Umbao v. Yap (G.R. No. L-8933)

Facts:

Petitioner Umbao and respondent Yap both had agreed in writing to “submit their case to the Wage Administration Service for investigation” and “to abide by whatever decision (said) office may render on the case” which “they recognized . . . to be final and conclusive.” After proper investigation had been conducted by Severo Puncan of the same Service, who after hearing the parties and considering their evidence, declared in a written report, respondent Yap to be liable for unpaid wages; that the award had been approved by Ruben Santos, Acting Chief of the Service; and that respondent had refused to abide by and comply with it.  Respondent’s answer did not deny the existence of the covenant and of the award but questioned the enforceability of both, contending mainly that the Service had no legal authority to act as arbitrator, that the procedural requirements of Republic Act No. 602 had not been followed, and that the provisions of Republic Act No. 876 known as the Arbitration Law had been disregarded. Petitioner then asked for judgment on the pleadings. The Court, noting non-observance of the procedure outlined in Republic Act No. 876, gave judgment for defendant. However upon motion to reconsider, the judge seeing differently, held the arbitration agreements to be a contract obligatory on the parties under the provisions of the New Civil Code. Consequently, he rendered judgment against defendant. Hence this appeal.

Issue:

Whether or not the arbitration by the Service conformed with the Act.

Ruling:

The argument evidently assumes that a compromise agreement is the same as an arbitration agreement. Such assumption is error: one is different from the other; they are treated in two separate chapters of the Code.

No rules have been promulgated by this Court. However the Legislature adopted such rules in Republic Act No. 876 known as “The Arbitration Law’ effective December 1953. Said act was obviously adopted to supplement-not to supplant-the New Civil Code on arbitration. It expressly declares that “the provisions of chapters one and two, Title XIV, Book of the Civil Code the parties may select the arbitrator without court intervention. And section 8 of the Act impliedly permits them to do so. There is nothing in Republic Act 876 requiring court permission of knowledge or intervention before the arbitrator selected by the parties may perform his assigned work. The section does not mean there can be no arbitration without a previous court actuation.

The case between herein litigants has not required court intervention from the beginning, because they had named the arbitrator: the Administration Service and necessarily the proper officer, thereof, Severo Puncan. And this defendant should not be permitted to question the authority of said officer now, because he voluntarily submitted his evidence to him; and he only turned around to deny such authority when the resultant verdict adversely affected his pocket. He even appealed to the Secretary of Labor, and without questioning Puncan’s authority, pleaded for exoneration on the merits.

As to the arbitration proceedings, Republic Act No. 876 contains provisions about the procedure to be adopted by arbitrators, their oath, the hearings, and the form and content of the award. Even so, herein appellant asserted no prejudicial departure therefrom. As already stated, Republic Act No. 876 did not require court intervention (in the case at bar) prior to the award of the arbitrator, no ground for it having arisen, as the parties voluntarily took steps to carry out the settlement process down to the arbiter’s decision. It was only after such award, when defendant refused to comply that judicial action became necessary, thru the means afforded by the statute: confirmation of award and judgment.

These provisions, we believe, apply whether or not the court intervened from the very beginning. Now then, examining the complaint and the judgment entered herein in the light of the above directions, we find substantial conformity therewith; so much so that defendant raised no issue on the same.

Wherefore, the judgment should be, and is hereby affirmed.

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