THIRD DIVISION

DEL MONTE PHILIPPINES, INC. G.R. No. 158620

and WARFREDO C. BALANDRA,
Petitioners, Present:
QUISUMBING,
- versus - Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
MARIANO SALDIVAR, NENA VELASCO, JR., JJ.
TIMBAL, VIRGINIO VICERA,
ALFREDO AMONCIO and NAZARIO
S. COLASTE,
Respondents. Promulgated:
October 11, 2006
x---------------------------------------------------------------------------------x

DECISION
TINGA, J.:

The main issue for resolution herein is whether there was sufficient cause for
the dismissal of a rank-and-file employee effectuated through the enforcement of a
closed-shop provision in the Collective Bargaining Agreement (CBA) between the
employer and the union.

The operative facts are uncomplicated.

The Associated Labor Union (ALU) is the exclusive bargaining agent of
plantation workers of petitioner Del Monte Philippines, Inc. (Del Monte)
in Bukidnon.Respondent Nena Timbal (Timbal), as a rank-and-file employee of
Del Monte plantation in Bukidnon, is also a member of ALU. Del Monte and ALU
entered into a Collective Bargaining Agreement (CBA) with an effective term of
five (5) years from 1 September 1988 to 31 August 1993.[1]
Timbal, along with four other employees (collectively, co-employees), were
charged by ALU for disloyalty to the union, particularly for encouraging defections
to a rival union, the National Federation of Labor (NFL). The charge was contained
in a Complaint dated 25 March 1993, which specifically alleged, in relation to
Timbal: That on July 13, 1991 and the period prior or after thereto, said Nena
Timbal personally recruited other bonafide members of the ALU to attend NFL
seminars and has actually attended these seminars together with the other ALU
members.[2] The matter was referred to a body within the ALU
organization, ominously named Disloyalty Board.
The charge against Timbal was supported by an affidavit executed on 23
March 1993 by Gemma Artajo (Artajo), also an employee of Del Monte. Artajo
alleged that she was personally informed by Timbal on 13 July 1991 that a seminar
was to be conducted by the NFL on the following day. When Artajo demurred from
attending, Timbal assured her that she would be given honorarium in the amount
of P500.00 if she were to attend the NFL meeting and bring new recruits. Artajo
admitted having attended the NFL meeting together with her own recruits,
including Paz Piquero (Piquero). Artajo stated that after the meeting she was
given P500.00 by Timbal.[3]

Timbal filed an Answer before the Disloyalty Board, denying the allegations
in the complaint and the averments in Artajos Affidavit. She further alleged that her
husband, Modesto Timbal, had filed a complaint against Artajo for collection of a
sum of money on 17 March 1993, or just six (6) days before Artajo executed her
affidavit. She noted that the allegations against her were purportedly committed
nearly two (2) years earlier, and that Artajos act was motivated by hate and revenge
owing to the filing of the aforementioned civil action.[4]
Nevertheless, the ALU Disloyalty Board concluded that Timbal was guilty
of acts or conduct inimical to the interests of ALU, through a Resolution dated 7
May 1993.[5]It found that the acts imputed to Timbal were partisan activities,
prohibited since the freedom period had not yet commenced as of that time. Thus,
the Disloyalty Board recommended the expulsion of Timbal from membership in
ALU, and likewise her dismissal from Del Monte in accordance with the Union
Security Clause in the existing CBA between ALU and Del Monte. The Disloyalty
Board also reached the same conclusions as to the co-employees, expressed in
separate resolutions also recommending their expulsion from ALU.[6]
On 21 May 1993, the Regional Vice President of ALU adopted the
recommendations of the Disloyalty Board and expelled Timbal [7] and her coemployees from ALU.[8]The ALU National President affirmed the expulsion.[9] On
17 June 1993, Del Monte terminated Timbal and her co-employees effective 19
June 1993, noting that the termination was upon demand of [ALU] pursuant to
Sections 4 and 5 of Article III of the current Collective Bargaining Agreement.[10]
Timbal and her co-employees filed separate complaints against Del Monte
and/or its Personnel Manager Warfredo C. Balandra and ALU with the Regional
Arbitration Branch (RAB) of the National Labor Relations Commission (NLRC)
for illegal dismissal, unfair labor practice and damages. [11] The complaints were
consolidated and heard before Labor Arbiter Irving Pedilla. The Labor Arbiter
affirmed that all five (5) were illegally dismissed and ordered Del Monte to
reinstate complainants, including Timbal, to their former positions and to pay their
full backwages and other allowances, though the other claims and charges were
dismissed for want of basis.[12]

Only Del Monte interposed an appeal with the NLRC.[13] The NLRC
reversed the Labor Arbiter and ruled that all the complainants were validly
dismissed.[14] On review, the Court of Appeals ruled that only Timbal was illegally
dismissed.[15] At the same time, the appellate court found that Del Monte had failed
to observe procedural due process in dismissing the co-employees, and thus
ordered the company to pay P30,000.00 to each of the co-employees as penalties.
The co-employees sought to file a Petition for Review [16] with this Court assailing
the ruling of the Court of Appeals affirming their dismissal, but the petition was
denied because it was not timely filed.[17]
On the other hand, Del Monte, through the instant petition, assails the Court of
Appeals decision insofar as it ruled that Timbal was illegally dismissed. Notably, Del
Monte does not assail in this petition the award of P30,000.00 to each of the coemployees, and the ruling of the Court of Appeals in that regard should now be
considered final.

The reason offered by the Court of Appeals in exculpating Timbal revolves

around the problematic relationship between her and Artajo, the complaining
witness against her. As explained by the appellate court:
However, the NLRC should have considered in a different light the
situation of petitioner Nena Timbal. Timbal asserted before the NLRC, and
reiterates in this petition, that the statements of Gemma Artajo, ALUs sole witness
against her, should not be given weight because Artajo had an ax[e] to grind at the
time when she made the adverse statements against her. Respondents never
disputed the claim of Timbal that in the two (2) collection suits initiated by
Timbal and her husband, Artajo testified for the defendant in the first case and she
was even the defendant in the second case which was won by Timbal. We find it
hard to believe that Timbal would so willingly render herself vulnerable to
expulsion from the Union by revealing to an estranged colleague her desire to
shift loyalty. The strained relationship between Timbal and Artajo renders
doubtful the charge against the former that she attempted to recruit Artajo to join a
rival union. Inasmuch as the respondents failed to justify the termination of
Timbals employment, We hold that her reinstatement to her former position in
accordance with the September 27, 1996 decision of the Labor Arbiter is
appropriate.[18]

The Labor Arbiter, in his favorable ruling to the dismissed employees, had
noted that complainant Timbal[s] x x x accuser has an axe to grind against her for

an unpaid debt so that her testimony cannot be given credit. [19] The NLRC, in
reversing the Labor Arbiter, did not see it fit to mention the circumstances of the
apparent feud betweenTimbal and Artajo, except in the course of narrating Timbals
allegations.

However, in the present petition, Del Monte utilizes a new line of argument
in justifying Timbals dismissal. While it does not refute the contemporaneous illwill between Timbal and Artajo, it nonetheless alleges that there was a second
witness, Paz Piquero, who testified against Timbal before the Disloyalty Board.
[20]
Piquero had allegedly corroborated Artajos allegations and positively identified
Timbal as among those present during the seminar of the NFL conducted on 14
July 1992 and as having given her transportation money after the seminar was
finished. Del Monte asserts that Piquero was a disinterested witness against
Timbal.[21]
Del Monte also submits two (2) other grounds for review. It argues that the
decision of the Labor Arbiter, which awarded Timbal full backwages and other
allowances, was inconsistent with jurisprudence which held that an employer who
acted in good faith in dismissing employees on the basis of a closed-shop provision
is not liable to pay fullbackwages.[22] Finally, Del Monte asserts that it had, from
the incipience of these proceedings consistently prayed that in the event that it
were found with finality that the dismissal of Timbal and the others is illegal, ALU
should be made liable to Del Monte pursuant to the CBA. The Court of Appeals is
faulted for failing to rule upon such claim.
For her part, Timbal observes that Piqueros name was mentioned for the first
time in Del Montes Motion for Partial Reconsideration of the decision of the Court
of Appeals.[23] She claims that both Piquero and Artajo were not in good terms with
her after she had won a civil suit for the collection of a sum of money against their
immediate superior, one Virgie Condeza.[24]
The legality of Timbals dismissal is obviously the key issue in this case. We
are particularly called upon to determine whether at this late stage, the Court may
still give credence to the purported testimony of Piquero and justify Timbals
dismissal based on such testimony.

It bears elaboration that Timbals dismissal is not predicated on any of the

just or authorized causes for dismissal under Book Six, Title I of the Labor Code,
[25]
but on the union security clause in the CBA between Del Monte and ALU.
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.[26] The CBA, which covers all regular
hourly paid employees at the pineapple plantation in Bukidnon, [27] stipulates that all
present and subsequent employees shall be required to become a member of ALU
as a condition of continued employment. Sections 4 and 5, Article II of the CBA
further state:
ARTICLE II
Section 4. Loss of membership in the UNION shall not be a ground for
dismissal by the Company except where loss of membership is due to:
1. Voluntary resignation from [ALU] earlier than the expiry
date of this [CBA];
2. Non-payment of duly approved and ratified union dues and
fees; and
3. Disloyalty to [ALU] in accordance with its Constitution
and By-Laws as duly registered with the Department of Labor and
Employment.
Section 5. Upon request of [ALU], [Del Monte] shall dismiss from its
service in accordance with law, any member of the bargaining unit who loses his
membership in [ALU] pursuant to the provisions of the preceding section. [ALU]
assumes full responsibility for any such termination and hereby agrees to hold
[Del Monte] free from any liability by judgment of a competent authority for
claims arising out of dismissals made upon demand of [ALU], and [the] latter
shall reimburse the former of such sums as it shall have paid therefor. Such
reimbursement shall be deducted from union dues and agency fees until duly paid.
[28]

The CBA obviously adopts a closed-shop policy which mandates, as a

condition of employment, membership in the exclusive bargaining agent. A closed-

shop 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. [29] 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.[30]
Timbals expulsion from ALU was premised on the ground of disloyalty to
the union, which under Section 4(3), Article II of the CBA, also stands as a ground
for her dismissal from Del Monte. Indeed, Section 5, Article II of the CBA enjoins
Del Monte to dismiss from employment those employees expelled from ALU for
disloyalty, albeitwith the qualification in accordance with law.
Article 279 of the Labor Code ordains that in cases of regular employment,
the employer shall not terminate the services of an employee except for a just
cause or when authorized by [Title I, Book Six of the Labor Code]. Admittedly, the
enforcement of a closed-shop or union security provision in the CBA as a ground
for termination finds no extension within any of the provisions under Title I, Book
Six of the Labor Code. Yet jurisprudence has consistently recognized, thus: It is
State policy to promote unionism to enable workers to negotiate with management
on an even playing field and with more persuasiveness than if they were to
individually and separately bargain with the employer. For this reason, the law has
allowed stipulations for union shop and closed shop as means of encouraging
workers to join and support the union of their choice in the protection of their
rights and interests vis-a-vis the employer.[31]
It might be suggested that since Timbal was expelled from ALU on the
ground of disloyalty, Del Monte had no choice but to implement the CBA
provisions and cause her dismissal. Similarly, it might be posited that any tribunal
reviewing such dismissal is precluded from looking beyond the provisions of the
CBA in ascertaining whether such dismissal was valid. Yet deciding the problem
from such a closed perspective would virtually guarantee unmitigated discretion on
the part of the union in terminating the employment status of an individual
employee. What the Constitution does recognize is that all workers, whether union
members or not, are entitled to security of tenure. [32] The guarantee of security of

tenure itself is implemented through legislation, which lays down the proper
standards in determining whether such right was violated.[33]

Agabon v. NLRC[34] did qualify that constitutional due process or security of

tenure did not shield from dismissal an employee found guilty of a just cause for
termination even if the employer failed to render the statutory notice and hearing
requirement. At the same time, it should be understood that in the matter of
determining whether cause exists for termination, whether under Book Six, Title I
of the Labor Code or under a valid CBA, substantive due process must be observed
as a means of ensuring that security of tenure is not infringed.
Agabon observed that due process under the Labor Code comprised of two
aspects: substantive, i.e., the valid and authorized causes of employment
termination under the Labor Code; and procedural, i.e., the manner of dismissal.
[35]
No serious dispute arose in Agabon over the observance of substantive due
process in that case, or with the conclusion that the petitioners therein were guilty
of abandonment of work, one of the just causes for dismissal under the Labor
Code. The controversy in Agabon centered on whether the failure to observe
procedural due process, through the non-observance of the two-notice rule, should
lead to the invalidation of the dismissals. The Court ruled, over the dissents of
some Justices, that the failure by the employer to observe procedural due process
did not invalidate the dismissals for just cause of the petitioners therein.
However, Agabon did not do away with the requirement of substantive due
process, which is essentially the existence of just cause provided by law for a valid
dismissal. Thus,Agabon cannot be invoked to validate a dismissal wherein
substantive due process, or the proper determination of just cause, was not
observed.
Even if the dismissal of an employee is conditioned not on the grounds for
termination under the Labor Code, but pursuant to the provisions of a CBA, it still
is necessary to observe substantive due process in order to validate the
dismissal. As applied to the Labor Code, adherence to substantive due process is a
requisite for a valid determination that just or authorized causes existed to justify

the dismissal.[36] As applied to the dismissals grounded on violations of the CBA,

observance of substantial due process is indispensable in establishing the presence
of the cause or causes for dismissal as provided for in the CBA.
Substantive due process, as it applies to all forms of dismissals,
encompasses the proper presentation and appreciation of evidence to establish that
cause under law exists for the dismissal of an employee. This holds true even if the
dismissal is predicated on particular causes for dismissal established not by the
Labor Code, but by the CBA. Further, in order that any CBA-mandated dismissal
may receive the warrant of the courts and labor tribunals, the causes for dismissal
as provided for in the CBA must satisfy to the evidentiary threshold of the NLRC
and the courts.

It is necessary to emphasize these principles since the immutable truth under

our constitutional and labor laws is that no employee can be dismissed without
cause. Agabonmay have tempered the procedural due process requirements if just
cause for dismissal existed, but in no way did it eliminate the existence of a legally
prescribed cause as a requisite for any dismissal. The fact that a CBA may provide
for additional grounds for dismissal other than those established under the Labor
Code does not detract from the necessity to duly establish the existence of such
grounds before the dismissal may be validated. And even if the employer or, in this
case, the collective bargaining agent, is satisfied that cause has been established to
warrant the dismissal, such satisfaction will be of no consequence if, upon legal
challenge, they are unable to establish before the NLRC or the courts the presence
of such causes.
In the matter at bar, the Labor Arbiterthe proximate trier of factsand the
Court of Appeals both duly appreciated that the testimony of Artajo against Timbal
could not be given credence, especially in proving Timbals disloyalty to ALU. This
is due to the prior animosity between the two engendered by the pending civil
complaint filed by Timbals husband against Artajo. Considering that the civil
complaint was filed just six (6) days prior to the execution of Artajos affidavit
against Timbal, it would be plainly injudicious to presume that Artajo possessed an

unbiased state of mind as she executed that affidavit. Such circumstance was
considered by the Labor Arbiter, and especially the Court of Appeals, as they
rendered a favorable ruling to Timbal. The NLRC may have decided against
Artajo, but in doing so, it failed to provide any basis as to why Artajos testimony
should be believed, instead of disbelieved. No credible disputation was offered by
the NLRC to the claim that Artajo was biased against Timbal; hence, we should
adjudge the findings of the Labor Arbiter and the Court of Appeals as more cogent
on that point.
Before this Court, Del Monte does not even present any serious argument
that Artajos testimony against Timbal was free from prejudice. Instead, it posits
that Piqueros alleged testimony against Timbal before the Disloyalty Board should
be given credence, and that taken with Artajos testimony, should sufficiently
establish the ground of disloyalty for which Timbal should be dismissed.
The Court sees the danger to jurisprudence and the rights of workers in
acceding to Del Montes position. The dismissal for cause of employees must be
justified by substantial evidence, as appreciated by an impartial trier of facts. None
of the trier of facts belowthe Labor Arbiter, the NLRC and the Court of
Appealssaw fit to accord credence to Piqueros testimony, even assuming that such
testimony was properly contained in the record. Even the NLRC decision, which
was adverse to Timbal, made no reference at all to Piqueros alleged testimony.
Del Monte is able to point to only one instance wherein Piqueros name and
testimony appears on the record. It appears that among the several attachments to
the position paper submitted by the ALU before the NLRC-RAB was a copy of the
raw stenographic notes transcribed, apparently on 17 April 1993, during a hearing
before the Disloyalty Board. The transcription is not wholly legible, but there
appears to be references therein to the name Paz Piquero, and her apparent
testimony before the Disloyalty Board. We are unable to reproduce with accuracy,
based on the handwritten stenographic notes, the contents of this seeming
testimony of Piquero, although Del Monte claims before this Court that Piquero
had corroborated Artajos claims during such testimony, positively identified
[Timbals] presence in the NFL seminar on 14 July 1992, and confirmed that
Timbal gave Artajo P500.00 for recruiting participants in the NFL seminar.[37]

There are evident problems on our part, at this late stage, in appreciating
these raw stenographic notes adverting to the purported testimony of Piquero,
especially as a means of definitively concluding that Timbal was guilty of
disloyalty. Certainly, these notes cannot be appreciated as entries in the official
record, which are presumed prima facie evidence of the facts therein stated,[38] as
such records can only be made by a public officer of the Philippines or by a person
in the performance of a duty specially enjoined by law. These transcripts were not
taken during a hearing conducted by any public office in the Philippines, but they
were committed in the course of an internal disciplinary mechanism devised by a
privately organized labor union. Unless the authenticity of these notes is duly
proven before, and appreciated by the triers of fact, we cannot accord them any
presumptive or conclusive value.

Moreover, despite the fact that the apparent record of Piqueros testimony
was appended to ALUs position paper, the position paper itself does not make any
reference to such testimony, or even to Piqueros name for that matter. The position
paper observes that [t]his testimony of [Artajo] was directly corroborated by her
actual attendance on July 14, 1992 at the agreed [venue], but no mention is made
that such testimony was also directly corroborated by Piquero. Then again, it was
only Artajo, and not Piquero, who executed an affidavit recounting the allegations
against Timbal.
Indeed, we are inclined to agree with Timbals observation in her Comment
on the present petition that from the time the complaint was filed with the NLRCRAB, Piqueros name and testimony were invoked for the first time only in Del
Montes motion for reconsideration before the Court of Appeals. Other than the
handwritten reference made in the raw stenographic notes attached to ALUs
position paper before the NLRC-RAB, Piqueros name or testimony was not
mentioned either by ALU or Del Monte before any of the pleadings filed before the
NLRC-RAB, the NLRC, and even with those submitted to the Court of Appeals
prior to that courts decision.
In order for the Court to be able to appreciate Piqueros testimony as basis for
finding Timbal guilty of disloyalty, it is necessary that the fact of such testimony

must have been duly established before the NLRC-RAB, the NLRC, or at the very
least, even before the Court of Appeals. It is only after the fact of such testimony
has been established that the triers of fact can come to any conclusion as to the
veracity of the allegations in the testimony.
It should be mentioned that the Disloyalty Board, in its Resolution finding
Timbal guilty of disloyalty, did mention that Artajos testimony was corroborated
by Paz Piquero who positively identified and testified that Nena Timbal was
engaged in recruitment of ALU members at [Del Monte] to attend NFL seminars.
[39]

The Disloyalty Board may have appreciated Piqueros testimony in its own
finding that Timbal was guilty, yet the said board cannot be considered as a wholly
neutral or dispassionate tribunal since it was constituted by the very organization
that stood as the offended party in the disloyalty charge. Without impugning the
integrity of ALU and the mechanisms it has employed for the internal discipline of
its members, we nonetheless hold that in order that the dismissal of an employee
may be validated by this Court, it is necessary that the grounds for dismissal are
justified by substantial evidence as duly appreciated by an impartial trier of facts.
[40]
The existence of Piqueros testimony was appreciated only by the Disloyalty
Board, but not by any of the impartial tribunals which heard Timbals case. The
appreciation of such testimony by the Disloyalty Board without any similar
affirmation or concurrence by the NLRC-RAB, the NLRC, or the Court of
Appeals, cannot satisfy the substantive due process requirement as a means of
upholding Timbals dismissal.
All told, we see no error on the part of the Court of Appeals when it held that
Timbal was illegally dismissed.
We now turn to the second issue raised, whether the Labor Arbiter correctly
awarded full backwages to Timbal.
Del Monte cites a jurisprudential rule that an employer who acted in good
faith in dismissing employees on the basis of a closed- shop provision may not be
penalized even if the dismissal were illegal. Such a doctrine is admittedly
supported by the early case of National Labor Union v. Zip Venetian Blind[41] and

the later decision in 1989 ofSoriano v. Atienza,[42] wherein the Court affirmed the
disallowance of backwages or financial assistance in dismissals under the
aforementioned circumstance.
However, the Court now recognizes that this doctrine is inconsistent with
Article 279 of the Labor Code, as amended by Republic Act No. 6715, which took
effect just five (5) days after Soriano was promulgated. It is now provided in the
Labor Code that [a]n 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. Thus, where reinstatement is
adjudged, the award of backwages and other benefits continues beyond the date of
the labor arbiter's decision ordering reinstatement and extends up to the time said
order of reinstatement is actually carried out.[43]
Rep. Act No. 6715 effectively mitigated previous jurisprudence which had
limited the extent to which illegally dismissed employees could claim
for backwages. We explained in Ferrer v. NLRC:[44]
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.[45]

The
Labor
Arbiters
ruling,
which
entitled Timbal to
claim
full backwages and other allowances, without qualifications and diminutions,
computed from the time [she was] illegally dismisse[d] up to the time [she] will be
actually reinstated, conforms to Article 279 of the Labor Code. Hence, the Court of
Appeals was correct in affirming the Labor Arbiter insofar as Timbal was
concerned.
Finally, we address the claim that the Court of Appeals erred when it did not
rule on Del Montes claim for reimbursement against ALU. We do observe that
Section 5 of the CBA stipulated that [ALU] assumes full responsibility of any such
termination [of any member of the bargaining unit who loses his membership in
ALU] and hereby agrees to hold [Del Monte] free from any liability by judgment

of a competent authority for claims arising out of dismissals made upon demand of
[ALU], and latter shall reimburse the former of such sums as it shall have paid
therefore.[46]
This stipulation does present a cause of action in Del Montes favor should it
be held financially liable for the dismissal of an employee by reason of expulsion
from ALU.Nothing in this decision should preclude the operation of this provision
in the CBA. At the same time, we are unable to agree with Del Monte that the
Court of Appeals, or this Court, can implement this provision of the CBA and
accordingly directly condemn ALU to answer for the financial remuneration
due Timbal.
Before the Labor Arbiter, Del Monte had presented its cross-claim against
ALU for reimbursement should it be made liable for illegal dismissal or unfair
labor practice, pursuant to the CBA. The Labor Arbiter had actually passed upon
this claim for reimbursement, stating that [as] for the cross-claims of respondent
DMPI and Tabusuares against the respondent ALU-TUCP, this Branch cannot
validly entertain the same in the absence of employer-employee relationship
between the former and the latter.[47] We have examined Article 217 of the Labor
Code,[48] which sets forth the original jurisdiction of the Labor Arbiters. Article
217(c) states:
Cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation or enforcement of
company personnel policies shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as
may be provided in said agreements. [Emphasis supplied.]

In contrast, Article 261 of the Labor Code indubitably vests on the Voluntary
Arbitrator or panel of Voluntary Arbitrators the original and exclusive jurisdiction
to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement. [49] Among those areas of
conflict traditionally within the jurisdiction of Voluntary Arbitrators are contractinterpretation and contract-implementation,[50] the questions precisely involved in
Del Montes claim seeking enforcement of the CBA provision mandating restitution
by ALU should the company be held financially liable for dismissals pursuant to
the union security clause.

In reconciling the grants of jurisdiction vested under Articles 261 and 217 of
the Labor Code, the Court has pronounced that the original and exclusive
jurisdiction of the Labor Arbiter under Article 217(c) for money claims is limited
only to those arising from statutes or contracts other than a Collective Bargaining
Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have
original and exclusive jurisdiction over money claims arising from the
interpretation or implementation of the Collective Bargaining Agreement and,
those arising from the interpretation or enforcement of company personnel
policies, under Article 261.[51]
Our conclusion that the Labor Arbiter in the instant case could not properly
pass judgment on the cross-claim is further strengthened by the fact that Del Monte
and ALU expressly recognized the jurisdiction of Voluntary Arbitrators in the
CBA. Section 2, Article XXXI of the CBA provides:
Section 2. In the event a dispute arises concerning the application of, or
interpretation of this Agreement which cannot be settled pursuant to the
[grievance procedure set forth in the] preceding Section, the dispute shall be
submitted to an arbitrator agreed to by [Del Monte] and [ALU].
Should the parties fail to agree on the arbitrator, the same shall be drawn
by lottery from a list of arbitrators furnished by the Bureau of Labor Relations of
the Department of Labor and Employment.
xxxx

Thus, as the law indubitably precludes the Labor Arbiter from enforcing
money claims arising from the implementation of the CBA, the CBA herein
complementarily recognizes that it is the Voluntary Arbitrators which have
jurisdiction to hear the claim. The Labor Arbiter correctly refused to exercise
jurisdiction over Del Montes cross-claim, and the Court of Appeals would have no
basis had it acted differently. At the same time, even as we affirm the award
of backwages against Del Monte, our ruling should not operate to prejudice in any
way whatever causes of action Del Monte may have against ALU, in accordance
with the CBA.

WHEREFORE, the instant petition is DENIED. The assailed Decision of the

Court of Appeals dated 26 August 2002 is AFFIRMED. Costs against petitioner.
SO ORDERED.

DANTE

O.

TINGA Associate

Justice
WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairmans Attestation, it is hereby certified that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]

Rollo, p. 137.

[2]

Id. at 163.

[3]

Id. at 173.

[4]

Id. at 167-168.

[5]

Id. at 203-206.

[6]

Id. at 207-215, 252-255, 257-260.

See rollo, p. 216.

[7]

[8]

Id. at 217-218, 256, 261.

[9]

Id. at 140-141, 266-267, 271-272.

[10]

See id. at 142-144. See also id. at 73.

[11]

Rollo, p. 73. The complaints of Mariano Saldivar and Nazario Colaste were respectively docketed
as RAB 10-07-00433-93 and RAB 10-09-00473-93 while those of Nena Timbal, Virginio Vicera and Alfredo
Amoncio were docketed as RAB 10-07-00442-93.
[12]

Id. at 364.

[13]

Id. at 369-382.

[14]

Id. at 403-423. Decision authored by Acting Presiding Commissioner Oscar N. Abella, concurred in by
Commissioner Leon G. Gonzaga, Jr.
[15]

In a Decision dated 26 August 2002, penned by then Court of Appeals Associate Justice (now Supreme
Court Associate Justice) Cancio C. Garcia, concurred in by Associate Justices Marina L. Buzon and Eliezer R. de los
Reyes. Seerollo, pp. 12-23.
[16]

Docketed as G.R. No. 158394.

[17]

In a Resolution dated 1 September 2003. See rollo (G.R. No. 158394), pp. 674-676-401.

[18]

Rollo, p. 21.

[19]

Id. at 358.

[20]

See rollo, p. 51.

[21]

Id. at 52.

[22]

Particularly citing Confederated Sons of Labor v. Anakan Lumber Co., et al., 107 Phil. 915
(1960); National Labor Union v. Zip Venetian Blind, 112 Phil. 407 (1961) and Soriano v. Atienza, G.R. No.
68619, 16 March 1989, 171 SCRA 284. See rollo, pp. 55-58.
[23]

Rollo, p. 683.

[24]

Id.

[25]

See LABOR CODE, Arts. 282-284.

[26]

Ferrer v. NLRC, G.R. No. 100898, 5 July 1993, 224 SCRA 410, 418.

[27]

See rollo, p. 97.

[28]

Id. at 99-100.

[29]

ROTHENBERG ON LABOR RELATIONS, p. 48; cited in Confederated Sons of Labor

v. Anakan Lumber Co., et al., 107 Phil. 915, 918 (1960).
[30]

Ferrer v. NLRC, supra note 26 at 418, citing Lirag Textile Mills, Inc. v. Blanco, 109 SCRA 87 (1981).

[31]

Rivera v. Hon. Espiritu, 425 Phil. 169, 184 (2002), citing Liberty Flour Mills Employees v. Liberty Flour
Mills, Inc., G.R. Nos. 58768-70, 180 SCRA 668, 679-680 (1989).
[32]

See CONSTITUTION, Art. XIII, Sec. 3.

[33]

See Agabon v. NLRC, G.R. No. 158693, 17 November 2004, 442 SCRA 573, 689-690, J. Tinga, Separate
Opinion citing Phil. Aeolus Automotive United Corp. v. NLRC, 387 Phil. 250 (2000); Gonzales v. National Labor
Relations Commission, 372 Phil. 39 (1999); Jardine Davies v. National Labor Relations Commission, 370 Phil 310
(1999); Pearl S. Buck Foundation v. National Labor Relations Commission, G.R. No. 80728, February 21, 1990,
182 SCRA 446; Bagong Bayan Corporation, Realty Investors & Developers v. National Labor Relations
Commission, G.R. No. 61272, September 29, 1989, 178 SCRA 107; Labajo v. Alejandro, et al., No. L80383, September 26, 1988, 165 SCRA 747; D.M. Consunji, Inc. v. Pucan, et al., No. L-71413, March 21, 1988, 159
SCRA 107; Santos v. National Labor Relations Commission, L-76271, September 21, 1987, 154 SCRA
166; People's Bank & Trust Co. v. People's Bank & Trust Co. Employees Union, 161 Phil 15 (1976); Philippine
Movie Pictures Association v. Premiere Productions, 92 Phil. 843 (1953).
[34]

Id.

[35]

Agabon v. NLRC, supra note 33 at 612.

[36]

Substantive due process mandates that an employee can only be dismissed based on just or authorized
causes. Maneja v. NLRC, 353 Phil. 45, 66 (1998).
[37]

Rollo, p. 51.

[38]

See RULES OF CIVIL PROCEDURE, Rule 130, Sec. 44.

[39]

Rollo, p. 204.

[40]

There is no dispute that the requirement of an impartial tribunal is integral to substantive and
administrative due process. On the imperative of ensuring due process in administrative proceedings, Ang Tibay laid
down the guidelines for administrative tribunals to observe. However, what Ang Tibay failed to explicitly state was,
prescinding from the general principles governing due process, the requirement of an impartial tribunal which,
needless to say, dictates that one called upon to resolve a dispute may not sit as judge and jury simultaneously,
neither may he review his decision on appeal. GSIS v. Court of Appeals, 357 Phil. 511, 533 (1998).
[41]

Supra note 22.

[42]

Id.

[43]

See Pheschem Industrial Corp. v. Moldez, G.R. No. 161158, 9 May 2005 citing Rasonable v. NLRC, 253
SCRA 815 (1996).
[44]

Supra note 26 at 423. Incidentally, a case wherein the employees ordered reinstated were dismissed after
having been expelled from their union.
[45]

Supra note 26 at 423-424.

[46]

Rollo, p. 100.

[47]

Id. at 363.

[48]

Which reads in full: Art. 217. Jurisdiction of Labor Arbiters and the Commission (a) Except as
otherwise provided under this code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural
or non-agricultural:
(1) Unfair labor practice cases;

(2) Termination disputes;

(3) If accompanied with a claim of reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
(4) Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relation;
(5) Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts; and
(6) Except claims for Employees Compensation, Social Security, Medicare and maternity benefits,
all other claims arising from employer-employee relations, including those persons in
domestic or household service, involving an amount exceeding five thousand pesos
(P5,000.00), regardless of whether or not accompanied with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining agreements and those
arising from the interpretation or enforcement of company personnel policies shall be disposed by the Labor Arbiter
by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements."
[49]

See LABOR CODE, Art. 261. See also Sanyo Phil. Workers Union v. Canizares, G.R. No.
101619, 8 July 1992.
[50]

See Vivero v. Court of Appeals, 398 Phil. 158, 170 (2000).

[51]

San Jose v. NLRC, 355 Phil. 759, 772 (1998).

=====

Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION

G.R. No. 165407

HERMINIGILDO INGUILLO AND
ZENAIDA BERGANTE,
Petitioners,
- versus -

Present:
YNARES-SANTIAGO, J.,
Chairperson,
CARPIO,*
CORONA,**
NACHURA, and
PERALTA, JJ.

FIRST
PHILIPPINE
SCALES,
Promulgated:
INC.and/or AMPARO
June 5, 2009
POLICARPIO, MANAGER,
Respondents.
x-----------------------------------------------------x
DECISION
PERALTA, J.:
Assailed in this petition for review under Rule 45 of the Rules of Court are the
Court of Appeals (1) Decision[1] 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 entitledRATIPIKASYON NG KASUNDUAN.[5] Bergante and Inguillo,
who were members of FPSILU, signed the said document.[6]
During the lifetime of the CBA, Bergante, Inguillo and several FPSI employees
joined another union, 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 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 onFebruary 20, 1997.[21]
In their Position Paper,[22] Bergante and Inguillo claimed that they were not aware
of a petition seeking for their termination, and neither were they informed of the
grounds for their termination. They argued that had they been informed, they
would have impleaded FPSILU in their complaints. Inguillo could not think of a
valid reason for his dismissal except the fact that he was a very vocal and active
member of the NLM-KATIPUNAN. Bergante, for her part, surmised that she was
dismissed solely for being Inguillo's sister-in-law. She also reiterated the absence
of a memorandum stating that she committed an infraction of a company rule or
regulation or a violation of law that would justify her dismissal.
Inguillo also denounced respondents' act of withholding his salary, arguing that he
was not a party to the intra-union dispute from which the notice of garnishment

arose. Even assuming that he was, he argued that his salary was exempt from
execution.
In their Position Paper,[23] respondents maintained that Bergante and Inguillo's
dismissal was justified, as the same was done upon the demand of FPSILU, and
that FPSI complied in order to avoid a serious labor dispute among its officers and
members, which, in turn, would seriously affect production. They also justified that
the dismissal was in accordance with the Union Security Clause in the CBA, the
existence and validity of which was not disputed by Bergante and Inguillo. In fact,
the two had affixed their signatures to the document which ratified the CBA.
In his Decision[24] dated November 27, 1997, the Labor Arbiter dismissed the
remaining complaints of Bergante and Inguillo and held that they were not illegally
dismissed. He explained that the two clearly violated the Union Security Clause of
the CBA when they joined NLM-KATIPUNAN and committed acts detrimental to
the interests of FPSILU and respondents. The dispositive portion of the said
Decision states:
WHEREFORE, premises considered, judgment is hereby rendered:
1.
Declaring respondents First Philippines Scales, Inc. (First
Philippine Scales Industries [FPSI] and Amparo Policarpio, in her capacity as
President and General Manager of respondent FPSI, not guilty of illegal dismissal
as above discussed. However, considering the length of services rendered by
complainants Herminigildo Inguillo and Zenaida Bergante as employees of
respondent FPSI, plus the fact that the other complainants in the above-entitled
cases were previously granted financial assistance/separation pay through
amicable settlement, the afore-named respondents are hereby directed to pay
complainants Herminigildo Inguillo and Zenaida Bergante separation pay and
accrued legal holiday pay, as earlier computed, to wit:
Herminigildo Inguillo
Separation pay ................P22,490.00
Legal Holiday Pay........... 839.00
Total 23,329.00
Zenaida Bergante
Separation pay.................P43,225.00
Legal Holiday Pay........... 839.00
Total 44,064.00

2.
Directing the afore-named respondents to pay ten (10%) percent
attorney's fees based on the total monetary award to complainants Inguillo and
Bergante.
3.
Dismissing the claim for illegal withholding of salary of
complainant Inguillo for lack of merit as above discussed.
4.
Dismissing the other money claims and/or other charges of
complainants Inguillo and Bergante for lack of factual and legal basis.
5.
Dismissing the complaint of complainant Gilberto Lucero with
prejudice for having executed a Quitclaim and Release and voluntary resignation
in favor of respondents FPSI and Amparo Policarpio as above-discussed where
the former received the amount of P23,334.00 as financial assistance/separation
pay and legal holiday pay from the latter.
SO ORDERED.[25]

Bergante and Inguillo appealed before the NLRC, which reversed the Labor
Arbiter's Decision in a Resolution[26] dated June 8, 2001, the dispositive portion of
which provides:
WHEREFORE, the assailed decision is set aside. Respondents are hereby ordered
to reinstate complainants Inguillo and Bergante with full backwages from the time
of their dismissal up [to] their actual reinstatement. Further, respondents are also
directed to pay complainant Inguillo the amount representing his withheld salary
for the period March 15, 1998 to April 16, 1998. The sum corresponding to ten
percent (10%) of the total judgment award by way of attorney's fees is likewise
ordered. All other claims are ordered dismissed for lack of merit.
SO ORDERED.[27]

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

the Labor Arbiter's Decision.This time, the NLRC held that Bergante and Inguillo
were not illegally dismissed as respondents merely put in force the CBA provision
on the termination of the services of disaffiliating Union members upon the
recommendation of the Union. The dispositive portion of the said Resolution
provides:
WHEREFORE, the resolution of the Commission dated June 8, 2001 is set
aside. Declaring the dismissal of the complainants as valid, [t]his complaint for
illegal dismissal is dismissed.However, respondents are hereby directed to pay
complainant Inguillo the amount representing his withheld salary for the period
March 15, 1998 to April 16, 1998, plus ten (10%) percent as attorney's fees.
All other claims are ordered dismissed for lack of merit.
SO ORDERED.[30]

Not satisfied with the disposition of their complaints, Bergante and Inguillo filed a
petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals (CA).The CA dismissed the petition for lack of merit [31] and denied the
subsequent motion for reconsideration.[32] In affirming the legality of the dismissal,
the CA ratiocinated, thus:
x x x on the merits, we sustain the view adopted by the NLRC that:
x x x it cannot be said that the stipulation providing that the
employer may dismiss an employee whenever the union
recommends his expulsion either for disloyalty or for any violation
of its 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.
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 intraunion dispute between FPSILU and NLM-KATIPUNAN. In view of their
disaffiliation, as well as other acts allegedly detrimental to the interest of both
FPSILU and FPSI, a Petisyon was submitted to Policarpio, asking for the
termination of the services of employees who failed to maintain their Union
membership.
The Court is now tasked to determine whether the enforcement of the aforesaid
Union Security Clause justified herein petitioners' dismissal from the service.
In terminating the employment of an employee by enforcing the Union Security
Clause, the employer needs only to determine and prove that: (1) the union security
clause is applicable; (2) the union is requesting for the enforcement of the union
security provision in the CBA; and (3) there is sufficient evidence to support the
union's decision to expel the employee from the union or company.[43]
We hold that all the requisites have been sufficiently met and FPSI was justified in
enforcing the Union Security Clause, for the following reasons:
First. FPSI was justified in applying the Union Security Clause, as it was a valid
provision in the CBA, the existence and validity of which was not questioned by
either party.Moreover, petitioners were among the 93 employees who affixed their
signatures to the document that ratified the CBA. They cannot now turn their back
and deny knowledge of such provision.
Second. FPSILU acted on its prerogative to recommend to FPSI the dismissal of
the members who failed to maintain their membership with the Union. Aside from
joining another rival union, FPSILU cited other grounds committed by petitioners
and the other employees which tend to prejudice FPSIs interests, i.e., dereliction of
duty - by failing to call periodic membership meetings and to give financial
reports; depositing union funds in the names of Grutas and former Vice-President
Yolanda Tapang, instead of in the name of FPSILU care of the President; causing
damage to FPSI by deliberately slowing down production, preventing the Union

from even attempting to ask for an increase in benefits from the former; and
poisoning the minds of the rest of the members of the Union so that they would be
enticed to join the rival union.
Third. FPSILU's decision to ask for the termination of the employees in the
Petisyon was justified and supported by the evidence on record. Bergante and
Inguillo were undisputably former members of FPSILU. In fact, Inguillo was the
Secretary of Finance, the underlying reason why his salary was garnished to satisfy
the judgment of the Med-Arbiter who ordered 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 NLMKATIPUNAN 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 substantivewhether the termination of employment was based
on the provisions of the Labor Code or in accordance with the prevailing
jurisprudence; the other is procedural - the manner in which the dismissal was
effected.
The second aspect of due process was clarified by the Court in King of Kings
Transport v. Mamac,[48] stating, thus:
(1) The first written notice to be served on the employees should contain
the specific causes or grounds for termination against them, and a directive that
the employees are given the opportunity to submit their written explanation within
a reasonable period. x x x
(2) After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given the
opportunity to: (1) explain and clarifytheir 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 employers decision to dismiss him. [49] The
requirement of a hearing, on the other hand, is complied with as long as there was
an opportunity to be heard, and not necessarily that an actual hearing was
conducted.[50]
In the present case, the required two notices that must be given to herein
petitioners Bergante and Inguillo were lacking. The records are bereft of any
notice that would have given a semblance of substantial compliance on the part of
herein respondents. Respondents, however, aver that they had furnished the
employees concerned, including petitioners, with a copy of FPSILU's Petisyon. We
cannot consider that as compliance with the requirement of either the first notice or
the second notice. While the Petisyon enumerated the several grounds that would
justify the termination of the employees mentioned therein, yet such document is
only a recommendation by the Union upon which the employer may base its
decision. It cannot be considered a notice of termination. For as agreed upon by
FPSI and FPSILU in their CBA, the latter may only recommend to the former a
Union member's suspension or dismissal. Nowhere in the controverted Union
Security Clause was there a mention that once the union gives a recommendation,
the employer is bound outright to proceed with the termination.
Even assuming that the Petisyon amounts to a first notice, the employer cannot be
deemed to have substantially complied with the procedural requirements. True,
FPSILU enumerated the grounds in said Petisyon. But a perusal of each of them
leads Us to conclude that what was stated were general descriptions, which in no
way would enable the employees to intelligently prepare their explanation and
defenses. In addition, the Petisyon did not provide a directive that the employees
are given opportunity to submit their written explanation within a reasonable
period. Finally, even if We are to assume that the Petisyon is a second notice, still,
the requirement of due process is wanting. For as We have said, the second notice,
which is aimed to inform the employee that his service is already terminated, must
state that the employer has considered all the circumstances which involve the
charge and the grounds in the first notice have been established to justify the
severance of employment. After the claimed dialogue between Policarpio and the
employees mentioned in the Petisyon, the latter were simply told not to report for
work anymore.

These defects are bolstered by Bergante and Inguillo who remain steadfast in
denying that they were notified of the specific charges against them nor were they
given any memorandum to that effect. They averred that had they been informed
that their dismissal was due to FPSILU's demand/petition, they could have
impleaded the FPSILU together with the respondents. The Court has always
underscored the significance of the two-notice rule in dismissing an employee and
has ruled in a number of cases that non-compliance therewith is tantamount to
deprivation of the employees right to due process.[51]
As for the requirement of a hearing or conference, We hold that respondents also
failed to substantially comply with the same. Policarpio alleged that she had a
dialogue with the concerned employees; that she explained to them the demand of
FPSILU for their termination as well as the consequences of the Petisyon; and that
she had no choice but to act accordingly. She further averred that Grutas even
asked her to pay all the involved employees one (1)-month salary for every year of
service, plus their accrued legal holiday pay, but which she denied. She informed
them that it has been FPSI's practice to give employees, on a case-to-case basis,
only one-half () month salary for every year of service and after they have
tendered their voluntary resignation. The employees refused her offer and told her
that they will just file their claims with the DOLE.[52]
Policarpio's allegations are self-serving. Except for her claim as stated in the
respondent's Position Paper, nowhere from the records can We find that Bergante
and Inguillo were accorded the opportunity to present evidence in support of their
defenses. Policarpio relied heavily on the Petisyon of FPSILU. She failed to
convince Us that during the dialogue, she was able to ascertain the validity of the
charges mentioned in the Petisyon. In her futile attempt to prove compliance with
the procedural requirement, she reiterated that the objective of the dialogue was to
provide the employees the opportunity to receive the act of grace of FPSI by giving
them an amount equivalent to one-half () month of their salary for every year of
service. We are not convinced. We cannot even consider the demand and counteroffer for the payment of the employees as an amicable settlement between the
parties because what took place was merely a discussion only of the amount which
the employees are willing to accept and the amount which the respondents are
willing to give. Such non-compliance is also corroborated by Bergante and Inguillo

in their pleadings denouncing their unjustified dismissal. In fine, We hold that the
dialogue is not tantamount to the hearing or conference prescribed by law.
We reiterate, FPSI was justified in enforcing the Union Security Clause in the
CBA. However, We cannot countenance respondents' failure to accord herein
petitioners the due process they deserve after the former dismissed them outright
in order to avoid a serious labor dispute among the officers and members of the
bargaining agent.[53] In enforcing the Union Security Clause in the CBA, We are
upholding the sanctity and inviolability of contracts. But in doing so, We cannot
override an employees right to due process. [54]In Carino v. National Labor
Relations Commission,[55] We took a firm stand in holding that:
The power to dismiss is a normal prerogative of the employer. However,
this is not without limitation. The employer is bound to exercise caution in
terminating the services of his employees especially so when it is made upon
the request of a labor union pursuant to the Collective Bargaining
Agreement x x x. Dismissals must not be arbitrary and capricious. Due process
must be observed in dismissing an employee because it affects not only his
position but also his means of livelihood. Employers should respect and protect
the rights of their employees, which include the right to labor."

Thus, as held in that case, "the right of an employee to be informed of the charges
against him and to reasonable opportunity to present his side in a controversy with
either the company or his own Union is not wiped away by a Union Security
Clause or a Union Shop Clause in a collective bargaining agreement. An employee
is entitled to be protected not only from a company which disregards his rights but
also from his own Union, the leadership of which could yield to the temptation of
swift and arbitrary expulsion from membership and mere dismissal from his
job."[56]
In fine, We hold that while Bergante and Inguillo's dismissals were valid pursuant
to the enforcement of Union Security Clause, respondents however did not comply
with the requisite procedural due process. As in the case 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,
2004, in CA-G.R. SP No. 73992, are hereby AFFIRMED WITH
MODIFICATION in that while there was a valid ground for dismissal, the
procedural requirements for termination, as mandated by law and jurisprudence,
were not observed. Respondents First Philippine Scales, Inc. and/or Amparo
Policarpio are hereby ORDERED to PAY petitioners Zenaida Bergante and
Herminigildo Inguillo the amount of P30,000.00 each as nominal damages. No
pronouncement as to costs.
SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

ANTONIO T. CARPIO RENATO C. CORONA

Associate Justice Associate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Third Division, Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, I certify that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of the opinion of
the Courts Division.

REYNATO S. PUNO
Chief Justice

Designated to sit as an additional member, per Special Order No. 646 dated May 15, 2009.
Designated to sit as an additional member, per Special Order No. 631 dated April 29, 2009.
[1]
Penned by Associate Justice Salvador J. Valdez, Jr., with Associate Justices Josefina Guevara- Salonga and Arturo
D. Brion (now a member of the Court), concurring; rollo, pp. 37-51.
[2]
Id. at 53-54.
**

[3] Sometimes referred to as FPSI Independent Labor Union in other pleadings. See note 13.
[4] CA rollo, pp. 189-197.
[5] Id. at 198-199.
[6] Id. at 198.
[7] Entitled: In re: Intra Union Dispute at First Philippine Scales Industries, Nagkakaisang Lakas ng Manggagawa
(NLM)-Katipunan, Petitioner - versus First Philippine Scales Industries (Independent) Labor Union, Respondent;
First Philippine Scales Industries, Employer, docketed as Case No. OD-M-9503-046 (OS-A-7-140-95).
[8] Per Decision dated May 17, 1995.
[9] CA rollo, pp. 120-123.
[10] Id. at 124.
[11] Id. at 125.
[12] Id. at 126.
[13] Id. at 127-128. The grounds mentioned in the Petisyon are quoted as follows:
1. Ang mga opisyales na ito, ay ang mga dating [miyembro] at opisyales ng F.P.S.I. Independent Labor
Union, na rehistrado sa DOLE bilang isang lehitimong Union, at silay tumiwalag upang magtayo o magtatag ng
panibagongUnion;
2. Hindi rin siya nagpatawag ng meeting kung ano na ang nangyari sa aming Union at ang aming Union
fund. Hindi rin siya nag-submit ng financial statement sa DOLE;
3. Sila rin ang dahilan kung bakit naantala ang aming pakikipagnegosasyon sa inyo sa nalalabing dalawang
taon;
4. Nilabag din ni Domingo Grutas ang aming karapatan bilang isang [miyembro] ng Union, dahil gumawa
siya ng desisyon na lingid sa kaalaman ng kanyang kasamang opisyales at [miyembro];
5. Dahil sa kanilang panggugulo bumagsak ang ating produkto at yon ang dahilan kung bakit hindi namin
nakamit ang mga [benepisyo] na dapat naming hilingin at matanggap sa inyo;
6. Dahil sa kaguluhang iyon nawala ang aming team work, at pagkakaisa sa paggawa upang tumaas ang
ating produkto, at hindi kahiya-hiya kung hihiling kami ng karagdagang [benepisyo];
7. Hindi rin namin nakamit ang kanilang kooperasyon dahil hindi sila nakikipag-usap at nakikiisa sa amin,
bagkus, nagmamalaki pa, at nagbabalak pang manggulo muli;
8. Nilalason din nila ang isipan ng ibang [miyembro] ng aming Union upang kumalas ito sa aming
samahan;
9. Ang paglustay ng aming [pondo] na lingid sa aming kaalaman at pagdeposito ng pera sa pangalan ng
Presidente na si Domingo Grutas at Vise Presidente Yolanda Tapang, at hindi sa pangalan ng aming Union sa
pangangalaga ng aming Tresurero;
Kaya mahigpit po naming hinihiling sa inyong butihing opisina na tanggalin sila para wala nang hadlang at
balakid sa aming pagsusumikap na gumanda at mapabuti ang daloy ng ating produkto upang makamit din namin ang
iba pang [benepisyo]. (Emphasis supplied).
[14] See CA Decision, rollo, p. 39.
[15] Records, p. 2
[16] Docketed as NLRC-NCR-Case No. 00-05-03144-96; id. at 13-14.
[17] Docketed as NLRC-NCR-Case No. 00-05-03138-96; id. at 28.
[18] Records, pp. 46-47.
[19] Id. at 40-44. The aforesaid complainants, agreeing to amicably settle their cases, executed a Quitclaim and
Release upon receipt from FPSI of a financial consideration, as follows:
Vicente Go -------------------- P23,263.00
Shirley Tapang ----------------- P27,813.00
Yolanda Tapang ------------------- P39,740.00
Domingo Grutas ----------------- P23,589.00
Gerry Trinidad ------------------- P23,454.00
[20] Id. at 85.
[21] Id. at 135.
[22] Id. at 59-67.
[23] Id. at 72-80.
[24] CA rollo, pp. 45-66.
[25] Id. at 65-66.
[26] Id. at 67-73.
[27] Id. at 73.

[28] Penned by Commissioner Vicente S.E. Veloso, with Presiding Commissioner Roy V. Seeres and Commissioner
Alberto R. Quimpo, concurring.
[29] CA rollo, pp. 75-85.
[30] Id. at 84.
[31] Rollo, pp. 37-51.
[32] Id. at 53-54.
[33] Id. at 45-47.
[34]
ART. 282. Termination by employer. An employer may terminate an employment for any of the following
causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
[35]
ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor saving devises, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice to the workers and the Ministry of
Labor and Employment [Department of Labor and Employment] at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or to at least one-half () month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
[36]
ART. 284. Disease as ground for termination. An employer may terminate the services of an employee who has
been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial
to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at
least one (1) month salary or to one-half month salary for every year of service, whichever is greater, a fraction of at
least six (6) months being considered as one (1) whole year.
[37]
ART. 285. Termination by employee. (a) An employee may terminate without just cause the employeremployee relationship by serving a written notice on the employer at least one (1) month in advance. The employer
upon whom no such notice was served may hold the employee liable for damages.
(b) An employee may put an end to the relationship without serving any notice to the employer for any of
the following just causes:
1. Serious insult by the employer or his representative on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his
representative;
3. Commission of a crime or offense by the employer or his representative against the person of
the employee or any of the foregoing.
[38]
Alabang Country Club, Inc. v. NLRC, G.R. No. 170287, February 14, 2008, 545 SCRA 351, 361, citing Del
Monte Philippines v. Saldivar, 504 SCRA 192, 203-204 (2006).
[39] National Union of Workers in Hotels, Restaurants and Allied Industries-Manila Pavilion Hotel Chapter v.
NLRC, G.R. No. 179402, September 30, 2008, citing Azucena, C.A., The Labor Code with Comments and Cases,
Volume 2, Fifth Edition, 2004, p. 242. The other common types of union security clause are defined and
distinguished in the LABSTAT Updates of the Department of Labor and Employment, Vol. 1 No. 12, August 1997,
to wit: (a) Open shop, which is an arrangement on recruitment whereby an employer may hire any employee, union
member or not, but the new employee must join the union within a specified time and remain a member in good
standing; (b) Agency shop, which is an arrangement whereby non-members of the contracting union must pay the
union a sum equal to union dues known as agency fees for the benefits they received as a consequence of the
bargaining negotiations effected through the efforts of the union; and (c)Check off, which is an arrangement by a
union with the employer for dues to be deducted regularly from the members salaries wherein the sum collected is
remitted to the union by check. (Emphasis supplied).

[40] Alabang Country Club, Inc. v. NLRC, supra note 38, p. 361, citing 48 Am Jur 2d, 797, p. 509.
[41] Del Monte Philippines, Inc. v. Saldivar, G.R. No. 158620, October 11, 2006, 504 SCRA 192, 202-203, citing
ROTHENBERG ON LABOR RELATIONS, p. 48; cited in Confederated Sons of Labor v. Anakan Lumber Co., et
al., 107 Phil. 915, 918 (1960).
[42] Records, pp. 89-90. (Emphasis supplied).
[43] Alabang Country Club, Inc. v. NLRC, supra note 38, at 362.
[44] Supra note 38, at 201.
[45] G.R. No. 123782, September 16, 1997 SCRA 218, 236. In said case, one of the issues presented by the parties
was their disagreement on the enforcement of union security clause in the CBA. The Secretary of Labor however
considered the issue as procedural and failed to give a valid reason for avoiding the same. The Court held that the
Secretary of Labor committed grave abuse of discretion as he should have taken cognizance of the issue which is not
merely incidental to but essentially involved in the labor dispute itself, or which is otherwise submitted to him for
resolution. The Court went on to rule that it was precisely why the secretary assumed jurisdiction over the labor
dispute over which he has jurisdiction at his level.
[46] Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos, G.R. No. 113907, February 28, 2000,
326 SCRA 428, 470-471.
[47] Id. at 463, citing Sanyo Philippines Workers Union-PSSLU v. Canizares, 211 SCRA 361 (1992).
[48] G.R. No. 166208, June 29, 2007, 526 SCRA 116, 125-126. (Underscoring ours).
[49] Landtex Industries and William Go v. Ayson, G.R. No. 150278, August 9, 2007, 529 SCRA 631, 652.
[50] Id. at 652.
[51] Bughaw, Jr. v. Treasure Island Industrial Corporation, G.R. No. 173151, March 28, 2008, 550 SCRA 307, 322.
[52] Respondents Position Paper, records, pp. 72-81, 76.
[53] Records, p. 79.
[54] Supra note, 44, at 462.
[55] G.R. No. 91086, May 8, 1990, 185 SCRA 177, cited in Malayang Samahan ng mga Manggagawa sa M.
Greenfield v. Ramos, supra note 45, at 462. (Emphasis and underscoring supplied).
[56] Id. at 188-189.
[57] G.R. No. 158693, November 17, 2004, 442 SCRA 573.