Case Summary (G.R. No. 149552)
Procedural Posture and Relief Sought
The case reached the Supreme Court by a Petition for Review on Certiorari under Rule 45 seeking reversal of the Court of Appeals’ decision that set aside a Voluntary Arbitration Award of the NCMB. The Voluntary Arbitrator dismissed the employees’ complaint but awarded separation pay and attorney’s fees; the Court of Appeals ordered reinstatement with full backwages and assessed damages against the union officers; the Supreme Court was asked to review those holdings.
Key Dates
Key Dates and Timeline of Events
Collective bargaining agreement (CBA) retroactive to August 1, 1991 and signed November 30, 1991. Allegation letters and union resolution: February–March 1992. GMC memorandum terminating employment and placing employees on preventive suspension: March 24, 1992 (effective April 24, 1992). Voluntary Arbitration Award: August 16, 1995. Court of Appeals decision setting aside award: March 30, 2001 (motion for reconsideration denied July 18, 2001). Supreme Court decision: March 10, 2010 (decision under the 1987 Constitution).
Applicable Law and Legal Principles
Constitutional and Statutory Framework
Applicable constitutional framework: 1987 Philippine Constitution. Statutory and regulatory basis: Labor Code provisions on unfair labor practices and union security (Article 248(e)), rules on termination (Articles 282–285 and related jurisprudence), Republic Act No. 6715 on backwages computation, and established jurisprudence on the enforcement of union security clauses and due process in dismissal cases.
Collective Bargaining Agreement: Union Security Clause
Terms of the CBA — Closed Shop / Maintenance of Membership
The parties’ CBA contained a maintenance of membership / closed shop clause requiring employees to be union members in good standing as a condition of employment (Section 3), and a provision obligating GMC, upon written request of the union, to terminate employees who fail to meet those conditions (Section 6). The CBA additionally included a clause by which the union would absolve the company from liabilities resulting from dismissals pursuant to that clause.
Events Leading to Expulsion and Dismissal
Facts Relating to Charges, Expulsion and Employer Action
Union regional director Gabiana sent the accused employees copies of affidavits charging “acts inimical to the union” and demanded answers within three days; the accused employees reportedly refused to acknowledge receipt. On February 29, 1992 the union board (Pino, et al.) issued a resolution expelling the employees and recommended dismissal. Gabiana wrote to GMC requesting immediate dismissal; after further follow‑up and threats of an unfair labor practice suit, GMC issued notice terminating employment effective April 24, 1992 and placed the employees on preventive suspension.
Administrative and Arbitral Proceedings
Grievance, Strike Notice, Arbitration and NLRC Referral
The dismissed employees filed a Notice of Strike and sought conciliation with NCMB; conciliation failed. They filed a complaint before NLRC which dismissed for lack of jurisdiction and endorsed the case to NCMB for voluntary arbitration. The union grievance machinery failed to act; the NCMB Voluntary Arbitrator assumed jurisdiction and proceeded to hear the case based on position papers and documentary records.
Voluntary Arbitration Award
Voluntary Arbitrator’s Findings and Disposition
The NCMB Voluntary Arbitrator found the dismissals valid under the closed shop provision, held that the employees waived due process by refusing receipt of the letter, and deemed preventive suspension as self‑defense. The arbitrator dismissed the complaint for lack of merit but awarded separation pay (calculated at one‑half month per year of service as presented) and attorney’s fees equal to 10% of the total monetary award.
Court of Appeals’ Ruling
Court of Appeals’ Findings and Relief Ordered
The Court of Appeals granted certiorari, set aside the voluntar y arbitration award, and concluded that although dismissal pursuant to a valid closed shop provision could be lawful, GMC failed to observe elementary procedural due process. The CA ordered GMC to reinstate the employees with full backwages (solidarily with Pino, et al.) and held Pino, et al. liable for moral and exemplary damages (P50,000 and P30,000 each respectively) and attorney’s fees; GMC’s motion for reconsideration was denied.
Issues Raised to the Supreme Court
Issues Presented by GMC on Appeal
GMC contended that the Court of Appeals committed grave abuse of discretion by setting aside the arbitrator’s findings, by ruling that GMC failed to accord due process, and by holding GMC solidarily liable with union officers for payment of backwages. GMC argued the Court of Appeals improperly disturbed the voluntar y arbitrator’s factual findings and that GMC relied in good faith on the union’s expulsion decision and the CBA.
Standard of Review
Standard of Review on Factual Findings in Rule 45 Petition
The Supreme Court reiterated that under Rule 45 a petitioner can ordinarily raise only questions of law; however, a departure from this limitation is warranted where the factual findings of the appellate court are contrary to those of the trial court or agency or are unsupported by the record. Because the voluntar y arbitrator and the Court of Appeals reached contradictory factual conclusions, the Supreme Court deemed a review of the evidence necessary.
Substantive and Procedural Due Process in Union‑Security Dismissals
Legal Test for Enforcing Union Security Clauses and Due Process Requirements
The Court summarized the law: union security clauses (closed shop, union shop, maintenance of membership) are allowed by Article 248(e) of the Labor Code and by jurisprudence, and dismissal under such clauses can constitute a valid ground for termination provided three requisites are satisfied: (1) applicability of the union security clause, (2) a written request by the union for enforcement, and (3) sufficient evidence supporting the union’s decision to expel the employee. Separate from substantive sufficiency, procedural due process (notice and hearing) remains mandatory — the employer must give the affected employee written notice of the particular acts or omissions and an opportunity to be heard, and must follow this with a subsequent notice of dismissal.
Analysis of Evidence and Employer Conduct
Supreme Court’s Assessment of GMC’s Actions and the Record
The Supreme Court found that although the CBA’s closed shop/maintenance of membership clause was applicable and the union requested enforcement, GMC did not satisfy the indispensable third requisite: GMC never independently examined or proved the sufficiency of evidence supporting the union’s expulsion decision. The termination letters issued by GMC relied solely on the union resolution and the union’s demand and contained no mention of factual findings or proof supporting expulsion. The NCMB record lacked proof that the accused employees were properly served with charges or that any meaningful opportunity to answer was afforded. GMC’s reliance on the union’s alleged due‑process compliance was unproven; mere allegation that the union had accorded due process is insufficient.
Employer Duty and Limits of Presumption
Limits of Presumption of Regularity and Employer’s Separate Obligations
The Court emphasized that the presumption of regularity in official acts does not apply to private union officers as it does to public officers. Even assuming the union had valid grounds to expel members, the employer must independently accord notice and hearing to affected employees before effectuating dismissal under a CBA security clause. Precipitous compliance with union demands without inquiry can render the dismissal illegal and place liability on the employer despite the union’s instrumental role.
Conclusion on Illegality of Dismissal
Final Determination: Dismissal Was Illegal for Lack o
...continue readingCase Syllabus (G.R. No. 149552)
Case Caption, Nature of Action, and Relief Sought
- Petition for Review on Certiorari under Rule 45 of the Rules of Court by General Milling Corporation (GMC) seeking reversal of the Court of Appeals Decision dated March 30, 2001 and Resolution dated July 18, 2001 in CA-G.R. SP No. 40280.
- Case arises from a Voluntary Arbitration Award dated August 16, 1995 by NCMB, Cebu City (VA Case No. AC 389-01-01-95), which dismissed complaints filed by Ernesto Casio, Rolando Igot, Mario Famador, Nelson Lim, Felicisimo Booc, Procopio Obregon, Jr., and Antonio Aninipok (collectively, Casio, et al.) against GMC for unfair labor practice, illegal suspension, illegal dismissal, and damages.
- Primary relief contested on appeal: whether the Court of Appeals gravely abused discretion in setting aside the Voluntary Arbitration Award and ordering reinstatement and full backwages and in its findings regarding due process and solidarity liability with union officers.
Parties and Union Representation
- Petitioners: General Milling Corporation (GMC).
- Respondents (employees/claimants): Ernesto Casio (elected IBM-Local 31 President in June 1991), Rolando Igot, Mario Famador, Nelson Lim, Felicisimo Booc, Procopio Obregon, Jr., and Antonio Aninipok — regular employees with daily earnings of P173.75 to P201.50 and service of eight to 25 years.
- Other respondents (union officers/board members): Virgilio Pino (Acting President of IBM-Local 31), Paulino Cabreros, Ma. Luna P. Jumaoas, Dominador Booc, Fidel Valle, Bartolome Auman, Remegio Cabantan, Loreto Gonzaga, Edilberto Mendoza, and Antonio Panilag (collectively, Pino, et al.).
- Union: Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter, sole and exclusive bargaining agent of GMC’s rank-and-file employees in Lapu-Lapu City.
Collective Bargaining Agreement (CBA) — Relevant Clauses
- Effectivity: CBA signed November 30, 1991, retroactive to August 1, 1991.
- Section 3 — Maintenance of Membership:
- All employees (except those legally excluded) must become and remain members in good standing of the Union within 30 days upon signing the agreement and must maintain such membership as a condition of employment or continued employment.
- Section 6 — Employer’s Duty Upon Union Request:
- Upon written request of the Union, the Company shall terminate the services of any employee/worker who fails to fulfill Sections 3 and 4, subject to the Labor Laws and implementing rules.
- The Union shall absolve the Company from any and all liabilities and responsibilities to any employee dismissed pursuant to this provision.
Factual Background Leading to Expulsion and Dismissal
- February 24, 1992: Rodolfo Gabiana (IBM Regional Director for Visayas and Mindanao) furnished Casio, et al. with copies of affidavits from GMC employees Basilio Inoc and Juan Potot, charging Casio, et al. with "acts inimical to the interest of the union," and gave three days to file answers/counter-affidavits; Casio, et al. refused to acknowledge receipt.
- February 29, 1992: Pino, et al., as IBM-Local 31 officers and board members, issued a Resolution expelling Casio, et al. from the union; the Resolution states the three-day period lapsed, an ex parte investigation was conducted, charges were "more than adequately substantiated," and recommends dismissal from work; the Resolution was furnished to GMC management with a recommendation of dismissal.
- March 10 and March 19, 1992: Gabiana wrote to Eduardo Cabahug (GMC Vice-President) informing GMC of the expulsions and requesting immediate dismissal to preserve industrial peace; Gabiana warned that GMC’s failure to comply could constitute gross violation of the CBA and lead to an unfair labor practice case.
- Pressured by the threatened unfair labor practice suit, GMC issued a Memorandum dated March 24, 1992 terminating Casio, et al.’s employment effective April 24, 1992 and placed them under preventive suspension in the interim.
- March 27, 1992: Casio, et al. filed a Notice of Strike with NCMB-Regional Office No. VII alleging illegal dismissal, discrimination, coercion, and union busting; conciliation failed to settle the dispute.
Subsequent Administrative and Judicial Proceedings
- August 3, 1992: Casio, et al. filed a Complaint with the NLRC Regional Arbitration Branch VII for unfair labor practice — NLRC Case No. RAB-VII-08-0639-92; Labor Arbiter dismissed for lack of jurisdiction and endorsed the case to NCMB-RO for voluntary arbitration.
- Parties agreed to exhaust union grievance machinery first; Casio, et al. filed a complaint with IBM-Local 31’s Acting President Pino on September 7, 1994; the Board failed to hold proceedings, so Voluntary Arbitrator Alice K. Canonoy-Morada assumed jurisdiction and docketed the matter as VA Case No. AC 389-01-01-95.
- Positions and documents were submitted by parties (Pino, et al. did not submit Position Papers or documentary evidence).
- August 16, 1995: Voluntary Arbitration Award rendered; later contested in the Court of Appeals via Petition for Certiorari (Rule 65), where the Voluntary Arbitration Award was set aside on March 30, 2001; GMC’s Motion for Reconsideration denied July 18, 2001; GMC filed petition for review before the Supreme Court.
Findings and Disposition in the Voluntary Arbitration Award (Canonoy-Morada)
- Principal findings:
- GMC’s termination of Casio, et al. complied validly with the closed shop provision in the CBA.
- GMC had no competence to determine the good standing of a union member (internal union matter).
- Casio, et al. waived their right to due process when they refused to receive Gabiana’s letter dated February 24, 1992 which required answers to charges.
- GMC’s preventive suspension of Casio, et al. was an act of self-defense.
- The IBM-Local 31 Resolution dated February 29, 1992 expelling Casio, et al. automatically ousted them as union officers.
- Dispositive relief granted by the Voluntary Arbitrator:
- Complaint dismissed for lack of merit.
- GMC ordered to pay separation pay to each of the employees within seven calendar days at the rate of one-half month per year of service, with a schedule of computation and amounts specified for each employee (e.g., Casio P47,453.22 for 18 years; Igot P29,673.00 for 12 years; Famador P37,483.80 for 15 years; Lim P41,925.57 for 17 years; Booc P34,984.88 for 14 years; Obregon P18,185.84 for 8 years; Aninipok P65,400.25 for 25 years).
- Attorney’s fees fixed at ten percent (10%) of the total amount due, to be shared proportionately.
- All other claims denied.
Court of Appeals Ruling (CA-G.R. SP No. 40280)
- The Court of Appeals granted writ of certiorari and set aside the Voluntary Arbitration Award.
- Key reasoning:
- Although dismissal was made pursuant to a valid closed shop provision in the CBA, GMC failed to observe elementary rules of due process in implementing the dismissals.
- Because of the lack of due process, Casio, et al. were entitled to reinstatement with full backwages from time of dismissal until reinstatement.
- The Court of Appe