14. G.R. No.
126625 September 18, 1997 terminating the services of private
KANLAON CONSTRUCTION
ENTERPRISES CO., INC., petitioner,
vs. NATIONAL LABOR RELATIONS
COMMISSION, 5TH DIVISION, and
BENJAMIN RELUYA, JR., EDGARDO
GENAYAS, ERNESTO CANETE,
PROTACIO ROSALES, NESTOR
BENOYA, RODOLFO GONGOB,
DARIO BINOYA, BENJAMIN
BASMAYOR, ABELARDO SACURA,
FLORENCIO SACURA, ISABELO
MIRA, NEMESIO LACAR, JOSEPH
CABIGKIS, RODRIGO CILLON,
VIRGILIO QUIZON, GUARINO
EVANGELISTA, ALEJANDRO GATA,
BENEDICTO CALAGO, NILO GATA,
DIONISIO PERMACIO, JUANITO
SALUD, ADOR RIMPO, FELIPE
ORAEZ, JULIETO TEJADA,
TEOTIMO LACIO, ONOFRE QUIZON,
RUDY ALVAREZ, CRESENCIO
FLORES, ALFREDO PERMACIO,
CRESENCIO ALVIAR, HERNANI
SURILLA, DIOSDADO SOLON,
CENON ALBURO, ZACARIAS ORTIZ,
EUSEBIO BUSTILLO, GREGORIO
BAGO, JERRY VARGAS, EDUARDO
BUENO, PASCUAL HUDAYA,
ROGELIO NIETES, and REYNALDO
NIETES, respondents.
FACTS:
Petitioner is a domestic corporation
engaged in the construction business
nationwide with principal office at No. 11
Yakan St., La Vista Subdivision, Quezon
City. In 1988, petitioner was contracted by
the National Steel Corporation to construct
residential houses for its plant employees in
Steeltown, Sta. Elena, Iligan City. Private
respondents were hired by petitioner as
laborers in the project and worked under the
supervision of Engineers Paulino Estacio
and Mario Dulatre. In 1989, the project
neared its completion and petitioner started
respondents and its other employees.In
1990, private respondents filed separate
complaints against petitioner before Sub-
Regional Arbitration Branch XII, Iligan
City. Numbering forty-one (41) in all, they
claimed that petitioner paid them wages
below the minimum and sought payment of
their salary differentials and thirteenth-
month pay. Engineers Estacio and Dulatre
were named co-respondents.
The preliminary conferences before the
labor arbiters were attended by Engineers
Estacio and Dulatre and private respondents.
At the conference of June 11, 1990 before
Arbiter Siao, Engineer Estacio admitted
petitioner’s liability to private respondents
and agreed to pay their wage differentials
and thirteenth-month pay on June 19, 1990.
As a result of this agreement, Engineer
Estacio allegedly waived petitioner’s right to
file its position paper. 1 Private respondents
declared that they, too, were dispensing with
their position papers and were adopting their
complaints as their position paper.
Extension was denied by the LA Siao and
ordered the employer company to pay the
employees.Petitioner appealed to respondent
National Labor Relations Commission. It
alleged that it was denied due process and
that Engineers Estacio and Dulatre had no
authority to represent and bind petitioner.
NLRC affirmed the decisions of the Labor
Arbiters.
RULING:
It has been established that petitioner is a
private domestic corporation with principal
address in Quezon City. The complaints
against petitioner were filed in Iligan City
and summons served on Engineer Estacio in
Iligan City. The question now is whether
Engineer Estacio was an agent and
authorized representative of petitioner.
Under the Revised Rules of Court, 7 service
upon a private domestic corporation or
partnership must be made upon its officers,
such as the president, manager, secretary,
cashier, agent, or any of its directors. These
persons are deemed so integrated with the
corporation that they know their
responsibilities and immediately discern
what to do with any legal papers served on
them.
In the case at bar, Engineer Estacio, assisted
by Engineer Dulatre, managed and
supervised the construction project. 9
According to the Solicitor General and
private respondents, Engineer Estacio
attended to the project in Iligan City and
supervised the work of the employees
thereat. As manager, he had sufficient
responsibility and discretion to realize the
importance of the legal papers served on
him and to relay the same to the president or
other responsible officer of petitioner.
Summons for petitioner was therefore
validly served on him.Engineer Estacio’s
appearance before the labor arbiters and his
promise to settle the claims of private
respondents is another matter.
The general rule is that only lawyers are
allowed to appear before the labor arbiter
and respondent Commission in cases before
them. The Labor Code and the New Rules of
Procedure of the NLRC, nonetheless, lists
three (3) exceptions to the rule, viz: Sec. 6.
Appearances. — . . . . A non-lawyer may
appear before the Commission or any Labor
Arbiter only if:
(a) he represents himself as party to the case;
(b) he represents the organization or its
members, provided that he shall be made to
present written proof that he is properly
authorized; or
(c) he is a duly-accredited member of any
legal aid office duly recognized by the
Department of Justice or the Integrated Bar
of the Philippines in cases referred thereto
by the latter. . . . 10
A non-lawyer may appear before the labor
arbiters and the NLRC only if: (a) he
represents himself as a party to the case; (b)
he represents an organization or its
members, with written authorization from
them: or (c) he is a duly-accredited member
of any legal aid office duly recognized by
the Department of Justice or the Integrated
Bar of the Philippines in cases referred to by
the latter. 11Engineers Estacio and Dulatre
were not lawyers. Neither were they duly-
accredited members of a legal aid office.
Their appearance before the labor arbiters in
their capacity as parties to the cases was
authorized under the first exception to the
rule. However, their appearance on behalf of
petitioner required written proof of
authorization. It was incumbent upon the
arbiters to ascertain this authority especially
since both engineers were named co-
respondents in the cases before the arbiters.
Absent this authority, whatever statements
and declarations Engineer Estacio made
before the arbiters could not bind petitioner.
Nevertheless, even assuming that Engineer
Estacio and Atty. Abundiente were
authorized to appear as representatives of
petitioner, they could bind the latter only in
procedural matters before the arbiters and
respondent Commission. Petitioner’s
liability arose from Engineer Estacio’s
alleged promise to pay. A promise to pay
amounts to an offer to compromise and
requires a special power of attorney or the
express consent of petitioner. The authority
to compromise cannot be lightly presumed
and should be duly established by evidence.
Sec. 7. Authority to bind party. — Attorneys
and other representatives of parties shall
have authority to bind their clients in all
matters of procedure; but they cannot,
without a special power of attorney or
express consent, enter into a compromise
agreement with the opposing party in full or
partial discharge of a client’s claim.
After petitioner’s alleged representative
failed to pay the workers’ claims as
promised, Labor Arbiters Siao and Palangan
did not order the parties to file their
respective position papers. The arbiters
forthwith rendered a decision on the merits
without at least requiring private
respondents to substantiate their complaints.
The parties may have earlier waived their
right to file position papers but petitioner’s
waiver was made by Engineer Estacio on the
premise that petitioner shall have paid and
settled the claims of private respondents at
the scheduled conference. Since petitioner
reneged on its “promise,” there was a failure
to settle the case amicably. This should have
prompted the arbiters to order the parties to
file their position papers.
Sec.3.Submission of Position
Papers/Memorandum. — Should the parties
fail to agree upon an amicable settlement, in
whole or in part, during the conferences, the
Labor Arbiter shall issue an order stating
therein the matters taken up and agreed upon
during the conferences and directing the
parties to simultaneously file their respective
verified position papers.
15. G.R. No. 130866 September 16, 1998
ST. MARTIN FUNERAL HOME,
petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and
BIENVENIDO ARICAYOS, respondents.
FACTS:
Private respondent alleges that he started
working as Operations Manager of
petitioner St. Martin Funeral Home on
February 6, 1995. However, there was no
contract of employment executed between
him and petitioner nor was his name
included in the semi-monthly payroll. On
January 22, 1996, he was dismissed from his
employment for allegedly misappropriating
P38,000.00 which was intended for payment
by petitioner of its value added tax (VAT) to
the Bureau of Internal Revenue (BIR).
Petitioner on the other hand claims that
private respondent was not its employee but
only the uncle of Amelita Malabed, the
owner of petitioner St. Martin’s Funeral
Home. Sometime in 1995, private
respondent, who was formerly working as
an overseas contract worker, asked for
financial assistance from the mother of
Amelita. Since then, as an indication of
gratitude, private respondent voluntarily
helped the mother of Amelita in overseeing
the business.
January 1996, the mother of Amelita passed
away, so the latter then took over the
management of the business. She then
discovered that there were arrears in the
payment of taxes and other government fees,
although the records purported to show that
the same were already paid. Amelita then
made some changes in the business
operation and private respondent and his
wife were no longer allowed to participate in
the management thereof. As a consequence,
the latter filed a complaint charging that
petitioner had illegally terminated his
employment the labor arbiter rendered a
decision in favor of petitioner on October
25, 1996 declaring that no employer-
employee relationship existed between the
parties and, therefore, his office had no
jurisdiction over the case. Private respondent
appealed to the NLRC. NLRC remanded the
case to LA. MR was filed by the petitioner
which was denied.
RULING:
1) HISTORY: the legal history of the
NLRC. It was first established in the
Department of Labor by P.D. No. 21 on
October 14, 1972, and its decisions were
expressly declared to be appealable to the
Secretary of Labor and, ultimately, to the
President of the Philippines.
May 1, 1974, P.D. No. 442 enacted the
Labor Code of the Philippines, the same to
take effect six months after its promulgation.
8 Created and regulated therein is the
present NLRC which was attached to the
Department of Labor and Employment for
program and policy coordination only. 9
Initially, Article 302 (now, Article 223)
thereof also granted an aggrieved party the
remedy of appeal from the decision of the
NLRC to the Secretary of Labor, but P.D.
No. 1391 subsequently amended said
provision and abolished such appeals. No
appellate review has since then been
provided for. The argument that this Court
has no jurisdiction to review the decisions of
the NLRC, and formerly of the Secretary of
Labor, since there is no legal provision for
appellate review thereof, the Court
nevertheless rejected that thesis. It held that
there is an underlying power of the courts to
scrutinize the acts of such agencies on
questions of law and jurisdiction even
though no right of review is given by statute;
that the purpose of judicial review is to keep
the administrative agency within its
jurisdiction and protect the substantial rights
of the parties; and that it is that part of the
checks and balances which restricts the
separation of powers and forestalls arbitrary
and unjust adjudications.The remedy of the
aggrieved party is to timely file a motion for
reconsideration as a precondition for any
further or subsequent remedy, 12 and then
seasonably avail of the special civil action of
certiorari under Rule 65, 13 for which said
Rule has now fixed the reglementary period
of sixty days from notice of the decision.
Curiously, although the 10-day period for
finality of the decision of the NLRC may
already have lapsed as contemplated in
Section 223 of the Labor Code, it has been
held that this Court may still take
cognizance of the petition for certiorari on
jurisdictional and due process considerations
if filed within the reglementary period under
Rule 65.
The Court is, therefore, of the considered
opinion that ever since appeals from the
NLRC to the Supreme Court were
eliminated, the legislative intendment was
that the special civil action of certiorari was
and still is the proper vehicle for judicial
review of decisions of the NLRC. The use of
the word “appeal” in relation thereto and in
the instances we have noted could have been
a lapsus plumae because appeals by
certiorari and the original action for
certiorari are both modes of judicial review
addressed to the appellate courts. The
important distinction between them,
however, and with which the Court is
particularly concerned here is that the
special civil action of certiorari is within the
concurrent original jurisdiction of this Court
and the Court of Appeals; 23 whereas to
indulge in the assumption that appeals by
certiorari to the Supreme Court are allowed
would not subserve, but would subvert, the
intention of Congress as expressed in the
sponsorship speech on Senate Bill No. 1495.
2)Appeal.
-review of NLRC Decision is through Rule
65.
-jurisdiction: SC AND CA
-by way of hierarchy: the review shall be
initially filed before CA.
17. [G.R. No. 126322. January 16, 2002]
YUPANGCO COTTON MILLS, INC.,
petitioner, vs. COURT OF APPEALS,
HON. URBANO C. VICTORIO, SR.,
Presiding Judge, RTC Branch 50, Manila,
RODRIGO SY MENDOZA,
SAMAHANG MANGGAGAWA NG
ARTEX (SAMAR-ANGLO) represented
by its Local President RUSTICO
CORTEZ, and WESTERN GUARANTY
CORPORATION, respondents.
FACTS:
“From the records before us and by
petitioner’s own allegations and admission,
it has taken the following actions in
connection with its claim that a sheriff of the
National Labor Relations Commission
“erroneously and unlawfully levied” upon
certain properties which it claims as its own.
“1. It filed a notice of third-party claim with
the Labor Arbiter on May 4, 1995.
“2. It filed an Affidavit of Adverse Claim
with the National Labor Relations
Commission (NLRC) on July 4, 1995,
which was dismissed on August 30, 1995,
by the Labor Arbiter.
“3. It filed a petition for certiorari and
prohibition with the Regional Trial Court of
Manila, Branch 49, docketed as Civil Case
No. 95-75628 on October 6, 1995. The
Regional Trial Court dismissed the case on
October 11, 1995 for lack of merit.
“4. It appealed to the NLRC the order of the
Labor Arbiter dated August 13, 1995 which
dismissed the appeal for lack of merit on
December 8, 1995.
“5. It filed an original petition for mandatory
injunction with the NLRC on November 16,
1995. This was docketed as Case No.
NLRC-NCR-IC. 0000602-95. This case is
still pending with that Commission.
“6. It filed a complaint in the Regional Trial
Court in Manila which was docketed as
Civil Case No. 95-76395. The dismissal of
this case by public respondent triggered the
filing of the instant petition.
“In all of the foregoing actions, petitioner
raised a common issue, which is that it is the
owner of the properties located in the
compound and buildings of Artex
Development Corporation, which were
erroneously levied upon by the sheriff of the
NLRC as a consequence of the decision
rendered by the said Commission in a labor
case docketed as NLRC-NCR Case No. 00-
05-02960-90.”[2]On March 29, 1996, the
Court of Appeals promulgated a decision[3]
dismissing the petition on the ground of
forum shopping and that petitioner’s remedy
was to seek relief from this Court.
On April 18, 1996, petitioner filed with the
Court of Appeals a motion for
reconsideration of the decision.[4] Petitioner
argued that the filing of a complaint for
accion reinvindicatoria with the Regional
Trial Court was proper because it is a
remedy specifically granted to an owner
(whose properties were subjected to a writ
of execution to enforce a decision rendered
in a labor dispute in which it was not a
party) by Section 17 (now 16), Rule 39,
Revised Rules of Court and by the doctrines
laid down in Sy v. Discaya,[5] Santos v.
Bayhon[6] and Manliguez v. Court of
Appeals.[7]On August 27, 1996, the Court
of Appeals denied petitioner’s motion for
reconsideration
RULING:
1) FORUM SHOPPING. There is no forum-
shopping where two different orders were
questioned, two distinct causes of action and
issues were raised, and two objectives were
sought.In the case at bar, there was no
identity of parties, rights and causes of
action and reliefs sought.
The case before the NLRC where Labor
Arbiter Reyes issued a writ of execution on
the property of petitioner was a labor dispute
between Artex and Samar-Anglo. Petitioner
was not a party to the case. The only issue
petitioner raised before the NLRC was
whether or not the writ of execution issued
by the labor arbiter could be satisfied against
the property of petitioner, not a party to the
labor case.On the other hand, the accion
reinvindicatoria filed by petitioner in the
trial court was to recover the property
illegally levied upon and sold at auction.
Hence, the causes of action in these cases
were different.
2) THIRD PARTY CLAIM. a third party
whose property has been levied upon by a
sheriff to enforce a decision against a
judgment debtor is afforded with several
alternative remedies to protect its interests.
The third party may avail himself of
alternative remedies cumulatively, and one
will not preclude the third party from
availing himself of the other alternative
remedies in the event he failed in the remedy
first availed of.Thus, a third party may avail
himself of the following alternative
remedies:
a) File a third party claim with the sheriff of
the Labor Arbiter, and
b) If the third party claim is denied, the third
party may appeal the denial to the
NLRC.[13]
The remedies above mentioned are
cumulative and may be resorted to by a
third-party claimant independent of or
separately from and without need of availing
of the others. If a third-party claimant opted
to file a proper action to vindicate his claim
of ownership, he must institute an action,
distinct and separate from that in which the
judgment is being enforced, with the court
of competent jurisdiction even before or
without need of filing a claim in the court
which issued the writ, the latter not being a
condition sine qua non for the former. In
such proper action, the validity and
sufficiency of the title of the third-party
claimant will be resolved and a writ of
preliminary injunction against the sheriff
may be issued.
20. G.R. No. 161003 May 6, 2005
FELIPE O. MAGBANUA, CARLOS DE
LA CRUZ, REMY ARNAIZ, BILLY
ARNAIZ, ROLLY ARNAIZ, DOMINGO
SALARDA, JULIO CAHILIG and
NICANOR LABUEN, petitioners,
vs.
RIZALINO UY, respondent.
FACTS:
“As a final consequence of the final and
executory decision of the Supreme Court in
Rizalino P. Uy v. National Labor Relations
Commission, et. al. (GR No. 117983,
September 6, 1996) which affirmed with
modification the decision of the NLRC in
NLRC Case No. V-0427-93, hearings were
conducted [in the National Labor Relations
Commission Sub-Regional Arbitration
Branch in Iloilo City] to determine the
amount of wage differentials due the eight
(8) complainants therein, now [petitioners].
As computed, the award amounted to
P1,487,312.69 x x x.
“On February 3, 1997, [petitioners] filed a
Motion for Issuance of Writ of
Execution.“On May 19, 1997, [respondent]
Rizalino Uy filed a Manifestation requesting
that the cases be terminated and closed,
stating that the judgment award as computed
had been complied with to the satisfaction of
[petitioners]. Said Manifestation was also
signed by the eight (8) [petitioners].
Together with the Manifestation is a Joint
Affidavit dated May 5, 1997 of [petitioners],
attesting to the receipt of payment from
[respondent] and waiving all other benefits
due them in connection with their complaint.
“On June 3, 1997, [petitioners] filed an
Urgent Motion for Issuance of Writ of
Execution wherein they confirmed that each
of them received P40,000 from [respondent]
on May 2, 1997.“On June 9, 1997,
[respondent] opposed the motion on the
ground that the judgment award had been
fully satisfied. In their Reply, [petitioners]
claimed that they received only partial
payments of the judgment award.“On
October 20, 1997, six (6) of the eight (8)
[petitioners] filed a Manifestation requesting
that the cases be considered closed and
terminated as they are already satisfied of
what they have received (a total of
P320,000) from [respondent]. Together with
said Manifestation is a Joint Affidavit in the
local dialect, dated October 20, 1997, of the
six (6) [petitioners] attesting that they have
no more collectible amount from
[respondent] and if there is any, they are
abandoning and waiving the same.
“On February 27, 1998, the Labor Arbiter
issued an order denying the motion for
issuance of writ of execution and
[considered] the cases closed and terminated
x x x.“On appeal, the [National Labor
Relations Commission (hereinafter
‘NLRC’)] reversed the Labor Arbiter and
directed the immediate issuance of a writ of
execution, holding that a final and executory
judgment can no longer be altered and that
quitclaims and releases are normally
frowned upon as contrary to public
policy.”The CA held that compromise
agreements may be entered into even after a
final judgment. Thus, petitioners validly
released respondent from any claims, upon
the voluntary execution of a waiver pursuant
to the compromise agreement.
The appellate court denied petitioners’
motion for reconsideration for having been
filed out of time.
RULING:
1) COMPROMISE AFTER FINAL
JUDGMENT. A compromise agreement is a
contract whereby the parties make reciprocal
concessions in order to resolve their
differences and thus avoid or put an end to a
lawsuit.11 They adjust their difficulties in
the manner they have agreed upon,
disregarding the possible gain in litigation
and keeping in mind that such gain is
balanced by the danger of losing. Verily, the
compromise may be either extrajudicial (to
prevent litigation) or judicial (to end a
litigation).
A compromise must not be contrary to law,
morals, good customs and public policy; and
must have been freely and intelligently
executed by and between the parties. To
have the force of law between the parties, it
must comply with the requisites and
principles of contracts. Upon the parties, it
has the effect and the authority of res
judicata, once entered into.
When a compromise agreement is given
judicial approval, it becomes more than a
contract binding upon the parties. Having
been sanctioned by the court, it is entered as
a determination of a controversy and has the
force and effect of a judgment. It is
immediately executory and not appealable,
except for vices of consent or forgery. The
nonfulfillment of its terms and conditions
justifies the issuance of a writ of execution;
in such an instance, execution becomes a
ministerial duty of the court.
General Rule: Article 2040 of the Civil
Code does not refer to the validity of a
compromise agreement entered into after
final judgment. Moreover, an important
requisite, which is lack of knowledge of the
final judgment, is wanting in the present
case.
Exceptions: The issue involving the validity
of a compromise agreement notwithstanding
a final judgment is not novel. Jesalva v.
Bautista upheld a compromise agreement
that covered cases pending trial, on appeal,
and with final judgment. The Court noted
that Article 2040 impliedly allowed such
agreements; there was no limitation as to
when these should be entered into. Palanca
v. Court of Industrial Relations sustained a
compromise agreement, notwithstanding a
final judgment in which only the amount of
back wages was left to be determined. The
Court found no evidence of fraud or of any
showing that the agreement was contrary to
law, morals, good customs, public order, or
public policy. Gatchalian v. Arlegui upheld
the right to compromise prior to the
execution of a final judgment. The Court
ruled that the final judgment had been
novated and superseded by a compromise
agreement. Also, Northern Lines, Inc. v.
Court of Tax Appeals recognized the right to
compromise final and executory judgments,
as long as such right was exercised by the
proper party litigants.
There is no justification to disallow a
compromise agreement, solely because it
was entered into after final judgment. The
validity of the agreement is determined by
compliance with the requisites and
principles of contracts, not by when it was
entered into. As provided by the law on
contracts, a valid compromise must have the
following elements: (1) the consent of the
parties to the compromise, (2) an object
certain that is the subject matter of the
compromise, and (3) the cause of the
obligation that is established.
The principle of novation supports the
validity of a compromise after final
judgment. Novation, a mode of
extinguishing an obligation,43 is done by
changing the object or principal condition of
an obligation, substituting the person of the
debtor, or surrogating a third person in the
exercise of the rights of the creditor.44
For an obligation to be extinguished by
another, the law requires either of these two
conditions: (1) the substitution is
unequivocally declared, or (2) the old and
the new obligations are incompatible on
every point.45 A compromise of a final
judgment operates as a novation of the
judgment obligation, upon compliance with
either requisite.46 In the present case, the
incompatibility of the final judgment with
the compromise agreement is evident,
because the latter was precisely entered into
to supersede the former.
2) WAIVER OF QUITCLAIMS. The
presence or the absence of counsel when a
waiver is executed does not determine its
validity. There is no law requiring the
presence of a counsel to validate a waiver.
The test is whether it was executed
voluntarily, freely and intelligently; and
whether the consideration for it was credible
and reasonable. Where there is clear proof
that a waiver was wangled from an
unsuspecting or a gullible person, the law
must step in to annul such transaction.
In the present case, petitioners failed to
present any evidence to show that their
consent had been vitiated.
“Should the parties arrive at any agreement
as to the whole or any part of the dispute,
the same shall be reduced to writing and
signed by the parties and their respective
counsel, or authorized representative, if
any,50 before the Labor Arbiter.
“The settlement shall be approved by the
Labor Arbiter after being satisfied that it
was voluntarily entered into by the parties
and after having explained to them the terms
and consequences thereof.

“A compromise agreement entered into by

the parties not in the presence of the Labor
Arbiter before whom the case is pending
shall be approved by him, if after
confronting the parties, particularly the
complainants, he is satisfied that they
understand the terms and conditions of the
settlement and that it was entered into freely
and voluntarily by them and the agreement
is not contrary to law, morals, and public
policy.”51

This provision refers to proceedings in a

mandatory/conciliation conference during
the initial stage of the litigation. Such
provision should be made applicable to the
proceedings in the pre-execution conference,
for which the procedure for approving a
waiver after final judgment is not stated.
There is no reason to make a distinction
between the proceedings in
mandatory/conciliation and those in pre-
execution conferences.