Negros Metal Corporation vs. Lamayo

Labor arbiters have original and exclusive jurisdiction over termination disputes, and such disputes fall within the grievance machinery or voluntary arbitration only when the parties unmistakably express their agreement to submit the same to voluntary arbitration under Article 262 of the Labor Code. Absent such express agreement, and absent an express CBA provision including termination disputes within the grievance machinery, the labor arbiter retains jurisdiction.

Respondent Armelo J. Lamayo was employed by petitioner Negros Metal Corporation as a machinist beginning September 1999. The company had a Collective Bargaining Agreement (CBA) containing a grievance machinery provision defining a grievance as any disagreement between the union and the employer or between a worker and the employer as to the application and interpretation of any of the provisions of the contract. Respondent had resigned from the union effective March 18, 2001, more than a year before the events giving rise to the dispute.

Armelo J. Lamayo began working for Negros Metal Corporation in September 1999 as a machinist. Sometime in May 2002, while Lamayo was at the company's foundry grinding some tools he was using, company manager William Uy, Sr. called his attention as to why he was using the grinder there. Lamayo replied that since the machine there was bigger, he would finish his work faster. His explanation was found unsatisfactory, and he was charged via memorandum with loitering and warned.

Taking the warning as a three-day suspension as penalized under company rules, Lamayo reported for work after three days, only to be meted with another 10-day suspension — from May 30 to June 10, 2002 — for allegedly failing to sign the memorandum suspending him earlier. After serving the second suspension, Lamayo reported for work on June 11, 2002, but Uy informed him that his services had been terminated and that he should draft his resignation letter. Lamayo thereupon filed a complaint for illegal dismissal on June 17, 2002.

In lieu of a position paper, petitioner submitted a Manifestation contending that the complaint should be dismissed for lack of jurisdiction, arguing that under the CBA, such matters must first be brought before the company's grievance machinery. The Labor Arbiter brushed aside this contention and held that Lamayo was illegally dismissed. On appeal, the NLRC set aside the Labor Arbiter's ruling and remanded the case for disposition based on the company's grievance procedure, relying on a letter from company union president Arturo Ronquillo invoking the CBA provision on grievance procedure. The Court of Appeals reversed the NLRC, reinstating the Labor Arbiter's decision. The appellate court found that Lamayo's dismissal did not proceed from the parties' interpretation or implementation of the CBA, that the laws governing illegal dismissal are found in labor statutes and not in the CBA, and that Lamayo had denied having made the option to go through the grievance machinery — he had resigned from the union effective March 18, 2001, as evidenced by a certification from the union's past president. The appellate court further held that Lamayo was not allowed to return to work after serving two suspensions without notice and hearing, and that his failure to seek reinstatement did not negate his claim for illegal dismissal.

• Grievance Machinery as Precondition: Petitioner maintained that the grievance machinery procedure should have been followed first before respondent's complaint for illegal dismissal could be given due course, citing the CBA provision on grievance machinery and a letter from the union president invoking the grievance procedure.

• Jurisdiction: Whether the Labor Arbiter had jurisdiction over respondent's complaint for illegal dismissal, or whether the matter should first have been coursed through the company's grievance machinery under the CBA.
• Validity of Dismissal: Whether respondent was illegally dismissed.

• Jurisdiction: Yes. The Labor Arbiter had original and exclusive jurisdiction over the termination dispute, the CBA's grievance machinery provision not having expressly included termination disputes within its ambit, and no unmistakable agreement to submit the dispute to voluntary arbitration having been shown under Article 262.
• Validity of Dismissal: Yes. Respondent was illegally dismissed, having been summarily terminated without the requisite notice and hearing, as found by the Labor Arbiter and affirmed by the Court of Appeals.

• Jurisdiction: Articles 217, 261, and 262 of the Labor Code delineate the respective jurisdictions of labor arbiters and voluntary arbitrators. Under Article 217, labor arbiters have original and exclusive jurisdiction over termination disputes. Under Article 261, voluntary arbitrators have original and exclusive jurisdiction over unresolved grievances arising from the interpretation or implementation of the CBA and company personnel policies. Under Article 262, voluntary arbitrators may hear and decide all other labor disputes, including unfair labor practices and bargaining deadlocks, only upon agreement of the parties. As a general rule, termination disputes should be brought before a labor arbiter, except when the parties unmistakably express their agreement to submit the same to voluntary arbitration. In this case, the CBA's grievance machinery provision defined a grievance as any disagreement between the union and the employer or between a worker and the employer as to the application and interpretation of any of the provisions of the contract, and expressly excluded matters "regulated by existing labor laws." The provision did not expressly state that termination disputes were included. Even assuming that the suspension could be considered a "disagreement" bearing on the application and interpretation of CBA provisions, respondent could not have bound himself to bring the matter to grievance procedure or voluntary arbitration, because he had resigned from the union more than a year before his suspension, as evidenced by a March 20, 2001 certification, and he denied having a hand in the union president's letter invoking the grievance procedure. Accordingly, the labor tribunal had original and exclusive jurisdiction over the complaint.

• Validity of Dismissal: The Court sustained the Labor Arbiter's ruling that respondent was illegally dismissed, there being no showing that he was accorded due process when he was summarily terminated after serving two suspensions. The Court declined to review the evidence, citing the well-entrenched rule that findings of fact of administrative officials such as labor arbiters, who have acquired expertise on account of their specialized jurisdiction, are accorded respect and finality, particularly when affirmed on appeal. The appellate court's findings — that respondent was not allowed to return to work after serving two suspensions without notice and hearing, and that his failure to seek reinstatement did not negate his claim for illegal dismissal — were thus upheld.

• Jurisdiction of Labor Arbiters over Termination Disputes — Under Article 217 of the Labor Code, labor arbiters have original and exclusive jurisdiction over termination disputes. This jurisdiction is not displaced by the existence of a CBA grievance machinery unless the CBA expressly includes termination disputes within the scope of grievances, or the parties unmistakably agree under Article 262 to submit the termination dispute to voluntary arbitration. In this case, the CBA provision defined grievances narrowly as disagreements over the application and interpretation of the contract and expressly excluded matters regulated by existing labor laws; termination disputes, being governed by labor statutes, fell outside that definition.

• Finality of Administrative Findings of Fact — Findings of fact of administrative officials such as labor arbiters, who have acquired expertise on account of their specialized jurisdiction, are accorded by the courts not only respect but, most often, finality, particularly when affirmed on appeal. The Supreme Court, not being a trier of facts, does not review the evidence on record or reassess the probative weight thereof.

• "As a general rule then, termination disputes should be brought before a labor arbiter, except when the parties, under Art. 262, unmistakably express that they agree to submit the same to voluntary arbitration." — This passage states the controlling rule allocating jurisdiction over termination disputes between labor arbiters and voluntary arbitrators, and is the ratio decidendi on the jurisdictional issue.

• "Other matters subject of collective bargaining or regulated by existing labor laws shall not be considered as grievances." — This is the CBA provision quoted by the Court to show that termination disputes, being regulated by existing labor laws, were expressly excluded from the grievance machinery, thereby reinforcing the labor arbiter's jurisdiction.

• San Miguel Corporation vs. NLRC, G.R. No. 108001, March 15, 1996, 255 SCRA 133 — Cited as supporting authority for the rule that termination disputes should be brought before a labor arbiter except when the parties unmistakably express their agreement to submit the same to voluntary arbitration.

• Article 217, Labor Code — Defines the jurisdiction of labor arbiters, including original and exclusive jurisdiction over termination disputes. The Court applied this provision to confirm the Labor Arbiter's jurisdiction over respondent's complaint for illegal dismissal.
• Article 261, Labor Code — Defines the jurisdiction of voluntary arbitrators over unresolved grievances arising from the interpretation or implementation of the CBA and company personnel policies. The Court distinguished this from termination disputes, which are not grievances under this article.
• 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 found no such unmistakable agreement in this case.
• Article IV, Section 1, CBA (Grievance Machinery) — Defined a grievance as any disagreement as to the application and interpretation of any of the provisions of the contract, and expressly excluded matters regulated by existing labor laws. The Court relied on this provision to conclude that termination disputes were not covered by the grievance machinery.

Justices Arturo D. Brion, Lucas P. Bersamin, Martin S. Villarama, Jr., and Ma. Lourdes P. A. Sereno concurred.