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PHILIPPINE ELECTRIC CORPORATION v. CA

FACTS:

The petitioner in this case is the Philippine Electric Corporation (PHILEC), a domestic corporation engaged in the manufacture and repairs of high voltage transformers. Among its rank-and-file employees were Eleodoro V. Lipio (Lipio) and Emerlito C. Ignacio, Sr. (Ignacio, Sr.), both former members of the PHILEC Workers' Union (PWU), which is the exclusive bargaining representative of PHILEC's rank-and-file employees. From June 1, 1989, to May 31, 1997, PHILEC and its rank-and-file employees were governed by collective bargaining agreements, which provided for step increases in an employee's basic salary in case of promotion. On August 18, 1997, PHILEC selected Lipio for promotion from Machinist to Foreman I, and on August 21, 1997, PHILEC selected Ignacio, Sr. for training for the same position. PHILEC issued memoranda to them indicating the schedule of training allowances during their training period. However, PWU claimed that the schedule of training allowances did not conform to the provisions of the collective bargaining agreement. The grievance was submitted to voluntary arbitration, and the issues to be resolved were whether PHILEC violated the collective bargaining agreement in implementing the step increases and whether its manner of implementing the step increases constitutes unfair labor practice.

Philippine Industrial Engineering and Construction Corporation (PHILEC) and Philippine Workers Union (PWU) designated Hon. Ramon T. Jimenez as the Voluntary Arbitrator. Voluntary Arbitrator Jimenez directed the parties to file their respective position papers. PWU argued that PHILEC failed to follow the schedule of step increases under Article X, Section 4 of the collective bargaining agreement (CBA). They claimed that Lipio and Ignacio, Sr., who were selected for training, should receive the training allowance based on the step increases for their respective pay grades. On the other hand, PHILEC maintained that they applied the "Modified SGV" pay grade scale since they had not negotiated a new CBA with PWU. The "Modified SGV" pay grade scale aimed to preserve the hierarchical wage structure within PHILEC's enterprise. Voluntary Arbitrator Jimenez ruled that PHILEC violated the CBA and ordered them to pay Lipio and Ignacio, Sr. training allowance based on Article X of the CBA. Voluntary Arbitrator Jimenez dismissed PWU's claim of unfair labor practice, stating that PHILEC's acts did not constitute a gross violation or a flagrant refusal to comply with the economic provisions of the agreement.

PHILEC, the respondent, was ordered by Voluntary Arbitrator Jimenez to pay Lipio and Ignacio, Sr., the petitioners, training allowance based on the collective bargaining agreement (CBA) between PHILEC and PWU. PHILEC received a copy of the decision on August 16, 1999, and filed a motion for partial reconsideration on August 26, 1999. The motion was denied in a resolution dated July 7, 2000, which PHILEC received on August 11, 2000. PHILEC then filed a petition for certiorari before the Court of Appeals on August 29, 2000, claiming that the voluntary arbitrator had gravely abused his discretion. PHILEC argued that it did not violate the CBA and that the training allowance should be computed based on a different CBA with ASSET. The Court of Appeals affirmed the decision of the voluntary arbitrator, leading PHILEC to file a motion for reconsideration, which was denied. PHILEC then filed a petition for review on certiorari before the Supreme Court on August 3, 2005, arguing that their violation of the CBA had not been established and that a different CBA should apply. The Supreme Court ordered PWU to comment on the case, and PWU argued that the voluntary arbitrator had correctly applied the provisions of the CBA between PHILEC and PWU. The issue for resolution is whether the voluntary arbitrator abused his discretion in ordering PHILEC to pay the training allowance based on the CBA.

The case involves the interpretation and implementation of a Collective Bargaining Agreement (CBA) and the enforcement of company personnel policies. It states that violations of a CBA, except for gross violations, will no longer be treated as unfair labor practice and will be resolved as grievances under the CBA. Gross violations are defined as flagrant and/or malicious refusal to comply with the economic provisions of the agreement.

The Commission, its Regional Offices, and the Regional Directors of the Department of Labor and Employment are prohibited from entertaining disputes, grievances, or matters under the jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators. Instead, they should immediately dispose and refer such matters to the Grievance Machinery or Voluntary Arbitration provided in the CBA.

Article 262 states that the Voluntary Arbitrator or panel of Voluntary Arbitrators, with the agreement of the parties, shall also hear and decide all other labor disputes, including unfair labor practices and bargaining deadlocks.

The case cites Luzon Development Bank v. Association of Luzon Development Bank Employees, wherein it was ruled that the proper remedy against the award or decision of the Voluntary Arbitrator is an appeal before the Court of Appeals. The office of a Voluntary Arbitrator or panel of Voluntary Arbitrators is characterized as a quasi-judicial agency, and their decisions have the same legal effect as judgments of a court.

ISSUES:

  1. Whether the decision or award of the Voluntary Arbitrator is appealable before the Court of Appeals.

  2. Whether the Rules of Court, particularly Rule 43, Section 2, superseded the ruling in Luzon Development Bank v. Association of Luzon Development Bank Employees.

  3. Whether Rule 43, Section 2 supersedes the ruling in Luzon Development Bank.

  4. Whether the decision of the voluntary arbitrator is appealable to the Court of Appeals.

  5. Whether the Voluntary Arbitrator's decision must be appealed before the Court of Appeals within 10 calendar days from receipt of the decision as provided in the Labor Code.

  6. Whether the 10-day period to appeal under the Labor Code is a substantive right that cannot be diminished, increased, or modified through the Rules of Court.

  7. Whether the case is already "beyond the purview of this Court to act upon" due to the insurmountable procedural issue.

  8. Whether PHILEC must pay training allowance based on the step increases provided in the June 1, 1997 collective bargaining agreement.

    • Whether Lipio and Ignacio, Sr. are entitled to training allowance based on the collective bargaining agreement.
    • Whether Lipio and Ignacio, Sr. are entitled to legal interest on their training allowances.

RULING:

  1. Yes, the decision or award of the Voluntary Arbitrator is appealable before the Court of Appeals. The Voluntary Arbitrator is considered a quasi-judicial agency and his decisions have the same legal effect as judgments of a court. The Court of Appeals has the exclusive original jurisdiction over decisions or awards of quasi-judicial agencies and instrumentalities, including the Voluntary Arbitrator.

  2. No, the Rules of Court, specifically Rule 43, Section 2, did not supersede the ruling in Luzon Development Bank v. Association of Luzon Development Bank Employees. The Luzon Development Bank ruling remains "good law" and continues to be applicable in cases involving the appeal of decisions or awards of the Voluntary Arbitrator.

  3. Rule 43, Section 2 does not supersede the ruling in Luzon Development Bank. While the provision may be new to the Rules of Court, it is merely a reiteration of the exception to the exclusive appellate jurisdiction of the Court of Appeals. The Court held in Luzon Development Bank that the decisions of voluntary arbitrators do not fall within the exception, and therefore, should be appealable to the Court of Appeals.

  4. The decision of the voluntary arbitrator is appealable to the Court of Appeals. The Court held that the award or decision of the voluntary arbitrator should be treated like those of quasi-judicial agencies, boards, and commissions enumerated in Revised Administrative Circular No. 1-95. Hence, the decision of the voluntary arbitrator is subject to appeal to the Court of Appeals.

  5. Yes, the Voluntary Arbitrator's decision must be appealed before the Court of Appeals within 10 calendar days from receipt of the decision as provided in the Labor Code. Appeal is a "statutory privilege" that must be exercised in accordance with the provisions of the law. Failure to perfect an appeal within the reglementary period renders the decision final and executory and deprives the appellate court of jurisdiction to entertain the appeal. Thus, if the decision is appealed on the 11th to 15th day from receipt, as allowed under the Rules, but has already become final and executory after the 10-day period in the Labor Code, no appellate court will have jurisdiction over the appeal.

  6. Yes, the 10-day period to appeal under the Labor Code is a substantive right that cannot be diminished, increased, or modified through the Rules of Court. Under Article VIII, Section 5(5) of the Constitution, the Supreme Court "shall not diminish, increase, or modify substantive rights" in promulgating rules of procedure in courts. Since the 10-day period to appeal under the Labor Code is provided in the statute, it must be complied with and cannot be modified through the Rules of Court. In case of conflict between the law and the Rules of Court, the law will prevail.

  7. The case is already "beyond the purview of this Court to act upon" due to the insurmountable procedural issue.

  8. PHILEC must pay training allowance based on the step increases provided in the June 1, 1997 collective bargaining agreement.

    • Lipio and Ignacio, Sr. are entitled to receive training allowance based on the collective bargaining agreement.
    • Lipio and Ignacio, Sr. are entitled to legal interest on their training allowances, at a rate of 12% per annum from the finality of the decision until full payment.

PRINCIPLES:

  • The decisions or awards of the Voluntary Arbitrator have the same legal effect as judgments of a court.

  • The Voluntary Arbitrator is considered a quasi-judicial agency and his decisions are appealable before the Court of Appeals.

  • The Court of Appeals has the exclusive original jurisdiction over decisions or awards of quasi-judicial agencies and instrumentalities, including the Voluntary Arbitrator.

  • The decisions of voluntary arbitrators are not covered by the exception under Rule 43, Section 2 and are therefore appealable to the Court of Appeals.

  • The decision or award of the voluntary arbitrator shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties.

  • The reglementary period for filing an appeal from the decision or award of the voluntary arbitrator is fifteen (15) days from notice of the award, judgment, final order or resolution.

  • The 15-day reglementary period to appeal a Voluntary Arbitrator's decision as provided in Rule 43 of the Rules of Court must give way to the 10-day reglementary period under the Labor Code.

  • The 10-day period to appeal under the Labor Code is a substantive right that cannot be diminished, increased, or modified through the Rules of Court.

  • A collective bargaining agreement is a contract executed upon the request of either the employer or the exclusive bargaining representative of the employees incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment.

  • A collective bargaining agreement is the law between the parties and must be complied with in good faith.

  • Training is a condition precedent for promotion.

  • Selection for training does not mean automatic transfer out of the bargaining unit of rank-and-file employees.

  • Provisions of a collective bargaining agreement must be applied uniformly and complied with in good faith.

  • Only provisions embodied in the collective bargaining agreement should be interpreted and complied with. Proposals that do not find print in the collective bargaining agreement are not part thereof.

  • If the parties want to incorporate a specific economic proposal, it should be requested or demanded to be incorporated in the collective bargaining agreement.

  • Provisions of a collective bargaining agreement must be negotiated and settled before the actual signing of the agreement to avoid any laches.

  • Uniformity and good faith must be applied in the implementation of an employment agreement.

  • Legal interest on a judgment awarding a sum of money becomes final and executory is set at 12% per annum until full payment.

  • If a judgment has become final and executory prior to the effectivity of a new law or circular, the interest rate fixed in the judgment shall continue to apply.