VOL.

54, DECEMBER 19, 1973 265

Ferrer vs. Reyes
*

No. L-24552. December 19, 1973.

MANUEL G. FERRER, MARIANO LOPEZ, RAFAEL G.

FERRER, BRIGIDO HUERGAS, FRANCISCO
ESPIRITU, ANTONIO BLANCO, ANTONIO J.
ESGUERRA, FEDERICO PABELICO, ANTONIO
ROLDAN, ISIDORO F. NARIO, CONCHITA
ROMUALDEZ YAP, RUBY V. PRECILLA, EDILBERTO
RAMATOY, BEN FRANCISCO, MARIO ONGPIN,
RAFAEL N. TAYAG, JR., JIMENO V. BERNABE,
MARCIAL CANDELARIO, CASTO BORROMEO, NELIA
DE LA PAZ LOZON, LORETO REYES, LETICIA
GENERAL, JOSE FULGADO, JOSE VILLAMIN,
DAMACENO FAGARA, GALICANO ESPIRITU, AND
OTHER PHILIPPINE AIRLINES, INC., EMPLOYEES
SIMILARLY SITUATED, petitioners, vs. THE HON.
SAMUEL F. REYES, JUDGE OF THE COURT OF FIRST
INSTANCE OF RIZAL, PHILIPPINE AIRLINES
EMPLOYEES ASSOCIATION (PALEA), ENRIQUE
JIMENEZ, MARIANO AMPIL, JR., and THE PHILLIPINE
AIR LINES, INC. (PAL), respondents.

Civil procedure; Parties; Class suits; A class suit may not be

dismissed at the instance of only some of all the parties involved.—
The ground advanced in the motion to withdraw the petition at
bar that “the petitioners are no longer interested in the
prosecution of the . . . case, because the issues therein have now
become moot and academic, by reason of the amicable settlement”
entered into by them on October 22, 1965 in the case below, lacks
basis in fact and in law: In fact, because it is only Atty. Ferrer and
his 26 named co-petitioners who have lost interest in the
prosecution of the case—but not the many other thousands of PAL
employees and their union, the PALEA, who as above stated,
oppose the 20% deduction of attorneys’ fees for respondents
Jimenez and Ampil as unauthorized, oppressive and
unconscionable; and in law, because the purported amicable
settlement is only an amicable settlement of Ferrer’s and his 25
co-petitioners’ individual claims but without the express
individual authorization cannot bind the many other thousands of
the real parties in interest, the PAL employees in whose favor the
back wages award was explicitly made.
 Attorneys; Counsel may not compromise the client’s case
without express authorization.—While petitioner-Atty. Ferrer,

_______________

* FIRST DIVISION.

266

266 SUPREME COURT REPORTS ANNOTATED

Ferrer vs. Reyes

could withdraw as a petitioner in the case at bar, since he filed the

complaint below and the petition at bar as counsel of the
thousands of PAL employees entitled to the Saturday backwages
protesting against the unreasonable and unauthorized 25%
deduction sought to be made by respondents therefrom, he could
not just withdraw as such counsel and completely abandon their
interests as clients represented by him in a class suit without
prior leave of this Court and without his being properly
substituted by another as counsel for said PAL employees against
whom his personal and individual interests have now come into
conflict. Otherwise, petitioner-Atty. Ferrer would be permitted
deviously to circumvent the proscription of Rule 138, section 23
that attorneys “cannot, without special authority, compromise
their clients’ litigation, or receive anything in discharge of a
client’s claim but the full amount in cash.”
Injunction; Abuse of discretion; Court abuses its discretion in
requiring premature payment of disputed attorney’s fees.—The
Court finds and so holds that respondent court did act with grave
abuse of discretion in arbitrarily and prematurely ordering the
turn over of the questioned 25% of the PAL employees’ backwages
to PALEA for payment of the questioned 20% attorneys’ fees of
respondents Jimenez and Ampil and 5% as a share claimed by the
PALEA for itself—when the very validity, reasonableness and
conscionableness of such charges and deductions are seriously
questioned in the complaint below and should be first duly tried
and adjudicated.

ORIGINAL ACTION in the Supreme Court. Certiorari and

prohibition.

The facts are stated in the opinion of the Court.

Manuel G. Ferrer and Manuel C. Gonzales for
petitioners.
Calpo & Alvir for respondents.
Enrique Jimenez and Mariano Ampil, Jr. for and in
their own behalves.
TEEHANKEE, J.:

In this original action, the Court grants certiorari as

prayed for. The motion to withdraw petition filed as a class
suit by petitioner Manuel G. Ferrer and his 25 co-
petitioners is denied

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VOL. 54, DECEMBER 19, 1973 267

Ferrer vs. Reyes

in view of the serious objections raised by the PALEA on

behalf of all the thousands of other PAL employees who
question as unauthorized and unconscionable the 25%
sought to be deducted from the Saturday back wages
awarded them individually in a final judgment by way of
20% attorney’s fees estimated at P520,000.00 and 5% union
charge.
The Court holds that respondent court acted with grave
abuse of discretion in arbitrarily and prematurely ordering
the turn-over of the questioned 25% deduction to PALEA
for payment of said attorney’s fees and charges, when the
very validity, reasonableness and conscionableness fo such
charges and deductions are seriously questioned in the
complaint filed with respondent court and should be first
duly tried and adjudicated.
The parties responsible for such premature turn-over
and release of the moneys deposited with respondent court
are ordered to restore said amounts and to show cause why
they should not be held in contempt of court for
disregarding and violating the Court’s subsisting
preliminary injunction of May 28, 1965, precisely enjoining
such premature turn-over and release of the questioned
deduction.
In Philippine
1 Air Lines Employees’ Association (PALEA)
vs. PAL, this Court, through then Justice Roberto
Concepcion, affirmed the judgment of the Manila court of
first instance declaring therein defendant Philippine Air
Lines to be a government-controlled corporation under the
provisions of Republic Act No. 1880 (providing for a 40-
hour week) by virtue of the 54% controlling stock held by
the National Development Corporation therein. The
judgment therefore declared defendant PAL’s liability to its
employees and laborers as follows:

“2. ordering the defendant to comply with the

provisions of Republic Act No. 1880 by shortening
the hours of work a week for its employees and daily
wage from 48 to 40 hours, and from Monday
through Friday at the rate of 8 hours of work a day;
 but if the exigencies of the service demand, it may
require the members of the

_______________

1 11 SCRA 387 (June 30, 1964).

268

268 SUPREME COURT REPORTS ANNOTATED

Ferrer vs. Reyes

plaintiff union to work beyond 40 hours a week by

paying them their basic rate of compensation only,
pursuant to Section 4 of the Eight-Hours Labor
Law;
“3. Adjudging the defendant, once this decision has
become final, to render a report, within one month
from the date of its finality, containing the names of
the members of the plaintiff union who have worked
on Saturdays beginning July 1, 1957, up to the time
defendant has started complying with this decision,
and to pay said employees and laborers the
compensation due on Saturdays they have worked
thru the plaintiff Union on the strength of the deed
of assignment; and
“4. Adjudging the defendant to pay attorney’s fees to
plaintiff’s
2 counsel in the sum of P3,000.00 and
costs.”

In disposing of therein defendant-appellant PAL’s

contention that the union members’ formal assignment of
right and cause of action in favor of the union PALEA as
plaintiff was null and void, this Court expressly held that:
“the main issue in this case is whether defendant is a
government-controlled corporation under the provisions of
Republic Act No. 1880, and it is “obvious that, regardless of
and even without said assignment, the plaintiff, as a
legitimate and registered labor organization, may bring
this action for the extension of the benefits of said Act to its
members. x x x The collection by them of additional
compensation is merely a possible incident of said main
issue, if decided in their favor.”
The total back wages due the PAL employees and
laborers for their extra Saturday work during the period in
question (July 1, 1957 to September 5, 1961) amounted to
approximately P2.6 million.
In implementing the judgment, the Manila court
authorized defendant PAL to discharge the judgment in
favor of the employees and laborers entitled thereto
through their union (PALEA) in three installment
payments of P1 million (about 40% of the total amount) out
of the amount already deposited and two other
installments of 30% each on March 31, 1965 and June 30,
1965, respectively.

_______________

2 Rollo, pp. 23-24; emphasis supplied.

269

VOL. 54, DECEMBER 19, 1973 269

Ferrer vs. Reyes

Instead of distributing the first installment of P1 million,

respondent PALEA withheld and deducted therefrom an
amount of about P260,000.00 (equivalent to more than 25%
thereof), allegedly representing 15% and 5% attorneys’ fees
due to Attys. Enrique Jimenez and Mariano Ampil, Jr. as
counsels of PALEA in the case plus another 5% as share of
the PALEA itself.
In view of the delay attending the distribution of the
first installment, the Manila court in an order dated March
27, 1965 authorized PAL to pay the 2nd and 3rd
installment of the Saturday back wages directly to the
employees and workers entitled thereto, but provided that
25% thereof be withheld and paid to PALEA (5%) and its
above-named counsels (20%) as in the first installment, as
stated in the preceding paragraph.
According to the petition, herein petitioners-employees
on their own behalf and on behalf of all their co-employees
of PAL similarly entitled to Saturday back wages sought to
intervene in the Manila court case in order to object to such
25% deduction from the judgment in their favor, but owing
to PALEA’s objection through its counsels and co-
respondents Attys. Jiminez and Ampil and due to the fact
that the judgment was already final and said attorneys
were not parties to the case, their intervention was denied
without prejudice to their rights to institute the necessary
action to protect their interest and to contest the
withholding and deduction of 25% of their back wages and
the payment thereof to said counsels-respondents
3 and
PALEA in the proper court or forum.
Hence, since the act sought to be enjoined (PAL’s
payment of the questioned 25% deduction was to be
performed in Makati, Rizal, where PAL has its main
offices), petitioners filed suit in the Rizal court of first
instance to enjoin PAL, and the other co-respondents from
deducting 25% from the second and third installments of
the Saturday back wages due to its employees or at least to
require the deposit thereof with the said court and to order
the return of the 25% already deducted from the first
installment of P1 million.

_______________

3 Rollo, p. 17.

270

270 SUPREME COURT REPORTS ANNOTATED

Ferrer vs. Reyes

Petitioners submitted that the deduction of such 25% from

the Saturday back wages due them and their co-employees
of PAL was “unauthorized, contrary to law, oppressive and
amounts to deprivation of property without due process of
law” since inter alia, such deductions were never validly
authorized by the employees; the amount of 20% allotted as
the union’s counsel’s fees estimated at P520,000.00 was
“unreasonable and unconscionable considering the services
rendered by said counsels and the nature of the case for
which the said compensation is supposed to be paid.
Moreover, the defendant PALEA has funds contributed to
it by plaintiffs herein and other members of said union
from 4 which the attorney’s fees of said counsel may be5
paid” ; the court of industrial relations in a final order
upheld by this Court which dismissed a petition to review
the same, held that the PAL has no authority to make
payroll deductions except for established uniform initiation
fees and the regular periodic membership dues of members
of PALEA and that other deductions may be made only
upon individual authorizations signed by the employees
concerned in cases permitted by law and that the
employees have not executed any written authorization to
make such 25% deduction from their Saturday back wages;
the present officers of PALEA were out of PAL’s premises
because of a charge of illegal strike against them pending
in the court of industrial relations and at any rate, their
term was to expire in April, 1965 and hence, assuming that
the union PALEA was entitled to the 5% deduction claimed
by it, payment to the present set of officers was inadvisable
and should await the results of the coming election of new
officers of the union.
Respondent court in its order of March 31, 1965, found
the petition sufficient in form and substance and issued a
restraining order upon a P1,000-bond restraining
respondents PAL from delivering to PALEA “whatever
amount it may deduct from the back pay of plaintiffs and
employees similarly situated,” and set the preliminary
injunction incident for hearing on April 6, 1965.
_______________

4 Rollo, p. 26.
5 In Case 43-IPA of the court of industrial relations.

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VOL. 54, DECEMBER 19, 1973 271

Ferrer vs. Reyes

On April 6, 1965, respondents PALEA, Jimenez and Ampil

filed a motion to dissolve writ of injunction. Without
receiving any evidence, respondent court issued its order of
the same date, after hearing arguments, setting aside its
restraining order of March 31, 1965 and ordering the PAL
“to turn over the amount represented by 25% to the
Philippine Air Lines Employees Association (PALEA).”
Meanwhile, the PAL filed its answer of April 13, 1965,
wherein it disclaimed any interest in the money involved in
the back wages judgment and expressed readiness to
dispose of the same as directed by competent authority.
The other respondents, PALEA, Jimenez and Ampil, filed
their answer of April 14, 1965 to petitioners’ complaint,
joining factual and legal issues.
Petitioners’ motion for reconsideration of April 19, 1965,
praying for reconsideration of respondent court’s order of
April 6, 1965 denying preliminary injunction was denied by
respondent court in its order of April 24, 1965, wherein it
ordered PAL to forthwith implement its previous order
requiring the turn-over of the 25% deduction to PALEA.
Hence, the present petition for certiorari and prohibition
filed on May 17, 1965, wherein petitioners through their co-
petitioner and counsel, Atty. Manuel G. Ferrer, stressed
that a reading of the Manila court case awarding the
Saturday back wages shows “that the ultimate parties-
plaintiffs were specific employees not respondent PALEA
and consequently, there was no reason for respondent
PALEA to 6 collect attorneys’ fees without express
authority.”
The petition charged that:

“Respondent judge committed grave abuse of discretion

amounting to lack of jurisdiction in dissolving his writ of
injunction of March 31, 1965 and directing respondent PAL to
turn over to PALEA 25% of the backwages of the employees—or
approximately P250,000.00 which petitioner will likely not be able
to recover if judgment should ultimately be in their favor—
because

_______________

6 Rollo, pp. 18-19; emphasis supplied.

 272

272 SUPREME COURT REPORTS ANNOTATED

Ferrer vs. Reyes

“I

“The order to turn over 25% of the employees’ backwages to

PALEA is unwarranted, arbitrary, beyond his jurisdiction and at
best should be treated as obiter dictum.

“II

“The Directive to respondent PAL to deliver the 25% of the

backwages to respondent PALEA which the complaint precisely
intended to prevent has rendered the case prematurely moot and
academic to the irreparable injury of petitioner.

“III

“The dissolution of the writ of preliminary injunction was

issued without evidence and merely on the basis of respondents
PALEA, Jimenez and Ampil’s bare and unverified motion to
dissolve writ of injunction
7 containing averments of facts which
necessitated proof.”

The Court per its resolution of May 19, 1965, ordered

respondents to answer the petition and the issuance upon a
P5,000-bond of a preliminary injunction writ (issued on
May 28, 1965) enjoining respondent court from executing
its challenged order of April 6, 1965, directing PAL, to turn
over to respondent PALEA the questioned 25% deduction
from the Saturday back wages due to petitioners and
employees entitled thereto under the Manila court
judgment.
Respondent PAL filed its answer on June 10, 1965,
reiterating its disclaimer of any interest in the amount
involved.
Respondents Jimenez and Ampil filed on June 11, 1965
their answer on their own behalf and the other respondents
(except PAL), wherein they cited inter alia a subsequent
order of May 21, 1965 of respondent court ordering PAL to
deposit in court “an amount equivalent to 20% of the
backwages of its employees it had already deducted from
said wages and which is now being retained by said
defendant”, overruling PAL’s

_______________

7 Rollo, pp. 13-14.

273
 VOL. 54, DECEMBER 19, 1973 273
Ferrer vs. Reyes

opposition that PALEA “had now two (2) sets of officers8

claiming to be the legitimate representatives of said union’
The case was heard by the Court on October 8, 1965,
and the Court granted the parties a 15-day period to file
memoranda in lieu of oral argument.
No such memoranda were filed. Instead, on October 30,
1965, petitioners filed a motion to withdraw petition, with
the conformity of both respondents Jimenez and Ampil as
“respondents and counsel for the other respondent except
‘PAL’ ” stating “(T)hat on October 24, 1965, the aboved-
named petitioners and respondents, except the Hon.
Samuel F. Reyes, have reached an amicable settlement in
connection with Civil Case No. 8634 of the Court of First
Instance of Rizal, from which the instant Pleading in
Certiorari stems” and “(T)hat the petitioners are no longer
interested in the prosecution of the above-entitled case,
because the issues therein have now become moot and
academic, by reason of the said amicable settlement
adverted to above.”
The Court required comment on such withdrawal motion
from the parties.
The comments filed by PAL and by the union PALEA
through new counsels, Attys. Calpo and Alvir, raise serious
objections against the granting of such withdrawal motion
filed by petitioners.
PAL’s comment of December 2, 1965 brought to the
Court’s attention a series of orders issued by respondent
Court notwithstanding the injunction issued by this Court,
whereby respondent court in an order dated July 20, 1965,
ruled motu proprio on the “side issue of whether or not the
case at bar is a class suit” and ignoring the plain fact of
record that the Manila court judgment of Saturday back
wages was specifically in favor of “the members of the
plaintiff union [PALEA] who have worked on Saturdays
beginning July 1, 1957”, held that since there were only 26
PALEA members named as plaintiffs (above-named
petitioners) out of a total membership of around

_______________

8 Rollo, pp. 99-100.

274

274 SUPREME COURT REPORTS ANNOTATED

Ferrer vs. Reyes
2, 300, “the instant litigation is not a class suit but an
ordinary civil action with the 26 persons named and
appearing as 10plaintiffs as the only ones interested in this
case as such.”
In orders of May 6, 1965 and October 6, 1965,
respondent court required PAL to deposit the 20%
deduction claimed for respondents-counsels Jimenez and
Ampil corresponding to the second and third installments
which PAL perforce so deposited in the respective amounts
of P155,300.23 and P91,412.30 or a total of P246,712.53;
added to the P200,000.00 already deducted by said counsel
from the first installment of P1-million, said 11counsels’ total
claim for attorney’s fees became P446,712.53.
Petitioner Manuel G. Ferrer as attorney for plaintiffs
below then asked that the very class suit instituted by him
on behalf of his co-employees be dismissed on the ground
that respondents counsels Jimenez and Ampil of PALEA
had agreed to restore the deductions made from his
Saturday back wages and the 25 other employees expressly
named as plaintiffs. Atty. Ferrer manifested his consent
that the balance of the amounts deposited by PAL
corresponding to the back wages of his co-employees of PAL
as expressly so awarded in the Manila court judgment be
released in favor of said counsels of the union, which
respondent court granted, notwithstanding this Court’s
preliminary injunction against the turn-over of such
questioned deduction to the union or counsel.
Respondent court summarily ignored the basic questions
raised as to the reasonableness and oppressiveness and
lack of individual authorization on the part of the PAL
employees—express awardees under the judgment award—
of the deduction as alleged attorneys’ fees and the
fundamental fact that if the suit filed by Atty. Ferrer and
his 25-co-petitioners was not a class suit, then respondent
court could not acquire jurisdiction over the case, since the
total claims of said 26 plaintiffs (petitioners herein) against
the questioned deductions do not exceed P10,000.00, so as
to fall within respondent court’s jurisdiction as a court of
first instance.

_______________

10 Rollo, pp. 143-144.

11 Rollo, p. 140.

275

VOL. 54, DECEMBER 19, 1973 275

Ferrer vs. Reyes
PAL taking up the cudgels for overwhelming number of its
employees whose interest and claims were thus seemingly
abandoned by Atty. Ferrer who theretofore insisted on his
class suit and complained against any deduction from the
judgment award in behalf of all the PAL employees entitled
to receive their Saturday back wages in full as awarded by
the Manila court judgment, (expressly insisting in his
petition at bar that respondent court’s order “to turn over
25% of the employees’ back wages to PALEA is
unwarranted, arbitrary (and) beyond (its) jurisdiction” and
that the suit filed by him was for the benefit of all PAL
employees similarly situated as him and his 25 co-
petitioners) asked that respondents be asked to explain
their gross disregard of this Court’s injunction writ and
show cause why they should not be held in contempt of
court.
The union PALEA filed through new counsels Attys.
Calpo and Alvir, its “Opposition to Motion to Withdraw
Petition dated October 28, 1965 filed by Manuel G. Ferrer”
dated December 13, 1965 with the affidavit of Vicente S.
Balajadia, new president of the PALEA, wherein they
informed the Court inter alia that—
—On May 1, 1965, PALEA contracted the professional
services of Ceferino R. Magat & Associates represented by
Atty. Eduardo M. Albano to handle all its cases and
specifically to recover the 20% deducted by the old set of
officers for payment to their previous counsels, respondents
Jimenez and Ampil.
—Neither the new president nor the board of directors of
PALEA authorized Atty. Albano to enter into the
compromise agreement dated October 22, 1965 for
dismissal of the class suit instituted by Manuel G. Ferrer
and 25 other plaintiffs (petitioners) in respondent court,
which Atty. Albano executed and signed purportedly on
behalf of PALEA without any authority whatsoever; and
—PALEA’s stand through its new set of officers since
May 1, 1965 supported the stand of the PALEA members
that “the former counsels, Enrique Jimenez and Mariano
V. Ampil, Jr. had no direct client-lawyer relationship with
its members and

276

276 SUPREME COURT REPORTS ANNOTATED

Ferrer vs. Reyes

therefore are not entitled to the 20% lawyers’ fees asked for
by them from the individual members” and PALEA’s
interest was to protect not only the rights of Ferrer and
the 25 other named petitioners “but to protect also the
rights of all the other 12employees of PAL similarly situated
with Manuel Ferrer.”
The Court under its resolution of February 28, 1966,
resolved to take up Ferrer’s motion to withdraw petition
and the subsequent pleadings above related upon
consideration of the case on the merits.

By virtue of the very grave and serious questions raised

against the actuations of petitioner-Atty. Manuel G.
Ferrer as counsel for petitioners, Atty. Eduardo Albano as
counsel for PALEA who executed a purported compromise
agreement on behalf of PALEA without authority and
respondents-Attys. Jimenez and Ampil, who apparently
caused the questioned 20% to be deducted and paid to them
notwithstanding this Court’s preliminary injunction, as
well as of respondent judge himself who issued the orders
for the release of the 20% deduction in contravention of this
Court’s injunction, as stated hereinabove, it is manifest
that petitioners’ motion to withdraw the petition at bar
dated October 28, 1965 may not be granted.
The ground advanced in said motion that “petitioners
are no longer interested in the prosecution of the . . . case,
because the issues therein have now become moot and
academic, by reason of the amicable settlement” entered
into by them on October 22, 1965 in the case below, lacks
basis in fact and in law: In fact, because it is only Atty.
Ferrer and his 25 named co-petitioners who have lost
interest in the prosecution of the case—but not the many
other thousands of PAL employees and their union, the
PALEA, who as above stated, oppose the 20% deduction of
attorney’s fees for respondents Jimenez and Ampil as
unauthorized, oppressive and unconscionable; and in law,
because the purported amicable settlement is only an
amicable settlement of Ferrer’s and his 25 co-petitioners’
individual claims but without express individual
authorization

_______________

12 Idem, pp. 169, 170.

277

VOL. 54, DECEMBER 19, 1973 277

Ferrer vs. Reyes

cannot bind the many other thousands of the real parties in

interest, the PAL employees in13 whose favor the back wages
award was explicitly made, not to mention that the
PALEA through its new set of officers expressly disclaims
and rejects such settlement as having been executed by
Atty. Albano in betrayal of its trust and without its
authorization.
Since respondent court had declared Ferrer’s suit to be
his individual suit together with that of his 25 co-plaintiffs
and not a class suit, it strains one’s comprehension as to
how on the strength of the so-called amicable settlement
executed by Ferrer as plaintiff and as counsel for the other
25 other plaintiffs, wherein they “recognize and honor” the
old officers’ commitment to pay respondents Jimenez and
Ampil 20% attorneys’ fees and “ratify” the said fees,
respondent court, notwithstanding this Court’s injunction,
could order the release not only of the small share of
Ferrer and his 25 co-plaintiffs (less than P10,000) but of
the entire questioned total of P446,712.53 corresponding to
the unrepresented mass of PAL employees from whose
backwages said amount (20%) was deducted without their
consent and against their will. Since respondent court held
that Ferrer and his 25 co-petitioners were representing
their individual interests and not the mass of PAL
employees similarly situated and awarded backwages,
Ferrer and his co-petitioners obviously had no authority or
personality to represent nor to bind the mass of PAL
employees as far as the questioned 20% attorneys’ fees
were concerned.
Stated in another way, while petitioner-Atty. Ferrer
could withdraw as a petitioner in the case at bar, since he
filed the complaint below and the petition at bar as counsel
of the thousands of PAL employees entitled to the Saturday
backwages protesting against the unreasonable and
unauthorized 25% deduction sought to be made by
respondents therefrom, he could not just withdraw as such
counsel and completely abandon their interests as clients
represented by him in a class suit (by the simple expedient
of turning about and disclaiming the suit filed by him ab
initio as a class suit)

_______________

13 See Heirs of T.M. Cruz vs. CIR, 30 SCRA 917 (1969) and cases cited.

278

278 SUPREME COURT REPORTS ANNOTATED

Ferrer vs. Reyes

without prior leave of this Court and without his being

properly substituted by another as counsel for said PAL
employees against whom his personal and individual
interests have now come into conflict. Otherwise,
petitioner-Atty. Ferrer would be permitted deviously to
circumvent the proscription of Rule 138, section 23 that
attorneys “cannot, without special authority, compromise
their clients’ litigation, or receive anything in discharge of
a client’s claim but the full amount in cash.”
Technically, respondent court’s subsequent order of July
20, 1965 declaring the suit before him to be an individual,
and not a class, suit of petitioner Ferrer and his 25 co-
plaintiffs is not before this Court in the present original
action for adjudication. Assuming this finding to be correct,
however, respondent court could not on the strength
thereof validly order the turning over to PALEA or
counsels-respondents Jimenez and Ampil of “the amount
represented by 25% of the backwages due the petitioners
and employees similarly situated” under the Manila court
judgment in Case No. 37122, except for the portion thereof
due Ferrer and his 25 co-petitioners, since the far greater
portion thereof due to the mass of PAL employees was
covered by this Court’s preliminary injunction of May 28,
1965 which subsists in full force and effect. Petitioner
Ferrer and respondents Jimenez and Ampil stand
responsible for this gross disregard of this Court’s
preliminary injunction and will be ordered jointly and
severally to restore and re-deposit such amount wrongfully
taken by them with respondent court, as below directed.

II

With the denial of the motion to withdraw petition, the

Court will now briefly deal with the merits of the petition
filed expressly by Ferrer and his 25 co-petitioners not only
in their own but on behalf of all other PAL employees in
whose individual favor the Manila court awarded Saturday
backwages. The Court finds and so holds that respondent
court did act with grave abuse of discretion in arbitrarily
and prematurely ordering the turn over of the questioned
25% of the PAL employees’ backwages to PALEA for
payment of the questioned 20% attorneys’ fees of
respondents Jimenez and

279

VOL. 54, DECEMBER 19, 1973 279

Ferrer vs. Reyes

Ampil and 5% as a share claimed by the PALEA for itself—

when the very validity, reasonableness and
conscionableness of such charges and deductions are
seriously questioned in the complaint below and should be
first duly tried and adjudicated.
 With the withdrawal of petitioner Manuel G. Ferrer
and his 25 co-petitioners as plaintiffs in the case below, the
PALEA with the new set of officers opposed, as Ferrer
originally was, to the deduction of the questioned 25%
charges, (as represented by Attys. Calpo and Alvir who
filed their appearance herein on December 13, 1965) should
be duly ordered by respondent court to intervene as
plaintiffs in the case below. A representative group of PAL
employees entitled to the backwages should be allowed to
intervene, considering that the real parties in interest are
the individual employees in whose individual favor the
Saturday backwages were awarded explicitly by the Manila
court and the union serves only as the agent and fiduciary
of its members and may waive or dispose of the judgment
award by compromise or settlement only with the express
authority of the “individual workers who 14are the real
judgment creditors” as held in Cruz vs. CIR. Thereafter,
respondent court should proceed to try the issues
principally on whether the union can validly make any
deduction of 5% of the backwages awarded as its own share
and of 20% thereof for attorneys’ fees of respondents
Jimenez and Ampil without the individual PAL employees’
written consent and authorization, and assuming that such
deduction could be made, whether the percentages and fees
sought to be deducted are “unreasonable and
unconscionable” and if so, assess the reasonable amount of
union charges and attorneys’ fees.
In such assessment, respondent court will be guided by
the very criteria agreed upon by respondents-attorneys
Jimenez and Ampil in their so-called “compromise 15

agreement” of October 22, 1965 with Ferrer wherein

Ferrer presumptously

_______________

14 See fn. 13.

15 The so-called “compromise agreement” cited “the length of time (6
years) consumed in the litigation, the 13 witnesses presented by the
‘PALEA’, and the 78 documents as Exhibits in the case, the expenses
incurred in the prosecution of the suit, and last but not least, the
favorable verdict obtained.”

280

280 VOL. 54, DECEMBER 19, 1973

Ferrer vs. Reyes

purported to “ratify” the 20% charged by said counsels as

“just and
16 reasonable,” and by this Court’s guidelines on the

matter.
III

With reference to respondent court’s order ordering the

immediate release of the 25% questioned deduction
deposited by PAL with it and turn-over of which to PALE A
for payment to respondents counsels Jimenez and Ampil as
per the questioned order of April 6, 1965 was enjoined by
this Court, petitioner Manuel G. Ferrer and respondents
Jimenez and Ampil are jointly and severally responsible for
the return and restoration of the full amount of said
deposits wrongfully released to respondents Jimenez and
Ampil at their instance and through their so-called
“Compromise Agreement” of October 22, 1965, in gross
disregard and violation of this Court’s writ of preliminary
injunction of May 28, 1965, so that the status quo sought to
be preserved by the17 Court’s injunction may be duly restored
and maintained.
As already indicated above, they should be the first ones
to realize that their so-called “compromise agreement”
(which was never submitted to this Court and which
manifestly disregarded and contravened this Court’s
injunction) could only compromise and settle the individual
claims of Ferrer and his 25 co-plaintiffs (on the very
premise of respondent court’s order that their suit was an
individual, not a class suit) and not the principal claims of
all the other PAL employees who were the specific
awardees and judgment creditors of the Saturday
backwages and who had not sanctioned the 25% deduction
for 5% union charges and 20% attorneys’ fees, amounting
to close to half a million pesos in dispute. Ferrer having
disclaimed his class suit and having come to terms with
respondents could not certainly presume nevertheless to
continue to speak for them, much less bind them with his
“ratification” of the questioned

_______________

16 See Heirs of T.M. Cruz vs. CIR, fn. 13, where this Court authorized
collection of 30% contingent attorneys’ fees only on P150,000.00 of a
P423,756.74 judgment; and Meralco Workers Union vs. Gaerlan, 32 SCRA
419 (1970).
17 See Comm. of Public Highways vs. San Diego, 31 SCRA 616, 622
(1970).

281

VOL. 54, DECEMBER 19, 1973 281

Ferrer vs. Reyes
charges and fees and “consent” to their turn-over and
payment to respondents-counsels.
Said petitioner Manuel G. Ferrer and respondents
counsels Enrique Jimenez and Mariano Ampil, Jr., by the
same token, shall be required to show cause why they
should not be held in contempt of court for disregarding
and violating the Court’s preliminary injunction of May 28,
1965. Respondent court is exempted from this requirement
only, because it is no longer presided by the respondent
judge named in the petition who was responsible for the
issuance of the release order in contravention of this
Court’s injunction.

————

ACCORDINGLY, the writ of certiorari prayed for is

granted and respondent court’s orders of April 6, 1965 and
April 24, 1965 are hereby annulled and set aside. The case
is remanded to respondent court for further proceedings as
indicated in the body of the Court’s opinion.
Petitioner Manuel G. Ferrer and respondents Attys.
Enrique Jimenez and Mariano Ampil, Jr. are ordered
jointly and severally to return and re-deposit the full
amount deposited by PAL with respondent court
representing the 25% questioned deduction, (except the
portion thereof corresponding to the individual shares of
Ferrer and his 25 co-plaintiffs), turn-over of which to
PALEA and said respondents for their questioned
attorneys’ fees under respondent court’s order of April 6,
1965 was enjoined by this Court but which they caused to
be wrongfully released to said respondents under their so-
called “compromise agreement” of October 22, 1965 in
violation of this Court’s injunction of May 28, 1965. Said
named parties, Attys. Ferrer, Jimenez and Ampil shall
make such restoration and re-deposit with respondent
court within thirty (30) days from date of entry of this
judgment and shall file the corresponding manifestation of
compliance within ten (10) days thereafter.
Said named parties Attys. Ferrer, Jimenez and Ampil
are further required to show cause within ten (10) days
from notice hereof why they should not be held in contempt
of Court for

282

282 SUPREME COURT REPORTS ANNOTATED

Sayson vs. Singson

disregarding and violating this Court’s injunction of May

28, 1965.
 The Clerk of Court is directed to serve copies of this
decision directly to the PALEA as well as to their counsel of
record, Attys. Calpo and Alvir.
So ordered.

Makalintal, C.J., Makasiar, Esguerra and Muñoz

Palma, JJ., concur.
Castro, J., concurs in the result.

Writ granted and orders annulled and set aside. Case

remanded to respondent court for further proceedings.

Notes.—Class Suit by Members of a Union. Where the

right of the members of the union to the wages in question
was only recognized when the collective bargaining
agreement between the union and the company was
concluded, the action for said wages may be brought in the
name of the union that has obliged itself to secure those
wages for its members, without need of joining said
members. National Brewery and Allied Industries Labor
Union of the Philippines vs. San Miguel Brewery, Inc., L-
19017, December 27, 1963, 9 SCRA 847.

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