RUSTICO PASCUAL, ALBERTO JOSE, ELADIO GREGORIO, REDENTOR V. SOTTO, RODRIGO V. SOTTO, MARIANO HERRANZ, MARINA DAVILA, EDUARDO OCAMPO, PEDRO ASENSI, FRANCISCO PADUA, JUANITO SAN M…

The question in this case is whether or not a lawyer may collect
attorney’s fees from non-union members who were not his clients but were
extended by the employer salary increases similar to those given to union
members in settlement of a labor dispute prosecuted by said lawyer.

The petitioners, namely: Rustico Pascual, Alberto Jose, Eladio
Gregorio, Redentor V. Sotto, Rodrigo V. Sotto, Mariano Herranz, Marina Davila,
Eduardo Ocampo, Pedro Asensi, Francisco Padua, Juanito San Miguel, Rafael
Francisco, Eliseo Lizada, Federico de Lange, Cesar Victoriano, Alcibiades Jose,
Florita del Rosario, et al., were supervisors, junior executives or
confidential employees of Pan American World Airways, Inc. (respondent Company)
at the time this special civil action was commenced in July, 1967, and were,
therefore, ineligible to join the union of the rank and file employees, the Pan
American Employees Association or PANAMEA.

Respondent Atty. Jose C. Espinas represented PANAMEA in a labor
dispute with respondent Company which arose in connection with a provision,
Art. 6(d), in the collective bargaining contract between PANAMEA and respondent
Company concluded on March 17, 1960, which stipulated that if “a law
diminishing the value of Philippine currency is enacted and as a result thereof
the company is granted the necessary authority to in­crease its rates, either
party may, upon written notice to the other, re-open this agreement for
negotiation of wage rates x x x.” PANAMEA made a demand on July 8, 1960,
for negotiation of wage increases pursuant to the above-quoted provision and
negotiations were had but when no agreement was reached a strike was called by
PANAMEA on August 1, 1960.

On August 3, 1960, the dispute was certified by the President of
the Philippines to respondent Court of Industrial Relations, CIR, and the case
was doc­keted therein as Case No. 30-IPA. On August 4, 1960, respondent Atty. Espinas entered the case as lawyer
for the union. A Return to Work
Agreement was made with the submission of the case to respondent CIR. On November 22, 1960, respondent CIR ordered
the parties to negotiate on wages. An
appeal from this order was made to this Court and docketed as G.R. No. L-18345,
entitled PanAm World Airways vs. PAA Employees Association and CIR. This Court affirmed the order of the CIR.

While Case No. 30-IPA was pending resolution, another labor
dispute resulting in a strike arose bet­ween PANAMEA and respondent
Company. This second case was also
certified by the President to respondent CIR on September 4, 1963, and docketed
as Case No. 44-IPA.

On July 14, 1964, PANAMEA, for the third time, went on strike.

A solution was finally reached on July 24, 1964, when PANAMEA and
respondent Company framed a new agreement which was embodied in an Order of the
CIR dated July 27, 1964, wherein respondent Company agreed to “increase
the present salary of each employee, member of the Petitioner Union by fifteen
per cent (15%)” effective March 1, 1963. This ended the strike and terminated the two cases, except the wage
adjustment issue for the period covered by the old contract, which the parties
agreed to submit to arbitration. They
did so in September, 1964.

On June 21, 1965, Judge Arsenio I. Martinez of the CIR, Acting as
Arbitrator, rendered an award the dis­positive portion of which states as
follows:

“After a careful consideration of the arguments and the
evidence of both parties, we believe and so hold that a sum equivalent to four
(4) months salary of the employees concerned based on the pay rates as of Feb­ruary
28, 1963, payable in two installments, would be a fair and reasonable
settlement of the claim for wage adjustment for the period covering the
effectivity of the collective contract executed on March 17, 1960.”

It appears that respondent Company extended all the wage increase
benefits awarded to PANAMEA in the two CIR cases to all its employees,
including peti­tioners who, as aforesaid, occupy supervisory, junior executive,
and confidential positions.

In a motion dated June 30, 1965, Atty. Espinas asked for the
approval of attorney’s lien of 20% against the benefits that were extended to
employees who were not members of the union. This was opposed by respondent Company in an Answer dated July 2, 1965.

On November 16, 1965, a “Clarification of Arbitra­tion
Award” was issued by Judge Arsenio R. Martinez, again acting as
Arbitrator, where the question of attorney’s lien was passed upon in the
following manner:

“Incidentally, several actions have been filed regarding the
question of attorney’s fees. As shown
by the records, it is with respect to the benefits to be received by the
supervisors of the res­pondent company that attorney’s lien are being sought to
be imposed, as well as upon certain non-union members of the rank and
file. Nevertheless, the Arbitrator can
not see its way clear on these issues. The terms of the Agreement is for the Presiding Judge to act as
Arbitrator on the question of wage adjustment. Whatever action has been made so far is on account and solely because of
this designation. However, to solve the
issue once and for all on the assumption that matter is interrelated to all
others, considering that just as the workers are entitled to the benefits, their
lawyers too, by all standard of fairness, are equally entitled, this arbitrator
feels that it can take cognizance of. Consequently, all those who stand to profit by the award must pay
attorney’s fees based on the agreement as to the amount.”

In the dispositive portion of the clarification, Judge Martinez
directed “(c) As to attorney’s fees, let the parties be guided accordingly
in pursuance thereof.”

Nothing happened until April 18, 1967, when Judge Joaquin M.
Salvador, acting as Associate Judge of the respondent CIR, issued an order
granting the motion of Atty. Espinas.

On April 24, 1967, petitioners filed a Special Appearance and
Motion to Dismiss, questioning the award of attorney’s fees, claiming that they
are supervisors, junior executives and confidential employees of the res­pondent
Company and are therefore expressly excluded from being members of PANAMEA;
that they did not derive any benefit from the agreement between PANAMEA and res­pondent
Company; and that they had not been made parties directly or indirectly in
Cases Nos. 30-IPA and 44-IPA, nor had they come within the jurisdiction of
respondent CIR, nor had they authorized respondent Company to act in their
behalf.

Respondent Company, for its part, also filed a Motion for
Reconsideration to Set Aside the grant of attorney’s fees. The respondent Court en banc
denied the motion on May 22, 1967.

Hence, this petition for certiorari and prohibition, with
preliminary injunction to declare the Order of respondent CIR null and void and
to prohibit res­pondents, particularly the CIR and Atty. Jose C. Espinas, from
undertaking further proceedings against petitioners.

This Court granted the writ of preliminary in­junction prayed
for.

Respondent Company admits in its Answer all the allegations of
fact in the petition as well as the allegations in support of the petition for
prelimina­ry injunction.

Respondent Espinas, after filing his Answer, entered a Motion
before this Court on September 13, 1967, for deposit of his attorney’s fees in
the two labor cases computed by the CIR as amounting to P68,317.36.

Respondent Company countered that the amount of P68,317.36 sought
as deposit constitutes the 20% of the benefits received by all of the employees
of the respondent Company, including the rank and file em­ployees who are
members of the Union and from whom respondent Espinas is not claiming a lien
and those who are no longer employed by the Company. It mani­fested on September 29, 1967, that 20% of the benefits
received by petitioners amounts only to P25,988.21.

Petitioners opposed the Motion to Deposit on October 2, 1967, on
the ground that claim for attor­ney’s fees is enforceable only by writ of
execution. On December 8, 1967, this
Court denied the Motion.

The foregoing recitation of facts shows the fol­lowing salient
points: first, petitioners were never made parties in Cases Nos. 30-IPA and
44-IPA and had never come within the jurisdiction of respondent CIR except when
they filed a special appearance to contest the award of attorney’s fees against
them; second, Atty. Espinas has no contract for lawyer’s services with the
petitioners; third, it does not appear that Atty. Espinas performed any special
service for peti­tioners in the two cases that were filed with the CIR; and,
fourth, petitioners were at that time supervisors, junior executives, or confidential
employees while Atty. Espinas represented a union composed of the rank and
file.

It is admitted by respondent Espinas that:

“There is no dispute here that res­pondent Atty. Espinas has
no contract for legal services with the petitioners. There is also no dispute that the petitioners were never the
clients of respondent Espinas. Neither
is it disputed by the respondent that there is a lack of attorney and client
rela­tionship between the petitioners and respon­dent Espinas.” (Rollo, p.
171.)

The question, therefore, is whether his claim for attorney’s fees
can be supported on other grounds.

Respondent Espinas bases his claim on the alle­gation that his
work benefited not only the union members but also those not members of the
union. In effect he claims that the
latter should be made to pay on the principle of quasi-contract. Quasi-contracts are defined in Art. 2142 of
the Civil Code, thus: “Certain lawful, voluntary and unilateral acts give
rise to the juridical relation of quasi-contract to the end that no one shall
be unjustly enriched or benefited at the expense of another.”

However, the principle of quasi-contract cannot be applied in
this case. For as pointed out in National
Brewery and Allied Industries Labor Union of the Philippines vs. San Miguel
Brewery, Inc., L-18170, August 31, 1963, 8 SCRA 806, where the same
principle was invoked: “But the
benefits that accrue to nonmembers by reason of a collective bargaining
agreement can hardly be termed ‘unjust enrichment’ because, as already pointed
out, the same are extended to them precisely to avoid discrimination among
employees. [International Oil Factory
Workers’ Union (FFW) vs. Martinez, et al., G.R. No. L-15560, Dec. 31,
1960].” (At pp. 811-812.) See also Philippine Air Lines Supervisors
Assn. vs. Jimenez, L-26622, May 31, 1974, 57 SCRA 260.

In this case, respondent Company extended to the petitioners
similar wage increases that had been won by PANAMEA in order to maintain
equilibrium in the Company – not because of the efforts that respondent Espinas
exerted. In fact, petitioners allege,
and this stands uncontradicted, that respondent Company had in fact offered
higher wage increases but because the union and Espinas decided to go on strike,
the resulting award was much less. Petitioners
also allege that they had long been due for merit increases which did not,
however, materialize because the respondent Company wanted to avoid a union
strike and a suit for unfair labor practice.

The questioned order relies on two cases where the Supreme Court
allowed attorney’s fees to be collected against non-union members: Union Empleados De Trenes vs. Kapisanan
ng mga Manggagawa, MRR et al., 110 Phil. 309, and Martinez et al. vs.
Union de Maquinista Fogoneros y Motormen et al., L-19455-56, Jan. 30, 1967,
19 SCRA 167.

The ruling in the case of Union de Empleados de Trenes vs.
Kapisanan ng mga Manggaqawa sa M.R.R. Co., et al. supra is
inapplicable as the factual setting of that case is different from that of the
case at hand. There, the lawyer, Atty.
Gregorio E. Fajardo, had filed a petition for additional compensation for night
work in favor of Kapisanan ng mga Manggagawa sa M.R.R. Co. Subsequently, another case seeking the same
relief was filed by Union de Empleados de Trenes. The latter was allowed to intervene in the first case and even
offered to pay Atty. Fajardo 5% attorney’s fees. In February 1950, Atty. Fajardo was able to secure a 25%
additional compensation for night work for Kapisanan and the award was also
made applicable by the Court of Industrial Relations to all employees and
workers of the Manila Railroad Company, whether members of any union or
not. At this point, Atty. Fajardo was
dismissed by Kapisanan. Thereafter, in
June 1950, the Union de Empleados de Trenes agreed to abide by the decision of
the Court of Industrial Relations in the first case. As the company was not then in a financial condition to comply
with the award, proceedings for the execution of the award obtained by Atty.
Fajardo were initiated – by another lawyer – only in 1956, where the issue of
attorney’s fees also came up. This time
the Union de Empleados de Trenes asked to be excluded from the first case
contending that it derived its benefits in the second case – in order to avoid
payment of attorney’s fees. The Court
of Industrial Relations did not sustain its stand and this Court upheld the
award of attorney’s fees against the Union de Empleados de Trenes. Clearly, an implied lawyer-client
relationship existed between Union de Empleados de Trenes and the lawyers for
Kapi­sanan, binding the Union to pay attorney’s fees.

Moreover, this Court, in the case of Philippine Air Lines
Supervisors’ Assn. vs. Jimenez, supra, observed that in the case of Union
de Empleados de Trenes “the benefits obtained for all workers would
not have materialized were it not for the special efforts and successful
prosecution by the claimant union and its attorneys of the suit for special
bene­fits and hence the industrial court deemed it just and equitable that all
employees benefited by the hard-earned judicial award share in the fees and
expenses.” (At p. 272.)

There is nothing in this case that would justify a conclusion
that Atty. Espinas rendered special legal service which resulted in special
benefits to petitioners nor is there even any circumstance that would imply
that petitioners encouraged and supported the efforts of Atty. Espinas. Petitioners received what they did, not
because of Espinas’ efforts, but because of respondent Company’s policy of
non-discrimination.

The case of Martinez et al. vs. Union de Maqui­nistas
Fogoneros y Motormen et al. supra, also involves a different set of
facts. In that case, two unions in the
Manila Railroad Company, namely, the Union de Maquinistas Fogoneros y Motormen,
designated as the sole representative of all maquinistas, fogoneros and
motormen, and the Union de Empleados de Trenes, the sole representative of all
the conductors, route agents and porters, demanded wage increases. After the unions struck, the case was
certified by the President of the Philippines to the Court of Industrial
Relations. The Kapisanan ng mga
Manggagawa sa M.R.R. Co., which was designated as the sole representative of
the rest of the company’s personnel, was allowed to intervene in the case. After several negotiations and hearings, the
Court of Industrial Relations awarded a permanent wage increase and made the
same applicable to every employee of the Manila Railroad Company. In view of this, the attorneys who represented
the three unions filed a motion to have their lien for attorney’s fees extended
to the increase received by all other employees who were not members of the
unions. The industrial court granted
the motion.

In affirming the grant of attorney’s fees against the non-union
members, this Court considered it pertinent that “the general policy of
the law is to encourage unionism to enable employees to bargain with the
employer upon a more or less equal footing.” The Court was of the view
that exemption of the non-union members who benefited from the award would run
“counter to this policy because it tends to encourage a substantial
portion of the employee force of any corporation not to affiliate with the
Union that has a collective bargaining agreement with the Company, and sit idly
while the union members are fighting to secure benefits that are later extended
not only to them but also to all other employees of the company.” (At p.
171) This rationale does not apply in the case at hand where the employees
sought to be taxed with attorney’s fees are all supervisors, junior exe­cutives,
and confidential employees, and, therefore, could never become members of the
union that originally obtained benefits.

This Court is mindful of the comprehensive charac­ter of the
power of the CIR under Section 17 of C.A. No. 103 to “alter or modify in
whole or in part or set aside any such award, order or decision or reopen any
question involved therein” during the effectiveness of an award. As aptly stated by Senior Justice Fernando
in Philippine Association of Free Labor Unions (PAFLU) vs. Salvador,
L-29471, September 28, 1968, 25 SCRA 393: “The power of the Court of Industrial Relations which, as thus
phrased, is comprehensive in character, has been given an interpretation by us
consistent with the well-nigh sweeping reach of its language. It has never been construed in a niggardly
sense; the recognition of such authority has been full and sympathetic, never
grudging.” However, the power of the CIR under that section is not
unlimited; it must be confined to matters involved in the award which resolves
the labor dispute. The jurisdiction of
the CIR in the two labor cases was acquired upon presidential certification and
this covers only the labor dispute between PANAMEA and respondent Company over
the wage adjustment issue under the old collective bargaining agreement, as
well as wage in­creases that were the subject of a new agreement. Its authority, therefore, was confined to
the parties to the dispute. The salary
increases granted to peti­tioners by respondent Company were not related to the
labor dispute nor part of the award made in the two cases. Perforce, a claim for attorney’s fees
against petitioners is not related to the two cases certified to the industrial
court.

In the case of Northwest Airline vs. Northwest Airline Sales
Employees Association, L-17378, April 20, 1962, 4 SCRA 1265, this Court
placed in proper perspec­tive the power of the CIR under Section 17 to reopen
any question during the effectiveness of an award when it held:

“But this applies only where the subsequent matter is
incidental or related to the original or main case and not where, as in the
instant case, the new controversy has absolutely no relation or is alien to the
original or main case. To hold
otherwise would be to grant to respondent Court excessive or broad powers, not
conferred or contemplated by the statute.” (At p. 1271)

WHEREFORE, the petition for a writ of certiorari and
prohibition is hereby granted and the questioned order dated April 18, 1967, is
set aside as null and void. The writ of
preliminary injunction issued is hereby made permanent. No costs.

SO ORDERED.

Barredo, Antonio, Aquino, Concepcion, Jr., and Santos, JJ., concur.

Fernando, J., (Chairman), did
not take part.