KAPISANAN NG MGA MANGGAGAWA SA MANILA RAILROAD COMPANY, PETITIONER, VS. RAFAEL HERNANDEZ, ET AL., RESPONDENTS.

Kapisanan ng mga Manggagawa sa Manila Railroad Company versus Hernandez

The Case

This is a petition for review by certiorari brought by the Kapisanan ng mga Manggagawa sa Manila Railroad Company, the labor union, against Rafael Hernandez and some four hundred of its own members. The members had charged the union and its incumbent officers and directors with unfair labor practice before the Court of Industrial Relations for passing resolutions that assessed members, spent union funds, and raised salaries without the authority and consent of the general membership. The case matters because it fixes the boundaries of a court's power to enter the internal affairs of a labor union: when the Court of Industrial Relations may intervene under the Industrial Peace Act, how the ten percent requirement is satisfied, when the exhaustion of internal remedies may be excused, and how far the court may go outside the evidence taken at the hearing without offending due process.

Procedural History

Rafael Hernandez and about four hundred members of the union, through the Acting Prosecutor of the Court of Industrial Relations, filed a complaint against the union and its incumbent officers and members of the board of directors, charging violation of several subsections of Section 17 of Republic Act Number 875. After hearing, the trial court, through Judge Jose S. Bautista, rendered judgment dismissing all charges except paragraph nine of the complaint, declaring the respondents guilty of unfair labor practice under sub-paragraph (l) of Section 17, directing them to cease and desist, and ordering them to allow complainant Rafael Hernandez to inspect the books of accounts and other pertinent documents of the union. The complainants moved for reconsideration. The court en banc issued a resolution granting the motion, with Judges Jose S. Bautista and Baltazar Villanueva dissenting and voting to affirm the original decision. The union then filed the present petition for review with the Supreme Court.

Facts

On December 12, 1960, Rafael Hernandez and some four hundred members of the union filed a complaint with the Court of Industrial Relations against the union and its incumbent officers and directors. They alleged that the officers passed resolutions imposing a monthly assessment of five pesos on every member without their authority and consent; appropriated five thousand pesos from the forced savings of the union for attorney's fees; appropriated fifteen thousand pesos for the trip abroad of Vicente Olazo, the union president; increased the monthly salaries of union officers without the approval of the general membership; authorized the expenditure of five thousand pesos from the strike fund; abused the use of the union car; failed to render an accounting of the trip abroad; and refused to let complainant Hernandez inspect the books of accounts.

After the hearing before the trial court was closed but before decision was rendered, the respondents submitted a certification stating that in a convention held on March 23, 24 and 25, 1961, the majority of the members ratified the collection of five pesos monthly as a special assessment to cover the deficit for retirement benefits, ratified all union expenditures and resolutions for the year 1959 to 1960 that were being questioned in the case, and approved the president's accounting of his trip abroad. The certification was made part of the record.

The trial court rendered judgment on July 27, 1961, dismissing all charges except paragraph nine, which concerned the refusal to allow inspection of the books. On motion for reconsideration, the court en banc issued a resolution on April 26, 1962, ordering the respondents to cease and desist from the unfair labor practice acts, to stop the monthly collection of five pesos, to render an accounting of the expenses of Olazo's trip abroad in July 1960 and reimburse to the union all expenditures and salary increases not properly authorized under the constitution and by-laws, and to post a copy of the resolution in two conspicuous places and report compliance within thirty days.

Issues

• Whether or not the Court of Industrial Relations has the power under Section 17 of Republic Act Number 875 to declare a union assessment excessive and unjustified where the necessity for the same is admitted by the respondents themselves.
• Whether or not the Court of Industrial Relations may interfere with the internal labor organization procedures of the union where the evidence shows that redress to the highest union governing body has not been availed of.
• Whether or not in unfair labor practice proceedings the Court of Industrial Relations is limited to evidence presented during the hearing.
• Whether or not the ten percent requirement under Section 17 of Republic Act Number 875 is complied with where the union members involved are not properly identified.

Applicable Provisions

Section 17 of Republic Act Number 875, the Industrial Peace Act, provides:

Section 17. Rights and conditions of membership in labor organizations. It is hereby declared to be the public policy of the Philippines to encourage the following internal labor organization procedures. A minimum of ten percent of the members of a labor organization may report an alleged violation of these procedures in their labor organization to the court. If the Court finds, upon investigation, evidence to substantiate the alleged violation and that efforts to correct the alleged violation through the procedures provided by the labor organization's constitution or by-laws have been exhausted the court shall dispose of the complaint as in unfair labor practice cases.

This is the very provision that sanctions judicial interference in the internal affairs of a union, and it supplies the two conditions for intervention: the ten percent concurrence and the exhaustion of internal procedures.

Section 5(b) of Republic Act Number 875 provides:

Section 5. Unfair labor practice cases. (b) The court shall not be bound solely by the evidence presented during the hearing but may avail itself of all other means such as, but not limited to, ocular inspections and questioning of well-informed persons, which results must be made a part of the record.

This provision defines the scope of the court's fact-finding power, but the Court reads it as subject to the requirements of due process.

Ruling

On the first issue, the Court held that the contention is not correct. The complaint did not touch on whether the assessment was excessive or unjustified, but on the fact that it was, together with the other actuations of the officers and directors, contrary to the constitution and by-laws of the union. Section 1, Article VI of the union's constitution and by-laws provides for a contribution of two pesos from each member to cover retirement benefits. The collection of five pesos was based merely on a circular of the president, apparently authorized by the board of directors. The board alone cannot amend the constitution and by-laws, and the increased assessment was in the nature of such an amendment, requiring approval in a convention of the members.

On the second issue, the Court held that while redress must first be sought within the organization, this requirement is not absolute and yields to exceptions. The complaint was filed against the union and its incumbent officers, some of whom were members of the board of directors, and the constitution and by-laws provide that charges for violations shall be filed before that same board. If the complainants had done so, the board would in effect be acting as respondent, investigator and judge at the same time. Where exhaustion of remedies within the union would practically amount to a denial of justice, or would be illusory or vain, it will not be insisted upon, particularly where property rights of the members are involved.

On the third issue, the Court held that Section 5(b) is not meant to do away with the requirements of due process. The respondents had the right to be heard before the certification was admitted so that it could inquire into and test, by cross-examination if necessary, the veracity of the facts alleged therein. Otherwise self-serving evidence could easily find its way into the record. Nevertheless, the Court could not close its eyes to the fact that the resolutions, apparently passed precisely to meet the objections in the complaint, may have a material bearing on the issues, and it would serve the ends of truth and justice to have them properly presented as evidence.

On the fourth issue, the Court held that the lower court found the ten percent requirement complied with, and it had no reason for disturbing this finding of fact.

Doctrine

Judicial interference in the internal affairs of a labor union is sanctioned by Section 17 of Republic Act Number 875, but two requirements must be satisfied: at least ten percent of the union membership must concur to report the alleged violation, and the procedures provided by the union's constitution or by-laws must first be exhausted. The exhaustion requirement is not absolute; it yields where it would practically amount to a denial of justice, or would be illusory or vain, particularly where property rights of the members are involved. The court's power under Section 5(b) to go beyond the evidence presented at the hearing does not dispense with due process; a party has the right to be heard and to cross-examine before extra-record evidence is admitted, lest self-serving evidence find its way into the record.

Disposition

The decision appealed from was set aside and the case was remanded to the trial court for the reception of evidence concerning the resolutions, and for the rendition of the corresponding judgment thereafter, with no pronouncement as to costs.

Remember This

The single line worth memorizing is that the exhaustion of internal union remedies is not absolute and yields where it would be illusory or vain, particularly where property rights are involved. Examiners like to use this case on the ten percent concurrence requirement, the exceptions to exhaustion of internal remedies, and the limits of the court's power to admit evidence outside the hearing under the Industrial Peace Act.