OCEANIC BIC DIVISION (FFW), PABLITO ORDANOSO, PETITIONERS, VS. FLERIDA RUTH P. ROMERO AS VOLUNTARY ARBITRATOR, OCEANIC BIC MANUFACTURING, AND GLICERIO LEDESMA, RESPONDENTS.

Oceanic BIC Division versus Romero

The Case

This is a petition for review on certiorari brought by the Oceanic BIC Division of the Federation of Free Workers and its member Pablito Ordanoso against the voluntary arbitrator Flerida Ruth P. Romero, the company Oceanic BIC Manufacturing, and its production manager Glicerio Ledesma. The petitioners ask the Supreme Court to reverse the arbitrator's award upholding the dismissal of Ordanoso without a written clearance from the Secretary of Labor. The case matters because it settles two things a labor lawyer must know: that voluntary arbitration awards are not absolutely beyond judicial review, and that the clearance requirement under Presidential Decree Number 21 protects only regular employees with at least one year of service, not probationary workers.

Procedural History

The union and Ordanoso first sought a grievance conference with management, which failed to produce an amicable settlement. They then filed a complaint with the National Labor Relations Commission of the Department of Labor, charging unfair labor practice, unjust dismissal, violation of the collective bargaining agreement, and violation of Presidential Decree Number 21 and its implementing rules. The case was referred back to the parties for exhaustion of the grievance procedure under the collective bargaining agreement. The parties later agreed to submit the dispute to a voluntary arbitrator, who after hearing issued a decision upholding the company's actions. From that award, the petitioners came to the Supreme Court on a petition for review on certiorari.

Facts

Pablito Ordanoso entered into a six-month contract of temporary employment with the respondent corporation from October 3, 1973 to April 3, 1974. The contract stipulated that the company had the right to separate him at any time within the period should his services not be satisfactory. When that contract expired, he entered into a second six-month contract, this time as a probationary worker, from April 4, 1974 to October 4, 1974, with a note advising him to improve his performance.

The company conducted periodic performance ratings through group leaders, considering cooperation, attendance, quality of work, skill, initiative, leadership, obedience, and intelligence, for purposes of conversion from probationary to regular permanent employment. Ordanoso's first rating was described as just passing, and later ratings showed unsatisfactory performance. He was given memoranda to improve, including one warning him of his low average performance.

On October 3, 1974, Ledesma terminated Ordanoso's services because of his below average performance rating. The union protested and the dispute eventually reached the voluntary arbitrator, who ruled that the dismissal was not unfair labor practice, not a violation of the collective bargaining agreement, and not a violation of Presidential Decree Number 21, because Ordanoso was not covered by the written clearance requirement.

Issues

• Whether or not the Supreme Court may review a voluntary arbitration award despite statutory provisions making such awards final.
• Whether or not the dismissal of Ordanoso without a written clearance from the Secretary of Labor was valid under Presidential Decree Number 21 and its Implementing Instructions.

Applicable Provisions

Section 11 of Presidential Decree Number 21 provides:

No employers may shut down his establishment or dismiss or terminate the services of regular employees with at least one year of service without the written clearance of the Secretary of Labor.

This is the core provision whose scope the Court had to fix, since the clearance requirement turns on whether the employee is regular and has served at least one year.

Section 1 of Implementing Instructions Number 1 provides:

Every employer shall secure a written prior clearance from the Secretary of Labor for any of the following cases irrespective of whether the employer complies with the requirements of existing laws on the service of notice terminating the services of an employee and the payment of severance pay: (a) All dismissals, with or without just cause, of regular employees with at least one (1) year of service; (d) Any termination of employment, suspension or lay-off not otherwise covered by Section 3 of these instructions.

This defines when prior clearance is mandatory and confines it to regular employees with at least one year of service.

Section 3 of the same Implementing Instructions provides:

Every employer shall submit a report in the form and manner prescribed by this issuance on the following termination of employment, suspension, lay-off or shutdown which may be effected by the employer without the prior clearance of the Secretary of Labor: (b) All dismissals, suspensions, or lay-offs of employees with less than one (1) year of service;

This shows that for employees with less than one year of service, only a report, not a prior clearance, is required.

Ruling

On the first issue, the Court held that voluntary arbitration awards, while entitled to the highest respect and a measure of finality, are not beyond judicial review. The statutory rule making such awards final and inappealable refers to appeals to the National Labor Relations Commission, not to judicial review. A voluntary arbitrator acts in a quasi-judicial capacity, and there is no reason why her decisions involving interpretation of law should escape the Court's review, especially where want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law is shown.

On the second issue, the Court held that Ordanoso was not a regular employee but a probationary employee when his services were terminated. Under the definition in the Implementing Instructions, a regular employee is one with an aggregate service of at least twelve months for the last two consecutive years prior to the proposed termination. Ordanoso did not meet this definition, so he was not covered by the written clearance requirement. Neither was he covered by the report requirement, which applies to employees with less than one year of service, since he had slightly more than one year. The Court acknowledged a gap in the regulations and said such a gap should generally be resolved in favor of the dismissed worker, but in this case the poor job performance of Ordanoso was documented, and the employer did not act arbitrarily or wrongly in finding his performance below the required ratings.

Doctrine

First, voluntary arbitration awards are final and inappealable only as to appeals to the National Labor Relations Commission; they remain subject to judicial review on questions of law and jurisdiction, and for grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law. Second, the written clearance requirement under Presidential Decree Number 21 applies only to regular employees with at least one year of service, as defined in the Implementing Instructions, meaning an aggregate service of at least twelve months for the last two consecutive years prior to termination. A probationary employee may be terminated at the end of the agreed period for unsatisfactory performance without prior clearance.

Disposition

The petition was dismissed and the decision of the voluntary arbitrator upholding Ordanoso's dismissal was affirmed.

Remember This

The one line to memorize: a voluntary arbitration award is final only against appeal to the labor commission, never against judicial review on a question of law. Examiners use this case to test the scope of judicial review over arbitration awards and the meaning of regular employee under the old clearance law.