Teng v. Pahagac: “Where Congress has not clearly required exhaustion, sound judicial discretion governs, guided by congressional intent.” Quid hoc sibi vult? *

*

Francis V. Sobreviñas**

It has been said that the test of a good voluntary arbitration award is its unqualified acceptance by the parties to the case. Acceptance can be inferred when no appeal is taken by either party during the prescribed period of ten (10) calendar days from the release of the decision of the Voluntary Arbitrator (VA).This also means that both the complainant and respondent agree to comply with the terms of the award without waiting for the coercive persuasion of a writ of execution. Unfortunately, not all the parties abide by the VA’s decision even if they have so stipulated in the Submission Agreement[1] and notwithstanding that Article 262-A of the Labor Code appears to place the decision of the VA beyond the reach of judicial authority when it states that the decision or award of a VA shall be final and executory after 10 days from receipt thereof by the parties. In several landmark cases like Oceanic Bic Division (FFW) v. Romero[2] and Mantrade/FMMC Division Employees & Workers Union v. Bacungan,[3] however, the Supreme Court held that –

“Inspite of statutory provisions making ‘final’ the decisions of certain administrative agencies, we have taken cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law were brought to our attention.”[4]

Prior to 1995, the mode of appeal from the decision of the VA was generally through a petition for certiorari under Rule 65 of the Rules of Court. But by virtue of the ruling in Luzon Development Bank v. Association of Luzon Development Bank Employees,[5] the Court ordained that the Court of Appeals (CA) had concurrent jurisdiction over an appeal from such decision. Hence, a petition questioning the decision or award of a VA was remanded to the CA for proper disposition. Pursuant to the 1997 Rules of Civil Procedure, the award, judgment, final order or resolution of a VA is appealable to the CA through a petition for review under Rule 43.

With the great advancements made in the field of communications and information technology, today’s VA realizes the urgency to keep abreast of recent developments in labor relations law and jurisprudence. Indeed, one of his responsibilities is to maintain and upgrade the professional standards of the profession by being up to date with principles, practices and developments that are relevant to the field of arbitration practice. To inform and aid our colleagues in the performance of their duties as practitioners and advocates of voluntary arbitration, this paper will examine a case decided only last November 17, 2010 that tackled the issue of procedure in voluntary arbitration.

On February 17, 2003, the Secretary of Labor and Employment signed Department Order No. 40-03 (DO 40-03), Series of 2003. Published in the March 1, 2003 issue of Today, this particular issuance, which amends the Implementing Rules of Book V of the Labor Code of the Philippines, took effect on March 15, 2003.[6] Section 7, Rule XIX of DO 40-03 provides for the finality of the award or decision of the VA, to wit:

“Section 7. Finality of Award/Decision. – The decision, order, resolution or award of the voluntary arbitrator or panel of voluntary arbitrators shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties and it shall not be subject of a motion for reconsideration.”

On March 7, 2005, the Secretary approved the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings. Published on July 4, 2005 in the National Administrative Register, said guidelines took effect on July 19, 2005.[7]

We find the following provisions in Rule VII of the Revised Guideline:

“Section 6. Finality of Decision. – The decision of the Voluntary Arbitrator shall be final and executory after ten (10) calendar days from receipt of the copy of the decision by the parties.

Section 7. Motions for Reconsideration. – The decision of the Voluntary Arbitrator is not subject of a motion for reconsideration.”

From the time that DO 40-03 and the Revised Guidelines took effect, the procedure invariably followed by a party aggrieved by the decision of a VA was to forego the filing of a motion for reconsideration and proceed, instead, to the CA on a Petition for Review on Certiorari under Rule 43 of the Rules of Court.

In one case[8] decided following the issuance of DO 40-03 and the Revised Guidelines, the CA acknowledged that “Section 7, Rule XIX of Department Order No. 40-03, Series of 2003 is explicit that the decision of a voluntary arbitrator cannot be the subject of a motion for reconsideration.”  Much later, the appellate court, in Malayan Insurance Company, Inc. v. Malayan Employees Association-Federation of Free Workers (FFW),[9] was called upon to make a distinction between a motion for clarification and a motion for reconsideration filed with the VA and, in the process, ruled that while the former pleading is permissible the latter is proscribed for being a prohibited pleading. Thus said the second highest court of the land:

“MICI next argues that the motion for clarification filed by the union is in the nature of a motion for reconsideration, which is a prohibited pleading under the Implementing Rules of the Labor Code. It insists that the union should have brought a petition for review to question the voluntary arbitrator (sic) decision.

The argument is untenable. A reading of the entirety of Department Order NO. 40-03 fails to show that a clarification is not a prohibited pleading. What is expressly barred is the filing of a motion for reconsideration. Section 7, Article XIX of D.O. No. 40-03 is explicit, to wit:

“Section 7. Finality of Award/Decision. – The Decision, order, resolution or award of the voluntary arbitrator or panel of voluntary arbitrators, shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties and it shall not be subject of a motion for reconsideration.

          A motion seeking reconsideration is intent on setting aside or modifying the entirety or a portion of a decision. On the other hand, a clarificatory motion is filed when ‘in the opinion of the party, a decision appears to be ambiguous and difficult to comply with, he may ask for its clarification so as to satisfy himself that he is implementing the decision correctly.’

This remedy is available to a party before or after judgment has become final and executory.

An examination of the motion for clarification shows that it is not in the nature of a motion for reconsideration. The union was only asking whether it is entitled to premium pay following the finding that Section 2, Article IX of the CBA had been violated when MICI employees were required to work on August 25 and 26, 2004. Its motion did not seek to modify substantially the holdings of the voluntary arbitrator but only to remove what it saw as an unclear aspect of the decision’s fallo.[10]

In the very recent case of Teng v. Pahagac,[11]  the VA rendered a decision declaring that no employer-employee relationship existed between the petitioner and the respondents. The respondents received the VA’s decision on June 12, 2003. They filed a motion for reconsideration, which was denied on July 8, 2003. The VA reasoned out that Section 6, Rule VII of the 1989 Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings (1989 Procedural Guidelines) does not provide the remedy of a motion for reconsideration to the party adversely affected by the Voluntary Arbitrator’s order or decision. According to the VA, an award or decision of the VA becomes final and executory after ten (10) calendar days from receipt of copies of the award or decision by the parties.[12]

On July 21, 2003, the respondents elevated the case to the CA.[13] In its decision of September 21, 2004, the CA reversed the VA’s decision after finding sufficient evidence showing the existence of employer-employee relationship.

The petitioner moved to reconsider the CA’s decision, but the latter denied the motion. He, thereafter, filed a Petition for Review on Certiorari[14] with the Supreme Court alleging, inter alia, that the VA’s decision is not subject to a motion for reconsideration. Before the highest court of the land, Teng contended that the VA’s decision is not subject to a motion for reconsideration in the absence of any specific provision allowing this recourse under Article 262-A of the Labor Code. He cited the 1989 Procedural Guidelines which, as the VA declared, do not provide the remedy of a motion for reconsideration. Petitioner claimed that after the lapse of 10 days from his receipt, the VA’s decision becomes final and executory unless an appeal is taken. He likewise argued that when the respondents received the VA’s decision on June 12, 2003, they had only 10 days, or until June 22, 2003, to file an appeal. Therefore, as respondents opted instead to move for reconsideration, the 10-day period to appeal continued to run. Hence, the VA’s decision had already become final and executory by the time respondents assailed it before the CA on July 21, 2003.

Our Supreme Court[15] denied the petition for lack of merit, deciding that petitioner’s allegation that the VA’s decision had become final and executory by the time the respondents filed an appeal with the CA was erroneous. Consequently, it held that the respondents seasonably filed a motion for reconsideration of the VA’s decision and the VA erred in denying the said motion on the ground that no motion for reconsideration is allowed. In finding for the respondents, the Court emphasized that Article 262-A does not preclude the filing of a motion for reconsideration of the VA’s decision.[16]  Initially expressing surprise that neither the VA nor petitioner cited DO 40-03 and the 2005 Procedural Guidelines as authorities for their cause “considering that these were the governing rules while the case was pending and these directly and fully supported their theory”, the Court thereafter quickly affirmed that “(h)ad they done so, their reliance on the provisions would have nevertheless been unavailing for reasons we shall now discuss.”

And discuss the Supreme Court did the importance of filing a motion for reconsideration as “the more appropriate remedy in line with the doctrine of exhaustion of administrative remedies.”

Significantly, the Court announced that Article 262-A of the Labor Code does not prohibit the filing of a motion for reconsideration. As a matter of fact, it asserted that in a number of decisions promulgated earlier, the filing of such a motion was allowed. In the Court’s own words:

“Article 262-A of the Labor Code does not prohibit the filing of a motion for reconsideration.

On March 21, 1989, Republic Act No. 6715 took effect, amending, among others, Article 263 of the Labor Code which was originally worded as:

Art. 263 x x x Voluntary arbitration awards or decisions shall be final, unappealable, and executory.

As amended, Article 263 is now Article 262-A, which states:

Art. 262-A. x x x [T]he award or decision x x x 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.

Notably, Article 262-A deleted the word “unappealable” from Article 263. The deliberate selection of the language in the amendatory act differing from that of the original act indicates that the legislature intended a change in the law, and the court should endeavor to give effect to such intent. We recognized the intent of the change of phraseology in Imperial Textile Mills, Inc. v. Sampang,[17] where we ruled that:

It is true that the present rule [Art. 262-A] makes the voluntary arbitration award final and executory after ten calendar days from receipt of the copy of the award or decision by the parties. Presumably, the decision may still be reconsidered by the Voluntary Arbitrator on the

basis of a motion for reconsideration duly filed during that period.

In Coca-Cola Bottlers Phil., Inc., Sales Force Union-PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc.[18], we likewise ruled that the VA’s decision may still be reconsidered on the basis of a motion for reconsideration seasonably filed within 10 days from receipt thereof. The seasonable filing of a motion for reconsideration is a mandatory requirement to forestall the finality of such decision. We further cited the 1989 Procedural Guidelines which implemented Article 262-A, viz:

[U]nder Section 6, Rule VII of the same guidelines implementing Article 262-A of the Labor Code, this Decision, as a matter of course, would become final and executory after ten (10) calendar days from receipt of copies of the decision by the parties x x x unless, in the meantime, a motion for reconsideration or a petition for review to the Court of Appeals under Rule 43 of the Rules of Court is filed within the same 10-day period.

These rulings fully establish that the absence of a categorical language in Article 262-A does not preclude the filing of a motion for reconsideration of the VA’s decision within the 10-day period. Teng’s allegation that the VA’s decision had become final and executory by the time the respondent workers filed an appeal with the CA thus fails. We consequently rule that the respondent workers seasonably filed a motion for reconsideration of the VA’s judgment, and the VA erred in denying the motion because no motion for reconsideration is allowed.”

Then the Court continued to analyze the motion for reconsideration as an essential element of the doctrine of exhaustion of administrative remedies, thus:

“By allowing a 10-day period, the obvious intent of Congress in amending Article 263 to Article 262-A is to provide an opportunity for the party adversely affected by the VA’s decision to seek recourse via a motion for reconsideration or a petition for review under Rule 43 of the Rules of Court filed with the CA. Indeed, a motion for reconsideration is the more appropriate remedy in line with the doctrine of exhaustion of administrative remedies. For this reason, an appeal from administrative agencies to the CA via Rule 43 of the Rules of Court requires exhaustion of available remedies as a condition precedent to a petition under that Rule.

The requirement that administrative remedies be exhausted is based on the doctrine that in providing for a remedy before an administrative agency, every opportunity must be given to the agency to resolve the matter and to exhaust all opportunities for a resolution under the given remedy before bringing an action in, or resorting to, the courts of justice. Where Congress has not clearly required exhaustion, sound judicial discretion governs, guided by congressional intent.”[19]

The Tribunal likewise emphasized that in the exercise of its power to promulgate implementing rules and regulations, an implementing agency, such as the Department of Labor and Employment, is restricted from going beyond the terms of the law it seeks to implement; it should neither modify nor improve the law. The agency formulating the rules and guidelines cannot exceed the statutory authority granted to it by the legislature. For this reason:

“By disallowing reconsideration of the VA’s decision, Section 7, Rule XIX of DO 40-03 and Section 7 of the 2005 Procedural Guidelines went directly against the legislative intent behind Article 262-A of the Labor Code. These rules deny the VA the chance to correct himself and compel the courts of justice to prematurely intervene with the action of an administrative agency entrusted with the adjudication of controversies coming under its special knowledge, training and specific field of expertise. In this era of clogged court dockets, the need for specialized administrative agencies with the special knowledge, experience and capability to hear and determine promptly disputes on technical matters or intricate questions of facts, subject to judicial review, is indispensable. In Industrial Enterprises, Inc. v. Court of Appeals,[20] we ruled that relief must first be obtained in an administrative proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court.”

As already seen, the petitioner in Teng[21] boldly and forcefully maintained that the VA’s decision is not subject to a motion for reconsideration in the absence of any specific provision allowing this recourse under Article 262-A of the Labor Code. And even more critically, the Court itself conceded that DO 40-03 and the Revised Procedural Guidelines are the authorities for petitioner’s cause in the legal dispute. In other words, an actual controversy calling for the exercise of judicial power was brought up in this case. Now then, while a pronouncement was made that the agency formulating the rules and guidelines cannot exceed the statutory authority granted to it by the legislature and that the filing of a motion for reconsideration of the VA’s decision is a “condition precedent” to the institution of a petition for certiorari with the CA via Rule 43 to challenge the VA’s ruling, the Court did not declare the said rules unlawful or illegal albeit a question concerning the validity thereof was squarely  raised before it.

The writer submits that a clear and categorical statement should have been made by the Court that the rules in question are invalid. This is so because it recognized at once that petitioner invoked said rules and sought the determination of their legality. Had it done so, the Court, by tradition and in our system of judicial administration, would doubtless have provided guidance and enlightenment to everyone, nay, stability in the law which is eminently to be desired. The view that definitive action ought to have been taken because it is indispensable for an effective and expeditious administration of justice can better be appreciated if we note that under DO 40-03, there is an analogous rule in respect of certification election cases, stating  that  the decision of the Secretary of Labor and Employment shall be final and executory after ten (10) days from receipt thereof by the parties and that it shall not be subject of a motion for reconsideration. The parallel provision reads as follows:

“Section 21. Decision of the Secretary. – the Secretary shall have fifteen (15) days from receipt of the entire records of the petition within which to decide the appeal. The filing of the memorandum of appeal from the order or decision of the Med-Arbiter stays the holding of any certification election.

The decision of the Secretary shall become final and executory after ten (10) days from receipt thereof by the parties. No motion for reconsideration of the decision shall be entertained.[22]

In the case of Chris Garments Corporation v. Sto. Tomas,[23] the Supreme Court recognized the validity of the aforequoted rule contained in DO 40-03, which prohibits the filing of a motion for reconsideration. The Court stated:

“Under Department Order No. 40-03, Series of 2003, the decision of the Secretary of Labor and Employment shall be final and executory after ten days from receipt thereof by the parties and that it shall not be subject of a motion for reconsideration.

In this case, the Decision dated January 18, 2005 of the Secretary of Labor and Employment was received by petitioner on January 25, 2005. It would have become final and executory on February 4, 2005, the tenth day from petitioner’s receipt of the decision. However, petitioner   filed a petition for certiorari with  the  Court of Appeals on even date. Clearly, petitioner availed [itself] of the   proper  remedy  since  Department  Order  No. 40-03 explicitly prohibits the filing of a motion for reconsideration. Such motion becomes dispensable and not at all necessary.”[24]

Based on the foregoing, the first question that comes to mind is what effect will the Teng doctrine, prohibiting the filing of a motion for reconsideration, have on the extant Section 21, Rule VIII, of DO 40-03 which was upheld in Chris Garments Corporation?  How should a VA react when, upon receipt of his decision, the aggrieved party submits a motion for reconsideration? What stance will he assume when the prevailing party, in opposition to the motion for reconsideration, interposes the argument that in both the cases of Imperial Textile Mills[25] and Coca-Cola Bottlers Phil., Inc. Sales Force Union-PTGWO-Balais[26], the Court simply stated that the VA’s decision “MAY” still be reconsidered on the basis of a motion for reconsideration filed within ten (10) days from receipt thereof? What is he to make of the assertion that Article 262-A does not authorize the filing of any motion for reconsideration of the VA’s decision and that even the Court itself admitted in Teng  “the absence of a categorical language in Article 262-A” providing for the filing of such a motion?

By way of conclusion, it is of paramount importance not only to VAs and advocates of voluntary arbitration, in particular, but also the public, in general, that the rule on the filing of a motion for reconsideration before going to the CA be settled absolutely and completely as all laws and regulations “relate to the people in general albeit there are some that do not apply to them directly”[27]. As a matter of public policy and sound practice, this rule should be decisively determined to avoid confusion between and among the parties to a labor controversy. For this reason, it is recommended, therefore, that Congress take the appropriate legislative action by enacting a law that would make the language of Article 262-A of the Labor Code more clear and precise in relation to the filing of a motion for reconsideration of the VA’s decision. For its part, the Department of Labor and Employment may take a closer look at DO 40-03 and the Revised Guidelines to make them hew closely to current statutes, decisional laws or jurisprudential policies.  Finally, we can hope that the Supreme Court, as the final arbiter of all legal disputes, will reconcile conflicting judicial decisions or abrogate outdated ones by a contrary but specific and unambiguous ruling depending on the facts and circumstances involved.[28]

 



* What does this mean?

** Managing Partner, Sobreviñas Hayudini Navarro & San Juan; B.S., Ateneo de Manila University; LL.B, University of the Philippines; LL.M, Northwestern University. The author is past president of the Philippine Association on Voluntary Arbitration, a practicing lawyer and professorial lecturer in the UP College of Law.

[1] Under Rule II, Section 1 (i) of the 2005 Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings, “Submission Agreement — refers to a written agreement by the parties submitting their case for arbitration containing the issues, the chosen arbitrator and stipulation to abide by and comply with the resolution including the cost of arbitration.”

[2] 130 SCRA 392 [1984].

[3] 144 SCRA 510 [1986].

[4] Note 2, supra., at 399.

[5] 249 SCRA 162 [1995].

[6] Article III of Rule XXVI of DO 40-03 states that “(t)he foregoing rules shall take effect two weeks after completion of publication in one (1) newspaper of general circulation.”

[7] Vol. 16, No. 1, January-March 2005. Under Rule X, Section 1 of the Revised Procedural Guidelines, the rules “shall take effect 15 days after their publication in one (1) newspaper of general circulation.”

[8] Malayan Insurance Company, Inc. v. Malayan Employees Association-Federation of Free Workers, CA-G.R. SP No. 85093, October 4, 2005.

[9] CA-G.R. SP No. 89328, November 27, 2006.

[10] Underlining supplied; bold text in original decision. For the layman, a motion for reconsideration, referred to as MR, for short, is a pleading whereby the movant asks the court to revisit its decision which, in his view, is not supported by the facts, the law, or the evidence with a view to having it modified or reversed. The movant usually has 10-15 days from notice of the decision to file his motion. Failing that, the decision will become final and executory. (Khan, Everybody’s Dictionary of Philippine Law 145 [2007])

[11] G.R. No. 169704, November 17, 2010.

[12] E.O. No. 126, as amended by E.O. No. 251, and Articles 260-262 (b) of the Labor Code, as amended by R.A. 6715.

[13] Pursuant to Rule 43, Rules of Court.

[14] Under Rule 45, Rules of Court.

[15] Third Division.

[16] Art. 262-A provides:

ARTICLE 262-A. Procedures. – The Voluntary Arbitrator or Panel of Voluntary Arbitrators shall have the power to hold hearings, receive evidence 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. Hearings 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 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.”

[17] 219 SCRA 651 (1993).

[18] 464 SCRA 507 (2005).

[19] Emphasis supplied.

[20] 184 SCRA 426 (1990).

[21] Note 11, supra.

[22] Rule VIII, underlining supplied.

[23] 576 SCRA 13 (2009).

[24] At 19-20, underlining supplied. Under existing jurisprudence, a party aggrieved by the decision of the Secretary of Labor and Employment can go up to the Court Appeals. This was the ruling in National Federation of Labor v. Laguesma, 304 SCRA 405, 419-420 (1999), where the Supreme Court made this pronouncement:

“In fine, we find that it is procedurally feasible as well as practicable that petitions for certiorari under Rule 65 against the decisions of the Secretary of Labor rendered under the Labor Code and its implementing and related rules be filed initially in the Court of Appeals. Paramount consideration is strict observance of the doctrine on the hierarchy of courts, emphasized in St. Martin Funeral Homes v. NLRC, on ‘the judicial policy that this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify availment of a remedy within and calling for the exercise of our primary jurisdiction.’”

[25] Note 12, supra.

[26] Note 13, supra.

[27] Tañada v. Tuvera, 146 SCRA 446, 453 (1986).

[28] Under Article VIII, Section 4 (3) of the Constitution, “no doctrine or principle of law laid down by the court in a decision rendered en banc or in decision may be modified or reversed except by the court sitting en banc.Teng was decided by the Third Division of the Supreme Court. On the other hand, Chris Garments Corp. was decided by the Second Division.

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