ATLAS FARMS, INC., petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, JAIME O. DELA PEA and

MARCIAL I. ABION, respondents.
[G.R. No. 142244. November 18, 2002]
FACTS: Private respondents Jaime O. dela Pea and Marcial I. Abion, both employed
under petitioner Atlas Farms Inc. were terminated on separate causes. On March 13,
1993, Pea was allegedly caught urinating and defecating on company premises not
intended for the purpose while Abion caused the clogging of the fishpond drainage
resulting in damages worth several hundred thousand pesos when he improperly
disposed of the cut grass and other waste materials into the ponds drainage
system. A formal notice was issued directing them to explain within 24 hours why
disciplinary action should not be taken against the for violating company rules and
regulations but they refused to receive the formal notice. Both were terminated on
March 20, 1993 and October 27, 1992 respectively. They also acknowledged receipt
of their separation pays.
Both private respondents worked seven days a week, including holidays, without
holiday pay, rest day pay, service incentive leave pay and night shift differential
pay. When terminated ,Abion was receiving a monthly salary of P4,500 while Pea
was receiving P180 pesos daily wage, or an average monthly salary of P5,402.
Pea and Abion filed separate complaints for illegal dismissal that were later
consolidated. Both claimed that their termination from service was due to
petitioners suspicion that they were the leaders in a plan to form a union to
compete and replace the existing management-dominated union.
On November 9, 1993, the labor arbiter dismissed their compla3ints on the ground
that the grievance machinery in the collective bargaining agreement (CBA) had not
yet been exhausted. Private respondents availed of the grievance process, but later
on refiled the case before the NLRC in Region IV. They alleged lack of sympathy on
petitioners part to engage in conciliation proceedings.
Their cases were consolidated in the NLRC. At the initial mandatory conference,
petitioner filed a motion to dismiss, on the ground of lack of jurisdiction, alleging
private respondents themselves admitted that they were members of the
employees union with which petitioner had an existing CBA. This being the case,
according to petitioner, jurisdiction over the case belonged to the grievance
machinery and thereafter the voluntary arbitrator, as provided in the CBA.
In a decision dated January 30, 1996, the labor arbiter dismissed the complaint for
lack of merit, finding that the case was one of illegal dismissal and did not involve
the interpretation or implementation of any CBA provision. He stated that Article
217 (c) of the Labor Code[6] was inapplicable to the case. Further, the labor arbiter

found that although both complainants did not substantiate their claims of illegal
dismissal, there was proof that private respondents voluntarily accepted their
separation pay and petitioners financial assistance.
Thus, private respondents brought the case to the NLRC, which reversed the labor
arbiters decision. Dissatisfied with the NLRC ruling, petitioner went to the Court of
Appeals by way of a petition for review on certiorari under Rule 65, seeking
reinstatement of the labor arbiters decision.
ISSUE: Whether or not the labor arbiter and the NLRC had jurisdiction to decide
complaints for illegal dismissal.*
HELD: YES. Article 217 of the Labor Code provides that labor arbiters have
original and exclusive jurisdiction over termination disputes. A possible
exception is provided in Article 261 of the Labor Code, which provides
thatThe Voluntary Arbitrator or panel of voluntary arbitrators shall have 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
referred to in the immediately preceding article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in character, shall
no longer be treated as unfair labor practice and shall be resolved as grievances
under the Collective Bargaining Agreement. For purposes of this article, gross
violations of Collective Bargaining Agreement shall mean flagrant and or malicious
refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department
of Labor and Employment shall not entertain disputes, grievances or matters under
the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of
Voluntary Arbitrators and shall immediately dispose and refer the same to the
grievance Machinery or Arbitration provided in the Collective Bargaining Agreement.
But as held in Vivero vs. CA,[14] petitioner cannot arrogate into the powers of
Voluntary Arbitrators the original and exclusive jurisdiction of Labor Arbiters over
unfair labor practices, termination disputes, and claims for damages, in the absence
of an express agreement between the parties in order for Article 262 of the Labor
Code [Jurisdiction over other labor disputes] to apply in the case at bar.
Coming to the merits of the petition, the NLRC found that petitioner did not comply
with the requirements of a valid dismissal. For a dismissal to be valid, the employer
must show that: (1) the employee was accorded due process, and (2) the dismissal
must be for any of the valid causes provided for by law.[22] No evidence was shown
that private respondents refused, as alleged, to receive the notices requiring them
to show cause why no disciplinary action should be taken against them. Without

proof of notice, private respondents who were subsequently dismissed without

hearing were also deprived of a chance to air their side at the level of the grievance
machinery. Given the fact of dismissal, it can be said that the cases were
effectively removed from the jurisdiction of the voluntary arbitrator, thus
placing them within the jurisdiction of the labor arbiter. 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 employees rights, it is already cognizable by
the labor arbiter.
*There were three issues discussed in the case namely: 1. The validity of the
dismissal. 2. The Jurisdictio of the Labor Arbiter and the NLRC, and finally, 3.) The
Party liable for the cost of the suit. Pursuant to the discussion on Art. 217 as set in
the syllabus, the issue herein discussed pertains only to the second one.