Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

THIRTEENTH CONGRESS
First Regular Session

House sito. 1749

Introduced by: REP. PROSPERO A. PICHAY, JR.

EXPLANATORY NOTE

Voluntary arbitration is a machinery created by PD 442 to function as first aid
to a bleeding labor-management relationship. Like paramedics are to an accident
victim, arbitrators must move lest the patient dies from blood loss. Due to loopholes
in the law that created it, this quick-reaction body often failed to perform its intended
function, if at all summoned to arbitrate.

This measure aims therefore to mend the gaping flaws of the existing code,
thereby save labor-management relations quickly and fairly for all concerned sectors.
‘The bill amends five articles of PD 442 on the following matters: 1) the selection of the
voluntary arbitrators or a panel of Voluntary Arbitrators; 2) the redefining jurisdiction
of the body to hear cases of termination of workers, productivity schemes or wage
distortions arising from legislated or mandated wage increases; 3) meting out
providing sanctions against erring arbitrators; 4) determining the fees of the
arbitrators; and 5) providing subsidy for unions that cannot shoulder the fees of the
arbitrators.

At no other time has the need for strengthening voluntary arbitration been more
acutely felt than now when the nation is reeling from an air transport crisis caused by «
the bitter labor dispute at the country's official flag carrier. Other enterprises in
distress could follow suit due to the prevailing financial crisis throughout Asia. The
light at the end of the tunnel for the financial sector is still nowhere in sight, yet there
is hope for strained labor-management relations should this bill be enacted into law.

Approval of this important measure is thus most earnestly and urgently
requested.

PROSPERO“A. PICHAY, JR.

Mn



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

THIRTEENTH CONGRESS
First Regular Session

1749

HOUSE BILL NO.

Introduced by: REP. PROSPERO A. PICHAY, JR.

AN ACT
FURTHER STRENGTHENING VOLUNTARY ARBITRATION AS A PREFERENTIAL
MODE OF LABOR DISPUTE SETTLEMENT, AMENDING FOR THE PURPOSE
ARTICLES 260, 261, 262-A, 262-B AND 277 (F) OF PD 442, OTHERWISE KNOWN AS
THE LABOR CODE OF THE PHILIPPINES, AS AMENDED

Be it enacted by the Senate and the House of Representatives of the Congress of the
Philippines in Session assembled:

SECTION 1. Article 260 of PD 442, otherwise known as the Labor Code of the
Philippines, as amended, is hereby amended to read as follows:

"ART. 260. Grievance Machinery and Voluntary Arbitration. -- The parties to a
Collective Bargaining Agreement shall include therein provisions that will ensure the
mutual observance of its terms and conditions, They shall establish a machinery for
the adjustment and resolution of grievances arising from the interpretation or
enforcement of company personnel policies.

"All grievances submitted to the grievance machinery which are not settled
within seven (7) calendar days from the date of its submission shall automatically be
referred to voluntary arbitration prescribed in the Collective Bargaining Agreement.

“For this purpose, parties to a Collective Bargaining Agreement shall name and
designate in advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or
include in the agreement a procedure for the selection of such Voluntary Arbitrator or
panel of Voluntary Arbitrators,] preferably from the listing of qualified Voluntary
Arbitrators duly accredited by the Board. In case the parties fail to NAME AND
DESIGNATE IN ADVANCE [select] a Voluntary Arbitrator or panel of Voluntary
Arbitrators UPON REQUEST BY ANY OF THE PARTIES, which shall act with the same


force and effect as if the Arbitrator has been SO NAMED AND DESIGNATED [selected
by the parties as described above].

SEC. 2. Article 261 of PD 442, otherwise known as the Labor Code of the
Philippines, as amended, shall likewise be, as it is hereby, further amended to read as
follows:

“ART. 261. Jurisdiction of Voluntary Arbitrator or panel of Voluntary
Arbitrators. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved grievances arising
from the interpretation or enforcement of company personnel policies referred to in the
immediately preceding Article, INCLUDING CASES OF TERMINATION OF WORKERS
COVERED BY COLLECTIVE BARGAINING AGREEMENTS, PRODUCTIVITY SCHEMES
OR WAGE INCREASES. Accordingly, violations of a collective Bargaining Agreement,
except those which are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the Collective Bargaining
Agreement. For purposes of this article, gross violations of Collective Bargaining
Agreement shall mean the flagrant and or malicious refusal to comply with the
economic provisions of such agreement.

“The Commission, its Regional Offices and Regional Directors of the Department
of Labor and Employment shall not entertain disputes, grievances or matters under
the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and refer the same to the Grievance

Machinery or Voluntary arbitration provided in the Collective Bargaining Agreement."

SEC. 3. Article 262-A of PD 442, otherwise known as the Labor Code, as
amended, should further be, as it is hereby amended to read as follows:

"ART. 262-A. Procedures. - The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have the power to hold hearings, receive evidences
and take whatever action is necessary to resolve the issue or issues subject of
the dispute, including efforts to effect a voluntary settlement of the parties.

“All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party or the exclusion of any witness
from the proceeding shall be determined by the Voluntary Arbitrator or panel of


Voluntary Arbitrators. Hearing may be adjourned for cause or upon agreement
by the parties.

“Unless the parties agree otherwise, it shall be mandatory for the
Voluntary Arbitrator or panel of Voluntary Arbitrators to render an award or
decision within twenty (20) calendar days from the date of submission of the
dispute to voluntary arbitration, FAILURE ON HIS OR THEIR PART TO
RENDER AN AWARD OR DECISION WITHIN SUCH PRESCRIBED PERIOD
SHALL BE SUFFICIENT CAUSE FOR THE BOARD TO DELIST OR REMOVE
THEIR NAMES FROM THE LIST OF ACCREDITED VOLUNTARY ARBITRATORS
AND BAR THEM FROM THE PRACTICE OF THE PROFESSION; MOREOVER IN
SUCH CASES, IT SHALL BE UNLAWFUL FOR THE VOLUNTARY ARBITRATOR
OR ARBITRATORS TO REFUSE OR FAIL TO TURN OVER TO THE BOARD THE
RECORDS OF THE CASE WITHIN TEN (10) DAYS AFTER ITS DEMAND FOR
THE SAME FOR FURTHER DISPOSITION IN ACCORDANCE WITH THE
PROVISIONS OF THE PRECEDING PARAGRAPH.

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.

"Upon motion of any interested party, the Voluntary Arbitrator or panel
of Voluntary Arbitrators or the Labor Arbiter in the Region where the movant
reside, in case of the absence or incapacity of the Voluntary Arbitrator or panel
of Voluntary Arbitrators for any reason, may issue a writ of execution requiring
either the sheriff of the Commission or regular courts or any public official
whom the parties may designate in the submission agreement to execute the

final decision, order or award."

SEC. 4. Article 262-B of PD 442, otherwise known as the Labor Code of the
Philippine, as amended should also be, as it is hereby, amended to read as follows:

"ART. 262-B. Cost of voluntary arbitration and voluntary arbitrator's fee.

- The parties to a Collective Bargaining Agreement shall provide therein a

proportionate sharing scheme on the cost of voluntary arbitration, including

PAYMENT OF the Voluntary Arbitrator's fee. The fixing of fees of voluntary


arbitrators or panel of Voluntary Arbitrators, whether shouldered wholly by the
parties or TO BE subsidized by the Special Voluntary Arbitration Fund, TO BE
MADE IN ACCORDANCE WITH THE GUIDELINES ISSUED BY THE BOARD
UPON THE RECOMMENDATION OF THE COUNCIL AND APPROVED BY THE
SECRETARY OF LABOR AND EMPLOYMENT, shall take into account the
following factors:

(a) Nature of the case;

(b) Time consumed in hearing the case;

(©) Professional standing of the Voluntary Arbitrator;

(d) Capacity to pay the parties; and

(e) Fees provided for in the Revised Rules of Court.

SEC. 5. Paragraph (f) of Article 277 of PD 442, otherwise known as the Labor
Code of the Philippines, as amended, should likewise be, as it is hereby amended to
read as follows:
() a special Voluntary Arbitration Fund is hereby established in the
Board to subsidize the cost of voluntary arbitration [in cases involving the
interpretation of the Collective Bargaining Agreement) including the
Arbitrator's fees, and for such other related purposes to promote and develop
voluntary arbitration. The Board shall administer the Special Voluntary
Arbitration Fund in accordance with the guidelines it may adopt upon the
recommendation of the Council, which guidelines shall be subject to the
approval of the Secretary of Labor and Employment; PROVIDED THAT EIGHTY
PERCENT (80%) OF THE FUND SHALL BE ALLOCATED FOR SUBSIDY FOR
UNIONS WHICH DOES NOT HAVE THE CAPACITY TO PAY THEIR AGREED
SHARE OF THE VOLUNTARY ARBITRATORS' FEE AS PROVIDED FOR IN THE
COLLECTIVE BARGAINING AGREEMENT. Continuing funds needed for this
purpose in the [initial] yearly amount of SEVENTY-FIVE (75) MILLION PESOS (P
75,000,000) [fifteen million pesos] shall be provided in the [1989] annual
General Appropriations Acts.
"The amount of subsidy in appropriate cases shall be determined by the
Board in accordance with established guidelines issued by it upon the

recommendation of the Council.


"The REMAINING TWENTY PERCENT (20%) OF THE Fund shall [also] be
utilized for the operation of the Council, the training and education of Voluntary
Arbitrators, and the Voluntary Arbitration Program.”

SEC. 6. All laws, orders, issuances, rules and regulations or parts thereof
inconsistent with the provisions of this Act are hereby repealed, amended or codified
accordingly.

SEC. 7. The Secretary of Labor and Employment shall promulgate the
necessary rules and regulations to implement the provisions of this Act.

SEC. 8. If any provision of this Act or application of such provision to any
period or circumstance is held invalid for any reason, the remainder of this Act or the
application of such provision to other persons or circumstances shall not be affected

thereby.

SEC. 9. This Act shall take effect fifteen days (15) after its complete publication

in at least one (1) newspaper of national circulation.

Approved,