SECOND DIVISION

[G.R. No. 197309. October 10, 2012.]

ACE NAVIGATION CO., INC., VELA INTERNATIONAL MARINE LTD.,

and/or RODOLFO PAMINTUAN , petitioners, vs . TEODORICO
FERNANDEZ, assisted by GLENITA FERNANDEZ , respondent.

DECISION

BRION , J : p

For resolution is the petition for review on certiorari 1 which seeks to nullify the
decision 2 dated September 22, 2010 and the resolution 3 dated May 26, 2011 of the
Court of Appeals (CA) in CA-G.R. SP No. 112081.
The Antecedents
On October 9, 2008, seaman Teodorico Fernandez (Fernandez), assisted by his
wife, Glenita Fernandez, led with the National Labor Relations Commission (NLRC) a
complaint for disability bene ts, with prayer for moral and exemplary damages, plus
attorney's fees, against Ace Navigation Co., Inc., Vela International Marine Ltd., and/or
Rodolfo Pamintuan (petitioners).
The petitioners moved to dismiss the complaint, 4 contending that the labor
arbiter had no jurisdiction over the dispute. They argued that exclusive original
jurisdiction is with the voluntary arbitrator or panel of voluntary arbitrators, pursuant to
Section 29 of the POEA Standard Employment Contract (POEA-SEC), since the parties
are covered by the AMOSUP-TCC or AMOSUP-VELA (as later cited by the petitioners)
collective bargaining agreement (CBA). Under Section 14 of the CBA, a dispute between
a seafarer and the company shall be settled through the grievance machinery and
mandatory voluntary arbitration.
Fernandez opposed the motion. 5 He argued that inasmuch as his complaint
involves a money claim, original and exclusive jurisdiction over the case is vested with
the labor arbiter.
The Compulsory Arbitration Rulings
On December 9, 2008, Labor Arbiter Romelita N. Rio orido denied the motion to
dismiss, holding that under Section 10 of Republic Act (R.A.) No. 8042, the Migrant
Workers and Overseas Filipinos Act of 1995, the labor arbiter has original and exclusive
jurisdiction over money claims arising out of an employer-employee relationship or by
virtue of any law or contract, notwithstanding any provision of law to the contrary. 6 aDcHIC

The petitioners appealed to the NLRC, but the labor agency denied the appeal. It
agreed with the labor arbiter that the case involves a money claim and is within the
jurisdiction of the labor arbiter, in accordance with Section 10 of R.A. No. 8042.
Additionally, it declared that the denial of the motion to dismiss is an interlocutory
order which is not appealable. Accordingly, it remanded the case to the labor arbiter for
further proceedings. The petitioners moved for reconsideration, but the NLRC denied
the motion, prompting the petitioners to elevate the case to the CA through a petition
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 for certiorari under Rule 65 of the Rules of Court.
The CA Decision
Through its decision of September 22, 2010, 7 the CA denied the petition on
procedural and substantive grounds.
Procedurally, it found the petitioners to have availed of the wrong remedy when
they challenged the labor arbiter's denial of their motion to dismiss by way of an appeal
to the NLRC. It stressed that pursuant to the NLRC rules, 8 an order denying a motion to
dismiss is interlocutory and is not subject to appeal.
On the merits of the case, the CA believed that the petition cannot also prosper.
It rejected the petitioners' submission that the grievance and voluntary arbitration
procedure of the parties' CBA has jurisdiction over the case, to the exclusion of the
labor arbiter and the NLRC. As the labor arbiter and the NLRC did, it opined that under
Section 10 of R.A. No. 8042, the labor arbiter has the original and exclusive jurisdiction
to hear Fernandez's money claims.
Further, the CA clari ed that while the law 9 allows parties to submit to voluntary
arbitration other labor disputes, including matters falling within the original and
exclusive jurisdiction of the labor arbiters under Article 217 of the Labor Code as this
Court recognized in Vivero v. Court of Appeals , 1 0 the parties' submission agreement
must be expressed in unequivocal language. It found no such unequivocal language in
the AMOSUP/TCC CBA that the parties agreed to submit money claims or, more
specifically, claims for disability benefits to voluntary arbitration.
The CA also took note of the POEA-SEC 1 1 which provides in its Section 29 that
in cases of claims and disputes arising from a Filipino seafarer's employment, the
parties covered by a CBA shall submit the claim or dispute to the original and exclusive
jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. The CA
explained that the relevant POEA-SEC provisions should likewise be quali ed by the
ruling in the Vivero case, the Labor Code, and other applicable laws and jurisprudence.
In sum, the CA stressed that the jurisdiction of voluntary arbitrators is limited to
the seafarers' claims which do not fall within the labor arbiter's original and exclusive
jurisdiction or even in cases where the labor arbiter has jurisdiction, the parties have
agreed in unmistakable terms (through their CBA) to submit the case to voluntary
arbitration.
The petitioners moved for reconsideration of the CA decision, but the appellate
court denied the motion, reiterating its earlier pronouncement that on the ground alone
of the petitioners' wrong choice of remedy, the petition must fail.
The Petition
The petitioners are now before this Court praying for a reversal of the CA
judgment on the following grounds:
1. The CA committed a reversible error in disregarding the Omnibus
Implementing Rules and Regulations (IRR) of the Migrant Workers and Overseas
Filipinos Act of 1995, 1 2 as amended by R.A. No. 10022, 1 3 mandating that "For OFWs
with collective bargaining agreements, the case shall be submitted for voluntary
arbitration in accordance with Articles 261 and 262 of the Labor Code." 1 4
The petitioners bewail the CA's rejection of the above argument for the reason
that the remedy they pursued was inconsistent with the 2005 Revised Rules of
Procedure of the NLRC. Citing Municipality of Sta. Fe v. Municipality of Aritao , 1 5 they
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 argue that the "dismissal of a case for lack of jurisdiction may be raised at any stage of
the proceedings."
In any event, they posit that the IRR of R.A. No. 10022 is in the nature of an
adjective or procedural law which must be given retroactive effect and which should
have been applied by the CA in resolving the present case.
2. The CA committed a reversible error in ruling that the AMOSUP-VELA CBA
does not contain unequivocal wordings for the mandatory referral of Fernandez's claim
to voluntary arbitration.
The petitioners assail the CA's failure to explain the basis "for ruling that no
explicit or unequivocal wordings appeared on said CBA for the mandatory referral of
the disability claim to arbitration." 1 6 They surmise that the CA construed the phrase
"either party m ay refer the case to a MANDATORY ARBITRATION COMMITTEE" under
Section 14.7 (a) of the CBA as merely permissive and not mandatory because of the
use of the word "may ." They contend that notwithstanding the use of the word "may ,"
the parties unequivocally and unmistakably agreed to refer the present disability claim
to mandatory arbitration.
3. The CA committed a reversible error in disregarding the NLRC
memorandum prescribing the appropriate action for complaints and/or proceedings
which were initially processed in the grievance machinery of existing CBAs. In their
motion for reconsideration with the CA, the petitioners manifested that the appellate
court's assailed decision had been modified by the following directive of the NLRC: cITAaD

As one of the measures being adopted by our agency in response to the

Platform and Policy Pronouncements on Labor Employment, you are hereby
directed to immediately dismiss the complaint and/or terminate proceedings
which were initially processed in the grievance machinery as provided in the
existing Collective Bargaining Agreements (CBAs) between parties, through the
issuance of an Order of Dismissal and referral of the disputes to the National
Conciliation Mediation Board (NCMB) for voluntary arbitration.
FOR STRICT COMPLIANCE. 1 7
4. On July 31, 2012, 1 8 the petitioners manifested before the Court that on
June 13, 2012, the Court's Second Division issued a ruling in G.R. No. 172642, entitled
Estate of Nelson R. Dulay, represented by his wife Merridy Jane P. Dulay v. Aboitiz
Jebsen Maritime, Inc., and General Charterers, Inc., upholding the jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators over a seafarer's money claim.
They implore the Court that since the factual backdrop and the issues involved in the
case are similar to the present dispute, the Dulay ruling should be applied to this case
and which should accordingly be referred to the National Conciliation and Mediation
Board for voluntary arbitration.
The Case for Fernandez
In compliance with the Court's directive, 1 9 Fernandez led on October 7, 2011
his Comment 2 0 (on the Petition) with the plea that the petition be dismissed for lack of
merit. Fernandez presents the following arguments:
1. The IRR of the Migrant Workers and Overseas Filipinos Act of 1995 (R.A.
No. 8042), as amended by R.A. No. 10022, 2 1 did not divest the labor arbiters of their
original and exclusive jurisdiction over money claims arising from employment, for
nowhere in said IRR is there such a divestment.
2. The voluntary arbitrators do not have jurisdiction over the present
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 controversy as can be deduced from Articles 261 and 262 of the Labor Code.
Fernandez explains that his complaint does not involve any "unresolved grievances
arising from the interpretation or implementation of the Collective Bargaining
Agreement [nor] from the interpretation or enforcement of company personnel
policies[.]" 2 2 As he never referred his claim to the grievance machinery, there is no
"unresolved grievance" to speak of. His complaint involves a claim for compensation
and damages which is outside the voluntary arbitrator's jurisdiction under Article 261.
Further, only disputes involving the union and the company shall be referred to the
grievance machinery and to voluntary arbitration, as the Court held in Sanyo Philippines
Workers Union-PSSLU v. Cañizares 2 3 and Silva v. NLRC n. 2 4
3. The CA correctly ruled that no unequivocal wordings appear in the CBA for
the mandatory referral of Fernandez's disability claim to a voluntary arbitrator.
The Court's Ruling
We rst rule on the procedural question arising from the labor arbiter's denial of
the petitioners' motion to dismiss the complaint. On this point, Section 6, Rule V of The
2005 Revised Rules of Procedure of the NLRC provides: HTASIa

On or before the date set for the mandatory conciliation and mediation
conference, the respondent may le a motion to dismiss. Any motion to dismiss
on the ground of lack of jurisdiction, improper venue, or that the cause of action
is barred by prior judgment, prescription, or forum shopping, shall be
immediately resolved by the Labor Arbiter through a written order. An order
denying the motion to dismiss, or suspending its resolution until the nal
determination of the case, is not appealable. [underscoring ours]
Corollarily, Section 10, Rule VI of the same Rules states:
Frivolous or Dilatory Appeals. — No appeal from an interlocutory order
shall be entertained. To discourage frivolous or dilatory appeals, including those
taken from interlocutory orders, the Commission may censure or cite in
contempt the erring parties and their counsels, or subject them to reasonable
fine or penalty.
In Indiana Aerospace University v. Comm. on Higher Educ. , 2 5 the Court declared
that "[a]n order denying a motion to dismiss is interlocutory"; the proper remedy in this
situation is to appeal after a decision has been rendered. Clearly, the denial of the
petitioners' motion to dismiss in the present case was an interlocutory order and,
therefore, not subject to appeal as the CA aptly noted.
The petition's procedural lapse notwithstanding, the CA proceeded to review the
merits of the case and adjudged the petition unmeritorious. We nd the CA's action in
order. The Labor Code itself declares that "it is the spirit and intention of this Code that
the Commission and its members and the Labor Arbiters shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively and
without regard to technicalities of law or procedure, all in the interest of due process."
26

We now address the focal question of who has the original and exclusive
jurisdiction over Fernandez's disability claim — the labor arbiter under Section 10 of R.A.
No. 8042, as amended, or the voluntary arbitration mechanism as prescribed in the
parties' CBA and the POEA-SEC?
The answer lies in the State's labor relations policy laid down in the Constitution
and eshed out in the enabling statute, the Labor Code. Section 3, Article XIII (on Social
Justice and Human Rights) of the Constitution declares:
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 xxx xxx xxx
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.
Article 260 of the Labor Code (Grievance machinery and voluntary arbitration)
states:
The parties to a Collective Bargaining Agreement shall include therein
provisions that will ensure the mutual observance of its terms and conditions.
They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective
Bargaining Agreement and those arising from the interpretation or enforcement
of company personnel policies.
Article 261 of the Labor Code (Jurisdiction of Voluntary Arbitrators or panel of
Voluntary Arbitrators), on the other hand, reads in part:
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company
personnel policies[.]
Article 262 of the Labor Code (Jurisdiction over other labor disputes) declares:
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.
Further, the POEA-SEC, which governs the employment of Filipino seafarers,
provides in its Section 29 on Dispute Settlement Procedures:
In cases of claims and disputes arising from this employment,
the parties covered by a collective bargaining agreement shall submit
the claim or dispute to the original and exclusive jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators . If the parties are
not covered by a collective bargaining agreement, the parties may at their option
submit the claim or dispute to either the original and exclusive jurisdiction of the
National Labor Relations Commission (NLRC), pursuant to Republic Act (RA)
8042 otherwise known as the Migrant Workers and Overseas Filipinos Act of
1995 or to the original and exclusive jurisdiction of the voluntary arbitrator or
panel of voluntary arbitrators. If there is no provision as to the voluntary
arbitrators to be appointed by the parties, the same shall be appointed from the
accredited voluntary arbitrators of the National Conciliation and Mediation
Board of the Department of Labor and Employment. [emphasis ours] SEIcHa

We find merit in the petition.

Under the above-quoted constitutional and legal provisions, the voluntary
arbitrator or panel of voluntary arbitrators has original and exclusive jurisdiction over
Fernandez's disability claim. There is no dispute that the claim arose out of Fernandez's
employment with the petitioners and that their relationship is covered by a CBA — the
AMOSUP/TCC or the AMOSUP-VELA CBA. The CBA provides for a grievance procedure
for the resolution of grievances or disputes which occur during the employment
relationship and, like the grievance machinery created under Article 261 of the Labor
Code, it is a two-tiered mechanism, with voluntary arbitration as the last step.
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 Contrary to the CA's reading of the CBA's Article 14, there is unequivocal or
unmistakable language in the agreement which mandatorily requires the parties to
submit to the grievance procedure any dispute or cause of action they may have
against each other. The relevant provisions of the CBA state:
14.6 Any Dispute, grievance, or misunderstanding concerning any
ruling, practice, wages or working conditions in the COMPANY or
any breach of the Contract of Employment, or any dispute arising
from the meaning or application of the provisions of this
Agreement or a claim of violation thereof or any complaint or
cause of action that any such Seaman may have against the
COMPANY, as well as complaints which the COMPANY may have
against such Seaman shall be brought to the attention of the
GRIEVANCE RESOLUTION COMMITTEE before either party takes
any action, legal or otherwise. Bringing such a dispute to the
Grievance Resolution Committee shall be unwaivable prerequisite
or condition precedent for bringing any action, legal or otherwise,
in any forum and the failure to so refer the dispute shall bar any
and all legal or other actions.

14.7a) If by reason of the nature of the Dispute, the parties are

unable to amicably settle the dispute, either party may refer the
case to a MANDATORY ARBITRATION COMMITTEE . The
MANDATORY ARBITRATION COMMITTEE shall consist of one
representative to be designated by the UNION, and one representative to be
designated by the COMPANY and a third member who shall act as
Chairman and shall be nominated by mutual choice of the parties. . . .
h) Referral of all unresolved disputes from the Grievance Resolution
Committee to the Mandatory Arbitration Committee shall be
unwaivable prerequisite or condition precedent for bringing any
action, claim, or cause of action, legal or otherwise, before any
court, tribunal, or panel in any jurisdiction. The failure by a party
or seaman to so refer and avail oneself to the dispute resolution
mechanism contained in this action shall bar any legal or other
action. All parties expressly agree that the orderly resolution of
all claims in the prescribed manner served the interests of
reaching settlements or claims in an orderly and uniform manner,
as well as preserving peaceful and harmonious labor relations
between seaman, the Union, and the Company. 2 7 (emphases ours)

What might have caused the CA to miss the clear intent of the parties in prescribing a
grievance procedure in their CBA is, as the petitioners' have intimated, the use of the
auxiliary verb "may " in Article 14.7 (a) of the CBA which, to reiterate, provides that "[i]f
by reason of the nature of the Dispute, the parties are unable to amicably
settle the dispute, either party may refer the case to a MANDATORY
ARBITRATION COMMITTEE ." 2 8
While the CA did not qualify its reading of the subject provision of the CBA, it is
reasonable to conclude that it viewed as optional the referral of a dispute to the
mandatory arbitration committee when the parties are unable to amicably settle the
dispute.
We nd this a strained interpretation of the CBA provision. The CA read the
provision separately, or in isolation of the other sections of Article 14, especially 14.7
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 (h), which, in clear, explicit language, states that the "referral of all unresolved
disputes from the Grievance Resolution Committee to the Mandatory
Arbitration Committee shall be unwaivable prerequisite or condition
precedent for bringing any action, claim, or cause of action, legal or
otherwise, before any court, tribunal, or panel in any jurisdiction" 2 9 and that
the failure by a party or seaman to so refer the dispute to the prescribed
dispute resolution mechanism shall bar any legal or other action. AcaEDC

Read in its entirety, the CBA's Article 14 (Grievance Procedure) unmistakably

re ects the parties' agreement to submit any unresolved dispute at the grievance
resolution stage to mandatory voluntary arbitration under Article 14.7 (h) of the CBA.
And, it should be added that, in compliance with Section 29 of the POEA-SEC which
requires that in cases of claims and disputes arising from a seafarer's employment, the
parties covered by a CBA shall submit the claim or dispute to the original and exclusive
jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators.
Since the parties used unequivocal language in their CBA for the submission of
their disputes to voluntary arbitration (a condition laid down in Vivero for the
recognition of the submission to voluntary arbitration of matters within the original and
exclusive jurisdiction of labor arbiters), we nd that the CA committed a reversible error
in its ruling; it disregarded the clear mandate of the CBA between the parties and the
POEA-SEC for submission of the present dispute to voluntary arbitration.
Consistent with this nding, Fernandez's contention — that his complaint for
disability bene ts is a money claim that falls within the original and exclusive
jurisdiction of the labor arbiter under Section 10 of R.A. No. 8042 — is untenable. We
likewise reject his argument that he never referred his claim to the grievance machinery
(so that no unresolved grievance exists as required under Article 261 of the Labor
Code), and that the parties to the case are not the union and the employer. 3 0 Needless
to state, no such distinction exists in the parties' CBA and the POEA-SEC.IATHaS

It bears stressing at this point that we are upholding the jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators over the present dispute, not only
because of the clear language of the parties' CBA on the matter; more importantly, we
so uphold the voluntary arbitrator's jurisdiction, in recognition of the State's express
preference for voluntary modes of dispute settlement, such as conciliation and
voluntary arbitration as expressed in the Constitution, the law and the rules.
In this light, we see no need to further consider the petitioners' submission
regarding the IRR of the Migrant Workers and Overseas Filipinos Act of 1995, as
amended by R.A. No. 10022, except to note that the IRR lends further support to our
ruling.
In closing, we quote with approval a most recent Court pronouncement on the
same issue, thus —
It is settled that when the parties have validly agreed on a
procedure for resolving grievances and to submit a dispute to
voluntary arbitration then that procedure should be strictly observed.
3 1 (emphasis ours)

WHEREFORE , premises considered, the petition is GRANTED . The assailed

decision and resolution of the Court of Appeals are SET ASIDE . Teodorico Fernandez's
disability claim is REFERRED to the Grievance Resolution Committee of the parties'
collective bargaining agreement and/or the Mandatory Arbitration Committee, if
warranted.
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 SO ORDERED . aIcDCT

Carpio, Del Castillo, Perez and Perlas-Bernabe, JJ., concur.

Footnotes

1.Rollo, pp. 33-52; filed pursuant to Rule 45 of the Rules of Court.

2.Id. at 61-73; penned by Associate Justice Mari or P. Punzalan-Castillo, and concurred in by
Associates Justices Josefina Guevara-Salonga and Franchito N. Diamante.

3.Id. at 75-77.
4.CA rollo, pp. 58-66.
5.Id. at 102-111.
6.Id. at 56; Order issued by Labor Arbiter Rioflorido.

7.Supra note 2.
8.The 2005 Revised Rules of Procedure of the NLRC, Rule VI, Section 10.
9.LABOR CODE, Article 262.
10.398 Phil. 158, 169 (2000).
11.Rollo, pp. 90-138; Department Order No. 4, s. of 2000; and the Amended Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going
Vessels.
12.R.A. No. 8042.
13.An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and
Overseas Filipinos Act of 1995, As Amended, Further Improving the Standard of
Protection and Promotion of the Welfare of Migrant Workers, Their Families and
Overseas Filipinos in Distress, and for Other Purposes.

14.Rollo, p. 109.
15.G.R. No. 140474, September 21, 2007, 533 SCRA 586, 599.
16.Supra note 1, at 47.
17.Id. at 51.

18.Rollo, pp. 185-190.

19.Rollo, pp. 167-168; Resolution dated August 15, 2011.
20.Id. at 173-183.
21.Supra note 13.
22.Rollo, p. 175.

23.G.R. No. 101619, July 8, 1992, 211 SCRA 361, 373.

24.G.R. No. 110226, June 19, 1997, 274 SCRA 159, 170.
25.408 Phil. 483, 501 (2001); see also Locsin v. Nissan Lease Phils., Inc., G.R. No. 185567,
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 October 20, 2010, 634 SCRA 392, 403-404.
26.LABOR CODE, Article 221.
27.Rollo, pp. 159-160.

28.Id. at 160; emphasis ours.

29.Ibid.; emphasis ours.
30.Sanyo Philippines Workers Union-PSSLU v. Cañizares, supra note 23, at 373; and Silva v. CA
n , supra note 24 at 170.

31.Estate of Nelson R. Dulay, represented by his wife Merridy Jane P. Dulay v. Aboitiz Jebsen
Maritime, Inc. and General Charterer, Inc., G.R. No. 172642, June 13, 2012, citing Vivero v.
Court of Appeals, supra note 10.
n Note from the Publisher: Written as "Silva v. CA" in the original document.

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