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Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 157775               October 19, 2007

LEYTE IV ELECTRIC COOPERATIVE, INC., Petitioner,
vs.
LEYECO IV Employees Union-ALU, Respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Resolution¹ dated September 4, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 72336 which dismissed outright petitioner's Petition for Certiorari for adopting a wrong mode of appeal and the CA Resolution² dated February 28, 2003 which denied petitioner's Motion for Reconsideration.

The facts:

On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU (respondent) entered into a Collective Bargaining Agreement (CBA)³ covering petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998.

On June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all employees, as provided for in the CBA.⁴

On June 20, 2000, petitioner, through its legal counsel, sent a letter-reply to Casilan, explaining that after perusing all available pay slips, it found that it had paid all employees all the holiday pays enumerated in the CBA.⁵

After exhausting the procedures of the grievance machinery, the parties agreed to submit the issues of the interpretation and implementation of Section 2, Article VIII of the CBA on the payment of holiday pay, for arbitration of the National Conciliation and Mediation Board (NCMB), Regional Office No. VIII in Tacloban City.⁶ The parties were required to submit their respective position papers, after which the dispute was submitted for decision.

While admitting in its Position Paper⁷ that the employees were paid all of the days of the month even if there was no work, respondent alleged that it is not prevented from making separate demands for the payment of regular holidays concomitant with the provisions of the CBA, with its supporting documents consisting of a letter demanding payment of holiday pay, petitioner's reply thereto and respondent's rejoinder, a computation in the amount of ₱1,054,393.07 for the unpaid legal holidays, and several pay slips.

Petitioner, on the other hand, in its Position Paper,⁸ insisted payment of the holiday pay in compliance with the CBA provisions, stating that payment was presumed since the formula used in determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the employees are already paid their regular and special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.

On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a Decision⁹ in favor of respondent, holding petitioner liable for payment of unpaid holidays from 1998 to 2000 in the sum of ₱1,054,393.07. He reasoned that petitioner miserably failed to show that it complied with the CBA mandate that holiday pay be "reflected during any payroll period of occurrence" since the payroll slips did not reflect any payment of the paid holidays. He found unacceptable not only petitioner's presumption of payment of holiday pay based on a formula used in determining and computing the daily rate of each covered employee, but also petitioner's further submission that the rate of its employees is not less than the statutory minimum wage multiplied by 365 days and divided by twelve.

On April 11, 2001, petitioner filed a Motion for Reconsideration¹⁰ but it was denied by the Voluntary Arbitrator in a Resolution¹¹ dated June 17, 2002. Petitioner received said Resolution on June 27, 2002.¹²

Thirty days later, or on July 27, 2002,¹³ petitioner filed a Petition for Certiorari¹⁴ in the CA, ascribing grave abuse of discretion amounting to lack of jurisdiction to the Voluntary Arbitrator: (a) for ignoring that in said company the divisor for computing the applicable daily rate of rank-and-file employees is 360 days which already includes payment of 13 un-worked regular holidays under Section 2, Article VIII of the CBA;¹⁵ and (b) for holding the petitioner liable for the unpaid holidays just because the payroll slips submitted as evidence did not show any payment for the regular holidays.¹⁶

In a Resolution¹⁷ dated September 4, 2002, the CA dismissed outright petitioner's Petition for Certiorari for adopting a wrong mode of appeal. It reasoned:

Considering that what is assailed in the present recourse is a Decision of a Voluntary Arbitrator, the proper remedy is a petition for review under Rule 43 of the 1997 Rules of Civil Procedure; hence, the present petition for certiorari under Rule 65 filed on August 15, 2002, should be rejected, as such a petition cannot be a substitute for a lost appeal. And in this case, the period for appeal via a petition for review has already lapsed since the petitioner received a copy of the Resolution denying its motion for reconsideration on June 27, 2002, so that its last day to appeal lapsed on July 12, 2002.

x x x x¹⁸

Petitioner filed a Motion for Reconsideration¹⁹ but it was denied by the CA in a Resolution²⁰ dated February 28, 2003.

Hence, the present petition anchored on the following grounds:

(1) The Honorable Court of Appeals erred in rejecting the petition for certiorari under Rule 65 of the Rules of Court filed by herein petitioner to assail the Decision of the Voluntary Arbitrator.²¹

(2) Even if decisions of voluntary arbitrator or panel of voluntary arbitrators are appealable to the Honorable Court of Appeals under Rule 43, a petition for certiorari under Rule 65 is still available if it is grounded on grave abuse of discretion. Hence, the Honorable Court of Appeals erred in rejecting the petition for certiorari under Rule 65 of the Rules of Court filed by herein petitioner.²²

(3) The Honorable Court of Appeals erred in refusing to rule on the legal issue presented by herein petitioner in the petition for certiorari that it had filed and in putting emphasis instead on a technicality of procedure. The legal issues needs a clear-cut ruling by this Honorable Court for the guidance of herein petitioner and private respondent.²³

Petitioner contends that Rule 65 of the Rules of Court is the applicable mode of appeal to the CA from judgments issued by a voluntary arbitrator since Rule 43 only allows appeal from judgments of particular quasi-judicial agencies and voluntary arbitrators authorized by law and not those judgments and orders issued under the Labor Code; that the petition before the CA did not raise issues of fact but was founded on jurisdictional issues and, therefore, reviewable through a special civil action for certiorari under Rule 65; that technicalities of law and procedure should not be utilized to subvert the ends of substantial justice.

In its Comment,²⁴ respondent avers that Luzon Development Bank v. Association of Luzon Development Bank Employees²⁵ laid down the prevailing rule that judgments of the Voluntary Arbitrator are appealable to the CA under Section 1, Rule 43 of the Rules of Court; that having failed to file the appropriate remedy due to the lapse of the appeal period, petitioner cannot simply invoke Rule 65 for its own convenience, as an alternative remedy.

In its Reply,²⁶ petitioner submits that the ruling in Luzon Development Bank does not expressly exclude the filing of a petition for certiorari under Rule 65 of the Rules of Court to assail a decision of a voluntary arbitrator. It reiterates that technicalities of law and procedure should not be utilized to subvert the ends of substantial justice.

It has long been settled in the landmark case Luzon Development Bank that a voluntary arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency; hence, his decisions and awards are appealable to the CA. This is so because the awards of voluntary arbitrators become final and executory upon the lapse of the period to appeal;²⁷ and since their awards determine the rights of parties, their decisions have the same effect as judgments of a court. Therefore, the proper remedy from an award of a voluntary arbitrator is a petition for review to the CA, following Revised Administrative Circular No. 1-95, which provided for a uniform procedure for appellate review of all adjudications of quasi-judicial entities, which is now embodied in Section 1, Rule 43 of the 1997 Rules of Civil Procedure, which reads:

SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission, Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification Administration, Energy Regulatory Board, National Telecommunications Commission, Department of Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees Compensation Commission, Agricultural Inventions Board, Insurance Commission, Philippine Atomic Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and voluntary arbitrators authorized by law.²⁸ (Emphasis supplied)

Section 2, Rule 43 of the 1997 Rules of Civil Procedure which provides that:

SEC. 2. Cases not covered. - This Rule shall not apply to judgments or final orders issued under the Labor Code of the Philippines.

did not alter the Court's ruling in Luzon Development Bank. Section 2, Rule 42 of the 1997 Rules of Civil Procedure, is nothing more than a reiteration of the exception to the exclusive appellate jurisdiction of the CA,²⁹ as provided for in Section 9, Batas Pambansa Blg. 129,³⁰ as amended by Republic Act No. 7902:³¹

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Employees’ Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Court took into account this exception in Luzon Development Bank but, nevertheless, held that the decisions of voluntary arbitrators issued pursuant to the Labor Code do not come within its ambit, thus:

x x x. The fact that [the voluntary arbitrator’s] functions and powers are provided for in the Labor Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that, although the Employees’ Compensation Commission is also provided for in the Labor Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down the procedure for the appealability of its decisions to the Court of Appeals under the foregoing rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.

A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated therein.

This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter.³²

This ruling has been repeatedly reiterated in subsequent cases³³ and continues to be the controlling doctrine. Thus, the general rule is that the proper remedy from decisions of voluntary arbitrators is a petition for review under Rule 43 of the Rules of Court.

Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the tribunal, board or officer exercising judicial or quasi-judicial functions acted in total disregard of evidence material to or decisive of the controversy.³⁴ As this Court elucidated in Garcia v. National Labor Relations Commission³⁵ -

[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals, we emphasized thus:

[I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari proceedings. The cases in which certiorari will issue cannot be defined, because to do so would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that authority is not wanting to show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our superintending control over inferior courts, we are to be guided by all the circumstances of each particular case "as the ends of justice may require." So it is that the writ will be granted where necessary to prevent a substantial wrong or to do substantial justice. ³⁶

In addition, while the settled rule is that an independent action for certiorari may be availed of only when there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law³⁷ and certiorari is not a substitute for the lapsed remedy of appeal,³⁸ there are a few significant exceptions when the extraordinary remedy of certiorari may be resorted to despite the availability of an appeal, namely: (a) when public welfare and the advancement of public policy dictate; (b) when the broader interests of justice so require; (c) when the writs issued are null; and (d) when the questioned order amounts to an oppressive exercise of judicial authority.³⁹

In this case, while the petition was filed on July 27, 2002,⁴⁰ 15 days after July 12, 2002, the expiration of the 15-day reglementary period for filing an appeal under Rule 43, the broader interests of justice warrant relaxation of the rules on procedure. Besides, petitioner alleges that the Voluntary Arbitrator’s conclusions have no basis in fact and in law; hence, the petition should not be dismissed on procedural grounds.

The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position Paper⁴¹ that the employees were paid all the days of the month even if not worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of employees’ salaries gains significance.

In Union of Filipro Employees v. Vivar, Jr.⁴² the Court held that "[t]he divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee’s salary and in the computation of his daily rate". This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano,⁴³ Producers Bank of the Philippines v. National Labor Relations Commission⁴⁴ and Odango v. National Labor Relations Commission,⁴⁵ among others.⁴⁶

In Wellington,⁴⁷ the monthly salary was fixed by Wellington to provide for compensation for every working day of the year including the holidays specified by law – and excluding only Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is, it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed actually covered payment for 314 days of the year, including regular and special holidays, as well as days when no work was done by reason of fortuitous cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause not attributable to the employees.

In Producers Bank,⁴⁸ the employer used the divisor 314 in arriving at the daily wage rate of monthly salaried employees. The divisor 314 was arrived at by subtracting all Sundays from the total number of calendar days in a year, since Saturdays are considered paid rest days. The Court held that the use of 314 as a divisor leads to the inevitable conclusion that the ten legal holidays are already included therein.

In Odango v. National Labor Relations Commission,⁴⁹ the Court ruled that the use of a divisor that was less than 365 days cannot make the employer automatically liable for underpayment of holiday pay. In said case, the employees were required to work only from Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that the employees were deprived of their holiday pay for some or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum of 287 days.

In this case, the employees are required to work only from Monday to Friday.1âwphi1 Thus, the minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably, petitioner's employees are being given their holiday pay.

Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting respondent's claim of non-payment of holiday pay, a "double burden" was imposed upon petitioner because it was being made to pay twice for its employees' holiday pay when payment thereof had already been included in the computation of their monthly salaries. Moreover, it is absurd to grant respondent's claim of non-payment when they in fact admitted that they were being paid all of the days of the month even if not worked. By granting respondent's claim, the Voluntary Arbitrator sanctioned unjust enrichment in favor of the respondent and caused unjust financial burden to the petitioner. Obviously, the Court cannot allow this.

While the Constitution is committed to the policy of social justice⁵⁰ and the protection of the working class,⁵¹ it should not be supposed that every labor dispute would automatically be decided in favor of labor. Management also has it own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.⁵²

WHEREFORE, the petition for review is GRANTED. The Resolutions dated September 4, 2002 and February 28, 2003 of the Court of Appeals in CA-G.R. SP No. 72336 are REVERSED and SET ASIDE. The Decision dated March 1, 2001 and Resolution dated June 17, 2002 of the Voluntary Arbitrator are declared NULL and VOID.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MINITA V. CHICO-NAZARIO Associate Justice

ANTONIO EDUARDO B. NACHURA Associate Justice

RUBEN T. REYES
Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes

* The present petition impleaded the Court of Appeals as respondent. Pursuant to Section 4, Rule 45 of the Rules of Court, the name of the Court of Appeals is deleted from the title.

¹ Penned by Associate Justice Salvador J. Valdez, Jr. (now deceased) and concurred in by Associate Justices Mercedes Gozo-Dadole (retired) and Amelita G. Tolentino, CA rollo, p. 55.

² Id. at 73.

³ CA rollo, p. 18.

⁴ Id. at 24 and 22.

⁵ Id. at 25.

⁶ Id. at 29.

⁷ Id. at 30.

⁸ CA rollo, p. 38.

⁹ Id. at 46.

¹⁰ Id. at 49.

¹¹ Id. at 53.

¹² Id. at 8.

¹³ CA rollo, p. 4. Envelope showing date of posting by registered mail on July 27, 2002. Petition was received by the CA on August 15, 2002.

¹⁴ Id. at 3.

¹⁵ Id. at 9.

¹⁶ Id. at11.

¹⁷ Supra note 1.

¹⁸ Id.

¹⁹ Id. at 56.

²⁰ Supra note 2.

²¹ CA rollo, p. 19.

²² Id. at 24.

²³ Id. at 26.

²⁴ Id. at 116.

²⁵ G.R. No. 120319, October 6, 1995, 249 SCRA 162.

²⁶ Rollo, p. 123.

²⁷ Supra note 22 at 168, citing Volkschel Labor Union v. National Labor Relations Commission, No. L-39686, June 25, 1980, 98 SCRA 314.

²⁸ 1997 Rules of Civil Procedure, Rule 43, Sec. 1.

²⁹ Alcantara, Jr. v. Court of Appeals, G.R. No. 143397, August 6, 2002, 386 SCRA 370, 379.

³⁰ An Act Reorganizing the Judiciary, Appropriating Funds Therefor, and for Other Purposes.

³¹ An Act Expanding the Jurisdiction of the Court of Appeals, Amending for the Purpose Section Nine of Batas Pambansa Blg. 129, as Amended, Known as The Judiciary Reorganization Act of 1980.

³² Supra note 23, at 170-171.

³³ See Centro Escolar University Faculty and Allied Workers Union-Independent v. Court of Appeals, G.R. No. 165486, May 31, 2006, 490 SCRA 61; Nippon Paint Employees Union-Olalia v. Court of Appeals, G.R. No. 159010, November 19, 2004, 443 SCRA 286; Alcantara, Jr. v. Court of Appeals, supra.

³⁴ Maraguinot, Jr. v. National Labor Relations Commission, 348 Phil. 580; 284 SCRA 539 (1998): Sajonas v. National Labor Relations Commission,, G.R. No. 49286, March 15, 1990, 183 SCRA 182, 186.

³⁵ G.R. No. 147427, February 7, 2005, 450 SCRA 535.

³⁶ Supra note 35, at 548-549.

³⁷ 1997 Rules of Civil Procedure, Rule 65, Sec. 1.

³⁸ Madrigal Transport, Inc. v. Lapanday Holdings Corporation, G.R. No. 156067, August 11, 2004, 436 SCRA 123, 127.

³⁹ Madriaga v. Court of Appeals, G.R. No. 142001, July 14, 2005; Martillano v. Court of Appeals, G.R. No. 148277, June 29, 2004; Heirs of Lourdes Padilla v. Court of Appeals, 469 Phil. 196, 204 (2004); Metropolitan Manila Development Authority v. JANCOM Environmental Corp., 425 Phil. 961, 974 (2002); Uy Chua v. Court of Appeals, 398 Phil. 17, 30 (2000).

⁴⁰ CA rollo, p. 4.

⁴¹ Id. at 34.

⁴² G.R. No. 79255, January 20, 1992, 205 SCRA 200.

⁴³ G.R. No. 114698, July 3, 1995, 245 SCRA 561

⁴⁴ G.R. No. 100701, 28 March 2001, 355 SCRA 489, 508.

⁴⁵ G. R. No. 147420, June 10, 2004, 431 SCRA 633, 641-642.

⁴⁶ See Trans-Asia Phils. Employees Association v. National Labor Relations Commission, G. R. No. 118289, December 13, 1999, 320 SCRA 547.

⁴⁷ Supra note 43.

⁴⁸ Supra note 44.

⁴⁹ Supra note 45.

⁵⁰ 1987 Constitution, Article II, Sec. 10.

⁵¹ 1987 Constitution, Article II, Sec. 18.

⁵² Lawin Security Services, Inc. v. National Labor Relations Commission, 339 Phil. 330 (1997); Sosito v. Aguinaldo Development Corporation, No. L-48926, December 14, 1987, 156 SCRA 392, 396.

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