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Alipio Ruga, et. al. vs. NLRC

G.R. No. L-72654-61

January 22, 1990


Petitioners were members of one of several fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises. For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on percentage commission basis. As agreed upon, they received thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the fishing trip, otherwise, they received ten percent (10%) of the total proceeds of the sale. The patron/pilot, chief engineer and master fisherman received a minimum income of P350.00 per week while the assistant engineer, second fisherman, and fisherman-winchman received a minimum income of P260.00 per week. One day, upon arrival at the fishing port, petitioners were told to proceed to the police station for investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the charge claiming that the same was a countermove to their having formed a labor union and becoming members of Defender of Industrial Agricultural Labor Organizations and General Workers Union. Despite the fact that no witnesses were presented to prove the charge and no criminal charges were formally filed, private respondent refused to allow petitioners to return to the fishing vessel to resume their work. Hence, petitioners filed their complaints. Private respondent denied the employer-employee relationship between private respondent and petitioners on the theory that private respondent and petitioners were engaged in a joint venture.

Issue: Whether or not there is an employer-employee relationship.


In determining the existence of an employer-employee relationship, the elements that are generally considered are the following (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. From the four (4) elements mentioned, the Supreme Court has generally relied on the so-called right-of-control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. The test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. The conduct of the fishing operations was shown to be under the control and supervision of private respondent's operations manager. Matters dealing on the fixing of the schedule of the fishing trip and the time to return to the fishing port were shown to be the prerogative of private respondent. While tenure or length of employment is not considered as the test of employment, nevertheless the hiring of petitioners to perform work which is necessary or desirable in the usual business or trade of private respondent for a period of 8-15 years since 1968 qualify them as regular employees within the meaning of Article 281 of the Labor Code as they were indeed engaged to perform activities usually necessary or desirable in the usual fishing business or occupation of private respondent.

Loyola Security and Detective Agency vs. NLRC

G.R. No. 113287

May 9, 1995


Private respondents Victor Prado, Sr. and Matilde Tuscano filed a complaint against petitioners, the Loyola Security and Detective Agency for illegal dismissal, illegal deduction underpayment of wages, non-payment of overtime pay, legal holiday pay, premium pay for holiday and rest day, and violation of P.D. No. 851. The Labor Arbiter ruled in favor of private respondents. NLRC affirmed the decision when appealed. Private respondents then filed a Motion for Issuance of a Writ of Execution. However, they filed a Joint Manifestation acknowledging complete satisfaction of the award. Later, private respondents again filed a Motion for the Issuance of an Alias Writ of Execution for the recovery of the balance of the award, claiming that they received less than the award of the Labor Arbiter. The motion was granted. Petitioners' motion for reconsideration was denied.

Issue: Whether or not entering into a compromise agreement and in accepting an advance constituted a novation of the award.


The Labor Code of the Philippines does not contain any provision on compromise agreements or quitclaims in cases pending before the Labor Arbiter and the NLRC. However, the New Rules of Procedure of NLRC in Section 2, Rule V (Proceedings Before Labor Arbiter) provides that 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 counsels, if any, before the Labor Arbiter. The settlement shall be approved by the Labor Arbiter after being satisfied that it was voluntarily entered into by the parties and after having explained to them the terms and consequences thereof. A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before whom the case is pending shall be approved by him if, after confronting the parties, particularly the complainants, he is satisfied that they understand the terms and conditions of the settlement and that it was entered into freely, and voluntarily by them and the agreement is not contrary to law, morals and public policies.

Ricky Garcia, et al. vs. NLRC

G.R. No. 119649

July 28, 1997


Ninety-five workers, including the twenty-five petitioners herein, were assisted by a labor federation, the National Organization of Workingmen (NOWM) in their suit against respondent companies for illegal dismissal, regularization, underpayment of wages, holiday pay, premium pay etc. They alleged that Armor Industrial Corporation, Gibson Contractor Services, Juner Contractor Services, Libra Manpower Agency and Anjo Contractor, all “labor-only” contractors, recruited them and supplied them to Globe Paper Mills and Keng Hua Paper Products where they performed activities directly necessary to the companies’ principal business. The Labor Arbiter's decision favored them and was affirmed by the NLRC. The disputed Compromise Agreement was executed and settled the case. Respondent Commission rendered its Decision approving the Compromise Agreement, setting aside the decision of the Labor Arbiter and dismissing the instant case. The NLRC held that the complainants were fully aware of the award in their favor when they voluntarily entered into the compromise agreement. They thus disregarded the judgment award and opted for the last and sincere offer of respondent Globe Paper Mills instead of waiting out the appeal filed by respondents. Respondent NLRC added that it cannot subscribe to complainants’ contention that they signed the compromise agreement under the compulson of “dire necessity” and held that position as a mere afterthought.

Issue: Whether or not the validity of a compromise agreement and quitclaims executed during the pendency of appeal to the respondent Commission.


A compromise agreement is executed by parties who adjust their difficulties by mutual consent in order to prevent or to put an end to a lawsuit. Additionally, each of the parties is motivated by “the hope of gaining, balanced by the danger of losing.” Under the Labor Code, any compromise settlement voluntarily agreed upon by the parties with the assistance of the Bureau of Labor Relations or the regional office of the Department of Labor and Employment shall be final and binding upon the parties. Even if contracted without the assistance of labor officials, compromise agreements between workers and their employers have been upheld and considered as valid, accepted and even desirable means of settling disputes. “Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and employee, obviously do not stand on the same footing. The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of job, he had to face the harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence not of choice. One thing, sure however, is that petitioners did not relent their claim. They pressed it. They are deemed not to have waived any of their rights.”

Golden Donuts, Inc. vs. NLRC

G.R. Nos. 113666-68

January 19, 2000


Private respondents were employees of petitioner Golden Donuts, Inc., and were the complainants in three consolidated cases with the Labor Arbiter. The latter had rendered a decision upholding the dismissal of private respondents and ruling that they were bound by the compromise agreement entered into by the union with petitioners. Private respondents interposed an appeal to the NLRC, claiming that the union had no authority to waive or compromise their individual rights and that they were not bound by the compromise agreement entered into by the union with petitioners. NLRC modified the decision of the Labor Arbiter and ordered Golden Donuts, Inc. to reinstate private respondents to their former positions without loss of seniority rights and back-wages limited to three years from the time of their dismissal up to the time of reinstatement.


1. Whether or not a union may compromise or waive the rights to security of tenure and money claims of its minority members, without the latter’s consent. 2. Whether or not the compromise agreement entered into by the union with petitioner company, which has not been consented to nor ratified by respondents minority members has the effect of res judicata upon them.



No. First, even if a clear majority of the union members agreed to a settlement with the

employer, the union has no authority to compromise the individual claims of members who did not consent to such settlement. Rule 138 Section 23 of the 1964 Revised Rules of Court requires a special authority before an attorney may compromise his client’s litigation. "The authority to compromise cannot lightly be presumed and should be duly established by evidence." In the case at bar, minority union members did not authorize the union to compromise their individual claims. 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. As private respondents did not authorize the union to represent them in the compromise settlement, they are not bound by the terms thereof. Second, whether minority union members who did not consent to a compromise agreement are bound by the majority decision approving a compromise settlement has been resolved in the negative.

2. The judgment of the Labor Arbiter based on the compromise agreement in question does not

have the effect of res judicata upon private respondents who did not agree thereto. "A compromise, once approved by final orders of the court has the force of res judicata between the parties and should not be disturbed except for vices of consent or forgery." A compromise is basically a contract perfected by mere consent. "Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract." A compromise agreement is not valid when a party in the case has not signed the same or when someone signs for and in behalf of such party without authority to do so.

Felipe Magbanua, et al. vs. Rizalino Uy

G.R. No. 161003

May 6, 2005


Hearings were conducted to determine the amount of wage differentials due the eight petitioners. The petitioners filed a Motion for Issuance of Writ of Execution. Respondent 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. Together with the manifestation is a Joint Affidavit of petitioners attested to the receipt of payment from respondent and waiving all other benefits due them in connection with their complaint. Six of the petitioners filed a Manifestation requesting that the cases be considered closed and terminated as they are already satisfied of what they have received from respondent. Together with said Manifestation is a Joint Affidavit attesting that they have no more collectible amount from respondent and if there is any, they are abandoning and waiving the same.

Issue: Whether or not the final and executory judgment of the Supreme Court could be subject to compromise settlement.


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. Petitioners voluntarily entered into the compromise agreement. 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.


1. Alipio Ruga, et. al. vs. NLRC, G.R. No. L-72654-61, January 22, 1990

2. Loyola Security and Detective Agency vs. NLRC, G.R. No. 113287, May 9, 1995

3. Ricky Garcia, et al. vs. NLRC, G.R. No. 119649, July 28, 1997

4. Golden Donuts, Inc. vs. NLRC, G.R. Nos. 113666-68, January 19, 2000

5. Felipe Magbanua, et al. vs. Rizalino Uy, G.R. No. 161003, May 6, 2005

Submitted by: Celina May R. Tang, Block A Professor: Atty Mila Raquid-Arroyo