G.R. No. 132177 - Caoibes, Jr. vs. Ombudsman

Silverio Umbao (plaintiff and employee) filed a complaint against Santiago Yap (defendant and employer) for unpaid overtime wages and attorney’s fees.
The dispute centered on a claim for P2,298.97 in unpaid overtime pay and an additional P300 in attorney’s fees, with interest at 6% per annum from the filing date of the complaint.

In June 1954, the parties entered into a written arbitration agreement to settle disputes regarding unpaid wages.
The agreement provided for submission of their case to the Wage Administration Service for investigation, with both parties declaring the resultant decision to be final and conclusive.

Severo Puncan, an officer of the Wage Administration Service, conducted a proper investigation, heard both parties, and examined the evidence.
Based on the proceedings, Puncan rendered a written report declaring Santiago Yap liable for unpaid wages amounting to P2,998.97.
The award was approved by Ruben Santos, Acting Chief of the Service.
Despite the award, Santiago Yap refused to comply with the decision, prompting subsequent legal action.

Initially, the Manila Court of First Instance issued a judgment ordering Santiago Yap to pay the amounts as determined by the arbitration award, including costs.
In the defendant’s answer, while not denying the existence of the arbitration agreement or the award, Santiago Yap questioned:

The legal authority of the Wage Administration Service to act as arbitrator.
The compliance with procedural requirements under Republic Act No. 602 and Republic Act No. 876 (Arbitration Law).

Based on the defendant’s arguments concerning procedural non-observance of Republic Act No. 876, the trial court initially ruled in favor of the defendant.
Upon a motion to reconsider, the trial court reversed its earlier finding, holding that the arbitration agreement constituted a binding contract under the New Civil Code (Arts. 2042 et seq.) and rendered judgment against Santiago Yap.
Santiago Yap subsequently appealed the reconsidered decision, leading to the present appellate review.

Whether the arbitration agreement entered into by the parties is enforceable as a binding contract under the New Civil Code.
Whether the award rendered by the Wage Administration Service is valid and capable of judicial confirmation.

Whether the arbitrator’s appointment and actions complied with the procedural requirements set forth in Republic Act No. 876 (Arbitration Law).
Whether the absence of court intervention or the non-application of Supreme Court promulgated rules for the appointment of arbitrators renders the arbitration proceedings and subsequent award defective.

Whether the nature of the agreement between the parties should be considered a compromise agreement requiring reciprocal concessions, or an arbitration agreement, which is governed by a different legal regime.