ALABANG COUNTRY CLUB, INC., G.R. No.

170287
Petitioner,
Present:
- versus QUISUMBING, J., Chairperson,
CARPIO MORALES,
NATIONAL LABOR RELATIONS AZCUNA,
COMMISSION, ALABANG TINGA, and
COUNTRY CLUB INDEPENDENT VELASCO, JR., JJ.
EMPLOYEES UNION,
CHRISTOPHER PIZARRO,
MICHAEL BRAZA, and Promulgated:
NOLASCO CASTUERAS,
Respondents. February 14, 2008
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit corporation with principal
office at Country Club Drive, Ayala Alabang, Muntinlupa City. Respondent Alabang Country
Club Independent Employees Union (Union) is the exclusive bargaining agent of the Clubs rank-

and-file employees. In April 1996, respondents Christopher Pizarro, Michael Braza, and Nolasco
Castueras were elected Union President, Vice-President, and Treasurer, respectively.

On June 21, 1999, the Club and the Union entered into a Collective Bargaining Agreement
(CBA), which provided for a Union shop and maintenance of membership shop.

The pertinent parts of the CBA included in Article II on Union Security read, as follows:
ARTICLE II
UNION SECURITY

SECTION 1. CONDITION OF EMPLOYMENT. All regular rank-and-file employees, who are

members or subsequently become members of the UNION shall maintain their membership in
good standing as a condition for their continued employment by the CLUB during the lifetime of
this Agreement or any extension thereof.

SECTION 2. [COMPULSORY] UNION MEMBERSHIP FOR NEW REGULAR RANK-ANDFILE EMPLOYEES

a)
New regular rank-and-file employees of the Club shall join the UNION within five (5) days
from the date of their appointment as regular employees as a condition for their continued
employment during the lifetime of this Agreement, otherwise, their failure to do so shall be a
ground for dismissal from the CLUB upon demand by theUNION.
b)
The Club agrees to furnish the UNION the names of all new probationary and regular
employees covered by this Agreement not later than three (3) days from the date of regular
appointment showing the positions and dates of hiring.

xxxx

SECTION 4. TERMINATION UPON UNION DEMAND. Upon written demand of

the UNION and after observing due process, the Club shall dismiss a regular rank-and-file
employee on any of the following grounds:

(a)

Failure to join the UNION within five (5) days from the time of regularization;

(b)

Resignation from the UNION, except within the period allowed by law;

(c)

Conviction of a crime involving moral turpitude;

(d)

Non-payment of UNION dues, fees, and assessments;

(e)

Joining another UNION except within the period allowed by law;

(f)

Malversation of union funds;

(g)

Actively campaigning to discourage membership in the UNION; and

(h)

Inflicting harm or injury to any member or officer of the UNION.

It is understood that the UNION shall hold the CLUB free and harmless [sic] from any liability
or damage whatsoever which may be imposed upon it by any competent judicial or quasi-judicial
authority as a result of such dismissal and the UNION shall reimburse the CLUB for any and all
liability or damage it may be adjudged.[1] (Emphasis supplied.)

Subsequently, in July 2001, an election was held and a new set of officers was elected. Soon
thereafter, the new officers conducted an audit of the Union funds. They discovered some
irregularly recorded entries, unaccounted expenses and disbursements, and uncollected loans
from the Union funds. The Union notified respondents Pizarro, Braza, and Castueras of the audit
results and asked them to explain the discrepancies in writing.[2]

Thereafter, on October 6, 2001, in a meeting called by the Union, respondents Pizarro, Braza,
and Castueras explained their side. Braza denied any wrongdoing and instead asked that the
investigation be addressed to Castueras, who was the Union Treasurer at that time. With regard
to his unpaid loans, Braza claimed he had been paying through monthly salary deductions and
said the Union could continue to deduct from his salary until full payment of his loans, provided
he would be reimbursed should the result of the initial audit be proven wrong by a licensed
auditor. With regard to the Union expenses which were without receipts, Braza explained that
these were legitimate expenses for which receipts were not issued, e.g. transportation fares, food
purchases from small eateries, and food and transportation allowances given to Union members
with pending complaints with the Department of Labor and Employment, the National Labor
Relations Commission (NLRC), and the fiscals office. He explained that though there were no
receipts for these expenses, these were supported by vouchers and itemized as expenses.
Regarding his unpaid and unliquidated cash advances amounting to almost PhP 20,000, Braza
explained that these were not actual cash advances but payments to a certain Ricardo Ricafrente
who had loaned PhP 200,000 to the Union.[3]

Pizarro, for his part, blamed Castueras for his unpaid and uncollected loan and cash advances. He
claimed his salaries were regularly deducted to pay his loan and he did not know why these
remained unpaid in the records.Nonetheless, he likewise agreed to continuous salary deductions
until all his accountabilities were paid.[4]

Castueras also denied any wrongdoing and claimed that the irregular entries in the records were
unintentional and were due to inadvertence because of his voluminous work load. He offered that
his unpaid personal loan of PhP 27,500 also be deducted from his salary until the loans were
fully paid. Without admitting any fault on his part, Castueras suggested that his salary be
deducted until the unaccounted difference between the loans and the amount collected amounting
to a total of PhP 22,000 is paid.[5]

Despite their explanations, respondents Pizarro, Braza, and Castueras were expelled from
the Union, and, on October 16, 2001, were furnished individual letters of expulsion for
malversation of Union funds.[6] Attached to the letters were copies of the Panawagan ng mga
Opisyales ng Unyon signed by 37 out of 63 Union members and officers, and a Board of
Directors Resolution[7] expelling them from the Union.

In a letter dated October 18, 2001, the Union, invoking the Security Clause of the CBA,
demanded that the Club dismiss respondents Pizarro, Braza, and Castueras in view of their
expulsion from the Union.[8] The Club required the three respondents to show cause in writing
within 48 hours from notice why they should not be dismissed. Pizarro and Castueras submitted
their respective written explanations on October 20, 2001, while Braza submitted his explanation
the following day.

During the last week of October 2001, the Clubs general manager called respondents Pizarro,
Braza, and Castueras for an informal conference inquiring about the charges against them. Said
respondents gave their explanation and asserted that the Union funds allegedly malversed by
them were even over the total amount collected during their tenure as Union officersPhP 120,000
for Braza, PhP 57,000 for Castueras, and PhP 10,840 for Pizarro, as against the total collection
from April 1996 to December 2001 of only PhP 102,000. They claimed the charges are
baseless. The general manager announced he would conduct a formal investigation.

Nonetheless, after weighing the verbal and written explanations of the three respondents, the
Club concluded that said respondents failed to refute the validity of their expulsion from
the Union. Thus, it was constrained to terminate the employment of said respondents. On
December 26, 2001, said respondents received their notices of termination from the Club.[9]

Respondents Pizarro, Braza, and Castueras challenged their dismissal from the Club in an illegal
dismissal complaint docketed as NLRC-NCR Case No. 30-01-00130-02 filed with the NLRC,
National Capital Region Arbitration Branch. In his January 27, 2003 Decision,[10] the Labor
Arbiter ruled in favor of the Club, and found that there was justifiable cause in terminating said
respondents. He dismissed the complaint for lack of merit.

On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an Appeal docketed
as NLRC NCR CA No. 034601-03 with the NLRC.

On February 26, 2004, the NLRC rendered a Decision[11] granting the appeal, the fallo of which
reads:

WHEREFORE, finding merit in the Appeal, judgment is hereby rendered declaring the dismissal
of the complainants illegal. x x x Alabang Country Club, Inc. and Alabang Country Club
Independent Union are hereby ordered to reinstate complainants Christopher Pizarro, Nolasco
Castueras and Michael Braza to their former positions without loss of seniority rights and other
privileges with full backwages from the time they were dismissed up to their actual
reinstatement.

SO ORDERED.

The NLRC ruled that there was no justifiable cause for the termination of respondents Pizarro,
Braza, and Castueras. The commissioners relied heavily on Section 2, Rule XVIII of the Rules
Implementing Book V of the Labor Code.Sec. 2 provides:

SEC. 2. Actions arising from Article 241 of the Code. Any action arising from the administration
or accounting of union funds shall be filed and disposed of as an intra-union dispute in
accordance with Rule XIV of this Book.

In case of violation, the Regional or Bureau Director shall order the responsible officer to render
an accounting of funds before the general membership and may, where circumstances warrant,
mete the appropriate penalty to the erring officer/s, including suspension or expulsion from the
union.[12]

According to the NLRC, said respondents expulsion from the Union was illegal since the DOLE
had not yet made any definitive ruling on their liability regarding the administration of
the Unions funds.

The Club then filed a motion for reconsideration which the NLRC denied in its June 20, 2004
Resolution.[13]

Aggrieved by the Decision and Resolution of the NLRC, the Club filed a Petition for Certiorari
which was docketed as CA-G.R. SP No. 86171 with the Court of Appeals (CA).
The CA Upheld the NLRC Ruling
that the Three Respondents were Deprived Due Process
On July 5, 2005, the appellate court rendered a Decision,[14] denying the petition and upholding
the Decision of the NLRC. The CAs Decision focused mainly on the Clubs perceived failure to
afford due process to the three respondents. It found that said respondents were not given the
opportunity to be heard in a separate hearing as required by Sec. 2(b), Rule XXIII, Book V of the
Omnibus Rules Implementing the Labor Code, as follows:

SEC. 2. Standards of due process; requirements of notice.In all cases of termination of

employment, the following standards of due process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Code:

xxxx

(b) A hearing or conference during which the employee concerned, with the assistance of counsel
if the employee so desires, is given opportunity to respond to the charge, present his evidence or
rebut the evidence presented against him.

The CA also said the dismissal of the three respondents was contrary to the doctrine laid down
in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos (Malayang Samahan),
where this Court ruled that even on the assumption that the union had valid grounds to expel the
local union officers, due process requires that the union officers be accorded a separate hearing
by the employer company.[15]

In a Resolution[16] dated October 20, 2005, the CA denied the Clubs motion for reconsideration.

The Club now comes before this Court with these issues for our resolution, summarized as
follows:
1.
Whether there was just cause to dismiss private respondents, and whether they were
afforded due process in accordance with the standards provided for by the Labor Code and its
Implementing Rules.

2.
Whether or not the CA erred in not finding that the NLRC committed grave abuse
of discretion amounting to lack or excess of jurisdiction when it ruled that respondents Pizarro,
Braza, and Castueras were illegally expelled from the Union.

3.

Whether the case of Agabon vs. NLRC[17] should be applied to this case.

4.
Whether that in the absence of bad faith and malice on the part of the Club,
the Union is solely liable for the termination from employment of said respondents.

The main issue is whether the three respondents were illegally dismissed and whether they were
afforded due process.

The Club avers that the dismissal of the three respondents was in accordance with the Union
security provisions in their CBA. The Club also claims that the three respondents were afforded
due process, since the Club conducted an investigation separate and independent from that
conducted by the Union.

Respondents Pizarro, Braza, and Castueras, on the other hand, contend that the Club failed to
conduct a separate hearing as prescribed by Sec. 2(b), Rule XXIII, Book V of the implementing
rules of the Code.

First, we resolve the legality of the three respondents dismissal from the Club.

Valid Grounds for Termination

Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just
causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due to disease under
Art. 284; and (4) termination by the employee or resignation under Art. 285.

Another cause for termination is dismissal from employment due to the enforcement of the union
security clause in the CBA. Here, Art. II of the CBA on Union security contains the provisions
on the Union shop and maintenance of membership shop. There is union shop when all new
regular employees are required to join the union within a certain period as a condition for their
continued employment. There is maintenance of membership shop when employees who are
union members as of the effective date of the agreement, or who thereafter become members,
must maintain union membership as a condition for continued employment until they are
promoted or transferred out of the bargaining unit or the agreement is terminated.[18] Termination

of employment by virtue of a union security clause embodied in a CBA is recognized and

accepted in our jurisdiction.[19] This practice strengthens the union and prevents disunity in the
bargaining unit within the duration of the CBA. By preventing member disaffiliation with the
threat of expulsion from the union and the consequent termination of employment, the authorized
bargaining representative gains more numbers and strengthens its position as against other
unions which may want to claim majority representation.

In terminating the employment of an employee by enforcing the union security clause, the
employer needs only to determine and prove that: (1) the union security clause is applicable; (2)
the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the unions decision to expel the employee from the
union. These requisites constitute just cause for terminating an employee based on the CBAs
union security provision.

The language of Art. II of the CBA that the Union members must maintain their membership in
good standing as a condition sine qua non for their continued employment with the Club is
unequivocal. It is also clear that upon demand by the Union and after due process, the Club shall
terminate the employment of a regular rank-and-file employee who may be found liable for a
number of offenses, one of which is malversation of Union funds.[20]

Below is the letter sent to respondents Pizarro, Braza, and Castueras, informing them of their
termination:

On October 18, 2001, the Club received a letter from the Board of Directors of the Alabang
Country Club Independent Employees Union (Union) demanding your dismissal from service by
reason of your alleged commission of act of dishonesty, specifically malversation of union funds.
In support thereof, the Club was furnished copies of the following documents:

1.
A letter under the subject Result of Audit dated September 14, 2001 (receipt of which was
duly acknowledged from your end), which required you to explain in writing the charges against
you (copy attached);

2.
The Unions Board of Directors Resolution dated October 2, 2001, which explained that
the Union afforded you an opportunity to explain your side to the charges;

3.
Minutes of the meeting of the Unions Board of Directors wherein an administrative
investigation of the case was conducted last October 6, 2001; and

4.
The Unions Board of Directors Resolution dated October 15, 2001 which resolved your
expulsion from theUnion for acts of dishonesty and malversation of union funds, which was duly
approved by the general membership.

After a careful evaluation of the evidence on hand vis--vis a thorough assessment of your
defenses presented in your letter-explanation dated October 6, 2001 of which you also expressed
that you waived your right to be present during the administrative investigation conducted by the
Unions Board of Directors on October 6, 2001, Management has reached the conclusion that
there are overwhelming reasons to consider that you have violated Section 4(f) of the CBA,
particularly on the grounds of malversation of union funds. The Club has determined that you
were sufficiently afforded due process under the circumstances.

Inasmuch as the Club is duty-bound to comply with its obligation under Section 4(f) of the CBA,
it is unfortunate that Management is left with no other recourse but to consider your termination
from service effective upon your receipt thereof. We wish to thank you for your services during
your employment with the Company. It would be more prudent that we just move on
independently if only to maintain industrial peace in the workplace.

Be guided accordingly.[21]

Gleaned from the above, the three respondents were expelled from and by the Union after due
investigation for acts of dishonesty and malversation of Union funds. In accordance with the
CBA, the Union properly requested the Club, through the October 18, 2001 letter[22] signed by
Mario Orense, the Union President, and addressed to Cynthia Figueroa, the Clubs HRD
Manager, to enforce the Union security provision in their CBA and terminate said
respondents. Then, in compliance with the Unions request, the Club reviewed the documents
submitted by the Union, requested said respondents to submit written explanations, and
thereafter afforded them reasonable opportunity to present their side. After it had determined that
there was sufficient evidence that said respondents malversed Union funds, the Club dismissed
them from their employment conformably with Sec. 4(f) of the CBA.

Considering the foregoing circumstances, we are constrained to rule that there is sufficient cause
for the three respondents termination from employment.

Were respondents Pizarro, Braza, and Castueras accorded due process before their employments
were terminated?

We rule that the Club substantially complied with the due process requirements before it
dismissed the three respondents.

The three respondents aver that the Club violated their rights to due process as enunciated
in Malayang Samahan,[23] when it failed to conduct an independent and separate hearing before
they were dismissed from service.

The CA, in dismissing the Clubs petition and affirming the Decision of the NLRC, also relied on
the same case. We explained in Malayang Samahan:

x x x Although this Court has ruled that union security clauses embodied in the collective
bargaining agreement may be validly enforced and that dismissals pursuant thereto may likewise
be valid, this does not erode the fundamental requirements of due process. The reason behind the

enforcement of union security clauses which is the sanctity and inviolability of contracts cannot
override ones right to due process.[24]

In the above case, we pronounced that while the company, under a maintenance of membership
provision of the CBA, is bound to dismiss any employee expelled by the union for disloyalty
upon its written request, this undertaking should not be done hastily and summarily. The
company acts in bad faith in dismissing a worker without giving him the benefit of a hearing.
[25]
We cautioned in the same case that the power to dismiss is a normal prerogative of the
employer; however, this power has a limitation. The employer is bound to exercise caution in
terminating the services of the employees especially so when it is made upon the request of a
labor union pursuant to the CBA. Dismissals must not be arbitrary and capricious. Due process
must be observed in dismissing employees because the dismissal affects not only their positions
but also their means of livelihood. Employers should respect and protect the rights of their
employees, which include the right to labor.[26]

The CA and the three respondents err in relying on Malayang Samahan, as its ruling has no
application to this case. In Malayang Samahan, the union members were expelled from the union
and were immediately dismissed from the company without any semblance of due process. Both
the union and the company did not conduct administrative hearings to give the employees a
chance to explain themselves. In the present case, the Club has substantially complied with due
process. The three respondents were notified that their dismissal was being requested by
theUnion, and their explanations were heard. Then, the Club, through its President, conferred
with said respondents during the last week of October 2001. The three respondents were
dismissed only after the Club reviewed and considered the documents submitted by the Union
vis--vis the written explanations submitted by said respondents.Under these circumstances, we
find that the Club had afforded the three respondents a reasonable opportunity to be heard and
defend themselves.

On the applicability of Agabon, the Club points out that the CA ruled that the three respondents
were illegally dismissed primarily because they were not afforded due process. We are not
unaware of the doctrine enunciated inAgabon that when there is just cause for the dismissal of an
employee, the lack of statutory due process should not nullify the dismissal, or render it illegal or
ineffectual, and the employer should indemnify the employee for the violation of his statutory

rights.[27] However, we find that we could not apply Agabon to this case as we have found that
the three respondents were validly dismissed and were actually afforded due process.

Finally, the issue that since there was no bad faith on the part of the Club, the Union is solely
liable for the termination from employment of the three respondents, has been mooted by our
finding that their dismissal is valid.

WHEREFORE, premises considered, the Decision dated July 5, 2005 of the CA and the Decision
datedFebruary 26, 2004 of the NLRC are hereby REVERSED and SET ASIDE. The Decision
dated January 27, 2003 of the Labor Arbiter in NLRC-NCR Case No. 30-01-00130-02 is
hereby REINSTATED.

No costs.

SO ORDERED.

PICOP RESOURCES,

G.R. No. 172666

INCORPORATED (PRI),
Represented in this Petition by MR.
WILFREDO D. FUENTES, in his
capacity as

Present:

Senior Vice-President and

PERALTA, J., Acting Chairperson,

Resident Manager,

ABAD,

Petitioner,

MENDOZA,

SERENO, and
PERLAS-BERNABE, JJ.
- versus -

RICARDO DEQUILLA,
ELMO PABILANDO,
CESAR ATIENZA and

Promulgated:

ANICETO ORBETA, JR.,

and NAMAPRI-SPFI,

December 7, 2011

Respondents.

X -----------------------------------------------------------------------------------------------------X

DECISION

MENDOZA, J.:

This is a petition for review assailing the April 14, 2005 Decision[1] of the Court of
Appeals (CA) which reversed and set aside the Resolutions[2] of the National Labor Relations
Commission (NLRC) dated December 27, 2002 and March 28, 2003, and reinstated the June 9,
2001 Decision[3] of the Labor Arbiter (LA), which declared the dismissal of the private
respondents as illegal.

The Facts

Ricardo Dequilla, Cesar Atienza and Aniceto Orbeta (private respondents) were regular rankand-file employees of Picop Resources, Inc. (PICOP) and members of the NAMAPRI-SPFL, a
duly registered labor organization and existing bargaining agent of the PICOP rank-and-file
employees. PICOP and NAMAPRI-SPFL had a collective bargaining agreement (CBA) which
would expire on May 22, 2000.

On May 16, 2000, the late Atty. Proculo P. Fuentes, Jr. (Atty. Fuentes), then National President of
the Southern Philippines Federation of Labor (SPFL), advised the PICOP management to
terminate about 800 employees due to acts of disloyalty, specifically, for allegedly campaigning,
supporting and signing a petition for the certification of a rival union, the Federation of Free
Workers Union (FFW) before the 60-day freedom period and during the effectivity of the CBA.
Such acts of disloyalty were construed to be a valid cause for termination under the terms and
conditions of the CBA. Based on the CBA, the freedom period would start on March 22, 2000.

Acting on the advice of Atty. Fuentes, Atty. Romero Boniel (Atty. Boniel), Manager of the PICOP
Legal and Labor Relations Department, issued a memorandum directing the employees
concerned to explain within seventy-two (72) hours why their employment should not be
terminated due to alleged acts of disloyalty. Upon receiving their explanation letters, Atty. Boniel
endorsed the same to Atty. Fuentes who then requested the termination of 46 employees found
guilty of acts of disloyalty.

On October 16, 2000, PICOP served a notice of termination due to acts of disloyalty to 31 of the
46 employees. Private respondents were among the 31 employees dismissed from employment
by PICOP on November 16, 2000.

Enraged at what management did to them, private respondents filed a complaint before the
NLRC Regional Arbitration Branch No. XIII, Butuan City, for Unfair Labor Practice and Illegal
Dismissal with money claims, damages and attorneys fees.

LA Ruling

On June 9, 2001, after the parties submitted their respective position papers, the LA rendered a
decision declaring as illegal the termination of the private respondents. The dispositive portion of
the LA Decision reads:

WHEREFORE, premises considered, judgment is hereby entered:

1.

Declaring complainants dismissal illegal; and

2.
Ordering respondents PRI and NAMPRI-SPFL to reinstate complainants to their
former or equivalent positions without loss of seniority rights and to jointly and
solidarily pay their backwages in the total amount of 177,403.68, as shown in the
computation, hereto attached and marked as Annex A hereof, plus damages in the
amount of 10,000.00 each and attorneys fees equivalent to 10% of the total monetary
award.

SO ORDERED. [4]

NLRC Ruling

PICOP elevated the LA decision to the NLRC but its appeal was dismissed in the November 19,
2002 NLRC Resolution.[5] On motion for reconsideration, however, the NLRC issued another
resolution,[6] dated December 27, 2002, reversing and setting aside its November 19, 2002
Resolution, the dispositive portion of which reads:

WHEREFORE, foregoing premises considered, the above resolution dated November

19, 2002, is Reversed and Set Aside. In lieu thereof, a new judgment is rendered
DISMISSING the above-entitled case for lack of merit.

SO ORDERED.[7]

CA Ruling

Upon the denial of their motion for reconsideration, the private respondents brought the case to
the CA. OnApril 14, 2005, the CA rendered the subject decision reversing and setting aside
the December 27, 2002 NLRC resolution and reinstating the June 9, 2001 Decision of the LA.
The decretal portion of the CA decision reads:

WHEREFORE, premises considered, [the] instant petition is GRANTED and the

assailed resolutions of the Public Respondent NLRC are hereby REVERSED and SET
ASIDE. In view thereof, ordered REINSTATED is the Decision of Acting Executive
Labor Arbiter Rogelio P. Legaspi dated 09 June 2001 which reads:

WHEREFORE, premises considered, judgment is hereby entered:

1.

Declaring complainants dismissal illegal; and

2.
Ordering Respondents PRI and NAMPRI-SPFL to reinstate Complainants to their
former or equivalent positions without loss of seniority rights and to jointly and
solidarily pay their backwages in the total amount of 177,403.68, plus damages in the
amount of 10,000.00 each and attorneys fees equivalent to 10% of the total monetary
award.

SO ORDERED.[8]

The CA ruled, among others, that although private respondents signed an authorization for the
filing of the petition for certification election of a rival union, PICOP Democratic Trade
Unionist-Federation of Free Workers(FFW), such act was not a sufficient ground to terminate the
employment of private respondents. It explained:

Ruminating from the alleged violation of the CBA, We see no reason, sufficient and
compelling enough, to sustain the Public Respondents raison detre in overturning the
Labor Arbiters ruling in favor of the Petitioners. While it is true that Petitioners signed
the authorization in support of the Petition for certification election of FFW before the
freedom period, such act is not a sufficient ground to terminate the employment of the
Petitioners in as much as the petition itself was filed during the freedom period. Hence,
there is nil a basis to impute acts of disloyalty to Petitioners. Imputations of an alleged
violation of the CBA should not arise from a vague and all embracing definition of
alleged acts of disloyalty. Neither should it arise from speculative inferences where no
evidence appears from the record that Respondent NAMAPRI-SPFL expressly defined
acts of disloyalty. Besides, to Our mind, signing an authorization for the filing of the
petition for certification election does not constitute an act of disloyalty per se. There
must be proof of contemporaneous acts of resignation or withdrawal of their

membership from the Respondent NAMAPRI-SPFL to which they are members.

Respondents miserably failed to present evidence to justify a valid termination of
employees in pursuance to the CBA allegedly violated. Petitioners, in fact remained in
good standing, a continuing requirement for retaining their employment in the
Respondent PRI. Petitioners neither joined nor affiliated with FFW and continuously
paid their union dues with Respondent NAMAPRI-SPFL. Consequently, this lends
credence to the Labor Arbiters ruling that Petitioners dismissal was indeed illegal.

Likewise, the advise of the Respondent NAMAPRI-SPFL to the Respondent PRI to effect
the termination of employees, including herein Petitioners, finds no basis in fact and in
law considering that at the time the Respondent PRI dismissed the Petitioners, among
others, on 16 November 2000, there was no more CBA to speak of after it had already
expired on 22 May 2000.[9]

The CA further agreed with private respondents that Article 256 and not Article 253, of the Labor
Code applied in this case. The CA discussed this point as follows:

We are inclined to favor Petitioners stance that Article 256, supra, is applicable. The
issue of acts of disloyalty relates more to a direct connection on the alleged violation or
breach of loyalty to the majority status of the incumbent union than on violation of the
terms and conditions of the agreement under Article 253,supra, as the Respondents
would want Us to believe. Article 256 provides that at the expiration of the 60-day
period reckoned from the expiration date of the CBA, the employer shall continue to
recognize the majority status of the incumbent bargaining agent only where no petition
for certification election is filed. However, as earlier pointed, a petition was already filed
by the Petitioners, among others, during the 60-day freedom period. Clearly, from the
imports of said provision, it will render nugatory the purpose of the law providing for a
freedom period for the filing of a petition for certification election should the act of
signing/filing the said petition be interpreted as an act of disloyalty and will render farce
the need for a certification election as an instrument of ascertaining the true expression
of the will of the workers as to which labor organization would represent them.

To construe the provision of law in Article 253, supra, as imposing a restriction against
the signing and filing a petition for certification election during the freedom period, is to
violate the constitutional right of the employees to organize freely. It is a basic precept of
statutory construction that statutes should be construed not so much according to the
letters that killeth but in line with the purpose for which they have been enacted.[10]

Not in conformity with the CA decision, PICOP filed this petition for review posing the
following

ISSUES

WHETHER [OR NOT] AN EXISTING COLLECTIVE BARGAINING AGREEMENT (CBA)

CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITIONS
INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD
WHEN NO NEW CBA HAS YET BEEN ENTERED INTO?

WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR

CONCLUSION OF LAWFALLS WITHIN THE AMBIT OF THE EXTRA ORDINARY
REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.[11]

PICOP basically argues that Article 253 of the Labor Code applies in this case. Article 253 of the
Labor Code provides that the terms and conditions of a CBA remain in full force and effect even
beyond the 5-year period when no new CBA has yet been reached. It claims that the private
respondents violated this provision when they campaigned for, supported and signed FFWs
petition for certification election on March 19 and 20, 2000, before the onset of the freedom
period. It further argues that private respondents were not denied due process when they were
terminated. Finally, it claims that the decision of the NLRC on the issues raised was not without
merit. Even assuming that it erred in its judgment on the legal issues raised, its error is not
equivalent to an abuse of discretion that should fall within the ambit of the extraordinary remedy
of certiorari.

Private respondents position

Private respondents argue that the substantial arguments raised by PICOP in this petition are
basically a rehash of the same issues and arguments contained in its Motion for Reconsideration
of the CA decision. Private respondents adopted and repleaded the ruling of the CA in their
Comment[12] on this petition.

The Courts Ruling

The petition merits a denial.

There is no question that in the CBA entered into by the parties, there is a union security clause.
The clause imposes upon the workers the obligation to join and maintain membership in the
companys recognized union as a condition for employment.

"Union security" is a generic term, which is applied to and comprehends "closed shop,"
"union shop," "maintenance of membership," or any other form of agreement which

imposes upon employees the obligation to acquire or retain union membership as a

condition affecting employment. There is union shop when all new regular employees
are required to join the union within a certain period as a condition for their continued
employment. There is maintenance of membership shop when employees, who are
union members as of the effective date of the agreement, or who thereafter become
members, must maintain union membership as a condition for continued employment
until they are promoted or transferred out of the bargaining unit, or the agreement is
terminated. A closed shop, on the other hand, may be defined as an enterprise in which,
by agreement between the employer and his employees or their representatives, no
person may be employed in any or certain agreed departments of the enterprise unless
he or she is, becomes, and, for the duration of the agreement, remains a member in good
standing of a union entirely comprised of or of which the employees in interest are a
part.[13]

There is no dispute that private respondents were members of NAMAPRI-SPFL who were
terminated by PICOP due to alleged acts of disloyalty. It is basic in labor jurisprudence that the
burden of proof rests upon management to show that the dismissal of its worker was based on a
just cause. When an employer exercises its power to terminate an employee by enforcing the
union security clause, it needs to determine and prove the following: (1) the union security clause
is applicable; (2) the union is requesting for the enforcement of the union security provision in
the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the
employee from the union.[14]

In this case, the resolution thereof hinges on whether PICOP was able to show sufficient
evidence to support the decision of the union to expel private respondents from it.

PICOP basically contends that private respondents were justly terminated from employment for
campaigning, supporting and signing a petition for the certification of FFW, a rival union, before
the 60-day freedom period and during the effectivity of the CBA. Their acts constitute an act of
disloyalty against the union which is valid cause for termination pursuant to the Union Security
Clause in the CBA.

The Court finds Itself unable to agree.

Considering the peculiar circumstances, the Court is of the view that the acts of private
respondents are not enough proof of a violation of the Union Security Clause which would
warrant their dismissal. PICOP failed to show in detail how private respondents campaigned and
supported FFW. Their mere act of signing an authorization for a petition for certification election
before the freedom period does not necessarily demonstrate union disloyalty. It is far from being
within the definition of acts of disloyalty as PICOP would want the Court to believe. The act of
signing an authorization for a petition for certification election is not disloyalty to the union per
se considering that the petition for certification election itself was filed during the freedom
period which started on March 22, 2000.

Moreover, as correctly ruled by the CA, the records are bereft of proof of any contemporaneous
acts of resignation or withdrawal of union membership or non-payment of union dues. Neither is
there proof that private respondents joined FFW. The fact is, private respondents remained in
good standing with their union, NAMAPRI-SPFL. This point was settled in the case of PICOP
Resources, Incorporated (PRI) v. Anacleto L. Taeca,[15] where it was written:

However, as to the third requisite, we find that there is no sufficient evidence to support
the decision of PRI to terminate the employment of the respondents.

PRI alleged that respondents were terminated from employment based on the alleged
acts of disloyalty they committed when they signed an authorization for the Federation
of Free Workers (FFW) to file a Petition for Certification Election among all rank-andfile employees of PRI. It contends that the acts of respondents are a violation of the
Union Security Clause, as provided in their Collective Bargaining Agreement.

We are unconvinced.

We are in consonance with the Court of Appeals when it held that the mere signing of
the authorization in support of the Petition for Certification Election of FFW on March
19, 20 and 21, or before the "freedom period," is not sufficient ground to terminate the
employment of respondents inasmuch as the petition itself was actually filed during the
freedom period. Nothing in the records would show that respondents failed to maintain
their membership in good standing in the Union. Respondents did not resign or
withdraw their membership from the Union to which they belong. Respondents
continued to pay their union dues and never joined the FFW.

Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of
signing an authorization letter to file a petition for certification election as they signed it
outside the freedom period. However, we are constrained to believe that an
"authorization letter to file a petition for certification election" is different from an
actual "Petition for Certification Election." Likewise, as per records, it was clear that the
actual Petition for Certification Election of FFW was filed only on May 18, 2000. Thus, it
was within the ambit of the freedom period which commenced from March 21,
2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition
for certification election outside the 60-day freedom period. This is not the situation in
this case. If at all, the signing of the authorization to file a certification election was
merely preparatory to the filing of the petition for certification election, or an exercise of
respondents right to self-organization.[16]

Finally, PICOP insists that Article 253 of the Labor Code applies in this case, not Article 256
thereof. The Court agrees with the CA that its argument is misplaced. This issue was tackled and
settled in the same PICOP Resources, Incorporated (PRI) v. Taeca case, to wit:

Moreover, PRI anchored their decision to terminate respondents employment on Article

253 of the Labor Code which states that "it shall be the duty of both parties to keep the
status quo and to continue in full force and effect the terms and conditions of the
existing agreement during the 60-day period and/or until a new agreement is reached
by the parties." It claimed that they are still bound by the Union Security Clause of the
CBA even after the expiration of the CBA; hence, the need to terminate the employment
of respondents.

Petitioner's reliance on Article 253 is misplaced.

The provision of Article 256 of the Labor Code is particularly enlightening. It reads:

Article 256. Representation issue in organized establishments. - In organized

establishments, when a verified petition questioning the majority status of the
incumbent bargaining agent is filed before the Department of Labor and Employment
within the sixty-day period before the expiration of a collective bargaining agreement,
the Med-Arbiter shall automatically order an election by secret ballot when the verified
petition is supported by the written consent of at least twenty-five percent (25%) of all
the employees in the bargaining unit to ascertain the will of the employees in the
appropriate bargaining unit. To have a valid election, at least a majority of all eligible
voters in the unit must have cast their votes. The labor union receiving the majority of
the valid votes cast shall be certified as the exclusive bargaining agent of all the workers
in the unit. When an election which provides for three or more choices results in no
choice receiving a majority of the valid votes cast, a run-off election shall be conducted
between the labor unions receiving the two highest number of votes: Provided, That the
total number of votes for all contending unions is at least fifty per cent (50%) of the
number of votes cast.
At the expiration of the freedom period, the employer shall continue to recognize the
majority status of the incumbent bargaining agent where no petition for certification
election is filed.

Applying the same provision, it can be said that while it is incumbent for the employer
to continue to recognize the majority status of the incumbent bargaining agent even
after the expiration of the freedom period, they could only do so when no petition for
certification election was filed. The reason is, with a pending petition for certification,
any such agreement entered into by management with a labor organization is fraught
with the risk that such a labor union may not be chosen thereafter as the collective
bargaining representative. The provision for status quo is conditioned on the fact that
no certification election was filed during the freedom period. Any other view would
render nugatory the clear statutory policy to favor certification election as the means of
ascertaining the true expression of the will of the workers as to which labor organization
would represent them.

In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a
petition for certification election was already ordered by the Med-Arbiter of DOLE
Caraga Region on August 23, 2000. Therefore, following Article 256, at the expiration of
the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent
bargaining agent does not hold true when petitions for certification election were filed,
as in this case.

Moreover, the last sentence of Article 253 which provides for automatic renewal
pertains only to the economic provisions of the CBA, and does not include
representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of
a petition for certification election. When there is a representational issue, the status
quo provision in so far as the need to await the creation of a new agreement will not
apply. Otherwise, it will create an absurd situation where the union members will be
forced to maintain membership by virtue of the union security clause existing under the
CBA and, thereafter, support another union when filing a petition for certification
election. If we apply it, there will always be an issue of disloyalty whenever the
employees exercise their right to self-organization. The holding of a certification election
is a statutory policy that should not be circumvented, or compromised.

Time and again, we have ruled that we adhere to the policy of enhancing the welfare of
the workers. Their freedom to choose who should be their bargaining representative is
of paramount importance. The fact that there already exists a bargaining representative
in the unit concerned is of no moment as long as the petition for certification election
was filed within the freedom period. What is imperative is that by such a petition for
certification election the employees are given the opportunity to make known of who
shall have the right to represent them thereafter. Not only some, but all of them should
have the right to do so. What is equally important is that everyone be given a democratic
space in the bargaining unit concerned.

We will emphasize anew that the power to dismiss is a normal prerogative of the
employer. This, however, is not without limitations. The employer is bound to exercise
caution in terminating the services of his employees especially so when it is made upon
the request of a labor union pursuant to the Collective Bargaining Agreement.
Dismissals must not be arbitrary and capricious. Due process must be observed in

dismissing an employee, because it affects not only his position but also his means of
livelihood. Employers should, therefore, respect and protect the rights of their
employees, which include the right to labor. [17]

Considering that private respondents were illegally dismissed, basic law provides that they shall
be entitled to the benefit of full backwages and reinstatement unless the latter is no longer viable,
in which case, a grant of separation pay shall be awarded equivalent to one month salary for
every year of service.

X x x Under Republic Act No. 6715, employees who are illegally dismissed are entitled to
full backwages, inclusive of allowances and other benefits, or their monetary equivalent,
computed from the time their actual compensation was withheld from them up to the
time of their actual reinstatement. But if reinstatement is no longer possible, the
backwages shall be computed from the time of their illegal termination up to the finality
of the decision X x x.[18]

Private respondents are also entitled to an award of attorneys fees equivalent to 10% of the total
monetary award as they were compelled to litigate in order to seek redress for their illegal
dismissal.

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 165407

HERMINIGILDO INGUILLO AND

ZENAIDA BERGANTE,
Petitioners,

Present:

YNARES-SANTIAGO, J.,
Chairperson,

- versus -

CARPIO,*
CORONA,**
NACHURA, and
PERALTA, JJ.

FIRST PHILIPPINE SCALES,

INC.and/or AMPARO POLICARPIO,
MANAGER,

Promulgated:

Respondents.

June 5, 2009

x-----------------------------------------------------x

DECISION

PERALTA, J.:

Assailed in this petition for review under Rule 45 of the Rules of Court are the Court of Appeals
(1) Decision[1] datedMarch 11, 2004 in CA-G.R. SP No. 73992, which dismissed the Petition
for Certiorari of petitioners Zenaida Bergante (Bergante) and Herminigildo Inguillo (Inguillo);
and (2) Resolution[2] dated September 17, 2004 denying petitioners' Motion for
Reconsideration. The appellate court sustained the ruling of the National Labor Relations

Commission (NLRC) that petitioners were validly dismissed pursuant to a Union Security Clause
in the collective bargaining agreement.
The facts of the case are as follows:

First Philippine Scales, Inc. (FPSI), a domestic corporation engaged in the manufacturing of
weighing scales, employed Bergante and Inguillo as assemblers on August 15, 1977 and
September 10, 1986, respectively.

In 1991, FPSI and First Philippine Scales Industries Labor Union (FPSILU)[3] entered into a
Collective Bargaining Agreement (CBA),[4] the duration of which was for a period of five (5)
years starting on September 12, 1991 untilSeptember 12, 1996. On September 19, 1991, the
members of FPSILU ratified the CBA in a document entitledRATIPIKASYON NG
KASUNDUAN.[5] Bergante and Inguillo, who were members of FPSILU, signed the said
document.[6]

During the lifetime of the CBA, Bergante, Inguillo and several FPSI employees joined another
union, theNagkakaisang Lakas ng Manggagawa (NLM), which was affiliated with a federation
called KATIPUNAN (NLM-KATIPUNAN, for brevity). Subsequently, NLM-KATIPUNAN filed
with the Department of Labor and Employment (DOLE) an intra-union dispute[7] against FPSILU
and FPSI. In said case, the Med-Arbiter decided[8] in favor of FPSILU. It also ordered the officers
and members of NLM-KATIPUNAN to return to FPSILU the amount ofP90,000.00 pertaining to
the union dues erroneously collected from the employees. Upon finality of the Med-Arbiter's
Decision, a Writ of Execution[9] was issued to collect the adjudged amount from NLMKATIPUNAN. However, as no amount was recovered, notices of garnishment were issued to
United Coconut Planters Bank (Kalookan City Branch)[10] and to FPSI[11] for the latter to hold for
FPSILU the earnings of Domingo Grutas, Jr. (Grutas) and Inguillo, formerly FPSILU's President
and Secretary for Finance, respectively, to the extent of P13,032.18.Resultantly, the amount
of P5,140.55 was collected,[12] P1,695.72 of which came from the salary of Grutas, while
the P3,444.83 came from that of Inguillo.

Meanwhile, on March 29, 1996, the executive board and members of the FPSILU addressed a
document dated March 18, 1996 denominated as Petisyon[13] to FPSI's general manager, Amparo
Policarpio (Policarpio), seeking the termination of the services of the following employees,

namely: Grutas, Yolanda Tapang, Shirley Tapang, Gerry Trinidad, Gilbert Lucero, Inguillo,
Bergante, and Vicente Go, on the following grounds:[14] (1) disloyalty to the Union by separating
from it and affiliating with a rival Union, the NLM-KATIPUNAN; (2) dereliction of duty by
failing to call periodic membership meetings and to give financial reports; (3) depositing Union
funds in the names of Grutas and former Vice-President Yolanda Tapang, instead of in the name
of FPSILU, care of the President; (4) causing damage to FPSI by deliberately slowing down
production, preventing the Union to even attempt to ask for an increase in benefits from the
former; and (5) poisoning the minds of the rest of the members of the Union so that they would
be enticed to join the rival union.

On May 13, 1996, Inguillo filed with the NLRC a complaint against FPSI and/or Policarpio
(respondents) for illegal withholding of salary and damages, docketed as NLRC-NCR-Case No.
00-05-03036-96.[15]
On May 16, 1996, respondents terminated the services of the employees mentioned in the
Petisyon.
The following day, two (2) separate complaints for illegal dismissal, reinstatement and damages
were filed against respondents by: (1) NLM-KATIPUNAN, Grutas, Trinidad, Bergante, Yolanda
Tapang, Go, Shirley Tapang and Lucero[16] (Grutas complaint, for brevity); and (2)
Inguillo[17] (Inguillo complaint). Both complaints were consolidated with Inguillo's prior
complaint for illegal withholding of salary, which was pending before Labor Arbiter Manuel
Manansala. After the preliminary mandatory conference, some of the complainants agreed to
amicably settle their cases. Consequently, the Labor Arbiter issued an Order[18] dated October 1,
1996, dismissing with prejudice the complaints of Go, Shirley Tapang, Yolanda Tapang, Grutas,
and Trinidad.[19] Lucero also settled the case after receiving his settlement money and executing a
Quitclaim and Release in favor of FPSI and Policarpio.[20]

Bergante and Inguillo, the remaining complainants, were directed to submit their respective
position papers, after which their complaints were submitted for resolution on February 20, 1997.
[21]

In their Position Paper,[22] Bergante and Inguillo claimed that they were not aware of a petition
seeking for their termination, and neither were they informed of the grounds for their
termination. They argued that had they been informed, they would have impleaded FPSILU in
their complaints. Inguillo could not think of a valid reason for his dismissal except the fact that
he was a very vocal and active member of the NLM-KATIPUNAN. Bergante, for her part,
surmised that she was dismissed solely for being Inguillo's sister-in-law. She also reiterated the

absence of a memorandum stating that she committed an infraction of a company rule or

regulation or a violation of law that would justify her dismissal.
Inguillo also denounced respondents' act of withholding his salary, arguing that he was not a
party to the intra-union dispute from which the notice of garnishment arose. Even assuming that
he was, he argued that his salary was exempt from execution.

In their Position Paper,[23] respondents maintained that Bergante and Inguillo's dismissal was
justified, as the same was done upon the demand of FPSILU, and that FPSI complied in order to
avoid a serious labor dispute among its officers and members, which, in turn, would seriously
affect production. They also justified that the dismissal was in accordance with the Union
Security Clause in the CBA, the existence and validity of which was not disputed by Bergante
and Inguillo. In fact, the two had affixed their signatures to the document which ratified the
CBA.

In his Decision[24] dated November 27, 1997, the Labor Arbiter dismissed the remaining
complaints of Bergante and Inguillo and held that they were not illegally dismissed. He
explained that the two clearly violated the Union Security Clause of the CBA when they joined
NLM-KATIPUNAN and committed acts detrimental to the interests of FPSILU and
respondents. The dispositive portion of the said Decision states:
WHEREFORE, premises considered, judgment is hereby rendered:

1.
Declaring respondents First Philippines Scales, Inc. (First Philippine Scales
Industries [FPSI] and Amparo Policarpio, in her capacity as President and General Manager of
respondent FPSI, not guilty of illegal dismissal as above discussed. However, considering the
length of services rendered by complainants Herminigildo Inguillo and Zenaida Bergante as
employees of respondent FPSI, plus the fact that the other complainants in the above-entitled
cases were previously granted financial assistance/separation pay through amicable settlement,
the afore-named respondents are hereby directed to pay complainants Herminigildo Inguillo and
Zenaida Bergante separation pay and accrued legal holiday pay, as earlier computed, to wit:
Herminigildo Inguillo
Separation pay ................P22,490.00

Legal Holiday Pay........... 839.00

Total 23,329.00

Zenaida Bergante
Separation pay.................P43,225.00
Legal Holiday Pay........... 839.00
Total 44,064.00

2.
Directing the afore-named respondents to pay ten (10%) percent attorney's fees
based on the total monetary award to complainants Inguillo and Bergante.

3.
Dismissing the claim for illegal withholding of salary of complainant Inguillo for
lack of merit as above discussed.

4.
Dismissing the other money claims and/or other charges of complainants Inguillo
and Bergante for lack of factual and legal basis.

5.
Dismissing the complaint of complainant Gilberto Lucero with prejudice for having
executed a Quitclaim and Release and voluntary resignation in favor of respondents FPSI and
Amparo Policarpio as above-discussed where the former received the amount of P23,334.00 as
financial assistance/separation pay and legal holiday pay from the latter.

SO ORDERED.[25]

Bergante and Inguillo appealed before the NLRC, which reversed the Labor Arbiter's Decision in
a Resolution[26]dated June 8, 2001, the dispositive portion of which provides:
WHEREFORE, the assailed decision is set aside. Respondents are hereby ordered to reinstate
complainants Inguillo and Bergante with full backwages from the time of their dismissal up [to]
their actual reinstatement. Further, respondents are also directed to pay complainant Inguillo the
amount representing his withheld salary for the period March 15, 1998 toApril 16, 1998. The
sum corresponding to ten percent (10%) of the total judgment award by way of attorney's fees is
likewise ordered. All other claims are ordered dismissed for lack of merit.

SO ORDERED.[27]

In reversing the Labor Arbiter, the NLRC[28] ratiocinated that respondents failed to present
evidence to show that Bergante and Inguillo committed acts inimical to FPSILU's interest. It also
observed that, since the two (2) were not informed of their dismissal, the justification given by
FPSI that it was merely constrained to dismiss the employees due to persistent demand from
the Union clearly proved the claim of summary dismissal and violation of the employees' right to
due process.
Respondents filed a Motion for Reconsideration, which was referred by the NLRC to Executive
Labor Arbiter Vito C. Bose for report and recommendation. In its Resolution[29] dated August 26,
2002, the NLRC adopted in toto the report and recommendation of Arbiter Bose which set aside
its previous Resolution reversing the Labor Arbiter's Decision. This time, the NLRC held that
Bergante and Inguillo were not illegally dismissed as respondents merely put in force the CBA
provision on the termination of the services of disaffiliating Union members upon the
recommendation of the Union. The dispositive portion of the said Resolution provides:

WHEREFORE, the resolution of the Commission dated June 8, 2001 is set aside. Declaring the
dismissal of the complainants as valid, [t]his complaint for illegal dismissal is
dismissed. However, respondents are hereby directed to pay complainant Inguillo the amount
representing his withheld salary for the period March 15, 1998 to April 16, 1998, plus ten (10%)
percent as attorney's fees.

All other claims are ordered dismissed for lack of merit.

SO ORDERED.[30]

Not satisfied with the disposition of their complaints, Bergante and Inguillo filed a petition
for certiorari under Rule 65 of the Rules of Court with the Court of Appeals (CA). The CA
dismissed the petition for lack of merit[31] and denied the subsequent motion for reconsideration.
[32]
In affirming the legality of the dismissal, the CA ratiocinated, thus:

x x x on the merits, we sustain the view adopted by the NLRC that:

x x x it cannot be said that the stipulation providing that the employer may dismiss an employee
whenever the union recommends his expulsion either for disloyalty or for any violation of its bylaws and constitution is illegal or constitutive of unfair labor practice, for such is one of the
matters on which management and labor can agree in order to bring about the harmonious
relations between them and the union, and cohesion and integrity of their organization. And as an
act of loyalty, a union may certainly require its members not to affiliate with any other labor
union and to consider its infringement as a reasonable cause for separation.

The employer FPSI did nothing but to put in force their agreement when it separated the
disaffiliating union members, herein complainants, upon the recommendation of the union. Such
a stipulation is not only necessary to maintain loyalty and preserve the integrity of the union, but
is allowed by the Magna Carta of Labor when it provided that while it is recognized that an
employee shall have the right of self-organization, it is at the same time postulated that such
rights shall not injure the right of the labor organization to prescribe its own rules with respect to
the acquisition or retention of membership therein. Having ratified their CBA and being then
members of FPSILU, the complainants owe fealty and are required under the Union Security
clause to maintain their membership in good standing with it during the term thereof, a
requirement which ceases to be binding only during the 60-day freedom period immediately
preceding the expiration of the CBA, which was not present in this case.

x x x the dismissal of the complainants pursuant to the demand of the majority union in
accordance with their union security [clause] agreement following the loss of seniority rights is
valid and privileged and does not constitute unfair labor practice or illegal dismissal.

Indeed, the Supreme Court has for so long a time already recognized a union security clause in
the CBA, like the one at bar, as a specie of closed-shop arrangement and trenchantly upheld the
validity of the action of the employer in enforcing its terms as a lawful exercise of its rights and
obligations under the contract.

The collective bargaining agreement in this case contains a union security clause-a closed-shop
agreement.

A closed-shop agreement is an agreement whereby an employer binds himself to hire only

members of the contracting union who must continue to remain members in good standing to
keep their jobs. It is the most prized achievement of unionism. It adds membership and
compulsory dues. By holding out to loyal members a promise of employment in the closed-shop,
it welds group solidarity. (National Labor Union v. Aguinaldo's Echague Inc., 97 Phil. 184). It is
a very effective form of union security agreement.

This Court has held that a closed-shop is a valid form of union security, and such a provision in a
collective bargaining agreement is not a restriction of the right of freedom of association
guaranteed by the Constitution. (Lirag Textile Mills, Inc. v. Blanco, 109 SCRA 87; Manalang v.
Artex Development Company, Inc., 21 SCRA 561.)[33]

Hence, the present petition.

Essentially, the Labor Code of the Philippines has several provisions under which an employee
may be validly terminated, namely: (1) just causes under Article 282;[34] (2) authorized causes

under Article 283;[35] (3) termination due to disease under Article 284;[36] and (4) termination by
the employee or resignation under Article 285.[37] While the said provisions did not mention as
ground the enforcement of the Union Security Clause in the CBA, the dismissal from
employment based on the same is recognized and accepted in our jurisdiction.[38]

Union security is a generic term, which is applied to and comprehends closed shop, union
shop, maintenance of membership or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a condition affecting
employment.[39] There is union shop when all new regular employees are required to join the
union within a certain period as a condition for their continued employment. There is
maintenance of membership shop when employees, who are union members as of the effective
date of the agreement, or who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out of the bargaining
unit or the agreement is terminated.[40] A closed-shop, on the other hand, may be defined as an
enterprise in which, by agreement between the employer and his employees or their
representatives, no person may be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member
in good standing of a union entirely comprised of or of which the employees in interest are a
part.[41]

In their Petition, Bergante and Inguillo assail the legality of their termination based on the Union
Security Clause in the CBA between FPSI and FPSILU. Article II[42] of the CBA pertains to
Union Security and Representatives, which provides:

The Company hereby agrees to a UNION SECURITY [CLAUSE] with the following terms:

1.
All bonafide union members as of the effective date of this agreement and all those
employees within the bargaining unit who shall subsequently become members of the UNION
during the period of this agreement shall, as a condition to their continued employment, maintain
their membership with the UNION under the FIRST PHIL. SCALES INDUSTRIES LABOR
UNION Constitution and By-laws and this Agreement;

2.
Within thirty (30) days from the signing of this Agreement, all workers eligible for
membership who are not union members shall become and to remain members in good standing
as bonafide union members therein as a condition of continued employment;

3.
New workers hired shall likewise become members of the UNION from date they
become regular and permanent workers and shall remain members in good standing as bonafide
union members therein as a condition of continued employment;

4.
In case a worker refused to join the Union, the Union will undertake to notify
workers to join and become union members. If said worker or workers still refuses, he or they
shall be notified by the Company of his/her dismissal as a consequence thereof and thereafter
terminated after 30 days notice according to the Labor Code.

5.
Any employee/union member who fails to retain union membership in good
standingmay be recommended for suspension or dismissal by the Union Directorate and/or
FPSILU Executive Council for any of the following causes:
a) Acts of Disloyalty;
b) Voluntary Resignation or Abandonment from the UNION;
c) Organization of or joining another labor union or any labor group that would work against the
UNION;
d) Participation in any unfair labor practice or violation of the Agreement, or activity derogatory
to the UNION decision;
e) Disauthorization of, or Non-payment of, monthly membership dues, fees, fines and other
financial assessments to the Union;
f) Any criminal violation or violent conduct or activity against any UNION member without
justification and affecting UNION rights or obligations under the said Agreement.
Verily, the aforesaid provision requires all members to maintain their membership with FPSILU
during the lifetime of the CBA. Failing so, and for any of the causes enumerated therein, the
Union Directorate and/or FPSILU Executive Council may recommend to FPSI an

employee/union member's suspension or dismissal. Records show that Bergante and Inguillo
were former members of FPSILU based on their signatures in the document which ratified the
CBA. It can also be inferred that they disaffiliated from FPSILU when the CBA was still in force
and subsisting, as can be gleaned from the documents relative to the intra-union dispute between
FPSILU and NLM-KATIPUNAN. In view of their disaffiliation, as well as other acts allegedly
detrimental to the interest of both FPSILU and FPSI, a Petisyon was submitted to Policarpio,
asking for the termination of the services of employees who failed to maintain their Union
membership.

The Court is now tasked to determine whether the enforcement of the aforesaid Union Security
Clause justified herein petitioners' dismissal from the service.

In terminating the employment of an employee by enforcing the Union Security Clause, the
employer needs only to determine and prove that: (1) the union security clause is applicable; (2)
the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the union's decision to expel the employee from the union
or company.[43]

We hold that all the requisites have been sufficiently met and FPSI was justified in enforcing the
Union Security Clause, for the following reasons:

First. FPSI was justified in applying the Union Security Clause, as it was a valid provision in the
CBA, the existence and validity of which was not questioned by either party. Moreover,
petitioners were among the 93 employees who affixed their signatures to the document that
ratified the CBA. They cannot now turn their back and deny knowledge of such provision.

Second. FPSILU acted on its prerogative to recommend to FPSI the dismissal of the members
who failed to maintain their membership with the Union. Aside from joining another rival union,
FPSILU cited other grounds committed by petitioners and the other employees which tend to
prejudice FPSIs interests, i.e., dereliction of duty - by failing to call periodic membership
meetings and to give financial reports; depositing union funds in the names of Grutas and former
Vice-President Yolanda Tapang, instead of in the name of FPSILU care of the President; causing

damage to FPSI by deliberately slowing down production, preventing the Union from even
attempting to ask for an increase in benefits from the former; and poisoning the minds of the rest
of the members of the Union so that they would be enticed to join the rival union.

Third. FPSILU's decision to ask for the termination of the employees in the Petisyon was
justified and supported by the evidence on record. Bergante and Inguillo were undisputably
former members of FPSILU. In fact, Inguillo was the Secretary of Finance, the underlying reason
why his salary was garnished to satisfy the judgment of the Med-Arbiter who ordered NLMKATIPUNAN to return the Union dues it erroneously collected from the employees. Their then
affiliation with FPSILU was also clearly shown by their signatures in the document which
ratified the CBA.Without a doubt, they committed acts of disloyalty to the Union when they
failed not only to maintain their membership but also disaffiliated from it. They abandoned
FPSILU and even joined another union which works against the former's interests. This is
evident from the intra-union dispute filed by NLM-KATIPUNAN against FPSILU. Once
affiliated with NLM-KATIPUNAN, Bergante and Inguillo proceeded to recruit other employees
to disaffiliate from FPSILU and even collected Union dues from them.

In Del Monte Philippines,[44] the stipulations in the CBA authorizing the dismissal of employees
are of equal import as the statutory provisions on dismissal under the Labor Code, since a CBA is
the law between the company and theUnion, and compliance therewith is mandated by the
express policy to give protection to labor. In Caltex Refinery Employees Association (CREA) v.
Brillantes,[45] the Court expounded on the effectiveness of union security clause when it held that
it is one intended to strengthen the contracting union and to protect it from the fickleness or
perfidy of its own members. For without such safeguards, group solidarity becomes uncertain;
the union becomes gradually weakened and increasingly vulnerable to company machinations. In
this security clause lies the strength of the union during the enforcement of the collective
bargaining agreement. It is this clause that provides labor with substantial power in collective
bargaining.
Nonetheless, while We uphold dismissal pursuant to a union security clause, the same is not
without a condition or restriction. For to allow its untrammeled enforcement would encourage
arbitrary dismissal and abuse by the employer, to the detriment of the employees. Thus, to
safeguard the rights of the employees, We have said time and again that dismissals pursuant to
union security clauses are valid and legal, subject only to the requirement of due process, that is,
notice and hearing prior to dismissal.[46] In like manner, We emphasized that the enforcement of
union security clauses is authorized by law, provided such enforcement is not characterized by
arbitrariness, and always with due process.[47]

There are two (2) aspects which characterize the concept of due process under the Labor Code:
one is substantivewhether the termination of employment was based on the provisions of the
Labor Code or in accordance with the prevailing jurisprudence; the other is procedural - the
manner in which the dismissal was effected.

The second aspect of due process was clarified by the Court in King of Kings Transport v.
Mamac,[48] stating, thus:

(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. x x x

(2) After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein theemployees will be given the opportunity to: (1) explain and
clarify their defenses to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the management. During the
hearing or conference, the employees are given the chance to defend themselves personally, with
the assistance of a representative or counsel of their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the
employees awritten notice of termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds have been established to
justify the severance of their employment.

Corollarily, procedural due process in the dismissal of employees requires notice and
hearing. The employer must furnish the employee two written notices before termination may be
effected. The first notice apprises the employee of the particular acts or omissions for which his

dismissal is sought, while the second notice informs the employee of the employers decision to
dismiss him.[49] The requirement of a hearing, on the other hand, is complied with as long as there
was an opportunity to be heard, and not necessarily that an actual hearing was conducted.[50]

In the present case, the required two notices that must be given to herein petitioners Bergante and
Inguillo were lacking. The records are bereft of any notice that would have given a semblance of
substantial compliance on the part of herein respondents. Respondents, however, aver that they
had furnished the employees concerned, including petitioners, with a copy of FPSILU's
Petisyon. We cannot consider that as compliance with the requirement of either the first notice or
the second notice. While the Petisyon enumerated the several grounds that would justify the
termination of the employees mentioned therein, yet such document is only a recommendation
by the Union upon which the employer may base its decision. It cannot be considered a notice of
termination. For as agreed upon by FPSI and FPSILU in their CBA, the latter may only
recommend to the former a Union member's suspension or dismissal. Nowhere in the
controverted Union Security Clause was there a mention that once the union gives a
recommendation, the employer is bound outright to proceed with the termination.
Even assuming that the Petisyon amounts to a first notice, the employer cannot be deemed to
have substantially complied with the procedural requirements. True, FPSILU enumerated the
grounds in said Petisyon. But a perusal of each of them leads Us to conclude that what was stated
were general descriptions, which in no way would enable the employees to intelligently prepare
their explanation and defenses. In addition, the Petisyon did not provide a directive that the
employees are given opportunity to submit their written explanation within a reasonable
period. Finally, even if We are to assume that the Petisyon is a second notice, still, the
requirement of due process is wanting. For as We have said, the second notice, which is aimed to
inform the employee that his service is already terminated, must state that the employer has
considered all the circumstances which involve the charge and the grounds in the first notice
have been established to justify the severance of employment. After the claimed dialogue
between Policarpio and the employees mentioned in the Petisyon, the latter were simply told not
to report for work anymore.
These defects are bolstered by Bergante and Inguillo who remain steadfast in denying that they
were notified of the specific charges against them nor were they given any memorandum to that
effect. They averred that had they been informed that their dismissal was due to FPSILU's
demand/petition, they could have impleaded the FPSILU together with the respondents. The
Court has always underscored the significance of the two-notice rule in dismissing an employee
and has ruled in a number of cases that non-compliance therewith is tantamount to deprivation of
the employees right to due process.[51]

As for the requirement of a hearing or conference, We hold that respondents also failed to
substantially comply with the same. Policarpio alleged that she had a dialogue with the
concerned employees; that she explained to them the demand of FPSILU for their termination as
well as the consequences of the Petisyon; and that she had no choice but to act accordingly. She
further averred that Grutas even asked her to pay all the involved employees one (1)-month
salary for every year of service, plus their accrued legal holiday pay, but which she denied. She
informed them that it has been FPSI's practice to give employees, on a case-to-case basis, only
one-half () month salary for every year of service and after they have tendered their voluntary
resignation. The employees refused her offer and told her that they will just file their claims with
the DOLE.[52]
Policarpio's allegations are self-serving. Except for her claim as stated in the respondent's
Position Paper, nowhere from the records can We find that Bergante and Inguillo were accorded
the opportunity to present evidence in support of their defenses. Policarpio relied heavily on the
Petisyon of FPSILU. She failed to convince Us that during the dialogue, she was able to ascertain
the validity of the charges mentioned in the Petisyon. In her futile attempt to prove compliance
with the procedural requirement, she reiterated that the objective of the dialogue was to provide
the employees the opportunity to receive the act of grace of FPSI by giving them an amount
equivalent to one-half () month of their salary for every year of service. We are not
convinced. We cannot even consider the demand and counter-offer for the payment of the
employees as an amicable settlement between the parties because what took place was merely a
discussion only of the amount which the employees are willing to accept and the amount which
the respondents are willing to give. Such non-compliance is also corroborated by Bergante and
Inguillo in their pleadings denouncing their unjustified dismissal. In fine, We hold that the
dialogue is not tantamount to the hearing or conference prescribed by law.
We reiterate, FPSI was justified in enforcing the Union Security Clause in the CBA. However,
We cannot countenance respondents' failure to accord herein petitioners the due process they
deserve after the former dismissed them outright in order to avoid a serious labor dispute among
the officers and members of the bargaining agent.[53]In enforcing the Union Security Clause in the
CBA, We are upholding the sanctity and inviolability of contracts. But in doing so, We cannot
override an employees right to due process.[54] In Carino v. National Labor Relations
Commission,[55] We took a firm stand in holding that:

The power to dismiss is a normal prerogative of the employer. However, this is not without
limitation. The employer is bound to exercise caution in terminating the services of his
employees especially so when it is made upon the request of a labor union pursuant to the

Collective Bargaining Agreement x x x. Dismissals must not be arbitrary and capricious. Due
process must be observed in dismissing an employee because it affects not only his position but
also his means of livelihood. Employers should respect and protect the rights of their employees,
which include the right to labor."

Thus, as held in that case, "the right of an employee to be informed of the charges against him
and to reasonable opportunity to present his side in a controversy with either the company or his
own Union is not wiped away by a Union Security Clause or a Union Shop Clause in a collective
bargaining agreement. An employee is entitled to be protected not only from a company which
disregards his rights but also from his own Union, the leadership of which could yield to the
temptation of swift and arbitrary expulsion from membership and mere dismissal from his
job."[56]
In fine, We hold that while Bergante and Inguillo's dismissals were valid pursuant to the
enforcement of Union Security Clause, respondents however did not comply with the requisite
procedural due process. As in the case ofAgabon v. National Labor Relations Commission,
[57]
where the dismissal is for a cause recognized by the prevailing jurisprudence, the absence of
the statutory due process should not nullify the dismissal or render it illegal, or
ineffectual. Accordingly, for violating Bergante and Inguillo's statutory rights, respondents
should indemnify them the amount of P30,000.00 each as nominal damages.

In view of the foregoing, We see no reason to discuss the other matters raised by petitioners.

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals
Decision dated March 11, 2004 and Resolution dated September 17, 2004, in CA-G.R. SP No.
73992, are hereby AFFIRMED WITH MODIFICATION in that while there was a valid ground
for dismissal, the procedural requirements for termination, as mandated by law and
jurisprudence, were not observed. Respondents First Philippine Scales, Inc. and/or Amparo
Policarpio are hereby ORDERED to PAY petitioners Zenaida Bergante and Herminigildo Inguillo
the amount ofP30,000.00 each as nominal damages. No pronouncement as to costs.

SO ORDERED.

PICOP RESOURCES, INCORPORATED

(PRI),

G.R. No. 160828

Petitioner,
Present:

versus

CARPIO, J., Chairperson,

ANACLETO L. TAECA, GEREMIAS S.
TATO, JAIME N. CAMPOS, MARTINIANO
A. MAGAYON, JOSEPH B. BALGOA,
MANUEL G. ABUCAY, MOISES M.
ALBARAN,MARGARITO G.
ALICANTE, JERRY ROMEO T. AVILA,
LORENZO D. CANON, RAUL P. DUERO,
DANILO Y. ILAN, MANUEL M.
MATURAN, JR., LUISITO R. POPERA,
CLEMENTINO C. QUIMAN, ROBERTO Q.
SILOT, CHARLITO D. SINDAY, REMBERT
B. SUZONALLAN J. TRIMIDAL, and
NAMAPRI-SPFL,

NACHURA,
PERALTA
ABAD, and
MENDOZA, JJ.

Promulgated:

Respondents.
August 9, 2010

x----------------------------------------------------------------------------------------x

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the
reversal of the Decision[1] dated July 25, 2003 and Resolution[2] dated October 23, 2003 of the
Court of Appeals in CA-G.R. SP No. 71760, setting aside the Resolutions dated October 8,
2001[3] and April 29, 2002[4] of the National Labor Relations Commission in NLRC CA No. M006309-2001 and reinstating the Decision[5] dated March 16, 2001 of the Labor Arbiter.

The facts, as culled from the records, are as follows:

On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph Balgoa, Jaime
Campos, Geremias Tato, Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a
Complaint for unfair labor practice, illegal dismissal and money claims against petitioner PICOP
Resources, Incorporated (PRI), Wilfredo Fuentes (in his capacity as PRI's Vice
President/Resident Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of
Legal/Labor), Southern Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his
capacity as Secretary General of SPFL), Pascasio Trugillo (in his capacity as Local President of
Nagkahiusang Mamumuo sa PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty.
Proculo Fuentes, Jr.[6] (in his capacity as National President of SPFL).

Respondents were regular rank-and-file employees of PRI and bona fide members
of Nagkahiusang Mamumuo sa PRI Southern Philippines Federation of Labor (NAMAPRISPFL), which is the collective bargaining agent for the rank-and-file employees of petitioner
PRI.

PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5)
years from May 22, 1995 until May 22, 2000.

The CBA contained the following union security provisions:

Article II- Union Security and Check-Off

Section 6. Maintenance of membership.

6.1 All employees within the appropriate bargaining unit who are members of the UNION at the
time of the signing of this AGREEMENT shall, as a condition of continued employment by the
COMPANY, maintain their membership in the UNION in good standing during the effectivity of
this AGREEMENT.

6.2 Any employee who may hereinafter be employed to occupy a position covered by the
bargaining unit shall be advised by the COMPANY that they are required to file an application
for membership with the UNION within thirty (30) days from the date his appointment shall
have been made regular.

6.3 The COMPANY, upon the written request of the UNION and after compliance with the
requirements of the New Labor Code, shall give notice of termination of services of any
employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this Article, but
it assumes no obligation to discharge any employee if it has reasonable grounds to believe either
that membership in the UNION was not available to the employee on the same terms and
conditions generally applicable to other members, or that membership was denied or terminated
for reasons other than voluntary resignation or non-payment of regular union dues. Separation
under the Section is understood to be for cause, consequently, the dismissed employee is not
entitled to separation benefits provided under the New Labor Code and in this AGREEMENT.[7]

On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management of PRI
demanding the termination of employees who allegedly campaigned for, supported and signed
the Petition for Certification Election of the Federation of Free Workers Union (FFW) during the
effectivity of the CBA. NAMAPRI-SPFL considered said act of campaigning for and signing the
petition for certification election of FFW as an act of disloyalty and a valid basis for termination
for a cause in accordance with its Constitution and By-Laws, and the terms and conditions of the
CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.

In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to
investigate those union members who signed the Petition for Certification Election of FFW
during the existence of their CBA. NAMAPRI-SPFL, likewise, furnished PRI with machine
copy of the authorization letters dated March 19, 20 and 21, 2000, which contained the names
and signatures of employees.

Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A. Boniel
issued a memorandum addressed to the concerned employees to explain in writing within 72
hours why their employment should not be terminated due to acts of disloyalty as alleged by
their Union.

Within the period from May 26 to June 2, 2000, a number of employees who were served
explanation memorandum submitted their explanation, while some did not.

In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the employees to
Atty. Fuentes for evaluation and final disposition in accordance with the CBA.

After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of PRI
that the Union found the member's explanations to be unsatisfactory. He reiterated the demand
for termination, but only of 46 member-employees, including respondents.

On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46
employees whom NAMAPRIL-SPFL sought to be terminated on the ground of acts of disloyalty
committed against it when respondents allegedly supported and signed the Petition for
Certification Election of FFW before the freedom period during the effectivity of the CBA. A
Notice dated October 21, 2000 was also served on the Department of Labor and Employment
Office (DOLE), Caraga Region.

Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a), (b),
(c), (d) and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio
Trujillo were accused of violating Article 248 (a) and (b) of the Labor Code.

Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL
or submitted to PRI any union dues and check-off disauthorizations against NAMAPRI-SPFL.
They claimed that they continue to remain on record as bona fide members of NAMAPRI-SPFL.
They pointed out that a patent manifestation of ones disloyalty would have been the explicit
resignation or withdrawal of membership from the Union accompanied by an advice to
management to discontinue union dues and check-off deductions. They insisted that mere
affixation of signature on such authorization to file a petition for certification election was
not per se an act of disloyalty. They claimed that while it may be true that they signed the said
authorization before the start of the freedom period, the petition of FFW was only filed with the
DOLE on May 18, 2000, or 58 days after the start of the freedom period.
Respondents maintained that their acts of signing the authorization signifying support to the
filing of a Petition for Certification Election of FFW was merely prompted by their desire to
have a certification election among the rank-and-file employees of PRI with hopes of a CBA
negotiation in due time; and not to cause the downfall of NAMAPRI-SPFL.

Furthermore, respondents contended that there was lack of procedural due process. Both the
letter dated May 16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of
Trujillo addressed to PRI did not mention their names. Respondents stressed that NAMAPRISPFL merely requested PRI to investigate union members who supported the Petition for
Certification Election of FFW. Respondents claimed that they should have been summoned
individually, confronted with the accusation and investigated accordingly and from where the
Union may base its findings of disloyalty and, thereafter, recommend to management the
termination for causes.

Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it
was no longer the bargaining representative of the rank-and-file workers of PRI, because the
CBA had already expired on May 22, 2000. Hence, there could be no justification in PRIs act of
dismissing respondents due to acts of disloyalty.

Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the
wishes of the Union in discharging them on the ground of disloyalty to the Union amounted to
interference with, restraint or coercion of respondents exercise of their right to self-organization.
The act indirectly required petitioners to support and maintain their membership with
NAMAPRI-SPFL as a condition for their continued employment. The acts of NAMAPRI-SPFL,
Atty. Fuentes and Trujillo amounted to actual restraint and coercion of the petitioners in the
exercise of their rights to self-organization and constituted acts of unfair labor practice.

In a Decision[8] dated March 16, 2001, the Labor Arbiter declared the respondents dismissal to be
illegal and ordered PRI to reinstate respondents to their former or equivalent positions without
loss of seniority rights and to jointly and solidarily pay their backwages. The dispositive portion
of which reads:

WHEREFORE, premises considered, judgment is hereby entered:

1.

Declaring complainants dismissal illegal; and

2.
Ordering respondents Picop Resources Inc. (PRI) and NAMAPRI-SPFL to reinstate
complainants to their former or equivalent positions without loss of seniority rights and to
jointly and solidarily pay their backwages in the total amount of P420,339.30 as shown in the
said Annex A plus damages in the amount of P10,000.00 each, or a total ofP210,000.00 and
attorneys fees equivalent to 10% of the total monetary award.

SO ORDERED.[9]

PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC),
which reversed the decision of the Labor Arbiter; thus, declaring the dismissal of respondents
from employment as legal.

Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of
merit.

Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals
and sought the nullification of the Resolution of the NLRC dated October 8, 2001 which
reversed the Decision dated March 16. 2001 of Labor Arbiter and the Resolution dated April 29,
2002, which denied respondents motion for reconsideration.

On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the
NLRC and reinstated the Decision dated March 16, 2001 of the Labor Arbiter.

Thus, before this Court, PRI, as petitioner, raised the following issues:

I
WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA)
CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION

INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR

PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO.
II
WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR
CONCLUSION OF LAW FALL WITHIN THE AMBIT OF THE EXTRAORDINARY
REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.[10]

We will first delve on the technical issue raised.

PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of
assailing the decision of the NLRC. It claimed that assuming that the NLRC erred in its
judgment on the legal issues, its error, if any, is not tantamount to abuse of discretion falling
within the ambit of Rule 65.

Petitioner is mistaken.

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National
Labor Relations Commission.[11] This Court held that the proper vehicle for such review was a
Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action
should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of
courts.[12] Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of
Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as
the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of its original
jurisdiction over Petitions for Certiorari is specifically given the power to pass upon the
evidence, if and when necessary, to resolve factual issues. [13]
We now come to the main issue of whether there was just cause to terminate the employment of
respondents.
PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in
good faith at the instance of the incumbent union pursuant to the Union Security Clause of the
CBA.

Citing Article 253 of the Labor Code,[14] PRI contends that as parties to the CBA, they are
enjoined to keep thestatus quo and continue in full force and effect the terms and conditions of
the existing CBA during the 60-day period and/or until a new agreement is reached by the
parties.
Petitioner's argument is untenable.

Union security" is a generic term, which is applied to and comprehends "closed shop," union
shop," "maintenance of membership," or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a condition affecting
employment. There is union shop when all new regular employees are required to join the union
within a certain period as a condition for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership as a condition
for continued employment until they are promoted or transferred out of the bargaining unit, or
the agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in
which, by agreement between the employer and his employees or their representatives, no person
may be employed in any or certain agreed departments of the enterprise unless he or she is,
becomes, and, for the duration of the agreement, remains a member in good standing of a union
entirely comprised of or of which the employees in interest are a part.[15]

However, in terminating the employment of an employee by enforcing the union security clause,
the employer needs to determine and prove that: (1) the union security clause is applicable; (2)
the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the decision of the union to expel the employee from the
union. These requisites constitute just cause for terminating an employee based on the union
security provision of the CBA.[16]

As to the first requisite, there is no question that the CBA between PRI and respondents included
a union security clause, specifically, a maintenance of membership as stipulated in Sections 6 of
Article II, Union Security and Check-Off. Following the same provision, PRI, upon written
request from the Union, can indeed terminate the employment of the employee who failed to
maintain its good standing as a union member.

Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions demanded from
PRI, in their letters dated May 16 and 23, 2000, to terminate the employment of respondents due
to their acts of disloyalty to the Union.

However, as to the third requisite, we find that there is no sufficient evidence to support the
decision of PRI to terminate the employment of the respondents.

PRI alleged that respondents were terminated from employment based on the alleged acts of
disloyalty they committed when they signed an authorization for the Federation of Free Workers
(FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It
contends that the acts of respondents are a violation of the Union Security Clause, as provided in
their Collective Bargaining Agreement.

We are unconvinced.
We are in consonance with the Court of Appeals when it held that the mere signing of the
authorization in support of the Petition for Certification Election of FFW on March 19, 20 and
21, or before the freedom period, is not sufficient ground to terminate the employment of
respondents inasmuch as the petition itself was actually filed during the freedom period. Nothing
in the records would show that respondents failed to maintain their membership in good standing
in the Union. Respondents did not resign or withdraw their membership from the Union to which
they belong. Respondents continued to pay their union dues and never joined the FFW.

Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing
an authorization letter to file a petition for certification election as they signed it outside the
freedom period. However, we are constrained to believe that an authorization letter to file a
petition for certification election is different from an actual Petition for Certification
Election. Likewise, as per records, it was clear that the actual Petition for Certification Election
of FFW was filed only on May 18, 2000.[17] Thus, it was within the ambit of the freedom period
which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is
prohibited is the filing of a petition for certification election outside the 60-day freedom period.
[18]
This is not the situation in this case. If at all, the signing of the authorization to file a
certification election was merely preparatory to the filing of the petition for certification election,
or an exercise of respondents right to self-organization.

Moreover, PRI anchored their decision to terminate respondents employment on Article 253 of
the Labor Code which states that it shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing agreement during the 60day period and/or until a new agreement is reached by the parties. It claimed that they are still
bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence, the
need to terminate the employment of respondents.
Petitioner's reliance on Article 253 is misplaced.

The provision of Article 256 of the Labor Code is particularly enlightening. It reads:

Article 256. Representation issue in organized establishments. - In organized establishments,

when a verified petition questioning the majority status of the incumbent bargaining agent is
filed before the Department of Labor and Employment within the sixty-day period before the
expiration of a collective bargaining agreement, the Med-Arbiter shall automatically order an
election by secret ballot when the verified petition is supported by the written consent of at least
twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the
employees in the appropriate bargaining unit. To have a valid election, at least a majority of all
eligible voters in the unit must have cast their votes. The labor union receiving the majority of
the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the
unit. When an election which provides for three or more choices results in no choice receiving a
majority of the valid votes cast, a run-off election shall be conducted between the labor unions
receiving the two highest number of votes: Provided, That the total number of votes for all
contending unions is at least fifty per cent (50%) of the number of votes cast.
At the expiration of the freedom period, the employer shall continue to recognize the majority
status of the incumbent bargaining agent where no petition for certification election is filed.[19]

Applying the same provision, it can be said that while it is incumbent for the employer to
continue to recognize the majority status of the incumbent bargaining agent even after the
expiration of the freedom period, they could only do so when no petition for certification election
was filed. The reason is, with a pending petition for certification, any such agreement entered
into by management with a labor organization is fraught with the risk that such a labor union
may not be chosen thereafter as the collective bargaining representative.[20] The provision

for status quo is conditioned on the fact that no certification election was filed during the
freedom period. Any other view would render nugatory the clear statutory policy to favor
certification election as the means of ascertaining the true expression of the will of the workers
as to which labor organization would represent them.[21]
In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for
certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on
August 23, 2000.[22] Therefore, following Article 256, at the expiration of the freedom period,
PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold
true when petitions for certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to
the economic provisions of the CBA, and does not include representational aspect of the CBA.
An existing CBA cannot constitute a bar to a filing of a petition for certification election. When
there is a representational issue, the status quo provision in so far as the need to await the
creation of a new agreement will not apply. Otherwise, it will create an absurd situation where
the union members will be forced to maintain membership by virtue of the union security clause
existing under the CBA and, thereafter, support another union when filing a petition for
certification election. If we apply it, there will always be an issue of disloyalty whenever the
employees exercise their right to self-organization. The holding of a certification election is a
statutory policy that should not be circumvented,[23] or compromised.
Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the
workers. Their freedom to choose who should be their bargaining representative is of paramount
importance. The fact that there already exists a bargaining representative in the unit concerned is
of no moment as long as the petition for certification election was filed within the freedom
period. What is imperative is that by such a petition for certification election the employees are
given the opportunity to make known of who shall have the right to represent them thereafter.
Not only some, but all of them should have the right to do so. What is equally important is that
everyone be given a democratic space in the bargaining unit concerned.[24]

We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This,
however, is not without limitations. The employer is bound to exercise caution in terminating the
services of his employees especially so when it is made upon the request of a labor union
pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary and
capricious. Due process must be observed in dismissing an employee, because it affects not only
his position but also his means of livelihood. Employers should, therefore, respect and protect
the rights of their employees, which include the right to labor.[25]

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and
reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In
awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount
to be awarded shall be equivalent to one month salary for every year of service. Under Republic
Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits, or their monetary equivalent, computed from the time their actual
compensation was withheld from them up to the time of their actual reinstatement. But if
reinstatement is no longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. Moreover, respondents, having been
compelled to litigate in order to seek redress for their illegal dismissal, are entitled to the award
of attorneys fees equivalent to 10% of the total monetary award.[26]
WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and the Resolution
dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, which set aside
the Resolutions dated October 8, 2001 and April 29, 2002 of the National Labor Relations
Commission in NLRC CA No. M-006309-2001, areAFFIRMED accordingly. Respondents
are hereby awarded full backwages and other allowances, without qualifications and
diminutions, computed from the time they were illegally dismissed up to the time they are
actually reinstated. Let this case be remanded to the Labor Arbiter for proper computation of
the full backwages due respondents, in accordance with Article 279 of the Labor Code, as
expeditiously as possible.

SO ORDERED.

GENERAL MILLING
CORPORATION,

G.R. No. 149552

Petitioner,

Present:
- versus -

PUNO, C.J.,
Chairperson,
ERNESTO CASIO, ROLANDO IGOT,
MARIO FAMADOR, NELSON LIM,
FELICISIMO BOOC, PROCOPIO
OBREGON, JR., and ANTONIO
ANINIPOK,
Respondents,

CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.

and

VIRGILIO PINO, PAULINO

CABREROS, MA. LUNA P.
JUMAOAS, DOMINADOR BOOC,
FIDEL VALLE, BARTOLOME
AUMAN, REMEGIO CABANTAN,
LORETO GONZAGA, EDILBERTO
MENDOZA and ANTONIO PANILAG,
Respondents.
Promulgated:

March 10, 2010

x---------------------------------------------------x

DECISION

LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the
reversal of the Decision[1] dated March 30, 2001 and Resolution[2] dated July 18, 2001 of the
Court of Appeals in CA-G.R. SP No. 40280, setting aside the Voluntary Arbitration
Award[3] dated August 16, 1995 of the National Conciliation and Mediation Board (NCMB),
Cebu City, in VA Case No. AC 389-01-01-95. Voluntary Arbitrator Alice K. Canonoy-Morada
(Canonoy-Morada) dismissed the Complaint filed by respondents Ernesto Casio, Rolando Igot,
Mario Famador, Nelson Lim, Felicisimo Booc, Procopio Obregon, Jr. and Antonio Aninipok
(Casio, et al.) against petitioner General Milling Corporation (GMC) for unfair labor practice,
illegal suspension, illegal dismissal, and payment of moral and exemplary damages.

The labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter (Local 31) was the sole
and exclusive bargaining agent of the rank and file employees of GMC in Lapu-Lapu City. On
November 30, 1991, IBM-Local 31, through its officers and board members, namely,
respondents Virgilio Pino,[4] Paulino Cabreros, Ma. Luna P. Jumaoas, Dominador Booc,
Bartolome Auman, Remegio Cabantan, Fidel Valle, Loreto Gonzaga, Edilberto Mendoza and
Antonio Panilag (Pino, et al.), entered into a Collective Bargaining Agreement (CBA) with
GMC. The effectivity of the said CBA was retroactive to August 1, 1991.[5]

The CBA contained the following union security provisions:

Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers employed by the

Company with the exception of those who are specifically excluded by law and by the terms of
this Agreement must be members in good standing of the Union within thirty (30) days upon the
signing of this agreement and shall maintain such membership in good standing thereof as a
condition of their employment or continued employment.
Section 6. The Company, upon written request of the Union, shall terminate the services of any
employee/worker who fails to fulfill the conditions set forth in Sections 3 and 4 thereof, subject
however, to the provisions of the Labor Laws of the Philippines and their Implementing Rules
and Regulations. The Union shall absolve the Company from any and all liabilities, pecuniary or
otherwise, and responsibilities to any employee or worker who is dismissed or terminated in
pursuant thereof.[6]

Casio, et al. were regular employees of GMC with daily earnings ranging from P173.75
to P201.50, and length of service varying from eight to 25 years.[7] Casio was elected IBM-Local
31 President for a three-year term in June 1991, while his co-respondents were union shop
stewards.

In a letter[8] dated February 24, 1992, Rodolfo Gabiana (Gabiana), the IBM Regional Director for
Visayas and Mindanao, furnished Casio, et al. with copies of the Affidavits of GMC employees
Basilio Inoc and Juan Potot, charging Casio, et al. with acts inimical to the interest of the
union. Through the same letter, Gabiana gave Casio, et al. three days from receipt thereof within

which to file their answers or counter-affidavits. However, Casio, et al. refused to acknowledge
receipt of Gabianas letter.

Subsequently, on February 29, 1992, Pino, et al., as officers and members of the IBM-Local 31,
issued a Resolution[9] expelling Casio, et al. from the union. Pertinent portions of the Resolution
are reproduced below:

Whereas, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok, Mario
Famador, Nelson Lim and Ernesto Casio, through Ernesto Casio have refused to acknowledge
receipt of the letter-complaint dated February 24, 1992, requiring them to file their answer[s] or
counter-affidavits as against the charge of acts inimical to the interest of the union and that in
view of such refusal to acknowledge receipt, a copy of said letter complaint was dropped or left
in front of E. Casio;

Whereas, the three (3)[-]day period given to file their answer or counter-affidavit have already
lapsed prompting the union Board to investigate the charge ex parte;

Whereas, after such ex parte investigation the said charge has been more than adequately
substantiated by the affidavits/witnesses and documentary exhibits presented.

NOW, THEREFORE, RESOLVED as it is hereby RESOLVED, that Ernesto Casio, Felicisimo

Booc, Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok, Mario Famador and Nelson Lim
be expelled as union member[s] of good standing effectively immediately.

RESOLVED FURTHER, to furnish copy of this Resolution to the GMC Management for their
information and guidance with the recommendation as it is hereby recommended to dismiss the
above-named employees from work.

Gabiana then wrote a letter[10] dated March 10, 1992, addressed to Eduardo Cabahug (Cabahug),
GMC Vice-President for Engineering and Plant Administration, informing the company of the
expulsion of Casio, et al. from the union pursuant to the Resolution dated February 29, 1992 of
IBM-Local 31 officers and board members. Gabiana likewise requested that Casio, et al. be
immediately dismissed from their work for the interest of industrial peace in the plant.
Gabiana followed-up with another letter[11] dated March 19, 1992, inquiring from Cabahug why
Casio, et al. were still employed with GMC despite the request of IBM-Local 31 that Casio, et al.
be immediately dismissed from service pursuant to the closed shop provision in the existing
CBA. Gabiana reiterated the demand of IBM-Local 31 that GMC dismiss Casio, et al., with the
warning that failure of GMC to do so would constitute gross violation of the existing CBA and
constrain the union to file a case for unfair labor practice against GMC.

Pressured by the threatened filing of a suit for unfair labor practice, GMC acceded to Gabianas
request to terminate the employment of Casio, et al. GMC issued a Memorandum dated March
24, 1992 terminating the employment of Casio, et al. effective April 24, 1992 and placing the
latter under preventive suspension for the meantime.

On March 27, 1992, Casio, et al., in the name of IBM-Local 31, filed a Notice of Strike with the
NCMB-Regional Office No. VII (NCMB-RO). Casio, et al. alleged as bases for the strike the
illegal dismissal of union officers and members, discrimination, coercion, and union busting. The
NCMB-RO held conciliation proceedings, but no settlement was reached among the parties.[12]

Casio, et al. next sought recourse from the National Labor Relations Commission (NLRC)
Regional Arbitration Branch VII by filing on August 3, 1992 a Complaint against GMC and
Pino, et al. for unfair labor practice, particularly, the termination of legitimate union officers,
illegal suspension, illegal dismissal, and moral and exemplary damages. Their Complaint was
docketed as NLRC Case No. RAB-VII-08-0639-92.[13]

Finding that NLRC Case No. RAB-VII-08-0639-92 did not undergo voluntary arbitration, the
Labor Arbiter dismissed the case for lack of jurisdiction, but endorsed the same to the NCMBRO. Prior to undergoing voluntary arbitration before the NCMB-RO, however, the parties agreed
to first submit the case to the grievance machinery of IBM-Local 31. On September 7, 1994,
Casio, et al. filed their Complaint with Pino, the Acting President of IBM-Local 31. Pino
acknowledged receipt of the Complaint and assured Casio, et al. that they would be seasonably
notified of whatever decision and/or action the Board may have in the instant case.[14] When the
IBM-Local 31 Board failed to hold grievance proceedings on the Complaint of Casio, et al.,
NCMB Voluntary Arbitrator Canonoy-Morada assumed jurisdiction over the same. The
Complaint was docketed as VA Case No. AC 389-01-01-95.

Based on the Position Papers and other documents submitted by the parties,[15] Voluntary
Arbitrator Canonoy-Morada rendered on August 16, 1995 a Voluntary Arbitration Award
dismissing the Complaint in VA Case No. AC 389-01-01-95 for lack of merit, but granting
separation pay and attorneys fees to Casio, et al. The Voluntary Arbitration Award presented the
following findings: (1) the termination by GMC of the employment of Casio, et al.was in valid
compliance with the closed shop provision in the CBA; (2) GMC had no competence to
determine the good standing of a union member; (3) Casio, et al. waived their right to due
process when they refused to receive Gabianas letter dated February 24, 1992, which required
them to submit their answer to the charges against them; (4) the preventive suspension of
Casio, et al. by GMC was an act of self-defense; and (5) the IBM-Local 31 Resolution dated
February 29, 1992 expelling Casio, et al. as union members, also automatically ousted them as
union officers.[16] The dispositive portion of the Voluntary Arbitration Award reads:

WHEREFORE, above premises considered, this case filed by [Casio, et al.] is hereby ordered
DISMISSED for lack of merit.

Since the dismissal is not for a cause detrimental to the interest of the company, respondent
General Milling Corporation is, nonetheless, ordered to pay separation pay to all [Casio, et al.]
within seven (7) calendar days upon receipt of this order at the rate of one-half month per year of
service reckoned from the time of their employment until the date of their separation on March
24, 1992, thus:

Employee Date Hired Rate/Month Service Total

(1/2 mo/yr
of service)

Casio April 24/74 P2,636.29 x 18 years = P47,453.22

Igot May 1980 P2,472.75 x 12 years = P29,673.00
Famador Feb. 1977 P2,498.92 x 15 years = P37,483.80
Lim Aug. 1975 P2,466.21 x 17 years = P41,925.57
Booc Aug. 1978 P2,498.92 x 14 years = P34,984.88
Obregon May 1984 P2,273.23 x 08 years = P18,185.84
Aninipok Sept. 1967 P2,616.01 x 25 years = P65,400.25

The attorneys fees for [Casio, et al.s] counsel shall be ten percent (10%) of the total amount due
them; and shall be shared proportionately by all of the same [Casio, et al.].

All other claims are hereby denied.[17]

Dissatisfied with the Voluntary Arbitration Award, Casio, et al. went to the Court of Appeals by
way of a Petition for Certiorari under Rule 65 of the Rules of Court to have said Award set aside.

The Court of Appeals granted the writ of certiorari and set aside the Voluntary Arbitration
Award. The appellate court ruled that while the dismissal of Casio, et al., was made by GMC
pursuant to a valid closed shop provision under the CBA, the company, however, failed to
observe the elementary rules of due process in implementing the said dismissal. Consequently,
Casio, et al. were entitled to reinstatement with backwages from the time of their dismissal up to
the time of their reinstatement. Nevertheless, the Court of Appeals did not hold GMC liable to
Casio, et al. for moral and exemplary damages and attorneys fees, there being no showing that
their dismissal was attended by bad faith or malice, or that the dismissal was effected in a
wanton, oppressive, or malevolent manner, given that GMC merely accommodated the request of
IBM-Local 31. The appellate court, instead, made Pino, et al. liable to Casio, et al., for moral and
exemplary damages and attorneys fees, since it was on the basis of the imputations and
actuations of Pino, et al. that Casio, et al. were illegally dismissed from employment. The Court
of Appeals thus decreed:

WHEREFORE, the assailed award is hereby SET ASIDE, and private respondent General
Milling Corporation is hereby ordered to reinstate [Casio, et al.] to their former positions without
loss of seniority rights, and to pay their full backwages, solidarily with [Pino, et al.]. Further,
[Pino, et al.] are ordered to indemnify each of [Casio, et al.] in the form of moral and exemplary
damages in the amounts of P50,000.00 and P30,000.00, respectively, and to pay attorneys fees.[18]

The Motion for Reconsideration of GMC was denied by the Court of Appeals in the Resolution
dated July 18, 2001.

Hence, GMC filed the instant Petition for Review, arguing that:

THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT SET

ASIDE THE AWARD OF THE VOLUNTARY ARBITRATOR, AND IN AWARDING

REINSTATEMENT AND FULL BACKWAGES TO [Casio, et al.].

II

THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT SAID
THAT PETITIONER GMC FAILED TO ACCORD DUE PROCESS TO [Casio, et al.].

III

THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT DID
NOT ABSOLVE PETITIONER GMC OF ANY LIABILITY AND INSTEAD RULED THAT IT
WAS SOLIDARILY LIABLE WITH THE UNION OFFICERS FOR THE PAYMENT OF FULL
BACKWAGES TO [Casio, et al.].

At this point, we take note that Pino, et al. did not appeal from the decision of the Court of
Appeals.

GMC avers that in reviewing and reversing the findings of the Voluntary Arbitrator, the Court of
Appeals departed from the principle of conclusiveness of the trial judges findings. GMC also
claims that the findings of the Voluntary Arbitrator as to the legality of the termination from
employment of Casio, et al. are well supported by evidence. GMC further insists that before IBPLocal 31 expelled Casio, et al. from the union and requested GMC to dismiss Casio, et al. from
service pursuant to the closed shop provision in the CBA, IBP-Local 31 already accorded
Casio, et al. due process, only that Casio, et al. refused to avail themselves of such
opportunity. GMC additionally maintains that Casio, et al. were expelled by IBP-Local 31 for

acts inimical to the interest of the union, and GMC had no authority to inquire into or rule on
which employee-member is or is not loyal to the union, this being an internal affair of the
union. Thus, GMC had to rely on the presumption that Pino, et al. regularly performed their
duties and functions as IBP-Local 31 officers and board members, when the latter investigated
and ruled on the charges against Casio, et al.[19] GMC finally asserts that Pino, et al., the IBPLocal 31 officers and board members who resolved to expel Casio, et al. from the union, and not
GMC, should be held liable for the reinstatement of and payment of full backwages to Casio, et
al. for the company had acted in good faith and merely complied with the closed shop provision
in the CBA.

On the other hand, Casio, et al. counters that GMC failed to identify the specific pieces of
evidence supporting the findings of the Voluntary Arbitrator. Casio, et al. contends that to accord
them due process, GMC itself, as the employer, should have held proceedings distinct and
separate from those conducted by IBM-Local 31. GMC cannot justify its failure to conduct its
own inquiry using the argument that such proceedings would constitute an intrusion by the
company into the internal affairs of the union. The claim of GMC that it had acted in good faith
when it dismissed Casio, et al. from service in accordance with the closed shop provision of the
CBA is inconsistent with the failure of the company to accord the dismissed employees their
right to due process.

In general, in a petition for review on certiorari as a mode of appeal under Rule 45 of the Rules
of Court, the petitioner can raise only questions of law - the Supreme Court is not the proper
venue to consider a factual issue as it is not a trier of facts. A departure from the general rule
may be warranted where the findings of fact of the Court of Appeals are contrary to the findings
and conclusions of the trial court [or quasi-judicial agency, as the case may be], or when the
same is unsupported by the evidence on record.[20]

Whether Casio, et al. were illegally dismissed without any valid reason is a question of fact
better left to quasi-judicial agencies to determine. In this case, the Voluntary Arbitrator was
convinced that Casio, et al. were legally dismissed; while the Court of Appeals believed the
opposite, because even though the dismissal of Casio, et al. was made by GMC pursuant to a
valid closed shop provision in the CBA, the company still failed to observe the elementary rules
of due process. The Court is therefore constrained to take a second look at the evidence on record
considering that the factual findings of the Voluntary Arbitrator and the Court of Appeals are
contradictory.

There are two aspects which characterize the concept of due process under the Labor Code: one
is substantive whether the termination of employment was based on the provision of the Labor
Code or in accordance with the prevailing jurisprudence; the other is procedural the manner in
which the dismissal was effected.[21]

After a thorough review of the records, the Court agrees with the Court of Appeals. The
dismissal of Casio, et al. was indeed illegal, having been done without just cause and the
observance of procedural due process.

In Alabang Country Club, Inc. v. National Labor Relations Commission,[22] the Court laid down
the grounds for which an employee may be validly terminated, thus:

Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just
causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due to disease under
Art. 284, and (4) termination by the employee or resignation under Art. 285.

Another cause for termination is dismissal from employment due to the enforcement of the union
security clause in the CBA. x x x. (Emphasis ours.)

Union security is a generic term, which is applied to and comprehends closed shop, union
shop, maintenance of membership, or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a condition affecting
employment. There is union shop when all new regular employees are required to join the union
within a certain period as a condition for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership as a condition
for continued employment until they are promoted or transferred out of the bargaining unit or the
agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in

which, by agreement between the employer and his employees or their representatives, no person
may be employed in any or certain agreed departments of the enterprise unless he or she is,
becomes, and, for the duration of the agreement, remains a member in good standing of a union
entirely comprised of or of which the employees in interest are a part.[23]

Union security clauses are recognized and explicitly allowed under Article 248(e) of the Labor
Code, which provides that:

Art. 248. Unfair Labor Practices of Employers. x x x

xxxx

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor organization. Nothing
in this Code or in any other law shall stop the parties from requiring membership in a recognized
collective bargaining agent as a condition for employment, except those employees who are
already members of another union at the time of the signing of the collective bargaining
agreement. (Emphasis supplied.)

It is State policy to promote unionism to enable workers to negotiate with management on an

even playing field and with more persuasiveness than if they were to individually and separately
bargain with the employer. For this reason, the law has allowed stipulations for union shop and
closed shop as means of encouraging workers to join and support the union of their choice in the
protection of their rights and interest vis--vis the employer.[24]

Moreover, a stipulation in the CBA authorizing the dismissal of employees are of equal import as
the statutory provisions on dismissal under the Labor Code, since a CBA is the law between the
company and the union and compliance therewith is mandated by the express policy to give
protection to labor.[25]

In terminating the employment of an employee by enforcing the union security clause, the
employer needs only to determine and prove that: (1) the union security clause is applicable; (2)
the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the decision of the union to expel the employee from the
union. These requisites constitute just cause for terminating an employee based on the union
security provision of the CBA.[26]

There is no question that in the present case, the CBA between GMC and IBM-Local 31 included
a maintenance of membership and closed shop clause as can be gleaned from Sections 3 and 6 of
Article II. IBM-Local 31, by written request, can ask GMC to terminate the employment of the
employee/worker who failed to maintain its good standing as a union member.

It is similarly undisputed that IBM-Local 31, through Gabiana, the IBM Regional Director for
Visayas and Mindanao, twice requested GMC, in the letters dated March 10 and 19, 1992, to
terminate the employment of Casio,et al. as a necessary consequence of their expulsion from the
union.

It is the third requisite that there is sufficient evidence to support the decision of IBM-Local 31 to
expel Casio,et al. which appears to be lacking in this case.

The full text of the individual but identical termination letters,[27] served by GMC on Casio, et al.,
is very revealing. They read:
To: [Employees Name]
From: Legal Counsel

Subject: Dismissal Upon Union Request Thru

CBA Closed Shop Provision

The company is in receipt of two letters dated March 10, 1992 and March 19, 1992 respectively
from the union at the Mill in Lapulapu demanding the termination of your employment pursuant
to the closed shop provision of our existing Collective Bargaining Agreement. It appears from
the attached resolutions that you have been expelled from union membership and has thus ceased
to become a member in good standing. The resolutions are signed by the same officers who
executed and signed our existing CBA, copies of the letters and resolutions are enclosed hereto
for your reference.

The CBA in Article II provides the following:

Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers employed by the

Company with the exception of those who are specifically excluded by law and by the terms of
this Agreement must be members in good standing of the Union within thirty (30) days upon the
signing of this agreement and shall maintain such membership in good standing thereof as a
condition of their employment or continued employment.

Section 6. The Company, upon written request of the Union, shall terminate the services of any
employee/worker who fails to fulfill the conditions set forth in Sections 3 and 4 thereof, subject
however, to the provisions of the Labor Laws of the Philippines and their Implementing Rules
and Regulations. The Union shall absolve the Company from any and all liabilities, pecuniary or
otherwise, and responsibilities to any employee or worker who is dismissed or terminated in
pursuant thereof.

The provisions of the CBA are clear enough. The termination of employment on the basis of the
closed shop provision of the CBA is well recognized in law and in jurisprudence.

There is no valid ground to refuse to terminate. On the other hand as pointed out in the unions
strongly demanding letter dated March 19, 1992, the company could be sued for unfair labor
practice. While we would have wanted not to accommodate the unions request, we are left with
no other option. The terms of the CBA should be respected. To refuse to enforce the CBA would
result in the breakdown of industrial peace and the end of harmonious relations between the
union and management. The company would face the collective anger and enmity of its
employees who are union members.

In the light of the unions very insistent demand, verbal and in writing and to avoid the union
accusation of coddling you, and considering the explicitly mandatory language of the closed
shop provision of the CBA, the company is constrained to terminate your employment, to give
you ample time to look and find another employment, and/or exert efforts to become again a
member of good standing of your union, effective April 24, 1992.

In the meantime, to prevent serious danger to the life and property of the company and of its
employees, we are placing you under preventive suspension beginning today.

It is apparent from the aforequoted letter that GMC terminated the employment of Casio, et al.
relying upon the Resolution dated February 29, 1992 of Pino, et al. expelling Casio, et al. from
IBM-Local 31; Gabianas Letters dated March 10 and 19, 1992 demanding that GMC terminate
the employment of Casio, et al. on the basis of the closed shop clause in the CBA; and the threat
of being sued by IBM-Local 31 for unfair labor practice. The letter made no mention at all of the
evidence supporting the decision of IBM-Local 31 to expel Casio, et al. from the union. GMC
never alleged nor attempted to prove that the company actually looked into the evidence of IBMLocal 31 for expelling Casio, et al. and made a determination on the sufficiency thereof. Without
such a determination, GMC cannot claim that it had terminated the employment of Casio, et al.
for just cause.

The failure of GMC to make a determination of the sufficiency of evidence supporting the
decision of IBM-Local 31 to expel Casio, et al. is a direct consequence of the non-observance by
GMC of procedural due process in the dismissal of employees.

As a defense, GMC contends that as an employer, its only duty was to ascertain that IBM-Local
31 accorded Casio, et al. due process; and, it is the finding of the company that IBM-Local 31
did give Casio, et al. the opportunity to answer the charges against them, but they refused to avail
themselves of such opportunity.

This argument is without basis.

The Court has stressed time and again that allegations must be proven by sufficient evidence
because mere allegation is definitely not evidence.[28] Once more, in Great Southern Maritime
Services Corporation. v. Acua,[29]the Court declared:

Time and again we have ruled that in illegal dismissal cases like the present one, the onus of
proving that the employee was not dismissed or if dismissed, that the dismissal was not illegal,
rests on the employer and failure to discharge the same would mean that the dismissal is not
justified and therefore illegal. Thus, petitioners must not only rely on the weakness of
respondents evidence but must stand on the merits of their own defense. A party alleging a
critical fact must support his allegation with substantial evidence for any decision based on
unsubstantiated allegation cannot stand as it will offend due process. x x x. (Emphasis supplied.)

The records of this case are absolutely bereft of any supporting evidence to substantiate the bare
allegation of GMC that Casio, et al. were accorded due process by IBM-Local 31. There is
nothing on record that would indicate that IBM-Local 31 actually notified Casio, et al. of the
charges against them or that they were given the chance to explain their side. All that was stated
in the IBM-Local 31 Resolution dated February 29, 1992, expelling Casio, et al. from the union,
was that a copy of the said letter complaint [dated February 24, 1992] was dropped or left in
front of E. Casio.[30] It was not established that said letter-complaint charging Casio, et al. with

acts inimical to the interest of the union was properly served upon Casio, that Casio willfully
refused to accept the said letter-notice, or that Casio had the authority to receive the same letternotice on behalf of the other employees similarly accused. Its worthy to note that Casio, et al.
were expelled only five days after the issuance of the letter-complaint against them. The Court
cannot find proof on record when the three-day period, within which Casio, et al. was supposed
to file their answer or counter-affidavits, started to run and had expired. The Court is likewise
unconvinced that the said three-day period was sufficient for Casio, et al. to prepare their
defenses and evidence to refute the serious charges against them.

Contrary to the position of GMC, the acts of Pino, et al. as officers and board members of IBMLocal 31, in expelling Casio, et al. from the union, do not enjoy the presumption of regularity in
the performance of official duties, because the presumption applies only to public officers from
the highest to the lowest in the service of the Government, departments, bureaus, offices, and/or
its political subdivisions.[31]

More importantly, in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc.,[32] the
Court issued the following reminder to employers:

The power to dismiss is a normal prerogative of the employer. However, this is not without
limitations. The employer is bound to exercise caution in terminating the services of his
employees especially so when it is made upon the request of a labor union pursuant to the
Collective Bargaining Agreement. x x x. Dismissals must not be arbitrary and capricious. Due
process must be observed in dismissing an employee because it affects not only his position but
also his means of livelihood. Employers should therefore respect and protect the rights of their
employees, which include the right to labor. x x x.

The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v.

Ramos[33] that:

While respondent company may validly dismiss the employees expelled by the union for
disloyalty under the union security clause of the collective bargaining agreement upon the
recommendation by the union, this dismissal should not be done hastily and summarily thereby
eroding the employees right to due process, self-organization and security of tenure. The
enforcement of union security clauses is authorized by law provided such enforcement is not
characterized by arbitrariness, and always with due process. Even on the assumption that the
federation had valid grounds to expel the union officers, due process requires that these union
officers be accorded a separate hearing by respondent company. (Emphases supplied.)

The twin requirements of notice and hearing constitute the essential elements of procedural due
process. The law requires the employer to furnish the employee sought to be dismissed with two
written notices before termination of employment can be legally effected: (1) a written notice
apprising the employee of the particular acts or omissions for which his dismissal is sought in
order to afford him an opportunity to be heard and to defend himself with the assistance of
counsel, if he desires, and (2) a subsequent notice informing the employee of the employers
decision to dismiss him. This procedure is mandatory and its absence taints the dismissal with
illegality.[34]

Irrefragably, GMC cannot dispense with the requirements of notice and hearing before
dismissing Casio, et al. even when said dismissal is pursuant to the closed shop provision in the
CBA. The rights of an employee to be informed of the charges against him and to reasonable
opportunity to present his side in a controversy with either the company or his own union are not
wiped away by a union security clause or a union shop clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a company which disregards
his rights but also from his own union the leadership of which could yield to the temptation of
swift and arbitrary expulsion from membership and hence dismissal from his job.[35]

In the case at bar, Casio, et al. did not receive any other communication from GMC, except the
written notice of termination dated March 24, 1992. GMC, by its own admission, did not conduct
a separate and independent investigation to determine the sufficiency of the evidence supporting
the expulsion of Casio, et al. by IBP-Local 31. It straight away acceded to the demand of IBPLocal 31 to dismiss Casio, et al.

The very same circumstances took place in Liberty Cotton Mills, wherein the Court held that the
employer-company acted in bad faith in dismissing its workers without giving said workers an
opportunity to present their side in the controversy with their union, thus:

While respondent company, under the Maintenance of Membership provision of the Collective
Bargaining Agreement, is bound to dismiss any employee expelled by PAFLU for disloyalty,
upon its written request, this undertaking should not be done hastily and summarily. The
company acted in bad faith in dismissing petitioner workers without giving them the benefit of a
hearing. It did not even bother to inquire from the workers concerned and from PAFLU itself
about the cause of the expulsion of the petitioner workers. Instead, the company immediately
dismissed the workers on May 30, 1964 after its receipt of the request of PAFLU on May 29,
1964 in a span of only one day stating that it had no alternative but to comply with its obligation
under the Security Agreement in the Collective Bargaining Agreement, thereby disregarding the
right of the workers to due process, self-organization and security of tenure.[36](Emphasis ours.)

In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only did GMC fail
to make a determination of the sufficiency of evidence to support the decision of IBM-Local 31
to expel Casio, et al., but also to accord the expelled union members procedural due process, i.e.,
notice and hearing, prior to the termination of their employment

Consequently, GMC cannot insist that it has no liability for the payment of backwages and
damages to Casio,et al., and that the liability for such payment should fall only upon Pino, et al.,
as the IBP-Local 31 officers and board members who expelled Casio, et al. GMC completely
missed the point that the expulsion of Casio, et al. by IBP-Local 31 and the termination of
employment of the same employees by GMC, although related, are two separate and distinct
acts. Despite a closed shop provision in the CBA and the expulsion of Casio, et al. from IBPLocal 31, law and jurisprudence imposes upon GMC the obligation to accord Casio, et al.
substantive and procedural due process before complying with the demand of IBP-Local 31 to
dismiss the expelled union members from service. The failure of GMC to carry out this
obligation makes it liable for illegal dismissal of Casio, et al.

In Malayang Samahan ng mga Manggagawa sa M. Greenfield,[37] the Court held that

notwithstanding the fact that the dismissal was at the instance of the federation and that the
federation undertook to hold the company free from any liability resulting from the dismissal of
several employees, the company may still be held liable if it was remiss in its duty to accord the
would-be dismissed employees their right to be heard on the matter.

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and
reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In
awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount
to be awarded shall be equivalent to one month salary for every year of service. Under Republic
Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time their actual
compensation was withheld from them up to the time of their actual reinstatement but if
reinstatement is no longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. Thus, Casio, et al. are entitled to backwages
and separation pay considering that reinstatement is no longer possible because the positions
they previously occupied are no longer existing, as declared by GMC.[38]
Casio, et al., having been compelled to litigate in order to seek redress for their illegal dismissal,
are entitled to the award of attorneys fees equivalent to 10% of the total monetary award.[39]

WHEREFORE, the instant petition is hereby DENIED. The assailed decision of the Court of
Appeals dated March 30, 2001 in CA-G.R. SP No. 40280 is AFFIRMED.

SO ORDERED.