G.R. No. 91086, May 8, 1990
Virgilio S. Cariño, petitioner, vs. National Labor Relations Commission, Harrison Industrial Corporation and Harrison Industrial Workers’ Union, respondents.

FACTS

Petitioner Virgilio Cariño, former President of respondent Harrison Industrial Workers’ Union, faced serious charges from the union membership, including conspiring with the company during CBA negotiations, mismanaging union funds, unilaterally increasing dues, concealing the CBA, and refusing to turn over funds. An investigating committee repeatedly invited him to answer these charges, but he failed to respond. A general membership meeting was held on June 11, 1987, where the charges were presented, leading to a petition for a special election of officers. After hearings at the Bureau of Labor Relations, which Cariño did not attend, a general membership meeting on August 5, 1987, found him guilty, expelled him from the union, and recommended his termination from employment pursuant to the union security clause in the CBA. The company, Harrison Industrial Corporation, terminated Cariño on September 16, 1987.
Cariño filed a complaint for illegal dismissal. The Labor Arbiter ruled in his favor, ordering reinstatement with full backwages, finding no just cause under the union’s constitution and by-laws and a denial of due process. On appeal, the NLRC reversed, holding that Cariño’s silence to the charges amounted to an admission of guilt, constituting just cause for dismissal under the CBA’s union security clause. However, the NLRC agreed the dismissal lacked procedural due process and thus awarded separation pay as financial assistance, to be paid solidarily by the company and the union.

ISSUE

The primary issue is whether the NLRC committed grave abuse of discretion in: (1) taking cognizance of the union’s late appeal; and (2) finding just cause for dismissal but awarding separation pay due to a procedural defect.

RULING

The Supreme Court dismissed the petition, upholding the NLRC’s decision with modification. On the procedural issue, the Court ruled that the NLRC correctly took cognizance of the union’s late appeal. The rights and liabilities of the company and the union were so interwoven and interdependent that they were substantively inseparable. Since the company had seasonably appealed, the NLRC could properly consider the union’s appeal to determine the validity of Cariño’s expulsion, which was essential to adjudicating the lawfulness of the company’s dismissal action under the union security clause.
On the substantive issue, the Court affirmed the NLRC’s finding of just cause for dismissal. The CBA’s union security clause (Article II, Sections 4 & 5) obligated employees to maintain union membership, and the union’s constitution and by-laws provided for expulsion for acts prejudicial to the union’s interests. Cariño’s failure to answer the serious charges of mismanagement and dishonesty, despite repeated opportunities, justified the union’s expulsion order. This valid expulsion compelled the company to dismiss him under the CBA.
However, the Court agreed that the company failed to accord Cariño procedural due process by not conducting its own investigation before effecting termination. Nonetheless, the Court modified the NLRC’s award. It eliminated the grant of separation pay, holding that such “financial assistance” was unwarranted given the nature of the dishonesty-related charges. Instead, imposing a nominal penalty for the procedural lapse was more appropriate. The Court ordered the company and the union to pay Cariño a solidary penalty of P5,000.00, in lieu of separation pay.