Golden Donuts, Inc. v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Private respondents, employees of petitioner Golden Donuts, Inc., were members of the Kapisanan ng Manggagawa sa Dunkin Donut-CFW (KMDD-CFW). Their collective bargaining agreement expired on November 16, 1989. During the freedom period, CBA negotiations commenced but were marred by delays and walkouts, leading the union to declare a deadlock. Subsequently, the union struck on December 18, 1989. Petitioner filed a complaint seeking to declare the strike illegal due to alleged illegal acts, including barricading premises, overturning a company van, and lack of strike vote and report to the DOLE. A compromise agreement was later entered into by KMDD-CFW and Golden Donuts, Inc. on July 16, 1990, wherein parties agreed to withdraw all cases and the company would provide separation pay to 262 striking employees. However, five complainants (private respondents herein) disagreed and did not receive the separation pay, arguing the compromise was made without their individual consent or ratification by the majority of the union membership. Procedural History: The five complainants filed individual labor cases. The Labor Arbiter ruled in favor of the employer, upholding the dismissal and finding the private respondents bound by the compromise agreement. The National Labor Relations Commission (NLRC) modified the decision, ordering reinstatement without loss of seniority rights and back wages limited to three years, along with separation pay and attorney's fees. The NLRC denied the employer's motion for reconsideration. The Petition: Petitioners filed a petition for certiorari, questioning the NLRC's resolution and order, primarily on the grounds that a union may compromise or waive the rights of its minority members without their consent, and whether the compromise agreement has the effect of res judicata on them.
Issue(s)
Whether a union may compromise or waive the rights to security of tenure and money claims of its minority members without their consent. Whether a compromise agreement entered into by the union with the company, without the consent or ratification of minority members, has the effect of res judicata upon them. Whether private respondents are entitled to monetary benefits subject of their individual complaints.
Ruling
The petition is dismissed. The Supreme Court affirmed the NLRC resolution and order, with the modification of deleting the award of separation pay to private respondents. The Court held that private respondents are entitled to reinstatement and back wages.
Ratio Decidendi
On the issue of whether a union may compromise or waive the rights to security of tenure and money claims of its minority members without their consent: The Supreme Court ruled in the negative. It held that even if a clear majority of union members agreed to a settlement, the union lacks the authority to compromise the individual claims of members who did not consent. Rule 138, Section 23 of the 1964 Revised Rules of Court requires special authority for an attorney to compromise a client's litigation, and such authority cannot be presumed but must be duly established by evidence. In this case, the minority union members did not authorize the union to compromise their individual claims. Absent a showing of special authority, there was no valid waiver of their rights to reinstatement and back wages. The Court cited Kaisahan ng mga Manggagawa sa La Campana v. Sarmiento and Quiban vs. Butalid. On the issue of whether a compromise agreement entered into by the union with the company, without the consent or ratification of minority members, has the effect of res judicata upon them: The Supreme Court held that such a compromise agreement does not have the effect of res judicata upon minority members who did not consent. A compromise is essentially a contract perfected by consent. For a compromise agreement to be valid and binding, all parties must consent. The Court reiterated the principle that 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, as enunciated in Kaisahan ng mga Manggagawa sa La Campana and General Rubber and Footwear Corp. vs. Drilon. The beneficiaries of money claims are the individual complainants themselves, and the union can only assist, not decide for them. The Court further stated that a judgment upon a compromise agreement is conclusive only upon parties thereto and their privies, and since private respondents were not parties to the compromise agreement, the requirement of identity of parties for res judicata was not satisfied. On the issue of whether private respondents are entitled to monetary benefits subject of their individual complaints: The Supreme Court affirmed the NLRC's ruling that private respondents are entitled to reinstatement and back wages. The Court found no evidence that private respondents committed any illegal acts during the strike, thus their dismissal was deemed illegal. The employer bears the burden to prove that termination was after due process and for a valid cause. However, the Court modified the NLRC ruling by deleting the award of separation pay, as private respondents were entitled to reinstatement and back wages, and there was no showing of strained relations that would prevent their reinstatement. The Court cited Art. 279, Labor Code and Asia World Recruitment, Inc. vs. National Labor Relations Commission.
Main Doctrine
A union has no authority to compromise or waive the individual claims of its members, particularly those concerning security of tenure and money claims, without their specific and individual consent. A compromise agreement entered into by a union without the consent of minority members does not have the effect of res judicata upon them.