G.R. No. L-18467 and L-18470. September 30, 1963.
Victorias Milling Co., Inc., petitioner, vs. Victorias-Manapla Workers Organization – PAFLU, Free Visayan Workers (FFW), et al., respondents.

Victorias-Manapla Workers Organization – PAFLU, petitioner, vs. Court of Industrial Relations, and Free Visayan Workers (FFW), respondents.

FACTS

The case originated from an unfair labor practice complaint against Victorias Milling Company, Inc. The company had a collective bargaining agreement with the Free Visayan Workers (FFW), containing a closed-shop clause and an automatic renewal provision effective beyond December 31, 1959, absent timely notice to terminate. A rival union, Victorias-Manapla Workers Organization (PAFLU), later sought recognition as the bargaining agent, filing a petition for certification election. While this representation issue was pending, ten employees, who were members of FFW and had received wage increases under the renewed CBA, resigned from FFW and joined PAFLU in February 1960. FFW investigated and expelled them, then advised the company to dismiss them pursuant to the closed-shop clause. The company complied, dismissing the ten employees.

ISSUE

The core issue is whether the dismissal of the ten employees, based on the closed-shop clause in the CBA between the company and FFW, constituted unfair labor practice, particularly given the pending petition for certification election filed by the rival union PAFLU.

RULING

The Supreme Court ruled the dismissals were valid and did not constitute unfair labor practice. The legal logic rests on the validity and continued enforceability of the closed-shop agreement. The CBA with FFW was automatically renewed and remained in full force because neither party gave the required notice to terminate. Consequently, its terms, including the closed-shop clause requiring union membership as a condition of employment, were legally binding on both the company and the covered employees during the renewal period. The pending certification election did not automatically nullify the existing CBA or suspend its operation. The Court, citing U.S. jurisprudence, upheld the validity of closed-shop agreements as instruments of labor stability, recognizing a union’s right to self-preservation against rival groups. The company’s dismissal action was a mere contractual enforcement of a valid clause upon the union’s advice, not an independent discriminatory act against PAFLU. Since the dismissals were pursuant to a lawful agreement, they could not be deemed unfair labor practice. The claim for back wages by PAFLU on behalf of the dismissed employees was consequently denied.