Agency fee collection is recognized by Article 259 (formerly Article 248) of the Labor Code, as amended. The legal basis of the union’s right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that non-union employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union.
Get a copy of the renumbered and updated Labor Code of the Philippines 2018 Edition
PEU’s Board of Directors passed Local Board Resolution authorizing (a) the affiliation of PEU with NUWHRAIN, and the direct membership of its individual members thereto; (b) the compliance with all the requirements therefor; and (c) the Local President to sign the affiliation agreement with NUWHRAIN upon acceptance of such affiliation. On the same day, the said act was submitted to the general membership, and was duly ratified by 223 PEU members.
PEU-NUWHRAIN sought to increase the union dues/agency fees from one percent (1%) to two percent (2%) of the rank and file employees’ monthly salaries, brought about by PEU’s affiliation with NUWHRAIN, which supposedly requires its affiliates to remit to it two percent (2%) of their monthly salaries.
Meanwhile, the OSEC resolved the collective bargaining deadlock between PEU-NUWHRAIN and The Peninsula Manila Hotel (Hotel), ordering the parties to execute a collective bargaining agreement (CBA) incorporating the dispositions therein (arbitral award). The parties have yet to actually sign a CBA but have, for the most part, implemented the arbitral award.
PEU-NUWHRAIN requested the OSEC for Administrative Intervention for Dispute Avoidance (AIDA) pursuant to DOLE Circular No. 1, series of 2006 in relation to the issue, among others, of its entitlement to collect increased agency fees from the non-PEU members.
The non-PEU members objected to the assessment of increased agency fees arguing that: (a) the new CBA is unenforceable since no written CBA has been formally signed and executed by PEU-NUWHRAIN and the Hotel; (b) the 2% agency fee is exorbitant and unreasonable; and (c) PEU-NUWHRAIN failed to comply with the mandatory requirements for such.
The OSEC upheld PEU-NUWHRAIN’s right to collect agency fees from the non-PEU members in accordance with the expired CBA, which was declared to be in full force and effect, but only at the rate of one percent (1%), and denied its bid to increase the agency fees to two percent (2%) for failure to show that its general membership approved the same.
The OSEC pointed out that the only direct proof presented for the claimed increase in union dues was the PEU President’s application for union membership with PEU-NUWHRAIN together with his Individual Check-Off Authorization, which precedes such application and, thus, cannot be given credence.
Dissatisfied PEU-NUWHRAIN moved for reconsideration attaching thereto copies of: (a) the July 1, 2010 GMR confirming and affirming the alleged approval of the deduction of two percent (2%) union dues from the members’ monthly basic salaries; (b) the individual check-off authorizations dated November 26 and 27, 2008 from three (3) members authorizing the deduction of two percent (2%) union dues from their monthly basic salaries; and (c) payslips of some PEU-NUWHRAIN members purportedly showing the deduction of two percent (2%) union dues from their monthly basic pay beginning January 2009.
On March 6, 2012, the OSEC issued an Order partially granting PEU-NUWHRAIN’s motion for reconsideration, and declaring it entitled to collect two percent (2%) agency fees from the non-PEU members beginning July 2010 since the GMR showing approval for the increase of the union dues from one percent (1%) to two percent (2%) was only procured at that time.
Unperturbed, filed a petition for certiorari with the CA alleging that the OSEC committed grave abuse of discretion amounting to lack or excess of jurisdiction in allowing PEU-NUWHRAIN to collection increased agency fees despite non-compliance with the legal requirements therefor.
The CA set aside the OSEC’s Order declaring entitlement to collect 2%, and reinstated the Decision giving right to collect 1% agency fee only.
It ruled that PEU-NUWHRAIN failed to prove compliance with the requisites for a valid check-off since the October 28, 2008 minutes do not show that the increase in union dues was duly approved by its general membership. It also found the July 1, 2010 GMR suspicious considering that it surfaced only after PEU received the OSEC Decision disallowing the collection of increased agency fees.
PNEU-NUWHRAIN moved for reconsideration, which was, however, denied. Hence, the present petition.
Whether or not the documentary requirements for the collection of agency fee has been satisfied
Whether or not failure to establish due deliberation and approval of the increase in union dues there is a basis for the collection of agency fee
The SC did not find merit in the petition.
The recognized collective bargaining union which successfully negotiated the CBA with the employer is given the right to collect a reasonable fee called “agency fee” from non-union members who are employees of the appropriate bargaining unit, in an amount equivalent to the dues and other fees paid by union members, in case they accept the benefits under the CBA.
While the collection of agency fees is recognized by Article 259 (formerly Article 248) of the Labor Code, as amended, the legal basis of the union’s right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that non-union employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union.
PEU-NUWHRAIN’s right to collect agency fees is not disputed. However, the rate of agency fees it seeks to collect from the non-PEU members is contested, considering its failure to comply with the requirements for a valid increase of union dues, rendering the collection of increased agency fees unjustified.
Case law interpreting Article 250 (n) and (o) (formerly Article 241) of the Labor Code, as amended, mandates the submission of three (3) documentary requisites in order to justify a valid levy of increased union dues. These are: (a) an authorization by a written resolution of the majority of all the members at the general membership meeting duly called for the purpose; (b) the secretary’s record of the minutes of the meeting, which shall include the list of all members present, the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees; and (c) individual written authorizations for check-off duly signed by the employees concerned.
PEU-NUWHRAIN failed to show compliance with the foregoing requirements. It attempted to remedy the “inadvertent omission” of the matter of the approval of the deduction of two percent (2%) union dues from the monthly basic salary of each union member through the July 1, 2010 GMR.
While the matter of implementing the two percent (2%) union dues was taken up during the PEU-NUWHRAIN’s 8th General Membership Meeting on October 28, 2008, there was no sufficient showing that the same had been duly deliberated and approved. The minutes of the Assembly itself belie PEU-NUWHRAIN’s claim that the increase in union dues and the corresponding check-off were duly approved since it merely stated that “the [two percent (2%)] Union dues will have to be implemented,” meaning, it would still require the submission of such matter to the Assembly for deliberation and approval.
Such conclusion is bolstered by the silence of the October 28, 2008 GMR on the matter of two percent (2%) union dues, in contrast to the payment of 10% attorney’s fees from the CBA backwages which was clearly spelled out as having been “discussed and approved.” Thus, if indeed majority of the members of [PEU-NUWHRAIN] approved the increase in union dues, the same should have been mentioned in the October 28, 2008 minutes, and reflected in the GMR of the same date.
Having failed to establish due deliberation and approval of the increase in union dues from one percent (1%) to two percent (2%), as well as the deduction of the two percent (2%) union dues during PEU-NUWHRAIN’s 8th General Membership Meeting on October 28, 2008, there was nothing to confirm, affirm, or ratify through the July 1, 2010 GMR.
Corollarily, no individual check-off authorizations can proceed therefrom, and the submission of the November 2008 check-off authorizations becomes inconsequential. 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. However, PEU-NUWHRAIN failed to comply. Thus, the CA correctly ruled that there is no legal basis to impose union dues and agency fees more than that allowed in the expired CBA, i.e., at one percent (1%) of the employee’s monthly basic salary.