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Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-23331-32 December 27, 1969

These cases are separate appeals filed by respective petitioners from respondent Court's Orders of November 8, 1963 and March 9, 1964 approving by a split 3 to 1 vote the settlement for P100,000.00 of the estimated P423,756.74 judgment liability of respondent firm in favor of the claimants-members of the Santiago labor Union, executed on November 8, 1963 between respondent firm and the labor union as represented by a majority of its board of directors. The appeals are jointly resolved in this decision. Petitioners in Cases L-23331-32 are the retained lawyers of the Santiago Labor Union who question respondent Court's approval of respondent firm's settlement of the union members' judgment claims with the union board of directors, without their knowledge and consent, notwithstanding their duly recorded attorneys' lien, and over the objection of a board member that the union board had no authority to compromise 1 or quit-claim the judgment rights of the union members. Petitioners in Cases L-23361-62 are forty-nine (49) claimants-members of the Santiago Labor Union who assail respondent Court's approval of the questioned settlement, without their authority as the real parties in interest, and who denounce the settlement as unconscionable and having been entered into by the majority of the union board "under circumstances of fraud, deceit, mispresentation and/or concealment, especially where a member of the Court has actively used his official and personal influence to effect the settlement which is manifestly unjust to laborers who by reason of their financial disadvantages in a conflict with their employers need 2 all the aid of the Court for their protection, consonant with law, justice and equity." The factual background goes as far back as June 21, 1952, when the Santiago Labor Union, composed of workers of the Santiago Rice Mill, a business enterprise engaged in the buying and milling of palay at Santiago, Isabela, and owned operated by King Hong Co., filed before the respondent Court of Industrial Relations Cases Nos. 709-V and V-1 hereof, a petition for overtime pay, premium pay for night, Sunday and holiday work, and for reinstatement of workers illegally laid off. As of then, the total sum claimed by the workers, as itemized in their amended petition of September 2, 1952 P100,816.36 for overtime pay, P19,350.00 for premium pay and P3,360.00 3 for differential pay under the Minimum Wage Law amounted to P123,526.36. As recorded in this Court's decision of August 31, 1962 in Santiago Rice Mill, et al. vs. 4 Santiago Labor Union, which affirmed the Court of Industrial Relations judgment in favor of the workers, "on September 19, 1958, after a protracted hearing during which scores of witnesses and voluminous exhibits were presented, the court, thru Judge Emiliano G. Tabigne, rendered decision dismissing the petition of the union for lack of merit and want of jurisdiction; but, upon a motion for reconsideration, the Court of Industrial en banc, by a split decision of 3-2 vote, issued a resolution reversing the decision of the trial judge. The dispositive part of said resolution reads: "WHEREFORE, the respondents are hereby ordered to pay the overtime claim of both male and female claimants herein computed at their basic pay for each period in question; the legal premium for night, Sunday and holiday work or services rendered by the male claimants herein computed also on the proven basic wage or salary at the time in question; to pay the overtime claim of their drivers computed on their respective monthly salaries; to pay

HEIRS OF TEODOLO M. CRUZ, (represented by ARSENIA, FREDESWINDA, TEODOLO, JR., ERLINDA, EDGARDO and MYRNA, all surnamed CRUZ), MARY CONCEPCION and EDGARDO CRUZ, petitioners, vs. COURT OF INDUSTRIAL RELATIONS, SANTIAGO RICE MILL and KING HONG AND COMPANY, respondents. Mary Concepcion and Eduardo P. Tolentino and Garcia and D. R. Cruz for respondents. Cruz for petitioners.

G.R. No. L-23361-62

December 27, 1969

LYDIA BULOS, PACIENCIA BATOON, NATIVIDAD V. MALGAPO, FAUSTINO ABEDOZA, CARMELITA AGGASID, LYDIA ALBINO, JUANITO ANDRES, LEONILA ANDRES, AIDA BATOON, CORNELIO BANGOT, PABLO BAUTISTA, CONSOLACION GALAD, AVELINA CADUAS, ELENA DE LA CRUZ, VICTORIANO DE LA CRUZ, LEOCADIO DASALLA, VIRGINIA DASALLA, FLORA S. DUCAY, CRESENCIA EVIDENCIO, CATALINO GIMENEZ, DIONISIA GUILLERMO, ARSENIA LABASAN, FRANCISCO LAPLANO, DIONISIO LABASAN, MAURICIA LAZATIN, LORETA MACAPAGAL, IGNACIA LUNA, FELICITA MANGADAP, FELICIDAD MARIANO, JULIAN MELCHOR, RICARDO MELCHOR, ANITA MENDOZA, ALBERTO MIGUEL, FERNANDO NAVALTA, PEDRO NOOL, JUANITA ORANI, NEMESIA SOLA, VERONICA SOLA, CECILIA SOLIVEN, MANUEL SAGABAIN, FILEMON SAGABAIN, ANICETA RESPONSO, FELICIANO RICO, PETRONILA RIVERA, ROSALINA TULAWAN and MARIA VILLANUEVA, petitioners, vs. THE COURT OF INDUSTRIAL RELATIONS, HONORABLE EMILIANO TABIGNE, HONORABLE AMANDO BUGAYONG, HONORABLE ANSBERTO PAREDES, ASSOCIATE JUDGES, COURT OF INDUSTRIAL RELATIONS; SANTIAGO RICE MILL; KING HONG CO., INC.; SANTIAGO LABOR UNION alias MAGAT LABOR UNION, respondents. Emilio D. Castellanes for petitioners. Dioscoro P. Avancea for respondent Santiago Labor Union. TEEHANKEE, J.:

the differentials due each of the women claimants on their wages from August 4, 1951 at the rate of P2.00 daily and P3.000 daily from August 4, 1952; and to reinstate the claimants both male and female, who have testified and proved their having been illegally laid-off, with the right of respondents to deduct from the back wages due each claimant any amount earned during the period of the illegal dismissal." The worker's decade of travail was not yet to be at an end, however, despite this Court's affirmance of the judgment for the workers. After the remand of the records for enforcement by respondent Court, and the corresponding examination of books, said Court's Chief Examiner filed his Partial Report of December 14, 1962, wherein the judgment award in favor of the workers was determined and computed, as follows: (a) For back wages from January 1, 1953 to April 30, 1962 of all the 35 employees and laborers (26 workers, 6 laborers and 3 drivers) who testified in court, per dispositive part of the judgment, "before deducting the amounts earned during the period of the back wages by each claimant and before deduction of amounts corresponding to the back wages of claimants who died before April 30, 1962" at P6,380.00 for each of the 32 workers and P28,000.00 for each of the 3 drivers P288,160.00 (b) For overtime and premium pay from January 1, 1948 to December 31, 1952 of some 104 workers, in varying 5 amounts. 125,216.74 (c) For minimum wage differentials of P2.00 daily from September 10, 1951 to December 31, 1951 of 60 women workers 10,380.00 TOTAL P423,756.74

A general opposition to the Chief Examiner's Report was filed by respondent firm. Judge Emiliano G. Tabigne, as the trial judge, supra, ordered a hearing thereon on December 22, 1962, as a condition precedent to execution of the judgment. Such Report was submitted for resolution and approval at the hearing of December 22, 1962, but the records before us fail to show that the trial judge ever acted on or approved the Report. Before and after the submittal of the Chief Examiner's Report of December 14, 1962, the union pressed for execution of the final judgment in favor of its claimantsmembers. It filed, furthermore, on December 20, 1962, an Urgent Motion for Preliminary Attachment, in view of the disposition by respondent firm of its trucks and automotive equipment and by virtue of the fact admitted by respondent firm that it had stopped operations preparatory to liquidation, by reason of the alien nationality of most of its stockholders, under the provisions of Republic Act No. 3018 nationalizing the rice and corn industry. In another motion of December 4, 1962, the union had asked that the Court at least order respondent firm to put up a bond of P500,000.00 to answer for the payment of the judgment or to deposit said amount in Court. Petitioners assert that these motions were left hanging until the union filed 8 a mandamus petition with this Court, after which the trial judge issued and released on April 15, 1963 his Order dated March 30, 1963. In this Order, the trial Judge, recognizing that "petitioner (union) and its members concerned should be extended the necessary protection of their rights" ordered respondent firm, within 10 days from its finality, to deposit in Court the sum of one hundred thousand (P100,000.00) pesos and to file a surety bond of equal amount, "to guarantee the payment of whatever amount (a) due petitioner (union) and its members concerned after this Court shall have finally decided the obligation of herein respondents under the judgment." This Order was affirmed by respondent courten banc, in its Resolution denying respondent firm's motion for reconsideration thereof. Respondent sought a review by this Court of the said Order and Resolution requiring it to deposit P100,000.00 and to file a surety bond of equal amount to guarantee payment of its judgment obligation in Santiago Rice Mill et al. vs. Santiago Labor Union, etc., docketed as Cases G.R. Nos. L-21758-59 of this Court. this Court, in its Resolution of September 20, 1963, dismissed for lack of merit respondent's petition for review, and the dismissal became final on October 24, 1963. Earlier, June 25, 1963, pursuant to the request of the parties, who had advised the trial judge that they would meet at the premises of respondent firm at Santiago, Isabela, to take up direct negotiations for the possible settlement of the judgment, a team of employees of the Court had been sent to help in the negotiations. the transcript of the negotiations records that respondent had then offered the Union the maximum amount of P110,000.00 in full settlement of its obligations to the membersclaimants of the Union under the judgment, but that the union rejected the offer and counter-offered the minimum amount of P200,000.00. The Union meanwhile filed to no avail a series of urgent motions on May 8, July 1, August 29 and September 6, 1963 for approval of the Chief Examiner's Partial Report of December 14, 1962 and for enforcement, through a writ of execution or contempt proceedings, of the Order of March 30, 1963 requiring firm to deposit a total of

Petitioners claim, furthermore, that "in this computation, however, the filed examiners did not include the claims of seventy (70) other laborers whose total claims (for back wages), at the rate of P6,300.00 each, would be P441,000.00. Therefore, the correct 6 grand total amount due the laborers would be P864,756.74." The Chief Examiner's Report showed respondent firm's total assets as at October 31, 1962 to be P191.151.08 (cash account of P148,411.20, fixed assets of buildings, machinery & equipment, corn mill, etc. with a book value of P40,073.75 and deferred charges of P2,666.14), and its net worth to be in the same amount of P191,151.08, (capital stock paid up of P232,000.00 less deficit of P40,848.92). the Report further stated that in January, 1962 and on August 9, 1962, respondent firm sold its trucks, jeep and one car, with a net book value of P2,628.71 for P27,000.00 or a net gain of P24,371.29. Petitioners claim that the book value of respondent firm's fixed assets is only one-sixth of their actual market value of P240.442.50, and that its total leviable assets therefore amounted to close to P390,000.00, without taking into account the huge income potential of its rice mill operations. Respondent firm disputes such a 7 figure as "completely gratuitous and without basis in fact."

P200,000 in cash and bond to guarantee payment of the judgment. Upon the finality of this Court's Resolution dismissing respondent's petition for a review of said Order of March 30, 1963, the union again filed on October 29, 1963 still another Urgent Motion, advising the trial judge of this Court's action rejecting respondent's appeal and invoking the Court's ministerial duty of enforcing its said Order in vain again, as shall presently be seen. The trial judge took no action on this latest Urgent Motion of the Union, wherein it emphasized that respondent, with this Court's action rejecting its appeal, no longer had any excuse for refusing its appeal, no longer had any excuse for refusing to comply with the deposit Order. Instead, an unscheduled conference was called and held on October 31, 1963 in the chambers of the trial judge, and attended by representatives of respondent firm, including their counsels of record, on one hand and Segundino S. Maylem, president of the union and eight directors of the union, on the other. Four of these nine union representatives, including the union president himself, had no claims of rewards whatever under the judgment. Said union officials were not assisted by counsel, as petitioner Mary Concepcion, counsel of record of the union, was not present, not having been notified of the conference. At this conference of October 31, 1963, respondent firm made again the same offer to settle and quitclaim the judgment in favor of the union members for the same amount of P110,000.00, which offer had already been rejected by the union at the earlier conference held on June 25, 1963 at Santiago, Isabela, supra. But this time, as appears from the transcript of the conference, respondent and the directors of the union decided to settle the case amicably with the payment by the firm of the same amount of P110,000.00 which was deposited with the Court's disbursing officer "immediately upon the signing of the settlement which will be prepared by the respondent firm through its counsel." The complete transcript of the conference, as reproduced by respondent in its brief, follows: COURT: The parties have solicited the intervention of the court for the settlement of this case. They have decided to settle it amicably with the condition that the management will pay ONE HUNDRED TEN THOUSAND PESOS (P110,000.00) cash, and that the said amount will be deposited with the Disbursing Officer of the Court immediately upon the signing of the settlement which will be prepared by the respondent firm through its counsel. Now, Mr. Maylem, make your manifestation on record. MR. MAYLEM: As per unanimous decision of the present members of the board composing of nine, the three are not members of the board, present before this Honorable Court to date, (sic) they have agreed to accept the proffer of ONE HUNDRED TEN THOUSAND PESOS (P110,000.00) as full settlement of their claims in Cases Nos. 709V and 709-V (1).

ATTY. GARCIA: In behalf of the respondent and the management of the said respondent and also in behalf of Mr. Pino, who is the attorney-infact of the respondent corporation, with full power to enter into this settlement, we wish to manifest and uniform this Honorable Court that the acceptance of the proffer of P110,000.00 in full settlement of the claims of petitioners is with the full agreement of the said respondent. We are disposed to deposit the amount of P110,000.00 on or about Friday, November 8, 1963, and said deposit to be made with the Disbursing Officer of this Court and said deposit to be in certified checks of a local bank and which is actually equivalent to cash. In line further with the suggestion of the Honorable Judge, we ware willing to assume the payment of the deposit fee upon our depositing the said amount of P110,000.00. There is a previous understanding which was not made of record as to the fact that to enable the members of the board of directors of the petitioner union to come back to Manila next week to enable them to sign the settlement papers, we have agreed to advance the sum of TWO HUNDRED PESOS (P200.00) to the petitioner for the account of said settlement and which will be used by the said petitioners in their travelling expenses between Manila and Santiago, going and coming. COURT: Noted. MR. MAYLEM: We request the Court that Mrs. Mary Concepcion should be presented during the signing of the agreement on or about November 8, 1963, at 2:30 P.M. COURT: NOTED.
9

As against the official transcript of the proceedings of the conference above reproduced, petitioner Natividad Magalpo, a director of the union, together with petitioners Lydia Bulos and Paciencia Batoon, both union members-claimants, filed on November 5, 1963, through their present counsel, who duly entered their appearance, their verified "Manifestation and Objection with Ex-Parte Urgent Motion", relating what transpired at the conference, charging the union president, Maylem, with bad faith in that he never previously advised the union representatives that the conference of October 31, 1963 was to discuss a compromise settlement nor that this court's resolution dismissing respondent's appeal from the trial judge's Order dated March 30, 1963 requiring respondent to deposit P200,000.00 in cash and surety bond had already become final, and asking the trial judge to shelve the proposed

settlement until respondent firm shall have complied with the said deposit order. The pertinent portions of said Objection and Urgent Motion read: 3. That during the conference, the matter of amicably settling the case was discussed; petitioners representatives pressed for at least P150,000.00 as a fair amount and the representatives of the respondents were insisting on their offer of a definite sum of P110,000.00; 4. That in the course of the conference, no mention at all was made of the entry of judgment in G.R. Nos. L-21758-59, Supreme Court of the Philippines, entitled "Santiago Rice Mill, et al. vs. Santiago Labor Union, etc." on October 24, 1963, thereby becoming final and executory ; that the aforesaid entry of judgment reads as follows: "After a consideration of the allegation of the petition filed in cases L-21758 and L-21759 (Santiago rice Mill, etc. vs. Santiago Labor Union, et al.) for review of the order and resolution of the Court of Industrial Relations referred to therein, the COURT RESOLVED to dismiss the petition for lack of merit." 5. That by the terms of the afore-cited entry of judgment, the Respondent's, in effect, are ordered to deposit the sum of P100,000 in cash, Philippine Currency and similar amount P100,000 in surety bond, pursuant to the order of this Honorable court of March 30, 1963, which was affirmed in the abovecited Supreme Court resolutions; 6. That as a consequence of the ignorance of the Board of Directors of Petitioner of this entry, then present, they tentatively agreed to the offer of P110,000.00 of Respondents, until November 8, 1963 when the final conference before this Honorable Court will be held; 7. That movants consented to come to Manila on the understanding that the conference was to be held with the Attorney-in-fact of the petitioner, the "CREAM, INC.," formerly, Credit Research and Intelligence, its exclusive authorized representative for the evaluation, adjustment and liquidation of its claim against Respondent, that they were very much taken back in having been taken to the Court of Industrial Relations on October 31, 1963 by the President of the Petitioner, Mr. Segundino S. Maylem; that even while they were already inside the building, they were informed that the purpose was to talk about a compromise settlements with respondent's representatives; as a result of these circumstances, your movants although present, were not able to register their objections to the proceedings; that immediately after the aforesaid conference, the herein movants came to know of the entry of judgment in the Supreme Court, infra; (sic) 8. That the herein Movant's register and manifest their objections to the proceeding held and to the tentative agreement manifested by the Board of Directors of the Santiago Labor Union then present, on the following grounds:

a) That the Board of Directors did not have any express authority of the members of the Santiago Labor Union to enter into any compromise for the sum of P110,000.00; on the contrary, the latest authority granted its Attorney-in-fact, the "CREAM, INC." was for the sum of P150,000.00 which authority was given only, very recently: b) That the proceedings on October 31, 1963 was tainted by apparent bad faith on the part of the President of the Petitioner, Mr. Segundino s. Maylem, in that there never was a time before the conference when he intimated or otherwise made known to the movants, that a conference would be held before Judge Emiliano Tabigne. The only reason for the trip to Manila was the conference with "CREAM, Inc." officials; c) That the effect of the entry of judgment in G.R. Nos. L-21758-59, infra, was not explained to the members of the Board of Petitioner at any time, much less made known , although it was later ascertained that President Segundino s. Maylem all the time, BEFORE THE CONFERENCE, knew of the existence of the order; what was emphasized was the claim of the Respondents that they are unable to pay more than P110,000.00 ; (emphasis supplied.) d) That the amount of P110,000.00 is unconscionable, considering that the total claims of the members of the Petitioner, is more than P400,000, not to mention that all the time the negotiations were being made the Supreme Court's final order makes mandatory Respondent's deposit of P100,000, cas in Philippine Currency and P100,000 in surety bond. 9. That Movant's vehemently disagree to any settlement as tentatively agreed upon, for, in effect, they will only get fourteen percent, (14%) approximately, or one-seventh of the amounts as computed by the Chief Examiner of this Honorable Court; xxx xxx xxx

WHEREFORE, it is respectfully prayed that: a) Respondent be required to deposit the sum of P100,000.00 in cash, Philippine Currency, and P100,000.00 in surety bond, pursuant to the entry of judgment in G.R. Nos. L-21758-59; b) That these movants be afforded opportunity by this Honorable Court to be heard regarding the surety bond to be submitted by the Respondent, before approval thereof; c) The tentative settlement be shelved;

d) The further action on any settlement or compromise be held in abeyance to await compliance by the Respondent of the entry of judgment in G.R. Nos. L-21758-59; e) Hearings on the Report of the Chief Examiner be resumed immediately and without interruption in view of the provisions of Republic Act 3108, until 10 final termination as soon as possible long before December 31, 1963, There petitioners further filed on the same date, November 4, 1963 an urgent Ex parte Motion for the issuance of a writ of execution for the enforcement of the deposit order against respondent firm, and asked the trial judge to act on their two urgent motions upon receipt thereof. Both urgent motions were totally ignored by both the trial judge as well as by the respondent firm, despite due notice on the latter. The request of the union president, Maylem, at the October 31, 1963 conference that the trial judge have the union counsel present during the proposed signing of the settlement agreement set for November 8, 1963, as expressly noted by the trial judge, was likewise ignored. Notwithstanding that notice of the conference set for November 8, 1963 at 2:30 p.m. was served on November 5, 1963 on the union counsel, petitioner Mary Concepcion, the scheduled conference was never held. Unexplained, Maylem, the union president and nine other members of the union's board of directors (out of 13 board members) even before the scheduled hour of the conference of November 8, 1963 at 2:30 p.m. had earlier executed a "Settlement" on said date, without the knowledge, advice, and conformity of the union counsel, with respondent firm's attorney-in- fact, who was duly assisted by respondent's two counsels, who likewise executed the "Settlement." In this "Settlement", the said union officials claiming to act "with the authorization of the Board of Directors and its members, "in consideration of the sum of P110,000.00, or one-fourth of the estimated P423,756.74-judgment liability of respondent firm, as computed in the respondent Court's Chief Examiner's Partial Report of December 14, 1962, "waived and quitclaimed . . . any and all claims it (the union) may have against the respondent as well as the claim of each and every one of the members of the said petitioner union against the respondent firm." The union further "warranted" in said "Settlement" "that aside from the petitioner (union) itselfand the members thereof, there are no other persons who have any interest over the judgment debt and that if it should happen that other persons shall make a claim against the respondent and/or said judgment 11 debt, that the respondent, nevertheless, shall no longer be liable therefor." The "Settlement" was immediately submitted to the trial judge who forthwith on the same day, November 8, 1963, issued his Order, approving the same, and entered into respondent Court's records at 1:45 p.m. of the same day, as follows: Considering that the bases of the above quoted settlement is well founded and justified and not contrary to law, morals and/or public policy, approval of the same is, therefore, in order.

WHEREFORE, the Court hereby approves the settlement of the parties in these cases; and shall as between the parties to the same be deemed to be a decision and/or award in these matters therein treated in the aforesaid settlement; and upon acknowledgment of the sum of money in the said settlement, these cases shall be deemed closed and terminated. Petitioners-lawyers Mary Concepcion, et al. upon learning of the "Settlement" and respondent's deposit with the Court of the sum of P110,000.00 in pursuance thereof filed in the afternoon of November 8, 1963 a motion for withdrawal of the sum of P33,000.00 equivalent to their 30% contingent fee, without prejudice to such action as they may take for enforcing their lien to its full extent. The trial judge granted such motion in its Order of November 9, 1963. In due course, said petitioners moved for reconsideration and setting aside of the trial judge's Order of November 8, 1963 approving the "Settlement" and prayed respondent Court en banc to reinstate the judgment against respondent and to enforce the deposit order dated March 30, 1963. Petitioners Magalpo, Bulos and Batoon, likewise moved respondent Court en banc to reconsider and set aside the trial judge's approval of the "Settlement", in disregard of their objection and pending motions of November 5, 1963 to shelve the proposed settlement and to enforce the deposit Order. On December 26, 1963, they were joined in their plea for reconsideration by forty-seven other union members-claimants, Co-petitioners at bar. Respondent, on the other hand, filed its opposition to the motions for reconsideration, questioning the personality and interest of petitioners-movants Magalpo and her 2 other co-movants and asserting that they were bound by the "Settlement" entered into by their union's board of directors. It alleged that it had deposited with respondent Court the sum of P110,000.00 stipulated in the "Settlement" on the same day of its approval by the trial judge. It filed with respondent Court on November 21, 1963 a letter of ratification dated November 10, 1963 addressed to the trial judge and purportedly signed by some 79 union members-claimants confirming and accepting the settlement executed by the union board. Petitioners in their brief list 21 of these signatures as questionable, asserting that they are at variance with other corresponding signatures in the Payroll dated November 8, 1963 submitted to respondent Court on November 21, 1963, such that "either one or the other signature is a forgery." Respondent counters that there is "absolutely no truth to the claim" and that the signers of the ratification letter "have all received their individual shares of the P110,000.00 settlement paid by respondent company and this in itself is a ratification on their part of said settlement." Nothing appears in the record, however, as to whether and in what manner the respondent Court determined the authenticity of the signatures. Respondent further filed on December 18, 1963 a motion for reconsideration of the trial judge's Order approving payment of P33,000.00 to the petitioners-attorneys by way of attorneys' fees. On August 1, 1964, and August 4, 1964, after petitioners had filed on November 29, December 2 and 17, 1963 and January 16, 1964 various urgent motions to set for hearing and for resolution, they were served with copies of respondent Court's en banc Resolution dated March 9, 1964, penned by the trial judge, "finding no sufficient justifications to set aside, disturb or modify the Order issued in these cases on November 8 and 9, 1963" and denying all three motions for reconsideration. Judges

Amando C. Bugayong and Ansberto F. Paredes concurred under date of July 29, 1964 with the Resolution, while Judge Arsenio Martinez took no part. No statement of the material allegations of, and issues raised in, the pertinent pleadings set out in detail hereinabove nor reasons for the conclusion of insufficient justification reached by the majority resolution are given therein. Then Presiding Judge Jose S. Bautista dissented. "Taking into account the precipitate approval of settlement over the objection of some union members concerned and without hearing them, on the strength simply of the manifestation of the petitioner's Board of Directors that it had authority to compromise when previously said union members concerned had already manifested in Annex "E" (Exhibit "G", at bar) that there was no such authority," he voted "that the case be restored to the status quo as of October 30, 1963, but the payment already made to the union members be considered as partial payments on account, subject to final liquidation and adjustment; that an order of execution of the judgment in cases Nos. G.R. L-21758 and L-21759 of the Supreme Court be issued (upholding the Order of March 30, 1963 for deposit of P200,000.00 in cash and surety bond) be issued and that the Hearing Officer shall resume the hearing of the Examiner's Report. Hence, the appeals of petitioners. The Santiago Labor Union, impleaded as party respondent in Cases L-23361-62, filed its Answer on September 24, 1964, "putting its weight behind the prayers of the petitioners." The Answer reveals that the union members, feeling betrayed, had disauthorized and removed from office Maylem, the union president and his board of directors who had executed the "Settlement" with respondent firm and disclaimed the documents of ratification that they had signed at the behest of Maylem. The union averred in its Answer that: a) The real parties in interest in Cases 709-V and 709 V(1), CIR, are the members of respondent Labor Union; b) The records of the respondent labor union do not show any grant by the members to the former incumbency of any previous authority to negotiate the claim or subsequent ratification of the settlement for P110,000.00 for it is unthinkable and ridiculous for the real parties in interest to give away gratuitously what had been awarded to them in a final judgment, for a much lesser amount than that of the award; c) The members are unanimous in the assertion that the documents they signed at the behest of former President Segundino S. Maylem were represented and understood to be but an authority to collect a part of the court award to the members; d) That the records of the respondent labor union disclose that the members of the union have unanimously acted, in their individual capacities to proceed with the prosecution and collection of whatever sums they might yet be entitled to collect, in order to show unequivocally that the negotiation made by former President Segundino S. Maylem and his board of directors

was unauthorized, and to spotlight the betrayal of the members of the Union by said Segundino S. Maylem and his board of directors of the former union incumbency; 6. That fundamentally, there is no contentious issue between the petitioners and respondent labor union; if at all, the only distinction is between the personality of the real parties in interest, the union members who have initiated and instituted this petition as against the limited and formal personality of the respondent labor union to 12 represent them when so authorized by their collective will." The core question is whether this Court can give its sanction to respondent Court's majority resolution upholding the trial judge's approval of the union board's settlement for P110,000.00 of the estimated P423,766.74-judgment liability of respondent firm in favor of the individual union members, over the timely opposition formally filed by three members (later joined by forty-seven other members) expressly calling attention to the union board's bad faith in the premises and lack of any express authority to enter into the settlement, and without giving the union the opportunity of being heard and assisted by counsel and notwithstanding the fact that respondent firm, which had sufficient cash and fixed assets, was under legal compulsion by virtue of respondent court's own final order to deposit P100,000.00 in cash and another P100,000.00 in surety bond to guarantee payment of the union members' judgment claims? The question answers itself. The precipitate approval of the purported settlement under the circumstances goes against the grain of fundamental considerations of justice, equity and due process. 1. To begin with, petitioners were not accorded due process of law, when, for reasons unexplained in the record, the conference set for November 8, 1963 at 2:30 p.m. to take up formally the proposed settlement was cancelled and never held. (supra, pp. 8-9) Notice thereof had been served on the union counsel, in accordance with the express request of the union president, as expressly noted by the trial judge. Yet, such notice was deliberately disregarded and the union was deprived of the 13 assistance of its counsel. Instead, the settlement as unilaterally drafted by respondent's counsel (supra, p. 7) was executed ahead of the scheduled hour of the conference that turned out to be a non-conference, by the union president with nine other members of the union's board of directors, without the knowledge, advice and conformity of the union counsel, while respondent was duly assisted by its two counsels. By 1:45 p.m. of the same day, the settlement had been approved by the trial judge as "not contrary to law, morals and public policy." Similarly, petitioners Magalpo, a board member herself and her co-petitioners Bulos and Batoon were not accorded an opportunity for a fair hearing on their grave charges against the union leadership and their urgent motions to shelve the proposed settlement and to enforce the final order of respondent court requiring respondent firm to deposit P200,000.00 in cash and surety bond for satisfaction of the union members' judgment, as said motions were totally ignored by the trial judge and not touched upon at all in his Order rashly approving the settlement. 2. The lack of due deliberation and caution in the trial judge's instant approval of the settlement is seen from the stipulations therein that the union thereby waived and quitclaimed any and all claims which it may have against the respondent, as well as

the claim of each and every one of the members of the union against respondent , when precisely the authority of the union board members to enter into any such compromise or settlement was under express challenge by petitioner Magalpo, a board member herself in her Objection and Urgent Motion to shelve the settlement filed on November 5, 1963, which the trial judge completely disregarded. Petitioner Magalpo further made serious charges that Maylem, the union president, had misled the board members into attending the unscheduled conference held on October 31, 1963 before the trial judge, and had deliberately concealed from them the fact of entry on October 24, 1963 of the Order of this Court in G.R. Nos. L-21758-59 upholding the P200,000.00 deposit Order of respondent court and the effect thereof of making mandatory upon the trial judge, in accordance with the terms of his own order, the issuance of a writ for execution or enforcement to compel respondent to so deposit P100,000.00 in cash and an equal amount in surety bond to guarantee satisfaction of the union members' judgment against respondent. In point of facts, the union's own Urgent Motion of October 29, 1963, emphasizing that respondent no longer had any excuse for not complying with the deposit order, as well as petitioner Magalpo, et al.'s Urgent ex parte motion of November 4, 1963 to the same effect were pending before the trial judge, unresolved and unacted upon. Petitioners Magalpo, et al. had reason therefore, to assail the proposed settlement for P110,000.00 as unconscionable, when at the very least the union members could be assured of P200,000.00 under the deposit order to satisfy their judgment credit, while the report of respondent court's examiner showed that respondent firm had sufficient assets, ( supra, p. 5), and considering that their partial judgment credit, as estimated by respondent court's examiner, amounted to more than P400,000.00. 3. The trial judge's rush approval of the settlement disregarded the grave adverse consequences thereof to the union members. The settlement, as prepared by respondent's counsel, provided for a union warranty that aside from the union itself and the members thereof, "there are no other persons who have any interests over the judgment debt and that if it should happen that other persons shall make a claim against the respondent and/or said judgment debt, that the respondent, nevertheless, shall no longer be liable therefor." Such warranty was against the very facts of record, which showed that as early as June 21, 1963, petitioners-counsels in Cases L-2333132 had duly recorded their attorneys' lien of "30 % of whatever amount may finally be awarded in favor of the petitioner." Thus, technically, since the award in favor of the union members amounted to more than P400,000.00, the settlement for P110,000.00 would conceivably just about cover the 30% attorneys' fees payable to the petitionerscounsels under the contract, if they were so minded to enforce it and bad faith on the 14 union's part were shown, with the union members left holding an empty bag. Such onerous terms of the settlement could not then properly be approved by the trial judge as "not contrary to law, morals and public policy." 4. All these underscore the failure of due process when petitioners were deprived of the formal conference on the proposed settlement scheduled for November 8, 1963 and of their right to be assisted by the union counsel as expressly requested, so that a fair hearing could be accorded petitioners and an opportunity afforded them to air their serious charges of bad faith and lack of authority against the union leadership. Certainly, all these serious questions and charges made by petitioners could have been threshed out and verified, if the formal conference scheduled for November 8, 1963 had been held with the presence of union counsel, considering that the latter likewise had a right to be heard, since they had duly made of record their attorneys'

lien upon the judgment. Respondent, in its brief, asserts that it vividly remembers that the trial judge repeatedly made mention of the P200,000.00 deposit order during the unscheduled conference of October 31, 1963 and "even explained the matter to the members of the board in their native dialect." But the transcript of the conference reproduced above (supra, pp. 7-9) does not bear out this assertion. The transcript is obviously deficient and does not reflect the actual discussions and proceedings. This is to be deplored, for in a matter of such great importance, especially where the union officials were unassisted by counsel in an unscheduled conference, care should be taken by the trial judge that the proceedings are faithfully recorded. Thus, although the transcript again fails to make any mention of it, respondent, in its brief, in effect provides support for petitioners' plaint against the unscheduled conference and precipitate approval of the settlement behind the back of union counsel, when it states that "the presiding judge tried to help the parties reach a settlement by stressing to the union that there was no sense in demanding more than P110,000.00 from the respondent if that was all it could afford, and that any more delay in the execution of its award to the union members might lead to their getting much less than the P110,000.00 already being offered by respondents," and "while it is true that the presiding judge took an active part in helping the parties reach such settlement, it was only in line with the policy of the law encouraging settlement of cases even after final 16 judgment." The obvious fallacy of this untenable posture assumed by the trial judge, of course, is that with this Court having upheld his P200,000.00 deposit order, it made every sense to enforce execution of said order, which it was practically his ministerial duty to do so, to assure the union members of recovery of their judgment credit at the very least to the extent of P200,000.00, as the trial judge had expressly recognized therein that "petitioner (union) and its members concerned should be extended the necessary protection of their rights." Any further delay in the execution of the judgment award in favor of the union members could readily be obviated, if the trial judge would but expedite the hearings for approval of the Court examiner's Report which had been filed and left pending since December 14, 1962. As correctly contended by petitioners, he could have placed the union members, unassisted as they were by counsel, on an equal footing in negotiating with respondent by a mere stroke of his pen by ordering the enforcement of his final P200,000.00 deposit order, as to which there no longer existed any obstacle. We find the forcing through of the settlement, under such circumstances, arbitrary, unfair and unconscionable. 5. Another vital reason for striking down the settlement is the lack of any express or specific authority of the president and majority of the union board of directors to execute the same and scale down the estimated P423,756.74-judgment liability of respondent firm in favor of the individual union members to P110,000.00. On the contrary, petitioner board member Magalpo timely challenged the authority of the union board to execute any such settlement, expressly informing the trial judge that the union had specifically appointed an entity in Manila, the "CREAM, Inc.", formerly Credit Research and Intelligence, as its attorney-in-fact and "exclusive authorized representative for the evaluation, adjustment and liquidation of its claim against respondent." Forty-seven other union members-claimants joined petitioner Magalpo in their denunciation of the union board's unauthorized action, and in their plea for reconsideration with respondent court. Forty-nine union members-claimants entitled to the bulk of the judgment award have filed this appeal from the adverse rulings of the Court below. These union members have repudiated the former union president, Maylem and his board of directors, for having betrayed the union members, and the new union leadership, in its Answer filed with the Court, has joined petitioners in their

15

prayer for redress, categorically asserting that the union records do not show any grant by the members to the former union board under Maylem to "negotiate the claim or subsequent ratification of the settlement for P110,000.00" which is "unthinkable and ridiculous." (supra, p. 15) Under such circumstances, the letter of ratification of the settlement purportedly signed by some 79 members, many of whose signatures thereon are denounced as forgeries and which ratification was not authenticated in the proceedings below and has been expressly disowned by petitioners herein, cannot be given any legal significance or effect. 6. When it is further taken into consideration that the judgment award, as affirmed by 17 this Court's decision of August 31, 1962, was for the payment of overtime, premium and differential pay to the individual union members as claimants and for the reinstatement of the individual union members who testified and proved their having been illegally laid-off, which represent a personal material interest directly in favor of the individual union members, as against the lack of material interest on the part of the union as such, the union's lack of authority to execute the settlement, in the absence of express or specific authorization by the union members, becomes patent. The authority of the union as such, to execute a settlement of the judgment award in favor of the individual union members, cannot be presumed but must be expressly granted. 7. Recently, in the analogous case of La Campana Food Products, Inc. etc. 18 Employees Ass'n vs. Court of Industrial Relations, et al., this Court ruled upon the merits of the union's appeal, and set aside the Industrial Court's questioned orders which would reopen its previous judgment finding the employer guilty of unfair labor practice and ordering the reinstatement of, and payment of back wages from December 4, 1963 to, twenty-one (21) union members. In handing down its decision, this Court disregarded the petitioner union's motion to dismiss the appeal, filed through new counsel while the case was pending decision, alleging that the union's legislative council had adopted a resolution relieving the former union counsel of his services and authorizing the dismissal of the case, on the premise that such dismissal "would serve the best interests of both parties who are now in the process of formulating a collective bargaining agreement in their earnest desire to establish industrial peace and promote the economic well-being of all the parties concerned." For this Court ruled that the union's loss of interest in the case was no ground for dismissing the case, since "the labor union as a body in reality has not so great a material interest in the controversy as would prejudice it in the event of dismissal. It is the twenty-one (21) members for whose benefit the ULP case was prosecuted who stand to take tremendous losses" and suffer injustice . Upholding the individual union members in their stand of vindicating their rights acquired under the final judgment as against the union's legislative council's resolution to dismiss the case, this Court, speaking through Mr. Justice Sanchez, thus held: We now come to the motion to dismiss filed in this Court on March 10, 1969 by new counsel for petitioner. In that motion, we read the averment that the petitioning union, "after careful and serious consideration of their Petition, taken in the light of recent developments affecting their relationship with the respondent-company, have decided that they have lost interest in the further prosecution of their claims"; that the union's legislative council, on February 5, 1969, adopted a resolution authorizing the new counsel to file a motion dismissing this case; that the former counsel who directed this case before

this Court, Atty. Eulogio R. Lerum, had been relieved of his services in a letter of the union dated January 13, 1969; and that "the dismissal of this instant case would serve the best interests of both parties who are now in the process of formulating a collective bargaining agreement in their earnest desire to establish industrial peace and promote the economic well-being of all parties concerned." This drew a reply from Atty. Eulogio R. Lerum that "while he admits that he had received termination notice from the alleged officers of the abovenamed union, he had not been disauthorized by the complainants who had retained him to appear in their behalf" and that "said complainants are against the dismissal of their case for the reason that they want to vindicate their rights and it is against public policy to settle an unfair labor practice by amicable settlement (Sec. 5 [a], Rep. Act 875)." While it may be true that the labor union itself has lost interest in the case, we do not believe that such should give ground for the dismissal of this case. The labor union as a body in reality has not so great a material interest in the controversy as would prejudice it in the event of dismissal. It is the twentyone (21) members for whose benefit the ULP case was prosecuted who stand to take tremendous losses. Nor is the argument that union and employer are now in the process of formulating a collective bargaining agreement of any consequence. That would not be affected by the decision we now render as an aftermath of the ULP case. Unless of course such a dismissal is a quid pro quo before the parties could sit around the bargaining table. Which surely enough is not to the 'best interests' of the laborers. And, as we examine the record, we observe none of the members of the legislative council who adopted the resolution relied upon in the motion to dismiss is personally affected by the decision rendered by the CIR in Case 3985-ULP. That decision, it will be recalled, directs private respondents herein not only to reinstate the twenty-one (21) union members without loss of seniority and other benefits and privileges but also to pay their respective backwages from December 4, 1963, date of filing of the charge, basis of the complaint, until actual reinstatement. It is easy enough to perceive the injustice which may be visited upon these twenty-one (21) union members if the petition herein were to be dismissed. For then, a new trial will be had, with the consequent trouble, expense, anxiety and another long delay before they could enjoy the fruits of their victory which they have legally and definitely won only after a long and protracted legal battle. At any rate, it is better on balance that we foreclose a flanking movement which could destroy rather than uphold the rights to reinstatement and monetary award of individual laborers acquired under the final judgment. 8. Just as this Court has stricken down unjust exploitation of laborers by oppressive employers, so will it strike down their unfair treatment by their own unworthy leaders. 19 The Constitution enjoins the State to afford protection to labor. Fair dealing is equally demanded of unions as well as of employers in their dealings with employees. The union has been evolved as an organization of collective strength for the protection of labor against the unjust exactions of capital, but equally important is the requirement of fair dealing between the union and its members, which is fiduciary in nature, and arises out of two factors: "one is the degree of dependence of the individual employee on the union organization; the other, a corollary of the first, is the

comprehensive power vested in the union with respect to the individual." The union may be considered but the agent of its members for the purpose of securing for them fair and just wages and good working conditions and is subject to the obligation of giving the members as its principals all information relevant to union and labor matters entrusted to it. As already discussed above, the union leadership in the case at bar was recreant in its duty towards the union members in apparently having failed to disclose to the union members the full situation of their judgment credit against respondent, to wit, that they were in the advantageous position of being able to require enforcement of the respondent court's P200,000.00-deposit order, and in presuming that it had authority to waive and quitclaim the estimated P423,756.74judgment credit of the union members for the unconscionable amount of P110,000.00, which had already been previously rejected by the workers. Respondent firm could not claim that it dealt in good faith with the union officials, for it hastily executed the purported settlement notwithstanding the serious charges of bad faith against the union leadership, and the non-holding of the scheduled conference where the union leaders, at their express request, could be duly assisted by union counsel. It is noteworthy that respondent never filed with the court below any denial or responsive pleading traversing the factual allegations in petitioner Magalpo's Manifestation and Objection charging that at the unscheduled conference of October 31, 1963, the proposed settlement was in effect railroaded with the fact of the finality of the P200,000.00-deposit order not having been disclosed to the union representatives. Such failure on the part of respondent constitutes an implied admission of the material averments. Respondent's justification now that it did not file any responsive pleading or denial because Magalpo and her co-petitioners had no personality to file their pleadings as they were not parties to the cases in the lower court is of no avail, for they were actually the awardees and beneficiaries under the judgment against respondent and the union was but their agent. Deplorable also is the failure of the trial judge to defer precipitate action on approval of the settlement until the union could be afforded the opportunity of a hearing thereon duly assisted by counsel, and failure later of the majority of respondent court in the reconsideration proceedings, as well, to look seriously into the grave charges of bad faith and deception against the union officials and their lack of authority to execute the settlement. All of these charges were just swept under the rug, and summarily dismissed, without even being mentioned, in the unreasoned en banc Resolution, finding arbitrarily as against the facts herein collated by this Court from the pertinent pleadings and annexes furnished it, "no sufficient justification to set aside, disturb or modify" the questioned approval of the settlement. . 9. The cases of Jesalva, et al. vs. Bautista, and Diomela, et al. vs. Court of 22 Industrial Relations, cited by respondent, clearly have no application in the present case. In Jesalva, seventeen cases in different stages of hearing or execution before the Industrial Court were settled by a compromise agreement, and this Court held that the three petitioners who questioned the settlement were "bound by the actions of the Union, that is to say, a majority of the members of the union." There was no question there that the union had acted with the authority of the union membership. No deceit or concealment or misrepresentation tainted the settlement. Neither was the amount of the settlement denounced as unconscionable. The employer there, Premiere Productions, Inc., agreed to pay the amount of P200,000.00 which appeared to be a reasonable settlement as against the judgment credit of the union workers, and further agreed to lease to the union its equipment and facilities for the Union to produce two moving pictures, apparently to cover the other wage claims of the union
21

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workers which were still pending trial and resolution. In Diomela, the labormanagement disputes were settled amicably with the unfair labor practice charge against the employer, Squibb and Sons, (Phil.) being withdrawn, upon motion signed by the union president and the three employees against whom the acts of unfair labor practice charged in the complaint had been allegedly committed, to which motion the Court's prosecutor gave his conformity, and with the employer, which had secured a permanent writ of injunction restraining the strikers who had apparently declared an illegal strike, against the commission of acts of violence, threats and intimidation, agreeing to pay three months separation pay to each striking employee. There was no question, therefore, of the authority of the union president to withdraw the unfair labor practice charge, as the three employees directly affected had co-signed the withdrawal motion with him. The subsequent move of Diomela and 23 co-petitioners to disauthorize the union and its counsel of record, was by their own pleading overruled by the majority of the union membership. The other acts of unfair labor practice sought to be filed by Diomela and his companions were there ruled out as splitting a cause of action and harassing the employer with subsequent charges, based upon acts committed during the same period of time and which should have been included in the charges first preferred. What should be borne in mind is that the interests of the individual worker can be better protected on the whole by a strong union aware of its moral and legal obligations to represent the rank and file faithfully and secure for them the best wages and working terms and conditions in the process of collective bargaining. As has been aptly pointed out, the will of the majority must prevail over that of the minority in the process, for "under the philosophy of collective responsibility, an employer who bargains in good faith should be entitled to rely upon the promises and agreements of the union representatives with whom he must deal under the compulsion of law and contract. The collective bargaining process should be carried on between parties who can mutually respect and rely upon the authority of 23 each other." Where, however, collective bargaining process is not involved, and what is at stake are back wages already earned by the individual workers by way of overtime, premium and differential pay, and final judgment has been rendered in their favor, the present case, the real parties in interest with direct material interest, as against the union which has only served as a vehicle for collective action to enforce 24 their just claims, are the individual workers themselves. Authority of the union to waive or quitclaim all or part of the judgment award in favor of the individual workers cannot be lightly presumed but must be expressly granted, and the employer, as judgment debtor, must deal in all good faith with the union as the agent of the individual workers. The Court in turn should certainly verify and assure itself of the fact and extent of the authority of the union leadership to execute any compromise or settlement of the judgment on behalf of the individual workers who are the real judgment creditors. We therefore sustain the minority opinion of then Presiding Judge Bautista of respondent Court that the settlement was precipitately approved without verification of the union board's authority to execute the compromise settlement, and find that there was no such authority. The said settlement is therefore set aside and the cases below are restored to the status quo, as of October 30, 1963, with the payments already made to the union members to be considered as partial payments on account, subject to final liquidation and adjustment. It is directed that an order for the enforcement of the P200,000.00-deposit order dated March 30, 1963 issued in the cases below, and upheld in Cases G.R. Nos. L-21758-59 of this Court dismissing the respondent's petition for review, be forthwith issued, and that hearings on the Chief Examiner's

Report of December 14, 1962 be resumed immediately and without interruption so that the amounts due under the judgment to the individual union members may be finally determined without further delay. It is unfortunate that pending these proceedings, no application for preliminary injunction restraining respondent firm from disposing of its assets was made, since as stated above, ( supra, p. 5) respondent had stopped operations in 1962 preparatory to liquidation, by virtue of the provisions of Republic Act No. 3018 nationalizing the rice and corn industry. The respondent firm's stockholders are, however, charged with notice of the firm's liability by virtue of the pendency of these appeals, and should any liquidating dividends have been distributed and paid to them in the meantime, they shall stand liable for the satisfaction of the union workers' judgment against respondent to the extent of such dividends respectively paid to and received by them. Similarly, any outstanding unpaid subscriptions or balances of subscriptions to the firm's capital stock, estimated 25 at P20,000.00, shall be subject to garnishment and execution in satisfaction of the judgment. As to the contingent 30% attorneys' fees of petitioners-lawyers, the Court deems it proper at this stage, to direct in the exercise of its authority to control the amount of such fees, that petitioners-lawyers may collect their stipulated contingent 30% attorneys' fees to the extent that additional amounts may be realized on the union workers' judgment up to the sum of P150,000.00, including the initial payment of P110,000.00, (on which they have already collected their corresponding fee), such that any further amounts collected beyond said sum of P150,000.00 shall no longer be subject to said contingent fee. WHEREFORE, the respondent Court's Orders of November 8, 1963 and March 9, 1964 are hereby declared null and void and set aside. The respondent court is directed to proceed immediately with the execution of the judgment rendered by it against respondent firm in Cases Nos. 709-V and V-1 as affirmed by this Court's decision of August 31, 26 1962, in accordance with the directives set forth in the next preceding paragraph, which is incorporated by reference as an integral portion of the dispositive part of this decision. With costs against private respondent in both cases herein decided.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

maintain their membership in good standing in the Union as a condition of their continued employment with the Company. New workers whom the Management may employ shall, as a condition of continued employment with the company, become members of the FOITAF after 60 working days of continuous employment. The plaintiffs-appellees were members in good standing of the labor union until August 28, 1964, when they formally resigned from the Union (Annex "A", Complaint), invoking their constitutional right to freedom of religion, the free exercise of which exempts them from being compelled to join any labor organization, when such is contrary to their religious beliefs and convictions, as provided by Republic Act No. 1 3350, which became a law on June 18, 1961. In its answer dated August 31, 1964, to the resignation of the plaintiffs-appellees (Annex "B", ibid.), the Union, through its president Severino Tabalno, gave them fifteen (15) days from receipt of said letter to reconsider their resignation, otherwise it would ask the Company to enforce the above-quoted union shop agreement. Thereafter, or on October 14, 1964, the Company, through its president Bienvenido A. Tan, Jr., formally gave the plaintiffsappellees up to October 23, 1964 within which to re-affiliate with the Union on pain of dismissal (Annex "C", ibid.). Instead of reconsidering their resignation, the plaintiffsappellees filed on October 20, 1964 the present action for injunction, which was amended on January 30, 1965, alleging, among others, that (1) they have a right to remain in their employment, which is properly within the meaning of constitutional 2 guarantees, for they cannot be legally dismissed by defendant Company for failing to maintain their membership in the defendant Union, being old employees of the 3 former; (2) their resignation from the labor Union is but an exercise of their right to freedom of religion guaranteed by the Constitution, which guarantee is implemented by Republic Act No. 3350; and (3) being no longer members of the labor Union, they were no longer obliged to pay said dues and assessments through payroll 4 deductions; Plaintiffs-appellees, therefore, prayed that judgment be rendered (1) to enjoin immediately ex-parte the defendants from dismissing plaintiffs from their employment, and from collecting union dues and assessments through payroll deduction from plaintiffs' earned wages; (2) to order defendants to reimburse, jointly and severally, all union dues and assessments collected from plaintiffs since their resignation from defendant Union and to pay moral and exemplary damages, attorney's fees of P900.00 and costs. Both defendants filed their respective answers. In its answer with special and affirmative defenses, dated November 13, 1964, defendant Company averred, among others, that (1) there is an existing working agreement between defendant Union and defendant Company providing for a "Closed shop"; (2) plaintiffs resigned from the Union; (3) defendant Union insists that defendant Company comply with the contract recognizing a closed shop; and (4) if defendant Company does not comply with the collective bargaining agreement with the Union, it will be subjected to a suit for damages or risk the possibility of a strike for violation of the collective bargaining agreement. Defendant Company then prayed that plaintiffs and defendant Union be required to interplead their respective cases and that judgment be rendered in favor of whomsoever is entitled to just relief as may be proper under the circumstances. Defendant-appellant Union, in its amended answer with affirmative and special defenses, dated March 26, 1965, to the amended complaint, alleged, among others, that the plaintiffs are covered by the collective bargaining contract as Republic Act

G.R. No. L-27113 November 19, 1974 SABINA BASA, BONIFACIO BASA, BONIFACIO CABALHIN and PRIMITIVO GALLARDO, plaintiffs-appellees, vs. FEDERACION OBRERA DE LA INDUSTRIA TABAQUERA Y OTROS TRABAJADORES DE FILIPINAS (FOITAF) and LA DICHA LA PAZ Y BUEN VIAJE CIGAR AND CIGARETTE FACTORY defendants. FEDERACION OBRERA DE LA INDUSTRIA TABAQUERA Y OTROS TRABAJADORES DE FILIPINAS (FOITAF), defendant-appellant. Eliseo M. Cruz for plaintiffs-appellees. Teofilo C. Villarico for defendant-appellant.

ANTONIO, J.:p Appeal from the decision, dated March 31, 1966, of the Court of First Instance, Branch IV, Quezon City, (1) enjoining defendant La Dicha La Paz y Buen Viaje Cigar and Cigarette Factory from dismissing plaintiffs-appellees Sabina Basa, Bonifacio Basa, Bonifacio Cabalhin and Primitivo Gallardo from their employment in said company; and (2) ordering both the company and defendant-appellant Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinos(FOITAF) to reimburse all union dues and assessments collected from plaintiffs-appellees from the date of their resignation as members in defendant union until the date of the last collection, to pay attorney's fees in the amount of P900.00 and the costs of suit. The records show that plaintiffs-appellees Sabina Basa, Bonifacio Basa, Bonifacio Cabalhin and Primitivo Gallardo, who are members of "Iglesia ni Cristo", have been employed with the defendant company, La Dicha La Paz y Buen Viaje Cigar and Cigarette Factory, since 1949, 1952, 1960 and 1957, respectively, and were therefore employees of that company on April 21, 1961, when the collective bargaining contract between the company and the defendant union, Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas (FOITAF) was executed. This agreement provided for a union shop clause, thus: RECOGNITION AND UNION SECURITY: (2) All workers and laborers who are members of the FOITAF shall remain and

No. 3350 under which they seek exemption from membership in the Union, is unconstitutional for it (1) impairs the obligations of contracts (Sec. 1[10], Art. III, 1935 Constitution); (2) denies to workers the right to equal protection of the laws (Sec. 1[1], Art. III, id.); (3) abridges the freedom of workers to form associations (Sec. 1[6], Art. III, id.); and (4) contravenes the constitutional mandate that the State shall afford protection to labor (Sec. 6, Art. XIV, id.); and that this Act was declared unconstitutional by the Court of Industrial Relations in the case of National Labor Union vs. Hacienda Luisita, et al., Case No. 49-IPA. Defendant-appellant Union then prayed that the complaint be dismissed. Subsequently, or on March 31, 1966, the lower court rendered the aforementioned decision. From the aforesaid decision, defendant Union has appealed to this Court, contending that the lower court erred in not declaring Republic Act No. 3350 as unconstitutional, reiterating the arguments it advanced before the court a quo. We find the appeal to be without merit. To begin with, House Bill No. 5859, which later became Republic Act No. 3350, was enacted into law with the explicit purpose of safeguarding and maintaining inviolate 5 the religious freedom of all individuals. In this appeal, appellant labor union contends that Republic Act No. 3350 is violative of the fundamental charter, as (a) it infringes on the constitutional bar against a law respecting an establishment of religion or a religious test for the exercise of civil and political rights (Sec. 1[7] of Article III, 1935 Constitution, (b) impairs the obligation of contracts (Sec. 1[10], Art. III, id.), (c) denies the equal, protection of the laws (Sec. 1[1], Art. III, id.), (d) abridges the freedom to form associations not contrary to law (Sec. 1[6], Art. III, id.), and (e) impairs the constitutional mandate that the State shall afford protection to labor (Sec. 5, Art. III; Sec. 6, Art. XIV, id.). Recently, in Benjamin Victoriano Elizalde Rope Workers' Union, et al. , a unanimous Court sustained the constitutionality of Republic Act No. 3350. In rejecting the arguments advanced by appellant labor union, imputing to said statute alleged constitutional infirmities similar to those now asserted by the defendant-appellant in the case at bar, We declared: Both the Constitution and Republic Act No. 875 recognized freedom of association. Section 1[6] of Article III of the Constitution of 1935, as well as Section 7 of Article IV of the Constitution of 1973, provide that the right to form associations or societies for purposes not contrary to law shall not be abridged. Section 3 of Republic Act No. 875 provides that employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. What the Constitution and the Industrial Peace Act recognize and guarantee is the "right" to form or join associations. Notwithstanding the different theories propounded by the different schools of jurisprudence regarding the nature and contents of a "right", it can
6

be safely said that whatever theory one subscribes to, a right comprehends at least two broad notions, namely: first, liberty or freedom, i.e., the absence of legal restraint, whereby an employee may act for himself without being prevented by law; and second, power, whereby an employee may, as he pleases, join or refrain from joining an association. It is, therefore, the employee who should decide for himself whether he should join or not an association; and should he choose to join, he himself makes up his mind as to which association he would join; and even after he has joined, he still retains the liberty and the power to leave and cancel his membership with said organization at any time. It is clear, therefore, that the right to join a union includes the right to abstain from joining any union. Inasmuch as what both the Constitution and the Industrial Peace Act have recognized, and guaranteed to the employee, is the "right" to join associations of his choice, it would be absurd to say that the law also imposes, in the same breath, upon the employee the duty to join associations. The law does not enjoin an employee to sign up with any association. The right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only members of the collective bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs. Thus Section 4[a] (4) of the Industrial Peace Act, before its amendment by Republic Act No. 3350, provides that although it would be an unfair labor practice for an employer "to discriminate in regard to hire or tenure of employment or any term or condition of employment to encourage or discouraged membership in any labor organization" the employer is, however, not precluded "from making an agreement with a labor organization to require as a condition of employment membership therein, if such labor organization is the representative of the employees". By virtue, therefore, of a closed shop agreement, before the enactment of Republic Act No. 3350, if any person, regardless of his religious beliefs, wishes to be employed or to keep his employment, he must become a member of the collective bargaining union. Hence, the right of said employee not to join the labor union is curtailed and withdrawn. To that all-embracing coverage of the closed shop arrangement, Republic Act No. 3350 introduced an exception, when it added to Section 4[al (4) of the Industrial Peace Act the following proviso: "but such agreement shall not cover members of any religious sects which prohibit affiliation of their members in any such labor organization". Republic Act No. 3350 merely excludes ipso jure from the application and coverage of the closed shop agreement the employees belonging to any religious sects which prohibit affiliation of their members with any labor organization. What the

exception provides, therefore, is that members of said religious sects cannot be compelled or coerced to join labor unions even when said unions have closed shop agreements with the employers; that in spite of any closed shop agreement, members of said religious sects cannot be refused employment or dismissed from their jobs on the sole ground that they are not members of the collective bargaining union. It is clear, therefore, that the assailed Act, far from infringing the constitutional provision on freedom of association, upholds and reinforces it. It does not prohibit the members of said religious sects from affiliating with labor unions. It still leaves to said members the liberty and the power to affiliate, or not to affiliate, with labor unions. If, notwithstanding their religious beliefs, the members of said religious sects prefer to sign up with the labor union, they can do so. If in deference and fealty to their religious faith, they refuse to sign up, they can do so; the law does not coerce them to join; neither does the law prohibit them from joining; and neither may the employer or labor union compel them to join. Republic Act No. 3350, therefore, does not violate the constitutional provision on freedom of association. 2. Appellant Union also contends that the Act is unconstitutional for impairing the obligation of its contract, specifically, the "union security clause" embodied in its Collective Bargaining Agreement with the Company, by virtue of which "membership in the union was required as a condition for employment for all permanent employees workers". This agreement was already in existence at the time Republic Act No. 3350 was enacted on June 18, 1961, and it cannot, therefore, be deemed to have been incorporated into the agreement. But by reason of this amendment, Appellee, as well as others similarly situated, could no longer be dismissed from his job even if he should cease to be a member, or disaffiliate from the Union, and the Company could continue employing him notwithstanding his disaffiliation from the Union. The Act, therefore, introduced a change into the express terms of the union security clause; the Company was partly absolved by law from the contractual obligation it had with the Union of employing only Union members in Permanent Positions. It cannot be denied, therefore, that there was indeed an impairment of said union security clause. . xxx xxx xxx "It should not be overlooked, however, that the prohibition to impair the obligation of contracts is not absolute and unqualified. The prohibition is general, affording a broad outline and requiring construction to fill in the details. The prohibition is not to be read with literal exactness like a mathematical formula, for it prohibits unreasonable impairment only. In spite of the constitutional prohibition, the State continues to possess authority to safeguard the vital interests of its people. Legislation appropriate to safeguarding said interests may modify or abrogate contracts already in effect. For not only are existing laws read into contracts

in order to fix the obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. All contracts made with reference to any matter that is subject to regulation under the police power must be understood as made in reference to the possible exercise of that power. Otherwise, important and valuable reforms may be precluded by the simple device of entering into contracts for the purpose of doing that which otherwise may be prohibited. The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worthwhile a government which retains adequate authority to secure the peace and good order of society. The contract clause of the Constitution must, therefore, be not only in harmony with, but also in subordination to, in appropriate instances, the reserved power of the state to safeguard the vital interests of the people. It follows that not all legislations, which have the effect of impairing a contract are obnoxious to the constitutional prohibition as to impairment, and a statute passed in the legitimate exercise of police power, although it incidentally destroys existing contract rights, must be upheld by the courts. This has special application to contracts regulating relations between capital and labor which are not merely contractual, and said labor contracts, for being impressed with public interest, must yield to the common good. xxx xxx xxx In order to determine whether legislation unconstitutionally impairs contract obligations, no unchanging yardstick, applicable at all times and under all circumstances, by which the validity of each statute may be measured or determined, has been fashioned, but every case must be determined upon its own circumstances. Legislation impairing the obligation of contracts can be sustained when it is enacted for the promotion of the general good of the people, and when the means adopted to secure that end are reasonable. Both the end sought and the means adopted must be legitimate, i.e., within the scope of the reserved power of the state construed in harmony with the constitutional limitation of that power. What then was the purpose sought to be achieved by Republic Act No. 3350? Its purpose was to insure freedom of belief and religion, and to promote the general welfare by; preventing discrimination against those members of religious sects which prohibit their members from joining labor unions, confirming thereby their natural statutory and constitutional right to work, the fruits of which work are usually the only means whereby they can maintain their own life and the life of their dependents. It cannot be gainsaid that said purpose is legitimate.

The questioned Act also provides protection to members of said religious sects against two aggregates of group strength from which the individual needs protection. The individual, employee, at various times in his working life, is confronted by two aggregates of power collective labor directed by a union, and collective capital, directed by management. The union, an institution develop to organize labor into a collective force and thus protect the individual employee from the power of collective capital, is, paradoxically, both the champion of employee rights, and a new source of their frustration. Moreover, when the Union interacts with management, it produces yet a third aggregate of group strength from which the individual also needs protection the collective bargaining relationship. It may not be amiss to point out here that the free exercise of religious profession or belief is superior to contract rights. In case of conflict, the latter must, therefore, yield to the former. The Supreme Court of the United States has also declared on several occasions that the rights in the First Amendment, which include freedom of religion, enjoy a preferred position in the constitutional system. Religious freedom, although not unlimited, is a fundamental personal right and liberty, and has a preferred position in the hierarchy of values. Contractual rights, therefore, must yield to freedom of religion. It is only where unavoidably necessary to prevent an immediate and grave danger to the security and welfare of the community that infringement of religious freedom may be justified, and only to the smallest extent necessary to avoid the danger. 3. In further support of its contention that Republic Act No. 3350 is unconstitutional, appellant Union averred that said Act discriminates in favor of members of said religious sects in violation of Section 1[7] of Article III of the 1935 Constitution, and which is now Section 8 of Article IV of the 1973 Constitution, which provides: No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free exercise and enjoyment of religious profession and worship, without discrimination and preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights. The constitutional provision not only prohibits legislation for the support of any religious tenets or the modes of worship of any sect, thus forestalling compulsion by law of the acceptance of any creed or the practice of any form of worship, but also assures the free exercise of one's chosen form of religion within limits of utmost amplitude. It has been said that the religion clauses of the Constitution are all designed to protect the broadest possible liberty

of conscience, to allow each man to believe as his conscience directs, to profess his beliefs, and to live as he believes he ought to live, consistent with the liberty of others and with the common good. Any legislation whose effect or purpose is to impede the observance of one or all religions, or to discriminate inviciously between the religions, is invalid, even though the burden may be characterized as being only indirect. But if the state regulates conduct by enacting, within its power, a general law which has for its purpose and effect to advance the state's secular goals, the statute is valid despite its indirect burden on religious observance, unless the state can accomplish its purpose without imposing such burden. In Aglipay v. Ruiz, this Court had occasion to state that the government precluded from pursuing valid objectives secular in character even if the incidental result would be favorable to a religion or sect. It has likewise been held that the statute, in order to withstand the strictures of constitutional prohibition, must have a secular legislative purpose and a primary effect that neither advances nor inhibits religion. Assessed by these criteria, Republic Act No. 3350 cannot be said to violate the constitutional inhibition of the "no establishment" (of religion) clause of the Constitution. The purpose of Republic Act No. 3350 is secular, wordly, and temporal, not spiritual or religious or holy and eternal. It was intended to serve the secular purpose of advancing the constitutional right to the free exercise of religion, by averting that certain persons be refused work, or be dismissed from work, or be dispossessed of their right to work and of being impeded to pursue a modest means of livelihood, by reason of union security agreements. To help its citizens to find gainful employment whereby they can make a living to support themselves and their families is a valid objective of the state. In fact, the state is enjoined, in the 1935 Constitution, to afford protection to labor, and regulate the relations between labor and capital and industry. More so now in the 1973 Constitution where it is mandated that "the State shall afford protection to labor, promote full employment and equality in employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relation between workers and employers. The primary effects of the exemption from closed shop agreements in favor of members of religious sects that prohibit their members from affiliating with a labor organization, is the protection of said employees against the aggregate force of the collective bargaining agreement, and relieving certain citizens of a burden on their religious beliefs; and by eliminating to a certain extent economic insecurity due to unemployment, which is a serious menace to the health, morals, and welfare of the people of the State, the Act also promotes the well-being of society. It is our view that the exemption from the effects of closed shop agreement does not directly

advance, or diminish, the interests of any particular religion. Although the exemption may benefit those who are members of religious sects that prohibit their members from joining labor unions, the benefit upon the religious sects is merely incidental and indirect. The "establishment clause" (of religion) does not ban regulation on conduct whose reason or effect merely happens to coincide or harmonize with the tenets of some or all religions. The free exercise clause of the Constitution has been interpreted to require that religious exercise be preferentially aided. We believe that in enacting Republic Act No. 3350, Congress acted consistently with the spirit of the constitutional provision. It acted merely to relieve the exercise of religion, by certain persons, of a burden that is imposed by union security agreements. It was Congress itself that imposed that burden when it enacted the Industrial Peace Act (Republic Act 875), and, certainly, Congress, if it so deems advisable, could take away the same burden. It is certain that not every conscience can be accomodated by all the laws of the land; but when general laws conflict with scrupples of conscience, exemptions ought to be granted unless some "compelling state interest" intervenes. In the instant case, We see no such compelling state interest to withhold the exemption. Appellant bewails that while Republic Act No. 3350 protects members of certain religious sects, it leaves no right to, and is silent as to the protection of, labor organizations. The purpose of Republic Act No. 3350 was not to grant rights to labor unions. The rights of labor unions are amply provided for in Republic Act No. 875 and the new Labor Code. As to the lamented silence of the Act regarding the rights and protection of labor unions, suffice it to say, first, that the validity of a statute is determined by its provisions, not by its silence; and, second, the fact that the law may work hardship does not render it unconstitutional. It would not be amiss to state, regarding this matter, that to compel persons to join and remain members of a union to keep their jobs in violation of their religious scrupples, would hurt, rather than help, labor unions. Congress has seen it fit to exempt religious objectors lest their resistance spread to other workers, for religious objections have contagious potentialities more than political and philosophic objections. Furthermore, let it be noted unity and loyalty even to the country, and a fortiorari to a labor union assuming that such unity and loyalty can be attained through coercion is not a goal that is constitutionally obtainable at the expense of religious liberty. A desirable end cannot be promoted by prohibited means. 4. Appellant's fourth contention, that Republic Act No. 3350 violates the constitutional prohibition against requiring a religious test for the

exercise of a civil right or a political right, is not well taken. The Act does not require as a qualification, or condition, for joining any lawful association membership in any particular religion or in any religious sect; neither does the Act require affiliation with a religious sect that prohibits its members from joining a labor union as a condition or qualification for withdrawing from a labor union. Joining or withdrawing from a labor union requires a positive act. Republic Act No. 3350 only exempts members with such religious affiliation from the coverage of closed shop agreements. So, under this Act, a religious objector is not required to do a positive act to exercise the right to join or to resign from the union. He is exempted ipso jure without need of any positive act on his part. A conscientious religious objector need not perform a positive act or exercise the right of resigning from the labor union he is exempted from the coverage of any closed shop agreement that a labor union may have entered into. How then can there be a religious test required for the exercise of a right when no right need be exercised? xxx xxx xxx 5. Appellant avers as its fifth ground that Republic Act No. 3350 is a discriminatory legislation, inasmuch as it grants to the members of certain religious sects undue advantages over other workers, thus violating Section 1 of Article III of the 1935 Constitution which forbids the denial to any person of the equal protection of the laws. The guaranty of equal protection of the laws is not a guaranty of equality in the application of the laws upon all citizens of the state. It is not, therefore, a requirement, in order to avoid the constitutional prohibition against inequality, that every man, woman and child should be affected alike by a statute. Equality of operation of statutes does not mean indiscriminate operation on persons merely as such, but on persons according to the circumstances surrounding them. It guarantees equality, not identity of rights. The Constitution does not require that things which are different in fact be treated in law as though they were the same. The equal protection clause does not forbid discrimination as to things that are different. It does not prohibit legislation which is limited either in the object to which it is directed or by the territory within which it is to operate. The equal protection of the laws clause of the Constitution allows classification. Classification in law, as in the other departments of knowledge or practice, is the grouping of things in speculation or practice because they agree with one another in certain particulars. A law is not invalid because of simple inequality. The very idea of classification is that of inequality, so that it goes without saying that the mere fact of inequality in no manner determines the matter of constitutionality. All that is required of a valid classification is that it be reasonable, which means that the classification should be based

on substantial distinctions which make for real differences; that it must be germane to the purpose of the law; that it must not be limited to existing conditions only; and that it must apply equally to each member of the class. This Court has held that the standard is satisfied if the classification or distinction is based on a reasonable foundation or rational basis and is not palpably arbitrary. In the exercise of its power to make classifications for the purpose of enacting laws over matters within its jurisdiction, the state is recognized as enjoying a wide range of discretion. It is not necessary that the classification be based on scientific or marked differences of things or in their relation. Neither is it necessary that the classification be made with mathematical nicety. Hence legislative classification may in many cases properly rest on narrow distinctions, for the equal protection guaranty does not preclude the legislature from recognizing degrees of evil or harm, and legislation is addressed to evils as they may appear. We believe that Republic Act No. 3350 satisfies the aforementioned requirements. The Act classifies employees and workers, as to the effect and coverage of union shop security agreements, into those who by reason of their religious beliefs and convictions cannot sign up with a labor union, and those whose religion does not prohibit membership in labor unions. The classification rests on real or substantial, not merely imaginary or whimsical, distinctions. There is such real distinction in the beliefs, feelings and sentiments of employees. Employees do not believe in the same religious faith and different religions differ in their dogmas and canons. Religious beliefs, manifestations and practices, though they are found in all places, and in all times, take so many varied forms as to be almost beyond imagination. There are many views that comprise the broad spectrum of religious beliefs among the people. There are diverse manners in which beliefs, equally paramount in the lives of their possessors, may be articulated. Today the country is far more heterogenous in religion than before, differences in religion do exist, and these differences are important and should not be ignored. Even from the psychological point of view, the classification is based on real and important differences. Religious beliefs are not mere beliefs, mere ideas existing only in the mind, for they carry with them practical consequences and are the motives of certain rules of human conduct and the justification of certain acts. Religious sentiment makes a man view things and events in their relation to his God. It gives to human life its distinctive character, its tone, its happiness, or unhappiness, its enjoyment or irksomeness. Usually, a strong and passionate desire is involved in a religious belief. To certain persons, no single factor of their experience is more important to them than their religion, or their not having any religion. Because of differences in religious belief and sentiments, a very poor person may consider himself better than the rich, and the

man who even lacks the necessities of life may be more cheerful than the one who has all possible luxuries. Due to their religious beliefs people, like the martyrs, became resigned to the inevitable and accepted cheerfully even the most painful and excruciating pains. Because of differences in religious beliefs, the world has witnessed turmoil, civil strife, persecution, hatred, bloodshed and war, generated to a large extent by members of sects who were intolerant of other religious beliefs. The classification, introduced by Republic Act No. 3350, therefore, rests on substantial distinctions. The classification introduced by said Act is also germane to its purpose. The purpose of the law is precisely to avoid those who cannot, because of their religious belief, join labor unions, from being deprived of their right to work and from being dismissed from their work because of union shop security agreements. xxx xxx xxx 6. Appellant's further contention that Republic Act No. 3350 violates the constitutional provision on social justice is also baseless. Social justice is intended to promote the welfare of all the people. Republic Act No. 3350 promotes that welfare insofar as it looks after the welfare of those who, because of their religious belief, cannot join labor unions; the Act prevents their being deprived of work and of the means of livelihood. In determining whether any particular measure is for public advantage, it is not necessary that the entire state be directly benefited it is sufficient that a portion of the state be benefited thereby. Social justice also means the adoption by the Government of measures calculated to insure economic stability of all component elements of society, through the maintenance of a proper economic and social equilibrium in the inter-relations of the members of the community. Republic Act No. 3350 insures economic stability to the members of a religious sect, like the Iglesia ni Cristo, who are also component elements of society, for it insures security in their employment, notwithstanding their failure to join a labor union having a closed shop agreement with the employer. The Act also advances the proper economic and social equilibrium between labor unions and employees who cannot join labor unions, for it exempts the latter from the compelling necessity of joining labor unions that have closed shop agreements, and equalizes, in so far as opportunity to work is concerned, those whose religion prohibits membership in labor unions with those whose religion does not prohibit said membership. Social justice does not imply social equality, because social inequality will always exist as long as social relations depend on personal or subjective proclivities. Social justice does not require legal equality because legal equality, being a relative term, is necessarily premised on differentiations based on personal or natural conditions. Social justice guarantees equality of

opportunity, and this is precisely what Republic Act No. 3350 proposes to accomplish it gives laborers, irrespective of their religious scrupples, equal opportunity for work. xxx xxx xxx As comprehensively observed by Justice Fernando in his concurring opinion in that case: 3. There is, however, the question of whether such an exception possesses an implication that lessens the effectiveness of state efforts to protect labor, likewise, as noted, constitutionally ordained. Such a view, on the surface, may not be lacking in plausibility, but upon closer analysis, it cannot stand scrutiny. Thought must be given to the freedom of association, likewise an aspect of intellectual liberty. For the late Professor Howe, constitutionalist and in his lifetime the biographer of the great Holmes, it even partakes of the political theory of pluralistic sovereignty. So great is the respect for the autonomy accorded voluntary societies. Such a right implies at the very least that one can determine for himself whether or not he should join or refrain from joining a labor organization, an institutional device for promoting the welfare of the working man. A closed shop, on the other hand, is inherently coercive. That is why, as is unmistakably reflected in our decisions, the latest of which isGuijarno v. Court of Industrial Relations, it is far from being a favorite of the law. For a statutory provision then to further curtail its operation, is precisely to follow the dictates of sound public policy. Plaintiffs-appellees cannot, therefore, be summarily dismissed from their employment in the defendant Company as a result of their resignation from the appellant notwithstanding the existence of a union shop clause in the labor union collective bargaining agreement, as Republic Act No. 3350 exempts them from joining any labor organization, when such is contrary to their religious beliefs and convictions. We have also previously held that a member of a labor union may leave and cancel his membership with the union at anytime. When an employee or laborer joins a labor union, he does not make any commitment or assume an undertaking to continue his membership therein for any fixed period of time, much less indefinitely. The moment he has resigned or separated from the Union, he is no longer obliged to pay his dues and assessments to said organization. 7 We find, therefore, no error in the trial court's order, requiring both the company and defendant-appellant labor Union to reimburse all union dues and assessments collected from plaintiffs-appellees from the date of their resignations as members of the Union until the date of the last collection. WHEREFORE, the appealed decision is hereby affirmed, with costs against the defendant-appellant. Fernando (Chairman), Barredo, Fernandez and Aquino, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

a) the Department of Labor and Employment (DOLE) has no jurisdiction over the case since the existence of employer-employee relationship is at issue; b) the right of petitioner to due process was denied when the evidence of the union members' being commission agents was disregarded by the Labor Secretary; c) the public respondents patently erred in finding that there exists an employeremployee relationship;

G.R. No. 91307 January 24, 1991 SINGER SEWING MACHINE COMPANY, petitioner vs. HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER MACHINE COLLECTORS UNION-BAGUIO (SIMACUB), respondents. Misa, Castro, Villanueva, Oposa, Narvasa & Pesigan for petitioner. Domogan, Lockey, Orate & Dao-ayan Law Office for private respondent. d) the public respondents whimsically disregarded the well-settled rule that commission agents are not employees but are independent contractors. The respondents, on the other hand, insist that the provisions of the Collection Agency Agreement belie the Company's position that the union members are independent contractors. To prove that union members are employees, it is asserted that they "perform the most desirable and necessary activities for the continuous and effective operations of the business of the petitioner Company" (citing Article 280 of the Labor Code). They add that the termination of the agreement by the petitioner pending the resolution of the case before the DOLE "only shows the weakness of petitioner's stand" and was "for the purpose of frustrating the constitutionally mandated rights of the members of private respondent union to self-organization and collective organization." They also contend that under Section 8, Rule 8, Book No. III of the Omnibus Rules Implementing the Labor Code, which defines job-contracting, they cannot legally qualify as independent contractors who must be free from control of the alleged employer, who carry independent businesses and who have substantial capital or investment in the form of equipment, tools, and the like necessary in the conduct of the business. The present case mainly calls for the application of the control test, which if not satisfied, would lead us to conclude that no employer-employee relationship exists. Hence, if the union members are not employees, no right to organize for purposes of bargaining, nor to be certified as such bargaining agent can ever be recognized. The following elements are generally considered in the determination of the employeremployee relationship; "(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct although the latter is the most important element" (Mafinco Trading Corporation v. Ople, 70 SCRA 139 [1976]; Development Bank of the Philippines v. National Labor Relations Commission, 175 SCRA 537 [1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72 [1984]; Broadway Motors Inc. v. NLRC, 156 SCRA 522 [1987]; Brotherhood Labor Unity Movement in the Philippines v. Zamora, 147 SCRA 49 [1986]). The Collection Agency Agreement defines the relationship between the Company and each of the union members who signed a contract. The petitioner relies on the following stipulations in the agreements: (a) a collector is designated as a collecting agent" who is to be considered at all times as an independent contractor and not employee of the Company; (b) collection of all payments on installment accounts are to be made monthly or oftener; (c) an agent is paid his compensation for service in the form of a commission of 6% of all collections made and turned over plus a bonus on said collections; (d) an agent is required to post a cash bond of three thousand

GUTIERREZ, JR., J.:p This is a petition for certiorari assailing the order of Med-Arbiter Designate Felix B. Chaguile, Jr., the resolution of then Labor Secretary Franklin M. Drilon affirming said order on appeal and the order denying the motion for reconsideration in the case entitled "In Re: Petition for Direct Certification as the Sole and Exclusive Collective Bargaining Agent of Collectors of Singer Sewing Machine Company-Singer Machine Collectors Union-Baguio (SIMACUB)" docketed as OS-MA-A-7-119-89 (IRD Case No. 02-89 MED). On February 15, 1989, the respondent union filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of the Singer Sewing Machine Company, Baguio City branch (hereinafter referred to as "the Company"). The Company opposed the petition mainly on the ground that the union members are actually not employees but are independent contractors as evidenced by the collection agency agreement which they signed. The respondent Med-Arbiter, finding that there exists an employer-employee relationship between the union members and the Company, granted the petition for certification election. On appeal, Secretary of Labor Franklin M. Drilon affirmed it. The motion for reconsideration of the Secretary's resolution was denied. Hence, this petition in which the Company alleges that public respondents acted in excess of jurisdiction and/or committed grave abuse of discretion in that:

pesos (P3,000.00) to assure the faithful performance and observance of the terms and conditions under the agreement; (e) he is subject to all the terms and conditions in the agreement; (f) the agreement is effective for one year from the date of its execution and renewable on a yearly basis; and (g) his services shall be terminated in case of failure to satisfy the minimum monthly collection performance required, failure to post a cash bond, or cancellation of the agreement at the instance of either party unless the agent has a pending obligation or indebtedness in favor of the Company. Meanwhile, the respondents rely on other features to strengthen their position that the collectors are employees. They quote paragraph 2 which states that an agent shall utilize only receipt forms authorized and issued by the Company. They also note paragraph 3 which states that an agent has to submit and deliver at least once a week or as often as required a report of all collections made using report forms furnished by the Company. Paragraph 4 on the monthly collection quota required by the Company is deemed by respondents as a control measure over the means by which an agent is to perform his services. The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all collecting agents are employees and neither are all collecting agents independent contractors. The collectors could fall under either category depending on the facts of each case. The Agreement confirms the status of the collecting agent in this case as an independent contractor not only because he is explicitly described as such but also because the provisions permit him to perform collection services for the company without being subject to the control of the latter except only as to the result of his work. After a careful analysis of the contents of the agreement, we rule in favor of the petitioner. The requirement that collection agents utilize only receipt forms and report forms issued by the Company and that reports shall be submitted at least once a week is not necessarily an indication of control over the means by which the job of collection is to be performed. The agreement itself specifically explains that receipt forms shall be used for the purpose of avoiding a co-mingling of personal funds of the agent with the money collected on behalf of the Company. Likewise, the use of standard report forms as well as the regular time within which to submit a report of collection are intended to facilitate order in office procedures. Even if the report requirements are to be called control measures, any control is only with respect to the end result of the collection since the requirements regulate the things to be done after the performance of the collection job or the rendition of the service. The monthly collection quota is a normal requirement found in similar contractual agreements and is so stipulated to encourage a collecting agent to report at least the minimum amount of proceeds. In fact, paragraph 5, section b gives a bonus, aside from the regular commission every time the quota is reached. As a requirement for the fulfillment of the contract, it is subject to agreement by both parties. Hence, if the other contracting party does not accede to it, he can choose not to sign it. From the records, it is clear that the Company and each collecting agent intended that the former take control only over the amount of collection, which is a result of the job performed.

The respondents' contention that the union members are employees of the Company is based on selected provisions of the Agreement but ignores the following circumstances which respondents never refuted either in the trial proceedings before the labor officials nor in its pleadings filed before this Court. 1. The collection agents are not required to observe office hours or report to Singer's office everyday except, naturally and necessarily, for the purpose of remitting their collections. 2. The collection agents do not have to devote their time exclusively for SINGER. There is no prohibition on the part of the collection agents from working elsewhere. Nor are these agents required to account for their time and submit a record of their activity. 3. The manner and method of effecting collections are left solely to the discretion of the collection agents without any interference on the part of Singer. 4. The collection agents shoulder their transportation expenses incurred in the collections of the accounts assigned to them. 5. The collection agents are paid strictly on commission basis. The amounts paid to them are based solely on the amounts of collection each of them make. They do not receive any commission if they do not effect any collection even if they put a lot of effort in collecting. They are paid commission on the basis of actual collections. 6. The commissions earned by the collection agents are directly deducted by them from the amount of collections they are able to effect. The net amount is what is then remitted to Singer." ( Rollo, pp. 7-8) If indeed the union members are controlled as to the manner by which they are supposed to perform their collections, they should have explicitly said so in detail by specifically denying each of the facts asserted by the petitioner. As there seems to be no objections on the part of the respondents, the Court finds that they miserably failed to defend their position. A thorough examination of the facts of the case leads us to the conclusion that the existence of an employer-employee relationship between the Company and the collection agents cannot be sustained. The plain language of the agreement reveals that the designation as collection agent does not create an employment relationship and that the applicant is to be considered at all times as an independent contractor. This is consistent with the first rule of interpretation that the literal meaning of the stipulations in the contract controls (Article 1370, Civil Code; La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor, Relations, 123 SCRA 679 [1983]). No such words as "to hire and employ" are present. Moreover, the agreement did not fix an amount for wages nor the

required working hours. Compensation is earned only on the basis of the tangible results produced, i.e., total collections made (Sarra v. Agarrado, 166 SCRA 625 [1988]). In Investment Planning Corp. of the Philippines v. Social Security System, 21 SCRA 924 [1967] which involved commission agents, this Court had the occasion to rule, thus: We are convinced from the facts that the work of petitioner's agents or registered representatives more nearly approximates that of an independent contractor than that of an employee. The latter is paid for the labor he performs, that is, for the acts of which such labor consists the former is paid for the result thereof . . . . xxx xxx xxx Even if an agent of petitioner should devote all of his time and effort trying to sell its investment plans he would not necessarily be entitled to compensation therefor. His right to compensation depends upon and is measured by the tangible results he produces." Moreover, the collection agent does his work "more or less at his own pleasure" without a regular daily time frame imposed on him (Investment Planning Corporation of the Philippines v. Social Security System, supra; See alsoSocial Security System v. Court of Appeals, 30 SCRA 210 [1969]). The grounds specified in the contract for termination of the relationship do not support the view that control exists "for the causes of termination thus specified have no relation to the means and methods of work that are ordinarily required of or imposed upon employees." (Investment Planning Corp. of the Phil. v. Social Security System, supra) The last and most important element of the control test is not satisfied by the terms and conditions of the contracts. There is nothing in the agreement which implies control by the Company not only over the end to be achieved but also over the means and methods in achieving the end (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]). The Court finds the contention of the respondents that the union members are employees under Article 280 of the Labor Code to have no basis. The definition that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party shall render services for and in behalf of another for a consideration (no matter how necessary for the latter's business) even without being hired as an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement. The Court agrees with the petitioner's argument that Article 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to

security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute. Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code does not apply to this case. Respondents assert that the said provision on job contracting requires that for one to be considered an independent contractor, he must have "substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business." There is no showing that a collection agent needs tools and machineries. Moreover, the provision must be viewed in relation to Article 106 of the Labor Code which provides: Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. xxx xxx xxx There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him." (p. 20) It can readily be seen that Section 8, Rule 8, Book Ill and Article 106 are relevant in determining whether the employer is solidarily liable to the employees of an alleged contractor and/or sub-contractor for unpaid wages in case it is proven that there is a job-contracting situation. The assumption of jurisdiction by the DOLE over the case is justified as the case was brought on appeal by the petitioner itself which prayed for the reversal of the Order of the Med-Arbiter on the ground that the union members are not its employees. Hence, the petitioner submitted itself as well as the issue of existence of an employment relationship to the jurisdiction of the DOLE which was faced with a dispute on an application for certification election.

The Court finds that since private respondents are not employees of the Company, they are not entitled to the constitutional right to join or form a labor organization for purposes of collective bargaining. Accordingly, there is no constitutional and legal basis for their "union" to be granted their petition for direct certification. This Court made this pronouncement in La Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations, supra: . . . The question of whether employer-employee relationship exists is a primordial consideration before extending labor benefits under the workmen's compensation, social security, medicare, termination pay and labor relations law. It is important in the determination of who shall be included in a proposed bargaining unit because, it is the sine qua non, the fundamental and essential condition that a bargaining unit be composed of employees. Failure to establish this juridical relationship between the union members and the employer affects the legality of the union itself. It means the ineligibility of the union members to present a petition for certification election as well as to vote therein . . . . (At p. 689) WHEREFORE, the Order dated June 14,1989 of Med-Arbiter Designate Felix B. Chaguile, Jr., the Resolution and Order of Secretary Franklin M. Drilon dated November 2, 1989 and December 14, 1989, respectively are hereby REVERSED and SET ASIDE. The petition for certification election is ordered dismissed and the temporary restraining order issued by the Court on December 21, 1989 is made permanent. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-50241 December 19, 1980 PASUDECO WORKERS UNION OFFICERS, petitioners, vs. BUREAU OF LABOR RELATIONS and RICARDO ALCONGA, respondents.

prescribed period, it cannot be said that the protest in question has already prescribed. 5 Nor could petitioners rely on the ten-day period under the 1978 Election Code for the filing of an election protest. The analogy does not hold. It is flimsy and far-fetched. Again, the comment is illuminating: "The reason is obvious. The Code governing the conduct of election in the country is not all encompassing as to cover election of labor union officers Its coverage pertains solely to the election of certain public officers." 6 2. There is no merit, either, to the equally untenable proposition advanced by petitioners that a grave abuse of discretion sufficient in character for a certiorari proceeding to succeed was committed when respondent Bureau assumed jurisdiction for the sole reason that the election protest was filed in the Manila office of the Ministry of Labor when, according to the rules, the situs should be "the regional office where the union is domiciled." A cursory knowledge of the applicable principles, both constitutional and statutory, should have rendered clear that the Minister of Labor certainty can entertain petitions filed directly with his office. That is implied in the concept of control which such a dignitary possesses. 3. An even more decisive consideration is that the right to self organization, 7 an aspect of the highly-prized freedom of the liberty of association, 8 would be diluted if in the choice of the officials to govern its affairs, the election is not fairly and honestly conducted. Conformably to such a view, this Court even under the previous statutes, 9 had accorded due recognition to the competence of the then Court of Industrial Relations to see to it that no abuse is committed by any official of a labor organization in the conduct of its affairs. Such an approach was given added emphasis in a recent decision, Duyag v. Inciong, 10 where the ponente, Justice Aquino, stressed: "For the protection of union members and in order that the affairs of the union may be administered honestly, labor officials should be vigilant and watchful in monitoring and checking the administration of union affairs." 11 WHEREFORE, the petitioner for certiorari is dismissed for lack of merit and the temporary restraining order issued on April 2, 1979, rifted and declared to be of no further force and effect. This decision is immediately executory. Barredo, Aquino, Concepcion, Jr., Abad Santos and De Castro, JJ., concur.

FERNANDO, C.J.: An order of the Bureau of Labor Relations ordering a recount of the ballots cast in the election of officers of the PASUDECO Workers' Union for reasons of equity is assailed in tills certiorari petition on the ground that it was filed after the ten-day period, and in the wrong office at that, namely, with the Ministry of Labor instead of the regional office where the union is domiciled. As pointed out in the Comment of the Solicitor General, 1 such a step was taken in view of the irregularities that had attended the counting of the ballots, more specifically that " 1) only one padlock was used; 2) no fist of registration of voters were found inside the ballot box; 3) no ballot stubs were found; and 4) no excess ballots which were not used in the election were found and are unaccounted for. 2 With the specific reference to the 172 ballots, the irregularities allegedly consisted of the following: " '1) Some ballots used in the 2 January 1978 election bearing the signature of Federico Taruc, Chairman of the MOL R03 election committee, were properly Identified; 2) Many of the ballots cast were found spurious in that counter signatures of the protestant Alconga are allegedly falsified; 3) More than one kind of writing instruments were utilized in the filing up of the candidates' names in the ballots indicating alleged tampering with the same." 3 The Comment was treated as the answer. It sought the dismissal of this petition. Thereafter, the petition was considered submitted for decision. As prayed for, this petition must be dismissed. 1. The contention by petitioners that because the protest was filed twenty-three days after the canvassing of votes, respondent Bureau was devoid of jurisdiction, finds no support in law. Their reliance on the implementing rules and regulations of the New Labor Code, 4 prescribing a five-day period after the election, with the failure to do so resulting in its being deemed waived, is vain and illusory. As pointed out in the Comment of the Solicitor General: "The contention cannot be sustained. It must be stressed that Rule VI, Book V, of the Rules and Regulations Implementing the New Labor Code refers to a certification election for the determination of the collective bargaining representative of the workers. It does not cover [the] intra-union election of officers. Consequently, the same does not apply to the case at bar as [the] intra-union election of officers is governed by the union's by-laws. Petitioner, however, admits that their constitution and by-laws are silent on this point. Hence, in the absence of a

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 152322 February 15, 2005

4. Circulating false rumors about the work of the Association or sabotaging the same; 5. Withholding from the Association and/or members material information as to their rightful entitlement to benefits and/or money claims; 6. Acting as a spy against the Association or divulging confidential matters to persons not entitled thereto; 7. Such other offenses, which may injure or disrupt the functions of the 4 Association. Through a collective reply dated 19 September 1997, private respondents denied the allegations. Thereafter, on 23 September 1997, they sent a letter dated 22 September 1997 to the Chairman and Members of UEEAs Disciplinary Committee, informing them that the Memorandum of 15 September 1997 was vague and without legal basis, therefore, no intelligent answer may be made by them. They likewise stated that any sanction that will be imposed by the committee would be violative of their 5 right to due process. The Disciplinary Committee issued another Memorandum, dated 24 September 1997, giving the respondents another seventy-two hours from receipt within which to properly reply, explaining that the collective reply letter and supplemental answer which were earlier submitted were not responsive to the first Memorandum. Their failure would be construed as an admission of the truthfulness and veracity of the 6 charges. On 01 October 1997, the respondents issued a denial for the second time, and inquired from the Disciplinary Committee as to whether they were being formally 7 charged. On 09 October 1997, Ernesto Verceles, in his capacity as president of the association, through a Memorandum, informed Rodel Dalupan, et al., that their membership in the association has been suspended and shall take effect immediately upon receipt thereof. Verceles said he was acting upon the disciplinary committees 8 finding of a prima facie case against them. Respondent Ricardo Uy also received a 9 similar memorandum on 03 November 1997. On 01 December 1997, a complaint for illegal suspension, willful and unlawful violation of UEEA constitution and by-laws, refusal to render financial and other reports, deliberate refusal to call general and special meetings, illegal holdover of terms and damages was filed by the respondents against herein petitioners Ernesto C. Verceles, Diosdado F. Trinidad, Salvador G. Blancia, Rosemarie De Lumban, Felicitas Ramos, Miguel Teao, Jaime Bautista and Fidel Acero before the Department of Labor and Employment, National Capital Region (DOLE-NCR). A few days after the filing of the complaint, i.e., on 10 December 1997, a 11 resolution was passed by UEEA which reads as follows:
10

ERNESTO C. VERCELES, DIOSDADO F. TRINIDAD, SALVADOR G. BLANCIA, ROSEMARIE DE LUMBAN, FELICITAS F. RAMOS, MIGUEL TEAO, JAIME BAUTISTA and FIDEL ACERO, as Officers of the University of the East Employees Association, petitioners, vs. BUREAU OF LABOR RELATIONS-DEPARTMENT OF LABOR AND EMPLOYMENT, DEPARTMENT OF LABOR AND EMPLOYMENT-NATIONAL CAPITAL REGION, RODEL E. DALUPAN, EFREN J. DE OCAMPO, PROCESO TOTTO, JR., ELIZABETH ALARCA, ELVIRA S. MANALO, and RICARDO UY, respondents. DECISION CHICO-NAZARIO, J.: Before Us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil 1 2 Procedure, assailing the Decision and Resolution rendered by the Court of Appeals, dated 24 October 2001 and 15 February 2002, respectively. The Facts Private respondents Rodel E. Dalupan, Efren J. De Ocampo, Proceso Totto, Jr., Elizabeth Alarca, and Elvira S. Manalo are members of the University of the East Employees Association (UEEA). On 15 September 1997, they each received a Memorandum from the UEEA charging them with spreading false rumors and creating disinformation among the members of the said association. They were given 3 seventy-two hours from receipt of the Memorandum to submit their Answer. The acts of the respondents allegedly fall under General Assembly Resolution No. 4, Series of 1979, to wit: 1. Circulating false rumors about the progress of the negotiations for collective bargaining; 2. Creating distrust or loss of trust and confidence of members in the Association; 3. Creating dissension among the members;

RESOLUTION WHEREAS, the Association has gone thru a most arduous, difficult, and trying times in working to obtain the best terms and conditions of employment for its members, specifically for the period 1992 to 1996; WHEREAS, said difficulties are in the form of near strikes, cases with the Department of Labor and Employment and its agencies, as well as with the Supreme Court; WHEREAS, the general membership (has) shown exceptional patience and perseverance and generally (had) demonstrated full trust and confidence in the Association officers and accordingly approved the manner and/or actions undertaken in pursuing said difficult task of arriving at a most beneficial agreement for the general membership; NOW, THEREFORE, be it resolved as it is hereby resolved that: ... b) the general membership reiterate its loyalty to the Association and commends the Association officers for their effort expended in working for the benefit of the whole membership. APPROVED. Manila. 10 December 1997. On 22 November 1999, a decision was rendered by Regional Director Maximo B. Lim, adverse to petitioners, the dispositive portion of which reads: WHEREFORE, premises considered, respondent[s] [are] hereby ordered: 1. to immediately lift suspension imposed upon the complainants; 2. to hold a general membership meeting wherein they (respondents) make open and available the unions/associations books of accounts and other documents pertaining to the union funds [and] thereby explain the financial status of the union; 3. to regularly conduct special and general membership meetings in accordance with the unions constitution and by-laws; 4. to immediately hold/conduct an election of officers in accordance with the unions constitution and by-laws.
12

Accordingly, the claims of complainants for damages [are] hereby ordered dismissed for lack of jurisdiction. However, within ten (10) days upon receipt of this Order, the complainants are hereby directed to submit a written report whether or not the respondents had complied with this Order. The petitioners appealed to the Bureau of Labor Relations of the Department of Labor and Employment (BLR-DOLE). During the pendency of this appeal, or on 07 April 2000, an election of officers was held by the UEEA. The appeal, however, was 13 dismissed for lack of merit in a Resolution dated 22 September 2000, the decretal portion of which reads: WHEREFORE, the appeal is hereby DISMISSED for lack of merit and the decision dated 22 (November) 1999 of Regional Director Maximo B. Lim, DOLE-NCR, is AFFIRMED. Meanwhile, Resolution No. 8, Series of 2000, was passed by the UEEA, wherein the members allegedly reiterated their support and approval of the acts and collateral 14 actions of the officers. A Motion for Reconsideration was filed by the petitioners with the BLR-DOLE, but 16 was denied in a Resolution dated 15 January 2001. A special civil action for certiorari was thereafter filed before the Court of Appeals citing grave abuse of discretion amounting to lack or excess of jurisdiction. In a 18 Resolution dated 22 February 2001, the Court of Appeals dismissed the petition outright for failure to comply with the provisions of Section 1, Rule 65 in relation to Section 3, Rule 46 of the 1997 Rules of Civil Procedure. A Motion for 19 20 Reconsideration was filed which was granted in a Resolution dated 24 April 2001, thus, reinstating the petition.1awphi1.nt On 24 October 2001, the Court of Appeals rendered a Decision petition, the dispositive portion of which reads:
21 17 15

dismissing the

WHEREFORE, premises considered, the instant petition is DENIED COURSE and DISMISSED for lack of merit. No pronouncement as to costs.
22

DUE

A Motion for Reconsideration was thereafter filed by the petitioners. In a 23 Resolution dated 15 February 2002, the Court of Appeals modified its earlier decision. The decretal portion of which states: WHEREFORE, the questioned decision of this court is MODIFIED. The 22 September 2000 and 15 January 2001 resolutions of the BLR insofar as they affirmed the part of the 22 November 1999 decision of the Regional Director of DOLE-NCR ordering the immediate holding of election are HEREBY ANNULLED AND SET ASIDE. All the other aspects of the assailed Resolutions are AFFIRMED.

Not satisfied, the petitioners filed a petition for review on certiorari The Issues The petitioners raise the following issues:

24

before this Court.

percent (30%) support requirement pursuant to Section 1, Rule XIV, Article I, Department Order No. 9, is not applicable to them because their complaint was primordially predicated on their suspension while the rest of the causes of action were 30 mere collateral consequences of the principal cause of action. It is worthy to note that the BLR-DOLE, in its Resolution dated 22 September 2000, underscored the negligence of herein petitioners not only in the submission of their 31 pleadings but also in attending the hearings called for the purpose. Even the Court of Appeals, in its decision, made this observation, thus: It is apparent, however, that petitioners were to blame for their predicament. They repeatedly failed to appear in a series of conferences scheduled by the DOLE-NCR, asked for resetting of hearings, and requested for extension of time to file its answer. Hence, when they again did not attend a hearing on a date they themselves asked for, private respondents (complainants therein) moved for the submission of the case based on their complaint, position paper and annexes attached thereto. When DOLE-NCR directed the parties to submit their respective position papers, petitioners again moved for extension of time to file the same. When another notice was given to the parties to comply with the directive, petitioners prayed for another extension of time. (Private respondents, however, reiterated their earlier motion to have the case resolved based on available pleadings.) After six (6) months or so, 32 petitioners finally filed not their position paper but their answer. The Court of Appeals was justified in upholding the DOLE-NCR and BLR-DOLE decisions based on the complaint and answer. We cannot accept petitioners line of reasoning that since no position papers were submitted, no decision may be made by the adjudicating body. As ruled by Regional Director Maximo B. Lim in his decision, the complaint and the answer thereto were adopted as the parties position papers. 33 Thereafter, the case shall be deemed submitted for resolution. Labor laws mandate the speedy disposition of cases, with the least attention to 34 technicalities but without sacrificing the fundamental requisites of due process. The 35 essence of due process is simply an opportunity to be heard. In this case, it cannot be said that there was a denial of due process on the part of the petitioners because they were given all the chances to refute the allegations of the private respondents, and the delay in the proceedings before the DOLE-NCR was clearly attributable to them. The argument that there was failure to exhaust administrative remedies cannot be sustained. One of the instances when the rule of exhaustion of administrative 36 remedies may be disregarded is when there is a violation of due process. In this case, the respondents have chronicled from the very beginning that they were indefinitely suspended without the benefit of a formal charge sufficient in form and substance. Therefore, the rule on exhaustion of administrative remedies cannot squarely apply to them. On the matter concerning the 30% support requirement needed to report violations of rights and conditions of union membership, as found in the last paragraph of Article

1. WHETHER OR NOT THERE IS REVERSIBLE ERROR IN THE COURT OF APPEALS UPHOLDING THE DOLE-NCR AND BLR-DOLE DECISIONS BASED ONLY ON THE COMPLAINT AND ANSWER; 2. WHETHER OR NOT IT IS REVERSIBLE ERROR FOR THE COURT OF APPEALS TO HOLD THE ELECTION OF APRIL 7, 2000 AS INVALID AND A NULLITY; 3. WHETHER OR NOT IT IS REVERSIBLE ERROR TO UPHOLD BLRDOLES FINDING THAT THE SUSPENSION WAS ILLEGAL; and 4. WHETHER OR NOT THE ALLEGED NON-HOLDING OF MEETINGS AND ALLEGED NON-SUBMISSION OF REPORTS ARE MOOT AND ACADEMIC, AND WHETHER THE DECISION TO HOLD MEETINGS AND SUBMIT REPORTS CONTRADICT AND OVERRIDE THE SOVEREIGN 25 WILL OF THE MAJORITY. The Courts Rulings We shall discuss the issues in seriatim. First Issue: was the court a quo correct in upholding the DOLE-NCR and BLR-DOLE decisions based only on the complaint and answer? Petitioners contend that the complaint filed by the private respondents in DOLE-NCR was a mere recital of bare, self serving and unsubstantiated allegations. Both parties did not submit position papers, and the DOLE-NCR resolved the case based only on the complaint and answer. Also, by failing to submit a reply to the answer, private 26 respondents, in effect admitted the petitioners controversion of the charges. They further argue that the private respondents did not exhaust administrative remedies and that the requirement of support by at least 30% of the members of the association pursuant to Section 1, Rule XIV, Article I, Department Order No. 9 of 27 DOLE, was not complied with. Private respondents, on the other hand, assert that the records show that despite their failure to submit their position papers, they nonetheless moved that the case be resolved by DOLE-NCR based on the complaint, answer and available exhibits or 28 annexes integrated with the aforesaid pleadings. The principle of non-exhaustion of administrative remedies that would warrant the dismissal of the case should not operate against them because they were deprived of their right to due process when they were indefinitely suspended without the benefit of a formal charge which is 29 sufficient in form and substance. The respondents also point out that the thirty

241 of the Labor Code, we likewise cannot sanction the petitioners. We have already made our pronouncement in the case of Rodriguez v. Director, Bureau of 38 Labor Relations that the 30% requirement is not mandatory. In this case, the Court, 39 speaking through Chief Justice Andres R. Narvasa, held in part: The respondent Directors ruling, however, that the assent of 30% of the union membership, mentioned in Article 242 of the Labor Code, was mandatory and essential to the filing of a complaint for any violation of rights and conditions of membership in a labor organization (such as the arbitrary and oppressive increase of union dues here complained of), cannot be affirmed and will be reversed. The very article relied upon militates against the proposition. It states that a report of a violation of rights and conditions of membership in a labor organization maybe made by "(a)t least thirty percent (30%) of all the members of a union or any member or members specially concerned." The use of the permissive "may" in the provision at once negates the notion that the assent of 30% of all the members is mandatory. More decisive is the fact that the provision expressly declares that the report may be made, alternatively by "any member or members specially concerned." And further confirmation that the assent of 30% of the union members is not a factor in the acquisition of jurisdiction by the Bureau of Labor Relations is furnished by Article 226 of the same Labor Code, which grants original and exclusive jurisdiction to the Bureau, and the Labor Relations Division in the Regional Offices of the Department of Labor, over "all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor management relations," making no reference whatsoever to any such 30%-support requirement. Indeed, the officials mentioned are given the power to act "on all inter-union and intra-union conflicts (1) " upon request of either or both parties" as well as (2) "at their own initiative." Second Issue: was the election held on 07 April 2000 valid or a nullity? This issue arose from the fact that the original decision of the DOLE-NCR dated 22 November 1999, ordered petitioners, among other things, to "immediately hold/conduct an election of officers . . ." Petitioners, it must be recalled, appealed from the DOLE-NCR decision to the BLR-DOLE. During the pendency of the appeal, however, an election of officers was held on 07 April 2000. Subsequently, the BLRDOLE affirmed the decision of the DOLE-NCR, but with the pronouncement that ". . . the supposed election conducted on (07) April 2000 is null and void and cannot 40 produce legal effects adverse to appellants." The petitioners contend that since the election was held on 07 April 2000, and the original complaint before the DOLE-NCR was filed on 01 December 1997, the former could not have been the subject of the complaint. There was, according to petitioners, reversible error in the BLR-DOLEs adding to the DOLE-NCRs decision, the nullification of the 07 April 2000 election. The BLR DOLE should have limited itself to affirming, modifying or setting aside and canceling the provisions of the dispositive portion of the DOLE-NCRs decision which was subject of the appeal. The election was held because the term of the petitioners (extended for five years under Republic 41 Act No. 6715 ) expired on 07 April 2000. As amended by Republic Act 6715, paragraph (c) of Article 241 of the Labor Code now reads:

37

(c) The members shall directly elect their officers in the local union, as well as their national officers in the national union or federation to which they or their local union is affiliated, by secret ballots at intervals of five (5) years. It just so happened that the holding of the election coincided with the DOLE-NCR 42 decision. The private respondents, in answer to this, point out that the 07 April 2000 election, as appearing in the 22 September 2000 Resolution of the BLR-DOLE, was set aside not on the flimsy reason that there was no complaint to invalidate it, but due to the appeal of the petitioners questioning the BLR-DOLEs order. The appeal effectively suspended the effect of the DOLE-NCR Regional Directors order for the immediate holding of election of officers in accordance with the unions constitution and by 43 laws. On this matter, the Court of Appeals made the following observation: Consequently, the Regional Director of DOLE-NCR erred in ordering the immediate holding of election of officers of UEEA, and the Bureau of Labor Relations (BLR)Department of Labor and Employment, insofar as it affirmed this particular order, committed an act amounting to grave abuse of discretion. Nonetheless, despite of this finding, the election of UEEA officers on 7 April 2000 cannot acquire a semblance of legality. First, it was conducted pursuant to the aforesaid (erroneous) order of the Regional Director as manifested by the petitioners. Second, it was purposely done to pre-empt the resolution of the case by the BLR and to deprive private respondents their substantial right to participate in the election. Third, petitioners cannot be allowed to take an inconsistent position to later on claim that the election of 7 April 2000 was held because it was already due while previously declaring that it was made in line with the order of the Regional Director, for this would go against the principle of fair play. Thus, while the BLR was wrong in affirming the order of the Regional Director for the immediate holding of election, it was right in nullifying the 7 April 2000 UEEA election of officers. It was simply improper for the petitioners to implement the said order which was then one of the subjects of their appeal in the BLR. To hold otherwise would be to dispossess the BLR of its inherent power to control the conduct of the 44 proceedings of cases pending before it for resolution. Based on the prevailing facts of this case, we affirm the foregoing findings of the court a quo. We cannot hold the election of 07 April 2000 valid as this would make us condone an iniquitous act. Said election was perceptibly done to hinder any resolution or decision that would be made by BLR-DOLE. The Regional Director indeed ordered the immediate holding of an election in its Order dated 22 November 1999. The records show that the petitioners questioned this order of the Regional Director before 45 the BLR-DOLE by way of appeal, and yet, they conducted the election, allegedly because it was due under Republic Act No. 6715. Why this was done by the petitioners escapes us. But as rightfully observed by the BLR-DOLE:

. . . Indeed, it is obvious that the general membership meeting and election of officers was done purposely to pre-empt our resolution of this case and, more importantly, the 46 participation of appellees in the election. This cannot be tolerated. Third Issue: was the indefinite suspension of the private respondents illegal? We rule in the affirmative. The petitioners posit the theory that the records do not support the findings of the BLR-DOLE that no investigation was conducted making the suspension illegal because of lack of due process. It is best to remind the petitioners that this Court, as we have held in a long line of 47 decisions, is not a trier of facts. The instant case is a petition for review 48 49 on certiorari where only questions of law may be raised. The exceptions to this rule find no application here. This being the case, the findings of fact of the DOLENCR and the BLR-DOLE as affirmed by the Court of Appeals to the effect that no investigation was conducted, shall not be disturbed. As properly held by the court a quo: Petitioners have failed to show that the findings of facts and conclusions of law of both the DOLE-NCR and BLR-DOLE were arrived at with grave abuse of discretion or without substantial evidence. A careful review of the pleadings before Us reveals that the decision and resolutions of the concerned agencies were correctly anchored in 50 law and on substantial evidence. Fourth Issue: is the non-holding of meetings and non-submission of reports by the petitioners moot and academic, and whether the decision to hold meetings and submit reports contradict and override the sovereign will of the majority? We do not believe so. This issue was precipitated by the Court of Appeals decision affirming the order of DOLE Regional Director Maximo B. Lim for the petitioners to hold a general membership meeting wherein they make open and available the unions/associations books of accounts and other documents pertaining to the union funds, and to regularly conduct special and general membership meetings in accordance with the 51 unions constitution and by-laws. It is to be recalled that the private respondents, when they filed a complaint before the DOLE-NCR also complained of petitioners refusal to render financial and other reports, and deliberate refusal to call general and special meetings. Petitioners do not hide the fact that they belatedly submitted their financial reports and the minutes of their meetings to the DOLE. The issue of belatedly submitting these reports, according to the petitioners, had been rendered moot and academic by their eventual compliance. Besides, this has been the practice of the 52 association. Moreover, the petitioners likewise maintain that the passage of General Assembly Resolution No. 10 dated 10 December 1997 and Resolution No. 8, Series of 2000, following the application of the principle that the sovereign majority rules,

cured any liability that may have been brought about by their belated 53 actions. 1awphi1.nt As found by the Court of Appeals, the financial statements for the years 1995 up to 1997 were submitted to DOLE-NCR only on 06 February 1998 while that for the year 54 1998 was submitted only on 16 March 1999. The last associations meeting was conducted on 21 April 1995, and the copy of the minutes thereon was submitted to BLR-DOLE only on 24 February 1998. The passage of General Assembly Resolution No. 10 dated 10 December 1997 and 55 Resolution No. 8, Series of 2000, which supposedly cured the lapses committed by the associations officers and reiterated the approval of the general membership of the acts and collateral actions of the associations officers cannot redeem the petitioners from their predicament. The obligation to hold meetings and render financial reports is mandated by UEEAs constitution and by-laws. This fact was never denied by the petitioners. Their eventual compliance, as what happened in this case, shall not release them from the obligation to accomplish these things in the future. Prompt compliance in rendering financial reports together with the holding of regular meetings with the submission of the minutes thereon with the BLR-DOLE and DOLENCR shall negate any suspicion of dishonesty on the part of UEEAs o fficers. This is not only true with UEEA, but likewise with other unions/associations, as this matter is imbued with public interest. Undeniably, transparency in the official undertakings of union officers will bolster genuine trade unionism in the country. WHEREFORE, in view of all the foregoing, the Decision and Resolution of the Court of Appeals subjects of the instant case, are affirmed. Costs against the petitioners. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-47775 July 5, 1980 JULIAN DUYAG, ARMANDO OLIVARES, JOSE ECHEVARIA, ALEJANDRO SEVILLA and FELIMON GUINGON,petitioners, vs. HON. AMANDO G. INCIONG, as Acting Director of Labor Relation CARMELO C. NORIEL, as Director of Labor Relations, RICA R. MANALAD, HONORATO K. LEANO, EDUARDO AMPARO and SANTOS PUERTO,respondents.

For April and May, 1975, the respondents caused to be collected monthly union dues amounting to nineteen pesos or another increase of one peso. And for the first semester of 1976, a deduction of eight pesos and fifty centavos was made from the mid-year bonus without any board resolution authorizing such deduction. In prior years, no deduction for union dues was made from the mid-year bonus. The med-arbiter concluded that the increases in union dues and the deduction from the mid-year bonus are void because the same were collected in contravention of the constitution and by-laws. Moreover, their collection was not covered by any check-off authorization nor evidenced by any receipt and was in contravention of the Labor Code. The amounts collected were not duly accounted for. The Labor Code provides: ART. 242. Rights and conditions of membership in a labor organization. The following are the rights and conditions of membership in a labor organization: xxxxxxxxx (g) No officer, agent or member of a labor organization shall collect any fees, dues, or other contributions in its behalf or make any disbursement of its money or funds unless he is duly authorized pursuant to its constitution and by-laws; (h) Every payment of fees, dues or other contributions by a member shall be evidenced by a receipt signed by the officer or agent making the collection and entered into the record of the organization to be kept and maintained for the purpose; xxx xxx xxx (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 caned 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 assessments or fees. The record shall be attested to by the president; (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; and xxx xxx xxx.

AQUINO, J.: This case is about the removal of private respondents as union officers due to alleged irregularities and anomalies in the administration of the affairs of the union. On January 14, 1977, the five petitioners, who are arrastre checkers of E. Razon, Inc. in the South Harbor, Port Area, Manila as well as bona fide members of the Associated Port Checkers and Workers Union, filed with Regional Office No. 4 of the Department of Labor a complaint containing several charges against the four private respondents, who, respectively, are the president (for more than twenty years), treasurer, vice-president and auditor of the union. The record reveals the following facts, some of which are admitted or not denied by the private respondents, whiny the other facts are supported by substantial evidence which is summarized in the decisions of the med-arbiter and the Director of Labor Relations: Unauthorized increases in union dues. for arrastre checkers, the monthly union dues amount to ten pesos, as fixed in section 2(b), article VI of the union's constitution and bylaws approved on September 5,1969. The monthly union dues were increased by two pesos in the resolution of September 1, 1970 and by five pesos in the resolution of March 14, 1972. However, those two resolutions are void because they were not approved by three-fourths of all the members of the board of directors, as required in article VII of the union's constitution and by-laws, dealing with amendments. For March, April and May, 1973, the respondents without the benefit of any board resolution caused to be collected an additional one peso, thus increasing the union dues to eighteen pesos.

The foregoing legal provisions apply squarely to the unauthorized deductions from the wages of the arrastre checkers. For such unauthorized collection of union dues, the responsibility of respondent Ricardo R. Manalad, as union president, is not denied. Withholding of union members' share in the profits amounting to P18,640.09 . E. Razon, Inc., the arrastre operator, paid to the union on December 18. 1973 the sum of P25,684.61 as its share of the profits (profit-share) for the period from May to October, 1973. Instead of distributing the whole amount to the union members, the dents paid to them only P19,974 and retained the of P5,710.61 which had not been accounted for. The Labor Arbiter found that other amounts were withheld by the respondents from the union's profit-shares for subsequent periods. The total amount withheld is P18,640.09 or P18.570.63, as shown in page 8 of private respondents' memorandum. With specific reference to the profit-share amounting to P22,559.50 paid by E. Razon, Inc. for the period from November, 1973 to February, 1974, the respondents deposited the amount in the account of the union's Cooperative Credit Union of which respondent Manalad was also the president. Later, the respondents withdrew the said amount, distributed among the union members the sum of P20,848 and withheld the balance of P1,711.50, which respondent Manalad and the union treasurer, respondent Honorato K. Leano appropriated as follows: Manalad Filipinas Bank and Trust Com pany, Manila Hilton Branch Chock No. 352966 dated March 22, 1975, drawn to cash................. P1.000.00 Leao Filipinos Rank and Trust Company, Manila Hilton Branch Chock No. 352967 dated March 22, 1975, drawn to cash............................ 559.50 Leao Filipinos Bank and Trust Company Manila Hilton Branch Check No. 352968 dated March 22,1975, drawn to cash............................. 152.00 TOTAL ......................................... P1, 711.50 The med-arbiter found that the modus operandi resorted to by the respondents with respect to the profit-share amounting to P22,559.50 was followed by them as to the deductions from the profit-shares for the other periods. He surmised that the union officers must have deducted a considerable amount from the profit-shares because they started that practice in 1966 when E. Razon, Inc. and Guacods Marine Terminals, Inc. commenced the profit-share program However, during the pendency of the case in this Court, the private respondents submitted a resolution dated November 25, 1977 wherein more than ninety percent of the union members allegedly ratified the deductions from the mid-year bonus and profit-shares and authorized future deductions (pp. 921 and 1615-6, Rollo).

Although the said resolution rendered this aspect of the case moot, it cannot obliterate the violations of the constitution and by-laws and the Labor Code already committed by respondents Manalad and Leano The deduction of union dues from the mid-year bonus and the withholding of part of the profit-shares were illegal and improper at the time they were made. Disbursements exceeding P500 which were not authorized by the board of directors . Section 4(d), article IV of the union's constitution and by-laws provides that the board of directors may "authorize and approve all disbursements from union fund where the amount involved is more than P500 and without that authorization or approval in due form, no such disbursements will be allowed by the Treasurer Respondent Manalad made the following disbursements of union funds in an amount exceeding P500 without the requisite authorization of the board of directors:
Evidence Annex S Annex T Annexes U to W Date March 26, 1969 June 1, 1970 July 13, August 6 and Sept. 24, 1971 Annexes Y,X,Z and Z I and AA to CC March 5 and 30 April 10, May 18 Aug. 30, Sept. 20 and Dec. 31, 1973 Annex D Annex R Dec. 6, 1974 June 12, 1976 7,028.00 1,000.00 900.00 Amount disbursed P1,400.00 1,000.00 3,111.40

Respondents Manalad and Leao, also without prior board authorization, withdrew on twenty-three occasions union funds in the aggregate sum of P43,026.80 deposited in Savings Account No. 5953 of the Manila Hilton Branch of the Filipinos Bank and Trust Company (Annexes GG to GG-22). The sum of P3,500 was paid to respondent Amparo pursuant to a resolution dated July 12, 1971 which was approved by only six members of the board of directors, instead of fourteen members, as required in the constitution and by-laws of the union. Maladministration of welfare fund. Respondent Manalad allowed the application of the funds of the union's Welfare Plan to the following extraneous purposes:

1. On March 31, and April 6 and 14, 1973, the sum of P5,000 was taken from the Pacific Memorial Plan collections and loaned to the union's Cooperative Credit Union, Inc. 2. On October 7, 1973, the sum of P1,500 was loaned to the same cooperative for organizational expenses. 3. On August 7, 1971, the sum of P200 was taken from the welfare fund for advance representation expenses of Manalad. 4. On December 18, 1971, the sum of P1,600 was taken from the welfare fund to cover cash advances to Marcelino Melegrito to be repaid upon the release of his credit union loan on March 8, 1973. According to the complainants, those disbursements were not authorized by the board of directors. Respondents Manalad, Amparo and Puerto approved the payment of retirement benefits amounting to (1) P3,500 to Miguel de Leon on June 21, 1976; (2) P7,000 to Eduardo Topacio on July 30, 1976 and (3) P7,000 to Roberto Victoria on August 4, 1976. According to the complainants, the three employees did not deserve retirement benefits because they had been dismissed for prolonged absences and they had ceased to be members of the Welfare Plan. Membership in another union. Respondents Manalad, Amparo and Puerto are also officers of the Philippine Technical Clerical Commercial Employees Association, another labor union. Their membership in the latter union is manifestly violative of section 9, article III of the constitution and by-laws of the arrastre checkers' union which provides that an elected officer shall be deemed disqualified if he becomes a member of another organization. In this connection, the complainants presented evidence to prove that because of that interlocking stewardship of the arrastre checkers' union and the other union, the respondents improperly channeled to the latter funds of the arrastre checkers' union. Thus, on December 17, 1976 and March 29, June 9 and August 31, 1976, Manalad approved payments by the arrastre checkers' union to the other union of the sums of P1,000, P250 and P1,250. Conflict of interest on the part of Manalad. Respondent Manalad organized a family corporation known as the Comet Integrated Stevedoring Services, Inc. whose rank-and-file employees are also members of the arrastre checkers' union. Thus, Manalad has functioned in the dual capacity of labor leader and employer, not to mention the fact that he is also an officer of another labor union, PTCCEA.

As head of the arrastre checkers' union, he issued customs passes for the checkers of his family-owned stevedoring firm to facilitate their rendition of services to some shipping companies. The complainants contend that such a situation has involved Manalad in a conflict of interest: if he favors his stevedoring firm, he is bound to jeopardize the interests of the arrastre checkers' union of which he is the president. Under these facts, the med-arbiter in his decision of August 29, 1977 ordered the removal of the private respondents as officers of the union and directed them to reimburse to the members thereof the amounts illegally collected from them. The private respondents appealed to the Director of Labor Relations who in his decision of November 9, 1977 reversed the is not necessary and that the five com tsn have the right and personality to institute the proceeding for the removal of the respondents, to recover the amounts illegally collective or decision of the med-arbiter. The Director held that resort to intra-union remedies is not necessary and that the five complainants have the rights and personality to institute the proceedings for the removal of the respondents, to recover the amount illegally collected orwithheld from them and to question illegal disbursements and expenditure of union funds. However, the Director ruled that the power to remove the union officers rests in the members and that the Bureau of Labor Relations generally has nothing to do with the tenure of union officers which "is a political question". The Director further ruled that his office has jurisdiction to look into the charge of illegal disbursements of union funds. He directed the Labor Organization Division of the Bureau to examine the books of account and financial records of the union and to submit a report on such examination. The motions for reconsideration filed by the parties were denied by the Undersecretary of Labor in his resolution of January 25, 1978 (he was then Acting Director of Labor Relations). He ruled that the expulsion of union officers is the prerogative of the members of the union. That decision of the Director is assailed in these special civil actions of certiorari and prohibition filed on February 10, 1978. The petitioners pray that the four union officers be expelled. The case has been simplified by the admission of the private respondents in page 13 of their memorandum that the Bureau of Labor Relations has unquestionably the power to remove erring union officers under the last paragraph of Article 242 of the Labor Code. That paragraph provides that any violation of the rights and conditions of union membership as enumerated in paragraphs (a) to (p) of Article 242, "shall be a ground for cancellation of union registration or expulsion of officer from office, whichever is

appropriate. At least thirty percent (30%) of all the members of a union or any member or members specially concerned may report such violation to the Bureau (of labor Relations). The Bureau shall have the power to hear and decide any reported violation to mete the appropriate penal Nevertheless, the private respondents qualify their admission with the opinion that the Bureau of Labor Relations should remove the guilty union officers only when the members could not do so under the union's constitution and by-laws and that the removal should be subject to review by the Minister of Labor. The Office of the Solicitor General, as amicus curiae, has taken the unqualified stand that the Bureau is empowered to expel from the union any officer found guilty of violating any of the rights and conditions of union membership specified in article 242. In this appeal, the Director of Labor Relations maintains his view that the power of removal belongs to the union members, since the power to choose the officers belongs to them, and that the med-arbiter and the Director should simply assist the union members in enforcing its constitution and by-laws. We hold that the Labor Arbiter did not err in removing the respondents as union officers. The membership of Manalad and Puerto in another union is a sufficient ground for their removal under the constitution and by-laws of the union. In Manalad's case, his organization of a family-owned corporation competing with. the union headed by him renders it untenable that he should remain as union president. We hold further that Med Puerto and Leano violated the rights and conditions of membership in the union within the meaning of Article 242. Hence, on that ground their expulsion from office is also justified. The petitioners are entitled to the refund of the union dues illegally collected from them. The union should be the proper refund. The Director of Labor Relations erred in holding that, as a matter of policy, the tenure of union office being a "political question is, generally, a matter outside his Bureau's jurisdiction and should be pa upon by the union members themselves. After hearing and even without submitting the matter to the union members, e union officials may be removed by the Director of Labor decisions as clearly provided him "we 242. The Director should apply the law and not make policy considerations prevail over its clear intent and meaning. "The majority of the laws need no interpretation or construction. They require only application, and if there were more application and less construction, there would be more stability in the law, and more people would know what the law is." Lizarraga Hermanos vs. Yap Tico 24 Phil. 504, 513).

The labor officials should not hesitate to enforcement strictly the law and regulations governing trade unions even if that course of action would curtail the so-called union autonomy and freedom from government interference. For the protection of union members and in order that the affairs of the union may be administered honestly, labor officials should be vigilant and watchful in monitoring and checking the administration of union affairs. Laxity, permissiveness, neglect and apathy in supervising and regulating the activities of union officials would result in corruption and oppression. Internal safeguards within the union can easily be ignored or swept aside by abusive, arrogant and unscrupulous union officials to the prejudice of the members. It is necessary and desirable that the Bureau of Labor Relations and the Ministry of Labor should exercise close and constant supervision over labor unions, particularly the handling of their funds, so as to forestall abuses and venalities. Hence, the Director acted correctly in ordering an examination of the books and records of the union. The examination should include a verification of the charge that the petty loans extended by the union to its members were usurious and that the fee for the issuance of cheeks is unwarranted since the loans were made in cash. WHEREFORE, (1) that portion of the decision of the med-arbiter, removing respondents Manalad, Leano and Puerto as union officers, is affirmed. (Respondent Amparo is no longer an officer of the union.) (2) We also affirm that portion of the decision of the Director of Labor Relations, directing the Bureau's Labor Organization Division to examine the books of accounts and records of the Associated Port Checkers and Workers Union and to submit a report on such examination within a reasonable time. (3) We declare that the five petitioners are entitled to a refund of the union dues illegally collected from them. The Director of Labor Relations is ordered to require the union to make the refund within twenty days from notice to his counsel of the entry of judgment in this case. Costs against the private respondents. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 72772-73 June 28, 1989 RICARDO R. MANALAD, ALFONSO ROMERO, MARIO SANTOS, RITCHIE TUICO, HONORATO K. LEAO, SANTOS B. PUERTO, LEONARDO NAVARRO, BENJAMIN ERNACIO, FELIPE BENCITO, GERARDITO ROXAS, GONZALO RAMOS, FEDERICO MUOZ, PABLO FRANCO and CONRADO LOPEZ, petitioners, vs. DIRECTOR CRESENCIANO B. TRAJANO, PABLO B. BABULA, JULIAN DUYAG, DOMINADOR JAVIER, REMIGIO DEL MUNDO, OLMO MIJARES, RUDY VERGARA, ARTURO AZARCON, JOSE BINDOY, GERARDO COMMANDANTE, ROBERTO BUSTILLOS, PAQUITO BALANDING, OSCAR FERNANDEZ, and JACK HUGGINS, JR., respondents.* Remberto Z. Evio for petitioners. De Jesus, Paguio & Manimtim for private respondents. REGALADO, J.: The parties herein are employees of United Dockhandlers, Inc. They are members of rival groups in the Associated Port Checkers and Workers' Union (APCWU for short) in said company, the petitioners' faction being led by petitioner Ricardo R. Manalad, with respondent Pablo B. Babula heading the group of private respondents. From their submissions, it appears that sometime in 1982, the petitioners were disqualified from running as candidates in the election of APCWU officers by the MedArbiter, which election had theretofore been scheduled for November 17, 1981 but 1 was enjoined and ordered reset. However, on appeal, said order was set aside by the Director of the Bureau of Labor Relations on October 31, 1984. Thereafter, the election of officers and board members of the union was held on November 26, 1984, with the candidates of the petitioners, that is, Manalad, Leano and Puerto, winning over those of the private respondents, who were Babula, Mijares and Navarro, for the positions of president, treasurer and auditor, respectively. As a consequence, the latter group filed a petition for review with this Court assailing the aforesaid order of October 31, 1984 of the Bureau of Labor Relations which had declared the aforesaid 2 petitioners eligible to run for said union offices. This case, entitled "Associated Port Checkers and Workers Union, et al. vs. Ricardo R. Manalad, et al." was docketed as G.R. Nos. 69684-85. On July 3, 1985, the Court promulgated a resolution therein, which was immediately executory, as follows:

1. To DISMISS the petition for lack of merit and to DENY all pending motions incident thereto; 2. (a) To DECLARE VACANT all the offices of the Associated Port Checkers and Workers Union, and (b) to ORDER that the petitioners headed by Pablo B. Babula who has held over as acting president since 1981, and all other persons acting as officers of the said union, to cease acting as such upon receipt of this resolution, and to turn over immediately the management of the union affairs to respondent Director of the Bureau of Labor Relations, who shall act as caretaker until after a new set of union officers shall have been elected and duly qualified as provided in the next succeeding paragraph, and accordingly, (c) to GRANT the motion to transfer the union funds to said respondent Director of the Bureau of Labor Relations as such caretaker, which funds may not be disbursed by him except for urgent union purposes and for necessary expenses of the election and which funds shall be turned over by him to the new set of union officers to be duly elected and qualified, as herein provided; and 3. To ORDER the holding of a special election of union officers under the supervision of the National Capital Region Labor Office not later than Saturday, July 20, 1985, which shall be governed by the union's 1978 Constitution and ByLaws as amended in 1981 (disregarding all subsequent amendments) and the outcome of which shall be immediately certified as to the president and officers of the union who shall forthwith assume and discharge the functions of the 3 respective offices to which they shall have been thus elected. Pursuant thereto, the Director of the Bureau of Labor Relations issued an order on July 10, 1985 to the effect that he was taking over the management of the affairs of said union, ordering private respondents Babula and all other persons to cease acting as officers of the union, and requiring them to turn over the union funds to said 4 director. Subsequently, the Court's aforesaid resolution of July 3, 1985 was modified on July 17, 1985 by providing that the special election scheduled on July 20, 1985 shall be held under the personal supervision of respondent Director Trajano, with the assistance of his staff, under the usual rules and applying suppletorily the union's 5 1978 constitution and by-laws. Meanwhile, on July 13, 1985, a motion was filed by the petitioners with this Court in G.R. No. 69684-85 asking that the private respondents be cited in contempt and for their disqualification from running in the projected special election due to their alleged 6 refusal to comply with the resolution above quoted. The petitioner also wrote a letter 7 to the Director on July 18, 1985 objecting to the candidacy of private respondents. Nevertheless, the scheduled special election was held resulting in the victory of the candidates of the private respondents. Petitioner then filed a motion with the Court for the annulment of the special election, repeating their allegation that there was non8 compliance with the Court's resolution of July 3, 1985 by private respondents. On July 26, 1985, respondent Director issued a resolution proclaiming private respondents as the winners in the special election and duly elected officers of APCWU, with the following observation: "The submission that Mr. Babula failed to completely turn over management of the union to the undersigned is within the

competence and authority of the Supreme Court to pass upon considering that the 9 mandate for such a turn-over came from the Court. Petitioners filed with respondent director a motion for reconsideration on August 2, 1985 seeking he reversal of said resolution of July 26, 1985. This motion having been denied, petitioner filed a second motion for reconsideration on August 28, 1985 but 10 the same was likewise denied on October 14, 1985. In the meantime, this Court in a resolution dated September 1, 1985 denied the motion of the petitioner to annul the special election of July 20, 1985, but without 11 prejudice to the filing of a proper petition with the Bureau of Labor Relations. The instant petition was thereafter filed, principally praying: 1. That the questioned Resolution dated July 26, 1985 (Annex 'A'), Order dated August 19, 1985 (Annex 'B'), and Order dated October 4, 1986 (Annex 'C') of public respondent Cresenciano B. Trajano, Director of Bureau of Labor Relations be reversed and set aside; 2. That respondents Pablo B. Babula and his group be disqualified for not complying with the Resolution dated July 3, 1985 (Annex 'D') of this Honorable Court and the votes cast in their favor in the July 20, 1985 election be invalidated and the candidates who received the next highest number of votes in said election be declared the winner thereof; 3. Or in the alternative, that the election held in (sic) July 20, 1985 be annulled and a new election be called three weeks after respondents Pablo Babula, et al. have complied with the conditions imposed by the Resolution dated July 3, 1985 of this Honorable Court and an audit has been made of the different funds of the 12 Union for the year 1985; xxx xxx xxx We gave due course to this petition on April 9, 1986 but petitioners' motion for a writ 13 of preliminary injunction was denied. In an urgent motion, dated November 18, 1987, petitioners prayed that "in the event that they win the present case this Honorable Court upholds the November 24, (sic) 1984 election, the three-year term of office of petitioners should commence only after the finality of the resolution/decision to be rendered in the case at bar; that a restraining order be issued enjoining the holding of the new election of union officers until the final disposition of the instant case so as not to render the issue raised herein 14 moot and academic." We denied this motion on May 25, 1988 for lack of merit, considering that "(w)hen this Court, through its First Division called for the holding of special elections of union officers in G.R. Nos. 69684-85, there was an implied nullification of the refusal of the November 26, 1984 elections. This being the case, and petitioners having participated in the special elections held on July 20, 1985, they cannot now claim a right to the positions under consideration on the basis of said 15 voided November 26, 1984 elections.

Meanwhile, the three-year term of the private respondents under the disputed July 20, 1985 elections expired on July 20, 1988, hence We resolved to require the petitioners to show cause why these cases should not be dismissed for being moot and 16 academic. Responding thereto, petitioners reiterated their position stated in their urgent motion, dated November 27, 1987, that they be declared the winners is said election with their terms of three (3) years to commence from the time they assume 17 office in execution of a final and executory resolution this Court. On November 17, 1988, petitioners filed a motion to restrain the holding of a new election of officers of the union scheduled on November 28, 1988. However, before any action could be taken on said motion the election was held as scheduled, hence the petitioner filed a motion, dated December 1, 1988, to annul said election. After a careful consideration of the facts of this case, We are of the considered view that the expiration of the terms of office of the union officers and the election of officers on November 28, 1988 have rendered the issues raised by petitioners in this case moot and academic. It is pointless and unrealistic to insist on annulling an election of officers whose terms had already expired. We would have thereby a judgment on a matter which cannot have any practical legal effect upon a 18 controversy, even if existing, and which, in the nature of things, cannot be enforced. We must consequently abide by our consistent ruling that where certain events or circumstances have taken place during the pendency of the case which would render 19 the case moot and academic, the petition should be dismissed. Moreover, it is the better part of conventional or pragmatic solutions in cases of this nature, absent overriding considerations to the contrary, to respect the will of the majority of the workers who voted in the November 28, 1988 elections. Although decreed under a different setting, it is apropos to recall in this case Our ruling that where the people have elected a man to office, it must be assumed that they did this with knowledge of his life and character, and that they disregarded or forgave his 20 faults or misconduct, if he had been guilty of any. We agree with the petitioners that disobedience to a resolution of this Court should not be left unpunished. However, before the alleged disobedient party may be cited for contempt, the allegations against him should be clearly established. The contentions of petitioners, even disregarding some evidential deficiencies, do not adequately establish the basis for contempt. On the contrary, respondents have satisfactorily answered the averments thereon. At this juncture, it would further be appropriate to remind petitioners that even if the disqualification of private respondents could be justified, the candidates of petitioners certainly cannot be declared as the winners in the disputed election. The mere fact that they obtained the second highest number of votes does not mean that they will thereby be considered as the elected officers if the true winners are disqualified. ACCORDINGLY, this case is DISMISSED for being moot and academic. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

2. March 13, 1980 Payment for sound system P90.00 3. March 12, 1980 Picture taking, entrance fee in Manila Zoo with Atty. Delos Santos P75.00 4. March 24, 1980 Payment for sound System P90.00

G.R. No. L-62306 January 21, 1985 5. July 16, 1980 Jeep hired P264.00 KAPISANAN NG MANGGAGAWANG PINAGYAKAP (KMP), ISAGANI GUTIERREZ, FLORENCIA CARREON, JOSE FLORES, DENNIS ALINEA, ELADIO DE LUNA and CRISANTO DE VILLA, petitioners, vs. THE HONORABLE CRESENCIANO TRAJANO, DIRECTOR OF THE BUREAU OF LABOR RELATIONS, CATALINO SILVESTRE, and CESAR ALFARO, respondents. Jose C. Espinas for petitioners. Balagtas P. Ilagan for private respondents. 6. August 30, 1980 Partial payment of traveling expenses disallowed P68.00 7. October 30, 1980 Representation expenses P180.00 8. May 31, 1981 Payment for long distance call P10.00 9. May 31, 1981 Payment for legal expenses P500.00 TOTAL............................................................. P1,278.00 B. Respondent union officers failed to keep, maintain and submit for verification the records of union accounts for the years 1977, and 1978, 1979, or purposely suppressed the same; C. Respondent union officers failed to maintain segregated disbursement receipts in accordance with the five (5) segregated union funds (general fund, educational funds, mutual aid fund, burial assistance fund and union building fund) for which they maintained a distinct and separate bank accounts for each. D. The Union's constitution and by-laws is not ratified by the general membership hence, illegal. (pp. 27-28, Rollo) Based on the foregoing revelations, private respondents filed with the Regional Office No. IV-A, Quezon City, Ministry of Labor and Employment, a petition docketed as R04-ALRD-M- 9-35-81, for the expulsion of the union officers on the ground that they committed gross violation of the Labor Code, specifically paragraphs (a), (b), (g), (h), (j) and (k) of Article 242; and, the constitution and by-laws of the Union, particularly the provisions of Sections 6 and 7 thereof. In their Answer, the union officers denied the imputation and argued that the disallowed expenditures were made in good faith; that the same conduced to the benefit of the members; and, that they are willing to reimburse the same from their own personal funds. They likewise asserted that they should not be held accountable for the non-production of the books of accounts of the Union for the years 1977, 1978 and 1979 because they were not the officers then and not one of the former officers of the Union had turned over to them the records in question. Further, they averred that the non-ratification of the constitution and by-laws of the Union and the non-

RELOVA, J.: Petitioners seek to annul the resolution and order, dated August 13 and October 19, 1982, respectively, of public respondent Director Cresenciano B. Trajano of the Bureau of Labor Relations, Ministry of Labor and Employment, in BLR Case No. A0100-82 (RO4-A-LRD-M-9-35-81), entitled: "Catalino Silvestre, et al., vs. Kapisanan ng Manggagawang Pinagyakap (KMP) Labor Union and its Officers" affirming MedArbiter Antonio D. Cabibihan's order dated April 28, 1982, directing the said Union to hold and conduct, pursuant to its constitution and by-laws and under the supervision of the Bureau of Labor Relations, a general membership meeting, to vote for or against the expulsion or suspension of the herein petitioner union officers. Records show that on June 30, 1981 a written request for accounts examination of the financial status of the Kapisanan ng Manggagawang Pinagyakap (KMP) Labor Union (Union for brevity), the existing labor union at Franklin Baker Company in San Pablo City, was filed by private respondent Catalino Silvestre and thirteen (13) other employees, who are also members of the said Union. Acting on said request, Union Account Examiner Florencio R. Vicedo of the Ministry of Labor and Employment conducted the necessary investigation and, thereafter, submitted a report, with the following findings: A. Disallowed expenditures P1,278.00, as reflected in the following breakdown: 1. January 9, 1980 Excess claim for refund P1.00

segregation of the Union funds occurred before they became officers and that they have already been correcting the same. On April 28, 1982, Med-Arbiter Antonio D. Cabibihan ordered the holding of a referendum, to be conducted under the supervision of the Bureau of Labor Relations, to decide on the issue of whether to expel or suspend the union officers from their respective positions. Petitioners appealed the said order of Med-Arbiter Cabibihan to herein public respondent Director Trajano of the Bureau of Labor Relations, Ministry of Labor, Manila, claiming that the same is not in accordance with the facts contained in the records and is contrary to law. They pointed out that the disallowed expenditures of P1,278.00 were made in good faith and not used for the personal benefit of herein union officers but, instead, contributed to the benefit of the members. On the alleged failure to maintain and submitted the books of accounts for the years 1977, 1978 and 1979, they argued that they were elected in 1980 only and, therefore, they could not be made responsible for the omissions of their predecessors who failed to turn over union records for the questioned period. Anent their alleged failure to maintain segregated disbursement receipts in accordance with the five (5) segregated funds, petitioners maintained that the same did not result to any loss of funds and such error in procedure had already been corrected. They also demonstrated that there would be a general election on October 4, 1982, at which time, both the election and the desired referendum could be undertaken to determine the membership at minimum expense. They prayed that the resolution on the issue be held in abeyance. Private respondents, on the other hand, claimed that the Med-Arbiter erred in calling a referendum to decide the issue. They reiterated that the appropriate action should be the expulsion of the herein union officers. On August 13, 1982, public respondent Director Trajano dismissed both appeals of petitioners and private respondents and affirmed in toto the order of Med-Arbiter Cabibihan. Petitioners filed a Motion for Reconsideration of the Resolution of August 13, 1982 of Public respondent Director Trajano, reiterating their arguments in their appeal and further clarifying that what the Union Account Officer Florencio R. Vicedo found was that the amount of P1,278.00 was not supported by official receipts and therefore should not be allowed as disbursement from the union funds; and that he did not say that the amount was converted by them for their own personal benefit. They, likewise, informed public respondent Director Trajano that in the general election held on October 4, 1982, all of them, except petitioners Ambrocio dela Cruz and Eliseo Celerio, who ran for the positions of Vice-President and member of the Board of Directors, respectively, were elected by the overwhelming majority of the members, while private respondents Catalino Silvestre and Cesar Alfaro who also ran for the position of Auditor, lost. Thereafter, they moved for the dismissal of the appeal for having been rendered moot and academic by their re-election. On October 19, 1982, public respondent Director Trajano issued the second questioned order denying petitioners' Motion for Reconsideration.

Hence, this petition which We find meritorious for the following reasons: 1. If herein union officers (also petitioners) were guilty of the alleged acts imputed against them, said public respondent pursuant to Article 242 of the New Labor Code and in the light of Our ruling in Duyag vs. Inciong, 98 SCRA 522, should have meted out the appropriate penalty on them, i.e., to expel them from the Union, as prayed for, and not call for a referendum to decide the issue; 2. The alleged falsification and misrepresentation of herein union officers were not supported by substantial evidence. The fact that they disbursed the amount of P1,278.00 from Union funds and later on was disallowed for failure to attach supporting papers thereon did not of itself constitute falsification and/or misrepresentation. The expenditures appeared to have been made in good faith and the amount spent for the purpose mentioned in the report, if concurred in or accepted by the members, are reasonable; and 3. The repudiation of both private respondents to the highly sensitive position of auditor at the October 4, 1982 election, is a convincing manifestation and demonstration of the union membership's faith in the herein officers' leadership on one hand and a clear condonation of an act they had allegedly committed. By and large, the holding of the referendum in question has become moot and academic. This is in line with Our ruling in Pascual vs. Provincial Board of Nueva Ecija, 106 Phil. 471, which We quote: The Court should never remove a public officer for acts done prior to his present term of office. To do otherwise would be to deprive the people of their right to elect their officers. When the people have elected a man to office, it must be assumed that they did this with knowledge of his life and character, and that they disregarded or forgave Ms faults or misconduct, if he had been guilty of any. It is not for the court, by reason of such faults or misconduct to practically overrule the will of the people. ACCORDINGLY, the resolution and order, dated August 13 and October 19, 1982, respectively, of public respondent Director Cresenciano B. Trajano of the Bureau of Labor Relations, Ministry of Labor, Manila in BLR Case No. A-0100-82 (RO4-A-LRDM-9-35-81) are SET ASIDE and, the petition for expulsion of herein union officers in R04-A-LRD-M-9-35-81 is hereby DISMISSED for having been rendered moot and academic by the election of herein union officers in the general membership meeting/election held on October 4, 1982. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-78061 November 24, 1988 LITTON MILLS EMPLOYEES ASSOCIATION-KAPATIRAN AND ROGELIO ABONG, petitioners, vs. HONORABLE PURA FERRER-CALLEJA, in her capacity as Director of the Bureau of Labor Relations, RODOLFO UMALI AND LITTON MILLS, INC., respondents. Paterno D. Menzon Law Office for petitioners. The Solicitor General for public respondent. Ferdinand M. Casis for private respondent Umali. Marquinez, Juanitas, Perez, Gonzales, Bolos & Associates for respondent, Litton Mills, Inc.

steward, Norberto David, dated 14 August 1986, which was attested to by Timoteo 1 Aranjuez GATCORD's President, as inducting officer. Umali then caused mimeographed leaflets to be distributed to the union-members, urging them to continue affiliating with GATCORD, at the same time maligning petitioner union's legal counsel Paterno D. Menzon, as well as Messrs. Badillo and 2 Abong, the former and incumbent vice-president of petitioner-union. As a consequence, a majority of the union-members, numbering 725 out of a total membership of 1,100, more or less, opposed the affiliation of LMEA-K with GATCORD, and expressly manifested their intention to remain as an independent4 union, in a statement, "Sama-Samang Kapasiyahan", dated 18 August 1986 which, among others, also authorized petitioner Abong to take appropriate steps against respondent Umali, including impeachment, should the latter continue the affiliation of the petitioner-union with GATCORD. Despite the opposition of a majority of the union membership to the petitioner- union's affiliation with GATCORD, Umali continued with it, as evidenced by a letter he wrote to LMI, dated 20 August 1986, which was written on paper with the letterhead of GATCORD printed on it. The said letter, which was in reference to the number of workers of LMI who were to be given regular appointments, and those who were to be terminated and replaced, was again attested to by Timoteo Aranjuez GATCORD's National 5 President. Thereafter, Abong and the majority of the elected union officers signed a letter, dated 24 August 1986, addressed to Umali, accusing him of disloyalty by reasons of his affiliation with GATCORD, and advising him to appear before them on August 1986 at 2:00 p.m. in the company canteen, to refute the charge of disloyalty against him. The same letter warned Umali that his failure to attend said meeting would be interpreted as an admission on his part of the charge levelled against him. Umali did not show up at the appointed confrontation of 27 August 1986. Consequently, the majority of the union officers, led by Abong, voted to impeach Umali, who was informed of this fact by letter, dated 30 August 1986, addressed to him, with copy furnished Mr. James Go, the senior vice-president of LMI. Abong also wrote the latter, informing him, of Umali's impeachment, and invoking the provision of the collective bargaining agreement on union security, i.e., that the petitioner union may request LMI to dismiss an impeached officer or members of the union. The company's position on the request of the petitioners, as stated in its letter to the petitioners, dated 10 September 1986, was that the petitioner should first comply with the provision of the CBA, to wit: An employee who is expelled from the Union for cause shall, upon demand by the Union, be terminated from employment, provided that all pertinent requirements of the Ministry of Labor and Employment are first complied with; provided that the Union shall hold the company free from any liability that may arise due to said 5 termination -A
3

PADILIA, J.: This is a petition for review on certiorari, with prayer for preliminary injunction, seeking to prevent private respondent Rodolfo Umali from affiliating the petitioner-union, Litton Mills Employees Association-Kapatiran (LMEA-K, for short), with the National Union of Garments, Textile Cordage and General Workers of the Philippines (GATCORD, for short), and to enjoin the latter or any of its representatives from representing petitioner-union in any capacity whatsoever. The petition also seeks to declare as null and void petitioner union's affiliation with GATCORD: that LMEA-K union President, Rodolfo Umali, be declared impeached, and that respondent company, Litton Mills, Inc. (LMI, for short) be ordered by this Court to terminate Umali from his employment. Petitioner union, LMEA-K, is a legitimate labor organization in the respondent company, LMI, while individual petitioner, Rogelio Abong, and individual respondent, Rodolfo Umali, are the vice- president, respectively, of LMEA-K. The facts of the case are as follows: On 14 August 1986, without the knowledge and approval of the general membership of LMEA-K, Umali "Affiliated" petitioner-union with the federation of GATCORD. This is evidenced by the Pledge of Allegiance signed by the union's newly appointed shop

In other words, LMI required the petitioners to first thresh out the matter with the proper office of the Department of Labor and Employment, before it could act on petitioners' request to terminate Umali from his employment with LMI. On 25 September 1986, petitioners lodged a complaint against Umali and LMI before the med-arbiter section of the National Capital Region of the Department of Labor and Employment, docketed as NCR-LRD-M-9-718-86, praying that, after notice and hearing, an order be issued declaring as valid the impeachment of Rodolfo Umali and that respondent company be ordered to comply with Sec. 5, par. b Article IV of the CBA, by terminating the employment of Umali, and proclaiming Rogelio Abong, the 6 union's vice-president, as the new president of the union. Umali filed his answer, after which petitioners filed their reply averring that Umali's open defiance of the will of the majority of the union members for the union to remain an independent union, and Umali's contention that the majority wanted to affiliate with GATCORD, without submitting up to that time any evidence to support such contention were clear evidence of his disloyalty to petitioner-union, for which he ought to be impeached. Thereafter, petitioners filed a Supplemental Reply stating, among others, that of the 700 signatures of union members eventually submitted by Umali, as belonging to those who supported affiliation with GATCORD, a) 111 signatures were forged or faked signatures, b) 6 were those of resigned employees, and c) 44 were by those who signed 2 or 3 times, summing up to a total of 161 signatures that should be excluded from Umali's submission of 700 affirming signatures, thereby leaving only 539 signatures in favor of affiliation with GATCORD. Aside from averring unauthorized affiliation of LMEA-K with GATCORD, petitionerunion (LMEAK) alleged in its supplemental reply that the mere use by Umali of falsified signatures of union members was enough reason for his expulsion as president of LMEA-K. On 15 November 1986, Med-Arbiter Residali Abdullah issued an order declaring that the issue of affiliation cannot be dealt with in the complaint filed by petitioners, and that the impeachment of Umali was null and void. The Med-Arbiter found no valid ground to sustain the impeachment of Rodolfo Umali as president of the petitioner union, since Umali was not afforded his right to due process, his impeachment having been approved without compliance with the procedure laid down in the petitioner-union's constitution and by-laws. The MedArbiter also considered the petitioner union's "Sama-Samang Kapasiyahan" as mere declarations of some union members opposing the proposed affiliation of the union with GATCORD, and stating their preference to remain an independent union, but not as a petition charging respondent Umali with a specific offense against the union. The Med-Arbiter further held that the letter-decision of the petitioner-union which impeached respondent Umali was bereft of any legal merit, because the nonappearance of Umali at the first scheduled meeting of 27 August 1986 cannot be legally construed as an admission on his part of the charges levelled against him. The Med-Arbiter then held thus:

Again, even on the assumption that respondent Umali urged the general membership of the complainant union to join with him in his move to affiliate the union with the federation but [sic] such act on the part of Rodolfo Umali cannot to our mind be considered union disloyalty to warrant his removal from office and his expulsion from the union. It should be noted that Litton MiIIs Employees Association-KAPATIRAN is an independent registered labor organization without any affiliation. So that, respondent Umali cannot be held liable under Par. (b), Section 5, Art. IV of the union's constitution and by-laws as he was only trying to affiliate the union with the federation for reason, perhaps, to avail [sic] the services and assistance of the federation and not organizing or joining another labor union. Organizing or joining another labor union is different from affiliation of the union. The former implies abandonment of the union membership as what the [sic] respondent Umali did. On this score, respondent Umali cannot be stripped of his membership much less to remove him (sic) from the union presidency. ... As to the second issue, it appearing that the impeachment of respondent Umali is adjudged to be without valid ground, the union security clause of the existing CBA does not apply. Hence, the prayer of the complainants to terminate the employment of Rodolfo Umali with Litton Mills, Inc. should not be given due course. Petitioners appealed the Med-Arbiter's order to the public respondent, who, in a Resolution, dated 13 February 1987, dismissed the appeal for lack of merit, and affirmed in toto the order of the Med-Arbiter, dated 17 November 1986. Petitioner's motion for reconsideration was denied in an order, dated 1 April 1987. Hence, the present recourse. The controversy, in the case at bar stems from respondent Umali's act of affiliating the petitioner-union with GATCORD, which caused the union officers to impeach Umali for disloyalty to the union. The impeachment is anchored on a provision in the petitioner union's Constitution and By-Laws, which reads as follows: Art. IV, Section 5. Membership may be lost under the following grounds: xxx xxx xxx b) Organizing or joining another labor union or any federation. xxx xxx xxx -a (Emphasis supplied) One of the grounds for losing membership in the union, as aforestated, is by joining a federation. There is no dispute in the present case that GATCORD is a labor federation, to which respondent Umali affiliated the petitioner-union as evidenced by mimeographed leaflets he caused to be distributed among the union-members, urging them to continue affiliating with GATCORD, the Pledge of Allegiance of newly7

appointed Shop Steward Norberto David, and the letter of Umali to LMI, dated 20 August 1986, the last two (2) being attested to by GATCORD's National President Timoteo Aranjuaez and the fact that the letter dated 20 August 1986 was written on paper with GATCORD's letterhead Also, the affiliation of the petitioner union with GATCORD was affirmed by Umali himself, when he presented the alleged 700 signatures of union-members who supported his move of affiliating the union LMEAK with GATCORD. Hence, it cannot be denied that Umali did not only propose the affiliation, but in fact affiliated the petitioner union with GATCORD, in contravention of the above-cited prohibition in Section 5, Article IV of the petitioner union's Constitution and By-Laws. And yet, if the act of Umali in affiliating the petitioner-union with GATCORD, is with the consent of a majority of the union membership, then any violation of the petitioner-union's Constitution and By-Laws becomes of little consequence. It will appear in such case that the union itself has ratified the act of affiliation. It will be noted that Umali, albeit belatedly, presented the signatures of 700 members of the union, as proof of the support he had from them for the union's affiliation with GATCORD. On the other hand, petitioners presented 725 signatures, or 65.9% of the entire union membership, who signed the "Sama-Samang Kapasiyahan", as proof of those who opposed the affiliation, in addition to petitioners' allegation that out of the 700 signatures presented by Umali, 161 signatures were either forged or faked, twice or thrice written, or signatures of already resigned employees. This Court takes notice of the fact that in all of the pleadings submitted by respondent Umali, lie never bothered to refute the charge of the petitioners as to the questioned 161 signatures; neither has he denied that the union members who opposed the affiliation were more than those who supported it. Hence, this Court finds that the affiliation of the petitioner union with GATCORD was done by Umali without the support of the majority of the union membership. Furthermore, the Court notes that the collective bargaining agreement of the petitioner-union LMEAK with LMI was to expire only on 31 October 1987, whereas, Umali affiliated the union around August 1986, or about 14 months before the expiration of said CBA. The affiliation of the petitioner-union with GATCORD converted the former's status from that of an independent union to that of a local of a labor federation. Such change in status not only affects the Identity of the petitioner union but also its powers, duties and privileges, for as a local, it will have to contend with and consult the federation, in matters affecting the union. The act of affiliating with a federation is a major modification in the status of the petition union. And such act is a violation of the rule that no modification of the CBA can be made during its existence, unless either party serves written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration 8 date. Hence, there was a violation of the existing CBA, on the part of Umali. As to the impeachment of a union officer, Section 2, Article XV of the petitioner-union's Constitution and By-Laws provides the procedures to be followed, to wit: (1) Impeachment should be initiated by petition signed by at least 30% of

all bona fide members of the union, and addressed to the Chairman of the Executive Board; (b) A general membership meeting shall be convened by the Board Chairman to consider the impeachment of an officer; (c) Before any impeachment vote is finally taken, the union officer against whom impeachment charges have been filed shall be given ample opportunity to defend himself , and (d) A majority of all the members of the union shall be required to impeach or recall union officers. It clearly appears that the above cited procedure was not followed by the petitioners when they impeached Umali. To be sure, there was difficulty on the part of the petitioners in complying with the required procedure for impeachment, considering that the petition to impeach had to be addressed to the Chairman of the Executive Board of the Union, and that the majority membership which would decide on the impeachment had to be convened only upon call of the Chairman of the Executive Board who, in the case at bar, happened to be respondent Umali himself. Nevertheless, despite the practical difficulties in complying with the said procedure, petitioners should have shown substantial compliance with said impeachment procedure, by giving Umali ample opportunity to defend himself, as contrasted to an outright impeachment, right after he failed to appear before the first and only investigation scheduled on 27 August 1986 in the Litton Canteen. The above conclusions notwithstanding, the Court believes that the union-members themselves know what is best for them, i.e., whether they still want respondent Umali as their Union President, and whether they wish to affiliate their union with GATCORD. And, the best and most appropriate means of ascertaining the will of the union members is through a certification election. Consistent with the foregoing observations, it appears from from the record that a group of employees headed by petitioner Rogelio Abong broke away from the petitioner-union and formed a new union, called Litton Mills Workers Union, and that in a certification election that followed, said Litton Mills Workers Union, headed by 9 petitioner Abong, was chosen as the collective bargaining agent. Because of this supervening event, it now appears clear that the majority of the heretofore members of petitioner-union LMEAK do not wish respondent Umali to continue as their president; neither do they wish their union to be affiliated with the GATCORD federation. Consequently, the issues in this petition have become moot and academic.
The Manifestation of the petitioners, dated 9 October 1987, after informing the Court of the election of the Litton Mills Workers union headed by petitioner Abong, as the collective bargaining representative in LMI, reiterates the prayer that respondent Umali be considered and declared as impeached. This issue has, to the mind of the Court, likewise become moot and academic for it is inconceivable that Umali will be retained as president of the new collective bargaining agent, the Litton Mills Workers Union, while Umali's continued presidency of LMEAIC as a minority union if still existing in LMI, has ceased to be of any moment in the instant case. WHEREFORE, the petition is DENIED for having become moot and academic. Without pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 115949 March 16, 2000

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 attorney's fees. It also contained an authorization for SolidBank Corporation to checkoff said attorney's 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 2 authorized representative. The new CBA was signed on February 21, 1992. The bank then, on request of the union, made payroll deductions for attorney's 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 attorney's fees as well as for quantification of the benefits in the 3 1992 CBA. 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 4 grounds. 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 attorney's 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 attorney's fees, in accordance with Section II, Rule VIII of Book II (sic) of the Omnibus Rules Implementing the Labor Code.5

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 SOLID BANK UNION MEMBERS, respondents.

QUISUMBING, J.: Before us is a special civil action for certiorari seeking to reverse partially the 1 Order 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 union's 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 union's 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.

On appeal, the Secretary of Labor rendered a Resolution 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 attorney's fees; and (2) the directive on the payment of 5% attorney's fees should be deleted for lack of basis.

SO ORDERED.

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

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? Petitioners argue that the General Membership Resolution authorizing the bank to check-off attorney's fee from the first lump sum payment of the legal benefits to the employees under the new CBA satisfies the legal requirements for such 9 assessment. 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 10 formalities mandated by the Labor Code. In check-off, the employer, on agreement with the Union, or on prior authorization from employees, deducts union dues or agency fees from the latter's wages and 11 remits them directly to the union. It assures continuous funding; for the labor organization. As this Court has acknowledged, the system of check-off is primarily for 12 the benefit of the union and only indirectly for the individual employees. The pertinent legal provisions on check-offs are found in Article 222 (b) and Article 241 (o) of the Labor Code.
Art. 222 (b) states: No attorney's 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 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. (Emphasis ours) Art. 241 (o) provides: 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 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).

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 union's incidental expenses, attorney's 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 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 14 shortcuts are allowed. In Stellar Industrial Services, Inc. vs. NLRC 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 15 Broadcasting Corporation, et. al., 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 attorney's fees in Article 222, paragraph (b) of the Labor Code applies only when the payment of attorney's 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 Islands 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 attorney's 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 attorney's 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 attorney's 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.)1wphi1 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 union's 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.1wphi1.nt SO ORDERED.
13

Art. 241 has three (3) requisites for the validity of the special assessment for union's incidental expenses, attorney's 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) secretary's record of the minutes of the meeting; and (3) individual written authorization for check off duly signed by the employees concerned. Clearly, attorney's fees may not be deducted or checked off from any amount due to an employee without his written consent.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 77959 January 9, 1989 RADIO COMMUNICATIONS OF THE PHILIPPINES, INC., petitioner, vs. THE SECRETARY OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR OF THE NATIONAL CAPITAL REGION, DEPARTMENT OF LABOR AND EMPLOYMENT and UNITED RCPI COMMUNICATIONS LABOR ASSOCIATION (URCPICLA)-FUR, respondents. Ermitao, Asuncion, Manzano & Associates for petitioner. The Solicitor General for public respondent. Abad, Leano & Associates for respondent URCPICLA.

resolution of July 15, 1985 in G.R. No. 70148 dismissed RCPI's petition for certiorari 4 for lack of merit. Entry of final judgment was issued by the Court on July 15, 1985. Furthermore, it is not denied that as early as March 13, 1985, before the aforesaid case was elevated to this Court, respondent union filed a motion for the issuance of a writ of execution, asserting therein its claim to 15% of the total backpay due to all its members as "union service fee" for having successfully prosecuted the latter's claim for payment of wages and for reimbursement of expenses incurred by FUR and prayed for the segregation and remittance of said amount to FUR thru its National 5 President. In a subsequent "Motion for Immediate Issuance of Writ of Execution", dated September 9, 1985, respondent union reiterated its claim for said union service fee but this time in an amount equivalent to 20% of the total backpay due its members, to 6 be remitted to the institution previously adverted to. On September 24, 1985, petitioner filed its opposition to said motion, asserting, among others, that "there is no legal basis for respondent Union to have the sum equivalent to 20% union service fee deducted from the amount due to every recipient 7 8 member". An alias writ of execution was issued on September 26, 1985. On October 24, 1985, without the knowledge and consent of respondent union, 9 petitioner entered into a compromise agreements with BMRCPI-NFL as the new bargaining agent of oppositors RCPI employees, the pertinent provisions whereof are hereunder reproduced: WHEREAS, there are now pending with the National Labor Relations Commission Case No. NLRC-NCR- 11-5265-83 (NFL, et al. vs. RCPI) relative to RCPI's alleged liabilities under P.D. 1713 and Wage Orders 1, 2 and 3 and NLRC Certified Case No. 0356, with the National Wages Council and the Office of the Regional Director, Ministry of Labor and Employment, National Capital Region NWC Case Ref. No. WO-1-13 (O.P. Case No. 1882, S.C. G.R. No. 70148) relative to RCPI's alleged liabilities under Wage Order No. 1; and with the Office of the Regional Director, MOLE-NCR, a similar case (NCR-FSD-10-118- 83); 'WHEREAS, RCPI is one of the parties in the above cases and is herein represented by its duly authorized representative/s while the complainant/employees of RCPI are the other real parties in interest in the said cases and are represented herein by BMRCPI-NFL, the duly certified bargaining agent of the said complainant/employees; WHEREAS, it is to the actual interest and benefit of the parties mentioned in the preceding WHEREAS (the herein parties) that this Compromise Agreement be entered into by and between them for the purpose of novating the above mentioned cases, particularly any and all decisions therein, with the view of re-defining the parties' rights and obligations under the various Presidential Decrees and/or Wage Orders subjects of the above mentioned cases.

REGALADO, J.: This petition for certiorari seeks the annulment of the orders issued by public respondents in NWC Ref. No. W01-13, viz: (1) the order of May 7, 1986 of respondent Regional Director requiring petitioner Radio Communications of the Philippines, Inc. (hereinafter, RCPI) and its employees represented by Buklod ng Manggagawa sa RCPI-NFL (BMRCPI-NFL, for brevity) to pay private respondent United RCPI Communications Labor Association (URCPICLA-FUR for short) its 15% union service fee of P427,845.60, jointly and severally, and accordingly directing the issuance of a writ of execution and garnishment of RCPI's bank account for the satisfaction of said fee; (2) the order of August 16, 1986 of respondent Secretary of Labor and Employment modifying the foregoing order by reducing the union service fee to 10% of the awarded amounts and holding petitioner solely liable for the payment of such fee; and (3) the order, dated March 20, 1987, of respondent Secretary denying petitioner's motion for reconsideration. The records show that on May 4, 1981, petitioner, a domestic corporation engaged in the telecommunications business, filed with the National Wages Council an 2 application for exemption from the coverage of Wage Order No. 1. The application was opposed by respondent URCPICLA-FUR, a labor organization affiliated with the Federation of Unions of Rizal (FUR). On May 22, 1981, the National Wages Council, 3 through its Chairman, rendered a letter-decision disapproving said application and ordering the petitioner to pay its covered employees the mandatory living allowance of P2.00 daily effective March 22, 1981. Said letter-decision was affirmed by the Office of the President in O.P. Case No. 1882 and, subsequently, this Court in its
1

NOW, THEREFORE, for and in consideration of the foregoing premises and the terms and conditions herein stated, the parties have agreed and bound themselves as follows: THAT 1. RCPI by way of a compromise settlement acknowledges its alleged liability under PD 1713 (mandatory third year) and Wage Order 1 (first and third year) subject of the cases mentioned in the first WHEREAS hereof; 2. As consideration for the dismissal with prejudice of the above-captioned cases and the novation thereof and of all decisions in said cases, the parties hereby further agree that: a) On November 30, 1985, RCPI shall pay to each of its employees/complainants 30% of whatever is due him/her under PD 1713 (mandatory third year) and Wage Order 1 (first and third year) subject of the cases mentioned in the first WHEREAS hereof; b) The balance of 70% due to each employee/complainant under PD 1713 (mandatory third year) and Wage Order 1 (first and third year) subject of the cases mentioned in the first WHEREAS hereof shall be the subject of reopening and/or negotiation by the parties on July 31, 1986 for the purpose of reaching a compromise settlement thereon on terms mutually acceptable. Against this 30% shall be deducted in full all personal cash advances of every covered employee; c) Of and from the aforesaid total amount due every employee, 10% thereof shall be considered as attorney's fee due Atty. Rodolfo Capocyan, the same to be deducted from the remaining 70% and distributed to Atty. R. Capocyan at the time of the distribution of the remaining 70%. In this connection, Atty. Rodolfo Capocyan manifest (sic) that he is authorized by the covered employee (sic) to collect 10% of whatever is/are due them as attorney's fees and undertakes and binds himself to submit to RCPI the required individual check-off authorization with respect to the 30%. He and the herein union assume sole responsibility for and shall hold RCPI free and harmless from any claim, suit or complaint arising from the deduction of this 10% attorney's fee,' xxx What transpired thereafter is more completely and undisputedly narrated by the Solicitor General in behalf of public respondent, thus: Thereupon, the parties to the compromise agreement filed a joint Motion to Dismiss with Prejudice praying for the dismissal of the same with prejudice on the ground that the decision of the National Wages Council dated May 22, 1981 had already been novated by the Compromise Agreement re-defining the rights and obligations of the parties. Respondent Union on November 7, 1985 countered by opposing the motion and alleging that one of the signatories thereof-Buklod ng Manggagawa sa RCPI is not a party in interest

in the case but that it was respondent Union which represented oppositors RCPI employees all the way from the level of the National Wages Council up the Supreme Court. Respondent Union therefore claimed that the Compromise Agreement is irregular and invalid, apart from the fact that there was nothing to compromise in the face of a final and executory decision. On November 22, 1985, respondent Union filed an Urgent Motion for Lien (15% Union Service Fee) calling attention to a Resolution passed and approved by the URCPICLA-FUR Legislative Board on June 4, 1984 declaring respondent union entitled to a sum equivalent to 15% of the total backpay received by each RCPI employee from RCPI as union service fee and reimbursement of expenses incurred in successfully handling the instant case. Respondent Union prayed that RCPI be required to deposit with the Cashier of the National Capital Region, Ministry of Labor and Employment an amount equivalent to 15% of the total amount due to the covered employees as union service fee. Copy of this motion was received by the Office of the President, RCPI on November 28, 1985. xxx 'Acting on the Urgent Motion for Lien, Director Severo M. Pucan issued an Order dated November 25, 1985 awarding to URCPICLA-FUR and FUR 15% of the total backpay of RCPI employees as their union service fees, and directing RCPI to deposit said amount with the cashier of the Regional Office for proper disposition to said awardees. Despite notice of the Order of November 25, 1985, and its accompanying letter requesting the management of RCPI to withhold the 15% union service fee from each employee affected, petitioner paid in full the covered employees on November 29, 1985, without deducting the union service fee of 15%. In its motion for reconsideration and to set aside the Order of November 25, 1985, petitioner argued that said Order has been rendered moot and academic by the fact that it had already paid in full the award under the decision of the National Wages Council. It proposed instead that URCPICLA and/or FUR re-direct their efforts at collection to the rank and file employees of RCPI. It also attacked the questioned order as null and void ab anitio for lack of jurisdiction and due process. On December 16, 1985, respondent Union filed a petition praying for garnishment of petitioner's funds in its depository banks to effect remittance of its 15% union service fee in view of the payment in full by the latter of the wages due its covered employees. Petitioner moved to dismiss the petition for garnishment as illegal, irregular and highly anomalous. This was opposed by 10 respondent Union. At this juncture, the record shows that on December 19, 1985, said Regional Director issued an order declaring the decision fully satisfied and lifting all the garnishments effected pursuant thereto "(C)onsidering that the Alias Writ of Execution dated 26 11 September 1985 in this case had already been fully satisfied.

However, it appears that thereafter, in an order dated May 7, 1986, NCR officer-incharge Romeo A. Young found petitioner RCPI and its employees jointly and severally liable for the payment of the 15% union service fee amounting to P427,845.60 to private respondent URCPICLA-FUR and consequently ordered the garnishment of petitioner's bank account to enforce said claim. It was his position that although the decision of the National Wages Council did not categorically require payment of the 15% service fee directly to URCPICLA-FUR it had acted as the counsel of record of petitioner's employees, hence said payment could be authorized by applying suppletorily the provisions of Section 37, Rule 138 of the Rules of Court on attorney's lien. Said order further noted that the transaction entered into by petitioner in favor of BMRCPI-NFL in the guise of a compromise agreement, was made without the consent of URCPICLA-FUR in clear defraudation of the latter's right 12 to the 15% union service fee justly due it. Acting on petitioners "Omnibus Motion" seeking, among others, a reconsideration of said order of May 7, 1986, which motion was treated as an appeal, respondent Secretary of Labor and Employment issued an order on August 18, 1986 modifying the order appealed from by holding petitioner solely liable to respondent union for 10% of the awarded amounts as attorney's fees, on the rationale that: ... oppositor's claim for attorney's fee was the ultimate consequence of the noncompliance of RCPI with Wage Order No. 1. The RCPI employees were forced to avail of the services of oppositor as counsel, RCPI having continuously withheld payment of said benefit. They were forced to litigate up to the Supreme Court for the protection of their interest. In the case of Cristobal vs. ECC, I,49280 promulgated February 26, 1981, 103 SCRA 339, the Supreme Court ruled that 'the defaulting employer or government agency remains liable for attorney's fees because it compelled the complainant to employ the services of counsel by unjustly refusing to recognize the validity of the claim.' Attorney's fee due the 13 oppositor is, thus, chargeable against RCPI. Hence, the instant petition, basically on the sole issue of whether the public respondents acted with grave abuse of discretion amounting to lack of jurisdiction in holding the petitioner solely liable for "union service fee' to respondent URCPICLAFUR. We hold in the negative. The contention of petitioner that the challenged order of May 7, 1986 was issued with grave abuse of discretion, for supposedly imposing an additional obligation in the form of attorney's fees not contemplated in the decision of the National Wages Council, is bereft of merit. While it is true that the original decision of said Council; did not expressly provide for payment of attorney's fees, that particular aspect or deficiency is deemed to have been supplied, if not modified pro tanto, by the compromise agreement subsequently executed between the parties. A cursory perusal of said agreement shows an unqualified admission by petitioner that "from the aforesaid total amount due every 14 employee, 10% thereof shall be considered as attorney's fee, although, as hereinafter discussed, it sought to withhold it from respondent union. Considering,

however, that respondent union was categorically found by the Labor Secretary to have been responsible for the successful prosecution of the case to its ultimate conclusion in behalf of its member, employees of herein petitioner, its right to fees for services rendered, or what it termed as "union service fee," is indubitable. The further pretension of petitioner that respondent union is not entitled to attorney's fee or union service fee because it is not a member of the Bar is both untenable and in disregard of the liberalized scheme and theory of representation for labor adopted in the Labor Code. As explained by the order of the Deputy Minister of August 18, 1986 hereinbefore adverted to ... The appearance of labor federations and local unions as counsel in labor proceedings has been given legal sanction and we need only cite Art. 222 of the Labor Code which allows non-lawyers to represent their organization or members thereof. It is undisputed that oppositor (private respondent herein) was the counsel on record of the RCPI employees in their claim for EC0LA under Wage Order No. 1 since the inception of the proceedings at the National Wages Council up to the Supreme Court. It had therefore a valid claim for attorney's fee which it called 15 union service fee'. .. (Emphasis supplied). As affirmed and further clarified by respondent Secretary of Labor and Employment in his order of March 20, 1987 'While the claim for union service fee was initially directed against the union members, there is no dispute that the claim was basically for attorney's fee. As a matter of fact, RCPI admitted that the union service fee is 'for Compensation 16 for services rendered by the union. ... We also cannot but look askance and take a quizzical view of the aforequoted compromise agreement on which petitioner anchors its main arguments. Aside from the fact that, as already stated, the same was concluded behind the back of private respondent, so to speak, and with another labor union and a lawyer neither of whom prior thereto had a hand in the recovery of benefits for the RCPI employees concerned, there are certain indicia which cast serious doubts on the motives and actuations therein of petitioner. As already stated, as early as March 13, 1985, private respondent had moved for the deduction of said fee from the total backpay awarded in the decision of the Council. It reiterated such claim in its motion for a writ of execution filed on September 10, 1985 after this Court had dismissed the petition for certiorari filed by petitioner in G.R. No. 70148. Petitioner was fully aware of these proceedings since it even filed its opposition thereto on September 23, 1985, but in the aforestated order of November 25, 1985, private respondent was awarded 15% of the total backpay of the RCPI employees as its union service fee, with petitioner being directed to deposit said

amount with the NCR office. Yet, on November 29, 1985, petitioner, despite timely notice of said order and in total disregard thereof, directly paid its employees the full 17 amount of their backpay, without deducting the union service fee. Again, as is evident in the aforequoted provisions of the compromise agreement, petitioner was bound to pay only 30% of the amount due each employee on November 30, 1985, while the balance of 70% would still be the subject of renegotiation by the parties on July 31, 1986. Yet, despite such conditions beneficial to it, petitioner paid in full the backpay of its employees on November 29, 1985, ignoring the service fee due the private respondent. Worse, petitioner supposedly paid to one Atty. Rodolfo M. Capocyan the 10% fee that properly pertained to herein private respondent, an unjustified and baffling diversion of funds. It tried to explain away such obvious tergiversation by claiming that said 10% fee corresponded to the other claims embraced in the compromise agreement but not the liability under Wage Order No. 1, an apocryphal contradiction of its 18 contrary admission in Paragraph 7 of its Reply and the provisions of Paragraph 2(c) of the compromise agreement. On top of that, the records do not show any rejoinder or explanation by petitioner of this grave revelation and accusation of the Solicitor General: But the spurious and fraudulent character of such disposition made by petitioner is clearly inferable from the circumstances that: ... (2) there is no such Atty. Rodolfo Capocyan in the Attorney's Rollo of this Court (See Communication from the Office of the Bar Confidant of the Supreme Court dated March 17, 1986 found on page 459 of the record). Atty. Capocyan, being a mere fictitious character, his 'attorney's fees' which included the claim of private respondent, necessarily devolved upon petitioner. 'It would now appear that petitioner had a secret interest over the 10% fees due and owing to private respondent and thru the manipulations of petitioner's agents were given the appearance of attorney's fees' to a certain Atty. Rodolfo Capocyan. It cannot be denied that by such fraudulent method, private respondent was 19 deprived of its just and lawful fees. Even the employment of the term "novation" in the compromise agreement appears to have been dictated by the dubious motive to secure dismissal with prejudice of the decision of the National Wages Council. For, despite the express, albeit improper use of such term, there could have been no valid novation of the prior judgment for the simple reason that the pre-existing obligation thereunder and the new one sought to be created are not absolutely incompatible. On the contrary, the compromise agreement expressly recognizes the respective obligations of the parties in said judgment and precisely provides a method by which the same shall be extinguished, which method is, as expressly stated in said contract, by installment payments. The contract, instead of containing provisions incompatible with the obligations in the judgment, expressly ratifies such obligations and contains provisions for satisfying them. The said agreement simply gave the petitioner a method and more time for the satisfaction of said judgment. It did not extinguish the obligations contained in the judgment, until the terms of said agreement had been fully complied with. Had the

petitioner continued to comply with the conditions of said agreement, it could have successfully invoked its provisions against the issuance of a writ of execution upon said judgment. The contract and the punctual compliance with its terms only delayed the right of the respondent union to the execution of the judgment. The judgment was not satisfied and the obligations existing thereunder still subsisted until the terms of 20 the agreement had been fully complied with. Finally, petitioner cannot invoke the lack of an individual written authorization from the employees as a shield for its fraudulent refusal to pay the service fee of private respondent. Prior to the payment made to its employees, petitioner was ordered by the Regional Director to deduct the 15% attorney's fee from the total amount due its employees and to deposit the same with the Regional Labor Office. Petitioner failed to do so allegedly because of the absence of individual written authorizations. Be that as it may, the lack thereof was remedied and supplied by the execution of the compromise agreement whereby the employees, expressly approved the 10% deduction and held petitioner RCPI free from any claim, suit or complaint arising from the deduction thereof. When petitioner was thereafter again ordered to pay the 10% fees to respondent union, it no longer had any legal basis or subterfuge for refusing to pay the latter. We agree that Article 222 of the Labor Code requiring an individual written authorization as a prerequisite to wage deductions seeks to protect the employee against unwarranted practices that would diminish his compensation without his 21 knowledge and consent. However, for all intents and purposes, the deductions required of the petitioner and the employees do not run counter to the express mandate of the law since the same are not unwarranted or without their knowledge and consent. Also, the deductions for the union service fee in question are authorized 22 by law and do not require individual check-off authorizations. On the foregoing considerations, We find no cogent reason to disturb the order of the Secretary of Labor and Employment finding petitioner liable for the union service fee of private respondent. WHEREFORE, the order of the Secretary of Labor of August 16, 1986 is hereby AFFIRMED and the petition at bar is DISMISSED, with double costs against petitioner. The temporary restraining order issued pursuant to the Resolution of the Court of June 22, 1987 is LIFTED and declared of no further force and effect. SO ORDERED.

SUPREME COURT EN BANC

January 29, 1959, rendered, judgment, the pertinent portion of which reads: chanroblespublishingcompany Issues having been joined, this case was heard on August 15, 1958 with complainants presenting as their first witness Benjamin Umali who testified that complaint union is duly registered and that individual complainants are its members who were formerly employed in respondent company; that individual complainants were dismissed on or about May 27, 1957, because they were discriminated against in regard to their union membership; that despite repeated requests, both respondents refused to furnish complainant union copy of the collective bargaining agreement embodying the closed-shop agreement to verify its existence before joining the respondent union, and that he (Umali) was able to see the same in the Department of Labor only on May 29, 1957; that upon verification, he (Umali) immediately told complaint union members to join respondent union pursuant to said closed-shop provision, that is, as a condition of their continued employment; that on May 30, 1957, complainant union members applied for membership in respondent union which refused them, and that for this sole reason, respondent company likewise did not accept them for work. chanroblespublishingcompany On cross-examination, Umali declared that he was informed of the existence of the closed-shop agreement when he received a letter from one Alegria B. Jose, but he was not shown copy of the collective bargaining contract containing the closed-shop in question; that individual complainants, although informed of the closed-shop agreement, have never seen copy of the same which they have been requested from respondents; and that they (individual complainants) saw the agreement in question only on May 29, 1957 when he (Umali) went to the Labor Department to copy the same upon suggestion of respondent company manager. When asked by the Hearing Examiner, Umali stated that he had been dismissed at the time he saw the collective bargaining contract. chanroblespublishingcompany Another witness for complainants, Mrs. Concha Sibal, was presented, testifying that she has been employed in respondent company since 1946 and that her cocomplainants have likewise been working there for a long time; that complainant union was organized in November, 1953, much ahead of respondent union; that individual complainants were refused membership in respondent union and were not allowed to work anymore in respondent company. And in all other respects, Mrs. Sibal practically and substantially corroborated the testimony of witness Umali. She was not cross-examined. chanroblespublishingcompany With the testimony of the above witnesses, the complainant rested their case. Af ter several notices of hearing duly sent to and received by the parties, respondents failed to appear and adduce their evidence. For this reason, this Court, in a hearing conducted on January 21, 1959, considered this case submitted for decision. chanroblespublishingcompany From the evidence on record, it can be readily seen that complaint union members have expressed their willingness to join respondent union verifying the existence of the collective bargaining agreement embodying the closed-shop provision when they proceeded to the Department of Labor on May 29, 1957, to copy said agreement. In fact, the following day, May 30, 1957, said complaints applied for membership in respondent

LOCAL 7, PRESS & PRINTING FREE WORKERS (FFW), CONCHA SIBAL, DOLORES SISON, OLIMPIA ARCILLA, ET AL., Petitioner,

-versusNovember 29, 1960

G.R. No. L-16093

HON. JUDGES EMILIANO TABIGNE, ARSENIO I. MARTINEZ, GUSTAVO VICTORIANO, DEMOCRATIC LABOR UNION, and UNITED CARDBOARD BOX FACTORY, Respondents. x---------------------------------------------------x

DECISION

BARRERA, J.:

In the Court of Industrial Relations, an unfair labor practice case was instituted by CIR Acting Prosecutor Julio R. Logarta in behalf of petitioners Concha Sibal, Olimpia Arcilla, Maria Dulatre, Magdalena Sigua, Alfonso Lopez, Marieta Cabangal, Remedios Lumabas, and Estela Dublada, members of the Local 7, Press and Printing Free Workers (FFW), alleging that petitioners were dismissed by their employer respondent United Cardboard Box Factory upon request of the latters co respondent, Democratic Labor Union, with which respondent Company has a collective bargaining agreement with a close shop clause; that petitioners, upon hearing of the close shop agreement, applied for membership with the respondent Union but were not accepted, and instead, were dismissed by Tan Tiong So, manager of respondent Company; and that said acts of respondents Union and Company are in violation of Section 4(a) (4) and 4(b) (2) [1] of Republic Act No. 875. It is prayed, among others, that respondents Union and Company be declared guilty of unfair labor practice as charged; that respondent Union be directed to accept said petitioners as its members; and (3) that respondent Company be ordered to reinstate petitioners to their former positions with back wages from the time of their dismissal to the date of their actual reinstatement. chanroblespublishingcompany Although both respondent filed their respective answers, neither appeared at the hearing at which petitioner were allowed to present their evidence. The court, on

union, but the latter refused them, for which reason, respondent company justified its stand for not accepting them for re-employment. It is therefore evident that individual complainants have shown their sincere desire to abide by the closed- shop contract entered into by respondent company and respondent union. The fact that they were not able to join respondent union within the period prescribed in the agreement, assuming there is such time limit, should not militate against them for they were not furnished copy of the contract, notwithstanding their persistent requests from both respondents. Vigilant and zealous perhaps as they were, the individual complainants merely exercised the necessary diligence and prudence as union members before entering into the folds of another labor organization by requiring the respondents to prove the existence of the closed-shop provision in question. This, the respondents could have easily done by the simple expediency of showing to the complainants a copy of the collective bargaining contract which the former are supposed to possess. chanroblespublishingcompany Closed-shop contract is the most prized achievement of unionism, as it adds membership and compulsory dues. By holding out to loyal members a promise of employment in the closed-shop, it wields group solidarity. In keeping with this doctrine and with the protection to labor policy envisioned in our Constitution, this Court will liberally construe the closed- shop provision in question in favor of the increased membership of the certified union and of the security of tenure of the workers concerned. Respondent company even admitted in its answer that in spite of the length of period of absence of complainants, it will not refuse complainants employment anytime, if the Court believes it will not violate closed-shop agreement. This Court holds there is no such intended violation. WHEREFORE, IN VIEW OF THE FOREGOING CONSIDERATION, this Court hereby orders the respondent union to accept as additional members all the above-named individual complainants; namely, Concha Sibal, Dolores Sison, Olimpia Arcilla, Maria Dulatre, Magdalena Sigua, Alfonso Lopez, Marieta Cabangal, Remedios Lumabas and Estela Dublada, directs the respondent Company to reinstate the said individual complainants with full back wages from the time of their respective dismissals to their actual reinstatement; and accounts and services of respondent company in order to compute the back wages of the individuals complainants. chanroblespublishingcompany SO ORDERED. Manila, Philippines, January 29, 1959. (Sgd.) JOSE S. BAUTISTA Presiding Judge.

On August 5, 1959, petitioners filed a motion for execution of the judgment, which was granted by the court, in its order of September 24, 1959. However, on September 26, 1959, the court en banc. in considering respondent Unions motion for reconsideration (of the order January 29, 1959) re opened the entire case in a Resolution[2] the dispositive part of which states: chanroblespublishingcompany WHEREFORE, the motion for reconsideration is hereby granted; and this case is, therefore, remanded to the Trial Court to reopen this case, allow the respondents to cross-examine the witnesses already presented by the petitioners, and permit them to submit their evidence in support of their respective defenses. SO ORDERED.

Against this resolution, petitioners have filed the present petition for certiorari. chanroblespublishingcompany The resolution in question can not be sustained, insofar as it directs the reopening of the case as to respondent Company. In the answer filed in behalf of the Company, it admitted that it dismissed the herein petitioners, but alleged that it did so upon demand of the respondent Union on the strength of the closed-shop clause of its collective bargaining agreement. The record shows that it did not appear in any of the dates on which the case was set for trial. The records further show that the Companys motion for reconsideration of the order (dated January 29, 1959) of the lower court directing the Company to reinstate the petitioners to their positions with back wages, was denied by the lower court, in its resolution en banc of February 26, 1959. Respondent Company did not appeal from said order or resolution; and the same, having become final and executory, petitioners, on August 5, 1959, filed a motion for execution of said order (of January 29), which the lower court granted, in its order of September 24, 1959. In the circumstances, the lower court committed a grave error in reopening the case as the respondent Company. chanroblespublishingcompany At this juncture, it may be stated that petitioners dismissal by respo ndents Company is unjustified, considering that the closed-shop clause contained in the collective bargaining agreement it entered into with respondent Union is inapplicable to petitioners who were already in the Companys service at the time of its exec ution (I Francisco, Labor Laws [3rd Ed.] 374-375, citing Electric Vacuum Cleaner Co., NLRB No. 75 [1939], cited in II Teller Labor Disputes and Collective Bargaining, 867-868). chanroblespublishingcompany Respondent Companys claim that the order of Janua ry 29, 1959 is not a final order and, therefore, is unappealable is correct, only insofar as it directs the CIR Examiner to examine its (the Companys) books and records of accounts and services, in order to compute the back wages of petitioners, but not as the portion of said order directing petitioners reinstatement with full back wages from the time of their respective dismissals to their actual reinstatement. To our mind, an order of reinstatement, unlike an award, becomes final, upon the expiration of the time of appeal, as it finally disposes of the pending action (for reinstatement), so that

It would seem that respondents Company and Union filed their respective motions for reconsideration of said decision, although these pleadings do not appear in the record. On February 26, 1959, the court en banc issued a resolution denying respondent Companys motion for reconsideration (nothing was said about the Unions motion) for failure to file arguments in support of its motion within the 10-day reglementary period prescribed by the rules of the court. No appeal was taken from this order. chanroblespublishingcompany

nothing more can be done with it in the Co. vs. Olsen, 48 Phil., 238; 1 Moran, Comments on the Rules of Court [1952] Ed. 894-895). chanroblespublishingcompany The aforementioned resolution should, however, be upheld, insofar as it orders the case reopened with respect to the respondent Union, and allows it to cross-examine petitioners witnesses and submit evidence for its defense. Respondent Unions motion for reconsideration, it will be noted, was filed in due time, before the resolution became final. The records disclose some justification for the Unions failure to appear at the hearing of the case on January 21, 1959, which would indicate that the lower court committed no grave abuse of discretion as to constitute a reversible error. It appears that the previous hearings of the case were had before the CIR Hearing Examiner. Prior to the last date of hearing of January 21, however, the case was, without due notice to respondent union, withdrawn from the Examiner and assigned to CIR judge Jose S. Bautista. It is claimed for the union that due to the absence of said notice of the transfer of the hearing to the trial judge, respondent union failed to appear before the latter on said date. chanroblespublishingcompany Moreover, there is reason to reopen the case as to respondent the opportunity to present evidence for its refusal or failure to members thereof, considering that, as a rule, no laborer or abstract or absolute right to union membership (I Francisco, op. Am. Jur. 861; 4 Am. Jur. 462; 97 ALR 594). Union, to afford it admit petitioners as employee has an cit., 68-69, citing 31

For all the foregoing, the resolution appealed from is reversed, insofar as it directs the reopening of the case as to respondent Company, but affirmed, insofar as it orders its reopening with respect to respondent Union. As to the latter, we hereby order the case remanded to the court a quo, for further proceedings consistent herewith. Without costs. It is so ordered.