LECTURE: LAW ON LABOR RELATIONS

By: ATTY. EDWIN E. TORRES, MSU (2017)

I. RIGHT TO SELF-ORGANIZATION

Distinction Between Labor Organization and Workers Association

Labor Organization – means any union or association of employees which exists in the whole or in part
for the purpose of collective bargaining or for dealing with employers concerning terms and conditions or
employment. (Sec. 1-h, Rule 1,Book V. ORILC). A legitimate labor organization is a labor organization
registered with the Department of labor. (Sec. 1-h, Rule1, Book V, ORILC). Only legitimate labor
organizations have the right to represent their members for collective bargaining. (Sec.1, Rule II, Book V,
ORILC)

Workers’ Association – means any association of workers organized for the mutual aid and protection of
its members or for any legitimate purpose other than collective bargaining. (Sec. 1-j, Book V, ORILC).
Including ambulant, intermittent and other workers, the self-emplyed, rural workers and those without any
definite employees may form workers associations (Sec.3. Rule II, Book V, ORILC).

II. MEMBERSHIP IN LABOR ORGANIZATIONS

Who can be members in a labor organization?

1. All persons employed in commercial, industrial and agricultural enterprises (Art.243, LC);
2. Employees of government-owned or controlled corporations established under the Corporation
Code (Art. 244, LC);
3. Employees of religious, charitable, medical or educational institutions whether operating for profit
or not (Art. 243, LC);
4. Alien employees with valid working permits issued by the DOLE if they are nationals of a country
which grants the same or similar rights to Filipino workers, as certified, as certified by the
Department of Foreign Affairs (Sec.2 Rule II, Book V, ORILC).

DISCUSSION:

Section 2(5), B (The Civil Service Commission), Art. IX of the 1987 Philippine Constitution states: “The
right to self-organization shall not be denied to government employees.” However, government
employees cannot organize unions for the purpose of collective bargaining because their terms and
conditions of employment are determined by the Constitution, Civil Service Laws and regulations. For
instance, Section 5, B, Article IX of the Constitution provides that Congress shall provide for the
standardization of compensation of government officials and employees … Hence, there cannot be
negotiation of compensation above the standards fixed by law for government employees because the
same runs counter to the objective of standardization. So, what can public service unions do?
Commissioner Ople pointed out:

“. . . they do acquire a forum where, among other things, professional and self-
development is promoted and encouraged. They also act as watchdogs of their own
bosses so that when graft and corruption is committed, generally, it is the unions who are
no longer afraid by virtue of the armor of self-organization that becomes the public’s own
allies for detecting graft and corruption and for exposing it… 1

However, the Civil Service embraces government-owned or controlled corporation with original Charters
but not those established under the Corporation Code. 244 of the Labor Code expressly provided that the
employees of the latter can join labor organizations for the purpose of collective bargaining. Besides, the
authorization under Section 5, B Article IX of the Constitution for the standardization by Congress of
compensation of government officials and employees only include government-owned or controlled
corporations with original charters.

While the constitution recognizes the right of government employees to organize, they are prohibited from
staging strikes, demonstrations, mass leaves, walk-outs and other forms of mass action which will result
in temporary stoppage or disruption of public services. The right of government employees to organize it
limited only to the formation of unions or associations, without including the right to strike. The right of the
sovereign to prohibit strikes or work stoppages by public employees was clearly recognized at the
common law. To grant employees of the public sector the right to strike, there must be a clear and direct
legislative authority therefor.2

1
Bernas. The Constitution of the Republic of the Philippines. p. 1027.
2
Banglasan, et al. vs. Court of Appeals, et.al. G.R. No. 124678, 31 July 1997.

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A. Classification of Employees In The Labor Code:

1. Managerial – is one who is vested with powers or prerogatives to lay down and execute
management policies and/or hire, transfer, suspend, layoff, recall, discharge, assign or discipline
employees (Sec. 1-t, Rule II, Book V. ORILC).
2. Supervisory - is one who, in the interest of the employer, effectively recommends managerial
actions if the exercise of such authority is not merely routinary or clerical in nature but requires the
use of independent judgment (Sec. 1-t, Rule II, Book V. ORILC).
3. Rank-and-File – one who is not a managerial or supervisory employee.

Rule: Managerial and confidential employees cannot join unions. Supervisory employees can form their
own union but cannot join the union of the rank-and-file. But they can join the national federation of the
rank-and-file union.

DISCUSSION:

1. When the Labor Code (PD 442) was enacted in 1974, the category of supervisors and their right
to join unions were not recognized. RA 6715 passed in 1989 introduced the amendment which re-
classified employees into (a) managerial, (b) supervisory, and (c) rank-and-file. This recognizes that the
interests of supervisors and the rank-and-file are separate and distinct. The functions of supervisors,
being recommendatory in nature, are more identified with the interests of the employer. The performance
of these functions may, thus, run counter to the interests of the rank-and-file. 3

2. Confidential employees are those who assist or act in (a) confidential capacity, in regard (b) to
persons who formulate, determine, and effectuate management policies (especially in the field of labor
relations). The two criteria are cumulative, and both must be met if an employee is to be considered a
confidential employee – i.e. the confidential relationship must exist between the employee and his
superior officer; and that the officer must handle the prescribed responsibilities relating to labor relations.
Article 245 of the Laor Code does not directly prohibit confidential employees from engaging in union
activities. However, under the doctrine of necessary implication, the disqualification of managerial
employees equally applies to confidential employees. The confidential-employee rule justifies exclusion
of confidential employees because in the normal course of their duties they become aware of
management policies relating to labor relations. It must be stressed, however, that when the employee
does not have access to confidential labor relations information, there is no legal prohibition against
confidential employees from forming, assisting, or joining unions. 4 Athough the work of legal secretaries
are routinary and clerical, the are confidential employees because they are tasked with the typing of legal
documents, memoranda and correspondence, the keeping of records and files, the giving of and receiving
notices and such other duties as required by the legal personnel of the corporation. 5

3. Types of managerial employee: The term manager generally refers to anyone who is responsible
for subordinates and other organizational resources. As a class, managers constitute three levels of a
pyramid:

Top
M
Manan
age
m en
men
M iddle
Middle
t
M anagem ent
Management
First-line M anagem ent (also called
Management
Supervisors)

1. FIRST-LINE MANAGERS – the lowest level in an organization at which individuals are

responsible for the work of others is called first-line or first-level management. First-line
managers direct operating employees only; they do not supervise other managers.
Examples of first-line managers are the foreman or production supervisor in a
manufacturing plant, the technical supervisor in a research department, and the clerical
supervisor in a large office. First-level managers are often called supervisors.

2. MIDDLE MANAGERS – the term middle management can refer to more than one level
in an organization. Middle managers direct the activities of other managers and
sometimes also those of operating employees.

3. TOP MANAGERS – composed of a comparatively small group of executives. Top

management is responsible for the overall management of the organization. It
establishes operating policies and guides the organization’s interactions with its

3
Atlas Lithographic Services, Inc. vs. Laguesma, et.al. G.R. No. 96566, 6 January 1992.
4
Subguanon rural Bank, Inc. vs. Laguesma, et.al. G.R. No. 116194, 2 February 2000.
5
Pier 8 Arrastre & Stevedoring Services, Inc. vs. Roldan-Confessor, G.R. No. 110854, 3 February 1995.

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 environment. Typical titles of top managers are “chief executive officer,” “president,” and
“senior vice-president.” Actual titles vary from one organization to another and are not
always a reliable guide to membership in the highest management classification.

A distinction, therefore, exists between those who have the authority to devise, implement and control
strategic and operational policies (top and middle managers) and those whose task is simply to ensure
that such policies are carried out by the rank and file employees of an organization (first-level managers).
What distinguishes them from the rank-and-file employees is that they act in the interest of the employer
in supervising such rank-and-file employees.

Unlike supervisors who basically merely direct operating employees in line with set tasks assigned to
them, the route managers of Pepsi Cola are responsible for the success of the company’s main line of
business through management of their respective sales teams. Such management necessarily involves
the planning, direction, operation and evaluation of their individual teams and areas which the work of
supervisors does not entail. The route managers cannot thus possible be classified as mere supervisors
because their work does not only involve, but goes far beyond, the simple direction or supervision of
operating employees to accomplish objectives set by those above them. They are not mere functionaries
with simple oversight functions but business administrators in their own right. The supervisory employees
defined in Article 212(m) of the Labor Code have only the power to recommend managerial actions. The
route managers more than recommend effective management action. They perform operational, human
resource, financial and marketing functions for the company, all of which involve the laying down of
operating policies for themselves and their teams. Therefore, they are ineligible from joining labor
unions.6

B. When can an employee join a labor organization?

Any employee whether employed for a definite period or not shall, beginning on the first day of his
service, be eligible for membership in any labor organization. (Sec. 2, Rule II, Book V, ORILC).
Therefore, probationary employees are eligible for union membership.

III. ACQUISITION OF LEGAL PERSONALITY

A. Kinds of labor organizations:

1. Independent Union – a labor organization operating at the enterprise level whose legal
personality is derived through an independent action for registration with the DOLE. It may be
affiliated with a federation, national or industry union, in which case it may also be referred to as
an affiliate.

2. National Union/Federation – a labor organization with at least ten (10) locals/chapters or affiliates
each of which must be a duly certified or recognized collective bargaining agent.

3. Local Union/Chapter – any labor organization operating at the enterprise level whose legal
personalty is derived through the issuance of a charter by a duly registered federation or national
union.

4. Industry Union – any labor organization operating within an identified industry, organized for
collective bargaining or for dealing with employers concerning terms and conditions of
employment within an industry, or for participating in the formulation of social and employment
policies, standards and programs in such industry.

5. Trade Union Center – any group of registered national unions or federations organized for the
mutual aid and protection of its members, for assisting such members in collective bargaining, or
for participating in the formulation of social and employment policies, standards and programs.

Rule: The DOLE issued Department Order No. 40-03 (effective 15 March 2003) which amended Book
V of the ORILC. It provides that applications for registration of labor organizations shall be filed
either with the Regional Office or with the BLR.

DISCUSSION:

1. Two ways for a labor organization to acquire legitimacy: (a) when it is issued a Certificate of
Registration by the BLR; and (b) when an unregistered union becomes a local or chapter of a national
federation. In the later case, the unregistered union need not be given a Certificate of Registration by the
BLR.

2. A local union does not owe its existence to the federation with which it is affiliated. It is a
separate and distinct voluntary association owing its creation to the will of its members. Mere affiliation
6
United Pepsi-Cola Supervisory Union (UPSU) vs. Laguesma, et al., G.R. No. 122226, March 25, 1998.

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does not divest the local union of its own personality; neither does it give the mother federation the
license to act independently of the local union. It only gives rise to a contract of agency, where the former
acts in representation of the latter. Hence, local unions are considered principals while the federation is
deemed to be merely their agents. As such principals, the unions are entitled to exercise the rights and
privileges of a legitimate labor organization, including the right to seek certification as the sole and
exclusive bargaining agent in the appropriate employer unit. 7

3. A union that affiliated with PAFLU won a certification election which was protested by another
union. While the election protest was pending, the union disaffiliated from PAFLU and then affiliated with
NCW. Then it negotiated a CBA with the employer while affiliated with NCW. Was the disaffiliation
during the pendency of an election protest in order? Answer: Yes. Local unions have the right to
disaffiliate from their mother federation on the ground that as separate and voluntary associations, they
do not owe their creation and existence to the national federation to which they are affiliated but, instead,
to the will of their members. The sole essence of affiliation is to increase, by collective action, the
common bargaining power of local unions for the effective enhancement and protection of their interests.
Yet the local unions remain the basic units of association, free to serve their own interests subject to the
restraints imposed by the constitution and by-laws of the national federation, and free also to renounce
the affiliation upon the terms laid down in the agreement which brought such affiliation into existence. 8

4. Art. 245 of LC as amended by RA 9481: “The rank-and-file union and the supervisor’s union
operating within the same establishment may join the same federation or national union.”

5. Section 5, Rule V of the Implementing Rules of Book V: “The labor organization or workers’
association shall be deemed registered and vested with legal personality on the date of issuance of its
certificate of registration. Such legal personality cannot thereafter be subject to collateral attack but may
be questioned only in an independent petition for cancellation in accordance with these Rules. ” Hence,
the legitimacy of a union cannot be collaterally attacked through a challenge in a petition for certification
election.

6. While a "national union" or "federation" is a labor organization with at least ten locals or chapters
or affiliates, each of which must be a duly certified or recognized collective bargaining agent; a trade union
center, on the other hand, is composed of a group of registered national unions or federations.
Department Order No. 9 mentions two labor organizations either of which is allowed to directly create a
local or chapter through chartering – a duly registered federation or a national union. Department Order
No. 9 defines a "chartered local" as a labor organization in the private sector operating at the enterprise
level that acquired legal personality through a charter certificate, issued by a duly registered federation or
national union and reported to the Regional Office in accordance with Rule III, Section 2-E of these Rules.
A trade union center is not included as having the right to issue a charter certificate. Hence, it cannot
create a local chapter by the issuance of a charter certificate. 9

IV. DETERMINATION OF REPRESENTATION STATUS

A. Appropriateness of the Bargaining Unit:

A bargaining unit is a group of employees of a given employer, comprised of all or less than all
the entire body of employees, consistent with equity to the employer, that indicate to be the best
suited to serve the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.

DISCUSSION:

1. The fundamental factors in determining the appropriate collective bargaining unit are:

1) The will of the employees (Globe doctrine);

2) Affinity and unity of the employees’ interest, such as substantial similarity of work and
duties, or similarity of compensation and working conditions (substantial Mutual Interests
Rule);
3) Prior collective bargaining history; and
4) Similarity of employment status.

7
Coastal Subic Bay Terminal, Inc. vs. DOLE, G.R. No. 157117, November 20, 2006.
8
Philippine Skylanders, Inc., et.al. vs. NLRC, et.al. G.R. No. 127374, 31 January 1992.
9
San Miguel Corporation Employees Union-Philippine Transport and General Workers Organization (SMCEU-
PTGWO) vs. San Miguel Packaging Products Employees Union-Pambansang Diwa ng Manggagawang Pilipino
(SMPPEU-PDMP), G.R. No. 171153, September 12, 2007.

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The test of grouping is mutuality or commonality of interests. The employees sought to be represented by
the collective bargaining agent must have substantial mutual interest in terms of employment and working
conditions as evidenced by the type of work they perform. 10

2. Employees in two corporations cannot be treated as a single bargaining unit even if the
businesses of the two corporations are related.11

B. Modes of Determining Exclusive Bargaining Agent:

1. Voluntary recognition - in an unorganized establishment, the employer may voluntarily recognize

the representation status of a union.

2. Compulsory recognition - the recognition of an exclusive bargaining agent via a certification

election. A certification election may be initiated by:
a) A legitimate labor organization, or by
b) An employer when requested to bargain collectively and the status of the union is in
doubt.

C. Distinction between unorganized and an organized establishment:

a) An organized establishment is a establishment where there exists a recognized or
certified exclusive bargaining agent.
b) An unorganized establishment is an establishment where a recognized or certified
exclusive bargaining agent does not exist.

DISCUSSION:

1. Importance of distinction: In an “unorganized establishment,” the employer may voluntarily

recognize a union as the sole and exclusive bargaining agent of its employees. Voluntary recognition of a
union cannot be made in an “organized establishment.” The employer cannot voluntarily recognize one
union when there is already another union that is recognized or certified as the exclusive bargaining agent
of its employees.

2. When a PCE is filed in an “unorganized establishment,” the Med-Arbiter shall automatically

conduct a certification election. But when the establishment is “organized,” the Med-Arbiter shall conduct
a certification election only when the PCE is verified and is supported by the written consent of at least
25% of all the employees in the bargaining unit. However, 25% consent signatures may be submitted
after the filing of the PCE. The administrative rule that they should be attached to the PCE should only be
given directory effect so as not to frustrate the determination of the legitimate representative of the
workers.12 Per Department Order No. 40, an appeal of a Med-Arbiter’s order to hold a certification
election will not stay the holding thereof where the employer company is an unorganized establishment,
and where no union has yet been duly recognized or certified as a bargaining representative. 13

3. In an “unorganized establishment,” a PCE may be filed any time. But in an “unorganized

establishment,” a PCE may only be filed within the “freedom period,” i.e., 60 days before the expiration of
an existing CBA.

4. The fact that a company’s rank-and-file employees are already represented by a certified
bargaining agent does not make the company an “organized establishment” with respect to the
supervisory employees. The company may be deemed an “unorganized establishment” since no certified
bargaining agent represented the supervisory employees. 14

10
San Miguel corporation vs. Laguesma. G.R. No. 100485, 21 September 1994. In this case the Supreme court
found appropriate the bargaining unit of all Magnolia sales personnel in North Luzon as against the sale offices as
bargaining units.
11
Sta. Lucia East Commercial Corporation vs. Secretary of Labor, G.R. No. 162355, August 14, 2009.
12
Port Workers Union of the Philippines (PWUP) vs. Laguesma, G.R. No. 94929, March 18, 1992.
13
Notre Dame of Greater Manila vs. Laguesma, G.R. No.149833, June 29, 2004.
14
Philippine Telegraph and Telephone Corporation vs. Laguesma, G.R. No. 101730, June 17,1993.