FIRST DIVISION warned to improve.

Petitioners aver that Galays attitude resulted to the decline

in the companys efficiency and productivity. Petitioners presented a
HEAVYLIFT MANILA, INC. and/or G.R. No. 154410 letter[4] dated February 23, 1999 and a notice of termination [5] dated August 16,
JOSEPHINE EVANGELIO, 1999.
Administrative & Finance Present: The Labor Arbiter found that Galay was illegally terminated for petitioners
Manager, AND CAPT. Davide, Jr., C.J., failure to prove that she violated any company regulation, and for failure to give
ROLANDO*TOLENTINO, (Chairman), the proper notice as required by law.[6]
Petitioners, Quisumbing, Petitioner appealed to the NLRC. The latter, however, denied the appeal for lack
Ynares-Santiago, of merit and affirmed the decision of the Labor Arbiter.[7] A motion for
Carpio, and reconsideration was subsequently filed but which was likewise denied.[8]
Azcuna, JJ. Petitioner elevated the case by certiorari to the Court of Appeals. But, petitioners
- versus - failed to: state the full names and actual addresses of all the petitioners; attach
the copies of all pleadings and supporting documents; properly verify the
petition; and certify against forum-shopping. For these procedural lapses, the
petition was dismissed.[9] Petitioners moved for reconsideration and attached a
THE COURT OF APPEALS, board resolution authorizing petitioner Tolentino to legally represent the
MA. DOTTIE GALAY and the Promulgated: company. Nonetheless, the Court of Appeals denied the motion for lack of
NATIONAL LABOR RELATIONS justifying circumstances, and because the attached board resolution was issued
COMMISSION, October 20, 2005 after the petition was filed.[10]
Respondents. Hence, the instant petition for certiorari alleging that
I. The Honorable Court of Appeals grossly erred in relying too much on form
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x rather than on the merits of the petition thereby denying petitioners of right to
DECISION due process.
QUISUMBING, J.: II. The NLRC acted in a whimsical, arbitrary and despotic manner with grave
Before us is a petition for certiorari assailing the Resolution[1] dated December abuse of discretion when it ruled that:
18, 2001 of the Court of Appeals in CA-G.R. SP No. 68072 denying the petition for a. Petitioners failed to submit substantial evidence that will prove petitioners
failure to comply with procedural rules, as well as the Decision[2] dated August had withdrawn their trust and confidence upon the respondent
30, 2001 and the Resolution[3] dated September 28, 2001 of the National Labor notwithstanding the admitted strained and irreconcilable relationship between
Relations Commission (NLRC) which affirmed the Labor Arbiters decision respondent Galay and petitioners.
finding petitioners guilty of illegal dismissal. b. The cause for terminating the employment of respondent by the petitioner
The factual antecedents of the case are as follows: appears foreign to the causes of terminating an employment either under loss
On February 23, 1999, petitioner Heavylift, a maritime agency, thru a letter of trust and confidence or under analogous causes.
signed by petitioner Josephine Evangelio, Administrative and Finance Manager c. The NLRC acted in a despotic manner when it
of Heavylift, informed respondent Ma. Dottie Galay, Heavylift Insurance and ruled that complainant is entitled
Provisions Assistant, of her low performance rating and the negative feedback to service incentive pay and
from her team members regarding her work attitude. The letter also notified her 13th month pay in the absence of
that she was being relieved of her other functions except the development of the any claim, prayer or evidence.
new Access program. III. It is a grave abuse of discretion on the part of the NLRC
Subsequently, on August 16, 1999, Galay was terminated for alleged loss of when it made it to appear that the right of worker
confidence. Thereafter, she filed with the Labor Arbiter a complaint for illegal for security of tenure is absolute.[11]
dismissal and nonpayment of service incentive leave and 13th month pay against Simply, the issues are (1) Were the petitioners denied due process with the Court
petitioners. of Appeals dismissal of the petition on technical grounds? (2) Is attitude problem
Before the labor arbiter, petitioners alleged that Galay had an attitude problem a valid ground for the termination of an employee? (3) If in the affirmative, was
and did not get along with her co-employees for which she was constantly this sufficiently proved? (4) Were the procedural requirements for an effectual

1
dismissal present? and (5) Were the awards of service incentive pay and
13th month pay proper?
Anent the first issue, petitioners posit that instead of denying outright their
petition on technicalities, the Court of Appeals should have given it due course.
Petitioners explain that only the name and address of petitioner Heavylift were
stated in the petition because it was the real party in interest, while the rest were
mere nominal parties. They also reasoned that it was not necessary to attach the
pleadings submitted to the Labor Arbiter as the arguments asserted therein were
sufficiently tackled and reiterated in the petition. Lastly, petitioners submit that
petitioner Tolentino was authorized by the Board of Directors as the legal
representative of the agency and its officers.
Respondent counters that strict adherence to the rules of procedure is required
to promote efficiency and orderliness. It adds that petitioners did not present
any persuasive reason for a liberal application of the Rules.
The Rules of Court require that the petition for certiorari shall be
verified,[12] contain the full names and actual addresses of all the petitioners and
respondents, accompanied by a certified true copy of the subject decision, order
or resolution and other documents relevant or pertinent thereto, and be
submitted with the certification of non-forum shopping signed by the
principal.[13]
We likewise have enunciated that the Rules of Court are designed for the proper
and prompt disposition of cases. In not a few instances, we relaxed the rigid
application of the rules to afford the parties opportunity to fully ventilate their
cases on the merits. In that way, the ends of justice would be better served.[14]
Additionally, verification of a pleading is a formal, not a jurisdictional requisite. It
is intended to secure an assurance that what are alleged in the pleading are true
and correct and not the product of the imagination or a matter of speculation,
and that the pleading is filed in good faith.[15]
The rule on certification against forum-shopping requires strict compliance. The
requirement underscores its mandatory nature such that it cannot be altogether
dispensed with. However, under justifiable circumstances, the Court does allow
substantial compliance.[16]
Further, we accept petitioners inadvertence to state the names and addresses of
the other petitioners as a minor defect. We also accept their explanation on their
failure to incorporate the Labor Arbiters decision.
Thus, mindful that the greater interest of justice would be served if the petition
is adjudicated on its merits,[17] we will proceed with the remaining issues, and
discuss them jointly.
Was there just cause in the termination of Galay?
Petitioners assert that it terminated Galay because she had an attitude problem.
This situation, according to petitioners, is analogous to loss of trust and
confidence. They aver that respondent did not deny the strained and
irreconcilable relationship between them, in effect, admitting the same. Further,
petitioners aver that having lost their trust and confidence on Galay, they could
2
no longer make her in-charge of the confidential Crew Information System which
accounts for the personnel, management and professional records of all the
employees of and seamen connected with the company. Lastly, petitioners
maintain that because of Galays attitude, the companys work atmosphere had
become very strained and had gravely affected the workers and their outputs.
Galays dismissal, according to petitioners, was merely an act of self-preservation.
Petitioners explained that they sent Galay a letter of notice dated February 23,
1999, apprising her of her low performance and her attitude problem, before the
letter of her termination dated August 16, 1999. Petitioners claim that the
company waited for six months, to give Galay a chance to undergo counseling
before dismissing her from the service.
Galay counters that petitioners failed to show a just and valid cause for her
termination, and that letters of notice and termination did not comply with the
twin requirement of notice and hearing. Galay argues that the letter dated
February 23, 1999 neither informed her of her infraction of any company rule
that warrants disciplinary action; nor required her to submit an explanation.
An employee who cannot get along with his co-employees is detrimental to the
company for he can upset and strain the working environment. Without the
necessary teamwork and synergy, the organization cannot function well. Thus,
management has the prerogative to take the necessary action to correct the
situation and protect its organization. When personal differences between
employees and management affect the work environment, the peace of the
company is affected. Thus, an employees attitude problem is a valid ground for
his termination.[18] It is a situation analogous to loss of trust and confidence that
must be duly proved by the employer. Similarly, compliance with the twin
requirement of notice and hearing must also be proven by the employer.
However, we are not convinced that in the present case, petitioners have shown
sufficiently clear and convincing evidence to justify Galays termination. Though
they are correct in saying that in this case, proof beyond reasonable doubt is not
required, still there must be substantial evidence to support the termination on
the ground of attitude.[19] The mere mention of negative feedback from her team
members, and the letter dated February 23, 1999, are not proof of her attitude
problem. Likewise, her failure to refute petitioners allegations of her negative
attitude does not amount to admission. Technical rules of procedure are not
binding in labor cases.[20] Besides, the burden of proof is not on the employee but
on the employer who must affirmatively show adequate evidence that the
dismissal was for justifiable cause.[21]
In our view, neither does the February 23, 1999 letter constitute the required
notice. The letter did not inform her of the specific acts complained of and their
corresponding penalty. The law requires the employer to give the worker to be
dismissed two written notices before terminating his employment, namely, (1) a
notice which apprises the employee of the particular acts or omissions for which
his dismissal is sought; and (2) the subsequent notice which informs the
employee of the employers decision to dismiss him.[22] Additionally, the letter
never gave respondent Galay an opportunity to explain herself, hence denying
her due process.
In sum, we find that Galay was illegally dismissed, because petitioners failed to
show adequately that a valid cause for terminating respondent exists, and
because petitioners failed to comply with the twin requirement of notice and
hearing.
Apropos the award of service incentive pay and 13th month pay, we find that they
were properly prayed for by Galay. These were subsumed in the complaint and
under the position papers general prayer of such other relief as are just and
equitable under the law. Petitioners failed to present evidence that these benefits
were already paid. Moreover, this issue involves a question of fact which is not
proper in a petition for certiorari and the determinations of the Labor Arbiter
and the NLRC are afforded great weight and respect by the courts on these
matters, when these findings are supported by substantial evidence, and devoid
of any unfairness or arbitrariness. [23] Hence, their findings must be sustained.
WHEREFORE, the Decision dated September 16, 2000 of the Labor Arbiter in
NLRC NCR Case No. 00-08-08461-99 as well as Decision dated August 30, 2001
and the Resolution dated September 28, 2001 of the National Labor Relations
Commission in NLRC NCR CA No. 026466-2000 are hereby AFFIRMED.
Costs against petitioners.
SO ORDERED.
3
G.R. No. 100898
ALEX FERRER v. NLRC
MELO, J.:
The petition for certiorari before us seeks to annul and set aside: (a) the decision
dated June 20, 1991 of the Second Division of the National Labor Relations
Commission (NLRC) (Penned by Commissioner Rustico L. Diokno and concurred
in by Presiding Commissioner Edna Bonto-Perez and Commissioner Domingo H.
Zapanta) which affirmed in toto the decision of April 5, 1990 of Labor Arbiter
Eduardo J. Carpio dismissing the complaint for illegal dismissal and unfair labor
practice on the ground that both the company, and the union merely complied
with the collective bargaining agreement provision sanctioning the termination
of any employee who fails to retain membership in good standing with the union;
and (b) the NLRC resolution denying the motion for the reconsideration of said
decision (NLRC NCR Case No. 00-10-04855-89).
Petitioners were regular and permanent employees of the Occidental Foundry
Corporation (OFC) in Malanday, Valenzuela, Metro Manila which was under the
management of Hui Kam Chang. As piece workers, petitioners' earnings ranged
from P110 to P140 a day. They had been in the employ of OFC for about ten years
at the time of their dismissal in 1989 (p. 38, Rollo).
On January 5, 1989, the Samahang Manggagawa ng Occidental Foundry
Corporation-FFW (SAMAHAN) and the OFC entered into a collective bargaining
agreement (CBA) which would be effective for the three-year period between
October 1, 1988 and September 30, 1991 (Memorandum for OFC and Hui Kam
Chang, p. 6, Rollo; p. 551). Article II thereof provides for a union security clause
thus:
Section 1 - The company agrees that all permanent and regular factory workers
in the company who are members in good standing of the union or who
thereafter may become members, shall as a condition of continued employment,
maintain their membership in the union in good standing for the duration of the
agreement.
xxx x xx x xx
Section 3 - The parties agree that failure to retain membership in good standing
with the UNION shall be ground for the operation of paragraph 1 hereof and the
dismissal by the company of the aforesaid employee upon written request by the
union. The aforesaid request shall be accompanied by a verified carbon original
of the Board of (sic) Resolution by the UNION signed by at least a majority of its
officers/directors. (p. 562, Rollo.)
On May 6, 1989, petitioner Alex Ferrer and the SAMAHAN, filed in the
Department of Labor and Employment (DOLE), a complaint for the expulsion
from SAMAHAN of the following officers: Genaro Capitle (president), Jesus
Tumagan (vice-president), Godofredo Pacheco (auditor), and Marcelino Pacheco
(board member) (Case No. NCR-00-M-89-11-01). The complaint was founded on
said officers' alleged inattentiveness to the economic demands of the workers.
However, on September 4, 1989, petitioners Diaz and Alex Ferrer withdrew the
petition (p. 590, Rollo).
On September 10, 1989, petitioners conducted a special election of officers of the
SAMAHAN (pp. 205 & 583, Rollo). Said election was, however, later questioned
by the FFW. Nonetheless, the elected set of officers tried to dissuade the OFC
from remitting union dues to the officers led by Capitle who were allied with the
FFW. Later, however, Romulo Erlano, one of the officers elected at the special
election, manifested to the DOLE that he was no longer objecting to the
remittance of union dues to the officers led by Capitle. Petitioners' move to stage
a strike based on economic demands was also later disowned by members of the
SAMAHAN.
The intraunion squabble came to a head when, on September 11, 1989, a
resolution expelling petitioners from the SAMAHAN was issued by the aforesaid
union officials headed by Capitle, together with board members George Ignas,
Pio Domingo, and Jaime Baynado (pp. 286 & 599, Rollo). The following day,
Capitle sent OFC the following letter:
12 September 1989
Mr. Hui Kam Chang
General Manager
Malanday, Valenzuela
Metro Manila
Dear Mr. Chang:
In compliance with Article II, Sec. 3 of the Union Security Clause as enunciated in
our Collective Bargaining Agreement, I would like you to dismiss the following
employees on the ground of failure to retain membership in good standing:
1. Alex Ferrer
2. Gil de Guzman
3. Henry Diaz
4. Domingo Bancolita
5. Rafael Ferrer, Jr.
Attached herewith is the verified carbon original of the Board Resolution of the
union signed by the majority of its officers/directors.
Thank you very much.
Very truly yours,
(Sgd.)
GENARO CAPITLE
President
(p. 66, Rollo.)
Although petitioners received this letter weeks after its date, it appears that on
that same date, they had learned about their dismissal from employment as
shown by the letter also dated September 13, 1989 which they sent the
Federation of Democratic Labor Unions (FEDLU). They volunteered therein to be
4
admitted as members of the FEDLU and requested that they be represented
("katawanin") by said federation before the DOLE in the complaint which they
intended to file against the union (SAMAHAN), the FFW and the company for
illegal dismissal, reinstatement, and other benefits in accordance with law (p. 74,
Rollo).
Thereafter, on various dates, petitioners sent individual letters to Hui Kam Chang
professing innocence of the charges levelled against them by the SAMAHAN and
the FFW and pleading that they be reinstated (pp. 69-73, Rollo). Their letters
appear to have elicited no response.
Thus, contending that their dismissal was without cause and in utter disregard
of their right to due process of law, petitioners, through the FEDLU, filed a
complaint for illegal dismissal and unfair labor practice before the NLRC against
Hui Kam Chang, OFC, Macedonio S. Velasco (as representative of the FFW), the
FFW, and the SAMAHAN officers headed by Capitle (p. 75, Rollo).
In due course, after the case was ventilated through position papers and other
documents, the labor arbiter rendered a decision dismissing petitioners'
complaint (pp. 79-89, Rollo). He found that in dismissing petitioners, OFC was
"merely complying with the mandatory provisions of the CBA - the law between
it and the union." He added:
To register compliance with the said covenant, all that is necessary is a written
request of the union requesting dismissal of the employees who have failed to
retain membership in good standing with the union. The matter or question,
therefore, of determining why and how did complainants fail to retain
membership in good standing is not for the company to inquire via formal
investigation. By having the request of the union, a legal presumption that the
request was born out of a formal inquiry by the union that subject employees
failed to retain membership in good standing, failed to exist. This means
generally that where a valid closed shop or similar agreement is in force with
respect to a particular bargaining unit as in the case a quo, the employer shall
refuse to employ any person unless he is a member of the majority union and the
employer shall dismiss employees who fail to retain their membership in the
majority union. This must be deemed a just cause recognized by law and
jurisprudence. The effect is discrimination to encourage membership in other
unions. (pp. 86-87, Rollo.)
Hence, the labor arbiter concluded, the dismissal of petitioners was an exercise
of legitimate management prerogative which cannot be considered as an unfair
labor practice. On whether the SAMAHAN and the FFW could be held liable for
illegal dismissal and unfair labor practice, the arbiter opined that since there was
no employer-employee relationship between petitioners and respondent unions,
the complaint against the latter has no factual and legal bases, because
petitioners "should not have confused expulsion from membership in the union
as one and the same incident to their subsequent employment termination."
Consequently, petitioners appealed to the NLRC on the grounds that there was
prima facie evidence of abuse of discretion on the part of the labor arbiter and
that he committed serious errors in his findings of facts.
On June 20, 1991, the NLRC rendered the herein questioned decision
affirming in toto the decision of the labor arbiter. Petitioners' motion for the
reconsideration of the NLRC decision having been denied, they resorted to the
instant petition for certiorari which presents the issue of whether or not
respondent Commission gravely abused its discretion in affirming the decision
of the labor arbiter which is allegedly in defiance of the elementary principles of
procedural due process as the petitioners were summarily dismissed from
employment without an investigation having been conducted by the OFC on the
veracity of the allegation of the SAMAHAN-FFW that they violated the CBA.
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. Said policy should
be given paramount consideration unless otherwise provided for by law
(Meycauayan College vs. Drilon, 185 SCRA 50 [1990]). A CBA provision for a
closed shop is a valid form of union security and it is not a restriction on the right
or freedom of association guaranteed by the Constitution (Lirag Textile Mills, Inc.
vs. Blanco, 109 SCRA 87 [1981]). However, in the implementation of the
provisions of the CBA, both parties thereto should see to it that no right is
violated or impaired. In the case at bar, while it is true that the CBA between OFC
and the SAMAHAN provided for the dismissal of employees who have not
maintained their membership in the union, the manner in which the dismissal
was enforced left much to be desired in terms of respect for the right of
petitioners to procedural due process.
In the first place, the union has a specific provision for the permanent or
temporary "expulsion" of its erring members in its constitution and by-laws
("saligang batas at alituntunin"). Under the heading membership and removal
("pag-aanib at pagtitiwalag"), it states:
Sec. 4. Ang sinumang kasapi ay maaring itwalag (sic)
ng Samahan pangsamantala o tuluyan sa pamamgitan (sic) ng tatlo't ikaapat
(3/4) na bahagi ng dami ng bilang ng Pamunuang Tagapagpaganap. Pagkaraan
lamang sa pandinig sa kanyang kaso. Batay sa sumusunod:
(a) Sinumang gumawa ng mga bagay bagay na labag at lihis sa patakaran
ng Samahan.
(b) Sinumang gumawa ng mga bagay na maaaring ikabuwag ng Samahan.
(c) Hindi paghuhulog ng butaw sa loob ng tatlong buwan na walang sakit o
Doctor's Certificate.
(d) Hindi pagbibigay ng abuloy na itinatadhana ng Samahan.
(e) Sinumang kasapi na natanggal sa kapisanan at gustong sumapi uli ay
magpapanibago ng bilang, mula sa taon ng kanyang pagsapi uli sa Samahan.
(Underscoring supplied; Ibid., p. 177).
No hearing ("pandinig") was ever conducted by the SAMAHAN to look into
petitioners' explanation of their moves to oust the union leadership under
5
Capitle, or their subsequent affiliation with FEDLU. While it is true that
petitioners' actions might have precipitated divisiveness and, later, showed
disloyalty to the union, still, the SAMAHAN should have observed its own
constitution and by-laws by giving petitioners an opportunity to air their side
and explain their moves. If, after an investigation the petitioners were found to
have violated union rules, then and only then should they be subjected to proper
disciplinary measures.
Here lies the distinction between the facts of this case and that of Cariño vs.
NLRC (185 SCRA 177 [1990]) upon which the Solicitor General heavily relies in
supporting the stand of petitioners. In Cariño, the erring union official was given
the chance to answer the complaints against him before an investigating
committee created for that purpose. On the other hand, herein petitioners were
not given even one opportunity to explain their side in the controversy. This
procedural lapse should not have been overlooked considering the union
security provision of the CBA.
What aggravated the situation in this case is the fact that OFC itself took for
granted that the SAMAHAN had actually conducted an inquiry and considered
the CBA provision for the closed shop as self-operating that, upon receipt of a
notice that some members of the SAMAHAN had failed to maintain their
membership in good standing in accordance with the CBA, it summarily
dismissed petitioners. To make matters worse, the labor arbiter and the NLRC
shared the same view in holding that "(t)he matter or question, therefore, of
determining why and how did complainants fail to retain membership in good
standing is not for the company to inquire via formal investigation" (pp. 87 &
135, Rollo). In this regard, the following words of my learned brother, Mr. Justice
Feliciano, in the Resolution in Cariño are apt:
4. Turning now to the involvement of the Company in the dismissal of
petitioner Cariño, we note that the Company upon being formally advised in
writing of the expulsion of petitioner Cariño from the Union, in turn simply
issued a termination letter to Cariño, the termination being made effective the
very next day. We believe that the Company should have given petitioner Cariño
an opportunity to explain his side of the controversy with the Union.
Notwithstanding the Union's Security Clause in the CBA, the Company should
have reasonably satisfied itself by its own inquiry that the Union had not been
merely acting arbitrarily and capriciously in impeaching and expelling petitioner
Cariño…
x x x
x x x
x x x
5. We conclude that the Company had failed to accord to petitioner Cariño the
latter's right to procedural due process. 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 CBA. 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. (pp.
186 & 189.)
The need for a company investigation is founded on the consistent ruling of this
Court that the twin requirements of notice and hearing which are essential
elements of due process must be met in employment-termination cases. The
employee concerned must be notified of the employer's intent to dismiss him and
of the reason or reasons for the proposed dismissal. The hearing affords the
employee an opportunity to answer the charge or charges against him and to
defend himself therefrom before dismissal is effected (Kwikway Engineering
Works vs. NLRC, 195 SCRA 526 [1991]; Salaw vs. NLRC, 202 SCRA 7 [1991]).
Observance to the letter of company rules on investigation of an employee about
to be dismissed is not mandatory. It is enough that there is due notice and
hearing before a decision to dismiss is made (Mendoza vs. NLRC, 195 SCRA 606
[1991]). But even if no hearing is conducted, the requirement of due process
would have been met where a chance to explain a party's side of the controversy
had been accorded him (Philippine Airlines, Inc. vs. NLRC, 198 SCRA 748 [1991]).
If an employee may be considered illegally dismissed because he was not
accorded fair investigation (Hellenic Philippine Shipping vs. Siete, 195 SCRA 179
[1991]), the more reason there is to strike down as an inexcusable and disdainful
rejection of due process a situation where there is no investigation at all
(See: Colegio del Sto. Niño vs. NLRC, 197 SCRA 611 [1991]; Artex Development
Co., Inc. vs. NLRC, 187 SCRA 611 [1990]). The need for the observance of an
employee's right to procedural due process in termination cases cannot be
overemphasized. After all, one's employment, profession, trade, or calling is a
"property right" and the wrongful interference therewith gives rise to an
actionable wrong (Callanta vs. Carnation Philippines, Inc., 145 SCRA 268 [1986]).
Verily, a man's right to his labor is property within the meaning of constitutional
guarantees which he cannot be deprived of without due process (Batangas
Laguna Tayabas Bus Co. vs. Court of Appeals, 71 SCRA 470 [1976]).
While the law recognizes the right of an employer to dismiss employees in
warranted cases, it frowns upon arbitrariness as when employees are not
accorded due process (Tan, Jr. vs. NLRC, 183 SCRA 651 [1990]). Thus, the
prerogatives of the OFC to dismiss petitioners should not have been whimsically
done for it unduly exposed itself to a charge of unfair labor practice for
dismissing petitioners in line with the closed shop provision of the CBA, without
a proper hearing (Tropical Hut Employees' Union-CGW vs. Tropical Hut Food
Market, Inc., 181 SCRA 173 [1990]; citing Binalbagan-Isabela Sugar Co., Inc.
(BISCOM) vs. Philippine Association of Free Labor Unions (PAFLU), 8 SCRA 700
[1983]). Neither can the manner of dismissal be considered within the ambit of
managerial prerogatives, for while termination of employment is traditionally
considered a management prerogative, it is not an absolute prerogative subject
6
as it is to limitations founded in law, the CBA, or general principles of fair play
and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).
Under Rule XIV, Sections 2, 5, and 6 of the rules implementing Batas Pambansa
Blg. 130, the OFC and the SAMAHAN should solidarily indemnify petitioners for
the violation of their right to procedural due process (Great Pacific Life
Assurance Corporation vs. NLRC, 187 SCRA 694 [1990], citing Wenphil vs. NLRC,
170 SCRA 69 [1989], Cariño vs. NLRC, supra). However, such penalty may be
imposed only where the termination of employment is justified and not when the
dismissal is illegal as in this case where the damages are in the form of back
wages.
As earlier discussed, petitioners' alleged act of sowing disunity among the
members of the SAMAHAN could have been ventilated and threshed out through
a grievance procedure within the union itself. But resort to such procedure was
not pursued. What actually happened in this case was that some members,
including petitioners, tried to unseat the SAMAHAN leadership headed by Capitle
due to the latter's alleged inattention to petitioners' demands for the
implementation of the P25-wage increase which took effect on July 1, 1989. The
intraunion controversy was such that petitioners even requested the FFW to
intervene to facilitate the enforcement of the said wage increase (Petition, p. 54;
p. 55, Rollo).
Petitioners sought the help of the FEDLU only after they had learned of the
termination of their employment upon the recommendation of Capitle. Their
alleged application with federations other than the FFW (Labor Arbiter's
Decision, pp. 4-5; pp. 82-83, Rollo) can hardly be considered as disloyalty to the
SAMAHAN, nor may the filing of such applications denote that petitioners failed
to maintain in good standing their membership in the SAMAHAN. The SAMAHAN
is a different entity from FFW, the federation to which it belonged. Neither may
it be inferred that petitioners sought disaffiliation from the FFW for petitioners
had not formed a union distinct from that of the SAMAHAN. Parenthetically, the
right of a local union to disaffiliate from a federation in the absence of any
provision in the federation's constitution preventing disaffiliation of a local
union is legal (People's Industrial and Commercial Employees and Workers Org.
(FFW) vs. People's Industrial and Commercial Corp., 112 SCRA 440 [1982]). Such
right is consistent with the constitutional guarantee of freedom of association
(Tropical Hut Employees' Union-CGW vs. Tropical Hut Food Market, Inc., 181
SCRA 173 [1990]).
Hence, while petitioners' act of holding a special ejection to oust Capitle, et al.
may be considered as an act of sowing disunity among the SAMAHAN members,
and, perhaps, disloyalty to the union officials, which could have been dealt with
by the union as a disciplinary matter, it certainly cannot be considered as
constituting disloyalty to the union. Faced with a SAMAHAN leadership which
they had tried to remove as officials, it was but a natural act of self-preservation
that petitioners fled to the arms of the FEDLU after the union and the OFC had
tried to terminate their employment. Petitioners should not be made
accountable for such an act.
With the passage of Republic Act No. 6715 which took effect on March 21, 1989,
Article 279 of the Labor Code was amended to read as follows:
Security of Tenure. -- In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement.
and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of
the National Labor Relations Commission, it would seem that the Mercury Drug
Rule (Mercury Drug Co., Inc. vs. Court of Industrial Relations, 56 SCRA 694
[1974]) which limited the award of back wages of illegally dismissed workers to
three (3) years "without deduction or qualification" to obviate the need for
further proceedings in the course of execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages, allowances, and
other benefits for the entire period he was out of work subject to the rule
enunciated before the Mercury Drug Rule, which is that the employer may,
however, deduct any amount which the employee may have earned during the
period of his illegal termination (East Asiatic Company, Ltd. vs. Court of
Industrial Relations, 40 SCRA 521 [1971]). Computation of full back wages and
presentation of proof as to income earned elsewhere by the illegally dismissed
employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant
with Section 3, Rule 8 of the 1990 new Rules of Procedure of the National Labor
Relations Commission.
Inasmuch as we have ascertained in the text of this discourse that the OFC
whimsically dismissed petitioners without proper hearing and has thus opened
OFC to a charge of unfair labor practice, it ineluctably follows that petitioners can
receive their back wages computed from the moment their compensation was
withheld after their dismissal in 1989 up to the date of actual reinstatement. In
such a scenario, the award of back wages can extend beyond the 3-year period
fixed by the Mercury Drug Rule depending, of course, on when the employer will
reinstate the employees.
It may appear that Article 279 of the Labor Code, as amended by Republic Act No.
6715, has made the employer bear a heavier burden than that pronounced in the
Mercury Drug Rule, but perhaps Republic Act No. 6715 was enacted precisely for
the employer to realize that the employee must be immediately restored to his
former position, and to impress the idea that immediate reinstatement is
tantamount to a cost-saving measure in terms of overhead expense plus
incremental productivity to the company which lies in the hands of the employer.
7
WHEREFORE, the decision appealed from is hereby SET ASIDE and private
respondents are hereby ordered to reinstate petitioners to their former or
equivalent positions without loss of seniority rights and with full back wages,
inclusive of allowances and other benefits or their monetary equivalent,
pursuant to Article 279 of the Labor Code, as amended by Republic Act. No. 6715.
SO ORDERED.
GR No. 165407
HERMINIGILDO INGUILLO v. FIRST PHILIPPINE SCALES
606 Phil. 464
PERALTA, J.:
Assailed in this petition for review under Rule 45 of the Rules of Court are the
Court of Appeals (1) Decision[1] dated March 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 until
September 12, 1996. On September 19, 1991, the members of FPSILU ratified the
CBA in a document entitled RATIPIKASYON 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, the Nagkakaisang 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 of
P90,000.00 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 NLM-KATIPUNAN.
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
8
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 are also directed to pay complainant Inguillo the amount representing his
dismissal as above discussed. However, considering the length of withheld salary for the period March 15, 1998 to April 16, 1998. The sum
services rendered by complainants Herminigildo Inguillo and Zenaida corresponding to ten percent (10%) of the total judgment award by way of
Bergante as employees of respondent FPSI, plus the fact that the other attorney's fees is likewise ordered. All other claims are ordered dismissed for
complainants in the above-entitled cases were previously granted lack of merit.
financial assistance/separation pay through amicable settlement, the
afore-named respondents are hereby directed to pay complainants SO ORDERED.[27]
Herminigildo Inguillo and Zenaida Bergante separation pay and In reversing the Labor Arbiter, the NLRC[28] ratiocinated that respondents failed
accrued legal holiday pay, as earlier computed, to wit: 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
Herminigildo Inguillo of their dismissal, the justification given by FPSI that it was merely constrained
Separation pay................ P22,490.00 to dismiss the employees due to persistent demand from the Union clearly
Legal Holiday Pay........... 839.00 proved the claim of summary dismissal and violation of the employees' right to
due process.
Total 23,329.00
Zenaida Bergante Respondents filed a Motion for Reconsideration, which was referred by the NLRC
Separation pay................. P43,225.00 to Executive Labor Arbiter Vito C. Bose for report and recommendation. In its
Legal Holiday Pay........... 839.00 Resolution[29] dated August 26, 2002, the NLRC adopted in toto the report and
recommendation of Arbiter Bose which set aside its previous Resolution
Total 44,064.00 reversing the Labor Arbiter's Decision. This time, the NLRC held that Bergante
2. Directing the afore-named respondents to pay ten (10%) percent and Inguillo were not illegally dismissed as respondents merely put in force the
attorney's fees based on the total monetary award to complainants CBA provision on the termination of the services of disaffiliating Union members
Inguillo and Bergante. upon the recommendation of the Union. The dispositive portion of the said
Resolution provides:
3. Dismissing the claim for illegal withholding of salary of complainant
Inguillo for lack of merit as above discussed. 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
4. Dismissing the other money claims and/or other charges of dismissal is dismissed. However, respondents are hereby directed to pay
complainants Inguillo and Bergante for lack of factual and legal basis. 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.
5. Dismissing the complaint of complainant Gilberto Lucero with
prejudice for having executed a Quitclaim and Release and voluntary All other claims are ordered dismissed for lack of merit.
resignation in favor of respondents FPSI and Amparo Policarpio as
above-discussed where the former received the amount of P23,334.00 SO ORDERED.[30]
as financial assistance/separation pay and legal holiday pay from the Not satisfied with the disposition of their complaints, Bergante and Inguillo filed
latter. a petition for certiorari under Rule 65 of the Rules of Court with the Court of
SO ORDERED.[25] Appeals (CA). The CA dismissed the petition for lack of merit[31] and denied the
Bergante and Inguillo appealed before the NLRC, which reversed the Labor subsequent motion for reconsideration.[32] In affirming the legality of the
Arbiter's Decision in a Resolution[26] dated June 8, 2001, the dispositive portion dismissal, the CA ratiocinated, thus:
of which provides:
x x x on the merits, we sustain the view adopted by the NLRC that:
WHEREFORE, the assailed decision is set aside. Respondents are hereby ordered
to reinstate complainants Inguillo and Bergante with full backwages from the x x x it cannot be said that the stipulation providing that the employer may
time of their dismissal up [to] their actual reinstatement. Further, respondents dismiss an employee whenever the union recommends his expulsion either for

9
disloyalty or for any violation of its by-laws 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.
10
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 standing may 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.
11
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 FPSI's 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 NLM-KATIPUNAN 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 the Union, 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 substantive--whether 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 the employees will be given the opportunity
12
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 a written 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 employer's 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 employee's 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 (½) 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 (½) 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
13
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 employee's 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 of Agabon
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, PICOP RESOURCES, G.R. No. 160828
2004, in CA-G.R. SP No. 73992, are hereby AFFIRMED WITH MODIFICATION in INCORPORATED (PRI),
that while there was a valid ground for dismissal, the procedural requirements Petitioner,
for termination, as mandated by law and jurisprudence, were not observed. Present:
Respondents First Philippine Scales, Inc. and/or Amparo Policarpio are - versus
hereby ORDERED to PAY petitioners Zenaida Bergante and Herminigildo
Inguillo the amount of P30,000.00 each as nominal damages. No pronouncement ANACLETO L. TAECA, GEREMIAS S. CARPIO, J., Chairperson,
as to costs. TATO, JAIME N. CAMPOS, NACHURA,
MARTINIANO A. MAGAYON, JOSEPH PERALTA
SO ORDERED. B. BALGOA, MANUEL G. ABUCAY, ABAD, and
MOISES M. ALBARAN, MARGARITO MENDOZA, JJ.
G. ALICANTE, JERRY ROMEO T.
AVILA, LORENZO D. CANON, RAUL
P. DUERO, DANILO Y. ILAN, MANUEL Promulgated:
M. MATURAN, JR., LUISITO R.
POPERA, CLEMENTINO C. QUIMAN, August 9, 2010
ROBERTO Q. SILOT, CHARLITO D.
SINDAY, REMBERT B. SUZONALLAN
J. TRIMIDAL, and NAMAPRI-SPFL,
Respondents.

x----------------------------------------------------------------------------------------x
SECOND DIVISION

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

14
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. M-006309-2001 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 (NAMAPRI-SPFL), 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
15
(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.
16
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 NAMAPRI-SPFL 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
 of P210,000.00 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 Union security" is a generic term, which is applied to and comprehends
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.
17
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 the status 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.
"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
18
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 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.[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
19
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, are AFFIRMED 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.