Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
First Regular Session
THIRTEENTH CONGRESS

House Bill No. 39'70

Introduced by Representatives Mario “Mayong” Joyo Aguja,
Loretta Ann P. Rosales and Ana Theresia Hontiveros-Baraquel
(AKBAYAN Party List), and Representative Del De Guzman
(Lone District of Marikina City)

AN ACT TO ENHANCE THE PHILIPPINE INDUSTRIAL AND LABOR DISPUTE
SETTLEMENT SYSTEM AND FOR THAT PURPOSE, AMENDING CERTAIN
PROVISIONS OF PRESIDENTIAL DECREE NO. 442 OTHERWISE KNOWN AS THE
LABOR CODE OF THE PHILIPPINES.

EXPLANATORY NOTE

The evolution of mechanisms designed to resolve industrial and labor
disputes from the Court of Industrial Relations established under CA No. 103
(1936) to the current system under the Labor Code (P.D. No. 442 as amended)
has resulted in a web of intricate and often overlapping jurisdictions which is
continuously plagued by perceptions of inefficiency, ineffectiveness and
corruption. The present proposal argues in favor of a holistic and comprehensive
approach to the problems besetting our industrial and labor dispute resolution
system. In essence, the following are the key issues which the proposed new
system of industrial and labor dispute resolution addresses:

1, As the system of resolving industrial and labor disputes developed, we
observe a gradual shift from court-situated adjudication to the introduction
of mediation and voluntary arbitration as means to bring the outcome of
industrial and labor disputes closer to the desires and needs of the parties
involved. And yet, as it stands, industrial and labor disputes are still
resolved by compulsory arbitration either at the National Labor Relations
Commission (NLRC), by the Secretary of Labor and Employment, and
even by the inappropriately named system of voluntary arbitration
Methods of alternative dispute resolution (ADR) remain footnotes to the
whole dispute resolution process, particularly as they are given merely a
token significance at the labor arbiter’s level. This, notwithstanding that
industrial and labor disputes are arguably the most fertile ground in which
ADR may bear fruit.


Hence, even if ADR is more thought out and emphasized in
agencies such as the National Conciliation And Mediation Board (NCMB),
ADR remains at the fringes of the Philippine industrial and labor dispute
resolution system. Hence, there is a need to bring ADR processes into
the forefront of and embed it at the core of the State mechanism
designed to address industrial and labor disputes. Corollarily, there
is a need to formulate and implement ADR processes intelligently
and comprehensively, thus maximizing its benefits to the
stakeholders in particular and to the State in particular.

. Through the introduction of piecemeal amendments to the industrial and
labor dispute resolution process, our current system is now characterized
by multiple venues, a large bureaucracy and often confusing rules
regarding jurisdiction and procedure. The Department of Labor and
Employment classifies labor disputes into disputes between:

1.) the employer and its employees or employee's organizations’
2.) two associations of employees; and
3.) members of employees’ organizations

Further, the Department categorizes these disputes into three

+ Labor Standard Disputes include non-payment or under-payment of
wages and wage-related benefits and violations of health and safety
standards. -

* Labor Relations Dispute include employee discipline or dismissals,
unfair labor practices, disputes arising from the right of unions to
represent employees for purposes of bargaining, bargaining deadlocks,
strikes and lockouts, contract administration, and personnel policy
disputes.

* Welfare and Social Legislations Disputes refer to claims arising from
failure of the employer to comply with its social and welfare obligations
under the law, such as remittance of SSS premiums and ECC
contributions, or failure to pay social benefits including maternity pay,
medicare and disability compensation

Persons intending to file a claim regarding any of the issues above must
sort through a virtual maze of agencies to which she may be directed.
According to the Departrnent:

* Labor Standards Disputes, including simple money claims not
exceeding P5,000.00, which arises out of employee-employer
relations are referred to the Regional Office (RO) of the DOLE.

* Labor Relations Disputes, particularly illegal dismissals with or
without claim for reinstatement, unfair labor practices, strikes and
lockouts and claims of damages are referred to the labor Arbiter in
the Regional Arbitration Branches of NLRC.


* Union Representation are referred to the Med-Arbiter of the DOLE-
RO.

* Intra-Union Disputes and Cancellation of Union Registration are
referred to the DOLE-RO or the Bureau of Labor Relations.

* Bargaining Deadlocks Needing Conciliation and Mediation are
referred to the Regional Branches of NCMB.

* CBA Administration Disputes Involving Personnel Policies are
referred to the Grievance Machinery at the establishment, if any,
then with the regional branches of the NCMB.

* Social Legislation Disputes are referred to the Regional Branches of
the ECC or the SSS.

It is observed that the multiplicity of venue which marks our current system
is not by design nor was intentional in any way. On the contrary, the
intricate system we have is the result of a lack of design and need of a
well-considered plan. In essence, we have failed to ask why we have
such a system and more basic, can we not have a single entry point for all
industrial and labor disputes? Hence, there is a need to rethink the
current system of resolving industrial and labor disputes in order to
promote simplicity and minimize the bureaucracy which needs to
Support it. This will address the pervading confusion in jurisdictions of the
Present system. There is a need to create a system where
stakeholders can take their issues to a single agency which has the
requisite expertise to address the distinct dynamics and
characteristics of industrial and labor disputes,

. The speed (or lack thereof) by which industrial and labor disputes are

resolved is a function of the efficiency of our dispute resolution
mechanism. Currently, simple labor cases may take five to seven years to
go through the present system from the plant level to the Supreme Court
and to execution. Hence, there is a need to expedite the manner by
which industrial and labor disputes are resolved. Opportunities for
delay and hence, corruption, should be minimized and appeals, while
necessary, should be limited to petitions for certiorari before the
Supreme Court. Needless to say, the matter of delay could also be
addressed by a system of mediation designed to reduce the number
of claims reaching arbitration.

For these reasons, a new system of resolving industrial and labor disputes is
Proposed. Building on concepts already in place, the proposed scheme is
characterized by the following changes:

1.

Single entry. All industrial and labor disputes are to be brought to a
single agency, the newly created National Mediation and Arbitration Board
(NMAB).

Mediation as the backbone. All claims brought to the NMAB shall be
subject to mediation efforts conducted by persons hired and trained
specifically for that purpose. This is a great departure from the present


system where mediation is perfunctorily performed by arbiters and even
untrained assistants. Mediation proceedings are, as they should be, kept
confidential. This is a far cry from the present system where mediation is
entrusted to the person who is subsequently to decide the same case.
Only where mediation fails to help the parties reach an agreeable
settlement are claims brought before arbitration

3. Professional Arbitration. Arbitrators should be familiar with employer -
employee issues though they need not be lawyers. Arbitrators shall be
accredited and named in a list kept by the Department of Labor and
Employment. A selection process allows parties to entrust their cases to
arbitrators who have shown competence and probity over time.

4. Direct recourse to the Supreme Court. Arbitral Awards shall be final
and executory except by petition for certiorari before the Supreme Court

While each of the above features is in itself a big step forward beyond the present
system, the strength of the present proposal lies in the integration of all these
features into a single and united whole, with each part designed to complement
the others as well as the sum.

Hence, the support of this bill is earnestly sought.

Rep. MARIO 4 ING” JOYO AGUJA

Rep. LORETTA ANN P. ROSALES

Rep. ke THERESIA HONTIGEROS-BARAQUEL

Rep. DI GUZMAN


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

First Regular Session

THIRTEENTH CONGRESS
House Bill No._ 397)

Introduced by Representatives Mario “Mayong” Joyo Aguja,
Loretta Ann P. Rosales and Ana Theresia Hontiveros-Baraquel
(AKBAYAN Party List), and Representative Del De Guzman
(Lone District of Marikina City)

AN ACT TO ENHANCE THE PHILIPPINE INDUSTRIAL AND LABOR DISPUTE
SETTLEMENT SYSTEM AND FOR THAT PURPOSE, AMENDING CERTAIN
PROVISIONS OF PRESIDENTIAL DECREE NO. 442 OTHERWISE KNOWN AS THE
LABOR CODE OF THE PHILIPPINES.

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

Section 1. Short Title. This Act shall be known as the INDUSTRIAL AND LABOR
DISPUTE SETTLEMENT ACT of 2004

Section 2. Declaration of Policy. Article 211 of the Labor Code shall be repealed and
replaced as follows:

Article 214. Declaration of Policy. A. Itis the policy of the State:

(a) To promote and emphasize the primacy of free collective bargaining and
negotiations AND THE USE OF ALTERNATIVE MODES OF DISPUTE
RESOLUTION, INCLUDING MEDIATION, as modes of settling industrial or
labor disputes; .

(b) To promote free trade unionism as an instrument for the enhancement of
democracy and the promotion of social justice and development;

(0) To foster the free and voluntary organization of a strong and united labor
movement;

(d) To promote the enlightenment of workers concerning their rights and
obligations as union members and as employees;

(e) To provide an adequate administrative machinery for the expeditious
settlement of industrial and labor disputes;

(f) To ensure a stable but dynamic and just industrial peace; and


(g) To ensure the participation of workers in decision and policy-making
processes affecting their rights, duties and welfare.

B. To encourage a truly democratic method of regulating the relations between the
employers and employees by means of agreements freely entered into through
collective bargaining, no court or administrative agency or official shall have the
power to set or fix wages, rates of pay, hours of work or other terms and conditions of
employment, except as otherwise provided under this Code.

Section 3. Definitions. Article 212 of the Labor Code shall be repealed and replaced as

follows:

Chapter I
DEFINITIONS

Article 212. Definitions.

(a)

(b)

(c)

(a)
(e)
(f)

(9)
(h)

@

@

(k)

“Alternative Dispute Resolution” and "ADR" refer to any process or
procedure used to resolve a dispute or controversy other than by
adjudication of a judge of a court or tribunal in which a neutral third
party participates to assist in the resolution of issues, which includes
arbitration, mediation, early neutral evaluation, mini-trial, or any
combination thereof,

“Arbitral Award” means any final decision by an arbitrator in resolving
the issue in an industrial or labor controversy

“Arbitration” means a voluntary dispute resolution process in which
one or three arbitrators, appointed in accordance with this Code,
resolve an industrial or labor dispute, consistent with the Code, by
rendering an award.

“Arbitrator” refers to the person chosen according to this Code to
render an award in an appropriate industrial or labor dispute.

“Bargaining representative" nieans a legitimate labor organization the
members of which may or may not be employed by the employer.

"Bureau" means the Bureau of Labor Relations and/or the Labor
Relations Divisions in the regional offices.

“Board” refers to the National Mediation and Arbitration Board.

“Claimant” or “Complainant” refers to any party who files a claim with
the Board in accordance with the Code.

“Contempt’ refers to either direct or indirect contempt and, as used in
this Act, may call for’the suppletory application of the pertinent
provisions of the Rules of Court

“Company union" means any labor organization whose formation,
function or administration has been assisted by any act defined as

* unfair labor practice by this Code.

“Council” refers to the Tripartite Industrial Peace Council under
Executive Order No. 49 series of 1998, and Executive Order No. 97,
series of 1999.


0)

(m)

(n)

(0)

(p)

(q)

o

(s)

)

(u)
Ww)

(w)

(x)

"Employer" includes any person acting in the interest of an employer,
directly or indirectly. The term shall not include any labor organization
or any of its officers or agents except when acting as employer.

"Employee" includes any person in the employ of an employer. The
term shall not be limited to the employees of a particular employer,
unless the Code so explicitly states. It shall include any individual
whose work has ceased as a result of or in connection with any
current industrial or labor dispute or because of any unfair labor
practice

“Industrial and labor dispute” includes any controversy or matter
concerning terms and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining, changing
or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and

- employee

“Internal union dispute" includes all disputes or grievances arising
from any violation of or disagreement over any provision of the
constitution and by laws of a union, including any violation of the rights
and conditions of union membership provided for in this Code

“Labor organization" means any union or association of employees
which exists in whole or in part for the purpose of collective bargaining
or of dealing with employers concerning terms and conditions of
employment.

“Legitimate labor organization” means any labor organization duly
registered with the Department of Labor and Employment, and
includes any branch or local thereof

"Lockout" means any temporary refusal of an employer to furnish work
as a result of an industrial or labor dispute.

“Managerial employee" is one who is vested with the powers or
prerogatives to lay down and execute management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees. Supervisory employees are those who, in the interest of
the employer, effectively recommend such managerial actions if the
exercise of such authority is not merely routinary or clerical in nature
but requires the use of independent judgment. All employees not
falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book

“Mediation” refers to the process defined by the Code in which a
mediator, selected according to the Code, facilitates communication
and negotiation, and assist parties in reaching a voluntary agreement
regarding an industrial or labor dispute.

“Mediators” refers to a person who conducts mediation

“Respondent refers to any party against whom a claim has been filed
in accordance with this Code.

"Strike" means any temporary stoppage of work by the concerted
action of employees as a result of an industrial or industrial and labor.

"Strike area" means the establishment, warehouses, depots, plants or
offices, including the sites or premises used as runaway shops, of the
employer struck against, as well as the immediate vicinity actually


used by picketing strikers in moving to and fro before all points of
entrance to and exit from said establishment

(y) _ “Strike-breaker" means any person who obstructs, impedes, or
interferes with by force, violence, coercion, threats, or intimidation any
peaceful picketing affecting wages, hours or conditions of work or in
the exercise of the right of self-organization or collective bargaining.

(2) “Unfair labor practice" means any unfair labor practice as expressly
defined by the Code.

Section 4. Dispute Resolution System. Article 213 of the Labor Code shall be
repealed and replaced as follows:

Title Il
RESOLUTION OF INDUSTRIAL AND LABOR DISPUTES.

Article 213. A. The National Mediation and Arbitration Board. There shall be
a National Mediation and Arbitration Board which shall be attached to,
administered, and supervised by the Department of Labor and Employment,
composed of an Executive Director and four (4) Deputy Executive Directors. The
Executive Director shall exercise supervision over all personnel of the Board,
including mediators and arbitrators. The Board shall also be composed of as.
many mediators, sheriffs, and staff members as shall be necessary for its
effective operations, :

The Board shall have its main office in Metropolitan Manila and shall establish as
many branches as there are administrative regions in the country, with as many
mediators for each branch as shall be necessary for their effective operations.
Each branch of the Board shall be headed by an Executive Mediator who shall be
appointed by the Executive Director.

B. The Executive Director and Deputy Directors. The Executive Director shall
be appointed by the President for a term of three (3) years upon recommendation
of the Secretary of Labor and Employment. Workers’ groups represented in the
Tripartite Industrial Peace Council shall submit a list of six (6) names to the
President who shall choose two persons from the list to serve as Deputy
Executive Directors of the Board. Likewise, employers’ groups represented in the
Tripartite Industrial Peace Council shall submit a list of six (6) names to the
President who shall choose two persons from the list to serve as Deputy
Executive Directors of the Board. Each Deputy Executive Director shall serve for
a term of three (3) years.

The Executive Director shall receive an annual salary at least equivalent to, and
be entitled to the same allowances and benefits, including retirement, to that of a
Justice of the Court of Appeals. Each Deputy Executive Director shall receive an
annual salary at least equivalent to, and be entitled to the same allowances and
benefits, including retirement, to that of an Assistant Secretary of the Department
of Labor and Employment. In no case, however, shall the provision of this article
result in the diminution of existing salaries, allowances and benefits of the
aforementioned officials.

C. Mediators. Each Mediator shall be appointed by the Secretary of Labor and
Employment, provided that the Secretary shall ensure that at least thirty percent
(30%) of all mediators females and provided further, that each mediator should:


1) have at least five (5) years of experience in handling industrial or labor
matters; and

2) have at least one hundred twenty (120) hours of relevant training on
alternative dispute resolution given by an institution accredited by the
Board or by the Office for Alternative Dispute Resolution created
under Republic Act No, 9285;

3) after being appointed, undergo regular training on alternative dispute
resolution given by an accredited institution of the Board or by the
Office for Alternative Dispute Resolution created under Republic Act
No. 9285,

Mediators shall hold office during good behavior until they reach 65 years of age
or unless sooner removed for violation of their duties under law or rules or
become incapacitated to discharge the duties of their office.

The Secretary of Labor and Employment shall formulate and issue a Code of
‘Conduct for Mediators in Industrial and Labor Disputes which shall provide for the
standard of conduct expected of all Mediators of the Board in discharging their
duties. Violation of said Code of Conduct shall be ground to dismiss a Mediator
from office.

D. Arbitrators. Arbitrators shall not be permanently employed by the Board and
shall render service and receive compensation only in case of actual arbitration of
an industrial or labor dispute. Arbitrators may be called upon by the Board to
arbitrate an industrial or labor dispute provided that they are listed in the
Department's official list of Arbitrators. For this purpose, the Board shall maintain
a list of accredited arbitrators which shall be reviewed annually by the Board

In addition to procedures and requirements determined by the Secretary,
accreditation shall ensure that arbitrators are persons of distinction in whom
employers, employees, employees’ groups and the government can have
confidence. Arbitrators should have at least five (5) years of experience in
handling industrial or labor matters. They shall have no personal or financial
interest in the results of the proceedings in which they are appointed and shall
have no relation to the underlying dispute or to the parties or their counsel that
may create an appearance of bias

The Secretary of Labor and Employment shall formulate and issue a Code of
Conduct for Arbitrators in Industrial and Labor Disputes which shall provide for
the standard of conduct expected of all Arbitrators of the Board in discharging
their duties. Violation of the Code of Conduct for Arbitrators, including failure to
issue an award within the.mandatory period, shall constitute sufficient ground to
revoke his accreditation as an arbitrator. The Code shall identify that conduct
which may be grounds to remove and replace an arbitrator from a particular
dispute which he has already accepted to arbitrate

E. Staff. The Secretary of Labor and Employment shall, in consultation with the
Executive’ Director, appoint the staff and employees of the Board and its regional
branches, including sherrifs, as the needs of the service may require, subject to
the civil service law, rules, and regulations, provided that the Secretary shall
ensure that at least thirty percent (30%) of the staff so appointed shall be female.


4
The Secretary shall formulate and issue a Code of Conduct for sheriffs and staff
in Industrial and Labor Disputes which shall provide for the standard of conduct
expected of all sheriffs and staff of the Board in discharging their duties.

Section 5. Functions and powers of the Board. Article 214 of the Labor Code shall be
repealed and replaced as follows:

ART. 214. Functions and Powers of the Board. - The Board shall have the

power and authority:

(a) To promulgate rules and regulations governing the mediation and arbitration
of disputes before it and its regional branches, as well as those pertaining to its
internal functions and such rules and regulations as may be necessary to carry
out the purposes of this Code;

(b) To administer oaths, summon the parties to a controversy, issue subpoenas
requiring the attendance and testimony of witnesses or the production of such
books, papers, contracts, records, statement of accounts, agreements, and
others as may be material to the matter under investigation, and to testify in any
investigation or hearing conducted in pursuance of this Code;

(c) In arbitration, to proceed to hear and determine the disputes in the absence of
any party thereto who has been summoned or served with notice to appear, and
in mediation and arbitration, to conduct investigation for the determination of a
question, matter or controversy within its jurisdiction, conduct its proceedings or
any part thereof in public or in private, adjourn its hearings to any time and place,
refer technical matters or accounts to an expert and to accept his report as
evidence after hearing of the parties upon due notice, direct parties to be joined
in or excluded from the proceedings, correct, amend, or waive any error, defect or
irregularity whether in substance or in form, and give all such directions as it may
deem necessary or expedient in the determination of the dispute before it; and

(d) To hold any person in contempt directly or indirectly and impose appropriate
penalties therefor in accordance with law and the Rules of Court.

(e) In appropriate cases and according to this Code, to enjoin or restrain any
actual or threatened commission of any or all prohibited or unlawful acts or to
require the performance of a particular act in any industrial or labor dispute.

(f) At any time during working hours, conduct an ocular inspection on any
establishment, building, ship or vessel, place or premises, including any work,
material, implement, machinery, appliance or any object therein, and ask any
employee, laborer, or any person, as the case may be, for any information or data
concerning any matter or question relative to the object of the investigation

Section 6. Jurisdiction. Article 215 of the Labor Code shall be repealed and replaced
as follows:

Article 215 . Claims cognizable by the Board. The Board shall have original and
exclusive jurisdiction to mediate and arbitrate all industrial or labor disputes including
the following:

1. Claims involving wages, rates of pay, hours of work and other terms and
conditions of employment;

2. Claims for any sum of money, regardless of amount;


3. Claims of illegal or ineffectual termination or suspension;

4. Claims for actual, moral, exemplary and other forms of damages, as well as
interest, attorney's fees, and costs of litigation arising from employer-
employee relations;

5. Claims under Section 10 of Republic Act No. 8042;
Claims of legitimate labor organizations against other labor organizations;

7. Claims against labor organizations made by their members or other interested
parties;

8. Claims arising from bargaining deadlock;
9. Claims of unfair labor practice;

10. Claims arising from any violation of Article 264 of this Code, including claims
involving the legality of strikes and lockouts;

11. Claims of any violation of a collective bargaining agreement including those
arising from the interpretation or implementation of the collective bargaining
agreement;

12. Claims arising from the interpretation, implementation, or enforcement of
company personnel policies or similar rules, including disputes which are not
resolved even after going through the appropriate grievance procedure:

13. Any other claims arising from an employer-employee relationship;

14. Claims involving injunction and temporary restraining orders arising from the
disputes enumerated herein

No dispute, claim, complaint, or petition, including those for restraining orders or
injunctive relief, arising out of, related to, or involving the above disputes shall be
heard or decided by any other court or tribunal, except by the Supreme Court which
may give due course to a petition for certiorari involving an arbitral award.

However, claims within the exclusive jurisdiction of the Employee's Compensation
Commission (ECC) or the Social Security System (SSS) are excluded from the
coverage of this Article. Likewise, registration of labor organizations and
proceedings to determine majority representation among employees shall continue to
be filed with the appropriate Regional Office and shall not be within the jurisdiction of
the Board as herein defined.

Section 7. Mediation. Article 216 of the Labor Code shall be repealed and replaced as
follows:

Article 216. A. Immediate referral to Mediation. All disputes filed with the
Board shall immediately be referred to a mediator who shall mediate between the
parties for a period not exceeding sixty (60) calendar days from the date of the
initial conference without extension. After a claim is filed, the Board shall set the
case for preliminary conference and a notice to the parties thereof shall be sent
not later than five (5) days after referral to a mediator.

The mediator shall be chosen by the Board upon considering the nature and
complexity of the claims as well as the preferences of the parties, if known. One
(1) mediator will be appointed unless the Board determines otherwise.


In all disputes, no person shall serve as a mediator in any dispute in which that
person has any financial or personal interest in the result of the mediation, except
by the written consent of all parties. Prior to accepting an appointment, the
prospective mediator shall disclose any circumstance likely to create a
presumption of bias. Upon receipt of such information, the Board shall either
replace the mediator or immediately communicate the information to the parties
for their comments. In the event that the parties disagree as to whether the
mediator shall serve, the Board will appoint another mediator. The Board is
authorized to appoint another mediator if the appointed mediator is unable to
serve promptly.

B. Process of Mediation.

1. Representation. Any party may be represented by a person of the party's
choice. The names and addresses of such persons shall be communicated by the
respective parties in writing to all parties and to the Board.

2. Date, Time, and Place of Mediation. The mediator shall fix the date and the
time of each mediation session. The mediation shall be held at the appropriate
regional office of the Board, or at any other convenient location agreeable to the
mediator and the parties, as the mediator shall determine.

3. Identification of Matters in Dispute. The mediator shall exercise complete
control over all medidtion proceedings in pursuit of a just, adequate, and speedy
agreement between the parties. During the first hearing, the mediator shall
identify the issues involved and the respective opinions of the parties thereto.
The parties will be expected to produce all information reasonably required for the
mediator to understand the issues presented. For this purpose, the mediator may
issue subpoenas duces tecum and subpoenas ad testificandum to require the
production of necessary documents, property. or persons and may cite persons in
violation of such orders in contempt.

4. Authority of Mediator. The mediator does not have the authority to impose a
settlement on the parties but will attempt to help them reach a satisfactory
resolution of their dispute. The mediator is authorized to conduct joint and
separate meetings with the parties and to make oral and written
recommendations for settlement. Whenever necessary, the mediator may also
obtain expert advice concerning technical aspects of the dispute, provided that
the parties agree. Arrangements for obtaining such advice shall be made by the
mediator or the parties, as the mediator shall determine.

The mediator may seek the agreement of the parties to resort to various methods
of ADR including the following

Open Door Policy: Employees are encouraged to meet with their
immediate supervisor or manager to discuss problems arising out of the
workplace environment. In this case, the mediator may request the
presence of any person necessary to the resolution of the dispute.

Ombuds: A neutral third party (either from within or outside the company)
is designated to confidentially investigate and propose settlement of
employment complaints brought by employees. In this case, the mediator
may engage a neutral third party to investigate the claims and render a
non-binding finding thereon


Internal Mediation: A process for resolving disputes in which a neutral
third person from within the company, helps the disputing parties
negotiate a mutually acceptable settlement. For this purpose, the
mediator may request employees and/or managers from within the same
company to help mediate the dispute.

Peer Review. A panel of employees (or employees and managers) works
together to resolve employment complaints. In this regard, mediators may
request employees and/or managers from other companies to investigate
the dispute and render non-binding findings thereon. Mediators shall
endeavour to involve employees and managers who are from the same or
similar industry. In all cases, mediators shall take all necessary steps to
preserve the confidentiality of the dispute

The mediator is authorized to end the mediation upon the execution of a
settlement agreement by the parties which shall be duly attested by the mediator.
Any settlement reached by the parties duly attested by the mediator shall be
immediately binding between the parties and may be enforced and executed as
provided according to Article 221

The mediator is authorized to end the mediation by a written declaration of a
party or parties to the effect that the mediation proceedings are terminated or
whenever, in the judgment of the mediator, further efforts at mediation would not
contribute to a resolution of the dispute between the parties.

5. Privacy. Mediation sessions are private. The parties and their representatives
may attend mediation sessions but other persons may attend only with the
permission of the parties and with the consent of the mediator.

6. Confidentiality. Mediation proceedings shall be considered confidential and
information obtained therein shall not be published or disclosed to third parties
except (i) with the consent of the parties, or (ii) when necessary in cases where
the dispute is referred to arbitration or where resort to the Supreme Court under
Article 220.

The confidentiality of the proceedings shall include communications to or from the
mediator and all records, reports, or other documents received by a mediator
while serving in that capacity. Confidential information disclosed to a mediator by
the parties or by witnesses in the course of the mediation shall not be divulged by
the mediator. The mediator shall not be compelled to divulge such records or to
testify in regard to the mediation in any adversary proceeding or judicial forum

Any violation of the confidentiality of the proceedings shall be subject to the
following sanctions: :

(1) Without prejudice to the following paragraph, administrative action or
proceeding to be conducted by the Board, with proper notice and
hearing, for inhibition or prohibition from appearing as mediator,
"arbitrator, counsel or representative for any party in any case before
the Board for a period to be determined by the Board;

(2) __ ifthe violator is a professional, administrative/disciplinary action before
the appropriate authority, including the Supreme Court and
Professional Regulation Commission (PRC), at the instance of any
party or of the Board.


Section 8. Referral to Arbitration. Article 217 of the Labor Code shall be repealed and
replaced as follows:

Article 217. Referral to Arbitration. In case of failure of mediation, the
mediator shall accomplish a report to this effect and automatically refer the case
to Arbitration, except if all parties express in writing their refusal to arbitrate. In
case any of the parties fail or refuse to participate in the mediation, the
Participating parties can choose to declare a failure of mediation, in which case
such participating parties can decide either to refuse or proceed to arbitration.

For purposes of this Title, there is a failure of mediation in any of the following
cases:

(1) Where parties fail to reach an amicable settlement after the lapse of
sixty (60) calendar days from the date of the initial mediation
conference;

(2) Regardless of paragraph (1), where any party necessary to reach a
complete settlement of the claim fails or refuses to participate in the
mediation; or

(3) Regardless of paragraph (1), where the mediator reaches the
conclusion that the parties will not reach an amicable settlement or
that further efforts at mediation are no longer worthwhile

In all cases, there may be a failure of mediation with regard only some or not all
of the claims brought to mediation. In this case, failure of mediation may be
declared only with regard the unresolved claims

Section 9. Arbitration. Article 218 of the Labor Code shall be repealed and replaced
as follows:

Article 218. A. Start of Arbitration. Arbitration is deemed commenced from the
time that the Board issues a report declaring a failure of mediation, except in
cases where all parties or, in appropriate cases, participating parties decide not to
proceed to arbitration,

8B. Number of Arbitrators. The parties may agree on the number of arbitrators
which shall be one (1) or three (3). If the parties cannot agree on the number of
arbitrators or in case any party fails or refuses to participate in the proceedings,
the Board shall consider the nature and complexity of the case in determining
whether to assign one or three arbitrators to the dispute

C. Selection of Arbitrator.

1. Arbitrator of Choice. If there is to be only one (1) arbitrator, the person freely
chosen by all the parties shall arbitrate the claims, provided that such person
remains in good standing in the Department's official list of arbitrators.

If the claim is to be referred to three (3) arbitrators, the claimant shall name one
(1) arbitrator and the respondent shall name one (1) arbitrator. The third
arbitrator who shall serve as the Chairperson shall be chosen according to the
procedure pertaining to no arbitrator of choice. All three (3) arbitrators should
remain in good standing in the Department's official list of arbitrators.


2, No Arbitrator of Choice. If the parties cannot agree on an Arbitrator within five
(6) days after the mediator determines a failure of mediation, the Board shall
send to the parties a list of not less than nine (9) names of arbitrators in good
standing in the Department's official list of arbitrators. Each name shall be
accompanied by a brief statement of their respective qualifications and
experience and their business or professional connections. The list shall be
accompanied by a summons from the Board to appear at a meeting at which the
parties shall be given an opportunity to select one (1) arbitrator of choice. In
cases where a temporary or permanent injunction is prayed for, the Board shall
immediately call the parties to a meeting at which the parties shall be given an
opportunity to select three (3) arbitrators of choice.

At that meeting, if the parties still cannot identify a common choice, each party
shall proceed to select the arbitrator in the following manner:

The claimant shall strike out one name from the list.

Then, the respondent shall strike out one name from the list.

The process is repeated until only one name is left in the list.

‘Such remaining person shall be the appointed Arbitrator of the claim.

RONe

Any party who has been duly summoned to the meeting for the selection of
arbitrators but fails to attend the meeting for any reason shall be bound by the
choice of arbitrator made during that meeting.

3. Multiple Claimants with Common Claims. If there are more than one claimant
but with similar or common claims, the claimants must choose one person among
them to represent them in determining the arbitrator. For this purpose, the
claimants may choose to be represented by counsel

4. Multiple Respondents. In case there is more than one respondent against
whom common claims are made, they must choose a person among them who
will represent them in determining the arbitrator

D. Acceptance of Appointment. The Arbitrator shall, before entering upon the
duties of the office, sign a Statement which shall be filed with the Board and a
copy thereof provided to each party. The statement shall include a sworn
acceptance by the arbitrator of the particular case assigned to him and an oath to
decide it according to the Constitution and the law.

E. Challenge of Arbitrators. (1) No later than ten (10) days after the
identification of the arbitrator, all parties may jointly challenge the &rbitrator by
communicating their challenge to the Board in writing, Upon receipt of a joint
challenge, the Board shall replace the arbitrator and a new one chosen in
accordance with Article 218.

(2) No later than ten (10) days after the arbitrator has been identified, any party
may challenge the arbitrator by communicating his challenge to the Board in
writing. ‘Such challenge should be based on the grounds for disqualification
specified under the Code of Conduct for Arbitrators formulated by the Secretary.
Within ten (10) days of receiving the challenge, the Board shall replace the
arbitrator or communicate the challenge to the other parties. Any of the other
parties may oppose the challenge by written opposition addressed to the Board
within ten (10) days from receipt of the communication regarding the challenge. It


shall be absolutely mandatory for the Board to decide on the challenge within
twenty five (25) days after receiving the challenge

This decision shall be interlocutory and not appealable. If the arbitrator is
retained, the arbitrator shall proceed with arbitration proceedings. If the arbitrator
is replaced, the parties shall choose another arbitrator according to Article 218.
In every case, any party may exercise the privilege of challenge only once,
provided that for this purpose, multiple parties shall be considered as one party.

Section 10. Arbitration Procedure. Article 219 of the Labor Code shall be repealed
and replaced as follows:

Article 219. Procedure of Arbitration.

A. Disclosure. At the first hearing, the arbitrator shall disclose all information
that might be relevant to preserving neutrality, including but not limited to service
as an arbitrator in any past or pending case involving any of the parties and/or
their representatives. The arbitrator shall also disclose how long he will take to
decide the case at hand subject to the limitations as to time under Article 220

B. Determinations. At the first hearing, the arbitrator shall exert all efforts to
explore and resolve matters that will expedite the arbitration proceedings. In
particular, the arbitrator must determine the following

1. the issues to be arbitrated;

2. the date, time, place and estimated duration of the successive hearings;

3. the law, standards, rules of evidence and burdens of proof that are to
apply to the proceeding; 7

4. the stipulations and declarations regarding facts, exhibits, witnesses and

other issues;

the names of witnesses (including expert witnesses), the scope of witness

testimony, and witness exclusion;

the need for a stenographic record;

the form of the award;

the allocation of attorney's fees and costs;

any other issues relating to the subject or conduct of the arbitration;

o

LOND

C. Technical rules not binding on proceedings. - The arbitrator shall exercise
complete control over all arbitration proceedings to ensure a speedy, adequate,
and just disposition of the disputes and cases submitted to him for resolution. In
any proceeding before the Board and any of its arbitrators, the rules of evidence
prevailing in courts of law or equity shall not be controlling and arbitrators shall,
consistent with due process and the provisions of this Article, use every and all
reasonable means to ascertain the facts in each case speedily and with utmost
neutrality,

Unless all parties expressly agree in writing to do otherwise, the arbitrator shall
require simultaneous submission of position papers to which shall be attached
the affidavits of the parties’ respective witnesses as well as such relevant
documents which they shall identify to support their respective declarations.
Thereafter, the parties shall be allowed to submit their respective replies
accompanied by affidavits containing rebuttal testimony and supporting
documents.


In all cases, the affidavits submitted by the parties shall constitute the direct
testimonies of the persons who executed the same, All affiants may be subjected
to cross-examination, redirect, or re-cross examination by the arbitrator motu
proprio or by any appropriate party upon motion. The affidavit of any affiant who
fails to testify shall not be considered as competent evidence for the party
presenting the affidavit. However, the adverse party may utilize the same for any
admissible purpose.

The parties may offer such evidence as is relevant and material to the dispute
and shall produce such evidence as the arbitrator deems necessary to an
understanding and determination of the dispute. The arbitrator shall have the
authority to issue subpoenas duces tecum and subpoenas ad testificandum to
require the production of documents, evidence, or persons to give testimony
relevant to the dispute. He shall also have the authority to administer oaths to
witnesses.

All parties to the dispute must attend the arbitration proceedings on pain of
contempt. The attendance of any third party or the exclusion of any witness from
the proceedings shall be determined by the arbitrator.

D. Discovery. Throughout the proceedings, the arbitrator shall have the
authority to order such discovery, by way of deposition, interrogatory, document
production, or otherwise, as the arbitrator considers necessary to a full and fair
exploration of the issues in dispute, consistent with the expedited nature of
arbitration and applying suppletorily the pertinent provisions of the Rules of Court

E. Inspection or Investigation. An arbitrator finding it necessary to make an
inspection or investigation in connection with the arbitration shall advise the
parties thereof. The arbitrator shall set the date and time of the inspection and
shall notify the parties accordingly. Any party who so desires may be present
during the inspection or investigation. In the event that one or all parties are not
present during the inspection or investigation, the arbitrator shall make an oral or
written report to the parties and afford them an opportunity to comment

Article 11. Award. Article 220 of the Labor Code shall be repealed and replaced as
follows:

Article 220. Award. Unless the parties expressly agree otherwise in writing, it
shall be mandatory for the arbitrator to render an award within ninety (90)
calendar days from the date of his acceptance of the arbitration. Failure on the
part of the arbitrator to issue an award or decision within the stipulated period
shall constitute sufficient ground to revoke his accreditation as an arbitrator.

The award or decision of the arbitrator 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 and may only be
brought before the Supreme Court through a special civil action for certiorari
The arbitrator shall entertain no motion for reconsideration or appeal

Article 12. Execution. Article 221 of the Labor Code shall be amended to read as
follows:

Article 221. Execution. Settlement agreements or Arbitral awards resulting
from mediation or arbitration proceedings in this Title may be enforced by any
interested party by motion directed to the Board. Upon such motion, the Board,


through the Executive Director or his authorized representative, may issue a writ
of execution on a settlement agreement or arbitral award within five (5) years
from the date it was reached or becomes final and executory, requiring the sheriff
or authorized person of the Board to execute the settlement agreement or arbitral
award. In any case, it shall be the duty of the responsible officer to immediately
furnish the counsels of record and the parties with copies of said settlement
agreement or arbitral award. Failure to comply with the duty prescribed herein
shall subject such responsible officer to appropriate administrative sanctions.

Article 13. Representation. Article 222 of the Labor Code shall be amended to read as
follows:

Article 222. Representation. Parties should personally appear before the Board and

any of its mediators or arbitrators provided that juridical persons may be represented

by any person specially authorized in writing to do so. At any proceeding before the

Board or any of its mediators or arbitrators, non-lawyers shall be allowed to represent

any party in the following cases:

1) he is representing himself,

2) he is representing a legitimate or registered corporation or belongs to a legitimate
labor organization;

3) he is authorized under the student practice rule under Rule 138-A of the Rules of
Court.

Within one year from the effectivity of this Act, the Secretary shall formulate the rules
regarding the participation, representation, and appearance of paralegals in labor and
industrial disputes, including the formulation of rules for the accreditation of such
paralegals for these and other purposes. 7

Article 14. Injunctions. Article 223 of the Labor Code shall be repealed and replaced
as follows:

Article 223. Injunctions. To enjoin or restrain any actual or threatened
commission of any or all prohibited or unlawful acts or to require the performance
of a particular act in any industrial or labor dispute which, if not restrained or
performed forthwith, may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party, a petition for injunction or
Petition for mandatory injunction may be filed with the Board and the same shall
automatically be referred for arbitration to a panel of three (3) Arbitrators, chosen
in accordance with Article 218, provided, that no temporary or permanent
injunction in any case involving or growing out of a industrial or labor dispute as
defined in this Code shall be issued except upon a unanimous decision of the
panel and only after the posting of the necessary bond and hearing the testimony
of witnesses, with opportunity for cross-examination, in support of the allegations
of a complaint made under oath and testimony in opposition thereto, if offered

Such hearing shall be held after due and personal notice thereof has been
served, in such manner as the Board shall direct, to all known persons against
whom relief is sought, and also to the Chief Executive and other public officials of
the province or city within which the unlawful acts have been threatened or
committed, charged with the duty to protect complainant's property: provided,
however, that if the party praying for a restraining order or injunction shall also
allege that, unless a temporary restraining order shall be issued without notice, a
substantial and irreparable injury to complainant's property will be unavoidable,
such a temporary restraining order may be issued upon testimony under oath,
sufficient, if sustained, to justify the Board in issuing a temporary injunction upon


hearing after notice and only after both parties are given ample opportunity to
cross examine one another's witnesses. Such a temporary restraining order shall
be effective for no longer than ten (10) days and shall become void at the
expiration of said ten (10) days.

No such temporary restraining order or temporary injunction shall be
issued except on condition that the petitioning party shall first file an undertaking
with adequate security in an amount to be fixed by the Board sufficient to
recompense those enjoined for any loss, expense or damage caused by the
improvident or erroneous issuance of such order or injunction, including all
reasonable costs, together with a reasonable attorney's fee, and expense of
defense against the order or against the granting of any injunctive relief sought in
the same proceeding and subsequently denied by the Board.

The undertaking herein mentioned shail be understood to constitute an
agreement entered into by the party seeking an injunction and the surety upon
which an order may be rendered in the same suit or proceeding against said
party and surety, upon a hearing to assess damages, of which hearing, the party
seeking an injunction and surety shall have reasonable notice, the said party and
surety submitting themselves to the jurisdiction of the Board for that purpose. But
nothing herein contained shall deprive any party having a claim or cause of action
under or upon such undertaking from electing to pursue his ordinary remedy by
suit at law or in equity: provided, further, that the reception of evidence for the
application of a writ of injunction may, be delegated by the Board to any panel
consisting of three (3) Arbitrators chosen according to Article 218 who shall
conduct such hearings in such places as he may determine to be accessible to
the parties and their witnesses and shall submit thereafter his recommendation to
the Board. 7

Article 15. Grievance machinery. Article 260 of the Labor Code shall be amended 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 implementation of their Collective Bargaining Agreement and
those 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 THE BOARD.FOR MEDIATION.

[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
select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall
designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be
necessary, pursuant to the selection procedure agreed upon in the Collective
Bargaining Agreement, which shall act with the same force and effect as if the
Arbitrator or panel of Arbitrators has been selected by the parties as described
above.]


Article 16. Abolition of the National Labor Relations Commission and the National
Conciliation and Mediation Board. The existing National Labor Relations Commission
and National Conciliation and Mediation Board are hereby abolished. All unexpended
funds, properties, equipment and records of the NLRC and NCMB, and such of its
Personnel as may be necessary, as determined by the Secretary of Labor and
Employment, are hereby transferred to the Board and to its regional branches.
Personnel not absorbed by or transferred to the Board shall enjoy benefits granted under
existing laws.

Article 17. Disposition of pending cases. All cases pending before the NLRC on the
date of effectivity of this code shall be transferred to and processed by the Board created
under this law having cognizance of the same in accordance with the procedure laid
down herein and its implementing rules and regulations.

Article 18. Personnel whose services are terminated. NLRC personnel whose
services are terminated as a result of the implementation of this law shall enjoy the rights
and protection provided under civil service law, rules and regulations.

Article 19. Separability provisions. If any provision of this law or the application
thereof to any person or circumstance, is held invalid, the remainder of this law, or the
application of such provision or part fo other persons or circumstances, shall not be
affected thereby.

Article 20. Repealing clause. Articles 223,224, 225, 226, 227, 233, 261, 262, 262-A
and 262-B of the Labor Code as amended are hereby expressly repealed. All other
provisions of existing laws, orders, decrees, rules and regulations inconsistent herewith
are hereby repealed.

Article 21. Effectivity. This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in at least two (2) newspapers of general circulation

Approved.