Acedera vs. ICTSI

A labor union authorized under Article 242(a) of the Labor Code to represent its members in collective bargaining may also represent them in enforcing CBA provisions; individual members whose interests are already represented by the union may not intervene in the representative action absent clear and convincing evidence of fraud, collusion, or lack of good faith on the part of the union.

International Container Terminal Services, Inc. (ICTSI) and Associated Port Checkers & Workers Union-International Container Terminal Services, Inc. Local Chapter (APCWU-ICTSI) were parties to successive collective bargaining agreements covering ICTSI's employees, among them petitioners. Article 242(a) of the Labor Code authorizes a labor union to act as representative of its members for collective bargaining, and the Rules of Court govern intervention and representation in judicial proceedings. The dispute concerns the divisor used to compute daily wages under the CBA and whether individual employees may intervene in a union-filed action to enforce CBA provisions.

Petitioners Jerry Acedera, Antonio Parilla, and the other persons listed in Annex "A" were employees of International Container Terminal Services, Inc. (ICTSI) and officers or members of Associated Port Checkers & Workers Union-International Container Terminal Services, Inc. Local Chapter (APCWU-ICTSI), a labor organization duly registered as a local affiliate of the Associated Port Checkers & Workers Union (APCWU). When ICTSI began operations in 1988, it determined the rate of pay of its employees by using 304 days, the number of days of work in a year, as divisor.

On September 28, 1990, ICTSI entered into its first Collective Bargaining Agreement (CBA) with APCWU, with a term of five years effective until September 28, 1995. The CBA was renegotiated and renewed through a second CBA that took effect on September 29, 1995, effective for another five years. Both CBAs contained an identically worded provision on hours and days of work, Article IX, Section 1, stating that the regular working days in a week shall be five days on any day from Monday to Sunday, as scheduled by the company upon seven days prior notice unless any such day is declared a special holiday. In accordance with that provision, the employees' work week was reduced to five days, or a total of 250 days a year. ICTSI, however, continued using the 304-day divisor in computing the wages of the employees.

On November 10, 1990, the Regional Tripartite Wage and Productivity Board (RTWPB) in the National Capital Region decreed a P17.00 daily wage increase for all workers and employees receiving P125.00 per day or lower in the National Capital Region. The then president of APCWU, together with some union members, requested ICTSI's Human Resource Department/Personnel Manager to compute the actual monthly increase in the employees' wages by multiplying the RTWPB-mandated increase by 365 days and dividing the product by 12 months. Heeding the proposal and following the implementation of the new wage order, ICTSI stopped using 304 days as divisor and started using 365 days in determining the daily wage of its employees and other consequential compensation, even if the employees' work week consisted of only five days as agreed upon in the CBA.

In early 1997, ICTSI went on a retrenchment program and laid off its on-call employees. This prompted APCWU-ICTSI to file a notice of strike which included as cause of action not only the retrenchment of the employees but also ICTSI's use of 365 days as divisor in the computation of wages. The dispute respecting the retrenchment was resolved by a compromise settlement, while that respecting the computation of wages was referred to the Labor Arbiter.

On February 26, 1997, APCWU, on behalf of its members and other employees similarly situated, filed with the Labor Arbiter a complaint against ICTSI. The complaint was dismissed for APCWU's failure to file its position paper. Upon the demand of petitioners, APCWU filed a motion to revive the case, which was granted; APCWU thereupon filed its position paper on August 22, 1997. On December 8, 1997, petitioners filed with the Labor Arbiter a Complaint-in-Intervention with Motion to Intervene. They justified the move by stating that if the union succeeded in prosecuting the case and obtained a favorable reward, it was actually they who would benefit; if the union failed to prove its case or to prosecute it diligently, the individual workers or members would suffer great and immeasurable loss. They wanted to insure that the case would thereafter be prosecuted with all due diligence and would not again be dismissed for lack of interest on the part of the union.

The Labor Arbiter rendered a decision declaring that the correct divisor in computing the daily wage and other labor standard benefits of ICTSI employees who were members of the complainant union, as well as other employees similarly situated, was 250 days, and ordered ICTSI to pay the employees concerned differentials representing underpayment of salaries and other benefits reckoned three years back from February 26, 1997, or computed from February 27, 1994 until paid, with the salary differentials temporarily computed for one year in the amount of P468,040.00 for purposes of appeal. In the same decision, the Labor Arbiter denied petitioners' Complaint-in-Intervention with Motion for Intervention upon a finding that they were already well represented by APCWU.

• Right to Intervene: Petitioners maintained that they complied with Rule 19, Section 1 of the 1997 Rules of Civil Procedure because (1) they were the ones who stood to gain or lose by the direct legal operation and effect of any judgment that might be rendered in the case; (2) no undue delay or prejudice would result from their intervention since their Complaint-in-Intervention with Motion to Intervene was filed while the Labor Arbiter was still hearing the case and before any decision thereon was rendered; and (3) it was not possible for them to file a separate case, as they would be guilty of forum shopping because the only forum available to them was the Labor Arbiter.
• Union Representation and Good Faith: Petitioners argued that intervention was necessary because they, not the union, would benefit from a favorable judgment and would suffer loss if the union failed to prosecute diligently; they cited the dismissal of the case, first by the Labor Arbiter and later by the Court of Appeals, and expressed fear that APCWU would not prosecute the case diligently because of its alleged "sweetheart relationship" with ICTSI.
• Assigned Errors on Appeal: Petitioners faulted the Court of Appeals for rejecting the CBA as the source of the divisor to determine the workers' daily rate and for disregarding applicable Supreme Court decisions; for ruling that petitioners were already in estoppel; for ruling that petitioners had no legal right to intervene in and pursue the case and that their intervention was a superfluity; and for holding, although merely as an obiter dictum, that only petitioner Jerry Acedera signed the certificate of non-forum shopping.

• Right to Intervene: Whether individual union members may intervene in a labor case filed by their union on behalf of its members and other employees similarly situated, absent proof of fraud, collusion, or lack of good faith on the part of the union.

• Right to Intervene: No. A person whose interests are already represented by a labor union authorized under Article 242(a) of the Labor Code may not intervene absent clear and convincing evidence of fraud, collusion, or lack of good faith on the part of the union.

• Right to Intervene: Rule 19, Section 1 of the 1997 Rules of Civil Procedure allows a person with legal interest in the matter in litigation, or in the success of either party, or an interest against both, to intervene with leave of court, subject to considerations of undue delay or prejudice and whether the intervenor's right may be fully protected in a separate proceeding. Petitioners claimed compliance with these requisites, but the rule on intervention had to be read with the rule on representation under Rule 3, Section 3, which provides that where an action is prosecuted or defended by a representative, the beneficiary is included in the title of the case and is deemed the real party in interest, and the representative may be a party authorized by law. A labor union is one such party authorized by law under Article 242(a) of the Labor Code, which allows a union to act as the representative of its members for collective bargaining; this authority includes the power to represent its members for the purpose of enforcing the provisions of the CBA. APCWU acted in that representative capacity, having filed the complaint "for and in behalf of its Union members and other employees similarly situated," as the title of the case expressly stated. While a party acting in a representative capacity may be permitted to intervene, ordinarily a person whose interests are already represented will not be permitted to intervene, except when there is a suggestion of fraud or collusion or that the representative will not act in good faith for the protection of all interests represented. Petitioners cited the dismissal of the case, first by the Labor Arbiter and later by the Court of Appeals, but the dismissal did not by itself show fraud, collusion, or lack of good faith on the part of APCWU; clear and convincing evidence of such misconduct, independent of the dismissal, was required, and petitioners failed to proffer it. Petitioners also expressed fear that APCWU would not prosecute the case diligently because of an alleged "sweetheart relationship" with ICTSI, but nothing in the record supported the allegation, which surfaced only in petitioners' reply to ICTSI's comment filed on June 20, 2001, more than 42 months after they filed their Complaint-in-Intervention. The Court reiterated that for a member of a class to intervene in a representative action, fraud, collusion, or lack of good faith on the part of the representative must be proven by facts borne on record; mere assertions do not suffice. Because the denial of intervention was determinative, the other assigned errors were left undiscussed.

• Representative Action by Labor Union — Under Article 242(a) of the Labor Code, a labor union may act as the representative of its members for the purpose of collective bargaining. This authority includes the power to represent its members for the purpose of enforcing the provisions of the CBA. In this case, APCWU filed the labor complaint "for and in behalf of its Union members and other employees similarly situated," and the Court held that it was the authorized representative of petitioners' interests.
• Intervention by a Person Already Represented — Although Rule 19, Section 1 of the 1997 Rules of Civil Procedure allows a person with legal interest to intervene, a person whose interests are already represented by another will not ordinarily be permitted to intervene. The exception is when there is a suggestion of fraud or collusion or that the representative will not act in good faith for the protection of all interests represented. The Court applied this rule to deny intervention by individual union members.
• Requisites for Intervention in a Representative Action — For a member of a class to be permitted to intervene in a representative action, fraud, collusion, or lack of good faith on the part of the representative must be proven. The proof must be based on facts borne on record; mere assertions do not suffice. The dismissal of the representative's case does not by itself establish fraud, collusion, or lack of good faith; clear and convincing evidence independent of the dismissal is required. Petitioners failed to meet this standard.
• Representation as Parties under Rule 3, Section 3 — Where an action is prosecuted or defended by a representative, the beneficiary is included in the title of the case and is deemed the real party in interest. The representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or the Rules. A labor union is a party authorized by law under Article 242(a) of the Labor Code. The Court used this provision to hold that petitioners' interests were already represented by APCWU.

• "While a party acting in a representative capacity, such as a union, may be permitted to intervene in a case, ordinarily, a person whose interests are already represented will not be permitted to do the same except when there is a suggestion of fraud or collusion or that the representative will not act in good faith for the protection of all interests represented by him." — This passage states the controlling rule on intervention by a person already represented, which the Court applied to deny petitioners' intervention.
• "The dismissal of the case does not, however, by itself show the existence of fraud or collusion or a lack of good faith on the part of APCWU. There must be clear and convincing evidence of fraud or collusion or lack of good faith independently of the dismissal. This, petitioners-appellants failed to proffer." — This passage defines the evidentiary standard for overcoming the bar against intervention by a represented party and explains why petitioners' reliance on the dismissal of the case was insufficient.
• "To reiterate, for a member of a class to be permitted to intervene in a representative action, fraud or collusion or lack of good faith on the part of the representative must be proven. It must be based on facts borne on record. Mere assertions, as what petitioners-appellants proffer, do not suffice." — This passage is the Court's canonical formulation of the requisites for intervention in a representative action and is frequently cited for the rule that mere allegations cannot justify intervention.
• "A labor union is one such party authorized to represent its members under Article 242(a) of the Labor Code which provides that a union may act as the representative of its members for the purpose of collective bargaining. This authority includes the power to represent its members for the purpose of enforcing the provisions of the CBA." — This passage establishes the union's authority to represent its members not only in collective bargaining but also in enforcing CBA provisions, which was the basis for finding that petitioners' interests were already represented.

• State ex rel. Kiser, Cohn & Shumaker, Inc. vs. Sammons et al., 57 N.E.2d. 587, 589-590 (1944) — Cited in support of the rule that a person whose interests are already represented will not ordinarily be permitted to intervene except when there is a suggestion of fraud or collusion or that the representative will not act in good faith. The Court relied on this authority in denying intervention.

• Rule 19, Section 1, 1997 Rules of Civil Procedure — Provides who may intervene: a person with legal interest in the matter in litigation, or in the success of either party, or an interest against both, or who is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or an officer thereof, may, with leave of court, be allowed to intervene. The court shall consider whether intervention will unduly delay or prejudice the adjudication of the rights of the original parties and whether the intervenor's right may be fully protected in a separate proceeding. The Court considered this rule but held that it did not entitle petitioners to intervene because their interests were already represented by APCWU.
• Rule 3, Section 3, Rules of Court — Provides that where an action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or the Rules. The Court applied this provision to hold that a labor union is a party authorized by law to represent its members.
• Article 242(a), Labor Code — Provides that a union may act as the representative of its members for the purpose of collective bargaining. The Court held that this authority includes the power to represent its members for the purpose of enforcing the provisions of the CBA, making APCWU the authorized representative of petitioners.

Puno, J. (Chairman); Panganiban, J.; Sandoval-Gutierrez, J.; and Corona, J.