G.R. No. 189947 ; January 25, 2012
MANILA PAVILION HOTEL, owned and operated by ACESITE (PHILS.) Hotel Corporation, Petitioner, vs. HENRY DELADA, Respondent.

FACTS

Respondent Henry Delada, the Union President of the Manila Pavilion Supervisors Association, was reassigned by petitioner Manila Pavilion Hotel (MPH) from Head Waiter of the Rotisserie restaurant to Head Waiter of the Seasons Coffee Shop pursuant to a supervisory personnel reorganization program. Delada declined the transfer and invoked the grievance procedure under their Collective Bargaining Agreement (CBA), requesting retention at his old post pending resolution. MPH directed him to report to his new assignment temporarily, without prejudice to the grievance. Delada refused and continued reporting to Rotisserie. Consequently, MPH issued several memoranda charging him with serious misconduct, willful disobedience, gross insubordination, gross and habitual neglect of duties, and willful breach of trust, and initiated administrative proceedings.
The grievance meeting failed to settle the validity of the transfer. Delada elevated the matter through the CBA’s grievance steps and eventually lodged a complaint with the National Conciliation and Mediation Board. On May 25, 2007, the parties agreed to submit specific issues for voluntary arbitration, including the validity of the transfer and the validity of a preventive suspension imposed by MPH. While this arbitration was pending, MPH continued its disciplinary action, found Delada guilty of insubordination for refusing the transfer order, and imposed a 90-day suspension.
The Panel of Voluntary Arbitrators (PVA) ruled on December 14, 2007, that the transfer was a valid exercise of management prerogative, done for efficient operations without malice, and did not result in diminution of salary or rank. The PVA also ruled that the preventive suspension lacked factual basis and that MPH lost its authority to impose the 90-day suspension because the issue of the transfer’s validity—which encompassed the issue of disobedience to that order—had been submitted to voluntary arbitration, giving the PVA exclusive jurisdiction. The PVA held MPH liable for back wages for the invalid suspensions. The Court of Appeals affirmed the PVA Decision.

ISSUE

1. Whether MPH retained the authority to continue with the administrative case against Delada for insubordination and willful disobedience of the transfer order after the parties submitted the issue of the transfer’s validity to voluntary arbitration.
2. Whether MPH is liable to pay back wages corresponding to the 90-day suspension penalty.

RULING

The Supreme Court GRANTED the Petition.
1. On MPH’s Authority to Discipline: The Court ruled that MPH retained its authority to discipline Delada for insubordination. The issue jointly submitted for voluntary arbitration was specifically the validity of the transfer order. The issue of Delada’s liability for refusing to obey that order—a separate question of employee discipline for willful disobedience—was not included in the submission agreement. Citing Sime Darby Pilipinas, Inc. v. Magsalin and Ludo & Luym Corporation v. Saornido, the Court held that while voluntary arbitrators have broad powers to decide submitted issues and matters necessarily linked thereto, the parties’ submission agreement did not indicate an intent to also arbitrate the disciplinary action for insubordination. The PVA’s finding that the transfer was valid did not automatically resolve the separate issue of whether Delada’s refusal to comply constituted punishable insubordination. Therefore, MPH did not relinquish its prerogative to impose disciplinary sanctions for acts of insubordination committed during the pendency of the arbitration.
2. On Liability for Back Wages: Consequently, the Court ruled that MPH is not liable to pay back wages for the period of the 90-day suspension. Since the imposition of the 90-day suspension was a valid exercise of MPH’s disciplinary authority, and not an invalid penalty, there is no basis for an award of back wages corresponding to that period.
The Court set aside the rulings of the Court of Appeals and the PVA on these points, upholding MPH’s right to impose the disciplinary penalty of suspension for Delada’s willful disobedience.