Slord Development Corporation v. Noya
SLORD Development Corporation v. Noya, G.R. No. 232687, February 4, 2019
- Labor Law
- illegal dismissal
- union security clause
- closed shop agreement
- collective bargaining agreement
- procedural due process
- nominal damages
- expulsion from union
- labor union disloyalty
- certiorari Rule 45 questions of law
- procedural requirements for dismissal
I. Facts of the Case
Respondent Benerando M. Noya was hired as a welder by petitioner Slord Development Corporation and was covered by a CBA containing a union security (closed shop) clause. After the union expelled him for disloyalty for organizing a rival union, petitioner terminated his employment upon written union demand; respondent sued for illegal dismissal and related claims, which the CA ultimately found to be illegal due to lack of sufficient evidence and procedural defects, prompting this petition.
Respondent Benerando M. Noya was hired on September 9, 2008 as a welder by petitioner Slord Development Corporation.
Petitioner and NLM-Katipunan entered into a Collective Bargaining Agreement effective April 14, 2009 to April 15, 2014, which included a union security clause providing that employees expelled from the union or who join/organize another labor union shall be dismissed upon written demand by the union.
Petitioner alleged that sometime in December 2013, respondent asked employees to affix signatures on a blank sheet to form a new union, leading NLM-Katipunan to file expulsion proceedings against him for disloyalty.
February 9, 2014
Respondent organized a new union named Bantay Manggagawa sa SLORD Development Corporation (BMSDC).
February 20, 2014
Respondent registered BMSDC with the Department of Labor and Employment (DOLE).
During the union investigation/expulsion proceedings, respondent failed to appear and participate in the scheduled hearings before NLM-Katipunan; the union resolved, with member ratification, to expel respondent for disloyalty.
February 27, 2014
NLM-Katipunan issued a notice of expulsion dated February 27, 2014 to respondent.
March 16, 2014
NLM-Katipunan sent petitioner a letter demanding termination of respondent’s employment pursuant to the union security clause of the CBA.
March 19, 2014
After informing respondent of the union’s decision and showing him the documents attached to the union’s demand, petitioner terminated respondent’s employment on March 19, 2014.
Respondent filed a complaint before the NLRC for illegal dismissal, unfair labor practice, and illegal deduction.
August 27, 2014
The Labor Arbiter dismissed the complaint for lack of merit, holding that petitioner was duty bound to terminate respondent following his expulsion and relying on the presence of a valid closed shop/union security arrangement in the CBA.
September 30, 2014
The NLRC affirmed the Labor Arbiter’s ruling but modified the award by ordering petitioner to pay respondent ₱10,000.00 as nominal damages for failure to provide respondent ample opportunity to defend himself through written notices and a subsequent hearing.
November 14, 2014
The NLRC denied respondent’s motion for reconsideration.
January 25, 2017
The Court of Appeals granted respondent’s petition, finding the dismissal illegal; it ordered petitioner to immediately reinstate respondent, pay full backwages and other allowances plus attorney’s fees equivalent to 10% of the total monetary award, and held there was no just cause due to lack of sufficient evidence supporting expulsion and that procedural due process was violated.
July 7, 2017
The Court of Appeals denied petitioner’s motion for reconsideration, prompting petitioner to file the present petition for review on certiorari.
February 4, 2019
The Supreme Court granted the petition, found the CA erred in attributing grave abuse of discretion to the NLRC, sustained termination as justified under the CBA’s union security/closed shop clause but held petitioner still failed to observe proper procedure, and thus reinstated the NLRC’s disposition with modification by adjusting the nominal damages award.
II. Issues
Whether or not the Court of Appeals was correct in ruling that respondent was illegally dismissed.
III. Ruling
Whether or not the Court of Appeals was correct in ruling that respondent was illegally dismissed.
The Court of Appeals was not correct in ruling that respondent was illegally dismissed; the dismissal could be justified under the CBA’s union security/closed shop mechanism but petitioner failed to follow the proper procedure, so only nominal damages were warranted.
How the Court reasoned
- A petition under Rule 45 allows only questions of law; the Court reviewed whether the CA correctly found grave abuse of discretion by the NLRC within that legal parameter.
- The Supreme Court determined that the CA erroneously treated the NLRC’s decision as tainted with grave abuse of discretion despite the NLRC’s findings being supported by substantial evidence and consistent with law and jurisprudence.
- Substantively, the Court recognized that enforcement of the CBA’s union security/closed shop clause provided just cause to terminate employment once the union lawfully expelled the employee for disloyalty, which aligned with the grounds stated in the CBA union security provision.
- Even with just cause through the union security mechanism, the Court held that petitioner failed to comply with the proper procedure in terminating respondent, which is tied to procedural due process requirements in termination cases.
- Because the procedural lapse did not negate the existence of just cause under the CBA, the proper monetary consequence was nominal damages rather than full backwages and reinstatement.
- Accordingly, the Supreme Court reinstated the NLRC rulings with modification by increasing the award of nominal damages.
“This notwithstanding, petitioner, however, failed to observe the proper procedure in terminating respondent's employment, warranting the payment of nominal damages.”
Rule applied
Rule 45 of the Rules of Civil Procedure; Article 259 (formerly 248), paragraph (e) of the Labor Code; CBA Article II (Union Security), Section 3 (Dismissal).
Doctrines
When a dismissal is sought to be enforced through a valid collective bargaining agreement’s union security/closed shop provision, the employer may have just cause based on the union’s expulsion; however, the employer must still observe procedural due process in the termination process, with only nominal damages typically awarded when the defect is procedural rather than substantive.
Final Disposition
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 138705 are REVERSED and SET ASIDE. The Decision dated September 30, 2014 and Resolution dated November 14, 2014 of the National Labor Relations Commission in NLRC LAC Case No. 09-002333-14 are REINSTATED with MODIFICATION in that petitioner is ordered to pay respondent the increased amount of nominal damages in accordance with the Supreme Court’s ruling.
Notes
Nominal damages were reduced/modified because the Court found just cause but a procedural due process lapse in how the termination was effected after union expulsion.