Ace Navigation Co., Inc. vs. Fernandez

A CBA-covered seafarer's disability claim falls within the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators, not the labor arbiter, where the parties' CBA contains unequivocal language making referral to the grievance machinery and mandatory arbitration an unwaivable prerequisite or condition precedent to any legal action. The State's express preference for voluntary modes of dispute settlement, embodied in the Constitution, the Labor Code, and the POEA-SEC, reinforces this jurisdictional allocation.

Teodorico Fernandez was a seaman employed by Ace Navigation Co., Inc., Vela International Marine Ltd., and/or Rodolfo Pamintuan, and his employment relationship with the petitioners was covered by a collective bargaining agreement cited variously as the AMOSUP-TCC or the AMOSUP-VELA CBA. The employment of Filipino seafarers is governed by the POEA Standard Employment Contract (POEA-SEC), whose Section 29 prescribes the dispute settlement procedure for claims and disputes arising from such employment. Article 14 of the CBA established a two-tiered grievance procedure consisting of a Grievance Resolution Committee and a Mandatory Arbitration Committee, with voluntary arbitration as the last step. The Constitution and the Labor Code supply the broader policy backdrop, the State having committed itself to the preferential use of voluntary modes in settling labor disputes.

Teodorico Fernandez was a seaman employed by Ace Navigation Co., Inc., Vela International Marine Ltd., and/or Rodolfo Pamintuan. His employment was governed by the POEA Standard Employment Contract, and his relationship with the petitioners was covered by a collective bargaining agreement cited variously as the AMOSUP-TCC or the AMOSUP-VELA CBA. Article 14 of that CBA established a grievance procedure — a two-tiered mechanism composed of a Grievance Resolution Committee and a Mandatory Arbitration Committee — with voluntary arbitration as the last step.

On October 9, 2008, Fernandez, assisted by his wife Glenita Fernandez, filed with the National Labor Relations Commission a complaint for disability benefits, with a prayer for moral and exemplary damages plus attorney's fees, against the petitioners.

The petitioners moved to dismiss the complaint, contending that the labor arbiter had no jurisdiction over the dispute. They argued that exclusive original jurisdiction rested with the voluntary arbitrator or panel of voluntary arbitrators under Section 29 of the POEA-SEC, since the parties were covered by the CBA, and that under Section 14 of the CBA a dispute between a seafarer and the company had to be settled through the grievance machinery and mandatory voluntary arbitration. Fernandez opposed the motion, arguing that because his complaint involved a money claim, original and exclusive jurisdiction over the case was vested in the labor arbiter.

It was undisputed that the claim arose out of Fernandez's employment with the petitioners and that their relationship was covered by the CBA. The parties' disagreement turned on which forum — the labor arbiter or the voluntary arbitration mechanism — had original and exclusive jurisdiction over the disability claim.

• Omnibus IRR of R.A. No. 10022: Petitioners argued that the Court of Appeals committed reversible error in disregarding the Omnibus Implementing Rules and Regulations of the Migrant Workers and Overseas Filipinos Act of 1995, as amended by R.A. No. 10022, which mandates 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; they contended that the IRR is adjective or procedural in nature and must be given retroactive effect.
• Wrong Choice of Remedy: Petitioners maintained that the dismissal of a case for lack of jurisdiction may be raised at any stage of the proceedings, citing Municipality of Sta. Fe vs. Municipality of Aritao, and bewailed the CA's rejection of their argument on the ground that the remedy they pursued was inconsistent with the 2005 Revised Rules of Procedure of the NLRC.
• Unequivocal CBA Language: Petitioners assailed the CA's failure to explain its basis for ruling that no explicit or unequivocal wordings appeared in the CBA for the mandatory referral of the disability claim to arbitration, surmising that the CA construed the phrase "either party may refer the case to a MANDATORY ARBITRATION COMMITTEE" under Section 14.7(a) as merely permissive because of the word "may," and contending that notwithstanding such word, the parties unequivocally and unmistakably agreed to refer the claim to mandatory arbitration.
• NLRC Memorandum: Petitioners argued that the CA disregarded the NLRC memorandum directing the immediate dismissal of complaints initially processed in the grievance machinery of existing CBAs and the referral of disputes to the National Conciliation and Mediation Board for voluntary arbitration.
• Dulay Ruling: Petitioners manifested that the Court's Second Division had issued a ruling in Estate of Nelson R. Dulay vs. Aboitiz Jebsen Maritime, Inc., upholding the jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators over a seafarer's money claim, and implored that the Dulay ruling be applied to the present dispute.

• No Divestment of Labor Arbiter's Jurisdiction: Fernandez argued that the IRR of the Migrant Workers and Overseas Filipinos Act of 1995, as amended by R.A. No. 10022, did not divest the labor arbiters of their original and exclusive jurisdiction over money claims arising from employment, for nowhere in the IRR is there such a divestment.
• No Jurisdiction of Voluntary Arbitrators: Fernandez maintained that the voluntary arbitrators do not have jurisdiction over the controversy, as deduced from Articles 261 and 262 of the Labor Code, because his complaint did not involve any unresolved grievance arising from the interpretation or implementation of the CBA or from the interpretation or enforcement of company personnel policies; he never referred his claim to the grievance machinery, so there was no unresolved grievance to speak of, and his claim for compensation and damages fell outside the voluntary arbitrator's jurisdiction under Article 261.
• Union-Company Disputes Only: Fernandez contended that only disputes involving the union and the company shall be referred to the grievance machinery and to voluntary arbitration, as held in Sanyo Philippines Workers Union-PSSLU vs. Cañizares and Silva vs. CA.
• No Unequivocal CBA Language: Fernandez argued that the CA correctly ruled that no unequivocal wordings appear in the CBA for the mandatory referral of his disability claim to a voluntary arbitrator.

• Propriety of the Remedy: Whether an order denying a motion to dismiss on the ground of lack of jurisdiction is appealable.
• Jurisdiction over the Disability Claim: Whether the labor arbiter or the voluntary arbitrator or panel of voluntary arbitrators has original and exclusive jurisdiction over a CBA-covered seafarer's disability claim.
• Unequivocal Submission to Voluntary Arbitration: Whether the CBA contains unequivocal language mandating referral of the dispute to the grievance machinery and voluntary arbitration.

• Propriety of the Remedy: No. An order denying a motion to dismiss is interlocutory and, under Section 6, Rule V and Section 10, Rule VI of the 2005 Revised Rules of Procedure of the NLRC, is not appealable; the proper remedy is to appeal after a decision on the merits has been rendered.
• Jurisdiction over the Disability Claim: The voluntary arbitrator or panel of voluntary arbitrators. Under Section 29 of the POEA-SEC and Articles 260 to 262 of the Labor Code, a CBA-covered seafarer's claim must be submitted to the voluntary arbitrator's original and exclusive jurisdiction, consistent with the State's preference for voluntary modes of dispute settlement.
• Unequivocal Submission to Voluntary Arbitration: Yes. Article 14 of the CBA, read in its entirety, contains unequivocal language — particularly Article 14.7(h) — making referral to the grievance machinery and mandatory arbitration an unwaivable prerequisite or condition precedent to any legal action.

• Propriety of the Remedy: Section 6, Rule V of the 2005 Revised Rules of Procedure of the NLRC provides that a motion to dismiss on the ground of lack of jurisdiction shall be immediately resolved by the Labor Arbiter through a written order, and that an order denying the motion to dismiss is not appealable. Section 10, Rule VI of the same Rules states that no appeal from an interlocutory order shall be entertained. Indiana Aerospace University vs. Comm. on Higher Educ. declared that an order denying a motion to dismiss is interlocutory and that the proper remedy is to appeal after a decision has been rendered. The denial of the petitioners' motion to dismiss was therefore an interlocutory order not subject to appeal, as the CA aptly noted. The petition's procedural lapse notwithstanding, the CA proceeded to review the merits and adjudged the petition unmeritorious; the Court found this action in order, since Article 221 of the Labor Code declares that it is the spirit and intention of the Code that the Commission, 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.
• Jurisdiction over the Disability Claim: The answer lies in the State's labor relations policy laid down in the Constitution and fleshed out in the Labor Code. Section 3, Article XIII of the Constitution declares that 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 requires parties to a CBA to establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their CBA and from the interpretation or enforcement of company personnel policies. Article 261 vests in the voluntary arbitrator or panel of voluntary arbitrators original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA and those arising from the interpretation or enforcement of company personnel policies, while Article 262 provides that, upon agreement of the parties, the voluntary arbitrator shall also hear and decide all other labor disputes, including unfair labor practices and bargaining deadlocks. Section 29 of the POEA-SEC provides 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. It was undisputed that Fernandez's claim arose out of his employment with the petitioners and that their relationship was covered by a CBA, which provided a grievance procedure that, like the grievance machinery under Article 261, is a two-tiered mechanism with voluntary arbitration as the last step. Under these constitutional and legal provisions, the voluntary arbitrator or panel of voluntary arbitrators has original and exclusive jurisdiction over Fernandez's disability claim. Fernandez's contention that his complaint for disability benefits is a money claim falling within the labor arbiter's original and exclusive jurisdiction under Section 10 of R.A. No. 8042 was untenable, and his argument that he never referred his claim to the grievance machinery — so that no unresolved grievance existed under Article 261 — and that the parties were not the union and the employer was likewise rejected, since no such distinction exists in the parties' CBA and the POEA-SEC. The Court upheld the voluntary arbitrator's jurisdiction not only because of the clear language of the CBA but, more importantly, 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, there was 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 the ruling.
• Unequivocal Submission to Voluntary Arbitration: Contrary to the CA's reading of Article 14 of the CBA, 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. Article 14.6 provides that any dispute, grievance, or misunderstanding concerning any ruling, practice, wages or working conditions, or any breach of the contract of employment, or any dispute arising from the meaning or application of the agreement or a claim of violation thereof, or any complaint or cause of action that any seaman may have against the company, as well as complaints which the company may have against the seaman, shall be brought to the attention of the Grievance Resolution Committee before either party takes any action, legal or otherwise, and that bringing such a dispute to the Committee shall be an unwaivable prerequisite or condition precedent for bringing any action in any forum, the failure to so refer the dispute barring any and all legal or other actions. Article 14.7(h) states that referral of all unresolved disputes from the Grievance Resolution Committee to the Mandatory Arbitration Committee shall be an 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, and that the failure by a party or seaman to so refer and avail oneself of the dispute resolution mechanism shall bar any legal or other action. What might have caused the CA to miss the clear intent of the parties was the use of the auxiliary verb "may" in Article 14.7(a), which provides that if by reason of the nature of the dispute the parties are unable to amicably settle it, either party may refer the case to a Mandatory Arbitration Committee. The Court found the CA's reading a strained interpretation, because the CA read the provision separately, or in isolation from the other sections of Article 14, especially Article 14.7(h). Read in its entirety, Article 14 unmistakably reflects the parties' agreement to submit any unresolved dispute at the grievance resolution stage to mandatory voluntary arbitration under Article 14.7(h), in compliance with Section 29 of the POEA-SEC. Since the parties used unequivocal language in their CBA for the submission of their disputes to voluntary arbitration — the 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 — the CA committed a reversible error in disregarding the clear mandate of the CBA and the POEA-SEC for submission of the present dispute to voluntary arbitration.

• Preferential Use of Voluntary Modes of Dispute Settlement — The State promotes 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 (Section 3, Article XIII, 1987 Constitution). The Court applied this policy as the foundational reason for upholding the voluntary arbitrator's jurisdiction, stressing that it upheld such jurisdiction not only because of the clear language of the CBA but, more importantly, in recognition of the State's express preference for voluntary modes of dispute settlement as expressed in the Constitution, the law, and the rules.
• Jurisdiction of Voluntary Arbitrators over CBA-Covered Seafarers' Claims — Under Section 29 of the POEA-SEC, 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. This is reinforced by Article 261 of the Labor Code, which vests in the voluntary arbitrator original and exclusive jurisdiction over all unresolved grievances arising from the interpretation or implementation of the CBA and from the interpretation or enforcement of company personnel policies, and by Article 262, which allows the voluntary arbitrator, upon agreement of the parties, to hear and decide all other labor disputes. The Court held that a CBA-covered seafarer's disability claim falls within this jurisdiction, not that of the labor arbiter under Section 10 of R.A. No. 8042.
• Unequivocal Submission to Voluntary Arbitration — Parties may submit to voluntary arbitration matters falling within the original and exclusive jurisdiction of the labor arbiters under Article 217 of the Labor Code, but the submission agreement must be expressed in unequivocal language. The Court found such unequivocal language in Article 14 of the CBA, particularly Article 14.7(h), which made referral to the grievance machinery and mandatory arbitration an unwaivable prerequisite or condition precedent to any legal action; the use of the word "may" in Article 14.7(a) did not render the referral optional when the provision was read in its entirety with Article 14.7(h).
• Interlocutory Orders Not Appealable — An order denying a motion to dismiss is interlocutory and, under Section 6, Rule V and Section 10, Rule VI of the 2005 Revised Rules of Procedure of the NLRC, is not subject to appeal; the proper remedy is to appeal after a decision on the merits has been rendered. The Court nonetheless sustained the CA's review of the merits despite this procedural lapse, invoking Article 221 of the Labor Code, which directs that the Commission, 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.

• "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." — This passage states the ratio decidendi on the focal jurisdictional question, anchoring the voluntary arbitrator's jurisdiction in the Constitution, the Labor Code, and the POEA-SEC.
• "Read in its entirety, the CBA's Article 14 (Grievance Procedure) unmistakably reflects 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." — This passage supplies the Court's construction of the CBA, rejecting the CA's isolated reading of Article 14.7(a) and its reliance on the word "may."
• "We find 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(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' 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." — This passage defines the interpretive error committed by the CA and articulates the controlling CBA language that made referral mandatory rather than permissive.
• "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." — Quoted with approval from the Court's recent pronouncement, this passage states the general rule requiring strict observance of an agreed grievance and voluntary arbitration procedure.

• Vivero vs. Court of Appeals, 398 Phil. 158, 169 (2000) — Controlling precedent relied upon by the Court; it recognized that parties may submit to voluntary arbitration matters falling within the original and exclusive jurisdiction of the labor arbiters under Article 217 of the Labor Code, provided the submission agreement is expressed in unequivocal language. The Court applied this condition in finding that the CBA's Article 14 contained the requisite unequivocal language.
• Indiana Aerospace University vs. Comm. on Higher Educ., 408 Phil. 483, 501 (2001) — Followed; it declared that an order denying a motion to dismiss is interlocutory and that the proper remedy is to appeal after a decision has been rendered, supporting the holding that the denial of the petitioners' motion to dismiss was not appealable.
• Estate of Nelson R. Dulay, represented by his wife Merridy Jane P. Dulay vs. Aboitiz Jebsen Maritime, Inc. and General Charterer, Inc., G.R. No. 172642, June 13, 2012 — Quoted with approval; it upheld the jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators over a seafarer's money claim, and the Court cited it for the rule that an agreed grievance and voluntary arbitration procedure should be strictly observed.
• Sanyo Philippines Workers Union-PSSLU vs. Cañizares, G.R. No. 101619, July 8, 1992, 211 SCRA 361, 373 — Cited by Fernandez for the proposition that only disputes involving the union and the company shall be referred to the grievance machinery and voluntary arbitration; the Court rejected this argument, noting that no such distinction exists in the parties' CBA and the POEA-SEC.
• Silva vs. CA, G.R. No. 110226, June 19, 1997, 274 SCRA 159, 170 — Cited by Fernandez to the same effect as Sanyo and likewise rejected by the Court.
• Municipality of Sta. Fe vs. Municipality of Aritao, G.R. No. 140474, September 21, 2007, 533 SCRA 586, 599 — Cited by the petitioners for the proposition that the dismissal of a case for lack of jurisdiction may be raised at any stage of the proceedings.

• Section 3, Article XIII, 1987 Constitution — Declares that 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. The Court invoked this as the constitutional foundation for upholding the voluntary arbitrator's jurisdiction.
• Article 260, Labor Code — Requires parties to a CBA to include provisions ensuring mutual observance of its terms and conditions and to establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their CBA and from the interpretation or enforcement of company personnel policies. The Court cited it to describe the grievance machinery that the CBA had established.
• Article 261, Labor Code — Vests in the voluntary arbitrator or panel of voluntary arbitrators original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA and those arising from the interpretation or enforcement of company personnel policies. The Court relied on it, together with the POEA-SEC, to locate jurisdiction over the disability claim.
• Article 262, Labor Code — Provides that, upon agreement of the parties, the voluntary arbitrator or panel of voluntary arbitrators shall also hear and decide all other labor disputes, including unfair labor practices and bargaining deadlocks. The Court cited it as part of the statutory framework supporting the voluntary arbitrator's jurisdiction.
• Article 221, Labor Code — Declares that it is the spirit and intention of the Code that the Commission, 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. The Court invoked it to justify the CA's review of the merits despite the petitioners' procedural lapse.
• Section 10, R.A. No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) — Vests in the labor arbiter 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. The labor arbiter, the NLRC, and the CA relied on it, but the Court held it did not confer jurisdiction over the present CBA-covered seafarer's claim.
• Section 29, POEA-SEC (Department Order No. 4, s. of 2000; Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels) — Provides 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. The Court applied it as a direct source of the voluntary arbitrator's jurisdiction.
• Section 6, Rule V and Section 10, Rule VI, 2005 Revised Rules of Procedure of the NLRC — Section 6, Rule V provides that a motion to dismiss on the ground of lack of jurisdiction shall be immediately resolved by the Labor Arbiter through a written order, and that an order denying the motion to dismiss is not appealable; Section 10, Rule VI provides that no appeal from an interlocutory order shall be entertained. The Court applied both to hold that the denial of the petitioners' motion to dismiss was not appealable.
• R.A. No. 10022 — An Act amending R.A. No. 8042, further improving the standard of protection and promotion of the welfare of migrant workers, their families, and overseas Filipinos in distress. The petitioners invoked its Omnibus IRR; the Court found no need to consider the submission further, except to note that the IRR lends further support to its ruling.

• Antonio T. Carpio (Chairperson)
• Mariano C. Del Castillo
• Jose Portugal Perez
• Estela M. Perlas-Bernabe