Lirag Textile Mills, Inc. vs. Blanco

A dismissal pursuant to a valid closed-shop/union-security agreement is not an unfair labor practice where the employee's admitted affiliation with a rival union and organizing activities violate the collective bargaining agreement and the union's constitution; the employer may lawfully dismiss the employee, and the Industrial Court's contrary finding may be reviewed where it ignored the evidence.

Lirag Textile Mills, Inc. (LITEX) had, since 1957, a union known as the Litex Employees Association (LEA). Epifanio D. Blanco was employed by LITEX on April 3, 1959, and joined LEA a few months thereafter. On January 2, 1960, LEA entered into its first collective bargaining agreement with LITEX for two years; it was subsequently renewed for three years, or up to March 31, 1965. The agreement contained union security and union shop provisions recognizing LEA as the sole and exclusive collective bargaining representative and requiring employees to join and remain members in good standing, with the union authorized to recommend separation of members no longer in good standing. LEA's constitution and by-laws, Article III, Section 5, allowed expulsion by majority vote of the Board of Officers, including the President, for affiliation with another labor union, refusal to obey the constitution and by-laws and rules, and acts prejudicial to the union and/or its members.

Lirag Textile Mills, Inc. (LITEX) had, since 1957, a union known as the Litex Employees Association (LEA). Epifanio D. Blanco was employed by LITEX on April 3, 1959, and joined LEA a few months thereafter. On January 2, 1960, LEA entered into its first collective bargaining agreement with LITEX for two years; it was subsequently renewed for three years, or up to March 31, 1965. The agreement contained union security and union shop provisions recognizing LEA as the sole and exclusive collective bargaining representative and requiring employees to join and remain members in good standing, with the union authorized to recommend separation of members no longer in good standing. LEA's constitution and by-laws, Article III, Section 5, allowed expulsion by majority vote of the Board of Officers, including the President, for affiliation with another labor union, refusal to obey the constitution and by-laws and rules, and acts prejudicial to the union and/or its members.

Sometime in January 1964, Blanco and several employees organized the Confederation of Industrial and Allied Labor Organization (CIALO). On April 1, 1964, CIALO filed a petition for certification election at LITEX before the Court of Industrial Relations in Case No. 1332-MC. The petition was dismissed, and the CIR certified LEA as the sole bargaining representative of the rank and file employees of LITEX. In the same month of April 1964, LEA's grievance committee conducted an investigation of its members suspected of having joined CIALO.

On April 24, 1964, LITEX dismissed Blanco for violation of company rules and regulations. The dismissal letter, signed by Personnel Officer Khrisnamurti A. Africano, stated that, per the Security Guards' report dated April 10, 1964, Blanco was (a) found distributing leaflets and reading materials inside the Service Bus, (b) subsequently apprehended at the gate with several other leaflets and an envelope with leaflets for distribution to company employees, and (c) refused to be searched upon entrance at the gate, in violation of existing company rules and regulations. The letter also cited prior warnings for misconduct and inefficiency on September 27, 1961 and June 1, 1963, two suspensions—on June 29, 1961 for an act resulting in injury to a co-employee and on July 29, 1963 for refusal to be searched and utterance of bad words against the guards and other offenses—and a definite last warning on July 11, 1963. Blanco's services were terminated effective Friday, April 24, 1964.

On April 27, 1964, LEA addressed a letter to LITEX recommending the immediate dismissal of 18 members named therein, who had been found to have violated the union's constitution and by-laws and the Revised Collective Bargaining Agreement by joining CIALO; attached were the minutes of the April 24, 1964 meeting of LEA's Board of Officers adopting a resolution of expulsion. Blanco's name was not included in the list, presumably because he had already been dismissed by the company on April 24, 1964, three days before. LITEX advised LEA of its reluctance to effect the termination of the 18 employees and asked for reconsideration, but LEA insisted on their dismissal and threatened to go to court if LITEX refused to honor its commitment under the collective bargaining agreement. The 18 employees were dismissed on different dates and filed separate complaints against LITEX. After investigation, Case No. 4219-ULP for unfair labor practice was filed before the CIR on behalf of Blanco and six others, alleging that LITEX, through Khrisnamurti Africano, discriminated against them with respect to tenure by dismissing them for no other reason than their willingness to join CIALO and/or affiliation therein and union activities, so as to discourage membership. The complaint listed Francisco Pineda (April 24, 1964), Antonio S. Lalucis (April 29, 1964), Eduardo Canlas (April 28, 1964), Leovigildo Roldan (April 28, 1964), Romeo Florentino (April 28, 1964), Daniel Fontaina (April 28, 1964), and Epifanio Blanco (April 24, 1964). LITEX denied the charge and raised defenses; the case was heard on the merits, and LEA's motion to intervene was denied for lack of legal basis.

The CIR found that Blanco had not been investigated by the company to determine whether he had refused to be searched, which the CIR described as the only regulation alleged to have been violated, and considered the other grounds for dismissal stale and pretextual; it concluded that the prevailing reason for his separation from the service was his union activities. Blanco admitted his affiliation with CIALO, and evidence showed that he, together with his co-employees, organized the rival union CIALO in contravention of the collective bargaining agreement and LEA's constitution and by-laws, of which they were then members. Blanco also admitted prior suspensions and warnings, including that he was nearly dismissed on July 13, 1963 under a letter of dismissal dated July 10, 1963 but, through LEA's intercession, was given a last warning instead on July 11, 1963; a suspension order for six days, from July 29 to August 3, 1963, was duly approved by LITEX. Blanco denied that he refused to be searched.

• Union Shop Demand: Petitioner argued that the CIR erred in holding that LEA did not demand Blanco's dismissal under the union shop provision merely because his name did not appear in the letter listing 18 employees, despite sufficient testimonial and documentary evidence to the contrary.
• Unfair Labor Practice Finding: Petitioner maintained that the CIR erred in holding Blanco's dismissal for violation of company rules was an unfair labor practice merely because the violation was simultaneously a union activity.
• Stale Grounds: Petitioner argued that the CIR erred in treating the prior warning for inefficiency and past misconduct violations, for which Blanco had been warned and suspended, as "stale" grounds, when the last violation for which he was dismissed occurred within nine months from the definite last warning.
• Closed-Shop and Equal Treatment: Petitioner contended there was no justifiable reason to single out Blanco, who was in an identical position as the five other complainants whose dismissals under the closed-shop agreement were upheld; if he had not already been dismissed, LEA would have demanded his dismissal because he was among those investigated and recommended for expulsion for joining CIALO. Petitioner also invoked the validity of the closed-shop provision and argued that Blanco's admitted CIALO affiliation and organizing a rival union were grounds for expulsion under LEA's constitution and by-laws.

• Scope of Closed-Shop: Blanco claimed in his Answer that the closed-shop provision applied only to newly hired employees and not to old employees like himself; he abandoned this argument in his Brief.
• Denial of Refusal to Search: Blanco denied that he refused to be searched.
• Discrimination/Union Activities: Blanco alleged in the complaint that he was dismissed for no other reason than his willingness to join CIALO and his union activities, so as to discourage membership.

• Union Shop Demand: Whether the CIR erred in holding that LEA did not demand Blanco's dismissal under the union shop provision merely because his name was not included in the list of 18 employees recommended for dismissal.
• Unfair Labor Practice: Whether Blanco's dismissal for violation of company rules constituted an unfair labor practice because the violation was also a union activity, and whether the prior warnings and suspensions were stale grounds.
• Closed-Shop Coverage: Whether the closed-shop provision applied only to newly hired employees and not to Blanco, who was already a member of LEA when the CBA was executed.
• Legality of Dismissal for Rival Union Affiliation: Whether Blanco could be legally dismissed for his affiliation with CIALO even if the refusal-to-be-searched charge was not sufficiently proven.

• Union Shop Demand: No. The CIR erred in singling out Blanco; he was in an identical position as the five other complainants whose dismissal under the closed-shop agreement was upheld. His name was absent only because LITEX had already dismissed him three days before LEA's recommendation.
• Unfair Labor Practice: No. The dismissal was not an unfair labor practice. Blanco's admitted affiliation with CIALO and his organizing a rival union, distributing leaflets and propaganda, violated the CBA and LEA's constitution and by-laws, a ground for expulsion; the closed-shop provision was valid.
• Closed-Shop Coverage: No. Blanco was already a member of LEA when the CBA containing the closed-shop provision was executed, and he was therefore bound by it.
• Legality of Dismissal for Rival Union Affiliation: Yes. Even if the refusal-to-be-searched charge was not sufficiently proven, Blanco could still be legally dismissed for his affiliation with CIALO, which was specifically prohibited by the CBA and LEA's constitution and by-laws.

• Union Shop Demand: The CIR's distinction was untenable because Blanco was identically situated with the five other complainants. His omission from the list of 18 was explained by his prior dismissal on April 24, 1964, three days before LEA's April 27, 1964 recommendation. Had LITEX not dismissed him, LEA would have demanded his dismissal, as he was among those investigated by LEA's grievance committee, which approved the recommendation to dismiss members who joined another union. Blanco himself made common cause with the other complainants in alleging dismissal for joining CIALO and union activities. Thus, no justifiable reason existed to treat his dismissal differently.
• Unfair Labor Practice: Reversible error attended the CIR's conclusion that the prevailing reason for Blanco's separation was union activities and that the other grounds were stale. Blanco admitted his affiliation with CIALO, and evidence showed that he and co-employees organized a rival union, CIALO, in contravention of the CBA and LEA's constitution and by-laws, of which they were then members. These acts constituted a ground for expulsion under Section 5 of LEA's constitution and by-laws. A closed-shop is a valid form of union security and is not a restriction on the constitutional right to freedom of association. Since the CIR upheld the validity of the closed-shop agreement and ruled as legal the dismissal of the other complainants pursuant thereto, it should likewise have upheld Blanco's separation on the same ground. Blanco's prior record showed admitted suspensions and warnings; he was nearly dismissed on July 13, 1963 but was given a last warning on July 11, 1963 through LEA's intercession, and was later suspended for six days from July 29 to August 3, 1963. His refusal to be searched was the same offense for which he had almost been dismissed in July 1963. Prior violations form part of an employee's record, and the present infraction coupled with a blemished record and a last warning nine months before led to dismissal. An employee may be dismissed for willful disobedience to reasonable and lawful rules, orders, and instructions known to the employee and pertaining to his duties. Even if the refusal-to-be-searched charge lacked sufficient proof, dismissal remained valid for CIALO affiliation.
• Closed-Shop Coverage: Blanco's argument that the closed-shop provision applied only to newly hired employees was abandoned in his Brief. In any event, he was already a member of LEA when the CBA containing the closed-shop provision was executed, and he was therefore bound by it. Manalang vs. Artex Development Company, Inc. held that even if employees were unaware of the stipulations in the CBA, their prior membership in the union and the force of the closed-shop provision bound them; neither ignorance nor dissatisfaction justified breach or formation of their own union.
• Legality of Dismissal for Rival Union Affiliation: Even granting Blanco could not be dismissed for refusal to be searched for lack of sufficient proof, he could still be legally dismissed for his affiliation with CIALO, which was specifically prohibited by the CBA and LEA's constitution and by-laws. Evidence of that affiliation was satisfactorily adduced. As a general rule, findings of fact of the Industrial Court are final and conclusive when supported by substantial evidence under Section 6, Republic Act No. 875, as amended; however, where the Industrial Court ignored evidence adduced by the parties, it committed grave abuse of discretion warranting review, as in this case. Mercury Drug Co., Inc. vs. CIR was cited for this exception.

• Closed-Shop as Valid Union Security — A closed-shop provision in a collective bargaining agreement is a valid form of union security and does not restrict the constitutional right to freedom of association. In this case, the LEA-LITEX closed-shop agreement was upheld, and dismissals effected pursuant to it were legal.
• Binding Effect of Closed-Shop on Existing Union Members — Employees who are already union members when a CBA containing a closed-shop provision is executed are bound by that provision; ignorance of or dissatisfaction with its terms does not justify breach or the formation of a rival union. The Court applied this to Blanco, who was an LEA member when the CBA was executed.
• Dismissal for Violation of Valid Union-Security Arrangement Is Not Unfair Labor Practice — An employer does not commit unfair labor practice when it dismisses an employee pursuant to a valid closed-shop agreement and the union's constitution and by-laws, where the employee's admitted affiliation with a rival union and organizing activities violate those instruments. The Court held Blanco's dismissal lawful on this ground, even if the refusal-to-be-searched charge was unproven.
• Finality of Industrial Court Factual Findings; Exception for Ignored Evidence — Findings of fact of the Industrial Court are final and conclusive when supported by substantial evidence, but may be reviewed where the Industrial Court ignored evidence adduced by the parties, amounting to grave abuse of discretion. The Court applied the exception because the CIR ignored evidence that Blanco was similarly situated to the other dismissed employees and had admitted CIALO affiliation.
• Dismissal for Willful Disobedience — An employee may be dismissed for willful disobedience to the employer's reasonable and lawful rules, orders, and instructions, known to the employee and pertaining to the duties he discharges. The Court noted Blanco's prior record and last warning, although it ultimately rested the dismissal's validity also on his CIALO affiliation.

• "This Court has held that closed-shop is a valid form of union security and such provision in a collective bargaining agreement is not a restriction of the right of freedom of association guaranteed by the Constitution." — States the Court's central doctrine upholding the validity of the closed-shop arrangement and rejecting the claim that it violates freedom of association.
• "There is no justifiable reason to single out BLANCO. He was in an Identical position as the five other complainants. If his name was not included in the list of 18 employees recommended for dismissal it was because he had been dismissed three days before by the company." — Expresses the ratio for reversing the CIR's discriminatory treatment of Blanco relative to the other dismissed employees.
• "Even granting, however, that he could not be dismissed on the ground of refusal to be searched for lack of sufficient proof, he can still be legally dismissed for his affiliation with CIALO which is specifically prohibited by the CBA and the Constitution and by-laws of LEA, in respect of which, evidence had been satisfactorily adduced." — States the alternative and independent ground sustaining Blanco's dismissal despite the insufficient proof on the search charge.
• "As a general rule, the findings of facts of the Industrial Court are final and conclusive when supported by substantial evidence. However, where, as in this case, respondent Court ignored the evidence adduced by the parties, it is guilty of grave abuse of discretion as to warrant a review by this Court of its findings of fact." — Defines the standard of review and the exception permitting the Supreme Court to review the CIR's factual findings.

• Manalang vs. Artex Development Company, Inc., 21 SCRA 562 (1967) — Cited as authority that employees are bound by a closed-shop provision even if unaware of or dissatisfied with its terms; their prior union membership and the agreement's force preclude breach or formation of their own union.
• Mercury Drug Co., Inc. vs. CIR, 56 SCRA 694 (1974) — Cited for the exception to the finality of Industrial Court factual findings where the court ignored evidence, constituting grave abuse of discretion.
• Batangas-Laguna Tayabas Bus Co. vs. Court of Appeals, 71 SCRA 470 (1976) — Cited for the rule that an employee may be dismissed for willful disobedience to reasonable and lawful rules, orders, and instructions of the employer, known to the employee and pertaining to his duties.

• Section 6, Republic Act No. 875, as amended — Provides that findings of fact of the Industrial Court are final and conclusive when supported by substantial evidence; the Court recognized the exception where the Industrial Court ignored evidence.
• Collective Bargaining Agreement, Sections 1 and 2 (Union Security and Union Shop) — Recognized LEA as sole and exclusive collective bargaining representative; required newly-hired probationary employees to join the union as a condition of continued regular employment; required employees to remain members in good standing; allowed the union to recommend separation of members no longer in good standing; provided that those losing membership could not be retained. Applied to justify Blanco's dismissal.
• LEA Constitution and By-Laws, Article III, Section 5 — Allowed expulsion by majority vote of the Board of Officers, including the President, for affiliation with another labor union, refusal to obey the constitution and by-laws and rules, and acts prejudicial to the union and/or its members. Applied because Blanco's CIALO affiliation and organizing activities fell within these grounds.
• Republic Act No. 875 (Industrial Peace Act) — The unfair labor practice case was filed and decided under this statute; the CIR found LITEX violated it, but the Supreme Court set aside that finding as to Blanco.

Teehankee (Chairman), Makasiar, Fernandez, and Guerrero, JJ., concur.