The Inadmissibility of Privileged Communication in Conciliation Proceedings: Absque Ulla Conditione
Francis V. Sobreviñas*
In the 2007 Bar Examinations in Labor Law, the following questions were asked:
“How sacrosanct are statements/data made at conciliation proceedings in the Department of Labor and Employment? What is the philosophy behind your answer?”
The foregoing questions were answered by our Supreme Court, initially, in the twin cases of Nissan Motors Philippines, Inc. v. Secretary of Labor and Employment and Bagong Nagkakaisang Lakas sa Nissan Motors NMPI-OLALIA-KMU v. Court of Appeals[1] and, subsequently, in the very recent case of Pentagon Steel Corp. v. Court of Appeals decided only last June 26, 2009.[2]
In those two labor cases, the highest court of the land had occasion to apply and interpret Article 233 of the Labor Code which prohibits the use in evidence of confidential information given during conciliation proceedings. The said statutory provision reads as follows:
The petitioner in Nissan Motors assailed the ruling of the Court of Appeals insofar as it affirmed, among others, the award by the Secretary of Labor and Employment of certain economic benefits to the Company’s rank-and-file workers. While the Supreme Court found to be proper the grant of such benefits as transportation allowance, 14th month pay, seniority pay, separation pay and the effectivity of the new collective bargaining agreement (CBA), it modified the annual salary increases for the reason that the award was based on confidential information given in the course of conciliation proceedings.
According to the Court:
The doctrine enunciated in Nissan Motors was further distilled in Pentagon Steel Corp.[5], another labor case, where the petitioner imputed grave abuse of discretion against the Court of Appeals in basing its decision on the proceedings that transpired when the parties were negotiating for a compromise agreement during the preliminary conference of the case. More particularly, the petitioner contended that the Court of Appeals cannot use the parties’ actions and/or agreements during the negotiations for a compromise agreement as basis for the conclusion that the respondent was illegally dismissed because an offer of compromise is not admissible in evidence under Section 27, Rule 130 of the Rules of Court.
The High Court agreed with the petitioner but for a different reason. Speaking through Mr. Justice Arturo D. Brion, the Tribunal held that the appellate court erred not so much because it admitted an offer of compromise in violation of Section 27, Rule 130 of the Rules of Court but because it ignored the clear mandate of Article 233 of the Labor Code.[6]
Thus said the Court:
In the present case, we find that the CA did indeed consider the statements the parties made during conciliation; thus, the CA erred by considering excluded materials in arriving at its conclusion. x x x”[7]
It then continued to mention the two-fold justification for the exclusionary rule, thus:
Second, offers for compromise are irrelevant because they are not intended as admissions by the parties making them. A true offer of compromise does not, in legal contemplation, involve an admission on the part of a defendant that he or she is legally liable, or on the part of a plaintiff, that his or her claim is groundless or even doubtful, since it is made with a view to avoid controversy and save the expense of litigation. It is the distinguishing mark of an offer of compromise that it is made tentatively, hypothetically, and in contemplation of mutual concessions.
While we agree with the petitioner that the CA should not have considered the agreements and/or statements made by the parties during the conciliation proceedings, the CA’s conclusion on illegal dismissal, however, was not grounded solely on the parties’ statements during conciliation, but was amply supported by other evidence on record, x x x. Based on these other pieces of evidence, the respondent was illegally dismissed; hence, our ruling regarding the statement made during conciliation has no effect at all on our final conclusion.”
It is noteworthy that under the Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings, the voluntary arbitrator must treat all significant aspects of the conciliation proceedings as confidential in nature unless confidentiality is waived by the parties.[8]And pursuant to the Code of Professional Responsibility for Accredited Voluntary Arbitrators of Labor Management Disputes, the voluntary arbitrator may conciliate or mediate to aid the parties in reaching a voluntary settlement of the dispute but he shall treat all significant aspects of an arbitration proceeding with absolute confidentiality, unless this requirement is waived by both parties.[9]
It is submitted that the two recent cases of Nissan Motors and Pentagon Steel are of sufficient significance as they throw light upon a very important aspect in the realm of labor law, particularly the treatment of privileged communication in conciliation, mediation and voluntary arbitration. Indeed, it cannot be gainsaid that voluntary arbitrators, while in the exercise of the creative role that their function demands, will find guidance in the aforementioned rulings.
To be accepted by the parties, the decision of the voluntary arbitrator must be in accordance with law. This means that the quasi-judicial officer who obtains statements/data from the parties in the course of conducting conciliation and/or mediation conferences should treat them as confidential information.[10] When the parties accept the decision, not resentfully, but cordially and willingly, the process of voluntary arbitration as a distinct, effective and superior alternative to other means of resolving labor disputes will be boosted all the more.
*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.
[1] 491 SCRA 604 [2006]. The case involved a labor dispute triggered by a collective bargaining deadlock between Nissan Motors and the union resulting in the filing of several notices of strike with the National Conciliation & Mediation Board (NCMB) involving a mix of economic and non-economic issues. The Secretary of Labor and Employment assumed jurisdiction over the dispute and proceeded to rule, inter alia, on the CBA deadlock
[2] G.R. No. 174141, June 26, 2009.
[3] Emphasis supplied.
[4] Note 1, supra., at 626-627.
[5] Note 2, supra.
[6] Section 27, Rule 130 of the Rules of Court states, in paragraph 1 thereof, that “[i]n civil cases, an offer of compromise is not an admission of any liability, and is not admissible in evidence against the offeror.” As a rule, an offer of compromise in a civil case is not a tacit admission of liability and cannot be proven over the objection of the offeror, unless such offer is clearly not only to “buy peace” but amounts to an admission of liability, the offered compromise being directed only to the amount to be paid (see El Varadero de Manila v. Insular Lumber Co., 46 Phil. 176 [1924]).
[7] Note 2, supra., italics in original decision.
[8] Rule VI, Section 2. The Revised Procedural Guidelines were signed by the Secretary of Labor and Employment on March 7, 2005, published in the ONAR, UP Law Center, Vol. 16 (January-March 2005), and released on July 4, 2005.
[9] Paragraph III, sub-paragraphs 2 and 3. See Basic Documents on Voluntary Arbitration of Labor-Management Disputes 2-6, NCMB [2006 Revised Edition].
[10] In the leading case of Luzon Development Bank v. Association of Luzon Development Bank Employees, 249 SCRA 162, 169, 171 [1995], the Supreme Court declared that a voluntary arbitrator is comprehended within the concept of a “quasi-judicial instrumentality.” He performs a state function pursuant to a governmental power delegated to him under the provisions therefor in the Labor Code. In effect, this equates the award or decision of the Voluntary Arbitrator with that of the Regional Trial Court.
