARISING FROM COMPLAINT/ROUTINE
INSPECTION
Sec. 3. Complaints where no employer-employee relationship actually exists. Where
employer-employee relationship no longer exists by reason of the fact that it has
already been severed, claims for payment of monetary benefits fall within the
exclusive and original jurisdiction of the labor arbiters. Accordingly, if on the face
of the complaint, it can be ascertained that employer-employee relationship no
10
longer exists, the case, whether accompanied by an allegation of illegal
dismissal, shall immediately be endorsed by the Regional Director to the
appropriate branch of the National Labor Relations Commission (NLRC).
Clearly the law accords a prerogative to the NLRC over the claim when the
employer-employee relationship has terminated or such relationship has not arisen at
all. The reason is obvious. In the second situation especially, the existence of an
employer-employee relationship is a matter which is not easily determinable from an
ordinary inspection, necessarily so, because the elements of such a relationship are
not verifiable from a mere ocular examination. The determination of which should
be comprehensive and intensive and therefore best left to the specialized quasi-
judicial body that is the NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and enforcement
power somehow has to make a determination of the existence of an employer-
employee relationship. Such prerogatival determination, however, cannot be
coextensive with the visitorial and enforcement power itself. Indeed, such
determination is merely preliminary, incidental and collateral to the DOLE’s primary
function of enforcing labor standards provisions. The determination of the existence
of employer-employee relationship is still primarily lodged with the NLRC.
Thus, before the DOLE may exercise its powers under Article 128, two important
questions must be resolved: (1) Does the employer-employee relationship still exist,
or alternatively, was there ever an employer-employee relationship to speak of; and
(2) Are there violations of the Labor Code or of any labor law?
A mere assertion of absence of employer-employee relationship does not deprive the
DOLE of jurisdiction over the claim under Article 128 of the Labor Code. At least a
prima facie showing of such absence of relationship, as in this case, is needed to
preclude the DOLE from the exercise of its power.
Without a doubt, petitioner, since the inception of this case had been consistent
in maintaining that respondent is not its employee. Certainly, a preliminary
determination, based on the evidence offered, and noted by the Labor Inspector
during the inspection as well as submitted during the proceedings before the
Regional Director puts in genuine doubt the existence of employer-employee
relationship. From that point on, the prudent recourse on the part of the DOLE
should have been to refer respondent to the NLRC for the proper dispensation
of his claims. Furthermore, as discussed earlier, even the evidence relied on by the
Regional Director in his order are mere self-serving declarations of respondent, and
hence cannot be relied upon as proof of employer-employee relationship.
Petition GRANTED.
___________

Other Issues (Just in case it will be asked, mahaba2 ung case)
 Aside from lack of jurisdiction, there is another cogent reason to to set aside
the Regional Director’s 27 February 2004 Order. A careful study of the case
reveals that the said Order, which found respondent as an employee of
petitioner and directed the payment of respondent’s money claims, is not
supported by substantial evidence, and was even made in disregard of the
evidence on record.
 Even if the labor inspector had noted petitioner’s manifestation and
documents in the Notice of Inspection Results, it is clear that he did not give
much credence to said evidence, as he did not find the need to investigate
the matter further. The labor inspector could have exerted a bit more effort
and looked into petitioner’s payroll, for example, or its roll of employees, or
interviewed other employees in the premises.
 The Court further examined the records and discovered to its dismay that
even the Regional Director turned a blind eye to the evidence presented by
petitioner and relied instead on the self-serving claims of respondent.
REPONDENT’S CLAIM IN HIS POSITION PAPER: hired by petitioner in
September 1996 as a radio talent/spinner, working from 8:00 am until 5 p.m., six
days a week, on a gross rate of P60.00 per script, earning an average of P15,0000.00
per month, payable on a semi-monthly basis xxx In support of his position paper,
respondent attached a photocopy of an identification card purportedly issued by
petitioner, bearing respondent’s picture and name with the designation “Spinner”; at
the back of the I.D., the following is written: ” This certifies that the card holder is a
duly Authorized MEDIA Representative of BOMBO RADYO PHILIPPINES …
Certificates were also submitted by respondent to support his claim.
EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP: Furthermore,
respondent’s pieces of evidence—the identification card and the certification issued
by petitioner’s Greman Solante— are not even determinative of an employer-
employee relationship. The certification, issued upon the request of respondent,
specifically stated that “MR. JANDELEON JUEZAN is a program employee of
PEOPLE’S BROADCASTING SERVICES, INC. (DYMF- Bombo Radyo Cebu),” it
is not therefore “crystal clear that complainant is a station employee rather than a
program employee hence entitled to all the benefits appurtenant thereto,”26 as found
by the DOLE Regional Director. Respondent should be bound by his own evidence.
Moreover, the classification as to whether one is a “station employee” and “program
employee,” as lifted from Policy Instruction No. 40,27 dividing the workers in the
broadcast industry into only two groups is not binding on this Court, especially when
the classification has no basis either in law or in fact.28
11
Even the identification card purportedly issued by petitioner is not proof of
employer-employee relationship since it only identified respondent as an
“Authorized Representative of Bombo Radyo…,” and not as an employee.
SUBSTANTIAL EVIDENCE: It has long been established that in administrative and
quasi-judicial proceedings, substantial evidence is sufficient as a basis for judgment
on the existence of employer-employee relationship. Substantial evidence, which is
the quantum of proof required in labor cases, is “that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion.”
 In the instant case, save for respondent’s self-serving allegations and self-
defeating evidence, there is no substantial basis to warrant the Regional
Director’s finding that respondent is an employee of petitioner.
RE APPEAL BOND: The purpose of an appeal bond is to ensure, during the period
of appeal, against any occurrence that would defeat or diminish recovery by the
aggrieved employees under the judgment if subsequently affirmed.40 The Deed of
Assignment in the instant case, like a cash or surety bond, serves the same purpose.
First, the Deed of Assignment constitutes not just a partial amount, but rather the
entire award in the appealed Order. Second, it is clear from the Deed of Assignment
that the entire amount is under the full control of the bank, and not of petitioner, and
is in fact payable to the DOLE Regional Office, to be withdrawn by the same office
after it had issued a writ of execution. For all intents and purposes, the Deed of
Assignment in tandem with the Letter Agreement and Cash Voucher is as good as
cash. Third, the Court finds that the execution of the Deed of Assignment, the Letter
Agreement and the Cash Voucher were made in good faith, and constituted clear
manifestation of petitioner’s willingness to pay the judgment amount.
MODE OF APPEAL: it is settled, as a general proposition, that the availability of an
appeal does not foreclose recourse to the extraordinary remedies, such
as certiorari and prohibition, where appeal is not adequate or equally beneficial,
speedy and sufficient xxx
This Court has even recognized that a recourse to certiorari is proper not only where
there is a clear deprivation of petitioner’s fundamental right to due process, but so
also where other special circumstances warrant immediate and more direct action.
After all, this Court has previously ruled that the extraordinary writ of certiorari will
lie if it is satisfactorily1avvphiestablished that the tribunal had acted capriciously and
whimsically in total disregard of evidence material to or even decisive of the
controversy

MCBURNIE V. GANZON
Ynares-Santiago, J. | Sept. 18, 2009 | In division
12
THIRD DIVISION
FACTS
Petition for review on certiorari under Rule 45 of a Court of Appeals decision
granting respondents Motion to Reduce Appeal Bond; directing them to post a bond
of P10 Million; and ordering the NLRC to give due course to their appeal and to
conduct further proceedings. Also assailed is a Resolution denying a motion for
reconsideration.
Petitioner Andrew McBurnie, an Australian national, signed a five-year employment
contract as executive vice-president of respondent EGI Managers through its
president EulalioGanzon. McBurnie later featured in an accident and while
recuperating from his injuries in Australia, he was informed by Ganzon that his
services were no longer needed. McBurnie filed a complaint for illegal dismissal
with prayer for the payment of his salary and benefits for the unexpired term of the
contract, damages and attorneys fees.
The Labor Arbiter declared petitioners dismissal illegal and ordering respondents to
pay salary and benefits for the unexpired term of the contract, moral and exemplary
damages, and attorneys fees. The NLRC denied respondent’s motion to reduce bond
and ordered respondents to post an additional bond together with the other
requirements under the NLRC Rules of Procedure within a non-extendible period of
10 days from receipt thereof, otherwise the appeal shall be dismissed. Respondents
moved for reconsideration but it was denied; respondents were again ordered to post
the additional appeal bond within another non-extendible period of 10 days from
receipt thereof.
Instead of complying, respondents filed a petition for certiorari and prohibition with
the CA with prayer for issuance of a preliminary injunction and/or temporary
restraining order. A TRO effective for 60 days was issued enjoining the NLRC from
enforcing its orders. After the TRO expired and respondents still failed to post
additional bond, the NLRC dismissed their appeal.

Following the denial of their MFR, respondents filed with the CA a petition for
certiorari with prayer for issuance of TRO and/or writ of preliminary injunction.
The CA issued a TRO enjoining the NLRC from enforcing resolution dismissing
respondents appeal, and its resolution denying the MFR. It issued a writ of
preliminary injunction. Petitioner assailed the issuance of the writ before the
Supreme Court. However, it was dismissed for submitting an affidavit of service
which failed to show a competent evidence of affiants identity.
Meanwhile, the CA rendered the assailed decision granting respondents motion to
reduce appeal bond and directing them to post an appeal bond of P10 million with
the NLRC, which was likewise ordered to give due course to the appeal and to
conduct further proceedings.
Petitioners MFR was denied hence this petition for review on certiorari.
POSITION OF PARTIES
Petitioner
Petitioner contends that the CA erred in holding that the NLRC committed grave
abuse of discretion when it outrightly dismissed the motion to reduce appeal bond
without fixing a reasonable amount therefor, thus depriving the respondents their
right to appeal the Labor Arbiters decision; that the rules on perfection of appeals
must be strictly applied; that the period for posting the bond cannot be made to
depend on the discretion of the party; that respondents not only refused to post
appeal bond within the prescribed period but the ground relied upon for the reduction
thereof, to wit: the awards were patent nullity and excessive, was not meritorious.
13
PROCEDURAL ISSUES
WON the CA committed reversible error in finding that the NLRC committed grave
abuse of discretion when it implemented the provision of the Labor Code, Art. 223
and Sec. 6, Rule VI of the NLRC Rules of Procedure. YES.
RULING
The petition is granted. The decision and resolution of the CA are reversed and set
aside. The resolutions of the NLRC are reinstated and affirmed.
Under Art. 223 of the Labor Code, 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. 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. The jurisdictional principle and the mandatory nature of
the appeal bond posted within the 10-day reglementary period are reaffirmed by the
New Rules of Procedure of the NLRC. 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.
Records show that respondents filed their memorandum of appeal and motion to
reduce appeal bond on the 10th or last day of the reglementary period. Although they
posted an initial appeal bond, the same was grossly inadequate. Further, there is no
basis in respondents contention that the awards of the Labor Arbiter were null and
excessive, and with premeditated intention to render respondents incapable of
posting an appeal bond and deprive them of the right to appeal.

It also does not escape judicial notice that the cash/surety bond requirement does not
necessitate the employer to physically surrender the entire amount of the monetary
judgment. The usual procedure is for the employer to obtain the services of a
bonding company, which will then require the employer to pay a percentage of the
award in exchange for a bond securing the full amount.
CASE DIGEST: LEPANTO CONSOLIDATED MINING
CORPORATION v. BELIO ICAO
FACTS: Private respondent Belio Icao, alleged in his complaint that
he was an employee of petitioner Lepanto Consolidated Mining
Corporation (LEPANTO), assigned as lead miner in its underground
mine in Paco, Mankayan, Benguet. On January 4, 2008, while taking a
break from work, Security Guard Larry Bulwayan and Dale Papsa-ao
14
pulled his skullguard harness. A few minutes later, he saw Bulwayan
pick up a wrapped object at the bathing station and gave it to his
companion. The two Security Guards then invited the private
respondent to go with them at the investigation office to answer
questions regarding the wrapped object. He was then charged with
highgrading or an act of concealing, possessing or unauthorized
extraction of highgrade material without proper authority.
Consequently, he was dismissed from his work despite his vehement
denial of the said charges.
Private respondent prayed that the petitioners be held liable for illegal
dismissal, to reinstate him to his former position without loss of
seniority rights and benefits, and to pay his full backwages, damages
and attorneys fees. He claimed that his dismissal from work was
without just or authorized cause since petitioners failed to prove by
ample and sufficient evidence that he stole gold bearing highgrade ores
from the company premises.
Petitioner averred that SG Bulyawan saw private respondent inserting
a wrapped object inside his right rubber boot and was later found in
the latters' skullguard upon inspection. The wrapped object turned out
to be pieces of stone ores.
The Labor Arbiter rendered a decision on September 30, 2008, holding
petitioner and its CEO liable for illegal dismissal and ordering to pay
respondent his full backwages and separation pay. The alleged
highgrading attributed by LCMCs security guards was found to have
been fabricated; consequently, there was no just cause for the
dismissal of respondent.
On December 8, 2008, petitioner and its CEO filed an Appearance
with Memorandum of Appeal before the NLRC, instead of posting the
required appeal bond in the form of a cash bond or a surety bond. They
requested that the NLRC release the cash bond which they had posted
in the separate case, Dangiw Siggaao case, which was decided earlier
in its favor, and apply that same cash bond to their present appeal bond
liability.
NLRC dismissed the appeal of the petitioner and the latters CEO for
 15

non-perfection. It found that they had failed to post the required appeal
bond, hence, declared the Labor Arbiters decision to be final and
executory. NLRC also denied the Motion for Reconsideration filed by
petitioner and its CEO.

The CA affirmed the Order of the NLRC. According to the Cam

petitioner and the latters CEO lost the right to appeal. The CA
explained that under Article 223 of the Labor Code, an appeal from the
labor arbiters Decisionmust be filed within 10 calendar days from
receipt of the decision. In case of a judgment involving a monetary
award, the posting of a cash or surety bond in an amount equivalent to
the monetary award is mandatory for the perfection of an appeal. In
the instant case, the CA found that petitioner and its CEO did not pay
the appeal fees and the required appeal bond equivalent
to₱345,879.45. Instead, it filed a Consolidated Motion praying that the
cash bond it had previously posted in another labor case be released
and applied to the present one. According to the CA, this arrangement
is not allowed under the rules ofprocedure of the NLRC. Nevertheless,
the CA ruled that the CEO of petitioner should be drooped as a party
to this case. The labor arbiter did not cite any factual or legal basis in
its Decision that would render the CEO liable to respondent.

ISSUE: Did the petitioner comply with the appeal bond
requirement under the Labor Code and the NLRC Rules by filing
a Consolidated Motion to release cash bond it posted in another
case?
HELD: Under Article 223 of the Labor Code, in appeals from any
decision or order of the labor arbiter, the posting of an appeal bond is
required. In case of a judgment involving a monetary award, an appeal
by the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary judgment
appealed from.
The 2011 NLRC Rules of Procedure incorporates this requirement in
Rule VI, Section 6, which provides: In case the decision of the Labor
Arbiter or the Regional Director involves a monetary award, an appeal
by the employer may be perfect only upon the posting of a bond.
In Viron Garments Manufacturing Co., Inc. v. NLRC, the court
explained the mandatory nature of this requirement as follows: The
intention of the lawmakers to make the bond an indispensable requisite
for the perfection of an appeal by the employer, is clearly limned in the
provision that an appeal by the employer may be perfected only upon
the posting of a cash or surety bond. The word only makes it perfectly
clear, that the lawmakers intended the posting of a cash or surety bond
by the employer to be the exclusive means by which an employer's
appeal may be perfected.
In Araneta v. Rodas, where the Court said that when the law does not
clearly provide a rule or norm for the tribunal to follow in deciding a
question submitted, but leaves to the tribunal the discretion to
determine the case in one way or another, the judge must decide the
question in conformity with justice, reason and equity, in view of the
circumstances of the case.
Applying this doctrine, we rule that petitioner substantially complied
with the mandatory requirement of posting an appeal bond for the
reasons explained below:
16
First, there is no question that the appeal was filed within the 10-day
reglementary period. Except for the alleged failure to post an appeal
bond, the appeal to the NLRC was therefore in order.
Second, it is also undisputed that petitioner an unencumbered amount
of money in the form of cash in the custody of the NLRC. To reiterate,
petitioner had posted a cash bond of ₱401,610.84 in the separate case
Dangiw Siggaao, which was earlier decided in its favor. As claimed by
petitioner and confirmed by the Judgment Division of the Judicial
Records Office of this Court, the Decision of the Court in Dangiw
Siggaao had become final and executory as of 28 April 2008,or more
than seven months before petitioner had to file its appeal in the present
case. This fact is shown by the Entry of Judgment on file with the
aforementioned office. Hence, the cash bond in that case ought to have
been released to petitioner then.
Third, the cash bond in the amount of ₱401,610.84 posted in Dangiw
Siggaao is more than enough to cover the appeal bond in the amount
of ₱345,879.45required in the present case.
Fourth, this ruling remains faithful to the spirit behind the appeal bond
requirement which is to ensure that workers will receive the money
awarded in their favor when the employers appeal eventually fails.
There was no showing at all of any attempt on the part of petitioner to
evade the posting of the appeal bond. On the contrary, petitioners
move showed a willingness to comply with the requirement. Hence,
the welfare of Icao is adequately protected.
This Court has liberally applied the NLRC Rules and the Labor Code
provisions on the posting of an appeal bond in exceptional cases. In
Your Bus Lines v. NLRC, the Court excused the appellants failure to
post a bond, because it relied on the notice of the decision. While the
notice enumerated all the other requirements for perfecting an appeal,
it did not include a bond in the list. In Blancaflor v. NLRC, the failure
of the appellant therein to post a bond was partly caused by the labor
arbiters failure to state the exact amount of monetary award due, which
would have been the basis of the amount of the bond to be posted. In
Cabalan Pastulan Negrito Labor Association v. NLRC, petitioner-
appellant was an association of Negritos performing trash-sorting
services in the American naval base in Subic Bay. The plea of the
 17

association that its appeal be given due course despite its non-posting
of a bond, on account of its insolvency and poverty, was granted by
this Court.

In the above cited cases, the Court found exceptional circumstance that
warranted an extraordinary exercise of its power to exempt a party
from the rules on appeal bond, there is all the more reason in the
present case to find that petitioner substantially complied with the
requirement. The Court will liberally apply the rules on in very highly
exceptional cases such as this, in keeping with the dictates of justice,
reason and equity. GRANTED.