DEL PILAR ACADEMY, EDUARDO ESPEJO AND ELISEO OCAMPO, JR., PETITIONERS, VS. DEL PILAR ACADEMY EMPLOYEES UNION RESPONDENT.

Del Pilar Academy versus Del Pilar Academy Employees Union

The Case

This is a labor law case about agency fees. Del Pilar Academy, an educational institution in Imus, Cavite, together with its president Eduardo Espejo and its board chairman Eliseo Ocampo, Jr., asks the Supreme Court to reverse the Court of Appeals. The union of its teaching and non-teaching personnel had demanded that the school collect agency fees from employees who are not union members. The school refused, insisting that each non-union employee must first sign an individual written authorization. The case matters because it settles two questions every labor lawyer must know: when a union may collect agency fees from non-members, and whether a check off of those fees requires individual written consent.

Procedural History

The union filed a complaint for unfair labor practice against the school and its officers before the Labor Arbiter. The Labor Arbiter dismissed the charge of unfair labor practice for want of basis, but held that the school erred in refusing to collect agency fees from non-union members. The union appealed to the National Labor Relations Commission, which affirmed the Arbiter. The Commission upheld the union's right to agency fees but did not treat the school's failure to deduct them as unfair labor practice. The union then went to the Court of Appeals by petition for certiorari. The Court of Appeals affirmed with modification: it upheld the union's right to collect agency fees and expressly ordered the school to deduct those fees from the salaries of non-union employees who receive the benefits of the collective bargaining agreement. The school's motion for reconsideration was denied. The school then came to the Supreme Court by petition for review on certiorari.

Facts

The union was the certified collective bargaining representative of the teaching and non-teaching personnel of Del Pilar Academy. In September 1994, the union and the school signed a collective bargaining agreement granting salary increases and other benefits. Among its provisions were a basic pay increase, a teaching load limited to twenty-three hours per week with overload pay for any excess, longevity pay of one hundred pesos for every five years of continuous service, two months of summer vacation leave with pay for faculty who had served six consecutive semesters, and fifteen days of leave with pay for non-teaching employees who had served at least one year.

The union then assessed agency fees against non-union employees and asked the school to deduct the amounts from their salaries. The school refused, saying the non-union employees were not amenable to the deduction. In September 1997, the union sought to renew the agreement. The school refused to renew unless the summer vacation leave provision was amended to cover only teachers with at least three consecutive years of satisfactory service. The union objected, calling it a diminution of benefits. The school refused to sign, and a deadlock followed. When the school declined voluntary arbitration, the union filed a complaint for unfair labor practice.

The school defended itself by saying that no individual check off authorization had been given by the non-union employees, and that its proposed amendment was meant only to conform the agreement to the Manual of Regulations for Private Schools. The Labor Arbiter, the National Labor Relations Commission, and the Court of Appeals all agreed that the union was entitled to agency fees, but none of them found the school guilty of unfair labor practice. The Court of Appeals, however, went further and ordered the school to deduct the fees.

Issues

• Whether or not the union is entitled to collect agency fees from non-union employees who receive benefits under the collective bargaining agreement.
• Whether or not an individual written authorization is necessary for a valid check off of agency fees from the salaries of non-union employees.

Applicable Provisions

Article 248, paragraph e, of the Labor Code provides:

Employees of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be assessed reasonable fees equivalent to the dues and other fees paid by the recognized collective bargaining agent, if such non-union members accept the benefits under the collective bargaining agreement. Provided, That the individual authorization required under Article 241, paragraph (o) of this Code shall not apply to the non-members of recognized collective bargaining agent.

This is the provision that grants the union its right to agency fees and expressly exempts non-members from the written authorization requirement.

Article 241, paragraph o, of the Labor Code provides:

Other than for mandatory activities under the Code, no special assessments, attorney's fees, negotiation fees or any other extraordinary fees may be checked off from any amount due to employee without an individual written authorization duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the deduction.

This is the general rule on check off, which the school invokes but which Article 248, paragraph e, expressly declares inapplicable to non-union members.

Ruling

On the first issue, the Court held that the union is entitled to collect agency fees. The school argued that its employees received no benefit from the agreement because the annual salary increase was mandated by a government department directive, not by the agreement. The Court rejected this. The salary increase was not the only benefit in the agreement. The union also negotiated the twenty-three hour teaching load limit, overload pay, longevity pay, two months of summer vacation leave with pay for faculty, and fifteen days of leave with pay for non-teaching personnel. These provisions surely benefited the non-union employees, justifying the collection of agency fees and the union's entitlement to them.

On the second issue, the Court held that no individual written authorization is needed. Article 248, paragraph e, makes it explicit that the written authorization requirement of Article 241, paragraph o, does not apply to non-union members, especially where they receive several benefits under the agreement. The Court quoted its earlier ruling in Holy Cross of Davao College versus Joaquin:

The employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the union's right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that non-union employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the bargaining union.

The Court therefore found that the Court of Appeals did not err in upholding the union's right to collect agency fees.

Doctrine

A union may collect agency fees from non-union employees who accept the benefits of a collective bargaining agreement. The right rests on a quasi-contractual basis: non-union employees may not unjustly enrich themselves by enjoying employment conditions negotiated by the bargaining union. The employer has the duty to deduct the fees from wages and remit them to the union when this is stipulated in the agreement or authorized in writing by the employees. But for non-union members, no individual written authorization is required. Article 248, paragraph e, expressly exempts them from the written authorization requirement of Article 241, paragraph o, of the Labor Code.

Disposition

The Supreme Court denied the petition and affirmed the decision and resolution of the Court of Appeals, which had ordered Del Pilar Academy to deduct agency fees from non-union members receiving the benefits of the collective bargaining agreement.

Remember This

Memorize this line: the acceptance of benefits under a collective bargaining agreement justifies the deduction of agency fees, and no individual written authorization is needed from non-union employees. Examiners use this case to test the quasi-contractual basis of agency fees and the express exemption of non-members from the check off authorization rule.