Unicraft Industries International Corporation vs. Court of Appeals

A voluntary arbitrator's decision rendered in violation of a party's right to due process is null and void and cannot be the subject of execution, notwithstanding the statutory finality accorded to such decisions.

Unicraft Industries International Corporation transferred its employees to a newly opened branch in Lapulapu City. The city government ordered the branch's closure due to a lack of business and building permits, prompting the corporation to dismiss the transferred employees eight days later. The employees filed complaints for illegal dismissal and money claims, which were eventually submitted to voluntary arbitration.

• Transfer and Closure: Petitioner Unicraft Industries International Corporation transferred private respondents to its Lapulapu City branch. The city government ordered the branch closed on July 3, 1995, for lacking business and building permits. Eight days after the transfer, petitioner corporation effected the mass dismissal of private respondents.
• Labor Complaints: Private respondents filed complaints for illegal dismissal, underpayment/non-payment of wages, and other monetary claims with the NLRC. Petitioners countered that the closure was lawful and that quitclaims had been executed.
• Arbitration Proceedings: Pursuant to Policy Instruction No. 56 and the parties' agreement, the case was submitted to voluntary arbitration before Florante V. Calipay. Petitioners filed a motion to re-select the arbitrator, which was denied. The arbitrator set the issues and scheduled a hearing for March 3, 1997.
• Denial of Due Process: Petitioners failed to appear at the March 3 hearing. They subsequently manifested that they received notice of the hearing at 4:00 PM on the day of the scheduled 3:00 PM hearing. Their motion for another hearing was denied.
• Arbitrator's Decision: On March 15, 1997, the arbitrator rendered judgment based solely on private respondents' position papers and the NLRC records, awarding back wages, separation pay, money claims, and attorney's fees.
• Stipulation on Remand: Petitioners filed a certiorari petition with the Court of Appeals. The parties stipulated to remand the case to the arbitrator so petitioners could present evidence, with petitioners posting a P6.5 million bond. The arbitrator, however, refused to conduct further proceedings, claiming he had lost jurisdiction upon rendering judgment.
• Partial Execution: The Court of Appeals granted private respondents' motion for partial execution of the separation pay and attorney's fees to alleviate the employees' financial distress, prompting the instant petition.

• Denial of Due Process: Petitioners argued that the Court of Appeals committed grave abuse of discretion by affirming the separation pay award despite the concession that petitioners were denied due process during the arbitration stage.
• Lack of Evidentiary Basis: Petitioners contended that the Court of Appeals affirmed the award without possessing the records and evidence necessary to support such a ruling.
• Violation of Stipulation: Petitioners maintained that the Court of Appeals gravely abused its discretion by issuing the assailed resolutions notwithstanding a valid and subsisting approved stipulation that had the force and effect of a judgment by compromise.

• Immediate Execution: Respondents argued for the immediate partial execution of the arbitrator's award to alleviate the financial distress and starvation of the dismissed employees.
• Arbitrator's Loss of Jurisdiction: Respondents supported the arbitrator's position that he had lost jurisdiction over the case upon the rendition of his judgment, precluding further proceedings.

• Due Process: Whether the Court of Appeals committed grave abuse of discretion in ordering the partial execution of the voluntary arbitrator's decision notwithstanding the violation of the petitioners' right to due process.
• Validity of the Award: Whether the voluntary arbitrator's decision is void for having been rendered without due process.

• Due Process: The Court of Appeals committed grave abuse of discretion amounting to lack of jurisdiction. The partial execution of a void decision cannot be allowed. The arbitrator's award was rendered without due process because petitioners received notice of the hearing after it had concluded, depriving them of the opportunity to present evidence. The Court of Appeals' order for partial execution was thus arbitrarily despotic.
• Validity of the Award: The voluntary arbitrator's decision was declared null and void. Statutory provisions making voluntary arbitrators' decisions final do not preclude review where there is a violation of due process. The award of separation pay inherently carries the conclusion of illegal dismissal, a finding that was prematurely made without hearing the employers. Because the arbitrator's decision was void, the Court of Appeals' order for its execution was likewise invalid.

• Cardinal Primary Rights in Administrative Adjudications — Derived from Ang Tibay v. CIR, these rights must be observed to satisfy the imperatives of due process in administrative and quasi-judicial bodies: (1) The right to a hearing, which includes the right to present one's case and submit evidence in support thereof; (2) The tribunal must consider the evidence presented; (3) The decision must have something to support itself; (4) The evidence must be substantial; (5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected; (6) The tribunal or body or any of its judges must act on its or his own independent consideration of the law and facts of the controversy, and not simply accept the view of a subordinate; (7) The board or body should, in all controversial questions, render its decision in such a manner that the parties to the proceeding can know the various issues involved, and the reason for the decision rendered. Applied to hold that the voluntary arbitrator violated due process by rendering judgment without affording the petitioners a reasonable opportunity to be heard.
• Finality of Voluntary Arbitrator Decisions — While decisions of voluntary arbitrators are accorded finality, they remain subject to review on grounds of want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantive justice, or erroneous interpretation of the law.

• "While the intendment of our laws is to favor the employee, it in no way implies that the employer is not entitled to due process. For a tribunal such as the NLRC to wantonly disregard the employer's constitutional right to be heard is a matter that cause great concern to the Court."
• "It is a cardinal rule in law that a decision or judgment is fatally defective if rendered in violation of a party-litigant's right to due process."
• "In its most basic sense, the right to due process is simply that every man is accorded a reasonable opportunity to be heard. Its very concept contemplates freedom from arbitrariness, as what is required is fairness or justice. It abhors all attempts to make an accusation synonymous with liability."

• Ang Tibay v. CIR, 69 Phil. 635 (1940) — Followed. Established the seven cardinal primary rights that must be respected in administrative adjudications to comply with due process.
• Philippine National Construction Corporation v. NLRC, 292 SCRA 266 (1998) — Followed. Reiterated that a decision rendered in violation of due process is fatally defective and reminded labor tribunals to uphold the employer's right to be heard.
• Continental Marble Corp. v. NLRC, 161 SCRA 151 (1988) — Followed. Held that despite statutory provisions making decisions of administrative agencies final, such decisions may still be reviewed for violations of due process.

• Rule VI, Section 6, Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings — Mandates that voluntary arbitrators provide the parties adequate opportunities to be heard in the conduct of arbitration proceedings. Applied to demonstrate the arbitrator's failure to comply with procedural due process.

Davide, Jr., C.J., Puno, Kapunan, and Pardo, JJ.