Ferrer v. Reyes
REITERATIONFacts
1. The Antecedents: This case concerns a dispute over the distribution of back wages awarded to Philippine Airlines, Inc. (PAL) employees for Saturday work performed between July 1, 1957, and September 5, 1961. The original judgment, affirmed by this Court, declared PAL a government-controlled corporation and mandated payment for extra Saturday work. The total back wages amounted to approximately P2.6 million. A significant portion of these funds, approximately P1 million from the first installment and subsequent installments, was subject to a 25% deduction allegedly for attorney's fees (20%) and union charges (5%). The validity and reasonableness of these deductions were sharply contested by the employees. 2. Procedural History: Following the Supreme Court's affirmation of the back wage award, the Manila Court of First Instance authorized PAL to pay the employees through their union, PALEA. PALEA, along with its counsels, Attys. Enrique Jimenez and Mariano Ampil, Jr., deducted approximately 25% from the first installment of P1 million. Petitioners, employees of PAL, sought to intervene in the Manila court to object to these deductions but were denied, with leave to pursue the matter in a separate action. Consequently, the petitioners filed a suit in the Rizal Court of First Instance to enjoin PAL from making further deductions and to recover the amounts already deducted. The Rizal court initially issued a restraining order but later dissolved it, ordering PAL to turn over the 25% deduction to PALEA. This led to the filing of the present petition for certiorari and prohibition with the Supreme Court. 3. The Petition: The petitioners, represented by Atty. Manuel G. Ferrer, filed this original action for certiorari and prohibition, challenging the Rizal court's order to turn over 25% of the back wages to PALEA and its counsels. They argued that the deductions were unauthorized, unreasonable, and constituted a deprivation of property without due process, as the employees had not provided individual authorization. The petition contended that the respondent court acted with grave abuse of discretion in dissolving the injunction and ordering the turnover without due hearing and evidence, thereby rendering the case moot and causing irreparable injury. The Supreme Court granted the writ of certiorari, annulling the challenged orders and remanding the case for further proceedings, emphasizing the need to determine the validity and reasonableness of the deductions.
Issue(s)
Whether the respondent court acted with grave abuse of discretion in ordering the turn-over of the 25% deduction from the Saturday back wages to PALEA and its counsels without prior trial on the validity, reasonableness, and conscionableness of such charges. Whether the petitioners' motion to withdraw the petition, based on an alleged amicable settlement, should be granted despite objections from other employees and the union. Whether petitioner Manuel G. Ferrer and respondents Attys. Enrique Jimenez and Mariano Ampil, Jr. should be held liable for the wrongful release of funds in violation of this Court's preliminary injunction.
Ruling
The Supreme Court granted the writ of certiorari, annulled and set aside the respondent court's orders of April 6, 1965, and April 24, 1965. The case was remanded to the respondent court for further proceedings. Petitioner Manuel G. Ferrer and respondents Attys. Enrique Jimenez and Mariano Ampil, Jr. were ordered jointly and severally to return and redeposit the full amount deposited by PAL representing the 25% questioned deduction (except the portion corresponding to Ferrer and his 25 co-plaintiffs) within thirty (30) days. They were also required to show cause within ten (10) days why they should not be held in contempt of court for violating the Court's preliminary injunction.
Ratio Decidendi
On the issue of grave abuse of discretion in ordering the turn-over of deductions: The Court held that the respondent court acted with grave abuse of discretion in arbitrarily and prematurely ordering the turn-over of the questioned 25% deduction to PALEA for the payment of attorney's fees and union charges. The validity, reasonableness, and conscionableness of these charges were seriously questioned in the complaint filed with the respondent court and should have been duly tried and adjudicated first. The Court emphasized that the ultimate parties-plaintiffs in the original back wages case were specific employees, not the union PALEA, and thus PALEA had no inherent right to collect attorney's fees without express authority from the individual employees. The Court reiterated that the union serves only as an agent and fiduciary of its members and can only compromise or dispose of judgment awards with the express authority of the individual workers who are the real judgment creditors. The respondent court's order to release funds despite the pending issues and the subsisting preliminary injunction from the Supreme Court was deemed a clear disregard of judicial process. On the motion to withdraw the petition: The Court denied the motion to withdraw the petition filed by petitioner Manuel G. Ferrer and his co-petitioners. The ground for withdrawal, an alleged amicable settlement, was found to be without basis in fact and in law. In fact, only Ferrer and his 25 named co-petitioners had lost interest, while thousands of other PAL employees and their union, PALEA, opposed the deductions. In law, the purported amicable settlement only covered the individual claims of Ferrer and his co-petitioners and could not bind the thousands of other employees who were the real parties in interest and had not authorized the deductions. Furthermore, the PALEA, through its new set of officers, expressly disclaimed and rejected the settlement, stating it was executed by their former counsel without authorization. The Court stressed that Atty. Ferrer, having filed the suit as counsel for thousands of employees in a class suit, could not unilaterally withdraw and abandon their interests without prior leave of court and proper substitution, especially when his personal interests now conflicted with those of his clients. On liability for violating the preliminary injunction: The Court found petitioner Manuel G. Ferrer and respondents Attys. Enrique Jimenez and Mariano Ampil, Jr. jointly and severally responsible for the wrongful release and restoration of the full amount of the 25% questioned deduction. This release occurred through their so-called "Compromise Agreement" of October 22, 1965, in gross disregard and violation of this Court's preliminary injunction of May 28, 1965. The Court noted that their "compromise agreement" could only settle the individual claims of Ferrer and his 25 co-plaintiffs, not the principal claims of the thousands of other PAL employees whose back wages were involved and who had not sanctioned the deductions. Ferrer, having disclaimed his class suit and settled his individual claim, could not presume to bind or represent the other employees. Consequently, they were ordered to restore the funds and show cause why they should not be held in contempt of court.
Main Doctrine
The Supreme Court granted certiorari, annulling and setting aside the orders of the respondent court which arbitrarily and prematurely ordered the turn-over of questioned deductions from back wages to the union and its counsels, holding that the validity and reasonableness of such charges must first be duly tried and adjudicated. The Court also ordered the restoration of wrongfully released funds and required certain parties to show cause why they should not be held in contempt for violating a subsisting preliminary injunction.