G.R. No. 94803 March 16, 1992
Talaga Barangay Water Service Cooperative, petitioner, vs. National Labor Relations Commission (Third Division), and Nemesia Opena, respondents.

FACTS

Petitioner Talaga Barangay Water Service Cooperative dismissed private respondent Nemesia Opena, its System Superintendent and a committee member, effective May 1, 1988. The Board of Directors issued the termination based on alleged offenses including shortage of collection, insubordination, and giving derogatory remarks. Opena had been previously suspended in 1987 for refusing to install a water line gadget. She filed a complaint for illegal dismissal. The Labor Arbiter initially ruled the dismissal legal but awarded financial assistance. On appeal, the NLRC set aside this decision, finding the dismissal illegal.
The NLRC held the dismissal invalid on two primary grounds. First, under the cooperative’s Constitution and By-Laws, the power to remove officers and committee members resided in the General Assembly, not the Board of Directors. Second, the alleged infractions were not sufficiently established, and Opena was not found culpable. The NLRC initially ordered payment of backwages and separation pay in lieu of reinstatement, citing strained relations. Upon motions for reconsideration, the NLRC modified its decision, ordering Opena’s reinstatement with full backwages not exceeding three years, noting the death of the Board President had removed the animosity.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in ruling that Opena was illegally dismissed and in ordering her reinstatement.

RULING

The Supreme Court dismissed the petition and affirmed the NLRC. The legal logic is clear and twofold. First, on the authority to dismiss, the Court upheld the NLRC’s interpretation of the cooperative’s own governing rules. Section 3, subsection (a) of its Constitution and By-Laws explicitly vested the General Assembly with the power to elect and remove directors, officers, and committee members. Since Opena was both an officer and a committee member, her removal could only be validly effectuated by the General Assembly. The Board of Directors had no such power, rendering its termination action null and void from the outset.
Second, on the propriety of reinstatement, the Court found the NLRC’s modification justified. The general rule that separation pay may substitute for reinstatement in cases of strained relations is not absolute. Following the precedent in Sibal v. Notre Dame of Greater Manila, strained relations must be compelling and serious, and should not arise merely from an employee’s valid act of asserting rights. The obstacle to reinstatement—the animosity primarily attributed to the deceased Board President—was eliminated during the proceedings. Therefore, ordering reinstatement was proper. To award separation pay would effectively validate an unauthorized and illegal dismissal. If the cooperative seeks her removal, it must follow the correct procedure before the General Assembly.