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Power of union to represent its members in labor cases

[G.R. No. 146073. January 13, 2003.]


JERRY E. ACEDERA, ANTONIO PARILLA, AND OTHERS LISTED IN ANNEX "A," 1 petitionersappellants, vs. INTERNATIONAL CONTAINER TERMINAL SERVICES, INC. (ICTSI), NATIONAL
LABOR RELATIONS COMMISSION and HON. COURT OF APPEALS, respondents-appellants.
Gilbert P. Lorenzo for petitioners.
Jimeno Jalandoni & Cope Law Offices for private respondent.
SYNOPSIS
Petitioners are employees of private respondent International Container Terminal Services, Inc.
(ICTSI) and are officers/members of Associated Port Checkers & Workers Union-International
Container Terminal Services, Inc. Local Chapter (APCWU-ICTSI), a labor organization duly registered
as a local affiliate of the Associated Port Checkers & Workers Union (APCWU). ICTSI went on a
retrenchment program and laid off its on-call employees. This prompted the APCWU-ICTSI to file a
notice of strike which included as cause of action not only the retrenchment of the employees but
also [CTSI's use of 365 days as divisor in the computation of wages, even if the employees' work
week consisted only of five days as agreed upon in the Collective Bargaining Agreement (CBA).
The dispute respecting the retrenchment was resolved by a compromise settlement, while that
respecting the computation of wages was referred to the Labor Arbiter. Subsequently, APCWU, on
behalf of its members and other employees similarly situated, filed with the Labor Arbiter a
complaint against ICTSI which was dismissed. Petitioners filed with the Labor Arbiter a Complaintin-Intervention with Motion to Intervene, but the same was denied upon finding that they are
already well represented by APCWU. The denial of petitioners' intervention was affirmed by the
NLRC. Petitioners filed a petition for certiorari with the Supreme Court which referred the petition to
the Court of Appeals (CA). The CA dismissed the petition. Hence, this present petition.
In denying the petition, the Supreme Court ruled that a labor union is one such party authorized to
represent its members under Article 242 (a) of the Labor Code which provides that a union may act
as the representative of its members for the purpose of collective bargaining. This authority
includes the power to represent its members for the purpose of enforcing the provisions of the
CBA. While a party acting in a representative capacity, such as a union, may be permitted to
intervene in a case, ordinarily, a person whose interests are already represented will not be
permitted to do the same except when there is a suggestion of fraud or collusion or that the
representative will not act in good faith for the protection of all interests represented by him.
Petitioners cite the dismissal of the case filed by APCWU, first by the Labor Arbiter, and later by the
CA. The dismissal of the case does not, however, by itself show the existence of fraud or collusion
or a lack of good faith on the part of APCWU. There must be clear and convincing evidence of fraud
or collusion or lack of good faith independently of the dismissal. This petitioners failed to proffer.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; LABOR ORGANIZATIONS;
RIGHTS OF LEGITIMATE LABOR ORGANIZATION; A UNION MAY ACT AS REPRESENTATIVE OF ITS
MEMBERS FOR THE PURPOSE OF COLLECTIVE BARGAINING; CASE AT BAR. A labor union is one
such party authorized to represent its members under Article 242(a) of the Labor Code which
provides that a union may act as the representative of its members for the purpose of collective
bargaining. This authority includes the power to represent its members for the purpose of
enforcing the provisions of the CBA. That APCWU acted in a representative capacity "for and in
behalf of its Union members and other employees similarly situated," the title of the case filed by it
at the Labor Arbiter's Office so expressly states.

2. REMEDIAL LAW; ACTIONS; PARTIES TO CIVIL ACTIONS; REPRESENTATIVES AS PARTIES; A PERSON


WHOSE INTERESTS ARE ALREADY REPRESENTED WILL NOT BE PERMITTED TO INTERVENE IN A
REPRESENTATIVE ACTION; EXCEPTIONS. While a party acting in a representative capacity, such
as a union, may be permitted to intervene in a case, ordinarily, a person whose interests are
already represented will not be permitted to do the same except when there is a suggestion of
fraud or collusion or that the representative will not act in good faith for the protection of all
interests represented by him. Petitioners-appellants cite the dismissal of the case filed by ICTSI,
first by the Labor Arbiter, and later by the Court of Appeals. The dismissal of the case does not,
however, by itself show the existence of fraud or collusion or a lack of good faith on the part of
APCWU. There must be clear and convincing evidence of fraud or collusion or lack of good faith
independently of the dismissal. This, petitioners-appellants failed to proffer.
DECISION
CARPIO MORALES, J p:
For consideration is the petition for review on certiorari assailing the decision of the Court of
Appeals affirming that of the National Labor Relations Commission (NLRC) which affirmed the
decision of the Labor Arbiter denying herein petitioners-appellants' Complaint-in-Intervention with
Motion for Intervention.
The antecedent facts are as follows:
Petitioners-appellants Jerry Acedera, et al. are employees of herein private respondent
International Container Terminal Services, Inc. (ICTSI) and are officers/members of Associated Port
Checkers & Workers Union-International Container Terminal Services, Inc. Local Chapter (APCWUICTSI), a labor organization duly registered as a local affiliate of the Associated Port Checkers &
Workers Union (APCWU).
When ICTSI started its operations in 1988, it determined the rate of pay of its employees by using
304 days, the number of days of work of the employees in a year, as divisor. 2
On September 28, 1990, ICTSI entered into its first Collective Bargaining Agreement (CBA) with
APCWU with a term of five years effective until September 28, 1995. 3 The CBA was renegotiated
and thereafter renewed through a second CBA that took effect on September 29, 1995, effective
for another five years. 4 Both CBAs contained an identically-worded provision on hours and days of
work reading:
Article IX
Regular Hours of Work and Days of Labor
Section 1. The regular working days in a week shall be five (5) days on any day from Monday to
Sunday, as may be scheduled by the COMPANY, upon seven (7) days prior notice unless any of this
day is declared a special holiday. 5 (Emphasis omitted)
In accordance with the above-quoted provision of the CBA, the employees' work week was reduced
to five days or a total of 250 days a year. ICTSI, however, continued using the 304-day divisor in
computing the wages of the employees. 6
On November 10, 1990, the Regional Tripartite Wage and Productivity Board (RTWPB) in the
National Capital Region decreed a P17.00 daily wage increase for all workers and employees
receiving P125.00 per day or lower in the National Capital Region. 7 The then president of APCWU,
together with some union members, thus requested the ICTSI's Human Resource
Department/Personnel Manager to compute the actual monthly increase in the employees' wages
by multiplying the RTWPB mandated increase by 365 days and dividing the product by 12
months. 8

Heeding the proposal and following the implementation of the new wage order, ICTSI stopped
using 304 days as divisor and started using 365 days in determining the daily wage of its
employees and other consequential compensation, even if the employees' work week consisted of
only five days as agreed upon in the CBA. 9
In early 1997, ICTSI went on a retrenchment program and laid off its on-call employees. 10 This
prompted the APCWU-ICTSI to file a notice of strike which included as cause of action not only the
retrenchment of the employees but also ICTSI's use of 365 days as divisor in the computation of
wages. 11 The dispute respecting the retrenchment was resolved by a compromise
settlement 12 while that respecting the computation of wages was referred to the Labor
Arbiter. 13
On February 26, 1997, APCWU, on behalf of its members and other employees similarly situated,
filed with the Labor Arbiter a complaint against ICTSI which was dismissed for APCWU's failure to
file its position paper. 14 Upon the demand of herein petitioners-appellants, APCWU filed a motion
to revive the case which was granted. APCWU thereupon filed its position paper on August 22,
1997. 15
On December 8, 1997, petitioners-appellants filed with the Labor Arbiter a Complaint-inIntervention with Motion to Intervene. 16 In the petition at bar, they justified their move to
intervene in this wise:
[S]hould the union succeed in prosecuting the case and in getting a favorable reward it is actually
they that would benefit from the decision. On the other hand, should the union fail to prove its
case, or to prosecute the case diligently, the individual workers or members of the union would
suffer great and immeasurable loss. . . . [t]hey wanted to insure by their intervention that the case
would thereafter be prosecuted with all due diligence and would not again be dismissed for lack of
interest to prosecute on the part of the union. 17
The Labor Arbiter rendered a decision, the dispositive portion of which reads:
WHEREFORE, decision is hereby rendered declaring that the correct divisor in computing the daily
wage and other labor standard benefits of the employees of respondent ICTSI who are members of
complainant Union as well as the other employees similarly situated is two hundred fifty (250) days
such that said respondent is hereby ordered to pay the employees concerned the differentials
representing the underpayment of said salaries and other benefits reckoned three (3) years back
from February 26, 1997, the date of filing of this complaint or computed from February 27 1994
until paid, but for purposes of appeal, the salary differentials are temporarily computed for one
year in the amount of Four Hundred Sixty Eight Thousand Forty Pesos (P468,040.00). 18
In the same decision, the Labor Arbiter denied petitioners-appellants' Complaint-in-Intervention
with Motion for Intervention upon a finding that they are already well represented by APCWU. 19
On appeal, the NLRC reversed the decision of the Labor Arbiter and dismissed APCWU's complaint
for lack of merit. 20 The denial of petitioners-appellants' intervention was, however, affirmed. 21
Unsatisfied with the decision of the NLRC, APCWU filed a petition for certiorari with the Court of
Appeals while petitioners-appellants filed theirs with this Court which referred the petition 22 to
the Court of Appeals.
The Court of Appeals dismissed APCWU's petition on the following grounds: failure to allege when
its motion for reconsideration of the NLRC decision was filed, failure to attach the necessary
appendices to the petition, and failure to file its motion for extension to file its petition within the
reglementary period. 23
As for petitioners-appellants' petition for certiorari, it was dismissed by the Court of Appeals in this
wise:

It is clear from the records that herein petitioners, claiming to be employees of respondent ICTSI,
are already well represented by its employees union, APCWU, in the petition before this Court (CAG.R. SP. No. 53266) although the same has been dismissed. The present petition is, therefore a
superfluity that deserves to be dismissed.Furthermore, only Acedera signed the Certificate of nonforum shopping. On this score alone, this petition should likewise be dismissed. We find that the
same has no merit considering that herein petitioners have not presented any meritorious
argument that would justify the reversal of the Decision of the NLRC.
Article IX of the CBA provides:
REGULAR HOURS OF WORK AND DAYS OF LABOR
"Section 1. The regular working days in a week shall be five (5) days on any day from Monday to
Sunday, as may be scheduled by the COMPANY, upon seven (7) days prior notice unless any of this
day is declared a special holiday. "
This provision categorically states the required number of working days an employee is expected
to work for a week. It does not, however, indicate the manner in which an employee's salary is to
be computed. In fact, nothing in the CBA makes any referral to any divisor which should be the
basis for determining the salary. The NLRC, therefore, correctly ruled that ". . . the absence of any
express or specific provision in the CBA that 250 days should be used as divisor altogether makes
the position of the Union untenable."
xxx xxx xxx
Considering that herein petitioners themselves requested that 365 days be used as the divisor in
computing their wage increase and later did not raise or object to the same during the
negotiations of the new CBA, they are clearly estopped to now complain of such computation only
because they no longer benefit from it. Indeed, the 365 divisor for the past seven (7) years has
already become practice and law between the company and its employees. 24 (Italics supplied)
xxx xxx xxx
Hence, the present petition of petitioners-appellants who fault the Court of Appeals as follows:
I
. . . IN REJECTING THE CBA OF THE PARTIES AS THE SOURCE OF THE DIVISOR TO DETERMINE THE
WORKERS' DAILY RATE TOTALLY DISREGARDED THE APPLICABLE LANDMARK DECISIONS OF THE
HONORABLE SUPREME COURT ON THE MATTER.
II
. . . [IN] DISREGARD[ING] APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT RULED
THAT THE PETITIONERS-APPELLANTS ARE ALREADY IN ESTOPPEL.
III
. . . IN RULING THAT THE PETITIONERS-APPELLANTS HAVE NO LEGAL RIGHT TO INTERVENE IN AND
PURSUE THIS CASE AND THAT THEIR INTERVENTION IS A SUPERFLUITY.
IV
. . . IN HOLDING, ALTHOUGH MERELY AS AN OBITER DICTUM, THAT ONLY PETITIONER JERRY
ACEDERA SIGNED THE CERTIFICATE OF NON-FORUM SHOPPING. 25
The third assigned error respecting petitioners-appellants' right to intervene shall first be passed
upon, it being determinative of their right to raise the other assigned errors.

Petitioners-appellants anchor their right to intervene on Rule 19 of the 1997 Rules of Civil
Procedure, Section 1 of which reads:
Section 1. Who may intervene. A person who has legal interest in the matter in litigation, or in
the success of either of the parties, or an interest against both, or is so situated to be adversely
affected by a distribution or other disposition of property in the custody of the court or of an officer
thereof may, with leave of court, be allowed to intervene in the action. The court shall consider
whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenor's right may be fully protected in a separate
proceeding.
They stress that they have complied with the requisites for intervention because (1) they are the
ones who stand to gain or lose by the direct legal operation and effect of any judgment that may
be rendered in this case, (2) no undue delay or prejudice would result from their intervention since
their Complaint-in-Intervention with Motion for Intervention was filed while the Labor Arbiter was
still hearing the case and before any decision thereon was rendered, and (3) it was not possible for
them to file a separate case as they would be guilty of forum shopping because the only forum
available for them was the Labor Arbiter. 26
Petitioners-appellants, however, failed to consider, in addition to the rule on intervention, the rule
on representation, thusly:
Sec. 3. Representatives as parties. Where the action is allowed to be prosecuted or defended by
a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the
title of the case and shall be deemed to be the real party in interest. A representative may be a
trustee of an express trust, a guardian, an executor or administrator, or a party authorized by
law or these Rules . . . 27 (Italics supplied)
A labor union is one such party authorized to represent its members under Article 242(a) of the
Labor Code which provides that a union may act as the representative of its members for the
purpose of collective bargaining. This authority includes the power to represent its members for
the purpose of enforcing the provisions of the CBA. That APCWU acted in a representative capacity
"for and in behalf of its Union members and other employees similarly situated," the title of the
case filed by it at the Labor Arbiter's Office so expressly states.
While a party acting in a representative capacity, such as a union, may be permitted to intervene
in a case, ordinarily, a person whose interests are already represented will not be permitted to do
the same 28 except when there is a suggestion of fraud or collusion or that the representative will
not act in good faith for the protection of all interests represented by him. 29
Petitioners-appellants cite the dismissal of the case filed by ICTSI, first by the Labor Arbiter, and
later by the Court of Appeals. 30 The dismissal of the case does not, however, by itself show the
existence of fraud or collusion or a lack of good faith on the part of APCWU. There must be clear
and convincing evidence of fraud or collusion or lack of good faith independently of the dismissal.
This, petitioners-appellants failed to proffer.
Petitioners-appellants likewise express their fear that APCWU would not prosecute the case
diligently because of its "sweetheart relationship" with ICTSI. 31 There is nothing on record,
however, to support this alleged relationship which allegation surfaces as a mere afterthought
because it was never raised early on. It was raised only in petitioners-appellants' reply to ICTSI's
comment in the petition at bar, the last pleading submitted to this Court, which was filed on June
20, 2001 or more than 42 months after petitioners-appellants filed their Complaint-in-Intervention
with Motion to Intervene with the Labor Arbiter.
To reiterate, for a member of a class to be permitted to intervene in a representative action, fraud
or collusion or lack of good faith on the part of the representative must be proven. It must be

based on facts borne on record. Mere assertions, as what petitioners-appellants proffer, do not
suffice.
The foregoing discussion leaves it unnecessary to discuss the other assigned errors.
WHEREFORE, the present petition is hereby DENIED. SO ORDERED.
||| (Acedera v. International Container Terminal Services, G.R. No. 146073, [January 13, 2003], 443
PHIL 132-142)

Settlement of money claim of union members


[G.R. Nos. 113666-68. January 19, 2000.]
GOLDEN DONUTS, INC. and LEOPOLDO PRIETO, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, AGAPITO MACANDOG, LEONISA M. HONTIVEROS, ROSITA D.
TAMARGO, LUCITA TEGIO and ALMA MAGTARAYO, respondents.
Armando V. Ampil for petitioners.
The Solicitor General for public respondent.
Donardo R. Paglinawan for A. Macandog.
Sanchez Mercado & Melchor Law Firm for private respondents.
SYNOPSIS
This is a petition for certiorari impugning the resolution of the National Labor Relations Commission
(NLRC), which modified the Labor Arbiter's decision and ordered reinstatement of private
respondents to their former positions without loss of seniority rights and payment of back wages
and separation pay.
The petition was anchored on the argument that a preponderant majority of the union members,
257 out of 262 members, having agreed to a compromise settlement whereby they shall be paid
separation pay in exchange for the dismissal of the criminal and unfair labor practice cases filed by
petitioners against them, the union is authorized to waive and compromise even the claims of
those who did not consent to the terms of such compromise agreement. Petitioners claimed that
the compromise agreement was binding on union members, including those who did not consent
thereto, such as private respondents.
Even if a clear majority of the union members agreed to a settlement with the employer, the union
had no authority to compromise the individual claims of members who did not consent to such
settlement. Rule 138, Section 23 of the 1964 Revised Rules of Court requires a special authority
before an attorney may compromise his client's litigation. Absent a showing of the union's special
authority to compromise the individual claims of private respondents for reinstatement and back
wages, there was no valid waiver of the aforesaid rights. As private respondents did not authorize
the union to represent them in the compromise settlement, they are not bound by the terms
thereof. Consequently, private respondents may pursue their individual claims against petitioners
before the Labor Arbiter. Moreover, the judgment of the Labor Arbiter based on the compromise
agreement in question did not have the effect of res judicata upon private respondents who did not
agree thereto since the requirement of identity of parties was not satisfied. A judgment upon a
compromise agreement has all the force and effect of any other judgment, hence, conclusive only
upon the parties thereto and their privies.
Since the Labor Arbiter found no evidence showing that private respondents committed any illegal
act during the strike, petitioners' failure to reinstate them after the settlement of the strike

amounted to illegal dismissal, entitling them to reinstatement and backwages. Accordingly, the
Court affirmed the Resolution of the NLRC with modification deleting the award of separation pay.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR RELATIONS; LABOR UNION; NO AUTHORITY TO
COMPROMISE INDIVIDUAL CLAIMS OF MEMBERS WITHOUT THE LATTER'S CONSENT. Even if a
clear majority of the union members agreed to a settlement with the employer, the union has no
authority to compromise the individual claims of members who did not consent to such settlement.
Rule 138, Section 23 of the 1964 Revised Rules of Court requires a special authority before an
attorney may compromise his client's litigation. "The authority to compromise cannot lightly be
presumed and should be duly established by evidence." In the case at bar, minority union
members did not authorize the union to compromise their individual claims. Absent a showing of
the union's special authority to compromise the individual claims of private respondents for
reinstatement and back wages, there is no valid waiver of the aforesaid rights. As private
respondents did not authorize the union to represent them in the compromise settlement, they are
not bound by the terms thereof.
2. ID.; ID.; ID.; MINORITY UNION MEMBERS WHO DID NOT CONSENT TO A COMPROMISE
AGREEMENT ARE NOT BOUND BY THE MAJORITY DECISION APPROVING THE SAME. Whether
minority union members who did not consent to a compromise agreement are bound by the
majority decision approving a compromise settlement has been resolved in the negative. In La
Campana, we explicitly declared: "Money claims due to laborers cannot be the object of settlement
or compromise effected by a union or counsel without the specific individual consent of each
laborer concerned. The beneficiaries are the individual complainants themselves. The union to
which they belong can only assist them but cannot decide for them." The case of La Campana was
re-affirmed in the General Rubber case. We have consistently ruled that "a compromise is
governed by the basic principle that the obligations arising therefrom have the force of law
between the parties." Consequently, private respondents may pursue their individual claims
against petitioners before the Labor Arbiter.
3. ID.; ID.; ID.; JUDGMENT APPROVING A COMPROMISE AGREEMENT ENTERED INTO BY THE UNION
CANNOT HAVE THE EFFECT OF RES JUDICATA UPON UNION MEMBERS WHO DID NOT AGREE
THERETO; PRIVATE RESPONDENTS CANNOT BE BARRED FROM ENTITLEMENT OF THEIR INDIVIDUAL
CLAIMS. The judgment of the Labor Arbiter based on the compromise agreement in question
does not have the effect of res judicata upon private respondents who did not agree thereto. "A
compromise, once approved by final orders of the court has the force of res judicata between the
parties and should not be disturbed except for vices of consent or forgery." A compromise is
basically a contract perfected by mere consent. "Consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to constitute the contract." A
compromise agreement is not valid when a party in the case has not signed the same or when
someone signed for and in behalf of such party without authority to do so. Private respondents
were not parties to the compromise agreement. Hence, the judgment approving such agreement
cannot have the effect of res judicata upon them since the requirement of identity of parties is not
satisfied. A judgment upon a compromise agreement has all the force and effect of any other
judgment, hence conclusive only upon parties thereto and their privies. Viewed in light of the
foregoing legal principles, the conclusion is inescapable that private respondents are not bound by
the compromise agreement entered into by the union without their consent. They have not waived
their right to security of tenure nor can they be barred from entitlement of their individual claims.
4. ID.; ID.; DISMISSAL; REQUISITES TO BE CONSIDERED LEGAL; REINSTATEMENT AND BACKWAGES;
AWARD THEREOF, WARRANTED IN CASE AT BAR. Since the Labor Arbiter found no evidence
showing that private respondents committed any illegal act during the strike, petitioners' failure to
reinstate them after the settlement of the strike amounts to illegal dismissal, entitling them to the
twin reliefs of reinstatement and back wages. "The burden is on the employer to prove that the

termination was after due process, and for a valid or authorized cause. For the two requisites in our
jurisdiction to constitute a valid dismissal are: (a) the existence of a cause expressly stated in
Article 282 of the Labor Code; and (b) the observance of due process, including the opportunity
given the employee to be heard and defend himself."
5. ID.; ID.; ID.; SEPARATION PAY; AWARD THEREOF, DELETED IN CASE AT BAR. The separation
pay must be deleted, as private respondents are entitled to reinstatement and back wages and
there is no showing of strained relations as would prevent their reinstatement.
DECISION
PARDO, J p:
The petition at bar is actually one for certiorari 1 impugning the resolution 2 of the National Labor
Relations Commission (NLRC), which modified the Labor Arbiter's decision and ordered petitioner to
reinstate complainants (respondents) to their former positions without loss of seniority rights and
back wages limited to three (3) years from dismissal up to time of reinstatement and to pay
respondents Rosita Tamargo, Lucita Tegio, Alma Magtarayo, and Leonisa Hontiveros each
separation pay of P4,000.00; to pay complainant Agapito Macandog separation pay of P4,000.00,
unpaid salary of P1,000.00; thirteenth month pay of P1,329.25 and attorney's fee of ten (10%) per
cent of the total amount due; and the order 3 denying reconsideration of the aforementioned
resolution.
Private respondents Macandog, Hontiveros, Tamargo, Tegio and Magtarayo, were employees of
petitioner Golden Donuts, Inc., and were the complainants in three consolidated cases filed in
September 1990 with the Labor Arbiter.
The facts are aptly summarized in the Labor Arbiter's decision dated January 29, 1993, as follows:
"Complainants were members of the Kapisanan ng Manggagawa sa Dunkin Donut-CFW (KMDDCFW, for short) whose collective bargaining agreement with the corporation expired on November
16, 1989. During the freedom period, or on October 17, 1989, respondents through its Human
Resources and Industrial Relations Manager informed the President of the Union that the initial CBA
negotiation was on October 26, 1989 and, at the same time, requested for the confirmation of the
people who shall be the regular members of the union panel in order to avoid any
misunderstanding. At which date however, despite the absence of Leopoldo Prieto, Jr., the
management representative, and the President of the Union, both panels were able to agree on the
rules regarding the negotiation, including the time, date and number of days the panels had to
meet. On November 7, 1989 (sic) CBA negotiations, the management panel arrived late, or at 1:35
P.M. which was thirty-five minutes late, thus prompting the union panel to walkout. Despite the
management request to go back and proceed with the agenda, the union simply ignored the same.
A day after, or on November 8, 1989, the management addressed a letter of apology to the union
and requested that the CBA negotiation be resumed on November 9, 15 and 17, 1989 which was
discredited in the following wise:
'November 9, 1989
'The Management CBA Negotiating Panel Golden Donuts, Inc.
'Attention: Ms. Gertrudes P. Bangalan
HRIR Manager
'We are in receipt of your letter expressing your sincere apology for the incident that happened last
Nov. 7, 1989 at AIT.
'Truly, it is our interest to come up with a peaceful negotiation, as we had displayed during our
previous meetings. From punctuality even up to the manner of discussion we had shown our

concern and sincere interest that we could finish our CBA as soon as possible smoothly and
peacefully.
'However, as we go on with the process, we observed that you are taking our CBA negotiation for
granted, not considering it as one of your priorities.
'However further, we would like to inform you that our final decision is to declare the negotiation
DEADLOCK (sic).
'Thus, we regret to inform you that we could not attent (sic) to your scheduled meeting this
afternoon.
'Sincerely yours,
'Florante M. Vicedo
'KMDD President'
"Came November 15 and 17, but the union panel did not show up despite the management letters
advising the former about the CBA meetings. Again, on November 20, 1989 management sent a
letter informing the union regarding the resumption of the negotiation, but the same turned out
fruitless. Finally, despite management's open letter of admonition under date of November 23,
1989, the union struck on December 18, 1989.
"On the ground that the strike was illegal because (a) it was started without the union having first
exercised the ritht (sic) to collective bargaining in violation of Article 264 (a) of the Labor Code; (b)
the strikers barricaded the company premises, barring ingress to and egress from the premises,
which resulted to the trapping of officers and employees; (c) the strikers, on December 19, 1989,
overturned the company's Isuzu Kc-20 Van with Plate No. 506 and, thereafter, smashed its
windshield, headlights and sidemirrors; (d) the strikers brandished broken bottles of Coca-Cola and
effectively prevented Ernesto de Castillo, the traffic dispatcher, and his driver, Narciso Urjal, from
making any move to pacify the mob; and (e) the strike was effected without any strike vote for the
purpose and without the approval of the majority of the membership, and for not having reported
the same to the Ministry (now Department) of Labor and Employment; a Complaint with Prayer for
Preliminary Injunction was filed by Golden Donuts, Inc. on January 9, 1990, seeking the following
relief (sic): a) to declare the strike illegal and to dismiss all officers of the union and members who
participated in the commission of illegal acts; b) to pay petitioner actual damages as may be
proven, the sum of Five Hundred Thousand (P500,000.00) Pesos and Three Hundred Thousand
(P300,000.00) Pesos, respectively, as moral and exemplary damages, plus attorney's fees. After
KMU's Atty. Pontenciano Flores was retained as counsel by the union and strikers, and sensing the
gravity of the penalties attendant to the strike resorted to, including the financial award that may
be due the Golden Donuts, Inc. and civil liabilities that may be awarded thereafter, said counsel
pleaded for a comprome (sic). Hence, on July 16, 1990, a compromise agreement was entered into
by the KMDD-CFW and Golden Donuts, Inc. whereby:
'4.4. The parties agree to withdraw/dismiss with prejudice any and all cases, whether criminal, civil
or labor filed against each other and agree to execute affidavit of desistance and/or Motion to
Dismiss to ensure the dismissal of these cases.
'5. Upon execution of this Agreement, the parties undertake not to file any other
charges/complaints against each other as this act constitutes a general waiver or release/quitclaim
by them (sic).' cdphil
apart from the separation pay said strikers, 262 in all, should receive from the corporation, the
variable amounts of which are stated in the list of workers attached to the agreement. Out of the
said 262 striking force, only the five (5) aforenamed complainants disagree (sic) and did not
receive the amount due, arguing that the compromise agreement was entered into by their

counsel and the President of the Union without their individual consent and/or authority and that
the same was not approved nor ratified by the majority of the union membership. Hence, these
complaints which were filed on the dates mentioned earlier." 4
On January 29, 1993, the Labor Arbiter rendered a decision upholding the dismissal of private
respondents and ruling that they were bound by the compromise agreement entered into by the
union with petitioners. The dispositive portion of the decision states:
"WHEREFORE, in conformity with the opinion above expressed, judgment is hereby rendered
ordering the Golden Donuts, Inc.:
"1. To pay complainants Rosita D. Tamargo, Lucita N. Tegio, Alma Magtarayo and Leonisa
Hontiveros each the sum of Four Thousand Five Hundred (P4,500.00) Pesos as separation pay;
"2. To pay complainant Agapito Macandog the following amounts:
a. Four Thousand Five Hundred (P4,500.00) Pesos as separation pay;
b. One Thousand (P1,000.00) Pesos as unpaid salary;
c. One Thousand Three Hundred Twenty-Nine and Twenty Five (P1,329.25) Centavos as balance of
his thirteenth month pay.
"3. To pay complainants' counsel ten percent (10%) of the total amount due them as attorney's
fees.
SO ORDERED." 5
In due time, private respondents interposed an appeal to the NLRC, claiming that the union had no
authority to waive or compromise their individual rights and that they were not bound by the
compromise agreement entered into by the union with petitioners.
On October 29, 1993, the NLRC issued a resolution which disposed of the case as follows:
"WHEREFORE, the decision of the Labor Arbiter is hereby accordingly modified and a new one
entered ordering respondent to reinstate complainants to their former positions without loss of
seniority rights and back-wages limited to three years from the time of their dismissal up to the
time of reinstatement.
"Furthermore, respondent is hereby ordered as follows:
"1. To pay complainants Rosita D. Tamargo, Lucita N. Tegio, Alma Magtarayo and Leonisa
Hontiveros each the sum of Four Thousand Five Hundred (P4,500.00) Pesos as separation pay;
"2. To pay complainant Agapito Macandog the following amounts:
"a. Four Thousand Five Hundred (P4,500.00) Pesos as separation pay;
"b. On Thousand (P1,000.00) Pesos as unpaid salary;
"c. One Thousand Three Hundred Twenty-Nine and Twenty-Five (P1,329.25) Centavos as balance of
his thirteenth month pay.
"3. To pay complainant's counsel ten percent (10%) of the total amount due them as attorney's
fees." 6
On January 31, 1994, the NLRC denied petitioners' motion for reconsideration of the resolution, for
lack of an assignment of "palpable" or "patent" errors. 7
Hence, this petition. 8

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The questions presented in the petition are: (1) whether or not a union may compromise or waive
the rights to security of tenure and money claims of its minority members, without the latter's
consent, and (2) whether or not the compromise agreement entered into by the union with
petitioner company, which has not been consented to nor ratified by respondents minority
members has the effect of res judicata upon them.
As a consequence of a negative ruling on the foregoing issues, there arises the issue of whether
private respondents are entitled to monetary benefits subject of their individual complaints.
The petition is anchored on the argument that a preponderant majority of the union members, that
is, 257 out of 262 members, having agreed to a compromise settlement whereby they shall be
paid separation pay in exchange for the dismissal of the criminal and unfair labor practice cases
filed by petitioners against them, the union is authorized to waive and compromise even the claims
of those who did not consent to the terms of such compromise agreement. In other words,
petitioners claim that the compromise agreement is binding on union members including those
who did not consent thereto, such as private respondents.
We find the petition without merit.
First, even if a clear majority of the union members agreed to a settlement with the employer, the
union has no authority to compromise the individual claims of members who did not consent to
such settlement. Rule 138 Section 23 of the 1964 Revised Rules of Court requires a special
authority before an attorney may compromise his client's litigation. "The authority to compromise
cannot lightly be presumed and should be duly established by evidence." 9
In the case at bar, minority union members did not authorize the union to compromise their
individual claims. Absent a showing of the union's special authority to compromise the individual
claims of private respondents for reinstatement and back wages, there is no valid waiver of the
aforesaid rights. As private respondents did not authorize the union to represent them in the
compromise settlement, they are not bound by the terms thereof. 10
Second, whether minority union members who did not consent to a compromise agreement are
bound by the majority decision approving a compromise settlement has been resolved in the
negative. 11
In La Campana, we explicitly declared:
"Money claims due to laborers cannot be the object of settlement or compromise effected by a
union or counsel without the specific individual consent of each laborer concerned. The
beneficiaries are the individual complainants themselves. The union to which they belong can only
assist them but cannot decide for them." 12
The case of La Campana was re-affirmed in the General Rubber case as follows:
"In the instant case, there is no dispute that private respondent has not ratified the Return-to-Work
Agreement. It follows, and we so hold, that private respondents cannot be held bound by the
Return-to-Work Agreement. The waiver of money claims, which in this case were accrued money
claims, by workers and employees must be regarded as a personal right, that is, a right that must
be personally exercised. For a waiver thereof to be legally effective, the individual consent or
ratification of the workers or employees involved must be shown. Neither the officers nor the
majority or the union had any authority to waive the accrued rights pertaining to the dissenting
minority members, even under a collective bargaining agreement which provided for a 'union
shop.' The same considerations of public policy which impelled the Court to reach the conclusion it
did in La Campana, are equally compelling in the present case. The members of the union need the
protective shield of this doctrine not only vis--vis their employer but also, at times, vis--vis the
management of their own union, and at other times even against their own imprudence or
impecuniousness." 13

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We have consistently ruled that "a compromise is governed by the basic principle that the
obligations arising therefrom have the force of law between the parties." 14
Consequently, private respondents may pursue their individual claims against petitioners before
the Labor Arbiter.
The judgment of the Labor Arbiter based on the compromise agreement in question does not have
the effect of res judicata upon private respondents who did not agree thereto.
"A compromise, once approved by final orders of the court has the force of res judicata between
the parties and should not be disturbed except for vices of consent or forgery." 15 A compromise is
basically a contract perfected by mere consent. "Consent is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to constitute the contract." 16 A
compromise agreement is not valid when a party in the case has not signed the same or when
someone signs for and in behalf of such party without authority to do so. 17
In SMI Fish Industries, Inc. vs. NLRC, 18 this Court declared that where the compromise agreement
was signed by only three of the five respondents, the non-signatories cannot be bound by that
amicable settlement. This is so as a compromise agreement is a contract and cannot affect third
persons who are not parties to it. 19
Private respondents were not parties to the compromise agreement. Hence, the judgment
approving such agreement cannot have the effect of res judicata upon them since the requirement
of identity of parties 20 is not satisfied. A judgment upon a compromise agreement has all the
force and effect of any other judgment, hence conclusive only upon parties thereto and their
privies. 21
Viewed in light of the foregoing legal principles, the conclusion is inescapable that private
respondents are not bound by the compromise agreement entered into by the union without their
consent. They have not waived their right to security of tenure nor can they be barred from
entitlement of their individual claims.
Since the Labor Arbiter found no evidence showing that private respondents committed any illegal
act during the strike, petitioners' failure to reinstate them after the settlement of the strike
amounts to illegal dismissal, entitling them to the twin reliefs of reinstatement and back wages. 22
"The burden is on the employer to prove that the termination was after due process, and for a valid
or authorized cause. 23 For the two requisites in our jurisdiction to constitute a valid dismissal are:
(a) the existence of a cause expressly stated in Article 282 of the Labor Code; and (b) the
observance of due process, including the opportunity given the employee to be heard and defend
himself." 24
However, the separation pay must be deleted, as private respondents are entitled to reinstatement
and back wages and there is no showing of strained relations as would prevent their
reinstatement. 25
WHEREFORE, the Court DISMISSES the petition and AFFIRMS the NLRC resolution dated October
29, 1993 and the order dated January 31, 1994, in NLRC NCR Case Nos. 00-08-04180-90, 00-0904807-90, and 00-09-04840-90, with modification deleting the award of separation pay to private
respondents. No costs. SO ORDERED.
||| (Golden Donuts, Inc. v. NLRC, G.R. Nos. 113666-68, [January 19, 2000], 379 PHIL 303-316)

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