G.R. No. 74453. May 5, 1989.
AMBROCIO VENGCO, RAMON MOISES, EUGENIA REYES, RAFAEL WAGAS and 80 others, petitioners, vs. HON. CRESENCIANO B. TRAJANO, in his capacity as Director of the Bureau of Labor Relations and EMMANUEL TIMBUNGCO, respondents.

FACTS

The Management of Anglo-American Tobacco Corporation and the Kapisanan ng Manggagawa sa Anglo-American Tobacco Corporation (FOITAF) entered into a compromise agreement for the payment of P150,000.00 to union members for unpaid emergency cost of living allowance (ECOLA) and other benefits. Respondent Emmanuel Timbungco, the union president, received and distributed the money. Petitioners, union members, alleged that Timbungco was not authorized to receive the funds and that he illegally deducted ten percent (10%) for attorney’s fees without their written consent, violating Article 242(o) of the Labor Code. They demanded an accounting, and upon Timbungco’s refusal, filed a complaint seeking his expulsion, an accounting, and publication of the distribution list.
The Med-Arbiter dismissed the complaint. On appeal, Bureau of Labor Relations (BLR) Director Cresenciano B. Trajano, in a December 29, 1982 decision, granted the appeal, ordered Timbungco to render a full accounting and publish the list, and expelled him as union president. However, upon Timbungco’s motion for reconsideration, an Officer-in-Charge issued an Order on May 23, 1983, setting aside the December 1982 decision and instead ordering an audit of the union’s books. Trajano affirmed this order on April 2, 1986, denying petitioners’ motion for reconsideration.

ISSUE

Whether the BLR Director gravely abused his discretion in ordering an audit of union books instead of affirming his prior decision which found Timbungco liable for illegal deduction of attorney’s fees and ordered his expulsion and an accounting.

RULING

Yes. The Supreme Court granted the petition, reversing the assailed Orders and reinstating the BLR Director’s decision of December 29, 1982. The Court found that Timbungco exceeded his authority as union president by personally receiving and withholding the P150,000.00, which should have been turned over to the union treasurer. Crucially, the 10% deduction for attorney’s fees was illegal. The provision in the Implementing Rules (Book III, Rule VIII, Section II) cited by Timbungco, which dispenses with written authorization for such deductions, applies only to wages recovered through judicial or administrative proceedings. The P150,000.00 represented unpaid ECOLA and fringe benefits, which are distinct from and excluded from the concept of wages or salaries. Furthermore, the payment resulted from an amicable settlement, not a final judgment in a recovery proceeding. Therefore, the mandatory written authorization under Article 242(o) of the Labor Code was required and was absent.
The subsequent Orders directing an audit of the union’s books constituted grave abuse of discretion as they were irrelevant and had no basis. The controversy centered on the propriety of the deduction from the members’ settlement benefits, not on union funds. The money was never entered into the union’s records since Timbungco did not turn it over to the treasurer. Consequently, the penalty of expulsion imposed on Timbungco for his violations was justified. The Court reinstated the December 29, 1982 decision ordering his expulsion, a full accounting, and publication of the distribution list.