G.R. No. 140960 ; January 20, 2003
LUDO & LUYM CORPORATION, petitioner, vs. FERDINAND SAORNIDO as voluntary arbitrator and LUDO EMPLOYEES UNION (LEU) representing 214 of its officers and members, respondents.

FACTS

Petitioner Ludo & Luym Corporation (LUDO) is a domestic corporation engaged in manufacturing. It engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for loading and unloading at its wharf. The arrastre workers were later hired as regular rank-and-file employees of LUDO on different dates and joined the respondent LUDO Employees Union (LEU). On April 13, 1992, the union entered into a Collective Bargaining Agreement (CBA) with LUDO, providing benefits varying with length of service. The union requested LUDO to include the period the workers rendered arrastre services through CLAS in their length of service to receive higher benefits. LUDO failed to act, leading the matter to voluntary arbitration. The parties executed a submission agreement raising the sole issue of the date of regularization of the workers. The Voluntary Arbitrator ruled that the employees were engaged in activities necessary to LUDO’s business and that CLAS was a labor-only contractor. The arbitrator held that the 214 complainants should be considered regular employees six months from their first day of service at CLAS and awarded them CBA benefits (sick leave, vacation leave, and annual wage increases) totaling P5,707,261.61, plus attorney’s fees and interest. LUDO’s motion for reconsideration was denied. The Court of Appeals affirmed the Voluntary Arbitrator’s decision in toto. Hence, this petition.

ISSUE

1. Whether the benefits claimed (salary increases, vacation leave, and sick leave benefits for 1977-1987) are barred by prescription when the case was filed in January 1995.
2. Whether a Voluntary Arbitrator can award benefits not claimed in the submission agreement.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals.
1. On prescription: The Court held the money claims were not barred by prescription. The three-year prescriptive period for money claims under Article 291 of the Labor Code begins from the time the cause of action accrues, which is when the obligor refuses to comply with the obligation in clear and unequivocal terms. In this case, LUDO merely promised to review company records in response to the demand without making a categorical refusal, preventing the cause of action from accruing. The Voluntary Arbitrator also found LUDO estopped from raising prescription because its promise to correct the length of service if proof was provided barred them from using laches or prescription as a defense.
2. On the award of benefits: The Court held that the Voluntary Arbitrator had the authority to award the benefits even though the submission agreement mentioned only the date of regularization. While an arbitrator generally decides questions expressly delineated in the submission agreement, arbitration is the final resort for dispute adjudication, and the arbitrator can assume the power to make a final settlement. The issue of regularization was viewed as a two-tiered issue; determining the date inherently involved the consequent entitlement to benefits. To require a separate action for payment would undermine labor proceedings and contravene the constitutional mandate of full protection to labor. The Voluntary Arbitrator had plenary jurisdiction to interpret the agreement and determine the scope of his authority to accomplish speedy labor justice.