GOVERNMENT SERVICE INSURANCE SYSTEM, PETITIONER, VS. GSIS SUPERVISORS UNION AND THE COURT OF INDUSTRIAL RELATIONS, RESPONDENTS.

The following background facts are essential to the understanding
of the present controversy:

In CIR Case No. 87-IPA (8) of the Court of Industrial Relations,
entitled GSIS Supervisors’ Union (GSISSU) vs. Government Service Insurance
System (GSIS), Attys. Cecilio B. Magadia,
Jr. and Filemon L. Uy, as
counsel for GSISSU, filed a petition demanding from the GSIS a one rate salary
increase effective January 1, 1969 for supervisors in Pay Classes 7 to 13,
similar to that granted to the rank and file employees, in Pay Classes 1 to 6
by virtue of a collective bargaining agreement between the GSIS and the GSIS
Employees’ Association (GSISEA [CUGCO]). 
After hearing, the Court of Industrial Relations issued an Order dated April 29, 1970 granting the one-step
salary adjustment to all supervisory personnel. 
The dispositive portion of that Order reads
thus:

“WHEREFORE, respondent GSIS is hereby ordered to cease and
desist from discriminating against petitioner, its members, and other employees
in the unit of supervisors, and to grant to all of said employees the same
salary, readjustment/increase as those already granted to Manuel Perlada and other members of GSISEA-CUGCO provided they
have not reached the maximum step of their respective pay classes.”^[1]

The Court of Industrial Relations en banc affirmed
the foregoing Order in a Resolution dated May 9, 1970.  The
GSIS appealed from the foregoing Orders to this Court, docketed as G.R. No.
L-32018.

In the meantime, on May 4, 1970, Attys. Magadia
and Uy, counsel for the GSISSU, filed with the Court
of Industrial Relations, in the same Case No. 87-IPA (8), a Notice of
Attorney’s Lien.  This was based on a
retainer agreement entered into between said counsel and the GSISSU whereby the
latter agreed to compensate them, contingent upon securing a favorable Court
award, in an amount equivalent to 15% of the salary increase that will ensue
from the salary adjustment that may be granted to each and every employee in
the bargaining unit of supervisors (Pay Classes 7 to 13).

On June 5, 1970, the GSISSU counsel filed a manifestation before
respondent Court of Industrial Relations alleging that the GSIS was about to
implement, in whole or in part, the Court of Industrial Relations Order and
Resolution appealed in G.R. No. L-32018, and prayed that their attorney’s lien
be approved.  The Court of Industrial
Relations approved the lien in its Order of June 5, 1970, stating:

“Considering the notice of attorney’s lien filed by the
counsel for petitioner GSISSU together with the manifestation of June 5, 1970,
that the management of respondent GSIS has decided to pay the award, in whole
or in part; the said attorney’s lien in an amount equivalent to 15% of the
salary increases occasioned by any salary adjustment to be given to all employees
of the respondent GSIS holding positions from Pay Classes 7 to 13 (of the GSIS
Salary & Position Classification Plan) is hereby ordered deducted from all
employees so affected should increases be actually effected.  Further, let the said amount deducted be paid
directly to said counsels of record of petitioner GSISSU, namely, Attorneys Cecilio Magadia and Filemon Uy.”

On July 24, 1970,
or during the pendency of G.R. No. L-32018, the GSIS
paid 50% of the salary increase differential for the year 1969 to all supervisory
personnel without deducting 15% representing attorney’s fees.  Attys. Magadia and Uy then filed a Motion for Enforcement of Attorney’s Lien,
which was granted by Associate Judge Joaquin M. Salvador of the Court of
Industrial Relations in an Order dated July
30, 1970, modifying that of June
5, 1970, the dispositive portion of which
provides:

“WHEREFORE, the respondent, especially its General Manager, is
hereby ordered to cause to be deducted the corresponding 15% from the total
amount paid to all employees in Pay Classes 7 to 13 last July 24, 1970 from the
next succeeding in-step differentials that will be paid, together with 15% of
any amount hereafter to be paid as in-step differentials to all employees in
Pay Classes 7 to 13, and to pay the amounts so deducted from members of the
GSISSU directly to Attys. Cecilio Magadia
& Filemon Uy.

Lastly, the amounts so deducted under the preceding paragraph
corresponding to employees who are not members of the GSISSU shall be deposited
in Court for further disposition.”^[2]

The GSIS moved for reconsideration of that Order, but the Court
of Industrial Relations en banc denied the same in its Resolution
of August 24, 1970.  From the said Order and Resolution, the GSIS
interposed the present appeal to this Court on the following Assignments of
Error:

“A

RESPONDENT COURT OF INDUSTRIAL RELATIONS COMMITTED A GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO LACK OF JURISDICTION WHEN IT DIRECTED YOUR PETITIONER
TO DEDUCT 15% FROM THE TOTAL AMOUNT PAID ON JULY 24, 1970 TO ALL SUPERVISORY
PERSONNEL AS WELL AS THE AMOUNT HEREAFTER TO BE PAID TO THEM AS IN-STEP
DIFFERENTIALS, CONSIDERING THAT IN ITS ORDER OF JULY 30, 1970, EXHIBIT ‘B’ OF THE PETITION FOR CERTIORARI;
RESPONDENT CIR STATED THAT THE SAID SALARY INCREASE PAID ON JULY 24, 1970 WERE
MADE PURSUANT TO EXISTING COLLECTIVE BARGAINING AGREEMENT.

“B

RESPONDENT COURT OF INDUSTRIAL RELATIONS ERRED IN NOT HOLDING THAT
UNDER THE PROVISION OF REPUBLIC ACT NO. 5440 APPROVED ON SEPTEMBER 9, 1968, THE FILING OF A PETITION FOR WRIT
OF CERTIORARI TO REVIEW THE JUDGMENT OF RESPONDENT COURT OF INDUSTRIAL RELATIONS CONTAINED IN THE ORDER OF APRIL 29, 1970, STAYS THE EXECUTION
OF THE JUDGMENT SOUGHT TO BE REVIEWED.”

The GSIS maintains that the payment of the salary differential to
employees belonging to Pay Classes 7 to 13 was effected to implement the
collective bargaining agreement it had with the GSISEA and not pursuant to the
Order of the Court of Industrial Relations dated July 30, 1970; and that
inasmuch as the attorney’s fees due counsel stemmed from the Court of
Industrial Relations Order of April 29, 1970, supra, still pending
appeal, the Court of Industrial Relations committed an error of law when it
ordered that the stipulated fee of counsel be deducted from the payments the
GSIS had made on July 24, 1970.

The portion of respondent Court’s Order, dated July 30, 1970, cited in the first
assigned error, which allegedly states that salary increases paid by the GSIS
on July 24, 1970 were made
pursuant to a collective bargaining agreement, reads:

“x x x

“Such partial implementation was confirmed by German Aquino, Corporate Paymaster of the GSIS, who testified that
on July 24, 1970 the respondent paid 50% of the in-step differential
corresponding to the period from July, 1969 to July, 1970 to all employees in
Pay Classes 1 to 13 who have not yet reached the maximum of their respective
pay classes without deducting 15% representing attorney’s fees; that a xerox copy of a sample payroll evidences the payment
effected (Exhibit ‘A’); that very soon, the respondent will pay the remaining
balance of 30%; and that the payment was made to implement a collective
bargaining agreement between the respondent GSIS and GSISEA-CUGCO.  It is to be noted, however, that this
contract is the very collective bargaining agreement earlier implemented by the
respondent in favor of Manuel Perlada and others and
found to be effected in discrimination of the employees in the bargaining unit
of supervisors.  And because of this
finding, the Court issued the Order dated April 29, 1970
directing the uniform application of the paid in-step differential.”^[3]

It should be obvious from the foregoing that the clause,
“that the payment was made to implement a collective bargaining agreement
between the respondent GSIS and the GSISEA-CUGCO”, referred to the
continuing testimony of the witness German Aquino and
was not a finding of respondent Court. 
This is confirmed in the later portion when the respondent Court
observed that the same collective bargaining agreement had been implemented in
discrimination of the supervisory employees. 
In fact, in the earlier Order of April
29, 1970, respondent Court explicitly stated:

“In the main case, this Sala has
issued an Order, affirmed by the Court En Banc, requiring
respondent (GSIS) to bargain with petitioner (GSISSU) on the terms and conditions
of employment of supervisors.  In another
incident of the case, the petitioner complained that respondent refused and
failed and up to now still refuses and fails to bargain with petitioners.  Under these circumstances, the collective
bargaining process cannot be availed of to secure for employees in the unit of
supervisors the same benefits already granted to Perlada
and others of the GSISEA.  As to result,
in regard to the enjoyment of the salary readjustment/increase, employees stand
to benefit from membership in the GSISEA. 
Corollarily, employees in the unit of which
petitioner is the certified bargaining agent cannot expect the same benefits as
what happened in this case.  This is
discrimination.”

It is clear then that while payment of the salary increase to employees of Pay Classes 1 to 6 was
implemented by virtue of the collective bargaining agreement between the GSIS
and the GSISEA-CUGCO, it was not so with respect to supervisory employees in
Pay Classes 7 to 13, members of the GSISSU with which the GSIS had no
collective bargaining agreement, and who were discriminated against, as found
by respondent Court.  It is precisely for
this reason that the Court of Industrial Relations Order of April 29, 1970 was issued directing
the uniform application of the paid in-step differentials.  In effect, therefore, contrary to the first
assigned error, the partial payment of the in-step salary differential to
supervisory personnel by the petitioner was in partial implementation of
respondent Court’s Orders of April 29,
1970 and July 30, 1970.

We come now to the second assigned error.  It is
a fact that Section 3 of Republic Act No. 5440, approved on September 9,
1968, provides that the filing of the petition for a Writ of Certiorari to review
the judgment of the Court of Industrial Relations stays the execution of the
judgment sought to be reviewed.  It is
significant to note, however, that it was petitioner GSIS itself which
partially implemented the Order sought to be reviewed without awaiting the
resolution of the Supreme Court in G.R. No. L-32018 by paying the employees of
Pay Classes 7 to 13, 50% of their salary increase.  Although petitioner claims that it did so by
virtue of a collective bargaining agreement with the GSISSU, we have found said
assertions to be baseless.  Petitioner
GSIS, therefore, cannot refuse now to deduct the amount corresponding to the
15% attorney’s fees of the counsel for GSISSU upon the allegation that the execution
of the Court of Industrial Relations judgment should be stayed pursuant to
Republic Act No. 5440.

In brief, We find that both errors attributed by petitioner to
the Court of Industrial Relations are without merit, and that said Court did not
err in directing petitioner to deduct the 15% for attorney’s fees as directed
in its Order of July 30, 1970.

WHEREFORE, the appealed Order of July 30, 1970 and the Resolution of August 24, 1970, issued by respondent
Court of Industrial Relations, are hereby affirmed.

With costs against petitioner.

SO ORDERED.

Teehankee, (Chairman), Makasiar, Fernandez, Guerrero,
and De Castro, JJ., concur.

^[1]
p. 18, Rollo.

^[2]
p. 4, Exhibit “B”,
Petition.

^[3]
pp. 2-3, Exhibit “B” of pp. 27-28, Rollo.