G.R. No.

91298 June 22, 1990

CORAZON PERIQUET, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION and THE PHIL.
NATIONAL CONSTRUCTION CORPORATION
(Formerly Construction Development Corp. of the
Phils.),
CRUZ, J.:
It is said that a woman has the privilege of changing
her mind but this is usually allowed only in affairs of
the heart where the rules are permissibly inconstant.
In the case before us, Corazon Periquet, the herein
petitioner, exercised this privilege in connection with
her work, where the rules are not as fickle.
The petitioner was dismissed as toll collector by the
Construction Development Corporation of the
Philippines, private respondent herein, for willful
breach of trust and unauthorized possession of
accountable toll tickets allegedly found in her purse
during a surprise inspection. Claiming she had been
"framed," she filed a complaint for illegal dismissal
and was sustained by the labor arbiter, who ordered
her reinstatement within ten days "without loss of
seniority rights and other privileges and with fun back
wages to be computed from the date of her actual
1
dismissal up to date of her actual reinstatement."
On appeal, this order was affirmed in toto by public
2
respondent NLRC on August 29, 1980.
On March 11, 1989, almost nine years later, the
petitioner filed a motion for the issuance of a writ of
execution of the decision. The motion was granted by
the executive labor arbiter in an order dated June 26,
1989, which required payment to the petitioner of the
sum of P205,207.42 "by way of implementing the
balance of the judgment amount" due from the
3
private respondent. Pursuant thereto, the said
amount was garnished by the NLRC sheriff on July
4
12, 1989. On September 11, 1989, however, the
NLRC sustained the appeal of the CDCP and set
aside the order dated June 20, 1989, the
corresponding writ of execution of June 26, 1989,
5
and the notice of garnishment.
In its decision, the public respondent held that the
motion for execution was time-barred, having been
filed beyond the five-year period prescribed by both
the Rules of Court and the Labor Code. It also
rejected the petitioner's claim that she had not been
reinstated on time and ruled as valid the two
quitclaims she had signed waiving her right to
reinstatement and acknowledging settlement in full of
her back wages and other benefits. The petitioner
contends that this decision is tainted with grave
abuse of discretion and asks for its reversal. We shall
affirm instead.
Sec. 6, Rule 39 of the Revised Rules of Court,
provides:
SEC. 6. Execution by motion or by independent
action. A judgment may be executed on motion
within five (5) years from the date of its entry or from
the date it becomes final and executory. After the
lapse of such time, and before it is barred by the
statute of limitations, a judgment may be enforced by
action.
A similar provision is found in Art. 224 of the Labor
Code, as amended by RA 6715, viz.

ART. 224. Execution of decision, orders, awards.

(a) The Secretary of Labor and Employment or any
Regional Director, the Commission or any Labor
Arbiter or Med-Arbiter, or the Voluntary Arbitrator
may, motu propio, or on motion of any interested
party, issue a writ of execution on a judgment within
five (5) years from the date it becomes final and
executory, requiring a sheriff or a duly deputized
officer to execute or enforce a final decision, order or
award. ...
The petitioner argues that the above rules are not
absolute and cites the exception snowed in Lancita v.
6
Magbanua, where the Court held:
Where judgments are for money only and wholly
unpaid, and execution has been previously withheld
in the interest of the judgment debtor, which is in
financial difficulties, the court has no discretion to
deny motions for leave to issue execution more than
five years after the judgments are entered.
(Application of Molnar, Belinsky, et al. v. Long Is.
Amusement Corp., I N.Y.S, 2d 866)
In computing the time limited for suing out of an
execution, although there is authority to the contrary,
the general rule is that there should not be included
the time when execution is stayed, either by
agreement of the parties for a definite time, by
injunction, by the taking of an appeal or writ of error
so as to operate as a supersedeas, by the death of a
party, or otherwise. Any interruption or delay
occasioned by the debtor will extend the time within
which the writ may be issued without scire facias.
xxx xxx xxx
There has been no indication that respondents herein
had ever slept on their rights to have the judgment
executed by mere motions, within the reglementary
period. The statute of limitation has not been devised
against those who wish to act but cannot do so, for
causes beyond their central.
Periquet insists it was the private respondent that
delayed and prevented the execution of the judgment
in her favor, but that is not the way we see it. The
record shows it was she who dilly-dallied.
The original decision called for her reinstatement
within ten days from receipt thereof following its
affirmance by the NLRC on August 29, 1980, but
there is no evidence that she demanded her
reinstatement or that she complained when her
demand was rejected. What appears is that she
entered into a compromise agreement with CDCP
where she waived her right to reinstatement and
received from the CDCP the sum of P14,000.00
representing her back wages from the date of her
7
dismissal to the date of the agreement.
Dismissing the compromise agreement, the petitioner
now claims she was actually reinstated only on
March 16, 1987, and so should be granted back pay
for the period beginning November 28, 1978, date of
her dismissal, until the date of her reinstatement. She
conveniently omits to mention several significant
developments that transpired during and after this
period that seriously cast doubt on her candor and
bona fides.
After accepting the sum of P14,000.00 from the
private respondent and waiving her right to
reinstatement in the compromise agreement, the

petitioner secured employment as kitchen dispatcher

at the Tito Rey Restaurant, where she worked from
October 1982 to March 1987. According to the
8
certification issued by that business, she received a
monthly compensation of P1,904.00, which was
higher than her salary in the CDCP.
For reasons not disclosed by the record, she applied
for re-employment with the CDCP and was on March
16,1987, given the position of xerox machine
operator with a basic salary of P1,030.00 plus
P461.33 in allowances, for a total of P1,491.33
9
monthly.
On June 27, 1988; she wrote the new management
of the CDCP and asked that the rights granted her by
the decision dated August 29, 1980, be recognized
10
because the waiver she had signed was invalid.
On September 19, 1988, the Corporate Legal
Counsel of the private respondent (now Philippine
National Construction Corporation) recommended
the payment to the petitioner of the sum of
P9,544.00, representing the balance of her back pay
for three years at P654. 00 per month (minus the
11
P14,000.00 earlier paid).
On November 10, 1988, the petitioner accepted this
additional amount and signed another Quitclaim and
Release reading as follows:
KNOW ALL MEN BY THESE PRESENTS:
THAT, I CORAZON PERIQUET, of legal age,
married and resident of No. 87 Annapolis St.,
Quezon City, hereby acknowledged receipt of the
sum of PESOS: NINE THOUSAND FIVE HUNDRED
FORTY FOUR PESOS ONLY (P9,544.00) Philippine
currency, representing the unpaid balance of the
back wages due me under the judgment award in
NLRC Case No. AB-2-864-79 entitled "Corazon
Periquet vs. PNCC- TOLLWAYS" and I further
manifest that this payment is in full satisfaction of all
my claims/demands in the aforesaid case. Likewise, I
hereby manifest that I had voluntarily waived
reinstatement to my former position as TOLL
TELLER and in lieu thereof, I sought and am satisfied
with my present position as XEROX MACHINE
OPERATOR in the Central Office.
Finally, I hereby certify that delay in my
reinstatement, after finality of the Decision dated 10
May 1979 was due to my own fault and that PNCC is
not liable thereto.
I hereby RELEASE AND DISCHARGE the said
corporation and its officers from money and all claims
by way of unpaid wages, separation pay, differential
pay, company, statutory and other benefits or
otherwise as may be due me in connection with the
above-entitled case. I hereby state further that I have
no more claims or right of action of whatever nature,
whether past, present, future or contingent against
said corporation and its officers, relative to NLRC
Case No. AB-2-864-79.
IN WITNESS WHEREOF, I have hereunto set my
hand this 10th day of November 1988 at
12
Mandaluyong, Metro Manila. (Emphasis supplied.)
The petitioner was apparently satisfied with the
settlement, for in the memorandum she sent the
PNCC Corporate Legal Counsel on November 24,
13
1988, she said in part:

Sir, this is indeed my chance to express my gratitude

to you and all others who have helped me and my
family enjoy the fruits of my years of stay with PNCC
by way of granting an additional amount of P9,544.00
among others ...
As per your recommendation contained therein in
said memo, I am now occupying the position of xerox
machine operator and is (sic) presently receiving a
monthly salary of P2,014.00.
Reacting to her inquiry about her entitlement to
longevity pay, yearly company increases and other
statutory benefits, the private respondent adjusted
her monthly salary from P2,014.00 to P3,588.00
monthly.
Then the lull. Then the bombshell.
On March 11, 1989, she filed the motion for
execution that is now the subject of this petition.
It is difficult to understand the attitude of the
petitioner, who has blown hot and cold, as if she
does not know her own mind. First she signed a
waiver and then she rejected it; then she signed
another waiver which she also rejected, again on the
ground that she had been deceived. In her first
waiver, she acknowledged full settlement of the
judgment in her favor, and then in the second waiver,
after accepting additional payment, she again
acknowledged fun settlement of the same judgment.
But now she is singing a different tune.
In her petition she is now disowning both
acknowledgments and claiming that the earlier
payments both of which she had accepted as
sufficient, are insufficient. They were valid before but
they are not valid now. She also claimed she was
harassed and cheated by the past management of
the CDCP and sought the help of the new
management of the PNCC under its "dynamic
leadership." But now she is denouncing the new
management-for also tricking her into signing the
second quitclaim.
Not all waivers and quitclaims are invalid as against
public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement,
it is binding on the parties and may not later be
disowned simply because of a change of mind. It is
only where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person, or
the terms of settlement are unconscionable on its
face, that the law will step in to annul the
questionable transaction. But where it is shown that
the person making the waiver did so voluntarily, with
full understanding of what he was doing, and the
consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a
valid and binding undertaking. As in this case.
The question may be asked: Why did the petitioner
sign the compromise agreement of September 16,
1980, and waive all her rights under the judgment in
consideration of the cash settlement she received? It
must be remembered that on that date the decision
could still have been elevated on certiorari before this
Court and there was still the possibility of its reversal.
The petitioner obviously decided that a bird in hand
was worth two on the wing and so opted for the
compromise agreement. The amount she was then
waiving, it is worth noting, had not yet come up to the

exorbitant sum of P205,207.42 that she was later to

demand after the lapse of eight years.
The back pay due the petitioner need not detain us.
We have held in countless cases that this should be
limited to three years from the date of the illegal
dismissal, during which period (but not beyond) the
dismissed employee is deemed unemployed without
14
the necessity of proof. Hence, the petitioner's
contention that she should be paid from 1978 to 1987
must be rejected, and even without regard to the fact
(that would otherwise have been counted against
her) that she was actually employed during most of
that period.
Finally, the petitioner's invocation of Article 223 of the
Labor Code to question the failure of the private
respondent to file a supersedeas bond is not welltaken. As the Solicitor General correctly points out,
the bond is required only when there is an appeal
from the decision with a monetary award, not an
order enforcing the decision, as in the case at bar.
As officers of the court, counsel are under obligation
to advise their clients against making untenable and
inconsistent claims like the ones raised in this petition
that have only needlessly taken up the valuable time
of this Court, the Solicitor General, the Government
Corporate Counsel, and the respondents. Lawyers
are not merely hired employees who must
unquestioningly do the bidding of the client, however
unreasonable this may be when tested by their own
expert appreciation of the pertinent facts and the
applicable law and jurisprudence. Counsel must
counsel.
WHEREFORE, the petition is DENIED, with costs
against the petitioner. It is so ordered.

[G.R. No. 87297. August 5, 1991.]

ALFREDO VELOSO and EDITO LIGUATON,
Petitioners, v. DEPARTMENT OF LABOR AND
EMPLOYMENT, NOAHS ARK SUGAR CARRIERS
AND WILSON T. GO, Respondents.

The law looks with disfavor upon quitclaims and

releases by employees who are inveigled or
pressured into signing them by unscrupulous
employers seeking to evade their legal
responsibilities. On the other hand, there are
legitimate waivers that represent a voluntary
settlement of laborers claims that should be
respected by the courts as the law between the
parties.
In the case at bar, the petitioners claim that they
were forced to sign their respective releases in favor
of their employer, the herein private respondent, by
reason of their dire necessity. The latter, for its part,
insists that the petitioner entered into the
compromise agreement freely and with open eyes
and should not now be permitted to reject their
solemn commitments.
The controversy began when the petitioners, along
with several co-employees, filed a complaint against

the private respondent for unfair labor practices,

underpayment, and non-payment of overtime,
holiday, and other benefits. This was decided in favor
of the complainants on October 6, 1987. The motion
for reconsideration, which was treated as an appeal,
was dismissed in a resolution dated February 17,
1988, the dispositive portion of which read as
follows:chanrob1es virtual 1aw library
WHEREFORE, the instant appeal is hereby
DISMISSED and the questioned Order affirmed with
the modification that the monetary awards to Jeric
Dequito, Custodio Ganuhay, Conrado Mori and
Rogelio Veloso are hereby deleted for being settled.
Let execution push through with respect to the
awards to Alfredo Veloso and Edito Liguaton.
On February 23, 1988, the private respondent filed a
motion for reconsideration and recomputation of the
amount awarded to the petitioners. On April 15,
1988, while the motion was pending, petitioner
Alfredo Veloso, through his wife Connie, signed a
Quitclaim and Release for and in consideration of
P25,000.00, 1 and on the same day his counsel, Atty.
Gaga Mauna, manifested "Satisfaction of Judgment"
by receipt of the said sum by Veloso. 2 For his part,
petitioner Liguaton filed a motion to dismiss dated
July 16, 1988, based on a Release and Quitclaim
dated July 19, 1988, 3 for and in consideration of the
sum of P20,000.00 he acknowledged to have
received from the private Respondent. 4
These releases were later impugned by the
petitioners on September 20, 1988, on the ground
that they were constrained to sign the documents
because of their "extreme necessity." In an Order
dated December 16, 1988, the Undersecretary of
Labor rejected their contention and ruled:chanrob1es
virtual 1aw library
IN VIEW THEREOF, complainants Motion to Declare
Quitclaim Null and Void is hereby denied for lack of
merit and the compromise agreements/settlements
dated April 15, 1988 and July 19, 1988 are hereby
approved. Respondents motion for reconsideration is
hereby denied for being moot and academic.
Reconsideration of the order having been denied on
March 7, 1989, the petitioners have come to this
Court on certiorari. They ask that the quitclaims they
have signed be annulled and that writs of execution
be issued for the sum of P21,267.92 in favor of
Veloso and the sum of P26,267.92 in favor of
Liguaton in settlement of their claims.
Their petition is based primarily on Pampanga Sugar
Development Co., Inc. v. Court of Industrial
Relations, 5 where it was held:chanrob1es virtual
1aw library
while rights may be waived, the same must not be
contrary to law, public order, public policy, morals or
good customs or prejudicial to a third person with a
right recognized by law. (Art. 6, New Civil Code) . . .

The above-quoted provision renders the quitclaim

agreements void ad initio in their entirety since they
obligated the workers concerned to forego their
benefits, while at the same time, exempted the
petitioner from any liability that it may choose to
reject. This runs counter to Art. 22 of the new Civil
Code which provides that no one shall be unjustly
enriched at the expense of another.
The Court had deliberated on the issues and the
arguments of the parties and finds that the petition
must fail. The exception and not the rule shall be
applied in this case.
The case cited is not apropos because the quitclaims
therein invoked were secured by the employer after it
had already lost in the lower court and were
subsequently rejected by this Court when the
employer invoked it in a petition for certiorari. By
contrast, the quitclaims in the case before us were
signed by the petitioners while the motion for
reconsideration was still pending in the DOLE, which
finally denied it on March 7, 1989. Furthermore, the
quitclaims in the cited case were entered into without
leave of the lower court whereas in the case at bar
the quitclaims were made with the knowledge and
approval of the DOLE, which declared in its order of
December 16, 1988, that "the compromise
agreement/settlements dated April 15, 1988 and July
19, 1988 are hereby approved."library
It is also noteworthy that the quitclaims were
voluntarily and knowingly made by both petitioners
even if they may now deny this. In the case of
Veloso, the quitclaim he had signed carried the
notation that the sum stated therein had been paid to
him in the presence of Atty. Gaga Mauna, his
counsel, and the document was attested by Atty.
Ferdinand Magabilin, Chief of the Industrial Relations
Division of the National Capitol Region of the DOLE.
In the case of Liguaton, his quitclaim was made with
the assistance of his counsel, Atty. Leopoldo
Balguma, who also notarized it and later confirmed it
with the filing of the motion to dismiss Liguatons
complaint.
The same Atty. Balguma is the petitioners counsel in
this proceeding. Curiously, he is now challenging the
very same quitclaim of Liguaton that he himself
notarized and invoked as the basis of Liguatons
motion to dismiss, but this time for a different reason.
Whereas he had earlier argued for Liguaton that the
latters signature was a forgery, he has abandoned
that contention and now claims that the quitclaim had
been executed because of the petitioners "dire
necessity."cralaw virtua1aw library
"Dire necessity" is not an acceptable ground for
annulling the releases, especially since it has not
been shown that the employees had been forced to
execute them. It has not even been proven that the
considerations for the quitclaims were
unconscionably low and that the petitioners had been
tricked into accepting them. While it is true that the
writ of execution dated November 24, 1987, called for

the collection of the amount of P46,267.92 each for

the petitioners, that amount was still subject to
recomputation and modification as the private
respondents motion for reconsideration was still
pending before the DOLE. The fact that the
petitioners accepted the lower amounts would
suggest that the original award was exorbitant and
they were apprehensive that it would be adjusted and
reduced. In any event, no deception has been
established on the part of the private respondent that
would justify the annulment of the petitioners
quitclaims.
The applicable law is Article 227 of the Labor Code
providing clearly as follows:1aw library
ARTICLE 227. Compromise agreements. Any
compromise settlement, including those involving
labor standard laws, voluntarily agreed upon by the
parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be
final and binding upon the parties. The National
Labor Relations Commission or any court shall not
assume jurisdiction over issues involved therein
except in case of non-compliance thereof or if there
is prima facie evidence that the settlement was
obtained through fraud, misrepresentation or
coercion.
The petitioners cannot renege on their agreement
simply because they may now feel they made a
mistake in not awaiting the resolution of the private
respondents motion for reconsideration and
recomputation. The possibility that the original award
might have been affirmed does not justify the
invalidation of the perfectly valid compromise
agreements they had entered into in good faith and
with full voluntariness. In General Rubber and
Footwear Corp. v. Drilon, 6 we "made clear that the
Court is not saying that accrued money claims can
never be effectively waived by workers and
employees." As we later declared in Periquet v.
NLRC :
Not all waivers and quitclaims are invalid as against
public policy. If the agreement was voluntarily
entered into and represents a reasonable settlement,
it is binding on the parties and may not later be
disowned simply because of a change of mind. It is
only where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person, or
the terms of settlement are unconscionable on its
face, that the law will step in to annul the
questionable transaction. But where it is shown that
the person making the waiver did so voluntarily, with
full understanding of what he was doing, and the
consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a
valid and binding undertaking. As in this case.
We find that the questioned quitclaims were
voluntarily and knowingly executed and that the
petitioners should not be relieved of their waivers on
the ground that they now feel they were improvident
in agreeing to the compromise. What they call their

"dire necessity" then is no warrant to nullify their

solemn undertaking, which cannot be any less
binding on them simply because they are laborers
and deserve the protection of the Constitution. The
Constitution protects the just, and it is not the
petitioners in this case.
WHEREFORE, the petition is DISMISSED, with costs
against the petitioners. It is so ordered.

deprived Eye Ball Disco of certain amounts of

money. According to the affiants, the petitioners
would get the claim stubs from customers of Eye Ball
Disco that entitle them to one free drink each, but the
petitioners did not surrender these stubs to the
cashier and instead made the customers pay for the
drinks; then, later, when other customers ordered
drinks, the petitioners would surrender these stubs to
the cashier as "payment" for the drinks of these other
customers and pocket their payment. 7

G.R. No. 110388

September 14, 1995
ARTEMIO LABOR, PEDRO BONITA, JR., DELFIN
MEDILLO, ALLAN ROMMEL GABUT, and IRENEO
VISABELLA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
GOLD CITY COMMERCIAL COMPLEX, INC., and
RUDY UY, respondents.

On 11 September 1991, Labor Examiner Edgardo

Diaz of the DOLE Regional Office No. XI submitted
his report 8 to the Regional Director wherein he
confirmed the labor standards violations committed
by Gold City, viz., (1) record-keeping; (2)
underpayment of minimum wage; (3) non-payment of
holiday pay; and, (4) overtime premium. He further
stated that:

Petitioners filed this special civil action for certiorari

seeking to reverse the decision of 24 September
1992 of public respondent National Labor Relations
Commission (NLRC), Fifth Division, in NLRC CA No.
M-000834-92 (RAB 11-08-00742-91) 1 which
vacated and set aside the decision of 27 March 1992
of Labor Arbiter Nicolas S. Sayon 2 declaring illegal
the petitioners' dismissal from their employment by
private respondent Gold City Commercial Complex,
Inc. (hereinafter Gold City) and ordering the latter to
pay separation pay and other money claims.

complainants have personally appeared before this

Office to manifest that they have nor received the
amounts indicated in the Cash Vouchers submitted
by the management of the subject establishment on
July 23, 1991 as payment for the Compromise
Settlement representing salary differentials and
allowances pursuant to Wage Order RTWPB-XI-02.

The petitioners were employees of Gold City at its

Eye Ball Disco located at Tagum, Davao. In a
complaint dated 19 August 1991 filed with the
Regional Office No. XI of the Department of Labor
and Employment (DOLE) in Davao City, the
petitioners charged Gold City with violations of labor
standards laws, specifically for underpayment of the
minimum wage non-payment of 13th month pay for
1991, premiums for holidays and rest days, holiday
pay service incentive leave pay, night shift differential
and allowance pursuant to RTWPB-XI-O2. 3
On 26 August 1991, the petitioners also filed with the
NLRC Regional Arbitration Branch No. XI in Davao
City a complaint against Gold City and its President,
herein private respondent Rudy Uy, for illegal
dismissal and for the same violations of labor
standards laws earlier complained of. 4 This case
was docketed as Case No. RAB-11-08-00742-91.
On 2 September 1991, one Atty. Rolando Casaway,
representing Lee Manuela Suelto, Ellen de Guzman,
Mary Grace Verano, and Percy Hangad, all
employees of Gold City, and Joenel de Mesa, a
customer of Eye Ball Disco, wrote the Provincial
Prosecutor of Davao requesting that a criminal action
against the petitioners for theft and/or estafa be
instituted. 5 In support thereof, he attached to his
letter the affidavits of de Mesa executed on 20
August 1991 and of the others he represented
executed on 23 August 1991 6 wherein the affiants
attested to alleged acts committed by the petitioners
during the period from June to August 1991 which

Said Labor Examiner also submitted a computation

of the amounts due the petitioners. 9 He then
recommended that the case be indorsed to the NLRC
because the amounts each of them is entitled to
receive exceeded the jurisdictional limit of P5,000.00
for money claims.
In the meanwhile, on 30 October 1991, 3rd Assistant
Provincial Prosecutor Justino Aventurado of Davao
handed down a resolution 10 dismissing the criminal
complaint against the petitioners He found the story
of the petitioners' co-employees and a customer
incredible and concluded thus:
Let it not be forgotten that the name of the game is
evidence The precious time of the court, the efforts of
all the parties shall go to naught in cases bereft of
evidence. This sort of offense involving money needs
physical evidence not mere words of mouth of
respondents' [herein petitioners] own co-workers.
Such weakness is worsened by the fact that the
complainant's [sic] witnesses who posture
protectiveness of their employer's interest spoke only
about the alleged irregularities several days and even
months after their commission. After the labor claims
were filed.
If they are that loyal or protective of the
establishment as they now appear to be, they should
have reported the irregularities a day after each
offense.
WHEREFORE, finding no cause to hold respondents
liable for estafa, this complaint is hereby dismissed.

The Provincial Prosecutor approved this resolution

and the records fail to disclose if Gold City had taken
any action to reverse the resolution.
Thereafter, Case No. RAB-11-08-0042-91 pending
before Labor Arbiter Nicolas Sayon became the sole
venue of the legal battle between the petitioners and
Gold City. Both parties therein were required to
submit their respective position papers. In their
position paper, 11 the petitioners alleged that Gold
City prevented Labor, Visabella, Medillo, and Gabut
from entering their work place on 22 August 1991
and Bonita on 24 August 1991; that their time cards
were taken off the time card rack; and that they were
advised to resign They assailed the notice of
termination given to them by Gold City dated 6
September 1991, 12 and denied having abandoned
their work for, as a matter of fact, Labor was on an
approved leave from 19 August to 21 August 1991
but was not allowed to return to work after that date.
They accused Gold City of unfair labor practice for
illegally dismissing them in retaliation for their having
filed a complaint for labor standards violations
against it. They also denied having signed any
quitclaim or compromise settlement They further
claimed the amounts found by the Labor Examiner as
due them from Gold City for the labor standards
violations and prayed for full back wages and
separation pay in lieu of reinstatement.
In its Position Paper, 13 Gold City asserted that the
petitioners were not illegally terminated but had
abandoned their work by not reporting to their place
of employment beginning on 19 August (petitioners
Labor and Bonita), 21 August (petitioners Medillo and
Gabut), and 22 August (petitioner Visabella) 1991. It
further alleged that as early as June 1991, the
petitioners were under investigation for the dishonest
acts for which they were charged with estafa and/or
theft in the Office of the Provincial Prosecutor, and to
preempt any action to be taken therein, the
petitioners filed the "baseless and unfounded
complaint" with the DOLE for the labor standards
violation and furthermore, abandoned their work to
make it appear that they were illegally dismissed. It
also alleged that on 6 September 1991, each of the
petitioners was sent a notice of possible termination
due to abandonment or for absence without official
leave or notice for six consecutive days, with a
warning that if no explanation is given within seven
days from receipt thereof, they will be terminated, 14
but the petitioners failed to reply to the notice and did
not report for work. It then concluded that the
abandonment justified their dismissal. As for the
petitioners' money claims, Gold City contended that
the petitioners were paid the minimum wage and
allowances, and that the computation made by the
DOLE (through the Labor Examiner) did not take into
account the other benefits given to the petitioners,
viz., board and lodging, meals, snacks, clothing and
transportation allowance, and the fact that their
Social Security Services (SSS) contributions and
cash advances were deducted from their gross pay.
It further alleged that the petitioners had already
"agreed to compromise settlement before the DOLE,

concerning money claims, as evidenced by cash

vouchers 15 duly signed" 16 by them.
The petitioners submitted their Reply 17 to Gold
City's position paper.
On 27 March 1992, the Labor Arbiter rendered his
decisions 18 in favor of the petitioners, the dispositive
portion of which reads as follows:
WHEREFORE, in view of all the foregoing, judgment
is hereby rendered:
1.
Declaring the dismissal of complainants
Artemio Labor, Pedro L. Bonita, Jr., Ireneo Visabella;
Delfin Medillo and Allan Rommel Gabut as ILLEGAL;
and
Ordering respondent Gold City Commercial Complex,
Inc. to pay the above-named complainants, the
following:
Name
Separation
Money Claims
Total Pay
or in the total amount of One Hundred Forty Three
Thousand Nine Hundred Eight Pesos and 61/100
(P143,908.61).
SO ORDERED.
We quote his ratiocinations in support thereof:
After judicious scrutiny of the parties' pleadings,
arguments, counter-arguments and evidences, this
office finds for the complainants.
First, on the illegal dismissal issue.
The approved application for leave of absence of
complainants Labor and Bonita negates the
abandonment charge of respondents. Said
applications, which were duly approved by
respondent Rudy Uy showed that complainant Labor
was actually on leave from August 19 to 21, 1991;
while complainant Bonita, on August 20 to 23, 1991.
With such reality, where could the abandonment of
work lie?
Besides, the fact that complainants have immediately
filed this complaint for illegal dismissal against them
proves that there was no intention on their part to
sever their employment with respondents. It is wellsettled in our jurisprudence that "For abandonment to
constitute a valid cause for termination of
employment, there must be a deliberate, unjustified
refusal of the employee to resume his employment.
This refusal must be clearly shown. Mere absence is
not sufficient, it must be accompanied by overt acts
unerringly pointing to the fact that the employee does
not want to work anymore" (Flexo Manufacturing
Corp. vs. NLRC, 135 SCRA 145, emphasis supplied).

Records likewise show that the issuance of notice of

termination by respondents on September 6, 1991
was only a mere subterfuge to shield themselves
from the sanction of the law for having violated the
mandatory requirements in the termination of
employment, which was issued long after
complainants had filed this case.
Under the Labor Code, as amended, the
requirements for the lawful dismissal of an employee
by his employer are two-fold: the substantive and the
procedural. Not only must the dismissal be for a valid
or authorized cause as provided by law (Article 279,
281, 282-284, New Labor Code), but the rudimentary
requirements of due process notice and hearing
must also be observed before an employee may
be dismissed. One does not suffice; without their
concurrence, the termination would, in the eyes of
the law be illegal. (Salaw vs. NLRC, G.R. No. 90786,
Sept. 27, 1991).
Neither the alleged commission of acts of dishonesty
by complainants would warrant the dismissal. It has
no leg to stand on. There is no sufficient proof or
evidence that tend to show that complainants were
really in cahoots with each other in misappropriating
the proceeds of the "unclaimed" free beer or softdrink
due to the disco pub customers, except the bare
allegations in the affidavits executed by one Joenel
Mendoza and respondents' cashiers. Undoubtedly,
they are self-serving testimonies. In fact, it is more
apparent that the charges imputed to complainants
are pure prevarication as respondents were bent to
dismiss complainants in reprisal to the complaint they
have filed with the DOLE.
Absent such two requirements, their dismissal is thus
patently illegal. Complainants were constructively
dismissed.
Payment of separation pay is proper under the
circumstances, and as alternately prayed for by the
complainants, which will be computed at one-month
pay for every year of service, a fraction of at least six
months being considered as one year. Thus, they are
entitled [to the] equivalent [of] two months' salary or
in the month of P5,338.00 for each of them
(P102.00 x 314 x 2)
Albeit respondents rebutted complainants' money
claims through the submission of the latter's payslips,
however, the same could not be credited in their
favor, being found spurious. The payslips, vis-a-vis
respondents, did not bear any entries such as meals,
snacks, lodging and SSS contributions (Annexes "A",
"B", Complainants' Reply to Respondents' Position
Paper). It is very obvious that those entries are
belatedly added by respondents to lessen their actual
liabilities to complainants.
There being no other proofs like payrolls or vouchers
that would support their compliance of labor standard
laws, complainants are awarded the following

benefits: representing salary differential, 13th month

pay for 1991 and holiday [pay] as computed by this
Office which is now part of the records of the case, to
wit:
Artemio Labor P30,927.24;
Ireneo Visabella 30,927.24;
Allan Rommel Gabut 30,927.24;
Pedro Bonita, Jr. 30,927.24; and
Delfin Medillo 22,814.27
This Office, however, took cognizance of the fact that
complainants were extended free lodging, meals and
snacks. Considering that the monetary award due
them was based on straight computations, we deem
it equitable that a twenty (20%) percent deduction is
proper to offset those fringe benefits as well as
absence, tardiness and non-working days incurred
during their tenure of employment.
As to the alleged receipt by complainants on the
compromise settlement of P2,000.00 each, we find
that they are not estopped from claiming the
monetary benefits due them. The Supreme Court has
ruled:
The fact that petitioner received his retirement
benefits voluntarily end executed a deed of release
and quitclaim does not militate against him. In the
case of MRR Crew Union vs. PNR, 72 SCRA 88, We
held: "That the employee has signed a satisfaction
receipt does not result in waiver, the law does not
consider as valid any agreement to receive less
compensation; that what a worker is entitled to
recover." A deed of release or quitclaim cannot bar
any employee from demanding benefits to which he
is legally entitled. (Fuentes vs. NLRC, 167 SCRA
767).
The rest of [the] money claim are hereby denied for
lack of factual and legal basis.
As expected, Gold City appealed the Labor Arbiter's
decision to the NLRC. On 24 September 1992, the
NLRC promulgated the challenged decision reversing
that of the Labor Arbiter's and dismissing the
petitioners' complaint. Essentially, the NLRC gave full
faith and credit to the same affidavits which were
submitted in the aforementioned criminal complaint
for estafa or theft filed against the petitioners,
Accordingly, it declared that the findings of the Labor
Arbiter that the accusations made by Gold City are
mere fabrications is not supported by the evidence
on record. To the NLRC, the filing by the petitioners
of the complaint with the DOLE was made "to
preempt respondents' lawful prerogatives." It also
ruled that there was abandonment by the petitioners
and that Gold City, in terminating them, complied with
the procedural requirements since it gave notice and
granted them an opportunity to explain their
absences, which they did not avail of. In ruling that
the petitioners were not illegally dismissed, the NLRC
found that just cause existed, viz., their dishonest
acts which do not require proof beyond reasonable
doubt. As to the money claims, the NLRC ruled that

the compromise settlements were freely and

voluntarily executed by the petitioners and their
allegation that they were tricked into signing it and
that the P2,000.00 was not given to them deserve
scant consideration; hence, they were estopped from
claiming such monetary benefits pursuant to the rule
laid down in Veloso vs. Department of Labor and
Employment, 19 which abandoned the ruling in
Fuentes vs. National Labor Relations Commission 20
that the Labor Arbiter relied upon.
Their motion for the reconsideration of the decision
having been denied by the NLRC, the petitioners filed
this special civil action for certiorari where they
alleged that the NLRC acted with grave abuse of
discretion amounting to lack or excess of jurisdiction
when:
(A)
IT ABSOLUTELY AND TOTALLY
DISMISSED THE CLAIMS OF PETITIONERS
DESPITE THE FINDINGS OF FACTS MADE BY
THE LABOR ARBITER AND THE ADMISSION OF
PRIVATE RESPONDENTS OF LIABILITIES AS
STATED IN THEIR POSITION PAPER.
(B)
IT HELD THAT PETITIONERS
ABANDONED THEIR WORK DESPITE
KNOWLEDGE THAT THE INSTANT CASE IS
ALREADY INSTITUTED AND THAT THEY
COMMITTED ACTS OF DISHONESTY DESPITE
SELF-SERVING AFFIDAVITS AND DISMISSAL OF
THE COMPLAINT.
We required the respondents to comment on the
petition.
As expected, the private respondents in their
comment support the NLRC and quoted the
arguments adduced in their Memorandum of Appeal
filed with the NLRC. 21
The Office of the Solicitor General filed a
Manifestation in lieu of a Comment 22 and prayed
that the NLRC be required to file its own comment.
The said Office takes a stand adverse to the NLRC
and in favor of the petitioners, and opines that Gold
City was not able to prove its charge of dishonesty. It
disagrees with the NLRC's finding that, because its
evidence consisting of the affidavits of its witnesses
"very clearly stated in detail how the complainants
[petitioners herein] cheated the customers and the
respondents as well," the petitioners are unworthy of
their employer's trust and confidence. On the
contrary, the Office of the Solicitor General argues
that the affidavits do not specify the individual
participation of the petitioners in the alleged losses
incurred by Gold City, and it proceeds to examine the
affidavits and point out their flaws. It also noted that
the affidavits which support the NLRC's decision
were the very same affidavits upon which the
complaint filed with the Provincial Prosecutor was
based and which was eventually dismissed for lack of
evidence. It added that, although it may be argued
that the dismissal of the criminal case does not bar
the employee's termination, the evidence,

nevertheless, does not support a conclusion that the

petitioners committed the dishonest acts complained
of.
The Office of the Solicitor General also maintains that
the petitioners did not abandon their work, again
disagreeing with the findings of the NLRC. It sounded
off its doubts as to the truth of the claim of dishonesty
because these acts were not mentioned at all in the
notices of 6 September 1991 given to the petitioners
which referred only to their alleged absences without
leave. If the accusations are true, contends the Office
of the Solicitor General, Gold City could have
immediately acted upon them by, for instance,
placing the petitioners under preventive suspension
or giving them the requisite notice and opportunity to
be heard in the investigation it was allegedly
conducting, but it did not do anything. The Office of
the Solicitor General concludes that there is no basis
for the charge of loss of confidence. Furthermore, the
immediate filing of the case for illegal dismissal by
the petitioners negates the theory of abandonment.
With respect to the money claims, the Office of the
Solicitor General opines that the petitioners are
entitled to them and their recovery is not barred by
the compromise settlement. It contradicts the opinion
of the NLRC that the case of Veloso had abandoned
the rule in Fuentes, citing Philippine National Oil
Company vs. National Labor Relations Commission
23 decided by this Court more recently than Veloso
wherein we reaffirmed the rule that quitclaims do not
bar recovery by the employees of their claims
because such quitclaims are frowned upon as
contrary to public policy. It also said that the
petitioners are still entitled to their money claims
because the alleged compromise settlement was for
an unconscionably lower amount than that awarded
to them by the Labor Arbiter.
It its own comment, 24 the NLRC sustains its
challenged resolution and submits that the issues
raised are factual and that there is no showing that
the NLRC committed such abuse of discretion but
rather, its assailed decision "is based on the records
and ably supported by the evidences presented by
the parties." As to the compromise agreements, it
maintained that they are valid since they were freely
and voluntarily executed by the parties.
We resolved to give due course to the petition and
required the parties to submit their respective
memoranda. Only the petitioners submitted their
memorandum. 25 The NLRC and the private
respondents manifested that their separate
comments will serve as their memoranda.
We decide in favor of the petitioners.
The first assigned error involves the question of
whether or not Gold City is guilty of labor standards
violations. The findings regarding this issue made by
the Labor Arbiter and the NLRC are opposed to one
another. While it is well-established that the findings
of facts of the NLRC are entitled to great respect and

are generally binding on this Court, it is equally wellsettled that the Court will not uphold erroneous
conclusions of the NLRC when the Court finds that
the latter committed grave abuse of discretion in
reversing the decision of the labor arbiter or when the
findings of facts from which the conclusions were
based were not supported by substantial evidence.
26
The Labor Arbiter adopted the findings of the Labor
Examiner that Gold City committed violations of the
labor standards laws. Gold City did not contest nor
protest the findings when it was presented with a
copy of the report made by the Labor Examiner. 27 It
raised its defenses only in the position paper it
submitted to the Labor Arbiter. The unexplained
delay in presenting pertinent documents to support
its defenses strengthens the assertion of the
petitioners that the pay slips presented by Gold City,
which the latter claims show proper deductions that
the petitioners knew of, were falsified, and that the
deductions were added only after these had already
been signed by them.
Recovery of the petitioners' money claims for the
violations of labor standard laws are not barred by
the alleged compromise agreements signed by the
petitioners. Contrary to the NLRC's opinion, Veloso
did not overturn the rule laid down in Fuentes The
said cases are not founded on similar or identical
facts, thus accounting for the difference in the rulings
made therein. In fact, we said in Veloso that the case
of Pampanga Sugar Development Co., Inc. vs. Court
of Industrial Relations 28 relied upon by the
petitioners therein and which enunciated the same
rule later applied in Fuentes, is not applicable to
Veloso because the pertinent facts differ. Veloso did
not lay down a rule totally different from what this
Court had set in Pampanga or even in Fuentes and
other similar cases. Veloso does not even apply in
this case because the petitioners had asserted, and
Gold City did not prove the contrary, that they initially
refused to sign a document purportedly waiving their
claims but were later tricked into signing the
vouchers which turned out to be for alleged
compromise settlements at P2,000.00 for: each of
them. We are inclined to agree with the petitioners.
Gold City has not submitted any compromise
agreement attended with the formulations of law. 29
All that it has are the cash vouchers, dated 17 July
1991, which states under the heading
PARTICULARS: "To payment of Compromise
Settlement representing Salary Differentials and
Allowances as per RTWPB-X1-02." Of course, a
voucher purporting to represent payment of the
consideration in a compromise agreement in not the
compromise agreement, itself. Since Gold City did
not submit any compromise agreement, then it is
logical to presume that none existed for it had the
burden of proving its own assertions.
Even if the petitioners did enter into a compromise
settlement with Gold City, such agreement would be
valid and binding only if, per Veloso, quoting Periquet
vs. National Labor Relations Commission, 30 the

agreement was voluntarily entered into and

represents a reasonable settlement of the claims. In
this case, as in Fuentes, the amounts purportedly
received by the petitioners were unreasonably lower
than what they were legally entitled to.
Furthermore, like in Pampanga, the "compromise
settlements" with the petitioners were not executed
with the assistance of the Bureau of Labor Relations
or the Regional Office of the DOLE pursuant to
Article 227 of the Labor Code. The records do not
disclose that the assistance of such office was ever
solicited. What Gold City did was merely to file with
the Regional Office of the DOLE in Davao City the
vouchers purporting to show payments of the alleged
considerations of the "compromise settlements."
Such filing can by no stretch of the imagination be
considered as the requisite assistance in the
execution of compromise settlements.
Finally, we also note that the alleged vouchers were
dated 17 July 1991 or before the filing of any
complaint with the DOLE on 19 August 1991 and
even before the Labor Examiner submitted his
findings of violations by Gold City. If indeed the
parties entered into such compromise agreements,
then Gold City should have submitted the vouchers
to the Labor Examiner to refute the petitioners' claim
and put an end to the controversy.
Having dispensed with the first error ascribed to the
NLRC, the next issue to be resolved is whether the
petitioners abandoned their jobs and, consequently,
whether their dismissal due to abandonment was
lawful.
To constitute abandonment, two elements must
concur: (1) the failure to report for work or absence
without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee
relationship, with the second element as the more
determinative factor and being manifested by some
overt acts. 31 Mere absence is not sufficient. 32 It is
the employer who has the burden of proof to show a
deliberate and unjustified refusal of the employee to
resume his employment without any intention of
returning. 33 Gold City failed to discharge this
burden. It did not adduce any proof of some overt act
of the petitioners that clearly and unequivocally show
their intention to abandon their posts. On the
contrary, the petitioners lost no time in filing the case
for illegal dismissal against them, taking only four
days from the time most of them were prevented
from entering their work place on 22 August 1991 to
the filing of the complaint on 26 August 1991. They
cannot, by any reasoning, be said to have
abandoned their work, for as we have also previously
ruled, the filing by an employee of a complaint for
illegal dismissal is proof enough of his desire to
return to work, thus negating the employer's charge
of abandonment. 34 Furthermore, petitioners Labor
and Bonita presented proof that during some of those
days that they were supposedly on AWOL (absence
without official leave), they were actually on official

leave as approved by no less than Rudy Uy himself.

35 Neither Gold City nor Rudy Uy had disputed this.
It may further be observed that the timing of Gold
City's alleged refusal to allow the petitioners to enter
their work place is highly suspicious. It happened on
22 August 1991 or only two days after the petitioners
filed their complaint for labor standards violations
with the DOLE. Mere coincidence? We think not.
What it is, though, is evidence that lends credence to
the allegation of the petitioners that they did not
abandon their employment as Gold City asserts but
were prevented from going to work. Thus, we cannot
agree with the NLRC when it said that the petitioners
"ha[d] to jump the gun against the respondents in
order to save their faces from their own wrong
doings, dishonest acts" by filing the case for illegal
dismissal against the respondents.
Equally baseless is the charge of dishonesty which
Gold City also relies upon to justify the dismissal of
the petitioners from their employment.
A charge of dishonesty involves serious misconduct
on the part of the employee, a breach of the trust
reposed by the employer upon him. The rule that
proof beyond reasonable doubt is not required to
terminate an employee on the charge of loss of
confidence and that it is sufficient that there is some
basis for such loss of confidence is not absolute. 36
The right of an employer to dismiss employees on
the ground that it has lost its trust and confidence in
him must not be exercised arbitrarily and without just
cause. 37 For loss of trust and confidence to be a
valid ground for an employee's dismissal, it must be
substantial and not arbitrary, and must be founded on
clearly established facts sufficient to warrant the
employee's separation from work. 38
Unfortunately for Gold City, the evidence it adduced
is insubstantial, inadequate, and unreliable to support
a conclusion that the petitioners are even remotely
guilty of the acts they are accused of committing. On
this matter, we agree with the observations and
conclusions of the Office of the Solicitor General
which we quote with approval, to wit:
Indeed, an examination of the affidavits would reveal
that the alleged offenses complained of and through
which private respondent Gold City sustained losses
estimated at P216,000.00 are couched in general
terms and do not specifically mention the individual
participation of each of the petitioners in the alleged
losses. For instance, in the affidavit . . . of Lee
Manuela Suelto, the following will be noted:
(i)
allegedly the order slip marked "Mrs. Ima V"
was missing but it does [not] mention who is
responsible for it;
(ii)
allegedly petitioner Visabella or Arnold
Veloso did not remit the amount of P60.00 collected
by Visabella from a customer but goes on to
conclude that both of them pocketed the amount;

(iii)
allegedly the amount paid by a customer for
several bottles of beer and soft drinks to petitioner
Visabella was turned over to Veloso but concludes
that both of them pocketed it;
(iv)
allegedly petitioner Visabella crumpled and
threw away an order slip he made out for four (4)
bottles of beer and four (4) soft drinks after receiving
payment from the said order but does not indicate if
he appropriated the same;
(v)
allegedly petitioner Gabut admitted to affiant
that he and Arnold Veloso made some money on an
order slip for draft beer and the former would give the
latter part of the money, if he was inclined to do so
since they were at odds at that time. The admission,
however, is hearsay and inadmissible against
petitioner Gabut.
On the other hand, the affidavits of Mary Grace
Verano, Ellen de Guzman and Renato Dalugdog
(Annexes "C", "D" ,and "F", respectively, of Annex
"D", Petition) are pro forma and, except for the
different sates of the incidents mentioned therein,
invariably show that petitioners, on three separate
occasions from June to August, 1991, failed to remit
the money collected by them allegedly remitted stubs
of entrance tickets which entitled customers to free
drinks.
If it is true that petitioners were cheating their
employer in the manner described in the affidavits of
private respondents' witnesses, how come that they,
who held the position of confidence as cashiers,
tolerated the practice from June 1991 and blew the
whistle only after petitioners filed a complaint of
underpayment of wages in August 19, 1991? As
pointed out by the investigating prosecutor, the
affiants should have reported the irregularities a day
after each offense.
The same may be said of the affidavit (Annex "A" of
Annex "D", Petition) of Joenel de Mesa and the
affidavit of Percy Hangad (Annex "B" of Annex "D",
Petition), both of which substantiate the alleged
modus operandi of petitioners. The alleged offenses
happened in June, 1991 and they came with a clean
breast of it only on August 20 and 23, 1991.
Moreover, establishing the mode by which petitioners
allegedly cheated private respondent Gold City does
not necessarily prove their complicity.
It is private respondents' posture that great weight
should be given to the affidavit of Joenel de Mesa, a
mere customer whose only alleged desire is to
protect the public similarly situated with him.
However, de Mesa charges only Visabella of using
his (Mesa's) entrance ticket stub deprive private
respondents of P60.00. The same could not be
imputed to his so-petitioners.
Although the employer's evidence is not required to
be of such degree as is required in criminal cases,
i.e., proof beyond reasonable doubt, such must be
substantial The same must clearly and convincingly

establish the facts upon which loss of confidence in

the employer may be made to rest. (Starlite Plastic
Industrial Corporation v. NLRC, 171 SCRA 315
[1989].
In the instant case, private respondents have not
clearly and convincingly shown by substantial
evidence the individual participation of each of the
petitioners in depriving their employer of the
estimated amount of P216,000.00 per year. As
correctly pointed out by the investigating prosecutor,
there was no cause to hold petitioners liable for the
offense imputed to them.
It may be argued by private respondents that the
acquittal of an employee in a criminal case does not
guarantee his reinstatement or that the dropping of a
criminal prosecution for an employee's alleged
misconduct does not bar his dismissal. (Starlite
Plastic Industrial Corp. Supra).
Still, such an argument would fail to impress since
petitioners' actual involvement or participation in the
irregularities complained of have not been proven.
Private respondents failed miserably even to
establish a prima facie case against them in the
prosecutor's office and, precisely, because of such
absence of evidence, the case was dismissed. What
private respondents had were "mere words of mouth"
and generalities which are not sufficient to afford
reasonable ground for belief that petitioners were
responsible for the misconduct imputed to them.
In the words of the Labor Arbiter, the alleged
commission of acts of dishonesty had no leg to stand
on. They are but prevarications in reprisal to the
complaint filed by petitioners with the DOLE.
There being no abandonment or commission of
dishonest acts by the petitioners, no just cause exists
to dismiss them, hence, their termination by Gold City
is illegal. The fact that Gold City sent them notices on
6 September 1991 becomes irrelevant. It does not
cure the illegality of their dismissal for lack of just
cause. It is interesting to note, however, that in its
letters of 6 September 1991 individually addressed to
the petitioner, Gold City sought an explanation from
the petitioners on their alleged absence without
official leave or, in short, their abandonment, and
warned them in the form of a reminder that such
absence is a ground for separation or dismissal from
the company. Nothing is mentioned about dishonesty
or any other misconduct on the part of the petitioners.
If indeed the petitioners were guilty of both
abandonment and dishonesty or misconduct, then
Gold City should have put them down in black and
white. The letters cum notice cannot then be
considered to include dishonesty or misconduct. It
would be a gross violation of the petitioners' right to
due process to dismiss them for that cause of which
they were not given notice or for a charge for which
they were never given an opportunity to defend
themselves. A dismissal must not only be for a valid
or substantial cause; the employer must also observe
the procedural aspect of due process in giving the

employee notice and the opportunity to be heard and

to defend himself. 39
At the same time, when the petitioners were
dismissed by preventing them from entering their
work place, no previous notice of any kind was given
to them at all. The case for illegal dismissal was filed
on 26 August 1991, or at least eleven days before
the date of the notices. The subsequent notices
cannot cure the lack of notice prior to the illegal
dismissal of the petitioners on 22 August and 24
August 1991.
As for the money claims of the petitioners, the award
made by the Labor Arbiter must be upheld, subject to
the modification with respect to the addition of an
award for back wages which the Labor Arbiter should
have made but did not.
This Court, after scrutinizing the documents and
evidence before it, agrees with the findings of the
Labor Arbiter on Gold City's disclaimer of liability for
the money claims and adopts them herein, the
pertinent portions of which are as follows:
Albeit respondents rebutted complainants' money
claims through the submission of the latter's payslips,
however, the same could not be credited in their
favor, being found spurious. The payslips, vis-a-vis
respondents, did not bear any entries such as meals,
snacks, lodgings and SSS contributions (Annexes
"A," "B," Complainants' Reply to Respondents'
Position Paper). It is very obvious that those entries
[were] belatedly added by respondents to lessen their
actual liabilities to complainants.
There being no other proofs like payrolls or vouchers
that would support their compliance [with] labor
standard benefits: representing salary differentials,
13th month pay for 1991 and holiday [pay] as
computed by this Office which is now part of the
records of this case, to wit:
1 Artemio Labor P30,927.24;
2 Ireneo Visabella 30,927.24;
3 Allan Rommel Gabut 30,927.24;
4 Pedro Bonita, Jr. 30,927.24; and
5 Delfin Medillo 22,814.27 40
From the above amounts, the Labor Arbiter deducted
twenty percent (20%) therefrom to represent the
benefits which the petitioners received, such as
lodging, meals and snacks, as well as for absences,
tardiness, and for non-working days when no work
was performed by them because, as it stated, "the
monetary award due to them was based on straight
computations." 41 Though the Labor Arbiter did not
explain why an arbitrary figure of 20% was used to
represent these deductions, since the petitioners did
not raise this as an issue and we do not find any
reason to delete or modify it, this value for

deductions, from the total money claims to be

awarded to the petitioners must stay.
With respect to the award of separation pay, the
same was properly made and is affirmed. Ordinarily,
a finding that an employee has been illegally
dismissed entitles him to reinstatement to his former
position without loss of seniority rights and to the
payment of back wages. 42 But in this case, the
petitioners did not pray for reinstatement in the
position paper they filed with the Labor Arbiter. 43
The latter in turn ordered the payment of separation
pay in lieu of reinstatement and this is part of the
decision that the petitioners seek to be affirmed by
this Court. That being the case, and as we have said
before, if the employee decides not to be reinstated,
the employer shall pay him separation pay in lieu of
reinstatement. 44 This is only just and practical
because reinstatement of the petitioners will no
longer be in the best interest of both the petitioners
and Gold City considering the animosity and
antagonism that exists between them brought about
by filing of charges both parties against each other in
the criminal as well as in the labor proceedings. 45
Gold City had also refused entry to the petitioners
into their work place, giving rise to strained relations
between the parties which make reinstatement
unacceptable to them. The petitioners would then be
entitled to separation pay equivalent to at least one
month's salary for every year of service in lieu of
reinstatement in addition to their full back wages.
The Labor Arbiter, however, failed to award wages
despite its ruling that the petitioners were illegally
dismissed. We thus deem it proper to make such an
award herein in addition to the money claims for
labor standards violations and for the separation pay.
As a rule, full back wages are computed from the
time of the employee's illegal dismissal until his
actual reinstatement, but since in this case,
reinstatement is not possible, the back wages must
be computed from the time of the petitioners' illegal
dismissal until the finality of our decision
herein. 46 This amount due the petitioners for back
wages, however, is subject to deductions for any
amount which the petitioners may have earned
during the period of illegal termination. 47
Computation of full back wages and presentation of
proof as to income earned elsewhere by the illegally
dismissed employees after their termination and
before full payment is effected by Gold City should be
ventilated in the execution proceedings before the
Labor Arbiter in accordance with the appropriate
rules of procedure of the NLRC. 48
WHEREFORE, the decision of public respondent
National Labor Relations Commission in NLRC CA
No. M-000834-92 (RAB 11-08-00742-91) is hereby
SET ASIDE and the decision of the Labor Arbiter is
REINSTATED, with the addition of an award of full
back wages to each of the petitioners from the time
of their illegal termination until the finality of this
decision.
SO ORDERED.

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.
Rights may be waived through a compromise
agreement, notwithstanding a final judgment that has
already settled the rights of the contracting parties.
To be binding, the compromise must be shown to
have been voluntarily, freely and intelligently
executed by the parties, who had full knowledge of
the judgment. Furthermore, it must not be contrary to
law, morals, good customs and public policy.
The Case
1
Before us is a Petition for Review under Rule 45 of
the Rules of Court, assailing the May 31, 2000
2
3
Decision and the October 30, 2003 Resolution of
the Court of Appeals (CA) in CA-GR SP No. 53581.
The challenged Decision disposed as follows:
"WHEREFORE, having found that public respondent
NLRC committed grave abuse of discretion, the
Court hereby SETS ASIDE the two assailed
Resolutions and REINSTATES the order of the
4
Labor Arbiter dated February 27, 1998."
The assailed Resolution denied reconsideration.
The Facts
The CA relates the facts in this wise:
"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.
xxx
xxx
xxx
"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.

xxx
xxx
xxx
"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
5
as contrary to public policy."
Ruling of the Court of Appeals
The CA held that compromise agreements may be
6
entered into even after a final judgment. Thus,
petitioners validly released respondent from any
claims, upon the voluntary execution of a waiver
7
pursuant to the compromise agreement.
The appellate court denied petitioners motion for
8
reconsideration for having been filed out of time.
9
Hence, this Petition.
The Issues
Petitioners raise the following issues for our
consideration:
"1. Whether or not the final and executory judgment
of the Supreme Court could be subject to
compromise settlement;
"2. Whether or not the petitioners affidavit waiving
their awards in [the] labor case executed without the
assistance of their counsel and labor arbiter is valid;
"3. Whether or not the ignorance of the jurisprudence
by the Court of Appeals and its erroneous counting of
the period to file [a] motion for reconsideration
constitute a denial of the petitioners right to due
10
process."
The Courts Ruling
The Petition has no merit.
First Issue:
Validity of the Compromise Agreement
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
11
to a lawsuit. They adjust their difficulties in the
manner they have agreed upon, disregarding the
possible gain in litigation and keeping in mind that
12
such gain is balanced by the danger of losing.
Verily, the compromise may be either extrajudicial (to
13
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
14
parties. To have the force of law between the
15
parties, it must comply with the requisites and
16
principles of contracts. Upon the parties, it has the

effect and the authority of res judicata, once entered

17
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
18
judgment. It is immediately executory and not
19
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
20
court.
Following these basic principles, apparently
unnecessary is a compromise agreement after final
judgment has been entered. Indeed, once the case is
terminated by final judgment, the rights of the parties
are settled. There are no more disputes that can be
compromised.
Compromise Agreements after Final Judgment
The Court is tasked, however, to determine the
legality of a compromise agreement after final
judgment, not the prudence of entering into one.
Petitioners vehemently argue that a compromise of a
final judgment is invalid under Article 2040 of the Civil
21
Code, which we quote:
"Art. 2040. If after a litigation has been decided by a
final judgment, a compromise should be agreed
upon, either or both parties being unaware of the
existence of the final judgment, the compromise may
be rescinded.
"Ignorance of a judgment which may be revoked or
set aside is not a valid ground for attacking a
compromise." (Bold types supplied)
The first paragraph of Article 2040 refers to a
scenario in which either or both of the parties are
unaware of a courts final judgment at the time they
agree on a compromise. In this case, the law allows
either of them to rescind the compromise agreement.
It is evident from the quoted paragraph that such an
agreement is not prohibited or void or voidable.
Instead, a remedy to impugn the contract, which is an
22
action for rescission, is declared available. The law
allows a party to rescind a compromise agreement,
because it could have been entered into in ignorance
of the fact that there was already a final judgment.
Knowledge of a decisions finality may affect the
resolve to enter into a compromise agreement.
The second paragraph, though irrelevant to the
present case, refers to the instance when the courts
decision is still appealable or otherwise subject to
modification. Under this paragraph, ignorance of the
decision is not a ground to rescind a compromise
agreement, because the parties are still unsure of the
final outcome of the case at this time.
Petitioners argument, therefore, fails to convince.
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.
Supported by Case Law
The issue involving the validity of a compromise
agreement notwithstanding a final judgment is not
23
novel. Jesalva v. Bautista upheld a compromise

agreement that covered cases pending trial, on

24
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
25
entered into. Palanca v. Court of Industrial
26
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
27
policy.
28
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
29
agreement. Also, Northern Lines, Inc. v. Court of
30
Tax Appeals recognized the right to compromise
final and executory judgments, as long as such right
31
was exercised by the proper party litigants.
32
Rovero v. Amparo, which petitioners cited, did not
set any precedent that all compromise agreements
after final judgment were invalid. In that case, the
customs commissioner imposed a fine on an
importer, based on the appraised value of the goods
illegally brought to the country. The latters appeal,
which eventually reached this Court, was denied.
Despite a final judgment, the customs commissioner
still reappraised the value of the goods and
effectively reduced the amount of fine. Holding that
he had no authority to compromise a final judgment,
the Court explained:
"It is argued that the parties to a case may enter into
a compromise about even a final judgment rendered
by a court, and it is contended x x x that the
reappraisal ordered by the Commissioner of Customs
and sanctioned by the Department of Finance was
authorized by Section 1369 of the [Revised
Administrative Code]. The contention may be
correct as regards private parties who are the
owners of the property subject-matter of the
litigation, and who are therefore free to do with
what they own or what is awarded to them, as
they please, even to the extent of renouncing the
award, or condoning the obligation imposed by
the judgment on the adverse party. Not so,
however, in the present case. Here, the
Commissioner of Customs is not a private party and
is not the owner of the money involved in the fine
based on the original appraisal. He is a mere agent
of the Government and acts as a trustee of the
money or property in his hands or coming thereto by
virtue of a favorable judgment. Unless expressly
authorized by his principal or by law, he is not
authorized to accept anything different from or
anything less than what is adjudicated in favor of the
33
Government." (Bold types supplied)
Compliance with the Rule on Contracts
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
34
is established.
In the present factual milieu, compliance with the
elements of a valid contract is not in issue.
Petitioners do not challenge the factual finding that
they entered into a compromise agreement with
respondent. There are no allegations of vitiated
consent. Neither was there any proof that the
agreement was defective or could be characterized
35
36
37
as rescissible, voidable, unenforceable, or
38
void. Instead, petitioners base their argument on
the sole fact that the agreement was executed
despite a final judgment, which the Court had
previously ruled to be allowed by law.
Petitioners voluntarily entered into the compromise
agreement, as shown by the following facts: (1) they
signed respondents Manifestation (filed with the
labor arbiter) that the judgment award had been
39
satisfied; (2) they executed a Joint Affidavit dated
May 5, 1997, attesting to the receipt of payment and
40
the waiver of all other benefits due them; and (3) 6
of the 8 petitioners filed a Manifestation with the labor
arbiter on October 20, 1997, requesting that the
cases be terminated because of their receipt of
41
payment in full satisfaction of their claims. These
circumstances also reveal that respondent has
already complied with its obligation pursuant to the
compromise agreement. Having already benefited
from the agreement, estoppel bars petitioners from
challenging it.
Advantages of Compromise
A reciprocal concession inherent in a compromise
agreement assures benefits for the contracting
parties. For the defeated litigant, obvious is the
advantage of a compromise after final judgment.
Liability arising from the judgment may be reduced.
As to the prevailing party, a compromise agreement
assures receipt of payment. Litigants are sometimes
deprived of their winnings because of unscrupulous
mechanisms meant to delay or evade the execution
of a final judgment.
The advantages of a compromise agreement appear
to be recognized by the NLRC in its Rules of
Procedure. As part of the proceedings in executing a
final judgment, litigants are required to attend a preexecution conference to thresh out matters relevant
42
to the execution. In the conference, any agreement
that would settle the final judgment in a particular
manner is necessarily a compromise.
Novation of an Obligation
The principle of novation supports the validity of a
compromise after final judgment. Novation, a mode
43
of extinguishing an obligation, 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
44
creditor.
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
45
point. A compromise of a final judgment operates
as a novation of the judgment obligation, upon

46

compliance with either requisite. 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.
Second Issue:
Validity of the Waiver
Having ruled on the validity of the compromise
agreement in the present suit, the Court now turns its
attention to the waiver of claims or quitclaim
executed by petitioners. The subject waiver was their
concession when they entered into the agreement.
They allege, however, that the absence of their
counsel and the labor arbiter when they executed the
waiver invalidates the document.
Not Determinative of the Waivers Validity
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
47
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
48
transaction. In the present case, petitioners failed to
present any evidence to show that their consent had
been vitiated.
The law is silent with regard to the procedure for
approving a waiver after a case has been
49
terminated. Relevant, however, is this reference to
the NLRCs New Rules of Procedure:
"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
50
any, 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
51
is not contrary to law, morals, and public policy."
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.
The labor arbiters absence when the waivers were
executed was remedied upon compliance with the
above procedure. The Court observes that the arbiter
made searching questions during the pre-execution
conference to ascertain whether petitioners had
52
voluntarily and freely executed the waivers.
Likewise, there was evidence that they made an
intelligent choice, considering that the contents of the

53

written waivers had been explained to them. The

labor arbiters absence when those waivers were
executed does not, therefore, invalidate them.
The Court declines to rule on the allegation that
respondents counsels encroached upon the
professional employment of petitioners lawyer when
54
they facilitated the waivers. The present action is
not the proper forum in which to raise any charge of
professional misconduct. More important, petitioners
failed to present any supporting evidence.
The third issue, which refers to the timely filing of
petitioners Motion for Reconsideration filed with the
CA, will no longer be discussed because this Courts
decision has resolved the case on the merits.
WHEREFORE, the Petition is DENIED and the
assailed Decision AFFIRMED. Costs against
petitioners.
SO ORDERED.

G.R. No. 164403

COSMOS BOTTLING CORPORATION,
- versus
NACHURA, and REYES, JJ.
March 4, 2008
LABOR disputes are often filled with acrimony. It is
inevitable when the interest of labor clashes with that
of capital. This one showcases labor and industry
trading charges of abandonment, insubordination and
illegal dismissal.
In resolving the controversy, We take another look at
the dichotomies between question of law and
question of fact, on one hand, and the doctrine of
conclusive finality and doctrine of great respect and
finality, on the other.
Sought to be set aside in this petition for
review on certiorari are the following dispositions of
the Court of Appeals (CA) in CA-G.R. SP No.
71229:[1] (a) Decision[2] dated April 6, 2004 which
reversed and set aside the June 29, 2001 Resolution
of the NLRC; and (b) Resolution[3] dated July 2,
2004 which denied the motion for reconsideration of
petitioner.
The Facts
Petitioner Cosmos Bottling Corporation is a
domestic corporation engaged in the business of
manufacturing, bottling and selling soft drinks.[4]
Respondent Pablo Nagrama, Jr. was initially
employed by petitioner as a maintenance mechanic
on June 24, 1993 at the Cosmos Plant in Cauayan,
Isabela.[5] On September 17, 1996, he was elected
by the local union as chief shop steward.
Respondent was designated by petitioner as waste
water treatment operator effective September 27,
1999.[6] Petitioner hired Clean Flow Philippines, Inc.
to conduct training seminars to acquaint petitioners
personnel on the operations of the water treatment
plant.[7] Respondent was instructed to attend the
seminar to be held on September 27-30, 1999.[8]

He failed to attend the first two (2) days of the

seminar.[9] In a letter by his immediate supervisor,
Josephine D. Calacien, dated September 29, 1999,
respondent was informed that charges of
abandonment of duty and gross insubordination had
been lodged against him. He was required to submit
his written explanation.[10]
Respondent filed his explanation on September 30,
1999. He contended that he had to attend to an
administrative hearing for fellow unionists which were
held at Santiago, Isabela; that before he went, he first
secured permission from the plant controller.[11] He
averred that as a union official, he is obligated to
attend to the problems of his fellow union members.
Hearing was held on the twin charges against
him. Respondent and officers of petitioner
corporation testified. On October 29, 1999, he was
formally terminated from service.
Respondent filed a complaint before the Labor
Arbiter, contending that he was illegally dismissed
and that petitioner had committed unfair labor
practices. In his Position Paper,[12] he explained his
absences as follows:
8. As Co-Chairman of the Grievance Committee of
the Union, the scope of my responsibility included
union members from the Cosmos Warehouse at
Santiago, Isabela. Furthermore, there was no shop
steward from the said warehouse who was available
for the said hearing;
9. I asked the permission of all of our managers for
my attendance in the said administrative hearing as
representative of the Union. Our managers (Mr.
Gabuco, Mr. Guina, Mr. Lelis, Mrs. Orosco, and Mr.
Pangon) all gave their consent;
10. Accordingly, I attended the hearing on Arnel
Brazuelas case on September 24, 1999, as Union
representative. The said hearing started on 9:00
A.M. and ended at about noon. After the said
hearing, I immediately went back to my post and
resumed my work (I was still assigned at the
advertising department during that time);

Neither was I warned that what I was doing was

contrary to company rules;
14. Another administrative hearing for the same
case was conducted on September 29, 1999. With
consent from my managers, I also attended the
hearing. Nobody questioned my attendance therein;
15. Another administrative hearing was conducted
on September 30, 1999 and I again represented the
union during the said hearing with my attendance
therein having been previously cleared by our
managers.[13]
On August 4, 1999, Labor Arbiter Ricardo N. Olarirez
rendered judgment sustaining the legality of the
dismissal of respondent. In ruling against him, the
Labor Arbiter held:
WHEREFORE, premises considered, judgment is
hereby rendered dismissing the above-entitled case
for lack of merit. All other claims are hereby
dismissed.[14]
The Labor Arbiter predicated the finding of
abandonment on the admission made by respondent
in a letter addressed to petitioners management.
The letter reads:
Ako po at ang aking buong sambahayan ay
humihingi ng paumanhin sa nalabag kong batas
paggawa sa Cosmos Bottling Corp. bunga lamang ito
ng aking ginawang sobrang malasakit sa aking mga
kasamahang sales force ng Santiago na sa
kasalukuyan ay may hinaharap na kaso, dahil sila po
ay humihingi ng payo kung ano ang dapat na
pakikiharap na gagawin at ito po ang naging sanhi na
pati ako ay hindi ko namalayan na nakagawa na rin
pala ako ng paglabag sa batas paggawa. Kayat
kung mamarapatin po ninyo ay humihingi pa po ako
ng pagkakataon pa na sana ay manatili pa po ang
mga kabutihan na ipinakita ninyo sa akin, at
ipinangangako ko po sa inyo na hindi na mauulit ang
mga pangyayaring ito at idinadalangin ko po sa Dios
naway pagpalain po kayong lahat ng ating
panginoong Dios sampu ng inyong buong
sambahayan.[15]

11. Nobody questioned my attendance during the

hearing. My immediate supervisor or anybody for
that matter did not inform me that what I was doing
was a violation of company policy;

Invoking Rule 129, Section 4 of the Rules of

Court, the Labor Arbiter considered the letter as a
judicial admission of guilt.[16] The Arbiter also ruled
that the charge of unfair labor practice was without
merit because it was not sufficiently shown that he
was dismissed for his union activities.

12. On September 28, 1999, another hearing was

conducted regarding two other companions of Arnel
Brazuela namely Joseph Salvador and Marcelino
Estimada. They also sought my attendance and after
obtaining the consent of our five managers, I
attended the said hearing as union representative;

Respondent appealed the matter to the National

Labor Relations Commission (NLRC). In a
Resolution[17] dated June 29, 2001, the NLRC
affirmed the decision of the Labor Arbiter, thus:

13. As in previous instance, I immediately returned

to my post after the termination of the hearing and
resumed whatever tasks I was doing. Again, nobody
questioned my appearance during the hearing.

WHEREFORE, finding no cogent reason to modify,

alter, much less reverse the decision appealed from,
the same is AFFIRMED en toto and the instant
appeal is DISMISSED for lack of merit.[18]

In denying the appeal, the NLRC stated:

Upon Our review of the record of the case,
We conceive no abuse of discretion as to compel a
reversal. Appellant failed to adduce convincing
evidence to show that the Labor Arbiter in rendering
the assailed decision had acted in a manner
inconsistent with the criteria set forth in the foregoing
pronouncement.
Neither are We persuaded to disturb the
factual findings of the Labor Arbiter a quo. The
material facts as found are all in accordance with the
evidence presented during the hearing as shown by
the record.[19]
Respondents motion for reconsideration was to no
avail. Undaunted, he elevated the matter to the CA
via petition for certiorari, seeking to annul and
reverse the NLRC Resolutions.[20]
On April 6, 2004, the CA reversed the NLRC ruling
and granted the reliefs sought,[21] disposing as
follows:

WHEREFORE, premises considered, the Court

hereby GRANTS the petition and the assailed June
29, 2001 decision of the National Labor Relations
Commission is hereby REVERSED and SET ASIDE
and a new one is entered directing private
respondents to:
(1) Pay the petitioner full backwages, plus all other
benefits, bonuses and general increases to which he
would have been normally entitled, had he not been
dismissed and had he not been forced to stop
working;
(2) Reinstate the petitioner without loss of seniority
rights and other privileges. If reinstatement is no
longer feasible, then separation pay equivalent to
one (1) month for every year of service in addition to
full backwages is mandated;
(3) Pay the petitioner an amount equivalent to 10% of
the judgment award as attorneys fees;

given permission by his managers to attend

controverted.[27]
The second requisite, which is a clear intention to
sever the employee-employer relationship, is also
absent. The letter cited by the Labor Arbiter as proof
of abandonment shows that respondent had no
intention of severing the employee-employer
relationship.[28] Moreover, the complaint for illegal
dismissal shows a desire to return to work.[29]
Anent the issue of gross insubordination,[30] the CA
found that respondent displayed a most
commendable attitude by seeking consent from five
(5) managers before absenting himself.[31] Although
the second requisite of gross insubordination, which
is willful disobedience, was present,[32] there was
still no ground to terminate respondents services
since the crucial requisite of perverse mental attitude
was lacking. His disobedience cannot be taken as
just cause for dismissal due to gross
insubordination.[33]
Issues
Dissatisfied, petitioner has come to Us via Rule 45,
submitting the following questions for Our
consideration:
A.
THE COURT OF APPEALS GRAVELY
ERRED WHEN IT IGNORED THE FACT THAT THE
EVIDENCE ON RECORD SUPPORTED THE
DISMISSAL OF THE PETITIONER ON ACCOUNT
OF ABANDONMENT AND GROSS
INSUBORDINATION.
B.
THE COURT OF APPEALS VIOLATED THE
DOCTRINE OF CONCLUSIVE FINALITY.[34]
Three (3) issues are hoisted for resolution. The first
is whether or not the CA gravely erred in its
judgment. The second is whether or not the CA
violated the doctrine of conclusive finality. The third
is whether or not the petition is violative of Rule 45 in
that only questions of law should be raised. We shall
resolve them in the reverse order, dealing with the
procedural ahead of the substantive question.
Our Ruling

(4) Pay the cost of the suit.

I. Questions of law and fact distinguished
SO ORDERED.[22]
The CA opined that the record is bare of any
evidence to justify the termination of respondent
Nagramas employment.[23] It reiterated the rule that
the burden was on the employer to prove
abandonment.[24] It found that there was no
evidence presented to show that the first requisite of
abandonment, which is absence without a valid or
justified reason, was present.[25] The justification of
attendance at the administrative hearing of fellow
union members in Santiago, Isabela was not
refuted.[26] Nor was the fact that respondent was

Respondent claims that petitioner is raising

questions of fact and not of law. Petitioner, for its
part, claims that the propriety of the reversal of the
CA of the factual findings of the NLRC and Labor
Arbiter is a question of law insofar as the CA should
have given finality to the factual findings of the
administrative agencies. It is likewise argued that the
CA committed an error in the application of the law
when it reversed the factual findings of the NLRC.
The Court has made numerous dichotomies between
questions of law and fact. A reading of these
dichotomies shows that labels attached to law and

fact are descriptive rather than definitive. We are not

alone in Our difficult task of clearly distinguishing
questions of fact from questions of law. The United
States Supreme Court has ruled that: we [do not] yet
know of any other rule or principle that will unerringly
distinguish a factual finding from a legal
conclusion.[35]
In Ramos v. Pepsi-Cola Bottling Co. of the P.I.,[36]
the Court ruled:
There is a question of law in a given case when the
doubt or difference arises as to what the law is on a
certain state of facts; there is a question of fact when
the doubt or difference arises as to the truth or the
falsehood of alleged facts.[37]
We shall label this the doubt dichotomy.
In Republic v. Sandiganbayan,[38] the Court ruled:
x x x A question of law exists when the doubt or
controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the
issue does not call for an examination of the
probative value of the evidence presented, the truth
or falsehood of facts being admitted. In contrast, a
question of fact exists when the doubt or difference
arises as to the truth or falsehood of facts or when
the query invites calibration of the whole evidence
considering mainly the credibility of the witnesses,
the existence and relevancy of specific surrounding
circumstances as well as their relation to each other
and to the whole, and the probability of the
situation.[39]
For the sake of brevity, We shall label this the law
application and calibration dichotomy.
In contrast, the dynamic legal scholarship in the
United States has birthed many commentaries on the
question of law and question of fact dichotomy. As
early as 1944, the law was described as growing
downward toward roots of fact which grew upward
to meet it.[40] In 1950, the late Professor Louis Jaffe
saw fact and law as a spectrum, with one shade
blending imperceptibly into the other.[41] Others
have defined questions of law as those that deal with
the general body of legal principles; questions of fact
deal with all other phenomena x x x.[42] Kenneth
Culp Davis also weighed in and noted that the
difference between fact and law has been
characterized as that between ought questions and
is questions.[43]
A look back at the rationale behind appellate review
provides some insight. Appellate review may be
characterized by two (2) extremes.[44] The first is
that an appellate court will defer in large part to a trial
courts or administrative tribunals determination
where the lower tribunal is in a better position to
make that determination than the appellate court.
Conversely, where the appellate court is as capable
of determining the question as is the trial court there
is little or no deference accorded to the lower

tribunal. Hence, questions of fact are accorded

deference because the lower tribunal was present at
the reception of evidence and had an opportunity to
view the demeanor of witnesses and assess their
credibility.
Questions of law, on the other hand, are traditionally
accorded little or no deference because there is
nothing intrinsic to their determination which gives
the trial court any advantage over an appellate
court.[45] As stated by Professor Davis: those who
see and hear the witnesses testify are in a better
position to determine some aspects of fact questions
than those who are limited to a cold record x x x.[46]
With Our own jurisprudence and United States
commentaries in mind, the question raised by
petitioner is simply a question of fact. Petitioner is
not asking Us to reassess the pleadings it submitted
to the CA.[47] Petitioner is, in fact, asking Us to reexamine the evidence. It claims evidence was
ignored by the CA which would prove abandonment
and gross insubordination.
Ordinarily, We would not touch this issue. The
findings of facts of the CA are as a general rule,
conclusive and binding on the Supreme Court.[48]
Our power of review is limited to questions of law. It
is well established that the Court is not a trier of facts
and does not routinely undertake the re-examination
of the evidence presented by the contending parties
during the trial of the case.
The Court, however, may determine the factual
milieu of cases or controversies under specific
circumstances, as follows:
(1) when the inference made is manifestly mistaken,
absurd or impossible;
(2) when there is a grave abuse of discretion;
(3) when the finding is grounded entirely on
speculations, surmises or conjectures;
(4) when the judgment of the Court of Appeals is
based on misapprehension of facts;
(5) when the findings of fact are conflicting;
(6) when the Court of Appeals, in making its
findings, went beyond the issues of the case and the
same is contrary to the admissions of both appellant
and appellee;
(7) when the findings of the Court of Appeals are
contrary to those of the trial court;
(8) when the findings of fact are conclusions without
citation of specific evidence on which they are based;
(9) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the
parties and which, if properly considered, would
justify a different conclusion; and
(10) when the findings of fact of the Court of Appeals
are premised on the absence of evidence and are
contradicted by the evidence on record.[49]
The fifth cited circumstance is pertinent to the
case at bar, in that petitioner asserts that the CA
made findings of fact in conflict with those of the
Labor Arbiter and NLRC. In Philippine American Life

and General Insurance Co. v. Gramaje,[50] the

Court, speaking through Justice Chico-Nazario, held:
As borne by the records, it appears that there
is a divergence between the findings of facts of the
Labor Arbiter as affirmed by the NLRC, and that of
the Court of Appeals. Therefore, for the purpose of
clarity and intelligibility, this Court will make an
infinitesimal scrutiny of the findings of facts of the
Labor Arbiter and the NLRC.[51]
Hence, despite petitioner raising a question of fact,
We opt to take cognizance of the questions brought
to Us by petitioner.
II. The doctrine of conclusive finality is not applicable.
Petitioner next asserts that the CA violated the
doctrine of conclusive finality when it reviewed the
factual findings of the Labor Arbiter and the
NLRC.[52]
The doctrine of conclusive finality is defined as the
comity that courts extend to the executive branch and
the recognition of the expertise of administrative
agencies in dealing with particular questions of
fact.[53] Simply put, the appellate court may defer to
the factual findings of the administrative agency due
to comity.
However, the prevailing doctrine with respect to
administrative findings of fact has no conclusive
finality. Rather, factual findings made by quasijudicial and administrative bodies when supported by
substantial evidence are accorded great respect and
even finality by the appellate courts.[54] In Ignacio v.
Coca-Cola Bottlers Phils., Inc.,[55] the Court held:
x x x Factual findings of the NLRC affirming those of
the Labor Arbiter, both bodies deemed to have
acquired expertise in matters within their jurisdictions,
when sufficiently supported by evidence on record,
are accorded respect if not finality, and are
considered binding on this Court. As long as their
decisions are devoid of any unfairness or
arbitrariness in the process of their deduction from
the evidence proffered by the parties, all that is left is
for the Court to stamp its affirmation and declare its
finality.[56] (Underscoring supplied)

This was reiterated in German Marine Agencies, Inc.

v. National Labor Relations Commission:[57]
The Supreme Court has always accorded respect
and finality to the findings of fact of the NLRC,
particularly if they coincide with those of the Labor
Arbiter, when supported by substantial evidence.
The reason for this is that a quasi-judicial agency like
the NLRC has acquired a unique expertise because
its jurisdiction is confined to specific matters.
Whether or not petitioners actually paid the balance
of the sickness wages to private respondent is a
factual question. In the absence of proof that the
labor arbiter or the NLRC had gravely abused their

discretion, the Court shall deem conclusive and

cannot be compelled to overturn this particular
factual finding.[58] (Underscoring supplied)
The doctrine of conclusive finality and doctrine of
great respect and finality both apply to factual
findings of administrative agencies in the exercise of
their quasi-judicial function. The former has no
evidentiary requirement while the latter must be
supported by substantial evidence.[59] The former is
based on comity, the latter is based on the doctrine
that administrative agencies possess specialized
knowledge and expertise in their respective
fields.[60] The former is not used in the Philippine
legal system while the latter is the established
standard.[61]
Appellate courts may still review the factual findings
of administrative agencies. The CA may resolve
factual issues by express mandate of law. Batas
Pambansa Blg. 129, as amended, expressly
provides:
Section 9. Jurisdiction. The Court of Appeals shall
exercise:
1. Original jurisdiction to issue writs of mandamus,
prohibition, certiorari, habeas corpus, and quo
warranto, and auxiliary writs or processes, whether or
not in aid of its appellate jurisdiction;
2. Exclusive original jurisdiction over actions for
annulment of judgments of Regional Trial Courts; and
3. Exclusive appellate jurisdiction over all final
judgments, resolutions, orders or awards of Regional
Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commission, including
the Securities and Exchange Commission, the Social
Security Commission, the Employees Compensation
Commission and the Civil Service Commission,
Except those falling within the appellate jurisdiction of
the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph 4 of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.
The Court of Appeals shall have the power to try
cases and conduct hearings, receive evidence and
perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and
appellate jurisdiction, including the power to grant
and conduct new trials or Appeals must be
continuous and must be completed within three (3)
months, unless extended by the Chief Justice.
Despite the respect given by the appellate
courts to administrative findings of fact, the CA is
empowered to resolve factual issues. A mere
doctrine espousing comity cannot overcome the
statutory mandate of the CA to resolve factual issues.
Moreover, neither the doctrine of conclusive
finality nor the doctrine of great respect and finality

has direct application to the case at bar. The CA did

not simply review the decision of the NLRC. The CA
took cognizance of a special civil action of certiorari.
Verily, the CA did not per se review the facts found or
the law applied by the NLRC. The CA reviewed the
discretion of the NLRC.
By the very nature of a petition for certiorari, the
appellate court reviews the exercise of jurisdiction of
the lower tribunal.[62] In the case at bar, Nagrama,
as petitioner, alleged that the NLRC acted with grave
abuse of discretion in affirming the findings of the
Labor Arbiter.[63] In a petition for certiorari, the
correctness of the legal conclusions of the tribunal is
not in issue per se. Rather, it is the exercise of
jurisdiction by the tribunal.
As often repeated by this Court, for the special civil
action of certiorari to lie, it must be shown that the
tribunal, board or officer exercising judicial functions
acted without or in excess of jurisdiction or with grave
abuse of discretion amounting to lack or excess of
jurisdiction, and that there is no appeal nor any plain,
speedy and adequate remedy in the ordinary course
of law for the purpose of amending or nullifying the
proceeding.[64] The sole purpose of the writ of
certiorari is the correction of errors of jurisdiction
including the commission of grave abuse of
discretion amounting to lack of jurisdiction.[65] A
special civil action of certiorari does not include
correction of public respondents evaluation of the
evidence and factual findings thereon.[66]
The oft-quoted trichotomy proposed by Professor
Rosenberg is informative: [A]ll appellate Gaul is
divided into three parts for review purposes:
questions of fact, of law and of discretion.[67] The
CA reviewed the discretion of the NLRC in the instant
case, not the facts or the law.
The CA found that the NLRC acted with grave abuse
of discretion since the decision lacked factual proof
and also ignored established jurisprudence.[68]
Thus, the CA concluded that the NLRC acted
capriciously and whimsically in the exercise of its
judgment.[69] The result of this error of jurisdiction
was that the judgment of the NLRC was rendered
void or at least voidable.[70] This is in sharp contrast
to an error of judgment which is reversible only if it
can be shown that prejudice has been caused
thereby.[71]
III. There is no abandonment and gross
insubordination.
Petitioner asserts that the CA gravely erred when it
ignored evidence on record that would prove
respondents abandonment and gross
insubordination.[72]
We yield to petitioners call for a recalibration of the
evidence because the factual findings of the NLRC
and Labor Arbiter conflict with that of the CA.[73]
Two (2) elements must be satisfied for an employee
to be guilty of abandonment.[74] The first is the

failure to report for work or absence without valid or

justifiable reason. The second is a clear intention to
sever the employer-employee relationship. The
second element is the more determinative factor and
must be evinced by overt acts. Likewise, the burden
of proof is on the employer to show the employees
clear and deliberate intent to discontinue his
employment without any intention of returning; mere
absence is not sufficient.
A review of the facts discloses that these twin
elements are not present here. First, respondents
absence was justified under the circumstances. He
was a shop steward, which recent jurisprudence
qualifies as a union officer.[75] As an officer, he had
a valid reason to attend the hearing of his union
brothers. He also asked for and was given
permission as can be seen from the minutes of his
hearing.[76] Petitioner does not contest this fact.
Permission negates any possibility of respondent
abandoning his job.
As to the second requisite, We are not convinced that
respondent intended to sever the employer-employee
relationship with Cosmos. He immediately complied
with the memo requiring him to explain his
absence.[77] His failure to report directly to his
Quality Assurance Supervisor and Analyst can be
dismissed as failure to properly understand the
instructions he was given, to wit:
JRF: Apat ang pumirma dito. Hinde, may report
kasi sa akin, kung hindi mo pa nakikita, eto ang
report ng mga QA Analysts this is to inform you that
Mr. Pablo A. Nagrama, was transferred to a new
assignment from Maintenance Mechanic to Waste
Water Treatment operator is not reporting to the QA
Department since the effectivity of the memo, up to
this date of writing. Ibig sabihin, mula pa nung date
na ginagawa nila ito.
PN:
So mali pala ang ginagawa ko, Sir, na
nagpupunta, dumidiretso ako sa Waste Water?
JRF & JBL: Mali yon.
PN:
Pasensiyahan nyo ako, Sir, kasi dumidiretso
ako sa Clean Flow.
JBL: Binasa mo ba yung appointment letter mo?
Nakalagay doon na dapat magrereport ka sa QA.
PN:
Kaya nga sinasabi ko kangina (JBL:
Maliwanag naman sa memo mo) nagkulang ako
diyan, may report ang QA na hindi ako nag-a-appear,
hindi, Sir, nagpupunta ako ng Clean Flow eh.
JBL:
ito.
PN:

Kaya nga, di inaamin mo itong pangyayaring

Inaamin ko, Sir.

JBL:
JRF:

Okey.
Okey, go to the next case.[78]

Moreover, respondent filed a complaint for illegal

dismissal.[79] A complaint for illegal dismissal shows
a desire to continue work.[80] Verily, a review of the

evidence shows that both elements of abandonment

are lacking.
For gross insubordination, also called willful
disobedience of a lawful order, to lie, two (2)
requisites are also necessary.[81] First, the assailed
conduct must have been intentional and
characterized by a wrongful and perverse
attitude.[82] Second, the order violated must have
been reasonable, lawful, and made known to the
employee and should pertain to the duties which he
has been engaged to discharge.[83]
There is no question that orders to attend the
seminar are lawful instructions by petitioner.
Respondent himself admitted his failure to obey
these lawful instructions in his letter, to wit:
Ako po at ang aking buong sambahayan ay
humihingi ng paumanhin sa nalabag kong batas
paggawa sa Cosmos Bottling Corp. bunga lamang ito
ng aking ginawang sobrang malasakit sa aking mga
kasamahang sales force ng Santiago na sa
kasalukuyan ay may hinaharap na kaso, dahil sila po
ay humihingi ng payo kung ano ang dapat na
pakikiharap na gagawin at ito po ang naging sanhi na
pati ako ay hindi ko namalayan na nakagawa na rin
pala ako ng paglabag sa batas paggawa. x x x[84]
The first element of gross insubordination,
however, is lacking. A review of the records shows
that respondents failure to report to his quality
assurance supervisor and failure to fully attend the
seminar was in no way tainted by a wrongful or
perverse attitude. His failure to secure a clearance
from Clean Flow was due to his attendance to his
union duties. Hence, there is no gross
insubordination.
IV. A few words on motion to withdraw
Petitioner has filed a motion to withdraw
dated December 27, 2007. However, it was brought
to Our attention only recently. Petitioner prayed that
the instant case be closed, terminated and forever
withdrawn from the business calendar of the
Honorable Courts Third Division by virtue of the
Compromise Agreement entered into by the parties
herein.
We deny the motion to withdraw on three
grounds:
First. The case has been submitted for decision on
December 14, 2005.[85] The time for withdrawal of
the appeal is governed by Section 3, Rule 50 of the
1997 Rules of Civil Procedure, viz.:
Sec. 3. Withdrawal of appeal. An appeal
may be withdrawn as of right at any time before the
filing of appellees brief. Thereafter, the withdrawal
may be allowed in the discretion of the court.
Verily, the withdrawal of this petition for review
on certiorari, which is in the nature of an appeal, may

be done as a matter of right at any time before the

filing of the appellees brief or memorandum. After
that period, the withdrawal may only be done with the
consent of the court.[86]
The records unveil that the motion to withdraw was
filed on December 27, 2007. At that time, the case
has long been submitted for decision. The draft
ponencia in this case has already been written and
deliberated upon by the Division when the motion for
withdrawal was brought to its attention.
The Court encourages parties to suits to settle their
differences amicably through compromise. However,
as far as practicable, compromises should be
pursued at the earliest possible opportunity, and with
notice to the court that the parties are exploring
avenues towards a settlement. This is to avoid
wasting the precious time of the court in deciding the
case.
Second. The motion to withdraw petition is founded
on a release, waiver and quitclaim, not on a
compromise agreement. It is not a joint motion.
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.[87] In forging a compromise, the parties
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.[88]
Petitioner anchors the motion to withdraw on a
compromise agreement it allegedly entered into with
respondent Nagrama. However, what is apparent is
that respondent had allegedly executed a Release,
Waiver and Quitclaim in petitioners favor. The
record is bereft of a compromise agreement. To put
an end to a litigation already submitted for decision,
the submission of a compromise agreement validly
executed and voluntarily signed by the parties is
necessary.
Here, the motion to withdraw was made at the sole
instance of petitioner. The motion would have been
more persuasive if both parties manifested a joint
desire to terminate the proceedings.
Third. The parties may execute a compromise
agreement even after the finality of this decision.
They are not precluded from doing so. In a catena of
cases, the Court has consistently ruled that even final
and executory judgments may be compromised. In
Northern Lines, Inc. v. Court of Tax Appeals,[89] the
Court recognized the right to compromise final and
executory judgments, as long as such right was
exercised by the proper party litigants.[90]
In Gatchalian v. Arlegui,[91] the Court upheld the
right to compromise prior to the execution of a final
judgment. The Court held that the final judgment had
been novated and superseded by a compromise
agreement. Palanca v. Court of Industrial

Relations[92] also 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.
WHEREFORE, the petition is DENIED for lack of
merit.

in violation of Section 23 of Republic Act No. 875.

Counsel for the SSSEA moved to postpone the
hearing to October 21, 1963, and to submit then a
memorandum, as well as the documents specified in
the notice. The motion was granted, but, nobody
appeared for the SSSEA on the date last mentioned.
The next day, October 22, 1963, Manuel Villagracia,
Assistant Secretary of the SSSEA filed with the
Office of the Registrar, a letter dated October 21,
1963, enclosing the following:

SO ORDERED.
1. Joint non-subversive affidavit of the officers of the
SSS Employees' Association-PAFLU;
G.R. No. L-22228

February 27, 1969

PHILIPPINE ASSOCIATION OF LABOR UNIONS

(PAFLU)
vs.
THE SECRETARY OF LABOR, THE DIRECTOR OF
LABOR RELATIONS and THE REGISTRAR OF
LABOR ORGANIZATIONS,
Petitioners pray for writs of certiorari and prohibition
to restrain respondents, the Secretary of Labor, the
Director of Labor Relations and the Registrar of
Labor Organizations, from enforcing an order of
cancellation of the registration certificate of the Social
Security System Employees Association
hereinafter referred to as the SSSEA which is
affiliated to the Philippine Association of Free Labor
Unions hereinafter referred to as PAFLU as
well as to annul all proceedings in connection with
said cancellation and to prohibit respondents from
enforcing Section 23 of Republic Act No. 875.
Petitioners, likewise, pray for a writ of preliminary
injunction pending the final determination of this
case. In their answer, respondents traversed some
allegations of fact and the legal conclusions made in
the petition. No writ of preliminary injunction
pendente lite has been issued.
It appears that on September 25, 1963, the
Registration of Labor Organizations hereinafter
referred to as the Registrar issued a notice of
hearing, on October 17, 1963, of the matter of
cancellation of the registration of the SSSEA,
because of:
1. Failure to furnish the Bureau of Labor Relations
with copies of the reports on the finances of that
union duly verified by affidavits which its treasurer or
treasurers rendered to said union and its members
covering the periods from September 24, 1960 to
September 23, 1961 and September 24, 1961 to
September 23, 1962, inclusive, within sixty days of
the 2 respective latter dates, which are the end of its
fiscal year; and
2. Failure to submit to this office the names, postal
addresses and non-subversive affidavits of the
officers of that union within sixty days of their election
in October (1st Sunday), 1961 and 1963, in
conformity with Article IV (1) of its constitution and
by-laws.

2. List of newly-elected officers of the Association in

its general elections held on April 29, 1963; and
3. Copy of the amended constitution and by-laws of
the Association.
Holding
1. That the joint non-subversive affidavit and the list
of officers mentioned in the letter of Mr. Manuel
Villagracia were not the documents referred to in the
notice of hearing and made the subject matter of the
present proceeding; and
2. That there is no iota of evidence on records to
show and/or warrant the dismissal of the present
proceeding.
on October 23, 1963, the Registrar rendered a
decision cancelling the SSSEA's Registration
Certificate No. 1-IP169, issued on September 30,
1960. Soon later, or on October 28, 1963, Alfredo
Fajardo, president of the SSSEA moved for a
reconsideration of said decision and prayed for time,
up to November 15, within which to submit the
requisite papers and data. An opposition thereto
having been filed by one Paulino Escueta, a member
of the SSSEA, upon the ground that the latter had
never submitted any financial statement to its
members, said motion was heard on November 27,
1963. Subsequently, or on December 4, 1963, the
Registrar issued an order declaring that the SSSEA
had "failed to submit the following requirements to
wit:
1. Non-subversive affidavits of Messrs. Teodoro
Sison, Alfonso Atienza, Rodolfo Zalameda,
Raymundo Sabino and Napoleon Pefianco who were
elected along with others on January 30, 1962.
2. Names, postal addresses and non-subversive
affidavits of all the officers who were supposedly
elected on October (1st Sunday), of its constitution
and by-laws.
and granting the SSSEA 15 days from notice to
comply with said requirements, as well as meanwhile
holding in abeyance the resolution of its motion for
reconsideration.

Pending such resolution, or on December 16, the

PAFLU, the SSSEA, Alfredo Fajardo "and all the
officers and members" of the SSSEA commenced
the present action, for the purpose stated at the
beginning of this decision, upon the ground that
Section 23 of Republic Act No. 875 violates their
freedom of assembly and association, and is
inconsistent with the Universal Declaration of Human
Rights; that it unduly delegates judicial power to an
administrative agency; that said Section 23 should be
deemed repealed by ILO-Convention No. 87; that
respondents have acted without or in excess of
jurisdiction and with grave abuse of discretion in
promulgating, on November 19, 1963, its decision
dated October 22, 1963, beyond the 30-day period
provided in Section 23(c) of Republic Act No. 875;
that "there is no appeal or any other plain, speedy
and adequate remedy in the ordinary course of law";
that the decision complained of had not been
approved by the Secretary of Labor; and that the
cancellation of the SSSEA's certificate of registration
would cause irreparable injury.
The theory to the effect that Section 23 of Republic
Act No. 875 unduly curtails the freedom of assembly
and association guaranteed in the Bill of Rights is
devoid of factual basis. The registration prescribed in
paragraph (b) of said section 1 is not a limitation to
the right of assembly or association, which may be
exercised with or without said registration. 2 The
latter is merely a condition sine qua non for the
acquisition of legal personality by labor organizations,
associations or unions and the possession of the
"rights and privileges granted by law to legitimate
labor organizations". The Constitution does not
guarantee these rights and privileges, much less said
personality, which are mere statutory creations, for
the possession and exercise of which registration is
required to protect both labor and the public against
abuses, fraud, or impostors who pose as organizers,
although not truly accredited agents of the union they
purport to represent. Such requirement is a valid
exercise of the police power, because the activities in
which labor organizations, associations and union of
workers are engaged affect public interest, which
should be protected. 3 Furthermore, the obligation to
submit financial statements, as a condition for the
non-cancellation of a certificate of registration, is a
reasonable regulation for the benefit of the members
of the organization, considering that the same
generally solicits funds or membership, as well as
oftentimes collects, on behalf of its members, huge
amounts of money due to them or to the
organization. 4
For the same reasons, said Section 23 does not
impinge upon the right of organization guaranteed in
the Declaration of Human Rights, or run counter to
Articles 2, 4, 7 and Section 2 of Article 8 of the ILOConvention No. 87, which provide that "workers and
employers, ... shall have the right to establish and ...
join organizations of their own choosing, without
previous authorization"; that "workers and employers
organizations shall not be liable to be dissolved or
suspended by administrative authority"; that "the

acquisition of legal personality by workers' and

employers' organizations, ... shall not be made
subject to conditions of such a character as to restrict
the application of the provisions" above mentioned;
and that "the guarantees provided for in" said
Convention shall not be impaired by the law of the
land.
In B.S.P. v. Araos, 5 we held that there is no
incompatibility between Republic Act No. 875 and the
Universal Declaration of Human Rights. Upon the
other hand, the cancellation of the SSSEA's
registration certificate would not entail a dissolution of
said association or its suspension. The existence of
the SSSEA would not be affected by said
cancellation, although its juridical personality and its
statutory rights and privileges as distinguished
from those conferred by the Constitution would be
suspended thereby.
To be registered, pursuant to Section 23(b) of
Republic Act No. 875, a labor organization,
association or union of workers must file with the
Department of Labor the following documents:
(1) A copy of the constitution and by-laws of the
organization together with a list of all officers of the
association, their addresses and the address of the
principal office of the organization;
(2) A sworn statement of all the officers of the said
organization, association or union to the effect that
they are not members of the Communist Party and
that they are not members of any organization which
teaches the overthrow of the Government by force or
by any illegal or unconstitutional method; and
(3) If the applicant organization has been in existence
for one or more years, a copy of its last annual
financial report.
Moreover, paragraph (d) of said-Section ordains that:
The registration and permit of a legitimate labor
organization shall be cancelled by the Department of
Labor, if the Department has reason to believe that
the labor organization no longer meets one or more
of the requirements of paragraph (b) above; or fails to
file with the Department Labor either its financial
report within the sixty days of the end of its fiscal year
or the names of its new officers along with their nonsubversive affidavits as outlined in paragraph (b)
above within sixty days of their election; however, the
Department of Labor shall not order the cancellation
of the registration and permit without due notice and
hearing, as provided under paragraph (c) above and
the affected labor organization shall have the same
right of appeal to the courts as previously provided.6
The determination of the question whether the
requirements of paragraph (b) have been met, or
whether or not the requisite financial report or nonsubversive affidavits have been filed within the period
above stated, is not judicial power. Indeed, all officers
of the government, including those in the executive

department, are supposed, to act on the basis of

facts, as they see the same. This is specially true as
regards administrative agencies given by law the
power to investigate and render decisions concerning
details related to the execution of laws the
enforcement of which is entrusted thereto. Hence,
speaking for this Court, Mr. Justice Reyes (J.B.L.)
had occassion to say:
The objections of the appellees to the
constitutionality of Republic Act No. 2056, not only as
an undue delegation of judicial power to the
Secretary of Public Works but also for being
unreasonable and arbitrary, are not tenable. It will be
noted that the Act (R.A. 2056) merely empowers the
Secretary to remove unauthorized obstructions or
encroachments upon public streams, constructions
that no private person was anyway entitled to make
because the bed of navigable streams is public
property, and ownership thereof is not acquirable by
adverse possession
(Palanca vs. Commonwealth, 69 Phil., 449).
It is true that the exercise of the Secretary's power
under the Act necessarily involves the determination
of some question of fact, such as the existence of the
stream and its previous navigable character; but
these functions, whether judicial or quasi-judicial, are
merely incidental to the exercise of the power
granted by law to clear navigable streams of
unauthorized obstructions or encroachments, and
authorities are clear that they are validly conferable
upon executive officials provided the party affected is
given opportunity to be heard, as is expressly
required by Republic Act No. 2056, section 2.7
It should be noted also, that, admittedly, the SSSEA
had not filed the non-subversive affidavits of some of
its officers "Messrs. Sison, Tolentino, Atienza,
Zalameda, Sabino and Pefianca" although said
organization avers that these persons "were either
resigned or out on leave as directors or officers of the
union", without specifying who had resigned and who
were on leave. This averment is, moreover,
controverted by respondents herein.
Again, the 30-day period invoked by the petitioners is
inapplicable to the decision complained of. Said
period is prescribed in paragraph (c) 8 of Section 23,
which refers to the proceedings for the "registration"
of labor organizations, associations or unions not to
the "cancellation" of said registration, which is
governed by the abovequoted paragraph (d) of the
same section.
Independently of the foregoing, we have repeatedly
held that legal provisions prescribing the period
within which a decision should be rendered are
directory, not mandatory in nature in the sense
that, a judgment promulgated after the expiration of
said period is not null and void, although the officer
who failed to comply with law may be dealt with
administratively, in consequence of his delay 9
unless the intention to the contrary is manifest. Such,

however, is not the import of said paragraph (c). In

the language of Black:
When a statute specifies the time at or within which
an act is to be done by a public officer or body, it is
generally held to be directory only as to the time, and
not mandatory, unless time is of the essence of the
thing to be done, or the language of the statute
contains negative words, or shows that the
designation of the time was intended as a limitation
of power, authority or right. 10
Then, again, there is no law requiring the approval,
by the Secretary of Labor, of the decision of the
Registrar decreeing the cancellation of a registration
certificate. In fact, the language of paragraph (d) of
Section 23, suggests that, once the conditions
therein specified are present, the office concerned
"shall" have no choice but to issue the order of
cancellation. Moreover, in the case at bar, there is
nothing, as yet, for the Secretary of Labor to approve
or disapprove, since petitioners, motion for
reconsideration of the Registrar's decision of October
23, 1963, is still pending resolution. In fact, this
circumstance shows, not only that the present action
is premature, 11 but, also, that petitioners have failed
to exhaust the administrative remedies available to
them. 12 Indeed, they could ask the Secretary of
Labor to disapprove the Registrar's decision or object
to its execution or enforcement, in the absence of
approval of the former, if the same were necessary,
on which we need not and do not express any
opinion.
IN VIEW OF THE FOREGOING, the petition herein
should be, as it is hereby dismissed, and the writs
prayed for denied, with costs against the petitioners.
It is so ordered.