G.R. No. 177283 April 7, 2009 DE LA SALLE UNIVERSITY and DR. CARMELITA I. QUEBENGCO, Petitioners, vs.

DE LA SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSUEA-NAFTEU), Respondent. DECISION CARPIO MORALES, J.: On challenge by the De La Salle University and its Executive Vice President Dr. Carmelita I. Quebengco (petitioners) via the present petition for review on certiorari is the Court of Appeals First Division Decision of September 16, 2005 1 in CA-G.R. No. SP No. 81220 which SET ASIDE the National Labor Relations Commission (NLRC) Second Division Orders of June 26, 2003 and September 30, 2003 affirming the dismissal of the complaint for Unfair Labor Practices (ULP) filed by De La Salle University Employees Association (respondent), and directed the NLRC Second Division to transmit the records of the said complaint to the NLRC Third Division. The antecedent facts of the case are as follows: In 2001, a splinter group of respondent led by one Belen Aliazas (Aliazas group) filed a petition for conduct of elections with the Department of Labor and Employment (DOLE), alleging that the then incumbent officers of respondent had failed to call for a regular election since 1985. Disputing the Aliazas groups allegation, respondent claimed that an election was conducted in 1987 but by virtue of the enactment of Republic Act 6715,2 which amended the Labor Code, the term of office of its officers was extended to five years or until 1992 during which a general assembly was held affirming their hold-over tenure until the termination of collective bargaining negotiations; and that a collective bargaining agreement (CBA) was executed only on March 30, 2000. Acting on the petition for the conduct of election filed by the Aliazas group, the DOLE-NCR held, by Decision of March 19, 2001, that the holdover authority of respondents incumbent set of officers had been extinguished by virtue of the execution of the CBA. It accordingly ordered the conduct of elections to be placed under the control and supervision of its Labor Relations Division 3 and subject to pre-election conferences. The conditions for the conduct of election imposed by the DOLE-NCR notwithstanding, respondent called for a regular election on July 9, 2001, without prior notice to the DOLE and without the conduct of pre-election conference, prompting the Aliazas group to file an Urgent Motion for Intervention with the Bureau of Labor Relations (BLR) of the DOLE. The BLR granted the Aliazas groups motion for intervention three days before the intended date of election or on July 6, 2001 and thus disposed as follows: WHEREFORE, without necessarily resolving the merits of the appeal and considering the urgency of the issues raised by appellees and the limited time involved, the motion is hereby GRANTED. Consequently, appellants and or the members of the DLSUEA-COMELEC headed by Mr. Dominador Almodovar or any of their authorized representatives are hereby directed to cease and desist from holding the general election of DLSUEA officers on 9 July 2001, until further ordered by this Office. SO ORDERED.4 (Emphasis and underscoring supplied) The Aliazas group thereupon, via letter of August 7, 2001 to Brother Rolando Dizon, FSC, President of petitioner DLSU, requested the University "to please put on escrow all union dues/agency fees and whatever money considerations deducted from salaries of concerned co-academic personnel until such time that an election of union officials has been scheduled and subsequent elections has been held." 5 (Underscoring in the original; emphasis supplied) Responding to the Aliazas groups request, petitioners, citing the abovementioned DOLE and BLR Orders, advised respondent by letter of August 16, 2001 as follows: x x x By virtue of the 19 March 2001 Decision and the 06 July 2001 Order of the Department of Labor and Employment (DOLE), the hold-over authority of your incumbent set of officers has been considered extinguished and an election of new union officers, to be conducted and supervised by the DOLE has been directed to be held. Until the result of this election comes out and a declaration by the DOLE of the validly elected officers is made, a void in the Union leadership exists. In the light of these circumstances, the University has no other alternative but to temporarily do the following : 1. Establish a savings account for the Union where all collected union dues and agency fees will be deposited and held in trust; and 2. Discontinue normal relations with any group within the Union including the incumbent set of officers. We are informing you of this decision of the University not only for your guidance but also for the apparent reason that the University does not want itself to be unnecessarily involved in your intra-union dispute. This is the only way that the University can maintain neutrality on this matter of grave concern. (Emphasis and underscoring supplied) Petitioners above-quoted move drew respondent to file a complaint against petitioners for Unfair Labor Practice (ULP complaint), claiming that petitioners unduly interfered with its internal affairs and discriminated against its members. The ULP complaint was docketed as NLRC-NCR Case No. S30-08-03757-01. During the pendency of its ULP complaint or on March 7, 2002, respondent filed its First Notice of Strike with the Office of the Secretary of Labor (OSL), charging petitioners for 1) gross violation of the CBA and 2) bargaining in bad faith which was certified for compulsory arbitration to the NLRC (certified case). The certified case, docketed as NLRC-NCR CC000222-02, was raffled to the NLRC Third Division. In the meantime, Labor Arbiter Felipe Pati, by Decision of July 12, 2002, dismissed respondents ULP complaint. Respondent appealed to the NLRC. The appeal was docketed as NLRC-NCR CA No. 033173-02 and lodged at the NLRC Second Division. While the dismissal of its ULP complaint was pending appeal before the NLRC Second Division, respondent, on behalf of some of its members, filed four other cases against petitioners which were lodged at the NLRC Second Division. Respondent thereafter filed in the certified case which was lodged at the NLRC Third Division a motion to have its four other cases and its ULP complaint then pending appeal before the NLRC Second Division to have these cases "subsumed" in the certified case. The NLRC Third Division granted respondents motion by Order of April 30, 2003. Petitioners moved to reconsider this Order but it was denied, prompting petitioners to elevate the matter via certiorari to the Court of Appeals. This petition, docketed as CA G.R. No. SP-79798, was raffled to the appellate courts Tenth Division. The NLRC Second Division, in the meantime, affirmed by Decision of June 26, 2003, the dismissal by the Arbiter of respondents ULP complaint. Respondent thus elevated the case to the Court of Appeals via certiorari, docketed as CA-G.R. No. 81220. This was raffled to the appellate courts First Division. By Decision of June 17, 2004, the Court of Appeals Tenth Division, to which petitioners certiorari petition in CA-G.R. No. SP-79798 challenging the April 30, 2003 NLRC Third Division Order "subsuming" respondents complaints including the ULP Complaint under the certified case, REVERSED the said Order of the NLRC Third Division6 with respect to the "subsuming" of respondents ULP complaint under the certified case, the ULP complaint having been, at the time the NLRC Third Division Order was issued, "already disposed of" (dismissed) by the Arbiter and was in fact pending appeal before the NLRC Second Division. Thus the Tenth Division of the appellate court held: Anent ULP case with docket No. NLRC-NCR Case No. S-30-08-03757-01 raffled to Labor Arbiter Pati for resolution, private respondent gravely erred in including it among the cases to be consolidated with NLRC NCR CC No. 000222-02. The case is obviously no longer under arbitration. The records show that when complainant-appellee (respondent Union) filed its motion to consolidate the cases on January 28, 2003 and the resolution of the said motion by the Third Division of the NLRC on April 30, 2003 granting the desired consolidation, NLRC-NCR Case No. S-30-08-03757-01 had already been disposed of by Labor Arbiter Pati and was, in fact, already on appeal before the Second Division of the NLRC , docketed therein as NLRCNCR CA No. 033173-02. According to the Union itself, on June 26, 2003, the NLRC affirmed the decision of Labor Arbiter Pati and on September 30, 2003, it denied the Unions motion for reconsideration. x x x (Citation omitted) The NLRC had thus already exhausted its jurisdiction over NLRC-NCR CA No. 033173-02. Consequently, the same case is now removed from the ambit of compulsory arbitration and may only be subject of judicial review via the special civil action of certiorari in this Court. But we are not informed if such a judicial action has been taken.7 (Emphasis and underscoring supplied) The Court of Appeals First Division subsequently resolving respondents petition for certiorari in CA-G.R. No. 81220 (which assailed the affirmance by the NLRC Second Division of the Arbiters dismissal of its ULP complaint), upon the sole issue of "whether the NLRC [ Second Division] committed grave abuse of discretion . . . in ignoring the order of the [NLRC] 3rd Division declaring subsumed or absorbed [herein respondents ULP complaint] in the certified case," answered the same in the affirmative via the herein challenged September 16, 2005 Decision. It thus set aside the NLRC Second Division Order affirming the dismissal of respondents ULP complaint and accordingly ordered said NLRC Second Division to transmit the entire records of the ULP complaint to the NLRC Third Division to which said ULP complaint had priorly been ordered consolidated by the latter Division with the certified case. WHEREFORE, premises considered, the petition is granted. Accordingly, the Order dated June 26, 2003 of National Labor Relations Commission (NLRC) as well as the Order dated September 30, 2003 are hereby set aside. The 2nd Division of the NLRC is hereby directed to transmit the entire records of the case to the 3rd Division [of the NLRC] for its resolution. SO ORDERED.8 (Underscoring supplied)

Hence, petitioners petition for review on certiorari at bar. Petitioners contend that the First Division of the Court of Appeals disregarded the ruling of the appellate courts Tenth Division setting aside the NLRC Third Division Order "subsuming" respondents ULP complaint, which was lodged at the NLRC Second Division, under the certified case pending with said NLRC Third Division. They fault the First Division of the appellate court for I . . . RULING THAT THE SECOND DIVISION OF THE NLRC COMMITTED SERIOUS ERROR OR GRAVE ABUSE OF DISCRETION WHEN IT AFFIRMED THE RULING OF LABOR ARBITER FELIPE P. PATI DATED 12 JULY 2002 (THROUGH ITS RESOLUTION AND ORDER DATED 26 JUNE 2003 AND 30 SEPTEMBER 2003, RESPECTIVELY) CONSIDERING THAT: A. WHEN THE NLRCS SECOND DIVISION RENDERED ITS 26 JUNE 2003 RESOLUTION, WHICH DISMISSED THE APPEAL FILED BY THE UNION AND AFFIRMED THE 12 JULY 2002 DECISION OF LABOR ARBITER FELIPE P. PATI IN NLRC NCR CASE NO. 30-08-0357-01 (NLRC NCR CA NO. 03317302), THE CONSOLIDATION ORDER OF THE NLRC THIRD DIVISION IN NCMB-NCR-NS NO. 03-093-02 (NLRC NCR CC NO. 000222-02) WHICH WAS ISSUED ON 30 APRIL 2003 HAD NOT YET ATTAINED FINALITY. B. . . . [NOT] TAK[ING] COGNIZANCE OF THE DECISION RENDERED BY THE TENTH DIVISION OF THE SAME COURT DATED 17 JUNE 2004, ANNULLING AND SETTING ASIDE THE 30 APRIL 2003 AND 28 JULY 2003 RESOLUTIONS OF THE THIRD DIVISION, WHICH ORDERED THE CONSOLIDATION OF ALL CASES FILED BY THE UNION AGAINST THE UNIVERSITY.9 In any event, petitioners contend that II THE SECOND DIVISION OF THE NLRC DID NOT GRAVELY ABUSE ITS DISCRETION WHEN IT HELD THAT THE PETITIONERS WERE NOT GUILTY OF UNFAIR LABOR PRACTICE, CONSIDERING THAT THE TEMPORARY MEASURES IMPLEMENTED BY THE UNIVERSITY WERE UNDERTAKEN IN GOOD FAITH AND ONLY TO MAINTAIN ITS NEUTRALITY AMID THE INTRA-UNION DISPUTE."10 (Underscoring supplied) The petition is partly meritorious. The June 17, 2004 Decision of the appellate courts Tenth Division setting aside the order of consolidation issued by the NLRC Third Division became final and executory on July 11, 2004. The herein challenged appellate courts First Division Decision reversing the NLRC Second Division Order which affirmed the dismissal of respondents ULP complaint and directing that the records of said complaint be transmitted to the NLRC Third Division was promulgated on September 16, 2005. It is thus clear that the appellate courts Tenth Division Decision declaring that the NLRC Third Divisions order "subsuming" respondents ULP complaint (then pending appeal before the NLRC Second Division) under the certified case pending before it (NLRC Third division) had become final and executory on July 11, 2004. Therefore, with respect to the herein challenged Decision of the appellate courts First Division ordering the NLRC Second Division to transmit the records of respondents ULP complaint to the NLRC Third Division, the same can no longer be effected, the appellate courts Tenth Division ruling having, it bears repeating, become final. To still transmit to the NLRC Third Division respondents ULP complaint on appeal which has already been resolved by the NLRC Second Division would lead to absurd consequences.1avvphi1 On the other matter raised by petitioners that their acts of withholding union and agency dues and suspension of normal relations with respondents incumbent set of officers pending the intra-union dispute did not constitute interference, the Court finds for respondent. Pending the final resolution of the intra-union dispute, respondents officers remained duly authorized to conduct union affairs. The clarification letter of May 16, 2003 issued by BLR Director Hans Leo J. Cacdac enlightens: We take this opportunity to clarify that there is no void in the DLSUEA leadership. The 19 March 2001 Decision of DOLE-NCR Regional Director should not be construed as an automatic termination of the incumbent officers tenure of office. As duly-elected officers of the DLSUEA, their leadership is not deemed terminated by the expiration of their terms of office, for they shall continue their functions and enjoy the rights and privileges pertaining to their respective positions in a hold-over capacity, until their successors shall have been elected and qualified.11 (Emphasis and underscoring supplied)1avvphi1 It bears noting that at the time petitioners questioned moves were adopted, a valid and existing CBA had been entered between the parties. It thus behooved petitioners to observe the terms and conditions thereof bearing on union dues and representation. It is axiomatic in labor relations that a CBA entered into by a legitimate labor organization and an employer becomes the law between the parties, compliance with which is mandated by express policy of the law.12 Respecting the issue of damages, respondent, in its Position Paper before the Labor Arbiter, prayed for the award of exemplary damages, nominal damages, and attorneys fees.1avvphi1 Exemplary or corrective damages are imposed by way of example or correction for the public good in addition to the moral, temperate, liquidated or compensatory damages. While the amount of exemplary damages need not be proved, respondent must show proof of entitlement to moral, temperate or compensatory damages before the Court may consider awarding exemplary damages. No such damages were prayed for, however, hence, the Court finds no basis to grant the prayer for exemplary damages. Nonetheless, the grant of nominal damages and attorneys fees to respondent under Article 2221 13 and Article 2208 (8)14 of the Civil Code, respectively, is in order. WHEREFORE, the petition, insofar as the challenged Court of Appeals First Division Decision ordering the transmittal by the NLRC Second Division of the records of respondents ULP complaint to the NLRC Third Division is concerned, has become moot. In so far as the petition involves the merits of the NLRC Second Division Decision is concerned, the same is REVERSED and a NEW one is entered finding petitioners liable for Unfair Labor Practice, and ordering them to pay respondent nominal damages in the amount of P250,000 and attorneys fees in the amount of P50,000. G.R. Nos. 158930-31 March 3, 2008 UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU), petitioner, vs. NESTL PHILIPPINES, INCORPORATED, respondent. x------------------------------------------x G.R. Nos. 158944-45 March 3, 2008 NESTL PHILIPPINES, INCORPORATED, petitioner, vs. UNION OF FILIPRO EMPLOYEES - DRUG, FOOD AND ALLIED INDUSTRIES UNIONS - KILUSANG MAYO UNO (UFE-DFA-KMU), respondent. RESOLUTION CHICO-NAZARIO, J.: On 22 August 2006, this Court promulgated its Decision 1 in the above-entitled cases, the dispositive part of which reads WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that Nestl be declared to have committed unfair labor practice in allegedly setting a precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45, however, is PARTLY GRANTED in that we REVERSE the ruling of the Court of Appeals in CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely abused her discretion in failing to confine her assumption of jurisdiction power over the ground rules of the CBA negotiations; but the ruling of the Court of Appeals on the inclusion of the Retirement Plan as a valid issue in the collective bargaining negotiations between UFE-DFA-KMU and Nestl is AFFIRMED. The parties are directed to resume negotiations respecting the Retirement Plan and to take action consistent with the discussions hereinabove set forth. No costs. Subsequent thereto, Nestl Philippines, Incorporated (Nestl) filed a Motion for Clarification 2 on 20 September 2006; while Union of Filipro Employees Drug, Food and Allied Industries Union Kilusang Mayo Uno (UFE-DFA-KMU), on 21 September 2006, filed a Motion for Partial Reconsideration 3 of the foregoing Decision. The material facts of the case, as determined by this Court in its Decision, may be summarized as follows: UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-and-file employees of Nestl belonging to the latters Alabang and Cabuyao plants. On 4 April 2001, as the existing collective bargaining agreement (CBA) between Nestl and UFE-DFA-KMU 4 was to end on 5 June 2001, 5 the Presidents of the Alabang and Cabuyao Divisions of UFE-DFA-KMU informed Nestl of their intent to "open [our] new Collective Bargaining Negotiation for the year 2001-2004 x x x as early as June 2001." 6 In response thereto, Nestl informed them that it was also preparing its own counter-proposal and proposed ground rules to govern the impending conduct of the CBA negotiations.

On 29 May 2001, in another letter to the UFE-DFA-KMU (Cabuyao Division only) 7, Nestl reiterated its stance that "unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom ."8 Dialogue between the company and the union thereafter ensued. On 14 August 2001, however, Nestl requested 9 the National Conciliation and Mediation Board (NCMB), Regional Office No. IV, Imus, Cavite, to conduct preventive mediation proceedings between it and UFE-DFA-KMU owing to an alleged impasse in said dialogue; i.e., that despite fifteen (15) meetings between them, the parties failed to reach any agreement on the proposed CBA. Conciliation proceedings proved ineffective, though, and the UFE-DFA-KMU filed a Notice of Strike10 on 31 October 2001 with the NCMB, complaining, in essence, of a bargaining deadlock pertaining to economic issues, i.e., "retirement (plan), panel composition, costs and attendance, and CBA". 11 On 07 November 2001, another Notice of Strike12 was filed by the union, this time predicated on Nestls alleged unfair labor practices, that is, bargaining in bad faith by setting pre-conditions in the ground rules and/or refusing to include the issue of the Retirement Plan in the CBA negotiations. The result of a strike vote conducted by the members of UFE-DFA-KMU yielded an overwhelming approval of the decision to hold a strike. 13 On 26 November 2001, prior to holding the strike, Nestl filed with the DOLE a Petition for Assumption of Jurisdiction, 14 praying for the Secretary of the DOLE, Hon. Patricia A. Sto. Tomas, to assume jurisdiction over the current labor dispute in order to effectively enjoin any impending strike by the members of the UFE-DFA-KMU at the Nestls Cabuyao Plant in Laguna. On 29 November 2001, Sec. Sto. Tomas issued an Order15 assuming jurisdiction over the subject labor dispute. The fallo of said Order states that: CONSIDERING THE FOREGOING, this Office hereby assumes jurisdiction over the labor dispute at the Nestl Philippines, Inc. (Cabuyao Plant) pursuant to Article 263 (g) of the Labor Code, as amended. Accordingly, any strike or lockout is hereby enjoined. The parties are directed to cease and desist from committing any act that might lead to the further deterioration of the current labor relations situation. The parties are further directed to meet and convene for the discussion of the union proposals and company counter-proposals before the National Conciliation and Mediation Board (NCMB) who is hereby designated as the delegate/facilitator of this Office for this purpose. The NCMB shall report to this Office the results of this attempt at conciliation and delimitation of the issues within thirty (30) days from the parties receipt of this Order, in no case later than December 31, 2001. If no settlement of all the issues is reached, this Office shall thereafter define the outstanding issues and order the filing of position papers for a ruling on the merits. UFE-DFA-KMU sought reconsideration 16 of the above but nonetheless moved for additional time to file its position paper as directed by the Assumption of Jurisdiction Order. On 14 January 2002, Sec. Sto. Tomas denied said motion for reconsideration. On 15 January 2002, despite the order enjoining the conduct of any strike or lockout and conciliation efforts by the NCMB, the employee members of UFE-DFA-KMU at Nestls Cabuyao Plant went on strike. In view of the above, in an Order dated on 16 January 2002, Sec. Sto. Tomas directed: (1) the members of UFE-DFA-KMU to return-to-work within twentyfour (24) hours from receipt of such Order; (2) Nestl to accept back all returning workers under the same terms and conditions existing preceding to the strike; (3) both parties to cease and desist from committing acts inimical to the on-going conciliation proceedings leading to the further deterioration of the situation; and (4) the submission of their respective position papers within ten (10) days from receipt thereof. But notwithstanding the Return-toWork Order, the members of UFE-DFA-KMU continued with their strike, thus, prompting Sec. Sto. Tomas to seek the assistance of the Philippine National Police (PNP) for the enforcement of said order. On 7 February 2002, Nestl and UFE-DFA-KMU filed their respective position papers. Nestl addressed several issues concerning economic provisions of the CBA as well as the non-inclusion of the issue of the Retirement Plan in the collective bargaining negotiations. On the other hand, UFE-DFA-KMU limited itself to the issue of whether or not the retirement plan was a mandatory subject in its CBA negotiations. On 11 February 2002, Sec. Sto. Tomas allowed UFE-DFA-KMU the chance to tender its stand on the other issues raised by Nestl but not covered by its initial position paper by way of a Supplemental Position Paper. UFE-DFA-KMU, instead of filing the above-mentioned supplement, filed several pleadings, one of which was a Manifestation with Motion for Reconsideration of the Order dated February 11, 2002 assailing the Order of February 11, 2002 for supposedly being contrary to law, jurisprudence and the evidence on record. The union posited that Sec. Sto. Tomas "could only assume jurisdiction over the issues mentioned in the notice of strike subject of the current dispute," 17 and that the Amended Notice of Strike it filed did not cite, as one of the grounds, the CBA deadlock. On 8 March 2002, Sec. Sto. Tomas denied the motion for reconsideration of UFE-DFA-KMU. Thereafter, UFE-DFA-KMU filed a Petition for Certiorari18 before the Court of Appeals, alleging that Sec. Sto. Tomas committed grave abuse of discretion amounting to lack or excess of jurisdiction when she issued the Orders of 11 February 2002 and 8 March 2002. In the interim, in an attempt to finally resolve the crippling labor dispute between the parties, then Acting Secretary of the DOLE, Hon. Arturo D. Brion, came out with an Order19 dated 02 April 2002, ruling that: a. we hereby recognize that the present Retirement Plan at the Nestl Cabuyao Plant is a unilateral grant that the parties have expressly so recognized subsequent to the Supreme Courts ruling in Nestl, Phils. Inc. vs. NLRC, G.R. No. 90231, February 4, 1991, and is therefore not a mandatory subject for bargaining; b. the Unions charge of unfair labor practice against the Company is hereby dismissed for lack of merit; c. the parties are directed to secure the best applicable terms of the recently concluded CBSs between Nestl Phils. Inc. and it eight (8) other bargaining units, and to adopt these as the terms and conditions of the Nestl Cabuyao Plant CBA; d. all union demands that are not covered by the provisions of the CBAs of the other eight (8) bargaining units in the Company are hereby denied; e. all existing provisions of the expired Nestl Cabuyao Plant CBA without any counterpart in the CBAs of the other eight bargaining units in the Company are hereby ordered maintained as part of the new Nestl Cabuyao Plant CBA; f. the parties shall execute their CBA within thirty (30) days from receipt of this Order, furnishing this Office a copy of the signed Agreement; g. this CBA shall, in so far as representation is concerned, be for a term of five (5) years; all other provisions shall be renegotiated not later than three (3) years after its effective date which shall be December 5, 2001 (or on the first day six months after the expiration on June 4, 2001 of the superceded CBA). UFE-DFA-KMU moved to reconsider the aforequoted ruling, but such was subsequently denied on 6 May 2002. For the second time, UFE-DFA-KMU went to the Court of Appeals via another Petition for Certiorari seeking to annul the Orders of 02 April 2002 and 06 May 2002 of the Secretary of the DOLE, having been issued in grave abuse of discretion amounting to lack or excess of jurisdiction. On 27 February 2003, the appellate court promulgated its Decision on the twin petitions for certiorari, ruling entirely in favor of UFE-DFA-KMU, the dispositive part thereof stating WHEREFORE, in view of the foregoing, there being grave abuse on the part of the public respondent in issuing all the assailed Orders, both petitions are hereby GRANTED. The assailed Orders dated February 11, 2001, and March 8, 2001 (CA-G.R. SP No. 69805), as well as the Orders dated April 2, 2002 and May 6, 2002 (CA-G.R. SP No. 71540) of the Secretary of Labor and Employment in the case entitled: "IN RE: LABOR DISPUTE AT NESTLE PHILIPPINES INC. (CABUYAO FACTORY)" under OS-AJ-0023-01 (NCMB-RBIV-CAV-PM-08-035-01, NCMB-RBIV-LAG-NS-10-03701, NCMB-RBIV-LAG-NS-11-10-03901) are hereby ANNULLED and SET ASIDE. Private respondent is hereby directed to resume the CBA negotiations with the petitioner. 20 Both parties appealed the aforequoted ruling. Nestl essentially assailed that part of the decision finding the DOLE Secretary to have gravely abused her discretion amounting to lack or excess of jurisdiction when she ruled that the Retirement Plan was not a valid issue to be tackled during the CBA negotiations; UFE-DFA-KMU, in contrast, questioned the appellate courts decision finding Nestl free and clear of any unfair labor practice. Since the motions for reconsideration of both parties were denied by the Court of Appeals in a joint Resolution dated 27 June 2003, UFE-DFA-KMU and Nestl separately filed the instant Petitions for Review on Certiorari under Rule 45 of the Rules of Court, as amended. G.R. No. 158930-31 was filed by UFE-DFA-KMU against Nestl seeking to reverse the Court of Appeals Decision insofar as the appellate courts failure to find Nestl guilty of unfair labor practice was concerned; while G.R. No. 158944-45 was instituted by Nestl against UFE-DFA-KMU likewise looking to annul and set aside the part of the Court of Appeals Decision declaring that: 1) the Retirement Plan was a valid collective bargaining issue; and 2) the scope of the power of the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the labor dispute between UFE-DFAKMU and Nestl was limited to the resolution of questions and matters pertaining merely to the ground rules of the collective bargaining negotiations to be conducted between the parties. On 29 March 2004, this Court resolved 21 to consolidate the two petitions inasmuch as they (1) involved the same set of parties; (2) arose from the same set of circumstances, i.e., from several Orders issued by then DOLE Secretary, Hon. Patricia A. Sto. Tomas, respecting her assumption of jurisdiction over

the labor dispute between Nestl and UFE-DFA-KMU, Alabang and Cabuyao Divisions; 22 and (3) similarly assailed the same Decision and Resolution of the Court of Appeals. After giving due course to the instant consolidated petitions, this Court promulgated on 22 August 2006 its Decision, now subject of UFE-DFA-KMUs Motion for Partial Reconsideration and Nestls Motion for Clarification. In its Motion for Partial Reconsideration, UFE-DFA-KMU would have this Court address and discuss anew points or arguments that have basically been passed upon in this Courts 22 August 2006 Decision. Firstly, it questions this Courts finding that Nestl was not guilty of unfair labor practice, considering that the transaction speaks for itself, i.e, res ipsa loquitor . And made an issue again is the question of whether or not the DOLE Secretary can take cognizance of matters beyond the amended Notice of Strike. As to Nestls prayer for clarification, the corporation seeks elucidation respecting the dispositive part of this Courts Decision directing herein parties to resume negotiations on the retirement compensation package of the concerned employees. It posits that "[i]n directing the parties to negotiate the Retirement Plan, the Honorable Court x x x might have overlooked the fact that here, the Secretary of Labor had already assumed jurisdiction over the entire 2001-2004 CBA controversy x x x." As to the charge of unfair labor practice : The motion does not put forward new arguments to substantiate the prayer for reconsideration of this Courts Decision except for the sole contention that the transaction speaks for itself, i.e., res ipsa loquitor . Nonetheless, even a perusal of the arguments of UFE-DFA-KMU in its petition and memorandum in consideration of the point heretofore raised will not convince us to change our disposition of the question of unfair labor practice. UFEDFA-KMU argues therein that Nestls "refusal to bargain on a very important CBA economic provision constitutes unfair labor practice." 23 It explains that Nestl set as a precondition for the holding of collective bargaining negotiations the non-inclusion of the issue of Retirement Plan. In its words, "respondent Nestl Phils., Inc. insisted that the Union should first agree that the retirement plan is not a bargaining issue before respondent Nestl would agree to discuss other issues in the CBA." 24 It then concluded that "the Court of Appeals committed a legal error in not ruling that respondent company is guilty of unfair labor practice. It also committed a legal error in failing to award damages to the petitioner for the ULP committed by the respondent."25 We are unconvinced still. The duty to bargain collectively is mandated by Articles 252 and 253 of the Labor Code, as amended, which state ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours, of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession. ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms of conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. Obviously, the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties; but the failure to reach an agreement after negotiations have continued for a reasonable period does not establish a lack of good faith. The statutes invite and contemplate a collective bargaining contract, but they do not compel one. The duty to bargain does not include the obligation to reach an agreement. The crucial question, therefore, of whether or not a party has met his statutory duty to bargain in good faith typically turns on the facts of the individual case. As we have said, there is no per se test of good faith in bargaining. Good faith or bad faith is an inference to be drawn from the facts. To some degree, the question of good faith may be a question of credibility. The effect of an employers or a unions individual actions is not the test of good-faith bargaining, but the impact of all such occasions or actions, considered as a whole, and the inferences fairly drawn therefrom collectively may offer a basis for the finding of the NLRC.26 For a charge of unfair labor practice to prosper, it must be shown that Nestl was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings, or grave anxiety resulted x x x"27 in disclaiming unilateral grants as proper subjects in their collective bargaining negotiations. While the law makes it an obligation for the employer and the employees to bargain collectively with each other, such compulsion does not include the commitment to precipitately accept or agree to the proposals of the other. All it contemplates is that both parties should approach the negotiation with an open mind and make reasonable effort to reach a common ground of agreement. Herein, the union merely bases its claim of refusal to bargain on a letter 28 dated 29 May 2001 written by Nestl where the latter laid down its position that "unilateral grants, one-time company grants, company-initiated policies and programs, which include, but are not limited to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA negotiations and therefore shall be excluded therefrom." But as we have stated in this Courts Decision, said letter is not tantamount to refusal to bargain. In thinking to exclude the issue of Retirement Plan from the CBA negotiations, Nestl, cannot be faulted for considering the same benefit as unilaterally granted, considering that eight out of nine bargaining units have allegedly agreed to treat the Retirement Plan as a unilaterally granted benefit. This is not a case where the employer exhibited an indifferent attitude towards collective bargaining, because the negotiations were not the unilateral activity of the bargaining representative. Nestls desire to settle the dispute and proceed with the negotiation being evident in its cry for compulsory arbitration is proof enough of its exertion of reasonable effort at good-faith bargaining. In the case at bar, Nestle never refused to bargain collectively with UFE-DFA-KMU. The corporation simply wanted to exclude the Retirement Plan from the issues to be taken up during CBA negotiations, on the postulation that such was in the nature of a unilaterally granted benefit. An employers steadfast insistence to exclude a particular substantive provision is no different from a bargaining representatives perseverance to include one that they deem of absolute necessity. Indeed, an adamant insistence on a bargaining position to the point where the negotiations reach an impasse does not establish bad faith.[fn24 p.10] It is but natural that at negotiations, management and labor adopt positions or make demands and offer proposals and counter-proposals. On account of the importance of the economic issue proposed by UFE-DFA-KMU, Nestle could have refused to bargain with the former but it did not. And the managements firm stand against the issue of the Retirement Plan did not mean that it was bargaining in bad faith. It had a right to insist on its position to the point of stalemate. The foregoing things considered, this Court replicates below its clear disposition of the issue: The concept of "unfair labor practice" is defined by the Labor Code as: ART. 247. CONCEPT OF UNFAIR LABOR PRACTICE AND PROCEDURE FOR PROSECUTION THEREOF . Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. x x x x. The same code likewise provides the acts constituting unfair labor practices committed by employers, to wit: ART. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. It shall be unlawful for an employer to commit any of the following unfair labor practices: (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; (b) To require as a condition of employment that a person or an employee shall not join a labor organization or shall withdraw from one to which he belongs; (c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization; (d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters; (e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining agent, if

such non-union members accept the benefits under the collective agreement. Provided, That the individual authorization required under Article 242, paragraph (o) of this Code shall not apply to the nonmembers of the recognized collective bargaining agent; [The article referred to is 241, not 242. CAA] (f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having given or being about to give testimony under this Code; (g) To violate the duty to bargain collectively as prescribed by this Code; (h) To pay negotiation or attorneys fees to the union or its officers or agents as part of the settlement of any issue in collective bargaining or any other dispute; or (i) To violate a collective bargaining agreement. The provisions of the preceding paragraph notwithstanding, only the officers and agents of corporations associations or partnerships who have actually participated, authorized or ratified unfair labor practices shall be held criminally liable. (Emphasis supplied.) Herein, Nestl is accused of violating its duty to bargain collectively when it purportedly imposed a pre-condition to its agreement to discuss and engage in collective bargaining negotiations with UFE-DFA-KMU. A meticulous review of the record and pleadings of the cases at bar shows that, of the two notices of strike filed by UFE-DFA-KMU before the NCMB, it was only on the second that the ground of unfair labor practice was alleged. Worse, the 7 November 2001 Notice of Strike merely contained a general allegation that Nestl committed unfair labor practice by bargaining in bad faith for supposedly "setting pre-condition in the ground rules (Retirement issue)." (Notice of Strike of 7 November 2001; Annex "C" of UFE-DFA-KMU Position Paper; DOLE original records, p. 146.) In contrast, Nestl, in its Position Paper, did not confine itself to the issue of the non-inclusion of the Retirement Plan but extensively discussed its stance on other economic matters pertaining to the CBA. It is UFE-DFA-KMU, therefore, who had the burden of proof to present substantial evidence to support the allegation of unfair labor practice. A perusal of the allegations and arguments raised by UFE-DFA-KMU in the Memorandum (in G.R. Nos. 158930-31) will readily disclose the need for the presentation of evidence other than its bare contention of unfair labor practice in order to make certain the propriety or impropriety of the ULP charge hurled against Nestl. Under Rule XIII, Sec. 4, Book V of the Implementing Rules of the Labor Code: x x x. In cases of unfair labor practices, the notice of strike shall as far as practicable, state the acts complained of and the efforts to resolve the dispute amicably." (Emphasis supplied.) In the case at bar, except for the assertion put forth by UFE-DFA-KMU, neither the second Notice of Strike nor the records of these cases substantiate a finding of unfair labor practice. It is not enough that the union believed that the employer committed acts of unfair labor practice when the circumstances clearly negate even a prima facie showing to warrant such a belief. ( Tiu v. National Labor Relations Commission, G.R. No. 123276, 18 August 1997, 277 SCRA 681, 688.) Employers are accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. ( Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) This mass of privileges comprises the so-called management prerogatives. (Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) In this connection, the rule is that good faith is always presumed. As long as the companys exercise of the same is in good faith to advance its interest and not for purpose of defeating or circumventing the rights of employees under the law or a valid agreement, such exercise will be upheld. (Capitol Medical Center, Inc. v. Meris, G.R. No. 155098, 16 September 2005, 470 SCRA 125, 136.) There is no per se test of good faith in bargaining. ( Hongkong Shanghai Banking Corporation Employees Union v. National Labor Relations Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.) Good faith or bad faith is an inference to be drawn from the facts. (Hongkong Shanghai Banking Corporation Employees Union v. National Labor Relations Commission , G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.) Herein, no proof was presented to exemplify bad faith on the part of Nestl apart from mere allegation. Construing arguendo that the content of the aforequoted letter of 29 May 2001 laid down a pre-condition to its agreement to bargain with UFE-DFA-KMU, Nestls inclusion in its Position Paper of its proposals affecting other matters covered by the CBA negates the claim of refusal to bargain or bargaining in bad faith. Accordingly, since UFE-DFA-KMU failed to proffer substantial evidence that would overcome the legal presumption of good faith on the part of Nestl, the award of moral and exemplary damages is unavailing. As to the jurisdiction of the DOLE Secretary under the amended Notice of Strike: This Court is not convinced by the argument raised by UFE-DFA-KMU that the DOLE Secretary should not have gone beyond the disagreement on the ground rules of the CBA negotiations. The union doggedly asserts that the entire labor dispute between herein parties concerns only the ground rules. Lest it be forgotten, it was UFE-DFA-KMU which first alleged a bargaining deadlock as the basis for the filing of its Notice of Strike; and at the time of the filing of the first Notice of Strike, several conciliation conferences had already been undertaken where both parties had already exchanged with each other their respective CBA proposals. In fact, during the conciliation meetings before the NCMB, but prior to the filing of the notices of strike, the parties had already delved into matters affecting the meat of the collective bargaining agreement. The Secretary of the DOLE simply relied on the Notices of Strike that were filed by UFE-DFA-KMU as stated in her Order of 08 March 2002, to wit: x x x The records disclose that the Union filed two Notices of Strike. The First is dated October 31, 2001 whose grounds are cited verbatim hereunder: "A. Bargaining Deadlock 1. Economic issues (specify) 1. Retirement 2. Panel Composition 3. Costs and Attendance 4. CBA" The second Notice of Strike is dated November 7, 2001 and the cited ground is like quoted verbatim below: "B. Unfair Labor Practices (specify) Bargaining in bad faith Setting pre-condition in the ground rules (Retirement issue)" Nowhere in the second Notice of Strike is it indicated that this Notice is an amendment to and took the place of the first Notice of Strike. In fact, our Assumption of Jurisdiction Order dated November 29, 2001 specifically cited the two (2) Notices of Strike without any objection on the part of the Union x x x.29 Had the parties not been at the stage where the substantive provisions of the proposed CBA had been put in issue, the union would not have based thereon its initial notice to strike. This Court maintains its original position in the Decision that, based on the Notices of Strike filed by UFE-DFA-KMU, the Secretary of the DOLE rightly decided on matters of substance. That the union later on changed its mind is of no moment because to give premium to such would make the legally mandated discretionary power of the Dole Secretary subservient to the whims of the parties. As to the point of clarification on the resumption of negotiations respecting the Retirement Plan : As for the supposed confusion or uncertainty of the dispositive part of this Courts Decision, Nestle moves for clarification of the statement "The parties are directed to resume negotiations respecting the Retirement Plan and to take action consistent with the discussion hereinabove set forth. No costs." The entire fallo of this Courts Decision reads: WHEREFORE, in view of the foregoing, the Petition in G.R. No. 158930-31 seeking that Nestl be declared to have committed unfair labor practice in allegedly setting a precondition to bargaining is DENIED. The Petition in G.R. No. 158944-45, however, is PARTLY GRANTED in that we REVERSE the ruling of the Court of Appeals in CA G.R. SP No. 69805 in so far as it ruled that the Secretary of the DOLE gravely abused her discretion in failing to confine her assumption of jurisdiction power over the ground rules of the CBA negotiations; but the ruling of the Court of Appeals on the inclusion of the Retirement Plan as a valid issue in the collective bargaining negotiations between UFE-DFA-KMU and Nestl is AFFIRMED. The parties are directed to resume negotiations respecting the Retirement Plan and to take action consistent with the discussions hereinabove set forth. No costs. Nestle interprets the foregoing as an order for the parties to resume negotiations by themselves respecting the issue of retirement benefits due the employees of the Cabuyao Plant. Otherwise stated, Nestle posits that the dispositive part of the Decision directs the parties to submit to a voluntary mode of dispute settlement. A read-through of this Courts Decision reveals that the ambiguity is more ostensible than real. This Courts Decision of 22 August 2006 designated marked boundaries as to the implications of the assailed Orders of the Secretary of the DOLE. We said therein that 1) the Retirement Plan is still a valid issue for herein parties collective bargaining negotiations; 2) the Court of Appeals committed reversible error in limiting to the issue of the ground rules the scope of the power of the Secretary of Labor to assume jurisdiction over the subject labor dispute; and 3) Nestl is not guilty of unfair labor practice.

Nowhere in our Decision did we require parties to submit to negotiate by themselves the tenor of the retirement benefits of the concerned employees of Nestl, precisely because the Secretary of the DOLE had already assumed jurisdiction over the labor dispute subject of herein petitions. Again, we spell out what encompass the Secretarys assumption of jurisdiction power. The Secretary of the DOLE has been explicitly granted by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. And, as a matter of necessity, it includes questions incidental to the labor dispute; that is, issues that are necessarily involved in the dispute itself, and not just to that ascribed in the Notice of Strike or otherwise submitted to him for resolution. In the case at bar, the issue of retirement benefits was specifically what was presented before the Secretary of the DOLE; hence, We reject Nestls interpretation. Our decision is crystal and cannot be interpreted any other way. The Secretary having already assumed jurisdiction over the labor dispute subject of these consolidated petitions, the issue concerning the retirement benefits of the concerned employees must be remanded back to him for proper disposition. All told, in consideration of the points afore-discussed and the fact that no substantial arguments have been raised by either party, this Court remains unconvinced that it should modify or reverse in any way its disposition of herein cases in its earlier Decision. The labor dispute between the Nestle and UFE-DFA-KMU has dragged on long enough. As no other issues are availing, let this Resolution write an ending to the protracted labor dispute between Nestl and UFE-DFA-KMU (Cabuyao Division). WHEREFORE, premises considered, the basic issues of the case having been passed upon and there being no new arguments availing, the Motion for Partial Reconsideration is hereby DENIED WITH FINALITY for lack of merit. Let these cases be remanded to the Secretary of the Department of Labor and Employment for proper disposition, consistent with the discussions in this Courts Decision of 22 August 2006 and as hereinabove set forth. No costs. G.R. No. 168569 October 5, 2007 SAN MIGUEL FOODS, INC., petitioner, vs. SAN MIGUEL CORPORATION EMPLOYEES UNION-PTWGO, respondent. DECISION CARPIO MORALES, J.: The present petition for review on certiorari raises the issue of whether respondents complaint is one for unfair labor practice (ULP) over which a Labor Arbiter has jurisdiction. At the time material to the case, respondent, San Miguel Corporation Employees Union PTWGO (the Union), was the sole bargaining agent of all the monthly paid employees of petitioner San Miguel Foods, Incorporated (SMFI). On November 9, 1992, some employees of SMFIs Finance Department, through the Union represented by Edgar Moraleda, brought a grievance against Finance Manager Gideon Montesa (Montesa), for "discrimination, favoritism, unfair labor practices, not flexible [sic], harassment, promoting divisiveness and sectarianism, etc.," 1 before SMFI Plant Operations Manager George Nava in accordance with Step 1 of the grievance machinery adopted in the Collective Bargaining Agreement (CBA) forged by SMFI and the Union. The Union sought the "1. review, evaluat[ion] & upgrad[ing of] all Finance staff and 2. promot[ion of] G.Q. Montesa to other SMC affiliate[s] & subsidiaries."2 At the grievance meeting held on January 14, 1993, SMFI informed the Union that it planned to address the grievance through a "work management review" which would be completed by March 1993, hence, it asked the finance personnel to give it their attention and cooperation. The "work management review" was not completed by March 1993, however, prompting the Union to, on March 26, 1993, elevate the grievance to Step 2.3 Almost nine months after the grievance meeting was held or on October 6, 1993, SMFI rendered a "Decision on Step 1 Grievance" stating that it was still in the process of completing the "work management review," 4 hence, the Unions requests could not be granted. The Union thereupon filed a complaint on October 20, 1993 before the National Labor Relations Commission (NLRC), Arbitration Branch, against SMFI, 5 its President Amadeo P. Veloso, and its Finance Manager Montesa for "unfair labor practice, [and] unjust discrimination in matters of promotion . . . " 6 It prayed that SMFI et al. be ordered to promote the therein named employees "with the corresponding pay increases or adjustment including payment of salary differentials plus attorneys fees[,] and to cease and desist from committing the same unjust discrimination in matters of promotion." 7 Instead of filing a position paper as required by the Labor Arbiter, SMFI et al. filed a motion to dismiss, 8 contending that the issues raised in the complaint were grievance issues and, therefore, "should be resolved in the grievance machinery provided in [the] collective bargaining agreements [sic] of the parties or in the mandated provision of voluntary arbitration which is also provided in the CBA." 9 The Union opposed the motion to dismiss. In its Position Paper, the Union specified acts of ULP of SMFI et al. under Article 248, paragraphs (e) and (i) of the Labor Code 10 which Article reads: Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair labor practices: xxxx (e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. x x x xxxx (i) To violate a collective bargaining agreement. xxxx By Order of February 18, 1994, the Labor Arbiter granted SMFI et al.s motion to dismiss and ordered the remand of the case to the grievance machinery for completion of the proceedings.11 The Union appealed the said order to the NLRC by "Motion for Reconsideration/Appeal" 12 which its Second Division granted and accordingly ordered the Labor Arbiter to continue the proceedings on the Unions complaint. 13 SMFI et al. filed a Motion for Reconsideration of the NLRC order but it was denied, hence, they filed a petition for certiorari with this Court. After the parties and the Solicitor General had filed their respective pleadings, this Court, by Resolution of January 25, 1999, referred the case to the Court of Appeals pursuant to St. Martin Funeral Homes v. NLRC.14 By Decision of July 31, 2002,15 the Court of Appeals denied SMFI et al.s petition for certiorari, it holding that the Labor Arbiter has jurisdiction over the complaint of the Union, they having violated the seniority rule under the CBA by appointing and promoting certain employees which amounted to a ULP.16 Before this Court, SMFI lodged the present petition for review on certiorari, faulting the appellate court in A. . . . FINDING THAT THE LABOR ARBITER HAS JURISDICTION OVER THE COMPLAINT OF RESPONDENT UNION B. . . . FINDING THAT SMFIS ALLEGED VIOLATION OF THE CBA CONSTITUTES UNFAIR LABOR PRACTICE. The jurisdiction of Labor Arbiters, enumerated in Article 217 of the Labor Code, includes complaints for ULP. SMFI argues that the allegations in the Unions complaint filed before the Labor Arbiter do not establish a cause of action for ULP, the Union having merely contended that SMFI was guilty thereof without specifying the ultimate facts upon which it was based. It cites Section 1 of Rule 8 of the Rules of Court as applying suppletorily to the proceedings before the Labor Arbiter, which Section reads: Section 1. In general. Every pleading shall contain in a methodical and logical form, a plain concise and direct statement of the ultimate facts on which the party pleading relies for his claim . . . Alleging that the Union failed to comply with this Rule, SMFI concludes that the Labor Arbiter has no jurisdiction over its complaint. A perusal of the complaint shows that, indeed, the particular acts of ULP alleged to have been committed by SMFI were not specified; neither were the ultimate facts in support thereof. In its Position Paper, however, the Union detailed the particular acts of ULP attributed to SMFI and the ultimate facts in support thereof. Section 7, Rule V of the New Rules of Procedure of the NLRC provides: Nature of Proceedings . The proceedings before the Labor Arbiter shall be non-litigious in nature . Subject to the requirements of due process, the technicalities of law and procedure and the rules obtaining in the courts of law shall not strictly apply thereto . The Labor Arbiter may avail himself of all reasonable means to ascertain the facts of the controversy speedily, including ocular inspection and examination of well-informed persons. (Emphasis and underscoring supplied) Section 1 of Rule 8 of the Rules of Court should thus not be strictly applied to a case filed before a Labor Arbiter. In determining jurisdiction over a case, allegations made in the complaint, as well as those in the position paper, may thus be considered. As stated above, the Union, in its Position Paper, mentioned the particular acts of ULP and the ultimate facts in support thereof. Thus it alleged: This is a complaint for unfair labor practices pursuant to Article 248 (e) and (i) of the Labor Code, as amended, which reads:

Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair labor practices: xxxx (e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. xxxx (i) to violate a collective bargaining agreement. and which was committed by herein respondents as follows: 1. large scale and wanton unjust discrimination in matters of promotion , particularly upon the following members of complainant: Ellen Ventura, Julie Geronimo, Ronnie Cruz, Rita Calasin, Romy de Peralta, Malou Alano, And E. M. Moraleda, all assigned with the Finance Department or respondent SMFI. 2. gross and blatant violations by respondent SMFI of Section 5, Article III (Job Security) and Section 4, Article VIII (Grievance Machinery) of the current collective bargaining agreement (CBA) between complainant and respondent SMFI, which provisions of said CBA are hereunder quoted for easy reference. (Emphasis and underscoring supplied) On the questioned promotions, the Union did not allege that they were done to encourage or discourage membership in a labor organization. In fact, those promoted were members of the complaining Union. The promotions do not thus amount to ULP under Article 248(e) of the Labor Code. As for the alleged ULP committed under Article 248(i), for violation of a CBA, this Article is qualified by Article 261 of the Labor Code, the pertinent portion of which latter Article reads: x x x violations of a Collective Bargaining Agreement, except those which are gross in character , shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. (Emphasis and underscoring supplied) Silva v. NLRC instructs that for a ULP case to be cognizable by the Labor Arbiter, and the NLRC to exercise its appellate jurisdiction, the allegations in the complaint should show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; AND (2) the violation pertains to the economic provisions of the CBA.17 (Emphasis and underscoring supplied) As reflected in the above-quoted allegations of the Union in its Position Paper, the Union charges SMFI to have violated the grievance machinery provision in the CBA. The grievance machinery provision in the CBA is not an economic provision, however, hence, the second requirement for a Labor Arbiter to exercise jurisdiction of a ULP is not present. The Union likewise charges SMFI, however, to have violated the Job Security provision in the CBA, specifically the seniority rule, in that SMFI "appointed less senior employees to positions at its Finance Department, consequently intentionally by-passing more senior employees who are deserving of said appointment." Article 4 of the Labor Code provides that "All doubts in the implementation and interpretation of the provisions of this Code, including implementing rules and regulations, shall be resolved in favor of labor." Since the seniority rule in the promotion of employees has a bearing on salary and benefits, it may, following a liberal construction of Article 261 of the Labor Code, be considered an "economic provision" of the CBA. As above-stated, the Union charges SMFI to have promoted less senior employees, thus bypassing others who were more senior and equally or more qualified. It may not be seriously disputed that this charge is a gross or flagrant violation of the seniority rule under the CBA, a ULP over which the Labor Arbiter has jurisdiction. SMFI, at all events, questions why the Court of Appeals came out with a finding that it (SMFI) disregarded the seniority rule under the CBA when its petition before said court merely raised a question of jurisdiction. The Court of Appeals having affirmed the NLRC decision finding that the Labor Arbiter has jurisdiction over the Unions complaint and thus remanding it to the Labor Arbiter for continuation of proceedings thereon, the appellate courts said finding may be taken to have been made only for the purpose of determining jurisdiction. G.R. Nos. 178222-23 September 29, 2010 MANILA MINING CORP. EMPLOYEES ASSOCIATION-FEDERATION OF FREE WORKERS CHAPTER, SAMUEL G. ZUIGA, in his capacity as President, Petitioners, vs. MANILA MINING CORP. and/or ARTEMIO F. DISINI, President, RENE F. CHANYUNGCO, (SVP-Treasurer), RODOLFO S. MIRANDA, (VPController), VIRGILIO MEDINA (VP), ATTY. CRISANTO MARTINEZ (HRD), NIGEL TAMLYN (Resident Manager), BRYAN YAP (VP), FELIPE YAP (Chairman of the Board), and the NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), Respondents. DECISION PEREZ, J.: This petition for review on certiorari seeks a reversal of the 30 June 2006 Decision 1 of the Court of Appeals in CA-G.R. SP No. 86073 and its Resolution 2 in the same case dated 30 May 2007. Respondent Manila Mining Corporation (MMC) is a publicly-listed corporation engaged in large-scale mining for gold and copper ore. MMC is required by law to maintain a tailings containment facility to store the waste material generated by its mining operations. Consequently, MMC constructed several tailings dams to treat and store its waste materials. One of these dams was Tailings Pond No. 7 (TP No. 7), which was constructed in 1993 and was operated under a permit issued by the Department of Environment and Natural Resources (DENR), through its Environmental Management Bureau (EMB) in Butuan City, Agusan del Norte.3 On 10 January 2000, eleven (11) rank-and-file employees of MMC, who later became complainants before the labor arbiter, attended the organizational meeting of MMC-Makati Employees Association-Federation of Free Workers Chapter (Union). On 3 March 2000, the Union filed with the Department of Labor and Employment (DOLE) all the requirements for its registration. The Union acquired its legitimate registration status on 30 March 2000. Subsequently, it submitted letters to MMC relating its intention to bargain collectively. On 11 July 2001, the Union submitted its Collective Bargaining Agreement (CBA) proposal to MMC. Upon expiration of the tailings permit on 25 July 2001, DENR-EMB did not issue a permanent permit due to the inability of MMC to secure an Environmental Compliance Certificate (ECC). An essential component of an ECC is social acceptability or the consent of the residents in the community to allow TP No. 7 to operate, which MMC failed to obtain. 4 Hence, it was compelled to temporarily shut down its mining operations, resulting in the temporary lay-off of more than 400 employees in the mine site. On 30 July 2001, MMC called for the suspension of negotiations on the CBA with the Union until resumption of mining operations. 5 Among the employees laid-off, complainants Samuel Zuiga, Myrna Maquio, Doroteo Torre, Arsenio Mark Perez, Edmundo Galvez, Diana Ruth Rellores, Jonathan Araneta, Teresita Lagman, Reynaldo Anzures, Gerardo Opena, and Edwin Tuazon, together with the Union filed a complaint before the labor arbiter6 on even date praying for reinstatement, recognition of the Union as the sole and exclusive representative of its rank-and-file employees, and payment of moral and exemplary damages and attorneys fees. 7 In their Position Paper,8 complainants challenged the validity of their lay-off on the averment that MMC was not suffering from business losses. They alleged that MMC did not want to bargain collectively with the Union, so that instead of submitting their counterproposal to the CBA, MMC decided to terminate all union officers and active members. Petitioners questioned the timing of their lay-off, and alleged that first, there was no showing that costcutting measures were taken by MMC; second, no criteria were employed in choosing which employees to lay-off; and third, the individuals laid-off were those who signed the attendance sheet of the union organizational meeting. Petitioners likewise claimed that they were denied due process because they were not given a 30-day notice informing them of the lay-off. Neither was the DOLE informed of this lay-off, as mandated by law. 9 Respondents justified the temporary lay-off as bona fide in character and a valid management prerogative pending the issuance of the permit to continuously operate TP No. 7. The labor arbiter ruled in favor of MMC and held that the temporary shutdown of the mining operation, as well as the temporary lay-off of the employees, is valid. 10 On appeal, the National Labor Relations Commission (NLRC) modified the judgment of the labor arbiter and ordered the payment of separation pay equivalent to one month pay for every year of service. It ratiocinated that the temporary lay-off, which exceeded more than six (6) months, had the effect of severance of the employer-employee relationship. The dispositive portion of the Decision read: WHEREFORE, the assailed decision is, as it is hereby, Vacated and Set Aside and a new one entered ordering respondent Manila Mining Corporation to pay the individual complainants their separation pay computed as follows: In addition respondent company is hereby ordered to pay attorneys fees to complainants equivalent to 10% of the award. 11

In an Order12 dated 31 May 2004, the NLRC affirmed its Resolution. Dissatisfied, both parties separately filed their petitions for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 86073 and CA G.R. SP No. 86163. The two petitions were consolidated upon motion by MMC in a Resolution dated 3 February 2005. In its Decision dated 30 June 2006, the Court of Appeals modified the NLRC ruling, thus: WHEREFORE, the instant petition is partially GRANTED and the challenged Resolution dated August 29, 2003 of public respondent National Labor Relations Commission in NLRC NCR CA No. 033111-(CA No. 033111-02) is MODIFIED insofar as it holds MMC liable to pay the Union attorneys fees equivalent to 10% of the award, which portion of the questioned decision is now SET ASIDE. The monetary award of separation pay is maintained, but is MODIFIED from one (1) month pay for every year of service to ONE-HALF (1/2) MONTH PAY for every year of service, a fraction of at least six (6) months being considered as one (1) whole year. 13 Both parties filed their respective motions for reconsideration but in a Resolution dated 30 May 2007, the Court of Appeals denied the motions for lack of merit.141avvphi1 Only the Union elevated the case to this Court via the instant petition for review on certiorari. The Union attributes bad faith on the part of MMC in implementing the temporary lay-off resulting in the complainants constructive dismissal. The Union alleges that the failure to obtain a permit to operate TP No. 7 is largely due to failure on the part of MMC to comply with the DENR-EMBs conditions. 15 The Union claims that the temporary lay-off was effected without any proper notice to the DOLE as mandated by Article 283 of the Labor Code. It further maintains that MMC did not observe the jurisprudential criteria in the selection of the employees to be laid-off. 16 The Union insists that MMC is guilty of unfair labor practice when it unilaterally suspended the negotiation for a CBA. The Union avers that the lay-off and subsequent termination of complainants were due to the formation of the union at MMC. 17 MMC defends the temporary lay-off of the employees as valid and done in the exercise of management prerogative. It concedes that upon expiration of the 6-month period, coupled with losses suffered by MMC, the complainants were constructively dismissed. However, MMC takes exception to the application of Article 286 of the Labor Code in that the 6-month period cannot and will not apply to the instant case in order to consider the employees terminated and to support the payment of separation pay. MMC explains that the 6-month period does not refer to a situation where the employer does not have any control over the nature, extent and period of the temporary suspension of operations. MMC adds that the suspension of MMCs operations is left primarily to the discretion of the DENR-EMB, which has the authority to issue MMCs permit to operate TP No. 7. 18 MMC further submits that where the closure is due to serious business losses, such as in this case where the aggregate losses amounted to over P880,000,000.00, the law does not impose any obligation upon the employer to pay separation benefits. 19 With respect to the charge of unfair labor practice, MMC avers that it merely deferred responding to the Unions letter-proposal until the resumption of its mining operations. It went to claim further that the employment relationship between the parties was suspended at the time the request to bargain was made.20 The issue of MMCs temporary suspension of business operations resulting in the temporary lay-off of some of its employees was squarely addressed by the labor tribunals and the Court of Appeals. They sustained in unison the validity of the temporary suspension, as well as the temporary lay-off. We agree. The lay-off is neither illegal nor can it be considered as unfair labor practice. Despite all efforts exerted by MMC, it did not succeed in obtaining the consent of the residents of the community where the tailings pond would operate, one of the conditions imposed by DENR-EMB in granting its application for a permanent permit. It is precisely MMCs faultless failure to secure a permit which caused the temporary shutdown of its mining operations. As aptly put by the Court of Appeals: The evidence on record indeed clearly shows that MMCs suspension of its mining operations was bonafide and the reason for such suspension was supported by substantial evidence. MMC cannot conduct mining operations without a tailings disposal system. For this purpose, MMC operates TP No. 7 under a valid permit from the Department of Environment and Natural Resources (DENR) through its Environmental Management Bureau (EMB). In fact, a "Temporary Authority to Construct and Operate" was issued on January 25, 2001 in favor of MMC valid for a period of six (6) months or until July 25, 2001. The NLRC did not dispute MMCs claim that it had timely filed an application for renewal of its permit to operate TP No. 7 but that the renewal permit was not immediately released by the DENR-EMB, hence, MMC was compelled to temporarily shutdown its milling and mining operations. Here, it is once apparent that the suspension of MMCs mining operations was not due to its fault nor was it necessitated by financial reasons. Such suspension was brought about by the non-issuance of a permit for the continued operation of TP No. 7 without which MMC cannot resume its milling and mining operations. x x x.21 [Emphasis supplied.] Unfair labor practice cannot be imputed to MMC since, as ruled by the Court of Appeals, the call of MMC for a suspension of the CBA negotiations cannot be equated to "refusal to bargain." Article 252 of the Labor Code defines the phrase "duty to bargain collectively," to wit: ARTICLE 252. Meaning of duty to bargain collectively . - The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreements [and executing a contract incorporating such agreements] if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession. For a charge of unfair labor practice to prosper, it must be shown that the employer was motivated by ill-will, bad faith or fraud, or was oppressive to labor. The employer must have acted in a manner contrary to morals, good customs, or public policy causing social humiliation, wounded feelings or grave anxiety. While the law makes it an obligation for the employer and the employees to bargain collectively with each other, such compulsion does not include the commitment to precipitately accept or agree to the proposals of the other. All it contemplates is that both parties should approach the negotiation with an open mind and make reasonable effort to reach a common ground of agreement. 22 The Union based its contention on the letter request by MMC for the suspension of the collective bargaining negotiations until it resumes operations. 23 Verily, it cannot be said that MMC deliberately avoided the negotiation. It merely sought a suspension and in fact, even expressed its willingness to negotiate once the mining operations resume. There was valid reliance on the suspension of mining operations for the suspension, in turn, of the CBA negotiation. The Union failed to prove bad faith in MMCs actuations. Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation at all to the laid-off employees. The validity of its act of suspending its operations does not excuse it from paying separation pay. MMC seeks refuge in Article 286 which provides: ART. 286. When employment not deemed terminated. The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty. Article 286 of the Labor Code allows the bona fide suspension of operations for a period not exceeding six (6) months. During the suspension, an employee is not deemed terminated. As a matter of fact, the employee is entitled to be reinstated once the employer resumes operations within the 6month period. However, Article 286 is silent with respect to the rights of the employee if the suspension of operations lasts for more than 6 months. Thus is bred the issue regarding the responsibility of MMC toward its employees. MMC subscribes to the view that for purposes of determining employer responsibility, an employment should likewise not be deemed terminated, should the suspension of operation go beyond six (6) months as long as the continued suspension is due, as in this case, to a cause beyond the control of the employer. We disagree. As correctly elucidated upon by the Court of Appeals: We observe that MMC was forced by the circumstances, hence, it resorted to a temporary suspension of its mining and milling operations. It is clear that MMC had no choice. It would be well to reiterate at this juncture that the reason for such suspension cannot be attributed to DENR-EMB. It is thus, evident, that the MMC declared temporary suspension of operations to avert further losses. 24 The decision to suspend operation ultimately lies with the employer, who in its desire to avert possible financial losses, declares, as here, suspension of operations. Article 283 of the Labor Code applies to MMC and it provides: ARTICLE 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 devices, 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 on the workers and the Ministry 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 his one (1) month pay or 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 at least one-half (1/2) 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. Said provision is emphatic that an employee, who was dismissed due to cessation of business operation, is entitled to the separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. And it is jurisprudential that separation pay should also be paid to employees even if the closure or cessation of operations is not due to losses. 25ten.lihpwal The Court is not impressed with the claim that actual severe financial losses exempt MMC from paying separation benefits to complainants. In the first place, MMC did not appeal the decision of the Court of Appeals which affirmed the NLRCs award of separation pay to complainants. MMCs failure had the effect of making the awards final so that MMC could no longer seek any other affirmative relief. In the second place, the non-issuance of a permit forced MMC to permanently cease its business operations, as confirmed by the Court of Appeals. Under Article 283, the employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations is bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as he pays his employees their termination pay in the amount corresponding to their length of service. 26 The cessation of operations, in the case at bar is of such nature. It was proven that MMC stopped its operations precisely due to failure to secure permit to operate a tailings pond. Separation pay must nonetheless be given to the separated employees. Finding no cogent reason to disturb its ruling, we affirm the Decision of the Court of Appeals. BASED ON THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. No costs. G.R. No. 186605 November 17, 2010 CENTRAL AZUCARERA DE BAIS EMPLOYEES UNION-NFL [CABEU-NFL], represented by its President, PABLITO SAGURAN, Petitioner, vs. CENTRAL AZUCARERA DE BAIS, INC. [CAB], represented by its President, ANTONIO STEVEN L. CHAN, Respondent. DECISION MENDOZA, J.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court filed by petitioner Central Azucarera De Bais Employees UnionNational Federation of Labor (CABEU-NFL) seeking to reverse and set aside: (1) the September 26, 2008 Decision 1 of the Court of Appeals (CA), in CAG.R. SP No. 03238, which reversed the July 18, 2007 Decision 2 and September 28, 2007 Resolution3 of the National Labor Relations Commission (NLRC) and reinstated the July 13, 2006 Decision 4 of the Labor Arbiter (LA); and (2) its January 21, 2009 Resolution 5 denying the Motion for Reconsideration of CABEU-NFL. THE FACTS Respondent Central Azucarera De Bais, Inc. (CAB) is a corporation duly organized and existing under the laws of the Philippines. It is represented by its President, Antonio Steven L. Chan (Chan), in this proceeding. CABEU-NFL is a duly registered labor union and a certified bargaining agent of the CAB rank-and-file employees, represented by its President, Pablito Saguran (Saguran). On January 19, 2004, CABEU-NFL sent CAB a proposed Collective Bargaining Agreement (CBA)6 seeking increases in the daily wage and vacation and sick leave benefits of the monthly employees and the grant of leave benefits and 13th month pay to seasonal workers. On March 27, 2004, CAB responded with a counter-proposal 7 to the effect that the production bonus incentive and special production bonus and incentives be maintained. In addition, respondent CAB agreed to execute a pro-rated increase of wages every time the government would mandate an increase in the minimum wage. CAB, however, did not agree to grant additional and separate Christmas bonuses. On May 21, 2004, CAB received an Amended Union Proposal8 sent by CABEU-NFL reducing its previous demand regarding wages and bonuses. CAB, however, maintained its position on the matter. Thus, the collective bargaining negotiations resulted in a deadlock. On account of the impasse, "CABEU-NFL filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB). The NCMB then assumed conciliatory-mediation jurisdiction and summoned the parties to conciliation conferences." 9 In its June 2, 2005 Letter sent to CAB 10 (letter-request), CABEU-NFL requested copies of CABs annual financial statements from 2001 to 2004 and asked for the resumption of conciliation meetings. CAB replied through its June 14, 2005 Letter 11 (letter-response) to NCMB Regional Director of Dumaguete City Isidro Cepeda, which reads: At the outset, it observed that the letter signed by Mr. Pablito Saguran who is no longer an employee of the Central for he was one of those lawfully terminated due to an authorized cause x x x. More importantly, the declared purpose of the requested conciliation meeting has already been rendered moot and academic because: (1) the Union which Mr. Saguran purportedly represents has already lost its majority status by reason of the disauthorization and withdrawal of support thereto by more than 90% of the rank and file employees in the bargaining unit of Central sometime in January, 2005, and (2) the workers themselves, acting as principal, after disauthorizing the previous agent CABEU-NFL have organized themselves into a new Union known as Central Azucarera de Bais Employees Labor Association (CABELA) and after obtaining their registration certificate and making due representation that it is a duly organized union representing almost all the rank and file workers in the Central, had concluded a new collective bargaining agreement with the Central on April 21, 2005 in Dumaguete City. The aforesaid CBA had been duly ratified by the rank and file workers constituting 91% of the collective bargaining unit x x x. Clearly, therefore, the request for further conciliation conference will serve no lawful and practical purpose. In view of the foregoing, and for the sake of continued industrial peace prevailing in the Central, we beseech the Honorable Office to disregard the aforesaid request. It appears that the NCMB failed to act on the letter-response of CAB. Neither did it convene CAB and CABEU-NFL to continue the negotiations between them. Reacting from the letter-response of CAB, CABEU-NFL filed a Complaint for Unfair Labor Practice 12 for the formers refusal to bargain with it. On July 13, 2006, the LA dismissed the complaint. 13 Pertinent portions of the LA decision read: The procedure in the discharge of the duty to bargain collectively is provided for in Article 250 of the Labor Code: (1) the party who desires to negotiate an agreement shall serve a written notice upon the other party with a statement of proposals; (2) the other party shall make a reply thereto not later than ten (10) days from receipt of notice; (3) if the dispute is unsettled resulting in a deadlock, the NCMB shall intervene upon the request or at its own initiative and call the parties to conciliation Meeting x x x (4) if the NCMB fails to effect an agreement, the Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their case to a voluntary arbitrator; (5) the parties may also go on strike or declare a lockout as the case may be after complying with legal requirements. Subject, of course, to the plenary power of the Secretary of Labor and Employment to assume jurisdiction over the dispute or to certify the same to the NLRC for compulsory arbitration. In the case at bar, the record shows that respondent CAB replied to the complainant Unions CBA proposals with its own set of counterproposals x x x. Likewise, respondent CAB responded to the Unions subsequent counterproposals x x x. Record further shows that respondent CAB participated in a series of CBA negotiations conducted by the parties at the plant level as well as in the conciliation/mediation proceedings conducted by the NCMB. Unfortunately, both exercises resulted in a deadlock. At this juncture it cannot be said, therefore, that respondent CAB refused to negotiate or that it violated its duty to bargain collectively in light of its active participation in the past CBA negotiations at the plant level as well as in the NCMB. x x x xxx xxx xxx We do not agree that respondent CAB committed an unfair labor practice act in questioning the capacity of Mr. Pablito Saguran to represent complainant union in the CBA negotiations because Mr. Pablito Saguran was no longer an employee of respondent CAB at that time having been separated from employment on the ground of redundancy and having received the corresponding separation benefits. x x x. So also, we do not find respondent CAB guilty of unfair labor practice by its act of writing the NCMB Director in a letter dated June 24, 2005, stating its legal position on complainants request for further conciliation to the effect that since almost [all] of the rank and file employees, the principals in a principal-agent relationship, have withdrawn their support to the complainant union and that in fact they have already organized themselves into a DOLE-registered labor union known as CABELA, any further conciliation will serve no lawful and practical purpose. x x x. At this juncture, it was incumbent upon the NCMB to make a ruling on the request of the complainant union as well as upon the corresponding comment of respondent CAB. If the NCMB chose not to pursue further negotiation between the parties, respondent CAB should not be faulted therefor. x x x. Under the facts obtaining, when the conciliation/mediation by the NCMB has not been officially concluded, we find the instant complaint for unfair labor practice not only without merit but also premature. WHEREFORE, foregoing considered, the case is hereby DISMISSED for lack of merit. SO ORDERED. On appeal, the NLRC in its July 18, 2007 Decision14 reversed the LAs decision and found CAB guilty of unfair labor practice. The NLRC explained:

The issue to be resolved is whether or not respondent company committed an unfair labor practice for violation of its duty to bargain collectively in good faith. xxx xxx xxx The important event to discuss in the instant case is respondents act of concluding a CBA with CABELA. As gleaned from respondents letter to NCMB dated June 14, 2005, it concluded a CBA with CABELA because they opined that complainant lost its majority status in January 2005 when 90% of the rank-and-file employees disauthorized and withdrew their support to complainant. These rank-and-file employees who withdrew their support, organized and formed CABELA. In fine, respondent believed that CABELA enjoyed the majority status of CABELA since it was supported by 90% of all employees in the bargaining unit. In resolving the issue of whether respondents act of concluding a CBA with CABELA is warranted under the circumstances is to examine the validity of such act. The mechanics of collective bargaining are set in motion only when the following jurisdictional preconditions are present, namely: 1) possession of the status of majority representation of the employees representative in accordance with any of the means of selection and designation provided for by the Labor Code, 2) proof of majority representation, and 3) a demand to bargain under Article 250, par. (a) of the Labor Code x x x. In the instant case, it is undeniable that complainant is the certified collective bargaining agent of the regular workers and seasonal employees of respondent. Its status as such was determined in a certification election conducted by the Department of Labor and Employment (DOLE). As such, there was no reason for respondent to deal and negotiate with CABELA since the latter does not have such status of majority representation. x x x. X x x. Based on this premise, respondent violated its duty to bargain with complainant when during the pendency of the conciliation proceedings before the NCMB it concluded a CBA with another union as a consequence, it refused to resume negotiation with complainant upon the latters demand.1avvphi1 With respect to respondents observation that the request for conciliation meeting was signed by one who is not eligible and authorized to represent any union with the company since he is no longer an employee, suffice it to state that at the time the request was made, such employee has questioned the validity of his dismissal with then NLRC. X x x. Respondents failure to act on the request of the complainant to resume negotiation for no valid reason constitutes unfair labor practice. Consequently, the proposed CBA as amended should be imposed to respondent. WHEREFORE, premises considered, the appealed Decision is REVERSED and SET ASIDE. Another one is entered declaring that respondent Central Azucarera de Bais is guilty of unfair labor practice. As such, the proposed CBA of complainant, as amended is imposed to respondent Central Azucarera de Bais. SO ORDERED. CAB moved for a reconsideration but the motion was denied by the NLRC in its resolution dated September 28, 2007. 15 Unsatisfied, CAB elevated the matter to the CA by way of a petition for certiorari under Rule 65 alleging grave abuse of discretion on the part of the NLRC in reversing the LA decision and issuing the questioned resolution. On September 26, 2008, the CA found CABs petition meritorious and reversed the NLRC decision and resolution. The CA pointed out: xxx xxx xxx First. This Court has acquired jurisdiction over the person of private respondent CABEU-NFL. Through its counsel of record, CABEU-NFL already filed its extensive comment on the instant petition. Hence, it is now useless to contend that it was denied notice of the same and the opportunity to be heard on it. x x x. xxx xxx xxx Second. Petitioner CAB was not shown to have violated the rule requiring parties to certify in their initiatory pleadings against forum shopping. Private respondent CABEU-NFL alleges in its comment that the two cases are pending before this Court: CA-G.R. No. 03132 and CA-G.R. No. 03017 involving the same parties as in the case at bar. Unfortunately, CABEU-NFL did not explain how the issues in those pending cases are related to or similar to those involved in this proceeding. x x x. xxx xxx xxx Third. x x x xxx xxx In the case at bar, private respondent CABEU-NFL failed in its burden of proof to present substantial evidence to support the allegation of unfair labor practice. The assailed Decision and Resolution of public respondent referred merely to two (2) circumstances which allegedly support the conclusion that the presumption of good faith had been rebutted and that bad faith was extant in petitioners actions. To recall, these circumstances are: (a) the execution of a supposed collective bargaining agreement with another labor union, CABELA; and (b) CABs sending of the letter dated June 14, 2005 to NCMB seeking to call off the collective bargaining negotiations. These, however, are not enough to ascribe the very serious offense of unfair labor practice upon petitioner. x x x. xxx xxx xxx x x x petitioner CAB was not scuttling the ongoing negotiations towards a new collective bargaining agreement. It was simply propounding a position to the NCMB for the latter to rule on. That the negotiations did not push through was not the result of CAB managements intransigence because there was none at least so far as the case record confirms. There is nothing that establishes petitioners predetermined resolve not to budge from an initial position perhaps stubbornness of some ambiguous sort but not the absence of good faith to pursue collective bargaining. x x x. xxx xxx xxx WHEREFORE, the instant petition is GRANTED. The assailed Decision dated July 18, 2007 and Resolution dated September 28, 2007 of public respondent National Labor Relations Commission in NLRC Case No. V-000002-07 are REVERSED and SET ASIDE. The Decision dated July 13, 2006 in NLRC RAB VII Case No. 07-0104-2005-D entitled Central Azucarera de Bais Employees Union-NFL (CABEU-NFL), represented by Pablito Saguran, complainant, versus, (CAB) and/or Steven Chan as Owner and Roberto de la Rosa as Manager, respondents of Labor Arbiter Fructuoso T. Villarin IV is REINSTATED and AFFIRMED IN TOTO. Costs of suit de oficio. SO ORDERED. CABEU-NFL moved for a reconsideration but its motion was denied by the CA in its Resolution dated January 21, 2009. 16 Hence this petition. In its Memorandum, 17 CABEU-NFL raised the following: ISSUES I) WHETHER OF NOT THE COURT OF APPEALS VIOLATED THE CONSTITUTIONAL RIGHTS OF PETITIONER WHEN THE HONORABLE COURT OF APPEALS REVERSED THE FINDINGS OF THE NATIONAL LABOR RELATIONS COMMISSION (NLRC) WHICH HELD RESPONDENT GUILTY OF UNFAIR LABOR PRACTICE .18 II) WHETHER OR NOT THE COURT OF APPEALS VIOLATED THE CONSTITUTIONAL RIGHTS OF THE PETITIONER WHEN IT GAVE DUE COURSE TO RESPONDENTS PETITION FOR CERTIORARI WITHOUT COMPLYING WITH THE JURISDICTIONAL REQUIREMENTS UNDER RULE 65, SECTION 1 AND SUPREME COURT CIRCULAR NO. 04-94, ON CERTIFICATION ON NON-FORUM SHOPPING. 19 In sum, the petition raises three (3) issues for the Courts consideration which are whether or not the CA erred: (1) in giving due course to the petition for certiorari despite service of the copy of the petition to CABEU-NFLs counsel and not to itself ; (2) in giving due course to the petition for certiorari despite the failure of CAB to indicate the address of CABEU-NFL in the petition; and (3) in absolving CAB of unfair labor practice. CABEU-NFL insists that the CA erred in giving due course to the petition for certiorari because respondent CAB served a copy of its CA petition to CABEUNFLs counsel and not to CABEU-NFL itself. CABEU-NFL, likewise, harps on the failure of CAB to indicate CABEU-NFLs full address in the said petition as required in petitions for certiorari, citing Section 1, Rule 6520 in relation to Section 3, Rule 46.21 Ultimately, CABEU-NFL aggressively asserts that CAB is guilty of unfair labor practice on the ground of its refusal to bargain collectively. CABEU-NFL claims to be the duly certified bargaining agent of the CAB rank-and-file employees such that it requested to bargain through a letter-request which was subsequently turned down by CAB in its letter-response. Anchored on the admission in the CAB letter-response of a supposed CBA with CABELA, CABEUNFL charges that such act constitutes a violation of CABs duty to bargain collectively under Article 253 of the Labor Code 22 and consequently an act of unfair labor practice prohibited under Article 248 (g) of the Labor Code. 23 CABEU-NFL also submits that CAB violated the prohibition against forum shopping when it filed its petition in the CA. CABEU-NFL claims that the failure of CABs counsel to disclose to the CA the pendency of CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 constituted forum shopping, a sufficient ground to dismiss the said petition. In its Memorandum, 24 CAB claims that service of the copy of the petition for certiorari to CABEU-NFLs counsel was sufficient. It vehemently denies its alleged failure to indicate CABEU-NFLs name and address in its petition. CAB also stresses that CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 "were initiated exclusively by members of CABEU and by CABEU itself, respectively, and not by CAB." 25 CAB further argues that there was no identity of issues or causes of action between the two abovementioned cases and this case.

On the issue of unfair labor practice, CAB counters that in view of the disassociation of more than 90% of rank-and-file workers from CABEU-NFL, it was constrained to negotiate and conclude in good faith a new CBA with CABELA, the newly established union by workers who disassociated from CABEUNFL. CAB emphasizes that it declined further negotiations with CABEU-NFL in good faith because to continue with it would serve no practical purpose. Considering that the NCMB has yet to resolve CABs query in its letter-response, CAB was left without any choice but accede to the demands of CABELA. In concluding a CBA with CABELA, CAB claims that it acted in the best interest of the rank-and-file workers which belied bad faith. THE COURTS RULING The petition lacks merit. On the technical issues, CABEU-NFLs insistence that service of the copy of the CA petition should have been made to it, rather than to its counsel, is unavailing. On the matter of service, Section 1, Rule 65 in relation to Section 3, Rule 46 of the Rules of Court, clearly provides that in a petition filed originally in the CA, the petitioner is required to serve a copy of the petition on the adverse party before its filing. If the adverse party appears by counsel, service shall be made on such counsel pursuant to Section 2, Rule 13.26 With respect to the alleged failure of CAB to indicate the address of CABEU-NFL in the CA petition, it appears that CABEU-NFL is misleading the Court. A perusal of the petition 27 filed before the CA reveals that CAB indeed indicated both the name 28 and address29 of CABEU-NFL. Moreover, the indication in said petition by CAB that CABEU-NFL could be served with court processes through its counsel was substantial compliance with the Rules. 30 The Court, likewise, cannot sustain CABEU-NFLs contention on forum shopping against CAB. By forum shopping, a party initiates two or more actions in separate tribunals, grounded on the same cause, hoping that one or the other tribunal would favorably dispose of the matter. The elements of forum shopping are: (1) identity of parties, or at least such parties as would represent the same interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration.31 In the case at bench, CABEU-NFL merely raised the fact of the pendency of CA-G.R. SP No. 033132 and CA-G.R. SP No. 03017 in its comment on the petition for certiorari32 filed before the CA without demonstrating any similarity in the causes of action between the said cases and the present case. The CA, citing the ruling in Tboli Agro-Industrial Development, Inc. v. Solilapsi 33 as authority, points out that: This Court cannot take judicial notice of what CA-G.R. No. 03132 and CA-G.R. No. 03017 involve because: "As a general rule, courts are not authorized to take judicial notice in the adjudication of cases pending before them of the contents of other cases even when such cases have been tried or are pending in the same court and notwithstanding the fact that both cases may have been tried or are actually pending before the same judge. Courts may be required to take judicial notice of the decisions of the appellate courts but not of the decisions of the coordinate trial courts, or even of a decision or the facts involved in another case tried by the same court itself, unless the parties introduce the same in evidence or the court, as a matter of convenience, decides to do so. Besides, judicial notice of matters which ought to be known to judges because of their judicial functions is only discretionary upon the court. It is not mandatory." In the absence of evidence to show that the issues involved in these cases are the same, this Court cannot give credence to private respondents claim of forum shopping. The Court now proceeds to determine whether or not respondent CAB was guilty of acts constituting unfair labor practice by refusing to bargain collectively. The Court rules in the negative. CAB is being accused of violating its duty to bargain collectively supposedly because of its act in concluding a CBA with CABELA, another union in the bargaining unit, and its failure to resume negotiations with CABEU-NFL. The concept of unfair labor practice is provided in Article 247 of the Labor Code which states: Article 247. Concept of Unfair Labor Practice and Procedure for Prosecution thereof. -- Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. xxx xxx xxx The Labor Code, likewise, enumerates the acts constituting unfair labor practices of the employer, thus: Article 248. Unfair Labor Practices of Employers.It shall be unlawful for an employer to commit any of the following unfair labor practice: xxx xxx xxx (g) To violate the duty to bargain collectively as prescribed by this Code. For a charge of unfair labor practice to prosper, it must be shown that CAB was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of course, that social humiliation, wounded feelings or grave anxiety resulted x x x" in suspending negotiations with CABEU-NFL. Notably, CAB believed that CABEU-NFL was no longer the representative of the workers. 34 It just wanted to foster industrial peace by bowing to the wishes of the overwhelming majority of its rank and file workers and by negotiating and concluding in good faith a CBA with CABELA."35 Such actions of CAB are nowhere tantamount to anti-unionism, the evil sought to be punished in cases of unfair labor practices. Furthermore, basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same. By imputing bad faith to the actuations of CAB, CABEU-NFL has the burden of proof to present substantial evidence to support the allegation of unfair labor practice. 36 Apparently, CABEU-NFL refers only to the circumstances mentioned in the letter-response, namely, the execution of the supposed CBA between CAB and CABELA and the request to suspend the negotiations, to conclude that bad faith attended CABs actions. The Court is of the view that CABEU-NFL, in simply relying on the said letter-response, failed to substantiate its claim of unfair labor practice to rebut the presumption of good faith. Moreover, as correctly determined by the LA, the filing of the complaint for unfair labor practice was premature inasmuch as the issue of collective bargaining is still pending before the NCMB. In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the Constitution that the rights of workers and the promotion of their welfare shall be protected. The Court is, likewise, guided by the goal of attaining industrial peace by the proper application of the law. Thus, it cannot favor one party, be it labor or management, in arriving at a just solution to a controversy if the party has no valid support to its claims. It is not within this Courts power to rule beyond the ambit of the law. 37 G.R. No. 162943 December 6, 2010 EMPLOYEES UNION OF BAYER PHILS., FFW and JUANITO S. FACUNDO, in his capacity as President, Petitioners, vs. BAYER PHILIPPINES, INC., DIETER J. LONISHEN (President), ASUNCION AMISTOSO (HRD Manager), AVELINA REMIGIO AND ANASTACIA VILLAREAL, Respondents. DECISION VILLARAMA, JR., J.: This petition for review on certiorari assails the Decision 1 dated December 15, 2003 and Resolution 2 dated March 23, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 73813. Petitioner Employees Union of Bayer Philippines 3 (EUBP) is the exclusive bargaining agent of all rank-and-file employees of Bayer Philippines (Bayer), and is an affiliate of the Federation of Free Workers (FFW). In 1997, EUBP, headed by its president Juanito S. Facundo (Facundo), negotiated with Bayer for the signing of a collective bargaining agreement (CBA). During the negotiations, EUBP rejected Bayers 9.9% wage-increase proposal resulting in a bargaining deadlock. Subsequently, EUBP staged a strike, prompting the Secretary of the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. In November 1997, pending the resolution of the dispute, respondent Avelina Remigio (Remigio) and 27 other union members, without any authority from their union leaders, accepted Bayers wage-increase proposal. EUBPs grievance committee questioned Remigios action and reprimanded Remigio and her allies. On January 7, 1998, the DOLE Secretary issued an arbitral award ordering EUBP and Bayer to execute a CBA retroactive to January 1, 1997 and to be made effective until December 31, 2001. The said CBA 4 was registered on July 8, 1998 with the Industrial Relations Division of the DOLENational Capital Region (NCR).5 Meanwhile, the rift between Facundos leadership and Remigios group broadened. On August 3, 1998, barely six months from the signing of the new CBA, during a company-sponsored seminar, 6 Remigio solicited signatures from union members in support of a resolution containing the decision of the signatories to: (1) disaffiliate from FFW, (2) rename the union as Reformed Employees Union of Bayer Philippines (REUBP), (3) adopt a new constitution and by-laws for the union, (4) abolish all existing officer positions in the union and elect a new set of interim officers, and (5) authorize REUBP to

administer the CBA between EUBP and Bayer.7 The said resolution was signed by 147 of the 257 local union members. A subsequent resolution was also issued affirming the first resolution. 8 A tug-of-war then ensued between the two rival groups, with both seeking recognition from Bayer and demanding remittance of the union dues collected from its rank-and-file members. On September 8, 1998, Remigios splinter group wrote Facundo, FFW and Bayer informing them of the decision of the majority of the union members to disaffiliate from FFW. 9 This was followed by another letter informing Facundo, FFW and Bayer that an interim set of REUBP executive officers and board of directors had been appointed, and demanding the remittance of all union dues to REUBP. Remigio also asked Bayer to desist from further transacting with EUBP. Facundo, meanwhile, sent similar requests to Bayer 10 requesting for the remittance of union dues in favor of EUBP and accusing the company of interfering with purely union matters. 11 Bayer responded by deciding not to deal with either of the two groups, and by placing the union dues collected in a trust account until the conflict between the two groups is resolved. 12 On September 15, 1998, EUBP filed a complaint for unfair labor practice (first ULP complaint) against Bayer for non-remittance of union dues. The case was docketed as NLRC-NCR-Case No. 00-09-07564-98.13 EUBP later sent a letter dated November 5, 1998 to Bayer asking for a grievance conference. 14 The meeting was conducted by the management on November 11, 1998, with all REUBP officers including their lawyers present. Facundo did not attend the meeting, but sent two EUBP officers to inform REUBP and the management that a preventive mediation conference between the two groups has been scheduled on November 12, 1998 before the National Conciliation and Mediation Board (NCMB). 15 Apparently, the two groups failed to settle their issues as Facundo again sent respondent Dieter J. Lonishen two more letters, dated January 14, 1999 16 and September 2, 1999,17 asking for a grievance meeting with the management to discuss the failure of the latter to comply with the terms of their CBA. Both requests remained unheeded. On February 9, 1999, while the first ULP case was still pending and despite EUBPs repeated request for a grievance conference, Bayer decided to turn over the collected union dues amounting to P254,857.15 to respondent Anastacia Villareal, Treasurer of REUBP. Aggrieved by the said development, EUBP lodged a complaint 18 on March 4, 1999 against Remigios group before the Industrial Relations Division of the DOLE praying for their expulsion from EUBP for commission of "acts that threaten the life of the union." On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor, Jr. dismissed the first ULP complaint for lack of jurisdiction. 19 The Arbiter explained that the root cause for Bayers failure to remit the collected union dues can be traced to the intra-union conflict between EUBP and Remigios group 20 and that the charges imputed against Bayer should have been submitted instead to voluntary arbitration. 21 EUBP did not appeal the said decision. 22 On December 14, 1999, petitioners filed a second ULP complaint against herein respondents docketed as NLRC-RAB-IV Case No. 12-11813-99-L. Three days later, petitioners amended the complaint charging the respondents with unfair labor practice committed by organizing a company union, gross violation of the CBA and violation of their duty to bargain. 23 Petitioners complained that Bayer refused to remit the collected union dues to EUBP despite several demands sent to the management.24 They also alleged that notwithstanding the requests sent to Bayer for a renegotiation of the last two years of the 1997-2001 CBA between EUBP and Bayer, the latter opted to negotiate instead with Remigios group. 25 On even date, REUBP and Bayer agreed to sign a new CBA. Remigio immediately informed her allies of the managements decision. 26 In response, petitioners immediately filed an urgent motion for the issuance of a restraining order/injunction 27 before the National Labor Relations Commission (NLRC) and the Labor Arbiter against respondents. Petitioners asserted their authority as the exclusive bargaining representative of all rankand-file employees of Bayer and asked that a temporary restraining order be issued against Remigios group and Bayer to prevent the employees from ratifying the new CBA. Later, petitioners filed a second amended complaint 28 to include in its complaint the issue of gross violation of the CBA for violation of the contract bar rule following Bayers decision to negotiate and sign a new CBA with Remigios group. Meanwhile, on January 26, 2000, the Regional Director of the Industrial Relations Division of DOLE issued a decision dismissing the issue on expulsion filed by EUBP against Remigio and her allies for failure to exhaust reliefs within the union and ordering the conduct of a referendum to determine which of the two groups should be recognized as union officers. 29 EUBP seasonably appealed the said decision to the Bureau of Labor Relations (BLR). 30 On June 16, 2000, the BLR reversed the Regional Directors ruling and ordered the management of Bayer to respect the authority of the duly-elected officers of EUBP in the administration of the prevailing CBA.31 Unfortunately, the said BLR ruling came late since Bayer had already signed a new CBA 32 with REUBP on February 21, 2000. The said CBA was eventually ratified by majority of the bargaining unit. 33 On June 2, 2000, Labor Arbiter Waldo Emerson R. Gan dismissed EUBPs second ULP complaint for lack of jurisdiction. 34 The Labor Arbiter explained the dismissal as follows: All told, were it not for the fact that there were two (2) [groups] of employees, the Union led by its President Juanito Facundo and the members who decided to disaffiliate led by Ms. Avelina Remigio, claiming to be the rightful representative of the rank and file employees, the Company would not have acted the way it did and the Union would not have filed the instant case. Clearly then, as the case involves intra-union disputes, this Office is bereft of any jurisdiction pursuant to Article 226 of the Labor Code, as amended, which provides pertinently in part, thus: "Bureau of Labor Relations The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor and Employment shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration." Specifically, with respect to the union dues, the authority is the case of Cebu Seamens Association[,] Inc. vs. Ferrer-Calleja, (212 SCRA 51), where the Supreme Court held that when the issue calls for the determination of which between the two groups within a union is entitled to the union dues, the same cannot be taken cognizance of by the NLRC. xxxx WHEREFORE, premises considered, the instant complaint is hereby DISMISSED on the ground of lack of jurisdiction. SO ORDERED.35 On June 28, 2000, the NLRC resolved to dismiss 36 petitioners motion for a restraining order and/or injunction stating that the subject matter involved an intra-union dispute, over which the said Commission has no jurisdiction. 37 Aggrieved by the Labor Arbiters decision to dismiss the second ULP complaint, petitioners appealed the said decision, but the NLRC denied the appeal. 38 EUBPs motion for reconsideration was likewise denied. 39 Thus, petitioners filed a Rule 65 petition to the CA. On December 15, 2003, the CA sustained both the Labor Arbiter and the NLRCs rulings. The appellate court explained, A cursory reading of the three pleadings, to wit: the Complaint (Vol. I, Rollo, p[p]. 166-167); the Amended Complaint (Vol. I, Rollo[,] pp. 168-172) and the Second Amended Complaint dated March 8, 2000 (Vol. II, Rollo, pp. 219-225) will readily show that the instant case was brought about by the action of the Group of REM[I]GIO to disaffiliate from FFW and to organized (sic) REUBP under the tutelage of REM[I]GIO and VILLAREAL. At first glance of the case at bar, it involves purely an (sic) inter-union and intra-union conflicts or disputes between EUBP-FFW and REUBP which issue should have been resolved by the Bureau of Labor Relations under Article 226 of the Labor Code. However, since no less than petitioners who admitted that respondents committed gross violations of the CBA, then the BLR is divested of jurisdiction over the case and the issue should have been referred to the Grievance Machinery and Voluntary Arbitrator and not to the Labor Arbiter as what petitioners did in the case at bar. x x x xxxx Furthermore, the CBA entered between BAYER and EUBP-FFW [has] a life span of only five years and after the said period, the employees have all the right to change their bargaining unit who will represent them. If there exist[s] two opposing unions in the same company, the remedy is not to declare that such act is considered unfair labor practice but rather they should conduct a certification election provided [that] it should be conducted within 60 days of the so[-]called freedom period before the expiration of the CBA. WHEREFORE, premises considered, this Petition is DENIED and the assailed Decision dated September 27, 2001 as well as the Order dated June 21, 2002, denying the motion for reconsideration, by the National Labor Relations Commission, First Division, in NLRC Case No. RAB-IV-12-11813-99-L, are hereby AFFIRMED in toto. Costs against petitioners. SO ORDERED.40 Undaunted, petitioners filed this Rule 45 petition before this Court. Initially, the said petition was denied for having been filed out of time and for failure to comply with the requirements provided in the 1997 Rules of Civil Procedure, as amended. 41 Upon petitioners motion, however, we decided to reinstate their appeal. The following are the issues raised by petitioners, to wit:

I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION PROMULGATED ON 23 MARCH 2004, DECIDED THE CASE IN ACCORDANCE WITH LAW AND JURISPRUDENCE; AND II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS, IN ARRIVING AT THE DECISION PROMULGATED ON 15 DECEMBER 2003 AND RESOLUTION PROMULGATED ON 23 MARCH 2004, GRAVELY ABUSE[D] ITS DISCRETION IN ITS FINDINGS AND CONCLUSION THAT: THE ACTS OF ABETTING OR ASSISTING IN THE CREATION OF ANOTHER UNION, NEGOTIATING OR BARGAINING WITH SUCH UNION, WHICH IS NOT THE SOLE AND EXCLUSIVE BARGAINING AGENT, VIOLATING THE DUTY TO BARGAIN COLLECTIVELY, REFUSAL TO PROCESS GRIEVABLE ISSUES IN THE GRIEVANCE MACHINERY AND/OR REFUSAL TO DEAL WITH THE SOLE AND EXCLUSIVE BARGAINING AGENT ARE ACTS CONSTITUTING OR TANTAMOUNT TO UNFAIR LABOR PRACTICE.42 Respondents Bayer, Lonishen and Amistoso, meanwhile, identify the issues as follows: I. WHETHER OR NOT THE UNIFORM FINDINGS OF THE COURT OF APPEALS, THE NLRC AND THE LABOR ARBITER ARE BINDING ON THIS HONORABLE COURT; II. WHETHER OR NOT THE LABOR ARBITER AND THE NLRC HAVE JURISDICTION OVER THE INSTANT CASE; III. WHETHER OR NOT THE INSTANT CASE INVOLVES AN INTRA-UNION DISPUTE; IV. WHETHER OR NOT RESPONDENTS COMPANY, LONISHEN AND AMISTOSO COMMITTED AN ACT OF UNFAIR LABOR PRACTICE; AND V. WHETHER OR NOT THE INSTANT CASE HAS BECOME MOOT AND ACADEMIC. 43 Essentially, the issue in this petition is whether the act of the management of Bayer in dealing and negotiating with Remigios splinter group despite its validly existing CBA with EUBP can be considered unfair labor practice and, if so, whether EUBP is entitled to any relief. Petitioners argue that the subject matter of their complaint, as well as the subsequent amendments thereto, pertain to the unfair labor practice act of respondents Bayer, Lonishen and Amistoso in dealing with Remigios splinter union. They contend that (1) the acts of abetting or assisting in the creation of another union is among those considered by the Labor Code, as amended, specifically under Article 248 (d) 44 thereof, as unfair labor practice; (2) the act of negotiating with such union constitutes a violation of Bayers duty to bargain collectively; and (3) Bayers unjustified refusal to process EUBPs grievances and to recognize the said union as the sole and exclusive bargaining agent are tantamount to unfair labor practice. 45 Respondents Bayer, Lonishen and Amistoso, on the other hand, contend that there can be no unfair labor practice on their part since the requisites for unfair labor practice i.e., that the violation of the CBA should be gross, and that it should involve violation in the economic provisions of the CBA were not satisfied. Moreover, they cite the ruling of the Labor Arbiter that the issues raised in the complaint should have been ventilated and threshed out before the voluntary arbitrators as provided in Article 261 of the Labor Code, as amended.46 Respondents Remigio and Villareal, meanwhile, point out that the case should be dismissed as against them since they are not real parties in interest in the ULP complaint against Bayer, 47 and since there are no specific or material acts imputed against them in the complaint. 48 The petition is partly meritorious. An intra-union dispute refers to any conflict between and among union members, including grievances arising from any violation of the rights and conditions of membership, violation of or disagreement over any provision of the unions constitution and by-laws, or disputes arising from chartering or disaffiliation of the union. 49 Sections 1 and 2, Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union disputes, viz: RULE XI INTER/INTRA-UNION DISPUTES AND OTHER RELATED LABOR RELATIONS DISPUTES Section 1. Coverage. - Inter/intra-union disputes shall include: (a) cancellation of registration of a labor organization filed by its members or by another labor organization; (b) conduct of election of union and workers association officers/nullification of election of union and workers association officers; (c) audit/accounts examination of union or workers association funds; (d) deregistration of collective bargaining agreements; (e) validity/invalidity of union affiliation or disaffiliation; (f) validity/invalidity of acceptance/non-acceptance for union membership; (g) validity/invalidity of impeachment/expulsion of union and workers association officers and members; (h) validity/invalidity of voluntary recognition; (i) opposition to application for union and CBA registration; (j) violations of or disagreements over any provision in a union or workers association constitution and by-laws; (k) disagreements over chartering or registration of labor organizations and collective bargaining agreements; (l) violations of the rights and conditions of union or workers association membership; (m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements; (n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining (1) between and among legitimate labor organizations; (2) between and among members of a union or workers association. Section 2. Coverage. Other related labor relations disputes shall include any conflict between a labor union and the employer or any individual, entity or group that is not a labor organization or workers association. This includes: (1) cancellation of registration of unions and workers associations; and (2) a petition for interpleader. It is clear from the foregoing that the issues raised by petitioners do not fall under any of the aforementioned circumstances constituting an intra-union dispute. More importantly, the petitioners do not seek a determination of whether it is the Facundo group (EUBP) or the Remigio group (REUBP) which is the true set of union officers. Instead, the issue raised pertained only to the validity of the acts of management in light of the fact that it still has an existing CBA with EUBP. Thus as to Bayer, Lonishen and Amistoso the question was whether they were liable for unfair labor practice, which issue was within the jurisdiction of the NLRC. The dismissal of the second ULP complaint was therefore erroneous. However, as to respondents Remigio and Villareal, we find that petitioners complaint was validly dismissed. Petitioners ULP complaint cannot prosper as against respondents Remigio and Villareal because the issue, as against them, essentially involves an intraunion dispute based on Section 1 (n) of DOLE Department Order No. 40-03. To rule on the validity or illegality of their acts, the Labor Arbiter and the NLRC will necessarily touch on the issues respecting the propriety of their disaffiliation and the legality of the establishment of REUBP issues that are outside the scope of their jurisdiction. Accordingly, the dismissal of the complaint was validly made, but only with respect to these two respondents. But are Bayer, Lonishen and Amistoso liable for unfair labor practice? On this score, we find that the evidence supports an answer in the affirmative. It must be remembered that a CBA is entered into in order to foster stability and mutual cooperation between labor and capital. An employer should not be allowed to rescind unilaterally its CBA with the duly certified bargaining agent it had previously contracted with, and decide to bargain anew with a different group if there is no legitimate reason for doing so and without first following the proper procedure. If such behavior would be tolerated, bargaining and negotiations between the employer and the union will never be truthful and meaningful, and no CBA forged after arduous negotiations will ever be honored or be relied upon. Article 253 of the Labor Code, as amended, plainly provides: ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. Where there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. 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. (Emphasis supplied.)1avvphi1 This is the reason why it is axiomatic in labor relations that a CBA entered into by a legitimate labor organization that has been duly certified as the exclusive bargaining representative and the employer becomes the law between them. Additionally, in the Certificate of Registration 50 issued by the DOLE, it is specified that the registered CBA serves as the covenant between the parties and has the force and effect of law between them during the period of its duration. Compliance with the terms and conditions of the CBA is mandated by express policy of the law primarily to afford protection to labor51 and to promote industrial peace. Thus, when a valid and binding CBA had been entered into by the workers and the employer, the latter is behooved to observe the terms and conditions thereof bearing on union dues and representation. 52 If the employer grossly violates its CBA with the duly recognized union, the former may be held administratively and criminally liable for unfair labor practice. 53 Respondents Bayer, Lonishen and Amistoso, contend that their acts cannot constitute unfair labor practice as the same did not involve gross violations in the economic provisions of the CBA, citing the provisions of Articles 248 (1) and 261 54 of the Labor Code, as amended. 55 Their argument is, however, misplaced.

Indeed, in Silva v. National Labor Relations Commission, 56 we explained the correlations of Article 248 (1) and Article 261 of the Labor Code to mean that for a ULP case to be cognizable by the Labor Arbiter, and for the NLRC to exercise appellate jurisdiction thereon, the allegations in the complaint must show prima facie the concurrence of two things, namely: (1) gross violation of the CBA; and (2) the violation pertains to the economic provisions of the CBA.57 This pronouncement in Silva, however, should not be construed to apply to violations of the CBA which can be considered as gross violations per se, such as utter disregard of the very existence of the CBA itself, similar to what happened in this case. When an employer proceeds to negotiate with a splinter union despite the existence of its valid CBA with the duly certified and exclusive bargaining agent, the former indubitably abandons its recognition of the latter and terminates the entire CBA. Respondents cannot claim good faith to justify their acts. They knew that Facundos group represented the duly-elected officers of EUBP. Moreover, they were cognizant of the fact that even the DOLE Secretary himself had recognized the legitimacy of EUBPs mandate by rendering an arbitral award ordering the signing of the 1997-2001 CBA between Bayer and EUBP. Respondents were likewise well-aware of the pendency of the intra-union dispute case, yet they still proceeded to turn over the collected union dues to REUBP and to effusively deal with Remigio. The totality of respondents conduct, therefore, reeks with anti-EUBP animus. Bayer, Lonishen and Amistoso argue that the case is already moot and academic following the lapse of the 1997-2001 CBA and their renegotiation with EUBP for the 2006-2007 CBA. They also reason that the act of the company in negotiating with EUBP for the 2006-2007 CBA is an obvious recognition on their part that EUBP is now the certified collective bargaining agent of its rank-and-file employees. 58 We do not agree. First, a legitimate labor organization cannot be construed to have abandoned its pending claim against the management/employer by returning to the negotiating table to fulfill its duty to represent the interest of its members, except when the pending claim has been expressly waived or compromised in its subsequent negotiations with the management. To hold otherwise would be tantamount to subjecting industrial peace to the precondition that previous claims that labor may have against capital must first be waived or abandoned before negotiations between them may resume. Undoubtedly, this would be against public policy of affording protection to labor and will encourage scheming employers to commit unlawful acts without fear of being sanctioned in the future.1avvphi1 Second, that the management of Bayer decided to recognize EUBP as the certified collective bargaining agent of its rank-and-file employees for purposes of its 2006-2007 CBA negotiations is of no moment. It did not obliterate the fact that the management of Bayer had withdrawn its recognition of EUBP and supported REUBP during the tumultuous implementation of the 1997-2001 CBA. Such act of interference which is violative of the existing CBA with EUBP led to the filing of the subject complaint. On the matter of damages prayed for by the petitioners, we have held that as a general rule, a corporation cannot suffer nor be entitled to moral damages. A corporation, and by analogy a labor organization, being an artificial person and having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental anguish. Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of life all of which cannot be suffered by an artificial, juridical person. 59 A fortiori, the prayer for exemplary damages must also be denied. 60 Nevertheless, we find it in order to award (1) nominal damages in the amount of P250,000.00 on the basis of our ruling in De La Salle University v. De La Salle University Employees Association (DLSUEA-NAFTEU) 61 and Article 2221,62 and (2) attorneys fees equivalent to 10% of the monetary award. The remittance to petitioners of the collected union dues previously turned over to Remigio and Villareal is likewise in order. WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The Decision dated December 15, 2003 and the Resolution dated March 23, 2004 of the Court of Appeals in CA-G.R. SP No. 73813 are MODIFIED as follows: 1) Respondents Bayer Phils., Dieter J. Lonishen and Asuncion Amistoso are found LIABLE for Unfair Labor Practice, and are hereby ORDERED to remit to petitioners the amount of P254,857.15 representing the collected union dues previously turned over to Avelina Remigio and Anastacia Villareal. They are likewise ORDERED to pay petitioners nominal damages in the amount of P250,000.00 and attorneys fees equivalent to 10% of the monetary award; and 2) The complaint, as against respondents Remigio and Villareal. is DISMISSED due to the lack of jurisdiction of the Labor Arbiter and the NLRC, the complaint being in the nature of an intra-union dispute. G.R. No. 180892 April 7, 2009 UST FACULTY UNION, Petitioner, vs. UNIVERSITY OF SANTO TOMAS, REV. FR. ROLANDO DE LA ROSA, REV. FR. RODELIO ALIGAN, DOMINGO LEGASPI, and MERCEDES HINAYON, Respondents. DECISION VELASCO, JR., J.: The Case This Petition for Review on Certiorari under Rule 45 seeks the reversal of the June 14, 2007 Decision 1 and November 26, 2007 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 92236. The CA Decision affirmed the November 28, 2003 3 and July 29, 20054 Resolutions of the Third Division of the National Labor Relations Commission (NLRC) in NLRC CA No. 037320-03. These Resolutions, in turn, affirmed the August 15, 2003 Decision of Labor Arbiter Edgardo M. Madriaga in NLRC NCR Case No. 10-06255-96. Entitled University of Santo Tomas Faculty Union v. University of Santo Tomas, Rev. Fr. Rolando De La Rosa, Rev. Fr. Rodelio Aligan, Domingo Legaspi, and Mercedes Hinayon, these decisions and resolutions were all in favor of respondents that were found not guilty of Unfair Labor Practice (ULP). The Facts On September 21, 1996, the University of Santo Tomas Faculty Union (USTFU) wrote a letter 5 to all its members informing them of a General Assembly (GA) that was to be held on October 5, 1996. The letter contained an agenda for the GA which included an election of officers. The then incumbent president of the USTFU was Atty. Eduardo J. Mario, Jr. On October 2, 1996, Fr. Rodel Aligan, O.P., Secretary General of the UST, issued a Memorandum 6 allowing the request of the Faculty Clubs of the university to hold a convocation on October 4, 1996. Members of the faculties of the university attended the convocation, including members of the USTFU, without the participation of the members of the UST administration. Also during the convocation, an election for the officers of the USTFU was conducted by a group called the Reformist Alliance. Upon learning that the convocation was intended to be an election, members of the USTFU walked out. Meanwhile, an election was conducted among those present, and Gil Gamilla and other faculty members (Gamilla Group) were elected as the president and officers, respectively, of the union. Such election was communicated to the UST administration in a letter dated October 4, 1996. 7 Thus, there were two (2) groups claiming to be the USTFU: the Gamilla Group and the group led by Atty. Mario, Jr. (Mario Group). On October 8, 1996, the Mario Group filed a complaint for ULP against the UST with the Arbitration Branch of the NLRC, docketed as NLRC NCR Case No. 10-06255-96. It also filed on October 11, 1996 a complaint with the Office of the Med-Arbiter of the Department of Labor and Employment (DOLE), praying for the nullification of the election of the Gamilla Group as officers of the USTFU. The complaint was docketed as Case No. NCR-OD-M-9610-016 and entitled UST Faulty Union, Gil Y. Gamilla, Corazon Qui, et al., v. Eduardo J. Mario, Jr., Ma. Melvyn Alamis, Norma Collantes, et al. On December 3, 1996, a Collective Bargaining Agreement 8 (CBA) was entered into by the Gamilla Group and the UST. The CBA superseded an existing CBA entered into by the UST and USTFU which was intended for the period of June 1, 1993 to May 31, 1998. 9 On January 27, 1997, Gamilla, accompanied by the barangay captain in the area, Dupont E. Aseron, and Justino Cardenas, Chief Security Officer of the UST, padlocked the office of the USTFU. Afterwards, an armed security guard of the UST was posted in front of the USTFU office. On February 11, 1997, the med-arbiter issued a Resolution, declaring the election of the Gamilla group as null and void and ordering that this group cease and desist from performing the duties and responsibilities of USTFU officers. This Resolution was appealed to the Director of the Bureau of Labor Relations (BLR), docketed as BLR Case No. A-8-49-97 and entitled UST Faulty Union, Gil Y. Gamilla, Corazon Qui, et al. v. Med-Arbiter Tomas F. Falconitin of the National Capital Region, Department of Labor and Employment (DOLE), Eduardo J. Mario, Jr., et al. Later, the director issued a Resolution dated August 15, 1997 affirming the Resolution of the med-arbiter. His Resolution was then appealed to this Court which rendered its November 16, 1999 Decision10 in G.R. No. 131235 upholding the ruling of the BLR. Thus, on January 21, 2000, USTFU filed a Manifestation 11 with the Arbitration Branch of the NLRC in NLRC Case No. 10-06255-96, informing it of the Decision of the Court. Thereafter, on August 15, 2003, the Arbitration Branch of the NLRC issued a Decision 12 dismissing the complaint for lack of merit. The complaint was dismissed on the ground that USTFU failed to establish with clear and convincing evidence that indeed UST was guilty of ULP. The acts of UST which USTFU complained of as ULP were the following: (1) allegedly calling for a convocation of faculty members which turned out to be an election of officers for the faculty union; (2) subsequently dealing with the Gamilla Group in establishing a new CBA; and (3) the assistance to the Gamilla Group in padlocking the USTFU office.

In his Decision, the labor arbiter explained that the alleged Memorandum dated October 2, 1996 merely granted the request of faculty members to hold such convocation. Moreover, by USTFUs own admission, no member of the UST administration attended or participated in the convocation. As to the CBA, the labor arbiter ruled that when the new CBA was entered into, (1) the Gamilla Group presented more than sufficient evidence to establish that they had been duly elected as officers of the USTFU; and (2) the ruling of the med-arbiter that the election of the Gamilla Group was null and void was not yet final and executory. Thus, UST was justified in dealing with and entering into a CBA with the Gamilla Group, including helping the Gamilla Group in securing the USTFU office. The USTFU appealed the labor arbiters Decision to the Third Division of the NLRC which rendered a Resolution dated November 28, 2003 affirming the Decision of the labor arbiter. USTFUs Motion for Reconsideration of the NLRCs November 28, 2003 Resolution was denied in a Resolution dated July 29, 2005. The case was then elevated to the CA which rendered the assailed Decision affirming the Resolutions of the NLRC. The CA also denied the Motion for Reconsideration of USTFU in the assailed resolution. Hence, we have this petition. The Issues 1. The Honorable Court of Appeals committed serious and reversible error when it dismissed the Petition for Certiorari in CA-G.R. SP No. 92236 and sustained the National Labor Relations Commissions ruling that the herein respondents are not guilty of Unfair Labor Practice despite abundance of evidence showing that Unfair Labor Practices were indeed committed. 2. The Honorable Court of Appeals committed serious and reversible error when it manifestly overlooked relevant facts not disputed by the parties which, if properly considered, would justify a different conclusion and in rendering a judgment that is based on a misapprehension of facts.13 The Courts Ruling The petition must be denied. UST Is Not Guilty of ULP Petitioner claims that given the factual circumstances attendant to the instant case, the labor arbiter, NLRC, and CA should have found that UST is guilty of ULP. Petitioner enumerates the acts constituting ULP as follows: (1) Atty. Domingo Legaspi, the legal counsel for the UST, conducted a faculty meeting in his office, supplying derogatory information about the Mario Group; (2) respondents provided the Gamilla Group with the facilities and forum to conduct elections, in the guise of a convocation; and (3) respondents transacted business with the Gamilla Group such as the processing of educational and hospital benefits, deducting USTFU dues from the faculty members without turning over the dues to the Mario Group, and entering into a CBA with them. Additionally, petitioner claims that the CA, NLRC, and labor arbiter ignored vital pieces of evidence. These were the Affidavit dated January 21, 2000 of Edgar Yu, the Certification dated January 27, 1997 of Alexander Sibug, and the picture of a security guard posted outside the USTFU office purportedly to "prevent entry into and exit from the union office." The concept of ULP is contained in Article 247 of the Labor Code which states: Article 247. Concept of unfair labor practice and procedure for prosecution thereof.Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. (Emphasis supplied.) Notably, petitioner claims that respondents violated paragraphs (a) and (d) of Art. 248 of the Code which provide: Article 248. Unfair labor practices of employers.It shall be unlawful for an employer to commit any of the following unfair labor practices: (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; xxxx (d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor organization, including the giving of financial or other support to it or its organizers or supporters. The general principle is that one who makes an allegation has the burden of proving it. While there are exceptions to this general rule, in the case of ULP, the alleging party has the burden of proving such ULP. Thus, we ruled in De Paul/King Philip Customs Tailor v. NLRC that "a party alleging a critical fact must support his allegation with substantial evidence. Any decision based on unsubstantiated allegation cannot stand as it will offend due process." 14 While in the more recent and more apt case of Standard Chartered Bank Employees Union (NUBE) v. Confesor, this Court enunciated: In order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 15 (Emphasis supplied.) In other words, whether the employee or employer alleges that the other party committed ULP, it is the burden of the alleging party to prove such allegation with substantial evidence. Such principle finds justification in the fact that ULP is punishable with both civil and/or criminal sanctions. 16 Given the above rulings of this Court, we shall now examine the acts of respondents which allegedly constitute ULP. With regard to the alleged derogatory remarks of Atty. Legaspi, the three tribunals correctly ruled that there was no evidence to support such allegation. The alleged evidence to support petitioners claim, the Affidavit dated January 21, 2000 of Yu, is unacceptable. In the Affidavit it is stated that: "6. That in the said meeting, Atty. Legaspi gave the participants information that are derogatory to the officers of the UST Faculty Union." 17 It may be observed that the information allegedly provided during the meeting as "derogatory" is a conclusion of law and not of fact. What may be derogatory to Yu may not be punishable under the law. There was, therefore, no fact that was established by the Affidavit. Hence, petitioner failed to present evidence in support of its claim that respondents committed ULP through alleged remarks of Atty. Legaspi. As to the convocation, petitioner avers that: "Indeed, Respondents, under the guise of a faculty convocation, ordered the suspension of classes and required the faculty members to attend the supposed faculty convocation which was to be held at the Education Auditorium of the University of Santo Tomas."18 An examination of the Memorandum dated October 2, 199619 would, however, rebut such allegation. It stated: MEMORANDUM TO THE DEANS, REGENTS, PRINCIPALS AND HEADS OF DEPARTMENTS Re: Convocation of Faculty Club As per request of the Faculty Clubs of the different Faculties, Colleges, Schools and Institutes in the University through their Presidents, we are allowing them to hold a convocation on Friday, October 4, 1996 at 9:00 in the morning to 12:00 noon at the Education Auditorium. The officers and members of said faculty clubs are, therefore, excused from their classes on Friday from 9:00 to 12:00 noon to allow them to attend. Regular classes shall resume at 1:00 in the afternoon. Please be guided accordingly. Thank you. FR. RODEL ALIGAN, O.P. (Sgd.) Secretary General In no way can the contents of this memorandum be interpreted to mean that faculty members were required to attend the convocation. Not one coercive term was used in the memorandum to show that the faculty club members were compelled to attend such convocation. And the phrase "we are allowing them to hold a convocation" negates any idea that the UST would participate in the proceedings. Moreover, the CA ruled properly: More importantly, USTFU itself even admitted that during the October [4], 1996 convocation/election, not a single University Official was present. And the Faculty Convocation was held without the overt participation of any UST Administrator or Official. 20 In other words, the Memorandum dated October 2, 1996 does not support a claim that UST organized the convocation in connivance with the Gamilla Group. Anent USTs dealing with the Gamilla Group, including the processing of faculty members educational and hospitalization benefits, the labor arbiter ruled that: Neither are We persuaded by complainants stand that respondents acquiescence to bargain with USTFU, through Gamillas group, constitutes unfair labor practice. x x x Such conduct alone, uncorroborated by other overt acts leading to the commission of ULP, does not conclusively show and establish the commission of such unlawful acts.21 The fact of the matter is, the Gamilla Group represented itself to respondents as the duly elected officials of the USTFU. 22 As such, respondents were bound to deal with them. Art. 248(g) of the Labor Code provides that:

ART. 248. Unfair labor practices of employers.It shall be unlawful for an employer to commit any of the following unfair labor practice: xxxx (g) To violate the duty to bargain collectively as prescribed by this Code. Correlatively, Art. 250(a) of the Code provides: ART. 250. Procedure in collective bargaining.The following procedures shall be observed in collective bargaining: (a) When a party desires to negotiate an agreement, it shall serve a written notice upon the other party with a statement of its proposals. The other party shall make a reply thereto not later than ten (10) calendar days from receipt of such notice; Moreover, Art. 252 of the Code defines the duty to bargain collectively as: ART. 252. Meaning of duty to bargain collectively.The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment including proposals for adjusting any grievances or questions arising under such agreement and executing a contract incorporating such agreements if requested by either party but such duty does not compel any party to agree to a proposal or to make any concession. (Emphasis ours.) In the instant case, until our Decision in G.R. No. 131235 that the Gamilla Group was not validly elected into office, there was no reason to believe that the members of the Gamilla Group were not the validly elected officers and directors of USTFU. To reiterate, the Gamilla Group submitted a Letter dated October 4, 1996 whereby it informed Fr. Rolando De La Rosa that its members were the newly elected officers and directors of USTFU. In the Letter, every officer allegedly elected was identified with the Letter signed by the alleged newly elected Secretary General and President, Ma. Lourdes Medina and Gamilla, respectively. More important though is the fact that the records are bereft of any evidence to show that the Mario Group informed the UST of their objections to the election of the Gamilla Group. In fact, there is even no evidence to show that the scheduled elections on October 5, 1996 that was supposed to be presided over by the Mario Group ever pushed through. Instead, petitioner filed a complaint with the med-arbiter on October 11, 1996 praying for the nullification of the election of the Gamilla Group. lavvphil.zw+ As such, there was no reason not to recognize the Gamilla Group as the new officers and directors of USTFU. And as stated in the above-quoted provisions of the Labor Code, the UST was obligated to deal with the USTFU, as the recognized representative of the bargaining unit, through the Gamilla Group. USTs failure to negotiate with the USTFU would have constituted ULP. It is not the duty or obligation of respondents to inquire into the validity of the election of the Gamilla Group. Such issue is properly an intra-union controversy subject to the jurisdiction of the med-arbiter of the DOLE. Respondents could not have been expected to stop dealing with the Gamilla Group on the mere accusation of the Mario Group that the former was not validly elected into office. The subsequent ruling of this Court in G.R. No. 131235 that the Gamilla Group was not validly elected into office cannot support petitioners allegation of ULP. Had respondents dealt with the Gamilla Group after our ruling in G.R. No. 131235 had become final and executory, it would have been a different story. As the CA ruled correctly, until the validity of the election of the Gamilla Group is resolved with finality, respondents could not be faulted for negotiating with said group. Petitioner further alleges that respondents are guilty of ULP when on January 27, 1997, "Justino Cardenas, Detachment Commander of the security agency contracted by the UST to provide security services to the university, led a group of persons, including Dr. Gil Gamilla, who padlocked the door leading to the USTFU." 23 Petitioner claims that "Gamilla who was and is still being favored by the employer, had no right whatsoever to padlock the union office. And, yet the Administrators of the University of Santo Tomas aided him in performing an unlawful act." Petitioner adds that an armed security guard was posted at the USTFU office in order to prevent the Mario Group from performing its duties. 24 To support such contention, petitioner provides as evidence a Certification dated January 27, 1997 25 of Sibug, a messenger of the USTFU, and a photograph 26 of a security guard standing before the USTFU office. These pieces of evidence fail to support petitioners conclusions. As to the padlocking of the USTFU office, it must be emphasized that based on the Certification of Sibug, Cardenas was merely present, with Brgy. Captain Aseron of Brgy. 470, Zone 46, at the padlocking of the USTFU office. The Certification also stated that Sibug himself also padlocked the USTFU office and that he was neither harassed nor coerced by the padlocking group. Clearly, Cardenas mere presence cannot be equated to a positive act of "aiding" the Gamilla Group in securing the USTFU office. With regard to the photograph, while it evidences that there was indeed a guard posted at the USTFU office, such cannot be used to claim that the guard prevented the Mario Group from performing its duties. Petitioner again failed to present evidence to support its contention that UST committed acts amounting to ULP. In any event, it bears stressing that at the time of these events, the legitimacy of the Gamilla Group as the valid officers and directors of the USTFU was already submitted to the med-arbiter and no decision had yet been reached on the matter. Having been shown evidence to support the legitimacy of the Gamilla Group with no counter-evidence from the Mario Group, UST had to recognize the Gamilla Group and negotiate with it. Thus, the acts of UST in support of the USTFU as the legitimate representative of the bargaining unit, albeit through the Gamilla Group, cannot be considered as ULP. Finally, petitioner claims that "despite the ruling of this Honorable Court, the University of Santo Tomas still entertains the interlopers whose claim to the leadership of the USTFU has been rejected by the [DOLE] and the Highest Tribunal." 27 Petitioner, however, fails to enumerate such objectionable actions of the UST. Again, petitioner fails to present substantial evidence in support of its claim. 1avvphi1 In sum, petitioner makes several allegations that UST committed ULP. The onus probandi falls on the shoulders of petitioner to establish or substantiate such claims by the requisite quantum of evidence. In labor cases as in other administrative proceedings, substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required. In the petition at bar, petitioner miserably failed to adduce substantial evidence as basis for the grant of relief. WHEREFORE, the petition is hereby DENIED. The June 14, 2007 Decision and November 26, 2007 Resolution of the CA in CA-G.R. SP No. 92236 are hereby AFFIRMED. G.R. No. 170287 February 14, 2008 ALABANG COUNTRY CLUB, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, ALABANG COUNTRY CLUB INDEPENDENT EMPLOYEES UNION, CHRISTOPHER PIZARRO, MICHAEL BRAZA, and NOLASCO CASTUERAS, respondents. DECISION VELASCO, JR., J.: Petitioner Alabang Country Club, Inc. (Club) is a domestic non-profit corporation with principal office at Country Club Drive, Ayala Alabang, Muntinlupa City. Respondent Alabang Country Club Independent Employees Union (Union) is the exclusive bargaining agent of the Club's rank-and-file employees. In April 1996, respondents Christopher Pizarro, Michael Braza, and Nolasco Castueras were elected Union President, Vice-President, and Treasurer, respectively. On June 21, 1999, the Club and the Union entered into a Collective Bargaining Agreement (CBA), which provided for a Union shop and maintenance of membership shop. The pertinent parts of the CBA included in Article II on Union Security read, as follows: ARTICLE II UNION SECURITY SECTION 1. CONDITION OF EMPLOYMENT. All regular rank-and-file employees, who are members or subsequently become members of the UNION shall maintain their membership in good standing as a condition for their continued employment by the CLUB during the lifetime of this Agreement or any extension thereof. SECTION 2. [COMPULSORY] UNION MEMBERSHIP FOR NEW REGULAR RANK-AND-FILE EMPLOYEES a) New regular rank-and-file employees of the Club shall join the UNION within five (5) days from the date of their appointment as regular employees as a condition for their continued employment during the lifetime of this Agreement, otherwise, their failure to do so shall be a ground for dismissal from the CLUB upon demand by the UNION. b) The Club agrees to furnish the UNION the names of all new probationary and regular employees covered by this Agreement not later than three (3) days from the date of regular appointment showing the positions and dates of hiring. xxxx SECTION 4. TERMINATION UPON UNION DEMAND. Upon written demand of the UNION and after observing due process, the Club shall dismiss a regular rank-and-file employee on any of the following grounds:

(a) Failure to join the UNION within five (5) days from the time of regularization; (b) Resignation from the UNION, except within the period allowed by law; (c) Conviction of a crime involving moral turpitude; (d) Non-payment of UNION dues, fees, and assessments; (e) Joining another UNION except within the period allowed by law; (f) Malversation of union funds; (g) Actively campaigning to discourage membership in the UNION; and (h) Inflicting harm or injury to any member or officer of the UNION. It is understood that the UNION shall hold the CLUB free and harmless [sic] from any liability or damage whatsoever which may be imposed upon it by any competent judicial or quasi-judicial authority as a result of such dismissal and the UNION shall reimburse the CLUB for any and all liability or damage it may be adjudged. 1 (Emphasis supplied.) Subsequently, in July 2001, an election was held and a new set of officers was elected. Soon thereafter, the new officers conducted an audit of the Union funds. They discovered some irregularly recorded entries, unaccounted expenses and disbursements, and uncollected loans from the Union funds. The Union notified respondents Pizarro, Braza, and Castueras of the audit results and asked them to explain the discrepancies in writing. 2 Thereafter, on October 6, 2001, in a meeting called by the Union, respondents Pizarro, Braza, and Castueras explained their side. Braza denied any wrongdoing and instead asked that the investigation be addressed to Castueras, who was the Union Treasurer at that time. With regard to his unpaid loans, Braza claimed he had been paying through monthly salary deductions and said the Union could continue to deduct from his salary until full payment of his loans, provided he would be reimbursed should the result of the initial audit be proven wrong by a licensed auditor. With regard to the Union expenses which were without receipts, Braza explained that these were legitimate expenses for which receipts were not issued, e.g. transportation fares, food purchases from small eateries, and food and transportation allowances given to Union members with pending complaints with the Department of Labor and Employment, the National Labor Relations Commission (NLRC), and the fiscal's office. He explained that though there were no receipts for these expenses, these were supported by vouchers and itemized as expenses. Regarding his unpaid and unliquidated cash advances amounting to almost PhP 20,000, Braza explained that these were not actual cash advances but payments to a certain Ricardo Ricafrente who had loaned PhP 200,000 to the Union.3 Pizarro, for his part, blamed Castueras for his unpaid and uncollected loan and cash advances. He claimed his salaries were regularly deducted to pay his loan and he did not know why these remained unpaid in the records. Nonetheless, he likewise agreed to continuous salary deductions until all his accountabilities were paid.4 Castueras also denied any wrongdoing and claimed that the irregular entries in the records were unintentional and were due to inadvertence because of his voluminous work load. He offered that his unpaid personal loan of PhP 27,500 also be deducted from his salary until the loans were fully paid. Without admitting any fault on his part, Castueras suggested that his salary be deducted until the unaccounted difference between the loans and the amount collected amounting to a total of PhP 22,000 is paid. 5 Despite their explanations, respondents Pizarro, Braza, and Castueras were expelled from the Union, and, on October 16, 2001, were furnished individual letters of expulsion for malversation of Union funds. 6 Attached to the letters were copies of the Panawagan ng mga Opisyales ng Unyon signed by 37 out of 63 Union members and officers, and a Board of Directors' Resolution 7 expelling them from the Union. In a letter dated October 18, 2001, the Union, invoking the Security Clause of the CBA, demanded that the Club dismiss respondents Pizarro, Braza, and Castueras in view of their expulsion from the Union. 8 The Club required the three respondents to show cause in writing within 48 hours from notice why they should not be dismissed. Pizarro and Castueras submitted their respective written explanations on October 20, 2001, while Braza submitted his explanation the following day. During the last week of October 2001, the Club's general manager called respondents Pizarro, Braza, and Castueras for an informal conference inquiring about the charges against them. Said respondents gave their explanation and asserted that the Union funds allegedly malversed by them were even over the total amount collected during their tenure as Union officers-PhP 120,000 for Braza, PhP 57,000 for Castueras, and PhP 10,840 for Pizarro, as against the total collection from April 1996 to December 2001 of only PhP 102,000. They claimed the charges are baseless. The general manager announced he would conduct a formal investigation. Nonetheless, after weighing the verbal and written explanations of the three respondents, the Club concluded that said respondents failed to refute the validity of their expulsion from the Union. Thus, it was constrained to terminate the employment of said respondents. On December 26, 2001, said respondents received their notices of termination from the Club. 9 Respondents Pizarro, Braza, and Castueras challenged their dismissal from the Club in an illegal dismissal complaint docketed as NLRC-NCR Case No. 3001-00130-02 filed with the NLRC, National Capital Region Arbitration Branch. In his January 27, 2003 Decision, 10 the Labor Arbiter ruled in favor of the Club, and found that there was justifiable cause in terminating said respondents. He dismissed the complaint for lack of merit. On February 21, 2003, respondents Pizarro, Braza, and Castueras filed an Appeal docketed as NLRC NCR CA No. 034601-03 with the NLRC. On February 26, 2004, the NLRC rendered a Decision 11 granting the appeal, the fallo of which reads: WHEREFORE, finding merit in the Appeal, judgment is hereby rendered declaring the dismissal of the complainants illegal. x x x Alabang Country Club, Inc. and Alabang Country Club Independent Union are hereby ordered to reinstate complainants Christopher Pizarro, Nolasco Castueras and Michael Braza to their former positions without loss of seniority rights and other privileges with full backwages from the time they were dismissed up to their actual reinstatement. SO ORDERED. The NLRC ruled that there was no justifiable cause for the termination of respondents Pizarro, Braza, and Castueras. The commissioners relied heavily on Section 2, Rule XVIII of the Rules Implementing Book V of the Labor Code. Sec. 2 provides: SEC. 2. Actions arising from Article 241 of the Code. - Any action arising from the administration or accounting of union funds shall be filed and disposed of as an intra-union dispute in accordance with Rule XIV of this Book. In case of violation, the Regional or Bureau Director shall order the responsible officer to render an accounting of funds before the general membership and may, where circumstances warrant, mete the appropriate penalty to the erring officer/s, including suspension or expulsion from the union. 12 According to the NLRC, said respondents' expulsion from the Union was illegal since the DOLE had not yet made any definitive ruling on their liability regarding the administration of the Union's funds. The Club then filed a motion for reconsideration which the NLRC denied in its June 20, 2004 Resolution. 13 Aggrieved by the Decision and Resolution of the NLRC, the Club filed a Petition for Certiorari which was docketed as CA-G.R. SP No. 86171 with the Court of Appeals (CA). The CA Upheld the NLRC Ruling that the Three Respondents were Deprived Due Process 14 On July 5, 2005, the appellate court rendered a Decision, denying the petition and upholding the Decision of the NLRC. The CA's Decision focused mainly on the Club's perceived failure to afford due process to the three respondents. It found that said respondents were not given the opportunity to be heard in a separate hearing as required by Sec. 2(b), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, as follows: SEC. 2. Standards of due process; requirements of notice .-In all cases of termination of employment, the following standards of due process shall be substantially observed: For termination of employment based on just causes as defined in Article 282 of the Code: xxxx (b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him. The CA also said the dismissal of the three respondents was contrary to the doctrine laid down in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos (Malayang Samahan), where this Court ruled that even on the assumption that the union had valid grounds to expel the local union officers, due process requires that the union officers be accorded a separate hearing by the employer company. 15 In a Resolution 16 dated October 20, 2005, the CA denied the Club's motion for reconsideration. The Club now comes before this Court with these issues for our resolution, summarized as follows: 1. Whether there was just cause to dismiss private respondents, and whether they were afforded due process in accordance with the standards provided for by the Labor Code and its Implementing Rules. 2. Whether or not the CA erred in not finding that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ruled that respondents Pizarro, Braza, and Castueras were illegally expelled from the Union.

3. Whether the case of Agabon vs. NLRC17 should be applied to this case. 4. Whether that in the absence of bad faith and malice on the part of the Club, the Union is solely liable for the termination from employment of said respondents. The main issue is whether the three respondents were illegally dismissed and whether they were afforded due process. The Club avers that the dismissal of the three respondents was in accordance with the Union security provisions in their CBA. The Club also claims that the three respondents were afforded due process, since the Club conducted an investigation separate and independent from that conducted by the Union. Respondents Pizarro, Braza, and Castueras, on the other hand, contend that the Club failed to conduct a separate hearing as prescribed by Sec. 2(b), Rule XXIII, Book V of the implementing rules of the Code. First, we resolve the legality of the three respondents' dismissal from the Club. Valid Grounds for Termination Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due to disease under Art. 284; and (4) termination by the employee or resignation under Art. 285. Another cause for termination is dismissal from employment due to the enforcement of the union security clause in the CBA. Here, Art. II of the CBA on Union security contains the provisions on the Union shop and maintenance of membership shop. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. 18 Termination of employment by virtue of a union security clause embodied in a CBA is recognized and accepted in our jurisdiction. 19 This practice strengthens the union and prevents disunity in the bargaining unit within the duration of the CBA. By preventing member disaffiliation with the threat of expulsion from the union and the consequent termination of employment, the authorized bargaining representative gains more numbers and strengthens its position as against other unions which may want to claim majority representation. In terminating the employment of an employee by enforcing the union security clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the union's decision to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the CBA's union security provision. The language of Art. II of the CBA that the Union members must maintain their membership in good standing as a condition sine qua non for their continued employment with the Club is unequivocal. It is also clear that upon demand by the Union and after due process, the Club shall terminate the employment of a regular rank-and-file employee who may be found liable for a number of offenses, one of which is malversation of Union funds. 20 Below is the letter sent to respondents Pizarro, Braza, and Castueras, informing them of their termination: On October 18, 2001, the Club received a letter from the Board of Directors of the Alabang Country Club Independent Employees' Union ("Union") demanding your dismissal from service by reason of your alleged commission of act of dishonesty, specifically malversation of union funds. In support thereof, the Club was furnished copies of the following documents: 1. A letter under the subject "Result of Audit" dated September 14, 2001 (receipt of which was duly acknowledged from your end), which required you to explain in writing the charges against you (copy attached); 2. The Union's Board of Directors' Resolution dated October 2, 2001, which explained that the Union afforded you an opportunity to explain your side to the charges; 3. Minutes of the meeting of the Union's Board of Directors wherein an administrative investigation of the case was conducted last October 6, 2001; and 4. The Union's Board of Directors' Resolution dated October 15, 2001 which resolved your expulsion from the Union for acts of dishonesty and malversation of union funds, which was duly approved by the general membership. After a careful evaluation of the evidence on hand vis--vis a thorough assessment of your defenses presented in your letter-explanation dated October 6, 2001 of which you also expressed that you waived your right to be present during the administrative investigation conducted by the Union's Board of Directors on October 6, 2001, Management has reached the conclusion that there are overwhelming reasons to consider that you have violated Section 4(f) of the CBA , particularly on the grounds of malversation of union funds. The Club has determined that you were sufficiently afforded due process under the circumstances. Inasmuch as the Club is duty-bound to comply with its obligation under Section 4(f) of the CBA, it is unfortunate that Management is left with no other recourse but to consider your termination from service effective upon your receipt thereof. We wish to thank you for your services during your employment with the Company. It would be more prudent that we just move on independently if only to maintain industrial peace in the workplace. Be guided accordingly.21 Gleaned from the above, the three respondents were expelled from and by the Union after due investigation for acts of dishonesty and malversation of Union funds. In accordance with the CBA, the Union properly requested the Club, through the October 18, 2001 letter 22 signed by Mario Orense, the Union President, and addressed to Cynthia Figueroa, the Club's HRD Manager, to enforce the Union security provision in their CBA and terminate said respondents. Then, in compliance with the Union's request, the Club reviewed the documents submitted by the Union, requested said respondents to submit written explanations, and thereafter afforded them reasonable opportunity to present their side. After it had determined that there was sufficient evidence that said respondents malversed Union funds, the Club dismissed them from their employment conformably with Sec. 4(f) of the CBA. Considering the foregoing circumstances, we are constrained to rule that there is sufficient cause for the three respondents' termination from employment. Were respondents Pizarro, Braza, and Castueras accorded due process before their employments were terminated? We rule that the Club substantially complied with the due process requirements before it dismissed the three respondents. The three respondents aver that the Club violated their rights to due process as enunciated in Malayang Samahan,23 when it failed to conduct an independent and separate hearing before they were dismissed from service. The CA, in dismissing the Club's petition and affirming the Decision of the NLRC, also relied on the same case. We explained in Malayang Samahan: x x x Although this Court has ruled that union security clauses embodied in the collective bargaining agreement may be validly enforced and that dismissals pursuant thereto may likewise be valid, this does not erode the fundamental requirements of due process. The reason behind the enforcement of union security clauses which is the sanctity and inviolability of contracts cannot override one's right to due process. 24 In the above case, we pronounced that while the company, under a maintenance of membership provision of the CBA, is bound to dismiss any employee expelled by the union for disloyalty upon its written request, this undertaking should not be done hastily and summarily. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing. 25 We cautioned in the same case that the power to dismiss is a normal prerogative of the employer; however, this power has a limitation. The employer is bound to exercise caution in terminating the services of the employees especially so when it is made upon the request of a labor union pursuant to the CBA. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing employees because the dismissal affects not only their positions but also their means of livelihood. Employers should respect and protect the rights of their employees, which include the right to labor. 26 The CA and the three respondents err in relying on Malayang Samahan, as its ruling has no application to this case. In Malayang Samahan, the union members were expelled from the union and were immediately dismissed from the company without any semblance of due process. Both the union and the company did not conduct administrative hearings to give the employees a chance to explain themselves. In the present case, the Club has substantially complied with due process. The three respondents were notified that their dismissal was being requested by the Union, and their explanations were heard. Then, the Club, through its President, conferred with said respondents during the last week of October 2001. The three respondents were dismissed only after the Club reviewed and considered the documents submitted by the Union vis--vis the written explanations submitted by said respondents. Under these circumstances, we find that the Club had afforded the three respondents a reasonable opportunity to be heard and defend themselves. On the applicability of Agabon, the Club points out that the CA ruled that the three respondents were illegally dismissed primarily because they were not afforded due process. We are not unaware of the doctrine enunciated in Agabon that when there is just cause for the dismissal of an employee, the lack of statutory due process should not nullify the dismissal, or render it illegal or ineffectual, and the employer should indemnify the employee for the violation of his statutory rights. 27 However, we find that we could not apply Agabon to this case as we have found that the three respondents were validly dismissed and were actually afforded due process.

Finally, the issue that since there was no bad faith on the part of the Club, the Union is solely liable for the termination from employment of the three respondents, has been mooted by our finding that their dismissal is valid. WHEREFORE, premises considered, the Decision dated July 5, 2005 of the CA and the Decision dated February 26, 2004 of the NLRC are hereby REVERSED and SET ASIDE. The Decision dated January 27, 2003 of the Labor Arbiter in NLRC-NCR Case No. 30-01-00130-02 is hereby REINSTATED. G.R. No. 165407 June 5, 2009 HERMINIGILDO INGUILLO and ZENAIDA BERGANTE, Petitioners, vs. FIRST PHILIPPINE SCALES, Inc. and/or AMPARO POLICARPIO, Manager, Respondents. 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 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 FPSI11 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 Order18 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. 1avvphi1 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 Decision24 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 aforenamed 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 ................ Legal Holiday Pay........... Total Zenaida Bergante Separation pay................. Legal Holiday Pay........... Total P43,225.00 839.00 44,064.00 P22,490.00 839.00 23,329.00

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 II42 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. 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 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 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 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 employers decision to dismiss him. 49 The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. 50 In the present case, the required two notices that must be given to herein petitioners Bergante and Inguillo were lacking. The records are bereft of any notice that would have given a semblance of substantial compliance on the part of herein respondents. Respondents, however, aver that they had furnished the employees concerned, including petitioners, with a copy of FPSILU's "Petisyon." We cannot consider that as compliance with the requirement of either the first notice or the second notice. While the "Petisyon" enumerated the several grounds that would justify the termination of the employees mentioned therein, yet such document is only a recommendation by the Union upon which the employer may base its decision. It cannot be considered a notice of termination. For as agreed upon by FPSI and FPSILU in their CBA, the latter may only recommend to the former a Union member's suspension or dismissal. Nowhere in the controverted Union Security Clause was there a mention that once the union gives a recommendation, the employer is bound outright to proceed with the termination. Even assuming that the "Petisyon" amounts to a first notice, the employer cannot be deemed to have substantially complied with the procedural requirements. True, FPSILU enumerated the grounds in said "Petisyon." But a perusal of each of them leads Us to conclude that what was stated were general descriptions, which in no way would enable the employees to intelligently prepare their explanation and defenses. In addition, the "Petisyon" did not provide a directive that the employees are given opportunity to submit their written explanation within a reasonable period. Finally, even if We are to assume that the "Petisyon" is a second notice, still, the requirement of due process is wanting. For as We have said, the second notice, which is aimed to inform the employee that his service is already terminated, must state that the employer has considered all the circumstances which involve the charge and the grounds in the first notice have been established to justify the severance of employment. After the claimed dialogue between Policarpio and the employees mentioned in the "Petisyon," the latter were simply told not to report for work anymore. These defects are bolstered by Bergante and Inguillo who remain steadfast in denying that they were notified of the specific charges against them nor were they given any memorandum to that effect. They averred that had they been informed that their dismissal was due to FPSILU's demand/petition, they could have impleaded the FPSILU together with the respondents. The Court has always underscored the significance of the two-notice rule in dismissing an employee and has ruled in a number of cases that non-compliance therewith is tantamount to deprivation of the employees right to due process.51 As for the requirement of a hearing or conference, We hold that respondents also failed to substantially comply with the same. Policarpio alleged that she had a dialogue with the concerned employees; that she explained to them the demand of FPSILU for their termination as well as the consequences of the "Petisyon"; and that she had no choice but to act accordingly. She further averred that Grutas even asked her to pay all the involved employees one (1)-month salary for every year of service, plus their accrued legal holiday pay, but which she denied. She informed them that it has been FPSI's

practice to give employees, on a case-to-case basis, only one-half () month salary for every year of service and after they have tendered their voluntary resignation. The employees refused her offer and told her that they will just file their claims with the DOLE. 52 Policarpio's allegations are self-serving. Except for her claim as stated in the respondent's Position Paper, nowhere from the records can We find that Bergante and Inguillo were accorded the opportunity to present evidence in support of their defenses. Policarpio relied heavily on the "Petisyon" of FPSILU. She failed to convince Us that during the dialogue, she was able to ascertain the validity of the charges mentioned in the "Petisyon." In her futile attempt to prove compliance with the procedural requirement, she reiterated that the objective of the dialogue was to provide the employees "the opportunity to receive the act of grace of FPSI by giving them an amount equivalent to one-half () month of their salary for every year of service." We are not convinced. We cannot even consider the demand and counter-offer for the payment of the employees as an amicable settlement between the parties because what took place was merely a discussion only of the amount which the employees are willing to accept and the amount which the respondents are willing to give. Such non-compliance is also corroborated by Bergante and Inguillo in their pleadings denouncing their unjustified dismissal. In fine, We hold that the dialogue is not tantamount to the hearing or conference prescribed by law. We reiterate, FPSI was justified in enforcing the Union Security Clause in the CBA. However, We cannot countenance respondents' failure to accord herein petitioners the due process they deserve after the former dismissed them outright "in order to avoid a serious labor dispute among the officers and members of the bargaining agent." 53 In enforcing the Union Security Clause in the CBA, We are upholding the sanctity and inviolability of contracts. But in doing so, We cannot override an employees right to due process. 54 In Carino v. National Labor Relations Commission ,55 We took a firm stand in holding that: The power to dismiss is a normal prerogative of the employer. However, this is not without limitation. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement x x x. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee because it affects not only his position but also his means of livelihood. Employers should respect and protect the rights of their employees, which include the right to labor." Thus, as held in that case, "the right of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own Union is not wiped away by a Union Security Clause or a Union Shop Clause in a collective bargaining agreement. An employee is entitled to be protected not only from a company which disregards his rights but also from his own Union, the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere dismissal from his job." 56 In fine, We hold that while Bergante and Inguillo's dismissals were valid pursuant to the enforcement of Union Security Clause, respondents however did not comply with the requisite procedural due process. As in the case 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. G.R. No. 149552 March 10, 2010 GENERAL MILLING CORPORATION, Petitioner, vs. ERNESTO CASIO, ROLANDO IGOT, MARIO FAMADOR, NELSON LIM, FELICISIMO BOOC, PROCOPIO OBREGON, JR., and ANTONIO ANINIPOK, Respondents, and VIRGILIO PINO, PAULINO CABREROS, MA. LUNA P. JUMAOAS, DOMINADOR BOOC, FIDEL VALLE, BARTOLOME AUMAN, REMEGIO CABANTAN, LORETO GONZAGA, EDILBERTO MENDOZA and ANTONIO PANILAG, Respondents. DECISION LEONARDO-DE CASTRO, J.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the Decision 1 dated March 30, 2001 and Resolution 2 dated July 18, 2001 of the Court of Appeals in CA-G.R. SP No. 40280, setting aside the Voluntary Arbitration Award 3 dated August 16, 1995 of the National Conciliation and Mediation Board (NCMB), Cebu City, in VA Case No. AC 389-01-01-95. Voluntary Arbitrator Alice K. Canonoy-Morada (CanonoyMorada) dismissed the Complaint filed by respondents Ernesto Casio, Rolando Igot, Mario Famador, Nelson Lim, Felicisimo Booc, Procopio Obregon, Jr. and Antonio Aninipok (Casio, et al.) against petitioner General Milling Corporation (GMC) for unfair labor practice, illegal suspension, illegal dismissal, and payment of moral and exemplary damages. The labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter (Local 31) was the sole and exclusive bargaining agent of the rank and file employees of GMC in Lapu-Lapu City. On November 30, 1991, IBM-Local 31, through its officers and board members, namely, respondents Virgilio Pino, 4 Paulino Cabreros, Ma. Luna P. Jumaoas, Dominador Booc, Bartolome Auman, Remegio Cabantan, Fidel Valle, Loreto Gonzaga, Edilberto Mendoza and Antonio Panilag (Pino, et al.), entered into a Collective Bargaining Agreement (CBA) with GMC. The effectivity of the said CBA was retroactive to August 1, 1991.5 The CBA contained the following union security provisions: Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers employed by the Company with the exception of those who are specifically excluded by law and by the terms of this Agreement must be members in good standing of the Union within thirty (30) days upon the signing of this agreement and shall maintain such membership in good standing thereof as a condition of their employment or continued employment. Section 6. The Company, upon written request of the Union, shall terminate the services of any employee/worker who fails to fulfill the conditions set forth in Sections 3 and 4 thereof, subject however, to the provisions of the Labor Laws of the Philippines and their Implementing Rules and Regulations. The Union shall absolve the Company from any and all liabilities, pecuniary or otherwise, and responsibilities to any employee or worker who is dismissed or terminated in pursuant thereof. 6 Casio, et al. were regular employees of GMC with daily earnings ranging from P173.75 to P201.50, and length of service varying from eight to 25 years. 7 Casio was elected IBM-Local 31 President for a three-year term in June 1991, while his co-respondents were union shop stewards. In a letter8 dated February 24, 1992, Rodolfo Gabiana (Gabiana), the IBM Regional Director for Visayas and Mindanao, furnished Casio, et al. with copies of the Affidavits of GMC employees Basilio Inoc and Juan Potot, charging Casio, et al. with "acts inimical to the interest of the union." Through the same letter, Gabiana gave Casio, et al. three days from receipt thereof within which to file their answers or counter-affidavits. However, Casio, et al. refused to acknowledge receipt of Gabianas letter. Subsequently, on February 29, 1992, Pino, et al., as officers and members of the IBM-Local 31, issued a Resolution 9 expelling Casio, et al. from the union. Pertinent portions of the Resolution are reproduced below: Whereas, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok, Mario Famador, Nelson Lim and Ernesto Casio, through Ernesto Casio have refused to acknowledge receipt of the letter-complaint dated February 24, 1992, requiring them to file their answer[s] or counter-affidavits as against the charge of "acts inimical to the interest of the union" and that in view of such refusal to acknowledge receipt, a copy of said letter complaint was dropped or left in front of E. Casio; Whereas, the three (3)[-]day period given to file their answer or counter-affidavit have already lapsed prompting the union Board to investigate the charge ex parte; Whereas, after such ex parte investigation the said charge has been more than adequately substantiated by the affidavits/witnesses and documentary exhibits presented. NOW, THEREFORE, RESOLVED as it is hereby RESOLVED, that Ernesto Casio, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok, Mario Famador and Nelson Lim be expelled as union member[s] of good standing effectively immediately. RESOLVED FURTHER, to furnish copy of this Resolution to the GMC Management for their information and guidance with the recommendation as it is hereby recommended to dismiss the above-named employees from work.

Gabiana then wrote a letter 10 dated March 10, 1992, addressed to Eduardo Cabahug (Cabahug), GMC Vice-President for Engineering and Plant Administration, informing the company of the expulsion of Casio, et al. from the union pursuant to the Resolution dated February 29, 1992 of IBM-Local 31 officers and board members. Gabiana likewise requested that Casio, et al. "be immediately dismissed from their work for the interest of industrial peace in the plant." Gabiana followed-up with another letter 11 dated March 19, 1992, inquiring from Cabahug why Casio, et al. were still employed with GMC despite the request of IBM-Local 31 that Casio, et al. be immediately dismissed from service pursuant to the closed shop provision in the existing CBA. Gabiana reiterated the demand of IBM-Local 31 that GMC dismiss Casio, et al., with the warning that failure of GMC to do so would constitute gross violation of the existing CBA and constrain the union to file a case for unfair labor practice against GMC. Pressured by the threatened filing of a suit for unfair labor practice, GMC acceded to Gabianas request to terminate the employment of Casio, et al. GMC issued a Memorandum dated March 24, 1992 terminating the employment of Casio, et al. effective April 24, 1992 and placing the latter under preventive suspension for the meantime. On March 27, 1992, Casio, et al., in the name of IBM-Local 31, filed a Notice of Strike with the NCMB-Regional Office No. VII (NCMB-RO). Casio, et al. alleged as bases for the strike the illegal dismissal of union officers and members, discrimination, coercion, and union busting. The NCMB-RO held conciliation proceedings, but no settlement was reached among the parties. 12 Casio, et al. next sought recourse from the National Labor Relations Commission (NLRC) Regional Arbitration Branch VII by filing on August 3, 1992 a Complaint against GMC and Pino, et al. for unfair labor practice, particularly, the termination of legitimate union officers, illegal suspension, illegal dismissal, and moral and exemplary damages. Their Complaint was docketed as NLRC Case No. RAB-VII-08-0639-92. 13 Finding that NLRC Case No. RAB-VII-08-0639-92 did not undergo voluntary arbitration, the Labor Arbiter dismissed the case for lack of jurisdiction, but endorsed the same to the NCMB-RO. Prior to undergoing voluntary arbitration before the NCMB-RO, however, the parties agreed to first submit the case to the grievance machinery of IBM-Local 31. On September 7, 1994, Casio, et al. filed their Complaint with Pino, the Acting President of IBM-Local 31. Pino acknowledged receipt of the Complaint and assured Casio, et al. that they would be "seasonably notified of whatever decision and/or action the Board may have in the instant case." 14 When the IBM-Local 31 Board failed to hold grievance proceedings on the Complaint of Casio, et al., NCMB Voluntary Arbitrator Canonoy-Morada assumed jurisdiction over the same. The Complaint was docketed as VA Case No. AC 389-01-01-95. Based on the Position Papers and other documents submitted by the parties, 15 Voluntary Arbitrator Canonoy-Morada rendered on August 16, 1995 a Voluntary Arbitration Award dismissing the Complaint in VA Case No. AC 389-01-01-95 for lack of merit, but granting separation pay and attorneys fees to Casio, et al. The Voluntary Arbitration Award presented the following findings: (1) the termination by GMC of the employment of Casio, et al. was in valid compliance with the closed shop provision in the CBA; (2) GMC had no competence to determine the good standing of a union member; (3) Casio, et al. waived their right to due process when they refused to receive Gabianas letter dated February 24, 1992, which required them to submit their answer to the charges against them; (4) the preventive suspension of Casio, et al. by GMC was an act of self-defense; and (5) the IBM-Local 31 Resolution dated February 29, 1992 expelling Casio, et al. as union members, also automatically ousted them as union officers. 16 The dispositive portion of the Voluntary Arbitration Award reads: WHEREFORE, above premises considered, this case filed by [Casio, et al.] is hereby ordered DISMISSED for lack of merit. Since the dismissal is not for a cause detrimental to the interest of the company, respondent General Milling Corporation is, nonetheless, ordered to pay separation pay to all [Casio, et al.] within seven (7) calendar days upon receipt of this order at the rate of one-half month per year of service reckoned from the time of their employment until the date of their separation on March 24, 1992, thus: Employe e Casio Igot Famador Lim Booc Obregon Aninipok Date Hired Rate/Month (1/2 mo/yr of service) P2,636.29 P2,472.75 P2,498.92 P2,466.21 P2,498.92 P2,273.23 P2,616.01 Service Total

April 24/74 May 1980 Feb. 1977 Aug. 1975 Aug. 1978 May 1984 Sept. 1967

x 18 years = x 12 years = x 15 years = x 17 years = x 14 years = x 08 years = x 25 years =

P47,453.22 P29,673.00 P37,483.80 P41,925.57 P34,984.88 P18,185.84 P65,400.25

The attorneys fees for [Casio, et al.s] counsel shall be ten percent (10%) of the total amount due them; and shall be shared proportionately by all of the same [Casio, et al.]. All other claims are hereby denied.17 Dissatisfied with the Voluntary Arbitration Award, Casio, et al. went to the Court of Appeals by way of a Petition for Certiorari under Rule 65 of the Rules of Court to have said Award set aside. The Court of Appeals granted the writ of certiorari and set aside the Voluntary Arbitration Award. The appellate court ruled that while the dismissal of Casio, et al., was made by GMC pursuant to a valid closed shop provision under the CBA, the company, however, failed to observe the elementary rules of due process in implementing the said dismissal. Consequently, Casio, et al. were entitled to reinstatement with backwages from the time of their dismissal up to the time of their reinstatement. Nevertheless, the Court of Appeals did not hold GMC liable to Casio, et al. for moral and exemplary damages and attorneys fees, there being no showing that their dismissal was attended by bad faith or malice, or that the dismissal was effected in a wanton, oppressive, or malevolent manner, given that GMC merely accommodated the request of IBM-Local 31. The appellate court, instead, made Pino, et al. liable to Casio, et al., for moral and exemplary damages and attorneys fees, since it was on the basis of the imputations and actuations of Pino, et al. that Casio, et al. were illegally dismissed from employment. The Court of Appeals thus decreed: WHEREFORE, the assailed award is hereby SET ASIDE, and private respondent General Milling Corporation is hereby ordered to reinstate [Casio, et al.] to their former positions without loss of seniority rights, and to pay their full backwages, solidarily with [Pino, et al.]. Further, [Pino, et al.] are ordered to indemnify each of [Casio, et al.] in the form of moral and exemplary damages in the amounts of P50,000.00 and P30,000.00, respectively, and to pay attorneys fees.18 The Motion for Reconsideration of GMC was denied by the Court of Appeals in the Resolution dated July 18, 2001. Hence, GMC filed the instant Petition for Review, arguing that: I THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT SET ASIDE THE AWARD OF THE VOLUNTARY ARBITRATOR, AND IN AWARDING REINSTATEMENT AND FULL BACKWAGES TO [Casio, et al.]. II THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT SAID THAT PETITIONER GMC FAILED TO ACCORD DUE PROCESS TO [Casio, et al.]. III THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT DID NOT ABSOLVE PETITIONER GMC OF ANY LIABILITY AND INSTEAD RULED THAT IT WAS SOLIDARILY LIABLE WITH THE UNION OFFICERS FOR THE PAYMENT OF FULL BACKWAGES TO [Casio, et al.]. At this point, we take note that Pino, et al. did not appeal from the decision of the Court of Appeals. GMC avers that in reviewing and reversing the findings of the Voluntary Arbitrator, the Court of Appeals departed from the principle of conclusiveness of the trial judges findings. GMC also claims that the findings of the Voluntary Arbitrator as to the legality of the termination from employment of Casio, et al. are well supported by evidence. GMC further insists that before IBP-Local 31 expelled Casio, et al. from the union and requested GMC to dismiss Casio, et al. from service pursuant to the closed shop provision in the CBA, IBP-Local 31 already accorded Casio, et al. due process, only that Casio, et al.

refused to avail themselves of such opportunity. GMC additionally maintains that Casio, et al. were expelled by IBP-Local 31 for "acts inimical to the interest of the union," and GMC had no authority to inquire into or rule on which employee-member is or is not loyal to the union, this being an internal affair of the union. Thus, GMC had to rely on the presumption that Pino, et al. regularly performed their duties and functions as IBP-Local 31 officers and board members, when the latter investigated and ruled on the charges against Casio, et al. 19 GMC finally asserts that Pino, et al., the IBP-Local 31 officers and board members who resolved to expel Casio, et al. from the union, and not GMC, should be held liable for the reinstatement of and payment of full backwages to Casio, et al. for the company had acted in good faith and merely complied with the closed shop provision in the CBA. On the other hand, Casio, et al. counters that GMC failed to identify the specific pieces of evidence supporting the findings of the Voluntary Arbitrator. Casio, et al. contends that to accord them due process, GMC itself, as the employer, should have held proceedings distinct and separate from those conducted by IBM-Local 31. GMC cannot justify its failure to conduct its own inquiry using the argument that such proceedings would constitute an intrusion by the company into the internal affairs of the union. The claim of GMC that it had acted in good faith when it dismissed Casio, et al. from service in accordance with the closed shop provision of the CBA is inconsistent with the failure of the company to accord the dismissed employees their right to due process. In general, in a "petition for review on certiorari as a mode of appeal under Rule 45 of the Rules of Court, the petitioner can raise only questions of law the Supreme Court is not the proper venue to consider a factual issue as it is not a trier of facts. A departure from the general rule may be warranted where the findings of fact of the Court of Appeals are contrary to the findings and conclusions of the trial court [or quasi-judicial agency, as the case may be], or when the same is unsupported by the evidence on record." 20 Whether Casio, et al. were illegally dismissed without any valid reason is a question of fact better left to quasi-judicial agencies to determine. In this case, the Voluntary Arbitrator was convinced that Casio, et al. were legally dismissed; while the Court of Appeals believed the opposite, because even though the dismissal of Casio, et al. was made by GMC pursuant to a valid closed shop provision in the CBA, the company still failed to observe the elementary rules of due process. The Court is therefore constrained to take a second look at the evidence on record considering that the factual findings of the Voluntary Arbitrator and the Court of Appeals are contradictory. There are two aspects which characterize the concept of due process under the Labor Code: one is substantive whether the termination of employment was based on the provision of the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural the manner in which the dismissal was effected. 21 After a thorough review of the records, the Court agrees with the Court of Appeals. The dismissal of Casio, et al. was indeed illegal, having been done without just cause and the observance of procedural due process. In Alabang Country Club, Inc. v. National Labor Relations Commission, 22 the Court laid down the grounds for which an employee may be validly terminated, thus: Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due to disease under Art. 284, and (4) termination by the employee or resignation under Art. 285. Another cause for termination is dismissal from employment due to the enforcement of the union security clause in the CBA. x x x. (Emphasis ours.) "Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.23 Union security clauses are recognized and explicitly allowed under Article 248(e) of the Labor Code, which provides that: Art. 248. Unfair Labor Practices of Employers. x x x xxxx (e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. (Emphasis supplied.) It is State policy to promote unionism to enable workers to negotiate with management on an even playing field and with more persuasiveness than if they were to individually and separately bargain with the employer. For this reason, the law has allowed stipulations for "union shop" and "closed shop" as means of encouraging workers to join and support the union of their choice in the protection of their rights and interest vis--vis the employer. 24 Moreover, a stipulation in the CBA authorizing the dismissal of employees are of equal import as the statutory provisions on dismissal under the Labor Code, since "a CBA is the law between the company and the union and compliance therewith is mandated by the express policy to give protection to labor."25 In terminating the employment of an employee by enforcing the union security clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA. 26 There is no question that in the present case, the CBA between GMC and IBM-Local 31 included a maintenance of membership and closed shop clause as can be gleaned from Sections 3 and 6 of Article II. IBM-Local 31, by written request, can ask GMC to terminate the employment of the employee/worker who failed to maintain its good standing as a union member. It is similarly undisputed that IBM-Local 31, through Gabiana, the IBM Regional Director for Visayas and Mindanao, twice requested GMC, in the letters dated March 10 and 19, 1992, to terminate the employment of Casio, et al. as a necessary consequence of their expulsion from the union. It is the third requisite that there is sufficient evidence to support the decision of IBM-Local 31 to expel Casio, et al. which appears to be lacking in this case. The full text of the individual but identical termination letters, 27 served by GMC on Casio, et al., is very revealing. They read: To: [Employees Name] From: Legal Counsel Subject: Dismissal Upon Union Request Thru CBA Closed Shop Provision The company is in receipt of two letters dated March 10, 1992 and March 19, 1992 respectively from the union at the Mill in Lapulapu demanding the termination of your employment pursuant to the closed shop provision of our existing Collective Bargaining Agreement. It appears from the attached resolutions that you have been expelled from union membership and has thus ceased to become a member in good standing. The resolutions are signed by the same officers who executed and signed our existing CBA, copies of the letters and resolutions are enclosed hereto for your reference. The CBA in Article II provides the following: Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers employed by the Company with the exception of those who are specifically excluded by law and by the terms of this Agreement must be members in good standing of the Union within thirty (30) days upon the signing of this agreement and shall maintain such membership in good standing thereof as a condition of their employment or continued employment. Section 6. The Company, upon written request of the Union, shall terminate the services of any employee/worker who fails to fulfill the conditions set forth in Sections 3 and 4 thereof, subject however, to the provisions of the Labor Laws of the Philippines and their Implementing Rules and Regulations. The Union shall absolve the Company from any and all liabilities, pecuniary or otherwise, and responsibilities to any employee or worker who is dismissed or terminated in pursuant thereof. The provisions of the CBA are clear enough. The termination of employment on the basis of the closed shop provision of the CBA is well recognized in law and in jurisprudence. There is no valid ground to refuse to terminate. On the other hand as pointed out in the unions strongly demanding letter dated March 19, 1992, the company could be sued for unfair labor practice. While we would have wanted not to accommodate the unions request, we are left with no other option. The terms of the CBA should be respected. To refuse to enforce the CBA would result in the breakdown of industrial peace and the end of harmonious relations between the union and management. The company would face the collective anger and enmity of its employees who are union members.

In the light of the unions very insistent demand, verbal and in writing and to avoid the union accusation of "coddling" you, and considering the explicitly mandatory language of the closed shop provision of the CBA, the company is constrained to terminate your employment, to give you ample time to look and find another employment, and/or exert efforts to become again a member of good standing of your union, effective April 24, 1992. In the meantime, to prevent serious danger to the life and property of the company and of its employees, we are placing you under preventive suspension beginning today. It is apparent from the aforequoted letter that GMC terminated the employment of Casio, et al. relying upon the Resolution dated February 29, 1992 of Pino, et al. expelling Casio, et al. from IBM-Local 31; Gabianas Letters dated March 10 and 19, 1992 demanding that GMC terminate the employment of Casio, et al. on the basis of the closed shop clause in the CBA; and the threat of being sued by IBM-Local 31 for unfair labor practice. The letter made no mention at all of the evidence supporting the decision of IBM-Local 31 to expel Casio, et al. from the union. GMC never alleged nor attempted to prove that the company actually looked into the evidence of IBM-Local 31 for expelling Casio, et al. and made a determination on the sufficiency thereof. Without such a determination, GMC cannot claim that it had terminated the employment of Casio, et al. for just cause. The failure of GMC to make a determination of the sufficiency of evidence supporting the decision of IBM-Local 31 to expel Casio, et al. is a direct consequence of the non-observance by GMC of procedural due process in the dismissal of employees. As a defense, GMC contends that as an employer, its only duty was to ascertain that IBM-Local 31 accorded Casio, et al. due process; and, it is the finding of the company that IBM-Local 31 did give Casio, et al. the opportunity to answer the charges against them, but they refused to avail themselves of such opportunity. This argument is without basis. The Court has stressed time and again that allegations must be proven by sufficient evidence because mere allegation is definitely not evidence. 28 Once more, in Great Southern Maritime Services Corporation. v. Acua, 29 the Court declared: Time and again we have ruled that in illegal dismissal cases like the present one, the onus of proving that the employee was not dismissed or if dismissed, that the dismissal was not illegal, rests on the employer and failure to discharge the same would mean that the dismissal is not justified and therefore illegal. Thus, petitioners must not only rely on the weakness of respondents evidence but must stand on the merits of their own defense. A party alleging a critical fact must support his allegation with substantial evidence for any decision based on unsubstantiated allegation cannot stand as it will offend due process. x x x. (Emphasis supplied.) The records of this case are absolutely bereft of any supporting evidence to substantiate the bare allegation of GMC that Casio, et al. were accorded due process by IBM-Local 31. There is nothing on record that would indicate that IBM-Local 31 actually notified Casio, et al. of the charges against them or that they were given the chance to explain their side. All that was stated in the IBM-Local 31 Resolution dated February 29, 1992, expelling Casio, et al. from the union, was that "a copy of the said letter complaint [dated February 24, 1992] was dropped or left in front of E. Casio." 30 It was not established that said letter-complaint charging Casio, et al. with acts inimical to the interest of the union was properly served upon Casio, that Casio willfully refused to accept the said letter-notice, or that Casio had the authority to receive the same letter-notice on behalf of the other employees similarly accused. Its worthy to note that Casio, et al. were expelled only five days after the issuance of the letter-complaint against them. The Court cannot find proof on record when the three-day period, within which Casio, et al. was supposed to file their answer or counter-affidavits, started to run and had expired. The Court is likewise unconvinced that the said three-day period was sufficient for Casio, et al. to prepare their defenses and evidence to refute the serious charges against them. Contrary to the position of GMC, the acts of Pino, et al. as officers and board members of IBM-Local 31, in expelling Casio, et al. from the union, do not enjoy the presumption of regularity in the performance of official duties, because the presumption applies only to public officers from the highest to the lowest in the service of the Government, departments, bureaus, offices, and/or its political subdivisions. 31 More importantly, in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., 32 the Court issued the following reminder to employers: The power to dismiss is a normal prerogative of the employer. However, this is not without limitations. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. x x x. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee because it affects not only his position but also his means of livelihood. Employers should therefore respect and protect the rights of their employees, which include the right to labor. x x x.1avvphi1 The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos 33 that: While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should not be done hastily and summarily thereby eroding the employees right to due process, self-organization and security of tenure. The enforcement of union security clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and always with due process. Even on the assumption that the federation had valid grounds to expel the union officers, due process requires that these union officers be accorded a separate hearing by respondent company. (Emphases supplied.) The twin requirements of notice and hearing constitute the essential elements of procedural due process. The law requires the employer to furnish the employee sought to be dismissed with two written notices before termination of employment can be legally effected: (1) a written notice apprising the employee of the particular acts or omissions for which his dismissal is sought in order to afford him an opportunity to be heard and to defend himself with the assistance of counsel, if he desires, and (2) a subsequent notice informing the employee of the employers decision to dismiss him. This procedure is mandatory and its absence taints the dismissal with illegality. 34 Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing Casio, et al. even when said dismissal is pursuant to the closed shop provision in the CBA. The rights of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own union are not wiped away by a union security clause or a union shop clause in a collective bargaining agreement. An employee is entitled to be protected not only from a company which disregards his rights but also from his own union the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and hence dismissal from his job. 35 In the case at bar, Casio, et al. did not receive any other communication from GMC, except the written notice of termination dated March 24, 1992. GMC, by its own admission, did not conduct a separate and independent investigation to determine the sufficiency of the evidence supporting the expulsion of Casio, et al. by IBP-Local 31. It straight away acceded to the demand of IBP-Local 31 to dismiss Casio, et al. The very same circumstances took place in Liberty Cotton Mills, wherein the Court held that the employer-company acted in bad faith in dismissing its workers without giving said workers an opportunity to present their side in the controversy with their union, thus: While respondent company, under the Maintenance of Membership provision of the Collective Bargaining Agreement, is bound to dismiss any employee expelled by PAFLU for disloyalty, upon its written request, this undertaking should not be done hastily and summarily. The company acted in bad faith in dismissing petitioner workers without giving them the benefit of a hearing. It did not even bother to inquire from the workers concerned and from PAFLU itself about the cause of the expulsion of the petitioner workers. Instead, the company immediately dismissed the workers on May 30, 1964 after its receipt of the request of PAFLU on May 29, 1964 in a span of only one day stating that it had no alternative but to comply with its obligation under the Security Agreement in the Collective Bargaining Agreement, thereby disregarding the right of the workers to due process, self-organization and security of tenure.36 (Emphasis ours.) In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only did GMC fail to make a determination of the sufficiency of evidence to support the decision of IBM-Local 31 to expel Casio, et al., but also to accord the expelled union members procedural due process, i.e., notice and hearing, prior to the termination of their employment Consequently, GMC cannot insist that it has no liability for the payment of backwages and damages to Casio, et al., and that the liability for such payment should fall only upon Pino, et al., as the IBP-Local 31 officers and board members who expelled Casio, et al. GMC completely missed the point that the expulsion of Casio, et al. by IBP-Local 31 and the termination of employment of the same employees by GMC, although related, are two separate and distinct acts. Despite a closed shop provision in the CBA and the expulsion of Casio, et al. from IBP-Local 31, law and jurisprudence imposes upon GMC the obligation to accord Casio, et al. substantive and procedural due process before complying with the demand of IBP-Local 31 to dismiss the expelled union members from service. The failure of GMC to carry out this obligation makes it liable for illegal dismissal of Casio, et al. In Malayang Samahan ng mga Manggagawa sa M. Greenfield, 37 the Court held that notwithstanding the fact that the dismissal was at the instance of the federation and that the federation undertook to hold the company free from any liability resulting from the dismissal of several employees, the company may still be held liable if it was remiss in its duty to accord the would-be dismissed employees their right to be heard on the matter. An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement but if reinstatement is no longer possible, the backwages shall be computed from the time of

their illegal termination up to the finality of the decision. Thus, Casio, et al. are entitled to backwages and separation pay considering that reinstatement is no longer possible because the positions they previously occupied are no longer existing, as declared by GMC. 38 Casio, et al., having been compelled to litigate in order to seek redress for their illegal dismissal, are entitled to the award of attorneys fees equivalent to 10% of the total monetary award.39 G.R. No. 172666 December 7, 2011 PICOP RESOURCES, INCORPORATED (PRI), Represented in this Petition by MR. WILFREDO D. FUENTES, in his capacity as Senior VicePresident and Resident Manager, Petitioner, vs. RICARDO DEQUILLA, ELMO PABILANDO, CESAR ATIENZA and ANICETO ORBETA, JR., and NAMAPRI-SPFI, Respondents. DECISION MENDOZA, J.: This is a petition for review assailing the April 14, 2005 Decision 1 of the Court of Appeals (CA) which reversed and set aside the Resolutions 2 of the National Labor Relations Commission (NLRC) dated December 27, 2002 and March 28, 2003, and reinstated the June 9, 2001 Decision 3 of the Labor Arbiter (LA), which declared the dismissal of the private respondents as illegal. The Facts Ricardo Dequilla, Cesar Atienza and Aniceto Orbeta (private respondents) were regular rank-and-file employees of Picop Resources, Inc. (PICOP) and members of the NAMAPRI-SPFL, a duly registered labor organization and existing bargaining agent of the PICOP rank-and-file employees. PICOP and NAMAPRI-SPFL had a collective bargaining agreement (CBA) which would expire on May 22, 2000. On May 16, 2000, the late Atty. Proculo P. Fuentes, Jr. (Atty. Fuentes), then National President of the Southern Philippines Federation of Labor (SPFL), advised the PICOP management to terminate about 800 employees due to acts of disloyalty, specifically, for allegedly campaigning, supporting and signing a petition for the certification of a rival union, the Federation of Free Workers Union (FFW) before the 60-day "freedom period" and during the effectivity of the CBA. Such acts of disloyalty were construed to be a valid cause for termination under the terms and conditions of the CBA. Based on the CBA, the freedom period would start on March 22, 2000. Acting on the advice of Atty. Fuentes, Atty. Romero Boniel (Atty. Boniel), Manager of the PICOP Legal and Labor Relations Department, issued a memorandum directing the employees concerned to explain within seventy-two (72) hours why their employment should not be terminated due to alleged acts of disloyalty. Upon receiving their explanation letters, Atty. Boniel endorsed the same to Atty. Fuentes who then requested the termination of 46 employees found guilty of acts of disloyalty. On October 16, 2000, PICOP served a notice of termination due to acts of disloyalty to 31 of the 46 employees. Private respondents were among the 31 employees dismissed from employment by PICOP on November 16, 2000. Enraged at what management did to them, private respondents filed a complaint before the NLRC Regional Arbitration Branch No. XIII, Butuan City, for Unfair Labor Practice and Illegal Dismissal with money claims, damages and attorneys fees. LA Ruling On June 9, 2001, after the parties submitted their respective position papers, the LA rendered a decision declaring as illegal the termination of the private respondents. The dispositive portion of the LA Decision reads: WHEREFORE, premises considered, judgment is hereby entered: 1. Declaring complainants dismissal illegal; and 2. Ordering respondents PRI and NAMPRI-SPFL to reinstate complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P 177,403.68, as shown in the computation, hereto attached and marked as Annex "A" hereof, plus damages in the amount of P 10,000.00 each and attorneys fees equivalent to 10% of the total monetary award. SO ORDERED. 4 NLRC Ruling PICOP elevated the LA decision to the NLRC but its appeal was dismissed in the November 19, 2002 NLRC Resolution. 5 On motion for reconsideration, however, the NLRC issued another resolution, 6 dated December 27, 2002, reversing and setting aside its November 19, 2002 Resolution, the dispositive portion of which reads: WHEREFORE, foregoing premises considered, the above resolution dated November 19, 2002, is Reversed and Set Aside. In lieu thereof, a new judgment is rendered DISMISSING the above-entitled case for lack of merit. SO ORDERED.7 CA Ruling Upon the denial of their motion for reconsideration, the private respondents brought the case to the CA. On April 14, 2005, the CA rendered the subject decision reversing and setting aside the December 27, 2002 NLRC resolution and reinstating the June 9, 2001 Decision of the LA. The decretal portion of the CA decision reads: WHEREFORE, premises considered, [the] instant petition is GRANTED and the assailed resolutions of the Public Respondent NLRC are hereby REVERSED and SET ASIDE. In view thereof, ordered REINSTATED is the Decision of Acting Executive Labor Arbiter Rogelio P. Legaspi dated 09 June 2001 which reads: WHEREFORE, premises considered, judgment is hereby entered: 1. Declaring complainants dismissal illegal; and 2. Ordering Respondents PRI and NAMPRI-SPFL to reinstate Complainants to their former or equivalent positions without loss of seniority rights and to jointly and solidarily pay their backwages in the total amount of P 177,403.68, plus damages in the amount of P 10,000.00 each and attorneys fees equivalent to 10% of the total monetary award. SO ORDERED.8 The CA ruled, among others, that although private respondents signed an authorization for the filing of the petition for certification election of a rival union, PICOP Democratic Trade Unionist-Federation of Free Workers (FFW), such act was not a sufficient ground to terminate the employment of private respondents. It explained: Ruminating from the alleged violation of the CBA, We see no reason, sufficient and compelling enough, to sustain the Public Respondents raison detre in overturning the Labor Arbiters ruling in favor of the Petitioners. While it is true that Petitioners signed the authorization in support of the Petition for certification election of FFW before the "freedom period," such act is not a sufficient ground to terminate the employment of the Petitioners in as much as the petition itself was filed during the freedom period. Hence, there is nil a basis to impute acts of disloyalty to Petitioners. Imputations of an alleged violation of the CBA should not arise from a vague and all embracing definition of alleged "acts of disloyalty." Neither should it arise from speculative inferences where no evidence appears from the record that Respondent NAMAPRI-SPFL expressly defined "acts of disloyalty." Besides, to Our mind, signing an authorization for the filing of the petition for certification election does not constitute an act of disloyalty per se. There must be proof of contemporaneous acts of resignation or withdrawal of their membership from the Respondent NAMAPRI-SPFL to which they are members. Respondents miserably failed to present evidence to justify a valid termination of employees in pursuance to the CBA allegedly violated. Petitioners, in fact remained in good standing, a continuing requirement for retaining their employment in the Respondent PRI. Petitioners neither joined nor affiliated with FFW and continuously paid their union dues with Respondent NAMAPRI-SPFL. Consequently, this lends credence to the Labor Arbiters ruling that Petitioners dismissal was indeed illegal. Likewise, the advise of the Respondent NAMAPRI-SPFL to the Respondent PRI to effect the termination of employees, including herein Petitioners, finds no basis in fact and in law considering that at the time the Respondent PRI dismissed the Petitioners, among others, on 16 November 2000, there was no more CBA to speak of after it had already expired on 22 May 2000.9 The CA further agreed with private respondents that Article 256 and not Article 253, of the Labor Code applied in this case. The CA discussed this point as follows: We are inclined to favor Petitioners stance that Article 256, supra, is applicable. The issue of acts of disloyalty relates more to a direct connection on the alleged violation or breach of loyalty to the majority status of the incumbent union than on violation of the terms and conditions of the agreement under Article 253, supra, as the Respondents would want Us to believe. Article 256 provides that at the expiration of the 60-day period reckoned from the expiration date of the CBA, the employer shall continue to recognize the majority status of the incumbent bargaining agent only where no petition for certification election is filed. However, as earlier pointed, a petition was already filed by the Petitioners, among others, during the 60-day freedom period. Clearly, from the imports of said provision, it will render nugatory the purpose of the law providing for a freedom period for the filing of a petition

for certification election should the act of signing/filing the said petition be interpreted as an act of disloyalty and will render farce the need for a certification election as an instrument of ascertaining the true expression of the will of the workers as to which labor organization would represent them. To construe the provision of law in Article 253, supra, as imposing a restriction against the signing and filing a petition for certification election during the freedom period, is to violate the constitutional right of the employees to organize freely. It is a basic precept of statutory construction that statutes should be construed not so much according to the letters that killeth but in line with the purpose for which they have been enacted. 10 Not in conformity with the CA decision, PICOP filed this petition for review posing the following ISSUES WHETHER [OR NOT] AN EXISTING COLLECTIVE BARGAINING AGREEMENT (CBA) CAN BE GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITIONS INCLUDING ITS UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET BEEN ENTERED INTO? WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF LAW FALLS WITHIN THE AMBIT OF THE EXTRA ORDINARY REMEDY OF CERTIORARI UNDER RULE 65, REVISED RULES OF COURT.11 PICOP basically argues that Article 253 of the Labor Code applies in this case. Article 253 of the Labor Code provides that the terms and conditions of a CBA remain in full force and effect even beyond the 5-year period when no new CBA has yet been reached. It claims that the private respondents violated this provision when they campaigned for, supported and signed FFWs petition for certification election on March 19 and 20, 2000, before the onset of the freedom period. It further argues that private respondents were not denied due process when they were terminated. Finally, it claims that the decision of the NLRC on the issues raised was not without merit. Even assuming that it erred in its judgment on the legal issues raised, its error is not equivalent to an abuse of discretion that should fall within the ambit of the extraordinary remedy of certiorari. Private respondents position Private respondents argue that the substantial arguments raised by PICOP in this petition are basically a rehash of the same issues and arguments contained in its Motion for Reconsideration of the CA decision. Private respondents adopted and repleaded the ruling of the CA in their Comment 12 on this petition. The Courts Ruling The petition merits a denial. There is no question that in the CBA entered into by the parties, there is a union security clause. The clause imposes upon the workers the obligation to join and maintain membership in the companys recognized union as a condition for employment. "Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.13 There is no dispute that private respondents were members of NAMAPRI-SPFL who were terminated by PICOP due to alleged acts of disloyalty. It is basic in labor jurisprudence that the burden of proof rests upon management to show that the dismissal of its worker was based on a just cause. When an employer exercises its power to terminate an employee by enforcing the union security clause, it needs to determine and prove the following: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. 14 In this case, the resolution thereof hinges on whether PICOP was able to show sufficient evidence to support the decision of the union to expel private respondents from it. PICOP basically contends that private respondents were justly terminated from employment for campaigning, supporting and signing a petition for the certification of FFW, a rival union, before the 60-day "freedom period" and during the effectivity of the CBA. Their acts constitute an act of disloyalty against the union which is valid cause for termination pursuant to the Union Security Clause in the CBA. The Court finds Itself unable to agree. Considering the peculiar circumstances, the Court is of the view that the acts of private respondents are not enough proof of a violation of the Union Security Clause which would warrant their dismissal. PICOP failed to show in detail how private respondents campaigned and supported FFW. Their mere act of signing an authorization for a petition for certification election before the freedom period does not necessarily demonstrate union disloyalty. It is far from being within the definition of "acts of disloyalty" as PICOP would want the Court to believe. The act of "signing an authorization for a petition for certification election" is not disloyalty to the union per se considering that the petition for certification election itself was filed during the freedom period which started on March 22, 2000. Moreover, as correctly ruled by the CA, the records are bereft of proof of any contemporaneous acts of resignation or withdrawal of union membership or non-payment of union dues. Neither is there proof that private respondents joined FFW. The fact is, private respondents remained in good standing with their union, NAMAPRI-SPFL. This point was settled in the case of PICOP Resources, Incorporated (PRI) v. Anacleto L. Taeca, 15 where it was written: However, as to the third requisite, we find that there is no sufficient evidence to support the decision of PRI to terminate the employment of the respondents. PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a violation of the Union Security Clause, as provided in their Collective Bargaining Agreement. We are unconvinced. We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the "freedom period," is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. Nothing in the records would show that respondents failed to maintain their membership in good standing in the Union. Respondents did not resign or withdraw their membership from the Union to which they belong. Respondents continued to pay their union dues and never joined the FFW. Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an "authorization letter to file a petition for certification election" is different from an actual "Petition for Certification Election." Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000. Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period. This is not the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents right to self-organization. 16 Finally, PICOP insists that Article 253 of the Labor Code applies in this case, not Article 256 thereof. The Court agrees with the CA that its argument is misplaced. This issue was tackled and settled in the same PICOP Resources, Incorporated (PRI) v. Taeca case, to wit: Moreover, PRI anchored their decision to terminate respondents employment on Article 253 of the Labor Code which states that "it shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties." It claimed that they are still bound by the Union Security Clause of the CBA even after the expiration of the CBA; hence, the need to terminate the employment of respondents. Petitioner's reliance on Article 253 is misplaced. The provision of Article 256 of the Labor Code is particularly enlightening. It reads: Article 256. Representation issue in organized establishments. - In organized establishments, when a verified petition questioning the majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period before the expiration of a collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the verified petition is supported by the written consent of at least twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor unions

receiving the two highest number of votes: Provided, That the total number of votes for all contending unions is at least fifty per cent (50%) of the number of votes cast. At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent where no petition for certification election is filed. Applying the same provision, it can be said that while it is incumbent for the employer to continue to recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period, they could only do so when no petition for certification election was filed. The reason is, with a pending petition for certification, any such agreement entered into by management with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter as the collective bargaining representative. The provision for status quo is conditioned on the fact that no certification election was filed during the freedom period. Any other view would render nugatory the clear statutory policy to favor certification election as the means of ascertaining the true expression of the will of the workers as to which labor organization would represent them. In the instant case, four (4) petitions were filed as early as May 12, 2000. 1awphi1 In fact, a petition for certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000. Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case. Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a representational issue, the status quo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise, it will create an absurd situation where the union members will be forced to maintain membership by virtue of the union security clause existing under the CBA and, thereafter, support another union when filing a petition for certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise their right to self-organization. The holding of a certification election is a statutory policy that should not be circumvented, or compromised. Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Their freedom to choose who should be their bargaining representative is of paramount importance. The fact that there already exists a bargaining representative in the unit concerned is of no moment as long as the petition for certification election was filed within the freedom period. What is imperative is that by such a petition for certification election the employees are given the opportunity to make known of who shall have the right to represent them thereafter. Not only some, but all of them should have the right to do so. What is equally important is that everyone be given a democratic space in the bargaining unit concerned. We will emphasize anew that the power to dismiss is a normal prerogative of the employer. 1avvphi1 This, however, is not without limitations. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee, because it affects not only his position but also his means of livelihood. Employers should, therefore, respect and protect the rights of their employees, which include the right to labor. 17 Considering that private respondents were illegally dismissed, basic law provides that they shall be entitled to the benefit of full backwages and reinstatement unless the latter is no longer viable, in which case, a grant of separation pay shall be awarded equivalent to one month salary for every year of service. X x x Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision X x x. 18 Private respondents are also entitled to an award of attorneys fees equivalent to 10% of the total monetary award as they were compelled to litigate in order to seek redress for their illegal dismissal. G.R. No. 164301 August 10, 2010 BANK OF THE PHILIPPINE ISLANDS, Petitioner, vs. BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK, Respondent. DECISION LEONARDO-DE CASTRO, J.: May a corporation invoke its merger with another corporation as a valid ground to exempt its "absorbed employees" from the coverage of a union shop clause contained in its existing Collective Bargaining Agreement (CBA) with its own certified labor union? That is the question we shall endeavor to answer in this petition for review filed by an employer after the Court of Appeals decided in favor of respondent union, which is the employees recognized collective bargaining representative. At the outset, we should call to mind the spirit and the letter of the Labor Code provisions on union security clauses, specifically Article 248 (e), which states, "x x x Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement."1 This case which involves the application of a collective bargaining agreement with a union shop clause should be resolved principally from the standpoint of the clear provisions of our labor laws, and the express terms of the CBA in question, and not by inference from the general consequence of the merger of corporations under the Corporation Code, which obviously does not deal with and, therefore, is silent on the terms and conditions of employment in corporations or juridical entities. This issue must be resolved NOW, instead of postponing it to a future time when the CBA is renegotiated as suggested by the Honorable Justice Arturo D. Brion because the same issue may still be resurrected in the renegotiation if the absorbed employees insist on their privileged status of being exempt from any union shop clause or any variant thereof. We find it significant to note that it is only the employer, Bank of the Philippine Islands (BPI), that brought the case up to this Court via the instant petition for review; while the employees actually involved in the case did not pursue the same relief, but had instead chosen in effect to acquiesce to the decision of the Court of Appeals which effectively required them to comply with the union shop clause under the existing CBA at the time of the merger of BPI with Far East Bank and Trust Company (FEBTC), which decision had already become final and executory as to the aforesaid employees. By not appealing the decision of the Court of Appeals, the aforesaid employees are bound by the said Court of Appeals decision to join BPIs duly certified labor union. In view of the apparent acquiescence of the affected FEBTC employees in the Court of Appeals decision, BPI should not have pursued this petition for review. However, even assuming that BPI may do so, the same still cannot prosper. What is before us now is a petition for review under Rule 45 of the Rules of Court of the Decision 2 dated September 30, 2003 of the Court of Appeals, as reiterated in its Resolution 3 of June 9, 2004, reversing and setting aside the Decision 4 dated November 23, 2001 of Voluntary Arbitrator Rosalina Letrondo-Montejo, in CA-G.R. SP No. 70445, entitled BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank v. Bank of the Philippine Islands, et al. The antecedent facts are as follows: On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger executed on January 20, 2000 by and between BPI, herein petitioner, and FEBTC.5 This Article and Plan of Merger was approved by the Securities and Exchange Commission on April 7, 2000. 6 Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC were transferred to and absorbed by BPI as the surviving corporation. FEBTC employees, including those in its different branches across the country, were hired by petitioner as its own employees, with their status and tenure recognized and salaries and benefits maintained. Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI Unibank (hereinafter the "Union," for brevity) is the exclusive bargaining agent of BPIs rank and file employees in Davao City. The former FEBTC rank-and-file employees in Davao City did not belong to any labor union at the time of the merger. Prior to the effectivity of the merger, or on March 31, 2000, respondent Union invited said FEBTC employees to a meeting regarding the Union Shop Clause (Article II, Section 2) of the existing CBA between petitioner BPI and respondent Union. 7 The parties both advert to certain provisions of the existing CBA, which are quoted below: ARTICLE I Section 1. Recognition and Bargaining Unit The BANK recognizes the UNION as the sole and exclusive collective bargaining representative of all the regular rank and file employees of the Bank offices in Davao City. Section 2. Exclusions Section 3. Additional Exclusions Section 4. Copy of Contract ARTICLE II

Section 1. Maintenance of Membership All employees within the bargaining unit who are members of the Union on the date of the effectivity of this Agreement as well as employees within the bargaining unit who subsequently join or become members of the Union during the lifetime of this Agreement shall as a condition of their continued employment with the Bank, maintain their membership in the Union in good standing. Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is a condition of their continued employment with the Bank. 8 (Emphases supplied.) After the meeting called by the Union, some of the former FEBTC employees joined the Union, while others refused. Later, however, some of those who initially joined retracted their membership. 9 Respondent Union then sent notices to the former FEBTC employees who refused to join, as well as those who retracted their membership, and called them to a hearing regarding the matter. When these former FEBTC employees refused to attend the hearing, the president of the Union requested BPI to implement the Union Shop Clause of the CBA and to terminate their employment pursuant thereto. 10 After two months of management inaction on the request, respondent Union informed petitioner BPI of its decision to refer the issue of the implementation of the Union Shop Clause of the CBA to the Grievance Committee. However, the issue remained unresolved at this level and so it was subsequently submitted for voluntary arbitration by the parties. 11 Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision 12 dated November 23, 2001, ruled in favor of petitioner BPIs interpretation that the former FEBTC employees were not covered by the Union Security Clause of the CBA between the Union and the Bank on the ground that the said employees were not new employees who were hired and subsequently regularized, but were absorbed employees "by operation of law" because the "former employees of FEBTC can be considered assets and liabilities of the absorbed corporation ." The Voluntary Arbitrator concluded that the former FEBTC employees could not be compelled to join the Union, as it was their constitutional right to join or not to join any organization. Respondent Union filed a Motion for Reconsideration, but the Voluntary Arbitrator denied the same in an Order dated March 25, 2002. 13 Dissatisfied, respondent then appealed the Voluntary Arbitrators decision to the Court of Appeals. In the herein assailed Decision dated September 30, 2003, the Court of Appeals reversed and set aside the Decision of the Voluntary Arbitrator. 14 Likewise, the Court of Appeals denied herein petitioners Motion for Reconsideration in a Resolution dated June 9, 2004. The Court of Appeals pertinently ruled in its Decision: A union-shop clause has been defined as a form of union security provision wherein non-members may be hired, but to retain employment must become union members after a certain period. There is no question as to the existence of the union-shop clause in the CBA between the petitioner-union and the company. The controversy lies in its application to the "absorbed" employees. This Court agrees with the voluntary arbitrator that the ABSORBED employees are distinct and different from NEW employees BUT only in so far as their employment service is concerned. The distinction ends there. In the case at bar, the absorbed employees length of service from its former employer is tacked with their employment with BPI. Otherwise stated, the absorbed employees service is continuous and there is no gap in their service record. This Court is persuaded that the similarities of "new" and "absorbed" employees far outweighs the distinction between them. The similarities lies on the following, to wit: (a) they have a new employer; (b) new working conditions; (c) new terms of employment and; (d) new company policy to follow. As such, they should be considered as "new" employees for purposes of applying the provisions of the CBA regarding the "union-shop" clause. To rule otherwise would definitely result to a very awkward and unfair situation wherein the "absorbed" employees shall be in a different if not, better situation than the existing BPI employees. The existing BPI employees by virtue of the "union-shop" clause are required to pay the monthly union dues, remain as members in good standing of the union otherwise, they shall be terminated from the company, and other union-related obligations. On the other hand, the "absorbed" employees shall enjoy the "fruits of labor" of the petitioner-union and its members for nothing in exchange. Certainly, this would disturb industrial peace in the company which is the paramount reason for the existence of the CBA and the union. The voluntary arbitrators interpretation of the provisions of the CBA concerning the coverage of the "union-shop" clause is at war with the spirit and the rationale why the Labor Code itself allows the existence of such provision. The Supreme Court in the case of Manila Mandarin Employees Union vs. NLRC (G.R. No. 76989, September 29, 1987) rule, to quote: "This Court has held that 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. 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 wields group solidarity." (Emphasis supplied) Hence, the voluntary arbitrator erred in construing the CBA literally at the expense of industrial peace in the company. With the foregoing ruling from this Court, necessarily, the alternative prayer of the petitioner to require the individual respondents to become members or if they refuse, for this Court to direct respondent BPI to dismiss them, follows. 15 Hence, petitioners present recourse, raising the following issues: I WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE FORMER FEBTC EMPLOYEES SHOULD BE CONSIDERED NEW EMPLOYEES OF BPI FOR PURPOSES OF APPLYING THE UNION SHOP CLAUSE OF THE CBA II WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE VOLUNTARY ARBITRATORS INTERPRETATION OF THE COVERAGE OF THE UNION SHOP CLAUSE IS "AT WAR WITH THE SPIRIT AND THE RATIONALE WHY THE LABOR CODE ITSELF ALLOWS THE EXISTENCE OF SUCH PROVISION"16 In essence, the sole issue in this case is whether or not the former FEBTC employees that were absorbed by petitioner upon the merger between FEBTC and BPI should be covered by the Union Shop Clause found in the existing CBA between petitioner and respondent Union. Petitioner is of the position that the former FEBTC employees are not new employees of BPI for purposes of applying the Union Shop Clause of the CBA, on this note, petitioner points to Section 2, Article II of the CBA, which provides: New employees falling within the bargaining unit as defined in Article I of this Agreement, who may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is a condition of their continued employment with the Bank. 17 (Emphases supplied.) Petitioner argues that the term "new employees" in the Union Shop Clause of the CBA is qualified by the phrases "who may hereafter be regularly employed" and "after they become regular employees" which led petitioner to conclude that the "new employees" referred to in, and contemplated by, the Union Shop Clause of the CBA were only those employees who were "new" to BPI, on account of having been hired initially on a temporary or probationary status for possible regular employment at some future date. BPI argues that the FEBTC employees absorbed by BPI cannot be considered as "new employees" of BPI for purposes of applying the Union Shop Clause of the CBA. 18 According to petitioner, the contrary interpretation made by the Court of Appeals of this particular CBA provision ignores, or even defies, what petitioner assumes as its clear meaning and scope which allegedly contradicts the Courts strict and restrictive enforcement of union security agreements. We do not agree. Section 2, Article II of the CBA is silent as to how one becomes a "regular employee" of the BPI for the first time. There is nothing in the said provision which requires that a "new" regular employee first undergo a temporary or probationary status before being deemed as such under the union shop clause of the CBA. "Union security" is a generic term which is applied to and comprehends "closed shop," "union shop," "maintenance of membership" or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period 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. 19 In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc. ,20 we ruled that: It is the policy of the State to promote unionism to enable the workers to negotiate with management on the same level and with more persuasiveness than if they were to individually and independently bargain for the improvement of their respective conditions. To this end, the Constitution guarantees to them the rights "to self-organization, collective bargaining and negotiations and peaceful concerted actions including

the right to strike in accordance with law." There is no question that these purposes could be thwarted if every worker were to choose to go his own separate way instead of joining his co-employees in planning collective action and presenting a united front when they sit down to bargain with their employers. It is for this reason that the law has sanctioned stipulations for the union shop and the closed shop as a means of encouraging the workers to join and support the labor union of their own choice as their representative in the negotiation of their demands and the protection of their interest vis-vis the employer. (Emphasis ours.) In other words, the purpose of a union shop or other union security arrangement is to guarantee the continued existence of the union through enforced membership for the benefit of the workers. All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are subject to its terms. However, under law and jurisprudence, the following kinds of employees are exempted from its coverage , namely, employees who at the time the union shop agreement takes effect are bona fide members of a religious organization which prohibits its members from joining labor unions on religious grounds; 21 employees already in the service and already members of a union other than the majority at the time the union shop agreement took effect;22 confidential employees who are excluded from the rank and file bargaining unit; 23 and employees excluded from the union shop by express terms of the agreement . When certain employees are obliged to join a particular union as a requisite for continued employment, as in the case of Union Security Clauses, this condition is a valid restriction of the freedom or right not to join any labor organization because it is in favor of unionism. This Court, on occasion, has even held that a union security clause in a CBA is not a restriction of the right of freedom of association guaranteed by the Constitution. 24 Moreover, 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 wields group solidarity.25 Indeed, the situation of the former FEBTC employees in this case clearly does not fall within the first three exceptions to the application of the Union Shop Clause discussed earlier. No allegation or evidence of religious exemption or prior membership in another union or engagement as a confidential employee was presented by both parties. The sole category therefore in which petitioner may prove its claim is the fourth recognized exception or whether the former FEBTC employees are excluded by the express terms of the existing CBA between petitioner and respondent. To reiterate, petitioner insists that the term "new employees," as the same is used in the Union Shop Clause of the CBA at issue, refers only to employees hired by BPI as non-regular employees who later qualify for regular employment and become regular employees, and not those who, as a legal consequence of a merger, are allegedly automatically deemed regular employees of BPI. However, the CBA does not make a distinction as to how a regular employee attains such a status. Moreover, there is nothing in the Corporation Law and the merger agreement mandating the automatic employment as regular employees by the surviving corporation in the merger. It is apparent that petitioner hinges its argument that the former FEBTC employees were absorbed by BPI merely as a legal consequence of a merger based on the characterization by the Voluntary Arbiter of these absorbed employees as included in the "assets and liabilities" of the dissolved corporation - assets because they help the Bank in its operation and liabilities because redundant employees may be terminated and company benefits will be paid to them, thus reducing the Banks financial status. Based on this ratiocination, she ruled that the same are not new employees of BPI as contemplated by the CBA at issue, noting that the Certificate of Filing of the Articles of Merger and Plan of Merger between FEBTC and BPI stated that "x x x the entire assets and liabilities of FAR EASTERN BANK & TRUST COMPANY will be transferred to and absorbed by the BANK OF THE PHILIPPINE ISLANDS x x x (underlining supplied)." 26 In sum, the Voluntary Arbiter upheld the reasoning of petitioner that the FEBTC employees became BPI employees by "operation of law" because they are included in the term "assets and liabilities." Absorbed FEBTC Employees are Neither Assets nor Liabilities In legal parlance, however, human beings are never embraced in the term "assets and liabilities." Moreover, BPIs absorption of former FEBTC employees was neither by operation of law nor by legal consequence of contract. There was no government regulation or law that compelled the merger of the two banks or the absorption of the employees of the dissolved corporation by the surviving corporation. Had there been such law or regulation, the absorption of employees of the non-surviving entities of the merger would have been mandatory on the surviving corporation. 27 In the present case, the merger was voluntarily entered into by both banks presumably for some mutually acceptable consideration. In fact, the Corporation Code does not also mandate the absorption of the employees of the non-surviving corporation by the surviving corporation in the case of a merger. Section 80 of the Corporation Code provides: SEC. 80. Effects of merger or consolidation. The merger or consolidation, as provided in the preceding sections shall have the following effects: 1. The constituent corporations shall become a single corporation which, in case of merger, shall be the surviving corporation designated in the plan of merger; and, in case of consolidation, shall be the consolidated corporation designated in the plan of consolidation; 2. The separate existence of the constituent corporations shall cease, except that of the surviving or the consolidated corporation; 3. The surviving or the consolidated corporation shall possess all the rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a corporation organized under this Code; 4. The surviving or the consolidated corporation shall thereupon and thereafter possess all the rights, privileges, immunities and franchises of each of the constituent corporations; and all property, real or personal, and all receivables due on whatever account, including subscriptions to shares and other choses in action, and all and every other interest of, or belonging to, or due to each constituent corporation, shall be taken and deemed to be transferred to and vested in such surviving or consolidated corporation without further act or deed; and 5. The surviving or the consolidated corporation shall be responsible and liable for all the liabilities and obligations of each of the constituent corporations in the same manner as if such surviving or consolidated corporation had itself incurred such liabilities or obligations; and any claim, action or proceeding pending by or against any of such constituent corporations may be prosecuted by or against the surviving or consolidated corporation, as the case may be. Neither the rights of creditors nor any lien upon the property of any of such constituent corporations shall be impaired by such merger or consolidated. Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000 did not contain any specific stipulation with respect to the employment contracts of existing personnel of the non-surviving entity which is FEBTC. Unlike the Voluntary Arbitrator, this Court cannot uphold the reasoning that the general stipulation regarding transfer of FEBTC assets and liabilities to BPI as set forth in the Articles of Merger necessarily includes the transfer of all FEBTC employees into the employ of BPI and neither BPI nor the FEBTC employees allegedly could do anything about it. Even if it is so, it does not follow that the absorbed employees should not be subject to the terms and conditions of employment obtaining in the surviving corporation. The rule is that unless expressly assumed, labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise, labor contracts being in personam, thus binding only between the parties. A labor contract merely creates an action in personam and does not create any real right which should be respected by third parties. This conclusion draws its force from the right of an employer to select his employees and to decide when to engage them as protected under our Constitution, and the same can only be restricted by law through the exercise of the police power.28 Furthermore, this Court believes that it is contrary to public policy to declare the former FEBTC employees as forming part of the assets or liabilities of FEBTC that were transferred and absorbed by BPI in the Articles of Merger. Assets and liabilities, in this instance, should be deemed to refer only to property rights and obligations of FEBTC and do not include the employment contracts of its personnel. A corporation cannot unilaterally transfer its employees to another employer like chattel. Certainly, if BPI as an employer had the right to choose who to retain among FEBTCs employees, FEBTC employees had the concomitant right to choose not to be absorbed by BPI. Even though FEBTC employees had no choice or control over the merger of their employer with BPI, they had a choice whether or not they would allow themselves to be absorbed by BPI. Certainly nothing prevented the FEBTCs employees from resigning or retiring and seeking employment elsewhere instead of going along with the proposed absorption. Employment is a personal consensual contract and absorption by BPI of a former FEBTC employee without the consent of the employee is in violation of an individuals freedom to contract. It would have been a different matter if there was an express provision in the articles of merger that as a condition for the merger, BPI was being required to assume all the employment contracts of all existing FEBTC employees with the conformity of the employees. In the absence of such a provision in the articles of merger, then BPI clearly had the business management decision as to whether or not employ FEBTCs employees. FEBTC employees likewise retained the prerogative to allow themselves to be absorbed or not; otherwise, that would be tantamount to involuntary servitude. There appears to be no dispute that with respect to FEBTC employees that BPI chose not to employ or FEBTC employees who chose to retire or be separated from employment instead of "being absorbed," BPIs assumed liability to these employees pursuant to the merger is FEBTCs liability to them in terms of separation pay,29 retirement pay30 or other benefits that may be due them depending on the circumstances. Legal Consequences of Mergers

Although not binding on this Court, American jurisprudence on the consequences of voluntary mergers on the right to employment and seniority rights is persuasive and illuminating. We quote the following pertinent discussion from the American Law Reports: Several cases have involved the situation where as a result of mergers, consolidations, or shutdowns, one group of employees, who had accumulated seniority at one plant or for one employer, finds that their jobs have been discontinued except to the extent that they are offered employment at the place or by the employer where the work is to be carried on in the future. Such cases have involved the question whether such transferring employees should be entitled to carry with them their accumulated seniority or whether they are to be compelled to start over at the bottom of the seniority list in the "new" job. It has been recognized in some cases that the accumulated seniority does not survive and cannot be transferred to the "new" job. In Carver v Brien (1942) 315 Ill App 643, 43 NE2d 597, the shop work of three formerly separate railroad corporations, which had previously operated separate facilities, was consolidated in the shops of one of the roads. Displaced employees of the other two roads were given preference for the new jobs created in the shops of the railroad which took over the work. A controversy arose between the employees as to whether the displaced employees were entitled to carry with them to the new jobs the seniority rights they had accumulated with their prior employers, that is, whether the rosters of the three corporations, for seniority purposes, should be "dovetailed" or whether the transferring employees should go to the bottom of the roster of their new employer. Labor representatives of the various systems involved attempted to work out an agreement which, in effect, preserved the seniority status obtained in the prior employment on other roads, and the action was for specific performance of this agreement against a demurring group of the original employees of the railroad which was operating the consolidated shops. The relief sought was denied, the court saying that, absent some specific contract provision otherwise, seniority rights were ordinarily limited to the employment in which they were earned, and concluding that the contract for which specific performance was sought was not such a completed and binding agreement as would support such equitable relief, since the railroad, whose concurrence in the arrangements made was essential to their effectuation, was not a party to the agreement. Where the provisions of a labor contract provided that in the event that a trucker absorbed the business of another private contractor or common carrier, or was a party to a merger of lines, the seniority of the employees absorbed or affected thereby should be determined by mutual agreement between the trucker and the unions involved, it was held in Moore v International Brotherhood of Teamsters, etc. (1962, Ky) 356 SW2d 241, that the trucker was not required to absorb the affected employees as well as the business, the court saying that they could find no such meaning in the above clause, stating that it dealt only with seniority, and not with initial employment. Unless and until the absorbing company agreed to take the employees of the company whose business was being absorbed, no seniority problem was created, said the court, hence the provision of the contract could have no application. Furthermore, said the court, it did not require that the absorbing company take these employees, but only that if it did take them the question of seniority between the old and new employees would be worked out by agreement or else be submitted to the grievance procedure. 31 (Emphasis ours.) Indeed, from the tenor of local and foreign authorities, in voluntary mergers, absorption of the dissolved corporations employees or the recognition of the absorbed employees service with their previous employer may be demanded from the surviving corporation if required by provision of law or contract. The dissent of Justice Arturo D. Brion tries to make a distinction as to the terms and conditions of employment of the absorbed employees in the case of a corporate merger or consolidation which will, in effect, take away from corporate management the prerogative to make purely business decisions on the hiring of employees or will give it an excuse not to apply the CBA in force to the prejudice of its own employees and their recognized collective bargaining agent. In this regard, we disagree with Justice Brion. Justice Brion takes the position that because the surviving corporation continues the personality of the dissolved corporation and acquires all the latters rights and obligations, it is duty-bound to absorb the dissolved corporations employees, even in the absence of a stipulation in the plan of merger. He proposes that this interpretation would provide the necessary protection to labor as it spares workers from being "left in legal limbo." However, there are instances where an employer can validly discontinue or terminate the employment of an employee without violating his right to security of tenure. Among others, in case of redundancy, for example, superfluous employees may be terminated and such termination would be authorized under Article 283 of the Labor Code.32 Moreover, assuming for the sake of argument that there is an obligation to hire or absorb all employees of the non-surviving corporation, there is still no basis to conclude that the terms and conditions of employment under a valid collective bargaining agreement in force in the surviving corporation should not be made to apply to the absorbed employees. The Corporation Code and the Subject Merger Agreement are Silent on Efficacy, Terms and Conditions of Employment Contracts The lack of a provision in the plan of merger regarding the transfer of employment contracts to the surviving corporation could have very well been deliberate on the part of the parties to the merger, in order to grant the surviving corporation the freedom to choose who among the dissolved corporations employees to retain, in accordance with the surviving corporations business needs. If terminations, for instance due to redundancy or labor-saving devices or to prevent losses, are done in good faith, they would be valid. The surviving corporation too is duty-bound to protect the rights of its own employees who may be affected by the merger in terms of seniority and other conditions of their employment due to the merger. Thus, we are not convinced that in the absence of a stipulation in the merger plan the surviving corporation was compelled, or may be judicially compelled, to absorb all employees under the same terms and conditions obtaining in the dissolved corporation as the surviving corporation should also take into consideration the state of its business and its obligations to its own employees, and to their certified collective bargaining agent or labor union. Even assuming we accept Justice Brions theory that in a merger situation the surviving corporation should be compelled to absorb the dissolved corporations employees as a legal consequence of the merger and as a social justice consideration, it bears to emphasize his dissent also recognizes that the employee may choose to end his employment at any time by voluntarily resigning. For the employee to be "absorbed" by BPI, it requires the employees implied or express consent. It is because of this human element in employment contracts and the personal, consensual nature thereof that we cannot agree that, in a merger situation, employment contracts are automatically transferable from one entity to another in the same manner that a contract pertaining to purely proprietary rights such as a promissory note or a deed of sale of property is perfectly and automatically transferable to the surviving corporation. That BPI is the same entity as FEBTC after the merger is but a legal fiction intended as a tool to adjudicate rights and obligations between and among the merged corporations and the persons that deal with them. Although in a merger it is as if there is no change in the personality of the employer, there is in reality a change in the situation of the employee. Once an FEBTC employee is absorbed, there are presumably changes in his condition of employment even if his previous tenure and salary rate is recognized by BPI. It is reasonable to assume that BPI would have different rules and regulations and company practices than FEBTC and it is incumbent upon the former FEBTC employees to obey these new rules and adapt to their new environment. Not the least of the changes in employment condition that the absorbed FEBTC employees must face is the fact that prior to the merger they were employees of an unorganized establishment and after the merger they became employees of a unionized company that had an existing collective bargaining agreement with the certified union. This presupposes that the union who is party to the collective bargaining agreement is the certified union that has, in the appropriate certification election, been shown to represent a majority of the members of the bargaining unit. Likewise, with respect to FEBTC employees that BPI chose to employ and who also chose to be absorbed, then due to BPIs blanket assumption of liabilities and obligations under the articles of merger, BPI was bound to respect the years of service of these FEBTC employees and to pay the same, or commensurate salaries and other benefits that these employees previously enjoyed with FEBTC. As the Union likewise pointed out in its pleadings, there were benefits under the CBA that the former FEBTC employees did not enjoy with their previous employer. As BPI employees, they will enjoy all these CBA benefits upon their "absorption." Thus, although in a sense BPI is continuing FEBTCs employment of these absorbed employees, BPIs employment of these absorbed employees was not under exactly the same terms and conditions as stated in the latters employment contracts with FEBTC. This further strengthens the view that BPI and the former FEBTC employees voluntarily contracted with each other for their employment in the surviving corporation. Proper Appreciation of the Term "New Employees" Under the CBA In any event, it is of no moment that the former FEBTC employees retained the regular status that they possessed while working for their former employer upon their absorption by petitioner. This fact would not remove them from the scope of the phrase "new employees" as contemplated in the Union Shop Clause of the CBA, contrary to petitioners insistence that the term "new employees" only refers to those who are initially hired as nonregular employees for possible regular employment. The Union Shop Clause in the CBA simply states that "new employees" who during the effectivity of the CBA "may be regularly employed" by the Bank must join the union within thirty (30) days from their regularization. There is nothing in the said clause that limits its application to only new employees who possess non-regular status, meaning probationary status, at the start of their employment. Petitioner likewise failed to point to any provision in the CBA expressly excluding from the Union Shop Clause new employees who are "absorbed" as regular employees from the beginning of their employment. What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioners new regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a condition of their continued employment. The dissenting opinion of Justice Brion dovetails with Justice Carpios view only in their restrictive interpretation of who are "new employees" under the CBA. To our dissenting colleagues, the phrase "new employees" (who are covered by the union shop clause) should only include new employees who

were hired as probationary during the life of the CBA and were later granted regular status. They propose that the former FEBTC employees who were deemed regular employees from the beginning of their employment with BPI should be treated as a special class of employees and be excluded from the union shop clause. Justice Brion himself points out that there is no clear, categorical definition of "new employee" in the CBA. In other words, the term "new employee" as used in the union shop clause is used broadly without any qualification or distinction. However, the Court should not uphold an interpretation of the term "new employee" based on the general and extraneous provisions of the Corporation Code on merger that would defeat, rather than fulfill, the purpose of the union shop clause. To reiterate, the provision of the Article 248(e) of the Labor Code in point mandates that nothing in the said Code or any other law should stop the parties from requiring membership in a recognized collective bargaining agent as a condition of employment. Significantly, petitioner BPI never stretches its arguments so far as to state that the absorbed employees should be deemed "old employees" who are not covered by the Union Shop Clause. This is not surprising. By law and jurisprudence, a merger only becomes effective upon approval by the Securities and Exchange Commission (SEC) of the articles of merger. In Associated Bank v. Court of Appeals,33 we held: The procedure to be followed is prescribed under the Corporation Code. Section 79 of said Code requires the approval by the Securities and Exchange Commission (SEC) of the articles of merger which, in turn, must have been duly approved by a majority of the respective stockholders of the constituent corporations. The same provision further states that the merger shall be effective only upon the issuance by the SEC of a certificate of merger. The effectivity date of the merger is crucial for determining when the merged or absorbed corporation ceases to exist; and when its rights, privileges, properties as well as liabilities pass on to the surviving corporation. (Emphasis ours.) In other words, even though BPI steps into the shoes of FEBTC as the surviving corporation, BPI does so at a particular point in time, i.e., the effectivity of the merger upon the SECs issuance of a certificate of merger. In fact, the articles of merger themselves provided that both BPI and FEBTC will continue their respective business operations until the SEC issues the certificate of merger and in the event SEC does not issue such a certificate, they agree to hold each other blameless for the non-consummation of the merger. Considering the foregoing principle, BPI could have only become the employer of the FEBTC employees it absorbed after the approval by the SEC of the merger. If the SEC did not approve the merger, BPI would not be in the position to absorb the employees of FEBTC at all. Indeed, there is evidence on record that BPI made the assignments of its absorbed employees in BPI effective April 10, 2000, or after the SECs approval of the merger. 34 In other words, BPI became the employer of the absorbed employees only at some point after the effectivity of the merger, notwithstanding the fact that the absorbed employees years of service with FEBTC were voluntarily recognized by BPI. Even assuming for the sake of argument that we consider the absorbed FEBTC employees as "old employees" of BPI who are not members of any union (i.e., it is their date of hiring by FEBTC and not the date of their absorption that is considered), this does not necessarily exclude them from the union security clause in the CBA. The CBA subject of this case was effective from April 1, 1996 until March 31, 2001. Based on the allegations of the former FEBTC employees themselves, there were former FEBTC employees who were hired by FEBTC after April 1, 1996 and if their date of hiring by FEBTC is considered as their date of hiring by BPI, they would undeniably be considered "new employees" of BPI within the contemplation of the Union Shop Clause of the said CBA. Otherwise, it would lead to the absurd situation that we would discriminate not only between new BPI employees (hired during the life of the CBA) and former FEBTC employees (absorbed during the life of the CBA) but also among the former FEBTC employees themselves. In other words, we would be treating employees who are exactly similarly situated (i.e., the group of absorbed FEBTC employees) differently. This hardly satisfies the demands of equality and justice. Petitioner limited itself to the argument that its absorbed employees do not fall within the term "new employees" contemplated under the Union Shop Clause with the apparent objective of excluding all, and not just some, of the former FEBTC employees from the application of the Union Shop Clause. However, in law or even under the express terms of the CBA, there is no special class of employees called "absorbed employees." In order for the Court to apply or not apply the Union Shop Clause, we can only classify the former FEBTC employees as either "old" or "new." If they are not "old" employees, they are necessarily "new" employees. If they are new employees, the Union Shop Clause did not distinguish between new employees who are nonregular at their hiring but who subsequently become regular and new employees who are "absorbed" as regular and permanent from the beginning of their employment. The Union Shop Clause did not so distinguish, and so neither must we. No Substantial Distinction Under the CBA Between Regular Employees Hired After Probationary Status and Regular Employees Hired After the Merger Verily, we agree with the Court of Appeals that there are no substantial differences between a newly hired non-regular employee who was regularized weeks or months after his hiring and a new employee who was absorbed from another bank as a regular employee pursuant to a merger, for purposes of applying the Union Shop Clause. Both employees were hired/employed only after the CBA was signed. At the time they are being required to join the Union, they are both already regular rank and file employees of BPI. They belong to the same bargaining unit being represented by the Union. They both enjoy benefits that the Union was able to secure for them under the CBA. When they both entered the employ of BPI, the CBA and the Union Shop Clause therein were already in effect and neither of them had the opportunity to express their preference for unionism or not. We see no cogent reason why the Union Shop Clause should not be applied equally to these two types of new employees, for they are undeniably similarly situated. The effect or consequence of BPIs so-called "absorption" of former FEBTC employees should be limited to what they actually agreed to, i.e. recognition of the FEBTC employees years of service, salary rate and other benefits with their previous employer. The effect should not be stretched so far as to exempt former FEBTC employees from the existing CBA terms, company policies and rules which apply to employees similarly situated. If the Union Shop Clause is valid as to other new regular BPI employees, there is no reason why the same clause would be a violation of the "absorbed" employees freedom of association. Non-Application of Union Shop Clause Contrary to the Policy of the Labor Code and Inimical to Industrial Peace It is but fair that similarly situated employees who enjoy the same privileges of a CBA should be likewise subject to the same obligations the CBA imposes upon them. A contrary interpretation of the Union Shop Clause will be inimical to industrial peace and workers solidarity. This unfavorable situation will not be sufficiently addressed by asking the former FEBTC employees to simply pay agency fees to the Union in lieu of union membership, as the dissent of Justice Carpio suggests. The fact remains that other new regular employees, to whom the "absorbed employees" should be compared, do not have the option to simply pay the agency fees and they must join the Union or face termination. Petitioners restrictive reading of the Union Shop Clause could also inadvertently open an avenue, which an employer could readily use, in order to dilute the membership base of the certified union in the collective bargaining unit (CBU). By entering into a voluntary merger with a non-unionized company that employs more workers, an employer could get rid of its existing union by the simple expedient of arguing that the "absorbed employees" are not new employees, as are commonly understood to be covered by a CBAs union security clause. This could then lead to a new majority within the CBU that could potentially threaten the majority status of the existing union and, ultimately, spell its demise as the CBUs bargaining representative. Such a dreaded but not entirely far-fetched scenario is no different from the ingenious and creative "union-busting" schemes that corporations have fomented throughout the years, which this Court has foiled time and again in order to preserve and protect the valued place of labor in this jurisdiction consistent with the Constitutions mandate of insuring social justice. There is nothing in the Labor Code and other applicable laws or the CBA provision at issue that requires that a new employee has to be of probationary or non-regular status at the beginning of the employment relationship. An employer may confer upon a new employee the status of regular employment even at the onset of his engagement. Moreover, no law prohibits an employer from voluntarily recognizing the length of service of a new employee with a previous employer in relation to computation of benefits or seniority but it should not unduly be interpreted to exclude them from the coverage of the CBA which is a binding contractual obligation of the employer and employees. Indeed, a union security clause in a CBA should be interpreted to give meaning and effect to its purpose, which is to afford protection to the certified bargaining agent and ensure that the employer is dealing with a union that represents the interests of the legally mandated percentage of the members of the bargaining unit. The union shop clause offers protection to the certified bargaining agent by ensuring that future regular employees who (a) enter the employ of the company during the life of the CBA; (b) are deemed part of the collective bargaining unit; and (c) whose number will affect the number of members of the collective bargaining unit will be compelled to join the union. Such compulsion has legal effect, precisely because the employer by voluntarily entering in to a union shop clause in a CBA with the certified bargaining agent takes on the responsibility of dismissing the new regular employee who does not join the union. Without the union shop clause or with the restrictive interpretation thereof as proposed in the dissenting opinions, the company can jeopardize the majority status of the certified union by excluding from union membership all new regular employees whom the Company will "absorb" in future mergers and all new regular employees whom the Company hires as regular from the beginning of their employment without undergoing a probationary period. In this manner, the Company can increase the number of members of the collective bargaining unit and if this increase is not accompanied by a

corresponding increase in union membership, the certified union may lose its majority status and render it vulnerable to attack by another union who wishes to represent the same bargaining unit.35 Or worse, a certified union whose membership falls below twenty percent (20%) of the total members of the collective bargaining unit may lose its status as a legitimate labor organization altogether, even in a situation where there is no competing union. 36 In such a case, an interested party may file for the cancellation of the unions certificate of registration with the Bureau of Labor Relations. 37 Plainly, the restrictive interpretation of the union shop clause would place the certified unions very existence at the mercy and control of the employer. Relevantly, only BPI, the employer appears to be interested in pursuing this case . The former FEBTC employees have not joined BPI in this appeal. For the foregoing reasons, Justice Carpios proposal to simply require the former FEBTC to pay agency fees is wholly inadequate to compensate the certified union for the loss of additional membership supposedly guaranteed by compliance with the union shop clause. This is apart from the fact that treating these "absorbed employees" as a special class of new employees does not encourage worker solidarity in the company since another class of new employees (i.e. those whose were hired as probationary and later regularized during the life of the CBA) would not have the option of substituting union membership with payment of agency fees. Justice Brion, on the other hand, appears to recognize the inherent unfairness of perpetually excluding the "absorbed" employees from the ambit of the union shop clause. He proposes that this matter be left to negotiation by the parties in the next CBA. To our mind, however, this proposal does not sufficiently address the issue. With BPI already taking the position that employees "absorbed" pursuant to its voluntary mergers with other banks are exempt from the union shop clause, the chances of the said bank ever agreeing to the inclusion of such employees in a future CBA is next to nil more so, if BPIs narrow interpretation of the union shop clause is sustained by this Court. Right of an Employee not to Join a Union is not Absolute and Must Give Way to the Collective Good of All Members of the Bargaining Unit The dissenting opinions place a premium on the fact that even if the former FEBTC employees are not old employees, they nonetheless were employed as regular and permanent employees without a gap in their service. However, an employees permanent and regular employment status in itself does not necessarily exempt him from the coverage of a union shop clause. In the past this Court has upheld even the more stringent type of union security clause, i.e., the closed shop provision, and held that it can be made applicable to old employees who are already regular and permanent but have chosen not to join a union. In the early case of Juat v. Court of Industrial Relations,38 the Court held that an old employee who had no union may be compelled to join the union even if the collective bargaining agreement (CBA) imposing the closed shop provision was only entered into seven years after of the hiring of the said employee. To quote from that decision: A closed-shop agreement has been considered as one form of union security whereby only union members can be hired and workers must remain union members as a condition of continued employment. The requirement for employees or workers to become members of a union as a condition for employment redounds to the benefit and advantage of said employees because by holding out to loyal members a promise of employment in the closedshop the union wields group solidarity. In fact, it is said that "the closed-shop contract is the most prized achievement of unionism." xxxx This Court had categorically held in the case of Freeman Shirt Manufacturing Co., Inc., et al. vs. Court of Industrial Relations, et al. , G.R. No. L-16561, Jan. 28, 1961, that the closed-shop proviso of a collective bargaining agreement entered into between an employer and a duly authorized labor union is applicable not only to the employees or laborers that are employed after the collective bargaining agreement had been entered into but also to old employees who are not members of any labor union at the time the said collective bargaining agreement was entered into . In other words, if an employee or laborer is already a member of a labor union different from the union that entered into a collective bargaining agreement with the employer providing for a closed-shop, said employee or worker cannot be obliged to become a member of that union which had entered into a collective bargaining agreement with the employer as a condition for his continued employment. (Emphasis and underscoring supplied.) Although the present case does not involve a closed shop provision that included even old employees, the Juat example is but one of the cases that laid down the doctrine that the right not to join a union is not absolute. Theoretically, there is nothing in law or jurisprudence to prevent an employer and a union from stipulating that existing employees (who already attained regular and permanent status but who are not members of any union) are to be included in the coverage of a union security clause. Even Article 248(e) of the Labor Code only expressly exempts old employees who already have a union from inclusion in a union security clause. 39 Contrary to the assertion in the dissent of Justice Carpio, Juat has not been overturned by Victoriano v. Elizalde Rope Workers Union 40 nor by Reyes v. Trajano.41 The factual milieus of these three cases are vastly different. In Victoriano, the issue that confronted the Court was whether or not employees who were members of the Iglesia ni Kristo (INK) sect could be compelled to join the union under a closed shop provision, despite the fact that their religious beliefs prohibited them from joining a union. In that case, the Court was asked to balance the constitutional right to religious freedom against a host of other constitutional provisions including the freedom of association, the non-establishment clause, the non-impairment of contracts clause, the equal protection clause, and the social justice provision. In the end, the Court held that "religious freedom, although not unlimited, is a fundamental personal right and liberty, and has a preferred position in the hierarchy of values."42 However, Victoriano is consistent with Juat since they both affirm that the right to refrain from joining a union is not absolute. The relevant portion of Victoriano is quoted below: The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only member of the collective bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. Thus Section 4 (a) (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350, provides that although it would be an unfair labor practice for an employer "to discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization" the employer is, however, not precluded "from making an agreement with a labor organization to require as a condition of employment membership therein, if such labor organization is the representative of the employees." By virtue, therefore, of a closed shop agreement, before the enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs, wishes to be employed or to keep his employment, he must become a member of the collective bargaining union. Hence, the right of said employee not to join the labor union is curtailed and withdrawn. 43 (Emphases supplied.) If Juat exemplified an exception to the rule that a person has the right not to join a union, Victoriano merely created an exception to the exception on the ground of religious freedom. Reyes, on the other hand, did not involve the interpretation of any union security clause. In that case, there was no certified bargaining agent yet since the controversy arose during a certification election. In Reyes, the Court highlighted the idea that the freedom of association included the right not to associate or join a union in resolving the issue whether or not the votes of members of the INK sect who were part of the bargaining unit could be excluded in the results of a certification election, simply because they were not members of the two contesting unions and were expected to have voted for "NO UNION" in view of their religious affiliation. The Court upheld the inclusion of the votes of the INK members since in the previous case of Victoriano we held that INK members may not be compelled to join a union on the ground of religious freedom and even without Victoriano every employee has the right to vote "no union" in a certification election as part of his freedom of association. However, Reyes is not authority for Justice Carpios proposition that an employee who is not a member of any union may claim an exemption from an existing union security clause because he already has regular and permanent status but simply prefers not to join a union. The other cases cited in Justice Carpios dissent on this point are likewise inapplicable. Basa v. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas, 44 Anucension v. National Labor Union, 45 and Gonzales v. Central Azucarera de Tarlac Labor Union 46 all involved members of the INK. In line with Victoriano, these cases upheld the INK members claimed exemption from the union security clause on religious grounds. In the present case, the former FEBTC employees never claimed any religious grounds for their exemption from the Union Shop Clause. As for Philips Industrial Development, Inc. v. National Labor Relations Corporation 47 and Knitjoy Manufacturing, Inc. v. Ferrer-Calleja, 48 the employees who were exempted from joining the respondent union or who were excluded from participating in the certification election were found to be not members of the bargaining unit represented by respondent union and were free to form/join their own union. In the case at bar, it is undisputed that the former FEBTC employees were part of the bargaining unit that the Union represented. Thus, the rulings in Philips and Knitjoy have no relevance to the issues at hand. Time and again, this Court has ruled that the individual employees right not to join a union may be validly restricted by a union security clause in a CBA49 and such union security clause is not a violation of the employees constitutional right to freedom of association. 50 It is unsurprising that significant provisions on labor protection of the 1987 Constitution are found in Article XIII on Social Justice. The constitutional guarantee given the right to form unions 51 and the State policy to promote unionism 52 have social justice considerations. In Peoples Industrial and Commercial Employees and Workers Organization v. Peoples Industrial and Commercial Corporation, 53 we recognized that "[l]abor, being the weaker in economic power and resources than capital, deserve protection that is actually substantial and material."

The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge upon the individual employees right or freedom of association, is not to protect the union for the unions sake. Laws and jurisprudence promote unionism and afford certain protections to the certified bargaining agent in a unionized company because a strong and effective union presumably benefits all employees in the bargaining unit since such a union would be in a better position to demand improved benefits and conditions of work from the employer. This is the rationale behind the State policy to promote unionism declared in the Constitution, which was elucidated in the above-cited case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.54 In the case at bar, since the former FEBTC employees are deemed covered by the Union Shop Clause, they are required to join the certified bargaining agent, which supposedly has gathered the support of the majority of workers within the bargaining unit in the appropriate certification proceeding. Their joining the certified union would, in fact, be in the best interests of the former FEBTC employees for it unites their interests with the majority of employees in the bargaining unit. It encourages employee solidarity and affords sufficient protection to the majority status of the union during the life of the CBA which are the precisely the objectives of union security clauses, such as the Union Shop Clause involved herein. We are indeed not being called to balance the interests of individual employees as against the State policy of promoting unionism, since the employees, who were parties in the court below, no longer contested the adverse Court of Appeals decision. Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in recognition that ultimately the individual employee will be benefited by that policy. In the hierarchy of constitutional values, this Court has repeatedly held that the right to abstain from joining a labor organization is subordinate to the policy of encouraging unionism as an instrument of social justice. Also in the dissenting opinion of Justice Carpio, he maintains that one of the dire consequences to the former FEBTC employees who refuse to join the union is the forfeiture of their retirement benefits. This is clearly not the case precisely because BPI expressly recognized under the merger the length of service of the absorbed employees with FEBTC. Should some refuse to become members of the union, they may still opt to retire if they are qualified under the law, the applicable retirement plan, or the CBA, based on their combined length of service with FEBTC and BPI. Certainly, there is nothing in the union shop clause that should be read as to curtail an employees eligibility to apply for retirement if qualified under the law, the existing retirement plan, or the CBA as the case may be. In sum, this Court finds it reasonable and just to conclude that the Union Shop Clause of the CBA covers the former FEBTC employees who were hired/employed by BPI during the effectivity of the CBA in a manner which petitioner describes as "absorption." A contrary appreciation of the facts of this case would, undoubtedly, lead to an inequitable and very volatile labor situation which this Court has consistently ruled against. 1avvphi1 In the case of former FEBTC employees who initially joined the union but later withdrew their membership, there is even greater reason for the union to request their dismissal from the employer since the CBA also contained a Maintenance of Membership Clause. A final point in relation to procedural due process, the Court is not unmindful that the former FEBTC employees refusal to join the union and BPIs refusal to enforce the Union Shop Clause in this instance may have been based on the honest belief that the former FEBTC employees were not covered by said clause. In the interest of fairness, we believe the former FEBTC employees should be given a fresh thirty (30) days from notice of finality of this decision to join the union before the union demands BPI to terminate their employment under the Union Shop Clause, assuming said clause has been carried over in the present CBA and there has been no material change in the situation of the parties. WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty (30) day notice requirement imposed herein. Former FEBTC employees who opt not to become union members but who qualify for retirement shall receive their retirement benefits in accordance with law, the applicable retirement plan, or the CBA, as the case may be.