Employee who violates the union security clause provision in the CBA may be validly dismissed. Due process must be observed by the employer.

Thus, the SC held in the following case:

Slord Development Corporation vs. Noya
G.R. No. 232687, February 4, 2019

Union Security Clause; Valid Dismissal for Violation of the Union Security Clause Provision; Parallel Treatment Between Violation of Union Security Clause and Just Cause; Procedural Due Process in Termination Due to Violation of Union Security Clause; Freedom Period; Member-Employee Cannot Organize Another Union Outside of the Freedom Period


Respondent Benerando M. Noya (Noya) was employed as a welder by Petitionere Slord Development Corporation (Slord). Noya’s employment was covered by a CBA effective April 14, 2009 to April 15, 2014 between Slord’s and Nagkakaisang Lakas ng Manggagawa-Katipunan (NLM-Katipunan), the company’s sole and exclusive bargaining agent for all the regular rank-and-file employees.

Among its provisions was a union security clause which states as cause for dismissal of any new employee covered by the bargaining unit, who attains regular status in the company but fails to join the union mentioned and any union member who is expelled from the union or fails to maintain their membership in the union.

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Slord claimed that sometime in December 2013, Noya asked several employees to affix their signatures on a blank sheet of yellow paper for the purpose of forming a new union, prompting the president of NLM-Katipunan to file expulsion proceedings against him for disloyalty.

Subsequently, Noya organized a new union named the Bantay Manggagawa sa SLORD Development Corporation (BMSDC), which he registered with the Department of Labor and Employment (DOLE).

In the ensuing investigation, Noya failed to appear and participate at the scheduled hearings before the ·union. Thus, NLM-Katipunan resolved, with the ratification of its members, to expel Noya on the ground of disloyalty. Accordingly, a notice of expulsion was issued by NLM-Katipunan to Noya. Subsequently, a letter was sent by NLM-Katipunan to Slord, demanding his termination from employment pursuant to the union security clause of the CBA.

After notifying Noya of the union’s decision to expel him and showing him all the documents attached to the union’s demand for his dismissal, Noya’s employment was terminated.

Consequently, Noya filed a complaint for illegal dismissal, unfair labor practice, and illegal deduction against Slord before the National Labor Relations Commission (NLRC), asserting that he did not violate any CBA provision since he validly organized BMSDC during the freedom period.

LA Ruling:

The LA dismissed the case for lack of merit, ruling that Noya’s dismissal was neither illegal nor an unfair labor practice.

Among others, the LA held that Slord was duty-bound to terminate Noya’s employment after having been expelled by NLM-Katipunan for organizing a rival union. Notably, NLM-Katipunan has a valid closed shop agreement in the CBA that required the members to remain with the union as a condition for continued employment.

Aggrieved, Noya appealed to the NLRC.

NLRC Ruling:

The NLRC affirmed the LA Decision with modification, ordering Slord to pay Noya P10,000.00 as nominal damages.

In so ruling, the NLRC held that while Noya had committed an act of disloyalty that caused his expulsion from NLM-Katipunan and subsequent dismissal from work pursuant to the closed shop agreement provision of the CBA, Slord failed to provide Noya ample opportunity to defend himself through written notices and subsequent hearing.

Dissatisfied, Noya moved for reconsideration but the same was denied. Hence, Noya elevated the matter to the CA via a petition for certiorari.

CA Ruling:

The CA granted Noya’s petition, finding his dismissal to be illegal.

Accordingly, it ordered Slord to immediately reinstate Noya and pay his full backwages and other allowances, computed from the time he was illegally dismissed up to the time of actual reinstatement, plus attorney’s fees.

The CA found no just cause in terminating Noya’s employment for lack of sufficient evidence to support the union’s decision to expel him, explaining that the act of soliciting signatures on a blank yellow paper was not prohibited under the Labor Code nor could it be automatically considered as an act of disloyalty. Finally, it also found Noya to have been deprived of procedural due process.

Slord moved for reconsideration but the same was denied. Hence, the petition before the SC.


Whether or not an employee can be validly dismissed for non-compliance with the union security clause in the CBA

SC Ruling:

The SC found the petition meritorious.

While not explicitly mentioned in the Labor Code, case law recognizes that dismissal from employment due to the enforcement of the union security clause in the CBA is another just cause for termination of employment.

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Similar to the enumerated just causes in the Labor Code, the violation of a union security clause amounts to a commission of a wrongful act or omission out of one’s own volition; hence, it can be said that the dismissal process was initiated not by the employer but by the employee’s indiscretion.

Further, a stipulation in the CBA authorizing the dismissal of employees is 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; thus, there is parallel treatment between just causes and violation of the union security clause.

Pertinent is Article 259 (formerly 248), paragraph (e) of the Labor Code, which states that 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. The stipulation in a CBA based on this provision of the Labor Code is commonly known as the “union security clause.”

“Union security is a generic term which is applied to and comprehends ‘closed shop,’ ‘union shop,’ ‘maintenance of membership’ or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment.

There is union shop when all new regular employees are required to join the union within a certain period for their continued employment.

There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated.

A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.

To validly terminate the employment of an employee through the enforcement of the union security clause, the following requisites must concur:

(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.

In this case, the Court finds the confluence of the foregoing requisites, warranting the termination of Noya’s employment. It is undisputed that the CBA contains a closed shop agreement stipulating that Slord’s employees must join NLM-Katipunan and remain to be a member in good standing; otherwise, through a written demand, NLM-Katipunan can insist the dismissal of an employee. Notably, the Court has consistently upheld the validity of a closed shop agreement as a form of union security clause.

Further, records show that NLM-Katipunan requested the enforcement of the union security clause by demanding the dismissal of Noya from employment. In a letter, NLM-Katipunan asked Slord to dismiss Noya from employment for having committed an act of disloyalty in violation of the CBA’s union security clause. NLM-Katipunan explained that Noya solicited support from employees and thereafter, formed and organized a new union outside the freedom period, or from February 14, 2014 to April 14, 2014.

Finally, there is sufficient evidence to support the union’s decision to expel Noya. In Tanduay Distillery Labor Union v. NLRC (233 Phil. 488 (1987) the Court ruled that the organization by union members of a rival union outside the freedom period, without first terminating their membership in the union and without the knowledge of the officers of the latter union, is considered an act of disloyalty, for which the union members may be sanctioned. As an act of loyalty, a union may require its members not to affiliate with any other labor union and to consider its infringement as a reasonable cause for separation, pursuant to the union security clause in its CBA. Having ratified the CBA and being members of the union, union members owe fealty and are required under the union security clause to maintain their membership in good standing during the term thereof. This requirement ceases to be binding only during the sixty (60)-day freedom period immediately preceding the expiration of the CBA, which enjoys the principle of sanctity or inviolability of contracts guaranteed by the Constitution.

Thus, based on the above-discussed circumstances, the NLRC did not gravely abuse its discretion in ruling that there existed just cause to validly terminate Noya’s employment. This notwithstanding, Slord however, failed to observe the proper procedure in terminating Noya’s employment, warranting the payment of nominal damages.

In Distribution & Control Products, Inc. vs. Santos (G.R. No. 212616, July 10, 2017, 830 SCRA 452.) the Court has explained that procedural due process consists of the twin requirements of notice and hearing.

The employer must furnish the employee with two (2) written notices before the termination of employment can be effected:

(1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and

(2) the second informs the employee of the employer’s decision to dismiss him. The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.

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