Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 1 of 19

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
Republic of the Philippines acts of disloyalty, specifically, for allegedly campaigning, supporting and signing a petition for the certification of
Supreme Court a rival union, the Federation of Free Workers Union (FFW) before the 60-day freedom period and during the
Manila effectivity of the CBA. Such acts of disloyalty were construed to be a valid cause for termination under the terms
THIRD DIVISION 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
PICOP RESOURCES, G.R. No. 172666 Relations Department, issued a memorandum directing the employees concerned to explain within seventy-two
INCORPORATED (PRI), (72) hours why their employment should not be terminated due to alleged acts of disloyalty. Upon receiving their
Represented in this Petition by MR. WILFREDO D. explanation letters, Atty. Boniel endorsed the same to Atty. Fuentes who then requested the termination of 46
FUENTES, in his capacity as . employees found guilty of acts of disloyalty.
Senior Vice-President and
Resident Manager,
Petitioner, Promulgated: 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
- versus - on November 16, 2000.

RICARDO DEQUILLA, December 7, 2011 Enraged at what management did to them, private respondents filed a complaint before the NLRC Regional
ELMO PABILANDO, Arbitration Branch No. XIII, Butuan City, for Unfair Labor Practice and Illegal Dismissal with money claims,
CESAR ATIENZA and damages and attorneys fees.
ANICETO ORBETA, JR.,
and NAMAPRI-SPFI, LA Ruling
Respondents.
On June 9, 2001, after the parties submitted their respective position papers, the LA rendered a decision
X -----------------------------------------------------------------------------------------------------X declaring as illegal the termination of the private respondents. The dispositive portion of the LA Decision reads:
DECISION
MENDOZA, J.: WHEREFORE, premises considered, judgment is hereby entered:

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.
1. Declaring complainants dismissal illegal; and
2. Ordering respondents PRI and NAMPRI-SPFL to reinstate complainants
to their former or equivalent positions without loss of seniority rights
and to jointly and solidarily pay their backwages in the total amount
of ₱177,403.68, as shown in the computation, hereto attached and
marked as Annex A hereof, plus damages in the amount of ₱10,000.00
each and attorneys fees equivalent to 10% of the total monetary award.
SO ORDERED. [4]

NLRC Ruling
PICOP elevated the LA decision to the NLRC but its appeal was dismissed in the November 19,
2002 NLRC Resolution.[5] On motion for reconsideration, however, the NLRC issued another resolution, [6] dated
December 27, 2002, reversing and setting aside its November 19, 2002 Resolution, the dispositive portion of
which reads:
WHEREFORE, foregoing premises considered, the above resolution dated November
19, 2002, is Reversed and Set Aside. In lieu thereof, a new judgment is rendered DISMISSING
the above-entitled case for lack of merit.SO ORDERED.[7]
CA Ruling
Upon the denial of their motion for reconsideration, the private respondents brought the case to the CA.
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 ₱177,403.68, plus damages in
the amount of ₱10,000.00 each and attorneys fees equivalent to
10% of the total monetary award.SO ORDERED.[8]
The CA ruled, among others, that although private respondents signed an authorization for the filing of
the petition for certification election of a rival union, PICOP Democratic Trade Unionist-Federation of Free
Workers (FFW), such act was not a sufficient ground to terminate the employment of private respondents. It
explained:
Ruminating from the alleged violation of the CBA, We see no reason, sufficient and
compelling enough, to sustain the Public Respondents raison detre in overturning the Labor
Arbiters ruling in favor of the Petitioners. While it is true that Petitioners signed the
authorization in support of the Petition for certification election of FFW before the freedom
period, such act is not a sufficient ground to terminate the employment of the Petitioners in as
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 2 of 19
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
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 3 of 19
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
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 4 of 19
status quo and to continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period and/or until a new agreement is reached by the parties."
It claimed that they are still bound by the Union Security Clause of the CBA even after the
expiration of the CBA; hence, the need to terminate the employment of respondents.
Petitioner's reliance on Article 253 is misplaced.
The provision of Article 256 of the Labor Code is particularly enlightening. It reads:
Article 256. Representation issue in organized establishments. - In organized establishments,
when a verified petition questioning the majority status of the incumbent bargaining agent is filed
before the Department of Labor and Employment within the sixty-day period before the expiration of a
collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot
when the verified petition is supported by the written consent of at least twenty-five percent (25%) of
all the employees in the bargaining unit to ascertain the will of the employees in the appropriate
bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have
cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the
exclusive bargaining agent of all the workers in the unit. When an election which provides for three or
more choices results in no choice receiving a majority of the valid votes cast, a run-off election shall be
conducted between the labor unions receiving the two highest number of votes: Provided, That the total
number of votes for all contending unions is at least fifty per cent (50%) of the number of votes cast.
At the expiration of the freedom period, the employer shall continue to recognize the majority
status of the incumbent bargaining agent where no petition for certification election is filed.
Applying the same provision, it can be said that while it is incumbent for the employer to
continue to recognize the majority status of the incumbent bargaining agent even after the expiration of
the freedom period, they could only do so when no petition for certification election was filed. The
reason is, with a pending petition for certification, any such agreement entered into by management
with a labor organization is fraught with the risk that such a labor union may not be chosen thereafter
as the collective bargaining representative. The provision for status quo is conditioned on the fact that
no certification election was filed during the freedom period. Any other view would render nugatory the
clear statutory policy to favor certification election as the means of ascertaining the true expression of
the will of the workers as to which labor organization would represent them.
In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for
certification election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23,
2000. Therefore, following Article 256, at the expiration of the freedom period, PRI's obligation to
recognize NAMAPRI-SPFL as the incumbent bargaining agent does not hold true when petitions for
certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only
to the economic provisions of the CBA, and does not include representational aspect of the CBA. An
 Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 5 of 19

existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a Republic of the Philippines
representational issue, the status quo provision in so far as the need to await the creation of a new Supreme Court
agreement will not apply. Otherwise, it will create an absurd situation where the union members will be Manila
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 EN BANC
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. BANK OF THE PHILIPPINE ISLANDS, G.R. No. 164301

Time and again, we have ruled that we adhere to the policy of enhancing the welfare Petitioner Promulgated:
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 - versus - OCtober 19, 2011
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 BPI EMPLOYEES UNION-DAVAO CHAPTER-
election the employees are given the opportunity to make known of who shall have the right to FEDERATION OF UNIONS IN BPI UNIBANK,
represent them thereafter. Not only some, but all of them should have the right to do so. What Respondent.
is equally important is that everyone be given a democratic space in the bargaining unit x--------------------------------------------------
concerned.
RESOLUTION
We will emphasize anew that the power to dismiss is a normal prerogative of the LEONARDO-DE CASTRO, J.:
employer. This, however, is not without limitations. The employer is bound to exercise caution
in terminating the services of his employees especially so when it is made upon the request of In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for reconsideration [1] of
a labor union pursuant to the Collective Bargaining Agreement. Dismissals must not be our Decision dated August 10, 2010, holding that former employees of the Far East Bank and Trust Company
arbitrary and capricious. Due process must be observed in dismissing an employee, because it (FEBTC) absorbed by BPI pursuant to the two banks merger in 2000 were covered by the Union Shop Clause in
affects not only his position but also his means of livelihood. Employers should, therefore, the then existing collective bargaining agreement (CBA)[2] of BPI with respondent BPI Employees Union-Davao
respect and protect the rights of their employees, which include the right to labor. [17] Chapter-Federation of Unions in BPI Unibank (the Union).

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]
To recall, the Union Shop Clause involved in this long standing controversy provided, thus:
ARTICLE II
xxxx
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.[3] (Emphases supplied.)

Private respondents are also entitled to an award of attorneys fees equivalent to 10% of the total The bone of contention between the parties was whether or not the absorbed FEBTC employees fell
monetary award as they were compelled to litigate in order to seek redress for their illegal dismissal. within the definition of new employees under the Union Shop Clause, such that they may be required to join
respondent union and if they fail to do so, the Union may request BPI to terminate their employment, as the
WHEREFORE, the petition is DENIED.SO ORDERED. Union in fact did in the present case. Needless to state, BPI refused to accede to the Unions request. Although BPI

won the initial battle at the Voluntary Arbitrator level, BPIs position was rejected by the Court of Appeals which
ruled that the Voluntary Arbitrators interpretation of the Union Shop Clause was at war with the spirit and
rationale why the Labor Code allows the existence of such provision. On review with this Court, we upheld the
appellate courts ruling and disposed of the case as follows:
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.[4]
Notwithstanding our affirmation of the applicability of the Union Shop Clause to former FEBTC
employees, for reasons already extensively discussed in the August 10, 2010 Decision, even now BPI continues to
protest the inclusion of said employees in the Union Shop Clause.
In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the parties to the CBA clearly
intended to limit the application of the Union Shop Clause only to new employees who were hired as non-regular
employees but later attained regular status at some point after hiring. FEBTC employees cannot be considered
new employees as BPI merely stepped into the shoes of FEBTC as an employer purely as a consequence of the
merger.[5]
Petitioner likewise relies heavily on the dissenting opinions of our respected colleagues, Associate
Justices Antonio T. Carpio and Arturo D. Brion. From both dissenting opinions, petitioner derives its contention
that the situation of absorbed employees can be likened to old employees of BPI, insofar as their full tenure with
FEBTC was recognized by BPI and their salaries were maintained and safeguarded from diminution but such
absorbed employees cannot and should not be treated in exactly the same way as old BPI employees for there are
substantial differences between them.[6] Although petitioner admits that there are similarities between absorbed
and new employees, they insist there are marked differences between them as well. Thus, adopting Justice Brions
stance, petitioner contends that the absorbed FEBTC employees should be considered a sui generis group of
employees whose classification will not be duplicated until BPI has another merger where it would be the
surviving corporation.[7] Apparently borrowing from Justice Carpio, petitioner propounds that the Union Shop
Clause should be strictly construed since it purportedly curtails the right of the absorbed employees to abstain
from joining labor organizations.[8]
Pursuant to our directive, the Union filed its Comment[9] on the Motion for Reconsideration. In opposition to
petitioners arguments, the Union, in turn, adverts to our discussion in the August 10, 2010 Decision regarding the
voluntary nature of the merger between BPI and FEBTC, the lack of an express stipulation in the Articles of
Merger regarding the transfer of employment contracts to the surviving corporation, and the consensual nature
of employment contracts as valid bases for the conclusion that former FEBTC employees should be deemed new
employees.[10] The Union argues that the creation of employment relations between former FEBTC employees
and BPI (i.e., BPIs selection and engagement of former FEBTC employees, its payment of their wages, power of
dismissal and of control over the employees conduct) occurred after the merger, or to be more precise, after the
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 6 of 19
Securities and Exchange Commissions (SEC) approval of the merger.[11] The Union likewise points out that BPI
failed to offer any counterargument to the Courts reasoning that:
The rationale for upholding the validity of union shop clauses in a CBA, even if they
impinge upon the individual employee's right or freedom of association, is not to protect the
union for the union's 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. x x x.
x x x 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.[12]
While most of the arguments offered by BPI have already been thoroughly addressed in the August 10, 2010
Decision, we find that a qualification of our ruling is in order only with respect to the interpretation of the
provisions of the Articles of Merger and its implications on the former FEBTC employees security of tenure.
Taking a second look on this point, we have come to agree with Justice Brions view that it is more in keeping with
the dictates of social justice and the State policy of according full protection to labor to deem employment
contracts as automatically assumed by the surviving corporation in a merger, even in the absence of an express
stipulation in the articles of merger or the merger plan. In his dissenting opinion, Justice Brion reasoned that:
To my mind, due consideration of Section 80 of the Corporation Code, the
constitutionally declared policies on work, labor and employment, and the specific FEBTC-BPI
situation i.e., a merger with complete "body and soul" transfer of all that FEBTC embodied and
possessed and where both participating banks were willing (albeit by deed, not by their
written agreement) to provide for the affected human resources by recognizing continuity of
employment should point this Court to a declaration that in a complete merger situation
where there is total takeover by one corporation over another and there is silence in the
merger agreement on what the fate of the human resource complement shall be, the latter
should not be left in legal limbo and should be properly provided for, by compelling the
surviving entity to absorb these employees. This is what Section 80 of the Corporation Code
commands, as the surviving corporation has the legal obligation to assume all the obligations
and liabilities of the merged constituent corporation.
Not to be forgotten is that the affected employees managed, operated and worked on
the transferred assets and properties as their means of livelihood; they constituted a basic

component of their corporation during its existence. In a merger and consolidation situation,
they cannot be treated without consideration of the applicable constitutional declarations and
directives, or, worse, be simply disregarded. If they are so treated, it is up to this Court to read
and interpret the law so that they are treated in accordance with the legal requirements of
mergers and consolidation, read in light of the social justice, economic and social provisions of
our Constitution. Hence, there is a need for the surviving corporation to take responsibility for
the affected employees and to absorb them into its workforce where no appropriate provision
for the merged corporation's human resources component is made in the Merger Plan. [13]
By upholding the automatic assumption of the non-surviving corporations existing employment contracts by the
surviving corporation in a merger, the Court strengthens judicial protection of the right to security of tenure of
employees affected by a merger and avoids confusion regarding the status of their various benefits which were
among the chief objections of our dissenting colleagues. However, nothing in this Resolution shall impair the
right of an employer to terminate the employment of the absorbed employees for a lawful or authorized cause or
the right of such an employee to resign, retire or otherwise sever his employment, whether before or after the
merger, subject to existing contractual obligations. In this manner, Justice Brions theory of automatic assumption
may be reconciled with the majoritys concerns with the successor employers prerogative to choose its employees
and the prohibition against involuntary servitude.
Notwithstanding this concession, we find no reason to reverse our previous pronouncement that the absorbed
FEBTC employees are covered by the Union Shop Clause.
Even in our August 10, 2010 Decision, we already observed that the legal fiction in the law on mergers (that the
surviving corporation continues the corporate existence of the non-surviving corporation) is mainly a tool to
adjudicate the rights and obligations between and among the merged corporations and the persons that deal with
them.[14] Such a legal fiction cannot be unduly extended to an interpretation of a Union Shop Clause so as to defeat
its purpose under labor law. Hence, we stated in the Decision that:
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 petitioner's insistence that the
term "new employees" only refers to those who are initially hired as non-regular 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
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 7 of 19
Union Shop Clause is that upon the effectivity of the CBA, petitioner's 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.[15]
Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer as if the former had
been the employer of the latters employees from the beginning it must be emphasized that, in reality, the legal
consequences of the merger only occur at a specific date, i.e., upon its effectivity which is the date of approval of
the merger by the SEC. Thus, we observed in the Decision that BPI and FEBTC stipulated in the Articles of Merger
that they will both continue their respective business operations until the SEC issues the certificate of merger and
in the event no such certificate is issued, they shall hold each other blameless for the non-consummation of the
merger.[16] We likewise previously noted that BPI made its assignments of the former FEBTC employees effective
on April 10, 2000, or after the SEC approved the merger.[17] In other words, the obligation of BPI to pay the
salaries and benefits of the former FEBTC employees and its right of discipline and control over them only arose
with the effectivity of the merger.Concomitantly, the obligation of former FEBTC employees to render service to
BPI and their right to receive benefits from the latter also arose upon the effectivity of the merger.What is
material is that all of these legal consequences of the merger took place during the life of an existing and valid
CBA between BPI and the Union wherein they have mutually consented to include a Union Shop Clause.
From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers employees who (a)
enter the employ of BPI during the term of the CBA; (b) are part of the bargaining unit (defined in the CBA as
comprised of BPIs rank and file employees); and (c) become regular employees without distinguishing as to the
manner they acquire their regular status. Consequently, the number of such employees may adversely affect the
majority status of the Union and even its existence itself, as already amply explained in the Decision.
Indeed, there are differences between (a) new employees who are hired as probationary or temporary but later
regularized, and (b) new employees who, by virtue of a merger, are absorbed from another company as regular
and permanent from the beginning of their employment with the surviving corporation. It bears reiterating here
that these differences are too insubstantial to warrant the exclusion of the absorbed employees from the
application of the Union Shop Clause. In the Decision, we noted that:
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.[18]
Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop Clause would dilute
its efficacy and put the certified union that is supposedly being protected thereby at the mercy of
management. For if the former FEBTC employees had no say in the merger of its former employer with another
bank, as petitioner BPI repeatedly decries on their behalf, the Union likewise could not prevent BPI from
proceeding with the merger which undisputedly affected the number of employees in the bargaining unit that the
Union represents and may negatively impact on the Unions majority status. In this instance, we should be guided
by the principle that courts must place a practical and realistic construction upon a CBA, giving due consideration
to the context in which it is negotiated and purpose which it is intended to serve.[19]
We now come to the question: Does our affirmance of our ruling that former FEBTC employees
absorbed by BPI are covered by the Union Shop Clause violate their right to security of tenure which we
expressly upheld in this Resolution? We answer in the negative.
In Rance v. National Labor Relations Commission,[20] we held that:
It is the policy of the state to assure the right of workers to "security of tenure"
(Article XIII, Sec. 3 of the New Constitution, Section 9, Article II of the 1973 Constitution). The
guarantee is an act of social justice. When a person has no property, his job may possibly be his
only possession or means of livelihood. Therefore, he should be protected against any
arbitrary deprivation of his job. Article 280 of the Labor Code has construed security of
tenure as meaning that "the employer shall not terminate the services of an employee
except for a just cause or when authorized by" the Code. x x x (Emphasis supplied.)
We have also previously held that the fundamental guarantee of security of tenure and due process
dictates that no worker shall be dismissed except for a just and authorized cause provided by law and after due
process is observed.[21] Even as we now recognize the right to continuous, unbroken employment of workers who
are absorbed into a new company pursuant to a merger, it is but logical that their employment may be
terminated for any causes provided for under the law or in jurisprudence without violating their right to security
of tenure. As Justice Carpio discussed in his dissenting opinion, it is well-settled that termination of employment
by virtue of a union security clause embodied in a CBA is recognized in our jurisdiction.[22] In Del Monte
Philippines, Inc. v. Saldivar,[23] we explained the rationale for this policy in this wise:
Article 279 of the Labor Code ordains that "in cases of regular employment, the
employer shall not terminate the services of an employee except for a just cause or when
authorized by [Title I, Book Six of the Labor Code]." Admittedly, the enforcement of a
closed-shop or union security provision in the CBA as a ground for termination finds no
extension within any of the provisions under Title I, Book Six of the Labor Code. Yet
jurisprudence has consistently recognized, thus: "It is State policy to promote
unionism to enable workers to negotiate with management on an even playing field and with
more persuasiveness than if they were to individually and separately bargain with the
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 8 of 19
employer. For this reason, the law has allowed stipulations for 'union shop' and 'closed shop'
as means of encouraging workers to join and support the union of their choice in the
protection of their rights and interests vis-a-vis the employer."[24] (Emphasis supplied.)
Although it is accepted that non-compliance with a union security clause is a valid ground for an
employees dismissal, jurisprudence dictates that such a dismissal must still be done in accordance with due
process. This much we decreed in General Milling Corporation v. Casio,[25] to wit:
The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v.
Ramos 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.
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 employer's decision to dismiss him. This procedure is mandatory and its
absence taints the dismissal with illegality.
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. x x x[26] (Emphases supplied.)
In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty (30)-day period
from notice of finality of the Decision given to the affected FEBTC employees to join the Union before the latter
can request petitioner to terminate the formers employment, petitioner must still accord said employees the twin
 Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 9 of 19

requirements of notice and hearing on the possibility that they may have other justifications for not joining the This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the reversal of the
Union. Similar to our August 10, 2010 Decision, we reiterate that our ruling presupposes there has been no Decision[1] dated July 25, 2003 and Resolution[2] dated October 23, 2003 of the Court of Appeals in CA-G.R. SP No.
material change in the situation of the parties in the interim. 71760, setting aside the Resolutions dated October 8, 2001 [3] and April 29, 2002[4] of the National Labor
Relations Commission in NLRC CA No. M-006309-2001 and reinstating the Decision[5] dated March 16, 2001 of
WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August 10, 2010 the Labor Arbiter.
is AFFIRMED, subject to the qualifications that:
The facts, as culled from the records, are as follows:
(a) Petitioner is deemed to have assumed the employment contracts of the Far East Bank and Trust
Company (FEBTC) employees upon effectivity of the merger withoutbreak in the continuity of their On February 13, 2001, respondents Anacleto Taeca, Loreto Uriarte, Joseph Balgoa, Jaime Campos, Geremias Tato,
employment, even without express stipulation in the Articles of Merger; and Martiniano Magayon, Manuel Abucay and fourteen (14) others filed a Complaint for unfair labor practice, illegal
dismissal and money claims against petitioner PICOP Resources, Incorporated (PRI), Wilfredo Fuentes (in his
(b) Aside from the thirty (30) days, counted from notice of finality of the August 10, 2010 Decision, capacity as PRI's Vice President/Resident Manager), Atty. Romero Boniel (in his capacity as PRI's Manager of
given to former FEBTC employees to join the respondent, said employees shall be accorded full procedural due Legal/Labor), Southern Philippines Federation of Labor (SPFL), Atty. Wilbur T. Fuentes (in his capacity as
process before their employment may be terminated.SO ORDERED. Secretary General of SPFL), Pascasio Trugillo (in his capacity as Local President of Nagkahiusang Mamumuo sa
PICOP Resources, Inc.- SPFL [NAMAPRI-SPFL]) and Atty. Proculo Fuentes, Jr.[6] (in his capacity as National President
Republic of the Philippines of SPFL).
Supreme Court
Manila Respondents were regular rank-and-file employees of PRI and bona fide members of Nagkahiusang
SECOND DIVISION Mamumuo sa PRI Southern Philippines Federation of Labor (NAMAPRI-SPFL), which is the collective bargaining
agent for the rank-and-file employees of petitioner PRI.
PICOP RESOURCES, INCORPORATED (PRI), G.R. No. 160828
Petitioner, PRI has a collective bargaining agreement (CBA) with NAMAPRI-SPFL for a period of five (5) years from
May 22, 1995 until May 22, 2000.
- versus
The CBA contained the following union security provisions:
ANACLETO L. TAECA, GEREMIAS S. TATO, JAIME N.
CAMPOS, MARTINIANO A. MAGAYON, JOSEPH B. Article II- Union Security and Check-Off
BALGOA, MANUEL G. ABUCAY, MOISES M.
ALBARAN,MARGARITO G. ALICANTE, JERRY ROMEO T. Promulgated: Section 6. Maintenance of membership.
AVILA, LORENZO D. CANON, RAUL P. DUERO, DANILO Y.
ILAN, MANUEL M. MATURAN, JR., LUISITO R. POPERA, 6.1 All employees within the appropriate bargaining unit who are members of the
CLEMENTINO C. QUIMAN, ROBERTO Q. SILOT, UNION at the time of the signing of this AGREEMENT shall, as a condition of continued
CHARLITO D. SINDAY, REMBERT B. SUZONALLAN J. August 9, 2010 employment by the COMPANY, maintain their membership in the UNION in good standing
TRIMIDAL, and NAMAPRI-SPFL, during the effectivity of this AGREEMENT.

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

PERALTA, J.:

6.3 The COMPANY, upon the written request of the UNION and after compliance
with the requirements of the New Labor Code, shall give notice of termination of services
of any employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this
Article, but it assumes no obligation to discharge any employee if it has reasonable grounds to
believe either that membership in the UNION was not available to the employee on the same
terms and conditions generally applicable to other members, or that membership was denied
or terminated for reasons other than voluntary resignation or non-payment of regular union
dues. Separation under the Section is understood to be for cause, consequently, the dismissed
employee is not entitled to separation benefits provided under the New Labor Code and in this
AGREEMENT.[7]
On May 16, 2000, Atty. Proculo P. Fuentes (Atty. Fuentes) sent a letter to the management of PRI
demanding the termination of employees who allegedly campaigned for, supported and signed the Petition for
Certification Election of the Federation of Free Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-
SPFL considered said act of campaigning for and signing the petition for certification election of FFW as an act of
disloyalty and a valid basis for termination for a cause in accordance with its Constitution and By-Laws, and the
terms and conditions of the CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.
In a letter dated May 23, 2000, Mr. Pascasio Trugillo requested the management of PRI to investigate
those union members who signed the Petition for Certification Election of FFW during the existence of their CBA.
NAMAPRI-SPFL, likewise, furnished PRI with machine copy of the authorization letters dated March 19, 20 and
21, 2000, which contained the names and signatures of employees.
Acting on the May 16 and May 23, 2000 letters of the NAMAPRI-SPFL, Atty. Romero A. Boniel issued a
memorandum addressed to the concerned employees to explain in writing within 72 hours why their
employment should not be terminated due to acts of disloyalty as alleged by their Union.
Within the period from May 26 to June 2, 2000, a number of employees who were served explanation
memorandum submitted their explanation, while some did not.
In a letter dated June 2, 2000, Atty. Boniel endorsed the explanation letters of the employees to Atty.
Fuentes for evaluation and final disposition in accordance with the CBA.
After evaluation, in a letter dated July 12, 2000, Atty. Fuentes advised the management of PRI that the
Union found the member's explanations to be unsatisfactory. He reiterated the demand for termination, but only
of 46 member-employees, including respondents.
On October 16, 2000, PRI served notices of termination for causes to the 31 out of the 46 employees
whom NAMAPRIL-SPFL sought to be terminated on the ground of acts of disloyalty committed against it when
respondents allegedly supported and signed the Petition for Certification Election of FFW before the freedom
period during the effectivity of the CBA. A Notice dated October 21, 2000 was also served on the Department of
Labor and Employment Office (DOLE), Caraga Region.
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 10 of 19
Respondents then accused PRI of Unfair Labor Practice punishable under Article 248 (a), (b), (c), (d)
and (e) of the Labor Code, while Atty. Fuentes and Wilbur T. Fuentes and Pascasio Trujillo were accused of
violating Article 248 (a) and (b) of the Labor Code.
Respondents alleged that none of them ever withdrew their membership from NAMAPRI-SPFL or submitted to
PRI any union dues and check-off disauthorizations against NAMAPRI-SPFL. They claimed that they continue to
remain on record as bona fide members of NAMAPRI-SPFL. They pointed out that a patent manifestation of ones
disloyalty would have been the explicit resignation or withdrawal of membership from the Union accompanied
by an advice to management to discontinue union dues and check-off deductions. They insisted that mere
affixation of signature on such authorization to file a petition for certification election was not per se an act of
disloyalty. They claimed that while it may be true that they signed the said authorization before the start of the
freedom period, the petition of FFW was only filed with the DOLE on May 18, 2000, or 58 days after the start of
the freedom period.
Respondents maintained that their acts of signing the authorization signifying support to the filing of a Petition
for Certification Election of FFW was merely prompted by their desire to have a certification election among the
rank-and-file employees of PRI with hopes of a CBA negotiation in due time; and not to cause the downfall of
NAMAPRI-SPFL.
Furthermore, respondents contended that there was lack of procedural due process. Both the letter dated May
16, 2000 of Atty. Fuentes and the follow-up letter dated May 23, 2000 of Trujillo addressed to PRI did not
mention their names. Respondents stressed that NAMAPRI-SPFL merely requested PRI to investigate union
members who supported the Petition for Certification Election of FFW. Respondents claimed that they should
have been summoned individually, confronted with the accusation and investigated accordingly and from where
the Union may base its findings of disloyalty and, thereafter, recommend to management the termination for
causes.
Respondents, likewise, argued that at the time NAMAPRI-SPFL demanded their termination, it was no longer the
bargaining representative of the rank-and-file workers of PRI, because the CBA had already expired on May 22,
2000. Hence, there could be no justification in PRIs act of dismissing respondents due to acts of disloyalty.
Respondents asserted that the act of PRI, Wilfredo Fuentes and Atty. Boniel in giving in to the wishes of the Union
in discharging them on the ground of disloyalty to the Union amounted to interference with, restraint or coercion
of respondents exercise of their right to self-organization. The act indirectly required petitioners to support and
maintain their membership with NAMAPRI-SPFL as a condition for their continued employment. The acts of
NAMAPRI-SPFL, Atty. Fuentes and Trujillo amounted to actual restraint and coercion of the petitioners in the
exercise of their rights to self-organization and constituted acts of unfair labor practice.
In a Decision[8] dated March 16, 2001, the Labor Arbiter declared the respondents dismissal to be illegal
and ordered PRI to reinstate respondents to their former or equivalent positions without loss of seniority rights
and to jointly and solidarily pay their backwages. The dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby entered:
1. Declaring complainants dismissal illegal; and
2. Ordering respondents Picop Resources Inc. (PRI) and NAMAPRI-SPFL to
reinstate complainants to their former or equivalent positions without loss of seniority rights and
to jointly and solidarily pay their backwages in the total amount of P420,339.30 as shown in the
said Annex A plus damages in the amount of P10,000.00 each, or a total of P210,000.00 and
attorneys fees equivalent to 10% of the total monetary award.SO ORDERED.[9]
PRI and NAMAPRI-SPFL appealed to the National Labor Relations Commission (NLRC), which reversed the
decision of the Labor Arbiter; thus, declaring the dismissal of respondents from employment as legal.
Respondents filed a motion for reconsideration, but it was denied on April 29, 2001 for lack of merit.
Unsatisfied, respondents filed a petition for certiorari under Rule 65 before the Court of Appeals and sought the
nullification of the Resolution of the NLRC dated October 8, 2001 which reversed the Decision dated March 16.
2001 of Labor Arbiter and the Resolution dated April 29, 2002, which denied respondents motion for
reconsideration.
On July 25, 2003, the Court of Appeals reversed and set aside the assailed Resolutions of the NLRC and reinstated
the Decision dated March 16, 2001 of the Labor Arbiter.
Thus, before this Court, PRI, as petitioner, raised the following issues:
I condition for continued employment until they are promoted or transferred out of the bargaining unit, or the
WHETHER AN EXISTING COLLECTIVELY (sic) BARGAINING AGREEMENT (CBA) CAN BE
GIVEN ITS FULL FORCE AND EFFECT IN ALL ITS TERMS AND CONDITION INCLUDING ITS
UNION SECURITY CLAUSE, EVEN BEYOND THE 5-YEAR PERIOD WHEN NO NEW CBA HAS YET
BEEN ENTERED INTO.
II
WHETHER OR NOT AN HONEST ERROR IN THE INTERPRETATION AND/OR CONCLUSION OF
LAW FALL WITHIN THE AMBIT OF THE EXTRAORDINARY REMEDY OF CERTIORARI UNDER
RULE 65, REVISED RULES OF COURT.[10]
We will first delve on the technical issue raised.
PRI perceived a patent error in the mode of appeal elected by respondents for the purpose of assailing the
decision of the NLRC. It claimed that assuming that the NLRC erred in its judgment on the legal issues, its error, if
any, is not tantamount to abuse of discretion falling within the ambit of Rule 65.
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 11 of 19
Petitioner is mistaken.
The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled
as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission.[11] This Court held
that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of
Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the
hierarchy of courts.[12] Moreover, it is already settled that under Section 9 ofBatas Pambansa Blg. 129, as
amended by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for
the purpose of Section Nine ofBatas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of
1980), the Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions for Certiorari is
specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. [13]
We now come to the main issue of whether there was just cause to terminate the employment of
respondents.
PRI argued that the dismissal of the respondents was valid and legal. It claimed to have acted in good faith at the
instance of the incumbent union pursuant to the Union Security Clause of the CBA.
Citing Article 253 of the Labor Code,[14] PRI contends that as parties to the CBA, they are enjoined to keep
the status quo and continue in full force and effect the terms and conditions of the existing CBA during the 60-day
period and/or until a new agreement is reached by the parties.
Petitioner's argument is untenable.
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
agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by
agreement between the employer and his employees or their representatives, no person may be employed in any
or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which the employees in
interest are a part.[15]
However, in terminating the employment of an employee by enforcing the union security clause, the
employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is
requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to
support the decision of the union to expel the employee from the union. These requisites constitute just cause for
terminating an employee based on the union security provision of the CBA.[16]

As to the first requisite, there is no question that the CBA between PRI and respondents included a
union security clause, specifically, a maintenance of membership as stipulated in Sections 6 of Article II, Union
Security and Check-Off. Following the same provision, PRI, upon written request from the Union, can indeed
terminate the employment of the employee who failed to maintain its good standing as a union member.
Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2) occasions demanded from PRI, in
their letters dated May 16 and 23, 2000, to terminate the employment of respondents due to their acts of
disloyalty to the Union.
However, as to the third requisite, we find that there is no sufficient evidence to support the decision of
PRI to terminate the employment of the respondents.
PRI alleged that respondents were terminated from employment based on the alleged acts of disloyalty they
committed when they signed an authorization for the Federation of Free Workers (FFW) to file a Petition for
Certification Election among all rank-and-file employees of PRI. It contends that the acts of respondents are a
violation of the Union Security Clause, as provided in their Collective Bargaining Agreement.
We are unconvinced.
We are in consonance with the Court of Appeals when it held that the mere signing of the authorization in
support of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the freedom period, is
not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually
filed during the freedom period. Nothing in the records would show that respondents failed to maintain their
membership in good standing in the Union. Respondents did not resign or withdraw their membership from the
Union to which they belong. Respondents continued to pay their union dues and never joined the FFW.
Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization
letter to file a petition for certification election as they signed it outside the freedom period. However, we are
constrained to believe that an authorization letter to file a petition for certification election is different from an
actual Petition for Certification Election. Likewise, as per records, it was clear that the actual Petition for
Certification Election of FFW was filed only on May 18, 2000.[17] Thus, it was within the ambit of the freedom
period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the
filing of a petition for certification election outside the 60-day freedom period.[18] This is not the situation in this
case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of
the petition for certification election, or an exercise of respondents right to self-organization.
Moreover, PRI anchored their decision to terminate respondents employment on Article 253 of the
Labor Code which states that it shall be the duty of both parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during the 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.
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 12 of 19
The provision of Article 256 of the Labor Code is particularly enlightening. It reads:
Article 256. Representation issue in organized establishments. - In organized
establishments, when a verified petition questioning the majority status of the incumbent
bargaining agent is filed before the Department of Labor and Employment within the sixty-day
period before the expiration of a collective bargaining agreement, the Med-Arbiter shall
automatically order an election by secret ballot when the verified petition is supported by the
written consent of at least twenty-five percent (25%) of all the employees in the bargaining
unit to ascertain the will of the employees in the appropriate bargaining unit. To have a valid
election, at least a majority of all eligible voters in the unit must have cast their votes. The
labor union receiving the majority of the valid votes cast shall be certified as the exclusive
bargaining agent of all the workers in the unit. When an election which provides for three or
more choices results in no choice receiving a majority of the valid votes cast, a run-off election
shall be conducted between the labor unions receiving the two highest number of
votes: Provided, That the total number of votes for all contending unions is at least fifty per
cent (50%) of the number of votes cast.
At the expiration of the freedom period, the employer shall continue to recognize
the majority status of the incumbent bargaining agent where no petition for certification
election is filed.[19]
Applying the same provision, it can be said that while it is incumbent for the employer to continue to
recognize the majority status of the incumbent bargaining agent even after the expiration of the freedom period,
they could only do so when no petition for certification election was filed. The reason is, with a pending petition
for certification, any such agreement entered into by management with a labor organization is fraught with the
risk that such a labor union may not be chosen thereafter as the collective bargaining representative.[20] The
provision for status quo is conditioned on the fact that no certification election was filed during the freedom
period. Any other view would render nugatory the clear statutory policy to favor certification election as the
means of ascertaining the true expression of the will of the workers as to which labor organization would
represent them.[21]
In the instant case, four (4) petitions were filed as early as May 12, 2000. In fact, a petition for certification
election was already ordered by the Med-Arbiter of DOLE Caraga Region on August 23, 2000.[22] Therefore,
following Article 256, at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL as the
incumbent bargaining agent does not hold true when petitions for certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic renewal pertains only to the economic
provisions of the CBA, and does not include representational aspect of the CBA. An existing CBA cannot constitute
a bar to a filing of a petition for certification election. When there is a representational issue,
the status quo provision in so far as the need to await the creation of a new agreement will not apply. Otherwise,
it will create an absurd situation where the union members will be forced to maintain membership by virtue of
the union security clause existing under the CBA and, thereafter, support another union when filing a petition for
 Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 13 of 19

certification election. If we apply it, there will always be an issue of disloyalty whenever the employees exercise FIRST DIVISION
their right to self-organization. The holding of a certification election is a statutory policy that should not be
circumvented,[23] or compromised.
GENERAL MILLING CORPORATION, G.R. No. 149552
Time and again, we have ruled that we adhere to the policy of enhancing the welfare of the workers. Petitioner,
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 - versus -
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 ERNESTO CASIO, ROLANDO IGOT, MARIO
represent them thereafter. Not only some, but all of them should have the right to do so. What is equally FAMADOR, NELSON LIM, FELICISIMO BOOC,
important is that everyone be given a democratic space in the bargaining unit concerned. [24] PROCOPIO OBREGON, JR., and ANTONIO
ANINIPOK,
We will emphasize anew that the power to dismiss is a normal prerogative of the employer. This, however, is not Respondents,
without limitations. The employer is bound to exercise caution in terminating the services of his employees and
especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. VIRGILIO PINO, PAULINO CABREROS, MA. LUNA
Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee, P. JUMAOAS, DOMINADOR BOOC, FIDEL VALLE, Promulgated:
because it affects not only his position but also his means of livelihood. Employers should, therefore, respect and BARTOLOME AUMAN, REMEGIO CABANTAN,
protect the rights of their employees, which include the right to labor.[25] LORETO GONZAGA, EDILBERTO MENDOZA and
ANTONIO PANILAG,
An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and Respondents.
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 March 10, 2010
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 x---------------------------------------------------x
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 DECISION
up to the finality of the decision. Moreover, respondents, having been compelled to litigate in order to seek LEONARDO-DE CASTRO, J.:
redress for their illegal dismissal, are entitled to the award of attorneys fees equivalent to 10% of the total
monetary award.[26] 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.
WHEREFORE, the petition is DENIED. The Decision dated July 25, 2003 and the Resolution dated October 40280, setting aside the Voluntary Arbitration Award[3] dated August 16, 1995 of the National Conciliation and
23, 2003 of the Court of Appeals in CA-G.R. SP No. 71760, which set aside the Resolutions dated October 8, Mediation Board (NCMB), Cebu City, in VA Case No. AC 389-01-01-95. Voluntary Arbitrator Alice K. Canonoy-
2001 and April 29, 2002 of the National Labor Relations Commission in NLRC CA No. M-006309-2001, Morada (Canonoy-Morada) dismissed the Complaint filed by respondents Ernesto Casio, Rolando Igot, Mario
are AFFIRMEDaccordingly. Respondents are hereby awarded full backwages and other allowances, without Famador, Nelson Lim, Felicisimo Booc, Procopio Obregon, Jr. and Antonio Aninipok (Casio, et al.) against
qualifications and diminutions, computed from the time they were illegally di smissed up to the time they petitioner General Milling Corporation (GMC) for unfair labor practice, illegal suspension, illegal dismissal, and
are actually reinstated. Let this case be remanded to the Labor Arbiter for proper computation of the full payment of moral and exemplary damages.
backwages due respondents, in accordance with Article 279 of the Labor Code, as expeditiously as
possible.SO ORDERED. The labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter (Local 31) was the sole and
exclusive bargaining agent of the rank and file employees of GMC in Lapu-Lapu City. On November 30, 1991, IBM-
Local 31, through its officers and board members, namely, respondents Virgilio Pino,[4] Paulino Cabreros, Ma.
Luna P. Jumaoas, Dominador Booc, Bartolome Auman, Remegio Cabantan, Fidel Valle, Loreto Gonzaga, Edilberto

Mendoza and Antonio Panilag (Pino, et al.), entered into a Collective Bargaining Agreement (CBA) with GMC. The
effectivity of the said CBA was retroactive to August 1, 1991.[5]
The CBA contained the following union security provisions:
Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers employed by the
Company with the exception of those who are specifically excluded by law and by the terms of
this Agreement must be members in good standing of the Union within thirty (30) days upon
the signing of this agreement and shall maintain such membership in good standing thereof as
a condition of their employment or continued employment.
Section 6. The Company, upon written request of the Union, shall terminate the services of any
employee/worker who fails to fulfill the conditions set forth in Sections 3 and 4 thereof,
subject however, to the provisions of the Labor Laws of the Philippines and their
Implementing Rules and Regulations. The Union shall absolve the Company from any and all
liabilities, pecuniary or otherwise, and responsibilities to any employee or worker who is
dismissed or terminated in pursuant thereof.[6]
Casio, et al. were regular employees of GMC with daily earnings ranging from P173.75 to P201.50, and
length of service varying from eight to 25 years.[7] Casio was elected IBM-Local 31 President for a three-year term
in June 1991, while his co-respondents were union shop stewards.
In a letter[8] dated February 24, 1992, Rodolfo Gabiana (Gabiana), the IBM Regional Director for Visayas and
Mindanao, furnished Casio, et al. with copies of the Affidavits of GMC employees Basilio Inoc and Juan Potot,
charging Casio, et al. with acts inimical to the interest of the union. Through the same letter, Gabiana gave
Casio, et al. three days from receipt thereof within which to file their answers or counter-affidavits. However,
Casio, et al. refused to acknowledge receipt of Gabianas letter.
Subsequently, on February 29, 1992, Pino, et al., as officers and members of the IBM-Local 31, issued a
Resolution[9] expelling Casio, et al. from the union. Pertinent portions of the Resolution are reproduced below:
Whereas, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok,
Mario Famador, Nelson Lim and Ernesto Casio, through Ernesto Casio have refused to
acknowledge receipt of the letter-complaint dated February 24, 1992, requiring them to file
their answer[s] or counter-affidavits as against the charge of acts inimical to the interest of the
union and that in view of such refusal to acknowledge receipt, a copy of said letter complaint
was dropped or left in front of E. Casio;
Whereas, the three (3)[-]day period given to file their answer or counter-affidavit
have already lapsed prompting the union Board to investigate the charge ex parte;
Whereas, after such ex parte investigation the said charge has been more than
adequately substantiated by the affidavits/witnesses and documentary exhibits presented.
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 14 of 19
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:
Employee Date Hired Rate/Month Service Total
(1/2 mo/yr
of service)
Casio April 24/74 P2,636.29 x 18 years = P47,453.22
Igot May 1980 P2,472.75 x 12 years = P29,673.00
Famador Feb. 1977 P2,498.92 x 15 years = P37,483.80
Lim Aug. 1975 P2,466.21 x 17 years = P41,925.57
Booc Aug. 1978 P2,498.92 x 14 years = P34,984.88
Obregon May 1984 P2,273.23 x 08 years = P18,185.84
Aninipok Sept. 1967 P2,616.01 x 25 years = P65,400.25
The attorneys fees for [Casio, et al.s] counsel shall be ten percent (10%) of the total amount
due them; and shall be shared proportionately by all of the same [Casio, et al.].
All other claims are hereby denied.[17]
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 15 of 19
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.
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 16 of 19
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
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 17 of 19
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
Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 18 of 19
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.
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]
 Labor Relations Set VI *Picop v Dequilla to GMC v Casio * Page 19 of 19

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.)
members from service. The failure of GMC to carry out this obligation makes it liable for illegal dismissal of
Casio, et al.
In Malayang Samahan ng mga Manggagawa sa M. Greenfield,[37] the Court held that notwithstanding the
fact that the dismissal was at the instance of the federation and that the federation undertook to hold the
company free from any liability resulting from the dismissal of several employees, the company may still be held
liable if it was remiss in its duty to accord the would-be dismissed employees their right to be heard on the
matter.
An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and
reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In awarding separation
pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to
one month salary for every year of service. Under Republic Act No. 6715, employees who are illegally dismissed
are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed
from the time their actual compensation was withheld from them up to the time of their actual reinstatement but
if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination
up to the finality of the decision. Thus, Casio, et al. are entitled to backwages and separation pay considering that
reinstatement is no longer possible because the positions they previously occupied are no longer existing, as
declared by GMC.[38]
Casio, et al., having been compelled to litigate in order to seek redress for their illegal dismissal, are
entitled to the award of attorneys fees equivalent to 10% of the total monetary award.[39]
WHEREFORE, the instant petition is hereby DENIED. The assailed decision of the Court of Appeals dated March
30, 2001 in CA-G.R. SP No. 40280 is AFFIRMED.SO ORDERED.

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