G.R. No. 102132. March 19, 1993. DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN V.

ABARQUEZ, in his capacity as an accredited Voluntary Arbitrator and THE ASSOCIATION OF TRADE UNIONS (ATU-TUCP), respondents. ROMERO, J: In this petition for certiorari, petitioner Davao Integrated Port Services Corporation seeks to reverse the Award 1 issued on September 10, 1991 by respondent Ruben V. Abarquez, in his capacity as Voluntary Arbitrator of the National Conciliation and Mediation Board, Regional Arbitration Branch XI in Davao City in Case No. AC-211-BX1-10-003-91 which directed petitioner to grant and extend the privilege of commutation of the unenjoyed portion of the sick leave with pay benefits to its intermittent field workers who are members of the regular labor pool and the present regular extra pool in accordance with the Collective Bargaining Agreement (CBA) executed between petitioner and private respondent Association of Trade Unions (ATU-TUCP), from the time it was discontinued and henceforth. The facts are as follows: Petitioner Davao Integrated Port Stevedoring Services (petitioner-company) and private respondent ATU-TUCP (Union), the exclusive collective bargaining agent of the rank and file workers of petitioner-company, entered into a collective bargaining agreement (CBA) on October 16, 1985 which, under Sections 1 and 3, Article VIII thereof, provide for sick leave with pay benefits each year to its employees who have rendered at least one (1) year of service with the company, thus: "ARTICLE VIII Section 1. Sick Leaves The Company agrees to grant 15 days sick leave with pay each year to every regular non-intermittent worker who already rendered at least one year of service with the company. However, such sick leave can only be enjoyed upon certification by a company designated physician, and if the same is not enjoyed within one year period of the current year, any unenjoyed portion thereof, shall be converted to cash and shall be paid at the end of the said one year period. And provided however, that only those regular workers of the company whose work are not intermittent, are entitled to the herein sick leave privilege. xxx xxx xxx Section 3. All intermittent field workers of the company who are members of the Regular Labor Pool shall be entitled to vacation and sick leaves per year of service with pay under the following schedule based on the number of hours rendered including overtime, to wit:

Hours of Service Per Vacation Sick Leave Calendar Year Leave Less than 750 NII NII 751 825 6 days 6 days 826 900 7 7 901 925 8 8 926 1,050 9 9 1,051 1,125 10 10 1,126 1,200 11 11 1,201 1,275 12 12 1,276 1,350 13 13 1,351 1,425 14 14 1,426 1,500 15 15 The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above provided Sections 1 and 2 hereof, respectively." Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits were reproduced under Sections 1 and 3, Article VIII of the new CBA, but the coverage of the said benefits was expanded to include the "present Regular Extra Labor Pool as of the signing of this Agreement." Section 3, Article VIII, as revised, provides, thus: "Section 3. All intermittent field workers of the company who are members of the Regular Labor Pool and present Regular Extra Labor Pool as of the signing of this agreement shall be entitled to vacation and sick leaves per year of service with pay under the following schedule based on the number of hours rendered including overtime, to wit: Hours of Service Per Vacation Sick Leave Calendar Year Leave Less than 750 NII NII 751 825 6 days 6 days 826 900 7 7 901 925 8 8 926 1,050 9 9 1,051 1,125 10 10 1,126 1,200 11 11 1,201 1,275 12 12 1,276 1,350 13 13 1,351 1,425 14 14 1,426 1,500 15 15 The conditions for the availment of the herein vacation and sick leaves shall be in accordance with the above provided Sections 1 and 2 hereof, respectively." During the effectivity of the CBA of October 16, 1985 until three (3) months after its renewal on April 15, 1989, or until July 1989 (a total of three (3) years and

nine (9) months), all the field workers of petitioner who are members of the regular labor pool and the present regular extra labor pool who had rendered at least 750 hours up to 1,500 hours were extended sick leave with pay benefits. Any unenjoyed portion thereof at the end of the current year was converted to cash and paid at the end of the said one-year period pursuant to Sections 1 and 3, Article VIII of the CBA. The number of days of their sick leave per year depends on the number of hours of service per calendar year in accordance with the schedule provided in Section 3, Article VIII of the CBA. The commutation of the unenjoyed portion of the sick leave with pay benefits of the intermittent workers or its conversion to cash was, however, discontinued or withdrawn when petitioner-company under a new assistant manager, Mr. Benjamin Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the latter's resignation in June 1989), stopped the payment of its cash equivalent on the ground that they are not entitled to the said benefits under Sections 1 and 3 of the 1989 CBA. The Union objected to the said discontinuance of commutation or conversion to cash of the unenjoyed sick leave with pay benefits of petitioner's intermittent workers contending that it is a deviation from the true intent of the parties that negotiated the CBA; that it would violate the principle in labor laws that benefits already extended shall not be taken away and that it would result in discrimination between the non-intermittent and the intermittent workers of the petitioner-company. Upon failure of the parties to amicably settle the issue on the interpretation of Sections 1 and 3, Article VIII of the 1989 CBA, the Union brought the matter for voluntary arbitration before the National Conciliation and Mediation Board, Regional Arbitration Branch XI at Davao City by way of complaint for enforcement of the CBA. The parties mutually designated public respondent Ruben Abarquez, Jr. to act as voluntary arbitrator. After the parties had filed their respective position papers, 2 public respondent Ruben Abarquez, Jr. issued on September 10, 1991 an Award in favor of the Union ruling that the regular intermittent workers are entitled to commutation of their unenjoyed sick leave with pay benefits under Sections 1 and 3 of the 1989 CBA, the dispositive portion of which reads: "WHEREFORE, premises considered, the management of the respondent Davao Integrated Port Stevedoring Services Corporation is hereby directed to grant and extend the sick leave privilege of the commutation of the unenjoyed portion of the sick leave of all the intermittent field workers who are members of the regular labor pool and the present extra pool in accordance with the CBA from the time it was discontinued and henceforth. SO ORDERED." Petitioner-company disagreed with the respondent, hence, the instant petition. aforementioned ruling of public

Petitioner-company argued that it is clear from the language and intent of the last sentence of Section 1, Article VIII of the 1989 CBA that only the regular workers whose work are not intermittent are entitled to the benefit of conversion to cash of the unenjoyed portion of sick leave, thus: ". . . And provided, however, that only those regular workers of the Company whose work are not intermittent are entitled to the herein sick leave privilege." Petitioner-company further argued that while the intermittent workers were paid the cash equivalent of their unenjoyed sick leave with pay benefits during the previous management of Mr. Beltran who misinterpreted Sections 1 and 3 of Article VIII of the 1985 CBA, it was well within petitioner-company's rights to rectify the error it had committed and stop the payment of the said sick leave with pay benefits. An error in payment, according to petitioner-company, can never ripen into a practice. We find the arguments unmeritorious. A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract executed upon request of either the employer or the exclusive bargaining representative incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions arising under such agreement. While the terms and conditions of a CBA constitute the law between the parties, 3 it is not, however, an ordinary contract to which is applied the principles of law governing ordinary contracts. 4 A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. 5 It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA from the other related section on sick leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the discontinuance or withdrawal of the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave benefit to regular intermittent workers. The manner they were deprived of the privilege previously recognized and extended to them by petitioner-company during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989, or a period of three (3) years and nine (9) months, is not only tainted with arbitrariness but likewise discriminatory in nature. Petitioner-company is of the mistaken notion that since the privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave with pay benefits is found in Section 1, Article VIII, only the regular nonintermittent workers and no other can avail of the said privilege because of the proviso found in the last sentence thereof. It must be noted that the 1989 CBA has two (2) sections on sick leave with pay benefits which apply to two (2) distinct classes of workers in petitioner's

company, namely: (1) the regular non-intermittent workers or those workers who render a daily eight-hour service to the company and are governed by Section 1, Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of the regular labor pool and the present regular extra labor pool as of the signing of the agreement on April 15, 1989 or those workers who have irregular working days and are governed by Section 3, Article VIII of the 1989 CBA. It is not disputed that both classes of workers are entitled to sick leave with pay benefits provided they comply with the conditions set forth under Section 1 in relation to the last paragraph of Section 3, to wit: (1) the employee-applicant must be regular or must have rendered at least one year of service with the company; and (2) the application must be accompanied by a certification from a company-designated physician. Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and vacation leave benefits, among others, are by their nature, intended to be replacements for regular income which otherwise would not be earned because an employee is not working during the period of said leaves. 6 They are non-contributory in nature, in the sense that the employees contribute nothing to the operation of the benefits. 7 By their nature, upon agreement of the parties, they are intended to alleviate the economic condition of the workers. After a careful examination of Section 1 in relation to Section 3, Article VIII of the 1989 CBA in light of the facts and circumstances attendant in the instant case, we find and so hold that the last sentence of Section 1, Article VIII of the 1989 CBA, invoked by petitioner-company does not bar the regular intermittent workers from the privilege of commutation or conversion to cash of the unenjoyed portion of their sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege," as used in the last sentence of Section 1, refers to the privilege of having a fixed 15-day sick leave with pay which, as mandated by Section 1, only the non-intermittent workers are entitled to. This fixed 15-day sick leave with pay benefit should be distinguished from the variable number of days of sick leave, not to exceed 15 days, extended to intermittent workers under Section 3 depending on the number of hours of service rendered to the company, including overtime pursuant to the schedule provided therein. It is only fair and reasonable for petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular intermittent workers since, as the term "intermittent" implies, there is irregularity in their work-days. Reasonable and practical interpretation must be placed on contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such interpretation is to be adopted, that the thing may continue to have efficacy rather than fail. 8 We find the same to be a reasonable and practical distinction readily discernible in Section 1, in relation to Section 3, Article VIII of the 1989 CBA between the two classes of workers in the company insofar as sick leave with pay benefits are concerned. Any other distinction would cause discrimination on the part of intermittent workers contrary to the intention of the parties that mutually agreed in incorporating the questioned provisions in the 1989 CBA. Public respondent correctly observed that the parties to the CBA clearly intended the same sick leave privilege to be accorded the intermittent workers in the

same way that they are both given the same treatment with respect to vacation leaves - non-commutable and non-cumulative. If they are treated equally with respect to vacation leave privilege, with more reason should they be on par with each other with respect to sick leave privileges. 9 Besides, if the intention were otherwise, during its renegotiation, why did not the parties expressly stipulate in the 1989 CBA that regular intermittent workers are not entitled to commutation of the unenjoyed portion of their sick leave with pay benefits? Whatever doubt there may have been early on was clearly obliterated when petitioner-company recognized the said privilege and paid its intermittent workers the cash equivalent of the unenjoyed portion of their sick leave with pay benefits during the lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on April 15, 1989. Well-settled is it that the said privilege of commutation or conversion to cash, being an existing benefit, the petitionercompany may not unilaterally withdraw, or diminish such benefits. 10 It is a fact that petitioner-company had, on several instances in the past, granted and paid the cash equivalent of the unenjoyed portion of the sick leave benefits of some intermittent workers. 11 Under the circumstances, these may be deemed to have ripened into company practice or policy which cannot be peremptorily withdrawn. 12 Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator to direct the commutation of the unenjoyed portion of the sick leave with pay benefits of intermittent workers in his decision is misplaced. Article 261 of the Labor Code is clear. The questioned directive of the herein public respondent is the necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator under Article 261 of the Labor Code "to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement." We, therefore, find that no grave abuse of discretion was committed by public respondent in issuing the award (decision). Moreover, his interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is absolutely correct. WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award (decision) of public respondent dated September 10, 1991 is hereby AFFIRMED. No costs. SO ORDERED.

After hearing, the Voluntary Arbitrator rendered an Award, dated 15 December 1975, ordering respondent to pay the employees herein concerned, their holiday pay on the basis of his finding that the monthly salary of said employees does not include their pay for unworked holidays. The award was partially implemented by the respondent when it paid to the employees concerned their accrued holiday pay benefits covering the period November 1974 to December 1975. However, when the promulgation of the Integrated Implementing Rules of the Labor Code, pursuant to P. D. 850 on 16 February 1976 and the issuance by the Secretary of Labor on 23 April 1976 of Policy Instructions No. 9, the respondent stopped such payment. Hence, petitioner filed the subject motion for execution to enforce the award of the Voluntary Arbitrator. As mentioned above, the Executive Labor Arbiter, in his order dated 13 December 1976, ordered respondent to continue paying the unworked regular holidays to its monthly paid employees covered by the Award of the Voluntary Arbitrator, dated 15 December 1975. This was affirmed by the Commission and now before us on appeal. IN VIEW OF THE FOREGOING, let the Resolution of the Commission dated December 19, 1977 be, as it is hereby, set aside and a new judgment, granting the Motion To Quash Execution, and this case dismissed, for lack of merit. G.R. No. L-50184 April 11, 1980 CITIBANK PHILS. EMPLOYEES UNION NATU, petitioner, vs. THE HONORABLE MINISTER OF LABOR and CITIBANK, N. A., respondents. BARREDO, J.: Petition for certiorari praying that the order of the respondent Minister of Labor dated February 19, 1979 setting aside the resolution of National Labor Relations Commission of December 19, 1977, which in turn dismiss private respondent Citibank, N. A.'s appeal from the order dated December 13, 1976 of Executive Labor Arbiter Guillermo C. Medina denying said respondent's motion to quash the writ of execution issued against it in Case No. RB4-8-6332-75, entitled FNCB Employees Union Natu vs. First National City Bank, by virtue of the award made in said case by the mutually chosen lone voluntary Arbitrator Ruben F. Santos of December 19, 1975. The basic facts are stated in the order under review, which being quite brief may be quoted in full as basis for further discussion: Briefly, the undisputed facts are as follows: On 5 August 1975, petitioner filed the instant case for payment of regular holiday pay pursuant to Article 208 (a) of the Labor Code. Upon failure of concilation efforts to settle the case, the parties agreed to submit their dispute to voluntary arbitration. SO ORDERED. (Pp. 129-130, Record.) For the sake of further clarity, the following important details alleged in the petition and not denied by respondents may be added: IV. That in their letter of submission addressed to Atty. Ruben F. Santos, their common choice for voluntary arbitrator, the parties spelled out the terms of their arbitration agreement, as follows: Pursuant to the pertinent provisions of the existing Collective Bargaining Agreement between the First National City Bank and the First National City Bank Employees Union and the provisions of Article 262 (subsequently re-numbered 263) of the Labor Code, as amended, the following question by the undersigned is submitted to you for resolution as voluntary arbitrator: Whether or not employees of the Bank are legally entitled to holiday pay provided under Article 208 (now 94) of the Labor Code, considering their contractual wage scale. It is understood that the arbitrator may adopt such procedure, and call such hearing, as he may consider to be convenient for

the purpose of arriving at a just decision. The costs of arbitration shall be borne equally by the Bank and the Union. V. That the pertinent provisions of the parties' Collective Bargaining Agreement referred to in said submission relate to Step 4 of Article XVI of the Agreement, entitled 'Grievance', and reads as follows: Should the grievance remain unsettled within the period stated in Step 3, the matter shall be submitted to final and binding resolution by an arbitration Committee consisting of three (3) members, mutually designated by the BANK and the UNION and specifically named in Annex '2' whose tenure of office shall be co-extensive with the life of this contract unless earlier terminated by mutual agreement of the BANK and the UNION. (Emphasis supplied.) as well as to paragraph (d) thereof, which state that: The decision of the Arbitration Committee shall be in writing and shall be concurred in and signed by at least two (2) members of the Arbitration Committee. The decision of the Arbitration Committee sham be final and binding upon the BANK, the UNION, and the employee or employees concerned, and may be enforced in any court of competent jurisdiction. (Emphasis supplied.) VI That, on the other hand, the pertinent provisions of Article 262 (now 263) of the Labor Code referred to in the parties' submission are quoted as follows: ART. 263. Voluntary arbitration All disputes, grievances and matters referred to in the immediately preceding Article which are not settled through the grievance procedure provided in the collective agreement shall be referred to voluntary arbitration prescribed in said agreement. xxx Voluntary arbitration awards or decisions shall be final inappealable, and executory. However, voluntary arbitration awards or decisions on money claims involving an amount exceeding One Hundred Thousand Pesos (P100,000.00) or forty per cent (40%) of the paid-up capital of the respondent employer, whichever is lower, may be appealed to the Commission on grounds of abuse of discretion or gross incompetence. (Pp. 3-5, Record.)

Thus, as stated in the order here at issue, the sole reason given by respondent Minister of Labor for in effect refusing further implementation of the Arbitrator's award was the subsequent promulgation by him of the Integrated Implementing Rules of the Labor Code, pursuant to P. D. 850 which pertinently provides that: Section 2. Status of employees paid by the month. Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. (Section 2, Rule IV, Book Three of the Rules and Regulations Implementing the Labor Code. and the purported clarification thereof in Policy Instructions No. 9 of 23 February, 1976 (also his as follows: If the monthly-paid employee is receiving not less than P240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays. (Emphasis supplied.) (Page 6, Record.) In other words and briefly, the position of respondent Minister is that assuming the final and executory character of the award in question, the same could still be modified or set aside, as contended by the Solicitor General in his comment dated August 6, 1979, in consequence or by reason of the supervening acts of respondent Minister, citing, in support of such contention, the cases of Ocampo vs. Sanchez, 97 Phil. 479 in which the Supreme Court ruled that "when after judgment has been rendered and the latter has become final facts and circumstances transpire which render its execution impossible or unjust, the interested party may ask to modify or later judgment to harmonize the same with justice and the facts (Molina vs. Dela Riva, 8 Phil. 569; Behn, Meyer & Co. vs. McMicking, 1 Phil. 279; Warner Barners & Co. vs. Jaucian, 13 Phil. 4; Espiritu vs. Cross-filed and Guash, 14 Phil. 588; Flor Unata vs. Lichauco and Salinas, 36 Phil. 809, emphasis supplied." (Pp. 134i35, Rec.) After mature deliberation, We have arrived at the conclusion that the respondent's position is not well taken. The situation before Us in the instant case has no parity with those obtaining in the instances where this Court sanctioned departure from the terms of a final and executory judgment by reason of supervening events that would make literal execution in whole or in part of such judgment unjust and inequitable. It should be clear to anyone conversant with the elementary principles of collective bargaining and the constitutional injunction assuring the rights of workers thereto (Sec. a, Article II, Constitution of the Philippines) that the terms and conditions of a collective bargaining agreement constitute the sacred law between the parties as long as they do not contravene public order, interest or policy. We might say that the prohibition in the Constitution's Bill of Rights against the passage or promulgation of any law impairing the obligation of contracts applies with perhaps greater force to collective bargaining agreements, considering that these deal with the rights and interests of labor to which the charter explicitly affords protection. (Sec. 9, Article II.)

The award of the arbitrator in this case is not to be equated with a judicial decision. In effect, when in relation to a controversy as to working conditions, which necessarily include the amount of wages, allowances, bonuses, overtime pay, holiday pay, etc., the parties submit their differences to arbitration, they do not seek any judicial pronouncement technically as such they are merely asking the arbitrator to fix for them what would be the fair and just condition or term regarding the matter in dispute that should govern further collective bargaining relations between them. Stated differently, the arbitrator's award when stipulated by the parties to be conclusive becomes part and parcel of the CBA. Viewed in this sense, which We are fully convinced is most consistent with the principles of collective bargaining, the subsequent or supervening facts referred to by the Solicitor General consisting of acts of none other than the respondent Minister may not be invoked to alter, modify, reform, much less abrogate, the new terms, so to speak, of the collective bargaining inserted by virtue of the award of the arbitrator. To do otherwise would violate the proscription of the Constitution against impairment of the obligation of contracts. Importantly, the argument that the implementation of the arbitrator's award would contravene public policy (referring to the Policy Instructions of the Minister of Labor) is unavailing, for the simple reason that for an employer to agree either spontaneously or through arbitration to pay to this workers higher compensation than that provided by law cannot obviously be against public policy but, on the contrary, is a magnificent contribution to the attainment of the social justice objectives envisioned in the Constitution. With the foregoing view We have taken of the legal situation under controversy, We find no need to dwell on any of the other issues discussed by the parties, whether factual or legal, regarding the manner of computing and determining whether or not a given monthly wage includes unworked holidays. We hold that regardless of any law anterior or posterior to the Arbitrator's award, the collective bargaining agreement in this case has been correspondingly amended in a manner that is unalterable, immovable and immutable like the rock of Gibraltar, during the lifetime of the said collective bargaining agreement. WHEREFORE, the order of the respondent Minister of Labor of February 19, 1979 is hereby set aside and the resolution of the National Labor Regulations Commission of December 19, 1977 is affirmed, with costs against the private respondent. Aquino, Concepcion Jr., Guerrero and De Castro, JJ., concur. G.R. No. L-39686 June 25, 1980 VOLKSCHEL LABOR UNION, MARIANO SUAREZ, PEDRO TORRES, JAIME RAMOS and ANTONIO GALAN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and PEOPLE'S CAR, INCORPORATED respondents. DE CASTRO, J.:

Petition for review on certiorari of the decision of the National Labor Relations Commission which modified the award dated February 1, 1974 of the Arbitrator. The case arose from the complaint for unfair labor practice filed on March 15, 1973 by petitioner against respondent company on the following grounds: 1. Unjust transfers and suspension of unionists. 2. Gross violation of the collective bargaining agreement, party particularly re: agency clause. 3. Refusal to negotiate union grievances in good faith. Sometime in January, 1973, respondent company in an inter-office memorandum, 1 ordered the transfer of several employees from the Malabon District Office to the Cebu District and Magna Service, Inc., sister-company of said respondent. The union, thru its president, Casiano C. Garcia wrote a letter 2 to Mr. Rene Oboza, President and General Manager of the Company, sinking a reconsideration of the projected transfer. On January 9, 1973, the company issued an inter-office memorandum 3 informing the employees concerned that management is standing firm on its decision to transfer or assign them to the Cebu District and Magna Services and that they are suspended indefinitely for their refusal to comply with the management's order, which suspension will eventually lead to termination from the service for cause after the company secures the clearance from the Secretary of Labor. With this situation, Casiano Garcia, the union president, again wrote a letter to the management, requesting for the lifting of the employees' suspension without loss of personal rights and privileges and stating that by effecting the transfer of these employees, it would seem that the company is bent on "busting" the union chapter in Malabon District which tends to demoralize the members. In reply to said letter, the company, thru Mr. Rene Oboza, averred that the suspension was the result of the employees' violation of the Code of Discipline; that the act of suspension was merely an exercise of management's prerogative to discipline its employees, calling the attention of Mr. Garcia to Art. II, Section 1 of the CBA which provides: Management rights The COMPANY retains the sole right to manage its business including the number and location of factories or plants .... as well as to suspend, discharge, lay-off or take any discipline action against any employee for just causes ... and that management was well within its rights in enforcing a provision of the CBA. The respondent company adduced the reason that the questioned transfer was due to the fact that the Malabon District Office of the Company had been in a business slump on account of the construction and subsequent opening of the North Diversion Road at Balintawak, Rizal and other business factors which forced the company to decide on a re trenchment program involving the reduction of its personnel. It was also stressed by the company that a careful screening of all the employees' records was done to avoid injustice and that the selection of those involved in the retrenchment was made regardless of whether

they were union members or not; that it could have well decided to dismiss its employees at its Malabon Branch but instead of pursuing such course of action, it gave its employees several options to choose from: (1) temporary lay offs with priority of employment at the opening of respondent's Marikina Branch (2) transfer or relocation to any of respondents' branches or sister corporations; and (3) permanent termination from employment with separation pay; that some employees accepted and received respondent's offer of separation pay; and when herein petitioner-employees opted to remain with the company, they submitted themselves to its discretion when and where they should be transferred and/or relocated . On the other hand, petitioners maintain that the company violated the provision of Art. 1, Section 1 of the Collective Bar Agreement, to wit: UNION RECOGNITION AND CHECK-OFF Section 1. The COMPANY recognizes the union as the sole and exclusive bargaining representative for all regular rank and file workers of the COMPANY in the Greater Manila Area ... Petitioners contend that such transfer involved movement that would take the employees outside the bargaining unit in the agreement. Moreover, in refusing to be transferred to the Magna Services, Inc. and Cebu District, herein petitionersemployees claim that it would be very difficult to leave their families behind even if they wanted to, considering the prevailing economic conditions. Furthermore, petitioner union alleged that the company rouged to honor its commitment embodied in Art. III, Section 3 of the agreement, "that respondent company bound itself ... to assist the Union to collect and hereby guarantees collection, an agency fee equivalent to the Union membership dues but not P 4.00 per month from each regular employee ... and who is not a member of the Union; and since all the employees in the Company, whether they be union or member are entitled to all the benefits that their agent was able to for the it is in this light that the Union sseks the imposition of the Agency fee. The respondent company considers the issue of agency fee as sub judice since it was raised for resolution before the Court of First Instance of Rizal in a petition for declaratory relief praying for the proper construction and interpretation of the Provision on agency fee. In answer to this petitioner union argues that the NLRC has exclusive jurisdiction to have the Present dispute regarding agency fees in accordance with PD No. 21. Pending resolution of the complaint, the company reinstated Godofredo League and Edilberto Vicmudo while petitioners Suarez, Ramos, Torres and Galan were dismissed for insubordination. After a series of hearings and submission of the

parties' respective memoranda, the arbitrator rendered an award 1, 1974, the dispositive portion of which reads:

on February

WHEREFORE, and in recapitulation, the respondent company is hereby directed to reinstate Mariano Suarez, Jaime Ramos, Pedro Torres and Antonio Galan to their usual employment with full backwages from January 9, 1973 and to pay backwages to Godofredo League and Edilberto Vicmudo corresponding to the period of their unjust suspension and/or lay-off from January to February, 1973. Likewise, the respondent company is ordered to comply with its obligation under Art, III, Section 3 of the CBA and in this respect, to transmit all agency fees due the union in the amount of P 4.00 per capita monthly from January 1, 1972 up to the present time and to continue to comply with such obligation henceforth till the expiration of the CBA. So Ordered. From this award, respondent company appealed to the National Labor Commission. Petitioners objected to the appeal on the grounds that (1) the award had already become final and executory since the appeal was filed beyond the reglementary period; (2) the award is final and unappealable because of the provision of the collective bargaining agreement and (3) the award is supported by substantial evidence. On October 17, 1974, the Commission rendered a decision 5 modifying the arbitrator's award, thus:

WHEREFORE, complainants Suarez, Jaime Ramos, Pedro Torres and Antonio Galan are hereby ordered to comply with respondents directive to reassign or transfer them within (15) days from receipt of this decision. xxxxxxxxx The award appealed from is therefore, set aside insofar as it is inconsistent with this decision. So Ordered. Petitioners appealed to the Secretary of Labor on November 14, 1974 and during the pendency thereof, filed the instant petition for review that they cannot exclusively rely on their appeal to the Secretary of Labor when they received the disputed decision on November 8, 1974 (after the New Labor Code had already taken effect on November 1, 1974, repealing PD No. 21); that up to now there are no implementing rules promulgated yet by the New NLRC created by PD 442 and in order to prevent a grave irreparable damage to the interest of the petite they must file this appeal by certiorari pursuant to the Provision of the New Labor Code that the decision of the NLRC involving question of law could be appealed by certiorari to the Supreme Court." The following issues are presented to this Court for resolution :

1. As to whether or not the NLRC has the power to alter or modify the award by a voluntary arbitrator whose decision is final and executory pursuant to the CBA; and 2. As to whether or not the NLRC could still inverse or modify the voluntary arbitrator's award despite the appeal of the private respondent company was filed beyond the reglementary period or in other words the right to appeal has prescribed. The petition was given due Course on Feb. 24, 1975 and pending receipt of respondent's answer, the Secretary of labor on March 24, 1975 issued an order 6 denying petitioners appeal from the decision of respondent commission and accordingly enjoined the Parties to comply with the disposition set forth in the said appealed decision. In support of the first issue raised, petitioners argued that the voluntary arbitrator expressly stated in his award "that the parties agreed to refer the dispute to the undersigned for voluntary arbitration in accordance with the CBA" that said finding was not questioned by respondent company; that the decision revising the award of the voluntary arbitrator is violative of the CBA which provides: There shall be no appeal from an arbitrators decision. It shall be final and binding on the UNION, on all bargaining unit employment and on the COMPANY. The decision shall be such as to be dispositive of the matter or matters submitted to arbitration ... and that the provision in the CBA regarding the grievance machinery as well as the definition of the bargaining unit specifically delineating a definite place of work would be useless if respondent company could transfer employees at will even to places not covered by the CBA. As to the second issue raised, it is the contention of petitioners that the appeal of respondent company from the arbitraror's award was filed on March 5, 1974, which is bedroom the reglementary period, alleging that said respondent received the award on February 22, 1974; 8 and for the NLRC now to revise or disturb the award of the voluntary arbitrator would in effect be going against the very implementing rules it has promulgated requiring any aggrieved party to file an appeal within 5 days upon receipt of the award, which rule was adopted on October 18, 1972. In refutation of petitioners' contention respondent company alleged that the award rendered by the arbitrator is not the decision contemplated in and provoked for in the SCRA, that the fact that petitioners' appeal to the Secretary of Labor was still pending when they filed the instant petition clearly divests this Court from taking of the present case; that the NLRC's rule dated October 18, 1972 was expressly repealed by its subsequent supplementary rule issued on January 26, 1973 which reads in part, thus: Section 2. Appeal may be brought to the Commission on within ten (10) days upon receipt of the Award by the aggrieved party. 9

It was stressed by said respondent that the provision in the collective bargaining agreement is subordinate to the will of the state or the law; that is to say, if appeal is provided for or availab le under the law, said remedy cannot be foreclosed by mere stipulation of the parties. Arbitrator Alexander Guray stated in his award that the parties had earlier sought to settle their differences internally pursuant to the grievance machinery provided in their agreement; and when their efforts to resolve the problem failed, the parties agreed to refer the dispute to a voluntary arbitrator. A perusal of the records however show that on May 11, 1973, the Mediation-fact finding report submitted by Mediator Jose Collado, Jr. contained the following data: 10 II. Issue remained non-conciliatory. III. No Mutual Agreement for voluntary arbitration. IV. Referred to NLRC for Compulsory Arbitration The designation of Guray was thus as "Compulsory Arbitrator," 11 and the proceedings accordingly were actually that of compulsory arbitration with the right of appeal. However, because of respondent company's failure to perfect its appeal on time, the National Labor Relations Commission was divested of its jurisdiction to entertain the appeal. The records show that the respondent company's appeal to the Commission was filed on March 5, 1974 and was received by the Bureau of Labor Relations Division on March 6, 1974. 12 It was admitted by said respondent that its counsel received a copy of the arbitrator's award on February 22, 1974 and applying Section 2 of the NLRC Rules and Regulations providing for a ten-day period to appeal from receipt of the award, it is very clear by mathematical computation that the appeal was filed out of time; hence, the award attained finality. It is a well-settled rule that an award or judgment becomes final and executory upon the expiration of the period to appeal and no appeal was made within the reglementary period. The basic rule of finality of judgment is applicable indiscriminately to one and all since the rule is grounded on fundamental consideration of public policy and sound practice that at the risk of occasional error, the judgment of courts and award of quasi-judicial agencies must become final at some definite date fixed by law. 13 The lapse of the appeal period deprives courts of jurisdiction to alter a final judgment. In the instant case, the decision of the Commission 14 modifying the award of the arbitrator is nun and void for having been issued without jurisdiction and authority, the appeal taken thereto not having been filed on time. The perfection of an appeal within the reglementary period is not only mandatory but jurisdictional. 15 Respondent Company's contention that it filed its appeal within the reglementary period should not be given weight. Such allegation is not fully substantiated. There is here an apparent miscomputation by counsel of the appeal period which will not arrest the course of the same nor prevent the finality of the judgment, in simply stating that he filed the appeal on time. Otherwise, the definite and executory character of the judgment would be left to the whim of the losing party, when it is in the interest of everyone that the date when judgments become final should remain fixed and ascertainable. 16

In view of the above conclusion reached, there is no further need to discuss the merits of the dismissal of the employees for insubordination. The award having attained finality, becomes the law of the case, and must be complied with, no matter how erroneous it may be. It may also be pertinent to state that even if the proceedings herein be considered as in the nature of a voluntary arbitration as so held by the Arbitrator in his award, for reasons not quite clear from the records, the award appealed from shall be final and binding between the parties. The award of voluntary Arbitrators acting within the scope of their authority determines the rights of the parties, and their decisions have the same legal effects as a judgment of the Court. Such decisions on matters of fact and law are conclusive, and all matters in the award are thenceforth res judicata, on the theory that the matter has been adjudged by the tribunal which the parties have agreed to make final as tribunal of last resort. 17 WHEREFORE, the decision dated October 17, 1974 of the National Labor Relations Commission and the Order dated March 24, 1975 of the Secretary of Labor are hereby set aside and the award of the arbitrator is reinstated in toto. This decision is immediately executory. No pronouncement as to costs. G.R. No. L-43890 July 16, 1984 OCEANIC BIC DIVISION (FFW), PABLITO ORDANOSO, petitioners, vs.FLERIDA RUTH P. ROMERO AS VOLUNTARY ARBITRATOR. OCEANIC BIC MANUFACTURING, and GLICERIO LEDESMA, respondents. GUTIERREZ, JR., J.: In this petition for review on certiorari, we are asked to interpret Section 1 1 of Presidential Decree No. 21, ("Creating A National Labor Relations Commission And For Other Purposes") in relation to Sections 1, 3, and 10 of the Implementing Instructions No. 1 dated November 9, 1972 issued by the then ad hoc National Labor Relations Commission. The provisions refer to the clearance requirements for the dismissal, lay-off, or termination from employment of an employee by his employer. The facts of the case are not in dispute. Petitioner Pablito Ordanoso entered into a contract of temporary employment for the period of six (6) months beginning from October 3, 1973 to April 3, 1974 with the respondent corporation. Incorporated in the contract is a stipulation that "it is understood that the company has the right to separate you from its employ at anytime within the above period should your services not be satisfactory." When the contract expired on April 3, 1974, Ordanoso entered into another 6-month contract of employment, this time as probationary worker with the respondent company, from April 4, 1974 to October 4, 1974. A note to the effect that "this extension of your employment contract is being given with formal advice that you improve on your performance" was added to the stipulation which formed part of the first contract.

The respondent company through "group leaders" conducts periodic performance ratings on the workers. The results are considered for the workers' conversion from probationary to regular permanent employment. The criteria for performance ratings were cooperation, attendance, quality of work, skill, initiative and interest in work, leadership, obedience and intelligence. In the case of Ordanoso, Mr. Glicerio Ledesma, production manager, explained that the aforestated note attached to his contract of employment shows that Ordanoso's performance rating during his first six months employment in the company was "just passing." Subsequent performance ratings of Ordanoso by his group leaders submitted to Mr. Ledesma showed that his work performance was not satisfactory. Hence, in the memorandum prepared by Ledesma on workers' performance ratings which he sent to K. Bachmann, Jr., general manager, Ordanoso's name was included among those with below average performance. On the following day, Ledesma sent a memorandum to Ordanoso, telling him to improve his performance as he only attained a 2.75 rating On September 10, 1974, a memorandum was issued by Ledesma to some workers, among them Ordanoso, warning them of their low average performance with the advice to perform on the average performance level. On October 3, 1974, Ledesma terminated Ordanoso's services in the company because of his below average performance rating. Thereafter, the following events transpired: On October 4, 1974, complainant union (FFW Oceanic BIC Manufacturing Chapter), through its union president, Alfonso Leonids sent a letter dated October 3, 1974, to the Management of the respondent company wherein the union asked the company for a grievance conference in order to discuss the dismissal of complainant Pablito Ordanoso effective October 4, 1974. Apparently, the parties failed to reach an amicable settlement in the grievance conference. On October 25, 1974, the complainants (the local union and Pablito Ordanoso) filed a complaint with the NLRC, Dept. of Labor, docketed as NLRC Case No. Lr-6538. In the said complaint, the complainants charged the respondents company and Ledesma for: 1. Unfair Labor Practice; 2. Unjust and illegal dismissal of complainant Pabiko Ordanoso; 3. Violation of the CBA 4. Violation of P.D. No. 21 and its Implementing Rules. xxx xxx xxx

IV The afore-mentioned complaint (bearing another case no. Lr431-74) was finally disposed of by the conciliator of the Dept. of Labor, Regional Office No. IV, on January 16, 1975, by referring back the case to the parties for exhaustion of the grievance procedure in accordance with the CBA. ... V On January 20, 1975, the Federation of Free Workers, the mother federation of complainant union, sent a letter to the management of respondent company wherein the Federation suggested three (3) names to select from, as voluntary arbitrator. The parties failed to mutually select any of the three named in said letter but later selected Atty. Flerida Ruth P. Romero of the U.P. Law Center, Diliman, Quezon City. ... (Petition, Rollo, pp. 5-6). After due hearing, the voluntary arbitrator issued her decision dated April 30, 1976 upholding the company's actions. The dispositive portion of the decision reads: xxx xxx xxx Ipinapasya ng Tagahatol na ang pagtitiwalag kay Ordanoso ay hindi unfair labor practice, hindi labag sa collective bargaining contract at sa P.D. No. 21 o sa alituntunin nito, sapagkat hindi nauukol sa kanya ang pangangailangan ng written clearance bago magtanggal ng isang manggagawa. Isinagawa sa siyudad ng Quezon nitong ika-30 ng Abril, 1976. The respondents raise a jurisdictional issue. They contend that this Court does not have the power to review the voluntary arbitrator's award on the ground that: 1) Presidential Decree No. 442, (Labor Code) precludes this Court from reviewing voluntary arbitration awards save on special circumstances which are not present in the instant case; and 2) the nature of voluntary arbitration awards should be considered final. Petitioner Ordanoso was dismissed on October 4, 1974. He filed the complaint for illegal dismissal with the Department of Labor on October 25, 1974. Article 294 of the Labor Code, as amended provides: "All actions or claims accruing prior to the effectivity of this Code shall be determined in accordance with the laws in force at the time of their accrual." The law applicable in the instant case is Presidential Decree No. 21. In fact, the voluntary arbitrator herself admits this fact in her decision when she said: "Noong itiniwalag si Ordanoso noong ika-4 ng Oktubre, 1974, ang batas na umiiral ukol sa pagtatanggal ng mga tauhan ng mga bahay-kalakal ay ang Presidential Decree No. 21 at mga alituntunin nito ...

Anent the proposition that voluntary arbitration awards should be considered final, the respondents cite American precedents: The nature of an arbitrator's award is that it is equivalent to the first law of the parties. It is so because the disputants have willingly and contractually consented that the will of the arbitrator shall be substituted in place of theirs. For, after all, the parties have mutually reposed their trust and confidence in the honesty, integrity, competence and capability of the arbitrator. Such being the case, the role of the reviewer of a voluntary arbitration award is very limited, It merely acts as a guardian to see to it that no serious miscarriage of justice may be perpetuated or that public order or public policy might be subverted. The refusal of courts to review the merits of an arbitration award is the proper approach to an arbitration under collective bargaining agreements. The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of the awards. (Margetta v. Pam Pam Corporation, 354 F. Supp. 158, 1973), p. 160; cited in Fernandez, Labor Arbitration [1975], p. 355. xxx xxx xxx The refusal of courts to review the merits of an arbitration award is the proper approach to an arbitration under collective bargaining agreements. The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of the awards. (Union Emp. Div., Etc. v. Columbia Typographical Union No. 101, 353 F. Supp. 1348); (1973), p. 1349; cited in Fernandez, Ibid., pp. 355356; We hold that the District Court misconstrued its mandate. The duty of the courts is not to determine whether a prima facie case on the merits has been put forth by the party seeking arbitration. It is not the province of the court to look into the facts of the case. (Chambers v. Beaunit Corp., 404 F. 2d 128, Sanitary Corp. v. Local 7, International Brotherhood of Operative Potters, 358 F. 2d 455, 458 (6th Cir. 1966). The arbitrator is not to be viewed as a special master who will be called in after a prima facie case on the merits has been made out. (Local No. 6, M. & P. Int. U. of Am. v. Boyd G. Heminger, Inc., 483 F. 2d 129): (1973), p. 131. xxx xxx xxx It is particularly understood that the arbitral process in collective bargaining presupposes that the parties wanted the informed judgment of an arbitrator, precisely for the reason that judges cannot provide it. Therefore, a court asked to enforce a promise to arbitrate should ordinarily refrain from involving itself in the interpretation of the

substantive provisions of the contract. (Morris v. Werner Continental, Inc. 466 F.2d (1185); (1972), pp. 1190-1191, Ibid.) We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest respect and as a general rule must be accorded a certain measure of finality. This is especially true where the arbitrator chosen by the parties enjoys the first rate credentials of Professor Flerida Ruth Pineda Romero, Director of the U.P. Law Center and an academician of unquestioned expertise in the field of Labor Law. It is not correct, however, that this respect precludes the exercise of judicial review over their decisions. Article 262 of the Labor Code making voluntary arbitration awards final, inappealable, and executory except where the money claims exceed P100,000.00 or 40% of paid-up capital of the employer or where there is abuse of discretion or gross incompetence refers to appeals to the National Labor Relations Commission and not to judicial review. Inspite of statutory provisions making "final" the decisions of certain administrative agencies, we have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law were brought to our attention. There is no provision for appeal in the statute creating the Sandiganbayan but this has not precluded us from examining decisions of this special court brought to us in proper petitions. Thus, we have ruled: Yanglay raised a jurisdictional question which was not brought up by respondent public officials. He contends that this Court has no jurisdiction to review the decisions of the NLRC and the Secretary of Labor 'under the principle of separation of powers' and that judicial review is not provided for in Presidential Decree No. 21. That contention is a flagrant error. 'It is generally understood that as to administrative agencies exercising quasi-judicial or legislative power there is an underlying power in the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute (73 C.J.S. 506, note 56). The purpose of judicial review is to keep the administrative agency within its jurisdiction and protect substantial rights of parties affected by its decisions'(73 C.J.S. 507, Sec. 165). It is part of the system of checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications. Judicial review is proper in case of lack of jurisdiction, grave abuse of discretion, error of law, fraud or collusion (Timbancaya vs. Vicente, 62 O.G. 9424; Macatangay vs. Secretary of Public Works and Communications, 63 O.G. 11236; Ortua vs. Singson Encarnacion, 59 Phil. 440). "The courts may declare an action or resolution of an administrative authority to be illegal (1) because it violates or fails to comply with some mandatory provision of the law or (2) because it is corrupt, arbitrary or

capricious" (Borromeo vs. City of Manila and Rodriguez Lanuza, 62 Phil. 512, 516; Villegas vs. Auditor General, L-21352, November 29,1966, 18 SCRA 877, 891). [San Miguel Corporation v. Secretary of Labor, 64 SCRA 601]. xxx xxx xxx It is now settled rule that under the present Labor Code, (Presidential Decree No. 442, as amended [1974] if lack of power or arbitrary or improvident exercise of authority be shown, thus giving rise to a jurisdictional question, this Court may, in appropriate certiorari proceedings, pass upon the validity of the decisions reached by officials or administrative agencies in labor controversies. So it was assumed in Maglasang v. Ople, (L-38813, April 29, 1975, 63 SCRA 508). It was explicitly announced in San Miguel Corporation v. Secretary of Labor, (L39195, May 16, 1975, 64 SCRA 56) the opinion being penned by Justice Aquino. Accordingly, cases of that character continue to find a place in our docket. (Cf. United Employees Union of Gelmart Industries v. Noriel, L-40810, Oct. 3, 1975, 67 SCRA 267). The present suit is of that category. [Kapisanan ng mga Manggagawa sa La Suerte-Foitaf vs. Noriel, 77 SCRA 415-416]. A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity, There is no reason why her decisions involving interpretation of law should be beyond this Court's review. Administrative officials are presumed to act in accordance with law and yet we do not hesitate to pass upon their work where a question of law is involved or where a showing of abuse of authority or discretion in their official acts is properly raised in petitions for certiorari. On the merits of the petition, the petitioner questions the voluntary arbitrator's decision that under Presidential Decree No. 21, petitioner Ordanoso was properly dismissed by the respondent company without a written clearance from the Secretary of Labor, to wit: xxx xxx xxx Nang itiniwalag si Ordanoso noong ika-4 ng Oktubre, 1974, ang batas na umiiral ukol sa pagtatanggal ng mga tauhan sa mga bahay-kalakal ay ang Presidential Decree No. 21 at mga alituntunin nito. Ayon sa ikalabing-isang talata ng nasabing batas, walang pangasiwaan na maaring magtanggal ng kanilang mga regular na empleado na nakapanungkulan na nang isang taon nang walang written clearance ng Kalihim ng Paggawa. Ano naman ang pakahulugan ng batas sa taguring regular na empleado? Ayon sa Implementing Instructions No. 1 na nagpapaliwanag sa nasabing ikalabing-isang talata ng P.D. No. 21, ang regular na empleado ay yaong manggagawa na nakapaglingkod na nang hindi kukulangin sa labingdalawang buwan sa loob ng nakaraang magkasunod na dalawang taon bago natanggal ang nasabing manggagawa, kahit anupaman ang taguri ng pangasiwaan sa kaniyang pagkakahirang. Alalaong baga,

upang mataguriang regular na empleado, kailangan ay una, ang manggagawa ay kawani na ng bahay-kalakal nang hindi kukulangin sa dalawang taon nang nakararaan, at ikalawa, siya ay nakapaglingkod na nang hindi kukulangin sa kabuuang labindalawang buwan na hindi kailangang magkakasunod sa loob noong nasabing dalawang taon bago naganap ang pagtitiwalag. Kapag mapatunayan ng isang manggagawa na ang dalawang pangangailangang iyan ay nasa kanya, siya ay masasabing regular na empleado at hindi siya kagyat na matatanggal nang walang written clearance ng Kagawaran ng Paggawa. Kung ang manggagawang itiniwalag ay kulang sa isang pangangailangang iyan, siya'y hindi regular na empleado at hindi na kailangan ang written clearance upang siya ay matanggal. Mapapansin na ang manggagawang higit na matagal ang panunungkulan ang siyang tinatangkilik ng batas. Matapos ang paliwanag na iyan, mamamalas na si Ordanoso ay hindi regular na empleado, sapagkat isang taon pa lamang siyang naglilingkod sa bahay-kalakal ng Oceanic Commercial, Inc. Kung gayon, hindi kailangan ang written clearance upang siya ay matanggal ng pangasiwaan. Hindi nalalabag sa batas ang gayong pagtitiwalag sa kanya nang walang written clearance " The petitioner takes exception to the voluntary arbitrator's conclusions on the interpretation to be given Section 3 of Implementing Instruction No.1 xxx xxx xxx Pag-ukulan naman natin ng pansin ang isa pang matuwid ng manananggol ring nag-uusig. Ayon raw sa Seksiyon 1(d) ng Alituntunin, kailangan rin ng "clearance" lahat ng mga pagtanggal ng manggagawa na hindi nasasaklaw ng Seksiyon 3 nito. Ang Seksiyon 3 naman ay nililista ang mga pangyayari na kailangan lamang magharap ng ulat ang kompanya at hindi "clearance". Isa na rito ay ang pagtiwalag ng empleado na kulang ng isang taon ang panunungkulan. Kung gayon raw, mapaghuhulo na kapag isang taon o higit nang isang taon paninilbihan, hindi nga ulat lamang ang kailangan kung hindi 'clearance' na. Ipinalabas na si Ordanoso ay nasasakop sa kalagayang iyan na ang paglilingkod niya ay kulang ng isang taon kaya't hindi ulat lamang ang kailangan kung hindi "clearance" na sapagkat isang taon o nahigit na siyang naglilingkod, Hindi naman tumpak ang pakahulugan ng kabilang panig sa batas na pinag-uukulan ng pansin Malinaw at tiyak ang pangungusap ng Seksiyon 1 ng Alituntunin na "clearance" ang kailangan kapag ang ititiwalag ay regular na empleyado na nanilbihan na ng isa man lamang taon. Kung paghambingin ang hulo lamang (implication) ng manananggol ng naguusig at ang tiyak na salita ng batas na "regular na empleado," ang lulong matimbang ay ang tiyak at tahas na pananalita. Hindi kailangan ng "clearance" sa pagtanggal ng kahi't sino lamang na empleado na nakapaglingkod nang higit sa isang taon. Kailangang siya ay "regular na empleado", lalu't lalo na kapag ang empleado ay pangsamantala

lamang o dili kaya'y "probationary." Siya ay dagling sinusubok pa lamang kaya't kung sa panahon ng pagsusubok ay mapatunayang hindi sila mahusay, maaari silang tanggalin kaagad nang walang 'clearance' kapag humantong na sa katapusan na napagkasunduang panahon. Ganyan na nga mismo ang ginagawa ng bahay-kalakal na Oceanic Bic Manufacturing nang humantong na ang katapusan ng pangalawang anim na buwan at hindi sili nasisiyahan sa paglilingkod ni Ordanoso. (Emphasis supplied) In ascertaining the mandatory nature and the ambit of the clearance requirements before termination of employees may be effected, we start with the statutory provision found in Section 11 of Presidential Decree No. 21 which provides: No employers may shut down his establishment or dismiss or terminate the services of regular employees with at least one year of service without the written clearance of the Secretary of labor. The pertinent provisions of the Implementing Instructions No. 1 are as follows: Section 1. When Clearance Required. Every employer shall secure a written prior clearance from the Secretary of labor for any of the following cases irrespective of whether the employer complies with the requirements of existing laws on the service of notice terminating the services of an employee and the payment of severance pay; (a) All dismissals, with or without just cause, of regular employees with at least one (1) year of service; xxx xxx xxx xxx xxx xxx (d) Any termination of employment, suspension or lay-off not otherwise covered by Section 3 of these instructions. xxx xxx xxx Section 3. When Reports Required. Every employer shall submit a report in the form and manner prescribed by this issuance on the following termination of employment, suspension, lay-off or shutdown which may be effected by the employer without the prior clearance of the Secretary of Labor. xxx xxx xxx (b) All dismissals, suspensions, or lay-offs of employees with less than one (1) year of service; (Emphasis supplied). Under the definition in Section 1 of the Implementing Instructions, a regular employee is one with an aggregate service of at least twelve months for the last two consecutive years prior to the proposed termination. Ordanoso was not a regular employee but a probationary employee when his services were

terminated. It appears clear from the law that he was not covered by the requirement of a written prior clearance from the Secretary of Labor. Neither was he covered by Section 3 of the implementing rules which requires a report, not a prior clearance, whenever an employee with less than one year of service is dismissed, suspended, or laid-off. Ordanoso had slightly more than one year of service. There is a hiatus or gap in the clearance and reporting requirements provided by the administrative regulations. As a general rule, such a gap should be resolved in favor of the dismissed worker. For an employee who has served one year and one day not to have the minimal protection of at least a report on the cause of his dismissal while those who have served less than a year are entitled to such a report also appears incongruous. In this particular case, however, the poor job performance of Ordanoso is documented. The hearings before the respondent arbitrator establish that the respondent employer did not act arbitrarily or even wrongly in declaring Ordanoso's work performance as below the required ratings. During his first six months as a temporary employee when he should have exerted extra efforts to prove his capability for permanent employment, he was at the bottom or barely passing ratings of the required performance. He had to be placed on another six months' trial period as a probationary worker. During this second period, he clearly failed to make the grade. Ordanoso was given sufficient warnings each time that his job performance was unsatisfactory. There is no issue of due process violations. The petitioners concentrated on the failure of the employer to get a prior clearance from the Secretary of Labor and did not discuss the significance of the reporting requirements at all. Under the facts of this case and the applicable law, such a prior clearance was not necessary. It would also be most unfair to the employer to compel it to keep a below average worker simply because ambiguity in administrative requirements for clearances or reports depending on the length of service and employment status of a worker results in its not being instructed clearly to either report a dismisssal already effected or seek prior clearance before the dismissal. Considering the foregoing, we affirm the findings of the respondent voluntary arbitrator. WHEREFORE, the instant petition is DISMISSED for lack of merit. The Kapasiyahan of the voluntary arbitrator is AFFIRMED. SO ORDERED. Separate Opinions TEEHANKEE, J., concurring: I concur on the ground that petitioner Pablito Ordanoso was not a regular employee but a probationary employee and there was manifestly valid cause for his dismissal or separation as such. He had been given sufficient warnings about his unsatisfactory job performance and therefore his dismissal at the end of the

second six months trial period was for just cause in accordance with the terms of his probationary employment. On the question, however, of whether his dismissal falls under section 3 of the Implementing Instructions quoted in the main opinion, whereby the employer is required to submit a report of his dismissal which may be affected without prior clearance, it is my view that the gap or hiatus in the clearance and reporting requirements should be resolved in his favor and those similarly circumstanced. In other words, the fact that he and other such probationary workers may have slightly more than one year of service would not mean that the employer would not have to file the corresponding report of their dismissal. As is aptly stated in the main opinion, "for an employee who has served one year and one day not to have the minimal protection of at least a report on the cause of his dismissal while those who have served less than a year are entitled to such a report (also) appears incongruous." The employer's failure to file such report would not, however, make his dismissal for just cause illegal in view of the vagueness or ambiguity of the Administrative Instructions. But the employer who fails to file such report may be subjected to such administrative penalties or sanctions as may be duly provided. [G.R. No. L-48437, September 30, 1986] MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION (REPRESENTED BY PHILIPPINE SOCIAL SECURITY LABOR UNION - PSSLU FED. - TUCP, PETITIONER, VS. ARBITRATOR FROILAN M. BACUNGAN AND MANTRADE DEVELOPMENT CORPORATION, RESPONDENTS. DECISION FERIA, J.: This is a petition for Certiorari and Mandamus filed by petitioner against arbitrator Froilan M. Bacungan and Mantrade Development Corporation arising from the decision of respondent arbitrator, the dispositive part of which reads as follows: "CONSIDERING ALL THE ABOVE, We rule that Mantrade Development Corporation is not under legal obligation to pay holiday pay (as provided for in Article 94 of the Labor Code in the third official Department of Labor edition) to its monthly paid employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage, and this rule is applicable not only as of March 2, 1976 but as of November 1, 1974." Petitioner questions the validity of the pertinent section of the Rules and Regulations implementing the Labor Code as amended on which respondent arbitrator based his decision. On the other hand, respondent corporation has raised procedural and substantive objections. It contends that petitioner is barred from pursuing the present action in view of Article 263 of the Labor Code which provides in part that "voluntary arbitration awards or decisions shall be final, inappealable, and executory," as well as the rules implementing the same; the pertinent provision of the Collective Bargaining Agreement between petitioner and respondent corporation; and Article 2044 of the Civil Code which provides that "any stipulation that the arbitrators' award or decision shall be final, is valid, without

prejudice to Articles 2038, 2039, and 2040." Respondent corporation further contends that the special civil action of certiorari does not lie because respondent arbitrator is not an "officer exercising judicial functions" within the contemplation of Rule 65, Section 1, of the Rules of Court; that the instant petition raises an error of judgment on the part of respondent arbitrator and not an error of jurisdiction; that it prays for the annulment of certain rules and regulations issued by the Department of Labor, not for the annulment of the voluntary arbitration proceedings; and that appeal by certiorari under Section 29 of the Arbitration Law, Republic Act No. 876, is not applicable to the case at bar because arbitration in labor disputes is expressly excluded by Section 3 of said law. These contentions have been ruled against in the decision of this Court in the case of Oceanic Bic Division (FFW) vs. Romero, promulgated on July 16, 1984, wherein it stated: "We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest respect and as a general rule must be accorded a certain measure of finality. This is especially true where the arbitrator chosen by the parties enjoys the first rate credentials of Professor Flerida Ruth Pineda Romero, Director of the U. P. Law Center and an academician of unquestioned expertise in the field of Labor Law. It is not correct, however, that this respect precludes the exercise of judicial review over their decisions. Article 262 of the Labor Code making voluntary arbitration awards final, inappealable and executory, except where the money claims exceed P100,000.00 or 40% of the paid-up capital of the employer or where there is abuse of discretion or gross incompetence refers to appeals to the National Labor Relations Commission and not to judicial review. "In spite of statutory provisions making 'final' the decisions of certain administrative agencies, we have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the Law were brought to our attention. x x x xxx xxx xxx

(c) As used in this Article, "holiday" includes: New Year's Day, Maundy Thursday, Good Friday, the-ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and the thirtieth of December, and the day designated by law for holding a general election. they appear to be excluded under Sec. 2, Rule IV, Book III of the Rules and Regulations implementing said provision which reads thus: SEC. 2. Status of employees paid by the month. - Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not. Respondent arbitrator further opined that respondent corporation does not have any legal obligation to grant its monthly salaried employees holiday pay, unless it is argued that the pertinent section of the Rules and Regulations implementing Section 94 of the Labor Code is not in conformity with the law, and thus, without force and effect. This issue was subsequently decided on October 24, 1984 by a division of this Court in the case of Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, wherein it held as follows: "WE agree with the petitioner's contention that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9 issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor Code's provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion (p. 11, rec.). "Article 94 of the Labor Code, as amended by P. D. 850, provides: 'Art. 94. Right to holiday pay.- (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers. x x x' "The coverage and scope of exclusion of the Labor Code's holiday pay provisions is spelled out under Article 82 thereof which reads: 'Art. 82. Coverage.- The provision of this Title shall apply to employees in all establishments and undertakings, whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.' xxx xxx xxx "From the above-cited provisions, it is clear that monthly paid employees are not excluded from the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary of Labor excludes monthly paid employees from the said benefits by inserting under Rule IV, Book III of the implementing rules, Section 2, which provides that: 'employees who are

"A voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity. There is no reason why her decisions involving interpretation of law should be beyond this Court's review. Administrative officials are presumed to act in accordance with law and yet we do not hesitate to pass upon their work where a question of law is involved or where a showing of abuse of discretion in their official acts is properly raised in petitions for certiorari." (130 SCRA 392, 399, 400-401) In denying petitioner's claim for holiday pay, respondent arbitrator stated that although monthly salaried employees are not among those excluded from receiving such additional pay under Article 94 of the Labor Code of the Philippines, to wit: ART. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid compensation equivalent to twice his regular rate; and

uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not.'" (132 SCRA 663, 672-673) This ruling was reiterated by the Court en banc on August 28, 1985 in the case of Chartered Bank Employees Association vs. Ople, wherein it added that: "The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely 'employees who are uniformly paid by the month'. While the additional exclusion is only in the form of a presumption that all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the statute delimits or withholds is obviously ultra vires." (138 SCRA 273, 282. See also CBTC Employees Union vs. Clave, January 7, 1986, 141 SCRA 9.) Lastly, respondent corporation contends that mandamus does not lie to compel the performance of an act which the law does not clearly enjoin as a duty. True it is also that mandamus is not proper to enforce a contractual obligation, the remedy being an action for specific performance (Province of Pangasinan vs. Reparations Commission, November 29, 1977, 80 SCRA 376). In the case at bar, however, in view of the above-cited subsequent decisions of this Court clearly defining the legal duty to grant holiday pay to monthly salaried employees, mandamus is an appropriate equitable remedy (Dionisio vs. Paterno, July 23, 1980, 98 SCRA 677; Gonzales vs. Government Service Insurance System, September 10, 1981, 107 SCRA 492). WHEREFORE, the questioned decision of respondent arbitrator is SET ASIDE and respondent corporation is ordered to GRANT holiday pay to its monthly salaried employees. No costs. SO ORDERED. Fernan, Alampay, Gutierrez, Jr., and Paras, JJ., concur. G.R. No. 120319 October 6, 1995 LUZON DEVELOPMENT BANK, petitioner, vs.ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA in her capacity as VOLUNTARY ARBITRATOR, respondents. ROMERO, J.: From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue: Whether or not the company has violated the Collective Bargaining Agreement provision and the Memorandum of Agreement dated April 1994, on promotion.

At a conference, the parties agreed on the submission of their respective Position Papers on December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no Position Paper had been filed by LDB. On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision disposing as follows: WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining Agreement provision nor the Memorandum of Agreement on promotion. Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator and to prohibit her from enforcing the same. In labor law context, arbitration is the reference of a labor dispute to an impartial third person for determination on the basis of evidence and arguments presented by such parties who have bound themselves to accept the decision of the arbitrator as final and binding. Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory or voluntary. Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government to forego their right to strike and are compelled to accept the resolution of their dispute through arbitration by a third party. 1 The essence of arbitration remains since a resolution of a dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the parties, but in compulsory arbitration, such a third party is normally appointed by the government. Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final and binding resolution. 2 Ideally, arbitration awards are supposed to be complied with by both parties without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by both parties but to comply with the same. After all, they are presumed to have freely chosen arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to de bound by said arbitrator's decision. In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to include therein provisions for a machinery for the resolution of grievances arising from the interpretation or implementation of the CBA or company personnel policies. 3 For this purpose, parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include a procedure for their selection, preferably from those accredited by the National Conciliation and Mediation Board (NCMB). Article 261 of the Labor Code

accordingly provides for exclusive original jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the interpretation or implementation of the CBA and (2) the interpretation or enforcement of company personnel policies. Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over other labor disputes. On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the following enumerated cases: . . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employeremployee 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. xxx xxx xxx It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate jurisdiction of the National Labor Relations Commission (NLRC) for that matter. 4 The state of our present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties," 5 while the "(d)ecision, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders." 6 Hence, while there is an express mode of appeal from the decision of a labor arbiter, Republic Act No.

6715 is silent with respect to an appeal from the decision of a voluntary arbitrator. Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not, elevated to the Supreme Court itself on a petition for certiorari, 7 in effect equating the voluntary arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and imposes an unnecessary burden upon it. In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that the awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et al., 9 this Court ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity." Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasijudicial agency but independent of, and apart from, the NLRC since his decisions are not appealable to the latter. 10 Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall exercise: xxx xxx xxx (B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. xxx xxx xxx Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be considered as a quasi-judicial agency, board or commission, still both he and the panel are comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry Arbitration Commission, 11 that the broader term "instrumentalities" was purposely included in the above-quoted provision. An "instrumentality" is anything used as a means or agency. 12 Thus, the terms governmental "agency" or "instrumentality" are synonymous in the sense that either of them is a means by which a government acts, or by which a certain government act or function is performed. 13 The word "instrumentality," with

respect to a state, contemplates an authority to which the state delegates governmental power for the performance of a state function. 14 An individual person, like an administrator or executor, is a judicial instrumentality in the settling of an estate, 15 in the same manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the court, 16 and a trustee in bankruptcy of a defunct corporation is an instrumentality of the state. 17 The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the Employees Compensation Commission is also provided for in the Labor Code, Circular No. 191, which is the forerunner of the present Revised Administrative Circular No. 195, laid down the procedure for the appealability of its decisions to the Court of Appeals under the foregoing rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129. A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the quasijudicial agencies, boards and commissions enumerated therein. This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities 18 not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter. In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known as the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the contract or submission, or if none be specified, the Regional Trial Court for the province or city in which one of the parties resides or is doing business, or in which the arbitration is held, shall have jurisdiction. A party to the controversy may, at any time within one (1) month after an award is made, apply to the court having jurisdiction for an order confirming the award and the court must grant such order unless the award is vacated, modified or corrected. 19 In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this Court shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition. ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.

G.R. No. 165486

May 31, 2006

CENTRO ESCOLAR UNIVERSITY FACULTY AND ALLIED WORKERS UNION INDEPENDENT, Petitioner, vs. HON. COURT OF APPEALS, APRON MANGABAT as Voluntary Arbitrator, and CENTRO ESCOLAR UNIVERSITY, Respondents. DECISION PUNO, J.: Republic Act No. (R.A.) 6728, otherwise known as the "Government Assistance To Students and Teachers in Private Education Act," allows private schools to increase their tuition fees on the condition that 70% of the tuition fee increases shall go to the payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel. The petition at bar poses the issue of whether respondent Centro Escolar University may source from the 70% incremental proceeds (IP) the integrated IP incorporated into the salaries of its teaching and non-teaching staff pursuant to the collective bargaining agreements (CBAs) entered into by their union. It appears that petitioner union, representing the teaching and the non-teaching staff of respondent university, has existing CBAs with the university. Their respective CBAs granted both the teaching and the non-teaching staff increases in their compensation. The following increases were provided in the CBA of the teaching personnel for the period 2000 to 2005: ARTICLE V SALARIES Section 1. Salary Scales. In order to achieve a sound and effective administration, the UNIVERSITY and the UNION hereby agree on the salary scale based on the 2000 Faculty Ranking, which shall be given during the lifetime of this Agreement. Section 2. Hiring Rates. The following shall be the salary scale for the college teachers (inclusive of the amount of P3.00 per hour for faculty members with rank and P1.50 for those without rank) as a result of negotiation aimed at preventing distortion of the salary rate. In addition to the above rates, an integration of IP is added according to the following schedule: xxx Section 3. Improvement in salary due to Educational Qualifications. Any faculty member in the College Level shall be given P3.00 per hour increase in pay upon presentation to the Human Resource Department of his Special Order for a Masters Degree and P5.00 per hour increase in pay upon presentation to the

Human Resource Development of his Special Order for a Doctoral Degree; provided the same has not been considered in the determination of his rank. Section 4. Other benefits. a) Emergency Financial Assistance. The faculty member shall receive an additional P350.00 to the previous P800.00 for a total of P1,150.00 for the Emergency Financial Assistant (EFA). b) Mid-year Bonus. Mid-year bonus shall be improved from 115% to 120% of basic pay, effective April 1, 2000 to March 31, 2003. c) There shall be an improvement of summer pay for permanent faculty members with masters degree using the following table: xxx Section 5. At no time shall a faculty member suffer a reduction of the salary rate he enjoyed before the effectivity of this agreement even if his rate exceeds that which corresponds to his rank as established in the CBA Pay Scale set forth. Section 6. Salary increases arising from the CBAs (sic) and from faculty ranking shall not be deductible from the 70% share in the Incremental Proceeds (IP) of the faculty and non-teaching staff.1 (emphases supplied) Respondent university admits that salary increases provided under Sections 1, 2, 3 and 4 are taken from the university fund, while the salary increases brought about by the IP integration are deducted from the IP.2lawphil.net The CBA for the non-teaching personnel, on the other hand, provided: ARTICLE V SALARIES Section 1. Effective April 1, 2000 to March 31, 2005, all employees shall receive an additional basic salary of P600.00 per month. This is an across the board increase, over and above legislated wage increase. All employees shall also receive an additional P350.00 or a total of P1,150.00 for their EFA. Section 2. Job Classification and Salary Scale. The University agrees to adopt a table or classification of jobs in the University with component grade levels and corresponding salary ranges which shall form part of this contract by reference. Starting April 1, 2000, an increase of not more than 50% of the improvement given to the faculty shall be given to the non-teaching staff.

Section 3. Effective April 1, 2000 to March 31, 2005, longevity pay for the nonteaching staff shall be improved, following this table: xxx Section 4. There shall be a partial integration of incremental proceeds in the basic pay amounting to not more than P1,000/per month, according to the following schedule: xxx Section 5. Salary increases arising from CBAs (sic) from job classification shall not be deductible from the 70% share of the IP of the faculty and non-teaching staff.3 (emphases supplied) As with the salary increases for the schools faculty, the increases provided under Sections 1, 2 and 3 are also taken from the university fund, while the increases under Section 4 are deducted from the IP.4 Petitioner asserts that the integrated IP granted in the CBAs should not be deducted from the personnels 70% share in the IP. It cites the common provision in the CBAs of the faculty and the non-teaching staff prohibiting the deduction of salary increases arising from the CBA from their 70% share in the IP. Petitioner also sought the payment of additional IP for the faculty members with overload and permanent substitution units. On February 5, 2002, petitioner filed with the National Conciliation and Mediation Board a preventive mediation for the recovery of IP losses due to the universitys alleged deduction of the cost of CBA-won economic benefits from the 70% share of the teachers and employees in the IP. The parties submitted their position papers before the voluntary arbitrator. Petitioner contended that the deduction of the IP integration from the 70% share of tuition fee increase is illegal and contrary to the CBA, as the IP integration in the salary is considered a CBA-won increase, hence, may not be deducted from the 70%. It also claims that the IP is computed on a pro-rata basis, depending on the number of hours worked. Hence, those who are assigned overload units must also receive the corresponding IP for the extra assignment.5 Respondent university, meanwhile, averred that there are two kinds of salary increases in the CBAthe CBA-negotiated increase taken from the university fund, and the increase as a result of IP integration which, by its nature, is taken from the 70% share of the school personnel in the IP. It further argued that it would not be feasible to grant additional IP to teachers with overload or permanent substitution assignments, as the IP is distributed among all employees of the school, whether teaching or non-teaching. The only conceivable formula to accommodate the claim of teachers with overload or permanent substitution assignment is to reduce the share of the employees who have no such load. This, respondent university claimed, would create more problems than solutions for the university.6

In his decision dated April 10, 2003,7 Voluntary Arbitrator Apron Mangabat upheld the position of respondent university and dismissed the case. The dispositive portion of the decision reads: WHEREFORE, premises considered, judgment is hereby issued in favor of the Centro Escolar University and ordering that: 1. Integration of incremental proceeds in the basic pay as provided for in the Collective Bargaining Agreement shall be deducted from the employees share on the incremental proceeds; 2. Other than that currently provided in the Collective Bargaining Agreement, no other incremental proceeds shall be integrated in the basic pay; 3. No additional incremental proceeds shall be granted to faculty members with overload assignments and with permanent substitution classes; and, 4. The case is hereby dismissed.8 Petitioner elevated the case to the Court of Appeals via petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. The appellate court dismissed the petition on the ground that petitioner used a wrong mode of appeal. It held that petitioner should have filed an appeal under Rule 43 of the 1997 Rules of Civil Procedure.9 The Court of Appeals also denied the motion for reconsideration filed by petitioner.10 Hence, this petition based on the following grounds: 1. Respondent court committed reversible error in dismissing the instant petition on technical ground that appeal under Rule 43 is the proper remedy, and not certiorari under Rule 65, when no less than Section 2 of Rule 43 explicitly provides that Rule 43 does not apply in labor cases. 2. Respondent court committed reversible error in relying on Bautista vs. Court of Appeals when Bautista refers to criminal case (while this is a labor case) and the citation is a mere obiter dictum, hence, inapplicable. 3. Respondent court committed reversible error in denying pertitioners motion for reconsideration based on the case of Luzon Development Bank vs. Association of Luzon Development Bank Employees, to further support the original ruling that Rule 43 is the correct remedy. However, in that case, the Supreme Court equates the award or decisions of voluntary arbitrator with that of RTC and ruled that in a petition for certiorari from that award or decision, Court of Appeals have concurrent jurisdiction with Supreme Court. Thus it ordered the remanding of the

petition for certiorari to the Court of Appeals, thereby recognizing certiorari as a proper remedy. 4. Respondent court committed reversible error in not holding that, as ruled by the Honorable Supreme Court in a long line of cases, decision of voluntary arbitrator is final and unappealable, except when there is want or excess of jurisdiction, grave abuse of discretion, denial of substantial justice or erroneous interpretation of the law. In such cases, certiorari is the proper remedy. 5. Respondent court committed reversible errors in not holding that the voluntary arbitrator has acted with grave abuse of discretion, without or in excess of jurisdiction, in ignoring the CBA as the law between the parties and in not deciding the grievances through the interpretation or implementation of the CBA pursuant to his limited authority under Article 260 of the New Labor Code. 6. Respondent court committed reversible error in conveniently disposing the merit of the case on a one-sentence, one paragraph coup de grace that petitioner has failed to offer meritorious reasons or arguments for allowance of petition. The truth is that petitioner has adduced ample meritorious reasons and arguments. Since the assailed deductions and estimated amounts are all uncontroverted only questions of law are involved, i.e., whether the deductions are valid in view of the CBA prohibition, and whether the university is liable to refund the deducted amount totaling P500 million.11 The issues in this case are two-pronged: first, the procedural issue whether the decision of the voluntary arbitrator is appealable to the Court of Appeals under Rule 43 of the 1997 Rules of Civil Procedure; and second, the substantive issues (1) whether the university may deduct from the 70% share of the personnel in the IP the integrated IP granted in the CBAs of the teaching and the non-teaching staff; and (2) whether the teaching staff is entitled to additional IP for overload and permanent substitution units. We shall first address the procedural issue. We find that the Court of Appeals did not err in holding that petitioner used a wrong remedy when it filed a special civil action on certiorari under Rule 65 instead of an appeal under Rule 43 of the 1997 Rules of Civil Procedure. The Court held in Luzon Development Bank v. Association of Luzon Development Bank Employees12 that decisions of the voluntary arbitrator under the Labor Code are appealable to the Court of Appeals. In that case, the Court observed that the Labor Code was silent as regards the appeals from the decisions of the voluntary arbitrator, unlike those of the Labor Arbiter which may be appealed to the National Labor Relations Commission. The Court noted, however, that the voluntary arbitrator is a government instrumentality within the contemplation of Section 9 of Batas Pambansa Blg. (BP) 12913 which provides for the appellate jurisdiction of the Court of Appeals.14 The decisions of the voluntary arbitrator are akin to those of the Regional Trial Court, and, therefore, should first be appealed to the Court of Appeals before being elevated to this Court. This is in furtherance and

consistent with the original purpose of Circular No. 1-91 to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial agencies not expressly excepted from the coverage of Section 9 of BP 129. Circular No. 191 was later revised and became Revised Administrative Circular No. 1-95. The Rules of Court Revision Committee incorporated said circular in Rule 43 of the 1997 Rules of Civil Procedure. The inclusion of the decisions of the voluntary arbitrator in the Rule was based on the Courts pronouncements in Luzon Development Bank v. Association of Luzon Development Bank Employees.15 Petitioners argument, therefore, that the ruling in said case is inapplicable in this case is without merit. Moreover, a petition for certiorari is an extraordinary remedy that is adopted to correct errors of jurisdiction committed by the lower court or quasi-judicial agency, or when there is grave abuse of discretion on the part of such court or agency amounting to lack or excess of jurisdiction. Where the error is not one of jurisdiction, but of law or fact which is a mistake of judgment, the proper remedy should be appeal.16 In addition, an independent action for certiorari may be availed of only when there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.17 There was no question of jurisdiction involved in the decision of the voluntary arbitrator. What was being questioned was merely his findings of whether the universitys practice of sourcing the integrated IP in the CBA from the 70% share of the personnel in the IP violates the provisions of the CBA. Such is a proper subject of an appeal. Nonetheless, even if we overlook petitioners procedural lapse, the case should still be dismissed on substantive grounds. Section 5 (2) of R.A. 6728 provides: SEC. 5. Tuition Fee Supplement for Student in Private High School xxx (2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be granted and tuition fee under subparagraph (c) may be increased, on the condition that seventy percent (70%) of the amount subsidized allotted for tuition fee or of the tuition fee increases shall go to the payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel except administrators who are principal stockholders of the school, and may be used to cover increases as provided for in the collective bargaining agreements existing or in force at the time when this Act is approved and made effective: Provided, That government subsidies are not used directly for salaries of teachers of nonsecular subjects. x x x In Cebu Institute of Medicine v. Cebu Institute of Medicine Employees Union-National Federation of Labor,18 the Court held that the private institution concerned has the discretion on the disposition of the seventy percent (70%) incremental tuition fee increase. It enjoys the privilege of determining how much increase in salaries to grant and the kind and amount of allowances and other benefits to give. The only precondition is that seventy percent (70%) of the incremental tuition fee increase goes to the payment of salaries, wages,

allowances and other benefits of teaching and non-teaching personnel. In other words, the allocation of the 70% of the IP is considered a management prerogative. In that case, the Court allowed the charging against the 70% the employers share in the SSS, Medicare and Pag-ibig premiums, they falling within the category of "other benefits" as provided in Section 5 (2) of RA 6728. There is an additional element, however, in the case at bar. Here, the CBAs between the university and the teaching and the non-teaching staff prohibit the deduction of the CBA-won benefits from the 70% of the IP. The CBA is a negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit, including mandatory provisions for grievances and arbitration machineries.19 It is the law between the parties, and they are obliged to comply with its provisions. We need to resolve, therefore, whether the charging of the integrated IP against the 70% is violative of the CBA. We find that it is not. The voluntary arbitrator described the nature of the IP, thus: The allocation of 70% of the IP for payment of salaries, wages, allowances and other benefits of teaching and non-teaching personnel is clearly mandated by law. Yet, nowhere is it provided in Republic Act No. 6728 that the IP should be integrated with the salary and wages. The nature of IP is that it bears a reasonable relation as to whether or not universities/schools will increase their tuition fees. Like that of a bonus, IP is additional compensation subject to a resolutory condition imposed for its payment. But unlike a bonus or commission, the IP is not given for extra efforts exerted. Thus, a teacher originally handling a load of 21 units will not be provided IP the next school year even with the same teaching load, should there be a tuition fee increase. Historically, IP was allocated "to alleviate the sad plight of private schools, their personnel and all those directly and indirectly dependent on school incomes." It is additional benefit accorded to the employees. Hence, the determination of the amount of IP to be integrated into employees basic salary entails the exercise of the right of an employer to regulate all aspects of employment. Precisely, the employer has the right to change the basis of the payment of wages of the employees, subject to provisions of law. xxx Distinct and separate from employees basic salary, IP are sourced from increase in tuition fees while the basic salaries and wages and incidental salary increases i.e., due to educational qualifications, emergency financial assistance, mid-year bonus, longevity pay, job classification, among others are sourced from the university fund. This distinction bears importance in the IP integration as provided under the Collective Bargaining Agreement (CBA) between the parties. x x x20 The integrated IP provided in the CBAs of the teaching and the non-teaching staff is actually the share of the employees in the 70% of the IP that is incorporated

into their salaries as a result of the negotiation between the university and its personnel. The purpose of the integration is to regularize the receipt by the personnel of the benefits arising from the increase in the schools tuition fees. But it does not change the nature of the benefit as IP. There is no basis, therefore, for petitioners objection to the sourcing of the integrated IP from the 70% of the tuition fee increases. Finally, we agree with the discussion of the voluntary arbitrator as regards the award of additional IP to members of the faculty with overload or permanent substitution assignment: Coming now to the claim for additional IP for faculty members with overload assignments and with permanent substitution classes, the same must be denied. To be entitled to IP, it matters not that a teacher is handling a regular full teaching load or is handling extra teaching load. Professors handling extra teaching loads are correspondingly compensated depending on the extra units they are assigned. To grant them additional IP would amount to double compensation. As argued by University, "[t]he only conceivable formula to satisfy petitioners claim for additional incremental proceeds is to deduct from the IP benefits of teaching personnel who do not have overload assignments or who do not have permanent substitution classes, and from non-teaching staff, which formula will create more problems than solution[s]."21 In view of the foregoing, we find that the Court of Appeals did not err in dismissing the petition filed before it by herein petitioner. IN VIEW WHEREOF, the petition is DENIED. SO ORDERED.

of Labor. The parties' collective bargaining agreement had expired on March 15, 1989. As the parties failed to reach a new agreement, private respondent sought the aid of the National Conciliation and Mediation Board on October 30, 1989, but the deadlock remained unresolved. On February 9, 1990, private respondent filed a "Petition for Compulsory Arbitration" in the Arbitration Branch for the National Capital Region of the National Labor Relations Commission. At the initial hearing before the labor arbiter, the parties declared that conciliation efforts before the NCMB had terminated and it was their desire to submit the case for compulsory arbitration. Accordingly, they were required to submit their position papers and proposals, which they did, and in which they indicated portions of their respective proposals to which they agree, leaving the rest for arbitration. 1 On September 28, 1990, the labor arbiter rendered a decision embodying provisions for a new collective bargaining agreement. The dispositive portion of his decision reads: WHEREFORE, the petitioner UNION and the respondent COMPANY are directed to execute and formalize their new five-year collective bargaining agreement (CBA) retroactive to the date of expiry of the 1986-1989 CBA by adopting the provisions in the aforementioned text which incorporated therein in the dispositions set forth by this Arbitrator within thirty (30) days from receipt of this Decision. SO ORDERED. 2 Petitioner appealed, but its appeal was denied by the NLRC in its questioned resolution of October 10, 1991. On March 11, 1993, the NLRC denied petitioner's motion for reconsideration. Hence, this petition with the following assignment of errors: a) The NLRC erred in affirming the Labor Arbiter's decision 1. increasing the commission rate, the incentive pay, the salaries and wage of the fixed income employees covered by the CBA; 2. granting P500.00 signing bonus to the complaint-appellee; and

G.R. No. 109383 June 15, 1998 MANILA CENTRAL LINE CORPORATION, petitioner, vs. MANILA CENTRAL LINE FREE WORKERS UNION-NATIONAL FEDERATION OF LABOR and the NATIONAL LABOR RELATIONS COMMISSION, respondents. MENDOZA, J.: This is a petition for certiorari to set aside the resolution dated October 10, 1991 of the National Labor Relations Commission in NLRC NCR Case No. 000977-90, dismissing the appeal of petitioner Manila Central Line Corporation from the order of Labor Arbiter Donato G. Quinto, Jr. in NLRC NCR Case No. 02-00813-90, as well as the resolution dated March 11, 1993 of the NLRC, denying reconsideration. This case arose out of a collective bargaining deadlock between petitioner and private respondent Manila Central Line Free Workers Union-National Federation

3. holding that the effectivity of the renegotiated CBA shall be retroactive to March 15, 1989, the expiry date of the old CBA. b) There are serious errors in the findings of facts of the Labor Arbiter which were unqualified affirmed by the NLRC and which justify the review by this Honorable SUPREME COURT; c) The NLRC erred in upholding the jurisdiction of the Labor Arbiter; and

d) The NLRC erred in affirming the finalization of the CBA by the Labor Arbiter in disregard of the provisions agreed upon by the parties. The petition is without merit. We shall deal with these contentions in the order they are presented, with the exception of the argument concerning the jurisdiction of the Labor Arbiter (par. (c)), which we shall treat first since it raises a threshold question. First. Despite the fact that it agreed with the union to submit their dispute to the labor arbiter for arbitration, petitioner questions the jurisdiction of the labor arbiter to render the decision in question. Petitioner contends that the policy of the law now is to encourage resort to conciliation and voluntary arbitration as Art. 250 (e) of the Labor Code provides. Indeed, the Labor Code formerly provided that if the parties in collective bargaining fail to reach an agreement, the Bureau of Labor Relations should call them to conciliation meetings and, if its efforts were not successful, certify the dispute to a labor arbiter for compulsory arbitration. 3 But this was changed by R.A. No. 6715 which took effect on March 21, 1989. Art. 250(e) of the Labor Code now provides that if efforts at conciliation fail, the Board shall "encourage the parties to submit their case to a voluntary arbitrator." With specific reference to cases involving deadlocks in collective bargaining, Art. 262 provides: Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. This is what the parties did in this case. After the Board failed to resolve the bargaining deadlock between the parties, the union filed a petition for compulsory arbitration in the Arbitration Branch of the NLRC. Petitioner joined the petition and the case was submitted for decision. Although the union's petition was for "compulsory arbitration," the subsequent agreement of petitioner to submit the matter for arbitration in effect made the arbitration a voluntary one. The essence of voluntary arbitration, after all, is that it is by agreement of the parties, rather than compulsion of law, that a matter is submitted for arbitration. 4 It does not matter that the person chosen as arbitrator is a labor arbiter who, under Art. 217 of the Labor Code, is charged with the compulsory arbitration of certain labor cases. There is nothing in the law that prohibits these labor arbiters from also acting as voluntary arbitrators as long as the parties agree to have him hear and decide their dispute. Moreover, petitioner must be deemed to be estopped from questioning the authority of Labor Arbiter Donato G. Quinto, Jr. to act as voluntary arbitrator and render a decision in this case. Petitioner agreed, together with the union, to refer their dispute for arbitration to him. It was only after a decision was rendered that petitioner raised the question of lack of jurisdiction. Even the, petitioner did so only for the first time in a "supplemental memorandum of appeal" to the NLRC. 5 As the NLRC, through Commissioner Romeo B. Putong, held, it was too late in the day for petitioner to do this. 6

Indeed, it is inconsistent for petitioner to contend, on the one hand, that this case should have been resolved through voluntary arbitration and, on the other, to follow the procedure for compulsory arbitration by appealing the decision of the labor arbiter to the NLRC and subsequently questioning the latter's decision through this special civil action of certiorari. Pursuant to our decision in Luzon Development Bank v. Luzon Development Bank Employees Association, 7 this case, considered as a special civil action for certiorari to set aside the decision of a voluntary arbitrator, should have been referred, as a matter of policy, to the Court of Appeals. However, it was not evident in the beginning from a cursory consideration of the pleadings that what actually took place in the labor agency was a proceeding for voluntary arbitration. Accordingly, so as not to delay the disposition of this case, we have thought on balance that this case should be retained and decided on the merits. Second. In par. (a)(1) and par. (b) of its assignment of errors, petitioner questions factual findings of the labor arbiter and the NLRC. Such findings are generally held to be binding, and even final, so long as they are substantially supported by evidence in the record of the case. 8 This is specially so where, as here, the agency and a subordinate one which heard the case in the first instance are in full agreement as to the facts. 9 The decisions of both the NLRC and the labor arbiter contain an exhaustive discussion of the issues, belying petitioner's claim that they did not fully consider the evidence and appreciate what it claims are the "dire economics straits" it is in. This is evident from the following portion of the labor arbiter's order dated September 28, 1990, which the NLRC adopted: From the foregoing allegations of the parties and as expound (sic), discussed and/or argued by them in their respective position paper, the disagreement, or deadlock, as we say it, focus (sic) and centers on the so called "economic issues" particularly on the provisions on Salaries and Wages. Petitioner-Union proposed that the commission for drivers, conductors and conductresses shall be 10% and 8%, respectively, of their gross collections. In addition, as incentive pay, it proposed that drivers, conductors and conductresses shall be entitled to incentive pay as follows: (a) For a quota of P2,600.00, the incentive should be P40.00; (b) for a quota of P2,875.00, the incentive should be P50.00, and (c) for a quota of P3,155.00 the incentive pay should be P60.00. Further, petitioner-Union, insofar as the "fixed income employees" are concerned, they proposed that they should be granted a salary/wage increase as follows: (a) effective March 15, 1989 P12.00; (b) Effective March 15, 1990 P10.00; and (c) effective March 15, 1991 P8.00. Respondent, on the other hand, proposes that the commission for drivers and conductor/tresses shall be 8.5% and 6.5% of their gross collections, respectively. And in addition, these drivers and conductor/tresses shall be entitled to an incentive pay based on the following quota, to wit: (a) for quota of P3,276.00, the incentive pay is P35.00; (b) for quota of P3,635.00, it is P45.00; and for quota of

P3,994.00, it is P55.00. Respondent management has no proposal insofar as grant of increase/s to fixed income employees' subject of the bargaining unit. As noted at present under the old CBA, the commission being paid to drivers and conductor/tresses is 8% and 6%, respectively. During and in the negotiation, respondent proposes to raise this rate by .5% thus making it 8.5 and 6.5 respectively. Respondent in proposing an increase of .5% justifies the same by saying that such is only what it can afford as it had been incurring financial losses as shown by Financial Statement it submitted in evidence. This was rejected by the union which proposes that the rate of the commission be raised to 10% and 8% respectively, from 8% and 6%, or an increase by 2%, respectively. The union debunked the claim of the respondent-company that it had been financially suffering and had claim (sic) that it had earned profit in all the years that it had been under operation. A look at the parties' proposal and counter-proposal shows that the union was demanding that the rate be increased to 10% and 8% from the old rate of 8% and 6% or an increase of 2%, while that of the company effectively increased the rate by .5% to make the rate at 8.5% and 6.5%. From this, it appears that the disagreement lies on how much would the increase in the rate be. As appearing the union was asking for an increase equivalent to at least 25% for the drivers and at least 33% for the conductor/tresses, while that which proposed (sic) by the company shows an increase of at least 6% and 8% respectively. The difference between the parties proposal and counter-proposal is at least 19% and 25%, respectively. With this disagreement in this difference, it is thought of to be practical and reasonable to meet at the middle of the difference in the rate by dividing the same into two. Hence, the increase in the rate should be from the present 8% and 6% to 8.75% and 6.75%. However, in order to make the increase realistic it is opined that it should be rounded off to the nearest full number that is to 9% and 7%, respectively. As regards the incentive pay, the following appears: OLD CBA RESPONDENT'S PROPOSAL UNION'S PROPOSAL Quota Incentive Quota Incentive Quota Incentive P2,800.00 P35.00 P3,276.00 P35.00 P2,600.00 P40.00 3,100.00 P45.00 3,635.00 P45.00 2,600.00 50.00 3,400.00 P55.00 3,994.00 P55.00 3,155.00 60.00 As can be gleaned from the above respondent raised the quota but maintained the rate for the incentive pay, while the union lowers (sic) the quota and raises (sic) the rate for the incentive. To the mind of this arbitrator, he deems it proper and fair for both parties, to adopt the quota as proposed by the respondent and the rate for the incentive pay as proposed by the union. It is believe (sic) that such is fair and reasonable because as appearing in the parties' proposal and counter-

proposal, it would seem that they are trying to out-wit each other. Hence, such would be as follows: Quota Rate of Incentive Pay P3,276.00 P40.00 3,635.00 50.00 3,994.00 60.00 Another issue where the parties are in statements (sic) is the matter of increase in the salary and wages of the fixed income employees covered by the CBA. The union proposes an increase of P12.00, P10.00 and P8.00 to be spread in the three-year period, while the company did not submit a proposal for an increase claiming that it cannot afford to give any increase as it had suffered financial difficulty. However, as already discussed earlier where it is found that respondent, as shown by its financial statement, is not really in the verge of financial collapse, it is believed that it is reasonable and fair to the parties, particularly to the union that increase would be mandated. However, we could not adopt in toto the proposal of the union. Instead, we are to adopt the increase as provided under the old CBA , that is, P6.00 for the first year, P5.00 for the second year and P4.00 for the third year. 10 Petitioner contends, however, that the labor arbiter has a duty to indicate in his order every relevant proof necessary to show that the opposing party's evidence is superior to that of petitioner. This is not so. The quantum of proof required in proceeding before administrative agencies is "substantial evidence," not overwhelming or preponderant evidence. 11 The quoted portion of the labor arbiter's order shows that the proposals of the parties as well as petitioner's order shows that the proposals of the parties as well as petitioner's financial statements were carefully considered by him in arriving at his judgment. As the Solicitor General states: Nor did respondent NLRC overlook the protestations of the COMPANY that it is suffering from "gargantuan economic trouble." This assertion, however, was sufficiently refuted by the UNION by presenting proof that the COMPANY had acquired a bus terminal area in Tunasa. Moreover, the COMPANY had just imported machines to recondition their old buses. Also, as can be seen in the 1992 Financial Statement of the COMPANY, it acquired new buses worth P2,400,000.00. These facts verify the findings of the Labor Arbiter that the COMPANY is not on the verge of financial collapse . . . Also, the COMPANY had offered an increase of .5% but in the same breath, it claims that it can hardly maintain the commission rate of 8% and 6%. There is a contradiction of facts right there and then, which considerably weakens its assertions. The increase in commission rate will not really affect the income of the COMPANY. By their very nature, commissions will only be given to the employees if the COMPANY receives income. They are given in the form of incentives or encouragement so that employees would be inspired to put a little more industry on their particular tasks. This is unlike salaries and wages which are fixed amounts and which should be given to the employees regardless of whether the COMPANY is making any collection

or not. Therefore, the employees are merely asking a percentage of the earnings of the COMPANY, which they, through their efforts, helped produce. As regards the incentive pay increase, the COMPANY's financial position was also taken into consideration. It appears that the COMPANY and the UNION were trying to outwit each other in their respective proposals. Thus, the position adopted by the Labor Arbiter increasing the quota and the amount of incentive is a middle ground which is fair to both parties. The increase in salaries and wages was premised on the findings of the Labor Arbiter that the COMPANY was not on the verge of financial collapse and that an increase would be mandated, particularly taking into consideration the inflation or increase in the cost of living the subsequently years after the CBA was finalized. In adopting the wage increase rates provided in the old CBA, the financial condition of the COMPANY as well as the needs of the employees were taken into consideration. When conclusions of the Labor Arbiter are sufficiently corroborated by the evidence on record, the same should be respected by the appellant tribunals since he is in a better position to assess or evaluate the credibility of the contending parties [CDCP Tollways Operation Employees and Workers Union v. NLRC, 211 SCRA 58) . . . . 12 Nor is the grant of a P500.00 "signing bonus" to employees unreasonable or arbitrary. The amount is a modest sum, to be given by petitioner only once, in order to make employees finally agree to the new CBA. In ordering payment of this amount, the labor arbiter acted in accordance with Art. 262-A of the Labor Code which provides in part: Procedures. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have the power to hold hearings, receive evidences and take whatever action is necessary to resolve the issue or issues subject to the dispute, including efforts to effect a voluntary settlement between parties. (emphasis added) Third. Petitioner also contends that in ordering the new CBA to be effective on March 15, 1989, the expiry date of the old CBA, the labor arbiter acted contrary to Art. 253-A of the Labor Code. This provision states, among others, that: Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the negotiation of the collective bargaining agreement, the parties may exercise their rights under this Code. Art. 253-A refers to collective bargaining agreements entered into by the parties as a result of their mutual agreement. The CBA in this case, on the other hand, is

part of an arbitral award. As such, it may be made retroactive to the date of expiration of the previous agreement. As held In St. Luke's Medical Center, Inc. v. Torres: Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of the previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article 253-A cannot be properly applied to herein case. As correctly stated by public respondent in his assailed Order of April 12, 1991 dismissing petitioner's Motion for Reconsideration Anent the alleged lack of basis for the retroactivity provisions awarded, we would stress that the provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by and between the parties, and not arbitral awards . . . (p. 818 Rollo). Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof. 13 Indeed, petitioner has not shown that the question of effectivity was not included in the general agreement of the parties to submit their dispute for arbitration. To the contrary, as the order of the labor arbiter states, this question was among those submitted for arbitration by the parties: As regards the "Effectivity and Duration" clause, the company proposes that the collective bargaining agreement shall take effect only upon its signing and shall remain in full force and effect for a period of five years. The union proposes that the agreement shall take effect retroactive to March 15, 1989, the expiration date of the old CBA. And after an evaluation of the parties' respective contention and argument thereof, it is believed that of the union is fair and reasonable. It is the observation of this Arbitrator that in almost subsequent CBAs, the effectivity of the renegotiated CBA, usually and most often is made effective retroactive to the date when the immediately proceeding CBA expires so as to give a semblance of continuity. Hence, for this particular case, it is believed that there is nothing wrong adopting the stand of the union, that is that this CBA be made retroactive effective March 15, 1989. 14 Fourth. It is finally contended that the labor arbiter disregarded many provisions of the old CBA which the parties had "retained, improved and agreed upon," with the result that "the CBA finalized by the Honorable Labor Arbiter does not reflect the true intention of the parties." 15 Petitioner does not specify, however, what provisions of the old CBA were disregarded by the labor arbiter. Consequently, this allegation should simply be dismissed.

WHEREFORE, the petition is DISMISSED for lack of merit. SO ORDERED.

Petitioner claimed that it entrusted the preparation of the payroll to its office staff, including the computation and payment of the 13th-month pay and other benefits. When it changed its person in charge of the payroll in the process of computerizing its payroll, and after audit was conducted, it allegedly discovered the error of including non-basic pay or other benefits in the base figure used in the computation of the 13th-month pay of its employees. It cited the Rules and Regulations Implementing P.D. No. 851 (13th-Month Pay Law), effective December 22, 1975, Sec. 2(b) which stated that: "Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to P.D. No. 525 or Letter of Instruction No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.

G.R. No. 152456

April 28, 2004

SEVILLA TRADING COMPANY, petitioner, vs. A.V.A. TOMAS E. SEMANA, SEVILLA TRADING WORKERS UNIONSUPER, respondents. PUNO, J.: On appeal is the Decision1 of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 sustaining the Decision2 of Accredited Voluntary Arbitrator Tomas E. Semana dated 13 November 2000, as well as its subsequent Resolution3 dated 06 March 2002 denying petitioners Motion for Reconsideration. The facts of the case are as follows: For two to three years prior to 1999, petitioner Sevilla Trading Company (Sevilla Trading, for short), a domestic corporation engaged in trading business, organized and existing under Philippine laws, added to the base figure, in its computation of the 13th-month pay of its employees, the amount of other benefits received by the employees which are beyond the basic pay. These benefits included: (a) Overtime premium for regular overtime, legal and special holidays; (b) Legal holiday pay, premium pay for special holidays; (c) Night premium; (d) Bereavement leave pay; (e) Union leave pay; (f) Maternity leave pay; (g) Paternity leave pay; (h) Company vacation and sick leave pay; and (i) Cash conversion of unused company vacation and sick leave.

Petitioner then effected a change in the computation of the thirteenth month pay, as follows: 13th-month pay where: net basic pay = gross pay (non-basic pay or other benefits) net basic pay 12 months

Now excluded from the base figure used in the computation of the thirteenth month pay are the following: a) Overtime premium for regular overtime, legal and special holidays; b) Legal holiday pay, premium pay for special holidays; c) Night premium; d) Bereavement leave pay; e) Union leave pay; f) Maternity leave pay; g) Paternity leave pay; h) Company vacation and sick leave pay; and i) Cash conversion of unused vacation/sick leave. Hence, the new computation reduced the employees thirteenth month pay. The daily piece-rate workers represented by private respondent Sevilla Trading Workers Union SUPER (Union, for short), a duly organized and registered union, through the Grievance Machinery in their Collective Bargaining Agreement, contested the new computation and reduction of their thirteenth month pay. The parties failed to resolve the issue. On March 24, 2000, the parties submitted the issue of "whether or not the exclusion of leaves and other related benefits in the computation of 13th-month pay is valid" to respondent Accredited Voluntary Arbitrator Tomas E. Semana

(A.V.A. Semana, for short) of the National Conciliation and Mediation Board, for consideration and resolution. The Union alleged that petitioner violated the rule prohibiting the elimination or diminution of employees benefits as provided for in Art. 100 of the Labor Code, as amended. They claimed that paid leaves, like sick leave, vacation leave, paternity leave, union leave, bereavement leave, holiday pay and other leaves with pay in the CBA should be included in the base figure in the computation of their 13th-month pay. On the other hand, petitioner insisted that the computation of the 13th-month pay is based on basic salary, excluding benefits such as leaves with pay, as per P.D. No. 851, as amended. It maintained that, in adjusting its computation of the 13th-month pay, it merely rectified the mistake its personnel committed in the previous years. A.V.A. Semana decided in favor of the Union. The dispositive portion of his Decision reads as follows: WHEREFORE, premises considered, this Voluntary Arbitrator hereby declared that: 1. The company is hereby ordered to include sick leave and vacation leave, paternity leave, union leave, bereavement leave and other leave with pay in the CBA, premium for work done on rest days and special holidays, and pay for regular holidays in the computation of the 13thmonth pay to all covered and entitled employees; 2. The company is hereby ordered to pay corresponding backwages to all covered and entitled employees arising from the exclusion of said benefits in the computation of 13th-month pay for the year 1999. Petitioner received a copy of the Decision of the Arbitrator on December 20, 2000. It filed before the Court of Appeals, a "Manifestation and Motion for Time to File Petition for Certiorari" on January 19, 2001. A month later, on February 19, 2001, it filed its Petition for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure for the nullification of the Decision of the Arbitrator. In addition to its earlier allegations, petitioner claimed that assuming the old computation will be upheld, the reversal to the old computation can only be made to the extent of including non-basic benefits actually included by petitioner in the base figure in the computation of their 13th-month pay in the prior years. It must exclude those non-basic benefits which, in the first place, were not included in the original computation. The appellate court denied due course to, and dismissed the petition. Hence, this appeal. Petitioner Sevilla Trading enumerates the grounds of its appeal, as follows:

1. THE DECISION OF THE RESPONDENT COURT TO REVERT TO THE OLD COMPUTATION OF THE 13th-MONTH PAY ON THE BASIS THAT THE OLD COMPUTATION HAD RIPENED INTO PRACTICE IS WITHOUT LEGAL BASIS. 2. IF SUCH BE THE CASE, COMPANIES HAVE NO MEANS TO CORRECT ERRORS IN COMPUTATION WHICH WILL CAUSE GRAVE AND IRREPARABLE DAMAGE TO EMPLOYERS.4 First, we uphold the Court of Appeals in ruling that the proper remedy from the adverse decision of the arbitrator is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, not a petition for certiorari under Rule 65. Section 1 of Rule 43 states: RULE 43 Appeals from the Court of Tax Appeals and Quasi-Judicial Agencies to the Court of Appeals SECTION 1. Scope. This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law. [Emphasis supplied.] It is elementary that the special civil action of certiorari under Rule 65 is not, and cannot be a substitute for an appeal, where the latter remedy is available, as it was in this case. Petitioner Sevilla Trading failed to file an appeal within the fifteen-day reglementary period from its notice of the adverse decision of A.V.A. Semana. It received a copy of the decision of A.V.A. Semana on December 20, 2000, and should have filed its appeal under Rule 43 of the 1997 Rules of Civil Procedure on or before January 4, 2001. Instead, petitioner filed on January 19, 2001 a "Manifestation and Motion for Time to File Petition for Certiorari," and on February 19, 2001, it filed a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. Clearly, petitioner Sevilla Trading had a remedy of appeal but failed to use it. A special civil action under Rule 65 of the Rules of Court will not be a cure for failure to timely file a petition for review on certiorari under Rule 45 (Rule 43, in the case at bar) of the Rules of Court. Rule 65 is an independent action that cannot be availed of as a substitute for the lost remedy of an ordinary appeal,

including that under Rule 45 (Rule 43, in the case at bar), especially if such loss or lapse was occasioned by ones own neglect or error in the choice of remedies.5 Thus, the decision of A.V.A. Semana had become final and executory when petitioner Sevilla Trading filed its petition for certiorari on February 19, 2001. More particularly, the decision of A.V.A. Semana became final and executory upon the lapse of the fifteen-day reglementary period to appeal, or on January 5, 2001. Hence, the Court of Appeals is correct in holding that it no longer had appellate jurisdiction to alter, or much less, nullify the decision of A.V.A. Semana. Even assuming that the present petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a proper action, we still find no grave abuse of discretion amounting to lack or excess of jurisdiction committed by A.V.A. Semana. "Grave abuse of discretion" has been interpreted to mean "such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, or, in other words where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law." 6 We find nothing of that sort in the case at bar. On the contrary, we find the decision of A.V.A. Semana to be sound, valid, and in accord with law and jurisprudence. A.V.A. Semana is correct in holding that petitioners stance of mistake or error in the computation of the thirteenth month pay is unmeritorious. Petitioners submission of financial statements every year requires the services of a certified public accountant to audit its finances. It is quite impossible to suggest that they have discovered the alleged error in the payroll only in 1999. This implies that in previous years it does not know its cost of labor and operations. This is merely basic cost accounting. Also, petitioner failed to adduce any other relevant evidence to support its contention. Aside from its bare claim of mistake or error in the computation of the thirteenth month pay, petitioner merely appended to its petition a copy of the 1997-2002 Collective Bargaining Agreement and an alleged "corrected" computation of the thirteenth month pay. There was no explanation whatsoever why its inclusion of non-basic benefits in the base figure in the computation of their 13th-month pay in the prior years was made by mistake, despite the clarity of statute and jurisprudence at that time. The instant case needs to be distinguished from Globe Mackay Cable and Radio Corp. vs. NLRC,7 which petitioner Sevilla Trading invokes. In that case, this Court decided on the proper computation of the cost-of-living allowance (COLA) for monthly-paid employees. Petitioner Corporation, pursuant to Wage Order No. 6 (effective 30 October 1984), increased the COLA of its monthly-paid employees by multiplying the P3.00 daily COLA by 22 days, which is the number of working days in the company. The Union disagreed with the computation, claiming that the daily COLA rate of P3.00 should be multiplied by 30 days, which has been the practice of the company for several years. We upheld the contention of the petitioner corporation. To answer the Unions contention of company practice, we ruled that: Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos.

1 (26 March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate . . . The test of long practice has been enunciated thus: . . . Respondent Company agreed to continue giving holiday pay knowing fully well that said employees are not covered by the law requiring payment of holiday pay." (Oceanic Pharmacal Employees Union [FFW] vs. Inciong, 94 SCRA 270 [1979]) Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21 May 1984 that a formula for the conversion of the daily allowance to its monthly equivalent was laid down. Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application of the law . . . In the above quoted case, the grant by the employer of benefits through an erroneous application of the law due to absence of clear administrative guidelines is not considered a voluntary act which cannot be unilaterally discontinued. Such is not the case now. In the case at bar, the Court of Appeals is correct when it pointed out that as early as 1981, this Court has held in San Miguel Corporation vs. Inciong8 that: Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th-month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus. Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary: a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174; b) Profit sharing payments; c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary Blas Ople,

overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th-month pay. The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary of other payments which are properly considered as "fringe" benefits. Likewise, the catch-all exclusionary phrase "all allowances and monetary benefits which are not considered or integrated as part of the basic salary" shows also the intention to strip basic salary of any and all additions which may be in the form of allowances or "fringe" benefits. Moreover, the Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more empathic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay. While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an employer to an employee, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations paid by employer to an employee. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary. The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard to find any "earnings and other remunerations" expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose. In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the construction or application of the law. When petitioner Sevilla Trading still included over the years non-basic benefits of its employees, such as maternity leave pay, cash equivalent of unused vacation and sick leave, among others in the computation of the 13th-month pay, this may only be construed as a voluntary act on its part. Putting the blame on the petitioners payroll personnel is inexcusable. In Davao Fruits Corporation vs. Associated Labor Unions, we likewise held that:9

The "Supplementary Rules and Regulations Implementing P.D. No. 851" which put to rest all doubts in the computation of the thirteenth month pay, was issued by the Secretary of Labor as early as January 16, 1976, barely one month after the effectivity of P.D. No. 851 and its Implementing Rules. And yet, petitioner computed and paid the thirteenth month pay, without excluding the subject items therein until 1981. Petitioner continued its practice in December 1981, after promulgation of the aforequoted San Miguel decision on February 24, 1981, when petitioner purportedly "discovered" its mistake. From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation of its employees thirteenth month pay, without the payments for sick, vacation and maternity leave, premium for work done on rest days and special holidays, and pay for regular holidays. The considerable length of time the questioned items had been included by petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of mistake. A company practice favorable to the employees had indeed been established and the payments made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer, by virtue of Sec. 10 of the Rules and Regulations Implementing P.D. No. 851, and Art. 100 of the Labor Code of the Philippines which prohibit the diminution or elimination by the employer of the employees existing benefits. [Tiangco vs. Leogardo, Jr., 122 SCRA 267 (1983)] With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years. In the above quoted case of Davao Fruits Corporation vs. Associated Labor Unions,10 the company practice lasted for six (6) years. In another case, Davao Integrated Port Stevedoring Services vs. Abarquez,11 the employer, for three (3) years and nine (9) months, approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers. While in Tiangco vs. Leogardo, Jr.,12 the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three (3) years and four (4) months. In all these cases, this Court held that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. In the case at bar, petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. This, we rule likewise constitutes voluntary employer practice which cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code: Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

IN VIEW WHEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 63086 dated 27 November 2001 and its Resolution dated 06 March 2002 are hereby AFFIRMED. SO ORDERED.

said benefits and recommended their successors. Although such recommendees were merely high school graduates, KCPI nonetheless employed them. Sometime in 1991, Danilo L. Guerrero retired and recommended his nephew as his replacement. KCPI rejected Guerreros recommendation because his nephew was not a member of his (Guerreros) immediate family. The matter was brought to Voluntary Arbitrator Danilo Lorredo who ruled that Guerreros nephew should be employed as his replacement in accordance with the CBA. KCPI brought the matter to the Court. On September 21, 1993, the Court affirmed the ruling of the VA in Kimberly Clark Philippines v. Lorredo,5 where it was held that: As we see it, the phrase "in default thereof" has not been intended or contemplated by the parties as having a preclusive effect within the group. It simply sets a priority on who can possibly be recommendees for employment. The employee, in fine, need not be childless at all for him to be allowed to nominate a third degree collateral relative; otherwise, his ability to designate such relative is all but suddenly lost by the birth of an only child and regained by the latter's demise. This situation could not have been intended.6 However, the Court also ruled that KCPI was not obliged to unconditionally accept the recommendee since the latter must still meet the required employment standard theretofore set by it. Even a qualified recommendee would be hired only on a "probationary status." As such, KCPI was not left without its own safeguards under the agreement.7 On November 7, 1995, KCPI issued Guidelines on the Hiring of Replacements of Retired/Resigned Employees8 for the effective implementation of Article XX, Section 1 of the existing CBA, to take effect on January 1, 1996. The Guidelines require, among others, that: (a) such recommendees must be at least 18 years of age but not more than 30 years old at the time of the hiring, and (b) have completed, after graduating from high school, at least a two-year technical/vocational course or a third year level of college education. Moreover, where both husband and wife are employees of the company, they shall be treated as one family; hence, only one of the spouses would be allowed to avail of the benefit.9 UKCEU, through its President, Reynaldo B. Hermoso, requested for a grievance meeting, which was held on November 22, 1995.10 During the meeting, UKCEU specifically requested the deferment of the implementation of the Guidelines until January 1, 1997, after the next CBA negotiations in 1997 during which the matter will be taken up. KCPI agreed to postpone the implementation of the Guidelines until January 1, 1997 but only with respect to the educational qualification.11 During the negotiation for the 1997 CBA, UKCEU proposed the amendment of Article XX, Section 1 of the existing CBA. After the negotiation, KCPI and UKCEU executed a CBA to cover the period from July 1, 1997 to June 30, 1999. The educational qualifications contained in the Guidelines prepared and issued by KCPI were not incorporated in the CBA. Neither were the proposed amendment of UKCEU. Article XX, Section 1 of the preceding CBA was retained without any modification.12 KCPI continued to hire employees pursuant to the CBA up to 1998. It had employed 44 employees from 1995 to 1998.13

G.R. No. 162957

March 6, 2006

UNITED KIMBERLY-CLARK EMPLOYEES UNION PHILIPPINE TRANSPORT GENERAL WORKERS ORGANIZATION (UKCEU-PTGWO), Petitioner, vs.KIMBERLY CLARK PHILIPPINES, INC., Respondent. CALLEJO, SR., J.: Before the Court is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) which partially reversed and set aside the March 19, 2001 Resolution2 of the Voluntary Arbitrator (VA). Following are the factual antecedents: United Kimberly-Clark Employees Union (UKCEU), a local chapter affiliate of the Philippine Transport General Workers Organization (PTGWO), is the certified collective bargaining agent of all rank-and-file employees of the San Pedro milling plant of Kimberly-Clark Philippines, Inc. (KCPI), a multinational corporation engaged in the manufacture of bathroom and facial tissues, paper napkins, feminine care products, disposable diapers and absorbent cotton. Way back in 1980, KCPI and the UKCEU executed a Collective Bargaining Agreement (CBA). Article XX, Section 1 of the CBA reads: Section 1. The Company agrees to employ, regardless of sex, the immediate member of the family of an employee provided qualified, upon the employee's resignation, retirement, disability or death. In case of resignation, however, employment of an immediate member of the family of an employee may be allowed provided the employee has rendered a service of ten (10) years and above and the resignation is not a forced resignation. For the purpose of this section, the phrase "immediate member of the family of an employee" shall refer to the employee's legitimate children and in default thereof to the employee's collateral relative within the third civil degree. The recommendee of the retired/resigned employee shall, if qualified, be hired on probationary status. (Emphasis added)3 However, KCPI did not set any other employment qualifying standards for the recommendees of retired, resigned, deceased or disabled employees and agreed to hire such recommendees who were high school graduates as an act of liberality and generosity. The provision remained unchanged.4 Through the years, several UKCEU members who resigned or were disabled availed of the

However, in the second half of 1998, KCPI started to suspend the implementation of the CBA. This was partly due to the depressed economic conditions then prevailing in the Philippines, and in compliance with the freeze hiring policy of its Asia-Pacific headquarters.14 It refused to hire, as regular employees, 80 recommendees of retiring employees.15 KCPI and UKCEU failed to settle the matter through the existing grievance machinery. On April 23, 1999, the parties filed before the National Conciliation and Mediation Board (NCMB), a Submission Agreement referring to arbitration the issue of whether KCPI violated Article XX, Section 1 of the CBA. The parties agreed not to appeal any resolution/decision of the VA.16 Meantime, in August 1999, KCPI and UKCEU executed a new CBA. Article XX, Section 1 of the preceding CBA was incorporated in the new CBA, governing the relation of the parties up to June 30, 2002.17 UKCEU averred in its pleadings that the "qualification in terms of education," that is, admitting recommendees who were at least high school graduates, had been an established practice of KCPI since 1980. They appended to their position paper as Annexes "A," "A-1" to "A-5" thereof, a list of such recommendees who were hired by KCPI.18 This being the case, KCPI could not just unilaterally revoke such practice without its (UKCEU) consent and approval. UKCEU explained that while KCPI, in general, had the discretion to raise the educational qualification of its applicants for employment, this did not apply to recommendees due to the manner by which Article XX, Section 1 was implemented in the past. UKCEU emphasized that its benefits had already been institutionalized in the CBAs executed by the parties through the years. Thus, in refusing to hire the 80 recommendees as regular employees, KCPI violated its CBA with the union,19 equivalent to breach of contract and unfair labor practice. It was further pointed out that contrary to its claim that KCPI was implementing a freeze hiring policy, KCPI even hired more or less 400 casuals, most of whom were only high school graduates who performed activities necessary and desirable to KCPIs regular and usual business. They averred that the hiring of such employees was continuous, and on a five-month contract without extension or rehiring. UKCEU insisted that it was not estopped to question the move to "upgrade the academic standards" of recommendees, and that KCPI should have indicated its counterproposal during the 1997 and 1999 CBA negotiations. Since KCPI preferred to retain Article XX, Section 1 where the dispute and ambiguity developed, the union opined that such provision should be strictly construed against the company. UKCEU averred that either the husband or wife had the "right of replacement," and to the benefits offered by Article XX, Section 1; to deny them the right would be a clear discrimination and violation of the CBA, since both are paying members of union dues and individually vote for any policy determination. In its pleadings, KCPI maintained that pursuant to its management prerogative, it had the right to determine hiring standards under Article XX, Section 1 of the CBA without the consent or approval of UKCEU. It argued that like applicants for regular positions, recommendees of retiring employees must also be college graduates, in accordance with its November 7, 1995 Guidelines. It explained that such recommendees are applying for regular positions and not as casual, who

are hired on a temporary basis. KCPI averred that the employment educational standards in the Guidelines it issued on November 7, 1995 took effect on January 1, 1997 and that after its implementation was deferred, the union did not take any action. Hence, UKCEU was estopped from questioning the implementation of Article XX, Section 1 in the 1999 CBA. In fact, such upgraded educational qualifications under the November 7, 1995 Guidelines were never brought up by UKCEU, and were never discussed during the 1997 CBA negotiations. It asserted, however, that it was justified to temporarily suspend the implementation because the freeze hiring policy of its Asia-Pacific headquarters had affected both existing and new regular positions in the company. It pointed out that, in order to enforce the CBA provision, it normally fills up two regular positions because the recommendee of a union member who resigns, retires, dies or is disabled does not usually possess the same qualifications and skills of his/her predecessor. KCPI averred that it never anticipated this undue burden and was not in a position to sustain the practice, considering the lower volume in sales and a reduction in the number of working days in some areas of its operations. With respect to spouses who are both employed in KCPI, it was maintained that the policy regarding the availment of their benefits had always been consistent since 1980: only one of the spouses is entitled thereto, like the CBA provisions on the employees medical and funeral benefits. It pointed out that at the time Article XX, Section 1 was adopted, there was already an existing policy in KCPI prohibiting the hiring of a relative of an employee within the fourth civil degree of consanguinity or affinity. Thus, if the interpretation of UKCEU would be considered, an unwarranted and anomalous situation would result, since children of spouses who are both employed in the company fall within the second degree of consanguinity. Moreover, spouses should be treated as one family, much like the tax treatment on the claim for additional dependents. KCPI stressed that, as stated in the guidelines, the rationale for the policy is to maintain fairness and equality since the intended or actual beneficiary is the child of an employee. On May 8, 1999, the VA visited the premises of KCPI with prior notice to the parties, and discovered that KCPI employed casuals who performed the work of certain regular employees covered by the CBA.20 On March 19, 2001, the VA issued a Resolution in favor of UKCEU. The dispositive portion of the resolution reads: WHEREFORE, premises considered, this Voluntary Arbitrator, finds that (a) the Company cannot suspend implementation of Section 1, Article XX of the existing CBA unilaterally by upgrading the educational qualifications of "applicantsreplacements" than are required previously, and (b) the husband and the wife, under the said provision, are each entitled separately to recommend an applicant-replacement. SO ORDERED.21 The VA ruled that since the CBA is the law between the parties, KCPI could not just unilaterally change or suspend the implementation of the existing employment requirements, even in the light of the business situation then prevailing in the Philippines. Moreover, an unambiguous CBA provision must be interpreted according to its literal meaning and not beyond the parties' actual

intendment, and, in case of doubts, the same should be resolved in favor of labor. The VA declared that management prerogative does not give license to a company to set aside or ignore what had been agreed upon through negotiation. According to the VA, since KCPI failed to explain why it continued to hire casual workers doing the jobs of regular employees, it failed to substantiate its contention that the economic crisis did not warrant the hiring of regular employees.22 As to the applicability of Article XX, Section 1 to spouses employed by KCPI, the VA referred to Article I of the CBA, which provides that the Agreement covers all regular rank-and-file employees. Had the intention of the parties been to grant husband and wife employees the privilege of recommending only one applicantreplacement, it should have been stated in unequivocal terms.23 KCPI assailed the decision of the VA via petition for review24 before the CA. It alleged that: A. Contrary to the ruling of the Honorable Voluntary Arbitrator, petitioner may validly suspend the implementation of Section 1, Article XX, by reason of economic difficulty. B. Contrary to the ruling of the Honorable Voluntary Arbitrator, law and jurisprudence [recognize] management's prerogative to set the qualifications for [the] hiring of employees, including those hired as replacements under Section 1, Article XX. C. Contrary to the ruling of the Honorable Voluntary Arbitrator, reasonable application of statutory and contractual interpretation supports only one conclusion - that, in case of both spouses being KCPI employees, only one of them may avail himself or herself of the benefits of Section 1, Article XX.25 On July 23, 2003, the CA partially set aside the Resolution of the VA.26 The fallo of the decision reads: WHEREFORE, the petition is PARTIALLY GRANTED, and the Resolution of Voluntary Arbitrator Jose A. Cabatuando, Jr. dated March 19, 2001 is PARTIALLY REVERSED AND SET ASIDE. Petitioner may not suspend the implementation of Section 1, Article XX of the Collective Bargaining Agreement on account of alleged economic distress. Petitioner, however, may require that recommendees under the said provision must have completed at least a two-year technical/vocational course or reached the third year of any college-level course, as a valid exercise of management prerogative. And when spouses are both employed by petitioner, each may recommend a replacement in case of his death, disability, retirement or voluntary resignation pursuant to Section 1, Article XX of the Collective Bargaining Agreement. SO ORDERED.27 The CA ruled that KCPI may validly exercise its management prerogative and impose the requirement that recommendees should have at least completed a

two-year technical/vocational course or reached the third year of any collegelevel course. While the right of KCPI to set hiring standards for recommendees under the disputed provision of the CBA is apparent in the ruling of the Court in Kimberly Clark Philippines v. Lorredo,28 the CA concluded that the right of retired, resigned, disabled or deceased employees to recommend their replacements is not absolute. It emphasized that the recommendees must still meet the standard set by petitioner. The CA further opined that Article XX, Section 1 is not an inheritance the right to which attaches immediately upon an employee's death, disability, retirement or voluntary resignation. However, as to whether spouses employed by petitioner may separately recommend a replacement, the CA affirmed the observation of the VA that the provision was literally made to apply to "all" employees, and does not mean that only one of the spouses may avail of said benefit.29 The CA rejected the claim of KCPI that it (the court) should take judicial notice of the adverse effects of the Asian economic crisis to the operation of its business in the Philippines. As in the case of retrenchment, it was ruled that the company must still prove financial distress by sufficient and convincing evidence. Moreover, the CA held that for the theory of rebus sic stantibus to apply, it must be shown that the economic crisis made it extremely difficult for the company to comply with Article XX, Section 1 of the CBA, and that the change in the circumstances of the parties must be one which could not be foreseen at the time the contract was executed.30 Only UKCEU moved for a partial reconsideration of the CA Decision with respect to its ruling on the upgraded educational qualification of the recommendees.31 The CA denied the motion in a Resolution32 dated March 23, 2004. UKCEU, now petitioner, seeks relief from this Court in the instant petition. The issue in this case is whether or not the CA erred in ruling that, under Article XX, Section 1 of the 1997 CBA, respondent is required to hire only those recommendees of retired/resigned, deceased or disabled members of petitioner who had completed at least a two-year technical/vocational course or a thirdyear level of college education. This is anchored on the resolution of the issue of whether the November 7, 1995 Guidelines issued by respondent took effect on January 1, 1997. Petitioner avers that the CA erred in holding that, under Article XX, Section 1 of the 1997 CBA and the ruling of this Court in Kimberly Clark Philippines v. Lorredo, respondent is required to hire recommendees of retired/resigned, deceased or disabled employees who possess the educational qualification standards for employees contained in the November 7, 1995 Guidelines issued by respondent. Petitioner asserts that the employment qualification standards in Article XX, Section 1 of the CBA requiring the recommendees to be at least high school graduates is contrary to the practice that had been followed by respondent since 1980 up to 1998. Petitioner further avers that such practice, which had been established by respondent in implementing the CBA, cannot be unilaterally revoked by it. Petitioner argues that to allow respondent to set higher educational standards for employment of such recommendees is to render nugatory the right granted to them under the CBA and would defeat the ruling of

the Court in Kimberly Clark Philippines v. Lorredo. Petitioner avers that 70% of the employees of respondent are mere high school graduates who did not finish any technical or vocational course. This, notwithstanding, respondent had a profit of P527,000,000.00 in 1999. Petitioner stresses that the exercise of management prerogative must be circumscribed by the CBA of the parties. For its part, respondent maintains that under Article XX, Section 1 of its CBA with petitioner, a recommendee of retired/resigned, deceased or disabled members of petitioner must also be qualified for the position. Respondent also invokes Kimberly Clark Philippines v. Lorredo, insisting that the Court ruled therein that such recommendees must meet the employment standards set by respondent; conformably with such ruling, it issued said Guidelines on November 7, 1995. Thus, it is not proscribed from setting out higher qualification standards for said recommendees, such as those set forth in said Guidelines. Contrary to petitioners claim of employing recommendees who were only high school graduates, was not an established practice, as its policy had always been to hire college graduates for regular employment. Finally, respondent avers that the implementation of qualifications for the recommendees is a valid exercise of its management prerogative. Respondent also points out during their 1997 CBA negotiations, petitioner proposed the following revisions of Article XX, Section 1: Section 1. A replacement of a deceased employee or recommendee of a retiring or resigning employee with at least 10 years of service, when at least High School Graduate and able bodied, shall be hired by the Company as Trainee for the first six (6) months, and then probationary employee to a permanent position and if passed to qualifications made known to him shall be hired as a regular employee of the Company. Recommendee entitled to this right shall be limited to up to the third civil degree only.33 However, said proposal was not incorporated in the CBA of the parties since by then, the November 7, 1995 Guidelines had already taken effect. We rule against petitioner. As a general proposition, an arbitrator is confined to the interpretation and application of the collective bargaining agreement. He does not sit to dispense his own brand of industrial justice: his award is legitimate only in so far as it draws its essence from the CBA,34 i.e., when there is a rational nexus between the award and the CBA under consideration.35 It is said that an arbitral award does not draw its essence from the CBA; hence, there is an unauthorized amendment or alteration thereof, if: 1. It is so unfounded in reason and fact; 2. It is so unconnected with the working and purpose of the agreement; 3. It is without factual support in view of its language, its context, and any other indicia of the parties' intention;36 4. It ignores or abandons the plain language of the contract;37 5. It is mistakenly based on a crucial assumption which concededly is a nonfact;38 6. It is unlawful, arbitrary or capricious;39 and 7. It is contrary to public policy.40

A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. It covers the whole employment relationship and prescribes the rights and duties of the parties. It is a system of industrial self-government with the grievance machinery at the very heart of the system.41 The parties solve their problems by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties. If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail.42 However, if, in a CBA, the parties stipulate that the hirees must be presumed of employment qualification standards but fail to state such qualification standards in said CBA, the VA may resort to evidence extrinsic of the CBA to determine the full agreement intended by the parties. When a CBA may be expected to speak on a matter, but does not, its sentence imports ambiguity on that subject.43 The VA is not merely to rely on the cold and cryptic words on the face of the CBA but is mandated to discover the intention of the parties. Recognizing the inability of the parties to anticipate or address all future problems, gaps may be left to be filled in by reference to the practices of the industry, and the step which is equally a part of the CBA although not expressed in it.44 In order to ascertain the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered.45 The VA may also consider and rely upon negotiating and contractual history of the parties, evidence of past practices interpreting ambiguous provisions. The VA has to examine such practices to determine the scope of their agreement,46 as where the provision of the CBA has been loosely formulated.47 Moreover, the CBA must be construed liberally rather than narrowly and technically and the Court must place a practical and realistic construction upon it. In the present case, the parties are in agreement that, on its face, Article XX, Section 1 of their 1997 CBA does not contain any provision relative to the employment qualification standards of recommendees of retired/resigned, deceased or disabled employees of respondent who are members of petitioner. However, in determining the employment qualification standards for said recommendees, the VA should have relied on the November 7, 1995 Guidelines issued by respondent, which reads: D. Definition of the phrase "immediate member of the family of an employee" 1. The phrase "immediate member of the family of an employee" shall refer to the employees legitimate children and in default thereof to the employees collateral relatives within the third civil degree. 2. A resigned/retired employee may be allowed to recommend a collateral relative within the third civil degree (e.g., brother, sister, nephew or niece) as his/her replacement only in the following cases: a. Where the retired/resigned employee is single or if married has no legitimate children. b. Where the retired/resigned employees children are still minors (below 18 years old) at the time of his/her separation from the company. (Emphasis added)

E. General Provisions 1. The privilege to recommend a replacement can be exercised by the employee concerned only once. Thus, in the following cases, a recommendee who has been hired on probationary status can no longer be substituted with another recommendee. a. where the recommendee fails to pass in his performance evaluation. b. where the recommendee resigns without completing his probationary period. c. where the recommendee is dismissed for cause. d. where the recommendee dies during his probationary period.48 Respondent issued said Guidelines in light of the ruling of this Court in Kimberly Clark Philippines v. Lorredo. Respondent saw it imperative to do away with its practice of accommodating recommendees who were mere high school graduates, and to require higher employment standards for them. By agreement of the parties, the implementation of the Guidelines was deferred until January 1, 1997, unless revoked or amended by the 1997 CBA. Petitioner proposed that the practice of hiring recommendees of retired/resigned, deceased or disabled employees who were union members, who were at least high school graduates, be included in their CBA, but respondent did not agree. Hence, Article XX, Section 1 of the 1997 CBA of the parties remained intact. There was thus no more legal bar for respondent to implement the November 7, 1995 Guidelines. By executing the 1997 CBA, in its present form, petitioner is bound by the terms and conditions therein set forth. The VA, however, ignored the plain language of the 1997 CBA of the parties, as well as the Guidelines issued by respondent. He capriciously based his resolution on the respondents practice of hiring which, however, by agreement of petitioner and respondent, was discontinued. The Court has recognized in numerous instances the undoubted right of the employer to regulate, according to his own discretion and best judgment, all aspects of employment, including but not limited to, work assignments and supervision, working methods and regulations, time, place and manner of work, processes to be followed, and hiring, supervision, transfer, discipline, lay off, dismissal and recall of workers. Encompassing though it could be, the exercise of this right is not absolute. Management prerogative must be exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws, valid agreements such as the individual contract of employment and the collective bargaining agreement, and general principles of justice and fair play.49 In this case, the Court finds that respondent acted in accord with the CBA and the November 7, 1995 Guidelines, which, by agreement of the parties, may be implemented by respondent after January 1, 1997. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against petitioner. SO ORDERED G.R. No. 157775 October 19, 2007

LEYTE IV ELECTRIC COOPERATIVE, INC., Petitioner, Employees Union-ALU, Respondent. AUSTRIA-MARTINEZ, J.:

vs. LEYECO IV

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Resolution1 dated September 4, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 72336 which dismissed outright petitioner's Petition for Certiorari for adopting a wrong mode of appeal and the CA Resolution2 dated February 28, 2003 which denied petitioner's Motion for Reconsideration. The facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU (respondent) entered into a Collective Bargaining Agreement (CBA)3 covering petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all employees, as provided for in the CBA.4 On June 20, 2000, petitioner, through its legal counsel, sent a letter-reply to Casilan, explaining that after perusing all available pay slips, it found that it had paid all employees all the holiday pays enumerated in the CBA.5 After exhausting the procedures of the grievance machinery, the parties agreed to submit the issues of the interpretation and implementation of Section 2, Article VIII of the CBA on the payment of holiday pay, for arbitration of the National Conciliation and Mediation Board (NCMB), Regional Office No. VIII in Tacloban City.6 The parties were required to submit their respective position papers, after which the dispute was submitted for decision. While admitting in its Position Paper7 that the employees were paid all of the days of the month even if there was no work, respondent alleged that it is not prevented from making separate demands for the payment of regular holidays concomitant with the provisions of the CBA, with its supporting documents consisting of a letter demanding payment of holiday pay, petitioner's reply thereto and respondent's rejoinder, a computation in the amount of P1,054,393.07 for the unpaid legal holidays, and several pay slips. Petitioner, on the other hand, in its Position Paper,8 insisted payment of the holiday pay in compliance with the CBA provisions, stating that payment was presumed since the formula used in determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the employees are already paid their regular and special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.

On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a Decision9 in favor of respondent, holding petitioner liable for payment of unpaid holidays from 1998 to 2000 in the sum of P1,054,393.07. He reasoned that petitioner miserably failed to show that it complied with the CBA mandate that holiday pay be "reflected during any payroll period of occurrence" since the payroll slips did not reflect any payment of the paid holidays. He found unacceptable not only petitioner's presumption of payment of holiday pay based on a formula used in determining and computing the daily rate of each covered employee, but also petitioner's further submission that the rate of its employees is not less than the statutory minimum wage multiplied by 365 days and divided by twelve. On April 11, 2001, petitioner filed a Motion for Reconsideration10 but it was denied by the Voluntary Arbitrator in a Resolution11 dated June 17, 2002. Petitioner received said Resolution on June 27, 2002.12 Thirty days later, or on July 27, 2002,13 petitioner filed a Petition for Certiorari14 in the CA, ascribing grave abuse of discretion amounting to lack of jurisdiction to the Voluntary Arbitrator: (a) for ignoring that in said company the divisor for computing the applicable daily rate of rank-and-file employees is 360 days which already includes payment of 13 un-worked regular holidays under Section 2, Article VIII of the CBA;15 and (b) for holding the petitioner liable for the unpaid holidays just because the payroll slips submitted as evidence did not show any payment for the regular holidays.16 In a Resolution17 dated September 4, 2002, the CA dismissed outright petitioner's Petition for Certiorari for adopting a wrong mode of appeal. It reasoned: Considering that what is assailed in the present recourse is a Decision of a Voluntary Arbitrator, the proper remedy is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure; hence, the present petition for certiorari under Rule 65 filed on August 15, 2002, should be rejected, as such a petition cannot be a substitute for a lost appeal. And in this case, the period for appeal via a petition for review has already lapsed since the petitioner received a copy of the Resolution denying its motion for reconsideration on June 27, 2002, so that its last day to appeal lapsed on July 12, 2002. x x x x18 Petitioner filed a Motion for Reconsideration19 but it was denied by the CA in a Resolution20 dated February 28, 2003. Hence, the present petition anchored on the following grounds: (1) The Honorable Court of Appeals erred in rejecting the petition for certiorari under Rule 65 of the Rules of Court filed by herein petitioner to assail the Decision of the Voluntary Arbitrator.21 (2) Even if decisions of voluntary arbitrator or panel of voluntary arbitrators are appealable to the Honorable Court of Appeals under Rule 43, a petition for certiorari under Rule 65 is still available if it is

grounded on grave abuse of discretion. Hence, the Honorable Court of Appeals erred in rejecting the petition for certiorari under Rule 65 of the Rules of Court filed by herein petitioner.22 (3) The Honorable Court of Appeals erred in refusing to rule on the legal issue presented by herein petitioner in the petition for certiorari that it had filed and in putting emphasis instead on a technicality of procedure. The legal issues needs a clear-cut ruling by this Honorable Court for the guidance of herein petitioner and private respondent.23 Petitioner contends that Rule 65 of the Rules of Court is the applicable mode of appeal to the CA from judgments issued by a voluntary arbitrator since Rule 43 only allows appeal from judgments of particular quasi-judicial agencies and voluntary arbitrators authorized by law and not those judgments and orders issued under the Labor Code; that the petition before the CA did not raise issues of fact but was founded on jurisdictional issues and, therefore, reviewable through a special civil action for certiorari under Rule 65; that technicalities of law and procedure should not be utilized to subvert the ends of substantial justice. In its Comment,24 respondent avers that Luzon Development Bank v. Association of Luzon Development Bank Employees25 laid down the prevailing rule that judgments of the Voluntary Arbitrator are appealable to the CA under Section 1, Rule 43 of the Rules of Court; that having failed to file the appropriate remedy due to the lapse of the appeal period, petitioner cannot simply invoke Rule 65 for its own convenience, as an alternative remedy. In its Reply,26 petitioner submits that the ruling in Luzon Development Bank does not expressly exclude the filing of a petition for certiorari under Rule 65 of the Rules of Court to assail a decision of a voluntary arbitrator. It reiterates that technicalities of law and procedure should not be utilized to subvert the ends of substantial justice. It has long been settled in the landmark case Luzon Development Bank that a voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency; hence, his decisions and awards are appealable to the CA. This is so because the awards of voluntary arbitrators become final and executory upon the lapse of the period to appeal;27 and since their awards determine the rights of parties, their decisions have the same effect as judgments of a court. Therefore, the proper remedy from an award of a voluntary arbitrator is a petition for review to the CA, following Revised Administrative Circular No. 1-95, which provided for a uniform procedure for appellate review of all adjudications of quasi-judicial entities, which is now embodied in Section 1, Rule 43 of the 1997 Rules of Civil Procedure, which reads: SECTION 1. Scope. This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer,

National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law.28 (Emphasis supplied) Section 2, Rule 43 of the 1997 Rules of Civil Procedure which provides that: SEC. 2. Cases not covered. - This Rule shall not apply to judgments or final orders issued under the Labor Code of the Philippines. did not alter the Court's ruling in Luzon Development Bank. Section 2, Rule 42 of the 1997 Rules of Civil Procedure, is nothing more than a reiteration of the exception to the exclusive appellate jurisdiction of the CA,29 as provided for in Section 9, Batas Pambansa Blg. 129,30 as amended by Republic Act No. 7902:31 (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948. The Court took into account this exception in Luzon Development Bank but, nevertheless, held that the decisions of voluntary arbitrators issued pursuant to the Labor Code do not come within its ambit, thus: x x x. The fact that [the voluntary arbitrators] functions and powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the Employees Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down the procedure for the appealability of its decisions to the Court of Appeals under the foregoing rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129. A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the quasijudicial agencies, boards and commissions enumerated therein. This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute. Nor

will it run counter to the legislative intendment that decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter.32 This ruling has been repeatedly reiterated in subsequent cases33 and continues to be the controlling doctrine. Thus, the general rule is that the proper remedy from decisions of voluntary arbitrators is a petition for review under Rule 43 of the Rules of Court. Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the tribunal, board or officer exercising judicial or quasi-judicial functions acted in total disregard of evidence material to or decisive of the controversy.34 As this Court elucidated in Garcia v. National Labor Relations Commission35 [I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals, we emphasized thus: [I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari proceedings. The cases in which certiorari will issue cannot be defined, because to do so would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that authority is not wanting to show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our superintending control over inferior courts, we are to be guided by all the circumstances of each particular case "as the ends of justice may require." So it is that the writ will be granted where necessary to prevent a substantial wrong or to do substantial justice. 36 In addition, while the settled rule is that an independent action for certiorari may be availed of only when there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law37 and certiorari is not a substitute for the lapsed remedy of appeal,38 there are a few significant exceptions when the extraordinary remedy of certiorari may be resorted to despite the availability of an appeal, namely: (a) when public welfare and the advancement of public policy dictate; (b) when the broader interests of justice so require; (c) when the writs issued are null; and (d) when the questioned order amounts to an oppressive exercise of judicial authority.39 In this case, while the petition was filed on July 27, 2002,40 15 days after July 12, 2002, the expiration of the 15-day reglementary period for filing an appeal under Rule 43, the broader interests of justice warrant relaxation of the rules on procedure. Besides, petitioner alleges that the Voluntary Arbitrators conclusions have no basis in fact and in law; hence, the petition should not be dismissed on procedural grounds. The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position Paper41 that the employees were paid all the days of the month

even if not worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of employees salaries gains significance. In Union of Filipro Employees v. Vivar, Jr.42 the Court held that "[t]he divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employees salary and in the computation of his daily rate". This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano,43 Producers Bank of the Philippines v. National Labor Relations Commission44 and Odango v. National Labor Relations Commission,45 among others.46 In Wellington,47 the monthly salary was fixed by Wellington to provide for compensation for every working day of the year including the holidays specified by law and excluding only Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is, it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed actually covered payment for 314 days of the year, including regular and special holidays, as well as days when no work was done by reason of fortuitous cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause not attributable to the employees. In Producers Bank,48 the employer used the divisor 314 in arriving at the daily wage rate of monthly salaried employees. The divisor 314 was arrived at by subtracting all Sundays from the total number of calendar days in a year, since Saturdays are considered paid rest days. The Court held that the use of 314 as a divisor leads to the inevitable conclusion that the ten legal holidays are already included therein. In Odango v. National Labor Relations Commission,49 the Court ruled that the use of a divisor that was less than 365 days cannot make the employer automatically liable for underpayment of holiday pay. In said case, the employees were required to work only from Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that the employees were deprived of their holiday pay for some or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum of 287 days. In this case, the employees are required to work only from Monday to Friday.1wphi1 Thus, the minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably, petitioner's employees are being given their holiday pay. Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting respondent's claim of non-payment of holiday pay, a "double burden" was imposed upon petitioner because it was being made to pay twice for its employees' holiday pay when payment thereof had already been included in the computation of their monthly salaries. Moreover, it is absurd to grant respondent's claim of non-payment when they in fact admitted that they were being paid all of the days of the month even if not worked. By granting

respondent's claim, the Voluntary Arbitrator sanctioned unjust enrichment in favor of the respondent and caused unjust financial burden to the petitioner. Obviously, the Court cannot allow this. While the Constitution is committed to the policy of social justice50 and the protection of the working class,51 it should not be supposed that every labor dispute would automatically be decided in favor of labor. Management also has it own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.52 WHEREFORE, the petition for review is GRANTED. The Resolutions dated September 4, 2002 and February 28, 2003 of the Court of Appeals in CA-G.R. SP No. 72336 are REVERSED and SET ASIDE. The Decision dated March 1, 2001 and Resolution dated June 17, 2002 of the Voluntary Arbitrator are declared NULL and VOID.