Philippine Supreme Court Jurisprudence > Year 2016 > September 2016 Decisions > G.R. No. 220605, September 21, 2016 - COCA-COLA FEMSA PHILIPPINES, INC.,* Petitioner, v. BACOLOD SALES FORCE UNION-CONGRESS OF INDEPENDENT ORGANIZATION-ALU, Respondent.:

Before the Court is a petition for review on certiorari¹ assailing the Decision² dated December 22, 2014 and the Resolution³ dated September 8, 2015 of the Court of Appeals (CA) in CA-G.R. CEB-SP. No. 06892, which denied petitioner Coca-Cola Femsa Philippines, Inc.'s (petitioner) petition for review and upheld the Decision⁴ dated February 3, 2012 of the Panel of Voluntary Arbitrators (VA) of the National Conciliation and Mediation Board (NCMB)-Department of Labor and Employment in Case Nos. AC-777-RB6-06-01-10-2011, AC-782-RB6-06-01-10-2011, and AC-960-RB6-06-01-10-2011 on the ground that the same had already attained finality.

The Facts

Petitioner is a corporation engaged in the manufacture of non�alcoholic beverages. Sometime in 2001, Cosmos Bottling Corporation (Cosmos) ceded its sales functions to petitioner which resulted in the integration of a number of Cosmos's salesmen, including Fernando T. Oquiana, Norman F. Vinarta, and Santiago B. Espino, Jr. (Cosmos integrees) into petitioner's workforce as route salesmen. The Cosmos integrees were given salary adjustments that would align with that of petitioner's own route salesmen. At the time of integration, petitioner's system of product distribution was by direct selling, but it subsequently adopted the route-to�-market (RTM) system of distribution which led to the abolition of the route salesman position and its replacement by the account developer (AD) position. Thus, through an internal selection process, the Cosmos integrees' positions were eventually designated as ADs.⁵chanrobleslaw

Meanwhile, petitioner hired new ADs who were, however, subject to a different set of qualifications from the Cosmos integrees. The newly-hired ADs received a higher basic monthly pay although, allegedly, occupying the same position, job description, and functions as that of the Cosmos integrees. Furthermore, the newly-hired ADs were given, upon union membership, a monthly 45-kilogram (kg.) rice provision with a corresponding monthly deduction of the amount of P550.00 from their salaries.⁶chanrobleslaw

Aggrieved by the difference in treatment, respondent Bacolod Sales Force Union-Congress of Independent Organization-ALU, the recognized collective bargaining agent of the rank-and-file sales personnel of petitioner's Bacolod Plant⁷ (respondent), submitted its concerns to the grievance machinery in accordance with the Collective Bargaining Agreement (CBA), demanding, among others, that: (a) the salary rates of the Cosmos integrees be readjusted to equal to that of the newly-hired ADs' salary rates;⁸ (b) the conversion of the P550.00 monthly deduction from the salaries of the Bacolod Plant sales personnel into a 45-kg. rice provision be declared as a violation of the non-diminution rule under Article 100⁹ of the Labor Code, as amended; and (c) the employees concerned be reimbursed for the amounts illegally deducted.¹⁰chanrobleslaw

After the grievance process failed, the parties agreed to submit the unresolved matters to voluntary arbitration pursuant to Article 5 of the CBA, and filed a preventive mediation case before the NCMB raising the aforesaid issues.¹¹chanrobleslaw

Respondent claimed that the Cosmos integrees were being discriminated against the newly-hired ADs, in light of the disparity between their salaries¹² and reiterated that the monthly P550.00 deduction from the basic salaries of the new union members constitutes a violation of the non� diminution rule.¹³chanrobleslaw

For its part, petitioner maintained that the fixing of hiring rates is a management prerogative, adding that the Cosmos integrees and the newly� hired ADs were not similarly situated due to the apparent variance in the manner by which they were appointed and hired, as well as their qualifications, skills, and responsibilities for the position.¹⁴ Further, it claimed that the Cosmos integrees failed to meet all the basic qualifications for the AD position, such as age and educational attainrnent.¹⁵ For another, it contended that the rice subsidy of P550.00 per month to non-union members was automatically converted into an actual 45-kg. sack of rice upon union membership, which is, in reality, valued more than the amount of said subsidy and, thus, was not tantamount to any diminution of benefits.¹⁶chanrobleslaw

The VA's Ruling

In a Decision¹⁷ dated February 3, 2012 (VA Decision), the VA: (a) declared that the disparity in the wages of the Cosmos integrees and the newly-hired ADs was discriminatory for lack of substantial basis or valid criteria; (b) directed petitioner to realign or readjust the Cosmos integrees' basic salaries at par with that of the newly-hired ADs; (c) declared that the P550.00 deduction from the union members' basic salary in lieu of one (1) 45-kg. sack of rice every month was a violation of Article X¹⁸ of the CBA and Article 100 of the Labor Code, as amended; and (d) directed petitioner to comply with Article X of the CBA by giving rice ration free of charge, and to cease and desist from deducting P550.00 from the monthly salaries of the concerned employees, effective February 2012.¹⁹chanrobleslaw

The VA held that the lower salary rate given to the Cosmos integrees smacks of discrimination given that they hold the same position, perform the same work, share the same functions, and have the same job description as that of the newly-hired ADs. Thus, under the principle of "equal pay for equal work," the Cosmos integrees' failure to meet the new set of qualifications for ADs in view of their "over-age and lack of educational attainment" did not justify their lower salary rates.²⁰ Moreover, the P550.00 deduction from a union member's monthly salary and its conversion into a 45-kg. sack of rice ration constituted: (a) non-compliance with Article X of the CBA, which clearly provides that the grant of rice ration to employees shall be free of charge; and (b) a violation of the non-diminution rule under Article 100 of the Labor Code, as amended, because the said benefit has become part of the employment contract.²¹chanrobleslaw

Petitioner moved for reconsideration,²² which was denied in a Resolution²³ dated April 25, 2012 (VA Resolution).

The CA Proceedings

Petitioner received notice of the VA Resolution on May 21, 2012,²⁴ and filed its petition for review²⁵cralawred under Rule 43 of the Rules of Court (Rules) before the CA on June 5, 2012.²⁶chanrobleslaw

Respondent countered,²⁷ among others, that the VA Decision had become final and executory after ten (10) calendar days from receipt thereof pursuant to Article 262-A²⁸ of the Labor Code, as amended; hence, the CA petition must, perforce, fail.²⁹chanrobleslaw

Subsequently, a writ of execution³⁰ dated July 26, 2013 was issued by the VA and served upon petitioner. Thereafter, petitioner: (a) aligned the salaries of the Cosmos integrees with the newly-hired ADs; (b) paid the corresponding wage differentials; (c) refunded the amounts deducted from the union members' salaries; and (d) stopped the P550.00 monthly deductions from their salaries.³¹chanrobleslaw

In a Decision³² dated December 22, 2014, the CA denied the petition on the ground that the VA Decision had attained finality pursuant to Section 5,³³ Article 5 of the CBA, which explicitly provides that "[t]he decision of the Arbitration Committee shall be final and binding upon the COMPANY and the UNION, and the employees and may be enforced in any court of competent jurisdiction."³⁴chanrobleslaw

Petitioner filed its motion for reconsideration,³⁵ which was, however, denied in a Resolution³⁶ dated September 8, 2015; hence, this petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not the CA correctly held that the VA Decision can no longer be the subject of its review for having attained finality pursuant to the express provision under Section 5, Article 5 of the CBA.

The Court's Ruling

In the context of labor law, arbitration is the reference of a labor dispute to an impartial third person for determination on the basis of evidence and arguments presented by such parties who have bound themselves to accept the decision of the arbitrator as final and binding.³⁷ However, in view of the nature of their functions, voluntary arbitrators act in a quasi-judicial capacity;³⁸hence, their judgments or final orders which are declared final by law are not so exempt from judicial review when so warranted.³⁹ "Any agreement stipulating that 'the decision of the arbitrator shall be final and unappealable' and 'that no further judicial recourse if either party disagrees with the whole or any part of the arbitrator's award may be availed of' cannot be held to preclude in proper cases the power of judicial review which is inherent in courts."⁴⁰chanrobleslaw

Case law holds that 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 CA under Rule 43 of the Rules⁴¹ on questions of fact, of law, mixed questions of fact and law,⁴² or a mistake of judgment.⁴³ However, in several cases, the Court allowed the filing of a petition for certiorari from the VA's judgment to the CA under Rule 65 of the same Rules,⁴⁴ where the VA was averred to have acted without or in excess of his jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.⁴⁵chanrobleslaw

In this case, petitioner availed of the correct mode of review of the VA Decision by filing a petition for review with the CA under Rule 43 of the Rules, and in conformity with prevailing jurisprudence. In said petition, petitioner assailed the arbitral award, first, on the ground that "[t]he Panel seriously erred in declaring [that] the disparity between the wages of [the] Cosmos [i]ntegrees and [the] newly-hired [ADs] as discriminatory, and [in] directing [petitioner] to [realign] or [readjust] the basic salary rate of the Cosmos [i]ntegrees equivalent to that of the newly-hired [ADs]."⁴⁶ In this light, petitioner pointed out that the Cosmos [i]ntegrees "were not hired by [petitioner] for the AD Position because they met the qualifications therefor. Rather they were appointed as such because they passed the internal selection process which [petitioner] specifically applied to them" and, "[i]n fact, x x x all three (3) Cosmos [i]ntegrees failed to meet all the basic qualifications for the AD position, such as age and educational attainment."⁴⁷ On the other hand, the newly-hired ADs "were engaged on the basis of the qualifications they presented to [petitioner] at the time they applied for the job," and ''were no longer required to undergo the same selection process applied to the Cosmos [i]ntegrees inasmuch as they already possessed, at the time of their application, the minimum requirements for the job."⁴⁸ Based on the differences in the selection processes and qualifications, petitioner claimed that the "doctrine [of] 'equal pay for equal work' x x x has no application in the present case."⁴⁹ Further, it added that the measure of providing for higher salary rates was not done arbitrarily and illegally to discriminate against the Cosmos [i]ntegrees. Moreover, it claimed that "[b]eing an exercise of management prerogative, [petitioner] may very well offer newly-hired ADs a more competitive compensation scheme in order to attract more qualified candidates for the position."⁵⁰chanrobleslaw

In its petition before the Court, petitioner, citing certain cases on the matter,⁵¹ restated the same position, postulating that "the unilateral adoption [of] an upgraded salary scale that increased hiring rates of newly-hired employees without increasing the salary rates of the old employees [should be treated as] a valid exercise of business judgment prerogative, based on the high productivity of that particular group and the need to increase the company's hiring rate[;] otherwise[,] the employer's hands would be completely tie[d], and [it would be] discourage[d] from adjusting the salary rates for fear that it would result to x x x [the] demand [by] all employees, for a similar increase, especially if the financial condition of the business cannot address an across the board increase."⁵²chanrobleslaw

The Court sees the prima facie reasonableness of petitioner's asseverations and finds that the merits of its case, based on such argumentation, properly warrant judicial review. As such, the CA should look into the soundness of the VA rulings in relation to the nuances averred, particularly, the impact of the differences in the selection processes applied and relevant qualifications between the Cosmos integrees and the newly-hired ADs. Moreover, the CA ought to determine the proper application of the "equal pay for equal work" principle vis-a-vis the business decision of an employer to adopt a more competitive compensation scheme in light of the demands in human resource. Thus, borrowing the language in Chung Fu Industries (Phils.) Inc. v. CA⁵³ - which similarly involved a restrictive stipulation on appeal from an arbitral award the Court fmds that the CA erred in refusing "to look into the merits of [this] case, despite [a] prima facie showing of the existence of grounds warranting judicial review," which, thus, "effectively deprived petitione[r] of [the] opportunity to prove or substantiate [its] allegations."⁵⁴chanrobleslaw

In fact, aside from the above stated-issue, the following separate issues were left untouched by the CA: (a) as raised by petitioner, whether or not the conversion of the monthly P550.00 rice subsidy into one (1) 45-kg. sack of rice upon union membership constitutes a violation of Article 100 of the Labor Code, as amended, and non-compliance with Article X of the CBA;⁵⁵ and (b) as raised by respondent, whether or not the petition for review was filed out of time.⁵⁶ The materiality of these issues all the more reinforces the conclusion that the CA should not have refused to exercise judicial review of the assailed VA rulings, notwithstanding the CBA stipulation that the decision of the Arbitration Committee, i.e., the VA, shall be final and binding upon the parties. In fine, a remand to the CA for the prompt resolution of all these issues, including any other ancillary issues which the parties may have raised before it, is, therefore, in order. Verily, courts "should not shirk from exercising their power to review, where under applicable laws and jurisprudence, such power may be rightfully exercised,"⁵⁷ as in this case.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated December 22, 2014 and the Resolution dated September 8, 2015 of the Court of Appeals (CA) in CA-G.R. CEB-SP. No. 06892 are hereby SET ASIDE. The case is REMANDED to the CA for the prompt resolution of the aforementioned issues, including any other ancillary issues which the parties may have raised before it.

SO ORDERED.chanRoblesvirtualLawlibrary

Sereno, C.J., Leonardo-De Castro, Bersamin, and Caguioa, JJ., concur.

Endnotes:

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^* "Coca-Cola Bottlers Philippines, Inc." in the CA proceedings (see rollo, pp. 64 and 73). "Coca-Cola Bottles Phils., Inc." in the Department of Labor and Employment arbitration proceedings (see id. at 129 and 141).

¹ Id. at 10-52.

² Id. at 64-70. Penned by Associate Justice Marilyn B. Lagura-Yap with Associate Justices Edgardo L. Delos Santos and Jhosep Y. Lopez concurring.

³ Id. at 73-75.

⁴ Id. at 129-140. Penned by Chairman Jose I. Lapak, Jr. with Members Juvy A. Victoriano-Dioso and Elias A. Gatanela, Jr. concurring.

⁵ Id. at 64-65. See also id. at 129-130.

⁶ Id. at 65. See also id. at 130.

⁷ Id. at 64 and 129.

⁸ Id. at 65.

⁹ Article 100 of the Labor Code reads:ChanRoblesVirtualawlibrary

Article 100. Prohibition Against Elimination or Diminution of Benefits. - Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code."

¹⁰ See respondent's position paper dated November 8, 2011; rollo, p. 322.

¹¹ Id. at 65. See also id. at 160-161.

¹² Id. at 131.

¹³ Id. at 133. See also discussions in respondent's position paper; id. at 317-319.

¹⁴ Id. at 132.

¹⁵ Id. at 133.

¹⁶ Id. See also discussions in petitioner's position paper dated November 2, 2011; id. at 165-166, 170-171, and 174-175.

¹⁷ Id. at 129-140.

¹⁸ Article X of the CBA, reads:ChanRoblesVirtualawlibrary

ARTICLE X - RICE RATION

The COMPANY shall continue the practice in connection with the granting of the rice ration and the employee in active service shall, as heretofore, continue to receive, free of charge, one (1) sack of rice (45 kilos) per month. (See id. at 191.)

¹⁹ See id. at 66 and 139-140.

²⁰ See id. at 135-137.

²¹ See id. at 138-139.

²² See motion for reconsideration dated February 22, 2012; id. at 353-375.

²³ Id. at 141-148. Signed by Panel Members Juvy A. Victoriano-Dioso and Elias A. Gatanela, Jr. Panel Chairman Jose I. Lapak, Jr. filed a separate Concurring Opinion dated April 27, 2012; see id. at 149-155.

²⁴ See id. at 77.

²⁵cralawred Dated June 4, 2012. Id. at 76-119.

²⁶ See id. at 76.

²⁷ See Comments of the Respondent dated November 6, 2012; id. at 389-394.

²⁸ Article 262-A of the Labor Code, as amended (now Article 276 of the Labor Code, as renumbered under 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" approved on June 21, 2011; see also See Department of Labor and Employment Department Advisory No. 01, Series of 2015 entitled "RENUMBERING OF THE LABOR CODE OF THE PHILIPPINES, As AMENDED," approved on April 21, 2015) provides:ChanRoblesVirtualawlibrary

Art. 262-A Procedures. - x x x.

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.

x x x x

²⁹Rollo, p. 390.

³⁰ Not attached to the rollo.

³¹ See Affidavit dated December 14, 2015 of Cyrus U. Javelosa, a regular employee of petitioner with a position of AD; rollo, p. 463.

³² Id. at 6470.

³³ Article 5 (Voluntary Arbitration), Section 5 of the CBA reads:ChanRoblesVirtualawlibrary

Section 5. During the effectivity of this Agreement, the Arbitration Committee shall have no power to add, to subtract from, or modify any of the terms of this Agreement or any terms made supplementary thereto. The decision of the Arbitration Committee shall be final and binding upon the COMPANY and the UNION, and the employees and may be enforced in any court of competent jurisdiction. (Emphasis supplied; see id. at 187.)

³⁴ Id. at 68-69.

³⁵ See motion for reconsideration dated February 18, 2015; id. at 411-442.

³⁶ Id. at 73-75.

³⁷Luzon Dev. Bank v. Association of Luzon Dev. Bank Employees, 319 Phil. 262, 266 (1995).

³⁸ See id. at 271. See also Chung Fu Industries (Phils.), Inc. v. CA, G.R. No. 96283, February 25, 1992, 206 SCRA 545, 556.

³⁹ See Chung Fu Industries (Phils.), Inc. v. CA, id.

⁴⁰ See ABS-CBN Broadcasting Corp. v. World Interactive Network Systems (WINS) Japan Co., LTD., 568 Phil. 282, 293 (2008).

⁴¹ See Philippine Electric Corporation v. CA, G.R. No. 168612, December 10, 2014, 744 SCRA 361, 377-378; Royal Plant Workers Union v. Coca-Cola Bottlers Philippines, Inc.-Cebu Plant, 709 Phil. 350, 361 (2013); Samahan ng mga Manggagawa sa Hyatt v. Magsalin, 665 Phil. 584, 594-595 (2011); Samahan ng mga Manggagawa sa Hyatt-Nuwhrain-APL v. Bacungan, 601 Phil. 365, 370 (2009); AMA Computer College-Santiago City, Inc. v. Nacino, 568 Phil. 465, 470 (2008); Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees Union-ALU, 562 Phil. 743, 754 (2007); Centro Escolar University Faculty and Allied Workers Union-Independent v. CA, 523 Phil. 427, 436-437 (2006); Manila Midtown Hotel v. Borromeo, 482 Phil. 137, 141-142 (2004); and Sevilla Trading Company v. Semana, 472 Phil. 220, 229 (2004). See also ABS-CBN Broadcasting Corp. v. World Interactive Network Systems (WINS) Japan Co., LTD., id. at 292-294.

⁴² See Section 3, Rule 43 of the Rules.

⁴³Centro Escolar University Faculty and Allied Workers Union-Independent v. CA, supra note 41, at 438.

⁴⁴ See Mora v. Avesco Marketing Corporation, 591 Phil. 827, 834-836 (2008); and Unicraft Industries Int'l. Corp. v. CA, 407 Phil. 527, 538-540 (2001). See also Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees Union-ALU, supra note 41, at 754-756.

⁴⁵ See ABS-CBN Broadcasting Corp. v. World Interactive Network Systems (WINS) Japan Co., LTD., supra note 40, at 294; and Leyte IV Electric Cooperative, Inc. v. LEYECO IV Employees Union-ALU, supra note 41, at 756.

⁴⁶Rollo, p. 90.

⁴⁷ Id. at 98.

⁴⁸ Id.

⁴⁹ Id.

⁵⁰ Id. at 96.

⁵¹ See id.

⁵² Id. at 38-39.

⁵³ Supra note 38.

⁵⁴ Id. at 558.

⁵⁵Rollo, p. 107.

⁵⁶ See id. at 390.

⁵⁷Chung Fu Industries (Phils.), Inc. v. CA, supra note 38, at 558.