Arbitration in Labor Disputes:

Promoting Public Interest through Increased Participation of

Private Interests

In Partial Fulfillment of the Requirements for Labor Law under

Attorney Cesario Azucena
Research Paper for Labor Law II

Prepared by:
Dustin Michael H. Garcia
15-079

SY 2nd Semester, 2017-2018

Ateneo de Manila University
School of Law
 I. Introduction: The interaction of labor and capital is direct and personal.

The relationship of labor and capital is established through the direct and personal

interaction of the employer and employee. The would-be employee applies to work for the would-

be employer. He showcases his experience, skills, credentials, and character to him in hopes of

being hired to the exclusion of other applicants. In turn, the would-be employer evaluates the

would-be employee’s qualifications for the said work. Thereafter, he informs the applicant whether

he landed the job or not.

Once accepted, the applicant becomes the employee. He works for the employer under the

terms and conditions that may have been agreed upon by them in an employment contract. Disputes

arise between them along the course of employment for any failure of one to perform their

obligation to the other or any demand left unheeded by one to the other. Said disputes may result

to either an agreement or disagreement. If they end in disagreements, either may terminate the

employer-employee relationship as per the terms of the contract or law. Then, the aggrieved party

may resort to remedies available to them by law.

Following this chain of events, we see that the relationship of employers and employees is

direct and personal. It is a relationship that requires constant interaction for moving forward their

interests whether it would be salaries for the employees or profits for the employers. Therefore, a

positive relationship between employers and employees generally result to mutual economic gains.

For that matter, the beneficial management and harmonious existence of the business is generally

best governed by the joint efforts of both parties.

For example, one of the most significant rights of employees is the right to participate as

expressly provided in the 1987 Constitution. This right empowers employees to participate in the
decision and policy-making process with their employers concerning their rights, duties, and

welfare.1 Generally, employees participate in the management of the business through the Labor

Management Council.2 The right to participate is effectively exercised upon satisfying the

following conditions:

 Various stakeholders in the enterprise must recognize the problems inherent

in the operation of participative schemes and set realistic goals;

 Participation must be perceived as instrumental to the attainment of goals

valued by each party;

 A firm belief in and commitment to the participative processes on the part of

key management officials at all levels of the enterprise is crucial;

 Availability of accurate, opportune, systematic, and relevant information

about the enterprise to all those involved in participative schemes and
meaningful communications to the work force at all levels about the
operations of participative schemes are important;

 Acquisition of systematic knowledge and experience in managerial,

economic, and technical fields on the part of all those involved in participative
schemes; and

 Participation should take place at the appropriate levels in an enterprise in a

spirit of mutual trust, and various forms of participation (e.g. collective
bargaining and LMCs) must be integrated into the total system.

Another significant right of employees, particular to those in the private sector, as

expressed in the Constitution is the right to self-organization. Article XIII, Section 3 of the

Constitution states that:

“[the State] shall guarantee the rights of all workers to self-organization,

collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall

1
PHIL. CONSTI. art. XIII, §3; Labor Code, Art. 255; Philippine Airlines, Inc. v. NLRC, G.R. No. 85985, August 13,
1993.
2
A Decree Instituting a Labor Code Thereby Revising and Consolidating Labor and Social Laws To Afford Protection
to labor, Promote Employment And Human Resources Development And Insure Industrial Peace Based On Social
Justice [LABOR Code], Presidential Decree No. 422, Art. 277 (h) (1974) as amended by Section 33, Republic Act No.
6715, March 21, 1989).
 also participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law.”3

Despite this participatory process and conditions in place under the Labor Code and

relevant labor legislations, still, labor disputes arise. In such cases, it is in the best interest of both

parties to resolve the dispute to resume economic gains and preserve industrial peace.

In this paper, the author focuses on arbitration as the most effective and suitable process of

settling labor disputes for two main reasons: the parties are afforded the opportunity to set the rules

of the arbitral proceedings and the arbitral tribunal renders an arbitral award which finally

terminates the dispute. Through arbitration, both employers and employees achieve the resolution

of their disputes through a speedy and confidential process that is conducted by an impartial and

competent third party of their choice.

In establishing arbitration as the preferred mode of dispute resolution, the author would

discuss relevant points in the legal history of arbitration in the Philippines, its unique features and

advantages compared to other dispute resolutions, and compare arbitration in the context of labor

law with arbitration in the context of commercial law. Ultimately, the author would suggest a

model of arbitration that best suits the resolution of labor disputes.

This paper is not intended, however, to displace the grievance machinery procedure as the

initial mechanism for settling disputes.

II. Arbitration revolutionizes dispute resolution of issues on labor relations.

Arbitration is an inexpensive, speedy, and amicable method of settling disputes. It is

encouraged by no less than the Supreme Court because such dispute resolution effectively unclogs

3
PHIL CONSTI. art. XIII, §3; Contra the right to self-organization for government employees in Article IX, B, Section
2 (5): “[t]he right to self-organizati over don shall not be denied to government employees.”
judicial dockets and hasten the resolution of disputes.4 Further, the policy of the State is to actively

promote party autonomy in the resolution of disputes or the freedom of the parties to make their

own arrangements to resolve disputes such as arbitration.5 In this case, arbitration takes precedence

over other dispute settlement devices and precludes resort to strikes or lockouts.6

Arbitration may either be voluntary or compulsory. Arbitration is voluntary when parties

refer their dispute to an appointed arbitrator for a final and binding resolution.7 Voluntary

arbitrators have original and exclusive jurisdiction over the following cases:

 under Article 262 of the Labor Code, upon agreement of both parties, all labor
disputes; and

 under Article 261 of the Labor Code, based on grievance machinery provisions
of a CBA, all unresolved grievances arising from the interpretation or
implementation of the CBA and those arising from the interpretation or
enforcement of company personnel policies.8

Arbitration is compulsory when it is provided by law and conducted under the auspices of

the NLRC. For example, Article 217 of the Labor Code provides for the original and exclusive

jurisdiction of the NLRC, through the LA, over disputes of unfair labor practice cases,

termination disputes, (if accompanied with a claim for reinstatement), those cases that

workers may file involving wages, rates of pay, hours of work and other terms and

conditions of employment, claims for damages arising from employer-employee relations,

legality of strikes and lockouts, and money claims for more than P5,000.9 Article 218 (e) of the

Labor Code provides that the NLRC has jurisdiction over disputes concerning injunction to enjoin

4
LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc, G.R. No. 141833, March 26,
2003.
5
See An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the Philippines And to
Establish the Office for Alternative Dispute Resolution, and for Other Purposes [ADR Act of 2004], Republic Act No.
9285, §2 (2004).
6
C.A. AZUCENA, II THE LABOR CODE WITH COMMENTS AND CASES 545 (2004).
7
LABOR CODE, art. 262.
8
Id. arts. 261 & 262.
9
Id. art. 217.
or restrain actual or threatened commission of any or all prohibited or unlawful acts

or to require the performance of a particular act in any labor dispute which, if not

restrained or performed forthwith, may cause grave or irreparable damage to any party or

render ineffectual any decision in favor of such party.10 The Department of Labor and Employment

may also compulsorily arbitrate in cases of money claims not exceeding Php5,000.00.11

A further discussion on arbitration as a process for settling disputes is laid down in the

subsequent parts of this paper.

A. A brief legal history of arbitration in the Philippines before the 1987

Constitution

To understand arbitration, we must revisit its roots and the changes it underwent through

the decades. In doing so, we must pay particular attention not only to its legal changes but also the

socioeconomic factors that caused such changes.

Long before the Spanish occupation of the Philippines, local communities or barangays

have already resorted to arbitration in resolving conflicts concerning, for instance, property and

personal relationships.12 In cases of family quarrels, elders and parents may at times act as

arbitrators whose decisions are final and binding upon the parties concerned.13

Arbitration was conducted by the datu or the chieftain who hears the arguments of both

parties, establishes the facts, and resolves the dispute through an opinion.14 This opinion becomes

the basis of rights and duties of the respective parties to the dispute.15 Similar to the present feature

10
Id. art. 218.
11
Id. art. 129.
12
HANS CACDAC & TERESITA AUDEA, THE STATE OF PHILIPPINE VOLUNTARY ARBITRATION 5 (2005).
13
FRANCISCO LIM, COMMERCIAL ARBITRATION IN THE PHILIPPINES IN ATENEO LAW JOURNAL 396, 396 (2001).
14
Ibid.
15
HANS CACDAC & TERESITA AUDEA, supra note 12.
of an arbitral award, the datu’s opinion lays to rest with finality any dispute between the parties

and must be respected by them.16

During the Spanish period, the law on arbitration was governed by Book IV, Title XII, De

los transacciones y compromisos of the Codigo Civil.17 Arbitration was conducted by jucio de

amigables componedores or the friendly adjusters who were men with the ability to read and write.

The number of adjusters has to be an odd number which should not exceed five. The agreement to

arbitrate must be executed before the notary public. Otherwise, the agreement is void. An adjuster

could be challenged if he had an interest in the subject-matter of the dispute or that he was

antagonistic against a party. If the adjuster refused to resign, the aggrieved party may file before

the concerned Court of First Instance.18

When an arbitral award is issued, the losing party may file an appeal before the Supreme

Court of Spain sixty days thereafter. If no appeal was made, the award must be executed by the

Court of First Instance in the same manner as other judgments.19

During the American occupation and through the Commonwealth period, arbitration was

recognized as one of the modes of dispute settlement mechanisms in labor disputes. In fact, Article

XIV, Section 6 of the 1935 Constitution, or the “afford protection to labor” clause states that: “[t]he

state shall afford protection to labor, especially to working women and minors, regulating the

relations between landowner and tenant, and between labor and capital in industry and agriculture.

The State may provide for compulsory arbitration.”20

16
Ibid.
17
Chung Fu Industries v. CA, 206 SCRA 545 (1992).
18
Cordoba v. Conde, 2 Phil. 445 (1903).
19
Ibid.
20
1935 PHIL. CONSTI. art. XIV, §6.
 By that constitutional mandate, the legislature framed arbitration as a private process

between consenting parties which precludes government intervention except for limited instances.

Act 4055, Section 3 states that

“[i]f the parties to a controversy should agree to submit voluntarily to

arbitration, aboard of three persons shall be chosen in the following: one of
the special mediators provided for in section one, one who shall be the
chairman, shall be designated by the Secretary of Justice; one shall be
named by the landlord or employer directly interested, and one by the
tenants or employees or laborers or labor organization to which the
tenants or employees or laborers directly interested belong, of if they
belong to more than one, by all such labor organizations. In the event
that the tenants or employees or laborers engaged in any given
controversy are not members of a labor organization, such tenants or
employees or laborers may select a committee which shall have the right to
choose one arbitrator.”21

By force of this provision, employers and employees may agree to submit to arbitration

their labor disputes and even choose their individual arbitrators. Nevertheless, considering that

public interest dictates the protection of labor, the legislature seemed it best to have the minimum

involvement of the government through the participation of the Department of Justice in the

arbitral process through the appointment of presiding arbitrators.22

The judiciary, in accordance with State policy, adopted judicial restraint in taking

cognizance of disputes covered by arbitration. Case in point is Chang v. Royal Exchange

Assurance Corporation of London. In that case, the arbitration agreement is the law between the

parties should disputes arise in connection with their transaction. Hence, resort to arbitration was

a condition precedent before any party may invoke the jurisdiction of regular courts.23

21
An Act Providing for Mediation, Conciliation and Arbitration in Controversies between Landlords and Tenants and
Between Employers and Employees, and For Other Purposes, Act 4055, §3 (1933).
22
Id. §1.
23
Chang v. Royal Exchange Assurance Corporation of London, 8 Phil. 400 (1907).
 In Allen v. Province of Tayabas, arbitration precludes the courts from exercising

jurisdiction over the dispute. Unless the arbitration agreement absolutely closed the door to judicial

review, the court would only interfere with the actions of the arbitrator with great reluctance.24

Then in 1936, the legislature enacted Commonwealth Act 103 to establish compulsory

arbitration as the principal mode of dispute settlement. In conjunction with this, the Court of

Industrial Relations was created to compulsorily arbitrate all labor disputes.25 Commonwealth Act

103 was the government’s response to the mounting insurgency in the rice haciendas and sugar

plantations.26

The Court of Industrial Relations had two functions. The first function is to decide labor

disputes as stated in Section 4 of Commonwealth Act 103, to wit:

“[t]he Court shall take cognizance for purposes of prevention, arbitration,

decision and settlement, of any industrial or agricultural dispute causing
or likely to cause a strike or lockout, arising from differences as regards
wages, shares or compensation, hours of labor or conditions of tenancy or
employment, between employers and employees or laborers and between
landlords and tenants or farm-laborers, provided that the number of
employees, laborers or tenants or farm-laborers involved exceeds thirty, and
such industrial or agricultural dispute is submitted to the Court by the
Secretary of Labor, or by any or both of the parties to the controversy and
certified by the Secretary of Labor as existing and proper to be dealt with by
the Court for the sake of public interest. In all such cases, the Secretary of
Labor or the party or parties submitting the disputes, shall clearly and
specifically state in writing the questions to be decided. Upon the submission
of such a controversy or question by the Secretary of Labor, his intervention
therein as authorized by law, shall cease.”27

24
Allen v. Province of Tayabas, 38 Phil. 356 (1918).
25
An Act to Afford Protection of Labor by Creating a Court of Industrial Relations Empowered to Fix
Minimum Wages for Laborers and Maximum Rentals to be Paid by Tenants, and to Enforce Compulsory Arbitration
between Employees or Landlords, and Employees or Tenants, Respectively; and By Prescribing Penalties for the
Violation of Its Orders, Commonwealth Act 103, §4 (1936).
26
Ruben Torres & George Eduvala, Labor Relations Policy and Labor Movement IN PHILIPPINE LABOR REVIEW 4
(1977).
27
Commonwealth Act 103, supra note 25, §4.
 The second function refers to endeavor the reconciliation of the parties when proper. The

relevant part of the provision states that:

“[t]he Court shall, before hearing the dispute and in the course of such
hearing, endeavor to reconcile the parties and induce them to settle the
dispute by amicable agreement. If any agreement as to the whole or any
part of the dispute is arrived at by the parties, a memorandum of its terms
shall be made in writing, signed and acknowledged by the parties thereto
before the Judge of the Court or any official acting in his behalf and
authorized to administer oaths or acknowledgments, or, before a notary
public. The memorandum shall be filed in the office of the Clerk of the Court,
and, unless otherwise ordered by the Court, shall, as between the parties to
the agreement, have the same effect as, and be deemed to be, a decision or
award.”28

While the law mentions arbitration as the mode of dispute settlement, the term used should

not be confused with its usage under the present legal framework. Unlike the present form of

arbitration wherein parties to the agreement choose their own arbitrators, Judges of the Court of

Industrial Relations are appointed by the President upon the confirmation of the Commission on

Appointments of the National Assembly. Further, the Court of Industrial Relations operated under

the supervision of the Department of Justice.29

However, the Court of Industrial as a project of the government failed to contain both

organized and spontaneous strikes which it sought to prevent. The Court suffered from protracted

delays in the disposition of cases that resulted to the clogging of case dockets.30

As a response, in 1953, Congress enacted Republic Act 875 or the Magna Carta of Labor

or the Industrial Peace Act. This law shifted the labor relations policy from compulsory arbitration

to collective bargaining.31 Section 1 of Republic Act of 875 states that it is the policy of the State:

“(a) to eliminate the causes of industrial unrest by encouraging and protecting

the exercise by employees of their right to self-organization for the purpose

28
Ibid.
29
Id. §1.
30
ALFONSO ATIENZA, VOLUNTARY ARBITRATION AND COLLECTIVE BARGAINING IN THE PHILIPPINES 3 (2000).
31
HANS CACDAC & TERESITA AUDEA, supra note 12, at 5, 9.
 of collective bargaining and for the promotion of their moral, social, and
economic well-being.

(b) To promote sound stable industrial peace and the advancement of the
general welfare, health and safety and the best interests of employers and
employees by the settlement of issues respecting terms and conditions of
employment through the process of collective bargaining between employers
and representatives of their employees.

(c) To advance the settlement of issues between employers and employees

through collective bargaining by making available full and adequate
governmental facilities for conciliation and mediation to aid and encourage
employers and representatives of their employees in reaching and maintaining
agreements concerning terms and conditions of employment and in making
all reasonable efforts to settle their differences by mutual agreement; and

(d) To avoid or minimize differences which arise between the parties to

collective bargaining by prescribing certain rules to be followed in the
negotiation and administration of collective bargaining agreements and
by requiring the inclusion in any such agreement of provisions for adequate
notice of any proposed changes in the terms of such agreements, for the final
adjustment of grievances or questions regarding the application or
interpretation of such agreements and other provisions designated to prevent
the subsequent arising of such controversies.”

It is important to note that the law recognized that real industrial peace cannot be achieved

by compulsion of law, and that sound and stable industrial relations must rest on a voluntary and

bilateral basis. Thus, it upheld the principle of voluntarism and broadened the base of

industrial democratic structures.32

Moving forward to the Marcos regime, the 1973 Constitution, Article II, Section 9

reaffirmed the State policy on arbitration for the settlement of labor disputes. The provision

provides that

“[t]he State shall afford protection to labor, promote full employment

and equality in employment, ensure equal work opportunities regardless
of sex, race, or creed, and regulate the relation between workers and
employers. The State shall assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and humane conditions of
work. The State may provide for compulsory arbitration.”
32
Ibid.
 In line with this constitutional provision, Presidential Decree 21 was issued in 1972 to

establish the mandatory grievance procedure and voluntary arbitration as the mode of dispute

settlement, to wit:

“1) The grievance procedure installed as a mandatory initial stage

in the settlement of disputes;

2) Before assuming jurisdiction over any issue, dispute or grievance, the

Commission shall give the parties a chance to submit the controversy to a
voluntary arbitrator;

3) All collective bargaining agreements shall have a provision

designating a voluntary arbitrator to decide on all disputes arising from
the interpretation and implementation thereof; and

4) The clearance requirement for dismissal and termination of employees

with at least one year of service.”

Then, in 1974, the Labor Code of the Philippines was enacted which covered collective

bargaining, voluntary arbitration, and compulsory arbitration. On the one hand, voluntary

arbitration occurs when both employers and employee agree that their disputes must be settled

through arbitration that operates in accordance with the agreed processes of the parties. On the

other hand, compulsory arbitration operates under the auspices of the government with the

arbitrator appointed by the government.33

During this period, the law on arbitration with respect to labor disputes underwent several

changes. Hans Cacdac of then Executive Director of the National Conciliation and Mediation

Board of the Department of Labor and Employment summarized these changes as follows:

33
HANS CACDAC, TIERS OF RESOLUTION IN PHILIPPINE LABOR DISPUTE SETTLEMENT, 8, 10 (2005).
 A brief review of the amendments of the law on arbitration reveal that arbitration is created

by private consenting parties that is governed by the law as stipulated by the parties. As such, the

trend of the mentioned amendments shows the intention of the government to distance itself in an

arbitration that interests only the parties who are directly involved in the dispute.

However, there still remain instances wherein the government become directly involved in

labor disputes specially when the circumstances are of certain gravity to call for such intervention.

In Presidential Decree 570-A issued on November 1, 1974, arbitral awards on money claims

exceeding Php100,000.00 or 40% of the paid-up capital of respondent employer, whichever is

lower, may be appealed to the NLRC on the grounds of either abuse of discretion or gross

incompetence. The same rule was provided in Presidential Decree 850 issued on December 16,
1975. In Policy Instructions No. 14 issued on April 23, 1976, termination cases, with or without

collective bargaining agreement, are placed under the jurisdiction of the Regional Director.

These instances of government intervention are similar to those found in the present legal

framework. Article 263 (g) of the Labor Code provides that:

“[w]hen, in his opinion, there exists a labor dispute causing or likely to

cause a strike or lockout in an industry indispensable to the national
interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the
Commission for compulsory arbitration.

Such assumption or certification shall have the effect of automatically

enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time of
assumption or certification, all striking or locked out employees shall
immediately return-to-work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary of Labor and
Employment or the Commission may seek the assistance of law enforcement
agencies to ensure compliance with this provision as well as with such orders
as he may issue to enforce the same.”34

Then in the 1987 Constitution, the policy of the State in settling labor disputes was widened

in scope. Arguable, arbitration, albeit not mentioned, as a voluntary mode of dispute resolution

was highly encouraged. The relevant part, to wit:

“The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective

bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.

The State shall promote the principle of shared responsibility between

workers and employers and the preferential use of voluntary modes

34
LABOR CODE, art. 263 (g).
 in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production
and the right of enterprises to reasonable returns to investments, and to
expansion and growth.”

The provision is an acknowledgment of Filipino cultural values and usual modes of conduct

in dealing with disagreements. The objective is to prevent strikes, lockouts and confrontation by

creating a cooperative labor relations climate that will render resort to economic leverage

unnecessary. Most notably, the provision presents a new policy framework for the development of

a more cooperative labor relations policy that balances the rights of workers and employers,

through the principle of shared responsibility.35

Notwithstanding the State’s encouragement towards a private settlement of labor disputes,

the State retains a certain level of control over the resolution of such disputes. For instance,

although the arbitral award is final and binding, it may still be subject to an appeal to the Court of

Appeal through Rule 43 of the Rules of Court. Here, arbitrators in the context of voluntary

arbitration act in a quasi-judicial capacity. Thereafter, the losing party may appeal to the Supreme

Court through Rule 45 of the Rules of Court.36

Based on the foregoing, the present form of arbitration can be said to be an accumulation

of lessons throughout the different periods in Philippine history.

As regards the pre-colonial period, arbitration then is similar to the present arbitration. The

issues subject of the arbitration were those submitted by the parties. Further, these issues were

personal to the parties involved and within the knowledge of the arbitrator.

35
HANS CACDAC & TERESITA AUDEA, supra note 12, at 17.
36
Rules of Court, Rules 43 & 45.
 The arbitrator were neutral third parties who possess authority over the parties and receive

the utmost respect of the community. Hence, their decisions become binding and final to the parties

without the possibility for availing an appeal therefrom.

The Spanish introduced the civil law system of courts wherein arbitral awards are similar

to decisions of regular courts which may be appealed to a higher authority. A similar system was

adopted the Americans, albeit more restrictive in application, wherein appeals or resort to courts

are only applicable when the parties have participated in arbitration and they wish to appeal

therefrom.

During the Commonwealth period, the government established arbitration as compulsory

which covered all labor disputes under the jurisdiction of a tribunal called the Court of Industrial

Relations. At the same time, since labor was still a matter of public policy, the government

participated in the arbitral process by appointing the presiding arbitrator.

As such form of arbitration was ineffective at the time, the government shifted to a policy

of collective bargaining as opposed to arbitration.

Then during the time of the Marcos regime, the government incorporated both collective

bargaining and arbitration in the legal framework of labor disputes. Further, they added grievance

machinery as the mandatory process preceding arbitration. Arbitration then was characterized as a

mode of dispute settlement wherein the parties have virtually full control over the law and

processes governing their arbitration and the appointment of arbitrators subject to cases which call

for the intervention of the government.

Presently, employers and employees are highly encouraged to refer their disputes to

arbitration with decreasing level of government intervention on the same.

III. Labor disputes may be resolved through voluntary and involuntary processes.

Capital and labor continue to be the driving forces of the economy and the basic blocks of

society. As a result, the relationship between these forces is clothed with public interest.

For the State, the relationship between two forces must be preserved and strengthened.

Hence, the State protects the rights of the workers and promote their welfare.37 At the same time,

it encourages private enterprises, and provides incentives to the needed investments.38

In the event of capital-labor disputes, it is the policy of the State to promote the principle

of shared responsibility between workers and employers and the preferential use of voluntary

modes in settling disputes, including conciliation, and shall enforce their mutual compliance

therewith to foster industrial peace.39 These voluntary modes of dispute resolution include

mediation, conciliation,40 collective bargaining, and grievance procedure.41

Another mode of dispute resolution is the compulsory process of submitting to the

jurisdiction of the labor arbiter and the National Labor Relations Commission.42 Here, labor

disputes are resolved through the intervention of a government agency.

The following are the common means in settling labor disputes.

A. Mediation and Conciliation

Mediation is a voluntary process in which a mediator, selected by the disputing parties,

facilitates communication and negotiation, and assists the parties in reaching a voluntary

37
PHIL. CONSTI. art. II, §18.
38
PHIL. CONSTI. art. II, §20.
39
PHIL. CONSTI. art. XIII, §3.
40
See Department of Justice, Implementing Rules and Regulations of the Alternative Dispute Resolution Act of 2004
[IRR of ADR], Department Circular No. 98, Art. 1.6 (2009).
41
HANS CACDAC, supra note 33, at 6, 7.
42
See 2011 NLRC Rules of Procedure, as amended [2011 NLRC Rules of Procedure] (2011).
agreement regarding a dispute.43 Conciliation is a mild form of intervention by a neutral party,

who relies on persuasive expertise and takes an active role in assisting parties to amicably

settle a dispute.44 Both process are non-litigious/non-adversarial, less expensive, and expeditious.

Under this informal set-up, the parties find it more expedient to fully ventilate their respective

positions without running around with legal technicalities and, in the course thereof, afford them

a wider latitude of possible approaches to the problem.45

Mediation and conciliation can be availed of any party to a labor dispute by submitting an

informal or formal request for conciliation and mediation service with the National Conciliation

and Mediation Board (NCMB) or any of its regional branches. These processes may result to either

an agreement or disagreement. In case of agreement, the parties are bound to honor said agreement

entered into by them. It must be pointed out that such an agreement came into existence as a result

of painstaking efforts among the union, management, and the Conciliator/Mediator. It must be

noted that mediation and conciliation may be availed of even during strikes or submission by the

parties to the jurisdiction of the NLRC.46

B. Collective Bargaining

Collective bargaining is presently the primary mode of settling labor and industrial

disputes.47 Labor and management settle issues respecting terms and conditions of employment.

This relationship exists between an exclusive bargaining unit dealing with the employer48 and

culminates in an agreement between them which lasts for five years.49

43
IRR of ADR, supra note 40, art. 1.6 (B) (6).
44
National Conciliation and Mediation Board, Department of Labor and Employment accessed at:
http://co.ncmb.ph/conciliation-mediation/ (accessed on June 6, 2018).
45
Ibid.
46
Ibid.
47
LABOR CODE, art. 246; See HANS CACDAC, supra note 33, at 6 (2005)
48
Id. art. 242 (b).
49
Id. art. 253-A.
 In this way, collective bargaining acts as a preventive and curative measure. It prevents

labor disputes from occurring by establishing mutual understanding on the terms and conditions

of employment. It is curative in that initial disagreements as to the terms and conditions of

employment.

As a guarantee to the promotion of sound and stable industrial peace through the process

of collective bargaining, the law restrained the intervention of the government in in relations of

the union and the management.50 It follows then that courts, commissions, or boards have no

jurisdiction to issue restraining orders or injunctions involving or growing out of a labor dispute.

Further, no court has the power to set wages, rates of pay, hours of employment or conditions of

employment, to prevent undue restriction of free enterprise for capital and labor to encourage the

truly democratic method of regulating the relations between the employer and employee by means

of an agreement freely entered into through collective bargaining.51

C. Grievance Procedure

While collective bargaining relates to generally disputes that arise at the start of the

employment relationship, grievance procedure refers to disputes that arise after the start of

employment relationship. An employee may then have the right to present grievances to his

employer at any time.52 Surely, this statement does not mean that the employee alone directly deals

with his employer. Grievance machinery can be undertaken through the Labor Management

Council or by the exclusive bargaining unit.53

The procedures for grievance machinery may be governed by either the law or by the

agreement of the parties in a collective bargaining agreement. By agreement of the parties, under

50
Id. art. 3.
51
Id. art. 211 (B).
52
LABOR CODE, art. 255.
53
AZUCENA, supra note 6, at 321.
Article 260 of the Labor Code, parties to a collective bargaining agreement should include

provisions that ensure the mutual observance of its terms and conditions. They shall establish a

machinery for the adjustment and resolution of grievances arising from the interpretation or

implementation of the collective bargaining agreement and those arising from the interpretation or

enforcement of company personnel policies. The Supreme Court has defined “company personnel

policies” as guiding principles stated in broad, long-range terms that express the philosophy

or beliefs of an organization’s top authority regarding personnel matters. The usual sources of

grievances are rules and regulations governing disciplinary actions.54

By force of the law, grievance procedure applies to collective bargaining agreement with

no specific procedures for handling grievances and management personnel policies in unorganized

establishments that do not prescribe such procedures. The default procedure is laid down as

follows:

 An employee shall present this grievance or complaint orally or in writing to

the shop steward. Upon receipt thereof, the shop steward shall verify the facts
and determine whether or not the grievance is valid.

 If the grievance is valid, the shop steward shall immediately bring the
complaint to the employee’s immediate supervisor. The shop steward, the
employee, and his immediate supervisor shall exert efforts to settle the grievance
at their level.

 If no settlement is reached, the grievance shall be referred to the grievance

committee which have 10 days to decide the case.

 Where the issue involves or arises from the interpretation or implementation

of a provision in the collective bargaining agreement, or from any
order, memorandum, circular or assignment issued by the appropriate
authority in the establishment, and such issue cannot be resolved at the
level of the shop steward or the supervisor, the same may be referred
immediately to the grievance committee.

54
San Miguel Corp. v. NLRC, G.R. No. 108001, March 15, 1996.
 D. The Labor Arbiter and the National Labor Relations Commission

The Labor Arbiter (LA) and the National Labor Relations Commission (NLRC) are the

government agencies tasked to resolve labor disputes in cases specified by the law. As earlier

mentioned, the process undertaken by the NLRC and LA is compulsory arbitration.

The original and exclusive jurisdiction of the LA covers the following cases:

1. Unfair labor practice cases;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;

5. Cases arising from any violation of Article 264 of the Labor Code, as amended,
including questions involving the legality of strikes and lockouts;

6. Except claims for employees compensation not included in the next succeesing
paragraph, social security, medicare, and maternity benefits, all other claims arising
from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding Five Thousand Pesos (P5,000.00),
whether or not accompanied with a claim for reinstatement;

7. Wage distortion disputes in unorganized establishments not voluntarily settled by

the parties pursuant to Republic Act No. 6727;

8. Enforcement of compromise agreements when there is non-compliance by any of

the parties pursuant to Article 227 of the Labor Code, as amended;

9. Money claims arising out of employer-employee relationship or by virtue of any

law or contract, involving Filipino workers for overseas deployment, including claims
for actual, moral, exemplary and other forms of damages as provided by Section 10,
Republic Act No. 8042, as amended by Republic Act No. 10022; and

10. Other cases as may be provided by law.55

For the NLRC, the following cases fall under its jurisdiction:

55
2011 NLRC Rules of Procedure, supra note 42, Rule V, §1.
 1. Cases decided by the Labor Arbiter;

2. Cases decided by the Regional Directors or hearing officers on small money

claims;

3. Cases of national interest certified to by the Secretary of Labor;

4. Petitions for injunctions or temporary restraining order under Article 218 (e) of the
Labor Code, as amended; and

5. Petition to annul or modify the order or resolution (including those issued during
execution proceedings) of the Labor Arbiter.56

IV. Arbitration in Labor Disputes in Reference to Commercial Arbitration

After having discussed some dispute settlement mechanism and arbitration in the context

of labor disputes, let us now expand our discussion to arbitration in the context of commerce. In

doing so, we can draw lessons from another field of law to further develop the concept of

arbitration in the field of labor. For this reason, the author intends to use the commercial arbitration

model and apply such model in the context of labor law.

The adoption of the Republic Act of 876 or the Arbitration Law marked the policy of the

Congress, in representation of the State, in the encouragement of arbitration as a method of settling

disputes. In fact, this policy was reiterated in Republic Act 9285, Section 2 which states that: “the

policy of the State to actively promote party autonomy in the resolution of disputes or the freedom

of the parties to make their own arrangement to resolve disputes.” Further, it bears stressing that

the Philippines is a party to the United Nations Commission on International Trade Law Model

Law on International Commercial Arbitration which is the model law for arbitration in the world.

The following are the advantages and disadvantages of commercial arbitration as compared

and contrasted with voluntary arbitration and compulsory arbitration in Labor law.

56
National Labor Relations Commission, Department of Labor and Employment accessed at:
http://nlrc.dole.gov.ph/?q=node/7 (accessed on June 11, 2018).
 A. Advantages of Arbitration

i. Appointment of Arbitrators

In commercial arbitration, parties are free to appoint their arbitrators and prescribe the

number of arbitrators subject only to the following qualifications: must be of legal age, in full

enjoyment of civil rights, and knows how to read and write, shall not be interested in the case and

shall not be related to any of the parties within the sixth degree of consanguinity or affinity. Most

importantly, the arbitrator must not advocate for any of the parties.57

In compulsory arbitration, the President, upon the recommendation of the Secretary of

Labor and Employment, appoints the Labor Arbiters.58 The Labor Arbiters who actually conduct

the arbitration are chosen through a raffle.59 In voluntary arbitration, the preferred arbitrators are

those listed under the list of accredited voluntary arbitrators of the National Conciliation and

Mediation Board who are either members of the Philippine Association on Voluntary Arbitration,

Inc. or applicants who meet the minimum criteria for accreditation.60

ii. Impartiality and Independence of the Arbitrator

In commercial arbitration, as a fundamental principle in arbitration, arbitrators must remain

independent and impartial for the entire duration of the proceedings.61 On the one hand,

impartiality is the “test for the lack of impermissible bias in the mind of the arbitrator toward a

57
IRR, Rule 5.10.
58
National Labor Relations Commission, NLRC Recommends Filling-in of 15 Labor Arbiter Positions accessed at:
http://nlrc.dole.gov.ph/?q=node/44 (accessed on: June 11, 2018).
59
National Labor Relations Commission, Process Flow accessed at: http://nlrc.dole.gov.ph/?q=node/6 (accessed on
June 11, 2018).
60
Voluntary Arbitration accessed at:
http://www.ncmb.ph/VAP/Voluntary_Arbitrators/Qualifications%20&%20Types%20of%20VA.html (accessed on
June 11, 2018).
61
NIGEL BLACKABY, ET. AL, REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION 266, 268 (2009);
Matti S. KURKELA AND SANTTU TURUNEN, DUE PROCESS IN INTERNATIONAL COMMERCIAL ARBITRATION
107 (2010).
party or toward the subject-matter in dispute.” This test is a subjective one and it is not directed at

the appearance of bias but to its actual presence, which is “inferred from the facts and

circumstances surrounding the arbitrator’s exercise of the arbitral functions.”

Independence, on the other hand, is a term that refers to the relationship between the

arbitrator and the parties and indicates prior or current personal, social or business contact between

them. The closer the relationship between these “spheres,” the less “independent” the arbitrator or

tribunal is considered to be. Unlike the test for impartiality, the test for independence is an

objective one, as prior business or financial relations are easy to determine.62

Arbitrators who are not impartial or independent may be removed, or shall render an

arbitral award null and avoid for violation of due process.63 The same requirement of arbitrators is

present in voluntary arbitration.

In compulsory arbitration, It must be noted that labor arbiters and commissioners of the

NLRC must likewise be independent and impartial in dealing with labor disputes under their

jurisdiction.64 A labor arbiter or commissioner who is not impartial or independent may be subject

to inhibition by his volition or by upon any party’s motion.65 For example, a labor arbiter may be

inhibited on the ground of relationship with one of the parties, or counsel, until the fourth degree

by consanguinity or affinity, or on question of partiality. Moreover, a decision rendered by such

arbitrator may be subject to annulment.66

iii. Consensual

62
Sam Luttrell, Bias Challenges in International Commercial Arbitration: The Need for a “Real Danger”
Test IN KLUWER LAW INTERNATIONAL 20-24 (2009).
63
RCBC v. BDO, G.R. No. 196171, December 10, 2012.
64
See Code of Conduct for Commissioners and Labor Arbiters, Rules 1-3.
65
2011 NLRC Rules of Procedure, supra note 42, Rule V, Sec. 17.
66
See Ang Tibay v. CIR, G.R. No. L-46496, February 27, 1940.
 Commercial arbitration arises from a contract mutually agreed upon by the parties or an

arbitration agreement.67 An arbitration agreement occurs when two or more persons or parties

submit to the arbitration of one or more arbitrators any controversy existing between them at the

time of the submission and which may be the subject of an action, or the parties to any contract

may in such contract agree to settle by arbitration a controversy thereafter arising between them.68

There are two types of arbitration agreement: arbitration clause and submission agreement.

The former refers to an agreement that any dispute may arise out of or in connection with the

contract will be referred to arbitration. The latter refers to an agreement made after a dispute has

arisen. While both agreements have the same effect, in a submission agreement, the parties have

the better opportunity to frame the issues that would be submitted to arbitration because the issues

are already known to them.69

In Labor law, the same set-up applies to voluntary arbitration. Further, voluntary arbitration

has original and exclusive jurisdiction, as previously discussed, over disputes concerning the

interpretation or application of collective bargaining agreements or company personnel policies.

The case is different for compulsory arbitration in that arbitration is not agreed upon by the parties

but are compelled to arbitrate by force of the law in certain instances as previously discussed.

iv. Confidentiality

In commercial arbitration, the arbitration proceedings, including the records, evidence and

the arbitral award and other confidential information, shall be considered privileged and

confidential and shall not be published, except: with the consent of the parties or for the limited

67
An Act to Ordain and Institute the Civil Code of the Philippines [CIVIL Code], Republic Act No. 386, art. 1305
(1950).
68
An Act to Authorize the Making of Arbitration and Submission Agreements, to Provide for the Appointment of
Arbitrators and the Procedure for Arbitration in Civil Controversies, and for Other Purposes [The Arbitration Law],
Republic Act No. 876, §2 (1953).
69
GARY BORN, INTERNATIONAL ARBITRATION: LAW AND PRACTICE, 34-35 (2012).
purpose of disclosing to the court relevant documents in cases where resort to the court is allowed

by law.70

In compulsory arbitration, with respect to the labor arbiter or the NLRC, decisions,

resolutions and orders are open to the parties to the case and their counsel or authorized

representative during regular hours. Access to pleadings and other documents filed by parties to

the case are, however, restricted. Further, reports, drafts of decisions, records of deliberations or

documents of the labor arbiter and the NLRC involving private parties are confidential.71

v. Judicial Restraint

Commercial arbitration should always take precedence before resorting to regular courts.

If at least one party invokes the jurisdiction of the arbitral tribunal before pre-trial conference in

the regular courts, said court should refer the case to arbitration.72

Even when a regular court is asked to vacate an arbitral award, said regular court would

suspend the setting aside proceedings for a period of time determined by it in order to give the

tribunal an opportunity to resume arbitral proceedings or to take such other action as in arbitral

tribunal’s opinion will eliminate the grounds for setting aside an award.73

In compulsory arbitration, recourse to the courts can only be made through Rule 65 of the

Rules of Court or Certiorari after the Labor Arbiter and the NLRC have decided on the case in

accordance with the doctrine of exhaustion of administrative remedies. 74 In voluntary arbitration,

appeal may be taken to the Court of Appeal through Rule 43 because the arbitral tribunal exercised

quasi-judicial powers.75

70
IRR of ADR, supra note 40, art. 5.42.
71
2011 NLRC Rules of Procedure, supra note 42, Rule XIII, §8.
72
ADR Act of 2004, supra note 5, §24.
73
Supreme Court, Special Rules on Alternative Dispute Resolution [SRADR], A.M. No. 07-11-08-SC, Rule. 5.34
(2009).
74
Olores v. Manila Doctors College, G.R. No. 201663, March 31, 2014.
75
Rules of Court, Rule 43.
 vi. Interim Measures

In commercial arbitration, the arbitral tribunal, once constituted through the appointment

of arbitrators, may take interim measures which are necessary in respect of the subject matter of

the dispute or procedure. Said interim measures may include a preliminary injunction against a

party, appointment of receivers or detention of property that is the subject of the dispute in

arbitration or its preservation or inspection.

If the arbitral tribunal has yet to be constituted, the parties may seek interim measures from

regular courts. In the event that the interim measures conflict with that of the regular courts, those

of the arbitral tribunal shall prevail.76 This, however, does not preclude the parties from seeking

assistance with the regular courts in the enforcement of interim measures issued by the arbitral

tribunal.77

As regards compulsory arbitration, only the NLRC, through its divisions, has the power to

issue injunctions.78 The Labor Arbiter, in this case, can only receive evidence if ordered to do so

by the NLRC.79

vii. Competence-Competence

In commercial arbitration, the arbitral tribunal may rule on its own jurisdiction, including

any objections with respect to the existence or validity of the arbitration agreement.80 This is a

common feature of tribunals exercising judicial or quasi-judicial functions such as the labor arbiter

and the NLRC divisions or the voluntary arbitrators.

viii. Procedural Flexibility

76
SRADR, supra note 73, Rule 5.13-5.14.
77
SRADR, supra note 73, Rule 5.16.
78
2011 NLRC Rules of Procedures, supra note 42, Rule X, §1.
79
Lahm III and James P. Concepcion v Labor Arbiter Jovencio Mayor, Jr., A.C. No. 7430, February 15, 2012.
80
United Nations Commission on International Trade Law, Model Law on International Commercial Arbitration, art.
16 (2006).
 In commercial arbitration, since arbitration is governed by consent, it follows that the

parties may stipulate the rules or procedures to be followed by the arbitral tribunal. In default of

such stipulation, the arbitral tribunal, subject to the Alternative Dispute Resolution Act, may fix

its rules to the extent necessary for the resolution of the dispute.81 In this case, the parties may even

stipulate the venue or the place of arbitration.82 The same procedural flexibility is allowed in

voluntary arbitration.

In compulsory arbitration, the proceedings conducted therein are non-litigious and are

subject to the rules provided by the NLRC en banc such as the 2011 NLRC Rules of Procedure.

Subject to the requirements of due process, the technicalities of law and procedure and the rules

obtaining in the courts of law shall not strictly apply thereto.83 As in the case of venue, the

complainant may file in the Regional Arbitration Branch having jurisdiction over the workplace

of the complainant.84

ix. Finality of Decisions

In commercial, arbitral awards are immediately final and binding upon the parties. This is

a necessary consequence of the parties’ submission of their disputes to the arbitration. 85 With

respect to decisions of the voluntary86 and compulsory arbitrators, they are final upon the lapse of

the period to appeal or ten calendar days from receipt of the order.87

x. Appeal

81
SRADR, supra note 73, Rule 5.18.
82
SRADR, supra note 73, Rule 5.19.
83
2011 NLRC Rules of Procedure, supra note 42, Rule V, §2.
84
2011 NLRC Rules of Procedure, supra note 42, Rule IV, §1.
85
CIVIL CODE, art. 2044.
86
Coca-cola Bottlers Philippines, Inc. Sales Force Union-PTGWO-BALAIS v. Coca Cola-Bottlers Philippines, Inc.,
464 SCRA 507 (2005).
87
2011 NLRC Rules of Procedure, supra note 42, Rule XI, §1.
 Arbitral awards are not subject to appeal as they are final and binding upon the parties. The

issuance of arbitral awards terminates the proceedings in the arbitration stage. Said award may,

however, be vacated for the following reasons:

 The arbitral award was procured through corruption, fraud or other undue means;

 There was evident partiality or corruption in the arbitral tribunal or any of its
members;

 The arbitral tribunal was guilty of misconduct or any form of misbehavior that has
materially prejudiced the rights of any party such as refusing to postpone a hearing
upon sufficient cause shown or to hear evidence pertinent and material to the
controversy;

 One or more of the arbitrators was disqualified to act as such under the law and
willfully refrained from disclosing such disqualification; or

 The arbitral tribunal exceeded its powers, or so imperfectly executed them, such
that a complete, final and definite award upon the subject matter submitted to them
was not made.88

The abovementioned grounds relate only to the conduct of arbitral proceedings but not with

respect to the merits of the arbitration since arbitral awards are final and binding. Thus, an action

to vacate an award is not an appeal.89

Decisions rendered in compulsory arbitration are subject to appeal. The may entertain an

appeal therefrom on the following grounds:

 If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter;

 If the decision, order or award was secured through fraud or coercion, including
graft and corruption;

 If made purely on questions of law; and

88
SRADR, supra note 73, Rule 11.4.
89
Korea Technologies v. Lerma, G.R. No. 143581, January 7, 2008.
  If serious errors in the findings of facts are raised which would cause grave or
irreparable damage or injury to the appellant.90

While the appellate proceedings are not part of the compulsory arbitration already

terminated at the stage of the Labor Arbiter,91 the NLRC may still set aside the findings and

decision of the Labor Arbiter and enter a new one in lieu thereof.92

A losing party in the NLRC may seek recourse to the Court of Appeal through Rule 65 of

the Rules of Court or Certiorari.93

In cases of voluntary arbitration, the losing party may file an appeal, based on error of law

or facts, to the Court of Appeals through Rule 43 of the Rules of Court.94

xi. Enforcement

Enforcement of an arbitral award has the same force with court judgments.95 But unlike

court judgments or awards rendered by voluntary or compulsory arbitrators, arbitral awards in

commercial arbitration can be enforced after being confirmed by the Regional Trial Court.96 An

action for enforcement is treated as a special proceeding and may be filed in any of the following

courts: where the arbitration proceedings were conducted, where the asset to be attached or levied

upon, or the act to be enjoined, where any of the parties to the dispute resides or has its place of

business, or in the National Capital Region at the option of the applicant.97

90
LABOR CODE, art. 229.
91
Philippine Airlines, Inc. v. NLRC, G.R. No. 55159, December 22, 1989.
92
Coca-Cola Bottlers Phil., Inc. v Hingpit, et al., G.R. no. 127238, August 25, 1998.
93
St. Martin Funeral Home v. NLRC, G.R. No. 130866, September 16, 1998.
94
Rules of Court, Rule 43.
95
IRR of ADR, supra note 40, art. 5.37.
96
Id; The Arbitration Law, supra note 68, §23.
97
IRR of ADR, supra note 40, art. 5.39.
 In Labor Law, arbitral awards of compulsory of compulsory arbitrators (i.e. Labor Arbiters)

may be enforced after the perfection of the time to appeal or 10 calendar days from receipt of any

order granted to either party.98

xii. Settlement

In the course of the arbitration, parties may agree to settle the dispute which shall terminate

the arbitration proceedings and be recorded as an arbitral award. This award is called the consent

award based on compromise.99 The same rule applies to arbitration in Labor law.100

B. Disadvantages

i. Costs

In commercial arbitration, considering that the submission is entirely private, the costs shall

be shouldered either by both parties or by the losing party, depending on their agreement. In default

of such agreement, the arbitral tribunal may set the amount of costs and the party/ies to pay for the

costs.101 In compulsory arbitration, the government shoulders the expenses of the proceedings

subject to the payment of filing fees of the parties concerned.102 In voluntary arbitration, a portion

of the costs may be funded by the government through the Special Voluntary Arbitration Fund.103

ii. No Stare Decisis

Arbitral awards do not have the effect of stare decisis. They do not establish precedent.104

Similarly, awards rendered in compulsory arbitration do not establish precedent.105

98
LABOR CODE, art. 229 in relation to Vir-jen Shipping and Marine Services, Inc. v. NLRC, et al., G.R. Nos. 58011-
12, May 11, 2000.
99
IRR of ADR, supra note 40, Art. 5.30; See CIVIL CODE, art. 2038-2040.
100
Philippine Journalists, Inc. et al. v. NLRC, G.R. No. 166421, September 5, 2006.
101
IRR of ADR, supra note 40, art. 5.46.
102
National Labor Relations Commission, Process Flow accessed at: http://nlrc.dole.gov.ph/?q=node/6 (accessed on
June 11, 2018).
103
LABOR CODE, art. 231.
104
GARY BORN, supra note 69, at 432.
105
See Purisimo Cabaobas, et al. v. Pepsi-Cola Products Phil, Inc., G.R. No. 176908, March 25, 2015.
 Below is a table of the advantages and disadvantages of commercial arbitration as

compared and contrasted with those of voluntary and compulsory arbitration. This paper highlights

that commercial arbitration model may best suit resolving labor disputes. Said model allows the

parties to virtually control how the arbitral tribunal may conduct its proceedings and at the same

time provides the parties with a speedy resolution of the dispute through a final and binding arbitral

award.

Commercial Arbitration Voluntary Arbitration Compulsory Arbitration

(Labor Law) (Labor Law
Freedom to appoint Parties are free to Parties are free to Parties are not free to
arbitrators appoint anyone as appoint anyone as appoint anyone as
arbitrator. arbitrator. There arbitrator. The Labor
should be, however, a Arbiters, through a
preference to those raffle, act as
listed under the arbitrators.
accredited voluntary
arbitrators under the
NCMB.
Impartiality and Arbitrators must Arbitrators must Arbitrators must
Independence of possess both possess both possess both
Arbitrators impartiality and impartiality and impartiality and
independence. independence. independence.
Otherwise, they can be Otherwise, they can be Otherwise, they can be
subject to inhibition or subject to inhibition or subject to inhibition or
their arbitral awards their arbitral awards their arbitral awards
rendered can be rendered can be rendered can be
declared null and void. declared null and void. declared null and void.
Consensual Parties are free to Parties are free to The disputes under the
submit any or all submit any or all original and exclusive
disputes to arbitration. disputes to arbitration. jurisdiction of
In disputes concerning compulsory arbitration
the interpretation and are stated by law.
application of CBAs or
company personnel
policies, the voluntary
arbitrators have
original and exclusive
jurisdiction.
Confidentiality All communications, Decisions, resolutions, Decisions, resolutions,
written or oral, and or orders by the or orders by the
even awards are arbitrators may be arbitrators may be
confidential unless accessed. accessed.
 otherwise agreed by Communications made Communications made
the parties and in the during the proceedings during the proceedings
case of court referral. are, however, are, however,
confidential. confidential.
Judicial restraint Regular courts will Regular courts will Regular courts will
generally defer to the generally defer to the generally defer to the
judgment of the judgment of the judgment of the
arbitral tribunal. arbitral tribunal on the arbitral tribunal on the
ground of exhaustion ground of exhaustion
of administrative of administrative
remedies. remedies.
Interim measures The arbitral tribunal, Only the NLRC can Only the NLRC can
with the aid of regular issue injunctions. issue injunctions.
courts in certain cases,
may issue interim
measures.
Competence- The arbitral tribunal The arbitral tribunal The Labor Arbiter or
Competence may initially rule on its may initially rule on its the NLRC division, as
own jurisdiction. own jurisdiction. the case may be, may
initially rule on its own
jurisdiction.
Procedural Flexibility Parties may dictate the Parties may dictate the The proceedings are
rules that would rules that would non-litigious and are
govern the arbitral govern the arbitral just subject to the
tribunal. Place of tribunal. Place of discretion of the Labor
arbitration may be arbitration may be Arbiter or the NLRC
anywhere as agreed anywhere as agreed division, as the case
upon by the parties. upon by the parties. may be, and subject to
the 2011 NLRC Rules of
Procedure. Venue is
with the Labor Arbiter
which has jurisdiction
over the workplace of
the complainant.
Finality of Decisions Immediately final and Final and binding only Final and binding only
binding. after the lapse of the after the lapse of the
period to appeal. period to appeal.
Appeal No appeal but may Rule 43. The subject of Appeal to the NLRC.
subject to an action of appeal may concern The subject of appeal
vacating an award the merits. may concern the
before the regular merits.
courts. The subject of
appeal is limited only
to procedural
infirmities.
Enforcement Subject to the Motion for execution Motion for execution
confirmation of the before the Labor before the Labor
 arbitral award by the
regular courts.
Settlement Subject to settlement
or compromise of the
parties that may be in
the form of an arbitral
award.
Costs Funded by the parties
or the losing party.
Stare Decisis No Stare Decisis
Arbiter after the lapse Arbiter after the lapse
of period to appeal. of period to appeal.
Subject to settlement Subject to settlement
or compromise of the or compromise of the
parties that may be in parties.
the form of an arbitral
award.
Funded by both the Primarily funded by the
government and the government. Parties
parties or the losing may be required to pay
party. filing fees.
No Stare Decisis No Stare Decisis

The next table presents a comparison of the different modes of settling disputes.

Commercial Compulsory Grievance Collective Conciliation

Arbitration Arbitration Procedure Bargaining and
(NLRC and Mediation
LA)
Binding Final and Final and Binding upon Binding upon Final and
Settlement/Resolution binding binding agreement. agreement binding
arbitral decision which lasts upon
award. after the for five agreement.
lapse of the years.
period to
appeal.
Third-party Party- Labor Exclusive Exclusive Appointed
involvement appointed Arbiter, or Bargaining Bargaining Mediator or
arbitrators. NLRC Unit, or the Unit. Conciliator
division, by chosen union by the
raffle. representative, parties or
or chosen through the
representative. auspices of
the NCMB.
Dispute involved Any or all Has original A particular Terms and Any or all
disputes as and exclusive dispute at the conditions of disputes
agreed jurisdiction time. employment. that may be
upon by the over cases submitted
parties. provided by to
law. mediation
or
conciliation.
Conduct of Non- Non-litigious. Non-litigious Non-litigious. Non-
proceedings. litigious. As Subject to and informal. Process is litigious.
agreed the started with Informal.
upon by the discretion of the proposal
 parties. In the Labor to collective
default, as Arbiter or bargaining,
determined the NLRC then
by the division and proceeded
arbitral the 2011 with the
tribunal. NLRC Rules counter-
of proposal of
Procedure. the
employer.
Place of proceedings Anywhere In the venue Workplace. Workplace. Workplace
as agreed where the or
upon by the Labor Arbiter anywhere as
parties. has agreed
jurisdiction upon by the
over the parties.
workplace of
the
complainant.
Remedies Vacation of Appeal from File an action Strike or File an
an award as the Labor with the Labor lockout. action with
set forth by Arbiter to Arbiter. the Labor
law. the NLRC. Arbiter or
with the
voluntary
arbitrator as
the case
may be.
Resolution of the A resolution A resolution There is no There is no There is no
dispute of the of the binding binding binding
dispute is dispute is obligation to obligation to obligation
guaranteed guaranteed settle. settle. to settle.
through an through a
arbitral decision of
award. the Labor
Arbiter.
Costs Funded by Funded by Each party Each party Funded by
the parties, the must bear must bear the parties
or the government his/her own his/her own or the
losing party. subject to costs. costs. government
the filing through the
fees to be NCMB.
paid by the
parties.
 V. Conclusion: The need to expand the original and exclusive jurisdiction of voluntary
arbitration.

In the current legal framework, voluntary arbitration only acquires original and exclusive
jurisdiction over two instances: disputes regarding the interpretation or application of collective
bargaining agreements, and disputes regarding the interpretation or application of company
personnel policies. To the mind of the author, arbitration as a mode of settling labor disputes is
underutilized.
Throughout this paper, the different aspects of arbitration were discussed. Its legal history
showed the arbitration has been used as a mode of settling disputes between parties since pre-
colonial times until the present. That the State has always endeavored, by force of the Constitution,
the promotion of arbitration to resolve differences between employers and employees.
The different modes of settling disputes in the context of labor disputes were enumerated
and dissected to show the advantages and disadvantages of arbitration vis-à-vis such other modes
of settling disputes. This paper looked at the commercial arbitration model in order to highlight
improvements that can be made upon arbitration in the context of arbitration law.
As a final word, the author hopes that arbitration, based on the commercial arbitration
model, should be used in settling all labor disputes between employers and employees. As initially
stated in this paper, the dispute between employers and employees is direct and personal. Only the
parties concerned know the cause of the dispute and its possible resolutions. In the event of a
deadlock between the parties, they can resort to arbitration which is a model that they can control.
Further, such model is conducted by third-party/ies that are appointed by the parties based on trust
and expertise. Through arbitration, the parties can dictate the conduct of the proceedings and, at
the same time, are guaranteed to attain a final and binding arbitral award that finally settles the
disputes between the parties. This mode is in contrast with compulsory arbitration, or even in
voluntary arbitration, which are conducted under the auspices of the government which has a lesser
grasp of the issue of the parties compared to an arbitrator handpicked by the parties in the dispute
themselves.