G.R. No. 153310.
 March 2, 2004.* Relative to the construction of a condominium project called "The Salcedo Park,"
MEGAWORLD GLOBUS ASIA, INC., petitioner, vs. DSM CONSTRUCTION
AND DEVELOPMENT CORPORATION and PRUDENTIAL GUARANTEE
AND ASSURANCE, INC., respondents.
Remedial Law; Appeals; Construction Industry Arbitration Commission
(CIAC); Decisions of the CIAC may be appealed to the Court of Appeals not only on
questions of law but also on questions of fact and mixed questions of law and fact.—
Under Section 19 of Executive Order No. 1008, the CIAC’s arbitral award “shall be
final and inappealable except on questions of law which shall be appealable to the
Supreme Court.” In Metro Construction, however, this Court held that, with the
modification of E.O. No. 1008 by subsequent laws and issuances, decisions of the
CIAC may be appealed to the Court of Appeals not only on questions of law but also
on questions of fact and mixed questions of law and fact.
Same; Same; Findings of fact of administrative agencies and quasi-judicial
bodies, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but finality when affirmed
by the Court of Appeals.—Considering that the computations, as well as the
propriety of the awards of the Arbitral Tribunal, are unquestionably factual issues
that have been discussed and ruled upon by Arbitral Tribunal and affirmed by the
Court of Appeals, we cannot depart from such findings. Findings of fact of
administrative agencies and quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not
only respect, but finality when affirmed by the Court of Appeals.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Benitez, Parlade, Africa, Herrera, Parlade & Panga Law Office for
petitioner.
     Garrido & Associates Law Offices for respondent DSM Construction & Dev.
Corp.
     Felipe Antonio B. Remollo for respondent PGAI.
TINGA, J.:
Before this Court is a Petition for Review on Certiorari assailing the Decision dated
February 14, 2002, of the Court of Appeals in CA G.R. SP No. 67432,1 which
affirmed the Decision2 of the Construction Industry Arbitration Commission
(CIAC)3 dated September 8, 2001, in CIAC Case No. 22-2000 finding petitioner
Megaworld Globus Asia, Inc., liable to DSM Construction in the amount of
₱62,760,558.49.
The antecedents are as follows:
located at H.V. dela Costa St., Salcedo Village, Makati City, the project owner,
Megaworld, entered into three separate contracts with DSM Construction, namely:
(1) Contract for Architectural Finishing Works; (2) Contract for Interior Finishing
Works; and (3) Contract for Supply and Installation of Kitchen Cabinets and Closets.
The total contract price, which was initially placed at ₱300 Million, was later
reduced to ₱240 Million when the items for kitchen cabinets and walk-in closets
were deleted.4 The contracts also contain a stipulation for Retention Money, which is
a portion of the total contract price (usually, as in this case, 10%) set aside by the
project owner from all approved billings and retained for a certain period to
guarantee the performance by the contractor of all corrective works during the
defect-liability period which, in this case, is twelve months from the issuance of
the Taking Over Certificate of Works.5
The Letter of Award for Architectural Finishing Works provides that the period for
commencement and completion shall be twelve months, from August 1, 1997 to July
31, 1998. However, on February 21, 2000, representatives of both Megaworld and
DSM Construction entered into an Interim Agreement whereby they agreed on a new
schedule of the turnover of units from the 26th floor to the 40th floor, which was the
last of the contracted works.6 The consideration agreed upon in the Interim
Agreement was ₱53,000,000.00. Of this amount, ₱3,000,000.00 was to be released
immediately while five (5) equal installments of ₱7,000,000.00 were to be released
depending on the turn-over of units from the 26th floor to the 40th floor. The
remaining amount of ₱15,000,000.00 of the ₱53,000,000.00 consisted of half of the
retention money.7
Because of the differences that arose from the billings, DSM Construction filed on
August 21, 2002, a Complaint before the CIAC for compulsory arbitration, claiming
payment of ₱97,743,808.33 for the outstanding balance of the three construction
contracts, variation works, labor escalation, preliminaries loss and expense, earned
retention money, interests, and attorney’s fees. 8 DSM Construction alleged that it
already commenced the finishing works on the existing 12 floors on August 1, 1997,
instead of waiting for the entire 40-floor structure to be completed. At one time,
DSM Construction worked with other contractors whose work often depended on,
interfered or conflicted with said contractors. Delay by a trade contractor would start
a chain reaction by delaying or putting off other works.9
Interposing mainly the defense of delay in the turn-over of units and the poor quality
of work of DSM Construction, Megaworld filed its Answer and made a counter-
claim for loss of profits, liquidated damages, costs of take-over and rectification
works, administration expenses, interests, attorney’s fees and cost of arbitration in
the total amount of ₱85,869,870.28.10
1
Prudential Guarantee and Assurance, Inc. (PGAI), which issued a Performance
Bond to guarantee Megaworld’s contractual obligation on the project, was impleaded
by Megaworld as a third-party respondent.11
On March 28, 2001, the parties signed before the members of the Arbitral Tribunal
the Terms of Reference12 (TOR) where they setforth their admitted facts,13 respective
documentary evidence,14 summary of claims15 and issues to be resolved by the
tribunal.16 After presenting their evidence in the form of affidavits of witnesses, 17 the
parties submitted their respective memoranda/draft decisions.18
On October 19, 2001, the Arbitral Tribunal promulgated its Decision dated
September 28, 2001, awarding ₱62,760,558.49 to DSM Construction and
₱9,473,799.46 to Megaworld.19
Megaworld filed a Petition for Review under Rule 43 of the Rules of Civil Procedure
before the Court of Appeals. It faulted the Arbitral Tribunal for finding that DSM
Construction achieved a 95.56% level of accomplishment as of February 14, 2000;
for absolving DSM Corporation of the consequences of the alleged delay in the
performance of its work; and for ruling that DSM Construction had complied with
the contractual requirements for filing requests for extension. Megaworld likewise
questioned the sufficiency of evidence to justify the awards for liquidated damages;
the balance of the contract price; the balance of amounts payable on account of
the Interim Agreement of February 21, 2000; the amount of ₱6,596,675.55 for
variation orders; the amount of ₱29,380,902.35 as reimbursement for
preliminaries/loss and expense; the amount of ₱413,041.52 for labor escalation costs;
and the balance of the retention money in the amount of ₱14,700,000.00 despite its
award of ₱11,820,000.00 under the February 21, 2000, Interim Agreement. Finally,
Megaworld claimed that the Arbitral Tribunal erred in denying its claim for
liquidated damages, expenses incurred for the cost of take-over work, administrative
expenses, and its recourse against PGAI and for limiting its recovery for rectification
work to only ₱9,197,863.55.20
On February 14, 2002, the Court of Appeals promulgated its Decision21 affirming
that of the Arbitral Tribunal. The court pointed out that only questions of law may be
raised before it on appeal from an award of the CIAC.22 That pronouncement
notwithstanding, the Court of Appeals proceeded to review the decision of the
Arbitral Tribunal and found the same to be amply supported by evidence. 23
Megaworld sought reconsideration of the Court of Appeals’ Decision arguing,
among other things, that the appellate court ignored the ruling in Metro
Construction, Inc. v. Chatham Properties24 that the review of the CIAC award may
involve either questions of fact, law, or both fact and law.
The Court of Appeals denied the motion for reconsideration in its Resolution25 dated
April 25, 2002. While acknowledging that the findings of fact of the CIAC may be
questioned in line with Metro Construction,26 the appellate court stressed that the
tribunal’s decision is not devoid of factual or evidentiary support.
Megaworld elevated the case to this Court through the present Petition, advancing
the following grounds, viz:
I
THE COURT OF APPEALS IN EFFECT REFUSED TO HEED THE RULE LAID
DOWN BY THIS Honorable Court in the Metro Construction, INC. vs. Chatham
properties, inc. case when it dismissed mgai’s petition despite the grave questions of
both fact and law brought before it by the petitioner.
II
the finding of the appellate court that the decision was based on substantial evidence
adduced by both parties sans any review of the record or of attachments of dsm is
fatally wrong, such finding being merely an adoption of the tribunal’s decision
which, as earlier pointed out, was not supported by competent, credible and
admissible evidence.
III
the court of appeals seriously erred in giving blanket approval of all the unfounded
claims and conclusions of the ciac arbitral tribunal’s SEPTEMBER 28, 2001
decision to the detriment of petitioner’s cardinal right to due process, particularly to
its right to administrative due process.
IV
the findings and conclusions made by a highly partisan ciac arbitral tribunal have no
basis on the evidence on record. hence, the exception to the rule that only questions
of law may be brought to the honorable court is applicable in the case AT bar. 27
Although Megaworld, at the outset,28 intimates that the case involves grave questions
of both fact and law, a cursory reading of the Petition reveals that, except for the
amorphous advertence to administrative due process, the alleged errors
fundamentally involve only questions of fact. Megaworld’s plea for the Court to pass
upon the findings of facts of the Arbitral Tribunal, which were upheld by the
appellate court, must perforce fail.
2
To jumpstart its bid, Megaworld exploits the Court of Appeals’ pronouncement in the 31st floor while the 32nd to the 34th floors were only 60% completed.35 Megaworld
the assailed decision that only questions of law may be raised before it from an insisted, therefore, that the level of accomplishment was nowhere near 90%.
award of the CIAC. The appellate court did so, Megaworld continues, in evident
disregard of Metro Construction.29 DSM Construction countered that Megaworld, in claiming a level of accomplishment
of only 90%, contradicted its own Project Manager, TCGI,36 which came up with a
Under Section 19 of Executive Order No. 1008,30 the CIAC’s arbitral award "shall be different percentage of accomplishment that are notably higher than Megaworld’s
final and inappealable except on questions of law which shall be appealable to the computation.37
Supreme Court." In Metro Construction, however, this Court held that, with the
modification of E.O. No. 1008 by subsequent laws and issuances,31 decisions of the In resolving this issue, the Arbitral Tribunal relied on the computation of Davis
CIAC may be appealed to the Court of Appeals not only on questions of law but also Langdon & Seah (DLS), the project’s independent surveyor,38 which found the level
on questions of fact and mixed questions of law and fact. of accomplishment as of February 14, 2000, to be 95.56%. DLS’s computation is
recited in Exhibit "NN",39 thus:
Of such subsequent laws and issuances, only Section 1,32 Rule 43 of the 1997 Rules
of Civil Procedure expressly mentions the CIAC. While an argument may be made
that procedural rules cannot modify substantive law, adding in support thereof that Architectural Finishing :40
Section 1, Rule 43 has increased the jurisdiction of the Court of Appeals by
The 24th Progress Billing
expanding the scope of review of CIAC awards, or that it contravenes the rationale
evaluated by DLS covering the
for arbitration, extant from the record is the fact that no party raised such argument.
period November 15, 1999 to
Consequently, the matter need not be delved into. Php213,658,888.7741Php223,456,756.684
December 15, 1999 over the
Contract Price for Architectural
In any case, the attack against the merits of the Court of Appeals’ Decision must fail. Finishing Works.
Although Metro Construction may have been unbeknownst to the appellate court
when it promulgated its Decision, the fact remains that, as noted therein,33 it Kitchen Cabinets & Bedroom Closets:43
reviewed the findings of facts of the CIAC and ruled that the findings are amply
supported by the evidence. The 9th Progress Billing evaluated
by DLS covering the period
The Court of Appeals is presumed to have reviewed the case based on December 1, 1999 to December 9,
Php26,228,091.7344Php28,556,915.174
the Petition and its annexes, and weighed them against the Comment of DSM 1999 over the contract price for
Construction and the Decision of the Arbitral Tribunal to arrive at the conclusion that Kitchen Cabinet and Bedroom
the said Decision is based on substantial evidence. In administrative or quasi-judicial Closet.
bodies like the CIAC, a fact may be established if supported by substantial evidence
or that amount of relevant evidence which a reasonable mind might accept as Interior Finishing Works:46
adequate to justify a conclusion.34
The 13th Progress Billing
evaluated by DLS covering the
The tenability of the assailed Decision is clear from the following discussion of the period January 8, 2000 to February
arguments raised by Megaworld before the Court of Appeals which significantly are Php49,383,114.6747Php50,685,416.554
7, 2000 for the Interior Finishing
the same arguments it has raised before this Court. Works over the contract price for
Interior Finishing Work.
Issue of Accomplishment Level
Php213,658,888 Php26,228,091 Php49,383,114 289,270,295.17=9
Megaworld contested the finding of 95.56% level of accomplishment by the Arbitral .77 + .72 + .67 = 5.56%
Tribunal, alleging that the receipts DSM Construction issued for payments under
the Interim Agreement show that the latter only achieved 90% accomplishment up to Php223,456,756 Php Php50,685,416 302,699,097.40

3

.68 28,556,915.17 .55
Clearly, thus, CIAC’s finding that the level of accomplishment of DSM Construction
as of February 12, 2002, stood at 95.56% was affirmed by the Court of Appeals
because it is supported by substantial evidence.
The Court of Appeals also noted that the Arbitral Tribunal did not give due course to
all of DSM Construction’s claims. Indeed, the Arbitral Tribunal rejected the
construction company’s demand for payment for subsequent works done after
February 12, 2000, because Exhibit "OO," on which DSM Construction’s demand
was based, does not bear any mark that it had been received by Megaworld. Thus,
the Arbitral Tribunal concluded that subsequent works up to September 22, 2000,
when DSM Construction supposedly stopped working on the project, had not been
established.49
This Court observes that between the two contrasting claims of Megaworld and DSM
Construction on the percentage of work accomplishment, the Arbitral Tribunal
instead accorded weight to the assessment of DLS which is the project surveyor.
Apart from being reasonable, DLS’s evaluation is impartial. Thus, as correctly
pointed out by the Arbitral Tribunal, DLS rejected DSM Construction’s 99%
accomplishment claim when it limited its evaluation to only 95.56%.
Issues of Delay and Liquidated Damages
Next, Megaworld attributed the delay in the completion of the construction project
solely to DSM Construction. The latter countered that among the causes of delay was
the lack of coordination among trade contractors and the absence of a general
contractor.50 Although the contract purportedly contains a provision for the
coordination of trade contractors, the lack of privity among them prevented
coordination such that DSM Construction could not require compliance on the part
of the other trade contractors.
The Arbitral Tribunal decided this question by turning to Section 2.01 of the General
Conditions of the Contract, which states:
2.01 SITE, ACCESS & WORKS
The Contractor shall accept the Site as found on the date for possession and at their
own expense clear the site of any debris which may have been left by the preceding
occupants/contractors.
The Arbitral Tribunal held that Section 2.01 presupposes that on the date of
possession by DSM Construction of the work premises, the preceding contractor had
already left the same.51 The tribunal explained that the delay incurred by other trade
contractors also resulted in the delay of the work of DSM Construction.
It also pointed out that under Section 5.3 (1)52 of the Interim
Agreement,53 Megaworld is required to complete and turn over to DSM Construction
preceding works for the latter to complete their works in accordance with the
Revised Work Schedule. Section 5.3 (1), the Arbitral Tribunal noted, even allows
DSM Construction to recover losses incurred on account of the standby time of
DSM’s personnel/manpower or workers mobilized while Megaworld is not ready to
turn over the preceding works. The Arbitral Tribunal further held that, in accordance
with Section 5.3 (2)54of the Interim Agreement, DSM Construction was entitled to an
extension of time corresponding to the number of days of delay reckoned from the
time the preceding work item or area should have been turned over to DSM
Construction. Consequently, such delay, which is not exclusively imputable to DSM
Construction, negates the claim for liquidated damages by Megaworld. 55
In affirming the Arbitral Tribunal’s disposition of the issues of delay and payment of
liquidated damages, the appellate court noted that the Arbitral Tribunal narrated the
claims and defenses of both DSM Construction and Megaworld before making an
evaluation thereof and arriving at its conclusion.56 Clearly, the evidence and
arguments were carefully weighed to justify the said disposition.
The Tribunal’s finding that the project had already been delayed even before DSM
Construction commenced its work is borne out by the evidence. In his letter, Exhibit
X-2,57 Project Management Consultant Eduardo C. Arrojado, conceded that the
previous contractors had delayed the project, at the same time faulting DSM
Construction for incurring its own delay. Furthermore, the work of DSM
Construction pertaining as it did to the architectural and interior finishing stages as
well as the supply and installation of kitchen cabinets and closets, obviously related
to the final details and completion stage of the project. Thus, commencement of its
task had to depend on the turn over of the complete work of the prior contractors.
Hence, the delay of the previous contractors resulted in the delay of DSM
Construction’s work.
Issues of the Contract Price Balance and Retention Money
Megaworld also questioned the Arbitral Tribunal’s awards of ₱7,129,825.19
corresponding to the balance of the contract price, and ₱11,820,000.00 pursuant to
the Interim Agreement.58 Megaworld alleged that DSM Construction was no longer
entitled to the balance of the contract price and the retention money after the latter
received payments pursuant to the Interim Agreement in the amounts of
₱5,444,553.18 for the 26th to the 28th floors, another ₱5,444,553.18 for the 29th to the
4
31st floors at a 90% completion rate, and ₱4,161,818.18 for the 32nd to the 34thfloors
which were 60% completed. Megaworld also contended that since it spent more
money to complete the scope of work of DSM Construction, the latter was no longer
entitled to any of the balance.
On the other hand, DSM Construction argued that the award was justified in view of
the failure of Megaworld to controvert the amount of ₱7,129,825.19 included in the
Account Overview of DLS. DSM Construction also emphasized that it was not
claiming the entire ₱53 Million under the Interim Agreement but only the amount
corresponding to the actual work done. Even based on DLS’s computation, a total of
₱11,820,000.00 of retention money is still unpaid out of the 50% agreed to be
released under the Interim Agreement (₱15,000,000.00 less ₱3,180,000.00 retention
money or ₱11,820,000.00 for the paid billings).59
The Arbitral Tribunal ruled that the balance claimed under the three contracts was
based on what DSM Construction had actually accomplished less the payments it had
previously received. Considering that the remaining works which were performed by
another trade contractor, Deticio and Isabedra Builders, were paid directly by
Megaworld, no other cost for work accomplished in the Interim Agreement is due
DSM Construction except the retention money of ₱11,820,000.00.60
The Court of Appeals affirmed the award of the Arbitral Tribunal regarding the
balance of the contract price of ₱7,129,825.19 and the retention money of
₱11,820,000.00 to DSM Construction. The Court of Appeals noted that the Arbitral
Tribunal again narrated the claims and defenses of both DSM Construction and
Megaworld before arriving at its conclusion. The appellate court further stated that
the mere fact that the tribunal did not award the whole amount claimed by DSM
Construction (₱12,820,000.00) and instead awarded only ₱11,820,000.00 belies
Megaworld’s allegation that the tribunal adopted "hook, line and sinker" DSM
Construction’s claims.61
This Court finds the award of the balance of the contract price of ₱7,129,825.20
justified in view of DLS’ explanation in Exhibit MM-362 that the amount of
₱7,129,825.20 represented the unpaid billing for architectural, interior and kitchen
billings before Megaworld and DSM Construction drafted the Interim Agreement.
Issue of Variation Works 
Megaworld also disputed before the Court of Appeals the ₱6,686,675.55  award by
63
the Arbitral Tribunal for variation works. Variation works consist of the addition,
omission or alteration to the kind, quality or quantity of the works.64 DSM
Construction originally claimed a total of ₱26,208,639.00 for variation works done
but, of this claim, the Arbitral Tribunal only awarded ₱6,686,675.55 in line with the
evaluation of DLS.
Megaworld conceded that DSM Construction performed additional works to the
extent of ₱5,036,252.81. However, Megaworld claimed that since it incurred
expenses when it hired another trade contractor to take over the works left
uncompleted by DSM Construction, the latter lost its right to claim such amount
especially since DSM Construction did not comply with the documentation when
claiming variation works.65
DSM Construction asserted that the Arbitral Tribunal, in fact, should have awarded
₱26,208,639.00 instead of limiting the award to only ₱6,686,675.55 because it was
not even disputed that variation works were performed. It also contended that it
cannot be faulted for the lack of documentation because the fault lay on
Megaworld’s project manager who failed to forward the variation orders to DLS.66
The Arbitral Tribunal ruled in favor of DSM Construction, holding that there was
enough evidence to prove that the contractor made a request for change or variation
orders. The Arbitral Tribunal also found the testimony of Engineer Eduardo C.
Arrojado convincing, factual and balanced despite Megaworld’s attempt to discredit
him. However, while the amount claimed for variation works was ₱26,208,639.00,
the Arbitral Tribunal limited the awarded to only ₱6,686,675.5567 since a closer
scrutiny of the other items indicated that some works were not performed. 68
The appellate court upheld the award of the Arbitral Tribunal because the award was
based not only on the documentary exhibits prepared by DLS but on the testimony of
Engineer Eduardo C. Arrojado, as well.69
This Court is convinced that payments for variation works is due. Undoubtedly,
variation works were performed by DSM Construction. This was confirmed by
Engineer Eduardo C. Arrojado who testified that he recommended the payment for
substantial additional works to DSM Construction. He further stated that since time
was of the essence in the completion of the project, there were variation orders which
were performed without the prior approval of the owner. However, he explained that
this was a common construction practice. Finally, he stated that he agreed with the
evaluation of DLS.70
The testimony justified the Arbitral Tribunal’s reliance on the evaluation made by
DLS which limited the claim for variation works to ₱6,596,675.55.
Issue of Preliminaries/Loss and Expense
5
Megaworld also disputed the award of ₱29,380,902.35 for preliminaries/losses and
expense.
The provision for preliminaries/loss and expense in the contract assumes a direct loss
and/or expense incurred in the regular progress of work for which the contractor
would not be reimbursed under any other provision of the contract.71 DSM
Construction’s claim for preliminaries/loss and expense in the amount of
₱36,603,192.82 covered the loss and expense incurred on payroll, equipment rental,
materials and site clearing on account of such factors as delay in the execution of the
works for causes not attributable to DSM Construction.72
Megaworld refused to recognize DSM Construction’s claim because the latter
allegedly failed to comply with Clause 6.16 of the Conditions of Contract, which
imposes a two-month deadline for submission of claims for preliminaries reckoned
from "the happening of the event giving rise to the loss and expense."73 DSM
Construction, however, argued that the documentary evidence shows that out of the
four claims for preliminaries, only one (Exhibit MM-5with an evaluation of
₱17,552,722.47), covering the period August 1, 1998 to April 1999, was submitted
beyond the two-months requirement.74 DSM Construction also pointed out that the
two-month requirement for this claim was waived by Megaworld through DLS when
the latter recognized the validity of claims by coming up with an evaluation of
₱17,552,722.47 for the period covered in Exhibit MM-5.75
The Arbitral Tribunal ruled that DSM Construction was entitled to extended
preliminaries considering that delay was not attributable to DSM Construction. The
Arbitral Tribunal observed that Megaworld did not present evidence to refute the
claim for extended preliminaries which were previously evaluated by DLS.
However, after assessing the two previous evaluations by DLS, the tribunal ruled that
the claims for hauling and disposal and cleaning and clearing of debris should not be
included in the extended preliminaries. Hence, the Arbitral Tribunal reduced the
amount of ₱44,051.62 from the claim of ₱2,655,879.89 per Exhibit "MM-7," and
₱3,883,309.54 from the claim of ₱5,651,235.24 per Exhibit "MM-8," such amounts
being unnecessary.76
The appellate court affirmed the award, stressing the fact that the Arbitral Tribunal
denied some of the claims which it did not find valid.77
DSM Construction’s entitlement to the payment for preliminaries was explained by
Engineer Eduardo C. Arrojado to be the necessary result of the extension of the
contract between DSM Construction and Megaworld.78 Notably, majority of the
claims of DSM Construction was reduced by the Arbitral Tribunal on the basis
of Exhibit MM-479 or the Summary of Variation Order Status Report prepared by
DLS.
Although the Arbitral Tribunal ruled that DSM Construction was entitled to claim for
preliminaries, the award was not based on the claim of DSM Construction but on the
evaluation made by DLS.
The foregoing disquisition adequately shows that the evidence on record supports the
findings of facts of the Arbitral Tribunal on which the Court of Appeals based its
decision. In fact, although not all the exhibits in the Arbitral Tribunal were presented
before the Court of Appeals, the record of the appellate court contains the operative
facts and the substance of said exhibits, thus enabling the intelligent disposition of
the issues presented before it. This Court went over all the records, including the
exhibits, to ascertain whether the appellate court missed any crucial point. It did not.
The alleged undue favor accorded by the Arbitral Tribunal to DSM Construction is
belied by the fact that the Arbitral Tribunal did not grant all of DSM Construction’s
claims. In majority of DSM Construction’s claims, the Arbitral Tribunal awarded
amounts lower than what DSM Construction demanded. The Arbitral Tribunal also
granted some of Megaworld’s claims.80
Neither did the Court of Appeals merely "swallow hook, line and sinker" the award
of the Arbitral Tribunal. While the appellate court affirmed the decision of the
Arbitral Tribunal, it also ruled in favor of Megaworld when it limited DSM
Construction’s lien to only six units instead of all the condominium units to which
DSM was entitled under the Contract, rationalizing that the ₱62 Million award can
be covered by the value of the six units of the condominium project.81
Considering that the computations, as well as the propriety of the awards of the
Arbitral Tribunal, are unquestionably factual issues that have been discussed and
ruled upon by Arbitral Tribunal and affirmed by the Court of Appeals, we cannot
depart from such findings. Findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because their jurisdiction is confined
to specific matters, are generally accorded not only respect, but finality when
affirmed by the Court of Appeals.82
Megaworld, however, adamantly contends that the present case constitutes an
exception to the above rule because: (1) there is grave abuse of discretion in the
appreciation of facts; (2) the judgment is premised on misapprehension of facts; and,
(3) the findings of fact of the Court of Appeals is premised on the supposed absence
of evidence and is contradicted by the evidence on record.83
We disagree. None of these flaws appear in this case. Grave abuse of discretion
means the capricious or whimsical exercise of judgment that is so patent and gross as
to amount to an evasion of positive duty or a virtual refusal to perform a duty
enjoined by law, or to act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of passion or hostility.84 No
6
abuse of discretion was established by Megaworld. On the contrary, what is apparent
is Megaworld’s effort to attribute grave abuse of discretion to the Arbitral Tribunal
simply because of the unfavorable judgment against it. Megaworld’s assertion that
there was misapprehension of facts and that the evidence is insufficient to support
the decision is also untenable. The Decisions of the Arbitral Tribunal and the Court
of Appeals adequately explain the reasons therefor and are supported by substantial
evidence.
Likewise unmeritorious is Megaworld’s assertion that it was deprived of
administrative due process. The Arbitral Tribunal considered the arguments and the
evidence submitted by both parties. That it accorded greater weight to DSM
Construction’s evidence, by itself, does not constitute a denial of due process.
WHEREFORE, the Petition is DENIED. The Decision dated February 14, 2001, of
the Court of Appeals is AFFIRMED. The Temporary Restraining Order issued by
this Court on July 12, 2002, is hereby LIFTED. Costs against Petitioner.
SO ORDERED.
G.R. No. 187521. March 14, 2012.*
F.F. CRUZ & CO., INC., petitioner, vs. HR CONSTRUCTION CORP.,
respondent.
Construction Contracts; Construction Industry Arbitration Commission
(CIAC); Jurisdiction; Arbitration; Appeals; Executive Order (E.O.) No. 1008 vests
upon the Construction Industry Arbitration Commission (CIAC) original and
exclusive jurisdiction over disputes arising from, or connected with, contracts
entered into by parties involved in construction in the Philippines; The arbitral
award of Construction Industry Arbitration Commission (CIAC) shall be final and
inappealable except on questions of law which shall be appealable to the Supreme
Court.—Executive Order (E.O.) No. 1008 vests upon the CIAC original and
exclusive jurisdiction
_______________
**  Designated additional member per Special Order No. 1207 dated February
23, 2012.
* SECOND DIVISION.
303
VOL. 668, MARCH 14, 2012 303
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
over disputes arising from, or connected with, contracts entered into by parties
involved in construction in the Philippines. Under Section 19 of E.O. No. 1008, the
arbitral award of CIAC “shall be final and inappealable except on questions of law
which shall be appealable to the Supreme Court.” In Hi-Precision Steel Center, Inc.
v. Lim Kim Steel Builders, Inc., 228 SCRA 397 (1993), we explained raison d’
etre for the rule on finality of the CIAC’s arbitral award in this wise: Voluntary
arbitration involves the reference of a dispute to an impartial body, the members of
which are chosen by the parties themselves, which parties freely consent in advance
to abide by the arbitral award issued after proceedings where both parties had the
opportunity to be heard. The basic objective is to provide a speedy and inexpensive
method of settling disputes by allowing the parties to avoid the formalities, delay,
expense and aggravation which commonly accompany ordinary litigation, especially
litigation which goes through the entire hierarchy of courts. Executive Order No.
1008 created an arbitration facility to which the construction industry in the
Philippines can have recourse. The Executive Order was enacted to encourage the
early and expeditious settlement of disputes in the construction industry, a public
policy the implementation of which is necessary and important for the realization of
national development goals. Aware of the objective of voluntary arbitration in the
labor field, in the construction industry, and in any other area for that matter, the
Court will not assist one or the other or even both parties in any effort to subvert or
defeat that objective for their private purposes. The Court will not review the factual
findings of an arbitral tribunal upon the artful allegation that such body had
“misapprehended the facts” and will not pass upon issues which are, at bottom,
issues of fact, no matter how cleverly disguised they might be as “legal questions.”
The parties here had recourse to arbitration and chose the arbitrators themselves; they
must have had confidence in such arbitrators. x x x.
Questions of Law; A question of law arises when there is doubt as to what the
law is on a certain state of facts, while there is a question of fact when the doubt
arises as to the truth or falsity of the alleged facts.—A question of law arises when
there is doubt as to what the law is on a certain state of facts, while there is a
question of fact when the doubt arises as to the truth or falsity of the alleged facts.
For a question to be one of law, the same must not involve an examination of the
probative value of the evidence presented by the
304
304 SUPREME COURT REPORTS ANNOTATED
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
litigants or any of them. The resolution of the issue must rest solely on what
the law provides on the given set of circumstances. Once it is clear that the issue
invites a review of the evidence presented, the question posed is one of fact.
Waivers; Waiver is defined as “a voluntary and intentional relinquishment or
abandonment of a known existing legal right, advantage, benefit, claim or privilege,
which except for such waiver the party would have enjoyed; the voluntary
abandonment or surrender, by a capable person, of a right known by him to exist,
with the intent that such right shall be surrendered and such person forever deprived
of its benefit; or such conduct as warrants an inference of the relinquishment of such
right; or the intentional doing of an act inconsistent with claiming it.”—In People of
the Philippines v. Donato, 198 SCRA 130 (1991), this Court explained the doctrine
7
of waiver in this wise: Waiver is defined as “a voluntary and intentional
relinquishment or abandonment of a known existing legal right, advantage, benefit,
claim or privilege, which except for such waiver the party would have enjoyed; the
voluntary abandonment or surrender, by a capable person, of a right known by him to
exist, with the intent that such right shall be surrendered and such person forever
deprived of its benefit; or such conduct as warrants an inference of the
relinquishment of such right; or the intentional doing of an act inconsistent with
claiming it.” As to what rights and privileges may be waived, the authority is settled:
x x x the doctrine of waiver extends to rights and privileges of any character, and,
since the word ‘waiver’ covers every conceivable right, it is the general rule that a
person may waive any matter which affects his property, and any alienable
right or privilege of which he is the owner or which belongs to him or to which
he is legally entitled, whether secured by contract, conferred with statute, or
guaranteed by constitution, provided such rights and privileges rest in the
individual, are intended for his sole benefit, do not infringe on the rights of
others, and further provided the waiver of the right or privilege is not forbidden
by law, and does not contravene public policy; and the principle is recognized that
everyone has a right to waive, and agree to waive, the advantage of a law or rule
made solely for the benefit and protection of the individual in his private capacity, if
it can be dispensed with and relinquished without infringing on any public right, and
without detriment to the community at large. x x x.305
VOL. 668, MARCH 14, 2012 305
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
Reciprocal Obligations; Rescission; While the right to rescind reciprocal
obligations is implied, that is, that such right need not be expressly provided in the
contract, nevertheless the contracting parties may waive the same.—The right of
rescission is statutorily recognized in reciprocal obligations. Article 1191 of the Civil
Code pertinently reads: Art. 1191. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him. The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if the latter should become
impossible. The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period. This is understood to be without prejudice to the
rights of third persons who have acquired the thing, in accordance with Articles 1385
and 1388 and the Mortgage Law. The rescission referred to in this article, more
appropriately referred to as resolution is on the breach of faith by the defendant
which is violative of the reciprocity between the parties. The right to rescind,
however, may be waived, expressly or impliedly. While the right to rescind
reciprocal obligations is implied, that is, that such right need not be expressly
provided in the contract, nevertheless the contracting parties may waive the same.
Contrary to the respective dispositions of the CIAC and the CA, we find that HRCC
had no right to rescind the Subcontract Agreement in the guise of a work stoppage,
the latter having waived such right.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
   The facts are stated in the opinion of the Court.
  Vincent S. Tagoc for petitioner.
  Rodolfo B. Ta-asan for respondent.
REYES, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court
filed by petitioner F.F. Cruz & Co., Inc.
306
306 SUPREME COURT REPORTS ANNOTATED
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
(FFCCI) assailing the Decision1 dated February 6, 2009 and Resolution2 dated April
13, 2009 issued by the Court of Appeals (CA) in CA-G.R. SP No. 91860.
The Antecedent Facts
Sometime in 2004, FFCCI entered into a contract with the Department of Public
Works and Highways (DPWH) for the construction of the Magsaysay Viaduct,
known as the Lower Agusan Development Project. On August 9, 2004, FFCCI, in
turn, entered into a Subcontract Agreement 3with HR Construction Corporation
(HRCC) for the supply of materials, labor, equipment, tools and supervision for the
construction of a portion of the said project called the East Bank Levee and Cut-Off
Channel in accordance with the specifications of the main contract.
The subcontract price agreed upon by the parties amounted to P31,293,532.72.
Pursuant to the Subcontract Agreement, HRCC would submit to FFCCI a monthly
progress billing which the latter would then pay, subject to stipulated deductions,
within 30 days from receipt thereof.
The parties agreed that the requests of HRCC for payment should include
progress accomplishment of its completed works as approved by FFCCI.
Additionally, they agreed to conduct a joint measurement of the completed works of
HRCC together with the representative of DPWH and consultants to arrive at a
common quantity.
Thereafter, HRCC commenced the construction of the works pursuant to the
Subcontract Agreement.
_______________
1 Penned by Associate Justice Romeo F. Barza, with Associate Justices Josefina
Guevara-Salonga and Arcangelita M. Romilla-Lontok, concurring; Rollo, pp. 47-69.
2 Id., at p. 78.
3 Id., at pp. 85-92.
307
VOL. 668, MARCH 14, 2012 307
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
On September 17, 2004, HRCC submitted to FFCCI its first progress billing in
the amount of P2,029,081.59 covering the construction works it completed from
8
August 16 to September 15, 2004.4 However, FFCCI asserted that the DPWH was
then able to evaluate the completed works of HRCC only until July 25, 2004. Thus,
FFCCI only approved the gross amount of P423,502.88 for payment. Pursuant to the
Subcontract Agreement, FFCCI deducted from the said gross amount P42,350.29 for
retention and P7,700.05 for expanded withholding tax leaving a net payment in the
amount of P373,452.54. This amount was paid by FFCCI to HRCC on December 3,
2004.5
FFCCI and the DPWH then jointly evaluated the completed works of HRCC for
the period of July 26 to September 25, 2004. FFCCI claimed that the gross amount
due for the completed works during the said period was P2,008,837.52. From the
said gross amount due, FFCCI deducted therefrom P200,883.75 for retention and
P36,524.07 for expanded withholding tax leaving amount of P1,771,429.45 as the
approved net payment for the said period. FFCCI paid this amount on December 21,
2004.6
On October 29, 2004, HRCC submitted to FFCCI its second progress billing in
the amount of P1,587,760.23 covering its completed works from September 18 to 25,
2004.7 FFCCI did not pay the amount stated in the second progress billing, claiming
that it had already paid HRCC for the completed works for the period stated therein.
On even date, HRCC submitted its third progress billing in the amount of
P2,569,543.57 for its completed works from September 26 to October 25,
2004.8 FFCCI did not immedi-
_______________
4 Id., at p. 93.
5 Id., at p. 109.
6 Id., at p. 111.
7 Id., at p. 94.
8 Id., at p. 95.
308
308 SUPREME COURT REPORTS ANNOTATED
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
ately pay the amount stated in the third progress billing, claiming that it still had to
evaluate the works accomplished by HRCC.
On November 25, 2004, HRCC submitted to FFCCI its fourth progress billing in
the amount of P1,527,112.95 for the works it had completed from October 26 to
November 25, 2004.
Subsequently, FFCCI, after it had evaluated the completed works of HRCC from
September 26 to November 25, 2004, approved the payment of the gross amount of
P1,505,570.99 to HRCC. FFCCI deducted therefrom P150,557.10 for retention and
P27,374.02 for expanded withholding tax leaving a net payment of P1,327,639.87,
which amount was paid to HRCC on March 11, 2005.9
Meanwhile, HRCC sent FFCCI a letter10 dated December 13, 2004 demanding
the payment of its progress billings in the total amount of P7,340,046.09, plus
interests, within three days from receipt thereof. Subsequently, HRCC completely
halted the construction of the subcontracted project after taking its Christmas break
on December 18, 2004.
On March 7, 2005, HRCC, pursuant to the arbitration clause in the Subcontract
Agreement, filed with the Construction Industry Arbitration Commission (CIAC) a
Complaint11 against FFCCI praying for the payment of the following: (1) overdue
obligation in the reduced amount of P4,096,656.53 as of December 15, 2004 plus
legal interest; (2) P1,500,000.00 as attorney’s fees; (3) P80,000.00 as acceptance fee
and representation expenses; and (4) costs of litigation.
In its Answer,12 FFCCI claimed that it no longer has any liability on the
Subcontract Agreement as the three payments
_______________
9  Id., at p. 113.
10 Id., at p. 96.
11 Id., at pp. 79-84.
12 Id., at pp. 97-105.
309
VOL. 668, MARCH 14, 2012 309
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
it made to HRCC, which amounted to P3,472,521.86, already represented the amount
due to the latter in view of the works actually completed by HRCC as shown by the
survey it conducted jointly with the DPWH. FFCCI further asserted that the delay in
the payment processing was primarily attributable to HRCC inasmuch as it presented
unverified work accomplishments contrary to the stipulation in the Subcontract
Agreement regarding requests for payment.
Likewise, FFCCI maintained that HRCC failed to comply with the condition
stated under the Subcontract Agreement for the payment of the latter’s progress
billings, i.e. joint measurement of the completed works, and, hence, it was justified
in not paying the amount stated in HRCC’s progress billings.
On June 16, 2005, an Arbitral Tribunal was created composed of Engineer
Ricardo B. San Juan, Joven B. Joaquin and Attorney Alfredo F. Tadiar, with the
latter being appointed as the Chairman.
In a Preliminary Conference held on July 5, 2005, the parties defined the issues
to be resolved in the proceedings before the CIAC as follows:
1. What is the correct amount of [HRCC’s] unpaid progress billing?
2. Did [HRCC] comply with the conditions set forth in subparagraph 4.3 of
the Subcontract Agreement for the submission, evaluation/processing
and release of payment of its progress billings?
3. Did [HRCC] stop work on the project?
3.1 If so, is the work stoppage justified?
3.2 If so, what was the percentage and value of [HRCC’s] work
accomplishment at the time it stopped work on the project?310
310 SUPREME COURT REPORTS ANNOTATED
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
9
 4. Who between the parties should bear the cost of arbitration or in what
proportion should it be shared by the parties?13
Likewise, during the said Preliminary Conference, HRCC further reduced the
amount of overdue obligation it claimed from FFCCI to P2,768,916.66. During the
course of the proceedings before the CIAC, HRCC further reduced the said amount
to P2,635,397.77 – the exact difference between the total amount of HRCC’s
progress billings (P6,107,919.63) and FFCCI’s total payments in favor of the latter
(P3,472,521.86).
The CIAC Decision
On September 6, 2005, after due proceedings, the CIAC rendered a Decision 14 in
favor of HRCC, the decretal portion of which reads:
“WHEREFORE, judgment is hereby rendered in favor of the Claimant HR
CONSTRUCTION CORPORATION and AWARDmade on its monetary claim
against Respondent F.F. CRUZ & CO., INC., as follows:
[P]2,239,452.63    as the balance of its unpaid billings and
     101,161.57     as reimbursement of the arbitration  312
                                  costs.
[P]2,340,614.20    Total due the Claimant
Interest on the foregoing amount [P]2,239,452.63 shall be paid at the rate of
6% per annum from the date of this Decision. After finality of this Decision, interest
at the rate of 12% per annum shall be paid thereon until full payment of the awarded
amount shall have been made x x x.
SO ORDERED.”15
_______________
13 Id., at p. 124.
14 Id., at pp. 116-135.
15 Id., at p. 134.
311
VOL. 668, MARCH 14, 2012 311
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
The CIAC held that the payment method adopted by FFCCI is actually what is
known as the “back-to-back payment scheme” which was not agreed upon under the
Subcontract Agreement. As such, the CIAC ruled that FFCCI could not impose upon
HRCC its valuation of the works completed by the latter. The CIAC gave credence
to HRCC’s valuation of its completed works as stated in its progress billings. Thus:
“During the trial, [FFCCI’s] Aganon admitted that [HRCC’s] accomplishments
are included in its own billings to the DPWH together with a substantial mark-up to
cover overhead costs and profit. He further admitted that it is only when DPWH
approves its (Respondent’s) billings covering [HRCC’s] scope of work and pays for
them, that [FFCCI] will in turn pay [HRCC] for its billings on the sub-contracted
works.
On clarificatory questioning by the Tribunal, [FFCCI] admitted that there is no
“back-to-back” provision in the sub-contract as basis for this sequential payment
arrangement and, therefore, [FFCCI’s] imposition thereof by withholding payment
to [HRCC] until it is first paid by the project owner on the Main Contract, clearly
violates said sub-contract. It [is] this unauthorized implementation of a back-to-back
payment scheme that is seen to be the reason for [FFCCI’s] non-payment of the third
progress billings.
It is accordingly the holding of this Arbitral Tribunal that [FFCCI] is not
justified in withholding payment of [HRCC’s] third progress billing for this scheme
that [HRCC] has not agreed to in the sub-contract agreement x x x.
xxx
The total retention money deducted by [FFCCI] from [HRCC’s] three progress
billings, amounts to [P]395,945.14 x x x. The retention money is part of [HRCC’s]
progress billings and must, therefore, be credited to this account. The two amounts
(deductions and net payments) total [P]3,868,467.00 x x x. This represents the total
gross payments that should be credited and deducted from the total gross billings to
arrive at what has not been paid to the [HRCC]. This
312 SUPREME COURT REPORTS ANNOTATED
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
results in the amount of [P]2,239,452.63 ([P]6,107,919.63 - [P]3,868,467.00) as the
correct balance of [HRCC’s] unpaid billings.”16
Further, the CIAC ruled that FFCCI had already waived its right under the
Subcontract Agreement to require a joint measurement of HRCC’s completed works
as a condition precedent to the payment of the latter’s progress billings. Hence:
“[FFCCI] admits that in all three instances where it paid [HRCC] for its progress
billings, it never required compliance with the aforequoted contractual provision of a
prior joint quantification. Such repeated omission may reasonably be construed as
a waiver by [FFCCI] of its contractual right to require compliance of said condition
and it is now too late in the day to so impose it. Article 6 of the Civil Code expressly
provides that “rights may be waived unless the waiver is contrary to law, public
order, public policy, morals or good customs.” The tribunal cannot see any such
violation in this case.
xxx
[FFCCI’s] omission to enforce the contractually required condition of payment,
has led [HRCC] to believe it to be true that indeed [FFCCI] has waived the condition
of joint quantification and, therefore, [FFCCI] may not be permitted to falsify such
resulting position.”17
Likewise, the CIAC held that FFCCI’s non-payment of the progress billings
submitted by HRCC gave the latter the right to rescind the Subcontract Agreement
and, accordingly, HRCC’s work stoppage was justified. It further opined that, in
effect, FFCCI had ratified the right of HRCC to stop the construction works as it did
not file any counterclaim against HRCC for liquidated damages arising therefrom.
10
 FFCCI then filed a petition for review with CA assailing the foregoing x x x Second, [d]oes the payment of [FFCCI] to [HRCC] based on the results of the
disposition by the CIAC. above mentioned verification survey result in the former being obliged to accept
_______________ whatever accomplishment was reported by the latter?
16 Id., at pp. 127-128. [III.]
17 Id., at pp. 130-131. x x x Third, [d]oes the mere comparison of the payments made by [FFCCI] with the
   313 contested progress billings of [HRCC] amount to an adjudication of the controversy
VOL. 668, MARCH 14, 2012 313 between the parties?
[IV.]
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
x x x Fourth, [d]oes the failure of [FFCCI] to interpose a counterclaim against
[HRCC] for liquidated damages due to the latter’s work stoppage, amount to a
The CA Decision ratification of such work stoppage?
[V.]
On February 6, 2009, the CA rendered the herein assailed Decision 18 denying the x x x Fifth, [d]id the [CA] disregard or overlook significant and material facts which
petition for review filed by FFCCI. The CA agreed with the CIAC that FFCCI had would affect the result of the litigation?21
waived its right under the Subcontract Agreement to require a joint quantification of In sum, the crucial issues for this Court’s resolution are: first, what is the effect
HRCC’s completed works. of FFCCI’s non-compliance with the stipulation in the Subcontract Agreement
The CA further held that the amount due to HRCC as claimed by FFCCI could requiring a joint quantification of the works completed by HRCC on the payment of
not be given credence since the same was based on a survey of the completed works the progress billings submitted by the latter; and second, whether there was a valid
conducted without the participation of HRCC. Likewise, being the main contractor, it rescission of the Subcontract Agreement by HRCC.
ruled that it was the responsibility of FFCCI to include HRCC in the joint The Court’s Ruling
measurement of the completed works. Furthermore, the CA held that HRCC was The petition is not meritorious.
justified in stopping its construction works on the project as the failure of FFCCI to Procedural Issue:
pay its progress billings gave the former the right to rescind the Subcontract Finality and Conclusiveness of the CIAC’s
Agreement. Factual Findings
FFCCI sought a reconsideration 19 of the said February 6, 2009 Decision but it Before we delve into the substantial issues raised by FFCCI, we shall first
was denied by the CA in its Resolution20 dated April 13, 2009. address the procedural issue raised by
_______________
Issues 21 Rollo, pp. 21-22.
315
In the instant petition, FFCCI submits the following issues for this Court’s
VOL. 668, MARCH 14, 2012 315
resolution:
[I.] F.F. Cruz & Co., Inc. vs. HR Construction Corp.
x x x First, [d]oes the act of [FFCCI] in conducting a verification survey of HRCC. According to HRCC, the instant petition merely assails the factual findings
[HRCC’s] billings in the latter’s presence amount to a waiver of the right of [FFCCI] of the CIAC as affirmed by the CA and, accordingly, not proper subjects of an
to verify and approve said billings? What, if any, is the legal significance of said act? appeal under Rule 45 of the Rules of Court. It likewise pointed out that factual
_______________ findings of the CIAC, when affirmed by the CA, are final and conclusive upon this
18 Supra note 1. Court.
19 Rollo, pp. 70-77. Generally, the arbitral award of
20 Supra note 2. CIAC is final and may not be ap-
314 pealed except on questions of law.
314 SUPREME COURT REPORTS ANNOTATED Executive Order (E.O.) No. 100822 vests upon the CIAC original and exclusive
jurisdiction over disputes arising from, or connected with, contracts entered into by
F.F. Cruz & Co., Inc. vs. HR Construction Corp. parties involved in construction in the Philippines. Under Section 19 of E.O. No.
[II.] 1008, the arbitral award of CIAC “shall be final and inappealable except on
questions of law which shall be appealable to the Supreme Court.”23

11
 In Hi-Precision Steel Center, Inc. v. Lim Kim Steel Builders, Inc.,24 we undue means; (2) there was evident partiality or corruption of the arbitrators or of
explained raison d’ etre for the rule on finality of the CIAC’s arbitral award in this any of them; (3) the arbitrators were guilty of misconduct in refusing to postpone the
wise: hearing upon sufficient cause shown, or in refusing to
“Voluntary arbitration involves the reference of a dispute to an impartial body, _______________
the members of which are chosen by the parties themselves, which parties freely 25 Id., at p. 405.
consent in advance to abide by the arbitral award issued after proceedings where 26 479 Phil. 578; 435 SCRA 654 (2004).
both parties had the opportunity to be heard. The basic objective is to provide a 317
speedy and inexpensive method of settling disputes by allowing the parties to avoid VOL. 668, MARCH 14, 2012 317
the formalities, delay, expense and aggravation which com-
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
_______________
22 Creating an Arbitration Machinery in the Construction Industry of the hear evidence pertinent and material to the controversy; (4) one or more of the
Philippines, otherwise known as the “Construction Industry Arbitration Law.” arbitrators were disqualified to act as such under section nine of Republic Act No.
23 SC Circular No. 1-91 and Revised Administrative Circular No. 1-95 provides 876 and willfully refrained from disclosing such disqualifications or of any other
that appeal from the arbitral award of the CIAC must first be brought to the CA on misbehavior by which the rights of any party have been materially prejudiced; or (5)
questions of fact, law or mixed questions of fact and law. the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual,
24 G.R. No. 110434, December 13, 1993, 228 SCRA 397. final and definite award upon the subject matter submitted to them was not made. x x
316 x”27 (Citation omitted)
Issues on the proper interpretation
316 SUPREME COURT REPORTS ANNOTATED of the terms of the Subcontract
F.F. Cruz & Co., Inc. vs. HR Construction Corp. Agreement involve questions of law.
monly accompany ordinary litigation, especially litigation which goes through the A question of law arises when there is doubt as to what the law is on a certain
entire hierarchy of courts. Executive Order No. 1008 created an arbitration facility to state of facts, while there is a question of fact when the doubt arises as to the truth or
which the construction industry in the Philippines can have recourse. The Executive falsity of the alleged facts. For a question to be one of law, the same must not
Order was enacted to encourage the early and expeditious settlement of disputes in involve an examination of the probative value of the evidence presented by the
the construction industry, a public policy the implementation of which is necessary litigants or any of them. The resolution of the issue must rest solely on what the law
and important for the realization of national development goals. provides on the given set of circumstances. Once it is clear that the issue invites a
Aware of the objective of voluntary arbitration in the labor field, in the review of the evidence presented, the question posed is one of fact.28
construction industry, and in any other area for that matter, the Court will not assist On the surface, the instant petition appears to merely raise factual questions as it
one or the other or even both parties in any effort to subvert or defeat that objective mainly puts in issue the appropriate amount that is due to HRCC. However, a more
for their private purposes. The Court will not review the factual findings of an thorough analysis of the issues raised by FFCCI would show that it actually asserts
arbitral tribunal upon the artful allegation that such body had “misapprehended the questions of law.
facts” and will not pass upon issues which are, at bottom, issues of fact, no matter FFCCI primarily seeks from this Court a determination of whether amount
how cleverly disguised they might be as “legal questions.” The parties here had claimed by HRCC in its progress billing may be enforced against it in the absence of
recourse to arbitration and chose the arbitrators themselves; they must have had a joint measurement of the former’s completed works. Otherwise stated, the main
confidence in such arbitrators. x x x”25 (Citation omitted) question advanced by FFCCI is this: in the absence of the joint measurement agreed
Thus, in cases assailing the arbitral award rendered by the CIAC, this Court may upon in the Subcontract Agree-
only pass upon questions of law. Factual findings of construction arbitrators are final _______________
and conclusive and not reviewable by this Court on appeal. This rule, however, 27 Id., at pp. 590-591; p. 666.
admits of certain exceptions. 28 Vda. De Formoso v. Philippine National Bank, G.R. No. 154704, June 1,
In Spouses David v. Construction Industry and Arbitration Commission,26 we 2011, 650 SCRA 35.
laid down the instances when this Court may pass upon the factual findings of the 318
CIAC, thus: 318 SUPREME COURT REPORTS ANNOTATED
“We reiterate the rule that factual findings of construction arbitrators are final and
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
conclusive and not reviewable by this Court on appeal, except when the petitioner
proves affirmatively that: (1) the award was procured by corruption, fraud or other ment, how will the completed works of HRCC be verified and the amount due
thereon be computed?
12
 The determination of the foregoing question entails an interpretation of the terms
of the Subcontract Agreement vis-à-vis the respective rights of the parties herein. On
this point, it should be stressed that where an interpretation of the true agreement
between the parties is involved in an appeal, the appeal is in effect an inquiry of the
law between the parties, its interpretation necessarily involves a question of law.29
Moreover, we are not called upon to examine the probative value of the evidence
presented before the CIAC. Rather, what is actually sought from this Court is an
interpretation of the terms of the Subcontract Agreement as it relates to the dispute
between the parties.
First Substantive Issue: Effect of Non-compliance
with the Joint Quantification Requirement on
the Progress Billings of HRCC
Basically, the instant issue calls for a determination as to which of the parties’
respective valuation of accomplished works should be given credence. FFCCI claims
that its valuation should be upheld since the same was the result of a measurement of
the completed works conducted by it and the DPWH. On the other hand, HRCC
maintains that its valuation should be upheld on account of FFCCI’s failure to
observe the joint measurement requirement in ascertaining the extent of its
completed works.
The terms of the Subcontract
Agreement should prevail.
In resolving the dispute as to the proper valuation of the works accomplished by
HRCC, the primordial consideration
_______________
29 See Philippine National Construction Corporation v. Court of Appeals, G.R.
No. 159417, January 25, 2007, 512 SCRA 684, 695.
319
VOL. 668, MARCH 14, 2012 319
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
should be the terms of the Subcontract Agreement. It is basic that if the terms of a
contract are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulations shall control.30
In Abad v. Goldloop Properties, Inc.,31 we stressed that:
“A court’s purpose in examining a contract is to interpret the intent of the
contracting parties, as objectively manifested by them. The process of
interpreting a contract requires the court to make a preliminary inquiry as to whether
the contract before it is ambiguous. A contract provision is ambiguous if it is
susceptible of two reasonable alternative interpretations. Where the written terms
of the contract are not ambiguous and can only be read one way, the court will
interpret the contract as a matter of law. If the contract is determined to be
ambiguous, then the interpretation of the contract is left to the court, to resolve the
ambiguity in the light of the intrinsic evidence.” 32 (Emphasis supplied and citation
omitted)
Article 4 of the Subcontract Agreement, in part, contained the following
stipulations:
ARTICLE 4
SUBCONTRACT PRICE
4.1 The total SUBCONTRACT Price shall be THIRTY ONE MILLION TWO
HUNDRED NINETY THREE THOUSAND FIVE HUNDRED THIRTY
TWO PESOS & 72/100 ONLY ([P]31,293,532.72) inclusive of Value Added
Tax
x x x.
xxx
4.3 Terms of Payment
  FFCCI shall pay [HRCC] within thirty (30) days upon receipt of the
[HRCC’s] Monthly Progress Billings subject to deductions due to ten
percent (10%) 
_______________
30 Civil Code of the Philippines, Article 1370.
31 G.R. No. 168108, April 13, 2007, 521 SCRA 131.
32 Id., at p. 144.
320
320 SUPREME COURT REPORTS ANNOTATED
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
retention, and any other sums that may be due and recoverable by FFCCI from
[HRCC] under this SUBCONTRACT. In all cases, however, two percent (2%)
expanded withholding tax on the [HRCC’s] income will be deducted from the
monthly payments.
  Requests for the payment by the [HRCC] shall include progress
accomplishment of completed works (unit of work accomplished x unit
cost) as approved by [FFCCI]. Cut-off date of monthly billings shall be
every 25th of the month and joint measurement shall be conducted with
the DPWH’s representative, Consultants, FFCCI and [HRCC] to arrive
at a common/agreed quantity.”33 (Emphasis supplied)
Pursuant to the terms of payment agreed upon by the parties, FFCCI obliged
itself to pay the monthly progress billings of HRCC within 30 days from receipt of
the same. Additionally, the monthly progress billings of HRCC should indicate the
extent of the works completed by it, the same being essential to the valuation of the
amount that FFCCI would pay to HRCC.
The parties further agreed that the extent of HRCC’s completed works that would
be indicated in the monthly progress billings should be determined through a joint
measurement conducted by FFCCI and HRCC together with the representative of
DPWH and the consultants.
13
It is the responsibility of FFCCI  The CIAC held that FFCCI, on account of its failure to demand the joint
to call for the joint measurement measurement of HRCC’s completed works, had effectively waived its right to ask for
of HRCC’s completed works. the conduct of the same as a condition sine qua non to HRCC’s submission of its
It bears stressing that the joint measurement contemplated under the Subcontract monthly progress billings.
Agreement should be conducted by the parties herein together with the representative We agree.
of the DPWH and the consultants. Indubitably, FFCCI, being the main In People of the Philippines v. Donato,35 this Court explained the doctrine of
_______________ waiver in this wise:
33 Rollo, p. 87. “Waiver is defined as “a voluntary and intentional relinquishment or
321 abandonment of a known existing legal right, advantage, benefit, claim or privilege,
VOL. 668, MARCH 14, 2012 321 which except for such waiver the party would have enjoyed; the voluntary
abandonment or surrender, by a capable person, of a right known by him to exist,
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
with the intent that such right shall be surrendered and such person forever deprived
contractor of DPWH, has the responsibility to request the representative of DPWH to of its benefit; or such conduct as warrants an inference of the relinquishment of
conduct the said joint measurement. such right; or the intentional doing of an act inconsistent with claiming it.”
On this score, the testimony of Engineer Antonio M. Aganon, Jr., project As to what rights and privileges may be waived, the authority is settled:
manager of FFCCI, during the reception of evidence before the CIAC is telling, thus: x x x the doctrine of waiver extends to rights and privileges of any character,
MR. J. B. JOAQUIN: and, since the word ‘waiver’ covers every conceivable right, it is the general
Engr. Aganon, earlier there was a stipulation that in all the four billings, there never rule that a person may waive any matter which affects his property, and
was a joint quantification. any alienable right or privilege of which he is the owner or which belongs
PROF. A. F. TADIAR: to him or to which he is legally entitled, whether secured by contract,
  He admitted that earlier. Pinabasa ko sa kanya. conferred with statute, or guaranteed by constitution, provided such rights
ENGR. R. B. SAN JUAN: and privileges rest in the individual, are intended for his sole benefit, do
The joint quantification was done only between them and DPWH. not infringe on the rights of others, and further provided the waiver of
xxxx the right or privilege is not forbidden by law, and does not contravene
ENGR. AGANON: public policy; and the principle is recognized that everyone has a right
Puwede ko po bang i-explain sandali lang po regarding lang po doon sa _______________
quantification na iyon? Basically po as main contractor of DPWH, we are the 35 G.R. No. 79269, June 5, 1991, 198 SCRA 130.
ones who [are] requesting for joint survey quantification with the owner, 323
DPWH. Ngayon po, although wala sa papel na nag-witness and [HRCC] still the
same po, nandoon din po sila during that time, kaya lang ho . . . VOL. 668, MARCH 14, 2012 323
MR. J. B. JOAQUIN: F.F. Cruz & Co., Inc. vs. HR Construction Corp.
Hindi pumirma? to waive, and agree to waive, the advantage of a law or rule made solely for
ENGR. AGANON: the benefit and protection of the individual in his private capacity, if it can be
Hindi sila puwede pumirma kasi ho kami po ang contractor ng DPWH hindi dispensed with and relinquished without infringing on any public right, and
sila.34 (Emphasis supplied) without detriment to the community at large. x x x”36(Emphasis supplied and
FFCCI had waived its right to citations omitted)
demand for a joint measurement  Here, it is undisputed that the joint measurement of HRCC’s completed works
_______________ contemplated by the parties in the Subcontract Agreement never materialized.
34 Id., at pp. 330-331. Indeed, HRCC, on separate occasions, submitted its monthly progress billings
322 indicating the extent of the works it had completed sans prior joint measurement.
322 SUPREME COURT REPORTS ANNOTATED Thus:
F.F. Cruz & Co., Inc. vs. HR Construction Corp. Progress Billing Period Covered Amount
of HRCC’s completed works under  1st Progress Billing dated September August 16 to P2,029,081.59
the Subcontract Agreement. 17, 200437 September 15,

14
 2004 In view of FFCCI’s waiver of the joint measurement requirement, the CA,
essentially echoing the CIAC’s disposition, found that FFCCI is obliged to pay the
2nd Progress Billing dated October September 18 to P1,587,760.23
amount claimed by HRCC in its monthly progress billings. The CA reasoned thus:
29, 200438 25, 2004 “Verily, the joint measurement that [FFCCI] claims it conducted without the
3rd Progress Billing dated October 29, September 26 to P2,569,543.57 participation of [HRCC], to which [FFCCI] an-
200439 October 25, 2004 _______________
40 Supra note 5.
4th Progress Billing dated November October 26 to P1,527,112.95
41 Supra note 6.
25, 2004 November 25, 42 Supra note 9.
2004 325
FFCCI did not contest the said progress billings submitted by HRCC despite the VOL. 668, MARCH 14, 2012 325
lack of a joint measurement of the latter’s completed works as required under the
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
Subcontract Agreement. Instead, FFCCI proceeded to conduct its own verification of
the works actually completed by HRCC and, on separate dates, made the following chors its claim of full payment of its obligations to [HRCC], cannot be applied, nor
payments to HRCC: imposed, on [HRCC]. In other words, [HRCC] cannot be made to accept a
_______________ quantification of its works when the said quantification was made without its
36 Id., at p. 154. participation. As a consequence, [FFCCI’s] claim of full payment cannot be upheld
37 Supra note 4. as this is a result of a quantification that was made contrary to the express provisions
38 Supra note 7. of the Subcontract Agreement.
39 Supra note 8. The Court is aware that by ruling so, [FFCCI] would seem to be placed at a
324 disadvantage because it would result in [FFCCI] having to pay exactly what [HRCC]
was billing the former. If, on the other hand, the Court were to rule otherwise[,] then
324 SUPREME COURT REPORTS ANNOTATED [HRCC] would be the one at a disadvantage because it would be made to accept
F.F. Cruz & Co., Inc. vs. HR Construction Corp. payment that is less than what it was billing.
Date of Payment Period Covered Amount Circumstances considered, however, the Court deems it proper to rule in favor of
[HRCC] because of the explicit provision of the Subcontract Agreement that requires
December 3, 2004 40
April 2 to July 25, 2004 P373,452.24 the participation of the latter in the joint measurement. If the Court were to rule
December 21, 200441 July 26 to September 25, 2004 P1,771,429.45 otherwise, then the Court would, in effect, be disregarding the explicit agreement of
March 11, 2005 42
September 26 to November 25, P1,327,639.87 the parties in their contract.”43
Essentially, the question that should be resolved is this: In view of FFCCI’s
2004
waiver of its right to demand a joint measurement of HRCC’s completed works, is
FFCCI’s voluntary payment in favor of HRCC, albeit in amounts substantially
FFCCI now barred from disputing the claim of HRCC in its monthly progress
different from those claimed by the latter, is a glaring indication that it had
billings?
effectively waived its right to demand for the joint measurement of the completed
We rule in the affirmative.
works. FFCCI’s failure to demand a joint measurement of HRCC’s completed works
As intimated earlier, the joint measurement requirement is a mechanism
reasonably justified the inference that it had already relinquished its right to do so.
essentially granting FFCCI the opportunity to verify and, if necessary, contest
Indeed, not once did FFCCI insist on the conduct of a joint measurement to verify
HRCC’s valuation of its completed works prior to the submission of the latter’s
the extent of HRCC’s completed works despite its receipt of the four monthly
monthly progress billings.
progress billings submitted by the latter.
In the final analysis, the joint measurement requirement seeks to limit the dispute
FFCCI is already barred from 
between the parties with regard to the valuation of HRCC’s completed works.
contesting HRCC’s valuation of
Accordingly, any issue which FFCCI may have with regard to HRCC’s valua-
the completed works having 
_______________
waived its right to demand the
43 Rollo, pp. 65-66.
joint measurement require-
326
ment.
326 SUPREME COURT REPORTS ANNOTATED

15
 F.F. Cruz & Co., Inc. vs. HR Construction Corp.
tion of the works it had completed should be raised and resolved during the said joint
measurement instead of raising the same after HRCC had submitted its monthly
progress billings. Thus, having relinquished its right to ask for a joint measurement
of HRCC’s completed works, FFCCI had necessarily waived its right to dispute
HRCC’s valuation of the works it had accomplished.
Second Substantive Issue:
Validity of HRCC’s Rescission of the  Subcontract Agreement, which reads:
Subcontract Agreement
Both the CA and the CIAC held that the work stoppage of HRCC was justified as
the same is but an exercise of its right to rescind the Subcontract Agreement in view
of FFCCI’s failure to pay the former’s monthly progress billings. Further, the CIAC
stated that FFCCI could no longer assail the work stoppage of HRCC as it failed to
file any counterclaim against HRCC pursuant to the terms of the Subcontract
Agreement.
For its part, FFCCI asserted that the work stoppage of HRCC was not justified
and, in any case, its failure to raise a counterclaim against HRCC for liquidated
damages before the CIAC does not amount to a ratification of the latter’s work
stoppage.
The determination of the validity of HRCC’s work stoppage depends on a
determination of the following: first,whether HRCC has the right to extrajudicially
rescind the Subcontract Agreement; and second, whether FFCCI is already barred
from disputing the work stoppage of HRCC.
HRCC had waived its right to re-
scind the Subcontract Agreement.
The right of rescission is statutorily recognized in reciprocal obligations. Article
1191 of the Civil Code pertinently reads:327
VOL. 668, MARCH 14, 2012 327
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
“Art. 1191. The power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage
Law.”
The rescission referred to in this article, more appropriately referred to as
resolution is on the breach of faith by the defendant which is violative of the
reciprocity between the parties.44 The right to rescind, however, may be waived,
expressly or impliedly.45
While the right to rescind reciprocal obligations is implied, that is, that such right
need not be expressly provided in the contract, nevertheless the contracting parties
may waive the same.46
Contrary to the respective dispositions of the CIAC and the CA, we find that
HRCC had no right to rescind the Subcontract Agreement in the guise of a work
stoppage, the latter having waived such right. Apropos is Article 11.2 of the
_______________
44 Pryce Corp. v. Phil. Amusement and Gaming Corp., 497 Phil. 490, 505; 458
SCRA 164, 177 (2005), citing the Concurring Opinion of Mr. Justice J.B. L. Reyes
in Universal Food Corp. v. Court of Appeals, 144 Phil. 1, 21; 33 SCRA 1, 22-23
(1970).
45 Francisco v. DEAC Construction, Inc., G.R. No. 171312, February 4, 2008,
543 SCRA 644, 655.
46 Tolentino, Commentaries and Jurisprudence on the Civil Code of the
Philippines, Vol. IV (1991).
328
328 SUPREME COURT REPORTS ANNOTATED
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
11.2 Effects of Disputes and Continuing Obligations
  Notwithstanding any dispute, controversy, differences or arbitration
proceedings relating directly or indirectly to this SUBCONTRACT
Agreement and without prejudice to the eventual outcome
thereof, [HRCC] shall at all times proceed with the prompt
performance of the Works in accordance with the directives of
FFCCI and this SUBCONTRACT Agreement.47 (Emphasis
supplied)
Hence, in spite of the existence of dispute or controversy between the parties
during the course of the Subcontract Agreement, HRCC had agreed to continue the
performance of its obligations pursuant to the Subcontract Agreement. In view of the
provision of the Subcontract Agreement quoted above, HRCC is deemed to have
effectively waived its right to effect extrajudicial rescission of its contract with
FFCCI. Accordingly, HRCC, in the guise of rescinding the Subcontract Agreement,
was not justified in implementing a work stoppage.
The costs of arbitration should be
shared by the parties equally.
Section 1, Rule 142 of the Rules of Court provides:
“Section 1. Costs ordinarily follow results of suit.—Unless otherwise provided
in these rules, costs shall be allowed to the prevailing party as a matter of course, but
the court shall have power, for special reasons, to adjudge that either party shall pay
the costs of an action, or that the same be divided, as may be equitable. No costs
16
shall be allowed against the Republic of the Philippines unless otherwise provided by
law.” (Emphasis supplied)
Although, generally, costs are adjudged against the losing party, courts
nevertheless have discretion, for special reasons, to decree otherwise.
_______________
47 Rollo, p. 91.
329
VOL. 668, MARCH 14, 2012 329
F.F. Cruz & Co., Inc. vs. HR Construction Corp.
Here, considering that the work stoppage of HRCC is not justified, it is only
fitting that both parties should share in the burden of the cost of arbitration equally.
HRCC had a valid reason to institute the complaint against FFCCI in view of the
latter’s failure to pay the full amount of its monthly progress billings. However, we
disagree with the CIAC and the CA that only FFCCI should shoulder the arbitration
costs. The arbitration costs should be shared equally by FFCCI and HRCC in view of
the latter’s unjustified work stoppage.
WHEREFORE, in consideration of the foregoing disquisitions, the Decision
dated February 6, 2009 and Resolution dated April 13, 2009 of the Court of Appeals
in CA-G.R. SP No. 91860 are hereby AFFIRMED with MODIFICATION that the
arbitration costs shall be shared equally by the parties herein.
SO ORDERED.
Carpio (Chairperson), Brion, Perez and Sereno, JJ., concur. 
Judgment and resolution affirmed with modification.
Notes.—A waiver or quitclaim is a valid and binding agreement between the
parties, provided that it constitutes a credible and reasonable settlement, and that the
one accomplishing it has done so voluntarily and with a full understanding of its
import. (Plastimer Industrial Corporation vs. Gopo, 643 SCRA 502 [2011])
Factual findings of construction arbitrators are final and conclusive and not
reviewable by this Court on appeal. (De Guzman vs. Tumolva, 659 SCRA 725
[2011])
——o0o—— 

G.R. No. 211588, September 09, 2015

17
 WORLD'S BEST GAS, INC., Petitioner, v. HENRY VITAL, JOINED BY HIS
WIFE FLOSERFINA VITAL, Respondents.
DECISION
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1 filed by petitioner World's
Best Gas, Inc. (WBGI) assailing the Decision2 dated September 30, 2013 and the
Resolution3 dated March 4, 2014 of the Court of Appeals (CA) in CA-G.R. SP No.
123497, which affirmed the Decision4dated December 12, 2011 of the Regional Trial
Court of Bataan, Branch 2 (RTC) in Civil Case No. 8694 finding WBGI liable to
respondent Henry Vital (Vital) for his unpaid salaries and separation pay.
The Facts
Vital was one of the incorporators of WBGI, holding P500,000.00 worth of shares of
stocks therein.5 As a separate business venture, Vital and his wife, respondent
Floserfina Vital (respondents), sourced Liquefied Petroleum Gas (LPG) from WBGI
and distributed the same through ERJ Enterprises owned by them.6 As of
respondents' last statement of account, their outstanding balance with WBGI for
unpaid LPG amounted to P923,843.59.7
On January 6, 1999, Vital was appointed as Internal Auditor and Personnel Manager
by WBGI's President/CEO and continued to serve as such until his mandatory
retirement on September 25, 2003.8 Upon his retirement, WBGI's Board of Directors
computed Vital's retirement benefits at P82,500.00 by multiplying his P15,000.00
monthly pay by 5.5 years, which was the number of years he served as Internal
Auditor and Personnel Manager. WBGI also agreed to acquire Vital's P500,000.00
shares of stocks at par value.9
After offsetting the P500,000.00 due from WBGI's acquisition of his shares of stocks
against ERJ Enterprises' P923,843.59 outstanding balance to WBGI, Vital claimed
that the unpaid salaries and separation pay due him amounted to P845,000.00
and P250,000.00, respectively, leaving a net amount of P671,156.41 payable to him.
WBGI rejected Vital's claim and contended that after offsetting, Vital actually owed
it P369,156.19.10
On January 4, 2006, Vital filed a complaint before the National Labor Relations
Commission (NLRC) — Regional Arbitration Branch III (RAB), docketed as NLRC
Case No. RAB-III-01-9671-06, for non-payment of separation and retirement
benefits, underpayment of salaries/wages and 13th month pay, illegal reduction
of salary and benefits, and damages.11
For its part, WBGI averred that the Labor Arbiter (LA) had no jurisdiction over the
complaint because Vital is not an employee, but a mere incorporator and stockholder
of WBGI, hence, no employer-employee relationship exists between them.12
The LA Ruling
In a Decision13 dated May 3, 2006, the LA found that the issues between Vital and
WBGI are intra-corporate in nature as they arose between the relations of a
stockholder and the corporation, and not from an employee and employer
relationship.14 Thus, the LA dismissed the case for lack of jurisdiction,15 prompting
Vital to file his complaint16 for payment of unpaid salaries, separation and retirement
benefits, and damages on July 19, 2007 before the RTC, docketed as Civil Case No.
8694.17
The RTC Ruling
In a Decision18 dated December 12, 2011, the RTC, acting as a special commercial
court, oppositely found that Vital was an employee of WBGI and thereby, upheld his
claim of P845,000.00 and P250,000.00 in unpaid salaries and separation pay.
However, the RTC offset these amounts, including the P500,000.00 due from
WBGFs acquisition of Vital's shares of stocks, against the P923,843.59 payable to
WBGI from ERJ Enterprises, thus, awarding Vital the net amount of P671,156.41,
with legal interest from date of demand until full payment, P50,000.00 as attorney's
fees and costs of suit plus litigation expenses.19
The RTC ratiocinated that since the positions of Internal Auditor and Personnel
Manager were not provided for in WBGI's By-Laws, Vital was not a corporate
officer but an employee entitled to employment benefits. It also maintained that it
had jurisdiction to rule on the main intra-corporate controversy, together with the
question of damages and employment benefits.20
 
Aggrieved, WBGI elevated the case to the CA on appeal.21
 
The CA Ruling
In a Decision22 dated September 30, 2013, the CA dismissed the appeal, agreeing
with the RTC's finding that Vital was an employee of WGBI. While the CA observed
that the RTC's award of employment benefits to Vital was improper, as the same was
under the exclusive jurisdiction of the labor arbiters, it still ruled on said claim,
reasoning that it has the eventual authority to review the labor courts' decision on the
matter.23
WBGI filed a motion for reconsideration24 which was, however, denied in a
Resolution25 dated March 4, 2014; hence, the present petition.
18
 The Issue Before the Court
The main issue to be resolved is whether or not the CA erred in ruling upon Vital's
claim of P845,000.00 and P250,000.00 in unpaid salaries and separation pay.
The Court's Ruling
The petition is partly meritorious.
At the outset, it should be pointed out that the instant case actually involves three (3)
distinct causes of action, namely, (1) Vital's claim for P845,000.00 and P250,000.00
in unpaid salaries and separation pay; (2) the P923,843.59 in arrearages payable to
WBGI from ERJ Enterprises, which was admitted by Vital but not claimed by
WBGI; and (3) Vital's claim of P500,000.00 due from WBGI's acquisition of Vital's
shares of stocks. All of the foregoing were threshed out by the RTC in its December
12, 2011 Decision, and effectively upheld by the CA on appeal.
However, the RTC's adjudication of the first cause of action was improper since the
same is one which arose from Vital and WBGI's employer-employee relations,
involving an amount exceeding P5,000.00, hence, belonging to the jurisdiction of the
labor arbiters pursuant to Article 217 of the Labor Code:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30) calendar
days after the submission of the case by the parties for decision without extension,
even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:chanRoblesvirtualLawlibrary
 1. Unfair labor practice cases;ChanRoblesVirtualawlibrary
 2. Termination disputes;ChanRoblesVirtualawlibrary
 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;ChanRoblesVirtualawlibrary
 4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
 
 5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and
 6. Except claims for Employees' Compensation, 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) regardless of whether
accompanied with a claim for reinstatement.
 
 x x x x
Having no subject matter jurisdiction to resolve claims arising from employer-
employee relations, the RTC's ruling on Vital's claim of P845,000.00 and
P250,000.00 in unpaid salaries and separation pay is, thus, null and void, and
therefore, cannot perpetuate even if affirmed on appeal,26 rendering the CA's
ratiocination that it "has the eventual authority to review the labor courts' decision on
the matter"27 direly infirm. As a result, WBGI's petition is meritorious on this score.
However, since the dismissal is grounded on lack of jurisdiction, then the same
should be considered as a dismissal without prejudice.28As such, Vital may re-
file29the same claim, including those related thereto (e.g., moral and exemplary
damages, and attorney's fees) before the proper labor tribunal.
Contrary to its lack of jurisdiction over claims arising from employer-employee
relations, the RTC has: (a) general jurisdiction to adjudicate on the P923,843.59 in
arrearages payable to WBGI from ERJ Enterprises, which was admitted by
Vital but not claimed by WBGI;30and (b) special jurisdiction, as a special
commercial court, to adjudicate on Vital's claim of P500,000.00 from WBGI's
acquisition of his shares of stocks.31 Indeed, even acting as a special commercial
court, the RTC's general jurisdiction to adjudicate on the first-mentioned claim is
retained.
With the RTC's jurisdiction established over the above-mentioned causes of action,
Vital's claim of P500,000.00 due from WBGI's acquisition of his shares of stocks
should therefore be offsetagainst the P923,843.59 in arrearages payable to WBGI by
ERJ Enterprises owned by respondents, as prayed for by him. Hence, no amount can
be adjudicated in Vital's favor, since it is the respondents who, after due
computation, would be left liable to WBGI in the net amount of P423,843.59. This
notwithstanding, WBGI cannot recover this latter amount in this casesince it never
interposed a permissive counterclaim therefor in its answer. 32 It is well-settled that
courts cannot grant a relief not prayed for in the pleadings or in excess of what is
being sought by the party.33WBGI may, however, opt to file a separate collection
suit, including those related thereto (e.g., moral and exemplary damages, and
attorney's fees), to recover such sum.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated
September 30, 2013 and the Resolution dated March 4, 2014 of the Court of Appeals
in CA-G.R. SP No. 123497 are hereby SET ASIDE. A new one is
entered:chanRoblesvirtualLawlibrary
(a) DISMISSING respondent Henry Vital's (Vital) labor claims of P845,000.00 and
P250,000.00 in unpaid salaries and separation pay against petitioner World's Best
19
Gas, Inc.'s (WBGI), WITHOUT PREJUDICE as stated in this Decision; and

(b) RECOGNIZING WBGI's liability to Vital in the amount of P500,000.00 due

from the acquisition of his shares of stocks. This amount is,
however, OFFSET against the P923,843.59 in arrearages payable to WBGI by ERJ
Enterprises owned by Vital and his wife, respondent Floserfma Vital, leaving a net
amount of P423,843.59, which WBGI may claim in a separate case as stated in this
Decision.

SO ORDERED.chanroblesvirtuallawlibra

G.R. No. 203355. August 18, 2015.*

 
LEO R. ROSALES, EDGAR SOLIS, JONATHAN G. RANIOLA, LITO
FELICIANO, RAYMUNDO DIDAL, JR., NESTOR SALIN, ARNULFO S.
ABRIL, RUBEN FLORES, DANTE FERMA and MELCHOR SELGA,
petitioners, vs.NEW A.N.J.H. ENTERPRISES & N.H. OIL MILL
CORPORATION, NOEL AWAYAN, MA. FE AWAYAN, BYRON ILAGAN,
HEIDI A. ILAGAN and AVELINO AWAYAN, respondents.
Remedial Law; Civil Procedure; Appeals; On the issue of perfecting the
appeal, the Court of Appeals (CA) was correct when it pointed out that Rule VI of
the New Rules of Procedure of the National Labor Relations Commission (NLRC)
provides that a motion to reduce bond shall be entertained “upon the posting of a
bond in a reasonable amount in relation to the monetary award.”—On the issue of
perfecting the appeal, the CA was correct when it pointed out that Rule VI of the
New Rules of Procedure of the NLRC provides that a motion to reduce bond shall be
entertained “upon the posting of a bond in a reasonable amount in relation to the
monetary award.” As to what the “reasonable amount” is, the NLRC has wide
discretion in determining the reasonableness of the bond for purposes of perfecting
an appeal.
Same; Same; Res Judicata; Requisites of Res Judicata.—On the matter of the
application of the doctrine of res judicata, however, this Court is loath to sustain the
finding of the appellate court and the NLRC. For res judicata to apply, the
concurrence of the following requisites must be verified: (1) the former judgment is
final; (2) it is rendered by a court having jurisdiction over the subject matter and the
parties; (3) it is a judgment or an order on the merits; (4) there is — between the first
and the second actions — identity of parties, of subject matter, and of causes of
action.
_______________

*  EN BANC.
 
 
150
20
150 SUPREME COURT REPORTS ANNOTATED
Rosales vs. vs. New A.N.J.H. Enterprises
Labor Law; Labor Disputes; Words and Phrases; Article 219 (previously
Article 212) of the Labor Code defines a “labor dispute” as “any controversy or
matter concerning terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining, changing or arranging
the terms and conditions of employment, regardless of whether the disputants stand
in the proximate relation of employer and employee.”—Article 219 (previously
Article 212) of the Labor Code defines a “labor dispute” as “any controversy
or matter concerning terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining, changing or arranging
the terms and conditions of employment, regardless of whether the disputants stand
in the proximate relation of employer and employee.” As separation pay concerns a
term and condition of employment, Noel’s request to be guided in the payment
thereof is clearly a labor dispute under the Labor Code.
Same; Separation Pay; Labor Arbiters; Jurisdiction; The proper payment of
separation pay falls under the jurisdiction of the labor arbiter (LA) pursuant to Art.
224 (previously Art. 217) of the Labor Code, as it is mandated as a necessary
condition for the termination of employees.—The proper payment of separation pay
further falls under the jurisdiction of the labor arbiter pursuant to Art. 224
(previously Art. 217) of the Labor Code, as it is mandated as a necessary condition
for the termination of employees, viz.: Art. 224. Jurisdiction of the Labor Arbiters
and the Commission. (a) Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and decide, within
thirty (30) calendar days after the submission of the case by the parties for decision
without extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or nonagricultural: 1. Unfair labor
practice cases; 2. Termination disputes; x x x x 6. Except claims for employees
compensation, 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) regardless of whether accompanied with a claim for reinstatement.
Same; Same; Res Judicata; In SME Bank, Inc. v. De Guzman, 707 SCRA 35
(2013), the Supreme Court (SC) held that the accep-
 
151
VOL. 767, AUGUST 18, 2015 151
Rosales vs. vs. New A.N.J.H. Enterprises
tance of separation pay is an issue distinct from the legality of the dismissal of
the employees.—While there may be substantial identity of the parties, there is no
identity of subject matter or cause of action. In SME Bank, Inc. v. De Guzman, 707
SCRA 35 (2013), this Court held that the acceptance of separation pay is an issue
distinct from the legality of the dismissal of the employees. We held: The conformity
of the employees to the corporation’s act of considering them as terminated and their
subsequent acceptance of separation pay does not remove the taint of illegal
dismissal. Acceptance of separation pay does not bar the employees from
subsequently contesting the legality of their dismissal, nor does it estop them from
challenging the legality of their separation from the service.
Corporations; Piercing the Veil of Corporate Fiction; The application of the
doctrine of piercing the veil of corporate fiction is frowned upon.—The application
of the doctrine of piercing the veil of corporate fiction is frowned upon. However,
this Court will not hesitate to disregard the corporate fiction if it is used to such an
extent that injustice, fraud, or crime is committed against another in disregard of his
rights. In this case, petitioners advance the application of the doctrine because they
were terminated from employment on the pretext that there will be an impending
permanent closure of the business as a result of an intended sale of its assets to an
undisclosed corporation, and that there will be a change in the management.
Same; Same; Mere ownership by a single stockholder of all or nearly all of the
capital stock of the corporation does not by itself justify piercing the corporate veil.
—Subsequent events revealed that the buyer of the assets of their employer was a
corporation owned by the same employer and members of his family. Furthermore,
the business reopened in less than a month under the same management. Admittedly,
mere ownership by a single stockholder of all or nearly all of the capital stock of the
corporation does not by itself justify piercing the corporate veil. Nonetheless, in this
case, other circumstances show that the buyer of the assets of petitioners’ employer
is none other than his alter ego.
PETITION for review on certiorari of a decision of the Court of Appeals.
 
 
152
152 SUPREME COURT REPORTS ANNOTATED
Rosales vs. vs. New A.N.J.H. Enterprises
The facts are stated in the opinion of the Court.
  Florencio C. Lameyra for petitioners.
  Maria Christine C. Cabrera-Anonuevo for respondents.
 
VELASCO, JR., J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the September 5, 2012 Decision 1 of the Court of Appeals (CA) in C.A.-
G.R. S.P. No. 124395, which, in turn, affirmed the Resolutions of the National Labor
Relations Commission (NLRC) dated December 28, 2011 2 and February 28, 20123 in
NLRC-LAC Case No. 07-001796-11.
Respondent New ANJH Enterprises (New ANJH) is a sole proprietorship owned
by respondent Noel Awayan (Noel). Petitioners are its former employees who
worked as machine operators, drivers, helpers, lead and boiler men.
21
 Allegedly due to dwindling capital, on February 11, 2010, Noel wrote the 8  Id., at pp. 141-146. The following are the incorporators of NH Oil Mill
Director of the Department of Labor and Employment (DOLE) Region IV-A a letter
regarding New ANJH’s impending cessation of operations and the sale of its assets Name No. of Shares Subscribed Paid-Up
to respondent NH Oil Mill Corporation (NH Oil), as well as the termination of thirty-
three (33) employees by reason thereof. 4 On February 13, 2010, Noel met with the 33 1. Noel D. Awayan 7,900 P790,000.00 P237,000.00
affected employees, which included petitioners, to inform them of his plan. 5 On even
date, he gave the employees uni- 2. Heide A. Ilagan 1,900 P190,000.00 P57,000.00
_______________
3. Marife D. Awayan 100 P10,000.00 P3,000.00
1  Rollo, pp. 44-67. Penned by Associate Justice Vicente S.E. Veloso, with 4. Jay Byron S. Ilagan 50 P5,000.00 P1,500.00
Associate Justices Jane Aurora C. Lantion and Eduardo B. Peralta, Jr., concurring.
2  Id., at pp. 100-110. Penned by NLRC Presiding Commissioner Herminio V. 5. Imelda S. Awayan 50 P5,000.00 P1,500.00
Suelo, with Commissioners Angelo Ang Palana and Numeriano D. Villena,
TOTAL   P1,000,000.00 P300,000.00
concurring, Fourth Division.
3  Id., at pp. 111-115. Corporation with their respective subscribed and paid-up shares:
4  Id., at pp. 192-194.
5  Id., at pp. 195-196. 9  Id.
   
   
153 154
VOL. 767, AUGUST 18, 2015 153 154 SUPREME COURT REPORTS ANNOTATED
Rosales vs. vs. New A.N.J.H. Enterprises Rosales vs. vs. New A.N.J.H. Enterprises
formly-worded Notices dated February 12, 20106  informing them of the cessation of Please be informed that the business operations of the New ANJH Enterprises, a
operations of New ANJH effective March 15, 2010 and the sale of its assets to a single Proprietorship engaged in oil extraction situated in San Pablo City, will
corporation. Noel also offered the employees, including petitioners, their separation be permanently closed effective 15 March 2010 due to lack of capital caused by
pay. enormous uncollected receivables/debts and the necessity for the plant to undergo
On March 5, 2010, Noel signed a Deed of Sale selling the equipment, machines, general repairs and maintenance.
tools and/or other devices being used by New ANJH Enterprises for the x x x x
manufacturing and/or extraction of coconut oil for P950,000 to NH Oil, as In this connection, we respectfully request that we be allowed to effect the payment
represented by respondent Heidi A. Ilagan (Heidi), Noel’s sister.7 of the separation benefits to our employees before your Office and with your kind
6  Id., at pp. 435-444. intervention to ensure that we are properly guided by the provisions of law in this
7  Id., at pp. 190-191. undertaking.10 (emphasis supplied)
   
Parenthetically, the Articles of Incorporation of NH Oil were prepared on On March 16, 2010, petitioners Lito Feliciano (Feliciano), Edgar Solis (Solis),
January 27, 2010 with Noel appearing to have more than two-thirds (2/3) of the and Nestor Salin (Salin) received their respective separation pays, signed the
subscribed capital stock of the corporation. 8 The remaining shares had been corresponding check vouchers and executed Quitclaims and Release before Labor
subscribed by Heidi and other members of the Awayan family.9 Arbiter Melchisedek A. Guan (LA Guan) of NLRC-SRAB-IV San Pablo Office. 11
On March 8, 2010, respondents New ANJH and Noel filed before the NLRC On March 27, 2010, petitioner Leo Rosales (Rosales) similarly received his
Sub-Regional Arbitration Branch No. IV (NLRC-SRAB-IV), San Pablo City a separation pay from Noel and signed a Quitclaims and Release.12 On March 29,
“Letter Request for Intervention,” which was docketed as SRAB-IV-03-5066-10-L. 2010, the other petitioners, Arnulfo Abril (Abril), Raymundo Didal (Didal), Ruben
The letter request reads: Flores (Flores), Melchor Selga (Selga), Jonathan Ranola (Ranola), and Dante Ferma
_______________ (Ferma) also received their separation benefits and signed their
respective Quitclaims and Release and check vouchers.13

22
 Following the payments thus made to petitioners and their execution 19  Id., at pp. 254-274.
of Quitclaims and Release, LA Guan issued four (4) Orders, to wit: three Orders all  
dated March 22, 2010 for  
_______________ 156
156 SUPREME COURT REPORTS ANNOTATED
10  Id., at p. 307.
Rosales vs. vs. New A.N.J.H. Enterprises
11  Id., at pp. 447-448, 451-452, 455-456.
12  Id., at pp. 445-446. with the NLRC. They also posted 60% of the award ordered by the LA, or Six
13  Id., at pp. 449-450, 453-454, 457-464. Hundred Three Thousand Six Hundred Twenty-Seven and 52/100 Pesos
  (P603,627.52), as their appeal bond.21
  Meanwhile, petitioners also filed a Memorandum of Partial Appeal contending
155 that ELA Santos erred in failing to award them moral and exemplary damages.22
On September 24, 2011, the NLRC issued a Decision 23denying respondents’
VOL. 767, AUGUST 18, 2015 155 Verified Motion to Reduce Bond for lack of merit and so dismissing their appeal for
Rosales vs. vs. New A.N.J.H. Enterprises non-perfection. In the same Decision, the NLRC also granted petitioners’ partial
petitioners Feliciano, Solis, and Salin; 14 and one Order dated April 8, 2010 for appeal by modifying ELA Santos’ Decision to include the award of P20,000.00 to
petitioners Abril, Flores, Didal, Ferma, Rosales, Selga and Ranola.15 In the said each petitioner as moral and exemplary damages.24
Orders, LA Guan declared the “labor dispute” between New ANJH and petitioners as Respondents filed their Motion for Reconsideration with Motion to Admit
“dismissed with prejudice on ground of settlement.”16 Additional Appeal Cash Bond25 with corresponding payment of additional cash
Petitioners, however, filed a complaint for illegal dismissal, docketed as NLRC bond.26
Case No. RAB-IV-04-00649-10-L, with NLRC Regional Arbitration Branch IV While the motion was opposed by petitioners, 27 the NLRC, in its Resolution
(NLRC-RAB-IV) in Calamba City. They alleged in their complaint that while New dated December 28, 2011,28reversed its earlier Decision and ordered the dismissal of
ANJH stopped its operations on March 15, 2010, it resumed its operations as NH Oil petitioners’ complaint on the ground that it was barred by the Orders issued by LA
using the same machineries and with the same owners and management. 17Petitioners Guan under the doctrine of res judicata. Further, the NLRC pointed out that the sale
thus claimed that the sale of the assets of New ANJH to NH Oil was a circumvention of New ANJH’s assets to NH Oil Mill was in the exercise of sound management
of their security of tenure. prerogative and there was no proof that it was made to defeat petitioners’ security of
In a Decision dated April 29, 2011,18 Executive Labor Arbiter Generoso V. tenure.
Santos (ELA Santos) found that petitioners had been illegally dismissed and ordered _______________
their reinstatement and the payment of One Million Six Thousand Forty-Five and
87/100 Pesos (P1,006,045.87) corresponding to the petitioners’ full backwages less 20  Id., at pp. 275-277.
the amount paid to them as their respective “separation pay.” In ruling for the 21  Id.
petitioners, ELA Santos ratiocinated that the buyer “in the ‘impending sale’ 22  Id., at pp. 286-288.
undisclosed in the notices of [petitioners] is divulged by subsequent development to 23  Id., at pp. 290-297.
be practically the same as the seller.” Hence, for ELA Santos, it was extremely 24  Id., at p. 296.
difficult to conclude that the sale was genuine and can validly justify the termination 25  Id., at pp. 298-331.
of the petitioners. 26  Id., at p. 331.
Respondents filed their Notice of Appeal with Appeal Memorandum 19 along with 27  Id., at pp. 340-346.  
a Verified Motion to Reduce Bond20 28  Supra note 2.
_______________  
 
14  Id., at pp. 184-189. 157
15  Id., at pp. 182-183. VOL. 767, AUGUST 18, 2015 157
16  Id., at pp. 183, 185, 187, and 189.
Rosales vs. vs. New A.N.J.H. Enterprises
17  Id., at pp. 116-121.
18  Id., at pp. 238-251.

23
 In its Resolution dated February 28, 2012, 29 the NLRC denied petitioners’
Motion for Reconsideration. Hence, petitioners filed a petition for certiorari with the
CA.
In the assailed Decision,30 the appellate court denied the petition for certiorari,
thereby affirming the NLRC’s Resolutions dated December 28, 2011 and February
28, 2012.
In its Decision, the appellate court held that private respondents had substantially
complied with the rule requiring the posting of an appeal bond equivalent to the total
award given to the employees. More importantly, so the CA held, the Orders
rendered by LA Guan in NLRC Case No. SRAB-IV-03-5066-10-L were considered
final and binding upon the parties and had the force and effect of a judgment
rendered by the labor arbiter. Thus, the appellate court declared that the petitioners’
complaint for illegal dismissal was already barred by res judicata.
Aggrieved by the CA’s Decision, petitioners are now before this Court on a
petition for review on certiorari.
We find the petition to be with merit.
 
The suspension of the period to
perfect the appeal upon the filing  _______________
of a motion to reduce bond 
 
On the issue of perfecting the appeal, the CA was correct when it pointed out that
Rule VI of the New Rules of Procedure of the NLRC provides that a motion to
reduce bond shall be entertained “upon the posting of a bond in a reasonable amount
in relation to the monetary award.” As to what the “reasonable amount” is, the
NLRC has wide discretion in determining the reasonableness of the bond for
purposes of
_______________
29  Supra note 3.
30  Supra note 1.
 
 
158
158 SUPREME COURT REPORTS ANNOTATED
Rosales vs. vs. New A.N.J.H. Enterprises
perfecting an appeal. In Garcia v. KJ Commercial,31 this Court explained:
The filing of a motion to reduce bond and compliance with the two conditions
stop the running of the period to perfect an appeal. x x x
x x x x
The NLRC has full discretion to grant or deny the motion to reduce bond,
and it may rule on the motion beyond the 10-day period within which to perfect
an appeal. Obviously, at the time of the filing of the motion to reduce bond and
posting of a bond in a reasonable amount, there is no assurance whether the
appellant’s motion is indeed based on “meritorious ground” and whether the bond he
or she posted is of a “reasonable amount.” Thus, the appellant always runs the risk of
failing to perfect an appeal.
x x x In order to give full effect to the provisions on motion to reduce bond, the
appellant must be allowed to wait for the ruling of the NLRC on the motion
even beyond the 10-day period to perfect an appeal. If the NLRC grants the
motion and rules that there is indeed meritorious ground and that the amount of the
bond posted is reasonable, then the appeal is perfected. If the NLRC denies the
motion, the appellant may still file a motion for reconsideration as provided
under Section 15, Rule VII of the Rules. If the NLRC grants the motion for
reconsideration and rules that there is indeed meritorious ground and that the
amount of the bond posted is reasonable, then the appeal is perfected. If the
NLRC denies the motion, then the decision of the labor arbiter becomes final and
executory.
x x x
In any case, the rule that the filing of a motion to reduce bond shall not stop the
running of the period to perfect an appeal is not absolute. The Court may relax the
rule.
31  G.R. No. 196830, February 29, 2012, 667 SCRA 396.
 
 
159
VOL. 767, AUGUST 18, 2015 159
Rosales vs. vs. New A.N.J.H. Enterprises
In Intertranz Container Lines, Inc. v. Bautista, the Court held:
        “Jurisprudence tells us that in labor
cases, an appeal from a decision involving a
monetary award may be perfected only upon
the posting of cash or surety bond. The Court,
however, has relaxed this requirement under
certain exceptional circumstances in order to
resolve controversies on their merits. These
circumstances include: (1) fundamental con-
sideration of substantial justice; (2) preven-
tion of miscarriage of justice or of unjust en-
richment; and (3) special circumstances of the
case combined with its legal merits, and the
amount and the issue involved.”32 (emphasis
and underscoring supplied)
 
In this case, the NLRC had reconsidered its original position and declared that
the 60% bond was reasonable given the merits of the justification provided by
24
respondents in their Motion to Reduce Bond, as supplemented by their Motion for
Reconsideration with Motion to Admit Additional Appeal Cash Bond. The CA
affirmed the merits of the grounds cited by respondents in their motions and the
reasonableness of the bond originally posted by respondents. This is in accord with
the guidelines established in McBurnie v. Ganzon,33 where this Court declared that
the posting of a provisional cash or surety bond equivalent to ten percent (10%) of
the monetary award subject of the appeal is sufficient provided that there is
meritorious ground therefor, viz.:
[O]n the matter of the filing and acceptance of motions to reduce appeal bond, as
provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court
hereby
_______________
32  Id., at pp. 409-411.
33  G.R. Nos. 178034 & 178117, G.R. Nos. 186984-85, October 17, 2013, 707
SCRA 646.
 
160
160 SUPREME COURT REPORTS ANNOTATED
Rosales vs. vs. New A.N.J.H. Enterprises
RESOLVES that henceforth, the following guidelines shall be observed:
(a) The filing of a motion to reduce appeal bond shall be entertained by
the NLRC subject to the following conditions: (1) there is meritorious
ground; and (2) a bond in a reasonable amount is posted;
(b) For purposes of compliance with condition no. (2), a motion shall be
accompanied by the posting of a provisional cash or surety bond equivalent
to ten percent (10%) of the monetary award subject of the appeal,
exclusive of damages and attorney’s fees;
(c) Compliance with the foregoing conditions shall suffice to suspend
the running of the 10-day reglementary period to perfect an appeal from the
labor arbiter’s decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to
reduce bond and determine the final amount of bond that shall be posted by
the appellant, still in accordance with the standards of meritorious grounds
and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce bond, or
requires a bond that exceeds the amount of the provisional bond, the
appellant shall be given a fresh period of ten (10) days from notice of the
NLRC order within which to perfect the appeal by posting the required
appeal bond.34 (emphasis and underscoring added)
 
It is noted that the respondents have eventually posted the full amount of the
award ordered by the labor arbiter. Thus, given the absence of grave abuse of
discretion on the part of the NLRC and the affirmation of the CA of the
reasonableness of the motions and the amount of bond posted, there is
_______________
34  Id., at pp. 693-694.
 
 
161
VOL. 767, AUGUST 18, 2015 161
Rosales vs. vs. New A.N.J.H. Enterprises
no ground for this Court to reverse the CA’s finding that the appeal had been
perfected.  
 
Res Judicata does not bar the 
filing of the complaints for 
illegal dismissal
On the matter of the application of the doctrine of res judicata, however, this
Court is loath to sustain the finding of the appellate court and the NLRC. For res
judicata to apply, the concurrence of the following requisites must be verified: (1)
the former judgment is final; (2) it is rendered by a court having jurisdiction over the
subject matter and the parties; (3) it is a judgment or an order on the merits; (4) there
is —between the first and the second actions — identity of parties, of subject matter,
and of causes of action.35
The petitioners dispute the existence of all of the foregoing requisites. First,
petitioners contend that LA Guan does not have jurisdiction to issue the Orders in
SRAB-IV-03-5066-10-L since, in the first place, Noel’s letter-request for guidance in
the payment of separation pay is allegedly not a “labor dispute.”
Article 219 (previously Article 212) of the Labor Code defines a “labor dispute”
as “any controversy or matter concerning terms and conditions of employment or
the association or representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and employee.”
As separation pay concerns a term and condition of employment, Noel’s request to
be guided in the payment thereof is clearly a labor dispute under the Labor Code.
_______________
35  Luzon Development Bank v. Conquilla, G.R. No. 163338, September 21,
2005, 470 SCRA 533, 545.
 
 
162
162 SUPREME COURT REPORTS ANNOTATED
Rosales vs. vs. New A.N.J.H. Enterprises
25
 The proper payment of separation pay further falls under the jurisdiction of the
labor arbiter pursuant to Art. 224 (previously Art. 217) of the Labor Code, as it is
mandated as a necessary condition for the termination of employees, viz.:
Art. 224. Jurisdiction of the Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30) calendar
days after the submission of the case by the parties for decision without extension,
even in the absence of stenographic notes, the following cases involving all workers,
whether agricultural or nonagricultural:   upon. However, this Court will not hesitate to disregard the corporate fiction if it is
1. Unfair labor practice cases;
2. Termination disputes;
x x x x
6. Except claims for employees compensation, 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) regardless of whether accompanied with
a claim for reinstatement. (emphasis supplied)
 
The invocation of the labor arbiter’s jurisdiction by way of a letter-request
instead of a complaint is of no moment, as it is well-settled that the application of
technical rules of procedure is relaxed in labor cases.  
The third requisite, however, is not present. The Orders rendered by LA Guan
cannot be considered as constituting a judgment on the merits. The Orders simply
manifest that petitioners “are amenable to the computations made by the company
respecting their separation pay.” Nothing more.
 
 
163
VOL. 767, AUGUST 18, 2015 163
Rosales vs. vs. New A.N.J.H. Enterprises
They do not clearly state the petitioners’ right or New ANJH’s corresponding duty as
a result of the termination.36
Similarly, the fourth requisite is also absent. While there may be substantial
identity of the parties, there is no identity of subject matter or cause of action.
In SME Bank, Inc. v. De Guzman,37 this Court held that the acceptance of separation
pay is an issue distinct from the legality of the dismissal of the employees. We held:
The conformity of the employees to the corporation’s act of considering them as
terminated and their subsequent acceptance of separation pay does not remove the
taint of illegal dismissal. Acceptance of separation pay does not bar the
employees from subsequently contesting the legality of their dismissal, nor does
it estop them from challenging the legality of their separation from the
service.38 (emphasis supplied)
 
In the absence of the third and fourth requisites, the appellate court should have
proceeded to rule on the validity of petitioners’ termination.
 
Piercing the veil of corporate 
existence is justified in the 
present case 
 
The application of the doctrine of piercing the veil of corporate fiction is frowned
used to such
_______________
36  A judgment is “on the merits” when it amounts to a legal declaration of the
respective rights and duties of the parties, based upon the disclosed facts.
See Manalo v. Court of Appeals, G.R. No. 124204, April 20, 2001, 357 SCRA 112,
121; Mendiola v. Court of Appeals, G.R. No. 122807, July 5, 1996, 258 SCRA 492,
500-501.
37  G.R. No. 184517, October 8, 2013, 707 SCRA 35.
38  Id., at p. 57.
 
 
164
164 SUPREME COURT REPORTS ANNOTATED
Rosales vs. vs. New A.N.J.H. Enterprises
an extent that injustice, fraud, or crime is committed against another in disregard of
his rights.39
In this case, petitioners advance the application of the doctrine because they were
terminated from employment on the pretext that there will be an impending
permanent closure of the business as a result of an intended sale of its assets to an
undisclosed corporation, and that there will be a change in the management. The
termination notices received by petitioners identically read:
Nais po naming ipaabot sa inyo na ang New ANJH Enterprises ay ihihinto na
ang operasyon dahil sa nagpasya ako bilang may-ari na ipagbili na ang ari-arian
nito sa iba kung kayat magkakaroon ng pagpapalit sa pamumunuan nito.
Kaugnay po nito at ayon sa itinatadhana ng batas ay nais kong ipaabot sa inyo
na 30 araw matapos ninyong matanggap ang pasabing ito o simula sa Marso 15,
2010 ay ititigil na ang operasyon ng New ANJH Enterprises at sa nasabi ring petsa
ay matatapos na rin ang pagtratrabaho o “employment” ninyo sa New ANJH
Enterprises.40
 
Subsequent events, however, revealed that the buyer of the assets of their
employer was a corporation owned by the same employer and members of his
family. Furthermore, the business reopened in less than a month under the same
management.
26
 Admittedly, mere ownership by a single stockholder of all or nearly all of the
capital stock of the corporation does not by itself justify piercing the corporate veil.
Nonetheless, in this case, other circumstances show that the buyer of the assets of
 
_______________
39  Kukan International Corporation v. Reyes, G.R. No. 182729, September 29,
2010, 631 SCRA 596, 617.
40  Rollo, pp. 435-444.
 
 
165
VOL. 767, AUGUST 18, 2015 165
Rosales vs. vs. New A.N.J.H. Enterprises
petitioners’ employer is none other than his alter ego. 41 We quote with approval the
observations of ELA Santos:
Respondents did not allege that they informed complainants neither did they state
in the notices of termination that the buyer in the “impending sale” is NH Oil Mill.
Pondering on these observations, this Office finds it too difficult to surmise that
respondents’ omission was not deliberate, and so this Office holds that Noel was not
in good faith in dealing with complainants. The information disclosed by the
Certificate of Registration and Articles of Incorporation of NH Oil Mill explains
respondents’ motive. Its stockholders are members of [Noel’s] family known to
complainants, and Noel is the controlling stockholder and director. The
immediate resumption of operation after cessation of operation on March 15, 2010
further explains it. While complainants failed to prove that the stockholders in NH
Oil Mill were those who managed ANJH, respondents did not dispute that there
was no change in the management people, premises, tools, devices, equipment,
and machinery under NH Oil Mill. The buyer in the “impending sale”
undisclosed in the notices to complainants is divulged by subsequent
development to be practically the same as the seller. These things are inconsistent
with good faith.
x x x x
Here, complainants’ employment was terminated for the alleged sale of assets of
ANJH to NH Oil Mill that would allegedly entail [a] change of management. The
Deed of Sale dated March 5, 2010 [that] respondents presented (Annex “20,”
respondents position paper) to prove the “sale,” states that [for] the consideration of
Nine Hundred Fifty Thousand Pesos (Php950,000.00), Noel sold to NH Oil Mill the
equipment, machines, tool and/or other devises being used by ANJH for
manufacturing
_______________
41  Prince Transport, Inc. v. Garcia, G.R. No. 167291, January 12, 2011, 639
SCRA 312.
 
 
166
166 SUPREME COURT REPORTS ANNOTATED
Rosales vs. vs. New A.N.J.H. Enterprises
and/or extraction of coconut oil. This Office cannot simply accept it as sufficient
proof of sale by the seller to a distinct and separate entity.
x x x x
The subscribed capital stock of Noel and Heidi [in NH Oil] are worth
Php790,000.00 and Php190,000.00, respectively, or the total of
Php980,000.00. Respondents claim that Noel was managing ANJH and Heidi
was its Secretary. The Deed of Sale is signed by Noel and Heidi, Noel as [seller],
and Heidi as representative of NH Oil Mill. Respondents did not enumerate what
[were] the equipment etc. subject of the “sale,” and how they were depreciated, and
what [were] the equipment/machines owned by Avelino and rented by NH Oil Mill
and for how much? Therefrom, it is extremely difficult to conclude by quantum of
evidence acceptable to [a] reasonable mind, [that] the “sale to a distinct entity” is
genuine. And while the notices of termination state that there would be [a] change in
management, this Office notes that respondents do not deny that Noel and Heidi
continue to manage NH Oil Mill. Therefore, as far as complainants’ employment is
concerned, this Office pierces the veil of corporate fiction of NH Oil Mill and finds
that the purported sale thereto of the assets of ANJH is insufficient to validly
terminate such employment. This Office cannot rule otherwise without running afoul
to the mandate of the Constitution securing to the workingman his employment, and
guaranteeing to him full protection. So this Office declares that complainants were
illegally dismissed.42 (emphasis and underscoring supplied)
 
Clearly, the milieu of the present case compels this Court to remove NH Oil’s
corporate mask as it had become, and was used as, a shield for fraud, illegality and
inequity against the petitioners.
_______________
42  Rollo, pp. 246-248.
 
 
167
VOL. 767, AUGUST 18, 2015 167
Rosales vs. vs. New A.N.J.H. Enterprises
WHEREFORE, the instant petition is GRANTED and the Decision dated
September 5, 2012 of the Court of Appeals in C.A.-G.R. S.P. No. 124395, affirming
the Resolutions of the National Labor Relations Commission (NLRC) dated
December 28, 2011 and February 28, 2012 in NLRC-LAC Case No. 07-001796-11,
is hereby REVERSEDand SET ASIDE. The Decision of Executive Labor Arbiter
27
Generoso Santos in NLRC Case No. RAB-IV-04-00649-10-L to the effect that
petitioners were illegally dismissed is REINSTATED.
SO ORDERED.
Sereno (CJ.), Carpio, Leonardo-De Castro, Brion, Peralta, Bersamin, Del
Castillo, Perez, Mendoza, Perlas-Bernabe, Leonen and Jardeleza, JJ., concur.
Villarama, Jr., J., On Official Leave.
Reyes, J., On Leave.
Petition granted, judgment reversed and set aside.
Notes.—Under a variation of the doctrine of piercing the veil of corporate
fiction, when two business enterprises are owned, conducted and controlled by the
same parties, both law and equity will, when necessary to protect the rights of third
parties, disregard the legal fiction that two corporations are distinct entities and treat
them as identical or one and the same. (Heirs of Fe Tan Uy vs. International
Exchange Bank, 690 SCRA 519 [2013])
No motion to reduce bond shall be entertained except on meritorious grounds and
upon the posting of a bond in a reasonable amount in relation to the monetary award.
(McBurnie vs. Ganzon, 707 SCRA 646 [2013])
 
 
——o0o——

G.R. No. 168612. December 10, 2014.*

 
PHILIPPINE ELECTRIC CORPORATION (PHILEC), petitioner, vs. COURT
OF APPEALS, NATIONAL CONCILIATION AND MEDIATION BOARD
(NCMB), Department of Labor and Employment, RAMON T. JIMENEZ, in his
capacity as Voluntary Arbitrator, PHILEC WORKERS’ UNION (PWU),
ELEODORO V. LIPIO, and EMERLITO C. IGNACIO, respondents.
Labor Law; Voluntary Arbitrators; Appeals; The proper remedy to reverse or
modify a Voluntary Arbitrator’s or a panel of Voluntary Arbitrators’ decision or
award is to appeal the award or decision before the Court of Appeals (CA).—The
proper remedy to reverse or modify a Voluntary Arbitrator’s or a panel of Voluntary
Arbitrators’ decision or award is to appeal the award or decision before the Court of
Appeals.
Same; Same; Jurisdiction; A Voluntary Arbitrator or a panel of Voluntary

28
Arbitrators has the exclusive original jurisdiction over grievances arising from the
interpretation or implementation of collective bargaining agreements.—A Voluntary
Arbitrator or a panel of Voluntary Arbitrators has the exclusive original jurisdiction
over grievances arising from the interpretation or implementation of collective
bargaining agreements.  Should the parties agree, a Volun-
_______________
*  SECOND DIVISION.
362
362 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
tary Arbitrator or a panel of Voluntary Arbitrators shall also resolve the parties’ other
labor disputes, including unfair labor practices and bargaining deadlocks.
Same; Same; Appeals; Since the office of a Voluntary Arbitrator or a panel of
Voluntary Arbitrators is considered a quasi-judicial agency, the Supreme Court (SC)
concluded that a decision or award rendered by a Voluntary Arbitrator is
appealable before the Court of Appeals (CA).—Since the office of a Voluntary
Arbitrator or a panel of Voluntary Arbitrators is considered a quasi-judicial agency,
this court concluded that a decision or award rendered by a Voluntary Arbitrator is
appealable before the Court of Appeals. Under Section 9 of the Judiciary
Reorganization Act of 1980, the Court of Appeals has the exclusive original
jurisdiction over decisions or awards of quasi-judicial agencies and instrumentalities.
Same; Same; Judgments; Article 262-A of the Labor Code provides that the
award or decision of the Voluntary Arbitrator “shall be final and executory after ten
(10) calendar days from receipt of the copy of the award or decision by the
parties.”—Article 262-A of the Labor Code provides that the award or decision of
the Voluntary Arbitrator “shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the parties.”
Remedial Law; Civil Procedure; Appeals; It is true that Rule 43, Section 4 of
the Rules of Court provides for a fifteen (15)-day reglementary period for filing an
appeal.—It is true that Rule 43, Section 4 of the Rules of Court provides for a 15-day
reglementary period for filing an appeal: Section 4. Period of appeal.—The appeal
shall be taken within fifteen (15) days from notice of the award, judgment, final
order or resolution, or from the date of its last publication, if publication is required
by law for its effectivity, or of the denial of petitioner’s motion for new trial or
reconsideration duly filed in accordance with the governing law of the court or
agency a quo. Only one (1) motion for reconsideration shall be allowed. Upon proper
motion and the payment of the full amount of the docket fee before the expiration of
the reglementary period, the Court of Appeals may grant an additional period of
fifteen (15) days only within which to file the petition for review. No further
extension shall be granted except for the most compelling reason and in no case to
exceed fifteen (15) days.
363
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Same; Same; Same; Perfection of an appeal within the reglementary period is
not only mandatory but also jurisdictional so that failure to do so rendered the
decision final and executory, and deprives the appellate court of jurisdiction to alter
the final judgment much less to entertain the appeal.—Appeal is a “statutory
privilege,” which may be exercised “only in the manner and in accordance with the
provisions of the law.” “Perfection of an appeal within the reglementary period is not
only mandatory but also jurisdictional so that failure to do so rendered the decision
final and executory, and deprives the appellate court of jurisdiction to alter the final
judgment much less to entertain the appeal.”
Labor Law; Voluntary Arbitrators; Judgments; Statute provides that the
Voluntary Arbitrator’s decision “shall be final and executory after ten (10) calendar
days from receipt of the copy of the award or decision by the parties.”—We ruled
that Article 262-A of the Labor Code allows the appeal of decisions rendered by
Voluntary Arbitrators. Statute provides that the Voluntary Arbitrator’s decision
“shall be final and executory after ten (10) calendar days from receipt of the copy of
the award or decision by the parties.” Being provided in the statute, this 10-day
period must be complied with; otherwise, no appellate court will have jurisdiction
over the appeal. This absurd situation occurs when the decision is appealed on the
11th to 15th day from receipt as allowed under the Rules, but which decision, under
the law, has already become final and executory.
Same; Same; Appeals; The ten (10)-day period to appeal under the Labor
Code being a substantive right, this period cannot be diminished, increased, or
modified through the Rules of Court.—Under Article VIII, Section 5(5) of the
Constitution, this court “shall not diminish, increase, or modify substantive rights” in
promulgating rules of procedure in courts. The 10-day period to appeal under the
Labor Code being a substantive right, this period cannot be diminished, increased, or
modified through the Rules of Court.
Same; Same; Same; The rule is that a Voluntary Arbitrator’s award or
decision shall be appealed before the Court of Appeals (CA) within ten (10) days
from receipt of the award or decision.—The rule, therefore, is that a Voluntary
Arbitrator’s award or decision shall be appealed before the Court of Appeals within
10 days from receipt of the award or decision. Should the aggrieved party choose to
file a
364
364 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
motion for reconsideration with the Voluntary Arbitrator, the motion must be filed
29
within the same 10-day period since a motion for reconsideration is filed “within the
period for taking an appeal.”
Remedial Law; Special Civil Actions; Certiorari; An extraordinary remedy, a
petition for certiorari may be filed only if appeal is not available. If appeal is
available, an appeal must be taken even if the ground relied upon is grave abuse of
discretion.—A petition for certiorari is a special civil action “adopted to correct
errors of jurisdiction committed by the lower court or quasi-judicial agency, or when
there is grave abuse of discretion on the part of such court or agency amounting to
lack or excess of jurisdiction.” An extraordinary remedy, a petition for certiorari
may be filed only if appeal is not available. If appeal is available, an appeal must be
taken even if the ground relied upon is grave abuse of discretion. As an exception to
the rule, this court has allowed petitions for certiorari to be filed in lieu of an appeal
“(a) when the 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.”
Labor Law; Collective Bargaining Agreements; Words and Phrases; A
collective bargaining agreement (CBA) is “a contract executed upon the request of
either the employer or the exclusive bargaining representative of the employees
incorporating the agreement reached after negotiations with respect to wages, hours
of work and all other terms and conditions of employment, including proposals for
adjusting any grievances or questions arising under such agreement.”—A collective
bargaining agreement is “a contract executed upon the request of either the employer
or the exclusive bargaining representative of the employees incorporating the
agreement reached after negotiations with respect to wages, hours of work and all
other terms and conditions of employment, including proposals for adjusting any
grievances or questions arising under such agreement.” A collective bargaining
agreement being a contract, its provisions “constitute the law between the parties”
and must be complied with in good faith.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
365
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
May 25, 2004, dismissing the Philippine Electric Corporation’s petition for
certiorari for lack of merit.
 Philippine Electric Corporation (PHILEC) is a domestic corporation “engaged in the
manufacture and repairs of high voltage transformers.” 3 Among its rank-and-file
employees were Eleodoro V. Lipio (Lipio) and Emerlito C. Ignacio, Sr. (Ignacio,
Sr.), former members of the PHILEC Workers’ Union (PWU). 4 PWU is a legitimate
labor organization and the exclusive bargaining representative of PHILEC’s rank-
and-file employees.5
From June 1, 1989 to May 31, 1997, PHILEC and its rank-and-file employees were
governed by collective bargaining agreements providing for the following step
increases in an employee’s basic salary in case of promotion:6
_______________
1  Rollo, pp. 9-29.
2  Id., at pp. 32-40. The decision docketed as C.A.-G.R. S.P. No. 60457 was
penned by Associate Justice Aurora Santiago-Lagman and concurred in by Associate
Justices Romeo A. Brawner and Juan Q. Enriquez, Jr. of the Twelfth Division.
3  Id., at p. 84.
4  Id.
5  Id.
6  Id., at pp. 84 and 91.
366
366 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
 

  Sanidad, Abaya, Te, Viterbo, Enriquez & Tan for petitioner.

  Potenciano A. Flores, Jr. for respondents.
 
LEONEN, J.:
 
An appeal to reverse or modify a Voluntary Arbitrator’s award or decision must be
filed before the Court of Appeals within 10 calendar days from receipt of the award
or decision.
This is a petition1 for review on certiorari of the Court of Appeals’ decision 2 dated  

30
On August 18, 1997 and with the previous collective bargaining agreements already agreement, effective retroactively
expired, PHILEC selected Lipio for promotion from Machinist under Pay Grade _______________
VIII7 to Foreman I under Pay Grade B. 8 PHILEC served Lipio a memorandum,9 10  Id.
instructing him to undergo training for the position of Foreman I beginning on 11  Id., at p. 76.
August 25, 1997.  PHILEC undertook to pay Lipio training allowance as provided in 12  Id., at p. 135.
the memorandum: 13  Id.
This will confirm your selection and that you will undergo training for the position of 14  Id.
Foreman I (PG B) of the Tank Finishing Section, Distribution Transformer 368
Manufacturing and Repair effective August 25, 1997.
You will be trained as a Foreman I, and shall receive the following training 368 SUPREME COURT REPORTS ANNOTATED
allowance until you have completed Philippine Electric Corporation (PHILEC) vs. Court of Appeals
_______________
7  Id., at p. 76.
8  Id., at p. 134. on June 1, 1997 and expiring on May 31, 1999. 15 Under Article X, Section 4 of the
9  Id. June 1, 1997 collective bargaining agreement, a rank-and-file employee promoted
367 shall be entitled to the following step increases in his or her basic salary:16
Section 4. STEP INCREASES.—[Philippine Electric Corporation] shall adopt the
VOL. 744, DECEMBER 10, 2014 following step increases on the basic salary in case of promotion effective June 1,
Philippine Electric Corporation (PHILEC) vs. Court of Appeals 1997. Such increases shall be based on the scale below or upon the minimum of the
new pay grade to which the employee is promoted, whichever is higher:
 
the training/observation period which shall not exceed four (4) months.
First Month - - - - - P350.00
Second Month - - - - - P815.00
Third Month - - - - - P815.00
Fourth Month - - - - - P815.00
Please be guided accordingly.10
 
Ignacio, Sr., then DT-Assembler with Pay Grade VII, 11 was likewise selected for
training for the position of Foreman I.12 On August 21, 1997, PHILEC served
Ignacio, Sr. a memorandum,13 instructing him to undergo training with the following
schedule of allowance:    
This will confirm your selection and that you will undergo training for the position of To be promoted, a rank-and-file employee shall undergo training or observation and
Foreman I (PG B) of the Assembly Section, Distribution Transformer Manufacturing shall receive training allowance as provided in Article IX, Section 1(f) of the June 1,
and Repair effective August 25, 1997. 1997 collective bargaining agreement:17
You will be trained as a Foreman I, and shall receive the following training Section 1. JOB POSTING AND BIDDING:
allowance until you have completed the training/observation period which shall not ....
exceed four (4) months. (f) Allowance for employees under Training or Observation shall be on a graduated
First Month - - - - - P255.00 basis as follows:
Second Month - - - - - P605.00 For the first month of training, the allowance should be equivalent to one step
Third Month - - - - - P1,070.00 increase of the next
Fourth Month - - - - - P1,070.00 _______________
Please be guided accordingly.14 15  Id., at pp. 64 and 113.
  16  Id., at pp. 86-87 and 113-114.
On September 17, 1997, PHILEC and PWU entered into a new collective bargaining 17  Id., at pp. 113-114.
31
 369
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
higher grade. Every month thereafter the corresponding increase shall be equivalent
to the next higher grade until the allowance for the grade applied for is attained.
As an example, if a Grade I employee qualifies for a Grade III position, he will
receive the training allowance for Grade I to Grade II for the first month. On the
second month, he will receive the training allowance for Grade I to Grade II plus the
allowance for Grade II to Grade III. He will then continue to receive this amount
until he finishes his training or observation period.18
 
Claiming that the schedule of training allowance stated in the memoranda served on
Lipio and Ignacio, Sr. did not conform to Article X, Section 4 of the June 1, 1997
collective bargaining agreement, PWU submitted the grievance to the grievance
machinery.19
PWU and PHILEC failed to amicably settle their grievance.  Thus, on December 21,
1998, the parties filed a submission agreement 20 with the National Conciliation and
Mediation Board, submitting the following issues to voluntary arbitration:
I 22  Id.
WHETHER OR NOT PHILEC VIOLATED SECTION 4 (Step Increases)
ARTICLE X (Wage and Position Standardization) OF THE EXISTING
COLLECTIVE BARGAINING AGREEMENT (CBA) IN IMPLEMENTING THE
STEP INCREASES RELATIVE TO THE PROMOTION OF INDIVIDUAL
COMPLAINANTS.
 
II
WHETHER OR NOT PHILEC’s MANNER OF IMPLEMENTING THE STEP
INCREASES IN CONNECTION
_______________
18  Id., at p. 65.
19  Id., at pp. 85-86 and 115.
20  Id., at pp. 73-74.
370
370 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
WITH THE PROMOTION OF INDIVIDUAL COMPLAINANTS IN RELATION
TO THE PROVISIONS OF SECTION 4, ARTICLE X OF THE CBA
CONSTITUTES UNFAIR LABOR PRACTICE.21
In their submission agreement, PWU and PHILEC designated Hon. Ramon T.
Jimenez as Voluntary Arbitrator (Voluntary Arbitrator Jimenez). 22
Voluntary Arbitrator Jimenez, in the order23 dated January 4, 1999, directed the
parties to file their respective position papers.
In its position paper,24 PWU maintained that PHILEC failed to follow the schedule of
step increases under Article X, Section 4 of the June 1, 1997 collective bargaining
agreement.  Machinist I, Lipio’s position before he underwent training for Foreman
I, fell under Pay Grade VIII, while Foreman I fell under Pay Grade X. Following the
schedule under Article X, Section 4 of the June 1, 1997 collective bargaining
agreement and the formula under Article IX, Section 1(f), Lipio should be paid
training allowance equal to the step increase for pay grade bracket VIII-IX for the
first month of training. For the succeeding months, Lipio should be paid an
allowance equal to the step increase for pay grade bracket VIII-IX plus the step
increase for pay grade bracket IX-X, thus:25
First month - - - - - P456.00
Second month - - - - - P1,031.00
Third month - - - - - P1,031.00
Fourth month - - - - - P1,031.00.
_______________
21  Id., at p. 73.
23  Id., at p. 82.
24  Id., at pp. 111-133.
25  Id., at pp. 123-125.
371
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
With respect to Ignacio, Sr., he was holding the position of DT-Assembler under Pay
Grade VII when he was selected to train for the position of Foreman I under Pay
Grade X. Thus, for his first month of training, Ignacio, Sr. should be paid training
allowance equal to the step increase under pay grade bracket VII-VIII. For the
second month, he should be paid an allowance equal to the step increase under pay
grade bracket VII-VIII plus the step increase under pay grade bracket VIII-IX. For
the third and fourth months, Ignacio, Sr. should receive an allowance equal to the
amount he received for the second month plus the amount equal to the step increase
under pay grade bracket IX-X, thus:26
First month - - - - - P361.00
Second month - - - - - P817.00
Third month - - - - - P1,392.00
Fourth month - - - - - P1,392.00.
32
For PHILEC’s failure to apply the schedule of step increases under Article X of the 30  Id., at pp. 86-87.
June 1, 1997 collective bargaining agreement, PWU argued that PHILEC committed 31  Id., at p. 85.
an unfair labor practice under Article 24827 of the Labor Code.28 32  Id., at p. 87.
In its position paper,29 PHILEC emphasized that it promoted Lipio and Ignacio, Sr. 33  Id., at p. 67.
while it was still negotiating a new collective bargaining agreement with PWU. 34  Id.
Since PHILEC and PWU had not yet negotiated a new collective bargaining 373
agreement when PHILEC selected Lipio and Ignacio,
_______________ VOL. 744, DECEMBER 10, 2014
26  Id. Philippine Electric Corporation (PHILEC) vs. Court of Appeals
27  Labor Code, Art. 248 provides:
Art. 248. Unfair labor practices of employers.—It shall be unlawful for an
employer to commit any of the following unfair labor practice:  
....
(i) To violate a collective bargaining agreement.
28  Rollo, p. 129.
29  Id., at pp. 83-90.
372
372 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals

Sr. for training, PHILEC applied the “Modified SGV” pay grade scale in computing
Lipio’s and Ignacio, Sr.’s training allowance.30
This “Modified SGV” pay grade scale, which PHILEC and PWU allegedly agreed to
implement beginning on May 9, 1997, covered both rank-and-file and supervisory
employees.31 According to PHILEC, its past collective bargaining agreements with
the rank-and-file and supervisory unions resulted in an overlap of union membership
in Pay Grade IX of the rank-and-file employees and Pay Grade A of the supervisory
employees.32 Worse, past collective bargaining agreements resulted in rank-and-file
employees under Pay Grades IX and X enjoying higher step increases than
supervisory employees under Pay Grades A and B:33
 
 
To preserve the hierarchical wage structure within PHILEC’s enterprise, PHILEC
and PWU allegedly agreed to implement the uniform pay grade scale under the
“Modified SGV” pay grade system, thus:34
_______________
 
Pay grade bracket I-IX covered rank-and-file employees, while pay grade bracket A-
F covered supervisory employees.35
Under the “Modified SGV” pay grade scale, the position of Foreman I fell under Pay
Grade B. PHILEC then computed Lipio’s and Ignacio, Sr.’s training allowance
accordingly.36
PHILEC disputed PWU’s claim of unfair labor practice. According to PHILEC, it
did not violate its collective bargaining agreement with PWU when it implemented
the “Modified SGV” scale. Even assuming that it violated the collective bargaining
agreement, PHILEC argued that its violation was not “gross” or a “flagrant and/or
malicious refusal to comply with the economic provisions of [the collective
bargaining agreement].”37 PHILEC, therefore, was not guilty of unfair labor
practice.38
_______________
35  Id.
36  Id., at p. 54.
37  Labor Code, Art. 261 provides:
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary
Arbitrators.—The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
33
original and exclusive jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the Collective Bargaining
Agreement and those arising from the interpreta-
374
374 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Voluntary Arbitrator Jimenez held in the decision 39 dated August 13, 1999, that
PHILEC violated its collective bargaining agreement with PWU. 40 According to
Voluntary Arbitrator Jimenez, the June 1, 1997 collective bargaining agreement
governed when PHILEC selected Lipio and Ignacio, Sr. for promotion on August 18
and 21, 1997.41 The provisions of the collective bargaining agreement being the law
between the parties, PHILEC should have computed Lipio’s and Ignacio, Sr.’s
training allowance based on Article X, Section 4 of the June 1, 1997 collective
bargaining agreement.42
As to PHILEC’s claim that applying Article X, Section 4 would result in salary
distortion within PHILEC’s enterprise, Voluntary Arbitrator Jimenez ruled that this
was “a concern that PHILEC could have anticipated and could have taken corrective
action”43 before signing the collective bargaining agreement.
Voluntary Arbitrator Jimenez dismissed PWU’s claim of unfair labor practice. 44
According to him, PHILEC’s acts “cannot be considered a gross violation of the
[collective bargain-
_______________
tion or enforcement of company personnel policies referred to in the immediately
preceding article. Accordingly, violations of a Collective Bargaining Agreement,
except those which are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the Collective Bargaining
Agreement. For purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.
38  Rollo, p. 88.
39  Id., at pp. 63-71.
40  Id., at p. 70.
41  Id., at pp. 68-69.
42  Id.
43  Id., at pp. 69-70.
44  Id., at p. 71.
375
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
ing agreement] nor . . . [a] flagrant and/or malicious refusal to comply with the
economic provisions of the [agreement].”45
Thus, Voluntary Arbitrator Jimenez ordered PHILEC to pay Lipio and Ignacio, Sr.
training allowance based on Article X, Section 4 and Article IX, Section 1 of the
June 1, 1997 collective bargaining agreement.46
PHILEC received a copy of Voluntary Arbitrator Jimenez’s decision on August 16,
1999.47 On August 26, 1999, PHILEC filed a motion for partial reconsideration 48 of
Voluntary Arbitrator Jimenez’s decision.
In the resolution49 dated July 7, 2000, Voluntary Arbitrator Jimenez denied
PHILEC’s motion for partial reconsideration for lack of merit. PHILEC received a
copy of the July 7, 2000 resolution on August 11, 2000.50
On August 29, 2000, PHILEC filed a petition51 for certiorari before the Court of
Appeals, alleging that Voluntary Arbitrator Jimenez gravely abused his discretion in
rendering his decision.52 PHILEC maintained that it did not violate the June 1, 1997
collective bargaining agreement.53 It applied the “Modified SGV” pay grade rates to
avoid salary distortion within its enterprise. 54
In addition, PHILEC argued that Article X, Section 4 of the collective bargaining
agreement did not apply to Lipio and Ignacio, Sr. Considering that Lipio and Ignacio,
Sr. were promoted to a supervisory position, their training allowance
_______________
45  Id., at pp. 70-71.
46  Id., at p. 70.
47  Id., at p. 180.
48  Id., at pp. 179-185.
49  Id., at p. 72.
50  Id., at p. 46.
51  Id., at pp. 45-59.
52  Id., at p. 52.
53  Id., at p. 57.
54  Id., at p. 53.
376
376 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
should be computed based on the provisions of PHILEC’s collective bargaining
agreement with ASSET, the exclusive bargaining representative of PHILEC’s
supervisory employees.55
The Court of Appeals affirmed Voluntary Arbitrator Jimenez’s decision. 56 It agreed
that PHILEC was bound to apply Article X, Section 4 of its June 1, 1997 collective
bargaining agreement with PWU in computing Lipio’s and Ignacio, Sr.’s training
allowance.57 In its decision, the Court of Appeals denied due course and dismissed
PHILEC’s petition for certiorari for lack of merit.58
PHILEC filed a motion for reconsideration, which the Court of Appeals denied in the
34
resolution59 dated June 23, 2005.
On August 3, 2005, PHILEC filed its petition for review on certiorari before this
court,60 insisting that it did not violate its collective bargaining agreement with
PWU.61 PHILEC maintains that Lipio and Ignacio, Sr. were promoted to a position
covered by the pay grade scale for supervisory employees. 62 Consequently, the
provisions of PHILEC’s collective bargaining agreement with its supervisory
employees should apply, not its collective bargaining agreement with PWU. 63 To
insist on applying the pay grade scale in Article X, Section 4, PHILEC argues, would
result in a salary distortion within PHILEC.64
_______________
55  Id.
56  Id., at p. 40.
57  Id., at p. 38.
58  Id., at p. 40.
59  Id., at pp. 42-43.
60  Id., at p. 9.
61  Id., at p. 19.
62  Id., at p. 23.
63  Id.
64  Id., at p. 24.
377
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
In the resolution65 dated September 21, 2005, this court ordered PWU to comment on
PHILEC’s petition for review on certiorari.
In its comment,66 PWU argues that Voluntary Arbitrator Jimenez did not gravely
abuse his discretion in rendering his decision. He correctly applied the provisions of
the PWU collective bargaining agreement, the law between PHILEC and its rank-
and-file employees, in computing Lipio’s and Ignacio, Sr.’s training allowance. 67
On September 27, 2006, PHILEC filed its reply, 68 reiterating its arguments in its
petition for review on certiorari.
The issue for our resolution is whether Voluntary Arbitrator Jimenez gravely abused
his discretion in directing PHILEC to pay Lipio’s and Ignacio, Sr.’s training
allowance based on Article X, Section 4 of the June 1, 1997 rank-and-file collective
bargaining agreement.
This petition should be denied.
I A Voluntary Arbitrator or a panel of Voluntary Arbitrators has the exclusive original
 
The Voluntary Arbitrator’s decision dated August 13, 1999 is already final and
executory
We note that PHILEC filed before the Court of Appeals a petition for certiorari
under Rule 65 of the Rules of Court against Voluntary Arbitrator Jimenez’s
decision.69
This was not the proper remedy.
_______________
65  Id., at p. 335.
66  Id., at pp. 350-387. The May 7, 2006 comment was entitled
“MEMORANDUM.”
67  Id., at p. 351.
68  Id., at pp. 398-408.
69  Id., at p. 45.
378
378 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Instead, the proper remedy to reverse or modify a Voluntary Arbitrator’s or a panel
of Voluntary Arbitrators’ decision or award is to appeal the award or decision before
the Court of Appeals. Rule 43, Sections 1 and 3 of the Rules of Court provide:
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.
....
Sec. 3. Where to appeal.—
An appeal under this Rule may be taken to the Court of Appeals within the period
and in the manner herein provided, whether the appeal involves questions of fact, of
law, or mixed questions of fact and law. (Emphasis supplied)
jurisdiction over grievances arising from the interpretation or implementation of
collective bargaining agreements. Should the parties agree, a Voluntary
379
35

VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Arbitrator or a panel of Voluntary Arbitrators shall also resolve the parties’ other
labor disputes, including unfair labor practices and bargaining deadlocks. Articles
261 and 262 of the Labor Code provide:  
ART. 261. JURISDICTION OF VOLUNTARY ARBITRATORS OR PANEL OF
VOLUNTARY ARBITRATORS.—
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and
exclusive jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel policies
referred to in the immediately preceding article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in character, shall no
longer be treated as unfair labor practice and shall be resolved as grievances under
the Collective Bargaining Agreement. For purposes of this article, gross violations of
Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department
of Labor and Employment shall not entertain disputes, grievances, or matters under
the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of
Voluntary Arbitrators and shall immediately dispose and refer the same to the
Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining
Agreement.
 ART. 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.
380
380 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
In Luzon Development Bank v. Association of Luzon Development Bank Employees,70
this court ruled that the proper remedy against the award or decision of the Voluntary
Arbitrator is an appeal before the Court of Appeals. This court first characterized the
office of a Voluntary Arbitrator or a panel of Voluntary Arbitrators as a quasi-
judicial agency, citing Volkschel Labor Union, et al. v. NLRC 71 and Oceanic Bic
Division (FFW) v. Romero:72
In Volkschel Labor Union, et al. v. NLRC, et al., on the settled premise that the
judgments of courts and awards of quasi-judicial agencies must become final at some
definite time, this Court ruled that the awards of voluntary arbitrators determine the
rights of parties; hence, their decisions have the same legal effect as judgments of a
court. In Oceanic Bic Division (FFW), et al. v. Romero, et al., this Court ruled that “a
voluntary arbitrator by the nature of her functions acts in a quasi-judicial capacity.”
Under these rulings, it follows that the voluntary arbitrator, whether acting solely or
in a panel, enjoys in law the status of a quasi-judicial agency but independent of, and
apart from, the NLRC since his decisions are not appealable to the latter. 73 (Citations
omitted)
 
This court then stated that the office of a Voluntary Arbitrator or a panel of
Voluntary Arbitrators, even assuming that the office is not strictly a quasi-judicial
agency, may be considered an instrumentality, thus:
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators
may not strictly be
_______________
70  319 Phil. 262; 249 SCRA 162 (1995) [Per J. Romero, En Banc].
71  187 Phil. 202; 98 SCRA 314 (1980) [Per J. De Castro, First Division].
72  215 Phil. 340; 130 SCRA 392 (1984) [Per J. Gutierrez, Jr., Second Division].
73  Luzon Development Bank v. Association of Luzon Development Bank
Employees, supra at p. 269; pp. 168-169.
381
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
considered as a quasi-judicial agency, board or commission, still both he and the
panel are comprehended within the concept of a “quasi-judicial instrumentality.” It
may even be stated that it was to meet the very situation presented by the quasi-
judicial functions of the voluntary arbitrators here, as well as the subsequent
arbitrator/arbitral tribunal operating under the Construction Industry Arbitration
Commission, that the broader term “instrumentalities” was purposely included in the
above quoted provision.
An “instrumentality” is anything used as a means or agency. Thus, the terms
governmental “agency” or “instrumentality” are synonymous in the sense that either
of them is a means by which a government acts, or by which a certain government
act or function is performed. The word “instrumentality,” with respect to a state,
contemplates an authority to which the state delegates governmental power for the
performance of a state function. An individual person, like an administrator or
executor, is a judicial instrumentality in the settling of an estate, in the same manner
that a sub-agent appointed by a bankruptcy court is an instrumentality of the court,
and a trustee in bankruptcy of a defunct corporation is an instrumentality of the state.
The voluntary arbitrator no less performs a state function pursuant to a governmental
power delegated to him under the provisions therefor in the Labor Code and he falls,
therefore, within the contemplation of the term “instrumentality” in the aforequoted
Sec. 9 of B.P. 129.74 (Citations omitted)
36

Since the office of a Voluntary Arbitrator or a panel of Voluntary Arbitrators is
considered a quasi-judicial agency, this court concluded that a decision or award
rendered by a Voluntary Arbitrator is appealable before the Court of Appeals. Under
Section 9 of the Judiciary Reorganization Act of 1980, the Court of Appeals has the
exclusive original jurisdiction
_______________
74  Id., at pp. 270-271; pp. 169-170.
382
382 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
over decisions or awards of quasi-judicial agencies and instrumentalities:
Section 9. Jurisdiction.—The Court of Appeals shall exercise:
....
3. Exclusive appellate jurisdiction over all final judgements, resolutions, orders or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities,
boards or commission, including the Securities and Exchange Commission, the
Social Security 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. (Emphasis supplied)
 
Luzon Development Bank was decided in 1995 but remains “good law.” 75 In the
2002 case of Alcantara, Jr. v. Court of Appeals,76 this court rejected petitioner
Santiago Alcantara, Jr.’s argument that the Rules of Court, specifically Rule 43,
Section 2, superseded the Luzon Development Bank ruling:
Petitioner argues, however, that Luzon Development Bank is no longer good law
because of Section 2, Rule 43 of the Rules of Court, a new provision introduced by
the 1997 revision. The provision reads:
SEC. 2. Cases not covered.—This Rule shall not apply to judgments or final
orders issued under the Labor Code of the Philippines.
_______________
75  Alcantara, Jr. v. Court of Appeals, 435 Phil. 395, 404; 386 SCRA 370, 379
(2002) [Per J. Kapunan, First Division].
76  Id.
383
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
The provisions may be new to the Rules of Court but it is far from being a new law.
Section 2, Rule 42 of the 1997 Rules of Civil Procedure, as presently worded, is
nothing more but a reiteration of the exception to the exclusive appellate jurisdiction
of the Court of Appeals, as provided for in Section 9, Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902:
(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:
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
384
384 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
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. 77 (Emphases in the
original)
 
This court has since reiterated the Luzon Development Bank ruling in its decisions.78
_______________
77  Id., at pp. 404-406; pp. 379-380.
78  Royal Plant Workers Union v. Coca-Cola Bottlers Philippines, Inc.-Cebu
Plant, G.R. No. 198783, April 15, 2013, 696 SCRA 357 [Per J. Mendoza, Third
Division]; Samahan ng mga Manggagawa sa Hyatt (SAMASAH-NUWHRAIN) v.
37
Magsalin, G.R. No. 164939, June 6, 2011, 650 SCRA 445 [Per J. Villarama, Jr.,
Third Division]; Teng v. Pahagac, G.R. No. 169704, November 17, 2010, 635 SCRA
173 [Per J. Brion, Third Division]; Samahan ng mga Manggagawa sa Hyatt-
NUWHRAIN-APL v. Bacungan, 601 Phil. 365; 582 SCRA 369 (2009) [Per J. Tinga,
Second Division]; Mora v. Avesco Marketing Corporation, 591 Phil. 827; 571 SCRA
226 (2008) [Per J. Carpio-Morales, Second Division]; AMA Computer College-
Santiago City, Inc. v. Nacino, 568 Phil. 465; 544 SCRA 502 (2008) [Per J. Nachura,
Third Division]; Centro Escolar University Faculty and Allied Workers Union-
Independent v. Court of Appeals, 523 Phil. 427; 490 SCRA 61 (2006) [Per J. Puno,
Second Division]; Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO-
BALAIS v. Coca-Cola Bottlers Philippines, Inc., 502 Phil. 748; 464 SCRA 507
(2005) [Per J. Chico-Nazario, Second Division]; Nippon Paint Employees Union-
OLALIA v. Court of Appeals, 485 Phil. 675; 443 SCRA 286 (2004) [Per J. Puno,
Second Division]; Manila Midtown Hotel v. Borromeo, 482 Phil. 137; 438 SCRA
653 (2004) [Per J. Sandoval-Gutierrez, Third Division]; Sevilla Trading Company v.
Semana, G.R. No. 152456, April 28, 2004, 428 SCRA 239 [Per J. Puno, Second
Division].
385
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Article 262-A of the Labor Code provides that the award or decision of the
Voluntary Arbitrator “shall be final and executory after ten (10) calendar days from
receipt of the copy of the award or decision by the parties”:
Art. 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.
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.
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.
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.
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.
(Emphasis supplied)
386
386 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Thus, in Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO-BALAIS
v. Coca Cola-Bottlers Philippines, Inc.,79 this court declared that the decision of the
Voluntary Arbitrator had become final and executory because it was appealed
beyond the 10-day reglementary period under Article 262-A of the Labor Code.
It is true that Rule 43, Section 4 of the Rules of Court provides for a 15-day
reglementary period for filing an appeal:
Section 4. Period of appeal.—The appeal shall be taken within fifteen (15) days
from notice of the award, judgment, final order or resolution, or from the date of its
last publication, if publication is required by law for its effectivity, or of the denial of
petitioner’s motion for new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. Only one (1) motion for reconsideration
shall be allowed. Upon proper motion and the payment of the full amount of the
docket fee before the expiration of the reglementary period, the Court of Appeals
may grant an additional period of fifteen (15) days only within which to file the
petition for review. No further extension shall be granted except for the most
compelling reason and in no case to exceed fifteen (15) days. (Emphasis supplied)
The 15-day reglementary period has been upheld by this court in a long line of
cases.80 In AMA Computer College-
_______________
79  Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO-BALAIS v.
Coca-Cola Bottlers Philippines, Inc., id.
80  Royal Plant Workers Union v. Coca-Cola Bottlers Philippines, Inc.-Cebu
Plant, supra note 78 at pp. 371-372; Samahan ng mga Manggagawa sa Hyatt
(SAMASAH-NUWHRAIN) v. Magsalin, supra note 78 at p. 456; Mora v. Avesco
Marketing Corporation, supra note 78 at p. 836; p. 274; AMA Computer College-
Santiago City, Inc. v. Nacino, supra note 78 at p. 471; p. 510; Nippon Paint
Employees Union-OLALIA v. Court of Appeals, supra note 78 at p. 682; p. 292;
Manila Midtown Hotel v. Borromeo, supra note 78 at p. 142; p. 657; Sevilla Trading
Company v. Semana, supra note 78 at p. 244.
387
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
38

Santiago City, Inc. v. Nacino, Nippon Paint Employees Union-OLALIA v.
81
Court of Appeals,82 Manila Midtown Hotel v. Borromeo,83 and Sevilla Trading
Company v. Semana,84 this court denied petitioners’ petitions for review on
certiorari since petitioners failed to appeal the Voluntary Arbitrator’s decision within
the 15-day reglementary period under Rule 43.  In these cases, the Court of Appeals
had no jurisdiction to entertain the appeal assailing the Voluntary Arbitrator’s
decision.
Despite Rule 43 providing for a 15-day period to appeal, we rule that the
Voluntary Arbitrator’s decision must be appealed before the Court of Appeals within
10 calendar days from receipt of the decision as provided in the Labor Code.
Appeal is a “statutory privilege,” 85 which may be exercised “only in the manner
and in accordance with the provisions of the law.” 86 “Perfection of an appeal within
the reglementary period is not only mandatory but also jurisdictional so that failure
to do so rendered the decision final and executory, and deprives the appellate court
of jurisdiction to alter the final judgment much less to entertain the appeal.” 87
We ruled that Article 262-A of the Labor Code allows the appeal of decisions
rendered by Voluntary Arbitrators.88 Stat-
_______________
81  AMA Computer College-Santiago City, Inc. v. Nacino, supra note 78.
82  Nippon Paint Employees Union-OLALIA v. Court of Appeals, supra note 78.
83  Manila Midtown Hotel v. Borromeo, supra note 78.
84  Sevilla Trading Company v. Semana, supra note 78.
85  Fenequito v. Vergara, Jr., G.R. No. 172829, July 18, 2012, 677 SCRA 113,
117 [Per J. Peralta, Third Division].
86  Id.
87  Pedrosa v. Hill, 327 Phil. 153; 257 SCRA 373 (1996) [Per J. Bellosillo, First
Division].
88  Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO-BALAIS v.
Coca Cola-Bottlers Philippines, Inc., supra note 78.
388
388 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
ute provides that the Voluntary Arbitrator’s decision “shall be final and executory
after ten (10) calendar days from receipt of the copy of the award or decision by the
parties.” Being provided in the statute, this 10-day period must be complied with;
otherwise, no appellate court will have jurisdiction over the appeal. This absurd
situation occurs when the decision is appealed on the 11th to 15th day from receipt
as allowed under the Rules, but which decision, under the law, has already become
final and executory.
Furthermore, under Article VIII, Section 5(5) of the Constitution, this court “shall
not diminish, increase, or modify substantive rights” in promulgating rules of
procedure in courts.89 The 10-day period to appeal under the Labor Code being a
substantive right, this period cannot be diminished, increased, or modified through
the Rules of Court.90
 In Shioji v. Harvey,91 this court held that the “rules of court, promulgated by
authority of law, have the force and effect of law, if not in conflict with positive
law.”92 Rules of
_______________
89  Const., Art. VIII, Sec. 5, par. (5) provides:
Section 5. The Supreme Court shall have the following powers:
....
5. Promulgate rules concerning the protection and enforcement of constitutional
rights, pleading, practice, and procedure in all courts, the admission to the practice of
law, the integrated bar, and legal assistance to the under-privileged. Such rules shall
provide a simplified and inexpensive procedure for the speedy disposition of cases,
shall be uniform for all courts of the same grade, and shall not diminish, increase, or
modify substantive rights. Rules of procedure of special courts and quasi-judicial
bodies shall remain effective unless disapproved by the Supreme Court.
90  Habaluyas Enterprises, Inc. v. Japson, 226 Phil. 145; 142 SCRA 208 (1986)
[Per J. Feria, En Banc].
91  43 Phil. 333 (1922) [Per J. Malcolm, En Banc].
92  Id., at p. 342.
389
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Court are “subordinate to the statute.”93 In case of conflict between the law and the
Rules of Court, “the statute will prevail.”94
The rule, therefore, is that a Voluntary Arbitrator’s award or decision shall be
appealed before the Court of Appeals within 10 days from receipt of the award or
decision. Should the aggrieved party choose to file a motion for reconsideration with
the Voluntary Arbitrator,95 the motion must be filed within the same 10-day period
since a motion for reconsideration is filed “within the period for taking an appeal.” 96
A petition for certiorari is a special civil action “adopted to correct errors of
jurisdiction committed by the lower court or quasi-judicial agency, or when there is
grave abuse of discretion on the part of such court or agency amounting to lack or
excess of jurisdiction.”97 An extraordinary remedy,98 a petition for certiorari may be
filed only if appeal is not available. 99 If appeal is available, an appeal must be taken
even if the ground relied upon is grave abuse of discretion.100
As an exception to the rule, this court has allowed petitions for certiorari to be filed
in lieu of an appeal “(a) when the public welfare and the advancement of public
policy dictate; (b) when the broader interests of justice so require; (c) when
_______________
93  Id.
39
 94  Id.
95  Teng v. Pahagac, supra note 78 at p. 184.
96  Rules of Court, Rule 37, Sec. 1.
97  Centro Escolar University Faculty and Allied Workers Union-Independent v.
Court of Appeals, supra note 78 at pp. 437-438; p. 70.
98  Id., at p. 437; p 70.
99  Rules of Court, Rule 65, Sec. 1. Supra note 78 at p. 437; p. 70.
100  Bugarin v. Palisoc, 513 Phil. 59, 66; 476 SCRA 587, 595 (2005) [Per J.
Quisumbing, First Division]; Association of Integrated Security Force of Bislig
(AISFB)-ALU v. Court of Appeals, 505 Phil. 10, 18; 467 SCRA 483, 493 (2005) [Per
J. Chico-Nazario, Second Division].
390
390 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
the writs issued are null; and (d) when the questioned order amounts to an oppressive
exercise of judicial authority.”101
 In Unicraft Industries International Corporation, et al. v. The Hon. Court of
Appeals,102 petitioners filed a petition for certiorari against the Voluntary
Arbitrator’s decision. Finding that the Voluntary Arbitrator rendered an award
without giving petitioners an opportunity to present evidence, this court allowed
petitioners’ petition for certiorari despite being the wrong remedy. The Voluntary
Arbitrator’s award, this court said, was null and void for violation of petitioners’
right to due process.  This court decided the case on the merits.
In Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees Union-ALU,103
petitioner likewise filed a petition for certiorari against the Voluntary Arbitrator’s
decision, alleging that the decision lacked basis in fact and in law. Ruling that the
petition for certiorari was filed within the reglementary period for filing an appeal,
this court allowed petitioner’s petition for certiorari in “the broader interests of
justice.”104
 In Mora v. Avesco Marketing Corporation,105 this court held that petitioner Noel E.
Mora erred in filing a petition for certiorari against the Voluntary Arbitrator’s
decision. Nevertheless, this court decided the case on the merits “in the interest of
substantial justice to arrive at the proper conclusion that is conformable to the
evidentiary facts.”106
_______________
101  Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees Union-ALU,
562 Phil. 743, 755; 537 SCRA 154, 166 (2007) [Per J. Austria-Martinez, Third
Division]. (Emphases omitted)
102  407 Phil. 527; 355 SCRA 233 (2001) [Per J. Ynares-Santiago, First
Division].
103  Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees Union-ALU,
supra.
104  Id., at p. 756; p. 166.
105  Mora v. Avesco Marketing Corporation, supra note 78.
106  Id., at p. 836; p. 235.
391
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
None of the circumstances similar to Unicraft Leyte IV Electric Cooperative, and
Mora are present in this case. PHILEC received Voluntary Arbitrator Jimenez’s
resolution denying its motion for partial reconsideration on August 11, 2000. 107
PHILEC filed its petition for certiorari before the Court of Appeals on August 29,
2000,108 which was 18 days after its receipt of Voluntary Arbitrator Jimenez’s
resolution.  The petition for certiorari was filed beyond the 10-day reglementary
period for filing an appeal. We cannot consider PHILEC’s petition for certiorari as
an appeal.
There being no appeal seasonably filed in this case, Voluntary Arbitrator Jimenez’s
decision became final and executory after 10 calendar days from PHILEC’s receipt
of the resolution denying its motion for partial reconsideration. 109 Voluntary
Arbitrator Jimenez’s decision is already “beyond the purview of this Court to act
upon.”110
 
II
 
PHILEC must pay training allowance based on the step increases provided in the
June 1, 1997 collective bargaining agreement
 
The insurmountable procedural issue notwithstanding, the case will also fail on its
merits. Voluntary Arbitrator Jimenez correctly awarded both Lipio and Ignacio, Sr.
training allowances based on the amounts and formula provided in the June 1, 1997
collective bargaining agreement.
_______________
107  Rollo, p. 46.
108  Id., at p. 45.
109  See Manila Midtown Hotel v. Borromeo, supra note 78 at
p. 143; p. 656.
110  AMA Computer College-Santiago City, Inc. v. Nacino, supra note 78 at p.
471; p. 510.
392
392 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
40
A collective bargaining agreement is “a contract executed upon the request of either
the employer or the exclusive bargaining representative of the employees
incorporating the agreement reached after negotiations with respect to wages, hours
of work and all other terms and conditions of employment, including proposals for
adjusting any grievances or questions arising under such agreement.” 111 A collective
bargaining agreement being a contract, its provisions “constitute the law between the
parties”112 and must be complied with in good faith.113
PHILEC, as employer, and PWU, as the exclusive bargaining representative of
PHILEC’s rank-and-file employees, entered into a collective bargaining agreement,
which the parties agreed to make effective from June 1, 1997 to May 31, 1999.
Being the law between the parties, the June 1, 1997 collective bargaining agreement
must govern PHILEC and its rank-and-file employees within the agreed period.
Lipio and Ignacio, Sr. were rank-and-file employees when PHILEC selected them
for training for the position of Foreman I beginning August 25, 1997.  Lipio and
Ignacio, Sr. were selected for training during the effectivity of the June 1, 1997 rank-
and-file collective bargaining agreement. Therefore, Lipio’s and Ignacio, Sr.’s
training allowance must be computed based on Article X, Section 4 and Article IX,
Section 1(f) of the June 1, 1997 collective bargaining agreement.   117  Id.
Contrary to PHILEC’s claim, Lipio and Ignacio, Sr. were not transferred out of the
bargaining unit when they were selected for training. Lipio and Ignacio, Sr. remained
rank-and-file employees while they trained for the position of
_______________
111  Davao Integrated Port Stevedoring Services v. Abarquez, G.R. No. 102132,
March 19, 1993, 220 SCRA 197, 204 [Per J. Romero, Third Division].
112  Roche (Philippines) v. NLRC, 258-A Phil. 160, 171; 178 SCRA 386, 395
(1989) [Per J. Gancayco, First Division].
113  Civil Code, Art. 1159.
393
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Foreman I.  Under Article IX, Section 1(e) of the June 1, 1997 collective bargaining
agreement,114 a trainee who is “unable to demonstrate his ability to perform the
work . . . shall be reverted to his previous assignment. . . .” 115 According to the same
provision, the trainee “shall hold that job on a trial or observation basis and . . .
subject to prior approval of the authorized management official, be appointed to the
position in a regular capacity.”116
Thus, training is a condition precedent for promotion.  Selection for training does not
mean automatic transfer out of the bargaining unit of rank-and-file employees.
Moreover, the June 1, 1997 collective bargaining agreement states that the training
allowance of a rank-and-file employee “whose application for a posted job is
accepted shall [be computed] in accordance with Section (f) of [Article IX].”117
_______________
114  Rollo, p. 114. Collective Bargaining Agreement, Art. IX, Sec. 1(e)
provides:
....
(e)  An employee whose application for a posted job is accepted shall hold that
job on a trial or observation basis and during that period shall receive a monthly
allowance of an amount in accordance with Section (f) of this Article. During the
trial or observation period which shall not exceed four (4) months of actual training
if the employee isunable [sic] to demonstrate his ability to perform the work, he shall
be reverted to his previous assignment and the last preceding rate of pay but shall
not, for a period of three (3) months, be permitted to apply for any posted job in the
same higher classification. On the other hand, should the employee be considered
capable of holding the job, he shall, subject to prior approval of the authorized
management official, be appointed to the position in a regular capacity. Positions
vacated during the trial or observation period shall be filled up by temporary
employees hired for this purpose only, if necessary.
115  Id.
116  Id.
394
394 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Since Lipio and Ignacio, Sr. were rank-and-file employees when they applied for
training for the position of Foreman I, Lipio’s and Ignacio, Sr.’s training allowance
must be computed based on Article IX, Section 1(f) of the June 1, 1997 rank-and-file
collective bargaining agreement.
PHILEC allegedly applied the “Modified SGV” pay grade scale to prevent any salary
distortion within PHILEC’s enterprise.  This, however, does not justify PHILEC’s
noncompliance with the June 1, 1997 collective bargaining agreement. This pay
grade scale is not provided in the collective bargaining agreement. In Samahang
Manggagawa sa Top Form Manufacturing United Workers of the Philippines
(SMTFM-UWP) v. NLRC,118 this court ruled that “only provisions embodied in the
[collective bargaining agreement] should be so interpreted and complied with. Where
a proposal raised by a contracting party does not find print in the [collective
bargaining agreement], it is not part thereof and the proponent has no claim
whatsoever to its implementation.”119
Had PHILEC wanted the “Modified SGV” pay grade scale applied within its
enterprise, “it could have requested or demanded that [the ‘Modified SGV’ scale] be
incorporated in the [collective bargaining agreement].” 120 PHILEC had “the means
under the law to compel [PWU] to incorporate this specific economic proposal in the
[collective bargaining agreement].”121 It “could have invoked Article 252 of the
Labor Code”122 to
_______________
41
 118  356 Phil. 480; 295 SCRA 171 (1998) [Per J. Romero, Third Division].
119  Id., at p. 491; p. 183.
120  Id., at p. 490; p. 182.
121  Id.
122  Labor Code, Art. 252 provides:
Art. 252. Meaning of duty to bargain collectively.—The duty to bargain
collectively means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement
with respect to wages, hours of work and all other terms and condi-
395
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
incorporate the “Modified SGV” pay grade scale in its collective bargaining
agreement with PWU. But it did not. Since this “Modified SGV” pay grade scale
does not appear in PHILEC’s collective bargaining agreement with PWU, PHILEC
cannot insist on the “Modified SGV” pay grade scale’s application. We reiterate
Voluntary Arbitrator Jimenez’s decision dated August 13, 1999 where he said that:
. . . since the signing of the current CBA took place on September 27, 1997,
PHILEC, by oversight, may have overlooked the possibility of a wage distortion
occurring among ASSET-occupied positions. It is surmised that this matter could
have been negotiated and settled with PWU before the actual signing of the CBA on
September 27. Instead, PHILEC, again, allowed the provisions of Art. X, Sec. 4 of
the CBA to remain the way it is and is now suffering the consequences of its
laches.123 (Emphasis in the original)
 
We note that PHILEC did not dispute PWU’s contention that it selected several rank-
and-file employees for training and paid them training allowance based on the
schedule provided in the collective bargaining agreement effective at the time of the
trainees’ selection.124 PHILEC cannot choose when and to whom to apply the
provisions of its collective bargaining agreement. The provisions of a collective
bargaining agreement must be applied uniformly and complied with in good faith.
_______________
tions of employment including proposals for adjusting any grievances or questions
arising under such agreements if requested by either party but such duty does not
compel any party to agree to a proposal or to make any concession. Id.
123  Rollo, p. 70.
124  Id., at p. 65. PHILEC selected rank-and-file employees Rodolfo Montepio,
Rodel Unidad, Feliciano de los Santos, Berlin Diaz, and Melencio Rodriguez for
training for higher positions.
396
396 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Given the foregoing, Lipio’s and Ignacio, Sr.’s training allowance should be
computed based on Article X, Section 4 in relation to Article IX, Section 1(f) of the
June 1, 1997 rank-and-file collective bargaining agreement. Lipio, who held the
position of Machinist before selection for training as Foreman I, should receive
training allowance based on the following schedule:
First month - - - - - P456.00
Second month - - - - - P1,031.00
Third month - - - - - P1,031.00
Fourth month - - - - - P1,031.00
 
Ignacio, Sr., who held the position of DT-Assembler before selection for training as
Foreman I, should receive training allowance based on the following schedule:
First month - - - - - P361.00
Second month - - - - - P817.00
Third month - - - - - P1,392.00
Fourth month - - - - - P1,392.00
 
Considering that Voluntary Arbitrator Jimenez’s decision awarded sums of money,
Lipio and Ignacio, Sr. are entitled to legal interest on their training allowances.
Voluntary Arbitrator Jimenez’s decision having become final and executory on
August 22, 2000, PHILEC is liable for legal interest equal to 12% per annum from
finality of the decision until full payment as this court ruled in Eastern Shipping
Lines, Inc. v. Court of Appeals:125
When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest . . .  shall be 12% per annum from such finality
un-
_______________
125  G.R. No. 97412, July 12, 1994, 234 SCRA 78 [Per J. Vitug, En Banc].
397
VOL. 744, DECEMBER 10, 2014
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
til its satisfaction, this interim period being deemed to be by then as equivalent to a
forbearance of credit.126
 
The 6% legal interest under Circular No. 799, Series of 2013, of the Bangko Sentral
ng Pilipinas Monetary Board shall not apply, Voluntary Arbitrator Jimenez’s
decision having become final and executory prior to the effectivity of the circular on
July 1, 2013. In Nacar v. Gallery Frames,127 we held that:
. . . with regard to those judgments that have become final and executory prior to
42
July 1, 2013, said judgments shall not be disturbed and shall continue to be
implemented applying the rate of interest fixed therein.128
 
WHEREFORE, the petition for review on certiorari is DENIED. The Court of
Appeals’ decision dated May 25, 2004 is AFFIRMED.
Petitioner Philippine Electric Corporation is ORDERED to PAY respondent
Eleodoro V. Lipio a total of P3,549.00 for a four (4)-month training for the position
of Foreman I with legal interest of 12% per annum from August 22, 2000 until the
amount’s full satisfaction.
For respondent Emerlito C. Ignacio, Sr., Philippine Electric Corporation is
ORDERED to PAY a total of P3,962.00 for a four (4)-month training for the position
of Foreman I with legal interest of 12% per annum from August 22, 2000 until the
amount’s full satisfaction.
SO ORDERED.
_______________
126  Id., at p. 97.
127  G.R. No. 189871, August 13, 2013, 703 SCRA 439 [Per J. Peralta, En
Banc].
128  Id., at p. 457.
398
398 SUPREME COURT REPORTS ANNOTATED
Philippine Electric Corporation (PHILEC) vs. Court of Appeals
Carpio (Chairperson), Del Castillo, Villarama, Jr.** and Mendoza, JJ.,
concur.
Petition denied, judgment affirmed.
Notes.—The proper mode of appeal from a Voluntary Arbitrator’s decision is
review under Rule 43 of the 1997 Rules of Civil Procedure, not a petition for
certiorari; While Sec. 2 of the same Rule 43 provides that said Rule shall not apply
to judgments or final orders issued under the Labor Code, the same refers only to
cases decided by labor arbiters which are appealable to the National Labor Relations
Commission. (Mora vs. Avesco Marketing Corporation, 571 SCRA 226 [2008])
When the provision of the Collective Bargaining Agreement is clear, leaving no
doubt on the intention of the parties, the literal meaning of the stipulation shall
govern. (Wesleyan University-Philippines vs. Wesleyan University-Philippines
Faculty and Staff Association, 718 SCRA 601 [2014])
——o0o——
G.R. No. 200746. August 6, 2014.*
BENSON INDUSTRIES EMPLOYEES UNION-ALU-TUCP and/or VILMA
GENON, EDISA HORTELANO, LOURDES ARANAS, TONY
FORMENTERA, RENEBOY LEYSON, MA. ALONA ACALDO, MA.
CONCEPCION ABAO, TERESITA CALINAWAN, NICIFORO CABANSAG,
STELLA BARONGO, MARILYN POTOT, WELMER ABANID, LORENZO
ALIA, LINO PARADERO, DIOSDADO ANDALES, LUCENA ABESIA, and
ARMANDO YBAÑEZ, petitioners, vs. BENSON INDUSTRIES, INC.,
respondent.
Labor Law; Termination of Employment; Closure of Business; Closure of
business may be considered as a reversal of an employer’s fortune whereby there is
a complete cessation of business operations
_______________
* SECOND DIVISION.
319and/or an actual locking-up of the doors of the establishment, usually due
to financial losses.—Closure of business may be considered as a reversal of an
employer’s fortune whereby there is a complete cessation of business operations
and/or an actual locking-up of the doors of the establishment, usually due to financial
losses. Under the Labor Code, it is treated as an authorized cause for termination,
aimed at preventing further financial drain upon an employer who cannot anymore
pay its employees since business has already stopped. As a form of recompense, the
employer is required to pay its employees separation benefits, except when the
closure is due to serious business losses.
Same; Same; Same; Separation Pay; It is only in instances of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses that employees
whose employment has been terminated as a result are entitled to separation pay.—
While serious business losses generally exempt the employer from paying separation
benefits, it must be pointed that the exemption only pertains to the obligation of the
employer under Article 297 of the Labor Code. This is because of the law’s express
parameter that mandates payment of separation benefits “in case of closures or
cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses.” The policy distinction underlying Article 297 — that
is, the distinction between closures due to serious business losses and those which
are not — was deftly discussed by the Court in the case of Cama v. Joni’s Food
Services, Inc., 425 SCRA 259 (2004), as follows: The Constitution, while affording
full protection to labor, nonetheless, recognizes “the right of enterprises to
reasonable returns on investments, and to expansion and growth.” In line with this
protection afforded to business by the fundamental law, Article 283 [(now, Article
297)] of the Labor Code clearly makes a policy distinction. It is only in instances of
“retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or
financial reverses” that employees whose employment has been terminated as a
result are entitled to separation pay. In other words, Article 283 [(now, Article 297)]
of the Labor Code does not obligate an employer to pay separation benefits when the
43
closure is due to serious losses. To require an employer to be generous when it is no
longer in a position to do so, in
320our view, would be unduly oppressive, unjust, and unfair to the employer.
Ours is a system of laws, and the law in protecting the rights of the working man,
authorizes neither the oppression nor the self-destruction of the employer.
Same; Same; Same; Same; When the obligation to pay separation benefits,
however, is not sourced from law (particularly, Article 297 of the Labor Code), but
from contract, such as an existing collective bargaining agreement (CBA) between
the employer and its employees, an examination of the latter’s provisions becomes
necessary in order to determine the governing parameters for the said obligation.—
When the obligation to pay separation benefits, however, is not sourced from law
(particularly, Article 297 of the Labor Code), but from contract, such as an existing
collective bargaining agreement between the employer and its employees, an
examination of the latter’s provisions becomes necessary in order to determine the
governing parameters for the said obligation. To reiterate, an employer which closes
shop due to serious business losses is exempt from paying separation benefits under
Article 297 of the Labor Code for the reason that the said provision explicitly
requires the same only when the closure is not due to serious business losses;
conversely, the obligation is maintained when the employer’s closure is not due to
serious business losses. For a similar exemption to obtain against a contract, such as
a CBA, the tenor of the parties’ agreement ought to be similar to the law’s tenor.
When the parties, however, agree to deviate therefrom, and unqualifiedly covenant
the payment of separation benefits irrespective of the employer’s financial position,
then the obligatory force of that contract prevails and its terms should be carried out
to its full effect. Verily, it is fundamental that obligations arising from contracts have
the force of law between the contracting parties and thus should be complied with in
good faith; and parties are bound by the stipulations, clauses, terms and conditions
they have agreed to, the only limitation being that these stipulations, clauses, terms
and conditions are not contrary to law, morals, public order or public policy. Hence,
if the terms of a CBA are clear and there is no doubt as to the intention of the
contracting parties, the literal meaning of its stipulations shall prevail.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
321
The facts are stated in the opinion of the Court.
  Seno, Mendoza and Associates for petitioners.
  Vicente A. Espina, Jr. for respondent.
 PERLAS-BERNABE,  J.:
Before the Court is a petition for review on certiorari1assailing the
Decision2 dated September 27, 2011 and the Resolution3 dated January 31, 2012 of
the Court of Appeals (CA) in C.A.-G.R. S.P. No. 03842 which reversed and set aside
the Decision4 dated October 24, 2008 of the Voluntary Arbitrator (VA) of the
National Conciliation and Mediation Board (NCMB), and accordingly deleted the
award to petitioners Vilma Genon, Edisa Hortelano, Lourdes Aranas, Tony
Formentera, Reneboy Leyson, Ma. Alona Acaldo, Ma. Concepcion Abao, Teresita
Calinawan, Niciforo Cabansag, Stella Barongo, Marilyn Potot, Welmer Abanid,
Lorenzo Alia, Lino Paradero, Diosdado Andales, Lucena Abesia, and Armando
Ybañez (petitioners) of additional separation pay equivalent to four (4) days of work
for every year of service.
The Facts
Respondent Benson Industries, Inc. (Benson) is a domestic corporation engaged
in the manufacturing of green coils with the brand name Lion-Tiger Mosquito Killer.
On February 12, 2008, Benson sent its employees, including herein petitioners, a
notice5 informing them of their intended termination from
_______________
1 Rollo, pp. 5-26.
2 Id., at pp. 31-39. Penned by Associate Justice Gabriel T. Ingles, with Associate
Justices Pampio A. Abarintos and Eduardo B. Peralta, Jr., concurring.
3 Id., at pp. 41-42.
4 Id., at pp. 253-260. Penned by Voluntary Arbitrator Manuel P. Legaspi.
5 Id., at pp. 60-62.
322employment, to be effected on March 15, 2008 on the ground of closure and/or
cessation of business operations. In consequence, the majority of Benson’s
employees resigned.6 Meanwhile, petitioners, through Benson Industries Employees
Union-ALU-TUCP (Union), filed a notice of strike, claiming that the company’s
supposed closure was merely a ploy to replace the union members with lower paid
workers, and, as a result, increase its profit at their expense. 7 The strike did not,
however, push through due to the parties’ amicable settlement during the conciliation
proceedings before the NCMB, whereby petitioners accepted Benson’s payment of
separation pay, computed at 15 days for every year of service, as per the parties’
Memorandum of Agreement8 dated April 9, 2008.9
This notwithstanding, petitioners proffered a claim for the payment of additional
separation pay at the rate of four (4) days for every year of service. As basis,
petitioners invoked Section 1, Article VIII of the existing collective bargaining
agreement (CBA) executed by and between the Union and Benson which states that
“[Benson] shall pay to any employee/laborer who is terminated from the service
without any fault attributable to him, a ‘Separation Pay’ equivalent to not less than
nineteen (19) days’ pay for every year of service based upon the latest rate of pay of
the employee/laborer concerned.”10 Benson opposed petitioners’ claim, averring that
the separation pay already paid to them was already more than what the law requires.
Reaching an impasse on the conflict, the parties referred the issue to voluntary
arbitration, wherein the validity of Benson’s closure was brought up as well.11
_______________
6  Id., at pp. 43-44.
7   Id., at pp. 33 and 52.
8  Id., at p. 63.
9  Id., at p. 44.
10 Id., at p. 255.
11 Id., at pp. 254-255.
323The VA’s Ruling
44
 In a Decision12 dated October 24, 2008 (October 24, 2008 VA Decision), the VA
ruled in favor of petitioners, and, thus, ordered Benson to pay each of them
separation benefits in “an amount equivalent to four (4) days for every year of
service based on the latest rate of pay of the [individual petitioner] concerned subject
to whatever legally valid deductions chargeable against [said individual petitioner]
whenever applicable.”13
The VA ratiocinated that in computing the amount of separation benefits due to
petitioners, the basis should be the provision of the existing CBA between Benson
and the Union which explicitly states that should the employees be terminated
through no fault of their own, they should be awarded separation benefits at the rate
of 19 days for every year of service. In this regard, the VA opined that the provisions
of the CBA should be given effect because it expresses the latest agreement of the
union and the company, not to mention the fact that it gives more benefits to the
employees.14
Separately, the VA found adequate proof to support Benson’s position that it was
indeed in a state of insolvency, which, therefore, justified its closure and/or cessation
of business operations on the ground of serious business losses and/or financial
reverses.15
Dissatisfied, Benson elevated the matter on appeal before the CA.
_______________
12 Id., at pp. 253-260.
13 Id., at p. 50.
14 Id., at p. 255.
15 Id., at pp. 255-260.
324
The CA’s Ruling
In a Decision16 dated September 27, 2011, the CA reversed and set aside the
VA’s ruling, and accordingly deleted the award of additional separation benefits
equivalent to four (4) days of work for every year of service. It held that despite the
express provision in the CBA stating that Benson should pay its employees who
were terminated without their fault separation benefits equivalent to at least 19 days’
pay for every year of service, Benson cannot be compelled to do so considering its
current financial status.17
Aggrieved, petitioners moved for reconsideration, which was, however, denied
by the CA in a Resolution18 dated January 31, 2012, hence, this petition.
The Issue Before the Court
The sole issue for the Court’s resolution is whether or not the CA correctly
deleted the award to petitioners of additional separation benefits equivalent to four
(4) days of work for every year of service.
The Court’s Ruling
The petition is impressed with merit.
Closure of business may be considered as a reversal of an employer’s fortune
whereby there is a complete cessation of business operations and/or an actual
locking-up of the doors of the establishment, usually due to financial losses. Under
the Labor Code, it is treated as an authorized cause for termination, aimed at
preventing further financial drain upon an employer who cannot anymore pay its
employees since
_______________
16 Id., at pp. 31-39.
17 Id., at pp. 35-38.
18 Id., at pp. 41-42.
325business has already stopped. As a form of recompense, the employer is required
to pay its employees separation benefits, except when the closure is due to serious
business losses.19 Article 297 (formerly Article 283)20 of the Labor Code, as
amended, states this rule:
Art. 297. Closure of Establishment and Reduction of Personnel.—The employer
may also terminate the employment of any employee due to the installation of labor-
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, x x x. In case of
retrenchment to prevent losses and in cases of closures or cessation of operations
of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis
and underscoring supplied)
    While serious business losses generally exempt the employer from paying
separation benefits, it must be pointed that the exemption only pertains to the
obligation of the employer under Article 297 of the Labor Code. This is because of
the law’ s express parameter that mandates payment of separation benefits “in case
of closures or cessation of operations of establishment or undertaking not due to
serious busi-
_______________
19 See Sangwoo Philippines, Inc. v. Sangwoo Philippines, Inc. Employees
Union-Olalia, G.R. No. 173154 and G.R. No. 173229, December 9, 2013; citations
omitted.
20 As amended and renumbered by Republic Act No. 10151, entitled “An Act
Allowing the Employment of Night Workers, Thereby Repealing Articles 130 and
131 of Presidential Decree Number Four Hundred Forty-Two, as Amended,
Otherwise Known as the Labor Code of the Philippines.”
326ness losses or financial reverses.” The policy distinction underlying Article
297 — that is, the distinction between closures due to serious business losses and
those which are not — was deftly discussed by the Court in the case of Cama v.
Joni’s Food Services, Inc.,21 as follows:
The Constitution, while affording full protection to labor, nonetheless, recognizes
“the right of enterprises to reasonable returns on investments, and to expansion and
growth.” In line with this protection afforded to business by the fundamental law,
Article 283 [(now, Article 297)] of the Labor Code clearly makes a policy
distinction. It is only in instances of “retrenchment to prevent losses and in cases
of closures or cessation of operations of establishment or undertaking not due to
45
serious business losses or financial reverses” that employees whose employment
has been terminated as a result are entitled to separation pay. In other words, Article
283 [(now, Article 297)] of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to serious losses. To require an employer
to be generous when it is no longer in a position to do so, in our view, would be
unduly oppressive, unjust, and unfair to the employer. Ours is a system of laws, and
the law in protecting the rights of the working man, authorizes neither the oppression
nor the self-destruction of the employer. x x x.22 (Emphasis supplied)
    When the obligation to pay separation benefits, however, is not sourced from
law (particularly, Article 297 of the Labor Code), but from contract, 23 such as an
existing collective bar-
_______________
21 469 Phil. 223; 425 SCRA 259 (2004).
22 Id., at pp. 235-236; p. 269.
23 Article 1157 of the Civil Code provides:
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
327gaining agreement between the employer and its employees, an examination of
the latter’s provisions becomes necessary in order to determine the governing
parameters for the said obligation. To reiterate, an employer which closes shop due
to serious business losses is exempt from paying separation benefits under Article
297 of the Labor Code for the reason that the said provision explicitly requires the
same only when the closure is not due to serious business losses; conversely, the
obligation is maintained when the employer’s closure is not due to serious business
losses. For a similar exemption to obtain against a contract, such as a CBA, the tenor
of the parties’ agreement ought to be similar to the law’s tenor. When the parties,
however, agree to deviate therefrom, and unqualifiedly covenant the payment of
separation benefits irrespective of the employer’s financial position, then the
obligatory force of that contract prevails and its terms should be carried out to its full
effect. Verily, it is fundamental that obligations arising from contracts have the force
of law between the contracting parties and thus should be complied with in good
faith;24 and parties are bound by the stipulations, clauses, terms and conditions they
have agreed to, the only limitation being that these stipulations, clauses, terms and
conditions are not contrary to law, morals, public order or public policy. 25 Hence, if
the terms of a CBA are clear and there is no doubt as to the intention of the
contracting parties, the literal meaning of its stipulations shall prevail. 26 As
enunciated in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:27
_______________
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (Emphases supplied)
24 Prisma Construction & Development Corporation v. Menchavez, G.R. No.
160545, March 9, 2010, 614 SCRA 590, 597.
25 Id., at p. 601.
26 Supreme Steel Corporation v. Nagkakaisang Manggagawa Ng Supreme
Independent Union (NMSIND-APL), G.R. No. 185556, March 28, 2011, 646 SCRA
501, 521.
27 G.R. No. 145561, June 15, 2005, 460 SCRA 186.
328
A collective bargaining agreement refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of work and
all other terms and conditions of employment in a bargaining unit. As in all
contracts, the parties in a CBA may establish such stipulations, clauses, terms and
conditions as they may deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus, where the CBA is clear
and unambiguous, it becomes the law between the parties and compliance therewith
is mandated by the express policy of the law.28
    In this case, it is undisputed that a CBA was forged by the employer, Benson,
and its employees, through the Union, to govern their relations effective July 1, 2005
to June 30, 2010. It is equally undisputed that Benson agreed to and was thus
obligated under the CBA to pay its employees who had been terminated without any
fault attributable to them separation benefits at the rate of 19 days for every year of
service. This is particularly found in Section 1, Article VIII of the same contract, to
wit:
Section 1. Separation Pay.—The Company shall pay to any employee/laborer who
is terminated from the service without any fault attributable to him, a “Separation
Pay” equivalent to not less than nineteen (19) days’ pay for every year of service
based upon the latest rate of pay of the employee/laborer concerned.29
   As may be gleaned from the following whereas clauses in a Memorandum of
Agreement30 dated November 20, 2003 between the parties, Benson had been fully
aware of its distressed financial condition even at the time of the previous CBA
(effective from July 1, 2000 to June 30, 2005):
_______________
28 Id., at pp. 190-191.
29 Rollo, p. 255.
30 Id., at pp. 415-418.
329
WHEREAS, on February 01, 2001 the Company and the Union entered into a
Collective Bargaining Agreement (CBA) with effectivity from July 01, 2000 to June
30, 2005;
xxxx
WHEREAS, the Company and the Union recognize that the Philippines is at
present in grave economic crisis;
WHEREAS, the Union recognizes and acknowledges that the Company in
particular is in grave financial difficulties and that the Company is hard up to
meet its financial obligations to creditor banks that said creditor banks have even
threatened to foreclose the mortgages on and to seize the Company’s factory,
realties, machineries and assets and in fact, the Bank of the Philippine Islands, one of
the creditor banks scheduled on November 17, 1998 a foreclosure sale of the
46
Company’s factory, realties, machineries and assets in Extrajudicial Foreclosure
Case No. EJF-2773-CEB;
x x x x (Emphases supplied)
    Benson even admits in its Comment that it was already saddled with loan from
banks as early as 199731and that it had been unable to service its loan
obligations.32And yet, nothing appears on record to discount the fact that it still
unqualifiedly and freely agreed to the separation pay provision in the July 1, 2005 to
June 30, 2010 CBA, its distressed financial condition notwithstanding.
Thus, in view of the foregoing, the Court disagrees with the CA in negating
Benson’s obligation to pay petitioners their full separation benefits under the said
agreement. The postulation that Benson had closed its establishment and ceased
_______________
31 Id., at p. 455.
32 Id.
330operations due to serious business losses cannot be accepted as an excuse to clear
itself of any liability since the ground of serious business losses is not, unlike Article
297 of the Labor Code, considered as an exculpatory parameter under the
aforementioned CBA. Clearly, Benson, with full knowledge of its financial situation,
freely and voluntarily entered into such agreement with petitioners. Hence, having
failed to show that the subject CBA provision on separation benefits is contrary to
law, morals, public order or public policy, or that the same can be interpreted as one
with a condition — for instance, that the parties actually contemplated nonpayment
of separation benefits in the event of closure due to serious business losses — the
Court is constrained to reinstate the October 24, 2008 VA Decision ordering Benson
to pay each of the petitioners separation benefits in “an amount equivalent to four (4)
days for every year of service based on the latest rate of pay of the [individual
petitioner] concerned, subject to whatever legally valid deductions chargeable
against [said individual petitioner], whenever applicable.”33
Analogous to the foregoing is the Court’s disquisition in Lepanto Ceramics, Inc.
v. Lepanto Ceramics Employees Association,34 whereby the employer therein was
held liable for the payment of Christmas bonus benefits, considering that the grant
thereof was voluntarily and unqualifiedly agreed upon by the parties under the CBA
despite the employer’s full awareness of its distressed financial position (as Benson
in this case), viz.:
It is a familiar and fundamental doctrine in labor law that the CBA is the law
between the parties and they are obliged to comply with its provisions. This principle
stands strong and true in the case at bar.
A reading of the provision of the CBA reveals that the same provides for the
giving of a “Christmas gift
_______________
33 Id., at p. 260.
34 G.R. No. 180866, March 2, 2010, 614 SCRA 63.
331package/bonus” without qualification. Terse and clear, the said provision did not
state that the Christmas package shall be made to depend on the petitioner’s financial
standing. The records are also bereft of any showing that the petitioner made it
clear during the CBA negotiations that the bonus was dependent on any
condition. Indeed, if the petitioner and respondent Association intended that the
P3,000.00 bonus would be dependent on the company earnings, such intention
should have been expressed in the CBA.
It is noteworthy that in petitioner’s 1998 and 1999 financial Statements, it took
note that “the 1997 financial crisis in the Asian region adversely affected the
Philippine economy.”
From the foregoing, petitioner cannot insist on business losses as a basis for
disregarding its undertaking. It is manifestly clear that petitioner was very much
aware of the imminence and possibility of business losses owing to the 1997
financial crisis. In 1998, petitioner suffered a net loss of P14,347,548.00. Yet it gave
a P3,000.00 bonus to the members of the Association. In 1999, when petitioner’s
very own financial statement reflected that “the positive developments in the
economy have yet to favorably affect the operations of the company,” and reported a
loss of P346,025,733.00, it entered into the CBA with the respondent Association
whereby it contracted to grant a Christmas gift package/bonus to the
latter. Petitioner supposedly continued to incur losses on the years 2000 and
2001. Still and all, this did not deter it from honoring the CBA provision on
Christmas bonus as it continued to give P3,000.00 each to the members of the
respondent Association in the years 1999, 2000 and 2001.
All given, business losses are a feeble ground for petitioner to repudiate its
obligation under the CBA. The rule is settled that any benefit and supplement being
enjoyed by the employees cannot be reduced,
332diminished, discontinued or eliminated by the employer. The principle of non-
diminution of benefits is founded on the constitutional mandate to protect the rights
of workers and to promote their welfare and to afford labor full protection.
Hence, absent any proof that petitioner’s consent was vitiated by fraud, mistake
or duress, it is presumed that it entered into the CBA voluntarily and had full
knowledge of the contents thereof and was aware of its commitments under the
contract.35 (Emphases and underscoring supplied; citations omitted)
     A similar disposition was also made in the case of Eastern
Telecommunications Philippines, Inc. v. Eastern Telecoms Employees
Union,36 wherein the Court held as follows:
The parties to the contract must be presumed to have assumed the risks of
unfavorable developments. It is, therefore, only in absolutely exceptional changes of
circumstances that equity demands assistance for the debtor. In the case at bench, the
Court determines that ETPI’s claimed depressed financial state will not release it
from the binding effect of the 2001-2004 CBA Side Agreement.
ETPI appears to be well aware of its deteriorating financial condition when it
entered into the 2001-2004 CBA Side Agreement with ETEU and obliged itself to
pay bonuses to the members of ETEU. Considering that ETPI had been continuously
suffering huge losses from 2000 to 2002, its business losses in the year 2003 were
not exactly unforeseen or unexpected. Consequently, it cannot be said that the
difficulty in complying with its obligation under the Side Agreement was
“manifestly beyond the contemplation of the parties.” Besides, as held in Central
47
Bank of the Philippines v. Court of Appeals, mere pecuniary inability to fulfill an
engagement
_______________
35 Id., at pp. 73-74.
36 G.R. No. 185665, February 8, 2012, 665 SCRA 516.
333does not discharge a contractual obligation. Contracts, once perfected, are
binding between the contracting parties. Obligations arising therefrom have the force
of law and should be complied with in good faith. ETPI cannot renege from the
obligation it has freely assumed when it signed the 2001-2004 CBA Side
Agreement.37 (Emphases and underscoring supplied; citations omitted)
    To quell any doubts, it bears pointing out that the CA’s reliance on Galaxie
Steel Workers Union (GSWU-NAFLU-KMU) v. NLRC 38 and Cama v. Joni’s Food
Services, Inc.39 was actually misplaced since no CBA was involved in those cases.
As such, consistent with the parameters of Article 297 of the Labor Code as above
discussed, the payment of separation benefits in view of the employer’s serious
business losses in those cases was not in order. In the same light, North Davao
Mining Corporation v. NLRC40 was speciously applied by the CA given that the
payment of separation benefits in that case was not sourced from a contractual CBA
obligation but merely from a unilateral company practice which was deemed as an
act of generosity on the part of the employer. It was in this context that the Court
held that “to require [the company] to continue being generous when it is no longer
in a position to do so would certainly be unduly oppressive, unfair and most
revolting to the conscience.” 41 The factual dissimilarity of these cases to Benson and
petitioners’ situation therefore precludes the application ofthe same ruling.
Accordingly, finding no cogent reason for Benson not to comply with its
obligations under the July 1, 2005 to June 30, 2010 CBA, and considering further
that the interpretation of any law or provision affecting labor should be interpreted in
_______________
37 Id., at pp. 531-532.
38 535 Phil. 675; 504 SCRA 692 (2006).
39 Supra note 21.
40 G.R. No. 112546, March 13, 1996, 254 SCRA 721.
41 Id., at p. 730.
334favor of labor,42 the Court hereby reverses the CA Decision and reinstates the
October 24, 2008 VA Decision.
WHEREFORE, the petition is GRANTED. The Decision dated September 27,
2011 and the Resolution dated January 31, 2012 of the Court of Appeals in C.A.-
G.R. S.P. No. 03842 are hereby REVERSED and SET ASIDE. The Decision dated
October 24, 2008 of the Voluntary Arbitrator of the National Conciliation and
Mediation Board is REINSTATED.
SO ORDERED.
Carpio (Chairperson), Brion, Del Castillo and Perez, JJ., concur.
Petition granted, judgment and resolution reversed and set aside.
Notes.—Closure of business is the reversal of fortune of the employer whereby
there is a complete cessation of business operations and/or an actual locking-up of
the doors of the establishment, usually due to financial losses — as an authorized
cause for termination of employment, it aims to prevent further financial drain upon
an employer who can no longer pay his employees since business has already
stopped. (Peñafrancia Tours and Travel Transport, Inc. vs. Sarmiento, 634 SCRA
279 [2010])
Closure or cessation of business is the complete or partial cessation of the
operations and/or shut-down of the establishment of the employer; It is carried out to
either stave off the financial ruin or promote the business interest of the employee.
(Sy vs. Fairland Knitcraft Co., Inc., 662 SCRA 67 [2011])
——o0o——
G.R. No. 161006. October 14, 2015.*
 
ROGELIO BARONDA, petitioner, vs. HON. COURT OF APPEALS, and
HIDECO SUGAR MILLING CO., INC., respondents.
Labor Law; Voluntary Arbitrators; Appeals; Article 262-A of the Labor Code
expressly states that the award or decision of the Voluntary Arbitrator shall be final
and executory after ten (10) calendar days from receipt of the copy of the award or
decision by the parties.—The period of appeal was 10 days from receipt of the copy
of the order of July 25, 2001 by the parties. It is true that Section 4 of Rule 43
stipulates that the appeal shall be taken within 15 days from notice of the award,
judgment, final order or resolution, or from the date of its last publication, if
publication is required by law for its effectivity, or of the denial of the petitioner’s
motion for new trial or reconsideration duly filed in accordance with the governing
law of the court or agency a quo. However, Article 262-A of the Labor Code, the
relevant portion of which follows, expressly states that the award or decision of the
Voluntary Arbitrator shall be final and executory after 10 calendar days from receipt
of the copy of the award or decision by the parties, viz.: Art. 262-A. Procedures.—
x 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. 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.
48
 Same; Same; Same; Even if the error sought to be reviewed concerned grave
abuse of discretion on the part of the Voluntary Arbitrator, the remedy was an
appeal in due course by filing the petition for  278
_______________
*  FIRST DIVISION.
 
 
277
VOL. 772, OCTOBER 14, 2015 277
Baronda vs. Court of Appeals
review within ten (10) days from notice of the award or decision.—To begin
with, even if the error sought to be reviewed concerned grave abuse of discretion on
the part of the Voluntary Arbitrator, the remedy was an appeal in due course by filing
the petition for review within 10 days from notice of the award or decision. This was
because certiorari, as an extraordinary remedy, was available only when there was
no appeal, or any plain, speedy and adequate remedy in the ordinary course of law.
In other words, the justification for HIDECO’s resort to the extraordinary equitable
remedy of certiorari did not exist due to the availability of appeal, or other ordinary
remedies in law to which HIDECO as the aggrieved party could resort.
Same; Same; Same; Certiorari; Although it is true that certiorari cannot be a
substitute for a lost appeal, and that either remedy was not an alternative of the
other, the Supreme Court (SC) has at times permitted the resort to certiorari despite
the availability of appeal, or of any plain speedy and adequate remedy in the
ordinary course of law in exceptional situations.—Although it is true
that certiorari cannot be a substitute for a lost appeal, and that either remedy was not
an alternative of the other, we have at times permitted the resort to certiorari despite
the availability of appeal, or of any plain speedy and adequate remedy in the ordinary
course of law in exceptional situations, such as: (1) when the remedy of certiorari is
necessary to prevent irreparable damages and injury to a party; (2) where the trial
judge capriciously and whimsically exercised his judgment; (3) where there may be
danger of a failure of justice; (4) where appeal would be slow, inadequate and
insufficient; (5) where the issue raised is one purely of law; (6) where public interest
is involved; and (7) in case of urgency. Verily, as pointed out in Jaca v. Davao
Lumber Company, 113 SCRA 107 (1982), the availability of the ordinary course of
appeal does not constitute sufficient ground to prevent a party from making use
of certiorari where the appeal is not an adequate remedy or equally beneficial,
speedy and sufficient; for it is inadequacy, not the mere absence of all other legal
remedies and the danger of failure of justice without the writ that must usually
determine the propriety of certiorari. It is nonetheless necessary in such exceptional
situations for the petitioner to make a strong showing in such situations that the
respondent judicial or quasi-judicial official or tribunal lacked or exceeded its
jurisdiction, or gravely abused its discretion amounting to lack or excess of
jurisdiction.
 
 
278 SUPREME COURT REPORTS ANNOTATED
Baronda vs. Court of Appeals
Same; Reinstatement Pending Appeal; The immediate reinstatement of the
employee pending the appeal has been introduced by Section 12 of Republic Act
(RA) No. 6715, which amended Article 223 of the Labor Code.—The immediate
reinstatement of the employee pending the appeal has been introduced by Section 12
of Republic Act No. 6715, which amended Article 223 of the Labor Code, to wit:
SEC. 12. Article 223 of the same code is amended to read as follows: Art.
223. Appeal.—x x x x In any event, the decision of the Labor Arbiter reinstating
a dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The employee
shall either be admitted back to work under the same terms and conditions prevailing
prior to his dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.
Same; Same; Reinstatement pending appeal thus affirms the constitutional
mandate to protect labor and to enhance social justice.—The normal consequences
of a finding that an employee was illegally dismissed are, firstly, that the employee
becomes entitled to reinstatement to his former position without loss of seniority
rights; and secondly, the payment of wages corresponding to the period from his
illegal dismissal up to the time of actual reinstatement. These two consequences give
meaning and substance to the constitutional right of labor to security of tenure.
Reinstatement pending appeal thus affirms the constitutional mandate to protect
labor and to enhance social justice.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
  Santo Law Office for petitioner.
  Flor Amor A. Opon for respondent.
 
 
279
VOL. 772, OCTOBER 14, 2015 279
Baronda vs. Court of Appeals
BERSAMIN, J.:
 
The reinstatement aspect of the Voluntary Arbitrator’s award or decision is
immediately executory from its receipt by the parties.
 
The Case 
 
49
 The petitioner assails the decision 1 promulgated on August 21, 2003 in C.A.-
G.R. S.P. No. 67059, whereby the Court of Appeals (CA) annulled and set aside the
order issued by the Voluntary Arbitrator 2 granting his motion for the issuance of the
writ of execution.3
 
Antecedents  salary until complete payment is made.
Respondent Hideco Sugar Milling Co., Inc. (HIDECO) employed the petitioner
as a mud press truck driver with a daily salary of P281.00. On May 1, 1998, he hit
HIDECO’s transmission lines while operating a dump truck, causing a total factory
blackout from 9:00 p.m. until 2:00 a.m. of the next day. Power was eventually
restored but the restoration cost HIDECO damages totaling P26,481.11. Following
the incident, HIDECO served a notice of offense requiring him to explain the
incident within three days from notice. He complied. Thereafter, the management
conducted its investigation, and, finding him guilty of negligence, recommended his
dismissal.4 On June 15, 1998, the resident manager served a termination letter and
informed him of the decision to termi-
_______________
1  Rollo, pp. 23-38; penned by Associate Justice Cancio C. Garcia (later
Presiding Justice, and a member of the Court/retired/
deceased) with concurrence of Associate Justices Martin S. Villarama, Jr. (now a
member of the Court) and Mario L. Guariña III (retired).
2  Id., at pp. 50-51.
3  Id., at pp. 159-161.
4  Id., at p. 24.
 
 
280
280 SUPREME COURT REPORTS ANNOTATED
Baronda vs. Court of Appeals
nate his employment effective at the close of office hours of that day. Hence,
HIDECO no longer allowed him to report to work on the next day.5
In August 1998, the petitioner, along with another employee also dismissed by
HIDECO, filed in the Office of the Voluntary Arbitrator of the National Conciliation
and Mediation Board in Tacloban City a complaint for illegal dismissal against
HIDECO.   the rate of P1,500.00/month deductible from his salary starting in January 2001 until
Voluntary Arbitrator Antonio C. Lopez, Jr. handled the case and eventually
rendered his decision on January 13, 1999 by finding the petitioner’s dismissal
illegal, and ordering his reinstatement. Voluntary Arbitrator Lopez, Jr. deemed the
petitioner’s separation from the service from June 16, 1998 to January 15, 1999 as a
suspension from work without pay, and commanded him to pay on installment basis
the damages sustained by HIDECO from the May 1, 1998 incident he had caused, 6 to
wit:7
Wherefore, insofar as the case of ROGELIO BARONDA is concerned, this
Office finds his dismissal illegal and reinstatement is therefore ordered. His
separation on June 16, 1998 up to January 15, 1999 is deemed suspension without
pay for his negligent acts, and is further ordered to pay respondent employer the sum
of P26,484.41 for actual damages at P1,500.00 every month deductible from his
HIDECO filed a motion for reconsideration, 8 but the Voluntary Arbitrator denied
the motion on August 11, 2000.9 Accepting the outcome, HIDECO reinstated the
petitioner on September 29, 2000.10
_______________
5   Id., at pp. 24-25.
6   Id., at pp. 25-26.
7   Id., at p. 48.
8   Id., at pp. 138-141.
9   Id., at p. 142.
10  Id., at p. 27.
 
281
VOL. 772, OCTOBER 14, 2015 281
Baronda vs. Court of Appeals
Thereafter, on October 9, 2000, the petitioner filed his manifestation with motion
for the issuance of the writ of execution in the Office of the Voluntary
Arbitrator,11praying for the execution of the decision, and insisting on being entitled
to backwages and other benefits corresponding to the period from January 16, 1999
up to September 28, 2000 totaling P192,268.66 based on Article 279 of the Labor
Code (“An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement”).
HIDECO opposed the petitioner’s motion for execution, 12and simultaneously
presented its own motion for execution to enforce the decision of the Voluntary
Arbitrator directing the petitioner to pay the actual damages totaling P26,484.41 at
complete payment was made.13
In his order dated March 20, 2001, 14 the Voluntary Arbitrator denied the
petitioner’s motion for execution on the ground that the decision did not award any
backwages; and granted HIDECO’s motion for execution by directing the petitioner
to pay HIDECO P26,484.41 at the rate of P1,500.00/month.
On May 17, 2001, the petitioner filed another motion for execution praying that a
writ of execution requiring HIDECO to pay to him unpaid wages, 13th month pay
50
and bonuses from January 16, 2001, the date when his reinstatement was effected, 17  Id., at pp. 50-51.
until his actual reinstatement.15 HIDECO opposed the petitioner’s second motion for  
execution because “the items  
_______________ 283
VOL. 772, OCTOBER 14, 2015 283
11  Id., at pp. 144-145.
Baronda vs. Court of Appeals
12  Id., at pp. 152-155.
13  Id., at pp. 156-157. Having received a copy of the order of July 25, 2001 on August 7,
14  Id., at p. 158. 2001,18 HIDECO instituted a special civil action for certiorari in the Court of
15  Id., at pp. 159-162. Appeals (CA) on October 2, 2001.19
   
  Decision of the CA 
282  
HIDECO’s petition for certiorari averred that the Voluntary Arbitrator had acted
282 SUPREME COURT REPORTS ANNOTATED with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing
Baronda vs. Court of Appeals the July 25, 2001 order. It listed the following issues, namely:
prayed for by the complainant in his Motion for Issuance of Writ of Execution are I. The voluntary arbitrator, in rendering the assailed order actually granted an
not included in the dispository portion of the decision of the voluntary arbitrator, award without giving due process to the herein petitioner.20
neither are the said items mentioned in any part of the same decision.”16 II. The voluntary arbitrator resolved the (second) motion by applying Art. 223
On July 25, 2001, however, the Voluntary Arbitrator granted the petitioner’s of the Labor Code. Was this the correct law to apply under the circumstances? Did
second motion for execution,17 to wit: he have jurisdiction to apply this law?21
Wherefore, for failure of complainant to readmit complainant nor reinstate him in III. The decision dated January 13, 1999 clearly stated the relief that had been
the payroll for the period from January 21, [1999] up to September 28, 2000, let an granted to the complainant Baronda, which was reinstatement. Baronda was
order or execution issue for the satisfaction of his reinstatement wages in the amount reinstated on September 29, 2000, thus [HIDECO] had complied with the decision.
of P155,647.00 (554 days at P281.00 per day), 13th month pay in the amount of The questions therefore: Could a relief that is not written in the decision be
P7,200.00, bonus in the amount of P8,000.00 for 1999, and P8,000.00 for his signing executed? Since the voluntary arbitrator clearly did this in this case, is it not correct
bonus. to say that he committed grave abuse of discretion?22
The sheriff of the National Labor Relations Commission, Regional Arbitration IV. In the assailed Order dated July 25, 2001 the Voluntary Arbitrator said,
Branch No. VIII is directed to implement the writ. among others, that it treated a second motion for the issuance of a writ of execution,
So ordered. and that a first motion had already been denied on the ground that no backwages had
  been awarded to the com-
The Voluntary Arbitrator cited as basis Article 223 of the Labor Code, which _______________
pertinently provides:
Art. 223. Appeal.— 18  Id., at p. 54.
x x x x 19  CA Rollo, p. 2.
In any event, the decision of the Labor Arbiter reinstating a dismissed or 20  Id., at p. 10.
separated employee, insofar as the reinstatement aspect is concerned, shall 21  Id.
immediately be executory, even pending appeal. The employee shall either be 22  Id., at p. 11.
admitted back to work under the same terms and conditions prevailing prior to his  
dismissal or separation or, at the option of the employer, merely reinstated in the  
payroll. The posting of a bond by the employer shall not stay the execution for 284
reinstatement provided herein. 284 SUPREME COURT REPORTS ANNOTATED
_______________
Baronda vs. Court of Appeals
16  Id., at p. 164. plainant Baronda. Did he have any legal basis then to issue two different and
contradictory orders for what are essentially similar motions?23
51
 In his comment,24 the petitioner countered that the petition for certiorari should THE SAKE OF ARGUMENT THAT SAID PETITION COULD BE
be dismissed considering that HIDECO should have appealed the decision of the CONSIDERED AS FILED UNDER RULE 43 OF THE RULES OF COURT, THE
Voluntary Arbitrator under Rule 43 of the Rules of Courtbecause certiorari was not a HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN
substitute for a lost appeal; that HIDECO did not file a motion for reconsideration of NOT CONSIDERING THAT IT WAS FILED OUT OF TIME.
the questioned order, which would have been an adequate remedy at law; that the II.
petition for certiorari did not raise any jurisdictional error on the part of the THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF
Voluntary Arbitrator but only factual and legal issues not proper in certiorari; and LAW WHEN IT DID NOT DISMISS THE PETITION FILED BY THE PRIVATE
that the Voluntary Arbitrator did not commit any error, much less grave abuse of RESPONDENT FOR NOT HAVING PREVIOUSLY FILED A MOTION FOR
discretion amounting to lack or excess of jurisdiction in rendering the questioned RECONSIDERATION BEFORE RESORTING TO THE PETITION
order. FOR CERTIORARI.
In the decision promulgated on August 21, 2003, 25 the CA treated HIDECO’s _______________
petition for certiorari as a petition for review brought under Rule 43, and brushed
aside the matters raised by the petitioner. It observed that the petition 26  Id., at p. 37.
for certiorari included the contents required by Section 6, Rule 43 for the petition for 27  Id., at pp. 8-9.
review; that the writ of execution was proper only when the decision to be executed  
carried an award in favor of the movant; that the Voluntary Arbitrator had issued the  
writ of execution for backwages despite his decision lacking such award for 286
backwages; and that the reliance by the Voluntary Arbitrator on Article 223 of 286 SUPREME COURT REPORTS ANNOTATED
the Labor Code was misplaced because said provision referred to decisions, awards
or orders of the Labor Arbiter, not the Voluntary Arbitrator. It disposed as follows: Baronda vs. Court of Appeals
_______________ III.
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF
23  Id., at p. 14. LAW WHEN IT CONSIDERED THE WRIT OF EXECUTION AS ISSUED FOR
24  Id., at pp. 128-143. THE SATISFACTION OF BACKWAGES INSTEAD OF FOR REINSTATEMENT
25  Supra note 1. WAGES.
  IV.
  THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF
285 LAW AND SANCTIONED A VIOLATION OF THE EQUAL PROTECTION OF
THE LAWS WHEN IT RULED THAT THE REINSTATEMENT ASPECT OF
VOL. 772, OCTOBER 14, 2015 285 THE DECISION OF THE VOLUNTARY ARBITRATOR IS NOT
Baronda vs. Court of Appeals IMMEDIATELY EXECUTORY.
WHEREFORE, the instant petition is hereby GRANTED and the V.
questioned Order dated July 25, 2001 of the public THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF
respondent ANNULLED and SET ASIDE. LAW WHEN IT DECLARED THAT PRIVATE RESPONDENT WAS DENIED
SO ORDERED.26 DUE PROCESS OF LAW.
  In other words, the decisive issues for consideration and resolution are: (a)
Issues  whether or not the CA erred in granting HIDECO’s petition for certiorari despite its
  procedural flaws; and (b) whether or not the reinstatement aspect of the Voluntary
In this appeal, the petitioner submits the following issues,27 namely: Arbitrator’s decision was executory pending appeal.
I.  
THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF Ruling 
LAW WHEN IT CONSIDERED THE PETITION FOR CERTIORARI FILED BY  
PRIVATE RESPONDENT AS ONE FILED UNDER RULE 43 OF THE RULES The appeal is meritorious.
OF COURT WHEN SAID PETITION EXPRESSLY DECLARED THAT IT WAS  
FILED UNDER RULE 65 OF THE RULES OF COURT. EVEN GRANTING FOR I

52
 HIDECO’s proper recourse was to appeal
by petition for review; hence, the CA erred
in granting HIDECO’s petition for certiorari
 
 
287
VOL. 772, OCTOBER 14, 2015 287
Baronda vs. Court of Appeals
The order issued on July 25, 2001 by the Voluntary Arbitrator, albeit directing
the execution of the award or decision of January 13, 1999, was a final order, as
contrasted from a merely interlocutory order, because its issuance left nothing more
to be done or taken by the Voluntary Arbitrator in the case. 28 It thus completely
disposed of what the reinstatement
_______________
28  United Overseas Bank v. Ros, G.R. No. 171532, August 7, 2007, 529 SCRA
334, quoting from Investments, Inc. v. Court of Appeals, No. L-60036, January 27,
1987, 147 SCRA 334, 339-341, the following distinctions between a final judgment
or order, on one hand, and an interlocutory order, on the other, to wit:
x x x A “final” judgment or order is one that finally disposes of a case, leaving
nothing more to be done by the Court in respect thereto, e.g., an adjudication on the
merits which, on the basis of the evidence presented on the trial, declares
categorically what the rights and obligations of the parties are and which party is in
the right; or a judgment or order that dismisses an action on the ground, for instance,
of res judicata or prescription. Once rendered, the task of the Court is ended, as far
as deciding the controversy or determining the rights and liabilities of the litigants is
concerned. Nothing more remains to be done by the Court except to await the
parties’ next move (which among others, may consist of the filing of a motion for
new trial or reconsideration, or the taking of an appeal) and ultimately, of course, to
cause the execution of the judgment once it becomes “final” or, to use the established
and more distinctive term, “final and executory.”
x x x x
Conversely, an order that does not finally dispose of the case, and does not end
the Court’s task of adjudicating the parties’ contentions and determining their rights
and liabilities as regards each other, but obviously indicates that other things remain
to be done by the Court, is “interlocutory” e.g., an order denying motion to dismiss
under Rule 16 of the Rules, or granting of motion on ex-
 
 
288
288 SUPREME COURT REPORTS ANNOTATED
Baronda vs. Court of Appeals
of the petitioner as ordered by the Voluntary Arbitrator in the award or decision of
January 13, 1999 signified.
The proper remedy from such order was to appeal to the CA by petition for
review under Rule 43 of the Rules of Court, whose Section 1 specifically provides:
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
Boards 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 Regulation 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.
The period of appeal was 10 days from receipt of the copy of the order of July
25, 2001 by the parties. It is true that Section 4 of Rule 43 stipulates that the appeal
shall be taken within 15 days from notice of the award, judgment, final order
_______________
tension of time to file a pleading, or authorizing amendment thereof, or granting or
denying applications for postponement, or production or inspection of documents or
things, etc. Unlike a “final” judgment or order, which is appealable, as above pointed
out, an “interlocutory” order may not be questioned on appeal except only as part of
an appeal that may eventually be taken from the final judgment rendered in the case.
 
 
289
VOL. 772, OCTOBER 14, 2015 289
Baronda vs. Court of Appeals
or resolution, or from the date of its last publication, if publication is required by law
for its effectivity, or of the denial of the petitioner’s motion for new trial or
reconsideration duly filed in accordance with the governing law of the court or
agency a quo. However, Article 262-A of the Labor Code, the relevant portion of
which follows, expressly states that the award or decision of the Voluntary Arbitrator
shall be final and executory after 10 calendar days from receipt of the copy of the
award or decision by the parties, viz.:
Art. 262-A. Procedures.—
x 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.
53
 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.
(Emphasis supplied)
On account of Article 262-A of the Labor Code, the period to appeal was
necessarily 10 days from receipt of the copy of the award or decision of the
Voluntary Arbitrator or panel of Voluntary Arbitrators; otherwise, the order of July
25, 2001 would become final and immutable, because only a timely appeal or motion
for reconsideration could prevent the award or decision from attaining finality and
immutability.
Yet, HIDECO filed the petition for certiorari, not a petition for review under
Rule 43, and the CA liberally treated the petition for certiorari as a petition for
review under Rule 43.
 
 
290
290 SUPREME COURT REPORTS ANNOTATED
Baronda vs. Court of Appeals
We hold that such treatment by the CA was procedurally unwarranted.   exceptional situations.
To begin with, even if the error sought to be reviewed concerned grave abuse of
discretion on the part of the Voluntary Arbitrator, 29 the remedy was an appeal in due
course by filing the petition for review within 10 days from notice of the award or
decision. This was because certiorari, as an extraordinary remedy, was available
only when there was no appeal, or any plain, speedy and adequate remedy in the
ordinary course of law.30 In other words, the justification for HIDECO’s resort to the
extraordinary equitable remedy of certiorari did not exist due to the availability of
appeal, or other ordinary remedies in law to which HIDECO as the aggrieved party
could resort.
Although it is true that certiorari cannot be a substitute for a lost appeal, and that
either remedy was not an alternative of the other, we have at times permitted the
resort to certiorari despite the availability of appeal, or of any plain speedy and
adequate remedy in the ordinary course of law in exceptional situations, such as: (1)
when the remedy of certiorari is necessary to prevent irreparable damages and injury
to a party; (2) where the trial judge capriciously and whimsically exercised his
judgment; (3) where there may be danger of a failure of justice; (4) where appeal
would be slow, inadequate and insufficient; (5) where the issue raised is one purely
of law; (6) where public interest is involved; and (7) in case of urgency. 31 Verily, as
pointed out in Jaca v. Davao Lumber Company,32 the availability of the ordinary
course of appeal
_______________
29  Philippine Electric Corporation v. Court of Appeals, G.R. No. 168612,
December 10, 2014, 744 SCRA 361.
30  Section 1, Rule 65 of the Rules of Court.
31  Francisco Motors Corporation v. Court of Appeals, G.R. Nos. 117622-23,
October 23, 2006, 505 SCRA 8, 20; Republic v. Sandiganbayan (Third Division),
G.R. No. 113420, March 7, 1997, 269 SCRA 316, 325.
32  No. L-25771, March 29, 1982, 113 SCRA 107, 129.
 
291
VOL. 772, OCTOBER 14, 2015 291
Baronda vs. Court of Appeals
does not constitute sufficient ground to prevent a party from making use
of certiorari where the appeal is not an adequate remedy or equally beneficial,
speedy and sufficient; for it is inadequacy, not the mere absence of all other legal
remedies and the danger of failure of justice without the writ that must usually
determine the propriety of certiorari. It is nonetheless necessary in such exceptional
situations for the petitioner to make a strong showing in such situations that the
respondent judicial or quasi-judicial official or tribunal lacked or exceeded its
jurisdiction, or gravely abused its discretion amounting to lack or excess of
jurisdiction.
HIDECO did not establish that its case came within any of the aforestated
And secondly, HIDECO filed the petition for certiorarion October 2, 2001. Even
assuming, as the CA held, that the petition for certiorari contained the matters
required by Rule 43, such filing was not timely because 56 days had already lapsed
from HIDECO’s receipt of the denial by the Voluntary Arbitrator of the motion for
reconsideration. In short, HIDECO had thereby forfeited its right to appeal. We have
always emphasized the nature of appeal as a merely statutory right for the aggrieved
litigant, and such nature requires the strict observance of all the rules and regulations
as to the manner of its perfection and as to the time of its taking. Whenever appeal is
belatedly resorted to, therefore, the litigant forfeits the right to appeal, and the higher
court ipso facto loses the authority to review, reverse, modify or otherwise alter the
judgment. The loss of such authority is jurisdictional, and renders the adverse
judgment both final and immutable.  
 
II
Voluntary Arbitrator’s order of reinstatement
of the petitioner was immediately executory 
 
 
292
292 SUPREME COURT REPORTS ANNOTATED
Baronda vs. Court of Appeals
54
 The next query is whether the order of reinstatement of the petitioner by the
Voluntary Arbitrator was immediately executory or not.
We answer the query in the affirmative. Although the timely filing of a motion
for reconsideration or of an appeal forestalls the finality of the decision or award of
the Voluntary Arbitrator,33 the reinstatement aspect of the Voluntary Arbitrator’s
decision or award remains executory regardless of the filing of such motion for
reconsideration or appeal.
The immediate reinstatement of the employee pending the appeal has been
introduced by Section 12 of Republic Act No. 6715, which amended Article 223 of
the Labor Code, to wit:
SEC. 12. Article 223 of the same code is amended to read as follows:
Art. 223. Appeal.—
x x x x
In any event, the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be
admitted back to work under the same terms and conditions prevailing prior to his
dismissal or separation or, at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein. (bold underscoring supplied for emphasis)
The normal consequences of a finding that an employee was illegally dismissed
are, firstly, that the employee becomes entitled to reinstatement to his former position
without loss of seniority rights; and secondly, the payment of wages corresponding to
the period from his illegal dismissal up to the
_______________
33  Teng v. Pahagac, G.R. No. 169704, November 17, 2010, 635 SCRA 173,
182.
 
 
293
VOL. 772, OCTOBER 14, 2015 293
Baronda vs. Court of Appeals
time of actual reinstatement. These two consequences give meaning and substance to
the constitutional right of labor to security of tenure. 34 Reinstatement pending appeal
thus affirms the constitutional mandate to protect labor and to enhance social justice,
for, as the Court has said in Aris (Phil.), Inc. v. National Labor Relations
Commission:35
In authorizing execution pending appeal of the reinstatement aspect of a decision
of a Labor Arbiter reinstating a dismissed or separated employee, the law itself has
laid down a compassionate policy which, once more, vivifies and enhances the
provisions of the 1987 Constitution on labor and the workingman.
x x x x
These duties and responsibilities of the State are imposed not so much to express
sympathy for the workingman as to forcefully and meaningfully underscore labor as
a primary social and economic force, which the Constitution also expressly affirms
with equal intensity. Labor is an indispensable partner for the nation’s progress and
stability.
If in ordinary civil actions execution of judgment pending appeal is authorized
for reasons the determination of which is merely left to the discretion of the judge,
We find no plausible reason to withhold it in cases of decisions reinstating dismissed
or separated employees. In such cases, the poor employees had been deprived of
their only source of livelihood, their only means of support for their family their
lifeblood. To Us, this special circumstance is far better than any other which a judge,
in his sound discretion, may determine. In short, with respect to decisions reinstating
employees, the law itself has determined sufficiently overwhelming reason for its
execution pending appeal.
_______________
34  Santos v. National Labor Relations Commission, No. L-76721, September
21, 1987, 154 SCRA 166, 171-172.
35  G.R. No. 90501, August 5, 1991, 200 SCRA 246.
 
294
294 SUPREME COURT REPORTS ANNOTATED
Baronda vs. Court of Appeals
x x x Then, by and pursuant to the same power (police power), the State may
authorize an immediate implementation, pending appeal, of a decision reinstating a
dismissed or separated employee since that saving act is designed to stop, although
temporarily since the appeal may be decided in favor of the appellant, a continuing
threat or danger to the survival or even the life of the dismissed or separated
employee and its family.36
 
We also see no reason to obstruct the reinstatement decreed by the Voluntary
Arbitrator, or to treat it any less than the reinstatement that is ordered by the Labor
Arbiter. Voluntary arbitration really takes precedence over other dispute settlement
devices. Such primacy of voluntary arbitration is mandated by no less than the
Philippine Constitution,37 and is ingrained as a policy objective of our labor relations
law.38 The
_______________
36  Id., at pp. 254-255.
37  Constitution, Art. XIII, Sec. 3, viz.:
Sec. 3. 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.
55
 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 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.
38  Labor Code (1974), Art. 211, pertinently states:
Art. 211. Declaration of Policy.—A. It is the policy of the State:
 
 
295
VOL. 772, OCTOBER 14, 2015 295
Baronda vs. Court of Appeals
reinstatement order by the Voluntary Arbitrator should have the same authority,
force and effect as that of the reinstatement order by the Labor Arbiter not only to
encourage parties to settle their disputes through this mode, but also, and more
importantly, to enforce the constitutional mandate to protect labor, to provide
security of tenure, and to enhance social justice.
The 2001 Procedural Guidelines in the Execution of Voluntary Arbitration
Awards/Decisions (Guidelines), albeit not explicitly discussing the executory nature
of the reinstatement order, seems to align with the Court’s stance by punishing the
noncompliance by a party of the decision or order for reinstatement. Section 2, Rule
III of the Guidelines states:
Sec. 2. Issuance, Form and Contents of a Writ of Execution.—
x x x x
b) If the execution be for the reinstatement of any person to any position, office
or employment, such writ shall be served by the sheriff upon the losing party or in
case of death of the losing party upon his successor-in-interest, executor or
administrator and such party or person may be punished for contempt if he
disobeys such decision or order for reinstatement. (bold underscoring supplied for
emphasis)
 
The 2005 NCMB Revised Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings also supports this Court’s position, for Section 6 of its Rule
VIII reads:
Sec. 6. Effect of Filing of Petition for Certiorari on Execution.—The filing of
a petition for certiorari with the Court of Appeals or the Supreme Court shall not
stay 
_______________
(a) To promote and emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and conciliation, as modes of
settling labor or industrial disputes.
x x x x
 
 
296
296 SUPREME COURT REPORTS ANNOTATED
Baronda vs. Court of Appeals
the execution of the assailed decision unless a temporary restraining order or
injunction is issued by the Court of Appeals or the Supreme Court pending resolution
of such petition. (Emphasis ours)
We declare, therefore, that the reinstatement decreed by the Voluntary Arbitrator
was immediately executory upon the receipt of the award or decision by the parties.
WHEREFORE, the Court GRANTS the petition for review
on certiorari; REINSTATES the order dated July 25, 2001 of the Voluntary
Arbitrator; and ORDERS respondent Hideco Sugar Milling Co., Inc. to pay the costs
of suit.
SO ORDERED.
Sereno (CJ., Chairperson), Leonardo-De Castro, Perezand Perlas-Bernabe,
JJ., concur.
Petition granted.
Notes.—After the Labor Arbiter’s decision is reversed by a higher tribunal, the
employee may be barred from collecting the accrued wages, if it is shown that the
delay in enforcing the reinstatement pending appeal was without fault on the part of
the employer. (Islriz Trading vs. Capada, 641 SCRA 9 [2011])
A decision or award of a voluntary arbitrator is appealable to the CA via a
petition for review under Rule 43. (Royal Plant Workers Union vs. Coca-Cola
Bottlers Philippines, Inc.-Cebu Plant, 696 SCRA 357 [2013])
 
G.R. No. 211145. October 14, 2015.*
 
SAMAHAN NG MANGGAGAWA SA HANJIN SHIPYARD, rep. by its
President, ALFIE ALIPIO, petitioner, vs. BUREAU OF LABOR RELATIONS,
HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO., LTD. (HHIC-
PHIL.), respondents.
Labor Law; Labor Unions; Right to Self-organization; Workers can also form
and join a workers’ association as well as labor-management councils (LMC).—
56
More often than not, the right to self-organization connotes unionism. Workers,
however, can also form and join a workers’ association as well as labor-management
councils (LMC). Expressed in the highest law of the land is the right of all workers to
self-organization. Section 3, Article XIII of the 1987 Con-
_______________
*  SECOND DIVISION.
 
 
614
614 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
stitution states: Section 3. 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. x x x [Emphasis
supplied] And Section 8, Article III of the 1987 Constitution also states: Section 8.
The right of the people, including those employed in the public and private sectors,
to form unions, associations, or societies for purposes not contrary to law shall not be
abridged. In relation thereto, Article 3 of the Labor Code provides: Article  organization of workers formed for the mutual aid and protection of its members or
3. Declaration of basic policy.—The State shall afford protection to labor, promote
full employment, ensure equal work opportunities regardless of sex, race or creed
and regulate the relations 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.
Same; Same; Same; As Article 246 (now 252) of the Labor Code provides, the
right to self-organization includes the right to form, join or assist labor
organizations for the purpose of collective bargaining through representatives of
their own choosing and to engage in lawful concerted activities for the same purpose
for their mutual aid and protection.—As Article 246 (now 252) of the Labor Code
provides, the right to self-organization includes the right to form, join or assist labor
organizations for the purpose of collective bargaining through representatives of their
own choosing and to engage in lawful concerted activities for the same purpose for
their mutual aid and protection. This is in line with the policy of the State to foster
the free and voluntary organization of a strong and united labor movement as well as
to make sure that workers participate in policy and decision-making processes
affecting their rights, duties and welfare. The right to form a union or association or
to self-organization comprehends two notions, to wit: (a) the liberty or freedom, that
is, the absence of restraint which guarantees that the employee may act for himself
without being prevented by law; and (b) the power, by virtue of which an employee
may, as he pleases, join or refrain from joining an association.
Same; Same; Same; In view of the revered right of every worker to self-
organization, the law expressly allows and even encourages the  Same; Same; Same; The right to form or join a labor organization necessarily
 
 
615
VOL. 772, OCTOBER 14, 2015 615
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
formation of labor organizations.—In view of the revered right of every
worker to self-organization, the law expressly allows and even encourages the
formation of labor organizations. A labor organization is defined as “any union or
association or employees which exists in whole or in part for the purpose of
collective bargaining or of dealing with employers concerning terms and conditions
of employment.” A labor organization has two broad rights: (1) to bargain
collectively and (2) to deal with the employer concerning terms and conditions of
employment. To bargain collectively is a right given to a union once it registers itself
with the DOLE. Dealing with the employer, on the other hand, is a generic
description of interaction between employer and employees concerning grievances,
wages, work hours and other terms and conditions of employment, even if the
employees’ group is not registered with the DOLE.
Same; Same; Same; “Union” and “Workers’ Association,” Distinguished.—A
union refers to any labor organization in the private sector organized for collective
bargaining and for other legitimate purpose, while a workers’ association is an
for any legitimate purpose other than collective bargaining. Many associations or
groups of employees, or even combinations of only several persons, may qualify as a
labor organization yet fall short of constituting a labor union. While every labor
union is a labor organization, not every labor organization is a labor union. The
difference is one of organization, composition and operation.
Same; Same; Same; It is incorrect to say that it is the device and no other,
which secures industrial democracy.—Collective bargaining is just one of the forms
of employee participation. Despite so much interest in and the promotion of
collective bargaining, it is incorrect to say that it is the device and no other, which
secures industrial democracy. It is equally misleading to say that collective
bargaining is the end-goal of employee representation. Rather, the real aim
is employee participation in whatever form it may appear, bargaining or no
bargaining, union or no union. Any labor organization which may or may not be a
union may deal with the employer. This explains why a workers’ association or
organization does not always have to be a labor union and why employer-employee
collective interactions are not always collective bargaining.
 
 
616
616 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
includes the right to refuse or refrain from exercising the said right.—The right to
57
form or join a labor organization necessarily includes the right to refuse or refrain
from exercising the said right. It is self-evident that just as no one should be denied
the exercise of a right granted by law, so also, no one should be compelled to
exercise such a conferred right. Also inherent in the right to self-organization is the
right to choose whether to form a union for purposes of collective bargaining or a
workers’ association for purposes of providing mutual aid and protection. The right
to self-organization, however, is subject to certain limitations as provided by law.
For instance, the Labor Code specifically disallows managerial employees from
joining, assisting or forming any labor union. Meanwhile, supervisory employees,
while eligible for membership in labor organizations, are proscribed from joining the
collective bargaining unit of the rank-and-file employees. Even government
employees have the right to self-organization. It is not, however, regarded as existing
or available for purposes of collective bargaining, but simply for the furtherance and
protection of their interests.
Same; Same; Same; Misrepresentation; Misrepresentation, as a ground for
the cancellation of registration of a labor organization, is committed in connection
with the adoption, or ratification of the constitution and bylaws or amendments
thereto, the minutes of ratification, the list of members who took part in the
ratification of the constitution and bylaws or amendments thereto, and those in
connection with the election of officers, minutes of the election of officers, and the
list of voters.—Misrepresentation, as a ground for the cancellation of registration of a
labor organization, is committed “in connection with the adoption, or ratification of
the constitution and bylaws or amendments thereto, the minutes of ratification, the
list of members who took part in the ratification of the constitution and bylaws or
amendments thereto, and those in connection with the election of officers, minutes of
the election of officers, and the list of voters, x x x.”
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
 
617
VOL. 772, OCTOBER 14, 2015 617
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
  Virginia Lacsa Suarez for petitioner.
  Christian Abello for respondents.
 
MENDOZA, J.:
 
The right to self-organization is not limited to unionism. Workers may also form
or join an association for mutual aid and protection and for other legitimate purposes.
This is a petition for review on certiorari seeking to reverse and set aside the
July 4, 2013 Decision1 and the January 28, 2014 Resolution2 of the Court of Appeals
(CA)in C.A.-G.R. S.P. No. 123397, which reversed the November 28, 2011
Resolution3 of the Bureau of Labor Relations (BLR) and reinstated the April 20, 2010
Decision4 of the Department of Labor and Employment (DOLE) Regional Director,
cancelling the registration of Samahan ng Manggagawa sa Hanjin Shipyard
(Samahan) as a worker’s association under Article 243 (now Article 249) of the
Labor Code.
 
The Facts 
 
On February 16, 2010, Samahan, through its authorized representative, Alfie F.
Alipio, filed an application for registration 5 of its name “Samahan ng Mga
Manggagawa sa Hanjin Shipyard” with the DOLE. Attached to the application were
the list of names of the association’s officers and members, signatures of the
attendees of the February 7, 2010
_______________
1  Rollo, pp. 22-30; penned by Associate Justice Hakim S. Abdulwahid, with
Associate Justices Marlene Gonzales-Sison and Edwin D. Sorongon, concurring.
2  Id., at p. 32.
3  CA Rollo, pp. 118-123.
4  Id., at pp. 86-91.
5  Id., at p. 31.
 
 
618
618 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
meeting, copies of their Constitution and By-Laws. The application stated that
the association had a total of 120 members.
On February 26, 2010, the DOLE Regional Office No. 3, City of San Fernando,
Pampanga (DOLE-Pampanga),issued the corresponding certificate of registration 6 in
favor of Samahan.
On March 15, 2010, respondent Hanjin Heavy Industries and Construction Co.,
Ltd. Philippines (Hanjin), with offices at Greenbeach 1, Renondo
Peninsula, SitioAgustin, Barangay Cawag, Subic Bay Freeport Zone, filed a
petition7 with DOLE-Pampanga praying for the cancellation of registration of
Samahan’s association on the ground that its members did not fall under any of the
types of workers enumerated in the second sentence of Article 243 (now 249).
Hanjin opined that only ambulant, intermittent, itinerant, rural workers, self-
employed, and those without definite employers may form a workers’ association. It
further posited that one-third (1/3) of the members of the association had definite
employers and the continued existence and registration of the association would
prejudice the company’s goodwill.
58
 On March 18, 2010, Hanjin filed a supplemental petition,8 adding the alternative
ground that Samahan committed a misrepresentation in connection with the list of
members and/or voters who took part in the ratification of their constitution and
bylaws in its application for registration. Hanjin claimed that Samahan made it
appear that its members were all qualified to become members of the workers’
association.
On March 26, 2010, DOLE-Pampanga called for a conference, wherein Samahan
requested for a 10-day period to file a
_______________
6  Id., at p. 61.
7  Id., at pp. 62-68.
8  Id., at pp. 69-75.
 
 
619
VOL. 772, OCTOBER 14, 2015 619
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
responsive pleading. No pleading, however, was submitted. Instead, Samahan
filed a motion to dismiss on April 14, 2010.9
The Ruling of the DOLE
Regional Director  no right to petition for the cancellation of its registration. Samahan pointed out that
 
On April 20, 2010, DOLE Regional Director Ernesto Bihis ruled in favor of
Hanjin. He found that the preamble, as stated in the Constitution and By-Laws of
Samahan, was an admission on its part that all of its members were employees of
Hanjin, to wit:
KAMI, ang mga Manggagawa sa HANJIN Shipyard (SAMAHAN) ay
naglalayong isulong ang pagpapabuti ng kondisyon sa paggawa at katiyakan sa
hanapbuhay sa pamamagitan ng patuloy na pagpapaunlad ng kasanayan ng para sa
mga kasapi nito. Naniniwala na sa pamamagitan ng aming mga angking lakas,
kaalaman at kasanayan ay aming maitataguyod at makapag-aambag sa kaunlaran
ng isang lipunan. Na mararating at makakamit ang antas ng pagkilala, pagdakila at
pagpapahalaga sa mga tulad naming mga manggagawa.
x x x10
 
The same claim was made by Samahan in its motion to dismiss, but it failed to
adduce evidence that the remaining 63 members were also employees of Hanjin. Its
admission bolstered Hanjin’s claim that Samahan committed misrepresentation in its
application for registration as it made an express representation that all of its
members were employees of the former. Having a definite employer, these 57
members should have formed a labor union for collective bargaining. 11 The
dispositive portion of the decision of the Dole Regional Director, reads:
_______________
9   Id., at p. 87.
10  Id., at p. 53.
11  Id., at pp. 86-91.
 
620
620 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
WHEREFORE, premises considered, the petition is hereby GRANTED.
Consequently, the Certificate of Registration as Legitimate Workers Association
(LWA) issued to the SAMAHAN NG MGA MANGGAGAWA SA HANJIN
SHIPYARD (SAMAHAN) with Registration Numbers RO300-1002-WA-009 dated
February 26, 2010 is hereby CANCELLED, and said association is dropped from the
roster of labor organizations of this Office.
SO DECIDED.12
 
The Ruling of the Bureau
of Labor Relations 
Aggrieved, Samahan filed an appeal 13 before the BLR, arguing that Hanjin had
the words “Hanjin Shipyard,” as used in its application for registration, referred to a
workplace and not as employer or company. It explained that when a shipyard was
put up in Subic, Zambales, it became known as Hanjin Shipyard. Further, the
remaining 63 members signed the Sama-Samang Pagpapatunay which stated that
they were either working or had worked at Hanjin. Thus, the alleged
misrepresentation committed by Samahan had no leg to stand on.14
In its Comment to the Appeal,15 Hanjin averred that it was a party-in-interest. It
reiterated that Samahan committed misrepresentation in its application for
registration before DOLE Pampanga. While Samahan insisted that the remaining 63
members were either working, or had at least worked in Hanjin, only 10 attested to
such fact, thus, leaving its 53 members without any workplace to claim.
_______________
12  Id., at p. 91.
13  Id., at pp. 92-100.
14  Id., at p. 97.
15  Id., at pp. 101-114.
 
 
59
 621
VOL. 772, OCTOBER 14, 2015 621
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
On September 6, 2010, the BLR granted Samahan’s appeal and reversed the
ruling of the Regional Director. It stated that the law clearly afforded the right to
self-organization to all workers including those without definite employers. 16 As an
expression of the right to self-organization, industrial, commercial and self-employed
workers could form a workers’ association if they so desired but subject to the
limitation that it was only for mutual aid and protection. 17 Nowhere could it be found
that to form a workers’ association was prohibited or that the exercise of a workers’
right to self-organization was limited to collective bargaining.18
The BLR was of the opinion that there was no misrepresentation on the part of
Samahan. The phrase, “KAMI, ang mga Manggagawa sa Hanjin Shipyard,” if
translated, would be: “We, the workers at Hanjin Shipyard.” The use of the
preposition “at” instead of “of” would indicate that “Hanjin Shipyard” was intended
to describe a place.19 Should Hanjin feel that the use of its name had affected the
goodwill of the company, the remedy was not to seek the cancellation of the
association’s registration. At most, the use by Samahan of the name “Hanjin
Shipyard” would only warrant a change in the name of the association. 20 Thus, the
dispositive portion of the BLR decision reads:
WHEREFORE, the appeal is hereby GRANTED. The Order of DOLE Region III
Director Ernesto C. Bihis dated 20 April 2010 is REVERSED and SET ASIDE.
Accordingly, Samahan ng mga Manggagawa sa Hanjin Shipyard shall remain in
the roster of legitimate workers’ association.21
_______________
16  Id., at p. 121.
17  Id., at p. 122.
18  Id., at p. 121.
19  Id.
20  Id., at p. 123.
21  Id.
 
 
622
622 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
On October 14, 2010, Hanjin filed its motion for reconsideration.22
In its Resolution,23 dated November 28, 2011, the BLR affirmed its September 6,
2010 Decision, but directed Samahan to remove the words “Hanjin Shipyard” from
its name. The BLR explained that the Labor Code had no provision on the use of
trade or business name in the naming of a worker’s association, such matters being
governed by the Corporation Code. According to the BLR, the most equitable relief
that would strike a balance between the contending interests of Samahan and Hanjin
was to direct Samahan to drop the name “Hanjin Shipyard” without delisting it from
the roster of legitimate labor organizations. The fallo reads:
WHEREFORE, premises considered, our Decision dated 6 September 2010 is
hereby AFFIRMED with a DIRECTIVE for SAMAHAN to remove “HANJIN
SHIPYARD” from its name.
SO RESOLVED.24
 
Unsatisfied, Samahan filed a petition for certiorari25under Rule 65 before the
CA, docketed as C.A.-G.R. S.P. No. 123397.
In its March 21, 2012 Resolution,26 the CA dismissed the petition because of
Samahan’s failure to file a motion for reconsideration of the assailed November 28,
2011 Resolution.
On April 17, 2012, Samahan filed its motion for reconsideration 27 and on July 18,
2012, Hanjin filed its comment28 to oppose the same. On October 22, 2012, the CA
issued a resolution granting Samahan’s motion for reconsideration and
_______________
22  Id., at pp. 124-140.
23  Id., at pp. 29-30.
24  Id., at p. 30.
25  Id., at pp. 3-21.
26  Id., at pp. 144-145.
27  Id., at pp. 148-151.
28  Id., at pp. 159-163.
 
623
VOL. 772, OCTOBER 14, 2015 623
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
reinstating the petition. Hanjin was directed to file a comment five (5) days from
receipt of notice.29
On December 12, 2012, Hanjin filed its comment on the petition, 30 arguing that
to require Samahan to change its name was not tantamount to interfering with the
workers’ right to self-organization.31 Thus, it prayed, among others, for the dismissal
of the petition for Samahan’s failure to file the required motion for reconsideration. 32
On January 17, 2013, Samahan filed its reply.33
On March 22, 2013, Hanjin filed its memorandum.34
 
The Ruling of the Court of Appeals 
 
On July 4, 2013, the CA rendered its decision, holding that the registration of
Samahan as a legitimate workers’ association was contrary to the provisions of
60
Article 243 of the Labor Code.35 It stressed that only 57 out of the 120 members were
actually working in Hanjin while the phrase in the preamble of Samahan’s
Constitution and By-Laws, “KAMI, ang mga Manggagawa sa Hanjin Shipyard,”
created an impression that all its members were employees of HHIC. Such
unqualified manifestation which was used in its application for registration, was a
clear proof of misrepresentation which warranted the cancellation of Samahan’s
registration.
It also stated that the members of Samahan could not register it as a legitimate
worker’s association because the place where Hanjin’s industry was located was not
a rural area. Neither was there any evidence to show that the members of
_______________
29  Id., at pp. 167-168.
30  Id., at pp. 183-222.
31  Id., at p. 192.
32  Id., at p. 220.
33  Id., at pp. 238-242.
34  Id., at pp. 246-267.
35  Id., at p. 279.
 
 
624
624 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
the association were ambulant, intermittent or itinerant workers. 36
At any rate, the CA was of the view that dropping the words “Hanjin Shipyard”
from the association name would not prejudice or impair its right to self-organization
because it could adopt other appropriate names. The dispositive portion reads:
WHEREFORE, the petition is DISMISSED and the BLR’s directive, ordering
that the words “Hanjin Shipyard” be removed from petitioner association’s name, is
AFFIRMED. The Decision dated April 20, 2010 of the DOLE Regional Director in
Case No. RO300-1003-CP-001, which ordered the cancellation of petitioner
association’s registration is REINSTATED.
SO ORDERED.37
UNION, HENCE THEIR REGISTRATION AS A WORKERS’
ASSOCIATION SHOULD BE CANCELLED. 
II. THE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING
THE REMOVAL/
DELETION OF THE WORD “HANJIN” IN THE NAME OF THE UNION BY
REASON OF THE COMPANY’S PROPERTY RIGHT OVER THE
COMPANY NAME “HANJIN.”38
_______________
36  Id., at p. 278.
37  Rollo, pp. 29-30.
38  Id., at p. 12.
 
 
625
VOL. 772, OCTOBER 14, 2015 625
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
Samahan argues that the right to form a workers’ association is not exclusive to
intermittent, ambulant and itinerant workers. While the Labor Code allows the
workers “to form, join or assist labor organizations of their own choosing” for the
purpose of collective bargaining, it does not prohibit them from forming a labor
organization simply for purposes of mutual aid and protection. All members of
Samahan have one common place of work, Hanjin Shipyard. Thus, there is no reason
why they cannot use “Hanjin Shipyard” in their name.39
Hanjin counters that Samahan failed to adduce sufficient basis that all its
members were employees of Hanjin or its legitimate contractors, and that the use of
the name “Hanjin Shipyard” would create an impression that all its members were
employees of HHIC.40
Samahan reiterates its stand that workers with a definite employer can organize
any association for purposes of mutual aid and protection. Inherent in the workers’
right to self-organization is its right to name its own organization. Samahan referred
“Hanjin Shipyard” as their common place of work. Therefore, they may adopt the
same in their association’s name.41

The Court’s Ruling 

Hence, this petition, raising the following:  
  The petition is partly meritorious.
Issues   
  Right to self-organization
I. THE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT includes right to form a un-
SAMAHAN CANNOT FORM A WORKERS’ ASSOCIATION OF ion, workers’ association and
EMPLOYEES IN HANJIN AND INSTEAD SHOULD HAVE FORMED A labor management councils 
_______________

61
 39  Id., at p. 15.
40  Comment, id., at pp. 50-73.
41  Reply, id., at pp. 96-102.
 
 
626
626 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
More often than not, the right to self-organization connotes unionism. Workers,
however, can also form and join a workers’ association as well as labor-management
councils (LMC). Expressed in the highest law of the land is the right of all workers to
self-organization. Section 3, Article XIII of the 1987 Constitution states:
Section 3. 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. x x x
[Emphasis supplied]
And Section 8, Article III of the 1987 Constitution also states:
Section 8. The right of the people, including those employed in the
public and private sectors, to form unions, associations, or societies for
purposes not contrary to law shall not be abridged.
In relation thereto, Article 3 of the Labor Code provides:
Article 3. Declaration of basic policy.—The State shall afford
protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed and regulate the relations
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.
[Emphasis supplied]
 
As Article 246 (now 252) of the Labor Code provides, the right to self-
organization includes the right to form, join or
 
 
627
VOL. 772, OCTOBER 14, 2015 627
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
assist labor organizations for the purpose of collective bargaining through
representatives of their own choosing and to engage in lawful concerted activities for
the same purpose for their mutual aid and protection. This is in line with the policy
of the State to foster the free and voluntary organization of a strong and united labor
movement as well as to make sure that workers participate in policy and decision-
making processes affecting their rights, duties and welfare.42
The right to form a union or association or to self-organization comprehends two
notions, to wit: (a) the liberty or freedom, that is, the absence of restraint which
guarantees that the employee may act for himself without being prevented by law;
and (b) the power, by virtue of which an employee may, as he pleases, join or refrain
from joining an association.43
In view of the revered right of every worker to self-organization, the law
expressly allows and even encourages the formation of labor organizations. A labor
organization is defined as “any union or association or employees which exists in
whole or in part for the purpose of collective bargaining or of dealing with employers
concerning terms and conditions of employment.” 44 A labor organization has two
broad rights: (1) to bargain collectively and (2) to deal with the employer concerning
terms and conditions of employment. To bargain collectively is a right given to a
union once it registers itself with the DOLE. Dealing with the employer, on the other
hand, is a generic description of interaction between employer and employees
concerning grievances, wages, work hours and other terms and conditions of
employment, even if the employees’ group is not registered with the DOLE. 45
_______________
42  Article 211 (now 217), Labor Code of the Philippines.
43  Knitjoy Mfg., Inc. v. Ferrer-Calleja, G.R. No. 81883, September 23, 1992,
214 SCRA 174.
44  Article 218(g), Labor Code of the Philippines.
45  Azucena, The Labor Code with Comments and Cases, Volume II, p. 127
(1996); Pascual, Labor Relations Law, pp. 35-36.
 
 
628
628 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
A union refers to any labor organization in the private sector organized for
collective bargaining and for other legitimate purpose, 46 while a workers’ association
is an organization of workers formed for the mutual aid and protection of its
members or for any legitimate purpose other than collective bargaining. 47
Many associations or groups of employees, or even combinations of only several
persons, may qualify as a labor organization yet fall short of constituting a labor
union. While every labor union is a labor organization, not every labor organization
is a labor union. The difference is one of organization, composition and operation.48
Collective bargaining is just one of the forms of employee participation. Despite
so much interest in and the promotion of collective bargaining, it is incorrect to say
that it is the device and no other, which secures industrial democracy. It is equally
misleading to say that collective bargaining is the end-goal of employee
representation. Rather, the real aim is employee participation in whatever form it
62
may appear, bargaining or no bargaining, union or no union.49 Any labor
organization which may or may not be a union may deal with the employer. This
explains why a workers’ association or organization does not always have to be a
labor union and why employer-employee collective interactions are not always
collective bargaining.50
To further strengthen employee participation, Article 255 (now 261) 51 of the
Labor Code mandates that workers shall
_______________
46  Section 1(zz), Omnibus Rules Implementing the Labor Code.
47  Section 1(ccc), Omnibus Rules Implementing the Labor Code.
48  Azucena, The Labor Code with Comments and Cases, Volume II, p. 13,
7th edition, 2010.
49  Id., at p. 417.
50  Supra note 45.
51  Article 255. Exclusive bargaining representation and workers’
participation in policy and decision-making.—The labor organization designated or
selected by the majority of the employees in an
 
 
629
VOL. 772, OCTOBER 14, 2015 629
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
have the right to participate in policy and decision-making processes of the
establishment where they are employed insofar as said processes will directly affect
their rights, benefits and welfare. For this purpose, workers and employers may form
LMCs.
A cursory reading of the law demonstrates that a common element between
unionism and the formation of LMCs is the existence of an employer-employee
relationship. Where neither party is an employer nor an employee of the other, no
duty to bargain collectively would exist.52 In the same manner, expressed in Article
255 (now 261) is the requirement that such workers be employed in the
establishment before they can participate in policy and decision making processes.
In contrast, the existence of employer-employee relationship is not mandatory in
the formation of workers’ association. What the law simply requires is that the
members of the workers’ association, at the very least, share the same interest. The
very definition of a workers’ association speaks of “mutual aid and protection.
_______________
appropriate collective bargaining unit shall be the exclusive representative of the
employees in such unit for the purpose of collective bargaining. However, an
individual employee or group of employees shall have the right at any time to present
grievances to their employer.
Any provision of law to the contrary notwithstanding, workers shall have the
right, subject to such rules and regulations as the Secretary of Labor and
Employment may promulgate, to participate in policy and decision-making processes
of the establishment where they are employed insofar as said processes will directly
affect their rights, benefits and welfare. For this purpose, workers and employers
may form labor-management councils: Provided, That the representatives of the
workers in such labor-management councils shall be elected by at least the majority
of all employees in said establishment.
52  Allied Free Workers Union v. Compañia Maritima, 19 SCRA 258, 278-279
(1967). (Azucena, p. 351)
 
 
630
630 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
Right to choose whether to form or
join a union or workers’ associa-
tion belongs to workers themselves 
In the case at bench, the Court cannot sanction the opinion of the CA that
Samahan should have formed a union for purposes of collective bargaining instead of
a workers’ association because the choice belonged to it. The right to form or join a
labor organization necessarily includes the right to refuse or refrain from exercising
the said right. It is self-evident that just as no one should be denied the exercise of a
right granted by law, so also, no one should be compelled to exercise such a
conferred right.53 Also inherent in the right to self-organization is the right to choose
whether to form a union for purposes of collective bargaining or a workers’
association for purposes of providing mutual aid and protection.
The right to self-organization, however, is subject to certain limitations as
provided by law. For instance, the Labor Code specifically disallows managerial
employees from joining, assisting or forming any labor union. Meanwhile,
supervisory employees, while eligible for membership in labor organizations, are
proscribed from joining the collective bargaining unit of the rank-and-file
employees.54 Even government employees have the right to self-organization. It is
not, however, regarded as existing or available for purposes of collective bargaining,
but simply for the furtherance and protection of their interests. 55
Hanjin posits that the members of Samahan have definite employers, hence, they
should have formed a union instead of a workers’ association. The Court disagrees.
There is no pro-
_______________
53  Reyes v. Trajano, 209 SCRA 484, 489 (1992).
63
 54  Section 2, Rule 2, Department Order No. 40-03, Series of 2003.
55  Arizala v. Court of Appeals, 267 Phil. 615, 629; 189 SCRA 584, 597 (1990).
 
 
631
VOL. 772, OCTOBER 14, 2015 631
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
vision in the Labor Code that states that employees with definite employers may
form, join or assist unions only.
The Court cannot subscribe either to Hanjin’s position that Samahan’s members
cannot form the association because they are not covered by the second sentence of
Article 243 (now 249), to wit:
Article 243. Coverage and employees’ right to self-organization.—All
persons employed in commercial, industrial and agricultural enterprises and in
religious, charitable, medical, or educational institutions, whether operating for profit
or not, shall have the right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-employed people,
rural workers and those without any definite employers may form labor
organizations for their mutual aid and protection. (As amended by Batas
Pambansa Bilang 70, May 1, 1980)
[Emphasis supplied]
Further, Article 243 should be read together with Rule 2 of Department Order
(D.O.) No. 40-03, Series of 2003, which provides:
 
RULE II 
COVERAGE OF THE RIGHT TO SELF-ORGANIZATION
Section 1. Policy.—It is the policy of the State to promote the free and
responsible exercise of the right to self-organization through the establishment of a
simplified mechanism for the speedy registration of labor unions and workers
associations, determination of representation status and resolution of inter/intra-
union and other related labor relations disputes. Only legitimate or registered labor
unions shall have the right to represent their members for collective bargaining and
other pur-
 
 
632
632 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
poses. Workers’ associations shall have the right to represent their members for
purposes other than collective bargaining.
Section 2. Who may join labor unions and workers’ associations.—All
persons employed in commercial, industrial and agricultural enterprises, including
employees of government-owned or -controlled corporations without original
charters established under the Corporation Code, as well as employees of religious,
charitable, medical or educational institutions whether operating for profit or not,
shall have the right to self-organization and to form, join or assist labor unions for
purposes of collective bargaining: provided, however, that supervisory employees
shall not be eligible for membership in a labor union of the rank-and-file employees
but may form, join or assist separate labor unions of their own. Managerial
employees shall not be eligible to form, join or assist any labor unions for purposes
of collective bargaining. Alien employees with valid working permits issued by the
Department may exercise the right to self-organization and join or assist labor unions
for purposes of collective bargaining if they are nationals of a country which grants
the same or similar rights to Filipino workers, as certified by the Department of
Foreign Affairs.
For purposes of this section, any employee, whether employed for a definite
period or not, shall beginning on the first day of his/her service, be eligible for
membership in any labor organization.
All other workers, including ambulant, intermittent and other workers, the self-
employed, rural workers and those without any definite employers may form labor
organizations for their mutual aid and protection and other legitimate
purposes except collective bargaining.
[Emphases supplied]
Clearly, there is nothing in the foregoing implementing rules which provides that
workers, with definite employers, cannot form or join a workers’ association for
mutual aid and
 
633
VOL. 772, OCTOBER 14, 2015 633
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
protection. Section 2 thereof even broadens the coverage of workers who can
form or join a workers’ association. Thus, the Court agrees with Samahan’s
argument that the right to form a workers’ association is not exclusive to ambulant,
intermittent and itinerant workers. The option to form or join a union or a workers’
association lies with the workers themselves, and whether they have definite
employers or not.
 
No misrepresentation on the
part of Samahan to warrant
cancellation of registration 
 
64
 In this case, Samahan’s registration was cancelled not because its members were established is that the specific act or omission of the union deprived the complaining
prohibited from forming a workers’ association but because they allegedly employees-members of their right to choose.
committed misrepresentation for using the phrase, “KAMI, ang mga Manggagawa sa [Emphases supplied]
HANJIN Shipyard.”  
Misrepresentation, as a ground for the cancellation of registration of a labor Based on the foregoing, the Court concludes that misrepresentation, to be a
organization, is committed “in connection with the adoption, or ratification of the ground for the cancellation of the certificate of registration, must be done
constitution and by-laws or amendments thereto, the minutes of ratification, the list maliciously and deliberately. Further, the mistakes appearing in the application or at-
of members who took part in the ratification of the constitution and bylaws or _______________
amendments thereto, and those in connection with the election of officers, minutes of
the election of officers, and the list of voters, x x x.”56 58  581 Phil. 405; 559 SCRA 435 (2008).
In Takata Corporation v. Bureau of Relations,57 the DOLE Regional Director  
granted the petition for the cancellation of certificate of registration of Samahang  
Lakas Manggagawa sa Takata (Salamat) after finding that the employees who 635
attended the organizational meeting fell short of the 20% union registration VOL. 772, OCTOBER 14, 2015 635
requirement. The BLR, however, reversed the ruling of the DOLE Regional Director,
stating that petitioner Takata Corporation (Takata) failed to prove deliberate Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
_______________ tachments must be grave or refer to significant matters. The details as to how the
alleged fraud was committed must also be indubitably shown.
56  Section 3, Rule XIV, Department Order No. 40-03, Series of 2003. The records of this case reveal no deliberate or malicious intent to commit
57  G.R. No. 196276, June 4, 2014, 725 SCRA 61, 76. misrepresentation on the part of Samahan. The use of such words “KAMI, ang mga
  Manggagawa sa HANJIN Shipyard” in the preamble of the constitution and bylaws
  did not constitute misrepresentation so as to warrant the cancellation of Samahan’s
634 certificate of registration. Hanjin failed to indicate how this phrase constitutes a
malicious and deliberate misrepresentation. Neither was there any showing that the
634 SUPREME COURT REPORTS ANNOTATED alleged misrepresentation was serious in character. Misrepresentation is a devious
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations charge that cannot simply be entertained by mere surmises and conjectures.
and malicious misrepresentation on the part of respondent Salamat. Although Even granting arguendo that Samahan’s members misrepresented themselves as
Takata claimed that in the list of members, there was an employee whose name employees or workers of Hanjin, said misrepresentation does not relate to the
appeared twice and another was merely a project employee, such facts were not adoption or ratification of its constitution and bylaws or to the election of its officers.
considered misrepresentations in the absence of showing that the respondent  
deliberately did so for the purpose of increasing their union membership. The Court Removal of the word “Hanjin
ruled in favor of Salamat. Shipyard” from the associa-
In S.S. Ventures International v. S.S. Ventures Labor Union,58 the petition for tion’s name, however, does not
cancellation of certificate of registration was denied. The Court wrote: infringe on Samahan’s right
If the union’s application is infected by falsification and like serious to self-organization 
irregularities, especially those appearing on the face of the application and its  
attachments, a union should be denied recognition as a legitimate labor Nevertheless, the Court agrees with the BLR that “Hanjin Shipyard” must be
organization. Prescinding from these considerations, the issuance to the Union of removed in the name of the association. A legitimate workers’ association refers to
Certificate of Registration No. RO300-00-02-UR-0003 necessarily implies that its an association of workers organized for mutual aid and protection of its members or
application for registration and the supporting documents thereof are prima facie free for any legitimate purpose other than collective bargaining registered with the
from any vitiating irregularities. Another factor which militates against the veracity DOLE.59 Having been granted a certificate of registration, Samahan’s association is
of the allegations in the Sinumpaang Petisyon is the lack of particularities on how, now recognized by law as a legitimate workers’ association.
when and where respondent union perpetrated the alleged fraud on each _______________
member. Such details are crucial for in the proceedings for cancellation of union
registration on the ground of fraud or misrepresentation, what needs to be 59  Section 1(ff), Rule I, Department Order No. 40-03, Series of 2003.

65

 
636
636 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
According to Samahan, inherent in the workers’ right to self-organization is its
right to name its own organization. It seems to equate the dropping of words “Hanjin
Shipyard” from its name as a restraint in its exercise of the right to self-organization.
Hanjin, on the other hand, invokes that “Hanjin Shipyard” is a registered trade name
and, thus, it is within their right to prohibit its use.
As there is no provision under our labor laws which speak of the use of name by
a workers’ association, the Court refers to the Corporation Code, which governs the
names of juridical persons. Section 18 thereof provides:
No corporate name may be allowed by the Securities and Exchange Commission
if the proposed name is identical or deceptively or confusingly similar to that of
any existing corporation or to any other name already protected by law or is patently
deceptive, confusing or contrary to existing laws. When a change in the corporate
name is approved, the Commission shall issue an amended certificate of
incorporation under the amended name.
[Emphases supplied]
The policy underlying the prohibition in Section 18 against the registration of a
corporate name which is “identical or deceptively or confusingly similar” to that of
any existing corporation or which is “patently deceptive” or “patently confusing” or
“contrary to existing laws,” is the avoidance of fraud upon the public which would
have occasion to deal with the entity concerned, the evasion of legal obligations and
duties, and the reduction of difficulties of administration and supervision over
corporations.60
For the same reason, it would be misleading for the members of Samahan to use
“Hanjin Shipyard” in its name as it
_______________
60  Lyceum of the Philippines, Inc. v. Court of Appeals, G.R. No. 101897, March
5, 1993, 219 SCRA 610, 615.
637
VOL. 772, OCTOBER 14, 2015 637
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
could give the wrong impression that all of its members are employed by Hanjin.
Further, Section 9, Rule IV of D.O. No. 40-03, Series of 2003 explicitly states:
The change of name of a labor organization shall not affect its legal personality.
All the rights and obligations of a labor organization under its old name shall
continue to be exercised by the labor organization under its new name.
Thus, in the directive of the BLR removing the words “Hanjin Shipyard,” no
abridgement of Samahan’s right to self-organization was committed.
WHEREFORE, the petition is PARTIALLY GRANTED. The July 4, 2013
Decision and the January 28, 2014 Resolution of the Court of Appeals are
hereby REVERSED and SET ASIDE. The September 6, 2010 Resolution of the
Bureau of Labor Relations, as modified by its November 28, 2011 Resolution,
is REINSTATED.
SO ORDERED.
Brion** (Acting Chairperson), Peralta,*** Del Castilloand Leonen, JJ., concur.
Petition partially granted, judgment and resolution reversed and set aside.
Notes.—After the issuance of the certificate of registration, the labor
organization’s registration could be assailed directly through cancellation of
registration proceedings in accordance with Articles 238 and 239 of the Labor Code.
(Takata [Philippines] Corporation vs. Bureau of Labor Relations, 725 SCRA 61
[2014])
_______________
**  Per Special Order No. 2222 dated September 29, 2015.
***  Designated acting member per Special Order No. 2223 dated September 29,
2015.
 
638
638 SUPREME COURT REPORTS ANNOTATED
Samahan ng Manggagawa sa Hanjin Shipyard vs. Bureau of Labor Relations
A petition for cancellation of union registration shall not suspend the proceedings
for certification election nor shall it prevent the filing of a petition for certification
election.(Heritage Hotel Manila vs. Secretary of Labor and Employment, 730
SCRA 400 [2014])
 
——o0o——
66

G.R. No. 204693. July 13, 2016.*
 
GUAGUA NATIONAL COLLEGES, petitioner, vs.GUAGUA NATIONAL
COLLEGES FACULTY LABOR UNION and GUAGUA NATIONAL
COLLEGES NON-TEACHING AND MAINTENANCE LABOR UNION,
respondents.
Labor Law; Collective Bargaining Agreements; No Strike, No Lockout
Provision; It is settled that a “no strike, no lockout” provision in the Collective
Bargaining Agreement (CBA) “may [only] be invoked by [an] employer when the
strike is economic in nature or one which is conducted to force wage or other
agreements from the employer that are not mandated to be granted by law. It [is not
applicable when the strike] is grounded on unfair labor practice.”—Indeed, the
parties through their CBA, agreed to a “no strike, no lockout” policy and to resolve
their disputes through grievance machinery and voluntary arbitration. Despite these,
respondents were justified in filing a
_______________
*  SECOND DIVISION.
610
610 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
notice of strike in light of the facts of this case. It is settled that a “no strike, no
lockout” provision in the CBA “may [only] be invoked by [an] employer when the
strike is economic in nature or one which is conducted to force wage or other
agreements from the employer that are not mandated to be granted by law. It [is not
applicable when the strike] is grounded on unfair labor practice.” Here, while
respondents enumerated four grounds in their notice of strike, the facts of the case
reveal that what primarily impelled them to file said notice was their perception of
bad faith bargaining and violation of the duty to bargain collectively by GNC —
charges which constitute unfair labor practice under Article 248(g) of the Labor
Code.
Same; Voluntary Arbitration; It is the declared policy of the State to promote
and emphasize the primacy of voluntary arbitration as a mode of settling labor or
industrial disputes.—It must be noted that under the facts of University of San
Agustin Employees’ Union-FFW v. Court of Appeals, 485 SCRA 526 (2006), the
dispute between the parties primarily involved the formula in computing the TIP
share of the employees — one which clearly arose from the interpretation or
implementation of the CBA. Pursuant to Article 261 of the Labor Code, such a
grievance falls under the original and exclusive jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators. Even if otherwise, the dispute would still
fall under the said jurisdiction pursuant to Article 262 of the same Code since the
parties agreed in their CBA that practically all disputes, including bargaining
deadlock, shall be referred to grievance machinery that ends in voluntary arbitration.
It can safely be concluded, therefore, that the clear showing of the voluntary
arbitrator’s jurisdiction over the parties’ dispute in University of San Agustin is the
underlying reason why the Court upheld the CA’s directive for the parties to proceed
to voluntary arbitration in accordance with their CBA. After all, it is the declared
67
policy of the State to promote and emphasize the primacy of voluntary arbitration as
a mode of settling labor or industrial disputes.
Same; Voluntary Arbitrators; Jurisdiction; Since the parties allegedly agreed
to submit a dispute of this kind to their Collective Bargaining Agreement’s (CBA’s)
grievance resolution procedure which ends in voluntary arbitration, it is the
voluntary arbitrator which has jurisdiction in view of Article 262 of the Labor Code.
—Unlike in University of San Agustin Employees’ Union-FFW v. Court of Appeals,
485
 
 
611
VOL. 796, JULY 13, 2016 611
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
SCRA 526 (2006), the main cause of the dispute between the parties in this
case, i.e., GNC’s alleged commission of unfair labor practice, did not arise from the
interpretation or implementation of the parties’ CBA, or neither from the
interpretation or enforcement of company personnel policies. Hence, it does not fall
under the original and exclusive jurisdiction of the voluntary arbitrator or panel of
voluntary arbitrators under the aforementioned Article 261. Be that as it may, GNC
argues that since the grounds cited by respondents in their notice of strike come
within the scope of “grievance” under the grievance resolution and voluntary
arbitration provision of the parties’ CBA, the same is cognizable by the voluntary
arbitrator. Otherwise stated, since the parties allegedly agreed to submit a dispute of
this kind to their CBA’s grievance resolution procedure which ends in voluntary
arbitration, it is the voluntary arbitrator which has jurisdiction in view of Article 262
of the Labor Code.
Same; Same; Same; Unfair Labor Practices; There is a need for an express
stipulation in the Collective Bargaining Agreement (CBA) that unfair labor practices
should be resolved in the ultimate by the voluntary arbitrator or panel of voluntary
arbitrators since the same fall within a special class of disputes that are generally
within the exclusive original jurisdiction of the Labor Arbiter (LA) by express
provision of the law.—Plainly, a charge of unfair labor practice does not fall under
the first three definition of grievance as above quoted. Neither can it be considered as
embraced by the fourth which at first blush, appears to be a “catch-all” definition of
grievance because of the phrase “[a]ny other matter or dispute.” It has been held that
while the phrase “all other labor dispute” or its variant “any other matter or dispute”
may include unfair labor practices, it is imperative, however, that the agreement
between the union and the company states in unequivocal language that the parties
conform to the submission of unfair labor practices to voluntary arbitration. It is not
sufficient to merely say that parties to the CBA agree on principle that “all disputes”
or as in this case, “any other matter or dispute,” should be submitted to the grievance
machinery and eventually to the voluntary arbitrator. There is a need for an express
stipulation in the CBA that unfair labor practices should be resolved in the ultimate
by the voluntary arbitrator or panel of voluntary arbitrators since the same fall within
a special class of disputes that are generally within the exclusive original jurisdiction
of the Labor Arbiter by express provision of the law. “Absent such express stipu-
 
 
612
612 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
lation, the phrase ‘all disputes’ [or ‘any other matter or dispute’ for that matter]
should be construed as limited to the areas of conflict traditionally within the
jurisdiction of Voluntary Arbitrators, i.e., disputes relating to contract-interpretation,
contract-implementation, or interpretation or enforcement of company personnel
policies. [Unfair labor practices cases] — not falling within any of these categories
— should then be considered as a special area of interest governed by a specific
provision of law.”
Same; Compulsory Arbitration; The Secretary of Labor and Employment’s
certification for compulsory arbitration of a dispute over which he/she has assumed
jurisdiction is but an exercise of the powers granted to him/her by Article 263(g) of
the Labor Code as amended.—As expounded by both the NLRC and the CA, the
Secretary of Labor and Employment’s certification for compulsory arbitration of a
dispute over which he/she has assumed jurisdiction is but an exercise of the powers
granted to him/her by Article 263(g) of the Labor Code as amended. “[These] powers
x x x have been characterized as an exercise of the police power of the State, aimed
at promoting the public good. When the Secretary exercises these powers, he[/she] is
granted ‘great breadth of discretion’ to find a solution to a labor dispute.” The Court
therefore cannot subscribe to GNC’s contention since to say that compulsory
arbitration may only be resorted to in instances agreed upon by the parties would
limit the power of the Secretary of Labor and Employment to certify cases that are
proper subject of compulsory arbitration. The great breadth of discretion granted to
the Secretary of Labor and Employment for him/her to find an immediate solution to
a labor dispute would unnecessarily be diminished if such would be the case.
Same; Duty to Bargain Collectively; The effect of an employer’s or a union’s
actions individually is not the test of good faith bargaining, but the impact of all
such occasions or actions, considered as a whole.—The duty to bargain collectively
is defined under Article 252 of the Labor Code to, viz.: ARTICLE 252. Meaning of
duty to bargain collectively.—The duty to bargain collectively means the
performance of a mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement with respect
to wages, hours of work and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such agreements
and execut-
 
613
VOL. 796, JULY 13, 2016 613
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
68
 ing a contract incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to make any
agreement. (Emphasis supplied) “It has been held that the crucial question whether
or not a party has met his statutory duty to bargain in good faith typically turns on
the facts of the individual case. There is no per se test of good faith in bargaining.
Good faith or bad faith is an inference to be drawn from the facts.” “The effect of an
employer’s or a union’s actions individually is not the test of good faith bargaining,
but the impact of all such occasions or actions, considered as a whole. x x x” Here,
the collective conduct of GNC is indicative of its failure to meet its duty to bargain in
good faith. Badges of bad faith attended its actuations both at the plant and NCMB
levels. At the plant level, GNC failed to comply with the mandatory requirement of
serving a reply/counterproposal within 10 calendar days from receipt of a proposal, a
fact which by itself is already an indication of lack of genuine interest to bargain.
Then, it led respondents to believe that it was doing away with the
reply/counterproposal when it proceeded to just orally discuss the economic terms.
After a series of negotiation meetings, the parties finally agreed on the economic
terms which based on the records was the only contentious issue between them. In
fact, in their meeting of August 24, 2009, Rodriguez, in her capacity as member of
the management panel, already announced the benefits included under the CBA for
2009-2014. She then stated that the signing thereof would be underway. In the days
that followed, however, GNC ignored the follow-ups made by respondents regarding
the signing. It then suddenly capitalized on the fact that it had not yet submitted a
reply/counterproposal and thereupon served one upon respondents despite the parties
already having reached an agreement.
Same; Same; The employer’s duty to negotiate in good faith with its employees
consists of matching the latter’s proposals, if unacceptable, with counterproposals,
and of making every reasonable effort to reach an agreement.—Anent GNC’s claim
that it was suffering from financial difficulties which according to it was one of the
reasons why it saw the need to submit a counterproposal, suffice it to say that GNC
should have squarely raised this early on in the negotiations. After all, the
employer’s duty to negotiate in good faith with its employees consists of matching
the latter’s proposals, if unacceptable, with counterproposals, and of making every
reasonable effort to reach an agreement. There must be common willingness
 
614
614 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
among the parties to discuss freely and fully their respective claims and
demands and, when these are opposed, to justify them on reason. However, instead
of laying all its card on the table, GNC for reasons only known to it, chose to forego
the opportunity of discussing its claimed financial predicament with respondents as
shown by the following: (1) GNC did not submit a reply/counterproposal within 10
calendar days from its receipt of respondents’ proposed CBA on April 3, 2009 as
required by law; (2) while it later manifested through a letter dated May 27, 2009
that it is not inclined to grant the economic provisions in respondents’ proposal, it
did not fully discuss or explain to respondents its claimed opposition; (3) Atty.
Sampang did not make good on the promise he made in the meeting of June 16, 2009
that GNC would submit its counterproposal to respondents’ economic provisions
with the corresponding explanation; and (4) as shown by the minutes of the
meetings, the members of the management panel simply made general statements
that GNC was having financial difficulties but failed to elaborate on the same. As it
is, GNC allowed itself to go through the process of negotiating with respondents
without fully discussing its financial status and despite this, knowingly entered into
an agreement with them. It cannot, therefore, be allowed to later interpose an
opposition to the terms of the CBA based on financial incapacity by belatedly
submitting a counterproposal, which from the circumstances, is an obvious attempt
to stall what would have been the last step of the process — the execution of the
CBA. The Court cannot be expected to affix its imprimatur to such a dubious
maneuver.
Same; Same; In the cases of Kiok Loy v. National Labor Relations
Commission, 141 SCRA 179 (1986), Divine Word University of Tacloban v.
Secretary of Labor and Employment, 213 SCRA 759 (1992), and General Milling
Corporation v. Court of Appeals, 422 SCRA 514 (2004), the Supreme Court (SC)
unilaterally imposed upon the employers the Collective Bargaining Agreements
(CBAs) proposed by the unions after the employers were found to have violated their
duty to bargain collectively.—In the cases of Kiok Loy v. National Labor Relations
Commission, 141 SCRA 179 (1986), Divine Word University of Tacloban v.
Secretary of Labor and Employment, 213 SCRA 759 (1992), and General Milling
Corporation v. Court of Appeals, 422 SCRA 514 (2004), the Court unilaterally
imposed upon the employers the CBAs proposed by the unions after the employers
were found to have violated their duty to bargain collectively. This is
 
 
615
VOL. 796, JULY 13, 2016 615
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
on the premise that the said employers, by their acts which bespeak of
insincerity, had lost their statutory right to negotiate or renegotiate the terms and
conditions contained in the unions’ proposed CBAs. Here, the Court finds nothing
wrong in the pronouncement of the NLRC that the final CBA draft submitted by
respondents to the NCMB should serve as the parties’ CBA for the period June 1,
2009 to May 31, 2014. More than the fact that GNC is the erring party in this case,
records show that the said draft is actually the final CBA draft of the parties which
incorporates their agreements. Indeed and as held by the NLRC, fairness, equity and
social justice are best served if the said final CBA draft shall govern their industrial
relationship.
69
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
   Padilla Law Office for petitioner.
   Emmanuel Noel A. Cruz for respondents.
 
DEL CASTILLO, J.:
 
This Petition for Review on Certiorari assails the September 26, 2012
Decision1 and December 3, 2012 Resolution2 of the Court of Appeals (CA) in C.A.-
G.R. S.P. No. 120669, which respectively denied for lack of merit the Petition
for Certiorari filed therewith by petitioner Guagua National Colleges (GNC) and the
motion for reconsideration thereto.
_______________
1  CA Rollo, pp. 683-709; penned by Associate Justice Fernanda Lampas-Peralta
and concurred in by Associate Justices Francisco P. Acosta and Angelita A. Gacutan.
2  Id., at p. 741.
 
 
616
616 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
Factual Antecedents
 
GNC is an educational institution located in Sta. Filomena, Guagua, Pampanga.
On the other hand, respondents Guagua National Colleges Faculty Labor Union
(GNCFLU) and Guagua National Colleges Non-Teaching and Maintenance Labor
Union (GNCNTMLU) were the bargaining agents for GNC’s faculty members and
nonteaching and maintenance personnel, respectively.
Beginning 1994 until their present dispute, the parties concluded their Collective
Bargaining Agreements (CBAs) without issue as follows: (1) CBA effective June 1,
1994 to May 31, 1999 (1994-1999 CBA),3 the economic provisions of which were
renegotiated on November 3, 1997 for years 1997-1999; 4 (2) CBA effective June 1,
1999 to May 31, 2004,5 the economic provisions of which were renegotiated on July
4, 2002 for years 2002-2004;6 and (3) CBA effective June 1, 2004 to May 31,
2009.7 The aforementioned CBAs applied to both GNCFLU and GNCNTMLU
without distinction.
Significantly, the 1994-1999 CBA has a “no strike, no lockout” clause under
Section 17 thereof which likewise provides for mechanism for grievance resolution
and voluntary arbitration. This provision was considered carried over in the
subsequent CBAs.8
 
_______________
3  Records, pp. 76-88.
4  Id., at p. 91.
5  Id., at pp. 92-95.
6  Id., at pp. 96-97.
7  Id., at pp. 98-102.
8  This is in view of the following clauses in the parties’ subsequent CBAs, to
wit: (1) In the CBA for 1999-2004, “[Terms of the p]revious CBA — June 1, 1994-
May 31, 1999 which were not touched or covered by the current CBA — 1999-2004
is still honored and become part and parcel of the latter,” id., at p. 94; and (2) In the
CBA for 2004-2009, “Matters contained in the previous CBA, which
617
VOL. 796, JULY 13, 2016 617
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
On April 3, 2009, the Presidents of both GNCFLU and GNCNTMLU, wrote the
President of GNC, Atty. Ricardo V. Puno (Atty. Puno), to inform him of the former’s
intention to open the negotiation for the renewal of the then existing CBA which
would expire on May 31, 2009.9 Attached to the said letter was respondents’
proposal for the next CBA10which was received by GNC on even date.11
Instead of serving upon respondents a reply/counterproposal within 10 days from
its receipt of respondents’ proposal, GNC wrote respondents on May 11, 2009
calling for a meeting at 10:00 a.m. of May 15, 2009 regarding CBA negotiations.
While the said meeting took place and was attended by panel members from GNC,
GNCFLU and GNCNTMLU, no agreement was reached except that GNC would
notify respondents of the next negotiation meeting. However, what respondents later
received from GNC’s Corporate Secretary, Atty. Ricardo M. Sampang (Atty.
Sampang) was not a notice of meeting but a letter dated May 27, 2009 which, among
others, stated that the “management is not inclined to grant the economic/monetary-
related proposals in [respondents’] letter of April 3, 2009.”12
Still, respondents on June 1, 2009, requested for a conference with GNC to
discuss the ground rules.13 GNC granted respondents’ request and scheduled a
meeting at 1:00 p.m. of June 11, 2009 at the GNC boardroom. 14Although
respondents described GNC as “noncommittal” during the meeting, they nevertheless
reckoned thereon the start of the negotiation proper between the parties.
 
_______________
were not touched or covered by the current CBA are still honored and become part
and parcel of the latter,” id., at p. 102.
9   Id., at p. 103.
70
 10  Id., at pp. 104-106.
11  Id., at p. 103.
12  Id., at p. 107.
13  Id., at p. 108.
14  Id., at p. 109.
 
 
618
618 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
As to the events that transpired thereafter, the parties have conflicting claims.
While GNC asserted in general terms that the parties exchanged proposals and
counterproposals in the months that followed,15 respondents, on the other hand,
detailed the negotiations that allegedly ensued between the parties, 16 to wit: (1)
another meeting was held on June 16, 2009 but since GNC at that time still did not
have any reply/counterproposal to respondents’ proposal, it asked for three weeks to
submit the same; (2) in their July 10, 2009 meeting, GNC failed to submit its
purported counterproposal; (3) in the meeting of July 31, 2009, Cita Rodriguez
(Rodriguez), the school treasurer and a member of the management panel, discussed
with respondents some of the economic items in respondents’ proposal, particularly
those relating to longevity pay, birthday gift, family assistance, medical checkup and
clothing allowance; (4) the parties discussed further on longevity pay and family
assistance benefit in the August 11, 2009 meeting. They also talked about an increase
in rice subsidy; (5) in the August 17, 2009 meeting, Rodriguez stated that based on
GNC’s Faculty Manual of 2008, longevity pay shall be given according to the
number of years of service and shall be deemed as loyalty pay. The parties then
agreed to an increase of P5.00 in the longevity pay previously being given; (6) in the
following meeting of August 24, 2009, Rodriguez announced the increased benefits
included in the new CBA, to wit: loyalty pay, cash gift, rice subsidy, birthday gift
and clothing allowance. Rodriguez likewise confirmed the grant of a Union Office at
the 3rd floor of Goseco Building in GNC. However, respondents’ demand for an
increased signing bonus of P100,000.00 for each union (previously given at
P50,000.00 each union) remained unsettled. Nevertheless, the parties agreed to
further discuss the matter; (7) on September 23, 2009, respondents submitted to GNC
a draft of the CBA con-
_______________
15  Position Paper for Guagua National Colleges, id., at pp. 140-160.
16  [Respondents’] Position Paper, id., at pp. 49-74.
 
619
VOL. 796, JULY 13, 2016 619
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
taining all the benefits agreed upon. GNC requested that some revisions be made
thereon; (8) Atty. Sampang called for a meeting on October 9, 2009. In the said
meeting, the parties reviewed all the benefits agreed on. Rodriguez then stated that
the signing of the next CBA may take place the following meeting; (9) on October
15, 2009, respondents submitted to Atty. Sampang the agreed terms of the CBA
which already contained the revisions requested by GNC and the P100,000.00
signing bonus for each union. The document according to them was by then ready
for signing; (10) respondents made several follow-ups with both Atty. Sampang and
Rodriguez regarding the signing of the CBA but to no avail; (11) respondents
received from Atty. Sampang, through a letter17 dated December 21, 2009, GNC’s
counterproposal.18 Respondents were surprised since they thought all along that all
matters, except for some details on the signing bonus, were already settled. Besides,
the three-week period previously requested by GNC within which to submit its
counterproposal had long lapsed; (12) Atty. Sampang requested respondents to
attend a meeting with Atty. Puno on January 5, 2010. Despite Atty. Puno’s presence
in the school premises, he did not, however, face respondents’ representatives who
waited for him for a considerable length of time; (13) in view of the foregoing,
respondents were constrained to write Atty. Puno on January 8, 2010. 19 They stressed
that while they have been bargaining in good faith, it was otherwise on the part of
GNC. Respondents thus expressed their belief that the parties have already reached
an impasse. They therefore asked GNC to respond to their letter and therein state its
stand as to whether a third party is needed to assist them in threshing out their
differences. As respondents did not get any reply from GNC, they
 
 
_______________
17  Id., at p. 112.
18  Id., at pp. 113-119.
19  Id., at pp. 121-123.
 
 
620
620 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
filed on February 3, 2010 a preventive mediation case with the National Conciliation
and Mediation Board (NCMB).20
 
Proceedings before the National
Conciliation and Mediation Board
Again, the parties differ in their account of what transpired before the NCMB.
Respondents alleged that after several mediation meetings, the parties finally
agreed on the details regarding the grant of signing bonus. Hence, they undertook to
71
compose the final draft of the 2009-2014 CBA which it submitted to the NCMB on
May 14, 2010 and copy furnished GNC on May 21, 2010. 21 Respondents likewise
averred that the parties already agreed to schedule the signing of the said CBA on
May 28, 2010. To their dismay, however, no signing of the CBA took place. Instead,
Atty. Sabino Jose M. Padilla III (Atty. Padilla) appeared before the NCMB on behalf
of GNC and requested for 10 days or until June 7, 2010 within which to submit
GNC’s Comment/Counterproposal to the “Union[s’] CBA draft.” Although
disappointed that Atty. Padilla merely referred to the supposed “final draft” of the
parties as the “Union[s’] CBA draft,” respondents agreed to the period requested by
GNC to give the latter time to go over it. Respondents, however, manifested that they
would want the parties to meet again on June 1, 2010. Come the said date, no one
appeared on behalf of GNC. Thus, respondents filed on the same day a Notice of
Strike22 charging GNC with bad faith bargaining, violation of its duty to bargain,
gross violations of the provisions of the CBA, and gross and blatant diminution of
benefits. Subsequent to this, GNC allegedly stopped the grant of certain benefits to
its employees.
 
_______________
20  Id., at pp. 124-125.
21  [Respondents’] Position Paper, id., at pp. 49-74, 64.
22  Id., at pp. 169-170.
 
 
621
VOL. 796, JULY 13, 2016 621
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
GNC, on the other hand, contended that during mediation meetings with the
NCMB, respondents submitted several CBA drafts for its consideration. Upon its
receipt on May 21, 2010 of another draft CBA23 from respondents under cover letter
dated May 20, 2010,24 it decided to secure the services of Atty. Padilla to assist it in
its negotiations with respondents. Hence, on May 28, 2010, Atty. Padilla appeared
before the NCMB and asked for 10 days to submit GNC’s comment/counterproposal
to the purported draft CBA of respondents. However, on June 1, 2010, respondents
filed a notice of strike.
In view of the notice of strike, the NCMB called for a conciliation conference on
June 4, 2010 which was later set for continuation on June 9, 2010. Meanwhile on
June 7, 2010, GNC filed with the NCMB its counterproposal 25 to respondents’
purported final CBA draft.
Subsequently during the June 9, 2010 conference, GNC filed a Motion to Strike
Out Notice of Strike and to Refer Dispute to Grievance Machinery and Voluntary
Arbitration Pursuant to the Collective Bargaining Agreement. 26 It invoked the “no
strike, no lockout” clause and the grievance machinery and voluntary arbitration
provision of the parties’ existing CBA which was carried over from their 1994-1999
CBA and the CBAs subsequent thereto. According to it, the four grounds cited by
respondents in their notice of strike, i.e., bad faith bargaining, violation of the duty to
bargain, gross violation of the provisions of the CBA, and gross and blatant
diminution of benefits, all come within the definition of “grievance” under their
CBA, hence, not strikeable.
In the afternoon of the same day, respondents conducted their respective Strike
Votes wherein majority voted in favor
 
_______________
23  Id., at pp. 208-224.
24  Id., at p. 207.
25  Id., at pp. 227-223.
26  Id., at pp. 11-16.
 
 
622
622 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
of a strike.27 They then informed the NCMB of the strike vote results on June 21,
2010.28
Since the NCMB had not yet acted upon GNC’s Motion to Strike Out Notice of
Strike and to Refer Dispute to Grievance Machinery and Voluntary Arbitration
Pursuant to the Collective Bargaining Agreement despite the looming strike of
respondents, GNC urged the Secretary of Labor and Employment to assume
jurisdiction over the dispute.29 It specifically prayed in its letter of June 24, 2010 that
the Secretary of Labor and Employment, pursuant to Article 263(g)30 of the Labor
_______________
27  Id., at pp. 8-10.
28  Id., at pp. 6-7.
29  Id., at pp. 167-168.
30  Article 263. Strikes, picketing and lockouts.—
x x x x
           (g) When, 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
72
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.
        In line with the national concern for and the highest respect accorded to the
right of patients to life and health, strikes and lockouts in hospitals, clinics and
similar medical institutions shall, to every extent possible, be avoided, and all serious
efforts, not only by labor and management but government as well, be exhausted to
substantially minimize, if not prevent, their adverse effects on such life and health,
through the exercise, however legitimate, by labor of
 
623
VOL. 796, JULY 13, 2016 623
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
Code “assume jurisdiction over the labor dispute between GNC and the Unions, i.e.,
GNCFLU and GNCNTMLU[,] in order to enjoin the intended strike x x x and
thereafter direct the parties to submit the dispute to the grievance machinery and
voluntary arbitration provisions of the CBA.”31
In an Order32 dated June 28, 2010, the Secretary of Labor and Employment, after
finding the subject labor dispute as one affecting national interest, assumed
jurisdiction over the case; certified the same to the National Labor Relations
Commission (NLRC) for immediate compulsory arbitration; and accordingly
enjoined the intended strike.
 
_______________
its right to strike and by management to lockout. In labor disputes adversely affecting
the continued operation of such hospitals, clinics or medical institutions, it shall be
the duty of the striking union or locking-out employer to provide and maintain an
effective skeletal workforce of medical and other health personnel, whose movement
and services shall be unhampered and unrestricted, as are necessary to insure the
proper and adequate protection of the life and health of its patients, most especially
emergency cases, for the duration of the strike or lockout. In such cases, therefore,
the Secretary of Labor and Employment may immediately assume, within twenty-
four (24) hours from knowledge of the occurrence of such a strike or lockout,
jurisdiction over the same or certify it to the Commission for compulsory arbitration.
For this purpose, the contending parties are strictly enjoined to comply with such
orders, prohibitions and/or injunctions as are issued by the Secretary of Labor and
Employment or the Commission, under pain of immediate disciplinary action,
including dismissal or loss of employment status or payment by the locking-out
employer of backwages, damages and other affirmative relief, even criminal
prosecution against either or both of them.
         The foregoing notwithstanding, the President of the Philippines shall not be
precluded from determining the industries that, in his opinion, are indispensable to
the national interest, and from intervening at any time and assuming jurisdiction over
any such labor dispute in order to settle or terminate the same.
31  Records, p. 168.
32  Id., at pp. 35-38.
 
 
624
624 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
Proceedings before the National
Labor Relations Commission
In their Position Paper,33 respondents recounted that GNC at the plant level had
already failed to reply or furnish them a timely counterproposal. While GNC asked
for three weeks to submit its counterproposal in the meeting of June 16, 2009, no
such counterproposal was submitted. Instead, GNC opted to orally discuss with
respondents the terms of the CBA. Yet, after the conduct of a series of
meetings/negotiations and at a time when the parties had already substantially agreed
on the terms of the new CBA, respondents received from Atty. Sampang on
December 21, 2009 GNC’s counterproposal to respondents’ purported “latest
proposal.” Respondents denied the existence of any “latest proposal” which requires
a “counterproposal” from GNC. And even assuming that said counterproposal is
GNC’s answer to the proposal they furnished it at very outset, the same was already
belatedly submitted not only because the period to serve a reply/counterproposal had
long lapsed, but also since all matters were already substantially agreed upon by the
parties. This explains why at that point, respondents were already following up the
signing of the CBA.
The same goes true in the NCMB level. Respondents averred that the parties had
already come into agreement regarding the signing bonus after several
mediation/conciliation meetings held therein. But when they undertook to draft the
CBA containing the terms agreed upon by the parties and submitted the same to the
NCMB, Atty. Padilla suddenly entered the picture and submitted a counterproposal
to what he referred to as the “Union[s’] CBA draft” when in fact, the same was
actually the parties’ final draft. Respondents thus argued that GNC clearly committed
an unfair labor practice by bad faith bargaining. In addition, respondents averred that
GNC, without notice, stopped the release of benefits to its employees.
_______________
33  Id., at pp. 49-74.
 
 
625
VOL. 796, JULY 13, 2016 625
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
73
 For its part, GNC called attention to the fact that when it requested the Secretary
of Labor and Employment to assume jurisdiction over the dispute, it also prayed that
the same be ordered submitted to the grievance machinery and voluntary arbitration
provided for under the parties’ CBA. It stressed that its participation in the
compulsory arbitration proceeding should therefore not be construed as a waiver of
its position that jurisdiction over the dispute rests with the voluntary arbitrator in
view of the parties’ agreement in the CBA, the pertinent provisions of the Labor
Code, and of the Court’s ruling in University of San Agustin Employees’ Union-FFW
(USAEU-FFW) v. Court of Appeals.34
As to the charge of unfair labor practice on account of its alleged bad faith
bargaining and violation of duty to bargain, GNC argued that the same is belied by
the fact that since the very beginning, the parties were negotiating. This continued
during the mediation and conciliation proceedings before the NCMB. And had not
for respondents’ impatience which caused them to file a notice of strike, such
negotiations would have progressed. To GNC, respondents’ move of filing a notice
of strike was uncalled for and was only intended to compel GNC to hastily concede
to their proposals. What respondents refused to see, however, was GNC’s critical
financial status that hindered it from readily agreeing with their economic proposals.
GNC likewise denied the allegation that it stopped the release of benefits to its
employees. It explained that its Protégé Program 35 was only subjected to stricter
implementation guidelines but not stopped; that its employees received their
uniforms; and that it could not have stopped the grant of pilgrimage or excursion
benefits since no such benefit was provided for in their previous CBAs. What was
actually provided therein was the conduct of an annual retreat which was
_______________
34  520 Phil. 400; 485 SCRA 526 (2006).
35  Otherwise known as Child or Dependent Scholarship Privilege.
 
 
626
626 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
already held in December 2009 at the GNC campus; that as to rice subsidy, the same
is granted on a best effort basis and only when savings are generated; and that it had
always endeavored to provide, to the best of its ability, the rice subsidy benefits to its
employees. In fact, rice subsidy was last given in December 2009; and that since the
management was not generating savings from its operations, no rice subsidy has
been released thereafter. GNC asserted that it had been explaining these to the
respondents but the latter would just not listen.
The NLRC rendered a Decision36 on March 31, 2011.
As to GNC’s contention that jurisdiction over the dispute rests on the voluntary
arbitrator, the NLRC had this to say:
GNC prays that [w]e dismiss the labor dispute for lack of jurisdiction and direct
the parties to resolve their differences through the grievance machinery provided for
by their CBA and eventually, resolve it under voluntary arbitration. They aver that
x x x the failure or refusal of the NCMB and thereafter, the Secretary of Labor and
Employment to enforce the grievance machinery and voluntary arbitration x x x
[allowed] the unions to circumvent the CBA and their agreement to resolve conflicts
through voluntary arbitration by the simple [expedient] of filing a notice of strike.
We completely disagree.
When GNC filed their petition for assumption of jurisdiction[,] they prayed that:
“x x x. . .the Honorable Secretary of Labor and Employment, pursuant to
Article 263(g) of the Labor Code, assume jurisdiction over the labor dispute
between GNC and the Unions, i.e., GNCFLU and GNCNTMLU[,] in order to
enjoin the intended strike, or to order the immediate return to work of strikers
_______________
36  Records, pp. 319-343; penned by Commissioner Nieves E. Vivar-De Castro
and concurred in by Presiding Commissioner Benedicto R. Palacol and
Commissioner Isabel G. Panganiban-Ortiguerra.
 
 
627
VOL. 796, JULY 13, 2016 627
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
if a strike has taken place, and thereafter direct the parties to submit to the
grievance machinery and voluntary arbitration provisions of the CBA.”
The June 28, 2010 Order of the Secretary granted the assumption of jurisdiction
of the labor dispute and certified the same to this Commission for compulsory
arbitration. In effect, the Order denied GNC’s plea to submit the dispute to the
parties’ grievance machinery and voluntary arbitration. Article 263(g) does not
encompass referral of the labor dispute in an industry imbibed with national interest
to grievance machinery or voluntary arbitration. In the absence of a timely
reconsideration or proof that GNC had exercised any available remedy in law, the
Order now stands beyond reproach. In Union of Filipro Employees v. NLRCx x x, the
Supreme Court ruled:
“When sitting in a compulsory arbitration certified to by the Secretary of
Labor, the NLRC is not sitting as a judicial court but as an administrative
body charged with the duty to implement the order of the Secretary. Its
function only is to formulate the terms and conditions of the CBA and cannot
go beyond the scope of the order. Moreover, the Commission is further
tasked to act within the earliest time possible and with the end in view that its
action would not only serve the interests of the parties alone, but would also
have favorable implications to the community and to the economy as a whole.
This is the clear intention of the legislative body in enacting Art. 263,
74
 paragraph (g) of the Labor Code, as amended by Section 27 of RA 6175.”
x x x
Corollary thereto, as an implementing body, [o]ur authority does not include the
power to amend the Secretary’s Order. To accede to a referral of the labor dispute
 
 
628
628 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
to the grievance machinery and ultimately to voluntary arbitration is equivalent to
amending said Order. x x x37
 
The NLRC thus upheld its jurisdiction over the case, viz.:
The Secretary is explicitly granted by Article 263(g) of the Labor Code the
authority to assume jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, and decide the
same accordingly. Inevitably, this authority to assume jurisdiction over a labor
dispute must include and extend to all questions and controversies arising therefrom,
including cases over which the Labor Arbiter has exclusive jurisdiction x x x. It is
the declared policy of this Commission that in certified labor disputes for
compulsory arbitration, We must ensure and maintain industrial peace based on
social justice and national interest by having a full, complete and immediate
settlement or adjudication of all labor disputes between the parties, as well as issues
that are relevant to or incidents of the certified issues. Under Section 3, par. (b), Rule
VIII of our 2005 Revised Rules of Procedure:
“(b) All cases between the same parties, except where the certification
order specifies otherwise, the issues submitted for arbitration which are
already filed or may be filed, and are relevant to or are proper incidents of
the certified case, shall be considered subsumed or absorbed by the certified
case, and shall be decided by the appropriate Division of the Commission.
Subject to the second paragraph of Section 4 of Rule IV, the parties to a
certified case, under pain of contempt, shall inform their counsels and the
Division concerned of all cases pending with the Regional Arbitra-
_______________
37  Id., at pp. 332-334; italics and underscoring in the original; citations omitted.
 
 
629
VOL. 796, JULY 13, 2016 629
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
tion Branches and the Voluntary Arbitrators relative or incident to the
certified case before it.”
Plaintly, [o]ur jurisdiction in this certified case extends to all other issues
between the parties so long as they are relevant and germane in the resolution of the
main labor dispute. Our rules, under pain of contempt, require consolidation of all
cases pending with [o]ur Regional Arbitration Branches or with any Voluntary
Arbitrator and consider them included or absorbed in the certified case to be able to
completely and finally settle it. The intention of the law is an immediate and
complete resolution of a labor dispute in an industry indispensable to the national
interest. In this certified case, We are called to exercise [o]ur judgment and
adjudicate the labor dispute in accordance with the Order of the Secretary of Labor
and Employment. This Commission will not recuse from this responsibility for want
of jurisdiction.38
 
Anent the merits of the case, the NLRC held that based on the totality of conduct
of GNC, it was guilty of bad faith bargaining and therefore committed an unfair
labor practice. This was on account of GNC’s submission of a counterproposal
despite the parties already having reached an agreement regarding the terms of the
CBA. To the NLRC, the belated submission of GNC’s counterproposal was intended
to evade the execution of the CBA. With respect to GNC’s alleged withdrawal of
employees’ benefits, the NLRC ruled that pursuant to Article 253 of the Labor Code,
the parties have the duty to keep the status quo and to continue in full force and
effect the terms and conditions of their existing agreement within 60 days prior to the
expiration thereof and/or until a new agreement is reached by the parties. The NLRC,
thus, held that GNC failed to abide by this duty when it discontinued the release of
benefits pending the conclusion of a new CBA. Finally, pursuant to General Milling
Corporation v. Court of
_______________
38  Id., at pp. 330-332; italics and underscoring in the original.
 
 
630
630 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
Appeals,39 the NLRC deemed it proper to declare the final draft submitted by
respondents to the NCMB as the parties’ CBA for the period June 1, 2009 to May 31,
2014.
The NLRC ultimately ruled as follows:
WHEFORE, considering [o]ur foregoing disquisitions, [w]e find Guagua
National Colleges (GNC) to have committed an unfair labor practice by violating the
statutory duty to bargain collectively in good faith. We [o]rder that the final CBA
draft submitted by the unions to GNC and NCMB x x x be the Collective Bargaining
Agreement between the parties for the period June 1, 2009 to May 31, 2014 with the
parties free to renegotiate the economic provisions not later than May 31, 2012 in
accordance with Article 253-A of the Labor Code. Lastly, We further [o]rder that the
75
benefits agreed on by the parties as of August 24, 2009 be given retroactive effect to 1. Whether the subject labor dispute should have been ordered submitted to
June 1, 2009. voluntary arbitration by the Secretary of Labor and Employment pursuant
SO ORDERED.40 to the parties’ CBA and not certified to the NLRC for compulsory
  arbitration;          
Since GNC’s Motion for Reconsideration41 thereto was denied for lack of merit 2. Whether GNC is guilty of bad faith bargaining and thus violated its duty to
in the NLRC Resolution42 dated May 25, 2011, it sought recourse from the CA bargain;           
through a Petition for Certiorari.43 3. Whether the final CBA draft submitted by respondents to the NCMB was
  correctly declared to be the parties’ CBA for the period June 1, 2009 to
Ruling of the Court May 31, 2014.
of Appeals
  _______________
In a Decision44 dated September 26, 2012, the CA did not find any grave abuse of
discretion on the part of NLRC in issuing its assailed orders. Hence, it denied the 45  Id., at pp. 711-727.
Petition for lack of 46  Id., at p. 741.
_______________ 47  Rollo, p. 22.
 
39  467 Phil. 125; 422 SCRA 514 (2004).  
40  Records, pp. 342-343. 632
41  Id., at pp. 345-360.
632 SUPREME COURT REPORTS ANNOTATED
42  Id., at pp. 374-376.
43  CA Rollo, pp. 3-50. Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
44  Id., at pp. 683-709. Our Ruling
   
  The Petition has no merit.
631  
VOL. 796, JULY 13, 2016 631 The Secretary of Labor and Em-
ployment correctly certified the
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union subject labor dispute to the NLRC
merit. GNC filed a Motion for Reconsideration 45 thereto which, however, was for compulsory arbitration.
likewise denied in the Resolution46dated December 3, 2012.  
Hence, this Petition for Review on Certiorari. GNC asserts that it is the voluntary arbitrator which has jurisdiction over the
  grounds cited by respondents in their notice of strike in view of Section 17 of the
Issue parties’ 1994-1999 CBA. The said provision contains the agreement of the parties on
  a “no strike, no lockout” policy and on grievance resolution and voluntary arbitration
WHETHER THE COURT OF APPEALS X X X COMMITTED GRIEVOUS AND which was carried over to their subsequent CBAs up to the existing one. According
IRREVERSIBLE ERROR WHEN, IN ITS DECISION DATED 26 SEPTEMBER to GNC, respondents should not have filed a notice of strike in view of such “no
2012 AND RESOLUTION DATED 3 DECEMBER 2012, IT DISMISSED [GNC’s] strike, no lockout” clause and also since respondents’ grounds for strike are within
PETITION FOR CERTIORARI AND MOTION FOR RECONSIDERATION[,] the scope of “grievance” to be resolved in accordance with the said Section 17. It
RESPECTIVELY[,] FOR LACK OF MERIT, THEREBY AFFIRMING THE argues that respondents, by the simple expedient of filing a notice of strike, were able
DECISION DATED 31 MARCH 2011 AND RESOLUTION DATED 25 MAY to circumvent the “no strike, no lockout” clause and the grievance machinery and
2011 OF THE NATIONAL LABOR RELATIONS COMMISSION. X X X47 voluntary arbitration provision of their CBA.
  Indeed, the parties through their CBA, agreed to a “no strike, no lockout” policy
Essential to the determination of the issue raised is the resolution of the and to resolve their disputes through grievance machinery and voluntary arbitration.
following: Despite these, respondents were justified in filing a notice of strike in light of the
facts of this case. It is settled that a “no strike, no lockout” provision in the CBA

76
“may [only] be invoked by [an] employer when the strike is economic in nature or
one which is conducted to force wage or other agreements from the employer that are
not mandated to be granted by law. It [is not applicable when the strike] is grounded
on unfair labor prac-
 
 
633
VOL. 796, JULY 13, 2016 633
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
tice.”48 Here, while respondents enumerated four grounds in their notice of strike, the
facts of the case reveal that what primarily impelled them to file said notice was their
perception of bad faith bargaining and violation of the duty to bargain collectively by
GNC — charges which constitute unfair labor practice under Article 248(g) of the
Labor Code.49
To recall, respondents acted prudently when they filed a preventive mediation
case the first time that GNC refused to acknowledge at the plant level that the parties
already agreed on the terms of their incoming CBA. However, GNC again rebuffed
that the parties had already entered into an agreement when respondents submitted
the purported final CBA draft of the parties to the NCMB. Hence, respondents
cannot be faulted into believing that GNC was bargaining in bad faith and had no
genuine intention to comply with its duty to bargain collectively since it denied
arriving at an agreement with respondents not once but twice. This belief in good
faith prompted them to file a notice of strike. Clearly, respondents’ intention was to
protest what they perceived to be acts of unfair labor practice on the part of GNC
through the exercise of their right to strike enshrined in the Constitution and not to
circumvent the “no strike, no lockout” clause and the grievance machinery and
voluntary arbitration provision of the CBA.
GNC relies heavily on University of San Agustin.50According to it, the facts
therein are similar if not identical to the
_______________
48  A. Soriano Aviation v. Employees Association of A. Soriano Aviation, 612
Phil. 1093, 1103; 596 SCRA 189, 195 (2009).
49  ART. 248. Unfair labor practices of employers.—It shall be unlawful for
an employer to commit any of the following unfair labor practice:
x x x x
          (g) To violate the duty to bargain collectively as prescribed by this Code.
x x x x
50  University of San Agustin Employees’ Union-FFW (USAEU-FFW) v. Court
of Appeals, supra note 34.
 
 
634
634 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
facts of the present case. Hence, the Court’s ruling in the said case squarely applies
here.
In University of San Agustin, the University of San Agustin (the University) and
the University of San Agustin Employees’ Union (Union) entered into a five-year
CBA in 2000. Complementary to the economic provisions of the said CBA is Section
3, Article 8 thereof which provides for salary increases for school years 2000-2003.
Such salary increases shall take the form of either lump sum or a percentage of the
tuition incremental proceeds (TIP). Moreover and just like in the present case, the
parties’ CBA therein contained a “no strike, no lockout” clause, a grievance
machinery procedure, and a voluntary arbitration mechanism.
When the parties were renegotiating the economic provisions of their CBA, they
could not agree on the manner of computing the TIP. In view of this impasse, the
Union declared a bargaining deadlock. When the Union filed a Notice of Strike
before the NCMB, the University opposed the same by filing a Motion to Strike Out
Notice of Strike and to Refer the Dispute to Voluntary Arbitration invoking the “no
strike, no lockout” clause of their CBA. The NCMB, however, failed to resolve the
said motion. The parties then jointly requested the Secretary of Labor and
Employment to assume jurisdiction over the dispute. When the Secretary of Labor
and Employment assumed jurisdiction, it proceeded to hear and decide on the
dispute. Eventually, a Decision was rendered wherein the economic issues over
which the parties had a deadlock in the collective bargaining were resolved, among
others.
The CA, on certiorari petition, found merit in the University’s argument that the
Secretary of Labor abused his/her discretion in resolving the economic issues on the
ground that the same were proper subject of the grievance machinery as embodied in
the parties’ CBA. Accordingly, the said court directed the parties to submit the
economic issues to voluntary arbitration.
 
 
635
VOL. 796, JULY 13, 2016 635
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
This Court affirmed the CA’s ruling based on the following ratiocinations:
We x x x find logic in the CA’s directive for the herein parties to proceed with
voluntary arbitration as provided in their CBA. As we see it, the issue as to the
economic benefits, which included the issue on the formula in computing the TIP
share of the employees, is one that arises from the interpretation or implementation
of the CBA. To be sure, the parties’ CBA provides for a grievance machinery to
resolve any ‘complaint or dissatisfaction arising from the interpretation or
implementation of the CBA and those arising from the interpretation of enforcement
of company personnel policies.’ Moreover, the same CBA provides that should the
grievance machinery fail to resolve the grievance or dispute, the same shall be
‘referred to a Voluntary Arbitrator for arbitration and final resolution.’ However,
77
through no fault of the University these processes were not exhausted. It must be
recalled that while undergoing preventive mediation proceedings before the NCMB,
the Union declared a bargaining deadlock, filed a notice of strike and thereafter, went
on strike. The University filed a Motion to Strike Out Notice of Strike and to Refer
the Dispute to Voluntary Arbitration but the motion was not acted upon by the
NCMB. As borne by the records, the University has been consistent in its position
that the Union must exhaust the grievance machinery provisions of the CBA which
ends in voluntary arbitration.
The University’s stance is consistent with Articles 261 and 262 of the Labor
Code, as amended which respectively provide[s]:
Art. 261. Jurisdiction of voluntary arbitrators or panel of voluntary
arbitrators.—The Voluntary Arbitrator or panel of Voluntary Arbitrators
shall have original and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or implementation of
the collective bargaining agreement and those
 
 
636
636 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
arising from the interpretation or enforcement of company personnel policies
referred to in the immediately preceding article. Accordingly, violations of a
collective bargaining agreement, except those which are gross in character,
shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the collective bargaining agreement. For purposes of this
Article, gross violations of a collective bargaining agreement shall mean
flagrant and/or malicious refusal to comply with the economic provisions of
such agreement.
The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators and shall immediately
dispose and refer the same to the grievance machinery or voluntary
arbitration provided in the collective bargaining agreement.
Art. 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.
The grievance machinery and no strike, no lockout provisions of the CBA forged
by the University and the Union are founded on Articles 261 and 262 quoted above.
The parties agreed that practically all disputes — including bargaining deadlocks —
shall be referred to the grievance machinery which ends in voluntary arbitration.
Moreover, no strike or no lockout shall ensue while the matter is being resolved.
The University filed a Motion to Strike Out Notice of Strike and to Refer the
Dispute to Voluntary Arbitration precisely to call the attention of the NCMB and the
 
 
637
VOL. 796, JULY 13, 2016 637
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
Union to the fact that the CBA provides for a grievance machinery and the parties’
obligation to exhaust and honor said mechanism. Accordingly, the NCMB should
have directed the Union to honor its agreement with the University to exhaust
administrative grievance measures and bring the alleged deadlock to voluntary
arbitration. Unfortunately, the NCMB did not resolve the University’s motion thus
paving the way for the strike on September 19, 2003 and the deliberate
circumvention of the CBA’s grievance machinery and voluntary arbitration
provisions.
As we see it, the failure or refusal of the NCMB and thereafter the [Secretary of
Labor and Employment] to recognize, honor and enforce the grievance machinery
and voluntary arbitration provisions of the parties’ CBA unwittingly rendered said
provisions, as well as Articles 261 and 262 of the Labor Code, useless and
inoperative. As here, a union can easily circumvent the grievance machinery and
previous agreement to resolve differences or conflicts through voluntary arbitration
through the simple expedient of filing a notice of strike. On the other hand,
management can avoid the grievance machinery and voluntary arbitration provisions
of its CBA by simply filing a notice of lockout.51
 
It must be noted that under the facts of University of San Agustin, the dispute
between the parties primarily involved the formula in computing the TIP share of the
employees — one which clearly arose from the interpretation or implementation of
the CBA. Pursuant to Article 261 of the Labor Code,52 such a grievance falls under
the original and exclusive
_______________
51  Id., at pp. 413-415; pp. 540-542; citations omitted.
52  Article 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary
Arbitrators.—The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company
personnel policies referred to in the immediately preceding article. Accordingly,
violations of a Collective Bargaining Agreement, except
 
 
638
638 SUPREME COURT REPORTS ANNOTATED
78
 Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. Even if
otherwise, the dispute would still fall under the said jurisdiction pursuant to Article
26253 of the same Code since the parties agreed in their CBA that practically all
disputes, including bargaining deadlock, shall be referred to grievance machinery
that ends in voluntary arbitration.
It can safely be concluded, therefore, that the clear showing of the voluntary
arbitrator’s jurisdiction over the parties’ dispute in University of San Agustin is the
underlying reason why the Court upheld the CA’s directive for the parties to proceed
to voluntary arbitration in accordance with their CBA. After all, it is the declared
policy of the State to promote and emphasize the primacy of voluntary arbitration as
a mode of settling labor or industrial disputes.54
Contrary to GNC’s contention, however, there is a marked difference between
the facts of University of San Agustin and of the present case which makes the ruling
in the former inapplicable to the latter. Unlike in University of San Agustin, the main
cause of the dispute between the parties in this case, i.e., GNC’s alleged commission
of unfair labor practice, did not arise from the interpretation or implementation of the
parties’ CBA, or neither from the interpretation or enforcement of
_______________
those which are gross in character, shall no longer be treated as unfair labor practice
and shall be resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining Agreement shall
mean flagrant and/or malicious refusal to comply with the economic provisions of
such agreement.
x x x x
53  Article 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.
54  Sec. 3, Article XIII, 1987 Constitution; Article 211 of the Labor code.
 
639
VOL. 796, JULY 13, 2016 639
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
company personnel policies. Hence, it does not fall under the original and exclusive
jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators under the
aforementioned Article 261. Be that as it may, GNC argues that since the grounds
cited by respondents in their notice of strike come within the scope of “grievance”
under the grievance resolution and voluntary arbitration provision of the parties’
CBA, the same is cognizable by the voluntary arbitrator. Otherwise stated, since the
parties allegedly agreed to submit a dispute of this kind to their CBA’s grievance
resolution procedure which ends in voluntary arbitration, it is the voluntary arbitrator
which has jurisdiction in view of Article 262 of the Labor Code.
The grievance resolution and arbitration provision of the parties’ CBA provides
in part, viz.:
17. Grievance Machinery
The parties hereto agree on the principle that all disputes between labor and
management may be settled through friendly negotiations, that the parties have the
same interest in the continuity of work until all matters in dispute shall have been
discussed and settled in a manner to the mutual benefit of the parties herein, that an
open conflict in any form involves losses to the parties, hence, all efforts must be
exerted to avoid such an open conflict. In the furtherance of the foregoing principle,
the parties agree to establish a procedure for the adjustment of any grievance to
provide the widest opportunity for discussion of any dispute, request or complaint
and establish the procedure for the processing and settlement of grievances.
A grievance is defined as any protest, misunderstanding or difference of opinion
or dispute affecting the COLLEGE and the UNION or affecting any employee
covered by this Agreement with respect to:
1. Meaning, interpretation, implementation or violation of any of the
provisions of this Agreement;
 
 
640
640 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
2. Any matter directly relating or affecting the terms and conditions of
employment including all personnel policies;         
3. Dismissal, suspension and/or any other disciplinary action;         
4. Any other matter or dispute which may arise and is not settled by
means other than the grievance machinery.
x x x x55
Plainly, a charge of unfair labor practice does not fall under the first three
definition of grievance as above quoted. Neither can it be considered as embraced by
the fourth which at first blush, appears to be a “catch-all” definition of grievance
because of the phrase “[a]ny other matter or dispute.” It has been held that while the
phrase “all other labor dispute” or its variant “any other matter or dispute” may
include unfair labor practices, it is imperative, however, that the agreement between
the union and the company states in unequivocal language that the parties conform to
the submission of unfair labor practices to voluntary arbitration. 56 It is not sufficient
to merely say that parties to the CBA agree on principle that “all disputes” or as in
79
this case, “any other matter or dispute,” should be submitted to the grievance
machinery and eventually to the voluntary arbitrator. There is a need for an express
stipulation in the CBA that unfair labor practices should be resolved in the ultimate
by the voluntary arbitrator or panel of voluntary arbitrators since the same fall within
a special class of disputes that are generally within the exclusive original jurisdiction
of the Labor Arbiter by express provision of the law. 57 “Absent such express
stipulation, the phrase ‘all
_______________
55  Records, p. 83.
56  Vivero v. Court of Appeals, 398 Phil. 158, 169; 344 SCRA 268, 279 (2000),
citing San Miguel Corp. v. National Labor Relations Commission, 325 Phil. 401; 255
SCRA 133 (1996).
57  Art. 217 of the Labor Code provides in part:
 
 
641
VOL. 796, JULY 13, 2016 641
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
disputes’ [or “any other matter or dispute” for that matter] should be construed as
limited to the areas of conflict traditionally within the jurisdiction of Voluntary
Arbitrators, i.e., disputes relating to contract-interpretation, contract-implementation,
or interpretation or enforcement of company personnel policies. [Unfair labor
practices cases] — not falling within any of these categories — should then be
considered as a special area of interest governed by a specific provision of law.”58
In the absence here of an express stipulation in the CBA that GNC and
respondents agreed to submit cases of unfair labor practice to their grievance
machinery and eventually to voluntary arbitration, jurisdiction over the parties’
dispute does not vest upon the voluntary arbitrator. The reason behind the ruling
in University of San Agustin is therefore not attendant in this case and so does not
find any application here. As it stands, the parties’ dispute which centers on the
charge of unfair labor practice is the proper subject of compulsory arbitration. In
fact, GNC itself acknowledged in its June 24, 2010 letter to the Secretary of Labor
and Employment that a charge of unfair labor practice in a notice of strike is
ordinarily certified for compulsory arbitration.59
_______________
Art. 217. Jurisdiction of Labor Arbiters and the Commission.—
(a) Except as otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide x x x the following cases
involving all workers, whether agricultural or nonagricultural:
(1) Unfair labor practices cases.
x x x x
58  Vivero v. Court of Appeals, supra note 56 at p. 170; p. 279.
59  Records, p. 168. GNC stated, viz.: “Finally, although there is a charge of
unfair labor practice in the Unions’ Notice of Strike, which matter should
ordinarily be certified for compulsory arbitration, the records will indubitably
show — apart from the baselessness of the charge — that the proximate cause of the
labor
 
 
650
650 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
GNC further avers that under the parties’ CBA, there are only two instances
where compulsory arbitration may be resorted to, to wit: (1) at the grievance
machinery level, if respondents are not satisfied with GNC’s decision on a grievance;
and (2) at the voluntary arbitration level, when the parties cannot agree on the third
member of the Arbitration Committee. GNC thus contends that submission of the
parties’ dispute to compulsory arbitration is but another violation of their agreement
embodied in the CBA.
The argument is specious.
As expounded by both the NLRC and the CA, the Secretary of Labor and
Employment’s certification for compulsory arbitration of a dispute over which he/she
has assumed jurisdiction is but an exercise of the powers granted to him/her by
Article 263(g) of the Labor Code as amended. “[These] powers x x x have been
characterized as an exercise of the police power of the State, aimed at promoting the
public good. When the Secretary exercises these powers, he[/she] is granted ‘great
breadth of discretion’ to find a solution to a labor dispute.” 60 The Court therefore
cannot subscribe to GNC’s contention since to say that compulsory arbitration may
only be resorted to in instances agreed upon by the parties would limit the power of
the Secretary of Labor and Employment to certify cases that are proper subject of
compulsory arbitration. The great breadth of discretion granted to the Secretary of
Labor and Employment for him/her to find an immediate solution to a labor dispute
would unnecessarily be diminished if such would be the case.
 
 
_______________
dispute is the parties[’] differences in collective bargaining.” (Emphasis supplied)
60  Steel Corporation of the Philippines v. SCP Employees Union-National
Federation of Labor Unions, 574 Phil. 716, 732; 551 SCRA 594, 609 (2008).
 
 
643
VOL. 796, JULY 13, 2016 643
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
80
 In view of the above discourse, the Court finds that the Secretary of Labor and
Employment correctly certified the parties’ dispute to the NLRC for compulsory
arbitration.
 
GNC engaged in bad faith
bargaining and thus vio-
lated its duty to bargain.
 
GNC insists that it is not guilty of bad faith bargaining nor did it commit any
violation of its duty to bargain by pointing out that it consistently engaged in
negotiations with the respondents both at the plant and NCMB levels. It underscores
that following its submission of a counterproposal to the NCMB, it even manifested
that it was willing to negotiate on a marathon basis. This negates any ill will, bad
faith, fraud or conduct oppressive to labor on its part. In any case, there is no truth to
respondents’ assertion that the parties have already reached an agreement when GNC
submitted a counterproposal. Hence, it cannot be said that GNC engaged in dilatory
tactics to avoid the signing of the CBA since there was yet no final agreement to
speak of. GNC likewise justifies its submission of counterproposal asserting that the
same was necessary in view of the chronic financial situation of GNC, the need to
conclude a separate CBA for GNCFLU and GNCNTMLU, and in order to introduce
thereon improved provisions for the mutual benefit of the parties.
The duty to bargain collectively is defined under Article 252 of the Labor Code
to, viz.:
ARTICLE 252. Meaning of duty to bargain collectively.—The duty to
bargain collectively means the performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work and all other terms and conditions of
employment including proposals for adjusting any grievances or questions arising
under such agreements and executing a contract incorporating such agreements if re-
 
 
644
644 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
quested by either party but such duty does not compel any party to agree to a
proposal or to make any agreement. (Emphasis supplied)
 
“It has been held that the crucial question whether or not a party has met his
statutory duty to bargain in good faith typically turns on the facts of the individual
case. There is no per se test of good faith in bargaining. Good faith or bad faith is an
inference to be drawn from the facts.”61 “The effect of an employer’s or a union’s
actions individually is not the test of good faith bargaining, but the impact of all such
occasions or actions, considered as a whole. x x x”62
Here, the collective conduct of GNC is indicative of its failure to meet its duty to
bargain in good faith. Badges of bad faith attended its actuations both at the plant and
NCMB levels.
At the plant level, GNC failed to comply with the mandatory requirement of
serving a reply/counterproposal within 10 calendar days from receipt of a
proposal,63 a fact which by itself is already an indication of lack of genuine interest to
bargain.64 Then, it led respondents to believe that it was doing away with the
reply/counterproposal when it proceeded to just
_______________
61  The Hongkong and Shanghai Banking Corporation Employees Union v.
National Labor Relations Commission, 346 Phil. 524, 534; 281 SCRA 509, 518
(1997).
62  Id.
63  Article 250 of the Labor Code provides:
Article 250. Procedure in collective bargaining.—The following procedures shall
be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written
notice upon the other party with a statement of its proposals. The other party
shall make a reply thereto not later than ten (10) calendar days from receipt of
such notice.
x x x x
64  General Milling Corporation v. Court of Appeals, supra note 39 at p. 135; p.
522.
 
 
645
VOL. 796, JULY 13, 2016 645
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
orally discuss the economic terms. After a series of negotiation meetings, the parties
finally agreed on the economic terms which based on the records was the only
contentious issue between them. In fact, in their meeting of August 24, 2009,
Rodriguez, in her capacity as member of the management panel, already announced
the benefits included under the CBA for 2009-2014. 65 She then stated that the signing
thereof would be underway. In the days that followed, however, GNC ignored the
follow-ups made by respondents regarding the signing. It then suddenly capitalized
on the fact that it had not yet submitted a reply/counterproposal and thereupon served
one upon respondents despite the parties already having reached an agreement.
It could not be any clearer from the above circumstances that GNC has no
genuine intention to comply with its duty to bargain. It merely went through the
motions of negotiations and then entered into an agreement with respondents which
turned out to be an empty one since it later denounced the same by submitting a
reply/counterproposal. Worse, when respondents tried to clear out matters with the
81
GNC President through their letter of January 8, 2010, GNC did not even bother to
respond.
To persuade the Court that no agreement has yet been reached by the parties,
GNC refers to the minutes of the October 9, 2009 meeting indicating that the
economic benefits were still to be discussed with the President of GNC. GNC takes
this to mean that the economic benefits were at that time still subject to the approval
of the GNC President and, hence, not yet final. The Court, however, notes that GNC
conveniently disregarded not only the previous minutes of the parties’ meetings but
also the other significant portions of the October 9, 2009 minutes it alluded to. The
minutes of the meeting held on August 24, 2009 clearly shows that Rodriguez
categorically announced and enumerated all the benefits
_______________
65  See Minutes of the Meeting, Records, p. 312.
 
 
646
646 SUPREME COURT REPORTS ANNOTATED
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
“given by the school in the CBA 2009-2014.” 66 Plainly, this means that the
announced benefits were already approved by GNC. On the other hand, the minutes
of the meeting on October 09, 2009 states in full:
III. [Ms. Rodriguez] cited all the benefits of the permanent faculty and covered
employees granted in the previous CBAs.
She requested to [sum] up all these benefits and privileges including the [additional
benefits] acquired on this present CBA [which shall] be discussed with the
President, so next time we will be on the signing.67 (Emphasis supplied)
 
Nowhere from the aforequoted minutes of the meeting can it be deduced that the
terms of the CBA is still subject to the approval of the GNC President. There is no
clear showing that the purpose of discussing the economic benefits with him is to
secure his approval thereto. If at all, the purported discussion appears to be a mere
formality since the signing of the CBA was not made dependent to the result of the
discussion with him. As can be seen, the statement that “next time they will be on the
signing” is clearly unqualified. Indubitably, all indications lead to the conclusion that
the parties already agreed on the terms of the CBA and it was only the execution
thereof that needs to be done.
Anent GNC’s claim that it was suffering from financial difficulties which
according to it was one of the reasons why it saw the need to submit a counter-
proposal, suffice it to say that GNC should have squarely raised this early on in the
negotiations. After all, the employer’s duty to negotiate in good faith with its
employees consists of matching the latter’s proposals, if unacceptable, with
counterproposals, and of making
 
_______________
66  Id.
67  Id., at p. 313.
 
 
647
VOL. 796, JULY 13, 2016 647
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
every reasonable effort to reach an agreement. 68 There must be common willingness
among the parties to discuss freely and fully their respective claims and demands
and, when these are opposed, to justify them on reason. 69However, instead of laying
all its card on the table, GNC for reasons only known to it, chose to forego the
opportunity of discussing its claimed financial predicament with respondents as
shown by the following: (1) GNC did not submit a reply/counterproposal within 10
calendar days from its receipt of respondents’ proposed CBA on April 3, 2009 as
required by law; (2) while it later manifested through a letter dated May 27, 2009
that it is not inclined to grant the economic provisions in respondents’ proposal, it
did not fully discuss or explain to respondents its claimed opposition; (3) Atty.
Sampang did not make good on the promise he made in the meeting of June 16, 2009
that GNC would submit its counterproposal to respondents’ economic provisions
with the corresponding explanation;70 and (4) as shown by the minutes of the
meetings, the members of the management panel simply made general statements
that GNC was having financial difficulties but failed to elaborate on the same. As it
is, GNC allowed itself to go through the process of negotiating with respondents
without fully discussing its financial status and despite this, knowingly entered into
an agreement with them. It cannot, therefore, be allowed to later interpose an
opposition to the terms of the CBA based on financial incapacity by belatedly
submitting a counterproposal, which from the circumstances, is an obvious attempt
to stall what would have been the last step of the process — the execution of the
CBA. The Court cannot be expected to affix its imprimatur to such a dubious
maneuver.71
_______________
68  Herald Delivery Carriers Union v. Herald Publication, Inc., 154 Phil. 662,
669; 55 SCRA 713, 720 (1974).
69  Id.
70  Records, p. 307.
71  Kiok Loy v. National Labor Relations Commission, 225 Phil. 138, 146; 141
SCRA 179, 187 (1986).
 
 
648
648 SUPREME COURT REPORTS ANNOTATED
82
 Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union too late in the day since at that point there already exists a “final draft” submitted by
With respect to GNC’s assertion that its submission of a counterproposal was the respondents in accordance with the understanding reached by the parties in the
also impelled by the need to conclude a separate CBA for GNCFLU and conciliation/meetings conducted by the NCMB.
GNCNTMLU and to improve certain provisions, records reveal that during the In view of the foregoing, the Court finds that GNC engaged in bad faith
negotiations at the plant level, GNC did not at all entertain this idea. This explains bargaining and by the same violated its duty to bargain collectively as mandated by
why the matter was not brought to fore during the negotiations therein. The idea was law.
only introduced to GNC by Atty. Padilla when the former asked him to evaluate the Before turning to the next issue, however, the Court finds proper to pass upon the
final draft of the CBA submitted by respondents to the NCMB. Eventually, the same matter of GNC’s unilateral withdrawal of employee’s benefits as found by the
was used as a ground for GNC’s opposition to the said final draft as contained in the NLRC. GNC laments that while it squarely raised this matter before the CA, the said
counterproposal that GNC submitted to the NCMB. The matter, however, loses its court ignored the same.
significance in the light of the Court’s succeeding discussion as to the inopportune Guided by the basic rule that he who alleges must prove, 75 the Court finds that
submission of the said counterproposal. respondents failed to substantiate its claim that GNC unilaterally stopped the release
The overall conduct of GNC at the plant level, without a doubt, illustrates bad of certain benefits to its employees. All that respondents advanced were bare
faith bargaining. And as already stated, this display of bad faith continued even at the allegations without any proof. On the other hand, GNC was able to show that
NCMB. benefits such as clothing benefit76 and annual retreat were already extended to its
True, GNC participated in the conciliation meetings in the NCMB. In fact, the employees. The protégé benefit, although subjected to stricter implementation
minutes of the proceedings would show that the parties were able to settle certain _______________
matters about the signing bonus.72 Further, during the April 15, 2010
conciliation/meeting, it was agreed that respondents will come up with the “final 75  Lim v. Equitable PCI Bank, now known as the Banco De Oro Unibank, Inc.,
draft” of the parties to be submitted to the NCMB and copy furnished 724 Phil. 453, 454; 713 SCRA 555, 556 (2014).
GNC.73Respondents complied with the said undertaking such that the minutes of the 76  Records, pp. 244-245.
May 14, 2010 conciliation/meeting reveals that the only thing left for the parties to  
do was to go over the details of the final draft of the CBA for fine-tuning.74  
However, GNC again engaged itself in the scheme of denying that the parties 650
have already reached an agreement. It denies that the draft submitted by the 650 SUPREME COURT REPORTS ANNOTATED
respondents to the Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
_______________ guidelines, was likewise still in effect. 77 And while rice assistance was last given in
December 2009, the grant of the same was shown to be on a best effort
72  Minutes dated March 29, 2010, CA Rollo, p. 358. basis.78 Notably, respondents were not able to refute GNC’s explanation. Thus, the
73  Minutes dated April 15, 2010, id., at p. 359. Court finds the charge of unilateral withdrawal of benefits against GNC without
74  Minutes dated May 14, 2010, id., at p. 361. basis. Be that as it may, let it be made clear that this does not have any effect and
  therefore does not change the finding that GNC committed a violation of its duty to
  bargain as extensively discussed above.
649  
VOL. 796, JULY 13, 2016 649 The final CBA draft submitted
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union by respondents to the NCMB was
NCMB was the parties’ final draft. It instead asserts that the document was merely correctly imposed by the NLRC
respondents’ draft which was still subject to GNC’s consideration. The Court, as the parties’ CBA for the period
however, finds no merit in this assertion since as shown above, the minutes of the June 1, 2009 to May 31, 2014.
proceedings before the NCMB reveal otherwise.  
As proof of its claimed faithful intention to comply with its duty to bargain, GNC In the cases of Kiok Loy,79 Divine Word University of Tacloban v. Secretary of
asserts that it even manifested before the NCMB that it was willing to negotiate on a Labor and Employment,80 and General Milling Corporation,81 the Court unilaterally
marathon basis following its submission of a counterproposal. Suffice it to say, imposed upon the employers the CBAs proposed by the unions after the employers
however, that such manifestation, as well as the said counterproposal, already came were found to have violated their duty to bargain collectively. This is on the premise

83
that the said employers, by their acts which bespeak of insincerity, had lost their
statutory right to negotiate or renegotiate the terms and conditions contained in the
unions’ proposed CBAs.
Here, the Court finds nothing wrong in the pronouncement of the NLRC that the
final CBA draft submitted by respondents to the NCMB should serve as the parties’
CBA for the period June 1, 2009 to May 31, 2014. More than the fact that GNC is
the erring party in this case, records show that the said draft is actually the final CBA
draft of the parties which
_______________

77  Id., at pp. 242-243.

78  Id., at p. 250.
79  Supra note 71.
80  G.R. No. 91915, September 11, 1992, 213 SCRA 759.
81  General Milling Corporation v. Court of Appeals, supra note 39.
 
 
651
VOL. 796, JULY 13, 2016 651
Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union
incorporates their agreements. Indeed and as held by the NLRC, fairness, equity and
social justice are best served if the said final CBA draft shall govern their industrial
relationship.
All told, the Court finds that the CA correctly affirmed the ruling of the NLRC
and denied GNC’s Petition for Certiorari for lack of merit.
WHEREFORE, the Petition is hereby DENIED. The assailed Decision dated
September 26, 2012 and Resolution dated December 3, 2012 of the Court of Appeals
in C.A.-G.R. S.P. No. 120669 are AFFIRMED.
SO ORDERED.
Carpio (Chairperson), Brion and Leonen, JJ., concur.
Mendoza, J., On Official Leave.
Petition denied, judgment and resolution affirmed.
Notes.—The Voluntary Arbitrator’s (VA’s) decision may still be reconsidered on
the basis of a motion for reconsideration seasonably filed within 10 days from receipt
thereof; Seasonable filing of a motion for reconsideration is a mandatory requirement
to forestall the finality of such decision. (Teng vs. Pahagac, 635 SCRA 173 [2010])
Article 263(g) of the Labor Code gives the Secretary of Labor discretion to
assume jurisdiction over a labor dispute likely to cause a strike or a lockout in an G.R. No. 179732. September 13, 2017.*
industry indispensable to the national interest and to decide the controversy or to  
refer the same to the National Labor Relations Commission (NLRC) for compulsory DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
arbitration. (Santuyo vs. Remerco Garments Manufacturing, Inc., 616 SCRA 333 petitioner, vs. CMC/MONARK/PACIFIC/HI-TRI JOINT VENTURE,
[2010]) respondent.
——o0o—— Pleadings and Practice; Certification against Forum Shopping; It is settled
that certification against forum shopping must be executed by the party or principal

84
and not by counsel.—This Court has long enforced the strict procedural requirement
of verification and certification against non-forum shopping. It is settled that
certification against forum shopping must be executed by the party or principal and
not by counsel. In Anderson v. Ho, 688 SCRA 8 (2013), this Court explained that it
is the party who is in the best position to know whether he or she has filed a case
before any courts. It is clear in this case that counsel for petitioner, Atty. Valderama,
was not clothed with authority to sign on petitioner’s behalf.
Same; Same; The Supreme Court (SC) ruled before that: “the lack of a
certification against forum shopping, unlike that of verification, is generally not
cured by its submission after the filing of the petition.” Nevertheless, exceptions
exist, as in the case at bar, and it is more prudent to resolve the case on its merits
than dismiss it on purely technical grounds.—This Court ruled before that: “the lack
of a certification against forum shopping, unlike that of verification, is generally not
cured by its submission after the filing of the petition.” Nevertheless, exceptions
exist, as in the case at bar, and it is more
_______________
*  THIRD DIVISION.
 
 
398
398 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
prudent to resolve the case on its merits than dismiss it on purely technical
grounds.
Moot and Academic; Exceptions exist that would not prevent a court from
taking cognizance of cases seemingly moot and academic.—Indeed, the rule is that
courts will not rule on moot cases. However, the moot and academic principle is “not
a magical formula that can automatically dissuade the courts in resolving a case.”
Exceptions exist that would not prevent a court from taking cognizance of cases
seemingly moot and academic.
Remedial Law; Civil Procedure; Exhaustion of Administrative Remedies;
Under the doctrine of exhaustion of administrative remedies, the concerned
administrative agency must be given the opportunity to decide a matter within its
jurisdiction before an action is brought before the courts, otherwise, the action will
be declared premature.—Under the doctrine of exhaustion of administrative reme-
dies, the concerned administrative agency must be given the opportunity to decide a
matter within its jurisdiction before an action is brought before the courts, otherwise,
the action will be declared premature. In this case, CIAC found and correctly ruled
that respondent had duly complied with the contractual obligation to exhaust
administrative remedies provided for under subclause 67.1 of the Conditions of
Contract before it brought the case before the tribunal.
Construction Industry; Construction Industry Arbitration Commission;
Jurisdiction; Construction Industry Arbitration Commission’s (CIAC’s) specific
purpose is the “early and expeditious settlement of disputes” in the construction
industry as a recognition of the industry’s role in “the furtherance of national
development goals.”—CIAC was created under Executive Order No. 1008, or the
“Construction Industry Arbitration Law.” It was originally under the administrative
supervision of the Philippine Domestic Construction Board which, in turn, was an
implementing agency of the Construction Industry Authority of the Philippines. The
Construction Industry Authority of the Philippines is presently a part of the
Department of Trade and Industry as an attached agency. CIAC’s specific purpose is
the “early and expeditious settlement of disputes” in the construction industry as a
recognition of the industry’s role in “the furtherance of national development goals.”
 
 
399
VOL. 839, SEPTEMBER 13, 2017 399
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Same; Same; Same; As a general rule, findings of fact of Construction
Industry Arbitration Commission (CIAC), a quasi-judicial tribunal which has
expertise on matters regarding the construction industry, should be respected and
upheld.—As a general rule, findings of fact of CIAC, a quasi-judicial tribunal which
has expertise on matters regarding the construction industry, should be respected and
upheld. In National Housing Authority v. First United Constructors Corp., 657
SCRA 175 (2011), this Court held that CIAC’s factual findings, as affirmed by the
Court of Appeals, will not be overturned except as to the most compelling of
reasons: As this finding of fact by the CIAC was affirmed by the Court of Appeals,
and it being apparent that the CIAC arrived at said finding after a thorough
consideration of the evidence presented by both parties, the same may no longer be
reviewed by this Court. The all too familiar rule is that the Court will not, in a
petition for review on certiorari, entertain matters factual in nature, save for the
most compelling and cogent reasons, like when such factual findings were drawn
from a vacuum or arbitrarily reached, or are grounded entirely on speculation or
conjectures, are conflicting or are premised on the supposed evidence and
contradicted by the evidence on record or when the inference made is manifestly
mistaken or absurd. This conclusion is made more compelling by the fact that the
CIAC is a quasi-judicial body whose jurisdiction is confined to construction disputes.
Indeed, settled is the rule that findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because their jurisdiction is confined
to specific matters, are generally accorded not only respect, but finality when
affirmed by the Court of Appeals.
Arbitration; “Commercial Arbitration” and “Voluntary Arbitration,”
Distinguished.—In distinguishing between commercial arbitration, voluntary
arbitration under Article 219(14) of the Labor Code, and construction
85
arbitration, Freuhauf Electronics Philippines Corporation v. Technology Electronics
Assembly and Management Pacific, 810 SCRA 280 (2016), ruled that commercial
arbitral tribunals are purely ad hoc bodies operating through contractual consent,
hence, they are not quasi-judicial agencies. In contrast, voluntary arbitration under
the Labor Code and construction arbitration derive their authority from statute in
recognition of the public interest inherent in their respective spheres. Furthermore,
voluntary arbitration under the Labor Code and construction arbitration exist inde-
 
400
400 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
pendently of the will of the contracting parties: Voluntary Arbitrators resolve
labor disputes and grievances arising from the interpretation of Collective Bargaining
Agreements. These disputes were specifically excluded from the coverage of both
the Arbitration Law and the ADR Law. Unlike purely commercial relationships, the
relationship between capital and labor are heavily impressed with public interest.
Because of this, Voluntary Arbitrators authorized to resolve labor disputes have been
clothed with quasi-judicial authority. On the other hand, commercial relationships
covered by our commercial arbitration laws are purely private and contractual in
nature. Unlike labor relationships, they do not possess the same compelling state
interest that would justify state interference into the autonomy of contracts. Hence,
commercial arbitration is a purely private system of adjudication facilitated by
private citizens instead of government instrumentalities wielding quasi-judicial
powers. Moreover, judicial or quasi-judicial jurisdiction cannot be conferred upon a
tribunal by the parties alone. The Labor Code itself confers subject-matter
jurisdiction to Voluntary Arbitrators. Notably, the other arbitration body listed in
Rule 43 — the Construction Industry Arbitration Commission (CIAC) — is also a
government agency attached to the Department of Trade and Industry. Its
jurisdiction is likewise conferred by statute. By contrast, the subject matter
jurisdiction of commercial arbitrators is stipulated by the parties.
Remedial Law; Civil Procedure; Factual Findings; Findings of fact of
administrative agencies and quasi-judicial bodies are entitled to great respect and
even finality when affirmed by the appellate court.—To reiterate, findings of fact of
administrative agencies and quasi-judicial bodies are entitled to great respect and
even finality when affirmed by the appellate court. In this case, the Court of Appeals
found that respondent was entitled to the time extensions as evaluated by CIAC, the
agency tasked to resolve issues regarding the construction industry. Both tribunal
found that respondent was entitled to the extensions due to petitioners delayed
payments, peace and order situation, and Variation Order No. 2. These findings are
clearly supported by the facts on record.
Executive Agreements; Foreign Loan Agreements; A foreign loan agreement
with international financial institutions, such as a multilateral lending agency
organized by governments like the Asian Development Bank, is an executive or
international agreement contemplated by 
 
 
401
VOL. 839, SEPTEMBER 13, 2017 401
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
our government procurement system.—This Court has held that a foreign loan
agreement with international financial institutions, such as a multilateral lending
agency organized by governments like the Asian Development Bank, is an executive
or international agreement contemplated by our government procurement system.
Remedial Law; Civil Procedure; Specific Denials; Under Rule 8, Section 10 of
the Rules of Court, the “defendant must specify each material allegation of fact the
truth of which he does not admit and, whenever practicable, shall set forth the
substance of the matters upon which he relies to support his denial.”—Under Rule 8,
Section 10 of the Rules of Court, the “defendant must specify each material
allegation of fact the truth of which he does not admit and, whenever practicable,
shall set forth the substance of the matters upon which he relies to support his
denial.” There are three (3) modes of specific denial provided for under the Rules: 1)
by specifying each material allegation of the fact in the complaint, the truth of which
the defendant does not admit, and whenever practicable, setting forth the substance
of the matters which he will rely upon to support his denial; (2) by specifying so
much of an averment in the complaint as is true and material and denying only the
remainder; (3) by stating that the defendant is without knowledge or information
sufficient to form a belief as to the truth of a material averment in the complaint,
which has the effect of a denial.
Same; Same; Same; The denial in the answer must be definite as to what is
admitted and what is denied, such that the adverse party will not have to resort to
guesswork over “what is admitted, what is denied, and what is covered by denials of
knowledge as sufficient to form a belief.”—In Aquintey v. Spouses Tibong, 511
SCRA 414 (2006), this Court held that using “specifically” in a general denial does
not automatically convert that general denial to a specific one. The denial in the
answer must be definite as to what is admitted and what is denied, such that the
adverse party will not have to resort to guesswork over “what is admitted, what is
denied, and what is covered by denials of knowledge as sufficient to form a belief.”
Civil Law; Contracts; It is fundamental that a contract is the law between the
parties and, absent any showing that its provisions are wholly or in part contrary to
law, morals, good customs, public order, or public policy, it shall be enforced to the
letter by the 
 
 
402
402 SUPREME COURT REPORTS ANNOTATED
86
 Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
courts.—It is fundamental that a contract is the law between the parties and,
absent any showing that its provisions are wholly or in part contrary to law, morals,
good customs, public order, or public policy, it shall be enforced to the letter by the
courts. Respondent was not able to establish the basis of its claim that it is entitled to
an award of 24% interest. Moreover, as found by the Court of Appeals and CIAC,
the parties had agreed to delete the provision on interest on delayed payments, since
the project was funded by the Asian Development Bank. There is also no basis to
award respondent 24% interest as actual damages for the additional expenses it
incurred due to petitioner’s delayed payments.
Same; Damages; Actual Damages; The issue on the amount of actual or
compensatory damages is a question of fact, and except as provided by law or by
stipulation, one is entitled to adequate compensation only for pecuniary loss duly
proven.—Before actual damages may be awarded, it is imperative that the claimant
proves its claims first. The issue on the amount of actual or compensatory damages is
a question of fact, and except as provided by law or by stipulation, one is entitled to
adequate compensation only for pecuniary loss duly proven. In this case, respondent
has not sufficiently shown how awarding it 24% interest per annum on delayed
payments corresponds to the actual damages it allegedly suffered. Respondent failed
to show a causal relation between the alleged losses and the injury it suffered from
petitioner’s actions.
Interest Rates; On May 16, 2013, the Monetary Board of the Bangko Sentral
ng Pilipinas (BSP) issued Resolution No. 796, which revised the interest rate to be
imposed on the loan or forbearance of any money, goods, or credits.—On May 16,
2013, the Monetary Board of the Bangko Sentral ng Pilipinas issued Resolution No.
796, which revised the interest rate to be imposed on the loan or forbearance of any
money, goods, or credits. This was implemented in Bangko Sentral ng
Pilipinas Circular No.799 Series of 2013, which reads: The Monetary Board, in its
Resolution No. 796 dated 16 May 2013, approved the following revisions governing
the rate of interest in the absence of stipulation in loan contracts, thereby amending
Section 2 of Circular No. 905, Series of 1982: Section 1. The rate of interest for the
loan or forbearance of any money, goods or credits and the rate allowed in
judgments, in the absence of an express contract as to such rate of interest, shall be
six percent (6%) per annum. Section 2. In view of the above, Subsection X305.1 of
the Manual of Regulations
 
 
403
VOL. 839, SEPTEMBER 13, 2017 403
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
for Banks and Sections 4305Q.1, 43058.3 and 4303P.1 of the Manual of
Regulations for Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Civil Law; Before Nacar v. Gallery Frames, 703 SCRA 439 (2013), and
Bangko Sentral ng Pilipinas-Monetary Board (BSP-MB) Resolution No. 796 dated
May 16, 2013, the rate of legal interest was pegged at twelve percent (12%) per
annum from finality of judgment until its satisfaction, “this interim period being
deemed to be by then an equivalent to a forbearance of credit.”—Before Nacar v.
Gallery Frames, 703 SCRA 439 (2013), and Bangko Sentral ng Pilipinas-Monetary
Board Resolution No. 796 dated May 16, 2013, the rate of legal interest was pegged
at 12% per annum from finality of judgment until its satisfaction, “this interim period
being deemed to be by then an equivalent to a forbearance of credit.” With this
Court’s pronouncement in Nacar, the rate of interest imposed should be modified.
The monetary awards, as computed by the CIAC, should earn legal interest at the
rate of 12% per annum until June 30, 2013, after which, it shall earn legal interest at
the rate of 6% per annum until full satisfaction.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
   Office of the Solicitor General for petitioner.
   Aguirre, Abaño, Pamfilo, Paras, Pineda & Agustin Law Offices for
respondent.
LEONEN, J.:
 
As the administrative agency tasked with resolving issues pertaining to the
construction industry, the Construction Industry Arbitration Commission enjoys a
wide latitude in recognition of its technical expertise and experience. Its factual
findings are, thus, accorded respect and even finality, particularly when they are
affirmed by an appellate court.
 
 
403
VOL. 839, SEPTEMBER 13, 2017 403
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
This is a Petition for Review on Certiorari1 assailing the Court of Appeals’
Decision2 dated September 20, 2007 in C.A.-G.R. S.P. Nos. 88953 and 88911, which
affirmed the March 1, 2005 Award of the Construction Industry Arbitration Com-
mission (CIAC).
On April 29, 1999, Republic of the Philippines, through the Department of
Public Works and Highways (DPWH), and CMC/Monark/Pacific/Hi-Tri J.V. (the
Joint Venture) executed “Contract Agreement for the Construction of Contract Pack-
age 6MI-9, Pagadian-Buug Section, Zamboanga del Sur, Sixth Road Project, Road
Improvement Component Loan No. 1473-PHI”3 (Contract) for a total contract
amount of P713,330,885.28.4
87
 Parts I (General Conditions with forms of tender + agreement) and II (Conditions On March 3, 2004, the Joint Venture filed a Complaint 11against DPWH before
of Particular Application + Guidelines for Preparation of Part II Clauses) of the CIAC. Joint Venture’ claims, which amounted to P77,206,047.88, were as follows:
“Conditions of Contract for Works of Civil Engineering Construction of the _______________
Federation International Des Ingenieurs — Conseils” (Conditions of Contract)
formed part of the Contract.5 DPWH hired 6   Id.
_______________ 7   Id., at pp. 491-492, Joint Venture’s Complaint before the CIAC and pp. 742-
744, CIAC Award.
1  Rollo, pp. 398-463. 8   Id., at p. 728, CIAC Award.
2  Id., at pp. 464-480. The Decision was penned by Associate Justice Myrna 9   Id.
Dimaranan Vidal and concurred in by Associate Justices Jose C. Reyes, Jr. and Japar 10  Id., at p. 740.
B. Dimaampao of the Special Eighth Division, Court of Appeals, Manila. 11  Id., at pp. 486-500.
3  Id., at pp. 481-485.  
4  Id., at p. 482.  
5  Id., at p. 401. The “Conditions of Contract for Works of Civil Engineering 406
Construction” is a standard contract form prepared by the Federation 406 SUPREME COURT REPORTS ANNOTATED
International Des Ingenieurs — Conseils (FIDIC). The standard contract is
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
recommended for general use for the purpose of construction of such works where
tenders are invited on an international basis. The Conditions of Contract are also Joint Venture
equally suitable for use on domestic contracts. It is commonly referred to as the Red  
Book in the construction industry. Available at <http://fidic.org/bookshop/about- CLAIMANT’S CLAIM
bookshop/which-fidic-contract-should-i-use> (last accessed on September 4, 2017). Meanwhile, on July 8, 2004, the Joint Venture sent a “Notice of Mutual
  Termination of Contract”13 to DPWH requesting for a mutual termination of the
  contract subject of the arbitration case. This is due to its diminished financial
405 capability due to DPWH’s late payments, changes in the project involving payment
VOL. 839, SEPTEMBER 13, 2017 405 terms, peace and order problems, and previous agreement by the parties.
On July 16, 2004, then DPWH Acting Secretary Florante Soriquez accepted the
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri Joint Venture’s request for mutual termination of the contract.14
Joint Venture _______________
BCEOM French Engineering Consultants to oversee the project.6
On October 23, 2002, or while the project was ongoing, the Joint Venture’s truck 12  Id., at p. 732, CIAC Award.
and equipment were set on fire. On March 11, 2003, a bomb exploded at Joint 13  Id., at pp. 553-555.
Venture’s hatching plant located at Brgy. West Boyogan, Kumalarang, Zamboanga 14  Id., at pp. 338-339.
del Sur. According to reports, the bombing incident was caused by members of the  
Moro Islamic Liberation Front.7  
The Joint Venture made several written demands for extension and payment of 407
the foreign component of the Contract. There were efforts between the parties to VOL. 839, SEPTEMBER 13, 2017 407
settle the unpaid Payment Certificates amounting to P26,737,029.49. Thus, only the
foreign component of US$358,227.95 was up for negotiations subject to further Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
reduction of the amount on account of payments subsequently received by the Joint Joint Venture
Venture from DPWH.8 After hearing and submission of the parties’ respective memoranda, 15 CIAC
In a letter dated September 18, 2003, BCEOM French Engineering Consultants promulgated an Award16 on March 1, 2005, directing DPWH to pay the Joint
recommended that DPWH promptly pay the outstanding monies due the Joint Venture its money claims plus legal interest. CIAC, however, denied the Joint
Venture.9 The letter also stated that the actual volume of the Joint Venture’s Venture’s claim for price adjustment due to the delay in the issuance of a Notice to
accomplishment was “2,732m2 of hardrock and 4,444m3 of rippable rock,” making Proceed under Presidential Decree No. 1594 or the “Policies, Guidelines, Rules, and
the project 80% complete when it was halted.10

88
Regulations for Government Infrastructure Contracts.” 17The dispositive portion of
the Award read:
WHEREFORE, premises considered and in view of the resolution of the issues
presented, an Award is hereby rendered ordering the Respondent DPWH to pay the
Claimant the following:
1. Foreign Component of US$358,227.95 plus legal interest of US$18,313.79;
2. Equipment and Plant Losses of P5,080,000, plus legal interest of
P464,298.08;
3. Additional Costs resulting from the Bombing of P6,267,410.48 plus legal
interest of P320,410.63; and
4. Additional Costs in the contract price under Clause 69.4 of P20,311,072.66
plus legal interest of [P]1,038,368.78.
The claim of Claimant for adjustment under [Presidential Decree No.] 1594 of
P18,626,805.81 is hereby denied.
Pursuant to the case of Eastern Shipping Lines v. Court of Appeals, 234 SCRA
78, the foregoing monetary awards shall earn interest at the rate of 12% per
annum from the date the Award becomes final and executor until its satisfaction.
SO ORDERED.18
_______________
15  Id., at p. 733, CIAC Award.
16  Id., at pp. 726-751.
17  Id., at pp. 741-742 (CIAC Award).
18  Id., at pp. 750-751.
 
 
408
408 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
DPWH and the Joint Venture filed their respective petitions for review before the
Court of Appeals.19
The Court of Appeals in its Decision20 dated September 20, 2007, sustained
CIAC’s Award with certain modifications and remanded the case to CIAC for the
determination of the number of days’ extension that the Joint Venture is entitled to
and “the conversion rate in pesos of the awarded foreign exchange payments
stated.”21
The Court of Appeals held that CIAC did not commit reversible error in not
awarding the price adjustment sought by the Joint Venture under Presidential Decree
No. 1594 since it was the Asian Development Bank’s Guidelines on procurement
that was applicable and not Presidential Decree No. 1594.22
The Court of Appeals also held that CIAC did not err in not awarding actual
damages in the form of interest at the rate of 24% since there was no provision for
such interest payment in the Contract. However, the Court of Appeals ruled that
CIAC was correct when it awarded legal interest.23
The Court of Appeals sustained the Joint Venture’s argument on the
noninclusion of a clear finding of its entitlement to time extensions in the dispositive
portion of the CIAC Award. 24 The Court of Appeals held that CIAC did not clearly
dispose of the matter:
Yet, a close scrutiny of the foregoing disposition shows that it does not refer to
the 133 days as per Variation Order No. 2 since CIAC made mention that the project
is already terminated and the entire volume under said
_______________
19  Id., at pp. 78-79.
20  Id., at pp. 464-480.
21  Id., at p. 480.
22  Id., at pp. 473-474.
23  Id., at pp. 474-475.
24  Id., at pp. 475-476.
 
 
409
VOL. 839, SEPTEMBER 13, 2017 409
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Order “will not be consumed.” Whether or not the Claimant then deserves to get the
full 133 calendar days is a matter that has to be clearly resolved. On this, We hold
that this Court is not prepared to engage into a technical bout that only the expertise
of the CIAC can pass upon.25
On the other hand, the Court of Appeals did not accept DPWH’s argument that
the case was already moot and academic. According to the Court of Appeals, when
the Joint Venture requested for the mutual termination of the Contract on July 8,
2004, it did not waive its right to be paid the amounts due to it.26
The Court of Appeals, however, raised a concern with regard to CIAC’s order for
DPWH to pay its liabilities in US dollars. It held that the parties have agreed that “all
payments for works carried out after 31 May 2003 and related price escalation claims
and retention releases in the contract will be in pesos only, therefore no foreign
exchange payments.” This was never contested by the Joint Venture; hence, it may
be presumed that it acquiesced to the request of the DPWH.27
The dispositive portion of the Court of Appeals’ Decision read:
WHEREFORE, premises considered, the assailed Decision is
hereby AFFIRMED with MODIFICATION to include the award to the Claimant
of time extensions per: 1) delay in payment at One Hundred Eight (108) days, and 2)
extension Twenty-Nine (29) days due to peace and order situation.
89
 Re 1) the award of time extension per Variation Order No. 2 — as stated earlier 410 SUPREME COURT REPORTS ANNOTATED
elsewhere in the
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
_______________
Joint Venture
25  Id., at p. 477. Fifth, whether or not the Joint Venture is entitled to a price adjustment due to the
26  Id., at pp. 477-478. delay of the issuance of the Notice of the Proceed;
27  Id., at p. 479. Sixth, whether or not the Asian Development Bank Guidelines on Procurement or
  Presidential Decree 1594 applies with regard to once adjustments due to the delay of
  the issuance of the Notice to Proceed;
410 Seventh, whether or not the Joint Venture is entitled to its claim for equipment
410 SUPREME COURT REPORTS ANNOTATED and financial losses due to peace and order situation (additional costs);
Eighth, whether or not the Joint Venture is entitled to actual damages and interest
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri on its claims; and
Joint Venture Finally, whether or not the Joint Venture should be paid in local currency or in
Decision, the CIAC must make a vivid presentation of the number of calendar days U.S. dollars.
the Claimant is entitled to, and 2) the conversion rate in pesos of the awarded foreign  
exchange payments states, supra, in the assailed Decision, these matters are I
hereby REMANDED to the CIAC for proper disposition. Accordingly, the rest of  
the challenged Decision STANDS. According to respondent Joint Venture, the Petition suffers from a fatal defect in
SO ORDERED.28 (Emphasis in the original) its certification against non-forum shopping. The verification and certification
  against non-forum shopping was signed only by petitioner’s counsel, Atty. Mary
Petitioner DPWH filed the present Petition for Review 29assailing the Court of Jean D. Valderama, from the Office of the Solicitor General. 33
Appeals’ Decision. In a Resolution30dated January 28, 2008, this Court required This Court has long enforced the strict procedural requirement of verification and
respondent Joint Venture to file its Comment. certification against non-forum shopping.34 It is settled that certification against
On March 27, 2008, respondent filed its comment/opposition.31 Petitioner forum shopping must be executed by the party or principal and not by
thereafter filed its Reply32 on September 3, 2008. counsel.35 In Anderson v. Ho,36 this Court explained that it is
The issues for resolution in this case are: _______________
First, whether or not the case has become moot and academic due to the parties’
mutual termination of the Construction Contract; 33  Id., at p. 461.
Second, whether or not the case is premature due to Joint Venture’s 34  Anderson v. Ho, 701 Phil. 6, 13-15; 688 SCRA 8, 15-16 (2013) [Per J. Del
noncompliance with the doctrine of exhaustion of administrative remedies; Castillo, Second Division]; Clavecilla v. Quitain, 518 Phil. 53, 62-64; 482 SCRA
Third, whether or not the Joint Venture is entitled to the foreign component of 623, 631 (2006) [Per J. Austria-Martinez, First Division].
the Project in the amount of US$358,227.95; 35  Agustin v. Cruz-Herrera, 726 Phil. 533, 542-543; 716 SCRA 42, 52-53
Fourth, whether or not the Joint Venture is entitled to time extensions due to (2014) [Per J. Reyes, First Division]; Mariveles Shipyard 
Variation Order No. 2, peace and order problems, and delay in payment;  
_______________  
412
28  Id., at pp. 479-480. 412 SUPREME COURT REPORTS ANNOTATED
29  Id., at pp. 398-463.
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
30  Id., at p. 779.
31  Id., at pp. 785-815. Joint Venture
32  Id., at pp. 823-852. the party who is in the best position to know whether he or she has filed a case before
  any courts.37 It is clear in this case that counsel for petitioner, Atty. Valderama, was
  not clothed with authority to sign on petitioner’s behalf.
410

90
 In Resolution38 dated December 10, 2007, this Court noted petitioner’s
Manifestation that after the petition was posted, the verification page signed by
DPWH Secretary Hermogenes E. Ebdane was submitted to the Office of the Solicitor
General. In the same Resolution, this Court granted the Office of the Solicitor
General’s motion to admit the attached verification and to substitute and attach it to
the petition.
This Court ruled before that: “the lack of a certification against forum shopping,
unlike that of verification, is generally not cured by its submission after the filing of
the petition.”39 Nevertheless, exceptions40 exist, as in the case at bar, and it is more
prudent to resolve the case on its merits than dismiss it on purely technical grounds.41
 
II
 
In the assailed Decision, the Court of Appeals held that the mutual termination of
the Contract by the parties did not render the case moot and academic. 42 Accordingly,
when
_______________
Corp. v. Court of Appeals, 461 Phil. 249, 263; 415 SCRA 573, 583-584 (2003)
[Per J. Quisumbing, Second Division].
36  Anderson v. Ho, supra note 34.
37  Id., at p. 14; p. 17.
38  Rollo, p. 396A.
39  Clavecilla v. Quitain, supra note 34 at p. 63; p. 632.
40  Donato v. Court of Appeals, 462 Phil. 676, 690; 417 SCRA 216, 227 (2003)
[Per J. Austria-Martinez, Second Division]; Wee v. Galvez, 479 Phil. 737; 436 SCRA
96 (2004) [Per J. Quisumbing, First Division].
41  See Diamond Taxi v. Llamas, Jr., 729 Phil. 364, 379; 719 SCRA 10, 24-25
(2014) [Per J. Brion, Second Division].
42  Rollo, pp. 477-478.
 
 
413
VOL. 839, SEPTEMBER 13, 2017 413
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
respondent requested for the mutual termination of the Contract, it did not waive its
right to be paid the amounts due to it as shown in its letter:=
In view of the above considerations, we hereby respectfully request for
MUTUAL TERMINATION of our Contract. Our availment of this remedy does not
mean though that we are waiving our rights (1) to be paid for any and all monetary
benefits due and owing to us under the contract such as but not limited to payments
for works already done, materials delivered on site which are intended solely for the
construction and completion of the project, price escalation, etc., (2) and without
prejudice to our outstanding claims and entitlements that are lawfully due to
us.43 (Emphasis supplied)
 
Petitioner argues that the Court of Appeals erred in rendering the assailed
Decision, considering that the case is already moot and academic. Petitioner insists
that “the parties’ mutual termination of their contract prior to the adjudication of this
case by the CIAC on March 1, 2005, rendered the proceedings before CIAC moot
and academic.”44
According to petitioner, the principle of unjust enrichment does not apply in this
case “because respondent has incurred negative slippage/delay in carrying out their
contractual obligations due to reasons attributable to it. Moreover, the parties’ mutual
termination of the contract rendered the proceedings before the CIAC moot because
there was no more contract to be enforced.”45
Petitioner’s argument is untenable.
_______________
43  Id., at p. 555.
44  Id., at p. 426.
45  Id., at p. 414.
 
 
414
414 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Indeed, the rule is that courts will not rule on moot cases. 46 However, the moot
and academic principle is “not a magical formula that can automatically dissuade the
courts in resolving a case.” 47 Exceptions exist that would not prevent a court from
taking cognizance of cases seemingly moot and academic.48
In Carpio v. Court of Appeals,49 this Court held that a case could not be deemed
moot and academic when there remains an unresolved justiciable controversy. In that
case, this Court affirmed the Court of Appeals’ assailed resolutions, which denied
petitioner’s prayer for dismissal based on the argument that the Sheriff’s execution
pending appeal of the trial court’s decision rendered the case moot and academic.
This Court held that:
 [I]t is obvious that there remains an unresolved justiciable controversy in the
appealed case for accion publiciana. In particular, did respondent-spouses Oria
really encroach on the land of petitioner? If they did, does he have the right to
recover possession of the property? Furthermore, without preempting the disposition
of the case for accion publiciana pending before the CA, we note that if respondents
built structures on the subject land, and if they were builders in good faith, they
would be entitled to appropriate rights under the Civil Code. This Court merely
points out that there are still issues that the CA needs to resolve in the appealed case
before it.
91
 Moreover, there are also the questions of whether respondents should be made to
pay back monthly rentals
_______________
46  Pasig Printing Corporation v. Rockland Construction Company, Inc., 726
Phil. 256, 265; 715 SCRA 466, 475-476 (2014) [Per J. Mendoza, Third Division].
47  David v. Macapagal-Arroyo, 522 Phil. 705, 754; 489 SCRA 160, 214 (2006)
[Per J. Sandoval-Gutierrez, En Banc].
48  Id.
49  705 Phil. 153; 692 SCRA 162 (2013) [Per CJ. Sereno, First Division].
 
 
415
VOL. 839, SEPTEMBER 13, 2017 415
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
for the alleged encroachment; and whether the reward of attorney’s fees, which are
also being questioned, was proper. The pronouncements of the CA on these issues
would certainly be of practical value to the parties. After all, should it find that there
was no encroachment, for instance, respondents would be entitled to substantial
relief. In view of all these considerations, it cannot be said that the main case has
become moot and academic.50(Emphasis supplied)
 
In this case, issues arising from the mutually terminated Contract are not moot
and academic. As the Court of Appeals found, there are actual substantial reliefs that
respondent is entitled to. There is a practical use or value to decide on the issues
raised by the parties despite the mutual termination of the Contract between them.
These issues include the determination of amounts payable to respondent by virtue of
the time extensions, respondent’s entitlement to price adjustments due to the delay of
the issuance of the Notice to Proceed, additional costs, actual damages, and interest
on its claims. The agreement to mutually terminate the Contract did not wipe out
petitioner’s obligation to pay respondent on works done before the Contract’s
termination on October 27, 2004.
 
III
 
According to petitioner, the filing of the claim before CIAC was premature, since
under CIAC rules, there must be an exhaustion of administrative remedies first
before government contracts are brought to it for arbitration.51
Respondent, on the other hand, denies violating the rule on exhaustion of
administrative remedies. It claims that it sent
_______________
50  Id., at p. 164; pp. 174-175.
51  Rollo, pp. 426-427.
 
 
416
416 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
at least 17 demand letters to petitioner, four (4) of which were sent to the DPWH
Secretary directly.52
Petitioner’s argument fails to convince.
The case is not premature. The pertinent provision on available administrative
remedies can be found in Sub-Clause 67(1) of the Conditions of Contract:
Settlement of Disputes
Engineer’s Decision 67(1) If a dispute of any kind whatsoever arises between the
Employer and the Contractor in connection with, or arising out of, the Contract or the
execution of the Works, whether during the execution of the Works or after their
completion and whether before or after repudiation or other termination of the
Contract, including any dispute as to any opinion, instruction, determination,
certificate or valuation of the Engineer, the matter in dispute shall, in the first place,
be referred in writing to the Engineer, with a copy to the other party. Such reference
shall state that it is made pursuant to this Clause. No later than the eighty-fourth day
after the day on which he received such reference the Engineer shall give notice of
his decision to the Employer and the Contractor. Such decision shall state that it is
made pursuant to this Clause.
Unless the Contract has already been repudiated or terminated, the Contractor shall,
in every case, continue to proceed with the Works with all due diligence and the
Contractor and the Employer shall give effect forthwith to every such decision of the
Engineer unless and until the same shall be revised, as hereinafter provided, in an
amicable settlement or an arbitral award.
If either the Employer or the Contractor be dissatisfied with any decision of the
Engineer, or if the Engineer fails to give notice of his decision on or before the
eighty-fourth day after the day on which he received the
_______________
52  Id., at pp. 793-794.
 
 
417
VOL. 839, SEPTEMBER 13, 2017 417
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
92
reference, then either the Employer or the Contractor may, on or before the
seventieth day after the day on which he received notice of such decision, or on or
before the seventieth day after the day on which the said period of 84 days expired,
as the case may be, give notice to the other party, with a copy for information to the
Engineer, of his intention to commence arbitration, as hereinafter provided, as to the
matter in dispute. Such notice shall establish the entitlement of the party giving the
same to commence arbitration, as hereinafter provided, as to such dispute and,
subject to Sub-Clause 67.4, no arbitration in respect thereof may be commenced
unless such notice is given.
If the Engineer has given notice of his decision as to a matter in dispute to the
Employer and the Contractor and no notice of intention to commence arbitration as
to such dispute has been given by either the Employer or the Contractor on or before
the seventieth day after the day on which the parties received notice as to such deci -
sion from the Engineer, the said decision shall become final and binding upon the
Employer and the Contractor.53 (Emphasis supplied)
 
Under the doctrine of exhaustion of administrative remedies, the concerned
administrative agency must be given the opportunity to decide a matter within its
jurisdiction before an action is brought before the courts, otherwise, the action will
be declared premature.54
In this case, CIAC found and correctly ruled that respondent had duly complied
with the contractual obligation to exhaust administrative remedies provided for under
_______________
53  <http://www.quantumconsult.org/wp-contentuploads/2012/01/2927771-
FIDIC-for-civil-engineeing-construction-1987.pdf>  (Accessed on September 4,
2017).
54  See University of Santo Tomas v. Sanchez, 640 Phil. 189, 194-195; 626
SCRA 126, 132 (2010) [Per J. Del Castillo, First Division].
 
 
418
418 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
subclause 67.1 of the Conditions of Contract before it brought the case before the
tribunal:
The Claimant further alleged that, despite of such knowledge, no relief from the
Secretary was forthcoming. It would therefore be an exercise in futility if Claimant,
after it had sent respondent the seventeen (17) demand letters and despite the
unequivocal admission by Respondent’s foreign consultant in charge of the project
of respondent’s liability and failure to pay (Annex C of the Complaint), will further
be required to undergo another series of presentation and exchange of
documentation. Moreover, Respondent has not indicated any practical benefit of
resending the demand to the Secretary nor any prejudice for not doing so.
In this particular contract project, the procedural requirements governing the
Settlement of Disputes is specifically provided under Clause 67 of the Conditions of
the Contract which Claimant has complied with pursuant to the first paragraph of its
letter dated September 10, 2004 (Annex R) pertinent provisions thereof is read, as
follows:
“Pursuant to the provision of Clause 67.1 of the conditions of contracts,
we are formally referring to your good office several office several [sic]
points of disagreement between the position you have taken and the position
we have argued for. These were already the subject of voluminous
correspondence between your good self and our company but no clear-cut
resolution of the issues raised was ever made.”
In the last paragraph of the letter on September 10, 2004 (Annex “R”), Claimant
has requested Respondent for a definitive ruling on the disputes which were enume-
rated therein so that Claimant could avail of the remedies given to it by the aforesaid
Clause 67.1. In spite of Claimant’s request, respondent DPWH did not act on the
same.
 
 
419
VOL. 839, SEPTEMBER 13, 2017 419
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
The evidence also disclosed that as far as delayed payments are concerned,
Claimant made various verbal and written demands for payment as evidenced by
Exhibits “E” to “E-16” or starting December 5, 2000. The demands were not
heeded.55
A total of 17 demand letters were sent to petitioner to no avail. To require
respondent to wait for the DPWH Secretary’s response while respondent continued
to suffer financially would be to condone petitioner’s avoidance of its obligations to
respondent. Hence, even assuming that subclause 67.1 was not applicable, the case
would still fall within the exceptions to the doctrine of exhaustion of administrative
remedies56 since strict application of the doctrine will be set aside when requiring it
would only be unreasonable under the circumstances. 57
 
IV
 
Petitioner avers that the Court of Appeals gravely erred in rendering the assailed
decision because it completely ignored, overlooked, or misappreciated facts of
substance, which, if duly considered, would materially affect the outcome of the
case. Petitioner argues that the present case is an exception to the rule that only
questions of law may be raised in a Petition for Review under Rule 45 of the Rules
of Court.58
93
 Before delving into the issues raised, it is imperative to understand CIAC’s role
as the arbitral tribunal at the center of this dispute.
_______________
55  Rollo, p. 735.
56  Paat v. Court of Appeals, 334 Phil. 146, 153; 266 SCRA 167, 174 (1997)
[Per J. Torres, Jr., Second Division].
57  Information Technology Foundation of the Philippines v. Commission on
Elections, 464 Phil. 173, 207; 419 SCRA 141, 163 (2004) [Per J. Panganiban, En
Banc].
58  Rollo, pp. 430-431.
 
420
420 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
CIAC was created under Executive Order No. 1008, or the “Construction
Industry Arbitration Law.” It was originally under the administrative supervision of
the Philippine Domestic Construction Board 59 which, in turn, was an implementing
agency of the Construction Industry Authority of the Philippines. 60 The Construction
Industry Authority of the Philippines is presently a part of the Department of Trade
and Industry as an attached agency.61
CIAC’s specific purpose is the “early and expeditious settlement of disputes”62 in
the construction industry as a recognition of the industry’s role in “the furtherance of
national development goals.”63
Section 4 of the Construction Industry Arbitration Law lays out CIAC’s
jurisdiction:
Section 4. Jurisdiction.—The CIAC shall have original and exclusive jurisdiction
over disputes arising from, or connected with, contracts entered into by parties
involved in construction in the Philippines, whether the dispute arises before or after
the completion of the contract, or after the abandonment or breach thereof. These
disputes may involve government or private contracts. For the Board to acquire
jurisdiction, the parties to a dispute must agree to submit the same to voluntary
arbitration.
The jurisdiction of the CIAC may include but is not limited to violation of
specifications for materials and workmanship; violation of the terms of agreement;
interpretation and/or application of contractual time and delays; maintenance and
defects; payment, default of employer or contractor and changes in contract cost.
_______________
59  Exec. Order No. 1008, Sec. 3.
60  Id., 4th Whereas Clause.
61  <http://www.dti.gov.ph/about/the-organization/attached-agencies>.
62  Exec. Order No. 1008, Sec. 2.
63  Id., 3rd Whereas Clause.
 
421
VOL. 839, SEPTEMBER 13, 2017 421
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Excluded from the coverage of this law are disputes arising from employer-
employee relationships which shall continue to be covered by the Labor Code of the
Philippines.
Republic Act No. 9184 or the “Government Procurement Reform Act,”
recognized CIAC’s competence in arbitrating over contractual disputes within the
construction industry:
Section 59. Arbitration.—Any and all disputes arising from the implementation of
a contract covered by this Act shall be submitted to arbitration in the Philippines
according to the provisions of Republic Act No. 876, otherwise known as the
“Arbitration Law”: Provided, however, That, disputes that are within the
competence of the Construction Industry Arbitration Commission to resolve shall be
referred thereto. The process of arbitration shall be incorporated as a provision in the
contract that will be executed pursuant to the provisions of this Act: Provided, That
by mutual agreement, the parties may agree in writing to resort to alternative modes
of dispute resolution. (Emphasis supplied)
 
CIAC’s authority to arbitrate construction disputes was then incorporated into the
general statutory framework on alternative dispute resolution through Republic Act
No. 9285, the “Alternative Dispute Resolution Act of 2004.” Section 34 of Republic
Act No. 9285 specifically referred to the Construction Industry Arbitration Law,
while Section 35 confirmed CIAC’s jurisdiction:
CHAPTER 6 – ARBITRATION OF CONSTRUCTION DISPUTES
 
Section 34. Arbitration of Construction Disputes: Governing Law.—The
arbitration of construction disputes shall be governed by Executive Order No. 1008,
otherwise known as the Constitution Industry Arbitration Law.
 
 
422
422 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Section 35. Coverage of the Law.—Construction disputes which fall within the
original and exclusive jurisdiction of the Construction Industry Arbitration Commis-
94
sion (the “Commission”) shall include those between or among parties to, or who are
otherwise bound by, an arbitration agreement, directly or by reference whether such
parties are project owner, contractor, subcontractor, quantity surveyor, bondsman or
issuer of an insurance policy in a construction project.
The Commission shall continue to exercise original and exclusive jurisdiction
over construction disputes although the arbitration is “commercial” pursuant to
Section 21 of this Act.
 
As a general rule, findings of fact of CIAC, a quasi-judicial tribunal which has
expertise on matters regarding the construction industry, should be respected and
upheld. In National Housing Authority v. First United Constructors Corp.,64 this
Court held that CIAC’s factual findings, as affirmed by the Court of Appeals, will
not be overturned except as to the most compelling of reasons:
As this finding of fact by the CIAC was affirmed by the Court of Appeals, and it
being apparent that the CIAC arrived at said finding after a thorough consideration of
the evidence presented by both parties, the same may no longer be reviewed by this
Court. The all too familiar rule is that the Court will not, in a petition for review on
certiorari, entertain matters factual in nature, save for the most compelling and
cogent reasons, like when such factual findings were drawn from a vacuum or
arbitrarily reached, or are grounded entirely on speculation or conjectures, are
conflicting or are premised on the supposed evidence and contradicted by the
evidence on record or when the inference made is manifestly mistaken or absurd.
This conclusion is made
_______________
64  672 Phil. 621; 657 SCRA 175 (2011) [Per J. Perez, Second Division].
 
 
423
VOL. 839, SEPTEMBER 13, 2017 423
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
more compelling by the fact that the CIAC is a quasi-judicial body whose
jurisdiction is confined to construction disputes. Indeed, settled is the rule that
findings of fact of administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only respect, but finality when affirmed by the Court of
Appeals.65 (Emphasis supplied)
 
In distinguishing between commercial arbitration, voluntary arbitration under
Article 219(14) of the Labor Code,66 and construction arbitration, Freuhauf
Electronics Philippines Corporation v. Technology Electronics Assembly and
Management Pacific67 ruled that commercial arbitral tribunals are purely ad
hoc bodies operating through contractual consent, hence, they are not quasi-judicial
agencies. In contrast, voluntary arbitration under the Labor Code and construction
arbitration derive their authority from statute in recognition of the public interest
inherent in their respective spheres. Furthermore, voluntary arbitration under the
Labor Code and construction arbitration exist independently of the will of the
contracting parties:
_______________
65  Id., at p. 658; pp. 210-211.
66  Labor Code, Art. 212(14) provides:
Article 212. Definitions.—
. . . .
14. “Voluntary Arbitrator” means any person accredited by the Board as such
or any person named or designated in the Collective Bargaining Agreement by the
parties to act as their Voluntary Arbitrator, or one chosen with or without the
assistance of the National Conciliation and Mediation Board, pursuant to a selection
procedure agreed upon in the Collective Bargaining Agreement, or any official that
may be authorized by the Secretary of Labor and Employment to act as Voluntary
Arbitrator upon the written request and agreement of the parties to a labor dispute.
67  G.R. No. 204197, November 23, 2016, 810 SCRA 280.
 
 
424
424 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Voluntary Arbitrators resolve labor disputes and grievances arising from the
interpretation of Collective Bargaining Agreements. These disputes were specifically
excluded from the coverage of both the Arbitration Law and the ADR Law.
Unlike purely commercial relationships, the relationship between capital and
labor are heavily impressed with public interest. Because of this, Voluntary Arbit-
rators authorized to resolve labor disputes have been clothed with quasi-judicial
authority.
On the other hand, commercial relationships covered by our commercial
arbitration laws are purely private and contractual in nature. Unlike labor
relationships, they do not possess the same compelling state interest that would
justify state interference into the autonomy of contracts. Hence, commercial
arbitration is a purely private system of adjudication facilitated by private citizens
instead of government instrumentalities wielding quasi-judicial powers.
Moreover, judicial or quasi-judicial jurisdiction cannot be conferred upon a
tribunal by the parties alone. The Labor Code itself confers subject-matter
jurisdiction to Voluntary Arbitrators.
Notably, the other arbitration body listed in Rule 43 — the Construction Industry
Arbitration Commission (CIAC) — is also a government agency attached to the
Department of Trade and Industry. Its jurisdiction is likewise conferred by statute.
95
By contrast, the subject matter jurisdiction of commercial arbitrators is stipulated by
the parties.68 (Emphasis supplied)
 
V 73  Id., at p. 434.
Petitioner argues that respondent is not entitled to US$358,227.95, as the foreign
component of the Contract, because it is not yet legally demandable. 69 In declaring
that
_______________
68  Id., at pp. 307-308.
69  Rollo, pp. 431-435.
 
 
425
VOL. 839, SEPTEMBER 13, 2017 425
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
petitioner should pay the amount as the foreign component of the project, CIAC held
that petitioner did not deny said amount in its answer and that respondent’s failure to
renew its Letter of Credit does not justify petitioner’s act in withholding the dollar
component of the project.70
Petitioner maintains that the delay in payment was due to the negative slippage
incurred by respondent and its failure to renew its Letter of Credit. Petitioner argues
that under Clause 60.11 of the Conditions of the Contract, Part II, an irrevocable
standby letter of credit is required before petitioner can release the advance
payment.71 Petitioner states:
In this case, respondent does not deny that its LC No. OIDS-00022-00027-0
issued by the United Coconut Planters Bank (UCPB) expired on October 15,
2003. Petitioner reminded respondent several times on the imperative need for the
renewal of its LC to avoid delay in the processing of its billing. The purpose of said
LC is to guarantee the return of the advance payment by petitioner to respondent.72
Hence, petitioner claims that respondent cannot compel the payment of the
foreign component of the Contract because it did not comply with the letter of credit
requirement. Moreover, petitioner asserts that “In directing petitioner to pay the said
award to respondent without the latter posting the said letter of credit, the CIAC and
the Court of Appeals effectively amended the stipulation thereon in the contract
which is legally impermissible.”73
For respondent’s part, it argues that it was impossible to renew the Letter of
Credit. It explained that banks refused the renewal of the Letter of Credit since the
original contract
_______________
70  Id., at pp. 738-739.
71  Id., at pp. 432-433.
72  Id., at pp. 433-434.
 
426
426 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
period had already expired and petitioner did not act on respondent’s requests for
extension.74 In addition, evidence shows that “the main reason of the nonpayment of
dollar component was due to unresolved issues, the right-of-way acquisition problem
between ADB and the [government], wherein ADB was forced to suspend the loan
disbursement for the entire 6th Road Improvement Project effective 1 June 2003 due
to this conflict.”75 Nevertheless, respondent admitted that the mutual termination of
the Contract rendered the requirement of a Letter of Credit for the release of the
$358,227.95 moot and academic.76
This Court affirms the findings of CIAC and the Court of Appeals that
respondent is entitled to the foreign component of the Contract.
CIAC found that petitioner was not justified in withholding the payment for the
dollar component of the Contract. 77 Further, it found that respondent was justified
and not at fault for not reviewing the Letter of Credit. It held that:
The Arbitral Tribunal is persuaded that the main reason for the nonpayment of
the dollar component was due to the unresolved issues (right-of-way acquisition)
between the ADB and the Government of the Philippines where the Loan
Disbursement was suspended by ADB for the 6th Road Improvement Project
effective 01 June 2003 . . . The foreign Consultant even admonished Respondent
DPWH and reiterated that it should take prompt action to effect payment of
outstanding monies due, and nothing was ever mentioned of the failure to renew the
Letter of Credit. (Paragraph 3.2 of Affidavit by Ferdinand Mariano)
_______________
74  Id., at p. 798.
75  Id.
76  Id., at pp. 798-799.
77  Id., at p. 738.
 
 
427
VOL. 839, SEPTEMBER 13, 2017 427
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
96
 Moreover, Claimant explained to the Respondent why the Letter of credit could
not be renewed in its letter of 01 and 15 March 2004 (Exh. “C-16” and “C-17”). It
appears that one of the bank’s requirements for issuance of the Letter of Credit was
the approved time extension and the extension of the contract, but Respondent
refused to issue any document extending the contract.
On the other hand, the Respondent’s justification was only based on its
accounting requirement. It asserted that the LC guaranteed the advance payment as
well as the work completion. It further stated that the LC was a requirement by the
funding bank. (By Subair S. Diron, paragraph 3.1.1 of Joint Affidavit by Heinz
Reister, Diron and Pandapatan)78 (Emphasis supplied)
 
In National Housing Authority v. First United Constructors Corp.,79 this Court
held that the respondent contractor was entitled to the payment of its claims, as the
non-posting of the required Payment Guarantee Bond was due to the inaction of
petitioner National Housing Authority:
Petitioner’s subsequent refusal to process and pay these claims despite FUCC’s
willingness to submit a surety bond to secure the balance of the advance payment
still to be recouped by NHA — as the parties had agreed upon — which bond would
be submitted when the check payment for the claim is about to be released, clearly
constitutes a violation by NHA of FUCC’s right to be paid these acknowledged and
recognized claims. Thus, respondent had an accrued cause of action against
petitioner for these claims at the time it filed its Complaint, the constitutive elements
of which are clearly set forth therein.80 (Emphasis supplied)
_______________
78  Id., at p. 739.
79  National Housing Authority v. First United Constructors
Corporation, supra note 64.
80  Id., at p. 653; p. 205.
 
 
428
428 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
In the present case, the renewal of the Letter of Credit hinged on the extension of
the contract period. Despite notice by respondent of the bank’s requirement for the
renewal of the Letter of Credit, petitioner chose to ignore respondent’s requests for
time extensions. Therefore, petitioner cannot shift the blame to respondent and claim
that the Letter of Credit was a condition sine qua non for the payment of the dollar
component of the project.
 
VI
 
Petitioner also assails the findings of the Court of Appeals with regard to the time
extensions respondent is entitled to. Petitioner argues that both the CIAC and the
Court of Appeals failed to consider the subsequent payments made to respondent
after the conclusion of the arbitration hearings. Thus, the tribunal’s finding that
petitioner still owes respondent US$358,227.95 is factually erroneous.
Petitioner claims that “respondent failed to prove that it is entitled to the time
extensions of: (1) 133 calendar days in addition to the 144 calendar days previously
agreed by the parties, and (2) 108 calendar days due to delayed payments.”81
On the other hand, respondent argues that it is entitled to time extensions in
addition to the 144 calendar days granted to it under Variation Order No.
2.82 Respondent claims it is entitled to a total of 277 calendar days based on the
approved revised Project Evaluation Review Tracking Critical Path Method (PERT-
CPM) diagram and S-Curve.83As explained by witness Engr. Reyes, rock excavation
requires special skills, equipment, and explosives. These factors were not considered
when the original contract schedule was prepared. 84
_______________
81  Rollo, p. 435.
82  Id., at pp. 799-801.
83  Id., at p. 800.
84  Id.
 
 
429
VOL. 839, SEPTEMBER 13, 2017 429
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Respondent further claims that it is entitled to another time extension due to the
delay in payment. Respondent maintains that it infused more than double the 10%
credit line amounting to P157,747,945.00.85 Respondent also claims that it had
already mobilized working and state-of-the-art equipment.86
The DPWH Bureau of Construction evaluated respondent’s request for time
extension and recommended its approval to the Secretary. 87 However, the
recommendation was withdrawn “on the pretext that said DPWH guidelines for
computation of time extension due to delayed payments [were] revised and
modified.”88
Respondent points out that petitioner, through Engr. Pierre Castelli, had
acknowledged that the delayed payment had greatly affected respondent’s cash
flow.89
Respondent likewise asserts that it is entitled to a time extension due to peace
and order problems. Petitioner did not object to respondent’s entitlement to an
extension due to the peace and order situation. Hence, the only thing required is to
determine the number of calendar days’ extension respondent is entitled to based on
the circumstances.90
97
 Chief Resident Engineer Andre Drockur of BCEOM French Engineering
Consultant recommended a time extension of 29 calendar days due to the peace and
order situation. While respondent did not agree with the consultant’s recommen-
dation, it still adopted such recommendation to expedite the computation of time
extension due to peace and order problems.91
_______________
85  Id., at p. 801.
86  Id., at p. 802.
87  Id.
88  Id.
89  Id., at p. 803.
90  Id., at pp. 803-805.
91  Id., at p. 805.
 
 
430
430 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
According to CIAC, respondent was entitled to time extensions in addition to the
144-calendar day extension agreed upon by the parties, as per Variation Order No. 2:
The Arbitral tribunal finds that the computation presented by the Claimant based
form the approved revised PERT/CPM and S-Curve is acceptable and the 277
calendar days should have been granted by the Respondent or an additional of 133
calendar days. However, the project is now terminated. The actual accomplishment
as per letter of [Chief Resident Engineer] to DPWH dated September 18, 2003 shows
that the actual volume of accomplishment was only 2,732 m2 of hardrock an 4,444
m3 of rippable rock. Thus, the entire volume under Change Order #2 [or Variation
Order No. 2] will not be consumed as the work is no 80% complete[.] 92
 
The Court of Appeals affirmed that respondent was entitled to a 133-day time
extension in addition to the 144 calendar days under Variation Order No.
2.93 However, the Court of Appeals noted that CIAC did not specify whether
respondent was entitled to the full 133 days extension, considering that it found that
the entire volume in Variation Order No. 2 will not be fully used up due to
respondent’s 80% accomplishment.94
CIAC also held that respondent was entitled to a time extension of 108 calendar
days due to petitioner’s delayed payments95 and another time extension of 29
calendar days due to the peace and order situation in the project area.96
This Court sees no reason to deviate from the findings of both CIAC and the
Court of Appeals with regard to respondent’s entitlement to time extensions: 1)
under Variation
_______________
92  Id., at p. 740.
93  Id., at p. 477.
94  Id., at pp. 476-477.
95  Id., at pp. 740-741.
96  Id., at p. 741.
 
431
VOL. 839, SEPTEMBER 13, 2017 431
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Order No. 2; 2) due to the delay in payment; and 3) due to the peace and order
situation, since these are supported by the evidence on record.
To reiterate, findings of fact of administrative agencies and quasi-judicial bodies
are entitled to great respect and even finality when affirmed by the appellate
court.97 In this case, the Court of Appeals found that respondent was entitled to the
time extensions as evaluated by CIAC, the agency tasked to resolve issues regarding
the construction industry. Both tribunal found that respondent was entitled to the
extensions due to petitioner’s delayed payments, peace and order situation, and
Variation Order No. 2. These findings are clearly supported by the facts on record.
However, in light of the mutual termination of the Contract, the remand of the
case to CIAC will serve no practical purpose and is, therefore, unnecessary.
 
VII
 
According to respondent the delay in the issuance of the Notice to Proceed
entitles it to a price adjustment under Presidential Decree No. 1594. Bidding was
conducted in January 1998 and respondent was declared the winning bidder. The
Contract was signed on April 29, 1999. However, the Notice to Proceed was issued
on May 5, 1999, or after a delay of more than 120 days from the bidding date, which
entitles the bidder to an adjustment in the contract unit price under Presidential
Decree No. 1594.98
On the other hand, petitioner claims that respondent did not question the findings
of the Court of Appeals regarding price adjustment and claim for actual damages.
Hence, it
_______________
97  See Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and Surety
Corporation, 695 Phil. 169, 194; 681 SCRA 44, 66-67 (2012) [Per J.Mendoza, En
Banc].
98  Rollo, pp. 806-807.
 
 
432
98
432 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
should not be allowed to assail the Court of Appeals’ ruling on this issue before this
Court.99
Both CIAC and the Court of Appeals found that respondent was not entitled to a
price adjustment:
As to the first issue raised by the Claimant, this Court finds that the CIAC
committed no reversible error in not awarding the price adjustment being sought by
the Claimant under P.D. 1594, finding as flawed its claim based on the alleged
DPWH’s delay in the issuance of the notice to proceed.
We quote with approval the pertinent ratiocination of the CIAC on this point,
thus:
. . . .
However, the Claimant is not entitled to a price adjustment under P.D.
1594 because it is the ADB Guideline[s] on Procurement which should be
followed, and not the provisions on P.D. 1594. In fact the bid of the
Contractor was awarded despite its being above the approved Agency
Estimates (AAE), based on the ADB guidelines, and against the provisions of
P.D. 1594 (paragraph 7.2 of Joint Affidavit by Heinz Reister, Diron and
Pandapatan).
The Arbitral Tribunal finds that the Guidelines of the Asian Development
Bank govern this subject Project. Moreover, P.D. 1594 honors the treaties
and international or executive agreements to which the Philippine
Government is a signatory. Loan agreements such as those entered into with
international funding institutions like ADB are considered to be within the
ambit of DOJ opinion No. 46, S. 1987 and are therefore exempt from the
application of P.D. No. 1594 as amended
_______________
99  Id., at pp. 845-848.
 
 
433
VOL. 839, SEPTEMBER 13, 2017 433
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
(paragraph 7.1.1 of Joint Affidavit by Heinz Reister, Diron and Pandapatan).
. . . .
If the Claimant’s bid was awarded despite its being above the approved Agency
Estimates based on the ADB guidelines, and against the provisions of P.D. 1594, We
cannot see the rationale on why the Claimant now refuses to abide by the ADB
guidelines on procurement. After the claimant was benefited by the approved bid at
the inception of the project, We hold that it is unjustified for the Claimant not to be
bound by the ADB guidelines under the pretext that it fails to get the supposed price
adjustment.100 (Emphasis supplied)
 
While respondent did not appeal the Court of Appeals’ ruling with regard to its
entitlement to a price adjustment under Presidential Decree No. 1594, for purposes of
clarity and to finally settle the matter, this Court affirms the findings of CIAC and
the Court of Appeals.
This Court has held that a foreign loan agreement with international financial
institutions, such as a multilateral lending agency organized by governments like the
Asian Development Bank, is an executive or international agreement contemplated
by our government procurement system.101
In Abaya v. Ebdane, Jr.,102 this Court upheld the applicability of the Japan Bank
for International Cooperation’s Procurement Guidelines to the implementation of the
projects to be undertaken pursuant to the loan agreement between the
_______________
100  Id., at pp. 473-474.
101  Department of Budget and Management Procurement Service v. Kolonwel
Trading, 551 Phil. 1030, 1049; 524 SCRA 591, 608 (2007) [Per J. Garcia, En Banc].
This case applied the provisions of Rep. Act No. 9184 or the Government
Procurement Reform Act which came into effect in 2003.
102  544 Phil. 645; 515 SCRA 720 (2007) [Per J. Callejo, Sr., Third Division].
 
 
434
434 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Republic of the Philippines and Japan Bank for International Cooperation. 103
While the Implementing Rules and Regulations104 of Presidential Decree No.
1594 provides the formula for price adjustment in case of delay in the issuance of a
notice to proceed, the law does not proscribe parties from making certain contractual
stipulations. In this case, the Construction Contract is clear that in case of price
adjustments, Clause 70 of the Conditions of Contract will apply:
It is unclear from the records, however, whether the Asian Development Bank
Guidelines was substantially the same as Clause 70 of the Conditions of Contract.
Nevertheless, as in
_______________
103  Id., at p. 687; pp. 761-762.
104  IB 10.10 – ISSUANCE OF NOTICE TO PROCEED
1. The concerned government office/agency/corporation should issue the
Notice to Proceed (NTP) to the successful bidder not later than fifteen (15) calendar
99
days from the date of approval of the contract by the concerned/authorized
government official. The effectivity date of the NTP shall be specified by the agency
concerned.
2. For projects whereby the Notice to Proceed (NTP) is issued after 120
calendar days from the bidding date, the awarded bidder may request for a contract
unit price adjustment using the parametric formulae updated to the month of the
NTP. Computation of the unit price adjustment shall be the original contract unit
price multiplied by the fluctuation factor K without deducting the 5%. Such updated
unit prices shall be used as basis for computing the regular progress billings, and
price escalation for work accomplishment shall be calculated using the parametric
formulae herein prescribed as applied to the updated unit prices reckoned from the
month of the NTP. Adjustment of unit prices shall be made within fourteen (14)
calendar days from the date the required indices are available/issued by the
appropriate govemment agency.
3. That computation and payment of contract prices adjustment will be applied
in accordance with Clause 70 of the Conditions of Contract.105
105  Rollo, p. 482.
 
 
435
VOL. 839, SEPTEMBER 13, 2017 435
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
the Abaya case, it should be the guidelines that the parties have agreed upon, i.e., the
Asian Development Bank Guidelines, that should govern in case of issues arising
from the contract. Respondent failed to proffer evidence on what the Asian
Development Bank Guidelines provide, if any, in the event of a delay in the issuance
of a Notice to Proceed.
 
VIII
 
Petitioner argues that “CIAC and the Court of Appeals grossly erred in awarding
P5,080,000.00, plus legal interest of P464,298.08 for the alleged equipment and
financial losses; and additional cost resulting from the alleged bombing incident of
P6,267,410.48, plus legal interest of P320,410.63.”106
Furthermore, petitioner asserts that “the award to respondent of additional costs
in the contract price under Clause 69.4 of the General Conditions of the Contract in
the amount of P20,311,072.66, plus legal interest of P1,038,368.78 is
improper.”107 Petitioner maintains that the award to respondent of additional costs in
the contract price under Clause 69.4 of the General Conditions of Contract was
baseless, since the Engineer had not yet consulted with the parties to determine the
amount of additional costs.108
In contrast, respondent claims that it is entitled to equipment and financial losses
due to the peace and order situation.109
Petitioner’s arguments are untenable.
It has been sufficiently established that a peace and order problem arose at the
project site:
_______________
106  Id., at p. 442.
107  Id., at p. 447.
108  Id., at pp. 449-450.
109  Id., at p. 807.
 
 
436
436 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
The Arbitral Tribunal was persuaded by the fact that six (6) named persons and
four (4) John Does were accused of Destructive Arson in the Municipal Circuit Trial
Court of Dumalinao Zamboanga del Sur for feloniously setting on fire
simultaneously one (1) unit of Kumatsu Payloader amounting to Php3,000,000.00
and one (1) unit Isuzu 10 Wheeler Dump Truck amounting to Php800,000.00, both
belonging to the Claimant. The accused are believed NP’s with motives of hatred due
to vain collection of revolutionary taxes from Claimant (Exh. “C-5”).
The burning of the Payloader and Dump Truck, subject of the criminal case
(Exh. “C-5’’) was corroborated in its entirety by the testimony of Pedrito G.
Palancos, operator of the burnt Payloader in his affidavit, paragraph 6.6 to 6.9, part
of the Records of this case.
The Chief of Police of Kumalarang, Zamboanga del Sur submitted a Special
Written Report to the PNP Provincial Director, regarding the bombing at Claimant’s
hatching plant in Boyugan, Kumalarang, del Sur on 11 March 2003.
The bombing incident revealed that it resulted in conflagration causing damage
to the Generator Set, Caterpillar Brand KVA 180-180 and the Conveyor, with total
estimated cost of Php7,300,000.00.
Intelligence Action Agent gathered information that MILF Members, all armed
with undetermined numbers, but believed to be under Commander Susob Edris, were
sighted by the barangayofficials and the neighbor of the Plant location, when the
incident occurred (Exh. “C-9”).
The two incidents described above, one costing approximately Php3,800,000.00
and the other costing approximately Php7,300,000.00, will have a total of
approximately Php11,100,000.00 or Php11,347,410.48 to be exact. This is the
amount that Claimant is entitled due to the peace and order situation at the Project
site.110
_______________
110  Id., at pp. 742-743.
100
  
 
437
VOL. 839, SEPTEMBER 13, 2017 437
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
This Court finds that CIAC and the Court of Appeals did not err when they found
that respondent was entitled to its claim for equipment and financial losses. The
situation was an assumed risk of petitioner as employer and is, thus, compensable
under Clause 20.4 of the Conditions of Contract, which lists the Employer’s risks as:
 (a) war, hostilities (whether war be declared or not), invasion, act of foreign
enemies,
 (b) rebellion, revolution, insurrection, or military or usurped power, or civil war,
 (c) ionising radiations, or contamination by radio-activity from any nuclear fuel, or
from any nuclear waste from the combustion of nuclear fuel, radio active toxic
explosive, or other hazardous properties of any explosive nuclear assembly or
nuclear component thereof,
 (d) pressure waves caused by aircraft or other aerial devices travelling at sonic or
supersonic speeds,
(e) riot, commotion or disorder, unless solely restricted to employees of the
Contractor or of his Subcontractors and arising from the conduct of the Works,
(f) loss or damage due to the use or occupation by the Employer of any Section or
part of the Permanent Works, except as may be provided for in the Contract,
(g) loss or damage to the extent that it is due to the design of the Works, other any
part of the design provided by the Contractor or for which the Contractor is
responsible,
(h) any operation of the forces of nature against which an experienced contractor
could not reasonably have been expected to take precautions.111 (Emphasis supplied)
_______________
111  Id., at p. 530. See <http://www.quantumconsult.org/wp-content/
uploads/2012/01/2927771-FIDIC-for-civil-engineeing-construction-1987.pdf> (last
accessed on September 4, 2017).
 
 
438
438 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
It is clear from the above provision that the assumed risks of the employer under
Clause 20.4 of the Conditions of Contract include rebellion, revolution, insurrection,
or military or usurped power, or civil war.
Petitioner further insists that respondent is not yet entitled to the claim because
there is no determination by the Engineer of the costs incurred, as required under
Clause 69.4 of the Conditions of Contract.112
In its Answer before CIAC, petitioner denied respondent’s claims for additional
costs under Clause 69.4. Petitioner stated that its denial will be explained more
specifically in its Affirmative Defenses:
6. DENIES the allegations in paragraphs 12, 13, 14, 15 and 16 of the complaint for
being preposterous, misleading and patently without legal and factual basis, the truth
being that as per the Conditions of Contract, complainant is not entitled to the
payment of additional cost on slowdown or suspension of work on the project, reim-
bursement for alleged equipment losses and additional time extensions to complete
the project specifically stated/discussed in the Affirmative Defenses
hereof.113 (Emphasis supplied)
 
However, a perusal of petitioner’s Affirmative Defenses reveals that no such
qualification was made.
Under Rule 8, Section 10 of the Rules of Court, the “defendant must specify each
material allegation of fact the truth of which he does not admit and, whenever
practicable, shall set forth the substance of the matters upon which he relies to
support his denial.” There are three (3) modes of specific denial provided for under
the Rules:
_______________
112  Id., at pp. 449-450.
113  Id., at p. 503.
 
 
439
VOL. 839, SEPTEMBER 13, 2017 439
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
1) by specifying each material allegation of the fact in the complaint, the truth of
which the defendant does not admit, and whenever practicable, setting forth the
substance of the matters which he will rely upon to support his denial; (2) by
specifying so much of an averment in the complaint as is true and material and
denying only the remainder; (3) by stating that the defendant is without knowledge
or information sufficient to form a belief as to the truth of a material averment in the
complaint, which has the effect of a denial.114
In Aquintey v. Spouses Tibong,115 this Court held that using “specifically” in a
general denial does not automatically convert that general denial to a specific one.
The denial in the answer must be definite as to what is admitted and what is denied,
such that the adverse party will not have to resort to guesswork over “what is
101
admitted, what is denied, and what is covered by denials of knowledge as sufficient
to form a belief.”116
The petitioner only tackled the issue on the claim for additional costs in the Joint
Affidavit of petitioner’s witnesses Heinz Reister, Subair S. Diron, and Abdulfatak A.
Pandapatan:
Issue No. 9. Is claimant entitled to additional cost under Clause 69.4 of the General
Conditions of Contract? If so, how much?
Subair S. Diron and Abdulfatak A. Pandapatan testifying:
9.1 Q: Is claimant entitled to additional cost/charges under Clause 69.4 of the
General Conditions of Contract?
A: Not yet, the claimant should establish that it is allowed. 117
_______________
114  Philippine Bank of Communications v. Go, 658 Phil. 43, 57; 642 SCRA
693, 707 (2011) [Per J. Mendoza, Second Division].
115  540 Phil. 422; 511 SCRA 414 (2006) [Per J. Callejo, Sr., First Division].
116  Id., at p. 441; p. 433.
117  Rollo, p. 579.
 
 
440
440 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
This Court finds that petitioner failed to specifically deny the claims of
respondent and had, therefore, admitted such claims. This Court agrees that
respondent was able to establish its claims before the CIAC. This Court notes that
the project was in Mindanao, and mobilization of workers and equipment is not an
easy feat and not without cost. Respondent believed that the suspension would only
be temporary and work could resume at any time once petitioner settled its
obligation. Petitioner must compensate respondent for the costs it incurred without
any fault on respondent’s part.
IX
During the arbitration hearing before the CIAC, respondent itself admitted that
there was no provision in the Conditions of Contract for interest at the rate of
24% per annum on delayed payments.118
Respondent tries to excuse the lack of contractual stipulations by claiming that
the amount of 24% interest is payment for actual damages and not stipulated
interest.119
Respondent claims that petitioner is liable for the amounts respondent owes its
creditors in the total amounts of P10,297,090.42 and USD$118,094.93. In addition,
respondent avers that petitioner should pay it 6% interest per annum computed from
the receipt of the first demand letter for payment sent by respondent, as a result of
delay in the payment for work accomplished.120
The Court is not convinced.
It is fundamental that a contract is the law between the parties and, absent any
showing that its provisions are wholly
_______________
118  Id., at p. 747.
119  Id., at p. 813.
120  Id.
 
 
441
VOL. 839, SEPTEMBER 13, 2017 441
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
or in part contrary to law, morals, good customs, public order, or public policy, it
shall be enforced to the letter by the courts.121
Respondent was not able to establish the basis of its claim that it is entitled to an
award of 24% interest. Moreover, as found by the Court of Appeals and CIAC, the
parties had agreed to delete the provision on interest on delayed payments, since the
project was funded by the Asian Development Bank.122
There is also no basis to award respondent 24% interest as actual damages for the
additional expenses it incurred due to petitioner’s delayed payments.
Before actual damages may be awarded, it is imperative that the claimant proves
its claims first. The issue on the amount of actual or compensatory damages is a
question of fact,123 and except as provided by law or by stipulation, one is entitled to
adequate compensation only for pecuniary loss duly proven.124
In this case, respondent has not sufficiently shown how awarding it 24%
interest per annum on delayed payments corresponds to the actual damages it
allegedly suffered. Respondent failed to show a causal relation between the alleged
losses and the injury it suffered from petitioner’s actions.
X
Respondent claims that it should be paid in U.S. dollars as specified in the
Contract.125 It argues that the present case is
_______________
121  Stronghold Insurance Company, Incorporated v. Interpacific Container
Services, 762 Phil. 483, 491; 761 SCRA 210, 218-219 (2015) [Per J. Perez, First
Division].
122  Rollo, pp. 474-475.
102
 123  City of Dagupan v. Maramba, 738 Phil. 71, 96; 728 SCRA 520, 547 (2014)
[Per J. Leonen, Third Division].
124  Civil Code, Art. 2199.
125  Id., at pp. 813-814.
 
442
442 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
an exception to the general rule that obligations should be paid in Philippine
currency.126
The Court of Appeals held that the parties subsequently agreed that payments
made after March 31, 2003 shall be in pesos only:
However, one aspect in the CIAC’s decision is shrouded with cloud. This
concerns CIAC’s order to DPWH to pay its alleged liability to the Claimant in US
dollars. It is worthy to note that aside from the agreement of the parties —
particularly in paragraph 5 of the contract, supra, to fix the exchange rate at P34.9
for every US$1.00, the Claimant itself has acknowledged in its request that it was
advised by the DPWH per its letter dated 13 August 2003 that all payments for
works earned out after 31 March 2003 and related price escalation claims and
retention releases in the contract will be in pesos only, therefore no foreign
exchange payments. This fact was never contested by the Claimant thereby creating a
presumption that it has acquiesced to the request of the DPWH. Thus, We cannot see
Our way through on why the CIAC has still to make a ruling on the Interest
Computation of Delayed Payment at 6% Per Annum at US$45,206.14 as well as the
Foreign Component of US$358,227.95 plus legal interest at US$18,313.79 citing the
exemption of transactions where the funds involved are the proceeds of loans or
investments made through bona fide intermediaries or agents, by foreign government
and banking institutions such as the Asian Development Bank (ADB) from the
coverage of Republic Act 529 otherwise known a[s] “An Act to Assure Uniform
Value to Philippine Coin and Currency.” Worse, there was no mention about the
subsequent notice by the DPWH to the Claimant, supra, about their subsequent
understanding on “no foreign exchange payments.” This is indeed one dubious area
that needs to be clarified by no less than the CIAC itself.127 (Emphasis supplied)
_______________
126  Id., at p. 814.
127  Id., at pp. 478-479 (Court of Appeals Decision).
 
 
443
VOL. 839, SEPTEMBER 13, 2017 443
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Again, considering that respondent did not appeal the Court of Appeals’
decision, the appellate court’s ruling on this issue is deemed final as to respondent,
and there is no need to remand this issue to the CIAC. Issues not raised on appeal are
already final and cannot be disturbed.128
XI
 
CIAC imposed legal interest in its Award as follows:
In view of the foregoing, the Claimant is entitled to payment of legal interest of
6% per annum from the receipt of its extrajudicial demand.
Thus, under Issue No. 3 where the Claimant was awarded US$358,227.95, the
Claimant is entitled to legal interest of 6% per annum commencing from 2 March
2004 up to this date (or 311 days) in the amount of US$18,313.79.
Under Issue No. 8 where the Claimant was awarded P11,347,410.48, the
Claimant is entitled to legal interest of 6% per annum for the Equipment and Plant of
P5,080,000.00 commencing from 1 July 2003 (or 556 days) in the amount of
P464,298.08 and for the resulting Additional Expenses of P6,267,410.48
commencing from 2 March 2004 (or 311 days) in the amount of P320,410.63.
Under Issue No. 9 where the Claimant was awarded P20,311,072.66, the
Claimant is entitled to legal interest of 6% per annum for Additional Cost under 69.4
of the Conditions of Contract commencing from 2 March 2004 (or 311 days) in the
amount of P1,038,368.78.
Under Issue No. 10 with respect to the delayed payment of billings for various
amounts and on various dates, the Claimant is entitled to legal interest of 6% per 
_______________
128  See A.C. Ransom Labor Union-CCLU v. National Labor Relations
Commission, 226 Phil. 199, 204; 142 SCRA 269, 272 (1986) [Per J.Melencio-
Herrera, First Division].
444
444 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
annum as detailed in Attachment 1, in the amount of US$45,206.14 and
P2,175,516.63.
However, pursuant to the Eastern Shipping Lines v. Court of Appeals, 234 SCRA
78 (1994), a monetary award shall earn interest at the rate of 12% per annum from
the date when the award becomes final and executory until its satisfaction.129
 
On May 16, 2013, the Monetary Board of the Bangko Sentral ng Pilipinas issued
Resolution No. 796, which revised the interest rate to be imposed on the loan or
103
forbearance of any money, goods, or credits. This was implemented in Bangko
Sentral ng Pilipinas Circular No.799130 Series of 2013, which reads:
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the
following revisions governing the rate of interest in the absence of stipulation in loan
contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:
Section 1. The rate of interest for the loan or forbearance of any money, goods
or credits and the rate allowed in judgments, in the absence of an express
contract as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1, 43058.3 and 4303P.1 of the
Manual of Regulations for Non-Bank Financial Institutions are hereby amended
accordingly.
This Circular shall take effect on 1 July 2013.
_______________
129  Rollo, p. 749.
130  The subject of Bangko Sentral ng Pilipinas Circular No. 799 dated June 21,
2013 is the “[r]ate of interest in the absence of stipulation.”
 
 
445
VOL. 839, SEPTEMBER 13, 2017 445
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
Nacar v. Gallery Frames131 then laid down the guidelines for the imposition of
legal interest:
To recapitulate and for future guidance, the guidelines laid down in the case
of Eastern Shipping Lines are accordingly modified to embody BSP-MB Circular
No. 799, as follows:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on “Damages” of the Civil Code govern in
determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that which
may have been stipulated in writing. Furthermore, the interest due shall itself
earn legal interest from the time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 6% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached,
an interest on the amount of damages awarded may be imposed at the discretion
of the court at the rate of 6% per annum. No interest, however, shall be adjudged
on unliquidated claims or damages, except when or until the demand can be
established with reasonable certainty. Accordingly, where the demand is
_______________
131  Nacar v. Gallery Frames, 716 Phil. 267; 703 SCRA 439 (2013)
[Per J. Peralta, En Banc].
 
 
446
446 SUPREME COURT REPORTS ANNOTATED
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
established with reasonable certainty, the interest shall begin to run from the time
the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when
such certainty cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the judgment of the court
is made (at which time the quantification of damages may be deemed to have
been reasonably ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to a
forbearance of credit.
And, in addition to the above judgments that have become final and executory
prior to July 1, 2013, shall not be disturbed and shall continue to be implemented
applying the rate of interest fixed therein.132
 
Before Nacar and Bangko Sentral ng Pilipinas-Monetary Board Resolution No.
796 dated May 16, 2013, the rate of legal interest was pegged at 12% per annumfrom
finality of judgment until its satisfaction, “this interim period being deemed to be by
then an equivalent to a forbearance of credit.”133
With this Court’s pronouncement in Nacar, the rate of interest imposed should
be modified. The monetary awards, as computed by the CIAC, should earn legal
interest at the rate of 12% per annum until June 30, 2013, after which, it shall earn
legal interest at the rate of 6% per annum until full satisfaction.
_______________
132  Id., at pp. 281-283; pp. 457-458.
133  See Eastern Shipping Lines, Inc. v. Court of Appeals, 304 Phil. 236, 254;
234 SCRA 78, 97 (1994) [Per J. Vitug, En Banc].
104
  
 
447
VOL. 839, SEPTEMBER 13, 2017 447
Department of Public Works and Highways vs. CMC/Monark/Pacific/Hi-Tri
Joint Venture
The other issues raised by the parties were no longer discussed due to the mutual
termination of the Contract by parties, which rendered them moot and academic.
WHEREFORE, the Petition is DENIED. The Court of Appeals’ Decision dated
September 20, 2007 in C.A.-G.R. S.P. Nos. 88953 and 88911 is AFFIRMED with
MODIFICATIONS as follows: (1) that the order remanding the case to the
Construction Industry Arbitration Commission for proper disposition
is REVERSED for being moot and academic; and (2) that the legal interest rate is
pegged at twelve percent (12%) per annum until June 30, 2013, and then at six
percent (6%) per annum until full satisfaction.
SO ORDERED.
Velasco, Jr. (Chairperson), Bersamin, Martires andGesmundo, JJ., concur.
Petition denied, judgment affirmed with modifications.
Notes.—It has been repeatedly emphasized that in the case of natural persons,
the certification against forum shopping must be signed by the principal parties
themselves and not by the attorney. (Agustin vs. Cruz-Herrera, 716 SCRA 42
[2014])
Where the plaintiffs or petitioners share a common interest and invoke a common
cause of action or defense — the rule requiring all such plaintiffs or petitioners to
sign the certification against forum shopping may be relaxed. (Fernandez vs.
Villegas, 733 SCRA 548 [2014])
 
——o0o——

105