IN RE: PETITION FOR AUDIT OF THE BOOKS OF ACCOUNTS OF THE BATAAN REFINERS UNION OF THE PHILIPPINES (BRUP),

In re Petition for Audit of the Books of Accounts of the Bataan Refiners Union of the Philippines

The Case

This is a petition for certiorari under Rule 65 of the Rules of Court, brought by four union officers against the Director of the Bureau of Labor Relations. Concerned members of the Bataan Refiners Union of the Philippines had asked the Department of Labor and Employment for an independent audit of union funds for the years 2000 to 2002, and the audit ultimately produced an order holding the officers accountable and directing restitution. The officers came to the Supreme Court complaining of grave abuse of discretion. The case matters for two reasons: it fixes who may be made to restitute union funds after a financial examination, and it illustrates how the Court treats technical rules in labor cases.

Procedural History

On November 25, 2002, concerned union members filed a letter before the Regional Office III of the Department of Labor and Employment in San Fernando, Pampanga, seeking an independent audit of union funds for the years 2000 to 2002. The letter was treated as a complaint for audit. The officers moved to dismiss on procedural grounds, and the members answered that they had complied with the requirements and that the complaint was supported by twenty percent of the union membership.

On July 21, 2003, Regional Director Josefino Torres rendered a decision for the audit and examination of the union's books of account. A pre-audit conference was scheduled. On March 1, 2004, the Regional Director issued an order finding the officers guilty of illegal disbursements and ordering them to restitute union funds in the amount of 1,025,367.10 pesos. The officers appealed to the Bureau of Labor Relations. On October 11, 2004, Director Hans Leo Cacdac issued a resolution partially granting the appeal and ordered a re-audit, directing an accounts examiner-designate to receive evidence and review the findings. On the basis of that examiner's audit report of August 11, 2009, Director Rebecca Chato issued the order of March 23, 2010, directing the officers to account, justify and explain 783,099.15 pesos before a general membership assembly, and to restitute doubtful expenses of 10,578 pesos and a cash shortage of 14,864.95 pesos. A motion for reconsideration was denied in a resolution dated November 8, 2011. The officers then filed this petition for certiorari before the Supreme Court.

Facts

The Bataan Refiners Union of the Philippines had, for the period covered by the audit, Bernardo Abella, Junior as president and Justino Ainza as treasurer. Salvador Mendoza and Manuel Custodio were later elected president and treasurer, respectively, on November 15, 2002, with their tenures to commence on January 1, 2003. During the audited period, Salvador Mendoza was union vice-president.

Acting on the members' letter, the Regional Director ordered an audit. The audit examiner's findings led to the March 1, 2004 order disallowing expenses and directing restitution. On appeal, the Bureau Director ordered a re-audit, and the second examiner produced an audit report dated August 11, 2009. On that basis, the Bureau Director issued the March 23, 2010 order requiring the four named officers to account for 783,099.15 pesos before the general membership and to restitute the doubtful expenses and cash shortage.

The officers sought reconsideration, which was denied in the November 8, 2011 resolution. That resolution also directed the incumbent officers to call another general membership assembly and to adopt a resolution, in accordance with the union constitution and by-laws, on whether to accept the accounting and absolve the officers of liability. Hence the petition.

Issues

• Whether or not the Bureau Director gravely abused her discretion in not acting on the motions for reconsideration that the officers claim to have filed.
• Whether or not the Bureau Director gravely abused her discretion in upholding the audit notwithstanding the absence of a pre-audit conference.
• Whether or not the directive requiring the general membership to pass a resolution on the accounting amounts to an improper delegation of authority.
• Whether or not the Bureau Director gravely abused her discretion in holding Salvador Mendoza and Manuel Custodio liable as accountable officers for the period covered by the audit.

Applicable Provisions

Section 6 of Rule 18 of Department Order Number 09-1997, on relief under Article 274, provides:

Where the results of the financial examination so warrants, the Bureau or Regional Director may order the accountable officers to make resolution in favor of the union.

This fixes the class of persons who may be ordered to account after a financial examination, namely the accountable officers.

Section 13 of Rule 13 of Department Order Number 40-03, on the decision after audit, provides:

When warranted, the Med-Arbiter or Bureau Director shall order the restitution of union funds by the responsible officer(s) in the same decision.

This is the provision the Court uses to limit restitution to the responsible officers, meaning those who held office during the period covered by the audit.

Ruling

On the first issue, the Court held that no grave abuse of discretion may be ascribed to the Bureau Director for not considering the alleged motions for reconsideration. The records did not show that the motions were filed and received, and the officers' allegation remained what it was, an allegation. Even if the motions had been filed, the issues raised were already passed upon, and the insistence on rigid technical rules did not promote substantial justice. The Court stressed that labor cases must be decided according to justice and equity and the substantial merits of the controversy.

On the second issue, the Court held that certiorari is a remedy narrow in scope and inflexible in character, available only for an error of jurisdiction, not to cure errors in proceedings or erroneous conclusions of law or fact. The Court agreed that the matter of a pre-audit conference is discretionary on the part of the audit examiner, since hearings and resolutions of labor disputes are not governed by the strict and technical rules of evidence or procedure observed in regular courts. The officers failed to show that the lack of a pre-audit conference resulted in a denial of substantial justice.

On the third issue, the Court held that the contention must fail. The calling of a general membership meeting on the results of the audit was, as stated in the order, in accordance with the union constitution and by-laws. The officers did not attach a copy of those by-laws or quote pertinent portions to prove their claim. One who alleges a fact has the burden of proving it, and official duty is presumed to have been regularly performed.

On the fourth issue, the Court found merit. Only responsible officers may be ordered to restitute union funds, and fairness dictates that those made accountable should be the officers who held office during the period covered by the audit. The audit covered 2000 to 2002. Salvador Mendoza and Manuel Custodio were elected only on November 15, 2002, with tenures commencing January 1, 2003, so they could not be responsible for misappropriation committed when they were not yet responsible officers. As to Salvador Mendoza, although he was vice-president during the audited period, the authorized signatories to disbursements are the president, treasurer and auditor; the vice-president is not a signatory. There was thus no evidentiary and legal basis to hold them liable.

Doctrine

Only the responsible officers of a union may be ordered to restitute union funds after a financial examination, and responsibility attaches only to those who held the accountable office during the period covered by the audit in which funds were misspent or lost. Who the responsible officers are is generally provided in the constitution and by-laws of the union. In a petition for certiorari, the petitioner must show an error of jurisdiction or grave abuse of discretion, not mere errors in proceedings or erroneous conclusions of law or fact. Technical rules of procedure are relaxed in labor cases in favor of substantial justice, and one who alleges a fact, such as a defect in the audit or an improper delegation of authority, bears the burden of proving it.

Disposition

The petition was partially granted. The orders of the Bureau of Labor Relations were affirmed with modification, in that Salvador Mendoza and Manuel Custodio were declared not liable for the restitution of the doubtful expenses and cash shortages.

Remember This

Memorize this line: only the responsible officers who held office during the audited period may be ordered to restitute union funds. Examiners use this case to test the scope of a Bureau of Labor Relations audit order and the rule that technical procedure yields to substantial justice in labor cases.