Republic of the Philippines COURT OF APPEALS Mindanao Station Cagayan de Oro City

DELICIOSO CORPORATION CA-G.R. SP No. 12345-MIN REPRESENTED BY WILHELMINA (VA CASE NO. RB 000 AC 522-88-123GOMEZ, BOARD CHAIRMAN, 10) ALL REPRESENTED BY JUANITO ZULUETA, Petitioner, -versusSPECIAL CIVIL ACTION FOR CERTIORARI WITH APPLICATION FOR THE ISSUANCE OF A WRIT OF DELICIOSO EMPLOYEES UNION PRELIMINARY INJUNCTION AND ALU, REPRESENTED BY TEMPORARY RESTRAINING ORDER EDGAR DIZON, UNION PRESIDENT (PRIVATE RESPONDENT) AND HONORABLE VOLUNTARY ARBITRATOR SEVERINO NATUTO, OFFICE OF THE ACCREDITED VOLUNTARY ARBITRATOR, NATIONAL CONCILIATION AND MEDIATION BOARD, REGIONAL BRANCH NO. XII (PUBLIC RESPONDENT), Respondents.

MEMORANDUM
FOR THE PETITIONER

COMES NOW, Petitioner, through the undersigned counsel and to the Honorable Court of Appeals, most respectfully avers that:

1. On June 23, 2010, the Petitioner through counsel received copy of the Notice of Resolution dated May 19, 2010 with the attached Resolution requiring the parties to submit their respective

Memoranda within fifteen (15) days from notice;

2. Hence, this submission;

STATEMENT OF FACTS

Petitioner operates as an exporter of pineapples. To meet the market demands for these pineapples, Petitioner LFC procures pineapples from its own farms, from the farms leased from several landowners, and from growers of these pineapples. In its banana operations in Tampakan, South Cotabato, the Petitioner entered into Joint Production Agreements with several landowners wherein the landowners receive guaranteed income and production incentives. However, sometime in the first quarter of year 2008, the management of the Petitioner had decided to close down operations covering one hundred five (105) hectares of unproductive lands in Tampakan, South Cotabato. The Petitioner had to return these 105 hectares and close operations insofar as these areas are concerned because the cost of producing pineapples increased dramatically but the production in these areas could not cope up with the costs. Consequently, the Petitioner signed Agreements to Pre-terminate Contract with the affected landowners over the 105 hectares. Sample copies of the Agreement to Pre-terminate Contract are attached to the Petition for Certiorari as ANNEXES E to E-1. As a consequence, the Petitioner had to decrease its manpower and to retrench employees working in the 105 hectares as the manpower would then be in excess of what was reasonably required by the operations. The Petitioner informed the affected employees of the eventual return of the 105 hectares to the landowners and the consequent termination of the employees working in the said 105 hectares. The Petitioner told the Private Respondent that it would pay separation pay of one-half (1/2) month salary for every year of service. Afterwards, several meetings between the Petitioner and the 2

affected

employees

followed

because

the

Private

Respondent

demanded for separation pay of one (1) month salary for every year of service for the employees affected. On July 24, 2008, the Petitioner through its Production Manager Nilo Yambao served notices of termination to the affected employees, copy furnished the Department of Labor and Employment (DOLE). The termination was to be effective August 24, 2008. The fact of the termination of the affected employees was also furnished to the DOLE. In the said notices, the affected employees were informed that they would be paid separation pay equivalent to one-half month salary for every year of service inasmuch as all of them had rendered services of not less than one (1) year. Sample copies of the notices of termination are attached to the Petition for Certiorari as ANNEXES F to F-17 and copies of the report to the DOLE are attached to the Petition for Certiorari as ANNEXES G to G-5.

STATEMENT OF THE CASE

The Private Respondent lodged a complaint before the Office of the National Conciliation and Mediation Board (NCMB) because it demanded for the payment of separation pay of 100% or 1 month salary for every year of service but that the Petitioner could only afford to pay 50% or month salary for every year of service. No settlement was reached. In the last scheduled hearing on August 20, 2009 before the NCMB, the Petitioner maintained that it would only pay month salary for every year of service while the Private Respondent also remained resolute on its demand for 1 month salary for every year of service. The NCMB then suggested to the parties to submit the case to voluntary arbitration. However, the Petitioner refused because the issue on whether or not the separation pay should be month salary for every year of service or 1 month salary for every year of service, is not within the jurisdiction of the voluntary arbitrator. The Petitioner manifested that it is willing to meet the issue in the proper forum which is the Labor Arbiter of the National Labor Relations Commission (NLRC). Copy of the Minutes of the conference before the NCMB is 3

attached to the Petition for Certiorari as ANNEX H. On August 21, 2008, a Notice to Arbitrate was filed by the Private Respondent raising as issue the Redundancy Program of the Petitioner. Copy of the Notice to Arbitrate is attached to the Petition for Certiorari as ANNEXI. Pursuant to the Notice to Arbitrate, the NCMB issued a Notice of Conference on August 22, 2008 setting the meeting for the selection of a Voluntary Arbitrator on August 28, 2008. Copy of the Notice of Conference dated August 22, 2008 is attached to the Petition for Certiorari as ANNEX J. On August 24, 2008, the termination of the employees in the 105 hectares became effective pursuant to the Notice of Termination issued to the same employees on July 24, 2008. On August 28, 2008, the Petitioner filed a Manifestation reiterating its stand not to pursue voluntary arbitration because the issue involved is a termination dispute which is within the jurisdiction of the Labor Arbiter. Copy of the Manifestation is attached to the Petition for Certiorari as ANNEX K. On August 28, 2008, the NCMB issued another Notice of Conference setting a second meeting for the selection of voluntary arbitrator on September 3, 2008. Copy of the Notice of Conference dated August 28, 2008 is attached to the Petition for Certiorari as ANNEX L. Thus, the Petitioner filed a Supplemental Manifestation before the NCMB again reiterating its stand that it prefers to have the matter resolved by the Labor Arbiter which has jurisdiction over the issue. Copy of the Supplemental Manifestation is attached to the Petition for Certiorari as ANNEX M. On September 17, 2008, the NCMB through its Officer-in-Charge SID TOLERO replied to the Petitioners series of Manifestations essentially saying that the Petitioner may raise its objections upon the commencement of the voluntary arbitration meeting but not yet within the level of the NCMB. Copy of the letter dated September 17, 2008 is attached to the Petition for Certiorari as ANNEX N.

Despite the objections of the Petitioner, the NCMB proceeded to select a voluntary arbitrator in the person of HON. SEVERINO NATUTO. On October 6, 2008, the Petitioner replied to the letter dated September 17, 2008 clarifying its position that the case is not within the jurisdiction of the voluntary arbitrator and requesting for a ruling on the issue of whether or not the voluntary arbitrator has jurisdiction to take cognizance of the termination dispute. Copy of the letter dated October 6, 2008 is attached to the Petition for Certiorari as ANNEX O. On October 12, 2008, the Voluntary Arbitrator issued an Order stating that after going over the Submission Agreement, the only issue in the case referred to him was WHETHER OR NOT THE PAYMENT OF SEPARATION PAY IN THE REDUNDANCY OF THE AFFECTED NINETY TWO (92) WORKERS OF DELICIOSO CORPORATION IS 100% OR ONE (1) MONTH SALARY PER YEAR OF SERVICE OR 50% OR MONTH SALARY PER YEAR OF SERVICE. In the same Order, the parties were directed to submit their respective Position Papers within fifteen (15) days upon receipt of the Order. Copy of the Order dated October 12, 2008 is attached to the Petition for Certiorari as ANNEX P. On October 31, 2008, the Petitioner sent a letter to the Honorable Voluntary Arbitrator explaining that there was no Submission Agreement because the Petitioner did not agree to refer the matter to voluntary arbitration. The Petitioner also manifested that from the very beginning at the level of the NCMB, the Petitioner had objected to a referral to voluntary arbitration because the issue involved is not within the jurisdiction of the Voluntary Arbitrator. Copy of the letter dated October 31, 2008 is attached to the Petition for Certiorari as ANNEX Q. In an Order dated November 11, 2008, the Honorable Voluntary Arbitrator stated that he will consider the letter of the Petitioner as its Position Paper. Copy of the Order dated November 11, 2008 is attached to the Petition for Certiorari as ANNEX R. On December 3, 2008, the Petitioner received copy of the Private Respondents Position Paper and on January 5, 2009, the Petitioner 5

received a Supplement to the Position Paper also filed by the Private Respondent. Copies of the Private Respondents Position Paper and Supplement to the Position Paper are attached to the Petition for Certiorari as ANNEXES S and S-1. In the meantime while the case was pending, all employees received their separation pay and signed the corresponding Waiver, Release and Quitclaims wherein the separated employees released, demised, and discharged the Petitioner and held the Petitioner free and harmless from any and all claims, demands, damages or other causes of action arising out of their employment with the Petitioner by way of salaries, wages, allowances, and other benefits. Sample copies of the vouchers evidencing payment are attached to the Petition for Certiorari as ANNEXES T to T-4 while sample copies of the Waiver, Release and Quitclaims are attached to the Petition for Certiorari as ANNEXES U to U-4. Only the following persons did not yet receive their separation pay: a. b. c. d. e. f. g. FELIX UNO MORGANO TABO ROEL LOCSIN ANANIAS MESA JUVY UY NESTOR CONANAN BENJIE JOAQUIN as of the present, he is still processing the signing of his clearance for the purpose of accepting his separation pay of month salary for every year of service and signing the corresponding Waiver, Release and Quitclaim. h. MIGUELITO VALERA as of the present, he is still processing the signing of his clearance for the purpose of 6

accepting his separation pay of month salary for every year of service and signing the Waiver, Release and Quitclaim. Then, on December 27, 2008 the Honorable Voluntary Arbitrator rendered a Decision, the dispositive portion of which provides: WHEREFORE PREMISES CONSIDERED, respondent DELICIOSO CORPORATION is directed to pay members of the DELICIOSO EMPLOYEES UNION, who are affected by its cessation of operation pursuant to the notices of company cessation of operation, dated July 24, 2008, based on Article 283 of the Labor Code of the Philippines, as amended. Those employees who are affected by this case who only rendered less than a year shall only be entitled to one-half (1/2) month retirement pay. The Petitioner received a copy of the Decision dated December 27, 2008, on January 9, 2009. On January 19, 2009, the Petitioner filed a Motion for Reconsideration. Copy of the Motion for Reconsideration is attached to the Petition for Certiorari as ANNEX V. On March 17, 2009, the Private Respondent filed a Comment/Opposition to the Motion for Reconsideration with Motion for Execution, a copy of which is attached to the Petition for Certiorari as ANNEX W. the Petition for Certiorari as ANNEX X. On June 22, 2009, the Petitioner received a copy of the Order issued by the Honorable Voluntary Arbitrator on June 15, 2009 denying the Petitioners Motion for Reconsideration and directing that a writ of execution be issued to enforce the Decision dated December 27, 2008. The Petitioner filed a Reply on March 23, 2009, copy of which is attached to

ISSUES

Consolidating involved are:

the matters

raised by the parties

in their

respective pleadings in the instant Petition for Certiorari, the issues

1. Whether or not the Honorable Voluntary Arbitrator acted without or in excess of his jurisdiction in taking cognizance of the case lodged by the Private Respondents; 2. Whether or not the Honorable Voluntary Arbitrator acted with grave abuse of discretion amounting to lack or excess of jurisdiction in ruling that the Private Respondents are entitled to 100% or 1 month salary for every year of service despite the clear mandate of Article 283 of the Labor Code; and 3. Whether or not the Decision of the Honorable Voluntary Arbitrator in VA Case No. AC-522-88-123-10 has become final and executory.

ARGUMENTS/DISCUSSIONS

WHETHER OR NOT THE HONORABLE VOLUNTARY ARBITRATOR ACTED WITHOUT OR IN EXCESS OF HIS JURISDICTION IN TAKING COGNIZANCE OF THE CASE LODGED BY THE PRIVATE RESPONDENTS

From the very beginning, the Petitioner never wavered in its objection to the Honorable Voluntary Arbitrators assumption of jurisdiction. As early as when the instant case was still under conciliation/mediation with the NCMB and until the instant case was referred by the NCMB to the Honorable Voluntary Arbitrator, the Petitioner had consistently manifested its continuing objection to the referral of the case to voluntary arbitration, to the selection of a voluntary arbitrator, and to any other proceeding that will be undertaken in the level of the voluntary arbitrator. instant case due to lack of jurisdiction. 8 In fact, the Petitioner requested the Honorable Voluntary Arbitrator to dismiss the However, the Honorable

Voluntary Arbiter still proceeded to take cognizance of the case which culminated in the issuance of the Decision dated December 27, 2008. Then, in resolving the question of jurisdiction, the Honorable Voluntary Arbiter merely stated in the Decision dated December 27, 2008 that: After going over the Labor Code of the Philippines P.D. No. 442, as amended, we believe and submit that we have jurisdiction over this case pursuant to Article 283 of the Labor Code as amended provides: Clearly, the Honorable Voluntary Arbitrator arrogated unto himself jurisdiction over the case without even clearly saying why, how, and where in the Labor Code did he base his authority. In the landmark case of ANG TIBAY V. CIR (69 PHIL. 635) and reiterated in the recent case of SOLID HOMES, INC., vs. EVELINA LASERNA and GLORIA CAJIPE (G.R. No. 166051, April 8, 2008) , the Supreme Court laid down the cardinal rights of parties in administrative proceedings, as follows:

1) The right to a hearing, which includes the right to present ones case and submit evidence in support thereof. 2) The tribunal must consider the evidence

presented. 3) The decision must have something to support itself. 4) The evidence must be substantial. 5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected. 6) The tribunal or body or any of its judges must act on its or his own independent consideration of the law and facts of the controversy and not simply 9

accept the views of a subordinate in arriving at a decision. 7) The a board manner can or body the the should, parties various in to all the

controversial question, render its decision in such that know proceeding issues

involved, and the reason for the decision rendered. (Emphasis supplied)

In the questioned Decision, the Honorable Voluntary Arbitrator did not even bother to state why it has jurisdiction pursuant to the Labor Code of the Philippines. On the contrary, the Labor Code of the Philippines clearly shows that the Honorable Voluntary Arbitrator has no jurisdiction. To be precise, Article 261 of the Labor Code plainly provides that the jurisdiction of the Honorable Voluntary Arbitrator is limited to hearing and deciding all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies, viz: Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement

10

shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement. (Emphasis supplied)

It is very clear that the issue raised by the Private Respondent Union in the Notice to Arbitrate pertains to the Redundancy Program implemented by the Petitioner and specifically refers to the amount of separation pay that its members are claiming. This issue is essentially a terminate dispute. In the case of CELESTINO VIVIERO vs. COURT OF APPEALS (G.R. No. 138938, October 24, 2000), the Supreme Court held that if the issue is the termination of employees, this cannot be considered an issue pertaining to an interpretation or implementation of a provision in the Collective bargaining Agreement (CBA). As stated by the High Court:

Private respondents attempt to justify the conferment of jurisdiction over the case on the Voluntary Arbitrator on the ground that the issue involves the proper interpretation and implementation of the Grievance Procedure found in the CBA. They point out that when petitioner sought the assistance of his Union to avail of the grievance machinery, he in effect submitted himself to the procedure set forth in the CBA regarding submission of unresolved grievances to a Voluntary Arbitrator.

11

The

argument is

untenable. The form

case

is by

primarily a termination dispute. It is clear from the claim/assistance request submitted petitioner to AMOSUP that he was challenging the legality of his dismissal for lack of cause and lack of due process. The issue of whether there was proper interpretation provisions and implementation into play only of the CBA the comes because

grievance procedure provided for in the CBA was not observed after he sought his Unions assistance in contesting his termination. Thus, the question to be resolved necessarily springs from the primary issue of whether there was a valid termination; without this, then there would be no reason to invoke the need to interpret and implement the CBA provisions properly.

Moreover, even if the CBA provides that all disputes shall be settled through the grievance machinery and eventually by voluntary arbitration, the phrase all disputes does not embrace termination disputes without an express stipulation that it should extend to termination disputes. This was clearly discussed and explained by the Supreme Court in the case of CELESTINO VIVIERO vs. COURT OF APPEALS, supra, to wit:

XXX. stipulation in

There is a need for an express the CBA that illegal termination

disputes should be resolved by a Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the same fall within a special class of disputes that are generally within the exclusive original jurisdiction of Labor Arbiters by express provision of law. Absent such express stipulation, the phrase "all disputes" should be construed as limited to the areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators, i.e., disputes relating to contract-interpretation, contract-

12

implementation,

or

interpretation

or

enforcement of company personnel policies. Illegal termination disputes - not falling within any of these categories - should then be considered as a special area of interest governed by a specific provision of law.

Furthermore, the matter of giving one half month salary for every year of service to the employees terminated by reason of retrenchment does not involve a company personnel policy. As discussed by the Supreme Court in the case of UNION OF NESTLE WORKERS CAGAYAN DE ORO FACTORY vs. NESTLE PHILPPINES, INC., (G.R. No. 148303. October 17, 2002):

XXX. In San Miguel Corp. vs. NLRC, this Court held: Company personnel policies are guiding

principles stated in broad, long-range terms that express the philosophy or beliefs of an organizations top authority regarding personnel matters. of employees and include, and among other others, They the deal with matter affecting efficiency and well-being procedure in the administration of wages, benefits, promotions, transfer personnel movements which are usually not spelled out in the collective agreement.

The

instant

case

does

not

involve

procedure

in

the

administration of wages, benefits, promotions, transfer and other personnel movements. Rather, it is a termination issue involving the retrenchment of employees and the separation pay that must be given them.

13

When the affected employees were eventually terminated on August 24, 2008, the issue ceased to be an unresolved grievance. Thus, there is no longer room for interpretation or implementation of the collective bargaining agreement and for the interpretation or enforcement of company personnel policies. As held by the Supreme Court in the LABOR case of ROSARIO COMMISSION MANEJA and vs. NATIONAL RELATIONS MANILA

MIDTOWN HOTEL (G.R. No. 124013, June 5, 1998): However, Article 217 (c) should be read in conjunction with Article 261 of the Labor Code which grants to voluntary arbitrators original and exclusive jurisdiction grievances to hear of and from the decide the all unresolved or bargaining arising interpretation

implementation

collective

agreement and those arising from the interpretation or enforcement of company personnel policies. Note the phrase "unresolved grievances." In the case at bar, the termination of petitioner is not an unresolved grievance. xxx As we ruled in Sanyo, "Since there has been an actual termination, the matter falls within the jurisdiction of the labor Arbiter." The aforequoted doctrine is applicable foursquare in petitioner's case. The dismissal of the petitioner does not call for the interpretation or enforcement of company personnel policies but is a termination dispute which comes under the jurisdiction of the Labor Arbiter.

The same pronouncement was reiterated in the case of ATLAS FARMS, INC. vs. NATIONAL LABOR RELATIONS COMMISSION (G.R. No. 142244, November 18, 2002 ) where the Supreme Court held that:

14

Given the fact of dismissal, it can be said that the cases were effectively removed from the jurisdiction of the voluntary arbitrator, thus placing them within the jurisdiction of the labor arbiter. Where the dispute is just in the interpretation, implementation or enforcement stage, it may be referred to the grievance machinery set up in the CBA, or brought to voluntary arbitration. But, where there with was already violation actual of the termination, alleged

employees rights, it is already cognizable by the labor arbiter.

In addition, Article 283 of the Labor Code relied upon by the Honorable Voluntary Arbitrator as basis of his taking cognizance of the case does not mention at all the jurisdiction of voluntary arbitrators. Rather, Article 283 of the Labor Code merely provides for the right of the employer to terminate an employee due to the installation of laborsaving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation, and the separation pay that must be paid in these situations. Likewise significant is the fact that the Petitioner did not sign any Submission Agreement in the instant case. Thus, in the absence of a submission agreement conformed to by the Petitioner, there is no basis in referring the instant case to voluntary arbitration. Even if voluntary arbitration is preferred by the Private Respondent, this alone would not suffice because the preference of the Petitioner should also be considered. The Private Respondent has other remedies before the proper forum and it is not precluded from availing of those remedies. Voluntary arbitration is essentially what its nomenclature suggests --that it is voluntary. Thus, no party should be compelled to submit to the same if the issues can be effectively addressed by the appropriate forum. An arbitrator is not a public tribunal imposed upon the parties by a superior authority which the parties are obliged to accept. He has no general character to administer justice for a community which transcends the parties. He is rather part of a system of self-

15

government created by and confined to the parties ( Maurice S. Trotta, Arbitration of Labor Management Disputes, American Management Association, New York, 1974, p. 73). With respect to the persons of the affected employees

themselves, the Honorable Voluntary Arbitrator has no jurisdiction to award to them the separation pay of 100% or 1 month pay for every year of service because as already discussed above, by the eventual termination of these employees, the issue ceased to be an unresolved grievance. The representation of the Private Respondent union insofar as the Collective Bargaining Agreement with the Petitioner is concerned, is only with respect to unresolved grievances. Hence, by the actual termination of the affected employees, the union already lost representation of these affected employees unless the employees themselves gave a special power of attorney authorizing the Private Respondent union to represent them. The records show that no such special power of attorney exists. Instead, the records would show that the affected employees, except for FELIX UNO, MORGANO TABO, ROEL LOCSIN, ANANIAS MESA, JUVY UY and NESTOR CONANAN, are not interested to pursue the case because they already accepted their separation pay and signed their Waiver, Release and Quitclaims (ANNEXES U to U-4 of the Petition for Certiorari) even while the case was pending before the Honorable Voluntary Arbitrator.

WHETHER OR NOT THE HONORABLE VOLUNTARY ARBITRATOR ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN RULING THAT THE PRIVATE RESPONDENTS ARE ENTITLED TO 100% OR 1 MONTH SALARY FOR EVERY YEAR OF SERVICE DESPITE THE CLEAR MANDATE OF ARTICLE 283 OF THE LABOR CODE

The Honorable Voluntary Arbitrator arbitrarily, capriciously, and whimsically ruled that Private Respondents are entitled to 100% or 1 month salary for every year of service despite the clear mandate of Article 283 of the Labor Code.

16

Again, the Petitioner would like to point out the admitted and established facts, to wit: a. The Petitioner does not dispute the application of Article 283 of the Labor Code insofar as the payment of separation pay is concerned. However, taking into account that the issue is a termination dispute, the resolution of this issue should properly be referred to the Labor Arbiter. Without prejudice to the Petitioners objection to the jurisdiction of the Honorable Voluntary Arbitrator, the Petitioner in fact relied on Article 283 as its basis in the termination of the effected employees and the computation of separation pay; b. Second, based on the conciliation and mediation proceedings as well as the Position Paper filed by the Private Respondent, the Private Respondent does not dispute the fact that the Petitioner terminated employees; c. Third, its is not disputed by the Private Respondent that the Petitioner ceased operations in Tampakan, South Cotabato over 105 hectares; and d. Fourth, it is not disputed by the Private Respondent that the terminated employees came from the 105 hectares which were returned to the landowners.

Taking into account the foregoing facts, Article 283 of the Labor Code provides that: Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of 17

operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service , whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or under taking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Underlining supplied) Based on the afore-cited provision of law, if the cessation of business operations is not due to serious business losses or financial reverses, the computation of separation pay should be one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. Meaning, if the employee concerned has served for one (1) year or less, he should be paid equivalent to 1 month pay because if the computation is month pay for every year of service, the latter would yield a lower result. Hence, the separated employee is given at least 1 month pay because it is higher. If the employee has served for two years or more, he is entitled to month pay for every year of service because it is higher than 1 months pay. If the closure or cessation of business operations is due to serious business losses or financial reverses, the Labor Code does not impose any obligation upon the employer to pay separation benefits. In the case of GALAXIE STEEL WORKERS UNION (GSWU-NAFLU18

KMU), ET. AL. vs. NATIONAL LABOR RELATIONS COMMISSION, GALAXIE STEEL CORPORATION and RICARDO CHENG (G.R. No. 165757, October 17, 2006), the Supreme Court held: In North Davao Mining Corporation v. National Labor Relations Commission, this Court held that Article 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to serious business losses or financial reverses x x x" Where, the closure then is due to serious business losses, the Labor Code does not impose any obligation upon the employer to pay separation benefits. Explaining the policy distinction in Article 283 of the Labor Code, this Court, in Cama v. Jonis Food Services, Inc., declared: The Constitution, while affording full protection to labor, nonetheless, recognizes the right of enterprises to reasonable returns on investments, and to expansion and growth. In line with this protection afforded to business by the fundamental law, Article 283 of the Labor Code clearly makes a policy distinction. It is only in instances of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses that employees whose employment has been terminated as a result are entitled to separation pay. In other words, Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. To require an employer to be generous when it is no longer in a position to do so, in our view, would be unduly oppressive, unjust, and unfair to the employer. Ours is a system of laws, and the law in protecting the rights of the working man, 19

authorizes neither the oppression nor the selfdestruction of the employer. x x x (Emphasis supplied)

However, the Honorable Voluntary Arbitrator interpreted Article 283 as authorizing the payment of 1 month salary for every year of service or month pay for every year of service, whichever is higher. This is obviously, and with all due respect, an erroneous interpretation. The payment of 1 month pay is not for every year of service. Rather, it is paid only when the employee has rendered service of 1 year or less. One month pay is the minimum that the separated employee is entitled to receive. To interpret Article 283 to mean as mandating 1 month salary for every year of service or month pay for every year of service, whichever is higher, would lead to absurd results. Had this been the interpretation or intention of the law, there would have been no more need for Article 283 to use the words whichever is higher because 1 month salary for every year of service is always higher than month pay for every year of service. It should be noted and considered that even if the cessation of the Petitioners operations over the 105 hectares was due to serious business losses and therefore the Petitioner is legally not obligated to pay separation pay as held in the case of GALAXIE STEEL WORKERS UNION (GSWU-NAFLU-KMU), ET. AL. vs. NATIONAL LABOR RELATIONS COMMISSION, GALAXIE STEEL CORPORATION and RICARDO CHENG (G.R. No. 165757, October 17, 2006), the Petitioner, out of generosity, still offered to pay month salary for every year of service. To clarify, the offer was to pay month salary for every year of service to all because all the affected employees rendered service for more than one (1) year. With this, there is no need for the Petitioner to furnish the Private Respondent the audited financial statements inasmuch as the Petitioners financial standing is no longer in issue. The financial

standing of the employer would only be an issue if the employer will 20

allege that it will not pay separation pay due to serious business losses. However, the Petitioner in the instant case, offered to pay month pay for every year of service even if it is already suffering losses. Hence, because Article 283 authorizes the payment of 1 month pay or month pay for every year of service, whichever is higher, in cases of cessation or closure of operations not due to serious business losses or financial reverses, with or without the Petitioners audited financial statements, the payment of month salary for every year of service is in accordance with law. Lastly, there is no previous company practice of paying 1 month pay for every year of service to all separated employees. What the Petitioner company takes into consideration is what the law mandates and its own financial capability to give over and above what the law provides. Whatever generosity which the Petitioner might have extended in the past should not be used against it now in compelling it to give more than what the law provides. It would be grossly unfair for the Petitioner to be penalized on the basis of its past generosity. To reiterate the ruling of the Supreme Court in the case of GALAXIE STEEL WORKERS UNION (GSWU-NAFLU-KMU), ET. AL. vs. NATIONAL LABOR RELATIONS COMMISSION, GALAXIE STEEL CORPORATION and RICARDO CHENG, supra: To require an employer to be generous when it is no longer in a position to do so, in our view, would be unduly oppressive, unjust, and unfair to the employer. the working man, Ours is a system of neither the laws, and the law in protecting the rights of authorizes oppression nor the self-destruction of the

employer. x x x

WHETHER OR NOT THE DECISION OF THE HONORABLE VOLUNTARY ARBITRATOR IN VA CASE NO. AC-522-88-123-10 HAS BECOME FINAL AND EXECUTORY

21

The Private Respondents aver that the Decision of the Honorable Voluntary Arbitrator in VA Case No. AC-522-88-123-10 has become final and executory because the Petitioners Motion for Reconsideration did not toll the running of the prescriptive period within which to file an appropriate appeal by petition for review and that the Petition for Certiorari under Rule 65 of the Rules of Court is an erroneous remedy because the proper mode should have been a Petition for Review under Rule 43 of the Rules of Court. Such contention of the Respondents is misplaced. First, it has been clarified as early as in the case of LUZON DEVELOPMENT BANK vs. ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES (G.R. No. 120319 October 6, 1995) and reiterated in several recent jurisprudence, that the decisions of the Voluntary Arbitrators are in reality, not yet final and executory after ten (10) days. The remedies provided for under the Rules of Court would still apply inasmuch as Voluntary Arbitrators are covered by the term instrumentality mentioned in Batas Pambansa Blg. 129 whose orders, decisions, or resolutions can still be elevated to the Court of Appeals, viz:

The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his functions and powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the Employees Compensation Commission is also provided for in the Labor Code, Circular No. 191, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down the procedure for the appealability of its decisions to the

22

Court of Appeals under the foregoing rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129. A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated therein. This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter. (Emphasis supplied)

Thus, notwithstanding the language of Department Order No. 4003 relied upon by the Respondents, it is very clear that a review of the decisions of Voluntary Arbitrators is governed not by Department Order No. 40-03 but by the Rules of Court and the reglementary period for such review is likewise governed, not by Department Order No. 40-03 but by the Rules of Court . In the case of LEYTE IV ELECTRIC COOPERATIVE, INC. vs LEYECO IV EMPLOYEES UNION-ALU (G.R. No. 157775, October 19, 2007), the Supreme Court clarified that a party aggrieved by a decision of the Voluntary Arbitrator has the remedy of either a petition for review under Rule 43 of the Rules of Court or a 23

special civil action for certiorari under Rule 65 of the Rules of Court, to wit: This ruling has been repeatedly reiterated in subsequent cases and continues to be the controlling doctrine. Thus, the general rule is that the proper remedy from decisions of voluntary arbitrators is a petition for review under Rule 43 of the Rules of Court. Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the tribunal, board or officer exercising judicial or quasi-judicial functions Court acted in in total disregard v. of evidence Labor material to or decisive of the controversy. As this elucidated Garcia National Relations Commission [I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals, we emphasized thus: [I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari proceedings. The cases in which certiorari will issue cannot be defined, because to do so would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that authority is not wanting to show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our superintending control over inferior courts, we are to be guided by all the circumstances of each particular case as the ends of justice may require. So it is that the writ will be

24

granted where necessary to prevent a substantial wrong or to do substantial justice.

This same ruling was also made in the case of ABS-CBN BROADCASTING CORPORATION vs. WORLD INTERACTIVE NETWORK SYSTEMS (WINS) JAPAN CO., LTD., (G.R. No. 169332, February 11, 2008), wherein the Supreme Court enumerated the instances when Rule 65 may be resorted to, viz: This rule was cited in Sevilla Trading Company v. Semana, Manila Midtown Hotel v. Borromeo , and Nippon Paint Employees Union-Olalia v. Court of Appeals. These cases held that the proper remedy from the adverse decision of a voluntary arbitrator, if errors of fact and/or law are raised, is a petition for review under Rule 43 of the Rules of Court. Thus, petitioner's contention that it may avail of a petition for review under Rule 43 under the circumstances of this case is correct. As to petitioner's arguments that a petition for certiorari under Rule 65 may also be resorted to, we hold the same to be in accordance with the Constitution and jurisprudence.

Section 1 of Article VIII of the 1987 Constitution provides that: SECTION 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law.

Judicial power includes the duty of the courts of justice and to settle actual and to controversies involving rights which are legally demandable enforceable, determine whether or not there has been 25

a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. (Emphasis supplied) As may be gleaned from the above stated provision, it is well within the power and jurisdiction of the Court to inquire whether any instrumentality of the Government, such as a voluntary arbitrator, has gravely abused its discretion in the exercise of its functions and prerogatives. Any agreement stipulating that the decision of the arbitrator shall be final and unappealable and that no further judicial recourse if either party disagrees with the whole or any part of the arbitrator's award may be availed of cannot be held to preclude in proper cases the power of judicial review which is inherent in courts. We will not hesitate to review a voluntary arbitrator's award where there is a showing of grave abuse of authority or discretion and such is properly raised in a petition for certiorari and there is no appeal, nor any plain, speedy remedy in the course of law. Significantly, Insular Savings Bank v. Far East Bank and Trust Company definitively outlined several judicial remedies an aggrieved party to an arbitral award may undertake: (1) a petition in the proper RTC to issue an order to vacate the award on the grounds provided for in Section 24 of RA 876; (2) a petition for review in the CA under Rule 43 of the Rules of Court on and 26 questions of fact, of law, or mixed questions of fact and law;

(3)

a petition for certiorari under Rule 65 of the Rules of Court should the arbitrator have acted without or in excess of his jurisdiction or to lack or with grave excess of abuse of discretion amounting jurisdiction.

Then, in the case of AMA COMPUTER COLLEGE-SANTIAGO CITY, INC. vs. CHELLY P. NACINO (G.R. No. 162739, February 12, 2008), the Supreme Court likewise recognized that a Petition for Certiorari would be granted if the following circumstances are present, to wit: We are not unmindful of instances when certiorari was granted despite the availability of appeal, such as (a) when public welfare and the advancement of public policy dictates; (b) when the broader interest of justice so requires; (c) when the writs issued are null and void; or (d) when the questioned order amounts to an oppressive exercise of judicial authority. XXX

It bears emphasizing that the Decision dated December 27, 2008 issued by the Honorable Voluntary Arbitrator is being assailed as null and void because the Honorable Voluntary Arbitrator had no jurisdiction to take cognizance of the issue raised therein, which is a termination dispute. This was the consistent objection raised by the Petitioner from the very beginning that the Respondents insisted to refer the case to voluntary arbitration. As already discussed above, Article 261 of the Labor Code plainly provides that the jurisdiction of the Honorable Voluntary Arbitrator is limited to hearing and deciding all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those

27

arising from the interpretation or enforcement of company personnel policies. None of these instances are present in the instant case. Jurisdiction was not legally conferred upon the Voluntary Arbitrator just because the Respondents insisted to refer the case to voluntary arbitration. There was likewise no Submission Agreement to which the Petitioner was a signatory. Hence, it was grave abuse of discretion on the part of the Honorable Voluntary Arbitrator to have insisted his jurisdiction when he clearly did not have jurisdiction. In the instant case, because of the nullity of the questioned Decision as having been issued without jurisdiction, the deprivation of due process on the part of the Petitioner, and the total disregard by the Honorable Voluntary Arbitrator of evidence material to or decisive of the controversy, the proper remedy is not a Petition for Review under Rule 43 of the Rules of Court but Petition for Certiorari under Rule 65 of the same rules. The Petitioner by filing a motion for reconsideration, was merely requesting the Honorable Voluntary Arbitrator to rectify the error it committed before the Petitioner will avail of the remedy of certiorari under Rule 65 of the Rules of Court. In fact, in the same case of LEYTE IV ELECTRIC COOPERATIVE, INC. vs. LEYECO IV EMPLOYEES UNION-ALU, supra, the Petitioner therein also filed a Motion for Reconsideration of the Decision of the Voluntary Arbitrator on April 11, 2001 which motion was denied by the Voluntary Arbitrator in a Resolution which was received by the Petitioner on June 27, 2002. The Petitioner filed his Petition for Certiorari only on July 27, 2002. In the said case, the Supreme Court considered the motion for reconsideration as having tolled the reglementary period because it counted the reglementary period only upon the receipt by the Petitioner therein of the Voluntary Arbitrators Resolution denying the Motion for Reconsideration. That the reglementary period shall be counted only from the receipt of the resolution on the motion for reconsideration is likewise clear under Section 4, Rule 65 of the Rules of Court, as amended pursuant to A.M. No. 07-7-12-SC issued on December 4, 2007, which states that: 28

Sec. 4. When and where to file the petition. The petition shall be filed not later than sixty (60) days from notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion is required or not, the petition shall be filed not later than sixty (60) days counted from the notice of the denial of the motion. (Emphasis supplied)

Thus, it is incorrect to say that the Decision of the Honorable Voluntary Arbitrator already became final and executory ten (10) days from receipt thereof by the parties. The instant Petition being made to the Honorable Court of Appeals, the proper procedure that should govern is that laid down under the Rules of Court, not Department Order No. 40-03.

PRAYER

WHEREFORE, premises considered, it is most respectfully prayed that the Honorable Court of Appeals would grant the following relief to the Petitioner: 1) To find that the Honorable Voluntary Arbitrator SEVERINO NATUTO acted without or in excess of his jurisdiction in issuing the Decision dated December 27, 2008 and the Order dated June 15, 2009;

2) To review, reverse, annul and set aside the Decision dated December 27, 2008 and the Order dated June 15, 2009 of the Honorable Voluntary Arbitrator; 3) To permanently enjoin the Public and Private Respondents from implementing or executing the Decision dated December 27, 2008 and the Order dated June 15, 2009;

29

4) To grant such other reliefs which are just and equitable in the premises.

Respectfully submitted this 8th day of July, 2010, at Davao City (for Cagayan de Oro City), Philippines. By: ________________________________ Counsel for the Petitioner

30