Definitive Report - Report No 268, November 1989

Case No 1495 (Philippines) - Complaint date: 17-APR-89 - Closed

1. 214. The National Federation of Labor (NFL) presented a complaint of violations of trade union rights against the Government of the Philippines in a communication dated 17 April 1989. The Government supplied its observations on the case in a communication of 1 August 1989.
2. 215. The Philippines has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), the Right to Organise and Collective Bargaining Convention, 1949 (No. 98) and the Rural Workers' Organisations Convention, 1975 (No. 141).

A. The complainant's allegations

1. 216. In its communication of 17 April 1989, the NFL on behalf of its affiliate, the Cebu Plaza Hotel Employees' Union, explains that the employees' union is the certified bargaining representative of all the employees of Cebu Plaza Hotel Corporation and as such signed, on 14 November 1986, a three-year collective agreement. It attaches a copy of the agreement valid from 1 October 1986 to 30 September 1989.
2. 217. The NFL states that in December 1986 the President of the Philippines issued Proclamation No. 50 creating the Asset Privatisation Trust to take possession and dispose of government-owned or controlled corporations to the private sector. One of the Proclamation's provisions is the automatic termination of employer-employee relations upon the sale of the corporation. Section 27 reads:
   • Upon the sale or other disposition of the ownership and/or controlling interest of the government in a corporation held by the Trust, or all or substantially all of the assets of such corporation, the employer-employee relations between the government and the officers and other personnel of such corporations shall terminate by operation of law. None of such officers or employees shall retain any vested right to future employment in the privatized or disposed corporation, and the new owners or controlling interest holders thereof shall have full and absolute discretion to retain or dismiss said officers and employees and to hire the replacement or replacements of any one or all of them as the pleasure and confidence of such owners or controlling interest holders may dictate. (Emphasis added.)
   • Nothing in this section shall, however, be construed to deprive said officers and employees of their vested entitlements accrued in or the compensation and other benefits incident to their employment or attaching to termination under applicable employment contracts, collective bargaining agreements, and applicable legislation.
3. 218. According to the complainant, on 3 February 1987, the Asset Privatisation Trust acquired 70.4 per cent interest in the shares of stock of the Cebu Plaza Hotel Corporation. On 18 June 1987, the Trust conducted a public bidding for the assets of the Corporation at which the Pathfinder Holdings Phil. Inc. was the highest bidder. On 22 July 1987, the Committee on Privatization authorised the sale. On 22 September 1987, the services of all employees were terminated.
4. 219. Although the employees were advised to apply for rehiring to the new management, there was no assurance that they would be rehired and, if they were lucky enough to be rehired, they would have to undergo probationary status of six months. This means that their services can be terminated at any time during the said period.
5. 220. According to the NFL, on 15 October 1987, the new management assumed operations of the hotel with the same hotel name, the same building, the same premises and equipment but with a practically new set of employees. The security of employment of the old employees was devastated, the provisions of the existing collective bargaining agreement were totally ignored and the union was virtually busted.
6. 221. The complainant states that the union resorted to and exhausted all possible remedies to protect security of tenure and to maintain the benefits of the employees, as well as to preserve the local union, but to no avail. The Department of Labor is helpless in view of the provisions of Proclamation No. 50. The union has written several times to the President and other government entities, including the Senate, but to date there is no solution in sight.
7. 222. The complainant is of the opinion that the automatic termination of employment relations under section 27 of Proclamation No. 50 is an infringement of trade union rights. It is contrary to the guarantee under the Philippine Constitution (article 22(1)) of full protection of labour and the rights of all workers to self-organisation, collective bargaining and negotiations. This - states the NFL - is one obvious occasion where the Philippine Government, through the President, says something, like upholding the Constitution and adhering to international Conventions, but does another thing in practice.
8. 223. The fact that section 27 of Proclamation No. 50 violates established national and international standards on the matter is further shown by the statements of Senator Teofisto Guingona. He called for a review of the present Government's privatisation trust which, he said, threatens more than 100,000 government workers with unemployment. Senator Guingona said most of the workers confronted with the prospect of termination have no collective bargaining agreements, no leverage to negotiate for retention and no law to turn to for protection. A newspaper clipping reporting the said statement is provided by the NFL.
9. 224. According to the complainant, there is an urgent need to undertake measures to protect the welfare of the workers and preserve union rights in the Philippines. It appeals for rapid action to protect against the effects of Proclamation No. 50, which infringes in particular the right to self-organisation and collective bargaining.

B. The Government's reply

1. 225. In its communication of 1 August 1989, the Government points out that its reply adopts a strictly legal point of view for responding to the allegations that the Proclamation infringes the right to associate and to bargain collectively.
2. 226. First, it states that the acts complained of do not constitute a cause of action under the provisions of Conventions Nos. 87 and 98. The complaint itself does not expressly state which Conventions and which specific provisions of such Conventions have been violated by the Government. The Government therefore can only presume that the complaint is based on Conventions Nos. 87 and 98.
3. 227. In addition, the Government states that every complaint must be based on a violation of the rights which a complainant claims to enjoy; and that the respondent has committed acts (or omissions) in violation of those rights. Looking at the rights of the complainant and its members under the Conventions, the Government cites the Committee of Experts' General Survey on Freedom of Association and Collective Bargaining (1983, paragraph 45):
   • The Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) lays down the number of principles for guaranteeing workers and employers free exercise of the right to organise in relation to the public authorities. The Convention specifies four basic guarantees in this regard. The first is aimed at ensuring that all workers and employers have the right to establish and join organisations of their own choosing without previous authorisation. The second gives the organisations the right to draw up their constitutions and rules, to elect their representatives in full freedom, to organise their administration and activities and to formulate their programmes. The third protects the organisations against dissolution or suspension by administrative authority. The fourth grants the organisations the right to establish and join federations and confederations to affiliate with international organisations of workers and employers. Federations and confederations have the same rights as their affiliated organisations.
4. 228. The Government also quotes paragraph 253 of the General Survey:
   • The Right to Organise and Collective Bargaining Convention, 1949 (No. 98) deals with two essential aspects of trade union rights: workers' exercise of their right to organise vis-à-vis employers - the Convention contains specific provisions for the protection of the individual worker against acts of anti-union discrimination and for the protection of workers' and employers' organisations against interference in each other's affairs - and the promotion of voluntary collective bargaining.
5. 229. Secondly, the Government maintains that the complainant does not allege any fact which, assuming the veracity thereof, would constitute a violation of any of the Conventions. On this alone, it maintains that the complaint must be dismissed. The Government notes that the allegation is worded generally, namely that the acts as stated constitute an infringement of trade union rights, particularly the right to self-organisation and collective bargaining.
6. 230. To this the Government replies that the very existence of the collective bargaining agreement invoked by the complainant precludes a finding that there has been a violation of the organisation's rights under the Conventions. It adds that, even if the acts complained of do constitute a violation of the existing collective agreement, the complainant can seek relief therefrom only under and pursuant to the laws of the Philippines; the International Labour Organisation has no jurisdiction over the matter. In the Government's opinion, the ILO (and/or the relevant committee established by the ILO) would have competence to decide the issues presented only if the complaint concerned the violation of any of the complainant's basic rights arising from the Conventions. In the present case, however, the right to organise and the right to promote voluntary collective bargaining, as distinguished from the specific rights arising from the collective agreement, are not and cannot be raised as issues. It maintains that when it is alleged that the violation is of specific rights under a collective agreement, the matter can only be resolved in accordance with the provisions of the pertinent national law.
7. 231. In summary, the Government argues that when a contracting State accedes to or ratifies Conventions, it does not waive, abandon, relinquish or in any manner share its exclusive jurisdication over alleged violations of specific rights which arise from the exercise of any of the basic rights. Only when a basic right (such as to organise and to promote voluntary bargaining) is violated can the ILO assume jurisdiction.
8. 232. The Government continues stating that even if the ILO has jurisdiction over violations of specific rights, the complaint itself absolves the Government from criticism. The complaint is truthful and candid in that it does not allege that the reason for the termination of the employment of the workers concerned was because of their union activities; neither does it allege that the sale of the assets of the employer was a mere subterfuge for such termination. The complainant admits that the termination of the employment of the workers concerned was a direct and immediate result of the sale of the assets of the employer, which is a squarely economic reason.
9. 233. The Government refers to the supervisory bodies of the ILO as declaring, in relation to the Termination of Employment Convention, 1982 (No. 158) and Convention No. 98, that:
   • While these texts do not establish protection for unionised workers and union officers in the event of the termination for economic reasons, it is to be hoped that they will help to protect them against acts of anti-union discrimination, in pursuance of the principle laid down in Convention No. 98. (General Survey, 1983, paragraph 276.)
   • The Government claims that anti-union discrimination is not the issue in this case.
10. 234. It stresses that not every termination of employment constitutes a violation of the right to security of employment, whether such right is an inherent right, or a right granted by law, or a right recognised under the collective bargaining agreement. According to the Government, Proclamation No. 50 is thus not at issue because no specific protection against termination for economic reasons can be claimed by the complainant. Even assuming that the President of the Philippines had not promulgated Proclamation No. 50, given the ILO's supervisory bodies' interpretation of the Conventions, the complainant would still not have been able to claim specific protection.
11. 235. In any event, states the Government, the collective bargaining agreement invoked by the complainant, construed in the context of the facts alleged in the complaint, precludes any finding that there has been a violation of such agreement. The agreement entered into between the Cebu Plaza Hotel and the Cebu Plaza Hotel Employees' Union - National Federation of Labor dated 1 October 1986 states, among others:
    • SEPARABILITY. Should any part of this Agreement be rendered invalid by competent tribunal, by legislation, or by Presidential enactment, such invalidation shall not affect the validity of the unaffected parts which shall remain in full force and effect.
    • In the Government's view, the agreement voluntarily entered into by the complainant expressly admits and recognises the possibility that any part (and therefore, possibly also all parts) could be "rendered invalid ... by legislation, or by Presidential enactment ...". Moreover, the complainant itself states that what thwarted the collective agreement was Presidential Proclamation No. 50, among the provisions of which, as the complaint acknowledges, is "the automatic termination of employer-employee relations".
12. 236. Lastly, since the complaint involves the plight of Filipinos who have now lost their means of support, the Government recalls that it came to power in 1986 through a peaceful revolution of the Filipino people after 20 years of dictatorship. The present democracy inherited from the previous regime the following: (1) a foreign debt of a magnitude beyond the capacity of the Philippines to pay; (2) an economy in a shambles; (3) a huge budget deficit; (4) a horde of corporations which were established or acquired by the Government under the dictatorship - these corporations were not essential to the performance by the Government of its functions, and, because losses incurred, further aggravated the burden already borne by the entire nation. From these corporations, thousands of innocent Filipino workers derived their livelihood.
13. 237. It explains that difficult and even painful decisions had to be made to remedy this situation. One of these was to sell the holdings of the Government in corporations not essential to the exercise of its governmental functions. In the present case, the employer was in the hotel business, an activity clearly not essential to such exercise. As an indication of the concern of the Government, and as the complainant itself has stated, the repercussions of such sales are presently being discussed and studied by the Government in order to mitigate, if not altogether obviate, the adverse impacts of these difficult decisions on the lives of those affected. It states, however, that the Government can only act within the resources available to it. It also has a responsibility to the greater number of Filipinos who are not workers of these corporations.

C. The Committee's conclusions

1. 238. Before examining the substance of the complaint before it, the Committee considers it important to answer the Government's arguments claiming the non-receivability of the complaint. These arguments can be summarised along the following lines: (1) that the complaint lacks specificity when it refers to infringement of the right to self-organisation and collective bargaining; and (2) that local remedies have not been explored or exhausted by the complainant.
2. 239. One of the Committee's first stated receivability rules concerned the form of complaints. (See First Report, paragraph 30.) It explained already in 1952 that its function was to evaluate specific allegations and that it had to reject as unfounded allegations which were not sufficiently substantiated to warrant further inquiry. It stressed that complainant organisations should formulate their allegations in detail and substantiate them with satisfactory evidence. In the present case the NFL's letter of complaint is, in the opinion of the Committee, sufficiently detailed to warrant examination. In particular the Committee appreciates the quantity of relevant attachments provided to support the allegations. Given that ratification of the various Conventions on freedom of association is not a prerequisite for this special Governing Body procedure concerning alleged violations of trade union rights, it is immaterial that the complainant does not list the particular Articles of specific Conventions on which to base its complaint.
3. 240. In addition, although the use of internal legal procedures, whatever the outcome, is undoubtedly a factor to be taken into consideration, the Committee has always considered that, in view of its responsibilities, its competence to examine allegations is not subject to the exhaustion of national procedures of redress. (See Digest of decisions and principles of the Freedom of Association Committee, third edition, 1985, para. 33.) Thus the fact that the NFL or the Cebu Plaza Hotel Employees' Union has not brought the matter before national bodies such as the National Labor Relations Commission under section 217(1) and (2) of the Labor Code (unfair labour practice cases and termination disputes, respectively) and section 248(i) (unfair labour practices of an employer), nor has availed itself of other provisions such as section 277(b), section 279 and section 283 (protection against dismissal and protection upon closure of establishment), does not affect the Committee's competence to examine the allegations presented to it.
4. 241. Turning to the crux of this complaint, the Committee observes that the complainant alleges that a privatisation proclamation of 1986 enabled the new owner of the Cebu Plaza Hotel to dismiss, at its absolute discretion save the payment of vested entitlements and any accrued compensation, all the hotel employees and to hire new staff. This it did in late 1987. In addition, the complainant alleges that this mass dismissal violated the existing collective agreement and virtually "busted" the Cebu Plaza Hotel Employees' Union. A broader allegation overshadowing this specific incident is the plight of Filipino employees in general under the privatisation proclamation.
5. 242. In the opinion of the Committee, the Government is incorrect in assuming that the Proclamation does not conflict with ILO Conventions on freedom of association and that even without a privatisation proclamation the dismissed employees in this case would not have been able to claim protection. A reading of the preamble to Proclamation No. 50 shows that the Government intended to streamline its functional structures and the Government's reply in the present case shows that economic factors - such as the foreign debt, huge budget deficit and a great number of government-owned or controlled corporations running at a loss - were behind the decision to privatise certain companies. The fact remains, however, that this action removed the possibility of collective bargaining and led to the disappearance of the union.
6. 243. This was not just a side-effect of privatisation: the fact that successor rights of workers are not spelled out in the Proclamation and, rather, that section 27 expressly gives new owners "full and absolute discretion" to fire and hire, means that protection of a unionised workforce, and thus the union, was put completely to one side. Indeed, one of the provisions in the Cebu Plaza Hotel collective agreement appears pessimistically to predict a problem for the workers' rights in any future sale: article 3(5) states "In case of sale, transfer, lease or assignment of the business of the hotel during the effectivity of this agreement, the hotel agrees to exert its utmost (sic) that this agreement shall be respected by the vendee, transferee, lessee or assignee as a condition of such sale, transfer lease or assignment." In addition, the current reality is that the new employer has ignored the union and its collective agreement and appears not to be encouraging any rebirth of unionism in the Cebu Plaza Hotel. This is all the more alarming since the existing collective agreement was due to expire on 30 September 1989.
7. 244. The Committee can therefore only regret that the Government has permitted a situation to come about in which the circumstances arise. The Government's obligations under Convention No. 98 and the principles on freedom from anti-union discrimination cover not only acts of direct discrimination (such as demotion, dismissal, frequent transfer, and so on), but extend to the need to protect unionised employees from more subtle attacks which may be the outcome of omissions. It accordingly requests the Government to consider revising Proclamation No. 50 or to introduce a successor rights and duties clause in the transfer documents made under it, with a view to ensuring that, in the future, proprietorial changes will not remove the right to collective bargaining from employees, or directly or indirectly threaten unionised workers and their organisations.
8. 245. Returning to the plight of the Cebu Plaza Hotel ex-employees, the Committee would clarify one misunderstanding that appears in the Government's reply. In view of the separability clause in the collective agreement of 1 October 1986, those sections unaffected by Proclamation No. 50 remain in force - albeit ignored by the new employer. Thus, certain of the negotiated protections should be available to the dismissed workers. Proclamation No. 50 itself specifies that any new owner must not deprive dismissed employees of their vested entitlements attaching to termination under a variety of instruments, including any collective bargaining agreement in force.
9. 246. The Committee accordingly trusts that the various attempts at redress being made by the union (letters to the President, Senate, government entities), and on a broader scale, by the authorities (discussion and study of ways to mitigate or obviate the adverse repercussions of privatisation sales), will be treated seriously and expeditiously. It asks the Government to ensure that the appropriate action is taken so that the rights of the dismissed workers will be respected.

The Committee's recommendations

1. 247. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
   • (a) While noting the reasons put forward for the mass dismissal of unionised employees upon the privatisation of the Cebu Plaza Hotel, the Committee can only regret that the Government permitted a situation to arise in which the employment of workers could be terminated unilaterally and a union could be done away with.
   • (b) The Committee accordingly requests the Government to consider revising Proclamation No. 50 or to take other measures with a view to ensuring that, in the future, proprietorial changes will not remove the right to collective bargaining from employees, or directly or indirectly threaten unionised workers and their organisations.
   • (c) In relation to the employees whose services were terminated but whose rights to benefits have not been respected, the Committee trusts that the various attempts at redress will be treated seriously and expeditiously. It asks the Government to ensure that the appropriate action is taken to have these ex-employees' rights respected.