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ATLAS FARMS v. NLRC

FACTS:

This case involves the termination of employment of private respondents Jaime O. dela Peña and Marcial I. Abion by the petitioner. Dela Peña was initially terminated in July 1989 but was rehired and given an additional job. On March 13, 1993, he was allegedly caught urinating and defecating in places not intended for such purposes. He was issued a formal notice but refused to receive it and failed to explain. Thus, a notice of termination was sent to him on March 20, 1993. Abion, on the other hand, allegedly caused damages to the fishpond drainage system. He also refused to receive a written notice requiring him to explain and was terminated on October 27, 1992.

Both Dela Peña and Abion filed complaints for illegal dismissal, alleging that their termination was due to their alleged plan to form a union to compete and replace the existing management-dominated union. The labor arbiter initially dismissed their complaints on the ground of failure to exhaust the grievance machinery in the collective bargaining agreement (CBA). However, the NLRC reversed the decision and ruled in favor of the private respondents. The Court of Appeals affirmed the NLRC ruling with some modifications.

Petitioner filed a motion for reconsideration, but it was denied. Hence, petitioner filed this petition seeking the reversal of the Court of Appeals decision. The issues to be resolved include the legality of the dismissals, the jurisdiction of the labor arbiter and NLRC, and petitioner's liability for costs.

ISSUES:

  1. Whether the dismissal of the private respondents was in order.

  2. Whether the labor arbiter or the voluntary arbitrator has jurisdiction over termination disputes.

  3. Whether the arbitral jurisdiction covers termination disputes involving the interpretation and implementation of the grievance procedure in the collective bargaining agreement (CBA).

  4. Whether the labor arbiter and the NLRC had jurisdiction over the cases involving the dismissed employees' termination.

  5. Whether the dismissed employees are entitled to reinstatement or separation pay in lieu of reinstatement.

RULING:

  1. The dismissal of the private respondents was illegal. The Supreme Court agrees with the NLRC's finding that there is no legal basis to say that their dismissal was in order. Factual findings of agencies exercising quasi-judicial functions are accorded finality, unless shown to be reached arbitrarily.

  2. The labor arbiter has jurisdiction over termination disputes. While Article 217 of the Labor Code provides that labor arbiters have original and exclusive jurisdiction over termination disputes, the exception provided in Article 261 does not apply in this case. The voluntary arbitrator does not have jurisdiction over termination disputes, unless there is an express agreement between the parties for the application of Article 262.

  3. The issue of whether there was proper interpretation and implementation of the CBA provisions came into play only because the grievance procedure in the CBA was not observed. Since the real issue then was whether there was a valid termination, there was no reason to invoke the need to interpret nor question an implementation of any CBA provision. Therefore, the termination dispute falls under the jurisdiction of the labor arbiter and the NLRC.

  4. The labor arbiter and the NLRC had jurisdiction over the cases involving the dismissed employees' termination because the arbitration mechanism provided in the CBA for disputes involving the union and the company is rendered pointless without the union's active participation on behalf of the dismissed employees.

  5. Since reinstatement is no longer feasible as the petitioner had already closed its shop, the dismissed employees are entitled to separation pay in lieu of reinstatement.

PRINCIPLES:

  • Factual findings of agencies exercising quasi-judicial functions are accorded respect and finality.

  • Labor arbiters have original and exclusive jurisdiction over termination disputes, unless there is an express agreement for the application of Article 262.

  • The voluntary arbitrator does not have jurisdiction over termination disputes, unless there is an express agreement for the application of Article 262.

  • When the issue revolves around the legality of an employee's dismissal for lack of cause and due process, the case is primarily a termination dispute, and the arbitration mechanism in the CBA becomes secondary. (St. Martin Funeral Homes v. NLRC)

  • Disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. Arbitration without the union's active participation on behalf of the dismissed employees would be pointless or prejudicial to their cause. (Article 260, Labor Code)

  • For a dismissal to be valid, the employer must comply with the requirements of due process, and the dismissal must be for a valid cause provided by law. (NLRC v. Lloyd Asia)

  • Acceptance of separation pay and other monetary benefits by a terminated employee does not preclude reinstatement or full benefits under the law if reinstatement is no longer possible. (Carino v. ACCFA)

  • Reinstatement is the general rule for the remedy of illegal dismissal, but separation pay may be awarded in lieu of reinstatement if reinstatement is no longer feasible. (Sony Ericsson Mobile Communications v. Reyes)

  • The labor arbiter and the NLRC have jurisdiction over cases involving illegal dismissal, where there is an alleged violation of an employee's rights. (Labor Code)