Vivero vs. Court of Appeals

A termination dispute remains within the original and exclusive jurisdiction of the Labor Arbiter under Article 217 of the Labor Code even when the parties' CBA contains a grievance machinery and voluntary arbitration clause, unless the CBA contains an express stipulation in unequivocal language that termination disputes shall be submitted to voluntary arbitration; the mere use of "all disputes" language is insufficient, and a permissive "may" in the CBA's job-security provision preserves the employee's right to seek recourse before the Labor Arbiter.

Petitioner Celestino Vivero was a licensed seaman and member of the Associated Marine Officers and Seamen's Union of the Philippines (AMOSUP). AMOSUP had entered into a Collective Bargaining Agreement with private respondents Hammonia Marine Services and Hanseatic Shipping Co., Ltd., which contained, among others, a Grievance Procedure (Article XII) providing for a Grievance Committee and, failing settlement, referral to a Voluntary Arbitration Committee, and a Job Security provision (Article XVII) governing promotion, demotion, suspension, and dismissal of seamen. At the time petitioner filed his complaint, the governing law on overseas employment disputes was Executive Order No. 247, later superseded by Republic Act No. 8042, the Migrant Workers and Overseas Filipinos Act of 1995, which transferred jurisdiction over such cases to the NLRC.

Petitioner Celestino Vivero, a licensed seaman and member of the Associated Marine Officers and Seamen's Union of the Philippines (AMOSUP), was hired by private respondents as Chief Officer of the vessel M.V. Sunny Prince on 10 June 1994 under a contract providing for a ten-month duration, a basic monthly salary of US $1,100.00, 44 hours of work per week, overtime of US $495.00 lump sum, and vacation leave with pay at US $220.00 per month. The employment was governed by a Collective Bargaining Agreement entered into between AMOSUP and private respondents, which contained a Grievance Procedure (Article XII) establishing a Grievance Committee composed of two company representatives and two labor representatives, with unresolved disputes to be referred to a Voluntary Arbitration Committee, and a Job Security provision (Article XVII) addressing promotion, demotion, suspension, and dismissal of seamen.

On 15 July 1994, petitioner was repatriated on grounds of very poor performance and conduct, refusal to perform his job, refusal to report to the Captain or the vessel's Engineers or cooperate with other ship officers regarding problems in cleaning the cargo holds or the shipping pump, and dismal relations with the Captain of the vessel. On 1 August 1994, petitioner filed a complaint for illegal dismissal with AMOSUP. In his claim/assistance request form, he stated the nature of his complaint as illegal dismissal, citing that the master of the vessel created the trouble with physical injury and false allegations, that there was no proper procedure of grievance, and that there was no proper notice of dismissal. Pursuant to Article XII of the CBA, grievance proceedings were conducted, but the parties failed to reach an amicable settlement.

On 28 November 1994, petitioner filed a complaint with the Philippine Overseas Employment Administration (POEA), which then had jurisdiction over overseas employment disputes under Executive Order No. 247. While the case was pending, private respondents filed a Motion to Dismiss on the ground that the POEA lacked jurisdiction because petitioner had failed to refer the dispute to a Voluntary Arbitration Committee as required by the CBA. Upon enactment of Republic Act No. 8042, the case was transferred to the Adjudication Branch of the National Labor Relations Commission.

On 21 January 1997, Labor Arbiter Jovencio Ll. Mayor Jr. dismissed the complaint for want of jurisdiction, reasoning that the CBA provided for referral to a Voluntary Arbitration Committee and that Article 261 of the Labor Code vests original and exclusive jurisdiction over such disputes in Voluntary Arbitrators. Petitioner appealed to the NLRC, which on 28 May 1998 set aside the Labor Arbiter's decision, finding that petitioner had exhausted his remedy through the Grievance Committee and that the CBA's voluntary arbitration clause was not binding absent mutual agreement to submit. The NLRC remanded the case to the Labor Arbiter for further proceedings. Private respondents' motion for reconsideration was denied on 23 July 1998. Private respondents then elevated the case to the Court of Appeals, which reversed the NLRC and reinstated the Labor Arbiter's dismissal, holding that the CBA was the law between the parties and that voluntary arbitration was mandatory. Petitioner filed the present petition for review.

• Voluntary Nature of Referral: Petitioner argued that, as suggested by its very title, referral of cases to a Voluntary Arbitration Committee is voluntary in nature; otherwise, it would be called a Compulsory Arbitration Committee.
• Jurisdiction Under Article 217: Petitioner maintained that if referral to voluntary arbitration were deemed mandatory by virtue of the CBA, the NLRC would be effectively deprived of its jurisdiction to hear and decide termination disputes under Article 217 of the Labor Code.
• Waiver by Respondents: Petitioner contended that private respondents should be deemed to have waived their right to question the procedure followed, considering that they had already filed their Position Paper before belatedly filing a Motion to Dismiss.
• Nature of the Dispute: Petitioner asserted that his complaint was undeniably a termination dispute and did not involve interpretation or implementation of the CBA or enforcement of company personnel policies, and thus should fall within the original and exclusive jurisdiction of the Labor Arbiter under Article 217.

• Mandatory Character of CBA Provision: Respondents argued that the CBA provision requiring unresolved disputes to be referred to a Voluntary Arbitration Committee was mandatory, as the CBA is the law between the parties and compliance therewith is mandated by express state policy promoting voluntary arbitration.
• Interpretation and Implementation of CBA: Respondents contended that the case involved the proper interpretation and implementation of the Grievance Procedure found in the CBA, pointing to petitioner's own claim form which referenced the absence of proper grievance procedure and notice of dismissal.
• Submission to Union Jurisdiction: Respondents maintained that petitioner's act of seeking his Union's assistance demonstrated his conviction that the complaint was within the ambit of the grievance machinery and subsequently voluntary arbitration, as mandated by Article 261 of the Labor Code.

• Jurisdiction over Termination Disputes: Whether the NLRC is deprived of jurisdiction over illegal dismissal cases whenever a CBA provides for grievance machinery and voluntary arbitration proceedings, or whether the dismissal of an employee constitutes a "grievance between the parties" under the CBA, thereby placing the dispute within the exclusive original jurisdiction of Voluntary Arbitrators.
• Mandatory vs. Discretionary Referral: Whether the CBA's use of the permissive word "may" in its job-security provision renders submission of termination disputes to voluntary arbitration discretionary rather than mandatory.
• Waiver of Right to Invoke CBA Procedure: Whether private respondents waived their right to question the procedure followed by petitioner by filing their position paper first and delaying their motion to dismiss for nine months.

• Jurisdiction over Termination Disputes: No. The case is primarily a termination dispute falling under the original and exclusive jurisdiction of the Labor Arbiter under Article 217 of the Labor Code; it does not involve interpretation or implementation of the CBA so as to fall within the jurisdiction of Voluntary Arbitrators under Article 261.
• Mandatory vs. Discretionary Referral: No, referral was not mandatory. The use of the word "may" in Section 4, Article XVII (Job Security) of the CBA shows the parties' intention to reserve the right to submit termination disputes to the Labor Arbiter rather than to a Voluntary Arbitrator.
• Waiver of Right to Invoke CBA Procedure: Yes. Private respondents are deemed to have waived their right to question the procedure followed by petitioner by filing their position paper and waiting nine months before moving to dismiss, and by failing to take steps to convene a Voluntary Arbitration Committee.

• Jurisdiction over Termination Disputes: The Court examined the nature of the dispute and found it to be primarily a termination dispute, not one involving the interpretation or implementation of the CBA. Petitioner's claim form showed he was challenging the legality of his dismissal for lack of cause and lack of due process. The issue of proper interpretation and implementation of the CBA arose only because the grievance procedure was not observed after petitioner sought his Union's assistance; it was not the primary issue. Under Article 217(a)(2) of the Labor Code, Labor Arbiters have original and exclusive jurisdiction over termination disputes. Article 217(c) requires that cases arising from the interpretation of CBAs and company personnel policies be referred to grievance machinery and voluntary arbitration, but this applies only to disputes genuinely involving CBA interpretation or implementation. The Court relied on San Miguel Corp. vs. NLRC, which held that for termination disputes to fall within the jurisdiction of Voluntary Arbitrators under Article 262, the CBA must state in unequivocal language that the parties conform to the submission of termination disputes to voluntary arbitration. A general agreement that "all disputes" should be submitted to a Voluntary Arbitrator is insufficient. Absent an express stipulation, the phrase "all disputes" is limited to areas traditionally within the jurisdiction of Voluntary Arbitrators—contract interpretation, contract implementation, and interpretation or enforcement of company personnel policies. Illegal termination disputes constitute a special area governed by a specific provision of law (Article 217).

• Mandatory vs. Discretionary Referral: Although the CBA did address termination disputes in Article XVII (Job Security), the Court found that the submission to voluntary arbitration was discretionary. Section 4 of Article XVII states that upon reaching port, if a case or dispute is not satisfactorily settled, it "may be referred to the grievance machinery or procedure hereinafter provided." The use of the permissive word "may" demonstrates the parties' intent to reserve the right to submit the illegal termination dispute to the jurisdiction of the Labor Arbiter rather than to a Voluntary Arbitrator. Petitioner validly exercised this option when he filed his complaint before the proper government agency. The Court distinguished Navarro III vs. Damasco, where all parties voluntarily submitted to the Voluntary Arbitrator's jurisdiction by filing position papers and manifesting that they were not questioning his authority. In the present case, the dispute was never brought to a Voluntary Arbitrator, and petitioner expressly sought recognition of the Labor Arbiter's jurisdiction. The Court acknowledged that voluntary arbitration is mandatory in character when there is a specific agreement between the parties to that effect, but stressed that the CBA's use of "may" preserved the right of recourse to Labor Arbiters.

• Waiver of Right to Invoke CBA Procedure: The Court found that private respondents waived any right to invoke the CBA's arbitration clause. Both AMOSUP and private respondents submitted to the jurisdiction of the Labor Arbiter by filing their respective position papers and ignoring the grievance procedure set forth in the CBA. Private respondents waited nine months after filing their position paper before moving to dismiss for lack of jurisdiction. Under the CBA, both the Union and the respondent companies were responsible for selecting an impartial arbitrator or convening an arbitration committee, yet neither made any move toward this end. The Court also noted that private respondents never invoked Policy Instruction No. 56, which clarifies jurisdiction between Voluntary Arbitrators and Labor Arbiters over termination cases, in either their position papers or their motion to dismiss. At this late stage, referral to a Voluntary Arbitrator would not serve the ends of justice. Petitioner should not be deprived of his legitimate recourse because of the refusal of both the Union and the respondent companies to follow the grievance procedure.

• Requirement of Express Stipulation for Voluntary Arbitration of Termination Disputes — For a termination dispute to fall within the jurisdiction of a Voluntary Arbitrator under Article 262 of the Labor Code, the CBA must contain an express stipulation in unequivocal language that the parties conform to the submission of termination disputes to voluntary arbitration. A general agreement that "all disputes" should be submitted to a Voluntary Arbitrator is insufficient. Absent such express stipulation, the phrase "all disputes" is construed as limited to disputes traditionally within the jurisdiction of Voluntary Arbitrators—contract interpretation, contract implementation, and interpretation or enforcement of company personnel policies. Illegal termination disputes are a special area governed by Article 217 of the Labor Code, which vests original and exclusive jurisdiction in Labor Arbiters. The Court applied this doctrine by finding that while the CBA's Article XVII addressed termination disputes, the permissive word "may" in Section 4 showed the parties' intent to make referral discretionary.

• Waiver of Right to Invoke CBA Arbitration Clause — Where both the employer and the union submit to the jurisdiction of the Labor Arbiter by filing position papers and fail to timely invoke the CBA's grievance and arbitration procedure, they are deemed to have waived their right to question the procedure followed by the employee. The employer should not wait an unreasonable period—nine months in this case—after filing its position paper before moving to dismiss for lack of jurisdiction. Neither the union nor the employer can shift responsibility for non-compliance with the grievance procedure to the employee when both were obligated under the CBA to take steps to convene a Voluntary Arbitration Committee but failed to do so.

• Jurisdiction Determined by Law, Not by Consent — While jurisdiction is determined by law and not by the consent or agreement of the parties, the parties' voluntary submission to a particular forum without timely objection may constitute waiver of the right to invoke an alternative dispute resolution mechanism provided in a CBA. The Court clarified that the Court of Appeals was correct that voluntary arbitration is mandatory when there is a specific agreement, but the CBA's permissive language preserved the right of recourse to Labor Arbiters.

• "The case is primarily a termination dispute. It is clear from the claim/assistance request form submitted by petitioner to AMOSUP that he was challenging the legality of his dismissal for lack of cause and lack of due process. The issue of whether there was proper interpretation and implementation of the CBA provisions comes into play only because the grievance procedure provided for in the CBA was not observed after he sought his Union's assistance in contesting his termination." — This passage articulates the ratio decidendi: the primacy of the termination dispute characterization over the incidental CBA-interpretation question, which determines whether jurisdiction lies with the Labor Arbiter or the Voluntary Arbitrator.

• "Ergo, it is not sufficient to merely say that parties to the CBA agree on the principle that 'all disputes' should first be submitted to a Voluntary Arbitrator. There is a need for an express stipulation in the CBA that illegal termination disputes should be resolved by a Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the same fall within a special class of disputes that are generally within the exclusive original jurisdiction of Labor Arbiters by express provision of law." — This is the canonical formulation of the specificity requirement for CBA provisions seeking to subject termination disputes to voluntary arbitration, frequently cited in subsequent labor jurisprudence.

• "The use of the word 'may' shows the intention of the parties to reserve the right to submit the illegal termination dispute to the jurisdiction of the Labor Arbiter, rather than to a Voluntary Arbitrator. Petitioner validly exercised his option to submit his case to a Labor Arbiter when he filed his Complaint before the proper government agency." — This passage establishes that permissive language in a CBA's job-security provision preserves the employee's right to choose between grievance machinery and Labor Arbiter recourse.

• "As it is, private respondents are deemed to have waived their right to question the procedure followed by petitioner, assuming that they have the right to do so. Under their CBA, both Union and respondent companies are responsible for selecting an impartial arbitrator or for convening an arbitration committee; yet, it is apparent that neither made a move towards this end. Consequently, petitioner should not be deprived of his legitimate recourse because of the refusal of both Union and respondent companies to follow the grievance procedure." — This defines the waiver doctrine applicable when both employer and union fail to initiate the CBA's arbitration mechanism but later seek dismissal for failure to exhaust it.

• San Miguel Corp. vs. NLRC, G.R. No. 108001, March 15, 1996, 255 SCRA 133 — Controlling precedent. The Court relied on this case for the requirement that a CBA must contain an express stipulation in unequivocal language that termination disputes and unfair labor practices shall be submitted to voluntary arbitration. A general "all disputes" clause is insufficient. The Court applied this principle to hold that the CBA's permissive "may" language did not constitute the required unequivocal submission.

• Navarro III vs. Damasco, G.R. No. 101875, July 14, 1995, 246 SCRA 260 — Distinguished. Private respondents invoked this case for the state policy of promoting voluntary arbitration. The Court distinguished it on the ground that in Navarro III, all parties voluntarily submitted to the Voluntary Arbitrator's jurisdiction by filing position papers and manifesting that they were not questioning his authority, whereas in the present case the dispute was never brought to a Voluntary Arbitrator and petitioner sought the Labor Arbiter's jurisdiction.

• E. Razon, Inc. vs. Secretary of Labor and Employment, G.R. No. 85867, May 13, 1993, 222 SCRA 1 — Cited by the Court of Appeals for the proposition that the CBA is the law between the parties and compliance therewith is mandated by express policy of law. The Supreme Court did not overturn this principle but qualified its application by examining the specific language of the CBA.

• Tolentino vs. Court of Appeals, G.R. No. 123445, October 6, 1997, 280 SCRA 226 — Cited by the Court of Appeals for the rule that jurisdiction is determined by law and not by consent or agreement of the parties or by estoppel. The Supreme Court acknowledged this principle but found it inapplicable to defeat petitioner's recourse given the CBA's permissive language and the respondents' waiver.

• Luzon Development Bank vs. Association of Luzon Development Bank Employees, G.R. No. 120319, October 6, 1995, 249 SCRA 162 — Cited for the proposition that the Voluntary Arbitrator enjoys the status of a quasi-judicial agency independent of the NLRC, as his decisions are not appealable to the latter.

• Article 217, Labor Code — Defines the original and exclusive jurisdiction of Labor Arbiters, including termination disputes (par. a[2]) and claims for damages arising from employer-employee relations (par. a[4]). Paragraph (c) provides that cases arising from the interpretation of CBAs and company personnel policies shall be disposed of by the Labor Arbiter by referring the same to grievance machinery and voluntary arbitration. The Court held that petitioner's complaint was a termination dispute under paragraph (a)(2), not a CBA-interpretation case under paragraph (c), and thus fell within the Labor Arbiter's jurisdiction.

• Article 261, Labor Code — Vests Voluntary Arbitrators with original and exclusive jurisdiction over unresolved grievances arising from the interpretation or implementation of the CBA and those arising from the interpretation or enforcement of company personnel policies. The Court found this provision inapplicable because the dispute was primarily a termination dispute, not one arising from CBA interpretation or implementation.

• Article 262, Labor Code — Provides that Voluntary Arbitrators may hear and decide all other labor disputes, including unfair labor practices and bargaining deadlocks, upon agreement of the parties. The Court held that this provision requires the express agreement of the parties, and the CBA's permissive "may" language did not constitute such agreement.

• Article 241(p), Labor Code — Imposes on labor organizations and their officers the duty to inform members of the provisions of the CBA, the prevailing labor relations system, and all their rights and obligations under existing labor laws. The Court cited this provision to note that it was petitioner's responsibility, through his Union, to ascertain the CBA's provisions, though this did not defeat his claim given the CBA's permissive language and the respondents' waiver.

• Executive Order No. 247 — The law in force when petitioner filed his complaint with the POEA, vesting it with original and exclusive jurisdiction over claims arising out of employer-employee relationships involving Filipino overseas workers.

• Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) — Transferred jurisdiction over the case to the Adjudication Branch of the NLRC.

• Policy Instruction No. 56 — Issued by the Secretary of Labor on April 6, 1993, clarifying jurisdiction between Voluntary Arbitrators and Labor Arbiters over termination cases. The Court found it inapplicable because the case was a termination dispute not arising from CBA interpretation or implementation or enforcement of company personnel policies, and because private respondents never invoked it.

Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concurred.