Tag: Collective Bargaining

Faculty Rights and Union Membership: Protecting the Right to Self-Organization in Educational Institutions

This case underscores the right of faculty members in educational institutions to form or join labor organizations, clarifying that they are not inherently managerial employees ineligible for union membership. The Supreme Court affirmed the Asian Institute of Management Faculty Association’s (AFA) legitimacy, reinforcing the principle that employers cannot use certification election proceedings to undermine a union’s legal standing. This decision protects academic workers’ rights to collective bargaining and self-organization, ensuring their voices are heard in institutional governance.

The Academic Tug-of-War: Can Faculty Members Unionize or Are They Management?

The heart of this legal battle lies in determining whether faculty members at the Asian Institute of Management (AIM) are considered managerial employees. If deemed managerial, they would be ineligible to join or form a labor union, as per Article 255 of the Labor Code. AIM argued that its faculty members, particularly those on the tenure track, wield significant authority in determining faculty standards and influencing institutional policies, thus classifying them as part of management. This assertion was challenged by the Asian Institute of Management Faculty Association (AFA), which sought to represent the faculty in collective bargaining. The crucial question then becomes: Does the faculty’s role in academic governance equate to a managerial function that strips them of their right to unionize?

The Supreme Court, in resolving this dispute, sided with the faculty, emphasizing that their primary role is teaching and research, not managing the institution’s proprietary concerns. The Court highlighted that while faculty members may participate in academic committees and contribute to policy recommendations, these are subject to the approval of the Board of Trustees. This recommendatory function does not equate to the power to “lay down and execute management policies,” a key characteristic of managerial employees under Article 255 of the Labor Code. Citing University of the Philippines v. Ferrer-Calleja, the Court reiterated that faculty involvement in academic personnel committees is primarily advisory and subject to higher authorities’ review.

Building on this principle, the Court stressed the importance of upholding the constitutional right to self-organization. Article XIII, Section 3 of the Constitution guarantees workers’ rights to form unions and engage in collective bargaining. This right is not to be easily curtailed, and the burden of proof lies on the employer to demonstrate that employees are genuinely managerial and thus excluded from union membership. In this case, AIM failed to provide sufficient evidence to overcome the presumption in favor of the faculty’s right to self-organization.

Moreover, the Court addressed AIM’s attempt to challenge AFA’s legitimacy during the certification election proceedings. It firmly stated that the legitimacy of a labor organization cannot be collaterally attacked in such proceedings. The proper avenue for questioning a union’s legal personality is through an independent petition for cancellation of registration, as outlined in the Labor Code’s Implementing Rules. This procedural safeguard prevents employers from using certification elections to undermine established unions and ensures that workers can freely choose their bargaining representatives.

To further clarify, the Court cited Article 269 of the Labor Code, which mandates that a certification election be automatically conducted in an unorganized establishment upon the filing of a petition by a legitimate labor organization. As AIM was undisputed to be an unorganized establishment, AFA’s petition should have been granted, provided it met the formal requirements and none of the grounds for dismissal were present. The employer’s role in certification elections is that of a mere bystander, lacking the legal standing to interfere with the process or challenge the union’s legitimacy.

The Court also addressed AIM’s argument that AFA’s registration should be canceled due to misrepresentation, claiming that AFA falsely stated the employment status of its members. The Court emphasized that the grounds for cancellation of union registration are exclusive, as outlined in Article 247 of the Labor Code. These grounds include misrepresentation, false statements, or fraud in connection with the union’s constitution, by-laws, election of officers, or list of members. AIM failed to provide sufficient evidence to prove any such misrepresentation or fraud on AFA’s part.

The Court also addressed AIM’s argument regarding the faculty members’ work hours and whether the faculty members are subjected to rigid observance of working hours. The Court ruled that even though there were prescribed working hours, the same militates against a finding that they are managerial employees. The Supreme Court in Cathay Pacific Steel Corporation v. Court of Appeals ruled that a strict imposition of work hours on an employee is “uncharacteristic of a managerial employee.”

In conclusion, the Supreme Court’s decision in this case reaffirms the importance of protecting workers’ rights to self-organization and collective bargaining. It clarifies that faculty members in educational institutions are not automatically considered managerial employees and are entitled to form or join labor unions to represent their interests. The decision also reinforces the principle that employers cannot use certification election proceedings to collaterally attack a union’s legitimacy and that the grounds for cancellation of union registration are exclusive and must be proven by evidence.

FAQs

What was the key issue in this case?	The central issue was whether faculty members at the Asian Institute of Management (AIM) should be classified as managerial employees, which would disqualify them from joining a labor union, or as rank-and-file employees with the right to self-organization.
What did the Supreme Court decide?	The Supreme Court ruled that AIM’s faculty members are not managerial employees and affirmed their right to form and join a labor organization. The Court granted the Asian Institute of Management Faculty Association’s (AFA) petition to conduct a certification election and denied AIM’s petition to cancel AFA’s registration.
What is a certification election?	A certification election is a process where employees vote to determine whether they want to be represented by a labor union for collective bargaining purposes. It establishes which union, if any, will be the exclusive bargaining agent for the employees in a specific bargaining unit.
Why did AIM argue that its faculty members were managerial employees?	AIM argued that its faculty members, especially those on the tenure track, had significant influence in determining faculty standards and institutional policies. AIM contended that the faculty’s role in academic governance made them part of the management team.
What are the requirements for managerial employees?	The requirements for managerial employees are outlined in the Labor Code, defining them as employees vested with the power to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline employees.
What is the significance of the right to self-organization?	The right to self-organization, guaranteed by the Constitution, allows employees to form, join, or assist labor organizations for collective bargaining and mutual aid and protection. It is a fundamental right that promotes workers’ welfare and participation in workplace governance.
What is the bystander rule in certification elections?	The bystander rule dictates that employers should maintain a hands-off approach in certification elections, except when requested to bargain collectively. They cannot interfere with or oppose the process, as the choice of a bargaining representative is the exclusive concern of the employees.
What are the grounds for canceling a union’s registration?	The grounds for canceling a union’s registration, as outlined in Article 247 of the Labor Code, include misrepresentation, false statements, or fraud in connection with the union’s constitution, by-laws, election of officers, or list of members.
Can an employer challenge a union’s legitimacy during certification election proceedings?	No, the legitimacy of a labor organization cannot be collaterally attacked in certification election proceedings. The proper procedure is to file an independent petition for cancellation of registration.

This landmark ruling serves as a reminder that academic institutions must respect the rights of their faculty members to form unions and engage in collective bargaining. By upholding these rights, the Supreme Court ensures that academic workers have a voice in shaping their working conditions and contributing to the overall governance of their institutions.

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: ASIAN INSTITUTE OF MANAGEMENT FACULTY ASSOCIATION vs. ASIAN INSTITUTE OF MANAGEMENT, G.R. Nos. 197089 & 207971, August 31, 2022

August 31, 2022

Employer’s Role in Certification Elections: Remaining a Bystander Despite Reorganization

The Supreme Court affirmed that employers have a limited role in certification elections, emphasizing that they are primarily bystanders without the right to oppose such elections. This ruling underscores that employers cannot obstruct the process, even if they believe some employees are ineligible for union membership. The Court reiterated that employers must maintain a hands-off approach to ensure employees’ free choice of a bargaining representative. Furthermore, the decision clarifies that internal reorganizations do not automatically nullify certification election results, particularly when the changes are superficial and do not substantially alter employees’ roles or supervisory functions. This case highlights the importance of protecting employees’ rights to self-organization and collective bargaining, free from employer interference.

Coca-Cola’s Reorganization: A Genuine Change or Attempt to Thwart Unionization?

Coca-Cola FEMSA Philippines, Inc. (CCPI) faced a petition for certification election from the Coca-Cola FEMSA Phils., MOP Manufacturing Unit Coordinators and Supervisors Union – All Workers Alliance Trade Unions (the Union). CCPI argued that the employees the Union sought to represent were managerial and thus ineligible to unionize. The Circuit Mediator-Arbiter (MA) granted the Union’s petition, and a certification election proceeded, which the Union won. CCPI appealed, contending that a reorganization of its Misamis Oriental plant, which allegedly abolished the positions held by Union members, rendered the certification election moot. The Court of Appeals (CA) dismissed CCPI’s petition, leading to this case before the Supreme Court. The central legal question was whether CCPI’s reorganization was a legitimate business decision or a maneuver to undermine the employees’ right to unionize.

The Supreme Court identified a critical procedural lapse: CCPI’s engagement in **forum shopping**. According to the Court, forum shopping involves the repetitive use of multiple judicial remedies in different courts, based on substantially the same facts and issues. This is prohibited because it risks contradictory decisions from different tribunals. The Court noted:

Forum shopping is the repetitive availment of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in or already resolved adversely by some other court.

In this instance, CCPI had simultaneously pursued different legal avenues to challenge the certification election, including contesting the initial grant of the petition and protesting the election results. The Court emphasized that Rule 42, Section 2, requires petitioners to disclose any other actions involving the same issues in any court. CCPI failed to disclose the pendency of CA-G.R. SP No. 152835, thereby violating this rule and undermining the integrity of the judicial process.

Building on this procedural point, the Court reiterated the principle of the **employer as a bystander** in certification election proceedings. Article 271 of the Labor Code explicitly limits the employer’s role:

In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. The employer’s participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition.

This provision underscores that employers generally lack the standing to interfere with or oppose certification elections, which are primarily the concern of the employees. The employer’s main duty is to remain neutral and provide information when required.

The Court also addressed CCPI’s argument that the reorganization of its Misamis Oriental plant rendered the certification election moot. While acknowledging that business reorganization is a legitimate management prerogative, the Court scrutinized the actual changes implemented by CCPI. The Court referenced a 1945 ruling from the United States National Labor Relations Board:

The Board has recognized that its finding with respect to the appropriate unit in a particular business may subsequently become inappropriate due to changes in the business structure, operational methods of the employer, or the extent of union organization among the employees.

However, the CA and the MA had found that the reorganization resulted in only superficial changes. The Court highlighted that many of the new positions were mere consolidations or re-introductions of the old positions, with no significant alteration to the supervisory character of the roles. The Court provided a table to illustrate this point:

Position prior to reorganization	Reorganized position
(Line) Production Supervisor	Line Production Head
(Line) Production Coordinator	Line Production Head
Production Process Coordinator/Supervisor	Production Process Head
Maintenance Planning Coordinator	Maintenance Planning Head
Line Maintenance Coordinator	Line Maintenance Head
Preventive Maintenance Supervisor	Preventive Maintenance Head
Maintenance Supervisor	Process Maintenance Head
Auxiliary Maintenance Supervisor	Auxiliary Maintenance Head
Quality Process Coordinator	Quality Systems Head
Line Quality Supervisor	Quality Control Head – Line
Process Integrity Coordinator	Quality Control Head
Quality Assurance Coordinator	Quality Control Head
Warehouse Coordinator	Warehouse Head-Materials Warehouse Head-Inbound/Outbound Operations Warehouse Head-Inbound Warehouse Head-Outbound
Warehouse Supervisor

The Court concluded that the reorganization did not fundamentally alter the composition and integrity of the bargaining unit. The supervisory employees of CCPI’s Misamis Oriental plant had already granted the Union a mandate to represent them through a valid certification election. Therefore, the reorganization could not invalidate the election results.

FAQs

What was the key issue in this case?	The key issue was whether Coca-Cola FEMSA Philippines, Inc. (CCPI) could invalidate a certification election by arguing that its employees were managerial or by reorganizing its operations after the election was called.
What is a certification election?	A certification election is a process where employees vote to determine whether they want a union to represent them in collective bargaining with their employer. This process is governed by labor laws to ensure fairness and employee choice.
What does it mean for an employer to be a “bystander” in a certification election?	Being a “bystander” means the employer has a limited role in the election process, primarily to provide information when asked. They cannot interfere with or oppose the election, as it is the employees’ right to choose their representation.
What is forum shopping, and why is it prohibited?	Forum shopping is when a party files multiple lawsuits in different courts, all based on the same facts and issues, to increase their chances of a favorable outcome. It is prohibited because it can lead to conflicting rulings and wastes judicial resources.
Can a company reorganize its operations during a union certification process?	Yes, a company can reorganize its operations, but the reorganization must be a legitimate business decision, not a tactic to undermine the union. If the changes are superficial and don’t substantially alter employees’ roles, they may not invalidate the election.
What is the role of the Med-Arbiter (MA) in a certification election?	The Med-Arbiter oversees the certification election process, ensuring that it is conducted fairly and in accordance with labor laws. They make decisions on eligibility, resolve disputes, and certify the election results.
What happens after a union wins a certification election?	After a union wins a certification election, it becomes the exclusive bargaining representative for the employees in the bargaining unit. The employer is then legally obligated to bargain in good faith with the union over wages, hours, and other terms and conditions of employment.
What is a bargaining unit?	A bargaining unit is a group of employees who share a community of interest and can appropriately be grouped together for purposes of collective bargaining. The determination of an appropriate bargaining unit is crucial in certification elections.

In conclusion, the Supreme Court’s decision reaffirms the limited role of employers in certification elections and emphasizes the importance of protecting employees’ rights to self-organization and collective bargaining. Employers must remain neutral and cannot use reorganization as a pretext to undermine unionization efforts. This ruling serves as a reminder that labor laws prioritize the rights of employees to choose their representation freely.

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

November 17, 2021

Navigating Mootness in Labor Disputes: The Impact of Union Dissolution on Legal Proceedings
Key Takeaway: Union Dissolution Can Render Labor Disputes Moot, Affecting Legal Outcomes

New World International Development (Phil.), Inc., Stephan Stoss and Geuel F. Auste v. New World Renaissance Hotel Labor Union, G.R. No. 197889, July 28, 2021

Imagine a workplace where tensions simmer between management and employees, leading to a union filing a complaint for unfair labor practices. The legal battle escalates, moving through various courts, only to be halted by an unexpected twist: the union itself dissolves. This scenario, drawn from real-life, underscores the complexities of labor law and the doctrine of mootness. In the case of New World International Development (Phil.), Inc. vs. New World Renaissance Hotel Labor Union, the Philippine Supreme Court grappled with whether the dissolution of a union could render a labor dispute moot, ultimately affecting the rights and obligations of all parties involved.

The central issue in this case revolved around the New World Renaissance Hotel Labor Union’s complaint against the hotel’s management for refusing to negotiate a collective bargaining agreement (CBA). Despite the union’s efforts to engage in negotiations, the hotel cited pending legal challenges to the union’s certification as a reason for delay. The case’s journey through the labor arbiter, National Labor Relations Commission (NLRC), and Court of Appeals highlighted the intricate dance between labor rights and management prerogatives, culminating in a pivotal ruling by the Supreme Court.

Understanding the Legal Framework: Labor Rights and the Doctrine of Mootness

Labor law in the Philippines is designed to protect the rights of workers and promote fair labor practices. Central to this is the right of employees to form unions and engage in collective bargaining, as enshrined in the Labor Code of the Philippines. Section 255 of the Labor Code states, “It shall be the duty of both parties to bargain collectively in good faith.” This provision underscores the obligation of employers to negotiate with certified bargaining agents in good faith.

The concept of mootness, on the other hand, is a judicial doctrine that prevents courts from issuing advisory opinions on matters that no longer present a live controversy. According to the Supreme Court in J.O.S. Managing Builders, Inc. v. UOBP, “A case becomes moot when it ceases to present a justiciable controversy such that its adjudication would not yield any practical value or use.” This principle is crucial in understanding how the dissolution of a union can impact ongoing legal proceedings.

In everyday terms, imagine a scenario where a tenant sues a landlord over a lease dispute. If the tenant moves out before the case is resolved, the court may consider the case moot because the tenant no longer has a stake in the outcome. Similarly, in labor disputes, if a union dissolves, it may no longer have the legal standing to pursue its claims.

Chronicle of the Case: From Union Formation to Dissolution

The New World Renaissance Hotel Labor Union was certified as the sole and exclusive bargaining agent for the hotel’s rank-and-file employees following a certification election in July 2002. Eager to negotiate a CBA, the union submitted its initial proposal in September 2002, but the hotel did not respond, citing a pending petition to cancel the union’s certification.

As the union persisted, submitting amended proposals in March 2003 and November 2004, tensions escalated. The hotel’s management transferred several union officers to different positions, which the union claimed was a form of harassment. The union filed a complaint for unfair labor practice with the NLRC, which was initially dismissed by the labor arbiter on grounds of prematurity.

The case progressed through the NLRC and the Court of Appeals, with the latter eventually ruling in favor of the union, ordering the hotel to engage in CBA negotiations and pay attorney’s fees. However, the hotel appealed to the Supreme Court, citing a supervening event: the union’s dissolution by its members in December 2005.

The Supreme Court, in its decision, emphasized the significance of this dissolution, stating, “The dissolution of respondent union by its own members is a supervening event which rendered the case moot.” The Court further clarified that, “A supervening event consists of facts that transpire after the judgment became final and executory, or of new circumstances that develop after the judgment attained finality, including matters that the parties were not aware of prior to or during the trial because such matters were not yet in existence at that time.”

The procedural journey of this case underscores the importance of timely legal action and the potential impact of external events on legal outcomes. The following steps outline the case’s progression:
1. The union filed a complaint for unfair labor practice with the NLRC.
2. The labor arbiter dismissed the complaint, citing prematurity due to pending legal challenges.
3. The NLRC affirmed the labor arbiter’s decision on appeal.
4. The Court of Appeals reversed the NLRC’s decision, ordering CBA negotiations and attorney’s fees.
5. The Supreme Court granted the hotel’s petition, dismissing the case on grounds of mootness due to the union’s dissolution.
Practical Implications and Key Lessons

The Supreme Court’s ruling in this case has significant implications for labor disputes and the doctrine of mootness. For unions and employers alike, it highlights the importance of monitoring the status of labor organizations throughout legal proceedings. If a union dissolves, it may no longer have the legal standing to pursue its claims, potentially rendering ongoing cases moot.

For businesses, this ruling underscores the need to stay informed about changes within labor unions and to consider the potential impact of such changes on legal disputes. It also emphasizes the importance of engaging in good faith negotiations with certified bargaining agents to avoid allegations of unfair labor practices.

Key Lessons:
- Monitor the status of labor unions throughout legal proceedings to anticipate potential changes that could affect case outcomes.
- Engage in good faith negotiations with certified bargaining agents to mitigate the risk of unfair labor practice claims.
- Understand the doctrine of mootness and its potential application in labor disputes, particularly in cases involving union dissolution.
Frequently Asked Questions

What is the doctrine of mootness?
The doctrine of mootness is a legal principle that prevents courts from deciding cases where there is no longer a live controversy, as the resolution would not have any practical effect.

Can a union’s dissolution affect ongoing labor disputes?
Yes, if a union dissolves during a legal dispute, the case may be considered moot because the union no longer has the legal standing to pursue its claims.

What are the obligations of employers in collective bargaining?
Employers are required to bargain collectively in good faith with certified bargaining agents, as mandated by Section 255 of the Labor Code of the Philippines.

How can businesses protect themselves from unfair labor practice claims?
Businesses can protect themselves by engaging in good faith negotiations, documenting all interactions with unions, and staying informed about changes within labor organizations.

What should unions do if they face management resistance to negotiations?
Unions should document all attempts to negotiate, seek mediation through the National Conciliation and Mediation Board, and consider legal action if necessary.

Can a union be revived after dissolution?
Yes, a union can be revived if its members decide to reorganize and meet the legal requirements for union formation under the Labor Code.

How does the Supreme Court determine if a case is moot?
The Supreme Court considers whether the case presents a justiciable controversy and whether its resolution would yield any practical value or use.

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July 28, 2021

Collective Bargaining Limits: GOCCs and the Compensation System

The Supreme Court has clarified that while employees of government-owned or controlled corporations (GOCCs) have the right to form unions, their ability to negotiate economic terms in collective bargaining agreements is limited. This is particularly true for non-chartered GOCCs, which are governed by the Labor Code but must adhere to the Compensation and Position Classification System (CPCS) established by law. This system, designed to standardize compensation across GOCCs, restricts the scope of negotiable economic terms, ensuring that employee compensation aligns with legal parameters rather than private bargaining.

GSIS Family Bank: Can a Government-Acquired Bank Negotiate Employee Benefits?

The case of GSIS Family Bank Employees Union v. Villanueva arose from a dispute over the bank’s refusal to negotiate a new collective bargaining agreement (CBA) with its employees. The GSIS Union argued that as a private bank established under the Corporation Code, GSIS Family Bank should not be subject to Republic Act No. 10149, also known as the GOCC Governance Act of 2011. This law created the Governance Commission for Government-Owned or Controlled Corporations (GCG) and aimed to standardize compensation across GOCCs. The bank, however, contended that the GCG’s directive prevented it from negotiating economic terms with the union, leading to the legal challenge.

The central legal question was whether GSIS Family Bank, as a non-chartered GOCC, could enter into a collective bargaining agreement with its employees, particularly concerning economic benefits. The GSIS Union sought to compel the bank to negotiate a new CBA, arguing that it was a private entity governed by the Labor Code. The bank, on the other hand, maintained that it was bound by Republic Act No. 10149 and the GCG’s directives, which limited its authority to negotiate economic terms.

The Supreme Court addressed procedural and substantive issues in resolving the dispute. Initially, the Court examined whether a Petition for Certiorari was the correct legal remedy and whether the bank’s closure rendered the petition moot. It found that certiorari was not appropriate because the Governance Commission’s actions were advisory, not judicial or quasi-judicial. Nonetheless, the Court proceeded to discuss the substantive issues to guide the bench and bar on similar matters.

One key point of contention was the applicable legal framework. Presidential Decree No. 2029 and Executive Order No. 292 define a government-owned or controlled corporation. According to these laws, a GOCC is an agency organized as a stock or non-stock corporation, vested with functions relating to public needs, and owned by the government directly or through its instrumentalities. GSIS Family Bank met these criteria, as the Government Service Insurance System owned a significant portion of its outstanding capital stock, thus classifying it as a GOCC.

The Court emphasized the constitutional right of workers to self-organization, collective bargaining, and negotiation. Article XIII, Section 3 of the Constitution guarantees these rights to all workers, both in the public and private sectors. However, the Court clarified that while the right to self-organization is absolute, the right of government employees to collective bargaining and negotiation is subject to limitations. Relations between private employers and their employees are generally more flexible, subject to minimum requirements of wage laws and labor legislation. In contrast, the terms and conditions of employment for government workers are largely fixed by the legislature.

Furthermore, the Court cited Social Security System Employees Association v. Court of Appeals, emphasizing that government employees must often petition Congress for changes in employment terms that fall within legislative purview. This approach contrasts with private sector employees, who can negotiate a broader range of employment conditions directly with their employers. The decision in PCSO v. Chairperson Pulido-Tan, et al. reinforced this principle by highlighting that GOCCs are subject to compensation and position standards issued by the Department of Budget and Management and other applicable laws.

Considering these principles, the Supreme Court turned to the specifics of Republic Act No. 10149. The law applies to all GOCCs, including non-chartered entities, and mandates the development of a Compensation and Position Classification System (CPCS) to standardize compensation across the sector. Section 9 of the law explicitly states that no GOCC shall be exempt from the CPCS developed by the Governance Commission. Moreover, Executive Order No. 203, issued by President Aquino, unequivocally stated that governing boards of GOCCs may not negotiate the economic terms of collective bargaining agreements with their employees.

In conclusion, the Supreme Court ruled that GSIS Family Bank could not be faulted for refusing to enter into a new collective bargaining agreement with the GSIS Union. The bank lacked the authority to negotiate economic terms with its employees, given the prevailing legal framework and the directives of the Governance Commission. The Court underscored that Republic Act No. 10149, as applied to fully government-owned and controlled non-chartered corporations, prevails unless directly challenged in an appropriate case with a proper actual controversy.

FAQs

What was the key issue in this case?	The key issue was whether GSIS Family Bank, as a non-chartered government-owned or controlled corporation (GOCC), could enter into a collective bargaining agreement with its employees, specifically regarding economic terms.
What is a non-chartered GOCC?	A non-chartered GOCC is a government-owned or controlled corporation organized and operating under the Corporation Code, as opposed to one created by a special law or original charter.
What is the Compensation and Position Classification System (CPCS)?	The CPCS is a system developed by the Governance Commission for Government-Owned or Controlled Corporations (GCG) to standardize compensation and position classifications across all GOCCs. It aims to ensure reasonable and competitive remuneration schemes while maintaining fiscal responsibility.
Does Republic Act No. 10149 apply to all GOCCs?	Yes, Republic Act No. 10149, also known as the GOCC Governance Act of 2011, applies to all GOCCs, government financial institutions, and their subsidiaries, with certain exceptions like the Bangko Sentral ng Pilipinas and state universities and colleges.
Can government employees form unions?	Yes, government employees have the right to form unions, as guaranteed by the Constitution. However, their right to collective bargaining and negotiation is subject to limitations, particularly concerning terms fixed by law.
What did the Governance Commission do in this case?	The Governance Commission issued advisories stating that GSIS Family Bank, as a government financial institution, was not authorized to enter into a collective bargaining agreement with its employees based on the principle that the compensation system is provided by law.
Why did the Supreme Court deny the petition?	The Supreme Court denied the petition because the Governance Commission’s actions were advisory and not subject to certiorari. Additionally, GSIS Family Bank’s closure rendered the petition moot.
What is the significance of Executive Order No. 203?	Executive Order No. 203 reinforced the principle that governing boards of GOCCs, whether chartered or non-chartered, cannot negotiate the economic terms of collective bargaining agreements with their employees.

This case underscores the limits on collective bargaining for employees of government-owned or controlled corporations, particularly regarding economic terms. While the right to form unions is protected, the scope of negotiable issues is constrained by laws and regulations designed to standardize compensation and ensure fiscal responsibility across the government sector.

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

December 23, 2019

Maintaining Labor Peace: The Duty to Preserve Status Quo During Labor Disputes

In labor disputes, maintaining stability is paramount. The Supreme Court has affirmed that when the Secretary of Labor assumes jurisdiction over a labor dispute, employers must maintain the status quo. This means adhering to the terms and conditions of employment that existed before the dispute arose, ensuring a fair playing field while the matter is being resolved. Employers must hold off on implementing changes, like terminations, until the labor dispute finds resolution.

Coca-Cola’s Restructuring: Must Business Strategy Bend to Labor Law?

San Fernando Coca-Cola Rank-and-File Union (SACORU) challenged Coca-Cola Bottlers Philippines, Inc.’s (CCBPI) redundancy program, arguing it was an unfair labor practice. The core issue revolved around whether CCBPI could proceed with terminations due to redundancy after the Department of Labor and Employment (DOLE) assumed jurisdiction over the labor dispute. SACORU contended that the DOLE’s assumption of jurisdiction should have halted the termination of 27 union members, which was planned due to restructuring. CCBPI, on the other hand, maintained that the termination process had already begun when the DOLE stepped in, so continuing with the plan did not violate any orders.

The Supreme Court partially granted SACORU’s petition, clarifying the obligations of employers during labor disputes. The court emphasized that once the DOLE Secretary assumes jurisdiction, a return-to-work order is put in place to maintain status quo. This order is intended to prevent any actions that could exacerbate the situation while the dispute is being resolved. “When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration.” The Court highlighted that the purpose of the return-to-work order is to preserve the employment status of employees as it stood before the strike or lockout.

Building on this principle, the Court underscored that maintaining status quo means preserving the employment conditions as of the day before the strike. Therefore, from the moment the DOLE Secretary takes control until a resolution is reached, all parties must avoid any actions that could disrupt the existing state of affairs. This is crucial to prevent further economic instability and maintain the employer’s industry during dispute resolution. The Court cited Manggagawa ng Komunikasyon sa Pilipinas v. Philippine Long Distance Telephone Co., Inc., emphasizing that the return-to-work order is “interlocutory in nature, and is merely meant to maintain status quo while the main issue is being threshed out in the proper forum.”

Applying this to the case at hand, the Supreme Court found that CCBPI should have suspended the terminations scheduled for July 1, 2009, following the DOLE’s assumption of jurisdiction on June 23, 2009. The Court ordered CCBPI to pay the affected employees backwages and benefits from the original termination date until the NLRC’s resolution on March 16, 2010, which validated the redundancy program. This decision makes clear that the effectivity of terminations should have been suspended to comply with the return-to-work order. The company had a duty to maintain the conditions of employment as they were before the labor dispute escalated, until the NLRC made its final resolution.

However, the Court also affirmed the validity of CCBPI’s redundancy program and ruled that it did not constitute unfair labor practice. The Court relied on the findings of the NLRC and the Court of Appeals, which were supported by substantial evidence. The criteria for a valid redundancy program were clearly outlined: (1) written notice to employees and the Department of Labor and Employment, (2) payment of separation pay, (3) good faith in abolishing redundant positions, and (4) fair and reasonable criteria in identifying redundant positions. “(1) written notice served on both the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.” As these conditions were met by CCBPI, the redundancy program was deemed lawful.

This decision emphasizes the balance between an employer’s right to manage its business and the protection of employees’ rights during labor disputes. While companies can implement redundancy programs for legitimate business reasons, they must adhere to the legal requirements and respect the status quo when the DOLE intervenes. This approach contrasts with a scenario where employers could freely alter employment conditions mid-dispute, potentially weakening the employees’ position during negotiations and undermining the role of labor laws.

FAQs

What was the key issue in this case?	The central question was whether Coca-Cola could proceed with terminations due to redundancy after the DOLE assumed jurisdiction over a labor dispute, or whether the assumption of jurisdiction should have halted the terminations.
What is a return-to-work order?	A return-to-work order is issued by the DOLE Secretary to maintain the status quo in employment conditions during a labor dispute. It requires employees to return to work and employers to readmit them under the same terms and conditions as before the dispute.
What does “status quo” mean in this context?	Status quo refers to the employment status of the employees the day before the occurrence of the strike or lockout. This condition must be maintained while the labor dispute is being resolved.
What are the requirements for a valid redundancy program?	The requirements include written notice to employees and DOLE, payment of separation pay, good faith in abolishing positions, and fair criteria in identifying redundant positions. These were affirmed in Asian Alcohol Corp. v. National Labor Relations Commission.
What is considered unfair labor practice?	Unfair labor practice refers to actions that violate workers’ right to organize, affecting their ability to self-organize. The NLRC and CA found no evidence to support claims of unfair labor practice in this case.
What did the Supreme Court order Coca-Cola to do?	The Supreme Court ordered Coca-Cola to pay the 27 employees backwages from July 1, 2009, until March 16, 2010, and to re-compute their separation pay, considering that their termination was effective March 16, 2010.
Why did the Court uphold the validity of the redundancy program?	The Court upheld the redundancy program because Coca-Cola had complied with all the legal requirements, including providing notice, separation pay, and demonstrating good faith and fair criteria.
What is the significance of the DOLE Secretary’s assumption of jurisdiction?	It triggers the return-to-work order, compelling both employers and employees to maintain the existing employment conditions to ensure labor stability during the resolution of the dispute.

In conclusion, the Supreme Court’s decision underscores the importance of maintaining the status quo during labor disputes, reinforcing the DOLE Secretary’s authority to ensure stability while disputes are resolved. This case provides a clear guideline for employers, highlighting their obligations when the DOLE assumes jurisdiction, and affirming the need to balance business interests with employee rights.

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: SAN FERNANDO COCA-COLA RANK-AND-FILE UNION (SACORU) VS. COCA-COLA BOTTLERS PHILIPPINES, INC., G.R. No. 200499, October 04, 2017

October 4, 2017

Upholding Workers’ Rights: Wage Increases and Unfair Labor Practices in Collective Bargaining

This Supreme Court decision reinforces the principle that employers cannot use wage increases to undermine collective bargaining rights. The Court ruled that a company committed unfair labor practice by requiring employees to waive their rights to future collective bargaining agreements in exchange for wage increases. Consequently, the Court ordered the company to grant the same wage increases to employees who refused to sign the waivers, ensuring equitable treatment and rectifying the discriminatory impact of the employer’s actions.

Wage Waivers and Workers’ Rights: How SONEDCO Challenged Unfair Labor Practices

The case of SONEDCO Workers Free Labor Union (SWOFLU) vs. Universal Robina Corporation, Sugar Division-Southern Negros Development Corporation (SONEDCO), G.R. No. 220383, decided on July 5, 2017, revolves around allegations of unfair labor practices by the employer, Universal Robina Corporation (URC), against members of the SONEDCO Workers Free Labor Union. The core issue before the Supreme Court was whether URC’s practice of offering wage increases in exchange for waivers of collective bargaining rights constituted unfair labor practice, and whether the employees who refused to sign those waivers were entitled to the same wage increases as those who did. This case underscores the importance of protecting workers’ rights to collective bargaining and ensuring fair treatment in the workplace.

The factual backdrop involves URC-SONEDCO offering wage increases to its employees in 2007 and 2008, contingent upon signing waivers that would delay the effectivity of any subsequent Collective Bargaining Agreement (CBA). Specifically, the waivers stipulated that any new CBA would only be effective from January 1 of the following year. Some members of SONEDCO Workers Free Labor Union, recognizing this as a potential infringement on their rights to collective bargaining, refused to sign these waivers. Consequently, they did not receive the wage increases, leading to a disparity in pay between union members and non-union employees.

The legal framework governing this case is primarily rooted in Article 248 of the Labor Code, which prohibits unfair labor practices by employers. Unfair labor practices are defined as acts that violate the employees’ right to self-organization. Article 248(a) of the Labor Code explicitly states:

It shall be unfair labor practice for an employer:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

Building on this principle, the Supreme Court has consistently held that any act by an employer that undermines the employees’ right to collective bargaining constitutes unfair labor practice. The act of requiring employees to waive their rights to collective bargaining in exchange for wage increases falls squarely within this prohibition.

The Court meticulously examined the actions of URC-SONEDCO and found them to be in violation of the employees’ rights. The Court emphasized that the employer’s actions directly interfered with the employees’ right to self-organization and collective bargaining. By conditioning the grant of wage increases on the signing of waivers, URC-SONEDCO effectively discouraged its employees from participating in union activities and collective bargaining negotiations.

In its decision, the Supreme Court highlighted the principle that employees should not be penalized for exercising their right to self-organization. The Court stated that:

URC-SONEDCO restricted SONEDCO Workers Free Labor Union’s bargaining power when it asked the rank-and-file employees to sign a waiver foregoing Collective Bargaining Agreement negotiations in exchange for wage increases.

This approach contrasts with the principles of good faith bargaining, which requires employers to engage in meaningful negotiations with the employees’ representatives. The Court found that URC-SONEDCO’s actions demonstrated a lack of good faith in bargaining, as they sought to circumvent the collective bargaining process by directly dealing with individual employees.

The practical implications of this decision are far-reaching. It sends a clear message to employers that they cannot use financial incentives to undermine the collective bargaining rights of their employees. The ruling reinforces the importance of protecting the integrity of the collective bargaining process and ensuring that employees are free to exercise their rights without fear of reprisal. Furthermore, the Court’s decision highlights the need for employers to engage in good faith bargaining with unions and to refrain from any actions that could be construed as interference with the employees’ right to self-organization.

Moreover, the Supreme Court addressed the issue of the wage increase for 2009 onwards. While the Court initially denied the claim for the 2009 wage increase, it reconsidered its position based on the evidence presented by the petitioners. The petitioners demonstrated that the P32.00/day wage increase was integrated into the wages of those who signed the waivers, resulting in a continuing disparity in pay between those who signed the waivers and those who did not. The Court recognized that denying the wage increase to the petitioners would perpetuate the discrimination against them and would effectively reward the employer for its unfair labor practice.

Considering the circumstances, the Supreme Court decided to grant the P32.00/day wage increase to the petitioners, effective from January 1, 2009, to the present. The Court reasoned that this was necessary to eliminate the discrimination against the petitioners and to remedy the consequences of the employer’s unfair labor practice. The decision underscores the Court’s commitment to ensuring that employees are not penalized for asserting their rights and that employers are held accountable for their unfair labor practices.

Finally, the Supreme Court awarded attorney’s fees to the SONEDCO Workers Free Labor Union. The Court noted that attorney’s fees are warranted in cases where exemplary damages are awarded. Given that the Court had previously imposed exemplary damages on URC-SONEDCO, it deemed it proper to also grant attorney’s fees to the union.

In conclusion, this case serves as a significant reminder of the importance of protecting workers’ rights to self-organization and collective bargaining. The Supreme Court’s decision reaffirms the principle that employers cannot use financial incentives to undermine these rights and that employees who assert their rights should not be penalized for doing so. The ruling provides valuable guidance to employers and employees alike on the permissible boundaries of labor-management relations and underscores the need for good faith bargaining and fair treatment in the workplace.

FAQs

What was the key issue in this case?	The key issue was whether the employer committed unfair labor practice by requiring employees to waive their rights to collective bargaining in exchange for wage increases.
What is unfair labor practice?	Unfair labor practice refers to actions by employers or unions that violate employees’ rights to self-organization, collective bargaining, and other concerted activities. These practices are prohibited under the Labor Code.
What did the employer do in this case that was considered unfair labor practice?	The employer offered wage increases to employees who signed waivers that would delay the effectivity of any subsequent Collective Bargaining Agreement. This was deemed an interference with the employees’ right to collective bargaining.
What was the Court’s ruling on the wage increases?	The Court ordered the employer to grant the same wage increases to employees who refused to sign the waivers, ensuring equitable treatment and rectifying the discriminatory impact of the employer’s actions.
Why did the Court initially deny the claim for the 2009 wage increase?	Initially, the Court reasoned that a new Collective Bargaining Agreement was already in effect by 2009 and that this CBA governed the relationship between the management and the union.
What changed the Court’s decision regarding the 2009 wage increase?	The Court reconsidered its position based on evidence that the P32.00/day wage increase was integrated into the wages of those who signed the waivers, creating a continuing disparity.
What are the practical implications of this decision for employers?	Employers cannot use financial incentives to undermine the collective bargaining rights of their employees. They must engage in good faith bargaining and refrain from actions that interfere with employees’ rights.
What are the practical implications of this decision for employees?	Employees have the right to assert their collective bargaining rights without fear of reprisal. They are entitled to equitable treatment and cannot be penalized for refusing to waive their rights.
What is the significance of the award of attorney’s fees in this case?	The award of attorney’s fees recognizes the union’s effort to protect the interest of its members. It serves as a reminder that exemplary damages justifies payment of attorney’s fees.

In summary, the Supreme Court’s decision in SONEDCO Workers Free Labor Union vs. Universal Robina Corporation reinforces the importance of protecting workers’ rights to self-organization and collective bargaining. The ruling serves as a reminder to employers that they cannot use financial incentives to undermine these rights and that employees who assert their rights should not be penalized for doing so. The case underscores the need for good faith bargaining and fair treatment in the workplace.

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: SONEDCO Workers Free Labor Union (SWOFLU) / RENATO YUDE, MARIANITO REGINO, MANUEL YUMAGUE, FRANCISCO DACUDAG, RUDY ABABAO, DOMINIC SORNITO, SERGIO CAJUYONG, ROMULO LABONETE, GENEROSO GRANADA, EMILIO AGUS, ARNOLD CAYAO, BEN GENEVE, VICTOR MAQUE, RICARDO GOMEZ, RODOLFO GAWAN, JIMMY SULLIVAN, FEDERICO SUMUGAT, JR., ROMULO AVENTURA, JR., JURRY MAGALLANES, HERNAN EPISTOLA, JR., ROBERTO BELARTE, EDMON MONTALVO, TEODORO MAGUAD, DOMINGO TABABA, MAXIMO SALE, CYRUS DIONILLO, LEONARDO JUNSAY, JR., DANILO SAMILLION, MARIANITO BOCATEJA, JUANITO GEBUSION, RICARDO MAYO, RAUL ALIMON, ARNEL ARNAIZ, REBENCY BASOY, JIMMY VICTORIO BERNALDE, RICARDO BOCOL, JR., JOB CALAMBA, WOLFRANDO CALAMBA, RODOLFO CASISID, JR., EDGARDO DELA PENA, ALLAN DIONILLO, EDMUNDO EBIDO, JOSE ELEPTICO, JR., MARCELINO FLORES, HERNANDO FUENTEBILLA, SAUL HITALIA, JOSELITO JAGODILLA, NONITO JAYME, ADJIE JUANILLO, JEROLD JUDILLA, EDILBERTO NACIONAL, SANDY NAVALES, FELIPE NICOLASORA, JOSE PAMALO-AN, ISMAEL PEREZ, JR., ERNESTO RANDO, JR., PHILIP REPULLO, VICENTE RUIZ, JR., JOHN SUMUGAT, CARLO SUSANA, ROMEO TALAPIERO, JR., FERNANDO TRIENTA, FINDY VILLACRUZ, JOEL VILLANUEVA, AND JERRY MONTELIBANO, PETITIONERS, VS. UNIVERSAL ROBINA CORPORATION, SUGAR DIVISION-SOUTHERN NEGROS DEVELOPMENT CORPORATION (SONEDCO), RESPONDENTS., G.R. No. 220383, July 05, 2017

July 5, 2017

Union Registration: Misrepresentation Claims and the Limits of Cancellation Under the Labor Code

In De Ocampo Memorial Schools, Inc. v. Bigkis Manggagawa sa De Ocampo Memorial School, Inc., the Supreme Court affirmed that a union’s registration cannot be canceled based on alleged misrepresentation or fraud unless it gravely impairs the consent of the majority of union members. The Court emphasized that mere allegations of misrepresentation or a perceived lack of mutuality of interest among union members are insufficient grounds for cancellation under Article 247 of the Labor Code, absent concrete evidence of fraudulent intent during the union’s formation or ratification of its constitution and by-laws. This ruling reinforces the protection of workers’ rights to self-organization and collective bargaining, clarifying the stringent requirements for challenging a union’s legitimacy.

Can a Union’s Registration Be Revoked Over Alleged Misrepresentation?

De Ocampo Memorial Schools, Inc. (De Ocampo) sought to cancel the union registration of Bigkis Manggagawa sa De Ocampo Memorial School, Inc. (BMDOMSI), alleging misrepresentation, false statements, and fraud. De Ocampo argued that BMDOMSI shared officers and members with another union, misrepresented its members’ community of interest, and suppressed these facts during its registration. The Bureau of Labor Relations (BLR) and the Court of Appeals (CA) both ruled against De Ocampo, upholding BMDOMSI’s registration. The central legal question was whether BMDOMSI’s actions constituted sufficient grounds for cancellation of its union registration under Article 247 of the Labor Code.

The Supreme Court (SC) denied De Ocampo’s petition, affirming the CA’s decision. The Court emphasized that for fraud and misrepresentation to warrant the cancellation of union registration, they must be grave and compelling enough to undermine the consent of a majority of union members. The Court referred to Article 247, previously Article 239 of the Labor Code which provides the grounds for cancellation of union registration:

Art. 247. Grounds for Cancellation of Union Registration. – The following may constitute grounds for cancellation of union registration:

(a) 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;

(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters;

(c) Voluntary dissolution by the members.

De Ocampo argued that BMDOMSI misrepresented facts by failing to disclose the existence of another union, BMDOMMC, with which it shared officers and members. The Court disagreed, noting that the Report of Creation of Local Chapter filed by BMDOMSI accurately described the bargaining unit as composed of rank-and-file employees in technical and faculty roles. Crucially, the Court pointed out that the application form did not require disclosure of other unions or their officers. Thus, the Court concluded, there was no misrepresentation or false statement made by BMDOMSI in its application.

Further, De Ocampo contended that BMDOMSI suppressed the lack of mutuality or commonality of interest among its members, arguing this as grounds for cancellation. The SC rejected this argument, clarifying that lack of mutuality of interests is not among the grounds enumerated in Article 247 of the Labor Code for cancellation of union registration. The Court cited Tagaytay Highlands International Golf Club Incorporated v. Tagaytay Highlands Employees Union-PTGWO, reinforcing that the inclusion of disqualified employees in a union is not a ground for cancellation unless it stems from misrepresentation, false statement, or fraud as specified in Article 247. To succeed in decertifying a union, it must be proven that the alleged ineligibility of members resulted from fraud or misrepresentation related to the union’s foundational documents and processes.

The Court found that the BLR and CA’s finding that BMDOMSI members were rank-and-file employees was supported by substantial evidence. De Ocampo failed to provide sufficient evidence of fraud and misrepresentation beyond the allegations of shared officers with BMDOMMC and mixed membership. The Court emphasized the importance of substantial evidence when challenging a union’s legitimacy, especially given the expertise of administrative agencies like the BLR in labor matters. This aligns with established jurisprudence, which favors the stability and autonomy of labor organizations, requiring concrete proof before interfering with their registration.

The Court highlighted that direct challenges to a labor organization’s legitimacy based on fraud and misrepresentation require careful examination and supporting evidence. Allegations alone are insufficient, and the Court is not a trier of facts in this context. Findings of fact from administrative agencies and quasi-judicial bodies, such as the BLR, are generally accorded great respect and finality due to their specialized expertise. This reflects a broader legal principle of deference to administrative agencies in matters within their competence, promoting efficiency and consistency in the application of labor laws.

FAQs

What was the key issue in this case?	The key issue was whether the union’s registration should be canceled due to alleged misrepresentation, false statements, or fraud in its application, specifically regarding shared officers with another union and the mutuality of interest among its members.
What are the grounds for canceling a union’s registration according to the Labor Code?	The Labor Code (Article 247) allows for cancellation based on misrepresentation, false statements, or fraud related to the adoption or ratification of the constitution and by-laws, the election of officers, or voluntary dissolution.
Did the Court find evidence of fraud or misrepresentation by the union?	No, the Court agreed with the BLR and CA that the union did not commit fraud or misrepresentation in its application for registration. The Court found that the union accurately described the bargaining unit’s composition and that the application form did not require disclosure of other unions or their officers.
Is a lack of mutuality of interest among union members a ground for canceling registration?	No, the Court clarified that a lack of mutuality of interest among union members is not a ground for canceling registration under Article 247 of the Labor Code.
What kind of evidence is needed to challenge a union’s registration successfully?	To successfully challenge a union’s registration, there must be substantial evidence of fraud or misrepresentation that is grave and compelling enough to vitiate the consent of a majority of union members. Mere allegations are insufficient.
What was the significance of the BLR’s findings in this case?	The BLR’s findings, as an administrative agency with expertise in labor matters, were given great respect and finality by the Court, emphasizing the importance of deference to specialized agencies in their areas of competence.
Can a union’s registration be canceled simply because it shares officers with another union?	No, the Court implied that merely sharing officers with another union, without any fraudulent or misrepresentative actions, is not sufficient grounds for canceling a union’s registration.
What is the overall message of this ruling?	The ruling reinforces the protection of workers’ rights to self-organization and collective bargaining by clarifying the stringent requirements for challenging a union’s legitimacy, requiring concrete evidence of fraud or misrepresentation.

In conclusion, the Supreme Court’s decision in De Ocampo Memorial Schools, Inc. v. Bigkis Manggagawa sa De Ocampo Memorial School, Inc. underscores the high threshold required to cancel a union’s registration based on allegations of fraud or misrepresentation. This ruling safeguards the rights of workers to organize and bargain collectively, preventing employers from easily undermining duly registered labor organizations through unsubstantiated claims.

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: De Ocampo Memorial Schools, Inc. v. Bigkis Manggagawa sa De Ocampo Memorial School, Inc., G.R. No. 192648, March 15, 2017

March 15, 2017

Upholding Union Dues Requirements: When Increased Fees Need Member Approval

The Supreme Court affirmed that a labor union cannot collect increased agency fees from non-union members without strict compliance with legal requirements, particularly the approval of the increase by a majority of its members in a duly called general membership meeting. This ruling underscores the importance of adhering to the procedural safeguards outlined in the Labor Code to ensure fairness and transparency in the collection of union dues and agency fees. It serves as a reminder that while unions have the right to collect fees for benefits extended, this right is not absolute and must be exercised within the bounds of the law, protecting the interests of both union and non-union employees.

Can a Union Increase Your Dues? Inside the Fight Over Fair Fees at The Peninsula Manila

This case revolves around a dispute between the Peninsula Employees Union (PEU) and a group of non-union employees (NAE) at The Peninsula Manila Hotel concerning the collection of agency fees. PEU sought to increase these fees from one percent to two percent of the employees’ monthly salaries, citing its affiliation with the National Union of Workers in Hotel Restaurants and Allied Industries (NUWHRAIN). The central legal question is whether PEU complied with the necessary requirements under the Labor Code to validly increase these fees. The Supreme Court ultimately sided with the non-union employees, emphasizing the need for strict adherence to the law when increasing union dues.

The heart of the matter lies in Article 250 (n) and (o) of the Labor Code, which outlines the process for levying increased union dues. The law mandates three key requirements: first, authorization through a written resolution approved by a majority of all members at a general membership meeting called specifically for that purpose; second, a detailed record of the meeting minutes, including a list of attendees, votes cast, the purpose of the fees, and the recipient; and third, individual written authorizations for check-off, duly signed by the employees. These requirements serve as a safeguard to ensure that any increase in union dues is democratically approved and transparently implemented. Without these protections, employees could be subjected to arbitrary or unjustified fee increases.

In this case, PEU claimed that its general membership approved the increased dues during an October 2008 meeting. However, the Court found that the minutes of this meeting did not adequately demonstrate that the increase was properly deliberated and approved. While the minutes mentioned the need to implement the two percent dues due to PEU’s affiliation with NUWHRAIN, they did not explicitly state that the membership had voted in favor of the increase. Building on this point, the Court noted that a subsequent resolution issued by PEU in July 2010, which sought to retroactively confirm the approval, could not compensate for the initial lack of proper authorization. The Court underscored that the July 2010 resolution was not issued to approve the increase, but merely to affirm a prior action that was never properly established.

Furthermore, the Supreme Court highlighted that the individual check-off authorizations submitted by PEU were inconsequential because they were contingent on the valid approval of the increased dues. In other words, even if some employees had signed authorizations allowing the deduction of two percent from their salaries, these authorizations were invalid because the underlying increase in dues had not been properly authorized. The Court reinforced that the express consent of employees to any deduction from their compensation must be obtained by strictly following the steps outlined in the law. This strict interpretation is intended to protect employees from unauthorized or coercive deductions from their wages.

“Jurisprudence states that the express consent of the employee to any deduction in his compensation is required to be obtained in accordance with the steps outlined by the law, which must be followed to the letter.”

This ruling has significant implications for labor unions and employees alike. It serves as a stern reminder that unions must meticulously comply with the requirements of the Labor Code when increasing union dues or agency fees. Failure to do so can result in legal challenges and the invalidation of the increase. For employees, the decision reinforces their right to transparent and democratic processes in the management of union funds. It also provides legal recourse if they are subjected to unauthorized or improperly authorized deductions from their paychecks.

The Court cited specific provisions of the Labor Code to emphasize its decision. Article 259 (e) recognizes the right of a collective bargaining agent to assess reasonable fees from non-union members who benefit from a collective bargaining agreement. However, this right is not absolute and is subject to the requirements outlined in Article 250 (n) and (o). These provisions mandate that any special assessment or extraordinary fee must be authorized by a written resolution of a majority of all members in a general membership meeting, and that individual written authorizations for check-off must be duly signed by the employees. The Court’s decision underscores that these provisions must be read together to ensure a fair and balanced approach to the collection of union dues and agency fees.

The Supreme Court emphasized that it found no reversible error on the part of the Court of Appeals in granting the petition and finding that the Office of the Secretary of Labor and Employment (OSEC) gravely abused its discretion. The OSEC’s order allowing PEU to collect the increased agency fees was deemed patently contrary to law and therefore correctable through certiorari. Certiorari is a legal remedy used to correct errors of jurisdiction or grave abuse of discretion on the part of a government agency or lower court. In this case, the Court found that the OSEC’s decision was so flawed that it warranted the extraordinary remedy of certiorari.

This approach contrasts with a more lenient interpretation, where substantial compliance might suffice. The Court made clear that strict adherence to the law is required in matters affecting employees’ compensation. This strict approach is rooted in the recognition that employees are often in a vulnerable position and need legal protection against unauthorized deductions from their wages. It also promotes transparency and accountability in the management of union funds, ensuring that unions act in the best interests of their members and non-union employees.

Building on this principle, the decision reinforces the importance of accurate record-keeping and documentation by labor unions. Unions must maintain detailed and accurate minutes of their meetings, including a list of attendees, votes cast, and the specific purpose of any special assessments or fees. These records serve as evidence of compliance with the Labor Code and can be crucial in defending against legal challenges. In the absence of such records, it can be difficult for a union to demonstrate that it has properly authorized an increase in dues or fees.

In conclusion, the Supreme Court’s decision in this case serves as a valuable guide for labor unions and employees in the Philippines. It clarifies the legal requirements for increasing union dues and agency fees, and underscores the importance of strict compliance with the Labor Code. By adhering to these requirements, unions can ensure that they are acting fairly and transparently, while employees can protect their rights and interests. The decision promotes a more equitable and balanced relationship between labor unions and employees, fostering a more harmonious and productive workplace.

FAQs

What was the key issue in this case?	The key issue was whether the Peninsula Employees Union (PEU) followed the correct legal procedures to increase agency fees for non-union members. The court examined if the increase was properly authorized by its members.
What is an agency fee?	An agency fee is a payment made by non-union members to a union that represents them in collective bargaining. It covers the costs of negotiating and administering the collective bargaining agreement that benefits all employees.
What does the Labor Code say about increasing union dues?	The Labor Code requires that any increase in union dues or special assessments must be authorized by a written resolution of a majority of all members in a general membership meeting. Detailed meeting minutes and individual check-off authorizations are also required.
What did the Court rule about the minutes of the October 2008 meeting?	The Court found that the minutes of the October 2008 meeting did not clearly show that the increase in union dues had been properly deliberated and approved by the PEU membership. This lack of clarity was a key factor in the Court’s decision.
Why was the July 2010 resolution not sufficient?	The July 2010 resolution was intended to confirm or ratify a prior action. However, the Court determined that the prior action—the approval of the increased dues—had not been properly established, so the resolution could not retroactively validate the increase.
What is a check-off authorization?	A check-off authorization is a written consent from an employee allowing their employer to deduct union dues or other fees from their wages and remit them to the union. These authorizations must be obtained individually and voluntarily.
What happens if a union doesn’t follow the rules for increasing dues?	If a union fails to comply with the requirements of the Labor Code when increasing dues, the increase can be deemed invalid. Employees may be able to challenge the increase in court or through administrative channels.
What was the main takeaway of this case?	The main takeaway is that labor unions must strictly adhere to the requirements of the Labor Code when increasing union dues or agency fees. This includes obtaining proper authorization from their members and maintaining accurate records.

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

December 1, 2016

Piercing the Corporate Veil: Protecting Workers’ Rights in Certification Elections

In Erson Ang Lee v. Samahang Manggagawa, the Supreme Court upheld the right of workers to form a union and engage in collective bargaining, preventing employers from using separate corporate entities to frustrate this right. The Court allowed a certification election to proceed among the employees of three related companies, treating them as a single bargaining unit. This decision ensures that businesses cannot use corporate structures to undermine workers’ rights to organize and collectively bargain, reinforcing the protection afforded to labor under Philippine law.

Lamination Layers: When Shared Resources Obscure Workers’ Rights?

Erson Ang Lee, doing business as “Super Lamination Services,” challenged a Department of Labor and Employment (DOLE) decision allowing a certification election among the rank-and-file employees of Super Lamination, Express Lamination Services, Inc., and Express Coat Enterprises, Inc. Lee argued that these were separate entities, and thus, employees of one could not vote in the certification election of another. The core legal question was whether the doctrine of piercing the corporate veil should apply to treat these ostensibly separate companies as a single employer for purposes of collective bargaining.

The case began with three separate unions—Samahang Manggagawa ng Super Lamination (SMSLS-NAFLU-KMU), Express Lamination Workers’ Union, and Samahan ng mga Manggagawa ng Express Coat Enterprises, Inc.—filing petitions for certification elections in their respective companies. Super Lamination, Express Lamination, and Express Coat, all under the representation of one counsel, opposed the petitions, claiming a lack of employer-employee relationship between the establishments and the union members. They argued that employees listed in one company’s roster were actually employed by another, leading to the denial of all three petitions by DOLE’s National Capital Region (NCR) Med-Arbiters.

The unions appealed to the Office of the DOLE Secretary, which consolidated the appeals. They argued that the companies were unorganized and under the same management’s control and supervision. DOLE sided with the unions, finding that the companies had a common human resource department and rotated their workers, indicating a work-pooling scheme. This, according to DOLE, justified treating the companies as one entity for determining the appropriate bargaining unit in a certification election. DOLE applied the concept of multi-employer bargaining under Department Order 40-03, Series of 2003, and ordered a certification election among the rank-and-file employees of all three companies.

Lee appealed to the Court of Appeals (CA), which affirmed DOLE’s decision, agreeing that the companies were sister companies adopting a work-pooling scheme. The CA held that DOLE correctly applied the concept of multi-employer bargaining. Lee then elevated the case to the Supreme Court, arguing that separate corporations cannot be treated as a single bargaining unit.

The Supreme Court denied the petition and affirmed the CA’s decision. The Court tackled the issue of whether the doctrine of piercing the corporate veil was warranted. While acknowledging that separate corporations generally have distinct juridical personalities, the Court emphasized that this principle is not absolute. The doctrine of piercing the corporate veil allows the courts to disregard this separation when it is used to defeat public convenience, justify wrong, protect fraud, or defend crime. The Court cited several instances where it had disregarded separate juridical personalities to protect the rights of third parties, particularly laborers.

The Court outlined a settled formulation of the doctrine, stating that “when two business enterprises are owned, conducted, and controlled by the same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that these two entities are distinct and treat them as identical or as one and the same.” It emphasized that this formulation has been applied to cases where laborers are disadvantaged due to the separate juridical personalities of their employers, citing examples where corporations were held jointly and severally liable for back wages or found guilty of illegal dismissal.

In this case, the Court found that Super Lamination, Express Lamination, and Express Coat were under the control and management of petitioner Ang Lee. It enumerated several key facts that supported this conclusion: (1) the companies were engaged in the same business; (2) they operated and hired employees through a common human resource department; (3) workers were constantly rotated among the three companies; (4) the common human resource department imposed disciplinary sanctions and directed the daily performance of employees; (5) Super Lamination included employees of the other companies in its payroll and SSS registration; (6) Super Lamination issued and signed identification cards for employees working for the other companies; and (7) all three companies were represented by the same counsel, who presented the same arguments.

The Court also found an attempt to frustrate the workers’ right to collectively bargain. The companies alternately referred to one another as the employer of the union members, resulting in the dismissal of the certification election petitions and confusion among the employees. To safeguard the workers’ right to collective bargaining, the Court held that the corporate veil of Express Lamination and Express Coat must be pierced, and the three companies treated as one for the purpose of holding a certification election.

The Court distinguished this case from Diatagon Labor Federation Local v. Ople and Indophil Textile Mill Worker Union v. Calica, where it had refused to treat separate corporations as a single bargaining unit. In those cases, the corporations were found to be completely independent or were not involved in any act that frustrated the laborers’ rights. The Court emphasized that, in this case, not only were the companies found to be under the control of the petitioner, but there was also a discernible attempt to disregard the workers’ and unions’ right to collective bargaining.

The Court also addressed the argument that the rank-and-file employees of the three companies could not constitute an appropriate bargaining unit due to their different geographical locations. The Court reiterated that the basic test for determining an appropriate bargaining unit is whether the employees have substantial, mutual interests in wages, hours, working conditions, and other subjects of collective bargaining. While geographical location is a factor, it can be disregarded if the communal or mutual interests of the employees are not sacrificed.

In this case, the Court found that the employees had a communal interest based on their constant rotation among the three companies and the performance of the same or similar duties. Their employment status and working conditions were substantially similar, justifying the conclusion that they shared a community of interest. This finding aligns with the policy favoring a single-employer unit, as it strengthens the employees’ bargaining capacity. As the Court correctly observed, the work-pooling scheme should not be used to defeat the workers’ right to collective bargaining, which is essential for promoting harmonious labor-management relations.

FAQs

What was the key issue in this case?	The key issue was whether the doctrine of piercing the corporate veil should be applied to treat three related companies as a single employer for the purpose of a certification election.
What is a certification election?	A certification election is a process where employees vote to determine which union, if any, will represent them in collective bargaining with their employer. This ensures fair representation and negotiation.
What does it mean to “pierce the corporate veil”?	Piercing the corporate veil is a legal doctrine that allows a court to disregard the separate legal personality of a corporation. This is typically done when the corporation is used to commit fraud, injustice, or circumvent the law.
Why did the Supreme Court decide to pierce the corporate veil in this case?	The Court pierced the corporate veil because the three companies were found to be under the control of the same person and were using their separate corporate identities to frustrate the workers’ right to collective bargaining.
What is a bargaining unit?	A bargaining unit is a group of employees who share a community of interest and are represented by a union for collective bargaining purposes. The appropriate bargaining unit is key to ensuring fair representation.
What is multi-employer bargaining?	Multi-employer bargaining involves several employers negotiating collectively with a union that represents their employees. While optional under Department Order No. 40-03, it demonstrates the State’s policy to promote free and responsible collective bargaining.
What factors determine an appropriate bargaining unit?	The main factor is whether the employees share substantial, mutual interests in wages, hours, working conditions, and other subjects of collective bargaining. Geographical location is considered, but is secondary to the communal interests of the employees.
What is the significance of a work-pooling scheme in this case?	The work-pooling scheme, where employees were constantly rotated among the three companies, demonstrated that the companies were not truly separate and that the employees shared a community of interest, strengthening the case for piercing the corporate veil.

The Supreme Court’s decision in Erson Ang Lee v. Samahang Manggagawa reaffirms the importance of protecting workers’ rights to self-organization and collective bargaining. By applying the doctrine of piercing the corporate veil, the Court ensured that employers cannot use separate corporate entities to undermine these rights. This ruling serves as a reminder that labor laws are designed to promote fairness and equity in the workplace, and that the courts will not hesitate to disregard corporate structures when they are used to circumvent these laws.

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

November 21, 2016

Refusal to Bargain: Protecting Workers’ Rights to Collective Bargaining in the Philippines

The Supreme Court has affirmed that employers who obstruct union negotiations and limit bargaining power commit unfair labor practices. This decision emphasizes that determining whether an employer has bargained in good faith requires evaluating all actions during negotiations, ensuring employers cannot undermine workers’ rights through subtle tactics. This ruling protects the rights of unions to negotiate effectively on behalf of their members, reinforcing the principle of fair labor practices in the Philippines.

Wage Waivers or Workers’ Woes? URC-SONEDCO’s Bargaining Blunder

This case revolves around the dispute between the SONEDCO Workers Free Labor Union (SWOFLU) and Universal Robina Corporation, Sugar Division-Southern Negros Development Corporation (URC-SONEDCO). The central issue is whether URC-SONEDCO committed unfair labor practices by refusing to bargain with SWOFLU and requiring employees to sign waivers to receive wage increases. The petitioners, members of SWOFLU, argued that URC-SONEDCO’s actions violated their rights to self-organization, collective bargaining, and concerted action. The respondent, URC-SONEDCO, maintained that the waivers were a reasonable offer during the absence of a Collective Bargaining Agreement (CBA) and did not violate employees’ rights.

The dispute began after SWOFLU replaced the Philippine Agricultural Commercial and Industrial Workers Union (PACIWU-TUCP) as the exclusive bargaining representative of URC-SONEDCO’s rank-and-file employees. Despite SWOFLU’s repeated demands, URC-SONEDCO refused to negotiate a new CBA, citing the existing 2002 CBA with PACIWU-TUCP. In 2007 and 2008, URC-SONEDCO offered wage increases and other benefits to employees who signed waivers stating that any subsequent CBA would only be effective from January 1, 2008, and January 1, 2009, respectively. Several SWOFLU members refused to sign these waivers and, as a result, did not receive the offered benefits.

The legal framework for this case is rooted in Article 259 of the Labor Code, which outlines unfair labor practices of employers. Specifically, the court focused on Article 259(g), which prohibits employers from violating the duty to bargain collectively. The duty to bargain collectively, as defined in Article 263 of the Labor Code, requires both parties to meet and convene promptly and expeditiously in good faith to negotiate an agreement regarding wages, hours of work, and other terms and conditions of employment. The Supreme Court, in this case, emphasized that the totality of the employer’s conduct must be considered when determining if they failed to bargain in good faith.

The Supreme Court found that URC-SONEDCO’s actions constituted unfair labor practice. The court highlighted that URC-SONEDCO repeatedly refused to meet and bargain with SWOFLU, the exclusive bargaining agent of its rank-and-file employees. Despite several invitations from SWOFLU, URC-SONEDCO consistently declined to negotiate, unjustifiably relying on the 2002 CBA with PACIWU-TUCP. The Court cited Associated Trade Unions v. Trajano, stating that a CBA entered into when a petition for certification election is pending cannot be deemed permanent and should not preclude negotiations by another union with the management.

The Court will not rule on the merits and/or defects of the new CBA and shall only consider the fact that it was entered into at a time when the petition for certification election had already been filed by TUP AS and was then pending resolution. The said CBA cannot be deemed permanent, precluding the commencement of negotiations by another union with the management. In the meantime however, so as not to deprive the workers of the benefits of the said agreement, it shall be recognized and given effect on a temporary basis, subject to the results of the certification election. The agreement may be continued in force if ATU is certified as the exclusive bargaining representative of the workers or may be rejected and replaced in the event that TUP AS emerges as the winner.

Building on this, the Court noted that URC-SONEDCO failed to reply to SWOFLU’s collective bargaining agreement proposal sent on August 21, 2007, violating Article 261 of the Labor Code, which requires a reply within ten days. The Court also pointed out that URC-SONEDCO’s insistence on the 2002 CBA was contrary to the ruling in Associated Labor Unions v. Trajano, which affirmed that the winning union has the option to either continue the existing CBA or negotiate a new one.

The Supreme Court also addressed the issue of the waivers required for employees to receive wage increases. The court found that these waivers were a clear attempt to limit SWOFLU’s bargaining power. The waivers stipulated that any subsequent CBA would only be effective the year following the waiver, essentially asking employees to forego any benefits they might have received under a collective bargaining agreement in exchange for company-granted benefits. The Court emphasized that while the National Labor Relations Commission (NLRC) and the Court of Appeals saw the incentives as generous, they failed to recognize that URC-SONEDCO was attempting to restrict SWOFLU’s negotiating power.

Furthermore, the Supreme Court upheld the NLRC’s decision to grant the benefits for 2007 and 2008 to the employees who did not sign the waivers, as the 2009 CBA did not include those years, rendering the purpose of the waivers moot. However, the Court clarified that there was no need for the continuation of the wage increase for 2007 and 2008, as the 2009 CBA already contained wage increase provisions for 2009 to 2013.

Finally, the Supreme Court addressed the issue of damages. The court held that URC-SONEDCO was liable to pay moral and exemplary damages, citing Nueva Ecija Electric Cooperative, Inc. v. National Labor Relations Commission. The Court emphasized that unfair labor practices violate the constitutional rights of workers and employees to self-organization and disrupt industrial peace. As such, the Court deemed it proper to impose moral and exemplary damages on URC-SONEDCO.

FAQs

What was the key issue in this case?	The key issue was whether Universal Robina Corporation, Sugar Division-Southern Negros Development Corporation (URC-SONEDCO) committed unfair labor practices by refusing to bargain with SONEDCO Workers Free Labor Union (SWOFLU) and requiring employees to sign waivers to receive wage increases.
What is unfair labor practice according to the Labor Code?	Unfair labor practice includes interfering with employees’ right to self-organization, discriminating in regard to wages to discourage union membership, and violating the duty to bargain collectively as prescribed by the Labor Code.
What does the duty to bargain collectively entail?	The duty to bargain collectively means meeting and convening promptly and expeditiously in good faith to negotiate an agreement with respect to wages, hours of work, and all other terms and conditions of employment.
Why did the Supreme Court rule in favor of the petitioners?	The Supreme Court ruled in favor of the petitioners because URC-SONEDCO repeatedly refused to bargain with SWOFLU and imposed waivers that limited the union’s bargaining power, constituting unfair labor practice.
What was the significance of the waivers in this case?	The waivers required employees to forego any benefits they might have received under a collective bargaining agreement in exchange for company-granted benefits, effectively limiting the union’s bargaining power for the years 2007 and 2008.
What damages were awarded to the petitioners?	The Supreme Court ordered URC-SONEDCO to pay each of the petitioners the wage increase of P16.00 for the years 2007 and 2008 and to pay SWOFLU moral damages of P100,000.00 and exemplary damages of P200,000.00.
What was the legal basis for awarding damages in this case?	The legal basis for awarding damages was that unfair labor practices violate the constitutional rights of workers and employees to self-organization and disrupt industrial peace.
What is the implication of this ruling for employers in the Philippines?	This ruling reinforces the importance of bargaining in good faith with unions and prohibits employers from using waivers or other tactics to undermine the collective bargaining process and limit workers’ rights.

In conclusion, the Supreme Court’s decision underscores the importance of protecting workers’ rights to self-organization and collective bargaining. Employers must engage in good-faith negotiations with unions and refrain from actions that undermine the bargaining process. The imposition of moral and exemplary damages serves as a deterrent against unfair labor practices, promoting a more equitable and harmonious labor-management relationship.

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

October 5, 2016

Tag: Collective Bargaining

The Academic Tug-of-War: Can Faculty Members Unionize or Are They Management?

FAQs

Coca-Cola’s Reorganization: A Genuine Change or Attempt to Thwart Unionization?

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Key Takeaway: Union Dissolution Can Render Labor Disputes Moot, Affecting Legal Outcomes

New World International Development (Phil.), Inc., Stephan Stoss and Geuel F. Auste v. New World Renaissance Hotel Labor Union, G.R. No. 197889, July 28, 2021

Understanding the Legal Framework: Labor Rights and the Doctrine of Mootness

Chronicle of the Case: From Union Formation to Dissolution

Practical Implications and Key Lessons

Frequently Asked Questions

GSIS Family Bank: Can a Government-Acquired Bank Negotiate Employee Benefits?

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Coca-Cola’s Restructuring: Must Business Strategy Bend to Labor Law?

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Wage Waivers and Workers’ Rights: How SONEDCO Challenged Unfair Labor Practices

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Can a Union’s Registration Be Revoked Over Alleged Misrepresentation?

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Can a Union Increase Your Dues? Inside the Fight Over Fair Fees at The Peninsula Manila

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Lamination Layers: When Shared Resources Obscure Workers’ Rights?

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Wage Waivers or Workers’ Woes? URC-SONEDCO’s Bargaining Blunder

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