65.

GOLDEN DONUTS INC vs NLRC

GR NO. 113666-68 JAN 19, 2000

ISSUE:
Whether or not a union may compromise or waive the right to security of tenure
and money claims of its minority members, without the latter’s consent?

RULING:
No. Absent a showing of the union’s special authority to compromise the
individual claims of private respondents for reinstatement and back wages, there
is no valid waiver of the aforesaid rights. The judgment of the Labor Arbiter based
on the compromise agreement does not have the effect of res judicata upon
private respondents who did not agree thereto since the requirement of identity
of parties is not satisfied. A judgment upon a compromise agreement has all the
force and effect of any other judgment and is conclusive only upon parties
thereto and their privies. Private respondents have not waived their right to
security of tenure nor can they be barred from entitlement of their individual
claims. Since there was no evidence that private respondents committed any
illegal act, petitioner’s failure to reinstate them after the settlement of the strike
amounts to illegal dismissal.
66. MAGBANUA ET AL vs UY
GR NO. 161003 MAY 6, 2005

ISSUE:
Whether the final and executor judgment of the Supreme Court could be subject
to compromise settlement?

RULING:
Both in the affirmative. A compromise agreement is a contract whereby parties
make reciprocal concessions in order to resolve their differences and thus avoid
or put an end to a law suit. The Court noted that Article 2040 impliedly allowed
such agreements; there was no limitation as to when these should be entered
into. There is no justification to disallow a compromise agreement, solely because
it was entered into after final judgment. The validity of the agreement is
determined by compliance with the requisites and principles of contracts, not by
when it was entered into.
As provided by the law on contracts, a valid compromise must have the following
elements: (1) the consent of the parties to the compromise, (2) an object certain
that is the subject matter of the compromise, and (3) the cause of the obligation
that is established.
The principle of novation supports the validity of a compromise after final
judgment. Novation, a mode of extinguishing an obligation, 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.
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. A compromise of a final
judgment operates as a novation of the judgment obligation, upon compliance
with either requisite. In the present case, the incompatibility of the final judgment
with the compromise agreement is evident, because the latter was precisely
entered into to supersede the former.
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.
67. MINDORO LUMBER AND HARDWARE vs BACAY ET AL
GR NO. 158753 JUNE 8, 2005

ISSUE:
1.) Whether or not the Sama-samang Salaysay sa Pag -uurong ng Sakdal
constitutes a valid compromise agreement considering it was not assisted b
y the BLR or the Regional Office of DOLE?

2.) Whether or not the acknowledgment of the respondents that they each
received the amount of either P3,000.00 or P6,000.00 embodied in the said
Salaysay constitutes a valid quitclaim considering that the individual claims
are ranging from P6,744.20 to P242,626.90?

RULING:

1.) No. The petitioner points out that while the Sama-samang Salaysay sa Pag-
uurong ng Sakdal was executed without the assistance of the Bureau of Lab
or Relations (BLR) or the DOLE Regional Office, the November 4, 1999 Orde
r of the Regional Director in Case No. LSED-RO400-9807-CI-001
nonetheless shows that when Eduardo Bacay appeared before the said offic
e, he was assisted by counsel. The assistance of the BLR or the regional offic
e of the DOLE in the execution of a compromise settlement is a basic requir
ement; without it, there can be no valid compromise settlement. In this cas
e, the petitioner admits that the purported compromise settlement was ex
ecuted by the private respondents without such required assistance. The cl
osest form of assistance adverted to by the petitioner in this case was that
of Bacay’s counsel when the latter appeared before the Office of the Regio
nal Director to file the following: the Sama-samang Salaysay sa Pag-uurong
ng Sakdal executed by the private respondents; a Sinumpaang Salaysay exe
cuted by Bacay withdrawing the complaint; and the Motion to Dismiss. Suc
h assistance, however, is not the “assistance” required by Article 227. As su
ch, the Sama-samang Salaysay sa Pag-uurong ng Sakdal executed by the
respondents cannot qualify as a valid compromise settlement.

2.) No. The petitioner is correct in saying that there are legitimate waivers t
hat represent a voluntary and reasonable settlement of a worker’s claim w
hich should be respected by the courts as the law between the parties. Inde
ed, not all quitclaims are per se invalid or against public policy, except (1)w
here there is clear proof that the waiver was wangled from an unsuspecting
or gullible person, or (2) where the terms of settlement are unconscionable
on their faces; in these cases, the law will step in to annul the questionable
transactions. Such quitclaims are regarded as ineffective to bar the worker
s from claiming the full measure of their legal rights.

In the case at bar, the private respondents’ individual claims, ranging from
P6,744.20 to P242,626.90, are grossly disproportionate to what each of the
m actually received under the Sama-samang Salaysay sa Pag-
uurong ng Sakdal. The amount of the settlement is indubitably unconsciona
ble; hence, ineffective to bar the workers from claiming the full measure of
their legal rights.
68. EDI-STAFF BUILDERS INTERNATIONAL INC vs NLRC
GR NO. 145587 OCT 26, 2007

ISSUE:
Whether or not the Saudi labor laws should be applied?

RULING:
No. The specific Saudi labor laws were not proven in court. EDI did not present
proof as to the existence and the specific provisions of such foreign law. Hence,
processual presumption applies and Philippine labor laws shall be used. Under our
laws, an employee like Gran shall only be terminated upon just cause. The
allegations against him, at worst, shall only merit a suspension not a dismissal. His
incompetence is not proven because prior to being sent to Saudi Arabia, he
underwent the required trade test to prove his competence. The presumption
therefore is that he is competent and that it is upon OAB and EDI to prove
otherwise. No proof of his incompetence was ever adduced in court. His alleged
insubordination is likewise not proven. It was not proven that the submission of
daily track records is part of his job as a computer specialist. There was also a lack
of due process. Under our laws, Gran is entitled to the two notice rule whereby
prior to termination he should receive two notices. In the case at bar, he only
received one and he was immediately terminated on the same day he received the
notice.
Lastly, the quitclaim may not also release OAB from liability. Philippine laws is again
applied here sans proof of Saudi laws. Under Philippine Laws, a quitclaim is
generally frowned upon and are strictly examined. In this case, based on the
circumstances, Gran at that time has no option but to sign the quitclaim. The
quitclaim is also void because his separation pay was merely 2,948 Riyal which is
lower than the $850.00 monthly salary (3,190 Riyal).
69. ARELLANO ET AL vs POWERTECH CORP.
GR NO. 150861 JAN 22, 2008

ISSUE:
Whether or not, the compromise agreement is void?

RULING:
Yes, we give credence to the admission of Gestiada that he received the 150k as
payment for his own backwages. In his letter to Atty. Evangelista, Gestiada said
that he was pressured by Powertech to sign the waiver and quitclaim for
petitioners in order to receive his share in the P2.5 million judgment. Having no
stable job after his dismissal, Gestiada had no other choice but to breach his
fiduciary obligation to petitioners. He succumbed to the pressure of Powertech in
signing the waiver, release and quitclaim in exchange for the 150k. In short, he
colluded with Powertech to the detriment of petitioners. Powertech knew that
Gestiada had plenary authority to act for petitioners in the labor case. It had prior
dealings with him. It also knew that Gestiada was authorized to negotiate for any
amount “he may deem just and reasonable” and to sign waivers and quitclaims
on behalf of petitioners. Powertech obviously used that knowledge, capitalized
on the vulnerable position of Gestiada in entering into the agreement and took
advantage of the situation to the disadvantage of petitioners.To give effect
to the collusion, Gestiada had to get rid of Atty. Evangelista, who had previously
succeeded in nullifying the compromise agreement. He fired Atty. Evangelista
without cause basing his dismissal on his plenary authority as agent of
petitioners. He then procured the services of another lawyer, Atty. Felipe.
In line with Our conclusion that Powertech colluded with Gestiada, the CA gravely
erred in upholding the compromise agreement. The appellate court decision was
premised on the compromise agreement being entered into by Powertech and
Gestiada in good faith. It is now clear that there is ample evidence indicating that
Powertech was negotiating in bad faith and, worse, it colluded with Gestiada in
shortchanging, nay, fraudulently depriving petitioners of their just share in the
award.

Collusion is a species of fraud. Article 227 of the Labor Code empowers the NLRC
to void a compromise agreement for fraud, thus:
Any compromise settlement, including those involving labor standard laws,
voluntarily agreed upon by the parties with the assistance of the Bureau or the
regional office of the Department of Labor, shall be final and binding upon the
parties. The National Labor Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of non-compliance thereof
or if there is prima facie evidence that the settlement was obtained through
fraud, misrepresentation, or coercion.
In fine, We find that the CA erred in upholding the compromise agreement
between Powertech and Gestiada. The NLRC justifiably declared the compromise
agreement as void.
70. GOODRICH MFG. CORP. vs ATIVO ET AL
GR NO. 188002 FEB 1, 2010

ISSUE:
Whether or not respondents may still receive the deficiency amounts due them c
onsidering the release, waiver and quitclaim signed by them?

RULING:

The Court has given effect to quitclaims executed by employees if the employer is
able to prove the following requisites, to wit: (1) the employee executes a deed of
quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parti
es; (3) the consideration of the quitclaim is credible and reasonable; and (4) the c
ontract is not contrary to law, public order, public policy, morals or good customs,
or prejudicial to a third person with a right recognized by law.

In a comment, respondents themselves admitted that they were not coerced to si

gn the quitclaims. They, however, maintain that two (2) reasons moved them to si
gn the said documents: first, they believed Goodrich was terminating its business
on account of financial hardship; and second, they thought petitioners will pay th
em the full amount of their compensation.

The Court is not persuaded. First, the contents of the quitclaim documents that ha
ve been signed by the respondents are simple, clear and unequivocal.Second, res
pondents claim that they were deceived because petitioners did not really termin
ate their business since Mr. Chua Goy had set up another company with the same
line of business as Goodrich. Such contention, however, was not proven during th
e hearing before the Labor Arbiter and the NLRC. And third, the considerations re
ceived by the respondents from Goodrich do not appear to be grossly inadequate
vis-à-vis what they should receive in full because the amount computed by the
Labor Arbiter was even lesser.