Volkschel Labor Union vs. Bureau of Labor Relations

A local union may validly disaffiliate from its mother federation; upon valid disaffiliation and revocation of the individual check-off authorizations, the employer may no longer deduct and remit union dues to the federation, and the federation is not entitled to such dues.

Volkschel Labor Union was once affiliated with the Associated Labor Union for Metal Workers (ALUMETAL). On August 1, 1975, both unions, using the name Volkschel Labor Union Associated Labor Union for Metal Workers, jointly entered into a collective bargaining agreement with respondent companies. Section 3, Article I, of the CBA governed check-off, requiring payroll deductions of union membership dues and such special assessments, fees, or fines as may be duly authorized by the union, provided the same was covered by individual check-off authorization of union members. Article 241 (formerly Article 240) of the Labor Code allowed incumbent affiliates of existing federations or national unions to disaffiliate only for the purpose of joining a federation or national union in the industry or region in which it properly belongs or for operating as an independent labor group, and the Constitution guaranteed freedom of association.

Volkschel Labor Union was once affiliated with the Associated Labor Union for Metal Workers (ALUMETAL). On August 1, 1975, both unions, using the name Volkschel Labor Union Associated Labor Union for Metal Workers, jointly entered into a collective bargaining agreement with respondent companies DMG, Inc., People's Car, Inc., Karbayan, Inc., and RTC Machineries, Inc. Section 3, Article I, of the CBA required the companies to make payroll deductions of union membership dues and such special assessments, fees, or fines as may be duly authorized by the union, provided the same was covered by individual check-off authorization of union members. The deductions were to be transmitted within five days to the union treasurer; the company was to prepare two checks, one under the local union's name as its local fund including local special assessment funds, and the other for the ALU Regional Office regarding remittance of union dues deduction.

On March 10, 1976, a majority of petitioner's members decided to disaffiliate from respondent federation to operate on its own as an independent labor group pursuant to Article 241 (formerly Article 240) of the Labor Code of the Philippines. A resolution was adopted and signed by petitioner's members revoking their check-off authorization in favor of ALUMETAL, and notices thereof were served on ALUMETAL and respondent companies.

Confronted with whether to continue deducting and remitting union dues to ALUMETAL, which wrote respondent companies advising them to continue deducting union dues and remitting them to the federation, respondent companies sought the legal opinion of the Bureau as regards the controversy between the two unions. On November 11, 1976, Med-Arbiter George A. Eduvalla rendered a Resolution which in effect found the disaffiliation legal but at the same time gave the opinion that petitioner's members should continue paying their dues to ALUMETAL in the concept of agency fees. Both petitioner and ALUMETAL appealed to the Director. Petitioner contended that the Med-Arbiter's opinion that members remained obligated to pay dues to ALUMETAL was inconsistent with the dispositive finding that disaffiliation was valid. ALUMETAL assailed the Resolution asserting that the disaffiliation should have been declared contrary to law.

On January 25, 1977, the Bureau, through Acting Director Francisco L. Estrella, reversed the Med-Arbiter's Resolution and declared that the Bureau recognized the continued affiliation of Volkschel Labor Union with ALUMETAL. Petitioner appealed to the Secretary of Labor, who treated the appeal as a Motion for Reconsideration and referred it back to the Bureau. On March 14, 1977, the Bureau denied the appeal for lack of merit. On April 4, 1977, on motion of ALUMETAL, Acting Secretary of Labor Amado Gat Inciong issued a writ of execution commanding the NLRC Sheriff to enforce and execute the January 25, 1977 order, which had become final and executory. Pursuant thereto, the NLRC Sheriff enforced and implemented the order, and respondent companies turned over and handed to ALUMETAL the union dues and other assessments in accordance with the CBA check-off provision. On April 25, 1977, a Supplemental Petition was filed seeking a preliminary mandatory injunction commanding respondents to return to petitioner the union dues amounting to about P55,000.00 lawfully pertaining to it but allegedly illegally levied upon, collected, and handed over by the Bureau, acting through the NLRC sheriff, to ALUMETAL, with the collusion of respondents DMG, Inc., Karbayan, Inc., and RTC Machineries, Inc., and a preliminary restraining order prohibiting further delivery to ALUMETAL of union dues collected or to be collected through check-off from the wages of petitioner's members by respondent companies under the questioned writ of execution dated April 4, 1977.

• Validity of Disaffiliation: Petitioner contended that its disaffiliation was valid; a local union, being a separate and voluntary association, is free to disaffiliate when circumstances warrant, consistent with the constitutional guarantee of freedom of association.
• Absence of Opportunism and Federation Dereliction: Petitioner argued that the disaffiliation was not due to opportunism but was prompted by the federation's deliberate and habitual dereliction of duties as mother federation, including leaving employees' grievances unattended to the detriment of employees' rights and interests.
• Inconsistency of Agency-Fee Opinion: Petitioner contended that the Med-Arbiter's opinion that members remained obligated to pay dues to ALUMETAL was inconsistent with the dispositive finding that disaffiliation was valid.
• Illegal Collection and Return of Dues: In the Supplemental Petition, petitioner sought return of about P55,000.00 in union dues allegedly lawfully pertaining to it but illegally levied, collected, and handed over to ALUMETAL, and a restraining order against further check-off deliveries.

• Disaffiliation Contrary to Law: ALUMETAL assailed the Med-Arbiter's Resolution asserting that the disaffiliation should have been declared contrary to law.
• Continued Deduction and Remittance: ALUMETAL wrote respondent companies advising them to continue deducting union dues and remitting them to the federation.

• Validity of Disaffiliation: Whether petitioner union's disaffiliation from respondent federation is valid.
• Right to Continue Check-off Despite Revocation: Whether respondent companies have the right to effect union dues collections despite revocation by the employees of the check-off authorization.
• Federation's Entitlement to Dues: Whether respondent federation is entitled to union dues payments from petitioner union's members notwithstanding their disaffiliation from said federation.

• Validity of Disaffiliation: Yes. A local union, being a separate and voluntary association, is free to disaffiliate when circumstances warrant, consistent with the constitutional guarantee of freedom of association; no CBA provision prohibited withdrawal.
• Right to Continue Check-off Despite Revocation: No. The employer's obligation to deduct and remit dues is conditioned on the individual check-off authorization and on the employee's affiliation; without affiliation, the employer has no link to the mother union.
• Federation's Entitlement to Dues: No. The obligation to pay union dues is coterminous with affiliation or membership; after valid disaffiliation and revocation, the federation is not entitled to union dues from petitioner's members.

• Validity of Disaffiliation: The right of a local union to disaffiliate from its mother union is well-settled. Previous cases have repeatedly held that a local union, being a separate and voluntary association, is free to serve the interest of all its members, including the freedom to disaffiliate when circumstances warrant. This right is consistent with the constitutional guarantee of freedom of association. Although the Bureau declared a policy of restructuring the labor movement along industry lines to conjoin workers and worker groups, that policy, while commendable, cannot override the constitutional mandate to protect labor and the workers' right to self-organization. In implementing and interpreting the Labor Code and its regulations, the workingman's welfare should be the primordial and paramount consideration. Restricting petitioner's right to self-organization because of the CBA would go against the spirit of labor law. A disaffiliation does not disturb the enforceability and administration of a collective agreement; it does not occasion a change of administrators of the contract nor an amendment of its provisions. Nothing in the record showed that the contract between petitioner and ALUMETAL prohibited petitioner's withdrawal.
• Right to Continue Check-off Despite Revocation: Under Section 3, Article I, of the CBA, the obligation of respondent companies to deduct and remit dues to ALUMETAL was conditioned on the individual check-off authorization of petitioner's members. ALUMETAL was entitled to receive dues from respondent companies only as long as petitioner union was affiliated with it and respondent companies were authorized by their employees, members of petitioner union, to deduct union dues. Without affiliation, the employer had no link to the mother union. The obligation of an employee to pay union dues is coterminous with his affiliation or membership. The employees' check-off authorization, even if declared irrevocable, is good only as long as they remain members of the union concerned. A contract between an employer and the parent organization as bargaining agent for the employees is terminated by the disaffiliation of the local of which the employees are members. Respondent companies therefore were wrong in continuing the check-off in favor of respondent federation since they were duly notified of the disaffiliation and of petitioner's members having already rescinded their check-off authorization.
• Federation's Entitlement to Dues: With the resolution of the first two issues, there was no necessity to dwell further on the last issue. Respondent federation is not entitled to union dues payments from petitioner's members. A local union which has validly withdrawn from its affiliation with the parent association and which continues to represent the employees of an employer is entitled to the check-off dues under a collective bargaining contract.

• Right of Local Union to Disaffiliate — A local union, being a separate and voluntary association, is free to serve the interest of all its members, including the freedom to disaffiliate from its mother union when circumstances warrant. This right is consistent with the constitutional guarantee of freedom of association. The disaffiliation was upheld because no CBA provision prohibited withdrawal and the Bureau's industry-restructuring policy could not override workers' right to self-organization.
• Check-off Authorization Coterminous with Membership — The obligation of an employee to pay union dues is coterminous with his affiliation or membership. An employees' check-off authorization, even if declared irrevocable, is good only as long as they remain members of the union concerned. After petitioner's members disaffiliated and revoked their authorizations, respondent companies could no longer deduct and remit dues to ALUMETAL.
• Termination of Employer-Parent Union Contract by Disaffiliation — A contract between an employer and the parent organization as bargaining agent for the employees is terminated by the disaffiliation of the local of which the employees are members. Thus, the CBA-based check-off in favor of ALUMETAL ceased upon petitioner's valid disaffiliation.
• Primacy of Labor Welfare and Self-Organization — In implementing and interpreting the Labor Code and its regulations, the workingman's welfare should be the primordial and paramount consideration. This principle was used to reject the Bureau's policy of conjoining workers along industry lines as a basis for restricting petitioner's right to self-organization.
• Disaffiliation Does Not Disturb CBA Administration — A disaffiliation does not disturb the enforceability and administration of a collective agreement; it does not occasion a change of administrators of the contract nor even an amendment of its provisions. The Med-Arbiter's opinion on this point was adopted.
• Local Union's Entitlement to Check-off Dues After Valid Withdrawal — A local union which has validly withdrawn from its affiliation with the parent association and which continues to represent the employees of an employer is entitled to the check-off dues under a collective bargaining contract. Petitioner, not ALUMETAL, was entitled to the dues.

• "The right of a local union to disaffiliate from its mother union is well-settled. In previous cases, it has been repeatedly held that a local union, being a separate and voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when circumstances warrant." — States the settled rule on the local union's right to disaffiliate and supplies the primary basis for reversing the Bureau's recognition of continued affiliation.
• "The obligation of an employee to pay union dues is coterminous with his affiliation or membership. "The employees' check-off authorization, even if declared irrevocable, is good only as long as they remain members of the union concerned."" — Defines the duration of the check-off obligation and explains why revocation and disaffiliation terminated the companies' duty to remit dues to ALUMETAL.
• "A local union which has validly withdrawn from its affiliation with the parent association and which continues to represent the employees of an employer is entitled to the check-off dues under a collective bargaining contract." — States the affirmative entitlement of the disaffiliating local union to check-off dues and supports the order requiring ALUMETAL to return the collected dues.
• "A disaffiliation does not disturb the enforceability and administration of a collective agreement; it does not occasion a change of administrators of the contract nor even an amendment of the provisions thereof." — Explains that valid disaffiliation does not invalidate the CBA and was adopted to reject the argument that the CBA barred petitioner's withdrawal.

• Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, 66 SCRA 512 — Cited as one of the previous cases establishing that a local union, being a separate and voluntary association, is free to disaffiliate from its mother union when circumstances warrant.
• People's Industrial & Commercial Employees and Workers Organization (FFW) vs. People's Industrial & Commercial Corporation, 112 SCRA 440 — Cited together with Liberty Cotton Mills as precedent supporting the local union's right to disaffiliate.
• Phil. Federation of Petroleum Workers vs. Court of Industrial Relations, 37 SCRA 711 — Cited to support the rule that an employees' check-off authorization, even if declared irrevocable, is good only as long as they remain members of the union concerned.
• 51 C.J.S. 865 (citing Textile Workers Union of America, C.I.O. vs. Bellman Brook Bleaching Company) — Cited for the proposition that a contract between an employer and the parent organization as bargaining agent for the employees is terminated by the disaffiliation of the local of which the employees are members.

• Article 241 (formerly Article 240), Labor Code of the Philippines — Allows incumbent affiliates of existing federations or national unions to disaffiliate only for the purpose of joining a federation or national union in the industry or region in which it properly belongs or for the purpose of operating as an independent labor group. Petitioner's majority disaffiliation was made pursuant to this provision to operate as an independent labor group.
• Article IV, Section 7, Philippine Constitution — Guarantees freedom of association. The local union's right to disaffiliate was held consistent with this constitutional guarantee.
• Section 3, Article I, Collective Bargaining Agreement — Provides for check-off: the company agrees to make payroll deductions of union membership dues and such special assessments, fees, or fines as may be duly authorized by the union, provided the same is covered by individual check-off authorization of union members; deductions are to be transmitted within five days to the union treasurer, with two checks prepared, one under the local union's name as its local fund including local special assessment funds and the other for the ALU Regional Office regarding remittance of union dues deduction. The companies' obligation to deduct and remit to ALUMETAL was conditioned on individual check-off authorization and affiliation.

Makasiar, Aquino, Concepcion, Jr., Abad Santos and Escolin, JJ., concur.