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G.R.No.120319

TodayisThursday,January07,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC

G.R.No.120319October6,1995
LUZONDEVELOPMENTBANK,petitioner,
vs.
ASSOCIATIONOFLUZONDEVELOPMENTBANKEMPLOYEESandATTY.ESTERS.GARCIAinher
capacityasVOLUNTARYARBITRATOR,respondents.

ROMERO,J.:
FromasubmissionagreementoftheLuzonDevelopmentBank(LDB)andtheAssociationofLuzonDevelopment
BankEmployees(ALDBE)aroseanarbitrationcasetoresolvethefollowingissue:
Whether or not the company has violated the Collective Bargaining Agreement provision and the
MemorandumofAgreementdatedApril1994,onpromotion.
At a conference, the parties agreed on the submission of their respective Position Papers on December 115,
1994.Atty.EsterS.Garcia,inhercapacityasVoluntaryArbitrator,receivedALDBE'sPositionPaperonJanuary
18,1995.LDB,ontheotherhand,failedtosubmititsPositionPaperdespitealetterfromtheVoluntaryArbitrator
remindingthemtodoso.AsofMay23,1995noPositionPaperhadbeenfiledbyLDB.
OnMay24,1995,withoutLDB'sPositionPaper,theVoluntaryArbitratorrenderedadecisiondisposingasfollows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining
AgreementprovisionnortheMemorandumofAgreementonpromotion.
Hence,thispetitionforcertiorariandprohibitionseekingtosetasidethedecisionoftheVoluntaryArbitratorand
toprohibitherfromenforcingthesame.
Inlaborlawcontext,arbitrationisthereferenceofalabordisputetoanimpartialthirdpersonfordeterminationon
the basis of evidence and arguments presented by such parties who have bound themselves to accept the
decisionofthearbitratorasfinalandbinding.
Arbitrationmaybeclassified,onthebasisoftheobligationonwhichitisbased,aseithercompulsoryorvoluntary.
Compulsoryarbitrationisasystemwherebythepartiestoadisputearecompelledbythegovernmenttoforego
theirrighttostrikeandarecompelledtoaccepttheresolutionoftheirdisputethrougharbitrationbyathirdparty.1

Theessenceofarbitrationremainssincearesolutionofadisputeisarrivedatbyresorttoa
disinterested third party whose decision is final and binding on the parties, but in
compulsoryarbitration,suchathirdpartyisnormallyappointedbythegovernment.
Undervoluntaryarbitration,ontheotherhand,referralofadisputebythepartiesismade,pursuanttoavoluntary
arbitration clause in their collective agreement, to an impartial third person for a final and binding resolution. 2

Ideally,arbitrationawardsaresupposedtobecompliedwithbybothpartieswithoutdelay,
suchthatonceanawardhasbeenrenderedbyanarbitrator,nothingislefttobedoneby
both parties but to comply with the same. After all, they are presumed to have freely
chosenarbitrationasthemodeofsettlementforthatparticulardispute.Pursuantthereto,
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they have chosen a mutually acceptable arbitrator who shall hear and decide their case.
Aboveall,theyhavemutuallyagreedtodeboundbysaidarbitrator'sdecision.
InthePhilippinecontext,thepartiestoaCollectiveBargainingAgreement(CBA)arerequiredtoincludetherein
provisionsforamachineryfortheresolutionofgrievancesarisingfromtheinterpretationorimplementationofthe
CBAorcompanypersonnelpolicies.3Forthispurpose,partiestoaCBAshallnameanddesignate

therein a voluntary arbitrator or a panel of arbitrators, or include a procedure for their

selection, preferably from those accredited by the National Conciliation and Mediation
Board (NCMB). Article 261 of the Labor Code accordingly provides for exclusive original
jurisdictionofsuchvoluntaryarbitratororpanelofarbitratorsover(1)theinterpretationor
implementationoftheCBAand(2)theinterpretationorenforcementofcompanypersonnel
policies. Article 262 authorizes them, but only upon agreement of the parties, to exercise
jurisdictionoverotherlabordisputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the following
enumeratedcases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and
exclusivejurisdictiontohearanddecide,withinthirty(30)calendardaysafterthesubmissionofthe
case by the parties for decision without extension, even in the absence of stenographic notes, the
followingcasesinvolvingallworkers,whetheragriculturalornonagricultural:
1.Unfairlaborpracticecases
2.Terminationdisputes
3.Ifaccompaniedwithaclaimforreinstatement,thosecasesthatworkersmayfileinvolvingwages,
ratesofpay,hoursofworkandothertermsandconditionsofemployment
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer
employeerelations
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legalityofstrikesandlockouts
6.ExceptclaimsforEmployeesCompensation,SocialSecurity,Medicareandmaternitybenefits,all
other claims, arising from employeremployee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whetheraccompaniedwithaclaimforreinstatement.
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Itwillthusbenotedthatthejurisdictionconferredbylawonavoluntaryarbitratororapanelofsucharbitratorsis
quitelimitedcomparedtotheoriginaljurisdictionofthelaborarbiterandtheappellatejurisdictionoftheNational
Labor Relations Commission (NLRC) for that matter. 4 The state of our present law relating to

voluntary arbitration provides that "(t)he award or decision of the Voluntary Arbitrator . . .
shall be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties," 5 while the "(d)ecision, awards, or orders of the Labor
ArbiterarefinalandexecutoryunlessappealedtotheCommissionbyanyorbothparties
withinten(10)calendardaysfromreceiptofsuchdecisions,awards,ororders."6 Hence,
whilethereisanexpressmodeofappealfromthedecisionofalaborarbiter,RepublicAct
No.6715issilentwithrespecttoanappealfromthedecisionofavoluntaryarbitrator.
Yet,pastpracticeshowsthatadecisionorawardofavoluntaryarbitratoris,moreoftenthannot,elevatedtothe
Supreme Court itself on a petition for certiorari,7ineffectequatingthevoluntaryarbitratorwiththe

NLRC or the Court of Appeals. In the view of the Court, this is illogical and imposes an
unnecessaryburdenuponit.
InVolkschelLaborUnion,etal.v.NLRC,etal.,8onthesettledpremisethatthejudgmentsofcourts
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andawardsofquasijudicialagenciesmustbecomefinalatsomedefinitetime,thisCourt
ruled that the awards of voluntary arbitrators determine the rights of parties hence, their
decisions have the same legal effect as judgments of a court. In Oceanic Bic Division
(FFW),etal.v.Romero,etal.,9thisCourtruledthat"avoluntaryarbitratorbythenatureof
her functions acts in a quasijudicial capacity." Under these rulings, it follows that the
voluntaryarbitrator,whetheractingsolelyorinapanel,enjoysinlawthestatusofaquasi
judicialagencybutindependentof,andapartfrom,theNLRCsincehisdecisionsarenot
appealabletothelatter.10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall
exercise:
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(B)Exclusiveappellatejurisdictionoverallfinaljudgments,decisions,resolutions,ordersorawards
of Regional Trial Courts and quasijudicial agencies, instrumentalities, boards or commissions,
includingtheSecuritiesandExchangeCommission,theEmployeesCompensationCommissionand
the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential
Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third
paragraphandsubparagraph(4)ofthefourthparagraphofSection17oftheJudiciaryActof1948.
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Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly be
consideredasaquasijudicialagency,boardorcommission,stillbothheandthepanelarecomprehendedwithin
the concept of a "quasijudicial instrumentality." It may even be stated that it was to meet the very situation
presented by the quasijudicial functions of the voluntary arbitrators here, as well as the subsequent
arbitrator/arbitral tribunal operating under the Construction Industry Arbitration Commission, 11

that the
broaderterm"instrumentalities"waspurposelyincludedintheabovequotedprovision.
An"instrumentality"isanythingusedasameansoragency.12Thus,thetermsgovernmental"agency"

or"instrumentality"aresynonymousinthesensethateitherofthemisameansbywhicha
government acts, or by which a certain government act or function is performed. 13 The
word"instrumentality,"withrespecttoastate,contemplatesanauthoritytowhichthestate
delegates governmental power for the performance of a state function. 14 An individual
person, like an administrator or executor, is a judicial instrumentality in the settling of an
estate, 15 in the same manner that a subagent appointed by a bankruptcy court is an
instrumentality of the court, 16 and a trustee in bankruptcy of a defunct corporation is an
instrumentalityofthestate.17
The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to him
under the provisions therefor in the Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality"intheaforequotedSec.9ofB.P.129.Thefactthathisfunctionsandpowersareprovidedforin
theLaborCodedoesnotplacehimwithintheexceptionstosaidSec.9sinceheisaquasijudicialinstrumentality
as contemplated therein. It will be noted that, although the Employees Compensation Commission is also
providedforintheLaborCode,CircularNo.191,whichistheforerunnerofthepresentRevisedAdministrative
CircularNo.195,laiddowntheprocedurefortheappealabilityofitsdecisionstotheCourtofAppealsunderthe
foregoingrationalization,andthiswaslateradoptedbyRepublicActNo.7902inamendingSec.9ofB.P.129.
Afortiori,thedecisionorawardofthevoluntaryarbitratororpanelofarbitratorsshouldlikewisebeappealableto
theCourtofAppeals,inlinewiththeprocedureoutlinedinRevisedAdministrativeCircularNo.195,justlikethose
ofthequasijudicialagencies,boardsandcommissionsenumeratedtherein.
Thiswouldbeinfurtheranceof,andconsistentwith,theoriginalpurposeofCircularNo.191toprovideauniform
procedure for the appellate review of adjudications of all quasijudicial entities 18 not expressly excepted

fromthecoverageofSec.9ofB.P.129byeithertheConstitutionoranotherstatute.Nor
will it run counter to the legislative intendment that decisions of the NLRC be reviewable
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directly by the Supreme Court since, precisely, the cases within the adjudicative
competenceofthevoluntaryarbitratorareexcludedfromthejurisdictionoftheNLRCorthe
laborarbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known as the
Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the contract or
submission, or if none be specified, the Regional Trial Court for the province or city in which one of the parties
residesorisdoingbusiness,orinwhichthearbitrationisheld,shallhavejurisdiction.Apartytothecontroversy
may,atanytimewithinone(1)monthafteranawardismade,applytothecourthavingjurisdictionforanorder
19
confirmingtheawardandthecourtmustgrantsuchorderunlesstheawardisvacated,modifiedorcorrected.
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial court.
Consequently, in a petition for certiorari from that award or decision, the Court of Appeals must be deemed to
haveconcurrentjurisdictionwiththeSupremeCourt.Asamatterofpolicy,thisCourtshallhenceforthremandto
theCourtofAppealspetitionsofthisnatureforproperdisposition.
ACCORDINGLY,theCourtresolvedtoREFERthiscasetotheCourtofAppeals.
SOORDERED.
Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Francisco and Hermosisima, Jr., JJ.,
concur.
Feliciano,J.,concursintheresult.
Narvasa,C.J.andMelo,J.areonleave.
Footnotes
1Seide,ADictionaryofArbitration(1970).
2Ibid.
3Art.260,LaborCode.
4Art.217,LaborCode.
5Art.262A,par.4,LaborCode.
6Art.223,LaborCode.
7OceanicBicDivision(FFW),etal.v.Romero,etal.,130SCRA392(1984)SimeDarby
Pilipinas,Inc.v.Magsalin,etal.,180SCRA177(1989).
898SCRA314(1980).
9Supra.
10Art.262A,inrelationtoArt.217(b)and(c),LaborCode,asamendedbySec.9,R.A.
6715.
11ExecutiveOrderNo.1008.
12LaurensFederalSav.andLoanAss'nv.SouthCarolinaTaxCommission,112S.E.2d716,
719,236S.C.2.
13Govt.ofP.I.v.Springer,etal.,50Phil.259,334(1927).
14Ciullav.State,77N.Y.S.2d545,550,191Misc.528.
15InreTurncock'sEstate,300N.W.155,156,238Wis.438.
16InreBrownCo.,D.C.Me.,36F.Supp.275,277.
17Gagnev.Brush,D.C.N.H.,30F.Supp.714,716.
18FirstLepantoCeramics,Inc.v.CA,etal.,231SCRA30(1994).
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19Section23,R.A.No.876.

TheLawphilProjectArellanoLawFoundation

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