THIRD DIVISION

[G.R. NO. 165407 : June 5, 2009]

HERMINIGILDO INGUILLO and ZENAIDA BERGANTE, Petitioners, v. FIRST

PHILIPPINE SCALES, Inc. and/or AMPARO POLICARPIO, Manager, Respondents.

DECISION

PERALTA, J.:

Assailed in this Petition for Review under Rule 45 of the Rules of Court are the Court of Appeals
(1) Decision1 dated March 11, 2004 in CA-G.R. SP No. 73992, which dismissed the Petition for
Certiorari of petitioners Zenaida Bergante (Bergante) and Herminigildo Inguillo (Inguillo); and
(2) Resolution2 dated September 17, 2004 denying petitioners' Motion for Reconsideration. The
appellate court sustained the ruling of the National Labor Relations Commission (NLRC) that
petitioners were validly dismissed pursuant to a Union Security Clause in the collective
bargaining agreement.

The facts of the case are as follows:

First Philippine Scales, Inc. (FPSI), a domestic corporation engaged in the manufacturing of
weighing scales, employed Bergante and Inguillo as assemblers on August 15, 1977 and
September 10, 1986, respectively.

In 1991, FPSI and First Philippine Scales Industries Labor Union (FPSILU)3 entered into a
Collective Bargaining Agreement (CBA),4 the duration of which was for a period of five (5)
years starting on September 12, 1991 until September 12, 1996. On September 19, 1991, the
members of FPSILU ratified the CBA in a document entitled RATIPIKASYON NG
KASUNDUAN.5 Bergante and Inguillo, who were members of FPSILU, signed the said
document.6

During the lifetime of the CBA, Bergante, Inguillo and several FPSI employees joined another
union, the Nagkakaisang Lakas ng Manggagawa (NLM), which was affiliated with a federation
called KATIPUNAN (NLM-KATIPUNAN, for brevity). Subsequently, NLM-KATIPUNAN
filed with the Department of Labor and Employment (DOLE) an intra-union dispute7 against
FPSILU and FPSI. In said case, the Med-Arbiter decided8 in favor of FPSILU. It also ordered the
officers and members of NLM-KATIPUNAN to return to FPSILU the amount of P90,000.00
pertaining to the union dues erroneously collected from the employees. Upon finality of the
Med-Arbiter's Decision, a Writ of Execution9 was issued to collect the adjudged amount from
NLM-KATIPUNAN. However, as no amount was recovered, notices of garnishment were issued
to United Coconut Planters Bank (Kalookan City Branch)10 and to FPSI11 for the latter to hold for
FPSILU the earnings of Domingo Grutas, Jr. (Grutas) and Inguillo, formerly FPSILU's President
and Secretary for Finance, respectively, to the extent of P13,032.18. Resultantly, the amount of
P5,140.55 was collected,12 P1,695.72 of which came from the salary of Grutas, while the
P3,444.83 came from that of Inguillo.
Meanwhile, on March 29, 1996, the executive board and members of the FPSILU addressed a
document dated March 18, 1996 denominated as "Petisyon"13 to FPSI's general manager,
Amparo Policarpio (Policarpio), seeking the termination of the services of the following
employees, namely: Grutas, Yolanda Tapang, Shirley Tapang, Gerry Trinidad, Gilbert Lucero,
Inguillo, Bergante, and Vicente Go, on the following grounds:14 (1) disloyalty to the Union by
separating from it and affiliating with a rival Union, the NLM-KATIPUNAN; (2) dereliction of
duty by failing to call periodic membership meetings and to give financial reports; (3) depositing
Union funds in the names of Grutas and former Vice-President Yolanda Tapang, instead of in the
name of FPSILU, care of the President; (4) causing damage to FPSI by deliberately slowing
down production, preventing the Union to even attempt to ask for an increase in benefits from
the former; and (5) poisoning the minds of the rest of the members of the Union so that they
would be enticed to join the rival union.

On May 13, 1996, Inguillo filed with the NLRC a complaint against FPSI and/or Policarpio
(respondents) for illegal withholding of salary and damages, docketed as NLRC-NCR-Case No.
00-05-03036-96.15

On May 16, 1996, respondents terminated the services of the employees mentioned in the
"Petisyon."

The following day, two (2) separate complaints for illegal dismissal, reinstatement and damages
were filed against respondents by: (1) NLM-KATIPUNAN, Grutas, Trinidad, Bergante, Yolanda
Tapang, Go, Shirley Tapang and Lucero16 (Grutas complaint, for brevity); and (2) Inguillo17
(Inguillo complaint). Both complaints were consolidated with Inguillo's prior complaint for
illegal withholding of salary, which was pending before Labor Arbiter Manuel Manansala. After
the preliminary mandatory conference, some of the complainants agreed to amicably settle their
cases. Consequently, the Labor Arbiter issued an Order18 dated October 1, 1996, dismissing with
prejudice the complaints of Go, Shirley Tapang, Yolanda Tapang, Grutas, and Trinidad.19 Lucero
also settled the case after receiving his settlement money and executing a Quitclaim and Release
in favor of FPSI and Policarpio.20

Bergante and Inguillo, the remaining complainants, were directed to submit their respective
position papers, after which their complaints were submitted for resolution on February 20,
1997.21

In their Position Paper,22 Bergante and Inguillo claimed that they were not aware of a petition
seeking for their termination, and neither were they informed of the grounds for their
termination. They argued that had they been informed, they would have impleaded FPSILU in
their complaints. Inguillo could not think of a valid reason for his dismissal except the fact that
he was a very vocal and active member of the NLM-KATIPUNAN. Bergante, for her part,
surmised that she was dismissed solely for being Inguillo's sister-in-law. She also reiterated the
absence of a memorandum stating that she committed an infraction of a company rule or
regulation or a violation of law that would justify her dismissal.ςηαñrοblεš  νιr†υαl lαω lιbrαrÿ

Inguillo also denounced respondents' act of withholding his salary, arguing that he was not a
party to the intra-union dispute from which the notice of garnishment arose. Even assuming that
he was, he argued that his salary was exempt from execution.
In their Position Paper,23 respondents maintained that Bergante and Inguillo's dismissal was
justified, as the same was done upon the demand of FPSILU, and that FPSI complied in order to
avoid a serious labor dispute among its officers and members, which, in turn, would seriously
affect production. They also justified that the dismissal was in accordance with the Union
Security Clause in the CBA, the existence and validity of which was not disputed by Bergante
and Inguillo. In fact, the two had affixed their signatures to the document which ratified the
CBA.

In his Decision24 dated November 27, 1997, the Labor Arbiter dismissed the remaining
complaints of Bergante and Inguillo and held that they were not illegally dismissed. He
explained that the two clearly violated the Union Security Clause of the CBA when they joined
NLM-KATIPUNAN and committed acts detrimental to the interests of FPSILU and respondents.
The dispositive portion of the said Decision states:

WHEREFORE, premises considered, judgment is hereby rendered:

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

Herminigildo Inguillo

Separation pay ................ P22,490.00

Legal Holiday Pay........... 839.00
Total 23,329.00

Zenaida Bergante

Separation pay................. P43,225.00

Legal Holiday Pay........... 839.00
Total 44,064.00

2. Directing the afore-named respondents to pay ten (10%) percent attorney's fees based on the
total monetary award to complainants Inguillo and Bergante.

3. Dismissing the claim for illegal withholding of salary of complainant Inguillo for lack of merit
as above discussed.

4. Dismissing the other money claims and/or other charges of complainants Inguillo and
Bergante for lack of factual and legal basis.
5. Dismissing the complaint of complainant Gilberto Lucero with prejudice for having executed
a Quitclaim and Release and voluntary resignation in favor of respondents FPSI and Amparo
Policarpio as above-discussed where the former received the amount of P23,334.00 as financial
assistance/separation pay and legal holiday pay from the latter.

SO ORDERED.25

Bergante and Inguillo appealed before the NLRC, which reversed the Labor Arbiter's Decision in
a Resolution26 dated June 8, 2001, the dispositive portion of which provides:

WHEREFORE, the assailed decision is set aside. Respondents are hereby ordered to reinstate
complainants Inguillo and Bergante with full backwages from the time of their dismissal up [to]
their actual reinstatement. Further, respondents are also directed to pay complainant Inguillo the
amount representing his withheld salary for the period March 15, 1998 to April 16, 1998. The
sum corresponding to ten percent (10%) of the total judgment award by way of attorney's fees is
likewise ordered. All other claims are ordered dismissed for lack of merit.

SO ORDERED.27

In reversing the Labor Arbiter, the NLRC28 ratiocinated that respondents failed to present
evidence to show that Bergante and Inguillo committed acts inimical to FPSILU's interest. It also
observed that, since the two (2) were not informed of their dismissal, the justification given by
FPSI that it was merely constrained to dismiss the employees due to persistent demand from the
Union clearly proved the claim of summary dismissal and violation of the employees' right to
due process.

Respondents filed a Motion for Reconsideration, which was referred by the NLRC to Executive
Labor Arbiter Vito C. Bose for report and recommendation. In its Resolution29 dated August 26,
2002, the NLRC adopted in toto the report and recommendation of Arbiter Bose which set aside
its previous Resolution reversing the Labor Arbiter's Decision. This time, the NLRC held that
Bergante and Inguillo were not illegally dismissed as respondents merely put in force the CBA
provision on the termination of the services of disaffiliating Union members upon the
recommendation of the Union. The dispositive portion of the said Resolution provides:

WHEREFORE, the resolution of the Commission dated June 8, 2001 is set aside. Declaring the
dismissal of the complainants as valid, [t]his complaint for illegal dismissal is dismissed.
However, respondents are hereby directed to pay complainant Inguillo the amount representing
his withheld salary for the period March 15, 1998 to April 16, 1998, plus ten (10%) percent as
attorney's fees.

All other claims are ordered dismissed for lack of merit.

SO ORDERED.30

Not satisfied with the disposition of their complaints, Bergante and Inguillo filed a Petition for
Certiorari under Rule 65 of the Rules of Court with the Court of Appeals (CA). The CA
dismissed the petition for lack of merit31 and denied the subsequent motion for reconsideration.32
In affirming the legality of the dismissal, the CA ratiocinated, thus:
x x x on the merits, we sustain the view adopted by the NLRC that:

x x x it cannot be said that the stipulation providing that the employer may dismiss an employee
whenever the union recommends his expulsion either for disloyalty or for any violation of its by-
laws and constitution is illegal or constitutive of unfair labor practice, for such is one of the
matters on which management and labor can agree in order to bring about the harmonious
relations between them and the union, and cohesion and integrity of their organization. And as an
act of loyalty, a union may certainly require its members not to affiliate with any other labor
union and to consider its infringement as a reasonable cause for separation.

The employer FPSI did nothing but to put in force their agreement when it separated the
disaffiliating union members, herein complainants, upon the recommendation of the union. Such
a stipulation is not only necessary to maintain loyalty and preserve the integrity of the union, but
is allowed by the Magna Carta of Labor when it provided that while it is recognized that an
employee shall have the right of self-organization, it is at the same time postulated that such
rights shall not injure the right of the labor organization to prescribe its own rules with respect to
the acquisition or retention of membership therein. Having ratified their CBA and being then
members of FPSILU, the complainants owe fealty and are required under the Union Security
clause to maintain their membership in good standing with it during the term thereof, a
requirement which ceases to be binding only during the 60-day freedom period immediately
preceding the expiration of the CBA, which was not present in this case.

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

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

The collective bargaining agreement in this case contains a union security clause-a closed-shop
agreement.

A closed-shop agreement is an agreement whereby an employer binds himself to hire only

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

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

Hence, the present petition.

Essentially, the Labor Code of the Philippines has several provisions under which an employee
may be validly terminated, namely: (1) just causes under Article 282;34 (2) authorized causes
under Article 283;35 (3) termination due to disease under Article 284;36 and (4) termination by the
employee or resignation under Article 285.37 While the said provisions did not mention as ground
the enforcement of the Union Security Clause in the CBA, the dismissal from employment based
on the same is recognized and accepted in our jurisdiction.38

"Union security" is a generic term, which is applied to and comprehends "closed shop," "union
shop," "maintenance of membership" or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a condition affecting
employment.39 There is union shop when all new regular employees are required to join the
union within a certain period as a condition for their continued employment. There is
maintenance of membership shop when employees, who are union members as of the effective
date of the agreement, or who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out of the bargaining
unit or the agreement is terminated.40 A closed-shop, on the other hand, may be defined as an
enterprise in which, by agreement between the employer and his employees or their
representatives, no person may be employed in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member
in good standing of a union entirely comprised of or of which the employees in interest are a
part.41

In their Petition, Bergante and Inguillo assail the legality of their termination based on the Union
Security Clause in the CBA between FPSI and FPSILU. Article II42 of the CBA pertains to
Union Security and Representatives, which provides:

The Company hereby agrees to a UNION SECURITY [CLAUSE] with the following terms:

1. All bonafide union members as of the effective date of this agreement and all those
employees within the bargaining unit who shall subsequently become members of the UNION
during the period of this agreement shall, as a condition to their continued employment,
maintain their membership with the UNION under the FIRST PHIL. SCALES INDUSTRIES
LABOR UNION Constitution and By-laws and this Agreement;

2. Within thirty (30) days from the signing of this Agreement, all workers eligible for
membership who are not union members shall become and to remain members in good standing
as bonafide union members therein as a condition of continued employment;

3. New workers hired shall likewise become members of the UNION from date they become
regular and permanent workers and shall remain members in good standing as bonafide union
members therein as a condition of continued employment;

4. In case a worker refused to join the Union, the Union will undertake to notify workers to join
and become union members. If said worker or workers still refuses, he or they shall be notified
by the Company of his/her dismissal as a consequence thereof and thereafter terminated after 30
days notice according to the Labor Code.
5. Any employee/union member who fails to retain union membership in good standing may
be recommended for suspension or dismissal by the Union Directorate and/or FPSILU
Executive Council for any of the following causes:

a) Acts of Disloyalty;

b) Voluntary Resignation or Abandonment from the UNION;

c) Organization of or joining another labor union or any labor group that would work against the
UNION;

d) Participation in any unfair labor practice or violation of the Agreement, or activity derogatory
to the UNION decision;

e) Disauthorization of, or Non-payment of, monthly membership dues, fees, fines and other
financial assessments to the Union;

f) Any criminal violation or violent conduct or activity against any UNION member without
justification and affecting UNION rights or obligations under the said Agreement.

Verily, the aforesaid provision requires all members to maintain their membership with FPSILU
during the lifetime of the CBA. Failing so, and for any of the causes enumerated therein, the
Union Directorate and/or FPSILU Executive Council may recommend to FPSI an
employee/union member's suspension or dismissal. Records show that Bergante and Inguillo
were former members of FPSILU based on their signatures in the document which ratified the
CBA. It can also be inferred that they disaffiliated from FPSILU when the CBA was still in force
and subsisting, as can be gleaned from the documents relative to the intra-union dispute between
FPSILU and NLM-KATIPUNAN. In view of their disaffiliation, as well as other acts allegedly
detrimental to the interest of both FPSILU and FPSI, a "Petisyon" was submitted to Policarpio,
asking for the termination of the services of employees who failed to maintain their Union
membership.

The Court is now tasked to determine whether the enforcement of the aforesaid Union Security
Clause justified herein petitioners' dismissal from the service.

In terminating the employment of an employee by enforcing the Union Security Clause, the
employer needs only to determine and prove that: (1) the union security clause is applicable; (2)
the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the union's decision to expel the employee from the union
or company.43

We hold that all the requisites have been sufficiently met and FPSI was justified in enforcing the
Union Security Clause, for the following reasons:

First. FPSI was justified in applying the Union Security Clause, as it was a valid provision in the
CBA, the existence and validity of which was not questioned by either party. Moreover,
petitioners were among the 93 employees who affixed their signatures to the document that
ratified the CBA. They cannot now turn their back and deny knowledge of such provision.
Second. FPSILU acted on its prerogative to recommend to FPSI the dismissal of the members
who failed to maintain their membership with the Union. Aside from joining another rival union,
FPSILU cited other grounds committed by petitioners and the other employees which tend to
prejudice FPSI's interests, i.e., dereliction of duty - by failing to call periodic membership
meetings and to give financial reports; depositing union funds in the names of Grutas and former
Vice-President Yolanda Tapang, instead of in the name of FPSILU care of the President; causing
damage to FPSI by deliberately slowing down production, preventing the Union from even
attempting to ask for an increase in benefits from the former; and poisoning the minds of the rest
of the members of the Union so that they would be enticed to join the rival union.

Third. FPSILU's decision to ask for the termination of the employees in the "Petisyon" was
justified and supported by the evidence on record. Bergante and Inguillo were undisputably
former members of FPSILU. In fact, Inguillo was the Secretary of Finance, the underlying
reason why his salary was garnished to satisfy the judgment of the Med-Arbiter who ordered
NLM-KATIPUNAN to return the Union dues it erroneously collected from the employees. Their
then affiliation with FPSILU was also clearly shown by their signatures in the document which
ratified the CBA. Without a doubt, they committed acts of disloyalty to the Union when they
failed not only to maintain their membership but also disaffiliated from it. They abandoned
FPSILU and even joined another union which works against the former's interests. This is
evident from the intra-union dispute filed by NLM-KATIPUNAN against FPSILU. Once
affiliated with NLM-KATIPUNAN, Bergante and Inguillo proceeded to recruit other employees
to disaffiliate from FPSILU and even collected Union dues from them.

In Del Monte Philippines,44 the stipulations in the CBA authorizing the dismissal of employees
are of equal import as the statutory provisions on dismissal under the Labor Code, since a CBA
is the law between the company and the Union, and compliance therewith is mandated by the
express policy to give protection to labor. In Caltex Refinery Employees Association (CREA) v.
Brillantes,45 the Court expounded on the effectiveness of union security clause when it held that
it is one intended to strengthen the contracting union and to protect it from the fickleness or
perfidy of its own members. For without such safeguards, group solidarity becomes uncertain;
the union becomes gradually weakened and increasingly vulnerable to company machinations. In
this security clause lies the strength of the union during the enforcement of the collective
bargaining agreement. It is this clause that provides labor with substantial power in collective
bargaining.

Nonetheless, while We uphold dismissal pursuant to a union security clause, the same is not
without a condition or restriction. For to allow its untrammeled enforcement would encourage
arbitrary dismissal and abuse by the employer, to the detriment of the employees. Thus, to
safeguard the rights of the employees, We have said time and again that dismissals pursuant to
union security clauses are valid and legal, subject only to the requirement of due process, that is,
notice and hearing prior to dismissal.46 In like manner, We emphasized that the enforcement of
union security clauses is authorized by law, provided such enforcement is not characterized by
arbitrariness, and always with due process.47

There are two (2) aspects which characterize the concept of due process under the Labor Code:
one is substantive whether the termination of employment was based on the provisions of the
Labor Code or in accordance with the prevailing jurisprudence; the other is procedural - the
manner in which the dismissal was effected.
The second aspect of due process was clarified by the Court in King of Kings Transport v.
Mamac,48 stating, thus:

(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. x x x

(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the management. During the hearing or conference,
the employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or hearing could be used by
the parties as an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds have been established to
justify the severance of their employment.

Corollarily, procedural due process in the dismissal of employees requires notice and hearing.
The employer must furnish the employee two written notices before termination may be effected.
The first notice apprises the employee of the particular acts or omissions for which his dismissal
is sought, while the second notice informs the employee of the employer's decision to dismiss
him.49 The requirement of a hearing, on the other hand, is complied with as long as there was an
opportunity to be heard, and not necessarily that an actual hearing was conducted.50

In the present case, the required two notices that must be given to herein petitioners Bergante and
Inguillo were lacking. The records are bereft of any notice that would have given a semblance of
substantial compliance on the part of herein respondents. Respondents, however, aver that they
had furnished the employees concerned, including petitioners, with a copy of FPSILU's
"Petisyon." We cannot consider that as compliance with the requirement of either the first notice
or the second notice. While the "Petisyon" enumerated the several grounds that would justify the
termination of the employees mentioned therein, yet such document is only a recommendation
by the Union upon which the employer may base its decision. It cannot be considered a notice of
termination. For as agreed upon by FPSI and FPSILU in their CBA, the latter may only
recommend to the former a Union member's suspension or dismissal. Nowhere in the
controverted Union Security Clause was there a mention that once the union gives a
recommendation, the employer is bound outright to proceed with the termination.

Even assuming that the "Petisyon" amounts to a first notice, the employer cannot be deemed to
have substantially complied with the procedural requirements. True, FPSILU enumerated the
grounds in said "Petisyon." But a perusal of each of them leads Us to conclude that what was
stated were general descriptions, which in no way would enable the employees to intelligently
prepare their explanation and defenses. In addition, the "Petisyon" did not provide a directive
that the employees are given opportunity to submit their written explanation within a reasonable
period. Finally, even if We are to assume that the "Petisyon" is a second notice, still, the
requirement of due process is wanting. For as We have said, the second notice, which is aimed to
inform the employee that his service is already terminated, must state that the employer has
considered all the circumstances which involve the charge and the grounds in the first notice
have been established to justify the severance of employment. After the claimed dialogue
between Policarpio and the employees mentioned in the "Petisyon," the latter were simply told
not to report for work anymore.

These defects are bolstered by Bergante and Inguillo who remain steadfast in denying that they
were notified of the specific charges against them nor were they given any memorandum to that
effect. They averred that had they been informed that their dismissal was due to FPSILU's
demand/petition, they could have impleaded the FPSILU together with the respondents. The
Court has always underscored the significance of the two-notice rule in dismissing an employee
and has ruled in a number of cases that non-compliance therewith is tantamount to deprivation of
the employee's right to due process.51

As for the requirement of a hearing or conference, We hold that respondents also failed to
substantially comply with the same. Policarpio alleged that she had a dialogue with the
concerned employees; that she explained to them the demand of FPSILU for their termination as
well as the consequences of the "Petisyon"; and that she had no choice but to act accordingly.
She further averred that Grutas even asked her to pay all the involved employees one (1)-month
salary for every year of service, plus their accrued legal holiday pay, but which she denied. She
informed them that it has been FPSI's practice to give employees, on a case-to-case basis, only
one-half (' ) month salary for every year of service and after they have tendered their voluntary
resignation. The employees refused her offer and told her that they will just file their claims with
the DOLE.52

Policarpio's allegations are self-serving. Except for her claim as stated in the respondent's
Position Paper, nowhere from the records can We find that Bergante and Inguillo were accorded
the opportunity to present evidence in support of their defenses. Policarpio relied heavily on the
"Petisyon" of FPSILU. She failed to convince Us that during the dialogue, she was able to
ascertain the validity of the charges mentioned in the "Petisyon." In her futile attempt to prove
compliance with the procedural requirement, she reiterated that the objective of the dialogue was
to provide the employees "the opportunity to receive the act of grace of FPSI by giving them an
amount equivalent to one-half (' ) month of their salary for every year of service." We are not
convinced. We cannot even consider the demand and counter-offer for the payment of the
employees as an amicable settlement between the parties because what took place was merely a
discussion only of the amount which the employees are willing to accept and the amount which
the respondents are willing to give. Such non-compliance is also corroborated by Bergante and
Inguillo in their pleadings denouncing their unjustified dismissal. In fine, We hold that the
dialogue is not tantamount to the hearing or conference prescribed by law.

We reiterate, FPSI was justified in enforcing the Union Security Clause in the CBA. However,
We cannot countenance respondents' failure to accord herein petitioners the due process they
deserve after the former dismissed them outright "in order to avoid a serious labor dispute among
the officers and members of the bargaining agent."53 In enforcing the Union Security Clause in
the CBA, We are upholding the sanctity and inviolability of contracts. But in doing so, We
cannot override an employee's right to due process.54 In Carino v. National Labor Relations
Commission,55 We took a firm stand in holding that:

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

Thus, as held in that case, "the right of an employee to be informed of the charges against him
and to reasonable opportunity to present his side in a controversy with either the company or his
own Union is not wiped away by a Union Security Clause or a Union Shop Clause in a collective
bargaining agreement. An employee is entitled to be protected not only from a company which
disregards his rights but also from his own Union, the leadership of which could yield to the
temptation of swift and arbitrary expulsion from membership and mere dismissal from his job."56

In fine, We hold that while Bergante and Inguillo's dismissals were valid pursuant to the
enforcement of Union Security Clause, respondents however did not comply with the requisite
procedural due process. As in the case of Agabon v. National Labor Relations Commission,57
where the dismissal is for a cause recognized by the prevailing jurisprudence, the absence of the
statutory due process should not nullify the dismissal or render it illegal, or ineffectual.
Accordingly, for violating Bergante and Inguillo's statutory rights, respondents should indemnify
them the amount of P30,000.00 each as nominal damages.

In view of the foregoing, We see no reason to discuss the other matters raised by petitioners.

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals
Decision dated March 11, 2004 and Resolution dated September 17, 2004, in CA-G.R. SP No.
73992, are hereby AFFIRMED WITH MODIFICATION in that while there was a valid ground
for dismissal, the procedural requirements for termination, as mandated by law and
jurisprudence, were not observed. Respondents First Philippine Scales, Inc. and/or Amparo
Policarpio are hereby ORDERED to PAY petitioners Zenaida Bergante and Herminigildo
Inguillo the amount of P30,000.00 each as nominal damages. No pronouncement as to costs.

SO ORDERED.