Jurisdiction over illegal dismissal case

[G.R. No. 182295. June 26, 2013.]

7K CORPORATION, petitioner, vs. EDDIE ALBARICO, respondent.
DECISION
SERENO, C.J p:
This is a Petition for Review on Certiorari filed under Rule 45 of the Revised Rules of Court, asking the
Court to determine whether a voluntary arbitrator in a labor dispute exceeded his jurisdiction in deciding
issues not specified in the submission agreement of the parties. It assails the Decision dated 18 September
2007 and the Resolution dated 17 March 2008 of the Court of Appeals (CA).
FACTS
When he was dismissed on 5 April 1993, respondent Eddie Albarico (Albarico) was a regular employee of
petitioner 7K Corporation, a company selling water purifiers. He started working for the company in 1990 as
a salesman. Because of his good performance, his employment was regularized. He was also promoted
several times: from salesman, he was promoted to senior sales representative and then to acting team field
supervisor. In 1992, he was awarded the President's Trophy for being one of the company's top water
purifier specialist distributors.
In April of 1993, the chief operating officer of petitioner 7K Corporation terminated Albarico's employment
allegedly for his poor sales performance. Respondent had to stop reporting for work, and he subsequently
submitted his money claims against petitioner for arbitration before the National Conciliation and Mediation
Board (NCMB). The issue for voluntary arbitration before the NCMB, according to the parties' Submission
Agreement dated 19 April 1993, was whether respondent Albarico was entitled to the payment of
separation pay and the sales commission reserved for him by the corporation.
While the NCMB arbitration case was pending, respondent Albarico filed a Complaint against petitioner
corporation with the Arbitration Branch of the National Labor Relations Commission (NLRC) for illegal
dismissal with money claims for overtime pay, holiday compensation, commission, and food and travelling
allowances. The Complaint was decided by the labor arbiter in favor of respondent Albarico, who was
awarded separation pay in lieu of reinstatement, backwages and attorney's fees.
On appeal by petitioner, the labor arbiter's Decision was vacated by the NLRC for forum shopping on the
part of respondent Albarico, because the NCMB arbitration case was still pending. The NLRC Decision,
which explicitly stated that the dismissal was without prejudice to the pending NCMB arbitration
case, became final after no appeal was taken.
On 17 September 1997, petitioner corporation filed its Position Paper in the NCMB arbitration case. It
denied that respondent was terminated from work, much less illegally dismissed. The corporation claimed
that he had voluntarily stopped reporting for work after receiving a verbal reprimand for his sales
performance; hence, it was he who was guilty of abandonment of employment. Respondent made an oral
manifestation that he was adopting the position paper he submitted to the labor arbiter, a position paper in
which the former claimed that he had been illegally dismissed.
On 12 January 2005, almost 12 years after the filing of the NCMB case, both parties appeared in a hearing
before the NCMB. Respondent manifested that he was willing to settle the case amicably with petitioner
based on the decision of the labor arbiter ordering the payment of separation pay in lieu of reinstatement,
backwages and attorney's fees. On its part, petitioner made a counter-manifestation that it was likewise
1

amenable to settling the dispute. However, it was willing to pay only the separation pay and the sales
commission according to the Submission Agreement dated 19 April 1993.
The factual findings of the voluntary arbitrator, as well as of the CA, are not clear on what happened
afterwards. Even the records are bereft of sufficient information.
On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision finding petitioner corporation
liable for illegal dismissal. The termination of respondent Albarico, by reason of alleged poor performance,
was found invalid. The arbitrator explained that the promotions, increases in salary, and awards received
by respondent belied the claim that the latter was performing poorly. It was also found that Albarico could
not have abandoned his job, as the abandonment should have been clearly shown. Mere absence was not
sufficient, according to the arbitrator, but must have been accompanied by overt acts pointing to the fact
that the employee did not want to work anymore. It was noted that, in the present case, the immediate
filing of a complaint for illegal dismissal against the employer, with a prayer for reinstatement, showed that
the employee was not abandoning his work. The voluntary arbitrator also found that Albarico was dismissed
from his work without due process.
However, it was found that reinstatement was no longer possible because of the strained relationship of the
parties. Thus, in lieu of reinstatement, the voluntary arbitrator ordered the corporation to pay separation
pay for two years at P4,456 for each year, or a total amount of P8,912.
Additionally, in view of the finding that Albarico had been illegally dismissed, the voluntary arbitrator also
ruled that the former was entitled to backwages in the amount of P90,804. Finally, the arbitrator awarded
attorney's fees in respondent's favor, because he had been compelled to file an action for illegal dismissal.
Petitioner corporation subsequently appealed to the CA, imputing to the voluntary arbitrator grave abuse of
discretion amounting to lack or excess of jurisdiction for awarding backwages and attorney's fees to
respondent Albarico based on the former's finding of illegal dismissal. The arbitrator contended that the
issue of the legality of dismissal was not explicitly included in the Submission Agreement dated 19 April
1993 filed for voluntary arbitration and resolution. It prayed that the said awards be set aside, and that
only separation pay of P8,912.00 and sales commission of P4,787.60 be awarded.
The CA affirmed the Decision of the voluntary arbitrator, but eliminated the award of attorney's fees for
having been made without factual, legal or equitable justification. Petitioner's Motion for Partial
Reconsideration was denied as well.
Hence, this Petition.
ISSUE
The issue before the Court is whether the CA committed reversible error in finding that the voluntary
arbitrator properly assumed jurisdiction to decide the issue of the legality of the dismissal of respondent as
well as the latter's entitlement to backwages, even if neither the legality nor the entitlement was
expressedly claimed in the Submission Agreement of the parties.
The Petition is denied for being devoid of merit.
DISCUSSION
Preliminarily, we address petitioner's claim that under Article 217 of the Labor Code, original and exclusive
jurisdiction over termination disputes, such as the present case, is lodged only with the labor arbiter of the
NLRC.
Petitioner overlooks the proviso in the said article, thus:
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Art. 217.Jurisdiction of the Labor Arbiters and the Commission.

a.Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural:
xxx xxx xxx
2.Termination disputes;
xxx xxx xxx
6.Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims arising from employer-employee relations,including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement. (Emphases supplied)
Thus, although the general rule under the Labor Code gives the labor arbiter exclusive and original
jurisdiction over termination disputes, it also recognizes exceptions. One of the exceptions is provided in
Article 262 of the Labor Code. In San Jose v. NLRC, we said:
The phrase "Except as otherwise provided under this Code" refers to the following exceptions:
A.Art. 217. Jurisdiction of Labor Arbiters. . . .
xxx xxx xxx
(c)Cases arising from the interpretation or implementation of collective bargaining agreement and those
arising from the interpretation or enforcement of company procedure/policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance machinery and voluntary arbitrator as may be provided
in said agreement.
B.Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of
Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor
disputes including unfair labor practices and bargaining deadlocks. (Emphasis supplied)
We also said in the same case that "[t]he labor disputes referred to in the same Article 262 [of the Labor
Code] can include all those disputes mentioned in Article 217 over which the Labor Arbiter has original and
exclusive jurisdiction."
From the above discussion, it is clear that voluntary arbitrators may, by agreement of the parties, assume
jurisdiction over a termination dispute such as the present case, contrary to the assertion of petitioner that
they may not.
We now resolve the main issue. Petitioner argues that, assuming that the voluntary arbitrator has
jurisdiction over the present termination dispute, the latter should have limited his decision to the issue
contained in the Submission Agreement of the parties the issue of whether respondent Albarico was
entitled to separation pay and to the sales commission the latter earned before being
terminated. Petitioner asserts that under Article 262 of the Labor Code, the jurisdiction of a voluntary
arbitrator is strictly limited to the issues that the parties agree to submit. Thus, it contends that the
voluntary arbitrator exceeded his jurisdiction when he resolved the issues of the legality of the dismissal of
respondent and the latter's entitlement to backwages on the basis of a finding of illegal dismissal.

According to petitioner, the CA wrongly concluded that the issue of respondent's entitlement to separation
pay was necessarily based on his allegation of illegal dismissal, thereby making the issue of the legality of
his dismissal implicitly submitted to the voluntary arbitrator for resolution. Petitioner argues that this was
an erroneous conclusion, because separation pay may in fact be awarded even in circumstances in which
there is no illegal dismissal.
We rule that although petitioner correctly contends that separation pay may in fact be awarded for reasons
other than illegal dismissal, the circumstances of the instant case lead to no other conclusion than that the
claim of respondent Albarico for separation pay was premised on his allegation of illegal dismissal. Thus,
the voluntary arbitrator properly assumed jurisdiction over the issue of the legality of his dismissal.
True, under the Labor Code, separation pay may be given not only when there is illegal dismissal. In fact, it
is also given to employees who are terminated for authorized causes, such as redundancy, retrenchment or
installation of labor-saving devices under Article 283 of the Labor Code. Additionally, jurisprudence holds
that separation pay may also be awarded for considerations of social justice, even if an employee has been
terminated for a just cause other than serious misconduct or an act reflecting on moral character. The
Court has also ruled that separation pay may be awarded if it has become an established practice of the
company to pay the said benefit to voluntarily resigning employees or to those validly dismissed for nonmembership in a union as required in a closed-shop agreement.
The above circumstances, however, do not obtain in the present case. There is no claim that the issue of
entitlement to separation pay is being resolved in the context of any authorized cause of termination
undertaken by petitioner corporation. Neither is there any allegation that a consideration of social justice is
being resolved here. In fact, even in instances in which separation pay is awarded in consideration of social
justice, the issue of the validity of the dismissal still needs to be resolved first. Only when there is already a
finding of a valid dismissal for a just cause does the court then award separation pay for reason of social
justice. The other circumstances when separation pay may be awarded are not present in this case.
The foregoing findings indisputably prove that the issue of separation pay emanates solely from
respondent's allegation of illegal dismissal. In fact, petitioner itself acknowledged the issue of illegal
dismissal in its position paper submitted to the NCMB.
Moreover, we note that even the NLRC was of the understanding that the NCMB arbitration case sought to
resolve the issue of the legality of the dismissal of the respondent. In fact, the identity of the issue of the
legality of his dismissal, which was previously submitted to the NCMB, and later submitted to the NLRC,
was the basis of the latter's finding of forum shopping and the consequent dismissal of the case before it.
In fact, petitioner also implicitly acknowledged this when it filed before the NLRC its Motion to Dismiss
respondent's Complaint on the ground of forum shopping. Thus, it is now estopped from claiming that the
issue before the NCMB does not include the issue of the legality of the dismissal of respondent. Besides,
there has to be a reason for deciding the issue of respondent's entitlement to separation pay. To think
otherwise would lead to absurdity, because the voluntary arbitrator would then be deciding that issue in a
vacuum. The arbitrator would have no basis whatsoever for saying that Albarico was entitled to separation
pay or not if the issue of the legality of respondent's dismissal was not resolve first.
Hence, the voluntary arbitrator correctly assumed that the core issue behind the issue of separation pay is
the legality of the dismissal of respondent. Moreover, we have ruled in Sime Darby Pilipinas, Inc. v. Deputy
Administrator Magsalin that a voluntary arbitrator has plenary jurisdiction and authority to interpret an
agreement to arbitrate and to determine the scope of his own authority when the said agreement is vague
subject only, in a proper case, to the certiorari jurisdiction of this Court.

Having established that the issue of the legality of dismissal of Albarico was in fact necessarily albeit not
explicitly included in the Submission Agreement signed by the parties, this Court rules that the voluntary
arbitrator rightly assumed jurisdiction to decide the said issue.
Consequently, we also rule that the voluntary arbitrator may award backwages upon a finding of illegal
dismissal, even though the issue of entitlement thereto is not explicitly claimed in the Submission
Agreement. Backwages, in general, are awarded on the ground of equity as a form of relief that restores
the income lost by the terminated employee by reason of his illegal dismissal.
In Sime Darby we ruled that although the specific issue presented by the parties to the voluntary arbitrator
was only "the issue of performance bonus," the latter had the authority to determine not only the issue of
whether or not a performance bonus was to be granted, but also the related question of the amount of the
bonus, were it to be granted. We explained that there was no indication at all that the parties to the
arbitration agreement had regarded "the issue of performance bonus" as a two-tiered issue, of which only
one aspect was being submitted to arbitration. Thus, we held that the failure of the parties to limit the
issues specifically to that which was stated allowed the arbitrator to assume jurisdiction over the related
issue.
Similarly, in the present case, there is no indication that the issue of illegal dismissal should be treated as a
two-tiered issue whereupon entitlement to backwages must be determined separately. Besides, "since
arbitration is a final resort for the adjudication of disputes," the voluntary arbitrator in the present case can
assume that he has the necessary power to make a final settlement. Thus, we rule that the voluntary
arbitrator correctly assumed jurisdiction over the issue of entitlement of respondent Albarico to backwages
on the basis of the former's finding of illegal dismissal.
WHEREFORE, premises considered, the instant Petition is DENIED. The 18 September 2007 Decision and
17 March 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 92526, are hereby AFFIRMED.
SO ORDERED.
||| (7K Corp. v. Albarico, G.R. No. 182295, [June 26, 2013])

Exhaustion of administrative remedies

[G.R. No. 175492. February 27, 2013.]
CARLOS L. OCTAVIO, petitioner, vs. PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY, respondent.
DECISION
DEL CASTILLO, J p:
Every Collective Bargaining Agreement (CBA) shall provide a grievance machinery to which all disputes
arising from its implementation or interpretation will be subjected to compulsory negotiations. This essential
feature of a CBA provides the parties with a simple, inexpensive and expedient system of finding
reasonable and acceptable solutions to disputes and helps in the attainment of a sound and stable
industrial peace.
Before us is a Petition for Review on Certiorari assailing the August 31, 2006 Decision of the Court of
Appeals (CA) in CA-G.R. SP No. 93578, which dismissed petitioner Carlos L. Octavio's (Octavio) Petition
for Certiorari assailing the September 30, 2005 Resolution of the National Labor Relations Commission
(NLRC). Said NLRC Resolution affirmed the August 30, 2004 Decision of the Labor Arbiter which dismissed
5

Octavio's Complaint for payment of salary increases against respondent Philippine Long Distance Company
(PLDT). Likewise assailed in this Petition is the November 15, 2006 Resolution which denied Octavio's
Motion for Reconsideration.

Factual Antecedents
On May 28, 1999, PLDT and Gabay ng Unyon sa Telekomunikasyon ng mga Superbisor (GUTS) entered into
a CBA covering the period January 1, 1999 to December 31, 2001 (CBA of 1999-2001). Article VI, Section I
thereof provides:

Section 1.The COMPANY agrees to grant the following across-the-board salary increase during the three
years covered by this Agreement to all employees covered by the bargaining unit as of the given
dates: ICcaST
Effective January 1, 1999 10% of basic wage or P2,000.00 whichever is higher;
Effective January 1, 2000 11% of basic wage or P2,250.00 whichever is higher;
Effective January 1, 2001 12% of basic wage or P2,500.00 whichever is higher.
On October 1, 2000, PLDT hired Octavio as Sales System Analyst I on a probationary status. He became a
member of GUTS. When Octavio was regularized on January 1, 2001, he was receiving a monthly basic
salary of P10,000.00. On February 1, 2002, he was promoted to the position of Sales System Analyst 2 and
his salary was increased to P13,730.00.
On May 31, 2002, PLDT and GUTS entered into another CBA covering the period January 1, 2002 to
December 31, 2004 (CBA of 2002-2004) which provided for the following salary increases: 8% of basic
wage or P2,000.00 whichever is higher for the first year (2002); 10% of basic wage or P2,700.00 whichever
is higher for the second year (2003); and, 10% of basic wage or P2,400.00 whichever is higher for the third
year (2004).
Claiming that he was not given the salary increases of P2,500.00 effective January 1, 2001 and P2,000.00
effective January 1, 2002, Octavio wrote the President of GUTS, Adolfo Fajardo (Fajardo). Acting thereon
and on similar grievances from other GUTS members, Fajardo wrote the PLDT Human Resource Head to
inform management of the GUTS members' claim for entitlement to the across-the-board salary increases.
Accordingly, the Grievance Committee convened on October 7, 2002 consisting of representatives from
PLDT and GUTS. The Grievance Committee, however, failed to reach an agreement. In effect, it denied
Octavio's demand for salary increases. The Resolution (Committee Resolution), reads as follows:
October 7, 2002
UNION ISSUE:
1.Mr. Carlos L. Octavio, Sales System Analyst I, CCIM-Database, was promoted to S2 from S1 last February
01, 2002. He claimed that the whole P2,000 (1st yr. GUTS-CBA increase) was not given to him. ITScAE
2.He was hired as a probationary employee on October 01, 2000 and was regularized on January 01, 2001.
He claimed that Management failed to grant him the GUTS-CBA increase last January 2001.
MANAGEMENT POSITION:
Issue # 1:
A)Promotional Policy: adjustment of basic monthly salary to the minimum salary of the new position.
6

B)Mr. Octavio's salary at the time of his promotion and before the conclusion of the GUTS CBA was
P10,000.00.
C)Upon the effectivity of his promotion on February 1, 2002, his basic monthly salary was adjusted to
P13,730.00, the minimum salary of the new position.
D)In June 2002, the GUTS-CBA was concluded and Mr. Octavio's basic salary was recomputed to include
the P2,000.00 1st year increase retroactive January 2002. The resulting basic salary was P12,000.00.
E)Applying the above-mentioned policy, Mr. Octavio's basic salary was adjusted to the minimum salary of
the new position, which is P13,730.00.
Issue # 2:
All regularized supervisory employees as of January 1 are not entitled to the GUTS CBA increase. However,
as agreed with GUTS in the grievance case of 18 personnel of International & Luzon Core Network
Management Center, probationary employees who were hired outside of PLDT and regularized as
supervisors/management personnel on January 1, 2002 shall be entitled to GUTS CBA. This decision shall
be applied prospectively and all previous similar cases are not covered.
RESOLUTION:
After protracted deliberation of these issues, the committee failed to reach an agreement. Hence,
Management position deemed adopted. IADaSE
MANAGEMENT

UNION

(signed)

(signed)

WILFREDO A. GUADIA

ADOLFO L. FAJARDO

(signed)

(signed)

ROSALINDA S. RUIZ

CONFESOR A. ESPIRITU

(signed)

(signed)

ALEJANDRO C. FABIAN

CHARLITO A. AREVALO

Aggrieved, Octavio filed before the Arbitration Branch of the NLRC a Complaint for payment of said salary
increases.

Ruling of the Labor Arbiter

Octavio claimed entitlement to salary increases per the CBAs of 1999-2001 and 2002-2004. He insisted that
when he was regularized as a supervisory employee on January 1, 2001, he became entitled to receive the
across-the-board increase of P2,500.00 as provided for under the CBA of 1999-2001 which took effect on
January 1, 1999. Then pursuant to the CBA of 2002-2004, he should have received an additional increase
of P2,000.00 apart from the merit increase of P3,730.00 which was given him due to his promotion on
February 1, 2002. However, PLDT unilaterally decided to deem as included in the said P3,730.00 the
P2,000.00 across-the-board increase for 2002 as stipulated in the CBA of 2002-2004. This, according to
Octavio, amounts to diminution of benefits. Moreover, Octavio averred that the CBA cannot be the subject
of further negotiation as it has the force of law between the parties. Finally, Octavio claimed that PLDT
committed an act of unfair labor practice because, while it granted the claim for salary increase of 18
supervisory employees who were regularized on January 1, 2002 and onwards, it discriminated against him
by refusing to grant him the same salary increase. He thus prayed for an additional award of damages and
attorney's fees.
PLDT countered that the issues advanced by Octavio had already been resolved by the Union-Management
Grievance Committee when it denied his claims through the Committee Resolution. Moreover, the grant of
across-the-board salary increase for those who were regularized starting January 1, 2002 and the exclusion
thereto of those who were regularized on January 1, 2001, do not constitute an act of unfair labor practice
as would result in any discrimination or encourage or discourage membership in a labor organization. In
fact, when the Union-Management Grievance Committee came up with the Committee Resolution, they
considered the same as the most practicable and reasonable solution for both management and union. At
any rate, the said Committee Resolution had already become final and conclusive between the parties for
failure of Octavio to elevate the same to the proper forum. In addition, PLDT claimed that the NLRC has no
jurisdiction to hear and decide Octavio's claims.
In a Decision dated August 30, 2004, the Labor Arbiter dismissed the Complaint of Octavio and upheld the
Committee Resolution. HCSAIa

Ruling of the National Labor Relations Commission

Upon Octavio's appeal, the NLRC, in its September 30, 2005 Resolution, affirmed the Labor Arbiter's
Decision. It upheld the Labor Arbiter's finding that Octavio's salary had already been adjusted in accordance
with the provisions of the CBA. The NLRC further ruled that it has no jurisdiction to decide the issues
presented by Octavio, as the same involved the interpretation and implementation of the CBA. According to
it, Octavio should have brought his claim before the proper body as provided in the 2002-2004 CBA's
provision on grievance machinery and procedure.
Octavio's Motion for Reconsideration was likewise dismissed by the NLRC in its November 21, 2005
Resolution.

Ruling of the Court of Appeals

Octavio thus filed a Petition for Certiorari which the CA found to be without merit. In its August 31, 2006
Decision, the CA declared the Committee Resolution to be binding on Octavio, he being a member of
GUTS, and because he failed to question its validity and enforceability.
In his Motion for Reconsideration, Octavio disclaimed his alleged failure to question the Committee
Resolution by emphasizing that he filed a Complaint before the NLRC against PLDT. However, the CA
denied Octavio's Motion for Reconsideration in its November 15, 2006 Resolution.
Issues
Hence, Octavio filed this Petition raising the following issues for our consideration:
8

a.Whether . . . the employer and bargaining representative may amend the provisions of the collective
bargaining agreement without the consent and approval of the employees;
b.If so, whether the said agreement is binding [on] the employees;
c.Whether . . . merit increases may be awarded simultaneously with increases given in the Collective
Bargaining Agreement;
d.Whether . . . damages may be awarded to the employee for violation by the employer of its commitment
under its existing collective bargaining agreement. cTDECH
Octavio submits that the CA erred in upholding the Committee Resolution which denied his claim for salary
increases but granted the same request of 18 other similarly situated employees. He likewise asserts that
both PLDT and GUTS had the duty to strictly implement the CBA salary increases; hence, the Committee
Resolution, which effectively resulted in the modification of the CBAs' provision on salary increases, is void.
Octavio also insists that PLDT is bound to grant him the salary increase of P2,000.00 for the year 2002 on
top of the merit increase given to him by reason of his promotion. It is his stance that merit increases are
distinct and separate from across-the-board salary increases provided for under the CBA.
Our Ruling
The Petition has no merit.
Under Article 260 of the Labor Code, grievances arising from the interpretation or implementation of the
parties' CBA should be resolved in accordance with the grievance procedure embodied therein. It also
provides that all unsettled grievances shall be automatically referred for voluntary arbitration as prescribed
in the CBA.
In its Memorandum, PLDT set forth the grievance machinery and procedure provided under Article X of the
CBA of 2002-2004, viz.:
Section 1.GRIEVANCE MACHINERY. there shall be a Union-Management Grievance Committee composed
of three (3) Union representatives designated by the UNION Board of Directors and three (3) Management
representatives designated by the company President. The committee shall act upon any grievance properly
processed in accordance with the prescribed procedure. The Union representatives to the Committee shall
not lose pay for attending meetings where Management representatives are in attendance.
Section 2.GRIEVANCE PROCEDURE. The parties agree that all disputes between labor and management
may be settled through friendly negotiations; that the parties have the same interest in the continuity of
work until all points in dispute shall have been discussed and settled; that an open conflict in any form
involves losses to the parties; and that therefore, every effort shall be exerted to avoid such an open
conflict. In furtherance of these principles, the parties agree to observe the following grievance
procedures. HSaIDc
Step 1.Any employee (or group of employees) who believes that he has a justifiable grievance shall present
the matter initially to his division head, or if the division is involved in the grievance, to the company official
next higher to the division head (the local manager in the provincial exchanges) not later that fifteen (15)
days after the occurrence of the incident giving rise to the grievance. The initial presentation shall be made
to the division head either by the aggrieved party himself or by the Union Steward or by any Executive
Officer of the Union who is not a member of the grievance panel. The initial presentation may be made
orally or in writing.

Step 2.Any party who is not satisfied with the resolution of the grievance at Step 1 may appeal in writing to
the Union-Management Grievance Committee within seven (7) days from the date of receipt of the
department head's decision.
Step 3.If the grievance is not settled either because of deadlock or the failure of the committee
to decide the matter, the grievance shall be transferred to a Board of Arbitrators for the final
decision. The Board shall be composed of three (3) arbitrators, one to be nominated by the Union,
another to be nominated by the Management, and the third to be selected by the management and union
nominees. The decision of the board shall be final and binding both the company and the Union in
accordance with law. Expenses of arbitration shall be divided equally between the Company and the
Union. (Emphasis supplied)
Indisputably, the present controversy involves the determination of an employee's salary increases as
provided in the CBAs. When Octavio's claim for salary increases was referred to the Union-Management
Grievance Committee, the clear intention of the parties was to resolve their differences on the proper
interpretation and implementation of the pertinent provisions of the CBAs. And in accordance with the
procedure prescribed therein, the said committee made up of representatives of both the union and the
management convened. Unfortunately, it failed to reach an agreement. Octavio's recourse pursuant to the
CBA was to elevate his grievance to the Board of Arbitrators for final decision. Instead, nine months later,
Octavio filed a Complaint before the NLRC. SECcIH
It is settled that "when parties have validly agreed on a procedure for resolving grievances and to submit a
dispute to voluntary arbitration then that procedure should be strictly observed." Moreover, we have held
time and again that "before a party is allowed to seek the intervention of the court, it is a precondition that
he should have availed of all the means of administrative processes afforded him. Hence, if a remedy within
the administrative machinery can still be resorted to by giving the administrative officer concerned every
opportunity to decide on a matter that comes within his jurisdiction[, then] such remedy should be
exhausted first before the court's judicial power can be sought. The premature invocation of [the] court's
judicial intervention is fatal to one's cause of action." "The underlying principle of the rule on exhaustion of
administrative remedies rests on the presumption that when the administrative body, or grievance
machinery, is afforded a chance to pass upon the matter, it will decide the same correctly."
By failing to question the Committee Resolution through the proper procedure prescribed in the CBA, that
is, by raising the same before a Board of Arbitrators, Octavio is deemed to have waived his right to
question the same. Clearly, he departed from the grievance procedure mandated in the CBA and denied the
Board of Arbitrators the opportunity to pass upon a matter over which it has jurisdiction. Hence, and as
correctly held by the CA, Octavio's failure to assail the validity and enforceability of the Committee
Resolution makes the same binding upon him. On this score alone, Octavio's recourse to the labor tribunals
below, as well as to the CA, and, finally, to this Court, must therefore fail.
At any rate, Octavio cannot claim that the Committee Resolution is not valid, binding and conclusive as to
him for being a modification of the CBA in violation of Article 253 of the Labor Code. It bears to stress that
the said resolution is a product of the grievance procedure outlined in the CBA itself. It was arrived at after
the management and the union through their respective representatives conducted negotiations in
accordance with the CBA. On the other hand, Octavio never assailed the competence of the grievance
committee to take cognizance of his case. Neither did he question the authority or credibility of the union
representatives; hence, the latter are deemed to have properly bargained on his behalf since "unions are
the agent of its members for the purpose of securing just and fair wages and good working conditions." In
fine, it cannot be gainsaid that the Committee Resolution is a modification of the CBA. Rather, it only
provides for the proper implementation of the CBA provision respecting salary increases. aHICDc
10

Finally, Octavio's argument that the denial of his claim for salary increases constitutes a violation of Article
100 of the Labor Code is devoid of merit. Even assuming that there has been a diminution of benefits on
his part, Article 100 does not prohibit a union from offering and agreeing to reduce wages and benefits of
the employees as the right to free collective bargaining includes the right to suspend it. PLDT averred that
one of the reasons why Octavio's salary was recomputed as to include in his salary of P13,730.00 the
P2,000.00 increase for 2002 is to avoid salary distortion. At this point, it is well to emphasize that
bargaining should not be equated to an "adversarial litigation where rights and obligations are delineated
and remedies applied." Instead, it covers a process of finding a reasonable and acceptable solution to
stabilize labor-management relations to promote stable industrial peace. Clearly, the Committee Resolution
was arrived at after considering the intention of both PLDT and GUTS to foster industrial peace.
All told, we find no error on the part of the Labor Arbiter, the NLRC and the CA in unanimously upholding
the validity and enforceability of the Grievance Committee Resolution dated October 7, 2002.
WHEREFORE, the petition is DENIED. The August 31, 2006 Decision and November 15, 2006 Resolution
of the Court of Appeals in CA-G.R. SP No. 93578 are AFFIRMED.
SO ORDERED.
||| (Octavio v. Philippine Long Distance Telephone Co., G.R. No. 175492, [February 27, 2013])

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