FACTS:

This case involves a labor dispute between the United Lumber and General Workers of the Philippines (ULGWP) and the Mindanao Sawmill Marketing Group (MSMG), with the respondent company being the Mindanao Portland Cement Corporation. Initially, the ULGWP imposed a P50.00 fine on 356 union members for their failure to attend a general membership assembly. In retaliation, the ULGWP asked the respondent company to stop remitting the local union's share in the education funds. This prompted the respondent company to file a Complaint for Interpleader and Declaratory Relief. The Med-Arbiter issued an order directing the respondent company to remit the labor education program fund to the ULGWP and authorized the collection of the P50.00 fine from the union members. On appeal, the Director modified the order by requiring the respondent company to remit the fund to both the ULGWP and the MSMG. In September 1988, the ULGWP placed the MSMG under trusteeship and appointed an administrator. The ULGWP then informed the respondent company of the appointment of a new local union president and "disauthorized" the incumbent union officers from representing the employees. The union officers protested this action but were eventually expelled from the ULGWP. The federation demanded their termination from employment based on the union security clause in the collective bargaining agreement.

The United Lumber and General Workers of the Philippines (ULGWP), a labor federation, expelled 30 union officers of M. Greenfield, Inc. The expelled union officers were terminated from the company, leading to a protest by some members of the local union, resulting in a strike. The petitioners filed a Notice of Strike with the National Conciliation and Mediation Board (NCMB) alleging unfair labor practices. The strike was characterized by violence and damage to company properties. Following the strike, the company sent return-to-work notices to the striking employees, but only 261 employees were eventually accepted back to work. Those who did not respond to the notices were terminated. The union members filed a complaint against M. Greenfield, Inc. with the Department of Labor and Employment, alleging unfair labor practices.

The respondent company's lease contracts expired, and it was forced to vacate its office and factory premises. The company transferred its administration and account/client servicing department to another location and notified its employees of a temporary shutdown. The company offered relocation to interested employees and gave them until a specified date to enlist for relocation. The case was assigned to Labor Arbiter Manuel Asuncion but was later reassigned to Labor Arbiter Cresencio Ramos. Labor Arbiter Ramos dismissed the complaint, finding the termination to be valid based on the union security clause. The case was appealed to the NLRC and then to the Supreme Court. The main issue revolves around whether the respondent company was justified in dismissing the petitioner employees based on the labor federation's demand for the enforcement of the union security clause.

ISSUES:

1. Whether the decision rendered by the First Division of the NLRC is valid due to the temporary designation of a commissioner from another division.

2. Whether the dismissal of the petitioners by the respondent company upon the demand of the labor federation is justified.

3. Whether the dismissal of the petitioners was done in an arbitrary, hasty, capricious, and illegal manner.

4. Whether the federation had the authority to recommend the dismissal of the union officers.

5. Whether the dismissal of the union officers was valid and legal under the union security clause of the CBA, despite the lack of a separate and independent investigation.

6. Whether the company has the obligation to dismiss the employees expelled by the union without conducting its own inquiry into the cause of the expulsion.

7. Whether the company violated the right to due process of the petitioners by terminating them without giving them the opportunity to be heard.

8. Whether the petitioner union has legal personality to file the case on behalf of the individual employees.

9. Whether the officers of the respondent company can be held liable for the dismissal.

10. Whether the company acted in bad faith in effecting the dismissal of the employees.

11. Whether the federation was a principal party to the collective bargaining agreement.

12. Whether the expulsion of the petitioner union officers from the federation was justified.

13. Whether the disaffiliation of the local union from the federation is valid and in accordance with their constitution.

14. Whether the strike staged by the petitioners is illegal.

15. Whether the dismissal of the individual petitioners is justified.

16. Whether the filing of a complaint for illegal dismissal is consistent with the allegation of abandonment.

17. Whether the dismissal of an employee pursuant to a union security agreement constitutes unfair labor practice.

18. Whether the employer company officials can be held personally liable for damages on account of the employees' dismissal.

19. Whether the requirement of notice and hearing prior to termination of employment was violated in this case.

RULING:

1. The decision rendered by the First Division of the NLRC is valid despite the temporary designation of a commissioner from another division. The law allows for such temporary assignments whenever the required concurrence of two commissioners is not met.

2. The dismissal of the petitioners by the respondent company upon the demand of the labor federation is upheld as valid.

3. The petitioners' claim that their dismissal was arbitrary, hasty, capricious, and illegal is not substantiated.

4. The federation had the authority to recommend the dismissal of the union officers pursuant to the union security clause in the collective bargaining agreement.

5. The dismissal of the union officers was not valid and legal under the union security clause of the CBA. Although union security clauses may be enforced and dismissals pursuant to them may be valid, due process must still be observed. The enforcement of union security clauses cannot override one's right to due process.

6. The company has the obligation to dismiss employees expelled by the union under the union security clause, but this obligation should not be done hastily and summarily. The company should conduct its own separate and independent inquiry into the cause of the expulsion and whether the federation had valid grounds for expulsion. Dismissals must not be arbitrary and capricious.

7. The company violated the right to due process of the petitioners by terminating them without giving them the opportunity to be heard. The dismissal letters received by the petitioners stated that the dismissal shall be immediately effective, indicating the lack of due process.

8. The petitioner union has no legal personality to file the case on behalf of the individual employees. The right to file and prosecute the case is personal to the individual employees.

9. The officers of the respondent company cannot be held liable because they acted within the scope of their authority as mere corporate officers.

10. The company acted in bad faith in effecting the dismissal of the employees. Bad faith can be inferred from the fact that the workers were dismissed hastily and summarily. The company may still be held liable for the dismissal even if it was at the instance of the federation if it failed to accord the employees their right to be heard on the matter.

11. The federation was not a principal party to the collective bargaining agreement. The Interpleader case filed by the company established that the contracting parties of the CBA were M. Greenfield, Inc. and the Malayang Samahan ng Mga Manggagawa sa M. Greenfield, Inc. (MSMG)/United Lumber and General Workers of the Philippines (ULGWP). The federation was not a registered labor organization at the time of the signing of the CBA.

12. The expulsion of the petitioner union officers from the federation was justified. The Labor Arbiter found that the union officers were expelled for committing acts of disloyalty. However, the Court held that the act of disaffiliation and declaration of autonomy by the local union was within their rights. A local union has the right to disaffiliate from its mother union or declare its autonomy as it is a separate and voluntary association. In this case, there were no specific provisions in the federation's constitution prohibiting disaffiliation or the declaration of autonomy of a local union.

13. The disaffiliation of the local union from the federation is valid and in accordance with their constitution. The constitution of the federation does not specifically prohibit disaffiliation or declaration of autonomy. Hence, the dismissal based on disloyalty and violation of the federation's constitution is not valid.

14. The strike staged by the petitioners is legal. The strike was based on the belief that the respondent company committed unfair labor practices by dismissing the union officers. Even if the allegations of unfair labor practices are later found to be untrue, the presumption of legality of the strike prevails.

15. The dismissal of the individual petitioners is not justified. The refusal of the striking employees to heed the recall to work notice does not automatically imply abandonment. There must be a clear intention to sever the employer-employee relationship, manifested by overt acts. In this case, the burden of proof to show unjustified refusal to go back to work rests on the employer, and they failed to establish such intention.

16. The filing of a complaint for illegal dismissal is inconsistent with the allegation of abandonment. In this case, the employees filed a complaint when they were refused reinstatement, indicating that they did not abandon their work.

17. The dismissal of an employee by the company pursuant to a union security agreement does not constitute unfair labor practice as long as the requirement of due process, such as notice and hearing, is observed.

18. The employer company officials cannot be held personally liable for damages as the company has a separate and distinct personality from its officers who merely acted as its agents.

19. The dismissal in this case was invalidated because the employer company failed to afford the employees with due process, specifically notice and hearing prior to termination.

PRINCIPLES:

• The concurrence of two commissioners is necessary for the pronouncement of a judgment or resolution in the NLRC.

• The Chairman of the NLRC may temporarily designate commissioners from other divisions when the required concurrence is not met.

• Territorial divisions in the NLRC do not confer exclusive jurisdiction and are solely for administrative efficiency.

• Dismissal of employees upon the demand of a labor federation pursuant to a union security clause in a collective bargaining agreement may be justified.

• The power to dismiss is a normal prerogative of the employer, but it is not without limitations. Employers must exercise caution in terminating the services of their employees, especially when it is done upon the request of a labor union pursuant to the CBA. Dismissals must not be arbitrary and capricious, and due process must be observed. (Cariño v. NLRC)

• The right of an employee to be informed of the charges against him and to have a 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 CBA. Employees are entitled to be protected not only from a company that disregards their rights but also from their own union. (Cariño v. NLRC)

• While the issue of expulsion of local union officers is originally between the local union and the federation, it becomes a termination dispute when the company dismisses the employees without giving them a separate hearing. (Manila Electric Company Employees Association v. NLRC)

• Disaffiliation or declaration of autonomy of a local union from a federation is valid unless prohibited by the federation's constitution.

• The legality of a strike is determined by whether it is based on unfair labor practices or bargaining deadlocks and not on non-strikeable issues.

• A no strike, no lockout provision in a collective bargaining agreement can only be invoked in economic strikes, not in strikes based on unfair labor practices.

• Dismissal based on abandonment requires the presence of absence without valid reason and a clear intention to sever the employer-employee relationship manifested by overt acts. The burden of proof lies with the employer.

• Filing a complaint for illegal dismissal is inconsistent with the allegation of abandonment.

• Dismissals pursuant to union security agreements are valid and legal, provided that due process is observed.

• Employer company officials cannot be held personally liable for damages on account of employees' dismissal as the company has a separate legal personality.

• The requirement of notice and hearing must be observed before termination of employment can be legally effected.