VENGCO V. HON.

TRAJANO
173 S 155 / MAY 5, 1989 / MEDIALDEA, J. / LABOR Mandatory Activity
Nature
Petition for certiorari to review orders of BLR
Petitioners Ambrocio Vengco, Ramon Moises, Eugenia Reyes, Rafael Wagas and 80 others
per attached list
Respondents Hon. Cresenciano B. Trajano, in his capacity as Director of the Bureau of Labor
Relations and Emmanuel Timbungco
Case Brief.
Union President Timbungco deducted 10% attorneys fees from P150k received as amicable
settlement in a dispute for unpaid ECOLA and other benefits without the written consent of the
employees concerned. The SC ruled that this violated Art 240(o)1, LC.
Case Doctrine.
Attorneys fees may not be deducted or checked off from any amount due an employee without
his written consent except for mandatory activities under the Code. Mandatory activity a
judicial process of settling dispute laid down by the law.
Facts.

The Management of the Anglo-American Tobacco Corporation (AATC) and the

Kapisanan ng Manggagawa sa Anglo-American Tobacco Corporation (FOITAF)
entered into a compromise agreement whereby the former would pay the union
members P150k for claims arising from the unpaid ECOLA and other benefits which
were subject of their claim before the Ministry of Labor.
Respondent Emmanuel Timbungco, the union president, received the money in
installments and distributed the amount among the union members.
Petitioners Ambrocio Vengco, et al. (who were union members): Timbungco had not
been authorized by the union workers to get the money, and that 10% of the P150k
had been deducted to pay for attorneys fees without their written authorization, in
violation of Art 242(o), LC (now 247(o)). Demanded from Timbungco an accounting of
how the P150k was distributed to the members.
Timbungco did not comply, prompting Vengco et al. to file a complaint with the
Ministry of Labor praying for (a) his expulsion as union president for violation of the
unions constitution, by-laws, and the rights granted to the members under the LC; (b)
an order requiring him to render an accounting of the distribution; and (c) an order to
require him to publish in the bulletin board the list of the members and the
corresponding amount they received from the P150k.
Timbungco: Answered that he had been authorized via a resolution signed by a
majority of the union members to receive and distribute the P150k; that the
computation of the benefits was based on the company payroll; that the 10%
attorneys fees was in relation of the local unions claim for payment of ECOLA, which
is totally distinct and separate from the CBA negotiation; and that the 10% deduction
was in accordance with Sec II, Rule VII, Bk III, IRLC.
Med-Arbiter Willie Rodriguez dismissed the complaint for lack of merit. On appeal,
BLR Director Cresenciano Trajano granted the appeal, leading to Timbungcos
expulsion as president and ordering the accounting and publication as requested by
petitioners. On MR, Officer-in-Charge Victoriano Calaycay set aside the resolution but
ordered an audit examination of FOITAFs books of account.

1 Art 241(o): Rights and conditions of membership in a labor organization. (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

Issue.
1. WoN the deduction of 10% attorneys fees was legal - NO
Ratio.
1. WoN the deduction of 10% attorneys fees was legal NO

Clearly, attorneys fees may not be deducted or checked off from any amount
due 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.

In the instant case, the amicable settlement cannot be considered as a mandatory

activity under the Code. It is true that the union filed a claim for ECOLA and other
benefits before the Ministry of Labor, but the case never reached its conclusion in view
of the parties agreement. It is also not shown from the records that Atty. Benjamin
Sebastian (to whom the fees were paid) was instrumental in forging said agreement
on behalf of the union members.

The Kapisayahan or resolution did not confer upon Timbungco the power to
deduct 10% of the P150k despite the alleged approval of the majority of the union
members. An examination of the resolution shows it was defective. It was undated,
not captioned save for the first page, and did not state the purpose for which it
was prepared. Thus, the alleged signatories were not properly apprised thereof.
Moreover, the law explicitly requires the individual written authorization of each
employee concerned to make deduction of attorneys fees valid.
Moreover, the statement in the Kapisayahan indicated merely the workers intention to
receive their claim on the first week of Dec 1981 and to inform Timbungco of the
same. It did not confer upon Timbungco the authority to receive the workers fringe
benefits. Absent such authority, Timbungco should have turned the money to the
Union Treasurer, and thus exceeded his authority as president.
Finally, Bk III, Rule VIII, Sec II of the IRLC which dispenses with the required written
authorization from the employees concerned is inapplicable. This provision applies
where there is a judicial or administrative proceeding for recovery of wages; upon
termination of the same, the law allows at 10% deduction from the total amount due to
a winning party as attorneys fees. In this case, the fringe benefits were back
payments of unpaid ECOLA, which are totally distinct from their wages, and these
were effected through amicable settlement, not in administrative proceedings.
Decision.
Petition granted. O-I-C Calalays Orders reversed and set aside. Dir. Trajanos decision
reinstated.