Sanyo Phil. Workers Union-PSSLU vs. Canizares

Termination disputes arising from the enforcement of a union security clause in a CBA, where actual dismissal has already been effected, fall within the original and exclusive jurisdiction of Labor Arbiters under Article 217(a)(2) of the Labor Code. The grievance machinery and voluntary arbitrators under Articles 260-261 have jurisdiction only over unresolved grievances between the union and the company regarding the interpretation or implementation of the CBA, not over disputes between the union/company and dismissed employees. Consequently, DOLE Regional Directors and Regional Offices are barred by Article 261 from entertaining such disputes.

The case arises from the implementation of Republic Act No. 6715 (the Herrera Law), which amended the Labor Code and introduced a mandatory grievance machinery and voluntary arbitration procedure for disputes arising from the interpretation or implementation of CBAs. This created uncertainty regarding whether termination disputes based on CBA provisions (such as union security clauses) should be heard by Labor Arbiters or referred to the grievance machinery. The dispute specifically involved the Sanyo Philippines Workers Union (PSSLU) and Sanyo Philippines Inc., where the union sought the dismissal of certain employees pursuant to a union security clause, leading to a conflict over the proper forum for the employees' illegal dismissal complaint.

• PSSLU had an existing CBA with Sanyo Philippines Inc. effective July 1, 1989 to June 30, 1994, which contained a union security clause requiring members to maintain good standing and allowing the union to demand dismissal of members who resigned, refused to pay dues, or joined another labor organization.
• On February 7, 1990, PSSLU notified Sanyo that several employees (including Bernardo Yap, Arnel Salvo, Renato Baybon, Salvador Solibel, Allan Misterio, Reynaldo Ricohermoso, and Benito Valencia) were cancelled from membership for alleged anti-union activities, economic sabotage, and joining another union (KAMAO).
• On February 14, 1990, some KAMAO officers executed a pledge of cooperation with PSSLU, promising to respect the CBA and not engage in activities contrary to law.
• On March 4, 1991, PSSLU recommended the dismissal of the aforementioned employees (plus Gerardo Lasala, Edgardo Tangkay, Alexander Atanacio, and Leonardo Dionisio) for anti-union activities, violating the pledge of cooperation, and threatening union officers.
• The March 4, 1991 letter suggested that the Grievance Machinery be convened pursuant to Article XV, Section 3 of the CBA before actual dismissal.
• Sanyo placed the employees under preventive suspension on March 13, 1991, and considered them dismissed effective March 23, 1991 when they failed to appeal to the union.
• On May 20, 1991, the dismissed employees filed a complaint for illegal dismissal with the NLRC.

• The Labor Arbiter has no jurisdiction over the case under Article 217(c) of the Labor Code (as amended by RA 6715) and Article 261, as the dispute involves the interpretation or implementation of the CBA's union security clause.
• The Labor Arbiter's sole function is to refer the case to the grievance machinery and voluntary arbitration, not to assume jurisdiction.
• Policy Instruction No. 6 of the Secretary of Labor supports the position that such disputes should be referred to grievance machinery.

• The case is a termination dispute under Article 217(a)(2) of the Labor Code, over which Labor Arbiters have original and exclusive jurisdiction.
• The complaint does not involve the interpretation or implementation of the CBA but an actual termination dispute.
• Some of the dismissed employees were not covered by the CBA as they had joined KAMAO during the freedom period before the CBA took effect.
• The grievance machinery cannot be impartial as it is composed of representatives from the union and the company who are united in the decision to dismiss.

• Procedural Issues:
  • Whether the Labor Arbiter committed grave abuse of discretion in denying the motion to dismiss and assuming jurisdiction over the complaint instead of referring it to the grievance machinery.
• Substantive Issues:
  • Whether termination disputes arising from the enforcement of a union security clause in a CBA fall under the jurisdiction of Labor Arbiters or the grievance machinery/voluntary arbitrators.
  • Whether DOLE Regional Directors have jurisdiction over such disputes.

• Procedural:
  • The petition is dismissed. The Labor Arbiter did not commit grave abuse of discretion in assuming jurisdiction over the illegal dismissal complaint.
• Substantive:
  • Article 217(a) of the Labor Code grants Labor Arbiters original and exclusive jurisdiction over termination disputes, except as otherwise provided in the Code.
  • Article 217(c) and Articles 260-261 provide that grievances arising from the interpretation or implementation of CBAs shall be referred to the grievance machinery and voluntary arbitrators.
  • The grievance machinery is designed to resolve disputes between the parties to the CBA—the union and the company—not disputes where the union and company are united against individual employees.
  • In this case, no grievance existed between the union and the company because they were in agreement regarding the dismissal; the dispute was between the union/company and the dismissed employees.
  • Due process demands that dismissed workers' grievances be ventilated before an impartial body (the Labor Arbiter), not before a grievance machinery composed of union and company representatives who cannot be expected to be impartial.
  • Article 261 explicitly bars the NLRC, its Regional Offices, and the Regional Directors of the Department of Labor and Employment from entertaining disputes under the exclusive and original jurisdiction of voluntary arbitrators.

• Exclusive Jurisdiction of Labor Arbiters over Termination Disputes — Labor Arbiters have original and exclusive jurisdiction over termination disputes under Article 217(a)(2) of the Labor Code, even when the termination arises from the enforcement of a CBA provision, provided that actual dismissal has been effected.
• Scope of Grievance Machinery and Voluntary Arbitration — The grievance machinery and voluntary arbitrators have jurisdiction only over unresolved grievances between the union and the company regarding the interpretation or implementation of the CBA or enforcement of company personnel policies. This jurisdiction does not extend to termination disputes where the union and company are united against the dismissed employees.
• Bar on DOLE Regional Directors and Regional Offices — Under the last paragraph of Article 261, Regional Directors of the Department of Labor and Employment and Regional Offices of the NLRC are prohibited from entertaining disputes, grievances, or matters under the exclusive and original jurisdiction of voluntary arbitrators.
• Union Security Clause Enforcement — The enforcement of union security clauses is authorized by law provided it is not characterized by arbitrariness and is accompanied by due process. However, the resulting termination dispute is subject to the jurisdiction of Labor Arbiters.

• "The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or resolution of grievances arising from the interpretation or implementation of their CBA and those arising from the interpretation or enforcement of company personnel policies is mandatory."
• "The law grants to voluntary arbitrators original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies (Art. 261, Labor Code)."
• "The failure of the parties to the CBA to establish the grievance machinery and its unavailability is not an excuse for the Labor Arbiter to assume jurisdiction over disputes arising from the implementation and enforcement of a provision in the CBA."
• "Hence, only disputes involving the union and the company shall be referred to the grievance machinery or voluntary arbitrators."
• "In the instant case, both the union and the company are united or have come to an agreement regarding the dismissal of private respondents. No grievance between them exists which could be brought to a grievance machinery."
• "Due process demands that the dismissed workers grievances be ventilated before an impartial body."

• Manila Mandarin Employee Union v. NLRC, G.R. No. 76989, September 29, 1987 — Cited for the principle that enforcement of union security clauses is authorized by law provided it is not characterized by arbitrariness.
• Tropical Hut Employees Union v. Tropical Food Market, Inc., L-43495-99, January 20, 1990 — Cited for the principle that enforcement of union security clauses must be accompanied by due process.

• Article 217, Labor Code (as amended by Republic Act No. 6715) — Defines the jurisdiction of Labor Arbiters, including original and exclusive jurisdiction over termination disputes (paragraph a) and the mandatory referral of cases arising from interpretation or implementation of CBAs to grievance machinery (paragraph c).
• Article 260, Labor Code — Mandates that parties to a CBA establish a machinery for the adjustment and resolution of grievances arising from the interpretation or implementation of their CBA and those arising from the interpretation or enforcement of company personnel policies.
• Article 261, Labor Code — Grants voluntary arbitrators original and exclusive jurisdiction over all unresolved grievances arising from CBA interpretation/implementation; explicitly bars the NLRC, its Regional Offices, and DOLE Regional Directors from entertaining such disputes.
• Republic Act No. 6715 — Amendments to the Labor Code regarding the jurisdiction of Labor Arbiters and the establishment of grievance machinery.

• N/A (Cruz, Griño-Aquino, and Bellosillo, JJ., concurred without separate opinions).