G.R. No. 100898. July 05, 1993
ALEX FERRER, RAFAEL FERRER, HENRY DIAZ, DOMINGO BANCOLITA, GIL DE GUZMAN, AND FEDERATION OF DEMOCRATIC LABOR UNIONS, (FEDLU), PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSIO…
MELO, J.:
The petition for certiorari before us seeks to annul and
set aside: (a) the decision dated June
20, 1991 of the Second Division of the National Labor Relations Commission
(NLRC) (Penned by Commissioner Rustico L. Diokno and concurred in by Presiding
Commissioner Edna Bonto-Perez and Commissioner Domingo H. Zapanta) which
affirmed in toto the decision of April 5, 1990 of Labor Arbiter
Eduardo J. Carpio dismissing the complaint for illegal dismissal and unfair
labor practice on the ground that both the company, and the union merely
complied with the collective bargaining agreement provision sanctioning the
termination of any employee who fails to retain membership in good standing
with the union; and (b) the NLRC resolution denying the motion for the
reconsideration of said decision (NLRC NCR Case No. 00-10-04855-89).
Petitioners were regular and permanent employees of the
Occidental Foundry Corporation (OFC) in Malanday, Valenzuela, Metro Manila
which was under the management of Hui Kam Chang. As piece workers, petitioners’ earnings ranged from P110 to P140
a day. They had been in the employ of
OFC for about ten years at the time of their dismissal in 1989 (p. 38, Rollo).
On January 5, 1989, the Samahang Manggagawa ng Occidental Foundry
Corporation-FFW (SAMAHAN) and the OFC entered into a collective bargaining
agreement (CBA) which would be effective for the three-year period between
October 1, 1988 and September 30, 1991 (Memorandum for OFC and Hui Kam Chang,
p. 6, Rollo; p. 551). Article II
thereof provides for a union security clause thus:
Section 1 – The company agrees that all permanent and regular
factory workers in the company who are members in good standing of the union or
who thereafter may become members, shall as a condition of continued
employment, maintain their membership in the union in good standing for the
duration of the agreement.
x x x x x
x x x
x
Section 3 – The parties agree that failure to retain membership in
good standing with the UNION shall be ground for the operation of paragraph 1
hereof and the dismissal by the company of the aforesaid employee upon written
request by the union. The aforesaid
request shall be accompanied by a verified carbon original of the Board of
(sic) Resolution by the UNION signed by at least a majority of its officers/directors. (p. 562, Rollo.)
On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN, filed in
the Department of Labor and Employment (DOLE), a complaint for the expulsion
from SAMAHAN of the following officers: Genaro Capitle (president), Jesus Tumagan (vice-president), Godofredo
Pacheco (auditor), and Marcelino Pacheco (board member) (Case No.
NCR-00-M-89-11-01). The complaint was
founded on said officers’ alleged inattentiveness to the economic demands of
the workers. However, on September 4,
1989, petitioners Diaz and Alex Ferrer withdrew the petition (p. 590, Rollo).
On September 10, 1989, petitioners conducted a special election
of officers of the SAMAHAN (pp. 205 & 583, Rollo). Said election was, however, later questioned
by the FFW. Nonetheless, the elected
set of officers tried to dissuade the OFC from remitting union dues to the
officers led by Capitle who were allied with the FFW. Later, however, Romulo Erlano, one of the officers elected at the
special election, manifested to the DOLE that he was no longer objecting to the
remittance of union dues to the officers led by Capitle. Petitioners’ move to stage a strike based on
economic demands was also later disowned by members of the SAMAHAN.
The intraunion squabble came to a head when, on September 11,
1989, a resolution expelling petitioners from the SAMAHAN was issued by the
aforesaid union officials headed by Capitle, together with board members George
Ignas, Pio Domingo, and Jaime Baynado (pp. 286 & 599, Rollo). The following day, Capitle sent OFC the
following letter:
12 September 1989
Mr. Hui Kam Chang
General Manager
Malanday, Valenzuela
Metro Manila
Dear Mr. Chang:
In compliance with Article II, Sec. 3 of the Union Security Clause
as enunciated in our Collective Bargaining Agreement, I would like you to
dismiss the following employees on the ground of failure to retain membership
in good standing:
1. Alex Ferrer
2. Gil de Guzman
3. Henry Diaz
4. Domingo Bancolita
5. Rafael Ferrer, Jr.
Attached herewith is the verified carbon original of the Board Resolution
of the union signed by the majority of its officers/directors.
Thank you very much.
Very truly yours,
(Sgd.)
GENARO CAPITLE
President
(p. 66, Rollo.)
Although petitioners received this letter weeks after its date,
it appears that on that same date, they had learned about their dismissal from
employment as shown by the letter also dated September 13, 1989 which they sent
the Federation of Democratic Labor Unions (FEDLU). They volunteered therein to be admitted as members of the FEDLU
and requested that they be represented (“katawanin”) by said federation before
the DOLE in the complaint which they intended to file against the union
(SAMAHAN), the FFW and the company for illegal dismissal, reinstatement, and
other benefits in accordance with law (p. 74, Rollo).
Thereafter, on various dates, petitioners sent individual letters
to Hui Kam Chang professing innocence of the charges levelled against them by
the SAMAHAN and the FFW and pleading that they be reinstated (pp. 69-73,
Rollo). Their letters appear to have
elicited no response.
Thus, contending that their dismissal was without cause and in
utter disregard of their right to due process of law, petitioners, through the
FEDLU, filed a complaint for illegal dismissal and unfair labor practice before
the NLRC against Hui Kam Chang, OFC, Macedonio S. Velasco (as representative of
the FFW), the FFW, and the SAMAHAN officers headed by Capitle (p. 75, Rollo).
In due course, after the case was ventilated through position
papers and other documents, the labor arbiter rendered a decision dismissing
petitioners’ complaint (pp. 79-89, Rollo). He found that in dismissing petitioners, OFC was “merely complying with
the mandatory provisions of the CBA – the law between it and the union.” He
added:
To register compliance with the said covenant, all that is
necessary is a written request of the union requesting dismissal of the
employees who have failed to retain membership in good standing with the
union. The matter or question,
therefore, of determining why and how did complainants fail to retain
membership in good standing is not for the company to inquire via formal
investigation. By having the request of
the union, a legal presumption that the request was born out of a formal
inquiry by the union that subject employees failed to retain membership in good
standing, failed to exist. This means
generally that where a valid closed shop or similar agreement is in force with
respect to a particular bargaining unit as in the case a quo, the employer
shall refuse to employ any person unless he is a member of the majority union
and the employer shall dismiss employees who fail to retain their membership in
the majority union. This must be deemed
a just cause recognized by law and jurisprudence. The effect is discrimination to encourage membership in other
unions. (pp. 86-87, Rollo.)
Hence, the labor arbiter concluded, the dismissal of petitioners
was an exercise of legitimate management prerogative which cannot be considered
as an unfair labor practice. On whether
the SAMAHAN and the FFW could be held liable for illegal dismissal and unfair
labor practice, the arbiter opined that since there was no employer-employee
relationship between petitioners and respondent unions, the complaint against
the latter has no factual and legal bases, because petitioners “should not have
confused expulsion from membership in the union as one and the same incident to
their subsequent employment termination.”
Consequently, petitioners appealed to the NLRC on the grounds
that there was prima facie evidence of abuse of discretion on the part of the
labor arbiter and that he committed serious errors in his findings of facts.
On June 20, 1991, the NLRC rendered the herein questioned
decision affirming in toto the decision of the labor arbiter. Petitioners’ motion for the reconsideration
of the NLRC decision having been denied, they resorted to the instant petition
for certiorari which presents the issue of whether or not respondent
Commission gravely abused its discretion in affirming the decision of the labor
arbiter which is allegedly in defiance of the elementary principles of
procedural due process as the petitioners were summarily dismissed from
employment without an investigation having been conducted by the OFC on the
veracity of the allegation of the SAMAHAN-FFW that they violated the CBA.
A CBA is the law between the company and the union and compliance
therewith is mandated by the express policy to give protection to labor. Said policy should be given paramount
consideration unless otherwise provided for by law (Meycauayan College vs.
Drilon, 185 SCRA 50 [1990]). A CBA
provision for a closed shop is a valid form of union security and it is not a
restriction on the right or freedom of association guaranteed by the
Constitution (Lirag Textile Mills, Inc. vs. Blanco, 109 SCRA 87
[1981]). However, in the implementation
of the provisions of the CBA, both parties thereto should see to it that no
right is violated or impaired. In the
case at bar, while it is true that the CBA between OFC and the SAMAHAN provided
for the dismissal of employees who have not maintained their membership in the
union, the manner in which the dismissal was enforced left much to be desired
in terms of respect for the right of petitioners to procedural due process.
In the first place, the union has a specific provision for the
permanent or temporary “expulsion” of its erring members in its constitution
and by-laws (“saligang batas at alituntunin”). Under the heading membership and removal (“pag-aanib at pagtitiwalag”),
it states:
Sec. 4. Ang sinumang kasapi
ay maaring itwalag (sic) ng Samahan pangsamantala o tuluyan sa
pamamgitan (sic) ng tatlo’t ikaapat (3/4) na bahagi ng dami ng bilang ng Pamunuang
Tagapagpaganap. Pagkaraan lamang
sa pandinig sa kanyang kaso. Batay
sa sumusunod:
(a) Sinumang gumawa ng mga bagay bagay na labag at
lihis sa patakaran ng Samahan.
(b) Sinumang gumawa ng mga bagay na maaaring
ikabuwag ng Samahan.
(c) Hindi paghuhulog ng butaw sa loob ng tatlong buwan
na walang sakit o Doctor’s Certificate.
(d) Hindi pagbibigay ng abuloy na itinatadhana ng Samahan.
(e) Sinumang kasapi na natanggal sa kapisanan at
gustong sumapi uli ay magpapanibago ng bilang, mula sa taon ng kanyang pagsapi
uli sa Samahan. (Underscoring
supplied; Ibid., p. 177).
No hearing (“pandinig”) was ever conducted by the SAMAHAN to look
into petitioners’ explanation of their moves to oust the union leadership under
Capitle, or their subsequent affiliation with FEDLU. While it is true that petitioners’ actions might have
precipitated divisiveness and, later, showed disloyalty to the union, still,
the SAMAHAN should have observed its own constitution and by-laws by giving
petitioners an opportunity to air their side and explain their moves. If, after an investigation the petitioners
were found to have violated union rules, then and only then should they be
subjected to proper disciplinary measures.
Here lies the distinction between the facts of this case and that
of Cariño vs. NLRC (185 SCRA 177 [1990]) upon which the Solicitor
General heavily relies in supporting the stand of petitioners. In Cariño, the erring union official
was given the chance to answer the complaints against him before an
investigating committee created for that purpose. On the other hand, herein petitioners were not given even one
opportunity to explain their side in the controversy. This procedural lapse should not have been overlooked considering
the union security provision of the CBA.
What aggravated the situation in this case is the fact that OFC
itself took for granted that the SAMAHAN had actually conducted an inquiry and
considered the CBA provision for the closed shop as self-operating that, upon
receipt of a notice that some members of the SAMAHAN had failed to maintain
their membership in good standing in accordance with the CBA, it summarily
dismissed petitioners. To make matters
worse, the labor arbiter and the NLRC shared the same view in holding that
“(t)he matter or question, therefore, of determining why and how did
complainants fail to retain membership in good standing is not for the company
to inquire via formal investigation” (pp. 87 & 135, Rollo). In this regard, the following words of my
learned brother, Mr. Justice Feliciano, in the Resolution in Cariño are
apt:
4. Turning now to the involvement of the
Company in the dismissal of petitioner Cariño, we note that the Company upon
being formally advised in writing of the expulsion of petitioner Cariño from
the Union, in turn simply issued a termination letter to Cariño, the
termination being made effective the very next day. We believe that the Company should have given petitioner Cariño
an opportunity to explain his side of the controversy with the Union. Notwithstanding the Union’s Security Clause
in the CBA, the Company should have reasonably satisfied itself by its own
inquiry that the Union had not been merely acting arbitrarily and capriciously
in impeaching and expelling petitioner Cariño…
x x
x
x x x
x x x
5. We conclude that the Company had failed to
accord to petitioner Cariño the latter’s right to procedural due process. The right of an employee to be informed of
the charges against him and to reasonable opportunity to present his side in a
controversy with either the Company or his own Union, is not wiped away by a
Union Security Clause or a Union Shop Clause in a CBA. An employee is entitled to be protected not
only from a company which disregards his rights but also from his own Union the
leadership of which could yield to the temptation of swift and arbitrary
expulsion from membership and hence dismissal from his job. (pp. 186 & 189.)
The need for a company investigation is founded on the consistent
ruling of this Court that the twin requirements of notice and hearing which are
essential elements of due process must be met in employment-termination
cases. The employee concerned must be
notified of the employer’s intent to dismiss him and of the reason or reasons
for the proposed dismissal. The hearing
affords the employee an opportunity to answer the charge or charges against him
and to defend himself therefrom before dismissal is effected (Kwikway
Engineering Works vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC, 202
SCRA 7 [1991]). Observance to the
letter of company rules on investigation of an employee about to be dismissed
is not mandatory. It is enough that
there is due notice and hearing before a decision to dismiss is made (Mendoza
vs. NLRC, 195 SCRA 606 [1991]). But
even if no hearing is conducted, the requirement of due process would have been
met where a chance to explain a party’s side of the controversy had been
accorded him (Philippine Airlines, Inc. vs. NLRC, 198 SCRA 748 [1991]).
If an employee may be considered illegally dismissed because he
was not accorded fair investigation (Hellenic Philippine Shipping vs. Siete,
195 SCRA 179 [1991]), the more reason there is to strike down as an inexcusable
and disdainful rejection of due process a situation where there is no
investigation at all (See: Colegio
del Sto. Niño vs. NLRC, 197 SCRA 611 [1991]; Artex Development Co., Inc.
vs. NLRC, 187 SCRA 611 [1990]). The
need for the observance of an employee’s right to procedural due process in
termination cases cannot be overemphasized. After all, one’s employment, profession, trade, or calling is a
“property right” and the wrongful interference therewith gives rise to an
actionable wrong (Callanta vs. Carnation Philippines, Inc., 145 SCRA 268
[1986]). Verily, a man’s right to his
labor is property within the meaning of constitutional guarantees which he
cannot be deprived of without due process (Batangas Laguna Tayabas Bus Co.
vs. Court of Appeals, 71 SCRA 470 [1976]).
While the law recognizes the right of an employer to dismiss
employees in warranted cases, it frowns upon arbitrariness as when employees
are not accorded due process (Tan, Jr. vs. NLRC, 183 SCRA 651
[1990]). Thus, the prerogatives of the
OFC to dismiss petitioners should not have been whimsically done for it unduly
exposed itself to a charge of unfair labor practice for dismissing petitioners
in line with the closed shop provision of the CBA, without a proper hearing (Tropical
Hut Employees’ Union-CGW vs. Tropical Hut Food Market, Inc., 181 SCRA 173
[1990]; citing Binalbagan-Isabela Sugar Co., Inc. (BISCOM) vs. Philippine
Association of Free Labor Unions (PAFLU), 8 SCRA 700 [1983]). Neither can the manner of dismissal be
considered within the ambit of managerial prerogatives, for while termination
of employment is traditionally considered a management prerogative, it is not
an absolute prerogative subject as it is to limitations founded in law, the
CBA, or general principles of fair play and justice (University of Sto.
Tomas vs. NLRC, 190 SCRA 758 [1990]).
Under Rule XIV, Sections 2, 5, and 6 of the rules implementing
Batas Pambansa Blg. 130, the OFC and the SAMAHAN should solidarily indemnify
petitioners for the violation of their right to procedural due process (Great
Pacific Life Assurance Corporation vs. NLRC, 187 SCRA 694 [1990], citing Wenphil
vs. NLRC, 170 SCRA 69 [1989], Cariño vs. NLRC, supra). However, such penalty may be imposed only
where the termination of employment is justified and not when the dismissal is
illegal as in this case where the damages are in the form of back wages.
As earlier discussed, petitioners’ alleged act of sowing disunity
among the members of the SAMAHAN could have been ventilated and threshed out
through a grievance procedure within the union itself. But resort to such procedure was not
pursued. What actually happened in this
case was that some members, including petitioners, tried to unseat the SAMAHAN
leadership headed by Capitle due to the latter’s alleged inattention to
petitioners’ demands for the implementation of the P25-wage increase which took
effect on July 1, 1989. The intraunion
controversy was such that petitioners even requested the FFW to intervene to
facilitate the enforcement of the said wage increase (Petition, p. 54; p. 55,
Rollo).
Petitioners sought the help of the FEDLU only after they had
learned of the termination of their employment upon the recommendation of
Capitle. Their alleged application with
federations other than the FFW (Labor Arbiter’s Decision, pp. 4-5; pp. 82-83,
Rollo) can hardly be considered as disloyalty to the SAMAHAN, nor may the
filing of such applications denote that petitioners failed to maintain in good
standing their membership in the SAMAHAN. The SAMAHAN is a different entity from FFW, the federation to which it
belonged. Neither may it be inferred
that petitioners sought disaffiliation from the FFW for petitioners had
not formed a union distinct from that of the SAMAHAN. Parenthetically, the right of a local union to disaffiliate from
a federation in the absence of any provision in the federation’s constitution
preventing disaffiliation of a local union is legal (People’s Industrial and
Commercial Employees and Workers Org. (FFW) vs. People’s Industrial and
Commercial Corp., 112 SCRA 440 [1982]). Such right is consistent with the constitutional guarantee of freedom of
association (Tropical Hut Employees’ Union-CGW vs. Tropical Hut Food Market,
Inc., 181 SCRA 173 [1990]).
Hence, while petitioners’ act of holding a special ejection to
oust Capitle, et al. may be considered as an act of sowing disunity among the
SAMAHAN members, and, perhaps, disloyalty to the union officials, which could
have been dealt with by the union as a disciplinary matter, it certainly cannot
be considered as constituting disloyalty to the union. Faced with a SAMAHAN leadership which they
had tried to remove as officials, it was but a natural act of self-preservation
that petitioners fled to the arms of the FEDLU after the union and the
OFC had tried to terminate their employment. Petitioners should not be made accountable for such an act.
With the passage of Republic Act No. 6715 which took effect on
March 21, 1989, Article 279 of the Labor Code was amended to read as follows:
Security of Tenure. — In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee
who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of
his actual reinstatement.
and as implemented by Section 3, Rule 8
of the 1990 New Rules of Procedure of the National Labor Relations Commission,
it would seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court
of Industrial Relations, 56 SCRA 694 [1974]) which limited the award of
back wages of illegally dismissed workers to three (3) years “without deduction
or qualification” to obviate the need for further proceedings in the course of
execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages,
allowances, and other benefits for the entire period he was out of work
subject to the rule enunciated before the Mercury Drug Rule, which is that the
employer may, however, deduct any amount which the employee may have earned
during the period of his illegal termination (East Asiatic Company, Ltd. vs.
Court of Industrial Relations, 40 SCRA 521 [1971]). Computation of full back wages and
presentation of proof as to income earned elsewhere by the illegally dismissed
employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant
with Section 3, Rule 8 of the 1990 new Rules of Procedure of the National Labor
Relations Commission.
Inasmuch as we have ascertained in the text of this discourse
that the OFC whimsically dismissed petitioners without proper hearing and has
thus opened OFC to a charge of unfair labor practice, it ineluctably follows
that petitioners can receive their back wages computed from the moment their
compensation was withheld after their dismissal in 1989 up to the date of
actual reinstatement. In such a
scenario, the award of back wages can extend beyond the 3-year period fixed by
the Mercury Drug Rule depending, of course, on when the employer will reinstate
the employees.
It may appear that Article 279 of the Labor Code, as amended by Republic
Act No. 6715, has made the employer bear a heavier burden than that pronounced
in the Mercury Drug Rule, but perhaps Republic Act No. 6715 was enacted
precisely for the employer to realize that the employee must be
immediately restored to his former position, and to impress the idea that
immediate reinstatement is tantamount to a cost-saving measure in terms of
overhead expense plus incremental productivity to the company which lies in the
hands of the employer.
WHEREFORE, the decision appealed from is hereby SET ASIDE
and private respondents are hereby ordered to reinstate petitioners to their
former or equivalent positions without loss of seniority rights and with full
back wages, inclusive of allowances and other benefits or their monetary equivalent,
pursuant to Article 279 of the Labor Code, as amended by Republic Act. No.
6715.
SO ORDERED.
Feliciano, (Chairman), Bidin, Davide, Jr., and Romero, JJ.,
concur.