AMBROCIO VENGCO, RAMON MOISES, EUGENIA REYES, RAFAEL WAGAS AND 80 OTHERS PER ATTACHED LIST, PETITIONERS, VS. HON. CRESENCIANO B. TRAJANO, IN HIS CAPACITY AS DIRECTOR OF THE BURE…

This is a petition for certiorari which seeks to
annul:  (1) the Order of respondent
Director of the Bureau of Labor Relations dated May 23, 1983 in BLR Case No. A-0179-82 entitled “Ambrocio Vengco, et al. vs.
Emmanuel Timbungco” setting aside the decision
dated December 29, 1982;
and (2) the Order dated April 2, 1986
denying the motion for reconsideration of the Order dated May 23, 1983.

The antecedent facts are as follows:

Sometime in the latter part of 1981, the Management of the
Anglo-American Tobacco Corporation and the Kapisanan ng Manggagawa sa
Anglo-American Tobacco Corporation (FOITAF) entered into a compromise agreement
whereby the company will pay to the union members the sum of P150,000.00 for their claims arising from the unpaid emergency
cost of living allowance (ECOLA) and other benefits which were the subject of
their complaint before the Ministry of Labor. 
Respondent Emmanuel Timbungco (Timbungco, for short) who is the union president received
the money which was paid in installments. 
Thereafter, he distributed the amount among the union members.  Petitioners Ambrocio
Vengco, Ramon Moises,
Rafael Wagas and 80 others (Vengco,
et al., for short) who are union members noted that Timbungco
was not authorized by the union workers to get the money; and that ten percent
(10%) of the P150,000.00 had been deducted to pay for
attorney’s fees without their written authorization in violation of Article
242(o) of the Labor Code.  So, they
demanded from Timbungco an accounting of how the P150,000.00 was distributed to the members.  Timbungco did not
give in to their demand.  Thus, Vengco, et al. filed a complaint with the Ministry of Labor
praying for:  “(1) the expulsion of
Emmanuel Timbungco as president of the union for
violation of (the) union constitution and by-laws and the rights and conditions
of union members under the Labor Code; (2) an order to require Timbungco to render an accounting of how the P150,000.00
was distributed; and (3) an order to require private respondent to publish in the bulletin board the list of
the members and the corresponding amount they each received from the
P150,000.00.” (Memorandum for Petitioners, p. 150, Rollo).

In his answer with counterclaim, Timbungco
alleged among others, that he was authorized by a resolution signed by the
majority of the union members to receive and distribute the P150,000.00 among
the workers; that the computation of the benefits was based on the payroll of
the company; that the ten percent (10%) attorneys’ fees was in relation to the
claim of the local union for payment of emergency cost of living allowance
before the Ministry of Labor which is totally distinct and separate from the
negotiation of the CBA; and that the ten percent (10%) deduction was in
accordance with Section II, Rule No. VIII, Book No. 111 of the Rules and
Regulations implementing the Labor Code and therefore, no authorization from
the union members is required.

On July 19, 1982,
Med-Arbiter Willie B. Rodriguez issued an Order dismissing the complaint for
lack of merit.  (p. 33, Rollo)

Vengco, et al. appealed the aforesaid
order to the Bureau of Labor Relations.

On December 29, 1982,
respondent Director of the Bureau of Labor Relations Cresenciano
B. Trajano (Trajano, for
short) rendered a decision, the dispositive portion
of which states:

“Wherefore, premises considered, the instant appeal is hereby
granted and the Med-Arbiter’s Order dated 19 July 1982 hereby set aside.  Accordingly, respondent Emmanuel Timbungco is hereby ordered to render a full accounting of
the One Hundred Fifty Thousand Pesos (P150,000.00) he received from the
management of Anglo-American Tobacco Corporation in behalf of the members of
the Kapisanan ng mga Manggagawa sa Associated Anglo American Tobacco Corporation (FOITAF)
and to publish in the union’s bulletin board the list of all recipient union
members and the respective amounts they have received, within ten (10) days
from receipt hereof.  Further, respondent
is hereby expelled as president of the Kapisanan ng Manggagawa sa Associated Anglo American Tobacco Corporation
(FOITAF).  Lastly, the counterclaim
interposed by the respondent’s counsel, Atty. Benjamin Sebastian is hereby
ordered dismissed.

So decided.” (p. 50, Rollo)

Timbungco filed a motion for
reconsideration of the above-quoted decision while Vengco,
et al. filed their opposition to
the said motion.

On May 23, 1983,
Officer-in-Charge Victoriano R. Calaycay
issued an Order which held, thus:

“Wherefore, premises considered, our resolution dated 29 December 1982 is hereby set
aside.  However, an audit examination of
the Books of Account of Kapisanan ng
Manggagawa sa
Associated Anglo American Tobacco Corporation (FOITAF) is hereby ordered.

SO RESOLVED.” (p. 62, Rollo)

Vengco, et al. sought reconsideration
of the aforementioned order.  They
contended that the examination of
the books of accounts of the union is irrelevant considering that the issue
involved in the case does not consist of union funds but back pay received by
the union members from the company. 
Likewise, they pointed out that Timbungco did
not give the money to the union treasurer and consequently, the amount was not
entered in the records of the union.

On April 2, 1986,
Trajano issued an order which affirmed the resolution
of May 23, 1983 and denied
the motion for reconsideration for lack of merit.  (p. 58, Rollo)

Hence, the present recourse by Vengco, et al.

The issues raised in this case are as follows:

(1)  Whether or not Timbungco is guilty of illegally deducting 10% attorneys’
fees from petitioners’ backwages; and

(2)  Whether or not Trajano gravely abused his discretion amounting to lack of
jurisdiction in ordering examination of union books instead of affirming his
previous Order expelling Timbungco from the union and
ordering him to render an accounting of P150,000.00
received by him.  (p. 151, Rollo)

In the resolution
of June 4, 1986, We required the respondents to comment on the petition.

In his comment, Timbungco reiterates
the defenses he raised in his answer to the complaint filed against him before
the Med-Arbiter.  In addition, he claims
that he already filed an accounting report on the P150,000.00
with the Bureau of Labor Relations which enumerated the names of the workers
and the corresponding amounts they received with their respective signatures
opposite their names, the sub-total of the amount of benefits received per
department and the grand total of the amount distributed duly certified by the
Union Treasurer and Secretary and duly noted by Timbungco
as Union President.  (p. 73, Rollo)

The Solicitor General, in his comment, agrees with Vengco, et al. and recommends that the petition be given
due course.  (p. 100, Rollo)

Timbungco filed a reply to the
aforesaid comment of the Solicitor General which restates the arguments raised in his
comment.  (p. 121, Rollo)

The petition is
meritorious.

Article 241(o) of the Labor Code provides:

“Art. 241.  Rights and
conditions of membership in a labor
organization.- The following are the rights and
conditions of membership in a labor organization:

“x x x.

“(o).   Other than for mandatory activities
under the Code, no special assessment, attorney’s fees, negotiation fees or any other extraordinary fees may be
checked off from any amount due an employee without an individual written
authorization duly signed by an employee. 
The authorization should specifically state the amount, purpose and
beneficiary of the deduction.

“x x x.”

It is very clear
from the above-quoted provision that attorney’s fees may not be deducted or
checked off from any amount due to an employee without his written consent
except for mandatory activities under the Code. 
A mandatory activity has been defined as a judicial process of settling
dispute laid down by the law.  (Carlos P. Galvadores, et al. vs. Cresenciano B. Trajano, Director
of the Bureau of Labor Relations, et al., G.R. No. L-70067,
September 15,
1986, 144 SCRA 138).  In the instant case, the amicable settlement
entered into by the management and the union can not be considered as a
mandatory activity under the Code.  It is
true that the union filed a claim for emergency cost of living allowance and
other benefits before the Ministry of Labor. 
But this case never reached its conclusion in view of the parties’
agreement.  It is not also shown from the
records that Atty. Benjamin Sebastian was instrumental in forging the said
agreement on behalf of the union members.

Timbungco maintains that the “Kapasiyahan” gave him the authority to make the
deduction.  This contention is
unfounded.  Contrary to his claim, the
undated “Kapasiyahan” or resolution did not confer upon him
the power to deduct 10% of the P150,000.00 despite the
alleged approval of the majority
of the union workers.  A reading of the
said resolution (p. 75, Rollo) yields
the same conclusion arrived at by Trajano who
declared it defective.  We quote with
approval Trajano’s findings on this point:

“Further, a cursory examination of the alleged resolution
shows that it is quite defective.  Not
only that it is not dated but also that, with the exception of the first page,
the remaining pages were not captioned and did not state the very purpose for
which it was prepared.  Thus, the alleged
signatories were not properly apprised thereof. 
There is, therefore, truth in complainant’s contention that they never authorized, more so, they had no knowledge of the deduction
of 10% attorney’s fees until it was actually effected.  Consequently, the deduction was not
valid.” (p. 45, Rollo)

Moreover, the law is explicit.  It requires the individual written
authorization of each employee concerned, to make the deduction of attorney’s
fees valid.

Likewise, We find that the other “Kapasiyahan”
dated September 18, 1981
submitted by Timbungco belied his claim that he was
authorized by the union workers to receive the sum of P150,000.00
on their behalf.  The pertinent portion
of the said “Kapasiyahan” provides:

“3.  Na sa dahilang hindi
bigla ang pagbabayad sa nasabing
“CLAIM” bukod pa sa
marami kaming naghati-hati sa nasabing halaga ipinapasiya naming sa kusang-loob na kunin ang aming
bahagi sa aming kapisanan sa unang linggo
ng Disyembre, 1981 at ito’y ipinaalam namin sa Pangulo
ng Kapisanan na si Ginoong
Emmanuel Timbungco.” (p. 47, Rollo)

The above-quoted statement merely
indicated the intention of the
workers to get their claim on the first
week of December, 1981 and to inform Timbungco of
their intention.  Clearly, this statement
can not be construed to confer upon Timbungco the
authority to receive the fringe benefits for the workers.  Absent such authority, Timbungco
should not have kept the money to himself but should have turned it over to the
Union Treasurer.  He, therefore, exceeded
his authority as President of the Union.

Moreover, Book III, Rule VIII, Section II of the Implementing
Rules cited by Timbungco which dispenses with the required written
authorization from the employees concerned does not apply in this case.  This provision envisions a situation where
there is a judicial or administrative proceedings for
recovery of wages.  Upon termination of the proceedings, the law
allows a deduction for attorney’s fees of 10% from the total amount due to a
winning party.  In the herein case, the
fringe benefits received by the union members consist of back payments of their
unpaid emergency cost of living allowances which are totally distinct from
their wages.  Allowances are benefits
over and above the basic salaries of the employees (University
of Pangasinan Faculty Union
vs. University of Pangasinan, G.R. No. L-63122, February 20, 1984, 127 SCRA
691).  We have held that such
allowances are excluded from the concept of salaries or wages (Cebu Institute of Technology (CTI) vs. Ople, G.R. No. L-58870, December 18, 1987, 156 SCRA 629).  In
addition, the payment of the fringe benefits were
effected through an amicable settlement and not in an administrative
proceeding.

The submission by Timbungco of an
accounting report on the distribution of P150,000.00
is of no moment in the face of our findings that the deduction of 10% for
attorney’s fees is illegal and void for failure to comply with the requirements
of the law.

Considering the aforestated violations
of Timbungco, there can be no question that he should
bear the consequences of his acts.  We
find that the penalty of expulsion from the union presidency imposed upon Timbungco is justified.

In view of the foregoing, We hold that
the Orders dated May 23, 1983
and April 2, 1986 were
issued with grave abuse of discretion. 
The herein controversy involves the propriety of the 10% deduction from
the fringe benefits of the union workers which they received from the
management in settlement of their claims. 
Such issue does not touch on union dues or funds.  Besides, the sum of P150,000.00
was not entered into the records of the Union since, as
earlier stated, the money was not turned over by Timbungco
to the Union Treasurer.  Consequently,
the said Orders have no basis.

ACCORDINGLY, the petition is granted.  The assailed Orders dated May 23, 1983 of Officer-in-Charge Victoriano
R. Calaycay of the Bureau of Labor Relations, and
April 2, 1986 of respondent Director Cresenciano B. Trajano of the
same Bureau are REVERSED and SET ASIDE and the latter’s decision dated December
29, 1982 is hereby reinstated.  No costs.

SO ORDERED.

Narvasa, (Chairman), Cruz, and Grino-Aquino,
JJ., concur.

Gancayco, J., on leave.