28/11/2025
The (SC) has ruled that voluntary arbitrators have jurisdiction over a labor dispute only when both parties clearly and mutually agree to it. One party’s agreement is not enough if the other consistently objects.
In a Decision written by Senior Associate Justice Marvic M.V.F. Leonen, the SC’s Second Division ruled that the panel of voluntary arbitrators lacked authority to resolve the monetary claims of Benjie Tandayag against Magsaysay Maritime Corporation. Instead, the jurisdiction over the dispute lies with the Labor Arbiter (LA).
Tandayag, a seafarer hired by the corporation for one of its vessels, suffered a work-related injury while on board the vessel, leaving him permanently disabled. There was no collective bargaining agreement (CBA) between him and the corporation.
When the corporation refused to pay his disability and other related benefits, he filed a case with the National Conciliation and Mediation Board, which referred it to a panel of voluntary arbitrators (panel).
The parties entered into a submission agreement to arbitrate before the panel. However, the corporation argued that the panel lacked jurisdiction over the monetary claims. The panel disagreed, stating that the corporation waived its right to contest the panel’s jurisdiction when it signed the submission agreement. Ultimately, it ruled in favor of Tandayag.
The corporation challenged this decision before the Court of Appeals (CA), which ruled that the LA, not the voluntary arbitrators, has jurisdiction.
Upholding the CA, the SC cited the 𝘓𝘢𝘣𝘰𝘳 𝘊𝘰𝘥𝘦, which provides that money claims arising from employer-employee relations must be filed before the LA, a rule similarly stated in RA 8042 or the 𝘔𝘪𝘨𝘳𝘢𝘯𝘵 𝘞𝘰𝘳𝘬𝘦𝘳𝘴 𝘢𝘯𝘥 𝘖𝘷𝘦𝘳𝘴𝘦𝘢𝘴 𝘍𝘪𝘭𝘪𝘱𝘪𝘯𝘰𝘴 𝘈𝘤𝘵 for claims of overseas Filipino workers. Voluntary arbitrators, on the other hand, handle disputes involving CBAs, company policies, and 𝗼𝘁𝗵𝗲𝗿 𝗺𝗮𝘁𝘁𝗲𝗿𝘀 that 𝗯𝗼𝘁𝗵 𝗽𝗮𝗿𝘁𝗶𝗲𝘀 𝗮𝗴𝗿𝗲𝗲 𝘁𝗼 𝘀𝘂𝗯𝗺𝗶𝘁 to them.
In this case, there was no CBA, but Tandayag and the panel relied on the parties’ submission agreement.
However, records show that the corporation promptly and repeatedly objected to the voluntary arbitrators’ authority. In fact, it even asked that the jurisdiction issue be resolved and insisted that the case belonged to the LA.
The SC explained that the submission agreement did not mean the corporation accepted the voluntary arbitrators’ jurisdiction, since it clearly raised the issue from the start.
The SC added that while voluntary arbitration is encouraged, “𝘪𝘵 𝘮𝘶𝘴𝘵 𝘣𝘦 𝘤𝘢𝘵𝘦𝘨𝘰𝘳𝘪𝘤𝘢𝘭 𝘢𝘯𝘥 𝘶𝘯𝘦𝘲𝘶𝘪𝘷𝘰𝘤𝘢𝘭 𝘵𝘩𝘢𝘵 𝘣𝘰𝘵𝘩 𝘱𝘢𝘳𝘵𝘪𝘦𝘴 𝘵𝘰 𝘵𝘩𝘦 𝘥𝘪𝘴𝘱𝘶𝘵𝘦 𝘢𝘨𝘳𝘦𝘦𝘥 𝘵𝘰 𝘣𝘦 𝘣𝘰𝘶𝘯𝘥 𝘣𝘺 𝘵𝘩𝘦 𝘷𝘰𝘭𝘶𝘯𝘵𝘢𝘳𝘺 𝘢𝘳𝘣𝘪𝘵𝘳𝘢𝘵𝘰𝘳.” Submission to arbitration by one side is not enough if the other side consistently objects.
Read the full text of the Press Release at https://sc.judiciary.gov.ph/?p=156011.
Read the full text of the Decision at https://sc.judiciary.gov.ph/?p=156005.
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