ADR Case Digests First Set

ADR Case Digests | SET 1
Atty.Catherine Guerzo-Barrion [3-MANRESA 2015-16]
LM POWER ENGINEERING CORPORATION vs. CAPITOL is because there are some disparities between the
INDUSTRIAL CONSTRUCTION GROUPS, INC.| G.R. No. parties positions regarding the extent of the work
141833 | March 26, 2003 | done, the amount of advances and billable
JAVIER accomplishments, and the set off of expenses
incurred by Capitol Industrial in its take-over of LM
FACTS: Powers work.
POWER ENGINEERING CORP and CAPITOL According to LM Power, assuming arguendo that the
INDUSTRIAL CONSTRUCTION GROUPS entered into a dispute is arbitrable, the failure to file a formal
Subcontract Agreement involving electrical work. request for arbitration with the CIAC precluded the
2 years thereafter, Capitol Industrial took over some latter from acquiring jurisdiction over the question.
of the work contracted to LM Power which the latter
allegedly failed to finish it because of its inability to ISSUES:
procure materials. 1. WON there exists a dispute between them regarding
Upon completing its task under the Contract, LM the interpretation and implementation of the
Power billed Capitol Industrial for the amount of Subcontract Agreement that requires prior recourse
P6.7M. to voluntary arbitration? YES. The instant case
Capitol Industrial, however, refused to pay and involves technical discrepancies that are better left
contested the accuracy of the amount of advances to an arbitral body that has expertise in those
and billable accomplishments as listed. It also took areas.
refuge in the termination clause of the 2. In the affirmative, WON there is a need to file a
Agreement. That clause allowed it to set off the cost request first with the CIAC in order to vest it with
of the work that LM Power had failed to undertake jurisdiction to decide a construction dispute? NO.
due to termination or take-over against the Section 1 of Article III of the NEW Rules of
amount it owed the latter. Procedure Governing Construction Arbitration has
Because of the dispute, LM Power filed with the RTC dispensed with the requirement to submit a
of Makati a Complaint for Collection of the amount request for arbitration. Recourse to the CIAC may
representing the alleged balance due it under the now be availed of whenever a contract contains a
Subcontract. clause for the submission of a future controversy to
Capitol Industrial filed a Motion to Dismiss, alleging arbitration.
that the Complaint was premature because there
was no prior recourse to arbitration. SC RULING: Petition was DENIED. The assailed CA
RTC denied the Motion to Dismiss on the ground decision is AFFIRMED.
that the dispute did not involve the interpretation or
the implementation of the Agreement and was, 1. The Subcontract has the following arbitral clause:
therefore, not covered by the arbitral clause. 6. The Parties hereto agree that any dispute or
CA reversed the RTC and ordered the referral of the conflict as regards to interpretation and
case to arbitration. The CA held as arbitrable the implementation of this Agreement which cannot
issue of whether Capitol Industrials take-over of be settled between [respondent] and
some work items had been intended to be a [petitioner] amicably shall be settled by means
termination of the original contract *under Letter K of arbitration x x x.
of the Subcontract].
Clearly, the resolution of the dispute between the
ARGUMENTS: parties herein requires a referral to the provisions of
their Agreement. Within the scope of the arbitration
LM Power claims that there is no conflict regarding
clause are discrepancies as to the amount of
the interpretation or the implementation of the
advances and billable accomplishments, the
Agreement. Thus, without having to resort to prior
application of the provision on termination, and the
arbitration, it is entitled to collect the value of the
consequent set-off of expenses.
services it rendered through an ordinary action for
the collection of a sum of money from Capitol
A review of the factual allegations of the parties
Industrial.
reveals that they differ on the following questions,
Capitol Industrial contends that there is a need for
the resolutions of which lies in the interpretation of
prior arbitration as provided in the Agreement. This
the provisions of the Subcontract Agreement:
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a) Did a take-over/termination occur? version of Section 1, as applied in the Tesco

b) May the expenses incurred by Respondent in case, the law as it now stands does not provide
the take-over be set off against the amounts it that the parties should agree to submit disputes
owed Petitioner? arising from their agreement specifically to the
c) How much were the advances and billable CIAC for the latter to acquire jurisdiction over
accomplishments? the same. Rather, it is plain and clear that as
long as the parties agree to submit to voluntary
Being an inexpensive, speedy and amicable method arbitration, regardless of what forum they may
of settling disputes, arbitration along with choose, their agreement will fall within the
mediation, conciliation and negotiation is jurisdiction of the CIAC, such that, even if they
encouraged by the SC. Aside from unclogging specifically choose another forum, the parties
judicial dockets, arbitration also hastens the will not be precluded from electing to submit
resolution of disputes, especially of the commercial their dispute before the CIAC because this right
kind. It is thus regarded as the wave of the future has been vested upon each party by law, i.e.,
in international civil and commercial disputes. E.O. No. 1008.
Brushing aside a contractual agreement calling for
arbitration between the parties would be a step Clearly, there is no more need to file a request with
backward. the CIAC in order to vest it with jurisdiction to decide
a construction dispute.
Consistent with the above-mentioned policy of
encouraging alternative dispute resolution methods, The arbitral clause in the Agreement is a
courts should liberally construe arbitration clauses. commitment on the part of the parties to submit to
Provided such clause is susceptible of an arbitration the disputes covered therein. Because
interpretation that covers the asserted dispute, an that clause is binding, they are expected to abide by
order to arbitrate should be granted. Any doubt it in good faith. And because it covers the dispute
should be resolved in favor of arbitration. between the parties in the present case, either of
them may compel the other to arbitrate.
2. Section 1 of Article III of the NEW Rules of Procedure
Governing Construction Arbitration provides: ASSET PRIVATIZATION TRUST VS. CA
SECTION 1. Submission to CIAC Jurisdiction ASPILLA
An arbitration clause in a construction contract
or a submission to arbitration of a construction FACTS:
dispute shall be deemed an agreement to
submit an existing or future controversy to CIAC On July 3, 1968, the Republic of the Philippines thru
jurisdiction, notwithstanding the reference to a the Surigao Mineral Reservation Board, granted MMIC
different arbitration institution or arbitral body the exclusive right to explore, develop and exploit
in such contract or submission. When a contract nickel, cobalt and other minerals in the Surigao
contains a clause for the submission of a future mineral reservation.
controversy to arbitration, it is not necessary for
the parties to enter into a submission The Philippine Government undertook to support the
agreement before the claimant may invoke the financing of MMIC by purchase of MMIC debenture
jurisdiction of CIAC. bonds and extension of guarantees. Further, the
Philippine Government obtained a firm commitment
As clearly explained in China Chang Jiang Energy form the DBP and/or other government financing
Corporation v. Rosal Infrastructure Builders and institutions to subscribe in MMIC and issue guarantee/s
National Irrigation Administration v. Court of for foreign loans or deferred payment arrangements
Appeals:
MMIC, PNB and DBP executed a Mortgage Trust
Under the present Rules of Procedure, for a Agreement whereby MMIC, as mortgagor, agreed to
particular construction contract to fall within constitute a mortgage in favor or PNB and DBP as
the jurisdiction of CIAC, it is merely required mortgagees, over all MMIC's assets; subject of real estate
that the parties agree to submit the same to and chattel mortgage executed by the mortgagor.
voluntary arbitration unlike in the original
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As the various loans and advances made by DBP and PNB The nature and limits of the Arbitrators' power.
to MMIC had become overdue and since any
restructuring program relative to the loans was no longer As a rule, the award of an arbitrator cannot be set aside
feasible, and in compliance with the directive of for mere errors of judgment either as to the law or as to
Presidential Decree No. 385, DBP and PNB as mortgagees the facts. Courts are without power to amend or overrule
of MMIC assets, decided to exercise their right to merely because of disagreement with matters of law or
extrajudicially foreclose the mortgages in accordance facts determined by the arbitrators. They will not review
with the Mortgage Trust Agreement. the findings of law and fact contained in an award, and
will not undertake to substitute their judgment for that
The foreclosed assets were sold to PNB as the lone of the arbitrators, since any other rule would make an
bidder and were assigned to three newly formed award the commencement, not the end, of litigation.
corporations, namely, Nonoc Mining Corporation, Errors of law and fact, or an erroneous decision of
Maricalum Mining and Industrial Corporation, and Island matters submitted to the judgment of the arbitrators,
Cement Corporation. In 1986, these assets were are insufficient to invalidate an award fairly and honestly
transferred to the Asset Privatization Trust (APT). made. Judicial review of an arbitration is thus, more
limited than judicial review of a trial.
On February 28, 1985, Jesus S. Cabarrus, Sr. filed a
derivative suit against DBP and PNB before the RTC of Nonetheless, the arbitrators' award is not absolute and
Makati, Branch 62, for Annulment of Foreclosures, without exceptions. The arbitrators cannot resolve issues
Specific Performance and Damages. beyond the scope of the submission agreement. The
parties to such an agreement are bound by the
In the course of the trial, private respondents and arbitrators' award only to the extent and in the manner
petitioner APT, as successor of the DBP and the PNB's prescribed by the contract and only if the award is
interest in MMIC, mutually agreed to submit the case to rendered in conformity thereto. Thus, Sections 24 and 25
arbitration by entering into a "Compromise and of the Arbitration Law provide grounds for vacating,
Arbitration Agreement". rescinding or modifying an arbitration award. Where the
conditions described in Articles 2038, 2039, and 1040 of
The Compromise and Arbitration Agreement limited the the Civil Code applicable to compromises and arbitration
issues to the following: are attendant, the arbitration award may also be
annulled.
5. Issues The issues to be submitted for the
Committee's resolution shall be (a) Whether PLAINTIFFS According, Section 20 of R.A. 876 provides:
have the capacity or the personality to institute this
derivative suit in behalf of the MMIC or its directors, (b) Sec. 20. Form and contents of award. The award must
Whether or not the actions leading to, and including,. the be made in writing and signed and acknowledge by a
PNB-DBP foreclosure of the MMIC assets were proper, majority of the arbitrators, if more than one; and by the
valid and in good faith. sole arbitrator, if there is only only. Each party shall be
furnished with a copy of the award. The arbitrators in
Private respondents filed in the same Civil Case No. 9900 their award may grant any remedy or relief which they
an "Application/Motion for Confirmation of Arbitration deem just and equitable and within the scope of the
Award." Petitioner countered with an "Opposition and agreement of the parties, which shall include, but not be
Motion to Vacate Judgment" on the ground that the limited to, the specific performance of a contract.
arbitration award sought to be confirmed herein, far
exceeded the issues submitted and even granted moral xxx xxx xxx
damages.
The arbitrators shall have the power to decide only those
ISSUE: Whether or not the arbitrators exceeded their matters which have been submitted to them. The terms
power. of the award shall be confined to such disputes.
(Emphasis ours).
HELD:
xxx xxx xxx
Yes. The decision of the Arbitration Committee is hereby
VACATED.
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Sec. 24 of the same law enumerating the grounds for xxx xxx xxx
vacating an award states:
Finally, it should be stressed that while a court is
Sec. 24. Grounds for vacating award. In any one of the precluded from overturning an award for errors in the
following cases, the court must make an order vacating determination of factual issues, nevertheless, if an
the award upon the petition of any party to the examination of the record reveals no support whatever
controversy when such party proves affirmatively that in for the arbitrators determinations, their award must be
the arbitration proceeding: vacated. 40 in the same manner, an award must be
vacated if it was made in "manifest disregard of the law."
(a) The award was procured by corruption, fraud, or
other undue means; or Against the backdrop of the foregoing provisions and
principles, we find that the arbitrators came out with an
(b) That there was evident partiality or corruption award in excess of their powers and palpably devoid of
in the arbitrators or any of them; or factual and legal basis.
(c) That the arbitrators were guilty of misconduct in Additional issues (xx)
refusing to postpone the hearing upon sufficient cause
shown, or in refusing to hear evidence pertinent and The arbiters overstepped their powers by declaring as
material to the controversy; that one or more of the valid the proposed Financial Restructuring Program.
arbitrators was disqualified to act as such under section
nine hereof, and willfully refrained from disclosing such The Arbitration Committee went beyond its mandate and
disqualifications or any other misbehavior by which the thus acted in excess of its powers when it ruled on the
rights of any party have been materially prejudiced; or validity of, and gave effect to, the proposed FRP.
(d) That the arbitrators exceeded their powers, or In submitting the case to arbitration, the parties had
so imperfectly executed them, that a mutual, final and mutually agreed to limit the issue to the "validity of the
definite award upon the subject matter submitted to foreclosure" and to transform the relief prayed for
them was not made. (Emphasis ours) therein into pure money claims.
xxx xxx xxx. There is absolutely no evidence that the DBP and PNB
agreed, expressly or impliedly, to the proposed FRP. It
Section 25 which enumerates the grounds for modifying cannot be overemphasized that a FRP, as a contract,
the award provides: requires the consent of the parties thereto. The contract
must bind both contracting parties.
Sec. 25. Grounds for modifying or correcting award In
anyone of the following cases, the court must make an The arbiters exceeded their authority in awarding
order modifying or correcting the award, upon the damages to MMIC, which is not impleaded as a party to
application of any party to the controversy which was the derivative suit.
arbitrated:
Civil Case No. 9900 filed before the RTC being a
(a) Where there was an evident miscalculation of derivative suit, MMIC should have been impleaded as a
figures, or an evident mistake in the description of any party. It was not joined as a party plaintiff or party
person, thing or property referred to in the award; or defendant at any stage of the proceedings. As it is, the
award of damages to MMIC, which was not a party
(b) Where the arbitrators have awarded upon a before the Arbitration Committee, is a complete nullity.
matter not submitted to them, not affecting the merits of
the decision upon the matter submitted; or Settled is the doctrine that in a derivative suit, the
corporation is the real party in interest while the
(c) Where the award is imperfect in a matter of stockholder filing suit for the corporation's behalf is only
form not affecting the merits of the controversy, and if it a nominal party. The corporation should be included as a
had been a commissioner's report, the defect could have party in the suit.
been amended or disregarded by the court.
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The arbiters, likewise, exceeded their authority in implementation of CBA should be referred by the LA to
awarding moral damages to Jesus Cabarrus, Sr. the grievance machinery or voluntary arbitrator.
It is perplexing how the Arbitration Committee can in one ISSUE: Who has jurisdiction over the dispute? VA
breath rule that the case before it is a derivative suit, in
which the aggrieved party or the real party in interest is HELD:
supposedly the MMIC, and at the same time award moral VA has exclusive jurisdiction over unresolved grievances
damages to an individual stockholder. As provided under the Labor Code, the NLRC correctly
ruled that the Labor Arbiter had no jurisdiction to hear
It is a basic postulate that a corporation has a personality and decide petitioners money-claim underpayment of
separate and distinct from its stockholders. 63 The retirement benefits, as the controversy between the
properties foreclosed belonged to MMIC, not to its parties involved an issue arising from the interpretation
stockholders. Hence, if wrong was committed in the or implementation of a provision of the collective
foreclosure, it was done against the corporation. The bargaining agreement. The Voluntary Arbitrator or Panel
Arbitration Committee, therefore, passed upon matters of Voluntary Arbitrators has original and exclusive
nor submitted to it. jurisdiction over the controversy under Article 261 of the
Labor Code, and not the Labor Arbiter.
VICENTE SAN JOSE, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and OCEAN TERMINAL The court, however, will no longer order the remand of
SERVICES, INC., respondents. the case
[G.R. No. 121227. August 17, 1998] The Court will not remand the case to the Voluntary
DELA CRUZ Arbitrator or Panel of Voluntary Arbitrators for
hearing. This case has dragged on far too long -
FACTS: eight (8) years. Any further delay would be a denial of
Vicente San Jose, in his position paper, states that he speedy justice to an aged retired stevedore. There is
was hired sometime in July 1980 as a stevedore further the possibility that any Decision by the Voluntary
continuously until he was advised in April 1991 to Arbitrator or Panel of Voluntary Arbitrators will be
retire from service considering that he already reached appealed to the CA, and finally to this Court. Formula
65 years old. adopted by LA will be followed.
That accordingly, he did apply for retirement and was
paid P3,156.39 for retirement pay. To recapitulate; the Court hereby rules -
Contentions of Ocean Terminal Services: 1. That the NLRC correctly ruled that the LA had no
o San Jose only worked on rotation basis and not jurisdiction over the case, because the case involved an
seven days a week due to numerous stevedores issue arising from the interpretation or implementation
who cannot all be given assignments at the of a Collective Bargaining Agreement;
same time; 2. That we adopt the computation formula for the
o That he performed stevedoring job only on call, retirement benefits by the LA, and the basis thereof.
so while he was connected with the company The respondent must therefore pay the petitioner the
for the past 11 years, he did not actually render additional amount of Twenty-Five Thousand Four
11 years of service; Hundred Forty-Three and Seventy Centavos P25,443.70)
o That the burden of proving that San Joses latest Pesos.
salary was P200.00 rests upon him;
o That he already voluntarily signed a waiver of SAN MIGUEL CORPORATION, ANGEL G. ROA and
quitclaim. MELINDA MACARAIG, petitioners, vs. NATIONAL LABOR
The Labor Arbiter decided the case solely on the merits RELATIONS COMMISSION (Second Division), LABOR
of the complaint. ARBITER EDUARDO J. CARPIO, ILAW AT BUKLOD NG
LA arrived at the computation that the retirement MANGGAGAWA (IBM), ET AL., respondents. G.R. No.
differential is P25,443.70. 108001 March 15, 1996
NLRC reversed LA on the ground that the differential MUNOZ
being claimed by San Jose is based on their CBA and as
provided under the Labor Code, interpretation or FACTS: Private respondents, employed by petitioner San
Miguel Corporation (SMC) as mechanics, machinists, and
carpenters, were and still are, bona fide officers and
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members of private respondent Ilaw at Buklod ng the original and exclusive jurisdiction of Labor Arbiters
Manggagawa. over unfair labor practices, termination disputes, and
claims for damage in the absence of express agreement
July 31, 1990: private respondents were served a of the parties.)
Memorandum from petitioner Angel G. Roa, Vice-
President and Manager of SMC's Business Logistics HELD:
Division (BLD), to the effect that they had to be
separated from the service effective October 31, 1990 on FIRST
the ground of "redundancy or excess personnel." Petitioners' thesis is that the dispute as to the
Respondent union, in behalf of private respondents, termination of the union members and the unfair labor
opposed the intended dismissal and asked for a dialogue practice should first be settled by arbitration, and not
with management. Angel Roa issued another directly by the labor arbiter, following the above
Memorandum on October 1, 1990 informing private provision of the CBA, which ought to be treated as the
respondents that they would be dismissed from work law between the parties thereto.
effective as of the close of business hours on November
2, 1990. Private respondents were in fact purged on the The argument is unmeritorious.
date aforesaid.
The law in point is Article 217 (a) of the Labor Code. It is
February 25, 1991: private respondents filed a complaint elementary that this law is deemed written into the CBA.
against petitioners for Illegal Dismissal and Unfair Labor In fact, the law speaks in plain and unambiguous terms
Practices, with a prayer for damages and attorney's fees, that termination disputes, together with unfair labor
with the Arbitration Branch of respondent National Labor practices, are matters falling under the original and
Relations Commission. The complaint was assigned to exclusive jurisdiction of the Labor Arbiter, to wit:
Labor Arbiter Eduardo F. Carpio for hearing and proper
disposition. Art. 217 Jurisdiction of Labor Arbiters and the
April 15, 1991: petitioners filed a motion to dismiss the Commission (a) Except as otherwise provided under
complaint, alleging that respondent Labor Arbiter had no this Code, the Labor Arbiters shall have original and
jurisdiction over the subject matter of the complaint, and exclusive jurisdiction to hear and decide . . . the following
that respondent Labor Arbiter must defer consideration cases involving all workers, whether agricultural or non-
of the unfair labor practice complaint until after the agricultural: (1) Unfair labor practice cases; (2)
parties have gone through the grievance procedure Termination disputes;
provided for in the existing Collective Bargaining
Agreement (CBA). Labor Arbiter denied this motion. SMC xxx xxx xxx
appealed the denial, Commission dismissed the appeal.
Petitioners promptly filed a Motion for Reconsideration The sole exception to the above rule can be found under
which, however, was denied. Article 262 of the same Code, which provides:
ISSUES: Art. 262. Jurisdiction over other labor disputes The

voluntary arbitrator or panel of voluntary arbitrators,
WON THE LABOR ARBITER CANNOT EXERCISE upon agreement of the parties, shall also hear and decide
JURISDICTION OVER THE ALLEGED ILLEGAL all other labor disputes including unfair labor practices
TERMINATION AND ALLEGED ULP CASES WITHOUT PRIOR and bargaining dead locks. (As added by RA 6715).
RESORT TO GRIEVANCE AND ARBITRATION PROVIDED
UNDER THE CBA. (NO, respondents did not request for We subjected the records of this case, particularly the CA
reconsideration of managements decision in this case. LA to meticulous scrutiny and we find no agreement
has jurisdiction over illegal dismissal and ULP.) between SMC and the respondent union that would
state in unequivocal language that petitioners and the
WON THE STRONG STATE POLICY ON 'THE PROMOTION respondent union conform to the submission of
OF VOLUNTARY MODES OF SETTLEMENT OF LABOR termination disputes and unfair labor practices to
DISPUTES CRAFTED IN THE CONSTITUTION AND THE voluntary arbitration. Section 1, Article V of the CBA,
LABOR CODE DICTATES THE SUBMISSION OF THE CBA cited by the herein petitioners, certainly does not
DISPUTE TO GRIEVANCE AND ARBITRATION. (NO, it provide so. Hence, consistent with the general rule under
cannot arrogate into the powers of voluntary arbitrators Article 217 (a) of the Labor Code, the Labor Arbiter
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properly has jurisdiction over the complaint filed by the SECOND

respondent union on February 25, 1991 for illegal Petitioners insist that involved in the controversy is the
dismissal and unfair labor practice. interpretation and implementation of the CBA which is
grievable and arbitrable by law under Article 217 (c) of
Petitioners point however to Section 2, Article III of the the Labor Code, viz:
CBA, under the heading Job Security, to show that the
dispute is a proper subject of the grievance procedure, Art. 217 (c). Cases arising from the interpretation or
viz: implementation of collective bargaining agreements and
. . . The UNION, however, shall have the right to those arising from the interpretation or enforcement of
seek reconsideration of any discharge, lay-off or company personnel policies shall be disposed of by the
disciplinary action, and such requests for Labor Arbiter by referring the same to the grievance
reconsideration shall be considered a dispute or machinery and voluntary arbitration as may be provided
grievance to be dealt with in accordance with in said agreements. (As amended by RA 6715).
the procedure outlined in Article IV hereof [on
Grievance Machinery] . . .(Emphasis ours) Petitioners theorize that since respondents questioned
the discharges, the main question for resolution is
Petitioners allege that respondent union requested whether SMC had the management right or prerogative
management for a "reconsideration and review" of the to effect the discharges on the ground of redundancy,
company's decision to terminate the employment of the and this necessarily calls for the interpretation or
union members. By this act, petitioners argue, implementation of Article III (Job Security) in relation to
respondent union recognized that the questioned Article IV (Grievance Machinery) of the CBA.
dismissal is a grievable dispute by virtue of Section 2,
Article III of the CBA. This allegation was strongly denied Petitioner's theory does not hold water.
by the respondent union. In a Memorandum filed for the
public respondent NLRC, the Solicitor General supported The only relevant provision under Article III that may
the position of the respondent union that it did not seek need interpretation or implementation is Section 2 which
reconsideration from the SMC management in regard to was cited herein. However, as patiently pointed out by
the dismissal of the employees. this court, said provision does not come into play
considering that the union never exercised its right to
SMC fail miserably to prove that, indeed, the respondent seek reconsideration of the discharges effected by the
union requested for a reconsideration or review of the company. It would have been different had the union
management decision to dismiss the private sought reconsideration. Such recourse under Section 2
respondents. would have been treated as a grievance under Article IV
(Grievance Machinery) of the CBA, thus calling for the
A punctilious examination of the records indubitably possible interpretation or implementation of the entire
reveals that at no time did the respondent union exercise provision on Grievance Machinery as agreed upon by the
its right to seek reconsideration of the company's move parties. This was not the case however. The union
to terminate the employment of the union members, brought the termination dispute directly to the Labor
which request for reconsideration would have triggered Arbiter rendering Articles III and IV of the CBA
the application of Section 2, Article III of the CBA, thus inapplicable for the resolution of this case.
resulting in the treatment of the dispute as a grievance
to be dealt with in accordance with the Grievance The discharges, petitioners also contend, call for the
Machinery laid down in Article IV of the CBA. Stated interpretation or enforcement of company personnel
differently, the filing of a request for reconsideration by policies, particularly SMC's personnel policies on lay-offs
the respondent union, which is the condition sine qua arising from redundancy, and so, they may be considered
non to categorize the termination dispute and the ULP grievable and arbitrable by virtue of Article 217 (c). Not
complaint as a grievable dispute, was decidedly absent in necessarily so.
the case at bench. Hence, the respondent union acted
well within their rights in filing their complaint for illegal Company personnel policies are guiding principles stated
dismissal and ULP directly with the Labor Arbiter under in broad, long-range terms that express the philosophy
Article 217 (a) of the Labor Code. or beliefs of an organization's top authority regarding
personnel matters. They deal with matters affecting
efficiency and well being of employees and include,
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among others, the procedure in the administration of Petitioners (SMC) try to impress on this Court the strong
wages, benefits, promotions, transfer and other State policy on the promotion of voluntary modes of
personnel movements which are usually not spelled out settlement of labor disputes crafted in the Constitution
in the collective agreement. The usual source of and the Labor Code which dictate the submission of the
grievances, however, is the rules and regulations CBA dispute to grievance and arbitration.
governing disciplinary actions. Judging therefrom, the
questioned discharges due to alleged redundancy can In this regard, the response of the Solicitor General is
hardly be considered company personnel policies and apt:
therefore need not directly be subject to the grievance
machinery nor to voluntary arbitration. Petitioners deserve commendation for divulging and
THIRD bringing to public respondents' attention the noble
Petitioners would like to persuade us that respondents' legislative intent behind the law mandating the inclusion
ULP claims are merely conclusory and cannot serve to of grievance and voluntary arbitration provisions in the
vest jurisdiction to the Labor Arbiters. (There is no CBA. However, in the absence of an express legal
allegation of the existence of anti-union animus or of the conferment thereof, jurisdiction cannot be appropriated
ultimate facts showing how the discharges affected the by an official or tribunal (sic) no matter how well-
rights to self-organization of individual respondents). In intentioned it is, even in the pursuit of the dearest
short, petitioners maintain that respondents complaint substantial right.
does not allege a genuine case for ULP.
In the same manner, petitioners cannot arrogate into the
The Court is not convinced. powers of voluntary arbitrators the original and exclusive
jurisdiction of Labor Arbiters over unfair labor practices,
The complaint alleges (see full text). termination disputes, and claims for damages, in the
absence of an express agreement between the parties in
Short of pre-empting the proceedings before the Labor order for Article 262 of the Labor Law to apply in the case
Arbiter, the above complaint, makes out a genuine case at bar.
for ULP.
MARILOU GUANZON APALISOK, petitioner, vs. RADIO
Cited these cases in the full text: -Manila Pencil Co. v. CIR PHILIPPINES NETWORK RADIO STATION DYKC and
-People's Bank and Trust Co. v. People's Bank and Trust STATION MANAGER GEORGE SUAZO, respondents.
Co. Employees Union -Bataan Shipyard and Engineering TAN, J.
Co., Inc. v. NLRC.
Facts:
It matters not that the cause of termination in the above On May 15, 1995, Marilou Gaunzon Apalisok,
cited cases was retrenchment while that in the instant then Production Chief of Radio Philippines
case was redundancy. The important fact is that in all of Network (RPN) Station DYKC, received a
3
these cases, including the one at bar, all of the dismissed Memorandum from Branches Operations
employees were officers and members of their Manager Gilito Datoc asking her to submit a
respective unions, and their employers failed to give a written explanation why no disciplinary action
satisfactory explanation as to why this group of should be taken against her for performance of
employees was singled out. acts hostile to RPN, and arrogant, disrespectful
and defiant behavior towards her superior
We however find that based on the circumstances Station Manager George Suazo.
surrounding this case and settled jurisprudence on the She submitted her answer to the memorandum.
subject, the complaint filed by the private respondents However on May 31, 1995 Apalisok another
on February 25, 1991 alleges facts sufficient to constitute memo informing her of the termination of her
a bona fide case of ULP, and therefore properly services.
cognizable by the Labor Arbiter under Article 217 (a) of By letter of June 5, 1995, Apalisok informed RPN
the Labor Code. This is consistent with the rule that of her decision to waive her right to resolve her
jurisdiction over the subject matter is determined by the case through the grievance machinery of RPN as
allegations of the complaint. provided for in the CBA and to lodge her case
before the proper government forum.
FINALLY
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She thereafter filed a complaint against RPN agreed to have the dispute settled by a voluntary
DYKC and Suazo for illegal dismissal before the arbitrator when they freely executed the above-said
National Labor Relations Commission, Regional Submission Agreement. She thus concludes that the
Arbitration Branch of Region 7 which referred it voluntary arbitrator has jurisdiction over the controversy.
to the National Conciliation and Mediation She also contends in any event that even assuming that
Board. the voluntary arbitrator had no jurisdiction over the case,
By Submission Agreement dated June 20, 1995 it would not be in keeping with settled jurisprudence to
signed by their respective counsels, petitioner allow a losing party to question the authority of the
and respondents agreed to submit for voluntary voluntary arbitrator after it had freely submitted itself to
arbitration the issue of whether petitioner's its authority.
dismissal was valid and to abide by the decision
of the voluntary arbitrator. The above quoted Article 262 of the Labor Code provides
In her position paper submitted before the that upon agreement of the parties, the voluntary
voluntary arbitrator, Apalisok prayed that her arbitrator can hear and decide all other labor disputes.
dismissal be declared invalid and that she be
awarded separation pay, backwages and other Contrary to the finding of the Court of Appeals, voluntary
benefits. arbitration as a mode of settling the dispute was not
Respondents on the other hand prayed for the forced upon respondents. Both parties indeed agreed to
dismissal of the complaint, arguing that the submit the issue of validity of the dismissal of petitioner
voluntary arbitrator had no jurisdiction over the to the jurisdiction of the voluntary arbitrator by the
case and, assuming that he had, the complaint is Submission Agreement duly signed by their respective
dismissible for lack of merit as petitioner was counsels.
not illegally dismissed.
CA ruling: Finding that the option of petitioner LUDO & LUYM CORPORATION, petitioner,
not to subject the dispute to the grievance vs. FERDINAND SAORNIDO as voluntary arbitrator and
machinery provided for in the CBA was LUDOEMPLOYEES UNION (LEU) representing 214 of its
tantamount to relinquishing her right to avail of officers and members, respondents.
the aid of a voluntary arbitrator in settling the LUMANAG
dispute which "likewise converted an
unresolved grievance into a resolved one," held FACTS:
that the voluntary arbitrator did not have Petitioner LUDO & LUYM CORPORATION (LUDO for
jurisdiction over petitioner's complaint and brevity) is a domestic corporation engaged in the
accordingly nullified and set aside, by Decision manufacture of coconut oil, corn starch, glucose and
of October 30, 1998, the voluntary arbitration related products.
award. In the course of its business operations, LUDO
engaged the arrastre services of Cresencio Lu
Issue: Arrastre Services (CLAS) for the loading and
Whether or not the Voluntary Arbitrator had jurisdiction unloading of its finished products at the wharf.
over petitioner's complaint. YES These arrastre workers were subsequently hired, on
different dates, as regular rank-and-file employees
Ruling: of LUDO every time the latter needed additional
Apalisok cites Article 262 of the Labor Code: manpower services.
On April 13, 1992, respondent union entered into a
ARTICLE 262. JURISDICTION OVER OTHER LABOR collective bargaining agreement with LUDO which
DISPUTES. The Voluntary Arbitrator or panel of Voluntary provides certain benefits to the employees, the
Arbitrators, upon agreement of the parties, shall hear amount of which vary according to the length of
and decide all other labor disputesincluding unfair labor service rendered by the availing employee.
practices and bargaining deadlocks. Thereafter, the union requested LUDO to include in
its members period of service the time during which
She contends that her option not to subject the dispute they rendered arrastre services to LUDO through the
to the grievance machinery of RPN did not amount to her CLAS so that they could get higher benefits. LUDO
relinquishing of her right to avail of voluntary arbitration
as a mode of settling it for she and respondents in fact
9
failed to act on the request. Thus, the matter was of regularization, standard companion issues on
submitted for voluntary arbitration. reliefs and remedies are deemed
The parties accordingly executed a submission incorporated. Otherwise, the whole arbitration
agreement raising the sole issue of the date of process would be rendered purely academic and the
regularization of the workers for resolution by the law creating it inutile.
Voluntary Arbitrator. The jurisdiction of Voluntary Arbitrator or Panel of
Voluntary Arbitrator finds the claims of the Voluntary Arbitrators and Labor Arbiters is clearly
complainants meritorious defined and specifically delineated in the Labor
IMPORTANT: VA awarded the ff: Code. The pertinent provisions of the Labor Code,
a. the 214 complainants, as listed in the Annex A, read:
shall be considered regular employees of the Art. 217. Jurisdiction of Labor Arbiters and the
respondents six (6) months from the first day of Commission. --- (a) Except as otherwise
service at CLAS; provided under this Code the Labor Arbiters
b. the said complainants, being entitled to the CBA shall have original and exclusive jurisdiction to
benefits during the regular employment, are hear and decide, within thirty (30) calendar days
awarded a) sick leave, b) vacation leave & c) annual after the submission of the case by the parties
wage and salary increases during such period in the for decision without extension, even in the
amount of FIVE MILLION SEVEN HUNDRED SEVEN absence of stenographic notes, the following
THOUSAND TWO HUNDRED SIXTY ONE PESOS AND cases involving all workers, whether agricultural
SIXTY ONE CENTAVOS (P5,707,261.61) as computed or non-agricultural:
in Annex A; 1. Unfair labor practice cases:
c. the respondents shall pay attorneys fees of ten 2. Termination disputes;
(10) percent of the total award; 3. If accompanied with a claim for
d. an interest of twelve (12) percent per annum or reinstatement, those cases that workers may
one (1) percent per month shall be imposed to the file involving wage, rates of pay, hours of work
award from the date of promulgation until fully paid and other terms and conditions of employment;
if only to speed up the payment of these long over 4. Claims for actual, moral, exemplary and other
due CBA benefits deprived of the complaining forms of damages arising from the employer-
workers. employee relations;
Accordingly, all separation and/or retirement
benefits shall be construed from the date of xxx
regularization aforementioned subject only to the
appropriate government laws and other social Art. 261. Jurisdiction of Voluntary Arbitrators
legislation. or panel of Voluntary Arbitrators. The
Voluntary Arbitrator or panel of Voluntary
ISSUE: Arbitrators shall have original and exclusive
W/N a voluntary arbitrator can award benefits not jurisdiction to hear and decide all unresolved
claimed in the submission agreement. YES grievances arising from the interpretation or
implementation of the Collective Bargaining
HELD: Agreement and those arising from the
Petitioner contends that the appellate court gravely interpretation or enforcement of company
erred when it upheld the award of benefits which personnel policies referred to in the
were beyond the terms of submission immediately preceding article. Accordingly,
agreement. Petitioner asserts that the arbitrator violations of a Collective Bargaining Agreement,
must confine its adjudication to those issues except those which are gross in character, shall
submitted by the parties for arbitration, which in this no longer be treated as unfair labor practice and
case is the sole issue of the date of regularization of shall be resolved as grievances under the
the workers. Hence, the award of benefits by the Collective Bargaining Agreement. For purposes
arbitrator was done in excess of jurisdiction. of this article, gross violations of Collective
Respondents, for their part, argue that the arbitrator Bargaining Agreement shall mean flagrant
is empowered to award the assailed benefits and/or malicious refusal to comply with the
because notwithstanding the sole issue of the date economic provisions of such agreement.
10
The Commission, its Regional Offices and the make a final settlement. Thus, assuming that the
Regional Directors of the Department of Labor submission empowers the arbitrator to decide
and Employment shall not entertain disputes, whether an employee was discharged for just cause,
grievances or matters under the exclusive and the arbitrator in this instance can reasonable assume
original jurisdiction of the Voluntary Arbitrator that his powers extended beyond giving a yes-or-no
or panel of Voluntary Arbitrators and shall answer and included the power to reinstate him
immediately dispose and refer the same to the with or without back pay.
Grievance Machinery or Voluntary Arbitration In one case, the Supreme Court stressed that xxx the
provided in the Collective Bargaining Voluntary Arbitrator had plenary jurisdiction and
Agreement. authority to interpret the agreement to arbitrate
and to determine the scope of his own authority
Art. 262. Jurisdiction over other labor subject only, in a proper case, to the certiorari
disputes. The Voluntary Arbitrator or panel of jurisdiction of this Court. The Arbitrator, as already
Voluntary Arbitrators, upon agreement of the indicated, viewed his authority as embracing not
parties, shall also hear and decide all other labor merely the determination of the abstract question of
disputes including unfair labor practices and whether or not a performance bonus was to be
bargaining deadlocks. granted but also, in the affirmative case, the amount
thereof.
In construing the above provisions, we held in San By the same token, the issue of regularization should
Jose vs. NLRC, that the jurisdiction of the Labor be viewed as two-tiered issue. While the submission
Arbiter and the Voluntary Arbitrator or Panel of agreement mentioned only the determination of the
Voluntary Arbitrators over the cases enumerated in date or regularization, law and jurisprudence give
the Labor Code, Articles 217, 261 and 262, can the voluntary arbitrator enough leeway of authority
possibly include money claims in one form or as well as adequate prerogative to accomplish the
another. Comparatively, in Reformist Union of R.B. reason for which the law on voluntary arbitration
Liner, Inc. vs. NLRC, compulsory arbitration has been was created speedy labor justice. It bears stressing
defined both as the process of settlement of labor that the underlying reason why this case arose is to
disputes by a government agency which has the settle, once and for all, the ultimate question of
authority to investigate and to make an whether respondent employees are entitled to
award which is binding on all the parties, and as a higher benefits. To require them to file another
mode of arbitration where the parties are compelled action for payment of such benefits would certainly
to accept the resolution of their dispute through undermine labor proceedings and contravene the
arbitration by a third party (emphasis constitutional mandate providing full protection to
supplied). While a voluntary arbitrator is not part of labor.
the governmental unit or labor departments
personnel, said arbitrator renders arbitration In case i-ask: RE: PRESCRIPTION
services provided for under labor laws.
Generally, the arbitrator is expected to decide only As regards petitioners contention that the money claim in
this case is barred by prescription, we hold that this contention
those questions expressly delineated by the
is without merit. So is petitioners stance that the benefits
submission agreement. Nevertheless, the arbitrator
claimed by the respondents, i.e., sick leave, vacation leave and
can assume that he has the necessary power to th
13 -month pay, had already prescribed, considering the three-
make a final settlement since arbitration is the final year period for the institution of monetary claims. Such
resort for the adjudication of disputes. The succinct determination is a question of fact which must be ascertained
reasoning enunciated by the CA in support of its based on the evidence, both oral and documentary, presented
holding, that the Voluntary Arbitrator in a labor by the parties before the Voluntary Arbitrator. In this case, the
controversy has jurisdiction to render the Voluntary Arbitrator found that prescription has not as yet set
questioned arbitral awards, deserves our in to bar the respondents claims for the monetary benefits
awarded to them.
concurrence, thus:
In general, the arbitrator is expected to decide those Basic is the rule that findings of fact of administrative
questions expressly stated and limited in the and quasi-judicial bodies, which have acquired expertise
submission agreement. However, since arbitration is because their jurisdiction is confined to specific matters, are
the final resort for the adjudication of disputes, the generally accorded not only great respect but even
arbitrator can assume that he has the power to finality. Here, the Voluntary Arbitrator received the evidence of
11
the parties first-hand. No compelling reason has been shown well as refusal to perform his job and to report to
for us to diverge from the findings of the Voluntary Arbitrator, the Captain or the vessel's engineers or cooperate
especially since the appellate court affirmed his findings, that it with other ship officers about the proble in cleeaning
took some time for respondent employees to ventilate their
the cargo holds or of the shipping pump and his
claims because of the repeated assurances made by the
dismal relations with the vessel's captain, Viviero
petitioner that it would review the company records and
determine therefrom the validity of the claims, without was repatriated on July 15, 1994.
expressing a categorical denial of their claims. As elucidated by on August 1, 1994, Viviero filed a complaint for
the Voluntary Arbitrator: illegal dismissal at Associated Marine Officers' and
seaman's Union of the Philippines (AMOSUP) of
The respondents had raised prescription as defense. The which he was a member. Pursuant to Article XII of
controlling law, as ruled by the High Court, is: the CBA, grievance proceedings were conducted.
However, the parties failed to reach and settle he
The cause of action accrues until the party obligated
dispute amicably. So, on November 28, 1994, Viviero
refuses xxx to comply with his duty. Being warded off by
promises, the workers not having decided to assert [their]
filed a complaint with the POEA.
right[s], [their] causes of action had not accrued (Citation While the case was pending before the POEA,
omitted.) private respondents filed a Motion to Dismiss on the
ground that the POEA had no jurisdiction over the
Since the parties had continued their negotiations even case considering petitioner Vivero's failure to refer it
after the matter was raised before the Grievance to a Voluntary Arbitration Committee in accordance
Procedure and the voluntary arbitration, the respondents with the CBA between the parties. Upon the
had not refused to comply with their duty. They just enactment of RA 8042, the Migrant Workers and
wanted the complainants to present some proofs. The
Overseas Filipinos Act of 1995, the case was
complainants cause of action had not therefore accrued
yet. Besides, in the earlier voluntary arbitration case transferred to the Adjudication Branch of the
aforementioned involving exactly the same issue and National Labor Relations Commission.
employees similarly situated as the complainants, the The Labor Arbiter dismissed the Complaint.
same defense was raised and dismissed by Honorable Reason: the CBA of the parties provided for the
Thelma Jordan, Voluntary Arbitrator.
referral to a Voluntary Arbitration Committee
should the Grievance Committee fail to settle
In fact, the respondents promised to correct their length of
service and grant them the back CBA benefits if the the dispute, and considering the mandate of Art.
complainants can prove they are entitled rendered the former 261 of the Labor Code on the original and
in estoppel, barring them from raising the defense of laches or exclusive jurisdiction of Voluntary Arbitrators,
prescription. To hold otherwise amounts to rewarding the the Labor Arbiter clearly had no jurisdiction over
respondents for their duplicitous representation and abet them the case.
in a dishonest scheme against their workers Viviero appealed the dismissal to the NLRC. NLRC
reversed the Labor Arbiter's decision.
CELESTINO VIVIERO, petitioner,
Reason: the record was clear that petitioner had
vs.
exhausted his remedy by submitting his case to
COURT OF APPEALS, HAMMONIA MARINE SERVICES,
the Grievance Committee of AMOSUP.
and HANSEATIC SHIPPING CO., LTD. respondents.
Considering however that he could not obtain
TAN, K.
any settlement he had to ventilate his case
before the proper forum, i.e., the Philippine
Facts:
Overseas Employment Administration.
Celestino Vivero, a licensed seaman, is a member of
Respondents raised the matter before the CA
the Associated Marine Officers and Seamen's Union
contending that the provision in the CBA requiring a
of the Philippines (AMOSUP). A collective bargaining
dispute which remained unresolved by the
agreement was enetered into by AMOSUP and
Grievance Committee to be referred to a Voluntary
respondents which contains the procedure for
Arbitration Committee, was mandatory in character
grievance. (*see full text for the details of the
in view of the CBA between the parties. The CA ruled
Grievance Procedure under their CBA).
in their favor stating that:
Viviero was hired by respondent as chief officer of
MV Sunny Prince on June 10, 1994. However, on the the CBA "is the law between the parties and
grounds of very poor performance and conduct as compliance therewith is mandated by the
express policy of the law." Hence, petitioner
12
should have followed the provision in the CBA While the parties did agree to make termination
requiring the submission of the dispute to the disputes the proper subject of voluntary arbitration,
Voluntary Arbitration Committee once the such submission remains discretionary upon the parties.
Grievance Committee failed to settle the A perusal of the CBA provisions shows that Sec. 6, Art. XII
controversy. According to the Court of Appeals, (Grievance Procedure) of the CBA is the general
the parties did not have the choice to agreement of the parties to refer grievances, disputes or
"volunteer" to refer the dispute to the Voluntary misunderstandings to a grievance committee, and
Arbitrator or a Panel of Arbitrators when there henceforth, to a voluntary arbitration committee. In the
was already an agreement requiring them to do agreement, the use of the word "may" shows the
so. "Voluntary Arbitration" means that it is intention of the parties to reserve the right to submit the
binding because of a prior agreement or illegal termination dispute to the jurisdiction of the Labor
contract, while "Compulsory Arbitration" is Arbiter, rather than to a Voluntary Arbitrator. Petitioner
when the law declares the dispute subject to validly exercised his option to submit his case to a Labor
arbitration, regardless of the consent or desire Arbiter when he filed his Complaint before the proper
of the parties. government agency.
That the Labor Code itself enumerates the
original and exclusive jurisdiction of the In the case at bar, the dispute was never brought to a
Voluntary Arbitrator or Panel of Voluntary Voluntary Arbitrator for resolution; in fact, petitioner
Arbitrators, and prohibits the NLRC and the precisely requested the Court to recognize the
Regional Directors of the Department of Labor jurisdiction of the Labor Arbiter over the case. The Court
and Employment (DOLE) from entertaining cases had held in San Miguel Corp. v. NLRC that neither officials
falling under the same. nor tribunals can assume jurisdiction in the absence of an
express legal conferment. In the same manner, petitioner
Issue: whether the NLRC is deprived of jurisdiction over cannot arrogate into the powers of Voluntary Arbitrators
illegal dismissal cases whenever a CBA provides for the original and exclusive jurisdiction of Labor Arbiters
grievance machinery and voluntary arbitration over unfair labor practices, termination disputes, and
proceedings. Or, phrased in another way, does the claims for damages, in the absence of an express
dismissal of an employee constitute a "grievance agreement between the parties in order for Art. 262 of
between the parties," as defined under the provisions of the Labor Code to apply in the case at bar. In other
the CBA, and consequently, within the exclusive original words, the Court of Appeals is correct in holding that
jurisdiction of the Voluntary Arbitrators, thereby Voluntary Arbitration is mandatory in character if there is
rendering the NLRC without jurisdiction to decide the a specific agreement between the parties to that effect.
case? It must be stressed however that, in the case at bar, the
use of the word "may" shows the intention of the parties
Ruling: NO. to reserve the right of recourse to Labor Arbiters.
The case is primarily a termination dispute. Policy Instruction No. 56 does not apply in the case at
It is clear from the claim/assistance request form bar.
submitted by petitioner to AMOSUP that he was It may be observed that under Policy Instruction No.
challenging the legality of his dismissal for lack of cause 56 of the Secretary of Labor, dated 6 April 1993,
and lack of due process. The issue of whether there was "Clarifying the Jurisdiction Between Voluntary Arbitrators
proper interpretation and implementation of the CBA and Labor Arbiters Over Termination Cases and Providing
provisions comes into play only because the grievance Guidelines for the Referral of Said Cases Originally Filed
procedure provided for in the CBA was not observed with the NLRC to the NCMB," termination cases arising in
after he sought his Unions assistance in contesting his or resulting from the interpretation and implementation
termination. Thus, the question to be resolved of collective bargaining agreements and interpretation
necessarily springs from the primary issue of whether and enforcement of company personnel policies which
there was a valid termination; without this, then there were initially processed at the various steps of the plant-
would be no reason to invoke the need to interpret and level Grievance Procedures under the parties' collective
implement the CBA provisions properly. bargaining agreements fall within the original and
exclusive jurisdiction of the voluntary arbitrator pursuant
to Art. 217 (c) and Art. 261 of the Labor Code; and, if filed
before the Labor Arbiter, these cases shall be dismissed
13
by the Labor Arbiter for lack of jurisdiction and referred practices. The NCMB then conducted a series of
to the concerned NCMB Regional Branch for appropriate conciliation meetings but the parties failed to reach an
action towards an expeditious selection by the parties of amicable settlement. MERALCO filed an Urgent Petition
a Voluntary Arbitrator or Panel of Arbitrators based on with the DOLE praying that the Secretary assume
the procedures agreed upon in the CBA. jurisdiction over the labor dispute and to enjoin the
striking employees to go back to work. (granted)
However, as earlier stated, the instant case is a
termination dispute falling under the original and Thereafter, the parties submitted their respective
exclusive jurisdiction of the Labor Arbiter, and does not memoranda containing their demands (wage increase,
specifically involve the application, implementation or bonus, benefits, etc.)
enforcement of company personnel policies MERALCO filed a supplement to the motion for
contemplated in Policy Instruction No. 56. reconsideration on September 18, 1995, alleging that the
Consequently, Policy Instruction No. 56 does not apply in Secretary of Labor did not properly appreciate the effect
the case at bar. In any case, private respondents never of the awarded wages and benefits on MERALCOs
invoked the application of Policy Instruction No. 56 in financial viability.
theirPosition Papers, neither did they raise the question
in their Motion to Dismiss which they filed nine (9) MEWA likewise filed a motion asking the Secretary
months after the filing of their Position Papers. At this of Labor to reconsider its Order on the wage increase,
late stage of the proceedings, it would not serve the ends leaves, decentralized filing of paternity and maternity
of justice if this case is referred back to a Voluntary leaves, bonuses, retirement benefits, optional
Arbitrator considering that both the AMOSUP and private retirement, medical, dental and hospitalization benefits,
respondents have submitted to the jurisdiction of the short swing and payroll treatment. On its political
Labor Arbiter by filing their respective Position demands, MEWA asked the Secretary to rule its proposal
Papers and ignoring the grievance procedure set forth in to institute a Code of Discipline for its members and the
their CBA. unions representation in the administration of the
Pension Fund.
[G.R. No. 127598. January 27, 1999] On December 28, 1996, the Secretary issued an
MANILA ELECTRIC COMPANY, petitioner, vs. THE Order resolving the parties separate motions, the
HONORABLE SECRETARY OF LABOR LEONARDO modifications of the August 19, 1996 Order being
QUISUMBING AND MERALCO EMPLOYEES AND highlighted hereunder:
WORKERS ASSOCIATION (MEWA), respondents.
EVIOTA 1) Effectivity of Agreement - December 1, 1995 to
November 30, 1997.
MEWA is the duly recognized labor organization of the MERALCO also assails the Secretarys order that the
rank-and-file employees of MERALCO. effectivity of the new CBA shall retroact to December 1,
1995, the date of the commencement of the last two
MEWA informed MERALCO of its intention to re- years of the effectivity of the existing CBA.
negotiate the terms and conditions of their existing
1992-1997 CBA covering the remaining period of two On the other hand, MEWA supports the ruling of
years starting from December 1, 1995 to November 30, the Secretary on the theory that he has plenary power
1997. and discretion to fix the date of effectivity of his arbitral
award. MEWA also contends that if the arbitral award
MERALCO signified its willingness to re-negotiate and takes effect on the date of the Secretary Labors ruling on
formed a CBA negotiating panel for the purpose. MEWA the parties motion for reconsideration (i.e., on December
submitted its proposal which, in turn, presented a 28, 1996), an anomaly situation will result when CBA
counter-proposal. Thereafter, collective bargaining would be more than the 5-year term mandated by Article
negotiations proceeded. However, despite the series of 253-A of the Labor Code.
meetings between the negotiating panels of MERALCO
and MEWA, the parties failed to arrive at terms and ISSUE: What is the reckoning point of an arbitral award?
conditions acceptable to both of them. (deadlock)
HELD:
MEWA filed a Notice of Strike with the NCMB on the
grounds of bargaining deadlock and unfair labor
14
RETROACTIVITY OF THE CBA employer and the employees or their union. Absent such
Article 253-A serves as the guide in determining when an agreement as to retroactivity, the award shall retroact
the effectivity of the CBA at bar is to take effect. It to the first day after the six-month period following the
provides that the representation aspect of the CBA is to expiration of the last day of the CBA should there be one.
be for a term of 5 years, while In the absence of a CBA, the Secretary's determination
of the date of retroactivity as part of his discretionary
x x x [A]ll other provisions of the Collective powers over arbitral awards shall control.
Bargaining Agreement shall be re-negotiated not later
than 3 years after its execution. Any agreement on such [G.R. No. 119293. June 10, 2003]
other provisions of the Collective Bargaining Agreement SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL
entered into within 6 months from the date of expiry of LABOR RELATIONS COMMISSION, Second Division,
the term of such other provisions as fixed in such ILAW AT BUKLOD NG MANGGAGAWA
Collective Bargaining Agreement shall retroact to the day (IBM), respondents.
immediately following such date. If such agreement is MONTEFOLCA
entered into beyond 6 months, the parties shall agree on
the duration of the effectivity thereof. x x x. FACTS: Petitioner San Miguel Corporation (SMC) and
respondent Ilaw at Buklod ng Manggagawa (IBM),
Under these terms, it is clear that the 5-year term exclusive bargaining agent of petitioners daily-paid rank
requirement is specific to the representation aspect. and file employees, executed a Collective Bargaining
What the law additionally requires is that a CBA must be Agreement (CBA) under which they agreed to submit all
re-negotiated within 3 years after its execution. It is in disputes to grievance and arbitration proceedings. The
this re-negotiation that gives rise to the present CBA CBA also included a mutually enforceable no-strike no-
deadlock. lockout agreement.
If no agreement is reached within 6 months from On April 11, 1994, IBM, through its vice-president
the expiry date of the 3 years that follow the CBA Alfredo Colomeda, filed with the National Conciliation
execution, the law expressly gives the parties - not and Mediation Board (NCMB) a notice of strike, docketed
anybody else - the discretion to fix the effectivity of the as NCMB-NCR-NS-04-180-94, against petitioner for
agreement. allegedly committing: (1) illegal dismissal of union
members, (2) illegal transfer, (3) violation of CBA, (4)
Consequently, we find no sufficient legal ground on contracting out of jobs being performed by union
the other justification for the retroactive application of members, (5) labor-only contracting, (6) harassment of
the disputed CBA, and therefore hold that the CBA union officers and members, (7) non-recognition of duly-
should be effective for a term of 2 years counted from elected union officers, and (8) other acts of unfair labor
December 28, 1996 (the date of the Secretary of Labors practice.
disputed order on the parties motion for
reconsideration) up to December 27, 1999. The next day, IBM filed another notice of strike, this
time through its president Edilberto Galvez, raising
FROM THE TRANSCRIPT similar grounds.The Galvez group subsequently
Labor laws are silent as to when an arbitral award in a requested the NCMB to consolidate its notice of strike
labor dispute where the Secretary had assumed with that of the Colomeda groupto which the latter
jurisdiction by virtue of Article 263 (g) of the Labor Code opposed, alleging Galvezs lack of authority in filing the
shall retroact. In general, a CBA negotiated within six same.
months after the expiration of the existing CBA retroacts Petitioner thereafter filed a Motion for Severance
to the day immediately following such date and if agreed of Notices of Strike with Motion to Dismiss, on the
thereafter, the effectivity depends on the agreement of grounds that the notices raised non-strikeable issues and
the parties.18 On the other hand, the law is silent as to that they affected four corporations (San Miguel
the retroactivity of a CBA arbitral award or that granted Corporation, MAGNOLIA-NESTLE CORPORATION, the SAN
not by virtue of the mutual agreement of the parties but MIGUEL FOODS, INC., and the SAN MIGUEL JUICES, INC.)
by intervention of the government. Despite the silence of which are separate and distinct from each other.
the law, the Court rules herein that CBA arbitral awards
granted after six months from the expiration of the last
CBA shall retroact to such time agreed upon by both
15
After several conciliation meetings, NCMB Director Employment (DOLE) officials, expressly stated that cases
Reynaldo Ubaldo found that the real issues involved are filed in relation to their dispute will continue and will not
non-strikeable. Hence on May 2, 1994, he issued be affected in any manner whatsoever by the
separate letter-orders to both union groups, converting agreement. The picket lines ended and work was then
their notices of strike into preventive mediation. resumed.
On May 16, 1994, while separate preventive Respondent thereafter moved to reconsider the
mediation conferences were ongoing, the Colomeda issuance of the TRO, and sought to dismiss the injunction
group filed with the NCMB a notice of holding a strike case in view of the cessation of its picketing activities as a
vote. Petitioner opposed by filing a Manifestation and result of the signed MOA. It argued that the case had
Motion to Declare Notice of Strike Vote Illegal invoking become moot and academic there being no more
the case of PAL v. Drilon, which held that no strike could prohibited activities to restrain, be they actual or
be legally declared during the pendency of preventive threatened. Petitioner, however, opposed and submitted
mediation. NCMB Director Ubaldo in response issued copies of flyers being circulated by IBM, as proof of the
another letter to the Colomeda Group reiterating the unions alleged threat to revive the strikeThe NLRC did
conversion of the notice of strike into a case of not rule on the opposition to the TRO and allowed it to
preventive mediation and emphasizing the findings that lapse.
the grounds raised center only on an intra-union conflict,
On November 29, 1994, the NLRC issued the
which is not strikeable. The basic point to be resolved
challenged decision, denying the petition for injunction
entails the question of as to who between the two (2)
for lack of factual basis. It found that the circumstances
groups shall represent the workers for collective
bargaining purposes. at the time did not constitute or no longer constituted an
actual or threatened commission of unlawful acts. It
On May 27, 1994, the Colomeda group notified the likewise denied petitioners motion for reconsideration in
NCMB of the results of their strike vote, which favored its resolution dated February 1, 1995.
the holding of a strike. In reply, NCMB issued a letter
again advising them that by virtue of the PAL v. ISSUE: THE NLRC GRAVELY ABUSED ITS DISCRETION
WHEN IT FAILED TO ENFORCE, BY INJUNCTION, THE
Drilon ruling, their notice of strike is deemed not to have
PARTIES RECIPROCAL OBLIGATIONS TO SUBMIT TO
been filed, consequently invalidating any subsequent
strike for lack of compliance with the notice ARBITRATION AND NOT TO STRIKE.
requirement. Despite this and the pendency of the
preventive mediation proceedings, on June 4, 1994, IBM HELD: YES. Article 254 of the Labor Code provides that
went on strike. The strike paralyzed the operations of no temporary or permanent injunction or restraining
petitioner, causing it losses allegedly worth P29.98 order in any case involving or growing out of labor
million in daily lost production. disputes shall be issued by any court or other
entity except as otherwise provided in Articles 218 and
Two days after the declaration of strike, or on June 264 of the Labor Code. Under the first exception, Article
6, 1994, petitioner filed with public respondent NLRC an 218 (e) of the Labor Code expressly confers upon the
amended Petition for Injunction with Prayer for the NLRC the power to enjoin or restrain actual and
Issuance of Temporary Restraining Order, Free Ingress threatened commission of any or all prohibited or
and Egress Order and Deputization Order. After due unlawful acts, or to require the performance of a
hearing and ocular inspection, the NLRC on June 13, 1994 particular act in any labor dispute which, if not restrained
resolved to issue a temporary restraining order (TRO) or performed forthwith, may cause grave or irreparable
directing free ingress to and egress from petitioners damage to any party or render ineffectual any decision in
plants, without prejudice to the unions right to peaceful favor of such party x x x. The second exception, on the
picketing and continuous hearings on the injunction case. other hand, is when the labor organization or the
employer engages in any of the prohibited activities
To minimize further damage to itself, petitioner on
enumerated in Article 264.
June 16, 1994, entered into a Memorandum of
Agreement (MOA) with the respondent-union, calling for
a lifting of the picket lines and resumption of work in Pursuant to Article 218 (e), the coercive measure of
exchange of good faith talks between the management injunction may also be used to restrain an actual or
and the labor management committees. The MOA, threatened unlawful strike. In the case of San Miguel
[
signed in the presence of Department of Labor and Corporation v. NLRC, where the same issue of NLRCs
duty to enjoin an unlawful strike was raised, we ruled
16
that the NLRC committed grave abuse of discretion when mediation was ongoing, and notwithstanding the letter-
it denied the petition for injunction to restrain the union advisories of NCMB warning it of its lack of notice of
from declaring a strike based on non-strikeable grounds. strike.
Further, in IBM v. NLRC, we held that it is the legal duty
Such disregard of the mediation proceedings was a
and obligation of the NLRC to enjoin a partial strike
blatant violation of the Implementing Rules, which
staged in violation of the law. Failure promptly to issue
an injunction by the public respondent was likewise held explicitly oblige the parties to bargain collectively in good
faith and prohibit them from impeding or disrupting the
therein to be an abuse of discretion.
proceedings.
In the case at bar, petitioner sought a permanent
injunction to enjoin the respondents strike. A strike is Also noteworthy is public respondents disregard of
petitioners argument pointing out the unions failure to
considered as the most effective weapon in protecting
observe the CBA provisions on grievance and arbitration.
the rights of the employees to improve the terms and
In the case of San Miguel Corp. v. NLRC, we ruled that the
conditions of their employment. However, to be valid, a
strike must be pursued within legal bounds. One of the union therein violated the mandatory provisions of the
CBA when it filed a notice of strike without availing of the
procedural requisites that Article 263 of the Labor Code
remedies prescribed therein. Thus we held:
and its Implementing Rules prescribe is the filing of a
valid notice of strike with the NCMB. Imposed for the x x x For failing to exhaust all steps in the grievance
purpose of encouraging the voluntary settlement of machinery and arbitration proceedings provided in the
disputes, this requirement has been held to be Collective Bargaining Agreement, the notice of strike
mandatory, the lack of which shall render a strike illegal. should have been dismissed by the NLRC and private
In the present case, NCMB converted IBMs notices respondent union ordered to proceed with the grievance
and arbitration proceedings. In the case of Liberal Labor
into preventive mediation as it found that the real issues
Union vs. Phil. Can Co., the court declared as illegal the
raised are non-strikeable. Such order is in pursuance of
strike staged by the union for not complying with the
the NCMBs duty to exert all efforts at mediation and
conciliation to enable the parties to settle the dispute grievance procedure provided in the collective bargaining
agreement. . . (Citations omitted)
amicably and in line with the state policy of favoring
voluntary modes of settling labor disputes. In accordance
with the Implementing Rules of the Labor Code, the said As in the abovecited case, petitioner herein evinced its
conversion has the effect of dismissing the notices of willingness to negotiate with the union by seeking for an
strike filed by respondent. A case in point is PAL v. order from the NLRC to compel observance of the
[
Drilon, where we declared a strike illegal for lack of a grievance and arbitration proceedings. Respondent
valid notice of strike, in view of the NCMBs conversion of however resorted to force without exhausting all
the notice therein into a preventive mediation case. We available means within its reach. Such infringement of
ruled, thus: the aforecited CBA provisions constitutes further
justification for the issuance of an injunction against the
The NCMB had declared the notice of strike as strike. As we said long ago: Strikes held in violation of the
appropriate for preventive mediation. The effect of that terms contained in a collective bargaining agreement are
declaration (which PALEA did not ask to be reconsidered illegal especially when they provide for conclusive
or set aside) was to drop the case from the docket of arbitration clauses. These agreements must be strictly
notice of strikes, as provided in Rule 41 of the NCMB adhered to and respected if their ends have to be
Rules, as if there was no notice of strike. During the achieved.
pendency of preventive mediation proceedings no strike
could be legally declared... The strike which the union BENGUET CORPORATION vs DENR
mounted, while preventive mediation proceedings were GIDO
ongoing, was aptly described by the petitioner as an
ambush. (Emphasis supplied) Facts:
Clearly, therefore, applying the aforecited ruling to Benguet and J.G. Realty entered into a RAWOP, wherein
the case at bar, when the NCMB ordered the preventive J.G. Realty was acknowledged as the owner of four
mediation on May 2, 1994, respondent had thereupon mining claims respectively named as Bonito-I, Bonito-II,
lost the notices of strike it had filed. Subsequently, Bonito-III, and Bonito-IV,
however, it still defiantly proceeded with the strike while
17
However, on February 9, 1999, J.G. Realty sent a letter to final and executory. On this ground alone, the instant
the President of Benguet informing the latter that it was petition must be denied.
terminating the RAWOP mainly for allegedly failing and
violating some of the provisions in the contract and taht Even if we entertain the petition although
no stipulation was provided with respect to the term Benguet skirted the appeal to the CA via Rule 43, still, the
limit of the RAWOP. December 2, 2002 Decision and March 17, 2004
Resolution of the DENR-MAB in MAB Case No. 0124-01
In response, Benguets Manager for Legal should be maintained.
Services, wrote J.G. Realty a letter, therein alleging that Ruling:
Benguet complied with its obligations under the RAWOP.
Thus, Benguet posited that there was no valid ground for The case should have first been brought to voluntary
the termination of the RAWOP. It also reminded J.G. arbitration before the POA
Realty that it should submit the disagreement to
arbitration rather than unilaterally terminating the Secs. 11.01 and 11.02 of the RAWOP pertinently provide:
RAWOP.
11.01 Arbitration
J.G. Realty filed a Petition for Declaration of
[9]
Nullity/Cancellation of the RAWOP with the Legaspi Any disputes, differences or
City POA, Region V disagreements between BENGUET and
the OWNER with reference to anything
On March 19, 2001, the POA issued a Decision, declaring whatsoever pertaining to this
the [RAWOP] and its Supplemental Agreement cancelled Agreement that cannot be amicably
and without effect. Therefrom, Benguet filed a Notice of settled by them shall not be cause of
Appeal with the MAB. Thereafter, the MAB issued the any action of any kind whatsoever in
assailed December 2, 2002 Decision. Benguet then filed a any court or administrative agency but
Motion for Reconsideration of the assailed Decision shall, upon notice of one party to the
which was denied in the March 17, 2004Resolution of the other, be referred to a Board of
MAB. Hence, Benguet filed the instant petition. Arbitrators consisting of three (3)
Issue: members, one to be selected by
(1) Should the controversy have first been BENGUET, another to be selected by
submitted to arbitration before the POA took the OWNER and the third to be
cognizance of the case? selected by the aforementioned two
arbitrators so appointed.
Note: Before we dwell on the substantive issues, we find
that the instant petition can be denied outright as xxxx
Benguet resorted to an improper remedy. 11.02 Court Action
The last paragraph of Section 79 of Republic Act No. (RA) No action shall be instituted in court as
7942 or the Philippine Mining Act of 1995 states, A to any matter in dispute as
petition for review by certiorari and question of law may hereinabove stated, except to enforce
be filed by the aggrieved party with the Supreme Court the decision of the majority of the
within thirty (30) days from receipt of the order or Arbitrators.
decision of the [MAB].
However, this Court has already invalidated such Thus, Benguet argues that the POA should have first
provision in Carpio v. Sulu Resources Development referred the case to voluntary arbitration before taking
Corp. ruling that a decision of the MAB must first be cognizance of the case, citing Sec. 2 of RA 876 on persons
appealed to the Court of Appeals (CA) under Rule 43 of and matters subject to arbitration.
the Rules of Court, before recourse to this Court may be
had. On the other hand, in denying such argument, the POA
ruled that:
Petitioner having failed to properly appeal to the
CA under Rule 43, the decision of the MAB has become
18
While the parties may establish such may in such contract agree to settle by
stipulations clauses, terms and arbitration a controversy thereafter
conditions as they may deem arising between them. Such
convenient, the same must not be submission or contract shall be valid,
contrary to law and public policy. At a enforceable and irrevocable, save
glance, there is nothing wrong with the upon such grounds as exist at law for
terms and conditions of the agreement. the revocation of any contract.
But to state that an aggrieved party
cannot initiate an action without going Such submission or contract
to arbitration would be tying ones hand may include question[s] arising out of
even if there is a law which allows him valuations, appraisals or other
to do so. controversies which may be collateral,
incidental, precedent or subsequent to
The MAB, meanwhile, denied Benguets contention on any issue between the parties.
the ground of estoppel, stating:
In RA 9285 or the Alternative Dispute Resolution Act of
Benguet is in estoppel from questioning 2004, the Congress reiterated the efficacy of arbitration
the competence of the Panel of as an alternative mode of dispute resolution by stating in
Arbitrators to hear and decide in the Sec. 32 thereof that domestic arbitration shall still be
summary proceedings J.G. Realtys governed by RA 876. Clearly, a contractual stipulation
petition, when Benguet itself did not that requires prior resort to voluntary arbitration before
merely move for the dismissal of the the parties can go directly to court is not illegal and is in
case but also filed an Answer with fact promoted by the State. Thus, petitioner correctly
counterclaim seeking affirmative reliefs cites several cases whereby arbitration clauses have been
from the Panel of Arbitrators. upheld by this Court.
Moreover, the MAB ruled that the contractual provision Moreover, the contention that RA 7942 prevails over RA
on arbitration merely provides for an additional forum or 876 presupposes a conflict between the two laws. Such is
venue and does not divest the POA of the jurisdiction to not the case here. To reiterate, availment of voluntary
[
hear the case. arbitration before resort is made to the courts or quasi-
judicial agencies of the government is a valid contractual
In its July 20, 2004 Comment, J.G. Realty reiterated the stipulation that must be adhered to by the parties. As
above rulings of the POA and MAB. It argued that RA stated in Secs. 6 and 7 of RA 876:
7942 or the Philippine Mining Act of 1995 is a special law
which should prevail over the stipulations of the parties Section 6. Hearing by court.A
and over a general law, such as RA 876. It also argued party aggrieved by the failure, neglect
that the POA cannot be considered as a court under the or refusal of another to perform under
contemplation of RA 876 and that jurisprudence saying an agreement in writing providing for
that there must be prior resort to arbitration before filing arbitration may petition the court for
a case with the courts is inapplicable to the instant case an order directing that such
as the POA is itself already engaged in arbitration. arbitration proceed in the manner
provided for in such agreement. Five
On this issue, we rule for Benguet. days notice in writing of the hearing of
Sec. 2 of RA 876 elucidates the scope of arbitration: such application shall be served either
personally or by registered mail upon
Section 2. Persons and matters the party in default. The court shall
subject to arbitration.Two or more hear the parties, and upon being
persons or parties may submit to the satisfied that the making of the
arbitration of one or more arbitrators agreement or such failure to comply
any controversy existing between therewith is not in issue, shall make an
them at the time of the submission order directing the parties to proceed
and which may be the subject of an to arbitration in accordance with the
action, or the parties to any contract terms of the agreement. If the making
19
of the agreement or default be in issue J.G. Realtys contention, that prior resort to arbitration is
the court shall proceed to summarily unavailing in the instant case because the POAs mandate
hear such issue. If the finding be that is to arbitrate disputes involving mineral agreements, is
no agreement in writing providing for misplaced. A distinction must be made between
arbitration was made, or that there is voluntary and compulsory arbitration. In Ludo and Luym
no default in the proceeding Corporation v. Saordino, the Court had the occasion to
thereunder, the proceeding shall be distinguish between the two types of arbitrations:
dismissed. If the finding be that a Comparatively, in Reformist Union of
written provision for arbitration was R.B. Liner, Inc. vs. NLRC, compulsory
made and there is a default in arbitration has been defined both as
proceeding thereunder, an order shall the process of settlement of labor
be made summarily directing the disputes by a government
parties to proceed with the arbitration agencywhich has the authority to
in accordance with the terms thereof. investigate and to make an
award which is binding on all the
xxxx parties, and as a mode of arbitration
where the parties are compelled to
Section 7. Stay of civil action.If accept the resolution of their dispute
any suit or proceeding be brought upon through arbitration by a third party.
an issue arising out of an agreement While a voluntary arbitrator is not part
providing for the arbitration thereof, of the governmental unit or labor
the court in which such suit or departments personnel, said arbitrator
proceeding is pending, upon being renders arbitration services provided
satisfied that the issue involved in such for under labor laws.
suit or proceeding is referable to
arbitration, shall stay the action or There is a clear distinction between compulsory and
proceeding until an arbitration has voluntary arbitration. The arbitration provided by the
been had in accordance with the terms POA is compulsory, while the nature of the arbitration
of the agreement: Provided, That the provision in the RAWOP is voluntary, not involving any
applicant, for the stay is not in default government agency. Thus, J.G. Realtys argument on this
in proceeding with such arbitration. matter must fail.
In other words, in the event a case that should properly As to J.G. Realtys contention that the provisions of RA
be the subject of voluntary arbitration is erroneously 876 cannot apply to the instant case which involves an
filed with the courts or quasi-judicial agencies, on motion administrative agency, it must be pointed out that
of the defendant, the court or quasi-judicial agency shall Section 11.01 of the RAWOP states that:
determine whether such contractual provision for
arbitration is sufficient and effective. If in affirmative, the [Any controversy with regard to the
court or quasi-judicial agency shall then order the contract] shall not be cause of any
enforcement of said provision. Besides, in BF Corporation action of any kind whatsoever in any
v. Court of Appeals, we already ruled: court or administrative agency but
shall, upon notice of one party to the
In this connection, it bears other, be referred to a Board of
stressing that the lower court has not Arbitrators consisting of three (3)
lost its jurisdiction over the case. members, one to be selected by
Section 7 of Republic Act No. 876 BENGUET, another to be selected by
provides that proceedings therein have the OWNER and the third to be
only been stayed. After the special selected by the aforementioned two
proceeding of arbitration has been arbiters so appointed.
pursued and completed, then the lower
court may confirm the award made by There can be no quibbling that POA is a quasi-judicial
the arbitrator. body which forms part of the DENR, an administrative
agency. Hence, the provision on mandatory resort to
20
arbitration, freely entered into by the parties, must be therefrom to arbitration before the Arbitration of the
held binding against them. International Chamber of Commerce.
In sum, on the issue of whether POA should have When a dispute arose between the parties, respondent
referred the case to voluntary arbitration, we find that, RIB filed a complaint before respondent CIAC for
indeed, POA has no jurisdiction over the dispute which is arbitration. China Chang filed its answer with compulsory
governed by RA 876, the arbitration law. counterclaim and raised therein the issue of lack of
jurisdiction on the part of CIAC. In August 1995,CIAC
However, we find that Benguet is already estopped from considered the question of jurisdiction merely as a
questioning the POAs jurisdiction. As it were, when J.G. special defense which can be included as part of the
Realty filed DENR Case, Benguet filed its answer and issues of the Terms of Reference. China Chang filed a
participated in the proceedings before the POA, Region motion for reconsideration which was denied by CIAC in
V. Secondly, when the adverse POA Decision was October 1995.
rendered, it filed an appeal with the MAB and again
participated in the MAB proceedings. When the adverse China Chang raised the issue of lack of jurisdiction withth
December 2, 2002 MAB Decision was promulgated, it CA. In February 1996, CA dismissed the petition. China
filed a motion for reconsideration with the MAB. When Chang filed an MR, but denied by CA . China Chang
the adverse March 17, 2004 MAB Resolution was issued, questions the validity of Construction Industry
Benguet filed a petition with this Court pursuant to Sec. Arbitration Commission (CIAC) Resolution 3- 93
79 of RA 7942 impliedly recognizing MABs jurisdiction. In amending Section 1, Article III of CIAC Rules of Procedure
this factual milieu, the Court rules that the jurisdiction of Governing Construction Arbitration promulgated by the
POA and that of MAB can no longer be questioned by CIAC pursuant to its rule-making power granted under
Benguet at this late hour. What Benguet should have Section 21 of Executive Order No. 1008, which
done was to immediately challenge the POAs jurisdiction pertinently provides as follows:
by a special civil action for certiorari when POA ruled that
it has jurisdiction over the dispute. To redo the Article III Effect of the Agreement to Arbitrate
proceedings fully participated in by the parties after the Section 1. Submission to CIAC Jurisdiction An
lapse of seven years from date of institution of the arbitration clause in a construction contract or a
original action with the POA would be anathema to the submission to arbitration of a construction
speedy and efficient administration of justice. dispute shall be deemed an agreement to
submit an existing or future controversy to the
CHINA CHANG VS ROSAL INFRASTRUCTURE CIAC jurisdiction, notwithstanding the reference
ESCOVILLA to a different arbitral institution or arbitral body
in such contract or submission
DOCTRINE: Principle of Party Autonomy - That the parties
can agree on the terms and conditions of the contract ISSUE 1: W/N the CIAC have acquire jurisdiction over the
provided tis not contrary to law, orders, public policy or dispute.
morals. Take note that this was the ruling decided
BEFORE the effectivity of RA 9285. If the parties agree to ISSUE 2:Can parties in the case at bar agree to submit to
submit to arbitration their construction dispute under the arbitration their construction dispute under the CIAC.
CIAC, it is allowed under this case.
Ruling 1: Yes
FACTS: Petitioner China Chang is the operator of the
Binga Hydroelectric Plant in Itogon, Benguet, which is Ruling 2: Yes
under a Rehabilitate Operate and Leaseback Contract
(ROL Contract) with the NaPoCOr and engaged in the No restriction whatsoever on any party from submitting
rehabilitation of the power plant, including the a dispute for arbitration to an arbitral body other than
construction of check dams. the CIAC. On the contrary, the new rule, as amended
merely implements the letter and the spirit of its
On February 1994, petitioner China Chang engaged the enabling law, E.O. No. 1008, which vests jurisdiction
services of Rosal Infrustructure Builders (RIB) for the upon the CIAC:
construction of a Dam in Itogon, Benguet. In this
contract, the parties agreed to submit disputes arising
21
Section 4: Jurisdiction - The CIAC shall have the industry in the Philippines can have recourse. The
original and exclusive jurisdiction over disputes executive order was enacted to encourage the early and
arising from, or connected with, contracts expeditious settlement of disputes in the construction
entered into by the parties involved in the industry, a public policy the implementation of which is
construction in the Philippines, whether the necessary and important for the realization of national
dispute arises before or after the completion of development goals. "
the contracts, or after the abandonment or
breach thereof. These disputes may involve G.R. No. 129169 November 17, 1999 NATIONAL
government or private contracts. For the Board IRRIGATION ADMINISTRATION (NIA), petitioner,
to acquire jurisdiction, the parties to a dispute vs.HONORABLE COURT OF APPEALS (4th Division),
must agree to submit the same to voluntary CONSTRUCTION INDUSTRY ARBITRATION COMMISSION,
arbitration. (Emphasis supplied) and HYDRO RESOURCES CONTRACTORS CORPORATION,
respondents.
What the law merely requires for a particular CUTAMORA
construction contract to fall within the jurisdiction of
CIAC is for the parties to agree to submit the same to In a competitive bidding held by NIA in August 1978,
voluntary arbitration. Hydro Resources Contractors Corporation (hereafter
HYDRO) was awarded Contract MPI-C-2 for the
Now that Section 1, Article III, as amended, is submitted construction of the main civil works of the Magat
to test in the present petition, the Supreme Court ruled River Multi-Purpose Project. The contract provided
to uphold its validity with full certainty. that HYDRO would be paid partly in Philippine pesos
and partly in U.S. dollars.
However, this should not be understood to mean that HYDRO substantially completed the works under the
the parties may no longer stipulate to submit their contract in 1982 and final acceptance by NIA was
disputes to a different forum or arbitral boy. Parties may made in 1984. HYDRO thereafter determined that it
continue to stipulate as regards their preferred forum in still had an account receivable from NIA representing
case of voluntary arbitration, but in so doing, they may the dollar rate differential of the price escalation for
not divest the CIAC of jurisdiction as provided by law. the contract.
Under the elementary principle on the law on contracts After unsuccessfully pursuing its case with NIA,
that laws obtaining in a jurisdiction form part of all HYDRO, on 7 December 1994, filed with the CIAC a
agreements, when the law provides that the Board Request for Adjudication of the aforesaid claim.
acquires jurisdiction when the parties to the contract HYDRO nominated six arbitrators for the arbitration
agree to submit the same to voluntary arbitration, the panel, from among whom CIAC appointed Engr.
law in effect, automatically gives the parties an Lauro M. Cruz.
alternative forum before whom they may submit their On 6 January 1995, NIA filed its Answer wherein it
disputes. That alternative forum is the CIAC. questioned the jurisdiction of the CIAC alleging lack
of cause of action, laches and estoppel in view of
Other Matters: Also important ang defintion on voluntary HYDRO's alleged failure to avail of its right to submit
arbitration as defined in the case Hi-Precision Steel the dispute to arbitration within the prescribed
Center vs Lim Kim Steel Builders. period as provided in the contract. On the same
date, NIA filed a Compliance wherein it nominated
"Voluntary arbitration involves the reference of a dispute six arbitrators, from among whom CIAC appointed
to an impartial body, the members of which are chosen Atty. Custodio O. Parlade, and made a counterclaim.
by the parties themselves which parties freely consent in At the preliminary conference, NIA through its
advance to abide by the arbitral award issued after counsel Atty. Joy C. Legaspi of the Office of the
proceedings where both parties had the opportunity to Government Corporate Counsel, manifested that it
be heard. The basic objective is to provide a speedy and could not admit the genuineness of HYDRO's
inexpensive method of settling disputes by allowing the evidence since NIA's records had already been
parties to avoid the formalities, delay, expenses and destroyed. NIA requested an opportunity to examine
aggravation which commonly accompany ordinary the originals of the documents which HYDRO agreed
litigation, especially litigation which goes through the to provide.
entire hierarchy of courts. Executive Order No. 1008
created an arbitration facility to which the construction
22
On 13 March 1995, NIA filed a Motion to Dismiss exclusive jurisdiction over disputes arising from, or
alleging lack of jurisdiction over the disputes. NIA connected with contracts entered into by parties
contended that there was no agreement with involved in construction in the Philippines, whether
HYDRO to submit the dispute to CIAC for arbitration the dispute arises before or after the completion of
considering that the construction contract was the contract, or after the abandonment or breach
executed in 1978 and the project completed in 1982, thereof. The disputes may involve government or
whereas the Construction Industry Arbitration Law private contracts. For the Board to acquire
creating CIAC was signed only in 1985; and that jurisdiction, the parties to a dispute must agree to
while they have agreed to arbitration as a mode of submit the same to voluntary arbitration.
settlement of disputes, they could not have The complaint of HYDRO against NIA on the basis of
contemplated submission of their disputes to CIAC. the contract executed between them was filed on 7
NIA further argued that records show that it had not December 1994, during the effectivity of E.O. No.
voluntarily submitted itself to arbitration by CIAC 1008. Hence, it is well within the jurisdiction of CIAC.
citing TESCO Services, Inc. v. Hon. Abraham Vera, et The jurisdiction of a court is determined by the law
al., wherein it was ruled: in force at the time of the commencement of the
CIAC did not acquire jurisdiction over the action.
dispute arising from the sub-contract agreement NIA's argument that CIAC had no jurisdiction to
between petitioner TESCO and private arbitrate on contract which preceded its existence is
respondent LAROSA. The records do not show untenable. E.O. 1008 is clear that the CIAC has
that the parties agreed to submit the disputes to jurisdiction over all disputes arising from or
arbitration by the CIAC . . . . While both parties connected with construction contract whether the
in the sub-contract had agreed to submit the dispute arises before or after the completion of the
matter to arbitration, this was only between contract. Thus, the date the parties entered into a
themselves, no request having been made by contract and the date of completion of the same,
both with the CIAC. Hence, as already stated, even if these occurred before the constitution of the
the CIAC, has no jurisdiction over the dispute. . . CIAC, did not automatically divest the CIAC of
. . Nowhere in the said article (sub-contract) jurisdiction as long as the dispute submitted for
does it mention the CIAC, much less, vest arbitration arose after the constitution of the CIAC.
jurisdiction with the CIAC. Stated differently, the jurisdiction of CIAC is over the
On 11 April 1995, the arbitral body issued an order dispute, not the contract; and the instant dispute
which deferred the determination of the motion to having arisen when CIAC was already constituted,
dismiss and resolved to proceed with the hearing of the arbitral board was actually exercising current,
the case on the merits as the grounds cited by NIA not retroactive, jurisdiction.
did not seem to be "indubitable." NIA filed a motion NIA also contended that the CIAC did not acquire
for reconsideration of the aforesaid Order. CIAC in jurisdiction over the dispute since it was only HYDRO
denying the motion for reconsideration ruled that it that requested for arbitration. It asserts that to
has jurisdiction over the HYDRO's claim over NIA acquire jurisdiction over a case, as provided under
pursuant to E.O 1008 and that the hearing should E.O. 1008, the request for arbitration filed with CIAC
proceed as scheduled. should be made by both parties, and hence the
request by one party is not enough. It is undisputed
Issue: that the contracts between HYDRO and NIA
contained an arbitration clause wherein they agreed
Whether or not CIAC has jurisdiction. to submit to arbitration any dispute between them
that may arise before or after the termination of the
Held: agreement.
Consequently, the claim of HYDRO having arisen
Yes. CIAC has jurisdiction. from the contract is arbitrable. NIA's reliance with
the ruling on the case of Tesco Services Incorporated
Contrary to the claim of NIA, the CIAC has v. Vera, is misplaced.
jurisdiction over the controversy. Executive Order The 1988 CIAC Rules of Procedure which were
No. 1008, otherwise known as the "Construction applied by this Court in Tesco case had been duly
Industry Arbitration Law" which was promulgated on amended by CIAC Resolutions No. 2-91 and 3-93,
4 February 1985, vests upon CIAC original and Section 1 of Article III of which read as follows:
23
Submission to CIAC Jurisdiction An arbitration PHILIPPINE COMMERCIAL INTERNATIONAL

clause in a construction contract or a submission to BANK, petitioner, vs. COURT OF APPEALS, WILLIAM
arbitration of a construction contract or a GOLANGCO CONSTRUCTION CORP., Chairman ERNESTO
submission to arbitration of a construction dispute S. DE CASTRO, and members LAURO M. CRUZ and
shall be deemed an agreement to submit an existing VICTOR P. LAZATIN of the ARBITRAL TRIBUNAL of the
or future controversy to CIAC jurisdiction, CONSTRUCTION INDUSTRY ARBITRATION
notwithstanding the reference to a different COMMISSION, respondents.
arbitration institution or arbitral body in such LUMANAG
contract or submission. When a contract contains a
clause for the submission of a future controversy to FACTS:
arbitration, it is not necessary for the parties to PCIB contracted WGCC to construct the 5th to 21st
enter into a submission agreement before the floors of PCIB Tower II in Makati. Alleging that the
claimant may invoke the jurisdiction of CIAC. granite finish [of the tower] proved to be defective
Under the present Rules of Procedure, for a such that after all efforts at negotiations proved
particular construction contract to fall within the futile it hired another contractor to redo the
jurisdiction of CIAC, it is merely required that the defective finish, but that WGCC refused to pay it
parties agree to submit the same to voluntary actual damages incurred in the process, PCIB filed a
arbitration. Unlike in the original version of Section request for arbitration with the Construction
1, as applied in the Tesco case, the law as it now Industry Arbitration Commission (CIAC)
stands does not provide that the parties should WGCC denied PCIBs claim.
agree to submit disputes arising from their The CIAC, by Decision of June 21, 1996, found that
agreement specifically to the CIAC for the latter to PCIB was entitled to recover from WGCC.
acquire jurisdiction over the same. Rather, it is plain WGCC filed a Motion to Dismiss with Motion to Cite
and clear that as long as the parties agree to submit PCIB Counsel for Contempt on the ground that it was
to voluntary arbitration, regardless of what forum filed beyond the 15-day reglementary period for
they may choose, their agreement will fall within the filing an appeal, in support of which it alleged that,
jurisdiction of the CIAC, such that, even if they contrary to the allegation of counsel for PCIB that he
specifically choose another forum, the parties will acquired actual knowledge of the CIAC decision on
not be precluded from electing to submit their June 28, 1996, PCIB actually received a copy thereof
dispute before the CIAC because this right has been on June 24, 1996, hence, it had only until July 9,
vested upon each party by law, i.e., E.O. No. 1008. 1996 within which to file before the CA a petition for
Moreover, it is undeniable that NIA agreed to submit review. Since PCIB filed before the CA its petition for
the dispute for arbitration to the CIAC. NIA through Certiorari and/or Partial Review on July 12, 1996,
its counsel actively participated in the arbitration WGCC concluded that it was late by 3 days. WGCC
proceedings by filing an answer with counterclaim, [6]
attached to its motion a certified photocopy of the
as well as its compliance wherein it nominated pertinent entry in the CIAC logbook showing that
arbitrators to the proposed panel, participating in Engineer Bong Nuno received a copy of the decision
the deliberations on, and the formulation of, the for PCIB on June 24, 1996.
Terms of Reference of the arbitration proceeding, CA granted WGCCs Motion to Dismiss PCIBs petition
and examining the documents submitted by HYDRO upon a finding that indeed PCIB received a copy of
after NIA asked for the originals of the said the CIAC decision on June 24, 1996 and, therefore,
documents. its petition was belatedly filed.
PCIBs counsel disclaims that Engineer Bong Nuno is
his employee but submits anyway that he was not
authorized to receive the CIAC decision for him in his
(counsels) capacity as, by his claim, the authorized
representative of PCIB.
PCIBs counsel further argued as follows,
quoted verbatim:
Inasmuch as the undersigned counsel ha[s] not
officially received its copy of the Decision sought
to be reviewed because the Arbitral Tribunal
24
had such copy served only on [PCIB], the counsels jarring complaint that he was not officially
reglementary period should be reckoned from served with a copy of the CIAC decision.
the date when the undersigned counsel actually In fine, copy of the CIAC decision having admittedly
acquired knowledge thereof which was on 28 been served on and received by PCIB on June 24,
June 1996 when it filed [PCIBs] Motion for 1996, PCIBs counsel cannot assail the validity of such
Partial Reconsideration. Accordingly, treated as service by now claiming that the same was
a Petition for Review, pursuant to resolution No. ineffective as it was not served on him (counsel) as
2-95, this petition is seasonable. the duly authorized representative of PCIB.
It is an elementary rule of procedure that perfection
ISSUE: of an appeal within the reglementary period is not
W/N a partys counsel need to be notified of the text of only mandatory but also jurisdictional so that failure
the CIAC decision. NO. to do so renders the questioned decision final and
executory, and deprives an appellate court of
HELD: jurisdiction to alter the final judgment, much less to
entertain the appeal.
In the present petition before this Court, PCIBs
PCIB having filed its petition for Certiorari and/or
counsel now alleges that in the CIAC decision, he
Partial Review after the CIAC decision had become
was specifically named as the representative and
final and executory, the CA correctly granted WGCCs
counsel for [PCIB], but since the decision was not
Motion to Dismiss the same. This leaves it
served on him as the authorized representative of
unnecessary to pass upon PCIBs plaint about the CAs
PCIB but to an employee of [PCIB] on June 24, 1996,
refus[al] to allow [its] alternative reliefs for review
it was only on June 27 (sic), 1996 that [he] had actual
and/or certiorari. Suffice it to state that the
knowledge of the content of the decision.(Emphasis
following ruling of this Court instructs:
supplied). PCIBs counsels latest position may not be
We have time and again reminded members of the
entertained given his glaring admission that copy of
bench and bar that a special civil action for certiorari
the CIAC decision was duly served on June
under Rule 65 lies only when there is no appeal nor
24 1996 on PCIB, a party to the case which, as will
plain, speedy and adequate remedy in the ordinary
now be discussed, CIAC Rules mandates
course of law. Certiorari cannot be allowed when a
should be the one to be notified of the text of the
party to a case fails to appeal a judgment despite the
decision.
availability of that remedy, certiorari not being a
The CIAC Rules of Procedure does not contain a
substitute for lost appeal. The remedies of appeal
provision similar to Section 2, Rule 13 of the Revised
and certiorari are mutually exclusive and not
Rules of Court, reiterated in the 1997 Rules of Civil
alternative or successive (Emphasis supplied,
Procedure, which provides that service to any party
citations omitted.)
represented by counsel should be made upon his
PCIB, at all events, appeals for a relaxation of the
counsel, unless service upon the party himself is
Rules given the [substantial] issues and amounts
ordered by the court. Instead, Section 7, Article XV
involved. But even its present petition for certiorari
of the CIAC Rules of Procedure provides:
and mandamus is not the proper remedy from the
Section 7. Notification of Award to Parties Once
CA Resolution. What it should have filed was a
an award has been made, provided that the
petition for review under Rule 45 of the Rules of
costs of the arbitration have been fully paid to
Court. But even if, in accordance with the liberal
the Secretariat by the parties or by one of them,
spirit pervading the Rules of Court and in the interest
the Secretariat shall notify the parties of
of justice, this Court, in the exercise of its discretion,
the text signed by the Arbitrator or Arbitral
treats the present petition for certiorari as one for
Tribunal.
review under Rule 45, petitioner has failed to proffer
Additional copies certified true by the Executive
meritorious reasons or arguments for its allowance.
Director of the Secretariat shall be made
available, on request and at any time, to
the parties or their counsel but to no one
else. (Emphasis and underscoring supplied)
From the immediately-quoted provision of the CIAC
Rules, it is the parties who are to be notified of the
text of the CIAC decision. This answers PCIBs
25
F.F. CRUZ & CO., INC., vs HR Construction , GR 187521 / CIAC RULING

MARCH 14 2012 CIAC rendered a decision in favor of HRCC.
MILES
CA RULING
Facts: CA affirmed the decision.
Sometime in 2004, FFCCI entered into a contract with the
Issue: w/n decisions from the CIAC can be appealed via
Department of Public Works and Highways (DPWH) for
RULE 45 of the rules of court?
the construction of the Magsaysay Viaduct, known as the
Lower Agusan Development Project. On August 9, 2004,
HELD:
FFCCI, in turn, entered into a Subcontract Agreement[3]
Generally, the arbitral award of CIAC is final and may not
with HR Construction Corporation (HRCC) for the supply
be appealed except on questions of law.
of materials, labor, equipment, tools and supervision for
the construction of a portion of the said project called
Executive Order (E.O.) No. 1008[22] vests upon the CIAC
the East Bank Levee and Cut-Off Channel in accordance
original and exclusive jurisdiction over disputes arising
with the specifications of the main contract. The
from, or connected with, contracts entered into by
subcontract price agreed upon by the parties amounted
parties involved in construction in the Philippines. Under
to P31,293,532.72. Pursuant to the Subcontract
Section 19 of E.O. No. 1008, the arbitral award of CIAC
Agreement, HRCC would submit to FFCCI a monthly
"shall be final and inappealable except on questions of
progress billing which the latter would then pay, subject
law which shall be appealable to the Supreme Court."
to stipulated deductions, within 30 days from receipt
thereof.
We reiterate the rule that factual findings of construction
arbitrators are final and conclusive and not reviewable by
The parties agreed that the requests of HRCC for
this Court on appeal, except when the petitioner proves
payment should include progress accomplishment of its
affirmatively that: (1) the award was procured by
completed works as approved by FFCCI. Additionally,
corruption, fraud or other undue means; (2) there was
they agreed to conduct a joint measurement of the
evident partiality or corruption of the arbitrators or of
completed works of HRCC together with the
any of them; (3) the arbitrators were guilty of
representative of DPWH and consultants to arrive at a
misconduct in refusing to postpone the hearing upon
common quantity.
sufficient cause shown, or in refusing to hear evidence
pertinent and material to the controversy; (4) one or
Thereafter, HRCC commenced the construction of the
more of the arbitrators were disqualified to act as such
works pursuant to the Subcontract Agreement.
under section nine of Republic Act No. 876 and willfully
nd rd th refrained from disclosing such disqualifications or of any
However, FFCCI failed to pay the 2 , 3 and 4 progress
other misbehavior by which the rights of any party have
billings submitted by HRCC. HRCC, pursuant to the
been materially prejudiced; or (5) the arbitrators
arbitration clause in the Subcontract Agreement, filed
exceeded their powers, or so imperfectly executed them,
with the Construction Industry Arbitration Commission
that a mutual, final and definite award upon the subject
(CIAC) a Complaint[11] against FFCCI praying for the
matter submitted to them was not made.
payment of the following: (1) overdue obligation in the
reduced amount of P4,096,656.53 as of December 15,
Voluntary arbitration involves the reference of a dispute
2004 plus legal interest; (2) P1,500,000.00 as attorneys
to an impartial body, the members of which are chosen
fees; (3) P80,000.00 as acceptance fee and
by the parties themselves, which parties freely consent in
representation expenses; and (4) costs of litigation.
advance to abide by the arbitral award issued after
proceedings where both parties had the opportunity to
FFCCI maintained that HRCC failed to comply with the
be heard. The basic objective is to provide a speedy and
condition stated under the Subcontract Agreement for
inexpensive method of settling disputes by allowing the
the payment of the latters progress billings, i.e. joint
parties to avoid the formalities, delay, expense and
measurement of the completed works, and, hence, it was
aggravation which commonly accompany ordinary
justified in not paying the amount stated in HRCCs
litigation, especially litigation which goes through the
progress billings.
entire hierarchy of courts. Executive Order No. 1008
created an arbitration facility to which the construction
industry in the Philippines can have recourse. The
26
Executive Order was enacted to encourage the early and multi-storey building known as the Chatham House
expeditious settlement of disputes in the construction located at the corner of Herrera and Valero Streets,
industry, a public policy the implementation of which is Salcedo Village, Makati City, Metro Manila.
necessary and important for the realization of national
development goals. (Details: On 21 April 1994, the parties formally
entered into a contract for the construction of the
Aware of the objective of voluntary arbitration in the Chatham House for the contract price of P50,000,000.00
labor field, in the construction industry, and in any other inclusive of value-added tax, subject to adjustments in
area for that matter, the Court will not assist one or the accordance with Article 9 of the contract. On 12 July
other or even both parties in any effort to subvert or 1994, a Supplemental Contract was executed by and
defeat that objective for their private purposes. The between the parties whereby CHATHAM authorized MCI
Court will not review the factual findings of an arbitral to procure in behalf of the former materials, equipment,
tribunal upon the artful allegation that such body had tools, fixtures, refurbishing, furniture, and accessories
"misapprehended the facts" and will not pass upon necessary for the completion of the project. The total
issues which are, at bottom, issues of fact, no matter amount of procurement and transportation cost[s] and
how cleverly disguised they might be as "legal expenses which may be reimbursed by MCI from
questions." The parties here had recourse to arbitration CHATHAM shall not exceed the amount of
and chose the arbitrators themselves; they must have P75,000,000.00. CHATHAMs payments to MCI totaled
had confidence in such arbitrators. P104,875,792.37, representing payments for portions of
MCIs progress billings and xxx additional charges.)
nd
2 issue: Issues on the proper interpretation of the
terms of the Subcontract Agreement involve questions of In April 1998, MCI sought to collect from
law. CHATHAM a sum of money for unpaid progress billings
and other charges and instituted a request for
A question of law arises when there is doubt as to what adjudication of its claims with the CIAC (Construction
the law is on a certain state of facts, while there is a Industry Arbitration Commission).
question of fact when the doubt arises as to the truth or
falsity of the alleged facts. For a question to be one of Ruling of CIAC: The CIAC disposed of the specific
law, the same must not involve an examination of the money claims by either granting or reducing them. On
probative value of the evidence presented by the Issue No. 9, i.e., whether CHATHAM failed to complete
litigants or any of them. The resolution of the issue must and/or deliver the project within the approved
rest solely on what the law provides on the given set of completion period and, if so, whether CHATHAM is liable
circumstances. Once it is clear that the issue invites a for liquidated damages and how much, the CIAC ruled in
review of the evidence presented, the question posed is this wise:
one of fact.
This Tribunal holds that the provision of the
On the surface, the instant petition appears to merely contract insofar as the Overall Schedule is concerned
raise factual questions as it mainly puts in issue the cannot justifiably be applied in the instant case in view of
appropriate amount that is due to HRCC. However, a the implied take-over of the Chatham House project by
more thorough analysis of the issues raised by FFCCI CHATHAM. Accordingly, this Tribunal finds no necessity
would show that it actually asserts questions of law. to resolve whether or not MCI complete[d] and/or
deliver[ed] the project within the approved completion
period. In fact, Mr. Mercado testified that it was
[G.R. No. 141897. September 24, 2001] CHATHAM who ultimately completed the project, with
METRO CONSTRUCTION, INC., petitioner, vs. CHATHAM assistance of the construction managers. In any case, this
PROPERTIES, INC., respondent. Tribunal finds merit in RKDCCIs (RK Development and
MUNCAL Construction Co., Inc.) claim that MCI was in delay in the
concreting milestone and that [it] is liable for liquidated
FACTS: damages therefor. WHEREFORE, judgment is hereby
rendered in favor of the Claimant [MCI] directing
Respondent Chatham Properties, Inc. Respondent [CHATHAM] to pay Claimant [MCI] the net
(CHATHAM) and petitioner Metro Construction, Inc. sum of SIXTEEN MILLION ONE HUNDRED TWENTY SIX
(MCI) entered into a contract for the construction of a
27
THOUSAND NINE HUNDRED TWENTY TWO & 91/100 mention R.A. No. 7902, as enacted by Congress,
(16,126,922.91) PESOS effectively modified E.O. No. 1008.
Impugning the decision of the CIAC, CHATHAM instituted ISSUE: WON under existing law and rules the Court of
a petition for review with the Court of Appeals. Appeals can also review findings of facts of the
(Propriety of the factual findings and conclusions of CIAC) Construction Industry Arbitration Commission (CIAC).
YES
Ruling of CA: In upholding the decision of the
CIAC, the Court of Appeals confirmed the jurisprudential HELD:
principle that absent any showing of arbitrariness, the
CIACs findings as an administrative agency and quasi- E.O. No. 1008 vests upon the CIAC original and
judicial body should not only be accorded great respect exclusive jurisdiction over disputes arising from, or
but also given the stamp of finality. However, the Court connected with, contracts entered into by parties
of Appeals found exception in the CIACs disquisition of involved in construction in the Philippines, whether the
Issue No. 9 on the matter of liquidated damages. dispute arises before or after the completion of the
contract, or after the abandonment or breach
The Court of Appeals concluded that the interim thereof.[19] By express provision of Section 19 thereof,
takeover was necessitated by CHATHAMs insistence to the arbitral award of the CIAC is final and unappealable,
meet its own turnover dates with the buyers of the except on questions of law, which are appealable to the
projects units. Thus, CHATHAM was constrained to hire Supreme Court.
subcontractors with sufficient manpower and supervision
and incur various expenses to facilitate the completion of The parties, however, disagree on whether the
the project and/or assist MCI in making up for its delay. subsequent Supreme Court issuances on appellate
It is clear that [MCI] is liable for liquidated damages, as procedure and R.A. No. 7902 removed from the Supreme
per Article 13.5 of the Construction Contract, for its Court its appellate jurisdiction in Section 19 of E.O. No.
failure to complete the project within the period 1008 and vested the same in the Court of Appeals, and
stipulated in the Construction Contract and even despite whether appeals from CIAC awards are no longer
an extension of 53 days from the original schedule or of confined to questions of law.
the overall schedule of completion.
On 27 February 1991, this Court issued Circular
MCI filed the instant petition for review to No. 1-91, which prescribes the Rules Governing Appeals
challenge the decision of the Court of Appeals. MCI to the Court of Appeals from Final Orders or Decisions of
alleges that the Court of Appeals erred in reviewing and the Court of Tax Appeals and Quasi-Judicial Agencies.
reversing the CIACs factual findings, that there was an
implied takeover by CHATHAM of the project, and that Subsequently, on 23 February 1995, R.A. No.
MCI was not in delay in the overall schedule. In so doing, 7902 was enacted. It expanded the jurisdiction of the
the Court of Appeals contravened Section 19 of Court of Appeals and amended for that purpose Section
Executive Order (E.O.) No. 1008, which limits the review 9 of B.P. Blg. 129, otherwise known as the Judiciary
of an Arbitral Award to only questions of law, thus: Reorganization Act of 1980.
Section 19. Finality of Awards The arbitral award shall be
binding upon the parties. It shall be final and Then this Court issued Administrative Circular
inappealable (sic) except on questions of law which shall No. 1-95,[21] which revised Circular No. 1-91. Thereafter,
be appealable to the Supreme Court. this Court promulgated the 1997 Rules on Civil
Procedure. Sections 1, 2 and 3 of Rule 43.
For its part, CHATHAM avers that the evolution
on the rules governing appeals from judgments, Through Circular No. 1-91, the Supreme Court
decisions, resolutions, orders or awards of the CIAC intended to establish a uniform procedure for the review
convincingly discloses that E.O. No. 1008 has already of the final orders or decisions of the Court of Tax
been superseded. With the power of the Supreme Court Appeals and other quasi-judicial agencies provided that
to promulgate rules concerning the protection and an appeal therefrom is then allowed under existing
enforcement of constitutional rights, pleadings, practice, statutes to either the Court of Appeals or the Supreme
and procedure in all courts, its issuances and Court. The Circular designated the Court of Appeals as
amendments to the Rules on Civil Procedure, not to
28
the reviewing body to resolve questions of fact or of law completely removed with the issuance by the Supreme
or mixed questions of fact and law. Court of Revised Administrative Circular No. 1-95 and the
1997 Rules of Civil Procedure. Both categorically include
It is clear that Circular No. 1-91 covers the CIAC. the CIAC in the enumeration of quasi-judicial agencies
In the first place, it is a quasi-judicial agency. A quasi- comprehended therein. Section 3 of the former and
judicial agency or body has been defined as an organ of Section 3, Rule 43 of the latter, explicitly expand the
government other than a court and other than a issues that may be raised in an appeal from quasi-judicial
legislature, which affects the rights of private parties agencies or instrumentalities to the Court of Appeals
through either adjudication or rule-making. The CIACs within the period and in the manner therein provided.
primary function is that of a quasi-judicial agency, which Indisputably, the review of the CIAC award may involve
is to adjudicate claims and/or determine rights in either questions of fact, of law, or of fact and law.
accordance with procedures set forth in E.O. No. 1008.
In view of all the foregoing, we reject MCIs
In the second place, the language of Section 1 of submission that Circular No. 1-91, B.P. Blg. 129, as
Circular No. 1-91 emphasizes the obvious inclusion of the amended by R.A. 7902, Revised Administrative Circular 1-
CIAC even if it is not named in the enumeration of quasi- 95, and Rule 43 of the 1997 Rules of Civil Procedure
judicial agencies. The introductory words [a]mong these failed to efficaciously modify the provision on appeals in
agencies are preceding the enumeration of specific E.O. No. 1008. We further discard MCIs claim that these
quasi-judicial agencies only highlight the fact that the list amendments have the effect of merely changing the
is not exclusive or conclusive. forum for appeal from the Supreme Court to the Court of
Appeals.
In sum, under Circular No. 1-91, appeals from
the arbitral awards of the CIAC may be brought to the G.R. No. 110434 December 13, 1993
Court of Appeals, and not to the Supreme Court alone. HI-PRECISION STEEL CENTER, INC., petitioner, vs. LIM
The grounds for the appeal are likewise broadened to KIM STEEL BUILDERS, INC., and CONSTRUCTION
include appeals on questions of facts and appeals INDUSTRY ARBITRATION COMMISSION,respondents.
involving mixed questions of fact and law. BENIGA
The jurisdiction of the Court of Appeals over FACTS:

appeals from final orders or decisions of the CIAC is
further fortified by the amendments to B.P. Blg.129, as Hi-Precision entered into a contract with Steel Builders
introduced by R.A. No. 7902. With the amendments, the under which the latter as Contractor was to complete a
Court of Appeals is vested with appellate jurisdiction P21 Million construction project owned by the former
over all final judgments, decisions, resolutions, orders or within a period of 153 days, i.e.from 8 May 1990 to 8
awards of Regional Trial Courts and quasi-judicial October 1990. The project completion date was first
agencies, instrumentalities, boards or commissions, moved to 4 November 1990. On that date, however, only
except those within the appellate jurisdiction of the 75.8674% of the project was actually completed.
Supreme Court in accordance with the Constitution, the Petitioner attributed this non-completion to Steel
Labor Code of the Philippines under Presidential Decree Builders which allegedly had frequently incurred delays
No. 442, as amended, the provisions of this Act, and of during the original contract period and the extension
subparagraph (1) of the third paragraph and period. Upon the other hand, Steel Builders insisted that
subparagraph (4) of the fourth paragraph of Section 17 of the delays in the project were either excusable or due to
the Judiciary Act of 1948. Hi-Precision's own fault and issuance of change orders.
The project was taken over on 7 November 1990, and
While, again, the CIAC was not specifically eventually completed on February 1991, by Hi-Precision.
named in said provision, its inclusion therein is
irrefutable. The CIAC was not expressly covered in the Steel Builders filed a "Request for Adjudication" with
exclusion. Further, it is a quasi-judicial agency or CIAC. In its Complaint filed with the CIAC, Steel Builders
instrumentality. sought payment of its unpaid progress buildings, alleged
unearned profits and other receivables. Hi-Precision,
Any remaining doubt on the procedural upon the other hand, in its Answer and Amended
mutation of the provisions on appeal in E.O. No. 1008, Answer, claimed actual and liquidated damages,
vis--vis Circular No. 1-91 and R.A. No. 7902, was
29
reimbursement of alleged additional costs it had incurred RULING:

in order to complete the project and attorney's fees.
Executive Order No. 1008, as amended, provides, in its
The CIAC formed an Arbitral Tribunal with three (3) Section 19, as follows:
members, two (2) being appointed upon nomination of Sec. 19. Finality of Awards. The arbitral award
Hi-Precision and Steel Builders, respectively; the third shall be binding upon the parties. It shall be final
member (the Chairman) was appointed by the CIAC as a and inappealable except on questions of law
common nominee of the two (2) parties. On the which shall be appealable to the Supreme Court.
Chairman was a lawyer. After the arbitration proceeding,
the Arbitral Tribunal rendered a unanimous Award Section 19 makes it crystal clear that questions of fact
ordering Hi-Precision to pay Steel Builders. cannot be raised in proceedings before the Supreme
Court which is not a trier of facts in respect of an
A preliminary point needs to be made. We note that the arbitral award rendered under the aegis of the CIAC.
Arbitral Tribunal has not been impleaded as a respondent Consideration of the animating purpose of voluntary
in the Petition at bar. The CIAC has indeed been arbitration in general, and arbitration under the aegis of
impleaded; however, the Arbitral Award was not the CIAC in particular, requires us to apply rigorously the
rendered by the CIAC, but rather by the Arbitral Tribunal. above principle embodied in Section 19 that the Arbitral
Moreover, under Section 20 of Executive Order No. 1008, Tribunal's findings of fact shall be final and inappealable.
dated 4 February 1985, as amended, it is the Arbitral
Tribunal, or the single Arbitrator, with the concurrence of Voluntary arbitration involves the reference of a dispute
the CIAC, which issues the writ of execution requiring any to an impartial body, the members of which are chosen
sheriff or other proper officer to execute the award. We by the parties themselves, which parties freely consent in
consider that the Arbitral Tribunal which rendered the advance to abide by the arbitral award issued after
Award sought to be reviewed and set aside, should be proceedings where both parties had the opportunity to
impleaded even though the defense of its Award would be heard. The basic objective is to provide a speedy and
presumably have to be carried by the prevailing party. inexpensive method of settling disputes by allowing the
parties to avoid the formalities, delay, expense and
Petitioner Hi-Precision apparently seeks review of both aggravation which commonly accompany ordinary
under Rule 45 and Rule 65 of the Rules of Court. We do litigation, especially litigation which goes through the
not find it necessary to rule which of the two: a petition entire hierarchy of courts. Executive Order No. 1008
for review under Rule 45 or a petition for certiorari under created an arbitration facility to which the construction
Rule 65 is necessary under Executive Order No. 1008, industry in the Philippines can have recourse. The
as amended; this issue was, in any case, not squarely Executive Order was enacted to encourage the early and
raised by either party and has not been properly and expeditious settlement of disputes in the construction
adequately litigated. industry, a public policy the implementation of which is
necessary and important for the realization of national
ISSUES: development goals.
(a) Petitioner asks this Court to correct legal errors Aware of the objective of voluntary arbitration in the
committed by the Arbitral Tribunal, which at the same labor field, in the construction industry, and in any other
time constitute grave abuse of discretion amounting to area for that matter, the Court will not assist one or the
lack of jurisdiction on the part of the Arbitral Tribunal; other or even both parties in any effort to subvert or
and defeat that objective for their private purposes. The
Court will not review the factual findings of an arbitral
(b) Should the supposed errors petitioner asks us to tribunal upon the artful allegation that such body had
correct be characterized as errors of fact, such factual "misapprehended the facts" and will not pass upon issues
errors should nonetheless be reviewed because there which are, at bottom, issues of fact, no matter how
was "grave abuse of discretion" in the misapprehension cleverly disguised they might be as "legal questions." The
of facts on the part of the Arbitral Tribunal. parties here had recourse to arbitration and chose the
arbitrators themselves; they must have had confidence in
such arbitrators. The Court will not, therefore, permit the
parties to relitigate before it the issues of facts previously
presented and argued before the Arbitral Tribunal, save
30
only where a very clear showing is made that, in reaching Cargill. In its Complaint, respondent alleged that
its factual conclusions, the Arbitral Tribunal committed an it was engaged in buying and selling of molasses
error so egregious and hurtful to one party as to and petitioner was one of its various sources
constitute a grave abuse of discretion resulting in lack or from whom it purchased molasses.
loss of jurisdiction. Prototypical examples would be Petitioner, as seller, failed to comply with its
factual conclusions of the Tribunal which resulted in obligations under the contract, despite demands
deprivation of one or the other party of a fair from respondent, thus, the latter prayed for
opportunity to present its position before the Arbitral rescission of the contract and payment of
Tribunal, and an award obtained through fraud or the damages.
corruption of arbitrators. Any other, more relaxed, rule On July 24, 1998, petitioner filed a Motion to
would result in setting at naught the basic objective of a Dismiss/Suspend Proceedings and To Refer
voluntary arbitration and would reduce arbitration to a Controversy to Voluntary Arbitration,[4]
largely inutile institution. wherein it argued that the alleged contract
between the parties, dated July 11, 1996, was
Examination of the Petition at bar reveals that it is never consummated because respondent never
essentially an attempt to re-assert and re-litigate before returned the proposed agreement bearing its
this Court the detailed or itemized factual claims made written acceptance or conformity nor did
before the Arbitral Tribunal under a general averment respondent open the Irrevocable Letter of
that the Arbitral Tribunal had "misapprehended the Credit at sight.
facts" submitted to it. In the present Petition, too, Hi- It (Cargill) claimed that the contract contained
Precision claims that the Arbitral Tribunal had committed an arbitration clause, to wit:
grave abuse of discretion amounting to lack of
jurisdiction in reaching its factual and legal conclusions. o Any dispute which the Buyer and Seller
may not be able to settle by mutual
We consider that in asking this Court to go over each agreement shall be settled by
individual claim submitted by it and each individual arbitration in the City of New York
countering claim submitted by Steel Builders to the before the American Arbitration
Arbitral Tribunal, petitioner Hi-Precision is asking this Association. The Arbitration Award
Court to pass upon claims which are either clearly and shall be final and binding on both
directly factual in nature or require previous parties.
determination of factual issues. This upon the one hand.
Upon the other hand, the Court considers that petitioner o that respondent must first comply with
Hi-Precision has failed to show any serious errors of law the arbitration clause before resorting
amounting to grave abuse of discretion resulting in lack to court, thus, the RTC must either
of jurisdiction on the part of the Arbitral Tribunal, in dismiss the case or suspend the
either the methods employed or the results reached by proceedings and direct the parties to
the Arbitral Tribunal, in disposing of the detailed claims proceed with arbitration, pursuant to
of the respective parties. Sections 6 and 7[of Republic Act (R.A.)
No. 876, or the Arbitration Law.
WHEREFORE, for all the foregoing, the Petition is hereby
DISMISSED for lack of merit. Costs against petitioner. SO Respondent (San Fernando) filed an Opposition,
ORDERED. wherein it argued that the RTC has jurisdiction
over the action for rescission of contract and
CARGILL PHILIPPINES, INC. vs SAN FERNANDO REGALA could not be changed by the subject arbitration
TRADING, INC. clause. It cited cases wherein arbitration
BONIFACIO clauses, such as the subject clause in the
contract, had been struck down as void for
FACTS: being contrary to public policy since it provided
that the arbitration award shall be final and
On June 18, 1998, respondent San Fernando binding on both parties, thus, ousting the courts
Regala Trading, Inc. filed with the Regional Trial of jurisdiction.
Court (RTC) of Makati City a Complaint for RTC DENIED Cargills Motion To
Rescission of Contract with Damages against Dismiss/Suspend Proceedings and To Refer
31
Controversy To Voluntary Arbitration. RTC did applicability of the arbitration clause itself. A contrary
not find the suspension of the proceedings ruling would suggest that a party's mere repudiation of
warranted, since the Arbitration Law the main contract is sufficient to avoid arbitration. That
contemplates an arbitration proceeding that is exactly the situation that the separability doctrine, as
must be conducted in the Philippines under the well as jurisprudence applying it, seeks to avoid. We
jurisdiction and control of the RTC; and before add that when it was declared in G.R. No. 161957 that
an arbitrator who resides in the country; and the case should not be brought for arbitration, it should
that the arbitral award is subject to court be clarified that the case referred to is the case actually
approval, disapproval and modification, and that filed by Gonzales before the DENR Panel of Arbitrators,
there must be an appeal from the judgment of which was for the nullification of the main contract on
the RTC. the ground of fraud, as it had already been determined
CA found that stipulation providing for that the case should have been brought before the
arbitration in contractual obligation is both valid regular courts involving as it did judicial issues.
and constitutional; that arbitration as an
alternative mode of dispute resolution has long In so ruling that the validity of the contract containing
been accepted in our jurisdiction and expressly the arbitration agreement does not affect the
provided for in the Civil Code; that R.A. No. 876 applicability of the arbitration clause itself, we then
(the Arbitration Law) also expressly authorized applied the doctrine of separability, thus:
the arbitration of domestic disputes.
Notwithstanding such findings, the CA still held The doctrine of separability, or severability as other
that the case cannot be brought under the writers call it, enunciates that an arbitration agreement is
Arbitration Law for the purpose of suspending independent of the main contract. The arbitration
the proceedings before the RTC, since in its agreement is to be treated as a separate agreement and
Motion to Dismiss/Suspend proceedings, the arbitration agreement does not automatically
petitioner alleged, as one of the grounds terminate when the contract of which it is a part comes
thereof, that the subject contract between the to an end.The separability of the arbitration
parties did not exist or it was invalid; that the agreement is especially significant to the determination
said contract bearing the arbitration clause was of whether the invalidity of the main contract also
never consummated by the parties, thus, it was nullifies the arbitration clause. Indeed, the doctrine
proper that such issue be first resolved by the denotes that the invalidity of the main contract, also
court through an appropriate trial; that the issue referred to as the "container" contract, does not affect
involved a question of fact that the RTC should the validity of the arbitration agreement. Irrespective of
first resolve. Arbitration is not proper when one the fact that the main contract is invalid, the arbitration
of the parties repudiated the existence or clause/agreement still remains valid and enforceable.
validity of the contract.
Applying the Gonzales ruling, an arbitration agreement
ISSUE: which forms part of the main contract shall not be
WON CA erred in finding that this case cannot be regarded as invalid or non-existent just because the main
brought under the arbitration law for the purpose of contract is invalid or did not come into existence, since
suspending the proceedings in the RTC? YES the arbitration agreement shall be treated as a separate
(Doctrine of Separability/Severability applies) agreement independent of the main contract. To
reiterate. a contrary ruling would suggest that a party's
RULING: mere repudiation of the main contract is sufficient to
avoid arbitration and that is exactly the situation that the
In the Gonzales case, which the CA relied upon for not separability doctrine sought to avoid. Thus, we find that
ordering arbitration, had been modified upon a motion even the party who has repudiated the main contract is
for reconsideration in this wise: not prevented from enforcing its arbitration clause.
x x x The adjudication of the petition in G.R. No. 167994

effectively modifies part of the Decision dated 28
February 2005 in G.R. No. 161957. Hence, we now hold
that the validity of the contract containing the
agreement to submit to arbitration does not affect the
32

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ADR Case Digests | SET 1

Atty.Catherine Guerzo-Barrion [3-MANRESA 2015-16]

a) Did a take-over/termination occur? version of Section 1, as applied in the Tesco

ISSUES: Art. 262. Jurisdiction over other labor disputes The

properly has jurisdiction over the complaint filed by the SECOND

Submission to CIAC Jurisdiction An arbitration PHILIPPINE COMMERCIAL INTERNATIONAL

F.F. CRUZ & CO., INC., vs HR Construction , GR 187521 / CIAC RULING

The jurisdiction of the Court of Appeals over FACTS:

reimbursement of alleged additional costs it had incurred RULING:

x x x The adjudication of the petition in G.R. No. 167994

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