Atlas Farms, Inc. vs. NLRC

The labor arbiter has original and exclusive jurisdiction over termination disputes where actual termination has already occurred, even if a collective bargaining agreement provides for a grievance machinery, unless the dispute genuinely involves the interpretation or implementation of CBA provisions or company personnel policies; and acceptance of separation pay by an illegally dismissed employee does not constitute estoppel or waiver of the right to claim full backwages and reinstatement or separation pay in lieu thereof.

Atlas Farms, Inc. is an employer engaged in farming and feedmill operations, maintaining a collective bargaining agreement with an employees' union. Private respondents Jaime O. dela Peña and Marcial I. Abion were employees of Atlas Farms — Dela Peña as a veterinary aide and feedmill operator, Abion as a carpenter/mason and maintenance man. Both were members of the employees' union covered by an existing CBA that included a grievance machinery and provisions for voluntary arbitration. The dispute arose from the termination of Dela Peña and Abion's employment, which they characterized as illegal dismissal motivated by management's suspicion that they were organizing a rival union, and which petitioner justified as disciplinary action for violations of company rules.

Private respondent Jaime O. dela Peña was employed by Atlas Farms, Inc. as a veterinary aide in December 1975, terminated in July 1989, and re-hired on July 8, 1989 with the additional job of feedmill operator, tasked with training selected workers to operate the feedmill. On March 13, 1993, Dela Peña was allegedly caught urinating and defecating on company premises not intended for that purpose. The farm manager issued a formal notice directing him to explain within twenty-four hours why disciplinary action should not be taken. Petitioner claimed Dela Peña refused to receive the notice and never explained, verbally or in writing. On March 20, 1993, a notice of termination was sent, and Dela Peña acknowledged receipt of separation pay in the amount of ₱13,918.67. From July 8, 1989 until his termination, Dela Peña had worked seven days a week, including holidays, without overtime, holiday pay, rest day pay, or service incentive leave pay. At the time of dismissal, he was receiving ₱180 daily wage, or an average monthly salary of ₱5,402.

Co-respondent Marcial I. Abion was a carpenter/mason and maintenance man whose employment commenced on October 8, 1990. Petitioner alleged that Abion caused the clogging of the fishpond drainage system, resulting in damages worth several hundred thousand pesos, by improperly disposing of cut grass and waste materials into the drainage. A written notice was sent requiring him to explain, but petitioner claimed he refused to receive it or give an explanation. His services were terminated on October 27, 1992, and he acknowledged receipt of a written notice of dismissal with separation pay. Like Dela Peña, Abion worked seven days a week, including holidays, without holiday pay, rest day pay, service incentive leave pay, or night shift differential pay. When terminated, he was receiving a monthly salary of ₱4,500.

Dela Peña and Abion filed separate complaints for illegal dismissal, later consolidated, claiming their termination was due to petitioner's suspicion that they were leaders in a plan to form a union to compete with the existing management-dominated union. On November 9, 1993, the labor arbiter dismissed their complaints on the ground that the grievance machinery under the CBA had not been exhausted. The private respondents availed of the grievance process but later refiled before the NLRC in Region IV, alleging lack of sympathy on petitioner's part to engage in conciliation. The labor arbiter again dismissed the complaints on January 30, 1996 for lack of merit, but the NLRC reversed, finding the dismissal illegal. The Court of Appeals affirmed the NLRC with modifications, prompting the present petition.

• Just Cause for Dismissal: Petitioner contended that the dismissal of private respondents was for a just and valid cause, pursuant to the provisions of the company's rules and regulations — Dela Peña for urinating and defecating on company premises, and Abion for causing the clogging of the fishpond drainage resulting in substantial damages.
• Lack of Jurisdiction: Petitioner argued that the labor arbiter lacked jurisdiction, claiming the cases should have been resolved through the grievance machinery and eventually referred to voluntary arbitration as prescribed in the CBA, since private respondents were members of the employees' union with which petitioner had an existing CBA.
• Forum-Shopping: Petitioner maintained that private respondents, by initially availing of the grievance procedure under the CBA, recognized that their cases fell under the grievance machinery, and that filing before the NLRC without having exhausted that machinery constituted forum-shopping.
• Monetary Awards: Petitioner argued that the appellate court erred in ruling that private respondents were entitled to separation pay and full backwages, and in holding petitioner liable for costs of suit.

• Illegal Dismissal: Private respondents contended that they were illegally dismissed because management discovered their intention to form another union and because they were vocal in asserting their rights.
• Procedural Impropriety of Petition: Private respondents argued that the petition involved factual issues that cannot be properly raised in a petition for review on certiorari under Rule 45 of the Revised Rules of Court.

• Validity of Dismissal: Whether private respondents were legally and validly dismissed.
• Jurisdiction: Whether the labor arbiter and the NLRC had jurisdiction to decide the complaints for illegal dismissal, as opposed to the grievance machinery and voluntary arbitrator under the CBA.
• Costs of Suit: Whether petitioner is liable for costs of suit.

• Validity of Dismissal: No. The dismissal was illegal, petitioner having failed to substantiate the alleged infractions and to afford due process, as found by the NLRC.
• Jurisdiction: Yes. The labor arbiter and the NLRC had jurisdiction over the termination disputes, actual termination having occurred and the cases not involving genuine interpretation or implementation of CBA provisions.
• Costs of Suit: Yes. Petitioner was properly held liable for costs of suit, the dismissal having been found illegal and the labor arbiter and NLRC duly vested with jurisdiction.

• Validity of Dismissal: The first issue primarily involves questions of fact. The burden of proving that the dismissal was legal and valid fell upon petitioner. The NLRC found that petitioner failed to substantiate its claim that both respondents committed acts violating company rules and regulations. No evidence was shown that respondents refused to receive the notices requiring them to show cause. Without proof of notice, respondents were dismissed without hearing and deprived of a chance to air their side. Factual findings of quasi-judicial agencies are accorded not only respect but finality, and the Court is not a trier of facts. No compelling reason was found to deviate from the NLRC ruling that the dismissal was illegal, absent a showing that the NLRC reached its conclusion arbitrarily.

• Jurisdiction: Article 217 of the Labor Code vests labor arbiters with original and exclusive jurisdiction over termination disputes. Article 261 provides the exception for grievances arising from the interpretation or implementation of the CBA and company personnel policies, which fall under the voluntary arbitrator. However, as held in Vivero vs. CA, the employer cannot arrogate into the powers of voluntary arbitrators the original and exclusive jurisdiction of labor arbiters over termination disputes in the absence of an express agreement between the parties for Article 262 to apply. Policy Instruction No. 56 applies only to termination cases arising from the interpretation and implementation of CBAs and company personnel policies processed through plant-level grievance procedures — circumstances not present here. In Maneja vs. NLRC, the Court held that a dismissal case does not fall within the phrase "grievances arising from the interpretation or implementation of the collective bargaining agreement." Where there was already actual termination with alleged violation of employee rights, the case is cognizable by the labor arbiter. Moreover, pursuant to Article 260, only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators; here, the union had no participation, having failed to object to the dismissal, rendering arbitration without the union's active participation pointless or even prejudicial. Private respondents had also sought without success to avail of the grievance procedure, and petitioner failed to show proof that it took steps to convene the grievance machinery after the labor arbiter first dismissed the complaints.

• Costs of Suit: Having found the dismissal illegal and the labor arbiter and NLRC duly vested with jurisdiction, the Court agreed with the appellate court that petitioner should pay the costs of suit. The modification of monetary awards was warranted: reinstatement being no longer feasible because petitioner had closed its shop, separation pay in lieu of reinstatement was awarded. A terminated employee's receipt of separation pay and other monetary benefits does not preclude reinstatement or full benefits under the law, as held in Cariño vs. ACCFA, because the employer drove the employee to the wall and the latter's acceptance was a case of adherence, not choice — renuntiatio non praesumitur. Full backwages were awarded pursuant to R.A. 6715, computed from the time of illegal dismissal up to the date of promulgation, without qualification, considering reinstatement was no longer practicable.

• Jurisdiction over Termination Disputes — Labor arbiters have original and exclusive jurisdiction over termination disputes under Article 217 of the Labor Code. The exception under Article 261, vesting jurisdiction in the voluntary arbitrator over grievances arising from the interpretation or implementation of the CBA or company personnel policies, applies only when the dispute genuinely involves such interpretation or implementation. Where actual termination has already occurred with alleged violation of employee rights, the case falls within the labor arbiter's jurisdiction, not the voluntary arbitrator's. The employer cannot invoke the grievance machinery to divest the labor arbiter of jurisdiction absent an express agreement for Article 262 to apply.

• Non-Estoppel from Acceptance of Separation Pay — An illegally dismissed employee's acceptance of separation pay and other monetary benefits does not estop him from claiming reinstatement, full backwages, or separation pay in lieu of reinstatement. The employer and employee do not stand on the same footing; the employee, being out of job and facing the harsh necessities of life, is driven to accept money proffered. Such acceptance is deemed adherence, not choice, and does not constitute waiver of the right to press claims. Renuntiatio non praesumitur — waiver is not presumed.

• Finality of Factual Findings of Quasi-Judicial Agencies — Factual findings of agencies exercising quasi-judicial functions are accorded not only respect but finality, and the Supreme Court is not a trier of facts. The Court will not deviate from such findings absent a showing that the agency reached its conclusion arbitrarily.

• Separation Pay in Lieu of Reinstatement — Where reinstatement is no longer feasible, as when the employer has closed its shop, separation pay equivalent to one month's salary for every year of service is awarded in lieu of reinstatement. Full backwages are computed from the date of illegal dismissal up to the date of promulgation of the decision, without qualification, pursuant to R.A. 6715.

• "Where the dispute is just in the interpretation, implementation or enforcement stage, it may be referred to the grievance machinery set up in the CBA, or brought to voluntary arbitration. But, where there was already actual termination, with alleged violation of the employee's rights, it is already cognizable by the labor arbiter." — This passage establishes the demarcation between the jurisdiction of the voluntary arbitrator and the labor arbiter, keyed to whether actual termination has occurred.

• "Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and employee, obviously, do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of the money. Because out of job, he had to face the harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence, not of choice." — This passage, quoting Cariño vs. ACCFA, articulates the canonical rationale for why acceptance of separation pay does not bar an illegally dismissed employee's claims, a principle frequently cited in labor jurisprudence.

• "Consequently only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators. In these termination cases of private respondents, the union had no participation, it having failed to object to the dismissal of the employees concerned by the petitioner. It is obvious that arbitration without the union's active participation on behalf of the dismissed employees would be pointless, or even prejudicial to their cause." — This passage explains why the grievance machinery is inapplicable when the union does not participate in the employee's termination dispute, reinforcing the labor arbiter's jurisdiction.

• Vivero vs. CA, 344 SCRA 268 (2000) — Followed. Held that an employer cannot arrogate into the powers of voluntary arbitrators the original and exclusive jurisdiction of labor arbiters over termination disputes absent an express agreement between the parties for Article 262 to apply. Also cited for the principle that when the real issue is the validity of termination, the need to interpret or implement CBA provisions does not divest the labor arbiter of jurisdiction.

• Maneja vs. NLRC, 290 SCRA 603 (1998) — Followed. Held that a dismissal case does not fall within grievances arising from the interpretation or implementation of the CBA; the labor arbiter had original and exclusive jurisdiction over the termination case, and it was error to give the voluntary arbitrator jurisdiction.

• Cariño vs. ACCFA, 18 SCRA 183 (1966) — Followed. Established that acceptance of separation pay by a dismissed employee does not amount to estoppel, because the employee's acceptance is driven by necessity, not choice — renuntiatio non praesumitur.

• Sanyo Travel Corporation vs. NLRC, 280 SCRA 129 (1997) — Cited for the proposition that the Court will not deviate from NLRC findings absent a showing that the conclusion was reached arbitrarily.

• Bataan Shipyard and Engineering Corporation vs. NLRC, 269 SCRA 199 (1997) — Cited for the doctrine that factual findings of quasi-judicial agencies are accorded respect and finality.

• Article 217, Labor Code — Vesting labor arbiters with original and exclusive jurisdiction over termination disputes. Applied to confirm the labor arbiter's jurisdiction over the illegal dismissal complaints of Dela Peña and Abion.

• Article 261, Labor Code — Providing the voluntary arbitrator with original and exclusive jurisdiction over unresolved grievances arising from the interpretation or implementation of the CBA and company personnel policies. Distinguished from the present case, which involved actual termination and did not genuinely require CBA interpretation or implementation.

• Article 260, Labor Code — Requiring parties to a CBA to establish a grievance machinery and designate voluntary arbitrators in advance, with unsettled grievances automatically referred to voluntary arbitration. Applied to show that only disputes involving the union and the company are referred to the grievance machinery, which was inapplicable here since the union took no part.

• Republic Act No. 6715 — Amending the Labor Code on backwages. Applied to award full backwages to private respondents computed from the date of illegal dismissal up to the date of promulgation, without qualification, reinstatement being no longer practicable.

• Policy Instruction No. 56 (Secretary of Labor, April 6, 1993) — Clarifying jurisdiction between voluntary arbitrators and labor arbiters over termination cases. Distinguished and held inapplicable, as the instant case did not involve termination arising from the interpretation and implementation of CBAs or company personnel policies processed through plant-level grievance procedures.

Bellosillo (Chairman), Mendoza, and Callejo, Sr., JJ., concurred. Austria-Martinez, J., was on leave.