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 BLR and EMMANUEL
TIMBUNGCO, respondents.
G.R. No. 74453; May 5, 1989; MEDIALDEA, J.

Facts:
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. (FOI-TAF)
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 compliant before the Ministry of Labor.
Respondent, Emmanuel Timbungco 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 241(o) of the Labor Code. Vengco et al. 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. The Med-Arbiter dismissed
the complaint for lack of merit. Vengco, et al. appealed the aforesaid order to BLR which was granted by
then Director Trajano. Upon MR of Timbungco the Officer-in-Charge, Calaycay set aside the resolution
issued by Trajano, however and audit examination of the Books of Account of the union. Vengco, et al.
sought reconsideration of the said order but was denied by Trajano and he affirmed the resolution of the
OIC hence, the present recourse by Vengco, et al..

Issue: Whether or not Timbungco is guilty of illegally deducting 10% attorneys' fees from petitioners'
backwages.

Held: Yes.
Article 241 (o) of the Labor Code provides “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.” 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 entered into by the management and the union CAN
NOT BE CONSIDERED AS A MANDATORY ACTIVITY UNDER THE CODE.
Moreover, the law is explicit. Except for mandatory activities under the Code IT REQUIRES
THE INDIVIDUAL WRITTEN AUTHORIZATION OF EACH EMPLOYEE CONCERNED, TO
MAKE THE DEDUCTION OF ATTORNEY'S FEES VALID.
Also, 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. The petition is granted.
CARLOS P. GALVADORES, ET AL., petitioners, vs.
CRESENCIANO B. TRAJANO, Director of BLR, MANGGAGAWA NG KOMUNIKASYON SA
PILIPINAS (FIWU), PLDT, and JOSE C. ESPINAS, respondents.
G.R. No. 70067; September 15, 1986; MELENCIO-HERRERA, J.

Facts:
Atty. Jose C. Espinas has been the legal counsel of Free Telephone Workers Union now
Manggagawa ng Komunikasyon sa Pilipinas (Union for brevity), since 1964. For his services, he was
hired on a case to case contingent fee basis. He was again hired by the union in the labor dispute at PLDT
regarding the PLDT’s last offer to the deadlock in CBA negotiations which is expected by the union to
result in compulsory arbitration.
In the compulsory arbitration, the Minister of Labor awarded across-the-board wage increases
and other fringe benefits. As will be noted, there were improvements obtained from PLDT's "last offer."
Thereafter, the Executive Board of the Union passed a resolution requesting PLDT to deduct P115.00 per
employee for the legal services extended to the Union by Atty. Espinas however the petitioners initially
numbering 600 and finally 5,258, filed a letter-complaint before the MOLE through their authorized
representative, petitioner Galvadores assailing the imposition of P130.00 (later corrected to P155.00) per
employee as attorney's fees of respondents counsel. Petitioners took the position that the attorney's fees of
respondent counsel were not only unreasonable but also in violation of Article 241(o) of the Labor Code
and that the deductions cannot be given legal effect by a mere Board resolution but needs the ratification
by the general membership of the Union. Later, the Minister of Labor referred the dispute to the BLR.
Meanwhile a Manifestation was submitted attesting that plebiscite was conducted for the ratification of
the aforementioned resolution. This was questioned by the petitioners alleging that the question no. 2 in
the plebiscite was misleading and deceptive as it assumed that there was no dispute regarding the
deduction of attorney's fees from the monetary benefits awarded to PLDT employees. Director, Trajano
dismissed petitioners' complaint reasoning that the outcome of the plebiscite negates any further question
on the right of the union counsel to collect the amount of P115 from each of the employees involved.

Issues: Whether or not the check-off for attorney’s fees from the benefits awarded to PLDT’s employees
amounting to P1M, more or less is legal and in affirmative answer, the same should be taken from Union
funds.

Held:
The provisions of Article 222(b), Article 241 (o) of the Labor Code and Omnibus Rules
Implementing the Labor Code are clear. No check-offs from any amounts due employees may be effected
without individual written authorizations duly signed by the employee specifically stating the amount,
purpose and beneficiary of the deduction. The required individual authorizations in this case are wanting.
In fact, petitioner employees are vigorously objecting. The question asked in the plebiscite, besides not
being explicit, assumed that there was no dispute relative to attorney's fees.
Contrary to respondent Union's and Counsel's stand, the benefits awarded to PLDT employees
still formed part of the collective bargaining negotiations although placed already under compulsory
arbitration. This is not the "mandatory activity" under the Code which dispenses with individual written
authorizations for check-offs, notwithstanding its "compulsory" nature. It is a judicial process of settling
disputes laid down by law. Besides, Article 222(b) does not except a CBA, later placed under compulsory
arbitration, from the ambit of its prohibition. The attorney's fees herein involved may be charged against
Union funds pursuant to Article 222(b) of the Labor Code, as may be agreed upon between them.