The Supreme Court affirmed that a local union’s right to disaffiliate from its mother federation is a fundamental aspect of labor rights. This decision underscores the principle that local unions, as independent entities, have the autonomy to serve their members’ interests, including the freedom to separate from a federation when circumstances warrant. The ruling protects the rights of union members to self-organization and collective bargaining by recognizing the validity of a local union’s decision to disaffiliate and independently represent its members.

From NUBE to PEMA: Can a Local Union Chart Its Own Course?

This case arose from a dispute between the National Union of Bank Employees (NUBE) and the Philnabank Employees Association (PEMA) following PEMA’s disaffiliation from NUBE. The central question was whether PEMA’s disaffiliation was valid, thereby affecting NUBE’s right to collect union dues and represent PNB’s rank-and-file employees. Respondent Philippine National Bank (PNB) used to be a government-owned and controlled banking institution established under Public Act 2612. Its rank-and-file employees, being government personnel, were represented for collective negotiation by the Philnabank Employees Association (PEMA), a public sector union. In 1996, the Securities and Exchange Commission approved PNB’s new Articles of Incorporation and By-laws and its changed status as a private corporation. PEMA affiliated with petitioner National Union of Bank Employees (NUBE), which is a labor federation composed of unions in the banking industry, adopting the name NUBE-PNB Employees Chapter (NUBE-PEC). PEMA’s decision to disaffiliate stemmed from dissatisfaction with NUBE’s services and a desire for greater autonomy in representing its members.

The Court of Appeals (CA) reversed the Secretary of Labor’s decision, ruling in favor of PEMA’s valid disaffiliation. NUBE argued that the disaffiliation was invalid due to procedural lapses and that PEMA was not a separate entity. The Supreme Court (SC) disagreed, emphasizing the well-established right of a local union to disaffiliate from its mother union. The SC referenced several landmark cases to support its decision, including MSMG-UWP v. Hon. Ramos, which states that a local union has the right to disaffiliate from its mother union or declare its autonomy. Building on this principle, the Court reiterated that a local union is a separate and voluntary association, free to serve the interests of its members, including the freedom to disaffiliate.

The SC further emphasized the purpose of affiliation, noting that it is primarily to increase collective bargaining power. However, local unions remain the basic units of association, free to serve their own interests and renounce affiliation for mutual welfare. The decision underscored that affiliation does not strip the local union of its distinct legal personality or give the mother federation the right to act independently of the local union. Importantly, the Court found no evidence that PEMA was expressly forbidden to disaffiliate from NUBE or that any conditions were imposed for a valid breakaway. Therefore, PEMA was not precluded from disaffiliating after acquiring the status of an independent labor organization duly registered with the DOLE.

NUBE contended that PEMA’s disaffiliation was invalid because it did not follow the procedure outlined in Article 241 (d) of the Labor Code, which requires a secret ballot after due deliberation. The Court rejected this argument, pointing out that NUBE failed to provide a specific legal basis for this requirement. Even assuming that Article 241 (d) applied, the Court upheld PEMA’s disaffiliation, emphasizing the employees’ fundamental right to self-organization. Furthermore, the Court acknowledged the impracticality of conducting a secret ballot due to the geographical dispersion of PNB employees across numerous branches. It was understandable, therefore, why PEMA’s board of directors merely opted to submit for ratification of the majority their resolution to disaffiliate from NUBE.

The SC also considered the argument that the subsequent certification election, in which NUBE-PNB Chapter was voted as the sole bargaining agent, negated the disaffiliation. The Court found this argument unconvincing, stating that the names PEMA and NUBE-PNB Chapter represented the same entity. The appellate court found that a majority, indeed a vast majority, of the members of the local union ratified the action of the board to disaffiliate. Our count of the members who approved the board action is, 2,638. If we divide this by the number of eligible voters as per the certification election which is 3,742, the quotient is 70.5%, representing the proportion of the members in favor of disaffiliation. The [PEMA] says that the action was ratified by 81%. Either way, the groundswell of support for the measure was overwhelming.

The SC also highlighted the fact that NUBE did not dispute the validity of the signatures or the authenticity of the document showing support for PEMA’s disaffiliation. The list of PEMA members who agreed with the board resolution was unchallenged by NUBE. There was no evidence that the union members’ ratification was obtained through fraud, force, or intimidation. In light of PEMA’s valid disaffiliation, the Court held that NUBE lost its right to collect union dues held in trust by PNB. Once PEMA separated from NUBE and became an independent labor organization, it was no longer obligated to pay dues or assessments to NUBE. Consequently, PNB had no reason to continue making deductions for NUBE’s benefit.

The Court quoted the case of Volkschel Labor Union v. Bureau of Labor Relations, explaining that ALUMETAL (NUBE in this case) is entitled to receive the dues from respondent companies as long as petitioner union is affiliated with it and respondent companies are authorized by their employees (members of petitioner union) to deduct union dues. Without said affiliation, the employer has no link to the mother union. A contract between an employer and the parent organization as bargaining agent for the employees is terminated by the disaffiliation of the local of which the employees are members.

FAQs

What was the key issue in this case?	The key issue was whether PEMA validly disaffiliated from NUBE, affecting NUBE’s right to collect union dues and represent PNB employees.
What is the right to disaffiliation?	The right to disaffiliation allows a local union to separate from its mother federation, giving it autonomy and the freedom to represent its members’ interests independently.
Did the Court find PEMA’s disaffiliation valid?	Yes, the Supreme Court affirmed the Court of Appeals’ decision, finding PEMA’s disaffiliation from NUBE to be valid.
What happens to union dues after a valid disaffiliation?	After a valid disaffiliation, the local union is no longer obligated to pay dues to the former mother federation, and the employer should cease deductions for that federation.
Does affiliation strip a local union of its legal personality?	No, affiliation does not strip a local union of its distinct legal personality; it remains a separate and voluntary association.
Can a local union disaffiliate at any time?	Yes, unless prohibited by the union’s constitution or rules, a local union may disaffiliate at any time from its mother federation.
What happens if a local union does not follow the procedure on disaffiliation?	Non-compliance with procedure cannot override the employees’ fundamental right to self-organization.
Does the mother federation have the power to control the local union?	No, the mother federation does not have the power to control the local union and their affairs.

This case reinforces the importance of protecting the autonomy of local unions and the rights of their members to choose their representation. It provides a clear framework for evaluating the validity of disaffiliation and ensures that local unions can effectively serve their members’ interests.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: NATIONAL UNION OF BANK EMPLOYEES (NUBE) vs. PHILNABANK EMPLOYEES ASSOCIATION (PEMA) AND PHILIPPINE NATIONAL BANK, G.R. No. 174287, August 12, 2013