G.R. No. L-47775 - Duyag vs. Inciong

The petitioners are arrastre checkers employed by E. Razon, Inc. based in the South Harbor, Port Area, Manila and bona fide members of the Associated Port Checkers and Workers Union.
The private respondents are high-ranking union officers (including the president, treasurer, vice-president, and auditor) accused of conducting improper and unauthorized transactions in the administration of union funds and affairs.
On January 14, 1977, the petitioners filed a complaint with Regional Office No. 4 of the Department of Labor for alleged irregularities and anomalies in union fund administration and internal policies.

The union’s constitution and by-laws, approved on September 5, 1969, fixed the monthly union dues at ten pesos for arrastre checkers.
The union officers enacted several unauthorized increases:

An increase of two pesos (resolution dated September 1, 1970) and of five pesos (resolution dated March 14, 1972), both void for failing to obtain the three-fourths board approval required under article VII.
An additional increase of one peso for the months of March, April, and May 1973, raising the dues to eighteen pesos without any board resolution.
A further increase in April and May 1975 to nineteen pesos, again without the necessary board authorization.
A deduction of eight pesos and fifty centavos from the mid-year bonus during the first semester of 1976, unauthorized by any board resolution and unprecedented in prior years.

These actions contravened not only the union’s own constitution and by-laws but also the provisions of the Labor Code, specifically Article 242 (which governs the rights and conditions of membership) that require receipts, proper accounting, and adherence to prescribed authorizations.

E. Razon, Inc. remitted profit-shares to the union; for instance, P25,684.61 for the period from May to October 1973.
The respondents distributed only a part (e.g., P19,974) to the members while withholding a significant portion (e.g., P5,710.61), with similar practices observed in other periods.
Specifically, for a profit-share of P22,559.50 paid between November 1973 and February 1974, the respondents deposited funds in the union’s Cooperative Credit Union account, then withdrew and distributed a lesser sum (P20,848) while personally appropriating the balance (P1,711.50) through checks drawn by respondents Manalad and Leano.

The union’s by-laws (Section 4(d), Article IV) stipulate that any disbursement exceeding P500 requires prior authorization from the board of directors.
Respondent Manalad made numerous disbursements without such approval, including:

Additionally, Manalad and Leano withdrew union funds on twenty-three occasions from the union’s bank account aggregating to P43,026.80.
A separate unauthorized payment of P3,500 was made to respondent Amparo via a resolution approved by only six board members rather than the required fourteen.

In 1973, amounts of P5,000 and later P1,500 were loaned from the Pacific Memorial Plan collections to the union’s Cooperative Credit Union for purposes not originally intended.
Earlier, sums of P200 and P1,600 were similarly diverted for personal or extraneous disbursements (e.g., cash advances and representation expenses).

These disbursements, not sanctioned by the board, illustrate a pattern of misappropriation of funds intended to benefit the union members.

Respondents Manalad, Amparo, and Puerto were simultaneously officers of another labor union—the Philippine Technical Clerical Commercial Employees Association.
Such dual membership violates section 9, Article III of the arrastre checkers’ union constitution and by-laws, which disqualify elected officers who become members of another organization.
Specifically, respondent Manalad’s organization of a family-owned corporation (Comet Integrated Stevedoring Services, Inc.) compounded the conflict of interest:

As president, he issued customs passes that facilitated services for his firm, potentially disadvantaging the union and its members.

Despite a resolution dated November 25, 1977, in which more than 90% of the union members reportedly ratified the unauthorized deductions and authorized future ones, this did not cure the earlier violations of the constitution, by-laws, and the Labor Code.
The med-arbiter initially ordered the removal of the private respondents as union officers and mandated the reimbursement of illegally collected funds to the union members.
The Director of Labor Relations reversed the med-arbiter’s decision on the basis that the power to remove officers rests with the union membership; however, he did uphold his jurisdiction over unauthorized disbursements by directing an examination of the union’s books and financial records.

Whether the unauthorized increases in union dues and the deductions from wages and bonuses violated the union’s constitution and by-laws as well as pertinent provisions of the Labor Code.
Whether the withholding and partial distribution of the profit-shares constituted an illegal appropriation of union funds.
Whether the disbursements exceeding P500 made without proper board authorization amount to irregularities justifying the removal of union officers.
Whether the maladministration of the welfare fund—through unauthorized loans and disbursements—constitutes sufficient grounds for disciplinary action against the officers.
Whether the dual membership of certain officers in another labor union and the resultant conflict of interest breach the union’s internal regulations, thereby justifying their expulsion.
Whether the Director of Labor Relations had the requisite jurisdiction to remove union officers for violations under Article 242 of the Labor Code, even if such removal might also be viewed as a “political question” reserved for the union members.
Whether an intra-union ratification resolution, as submitted by the private respondents, could legalize or cure the earlier unauthorized actions and irregularities.