MERALCO WORKERS UNION, PETITIONER, VS. PANGILALO GAERLAN AND COURT OF INDUSTRIAL RELATIONS, RESPONDENTS.

Appeal taken by petitioner Meralco Workers
Union pursuant to Section 4, Rule 43 of the Rules of Court from an order issued
on March 3, 1965 by the respondent Court of Industrial Relations in its Case
No. 731-ULP entitled “Meralco Workers Union,
complainant, vs. Manila Electric Company, respondent,” and from said
court’s subsequent resolution dated April 2 of the same year denying peti­tioner’s
motion for reconsideration.

On July 28, 1955 petitioner Union filed an unfair labor practice
case against the Manila Electric Company, a
duly organized domestic public utility corporation – referred to
hereinafter as Meralco – docketed as Case No. 731-ULP
of the respondent court, praying for the reinstatement of Dionisio
Alcancia, a union
member, to his former position as bill collector, with back wages, and praying
further that Meralco be ordered to bargain
collectively in good faith with its employees or their representatives by
implementing the provisions of the collective bargaining agreement entered into
between them on April 29, 1955, particularly Section 7 thereof.  Meralco answered
alleging principally that its bill collector Alcancia
was dismissed because he had mis­appropriated and converted to his own use
collections made by him amounting to the sum of P593.00, and alleg­ing further
that it had faithfully complied with all the provisions of the bargaining
agreement of April 29, 1955
mentioned in the complaint.  After due
hearing the CIR, through Associate Judge Amanda C. Bugayong,
rendered its decision on December 20, 1961, the dis­positive
portion of which reads as follows:

“IN VIEW OF THE FOREGOING, the charges of unfair labor
practices against the res­pondent should be, as they are hereby, dis­missed.  This Court, however, without enforc­ing the
agreements between the parties which gave rise to some of the disputes herein,
hereby enjoins the parties to comply with the same as it was approved by this
Court in Case No. 7-IPA, since anyway the parties do not have any objection to
its literal implementation.”

The agreement referred to in the above-quoted portion of the CIR
decision is the collective bargaining agreement entered into between the
petitioner Union, on the one hand, and the Meralco, on the other, on April 29, 1955 which, upon submission to said court in Case No. 7-IPA,
was approved.  Said case arose out of the
exercise of com­pulsory arbitration power of the CIR under Section 10 of
Republic Act No. 875, and involved the same
parties as Case No.
731-ULP.  The implementation of the
aforesaid bargaining agreement, which was one of the reliefs
prayed for in the complaint filed by petitioner Union in
Case No. 731-ULP, had been clarified by the parties thereto on May 19, 1955.  Because it explains what the CIR said in the
appealed decision (“This Court, however, without en­forcing the agreements
between the parties which gave rise to some of the disputes herein hereby
enjoins the parties to comply with the same etc”), We quote the following
from said decision:

“CASE OF THE ALLEGED REFUSAL OF THE RESPONDENT TO BARGAIN
COLLECTIVELY IN GOOD FAITH BY FAILING TO COMPLY WITH THE COLLECTIVE BARGAINING
AGREEMENT ENTERED INTO BY THE PARTIES ON APRIL 29, 1955

“It is not
disputed by the parties that they entered into a collective bar­gaining agreement on April 29, 1955 con­taining
a provision, particularly Section 7 thereof, to wit:

‘Classification of Employees Positions and
Standardization of Salaries.

‘The UNION accepts the plan of classification of positions and
standardization of salaries as pre­pared and produced by the COMPANY, in
pursuance of Section 7 of the former Agreement of December 22, 1953, and the
COMPANY shall put it into effect after, and not before satisfying or complying
with the following condition:

That (a) all employees
receiving salaries or wages up to P250.00 per month or its equivalent will be
granted an automatic increase of thirteen per cent (13%) over their pre­sent
salaries or wages and (b) employees receiving salaries or wages above P250.00
per month or its equivalent will be grant­ed an automatic increase of six and
one half per cent (6-1/2%) over their present salaries or wages; it being
understood that the final rates will be to the nearest centavo per hour or the
nearest peso per month.

‘It is mutually understood and agreed by and between the parties
herein that the classification of positions and standardization of salaries are
not deemed to be final and in­flexible, but may be subject to such charges or
amendments as the parties herein may mutually agree from time to time.’

This agreement was marked as Exhibit ‘C’
and Section 7 thereof as Exhibit ‘C-1’. 
The question presented before this Court is whether or not the Company
is guilty of bargaining in bad faith by not alleged­ly implementing the
provision on the wage increase regarding the employees who were receiving
P300.00 a month.  It appears that this
agreement between the parties was deemed to be effective as of January 1, 1955, subject to such
changes and amendments that the parties may agree on from time to time.

“In the intervening period, there were questions raised in the
minds of both par­ties as to the implementation of Sec. 7 of the
agreement.  A conciliation meeting was
held on May 19, 1955 between the parties herein with Mr. H. B. Reyes and A. J. Buen­viaje
representing the respondent, while P. Gaerlan, S. Bunao, N. Cote, J. Campoma­nes,
and J. Croox representing the com­plainant.  The minutes of that meeting now forms part of
the record and is marked Ex­hibit ’10’. 
From the minutes of that meet­ing between the parties, it appears that
the following transpired:

‘x          x          x          x

1.   The first matter brought out by the Union
is the matter of salary increases, in accordance with the agreement, of
employees receiving P300.00 and up per month. 
Mr. Re­yes explained to the Union that im­mediately
after the agreement was signed he ordered the increase of salaries of employees
whose salaries are reviewed on the 1st of January of each year effective January 1, 1955, in accordance with
the agree­ment.  That employees whose
salaries are reviewed on the anniversary dates of employment have also been
reviewed as of the 1st day of the month of their anniversary dates of
employment, and others not reviewed heretofore will be reviewed during the year
1955 on the 1st days of the months of their employ­ment.  Mr. Reyes explained that this is in
accordance with the established po­licy regarding employees whose salaries are
reviewed on the anniversary dates of their employment because their sala­ries
have respectively been reviewed throughout the year 1954, from January to
December.  With this explanation, the Union
has agreed to such a policy and is satisfied with the Company’s pro­cedure of
reviewing the salaries of these particular employees.  The same agree­ment has been reached between
the Com­pany and the Union in the matter of the review
of salaries of hourly paid employees whose total monthly salary rates amounts
to P300.00 and above.

x          x          x          x’

This minutes was signed by Amado J. Buenviaje for the
respondent and Nicolas Cote for the complainant as secretary thereof.  Complainant contends that this
minutes could not have al­tered the agreement of the parties because it
was not acted upon and approved by its board of directors and/or its members in
general.  It was further alleged that Mr.
Cote could not have signed for the union. 
In other words, complainant repudiated what transpired in the
conciliation meeting between the parties on May 19, 1955.  The
questioning of the capacity of Cote to sign the minutes and the repudiation of
the agreement arrived at in that concilia­tion could not be sustained because,
as Exhibits ’10-A’, 10-B’, ’10-C’, ’10-D’, 10-E’, ’10-F’, ‘10-G’, ’10-H’, and ‘10-I’ show, Mr. Cote has
previously signed the minutes of other conciliation meetings between the
parties therein and the complainant has never re­pudiated any of what
transpired or was agreed upon in these meetings.  The Court can not see any reason why
complainant should go back on what was agreed upon in the conciliation meeting
of May 19, 1955.  It must also be considered that Mr. Gaerlan and other responsible officials of complainant were
present in that meet­ing and did not present any objections to what had been
agreed upon, indicating that they have agreed to it, as in fact they did.

“The question now is not
a question of whether the agreement entered into by the parties upon the
intervention of this court through the Honorable Associate Judge Juan L. Lanting was violated or not since this Court has no
jurisdiction to enforce collective bargaining agreements.  This was the doctrine enunciated in the case
of the Philippine Sugar Institute (G. R. No. L-13098, dated October 29, 1959).  Apparently, the question to be decided is
whether or not the respondent en­tered into the agreement without any intention
of complying with the same for if so, bad faith may be imputed upon it.  But this bad faith could not be imputed upon
the respondent even granting that they did not follow the agreement to the
letter on the point in question since it appears that this matter was taken up
in a conciliation meeting
between the parties wherein they were properly represented and wherein the
policy of the Company to the effect that the increase in pay equivalent to
6-1/2% was to be reviewed and granted on the anniversary month of the
employment of the employees con­cerned. 
As has been pointed out, the complainant did not oppose this policy
which the Company broached as the
one it would follow in implement­ing the collective bargaining agreement of the
parties regarding the wage increase of its em­ployees receiving above P250.00 a month.  If there was no bad faith, there could not
have been a refusal to bargain in good faith. 
It must also be remembered that the agreement was entered into through
the conciliatory powers of this Court, presided by the then Associate Judge
Juan L. Lanting who attested and approved the
same.  The agreement was not entered into
in the concept of free collective bargaining as now outlined by Republic Act No. 875, the very act under which
respondent is prosecuted.  It should also
be noted that there is nothing on the record to show that the respondent
followed its announced policy in implementing the wage increase in question to
dis­criminate against union members.  In
fact, the evidence shows or tends to show that the application of that policy
was univer­sal regardless of the union membership or activities of the
employees concerned.

“It is a well-settled rule that before any party may be found guilty of unfair la­bor practice, it
is essential to show that such party discriminated against union mem­bers or
against employees in order to dis­courage, interfere, or in any way meddle into
the union activities of such employees. 
Therefore, after considering the fact that the acts imputed by
complainant upon the respondent and alleged to be unfair labor practice acts were
agreed upon and executed only after a conciliation meeting with the responsible
officials of the complainant it could not be said that the Company or the
respondent herein is guilty of unfair labor practice.  It must be recalled that the causes of the
implementation of the policy and
the reasons thereof were announced to the responsible officials of the
complainant in that conciliation meeting on May 19, 1955, is too farfetched to
hold that the Company, the respondent herein, intended to commit un­fair labor
practice acts when the acts im­puted against it were first announced to the
union to which the latter agreed.

“At this juncture, it is noteworthy to mention that the
implementation of Section 7 of the agreement as proposed by the respondent and
agreed upon by complainant in the conciliation meeting of May 19, 1955 was more advantageous to the
employees.  In the agreement the wage
increase is to be implemented only once during the three years duration of the
contract.  While under the policy of the
respondent to which, as has been said, complainant agreed, the wage increase in
the percentages set forth in the agreement is to be implemented or granted not
once but every first of the month of the anni­versary of the employment of each
and every one of the employees concerned. 
In other words, during the three years dura­tion of the contract between
the parties, the wage increase will be implemented thrice instead of once as said contract seems to imply before
the parties held a conciliation meeting on May 19, 1955.  This again is another factor which the
Court took into consideration when disposing of this issue.  The general welfare of the respondents
em­ployees was paramount in the mind of the Court.”

x x x                                  x
x x                             x x x                             x
x x

“It must also be remembered, while this Court does not find
respondent guilty of refusing to bargain collectively in good faith, it is
taken into consideration the fact that the agreement in question arose out of
the exercise of compulsory arbitra­tion by this Court under Section 10 of Republic Act No. 875.  That case involves the same parties herein
and was docketed as Case No. 7-IPA.  And
it may be added that agreements arrived at pursuant to the exercise of the
powers of this Court under Section 10 of Republic Act No. 875 may be abandoned, amended or altered
only upon leave of court.”

Petitioner Union admits that respondent Pangilalo
Gaerlan, a member of the Philippine Bar, a clerk-typist in the Engineering
Department of Meralco and for some time President of petitioner Union,
signed and filed all the pleadings and appeared for the Union in all the hearings and other proceedings had in Case No. 7-IPA.

It appears that on July 11, 1962, or more than seven years after the collective
bargaining agreement mentioned heretofore was entered into by petitioner Union
and Meralco and approved by the respondent Court in Case
No. 7-IPA, respondent Gaerlan filed in his own behalf in Case No.
731-ULP a “Motion for Execution and Notice of Attorney’s Lien” alleging that the collective
bargaining agreement already referred to had an estimated monetary benefit for
the members of petitioner Union amounting to about P2,000,000; that petitioner
had retained him as counsel in Case No. 7-IPA on a contingent basis of 20% of
the total mone­tary benefits that might accrue in favor of the employees of Meralco as a result of said case.  Upon these facts he prayed the respondent
court (1) to order the computation of all the benefits received or to be
received by the mem­bers of the petitioner Union by virtue of the award in Cases 7-IPA and 731-ULP and (2)
to order further that 20% thereof be
approved as his attorney’s fees, the correspond­ing amount to be turned over to him in payment thereof. 

Gaerlan served no notice of the motion
abovementioned on, petitioner Union, for which reason during the hearing held in connection
therewith the CIR issued an order
requir­ing him to do so.  The notice was subsequently served on
Nicolas Cote, at the time President of petitioner Union, who subsequently
appeared and manifested that
while the Union had no objection to Gaerlan’s claim for attorney’s fees in so far as the supervisory employees
of Meralco were concerned, he, however, prayed that
he be given time to’ file an opposition to Gaerlan’s
claim in so far as it affected
other members of the Union.  This having been granted, petitioner Union filed its opposition on
October 21, 1962 alleging the following as grounds in support there­of: that Gaerlan’s retention as counsel for petitioner Union was made through misrepresentation and did not reflect the true intention of the Union; that the services for which he was claiming
compensation were primarily rendered by him as President of petitioner Union at
that time and that, as such
President, he was receiving due compensation;
that he had already been paid for whatever services he had rendered as the Union’s counsel in Case No.
7-IPA; that the award in Case No. 7-IPA – which was the approved version of the bargaining agreement entered into between petitioner Union and Meralco – was not the result of Gaerlan’s
legal services but was due to the efforts exerted by the Union and Management,
and that, at any rate, the contingent fees of 20% of the monetary benefits
awarded under said bargaining agreement were exorbitant and un­conscionable. 

On March 3, 1965
the CIR, through Judge Bugayong, issued the appealed
order granting, inter alia, res­pondent Gaerlan’s claim for attorney’s fees on a 20% contingent basis estimated to
amount to P400,000. 
This, according to petitioner Union, was done
without giving it a chance to be heard and present evidence in support of its
opposition filed as mentioned heretofore. 
On March 13, 1965 petitioner Union filed a motion for re­consideration alleging, among other things, that
res­pondent Gaerlan was not retained by it as its
counsel in Case No. 7-IPA because he was then its President; that the
resolution attesting to his retention as counsel and his right to compensation
was not only approved by less than a majority of petitioner’s Board of
Directors but was secured through fraud and misrepresentation; that, as stated
in a sworn statement subscribed by three mem­bers of said Board of Directors (Salvador Bunao,
Ale­jandro Santos and Marcelo Buenafe), the alleged
resolu­tion was signed by them in 1962 and not in February 26, 1955 as the
aforesaid resolution purported to show. 
On March 18, 1965 Gaerlan filed his opposition to the aforesaid motion for
reconsideration controverting the grounds relied upon
therein, to which petitioner Union filed a reply on April 15 of
the same year in which it alleged, inter alia, that
the respondent court had no jurisdiction over the subject matter of the pending
incident.  A few days later, Meralco moved the CIR to set the matter for oral argument
before the Court en banc.  Without
expressly passing upon this latter motion, the CIR denied the Union’s motion for reconsideration as well as a
similar motion filed by Meralco.

Apart from the present appeal before Us
taken by peti­tioner Union, Meralco
had appealed from the same order and resolution on April 30, 1965 (G. R. No. L-24453).  The appeal, however, was dismissed by Us on May 19 of the same year.

In support of the present appeal, petitioner Union
has submitted for consideration the following propositions:

(1)  that the CIR has no jurisdiction to determine
and award attorney’s fees in a
case involving purely a labor dispute; (2) that even if it had such
jurisdiction, it had no authority to do it in Case No. 731-ULP, nor to issue an
order in said Case No. /31-ULP for the execution of its award of attorney’s
fees in favor of respondent Gaerlan, the alleged
legal services of the latter having been rendered in another labor case
terminated seven years before; (3) that the CIR had no jurisdiction to grant
affirmative relief or any other kind of relief in an unfair labor practice case
after finding that the res­pondent therein had not committed the unfair labor
practice charged and was, therefore, acquitted; and finally, that assuming that
it had the authority to consider and make the award of attorney’s fees for
legal services rendered in Case No. 7-IPA and order its execution in Case No.
731- ULP, it had no authority to make the award and order its execution without
giving the party ordered to pay the attorney’s fees an opportunity to present
evidence in support of its opposition
to the claim for attorney’s fees.

The above propositions being interrelated, We
shall consider them jointly.

Gaerlan’s right to collect attorney’s
fees is pre­dicated upon legal services allegedly rendered by him to petitioner
Union and its members in connection with Case No. 7-IPA – a case involving the
exercise of compulsory arbitration power by the CIR under Republic Act No. 875
in which it had approved a collective bargaining agree­ment entered into
between the parties therein (petitioner Union and Meralco)
on April 29, 1955.

On the other hand, Case No. 731-ULP was an Unfair Labor Practice
case filed by petitioner Union against Meralco on
March 3, 1965 for the reinstatement of Dionisio Alcancia, a Meralco bill
collector and member of the Union, and for an order requiring Meralco to bargain collectively in good faith with its
employees or their representatives by implementing the provisions of the
aforesaid collective bargaining agreement of April 29, 1955, particularly
Section 7 thereof.  As heretofore
adverted to, the charge for un­fair labor practice was dismissed, and, in
relation to the other relief prayed for, the CIR declined to enforce the collective bargaining agreement limiting itself to enjoining the
parties thereto to comply with its provisions as approved by it in Case No. 7-IPA.

It is patent that it was error for respondent Gaerlan
to file his motion for award of attorney’s fees and for execution in Case
No. 731-ULP, in the same manner that it was error for the CIR to entertain
such motion and to issue the writ, in said case.  This conclusion is fortified by the fact
that, in the appealed order itself, the CIR held – following the doctrine laid
down in the case of Philippine Sugar Institute vs. CIR et al. (106 Phil. 401) –
that it has no jurisdiction to enforce collective bargaining agreements.  It is, therefore clear, that Case No. 7-IPA
which ended with a Collective Bargaining Agree­ment submitted to and approved by
the CIR, is the proper forum for the consideration of the professional fees due
to the lawyers who appeared for the parties therein.

Petitioner claims, however, that the CIR, being a court of
limited jurisdiction, has no authority to resolve Gaerlan’s
claim for attorney’s fees, which should be the subject of an ordinary civil
action.  This is without merit.  As stated heretofore, Gaerlan’s
claim for attorney’s fees can not be entertained in Case No. 731-ULP.  This, however, does not apply to Case No.
7-IPA, the subject matter of which – both parties concede – was within the
jurisdiction of the CIR.  The latter, con­sequently,
must be deemed to have jurisdiction, of all incidental matters connected with
the main issue – such as the professional fees due to the lawyers who repre­sented
the parties – even if a considerable period of time has already elapsed since
their services were ren­dered.

Moreover, even if we were to hold that the claim for attorney’s
fees under consideration may be entertained in Case No. 731-ULP, We would be
constrained to set aside the order and resolution appealed from on the ground
of lack of procedural due process.

As stated heretofore, upon being served with notice of the claim
for attorney’s fees and motion for execution filed by respondent, Gaerlan, petitioner Union, through its President at the
time, Mr. Cote, appeared and manifested that while the Union had no opposition
to the claim in so far as the supervisory employees of Meralco
were concerned, he asked for time to file an opposition thereto in so far as it
adversely affected other employees of Meralco.  As a matter
of fact, on November 8, 1962
petitioner Union, through its President, filed a formal
written opposition to Gaerlan’s claim and motion, raising substantial
issues whose resolution required a hearing and presentation of evidence.  Among them were that Gaerlan’s
retention as counsel for the Union was procured through misrepresentation and
did not reflect the true intention of the Union; that Gaerlan’s
appearance in Case No. 7-IPA was in his capacity as President of the Union and
not par­ticularly as counsel; that even if he had appeared as counsel, his
services as such had already
been duly com­pensated; that the
collective bargaining agreement executed by the parties in Case No. 7-IPA was
arrived at not through the efforts and services of Gaerlan
but through those of Management and the
Union; that the Board resolution pursuant to which Gaerlan’s
legal services were engaged was not
approved on February 26, 1955, as claimed by him, but sometime in 1962, and
that said resolution was not binding upon the Union because it was approved with the vote of less than the
majority of the members of its Board of Directors.

In connection with the above issues there appears nothing in the
record sufficient to overcome the Union’s contention that there had been no
formal hearing; that it had not been given sufficient opportunity to present
its evidence; and that after the filing of its opposition the next notice that
it received was in connection with the order of the CIR of March 3, 1965 which
is the order appealed from.  Bearing in
mind that the claim for attor­ney’s fees in question may reach the considerable
amount of P400,000.00
– an amount that may not be justified by the nature of the professional services
rendered – We are of the opinion,
and so hold, that it should have been the subject of a careful hearing, with
full opportunity given to both parties to the controversy to present what­ever
evidence they had to support their respective con­tentions.

WHEREFORE, the order and resolution appealed from are
hereby set aside, without prejudice to the right of respondent Gaerlan to file his claim for attorney’s fees in Case No.
7-IPA, where it should be resolved after
giving all the interested parties an opportunity to be heard in
accordance with law.  Without
costs.

Concepcion, Makalintal,
Ruiz Castro, Fernando, and Villamor, JJ., concur.

Reyes, JBL.  J., concurs with J. Teehankee’s  separate opinion as well as the main opinion.

Zaldivar, J., took no part.

Teehankee, J., concurs in this and in a separate opinion.

Barredo, J., on official leave.

Barredo, J., on official leave.