CONTENTS

STA ROSA COCA-COLA PLANT EMPLOYEES UNION VS CCBP............................................................................2

HALILI VS CIR.................................................................................................................................................................. 17
PACIFIC BANKING CORPORATION VS CLAVE........................................................................................................24
KAISAHAN AT KAPATIRAN VS MANILA WATER CO................................................................................................27
GABRIEL VS SOLE.........................................................................................................................................................35
MARINO VS GIL...............................................................................................................................................................38
VENGCO VS TRAJANO.................................................................................................................................................56
GALVADORES VS TRAJANO........................................................................................................................................59
CONTINENTAL CEMENT CORP LABOR UNION VS CONTINENTAL CEMENT..................................................62
STA ROSA COCA-COLA PLANT EMPLOYEES UNION VS CCBP
THIRD DIVISION

SANTA ROSA COCA-COLA G.R. Nos. 164302-03

PLANT EMPLOYEES
UNION, Donrico V. Sebastian,
Eulogio G. Batino, Samuel A. Present:
Atanque, Manolo C.
Zabaljauregui, Dionisio Tenorio,
Edwin P. Rellores, Luis B. YNARES-SANTIAGO, J.
Natividad, Myrna Petingco, Chairperson,
Feliciano Tolentino, Rodolfo A. AUSTRIA-MARTINEZ,
Amante, Jr., Cipriano C. Bello, CALLEJO, SR., and
Ronaldo T. Espino, Efren Galan, CHICO-NAZARIO, JJ.
and Jun Carmelito Santos,
Petitioners,

Promulgated:

- versus -

January 24, 2007

COCA-COLA BOTTLERS

PHILS., INC.,

Respondent.

x-----------------------------------------------------------------------------------------x

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP Nos. 74174

and 74860, which affirmed the ruling of the National Labor Relations Commission (NLRC) in NLRC CA No. 030424-02,

and the Labor Arbiter in NLRC Case No. RAB-IV-10-11579-99-L.

 The Antecedents

The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the sole and exclusive bargaining representative of the

regular daily paid workers and the monthly paid non-commission-earning employees of the Coca-Cola Bottlers

Philippines, Inc. (Company) in its Sta. Rosa, Laguna plant. The individual petitioners are Union officers, directors, and

shop stewards.

The Union and the Company had entered into a three-year Collective Bargaining Agreement (CBA) effective July

1, 1996 to expire on June 30, 1999. Upon the expiration of the CBA, the Union informed the Company of its desire to

renegotiate its terms. The CBA meetings commenced on July 26, 1999, where the Union and the Company discussed the

ground rules of the negotiations. The Union insisted that representatives from the Alyansa ng mga Unyon sa Coca-

Cola be allowed to sit down as observers in the CBA meetings. The Union officers and members also insisted that their

wages be based on their work shift rates. For its part, the Company was of the view that the members of the Alyansa were

not members of the bargaining unit. The Alyansa was a mere aggregate of employees of the Company in its various

plants; and is not a registered labor organization. Thus, an impasse ensued.[2]

On August 30, 1999, the Union, its officers, directors and six shop stewards filed a Notice of Strike with the

National Conciliation and Mediation Board (NCMB) Regional Office in Southern Tagalog, Imus, Cavite. The petitioners

relied on two grounds: (a) deadlock on CBA ground rules; and (b) unfair labor practice arising from the companys refusal

to bargain. The case was docketed as NCMB-RBIV-NS-08-046-99.[3]

The Company filed a Motion to Dismiss [4] alleging that the reasons cited by the Union were not valid grounds for a

strike. The Union then filed an Amended Notice of Strike on September 17, 1999 on the following grounds: (a) unfair labor

practice for the companys refusal to bargain in good faith; and (b) interference with the exercise of their right to self-

organization.[5]

Meanwhile, on September 15, 1999, the Union decided to participate in a mass action organized by the Alyansa

ng mga Unyon sa Coca-Cola in front of the Companys premises set for September 21, 1999. 106 Union members,

officers and members of the Board of Directors, and shop stewards, individually filed applications for leave of absence

for September 21, 1999. Certain that its operations in the plant would come to a complete stop since there were no

sufficient trained contractual employees who would take over, the Company disapproved all leave applications and

notified the applicants accordingly. [6] A day before the mass action, some Union members wore gears, red tag cloths

stating YES KAMI SA STRIKE as headgears and on the different parts of their uniform, shoulders and chests.

The Office of the Mayor issued a permit to the Union, allowing it to conduct a mass protest action within the

perimeter of the Coca-Cola plant on September 21, 1999 from9:00 a.m. to 12:00 noon.[7] Thus, the Union officers and

members held a picket along the front perimeter of the plant on September 21, 1999. All of the 14 personnel of the

Engineering Section of the Company did not report for work, and 71 production personnel were also absent. As a result,

only one of the three bottling lines operated during the day shift. All the three lines were operated during the night shift
with cumulative downtime of five (5) hours due to lack of manning, complement and skills requirement. The volume of

production for the day was short by 60,000 physical case[s] versus budget. [8]

On October 13, 1999, the Company filed a Petition to Declare Strike Illegal [9] alleging, inter alia, the following:

there was a deadlock in the CBA negotiations between the Union and Company, as a result of which a Notice of Strike

was filed by the Union; pending resolution of the Notice of Strike, the Union members filed applications for leave on

September 21, 1999 which were disapproved because operations in the plant may be disrupted; on September 20, 1999,

one day prior to the mass leave, the Union staged a protest action by wearing red arm bands denouncing the alleged anti-

labor practices of the company; on September 21, 1999, without observing the requirements mandated by law, the Union

picketed the premises of the Company in clear violation of Article 262 of the Labor Code; because of the slowdown in the

work, the Company suffered losses amounting to P2,733,366.29; the mass/protest action conducted on September 21,

1999 was clearly a strike; since the Union did not observe the requirements mandated by law, i.e., strike vote, cooling-off

period and reporting requirements, the strike was therefore illegal; the Union also violated the provision of the CBA on the

grievance machinery; there being a direct violation of the CBA, the Unions action constituted an unfair labor practice; and

the officers who knowingly participated in the commission of illegal acts during the strike should be declared to have lost

their employment status. The Company prayed that judgment be rendered as follows:

1. Declaring the strike illegal;

2. Declaring the officers of respondent Union or the individual respondents to have lost their
employment status;

3. Declaring respondent Union, its officers and members guilty of unfair labor practice for violation
of the CBA; and

4. Ordering the respondents to pay petitioner the following claims for damages:

a. Actual Damages in the amount of P 4,733,366.29

b. Moral Damages in the amount of Five (5) Million Pesos; and

c. Exemplary Damages in the amount of Two (2) Million Pesos. [10]

The Union filed an Answer with a Motion to Dismiss and/or to Suspend Proceedings [11] alleging therein that the

mass action conducted by its officers and members on September 21, 1999 was not a strike but just a valid exercise of

their right to picket, which is part of the right of free expression as guaranteed by the Constitution; several thousands of

workers nationwide had launched similar mass protest actions to demonstrate their continuing indignation over the ill

effects of martial rule in the Philippines.[12] It pointed out that even the officers and members of the Alyansa ng mga Unyon

sa Coca-Cola had similarly organized mass protest actions. The Union insisted that officers and members filed their

applications for leave for September 21, 1999 knowing fully well that there were no bottling operations scheduled on
September 21 and 22, 1999; they even secured a Mayors permit for the purpose. The workers, including the petitioners,

merely marched to and fro at the side of the highway near one of the gates of the Sta. Rosa Plant, the loading bay for

public vehicles. After 3 hours, everyone returned to work according to their respective shifting schedules.

The Union averred that the petition filed by the Company was designed to harass and its officers and members in order to

weaken the Unions position in the on-going collective bargaining negotiations.

In a letter to the Union President dated October 26, 1999, the NCMB stated that based on their allegations, the

real issue between the parties was not the proper subject of a strike, and should be the subject of peaceful and

reasonable dialogue. The NCMB recommended that the Notice of Strike of the Union be converted into a preventive

mediation case. After conciliation proceedings failed, the parties were required to submit their respective position papers.
[13]
In the meantime, the officers and directors of the Unionremained absent without the requisite approved

leaves. On October 11, 1999, they were required to submit their explanations why they should not be declared AWOL. [14]

On November 26, 1999, the Labor Arbiter rendered a Decision [15] granting the petition of the Company. He

declared that the September 21, 1999 mass leave was actually a strike under Article 212 of the Labor Code for the

following reasons: based on the reports submitted by the Production and Engineering Department of the Company, there

was a temporary work stoppage/slowdown in the company; [16] out of the usual three (3) lines for production for the day

shift, only one line operated by probationary employees was functional and there was a cumulative downtime of five (5)

hours attributed to the lack of manning complement and skills requirement. The Labor Arbiter further declared:

x x x [T]he September 21, 1999 activity of the union and the individual respondents herein fell
within the foregoing definition of a strike. Firstly, the union itself had admitted the fact that on the date in
question, respondent officers, together with their union members and supporters from the Alyansa ng mga
Unyon sa Coca-Cola, did not report for their usual work. Instead, they all assembled in front of the Sta.
Rosa Plant and picketed the premises. Very clearly, there was a concerted action here on the part of the
respondents brought about a temporary stoppage of work at two out of three bottling lines at the Sta.
Rosa Plant. According to Edwin Jaranilla, the Engineering Superintendent (Annex H, petition), all of his
departments 14 engineering personnel did not report for work on September 21, 1999, and that only Line
2 operated on the day shift. Honorio Tacla, the Production Superintendent, testified (Annex H-1), that 71
production personnel were likewise absent from their respective work stations on September 21, 1999,
and that only Line 2 operated on the day shift. Similarly, Federico Borja, Physical Distribution
Superintendent, stated under oath (Annex H-2) that 12 personnel from his department did not report for
work on September 21, 1999, and that no forklift servicing was done on Lines 1 and 3. From the foregoing
testimonies, it is evident that respondents concerted activity resulted in a temporary stoppage of work at
the Sta. Rosa Plant of the company. Thirdly, such concerted activity by respondents was by reason of a
labor dispute. Earlier, the union had filed a Notice of Strike against the company on account of a
disagreement with the latter regarding CBA ground rules, i.e., the demand of the Union for Alyansa
members from other plants to attend as observers during the CBA negotiation, and for the members of
the negotiating panel to be paid their wages based on their work shift rate. Moreover, on September 20,
1999, one day before respondents mass leave from work and concerted action, they had worn red tag
cloth materials on different parts of their uniform which contained the words, YES kami sa strike; Protesta
kami; Sahod, karapatan, manggagawa ipaglaban; and Union busting itigil. (Annexes G, G-1, G-2 & G-3).
These indicated that the concerted action taken by respondents against CCBPI was a result of or on
account of a labor dispute.[17]

According to the Labor Arbiter, the strike conducted by the Union was illegal since there was no showing that

the Union conducted a strike vote, observed the prescribed cooling-off period, much less, submitted a strike vote to the
DOLE within the required time. Consequently, for knowingly participating in the illegal strike, the individual petitioners were

considered to have lost their employment status.[18]

The Union appealed the decision to the NLRC. On July 31, 2002, the NLRC affirmed the decision of the Labor

Arbiter with the modification that Union Treasurer Charlita M. Abrigo, who was on bereavement leave at the time, should

be excluded from the list of those who participated in the illegal strike. She was thus ordered reinstated to her former

position with full backwages and benefits.[19]

The Union and its officers, directors and the shop stewards, filed a petition for certiorari in the CA. The case was

docketed as CA-G.R. SP No. 74174. Another petition was filed by Ricky G. Ganarial and Almira Romo, docketed as CA-

G.R. SP No. 74860. The two cases were consolidated in the 6th Division of the CA.

Petitioners alleged the following in their respective petitions:

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF

JURISDICTION FOR HAVING DECLARED PETITIONERS TO HAVE LOST THEIR EMPLOYMENT
WHEN FACTS WOULD SHOW PETITIONERS WERE NOT AFFORDED DUE PROCESS

II

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF

JURISDICTION IN DECLARING THE PEACEFUL PICKETING CONDUCTED BY THE UNION AS
ILLEGAL STRIKE DESPITE ABSENCE OF SUBSTANTIAL EVIDENCE ON THE INTENT TO CREATE
TEMPORARY WORK STOPPAGE

III

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF

JURISDICTION IN DECLARING THAT PETITIONERS HAVE LOST THEIR EMPLOYMENT FOR
KNOWINGLY PARTICIPATING IN AN ILLEGAL STRIKE DESPITE THE FACT THAT PETITIONERS ARE
NOT ELECTED OFFICERS OF THE UNION AND ARE MERE SHOP STEWARDS AND DESPITE THE
FACT THAT THERE WAS NO PROOF THAT THEY COMMITTED ILLEGAL ACTS.[20]

The petitioners, likewise, raised the following, to wit:

WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF THE
LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS WHEN
 HE DECLARED THAT THE STRIKE CONDUCTED BY THE RESPONDENTS ON SEPTEMBER 21,
1999 IS ILLEGAL.

WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS DISCRETION
AMOUNTING TO EXCESS OR LACK OF JURISDICTION IN AFFIRMING THE DECISION OF THE
LABOR ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS FINDINGS OF FACTS WHEN
HE DECLARED THAT INDIVIDUAL RESPONDENTS (NOW PETITIONERS), INCLUDING SIX (6)
UNION SHOP STEWARDS, ARE CONSIDERED TO HAVE LOST THEIR EMPLOYMENT STATUS
(EXCEPT CHARLITA ABRIGO) FOR KNOWINGLY PARTICIPATING IN SAID ILLEGAL STRIKE. [21]

On September 10, 2003, the CA rendered judgment dismissing the petition for lack of merit. It also declared that

petitioners, in CA-G.R. SP No. 74860, were guilty of forum shopping.

Petitioners filed a motion for reconsideration which the appellate court denied; hence, the instant petition was filed

based on the following grounds:

(1) THE HONORABLE COURT OF APPEALS HAS GRAVELY ABUSED ITS DISCRETION IN
DISMISSING THE PETITION BEFORE IT FOR LACK OF MERIT WHEN IT IS CLEAR FROM THE
EVIDENCE ON RECORD THAT THE SUBJECT MASS ACTION WAS A VALID EXERCISE OF THE
WORKERS CONSTITUTIONAL RIGHT TO PICKET WHICH IS PART OF THE RIGHT TO FREE
EXPRESSION.

(2) THE NLRC GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE DECISION OF
THE LABOR ARBITER A QUO WHEN IT CONCLUDED THAT AS ACONSEQUENCE OF THE
ILLEGALITY OF THE STRIKE, THE DISMISSAL OF THE OFFICERS OF THE UNION IS JUSTIFIED
AND VALID, IS NOT IN ACCORD WITH FACTS AND EVIDENCE ON RECORD.

(3) EVEN ASSUMING ARGUENDO THAT THE PROTEST MASS ACTION STAGED BY
PETITIONERS ON SEPTEMBER 21, 1999 CONSTITUTES A STRIKE, THE NLRC SERIOUSLY ERRED
WHEN IT AFFIRMED THE LABOR ARBITERS DECISION DECLARING THE FORFEITURE OF
EMPLOYMENT STATUS OF UNION OFFICERS AND SHOP STEWARDS (WHO HAVE NOT
COMMITTED ANY ILLEGAL ACT DURING THE CONDUCT OF THE SAID MASS ACTION) FOR
HAVING KNOWINGLY PARTICIPATED IN AN ILLEGAL STRIKE.[22]

The threshold issues in these cases are: (a) whether the September 21, 1999 mass action staged by

the Union was a strike; (b) if, in the affirmative, whether it was legal; and (c) whether the individual officers and shop

stewards of petitioner Union should be dismissed from their employment.

On the first and second issues, petitioners maintain that the September 21, 1999 mass protest action was not a

strike but a picket, a valid exercise of their constitutional right to free expression and assembly. [23] It was a peaceful mass

protest action to dramatize their legitimate grievances against respondent. They did not intend to have a work stoppage

since they knew beforehand that no bottling operations were scheduled on September 21, 1999 pursuant to the Logistics

Planning Services Mega Manila Production Plan dated September 15, 1999.[24] Thus, they applied for leaves of absences

for September 21, 1999 which, however, were not approved. They also obtained a mayors permit to hold the picket near

the highway, and they faithfully complied with the conditions set therein. The protesting workers were merely marching to

and fro at the side of the highway or the loading bay near one of the gates of the Company plant, certainly not blocking in

any way the ingress or egress from the Companys premises. Their request to hold their activity was for four (4) hours,

which was reduced to three (3) hours. Thereafter, they all went back to work. The bottling operations of the Company was

not stopped, even temporarily. Since petitioner Union did not intend to go on strike, there was no need to observe the

mandatory legal requirements for the conduct of a strike.

 Petitioners also point out that members belonging to the IBM-KMU at the San Fernando Coca-Cola bottling plant

staged simultaneous walkout from their work assignments for two consecutive days, on October 7 and 8, 1999. However,

the Secretary of Labor and Employment (SOLE) declared that the walkout was considered a mass action, not a strike,

and the officers of the IBM-KMU were only meted a three-day suspension. Respondent accepted the decision of the

SOLE and no longer appealed the decision. Petitioners insist that this should, likewise, apply in the resolution of the issue

of whether petitioners staged a strike or not, and whether the penalty of dismissal from the employment with the

respondent is just and equitable.

Petitioners also insist that they were denied the right to due process because the decision of the Labor Arbiter

was implemented even while their appeal was pending in the NLRC. The decision of the Labor Arbiter against them was

to become final and executory only until after the NLRC shall have resolved their appeal with finality.

On the third issue, petitioners aver that even assuming that they had indeed staged a strike, the penalty of

dismissal is too harsh. They insist that they acted in good faith.Besides, under Article 264 of the Labor Code, the dismissal

of the Union officers who participated in an illegal strike is discretionary on the employer. Moreover, six (6) of the

petitioners were shop stewards who were mere members of the Union and not officers thereof.

In its comment on the petition, respondent avers that the issues raised by petitioners are factual; hence,

inappropriate in a petition for review on certiorari. Besides, the findings of the Labor Arbiter had been affirmed by the

NLRC and the CA, and are, thus, conclusive on this Court.

Respondent further avers that the law offers no discretion as to the proper penalty that should be imposed against

a Union official participating in an illegal strike. Contrary to the contention of petitioners, shop stewards are also Union

officers. To support its claim, respondent cited Samahan ng Manggagawa sa Moldex Products, Inc. v. National Labor

Relations Commission,[25] International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America v.

Hoffa;[26] and Coleman v. Brotherhood of Railway and Steamship Clerks, etc. [27]

The petition is denied for lack of merit.

The ruling of the CA that petitioners staged a strike on September 21, 1999, and not merely a picket is correct.

It bears stressing that this is a finding made by the Labor Arbiter which was affirmed by the NLRC [28] and the CA.
[29]
The settled rule is that the factual findings and conclusions of tribunals, as long as they are based on substantial

evidence, are conclusive on this Court.[30] The raison detre is that quasi-judicial agencies, like the Labor Arbiter and the

NLRC, have acquired a unique expertise since their jurisdictions are confined to specific matters. Besides, under Rule 45

of the Rules of Court, the factual issues raised by the petitioner are inappropriate in a petition for review

on certiorari. Whether petitioners staged a strike or not is a factual issue.

 Petitioners failed to establish that the NLRC committed grave abuse of its discretion amounting to excess or lack

of jurisdiction in affirming the findings of the Labor Arbiter that petitioners had indeed staged a strike.

Article 212(o) of the Labor Code defines strike as a temporary stoppage of work by the concerted action of

employees as a result of an industrial or labor dispute. InBangalisan v. Court of Appeals,[31] the Court ruled that the fact

that the conventional term strike was not used by the striking employees to describe their common course of action is

inconsequential, since the substance of the situation, and not its appearance, will be deemed to be controlling. [32] The term

strike encompasses not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to

damage, destroy or sabotage plant equipment and facilities, and similar activities. [33]

Picketing involves merely the marching to and fro at the premises of the employer, usually accompanied by the

display of placards and other signs making known the facts involved in a labor dispute. [34] As applied to a labor dispute, to

picket means the stationing of one or more persons to observe and attempt to observe. The purpose of pickets is said to

be a means of peaceable persuasion.[35]

A labor dispute includes any controversy or matter concerning terms or conditions of employment or the

association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and

conditions of employment, regardless of whether the disputants stand in the proximate relation of employer and

employee.[36]

That there was a labor dispute between the parties, in this case, is not an issue. Petitioners notified the

respondent of their intention to stage a strike, and not merely to picket. Petitioners insistence to stage a strike is
 evident in the fact that an amended notice to strike was filed even as respondent moved to dismiss the first notice.

The basic elements of a strike are present in this case: 106 members of petitioner Union, whose respective applications

for leave of absence on September 21, 1999 were disapproved, opted not to report for work on said date, and gathered in

front of the company premises to hold a mass protest action. Petitioners deliberately absented themselves and instead

wore red ribbons, carried placards with slogans such as: YES KAMI SA STRIKE, PROTESTA KAMI, SAHOD,

KARAPATAN NG MANGGAGAWA IPAGLABAN, CBA-WAG BABOYIN, STOP UNION BUSTING. They marched to and

fro in front of the companys premises during working hours. Thus, petitioners engaged in a concerted activity which

already affected the companys operations. The mass concerted activity constituted a strike.

The bare fact that petitioners were given a Mayors permit is not conclusive evidence that their action/activity did

not amount to a strike. The Mayors description of what activities petitioners were allowed to conduct is inconsequential. To

repeat, what is definitive of whether the action staged by petitioners is a strike and not merely a picket is the totality of the

circumstances surrounding the situation.

A strike is the most powerful of the economic weapons of workers which they unsheathe to force management to

agree to an equitable sharing of the joint product of labor and capital. It is a weapon that can either breathe life to or

destroy the Union and its members in their struggle with management for a more equitable due to their labors. [37] The

decision to declare a strike must therefore rest on a rational basis, free from emotionalism, envisaged by the tempers and

tantrums of a few hot heads, and finally focused on the legitimate interests of the Union which should not, however, be

antithetical to the public welfare, and, to be valid, a strike must be pursued within legal bounds. The right to strike as a

means of attainment of social justice is never meant to oppress or destroy the employer. [38]

Since strikes cause disparity effects not only on the relationship between labor and management but also on the

general peace and progress of society, the law has provided limitations on the right to strike. For a strike to be valid, the

following procedural requisites provided by Art. 263 of the Labor Code must be observed: (a) a notice of strike filed with

the DOLE 30 days before the intended date thereof, or 15 days in case of unfair labor practice; (b) strike vote approved by

a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for

that purpose, (c) notice given to the DOLE of the results of the voting at least seven days before the intended strike.

These requirements are mandatory and the failure of a union to comply therewith renders the strike illegal. [39] It is clear in

this case that petitioners totally ignored the statutory requirements and embarked on their illegal strike. We quote, with

approval, the ruling of the CA which affirmed the decisions of the NLRC and of the Labor Arbiter:

Since it becomes undisputed that the mass action was indeed a strike, the next issue is
to determine whether the same was legal or not. Records reveal that the said strike did not
comply with the requirements of Article 263 (F) in relation to Article 264 of the Labor Code, which
specifically provides, thus:

ART. 263. STRIKES, PICKETING, AND LOCKOUTS

xxx xxx xxx xxx

(f) A decision to declare a strike must be approved by a majority of the total union
membership in the bargaining unit concerned, obtained by secret ballot in meetings or
referenda called for that purpose. A decision to declare a lockout must be approved by a
majority of the board of directors of the corporation or association or of the partners in a
partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be
 valid for the duration of the dispute based on substantially the same grounds considered when
the strike or lockout vote was taken. The Ministry may at its own initiative or upon the request of
any affected party, supervise the conduct of the secret balloting. In every case, the union or the
employer shall furnish the Ministry the results of the voting at least seven days before the
intended strike or lockout, subject to the cooling-off period herein provided.

ART. 264. PROHIBITED ACTIVITIES

(a) No labor organization or employer shall declare a strike or lockout without first having
bargained collectively in accordance with Title VII of this Book or without first having filed the
notice required in the preceding article or without the necessary strike or lockout vote first
having been obtained and reported to the Ministry.

No strike or lockout shall be declared after assumption of jurisdiction by the President or

the Minister or after certification or submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same grounds for the strike or lockout.

Any worker whose employment has been terminated as a consequence or an unlawful

lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly
participates in an illegal strike and any worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment status:
Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient
ground for termination of his employment, even if a replacement had been hired by the
employer during such lawful strike.

xxx xxx xxx xxx

Applying the aforecited mandatory requirements to the case at bench, the Labor Arbiter
found, thus:

In the present case, there is no evidence on record to show that respondents had
complied with the above mandatory requirements of law for a valid strike. Particularly, there is
no showing that respondents had observed the prescribed cooling-off period, conducted a
strike vote, much less submitted a strike vote report to the Department of Labor within the
required time. This being the case, respondents strike on September 21, 1999 is illegal. In the
recent case of CCBPI Postmix Workers Union vs. NLRC, 2999 (sic) SCRA 410, the Supreme
Court had said: It bears stressing that the strike requirements under Article 264 and 265 of the
Labor Code are mandatory requisites, without which, the strike will be considered illegal. The
evidence (sic) intention of the law in requiring the strike notice and strike-vote report as
mandatory requirements is to reasonably regulate the right to strike which is essential to the
attainment of legitimate policy objectives embodied in the law. Verily, substantial compliance
with a mandatory provision will not suffice. Strict adherence to the mandate of the law is
required.

Aside from the above infirmity, the strike staged by respondents was, further, in violation
of the CBA which stipulated under Section 1, Article VI, thereof that,

SECTION 1. The UNION agrees that there shall be no strike, walkout, stoppage or
slowdown of work, boycott, secondary boycott, refusal to handle any merchandise,
picketing, sitdown strikes of any kind, sympathetic or general strike, or any other
interference with any of the operations of the COMPANY during the term of this
Agreement, so long as the grievance procedure for which provision is made herein is
followed by the COMPANY.

Here, it is not disputed that respondents had not referred their issues to the grievance
machinery as a prior step. Instead, they chose to go on strike right away, thereby bypassing the
required grievance procedure dictated by the CBA.[40]

On the second and third issues, the ruling of the CA affirming the decisions of the NLRC and the Labor Arbiter

ordering the dismissal of the petitioners-officers, directors and shop stewards of petitioner Union is correct.

It bears stressing, however, that the law makes a distinction between union members and union officers. A worker

merely participating in an illegal strike may not be terminated from employment. It is only when he commits illegal acts

during a strike that he may be declared to have lost employment status.[41] For knowingly participating in an illegal strike or

participates in the commission of illegal acts during a strike, the law provides that a union officer may be terminated from
employment.[42] The law grants the employer the option of declaring a union officer who participated in an illegal strike as

having lost his employment. It possesses the right and prerogative to terminate the union officers from service. [43]

We quote, with approval, the following ruling of the Court of Appeals:

As to the imposition of the penalty provided for should an illegal strike be declared as such, We
find no legal or factual reason to digress from the following disquisition of the Labor Arbiter, to wit:

No doubt, the strike conducted by respondents on September 21, 1999 is illegal. Under Article
264(a) of the Labor Code, it is stated that, Any union officer who knowingly participates in the commission
of illegal acts during a strike may be declared to have lost his employment status. xxx. In the present
case, CCBPI had already promptly notified respondents and their members of the disapproval of their
leave. In fact, in the company notice (of the disapproval of their leave), CCBPI emphasized that
operations will come to a complete stop on September 21, 1999 if all the applications are approved. They
were further informed that, there are no sufficiently trained contractual employees who can take over as
replacements on that day (Annexes C, C-1 to C-18). In other words, respondents had known beforehand
that their planned mass leave would definitely result in a stoppage of the operations of the company
for September 21, 1999.Still, respondents knowingly and deliberately proceeded with their mass action,
unmindful of the ill effects thereof on the business operations of the company. In the case of Association
of Independent Unions in the Philippines v. NLRC, 305 SCRA 219, the Supreme Court had ruled that,

Union officers are duty-bound to guide their members to respect the law. If
instead of doing so, the officers urge the members to violate the law and defy the duly
constituted authorities, their dismissal from the service is just penalty or sanction for their
unlawful acts. The officers responsibility is greater than that of the members.

Here, the law required respondents to follow a set of mandatory procedures before they could go
on with their strike. But obviously, rather than call on their members to comply therewith, respondents
were the first ones to violate the same.[44]

Petitioners cannot find solace in the Order of the Secretary of Labor and Employment (SOLE) in OS-A-J-0033-99,

NCMB-RB 111-NS-10-44-99 and 11-51-99 involving the labor dispute between the Company and the Union therein (the

Ilaw at Buklod ng Manggagawa Local No. 1, representing the daily paid rank and file members of the respondent, as well

as the plant-based route helpers and drivers at its San Fernando Plant). In said case, the SOLE found that the

simultaneous walkout staged on October 7 and 8, 1999 was indeed a mass action, initiated by the Union leaders. The

acts of the Union leaders were, however, found to be illegal which warranted their dismissal, were it not for the presence

of mitigating factors,
i.e., the walkout was staged in support of their leaders in the course of the CBA negotiation which was pending for more

than nine (9) months; the Plant was not fully disrupted as the Company was able to operate despite the severe action of

the Union members, with the employment of casual and contractual workers; the Union had complied with the

requirements of a strike and refrained from staging an actual strike. [45]

Neither can the petitioners find refuge in the rulings of this Court in Panay Electric Company v. NLRC[46] or

in Lapanday Workers Union v. NLRC.[47] In the Panay case, the Court meted the suspension of the union officers, instead

of terminating their employment status since the NLRC found no sufficient proof of bad faith on the part of the union

officers who took part in the strike to protest the dismissal of their fellow worker, Enrique Huyan which was found to be

illegal. In Lapanday, the Court actually affirmed the dismissal of the union officers who could not claim good faith to

exculpate themselves. The officers, in fact, admitted knowledge of the law on strike, including its procedure in conducting

the same. The Court held that the officers cannot violate the law which was designed to promote their interests.

Finally, the contention of petitioners Elenette Moises, Almira Romo, Louie Labayani, Ricky Ganarial, Efren Galan and Jun

Carmelito Santos who were appointed as shop stewards of the Union that they were mere members and not the officers

of petitioner Union is barren of merit.

We agree with the observation of respondent that under Section 501(a) and (b) of the Landrum Griffin Act of 1959,
[48]
shop stewards are officers of the Union:

Sec. 501 (a) The officers, agents, shop stewards, and other representatives of a labor
organization occupy positions of trust in relation to such organization and its members as a group. It is,
therefore, the duty of each such person, taking into account the special problems and functions of a labor
organization, to hold its money and property solely for the benefit of the organization and its members and
to manage, invest, and expend the same in accordance with its constitution and bylaws and any
resolutions of the governing bodies adopted thereunder, to refrain from dealing with such organization as
an adverse party in any matter connected with his duties and from holding or acquiring any pecuniary or
personal interest which conflicts with the interest of such organization, and to account to the organization
for any profit received by him in whatever capacity in connection with transactions conducted by him or
under his direction on behalf of the organization. A general exculpatory resolution of a governing body
purporting to relieve any such person of liability for breach of the duties declared by this section shall be
void as against public policy.

(b) When any officer, agent, shop steward, or representative of any labor organization is alleged
to have violated the duties declared in subsection (a) of this section and the labor organization or its
governing board or officers refuse or fail to sue or recover damages or secure an accounting or other
appropriate relief within a reasonable time after being requested to do so by any member of the labor
organization, such member may sue such officer, agent, shop steward, or representative in any district
court of the United States or in any State court of competent jurisdiction to recover damages or secure an
accounting or other appropriate relief for the benefit of the labor organization. [49]

Under said Act, Section 3(q) thereof provides, as follows:

 (q) Officer, agent, shop steward, or other representative, when used with respect to a labor organization,
includes elected officials and key administrative personnel, whether elected or appointed (such as
business agents, heads of departments or major units, and organizers who exercise substantial
independent authority), but does not include salaried non-supervisory professional staff, stenographic, and
service personnel.[50]

Admittedly, there is no similar provision in the Labor Code of the Philippines; nonetheless, petitioners who are

shop stewards are considered union officers.

Officers normally mean those who hold defined offices. An officer is any person occupying a position identified as an

office. An office may be provided in the constitution of a labor union or by the union itself in its CBA with the employer. An

office is a word of familiar usage and should be construed according to the sense of the thing. [51]

Irrefragably, under its Constitution and By-Laws, petitioner Union has principal officers and subordinate officers, who are

either elected by its members, or appointed by its president, including the standing committees each to be headed by a

member of the Board of Directors. Thus, under Section 1, Article VI of petitioner Unions Constitution and By-Laws, the

principal officers and other officers, as well as their functions/duties and terms of office, are as follows:

ARTICLE VI

PRINCIPAL OFFICERS

SECTION 1. The governing body of the UNION shall be the following officers who shall be
elected through secret ballot by the general membership:

President Auditor

Vice-President two (2) Public Relations Officer

Secretary Sergeant-at-Arms

Treasurer Board of Directors nine (9)

SECTION 2. The above officers shall administer Unions affairs, formulate policies and implement
programs to effectively carry out the objectives of the UNION and the Labor Code of the Philippines and
manage all the monies and property of the UNION.

SECTION 3. The officers of the UNION and the members of the Board of Directors shall hold
office for a period of five (5) years from the date of their election until their successors shall have been
duly elected and qualified; provided that they remain members of the UNION in good standing.[52]

Section 6, Article II of the CBA of petitioner Union and respondent defines the position of shop steward, thus:
 SECTION 6. Shop Stewards. The UNION shall certify a total of eight (8) shop stewards and shall
inform management of the distribution of these stewards among the departments concerned.

Shop Stewards, union officers and members or employees shall not lose pay for attending Union-
Management Labor dialogues, investigations and grievance meetings with management. [53]

Section 6, Rule XIX of the Implementing Rules of Book V of the Labor Code mentions the functions and duties of shop

stewards, as follows:

Section 2. Procedures in handling grievances. In the absence of a specific provision in the collective
bargaining agreement prescribing for the procedures in handling grievance, the following shall apply:

(a) An employee shall present this grievance or complaint orally or in writing to the shop steward. Upon
receipt thereof, the shop steward shall verify the facts and determine whether or not the grievance is
valid.

(b) If the grievance is valid, the shop steward shall immediately bring the complaint to the employees
immediate supervisor. The shop steward, the employee and his immediate supervisor shall exert efforts to
settle the grievance at their level.

(c) If no settlement is reached, the grievance shall be referred to the grievance committee which
shall have ten (10) days to decide the case.

Where the issue involves or arises from the interpretation or implementation of a provision in the
collective bargaining agreement, or from any order, memorandum, circular or assignment issued by the
appropriate authority in the establishment, and such issue cannot be resolved at the level of the shop
steward or the supervisor, the same may be referred immediately to the grievance committee.

All grievance unsettled or unresolved within seven (7) calendar days from the date of its submission to the
last step in the grievance machinery shall automatically be referred to a voluntary arbitrator chosen in
accordance with the provisions of the collective bargaining agreement, or in the absence of such
provisions, by mutual agreement of the parties.[54]

Thus, a shop steward is appointed by the Union in a shop, department, or plant serves as representative of

the Union, charged with negotiating and adjustment of grievances of employees with the supervisor of the employer. [55] He

is the representative of the Union members in a building or other workplace. Blacks Law Dictionary defines a shop

steward as a union official who represents members in a particular department. His duties include the conduct of initial

negotiations for settlement of grievances.[56] He

is to help other members when they have concerns with the employer or other work-related issues. He is the first person

that workers turn to for assistance or information. If someone has a problem at work, the steward will help them sort it out
or, if necessary, help them file a complaint. [57] In the performance of his duties, he has to take cognizance of and resolve,

in the first instance, the grievances of the members of the Union. He is empowered to decide for himself whether the

grievance or complaint of a member of the petitioner Union is valid, and if valid, to resolve the same with the supervisor

failing which, the matter would be elevated to the Grievance Committee.

It is quite clear that the jurisdiction of shop stewards and the supervisors includes the determination of the issues

arising from the interpretation or even implementation of a provision of the CBA, or from any order or memorandum,

circular or assignments issued by the appropriate authority in the establishment. In fine, they are part and parcel of the

continuous process of grievance resolution designed to preserve and maintain peace among the employees and their

employer. They occupy positions of trust and laden with awesome responsibilities.

In this case, instead of playing the role of peacemakers and grievance solvers, the petitioners-shop stewards

participated in the strike. Thus, like the officers and directors of petitioner Union who joined the strike, petitioners-shop

stewards also deserve the penalty of dismissal from their employment.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision of the Court of

Appeals is AFFIRMED. No costs.

SO ORDERED.
HALILI VS CIR

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-24864 November 19, 1985

FORTUNATO HALILI, doing business under the name and style HALILI TRANSIT (substituted by Emilia de Vera de
Halili), petitioner
vs.
COURT OF INDUSTRIAL RELATIONS and HALILI BUS DRIVERS AND CONDUCTORS UNION
(PTGWO),respondents.

G.R. No. L-27773 November 19, 1985

EMILIA DE VERA VDA. DE HALILI, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS and HALILI BUS DRIVERS AND CONDUCTORS UNION
(PTGWO),respondents.

G.R. No. L-38655 November 19, 1985

FELICIDAD M. TOLENTINO, et al., petitioners,

vs.
COURT OF INDUSTRIAL RELATIONS, et al., respondents.

G.R. No. L-30110 November 19, 1985

EMILIA DE VERA. VDA. DE HALILI, petitioner,

vs,

HALILI BUS DRIVERS AND CONDUCTORS UNION (PTGWO) and COURT OF INDUSTRIAL
RELATIONS,respondents.

Ruben C. Asedillo counsel for Manila Bank.

Pedro A. Lopez counsel for Halili Bus Drivers Transport Hall.

RESOLUTION

MAKASIAR, C.J.:

On April 30, 1985, We resolved an urgent motion to cite Atty. Benjamin C. Pineda, Ricardo Capuno and Manila Bank
(Cubao Branch) in contempt for their continued failure to comply with this Court's temporary mandatory restraining order
issued on September 1, 1983 and with Its resolution dated September 13, 1983 which required compliance with the
aforesaid restraining order. WE disposed of the above motion in the following terms:

WHEREFORE, ATTY. BENJAMIN PINEDA IS HEREBY FOUND GUILTY OF INDIRECT CONTEMPT OF

COURT FOR WHICH HE IS HEREBY SENTENCED TO IMPRISONMENT IN THE MANILA CITY JAIL
UNTIL THE ORDERS OF THIS COURT DATED SEPTEMBER 1 AND SEPTEMBER 13, 1983 ARE
COMPLIED WITH.

ATTY. BENJAMIN PINEDA IS ALSO DIRECTED TO SHOW CAUSE WHY HE SHOULD NOT BE
DISBARRED UNDER RULE 138 OF THE REVISED RULES OF COURT.

LET COPIES OF THIS RESOLUTION AND THE RESOLUTION OF OCTOBER 18,1983 BE FURNISHED
THE MINISTRY OF LABOR AND THE TANODBAYAN FOR APPROPRIATE ACTION (p. 424, L- 27773
rec.).

Atty. Benjamin Pineda moved for reconsideration of the aforecited resolution on May 13, 1985, therein stating, among
other things, that he could not comply with Our resolution of September 1, 1983 since after withdrawals and
disbursements, only P 2,022.70 remained from his account with the Manila Bank (Cubao Branch); that he admits the
wrong he has committed, apologizes for the same and promises that he will do his best to make restitution; that as
evidence of his act of repentance and restitution, he delivered to the NLRC on May 10, 1985 TCT No. 181023 covering his
registered real estate property consisting of 633 square meters and the amount of P30,000.00 in cash, in partial
compliance with this Court's resolution of April 30, 1985; that he helped in facilitating the sale in order to pay the
accumulated real estate taxes; and that his retainer's contract was annotated at the back of the title of said property (TCT
No. 205785) as attorney's lien, Movant Pineda now prays for a reconsideration of Our April 30, 1985 resolution (p. 426, L-
27773 rec.).

On May 21, 1985, movant Pineda filed his supplement to motion for reconsideration therein stating, among other things,
that in compliance with this Court's resolution of October 18, 1983, remanding these cases to the NLRC for further
proceedings, Labor Arbiter Antonio Tria Tirona conducted a hearing on May 20, 1985 where the union, Atty. Jose C.
Espinas, Atty. Pedro Lopez and herein movant appeared; and, that the aforenamed parties agreed on these terms:

1. that movant is still answerable for the uncontested amount of P407,424.00 representing the 10%
excess attorney's fees in the amount of P203,712.00, to be refunded to the Union and the 10% attomey's
fees due to Atty. Espinas and Atty. Lopez in the amount of P203,712.00, as per NLRC order dated April
24, 1985. Said order awarded 7% attorney's fees to Atty. Espinas; 3% to Atty, Lopez and 10% to movant
Pineda, which apportionment corresponds to the 20% attorney's fees as adjudged in subject resolution.

2. that the real property covered by TCT No. 181023 which movant delivered to the NLRC plus the
amount of P30,000.00 remitted to the NLRC shall answer for his obligation; and he will sell the said
property and deposit the proceeds therefrom to the NLRC, for further proceedings.

In the aforesaid supplement, movant reiterates his averments that he negotiated the sale of the union property in 1983
under the impression that the NLRC had the authority to allow the questioned transaction and that it was as honest
opinion that when the CIR was abolished and replaced by the NLRC, the jurisdiction, power and functions of the former
were transferred to the latter agency which, he presumed, had the authority to authorize the purchase. Finally, he claims
that his acts were all done in good faith and reiterates his contrition and is making restitution for the same (p. 435, L-
27773 rec.).

On May 21, 1985, this Court issued a resolution denying movant's motion for reconsideration of April 30, 1985 for lack of
merit (p. 431 L-27773 rec.).

Movant counsel filed on June 6, 1985 his second motion for reconsideration of Our original subject resolution and the
aforecited minute resolution dated May 21, 1985 denying his first motion for reconsideration and the supplement thereto
for lack of merit. In this motion, movant alleges that his accountability as of June 5, 1985 (date of motion) has been
reduced to P377,424.00 and not anymore P710,969.30 as originally computed; that he restates that his accountability to
Attys. Jose C. Espinas and Pedro Lopez and the union is P407,424.00 only which amount was arrived at and agreed
upon by the parties in the proceedings held on May 20, 1985 and which represents the 20% attorney's fees due the three
lawyers on record (Pineda, Espinas and Lopez). The aforesaid attorney's fees were awarded in the order of the NLRC
issued on April 24, 1985; that per NLRC records, Atty, Espinas has already been paid P50,000.00 and Atty. Lopez has
already received P20,000.00 as partial attomey's fees; that movant's accountability remains at P377,424.00 after
deducting the amount of P30,000.00 (remitted on May 10, 1985) from the above amount of P407,424.00; that movant has
been doing his best to comply with this Court's order and purge himself of the contempt citation in these cases; and, not
being able to produce immediately the amount of P 407,424:00, he initially remitted the said amount of P30,000.00 and
delivered to the NLRC the title to his property as aforesaid; that in the hearing before the NLRC on June 3, 1985, movant
manifested on record in the presence of Atty. Espinas and the union officers that he is selling as other properties to satisfy
his remaining obligation and that Atty. Espinas and the union officers gave him reasonable time within which to sell said
other properties; and, that in the June 3 hearing at the NLRC, movant submitted a xerox copy of Cashier's Check No.
340573 dated June 23, 1983 of the Manila Bank -in the amount of P101,856.00 paid by him to the Halili Bus Drivers &
Conductors Union, for the account of the payee only. Movant now prays for the necessary correction of his accountability
from P710,969.30 to the reduced amount of P377,424.00 and for a chance to sell his properties, as agreed upon by the
parties, to enable him to pay the remaining amount of P377,424.00 (p. 444, L-27773, rec.).

On June 19, 1985, Arbiter Raymundo Valenzuela filed his manifestation and/or comment wherein he contends, among
other things, that sometime in the second week of August, 1982, the Office of the Executive Labor Arbiter Benigno L. Vivar
of the NCR, NLRC endorsed to him a pleading entitled "Motion and/or Manifestation" under caption of "Halili Bus Drivers
and Conductors Union (PTGWO), complainants, versus Fortunato F. Halili doing business under the name and style Halili
Transit, "Respondent, CIR Case No. 1099-V"; and, that said motion was signed under the heading "B.C. Pineda, Counsel
for the Complainant, c/o North Harbor Labor Federation-TUCP 1106-1005 Marcos Road Fronting Pier 6, North Harbor,
Tondo, Manila." Also, he claims that the aforecited motion with three attached documents (Notice of Judgment dated May
3, 1976 in G.R. Nos.
L-38655 and L30110; TCT No. 205755 and Order dated February 9, 1983 of herein movant) were the only records
endorsed to him for the resolution of Atty. Pineda's motion and that he was verbally informed by the former that the
records of CIR Case No. 1099-V could not be located anymore at the NLRC offices. He furthere alleges that since there
were no other records except the aforesaid motion of Atty. Pineda with the three annexes and, for the reasons that Atty.
Pineda is a brother in the profession and an officer of the Court and that this case started in 1958 and transferred from the
defunct CIR to the NLRC, he had reasonable ground to believe that the records of the case could not be found anymore.
Labor Arbiter Valenzuela also claims Chat as labor arbiter, he has the power, under Article 300 of the labor Code, to
execute and implement final and executory judgments. Finally, he avers that since the motion of Atty. Pineda filed on
December 1, 1982 with this Court praying for authority to dispose of subject property was merely "Noted" by said Court,
such action bolstered his belief that his office possesses the jurisdiction to authorize the questioned sale (p. 491, L-27773
rec.).
On June 25, 1985, Atty. Jose C. Espinas submitted his comment on the motions for reconsideration of Atty. B.C. Pineda
and on the manifestation and/or comment of Labor Arbiter Valenzuela, On the latter's manifestation and/or comment, Atty.
Espinas points to the following inaccuracies in the aforesaid pleading of Labor Arbiter Valenzuela:

1. Labor Arbiter Valenzuela, in citing the inscription at the transfer certificate of title, omitted some words which would
show that there are other counsel in these cases. He quotes the acurate notation thus:

PE-1101/T-205755Attorney's LienThis property is subject to attorney's lien and other counsel in CIR
Case No. 1099-B pursuant to their retainer contracts. (Doc No. 75, Page No. 16, Book I of the Notary
Public of Rizal, A.G. Gatmaytan).

2. It is not correct to say that in the "Notice of Judgment" by this Court in Cases L-38655 and L-301 10, the counsel
named therein for the union was only Atty. Pineda when the fact is that the decision of this Court in the aforecited cases
dated February 27 1976, acknowledges the representation of other lawyers in these words of its dispositive portion:
"subject to attorney's lien in favor of Atty, B.C Pineda and other counsel in said case pursuant to their retainer contracts.
(Emphasis supplied).

3. It is inaccurate for Labor Arbiter Valenzuela to allege That he did not determine attomey's fees in his orders when it
appears that in his order of February 9, 1983, the following was ordered:

(b) The Attorney's Lien equivalent to Thirty-Five percent (35%) of the total purchase price of said parcel of
land covered by TCT No 205755, as annotated at the back of said Title per Entry PE-1101/T-205755 in
favor of Atty. Benjamin C. Pineda. ...

4. While Labor Arbiter Valenzuela manifests that in cases L-38655 and

L-30110, Volume 69 of the SCRA which published the decision, carries the name of Atty. B.C. Pineda as counsel for the
union, he nevertheless avoids pointing out that in L-24864 which was previously published in Volume 22 of the SCRA,
Atty. Jose C. Espinas was named as the lone counsel.

5. Before Labor Arbiter Valenzuela acted on the motions of Atty. B.C. Pineda, he should have first exerted all efforts to
reconstitute the records since he very well knew that the records were not complete. He should have informed the
Executive labor Arbiter, who assigned to him the case that the records thereof were missing. He committed an act of
omission.

6. It is incorrect for Labor Arbiter Valenzuela to state that Atty. J.C. Espinas sought for a reduction of attorney's fees from
35% to 20% when the evidence would have shown, if a hearing on the two motions was conducted, that the contract for
services was contingent (20%) only for all lawyers of the firm per resolution of the union's general membership) as found
by Arbiter Tirona in his decision of April 24, 1985.

Atty. Espinas submits the following comment on Atty. Pineda's motion for reconsideration:

1. Atty. Pineda has never complied with this Court's three resolutions dated September 1, September 13 and October 18,
1983. Except for the check he issued on June 23, 1983 in the amount of P2,022.70 in favor of the union, he allegedly
spent P710,959.30 within a period of 2 months and 7 days (between June 23 and September 1, 1983). The declaration of
Atty. Pineda that the temporary mandatory restraining orders have become moot and academic by reason of exhaustion
of the funds imply that said orders are unimportant to him.

2. When Atty. Pineda filed his motion requesting for authority to sell the property on August 9, 1982, he attached a zerox
copy of the certificate of title thereto. The notation on the said title showed that he was not the only lawyer in his case, Yet,
he represented before Arbiter Valenzuela that he alone and the latter readily believed him. one was the counsel

3. Atty. Pineda's apologetic stance and allegation of good faith are negated by the fact that the additional cash payment
P25.000.00 to the union when the property was transferred to them intended for the payment of taxes, was never
accounted for; and, the fact that in alienating subject properly which was held in trust by the union, the consent of the
members workers, not only their leaders, is legally required.

4. The reduction of Atty. Pineda's accountability to P377,424.00 is premature since the proceedings for the determination
of his liability is still pending consideration before Arbiter Tirona. The determination of his liability for P101,856.00 given to
the union through Domingo Cabading and legal interests and damages claimed by the anion members against him are
also pending resolution.

5. In his order dated April 24, 1985, Labor Arbiter Tirona directed Atty. Pineda to deposit 25% of the 35% attorney's fees
collected by him (minus P2,022,70) previously deposited with the Commission for proper disposition, because Atty. Pineda
did not comply with the temporary mandatory restraining order of this Court (p. 538, L-27773 rec.).

The Solicitor General filed on July 28, 1985 his comment on the two motions for reconsideration and the supplement
hereto of Atty. B.C. Pineda. The Solicitor General submits that the attorney's fees of P 203,712.00 is deductible since Atty.
Pineda is entitled to said fees as per order of Arbiter Tirona: that the amount of P30,000.00 may also be deducted since it
corresponds to partial restitution of his liability; and, that the alleged donation of P101,856.00 may not be deducted
because it amounts to a rebate or a commission as already noted by this Court. He also submits that such donation is a
violation of Canon 34 of Legal Ethics. Furthermore. he reports that there was nothing in the hearing of May 20, 1985
which authorizes Atty. Pineda to deduct the above donation and that after deducting all amounts the latter has deposited
including the P20,000.00 on June 19, 1985, his accountability remains at P457,257.30 The Solicitor General finally
submits that contemnor Pineda's repeated protestations of good faith have no basis considering that he responded in
cavalier fashion to this Court's resolutions by simply stating in effect that since he has already spent the money, the orders
should be deemed moot and academic; that he maintained an arrogant attitude towards the proceedings in the NLRC;
and that he utterly failed, as union counsel, to protect the rights of the workers when he allowed realty taxes on the lot to
accumulate for 8 years, when he did not exert utmost diligence in causing the sale of the lot and when he charged
excessive attorney's fees amounting to over half a million pesos and spending the amount in over two months. The
Solicitor General thus prays for the denial of the motions for reconsideration for lack of merit (p. 225, L-38655, rec.).

On August 7, 1985, contemnor Atty. B.C. Pineda filed his comment on the comment of Atty. Jose C. Espinas dated June
25, 1985. He substantially alleges that Atty. Espinas continues harping on the "scheme" allegedly employed by the former
In this case: what Atty. Espinas file his urgent motion of August 25, 1983 when they failed to agree on the "balato" or token
payment which said lawyer asked of am; that contemnor Atty. Pineda is not running away from his obligations to the
parties concerned, which obligation is the reduced amount of P355,401.30; and, that he be given time, up to September,
1985, to dispose of his property in Mindoro, to enable him to pay his accountability, aside from his property in Quezon City
which is also for sale (p. 237, L-38655, rec.).

The Solicitor General filed its manifestation and motion in lieu of reply on August 30, 1985 in compliance with Our
resolution of June 27, 1985. In the above pleading, the Solicitor General submits that reply to the manifestation and or
comment of Arbiter Valenzuela should be referred to the Ministry of Labor and Employment since the said ministry, has
direct supervision and control over Valenzuela and it possesses the resources the veracity of his explanations. The
Solicitor General further resources with which to conduct an exhaustive investigation her manifests that with respect to the
comment of Atty. Jose Espinas on the two motions for reconsideration of Atty. Pineda he received a copy of such
comment as early as July 1, 1985 and hence, he was then able to incorporate some of Atty. Espinas' observations to
which he concurs in his consolidated comment on the same two motions which was later filed on July 23, 1985. With
regard to the comment of Atty. Espinas on the manifestation of Atty. Pineda, he reiterates his submission that the MOLE is
in a better position to investigate the veracity of Valenzuela's claim, and also to appreciate the observations and
conclusions of Atty. Espinas on such claims.

He therefore prays to be excused from filing a reply (p. 243, L-38655 rec.).

We will first tackle the two motions for reconsideration of B.C. Pineda. WE intend to treat separately the manifestation
and/or comment of Labor Arbiter Raymundo

The two motions for reconsideration of Atty. B.C. Pineda And the supplement thereto seeking a reconsideration of Our
resolution dated April 30, 1985 and praying for relief from contumacy are without merit.

In the aforecited resolution We have clearly established the continued defiance by contemnor Pineda of Our previous
resolutions of September 1 and 13, 1983. and adjudged him guilty of the indirect contempt charge.

WE stand firm on Our pronouncements in the April 30, 1985 resolution which We restate hereunder:

For civil contempt, Section 7, Rule 71 of the Revised Rules of court explicitly provides:

Sec. 7, Rule 71Imprisonment until order obeyed. When the contempt consists in the
omission to do an act which is vet in the power of the accused to perform, he may be
imprisoned by order of a superior court until he performs it.'

Thus, in the case of Harden vs. Director of Prisons (L-234981 Phil. 741 [Oct. 22, 1948]), where petitioner
was confined in prison for contempt of court, this Court, in denying the petition and resolving the question
of petitioner's indefinite confinement, had the occasion to apply and clarify the aforequoted provision in
tile following tenor:

The penalty complained of is neither cruel, unjust nor excessive. In Ex-parte Kemmler
136 U.S. 436, the United States Supreme Court said that punishments are cruel when
they involve torture or a lingering death, but the punishment of death is not cruel, within
the meaning of that word as used in the constitution. It implies there something inhuman
and barbarous, something more than the extinguishment of life.

The punishment meted out to the petitioner is not excessive. It is suitable and adapted to
its objective: and it accords with Section 7, Rule 64 of the Rules of Court which provides
that "when the contempt consists in the omission to do an act which is vet in the power of
the accused to perform, he may be imprisoned by order of a superior court until he
performs it.

If the term of imprisonment in this case is indefinite and might last through the natural life of the petitioner,
vet by the terms of the sentence the way is left open for him to avoid serving any part of it by complying
with the orders of the court, and in to manner put an end to his incarceration. In these circumstances, the
judgment cannot be said to be excessive or unjust (Davis vs. Murphy [1947], 188 P. 229-231). As stated
in a more recent case (De Wees [1948], 210 S.W., 2d, 145-147), "to order that one be imprisoned for an
indefinite period in a civil contempt is purely a remedial measure. Its purpose is to coerce the contemnor
 to do an act within his or her power to perform, He must have the means by which he may purge himself
of the contempt." The latter decision cites Staley vs. South Jersey Realty Co., 83 N.J. Eq., 300, 90 A.,
1042, 1043, in which the theory is expressed in this language:

In a civil contempt the proceeding is remedial, it is a step in the case the object of which is to coerce one
party for the benefit of the other party to do or to refrain from doing some act specified in the order of the
court. Hence, if imprisonment be ordered, it is remedial in purpose and coercion in character, and to that
end must relate to something to be done by the defendant by the doing of which he may discharge
himself, As quaintly expressed, the imprisoned man "carries the keys to his prison in his own pocket" (pp.
747-748).

Likewise, American courts had long enunciated these rulings:

The commitment of one found in contempt of a court order only until the contemnor shall have purged
himself of such contempt by complying with the order is a decisive characteristic of civil contempt, Maggio
v. Zeitz 333 US 56, 92 L. ed, 476, 68 S Ct 401.

Civil or quasi-criminal contempt is contemplated by a statute providing that if any person refused to obey
or perform any rule, order, or judgment of court, such court shall have power to fine and imprison such
person until the rule, order or judgment shall be complied with. Evans v. Evans, 193 Miss 468, 9 So 2d.
641. [17 Am. Jur. 2d] (pp, 418-420, L-27773 rec., emphasis supplied).

This Court takes note of the fact that in compliance with its resolution dated October 18, 1983, Labor Arbiter Antonio Tria
Tirona of the NLRC, after due hearing where all the parties concerned were present, issued an order on April 24, 1985
definitely fixing the percentages to which the union and the lawyers should be entitled. The dispositive portion of the said
order thus provides:

Wherefore, based on the records and the participation of all the lawyers in the case, Atty. Espinas is
entitled to attorney's fees equal to 7% of the total proceeds of the sale; Atty. Lopez35% and Atty. Pineda
10%. The excess of 15% fees on the 35% fees charged should be refunded to the union for distribution
to its members. Not having complied with the mandatory restraining order of the Supreme Court on
September 1, 1983, Atty. Benjamin C. Pineda is directed to deposit 25% out of the 35% collected by him
as fees (minus P2,022.70 previously deposited by the Manila Bank for his account) with the commission
for proper disposition.

The aforesaid apportionment is fair and reasonable. Atty. Pineda collected the amount of P712,992. 00 or 35% of the
selling price of P2,037,120.00.

Since his share in the fees is only P203,712.00, which is 10% of P2,037,120.00, Atty. Pineda is now accountable for and
should return the following amounts to:

1. Atty. Jose EspinasP14259840 or 7% of P2,037,120.00

2. Atty. Pedro LopezP61,113.60 or 3% or 3% P2,037, 120.00

3. Union P305,568.00 or 15% of P2,037,120.00

The total amount, therefore, which contemnor Pineda should account for is P509,280.00 (before any remittance or
payments were made). By far lie has only paid or remitted thru NLRC P2,022.70 plus P50,000.00 (to Atty. Espinas) plus
P20,000.00 (to Atty. Lopez) as per as allegation in his second motion for reconsideration filed on June 6, 1985, or a total
or P72,022.70.

Evidently, it appears from the within records that contemnor Pineda is still far from returning the remaining accountability
of P437,257.80, exclusive of interests. He has not even satisfied 15% of the original accountability of P509,280.00.
Deliberately or inadvertently, contemnor failed to include in his accounting (reflected in his second motion for
reconsideration? the amount of P305,568.00 which corresponds to the 15% Secs collected beyond the 20% allowed for
attorney's fees. Likewise, the within records bring out the fact that the amount of P101,856.00 which contemnor Pineda
allegedly donated to the. Union was actually taken from the purchase price of P2,037,120.00 and not from P712,992.00
which he originally collected.

From the foregoing, contemnor Pineda has miserably failed to commonly with Our resolution dated April 30, 1985. For
such non-compliance or better still, for not fully performing the act required of him, he cannot as yet purge himself of
contumacy

For, it is clear from the provision of Section 7, Rule 17 of the Revised Rules of Court that the rationale behind the
punishment of the contemnor is for him to make complete restitution to the party injured by the violation of an order. Thus,
if the contumacious act consists in the failure to perform an act or obligation which is yet in the power of the contemnor to
do, he may be imprisoned indefinitely until full and complete compliance with our order or resolution.

The essence of the imposition of an indefinite imprisonment on the contemnor is the ultimate and total performance of an
obligation required by an order of a superior court. This is why contumacy should be indivisible it cannot be the subject of
piece-meal compliance; otherwise, the very reason for which it is imposed, which is the complete compliance with an
order, would be defeated. Court orders and injunctions would be easily defied or ignored by litigants if, every time a
contemnor partially satisfies the same, he would be released from the contempt charge. This premature purging of
contumacy would not prevent the other party from filing another motion for contempt and this would naturally result in
endless litigations. hence, unless and until our courts show they mean business in exacting. full compliance with their
orders, the contempt of court might, become a futile exercise of judicial power. And eventually, litigants and their counsel
might lose respect for our courts.

Significantly, some American courts have the following pronouncements on the matter. Thus:

Except where the fundamental power of the court to imprison for contempt has been restricted by statute,
and subject to constitutional prohibitions, where a contemnor fails or refuses to obey an order of the court
for the payment of money lie may be imprisoned to compel obedience to such order. [Fla.Revell v.
Dishong 175 So. 129 Fla. 9; Va Branch v. Branch, S.E. 303; 144 Va. 244]. (17 C.J.S. 287).

xxx xxx xxx

...It has been said that imprisonment for contempt as means of coercion for civil purpose cannot be
resorted to until all other means fail [Mich.Atchison, etc. R. Co. v. Jennison, 27 N.W. 6, 60 Mich. 232],
but the court's power to order the contemnor's detention continues so long as the contumacy persists
[Ark.Lane v. Alexander, 271 S.W. 710, 168 Ark. 700] (17 C.J.S. 289).

Even as contemnor Atty, Pineda pleads good faith in having committed the contumacious acts and offers contrition,
apologies and restitution, such posture is not enough to purge himself of his legal and moral obligations particularly so
because he is a counsel for the workers whose interests he is duty bound to protect. Instead, he exploited their ignorance.

What really comes to Our minds now is this question: After all that the contemnor has done, could he still be considered a
competent, trustworthy and decent member of the Bar? Thus, in the case of Borromeo vs. Court of Appeals (L-39253, 87
SCRA 67 [November 24, 1978]), this Court had the candor to say that good faith alone is not a ground for exoneration of
the contempt charge.

Nevertheless, We are constrained to point out certain observations on and assessment of the manifestation and/or
comment of Arbiter Valenzuela which has been addressed to this Court. Offhand, his allegations therein suffer from flaws
and unwarranted assumptions, even misrepresentations.

Thus, when Arbiter Valenzuela quoted the inscription at the back of the Transfer Certificate of Title relative to attorney's
lien, he did not put the complete wording which should include the words "and other counsel in CIR Case No. 1099-B"
after the words "attorney's hen." Without the complete inscription, one would get the impression that there were no other
lawyers in the transaction.

Then again, Arbiter Valenzuela did not reveal the fact that in this Court's decision in L-38655 and L-301 10 dated February
27, 1976, said Court recognized the presence of other lawyers by stating therein thus: "subject to attorney's liens in favor
of Atty. B.C. Pineda and other counsel in said case pursuant to their retainer contracts" (please see paragraph one, page
6 of manifestation; underlining supplied).

Arbiter Valenzuela also disclaims that he never determined the extent of attorney's fees in his questioned order dated
February 9, 1983, when the fact is that in letter (b) of said order's dispositive portion, he specifically fixed the attorney's
lien equivalent to 35% of the total purchase price of the parcel of land in favor of Atty. B.C. Pineda,

It is indeed quite revealing for Arbiter Valenzuela to say that "on the basis of the available records then in the possession
of the undersigned Labor Arbiter, and the non-disclosure by A Atty. B. C Pineda that there are other lawyers involved" he
awarded attorney's fees in favor of contemnor Pineda only. This shows that Arbiter Valenzuela issued the two questioned
orders on the basis of patently wrong assumptions. He assumed that even without the intervention of the NLRC, as
successor of the CIR, the property could be disposed of. He forgot that there are still existing laws which should be
considered. Again, he erred in assuming that when the motions of Atty. Pineda with annexes were indorsed to him for
resolution in 1983, there were no other records which he could dig up. He wrongly assumed that just because Atty. Pineda
was a "brother in the profession and an Officer of the Court", the latter's verbal representation that the other records of
Case No. 1099-V could not be found, should be accepted readily. Finally, when contemnor Pineda's motion filed on
December 1, 1982 before this Court seeking authority to sell the subject property was merely "noted" by said Court,
Arbiter Valenzuela likewise wrongly assumed that his Office had the jurisdiction to authorize the sale of the same. As a
lawyer, he should have known that the word "noted" did not mean approval or inaction. He should have filed a motion with
this Court for the necessarily clarification. Instead he acted with precipitate haste.

All the foregoing facts indicate his connivance with Atty. Pineda.

Arbiter Valenzuela now assumes that as such labor arbiter, is empowered under Article 300 of the Labor Code, as
amended, to execute final judgments. But a thorough reading of said article does not show any such provision, which
reads thus:

Art. 300. Disposition of pending casesAll cases pending before the Court of Industrial Relations and the
National Labor Relations Commission established under Presidential Decree No. 21 on the date of
effectivity of this Code shall be transferred to and processed by the corresponding labor relations
 divisions or the National Labor Relations Commission created under this Code having cognizance of the
same in accordance with the procedure laid down herein and its implementing rules and regulations.
Cases on labor relations on appeal with the Secretary of Labor or the Office of the President of the
Philippines as of the date of effectivity of this Code shall remain under their respective jurisdiction and
shall be decided in accordance with the rules and regulations in force at the time of appeal.

All workmen's compensation cases pending before the Workmen's Compensation Units in the regional
offices of the Department of Labor and those pending before the Workmen's Compensation Commission
as of March 31, 1975, shall be processed and adjudicated in accordance with the law, rules and
procedure existing, prior to the effectivity of the Employees' Compensation and State Insurance Fund.

It is very sad to note that for a lawyer who has served the government for 29 years, Arbiter Valenzuela puts up the
defense that when he acted on the two motions of Atty. Pineda, he was primarily guided by his conscience. Then all of a
sudden he says that if there was an error, it was an error of the mind and not of the heart,

From the foregoing, it appears that Arbiter Valenzuela failed to observe the degree of prudence expected of him as a
government lawyer of 29 years. When the motions of Atty. Pineda were indorsed to him for proper action, he should have
first exhausted all efforts in locating or reconstructing the records upon as discovery that the same were incomplete. He
should have informed as superior officer or the one who assigned to him the motions that the records were lacking. He
should have initiated a reconstitution of the records by requiring all the lawyers in the case to produce their own records or
have sought their assistance in locating the records,

It took Atty. Espinas and some workers to locate and produce such records. Arbiter Valenzuela's acts may be treated as
nonfeasance and gross neglect of duty.

WHEREFORE, THE MOTIONS FOR RECONSIDERATION OF ATTY. BENJAMIN C. PINEDA ARE HEREBY DENIED
FOR LACK OF MERIT. FOR CONTEMPT OF COURT, HE IS ORDERED IMPRISONED IN THE MANILA CITY JAIL
UNTIL HE COMPLIES FULLY WITH THE RESOLUTION OF THIS COURT DATED APRIL 30,1985.

EIGHT (8) MEMBERS OF THE COURT VOTED TO DELETE THE THIRD PARAGRAPH ON PAGE 30 OF THE
RESOLUTION OF APRIL 30,1985, WHICH READS AS FOLLOWS:

LABOR ARBITER RAYMUNDO VALENZUELA SHOULD BE MADE TO ANSWER FOR HAVING ACTED
WITHOUT OR BEYOND HIS AUTHORITY IN PROPER ADMINISTRATIVE CHARGES, HE COULD
ALSO BE PROSECUTED BEFORE THE TANODBAYAN UNDER THE PROVISIONS OF THE ANTI
GRAFT LAW, INDEPENDENTLY OF HIS LIABILITIES AS A GOVERNMENT OFFICER ' HE COULD BE
THE SUBJECT OF DISBARMENT PROCEEDINGS UNDER SECTION 27, RULE 138 OF THE REVISED
RULES OF COURT.

LET COPIES OF THIS RESOLUTION BE FURNISHED THE MINISTRY OF LABOR AND EMPLOYMENT AND THE
TANODBAYAN FOR APPROPRIATE ACTION,
PACIFIC BANKING CORPORATION VS CLAVE
SECOND DIVISION

[G.R. No. 56965. March 7, 1984.]

PACIFIC BANKING CORPORATION, Petitioner, v. JACOBO C. CLAVE, Presidential Executive Assistant, JOAQUIN
T. VENUS, JR., Deputy Presidential Executive Assistant, PACIFIC BANKING CORPORATION EMPLOYEES
ORGANIZATION and JUANITO M. SAAVEDRA,Respondents.

Sycip, Salazar, Feliciano and Hernandez for Petitioner.

The Solicitor General for public Respondent.

Andres I. Fernandez for Intervenors.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; LABOR DISPUTES; APPEALS TO OFFICE OF THE PRESIDENT; NO
JURISDICTION TO ADJUDICATE ON ATTORNEYS FEES WHERE APPEAL WAS WITH RESPECT TO COLLECTIVE
BARGAINING AGREEMENT TERMS AND CONDITIONS; CASE AT BAR. Where the case was appealed to the Office
of the President with respect to the CBA terms and conditions, not with respect to attorneys fees, the Presidential
Executive Assistant had no jurisdiction to make an adjudication on Saavedras attorneys fees. Although the fees were a
mere incident, nevertheless, the jurisdiction to fix the same and to order the payment thereof was outside the pale of the
Office of the Presidents appellate jurisdiction. Presidential Executive Assistant Clave was right in adopting a hands-off
attitude in his first resolution and holding that the payment of the fees was a question between the lawyer and the union.

2. ID.; LABOR CODE; ATTORNEYS FEES; RECOVERY THEREOF UNDER ARTICLE III, LABOR CODE, REFERS TO A
PROCEEDING FOR RECOVERY OF WAGES; CASE AT BAR. Presidential Executive Assistant Clave should have
noticed that Article III which provides for payment of attorneys fees refers to a proceeding for the recovery of wages and
not to CBA negotiations. The two are different or distinct proceedings.

3. ID.; ID.; ID.; LIABILITY THEREFOR OF UNION FUNDS IN CASE AT BAR PURSUANT TO ARTICLE 222, LABOR
CODE. The case is covered squarely by the mandatory and explicit prescription of article 222 which is another
guarantee intended to protect the employee against unwarranted practices that would diminish his compensation without
his knowledge and consent. (See National Power Corporation Supervisors Union v. National Power Corporation, L-28805,
August 10, 1981, 106 SCRA 556). Other provisions of the Labor Code animated by the same intention are the following:
Article 242, paragraphs (n) and (o); 288, PD 442; 291, PD 570-A; 240, PD 626; 241, PD 850. There is no doubt that
lawyer Saavedra is entitled to the payment of his fees but Article 222 ordains that union funds should be used for that
purpose. The amount of P345,000 does not constitute union funds. It is money of the employees. The union, not the
employees, is obligated to Saavedra.

DECISION

AQUINO, J.:

This case is about the legality of deducting from the monetary benefits awarded in a collective bargaining agreement the
attorneys fees of the lawyer who assisted the union president in negotiating the agreement. It also involves the jurisdiction
of the Office of the President of the Philippines to order such deduction.

Since January, 1979, there had been negotiations between the Pacific Banking Corporation and the Pacific Banking
Corporation Employees Organization (PABECO) for a collective bargaining agreement for 1979 to 1981. Because of a
deadlock, the Minister of Labor assumed jurisdiction over the controversy. On July 10, 1979, the Deputy Minister rendered
a decision directing the parties to execute a CBA in accordance with the terms and conditions set forth in his decision (pp.
16-01, Rollo).

The union was represented in the negotiations by its president, Paula S. Paug, allegedly assisted as consultant by Jose P.
Umali, Jr., the president of the National Union of Bank Employees (NUBE) with which it was formerly affiliated (p. 209,
Rollo). Lawyer Juanito M. Saavedras earliest recorded participation in the case was on July 15 and 27, 1979 when he
filed a motion for reconsideration and a supplemental motion. No action was taken on said motions (p. 121,
Rollo).chanrobles virtual lawlibrary

The parties appealed to the Office of the President of the Philippines. The CBA negotiations were resumed. The union
president took part in the second phase of the negotiations. Saavedra filed a memorandum. He claimed he exerted much
effort to expedite the decision. The Office of the President issued on March 18, 1980 a resolution directing the parties to
execute a CBA containing the terms and conditions of employment embodied in the resolution.

The CBA was ultimately finalized on June 3, 1980. Monetary benefits of more than fourteen million pesos were involved in
the three-year CBA, according to the banks counsel.

Even before the formalization of the CBA on June 3, 1980, Saavedra on March 24, 1980 filed in the case his notice of
attorney s lien. On May 20, 1980, the banks vice-president in a reply to the letter of the union president stated that he
had serious doubts about paying the attorneys fees (pp. 144-145, Rollo).

The union officials requested the bank to withhold around P345,000 out of the total benefits as ten percent attorneys fees
of Saavedra. At first, the bank interposed no objection to the request in the interest of harmonious labor-management
relations (p. 145, Rollo). In theory, the actual ten percent attorneys fees may amount to more than one million pesos (p.
281, Rollo).

For nearly a year, the Office of the President in four resolutions wrestled with the propriety of Saavedras ten percent
attorneys fees. In a resolution dated May 29, 1980, Presidential Executive Assistant Jacobo C. Clave refused to intervene
in the matter. He ruled that the payment of attorneys fees was a question that should be settled by the union and its
lawyer themselves (p. 24, Rollo).

Then, he "clarified" that ruling in a second resolution wherein he directed that the attorneys fees may be deducted from
the total benefits and paid to Saavedra in accordance with the following provisions of the Labor Code:chanrobles
virtualawlibrary chanrobles.com:chanrobles.com.ph

"Art. 111. Attorneys fees. (a) In cases of unlawful withholding of wages the culpable party may be assessed attorneys
fees equivalent to ten percent of the amount of wages recovered.

"(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery
of wages, attorneys fees which exceed ten percent of the amount of wages recovered."cralaw virtua1aw library

Article 161 is implemented in Rule VIII, Book III of the Implementing Rules and Regulations as
follows:jgc:chanrobles.com.ph

"Sec. 11. Attorneys fees. Attorneys fees in any judicial or administrative proceedings for the recovery of wages shall
not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party."cralaw
virtua1aw library

Presidential Executive Assistant Clave should have noticed that article 111 refers to a proceeding for the recovery of
wages and not to CBA negotiations. The two are different or distinct proceedings. Not satisfied with the clarificatory
resolution, Clave issued a third resolution wherein he held that it is the legal obligation of the bank to turn over to the
union treasurer ten percent of the award as Saavedras fees.

Finally, in a fourth resolution dated April 13, 1981 Deputy Presidential Executive Assistant Joaquin T. Venus, Jr. ordered
the bank to pay the union treasurer the said attorneys fees less the amounts corresponding to the protesting employees.
He held that the following article 222 of the Labor Code, as amended by Presidential Decree No. 1691, effective May 1,
1980 (before the formalization of the CBA award) had no retroactive effect to the case:jgc:chanrobles.com.ph

"ART. 222. Appearances and Fees. . . . (b) No attorneys fees, negotiation fees or similar charges of any kind arising
from any collective bargaining negotiations or conclusion of the collective agreement shall be imposed on any individual
member of the contracting union: Provided, however, that attorneys fees may be charged against union funds in an
amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null
and void." (271, PD 442; 220, PD 626; 222, PD 1691).

The bank assailed in this Court the said resolutions by means of certiorari. On February 5, 1982, the NUBE and thirteen
employees of the bank, members of the PABECO, (p. 202, Rollo) intervened in this case and prayed that the said
resolutions be declared void and that said sum of P345,000 be paid directly to the employees or union members (p. 214,
Rollo).

We hold that, under the circumstances, the Office of the President had no jurisdiction to make an adjudication on
Saavedras attorneys fees. The case was appealed with respect to the CBA terms and conditions, not with respect to
attorneys fees. Although the fees were a mere incident, nevertheless, the jurisdiction to fix the same and to order the
payment thereof was outside the pale of Claves appellate jurisdiction. He was right in adopting a hands-off attitude in his
first resolution and holding that the payment of the fees was a question between the lawyer and the union.

Moreover, the case is covered squarely by the mandatory and explicit prescription of article 222 which is another
guarantee intended to protect the employee against unwarranted practices that would diminish his compensation without
his knowledge and consent. (See National Power Corporation Supervisors Union v. National Power Corporation, L-28805,
August 10, 1981, 106 SCRA 556). Other provisions of the Labor Code animated by the same intention are the
following:chanrobles virtual lawlibrary

"ART. 242. Rights and conditions of membership in a labor organization. The following are the rights and conditions of
membership in a labor organization:jgc:chanrobles.com.ph

"x x x

"(n) No special assessment or other extraordinary fees may be levied upon the members of a labor organization unless
authorized by a written resolution of a majority of all the members at 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;.

"(o) Other than for mandatory activities under the Code, no special assessment, attorneys fees, negotiation fees or any
other extraordinary fees may be checked off from any amount due an employee without an individual written authorization
duly signed by the employee. The authorization should specifically state the amount, purpose and beneficiary of the
deduction; and.

. . . (288, PD 442; 291, PD 570-A; 240, PD 626; 241, PD 850).

There is no doubt that lawyer Saavedra is entitled to the payment of his fees but article 222 ordains that union funds
should be used for that purpose. The amount of P345,000 does not constitute union funds. It is money of the employees.
The union, not the employees, is obligated to Saavedra.

WHEREFORE, the petition is granted. The resolutions dated August 12 and December 15, 1980 and April 13, 1981 are
reversed and set aside. The questioned amount of about P345,000, with its increments, if any, should be paid by the bank
directly to its employees. No costs.

SO ORDERED
KAISAHAN AT KAPATIRAN VS MANILA WATER CO
Republic of the Philippines
Supreme Court
Manila

SECOND DIVISION

KAISAHAN AT KAPATIRAN NG MGA G.R. No. 174179

MANGGAGAWA AT KAWANI SA MWC-EAST ZONE
UNION and EDUARDO BORELA, representing its
members, Present:

Petitioners,
CARPIO, J.,

Chairperson,

- versus - BRION,

PEREZ,

SERENO, and

REYES, JJ.

MANILA WATER COMPANY, INC.,

Respondent. Promulgated:

November 16, 2011

x------------------------------------------------------------------------------------x

DECISION

BRION, J.:

We resolve the petition for review on certiorari[1] filed by the petitioners, Kaisahan at Kapatiran ng mga

Manggagawa at Kawani sa MWC-East Zone Union (Union) and Eduardo Borela, assailing the decision[2] and the

resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 83654.[4]

 The Factual Antecedents

The background facts are not disputed and are summarized below.

The Union is the duly-recognized bargaining agent of the rank-and-file employees of the respondent Manila Water
Company, Inc. (Company) while Borela is the Union President.[5] On February 21, 1997, the Metropolitan Waterworks and
Sewerage System (MWSS) entered into a Concession Agreement (Agreement) with the Company to privatize the
operations of the MWSS.[6] Article 6.1.3 of the Agreement provides that the Concessionaire shall grant [its] employees
benefits no less favorable than those granted to MWSS employees at the time of [their] separation from MWSS. [7] Among
the benefits enjoyed by the employees of the MWSS were the amelioration allowance (AA) and the cost-of-living
allowance (COLA) granted in August 1979, pursuant to Letter of Implementation No. 97 issued by the Office of the
President.[8]

The payment of the AA and the COLA was discontinued pursuant to Republic Act No. 6758, otherwise known as
the Salary Standardization Law, which integrated the allowances into the standardized salary. [9] Nonetheless, in 2001,
the Union demanded from the Company the payment of the AA and the COLA during the renegotiation of the parties
Collective Bargaining Agreement (CBA).[10] The Company initially turned down this demand, however, it subsequently
agreed to an amendment of the CBA on the matter, which provides:

The Company shall implement the payment of the Amelioration Allowance and Cost of Living
[A]llowance retroactive August 1, 1997 should the MWSS decide to pay its employees and all its former
employees or upon award of a favorable order by the MWSS Regulatory Office or upon receipt of [a] final
court judgment.[11]

Thereafter, the Company integrated the AA into the monthly payroll of all its employees beginning August 1, 2002,
payment of the AA and the COLA after an appropriation was made and approved by the MWSS Board of Trustees. The
Company, however, did not subsequently include the COLA since the Commission on Audit disapproved its payment
because the Company had no funds to cover this benefit. [12]

As a result, the Union and Borela filed on April 15, 2003 a complaint against the Company for payment of the AA,
COLA, moral and exemplary damages, legal interest, and attorneys fees before the National Labor Relations Commission
(NLRC).[13]

The Compulsory Arbitration Rulings

In his decision of August 20, 2003, Labor Arbiter Aliman D. Mangandog (LA) ruled in favor of the petitioners and ordered
the payment of their AA and COLA, six percent (6%) interest of the total amount awarded, and ten percent (10%)
attorneys fees.[14]

On appeal by the Company, the NLRC affirmed with modification the LAs decision. [15] It set aside the award of the
COLA benefits because the claim was not proven and established, but ordered the Company to pay the petitioners their
accrued AA of about P107,300,000.00 in lump sum and to continue paying the AA starting August 1, 2002. It also upheld
the award of 10% attorneys fees to the petitioners.

In its Motion for Partial Reconsideration of the NLRCs December 19, 2003 decision, the Company pointed out that
the award of ten percent (10%) attorneys fees to the petitioners is already provided for in their December 19, 2003
Memorandum of Agreement (MOA) which mandated that attorneys fees shall be deducted from the AA and CBA
receivables.[16] This compromise agreement, concluded between the parties in connection with a notice of strike filed by
the Union in 2003,[17] provides among others that:[18]

31. Attorneys fees 10% to be deducted from AA and CBA receivables.

32. All other issues are considered withdrawn.[19]

In their Opposition, the petitioners argued that the MOA only covered the payment of their share in the contracted
attorneys fees, but did not include the attorneys fees awarded by the NLRC. To support their claim, the petitioners
submitted Borelas affidavit which relevantly stated:
 2. On December 19, 2003, in settlement of the notice of Strike for CBA Deadlock, Manila Water Company,
Inc. and the Union entered into an Agreement settling the deadlock issued (sic) of the CBA negotiation
including [the] payment of the AA and the mode of payment thereof.

3. Considering that the AA payment was included in the Agreement, the Union representation deemed it
wise, for practical reason, to authorize the company to immediately deduct from the benefits that will be
received by the member/employees the 10% attorneys fees in conformity with our contract with our
counsel.

4. The 10% attorneys fees paid by the members/employees is separate and distinct from
the obligation of the company to pay the 10% awarded attorneys fees which we also gave to our
counsel as part of our contingent fee agreement.

5. There was no agreement that we are going to shoulder the entire attorneys fees as this would
cost us 20% of the amount we would recover. There was also no agreement that the 10% attorneys fees
in the MOA represents the entire attorneys cost because the said payment represents only our
compliance of our share in the attorneys fees in conformity with our contract. Likewise, we did not waive
the awarded 10% attorneys fees because the same belongs to our counsel and not to us and beyond our
authority.[20] (emphasis ours)

The NLRC subsequently denied both parties Motions for Partial Reconsideration, [21] prompting the Company
to elevate the case to the CA via a petition for certiorariunder Rule 65 of the Rules of Court. It charged the NLRC of
grave abuse of discretion in sustaining the award of attorneys fees on the grounds that: (1) it is contrary to the
MOA[22] concerning the payment of attorneys fees; (2) there was no finding of unlawful withholding of wages or bad faith
on the part of the Company; and (3) the attorneys fees awarded are unconscionable.

The CA Decision

In its Decision promulgated on March 6, 2006, [23] the CA modified the assailed NLRC rulings by deleting [t]he
order for respondent MWCI to pay attorneys fees equivalent to 10% of the total judgment awards. The CA recognized the
binding effect of the MOA between the Company and the Union; it stressed that any further award of attorneys fees is
unfounded considering that it did not find anything in the Agreement that is contrary to law, morals, good customs, public
policy or public order.

In resolving the issue, the CA cited our ruling in Traders Royal Bank Employees Union-Independent v. NLRC,
[24]
where we distinguished between the two commonly accepted concepts of attorneys fees the ordinary and the
extraordinary. We held in that case that under its ordinary concept, attorneys fees are the reasonable compensation paid
to a lawyer by his client for legal services rendered. On the other hand, we ruled that in its extraordinary concept,
attorneys fees represent an indemnity for damages ordered by the court to be paid by the losing party in a litigation based
on what the law provides; it is payable to the client not to the lawyer, unless there is an agreement to the contrary.

The CA noted that the fees at issue in this case fall under the extraordinary concept the NLRC having ordered the
Company, as losing party, to pay the Union and its members ten percent (10%) attorneys fees. It found the award without
basis under Article 111 of the Labor Code which provides that attorneys fees equivalent to ten percent (10%) of the
amount of wages recovered may be assessed only in cases of unlawful withholding of wages.

The CA ruled that the facts of the case do not indicate any unlawful withholding of wages or bad faith attributable
to the Company. It also held that the additional grant of 10% attorneys fees violates Article 111 of the Labor Code
considering that the MOA between the parties already ensured the payment of 10% attorneys fees, deductible from the AA
and CBA receivables of the Unions members. The CA thus adjudged the NLRC decision awarding attorneys fees to have
been rendered with grave abuse of discretion.

The Union and Borela moved for reconsideration, but the CA denied the motion in its resolution of August 15,
[25]
2006. Hence, the present petition.

The Petition

The petitioners seek a reversal of the CA rulings on the sole ground that the appellate court committed a
reversible error in reviewing the factual findings of the NLRC and in substituting its own findings an action that is not
allowed under Rule 65 of the Rules of Court. They question the CAs re-evaluation of the evidence, particularly the MOA,
and its conclusion that there was no unlawful withholding of wages or bad faith attributable to the Company, thereby
contradicting the factual findings of the NLRC. They also submit that a petition for certiorari under Rule 65 is confined only
to issues of jurisdiction or grave abuse of discretion, and does not include the review of the NLRCs evaluation of the
evidence and its factual findings.[26]

The petitioners argue that in the present case, all the parties arguments and evidence relating to the award of
attorneys fees were carefully studied and weighed by the NLRC. As a result, the NLRC gave credence to Borelas affidavit
claiming that the attorneys fees paid by the Unions members are separate and distinct from the attorneys fees awarded
by the NLRC. The petitioners stress that whether the NLRC is correct in giving credence to Borelas affidavit is a question
that the CA cannot act upon in a petition forcertiorari unless grave abuse of discretion can be shown. [27]

The Case for the Company

In its Memorandum filed on September 7, 2007, [28]the Company argues that the correctness of the NLRCs
interpretation of the provision of the MOA, the reasonableness of the attorneys fees in question, and the application or
interpretation of a provision of the Labor Code on the matter are questions of law which the CA validly inquired into in
the certiorari proceedings. It argues that the CA correctly ruled that the NLRC acted with grave abuse of discretion when it
affirmed the LAs award of attorneys fees despite the absence of a finding of any unlawful withholding of wages or bad
faith on the part of the Company. It finally contends that the Unions demand, together with the NLRC award, is
unconscionable as it represents 20% of the amount due or about P21.4 million.

Issues

The core issues posed for our resolution are: (1) whether the CA can review the factual findings of the NLRC in a
Rule 65 petition; and (2) whether the NLRC gravely abused its discretion in awarding ten percent (10%) attorneys fees to
the petitioners.

The Courts Ruling

We find the petition and its arguments meritorious.

On the CAs Review of the NLRCs Factual Findings

We agree with the petitioners that as a rule, the CA cannot undertake a re-assessment of the evidence presented
in the case in certiorari proceedings under Rule 65 of the Rules of Court. [29] However, the rule admits of
exceptions. In Mercado v. AMA Computer College-Paraaque City, Inc.,[30] we held that the CA may examine the factual
findings of the NLRC to determine whether or not its conclusions are supported by substantial evidence, whose absence
justifies a finding of grave abuse of discretion. We ruled:

We agree with the petitioners that, as a rule in certiorari proceedings under Rule 65 of the Rules
of Court, the CA does not assess and weigh each piece of evidence introduced in the case. The CA only
examines the factual findings of the NLRC to determine whether or not the conclusions are supported by
substantial evidence whose absence points to grave abuse of discretion amounting to lack or excess of
jurisdiction. In the recent case of Protacio v. Laya Mananghaya & Co., we emphasized that:

As a general rule, in certiorari proceedings under Rule 65 of the Rules of Court,

the appellate court does not assess and weigh the sufficiency of evidence upon which the
Labor Arbiter and the NLRC based their conclusion. The query in this proceeding is
limited to the determination of whether or not the NLRC acted without or in excess of its
jurisdiction or with grave abuse of discretion in rendering its decision. However, as an
exception, the appellate court may examine and measure the factual findings of the
NLRC if the same are not supported by substantial evidence. The Court has not
hesitated to affirm the appellate courts reversals of the decisions of labor tribunals
if they are not supported by substantial evidence. [31] (italics and emphasis supplied;
citation omitted)

As discussed below, our review of the records and of the CA decision shows that the CA erred in ruling that the
NLRC gravely abused its discretion in awarding the petitioners ten percent (10%) attorneys fees without basis in fact and
in law. Corollary to the above-cited rule is the basic approach in the Rule 45 review of Rule 65 decisions of the CA in labor
cases which we articulated in Montoya v. Transmed Manila Corporation [32] as a guide and reminder to the CA. We laid
down that:

In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the
review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the
review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we
have to view the CA decision in the same context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the prism of whether it correctly
determined the presence or absence of grave abuse of discretion in the NLRC decision before it,
not on the basis of whether the NLRC decision on the merits of the case was correct. In other
words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of
the NLRC decision challenged before it. This is the approach that should be basic in a Rule 45 review of
a CA ruling in a labor case. In question form, the question to ask is: Did the CA correctly determine
whether the NLRC committed grave abuse of discretion in ruling on the case?[33] (italics and
emphases supplied)

In the present case, we are therefore tasked to determine whether the CA correctly ruled that the NLRC
committed grave abuse of discretion in awarding 10% attorneys fees to the petitioners.

On the Award of Attorneys Fees

Article 111 of the Labor Code, as amended, governs the grant of attorneys fees in labor cases:

Art. 111. Attorneys fees.- (a) In cases of unlawful withholding of wages, the culpable party may be
assessed attorneys fees equivalent to ten percent of the amount of wages recovered.
 (b) It shall be unlawful for any person to demand or accept, in any judicial or administrative
proceedings for the recovery of wages, attorneys fees which exceed ten percent of the amount of wages
recovered.

Section 8, Rule VIII, Book III of its Implementing Rules also provides, viz.:

Section 8. Attorneys fees. Attorneys fees in any judicial or administrative proceedings for the recovery of
wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount
due the winning party.

We explained in PCL Shipping Philippines, Inc. v. National Labor Relations Commission [34]that there are two
commonly accepted concepts of attorneys fees the ordinary and extraordinary. In its ordinary concept, an
attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal services the former renders;
compensation is paid for the cost and/or results of legal services per agreement or as may be assessed. In
its extraordinary concept, attorneys fees are deemed indemnity for damages ordered by the court to be paid by
the losing party to the winning party. The instances when these may be awarded are enumerated in Article 2208 of the
Civil Code, specifically in its paragraph 7 on actions for recovery of wages, and is payable not to the lawyer but to the
client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part
of compensation.[35]

We also held in PCL Shipping that Article 111 of the Labor Code, as amended, contemplates the extraordinary
concept of attorneys fees and that Article 111 is an exception to the declared policy of strict construction in the
award of attorneys fees. Although an express finding of facts and law is still necessary to prove the merit of the
award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the
wages. In carrying out and interpreting the Labor Code's provisions and implementing regulations, the employee's welfare
should be the primary and paramount consideration. This kind of interpretation gives meaning and substance to the liberal
and compassionate spirit of the law as embodied in Article 4 of the Labor Code (which provides that "[a]ll doubts in the
implementation and interpretation of the provisions of [the Labor Code], including its implementing rules and regulations,
shall be resolved in favor of labor") and Article 1702 of the Civil Code (which provides that "[i]n case of doubt, all labor
legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer). [36]

We similarly so ruled in RTG Construction, Inc. v. Facto [37]and in Ortiz v. San Miguel Corporation. [38] In RTG Construction,
we specifically stated:

Settled is the rule that in actions for recovery of wages, or where an employee was forced to litigate and,
thus, incur expenses to protect his rights and interests, a monetary award by way of attorneys fees is
justifiable under Article 111 of the Labor Code; Section 8, Rule VIII, Book III of its Implementing Rules;
and paragraph 7, Article 2208 of the Civil Code. The award of attorneys fees is proper, and there need
not be any showing that the employer acted maliciously or in bad faith when it withheld the
wages. There need only be a showing that the lawful wages were not paid accordingly.
[39]
(emphasis ours)
 In PCL Shipping, we found the award of attorneys fees due and appropriate since the respondent therein incurred
legal expenses after he was forced to file an action for recovery of his lawful wages and other benefits to protect his rights.
[40]
From this perspective and the above precedents, we conclude that the CA erred in ruling that a finding of the
employers malice or bad faith in withholding wages must precede an award of attorneys fees under Article 111 of the
Labor Code. To reiterate, a plain showing that the lawful wages were not paid without justification is sufficient.

In the present case, we find it undisputed that the union members are entitled to their AA benefits and that these
benefits were not paid by the Company. That the Company had no funds is not a defense as this was not an insuperable
cause that was cited and properly invoked. As a consequence, the union members represented by the Union were
compelled to litigate and incur legal expenses. On these bases, we find no difficulty in upholding the NLRCs award of ten
percent (10%) attorneys fees.

The more significant issue in this case is the effect of the MOA provision that attorneys fees shall be deducted
from the AA and CBA receivables. In this regard, the CA held that the additional grant of 10% attorneys fees by the NLRC
violates Article 111 of the Labor Code, considering that the MOA between the parties already ensured the payment of 10%
attorneys fees deductible from the AA and CBA receivables of the Unions members. In addition, the Company also argues
that the Unions demand, together with the NLRC award, is unconscionable as it represents 20% of the amount due or
about P21.4 million.

In Traders Royal Bank Employees Union-Independent v. NLRC,[41] we expounded on the concept of attorneys fees in the
context of Article 111 of the Labor Code, as follows:

In the first place, the fees mentioned here are the extraordinary attorneys fees recoverable
as indemnity for damages sustained by and payable to the prevailing part[y]. In the second place,
the ten percent (10%) attorneys fees provided for in Article 111 of the Labor Code and Section 11, Rule
VIII, Book III of the Implementing Rules is the maximum of the award that may thus be
granted. Article 111 thus fixes only the limit on the amount of attorneys fees the victorious party
may recover in any judicial or administrative proceedings and it does not even prevent the NLRC from
fixing an amount lower than the ten percent (10%) ceiling prescribed by the article when circumstances
warrant it.[42] (emphases ours; citation omitted)

In the present case, the ten percent (10%) attorneys fees awarded by the NLRC on the basis of Article 111 of the Labor
Code accrue to the Unions members as indemnity for damages and not to the Unions counsel as compensation for his
legal services, unless, they agreed that the award shall be given to their counsel as additional or part of his
compensation; in this case the Union bound itself to pay 10% attorneys fees to its counsel under the MOA and also
gave up the attorneys fees awarded to the Unions members in favor of their counsel. This is supported by Borelas affidavit
which stated that [t]he 10% attorneys fees paid by the members/employees is separate and distinct from the obligation of
the company to pay the 10% awarded attorneys fees which we also gave to our counsel as part of our contingent fee
agreement.[43] The limit to this agreement is that the indemnity for damages imposed by the NLRC on the losing party
(i.e., the Company) cannot exceed ten percent (10%).
 Properly viewed from this perspective, the award cannot be taken to mean an additional grant of attorneys fees, in
violation of the ten percent (10%) limit under Article 111 of the Labor Code since it rests on an entirely different legal
obligation than the one contracted under the MOA. Simply stated, the attorneys fees contracted under the MOA do not
refer to the amount of attorneys fees awarded by the NLRC; the MOA provision on attorneys fees does not have
any bearing at all to the attorneys fees awarded by the NLRC under Article 111 of the Labor Code. Based on these
considerations, it is clear that the CA erred in ruling that the LAs award of attorneys fees violated the maximum limit of ten
percent (10%) fixed by Article 111 of the Labor Code.

Under this interpretation, the Companys argument that the attorneys fees are unconscionable as they represent
20% of the amount due or about P21.4 million is more apparent than real. Since the attorneys fees awarded by the LA
pertained to the Unions members as indemnity for damages, it was totally within their right to waive the amount and give it
to their counsel as part of their contingent fee agreement. Beyond the limit fixed by Article 111 of the Labor Code, such
as between the lawyer and the client, the attorneys fees may exceed ten percent (10%) on the basis of quantum meruit,
as in the present case.[44]

WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed decision dated March 6,
2006 and the resolution dated August 15, 2006 of the Court of Appeals in CA-G.R. SP No. 83654
are REVERSED and SET ASIDE. The Labor Arbiters award of attorneys fees equivalent to ten percent (10%) of the total
judgment award is hereby REINSTATED.

No pronouncement as to costs.

SO ORDERED.
GABRIEL VS SOLE

SECOND DIVISION

[G.R. No. 115949. March 16, 2000]

EVANGELINE J. GABRIEL, TERESITA C. LUALHATI, EVELYN SIA, RODOLFO EUGENIO, ISAGANI MAKISIG, and
DEMETRIO SALAS, petitioners, vs. THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT and SIMEON
SARMIENTO, JESUS CARLOS MARTINEZ III, ALBERT NAPIAL, MARVIN ALMACIN, ROGELIO MATEO, GLENN
SIAPNO, EMILIANO CUETO, SALOME ATIENZA, NORMA V. GO, JUDITH DUDANG, MONINA DIZON, EUSEBIO
ROMERO, ISAGANI MORALES, ELISEO BUENAVENTURA, CLEMENTE AGCAMARAN, CARMELITA NOLASCO,
JOVITA FERI, LULU ACOSTA, CAROL LAZARO, NIDA ARRIZA, ROMAN BERNARDO, DOMINGO B. MACALDO,
EUGENE PIDLAOAN, MA. SOCORRO T. ANGOB, JOSEPHINE ALVAREZ, LOURDES FERRER, JACQUILINE
BAQUIRAN, GRACIA R. ESCUADRO, KRISTINA HERNANDEZ, LOURDES IBEAS, MACARIO GARCIA, BILLY
TECSON, ALEX RECTO III, LEBRUDO, JOSE RICAFORTE, RODOLFO MORADA, TERESA AMADO, ROSITA
TRINIDAD, JEANETTE ONG, VICTORINO LAS-AY, RANIEL DAYAO, OSCAR SANTOS, CRISTINA SALAVER,
VICTORIA ARINO, A.H. SAJO, MICHAEL BIETE, RED RP, GLORIA JUAT, ETHELINDA CASILAN, FAMER
DIPASUPIL, MA. HIDELISA POMER, MA. CHARLOTTE TAWATAO, GRACE REYES, ERNIE COLINA, ZENAIDA
MENDOZA, PAULITA ADORABLE, BERNARDO MADUMBA, NESTOR NAVARRO, EASTER YAP, ALMA LIM, FELISA
YU, TIMOTEO GANASTRA, REVELITA CARTAJENAS, ANGELITO CABUAL, ROBERTA TAN, DOMINADOR TAPO,
GRACE LIM, GADIANE JEMIE, CHRISTHDY DAUD, BENEDICTO ACOSTA, JESUSA ACOSTA, MA. AVELINA ARYAP,
EVELYN BENITEZ, ESTERITA CHU, EVANGELINE CHU, BETTY CINCO, RICARDO CONNEJO, MANULITO EVALO,
FRANCIS LEONIDA, GREGORIO NOBLEZA, RODOLFO RIVERAL, ELSA SIA, CLARA SUGBO, EDGARDO TABAO,
MANUEL VELOSO, MARLYN YU, ABSALON BUENA, WILFREDO PUERTO, FLORENTINA PINGOL, MARILOU DAR,
FE MORALES, MALEN BELLO, LORENA TAMAYO, CESAR LIM, PAUL BALTAZAR, ALFREDO GAYAGAS,
DUMAGUETE EMPLOYEES, CEBU EMPLOYEES, OZAMIZ EMPLOYEES, TACLOBAN EMPLOYEES AND ALL
OTHER SOLIDBANK UNION MEMBERS, respondents. C alrsc

DECISION

QUISUMBING, J.:

Before us is a special civil action for certiorari seeking to reverse partially the Order[1] of public respondent dated June 3,
1994, in Case No. OS-MA-A-8-170-92, which ruled that the workers through their union should be made to shoulder the
expenses incurred for the professional services of a lawyer in connection with the collective bargaining negotiations and
that the reimbursement for the deductions from the workers should be charged to the unions general fund or account.

The records show the following factual antecedents:

Petitioners comprise the Executive Board of the SolidBank Union, the duly recognized collective bargaining agent for the
rank and file employees of Solid Bank Corporation. Private respondents are members of said union.

Sometime in October 1991, the unions Executive Board decided to retain anew the service of Atty. Ignacio P. Lacsina
(now deceased) as union counsel in connection with the negotiations for a new Collective Bargaining Agreement (CBA).
Accordingly, on October 19, 1991, the board called a general membership meeting for the purpose. At the said meeting,
the majority of all union members approved and signed a resolution confirming the decision of the executive board to
engage the services of Atty. Lacsina as union counsel.

As approved, the resolution provided that ten percent (10%) of the total economic benefits that may be secured through
the negotiations be given to Atty. Lacsina as attorneys fees. It also contained an authorization for SolidBank Corporation
to check-off said attorneys fees from the first lump sum payment of benefits to the employees under the new CBA and to
turn over said amount to Atty. Lacsina and/or his duly authorized representative. [2]

The new CBA was signed on February 21, 1992. The bank then, on request of the union, made payroll deductions for
attorneys fees from the CBA benefits paid to the union members in accordance with the abovementioned resolution.

On October 2, 1992, private respondents instituted a complaint against the petitioners and the union counsel before the
Department of Labor and Employment (DOLE) for illegal deduction of attorneys fees as well as for quantification of the
benefits in the 1992 CBA.[3] Petitioners, in response, moved for the dismissal of the complaint citing litis pendentia, forum
shopping and failure to state a cause of action as their grounds. [4]Sccal r

On April 22, 1993, Med-Arbiter Paterno Adap of the DOLE- NCR issued the following Order:

"WHEREFORE, premises considered, the Respondents Union Officers and Counsel are hereby directed
to immediately return or refund to the Complainants the illegally deducted amount of attorneys fees from
the package of benefits due herein complainants under the aforesaid new CBA.

"Furthermore, Complainants are directed to pay five percent (5%) of the total amount to be refunded or
returned by the Respondent Union Officers and Counsel to them in favor of Atty. Armando D. Morales, as
 attorneys fees, in accordance with Section II, Rule VIII of Book II (sic) of the Omnibus Rules Implementing
the Labor Code."[5]

On appeal, the Secretary of Labor rendered a Resolution [6] dated December 27, 1993, stating:

"WHEREFORE, the appeal of respondents Evangeline Gabriel, et. al., is hereby partially granted and the
Order of the Med-Arbiter dated 22 April 1993 is hereby modified as follows: (1) that the ordered refund
shall be limited to those union members who have not signified their conformity to the check-off of
attorneys fees; and (2) the directive on the payment of 5% attorneys fees should be deleted for lack of
basis.

SO ORDERED."[7]

On Motion for Reconsideration, public respondent affirmed the said Order with modification that the unions counsel be
dropped as a party litigant and that the workers through their union should be made to shoulder the expenses incurred for
the attorneys services. Accordingly, the reimbursement should be charged to the unions general fund/account. [8]

Hence, the present petition seeking to partially annul the above-cited order of the public respondent for being allegedly
tainted with grave abuse of discretion amounting to lack of jurisdiction.

The sole issue for consideration is, did the public respondent act with grave abuse of discretion in issuing the challenged
order? Calrsp ped

Petitioners argue that the General Membership Resolution authorizing the bank to check-off attorneys fee from the first
lump sum payment of the benefits to the employees under the new CBA satisfies the legal requirements for such
assessment.[9] Private respondents, on the other hand, claim that the check-off provision in question is illegal because it
was never submitted for approval at a general membership meeting called for the purpose and that it failed to meet the
formalities mandated by the Labor Code.[10]

In check-off, the employer, on agreement with the Union, or on prior authorization from employees, deducts union dues or
agency fees from the latters wages and remits them directly to the union. [11] It assures continuous funding for the labor
organization. As this Court has acknowledged, the system of check-off is primarily for the benefit of the union and only
indirectly for the individual employees.[12]

The pertinent legal provisions on check-offs are found in Article 222 (b) and Article 241 (o) of the Labor Code.

Article 222 (b) states:

"No attorneys fees, negotiation fees or similar charges of any kind arising from any collective bargaining
negotiations or conclusions of the collective agreement shall be imposed on any individual member of the
contracting union: Provided, however, that attorneys fees may be charged against union funds in an
amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the
contrary shall be null and void." (Underscoring ours)

Article 241 (o) provides:

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

Article 241 has three (3) requisites for the validity of the special assessment for unions incidental expenses, attorneys
fees and representation expenses. These are: 1) authorization by a written resolution of the majority of all the members at
the general membership meeting called for the purpose; (2) secretarys record of the minutes of the meeting; and (3)
individual written authorization for check off duly signed by the employees concerned. Sce dp

Clearly, attorneys fees may not be deducted or checked off from any amount due to an employee without his written
consent.

After a thorough review of the records, we find that the General Membership Resolution of October 19, 1991 of the
SolidBank Union did not satisfy the requirements laid down by law and jurisprudence for the validity of the ten percent
(10%) special assessment for unions incidental expenses, attorneys fees and representation expenses. There were no
individual written check off authorizations by the employees concerned and so the assessment cannot be legally deducted
by their employer.

Even as early as February 1990, in the case of Palacol vs. Ferrer-Calleja [13] we said that the express consent of
employees is required, and this consent must be obtained in accordance with the steps outlined by law, which must be
followed to the letter. No shortcuts are allowed. In Stellar Industrial Services, Inc. vs. NLRC [14] we reiterated that a written
individual authorization duly signed by the employee concerned is a condition sine qua non for such deduction.
These pronouncements are also in accord with the recent ruling of this Court in the case of ABS-CBN Supervisors
Employees Union Members vs. ABS-CBN Broadcasting Corporation, et. al., [15] which provides:

"Premises studiedly considered, we are of the irresistible conclusion and, so find that the ruling in BPIEU-
ALU vs. NLRC that (1) the prohibition against attorneys fees in Article 222, paragraph (b) of the
Labor Code applies only when the payment of attorneys fees is effected through forced
contributions from the workers; and (2) that no deduction must be take from the workers who did
not sign the check-off authorization, applies to the case under consideration." (Emphasis ours.)

We likewise ruled in Bank of the Philippine Island Employees Union-Association Labor Union (BPIEU-ALU) vs. NLRC,[16]

" the afore-cited provision (Article 222 (b) of the Labor Code) as prohibiting the payment of attorneys fees
only when it is effected through forced contributions from workers from their own funds as distinguished
from the union funds. The purpose of the provision is to prevent imposition on the workers of the duty to
individually contribute their respective shares in the fee to be paid the attorney for his services on behalf
of the union in its negotiations with management. The obligation to pay the attorneys fees belongs to
the union and cannot be shunted to the workers as their direct responsibility. Neither the lawyer
nor the union itself may require the individual worker to assume the obligation to pay attorneys
fees from their own pockets. So categorical is this intent that the law makes it clear that any agreement
to the contrary shall be null and void ab initio." (Emphasis ours.) Edp sc

From all the foregoing, we are of the considered view that public respondent did not act with grave abuse of discretion in
ruling that the workers through their union should be made to shoulder the expenses incurred for the services of a lawyer.
And accordingly the reimbursement should be charged to the unions general fund or account. No deduction can be made
from the salaries of the concerned employees other than those mandated by law.

WHEREFORE, the petition is DENIED. The assailed Order dated June 3, 1994, of respondent Secretary of Labor signed
by Undersecretary Bienvenido E. Laguesma is AFFIRMED. No pronouncement as to costs.

SO ORDERED.
MARINO VS GIL
THIRD DIVISION

EDUARDO J. MARIO, JR., MA. MELVYN P. G.R. No. 149763

ALAMIS, NORMA P. COLLANTES, and
FERNANDO PEDROSA,
Present:
Petitioners,

YNARES-SANTIAGO, J.,
Chairperson,
CARPIO,*
CHICO-NAZARIO,
- versus -
VELASCO, JR., and

NACHURA, JJ.

GIL Y. GAMILLA, RENE LUIS TADLE,

NORMA S. CALAGUAS,
MA. LOURDES C. MEDINA, EDNA B.
SANCHEZ, REMEDIOS GARCIA, MAFEL
YSRAEL, ZAIDA GAMILLA, and AURORA
Promulgated:
DOMINGO,

Respondents.

July 7, 2009

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Assailed in this Petition for Review on Certiorari,[1] under Rule 45 of the Rules of Court, are (1) the
Decision[2] dated 16 March 2001 of the Court of Appeals in CA-G.R. SP No. 60657, dismissing petitioners Petition
for Certiorari under Rule 65 of the Rules of Court; and (2) the Resolution[3] dated 30 August 2001 of the appellate court in
the same case denying petitioners Motion for Reconsideration.

FACTS

The Petition at bar arose from the following factual and procedural antecedents.

(1) Case No. NCR-OD-M-9412-022

 At the time when the numerous controversies in the instant case first came about, petitioners Atty. Eduardo J.
Mario, Jr., Ma. Melvyn P. Alamis, Norma P. Collantes, and Fernando Pedrosa were among the executive officers and
directors (collectively called the Mario Group) of the University of Sto. Tomas Faculty Union (USTFU), a labor union duly
organized and registered under the laws of the Republic of the Philippines and the bargaining representative of the faculty
members of the University of Santo Tomas (UST).[4]

Respondents Gil Y. Gamilla, Rene Luis Tadle, Norma S. Calaguas, Ma. Lourdes C. Medina, Edna B. Sanchez,
Remedios Garcia, Mafel Ysrael, Zaida Gamilla, and Aurora Domingo were UST professors and USTFU members.

The 1986 Collective Bargaining Agreement (CBA) between UST and USTFU expired on 31 May 1988. Thereafter,
bargaining negotiations ensued between UST and theMario Group, which represented USTFU. As the parties were not
able to reach an agreement despite their earnest efforts, a bargaining deadlock was declared and USTFU filed a notice of
strike. Subsequently, then Secretary of the Department of Labor and Employment (DOLE) Franklin Drilon assumed
jurisdiction over the dispute, which was docketed as NCMB-NCR-NS-02-117-89. The DOLE Secretary issued an Order
on 19 October 1990, laying the terms and conditions for a new CBA between the UST and USTFU. In accordance with
said Order, the UST and USTFU entered into a CBA in 1991, which was to be effective for the period of 1 June 1988 to 31
May 1993 (hereinafter 1988-1993 CBA). In keeping with Article 253-A [5] of the Labor Code, as amended, the economic
provisions of the 1988-1993 CBA were subject to renegotiation for the fourth and fifth years.

Accordingly, on 10 September 1992, UST and USTFU executed a Memorandum of Agreement (MOA), [6] whereby
UST faculty members belonging to the collective bargaining unit were granted additional economic benefits for the fourth
and fifth years of the 1988-1993 CBA, specifically, the period from 1 June 1992 up to 31 May 1993. The relevant portions
of the MOA read:

MEMORANDUM OF AGREEMENT

xxxx

1.0. The University hereby grants additional benefits to Faculty Members belonging to the collective
bargaining unit as defined in Article I, Section 1 of the Collective Bargaining Agreement entered into
between the parties herein over and above the benefits now enjoyed by the said faculty members, which
additional benefits shall amount in the aggregate to P42,000,000.00[.]

2.0. Under this Agreement the University shall grant salary increases, to wit:

2.1. THIRTY (P30.00) PESOS per lecture unit per month to covered faculty members retroactive
to June 1, 1991;

2.2. Additional THIRTY (P30.00) PESOS per lecture unit per month on top of the salary increase granted in
[paragraph] 2.1 hereof to the said faculty members effective June 1, 1992;

2.3. In the case of a covered faculty member whose compensation is computed on a basis other than lecture
unit per month, he shall receive salary increases that are equivalent to those provided in paragraphs 2.1
and 2.2 hereof, with the amount of salary increases being arrived at by using the usual method of
computing the said faculty members basic pay;
 3.0. The UNIVERSITY shall likewise restore to the faculty members the amounts corresponding to the
deductions in salary that were taken from the pay checks in the second half of June, 1989 and in the first
half of July, 1989, provided that said deductions in salary relate to the union activities that were held in the
aforestated payroll periods, and provided further that the amounts involved shall be taken from the P42
Million (sic) economic package.

4.0. A portion of the P42,000,000.00 economic package amounting to P2,000,000.00 shall be used to
satisfy all obligations that remained outstanding and unpaid in the May 17, 1986 Collective Bargaining
Agreement.

5.0. Any unspent balance of the aggregate of P42,000,000.00 as of October 15, 1992, shall, within two
weeks, be remitted to the Union[:]

5.1. The unspent balance mentioned in paragraph 5.0 inclusive of earnings but exclusive of check-offs, shall be
used for the salary increases herein granted up to May 31, 1993, for increases in hospitalization,
educational and retirement benefits, and for other economic benefits.

6.0. The benefits herein granted constitute the entire and complete package of economic benefits granted
by the UNIVERSITY to the covered faculty members for the balance of the term of the existing collective
bargaining agreement.

7.0. It is clearly understood and agreed upon that the aggregate sum of P42 million is chargeable
against the share of the faculty members in the incremental proceeds of tuition fees collected and
still to be collected; Provided, however, that he (sic) commitment of the UNIVERSITY to pay the
aggregate sum of P42 million shall subsist even if the said amount exceeds the proportionate share that
may accrue to the faculty members in the tuition fee increases that the UNIVERSITY may be authorized
to collect in School-Year 1992-1993, and, Provided, finally, that the covered faculty members shall still be
entitled to their proportionate share in any undistributed portion of the incremental proceeds of the tuition
fee increases in School-Year 1992-1993, and incremental proceeds are, by law and pertinent
Department of Education Culture and Sports (DECS) regulations, required to be allotted for the
payment of salaries, wages, allowances and other benefits of teaching and non-teaching
personnel for the UNIVERSITY.

8.0. With this Agreement, the parties confirm that[:]

8.1. the University has complied with the requirements of the law relative to the release and distribution of the
incremental proceeds of tuition fee increases as these incremental proceeds pertain to the faculty share
in the tuition fee increase collected during the School-Year 1991-1992; and,

8.2. the economic benefits herein granted constitute the full and complete financial obligation of the UNIVERSITY
to the members of its faculty for the period June 1, 1991 to May 31, 1993, pursuant to the provisions of
the existing Collective Bargaining Agreement.

9.0. Subject to the provisions of law, and without reducing the amounts of salary increases granted under
paragraphs 2.0, 2.1, 2.2 and 2.3[,] the UNION shall have the right to a pro-rata lump sum check-off of
all sums of money due and payable to it from the package of economic benefits granted under this
Agreement, provided that there is an authorization of a majority of the members of the UNION and
provided, further, that the P42 million economic package herein granted shall not in any way be
exceeded.
 10.0. This Agreement shall be effective for a period of two (2) years, starting June 1, 1991 and ending on
May 31, 1993, provided, however, that if for any reason no new collective bargaining agreement is
entered into at the expiration date hereof, this Agreement, together with the March 18, 1991 Collective
Bargaining Agreement, shall remain in full force and effect until such time as a new collective bargaining
agreement shall have been executed by the parties.

xxxx

UNIVERSITY OF SANTO TOMAS UST FACULTY UNION

BY: BY:

(signed) (signed)

FR. TERESO M. CAMPILLO, JR., O.P. ATTY. EDUARDO J.

Treasurer MARINO, JR.

President

Attested by[:]

(signed)

REV. FR. ROLANDO DELA ROSA, O.P. (Emphasis ours.)

On 12 September 1992, the majority of USTFU members signed individual instruments of ratification, [7] which
purportedly signified their consent to the economic benefits granted under the MOA. Said instruments uniformly recited:

RATIFICATION OF THE UST-USTFU MEMORANDUM OF AGREEMENT DATED SEPTEMBER 10, 1992

GRANTING A PACKAGE OF THE P42 MILLION FACULTY BENEFITS WITH PROVISION FOR CHECK-
OFF.

September 12, 1992

Date

TO WHOM IT MAY CONCERN:

I, the undersigned UST faculty member, aware that the law requires ratification and that without
ratification by majority of all faculty members belonging to the collective bargaining unit, the Memorandum
of Agreement between the University of Santo Tomas and the UST Faculty Union (or USTFU) dated
September 10, 1992 may be questioned and all the faculty benefits granted therein may be cancelled, do
hereby ratify the said agreement.

Under the Agreement, the University shall pay P42 million over a period of two (2) years
from June 1, 1991 up to May 31, 1992.

In consideration of the efforts of the UST Faculty Union as the faculty members sole and
exclusive collective bargaining representative in obtaining the said P42 million package of economic
 benefits, a check-off of ten percent thereof covering union dues, and special assessment for Labor
Education Fund and attorneys fees from USTFU members and agency fee from non-members for
the period of the Agreement is hereby authorized to be made in one lump sum effective immediately,
provided that two per cent (sic) shall be for [the] administration of the Agreement and the balance of eight
per cent (sic) shall be for attorneys fees to be donated, as pledged by the USTFU lawyer to the Philippine
Foundation for the Advancement of the Teaching Profession, Inc. whose principal purpose is the
advancement of the teaching profession and teachers welfare, and provided further that the deductions
shall not be taken from my individual monthly salary but from the total package of P42 million due under
the Agreement.

_________________________

Signature of Faculty Member (Emphasis ours.)

USTFU, through its President, petitioner Atty. Mario, wrote a letter [8] dated 1 October 1992 to the UST Treasurer
requesting the release to the union of the sum of P4.2 million, which was 10% of the P42 million economic benefits
package granted by the MOA to faculty members belonging to the collective bargaining unit. The P4.2 million was sought
by USTFU in consideration of its efforts in obtaining the said P42 million economic benefits package. UST remitted the
sum of P4.2 million to USTFU on 9 October 1992.[9]

After deducting from the P42 million economic benefits package the P4.2 million check-off to USTFU, the
amounts owed to UST, and the salary increases and bonuses of the covered faculty members, a net amount
of P6,389,145.04 remained. The remaining amount was distributed to the faculty members on 18 November 1994.

On 15 December 1994, respondents[10] filed with the Med-Arbiter, DOLE-National Capital Region (NCR), a
Complaint for the expulsion of the Mario Group as USTFU officers and directors, which was docketed as Case No. NCR-
OD-M-9412-022.[11] Respondents alleged in their Complaint that the Mario Group violated the rights and conditions of
membership in USTFU, particularly by: 1) investing the unspent balance of the P42 million economic benefits package
given by UST without prior approval of the general membership; 2) simultaneously holding elections viva voce; 3) ratifying
the CBA involving the P42 million economic benefits package; and 4) approving the attorneys/agency fees worth P4.2
million in the form of check-off. Respondents prayed that the Mario Group be declared jointly and severally liable for
refunding all collected attorneys/agency fees from individual members of USTFU and the collective bargaining unit; and
that, after due hearing, the Mario group be expelled as USTFU officers and directors.

(2) Case No. NCR-OD-M-9510-028

On 16 December 1994, UST and USTFU, represented by the Mario Group, entered into a new CBA, effective 1
June 1993 to 31 May 1998 (1993-1998 CBA). This new CBA was registered with the DOLE on 20 February 1995.

Respondents[12] filed with the Med-Arbiter, DOLE-NCR, on 18 October 1995, another Complaint against the Mario
Group for violation of the rights and conditions of union membership, which was docketed as Case No. NCR-OD-M-9510-
028.[13] The Complaint primarily sought to invalidate certain provisions of the 1993-1998 CBA negotiated by the Mario
Group for USTFU and the registration of said CBA with the DOLE.

(3) Case No. NCR-OD-M-9610-001

 On 24 September 1996, petitioner Norma Collantes, as USTFU Secretary-General, posted notices in some faculty
rooms at UST, informing the union members of a general assembly to be held on 5 October 1996. Part of the agenda for
said date was the election of new USTFU officers. The following day, 25 September 1996, respondents wrote a letter [14] to
the USTFU Committee on Elections, urging the latter to re-schedule the elections to ensure a free, clean, honest, and
orderly election and to afford the union members the time to prepare themselves for the same. The USTFU Committee on
Elections failed to act positively on respondents letter, and neither did they adopt and promulgate the rules and
regulations for the conduct of the scheduled election.

Thus, on 1 October 1996, respondents[15] filed with the Med-Arbiter, DOLE-NCR, an Urgent Ex-
Parte Petition/Complaint, which was docketed as Case No. NCR-OD-M-9610-001.[16] Respondents alleged in their
Petition/Complaint that the general membership meeting called by the USTFU Board of Directors on 5 October 1996, the
agenda of which included the election of union officers, was in violation of the provisions of the Constitution and By-Laws
of USTFU. Respondents prayed that the DOLE supervise the conduct of the USTFU elections, and that they be awarded
attorneys fees.

On 4 October 1996, the Med-Arbiter DOLE-NCR, issued a Temporary Restraining Order (TRO) enjoining the
holding of the USTFU elections scheduled the next day.

(4) Case No. NCR-OD-M-9610-016

Also on 4 October 1996, the UST Secretary General headed a general faculty assembly attended by USTFU
members, as well as USTFU non-members, but who were members of the collective bargaining unit. During said
assembly, respondents were among the elected officers of USTFU (collectively referred to as the Gamilla
Group).Petitioners filed with the Med-Arbiter, DOLE-NCR, a Petition seeking injunctive reliefs and the nullification of the
results of the 4 October 1994 election. The Petition was docketed as Case No. NCR-OD-M-9610-016.

In a Decision dated 11 February 1997 in Case No. NCR-OD-M-9610-016, the Med-Arbiter DOLE-NCR, nullified
the election of the Gamilla Group as USTFU officers on4 October 1996 for having been conducted in violation of the
Constitution and By-Laws of the union. This ruling of the Med-Arbiter was affirmed on appeal by the Bureau of Labor
Relations (BLR) in a Resolution issued on 15 August 1997. Respondents were, thus, prompted to file a Petition
for Certiorari before this Court, docketed as G.R. No. 131235.

While G.R. No. 131235 was pending, the term of office of the Gamilla Group as USTFU officers expired on 4
October 1999. The Gamilla Group then scheduled the next election of USTFU officers on 14 January 2000.

On 16 November 1999, the Court promulgated its Decision in G.R. No. 131235, affirming the BLR Resolution
dated 15 August 1997 which ruled that the purported election of USTFU officers held on 4 October 1996 was void for
violating the Constitution and By-Laws of the union. [17]

(5) Case No. NCR-OD-M-9611-009

On 15 November 1996, respondents[18] filed before the Med-Arbiter, DOLE-NCR, a fourth Complaint/Petition against the
Mario Group, as well as the Philippine Foundation for the Advancement of the Teaching Profession, Inc., Security Bank
Corporation, and Bank of the Philippine Islands, which was docketed as Case No. NCR-OD-M-9611-009.[19]Respondents
claimed in their latest Complaint/Petition that they were the legitimate USTFU officers, having been elected on 4 October
1996. They prayed for an order directing the Mario Group to cease and desist from using the name of USTFU and from
performing acts for and on behalf of the USTFU and the rest of the members of the collective bargaining unit.

DOLE Department Order No. 9 took effect on 21 June 1997, amending the Rules Implementing Book V of the
Labor Code, as amended. Thereunder, jurisdiction over the complaints for any violation of the union constitution and by-
laws and the conditions of union membership was vested in the Regional Director of the DOLE. [20] Pursuant to said
Department Order, all four Petitions/Complaints filed by respondents against the Mario Group, particularly, Case No. NCR-
OD-M-9412-022, Case No. NCR-OD-M-9510-028, Case No. NCR-OD-M-9610-001, and Case No. NCR-OD-M-9611-
009 were consolidated and indorsed to the Office of the Regional Director of the DOLE-NCR.

On 27 May 1999, the DOLE-NCR Regional Director rendered a Decision [21] in the consolidated cases in
respondents favor.

In Case No. NCR-OD-M-9412-022 and Case No. NCR-OD-M-9510-028, the DOLE-NCR Regional Director
adjudged the Mario Group, as the executive officers of USTFU, guilty of violating the provisions of the USTFU Constitution
and By-laws by failing to collect union dues and to conduct a general assembly every three months. The DOLE-NCR
Regional Director also ruled that the Mario Group violated Article 241(c) [22] and (l)[23] of the Labor Code when they did not
submit a list of union officers to the DOLE; when they did not submit/provide DOLE and the USTFU members with copies
of the audited financial statements of the union; and when they invested in a bank, without prior consent of USTFU
members, the sum of P9,766,570.01, which formed part of the P42 million economic benefits package.

Additionally, the DOLE-NCR Regional Director declared that the check-off of P4.2 million collected by the Mario
Group, as negotiation fees, was invalid. According to the MOA executed on 10 September 1992 by UST and USTFU,
the P42 million economic benefits package was chargeable against the share of the faculty members in the incremental
proceeds of tuition fees collected and still to be collected. Under Republic Act No. 6728,[24] 70% of the tuition fee increases
should be allotted to academic and non-academic personnel. Given that the records were silent as to how much of
the P42 million economic benefits package was obtained through negotiations and how much was from the statutory
allotment of 70% of the tuition fee increases, the DOLE-NCR Regional Director held that the entire amount was within the
statutory allotment, which could not be the subject of negotiation and, thus, could not be burdened by negotiation fees.

The DOLE-NCR Regional Director further found that the principal subject of Case No. NCR-OD-M-9610-001 (i.e.,
violation by the Mario Group of the provisions on election of officers in the Labor Code and the USTFU Constitution and
By-Laws) had been superseded by the central event in Case No. NCR-OD-M-9611-009 (i.e., the subsequent election of
another set of USTFU officers consisting of the Gamilla Group). While there were two sets of USTFU officers vying for
legitimacy, the eventual ruling of the DOLE-NCR Regional Director, for the expulsion of the Mario Group from their
positions as USTFU officers, practically extinguished Case No. NCR-OD-M-9611-009.

The decretal portion of the 27 May 1999 Decision of the DOLE-NCR Regional Director reads:

WHEREFORE, premises considered, judgment is hereby rendered:

a) Expelling [the Mario Group] from their positions as officers of USTFU, and hereby
order them under pain of contempt, to cease and desist from performing acts as such officers;

b) Ordering [the Mario Group] to jointly and severally refund to USTFU the amount of
P4.2 M checked-off as attorneys fees from the P42 M economic package;
 c) Ordering [the Mario Group] to account for:

c.1. P2.0 M paid to USTFU in satisfaction of the remaining obligation of the

University under the 1986 CBA;

c.2. P7.0 M as consideration of the Compromise Agreement entered into by

USTFU involving certain labor cases;

c.3. Interest/earnings of the P9,766,570.01 balance of the P42 M

invested/deposited by [the Mario Group] with the PCI Capital Corporation.

d) Ordering conduct of election of Union officers under the supervision of this Department. [25]

Petitioners interposed an appeal[26] before the BLR, which was docketed as BLR-A-TR-52-25-10-99.

In the meantime, the election of USTFU officers was held as scheduled on 14 January 2000,[27] in which the Gamilla
Group claimed victory.[28] On 3 March 2000, the Gamilla group, as the new USTFU officers, entered into a Memorandum of
Agreement[29] with the UST, which provided for the economic benefits to be granted to the faculty members of the UST for
the years 1999-2001. Said Agreement was ratified by the USTFU members on 9 March 2000.

On the same day, 9 March 2000, the BLR promulgated its Decision [30] in BLR-A-TR-52-25-10-99, the fallo of which
provides:

WHEREFORE, the appeal is GRANTED IN PART. Accordingly, the decision appealed from is
hereby MODIFIED to the effect that appellant USTFU officers are hereby ordered to return to the general
membership the amount of P4.2 million they have collected by way of attorneys fees.

Let the entire records of this case be remanded to the Regional Office of origin for the immediate conduct
of election of officers of USTFU. The election shall be held under the control and supervision of the
Regional Office, in accordance with Section 1 (b), Rule XV of Department Order No. 9, unless the parties
mutually agree to a different procedure consistent with ensuring integrity and fairness in the electoral
exercise.

The BLR found no basis for the order of the DOLE-NCR Regional Director to the Mario Group to account for the amounts
of P2 million and P7 million supposedly paid by UST to USTFU. The BLR clarified that UST paid USTFU a lump sum
of P7 million. The P2 million of this lump sum was the payment by UST of its outstanding obligations to USTFU under the
1986 CBA. This amount was subsequently donated by USTFU members to the Philippine Foundation for the
Advancement of the Teaching Profession, Inc.The remaining P5 million of the lump sum was the consideration for the
settlement of an illegal dismissal case between UST and the Mario Group. Hence, the P5 million legally belonged to the
Mario Group, and there was no need to make it account for the same. As to the interest earnings of the sum
of P9,766,570.01 that was invested by the Mario Group in a bank, the BLR ruled that the same was included in the
amount of P6,389,145.04 that was distributed to the faculty members on 18 November 1994.

The BLR, however, agreed in the finding of the DOLE-NCR Regional Director that the P42 million economic benefits
package was sourced from the faculty members share in the tuition fee increases under Republic Act No. 6728. Under
said law, 70% of tuition fee increases shall go to the payment of salaries, wages, allowances, and other benefits of
teaching and non-teaching personnel. As was held in the decision [31] and subsequent resolution[32] of the Supreme Court
in Cebu Institute of Technology v. Ople, the law has already provided for the minimum percentage of tuition fee increases
to be allotted for teachers and other school personnel. This allotment is mandatory and cannot be diminished, although it
may be increased by collective bargaining. It follows that only the amount beyond that mandated by law shall be subject to
negotiation fees and attorney's fees for the simple reason that it was only this amount that the school employees had to
bargain for.

The BLR further reasoned that the P4.2 million collected by the Mario Group was in the nature of attorneys fees or
negotiation fees and, therefore, fell under the general prohibition against such fees in Article 222(b) [33] of the Labor Code,
as amended. Also, the exception to charging against union funds was not applicable because the P42 million economic
benefits package under the 10 September 1992 MOA was not union fund, as the same was intended not for the union
coffers, but for the members of the entire bargaining unit. The fact that the P4.2 million check-off was approved by the
majority of USTFU members was immaterial in view of the clear command of Article 222(b) that any contract, agreement,
or arrangement of any sort, contrary to the prohibition contained therein, shall be null and void.

Lastly, as to the alleged failure of the Mario Group to perform some of its duties, the BLR held that the change of USTFU
officers can best be decided, not by outright expulsion, but by the general membership through the actual conduct of
elections.

Petitioners Motion for Partial Reconsideration [34] of the foregoing Decision was denied by the BLR in a
Resolution[35] dated 13 June 2000.

Aggrieved once again, petitioners filed with the Court of Appeals a Petition for Certiorari[36] under Rule 65 of the
Rules of Court, which was docketed as CA-G.R. SP No. 60657. In a Resolution dated 26 September 2000, the Court of
Appeals directed respondents to file their Comment; and, in order not to render moot and academic the issues in the
Petition, enjoined respondents and all those acting for and on their behalf from enforcing, implementing, and effecting the
BLR Decision dated 9 March 2000.

On 16 March 2001, the Court of Appeals rendered its Decision in CA-G.R. SP No. 60657, favoring respondents.

According to the Court of Appeals, the BLR did not commit grave abuse of discretion, amounting to lack or excess
of jurisdiction, in ruling that the P42 million economic benefits package was merely the share of the faculty members in the
tuition fee increases pursuant to Republic Act No. 6728. The appellate court explained:

It is too plain to see that the 60% of the proceeds is to be allocated specifically for increase in
salaries or wages of the members of the faculty and all other employees of the school concerned. Under
Section 5(2) of Republic Act 6728, the amount had been increased to 70% of the tuition fee increases
which was specifically allocated to the payment of salaries, wages, allowances and other benefits of
teaching and non-teaching personnel of the school[,] except administrators who are principal stockholders
of the school and to cover increases as provided for in the collective bargaining agreements existing or in
force at the time the law became effective[.]

xxxx

It is too plain to see, too, that under the Memorandum of Agreement between UST and the Union,
x x x, the P42,000,000.00 economic package granted by the UST to the Union was in compliance with the
mandates of the law and pertinent Department of Education, Culture and Sports regulation (sic) required
to be allotted following the payment of salaries, wages, allowances and other benefits of teaching and
non-teaching personnel of the University[.]
 xxxx

Whether or not UST implemented the mandate of Republic Act 6728 voluntarily or through the
efforts and prodding of the Union does not and cannot change or alter a whit the nature of the economic
package or the purpose or purposes of the allocation of the said amount. For, if we acquiesced to and
sustained Petitioners stance, we will thereby be leaving the compliance by the private educational
institutions of the mandate of Republic Act 6728 at the will, mercy, whims and caprices of the Union and
the private educational institution. This cannot and should not come to pass.

With our foregoing findings and disquisitions, We thus agree with the [BLR] that the aforesaid
amount of P42,000,000.00 should not answer for any attorneys fees claimed by the Petitioners. x x x.

xxxx

Moreover, [Section 5 of Rule X of] the CBL of the Union provides that:

Section 5. Special assessments or other extraordinary fees such as for payment of

attorneys fees shall be made only upon such a resolution duly ratified by the general
membership by secret balloting. x x x.

Also, Article 241(n)[37] of the Labor Code, as amended, provides that no special assessment shall be
levied upon the members of the union unless authorized by a written resolution of a majority of all the
members at a general membership meeting duly called for the purpose[.]

xxxx

In ABS-CBN Supervisors-Employees Union Members versus ABS-CBN Broadcasting Corporation, 304

SCRA 489, our Supreme Court declared that Article 241(n) of the Labor Code, as amended, speaks of
three (3) requisites, to wit: (1) authorization by a written resolution of the majority of all members at the
general membership meeting called for the purpose; (2) secretarys record of the minutes of the meeting;
and (3) individual written authorization for check-off duly signed by the employee concerned.

Contrary to the provisions of Articles 222(b) and 241(n) of the Labor Code, as amended, and Section 5,
Rule X of [the] CBL of the Union, no resolution ratified by the general membership of [the] USTFU through
secret balloting which embodied the award of attorneys fees was submitted. Instead, the Petitioners
submitted copies of the form for the ratification of the MOA and the check-off for attorneys fees.

xxxx

The aforementioned ratification with check-off form embodied the: (a) ratification of the MOA; (b) check-
off of union dues; and (c) check-off of a special assessment, i.e., attorneys fees and labor education fund.
x x x. Patently, the CBL was not complied with.

Worse, the check-off for union dues and attorneys fees were included in the ratification of the MOA. The
members were thus placed in a situation where, upon ratification of the MOA, not only the check-off of
union dues and special assessment for labor education fund but also the payment of attorneys fees were
(sic) authorized.[38]
In like manner, the Court of Appeals found no grave abuse of discretion, amounting to lack or excess of jurisdiction, on the
part of the BLR in ordering the conduct of elections under the control and supervision of the DOLE-NCR. Said the
appellate court:

We agree with the Petitioners that the elections of officers of the Union, before the Decision of the
[BLR], had been unfettered by any intervention of the DOLE. However, We agree with the Decision of the
[BLR] for two (2) specific reasons, namely: (a) the parties are given an opportunity to first agree on a
different procedure to ensure the integrity and fairness of the electoral exercise, before the DOLE, may
supervise the election[.]

xxxx

Under Article IX of the CBL, the Board of Officers of the Union shall create a Committee on
Elections, Comelec for brevity, composed of a chairman and two (2) members appointed by the Board of
Officers[.]

xxxx

It, however, appears that the term of office of the Petitioners had already expired in September of 1996. In
fact, an election of officers was scheduled on October 6, 1996. However, on October 4, 1996,
[respondents] and the members of the faculty of UST, both union member and non-union member,
elected [respondents] as the new officers of the USTFU. The same was, however, (sic) nullified by the
Supreme Court, on November 16, 1999. However, as the term of office of the [respondents] had expired,
on October 4, 1999, there is nothing to nullify anymore. By virtue of an election, held on January 14,
2000, the [respondents] were elected as the new officers of the Union, which election was not contested
by the Petitioners or any other group in the union.

xxxx

We are thus faced with a situation where one set of officers claim to be the legitimate and incumbent
officers of the Union, pursuant to the CBL of the Union, and another set of officers who claim to have
been elected by the members of the faculty of the Union thru an election alleged to have been supervised
by the DOLE which situation partakes of and is akin to the nature of an intra-union dispute[.] x x x.

Undeniably, the CBL gives the Board of Officers the right to create and appoint members of the
Comelec. However, the CBL has no application to a situation where there are two (2) sets of officers, one
set claiming to be the legitimate incumbent officers holding over to their positions who have not exercised
their powers and functions therefor and another claiming to have been elected in an election supervised
by the DOLE and, at the same time, exercising the powers and functions appended to their positions. In
such a case, the BLR, which has jurisdiction over the intra-union dispute, can validly order the immediate
conduct of election of officers, otherwise, internecine disputes and blame-throwing will derail an orderly
and fair election. Indeed, Section 1(b), [Rule XV], Book V of the Implementing Rules and Regulations of
the Labor Code, as amended, by Department Order No. 09, Series of 1997, [39] provides that, in the
absence of any agreement among the members or any provision in the constitution and by-laws of the
labor organization, in an election ordered by the Regional Director, the chairman of the committee shall be
a representative of the Labor Relations Division of the Regional Office[.] [40]

Ultimately, the Court of Appeals decreed:

 IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied due course and is
hereby DISMISSED.[41]

Petitioners moved for reconsideration [42] of the Decision dated 16 March 2001 of the Court of Appeals, but it was
denied by the said court in its Resolution[43] dated 30 August 2001.

Petitioners elevated the case to this Court via the instant Petition, invoking the following assignment of errors:

I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR AND
GRAVELY ABUSED ITS DISCRETION WHEN IT UPHELD THE APPLICATION BY THE HONORABLE
DIRECTOR OF THE BUREAU OF LABOR RELATIONS OF THE PROVISIONS OF REPUBLIC ACT NO.
6728 TO THE P42 MILLION CBA PACKAGE OF ECONOMIC BENEFITS OBTAINED BY THE UST
FACULTY UNION FROM THE UNIVERSITY OF SANTO TOMAS.

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR AND
GRAVELY ABUSED ITS DISCRETION WHEN IT DISALLOWED THE LUMP-SUM CHECK-OFF
AMOUNTING TO P4.2 MILLION BY RULING THAT THE P42 MILLION CBA ECONOMIC PACKAGE
OBTAINED BY THE UST FACULTY UNION WAS MERELY AN ALLOCATION OF THE SEVENTY PER
CENT (70%) OF THE TUITION INCREASES AUTHORIZED BY LAW AND THE DEPARTMENT OF
EDUCATION, CULTURE AND SPORTS.

III.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR AND
GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED THE PROVISIONS ON ELECTION OF
UNION OFFICERS IN THE CONSTITUTION AND BY-LAWS OF THE UST FACULTY UNION AND
INSTEAD UPHELD THE DIRECTIVE OF THE HONORABLE DIRECTOR OF THE BUREAU OF LABOR
RELATIONS TO CONDUCT THE ELECTION OF UNION OFFICERS UNDER THE CONTROL AND
SUPERVISION OF THE REGIONAL DIRECTOR FOR THE NATIONAL CAPITAL REGION OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT.

Essentially, in order to arrive at a final disposition of the instant case, this Court is tasked to determine the
following: (1) the nature of the P42 million economic benefits package granted by UST to USTFU; (2) the legality of the
10% check-off collected by the Mario Group from the P42 million economic benefits package; and (3) the validity of the
BLR order for USTFU to conduct election of union officers under the control and supervision of the DOLE-NCR Regional
Director.
 II

RULING

(1) The P42 million economic benefits package

Petitioners argue that the P42 million economic benefits package granted to the covered faculty members were
additional benefits, which resulted from a long and arduous process of negotiations between the Mario Group and
UST. The BLR and the Court of Appeals were in error for considering the said amount as purely sourced from the
allocation by UST of 70% percent of the incremental proceeds of tuition fee increases, in accordance with Republic Act
No. 6728. Said law was improperly applied as a general law that decrees the allocation by all private schools of 70% of
their tuition fee increases to the payment of salaries, wages, allowances and other benefits of their teaching & non-
teaching personnel. It is clear from the title of the law itself that it only covers government assistance to students and
teachers in private education. Section 5 of Republic Act No. 6728 unequivocally limits the scope of the law to tuition fee
supplements and subsidies extended by the Government to students in private high schools. Thus, the petitioners
maintain that Republic Act No. 6728 has no application to the MOA executed on 10 September 1992 between UST and
USTFU, through the efforts of the Mario Group.

The Court disagrees with petitioners stance.

The provisions of Republic Act No. 6728 were not arbitrarily applied by the DOLE-NCR Regional Director, the
BLR, or the Court of Appeals to the P42 million economic benefits package granted by UST to USTFU, considering that
the parties themselves stipulated in Section 7 of the MOA they signed on 10 September 1992 that:

7.0. It is clearly understood and agreed upon that the aggregate sum of P42 million is chargeable
against the share of the faculty members in the incremental proceeds of tuition fees collected and
still to be collected[;] Provided, however, that he (sic) commitment of the UNIVERSITY to pay the
aggregate sum of P42 million shall subsist even if the said amount exceeds the proportionate share that
may accrue to the faculty members in the tuition fee increases that the UNIVERSITY may be authorized
to collect in SchoolYear 1992-1993, and, Provided, finally, that the covered faculty members shall still be
entitled to their proportionate share in any undistributed portion of the incremental proceeds of the tuition
fee increases in School-Year 1992-1993, and which incremental proceeds are, by law and pertinent
Department of Education Culture and Sports (DECS) regulations, required to be allotted for the
payment of salaries, wages, allowances and other benefits of teaching and non-teaching
personnel for the UNIVERSITY.[44] (Emphases supplied.)

The law in the aforequoted Section 7 of the MOA can only refer to Republic Act No. 6728, otherwise known as the
Government Assistance to Students and Teachers in Private Education Act." Republic Act No. 6728 was enacted in view
of the declared policy of the State, in conformity with the mandate of the Constitution, to promote and make quality
education accessible to all Filipino citizens, as well as the recognition of the State of the complementary roles of public
and private educational institutions in the educational system and the invaluable contribution that the private schools have
made and will make to education.[45] The said statute primarily grants various forms of financial aid to private educational
institutions such as tuition fee supplements, assistance funds, and scholarship grants. [46]

One such form of financial aid is provided under Section 5 of Republic Act No. 6728, which states:

SEC. 5. Tuition Fee Supplement for Student in Private High School.

 (1) Financial assistance for tuition for students in private high schools shall be provided by the
government through a voucher system in the following manner:

(a) For students enrolled in schools charging less than one thousand five hundred pesos ( P1,500) per
year in tuition and other fees during school year 1988-89 or such amount in subsequent years as may be
determined from time to time by the State Assistance Council: The Government shall provide them
with a voucher equal to two hundred ninety pesos P290.00: Provided, That the student pays in the
1989-1990 school year, tuition and other fees equal to the tuition and other fees paid during the preceding
academic year: Provided, further, That the Government shall reimburse the vouchers from the schools
concerned within sixty (60) days from the close of the registration period: Provided, furthermore, That the
student's family resides in the same city or province in which the high school is located unless the student
has been enrolled in that school during the previous academic year.

(b) For students enrolled in schools charging above one thousand five hundred pesos (P1,500) per year
in tuition and other fees during the school year 1988-1989 or such amount in subsequent years as may
be determined from time to time by the State Assistance Council, no assistance for tuition fees shall be
granted by the Government: Provided, however, That the schools concerned may raise their tuition
fee subject to Section 10 hereof.

(2) Assistance under paragraph (1), subparagraphs (a) and (b) shall be granted and tuition fees
under subparagraph (c) may be increased, on the condition that seventy percent (70%) of the
amount subsidized, allotted for tuition fee or of the tuition fee increases shall go to the payment of
salaries, wages, allowances and other benefits of teaching and non-teaching personnel except
administrators who are principal stockholders of the school, and may be used to cover increases as
provided for in the collective bargaining agreements existing or in force at the time when this Act
is approved and made effective: Provided, That government subsidies are not used directly for salaries
of teachers of nonsecular subjects. At least twenty percent (20%) shall go to the improvement or
modernization of buildings, equipment, libraries, laboratories, gymnasia and similar facilities and to the
payment of other costs of operation. For this purpose, schools shall maintain a separate record of
accounts for all assistance received from the government, any tuition fee increase, and the detailed
disposition and use thereof, which record shall be made available for periodic inspection as may be
determined by the State Assistance Council, during business hours, by the faculty, the non-teaching
personnel, students of the school concerned, and Department of Education, Culture and Sports and other
concerned government agencies. (Emphases ours.)

Although Section 5 of Republic Act No. 6728 does speak of government assistance to students in private high
schools, it is not limited to the same. Contrary to petitioners puerile claim, Section 5 likewise grants an unmistakable
authority to private high schools to increase their tuition fees, subject to the condition that seventy (70%) percent of the
tuition fee increases shall go to the payment of the salaries, wages, allowances, and other benefits of their teaching and
non-teaching personnel. The said allocation may also be used to cover increases in the salaries, wages, allowances, and
other benefits of school employees as provided for in the CBAs existing or in force at the time when Republic Act No.
6728 was approved and made effective.

Contrary to petitioners argument, the right of private schools to increase their tuition fee -- with their corresponding
obligation to allocate 70% of said increase to thepayment of the salaries, wages, allowances, and other benefits of their
employees -- is not limited to private high schools. Section 9[47] of Republic Act No. 6728, on Further Assistance to
Students in Private Colleges and Universities, is crystal clear in providing that:

d) Government assistance and tuition increases as described in this Section shall be governed by the
same conditions as provided under Section 5 (2).
 Indeed, a private educational institution under Republic Act No. 6728 still has the discretion on the disposition of
70% of the tuition fee increase. It enjoys the privilege of determining how much increase in salaries to grant and the kind
and amount of allowances and other benefits to give. The only precondition is that 70% percent of the incremental tuition
fee increase goes to the payment of salaries, wages, allowances and other benefits of teaching and non-teaching
personnel.[48]

In this case, UST and USTFU stipulated in their 10 September 1992 MOA that the P42 million economic benefits
package granted by UST to the members of the collective bargaining unit represented by USTFU, was chargeable against
the 70% allotment from the proceeds of the tuition fee increases collected and still to be collected by UST. As observed by
the DOLE-NCR Regional Director, and affirmed by both the BLR and the Court of Appeals, there is no showing that any
portion of the P42 million economic benefits package was derived from sources other than the 70% allotment from tuition
fee increases of UST.

Given the lack of evidence to the contrary, it can be conclusively presumed that the entire P42 million economic
benefits package extended to USTFU came from the 70% allotment from tuition fee increases of UST. Preceding from this
presumption, any deduction from the P42 million economic benefits package, such as the P4.2 million claimed by the
Mario Group as attorneys/agency fees, should not be allowed, because it would ultimately result in the reduction of the
statutorily mandated 70% allotment from the tuition fee increases of UST.

The other reasons for disallowing the P4.2 million attorneys/agency fees collected by the Mario Group from
the P42 million economic benefits package are discussed in the immediately succeeding paragraphs.

(2) The P4.2 Million Check-off

Petitioners contend that the P4.2 million check-off, from the P42 million economic benefits package, was lawfully made
since the requirements of Article 222(b) of the Labor Code, as amended, were complied with by the Mario Group. The
individual paychecks of the covered faculty employees were not reduced and the P4.2 million deducted from theP42
million economic benefits package became union funds, which were then used to pay attorneys fees, negotiation fees,
and similar charges arising from the CBA. In addition, the P4.2 million constituted a special assessment upon the USTFU
members, the requirements for which were properly observed. The special assessment was authorized in writing by the
general membership of USTFU during a meeting in which it was included as an item in the agenda. Petitioners fault the
Court of Appeals for disregarding the authorization of the special assessment by USTFU members. There is no law that
prohibits the insertion of a written authorization for the special assessment in the same instrument for the ratification of
the 10 September 1992 MOA. Neither is there a law prescribing a particular form that needs to be accomplished for the
authorization of the special assessment. The faculty members who signed the ratification of the MOA, which included the
authorization for the special assessment, have high educational attainment, and there is ample reason to believe that they
affixed their signatures thereto with full comprehension of what they were doing.

Again, the Court is not persuaded.

The pertinent legal provisions on a check-off are found in Articles 222(b) and 241(n) and (o) of the Labor Code, as
amended.
Article 222(b) states:

(b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective
bargaining negotiations or conclusion of the collective agreement shall be imposed on any individual
member of the contracting union: Provided, however, that attorney's fees may be charged against unions
 funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort
to the contrary shall be null and void.

Article 241(n) reads:

(n) No special assessment or other extraordinary fees may be levied upon the members of a labor
organization unless authorized by a written resolution of a majority of all the members at 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.

And Article 241(o) provides:

(o) 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 an
employee without an individual written authorization duly signed by the employee. The authorization
should specifically state the amount, purpose and beneficiary of the deduction.

Article 222(b) of the Labor Code, as amended, prohibits the payment of attorney's fees only when it is effected
through forced contributions from the employees from theirown funds as distinguished from union funds.[49] Hence, the
general rule is that attorneys fees, negotiation fees, and other similar charges may only be collected from union funds, not
from the amounts that pertain to individual union members. As an exception to the general rule, special assessments or
other extraordinary fees may be levied upon or checked off from any amount due an employee for as long as there is
proper authorization by the employee.

A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper
bargaining representative, or on prior authorization from the employees, deducts union dues or agency fees from the
latter's wages and remits them directly to the Union. Its desirability in a labor organization is quite evident. The Unionis
assured thereby of continuous funding. As this Court has acknowledged, the system of check-off is primarily for the benefit
of the Union and, only indirectly, for the individual employees.[50]

The Court finds that, in the instant case, the P42 million economic benefits package granted by UST did not
constitute union funds from whence the P4.2 million could have been validly deducted as attorneys fees. The P42 million
economic benefits package was not intended for the USTFU coffers, but for all the members of the bargaining unit USTFU
represented, whether members or non-members of the union. A close reading of the terms of the MOA reveals that after
the satisfaction of the outstanding obligations of UST under the 1986 CBA, the balance of the P42 million was to be
distributed to the covered faculty members of the collective bargaining unit in the form of salary increases, returns on
paycheck deductions; and increases in hospitalization, educational, and retirement benefits, and other economic
benefits. The deduction of the P4.2 million, as alleged attorneys/agency fees, from the P42 million economic benefits
package effectively decreased the share from said package accruing to each member of the collective bargaining unit.

Petitioners line of argument that the amount of P4.2 million became union funds after its deduction from the P42
million economic benefits package and, thus, could already be used to pay attorneys fees, negotiation fees, or similar
charges from the CBA is absurd. Petitioners reasoning is evidently flawed since the attorneys fees may only be paid from
union funds; yet the amount to be used in paying for the same does not become union funds until it is actually deducted
as attorneys fees from the benefits awarded to the employees. It is just a roundabout argument. What the law requires is
that the funds be already deemed union funds even before the attorneys fees are deducted or paid therefrom; it does not
become union funds after the deduction or payment. To rule otherwise will also render the general prohibition stated in
Article 222(b) nugatory, because all that the union needs to do is to deduct from the total benefits awarded to the
employees the amount intended for attorneys fees and, thus, convert the latter to union funds, which could then be used
to pay for the said attorneys fees.

The Court further determines that the requisites for a valid levy and check-off of special assessments, laid down
by Article 241(n) and (o), respectively, of the Labor Code, as amended, have not been complied with in the case at bar. To
recall, these requisites are: (1) an authorization by a written resolution of the majority of all the union members at the
general membership meeting duly called for the purpose; (2) secretary's record of the minutes of the meeting; and (3)
individual written authorization for check-off duly signed by the employee concerned. [51]

Additionally, Section 5, Rule X of the USTFU Constitution and By-Laws mandates that:

Section 5. Special assessments or other extraordinary fees such as for payment of attorneys fees shall be
made only upon a resolution duly ratified by the general membership by secret balloting.

In an attempt to comply with the foregoing requirements, the Mario Group caused the majority of the general
membership of USTFU to individually sign a document, which embodied the ratification of the MOA between UST and
USTFU, dated 10 September 1992, as well as the authorization for the check-off of P4.2 million, from the P42 million
economic benefits package, as payment for attorneys fees. As held by the Court of Appeals, however, the said documents
constitute unsatisfactory compliance with the requisites set forth in the Labor Code, as amended, and in the USTFU
Constitution and By-Laws, even though individually signed by a majority of USTFU members.

The inclusion of the authorization for a check-off of union dues and special assessments for the Labor Education
Fund and attorneys fees, in the same document for the ratification of the 10 September 1992 MOA granting the P42
million economic benefits package, necessarily vitiated the consent of USTFU members. For sure, it is fairly reasonable to
assume that no individual member of USTFU would casually turn down the substantial and lucrative award of P42 million
in economic benefits under the MOA.However, there was no way for any individual union member to separate his or her
consent to the ratification of the MOA from his or her authorization of the check-off of union dues and special
assessments. As it were, the ratification of the MOA carried with it the automatic authorization of the check-off of union
dues and special assessments in favor of the union. Such a situation militated against the legitimacy of the authorization
for the P4.2 million check-off by a majority of USTFU membership. Although the law does not prescribe a particular form
for the written authorization for the levy or check-off of special assessments, the authorization must, at the very least,
embody the genuine consent of the union member.

The failure of the Mario Group to strictly comply with the requirements set forth by the Labor Code, as amended,
and the USTFU Constitution and By-Laws, invalidates the questioned special assessment. Substantial compliance is not
enough in view of the fact that the special assessment will diminish the compensation of the union members.Their
express consent is required, and this consent must be obtained in accordance with the steps outlined by law, which must
be followed to the letter. No shortcuts are allowed.[52]

Viewed in this light, the Court does not hesitate to declare as illegal the check-off of P4.2 million, from the P42
million economic benefits package, for union dues and special assessments for the Labor Education Fund and attorneys
fees. Said amount rightfully belongs to and should be returned by petitioners to the intended beneficiaries thereof, i.e.,
members of the collective bargaining unit, whether or not members of USTFU. This directive is without prejudice to the
right of petitioners to seek reimbursement from the other USTFU officers and directors, who were part of the Mario Group,
and who were equally responsible for the illegal check-off of the aforesaid amount.

(3) Election of new officers

Having been overtaken by subsequent events, the Court need no longer pass upon the issue of the validity of
the order of BLR for USTFU to conduct its long overdue election of union officers, under the control and supervision of the
DOLE-NCR Regional Director.

The BLR issued such an order since USTFU then had two groups, namely, the Mario Group and the Gamilla
Group, each claiming to be the legitimate officers of USTFU.

The DOLE-NCR Regional Director, in his Decision dated 27 May 1999, decreed that the Mario Group be expelled
from their positions as USTFU officers. But then, the BLR, in its Decision promulgated on 9 March 2000, declared that the
change of officers could best be decided, not by expulsion, but by the general membership of the union through the
conduct of election, under the control and supervision of the DOLE-NCR Regional Director. In its assailed Decision dated
16 March 2001, the Court of Appeals agreed with the BLR judgment in its ruling that the conduct of an election, under the
control and supervision of the DOLE-NCR Regional Director, is necessary to settle the question of who, as between the
officers of the Mario Group and of the Gamilla Group, are the legitimate officers of the USTFU.

The Court points out, however, that neither the Decision of the BLR nor of the Court of Appeals took into account
the fact that an election of USTFU officers was already conducted on 14 January 2000, which was won by the Gamilla
Group. There is nothing in the records to show that the said election was contested or made the subject of litigation. The
Gamilla Group had exercised their powers as USTFU officers during their elected term. Since the term of union officers
under the USTFU Constitution and By-Laws was only for three years, then the term of the Gamilla Group already expired
in 2003. It is already beyond the jurisdiction of this Court, in the present Petition, to still look into the subsequent elections
of union officers held after 2003.

The election of the Gamilla Group as union officers in 2000 should have already been recognized by the BLR and
the Court of Appeals. The order for USTFU to conduct another election was only a superfluity. The issue of who between
the officers of the Mario Group and of the Gamilla Group are the legitimate USTFU officers has been rendered moot by
the succeeding events in the case.

WHEREFORE, premises considered, the Petition for Review under Rule 45 of the Rules of Court is
hereby DENIED. The Decision dated 16 March 2001 and the Resolution dated 30 August 2001 of the Court of Appeals in
CA-G.R. SP No. 60657, are hereby AFFIRMED WITH MODIFICATIONS. Petitioners are hereby ORDERED to reimburse,
jointly and severally, to the faculty members of the University of Sto. Tomas, belonging to the collective bargaining unit, the
amount of P4.2 million checked-off as union dues and special assessments for the Labor Education Fund and attorneys
fees, with legal interest of 6% per annum from 15 December 1994, until the finality of this decision. The order for the
conduct of election for the officers of the University of Sto. Tomas Faculty Union, under the control and supervision of the
Regional Director of the Department of Labor and Employment-National Capital Region, is hereby DELETED. No costs.

SO ORDERED.
VENGCO VS TRAJANO

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 74453 May 5, 1989

AMBROCIO VENGCO, RAMON MOISES, EUGENIA REYES, RAFAEL WAGAS and 80 others per attached
list, petitioners
vs.
HON. CRESENCIANO B. TRAJANO, in his capacity as Director of the Bureau of Labor Relations and EMMANUEL
TIMBUNGCO, respondents.

Jose T. Maghari for petitioners.

Benjamin C. Sebastian for private respondent.

MEDIALDEA, J.:

This is a petition for certiorari which seeks to annul: (1) the Order of respondent Director of the Bureau of Labor Relations
dated May 23, 1983 in BLR Case No. A-0179-82 entitled "Ambrocio Vengco, et al. vs. Emmanuel Timbungco" setting
aside the decision dated December 29, 1982; and (2) the Order dated April 2, 1986 denying the motion for reconsideration
of the Order dated May 23, 1983.

The antecedent facts are as follows:

Sometime in the latter part of 1981, the Management of the Anglo-American Tobacco Corporation and the Kapisanan ng
Manggagawa sa Anglo-American Tobacco Corporation (FOITAF) entered into a compromise agreement whereby the
company will pay to the union members the sum of P150,000.00 for their claims arising from the unpaid emergency cost
of living allowance (ECOLA) and other benefits which were the subject of their complaint before the Ministry of Labor.
Respondent Emmanuel Timbungco (Timbungco, for short) who is the union president received the money which was paid
in installments. Thereafter, he distributed the amount among the union members. Petitioners Ambrocio Vengco, Ramon
Moises, Rafael Wagas and 80 others (Vengco, et al., for short) who are union members noted that Timbungco was not
authorized by the union workers to get the money; and that ten percent (10%) of the P150,000.00 had been deducted to
pay for attorney's fees without their written authorization in violation of Article 242(o) of the Labor Code. So, they
demanded from Timbungco an accounting of how the P150,000.00 was distributed to the members. Timbungco did not
give in to their demand. Thus Vengco, et al. filed a complaint with the Ministry of Labor praying for: "(1) the expulsion of
Emmanuel Timbungco as president of the union for violation of (the) union constitution and by-laws and the rights and
conditions of union members under the Labor Code; (2) an order to require Timbungco to render an accounting of how the
P150,000.00 was distributed; and (3) an order to require private respondent to publish in the bulletin board the list of the
members and the corresponding amount they each received from the P150,000.00." (Memorandum for Petitioners, p.
150, (Rollo).

In his answer with counterclaim, Timbungco alleged among others, that he was authorized by a resolution signed by the
majority of the union members to receive and distribute the P150,000.00 among the workers; that the computation of the
benefits was based on the payroll of the company; that the ten percent (10%) attorney's fees was in relation to the claim of
the local union for payment of emergency cost of living allowance before the Ministry of Labor which is totally distinct and
separate from the negotiation of the CBA; and that the ten percent (10%) deduction was in accordance with Section II,
Rule No. VIII, Book No. III of the Rules and Regulations implementing the Labor Code and therefore, no authorization
from the union members is required.

On July 19, 1982, Med-Arbiter Willie B. Rodriguez issued an Order dismissing the complaint for lack of merit. (p. 33,
Rollo)

Vengco, et al. appealed the aforesaid order to the Bureau of Labor Relations.

On December 29, 1982, respondent Director of the Bureau of Labor Relations Cresenciano B. Trajano (Trajano, for short)
rendered a decision, the dispositive portion of which states:

Wherefore, premises considered, the instant appeal is hereby granted and the Med-Arbiter's Order dated
19 July 1982 hereby set aside. Accordingly, respondent Emmanuel Timbungco is hereby ordered to
render a full accounting of the One Hundred Fifty Thousand Pesos (P150,000.00) he received from the
management of Anglo-American Tobacco Corporation in behalf of the members of the Kapisanan ng mga
Manggagawa sa Associated Anglo-American Tobacco Corporation (FOITAF) and to publish in the union's
 bulletin board the list of all recipient union members and the respective amounts they have received,
within ten (10) days from receipt hereof. Further, respondent is hereby expelled as president of the
Kapisanan ng Manggagawa sa Anglo American Tobacco Corporation (FOITAF). Lastly, the counterclaim
interposed by the respondent's counsel, Atty. Benjamin Sebastian is hereby ordered dismissed.

So decided. (P. 50, Rollo.)

Timbungco filed a motion for reconsideration of the abovequoted decision while Vengco, et al. filed their opposition to the
said motion.

On May 23, 1983, Officer-in-Charge Victoriano R. Calaycay issued an Order which held, thus:

Wherefore premises considered, our resolution dated 29 December 1982 is hereby set aside. However,
an audit examination of the Books of Account of Kapisanan ng Manggagawa sa Associated Anglo-
American Tobacco Corporation (FOITAF) is hereby ordered.

SO RESOLVED. (p. 62, Rollo)

Vengco, et al, sought reconsideration of the aforementioned order. They contended that the examination of the books of
accounts of the union is irrelevant considering that the issue involved in the case does not consist of union funds but back
pay received by the union members from the company. Likewise, they pointed out that Timbungco did not give the money
to the union treasurer and consequently, the amount was not entered in the records of the union.

On April 2, 1986, Trajano issued an order which affirmed the resolution of May 23, 1983 and denied the motion for
reconsideration for lack of merit. (p. 58, Rollo)

Hence, the present recourse by Vengco, et al.

The issues raised in this case are as follows:

(1) Whether or not Timbungco is guilty of illegally deducting 10% attorneys' fees from petitioners'
backwages; and

(2) Whether or not Trajano gravely abused his discretion amounting to lack of jurisdiction in ordering
examination of union books instead of affirming his previous Order expelling Timbungco from the union
and ordering him to render an accounting of P150,000.00 received by him. (p. 151, Rollo)

In the resolution of June 4, 1986, We required the respondents to comment on the petition.

In his comment, Timbungco reiterates the defenses he raised in his answer to the complaint filed against him before the
Med-Arbiter In addition, he claims that he already filed an accounting report on the P150,000.00 with the Bureau of Labor
Relations which enumerated the names of the workers and the corresponding amounts they received with their respective
signatures opposite their names, the sub-total of the amount of benefits received per department and the grand total of
the amount distributed duly certified by the Union Treasurer and Secretary and duly noted by Timbungco as Union
President. (p. 73, Rollo)

The Solicitor General, in his comment, agrees with Vengco, et al. and recommends that the petition be given due course.
(p. 100, Rollo)

Timbungco filed a reply to the aforesaid comment of the solicitor General which restates the arguments raised in his
comment. (p. 121, Rollo)

The petition is meritorious.

Article 241 (o) of the Labor Code provides:

ART. 241. Rights and conditions of membership in a labor organization. The following are the rights
and conditions of membership in a labor organization.

x x x.

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

x x x.

It is very clear from the above-quoted provision that attorney's fees may not be deducted or checked off from any amount
due to an employee without his written consent except for mandatory activities under the Code. A mandatory activity has
been defined as a judicial process of settling dispute laid down by the law. (Carlos P. Galvadores, et al. vs. Cresenciano B.
Trajano, Director of the Bureau of Labor Relations, et al., G.R. No. L-70067, September 15, 1986, 144 SCRA 138). In the
instant case, the amicable settlement entered into by the management and the union can not be considered as a
mandatory activity under the Code. It is true that the union filed a claim for emergency cost of living allowance and other
benefits before the Ministry of Labor. But this case never reached its conclusion in view of the parties' agreement. It is not
also shown from the records that Atty. Benjamin Sebastian was instrumental in forging the said agreement on behalf of the
union members.

Timbungco maintains that the "Kapasiyahan" gave him the authority to make the deduction This contention is unfounded.
Contrary to his claim, the undated "Kapasiyahan" or resolution did not confer upon him the power to deduct 10% of the
P150,000.00 despite the alleged approval of the majority of the union workers. A reading of the said resolution (p. 75,
Rollo) yields the same conclusion arrived at by Trajano who declared it defective. We quote with approval Trajano's
findings on this point:

Further, a cursory examination of the alleged resolution shows that it is quite defective. Not only that it is
not dated but also that, with the exception of the first page, the remaining pages were not captioned and
did not state the very purpose for which it was prepared. Thus, the alleged signatories were not properly
apprised thereof. There is, therefore, truth in complainant's contention that they never authorized, more
so, they had no knowledge of the deduction of 10% attorney's fees until it was actually effected.
Consequently, the deduction was not valid. (p. 45, Rollo)

Moreover, the law is explicit. It requires the individual written authorization of each employee concerned, to make the
deduction of attorney's fees valid. Likewise, We find that the other "Kapasiyahan" dated September 18,1981 submitted by
Timbungco belied his claim that he was authorized by the union workers to receive the sum of P150,000.00 on their behalf
The pertinent portion of the said "Kapasiyahan" provides:

3. Na sa dahilang hindi bigla ang pagbabayad sa nasabing "CLAIM" bukod pa sa marami kaming naghati-
hati sa nasabing halaga ipinapasiya naming na kusang-loob na kunin ang aming bahagi sa aming
kapisanan sa unang linggo ng Disyembre, 1981 at ito'y ipinaalam namin sa Pangulo ng Kapisanan na si
Ginoong Emmanuel Timbungco. (p. 47, Rollo)

The above-quoted statement merely indicated the intention of the workers to get their claim on the first week of
December, 1981 and to inform Timbungco of their intention. Clearly, this statement can not be construed to confer upon
Timbungco the authority to receive the fringe benefits for the workers. Absent such authority, Timbungco should not have
kept the money to himself but should have turned it over to the Union Treasurer. He, therefore, exceeded his authority as
President of the Union.

Moreover, Book III, Rule VIII, Section II of the Implementing Rules cited by Timbungco which dispenses with the required
written authorization from the employees concerned does not apply in this case. This provision envisions a situation where
there is a judicial or administrative proceedings for recovery of wages. Upon termination of the proceedings, the law
allows a deduction for attorney's fees of 10% from the total amount due to a winning party. In the herein case, the fringe
benefits received by the union members consist of back payments of their unpaid emergency cost of living allowances
which are totally distinct from their wages. Allowances are benefits over and above the basic salaries of the employees
(University of Pangasinan Faculty Union vs. University of Pangasinan, G.R. No. L-63122, February 20, 1984, 127 SCRA
691). We have held that such allowances are excluded from the concept of salaries or wages (Cebu Institute of
Technology (CIT) vs. Ople, G.R. No. L-58870, December 18, 1987, 156 SCRA 629). In addition, the payment of the fringe
benefits were effected through an amicable settlement and not in an administrative proceeding.

The submission by Timbungco of an accounting report on the distribution of P 150,000.00 is of no moment in the face of
our findings that the deduction of 10% for attorney's fees is illegal and void for failure to comply with the requirements of
the law.

Considering the aforestated violations of Timbungco, there can be no question that he should bear the consequences of
his acts. We find that the penalty of expulsion from the union presidency imposed upon Timbungco is justified.

In view of the foregoing, We hold that the Orders dated May 23, 1983 and April 2, 1986 were issued with grave abuse of
discretion. The herein controversy involves the propriety of the 10% deduction from the fringe benefits of the union
workers which they received from the management in settlement of their claims. Such issue does not touch on union dues
or funds. Besides, the sum of P150,000.00 was not entered into the records of the Union since, as earlier stated, the
money was not turned over by Timbungco to the Union Treasurer. Consequently the said Orders have no basis.

ACCORDINGLY, the petition is granted. The assailed Orders dated May 23, 1983 of Officer-in-Charge Victoriano R.
Calaycay of the Bureau of Labor Relations, and April 2, 1986 of respondent Director Cresenciano B. Trajano of the same
Bureau are REVERSED and SET ASIDE and the latter's decision dated December 29, 1982 is hereby reinstated. No
costs.

SO ORDERED.
GALVADORES VS TRAJANO

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 70067 September 15, 1986

CARLOS P. GALVADORES, ET AL., petitioners,

vs.
CRESENCIANO B. TRAJANO, Director of the Bureau of Labor Relations, MANGGAGAWA NG KOMUNIKASYON
SA PILIPINAS (FIWU), PHILIPPINE LONG DISTANCE COMPANY (PLDT), and JOSE C. ESPINAS, respondents.

Dante A. Carandang for petitioners.

Jose C. Espinas for respondents.

RESOLUTION

MELENCIO-HERRERA, J.:

Petitioner employees of the Philippine Long Distance Telephone Company (PLDT) and members of respondent Free
Telephone Workers Union, now the Manggagawa ng Komunikasyon sa Pilipinas (simply referred to hereinafter as the
Union), question the legality of the check-off for attorney's fees amounting to P1M, more or less, of respondent Atty. Jose
C. Espinas (hereinafter referred to as "Respondent Counsel") from the monetary benefits awarded to PLDT employees in
a deadlocked collective bargaining agreement negotiations between the PLDT and the Union.

The case stemmed from the following facts:

Respondent Counsel has been the legal counsel of respondent Union since 1964. For his services, he was hired on a
case to case contingent fee basis. On September 7, 1983, he received a letter from the Union President reading:

The Free Telephone Workers Union once again request you to appear as counsel in the on going labor
dispute at PLDT. In consideration of your services therein, the union binds itself to compensate you for
your fees and expenses therein on a contingent basis. The amount shall be 10% of any improvement,
with retroactive effect, of the PLDT's last offer to the deadlock in CBA negotiations which we know will
result in a compulsory arbitration. A supporting board resolution will later confirm the letter. 1

PLDT's "last offer" referred to on the wage increases was: P230 for the first year of the proposed CBA; P100 for the
second year; and P90 for the third year. 2

On September 9, 1983, the Minister of Labor and Employment assumed jurisdiction over all unresolved issues in the
bargaining deadlock between PLDT and the Union and proceeded to resolve the same by compulsory arbitration.

On October 23, 1983, the Minister of Labor awarded across-the-board wage increases of P 330/month effective
November 9, 1982; P155/month effective November 9, 1983, and P155/month effective November 9, 1984, in addition to
the Christmas bonus of 1/2 month pay per employee effective December, 1983, and other fringe benefits. As will be noted,
there were improvements obtained from PLDT's "last offer."

On October 29, 1983, the Executive Board of the Union passed a resolution requesting PLDT to deduct P115.00 per
employee for the legal services extended to the Union by respondent Counsel.

On November 2, 1983, petitioners initially numbering 600 and finally 5,258, filed a letter-complaint before the MOLE
through their authorized representative, petitioner Carlos Galvadores assailing the imposition of P130.00 (later corrected
to P155.00) per employee as attorney's fees of respondents counsel. Annexed to the complaint were the written
statements of the employee authorizing Galvadores to act for and in their behalf. Petitioners took the position that the
attorney's fees of respondent counsel were not only unreasonable but also violative of Article 242(o) of the Labor Code;
and that he deductions cannot given legal effect by a mere Board resolution but needs the ratification by the general
membership of the Union.

Respondents Union and Counsel, on the other hand, proferred the argument that the attorney s fees being exacted
pertained to his services during compulsory arbitration proceedings and cannot be considered as negotiation fees or
attorney's fees within the context of Article 242(o) of the Labor Code and that contrary to petitioners' claim that
Respondent Counsel surfaced only as lawyer of the Union when the employees themselves engaged in mass action to
force a solution to the deadlock in their negotiations, he appeared continuously from September 8, 1983 until the decision
in the case was rendered on October 23, 1983. Petitioners proposed a solution offering to pay P10.00 per employee, but
Respondent Counsel refused.

In the meantime, on November 4, 1983, PLDT filed notice that assessment had been withheld from the differential pay
due petitioners but that the same would not be turned over to the Union without prior MOLE authority so as not to involve
management in the intra-union disagreement.

February 13, 1984, the Minister of Labor referred the dispute to the Bureau of Labor Relations for being intra-union
nature. Several hearings were held by that Bureau.

On March 22, 1984, the Union filed a Manifestation to the effect that about 6,067 members of the Union ratified the
October 29, 1983 resolution of the legislative council in a plebiscite called for that purpose. On the basis thereof, Counsel
moved for the payment of his legal fees under the September 7, 1983 contract.

Petitioners questioned the plebiscite on the ground that Question No. 2, which reads:

Question No. 2. Do you approve of the use of P1 million (P500,000.00 to be withdrawn from PECCI and
another P500,000.00 from IBAA) from our CBA negotiation fund together with the attorney's fees (P1
million) that was collected and to be loaned to the MKP/FTWU as our counterpart of the seed money to
start the housing program as agreed by the PLDT management and our union panel and included in the
award of the MOLE?

was misleading and deceptive as it assumed that there was no dispute regarding the deduction of attorney's fees from the
monetary benefits awarded to PLDT employees.

On February 18, 1985, respondent Director of the Bureau of Labor Relations dismissed petitioners' complaint for lack of
merit reasoning that "the outcome of the plebiscite negates any further question on the right of the union counsel to collect
the amount of P115 from each of the employees involved."

It is this Decision that is assailed by petitioners principally on the ground that the individual written authorization of an the
employees must first be obtained before any assessment can be made against the monetary benefits awarded to them
pursuant to Article 242(o) of the Labor Code; and that assuming that Respondent Counsel is entitled to attorney's fees,
the same should be taken from Union funds.

In their Comment, respondents Union and Counsel argue that compulsory arbitration is a "mandatory activity" and an
exception to Article 242(o) of the Labor Code, and that the Union members approved the questioned deduction in the
plebiscite of January, 1984, under the condition that P lM of the same would be made available for the Union's housing
project.

In his Comment, the Solicitor General agrees with petitioners that the issue presented is squarely covered by Article
222(b) of the Labor Code, as amended by P.D. No. 1691 so that attorney's fees, if legally payable, can only be charged
against Union funds.

The Court resolved to give due course.

Article 222(b) of the Labor Code provides:

Article 222. Appearance and Fees.

xxx xxx xxx

(b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective
bargaining negotiations or conclusion of the collective bargaining agreement shall be imposed on any
individual member of the contracting union; Provided, however, that attorney's fees may be charged
against union funds in an amount to be agreed upon by the parties. Any contract, agreement or
arrangement of any sort to the contrary shall be null and void.

While Article 242 of the same Code reads:

Art. 242. Rights and conditions of membership in a labor organization. The following are the rights and
conditions of membership in a labor organization:

xxx xxx xxx

(o) Other than for mandatory activities under the Code, no special assessment, attorney's fees,
negotiation fees or any other extraordinary fees may be checked off "from any amount due an employee
without individual written authorization duly signed by the employee. The authorization should specifically
state the amount, purpose and beneficiary of the deduction.
The Omnibus Rules Implementing the Labor Code also provide that deductions from wages of the employees may only
be made by the employer in cases authorized by law, including deductions for insurance premiums advanced by the
employer on behalf of the employees as well as union dues where the right to check-off is authorized in writing by the
individual employee himself. 3

The provisions are clear. No check-offs from any amounts due employees may be effected without individual written
authorizations duly signed by the employee specifically stating the amount, purpose and beneficiary of the deduction. The
required individual authorizations in this case are wanting. In fact, petitioner employees are vigorously objecting. The
question asked in the plebiscite, besides not being explicit, assumed that there was no dispute relative to attorney's fees.

Contrary to respondent Union's and Counsel's stand, the benefits awarded to PLDT employees still formed part of the
collective bargaining negotiations although placed already under compulsory arbitration. This is not the "mandatory
activity" under the Code which dispenses with individual written authorizations for check-offs, notwithstanding its
"compulsory" nature. It is a judicial process of settling disputes laid down by law. Besides, Article 222(b) does not except a
CBA, later placed under compulsory arbitration, from the ambit of its prohibition. The cardinal principle should be borne in
mind that employees are protected by law from unwarranted practices that diminish their compensation without their
knowledge and consent. 4

ACCORDINGLY, the assailed Decision of February 18, 1985 rendered by respondent Director of the Bureau of Labor
Relations, is hereby SET ASIDE. The attorney's fees herein involved may be charged against Union funds pursuant to
Article 222(b) of the Labor Code, as may be agreed upon between them.

SO ORDERED.
CONTINENTAL CEMENT CORP LABOR UNION VS CONTINENTAL CEMENT

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 51544 August 30, 1990

CONTINENTAL CEMENT CORPORATION LABOR UNION (NLU) petitioner,

vs.
CONTINENTAL CEMENT CORPORATION and the DEPUTY MINISTER OF LABOR, respondents.

Eulogio K. Lerum for petitioner.

Oliver A. Raymundo for private respondents.

GANCAYCO, J.:

This petition addresses the question of dismissal from the service of the officers and the suspension of some members of
petitioner union by the public respondent and the National Labor Relations Commission (NLRC).

On April 21, 1975, the NLRC issued an arbitration award in NLRC Cases No. 2406 and No. 3053 resolving certain
demands of the petitioner respecting the working terms and conditions that should be observed in the establishment of
private respondent. However, due to disagreement on the interpretation of the provisions of the award concerning
vacation, sick leaves and standardization of wages, compliance therewith was delayed. In order to compel private
respondent to immediately implement the award, petitioner staged a strike on October 25, 1975. It was, however, lifted
after the private respondent agreed to pay the disputed employees' leaves during the period July 1, 1974 to June 30, 1975
in three installments, that is, 50% on December 20, 1975, 25% on February 25, 1976 and 25% on March 15, 1976.

Meanwhile, private respondent sought clarification from the labor arbiter on whether a group of 91 workers who were
unable to complete 300 days of work within a 12-month period was entitled to proportionate payment of vacation and sick
leave benefits. On March 19, 1976, the labor arbiter ruled that the award required private respondent to make
proportionate payments in favor of the workers in question. This ruling was appealed by private respondent but on April 7,
1976 petitioner filed a notice of strike against private respondent for its refusal to make the proportionate payments
mentioned. Petitioner carried out its threatened strike on May 16, 1976. The strike was settled on May 22, 1976 with
private respondent agreeing inter alia, to pay the 91 workers concerned P25,000.00 for "humanitarian reasons." Private
respondent, however, reserved the right to seek clarification of its obligations under the NLRC award. Payment was made
on May 25, 1976.

The obligation of private respondent to pay the employees their vacation and sick leaves for the period July 1, 1975 to
June 30, 1976 developed into a new issue between the parties. Prior to the payment becoming due, private respondent
negotiated with petitioner for a staggered form of payment as before due to its financial difficulties and planned shutdown
of the plant in July. Petitioner at first insisted that its members be paid full; however, it subsequently agreed to installment
payments but gave warning on July 11, 1976, a Sunday, to the private respondent that payment of 50% of the benefits
should be made not later than July 12, 1976 and the remaining 50%., not later than the end of the month. Private
respondent requested an extension up to July 13, 1976 within which to consider the counter-proposal but this was
rejected by petitioner.

Petitioner staged a strike in the early of July 12, 1976, picketing the entrance of the premises of private respondent.
Among the officers and members of petitioner who were identified on the picket line were Rosauro Ancheta, Lauro
Bartolome, Abundio Cruz, Edwin Hugo, Manuel Sobrenilla, Antonio Mendoza, Alfredo Urtula, Lorenzo Hormadal, Nicolas
Sobrenilla, Dioscoro Sergio, Velasco Reyes, Fortunato Mendoza, Floro Villano, Lauro Francisco, Salva Nelson, Antonio
Cruz, Augusto Lopez and Francisco Sarmiento. Other workers at the roadblocks were not positively identified.

On July 13, 1976, the Minister of Labor issued an order thru the Director of the Bureau of Labor Relations, directing the
striking workers to resume work under the terms and conditions prevailing prior to the work stoppage. 1 The order was
served on the parties in the afternoon of the same date.

Nevertheless, on July 14, 1976, only 11 out of the total work force of about 120 workers in one shift reported for work and
were admitted by the company. On July 15, 1976, petitioner filed a motion for reconsideration of the return-to-work order
or its suspension pending compliance by private respondent with the 1975 NLRC award in favor of petitioner. Picketing
was resumed despite the presence of military personnel who were called to assist in the implementation of the return-to-
work order.
On July 23, 1976, the Minister of Labor certified the dispute between the parties to the NLRC for compulsory arbitration in
NLRC Certified Case No. 039. Under the Labor Code, this certification had the effect of automatically enjoining any strike
by the Union or lockout by the private respondent. Nonetheless, some 110 striking workers did not return to work.
Consequently, on July 26, 1976, private respondent filed with the Department of Labor reports on the dismissal of those
who failed to comply with the return-to-work order with copies of the reports furnished workers affected.

On July 29, 1976, the president of petitioner and 7 other officers requested admission to work but were informed that their
employment had been terminated by the company.

After due hearing, on March 10, 1977, the NLRC rendered judgment, the dispositive portion of which reads as follows:

WHEREFORE, this Commission hereby orders:

1. That the Union officers, together with its Board of Directors, namely: Rosauro Ancheta, Lauro
Bartolome, Alejandro Bernabe, Ireneo Bernabe, Romulo Buluran, Fortunato Mendoza, Rodolfo L.
Santiago, Guillermo Roque, Dioscoro Sergio, Manuel Sobrenilla, Sergio Panel, Antonio Mendoza; Isaias
Mendoza, Abundio Cruz, Edwin Hugo and Aquilino Sarmiento, be considered, as they are hereby
considered, separated from the service of the Company, and from their positions as officers of the Union,
as of 12 July 1976;

2. That the Union members who participated in the strike be considered, as they are hereby considered,
under suspension, by way of penalty, for the duration of their absence from work in the Company as a
consequence of their strike;

3. That the Union members referred to in the immediately preceding paragraph return to their work in the
Company, and that the latter take them back, at the same terms and conditions of employment obtaining
before 12 July 1976, within five (5) days from receipt of this Decision;

4. That the Company pay within ten (10) days from receipt of this Decision the vacation and sick leave
benefits of qualified employees for the period from 1 July 1975 to 30 June 1976, as well as the 13th
month pay and increased minimum wages, unless the Company has been duly exempted from the
payment of the same;

5. That the Company comply immediately and fully with the terms and conditions of the Award of
Voluntary Arbitrator Francisco Fuentes dated 12 September 1974 (NLRC Case Nos. 2406 and 3053);

6. That the Union and Company incorporate in their collective bargaining agreement all includible terms
and conditions in the Award referred to in paragraph 5 of this dispositive part; and

7. That, it appearing that the Union is officially affiliated with the National Labor Union (NLU) and since the
officers of the Union are, by virtue hereof, no longer holding their positions as such, the NLU temporarily
handle the affairs of the Union, in a trusteeship capacity, until the Union shall have reorganized in
accordance with its Constitution and By-Laws, or in the absence of applicable internal rules, in
accordance with the will of the majority of its members, but not more than three (3) months from the
promulgation of this Decision. 2

On July 22, 1977, the petitioner appealed the above decision of the NLRC to the Minister of Labor but the latter affirmed it
on March 6, 1979. 3 A motion for reconsideration filed by the Union was denied by the Minister of Labor on August 1,
1979. 4

Hence, this special civil action for certiorari, wherein the issues raised are (1) whether or not the strike staged by petitioner
on June 12, 1976 until its lifting was illegal; and (2) in the affirmative, whether or not the penalties meted out by the NLRC
to the Union officers and the members are warranted by the circumstances and the law.

Presidential Decree No. 823, as amended, provides:

Sec. 1. It is the policy of the State to encourage trade unionism and free collective bargaining within the
framework of compulsory and voluntary arbitration. Therefore, all forms of strikes, picketing and lockouts
are hereby strictly prohibited in vital industries . . .

Letter of Instruction No. 368 of the President provides:

For the guidance of workers and employers, some of whom have been led into filing notices of strikes and
lockouts even in vital industries, you are hereby instructed to consider the following as vital industries and
companies or firms under PD 823 as amended:

xxx xxx xxx

2. Companies or firms engaged in the manufacture or processing of the following essential commodities:

xxx xxx xxx

 B. Cement.

Private respondent was engaged in the manufacture of cement which is no doubt a vital industry in which a strike or
lockout is prohibited under the foregoing aforestated decree. And even assuming that private respondent was not
engaged in a vital industry, the strike that was staged by petitioner was nonetheless illegal. It was not in connection with
any unresolved economic issue in collective bargaining which is the only ground for which a lawful strike can be held.

Section 7 of the Rules and Regulations implementing Presidential Decree No. 823, as amended, provides:

Section 7. Requirements for strikes and lockouts. Strikes and lockouts may be declared only upon
compliance with the following requirements:

(a) Ground for strike A strike may be declared by a legitimate labor organization which is the
recognized bargaining agent of the appropriate bargaining agent of the appropriate bargaining unit in
connection with unresolved economic issues in collective bargaining in non-vital industries.

(b) Ground for lockout A lockout may be declared only by an employer in connection with unresolved
economic issues in collective bargaining in non-vital industries.

xxx xxx xxx

(d) Unauthorized strikes or lockouts. Notices of strikes or lockouts involving industries, establishments
or issues not covered or authorized under paragraphs (a) and (b) shall be dismissed, and the party filing
the notice of strike or lockout shall be advised thereof.

The issue between the petitioner and the private respondent at the time of the strike concerned merely the implementation
of an arbitration award of the NLRC. The petitioner had a remedy by applying for a writ of execution to enforce that award.
Its resort to a strike was without lawful basis.

Moreover, under Section 1 of Presidential Decree No. 823, there is a requirement of notice, as follows:

However, any legitimate labor union may strike and any employer may lockout in establishments not
covered by General Order No. 5 only on grounds of unresolved economic issues in collective bargaining,
in which case the union or the employer shall file a notice with the Bureau of Labor Relations at least 30
days before the intended strike or lockout. . . .

Petitioner claims that it filed a notice of strike on April 7, 1976. That notice was in connection with a dispute that had been
settled by the Memorandum Agreement between the parties dated May 22, 1976. A notice of strike is intended to enable
the Bureau of Labor Relations to try to settle the dispute amicably. The strike on July 12, 1976 denied the Bureau this
opportunity.

Petitioner invokes the right to strike as a measure of self-defense as it had been driven to the wall by the unjust refusal of
private respondent to comply with the NLRC award.

The non-compliance by the private respondent with the said award did not threaten the existence of petitioner or that of its
members. The dispute did not concern the right of the Union to organize nor the employees' right to work. It merely
involved the non-payment of the vacation and sick leaves of the employees for the past years' services.

Furthermore, petitioner could have applied with the Bureau of Labor Relations for a writ of execution to enforce the award
that was already final and executory.

As to the second issue, petitioner assails as too harsh the suspension meted out by the NLRC to its members.

The strikers in question did not only violate the no-strike policy of the state in regard to vital industries; instead, they
repeatedly defied the orders of the Director of Labor Relations and the Minister of Labor for them to return to work. Their
dismissal was recommended by the labor arbiter. However, out of compassion, the NLRC and the Minister of Labor only
suspended them.

Petitioner then contends that the separation from work of the officers of the union is quite severe. The officers had the
duty to guide their members to respect the law. Instead, they urged them to violate the law and defy the duly constituted
authorities. Their responsibility is greater than that of the members. Their dismissal from the service is a just penalty for
their unlawful acts.

It is within the power of the NLRC to order the removal of the officers of petitioner. This is provided for in the labor law.

Art. 242. 5 Rights and conditions of membership in a labor organization. The following are the rights
and conditions of membership in a labor organization:

xxx xxx xxx

 (p) It shall be the duty of any labor organization and its officers to inform its members on provisions of the
constitution and by-laws, collective bargaining agreement, the prevailing labor relations system and all
their rights and obligations under existing labor laws. For this purpose, registered labor organizations may
assess reasonable dues to finance labor relations seminars and other labor education activities.

Any violation of the above rights and conditions of membership shall be a ground for cancellation of union
registration or expulsion of an officer from office, which ever is appropriate. At least 30 per cent of all the
members of a union or any member or members specifically concerned may report such violation to the
Bureau. The Bureau shall have the power to hear and decide any reported violation and to mete out the
appropriate penalty.

The officers of petitioner misinformed the members and led them into staging an illegal strike. If the NLRC is to attain the
objective of the Labor Code to ensure a stable but dynamic and just industrial peace 6 the removal of undesirable labor
leaders must be effected.

WHEREFORE, the petition is DISMISSED as it has not been shown that the public respondent committed any grave
abuse of discretion in rendering the orders dated March 6, 1979 and August 1, 1979 affirming the decision of the NLRC
dated March 10, 1977.

SO ORDERED.