G.R. No.

149552 : March 10, 2010

GENERAL MILLING CORPORATION, Petitioner, v. ERNESTO CASIO et. al, Respondents.

I. Facts:

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. On November 30, 1991, IBM-Local 31, through its
officers and board members entered into a CBA with GMC. The effectivity of the said CBA was retroactive to
August 1, 1991.

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 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 and their IRR. 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.

Casio, et al. were regular employees of GMC. 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 dated February 1992, Rodolfo Gabiana, the IBM Regional Director, furnished Casio, et al. with
copies of the Affidavits of 2 GMC employees, 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 Gabiana’s letter.

Subsequently, Pino, et al., as officers and members of the IBM-Local 31, issued a Resolution expelling Casio, et
al. from the union.

Gabiana then wrote a letter 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. 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 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 ULP against GMC.

Pressured by the threatened filing of a suit for ULP, GMC acceded to Gabiana’s request to terminate the
employment of Casio, et al.
Casio, et al., in the name of IBM-Local 31, filed a Notice of Strike with the NCMB. Casio, et al. alleged as
bases for the strike the illegal dismissal of union officers and members, discrimination, coercion, and union
busting. The NCMB-held conciliation proceedings, but no settlement was reached among the parties.

Casio, et al. next sought recourse from the NLRC by filing 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.

Voluntary Arbitrator Canonoy-Morada rendered a Voluntary Arbitration Award dismissing the Complaint for
lack of merit, but granting separation pay and attorneys fees to Casio, et al. Dissatisfied with the Voluntary
Arbitration Award, Casio, et al. went to the CA. CA set aside the Voluntary Arbitration Award. CA 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.

II. Issue: W/N Casio, et al. were illegally dismissed. YES

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. The Court is therefore constrained to take a
second look at the evidence on record considering that the factual findings of the VA and the CA are
contradictory.

There are two aspects which characterize the concept of due process under the Labor Code: one is substantive
whether the termination of employment was based on the provision of the LC or in accordance with the
prevailing jurisprudence; the other is procedural the manner in which the dismissal was effected.

After a thorough review of the records, the Court agrees with the CS. 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. NLRC, 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.

"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.

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.

(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.

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-à-vis the
employer.

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."

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.

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 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.

It is apparent from the letter that GMC terminated the employment of Casio, et al. relying upon the Resolution
of Pino, et al. expelling Casio, et al. from IBM-Local 31; Gabiana’s Letters 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.

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, expelling Casio, et al. from the
union, was that "a copy of the said letter complaint was dropped or left in front of E. Casio." 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. It’s worthy to
note that Casio, et al. were expelled only five days after the issuance of the letter-complaint against them. The
Court cannot find proof on record when the three-day period, within which Casio, et al. was supposed to file
their answer or counter-affidavits, started to run and had expired. The Court is likewise unconvinced that the
said three-day period was sufficient for Casio, et al. to prepare their defenses and evidence to refute the serious
charges against them.

Contrary to the position of GMC, the acts of Pino, et al. as officers and board members of IBM-Local 31, in
expelling Casio, et al. from the union, do not enjoy the presumption of regularity in the performance of official
duties, because the presumption applies only to public officers from the highest to the lowest in the service of
the Government, departments, bureaus, offices, and/or its political subdivisions.

More importantly, in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc., and in Malayang
Samahan ng mga Manggagawa sa M. Greenfield v. Ramos  the Court issued the following reminder to
employers:

“The employer is bound to exercise caution in terminating the services of his employees especially so when it is
made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Dismissals must not
be arbitrary and capricious. Due process must be observed in dismissing an employee because it affects not only
his position but also his means of livelihood.”

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.

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.

In the case at bar, Casio, et al. did not receive any other communication from GMC, except the written notice of
termination. 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.

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