G.R. No. 77959 - Radio Communications of the Philippines, Inc. vs. Secretary of Labor and Employment

Petitioner, Radio Communications of the Philippines, Inc. (RCPI), a domestic telecommunications corporation, filed an application with the National Wages Council on May 4, 1981 seeking exemption from the coverage of Wage Order No. 1.
The application was opposed by the United RCPI Communications Labor Association (URCPICLA-FUR), a labor organization affiliated with the Federation of Unions of Rizal (FUR), which sought to protect the union’s interests and claim its service fee.
On May 22, 1981, the National Wages Council, through its Chairman, issued a letter-decision denying the exemption and ordering RCPI to pay its covered employees a mandatory living allowance of P2.00 daily effective March 22, 1981.
This decision was later affirmed by the Office of the President and by the Supreme Court in its resolution of July 15, 1985 in a related case (G.R. No. 70148).

As early as March 13, 1985—before the elevation of the case to the Supreme Court—the respondent union moved for the issuance of a writ of execution, asserting its right to a union service fee equal to 15% of the total backpay due its members.
On September 9, 1985, the union reiterated its claim in a “Motion for Immediate Issuance of Writ of Execution” by increasing the percentage to 20% of the total backpay.
Petitioner filed an opposition on September 24, 1985, arguing that there was no legal basis for deducting a 20% union service fee from each employee’s receivable amount.
An alias writ of execution was issued on September 26, 1985.

On October 24, 1985, RCPI, without the union’s knowledge or consent, entered into a compromise agreement with Buklod ng Manggagawa sa RCPI-NFL (BMRCPI-NFL), which had become the new bargaining agent for the employees formerly represented by the opposing union.
Key provisions of the agreement included:

Acknowledgment by RCPI of its alleged liabilities under PD 1713 and Wage Order No. 1.
A commitment to pay each employee 30% of what was due under the pertinent wage laws on November 30, 1985, with the remaining 70% to be subject to renegotiation on July 31, 1986.
A provision that 10% of the total amount due to each employee be designated as attorney’s fee payable to Atty. Rodolfo Capocyan, which was purportedly meant to cover services rendered by the union.

The agreement was designed to “novate” or transform the existing obligations under the decision of the National Wages Council, although its validity in extinguishing prior liabilities was later disputed.

On November 25, 1985, Acting Regional Director Romeo A. Young issued an order awarding URCPICLA-FUR 15% of RCPI’s total backpay as union service fee and directed the garnishment of RCPI’s bank account to effect the payment.
Despite receipt of this order and accompanying instructions for withholding the fee from employee backpays, RCPI paid the employees in full on November 29, 1985 without making any deductions for the union service fee.
On December 16, 1985, URCPICLA-FUR filed a petition for garnishment of RCPI’s funds to recover the 15% service fee.
A subsequent order on December 19, 1985, by the Regional Director declared the earlier alias writ of execution satisfied and lifted all prior garnishments.

On May 7, 1986, a new order was issued by an NCR officer, holding RCPI and its employees jointly and severally liable for the payment of the 15% union service fee, specifically amounting to P427,845.60.
Responding to RCPI’s omnibus motion for reconsideration—including the claim that the additional obligation in the form of attorney’s fees was not provided in the original National Wages Council decision—the Secretary of Labor and Employment modified the order on August 18, 1986. This modification reduced the rate to 10% of the awarded amounts and held RCPI solely liable for the fee.
The union and the Labor Department argued that RCPI’s continued noncompliance, including the diversion of funds to a purported attorney (Atty. Rodolfo Capocyan, whose existence was later called into question), vindicated the union’s claim to a union service fee construed as attorney’s fee.
Petitioner’s primary contention in the ensuing petition for certiorari was that the challenged orders, particularly the one of May 7, 1986, were issued with grave abuse of discretion and were based on an impermissible imposition of additional obligations not contemplated in the original wage decision.

Whether the orders requiring RCPI to pay a union service fee—originally at 15% and later modified to 10% as attorney’s fee—were legally and validly imposed.

Did the public respondents have jurisdiction and authority to impose the deduction despite the original National Wages Council decision not expressly providing for such a fee?
Was the modification of the fee, reducing the percentage and holding RCPI solely liable, a proper exercise of administrative discretion?

Whether the compromise agreement entered into by RCPI with BMRCPI-NFL effectively novated or extinguished RCPI’s preexisting obligations under the National Wages Council decision.

Can the agreement, which was entered into without the consent of URCPICLA-FUR, be used to shield RCPI from its payment obligations toward the union service fee?
Does the agreement validly modify the original order, or was it merely intended to delay payment while preserving the union’s right to its fee?

Whether the union’s claim for an attorney’s fee—understood to be the union service fee—has merit, notwithstanding the union’s status as a non-lawyer entity.

Is the representation by a labor union in a labor proceeding legally sanctioned under Article 222 of the Labor Code despite the union not being composed solely of lawyers?
Were the purported fees, including the diversion to an allegedly fictitious attorney (Atty. Rodolfo Capocyan), properly characterized and duly entitled?