G.R. No.

85333 February 26, 1990

CARMELITO L. PALACOL, ET AL., petitioners,

Wellington B. Lachica for petitioners.

Adolpho M. Guerzon for respondent Union.

GANCAYCO,  J.:

FACTS:

Main ISSSUE: Can a special assessment be validly deducted by a labor union from the lump-sum
pay of its members, granted under a collective bargaining agreement (CBA), notwithstanding a
subsequent disauthorization of the same by a majority of the union members? This is the main issue for
resolution in the instant petition for certiorari.

FACTS: The respondent Manila CCBPI Sales Force Union (hereinafter referred to as the Union), as the
collective bargaining agent of all regular salesmen, regular helpers, and relief helpers of the Manila Plant
and Metro Manila Sales Office of the respondent Coca-Cola Bottlers (Philippines), Inc. (hereinafter
referred to as the Company) concluded a new collective bargaining agreement with the latter. 

Among the compensation benefits granted to the employees was a general salary increase to be given
in lump sum including re-computation of actual commissions earned based on the new rates of increase.

CBA Provisions:

 deduct union dues equivalent to P10.00 every payday or P20.00 every month and,
 in addition, 10% by way of special assessment, from the CBA lump-sum pay granted to the
union members.
o purpose of the special assessment sought to be levied is "to put up a cooperative and
credit union; purchase vehicles and other items needed for the benefit of the officers and
the general membership; and for the payment for services rendered by union officers,
consultants and others." 2 
 There was also an additional proviso stating that the "matter of allocation ... shall be at the
discretion of our incumbent Union President."

This "Authorization and CBA Ratification" was obtained by the Union through a secret referendum held in
separate local membership meetings on various dates. 3 The total membership of the Union was about
800. Intially, 672 members originally authorized the 10% special assessment, while 173 opposed the
same. 4 However, later on, some of the members withdrew their approval, where the number became 528
objectors and a remainder of 272 supporters. 5

Petitioners assailed the 10% special assessment as a violation of Article 241(o) in relation to Article
222(b) of the Labor Code. Article 222(b) provides as follows:
 ART. 222. Appearances and Fees. —

xxx xxx xxx

(b) No attorney's fees, negotiation fees or similar charges of any kind

On the other hand, Article 241(o) mandates that:

ART. 241.  Rights and conditions of membership in a labor organization. —

xxx xxx xxx

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

petitioners cited Galvadores v. Trajano, 6 wherein it was ruled that no check-offs from any amount due
employees may be effected without individual written authorizations duly signed by the employees
specifically stating the amount, purpose, and beneficiary of the deduction.

Union’s answer: the Union countered that the deductions not only have the popular indorsement and
approval of the general membership, but likewise complied with the legal requirements of Article 241 (n)
and (o) of the Labor Code in that the board resolution of the Union imposing the questioned special
assessment had been duly approved in a general membership meeting and that the collection of a special
fund for labor education and research is mandated.

Article 241(n) of the Labor Code states that —

ART. 241. Rights and conditions of membership in a labor organization. —

xxx xxx xxx

(n) No special assessment or other extraordinary fees may be levied upon the members
of a labor organization unless authorized by a written resolution of a majority of all the
members at a general membership meeting duly called for the purpose. The secretary of
the organization shall record the minutes of the meeting including the list of all members
present, the votes cast, the purpose of the special assessment or fees and the recipient
of such assessments or fees. The record shall be attested to by the president;

Med Arbiter Ruling: Favors Petitioner

Appeal to the Bureau of Labor the order of the Med-Arbiter was reversed upholding the claim of the Union
that the special assessment is authorized under Article 241 (n) of the Labor Code, and that the Union has
complied with the requirements therein.
ISSUE: Whether or not a special assessment be validly deducted by a labor union from the lump-
sum pay of its members, granted under a collective bargaining agreement (CBA), notwithstanding a
subsequent disauthorization of the same by a majority of the union members?

SC Ruling: No.

1. Requirement:

The failure of the Union to comply strictly with the requirements set out by the law invalidates the
questioned special assessment. Substantial compliance is not enough in view of the fact that the
special assessment will diminish the compensation of the union members. Their express consent is
required, and this consent must be obtained in accordance with the steps outlined by law, which must be
followed to the letter. No shortcuts are allowed.

 Both paragraphs (n) and (o) of Article 241 apply. Paragraph (n) refers to "levy" while paragraph (o) refers
to "check-off" of a special assessment. Both provisions must be complied with. Under paragraph (n), the
Union must submit to the Company a written resolution of a majority of all the members at a
general membership meeting duly called for the purpose. In addition, the secretary of the
organization must record the minutes of the meeting which, in turn, must include, among others,
the list of all the members present as well as the votes cast.

In this case,

 the union the union held local membership meetings on separate occasions, on different dates
and at various venues, contrary to the express requirement that there must be a general
membership meeting. 
 it submitted only minutes of the local membership meetings when what is required is a written
resolution adopted at the general meeting. Worse still, the minutes of three of those local
meetings held were recorded by a union director and not by the union secretary.

2. Effects of Withdrawal of Authorization

Paragraph (o) on the other hand requires an individual written authorization duly signed by every
employee in order that a special assessment may be validly checked-off. Even assuming that the special
assessment was validly levied pursuant to paragraph (n), and granting that individual written
authorizations were obtained by the Union, nevertheless there can be no valid check-off considering that
the majority of the union members had already withdrawn their individual authorizations. A withdrawal of
individual authorizations is equivalent to no authorization at all. Hence, the ruling in Galvadores that "no
check-offs from any amounts due employees may be effected without an individual written authorization
signed by the employees ... " is applicable.

3. Forms of Dis-authorization:

The Union points out, however, that said disauthorizations are not valid for being collective in form, as
they are "mere bunches of randomly procured signatures, under loose sheets of paper." 11 The contention
deserves no merit for the simple reason that the documents containing the disauthorizations have the
signatures of the union members. The Court finds these retractions to be valid. There is nothing in the law
which requires that the disauthorization must be in individual form.

4. Purpose of the special assessment:

ART. 241.  Rights and conditions of membership in a labor organization. —

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

Of the stated purposes of the special assessment, as embodied in the board resolution of the Union, only
the collection of a special fund for labor and education research is mandated, as correctly pointed out by
the Union. The two other purposes, namely, the purchase of vehicles and other items for the benefit of the
union officers and the general membership, and the payment of services rendered by union officers,
consultants and others, should be supported by the regular union dues, there being no showing that the
latter are not sufficient to cover the same.

5. Art 22B of the Labor Code, “similar change”

The last stated purpose is contended by petitioners to fall under the coverage of Article 222 (b) of the
Labor Code. The contention is impressed with merit. Article 222 (b) prohibits attorney's fees,
negotiations fees and similar charges arising out of the conclusion of a collective bargaining
agreement from being imposed on any individual union member. The collection of the special
assessment partly for the payment for services rendered by union officers, consultants and others may
not be in the category of "attorney's fees or negotiations fees." But there is no question that it is an
exaction which falls within the category of a "similar charge," and, therefore, within the coverage of the
prohibition in the aforementioned article. 

6. Unlimited discretion of the union president:

There is an additional proviso giving the Union President unlimited discretion to allocate the proceeds of
the special assessment. Such a proviso may open the door to abuse by the officers of the Union
considering that the total amount of the special assessment is quite considerable — P1,027,694.33
collected from those union members who originally authorized the deduction, and P1,267,863.39 from
those who did not authorize the same, or subsequently retracted their authorizations.

The Court, therefore, stakes down the questioned special assessment for being a violation of Article 241,
paragraphs (n) and (o), and Article 222 (b) of the Labor Code.

WHEREFORE, the instant petition is hereby GRANTED. The Order of the Director of the Bureau of Labor
Relations dated August 19, 1988 is hereby REVERSED and SET ASIDE, while the order of the Med-
Arbiter dated February 17, 1988 is reinstated, and the respondent Coca-Cola Bottlers (Philippines), Inc. is
hereby ordered to immediately remit the amount of P1,267,863.39 to the respective union members from
whom the said amount was withheld. No pronouncement as to costs. This decision is immediately
executory.

SO ORDERED.