B. Legitimate labor organizations

Atty. Jericho Del Puerto

Atty. Jericho Del Puerto

Lawyer, Author, Mentor

Labor organization. Labor organization – means any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. (Article 219[g], Labor Code)

Legitimate labor organization. Legitimate labor organization – means any labor organization duly registered with the Department of Labor and Employment, and includes any branch or local thereof. (Article 219[h], Ibid.)

1. Registration with the DOLE

A federation, national union or industry or trade union center or an independent union shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements:
1) Fifty pesos (P50.00) registration fee;
2) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings;
3) In case the applicant is an independent union, the names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate;
4) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and
5) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it. (Article 240, Ibid.)

2. Cancellation of registration

Grounds for cancellation of union registration:
1) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification;
2) Misrepresentation, false statements or fraud in connection with the electionof officers, minutes of the election of officers, and the list of voters;
3) Voluntary dissolution by the members. (Article 247, Ibid.)
Voluntary Cancellation of Registration:
The registration of a legitimate labor organization may be cancelled by the organization itself:
Provided, That at least 2/3 of its general membership votes, in a meeting duly called for that purpose to dissolve the organization:
Provided, further, That an application to cancel registration is thereafter submitted by the board of the organization, attested to by the president thereof. (Article 248, Ibid.)

Equity of the Incumbent. All existing federations and national unions which meet the qualifications of a legitimate labor organization and none of the grounds for cancellation shall continue to maintain their existing affiliates regardless of the nature of the industry and the location of the affiliates. (Article 249, Ibid.)

Rank-and-file union and supervisors’ union in same federation. The rank and file union and the supervisors’ union operating within the same establishment may join the same federation or national union. (Article 245, Ibid.)

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BAR EXAM QUESTION

(Question XV, Labor Law, 2018 Bar Exam)

Nexturn Corporation employed Nini and Nono, whose tasks involved directing and supervising rank-and-file employees engaged in company operations. Nini and Nono are required to ensure that such employees obey company rules and regulations, and recommend to the company’s Human Resources Department any required disciplinary action against erring employees. In Nexturn Corporation, there are two independent unions, representing rank-and-file and supervisory employees, respectively.

b) May the two unions be affiliated with the same Union Federation? (2.5%)

SUGGESTED ANSWER:

Yes. Under the Labor Code, the rank-and-file union and the supervisors’ union operating within the same establishment may join the same federation or national union.

⦁⦁⦁⦁⦁

3. Affiliation/disaffiliation from national union or federation

Chartering and creation of a local chapter. A duly registered federation or national union may directly create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. The chapter shall acquire legal personality only for purposes of filing a petition for certification election from the date it was issued a charter certificate. (Article 241, Ibid.)

The chapter shall be entitled to all other rights and privileges of a legitimate labor organization only upon the submission of the following documents in addition to its charter certificate:
1) The names of the chapter’s officers, their addresses, and the principal office of the chapter; and
2) The chapter’s constitution and by-laws: Provided, That where the chapter’s constitution and by-laws are the same as that of the federation or the national union, this fact shall be indicated accordingly. (Paragraph 2, Article 241, Ibid.)
The additional supporting requirements shall be certified under oath by the secretary or treasurer of the chapter and attested by its president. (Paragraph 3, Article 241, Ibid.)

Labor union federation. –

Additional requirements for federations or national unions:
Subject to Article 238, if the applicant for registration is a federation or a national union, it shall, in addition to the requirements of the preceding Articles, submit the following:
1) Proof of the affiliation of at least ten (10) locals or chapters, each of which must be a duly recognized collective bargaining agent in the establishment or industry in which it operates, supporting the registration of such applicant federation or national union; and
2) The names and addresses of the companies where the locals or chapters operate and the list of all the members in each company involved. (Article 244, Ibid.)

Effect of a Petition for Cancellation of Registration. A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election.

In case of cancellation, nothing herein shall restrict the right of the union to seek just and equitable remedies in the appropriate courts. (Article 246, Ibid.)

Disaffiliation. –

General Rule: Disaffiliation is allowed.
The right of the local union to exercise the right to disaffiliate from its mother union is well settled in this jurisdiction.  (National Union of Bank Employees [NUBE] v. Philnabank Employees Association [PEMA], G.R. No. 174287, 12 August 2013)
A local union has the right to disaffiliate from its mother union or declare its autonomy. A local union, being a separate and voluntary association, is free to serve the interests of all its members including the freedom to disaffiliate or declare its autonomy from the federation which it belongs when circumstances warrant, in accordance with the constitutional guarantee of freedom of association. (Malayang Samahan ng mga Manggagawa sa M. Greenfield [MSMG-UWP] v. Ramos, G.R. No. 113907, 28 February 2000)
Exception: It is prohibited.
The right of the local members to withdraw from the federation and to form a new local union depends upon the provisions of the union’s constitution, by-laws and charter and, in the absence of enforceable provisions in the federation’s constitution preventing disaffiliation of a local union, a local may sever its relationship with its parent. (Ibid.)
The purpose of affiliation by a local union with a mother union or a federation is to increase by collective action the bargaining power in respect of the terms and conditions of labor. Yet the locals remained the basic units of association, free to serve their own and the common interest of all, subject to the restraints imposed by the Constitution and By-Laws of the Association, and free also to renounce the affiliation for mutual welfare upon the terms laid down in the agreement which brought it into existence. (Ibid.)
Thus, a local union which has affiliated itself with a federation is free to sever such affiliation anytime and such disaffiliation cannot be considered disloyalty. In the absence of specific provisions in the federation’s constitution prohibiting disaffiliation or the declaration of autonomy of a local union, a local may dissociate with its parent union. (Ibid.)
BAR EXAM TIPS
1) Disaffiliation is moderately asked in the bar exam.
2) Note the exception to the rule on disaffiliation which limits the freedom to disaffiliate.

Substitutionary doctrine.The “substitutionary” doctrine only provides that the employees cannot revoke the validly executed collective bargaining contract with their employer by the simple expedient of changing their bargaining agent. And it is in the light of this that the phrase “said new agent would have to respect said contract” must be understood. It only means that the employees, thru their new bargaining agent, cannot renege on their collective bargaining contract, except of course to negotiate with management for the shortening thereof. (Benguet Consolidated, Inc. v. BCI Employees and Workers Union-PAFLU, G.R. No. L-24711, 30 April 1968)

In formulating the “substitutionary” doctrine, the only consideration involved was the employees’ interest in the existing bargaining agreement. The agent’s interest never entered the picture. (Ibid.)

4. Rights of legitimate labor organizations

A legitimate labor organization shall have the right:
1) To act as the representative of its members for the purpose of collective bargaining;
2) To be certified as the exclusive representative of all the employees in an appropriate bargaining unit for purposes of collective bargaining;
3) To be furnished by the employer, upon written request, with its annual audited financial statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar days from the date of receipt of the request, after the union has been duly recognized by the employer or certified as the sole and exclusive bargaining representative of the employees in the bargaining unit, or within sixty (60) calendar days before the expiration of the existing collective bargaining agreement, or during the collective bargaining negotiation;
4) To own property, real or personal, for the use and benefit of the labor organization and its members;
5) To sue and be sued in its registered name; and
6) To undertake all other activities designed to benefit the organization and its members, including cooperative, housing, welfare and other projects not contrary to law.

Tax-free income and properties received from fraternal or similar organizations. Notwithstanding any provision of a general or special law to the contrary, the income and the properties of legitimate labor organizations, including grants, endowments, gifts, donations and contributions they may receive from fraternal and similar organizations, local or foreign, which are actually, directly and exclusively used for their lawful purposes, shall be free from taxes, duties and other assessments. The exemptions provided herein may be withdrawn only by a special law expressly repealing this provision. (ART. 251. [242], Ibid.)

5. Rights and conditions of membership in legitimate labor organizations

Rights and conditions of membership in a labor organization:
1) No arbitrary or excessive initiation fees shall be required of the members of a legitimate labor organization nor shall arbitrary, excessive or oppressive fine and forfeiture be imposed;
2) The members shall be entitled to full and detailed reports from their officers and representatives of all financial transactions as provided for in the constitution and by-laws of the organization;
3) The members shall directly elect their officers in the local union, as well as their national officers in the national union or federation to which they or their local union is affiliated, by secret ballot at intervals of five (5) years. No qualification requirement for candidacy to any position shall be imposed other than membership in good standing in subject labor organization. The secretary or any other responsible union officer shall furnish the Secretary of Labor and Employment with a list of the newly-elected officers, together with the appointive officers or agents who are entrusted with the handling of funds within thirty (30) calendar days after the election of officers or from the occurrence of any change in the list of officers of the labor organization;
4) The members shall determine by secret ballot, after due deliberation, any question of major policy affecting the entire membership of the organization, unless the nature of the organization or force majeure renders such secret ballot impractical, in which case, the board of directors of the organization may make the decision in behalf of the general membership;
5) No labor organization shall knowingly admit as members or continue in membership any individual who belongs to a subversive organization or who is engaged directly or indirectly in any subversive activity;
6) No person who has been convicted of a crime involving moral turpitude shall be eligible for election as a union officer or for appointment to any position in the union;
7) No officer, agent or member of a labor organization shall collect any fees, dues, or other contributions in its behalf or make any disbursement of its money or funds unless he is duly authorized pursuant to its constitution and by-laws;
8) Every payment of fees, dues or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and entered into the record of the organization to be kept and maintained for the purpose;
9) The funds of the organization shall not be applied for any purpose or object other than those expressly provided by its constitution and by-laws or those expressly authorized by written resolution adopted by the majority of the members at a general meeting duly called for the purpose;
10) Every income or revenue of the organization shall be evidenced by a record showing its source, and every expenditure of its funds shall be evidenced by a receipt from the person to whom the payment is made, which shall state the date, place and purpose of such payment. Such record or receipt shall form part of the financial records of the organization.
Any action involving the funds of the organization shall prescribe after three (3) years from the date of submission of the annual financial report to the Department of Labor and Employment or from the date the same should have been submitted as required by law, whichever comes earlier: Provided, That this provision shall apply only to a legitimate labor organization which has submitted the financial report requirements under this Code: Provided, further, That failure of any labor organization to comply with the periodic financial reports required by law and such rules and regulations promulgated thereunder six (6) months after the effectivity of this Act shall automatically result in the cancellation of union registration of such labor organization;
11) The officers of any labor organization shall not be paid any compensation other than the salaries and expenses due to their positions as specifically provided for in its constitution and by-laws, or in a written resolution duly authorized by a majority of all the members at a general membership meeting duly called for the purpose. The minutes of the meeting and the list of participants and ballots cast shall be subject to inspection by the Secretary of Labor or his duly authorized representatives. Any irregularities in the approval of the resolutions shall be a ground for impeachment or expulsion from the organization;
12) The treasurer of any labor organization and every officer thereof who is responsible for the account of such organization or for the collection, management, disbursement, custody or control of the funds, moneys and other properties of the organization, shall render to the organization and to its members a true and correct account of all moneys received and paid by him since he assumed office or since the last day on which he rendered such account, and of all bonds, securities and other properties of the organization entrusted to his custody or under his control. The rendering of such account shall be made:
a) At least once a year within thirty (30) days after the close of its fiscal year;
b) At such other times as may be required by a resolution of the majority of the members of the organization; and
c) Upon vacating his office.
The account shall be duly audited and verified by affidavit and a copy thereof shall be furnished the Secretary of Labor.
13) The books of accounts and other records of the financial activities of any labor organization shall be open to inspection by any officer or member thereof during office hours;
14) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members in a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees. The record shall be attested to by the president.
15) Other than for mandatory activities under the Code, no special assessments, from any amount due to an employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction; and
16) It shall be the duty of any labor organization and its officers to inform its members on the provisions of its constitution and by-laws, collective bargaining agreement, the prevailing labor relations system and all their rights and obligations under existing labor laws. (Article 250, [241], Labor Code)

Reasonale dues. For this purpose, registered labor organizations may assess reasonable dues to finance labor relations seminars and other labor education activities. Any violation of the above rights and conditions of membership shall be a ground for cancellation of union registration or expulsion of officers from office, whichever is appropriate. At least thirty percent (30%) of the members of a union or any member or members specially concerned may report such violation to the Bureau. The Bureau shall have the power to hear and decide any reported violation to mete the appropriate penalty. (Paragraph 2, Article 250, [241], Labor Code)

Criminal and civil liabilities. Criminal and civil liabilities arising from violations of above rights and conditions of membership shall continue to be under the jurisdiction of ordinary courts. (Paragraph 3, Article 250, [241], Ibid.)

BAR EXAM TIPS
1) Rights and conditions of membership in a labor organization  is moderately asked in the bar exam, particularly on the prohibition on special assessment or other extraordinary fees (see Nos. 14 and 15).
2) However, do note that a registered labor union is allowed to assess reasonable dues to finance its activities (see Paragraph 2, Article 250, [241], Labor Code)

6. Check off, assessments, union dues, and agency fees

a. Requirements for check off, assessments, agency fees, etc.:
1) Majority vote;
2) Special meeting duly called for the purpose;
3) Written resolution;

Requirements. No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless authorized by a written resolution of a majority of all the members in a general membership meeting duly called for the purpose. The secretary of the organization shall record the minutes of the meeting including the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees. The record shall be attested to by the president. (Article 250 [241][n], Labor Code)

Individual written authorization. Other than for mandatory activities under the Code, no special assessments, attorney’s fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to an employee without an individual written authorization duly signed by the employee. (Article 250 [241][o], Labor Code)

Same; Content of authorization. The authorization should specifically state the amount, purpose and beneficiary of the deduction. (Ibid.)

7. Union security clause

Concept: Union security. Union security – is a generic term which is applied to and comprehends “closed shop,” “union shop,” “maintenance of membership” or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. (Bank of the Philippine Islands v. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, 10 August 2010)

There is union shop when all new regular employees are required to join the union within a certain period for their continued employment. (Ibid.)

There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. (Ibid.)

A closed-shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part. (Ibid.)

BAR EXAM TIPS
1) Union security clause or closed-shop is moderately asked in the bar exam.
2) Note that it is not a limitation on the employees right to organize to have a union security clause in an establishment.

a. Enforced membership

General Rule: Enforced membership is valid.
When certain employees are obliged to join a particular union as a requisite for continued employment, as in the case of Union Security Clauses, this condition is a valid restriction of the freedom or right not to join any labor organization because it is in favor of unionism. This Court, on occasion, has even held that a union security clause in a CBA is not a restriction of the right of freedom of association guaranteed by the Constitution. (Ibid.)
Exceptions: When refusal is valid. All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are subject to its terms. However, under law and jurisprudence, the following kinds of employees are exempted from its coverage, namely, employees who at the time the union shop agreement takes effect are bona fide members of a religious organization which prohibits its members from joining labor unions on religious grounds; employees already in the service and already members of a union other than the majority at the time the union shop agreement took effect; confidential employees who are excluded from the rank and file bargaining unit; and employees excluded from the union shop by express terms of the agreement. (Ibid.)

Policy to promote unionism. It is the policy of the State to promote unionism to enable the workers to negotiate with management on the same level and with more persuasiveness than if they were to individually and independently bargain for the improvement of their respective conditions. To this end, the Constitution guarantees to them the rights “to self-organization, collective bargaining and negotiations and peaceful concerted actions including the right to strike in accordance with law.” There is no question that these purposes could be thwarted if every worker were to choose to go his own separate way instead of joining his co-employees in planning collective action and presenting a united front when they sit down to bargain with their employers. It is for this reason that the law has sanctioned stipulations for the union shop and the closed shop as a means of encouraging the workers to join and support the labor union of their own choice as their representative in the negotiation of their demands and the protection of their interest vis-à-vis the employer. (Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., G.R. Nos. 58768-70, 29 December 1989)

To guarantee continued existence of the union. In other words, the purpose of a union shop or other union security arrangement is to guarantee the continued existence of the union through enforced membership for the benefit of the workers. (Bank of the Philippine Islands v. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, supra.)

b. Absorbed employees in case of merger of Corporations

In law, there is no special class of employees called “absorbed employees.” In order for the Court to apply or not apply the Union Shop Clause, the Court can only classify the former employees (of the absorbed company) as either “old” or “new.” If they are not “old” employees, they are necessarily “new” employees. If they are new employees, the Union Shop Clause did not distinguish between new employees who are non-regular at their hiring but who subsequently become regular and new employees who are “absorbed” as regular and permanent from the beginning of their employment. The Union Shop Clause did not so distinguish, and so neither must we. (BPI v. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, En Banc, G.R. No. 164301, 10 August 201)

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