G.R. No. 186557; August 25, 2010
NEGROS METAL CORPORATION, Petitioner, vs. ARMELO J. LAMAYO, Respondent.

FACTS

Armelo J. Lamayo was employed by Negros Metal Corporation as a machinist. In May 2002, he was given a warning memorandum for loitering, which he treated as a three-day suspension. Upon returning to work, he was meted a second 10-day suspension for allegedly failing to sign the first memorandum. When he reported back after serving this suspension, the company manager informed him his services were terminated and instructed him to draft a resignation letter. Lamayo consequently filed a complaint for illegal dismissal.
The company, in its defense, contended that the Labor Arbiter had no jurisdiction over the complaint. It argued that under their Collective Bargaining Agreement (CBA), such disputes must first be submitted to the company’s grievance machinery. The Labor Arbiter ruled in favor of Lamayo, declaring the dismissal illegal. The NLRC reversed this, ordering the case remanded for grievance procedure, citing a letter from the union president indicating Lamayo had invoked the CBA provision. The Court of Appeals later reinstated the Labor Arbiter’s decision.

ISSUE

Whether the Labor Arbiter had original and exclusive jurisdiction over Lamayo’s complaint for illegal dismissal, or whether the dispute was required to first undergo the grievance machinery procedure under the CBA.

RULING

The Supreme Court ruled that the Labor Arbiter had jurisdiction. The legal logic hinges on the distinction between disputes under the Labor Code and those arising from the CBA’s interpretation or implementation. Under Article 217 of the Labor Code, Labor Arbiters have original and exclusive jurisdiction over termination disputes. Conversely, Article 261 grants Voluntary Arbitrators jurisdiction over unresolved grievances arising from the interpretation or implementation of a CBA.
The Court found that Lamayo’s complaint was fundamentally a termination dispute under Article 217, not a grievance about CBA interpretation. His dismissal was based on alleged infractions of company rules, not on any contested provision of the CBA. Furthermore, the Court upheld the factual finding that Lamayo had resigned from the union over a year before the incident, as evidenced by a certification. Therefore, he was not bound by the union president’s letter invoking the grievance procedure. Since the dismissal did not proceed from the CBA’s interpretation or implementation, the mandatory grievance machinery was inapplicable. On the merits, the Court affirmed the illegal dismissal finding due to the lack of due process, as Lamayo was summarily terminated without notice and hearing.