FREEMAN SHIRT MANUFACTURING CO., INC.

and SAW MUI

vs
CIR

Freeman Shirt Employees Labor Union won over the Kapisanan ng mga Manggagawa Sa Damit
Balangay (NAFLU) in a certification election, making the former the sole and exclusive bargaining
representative of Freeman Shirt Manufacturing Co. Inc. The union security clause provided for in the CBA
agreement between them stipulates:

2. Union Security; Union Shop. Membership in the UNION shall be a condition to continued
employment in the COMPANY. Employees who are not members of the UNION on the effectivity of this
Agreement and who fails to become a member of the UNION within thirty (30) days after such date of
effectivity, shall be dismissed by the COMPANY from employment upon notice of that fact by the
UNION to the COMPANY; any person hired by the COMPANY during the term of this Agreement who fails
to become a member of the UNION within thirty (30) days after becoming a regular employee shall
likewise be dismissed upon notice of that fact by the UNION to the COMPANY. Any employee who, during
the term of this Agreement, resigns from the UNION or is expelled therefrom in accordance with the
Constitution and By-Laws of the UNION shall likewise be dismissed by the COMPANY upon notice of that
fact by the UNION to the COMPANY.

Ten employees, members of NAFLU, refused to join the union within the 30 day period, and were thus
dismissed by the company upon the unions demand. They then filed a complaint for unfair labor practice
against Freeman Shirt Manufacturing Co., its general manager, and Freeman Shirt Employees Labor
Union, on the charge that the company has dominated the union, thus violating sec. 4(a) 1 of RA 875.

The Industrial Court absolved the company of charges of unfair labor practice, but ordered the
reinstatement of the said ten employees, prompting petitioner to appeal to this Court.

ISSUE: w/n a closed shop agreement applies to employees already members of another union

HELD: NO, such does not apply. Employees must be reinstated.

The closed-shop agreement authorized under see. 4, subsec. a (4) of the Industrial Peace Act above
quoted shouldapply to persons to be hired or to employees who are not yet members of any labor
organization. It is inapplicable to those already in the service who are members of another union. To hold
otherwise, i.e., that the employees in a company who are members of a minority union may be compelled
to disaffiliate from their union and join the majority or contracting union, would render nugatory the right of
all employees to self-organization and to form, join or assist labor organizations of their own choosing, a
right guaranteed by the Industrial Peace Act (sec. 3, Rep. Act No. 875) as well as by the Constitution (Art.
III, sec. 1[61).

1 To discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: Provided, That nothing
in this Act or in any other Act or statute of the Republic of the Philippines shall preclude an employer from making an agreement with a labor organization to require as a condition of
employment membership therein, if such labor organization is the representative of the employees as provided in section twelve;"