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Report on the Survey on Industrial Relations in East Asia



ILO- Japan Multi- Lateral Project, 2006

Report on the Survey on Industrial Relations in East Asia

Prepared by Maragtas S.V. Amante

ILO-Japan Multi-Lateral Project, 2006


Prepared by Maragtas S.V. Amante

© ILO- Japan Multi-Lateral Project, 2006

International Labour Organization

Subregional Office for East Asia
United Nations Building
Rajdamnern Nok Avenue
P.O. Box 2-349 Rajdamnern
Bangkok 10200, Thailand



Part 1: Legislative and Institutional Framework for Industrial Relations

A. Legislation on Labour Standards

B. Freedom of Association
Private sector
Right of employees to form or join unions
Union establishment and registration criteria
Responsibilities and rights of a union
Regulation of foreign assistance to union activities and reciprocal rights of foreigners
to join unions
Public sector

Part 2: Industrial Relations Actors

A. Government

B. Employers

C. Employees

Part 3: Legal and Institutional Framework and Practice of Collective

A. Duty to Bargain

B. Definition and Legal Status of Collective Agreement

C. Bargaining Unit

D. Level of Collective Bargaining

E. Bargaining agents/ Parties to the Collective Agreement

Bargaining committee
Third parties

F. Content of a Collective Bargaining Agreement

G. Procedural Requirements

H. Registration of Collective Bargaining Agreements

I. Implementation of Collective Bargaining Agreements

J. Disputes and grievances arising from implementation of CBAs

K. Termination of CBAs

L. Collective negotiations in the public sector

M. Other forms of employee representation

Part 4: Trends, Issues and Debates: Social partners’ and Political Actors’
Views and Proposals for Future development of national Bargaining
A. Major Issues and Trends in Collective Bargaining
Trends in collective bargaining
Disputes arising from collective bargaining
Information on workers representation
Issues in public sector collective bargaining

B. Prospects for labour law reforms


Appendix 1: Labour Centres in the Philippines

Appendix 2: Philippine national Labour Centres and their alliances, 2007

Appendix 3: Profiles of key Philippine Labour Centres

Appendix 4: Sample legal case studies of Philippine industrial relations

The Philippine’s industrial relations system developed in the context of its economic and
labour market growth. The strengths and weaknesses of the national industrial relations
system can be explained by the nature of employment relationships at the level of the
workplace, the industry and society as a whole. While the fundamental framework of labour
laws and standards is in place, there remain significant gaps between those who benefit from
decent work and labour justice, and those who do not.

The population of the Philippines is about 81.5 million people, half of whom live in rural areas.
Between 1996 and 2002, the population grew at a rate of 2.2 percent annually. The current
Gross Domestic Product (GDP) per capita is US $990.

The basic facts about the Philippine labour force in 1990, 2000 and 2006 are shown below in
Table A. The Filipino population has grown at an average annual rate of 2.0 percent. The
national unemployment rate is around 10.9 percent, and is more apparent among women
(10.3 percent to 11.7 percent) and youth (19.7 percent to 21.7 percent). Young people
account for almost half (49.7 percent) of the total unemployed. The labour force (employed
and unemployed workers) was around 24.5 million workers in 1990, and is now estimated at
35.6 million. The labour force grew at a rate of 2.8 percent in 1990, and 1.4 percent in 2006.

In 2006, there were 980,000 Overseas Filipino Workers (OFWs) processed through the
Philippine Overseas Employment Administration (POEA), but it is estimated that 8 million
Filipinos are permanent, temporary or undocumented migrants worldwide. The economic
contributions of OFWs and migrants abroad have assisted the Filipino economy in addressing
its balance of payments deficit, with remittances amounting to US$8.1 billion in 2004.

Open unemployment is only a partial indicator of the labour market condition in the country.
Many more millions of people are underemployed, or experience inadequate employment.
They may have a job, but the quality of their work is very low: with low earnings, poor working
conditions and lack of job protection. Too many workers remain trapped in low skilled, low
productivity activities with no career prospects. The expansion in the number of precarious
jobs over recent years is of particular concern. From 1999 to 2003, about 300,000 jobs were
lost in the formal sector compared with an increase of almost 2 million in the informal sector.

Table A: Basic facts about labour in the Philippines1

1990 2000 2006

Population (millions) 61.0 76.3 88.7
Population growth rate 2.3 2.1 2.0

Labour force (millions) 24.5 30.9 35.2

Annual change in 2.8 0.7 1.4
labour force (%)
Labour force 64.5 64.3 66.5
participation rate
(LFPR) (%)

Male LFPR (%) 81.8 80.3 82.9

Female LFPR (%) 47.5 48.4 50.2

Source: Philippine Statistical Yearbook (1990, 2000); Bureau of Labour Statistics
<>; National Statistics Office <>; Philippine Overseas
Employment Administration <> [Accessed: 15 January 2007]

Employed persons 22.5 27.8 32.9
Share of employed
persons (%) in:

Agriculture, forestry, 45.2 37.4 37.1

Manufacturing, mining 15.0 16.0 15.4
Services 39.8 46.6 47.5
Unemployment rate 8.1 10.1 10.9
Underemployment 20.5 22.3 22.7
rate (%)

Overseas Filipino 446,095 841,628 980,000

Workers (OFWs)

Part 1:
Legislative and Institutional Framework for Industrial

A. Legislation on Labour Standards

The Philippines has relatively abundant labour legislation, standards and policies. This
abundance of laws stands in direct contrast to the relatively low rate of unionization of the
workforce which is about 5 percent, and a much lower rate of coverage of workers in
collective bargaining agreements.

The Philippines ratified the fundamental conventions of the International Labour Organization
(ILO) on industrial relations as early as 1953, particularly Convention 87 on Freedom of
Association (1948) and Convention 98 on the Right to Organize and Collective Bargaining
(1949). Commitment to the United Nations Declaration on Human Rights (1948) is also an
important part of the country’s legal framework. These commitments to international norms
are reflected in part or in whole through the Philippine Constitution and various labour laws
and social legislation enacted so far. The framework of global standards and the Constitution
have guided policy and practice in the field of industrial relations in the Philippines, including
the areas of collective bargaining and disputes settlement.

The Philippine Constitution provides the fundamental framework for industrial relations, when
it declares:

“The State shall afford full protection to labour… It shall guarantee the rights of all
workers to self organization, collective bargaining and negotiations, and peaceful
concerted activities including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They
shall participate in policy and decision-making processes affecting their rights and
benefits as maybe provided by law.”2

In addition, the Philippine Bill of Rights guarantees “the right of the people, including those
employed in the public and private sectors, to form unions, associations or societies for
purposes not contrary to law…”. 3 These guarantees are likewise extended to the public
sector: “The right to self-organization shall not be denied to government employees”.4

The legal framework therefore guarantees the right to organize unions for the purpose of
collective bargaining for workers in both the private and public sectors. National laws enacted
by the Philippine Congress and policy directives by the executive branch of government
replicate these basic guarantees and provide for their implementation. Another source of
regulation is the decisions issued by the Philippine courts on various labour law cases and
disputes. These judicial and quasi-judicial bodies include the Secretary of Labour, labour
arbiters, voluntary arbitrators, the National Labour Relations Commission, the Court of
Appeals and the Supreme Court.

The Philippine Labor Code of 1974 is the key legislation on industrial relations, including
collective bargaining, disputes settlement and social dialogue. Among others, the law
provides for the recognition of labour organizations, as well as procedures for collective
bargaining, disputes settlement, and industrial action.

A key provision in the Labor Code is the mandate of the Philippine State to: “…promote and
emphasize the primacy of free collective bargaining and negotiations…” (Article 211(a)).

The Philippine Constitution 1987, Article XIII, Section 3 on ‘Social Justice and Human Rights’
Ibid, Article III, Section 8 on the ‘Bill of Rights’
Ibid, Article IX-B, Section 2(5)

The Labor Code also declares as state policy the promotion of “… free trade unionism as an
instrument for the enhancement of democracy and the promotion of social justice and
development” (Article 211(b)); and “…to ensure a stable society by dynamic and just industrial
peace” and “…to ensure the participation of workers in decision and policy making processes
affecting their rights, duties and welfare” (Article 211(g)).

Furthermore, the Labor Code stipulates that “no court or administrative agency or official shall
have the power to set or fix wages, rates of pay, hours of work or terms and conditions of
employment”, except where provided in the Code (Article 211(g)). Such a policy aims to
“encourage a truly democratic method of regulating the relations between the employers and
employees by means of agreements freely entered into through collective bargaining…”
(Article 212 (B)).

In keeping to its commitments arising from the ratification of various ILO conventions to
promote decent working conditions, the Philippines has legislated and implemented social
and labour standards in the following areas:

• Employment standards and non-discrimination;

• Workers rights: freedom of association, right to form/join unions;
• Collective bargaining;
• Hours and conditions of work;
• Wages and benefits;
• Social security; and
• Occupational health and safety.

Table 1.1 shows a summary of the important laws that provide for labour standards in relation
to employment, workers’ rights, working conditions, hours of work, health & safety and wages.
Most of these standards are provided by the Philippine Labor Code. Social security and
health insurance are provided separately by other social legislation. However, the application
of the Labor Code does not extend to all workers. It provides that labour standards

“shall apply to employees in all establishments and undertakings whether for profit or
not, but not to government employees, managerial employees, field personnel,
members of the family of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labour in appropriate regulations”
(Article 82).

Table 1.1: Important Labour laws in the Philippines

A) Employment standards

Issue Source of legislation Main features

Minimum age Art. 139, PLC* No child below 15 years shall be employed.
Those between 15-17 years of age may be
employed in non-hazardous jobs.
Non discrimination Art. 135, PLC Unlawful to discriminate against women
employees with respect to terms and
conditions of employment.
Art. 3, PLC The state shall…”ensure equal work
opportunities regardless of sex, race or
Regularisation Art. 280 & 281, PLC Probationary employment not to exceed 6

Employee shall be considered regular if

allowed to work beyond 6 months.
Employees could be regularized if duties are
necessary or desirable in the usual business

or trade of the employer.
Subcontracting Art. 106, PLC The Department of Labor and Employment
(DOLE) may restrict or prohibit the
contracting out of labour. It prohibits ‘labour
only contracting’ where the person supplying
workers to an employer does not have
substantial capital or investment in the form
of tools, equipment, machineries, work
premises, etc.
Security of tenure Art. 279, PLC Dismissal of regular employees is only
allowed with a just or authorized business
Night work and Art. 130, PLC Women are prohibited from working between
women 10 pm and 6 am.
Forced labour Art. 114 & Art. 116, While there is no direct mention prohibiting
PLC forced labour, these articles prohibit actions
that result in indebtedness or bonding of

* ‘PLC’: Philippines Labor Code (1974), as amended.

B) Wages

Issue Source of Legislation Main Features

Minimum wages Art. 99, Art. 120 to 127, Provides for minimum wages based on a
PLC regional rate as determined by tripartite wage
Overtime pay Art. 87, PLC Provides for overtime pay, which must be at
least 25% on top of regular pay.
Premium pay on Art. 93 & 94, PLC Provides for compensation for work on rest
holidays & rest days, Sundays or holidays- must be at least
days 30% on top of regular pay.
Night shift pay Art. 86, PLC Provides for a 10% night shift differential.
13th month pay Presidential Decree No. All employers are required to pay their
851 employees receiving a basic salary of not
more than P1,000 a month, a ‘13th-month
pay’ not later than December 24 of every
Non diminution in Art. 100, PLC Prohibition against elimination or diminution
pay of benefits.

C) Hours of work

Issue Source of legislation Main Features

8 hours of work Art. 83, PLC Defines the normal hours of work, not to
exceed 8 hours/day.
Meal periods Art. 85, PLC Provides for meal periods, not less than 60
minutes time-off for regular meals.
Weekly rest period Art. 91 to 92, PLC Provides for weekly rest periods after 6
consecutive working days, not less than 24
Paternity leave Republic Act No. 8187 All employees are entitled to seven days of
(1996) paternity leave.
Solo parent leave Republic Act No. 8972 Enterprises must set up a system to
(2000) recognize and help employees whom are
single/solo parents, including solo parents

D) Health & safety

Issue Source of Legislation Main Features

Paid maternity Art. 133, PLC Employees are entitled to paid maternity
leave leave at least 2 weeks before delivery and 4
weeks after delivery.
Medical and dental Art. 156 to 161, PLC Provides for first aid, medical and dental
services services, health program and one full-time
nurse for every 200 employees.
Health & safety Art. 162 to 165, PLC Safety and health standards and
Sexual Republic Act No. 7877 Enterprises must provide a Code of Discipline
harassment to prevent and address sexual harassment.

E) Social security

Item Source of legislation Main features

Employees’ Art. 166, PLC Social security and employees’
compensation compensation.
Social security Republic Act No. 1161 Social security law requiring compulsory
(1997) coverage.
GSIS law Republic Act No. 8291 Social security law concerning government
(1997) employees
HDMF law (Pag-ibig Law) Membership in the Home Development
Mutual Fund
Philhealth Republic Act No. 7575 National health insurance (enhanced

Sources: Philippine Labor Code (1974) and Implementing Rules, as amended, unless
otherwise indicated; Azucena (2005); ILS-DOLE (2000).

B. Freedom of Association
The Philippines is a signatory to the ILO conventions on Freedom of Association and Right to
Organise (C. 87 & C. 98) and the UN Declaration of Human Rights (1948), which include
trade union rights. The Philippine Constitution incorporated these commitments to
international norms, and the Labor Code provides for the implementation of trade union rights
of workers in the private sector. Executive Order 180 (1986) prescribes the rules pertaining to
the exercise of freedom of association in collective negotiations in the public sector, including
public hospitals, educational institutions and government-owned enterprises. The Philippines
Constitution (Article XIII, Section 3) guarantees the rights of all workers to self-organisation,
whether in the public or private sector. In practice, the actual exercise of this right depends on
the level of workers’ awareness and knowledge of their rights, and the degree of resistance
by employers.

Unions at the enterprise level in the Philippines are generally organised into federations and
labour centres on a general basis, and not by sector or industry. There is a relatively high
level of freedom of association provided by numerous pieces of labour legislation (see Table
1.2). The procedures for union registration and recognition generally start at the enterprise or
workplace unit level (Articles 234 to 240). There are specific rules for workers’ federations or
national unions “which must provide proof of at least 10 local union affiliates which are duly
recognized bargaining agents”. Further regulations mandate that “no federation or national
union shall be registered to engage in any organizational activity in more than one industry in
any area or region, and no federation or national union shall be registered to engage in any
organizational activity in more than one industry all over the country.” The government’s

Bureau of Labour Relations is responsible for ensuring “that federations and national unions
shall only organize locals or chapters within a specific industry” (Article 237 & 238).

Table 1.2: Labour laws on freedom of association, unions and workers’ rights

Issue Provision Main Features

Workers’ rights Art. 3, Section 8, The state shall guarantee the rights of
Philippines Constitution workers to self-organisation, collective
bargaining, security of tenure, and just
and humane conditions of work.
Union rights & Art. 234 to 240, Philippine Workers association or unions are
registration Labor Code (PLC) entitled to rights and privileges granted
by law.
Rights against unfair Art. 247 to 249, PLC Defines unfair labour practices of both
labour practices employers and labour organisations, with
criminal sanctions.
Right to strike Art. 263 & 264, PLC Workers have the right to engage in
concerted industrial action for purposes
of collective bargaining.
Right to collective Art. 250 to 259, PLC Procedures for a Collective Bargaining
bargaining Agreement, to be enforced for 5 years.
Grievance Art. 260 to 262, PLC Grievance-handling machinery &
procedures procedures, including voluntary
Arbitration Art. 261, PLC Parties shall name a voluntary arbitrator
for disputes settlement.
Public sector unions Executive Order 180 Right to form unions and engage in
(1987) collective negotiations among
government employees.

Private sector

The Philippines Labor Code governs the exercise of trade union rights in the private sector, in
relation to registration, membership requirements, recognition, intra-union disputes,
cancellation and unfair labour practices (Book V on Labour Relations, Articles 234 to 249).
‘Unions’ are defined as “any labour organization in the private sector organized for collective
bargaining and for other legitimate purposes” (Implementing Rules, Book V Rule I (h)).
‘Workers association’ on the other hand refers to “an association of workers organized for the
mutual aid and protection of its members for any legitimate purpose other than collective
bargaining” (Implementing Rules, Book V Rule I (j)). The Bureau of Labour Relations provides
separate forms for the registration of a workers association based on the following groupings:

• agricultural workers, farmers, fisheries workers;

• artisans and craft workers;
• independent transport workers such as drivers of jeepneys, vans, tricycles and
• home-based workers;
• construction workers;
• market, ambulant and sidewalk vendors;
• small scale mine workers; and
• the self-employed.

Rules on the registration, certification election and settlement of disputes within or between
workers’ associations are the same as the rules governing unions (DOLE Department Order
40-03, 2003). There is a lack of clarity as to whether or not workers’ associations have the
right to take concerted industrial action for legitimate purposes. However, the media has
reported that some workers’ associations, such as those for jeepney drivers and market

vendors, have successfully engaged in national concerted industrial action to negotiate
regulatory policies with government authorities.

In general, unions and workers’ associations are collectively referred to as ‘labour

organisations’. This term covers “any association of employees in the private sector, which
exists in whole or in part for the purpose of collective bargaining, mutual aid, interest,
cooperation, protection or for other lawful purposes” (Article 212(g)). On the other hand, a
‘legitimate labour organisation’ means any organisation registered with the Department of
Labour and Employment (Article 212(h)).

The Bureau of Labour Relations of the Philippines Department of Labour and Employment is
mandated by the law “to keep a registry of legitimate labour organizations” (Article 231, PLC).
The Bureau maintains a record of all collective bargaining agreements and other related
agreements, records of settlement of labour disputes and orders and decisions of voluntary
arbitrators. These records can be accessed by the public, provided that no specific
information submitted in confidence would be disclosed, that the issue is not undergoing
judicial litigation, and that its disclosure would not detrimentally affect the public interest or
national security.

Right of employees to form or join unions

All persons employed in commercial, industrial and agricultural enterprises, including

employees of government corporations, religious, medical, educational and non-profit
organisations shall have the right to self-organization and to form, join or assist labour
organizations for purposes of collective bargaining. The only exception is managerial
employees. Irregular or non-standard workers, self-employed, rural workers and those without
any definite employers may form labour organizations for mutual aid and protection purposes,
but not for the purpose of collective bargaining.

A union organized at the workplace or enterprise level is an independent free-standing

organization, regardless of whether it had been assisted by a national federation organiser. It
is possible for unions affiliated to various federations to co-exist at the enterprise, providing
that they are registered with the Bureau of Labour Relations and are eligible or qualified to
participate in the certification election to determine the bargaining agent with majority support.
The union chapter must have its own constitution and set of officers.

A ‘managerial employee’ is one who is vested with powers or prerogatives to set and execute
management policies and/or to hire, transfer, suspend, layoff, recall, discharge, assign or
discipline employees. Managers are excluded from joining a union or taking part in collective
bargaining. ‘Supervisory employees’ are those who, in the interest of the employer, effectively
recommend such managerial actions, and the exercise of such authority is not merely routine
or clerical in nature but require the use of independent judgment. All other employees who are
not managerial or supervisory as defined above are considered to be rank-and-file employees
(Implementing Rules, Book V Rule I Section 1(o)).

Supervisory employees shall not be eligible for membership in a labour organization of rank-
and-file employees. They may however join, assist or form separate labour organisations of
their own. Recent amendment to the Labor Code5 has meant that supervisory employees who
are included in an existing rank-and-file bargaining unit shall remain in that unit, but they
should form their own union henceforth. The amendment also states that supervisors who are
members of rank-and-file unions may continue their status and enjoy existing benefits from
the CBA, presumably until they form their own union.

Foreign employees with valid working permits issued by the Department of Labour and
Employment may exercise the right to self-organisation and join or assist labour organizations
for purposes of collective bargaining if they are nationals of a country which grants the same
or similar rights to Filipino workers, as certified by the Department of Foreign Affairs.

Provided by Republic Act No. 6715 which amended the Philippine Labor Code in 1989

Any employee, including those employed for a fixed term, is eligible to join a union on their
first day of work.

Union establishment and registration criteria

Any labour organization, federation or local union may file an application for registration with
the Bureau of Labour Relations or the DOLE Regional Office. The Bureau or the Regional
Office shall immediately process and either approve or deny the application. In the case of
approval, the Bureau or the Regional Office issues the registration certificate within thirty
calendar days from the date of filing.

An affiliate of a labour federation or national union may be a local branch or chapter of a

registered union. In this case, the labour federation or national union shall issue a charter
certificate indicating the creation or establishment of a ‘local’ or chapter, and a copy must be
submitted to the Bureau of Labour Relations. An independently registered union shall be
considered an affiliate of a labour federation or national union after submission to the Bureau
of the contract or agreement of affiliation within thirty days after its execution. This is important
since federation official(s) may be asked by the local union to represent them in the
negotiations, even if they do not work for the enterprise. All existing labour federations or
national unions are required to submit a list of all their affiliates and their addresses; and the
names and addresses of their officials. Labour federations or national unions with direct
membership are required to organise them into locals or chapters in their respective
companies or establishments.

The application for registration of a local union shall be signed by at least twenty percent of
the employees in the appropriate bargaining unit which the applicant union seeks to
represent. Applicant unions may submit all the signatures and names of employees in the
bargaining unit in the enterprise for registration. An ‘appropriate bargaining unit’ is a group of
all employees within the enterprise with collective interests, through similarity in the nature of
the work and duties, compensation, or working conditions. The requirements for union
registration includes: a registration fee, names of the officers, their addresses, the principal
address of the labour organisation, the minutes of the organisational meetings and the list of
workers who participated in such meetings, the names of all its members and the number of
employees in the bargaining unit. If the union has been in existence for one or more years,
copies of its annual financial reports shall also be submitted, along with copies of its
constitution and by-laws, minutes of its adoption or ratification and the list of members who
participated in those meetings. A sworn statement by the applicant union shall indicate that
there is no certified bargaining agent in the enterprise. In case there is an existing collective
bargaining agreement filed with the Department of Labour and Employment, the sworn
statement must state that the application for registration is filed during the sixty days before
the agreement expires.

It is possible that union registration will be denied due to non-compliance with the
requirements. The decision of the Regional Office or the Bureau denying the application shall
be in writing, stating in clear terms the reasons for the denial. A labour organisation at the
enterprise, industry and national level becomes ‘legitimate’ if it is registered with the Bureau of
Labour Relations. The Bureau of Labour Relations or the DOLE Regional Office may also
cancel the certificate of registration of any labour organization which fails to submit the
financial reports required by the Philippines Labor Code. The Bureau of Labour Relations is
the appropriate authority to decide union deregistration cases. There have been petitions for
some unions’ deregistration in the past by employers and from rival unions, some of which
were dismissed.

Responsibilities and rights of a union

The rights and conditions of membership in a labour organisation are specified in Article 241
of the Philippines Labor Code and the implementing rules which were augmented in 2003
through Department Order 40-03. Among others, no arbitrary or excessive initiation fees shall
be required of the members of a legitimate labour organisation. ‘Initiation fees’ refer to initial,
one-off fees for processing the membership application, before annual dues are deducted.

Union members are entitled to receive full and detailed reports from their officers and
representatives of all financial transactions of the union as provided in its constitution and by-

The local or chapter of a labour federation or national union shall maintain a constitution and
by-laws, set of officers and accounting books. Submissions or updates of reports shall follow
the rules of procedures of independently registered unions, federations or national unions.
Officers shall be employees of the company or establishment where the independently
registered union, affiliate, local or chapter of a labour federation or national union operates.

The union constitution and by-laws usually provide for the manner of election of union
officers, through secret ballot or other means. If there are no rules on this matter within the
union constitution, the guidelines from Department Order 40-03 (2003) by the DOLE’s Bureau
of Labour Relations may be used. The Bureau’s guidelines provide rules on requirements for
candidates and voters, officers to be elected, term of office, settlement of disputes,
determination of majority representation and the conduct of run-off elections. Members
directly elect their officers, including those of their affiliated national union or federation, by
secret ballot at intervals of every five years. No qualification requirements for candidacy to
any position shall be imposed other than that their membership is in good standing. However,
no person who has been convicted of a crime involving ‘moral turpitude’ shall be eligible for
election as a union officer or for appointment to any position in the union.

Union members shall also determine, by secret ballot after due deliberation, any question of
major policy affecting the entire membership of the organisation. The law also requires that
“no labour organisation shall knowingly admit as members or continue in membership any
individual who belongs to a subversive organization or who is engaged directly or indirectly in
any subversive activity”.

The Labor Code requires that the officers of any labour organisation shall not be paid any
compensation other than their salaries and expenses, as specifically provided for in its
constitution and by-laws, or in a written resolution duly authorized by a majority of participants
at a general membership meeting. The minutes of the meeting and the list of participants and
ballots cast shall be subject to inspection by the Secretary of Labour or their representative.
Any irregularities in the approval of resolutions shall be a ground for impeachment or
expulsion from the organisation.

The treasurer of the labour organisation and every officer responsible for the collection,
management, disbursement, custody or control of the funds, money and other properties of
the organisation, shall render to the organisation and its members a true and correct account
of all moneys received and paid since they assumed office or since the last day on which they
rendered such account, and of all bonds, securities and other properties of the organization
entrusted to their custody or under their control.

Regarding union funds, the Labor Code provides that “no special assessment or other
extraordinary fees may be levied upon the members of a labour organization unless
authorized by a written resolution of a majority of all the members in a general membership
meeting duly called for the purpose. The secretary of the organization shall record the
minutes of the meeting, including 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. The record
shall be attested to by the president” (Article 241(n)). It is the right of union members to raise
issues and take action within the framework of the organisation’s constitution and rules of
procedure, concerning what they consider as arbitrary or excessive fees, compared to fees of
other unions. Non-union members may raise these issues within the framework of company
rules and regulations before taking legal action at the Bureau of Labour Relations. The
Secretary of Labour, the Regional or Bureau Director has ‘visitatorial power’ to inquire into the
financial activities of any legitimate labour organisation and examine their books of accounts
and other records to determine the organisation’s compliance with the law and/or its own
constitution and by-laws (Article 274). Such examination shall be made upon the filing of a
request or complaint for the conduct of an accounts examination by any member of the labour

organisation, supported by the written consent of at least twenty percent of its total
membership (Department Order 40-03).

The union which has the majority vote of employees at an enterprise is certified as the
bargaining agent and may collect a reasonable ‘agency fee’ equivalent to the dues and other
fees paid by members from non-union members who benefit from and are covered by the
collective agreement. Sometimes, membership of a recognised collective bargaining agent at
the enterprise may be a requisite condition of employment (also known as the ‘closed shop’
provision), except for those employees who are already members of another union at the time
of the signing of a collective bargaining agreement.

There are no rules on how unions will spend the funds collected, except for the reporting
requirements of treasurers. The union must provide audited annual financial reports to the
Bureau of Labour Relations among other reports. The books of accounts and other records of
the financial activities of any labour organisation shall be open to inspection by any officer or
member during office hours (Article 241(g), (l) & (m)). Union members may also petition the
Bureau to audit union funds.

The Labor Code requires the officers of labour organisations to inform their members on the
provisions of its constitution and by-laws, collective bargaining agreement, the prevailing
labour relations system and members’ rights and obligations under existing labour laws. As
such, the Code requires legitimate labour organisation to conduct seminars and similar
activities on existing labour laws, collective agreements, company rules and regulations,
among others. The union seminars and educational activities may be conducted
independently of or in cooperation with DOLE and other labour education institutions
(Implementing Rules, Rule V and Rule XX, Section 2, DOLE Department Order40-03, 2003).

Labour unions act mainly as the representative of their members for the purposes of collective
bargaining. The union is certified as the exclusive representative of all the employees in an
appropriate bargaining unit for purposes of collective bargaining. The union has the right to
demand from the employer a copy of the annual audited financial statements, including the
balance sheet and the profit and loss statement, within thirty calendar days from the date of
receipt of the request and after the union has been duly recognized by the employer or
certified as the sole and exclusive bargaining representative of the employees in the
bargaining unit; or within sixty calendar days before the expiration of the existing collective
bargaining agreement, or during the collective bargaining negotiation.

Unions are authorized by law to own property for the use and benefit of the union and its
members. The union may file cases or complaints, and undertake all other activities designed
to benefit the organization and its members, including establishing cooperatives, housing,
welfare and other projects that do not contravene the law. The income and properties of
legitimate labour organisations, including grants, endowments, gifts, donations and
contributions they may receive from local or foreign fraternal and similar organizations, which
are actually, directly and exclusively used for lawful purposes shall be free from taxes, duties
and other assessments.

Unions are also required to report to the Bureau of Labor Relations of changes in the
organisation (Implementing Rules amended by DO40-03, Rule V).

Regulation of foreign assistance to union activities and reciprocal rights of foreigners

to join unions

The Philippines Labor Code states that “all aliens, natural or juridical, as well as foreign
organisations are strictly prohibited from engaging directly or indirectly in all forms of trade
union activities without prejudice to normal contacts between Philippine labour unions and
recognized international labour centres.” Foreign employees in the country with valid permits
issued by the Department of Labour and Employment may exercise the right to self-
organisation and join or assist labour organizations of their own choosing for purposes of
collective bargaining, provided that these foreign employees are nationals of a country which

grants the same or similar rights to Filipino workers (Article 269, as amended by Section 29,
Republic Act No. 6715 on March 21, 1989).

The Philippines Labor Code also regulates foreign assistance to labour unions. The law
states that “no foreign individual, organisation or entity may give any donations, grants or
other forms of assistance, in cash or in kind, directly or indirectly, to any labour organisation,
group of workers or any auxiliary thereof, such as cooperatives, credit unions and institutions
engaged in research, education or communication, in relation to trade union activities, without
prior permission by the Secretary of Labour. “

‘Trade union activities’ where foreign assistance is regulated include:

• organisation, formation and administration of labour organisation;

• negotiation and administration of collective bargaining agreements;
• all forms of concerted union action;
• organising, managing, or assisting union conventions, meetings, rallies, referenda,
teach-ins, seminars, conferences and institutes; and
• any form of participation or involvement in representation proceedings, representation
elections, consent elections, union elections.

Prohibition also applies to foreign donations, grants or other forms of assistance, in cash or in
kind, given directly or indirectly to any employer or employer’s organisation to support any
activity or activities affecting trade unions.

Public sector

Soon after the ratification of the 1987 Constitution, President Corazon C. Aquino implemented
the Constitutional mandate on the right of self-organisation of public sector employees
through Executive Order No. 180. This executive order was issued on 1 June 1987. The
status of this executive order is still in doubt as to whether it has the effect of legislation, since
the Philippines Congress was still to be elected and organised when it was issued. The
Philippines Congress has yet to enact a new law to provide public employees the right to
organise, engage in collective bargaining and engage in concerted activities including the
right to strike in accordance with law. Employment and working conditions in the government
sector are provided in Presidential Decree 807 (1975), which also defined the powers and
functions of the Civil Service Commission. There are also various pieces of legislation on
tenure, compensation, social security, health insurance, and retirement in the civil service.

The Philippines Constitution guarantees the rights of all workers to organise (Article XIII,
Section 3). The Philippine Labor Code provides for the exercise of this right to private sector
employees to “form, join or assist labour organisations for purposes of collective bargaining”.
In contrast, Executive Order No. 180 limits the right of government employees to “the
establishment of associations for the furtherance and protection of their interests”.

Executive Order 180 further provides that public sector unions may form “labour-management
committees, work councils, and other forms of workers’ participation schemes”, in
coordination with relevant government authorities. Distinct from the right to self-organisation,
the Executive Order recognized that “terms and conditions of employment or improvements
thereof, except those that are fixed by law, may be the subject of negotiations between duly
recognized employees’ organisations and appropriate bargaining authorities”. The subject of
negotiations is therefore limited: the parties cannot negotiate matters fixed by law, such as
compensation and benefits. Every year, the Philippines Congress appropriates the annual
budget, which fixes compensation and benefits for government employees according to a
standardised job position classification scheme - a matter which is outside the scope of
negotiations. However, bonuses from savings and cost of living allowances have often been
subject to contentious arguments between unions and government officials as to whether
these are legitimate items for negotiations. In some cases, the Commission on Audit has
disallowed the granting of certain allowances in collective agreements. There are indeed
numerous gaps in the law regarding public sector unions, which often give rise to disputes on
whether or not an item which involve a financial allocation in the government budget could be

the subject of negotiations. Issues which involve the exercise of managerial prerogative, such
as appointments and promotions, are also not subject to negotiations in the public sector.

Subsequently, the rules issued by the Civil Service Commission to implement Executive
Order 180 deal with the right of self-organisation, but also provide for limited collective
negotiations. The agreed outcomes of negotiations between public sector unions and heads
of government offices are contained in ‘collective negotiations agreements’ (CNAs) and not
collective bargaining agreements (CBAs). The Commission also categorically directed the
prohibition of any mass action by government employees which would result in temporary
stoppage of work, unless there was legislation from Congress to govern such strikes (Civil
Service Commission, 1990). Brion (1997) observes that with these policies, the Civil Service
Commission effectively postponed the question of whether public sector employees have the
constitutional right to collective bargaining by not making any reference to the issue.

As of June 2005, the Philippines Civil Service Commission reported that there were 1,428
registered unions in the public sector, with 293,704 members. There were 559 unions in
national government agencies (39 percent of total), 516 in local government units (36
percent), 169 in government-owned enterprises and 184 in state-owned colleges and
universities. Only 508 public sector unions (36 percent) were ‘accredited’ or recognized by
their top administrators for the purpose of collective negotiations. So far, 136 of the
‘accredited’ unions (27 percent) have successfully negotiated CNAs.

Most of the Philippines’ government unions belong to national public sector federations, of
which there are five major groups: the militant Confederation for Advancement, Recognition
Advancement and Unity of Government Employees (COURAGE), PS LINK, Philippine
Government Employees Association (PGEA), the Alliance of Health Workers (AHW) with
members working in public hospitals and health institutions, and the Alliance of Concerned
Teachers (ACT) with a majority of members working in public schools.

While Executive Order 180 states that it applies to all government employees, members of
the Armed Forces of the Philippines, police officers, fire service personnel and jail guards are
actually exempt from the coverage of this law. Executive Order 180 further defines the
bargaining units that employee associations may represent, and provides a procedure for the
certification of employee associations as exclusive negotiating agents. Responsibility for the
administration and implementation of the provisions of E.O. 180 is vested in the Public Sector
Labour-Management Council (PSLMC). The Council is composed of the Chairman of the Civil
Service Commission as the Chairperson, the Secretary of the Department of Labour and
Employment as the Vice Chairperson and Secretaries of the Departments of Finance, Justice,
and Budget and Management as members.

The law recognizes government employees, including public school teachers, as a category
distinct from workers in the private sector. The Labor Code explicitly distinguishes the
application of the laws concerning conditions of employment between public and private
sector workers. Despite some legal constraints, (for example, absence of a law with respect to
the right to strike), public sector employees have shown great persistence in organising a
unified and effective voice aimed at protecting their rights and welfare and improving the
terms and conditions of their employment.

There have been instances of mass actions lead by government unions involving work
stoppages and challenging the legitimacy of the Civil Service Commission rule prohibiting
strikes. The Supreme Court, however, has ruled that:

"it must necessarily regard the right to strike given to unions in private industry as not
applying to public employees and civil service employees. It has been stated that the
Government, in contrast to private employees, protects the interest of all people in the
public service, and that accordingly, such conflicting interests present in private
labour relations could not exist in the relations between Government and those whom

they employ. Moreover, it is asserted that public employees by joining labour unions
may be compelled to support objectives which are political in nature".6

The prohibition against strikes in the public sector is presently contained in Memorandum
Circular No. 6, Series of 1987 of the Civil Service Commission dated 21 April 1987 and
indirectly and impliedly in Executive Order No. 180 (1987) which provides certain guidelines
on the exercise of the constitutional right of government employees to organize themselves.
Hence, it could be observed that the prohibition is not statutory in nature but merely
administrative or regulatory in character. This is due to the absence of legislation either
prohibiting or allowing strikes, or even merely regulating the exercise of such a right by
government employees.

Data from the Philippines Civil Service Commission indicates steady growth of public sector
unions - from 29 unions with around 29,000 members in 1987, to 1,358 unions with around
264,000 members as of September 2004. This is despite the uneven and often fluctuating
trend of employment growth (and decline) in the public sector. The total number of
government employees in the public sector is estimated to be around 1,478,000, which
means 18 percent of all employees are union members. Looking retrospectively, only 12.5
percent of 1,287,651 regular government employees in 1999 were union members. In a span
of 17 years, from 1987 to 2004, the number of public sector unions grew by 22.6 percent per
year. Membership coverage, meanwhile, grew by 10.6 percent per year.

Alliance of Government Workers et. al. 124 SCRA 1(13) 1983, Philippines Supreme Court.

Part 2: Industrial Relations Actors

A. Government
The Philippine Department of Labour and Employment (DOLE) “supports the promotion of
industrial peace through education, expeditious and fair resolution of labour disputes,
enhancement of labour- management cooperation and promotion of tripartism in policy and
decision making.” The operating DOLE agencies that work together to achieve this strategy
are the Bureau of Labour Relations, the Tripartite Industrial Peace Council Secretariat, the
Industrial Relations Divisions and the Med-Arbitration Units of the Regional Offices, the Legal
Service, the National Conciliation and Mediation Board, the National Labour Relations
Commission and their regional units.

The DOLE has developed experience and expertise in the following areas of proactive
disputes settlement: conciliation and mediation, voluntary arbitration through the National
Conciliation and Mediation Board and compulsory arbitration through the administrative
labour court, the National Labour Relations Commission. Appeals to the Secretary of Labour,
the Court of Appeals and the Supreme Court are possible.

The Medium Term Philippine Development Plan (MTPDP) for 2005-2010 sets out the
government’s general blueprint for socio-economic development, including the framework for
employment and labour policy. The MTPDP states that its main task is to “fight poverty by
building prosperity for the greatest number of Filipino people”. To accomplish this goal, the
country must continue to open up economic opportunities, maintain socio-political stability,
and promote good stewardship – all to ensure better quality of life for its citizens. Strategic
measures are all aimed at spurring economic growth and creating jobs.8

The MTPDP targets an average annual economic growth rate of at least 7 percent by 2010.
The other key thrusts of the plan are: creation of 10 million jobs; reduction of poverty by half
to about 18 percent of the household population by 2010; support for 3 million entrepreneurs;
and the development of 2 million hectares of agribusiness land.

The goal with respect to decent and productive work in the MTPDP is to provide for adequate
income, and to protect rights at work. Social protection will be provided through participation
in the democratic processes at the workplace, and through tripartism and social dialogue.
Continuous improvement of workers’ capabilities will be pursued through the acquisition of
competitive skills and positive work ethics. The government, through the Department of
Labour and Employment, is committed to four major strategies in promoting job creation:
employment generation, employment preservation, employment facilitation and employment
enhancement.9 The government has pledged to provide support to employment generation
activities of the private sector, strengthen livelihood and entrepreneurship programs for
returning OFWs and their families and develop ’Worktrepreneurs’ in livelihood convergence
projects (such as Poverty Free Zones and Community Employment Zones).

To support its efforts in job creation, the government has pledged:

“to issue administrative guidelines and propose legislative amendments to the Labor
Code, to recognize flexible work arrangements (e.g. subcontracting, flexi-work, flexi-
wages) especially in business process outsourcing and cooperatives. The MPTDP
emphasizes that the promotion of decent work and respect for core labour standards
is paramount in these efforts.”

The government has also pledged:

Philippine Department of Labour & Employment website: [Accessed 5 March 2006]
Philippine National Economic Development Authority (NEDA) (2005), Medium Term Philippine
Development Plan (MTPDP), 2005-2010. Pasig City: NEDA.
Department of Labour and Employment website, [Accessed 25 April 2006]

“to enhance labour productivity and competitiveness, government shall showcase
productivity improvement programs in Micro, Small and Medium Enterprises
(MSMEs), including village-based Baranggay Micro Business Enterprises (BMBEs). It
shall promote a culture of self-regulation and voluntary compliance with labour
standards through the full implementation of the new labour standards framework,
and continuously review its wage policy framework vis-à-vis emerging labour and
industry requirements.”

In the enforcement of labour standards, there has been a significant shift in policy of the
Department of Labour and Employment. Through the Bureau of Working Conditions (BWC),
employers with at least 200 workers are encouraged to undertake a self-assessment. Small
enterprises are subject to technical visits by the BWC which provides advice on the
improvement of working conditions. Labour inspection is done through the regional offices of
the Bureau of Working Conditions.

The Labour Standards Enforcement Framework aims to build a culture of voluntary

compliance with labour standards by all establishments and workplaces and expand the
reach of the Department of Labour and Employment through partnerships with labour and
employers’ organization as well as with other government agencies and professional
organisations involved in promoting and protecting the welfare of Filipino workers. Given the
limited number of labour inspectors, inspections of establishments with 10 to 199 workers are
prioritised based on existence of complaints, imminent danger or imminent occurrence of
accidents and illnesses/injuries; hazardous workplaces; construction sites; and
establishments employing women and child workers.

B. Employers
The Employers’ Confederation of the Philippines (ECOP) safeguards the interests of business
in all areas related to labour-management relations, including social and economic policy
matters affecting this field, and the promotion of industrial harmony at a national level. The
ECOP is an umbrella organization for 45 chambers of commerce, industry and professional
associations. It also has 513 companies, mostly large firms, who are corporate members.

The ECOP represents employer interests in the formulation and recommendation of policy
proposals on issues affecting labour-management relations as well as other social and
economic policy questions before national governmental or international organizations. It is
the sole Philippine employers’ organization accredited with the ILO. ECOP accepts the need
to encourage and ensure the success of the tripartite consultation machinery in order for
workers, employers and the government to work harmoniously and effectively towards
achieving greater productivity and national progress.

The elected governors and officials of the leading chambers of commerce set ECOP’s
policies and priorities. The ECOP has a national structure. Services to members on a regional
level are achieved through its affiliates such as local chambers of commerce.

There are about 826,769 business establishments in the Philippines, of which 91 percent are
micro-enterprises which employ less than 9 workers. In 2003, there were 66,734 enterprises
with 10 or more employees. As an employers’ organization, ECOP has recognised the
importance of small and medium enterprises (SMEs) in generating employment and economic
growth. ECOP has sought to expand its programs and services to SMEs by responding to
their specific needs by developing new services or enhancing existing ones. In achieving the
goal of higher employment, ECOP has placed a significant importance on an effective labour
market and the promotion of a flexible legal environment. The priority of the ECOP’s policy
lobbying programme is in the area of labour law reform, as it wants to ensure its contribution
to the national economic agenda.

ECOP promotes socially responsible behaviour of enterprises at the workplace and has
developed a Corporate Social Responsibility (CSR) program that includes the promotion of
Equal Employment Opportunity (EEO) among managers, promotion of self-assessment and

social accountability tools as well as child-friendly and family-friendly workplace initiatives
(Leogardo 2004, 2005).

C. Employees
There is a diversity of union organisations in the Philippines. Enterprise-level unions could
affiliate to and be represented by federations, or choose to remain independent. The Bureau
of Labour Relations reports that as of 2006, there were 16,853 Philippines trade unions
representing 1,858,555 workers. There were 10 registered Labour Centres and 128
federations. There were 241,668 workers (17 percent of claimed union membership) covered
by 1,674 collective bargaining agreements in the private sector (see Table 2.1 below).

Only about 5 percent of the employed workforce is unionised, which raises questions as to
the welfare and protection of those who are not organized. In 2006, there were only 241,668
workers covered by collective bargaining agreements in the private sector, compared with a
reported claim of 2.3 million members by the unions. This comparison casts doubt over the
true representation of Philippine workers by their organisations- either many unions are
unable to conclude collective bargaining due to employer resistance or many of them are not
genuine unions. In addition, there is a significant decline of 56 percent in the number of
workers covered by collective bargaining agreements, which stood at 556,000 in 2005. There
are also problems of faulty record-keeping and double counting in union memberships. The
claimed union membership is 16 percent of the 14.6 million wage and salary workers, and
only 8 percent of the total employed workforce of 30.252 million.

Table 2.1: Existing Labour Organizations and Collective Bargaining Agreements

(CBAs) as of November 2006

Labour Organizations/ Collective Number Reported Members

Bargaining Agreements (CBAs)

Labour Organizations 28,496 2,279,932

Public Sector 1,531 291,343
Private Sector 15,322 1,567,212
Labour Centre 10 *
Industry Unions 2 *
Federations 128 847,887
Affiliates 556 147,030
Chartered Locals 7,748 700,857
Independent Unions 6,878 719,325

Workers’ Associations 11,643 421,377

Operating in one region 11,621 421,377
Operating in more than
22 *
one region

CBAs 1,674 241,668

Source: Bureau of Labour Relations, Department of Labour and Employment

Many Philippine trade unions have started to pursue activities outside collective bargaining,
such as investments in labour enterprises, renewed political unionism lobbying and
participation in government elections, programs for skills upgrading and retraining of workers
and organizing workers in the informal sector of the economy. This pursuit has widened the
scope of operations of the labour movement. These responses are apparent in the
statements and activities of the major trade unions groups, including the Trade Union
Congress of the Philippines (TUCP), the Federation of Free Workers (FFW) and the Alliance

Bureau of Labour Relations, Department of Labour and Employment, Statistics, Manila: DOLE-BLES, [Accessed 15 February 2007].

of Progressive Labour (APL). Many militant trade unions have organized political parties (or
‘party list groups’) to participate in parliamentary elections and represent workers at the
legislative level. These political groups include the Kilusang Mayo Uno (May First Movement)
which organized the Anakpawis (literally means ‘Toiling Masses’) and the Bayan Muna
(Nation First); and the Partido ng Manggagawa (Workers Party), the women’s party Gabriela,
and the Akbayan. Militant party list representatives have been elected to the Philippine
Congress, but only represent a minority of votes. They can influence debates but not
significantly alter the balance of parliamentary votes with respect to the majority interests of
traditional economic and political elites. The ECOP has vigorously opposed many of the
labour law proposals from the militant party list representatives, such as a legislated P125
(US$2.5 daily) across-the-board wage increase for all Philippine workers.

There are also independent labour groups with no direct involvement in union organizing,
such as the National Confederation of Labour (NCL), the Trade Unions of the Philippines and
Allied Services (TUPAS), the National Labour Union (NLU), the Philippine Transport and
General Workers Organization (PTGWO), the National Alliance of Trade Unions (NATU), and
the Associated Marine Officers and Seafarers Union of the Philippines (AMOSUP). Public
sector unions are either independent or belong to five competing national labour centres with
different ideologies.

National Labour Centres registered with the Bureau of Labour Relations are often invited to
send representatives to national and international meetings, dialogues and consultations,
such as tripartite ILO meetings. The two militant National Labour Centres- the Kilusang Mayo
Uno (KMU, May First Movement) and the Bukluranng Manggagawang Pilipino (BMP, Union of
Filipino Workers) are not recognized by the BLR. A KMU officer in an interview said that the
union has refused to register on the ground that registration requirements are a violation of
freedom of association. The major National Labour Centres also include worker associations
which do not undertake collective bargaining activities.

Union democracy, through regular elections, is often practiced at the enterprise level, as
required by the constitution and by laws when the terms of officers expire. At the federation
and national labour centres, practices vary. Unions such as the KMU and BMP generally hold
more regular elections than other labour federations.

In relation to the funding of a union’s finances at various levels of the organisation, there is no
specific law regarding the distribution or sharing of union funds. Unions which have registered
with the Bureau of Labour Relations may collect membership fees, even if they don’t have the
status of a collective bargaining agent. The common practice is to specify an amount in the
collective bargaining agreement or in the minutes of discussions. Local enterprise unions
usually pay a fixed amount of fees that are agreed in advance to their affiliated national
federations and legal representatives. However some provide payment based on the
percentage of wage or salary gains in the collective bargaining negotiations (which generally
ranges from 3 to 5 percent, although 10 percent is common for more difficult cases).
Proceeds from membership fees are usually shared equally between the union and the
federation. The federations in turn pay a certain fixed amount or percentage to the affiliated
National Labour Centre.

See Appendix 1 for a list of labour centres registered with the Bureau of Labour Relations,
and those that have not; Appendix 2 for a list of Philippine National Labour Centres and their
alliances; and Appendix 3 for the profiles of key Philippine Labour Centres.

Statements and activities of the major trade union organizations could be accessed in the following
websites: TUCP-; Federation of Free Workers (FFW)-; Alliance of
Progressive Labour (APL)-

Part 3: Legal and Institutional Framework and Practice of
Collective Bargaining

A. Duty to bargain
In the absence of an agreement or other voluntary arrangement providing for a more
expeditious manner of collective bargaining, it shall be the duty of the employer and
representatives of the employees to bargain collectively. The duty to bargain collectively is the
performance of a mutual obligation to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement with respect to wages, hours of work and all
other terms and conditions of employment. This duty extends to discussing proposals for
adjusting any grievances or questions arising under such agreement, or executing a contract
incorporating such agreements if requested by either party. However, such duty does not
compel any party to agree to a proposal or to make any concession in the negotiations.

When there is already an agreement in place, the duty to bargain collectively shall also mean
that neither party shall terminate nor modify such agreement during its lifetime.

B. Definition and Legal Status of Collective Agreement

The Philippine Labor Code defines a ‘Collective Bargaining Agreement’ as the negotiated
contract between a legitimate labour organization and an employer concerning wages, hours
of work and all other terms and conditions of employment in a bargaining unit, including
mandatory provisions for grievances and arbitration machineries.

C. Bargaining Unit
A ‘collective bargaining unit’ may cover different groups of employees in different locations
within one enterprise. Collective bargaining may cover one enterprise unit, or separate
bargaining units within the same enterprise, which shall not include supervisory employees
and security guards.

For the purpose of enterprise union recognition, an ‘appropriate bargaining unit’ is a group of
all employees within the enterprise with collective interests, through similarity in the nature of
the work and duties, compensation, or working conditions.

D. Level of Collective Bargaining

Collective bargaining is enterprise-based. There is no tradition of industry-based bargaining in
the Philippines.

E. Bargaining agents/ Parties to the Collective Agreement


Articles 250 to 259 of the Philippine Labor Code12 provide unions with the right to collective
bargaining and negotiations on behalf of employees at the enterprise. While there can be two
or more unions in the enterprise, only one union is able to gain recognition as the collective
bargaining agent to represent the workers in an ‘appropriate bargaining unit’. The
representation status of the collective bargaining agent is for five years, which is the
maximum duration of a CBA.

A union certification election refers to the process of determining, through secret ballot, the
sole and exclusive bargaining agent of the employees in an appropriate bargaining unit for
purposes of collective bargaining. Alternatively, a consent election could be held where the
parties voluntarily agree to determine the issue of majority representation. Where the
As amended by Republic Act 6715 (1989).

contending unions agree to a consent election, the government official (‘med-arbiter’) shall not
issue a formal order calling for the conduct of a certification election, but shall enter the fact of
the agreement in the minutes of a hearing (DO40-03, Rule VIII, Section 10).

It is also possible for both a union and employer to enter into CBA negotiations without a
certification procedure. This is possible in the case where the employer shows a positive
attitude towards the union’s organisation of workers at the enterprise. However, such cases
are rare. Employers rarely commence negotiations without challenging the union’s status
through certification elections.

Only the unions within an enterprise which are registered with the Bureau of Labour Relations
may file for a petition for certification election. Duly registered unions within the enterprise are
able to contest the majority status of the incumbent union by filing such a petition. It is also
possible for the employer or any other ‘party in interest’ may file a petition as an intervener to
contest the union’s majority status. There are enormous advantages for a union in gaining
recognition through winning the certification election, such as the right to collect ‘agency fees’
from non-union members who are covered by the agreement.

Even where there is a certified union for bargaining, workers may organise another union.
The fact that there already exists a certified union as the bargaining agent cannot be grounds
for denial of registration. Other unions which are not certified as the bargaining agent may
continue to exercise their rights, except those concerning collective bargaining. These unions
would still have the right to engage in concerted industrial action, as long as they follow the
legal procedures of providing for a strike ballot and filing for a notice of strike within the
prescribed period prior to the action. Their members shall not be subject to any unfair labour
practice or discrimination for not being a member of the certified bargaining agent.

If a collective bargaining agreement has yet to be registered with the DOLE, a petition for
certification election may be filed at any time. However, no certification election may be held
within one year from the date of the results of the last certification election. Neither may a
representation question be considered if, before the filing of a petition for certification election,
a bargaining deadlock to which an incumbent or certified bargaining agent is a party had been
submitted to conciliation or arbitration or had become the subject of a valid notice of strike or

In the case of a current collective bargaining agreement in place, a petition for certification
election or a motion for intervention can only be considered within the sixty days prior to the
expiry date of such agreement. The sixty-day period based on the original collective
bargaining agreement shall not be affected by any amendment, extension or renewal of the
collective bargaining agreement for purposes of certification election. At the expiration of the
sixty-day period, the employer shall continue to recognize the majority status of the incumbent
bargaining agent where no petition for certification election has been filed.

In addition, the petitioner should provide a description of the bargaining unit and state the
appropriate number of the employees in the alleged bargaining unit. The petition should be
supported by the written consent of at least 25% of all the employees in the bargaining unit. A
petition for certification election shall be filed with the Regional Office of DOLE which has
jurisdiction over the principal office of the petitioner. The petition shall be in writing and made
under oath. Any legitimate labour organisation or the employer, when requested to bargain
collectively, may file the petition.

Once a petition is properly filed by a legitimate labour organisation, a representative of DOLE

shall immediately order the certification election by secret ballot. Any petition which is filed
outside the sixty-day period, or does not satisfy the 25% written consent requirement shall be
dismissed outright.

Union certification elections are supervised by officials of the Department of Labour and
Employment. The DOLE Regional Office posts notices at least five working days before the
actual date of election in two highly visible places at the company premises. The notices shall
contain the date of election, names of the contending parties, the description of the bargaining

unit and the list of eligible voters. The DOLE Representation Officer has the power to decide
on any question on-the-spot arising from the conduct of the election. Any interested party
may, however, file a protest with the Representation Officer before the close of proceedings.
Protests that are not raised accordingly will be deemed as waived, and contained only in the
minutes of the proceedings.

The union which obtains a majority of the valid votes cast by eligible voters shall be certified
as the sole and exclusive bargaining agent of all the workers in the appropriate unit. A run-off
election may occur as a result of a certification election with three or more contending unions
and no contender received a majority of the valid votes cast. The run-off election is then
between the two unions receiving the highest numbers of votes in the certification election.
The DOLE Representation Officer shall on his own decision, conduct a run-off election within
five calendar days from the close of the election between the two highest polling unions. The
total votes for all contending unions should be at least 50% of the number of votes cast.

In order to have a valid election, at least a majority of all eligible voters in the bargaining unit
must have cast their votes. Otherwise, a failure of elections will be declared, although this is
rare. Another petition may be filed for certification or consent elections within six months of
the failed election (Rule VIII, Sections 17 to 19 of the Implementing Rules, DO40-03).

An appeal to contest the results of certification election is possible. Any party to an election
may appeal the order or results of the election as declared by the DOLE labour official. The
appeal should be addressed directly to the Secretary of Labour and Employment, on the
ground that the rules and regulations for the conduct of the election have been violated.
Appeals shall be decided within fifteen calendar days. All certification cases shall be decided
within twenty working days, in accordance with the rules and regulations prescribed by the
Secretary of Labour.

It is possible for all unions at the enterprise to agree to form a joint bargaining team, but they
must agree to support only one registered union in the certification election. The
Implementing Rules do not provide for a ‘joint team’ to run as a single contestant, but only
recognize the registered union which wins a majority vote among workers in the bargaining
unit. It is however possible for officers in other unions to play a role in the bargaining
committee, as long as both parties mutually agree.

Bargaining committee

The bargaining committee is usually composed of the union leaders at the workplace. At the
start, the bargaining committee may propose the inclusion of external advisers. For example,
if the union is an affiliate of a federation, it may seek the assistance of the federation’s
advisers in the collective bargaining process. New unions or newly elected leaders will usually
hire external advisers and lawyers. It is up to the employers to accept, oppose and negotiate
the composition of the committee. In most cases, union federation officials are part of the
bargaining committee.

Third parties

Lawyers, advisors, consultants and academics may support or advise bargaining unions and
employers, but they cannot participate in the negotiations unless recognized by both sides as
part of the bargaining committee.

F. Content of a Collective Bargaining Agreement

Beyond basic issues such as wages and working conditions, some of the other issues in CBA
negotiations between unions and employers commonly include:

• Multi-skilling, job rotation and training;

• Entrepreneurship training and development;
• Organisation of employee cooperatives, with management support and assistance for
loans, credit, consumption, marketing, production, etc.;

• Employees’ stock option programs (ESOP);
• Increase in retirement benefits, early retirement provisions, unemployment insurance,
pension plans, etc.;
• Reduction of work hours during downturns to prevent lay-offs;
• Free in salary increases, but with provisions for profit sharing and workers’
participation in management upon recovery;
• Other forms of labour-management cooperation (LMC) through safety & health
committees, employee participation machinery such as suggestion schemes, ‘Quality
Circles’ and works’ councils, grievance machinery, productivity improvement, and
labour-management strategic cooperation.

In addition, collective bargaining agreements may specify the ceiling for union membership
fees, the rights and protection of union leaders at the enterprise level and paid union leave for
organisational activities, including the exercise of duties in relation to external union positions
outside the enterprise without loss of wages. There are no provisions in the Philippines Labor
Code regarding these issues, although it is considered unfair labour practice for employers to
discriminate in regard to wages, hours of work and other terms and conditions of employment
in order to encourage or discourage membership in any labour organisation (Article 248(e)).

Most negotiations at the enterprise level refer to the wage rates and employment conditions in
the industry or geographical region, such as comparable firms in the same industrial zones or

G. Procedural Requirements
The CBA procedure starts when either the union or employer gives the other party a written
notice of its intention to negotiate an agreement, together with a statement of proposals. The
other party shall reply thereto not later than ten calendar days from receipt of such notice.
Should differences arise on the basis of such notice and reply, either party may request for a
conference which shall begin not later than ten calendar days from the date of request.

Both parties may seek mediation or conciliation assistance from the National Conciliation and
Mediation Board (NCMB) when they reach a deadlock in negotiations, though this is not
mandatory. The government has put in place an intervention program to encourage voluntary
arbitration, and disputes avoidance and prevention.

H. Registration of Collective Bargaining Agreements

A CBA must be registered with the Department of Labour and Employment within thirty days
of the finalisation of negotiations. A copy is submitted directly to the Bureau or the Regional
Offices of the DOLE for registration. The submission must be accompanied by proof that the
agreement has been posted in two public and accessible locations in the workplace and
ratified by the majority of workers in the bargaining unit.

If the CBA is executed based on an award decision by the appropriate government authority
or a voluntary arbitrator, the agreement shall likewise be submitted by the parties to the
Bureau of Labour Relations or the DOLE Regional Office, accompanied by verified proof of its
posting in two conspicuous places in the workplace. Both the union secretary and president
must certify that the agreement was ratified by a majority of the employees in the appropriate
bargaining unit.

I. Implementation of Collective Bargaining Agreements

Any CBA between a union and employer has a maximum term of five years, but may be
renegotiated no later than three years after its execution. Wages could be revisited and
adjusted within a three to five year period through mutual agreement. All provisions of the
CBA other than the representation issue may also be renegotiated.

The renegotiated wages and provisions shall apply retroactively to the day immediately
following the conclusion of the agreement, provided that it was entered into within six months
from the date of expiry of the original CBA. If any such agreement is entered into beyond the
six-month period, the parties shall agree on the duration of retroactivity.

In case of a deadlock in the renegotiation of the CBA, the parties may exercise their rights
under the Labor Code (i.e. mediation, conciliation, arbitration, concerted action and lockout).
All requirements relating to the registration of the renegotiated agreement shall also be
complied with.

Even if there is a deadlock in the re-negotiations, the five-year term of the existing CBA
remains since wages or any other provisions could only be changed within this period.
According to the DOLE, five-year agreements at most enterprises have contributed to more
stability in labour-management relations and a decline in disputes and strikes at the

Injunctions on the implementation of CBAs are prohibited. No temporary or permanent

injunction or restraining order shall be issued by any court or other entity in any case relating
to labour disputes, except where provided for in Articles 218 and 264 of the Code.13

J. Disputes and grievances arising from implementation of CBAs

In case of disputes, the National Conciliation and Mediation Board (NCMB) may assist in its
settlement. If the dispute is not settled, the NCMB shall intervene upon the request of either or
both parties or at its own initiative. The NCMB shall immediately call the parties to conciliation
meetings, and have the power to issue subpoenas requiring the attendance of the parties to
such meetings. It shall be the duty of the parties to participate fully and promptly in the
conciliation meetings when called upon by the Board. During the conciliation proceedings, the
parties are prohibited from doing any act which may disrupt or impede the early settlement of
the disputes. The Board must exert all efforts to settle disputes amicably and encourage the
parties to submit their case to a voluntary arbitrator.

While the certified bargaining agent is the exclusive representative of employees in a

bargaining unit for the purpose of collective bargaining, an individual employee or group of
employees shall have the right at any time to present grievances to their employer.

K. Termination of agreements
Either party can serve a written notice to terminate or modify the agreement at least sixty days
prior to its expiration date. It shall be the duty of both parties to continue the terms and
conditions of the existing agreement during the sixty-day period, until a new agreement is

L. Collective negotiations in the public sector

The Public Sector Labour-Management Council (PSLMC) has the primary responsibility for
the management of labour relations in the Philippine public sector, as provided for by
Executive Order No. 180. The secretariat of the Council is part of the Civil Service
Commission. The intent of the PSLMC is to provide for a disputes settlement mechanism in
the public sector. Pursuant to Executive Order No. 180, the PSLMC “shall exercise exclusive
original jurisdiction over… complaints, grievances, and other disputes involving government
employees which remain unresolved and irreconcilable, after the exhaustion of available
administrative remedies brought before the Council by the parties either jointly or individually”.

The PSLMC administers, promulgates and implements the Executive Order’s rules and
regulations. The PSLMC has issued several resolutions amending some provisions of the first
Executive Order notably on the number of members required to form a union (majority or 50%

As amended by Section 22, Republic Act No. 6715, March 21, 1989.

plus one) and the definition of what constitutes an organizational unit within which a union
may be formed. Nominated representatives from the labour sector are appointed by the
President to be members of the Council, acting as observers.

Further, the PSLMC may on its own decide to intervene in a dispute and assume jurisdiction
“whenever the interest of the public service so demands”. Proceedings before the PSLMC are
generally non-adversarial and non-litigious in character. Subject to the requirements of due
process, legal and procedural technicalities and formal rules derived from the courts of law
shall not be strictly applied.

The PSLMC has issued various resolutions on the following issues: implementing rules and
regulations on the right to unionize, classification of division chiefs, accreditation of unions,
determination of managerial and rank-and-file employees, security guards as union members,
submission of union constitution and by-laws, charging of agency fees, grant of bonuses and
the like.

There is a need for a systematic study of the history, experience and outcomes of the work of
the PSLMC. A preliminary study of social dialogue in the public sector reported that both
officials of government agencies and public sector unions do not think positively of the
PSLMC.14 They consider the Council as the least utilised and hardly effective channel for
social dialogue.

M. Other forms of employee representation

Given that unions do not represent the majority of Philippine workers, there exist other forms
of employee representation at the workplace. The Labor Code provide workers the right to
participate in policy and decision-making processes of the establishment where they are
employed insofar as said processes will directly affect their rights, benefits and welfare. For
this purpose, workers and employers may form Labour-Management Councils.
Representatives of the workers in such Labour-Management Councils shall be elected by at
least the majority of all employees in said establishment.

Employers are encouraged to form Labour-Management Councils (LMCs) as a means to

settle grievances and prevent labour disputes at the workplace. The Labor Code mandates
that the DOLE promote the formation of LMCs in both organized and unorganized
establishments. The purpose of LMCs is to enable workers to participate in policy and
decision-making processes in the establishment, insofar as said processes will directly affect
their rights, benefits and welfare (except those which are covered by collective bargaining
agreements or are traditional areas of bargaining). The Department shall promote other
labour-management cooperation schemes and, upon its own initiative or the request of both
parties, may assist in the formulation and development of programs and projects on
productivity, occupational safety and health, improvement of quality of work life, product
quality improvement, and other similar scheme (Implementing Rules, Rule XXI, Section 1 & 2
of DO40-03).

Other channels of communication and representation are regular committee meetings,

informal negotiations, creation of task forces with union representatives, special meetings with
senior management, monthly meetings and social activities at the workplace.

Nicolas B. Barriatos and Maria Catalina M. Tolentino, (2001) “Social Dialogue in the Public Service:
The Philippine Experience”. Unpublished commissioned report submitted to the ILO SEAPAT, Manila.

Part 4: Trends, issues and debates: social partners' and
political actors’ views and proposals for future development
of national bargaining systems
A. Major Issues and Trends in Collective Bargaining
Industrial relations in the Philippines have gone through a rich and diverse experience in both
policy and practice, spanning over a century since 1902 when the first labour union was
established. 15 Yet, after a hundred years, the challenge of globalization has brought both
workers and employers at the crossroads, with huge gaps in policy and practice. In particular,
there is a need for concerted action by employers, workers and the government to address
the deficit between policy on decent work, including freedom of association and collective
bargaining provided in Philippine labour laws, and the actual practice of these fundamental
concepts. The question of how to extend the benefits of unionism and collective bargaining to
the large, unorganised informal sector is also a major challenge.

Trends in collective bargaining

Collective bargaining in the Philippines is on a fluctuating trend: there were 3,106 agreements
in 1998, 2,700 in 2002 and 2,806 in 2005. These agreements covered around 551,000
workers in 1998, reduced slightly to 528,000 workers in 2002, and then went up again to
555,000 workers in 2005. 16 Collective agreements are mostly found in the manufacturing

Table 4.1: Unions and CBAs in the Philippines, 1990-2004

Unions and Collective Bargaining

Agreements (CBAs), in the Philippines,
1990 - 2004 June





1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Union 4637 5236 5710 6340 7274 7882 8248 8822 9374 9850 10296 10924 15444 16091 16354
CBA 4982 4409 4537 4983 4497 3264 3398 2987 3106 2956 2687 2518 2700 2842 2874

Union CBA

Philippine history books acknowledge that the first labour union in the country was the ‘Union Obrera
Democratica, UOD’, organized by Isabelo delos Reyes in 1902, at the beginning of the American
colonial period. It was a general union with members mainly from the printing industry.
Report from the Bureau of Labour Relations, Department of Labour and Employment.

Disputes arising from collective bargaining

Case studies of Philippine industrial relations show the intricate, complex but well established
web of rules and regulations. In the exercise of various workers’ rights such as freedom of
association and collective bargaining, adversarial industrial relations are to be expected as
employers attempt to limit challenges to their prerogative and authority.

Legal conflicts arising from collective bargaining cases can be long, stressful and expensive.
This is especially if employers and workers resort to compulsory arbitration and court battles.
Given the tumultuous experience in the 1980s and 1990s, government exerted tremendous
efforts to promote non-adversarial means of dispute settlement through conciliation,
mediation and voluntary arbitration. Labour management cooperation has been recognised as
a pro-active mechanism towards non-adversarial industrial relations. Educational institutions
such as the School of Labour and Industrial Relations of the University of the Philippines
organized short term training courses to assist unions and employers in understanding labour
laws, preventive measures for labour disputes, the use of labour-management councils and
good human resource management. Both employers and unions responded positively, and
the government has reported a sustained decline in strikes and other collective disputes since
then. There were only 12 strikes in 2006, compared to 26 in 2005. 17 However, individual
labour disputes from non-unionized workers involving claims of illegal dismissals, incorrect
compensation and other disputes have become more significant.

The Department of Labour and Employment (DOLE), through its various bodies such the
National Conciliation and Mediation Board (NCMB), the Bureau of Labour Relations, and the
National Labour Relations Commission, has set sight on sustaining the relatively peaceful
relations between labour and management at the moment to ensure a favourable
environment for investment and economic growth. Measures have been established to settle
enterprise-level disputes and prevent strikes and lockouts in anticipation of collective
bargaining agreements that would shortly expire. The DOLE needs to intensify its labour and
management education to foster greater understanding and cooperation between workers
and employers, especially at the enterprise level. The government has put in place
institutional mechanisms for conciliation and mediation efforts through the Administrative
Intervention for Dispute Avoidance (AIDA) program, which aims to reduce if not eliminate
strikes by settling enterprise-level disputes before they could escalate into strikes and

Information on workers representation

A list of labour centres, federations, unions and workers associations is available to the
public. 18 However, there seems to be no official system or procedure to process the
cancellation and removal of organizations on the list which have not submitted reports as
required by labour law in the last five years or more. This failure by such organizations should
have been rendered them defunct or in violation of the law. There is also no system to verify
the claims of union memberships, which overlap in many cases. The websites and
publications of the labour centres and federations do not generally publish the numbers of
claimed union membership. An alternative indicator of a labour centre’s membership strength
and support is the number of votes and seats won in the party-list elections for worker
representatives to the Philippine Congress. However, electoral protests show that the
elections are vulnerable to manipulation in some areas.

With no transparent data regarding membership of Philippine unions, the problem of

determining the ‘most representative’ workers organization remains. The government’s
recognition of worker representatives invited for consultations and social dialogue in national
and international forums are still conducted on an ad hoc, political and non-transparent basis.
There is a need for government, employers and workers organizations to agree to the
initiation of a regular procedure to reorganise the records of defunct or non-operational labour
See, for instance, the press release by the Department of Labour and Employment’s Information
Service, “Industrial front more peaceful as decline in strikes continues”, 6 December 2006.
The list of labour centres and federations can be downloaded from the Bureau of Labour Relations
website: [accessed 15 February 2007].

organizations, and to accurately reflect the number of unions and their members in labour

Issues in public sector collective bargaining

Public sector employee organizations in the Philippines are regarded as unions, despite the
wording of Executive Order 180 which provide only for ‘associations’. Public sector unions are
able to engage in collective negotiations over other terms and conditions of employment,
except for certain items such as compensation which is set by Congress.

The Philippine Supreme Court has, on various occasions, decided on disputes involving the
scope and application of public sector labour relations. For instance, the Supreme Court
pointed out in Alliance of Government Workers et. al. (124 SCRA1) that:

"…on the nature of the public employer and the peculiar character of the public
service, it must necessarily regard the right to strike given to unions in private industry
as not applying to public employees and civil service employees. It has been stated
that the Government, in contrast to private employees, protects the interest of all
people in the public service, and that accordingly, such conflicting interests present in
private Labour relations could not exist in the relations between Government and
those whom they employ. Moreover, it is asserted that public employees, by joining
labour unions may be compelled to support objectives which are political in nature."

The Supreme Court has reaffirmed its ruling that the right to strike is not available to public
sector employees, whether they belong to unions or associations. The State has adhered to a
strong prohibition of strikes in the public sector, even if the mass action is covered by a rally
permit.19 It is possible however for public sector employees to go on prior approved leave,
and participate in pickets, rallies or demonstrations as part of their exercise of the right to
freedom of expression.

The Supreme Court has stressed that the “terms and conditions of employment in the
government sector are governed by law, not by the relative strengths of management and
labour as they hammer out mutually acceptable terms across the collective bargaining
table.”20 Paradoxically, all representatives of ‘labour’ and ‘management’ in government are
employees. This ruling is indeed problematic, since it raises fundamental questions on the
validity of Executive Order 180 which provided for the exercise of the right to organize unions
in the public sector. Yet according to this ruling, the same unions are limited in their exercise
of the right to collective bargaining. These unions could, however, be part of federations or
National Labour Centres which could collectively negotiate with the Philippine Congress
regarding the budget for employees’ compensation. All government employees whose
appointments are processed in the Civil Service Commission, including those in state
enterprises, national agencies, local governments, health workers, teachers in public schools
and colleges, the police and the military, are covered by this ruling.

There has been a demand for changes in public sector labour-relations, such as the required
signatures for registration and accreditation of unions. 21 The public-sector unions have
proposed the abolition of the certification election requirements in the case where there are
two or more registered unions in the organizational unit. From the unions’ perspective, such
elections tend to create division among workers, giving rise to intra-union problems. The
unions believe that instead of a CE, a compromise agreement among the unions on collective
negotiations and grievance representation would be a better arrangement. They also propose

The Supreme Court affirmed its no-strike ruling in the case of Government Service Insurance System
(GSIS) versus its Kapisanan ng Manggagawa sa GSIS, GR170132, Philippine Supreme Court, 6 December 2006. GSIS is a government owned financial institution.
Association of Court of Appeals Employees (ACAE) vs. Pura Ferrer-Calleja, G.R. No. 94716,
Philippine Supreme Court,, 15 November 1991.
Melissa R. Serrano and Leian Marasigan (2004), “Issues and Concerns in Philippine Public Sector
Labour Relations”, paper prepared for discussion in the Public Sector Unionism Conference (Part II)
convened by the U.P. SOLAIR and the Friedrich Ebert Stiftung (FES)-Philippine Office on 9-10
November 2004, Royal Mandaya Hotel, Davao City.

that management should have the authority to decide on the terms of the negotiation
agreement without the intervention of the Commission on Audit and Department of Budget
and Management. Public sector unions must be able to negotiate issues such salary
increases and other allowances, subsidies and economic benefits. Finally, there is a need for
public sector unions to be represented in the PSLMC, which is now dominated by government

These issues indicate the limitations of the current industrial relations and bargaining
framework in the public sector. There are various mechanisms used to promote social
dialogue, including collective negotiations. Some government agencies have labour-
management committees and regular meetings with various types of employee associations.
However, there is certainly room for improvement in the current regulatory framework, such
as introducing legislation to govern labour relations in the public sector.

B. Prospects for labour law reforms

In 1999, the Philippine Congress organized a Labour Commission to receive and discuss
numerous initiatives and proposals for labour law reforms. Representatives from employers,
government, workers organizations and academia submitted position papers on proposed
changes and improvements. There were proposals for lesser restrictions on the exercise of
freedom of association, reduction of intervention from the state, more simplified procedures in
disputes settlement and more defined regulation for industrial relations in the public sector.
The Labour Commission ended its work in 2002 by putting forward some recommendations.
However, further action on the introduction of new legislation needs to be followed up with
both houses of Congress. Some of the obstacles to further labour law reforms in the
Philippines include: deadlocks on wage adjustments, vigorous objections from employers
about pro-worker ‘populist proposals’, lack of consensus among worker organizations on the
simplification of disputes settlement procedures and reduced government intervention, a lack
of priority on the agenda of parliament, and ‘grandstanding’ by political leaders.

Despite the obstacles, numerous bills on labour law reforms have been put forward by
lawmakers in both the lower and upper houses of the Philippine Congress. There is a need to
develop stronger consensus to put labour reforms at the forefront of the legislative and
executive agenda, to promote productive and harmonious industrial relations, and ensure
decent work and a better quality of life for Philippine workers.

Appendix 1: Labour Centres in the Philippines

A. Labour Centres registered with the Bureau of Labour Relations:

1. International Metal Workers Federation – Philippine Council (IMF-PC)

Date registered: 13 February 1973
Key officers: Cecilio Seno, President
Last reporting compliance: Financial Statement 2000
Members: No indicators.

2. Philippine Congress of Trade Unions (PHILCONTU) (no longer active)

Date registered: 21 January 1971
Key officers: Democrito Mendoza, President.
Last reporting compliance: Financial statement 1981. No reports submitted in the last 10
Membership: No indicators.

3. Philippine Trade Union Council (PTUC) (no longer active)

Date registered: 19 August 1980
Key officers: Alejandro Villaviza, President
Last reporting compliance: No reports submitted in the last 10 years.
Members: No indicators.

4. Lakas Manggagawa Labour Centre (LMLC) (no longer active)

Date registered: 21 August 1987
Key officers: Florentino Cruz, chairman; David Diwa Jr., Exec. Director
Last reporting compliance: No indicators.
Members: 14 federations.

5. Pambansang Diwa ng Manggagawang Pilipino (PDMP)

Date registered: 14 February 1991
Key officers: Roberto Oca, President; Geronimo Quadra, Chief of Staff & Spokesman
Last reporting compliance: No indicators.
Members: 18 federations.

6. National Confederation of Labour (NCL)

Date registered: 27 May 1994
Key officers: Felicisimo Carullo, Chairperson (deceased); Samuel del Rosario, Exec. VP
Last reporting compliance: No indicators.
Members: 7 federations.

7. Port Workers Union of the Philippines (PWUP)

Date registered: 4 May 1979
Key officers: Roberto Oca, President; Norberto Reyes, Exec. VP
Last reporting compliance: No reports within the last 10 years.
Members: No indicators.

8. Trade Union Congress of the Philippines (TUCP)

Date registered: 10 February 1976
Key officers: Democrito Mendoza, President; Ernesto Herrera, Secretary General
President: Democrito Mendoza (Also a president or key official of: PHILCONTU, VIMCONTU,
Last reporting compliance: No indicators.
Members: 40 federations, the biggest of which is the Associated Labour Union (ALU) with
50,774 workers as members. Considered as the most representative worker organization. No
current elected representative in the Philippine Congress (although past candidates have
been elected into Congress).

9. Visayas Mindanao Council of Trade Unions (VIMCONTU) (no longer active)

Date registered: 28 February 1963
Key officers: Democrito Mendoza, President; Cecilio Seno, Vice Pres. & Sec. Gen.
Last reporting compliance: Financial Statement 2004.
Members: No indicators.

10. Congress of Labour Organizations (CLO)

Date registered: 12 November 2001 (Registered as a federation but with activities as an
independent National Labour Centre)
Key officers: Timoteo Aranjuez, Chairman
Last reporting compliance: Founding documents 2002; Financial Statement 2001.
Members: No indicators.

11. Federation of Free Workers (FFW)

Date registered: 19 November 1956 (Registered as a federation, but not as a Labour Centre).
Key officers: Alan Montano, President. Antonio Asper, Vice President.
Membership: 27,927 workers in 373 local unions and 31 affiliates.

12. Trade Unions of the Philippines & Allied Services (TUPAS)

Date registered: 23 April 1971 (Registered as Federation, but not as a Labour centre).
Key officers: Vladimir Tupaz, Secretary General.
Membership: 10,563 workers in 228 unions & 31 affiliates.

B. Labour Centres not registered with the BLR

13. Alliance of Philippine Labour (APL)

Date organized: November 1996 (according to APL website)
Key officers: Danny Edralin, president; Joshua Mata, Sec. General
Elected 3 representatives in the Philippine Congress through the Akbayan party list
Key Labour federations: NUHWRAIN, Automotive Industry & Workers Association (AIWA)

14. Kilusang Mayo Uno (KMU)

Date organized: May 1980
Key officers: Crispin Beltran, Chairman Emeritus & elected representative; Elmer Labog,
Chairman; Joel Maglunsod, Secretary General
Members: 12 federations and 5 regional worker alliances.
Includes the following major federations:
• National Federation of Labour Unions (NAFLU), with 27,525 members in 215 unions
and 57 affiliates;
• Alliance of Democratic Labour Organizations (ADLO), 10,367 members in 264 unions
and 9 affiliates;
• Alliance of Nationalist & Genuine Labour Unions (ANGLO), 12,741 members in 198
unions and 17 affiliates.
• Organized Labour Association in Line Industry and Agriculture (OLALIA), 5,478
members in 66 unions and 2 affiliates.
Elected representatives in the Philippine Congress through the following party list
organizations: Anakpawis (1 representative), Bayan Muna (3 representatives) & Gabriela
(Women’s Party) (1 representative)

15. Bukluran ng Manggagawang Pilipino (BMP)

Date organized: Unknown
Key officers: Renato Magtubo, President & elected representative, Partido ng Manggagawa.
Elected representatives in the Philippine Congress through the Partido Manggagawa

Appendix 2: Philippine national Labour Centres and their alliances, 2007

From what is known in official reports, the media and other publications about Philippine trade
unions, the alliances of various national Labour Centres are shown below.

A. Labour Centres which work closely with government, employers and the ILO:

• Trade Union Congress of the Philippines (TUCP)

• Federation of Free Workers (FFW)

Both are affiliates of the International Trade Union Council (ITUC), from the merger of the
International Confederation of Free Trade Unions (ICFTU) & the World Confederation of
Labour (WCL).

B. Independent competing active labour groups, with no international affiliations

• Kilusang Mayo Uno (May First Movement)

Party lists: Anakpawis, Bayan Muna, Gabriela
• Alliance of Progressive Labour (APL)
Party list: Akbayan
• Bukluran ng Manggagawang Pilipino (Solidarity of Filipino Workers)
Party list: Partido Manggagawa (Labour party)

There is very limited coordination among these groups with respect to political and industrial
relations issues, and opposing government policies deemed contrary to workers’ interests.

C. Other independent labour groups

Trade Unions of the Philippines & Allied Services (TUPAS)

National Union of Bank Employees (NUBE) – UNI APRO
National Federation of Labour (NFL)
National Association of Trade Unions (NATU)
National Confederation of Labour (NCL)
Congress of Labour Organizations (CLO)

Appendix 3: Profiles of key Philippine Labour Centres

Trade Union Congress of the Philippines (TUCP)

From TUCP website:

“A truly representative democratic organization composed primarily of trade unions, workers'

organizations and other groups of workers. With members in all sectors and industries (from
agriculture to manufacturing to service) including government employees, associations/
organizations of groups, from the OFWs, informal sector, drivers, urban poor, youth groups,
cooperatives, alliances, coalitions and other civil society groups.

TUCP is dedicated to:

• Building democratic organizations run/led by members

• Strengthening the workers movement, building skills/capacities
• Instilling nationalism, solidarity, equity and social responsibility
• Promoting equal rights and opportunities for all
• Improving conditions of work and life of workers and their families, including those of

TUCP Areas of Concern:

• More responsive affiliated unions and associations, responsive to and working on

sectoral [labour, wages] and national concerns [good governance, economic
• Restructuring unions along industry lines (for more effective organizing, education
and operations) and union Councils in provincial levels
• Harmonizing industry issues for stronger advocacy and operations
• Expanded presence in strategic industries (for better union participation in policies
and programs)
• Increased networking and alliance work (catalyzing improvements in structures,
systems, and mechanisms, for more responsive government programs) working
together to address issues.”

Source: [Accessed 15 February 2007]

Kilusang Mayo Uno (KMU, May First Movement)

From KMU website:

“KMU is an independent labour centre promoting genuine, militant and patriotic trade
unionism. It is genuine because it recognizes the struggle between labour and capital and
upholds the legitimate interest of the working class; militant because it relies on the workers
collective struggle in defending trade union and democratic rights; and patriotic because it
seeks to end imperialist domination and control over the Philippines. In particular, the KMU
aims to:
 Protect and promote the workers right to employment, a decent wage, humane working
conditions and their right to form unions, bargain collectively and to strike;
 Defend the workers movement from yellow unionism and its reformist economist and
collaborationist tendencies;
 Heighten the political consciousness of the workers through massive education, step-by-
step solid organizing and mobilizations in and out of the workplace;
 Ensure the workers' participation in the national democratic struggle against imperialism,
feudalism and bureaucrat capitalism;
 Intensify and strengthen international solidarity with workers and the peoples of the

Source: [Accessed 15 February 2007]

Alliance of Progressive Labour (APL)

From the APL website:

“The Alliance of Progressive Labour (APL) is a national labour centre. Consistent with its
belief in social movement unionism, APL has built itself as a ‘multi-form centre’, drawing into
its fold various forms of labour organizations and not just trade unions. In the future, APL sees
itself as a singular union structure consolidated along industry and geographical lines. It is
committed to the advancement of social movement unionism - a strategy directed at
recognizing, organizing and mobilizing all types of workers and unions for engagements in
different arenas of struggle.

Social movement unionism, then, seeks to protect the rights of all workers, not just the wage-
earners. It is ‘social’ because it does not deal only with economic rights and political rights
that trade unions usually deal with. Rather, social movement unionism seeks to address even
the ‘social costs’ of oppressive economic and political systems. It recognizes the broadness of
workers’ interests and the diversity and complexity of work arrangements. As such, it is
geared toward the struggle for workers’ rights in all aspects — economic, political and socio-
cultural — and at all levels — local, national, global. In short, the strategic objective of social
movement unionism is nothing less than social transformation. This strategy is not limited to
‘trade union’ organizing and has been developed precisely to respond to new work
arrangements where employee-employer relationships do not exist or are not clear.”

Source: [Accessed 15 February 2007]

Appendix 4: Sample legal case studies of Philippine industrial relations

Case study 1- Implementation of the agreement: hiring of relatives22

The United Kimberly-Clark Employees Union (UKCEU), a local chapter affiliate of the
Philippine Transport General Workers’ Organization (PTGWO), is the certified collective
bargaining agent of all rank-and-file employees of the San Pedro milling plant of Kimberly-
Clark Philippines, Inc. (KCPI). The KCPI is a multinational corporation engaged in the
manufacture of bathroom and facial tissues, paper napkins, feminine care products,
disposable diapers and absorbent cotton.

Back in 1980, KCPI and the UKCEU executed a Collective Bargaining Agreement (CBA).
Article XX, Section 1 of the CBA reads:

“Section 1. The Company agrees to employ, regardless of sex, the immediate

member of the family of an employee provided qualified, upon the employee's
resignation, retirement, disability or death. In case of resignation, however,
employment of an immediate member of the family of an employee may be allowed
provided the employee has rendered a service of ten (10) years and above and the
resignation is not a forced resignation. For the purpose of this section, the phrase
“immediate member of the family of an employee” shall refer to the employee's
legitimate children and in default thereof to the employee's collateral relative within
the third civil degree. The recommendee of the retired/resigned employee shall, if
qualified, be hired on probationary status.”

However, KCPI did not set any other employment qualifying standards for the recommendees
of retired/resigned employees. As an act of liberality and generosity, it even agreed to hire
recommendees whom were merely high school graduates. This practice largely remained
unchanged. Throughout the years, several UKCEU members who resigned or were disabled,
availed of the said benefits and recommended their successors.

On 7 November 1995, KCPI issued new Guidelines on the Hiring of Replacements of

Retired/Resigned Employees for the effective implementation of Article XX, Section 1 of the
existing CBA, to take effect on 1 January 1996. The Guidelines require, among others, that
such recommendees must: (a) be at least 18 years of age but not more than 30 years old at
the time of the hiring, and (b) have completed at least a two-year technical/vocational course
or a third-year college education, upon graduating from high school. Moreover, where both
husband and wife are employees of the company, they shall be treated as one family;
therefore only one of the spouses would be allowed to avail of the benefit.

During the negotiation for the 1997 CBA, UKCEU proposed an amendment of Article XX,
Section 1 of the existing CBA. After the negotiation, KCPI and UKCEU executed a CBA to
cover the period from 1 July 1997 to 30 June 1999. Neither the UKCEU’s proposed
amendment nor the educational qualifications contained in the Guidelines prepared and
issued by KCPI were incorporated in the CBA. Article XX, Section 1 of the preceding CBA
was retained without any modification. KCPI continued to hire employees pursuant to the
CBA up to 1998. It had hired 44 of such employees from 1995 to 1998.

However, in the second half of 1998, KCPI suspended the implementation of the CBA. This
was partly due to the depressed economic conditions in the Philippines at the time, and in
compliance with the hiring freezes policy of its Asia-Pacific headquarters. It refused to hire 80
recommendees of retiring employees as regular employees. The KCPI and UKCEU failed to
settle the matter through the existing grievance machinery. Both parties referred the matter to
voluntary arbitration. The voluntary arbitrator decided that “the Company cannot suspend the
implementation of Section 1, Article XX of the existing CBA unilaterally by upgrading the
educational qualifications of ‘applicants-replacements’ than are required previously, and the

United Kimberly-Clark Employees Union – Philippine Transport General Workers Organization
(UKCEU – PTGWO) v Kimberly-Clark Philippines, Inc., GR No. 162957, Supreme Court of the
Philippines,, 6 March 2006.

husband and the wife, under the said provision, are each entitled separately to recommend
an applicant-replacement.” The voluntary arbitrator also declared that the exercise of
managerial prerogative does not permit a company to set aside or ignore what had been
agreed upon. The company then appealed the decision of the voluntary arbitrator to the Court
of Appeals. The Court decided in favour of the company, and the union subsequently

The Supreme Court ruled against the union. By agreement of the parties, the implementation
of the 1995 Guidelines was deferred until 1 January 1997, unless revoked or amended by the
1997 CBA. The petitioner (union) proposed that the practice of hiring recommendees of
retired/ resigned, deceased or disabled employees whom were at least high school
graduates, be included in the 1997 CBA. However, the respondent (employer) did not agree.
Hence, Article XX, Section 1 of the CBA remained intact and there was no legal bar for
respondent to implement the Guidelines from 1997 onwards. The petitioner was bound by the
terms and conditions of the CBA therein set forth. The voluntary arbitrator, however, ignored
the plain language of the CBA as well as the Guidelines issued by respondent. He
capriciously based his resolution on the respondent’s practice of hiring which, however, by
agreement of the petitioner and respondent, was discontinued.

The Court further stated that “a CBA is more than a contract; it is a generalized code to
govern a myriad of cases which the draftsmen cannot wholly anticipate. It covers the whole
employment relationship and prescribes the rights and duties of the parties. It is a system of
industrial self-government with the grievance machinery at the very heart of the system.”

In August 1999, KCPI and UKCEU executed a new CBA. Article XX, Section 1 of the
preceding CBA was incorporated into the new CBA, which governed the relationship of the
parties up to 30 June 2002.

Case study 2- Wage & compensation claims23

Article 100 of the Philippine Labor Code provides for prohibition against elimination or
diminution of benefits. American Wire and Cable Co., Inc. is a corporation engaged in the
manufacture of wires and cables. There are two unions in this company, the American Wire
and Cable Monthly-Rated Employees Union (Monthly-Rated Union) and the American Wire
and Cable Daily-Rated Employees Union (Daily-Rated Union). On 16 February 2001, an
action was filed before the NCMB of the Department of Labour and Employment (DOLE) by
the two unions for voluntary arbitration. They alleged that the company, without valid cause,
suddenly and unilaterally withdrew and denied certain benefits and entitlements that have
been long enjoyed by the employees. These benefits included: the presentation of service
awards, a 35% premium on top of an employee’s basic pay for work rendered on selected
days during the Holy Week and Christmas season, the organisation of a Christmas Party and
promotional increase.

The question was whether the company violated Article 100 of the Labor Code on non-
diminution of benefits. The union argued that the respondent’s withdrawal of the above
benefits violated Article 100, and that

“The grant of these benefits was a customary practice that can no longer be
unilaterally withdrawn by private respondent without the tacit consent of the petitioner.
The benefits in question were given by the respondent to the petitioner consistently,
deliberately, and unconditionally since time immemorial over a long period of time. As
such, it cannot be withdrawn from the petitioner at respondent’s whim and caprice,
and without the consent of the latter. The benefits given by the respondent cannot be
considered as a ‘bonus’ as they are not founded on profit. Even assuming that it can
be treated as a ‘bonus’, the grant of the same, by reason of its long and regular
concession, may be regarded as part of regular compensation.”

American Wire and Cable Daily Rated Employees Union versus American Wire and Cable Company,
GR No. 155059, Supreme Court of the Philippines,, 29 April 2005.

On the other hand, the company argued that:

“The grant of all subject benefits has not ripened into practice that the employees
concerned can claim a demandable right over them. The grant of these benefits was
conditional based upon the financial performance of the company and that
conditions/circumstances that existed before have indeed substantially changed
thereby justifying the discontinuance of said grants. The company’s financial
performance was affected by the recent political turmoil and instability that led the
entire nation to a bleeding economy. Hence, it only necessarily follows that the
company’s financial situation at present is already very much different from where it
was three or four years ago.”

The Supreme Court decided that:

“… for a bonus to be enforceable, it must have been promised by the employer and
expressly agreed upon by the parties, or it must have had a fixed amount and had
been a long and regular practice on the part of the employer… The benefits and
entitlements in question were never subjects of any express agreement between the
parties. They were never incorporated in the Collective Bargaining Agreement
(CBA)… To be considered a ‘regular practice’, the giving of the bonus should have
been done over a long period of time, and must be shown to have been consistent
and deliberate. The downtrend in the grant of these two bonuses over the years
demonstrates that there is nothing consistent about it.”

Case study 3- Illegal employment dismissals & union busting24

On 7 June 1998, the regular rank-and-file employees of Me-Shurn Corporation organized the
Me-Shurn Workers Union-FSM, an affiliate of the February Six Movement (FSM), a national
labour federation. The union had a pending application for registration with the Bureau of
Labour Relations (BLR) through a letter dated 11 June 1998. Ten days later, the petitioner
corporation (the company) started placing all the rank-and-file employees whom were
members of the union’s bargaining unit on forced leave. On 23 June 1998, the respondent
union filed a Petition for Certification Election. Instead of filing a response to the Petition, the
corporation filed a comment on 27 July 1998 stating that it would temporarily lay off
employees and cease operations, on the account of its alleged inability to meet the export
quota required by the Board of Investment.

While the Petition was pending, 184 union members allegedly submitted a retraction or
withdrawal on 14 July 1998. As a consequence, the med-arbiter dismissed the Petition. On 7
May 1999, Department of Labour and Employment (DOLE) Undersecretary Rosalinda
Dimapilis-Baldoz granted the union’s appeal and ordered the holding of a certification election
among the rank-and-file employees of the company.

On 4 August 1998, respondent union filed a Notice of Strike against the petitioner corporation
on the ground of unfair labour practice (illegal lockout and union busting).

On 31 August 1998, Chou Fang Kuen (Sammy Chou) and Raquel Lamayra of the company
imposed a precondition for the resumption of operation and the rehiring of laid-off workers.
The company allegedly required the remaining union officers to sign an agreement containing
a guarantee that upon their return to work, no union or labour organization would be
organized. Instead, the company requested the union officers to serve as mediators between
the workers and management. As a result, the union filed complaints against the company
and the case was assigned for compulsory arbitration. The respondents alleged that the

Me Shurn Corporation and Sammy Chou versus Me Shun Employees Union – FSM and Rosalina
Cruz., GR No. 156292, Supreme Court of the Philippines,, 11 January 2005.

company had engaged in unfair labour practice, illegal dismissal, underpayment of wages and
deficiency in separation pay, for which they claimed for damages and legal fees.

In its counter argument, the corporation replied that because of economic reversals, it was
compelled to close and cease its operations to prevent serious business losses; and that it
had the right to do so under Article 283 of the Labor Code. It further argued that in August
1998, it had paid its 342 laid-off employees separation pay and benefits to the total amount of
P1,682,863.88; and that by virtue of these payments, the cases had already become moot
and academic. It also averred that its resumption of operations in September 1998 had been
announced and posted in the Bataan Export Processing Zone, and that some of its former
employees had reapplied for positions.

Labour Arbiter Isorena dismissed the union’s complaints on the ground of a lack of merit. He
ruled that:

1. Actual and expected losses justified the closure of the company and its dismissal of
its employees;
2. The voluntary acceptance of separation pay by the workers precluded them from
questioning the validity of their dismissal; and
3. The claim for separation pay lacked factual basis.

On appeal, the NLRC reversed the Decision of Labour Arbiter Isorena. Finding the company
guilty of unfair labour practice, the Commission ruled that the closure of the company shortly
after the respondent union had been organized, as well as the dismissal of the employees,
had been effected under false pretences. The actual reason for the company’s actions
therefore was allegedly to bar the formation of the union. Accordingly, the NLRC held that the
illegally dismissed employees were entitled to back wages.

After the denial of their Motion for Reconsideration, the petitioner company appealed to the
Court of Appeals via a Petition for Certiorari. They maintained that the NLRC had committed
“grave abuse of discretion and serious errors of fact and law” in reversing the decision of the
Labour Arbiter and in finding that the corporation’s cessation of operations in August 1998
had been tainted with unfair labour practice.

The petitioner company added that respondent union’s legal personality to represent the
affected employees had already been repudiated by the workers themselves in the
certification election conducted by the DOLE. A certification election was held on 7
September 2000, at the premises of the company under the supervision of the DOLE, with
most workers voting for a non-union status.

The Court of Appeals dismissed the petition of the company because of its failure to submit
sufficient proof of business losses. It found that the company merely wanted to abort or
frustrate the formation of respondent union. The employer had the burden of proving that the
dismissal of the employees was for a valid or authorized cause. The burden was not
discharged in this case.

The appellate court further affirmed the union’s legal personality to represent the employees.
It held that:

1. Registration was not a prerequisite to the right of a labour organization to litigate; and
2. The cases may be treated as representative suits, with the respondent union acting
for the benefit of all its members.

The company appealed to the Supreme Court. The appeal was dismissed by the Court, which

“to justify the closure of a business and the termination of the services of the
concerned employees, the law requires the employer to prove that it suffered
substantial actual losses. The cessation of a company’s operations shortly after the
organization of a labour union, as well as the resumption of business barely a month

after, gives credence to the employees’ claim that the closure was meant to
discourage union membership and to interfere in union activities. These acts
constitute unfair labour practices.”

This case shows the contentious nature of employers’ challenges to a union’s legitimacy to
represent workers. In the case of Me Shurn, the union filed for a Certification Election on 29
June 1998. While this petition was initially dismissed by a lower ranking labour officer
because of the supposed retraction of some workers, the union’s appeal was granted by a
higher labour official whom ordered a certification election. According to the Supreme Court,
the DOLE would not have entertained the petition if the union was not a legitimate labour
organization. According to the Labor Code, in an unorganized establishment, only a legitimate
union may file a petition for certification election. Furthermore, the union could sue in its own
legal personality in order to challenge unfair labour practices committed by employers.
Preventing such a right to sue would be a violation of workers’ right to self-organization.
According to the Supreme Court, the exercise of this right is particularly important in cases
where the employers discriminate against one union by an immediate grant of exclusive
recognition to another union as a bargaining agent, despite the pending petition for
certification election. The results of such an election cannot be considered as repudiation by
the affected employees of the union’s right to represent them,

Case study 4- Compromise agreements and CBAs25

The Philippine Supreme Court has consistently ruled that a compromise is governed by the
basic principle that the obligations arising from it have the force of law between the parties. A
compromise is essentially a contract perfected by mere consent. A compromise, once
approved by final orders of the court, has the force of res judicata between the parties and
should not be disturbed unless the parties consent or there is evidence of forgery.

In SMI Fish Industries, Inc. vs. NLRC 26 , the Supreme Court declared that “where the
compromise agreement was signed by only three of the five respondents, the non-signatories
cannot be bound by that amicable settlement. A compromise agreement is a contract and
cannot affect third persons who are not parties to it.”

Even if a clear majority of union members have agreed to a settlement with the employer, the
union has no authority to compromise the individual claims of members whom did not consent
to such settlement. Rule 138, Section 23 of the 1964 Revised Rules of Court requires special
authority to granted before an attorney may compromise his client’s litigation-

“The authority to compromise cannot lightly be presumed and should be duly

established by evidence…. Without showing the union’s special authority to
compromise the individual claims of private respondents for reinstatement and back
wages, there is no valid waiver of these rights. As private respondents did not
authorize the union to represent them in the compromise settlement, they are not
bound by the terms thereof. Second, whether minority union members who did not
consent to a compromise agreement are bound by the majority decision approving a
compromise settlement has been resolved in the negative.

Money claims due to labourers cannot be the object of settlement or compromise

effected by a union or counsel without the specific individual consent of each
Labourer concerned. The beneficiaries are the individual complainants themselves.
The union to which they belong can only assist them but cannot decide for them.”

Dusit Hotel Nikko versus National Union of Workers in Hotel, Restaurant & Allied Industries
(NUWHRAIN) –Dusit Nikko Hotel Chapter, GR No. 160391, Supreme Court of the Philippines,, 9 August 2006.
213 SCRA 444, 448 (1992), Supreme Court of the Philippines,, G.R. Nos.
96952-56, September 2, 1992.

Case study 5: Strengths and limits of using legal strategies in industrial relations and
collective bargaining in Toyota Motor Philippines Corp (TMPC)

Court and other records27 show the various possibilities of confrontational and legal strategies
used by workers and unions to exercise their rights to organize and engage in collective
bargaining. On the other hand, it is not uncommon to find employers exerting substantial
efforts to fight and frustrate the union in every step of the way, often through legal means. In
some cases, the Supreme Court has decided in favour of the union. However, the cases had
undergone a long, expensive and frustrating legal process, some of which are still ongoing.
This case of the TMPC is a good example of the limits of utilising legal strategies in achieving
desired outcomes in industrial relations processes.

The Toyota Motors Philippines Corporation (TMPC) started operations in 1988. There were
1,242 employees in 2005. Toyota Japan owns 34 percent of the company, and 30 percent is
owned by the Metrobank Group of George Ty, a Filipino Chinese businessman. Another local
investor group, Titan Resources Corporation owns 21 percent. The remainder of the shares
are owned by minority local investors.

On 26 November 1992, the Toyota Motor Philippines Corporation Labour Union (TMPCLU)
filed a petition to the DOLE for a certification election. The TMPCLU's petition was dismissed
on the ground that the labour organization's membership was composed of supervisory and
rank-and-file employees in violation of Art. 245 of the Labor Code, and that at the time of the
filing of its petition, TMCPLU had not acquired legal personality. The TMPCLU appealed, and
the Secretary of Labour directed the holding of a certification election among the regular rank-
and-file employees of TMPC. However the TMPC management blocked this election, based
on a Supreme Court ruling that since TMPCLU's membership list contained the names of at
least twenty-seven supervisory employees in Level Five positions, "the union could not, prior
to purging itself of its supervisory employee members, attain the status of a legitimate labour
organization. Not being one, it cannot possess the requisite personality to file a petition for
certification election."

On 19 February 1997, the Supreme Court ruled that the employees of the respondent Toyota
Motor Philippines Corporation (TMPC) belonging to the Level 5 positions under its Single
Salary Structure set up were supervisory employees. The decision became final, and the
company implemented its Three-Function Salary Structure for employees.

On 24 April 1997, the Toyota Motors Philippines Corporation Employees and Workers Union
(TMPCEWU) filed a Petition for Certification Election before the Med-Arbitration Unit of the
DOLE-National Capital Region (DOLE-NCR), seeking to represent the rank-and-file
employees of the manufacturing division from Levels 1 to 4 of TMPC.

On 13 May 1997, while the case was pending hearing, the Toyota Motors Philippines
Corporation Labour Union (TMPCLU) claimed to be the legitimate labour organization in
TMPC, and filed a Motion to Intervene with Opposition to the Certification Election. It claimed
that the TMPCEWU petition was premature due to an earlier resolution by the Secretary of
Labour ordering the conduct of a certification election among the rank-and-file employees of
TMPC represented by the TMPCLU, which was the subject of certiorari proceedings before
the Supreme Court and still awaiting final resolution at the time. Further, the TMPCLU claimed
that the collective bargaining unit which the TMPCEWU sought to represent violated the
‘single or employer’ unit policy since it excluded rank-and-file employees in other divisions
and departments in the company.

On 4 February 1999, Toyota Motors Philippines Corporation Workers’ Association (TMPCWA)

filed a petition for certification election seeking to be recognized as the sole and exclusive
bargaining agent of all rank-and-file employees at the Bicutan and Sta. Rosa plants of the
Toyota Motors Philippines Corporation (TMPC). However, this move was vigorously opposed

Based on the Supreme Court records of the Toyota case; and the ILO
Freedom of Association Report on the Toyota Motor Philippine Case Report No. 332, Case 2252, accessed 30 April 2006.

by the Toyota Motors management on the ground that a case was pending before the
Supreme Court between the TMPCWA and the TMPCLU (whose registration certificate had
been cancelled). The company argued that the TMPCWA membership is the same as that of
the TMPCLU which sought to represent the same bargaining unit. The company further
asserted that this petition is a replicate of a previous petition that was dismissed on 18 June
1998. On 29 March 1999, the regional office of the DOLE dismissed TMPCWA’s petition. The
union subsequently appealed, and Undersecretary Rosalinda Dimapilis-Baldoz of the DOLE
reversed the decision on 25 June 1999, and ordered the conduct of a certification election.

The TMPC filed an appeal with the Court of Appeals, alleging ‘grave abuse of discretion’ on
the part of the Secretary of Labour and Employment. The company’s appeal was dismissed
and the certification election was set on 8 March 2000.

During the proceedings of determining which employees had the right to vote, the company
submitted a list of 1,110 employees at its Bicutan and Sta. Rosa Plants in its payroll system.
However, the TMPCWA questioned the eligibility of 120 employees in the list. On the basis of
a previous Supreme Court decision, the union contended that those 120 employees were not
rank-and-file but supervisory employees of the company.

The company asserted that the establishment of its ‘Three-Function Salary Structure’ had
already superseded the Supreme Court decision. The real supervisors or managers are
distinguished from rank-and-file employees based on their duties & functions. Nonetheless,
the certification election proceeded as scheduled. Out of the 1,110 employees, 1,063 cast
their votes, with 105 votes being challenged for allegedly being cast by supervisory
employees. Those 105 votes were not opened and considered. With 503 affirmative votes
and the exclusion of the 105 challenged votes, the TMPCWA asserted that it garnered the
majority of the 943 votes cast (less the challenged votes). Therefore, it filed a motion to be
certified as the sole and exclusive bargaining agent of all rank-and-file employees at the
company’s Sta. Rosa and Bicutan plants.

However, the company did not accept the results of the election and insisted that the 105
questioned votes be opened for purposes of determining the majority of the valid votes cast.
This was notwithstanding the fact that those 105 challenged and segregated ballots were cast
by employees occupying positions of Level 5 or above, whom were considered as supervisory
employees by a previous Supreme Court ruling. Management insisted that a new three-
function salary scheme had superseded the previous Court ruling. Nonetheless, on 12 May
2000, the Med-Arbiter declared the challenged votes to be disallowed and subsequently
TMPCWA was certified as the bargaining agent of the rank-and-file employees of the
company. The TMPC attempted to appeal the decision but the Secretary of Labour denied the
appeal. However, when the TMPCWA submitted its CBA for the company’s consideration, the
TMPC management refused to negotiate.

The company then filed a Motion for Reconsideration of the DOLE secretary’s decision. To
the union’s surprise, the DOLE issued an order requiring both parties to attend a hearing. The
union decided to hold an assembly after the scheduled hearing to express their dismay over
the decision. The TMPCWA filed a formal request to Toyota’s management on behalf of the
workers for them to attend the assembly from 21-23 February 2001. The union also
expressed the workers’ willingness to work without overtime pay on rest days in order to make
up for the lost time.

On 16 March 2001, 227 union officers and members were shocked to be informed by the
company that their employment had been terminated. Another 64 union members were
suspended for 30 days for participating in the assembly. On 19 March 2001, the union
proposed to the company that a conference be held between them on 21 March 2001 to
amicably settle all issues, including their current labour dispute and CBA regulations.
However, on 21 March, the company filed a petition before the Court of Appeals to nullify the
decision of the Secretary of Labour to recognize the TMPCWA as exclusive bargaining agent
for the rank-and-file employees. The company argued that the union had failed to obtain a
majority vote from the workers, and opposed the TMPCWA’s representation of workers in
collective bargaining. The company argued that:

• The TMPCWA was coercing and urging its members to force the company to start
negotiations for collective bargaining, despite a serious question mark on the status of
the union as the exclusive bargaining agent of the rank-and-file employees;
• 300 employees had refused to render overtime service on 21 February 2001 and
deliberately did not report for work from 22 - 23 February 2001;
• Operations in the production plant was paralyzed and lost potential sales in the
amount of P40,000,000;
• The government will suffer considerable losses in taxes from lost potential sales;
• If the issue of the challenged voters is not finally resolved, it will result in their mass
promotion not on the basis of their work performance but simply on the opinion of the
Secretary of Labour;
• If operations of the company are paralyzed due to the dispute on the status of the
challenged voters, its entire workforce of 1,600 employees will be adversely affected.
The company will resort to cost-reduction or even the closure of its business, thus
contributing to the already worsening unemployment conditions in the country.

The union filed a notice of strike. While the union was preparing for a strike ballot, it also
organised protest actions in front of Toyota’s two plants to persuade management to retract
its decision. A full-blown strike subsequently took place when management paid no attention
to the protests.

On 4 April 2001, the National Labour Relations Commission issued a Temporary Restraining
Order which practically allowed the company to disperse the strikers. On 9 April 2001, while
most of the strikers went home to visit their families, around 100 policemen and security
guards dispersed the remaining picket line and forcibly took all the strikers’ belongings.
Meanwhile, buses of ‘scabs’ and managerial employees were escorted into the plants.

A day after the violent dispersal of the strikers, the Secretary of Labour assumed jurisdiction
over the labour dispute and ordered the strikers to return to work. The DOLE Secretary
determined that the auto industry is indispensable to the national interest. Though
unconvinced, the union and its members nevertheless complied with the order. The union
also gave assurances that its members and officers would no longer stage a strike over the
certification election. The union then challenged the Secretary of Labour’s assumption of
jurisdiction before the Supreme Court, but the court affirmed the DOLE Secretary’s decision

After the Secretary of Labour referred the labour dispute to the National Labour Relations
Commission (NLRC), the union requested to defer the hearings. The NLRC declared the
protests to be illegal and decided that the company’s termination of 227 workers who
participated in the union assemblies was justified. It also declared that the union’s officers and
directors have forfeited their employment status for having led the protest assemblies.

Toyota’s management implemented the NLRC decision a week after its issuance. More than
half of the union’s membership had been dismissed, including the entire union leadership.
Toyota also filed criminal complaints against several union members and officers for grave

Finally, on 24 September 2003, after several appeals, the Supreme Court issued a decision
favourable to the TMPCWA, and denied the injunction requested by the company against the
union representing Toyota workers in collective bargaining.

Before the Supreme Court had issued this decision, on February 2003 the TMPCWA filed a
complaint to the ILO Freedom of Association Committee against the Government of the
Philippines and the Toyota Motor Philippines Corporation for infringement of ILO conventions
87 and 98 at ILO/CFA. In November 2003, the ILO/CFA recognized the complaint and ruled
that the Philippine government did in fact infringe on those ILO conventions. The Committee
made several recommendations, including:

1. The reinstatement of all the 233 dismissed union members;

2. The immediate resumption of CBA in order to establish healthy labour relations;

3. The withdrawal of criminal charges against union members;
4. Acceptance of ILO delegation; and
5. The amendment of relevant legislative provisions in the country’s Labor Code.

In 2003, the ILO Committee on Freedom of Association completed its report to the ILO
Governing Body concerning the complaint. The ILO urged the Philippine government not only
to review its current labour legislation but also to introduce fair, independent and speedy
procedures in the certification process to recognize a union in representing workers in
collective bargaining negotiations.

The ILO Committee requested the government to amend the Labor Code, as the Code in its
current form allowed the Secretary of Labour and Employment to submit the Toyota dispute
(and any dispute likely to cause a strike) to compulsory arbitration based on the argument that
the Toyota Motor Company represented "an industry indispensable to the national interest".
The exercise of such a power effectively contradicts the provisions of ILO Conventions 87 and
98 ratified by the Philippines.

In addition, the Committee observed that the administrative labour court decisions in the
Toyota case issued disproportionate sanctions for participating in an illegal strike. It urged the
government to facilitate the reinstatement of the 227 dismissed workers and 15 trade union
officers whom had lost their original employment status, or “to provide for their compensation
if reinstatement is not possible.” The ILO observed that the legal sanction of dismissal from
employment was a disproportionate penalty for participation in a peaceful strike. A ‘back to
work order’ in strikes which did not threaten the life, health, and safety of the population was
also not in conformity with ILO Conventions 87 & 98. The ILO recommended that the
government amend its labour laws to conform to these conventions.

The ILO also noted that it took more than one year to organize a certification election to
recognize the union, and another year to have the union confirmed as the exclusive
bargaining agent at the Toyota Motor Corporation. The ILO Committee noted that these
delays resulted from the various petitions, appeals and motions filed by the Toyota Motor
Corporation with the labour authorities, particularly with the Secretary of the Department of
Labour and Employment.

On 11 July 2005, the DOLE granted the petition for certification election filed by another
union, the Toyota Motor Philippines Corporation Labour Organization (TMPCLO). The
TMPCWA opposed this action, and argued that there is already a certified bargaining agent. It
accused the TMPCLO as a ‘yellow union’ that was supported by the company.

The DOLE went ahead to approve the rules and official list of voters for a Certification
Election which was held on 16 February 2006. The TMPCWA organized a picket-line protest
against what they perceived to be unjust rules by DOLE. However, the union also took part in
the election. The TMPCWA lost (237 votes) to TMPCLO (424 votes), out of a total of 894
employees who voted. Under the law, there is no official winner if the highest polling
candidate does not receive a majority vote (at least 50% + 1 of the total votes). There were
121 challenged voters and an additional 89 dismissed workers. The TMPCWA argued that
the challenged votes should have be considered and counted. It also filed a protest to
question the results, with allegations that its members had been harassed. Notwithstanding
the outcome of the case at the lower level, it is expected that either party will appeal all the
way to the Supreme Court. As in previous cases involving Toyota, this dispute may take many
years to resolve. Meanwhile, collective bargaining negotiations on wages, allowances and
incentives remain suspended.


Amante, Maragtas. 2006. Industrial Relations in the Philippine Auto Parts Supply & Vehicle
Industry. Quezon City: University of the Philippines School of Labour and Industrial Relations
(UP SOLAIR) and Centre for Labour Education & Research Development (CLEARED)
Foundation. Unpublished report.

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