Labor Standards

Voluntary arbitration

1. Concepts

“Voluntary arbitration” – refers to the mode of settling labor-management disputes by which the parties select a competent, trained and impartial persons who shall decide on the merits of the case and whose decisions is final, executory and unappealable. (Section 1[d], NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings)

“Voluntary Arbitrator” — Arbitrator for short, refers to any person who has been accredited by the Board as such, or any person named or designated in the collective bargaining agreement by the parties as their voluntary arbitrator, or one chosen with the assistance of the Department of Labor and Employment, pursuant to a selection procedure agreed upon in the CBA. (Section 1[e], Ibid.)

“Collective Bargaining Agreement” — CBA for short, refers to the negotiated contract between a duly recognized of certified exclusive bargaining agent of rank-and-file workers and the employer concerning wages, hours of work and all other terms and conditions of employment on the appropriate bargaining agreement, including mandatory provisions for grievance and arbitration machineries. (Section 1[f], Ibid.)

“Grievance” — is a complaint or dissatisfaction arising from the interpretation or implementation of the collective bargaining agreement (CBA) and those arising from interpretation or enforcement of personnel policies. (Section 1[g], Ibid.)

“Grievance Procedure” — refers to the system of grievance settlement at the plant level as provided in the collective bargaining agreement. It usually consists of successive steps starting at the level of complaint and his immediate supervisor and ending, when necessary, at the level of the top union and company officials. (Section 1[h], Ibid.)

a. Automatic referral

When grievances are raised by employees, the Labor Code requires that these be resolved within seven (7) days via the grievance machinery. Otherwise, if the grievances remain unresolved, they shall be automatically referred to voluntary arbitration as provided for in the CBA.

ART. 273. [260] Grievance Machinery and Voluntary Arbitration. x x x   All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the Collective Bargaining Agreement. (P.D. 442, Labor Code of the Philippines)

b. Designation of voluntary arbitrators

In order to properly implement the automatic referral, the Labor Code requires that the CBA should already “name and designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or include in the agreement a procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly accredited by the [NCMB].” (Paragraph 3, Article 273, P.D. 442, Labor Code of the Philippines)

Should the CBA fail to indicate the voluntary arbitrator/s or panel of voluntary arbitrators, the NCMB “shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the Collective Bargaining Agreement, which shall act with the same force and effect as if the Arbitrator or panel of Arbitrators have been selected by the parties as described above. (Ibid.)

2. Powers and authority

a. Power to hear, receive evidence, and decide

ART. 276. [262-A] Procedures. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have the power to hold hearings, receive evidences and take whatever action is necessary to resolve the issue or issues subject of the dispute, including efforts to effect a voluntary settlement between parties. (P.D. 442, Labor Code of the Philippines)

b. Authority to Conciliate and Mediate

The voluntary arbitrator or panel of voluntary arbitrators are encouraged to conciliate or mediate to aid the parties in reaching a voluntary settlement of the dispute, before proceeding with arbitration. (Section 1, Rule V, NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings)

c. Compulsory Powers

The voluntary arbitration or panel of voluntary arbitrators shall have the power to require any person to attend hearing/s as a witness. They shall have the power to subpoena witnesses and documents when the relevancy of the testimony and the materiality thereof have been demonstrated to the arbitrators. (Section 2, Rule V, Ibid.)

3. Jurisdiction of Voluntary Arbitrators

a. Original and exclusive jurisdiction

The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide:

1) All unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement (Article 274, Ibid.); and

2) All unresolved grievances arising from the interpretation or enforcement of company personnel policies referred to in Article 273 of the Labor Code. (Ibid);

3) All unresolved wage distortion cases as a result of the application of wage order issued by any Regional Tripartite Wages and Productivity Boards to be decided, unless otherwise agreed by the parties in writing, within ten (10) calendar days from the time said dispute was referred to voluntary arbitration; and

4) All disputes, grievances or other matters arising from the interpretation and implementation of productivity incentives  program which remains unresolved within twenty (20) calendar days from the time of the submission to labor-management committee. (See Republic Act Nos. 6727 and 6971, cited in Section 1, Rule IV, NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings)

1) CBA violations not gross in character

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. (Article 274, P.D. 442, Labor Code)

“Gross violations of Collective Bargaining Agreement” – for purposes of this jurisdiction of the voluntary arbitrators, shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. (Ibid.)

The NLRC, 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. (Paragraph 2, Article 274, Ibid.)

b. Concurrent jurisdiction

If the employer and the employee mutually consent to submit their labor dispute for resolution before voluntary arbitrators or a panel of voluntary arbitrators, then the latter shall have the power to “hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.” (Article 275, Ibid.)

ART. 275. [262] Jurisdiction over other Labor Disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, “shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. (P.D. 442, Labor Code of the Philippines)

Otherwise, if the parties do not mutual consent/agree to resorting to voluntary arbitration, then compulsory arbitration via the NLRC Labor Arbiter shall govern.

c. When Jurisdiction is Exercised

The voluntary arbitrator or panel of arbitrators chosen by the parties shall exercise jurisdiction over specific case/s upon receipt of a written Submission Agreement duly signed by both parties. (Section 3, Rule IV, NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings)

1) Contents of Submission Agreement

The Agreement shall contain, among others the following:

1) agreement to submit to arbitration;

2) specific issue/s or dispute/s to be submitted for resolution;

3) name of the arbitrator or panel of arbitrators;

4) agreement to perform or abide the decision or award. (Section 4, Rule 3, Ibid.)

2) Copies of Submission Agreement

Parties to the Submission Agreement shall furnish the concerned Regional Branch of the NCMB two (2) copies of the Agreement, one for the Regional Branch and the other for the Central Office. A sample of the Submission Agreement is attached. (Section 5, Rule 3, Ibid.)

4. Proceedings before Voluntary Arbitrator

a. Nature of Proceedings

The proceedings before a voluntary arbitrator are non-litigious in nature. They are not governed by technical rules applicable to court or judicial proceedings, but they must at all times, comply with the requirements of due process. (Section 1, Rule VI, NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings)

1) Attendance to hearings

All parties to the dispute shall be entitled to attend the arbitration proceedings. The attendance of any third party or the exclusion of any witness from the proceedings shall be determined by the Voluntary Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned for cause or upon agreement by the parties. (Paragraph 2, Article 276, P.D. 442, Labor Code)

b. Setting of Initial Conference: Notice to Parties

Within two (2) days from receipt of the Submission Agreement, the voluntary arbitrator, shall set the date, time and place of the initial conference, the parties shall be encouraged to explore all possible means of effecting a voluntary settlement of the dispute between them. Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be reduced in writing and signed by the parties before the voluntary arbitrator. (Section 2, Rule VI, NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings)

In the absence of any voluntary settlement, the voluntary arbitrator shall proceed with the hearing of the case on its merits. (Paragraph 2, Section 2, Rule VI, Ibid.)

c. Recording

The arbitrator shall arrange for the taking of stenographic record of proceedings and the testimony of witnesses when such record is requested by one or more parties, and payment of the cost thereof is assumed by such requesting party or parties. (Section 3, Rule VI, Ibid.)

d. Attendance of Persons

Persons having a direct interest in the subject of arbitration shall have right to attend any hearing; but the attendance of any person shall be at the discretion of the arbitrator. (Section 4, Rule VI, Ibid.)

e. Simplication of Arbitrable Issue/s

The arbitrator must see to it that he understands clearly the issue/s submitted to arbitration. If, after conferring with the parties, he finds the necessity to clarify/simplify the issue/s, he shall assist the parties in the reformulation of the same. (Section 5, Rule VI, Ibid.)

f. Arbitration Hearing

In the conduct of hearing, the arbitrator shall provide the parties adequate opportunities to be heard. He shall control the proceedings and see to it that proper decorum is observed. He must render a ruling of the issue/s raised in the course of the proceedings. He must treat all significant aspects of the proceedings as confidential in nature unless confidentiality is waived by the parties. (Section 6, Rule VI, Ibid.)

In the absence of any agreement, the normal order of the arbitrary hearing is, as follows:

1. Opening Statements by the Parties. The voluntary arbitrator may, at the commencement of the hearing, ask both parties for a brief statement of the issues in controversy. He shall have wide latitude of discretion in determining the order of presentation. He may decide who of the parties will present first a brief statement of the issues in controversy. In disciplinary cases, it is the party who disturbed the status quo in the relationship who will present first the opening statement. In cases of contract interpretation, the statement shall be presented first by the initiating party.

The voluntary arbitrator may require the parties to submit position papers, if the opening statement are not adequate to form a clear basis for understanding the positions of the parties with respect to the arbitrable issues and the possible evidences that the parties may present to support their respective positions. Thereafter, the voluntary arbitrator shall determine whether or not a hearing is necessary.

2. Stipulation of Facts. The voluntary arbitrator shall always attempt to draw the parties to stipulate facts which are no longer disputable, leaving the presentation and examination of evidence, only to such facts that are still in dispute.

3. Presentation of Evidence, Documentary or Oral, by Parties. Testimonies of witnesses shall be reduced in affidavit forms to avoid direct examination. All evidence, oral or documentary, must be subjected to examination by the opposing party to determine their authenticity.

The examination of evidence may follow the order similar to court litigations such direct examination, cross-examination, re-direct examination or re-cross examination. Such processes shall be understood merely as an aid to the arbitrator in determining the real facts of the case.

The voluntary arbitrator may propound questions to the witnesses directly after the parties are through with their examination, if he believes that pertinent facts have not been elicited, or when he feels that the parties or one of the parties is not capable of propounding the proper question, or when the parties or one of them is not represented by a counsel.

4. Recall of Witness, Rebuttal Evidence, Ocular Inspection, Etc. The necessity of recalling witnesses, acceptance of rebuttal evidence, the production of necessary documents, the

presentation of expert evidence and other modes of discovery shall be determined by the arbitrator motu propio or upon motion or request of either party.

The arbitrator may take an ocular inspection of any matter or premises which are in dispute, but such inspection shall be made only in the presence of all parties to the arbitration, unless any party who shall have received notice thereof fails to appear, in which event such inspection shall be made in the absence of such party.

5. Hearing and Judgment in Default. The hearing may proceed in the absence of any party who, after due notice, fails to be present at such hearing or fails to obtain an adjournment thereof. An award shall not be made solely on the default of a party. The arbitrator shall require the other party to submit such evidence as may be required for making an award.

6. Formal Offer of Evidence. The formal offer of evidence may be dispensed with unless otherwise agreed upon by the parties.

7. Closing of Hearing: Statement of the Parties: Submission of Briefs and Memoranda. In general, the closing statements of the parties terminate the hearing of the case if such would be sufficient for the voluntary arbitrator to form a basis for his award or decision. Otherwise, he may require the parties to submit briefs or closing memoranda. Definite time limit for the filing of such briefs or memoranda shall be fixed by the arbitrator at the close of the hearing.

8. Appreciation of Evidence. The relevancy and materiality of the evidence presented may be solely determined by the arbitrator and he may allow or accept evidence for his own appreciation of evidence, the arbitrator shall not be bound by the Rules of Court pertaining to evidence. (Paragraph 2, Section 6, Rule VI, Ibid.)

5. Arbitration Awards

a. Decision/Award

The final arbitral disposition of issue/s submitted to voluntary arbitration is the Decision. The disposition may take the form of a dismissal of a claim or grant of specific remedy, either by way of prohibition of particular acts or specific performance of particular acts. In the latter case the decision is called an Award. (Section 1, Rule VII, Ibid.)

b. Period to Render Decision/Award

The award or decision of voluntary arbitrator must be rendered within the time specified by the parties in their agreement but in no case to exceed twenty (20) calendar days from submission of the case to voluntary arbitration. (Section 2, Rule VII, Ibid.)

ART. 276. [262-A] Procedures…   x x x   Unless the parties agree otherwise, it shall be mandatory for the Voluntary Arbitrator or panel of Voluntary Arbitrators to render an award or decision within twenty (20) calendar days from the date of submission of the dispute to voluntary arbitration. (Paragraph 3, Article 276, P.D. 442, Labor Code)

c. Settlement During Arbitration

In the event that the parties to an arbitration have, during the course of such arbitration, settled their dispute, they may request the arbitrator to embody the settlement in the award to be rendered and signed by the arbitrator. (Section 3, Rule VII, NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings)

d. Basis of the Decision/Award

The award must state in clear, concise and definite terms the facts and the basis upon which the award was rendered. It must be based on the terms of the collective agreement and or existing and established practices and precedents. (Paragraph 2, Section 4, Rule VII, Ibid.)

In cases involving monetary claims, the award of the voluntary arbitrator shall specify the amount granted and the formula used in the computation if any. (Paragraph 2, Section 4, Rule VII, Ibid.)

ART. 276. [262-A] Procedures…   x x x   The award or decision of the Voluntary Arbitrator or panel of Voluntary Arbitrators shall contain the facts and the law on which it is based. It shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties. (Paragraph 4, Article 276, P.D. 442, Labor Code)

e. Extent of Award

The Arbitrator/s shall have the power to decide only those matters which have been submitted to arbitration. They may grant any remedy or relief which they deem just and equitable and within the scope of the submission agreement of the parties and shall include, but not limited to, the specific performance of particular act or acts. (Section 5, Rule VII, NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings)

f. Finality of Award of Decision

Awards or decisions of voluntary arbitrator become final and executory after ten (10) calendar days from receipt of copies of the award or decision by the parties. (Section 6, Rule VII, Ibid.)

g. Enforcement of Award

Both parties shall comply voluntarily and faithfully with the award. In instances of noncompliance by either or both parties, a motion to enforce/execute the award may be filed with the voluntary arbitrator who may issue a writ of execution requiring either the sheriff of the National Labor Relations Commission or the regular courts or any public official whom the parties may designate in the submission agreement, to execute the final decision or award.

In the absence of the voluntary arbitrator or in case of his incapacity, the motion shall be filed with the Labor Arbiter in the region having jurisdiction over the workplace. The filing of a motion for the issuance of writ of execution is without prejudice to any other action the aggrieved party may take against the non-complying party such as a petition for contempt or imposition of fines and penalties. (Section 7, Rule VII, Ibid.)

ART. 276. [262-A] Procedures…   x x x   Upon motion of any interested party, the Voluntary Arbitrator or panel of Voluntary Arbitrators or the Labor Arbiter in the region where the movant resides, in case of the absence or incapacity of the Voluntary Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue a writ of execution requiring either the sheriff of the Commission or regular courts or any public official whom the parties may designate in the submission agreement to execute the final decision, order or award. (Last paragraph, P.D. 442, Labor Code)

h. Monitoring and Reporting Requirements

In addition to the requirements to furnish the concerned Regional Branch with two (2) copies of the Submission Agreement, the voluntary arbitrator shall furnish the Regional Branch two (2) copies of the award or decision immediately after the issuance thereof. The Regional Branch shall keep one copy for their file and shall transmit the other copy to the Central Office.

A Monthly Status Report of Voluntary Arbitration cases shall be accomplished by accredited voluntary arbitrators utilizing VAD Form No. 1 and shall be submitted on or before the 7th of the month to concerned Regional Branches for every case being handled from date of acceptance to the date of enforcement of award/decision. Copy of the VAD Form No. 1 is attached. (Section 8, Rule VII, Ibid.)

6. Costs of voluntary arbitration fee

ART. 277. [262-B] Cost of Voluntary Arbitration Fee. The parties to a Collective Bargaining Agreement shall provide therein a proportionate sharing scheme on the cost of voluntary arbitration including the Voluntary Arbitrato or panel of Voluntary Arbitrators, whether shouldered wholly by the parties or subsidized by the Special Voluntary Arbitration Fund, shall take into account the following factors: (a) Nature of the case; (b) Time consumed in hearing the case; (c) Professional standing of the Voluntary Arbitrator; (d) Capacity to pay of the parties; and (e) Fees provided for in the Revised Rules of Court. (P.D. 442, Labor Code of the Philippines)

References

Presidential Decree No. 442, a.k.a. Labor Code of the Philippines

NCMB Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings

Disclaimer: All information is for educational and general information only. These should not be taken as professional legal advice or opinion. Please consult a competent lawyer to address your specific concerns. Any statements or opinions of the author are solely his own and do not reflect that of any organization he may be connected.

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