THIRD DIVISION

[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 :p

Assailed in this petition for review under Rule 45 of the Rules of Court
are the Court of Appeals (1) Decision 1 dated March 11, 2004 in CA-G.R. SP
No. 73992, which dismissed the Petition for Certiorari of petitioners Zenaida
Bergante (Bergante) and Herminigildo Inguillo (Inguillo); and (2) Resolution 2
dated September 17, 2004 denying petitioners' Motion for Reconsideration.
The appellate court sustained the ruling of the National Labor Relations
Commission (NLRC) that petitioners were validly dismissed pursuant to a
Union Security Clause in the collective bargaining agreement.
The facts of the case are as follows:
First Philippine Scales, Inc. (FPSI), a domestic corporation engaged in
the manufacturing of weighing scales, employed Bergante and Inguillo as
assemblers on August 15, 1977 and September 10, 1986, respectively.
In 1991, FPSI and First Philippine Scales Industries Labor Union (FPSILU)
3 entered into a Collective Bargaining Agreement (CBA), 4 the duration of
which was for a period of five (5) years starting on September 12, 1991 until
September 12, 1996. On September 19, 1991, the members of FPSILU
ratified the CBA in a document entitled RATIPIKASYON NG KASUNDUAN. 5
Bergante and Inguillo, who were members of FPSILU, signed the said
document. 6
During the lifetime of the CBA, Bergante, Inguillo and several FPSI
employees joined another union, the Nagkakaisang Lakas ng Manggagawa
(NLM), which was affiliated with a federation called KATIPUNAN (NLM-
KATIPUNAN, for brevity). Subsequently, NLM-KATIPUNAN filed with the
Department of Labor and Employment (DOLE) an intra-union dispute 7
against FPSILU and FPSI. In said case, the Med-Arbiter decided 8 in favor of
FPSILU. It also ordered the officers and members of NLM-KATIPUNAN to
return to FPSILU the amount of P90,000.00 pertaining to the union dues
erroneously collected from the employees. Upon finality of the Med-Arbiter's
Decision, a Writ of Execution 9 was issued to collect the adjudged amount
from NLM-KATIPUNAN. However, as no amount was recovered, notices of
garnishment were issued to United Coconut Planters Bank (Kalookan City
Branch) 10 and to FPSI 11 for the latter to hold for FPSILU the earnings of
Domingo Grutas, Jr. (Grutas) and Inguillo, formerly FPSILU's President and
Secretary for Finance, respectively, to the extent of P13,032.18. Resultantly,
the amount of P5,140.55 was collected, 12 P1,695.72 of which came from the
salary of Grutas, while the P3,444.83 came from that of Inguillo.
Meanwhile, on March 29, 1996, the executive board and members of
the FPSILU addressed a document dated March 18, 1996 denominated as
"Petisyon" 13 to FPSI's general manager, Amparo Policarpio (Policarpio),
seeking the termination of the services of the following employees, namely:
Grutas, Yolanda Tapang, Shirley Tapang, Gerry Trinidad, Gilbert Lucero,
Inguillo, Bergante, and Vicente Go, on the following grounds: 14 (1) disloyalty
to the Union by separating from it and affiliating with a rival Union, the NLM-
KATIPUNAN; (2) dereliction of duty by failing to call periodic membership
meetings and to give financial reports; (3) depositing Union funds in the
names of Grutas and former Vice-President Yolanda Tapang, instead of in the
name of FPSILU, care of the President; (4) causing damage to FPSI by
deliberately slowing down production, preventing the Union to even attempt
to ask for an increase in benefits from the former; and (5) poisoning the
minds of the rest of the members of the Union so that they would be enticed
to join the rival union.
On May 13, 1996, Inguillo filed with the NLRC a complaint against FPSI
and/or Policarpio (respondents) for illegal withholding of salary and
damages, docketed as NLRC-NCR-Case No. 00-05-03036-96. 15
On May 16, 1996, respondents terminated the services of the
employees mentioned in the "Petisyon".
The following day, two (2) separate complaints for illegal dismissal,
reinstatement and damages were filed against respondents by: (1) NLM-
KATIPUNAN, Grutas, Trinidad, Bergante, Yolanda Tapang, Go, Shirley Tapang
and Lucero 16 (Grutas complaint, for brevity); and (2) Inguillo 17 (Inguillo
complaint). Both complaints were consolidated with Inguillo's prior complaint
for illegal withholding of salary, which was pending before Labor Arbiter
Manuel Manansala. After the preliminary mandatory conference, some of the
complainants agreed to amicably settle their cases. Consequently, the Labor
Arbiter issued an Order 18 dated October 1, 1996, dismissing with prejudice
the complaints of Go, Shirley Tapang, Yolanda Tapang, Grutas, and Trinidad.
19 Lucero also settled the case after receiving his settlement money and

executing a Quitclaim and Release in favor of FPSI and Policarpio. 20 STcHDC

Bergante and Inguillo, the remaining complainants, were directed to

submit their respective position papers, after which their complaints were
submitted for resolution on February 20, 1997. 21
In their Position Paper, 22 Bergante and Inguillo claimed that they were
not aware of a petition seeking for their termination, and neither were they
informed of the grounds for their termination. They argued that had they
been informed, they would have impleaded FPSILU in their complaints.
Inguillo could not think of a valid reason for his dismissal except the fact that
he was a very vocal and active member of the NLM-KATIPUNAN. Bergante,
for her part, surmised that she was dismissed solely for being Inguillo's
sister-in-law. She also reiterated the absence of a memorandum stating that
she committed an infraction of a company rule or regulation or a violation of
law that would justify her dismissal.
Inguillo also denounced respondents' act of withholding his salary,
arguing that he was not a party to the intra-union dispute from which the
notice of garnishment arose. Even assuming that he was, he argued that his
salary was exempt from execution.
In their Position Paper, 23 respondents maintained that Bergante and
Inguillo's dismissal was justified, as the same was done upon the demand of
FPSILU, and that FPSI complied in order to avoid a serious labor dispute
among its officers and members, which, in turn, would seriously affect
production. They also justified that the dismissal was in accordance with the
Union Security Clause in the CBA, the existence and validity of which was not
disputed by Bergante and Inguillo. In fact, the two had affixed their
signatures to the document which ratified the CBA.
In his Decision 24 dated November 27, 1997, the Labor Arbiter
dismissed the remaining complaints of Bergante and Inguillo and held that
they were not illegally dismissed. He explained that the two clearly violated
the Union Security Clause of the CBA when they joined NLM-KATIPUNAN and
committed acts detrimental to the interests of FPSILU and respondents. The
dispositive portion of the said Decision states:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Declaring respondents First Philippines Scales, Inc. (First

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

Herminigildo Inguillo
Separation pay P22,490.00
Legal Holiday Pay 839.00
—————
Total 23,329.00
Zenaida Bergante
Separation pay P43,225.00
Legal Holiday Pay 839.00
—————
Total 44,064.00

2. Directing the afore-named respondents to pay ten (10%)

percent attorney's fees based on the total monetary award to
complainants Inguillo and Bergante.
 3. Dismissing the claim for illegal withholding of salary of
complainant Inguillo for lack of merit as above discussed.

4. Dismissing the other money claims and/or other charges of

complainants Inguillo and Bergante for lack of factual and legal basis.

5. Dismissing the complaint of complainant Gilberto Lucero

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

SO ORDERED. 25

Bergante and Inguillo appealed before the NLRC, which reversed the
Labor Arbiter's Decision in a Resolution 26 dated June 8, 2001, the dispositive
portion of which provides:

WHEREFORE, the assailed decision is set aside. Respondents are

hereby ordered to reinstate complainants Inguillo and Bergante with
full backwages from the time of their dismissal up [to] their actual
reinstatement. Further, respondents are also directed to pay
complainant Inguillo the amount representing his withheld salary for
the period March 15, 1998 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. CSDcTH

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:

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

. . . 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.

. . . the dismissal of the complainants pursuant to the

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

Indeed, the Supreme Court has for so long a time already

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

The collective bargaining agreement in this case contains a

union security clause — a closed-shop agreement.

A closed-shop agreement is an agreement whereby an

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

This Court has held that a closed-shop is a valid form of

union security, and such a provision in a collective bargaining
agreement is not a restriction of the right of freedom of
association guaranteed by the Constitution. (Lirag Textile Mills,
Inc. v. Blanco, 109 SCRA 87; Manalang v. Artex Development
Company, Inc., 21 SCRA 561.) 33

Hence, the present petition.

Essentially, the Labor Code of the Philippines has several provisions

under which an employee may be validly terminated, namely: (1) just causes
under Article 282; 34 (2) authorized causes under Article 283; 35 (3)
termination due to disease under Article 284; 36 and (4) termination by the
employee or resignation under Article 285. 37 While the said provisions did
not mention as ground the enforcement of the Union Security Clause in the
CBA, the dismissal from employment based on the same is recognized and
accepted in our jurisdiction. 38
"Union security" is a generic term, which is applied to and
comprehends "closed shop", "union shop", "maintenance of membership" or
any other form of agreement which imposes upon employees the obligation
to acquire or retain union membership as a condition affecting employment.
39 There is union shop when all new regular employees are required to join

the union within a certain period as a condition for their continued

employment. There is maintenance of membership shop when employees,
who are union members as of the effective date of the agreement, or who
thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred
out of the bargaining unit or the agreement is terminated. 40 A closed-shop,
on the other hand, may be defined as an enterprise in which, by agreement
between the employer and his employees or their representatives, no person
may be employed in any or certain agreed departments of the enterprise
unless he or she is, becomes, and, for the duration of the agreement,
remains a member in good standing of a union entirely comprised of or of
which the employees in interest are a part. 41
 In their Petition, Bergante and Inguillo assail the legality of their
termination based on the Union Security Clause in the CBA between FPSI and
FPSILU. Article II 42 of the CBA pertains to Union Security and
Representatives, which provides: aEHADT

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
FPSI's interests, i.e., dereliction of duty — by failing to call periodic
membership meetings and to give financial reports; depositing union funds
in the names of Grutas and former Vice-President Yolanda Tapang, instead of
in the name of FPSILU care of the President; causing damage to FPSI by
deliberately slowing down production, preventing the Union from even
attempting to ask for an increase in benefits from the former; and poisoning
the minds of the rest of the members of the Union so that they would be
enticed to join the rival union. DCSTAH

Third. FPSILU's decision to ask for the termination of the employees in

the "Petisyon" was justified and supported by the evidence on record.
Bergante and Inguillo were undisputably former members of FPSILU. In fact,
Inguillo was the Secretary of Finance, the underlying reason why his salary
was garnished to satisfy the judgment of the Med-Arbiter who ordered NLM-
KATIPUNAN to return the Union dues it erroneously collected from the
employees. Their then affiliation with FPSILU was also clearly shown by their
signatures in the document which ratified the CBA. Without a doubt, they
committed acts of disloyalty to the Union when they failed not only to
maintain their membership but also disaffiliated from it. They abandoned
FPSILU and even joined another union which works against the former's
interests. This is evident from the intra-union dispute filed by NLM-
KATIPUNAN against FPSILU. Once affiliated with NLM-KATIPUNAN, Bergante
and Inguillo proceeded to recruit other employees to disaffiliate from FPSILU
and even collected Union dues from them.
In Del Monte Philippines, 44 the stipulations in the CBA authorizing the
dismissal of employees are of equal import as the statutory provisions on
dismissal under the Labor Code, since a CBA is the law between the
company and the Union, and compliance therewith is mandated by the
express policy to give protection to labor. In Caltex Refinery Employees
Association (CREA) v. Brillantes, 45 the Court expounded on the effectiveness
of union security clause when it held that it is one intended to strengthen the
contracting union and to protect it from the fickleness or perfidy of its own
members. For without such safeguards, group solidarity becomes uncertain;
the union becomes gradually weakened and increasingly vulnerable to
company machinations. In this security clause lies the strength of the union
during the enforcement of the collective bargaining agreement. It is this
clause that provides labor with substantial power in collective bargaining.
Nonetheless, while We uphold dismissal pursuant to a union security
clause, the same is not without a condition or restriction. For to allow its
untrammeled enforcement would encourage arbitrary dismissal and abuse
by the employer, to the detriment of the employees. Thus, to safeguard the
rights of the employees, We have said time and again that dismissals
pursuant to union security clauses are valid and legal, subject only to the
requirement of due process, that is, notice and hearing prior to dismissal. 46
In like manner, We emphasized that the enforcement of union security
clauses is authorized by law, provided such enforcement is not characterized
by arbitrariness, and always with due process. 47
There are two (2) aspects which characterize the concept of due
process under the Labor Code: one is substantive — whether the termination
of employment was based on the provisions of the Labor Code or in
accordance with the prevailing jurisprudence; the other is procedural — the
manner in which the dismissal was effected.
The second aspect of due process was clarified by the Court in King of
Kings Transport v. Mamac, 48 stating, thus:
 (1) The first written notice to be served on the employees
should contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. . . .

(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 employer's
decision to dismiss him. 49 The requirement of a hearing, on the other hand,
is complied with as long as there was an opportunity to be heard, and not
necessarily that an actual hearing was conducted. 50
In the present case, the required two notices that must be given to
herein petitioners Bergante and Inguillo were lacking. The records are bereft
of any notice that would have given a semblance of substantial compliance
on the part of herein respondents. Respondents, however, aver that they
had furnished the employees concerned, including petitioners, with a copy of
FPSILU's "Petisyon". We cannot consider that as compliance with the
requirement of either the first notice or the second notice. While the
"Petisyon" enumerated the several grounds that would justify the
termination of the employees mentioned therein, yet such document is only
a recommendation by the Union upon which the employer may base its
decision. It cannot be considered a notice of termination. For as agreed upon
by FPSI and FPSILU in their CBA, the latter may only recommend to the
former a Union member's suspension or dismissal. Nowhere in the
controverted Union Security Clause was there a mention that once the union
gives a recommendation, the employer is bound outright to proceed with the
termination.
Even assuming that the "Petisyon" amounts to a first notice, the
employer cannot be deemed to have substantially complied with the
procedural requirements. True, FPSILU enumerated the grounds in said
"Petisyon". But a perusal of each of them leads Us to conclude that what was
stated were general descriptions, which in no way would enable the
employees to intelligently prepare their explanation and defenses. In
addition, the "Petisyon" did not provide a directive that the employees are
given opportunity to submit their written explanation within a reasonable
period. Finally, even if We are to assume that the "Petisyon" is a second
notice, still, the requirement of due process is wanting. For as We have said,
the second notice, which is aimed to inform the employee that his service is
already terminated, must state that the employer has considered all the
circumstances which involve the charge and the grounds in the first notice
have been established to justify the severance of employment. After the
claimed dialogue between Policarpio and the employees mentioned in the
"Petisyon", the latter were simply told not to report for work anymore. HAaDcS

These defects are bolstered by Bergante and Inguillo who remain

steadfast in denying that they were notified of the specific charges against
them nor were they given any memorandum to that effect. They averred
that had they been informed that their dismissal was due to FPSILU's
demand/petition, they could have impleaded the FPSILU together with the
respondents. The Court has always underscored the significance of the two-
notice rule in dismissing an employee and has ruled in a number of cases
that non-compliance therewith is tantamount to deprivation of the
employee's right to due process. 51
As for the requirement of a hearing or conference, We hold that
respondents also failed to substantially comply with the same. Policarpio
alleged that she had a dialogue with the concerned employees; that she
explained to them the demand of FPSILU for their termination as well as the
consequences of the "Petisyon"; and that she had no choice but to act
accordingly. She further averred that Grutas even asked her to pay all the
involved employees one (1)-month salary for every year of service, plus their
accrued legal holiday pay, but which she denied. She informed them that it
has been FPSI's practice to give employees, on a case-to-case basis, only
one-half (1/2) 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 (1/2) 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 employee's right to due
process. 54 In Carino v. National Labor Relations Commission, 55 We took a
firm stand in holding that:

The power to dismiss is a normal prerogative of the employer.

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

Thus, as held in that case, "the right of an employee to be informed of

the charges against him and to reasonable opportunity to present his side in
a controversy with either the company or his own Union is not wiped away by
a Union Security Clause or a Union Shop Clause in a collective bargaining
agreement. An employee is entitled to be protected not only from a
company which disregards his rights but also from his own Union, the
leadership of which could yield to the temptation of swift and arbitrary
expulsion from membership and mere dismissal from his job". 56
In fine, We hold that while Bergante and Inguillo's dismissals were valid
pursuant to the enforcement of Union Security Clause, respondents however
did not comply with the requisite procedural due process. As in the case of
Agabon v. National Labor Relations Commission, 57 where the dismissal is for
a cause recognized by the prevailing jurisprudence, the absence of the
statutory due process should not nullify the dismissal or render it illegal, or
ineffectual. Accordingly, for violating Bergante and Inguillo's statutory rights,
respondents should indemnify them the amount of P30,000.00 each as
nominal damages.
In view of the foregoing, We see no reason to discuss the other matters
raised by petitioners.
WHEREFORE, premises considered, the instant Petition is DENIED.
The Court of Appeals Decision dated March 11, 2004 and Resolution dated
September 17, 2004, in CA-G.R. SP No. 73992, are hereby AFFIRMED WITH
MODIFICATION in that while there was a valid ground for dismissal, the
procedural requirements for termination, as mandated by law and
jurisprudence, were not observed. Respondents First Philippine Scales, Inc.
and/or Amparo Policarpio are hereby ORDERED to PAY petitioners Zenaida
Bergante and Herminigildo Inguillo the amount of P30,000.00 each as
nominal damages. No pronouncement as to costs.
SO ORDERED.
Ynares-Santiago, Carpio, * Corona ** and Nachura, JJ., concur.

Footnotes

* Designated to sit as an additional member, per Special Order No. 646 dated
May 15, 2009.

** Designated to sit as an additional member, per Special Order No. 631 dated
April 29, 2009.

1. Penned by Associate Justice Salvador J. Valdez, Jr., with Associate Justices

Josefina Guevara-Salonga and Arturo D. Brion (now a member of the Court),
concurring; rollo, pp. 37-51.

2. Id. at 53-54.

3. Sometimes referred to as "FPSI Independent Labor Union" in other pleadings.

See note 13.

4. CA rollo, pp. 189-197. DHSCEc

5. Id. at 198-199.

6. Id. at 198.

7. Entitled: "In re: Intra Union Dispute at First Philippine Scales Industries,
Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan, Petitioner — versus
— First Philippine Scales Industries (Independent) Labor Union, Respondent;
First Philippine Scales Industries, Employer," docketed as Case No. OD-M-
9503-046 (OS-A-7-140-95).

8. Per Decision dated May 17, 1995.

9. CA rollo, pp. 120-123.

10. Id. at 124.

11. Id. at 125.

12. Id. at 126.

13. Id. at 127-128. The grounds mentioned in the "Petisyon" are quoted as
follows:

1. Ang mga opisyales na ito, ay ang mga dating [miyembro] at opisyales

ng F.P.S.I. Independent Labor Union, na rehistrado sa DOLE bilang isang
lehitimong Union, at sila'y tumiwalag upang magtayo o magtatag ng
 panibagong Union;

2. Hindi rin siya nagpatawag ng meeting kung ano na ang nangyari sa aming
Union at ang aming Union fund. Hindi rin siya nag-submit ng financial
statement sa DOLE;

3. Sila rin ang dahilan kung bakit naantala ang aming pakikipagnegosasyon
sa inyo sa nalalabing dalawang taon;

4. Nilabag din ni Domingo Grutas ang aming karapatan bilang isang

[miyembro] ng Union, dahil gumawa siya ng desisyon na lingid sa kaalaman
ng kanyang kasamang opisyales at [miyembro];

5. Dahil sa kanilang panggugulo bumagsak ang ating produkto at yon ang

dahilan kung bakit hindi namin nakamit ang mga [benepisyo] na dapat
naming hilingin at matanggap sa inyo;

6. Dahil sa kaguluhang iyon nawala ang aming team work, at pagkakaisa sa

paggawa upang tumaas ang ating produkto, at hindi kahiya-hiya kung
hihiling kami ng karagdagang [benepisyo];

7. Hindi rin namin nakamit ang kanilang kooperasyon dahil hindi sila
nakikipag-usap at nakikiisa sa amin, bagkus, nagmamalaki pa, at nagbabalak
pang manggulo muli;

8. Nilalason din nila ang isipan ng ibang [miyembro] ng aming Union upang
kumalas ito sa aming samahan;

9. Ang paglustay ng aming [pondo] na lingid sa aming kaalaman at

pagdeposito ng pera sa pangalan ng Presidente na si Domingo Grutas at Vise
Presidente Yolanda Tapang, at hindi sa pangalan ng aming Union sa
pangangalaga ng aming Tresurero;

Kaya mahigpit po naming hinihiling sa inyong butihing opisina na tanggalin

sila para wala nang hadlang at balakid sa aming pagsusumikap na gumanda
at mapabuti ang daloy ng ating produkto upang makamit din namin ang iba
pang [benepisyo]. (Emphasis supplied).

14. See CA Decision, rollo, p. 39.

15. Records, p. 2.

16. Docketed as NLRC-NCR-Case No. 00-05-03144-96; id. at 13-14.

17. Docketed as NLRC-NCR-Case No. 00-05-03138-96; id. at 28.

18. Records, pp. 46-47.

19. Id. at 40-44. The aforesaid complainants, agreeing to amicably settle their
cases, executed a Quitclaim and Release upon receipt from FPSI of a
financial consideration, as follows:

Vicente Go P23,263.00
Shirley Tapang P27,813.00
Yolanda Tapang P39,740.00
Domingo Grutas P23,589.00
 Gerry Trinidad P23,454.00

20. Id. at 85.

21. Id. at 135.

22. Id. at 59-67.

23. Id. at 72-80.

24. CA rollo, pp. 45-66.

25. Id. at 65-66.

26. Id. at 67-73.

27. Id. at 73.

28. Penned by Commissioner Vicente S.E. Veloso, with Presiding Commissioner

Roy V. Señeres and Commissioner Alberto R. Quimpo, concurring.

29. CA rollo, pp. 75-85.

30. Id. at 84.

31. Rollo, pp. 37-51.

32. Id. at 53-54.

33. Id. at 45-47.

34. ART. 282. Termination by employer. — An employer may terminate an

employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful

orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of

his employer or any immediate member of his family or his duly authorized
representative; and

(e) Other causes analogous to the foregoing.

35. ART. 283. Closure of establishment and reduction of personnel. —

The employer may also terminate the employment of any employee due to
the installation of labor-saving 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 to the workers and the
Ministry of Labor and Employment [Department of Labor and Employment] at
least one (1) month before the intended date thereof. In case of termination
due to the installation of labor saving devices or redundancy, the worker
 affected thereby shall be entitled to a separation pay equivalent to at least
one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or to at least one-half (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.

36. ART. 284. Disease as ground for termination. — An employer may

terminate the services of an employee who has been found to be suffering
from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1) month
salary or to one-half month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being considered as one (1)
whole year. cADTSH

37. ART. 285. Termination by employee. — (a) An employee may terminate

without just cause the employer-employee relationship by serving a written
notice on the employer at least one (1) month in advance. The employer
upon whom no such notice was served may hold the employee liable for
damages.

(b) An employee may put an end to the relationship without serving any
notice to the employer for any of the following just causes:

1. Serious insult by the employer or his representative on the honor and

person of the employee;

2. Inhuman and unbearable treatment accorded the employee by the

employer or his representative;

3. Commission of a crime or offense by the employer or his representative

against the person of the employee or any of the foregoing.

38. Alabang Country Club, Inc. v. NLRC, G.R. No. 170287, February 14, 2008,
545 SCRA 351, 361, citing Del Monte Philippines v. Saldivar, 504 SCRA 192,
203-204 (2006).

39. National Union of Workers in Hotels, Restaurants and Allied Industries-

Manila Pavilion Hotel Chapter v. NLRC, G.R. No. 179402, September 30,
2008, citing Azucena, C.A., The Labor Code with Comments and Cases,
Volume 2, Fifth Edition, 2004, p. 242. The other common types of union
security clause are defined and distinguished in the LABSTAT Updates of the
Department of Labor and Employment, Vol. 1, No. 12, August 1997, to wit:
(a) Open shop, which is an arrangement on recruitment whereby an
employer may hire any employee, union member or not, but the new
employee must join the union within a specified time and remain a member
in good standing; (b) Agency shop, which is an arrangement whereby non-
members of the contracting union must pay the union a sum equal to union
dues known as "agency fees" for the benefits they received as a
consequence of the bargaining negotiations effected through the efforts of
the union; and (c) Check off, which is an arrangement by a union with the
employer for dues to be deducted regularly from the members' salaries
 wherein the sum collected is remitted to the union by check. (Emphasis
supplied).

40. Alabang Country Club, Inc. v. NLRC, supra note 38, p. 361, citing 48 Am Jur
2d, § 797, p. 509.

41. Del Monte Philippines, Inc. v. Saldivar, G.R. No. 158620, October 11, 2006,
504 SCRA 192, 202-203, citing ROTHENBERG ON LABOR RELATIONS, p. 48;
cited in Confederated Sons of Labor v. Anakan Lumber Co., et al., 107 Phil.
915, 918 (1960).

42. Records, pp. 89-90. (Emphasis supplied).

43. Alabang Country Club, Inc. v. NLRC, supra note 38, at 362.

44. Supra note 38, at 201.

45. G.R. No. 123782, September 16, 1997 SCRA 218, 236. In said case, one of
the issues presented by the parties was their disagreement on the
enforcement of union security clause in the CBA. The Secretary of Labor
however considered the issue as procedural and failed to give a valid reason
for avoiding the same. The Court held that the Secretary of Labor committed
grave abuse of discretion as he should have taken cognizance of the issue
which is not merely incidental to but essentially involved in the labor dispute
itself, or which is otherwise submitted to him for resolution. The Court went
on to rule that it was precisely why the secretary assumed jurisdiction over
the labor dispute over which he has jurisdiction at his level.

46. Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos, G.R.

No. 113907, February 28, 2000, 326 SCRA 428, 470-471.

47. Id. at 463, citing Sanyo Philippines Workers Union-PSSLU v. Canizares, 211
SCRA 361 (1992).

48. G.R. No. 166208, June 29, 2007, 526 SCRA 116, 125-126. (Underscoring
ours).

49. Landtex Industries and William Go v. Ayson, G.R. No. 150278, August 9,
2007, 529 SCRA 631, 652.

50. Id. at 652. IEaHSD

51. Bughaw, Jr. v. Treasure Island Industrial Corporation, G.R. No. 173151,
March 28, 2008, 550 SCRA 307, 322.

52. Respondents' Position Paper, records, pp. 72-81, 76.

53. Records, p. 79.

54. Supra note, 44, at 462.

55. G.R. No. 91086, May 8, 1990, 185 SCRA 177, cited in Malayang Samahan
ng mga Manggagawa sa M. Greenfield v. Ramos, supra note 45, at 462.
(Emphasis and underscoring supplied).

56. Id. at 188-189.

57. G.R. No. 158693, November 17, 2004, 442 SCRA 573.