1

Motion for Extension of Time to File Petition

[G.R. No. 185220. July 27, 2009.]

LAGUNA METTS CORPORATION, petitioner, vs. COURT OF APPEALS, ARIES C. CAALAM and

GERALDINE ESGUERRA, respondents.

RESOLUTION

CORONA, J p:

This petition arose from a labor case filed by private respondents Aries C. Caalam and Geraldine Esguerra

against petitioner Laguna Metts Corporation (LMC). 1 The labor arbiter decided in favor of private respondents

and found that they were illegally dismissed by LMC. On appeal, however, the National Labor Relations

Commission (NLRC) reversed the decision of the labor arbiter in a decision dated February 21, 2008. Private

respondents' motion for reconsideration was denied in a resolution dated April 30, 2008.

Counsel for private respondents received the April 30, 2008 resolution of the NLRC on May 26, 2008. On July 25,

2008, he filed a motion for extension of time to file petition for certiorari under Rule 65 of the Rules of

Court. 2 The motion alleged that, for reasons 3 stated therein, the petition could not be filed in the Court of

Appeals within the prescribed 60-day period. 4 Thus, a 15-day extension period was prayed for. 5

In a resolution dated August 7, 2008, 6 the Court of Appeals granted the motion and gave private respondents a

non-extendible period of 15 days within which to file their petition for certiorari. LMC moved for the

reconsideration of the said resolution claiming that extensions of time to file a petition for certiorari are no longer

allowed under Section 4, Rule 65 of the Rules of Court, as amended by A.M. No. 07-7-12-SC dated December 4,

2007. 7 This was denied in a resolution dated October 22, 2008. According to the appellate court, while the

amendment of the third paragraph of Section 4, Rule 65 admittedly calls for stricter application to discourage the

filing of unwarranted motions for extension of time, it did not strip the Court of Appeals of the discretionary

power to grant a motion for extension in exceptional cases to serve the ends of justice.

Aggrieved, LMC now assails the resolutions dated August 7, 2008 and October 22, 2008 of the Court of Appeals

in this petition for certiorari under Rule 65 of the Rules of Court. It contends that the Court of Appeals

committed grave abuse of discretion when it granted private respondents' motion for extension of time to file

petition for certiorari as the Court of Appeals had no power to grant something that had already been expressly

deleted from the rules.

We agree.

Rules of procedure must be faithfully complied with and should not be discarded with the mere expediency of

claiming substantial merit. 8 As a corollary, rules prescribing the time for doing specific acts or for taking certain

proceedings are considered absolutely indispensable to prevent needless delays and to orderly and promptly

discharge judicial business. By their very nature, these rules are regarded as mandatory. 9

In De Los Santos v. Court of Appeals, 10 we ruled:

Section 4 of Rule 65 prescribes a period of 60 days within which to file a petition for certiorari. The 60-day

period is deemed reasonable and sufficient time for a party to mull over and to prepare a petition

asserting grave abuse of discretion by a lower court. The period was specifically set to avoid any

unreasonable delay that would violate the constitutional rights of the parties to a speedy

disposition of their case. (emphasis supplied)

While the proper courts previously had discretion to extend the period for filing a petition for certiorari beyond

the 60-day period, 11 the amendments to Rule 65 underA.M. No. 07-7-12-SC disallowed extensions of time to

file a petition for certiorari with the deletion of the paragraph that previously permitted such extensions.

Section 4, Rule 65 previously read:

2

SEC. 4.When and where petition filed. — The petition shall be filed not later than sixty (60) days from notice of

the judgment or resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion

is required or not, the sixty (60) day period shall be counted from notice of the denial of said motion.

The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a

corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as

defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid of

its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts

or omissions of a quasi-judicial agency, and unless otherwise provided by law or these rules, the petition shall be

filed in and cognizable only by the Court of Appeals.

No extension of time to file the petition shall be granted except for compelling reason and in no

case exceeding 15 days. 12 (emphasis supplied)

With its amendment under A.M. No. 07-7-12-SC, it now reads:

SEC. 4.When and where to file petition. — The petition shall be filed not later than sixty (60) days from notice of

the judgment or resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion

is required or not, the sixty (60) day period shall be counted from the notice of the denial of the motion.

If the petition relates to an act or an omission of a municipal trial court or of a corporation, a board, an officer or

a person, it shall be filed with the Regional Trial Court exercising jurisdiction over the territorial area as defined

by the Supreme Court. It may also be filed in the Court of Appeals or with the Sandiganbayan, whether or not

the same is in aid of the court's appellate jurisdiction. If the petition involves an act or an omission of a quasi-

judicial agency, unless otherwise provided by law or these rules, the petition shall be filed with and be

cognizable only by the Court of Appeals.

In election cases involving an act or omission of a municipal or a regional trial court, the petition shall be filed

exclusively with the Commission on Elections, in aid of its appellate jurisdiction.

As a rule, an amendment by the deletion of certain words or phrases indicates an intention to change its

meaning. It is presumed that the deletion would not have been made if there had been no intention to effect a

change in the meaning of the law or rule. The amended law or rule should accordingly be given a construction

different from that previous to its amendment. 13

If the Court intended to retain the authority of the proper courts to grant extensions under Section 4 of Rule 65,

the paragraph providing for such authority would have been preserved. The removal of the said paragraph

under the amendment by A.M. No. 07-7-12-SC of Section 4, Rule 65 simply meant that there can no longer be

any extension of the 60-day period within which to file a petition for certiorari.

The rationale for the amendments under A.M. No. 07-7-12-SC is essentially to prevent the use (or abuse) of the

petition for certiorari under Rule 65 to delay a case or even defeat the ends of justice. Deleting the paragraph

allowing extensions to file petition on compelling grounds did away with the filing of such motions. As the Rule

now stands, petitions for certiorari must be filed strictly within 60 days from notice of judgment or from the

order denying a motion for reconsideration.

In granting the private respondents' motion for extension of time to file petition for certiorari, the Court of

Appeals disregarded A.M. No. 07-7-12-SC. The action amounted to a modification, if not outright reversal, by the

Court of Appeals of A.M. No. 07-7-12-SC. In so doing, the Court of Appeals arrogated to itself a power it did not

possess, a power that only this Court may exercise. 14 For this reason, the challenged resolutions dated August

7, 2008 and October 22, 2008 were invalid as they were rendered by the Court of Appeals in excess of its

jurisdiction.

Even assuming that the Court of Appeals retained the discretion to grant extensions of time to file a petition

for certiorari for compelling reasons, the reasons proffered by private respondents' counsel did not qualify as

3

compelling. Heavy workload is relative and often self-serving. 15 Standing alone, it is not a sufficient reason to

deviate from the 60-day rule. 16

As to the other ground cited by private respondents' counsel, suffice it to say that it was a bare allegation

unsubstantiated by any proof or affidavit of merit. Besides, they could have filed the petition on time with a

motion to be allowed to litigate in forma pauperis. While social justice requires that the law look tenderly on the

disadvantaged sectors of society, neither the rich nor the poor has a license to disregard rules of procedure. The

fundamental rule of human relations enjoins everyone, regardless of standing in life, to duly observe procedural

rules as an aspect of acting with justice, giving everyone his due and observing honesty and good faith. 17 For

indeed, while technicalities should not unduly hamper our quest for justice, orderly procedure is essential to the

success of that quest to which all courts are devoted. 18

WHEREFORE, the petition is hereby GRANTED. The resolutions dated August 7, 2008 and October 22, 2008 of

the Court of Appeals in CA-G.R. SP No. 104510 areREVERSED and SET ASIDE and the petition in the said case

is ordered DISMISSED for having been filed out of time. SO ORDERED.

||| (Laguna Metts Corp. v. Court of Appeals, G.R. No. 185220, [July 27, 2009], 611 PHIL 530-538)

[G.R. No. 182382-83. February 24, 2010.]

JAIME S. DOMDOM, petitioner, vs. HON. THIRD AND FIFTH DIVISIONS OF THE SANDIGANBAYAN,

COMMISSION ON AUDIT and THE PEOPLE OF THE PHILIPPINES, respondents.

DECISION

CARPIO MORALES, J p:

By Affidavit of February 15, 2002, Hilconeda P. Abril, State Auditor V of the Commission on Audit (COA) assigned

at the Philippine Crop Insurance Corporation (PCIC), requested the Office of the Ombudsman to conduct a

preliminary investigation on the transactions-bases of the claims of Jaime S. Domdom (petitioner) for

miscellaneous and extraordinary expenses as a Director of PCIC, the receipts covering which were alleged to be

tampered. 1

After preliminary investigation, the Office of the Ombudsman found probable cause to charge petitioner with

nine counts of estafa through falsification of documents in view of irregularities in nine supporting receipts for

his claims for miscellaneous and extraordinary expenses, after verification with the establishments he had

transacted with. It thus directed the filing of the appropriate Informations with the Sandiganbayan. 2

The Informations were separately raffled and lodged among the five divisions of the Sandiganbayan. The First,

Second and Fifth Divisions granted petitioner's Motions for Consolidation of the cases raffled to them with that

having the lowest docket number, SB-07-CRM-0052, which was raffled to the Third Division. 3

The Sandiganbayan Third Division disallowed the consolidation, however, by Resolutions dated February 12 and

May 8, 2008, it holding mainly that the evidence in the cases sought to be consolidated differed 4 from that to

be presented in the one which bore the lowest docket number. It is gathered from the records that the

Sandiganbayan Fourth Division also denied petitioner's Motion for Consolidation. 5

Petitioner thus seeks relief from this Court via the present Petition for Certiorari, with prayer for temporary

restraining order (TRO) and/or writ of preliminary injunction, to enjoin the different divisions of the

Sandiganbayan from further proceeding with the cases against him during the pendency of this petition. 6

Petitioner argues that, among other things, all the cases against him arose from substantially identical series of

transactions involving alleged overstatements of miscellaneous and extraordinary expenses.

4

Respondent People of the Philippines (People), in its Comment, 7 counters that petitioner failed to file a motion

for reconsideration which is a condition precedent to the filing of a petition for certiorari; that the petition was

filed out of time since a motion for extension to file such kind of a petition is no longer allowed; that

consolidation is a matter of judicial discretion; and that the proceedings in the different divisions of the

Sandiganbayan may proceed independently as the Informations charged separate crimes committed on separate

occasions.

In the meantime, the Court issued a TRO 8 enjoining all divisions of the Sandiganbayan from further proceeding

with the trial of the cases against petitioner until further orders.

Prefatorily, the People raises procedural questions which the Court shall first address.

Concededly, the settled rule is that a motion for reconsideration is a condition sine qua non for the filing of a

petition for certiorari, its purpose being to grant an opportunity for the court a quo to correct any actual or

perceived error attributed to it by a re-examination of the legal and factual circumstances of the case. 9

The rule is, however, circumscribed by well-defined exceptions, such as where the order is a patent nullity

because the court a quo had no jurisdiction; where the questions raised in the certiorari proceeding have

been duly raised and passed upon by the lower court, or are the same as those raised and passed upon

in the lower court; where there is an urgent necessity for the resolution of the question, and any

further delay would prejudice the interests of the Government or of the petitioner, or the subject matter

of the action is perishable; where, under the circumstances, a motion for reconsideration would be useless;

where the petitioner was deprived of due process and there is extreme urgency for relief; where, in a criminal

case, relief from an order of arrest is urgent and the grant of such relief by the trial court is improbable; where

the proceedings in the lower court are a nullity for lack of due process; where the proceedings were ex parte or

in which the petitioner had no opportunity to object; and where the issue raised is one purely of law or

where public interest is involved. 10

The Court finds that the issue raised by petitioner had been duly raised and passed upon by the

Sandiganbayan Third Division, it having denied consolidation in two resolutions; that the issue calls

for resolution and any further delay would prejudice the interests of petitioner; and that the issue

raised is one purely of law, the facts not being contested. There is thus ample justification for relaxing the

rule requiring the prior filing of a motion for reconsideration.

On the People's argument that a motion for extension of time to file a petition for certiorari is no longer allowed,

the same rests on shaky grounds. Supposedly, the deletion of the following provision in Section 4 of Rule 65

by A.M. No. 07-7-12-SC 11 evinces an intention to absolutely prohibit motions for extension:

"No extension of time to file the petition shall be granted except for the most compelling reason and in no case

exceeding fifteen (15) days."

The full text of Section 4 of Rule 65, as amended by A.M. No. 07-7-12-SC, reads:

Sec. 4. When and where to file the petition. — The petition shall be filed not later than sixty (60) days from

notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed,

whether such motion is required or not, the petition shall be filed not later than sixty (60) days counted from the

notice of the denial of the motion.

If the petition relates to an act or an omission of a municipal trial court or of a corporation, a board, an officer or

a person, it shall be filed with the Regional Trial Court exercising jurisdiction over the territorial area as defined

by the Supreme Court. It may also be filed with the Court of Appeals or with the Sandiganbayan, whether or not

the same is in aid of the court's appellate jurisdiction. If the petition involves an act or an omission of a quasi-

judicial agency, unless otherwise provided by law or these rules, the petition shall be filed with and be

cognizable only by the Court of Appeals.

5

In election cases involving an act or an omission of a municipal or a regional trial court, the petition shall be filed

exclusively with the Commission on Elections, in aid of its appellate jurisdiction. (underscoring supplied)

That no mention is made in the above-quoted amended Section 4 of Rule 65 of a motion for extension, unlike in

the previous formulation, does not make the filing of such pleading absolutely prohibited. If such were the

intention, the deleted portion could just have simply been reworded to state that "no extension of time to file the

petition shall be granted." Absent such a prohibition, motions for extension are allowed, subject to the Court's

sound discretion. The present petition may thus be allowed, having been filed within the extension sought and,

at all events, given its merits.

In Teston v. Development Bank of the Philippines, 12 the Court laid down the requisites for the consolidation of

cases, viz.:

A court may order several actions pending before it to be tried together where they arise from the same act,

event or transaction, involve the same or like issues, and depend largely or substantially on the

same evidence, provided that the court has jurisdiction over the cases to be consolidated and that a joint trial

will not give one party an undue advantage or prejudice the substantial rights of any of the parties. (emphasis

and underscoring supplied.)

The rule allowing consolidation is designed to avoid multiplicity of suits, to guard against oppression or abuse, to

prevent delays, to clear congested dockets, and to simplify the work of the trial court — in short, the attainment

of justice with the least expense and vexation to the parties-litigants.

Thus, in Philippine Savings Bank v. Mañalac, Jr., 13 the Court disregarded the technical difference between an

action and a proceeding, and upheld the consolidation of a petition for the issuance of a writ of possession with

an ordinary civil action in order to achieve a more expeditious resolution of the cases.

In the present case, it would be more in keeping with law and equity if all the cases filed against petitioner were

consolidated with that having the lowest docket number pending with the Third Division of the Sandiganbayan.

The only notable differences in these cases lie in the date of the transaction, the entity transacted

with andamount involved. The charge and core element are the same — estafa through falsification of

documents based on alleged overstatements of claims for miscellaneous and extraordinary expenses. Notably,

the main witness is also the same — Hilconeda P. Abril.

It need not be underscored that consolidation of cases, when proper, results in the simplification of proceedings

which saves time, the resources of the parties and the courts, and a possible major abbreviation of trial. It

contributes to the swift dispensation of justice, and is in accord with the aim of affording the parties a just,

speedy and inexpensive determination of their cases before the courts. Above all, consolidation avoids the

possibility of rendering conflicting decisions in two or more cases which would otherwise require a single

judgment. 14

WHEREFORE, the petition is GRANTED. The Third Division of the Sandiganbayan is DIRECTED to allow the

consolidation of the cases against petitioner for estafathrough falsification of documents with SB-07-CRM-0052,

which has the lowest docket number pending with it. All other Divisions of the Sandiganbayan are accordingly

ORDERED to forward the subject cases to the Third Division. SO ORDERED.

||| (Domdom v. Sandiganbayan, G.R. No. 182382-83, [February 24, 2010])

[G.R. No. 192908. August 22, 2012.]

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF PUBLIC WORKS AND

HIGHWAYS (DPWH), petitioner, vs. ST. VINCENT DE PAUL COLLEGES, INC., respondent.

DECISION

6

REYES, J p:

Before the Court is a petition for review on certiorari 1 under Rule 45 of the Rules of Court, where petitioner

Republic of the Philippines (Republic), represented by the Department of Public Works and Highways through

the Office of the Solicitor General, questions the resolutions of the Court of Appeals (CA) in CA-G.R. SP No.

108499, to wit:

1.Resolution dated October 30, 2009 2 dismissing petitioner's petition for certiorari under Rule 65 for being filed

out of time; and

2.Resolution dated July 15, 2010 3 denying petitioner's motion for reconsideration.

Antecedent Facts

The instant case arose from two cases filed by the Republic seeking expropriation of certain properties in the

name of St. Vincent de Paul Colleges, Inc. (St. Vincent). In Civil Case No. 0062-04, the Republic sought to

expropriate 1,992 square meters out of a total area of 6,068 square meters of land for the construction of the

Manila-Cavite Toll Expressway Project (MCTEP). Said property belongs to St. Vincent covered by TCT No. T-

821169 and located in Binakayan, Kawit, Cavite. In Civil Case No. 0100-04, on the other hand, the Republic

sought to expropriate 2,450 square meters out of a total area of 9,039 square meters, also belonging to St.

Vincent and covered by TCT No. T-821170. Said property adjoins the property subject of Civil Case No. 0062-04.

Subsequently, the Republic filed in both cases an amended complaint alleging that the subject land originated

from a free patent title and should be adjudicated to it without payment of just compensation pursuant to

Section 112 of Commonwealth Act No. 141.

On August 9, 2005, the Republic filed in Civil Case No. 0062-04 a motion for the issuance of an order of

expropriation. 4 It was granted by the trial court per Order 5dated August 16, 2005, ruling that the Republic has

a lawful right to take the 1,992 square meters portion of the subject property, with "no pronouncement as to

just compensation" since the subject property originated from a free patent. 6 A motion for the issuance of an

order of expropriation was likewise filed by the Republic in Civil Case No. 0100-04 but before this could be

resolved, the Republic moved to consolidate the two cases, which was granted by the trial court. 7

On November 16, 2006, the trial court denied St. Vincent's motion for reconsideration of its Order dated August

16, 2005 granting expropriation. 8 As alleged in the petition, no appeal was taken by St. Vincent from said

orders. 9

After almost 2 years, or on July 28, 2008, St. Vincent filed a Manifestation with Motion for Clarification of the

Order dated August 16, 2005, 10 contending that although it does not oppose the ruling regarding the

determination of public purpose and the Republic's right to expropriate the subject land, it, however, claims that

it is entitled to just compensation.

Meanwhile, the Republic attempted to implement the Order dated August 16, 2005 by entering the subject

portion of St. Vincent's property. Aggrieved, the latter demanded upon the Republic and its agents to

immediately vacate, and remove any and all equipment or structures they introduced on its property in a

demand-letter11 dated October 3, 2008.

Due to St. Vincent's refusal to honor the order of expropriation, the Republic filed an urgent motion for the

issuance of a writ of possession, which was denied by the lower court in its Order 12 dated November 25, 2006

[2008]. The lower court, however, modified its Order dated August 16, 2005 and required the Republic to

immediately pay St. Vincent in an amount equivalent to one hundred percent (100%) of the value of the

property sought to be expropriated. The Republic moved for reconsideration but it was denied by the lower court

per Order 13 dated January 29, 2009 for lack of factual and legal basis.

Seeking to avail the extra ordinary remedy of certiorari under Rule 65 of the Rules of Court, the Republic filed

with the CA a motion for additional time of fifteen (15) days within which to file its petition. The CA granted the

7

motion in its Resolution 14 dated April 30, 2009 and the Republic was given a non-extensible period of fifteen

(15) days or until May 4, 2009 within which to file its petition for certiorari.

On April 30, 2009, the Republic filed its petition for certiorari assailing the lower court's orders dated November

25, 2008 and January 29, 2009 for having been issued with grave abuse of discretion amounting to lack or in

excess of jurisdiction.

On June 19, 2009, the CA, motu proprio, issued a Resolution 15 ordering the Republic to show cause why its

petition for certiorari should not be dismissed for being filed out of time, pursuant to A.M. No. 07-7-12-SC.

The Republic filed its Compliance with Explanation 16 dated July 1, 2009 pleading for the relaxation of the rules

by reason of the transcendental importance of the issues involved in the case and in consideration of substantial

justice. St. Vincent filed its Comment/Opposition 17 dated July 15, 2009 alleging among others that the said

explanation is merely pro forma due to the Republic's failure to justify its explanation.

On October 30, 2009, the CA rendered the assailed resolution dismissing the Republic's petition for certiorari on

the ground that the petition was filed out of time inasmuch as extensions of time are now disallowed by A.M.

No. 07-7-12-SC 18 and as applied in Laguna Metts Corporation v. Court of Appeals. 19

On November 26, 2009, the Republic filed its motion for reconsideration alleging that it merely relied in good

faith on the appellate court's resolution granting the former an additional period of fifteen (15) days within which

to file the subject petition.

On July 15, 2010, the CA rendered the assailed resolution denying the Republic's motion for reconsideration,

stating that it cannot disobey the ruling in Laguna Metts Corporation. 20

Hence, this petition.

The Republic relies on the CA resolution granting its motion for extension of time and upon the strength of the

substantial merits of its petition. The Republic also invokes Domdom v. Third and Fifth Divisions of the

Sandiganbayan, 21 where the Court ruled that absent a prohibition, motions for extensions are allowed, subject

to the Court's sound discretion.

St. Vincent, however, contends that the present petition fails to neither allege any circumstance nor state any

justification for the deliberate disregard of a very elementary rule of procedure like Section 4 of Rule 65 of the

Rules of Court. And in the absence of any such circumstance or justification, the general rule on pro

formamotions/pleadings must apply.

The Issue

The Republic discussed the substantial merits of its case; however, the CA did no more than include such

matters in its narration of facts, and neither did St. Vincent dwell on said issues. Hence, the only issue to be

resolved in this petition is whether the CA committed a reversible error when it dismissed the Republic's petition

forcertiorari for being filed out of time, pursuant to A.M. No. 07-7-12-SC.

The Court's Ruling

We GRANT the petition.

The Court notes that the CA Resolution dated April 30, 2009, which initially granted the Republic's motion for

extension, was premised on the mistaken notion that the petition filed by the latter was one for petition for

review as a mode of appeal. The CA resolution stated, among others: "[P]rovided that this Motion for Extension

of Time to File Petition for Review is seasonably filed, as prayed for, . . . ." 22 Thus, the CA granted extension

inasmuch as motions for this purpose are allowed by the rules.23 On this score alone, the CA should have

admitted the petition filed by the Republic since the latter merely relied on its Resolution dated April 30, 2009

granting the extension prayed for.

8

Nevertheless, the CA subsequently dismissed the petition filed by the Republic on the ground that the same was

filed out of time, following A.M. No. 07-7-12-SC. In its Resolution dated July 15, 2010, which dismissed the

Republic's motion for reconsideration, the CA also relied on the ruling in Laguna Metts Corporation that the sixty

(60)-day period within which to file a petition for certiorari is non-extendible. The petitioner, however, insists

that Domdom allows extensions of time to file a petition.

In order to resolve the instant controversy, the Court deems it necessary to discuss the relationship between its

respective rulings in Laguna Metts Corporation andDomdom with respect to the application of the amendment

introduced by A.M. No. 07-7-12-SC to Section 4, Rule 65 of the Rules of Court.

Before said amendment, Section 4 of Rule 65 originally provides:

Sec. 4. When and where petition filed. — The petition shall be filed not later than sixty (60) days from notice of

the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed, whether such

motion is required or not, the sixty (60) day period shall be counted from notice of the denial of said motion.

The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a

corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as

defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid of

its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the acts

or omissions of a quasi-judicial agency, unless otherwise provided by law or these rules, the petition shall be

filed in and cognizable only by the Court of Appeals.

No extension of time to file the petition shall be granted except for compelling reason and in no case exceeding

fifteen (15) days.

As amended by A.M. No. 07-7-12-SC, Section 4 of Rule 65 now reads:

Sec. 4. When and where petition filed. — The petition shall be filed not later than sixty (60) days from notice of

the judgment or resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion

is required or not, the sixty (60) day period shall be counted from notice of the denial of said motion.

If the petition relates to an act or an omission of a municipal trial court or of a corporation, a board, an officer or

a person, it shall be filed with the Regional Trial Court exercising jurisdiction over the territorial area as defined

by the Supreme Court. It may also be filed with the Court of Appeals or with the Sandiganbayan, whether or not

the same is in aid of the court's appellate jurisdiction. If the petition involves an act or an omission of a quasi-

judicial agency, unless otherwise provided by law or these rules, the petition shall be filed with and be

cognizable only by the Court of Appeals.

In election cases involving an act or an omission of a municipal or a regional trial court, the petition shall be filed

exclusively with the Commission on Elections, in aid of its appellate jurisdiction.

In interpreting said amendment, the Court, in Laguna Metts Corporation, held that:

As a rule, an amendment by the deletion of certain words or phrases indicates an intention to change its

meaning. It is presumed that the deletion would not have been made if there had been no intention to effect a

change in the meaning of the law or rule. The amended law or rule should accordingly be given a construction

different from that previous to its amendment.

If the Court intended to retain the authority of the proper courts to grant extensions under Section 4 of Rule 65,

the paragraph providing for such authority would have been preserved. The removal of the said paragraph

under the amendment by A.M. No. 07-7-12-SC of Section 4, Rule 65 simply meant that there can no longer be

any extension of the 60-day period within which to file a petition for certiorari.

The rationale for the amendments under A.M. No. 07-7-12-SC is essentially to prevent the use (or abuse) of the

petition for certiorari under Rule 65 to delay a case or even defeat the ends of justice. Deleting the paragraph

9

allowing extensions to file petition on compelling grounds did away with the filing of such motions. As the Rule

now stands, petitions for certiorari must be filed strictly within 60 days from notice of judgment or

from the order denying a motion for reconsideration. 24(Citation omitted and emphasis ours)

Nevertheless, Domdomlater stated:

On the People's argument that a motion for extension of time to file a petition for certiorari is no longer allowed,

the same rests on shaky grounds. Supposedly, the deletion of the following provision in Section 4 of Rule 65

by A.M. No. 07-7-12-SC evinces an intention to absolutely prohibit motions for extension:

"No extension of time to file the petition shall be granted except for the most compelling reason and in no case

exceeding fifteen (15) days."

The full text of Section 4 of Rule 65, as amended by A.M. No. 07-7-12-SC, reads:

xxx xxx xxx

That no mention is made in the above-quoted amended Section 4 of Rule 65 of a motion for

extension, unlike in the previous for formulation, does not make the filing of such pleading

absolutely prohibited. If such were the intention, the deleted portion could just have simply been

reworded to state that "no extension of time to file the petition shall be granted." Absent such

prohibition, motions for extensions are allowed, subject to the Court's sound discretion. The

present petition may thus be allowed, having been filed within the extension sought and, at all

events, given its merits. 25 (Citation omitted and emphasis and underscoring ours)

What seems to be a "conflict" is actually more apparent than real. A reading of the foregoing rulings leads to the

simple conclusion that Laguna Metts Corporationinvolves a strict application of the general rule that petitions

for certiorari must be filed strictly within sixty (60) days from notice of judgment or from the order

denying a motion for reconsideration. Domdom, on the other hand, relaxed the rule and allowed an

extension of the sixty (60)-day period subject to the Court's sound discretion. 26

Labao v. Flores 27 subsequently laid down some of the exceptions to the strict application of the rule, viz.:

Under Section 4 of Rule 65 of the 1997 Rules of Civil Procedure, certiorari should be instituted within a period of

60 days from notice of the judgment, order, or resolution sought to be assailed. The 60-day period is

inextendible to avoid any unreasonable delay that would violate the constitutional rights of parties

to a speedy disposition of their case.

xxx xxx xxx

However, there are recognized exceptions to their strict observance, such as: (1) most persuasive and

weighty reasons; (2) to relieve a litigant from an injustice not commensurate with his failure to comply with the

prescribed procedure; (3) good faith of the defaulting party by immediately paying within a reasonable time from

the time of the default; (4) the existence of special or compelling circumstances; (5) the merits of the case; (6) a

cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules; (7)

a lack of any showing that the review sought is merely frivolous and dilatory; (8) the other party will not be

unjustly prejudiced thereby; (9) fraud, accident, mistake or excusable negligence without appellant's fault; (10)

peculiar legal and equitable circumstances attendant to each case; (11) in the name of substantial justice and

fair play; (12) importance of the issues involved; and (13) exercise of sound discretion by the judge guided by all

the attendant circumstances. Thus, there should be an effort on the part of the party invoking liberality to

advance a reasonable or meritorious explanation for his/her failure to comply with the rules. 28 (Citations

omitted and emphasis ours)

Note that Labao explicitly recognized the general rule that the sixty (60)-day period within which to file a petition

for certiorari under Rule 65 is non-extendible, only that there are certain exceptional circumstances, which may

call for its non-observance. Even more recently, in Mid-Islands Power Generation Corporation v. Court of

10

Appeals, 29 the Court, taking into consideration Laguna Metts Corporation and Domdom, "relaxed the

procedural technicalities introduced under A.M. No. 07-7-12-SC in order to serve substantial justice and

safeguard strong public interest" and affirmed the extension granted by the CA to the respondent Power One

Corporation due to the exceptional nature of the case and the strong public interest involved.

In Laguna Metts Corporation v. Court of Appeals, we explained that the reason behind the amendments

under A.M. No. 07-7-12-SC was to prevent the use or abuse of the remedy of petition for certiorari in order to

delay a case or even defeat the ends of justice. We thus deleted the clause that allowed an extension of the

period to file a Rule 65 petition for compelling reasons. Instead, we deemed the 60-day period to file as

reasonable and sufficient time for a party to mull over the case and to prepare a petition that

asserts grave abuse of discretion by a lower court. The period was specifically set and limited in order to

avoid any unreasonable delay in the dispensation of justice, a delay that could violate the constitutional right of

the parties to a speedy disposition of their case. . . . .

Nevertheless, in the more recent case of Domdom v. Sandiganbayan, we ruled that the deletion of

the clause in Section 4, Rule 65 by A.M. No. 07-7-12-SC did not, ipso facto, make the filing of a

motion for extension to file a Rule 65 petition absolutely prohibited. We held in Domdom that if

absolute proscription were intended, the deleted portion could have just simply been reworded to specifically

prohibit an extension of time to file such petition. Thus, because of the lack of an express prohibition, we

held that motions for extension may be allowed, subject to this Court's sound discretion, and only

under exceptional and meritorious cases.

Indeed, we have relaxed the procedural technicalities introduced under A.M. No. 07-7-12-SC in order to serve

substantial justice and safeguard strong public interest. . . .:

xxx xxx xxx

The present Petition involves one of those exceptional cases in which relaxing the procedural rules

would serve substantial justice and safeguard strong public interest. . . . Consequently, in order to protect

strong public interest, this Court deems it appropriate and justifiable to relax the amendment of Section 4, Rule

65 underA.M. No. 07-7-12-SC, concerning the reglementary period for the filing of a Rule 65 petition.

Considering that the imminent power crisis is an exceptional and meritorious circumstance, the parties herein

should be allowed to litigate the issues on the merits. Furthermore, we find no significant prejudice to the

substantive rights of the litigants as respondent was able to file the Petition before the CA within

the 15-day extension it asked for. We therefore find no grave abuse of discretion attributable to the CA

when it granted respondent Power One's Motion for Extension to file its Petition for Certiorari. 30 (Citations

omitted and emphasis ours)

To reiterate, under Section 4, Rule 65 of the Rules of Court and as applied in Laguna Metts Corporation, the

general rule is that a petition for certiorari must be filed within sixty (60) days from notice of the judgment,

order, or resolution sought to be assailed. Under exceptional circumstances, however, and subject to the sound

discretion of the Court, said period may be extended pursuant to Domdom, Labao and Mid-Islands Power cases.

Accordingly, the CA should have admitted the Republic's petition: first, due to its own lapse when it granted the

extension sought by the Republic per Resolution dated April 30, 2009; second, because of the public interest

involved, i.e., expropriation of private property for public use (MCTEP); and finally, no undue prejudice or delay

will be caused to either party in admitting the petition.

WHEREFORE, premises considered, the petition is GRANTED. The Resolutions dated October 30, 2009 and

July 15, 2010 of the Court of Appeals in CA-G.R. SP No. 108499 are NULLIFIED. The Court of Appeals is

hereby ORDERED to REINSTATE and ADMIT the petition for certiorari filed by the Republic of the Philippines

in CA-G.R. SP No. 108499 and to proceed with the case with dispatch. SO ORDERED.

||| (Republic v. St. Vincent De Paul Colleges, Inc., G.R. No. 192908, [August 22, 2012])

11

Surety Bond Not Necessary on Certiorari

[G.R. No. 173189. February 13, 2013.]

JONATHAN I. SANG-AN, petitioner, vs. EQUATOR KNIGHTS DETECTIVE AND SECURITY AGENCY,

INC., respondent.

DECISION

BRION, J p:

Before the Court is the petition for review on certiorari 1 filed by petitioner Jonathan I. Sang-an assailing the

decision 2 dated September 29, 2005 and the resolution 3dated May 29, 2006 of the Court of Appeals (CA) in

CA-G.R. SP. No. 86677. The CA set aside the decision 4 dated December 15, 2003 of the National Labor

Relations Commission (NLRC) and reinstated the decision 5 dated July 30, 2001 of Labor Arbiter Geoffrey P.

Villahermosa (LA).

The Facts

Jonathan was the Assistant Operation Manager of respondent Equator Knights Detective and Security Agency,

Inc. (Equator). He was tasked, among others, with the duty of assisting in the operations of the security

services; he was also in charge of safekeeping Equator's firearms.

On April 21, 2001, Equator discovered that two firearms were missing from its inventory. The investigation

revealed that it was Jonathan who might have been responsible for the loss. 6 On April 24, 2001, Jonathan

was temporarily suspended from work pending further investigation.

On May 8, 2001, while Jonathan was under suspension, a security guard from Equator was apprehended by

policemen for violating the Commission on Elections' gun ban rule. The security guard stated in his

affidavit 7 that the unlicensed firearm had been issued to him by Jonathan.

On May 24, 2001, Jonathan filed with the NLRC a complaint for illegal suspension with prayer for

reinstatement. 8 In his position paper, however, he treated his case as one for illegal dismissal and alleged

that he had been denied due process when he was dismissed. 9 Equator, on the other hand, argued that

Jonathan's dismissal was not illegal but was instead for a just cause under Article 282 of the Labor Code. 10

On July 30, 2001, the LA rendered a decision 11 dismissing the complaint. It declared that no illegal

dismissal took place as Jonathan's services were terminated pursuant to a just cause. The LA found that

Jonathan was dismissed due to the two infractions he committed:

The basis for the termination of the complainant was first, when he was suspended when he issued a firearm

[to] a security guard and then replaced it with another one, then took the respondent['s] firearm with him and

since then both firearms were lost. . . . .

xxx xxx xxx

His second offense which resulted in his being terminated was when he issued an unlicensed firearm to a

Security Guard stationed in one of the business establishment[s] in Bais City which is a client of the respondents.

xxx xxx xxx

WHEREFORE, in the light of the foregoing, judgment is hereby rendered DISMISSING this case for lack of legal

and factual basis. 12

Jonathan appealed the LA's decision to the NLRC, contending that no charge had been laid against him; there

was no hearing or investigation of any kind; and he was not given any chance or opportunity to defend himself.

12

The NLRC sustained the findings of the LA that there had been just cause for his dismissal.

However, it found that Jonathan had been denied his right to due process when he was dismissed.

It held that Equator's letter informing him of his temporary suspension until further notice did not satisfy the

requirements of due process for a valid dismissal. Thus, the NLRC modified the LA's decision and ordered

Equator to pay Jonathan backwages from April 24, 2001 until the date of the NLRC's decision. Equator moved for

reconsideration but the NLRC denied the motion, prompting the filing of a petition for certiorari under Rule 65 of

the Rules of Court with the CA. Equator argued that the NLRC committed grave abuse of discretion when it

found that Jonathan had been denied procedural due process.

The CA reversed the decision of the NLRC, finding that Equator substantially complied with the procedural

requirements of due process. It found that the letter given to Jonathan did not mean that he had been

dismissed; rather, he was only suspended — the very reason for the case for illegal suspension Jonathan filed

before the LA.

The CA found that Jonathan filed his complaint for illegal suspension on May 2, 2001. During the pendency of

the illegal suspension case before the LA, Jonathan committed another offense on May 8, 2001 when he issued

the unlicensed firearm to Equator's security guard. The CA found that Equator's June 7, 2001 position paper

brought Jonathan's second offense before the LA for resolution; thus, Jonathan was not denied due

process. The CA reinstated the LA's decision dismissing Jonathan's complaint. Jonathan filed a motion

for reconsideration which the CA denied. He thereafter filed the present petition.

The Parties' Arguments

Jonathan contends that when Equator filed a petition for certiorari under Rule 65 of the Rules of Court alleging

grave abuse of discretion by the NLRC, it failed to post a cash or surety bond as required by Article 223 of the

Labor Code. Without complying with this condition, the petition for certiorari should have been dismissed

outright. Also, Jonathan contends that the CA's findings of fact are contrary to the findings of fact by the NLRC.

Since the findings of fact of quasi-judicial agencies are accorded respect and finality, he argues that the NLRC's

decision must be sustained.

Equator, on the other hand, submits that the rule on posting of cash or surety bond as required by Article 223 of

the Labor Code is not applicable in a petition forcertiorari under Rule 65 of the Rules of Court. It also submits

that both the LA and the NLRC concur in finding just cause for the dismissal of Jonathan; hence, Jonathan's

subsequent dismissal is valid.

The Issues

Given the parties' arguments, the case poses the following issues for the Court's resolution:

1.whether the posting of a cash or surety bond is required for the filing of a petition for certiorari under Rule 65

of the Rules of Court with the CA; and

2.whether Jonathan was validly dismissed.

The Court's Ruling

We find the petition partially meritorious.

A cash/surety bond is not needed in a

Petition for Certiorari under Rule 65

The requirement of a cash or surety bond as provided under Article 223 of the Labor Code only applies to

appeals from the orders of the LA to the NLRC. It does not apply to special civil actions such as a petition

for certiorari under Rule 65 of the Rules of Court. In fact, nowhere under Rule 65 does it state that a bond is

required for the filing of the petition.

13

A petition for certiorari is an original and independent action and is not part of the proceedings that resulted in

the judgment or order assailed before the CA. It deals with the issue of jurisdiction, and may be directed against

an interlocutory order of the lower court or tribunal prior to an appeal from the judgment, or to a final judgment

where there is no appeal or any plain, speedy or adequate remedy provided by law or by the rules.

Jonathan filed a complaint for

illegal dismissal

Contrary to the findings of the CA, Jonathan was not merely suspended but was dismissed from the service.

While Jonathan initially filed an action for illegal suspension, the position papers both parties filed treated the

case as one for illegal dismissal. Jonathan alleged in his position paper that "the [r]espondent illegally

SUSPENDED (DISMISSED) the . . . complainant[,]" and claimed that his dismissal lacked the required due

process. 13 Similarly, Equator's position paper states that after the commission of the second offense on May 8,

2001, "[management] made up a decision to dismiss [Jonathan]." 14 Even the LA treated the case before

him as "a case for illegal dismissal[.]" 15 In Equator's memorandum to this Court, it admitted that Jonathan was

dismissed. 16

We also find that Jonathan did not file his complaint for illegal suspension on May 2, 2001. The records of the

case disclose that the receiving date stamped on the complaint is May 24, 2001. The date relied upon by the CA,

May 2, 2001, was the date when the complaint was subscribed and sworn to before a notary public. 17 Due to

the second offense committed by Jonathan on May 8, 2001, Equator decided to dismiss him. Therefore, when

the LA tried the case, Jonathan had already been dismissed.

Equator failed to comply with the

procedural due process

In order to validly dismiss an employee, it is fundamental that the employer observe both substantive and

procedural due process — the termination of employment must be based on a just or authorized cause and the

dismissal can only be effected, after due notice and hearing. 18

This Court finds that Equator complied with the substantive requirements of due process when Jonathan

committed the two offenses.

Article 282 (A) of the Labor Code provides that an employee may be dismissed on the ground of serious

misconduct or willful disobedience of the lawful orders of his employer or representative in connection with his

work. Misconduct is improper or wrongful conduct; it is the transgression of some established and definite rule

of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere

error of judgment. The misconduct, to be serious within the meaning of the Labor Code, must be of such grave

and aggravated character and not merely trivial or unimportant. It is also important that the misconduct be in

connection with the employee's work to constitute just cause for his separation. 19

By losing two firearms and issuing an unlicensed firearm, Jonathan committed serious misconduct. He did not

merely violate a company policy; he violated the law itself (Presidential Decree No. 1866 or Codifying the Laws

on Illegal/Unlawful Possession, Manufacture, Dealing in, Acquisition or Disposition, of Firearms, Ammunition or

Explosives or Instruments Used in the Manufacture of Firearms, Ammunition or Explosives, and Imposing Stiffer

Penalties for Certain Violations Thereof and for Relevant Purposes), 20 and placed Equator and its employees at

risk of being made legally liable. Thus, Equator had a valid reason that warranted Jonathan's dismissal from

employment as Assistant Operation Manager.

The Court, however, finds that Equator failed to observe the proper procedure in terminating Jonathan's

services. Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides that:

Section 2.Standard of due process: requirements of notice. — In all cases of termination of employment, the

following standards of due process shall be substantially observed.

14

I.For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(a)A written notice served on the employee specifying the ground or grounds for termination, and giving to said

employee reasonable opportunity within which to explain his side;

(b)A hearing or conference during which the employee concerned, with the assistance of counsel if the employee

so desires, is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented

against him; and

(c)A written notice [of] termination served on the employee indicating that upon due consideration of all the

circumstances, grounds have been established to justify his termination. 21

Jurisprudence has expounded on the guarantee of due process, requiring the employer to furnish the employee

with two written notices before termination of employment can be effected: a first written notice that informs

the employee of the particular acts or omissions for which his or her dismissal is sought, and a second written

notice which informs the employee of the employer's decision to dismiss him. In considering whether the

charge in the first notice is sufficient to warrant dismissal under the second notice, the employer must afford the

employee ample opportunity to be heard.

A review of the records shows that Jonathan was not furnished with any written notice that informed him of the

acts he committed justifying his dismissal from employment. The notice of suspension given to Jonathan only

pertained to the first offense, i.e., the loss of Equator's firearms under Jonathan's watch. With respect to his

second offense (i.e., the issuance of an unlicensed firearm to Equator's security guard — that became the basis

for his dismissal), Jonathan was never given any notice that allowed him to air his side and to avail of the

guaranteed opportunity to be heard. That Equator brought the second offense before the LA does not serve as

notice because by then, Jonathan had already been dismissed.

In order to validly dismiss an employee, the observance of both substantive and procedural due process by the

employer is a condition sine qua non. Procedural due process requires that the employee be given a notice of

the charge against him, an ample opportunity to be heard, and a notice of termination. 22

Since Jonathan had been dismissed in violation of his right to procedural due process but for a just cause,

Equator should pay him nominal damages of P30,000.00, in accordance with Agabon v. NLRC. 23 The decision

of the NLRC, although final, was brought to the CA on a petition for certiorari and was eventually nullified for

grave abuse of discretion. When the CA ruled on the case, this Court had abandoned the ruling in Serrano v.

NLRC 24 in favor of the Agabon ruling.

WHEREFORE, we hereby PARTIALLY GRANT the petition. The decision dated September 29, 2005 and the

resolution dated May 29, 2006 of the Court of Appeals in CA-G.R. SP. No. 86677

are AFFIRMED with MODIFICATION. The employer, Equator Knights Detective and Security Agency, Inc.,

had sufficient basis to terminate the employment of Jonathan I. Sang-an whose dismissal is thus declared to be

substantively valid. However, he was denied his right to procedural due process for lack of the required notice of

dismissal. Consequently, Equator Knights Detective and Security Agency, Inc. is ordered to pay petitioner

Jonathan I. Sang-an P30,000.00 as nominal damages for its non-compliance with procedural due process. SO

ORDERED.

||| (Sang-an v. Equator Knights Detective and Security Agency, Inc., G.R. No. 173189, [February 13, 2013])

Appeal from the Decision of the NLRC

[G.R. No. 166096. September 11, 2008.]

PHILIPPINE NATIONAL BANK, petitioner, vs. RAMON BRIGIDO L. VELASCO, respondent.

D E C I S I O N

15

REYES, R.T., J p:

THIS is a tale of a bank officer-depositor clinging to his position after violating bank regulations and falsifying his

passbook to cover up a false transaction.

Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking

the reversal of the Decision 1 and Resolution 2 of the Court of Appeals (CA). The appealed decision reversed

those of the National Labor Relations Commission (NLRC) 3 and the Labor Arbiter 4 which dismissed the

complaint for illegal dismissal and damages of Ramon Brigido L. Velasco against Philippine National Bank (PNB).

The Facts

Ramon Brigido L. Velasco, a PNB audit officer, and his wife, Belen Amparo E. Velasco, maintained Dollar Savings

Account No. 010-714698-9 5 at PNB Escolta Branch. On June 30, 1995, while on official business at the Legazpi

Branch, he went to the PNB Ligao, Albay Branch and withdrew US$15,000.00 from the dollar savings account. At

that time, the account had a balance of US$15,486.07. The Ligao Branch is an off-line branch, i.e., one with no

network connection or computer linkage with other PNB branches and the head office. The transaction was

evidenced by an Interoffice Savings Account Withdrawal Slip, also known as the Ticket Exchange Center

(TEC). 6

On July 10, 1995, PNB Escolta Branch received the TEC covering the withdrawal. It was included among the

proofsheet entries of Cashier IV Ruben Francisco, Jr. The withdrawal was not, however, posted in the computer

of the Escolta Branch when it received said advice. This means that the withdrawal was not recorded. Thus, the

account of Velasco had an overstatement of US$15,000.00.

Sometime in September 1995, while Velasco was on a provincial audit, he claimed calling through phone a kin in

Manila who just arrived from abroad. This kin allegedly told him that his New York-based brother, Gregorio

Velasco, sent him various checks through his kin totaling US$15,000.00 and that the checks would just be

deposited in time in Velasco's account.

On October 6, 1995, Velasco updated his dollar savings account by depositing US$12.78, reflecting a balance of

US$15,486.01. He was allegedly satisfied with the updated balance, as he thought that the US$15,000.00 in his

account was the amount given by his brother.

On different dates, Subsequently, Velasco made several inter-branch withdrawals from the dollar savings

account, to wit:

PNB Branch Date Amount

PNB Legaspi November 7, 1995 US$2,000.00

PNB Legaspi November 13, 1995 3,329.97

Cash Dept. November 23, 1995 4,000.00

—————

Total US$9,329.97

=========

Mrs. Belen Velasco also withdrew several amounts on the dollar account, viz.:

PNB Branch Date Amount

PNB CEPZ December 6, 1995 US$11,494.00

PNB Frisco January 2, 1996 1,292.32

16

—————–

Total US$12,786.32

==========

Subsequently, the dollar savings account of the spouses was closed.

On February 6, 1996, in the course of conducting an audit at PNB Escolta Branch, Molina D. Salvador, a member

of the Internal Audit Department (IAD) of PNB, discovered that the inter-branch withdrawal made on June 30,

1995 by Velasco at PNB Ligao, Albay Branch in the amount of US$15,000.00 was not posted; and that no deposit

of said amount had been credited to the dollar savings account.

On February 7, 1996, Velasco was notified of the glitch when he reported at the IAD. He said it was only in the

evening that he was able to verify from his kin that the latter was not able to deposit in his account the

US$15,000.00. 7

The following day, or on February 8, 1996, Velasco went to Dolorita Donado, assistant vice president of the

Internal Audit Department and team leader of the Escolta Task Force, and delivered three (3) checks in the

amount of US$5,000.00 each or a total of US$15,000.00. However, Donato returned the checks to Velasco and

instructed him that he should personally deposit the checks.

On February 14, 1996, he deposited the checks and the amount was consequently applied to his unposted

withdrawal of US$15,000.00.

Meanwhile, on February 9, 1996, PNB vice president, B.C. Hermoso, required 8 Velasco to submit a written

explanation concerning the incident

On February 12, 1996, he submitted his sworn letter-explanation. 9 He described the inter-branch withdrawal at

PNB Ligao, Albay Branch on June 30, 1995 as "no-book",i.e., without the corresponding presentation to the bank

teller of the savings passbook. He stated, among others, that his withdrawal was accommodated as the

statement of account showed a balance of US$15,486.01, and that he is personally known to the officers and

staff, being a former colleague at the PNB Ligao, Albay Branch.

On February 27, 1996, PNB Ligao, Albay Branch division chief III, Rexor Quiambao, and financial specialist II,

Emma Gacer, and division chief II, including Renato M. Letada, confirmed the "no-book" withdrawal. 10

On March 5, 1996, PNB formally charged Velasco with "Dishonesty, Grave Misconduct, and/or Conduct Grossly

Prejudicial to the Best Interest of the Service for the irregular handling of Dollar Savings Account No. 010-

714698-9". 12 The administrative charge alleged that: (1) he transacted a no-book withdrawal against his Dollar

Savings Account No. 010-714698-9 at PNB Ligao, Albay Branch in violation of Section 1216 of the Manual of

Regulations for Banks; (2) in transacting the no-book withdrawal, he failed to present any letter of introduction

as required under General Circular 3-72/92; (3) the irregular inter-branch withdrawal was aggravated by the

failure of Escolta Branch to post/enter the withdrawal into the computer upon receipt of the TEC advice,

resulting in the overstatement of the account balance by US$15,000.00; and (4) since he was presumed to be

fully aware that neither the deposit nor withdrawal of the US$15,000.00 was reflected on the passbook, he was

able to appropriate the amount for his personal benefit, free of interest, to the damage and prejudice of PNB. 13

On April 8, 1996, PNB withheld his rice and sugar subsidy, dental/optical/outpatient medical benefits,

consolidated medical benefits, commutation of hospitalization benefits, clothing allowance, longevity pay,

anniversary bonus, Christmas bonus and cash gift, performance incentive award, and mid-year financial

assistance. 14 On April 10, 1996, he was placed under preventive suspension for a period of ninety (90)

days. 15

On May 2, 1996, Velasco submitted his sworn Answer 16 to the administrative charge against him. Unlike his

previous answer, he here claimed that his withdrawal on June 30, 1995 was "with passbook". As proof, he

17

attached a copy of his passbook 17 bearing the withdrawal entry of US$15,000.00 on June 30, 1995. Explaining

the inconsistency with his sworn letter-explanation on February 12, 1996, he said his initial answer was made

under pressing circumstances. He was unable to find his passbook which was then kept by his wife who could

not be contacted at that moment.

On October 2, 1996, the Administrative Adjudication Office (AAO) of PNB composed of Fernando R. Mangubat,

Jr., Wilfredo S. Verzosa, Celso D. Benologa, and Jesse L. Figueroa exonerated Velasco of the charges of

dishonesty and conduct prejudicial to the best interest of service. However, he was found guilty of grave

misconduct, mitigated by length of service and absence of actual loss to PNB. Thus, he was meted the penalty

of forced resignation with benefits. 18

On October 31, 1996, Velasco was formally notified of the findings of the AAO after its approval by the

management. As of that time, he had been employed with PNB for eighteen (18) years, holding the position

of Manager 1 of the IAD. He was earning P14,932.00 per month plus a monthly allowance of P3,940.00 or a

total salary of P18,872.00 per month.

On December 22, 1997, he filed a Complaint 19 against PNB for illegal suspension, illegal dismissal, and

damages before the NLRC.

Labor Arbiter, NLRC, and CA Dispositions

On July 9, 1999, Labor Arbiter Pablo C. Espiritu gave judgment, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered as follows:

1. Dismissing the complaint for illegal dismissal against respondents for want of merit.

2. Ordering PNB to pay complainant unpaid wages for the period May 12, 1996 to October 31, 1996 in the

amount of P103,796.00.

3. Dismissing complainant's claims for damages and other monetary claims for lack of merit.

SO ORDERED. 20

In his ruling, the Labor Arbiter opined that as an employee and officer of PNB for eighteen (18) long years,

Velasco is expected to know bank procedures, including the expected entries in a savings passbook. Even if it

should be assumed that he presented his passbook when he withdrew US$15,000.00 at the PNB Ligao Branch on

June 30, 1995, he should have known that there was something wrong with the amounts credited to his account

when he made an updated the on October 6, 1995. Being an audit officer, and fully aware of his withdrawal of

US$15,000.00, he should have made inquiries on the inconsistency of the entries in his passbook. 21

The Labor Arbiter also found as flimsy the argument that the additional US$15,000.00 was the amount given to

Velasco by his brother from the United States. As early as October 6, 1995, when he updated his passbook,

Velasco should have known that (1) his brother's checks in the amount of US$15,000.00 have not been

deposited in his dollar savings account and (2) he appears to have been improperly credited with

US$15,000.00. 22

Moreover, the Labor Arbiter held that the entry in the passbook purportedly reflecting the withdrawal of

US$15,000.00 is a forgery. It was done to conform to the defense of Velasco that he presented his passbook on

June 30, 1995. 23

On the charge of illegal suspension, the Labor Arbiter held that the preventive suspension of Velasco was

reasonable in view of the sensitive nature of his position. It was also necessary to protect the records of

PNB. 25 It follows that the withholding of his company benefits is reasonable. 26 Nonetheless, he should be

paid his salary from May 12, 1996 up to October 31, 1996. 27

His claim for damages and attorney's fees must be denied because PNB did not violate his rights. 28

18

Dissatisfied with the decision of the Labor Arbiter, both Velasco 29 and PNB 30 appealed to the NLRC.

On July 31, 2000, the NLRC affirmed with modification the Labor Arbiter decision, disposing, thus:

WHEREFORE, the decision appealed from is hereby MODIFIED to the extent that the award of unpaid salaries is

hereby REDUCED to the complainant's salaries from May 27, 1996 to July 31, 1996. Other dispositions in the

appealed decision stands (sic) affirmed. 31

In sustaining the Labor Arbiter, the NLRC held that Velasco's lack of knowledge of the non-posting of his

withdrawal is not credible. Even a cursory look at his passbook shows that no deposit of US$15,000.00 was ever

made. That there was still a balance of more than US$15,000.00 in his account after the withdrawal he made on

June 30, 1995 could only mean that the withdrawal was never posted. Worse, based also on the entries in his

passbook, it is clear that the withdrawal on June 30, 1995 was a "no-book" transaction. The withdrawal of

US$15,000.00 was not taken into consideration in the determination of the balance of June 30, 1995 and the

succeeding dates. Thus, it is clear that the entry in question was falsified. It was made merely to bolster his

subsequent claim that he presented his passbook when he withdrew on June 30, 1995. 32

The NLRC concluded that the falsification of the passbook shows deceit on the part of Velasco. He took

advantage of his position. The posting of the falsified entry could not have been made without, or was at least

facilitated by, his being an employee of the bank. Thus, his subsequent withdrawals amounted to losses on the

part of the bank. He made those withdrawals from his account with full knowledge that the balance of his

passbook of more than US$15,000.00 was attributed to the non-posting of the June 30, 1995 withdrawal. 33

The NLRC also held that he had been preventively suspended for more than thirty (30) days as of May 27, 1996.

Since he was paid his salaries from August 1, 1996 to October 31, 1996, he may recover only his salary from

May 27, 1996 to July 31, 1996. 34

Like the Labor Arbiter, the NLRC held that Velasco may not recover damages. His dismissal was not done

oppressively or in bad faith. Neither was he subjected to unnecessary embarrassment or humiliation. 35

His motion for reconsideration having been denied, Velasco elevated the matter to the CA by way of petition for

review on certiorari under Rule 43 of the Rules of Court.36 On April 22, 2004, the CA rendered the assailed

decision, the fallo stating, thus:

WHEREFORE, for the foregoing discussions, We REVERSE and SET ASIDE the findings of public respondent

NLRC and Labor Arbiter and hereby enter a decision ordering PNB to pay petitioner a separation pay equivalent

to half-month salary for every year of service, plus backwages from the time of his illegal termination up to the

finality of this decision.

SO ORDERED. 37

According to the CA, the failure of Velasco to present his passbook and a letter of introduction does not

constitute misconduct. Assuming for the sake of argument that he committed a serious misconduct in not

properly monitoring his account with ordinary diligence and prudence, the same may be said of PNB when it

failed to make the necessary posting of his withdrawal. 38 Lastly, the alleged offense of Velasco is not work-

related to constitute just cause for his dismissal. 39

Issues

PNB has filed the instant petition for review on certiorari, putting forth the following issues for Our

resolution, viz.:

I. WHETHER OR NOT THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN FINDING

THAT RESPONDENT HAS BEEN ILLEGALLY DISMISSED BY THE PETITIONERS.

II. WHETHER OR NOT THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN DIRECTING

PNB TO PAY RESPONDENT SEPARATION PAY AND BACKWAGES. 40 (Underscoring supplied)

19

We add a third issue which was raised by PNB before the CA but was, however, left unresolved: whether Velasco

took the correct recourse when he elevated the decision of the NLRC to the CA by way of petition for review

on certiorari under Rule 43.

Our Ruling

I. Appeal does not lie from the decision of the NLRC.

We first address the procedural question on the propriety of the Rule 43 petition. Rule 43 provides for appeal

from quasi-judicial agencies to the CA by way of petition for review. Petition for review on certiorari or appeal

by certiorari is a recourse to the Supreme Court under Rule 45.

The mode of appeal resorted to by Velasco is wrong because appeal is not the proper remedy in elevating to the

CA the decision of the NLRC. Section 2, Rule 43 of the 1997 Rules of Civil Procedure is explicit that Rule 43 "shall

not apply to judgments or final orders issued under the Labor Code of the Philippines".

The correct remedy that should have been availed of is the special civil action of certiorari under Rule 65. As this

Court held in the case of Pure Foods Corporation v. NLRC, 41 "the party may also seasonably avail of the special

civil action for certiorari, where the tribunal, board or officer exercising judicial functions has acted without or in

excess of its jurisdiction, or with grave abuse of discretion, and praying that judgment be rendered annulling or

modifying the proceedings, as the law requires, of such tribunal, board or officer". 42 In any case, St. Martin

Funeral Homes v. National Labor Relations Commission 43 settled any doubt as to the manner of elevating

decisions of the NLRC to the CA by holding that "the legislative intendment was that the special civil action

of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC". 44

That the decision of the NLRC is not subject to appeal could have been a ground for the CA to dismiss the

appeal of Velasco. 45 But even assuming, arguendo, that his petition could be liberally treated as one

for certiorari under Rule 65, the recourse should not have prospered.

II. Velasco committed serious misconduct, hence, his dismissal is justified.

Article 282 of the Labor Code enumerates the just causes where an employer may terminate the services of an

employee, 46 to wit:

a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or

representative in connection with his work;

b) Gross and habitual neglect by the employee of his duties;

c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized

representative;

d) Commission of a crime or offense by the employee against the person of his employer or any immediate

member of his family or his duly authorized representative; and

e) Other causes analogous to the foregoing.

In Austria v. National Labor Relations Commission, 47 the Court defined misconduct as "improper and wrongful

conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of

duty, willful in character, and implies wrongful intent and not mere error in judgment." 48 In Camus v. Civil

Service Board of Appeals, 49 misconduct was described as "wrong or improper conduct". 50 It implies a

wrongful intention and not a mere error of judgment. 51

Of course, ordinary misconduct would not justify the termination of the services of an employee. The law is

explicit that the misconduct should be serious. It is settled that in order for misconduct to be serious, "it must be

of such grave and aggravated character and not merely trivial or unimportant". 52 As amplified by

20

jurisprudence, the misconduct must (1) be serious; (2) relate to the performance of the employee's duties; and

(3) show that the employee has become unfit to continue working for the employer. 53

Measured by the foregoing yardstick, We rule that Velasco committed serious misconduct that warrants

termination from employment.

A. The misconduct is serious. Velasco violated bank rules when he transacted a "no-book" withdrawal by his

failure to present his passbook to the PNB Ligao, Albay Branch on June 30, 1995. Section 1216 of the Manual of

Regulations for Banks and Other Financial Intermediaries state that "[b]anks are prohibited from

issuing/accepting 'withdrawal authority slips' or any other similar instruments designed to effect withdrawals of

savings deposits without following the usual practice of requiring the depositors concerned to present their

passbooks and accomplishing the necessary withdrawal slips".

Further, he failed to present any letter of introduction as mandated under General Circular 3-72-92 which

requires that "[b]efore going out-of-town, the Depositor secures a Letter of Introduction from the branch/office

where his Peso Savings Account is maintained".

The presentation of passbook and letter of introduction is not without a valid reason. As aptly stated by the IAD

of PNB:

Considering that the PNB Ligao, Albay Branch is an offline branch, it is a must that an LOI and the passbook be

presented by the depositor before any withdrawal is allowed. This procedure is required in order for the

negotiating branch to determine or ascertain the available balance and the specimen signature of the

withdrawing party. Moreover, the maintaining branch upon issuance of the LOI shall place a "hold" on the

account in the computer as an internal control procedure. 54

True, a strict reading of General Circular 3-72-92 would lead one to conclude that only persons with peso

savings account are required to secure a letter of introduction. However, simple logic dictates that those

maintaining dollar savings account are also included. No cogent reason would be served by the rule if only

persons with peso savings account are required to get a letter of introduction. Otherwise, there can be a

circumvention of the rule. Nemo potest facere per alium qud non potest facere per directum. No one is allowed

to do indirectly what he is prohibited to do directly. Sinuman ay hindi pinapayagang gawin nang hindi

tuwiran ang ipinagbabawal gawin nang tuwiran.

As an audit officer, Velasco should be the first to ensure that banking laws, policies, rules and regulations, are

strictly observed and applied by its officers in the day-to-day transactions. The banking system is an

indispensable institution in the modern world. It plays a vital role in the economic life of every civilized nation.

Whether banks act as mere passive entities for the safekeeping and saving of money, or as active instruments of

business and commerce, they have become an ubiquitous presence among the citizenry, who have come to

regard them with respect and even gratitude and, most of all, confidence. 55

The CA, however, opined that the failure of Velasco to abide by the rules is not serious misconduct because (1)

from the admission of PNB itself, allowing bank personnel who are out-of-town to make a "no-book" transaction

without a letter of introduction is considered a common practice, and (2) the approving officers of PNB Ligao

Branch should have also been administratively charged considering that the "no-book" transaction could not

have pushed through without their approval. 56

In Santos v. San Miguel Corporation, 57 petitioner, in his defense, cited the prolonged practice of payroll

personnel, including persons in managerial levels, of encashing personal checks. Finding this argument

unmeritorious, the Court held that "[p]rolonged practice of encashing personal checks among respondent's

payroll personnel does not excuse or justify petitioner's misdeeds. Her willful and deliberate acts were in gross

violation of respondent's policy against encashment of personal checks of its personnel, embodied in its Cash

Department Memorandum dated September 6, 1989". 58 The Court even added that petitioner "cannot feign

ignorance of such memorandum as she is duty-bound to keep abreast of company policies related to financial

matters within the corporation". 59 We apply the same principle here.

21

Suffice it to state that the option of who to charge or punish belongs to PNB. As an employer, PNB is given the

latitude to determine who among its erring employees should be punished, to what extent and what penalty to

impose. 60 Too, by charging Velasco, PNB is not estopped from charging its other employees who might as well

have been remiss with their job.

Of course, We are not unaware that Velasco had a change of heart. In his sworn Letter-Explanation February 12,

1996, he admitted that his June 30, 1995 withdrawal of US$15,000.00 was a "no-book" transaction. However, in

his sworn Answer dated April 30, 1996, he claimed that he actually presented his passbook when he withdrew

on June 30, 1995.

To recall, he was charged with dishonesty, grave misconduct, and/or conduct grossly prejudicial to the best

interest of the service for irregularly handling his dollar savings account. Thus, it is safe to assume that when he

prepared his February 12, 1996 sworn Letter-Explanation, the circumstances surrounding his June 30, 1995

withdrawal at PNB Ligao, Albay Branch were still fresh on his mind. The allegations against him were serious,

which should have put him on guard from preparing a haphazard explanation. He should have been mindful that

dire consequences would surely befall him should the charges against him be proven. Lest it be forgotten, the

no-book withdrawal was confirmed by the concerned officers of PNB Ligao, Albay Branch, namely, Quiambao,

and Gacer, and including Letada. These circumstances, taken together, lead to no other conclusion than that

Velasco changed his explanation from "no-book" to "with book" transaction after realizing that he violated bank

rules and regulations.

Perez v. People, 61 is illustrative on this score. Perez, an acting municipal treasurer, submitted two contradicting

answers explaining the location of the missing funds under his custody and control: the first, reiterating his

previous verbal admission before the audit team that part of the money was used to pay for the loan of his late

brother, another portion was spent for the food of his family, and the rest for his medicine; and the second,

claiming that the alleged missing amount was in the possession and custody of his accountable personnel at the

time of the audit examination.

This Court held that the sudden turnaround of Perez was merely an afterthought. He "only changed his story to

exonerate himself, after realizing that his first Answer put him in a hole, so to speak". 62 Neither did the Court

believe that his alleged sickness affected the preparation of his first Answer. Perez "presented no convincing

evidence that his disease at the time he formulated that Answer diminished his capacity to formulate a true,

clear and coherent response to any query. In fact, its contents merely reiterated his verbal explanation to the

auditing team on January 5, 1989 on how he disposed of the missing funds". 63

We find no cogent reason to depart from Our ruling in Perez. The claim of Velasco that his initial answer was

made under pressing circumstances is too flimsy an excuse. It partakes of the nature of an alibi. As such, it

constitutes a self-serving negative evidence which cannot he accorded greater evidentiary weight than the

declaration of credible witnesses who testified on affirmative matters. 64 The Court has consistently frowned

upon the defense of alibi, and received it with caution, not only because it is inherently weak and unreliable but

also because it can be easily fabricated. 65

Also worth noting is that Velasco never imputed any ill motive on the part of Rexor, Gacer, and Letada who

collectively narrated that the June 30, 1995 withdrawal was a no-book transaction. They confirmed his earlier

version that he did not present his passbook when he withdrew the US$15,000.00 on June 30, 1995. In any

case, the fact that he changed his stance puts his credibility in doubt. Was he lying when he submitted his sworn

letter-explanation of February 12, 1996, or when he submitted his sworn Answer dated April 30, 1996? Allegans

contraria non est audiendus. He is not to be heard who alleges things contradictory to each other. Hindi dapat

pakinggan ang nagsasabi ng mga bagay na salungat sa isa't-isa.

Velasco did not only violate bank rules and regulations. What compounds his offense was his unusual silence. He

never informed PNB about the huge overstatement of US$15,000.00 in his account. He updated his passbook on

October 6, 1995 by depositing US$12.78. Thus, as early as that date, he should have known that something was

wrong with the credited balance in his passbook and reported it immediately to the concerned officers of PNB.

22

What he did, instead, was to keep mum until PNB discovered the incident and notified him on February 7, 1996,

or almost eight (8) months after his no-book withdrawal on June 30, 1995.

With his silence, he clearly intended to gain at the expense of PNB. The omission to report is not trivial or

inconsequential because it gave him the opportunity to withdraw from his dollar savings account more than its

real balance, as what he actually did. He took advantage of the overstatement of his account, instead of

protecting the interest of the bank. It would be impossible for him not to detect the error at the time he

deposited US$12.78 on October 6, 1995, because his account had a big balance despite the fact that no large

amount of money was deposited.

His claim that he was satisfied with the updated balance of US$15,486.01 on October 6, 1995, as he thought

that the US$15,000.00 in his account was the amount given by his brother, is simply unbelievable. It is a

desperate attempt at exculpation. The deposit of the money from his brother should have been reflected in the

on-line computer of PNB. The deposit would have also been posted for update upon the presentation of the

passbook on October 6, 1995. No deposit of US$15,000.00 was, however, reflected in the passbook.

In Aboitiz Shipping Corporation v. Dela Serna, 66 Tiu v. National Labor Relations Commission, 67 Five J Taxi v.

National Labor Relations Commission, 68 and Falguera v. Linsangan, 69 among other cases, this Court

consistently held that factual findings of quasi-judicial agencies, which have acquired expertise in matters

entrusted to their jurisdiction, are accorded not only respect but also finality if they are supported by substantial

evidence. 70 Thus, in the absence of proof that the Labor Arbiter or the NLRC had gravely abused their

discretion, this Court shall deem conclusive and will not overturn their particular factual findings. 71

The Labor Arbiter and the NLRC are in unison that Velasco transacted a no-book withdrawal and failed to

present a letter of introduction at PNB Ligao, Albay Branch on June 30, 1995. He also forged his passbook to

cover up his offense. Being duly supported by substantial evidence, We sustain said finding. Fitness for

continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct,

and ability separate and independent of each other. A service of irregularities, when combined, may constitute

serious misconduct which is a just cause for dismissal. 72

B. The serious misconduct relates to the performance of duties. The CA ruled that the offense of Velasco

was not work-related and does not warrant dismissal. It likewise held that there is no proof that his failure to be

a good depositor affected his duties or performance as an employee of PNB. 73

At first glance, the acts committed by Velasco pertain only to his being a depositor of PNB. But he has a dual

personality. He was a depositor and, at the same time, an officer of the bank.

On one hand, he failed to present his passbook and a letter of introduction when he withdrew US$15,000.00 at

PNB Ligao, Albay Branch on June 30, 1995. This serious misconduct was aggravated when he presented a

falsified passbook to make it appear that he did not commit any misdeed. On the other hand, he worked for PNB

for eighteen (18) long years, his last position having been as Manager 1 of the IAD. As such, he was involved in

the examination of the books of account of PNB. Thus, when he violated bank rules and regulations and tried to

cover up his infractions by falsifying his passbook, he was not only committing them as a depositor but also, or

rather more so, as an officer of the bank. It is akin to falsification of time cards, 74 and circulation of fake meal

tickets, 75 which this Court held as a just cause for terminating the services of an employee.

C. Velasco has become unfit to continue working at PNB. Taken together, his acts render him unfit to

remain in the employ of the bank. That it is his first offense is of no moment because he holds a managerial

position. Employers are allowed wide latitude of discretion in terminating managerial employees who, by virtue

of their position, require full trust and confidence in the performance of their duties. 76 Managerial employees

like Velasco are tasked to perform key and sensitive functions and are bound by more exacting work

ethics. 77 Indeed, not even his eighteen (18) years of service could exonerate him. As this Court held

in Equitable PCIBank v. Caguioa: 78

23

The leniency sought by respondent on the basis of her 35 years of service to the bank must be weighed in

conjunction with the other considerations raised by petitioners. As that service has been amply compensated,

her plea for leniency cannot offset her dishonesty. Even government employees who are validly dismissed from

the service by reason of timely discovered offenses are deprived of retirement benefits. Treating respondent in

the same manner as the loyal and code-abiding employees, despite the timely discovery of her Code violations,

may indeed have a demoralizing effect on the entire bank. Be it remembered that banks thrive on and endeavor

to retain public trust and confidence, every violation of which must thus be accompanied by appropriate

sanctions. 79

III. The CA erred in directing PNB to pay Velasco separation pay and backwages. PNB has no other

liability to Velasco, except his unpaid wages from May 27, 1996 to July 31, 1996.

PNB was registered under the Corporation Code under SEC Reg. No. ASO 96-005555 dated May 27,

1996. 80 Thus, on that day, employees of PNB came under the jurisdiction of the Labor Code, whose Sections 8

and 9 of Rule XXIII, Book V of the Implementing Rules state:

Section 8. Preventive Suspension. — The employer may place the worker concerned under preventive

suspension if his continued employment poses a serious and imminent threat to the life or property of the

employer or his co-workers.

Section 9. No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter

reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period

of suspension provided that during the period of extension, he pays the wages and other benefits due to the

worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if

the employer decides, after completion of the hearing, to dismiss the worker.

PNB has the right to preventively suspend Velasco during the pendency of the administrative case against him. It

was obviously done as a measure of self-protection. It was necessary to secure the vital records of PNB which, in

view of the position of Velasco as internal auditor, are easily accessible to him.

Velasco was preventively suspended for more than thirty (30) days as of May 27, 1996, while the records bear

that Velasco was paid his salaries from August 1, 1996 to October 31, 1996. 81 Thus, the NLRC is correct in its

holding that he may recover his salaries from May 27, 1996 to July 31, 1996.

He is not entitled to separation and backwages because he was not illegally dismissed. 82 We note though that

PNB was not at all insensitive to his plight, considering (1) his restitution of the amount akin to no actual loss to

the bank, and (2) his length of service of eighteen (18) years. 83 As stated earlier, PNB imposed on Velasco the

penalty of forced resignation with benefits, instead of dismissal. The records bear out that he was granted

P542,110.75 as separation benefits 84 which was used to offset his loan in the bank, leaving an outstanding

balance of P167,625.82 as of May 27, 1997. 85 We find that PNB acted humanely under the circumstances.

One last word.

The law imposes great burdens on the employer. One needs only to look at the varied provisions of the Labor

Code. Indeed, the law is tilted towards the plight of the working man. The Labor Code is titled that way and not

as "Employer Code". As one American ruling puts it, the protection of labor is the highest office of our laws. 86

Corollary to this, however, is the right of the employer to expect from the employee no less than adequate work,

diligence and good conduct. 87 As Mr. Justice Joseph McKenna of the United States Supreme Court said

in Arizona Copper Co. v. Hammer, 88 "[t]he difference between the position of the employer and the employee,

simply considering the latter as economically weaker, is not a justification for the violation of the rights of the

former". 89

WHEREFORE, the petition is GRANTED and the appealed Decision REVERSED and SET ASIDE. The Decision of

the National Labor Relations Commission is REINSTATED. SO ORDERED.

24

||| (PNB v. Velasco, G.R. No. 166096, [September 11, 2008], 586 PHIL 444-473)

[G.R. No. 162739. February 12, 2008.]

AMA COMPUTER COLLEGE-SANTIAGO CITY, INC., petitioner, vs. CHELLY P. NACINO, substituted by

the Heirs of Chelly P. Nacino, respondent.

R E S O L U T I O N

NACHURA, J p:

Before this Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Civil Procedure seeking

the reversal of the Court of Appeals (CA) Resolution 2 dated June 23, 2003, the dispositive portion of which

provides:

WHEREFORE, for being procedurally flawed, this petition for certiorari is hereby DENIED DUE COURSE, and

consequently DISMISSED. Needless to say, the prayer for temporary restraining order, being merely an adjunct

to the main suit, must be pro tanto DENIED.

SO ORDERED.

and of the CA Resolution 3 dated March 3, 2004 which denied petitioner's motion for reconsideration.

Petitioner AMA Computer College — Santiago City, Inc. (AMA) employed Chelly P. Nacino (Nacino) as Online

Coordinator of the college. On October 30, 2002, ostensibly upon inspection, the Human Resources Division

Supervisor, Mariziel C. San Pedro (San Pedro) found Nacino absent from his post. On the same day, San Pedro

issued a Memorandum 4 requiring Nacino to explain his absence. Nacino filed with San Pedro a written

explanation 5 claiming that he had to rush home at 1315 hours (1:15 PM) because he was suffering from LBM

(loose bowel movement) and that the facilities in the school were inadequate and inefficient, but he had gone

back to the school at 1410 hours (2:10 PM). Not satisfied with the explanation, San Pedro sought another

explanation because the earlier explanation "does not conform to a previous investigation conducted." 6 Nacino

furnished San Pedro the same written explanation he had earlier submitted. San Pedro then filed a formal

complaint against Nacino for false testimony, in addition to the charge of abandonment. An Investigating

Committee 7 was constituted to investigate the complaint and, pending investigation, Nacino was placed under

preventive suspension for a maximum of thirty (30) days, effective November 8, 2002. 8 The Investigating

Committee found Nacino guilty as charged, and was dismissed from the service on December 5, 2002. 9

Aggrieved, Nacino filed on December 13, 2002 a Complaint 10 for Illegal Suspension and Termination before the

National Conciliation and Mediation Board (NCMB) in Tuguegarao City. On January 10, 2003, Maria Luanne M.

Jali-jali (Jali-jali), AMA's representative, signed the submission Agreement, accepting the jurisdiction of Voluntary

Arbitrator Nicanor Y. Samaniego (Voluntary Arbitrator) over the controversy.

Before the Voluntary Arbitrator, the parties agreed to settle the case amicably, with Nacino discharging and

releasing AMA from all his claims in consideration of the sum of P7,719.81. The Decision 11 embodying the

Compromise Agreement and the corresponding Quitclaim and Release, 12 both dated February 21, 2003, were

duly prepared and signed, but the check in payment of the consideration for the settlement had yet to be

released.

On April 1, 2003, Nacino died in an accident. On April 15, 2003, the Voluntary Arbitrator rendered the assailed

Decision, 13 ordering Nacino's reinstatement and the payment of his backwages and 13th month pay. Therein,

the Voluntary Arbitrator manifested that, due to AMA's failure to pay the sum of P7,719.81, Nacino withdrew

from the Compromise Agreement, as shown by the conduct of a hearing on March 15, 2003 where both parties

appeared and were directed to file their position papers. The Voluntary Arbitrator also stated that Nacino

complied, but AMA failed to file its position paper and to appear before him despite summons. On May 7, 2003,

25

the Voluntary Arbitrator issued a Writ of Execution 14 upon motion of Nacino's surviving spouse, one Bernadeth

V. Nacino. AMA filed a Motion to Quash the said Writ but the Voluntary Arbitrator allegedly refused to receive the

same. 15 Thus, on May 22, 2003, the heirs of Nacino were able to garnish AMA's bank deposits in the amount of

P52,021.70.

On June 16, 2003, AMA filed a Petition 16 for Certiorari under Rule 65 before the CA. On June 23, 2003, the CA

dismissed the said petition because it was a wrong mode of review. It held that the proper remedy was an

appeal by way of Rule 43 of the Rules of Civil Procedure. Accordingly, the CA opined, an erroneous appeal shall

be dismissed outright pursuant to Section 2, Rule 50 of the Rules of Civil Procedure.

AMA filed its Motion for Reconsideration but the CA denied it in its Resolution dated March 3, 2004.

Hence, this petition based on the sole ground that:

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN DISMISSING THE PETITION FOR

CERTIORARI UNDER RULE 65 OF THE 1997 RULES OF CIVIL PROCEDURE FILED BY HEREIN PETITIONER.

AMA claims that Jali-jali was misinformed and misled in signing the Submission Agreement, subjecting AMA to

the jurisdiction of the Voluntary Arbitrator; that the Voluntary Arbitrator's Decision was issued under the Labor

Code and, as such, the same is not appealable under Rule 43, as provided for by Section 2 17 thereof, but

under Rule 65 of the Rules of Civil Procedure; and that the petition for certiorari is the only plain, speedy and

adequate remedy in this case since the Voluntary Arbitrator acted with grave abuse of discretion in disregarding

the parties' compromise agreement, in rendering the assailed Decision, and in issuing the Writ of Execution

without affording AMA its right to due process.

On the other hand, the heirs of Nacino refused to receive this Court's Resolution requiring them to file their

Comment 18 and, as such, were considered to have waived their right to file the same. 19

The instant petition lacks merit.

Pertinent is our ruling in Centro Escolar University Faculty and Allied Workers Union-Independent v. Court of

Appeals, 20 where we held:

We find that the Court of Appeals did not err in holding that petitioner used a wrong remedy when it filed a

special civil action on certiorari under Rule 65 instead of an appeal under Rule 43 of the 1997 Rules of Civil

Procedure. The Court held in Luzon Development Bank v. Association of Luzon Development Bank

Employees that decisions of the voluntary arbitrator under the Labor Code are appealable to the Court of

Appeals. In that case, the Court observed that the Labor Code was silent as regards the appeals from the

decisions of the voluntary arbitrator, unlike those of the Labor Arbiter which may be appealed to the National

Labor Relations Commission. The Court noted, however, that the voluntary arbitrator is a government

instrumentality within the contemplation of Section 9 of Batas Pambansa Blg.(BP) 129 which provides for the

appellate jurisdiction of the Court of Appeals. The decisions of the voluntary arbitrator are akin to those of the

Regional Trial Court, and, therefore, should first be appealed to the Court of Appeals before being elevated to

this Court. This is in furtherance and consistent with the original purpose of Circular No. 1-91 to provide a

uniform procedure for the appellate review of adjudications of all quasi-judicial agencies not expressly excepted

from the coverage of Section 9 of BP 129. Circular No. 1-91 was later revised and became Revised

Administrative Circular No. 1-95. The Rules of Court Revision Committee incorporated said circular in Rule 43 of

the 1997 Rules of Civil Procedure. The inclusion of the decisions of the voluntary arbitrator in the Rule was based

on the Court's pronouncements in Luzon Development Bank v. Association of Luzon Development Bank

Employees. Petitioner's argument, therefore, that the ruling in said case is inapplicable in this case is without

merit.

We are not unmindful of instances when certiorari was granted despite the availability of appeal, such as (a)

when public welfare and the advancement of public policy dictates; (b) when the broader interest of justice so

requires; (c) when the writs issued are null and void; or (d) when the questioned order amounts to an

26

oppressive exercise of judicial authority. 21 However, none of these recognized exceptions attends the case at

bar. AMA has sadly failed to show circumstances that would justify a deviation from the general rule. SaHIEA

While it is true that, in accordance with the liberal spirit which pervades the Rules of Court and in the interest of

justice, a petition for certiorari may be treated as having been filed under Rule 45, the petition for certiorari filed

by petitioner before the CA cannot be treated as such, without the exceptional circumstances mentioned above,

because it was filed way beyond the 15-day reglementary period within which to file the Petition for

Review. 22 AMA received the assailed Decision of the Voluntary Arbitrator on April 15, 2003 and it filed the

petition for certiorari under Rule 65 before the CA only on June 16, 2003. 23 By parity of reasoning, the same

reglementary period should apply to appeals taken from the decisions of Voluntary Arbitrators under Rule 43.

Based on the foregoing disquisitions, the assailed Decision of the Voluntary Arbitrator had already become final

and executory and beyond the purview of this Court to act upon. 24

Verily, rules of procedure exist for a noble purpose, and to disregard such rules in the guise of liberal

construction would be to defeat such purpose. Procedural rules are not to be disdained as mere technicalities.

They may not be ignored to suit the convenience of a party. Adjective law ensures the effective enforcement of

substantive rights through the orderly and speedy administration of justice. Rules are not intended to hamper

litigants or complicate litigation. But they help provide for a vital system of justice where suitors may be heard

following judicial procedure and in the correct forum. Public order and our system of justice are well served by a

conscientious observance by the parties of the procedural rules. 25

WHEREFORE, the instant Petition is DENIED for lack of merit. The assailed Court of Appeals Resolutions dated

June 23, 2003 and March 3, 2004 are hereby AFFIRMED. Costs against the petitioner. SO ORDERED.

||| (AMA Computer College-Santiago City, Inc. v. Nacino, G.R. No. 162739, [February 12, 2008], 568 PHIL 465-

472)

Scope of Judicial Review of Labor Cases by the Supreme Court

[G.R. No. 141802. January 29, 2007.]

G & M (PHIL.), INC., petitioner, vs. ZENAS RIVERA, respondent.

D E C I S I O N

SANDOVAL-GUTIERREZ, J p:

Before us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended,

assailing the Decision 1 dated September 13, 1999 and Resolution 2 dated January 13, 2000 rendered by the

Court of Appeals in CA-G.R. SP No. 51454, entitled "G & M (Phil.) Inc., petitioner, v. National Labor Relations

Commission and Zenas Rivera, respondents."

G & M (Phil.), Inc., petitioner, is a corporation engaged in the placement and recruitment business of overseas

contract workers. It deployed Lorenzo Rivera, respondent's husband, to work as equipment driver for its foreign

principal, Mohammad Al-Hammad Recruiting Office in Riyadh, Saudi Arabia for a period of two (2) years. After

working for one 1 year, 7 months and 17 days, Lorenzo met an accident and died on December 23, 1993.

Respondent filed with the Labor Arbiter a complaint for unpaid salary differentials for her late husband alleging

that he was not paid his salary for 23 days before he died. She submitted a "Final Settlement of Liability of

Foreign Employer" bearing the seal of the Philippine Embassy at Riyadh, Saudi Arabia and translated into English

by AL AMRI Translation Office. The Final Settlement is quoted as follows:

Entitlement Amount

1. Pending Leave Days SR 570.00

27

Months Day

2. Severance Pay (service award) 19 17 SR 896.81

3. Unpaid Salary 23 days SR 896.81

4. Death Compensation —————

TOTAL SR 2,310.14

Respondent further claimed that her husband actually received only a monthly salary of SR 700, way below than

that he ought to receive under his contract of employment which is US$ 600.

For its part, petitioner assailed the genuineness of the Final Settlement for lack of proper authentication. It

pointed out that petitioner's allegation that her husband received only a monthly salary of SR 700 is inconsistent

with the claim for unpaid salaries as it is not possible for a worker receiving SR 700 per month to have unpaid

salaries in the amount of SR 843.33 for 23 days. It likewise questioned respondent's basis for filing the

complaint, she not being a privy to her husband's working conditions while abroad.

In a Decision dated November 28, 1997, the Labor Arbiter ordered petitioner to pay respondent the following

amounts:

a) Unpaid salary

= US $23.08 per day

= US $23.08 x 23 working days

= US $530.84 or its peso equivalent its

========== actual payment

b) Salary Differential

US $ 600 x P26 = P15,600.00

SR 700 x 6.5 = P4,550.00

per month P10,050.00

x 19

—————

Total P190,950.00

=========

c) Plus 10% of the total award for and as attorney's fees.

On appeal, the National Labor Relations Commission (NLRC) rendered a Decision on July 13, 1998 denying

petitioner's appeal and affirming the Labor Arbiter's judgment. Petitioner's motion for reconsideration was denied

in a Resolution dated November 27, 1998.

Petitioner then filed a Petition for Certiorari with the Court of Appeals contending that the Labor Arbiter

committed grave abuse of discretion in sustaining respondent's claims.

In a Decision dated September 13, 1999, the Court of Appeals denied the petition, sustaining the findings of the

Labor Arbiter and the NLRC, thus:

28

The OCW INFO SHEET clearly states that the beneficiary of Lorenzo Rivera is his wife Zenas Rivera, hence, the

complainant in this case is the real party in interest because "she stands to be benefited by the judgment in this

suit or is the party entitled to the avails of the suit" (Salonga v. Warner, Barnes & Co., LTD., L-2246, Jan. 31,

1951).

In the same manner, the OCW INFO SHEET reveals that Lorenzo Rivera ought to receive US $600.00 basic

monthly salary. Since respondent's foreign principal keeps and maintains the employment records, it is therefore

incumbent upon the respondent to produce the payrolls and vouchers to prove that complainant's deceased

husband was duly paid of his basic monthly salary. Accordingly, whether the "Final Settlement" adduced as

supporting evidence by complainant is genuine or fake does not overcome the rule that the burden on labor

standards claim rests upon the employer.

Failure therefore on the part of the respondent to offer such payrolls and vouchers to controvert complainant's

claim for salary differentials is fatal.

The same ruling holds true with respect to claim for unpaid salary for 23 days. (p. 32, Rollo)

As to petitioner's allegation of inconsistency between the monthly salary of respondent's husband appearing in

the OCW Information Sheet and the claim of respondent that her husband is still entitled to a salary of SR

843.33 for 23 days, the appellate court found that "this discrepancy is explained by the fact that aside from his

monthly salary of SR 700, the deceased is still entitled to a monthly food allowance of SR 200 and monthly

overtime pay of SR 200."

The Court of Appeals further held:

On the other hand, petitioner was the one who failed to show that complainant's husband has received the

salary provided for under his OCW Info Sheet and OEC when the petitioner and its foreign principals were the

ones who keep and maintain the employment document of the deceased Rivera, such as the payrolls, the

vouchers and were in the best position to show that indeed the deceased received his monthly salary of US

$600.00 as per POEA approved contract.

Petitioner even failed to present any document/evidence to show/prove its contention of payment so, in the

absence of such evidence, it can be safely concluded that the deceased was not paid his monthly salary as per

POEA approved contract and his unpaid salaries were not given to him.

Petitioner filed the instant Petition for Review alleging that: (1) the Court of Appeals gravely erred in applying

the rule on "burden of proof" against petitioner inasmuch as non-payment of salaries, as claimed by respondent

was not sufficiently shown; and in holding that there is no inconsistency between the salary of petitioner's

husband appearing in the OCW Information Sheet and in the Final Settlement considering that no evidence

supports such conclusion.

The issues raised are essentially factual. Elementary is the principle that this Court is not a trier of facts. Judicial

review of labor cases does not go beyond the evaluation of the sufficiency of the evidence upon which its labor

officials' findings rest. As such, the findings of fact and conclusion of the NLRC are generally accorded not only

great weight and respect but even clothed with finality and deemed binding on this Court as long as they are

supported by substantial evidence. 3 This is because it is not the function of this Court to analyze or weigh all

over again the evidence already considered in the proceedings below; or reevaluate the credibility of witnesses;

or substitute the findings of fact of an administrative tribunal which has expertise in its special field. In this case,

we defer to the factual findings of the Labor Arbiter, who is deemed to have acquired expertise in matters within

his jurisdiction, specially since his findings were affirmed in toto by the NLRC and the Court of Appeals. 4

While there are recognized exceptions to this rule, we found no grounds to warrant our departure from the

common findings of the three tribunals below.

29

WHEREFORE, we DENY the instant petition and AFFIRM the assailed Decision of the Court of Appeals in CA-G.R.

SP No. 51454. Costs against petitioner. SO ORDERED.

||| (G & M (Phil.), Inc. v. Rivera, G.R. No. 141802, [January 29, 2007], 542 PHIL 175-180)

Exception to the Rule on Exhaustion of Administrative Remedies

[G.R. No. 168475. July 4, 2007.]

EMILIO E. DIOKNO, VICENTE R. ALCANTARA, ANTONIO Z. VERGARA, JR., DANTE M. TONG, JAIME

C. MENDOZA, ROMEO M. MACAPULAY, ROBERTO M. MASIGLAT, LEANDRO C. ATIENZA, ROMULO

AQUINO, JESUS SAMIA, GAUDENCIO CAMIT, DANTE PARAO, ALBERTO MABUGAT, EDGARDO

VILLANUEVA, JR., FRANCISCO ESCOTO, EDGARDO SEVILLA, FELICITO MACASAET, and JOSE Z.

TULLO, petitioners, vs. HON. HANS LEO J. CACDAC, in his capacity as Director of the Bureau of Labor

Relations, DOLE, MANILA, MED-ARBITER TRANQUILINO C. REYES, EDGARDO DAYA, PABLO LUCAS,

LEANDRO M. TABILOG, REYNALDO ESPIRITU, JOSE VITO, ANTONIO DE LUNA, ARMANDO YALUNG,

EDWIN LAYUG, NARDS PABILONA, REYNALDO REYES, EVANGELINE ESCALL, ALBERTO ALCANTARA,

ROGELIO CERVITILLO, MARCELINO MORELOS, FAUSTINO ERMINO, JIMMY S. ONG, ALFREDO

ESCALL, NARDITO C. ALVAREZ, JAIME T. VALERIANO, JOHNSON S. REYES, GAUDENCIO JIMENEZ,

JR., GAVINO R. VIDANES, ARNALDO G. TAYAO, BONIFACIO F. CIRUJANO, EDGARDO G. CADVONA,

MAXIMO A. CAOC, JOSE O. MACLIT, JR., LUZMINDO D. ACORDA, JR., LEMUEL R. RAGASA, and GIL

G. DE VERA, respondents.

D E C I S I O N

CHICO-NAZARIO, J p:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure, seeking

the nullification of the Decision 1 and Resolution 2 of the Court of Appeals in CA-G.R. SP No. 83061, dated 17

June 2004 and 10 June 2005, respectively, which dismissed petitioners' Petition for Certiorari and denied their

Motion for Reconsideration thereon.

The Facts

The First Line Association of Meralco Supervisory Employees (FLAMES) is a legitimate labor organization which is

the supervisory union of Meralco. Petitioners and private respondents are members of FLAMES.

On 1 April 2003, the FLAMES Executive Board created the Committee on Election (COMELEC) for the conduct of

its union elections scheduled on 7 May 2003. 3 The COMELEC was composed of petitioner Dante M. Tong as its

chairman, and petitioners Jaime C. Mendoza and Romeo M. Macapulay as members. Subsequently, private

respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano filed their respective

certificates of candidacy. On 12 April 2003, the COMELEC rejected Jimmy S. Ong's candidacy on the ground that

he was not a member of FLAMES. Meanwhile, the certificates of candidacy of Nardito C. Alvarez, Alfredo J.

Escall, and Jaime T. Valeriano were similarly rejected on the basis of the exclusion of their department from the

scope of the existing collective bargaining agreement (CBA). The employees assigned to the aforesaid

department are allegedly deemed disqualified from membership in the union for being confidential

employees. ITaCEc

On 24 April 2003, private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, Jaime T. Valeriano

(Ong, et al.), and a certain Leandro M. Tabilog filed a Petition 4before the Med-Arbitration Unit of the

Department of Labor and Employment (DOLE). They prayed, inter alia, for the nullification of the order of the

COMELEC which disallowed their candidacy. 5 They further prayed that petitioners be directed to render an

accounting of funds with full and detailed disclosure of expenditures and financial transactions; and that a

30

representative from the Bureau of Labor Relations (BLR) be designated to act as chairman of the COMELEC in

lieu of petitioner Dante M. Tong. 6

On 30 April 2003, DOLE-NCR Regional Director Alex E. Maraan issued an Order 7 directing DOLE personnel to

observe the conduct of the FLAMES election on 7 May 2003. 8

On 2 May 2003, petitioners filed a Petition 9 with the COMELEC seeking the disqualification of private

respondents Edgardo Daya, Pablo Lucas, Leandro Tabilog, Reynaldo Espiritu, Jose Vito, Antonio de Luna,

Armando Yalung, Edwin Layug, Nards Pabilona, Reynaldo Reyes, Evangeline Escall, Alberto Alcantara, Rogelio

Cervitillo, Marcelino Morelos, and Faustino Ermino (Daya, et al.). Petitioners alleged that Daya, et al., allowed

themselves to be assisted by non-union members, and committed acts of disloyalty which are inimical to the

interest of FLAMES. In their campaign, they allegedly colluded with the officers of the Meralco Savings and Loan

Association (MESALA) and the Meralco Mutual Aid and Benefits Association (MEMABA) and exerted undue

influence on the members of FLAMES.

On 6 May 2003, the COMELEC issued a Decision, 10 declaring Daya, et al., officially disqualified to run and/or to

participate in the 7 May 2003 FLAMES elections. The COMELEC also resolved to exclude their names from the list

of candidates in the polls or precincts, and further declared that any vote cast in their favor shall not be counted.

According to the COMELEC, Daya, et al., violated Article IV, Section 4 (a) (6) 11 of the FLAMES Constitution and

By-Laws (CBL) by allowing non-members to aid them in their campaign. Their acts of solicitation for support

from non-union members were deemed inimical to the interest of FLAMES.

On 7 May 2003, the COMELEC proclaimed the following candidates, including some of herein petitioners as

winners of the elections, to wit: 12

NAME POSITION

Emilio E. Diokno President

Vicente P. Alcantara Executive Vice President — External

Antonio Z. Vergara, Jr. Executive Vice President — Internal

Alberto L. Mabugat Vice-President — Organizing

Roberto D. Masiglat, Jr. Vice-President — Education

Leandro C. Atienza Vice-President — Chief Steward

Felito C. Macasaet Secretary

Edgardo R. Villanueva Asst. Secretary

Romulo C. Aquino Treasurer

Jesus D. Samia Asst. Treasurer

Gaudencio C. Camit Auditor

Rodante B. [Parao] Asst. Auditor

Jose Z. Tullo Central Coordinator

Bernardo C. Sevilla North Coordinator

Francis B. Escoto South Coordinator

On 8 May 2003, private respondents Daya, et al., along with Ong, et al., filed with the Med-Arbitration Unit of

the DOLE-NCR, a Petition 13 to: a) Nullify Order of Disqualification; b) Nullify Election Proceedings and Counting

31

of Votes; c) Declare Failure of Election; and d) Declare Holding of New Election to be Controlled and Supervised

by the DOLE. The Petition was docketed as Case No. NCR-OD-0304-002-LRD.

On 14 May 2003, another group led by private respondent Gaudencio Jimenez, Jr., along with private

respondents Johnson S. Reyes, Gavino R. Vidanes, Arnaldo G. Tayao, Bonifacio F. Cirujano, Edgardo G.

Cadavona, Maximo A. Caoc, Jose O. Maclit, Jr., Luzmindo D. Acorda, Jr., Lemuel R. Ragasa and Gil G. de Vera

(Jimenez, et al.) filed a Petition with the Med-Arbitration Unit of the DOLE-NCR against petitioners to nullify the 7

May 2003 election on the ground that the same was not free, orderly, and peaceful. It was docketed as Case No.

NCR-OD-0305-004-LRD, which was subsequently consolidated with the Petition of Daya, et al. and the earlier

Petition of Ong, et al.

Meanwhile, the records show that a subsequent election was held on 30 June 2004, which was participated in

and won by herein private respondents Daya, et al. The validity of the 30 June 2004 elections was assailed by

herein petitioners before the DOLE 14 and taken to the Court of Appeals in CA-G.R. SP No. 88264 on certiorari,

which case does not concern us in the instant Petition. The Court of Appeals, in the aforesaid case, rendered a

Decision 15 dated 12 January 2007, upholding the validity of the 30 June 2004 elections, and the declaration of

herein private respondents Daya, et al., as the duly elected winners therein.

The Decision of the Med-Arbiter

On 7 July 2003, Med-Arbiter Tranquilino B. Reyes, Jr. issued a Decision 16 in favor of private respondents,

Daya, et al. However, the petition of Jimenez, et al., was dismissed because it was premature, it appearing that

the COMELEC had not yet resolved their protest prior to their resort to the Med-Arbiter. Finally, the Petition of

Ong, et al., seeking to declare themselves as bona fide members of FLAMES was ordered dismissed.

The Med-Arbiter noted in his decision that during a conference which was held on 15 May 2003, the parties

agreed that the issue anent the qualifications of private respondents Ong, et al. had been rendered moot and

academic. 17

The Med-Arbiter reversed the disqualification imposed by the COMELEC against private respondents Daya, et al.

He said that the COMELEC accepted all the allegations of petitioners against private respondents Daya, et al.,

sans evidence to substantiate the same. Moreover, he found that the COMELEC erred in relying on Article IV,

Section 4 (a) (6) of the CBL as basis for their disqualification. The Med-Arbiter read the aforesaid provision to

refer to the dismissal and/or expulsion of a member from FLAMES, but not to the disqualification of a member as

a candidate in a union election. He rationalized that the COMELEC cannot disqualify a candidate on the same

grounds for expulsion of members, which power is vested by the CBL on the Executive Board. The Med-Arbiter

also held that there was a denial of due process because the COMELEC failed to receive private respondents

Daya, et al.'s motion for reconsideration of the order of their disqualification. The COMELEC was also found to

have refused to receive their written protest in violation of the union's CBL. 18

Lastly, the Med-Arbiter defended his jurisdiction over the case. He concluded that even as the election of union

officers is an internal affair of the union, his office has the right to inquire into the merits and conduct of the

election when its jurisdiction is sought. 19

The decretal portion of the Med-Arbiter's Decision states, viz:

WHEREFORE, premises considered, the [P]etition to Nullify the Order of Disqualification; Nullify Election

proceedings and counting of Votes; and Declare a Failure of Elections is hereby granted. The disqualification of

[private respondent] Ed[gardo] Daya, et al., is hereby considered as null and void. Perforce, the election of

union officers of FLAMES on May 7, 2003 is declared a failure and a new election is ordered conducted under the

supervision of the Department of Labor and Employment.

32

The [P]etition to conduct an accounting of union funds and to stop the release of funds to [petitioner] Diokno, et

al., is ordered dismissed for lack of merit.

And the Petition to Declare [private respondents] Jimmy Ong, Alfredo [E]scall, Nardito Alvarez, and Jaime

Valeriano as members of FLAMES is hereby ordered dismissed for lack of merit.

The [P]etition to Nullify the election filed by [private respondents] Gaudencio Jimenez, et al., is likewise ordered

dismissed. 20

Aggrieved, petitioners filed an appeal before the Director of the BLR.

The Ruling of the BLR Director

On 3 December 2003, the Director of the BLR issued a Resolution, 21 affirming in toto the assailed Decision of

the Med-Arbiter.

Public respondent Director Hans Leo J. Cacdac ruled, inter alia, that the COMELEC's reliance on Article IV,

Section 4 (a) (6) of the CBL, as a ground for disqualifying private respondents Daya, et al., was premature. He

echoed the interpretation of the Med-Arbiter that the COMELEC erroneously resorted to the aforecited provision

which refers to the expulsion of a member from the union on valid grounds and with due process, along with the

requisite 2/3 vote of the Executive Board. Hence, the COMELEC cut short the expulsion proceedings in

disqualifying private respondents Daya, et al. 22 The BLR Director further held that the case involves a question

of disqualification on account of the alleged commission by private respondents Daya, et al., of illegal campaign

acts, which acts were not specifically mentioned in the guidelines for the conduct of election as issued by the

COMELEC. Likewise, on the alleged refusal of private respondents Daya, et al., to submit to the jurisdiction of

the COMELEC by failing to file a petition to nullify its order of disqualification, the BLR Director deemed the same

as an exception to the rule on exhaustion of administrative remedies. Thus:

By themselves, such acts could not be taken as repugnant of COMELEC's authority. Sensing that they were

prejudiced by the disqualification order, it was only incumbent upon [private respondents Daya, et al.] to seek

remedy before a body, which they thought has a more objective perspective over the situation. In short, they

opted to bypass the administrative remedies within the union. Such a move could not be taken against [private

respondents Daya, et al.] considering that non-exhaustion of administrative remedies is justified in instances

where it would practically amount to a denial of justice, or would be illusory or vain, as in the present

controversy. 23

The BLR Director disposed in this wise:

WHEREFORE, the appeal is DISMISSED for lack of merit. The Decision of Med-Arbiter Tranquilino B. Reyes,

DOLE-NCR, dated 7 July 2003 is AFFIRMED in its entirety.

Let the records of this case be returned to the DOLE-NCR for the immediate conduct of election of officers of the

First Line Association of Meralco Supervisory Employees (FLAMES) under the supervision of DOLE-NCR

personnel. 24

Subsequently, petitioners sought a reversal of the 3 December 2003 Resolution, but the BLR Director issued a

Resolution dated 10 February 2003, 25 refusing to reverse his earlier Resolution for lack of merit.

Petitioners elevated the case to the Court of Appeals via a Petition for Certiorari.

The Ruling of the Court of Appeals

The Court of Appeals found petitioners' appeal to be bereft of merit.

The appellate court held that the provision relied upon by the COMELEC concerns the dismissal and/or expulsion

of union members, which power is vested in the FLAMES' Executive Board, and not the COMELEC. It affirmed

33

the finding of the BLR Director that the COMELEC, in disqualifying private respondents Daya, et al., committed a

procedural shortcut. It held:

Without the requisite two-thirds (2/3) vote of the Executive Board dismissing and/or expelling private

respondents for acts contemplated thereunder, the COMELEC was clearly violating the union's constitution and

bylaws (sic) by utilizing the aforequoted provision in its said May 6, 2003 decision and, in the process, arrogating

unto itself a power it did not possess. As the document embodying the covenant between a union and its

members and the fundamental law governing the members' rights and obligations, it goes without saying that

the constitution and bylaws (sic) should be upheld for as long as they are not contrary to law, good morals or

public policy. 26

On the matter of the failure of private respondents Daya, et al. to come up with 30 percent (30%) members'

support in filing the Petition to Nullify the COMELEC's Decision before the Med-Arbiter, the Court of Appeals said

that the petition did not involve the entire membership of FLAMES, so there was no need to comply with the

aforesaid requirement. Furthermore, the appellate court applied the exception to the rule on exhaustion of

administrative remedies on the ground, inter alia, that resort to such a remedy would have been futile, illusory or

vain. 27 Indeed, the Court of Appeals emphasized that private respondents Daya, et al., were directed by the

COMELEC to file their Answer to the petition for their disqualification only on 5 May 2003. Private respondents

Daya, et al., filed their Answer on 6 May 2003. On the same day, the COMELEC issued its Decision disqualifying

them. A day after, the 7 May 2003 election was held. The Court of Appeals further stressed that private

respondents Daya, et al.'s efforts to have their disqualification reconsidered were rebuffed by the COMELEC;

hence, they were left with no choice but to seek the intervention of the BLR, 28 which was declared to have

jurisdiction over intra-union disputes even at its own initiative under Article 226 29 of the Labor Code.

Petitioners sought a reconsideration of the 17 June 2004 Decision of the Court of Appeals, but the same was

denied in a Resolution 30 dated 10 June 2005.

Hence, the instant Petition.

At the outset, petitioners contend that the instant Petition falls under the exceptions to the rule that the

Supreme Court is not a trier of facts. They implore this Court to make factual determination anent the conduct of

the 7 May 2003 elections. They also question the jurisdiction of the BLR on the case at bar because of the failure

of private respondents Daya, et al., to exhaust administrative remedies within the union. It is the stance of

petitioner that Article 226 31 of the Labor Code which grants power to the BLR to resolve inter-union and intra-

union disputes is dead law, and has been amended by Section 14 of Republic Act No. 6715, whereby the

conciliation, mediation and voluntary arbitration functions of the BLR had been transferred to the National

Conciliation and Mediation Board.

Petitioners similarly assert that the 7 May 2003 election was conducted in a clean, honest, and orderly manner,

and that private respondents, some of whom are notbona fide members of FLAMES, were validly disqualified by

the COMELEC from running in the election. They also rehashed their argument that non-members of the union

were allowed by private respondents Daya, et al., to participate in the affair. They challenge the finding of the

BLR Director that the reliance by the COMELEC on Article IV, Section 4 (a) (6) of the CBL, was premature.

Petitioners insist that the COMELEC had the sole and exclusive power to pass upon the qualification of any

candidate, and therefore, it has the correlative power to disqualify any candidate in accordance with its

guidelines.

For their part, private respondents Daya, et al., maintain that the Petition they filed before the DOLE-NCR Med-

Arbiter questioning the disqualification order of the COMELEC and seeking the nullification of the 7 May 2003

election involves an intra-union dispute which is within the jurisdiction of the BLR. They further claim that the

COMELEC, in disqualifying them, mistakenly relied on a provision in the FLAMES' CBL that addresses the

expulsion of members from the union, and no expulsion proceedings were held against them. Finally, they

underscore the finding of the appellate court that there was disenfranchisement among the general membership

of FLAMES due to their wrongful disqualification which restricted the members' choices of candidates. They

34

reiterate the conclusion of the Court of Appeals that had the COMELEC tabulated the votes cast in their favor,

there would have been, at least, a basis for the declaration that they lost in the elections.

Issues

Petitioners attribute to the Court of Appeals several errors to substantiate their Petition. 32 They all boil down,

though, to the question of whether the Court of Appeals committed grave abuse of discretion when it affirmed

the jurisdiction of the BLR to take cognizance of the case and then upheld the ruling of the BLR Director and

Med-Arbiter, nullifying the COMELEC's order of disqualification of private respondents Daya et al., and annulling

the 7 May 2003 FLAMES elections.

The Court's Ruling

The Petition is devoid of merit.

We affirm the finding of the Court of Appeals upholding the jurisdiction of the BLR. Article 226 of the Labor

Code is hereunder reproduced, to wit:

ART. 226. BUREAU OF LABOR RELATIONS. — The Bureau of Labor Relations and the Labor Relations Divisions in

the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own

initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes,

grievances or problems arising from or affecting labor-management relations in all workplaces whether

agricultural or nonagricultural, except those arising from the implementation or interpretation of collective

bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by

agreement of the parties.

The amendment to Article 226, as couched in Republic Act No. 6715, 33 which is relied upon by petitioners in

arguing that the BLR had been divested of its jurisdiction, simply reads, thus:

Sec. 14. The second paragraph of Article 226 of the same Code is likewise hereby amended to read as follows:

"The Bureau shall have fifteen (15) calendar days to act on labor cases before it, subject to extension by

agreement of the parties."

This Court in Bautista v. Court of Appeals, 34 interpreting Article 226 of the Labor Code, was explicit in declaring

that the BLR has the original and exclusive jurisdiction on all inter-union and intra-union conflicts. We said that

since Article 226 of the Labor Code has declared that the BLR shall have original and exclusive authority to act

on all inter-union and intra-union conflicts, there should be no more doubt as to its jurisdiction. As defined, an

intra-union conflict would refer to a conflict within or inside a labor union, while an inter-union controversy or

dispute is one occurring or carried on between or among unions. 35 More specifically, an intra-union dispute is

defined under Section (z), Rule I of the Rules Implementing Book V of the Labor Code, viz:

(z) "Intra-Union Dispute" refers to any conflict between and among union members, and includes all disputes or

grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a

union, including cases arising from chartering or affiliation of labor organizations or from any violation of the

rights and conditions of union membership provided for in the Code.

The controversy in the case at bar is an intra-union dispute. There is no question that this is one which involves

a dispute within or inside FLAMES, a labor union. At issue is the propriety of the disqualification of private

respondents Daya, et al., by the FLAMES COMELEC in the 7 May 2003 elections. It must also be stressed that

even as the dispute involves allegations that private respondents Daya, et al., sought the help of non-members

of the union in their election campaign to the detriment of FLAMES, the same does not detract from the real

character of the controversy. It remains as one which involves the grievance over the constitution and by-laws of

a union, and it is a controversy involving members of the union. Moreover, the non-members of the union who

35

were alleged to have aided private respondents Daya, et al., are not parties in the case. We are, therefore,

unable to understand petitioners' persistence in placing the controversy outside of the jurisdiction of the BLR.

The law is very clear. It requires no further interpretation. The Petition which was initiated by private

respondents Daya, et al., before the BLR was properly within its cognizance, it being an intra-union dispute.

Indubitably, when private respondents Daya, et al., brought the case to the BLR, it was an invocation of the

power and authority of the BLR to act on an intra-union conflict.

After having settled the jurisdiction of the BLR, we proceed to determine if petitioners correctly raised the

argument that private respondents Daya, et al., prematurely sought the BLR's jurisdiction on the ground that

they failed to exhaust administrative remedies within the union. On this matter, we affirm the findings of the

Court of Appeals which upheld the application by the BLR Director of the exception to the rule of exhaustion of

administrative remedies. 2005jur

In this regard, this Court is emphatic that "before a party is allowed to seek the intervention of the court, it is a

pre-condition that he should have availed of all the means of administrative processes afforded him. Hence, if a

remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned

every opportunity to decide on a matter that comes within his jurisdiction when such remedy should be

exhausted first before the court's judicial power can be sought. The premature invocation of court's judicial

intervention is fatal to one's cause of action." 36

Verily, there are exceptions to the applicability of the doctrine. 37 Among the established exceptions are: 1)

when the question raised is purely legal; 2) when the administrative body is in estoppel; 3) when the act

complained of is patently illegal; 4) when there is urgent need for judicial intervention; 5) when the claim

involved is small; 6) when irreparable damage will be suffered; 7) when there is no other plain, speedy, and

adequate remedy; 8) when strong public interest is involved; 9) when the subject of the proceeding is private

land; 10) in quo warranto proceedings; 38 and 11) where the facts show that there was a violation of due

process. 39 As aptly determined by the BLR Director, private respondents Daya, et al., were prejudiced by the

disqualification order of the COMELEC. They endeavored to seek reconsideration, but the COMELEC failed to act

thereon. 40 The COMELEC was also found to have refused to receive their written protest. 41 The foregoing

facts sustain the finding that private respondents Daya, et al., were deprived of due process. Hence, it becomes

incumbent upon private respondents Daya, et al., to seek the aid of the BLR. To insist on the contrary is to

render their exhaustion of remedies within the union as illusory and vain. 42 These antecedent circumstances

convince this Court that there was proper application by the Med-Arbiter of the exception to the rule of

exhaustion of administrative remedies, as affirmed by the BLR Director, and upheld by the Court of Appeals.

We cannot accept, and the Court of Appeals rightfully rejected, the contention of petitioners that the private

respondents Daya, et al.'s complaint filed before the Med-Arbiter failed to comply with the jurisdictional

requirement because it was not supported by at least thirty percent (30%) of the members of the union. Section

1 of Rule XIV of the Implementing Rules of Book V mandates the thirty percent (30%) requirement only in cases

where the issue involves the entire membership of the union, which is clearly not the case before us. The issue

is obviously limited to the disqualification from participation in the elections by particular union members.

Having resolved the jurisdictional cobwebs in the instant case, it is now apt for this Court to address the issue

anent the disqualification of private respondents and the conduct of the 7 May 2003 elections.

On this matter, petitioners want this Court to consider the instant case as an exception to the rule that the

Supreme Court is not a trier of facts; hence, importuning that we make findings of fact anew. It bears stressing

that in a petition for review on certiorari, the scope of this Court's judicial review of decisions of the Court of

Appeals is generally confined only to errors of law, 43 and questions of fact are not entertained. We elucidated

on our fidelity to this rule, and we said:

Thus, only questions of law may be brought by the parties and passed upon by this Court in the exercise of its

power to review. Also, judicial review by this Court does not extend to a reevaluation of the sufficiency of the

evidence upon which the proper labor tribunal has based its determination. 44

36

It is aphoristic that a re-examination of factual findings cannot be done through a petition for review

on certiorari under Rule 45 of the Rules of Court because as earlier stated, this Court is not a trier of facts; it

reviews only questions of law. 45 The Supreme Court is not duty-bound to analyze and weigh again the

evidence considered in the proceedings below. 46 This is already outside the province of the instant Petition

for Certiorari. While there may be exceptions to this rule, petitioners miserably failed to show why the exceptions

should be applied here. With greater force must this rule be applied in the instant case where the factual

findings of the Med-Arbiter were affirmed by the BLR Director, and then, finally, by the Court of Appeals. The

findings below had sufficient bases both in fact and in law. The uniform conclusion was that private respondents

Daya, et al., were wrongfully disqualified by the COMELEC; consequently, the FLAMES election should be

annulled.

On the issue of disqualification, there was a blatant misapplication by the COMELEC of the FLAMES' CBL. As has

been established ad nauseam, the provision 47 relied upon by the COMELEC in disqualifying private respondents

Daya, et al., applies to a case of expulsion of members from the union.

In full, Article IV, Section 4 (a) (6) of the FLAMES' CBL, provides, to wit:

Section 4 (a). Any member may be DISMISSED and/or EXPELLED from the UNION, after due process and

investigation, by a two-thirds (2/3) vote of the Executive Board, for any of the following causes:

xxx xxx xxx

(6) Acting in a manner harmful to the interest and welfare of the UNION and/or its MEMBERS. 48

We highlight five points, thus:

First, Article IV, Section 4 (a) (6) of the FLAMES' CBL, embraces exclusively the case of dismissal and/or

expulsion of members from the union. Even a cursory reading of the provision does not tell us that the same is

to be automatically or directly applied in the disqualification of a candidate from union elections, which is the

matter at bar. It cannot be denied that the COMELEC erroneously relied on Article IV, Section 4 (a) (6) because

the same does not contemplate the situation of private respondents Daya, et al. The latter are not sought to be

expelled or dismissed by the Executive Board. They were brought before the COMELEC to be disqualified as

candidates in the 7 May 2003 elections.

Second, the aforecited provision evidently enunciates with clarity the procedural course that should be taken to

dismiss and expel a member from FLAMES. The CBL is succinct in stating that the dismissal and expulsion of a

member from the union should be after due process and investigation, the same to be exercised by two-thirds

(2/3) vote of the Executive Board for any of the causes 49 mentioned therein. The unmistakable directive is that

in cases of expulsion and dismissal, due process must be observed as laid down in the CBL.

Third, nevertheless, even if we maintain a lenient stance and consider the applicability of Article IV, Section 4 (a)

(6) in the disqualification of private respondents Daya, et al., from the elections of 7 May 2003, still, the

disqualification made by the COMELEC pursuant to the subject provision was a rank disregard of the clear due

process requirement embodied therein. Nowhere do we find that private respondents Daya, et al. were

investigated by the Executive Board. Neither do we see the observance of the voting requirement as regards

private respondents Daya, et al. In all respects, they were denied due process.

Fourth, the Court of Appeals, the BLR Director, and the Med-Arbiter uniformly found that due process was

wanting in the disqualification order of the COMELEC. We are in accord with their conclusion. If, indeed, there

was a violation by private respondents Daya, et al., of the FLAMES' CBL that could be a ground for their

expulsion and/or dismissal from the union, which in turn could possibly be made a ground for their

disqualification from the elections, the procedural requirements for their expulsion should have been observed.

In any event, therefore, whether the case involves dismissal and/or expulsion from the union or disqualification

from the elections, the proper procedure must be observed. The disqualification ruled by the COMELEC against

private respondents Daya, et al., must not be allowed to abridge a clear procedural policy established in the

37

FLAMES' CBL. If we uphold the COMELEC, we are countenancing a clear case of denial of due process which is

anathema to the Constitution of the Philippines which safeguards the right to due process.

Fifth, from another angle, the erroneous disqualification of private respondents Daya, et al., constituted a case

of disenfranchisement on the part of the member-voters of FLAMES. By wrongfully excluding them from the 7

May 2003 elections, the options afforded to the union members were clipped. Hence, the mandate of the union

cannot be said to have been rightfully determined. The factual irregularities in the FLAMES elections clearly

provide proper bases for the annulment of the union elections of 7 May 2003.

On a final note, as it appears that the question of the qualifications of private respondents Ong, et al. had been

rendered moot and academic, 50 we do not find any reason for this Court to rule on the matter. As borne out by

the records, the question had been laid to rest even when the case was still before the Med-Arbiter. 51

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated 17 June 2004, and its

Resolution dated 10 June 2005 in CA-G.R. SP No. 83061 are AFFIRMED. Costs against petitioners.

SO ORDERED.

||| (Diokno v. Cacdac, G.R. No. 168475, [July 4, 2007], 553 PHIL 405-431)

Validity of Compromise Agreement

[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.

D E C I S I O N

PANGANIBAN, J p:

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

Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, assailing the May 31, 2000

Decision 2 and the October 30, 2003 Resolution 3 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 Labor Arbiter dated February 27,

1998." 4

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

38

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 . . .

"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 . . .

"On appeal, the [National Labor Relations Commission (hereinafter 'NLRC')] reversed the Labor Arbiter and

directed the immediate issuance of a writ of execution, holding that a final and executory judgment can no

longer be altered and that quitclaims and releases are normally frowned upon as contrary to public policy." 5

Ruling of the Court of Appeals

The CA held that compromise agreements may be entered into even after a final judgment. 6 Thus, petitioners

validly released respondent from any claims, upon the voluntary execution of a waiver pursuant to the

compromise agreement. 7

The appellate court denied petitioners' motion for reconsideration for having been filed out of time. 8

Hence, this Petition. 9

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 process." 10

The Court's Ruling

39

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 to a lawsuit.11 They adjust their difficulties in the manner they have

agreed upon, disregarding the possible gain in litigation and keeping in mind that such gain is balanced by the

danger of losing. 12 Verily, the compromise may be either extrajudicial (to prevent litigation) or judicial (to end

a litigation). 13

A compromise must not be contrary to law, morals, good customs and public policy; and must have been freely

and intelligently executed by and between the parties. 14To have the force of law between the parties, 15 it

must comply with the requisites and principles of contracts. 16 Upon the parties, it has the effect and the

authority ofres judicata, once entered into. 17

When a compromise agreement is given judicial approval, it becomes more than a contract binding upon the

parties. Having been sanctioned by the court, it is entered as a determination of a controversy and has the force

and effect of a judgment. 18 It is immediately executory and not appealable, except for vices of consent or

forgery.19 The nonfulfillment of its terms and conditions justifies the issuance of a writ of execution; in such an

instance, execution becomes a ministerial duty of the court. 20

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 Code, which we quote: 21

"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

court's 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 action for rescission, is

declared available. 22 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 decision's 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 court's 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.

40

Supported by Case Law

The issue involving the validity of a compromise agreement notwithstanding a final judgment is not

novel. Jesalva v. Bautista 23 upheld a compromise agreement that covered cases pending trial, on appeal, and

with final judgment. 24 The Court noted that Article 2040 impliedly allowed such agreements; there was no

limitation as to when these should be entered into. 25 Palanca v. Court of Industrial Relations 26 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. 27

Gatchalian v. Arlegui 28 upheld the right to compromise prior to the execution of a final judgment. The Court

ruled that the final judgment had been novated and superseded by a compromise agreement. 29 Also, Northern

Lines, Inc. v. Court of Tax Appeals 30 recognized the right to compromise final and executory judgments, as

long as such right was exercised by the proper party litigants. 31

Rovero v. Amparo, 32 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 latter's 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 . . . 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 Government." 33 (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 is established. 34

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 as rescissible, 35 voidable, 36 unenforceable, 37 or void. 38 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

respondent's Manifestation (filed with the labor arbiter) that the judgment award had been satisfied; 39 (2) they

executed a Joint Affidavit dated May 5, 1997, attesting to the receipt of payment and the waiver of all other

41

benefits due them; 40 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 payment in full satisfaction of their

claims. 41 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 pre-execution conference

to thresh out matters relevant to the execution. 42 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 of

extinguishing an obligation, 43 is done by changing the object or principal condition of an obligation,

substituting the person of the debtor, or surrogating a third person in the exercise of the rights of the

creditor. 44

For an obligation to be extinguished by another, the law requires either of these two conditions: (1) the

substitution is unequivocally declared, or (2) the old and the new obligations are incompatible on every

point. 45 A compromise of a final judgment operates as a novation of the judgment obligation, upon compliance

with either requisite. 46 In the present case, the incompatibility of the final judgment with the compromise

agreement is evident, because the latter was precisely entered into to supersede the former.

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 Waiver's 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 reasonable. 47 Where there is

clear proof that a waiver was wangled from an unsuspecting or a gullible person, the law must step in to annul

such transaction. 48 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

terminated. 49 Relevant, however, is this reference to the NLRC's 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

any, 50 before the Labor Arbiter.

42

"The settlement shall be approved by the Labor Arbiter after being satisfied that it was voluntarily entered into

by the parties and after having explained to them the terms and consequences thereof.

"A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before whom the

case is pending shall be approved by him, if after confronting the parties, particularly the complainants, he is

satisfied that they understand the terms and conditions of the settlement and that it was entered into freely and

voluntarily by them and the agreement is not contrary to law, morals, and public policy." 51

This provision refers to proceedings in a mandatory/conciliation conference during the initial stage of the

litigation. Such provision should be made applicable to the proceedings in the pre-execution conference, for

which the procedure for approving a waiver after final judgment is not stated. There is no reason to make a

distinction between the proceedings in mandatory/conciliation and those in pre-execution conferences.

The labor arbiter's 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 voluntarily and freely executed the waivers. 52 Likewise, there was evidence

that they made an intelligent choice, considering that the contents of the written waivers had been explained to

them. 53 The labor arbiter's absence when those waivers were executed does not, therefore, invalidate them.

The Court declines to rule on the allegation that respondent's counsels encroached upon the professional

employment of petitioners' lawyer when they facilitated the waivers. 54 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 Court's decision has resolved the case on the merits.

WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners.

SO ORDERED.

||| (Magbanua v. Uy, G.R. No. 161003, [May 6, 2005], 497 PHIL 511-527)

[G.R. No. 160913. August 31, 2006.]

EUROTECH HAIR SYSTEMS, INC., LUTZ KUNACK, and JOSE BARIN, petitioners, vs. ANTONIO S.

GO, respondent.

R E S O L U T I O N

QUISUMBING, J p:

For review on certiorari are the Decision 1 dated July 9, 2003 and the Resolution 2 dated November 19, 2003, of

the Court of Appeals in CA-G.R. SP No. 69909 setting aside the National Labor Relations Commission (NLRC)

Decision 3 but reinstating with modification the Decision 4 of the Labor Arbiter.

The facts are as follows:

Petitioner Eurotech Hair Systems, Inc. is a domestic corporation engaged in the manufacture and export of wigs

and toupees. Petitioners Lutz Kunack and Jose E. Barin are the company's president and general manager,

respectively.

Respondent Antonio S. Go served as Eurotech's operations manager from September 2, 1996 until he was

dismissed on September 27, 1999. As operations manager, he drafted and implemented the plans for the

production of wigs and toupees. Respondent's responsibilities included manpower planning to meet the monthly

production targets.

43

In 1999, the company suffered production shortfalls. Thus, on September 2, 1999, petitioner Barin issued

respondent a memorandum, strongly advising him to improve his performance. He was also admonished

because of the late shipment of 80 units of hairpieces to one of petitioners' clients, Bergmann Company.

On September 7, 1999, Eurotech issued another memorandum reiterating the previous reminder for respondent

to improve his performance. Again, on September 21, 1999, Eurotech issued two memoranda, reminding

respondent of his continued failure to improve his performance. He was given 24 hours to explain in writing why

the company should not terminate his services on the ground of loss of trust and confidence.

On September 22, 1999, Eurotech relieved respondent as operations manager pending evaluation of his

performance. On September 24, 1999, Eurotech issued yet another memorandum reminding respondent of his

failure to submit his written explanation and granting him another 24 hours to submit such explanation. The

second 24-hour period lapsed without respondent's explanation. On September 27, 1999, petitioner Kunack

finally issued respondent a termination letter citing loss of trust and confidence.

Consequently, respondent filed against petitioners a complaint docketed as NLRC Case No. RAB-IV-10-11565-99-

L for illegal dismissal, separation pay, backwages, and damages. 5 The Labor Arbiter ruled for respondent.

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. 6 Respondent's

motion for reconsideration was denied. Hence, respondent elevated the matter to the Court of Appeals. The

appellate court set aside the decision of the NLRC and essentially reinstated the ruling of the Labor Arbiter.

Respondent received said Decision of the Court of Appeals on July 21, 2003. Prior to such receipt, he had

executed a quitclaim 7 in consideration of P450,000. Hence, on July 16, 2003, the Labor Arbiter issued an

Order 8 dismissing with prejudice the complaint for illegal dismissal in view of the said waiver.

Petitioners thus moved for reconsideration of the Court of Appeals' decision in light of the said settlement.

Respondent, on the other hand, manifested that he was not represented by his counsel when he signed the

quitclaim. He further alleged that he was in fact advised by petitioners not to inform his counsel about the

quitclaim.

The Court of Appeals denied the motion for reconsideration for lack of merit and voided for lack of jurisdiction

the Labor Arbiter's Order dismissing the case with prejudice.

Hence, the instant petition raising the following issues:

A

WHETHER OR NOT THE NLRC EXHIBITED GRAVE ABUSE OF DISCRETION IN RENDERING ITS DECISION DATED

30 JULY 2001 AND ITS ORDER DATED 20 DECEMBER 2001.

1. Whether or not respondent's Petition for Certiorari prayed for the Court of Appeals' correction of the NLRC's

evaluation of the evidence without establishing where the grave of abuse lies.

2. Whether or not the findings of facts by the NLRC are conclusive upon the Court of Appeals, which can no

longer be disturbed.

B

WHETHER OR NOT THE JUDGMENT OF THE COURT OF APPEALS HAD LEGAL BASIS AND WAS BASED ON

GROSS MISAPPRECIATION OF FACTS.

1. Whether or not the NLRC correctly ruled that there was sufficient and legitimate basis to terminate the

services of respondent for his gross incompetence resulting in the Company's loss of confidence on said

employee.

2. Whether or not the Court of Appeals had substantial basis to support its judgment.

44

3. Whether or not the Court of Appeals' ruling has violated the Company's constitutional right to reasonable

returns on its investments.

4. Whether or not respondent was afforded the required procedural due process.

C

WHETHER OR NOT THE COURT OF APPEALS HAD LEGAL BASIS IN HOLDING THAT THE LABOR ARBITER DID

NOT HAVE JURISDICTION TO DISMISS THE CASE IN VIEW OF THE COMPROMISE AGREEMENT REACHED

BETWEEN THE PARTIES. 9

Simply put, the issues now for our resolution are: (1) Was respondent's dismissal in accordance with law? and

(2) Is the compromise agreement entered into by the parties valid?

Petitioners contend the NLRC correctly ruled there was legitimate basis to terminate respondent for gross

incompetence resulting in the company's loss of confidence in him. But petitioners also claim that the Court of

Appeals' ruling effectively violated their constitutional right to reasonable returns on investment. They allege that

the evidence on record shows respondent was afforded the required procedural due process.

Petitioners likewise contend that the pendency of respondent's petition for certiorari before the Court of Appeals

did not divest the Labor Arbiter of jurisdiction to dismiss the case in view of the quitclaim. They add that

respondent knowingly and voluntarily executed the waiver in the presence of the Labor Arbiter. Petitioners

further allege that the compromise agreement has the force and effect of res judicata.

Respondent, for his part, counters that there was no legal or factual basis to terminate him on the ground of loss

of trust and confidence. He argues that allowing an employer to dismiss an employee on a simple claim of loss of

trust and confidence places the employee's right to security of tenure at the mercy of the employer.

Respondent further contends that the petition raises only questions of fact and should therefore be denied

outright. Finally, he assails the Court of Appeals' deletion of the award of attorney's fees. He argues that since

moral and exemplary damages have been awarded to respondent, an award of attorney's fees is proper under

Article 2208 10 of the Civil Code.

Considering all the circumstances in this case, we find the present petition meritorious.

Loss of trust and confidence to be a valid ground for an employee's dismissal must be based on a willful breach

and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely,

without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or

inadvertently. 11

While failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to

inefficiency may be a just cause for dismissal, 12 the employer must show what standards of work or reasonable

work assignments were prescribed which the employee failed to observe. In addition, the employer must prove

that the employee's failure to observe any such standards or assignments was due to his own inefficiency. 13

In this case, petitioners showed that respondent failed to meet production targets despite reminders to measure

up to the goals set by the company. However, they were unable to prove that such failure was due to

respondent's inefficiency. Significant factors that might explain the company's poor production include existing

market conditions at the time, the overall spending behavior of consumers, and the prevailing state of the

country's economy as a whole. The company's production shortfalls cannot be attributed to respondent alone,

absent any showing that he willfully breached the trust and confidence reposed in him by the petitioners.

Note that the burden of proof in dismissal cases rests on the employer. 14 In the instant case, however,

petitioners failed to prove that respondent was terminated for a valid cause. Evidence adduced was utterly

wanting as to respondent's alleged inefficiency constituting a willful breach of the trust and confidence reposed

in him by petitioners.

45

However, on the second issue, we find for petitioners.

Article 227 of the Labor Code provides:

ART. 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. . . .

Note, however, that even if contracted without the assistance of labor officials, compromise agreements

between workers and their employers remain valid and are still considered desirable means of settling

disputes. 15

A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver

voluntarily, with a full understanding of what he was entering into. All that is required for the compromise to be

deemed voluntarily entered into is personal and specific individual consent. Thus, contrary to respondent's

contention, the employee's counsel need not be present at the time of the signing of the compromise

agreement.

In this case, we find the consideration of P450,000 fair and reasonable under the circumstances. In addition,

records show that respondent gave his personal and specific individual consent with a full understanding of the

stakes involved. In our view, the compromise agreement in this case does not suffer from the badges of

invalidity.

The fact that the Order, which dismissed the case in view of the compromise agreement, was issued during the

pendency of the petition for certiorari in the Court of Appeals does not divest the Labor Arbiter of jurisdiction. A

petition for certiorari is an original action and does not interrupt the course of the principal case unless a

temporary restraining order or a writ of preliminary injunction has been issued against the public respondent

from further proceeding. 16 The Labor Arbiter thus acted well within his jurisdiction. Therefore, the Labor

Arbiter's Order dismissing the case with prejudice in view of the compromise agreement entered into by the

parties must be upheld.

WHEREFORE, the petition is GRANTED. The assailed Decision dated July 9, 2003 and Resolution dated

November 19, 2003, of the Court of Appeals in CA-G.R. SP No. 69909 are SET ASIDE. The July 16, 2003 Order

of the Labor Arbiter in NLRC Case No. RAB-IV-10-11565-99-L dismissing the case with prejudice is AFFIRMED.

No costs. SO ORDERED.

||| (Eurotech Hair Systems, Inc. v. Go, G.R. No. 160913, [August 31, 2006], 532 PHIL 317-326)

[G.R. No. 175366. August 11, 2008.]

J-PHIL MARINE, INC. and/or JESUS CANDAVA and NORMAN SHIPPING SERVICES, petitioners, vs.

NATIONAL LABOR RELATIONS COMMISSION and WARLITO E. DUMALAOG, respondents.

D E C I S I O N

CARPIO-MORALES, J p:

Warlito E. Dumalaog (respondent), who served as cook aboard vessels plying overseas, filed on March 4, 2002

before the National Labor Relations Commission (NLRC) a pro-forma complaint 1 against petitioners — manning

agency J-Phil Marine, Inc. (J-Phil), its then president Jesus Candava, and its foreign principal Norman Shipping

Services — for unpaid money claims, moral and exemplary damages, and attorney's fees.

Respondent thereafter filed two amended pro forma complaints 2 praying for the award of overtime pay,

vacation leave pay, sick leave pay, and disability/medical benefits, he having, by his claim, contracted

46

enlargement of the heart and severe thyroid enlargement in the discharge of his duties as cook which rendered

him disabled.

Respondent's total claim against petitioners was P864,343.30 plus P117,557.60 representing interest and

P195,928.66 representing attorney's fees. 3

By Decision 4 of August 29, 2003, Labor Arbiter Fe Superiaso-Cellan dismissed respondent's complaint for lack of

merit.

On appeal, 5 the NLRC, by Decision of September 27, 2004, reversed the Labor Arbiter's decision and awarded

US$50,000.00 disability benefit to respondent. It dismissed respondent's other claims, however, for lack of basis

or jurisdiction. 6 Petitioners' Motion for Reconsideration 7 having been denied by the NLRC, 8 they filed a

petition for certiorari 9 before the Court of Appeals.

By Resolution 10 of September 22, 2005, the Court of Appeals dismissed petitioners' petition for, inter alia,

failure to attach to the petition all material documents, and for defective verification and certification. Petitioners'

Motion for Reconsideration of the appellate court's Resolution was denied; 11 hence, they filed the present

Petition for Review on Certiorari.

During the pendency of the case before this Court, respondent, against the advice of his counsel, entered into a

compromise agreement with petitioners. He thereupon signed a Quitclaim and Release subscribed and sworn to

before the Labor Arbiter. 12

On May 8, 2007, petitioners filed before this Court a Manifestation 13 dated May 7, 2007 informing that, inter

alia, they and respondent had forged an amicable settlement.

On July 2, 2007, respondent's counsel filed before this Court a Comment and Opposition (to Petitioners'

Manifestation of May 7, 2007) 14 interposing no objection to the dismissal of the petition but objecting to "the

absolution" of petitioners from paying respondent the total amount of Fifty Thousand US Dollars (US$50,000.00)

or approximately P2,300,000.00, the amount awarded by the NLRC, he adding that:

There being already a payment of P450,000.00, and invoking the doctrine of parens patriae, we pray then [to]

this Honorable Supreme Court that the said amount be deducted from the [NLRC] judgment award of

US$50,000.00, or approximately P2,300,000.00, and petitioners be furthermore ordered to pay in favor of herein

respondent [the] remaining balance thereof.

xxx xxx xxx 15 (Emphasis in the original; underscoring supplied)

Respondent's counsel also filed before this Court, purportedly on behalf of respondent, a Comment 16 on the

present petition.

The parties having forged a compromise agreement as respondent in fact has executed a Quitclaim and Release,

the Court dismisses the petition.

Article 227 of the Labor Code provides:

Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the

parties with the assistance 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. (Emphasis and underscoring supplied)

In Olaybar v. NLRC, 17 the Court, recognizing the conclusiveness of compromise settlements as a means to end

labor disputes, held that Article 2037 of the Civil Code, which provides that "[a] compromise has upon the

parties the effect and authority of res judicata", applies suppletorily to labor cases even if the compromise is not

judicially approved. 18

47

That respondent was not assisted by his counsel when he entered into the compromise does not render it null

and void. Eurotech Hair Systems, Inc. v. Go 19 so enlightens:

A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver

voluntarily, with a full understanding of what he was entering into. All that is required for the compromise to be

deemed voluntarily entered into is personal and specific individual consent. Thus, contrary to respondent's

contention, the employee's counsel need not be present at the time of the signing of the compromise

agreement. 20 (Underscoring supplied)

It bears noting that, as reflected earlier, the Quitclaim and Waiver was subscribed and sworn to before the Labor

Arbiter.

Respondent's counsel nevertheless argues that "[t]he amount of Four Hundred Fifty Thousand Pesos

(P450,000.00) given to respondent on April 4, 2007, as 'full and final settlement of judgment award', is

unconscionably low, and un-[C]hristian, to say the least." 21 Only respondent, however, can impugn the

consideration of the compromise as being unconscionable.

The relation of attorney and client is in many respects one of agency, and the general rules of agency apply to

such relation. 22 The acts of an agent are deemed the acts of the principal only if the agent acts within the

scope of his authority. 23 The circumstances of this case indicate that respondent's counsel is acting beyond the

scope of his authority in questioning the compromise agreement.

That a client has undoubtedly the right to compromise a suit without the intervention of his lawyer 24 cannot be

gainsaid, the only qualification being that if such compromise is entered into with the intent of defrauding the

lawyer of the fees justly due him, the compromise must be subject to the said fees. 25 In the case at bar, there

is no showing that respondent intended to defraud his counsel of his fees. In fact, the Quitclaim and Release,

the execution of which was witnessed by petitioner J-Phil's president Eulalio C. Candava and one Antonio C.

Casim, notes that the 20% attorney's fees would be "paid 12 April 2007 — P90,000".

WHEREFORE, the petition is, in light of all the foregoing discussion, DISMISSED.

Let a copy of this Decision be furnished respondent, Warlito E. Dumalaog, at his given address at No. 5-B Illinois

Street, Cubao, Quezon City. SO ORDERED.

||| (J-Phil Marine, Inc. v. NLRC, G.R. No. 175366, [August 11, 2008], 583 PHIL 671-677)

[G.R. No. 198662. September 12, 2012.]

RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY, petitioners, vs. DOMINGO Z. YBAROLA, JR.

and ALFONSO E. RIVERA, JR., respondents.

RESOLUTION

BRION, J p:

We resolve the motion for reconsideration 1 of petitioners Radio Mindanao Network, Inc. (RMN) and Eric S.

Canoy addressing our Resolution 2 of December 7, 2011 which denied the appeal from the decision 3 and the

resolution 4 of the Court of Appeals (CA) in CA-G.R. SP No. 109016.

Factual Background

Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1, 1983,

respectively, by RMN. They eventually became account managers, soliciting advertisements and servicing various

clients of RMN.

48

On September 15, 2002, the respondents' services were terminated as a result of RMN's

reorganization/restructuring; they were given their separation pay — P631,250.00 for Ybarola, and P481,250.00

for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were later consolidated)

against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims, including attorney's

fees. They indicated that their monthly salary rates were P60,000.00 for Ybarola and P40,000.00 for Rivera.

The Compulsory Arbitration Proceedings

The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of the full

benefits due them; while they admitted that they signed release documents, they did so due to dire necessity.

The petitioners denied liability, contending that the amounts the respondents received represented a fair and

reasonable settlement of their claims, as attested to by the release/quitclaim affidavits which they executed

freely and voluntarily. They belied the respondents' claimed salary rates, alleging that they each received a

monthly salary of P9,177.00, as shown by the payrolls.

On July 18, 2007, Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the

payment of additional separation pay to the respondents — P490,066.00 for Ybarola and P429,517.55 for

Rivera. 5 The labor arbiter adjusted the separation pay award based on the respondents' Certificates of

Compensation Payment/Tax Withheld showing that Ybarola and Rivera were receiving an annual salary of

P482,477.61 and P697,303.00, respectively.

On appeal by the petitioners to the National Labor Relations Commission (NLRC), the NLRC set aside the labor

arbiter's decision and dismissed the complaint for lack of merit. 6 It ruled that the withholding tax certificate

cannot be the basis of the computation of the respondents' separation pay as the tax document included the

respondents' cost-of-living allowance and commissions; as a general rule, commissions cannot be included in the

base figure for the computation of the separation pay because they have to be earned by actual market

transactions attributable to the respondents, as held by the Court in Soriano v. NLRC 7 and San Miguel Jeepney

Service v. NLRC. 8 The NLRC upheld the validity of the respondents' quitclaim affidavits as they failed to show

that they were forced to execute the documents.

From the NLRC, the respondents sought relief from the CA through a petition for certiorari under Rule 65 of the

Rules of Court.

The CA Decision and the Court's Ruling

In its decision 9 of February 17, 2011, the CA granted the petition and set aside the assailed NLRC dispositions.

It reinstated the labor arbiter's separation pay award, rejecting the NLRC's ruling that the respondents'

commissions are not included in the computation of their separation pay. It pointed out that in the present case,

the respondents earned their commissions through actual market transactions attributable to them; these

commissions, therefore, were part of their salary.

The appellate court declared the release/quitclaim affidavits executed by the respondents invalid for being

against public policy, citing two reasons: (1) the terms of the settlement are unconscionable; the separation pay

the respondents received was deficient by at least P400,000.00 for each of them; and (2) the absence of

voluntariness when the respondents signed the document, it was their dire circumstances and inability to

support their families that finally drove them to accept the amount the petitioners offered. Significantly, they

dallied and it took them three months to sign the release/quitclaim affidavits.

The petitioners moved for reconsideration, but the CA denied the motion in a resolution 10 dated September 23,

2011. Thus, the petitioners appealed to this Court through a petition for review on certiorari under Rule 45 of

the Rules of Court.

49

By a Resolution 11 dated December 7, 2011, the Court denied the petition for failure to show any reversible

error or grave abuse of discretion in the assailed CA rulings.

The Motion for Reconsideration

The petitioners seek reconsideration of the Court's denial of their appeal on the ground that the CA, in fact,

committed reversible error in: (1) failing to declare that Canoy is not personally liable in the present case; (2)

disregarding the rule laid down in Talam v. National Labor Relations Commission 12 on the proper appreciation

of quitclaims; and (3) disregarding prevailing jurisprudence which places on the respondents the burden of

proving that their commissions were earned through actual market transactions attributable to them.

The petitioners fault the CA for not expressly declaring that no basis exists to hold Canoy personally liable for the

award to the respondents as they failed to specify any act Canoy committed against them or to explain how

Canoy participated in their dismissal. They express alarm as they believe that unless the Court acts, the

respondents will enforce the award against Canoy himself.

On the release/quitclaim issue, the petitioners bewail the CA's disregard of the Court's ruling in Talam that the

quitclaim that Francis Ray Talam, who was not an unlettered employee, executed was a voluntary act as there

was no showing that he was coerced into signing the instrument, and that he received a valuable consideration

for his less than two years of service with the company. They point out that in this case, the labor arbiter and

the NLRC correctly concluded that the respondents are hardly unlettered employees, but intelligent, well-

educated and who were too smart to be caught unaware of what they were doing. They stress, too, that the

respondents submitted no proof that they were in dire circumstances when they executed the release/quitclaim

document.

With regard to the controversy on the inclusion of the respondents' commissions in the computation of their

separation pay, the petitioners reiterate their contention that the respondents failed to show proof that they

earned the commissions through actual market forces attributable to them.

The Respondents' Position

Through their Comment/Opposition (to the Motion for Reconsideration), 13 the respondents pray that the

motion be denied for lack of merit. They argue that the motion is based on arguments already raised in the

petition for review which had already been denied by this Court.

The respondents submit that the issue of Canoy's personal liability has become final and conclusive on the

parties as the petitioners failed to raise the issue on time. They maintain that as the records show, the

petitioners failed to raise the issue in their appeal to the NLRC and neither did they bring it up in their motion for

reconsideration of the CA's decision reinstating the labor arbiter's award.

The Petitioners' Reply

In their reply (to the respondents' Comment/Opposition), 14 the petitioners ask that their petition be reinstated

to allow the full ventilation of the issues presented for consideration. They contend that the respondents merely

reiterated the CA pronouncements and have not confronted the issues raised and the jurisprudence they cited.

On the question of Canoy's personal liability, the petitioners take exception to the respondents' submission that

the matter had been resolved with finality and has become conclusive on them. They assert that they did not

raise the issue with the CA because there was no reason for them to do so as the ruling then being reviewed

was one which held that they were not liable to the respondents.

Our Ruling on the Motion for Reconsideration

We find the motion for reconsideration unmeritorious. The motion raises substantially the same

arguments presented in the petition and we find no compelling justification to grant the reconsideration prayed

for.

50

The petitioners insist that the respondents' commissions were not part of their salaries, because they failed to

present proof that they earned the commission due to actual market transactions attributable to them. They

submit that the commissions are profit-sharing payments which do not form part of their salaries. We are not

convinced. If these commissions had been really profit-sharing bonuses to the respondents, they should have

received the same amounts, yet, as the NLRC itself noted, Ybarola and Rivera received P372,173.11 and

P586,998.50 commissions, respectively, in 2002. 15 The variance in amounts the respondents received as

commissions supports the CA's finding that the salary structure of the respondents was such that they only

received a minimal amount as guaranteed wage; a greater part of their income was derived from the

commissions they get from soliciting advertisements; these advertisements are the "products" they sell. As the

CA aptly noted, this kind of salary structure does not detract from the character of the commissions being part of

the salary or wage paid to the employees for services rendered to the company, as the Court held in Philippine

Duplicators, Inc. v. NLRC. 16

The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission, 17 regarding the

"proper appreciation of quitclaims," as they put it, is misplaced. While Talam, in the cited case, and Ybarola and

Rivera, in this case, are not unlettered employees, their situations differ in all other respects.

In Talam, the employee received a valuable consideration for his less than two years of service with the

company; 18 he was not shortchanged and no essential unfairness took place. In this case, as the CA noted, the

separation pay the respondents each received was deficient by at least P400,000.00; thus, they were given only

half of the amount they were legally entitled to. To be sure, a settlement under these terms is not and cannot be

a reasonable one, given especially the respondents' length of service — 25 years for Ybarola and 19 years for

Rivera. The CA was correct when it opined that the respondents were in dire straits when they executed the

release/quitclaim affidavits. Without jobs and with families to support, they dallied in executing the quitclaim

instrument, but were eventually forced to sign given their circumstances.

Lastly, the petitioners are estopped from raising the issue of Canoy's personal liability. They did not raise it

before the NLRC in their appeal from the labor arbiter's decision, nor with the CA in their motion for

reconsideration of the appellate court's judgment. The risk of having Canoy's personal liability for the judgment

award did not arise only with the filing of the present petition, it had been there all along — in the NLRC, as well

as in the CA.

WHEREFORE, premises considered, we hereby DENY the motion for reconsideration with finality. No second

motion for reconsideration shall be entertained. Let judgment be entered in due course.

SO ORDERED.

||| (Radio Mindanao Network, Inc. v. Ybarola, Jr., G.R. No. 198662, [September 12, 2012])

[G.R. No. 174564. February 12, 2014.]

ATTY. EMMANUEL D. AGUSTIN, JOSEPHINE SOLANO, ADELAIDA FERNANDEZ, ALEJANDRO YUAN,

JOCELYN LAVARES, MARY JANE OLASO, MELANIE BRIONES, ROWENA PATRON, MA. LUISA CRUZ,

SUSAN TAPALES, RUSTY BAUTISTA, and JANET YUAN, petitioners, vs. ALEJANDRO CRUZ-

HERRERA,respondent.

DECISION

REYES, J p:

This is a petition for review on certiorari 1 assailing the Resolution 2 dated September 30, 2005 of the Court of

Appeals (CA) in CA-G.R. SP No. 85556 which approved the joint compromise agreement executed by respondent

Alejandro Cruz-Herrera (Herrera) and the former employees of Podden International Philippines, Inc. (Podden),

51

namely: Josephine Solano, Adelaida Fernandez, Alejandro Yuan, Jocelyn Lavares, Mary Jane Olaso, Melanie

Briones, Rowena Patron, Ma. Luisa Cruz, Susan Tapales, Rusty Bautista, and Janet Yuan (complainants).

The Antecedents

Respondent Herrera was the President of Podden while complainants were assemblers and/or line leader

assigned at the production department. 3 In 1993, the complainants were terminated from employment due to

financial reverses. Upon verification, however, with the Department of Labor and Employment, no such report of

financial reverses or even retrenchment was filed. This prompted the complainants to file a complaint for illegal

dismissal, monetary claims and damages against Podden and Herrera. 4 They engaged the services of Atty.

Emmanuel D. Agustin (Atty. Agustin) to handle the case 5 upon the verbal agreement that he will be paid on a

contingency basis at the rate of ten percent (10%) of the final monetary award or such amount of attorney's

fees that will be finally determined.

Proceedings before the Labor Arbiter

The complainants, thru Atty. Agustin, obtained a favorable ruling before the Labor Arbiter (LA) who disposed as

follows in its Decision 6 dated September 27, 1998, to wit:

WHEREFORE, premises considered, [Podden and Herrera] are hereby directed/ordered to immediately reinstate

the complainants to their former positions without loss of seniority rights and other privileges with full

backwages from date of dismissal up to actual date of reinstatement which as of this month is more or less in

the amount as follows:

COMPLAINANT AMOUNT

[P]238,680.00 = ([P]135.00/day x 26 days

= [P]3,510/mo. x 68 mos.)

1. JOSEPHINE SOLANO [P]238,680.00

2. ADELAIDA FERNANDEZ [P]238,680.00

3. ALEJANDRO YUAN [P]238,680.00

4. JOCELYN LAVARES [P]238,680.00

5. MARY JANE OLASO [P]238,680.00

6. MELANIE BRIONES [P]238,680.00

7. ROWENA PATRON [P]238,680.00

8. MA. LUISA CRUZ [P]238,680.00

9. SUSAN TAPALES [P]238,680.00

10. RUSTY BAUTISTA [P]238,680.00

11. JANET YUAN [P]238,680.00

——————————————

TOTAL [P]2,625,480.00

52

============

[Podden and Herrera] are further ordered to pay complainants their money claims representing their

underpayment of wages, 13th month pay, premium pay for holidays and rest days and service incentive leave

pay to be computed by the Fiscal Examiner of the Research, Information and Computation Unit of the

Commission in due time.

[Podden and Herrera] are furthermore ordered to pay each complainant the amount of [P]40,000.00 as moral

and exemplary damages, as well as ten (10%) of the total awards as attorney's fee.

SO ORDERED. 7

No appeal was taken from the foregoing judgment hence, on February 2, 1999, a motion for execution was filed.

The motion was set for a hearing on February 10, 1999 but was reset twice upon the parties' request for the

purpose of exploring the possibility of settlement. 8

On March 20, 1999, Herrera filed a Manifestation and Motion to deny issuance of the writ stating, among others,

that Podden ceased operations on December 1, 1994 or almost four years before judgment was rendered by the

LA on the illegal dismissal complaint and that nine of the eleven employees have executed Waivers and

Quitclaims rendering any execution of the judgment inequitable. 9

On July 20, 1999, the Computation and Examination Unit of the National Labor Relations Commission (NLRC)

released the computation of the total monetary award granted by the LA amounting to P3,358,441.84. 10

Atty. Agustin opposed Herrera's motion and argued that the issuance of a writ of execution is ministerial because

the LA decision has long been final and executory there being no appeal taken therefrom. He further claimed

that the alleged Waivers and Quitclaims were part of a scheme adopted by Podden to evade its liability and

defraud the complainants. 11

Resolving the conflict, the LA issued its Order 12 dated May 15, 2000 denying the motion for the issuance of a

writ of execution. The LA sustained as valid the Waivers and Quitclaims signed by all and not just nine of the

complainants, based on the following findings:

A cursory examination of the records reveal[s] that complainants, all eleven (11) of them, had indeed executed

their respective waiver and quitclaim thru an instrument entitled "Pagtalikod sa Karapatang Maghabol" absolving

[Podden and Herrera] from any and all liabilities that may arise against the latter to these cases. The

instruments were signed by the complainants and sworn to before Notary Public Amparo G. Ocampo.

Considering the fact that the complainants, through their common counsel, received a copy of the Decision in

these cases on December 28, 1998, it could only be supposed that as of that date they signed the instrument of

waiver and quitclaim on March 2, 1999, April 8, 1999 and March 31, 2000, they were already properly apprised

about the decision having been issued in their favor, more particularly the contents thereof, by their esteemed

counsel. The fact that complainants would execute such waiver and quitclaim, notwithstanding, only shows the

spontaneity and voluntariness of their deed.

Moreover, and as the instrument of waiver and quitclaim would show, the letter was written in the vernacular of

Filipino language. Complainants who are all presumed to be knowledgeable about the national language could

not have been misled with respect to the real meaning and plain import of the words used in the instrument.

That complainants meant and understood what they signed in the instrument is best shown by the fact that in

the subsequent hearings scheduled to take up the motion for writ of execution and the opposition thereto

(considering the relative importance of the matters raised and substantial awards to the complainants)[,]

complainants have failed to show up in any of them. 13

Accordingly, the quitclaims were held to have superseded the matter of issuing a writ of execution. Anent Atty.

Agustin's fees, the LA held that he is entitled to ten percent (10%) of the total monetary award obtained by the

complainants from the compromise agreement. The order disposed thus:

53

WHEREFORE, premises considered, the motion for writ of execution is denied on [the] ground that complainants

have already settled their cases with [Podden and Herrera].

On account of the settlement, however, [Podden and Herrera] are hereby ordered to pay complainants' counsel

ten (10%) percent of the amount received by complainants as attorney's fees.

SO ORDERED. 14

Ruling of the NLRC

On appeal, the NLRC reversed the LA Order dated May 15, 2000 for the reason that it unlawfully amended,

altered and modified the final and executory LA Decision dated September 27, 1998. The quitclaims were also

held invalid based on the unconscionably low amount received by each of the complainants thereunder which

ranged between P10,000.000 and P20,000.00 as against the judgment award of P238,680.00 for each individual

complainant. This factor was found by the NLRC to be a clear proof that the quitclaims were indeed wangled

from the unsuspecting complainants. The NLRC Resolution 15 dated May 7, 2003 thus held:

WHEREFORE, the appeal is GRANTED. The Order a quo of May 15, 2000 is hereby reversed and set aside and

a new one entered ordering the Labor Arbiter a quo to immediately issue the corresponding writ of execution for

the enforcement of the decision rendered in this case. The quitclaims executed by the complainants are hereby

nullified. However, any amount received by the complainants under the quitclaims shall be deducted from the

award due each of them.

SO ORDERED. 16

The NLRC reiterated the foregoing judgment in the Order 17 dated May 31, 2004 which denied Podden and

Herrera's motion for reconsideration. On August 13, 2004, the NLRC issued an Entry of Judgment declaring that

its Order dated May 31, 2004 has become final and executory on June 20, 2004. 18

Ruling of the CA

On August 6, 2004, Herrera filed a petition for certiorari before the CA assailing the issuances of the NLRC.

During the pendency of the petition or on August 30, 2005, a joint compromise agreement was submitted to the

CA narrating as follows:

WHEREAS, the parties have discussed their differences; claims, counterclaims and other issues in the above-

entitled cases and have decided to amicably and mutually settle the same;

WHEREAS, the parties have agreed that [Herrera] shall pay each of the [complainants] immediately upon the

signing of the Joint Compromise Agreement the amount of Php35,000.00 to each;

WHEREAS, the parties have agreed that [Herrera] shall pay the costs of the suit and attorney's fees of [the

complainants] equivalent to 10% (ten percent) of the total settlement agreement;

WHEREAS, the parties, their heirs, and assigns, agree to have the present case dismissed WITH PREJUDICE,

immediately; . . .[.] 19

In its assailed Resolution 20 dated September 30, 2005, the CA found the joint compromise agreement

consistent with law, public order and public policy, and consequently stamped its approval thereon and entered

judgment in accordance therewith, viz.:

Finding the above terms and conditions not contrary to law, public order and public policy, the parties' prayer

that the foregoing joint compromise agreement be approved and the extant case be dismissed with prejudice

is GRANTED and the agreement ADMITTED. Judgment is hereby entered in accordance thereto.

Parties are enjoined to strictly comply with this judgment on compromise.

SO ORDERED. 21

54

Atty. Agustin moved for the reconsideration of the foregoing resolution but his motion was denied in the CA

Resolution 22 dated September 8, 2006.

Displeased, Atty. Agustin, with the complainants named as his co-petitioners, interposed the present recourse

contending that the resolutions of the CA violated the principle of res judicata because they amended and

altered the final and executory LA Decision dated September 27, 1998 and NLRC Resolution dated May 7, 2003

on the basis of an unconscionable compromise agreement that was executed without his knowledge and

consent. Atty. Agustin prays that the joint compromise agreement be set aside, the LA Decision dated

September 27, 1998 executed and Herrera ordered to pay him P335,844.18 as attorney's fees pursuant to the

final and executory monetary award originally obtained by the complainants before the LA.

Our Ruling

We deny the petition.

The petition is dismissible outright for being accompanied by a defective certification of non-forum shopping

having been signed by Atty. Agustin instead of the complainants as the principal parties.

It has been repeatedly emphasized that in the case of natural persons, the certification against forum shopping

must be signed by the principal parties themselves and not by the attorney. 23 The purpose of the rule rests

mainly on practical sensibility. As explained in Clavecilla v. Quitain: 24

. . . [T]he certification (against forum shopping) must be signed by the plaintiff or any of the principal parties

and not by the attorney. For such certification is a peculiar personal representation on the part of the principal

party, an assurance given to the court or other tribunal that there are no other pending cases involving basically

the same parties, issues and causes of action.

. . . Obviously it is the petitioner, and not always the counsel whose professional services have been retained for

a particular case, who is in the best position to know whether he or it actually filed or caused the filing of a

petition in that case. Hence, a certification against forum shopping by counsel is a defective certification. 25

The Court has espoused leniency and overlooked such procedural misstep in cases bearing substantial merit

complemented by the written authority or general power of attorney granted by the parties to the actual

signatory. 26 However, no analogous justifiable reasons exist in the case at bar neither do the claims of Atty.

Agustin merit substantial consideration to justify a relaxation of the rule.

It is apparent that the complainants did not seek the instant review because they have already settled their

dispute with Herrera before the CA. It is Atty. Agustin's personal resolve to pursue this recourse premised on his

unwavering stance that the joint compromise agreement signed by the complainants was inequitable and

devious as they were denied the bigger monetary award adjudged by a final and executory judgment.

Atty. Agustin ought to be reminded that his professional relation with his clients is one of agency under the rules

thereof "[t]he acts of an agent are deemed the acts of the principal only if the agent acts within the scope of his

authority." 27 It is clear that under the circumstances of this case, Atty. Agustin is acting beyond the scope of

his authority in questioning the compromise agreement between the complainants, Podden and Herrera.

It is settled that parties may enter into a compromise agreement without the intervention of their

lawyer. 28 This precedes from the equally settled rule that a client has an undoubted right to settle a suit

without the intervention of his lawyer for he is generally conceded to have the exclusive control over the subject-

matter of the litigation and may, at any time before judgment, if acting in good faith, compromise, settle, and

adjust his cause of action out of court without his attorney's intervention, knowledge, or consent, even though

he has agreed with his attorney not to do so. Hence, the absence of a counsel's knowledge or consent does not

invalidate a compromise agreement. 29

Neither can a final judgment preclude a client from entering into a compromise. Rights may be waived through a

compromise agreement, notwithstanding a final judgment that has already settled the rights of the contracting

55

parties provided the compromise is shown to have been voluntarily, freely and intelligently executed by the

parties, who had full knowledge of the judgment. Additionally, it must not be contrary to law, morals, good

customs and public policy. 30

In the present case, the allegations of vitiated consent proffered by Atty. Agustin are all presumptions and

suppositions that have no bearing as evidence. There is no proof that the complainants were forced, intimidated

or defrauded into executing the quitclaims. On the contrary, the LA correctly observed that, based on the

following facts, the complainants voluntarily entered into and fully understood the contents and effect of the

quitclaims, to wit: (1) they have already received a copy and hence aware of the LA Decision dated September

27, 1998 when they signed the quitclaims on March 2, 1999, April 8, 1999 and March 31, 2000; (2) the

quitclaims were written in Filipino language which is known to and understood by the complainants; (3) none of

the complainants attended the hearings on the motion for execution of the LA Decision dated September 27,

1998; (4) they were consistent in their manifestations before the NLRC and the CA that they have already settled

their claims against Podden and Herrera hence, their request for the termination of the appeals filed by Atty.

Agustin before the said tribunals.

Furthermore, it is the complainants themselves who can impugn the consideration of the compromise as being

unconscionable 31 but no such repudiation was manifested before the Court or the courts a quo.

The ruling in Unicane Workers Union-CLUP v. NLRC 32 cited by Atty. Agustin is not applicable to the facts at

hand. The circumstances which led the Court to annul the quitclaim in Unicane are not attendant in the present

case. In Unicane, the attorney-in-fact who signed the quitclaim in behalf of the employees exceeded the scope

of his authority thus prejudicing the latter. Consequently, it was ruled that the quitclaim did not bind the

employees. No akin situation exists in the case at bar.

Further, Atty. Agustin's claim for his unpaid attorney's fees cannot nullify the subject joint compromise

agreement. 33

A compromise agreement is binding only between its privies and could not affect the rights of third persons who

were not parties to the agreement. One such third party is the lawyer who should not be totally deprived of his

compensation because of the compromise subscribed by the client. Otherwise, the terms of the compromise

agreement will be set aside, and the client shall be bound to pay the fees agreed upon with his lawyer. If the

adverse party settled the suit in bad faith, he will be made solidarily liable with the client for the payment of

such fees. The following discussions in Gubat v. National Power Corporation 34 elaborate on this matter,viz.:

As the validity of a compromise agreement cannot be prejudiced, so should not be the payment of a lawyer's

adequate and reasonable compensation for his services should the suit end by reason of the settlement. The

terms of the compromise subscribed to by the client should not be such that will amount to an entire deprivation

of his lawyer's fees, especially when the contract is on a contingent fee basis. In this sense, the compromise

settlement cannot bind the lawyer as a third party. A lawyer is as much entitled to judicial protection against

injustice or imposition of fraud on the part of his client as the client is against abuse on the part of his counsel.

The duty of the court is not only to ensure that a lawyer acts in a proper and lawful manner, but also to see to it

that a lawyer is paid his just fees.

Even if the compensation of a counsel is dependent only upon winning a case he himself secured for his client,

the subsequent withdrawal of the case on the client's own volition should never completely deprive counsel of

any legitimate compensation for his professional services. In all cases, a client is bound to pay his lawyer for his

services. The determination of bad faith only becomes significant and relevant if the adverse party will likewise

be held liable in shouldering the attorney's fees. 35(Citations omitted)

There is truth to Atty. Agustin's argument that the compromise agreement did not include or affect his attorney's

fees granted in the final and executory LA Decision dated September 27, 1998. Attorney's fees become vested

right when the order awarding those fees becomes final and executory and any compromise agreement

removing that right must include the lawyer's participation if it is to be valid against him. 36

56

However, equity dictates that an exception to such rule be made in this case with the end in view that the fair

share of litigants to the benefits of a suit be not displaced by a contract for legal services.

It must be noted that the complainants were laborers who desired to contest their dismissal for being illegal.

With no clear means to pay for costly legal services, they hired Atty. Agustin whose remuneration was subject to

the success of the illegal dismissal suit. Before a judgment was rendered in their favor, however, the company

closed down and settlement of the suit for an amount lesser than their monetary claims, instead of execution of

the favorable judgment, guaranteed the atonement for their illegal termination. To make the complainants liable

for the P335,844.18 attorney's fees adjudged in the LA Decision of September 27, 1998 would be allowing Atty.

Agustin to get a lion's share of the P385,000.00 37 received by the former from the compromise agreement that

terminated the suit; to allow that to happen will contravene the raison d'être for contingent fee arrangements.

Contingent fee arrangements "are permitted because they redound to the benefit of the poor client and the

lawyer 'especially in cases where the client has meritorious cause of action, but no means with which to pay for

legal services unless he can, with the sanction of law, make a contract for a contingent fee to be paid out of the

proceeds of the litigation. Oftentimes, the contingent fee arrangement is the only means by which the poor and

helpless can seek redress for injuries sustained and have their rights vindicated.'" 38

Further, a lawyer is not merely the defender of his client's cause. He is also, first and foremost, an officer of the

court and participates in the fundamental function of administering justice in society. It follows that a lawyer's

compensation for professional services rendered is subject to the supervision of the court in order to maintain

the dignity and integrity of the legal profession to which he belongs. 39 "[L]awyering is not a moneymaking

venture and lawyers are not merchants. Law advocacy, it has been stressed, is not capital that yields profits. The

returns it births are simple rewards for a job done or service rendered." 40

More importantly, Atty. Agustin was not totally deprived of his fees. Under the joint settlement agreement, he is

entitled to receive ten percent (10%) of the total settlement. We find the said amount reasonable considering

that the nature of the case did not involve complicated legal issues requiring much time, skill and effort.

It cannot be said that Herrera negotiated for the compromise agreement in bad faith. It remains undisputed that

Podden has ceased operations on December 1, 1994 or almost four years before the LA Decision dated

September 27, 1998 was rendered. 41 In view thereof, the implementation of the award became unfeasible and

a compromise settlement was more beneficial to the complainants as it assured them of reparation, albeit at a

reduced amount. This was the same situation prevailing at the time when Herrera manifested and reiterated

before the CA that a concession has been reached by the parties. Thus, the motivating force behind the

settlement was not to deprive or prejudice Atty. Agustin of his fees, but rather the inability of a dissolved

corporation to fully abide by its adjudged liabilities and the certainty of payment on the part of the complainants.

Also, collusion between complainants and Herrera cannot be inferred from the fact that Atty. Agustin obtained

lesser attorney's fees under the compromise agreement as against that which he could have gained if the LA

Decision dated September 27, 1998 was executed. Unless there is a showing that the complainants actually

received an amount higher than that stated in the settlement agreement, it cannot be said that Atty. Agustin

was unlawfully prejudiced. There is no proof submitted supporting such inference.

Under the above circumstances, Herrera cannot be made solidarily liable for Atty. Agustin's fees which, as a rule,

are the personal obligation of his clients, the complainants. However, pursuant to his undertaking in the joint

compromise agreement, Herrera is solely bound to compensate Atty. Agustin at the rate of ten percent (10%) of

the total settlement agreement. 42 Since the entire provisions of the joint compromise agreement are not

available in the records and only the relevant portions thereof were quoted in the CA Resolution dated

September 30, 2005, the Court deems it reasonable to impose a period of ten (10) days within which Herrera

should fulfill his obligation to Atty. Agustin.

WHEREFORE, premises considered, the petition is hereby DENIED. The Resolution dated September 30, 2005

of the Court of Appeals in CA-G.R. SP No. 85556 isAFFIRMED.

57

Pursuant to his undertaking in the joint compromise agreement, respondent Alejandro Cruz-Herrera

is ORDERED to pay, give, deliver to Atty. Emmanuel D. Agustin ten percent (10%) of the total settlement

agreement within a period of ten (10) days from notice hereof. Both of them are hereby REQUIRED to report

compliance with the foregoing order within a period of five days thereafter.

SO ORDERED.

||| (Agustin v. Cruz-Herrera, G.R. No. 174564, [February 12, 2014])

Remedies of Third Party Claimant

[G.R. No. 126322. January 16, 2002.]

YUPANGCO COTTON MILLS, INC., petitioner, vs. COURT OF APPEALS, HON. URBANO C. VICTORIO,

SR., Presiding Judge, RTC Branch 50, Manila, RODRIGO SY MENDOZA, SAMAHANG MANGGAGAWA

NG ARTEX (SAMAR-ANGLO) represented by its Local President RUSTICO CORTEZ, and WESTERN

GUARANTY CORPORATION, respondents.

Ermitaño Sangco Manzano & Associates for petitioner.

Ninfa P. Camitan for private respondent Western Guaranty Corp.

Potenciano Flores, Jr. for private respondent SAMAR-ANGLO & R. Mendoza.

SYNOPSIS

The petitioner alleged that a sheriff of the National Labor Relations Commission (NLRC) erroneously levied upon

certain properties which it claims ownership. As a consequence, it filed an adverse claim with the NLRC, which

was dismissed by the labor arbiter. The dismissal was appealed by the petitioner to the NLRC, but the same was

also dismissed for lack of merit. In the meantime, petitioner filed an original mandatory injunction with the

NLRC. While the injunction case was pending before the NLRC, petitioner filed a complaint for accion

reivindicatoria with the Regional Trial Court of Manila. The trial court dismissed the complaint, hence, petitioner

brought the case to the Court of Appeals. The Court of Appeals dismissed the petition on the ground of forum

shopping and lack of jurisdiction. Upon denial of the motion for reconsideration, the petitioner filed this appeal

before the Supreme Court.

The Supreme Court reversed the decision of the Court of Appeals. The Court ruled that there was no forum

shopping in the case at bar as there was no identity of parties, rights and causes of action and reliefs sought.

The case before the NLRC was a labor case on which petitioner was not a party, while the reivindicatoria case

filed by the petitioner in the trial court was to recover the property illegally levied upon and sold at public

auction. The Court also ruled that a third party may avail himself of alternative remedies cumulatively, and one

will not preclude the third party from availing himself of the alternative remedies in the event he failed in the

remedy first availed of. The Supreme Court annulled the sale on execution of the subject property and the

subsequent sale of the same.

SYLLABUS

1. REMEDIAL LAW; ACTIONS; FORUM SHOPPING; CONSTRUED. — In Golangco v. Court of Appeals, we held:

"What is truly important to consider in determining whether forum shopping exists or not is the vexation caused

the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the

same or related causes and/or grant the same or substantially the same reliefs, in the process creating possibility

of conflicting decisions being rendered by the different for a upon the same issues. ". . . "There is no forum-

shopping where two different orders were questioned, two distinct causes of action and issues were raised, and

two objectives were sought." The rule is that "for forum-shopping to exist both actions must involve the same

transactions, the same circumstances. The actions must also raise identical causes of action, subject matter and

58

issues. In Chemphil Export & Import Corporation v. Court of Appeals, we ruled that: "Forum-shopping or the act

of a party against whom an adverse judgment has been rendered in one forum, of seeking another (and

possible) opinion in another forum (other than by appeal or the special civil action of certiorari), or the institution

of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other

would make a favorable disposition."

2. ID.; ID.; THIRD PARTY CLAIMANT; MAY AVAIL OF SEVERAL ALTERNATIVE REMEDIES FOR THE PROTECTION

OF HIS INTEREST. — A third party whose property has been levied upon by a sheriff to enforce a decision

against a judgment debtor is afforded with several alternative remedies to protect its interests. The third party

may avail himself of alternative remedies cumulatively, and one will not preclude the third party from availing

himself of the other alternative remedies in the event he failed in the remedy first availed of. Thus, a third party

may avail himself of the following alternative remedies: a) File a third party claim with the sheriff of the Labor

Arbiter, and b) If the third party claim is denied, the third party may appeal the denial to the NLRC. Even if a

third party claim was denied, a third party may still file a proper action with a competent court to recover

ownership of the property illegally seized by the sheriff. This finds support in Section 17 (now 16), Rule 39,

Revised Rules of Court. In light of the above, the filing of a third party claim with the Labor Arbiter and the NLRC

did not preclude the petitioner from filing a subsequent action for recovery of property and damages with the

Regional Trial Court. And, the institution of such complaint will not make petitioner guilty of forum shopping.

3. ID.; ID.; ID.; FILING OF SEPARATE CIVIL ACTION FOR RECOVERY OF OWNERSHIP OF THE PROPERTY

LEVIED SHOULD NOT BE CONSIDERED INTERFERENCE UPON THE MAIN ACTION. — Jurisprudence is likewise

replete with rulings that since the third-party claimant is not one of the parties to the action, he could not,

strictly speaking, appeal from the order denying his claim, but should file a separate reivindicatory action against

the execution creditor or the purchaser of the property after the sale at public auction, or a complaint for

damages against the bond filed by the judgment creditor in favor of the sheriff. And in Lorenzana v. Cayetano,

we ruled that: "The rights of a third-party claimant should not be decided in the action where the third-party

claim has been presented, but in a separate action to be instituted by the third person. The appeal that should

be interposed if the term 'appeal' may properly be employed, is a separate reivindicatory action against the

execution creditor or the purchaser of the property after the sale at public auction, or complaint for damages to

be charged against the bond filed by the judgment creditor in favor of the sheriff. Such reivindicatory action is

reserved to the third-party claimant." A separate civil action for recovery of ownership of the property would not

constitute interference with the powers or processes of the Arbiter and the NLRC which rendered the judgment

to enforce and execute upon the levied properties. The property levied upon being that of a stranger is not

subject to levy. Thus, a separate action for recovery, upon a claim and prima-facie showing of ownership by the

petitioner, cannot be considered as interference.

D E C I S I O N

PARDO, J p:

The Case

The case is a petition for review on certiorari of the decision of the Court of Appeals 1 dismissing the petition

ruling that petitioner was guilty of forum shopping and that the proper remedy was appeal in due course,

not certiorari or mandamus.

In its decision, the Court of Appeals sustained the trial court's ruling that the remedies granted under Section 17,

Rule 39 of the Rules of Court are not available to the petitioner because the Manual of Instructions for Sheriffs of

the NLRC does not include the remedy of an independent action by the owner to establish his right to his

property.

The Facts

The facts, as found by the Court of Appeals, are as follows:

59

"From the records before us and by petitioner's own allegations and admission, it has taken the following actions

in connection with its claim that a sheriff of the National Labor Relations Commission "erroneously and lawfully

levied" upon certain properties which it claims as its own.

"1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995.

"2. It filed an Affidavit of Adverse Claim with the National Labor Relations Commission (NLRC) on July 4, 1995,

which was dismissed on August 30, 1995, by the Labor Arbiter.

"3. It filed a petition for certiorari and prohibition with the Regional Trial Court of Manila, Branch 49, docketed as

Civil Case No. 95-75628 on October 6, 1995. The Regional Trial Court dismissed the case on October 11, 1995

for lack of merit.

"4. It appealed to the NLRC the order of the Labor Arbiter dated August 13, 1995 which dismissed the appeal for

lack of merit on December 8, 1995.

"5. If filed an original petition for mandatory injunction with the NLRC on November 16, 1995. This was docketed

as Case No. NLRC-NCR-IC. 0000602-95. This case is still pending with that Commission.

"6. It filed a complaint in the Regional Trial Court in Manila which was docketed as Civil Case No. 95-76395. The

dismissal of this case by public respondent triggered the filing of the instant petition.

"In all of the foregoing actions, petitioner raised a common issue, which is that it is the owner of the properties

located in the compound and buildings of Artex Development Corporation, which were erroneously levied upon

by the sheriff of the NLRC as a consequence of the decision rendered by the said Commission in a labor case

docketed as NLRC-NCR Case No. 00-05-02960-90." 2

On March 29, 1996, the Court of Appeals promulgated a decision 3 dismissing the petition on the ground of

forum shopping and that petitioner's remedy was to seek relief from this Court.

On April 18, 1996, petitioner filed with the Court of Appeals a motion for reconsideration of the

decision. 4 Petitioner argued that the filing of a complaint for accion reivindicatoria with the Regional Trial Court

was proper because it is a remedy specifically granted to an owner (whose properties were subjected to a writ of

execution to enforce a decision rendered in a labor dispute in which it was not a party) by Section 17 (now 16),

Rule 39, Revised Rules of Court and by the doctrines laid down in Sy v. Discaya, 5 Santos v.

Bayhon 6 and Manliguez v. Court of Appeals. 7

In addition, petitioner argued that the reliefs sought and the issues involved in the complaint for recovery of

property and damages filed with the Regional Trial Court of Manila, presided over by respondent judge, were

entirely distinct and separate from the reliefs sought and the issues involved in the proceedings before the Labor

Arbiter and NLRC. Besides, petitioner pointed out that neither the NLRC nor the Labor Arbiter is empowered to

adjudicate matters involving ownership of properties.

On August 27, 1996, the Court of Appeals denied petitioner's motion for reconsideration. 8

Hence, this appeal. 9

The Issues

The issues raised are (1) whether the Court of Appeals erred in ruling that petitioner was guilty of forum

shopping, and (2) whether the Court of Appeals erred in dismissing the petitioner's accion reivindicatoria on the

ground of lack of jurisdiction of the trial court.

The Court's Ruling

On the first issue raised, we rule that there was no forum shopping.

In Golangco v. Court of Appeals, 10 we held:

60

"What is truly important to consider in determining whether forum shopping exists or not is the vexation caused

the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the

same or related causes and/or grant the same or substantially the same reliefs, in the process creating possibility

of conflicting decisions being rendered by the different for a upon the same issues.

"xxx xxx xxx

"There is no forum-shopping where two different orders were questioned, two distinct causes of action and

issues were raised, and two objectives were sought." (Italics ours)

In the case at bar, there was no identity of parties, rights and causes of action and reliefs sought.

The case before the NLRC where Labor Arbiter Reyes issued a writ of execution on the property of petitioner

was a labor dispute between Artex and Samar-Anglo. Petitioner was not a party to the case. The only issue

petitioner raised before the NLRC was whether or not the writ of execution issued by the labor arbiter could be

satisfied against the property of petitioner, not a party to the labor case.

On the other hand, the accion reivindicatoria filed by petitioner in the trial court was to recover the property

illegally levied upon and sold at auction. Hence, the causes of action in these cases were different.

The rule is that "for forum-shopping to exist both actions must involve the same transactions, the same

circumstances. The actions must also raise identical causes of action, subject matter and issues." 11

In Chemphil Export & Import Corporation v. Court of Appeals, 12 we ruled that:

"Forum-shopping or the act of a party against whom an adverse judgment has been rendered in one forum, of

seeking another (and possible) opinion in another forum (other than by appeal or the special civil action

of certiorari), or the institution of two (2) or more actions or proceedings grounded on the same cause on the

supposition that one or the other would make a favorable disposition."

On the second issue, a third party whose property has been levied upon by a sheriff to enforce a decision

against a judgment debtor is afforded with several alternative remedies to protect its interests. The third party

may avail himself of alternative remedies cumulatively, and one will not preclude the third party from availing

himself of the other alternative remedies in the event he failed in the remedy first availed of.

Thus, a third party may avail himself of the following alternative remedies:

a) File a third party claim with the sheriff of the Labor Arbiter, and

b) If the third party claim is denied, the third party may appeal the denial to the NLRC. 13

Even if a third party claim was denied, a third party may still file a proper action with a competent court to

recover ownership of the property illegally seized by the sheriff. This finds support in Section 17 (now 16), Rule

39, Revised Rules of Court, to wit:

"SEC. 17 (now 16). Proceedings where property claimed by third person. — If property claimed by any other

person than the judgment debtor or his agent, and such person makes an affidavit of his title thereto or right to

the possession thereof, stating the grounds of such right or title, and serve the same upon the officer making

the levy, and a copy thereof upon the judgment creditor, the officer shall not be bound to keep the property,

unless such judgment creditor or his agent, on demand of the officer, indemnify the officer against such claim by

a bond in a sum not greater than the value of the property levied on. In case of disagreement as to such value,

the same shall be determined by the court issuing the writ of execution.

"The officer is not liable for damages, for the taking or keeping of the property, to any third-party claimant

unless a claim is made by the latter and unless an action for damages is brought by him against the officer

within one hundred twenty (120) days from the date of the filing of the bond. But nothing herein contained shall

prevent such claimant or any third person from vindicating his claim to the property by any proper action.

61

"When the party in whose favor the writ of execution runs, is the Republic of the Philippines, or any officer duly

representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for

damages as a result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the

actual damages adjudged by the court shall be paid by the National Treasurer out of such funds as may be

appropriated for the purpose." (Italics ours)

In Sy v. Discaya, 14 we ruled that:

"The right of a third-party claimant to file an independent action to vindicate his claim of ownership over the

properties seized is reserved by Section 17 (now 16), Rule 39 of the Rules of Court, . . .:

"xxx xxx xxx

"As held in the case of Ong v. Tating, et. al., construing the aforecited rule, a third person whose property was

seized by a sheriff to answer for the obligation of a judgment debtor may invoke the supervisory power of the

court which authorized such execution. Upon due application by the third person and after summary hearing, the

court may command that the property be released from the mistaken levy and restored to the rightful owner or

possessor. What said court do in these instances, however, is limited to a determination of whether the sheriff

has acted rightly or wrongly in the performance of his duties in the execution of judgment, more specifically, if

he has indeed taken hold of property not belonging to the judgment debtor. The court does not and cannot pass

upon the question of title to the property, with any character of finality. It can treat of the matter only insofar as

may be necessary to decide if the sheriff has acted correctly or not. It can require the sheriff to restore the

property to the claimant's possession if warranted by the evidence. However, if the claimant's proof do not

persuade the court of the validity of his title or right of possession thereto, the claim will be denied.

"Independent of the above-stated recourse, a third-party claimant may also avail of the remedy known as

'terceria,' provided in Section 17 (now 16), Rule 39, by serving on the officer making the levy an affidavit of his

title and a copy thereof upon the judgment creditor. The officer shall not be bound to keep the property, unless

such judgment creditor or his agent, on demand of the officer, indemnifies the officer against such claim by a

bond in a sum not greater than the value of the property levied on. An action for damages may be brought

against the sheriff within one hundred twenty (120) days from the filing of the bond.

"The aforesaid remedies are nevertheless without prejudice to 'any proper action' that a third-party claimant may

deem suitable to vindicate 'his claim to the property.' Such a 'proper action' is, obviously, entirely distinct from

that explicitly prescribed in Section 17 of Rule 39, which is an action for damages brought by a third-party

claimant against the officer within one hundred twenty (120) days from the date of the filing of the bond for the

taking or keeping of the property subject of the 'terceria.'

"Quite obviously, too, this 'proper action' would have for its object the recovery of ownership or possession of

the property seized by the sheriff, as well as damages resulting from the allegedly wrongful seizure and

detention thereof despite the third-party claim; and it may be brought against the sheriff and such other parties

as may be alleged to have colluded with him in the supposedly wrongful execution proceedings, such as the

judgment creditor himself. Such 'proper action,' as above pointed out, is and should be an entirely separate and

distinct action from that in which execution has issued, if instituted by a stranger to the latter suit.

"The remedies above mentioned are cumulative and may be resorted to by a third-party claimant independent of

or separately from and without need of availing of the others. If a third-party claimant opted to file a proper

action to vindicate his claim of ownership, he must institute an action, distinct and separate from that in which

the judgment is being enforced, with the court of competent jurisdiction even before or without need of filing a

claim in the court which issued the writ, the latter not being a condition sine qua non for the former. In such

proper action, the validity and sufficiency of the title of the third-party claimant will be resolved and a writ of

preliminary injunction against the sheriff may be issued." (Emphasis and italics supplied)

62

In light of the above, the filing of a third party claim with the Labor Arbiter and the NLRC did not preclude the

petitioner from filing a subsequent action for recovery of property and damages with the Regional Trial Court.

And, the institution of such complaint will not make petitioner guilty of forum shopping. 15

In Santos v. Bayhon, 16 wherein Labor Arbiter Ceferina Diosana rendered a decision in NLRC NCR Case No. 1-

313-85 in favor of Kamapi, the NLRC affirmed the decision. Thereafter, Kamapi obtained a writ of execution

against the properties of Poly-Plastic products or Anthony Ching. However, respondent Priscilla Carrera filed a

third-party claim alleging that Anthony Ching had sold the property to her. Nevertheless, upon posting by the

judgment creditor of an indemnity bond, the NLRC Sheriff proceeded with the public auction sale. Consequently,

respondent Carrera filed with Regional Trial Court, Manila an action to recover the levied property and obtained

a temporary restraining order against Labor Arbiter Diosana and the NLRC Sheriff from issuing a certificate of

sale over the levied property. Eventually, Labor Arbiter Santos issued an order allowing the execution to proceed

against the property of Poly-Plastic Products. Also, Labor Arbiter Santos and the NLRC Sheriff filed a motion to

dismiss the civil case instituted by respondent Carrera on the ground that the Regional Trial Court did not have

jurisdiction over the labor case. The trial court issued an order enjoining the enforcement of the writ of

execution over the properties claimed by respondent Carrera pending the determination of the validity of the

sale made in her favor by the judgment debtor Poly-Plastic Products and Anthony Ching.

In dismissing the petition for certiorari filed by Labor Arbiter Santos, we ruled that:

". . .. The power of the NLRC to execute its judgments extends only to properties unquestionably belonging to

the judgment debtor (Special Servicing Corp. v. Centro La Paz, 121 SCRA 748).

"The general rule that no court has the power to interfere by injunction with the judgments or decrees of

another court with concurrent or coordinate jurisdiction possessing equal power to grant injunctive relief, applies

only when no third-party claimant is involved (Traders Royal Bank v. Intermediate Appellate Court, 133 SCRA

141 [1984]). When a third-party, or a stranger to the action, asserts a claim over the property levied upon, the

claimant may vindicate his claim by an independent action in the proper civil court which may stop the execution

of the judgment on property not belonging to the judgment debtor." (Italics ours)

In Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158 [1991], we ruled that:

"The well-settled doctrine is that a 'proper levy' is indispensable to a valid sale on execution. A sale unless

preceded by a valid levy is void. Therefore, since there was no sufficient levy on the execution in question, the

private respondent did not take any title to the properties sold thereunder . . ..

"A person other than the judgment debtor who claims ownership or right over the levied properties is not

precluded, however, from taking other legal remedies." (Italics ours)

Jurisprudence is likewise replete with rulings that since the third-party claimant is not one of the parties to the

action, he could not, strictly speaking, appeal from the order denying his claim, but should file a separate

reivindicatory action against the execution creditor or the purchaser of the property after the sale of public

auction, or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff. 17

And in Lorenzana v. Cayetano, 18 we ruled that:

"The rights of a third-party claimant should not be decided in the action where the third-party claim has been

presented, but in a separate action to be instituted by the third person. The appeal that should be interposed if

the term 'appeal' may properly be employed, is a separate reivindicatory action against the execution creditor or

the purchaser of the property after the sale at public auction, or compliant for damages to be charged against

the bond filed by the judgment creditor in favor of the sheriff. Such reivindicatory action is reserved to the third-

party claimant."

A separate civil action for recovery of ownership of the property would not constitute interference with the

powers or processes of the Arbiter and the NLRC which rendered the judgment to enforce and execute upon the

63

levied properties. The property levied upon being that of a stranger is not subject to levy. Thus, a separate

action for recovery, upon a claim and prima-facie showing of ownership by the petitioner, cannot be considered

as interference.

The Fallo

WHEREFORE, the Court REVERSES the decision of the Court of Appeals and the resolution denying

reconsideration. 19 In lieu thereof, the Court renders judgment ANNULLING the sale on execution of the subject

property conducted by NLRC Sheriff Anam Timbayan in favor of respondent SAMAR-ANGLO and the subsequent

sale of the same to Rodrigo Sy Mendoza. The Court declares the petitioner to be the rightful owner of the

property involved and remands the case to the trial court to determine the liability of respondents SAMAR-

ANGLO, Rodrigo Sy Mendoza, and WESTERN GUARANTY CORPORATION to pay actual damages that petitioner

claimed.

Costs against respondents, except the Court of Appeals.

SO ORDERED.

||| (Yupangco Cotton Mills, Inc. v. Court of Appeals, G.R. No. 126322, [January 16, 2002], 424 PHIL 469-481)