Augustin International Center, Inc. vs. Bartolome

Labor Arbiters have original and exclusive jurisdiction over illegal dismissal claims involving overseas Filipino workers pursuant to Section 10 of RA 8042, as amended, and a contractual dispute settlement provision requiring the participation of a Labour Attaché in amicable settlement does not constitute voluntary arbitration under the Labor Code so as to divest the LA of such jurisdiction; a recruitment agency is solidarily liable with the foreign employer for money claims arising from the employer-employee relationship between the foreign employer and the overseas worker, regardless of the absence of an employer-employee relationship between the agency and the worker.

AICI is an employment agency providing manpower to foreign corporations. In 2010, respondents Bartolome and Yamat applied with AICI as carpenter and tile setter, respectively, and were eventually engaged by Golden Arrow Company, Ltd., which had its office in Khartoum, Republic of Sudan. Their employment contracts, executed for a period of not less than twenty-four (24) months, contained a dispute settlement provision requiring that, in case the employee contests the employer's decision, the matter be settled amicably with the participation of the Labour Attaché or any authorized representative of the Philippine Embassy nearest the site of employment. The statutory framework governing overseas employment disputes is found in Section 10 of RA 8042, as amended by RA 10022, which grants Labor Arbiters original and exclusive jurisdiction over claims arising out of employer-employee relations involving Filipino workers for overseas deployment.

In 2010, Bartolome and Yamat applied as carpenter and tile setter, respectively, with AICI, an employment agency providing manpower to foreign corporations. They were eventually engaged by Golden Arrow Company, Ltd., 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, with a basic monthly salary of five hundred fifty US dollars ($550.00). Their contracts contained a dispute settlement provision stating that all claims and complaints relative to the employment contract would be settled in accordance with company policies, rules, and regulations, and that in case the employee contests the decision of the employer, the matter would be settled amicably with the participation of the Labour Attaché or any authorized representative of the Philippine Embassy nearest the site of employment.

Upon their arrival in Sudan sometime in March and April 2011, Golden Arrow transferred their employment to its sister company, Al Mamoun Trading and Investment Company. A year later, or on May 2, 2012, Al Mamoun served Notices of Termination of Service to respondents, briefly informing them of the management's decision to terminate their services effective May 7, 2012, and directing them to contact the HR department to finalize their out-process. The notices caused respondents to return to the Philippines.

On May 22, 2012, respondents 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 respondents abandoned their duties by mid-2012, relying on an e-mail message from Golden Arrow stating that Yamat and Bartolome refused to work, resulting in pending work, and that under company policy, refusal to carry out normal duties without satisfactory explanation constituted self-termination of employment.

The Labor Arbiter found that respondents were illegally dismissed, ordering AICI and Al Mamoun to pay each respondent P69,300.00 representing salaries for the unexpired portion of their contracts. 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 and likewise failed to show that respondents abandoned their duties. The NLRC affirmed the LA's ruling, noting that AICI and Al Mamoun failed to discharge their burden to prove by substantial evidence that the termination was valid. The CA denied the petition for certiorari, finding that respondents were neither served with notices recounting acts or omissions to justify their dismissal nor given the opportunity to explain their side, and that the defense of abandonment was unsubstantiated. AICI raised for the first time in its motion for reconsideration before the CA the argument that respondents failed to comply with the dispute settlement provision in their contracts, but the CA denied the motion.

• Jurisdiction of the Labor Arbiter: Petitioner maintained that based on the dispute settlement provision in respondents' employment contracts, the "primary jurisdiction" to decide the case is with the Labour Attaché or any authorized representative of the Philippine Embassy nearest the site of employment, and therefore the LA incorrectly took cognizance of the case.
• Absence of Employer-Employee Relationship: Petitioner argued that it cannot be held liable for illegal dismissal because it only recruits employees for foreign employers and, as such, does not have an employer-employee relationship with the overseas workers.

• Jurisdiction of the Labor Arbiter: Whether the LA correctly took cognizance of the illegal dismissal complaint notwithstanding the contractual dispute settlement provision requiring amicable settlement with the participation of the Labour Attaché.
• Liability of the Recruitment Agency: Whether AICI is liable for respondents' illegal dismissal and money claims despite the absence of an employer-employee relationship between AICI and the overseas workers.

• Jurisdiction of the Labor Arbiter: Yes. The LA correctly took cognizance of the case. Section 10 of RA 8042, as amended, explicitly grants Labor Arbiters original and exclusive jurisdiction over claims arising out of employer-employee relations involving Filipino workers for overseas deployment, and jurisdiction over the subject matter cannot be waived or modified by agreement of the parties.
• Liability of the Recruitment Agency: Yes. AICI is solidarily liable with the foreign employer for respondents' money claims. Section 10 of RA 8042, as amended, expressly provides that the liability of the principal/employer and the recruitment/placement agency for any and all claims shall be joint and several, and the absence of an employer-employee relationship between the agency and the workers does not exculpate the agency.

• Jurisdiction of the Labor Arbiter: Section 10 of RA 8042, as amended by RA 10022, explicitly provides that Labor Arbiters shall have original and exclusive jurisdiction to hear and decide claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment, including claims for actual, moral, exemplary, and other forms of damages. Jurisdiction over the subject matter is conferred by law and cannot be acquired or waived by agreement of the parties. The dispute settlement provision in respondents' contracts — which required that contested decisions be "settled amicably with participation of the Labour Attaché or any authorised representative of the Philippines Embassy nearest the site of employment" — did not constitute voluntary arbitration under the Labor Code. The text shows that the designated person was tasked merely to "participate" in the amicable settlement and not to "decide" the dispute, which is consistent with the mandate of Filipino Resource Centers, of which labor attachés are members, to engage in the "conciliation of disputes arising from employer-employee relationship." The CA therefore erred in assuming that the contractual provision triggered the voluntary arbitration mechanism under the Labor Code and inquiring whether there was an "express stipulation" submitting the termination dispute to such process. Additionally, AICI failed to raise the issue of respondents' supposed non-compliance with the dispute settlement provision before the LA and the NLRC, raising it only for the first time before the CA in its motion for reconsideration; such argument or defense was deemed waived and could no longer be considered on appeal.

• Liability of the Recruitment Agency: Section 10 of RA 8042, as amended, expressly provides that the liability of the principal/employer and the recruitment/placement agency for any and all claims under the section shall be joint and several. This solidary liability is meant to assure the aggrieved worker of immediate and sufficient payment of what is due, and 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 employer-employee relationship with respondents cannot exculpate it from liability to pay the latter's money claims. The law does not preclude AICI from going after the foreign employer for reimbursement of any payment it has made to respondents to answer for the money claims against the foreign employer.

• Jurisdiction over the subject matter is conferred by law and cannot be acquired or waived by agreement of the parties. — Jurisdiction over the subject matter is determined exclusively by the Constitution and the law; it cannot be conferred by the voluntary act or agreement of the parties, nor acquired through, waived, enlarged, or diminished by their act or omission. Applied in this case to hold that the contractual dispute settlement provision could not divest the LA of statutory jurisdiction over the illegal dismissal claim.

• Solidary liability of recruitment agencies with foreign employers for money claims of overseas Filipino workers. — Under Section 10 of RA 8042, as amended, the liability of the principal/employer and the recruitment/placement agency for any and all money claims shall be joint and several. This is meant to assure the aggrieved worker of immediate and sufficient payment and to provide an additional layer of protection against foreign employers that tend to violate labor laws. The recruitment agency may seek reimbursement from the foreign employer for any payment made to satisfy the workers' claims.

• Waiver of defenses and objections not raised in the proceedings below. — Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. A party who deliberately adopts a certain theory upon which the case is tried and decided by the lower court will not be permitted to change theory on appeal; points of law, theories, issues, and arguments not brought to the attention of the lower court need not, and ordinarily will not, be considered by a reviewing court.

• Distinction between amicable settlement with participation of a Labor Attaché and voluntary arbitration under the Labor Code. — A contractual provision requiring the participation of a Labour Attaché in the amicable settlement of disputes contemplates a conciliation mechanism whereby the parties negotiate with each other, not voluntary arbitration under the Labor Code wherein a third party renders a decision. The designated person is tasked merely to "participate" in the amicable settlement, not to "decide" the dispute. Absent an express stipulation submitting termination disputes to a Voluntary Arbitrator or panel of Voluntary Arbitrators, the dispute remains within the exclusive and original jurisdiction of the LA.

• "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." — This passage states the fundamental principle governing jurisdiction over the subject matter, which the Court applied to hold that the contractual dispute settlement provision could not divest the LA of statutory jurisdiction.

• "Clearly, the mechanism contemplated herein 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 passage distinguishes the contractual dispute settlement provision from voluntary arbitration under the Labor Code, clarifying that the Labour Attaché's role is conciliatory, not adjudicative, and therefore does not remove the case from the LA's jurisdiction.

• "issues not raised in the previous proceedings cannot be raised for the first time at a late stage." — This passage articulates the procedural bar against belatedly raising new theories on appeal, applied to hold that AICI's jurisdictional argument based on the dispute settlement provision was deemed waived for having been raised only in its motion for reconsideration before the CA.

• Cubero vs. Laguna West Multi-Purpose Cooperative, Inc., 538 Phil. 899 (2006) — Cited for the definitions of "original jurisdiction" as the power to take cognizance of a cause at its inception, try it, and pass judgment upon the law and facts, and "exclusive jurisdiction" as power possessed to the exclusion of others, supporting the Court's holding that the LA's jurisdiction over OFW claims is original and exclusive.

• Office of the Court Administrator vs. CA, 428 Phil. 696 (2002) — Cited for the rule that jurisdiction over the subject matter is determined exclusively by the Constitution and the law and cannot be conferred by the voluntary act or agreement of the parties, supporting the holding that the contractual provision could not divest the LA of jurisdiction.

• Sameer Overseas Placement Agency, Inc. vs. Cabiles, 740 Phil. 403 (2014) — Cited for the rationale of the solidary liability of recruitment agencies with foreign employers: to assure overseas workers of immediate and sufficient payment and to provide an additional layer of protection against foreign employers that tend to violate labor laws.

• Vivero vs. Court of Appeals, 398 Phil. 158 (2000) — Cited by the CA for the rule that if parties wish to submit termination disputes to voluntary arbitration, such agreement must be stated in "unequivocal language," and that the phrase "all disputes" is insufficient to divest the LA of jurisdiction. The Supreme Court modified the CA's reliance on this precedent by clarifying that the contractual provision did not involve voluntary arbitration at all.

• Section 10, Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995), as amended by Republic Act No. 10022 — Grants Labor Arbiters original and exclusive jurisdiction to hear and decide claims arising out of employer-employee relations or by virtue of any law or contract involving Filipino workers for overseas deployment, including claims for actual, moral, exemplary, and other forms of damages. Also provides that the liability of the principal/employer and the recruitment/placement agency for any and all claims shall be joint and several. Applied as the primary statutory basis for both the LA's jurisdiction and AICI's solidary liability.

• Article 275 (formerly Article 262), Labor Code — Provides that the Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. Distinguished from the contractual dispute settlement provision, which did not constitute voluntary arbitration under this article.

• Article 219 (formerly Article 212)(n), Labor Code — Defines "Voluntary Arbitrator" as any person accredited by the Board as such, or named or designated in the CBA by the parties, or chosen with or without the assistance of the NCMB, or any official authorized by the Secretary of Labor and Employment upon written request and agreement of the parties. Used to distinguish the Labour Attaché's role from that of a Voluntary Arbitrator.

• Section 1, Rule 9, Rules of Court — Provides that defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. Applied to hold that AICI's failure to raise the dispute settlement provision issue before the LA and NLRC constituted a waiver of that defense.

Carpio (Senior Associate Justice, Chairperson), Caguioa, J. Reyes, Jr., and Hernando, JJ., concurred.