Amicable settlement is one whereby the parties can negotiate with each other; it is not a voluntary arbitration under the Labor Code wherein a third party renders a decision to resolve the dispute.

Thus, as to whether this divests the Labor Arbiter of jurisdiction over an illegal dismissal case, the SC held as follows:

Augustin International Center, Inc. vs. Bartolome, et al.
G.R. No. 226578, January 28, 2019

Jurisdiction; Amicable Settlement; Voluntary Arbitrator; Solidary Liability; Illegal dismissal


Bartolome and Yamat applied as carpenter and tile setter, respectively, with Agustin International Center, Inc. (AICI), an employment agency providing manpower to foreign corporations. They were eventually engaged by Golden Arrow Company, Ltd. (Golden Arrow), which had its office in Khartoum, Republic of Sudan.

Thereafter, they signed their respective employment contracts stating that they would render services for a period not less than twenty-four (24) months. In their contracts, there was a provision on dispute settlement that reads:

“14. Settlement of disputes: All claims and complaints relative to the employment contract of the employee shall be settled in accordance with Company policies, rules, and regulations. In case the Employee contests the decision of the employer, the matter shall be settled amicably with [the) participation of the Labour Attache or any authorised representative of the Philippines Embassy nearest the site of employment.”

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Upon their arrival in Sudan, Golden Arrow transferred their employment to its sister company, Al Mamoun Trading and Investment Company (Al Mamoun). A year later, Al Mamoun served Notices of Termination of Service to Bartolome, et al., causing them to return to the Philippines.

As a result, they filed their complaint before the NLRC seeking that AICI and Al Mamoun be held liable for illegal dismissal, breach of contract, and payment of the unexpired portion of the contract.

For their part, AICI and Al Mamoun claimed that Bartolome, et al. abandoned their duties by mid-2012, based on the e-mail message 11 from Golden Arrow.

LA Ruling:

The LA held that Bartolome, et al. were illegally dismissed, and accordingly, ordered AICI and Al Marnoun to pay their salaries for the unexpired portion of their contract.

The LA explained that AICI and Al Mamoun failed to overcome their burden to prove that the dismissal was for a just or authorized cause. They likewise failed to show that Bartolome, et al. abandoned their duties.

Aggrieved, AICI and Al Marnoun filed an appeal.

NLRC Ruling:

The NLRC affirmed the LA’s ruling, noting that AICI and Al Marnoun failed to discharge their burden to prove by substantial evidence that the termination of Bartolome, et al.’s employment was valid.

Undaunted, AICI and Al Mamoun filed a petition for certiorari before the CA.

CA Ruling:

The CA denied the petition.

It held that AICI and Al Marnoun failed to comply with procedural and substantive due process in dismissing Bartolome, et al. from their employment. AICI and Al Mamoun moved for reconsideration, arguing for the first time that they were denied due process because Bartolome, et al. did not first contest their termination before the “[Labor] Attache or any [authorized] representative of the Philippine Embassy nearest the site of employment,” as stipulated in the employment contracts, before filing the complaint before the LA.

The CA denied the said motion. It explained that, as a rule, termination disputes should be brought before the LA, except when the parties agree to submit the dispute to voluntary arbitration pursuant to then Article 262 (now Article 275) of the Labor Code, provided that such agreement is stated “in unequivocal language.”

Citing jurisprudence, the CA added that the phrase “all disputes” is not sufficient to divest the LA of its jurisdiction over termination disputes. In the same manner, the phrase “all claims and complaints” in Bartolome, et al.’s employment contracts does not remove the LA’s jurisdiction to decide whether Bartolome, et al. were legally terminated.

Hence, AICI filed the petition before the SC.


Whether or not the parties’ stipulation in the employment contract to submit the dispute before the Labor Attache divested the Labor Arbiter of its original and executive jurisdiction to hear the illegal dismissal case

Whether or not the party which merely recruited workers for foreign employer can be held liable for illegal dismissal as it did not have employer-employee relationship with the workers recruited

Whether or not the dispute settlement provision in the agreement which was not invoked in the lower tribunal can be raised for the first time before the CA

Whether or not the Labor Attache before whom dispute was agreed to be amicably settled is a voluntary arbitrator which can deprive the LA of jurisdiction over illegal dismissal case

SC Ruling:

Section 10 of Republic Act No. (RA) 8042, as amended by RA 10022, explicitly provides that LAs have original and exclusive jurisdiction over claims arising out of employer-employee relations or by virtue of any law or contract involving Filipino workers for overseas deployment, as in this case.

Settled is the rule that jurisdiction over the subject matter is conferred by law and cannot be acquired or waived by agreement of the parties. As herein applied, the dispute settlement provision in Bartolome, et al.’s employment contracts cannot divest the LA of its jurisdiction over the illegal dismissal case. Hence, it correctly took cognizance of the complaint filed by Bartolome, et al. before it.

Moreover, issues not raised in the previous proceedings cannot be raised for the first time at a late stage. In this case, AICI failed to raise the issue of Bartolome, et al.’s supposed non-compliance with the dispute settlement provision before the LA, as well as before the NLRC. In fact, AICI only mentioned this issue for the first time before the CA in its motion for reconsideration. Therefore, such argument or defense is deemed waived and can no longer be considered on appeal. Hence, the Court rules that the LA properly took cognizance of this case.

The Voluntary Arbitrator under the Labor Code is one agreed upon by the parties to resolve certain disputes and is tasked to render an award or decision within twenty (20) calendar days pursuant to Article 276 of the Labor Code. This decision shall be final and executory after ten (10) calendar days from receipt thereof.

In this case, the mechanism contemplated by the parties is an amicable settlement whereby the parties can negotiate with each other; it is not a voluntary arbitration under the Labor Code wherein a third party renders a decision to resolve the dispute. The text of the contractual provision shows that the designated person is tasked merely to participate in the amicable settlement and not to decide the dispute. This participation is in line with the mandate of Filipinos Resource Centers, in which labor attaches are members, to engage in the “conciliation of disputes arising from employer-employee relationship.

Read more on Digest of Critical Decisions of the Supreme Court on Labor Cases

Hence, the Labor Attache or any authorized representative of the Philippine Embassy nearest the site of employment was not called upon to act as a Voluntary Arbitrator as contemplated under the Labor Code. It was therefore erroneous to assume that the contractual provision triggered the voluntary arbitration mechanism under the Labor Code and, on that premise, venture into an inquiry as to whether or not there was an “express stipulation” submitting the termination dispute to such process, which thereby puts the case beyond the ambit of the LA’s jurisdiction.

Considering that the parties did not submit the present illegal termination case to the voluntary arbitration mechanism, the dispute remained under the exclusive and original jurisdiction of the LA, which therefore correctly took cognizance of the case.

On the liability of recruitment entity for illegal dismissal, Section 10 of RA 8042, as amended expressly provides that a recruitment agency, such as AICI, is solidarily liable with the foreign employer for money claims arising out of the employee-employer relationship between the latter and the overseas Filipino worker.

Jurisprudence explains that this solidary liability is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him, as well as to afford overseas workers an additional layer of protection against foreign employers that tend to violate labor laws. In view of the express provision of law, AICI’s lack of an employee-employer relationship with Bartolome, et al. cannot exculpate it from its liability to pay the latter’s money claims.

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