SIME DARBY PILIPINAS, INC., PETITIONERS, VS. DEPUTY ADMINISTRATOR BUENAVENTURA C. MAGSALIN AS VOLUNTARY ARBITRATOR AND THE SIME DARBY EMPLOYEES ASSOCIATION, RESPONDENTS.

The Petition for Certiorari
before us assails the award of Voluntary Arbitrator Buenaventura Magsalin dated 17 August 1989 which directed petitioner Sime Darby Pilipinas, Inc. (Sime Darby) to pay the members of private respondent Sime Darby Employees Association (SDEA) a performance bonus equivalent to seventy-five
percent (75%) of their monthly basic pay for the year 1988-1989.

On 13 June
1989, petitioner Sime Darby and private respondent SDEA executed a Collective Bargaining Agreement (CBA) providing, among others, that:

“Article X, Section 1. 
A performance bonus shall be granted, the amount of which [is] to be
determined by the Company depending on the return of [sic] capital investment
as reflected in the annual financial statement.”

On 31 July 1989,
the Sime Darby Salaried Employees Association-ALU
(SDSEA-ALU) wrote petitioner demanding the implementation of a provision
identical to the above contained in their own CBA with petitioner.  Subsequently, petitioner called both
respondent SDEA and SDSEA-ALU to a meeting wherein the former explained that it
was unable to grant the performance bonus corresponding to the fiscal year
1988-1989 on the ground that the workers’ performance during said period did
not justify the award of such bonus.  On 27 July 1989, private respondent SDEA
filed with the National Conciliation and Mediation Board (NCMB) an urgent
request for preventive conciliation between private respondent and petitioner.

On 1 August 1989,
the parties were called to a conciliation meeting and in such meeting, both
parties agreed to submit their dispute to voluntary arbitration.  Their agreement to arbitrate stated, among
other things, that they were “submitting the issue of performance bonus
to voluntary arbitration” and that “the decision/award of the
voluntary arbitrator shall be respected and implemented by the parties as
final and executory, in accordance with the
law.”^[1]

On 14 August 1989,
petitioner filed its position paper which aimed to show that the performance of
the members of respondent union during the year was below the production goals
or targets set by Sime Darby for 1988-1989 and below
previous years’ levels for which reason the performance bonus could not be
granted.  Petitioner there referred to
the following performance indicators:  a) number
of tires produced; b) degree of wastage of production materials; and c) number
of pounds of tires produced per man hour. 
On that same day, 14 August
1989, petitioner manifested before the Voluntary Arbitrator that it
would file a Reply to the union’s Position Paper submitted on 10 August 1989 not later than 18 August 1989.

However, before petitioner could submit its Reply to the union’s
Position Paper, the Voluntary Arbitrator on 17 August 1989 issued an award which declared respondent
union entitled to a performance bonus equivalent to 75% of the monthly basic
pay of its members.  In that award, the
Voluntary Arbitrator held that a reading of the CBA provision on the
performance bonus would show that said provision was mandatory hence the only
issue to be resolved was the amount of performance bonus.  The Voluntary Arbitrator further stated that
petitioner company’s financial statements as of 30 June 1988 revealed retained earnings in the amount of
P324,370,372.32.  From the foregoing, the
Voluntary Arbitrator concluded that petitioner company could well afford to
give members of respondent union a substantial performance bonus.  The Voluntary Arbitrator also stated that
there was evidence to show that the company has given performance bonuses to
its managerial and non-unionized employees as well as to monthly paid
workers for the year 1988-1989.

Petitioner filed a motion for reconsideration which motion was
not entertained by the Voluntary Arbitrator upon the ground that under the
ruling of this Court in Solidbank v. Bureau
of Labor Relations, (G.R. No. 64926, promulgated 8 October 1984;
unpublished) he, the Voluntary Arbitrator, had automatically lost jurisdiction
over the arbitration case upon the issuance of the award.

In this Petition for Certiorari, petitioner mainly argues
that respondent Voluntary Arbitrator gravely abused his discretion in holding
that the grant of performance bonus was mandatory and that the only issue
before him was the amount of the bonus. 
It is contended that since a performance bonus is a “gift” based
on the company’s performance, the same is not justified when the company’s
performance has been poor.  Petitioner
claims that during the fiscal year of 1988-1989, the company performed poorly
as shown by the decline in tire production for the said year as well as the
increase of the rate of wastage of production materials, and also by the
decrease in the number of tires produced per man hour.  Petitioner also argues that even if a
performance bonus were justified, the Voluntary Arbitrator gravely abused his
discretion in giving an award of 75% of the monthly basic rate without any
evidence of the basis used in arriving at such an award.  It is insisted that under the relevant CBA
provision, the company determines the amount
of the bonus if the same be justified. 
Petitioner also alleged that respondent Arbitrator gravely erred when he
based the award on the company’s retained earnings the level of which
represents earnings accumulated during prior years and not merely during the
fiscal year 1988-1989.

On 8
November 1989, the
Court temporarily restrained the enforcement of the Voluntary Arbitrator’s
award to prevent the petition at bar becoming moot and academic.

We are not persuaded by
petitioner’s arguments.

One point needs to be
stressed at the outset:  the award of a
Voluntary Arbitrator is final and executory after ten
(10) calendar days from receipt of the award by the parties.^[2] There was a time when the award of a
Voluntary Arbitrator relating to money claims amounting to more than
P100,000.00 or forty percent (40%) of the paid-up capital of the employer
(whichever was lower), could be appealed to the National Labor Relations
Commission upon the grounds of:  (a)
abuse of discretion; or (b) gross incompetence, presumably of the arbitrator.^[3] This is no longer so today although, of
course, certiorari will lie in appropriate cases.  A petition for certiorari under Rule
65 of the Revised Rules of Court will lie only where a grave abuse of
discretion or an act without or in excess of jurisdiction on the part of
the Voluntary Arbitrator is clearly shown. 
It must be borne in mind that the writ of certiorari is an
extraordinary remedy and that certiorari jurisdiction is not to be
equated with appellate jurisdiction.  In a special civil action of certiorari,
the Court will not engage in a review of the facts found nor even of the law as interpreted or applied by the
Arbitrator unless the supposed errors of fact or of law
are so patent and gross and prejudicial as to amount to a grave abuse of
discretion or an exces de pouvoir on the part of the Arbitrator.^[4]
The Labor Code and its Implementing Rules thus clearly reflect the important
public policy of encouraging recourse to voluntary arbitration and of
shortening the arbitration process by rendering the arbitral award non-appealable to the NLRC. 
The result is that a voluntary arbitral award may be modified and set
aside only upon the same grounds on which a
decision of the NLRC itself may be modified or set aside, by this Court.

Examination of the pleadings in the instant Petition shows that
two (2) principal issues are
raised:  The first is whether or not the
Voluntary Arbitrator acted with grave abuse of discretion or without or in
excess of jurisdiction in passing upon both the question of whether or not a performance bonus is to be granted by petitioner Sime Darby to the private respondents and the further
question of the amount thereof.  The second is whether or not the award by the Arbitrator of a performance bonus amounting to seventy-five percent (75%) of the basic
monthly salary of members of private respondent union itself constituted a grave abuse of discretion or an act without or in excess of
jurisdiction.  We consider these issues seriatim.

1. In respect of the first issue, petitioner Sime
Darby urges that the Arbitrator gravely abused his discretion in passing upon
not only the question of whether or not a performance bonus is to be granted but also, in the affirmative case, the matter of the amount
thereof.  The position of petitioner, to
the extent we can understand it, is that the Arbitrator was authorized to
determine only the question of whether or not a performance bonus was to
be granted, the second question being reserved for determination by the
employer Sime Darby. 
We noted earlier that in their
agreement to arbitrate, the parties submitted to the Voluntary Arbitrator “the issue of performance bonus.”
The language of the agreement to arbitrate may be seen to be quite
cryptic.  There is no indication at all
that the parties to the arbitration agreement regarded “the issue of
performance bonus” as a two-tiered issue, only one tier of which was being
submitted to arbitration.  Possibly, Sime Darby’s counsel considered that issue as having dual
aspects and intended in his own mind to submit only one of those aspects to the
Arbitrator; if he did, however, he failed to reflect his thinking and intent in
the arbitration agreement.

It is thus essential to stress
that the Voluntary Arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to
determine the scope of his own authority subject only, in a proper case, to the
certiorari jurisdiction of this Court. 
The Arbitrator, as already indicated, viewed his authority as embracing
not merely the determination of the abstract question of whether or not a performance bonus was to be granted but also,
in the affirmative case, the amount thereof. 
The Arbitrator said in his award:

At this juncture, it would
not be amiss to emphasize to the parties that the matter of
performance bonus necessarily includes not only the determination of the
existence of the right of the union to this benefit but also the amount thereof.  This conclusion arises from a perusal of
the terms of the submission agreement entered
into by Sime Darby Pilipinas,
Inc. and Sime Darby Employees Association which
limited the voluntary arbitration only with regard to submission of position
papers of the parties, disposition and rendition of the award.  Nary
(sic) a trace of qualification as to the sole issue of performance bonus may be
gleaned from a review of said agreement.

With that as a timely reminder, this Arbitrator now proceeds to
resolve the issues herein submitted for resolution.  Without doubt, the Sime
Darby Employees Association is entitled to performance bonus.  This conclusion arises from an analysis of
the imperative terms of the CBA provision on production bonus, hereinunder reproduced, to wit:

“A performance bonus shall be granted the amount of which to be
determined by the Company depending on the return of capital investment as
reflected in the annual financial statements.”^[5]
(Underscoring supplied)

Analysis
of the relevant provisions of the CBA between the parties and examination of
the record of the instant case lead us to the conclusion that the Arbitrator’s
reading of the scope of his own authority must be sustained.

Article X, Section 1 of
the CBA is, grammatically speaking, cast in mandatory terms: “A
performance bonus shall be granted x x x.” The CBA provision goes on, however, immediately to
say that the amount of the performance bonus “(is) to be determined by
the Company.” Thus, notwithstanding the literal or grammatical tenor
of Article X, Section 1, as a practical matter, only the issue relating to the
amount of the bonus to be declared appears important.  Not much reflection is needed to show that
the critical issue is the scope of authority of the company to determine the
amount of any bonus to be granted.  If
the company’s discretionary authority were to be regarded as unlimited and if the company may declare in any event a merely nominal
bonus, the use of mandatory language in Article X, Section 1, would seem
largely illusory and cosmetic in effect. 
Alternatively, even if one were to disregard the use of “shall”
rather than “may” in Article X, Section 1, the question of whether or
not a performance bonus is to be granted, still cannot realistically be
dissociated from the intensely practical issue of the amount of the bonus to be
granted.  It is noteworthy that
petitioner Sime Darby itself did not spend much time
discussing as an abstract question whether or not the grant of a performance
bonus is per se obligatory upon the company.  Petitioner instead focused upon the
production performance of the company’s employees as bearing upon the appropriateness of any amount of bonus.  Further, if petitioner Sime Darby’s argument were to be taken seriously, one must
conclude that the parties to the arbitration agreement intended to refer only a
theoretical and practically meaningless issue to the Voluntary Arbitrator, a
conclusion that we find thoroughly unacceptable.

2. We turn then to the issue of whether or not the Voluntary
Arbitrator gravely abused his discretion or acted without or in excess of
jurisdiction in awarding an amount equivalent to seventy-five percent (75%) of
the basic monthly pay of members of respondent union.  Petitioner Sime
Darby contends that that award is devoid of factual basis.  We understand this contention to be that the
Arbitrator did not apply the relevant CBA provision.

Once more, we are not
persuaded by petitioner’s contention.

Article X, Section 1 of
the CBA does not in express terms identify whose performance is to appraised in determining an
appropriate amount to be awarded as performance bonus.  The Court considers that it is the
performance of the company as a whole, and not merely the production or
manufacturing performance of its employees, which is relevant in that
determination.  The CBA provision refers
to the return on investment of the company (ROI).  The return on the stockholders’ investment,
as we understand it, relates basically to the net profits shown by the
company and therefore to many more factors than simply the extent to which
production targets were achieved or the rise and fall of the manufacturing
efficiency ratios.  Among those factors
would be the cost of production, the quality of the products, the cost of
money, the debt-equity ratio, the cost of sales, the level of taxes due and
payable, the gross revenues realized, and so forth.  We note upon the other hand, that
petitioner’s counsel failed to discuss at all before
the Voluntary Arbitrator the rate of return on stockholders’ investment achieved
by Sime Darby for the year 1988-1989; as earlier
noted, counsel confined his argument and the evidence submitted by him to the
number of tires produced, the decrease in the rate of wastage of manufacturing
materials, and the productivity of the work force measured in terms of the
number of tires produced per man hour.

The Voluntary Arbitrator, upon the other hand, explicitly
considered the net earnings of petitioner Sime
Darby in 1988 (P100,000,000.00) and in the first semester of 1989
(P95,377,507.00) as well as the increase
in the company’s retained earnings from P265,729,826.00 in 1988 to P324,370,372.00 as of 30
June 1989.  Thus, the Arbitrator impliedly or indirectly took into account the return on
stockholders’ investment realized for the fiscal year 1988-1989.  It should also be noted that the relevant CBA
provision does not specify a minimum rate of return on investment (ROI)
which must be realized before any particular amount of bonus may or should be
declared by the company.

The Voluntary Arbitrator
also took into account, again in an indirect manner, the performance of Sime Darby’s employees by referring in his award to
“the total labor cost incurred by the Company”:

“This Arbitrator, however, is well aware that any effort in
this regard must be tempered and balanced as against the need to sustain the
continued viability of Sime Darby Pilipinas,
Inc. in accordance with the constitutional provision which recognizes ‘the
right of enterprise to reasonable returns on investment and to expansion and
growth.’ Furthermore, any award to be rendered must likewise take into
account the total labor cost incurred by the Company.  It should not merely be confined to those
pertaining to the members of the Sime Darby Employees
Association but necessarily include that which shall be paid and granted to all
other employees of Sime Darby this year.”^[6]
(Underscoring supplied)

On balance, we believe and so hold that the award of the
Voluntary Arbitrator of a bonus amounting to seventy-five percent (75%) of the
basic monthly salary cannot be said to be merely arbitrary or capricious or to
constitute an exces de pouvoir.

The remaining assertions of petitioner Sime
Darby relating to denial of procedural
due process by the Voluntary Arbitrator, consisting of failure to wait for
petitioner’s announced Reply (basically reiterative and amplificatory in
nature) to the union’s Position Paper and of alleged failure to consider
evidence submitted by petitioner, do not require extended consideration; they
are evidently bereft of merit.

WHEREFORE, the Petition for Certiorari is DISMISSED
for lack of merit.  The Temporary
Restraining Order issued on 8 November
1989 is hereby LIFTED.  This
Decision is immediately executory.  Costs against petitioner.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Bidin, and Cortes,
JJ., concur.

^[1]
Annex “B” of the Petition, Rollo p.
29; underscoring supplied.

^[2]
Article 262-A, Labor Code, as amended
by Republic Act No. 6715.

^[3]
Section 5, Rule XI of Book No. V, Rules Implementing the Labor Code.

^[4]
It is in this sense that Oceanic
Bic Division (FFW) v. Romero, 130 SCRA 392 (1984) and Mantrade/FMMC Division Employees and Workers
Union v. Bacungan, 144 SCRA 510 (1986) are to be understood.

^[5]
Rollo, p. 27.

^[6]
Rollo, p. 28.