The  above-entitled cases  originated from a complaint for  unfair labor practice against the  Victorias Milling Company, Inc., filed by the acting prosecutor of the Court of Industrial Relations on March 2, 1960.   At the hearing of the charges the parties   entered into  a stipulation of facts, the most important provisions of which  are  as follows:  On April 6, 1957 the Victorias  Milling Company, Inc. and the Free Visayan Workers entered into a  collective bargaining agreement  which  was to expire on December 31,  1959.  The agreement contains an automatic renewal clause  after  December   31,  1959.  The  duration  of the agreement and the automatic renewal clause are contained in the following paragraphs of the agreement:

"DURATION OF  AGREEMENT"

"This  agreement  shall  remain in  full force and  effect until midnight of December 31,  1959, continuing from year to year from the date  of the signing hereof, unless either party gives written notice by registered mail no more  than seventy-five (75)  days nor less than  thirty  (30) days  prior  to December  31, 1959, or each subsequent renewal  anniversary date thereafter, to the effect  that said party shall modify or  terminate the entire agreement, in which event  this agreement  shall be considered terminated or  open for negotiation.

"If  the notice  sent in  accordance which  the above paragraph affects a  portion or  portions of  the  agreement, the portion   or portions not affected shall remain in force during  the renewal period. "Twenty (20) days  after receipt of the notice of modification  or termination, the parties shall meet for the purpose of bargaining with respect to the provisions of  this  agreement or parts  thereof which have been terminated  by either  party."

Sometime in October,  1957, a petition  for  certification of elections  in  the Victorias  Milling  Company,  Inc. was filed  by Victorina  A. Combate and  318  others.  In this case  before  the Industrial Court in May, 1959, the Philippine Association of Free Labor Unions (PAFLU) intervened.   And on August 12, 1960, the Court of  Industrial Relations in the case for certification of elections ordered the   holding  of  a  certification  of election.  It does  not appear from the record that the election has already been made.   Neither does  the result thereof appear.

On October 26, 1959 Vicente Convito,  President of the Victorias-Manapla Workers Organization (PAPLU)  wrote a communication  to the respondent Victorias Milling Company, Inc., requesting that the company desist from entering into a new agreement with any union until the question of representation has been determined by the  court; that the majority of the workers  of the Victorias Milling Company, Inc. have joined the  said organization (PAFLU). Again  on October 29,  1959, Vicente Convito representing the  same Philippine Association  of Free   Labor  Unions wrote  a letter to the  respondent company alleging that in view of the affiliation of the workers and laborers with the Free Visayas Workers and in view of the fact that the latter's  agreement with  the  respondent  company is bound  to expire, certain  proposals be taken up  for  the purpose of collective bargaining.  In answer to the above two communications sent by the President of the PAFLU the respondent company wrote the representative of  the PAFLU as  follows:  That m view  of the fact that   the petition for the certification  of elections  is still pending and the issue of the majority representation has not been resolved yet, the respondent company could not take action on  the request for collective  bargaining presented by the PAFLU.

The complaint for  unfair  labor  practice arose from the dismissal  of 10 employees,  namely, Felino  Dalipe, Donato Anazarias,  Prudencio Parcon, Celestino Bernila, Remegio Seballos, Belarmino  Bartico,  Agustin  Dulano, Ignacio Lozano, Loreto Undar, and William Cevero. These employees were on or before  December 31, 1959 members of  the  Free Farmers Union or  the Federation of Free Workers.

On January  11, 1960, a supplemental agreement having been entered into by the Victorias Milling Company,  Inc. and the Free Visayan Workers  providing for wage increases, the above-named ten dismissed employees had received increases in their pay.  But on February 10, 1960, they  resigned  or separated  from the Free  Farmers or Workers Union and  joined the  Association of Free Labor Unions (PAFLU).   In view  of this change in their  affiliation from the  Free Farmers Union to the  Philippine Association  of Free Labor Unions  (PAFLU), which change became known to the respondent company, an investigation of their membership and change in membership was made.

The Free Visayan Workers Union conducted an investigation of the 10 dismissed employees prior to their expulsion from the respondent union and its  recommendation  was for  their   dismissal.  In  this investigation  it was  found out  that they received the wage increases on January 14, 1960, but  changed  their  affiliation on February 10, 1960, from the Free Visayan Workers Union to the Philippine Association  of  Free  Labor  Unions (PAPFLU). Consequently, with this finding of  the change in their membership and in  view of the  following portion of the existing agreement between the Free Farmers Union  and the respondent Company:

"Section 5(a).  All employees who are covered by this agreement as provided for in Section 4 hereof, who, at the date of the signing of the agreement, are  member of the union, shall remain members in good  standing as a condition  of continued employment.  Those covered employees who, at the date of the signing of this agreement, are  not members of   the  Union, shall  be required to join  and remain  members of the Union in good standing as a condition of continued employment. * *  *

"Any laborer or employee who shall join the union in pursuance of the above requirement and who thereafter shall  resign from the union or is expelled therefrom for any act contrary to the by-laws, rules and  regulation of the Union, shall  upon  the advise  of the Union to the  management of the company be dismissed from his employment.  It is  to be understood, however,  that the  company reserves its right  to look into the merits of  the expulsion of the laborer or employee concerned, where his  dismissal from the Company is  sought by the Union. *  * *"

which agreement is a closed-shop agreement, the respondent  company, upon advice of the  Free Farmers  Union, dismissed  the above-mentioned 10 employees.   Their dismissal  is  the subject of the  complaint for unfair labor practice filed by the prosecutor of  the Court  of  Industrial Relations in these two cases now before the Court. The  facts found by  the hearing  officer regarding the previous  affiliation  of the above-mentioned  ten dismissed employees are  as follows:

"With  respect  to the individual complainants,  except  Santiago Palomo  and Pedro  Moran, the charges in regard  to   said persons having been withdrawn (t.s.n. pp. 68-69), all were  former members of the respondent union.  On February 11, 1960, they severed their affiliation with  respondent  union  (Exhibits  "A" to "M-9").  Immediately thereafter  the   investigating committee of the Victorias Milling Company Unit  of the respondent union started an  investigation and its  finding forwarded  to  the Central  Board   of  said respondent union.  (Exhibit "F").  The latter accepted the resignation   of the complainants  and recommended their dismissal. (Exhibit  "G").  The respondent company in  similarly  worded  letters dismissed the said complainants based on the  union  security  provisions of the Collective Bargaining agreement in question (Exhibits "B"  to "B"-9"), after proper  investigation (Stipulation  No. 9).

"It must be noted  that the circumstances  mentioned in the  preceding paragraph occurred after the execution of the supplementary agreement and   after the period for  the  modification  and/or  termination  of the agreement has expired.

"It is  also a  fact that  the herein complainants before  their dismissal were members of the  respondent  union."

The  hearing  officer in arriving at its  recommendation to  the  court  reasoned as  follows:

"The reasons for those express prohibitions are apparent.   Should the closed shop  provisions for a collective bargaining agreement be given  absolute  effect, it  will maintain any labor organization in perpetuity despite the manifest wishes of the employees  concerned which is contrary  to the letter and  spirit of Republic Act No. 875.  Just as our very own system of life  guarantees  a periodical  gauge to determine  the  people's free  wishes in those  they have  elected to  govern  them through a system  of political  election, so must the bargaining representative cf  the employees  be equally determined at an appropriate  time and  the  Court of Industrial Relations by  law  is  the agency charged  with  such function, and the exercise of such choice should likewise be free from discrimination.

"While this Court  is  fully  aware  of  the possible  levelings of the  accusation  that  we  must  not  interfere with  the closed  shop provisions of any validity  entered bargaining  as the  same might constitute  internal  union   matters,  yet such  matters,  do  constitute relations going  deeply into  the  roots of the  right to self-organization which this  Court is duty bound by law to protect and uphold."

We do not agree with the court below  in its ruling  that the  recognition  and enforcement  cf  the closed-shop agreement between the Free Farmers Union  and  the Victorias

Milling Company, Inc. would tend to perpetuate the labor organization which secured it.  This claim cannot be true because the closed-shop agreement is to be enforced after December 31, 1959, automatically until such time as a new bargaining agreement can be entered into.

The ruling of the court below suspending the operation of the  agreement automatically renewed,  would produce as a result a period of interregnum in which no agreement would govern at all.  There would be a void if we do not authorize enforcement of  the  automatic renewal clause adopted  in the agreement.   Such a situation where no agreement is in  force to govern the relations  between laborers  and capitalists is unwise,  as it would give either party an opportunity  to commit a breach of the law.

Another reason for  enforcing  the  closed-shop agreement is the principle of sanctity or inviolability of contracts guaranteed by the Constitution.  As  a matter of principle the provision of the Industrial Peace Act granting freedom to employees  to organize themselves and  select their representative  for  entering  into bargaining   agreements, should be subordinated to the constitutional provision protecting  the  sanctity  of contracts.   We can not  conceive how freedom to contract, which should be allowed to be exercised  without  limitation may be subordinated to the freedom of laborers to choose the organization  they desire to represent them.  And even  if  the legislature had intended to do  so and made such  freedom of the laborer paramount to the  sanctity of obligation of contracts, such attempt  to  override  the   constitutional provision would necessarily ipso facto be null and void.

A case  brought  on  a writ of  certiorari to the Supreme Court of the United States presented the same problem that we now have before us, namely, the effectivity of a closed-shop agreement as against the freedom of the  laborers or employees to choose the labor organization they  want to affiliate  with.   There it was  said  that the Act granting the employer and employees the privilege to enter into  a closed-shop  agreement,  also recognized  the  right of  the workers to choose their union, but that said right to choose a labor union  is limited  by the proviso authorizing parties to enter into a closed-shop  agreement.   Hereinbelow is  a summary of the facts involved in said case and the reasons adduced by  the court in arriving at  its  conclusion:

Petitioner was engaged in producing glycerin for war purposes. Its employees were at  first represented  by a  union affiliated with the  American  Federation  of  Labor.  In  193S the International Longshoremen's and Warehousemen's Union, affiliated with the Congress of Industrial Organizations, became the representative of petitioner's employees.  On July 9, 1941, the  C. I. O. entered  into a collective bargaining  contract  with  petitioner which  contained a closed-shop  provision to the  effect that new employees shall be hired through the  offices of the  Union,  provided the  latter shall be able to furnish competent workers for  the work required;  otherwise, the employer may  hire from  outside  sources, provided  that employees so  hired shall make   application  for membership  in the Union within 15  days of their employment; and that the  employees covered  by  the  agreement  shall be  members in  good standing of the Union.  This contract was entered in good  faith by the parties and was of indefinite  duration.

On  July  24,   1945,    the  C.I.O. and  petitioner  entered  into  a supplemental agreement   that their contract of  July 9, 1941,  "shall remain  in  full  force   and  effect"  pending  approval of certain agreed-upon  items, other than   the  closed-shop provision,  by the War  Labor  Board.  Shortly after the  making  of the supplemental agreement, open agitation for a change of bargaining representative began at a period during which the National Labor Relation believed was appropriate  to seek a  redetermination of  representatives.  On July  31  an  unauthorized strike occurred  which  lasted two and  one half  days, although the  C.I.O. had pledged  its membership  not to  strike during   wartime.   A group of employees formed an independent  organization which  later sought to affiliate with the American Federation   of Labor.  Because they were   unmindful  of the warnings issued  by the C. I.  O. that disciplinary action against members would be taken for rival union activity, some 37  employees were suspended    and expelled by  the C.  I.  O. and discharged by petitioner upon demand by the C.I.O. on the ground that they were no longer "members in good standing" of  the C.I.O. as required by the closed-shop contract.

Petitioner was charged with violation of Sec. 8(1)  and Sec. 8(3) of the National  Labor  Relations Act  and  found by the  National Labor  Relations Board guilty thereof and ordered  to reinstate the discharged employees.  The Court  of Appeals  having entered  a decree enforcing the Board's order, a petition for a writ of certiorari against the judgment of said court was brought before the Supreme Court  of  the  United  States.

Sec. 8(3)  referred  to above considers  as unfair  labor  practice for  an employer  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, but  does not preclude  an  employer  from   making  an  agreement   with  labor organization  to  require as a condition  of employment membership therein, if such labor organization  is  the representative  of the employees.

Recognizing  that the  discharges had  the   effect   of interfering with the  employees' right  given  by Sec.  7 of the National  Labor Relations  Act  to self-organization and   to  collective bargaining through  representatives of their own choosing, and that  the discharges had  the effect of discriminating, contrary to the prohibition of  Sec. 8(3)  of said Act,  the  Supreme  Court  nevertheless found that a closed-shop agreement  was  valid  under  California law, and the California Supreme Court,  in the case of  James vs. Marinship (155 P2d  32), explicity   recognized   that a union may  expel persons who "have interests inimical to the union" because of the right of the union to reject Sr expel  persons  who refuse to  abide by any reasonable  regulation or lawful policy adopted by the  union. Citing the case of Davis vs.  International Alliance, 141  P2d 486, it stated  that  under  California  law, "an organization  has the natural right of  self-preservation,  and may  with propriety  expel members who show their disloyalty  by joining a rival organization." The contract was  held to be valid  under the  Act  and under state law.

Upholding the  validity of closed-shop  agreements  the   Supreme Court  further held that such  agreements protect  the  integrity of the  union  and provides  stability to  labor relations,  to achieve which was the primary  objective of Congress  in enacting  the  National Labor   Relations Act.  Congress knew that a closed-shop agreement would  interfere with   freedom  of employees to organize in another union  and would,  if  used, lead  inevitably   to discrimination  in tenure of  employment.   Nevertheless, Congress inserted the proviso of  See. 8(3) allowing  closed  shop contracts  with  full realization that it would  be  a limitation on  Sec. 7 granting  employees the the  right to self-organization  and  collective bargaining.   (Colgate-Palmolive-Peet Co.  vs. Nat. Labor Relations Bd., et al., 388 U.S. 355, 365, 94 L ed. 161).

The above U.S. Supreme Court decision cleared an employer which discharged employees expelled from the union because  of activities for a rival union,  from charges of unfair labor practice,  where its action was based  on a closed-shop contract with a bona fide labor union entered into and performed in good faith  and valid  in the  state where made.

Returning now to the case at bar, as we have found that  the dismissal  of the employees  by the respondent Victorias  Milling Company, Inc. was in pursuance of a clause of  an agreement  between said company and the Free  Farmers Union, which agreement became   automatically renewed upon its expiration  on December 31,  1959 and before a new bargaining agreement could  be  arrived at, the action of the respondent company in enforcing the terms of the closed-shop agreement is a valid exercise of its rights and obligations under the contract.  The dismissal by virtue thereof cannot constitute an  unfair  labor practice, as it was  in pursuance of an agreement that has been  found to be regular and of a closed-shop   agreement which under our laws is valid and binding.

The decision  of  the  lower  court declaring  that the  respondent company  was guilty of unfair labor practice should, therefore, be set  aside and the complaint for the said unfair labor practice dismissed.

The Victorias-Manapla Organization  (PAFLU) had also appealed from the decision of the court below for the reason that it did not grant them pay during the period of the dismissal  of the laborers in  question.  In view  of our ruling that the  dismissal was valid,  the appeal for  back wages must also be denied.  Without costs.  So ordered.

Bengzon, C.  J.,  Padilla,  Bautista Angelo,  Barrera, Paredes, Dizon,   Regala, and Makalintal, JJ., concur.