Historical Overview of Labor Dispute Settlement System

The Philippine labor relations system has gone through a number of historical phases. By coincidence, the major changes under each phase are those associated with the changes or modifications related to the system of dispute settlement.

The first phase was the colonial period, from the Spanish rule up to the American administration in the 1920’s. This period was characterized by outright repression of the right of workers to form their own organizations and the freewheeling nature of union formations and labor-management relations in the absence of enabling or guiding laws.

Era of Compulsory Arbitration: 1936-1953

In the mid-1930s, radical changes took place. As a result of the labor and peasant unrest, then President Manuel L. Quezon adopted a ‘Social Justice’ program patterned after the ‘New Deal’ of US President Franklin Delano Roosevelt. Part of the Social Justice Program was the institutionalization of compulsory arbitration to settle labor and agrarian disputes through the Court of Industrial relations (CIR). Quezon’s reform program was also reflected in the reformist provisions of the 1936 Constitution.

Article XIV, Section 6 of the 1936 Constitution, provided that:

“The state shall afford protection to labor, especially to working women and minors, and shall regulate the relations between landowner and tenant and between labor and capital in industry and agriculture. The State may provide for compulsory arbitration.”

In October 1936, the National Assembly enacted Commonwealth Act No. 103. CA 103 established the CIR to enforce compulsory arbitration between employers and employees, and landlords and tenants. At the same time, the government gave implied recognition to collective bargaining. Commonwealth Act. No. 213 vested collective bargaining rights upon an organization, association or union of laborers duly registered and permitted to operate by the Bureau of Labor (BLR).

However, compulsory arbitration was the principal mode of dispute settlement. The system worked quite well up to the outbreak of World War II.

But after the war, the system of compulsory arbitration under the CIR bogged down because of the cases clogging its dockets. This clogging was due partly to the unreasonable delays in the adjudication of cases. Rules of procedures permitted numerous postponements and allowed one or both parties to resort to delaying tactics.

Birth of Collective Bargaining

In 1953 and in response to the labor and peasant unrest in the 1940s, the government adopted another set of socio-economic reforms. In the labor relations front, reform took the form of a ‘shift’ from compulsory arbitration to collective bargaining.

Congress enacted  Republic Act 875, the Industrial Peace Act of 1953, more popularly known as the Magna Carta of Labor.

The Magna Carta gave explicit recognition to the employees’ right to self-organization for the purpose of collective bargaining. With an expanding industrial sector, hundreds of new unions with their respective collective bargaining agreements (CBAs) were registered in the 1950s and 1960s.

RA 875 limited the Court of Industrial Relations to labor disputes in industries considered “indispensable to national interest” as certified by the President of the Philippines. But despite this limitation, numerous cases were still submitted for compulsory arbitration, resulting again in the clogging of cases in the CIR dockets.

Martial Law Period

Upon the declaration of martial law, the old CIR was abolished and was replaced by an ad-hoc National Labor Relations Commission (NLRC). Later, the NLRC was formally instituted, along with the government’s reiteration of collective bargaining as the primary mode of dispute settlement. Hence, the official policy statement that DOLE was promoting “collective bargaining within the framework of compulsory arbitration”.

At the same time, the government showed interest in promoting voluntary arbitration with the issuance of Presidential Decree No. 21 (October 14, 1972). One direct offshoot of this was the formation of the Arbitration Association of the Philippines (AAP) in the same year.

Later in 1974, the Philippine Academy of Voluntary Professional Arbitrators (PAPA) was organized. PAPA, AAP and the UP Law Center conducted the First Conference on Voluntary Arbitration in 1974.

A historic development in 1974 was the issuance of Presidential Decree No. 442, promulgating the Labor Code of the Philippines.  

Post Martial Law Era

The lifting of Martial Law restored democracy in the nation and strengthened industrial democracy in the labor sector.

The 1987 Constitution of the Philippines declared voluntary modes of dispute settlement as the preferred mode of settling disputes.

Executive order No. 126 reorganized the Department of Labor and Employment (DOLE) and created the National Conciliation and Mediation Board (NCMB) to oversee the implementation of the constitutional mandate.

Executive Order No. 251 amended Executive Order No. 126 and created the Tripartite Voluntary Arbitration Advisory Council (TVAAC) to advise NCMB on the promotion of the voluntary arbitration program.

Republic Act No. 6715, otherwise known as the Herrera-Veloso Law, or the New Labor Relations Law, amended the Labor Code and declared the following policy thrusts in labor relations:

  1. To promote free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor disputes. [Art. 211 (a)]
  2. To provide an adequate machinery for the expeditious settlement of labor or industrial peace. [Art. 211 (e)]

Subsequently, DOLE renewed its campaign promoting voluntary arbitration as an alternative mode of dispute settlement. The AAP and PAPA were merged into the Philippine Association on Voluntary Arbitration, Inc. (PAVA) with Dr.. Cicero D. Calderon as the first President.

Later, PAVA under the Presidency of the late Atty.Nicanor A. Magno, the NCMB and the UP School of  Labor and Industrial Relations (UP-SOLAIR) organized the National Academy on Voluntary Arbitration (NAVA). Dr. Rene Ofreneo, Professor and former Dean of UP-SOLAIR is the founding president of NAVA.