McBurnie V Ganzon
October 17, 2013
Facts:
On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal and
other monetary claims against the respondents. McBurnie claimed that on May 11, 1999, he signed a five-year
employment agreement with the company EGI as an Executive Vice-President who shall oversee the
management of the company’s hotels and resorts within the Philippines. He performed work for the company
until sometime in November 1999, when he figured in an accident that compelled him to go back to Australia
while recuperating from his injuries. While in Australia, he was informed by respondent Ganzon that his services
were no longer needed because their intended project would no longer push through.
The respondents opposed the complaint, contending that their agreement with McBurnie was to
jointly invest in and establish a company for the management of hotels. They did not intend to create an
employer-employee relationship, and the execution of the employment contract that was being invoked by
McBurnie was solely for the purpose of allowing McBurnie to obtain an alien work permit in the Philippines. At
the time McBurnie left for Australia for his medical treatment, he had not yet obtained a work permit.
In a Decisiondated September 30, 2004, the LA declared McBurnie as having been illegally dismissed
from employment, and thus entitled to receive: (a) US$985,162.00 as salary and benefits for the unexpired term
of their employment contract, (b) ₱2,000,000.00 as moral and exemplary damages, and (c) attorney’s fees
equivalent to 10% of the total monetary award.
On appeal, the NLRC dismissed the appeal and motion to reduce the bond of approximately P60M.
On one of the many appeals to CA, it granted the motion to reduce appeal bond and directed NLRC to give due
course to their appeal. NLRC then reversed and set aside the ruling of LA above. The NLRC rule that: (1)
McBurnie was never an employee of the respondents and (2) he failed to obtain work permit that would have
allowed him to work for the respondents. The third division of SC however reversed the decision of CA granting
the motion to reduce the bond and it directive for the NLRC to give course to the appeal. The earlier ruling of LA
thus became final. This is deemed a third MR. (Note: The court held that even if it is procedurally defective since
it’s already a third MR, it does not preclude the court from ruling for the sake of substantial justice.)
Issue: W/NMcBurnie, an Australian national can be considered as an employee of Ganzon? NO
 The court basically adopted the ruling of NLRC.
 Court held that before McBurnie can allege illegal dismissal, it was necessary for him to establish, first
and foremost, that he was qualified and duly authorize to obtain employment w/in our jurisdiction.
This requirement for foreigners who intend to work w/in the country to obtain employment permit is
laid down in Art. 40 Title II of the Labor Code. Failure to do so poses serious problem in obtaining
relief from the Court. Hence, by the very fact that McBurnie failed to obtain employment permit
necessitates the dismissal of his labor complaint.
 The court also noted that McBurnie failed to establish employer –employee relationship. The records
disclose that employment of McBurnie is conditional on the successful completion of the project
financing for the hotel project in Baguio City and his acquisition of Alien Employment Permit.
o It must be noted that the project didn’t push through.
 McBurnie likewise failed to prove employer-employee relationship in accordance w/ the four-fold
test: (1) selection & engagement (2) payment of wages (3) power of dismissal and (4) control.
 McBurnie also failed to show any document such as payslips or vouchers of his salaries during the
time that he allegedly worked for the respondent.
G.R. No. 110494 November 18, 1996
REY GARCIA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Second Division, composed of HON.
EDNA BONTO-PEREZ as Presiding Commissioner, HON. ROGELIO RAYALA, as Ponente Commissioner and HON.
DOMINGO H. ZAPANTA as Commissioner, and MAHAL KONG PILIPINAS, INC., respondents
KAPUNAN, J.:
Sometime in September, 1990, petitioner Rey O Garcia was hired by private respondent Mahal Kong Pilipinas,
Inc. (MKPI) to review and edit articles, new items, literary contributions, essays, manuscripts, and other features
to be published in the Say Magazine and other publications owned by private respondent.
On March 16, 1992, petitioner's employment was terminated. At that time, he was allegedly receiving a monthly
salary of Eight Thousand Pesos (P8,000.00). Consequently, petitioner filed a complaint for illegal dismissal
against private respondent with National Labor Relations Commission (NLRC). The same was docketed as NLRC
NCR-00-04-02249-92.
Summons were thereafter duly served on private respondent to appear for a mandatory conference to be held
on April 29, 1992
On the appointed date, private respondent, represented by Necy Avecilla, sought a postponement of the
conference. The motion was granted and the date for the conference was reset to May 8, 1992.
On May 8, 1992, private respondent failed to appear prompting the Labor Arbiter to again reset the date of the
conference to May 27, 1992 with a warning that failure to appear and to submit its position paper on the said
date will be deemed a waiver of its right to be heard and to present its evidence.
On May 27, 1992, both parties appeared. Petitioner filed an amended complaint, a copy of which was served on
private respondent in open court. By mutual agreement of the parties, the filing of their respective position
papers as well as the next hearing was scheduled on June 9, 1992.
On said date, private respondent again failed to attend. It however, filed a letter requesting for the
postponement of the hearing. Petitioner vigorously objected and instead moved that private respondent be
declared in default and that he be allowed to present his evidence ex parte. Said motion was granted and
petitioner was given one (1) week to submit his position paper and documentary evidence after which the case
was to be considered submitted for decision.
On June 11, 1992, petitioner filed his position paper
On June 15, 1992, private respondent, through a letter from Marilou L. Bacobo, requested Labor Arbiter Nieves
V de Castro for time to answer petitioner's allegations. The letter-request found to be merely dilatory was
denied.
On August 13, 1992, Labor Arbiter Nieves V de Castro render decision, the decretal portion of which reads
WHEREFORE, respondent is hereby directed to reinstate complainant to his former
position effective August 16, 1992 with full backwages of P24,000 (from March 16, 1992 to
August 15, 1992) and all other benefits complainant was receiving prior to his termination
with notice to respondent that reinstatement order is immediately executory even
pending appeal.
SO ORDERED. 1
On September 10, 1992, private respondent received a copy of the said decision. However, instead of filing an
appeal therefrom, private respondent, through its company president Michael G. Say, wrote yet another letter
to the labor arbiter expressing suprise and disappointment over an allegedly erroneous decision. The letter
reads in full
DATE : 10 September 1992
TO : HON NIEVES DE CASTRO
FROM : MAHAL KONG PILIPINAS, INC.
RE : MANIFESTATION
 This is in response to the notice of judgment we have received this day, from your good office, with
decision dated August 13, 1992.
Your decision regarding the reinstating of Mr. Rey Garcia in the company is suprising and appalling
(sic). We would like to call your attention to a gross error of judgment.
1. It is not true that the complainant's contract with MAHAL KONG PILIPINAS, INC. took (in) effect in
September, 1990. But he used to be the contractor for editing of MAHAL KONG PILIPINAS
FOUNDATION, INC. a separate entity from MAHAL KONG PILIPINAS, INC.
His editing contract with Mahal Kong Pilipinas, Inc. only started last October of 1991.
2. Mahal kong Pilipinas, Inc. had already closed its office at 2nd Floor Silvertree Bldg., San Miguel
Ave., Cor Shaw Blvd. Pasig M.M.
3. It is not our intention to delay the position paper. It is just that we have been very busy (in)
during the past months closing the office.
4. True the complainant acted as the editor-in-chief of Say Magazine. The magazine is under
contract with him as editor-in-chief wherein we pay him per issue. Regarding the books, he only
acted as its honorary editor-in-chief, meaning only in name.
5. You stated dismissal from employment. How can he be dismissed from employment when he
was not even employed by the company. Again, I would like to remind you that Mr. Rey Garcia is
only a contractor, whom we contracted to do the magazine editing for us. He was not directly
under us.
6. How can we reinstate the complainant when there is no more SAY MAGAZINE. The magazine has
been shut down last March 1992.
We believe that Mr. Garcia is only doing this to extort money from us. I hope you will not allow
yourself to be his instrument in this wrongdoing.
Thank you very much.
Sincerely yours,
(SGD.)
MICHAEL G. SAY
Chief Executive Officer 2
As aforestated, no appeal was filed from the said decision, hence, the same became final and executory.
Accordingly, a writ of execution was issue on November 13, 1992.
Subsequently, private respondent filed a motion to quash the writ of execution but the same was not acted
upon.
On November 25, 1992, private respondent filed a petition for preliminary injunction with respondent NLRC.
On January 14, 1993, respondent NLRC issued a resolution disposing thusly:
NLRC NCR IC No. 00319-92 (NLRC NCR CASE No. 00-04-02249-92) entitled Mahal Kong Pilipinas Inc and
Michael Say vs. Hon. de Castro. Rene Masilungan and Rey Garcia — CONSIDERING the petition filed by
petitioner on November 25, 1992, the oral report of the Labor Arbiter assigned in this case, and the
records of the main case (NLRC NCR Case No. 00-04-02249-92), the Commission (Second Division)
RESOLVED to treat the letter of Michael Say, Chief Executive Officer of Mahal Kong Pilipinas, Inc.
received by the Docket Section, National Capital Region, NLRC, on September 10, 1992, (as an appeal)
which shall be resolved, in relation to the subject petition, by the said Division.3
Petitioner moved for a reconsideration of the said resolution contending that the subject decision had long
become final and executory.
On March 10, 1993, respondent NLRC issued a resolution ruling thusly.
WHEREFORE, premises considered the decision dated August 13, 1992 is vacated and set aside and the
writ of execution is hereby declared quashed. Thus, a new decision is hereby rendered remanding the
case for reception of evidence with dispatch.
SO ORDERED. 4
Obviously aggrieved, petitioner filed the instant petition predicated on the following assignment of errors, viz:
A
PUBLIC RESPONDENTS ACTED IN GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OF
JURISDICTION IN TREATING UNVERIFIED LETTER OF PRIVATE RESPONDENTS CHIEF EXECUTIVE OFFICER.
MICHAEL G. SAY, AS AN APPEAL BY SAID RESPONDENT FROM THE DECISION. DATED AUGUST 13, 1992
RENDERED BY LABOR ARBITER NIEVES V DE CASTRO.
B
PUBLIC RESPONDENTS ACTED WITH GRAVEL ABUSE OF DISCRETION. AMOUNTING TO A VIRTUAL
REFUSAL TO PERFORM THE DUTY ENJOINED OR TO ACT AT ALL IN CONTEMPLATION OF LAW. WHEN IT
EXERCISED ITS POWER OF REVIEW IN AN ARBITRARY OR DESPOTION MANNER TO THE PREJUDICE OF
PETITIONER IN FAVORABLY ACTING ON PRIVATE RESPONDENT'S APPEAL DESPITE NON-POSTING OF THE
REQUISITE CASH OR SURETY BONDS, and
C
PUBLIC RESPONDENTS ACTED IN AN ARBITRARY AND DESPOTIC EXERCISE OF POWER IN REMANDING
THE CASE TO THE LABOR ARBITER. 5
The assignment of errors boils down to the lone issue of whether or not respondent NLRC acted with grave
abuse of discretion or in excess of jurisdiction in treating the letter of Michael G Say as an appeal from the labor
arbiter's decision of August 13, 1992.
We rule it did. In blatant disregard for the rule mandating strict and rigorous compliance with the reglementary
period for appeals, respondents NLRC took cognizance of a mere letter from private respondent's president
expressing disappointment over what was perceived to be an appalling judgment of Labor Arbiter de Castro and
treated said letter as private respondent's appeal from the said decision.
The first paragraph of Article 223 of the Labor Code, as amended by R. A. 6715, provides
Art 223. Appeal — Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds.
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter.
(b) If the decision, order or award was secured through fraud or coercion, including graft and
corruption;
(c) If made purely on questions of law, and
Similarly, Section 3(a), Rule VI of the New Rules of Procedure of the NLRC provides:
Sec. 3. Requisites for Perfection of Appeal — (a) The appeal shall be filed within the reglementary period
as provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal
fee and the posting of a cash or surety bond as provided in Section 5 of this Rule, shall be accompanied
by a memorandum of appeal which shall state the grounds relied upon and the arguments in support
thereof; the relief prayed for; and a statement of the date when the appellant received the appealed
decision, order or award and proof of service on the other party of such appeal.
A mere notice of appeal without complying with the other requisites aforestated shall not stop the
running of the period for perfecting an appeal.
Clearly therefore, the perfection of an appeal in the manner and within the period prescribed by law is not only
mandatory but also jurisdictional.6 Failure to conform with the rules regarding appeal will certainly render the
judgment final and executory, hence, unappeasable.
In the case at bar, records bear out that private respondent did not comply with the foregoing mandatory rules
on appeals. After receiving a copy of the decision, private respondent through its president, wrote the labor
arbiter who rendered the decision and expressed dismay over the judgment. No appeal was taken therefrom
within ten (10) days from September 10, 1992, the date private respondent received a copy of such judgment.
Neither was a cash or surety bond posted by the private respondent. For even assuming for the sake of
argument that the letter is a valid notice of appeal, the lack of a cash or surety bonds is fatal to the appeal. The
judgment in question involves a monetary award, and in cases where the judgment involves a monetary award,
the second paragraph of Article 223 of the Labor Code, as amended by R.A. 6715, provides that the appeal by
the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the NLRC in the amount equivalent to the monetary award in the judgment
appealed from.
Clearly, respondent NLRC committed grave abuse of discretion and lack of jurisdiction in treating the letter of
private respondent's president as an appeal from the judgment of the labor arbiter. In the words of the Solicitor
General in his comment, the foregoing observations were summed up as follows
The plain letter sent by private respondent to Labor Arbiter Nieves de Castro is certainly not a notice of
appeal. The letter was not under oath, let alone accompanied by a memorandum of appeal. It was
nothing more than an expression of disappointment over what was perceived as an appalling judgment
of Labor Arbiter de Castro. It did not even seek any affirmative relief. Worse, there is no indication that
petitioner was furnished with a copy of said letter. Likewise, there was no proof that the required
appeal fee and cash or surety bond was paid and/or posted at the time the letter was received by the
Labor Arbiter. The statutory provision regarding an appeal instituted before NLRC uses the world shall
and which indicates that the requirement therein recited are mandatory, and non-observance thereof is
fatal to one's cause. These requirements, being mandatory in character, cannot be waived. Thus, NLRC's
ruling that private respondent's letter be treated as a notice of appeal is invalid. It is contrary to law.
Indeed, for private respondent's failure to comply with the mandatory requirements of a valid appeal,
the Labor Arbiter's Decision has attained finality. Nothing more can be done to revive or reopen the
proceedings a quo. The Labor Arbiter, therefore correctly acted in granting a writ of execution. 7
One final note. Private respondent's asseveration that it has been denied due process is likewise untenable. The
essence of due process is simply an opportunity to be heard, 8 or as applied to administrative proceedings, and
opportunity to explain one's side or an opportunity to seek a reconsideration of the action or ruling complained
of. 9 What the law prohibits is absolute absence of the opportunity to be heard, hence, a party cannot feign
denial of due process where he had been afforded the opportunity to present his side. In the case at bar, private
respondent was given ample opportunity to do just that on April 29, 1992. May 8, 1992, May 27, 1992 and June
9, 1992.
Prescinding from the foregoing respondent NLRC evidently acted with grave abuse of discretion and lack of
jurisdiction in treating the September 10, 1992 letter of Michael G. Say, president of private respondent, as an
appeal and in consequently remanding the case to the labor arbiter for reception of evidence.
WHEREFORE, the petition for certiorari is GRANTED. The NLRC Resolutions dated January 14, 1993 and March
10, 1993 are hereby SET ASIDE and the Decision of the Labor Arbiter dated August 13, 1992 is DECLARED to have
become final and executory. Costs against private respondent.
SO ORDERED.
WATERFRONT CEBU CITY CASINO HOTEL, INC. AND MARCO PROTACIO, v. ILDEBRANDO LEDESMA,
Facts:
Respondent Ledesma was employed as a House Detective at Waterfront. The basis of the complaints
was filed before Waterfront by ChristeMandal, a supplier of a concessionaire of Waterfront, and Rosanna
Lofranco, who was seeking a job at the same hotel. During the administrative hearings conducted by Waterfront,
it found that Ledesma kissed and mashed the breasts of ChristeMandal inside the hotel’s elevator, and
exhibited his penis and asked Rosanna Lofranco to masturbate him at the conference room of the hotel. In
2008, Ledesma filed a complaint for illegal dismissal thereafter the LA ruled that the dismissal of ledesma is
illegal. On appeal to the NLRC, the latter reversed the ruling of the LA and held that Ledesma’s acts of sexual
overtures to ChristeMandal and Rosanna Lofranco constituted grave misconduct justifying his dismissal from
employment. Ledesma filed motion for reconsideration but it was latterdenied and the copy of the said
Resolution was received by Atty. Abellana, Ledesma’s counsel, on March 15, 2010.
On May 17, 2010,or sixty-three (63) days after Atty. Abellana received a copy of the NLRC’s Resolution he filed
before the CA a petition for certiorari under Rule 65 of the Rules of Court. Ledesma contended that his receipt
on March 24, 2010 (and not the receipt on March 15, 2010 by Atty. Abellana), is the reckoning date of the 60-
day reglementary period within which to file the petition. Hence, Ledesma claims that the petition was timely
filed on May 17, 2010. Waterfront on the otherhand contend that the petition was belatedly filed. The CA,
thereafter, rendered a Decision, reversing the Decision of the NLRC and reinstating the ruling of the LA that the
dismissal is illegal.
Issue:
whether the petition for certiorari was timely filed with the CA?
Held:
The Court finds Waterfront’s petition to be meritorious. Under Section 4, Rule 65 of the Rules of
Court, 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.
Jurisprudence provides, present rule now mandatorily requires compliance with the reglementary period. 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 computing a period, the first day shall be excluded, and the last included; hence, the last
day to file his petition for certiorari is on May 14, 2010, a Friday.
In this case, the petition for certiorari was filed with the CA beyond the 60-day period. Atty. Abellana, Ledesma’s
counsel, admittedly received a copy of the NLRC Resolution denying the Motion for Reconsideration on March
15, 2010 while Ledesma received his copy on March 24, 2010. It must remember that, when a party to a suit
appears by counsel, service of every judgment and all orders of the court must be sent to the counsel. This is so
because notice to counsel is an effective notice to the client, while notice to the client and not his counsel is not
notice in law. Receipt of notice by the counsel of record is the reckoning point of the reglementary period.
Notice sent to counsel of record is binding upon the client.
Therefore, with the expiration of the 60-day period to file a petition for certiorari, a review of the Resolution of
the NLRC will be beyond the jurisdiction of any court. No longer assailable, the NLRC Resolution could not be
altered or modified. A decision that has acquired finality becomes immutable and unalterable and may no longer
be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact or law and
whether it will be made by the court that rendered it or by the highest court of the land.

TROPICAL HUT EMPLOYEES’ UNION-CGW et al vs.TROPICAL HUT FOOD MARKET, INC., et al
G.R. No. L-43495-99 January 20, 1990
FACTS: The rank and file workers of the Tropical Hut Food Market Incorporated (respondent company)
organized a local union called the Tropical Hut Employees Union (THEU) and immediately sought affiliation with
the National Association of Trade Unions (NATU). The NATU accepted the THEU application for affiliation.
The CBA between respondent company and THEU-NATU contains a union security clause:
xx
Union Membership and Union Check-off
Sec. 1 —. . . Employees who are already members of the UNION at the time of the signing of this Agreement or
who become so thereafter shall be required to maintain their membership therein as a condition of continued
employment.
Xx
Attached to the Agreement is a check-off Authorization Form, the terms of which are as follows:
We, the undersigned, hereby designate the NATU, of which the THEU is an affiliate as sole collective bargaining
agent in all matters relating to salary rates, hours of work and other terms and conditions of employment in the
Tropical Hut Food Market, Inc…xx
Later on, NATU received a letter jointly signed by the incumbent officers of the local union informing the NATU
that THEU was disaffiliating from the NATU federation. The employees were dismissed because, as respondent
company contended, they violated the union security clause.
ISSUE: Was the disaffiliation of the local union from the national federation valid?
HELD: YES
The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate
and voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate
when circumstances warrant. This right is consistent with the constitutional guarantee of freedom of
association
The inclusion of the word NATU after the name of the local union THEU in the registration with the Department
of Labor is merely to stress that the THEU is NATU’s affiliate at the time of the registration. It does not mean that
the said local union cannot stand on its own. Neither can it be interpreted to mean that it cannot pursue its own
interests independently of the federation. A local union owes its creation and continued existence to the will of
its members and not to the federation to which it belongs.
Further, there is no merit in the contention of the respondents that the act of disaffiliation violated the union
security clause of the CBA and that their dismissal as a consequence thereof is valid. A perusal of the CBAs shows
that the THEU-NATU, and not the NATU federation, was recognized as the sole and exclusive collective
bargaining agent for all its workers and employees in all matters concerning wages, hours of work and other
terms and conditions of employment. Although NATU was designated as the sole bargaining agent in the check-
off authorization form attached to the CBA, this simply means it was acting only for and in behalf of its affiliate.
The NATU possessed the status of an agent while the local union remained the basic principal union which
entered into contract with the respondent company. When the THEU disaffiliated from its mother federation,
the former did not lose its legal personality as the bargaining union under the CBA. Moreover, the union security
clause embodied in the agreements cannot be used to justify the dismissals meted to petitioners since it is not
applicable to the circumstances obtaining in this case. The CBA imposes dismissal only in case an employee is
expelled from the union for joining another federation or for forming another union or who fails or refuses to
maintain membership therein. The case at bar does not involve the withdrawal of merely some employees from
the union but of the whole THEU itself from its federation. Clearly, since there is no violation of the union
security provision in the CBA, there was no sufficient ground to terminate the employment of petitioners.
G.R. No. 87297 August 5, 1991
ALFREDO VELOSO and EDITO LIGUATON petitioners, vs. DEPARTMENT OF LABOR AND EMPLOYMENT, NOAH’S
ARK SUGAR CARRIERS AND WILSON T. GO, respondents.
DOCTRINE: The law looks with disfavor upon quitclaims and releases by employees who are inveigled or
pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities. On the
other hand, there are legitimate waivers that represent a voluntary settlement of laborer’s claims that should be
respected by the courts as the law between the parties.
FACTS: the petitioners, along with several co-employees, filed a complaint against the private respondent for
unfair labor practices, underpayment, and non-payment of overtime, holiday, and other benefits. This was
decided in favor of the complainants on October 6,1987. The motion for reconsideration, which was treated as
an appeal, was dismissed in a resolution dated February 17, 1988.
the private respondent filed a motion for reconsideration and recomputation of the amount awarded to the
petitioners. On April 15, 1988, while the motion was pending, petitioner Alfredo Veloso, through his wife
Connie, signed a Quitclaim and Release for and in consideration of P25,000.00, 1 and on the same day his
counsel, Atty. Gaga Mauna, manifested “Satisfaction of Judgment” by receipt of the said sum by Veloso. 2 For his
part, petitioner Liguaton filed a motion to dismiss dated July 16, 1988, based on a Release and Quitclaim dated
July 19,1988 , 3 for and in consideration of the sum of P20,000.00 he acknowledged to have received from the
private respondent.
the petitioners claim that they were forced to sign their respective releases in favor of their employer, the
herein private respondent, by reason of their dire necessity. The latter, for its part, insists that the petitioner
entered into the compromise agreement freely and with open eyes and should not now be permitted to reject
their solemn commitments.
These releases were later impugned by the petitioners on September 20, 1988, on the ground that they were
constrained to sign the documents because of their “extreme necessity.” In an Order dated December 16, 1988,
the Undersecretary of Labor rejected their contention and ruled:
IN VIEW THEREOF, complainants Motion to Declare Quitclaim Null and Void is hereby denied for lack of merit
and the compromise agreements/settlements dated April 15, 1988 and July 19, 1988 are hereby approved.
Respondents’ motion for reconsideration is hereby denied for being moot and academic.
Reconsideration of the order having been denied on March 7, 1989, the petitioners have come to this Court on
certiorari.
RULING: The Court had deliberated on the issues and the arguments of the parties and finds that the petition
must fail. The exception and not the rule shall be applied in this case.
The case cited is not apropos because the quitclaims therein invoked were secured by the employer after it had
already lost in the lower court and were subsequently rejected by this Court when the employer invoked it in a
petition for certiorari. By contrast, the quitclaims in the case before us were signed by the petitioners while the
motion for reconsideration was still pending in the DOLE, which finally deemed it on March 7, 1989.
Furthermore, the quitclaims in the cited case were entered into without leave of the lower court whereas in the
case at bar the quitclaims were made with the knowledge and approval of the DOLE, which declared in its order
of December 16, 1988, that “the compromise agreement/settlements dated April 15, 1988 and July 19, 1988 are
hereby approved.”
It is also noteworthy that the quitclaims were voluntarily and knowingly made by both petitioners even if they
may now deny this. In the case of Veloso, the quitclaim he had signed carried the notation that the sum stated
therein had been paid to him in the presence of Atty. Gaga Mauna, his counsel, and the document was attested
by Atty. Ferdinand Magabilin, Chief of the Industrial Relations Division of the National Capitol Region of the
DOLE. In the case of Liguaton, his quitclaim was made with the assistance of his counsel, Atty. Leopoldo
Balguma, who also notarized it and later confirmed it with the filing of the motion to dismiss Liguaton’s
complaint.
The same Atty. Balguma is the petitioners’ counsel in this proceeding. Curiously, he is now challenging the very
same quitclaim of Liguaton that he himself notarized and invoked as the basis of Liguaton’s motion to dismiss,
but this time for a different reason. whereas he had earlier argued for Liguaton that the latter’s signature was a
forgery, he has abandoned that contention and now claims that the quitclaim had been executed because of the
petitioners’ dire necessity.
“Dire necessity” is not an acceptable ground for annulling the releases, especially since it has not been shown
that the employees had been forced to execute them. It has not even been proven that the considerations for
the quitclaims were unconscionably low and that the petitioners had been tricked into accepting them. While it
is true that the writ of execution dated November 24, 1987, called for the collection of the amount of
P46,267.92 each for the petitioners, that amount was still subject to recomputation and modification as the
private respondent’s motion for reconsideration was still pending before the DOLE. The fact that the petitioners
accepted the lower amounts would suggest that the original award was exorbitant and they were apprehensive
that it would be adjusted and reduced. In any event, no deception has been established on the part of the
Private respondent that would justify the annulment of the Petitioners’ quitclaims.
G.R. No. 161003 May 6, 2005
FELIPE O. MAGBANUA, CARLOS DE LA CRUZ, REMY ARNAIZ, BILLY ARNAIZ, ROLLY ARNAIZ, DOMINGO
SALARDA, JULIO CAHILIG and NICANOR LABUEN, petitioners, vs. RIZALINO UY, respondent.
FACTS: “As a final consequence of the final and executory decision of the Supreme Court in Rizalino P. Uy v.
National Labor Relations Commission, et. al. (GR No. 117983, September 6, 1996) which affirmed with
modification the decision of the NLRC in NLRC Case No. V-0427-93, hearings were conducted [in the National
Labor Relations Commission Sub-Regional Arbitration Branch in Iloilo City] to determine the amount of wage
differentials due the eight (8) complainants therein, now [petitioners]. As computed, the award amounted to
P1,487,312.69 x x x.
“On February 3, 1997, [petitioners] filed a Motion for Issuance of Writ of Execution.
“On May 19, 1997, [respondent] Rizalino Uy filed a Manifestation requesting that the cases be terminated and
closed, stating that the judgment award as computed had been complied with to the satisfaction of
[petitioners]. Said Manifestation was also signed by the eight (8) [petitioners]. Together with the Manifestation
is a Joint Affidavit dated May 5, 1997 of [petitioners], attesting to the receipt of payment from [respondent] and
waiving all other benefits due them in connection with their complaint.
“On June 3, 1997, [petitioners] filed an Urgent Motion for Issuance of Writ of Execution wherein they confirmed
that each of them received P40,000 from [respondent] on May 2, 1997.
“On June 9, 1997, [respondent] opposed the motion on the ground that the judgment award had been fully
satisfied. In their Reply, [petitioners] claimed that they received only partial payments of the judgment award.
“On October 20, 1997, six (6) of the eight (8) [petitioners] filed a Manifestation requesting that the cases be
considered closed and terminated as they are already satisfied of what they have received (a total of P320,000)
from [respondent]. Together with said Manifestation is a Joint Affidavit in the local dialect, dated October 20,
1997, of the six (6) [petitioners] attesting that they have no more collectible amount from [respondent] and if
there is any, they are abandoning and waiving the same.
“On February 27, 1998, the Labor Arbiter issued an order denying the motion for issuance of writ of execution
and [considered] the cases closed and terminated x x x.
“On appeal, the [National Labor Relations Commission (hereinafter ‘NLRC’)] reversed the Labor Arbiter and
directed the immediate issuance of a writ of execution, holding that a final and executory judgment can no
longer be altered and that quitclaims and releases are normally frowned upon as contrary to public policy.”
The CA held that compromise agreements may be entered into even after a final judgment. Thus, petitioners
validly released respondent from any claims, upon the voluntary execution of a waiver pursuant to the
compromise agreement.
The appellate court denied petitioners’ motion for reconsideration for having been filed out of time.
RULING:
1) COMPROMISE AFTER FINAL JUDGMENT. A compromise agreement is a contract whereby the parties make
reciprocal concessions in order to resolve their differences and thus avoid or put an end to a lawsuit.11 They
adjust their difficulties in the manner they have agreed upon, disregarding the possible gain in litigation and
keeping in mind that such gain is balanced by the danger of losing. Verily, the compromise may be either
extrajudicial (to prevent litigation) or judicial (to end a litigation).
A compromise must not be contrary to law, morals, good customs and public policy; and must have been freely
and intelligently executed by and between the parties. To have the force of law between the parties, it must
comply with the requisites and principles of contracts. Upon the parties, it has the effect and the authority of res
judicata, once entered into.
When a compromise agreement is given judicial approval, it becomes more than a contract binding upon the
parties. Having been sanctioned by the court, it is entered as a determination of a controversy and has the force
and effect of a judgment. It is immediately executory and not appealable, except for vices of consent or forgery.
The nonfulfillment of its terms and conditions justifies the issuance of a writ of execution; in such an instance,
execution becomes a ministerial duty of the court.
General Rule: Article 2040 of the Civil Code does not refer to the validity of a compromise agreement entered
into after final judgment. Moreover, an important requisite, which is lack of knowledge of the final judgment, is
wanting in the present case.
Exceptions: The issue involving the validity of a compromise agreement notwithstanding a final judgment is not
novel. Jesalva v. Bautista upheld a compromise agreement that covered cases pending trial, on appeal, and with
final judgment. The Court noted that Article 2040 impliedly allowed such agreements; there was no limitation as
to when these should be entered into. Palanca v. Court of Industrial Relations sustained a compromise
agreement, notwithstanding a final judgment in which only the amount of back wages was left to be
determined. The Court found no evidence of fraud or of any showing that the agreement was contrary to law,
morals, good customs, public order, or public policy. Gatchalian v. Arlegui upheld the right to compromise prior
to the execution of a final judgment. The Court ruled that the final judgment had been novated and superseded
by a compromise agreement. Also, Northern Lines, Inc. v. Court of Tax Appeals recognized the right to
compromise final and executory judgments, as long as such right was exercised by the proper party litigants.
There is no justification to disallow a compromise agreement, solely because it was entered into after final
judgment. The validity of the agreement is determined by compliance with the requisites and principles of
contracts, not by when it was entered into. As provided by the law on contracts, a valid compromise must have
the following elements: (1) the consent of the parties to the compromise, (2) an object certain that is the subject
matter of the compromise, and (3) the cause of the obligation that is established.
The principle of novation supports the validity of a compromise after final judgment. Novation, a mode of
extinguishing an obligation,43 is done by changing the object or principal condition of an obligation, substituting
the person of the debtor, or surrogating a third person in the exercise of the rights of the creditor.44

For an obligation to be extinguished by another, the law requires either of these two conditions: (1) the
substitution is unequivocally declared, or (2) the old and the new obligations are incompatible on every point.45
A compromise of a final judgment operates as a novation of the judgment obligation, upon compliance with
either requisite.46 In the present case, the incompatibility of the final judgment with the compromise
agreement is evident, because the latter was precisely entered into to supersede the former.
2) WAIVER OF QUITCLAIMS. The presence or the absence of counsel when a waiver is executed does not
determine its validity. There is no law requiring the presence of a counsel to validate a waiver. The test is
whether it was executed voluntarily, freely and intelligently; and whether the consideration for it was credible
and reasonable. Where there is clear proof that a waiver was wangled from an unsuspecting or a gullible person,
the law must step in to annul such transaction.
In the present case, petitioners failed to present any evidence to show that their consent had been vitiated.
“Should the parties arrive at any agreement as to the whole or any part of the dispute, the same shall be
reduced to writing and signed by the parties and their respective counsel, or authorized representative, if any,50
before the Labor Arbiter.
“The settlement shall be approved by the Labor Arbiter after being satisfied that it was voluntarily entered into
by the parties and after having explained to them the terms and consequences thereof.
“A compromise agreement entered into by the parties not in the presence of the Labor Arbiter before whom the
case is pending shall be approved by him, if after confronting the parties, particularly the complainants, he is
satisfied that they understand the terms and conditions of the settlement and that it was entered into freely and
voluntarily by them and the agreement is not contrary to law, morals, and public policy.”51
This provision refers to proceedings in a mandatory/conciliation conference during the initial stage of the
litigation. Such provision should be made applicable to the proceedings in the pre-execution conference, for
which the procedure for approving a waiver after final judgment is not stated. There is no reason to make a
distinction between the proceedings in mandatory/conciliation and those in pre-execution conferences.
Litton Mills Employees Association-Kapatiran and Rogelio Abong v. Ferrer-Calleja
G.R. No. L-78061, November 24, 1988
Facts:
Petitioner union, LMEA-K, is a legitimate labor organization in the respondent company, LMI, while
individual petitioner, Rogelio Abong, and individual respondent, Rodolfo Umali, are the vice- president,
respectively, of LMEA-K.
 On 14 August 1986, without the knowledge and approval of the general membership of LMEA-K,
Umali "Affiliated" petitioner-union with the federation of GATCORD. Umali then caused
mimeographed leaflets to be distributed to the union-members, urging them to continue affiliating
with GATCORD.
 A majority of the union-members, numbering 725 out of a total membership of 1,100, more or less,
opposed the affiliation of LMEA-K with GATCORD, and expressly manifested their intention to remain
as an independent-union, in a statement, "Sama-Samang Kapasiyahan", dated 18 August 1986 which,
among others, also authorized petitioner Abong to take appropriate steps against respondent Umali,
including impeachment, should the latter continue the affiliation of the petitioner-union with
GATCORD.
 Despite the opposition of a majority of the union membership to the petitioner- union's affiliation
with GATCORD, Umali continued with it, as evidenced by a letter he wrote to LMI, dated 20 August
1986, which was written on paper with the letterhead of GATCORD printed on it.
 Thereafter, Abong and the majority of the elected union officers signed a letter, dated 24 August
1986, addressed to Umali, accusing him of disloyalty by reasons of his affiliation with GATCORD, and
advising him to appear before them on August 1986 at 2:00 p.m. in the company canteen, to refute
the charge of disloyalty against him. The same letter warned Umali that his failure to attend said
meeting would be interpreted as an admission on his part of the charge levelled against him. Umali
did not show up at the appointed confrontation of 27 August 1986.
 Consequently, the majority of the union officers, led by Abong, voted to impeach Umali
 The company's position on the request of the petitioners, as stated in its letter to the petitioners,
dated 10 September 1986, was that the petitioner should first comply with the provision of the CBA,
to wit: An employee who is expelled from the Union for cause shall, upon demand by the Union, be
terminated from employment, provided that all pertinent requirements of the Ministry of Labor and
Employment are first complied with; provided that the Union shall hold the company free from any
liability that may arise due to said termination
Decision of the Med-Arbiter
On 15 November 1986, Med-Arbiter Residali Abdullah issued an order declaring that the issue of
affiliation cannot be dealt with in the complaint filed by petitioners, and that the impeachment of Umali was null
and void.
The Med-Arbiter found no valid ground to sustain the impeachment of Rodolfo Umali as president of
the petitioner union, since Umali was not afforded his right to due process, his impeachment having been
approved without compliance with the procedure laid down in the petitioner-union's constitution and by-laws.
Respondent Umali cannot be held liable under Par. (b), Section 5, Art. IV of the union's constitution
and by-laws as he was only trying to affiliate the union with the federation for reason, perhaps, to avail [sic] the
services and assistance of the federation and not organizing or joining another labor union.
Issue:
Whether or not the respondent's act of affiliating petitioner-union with GATCORD is a ground for
impeachment under petitioner-union Constitution and By-Laws
Held:
Yes.
Ratio:
Art. IV, Section 5. Membership may be lost under the following grounds:
xxx xxx xxx
b) Organizing or joining another labor union or any federation.
 One of the grounds for losing membership in the union, as aforestated, is by joining a federation.
There is no dispute in the present case that GATCORD is a labor federation, to which respondent
Umali affiliated the petitioner-union as evidenced by mimeographed leaflets he caused to be
distributed among the union-members, urging them to continue affiliating with GATCORD, the Pledge
of Allegiance of newly-appointed Shop Steward Norberto David, and the letter of Umali to LMI, dated
20 August 1986, the last two (2) being attested to by GATCORD's National President Timoteo
Aranjuaez and the fact that the letter dated 20 August 1986 was written on paper with GATCORD's
letterhead Also, the affiliation of the petitioner union with GATCORD was affirmed by Umali himself,
when he presented the alleged 700 signatures of union-members who supported his move of
affiliating the union LMEAK with GATCORD. Hence, it cannot be denied that Umali did not only
propose the affiliation, but in fact affiliated the petitioner union with GATCORD, in contravention
of the above-cited prohibition in Section 5, Article IV of the petitioner union's Constitution and By-
Laws.
  It will appear in such case that the union itself has ratified the act of affiliation. It will be noted that
Umali, albeit belatedly, presented the signatures of 700 members of the union, as proof of the
support he had from them for the union's affiliation with GATCORD.
 On the other hand, petitioners presented 725 signatures, or 65.9% of the entire union membership,
who signed the "Sama-Samang Kapasiyahan", as proof of those who opposed the affiliation, in
addition to petitioners' allegation that out of the 700 signatures presented by Umali, 161 signatures
were either forged or faked, twice or thrice written, or signatures of already resigned employees.
(Ratification not valid kasi nga forged ung signatures)
As to the modification of CBA
Furthermore, the Court notes that the collective bargaining agreement of the petitioner-union LMEAK with LMI
was to expire only on 31 October 1987, whereas, Umali affiliated the union around August 1986, or about 14
months before the expiration of said CBA. The affiliation of the petitioner-union with GATCORD converted the
former's status from that of an independent union to that of a local of a labor federation. Such change in
status not only affects the Identity of the petitioner union but also its powers, duties and privileges, for as a
local, it will have to contend with and consult the federation, in matters affecting the union.
The act of affiliating with a federation is a major modification in the status of the petition union. And such act is
a violation of the rule that no modification of the CBA can be made during its existence, unless either party
serves written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date.
Hence, there was a violation of the existing CBA, on the part of Umali.
As to the procedures of impeachment of a union officer,
Section 2, Article XV of the petitioner-union's Constitution and By-Laws provides the procedures to be followed,
to wit: (1) Impeachment should be initiated by petition signed by at least 30% of all bona fide members of the
union, and addressed to the Chairman of the Executive Board; (b) A general membership meeting shall be
convened by the Board Chairman to consider the impeachment of an officer; (c) Before any impeachment vote is
finally taken, the union officer against whom impeachment charges have been filed shall be given ample
opportunity to defend himself , and (d) A majority of all the members of the union shall be required to impeach
or recall union officers.
It clearly appears that the above cited procedure was not followed by the petitioners when they
impeached Umali.
Petitioners should have shown substantial compliance with said impeachment procedure, by giving
Umali ample opportunity to defend himself, as contrasted to an outright impeachment, right after he failed to
appear before the first and only investigation scheduled on 27 August 1986 in the Litton Canteen.
Decision: Moot and academic
Consistent with the foregoing observations, it appears from from the record that a group of
employees headed by petitioner Rogelio Abong broke away from the petitioner-union and formed a new union,
called Litton Mills Workers Union, and that in a certification election that followed, said Litton Mills Workers
Union, headed by petitioner Abong, was chosen as the collective bargaining agent.
G.R. No. L-65173 October 27, 1986
HENRY CLYDE ABBOTT and PACIFICO ALUNAN, petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION,
THE PRESIDENT AND VICE-PRESIDENT TRAVELLERS LIFE ASSURANCE, AND THE REGIONAL ARBITRATION BRANCH
NO 10, NATIONAL LABOR RELATIONS COMMISSION CAGAYAN DE ORO CITY, respondents.
CRUZ, J.:
The factual backdrop of this petition for certiorari mandamus, and prohibition is as follows:
Petitioners Henry Clyde Abbott and Pacifica Alunan were both regular agency managers of respondent Travellers
Life Assurance of the Philippines, Inc. Without a written clearance, their services were terminated effective
August 16, 1977.1 They then filed a complaint in the Department of Labor for illegal dismissal back salaries,
commissions and bonuses. 2 A decision was rendered by Labor Arbiter Ildefonso Agbuya in their favor on August
27, 1978, granting a monetary award of P52,268.80 to Abbott and P46,315.00 to Alunan and ordering their
reinstatement. 3
Upon appeal to respondent Commission, the decision was affirmed on November 9, 198l. 4 The motion for
reconsideration filed by private respondent on January 26, 1982 was denied by the NLRC on March 24, 1982. 5
On May 25, 1982, after the lapse of eighty-six (86) days, petitioners filed a motion for execution and
recomputation of their money claims. This was opposed on June 26, 1982, private respondent intimating its
intention to file a petition for review on certiorari with the Supreme Court. 6
Petitioners, in a second motion for execution and recomputation dated July 26, 1982, argued that the opposition
was improper, the decision having become final and executory. 7 In reply, respondent filed a supplemental
opposition, saying that: 1) since June 21, 1978, petitioners had abandoned their work; and 2) petitioners were
the ones actually indebted to respondent because of the advances received by them. 8
Over petitioners' objection, the labor arbiter nonetheless took cognizance of respondents' opposition and set
the case anew for hearing.
On July 19, 1983, the labor artiber dismissed respondents' opposition, sustaining petitioners' argument that the
decision with respect to the money judgment was already final and executory. 9 Regarding petitioners' alleged
abandonment of work, the labor arbiter found that the claim was belied by respondents' own admission that
petitioners had indeed reported for work at its regional office in Cagayan de Oro City on June 31, 1978. 10
On August 4, 1983, private respondent appealed to the NLRC and moved to stay execution. 11 Stressing the
finality of the decision, petitioner reiterated its motion for execution. 12 On August 16, 1983, respondent
Commission accepted the appeal and issued an order restraining the enforcement of the original decision of the
labor arbiter as earlier approved by it. 13
Hence, this petition.
The principal issue raised in this petition is whether or not public respondent gravely abused its discretion in
entertaining the appeal and in issuing the challenged restraining order.
The Solicitor General observed:
The decision dated March 24, 1982 rendered by respondent Commission denying the motion for
reconsideration and affirming the Labor Arbiter's findings in favor of petitioners became immediately
final and executory upon promulgation thereof. This is so because said decision is inappealable and
cannot be reviewed except upon petition for certiorari before this Honorable Court. Being final and
executory, execution of said judgment should issue as a matter of right. 14
In Sawit vs. Rodas and Daquis vs. Bustos, we held that a judgment becomes final and executory by operation of
law, not by judicial declaration. 15 Accoridngly, finality of judgment becomes a fact upon the lapse of the
reglementary period of appeal if no appeal is perfected. 16 In such a situation, the prevailing party is entitled as a
matter of right to a writ of execution; 17 and issuance thereof is a ministerial duty, compellable by
mandamus. 18
In the instant case, however, what is sought to be reviewed is not the decision itself but the manner of its
execution. There is a big difference. While it is true that the decision itself has become final and executory and
so can no longer be challenged, there is no question either that it must be enforced in accordance with its terms
and conditions. Any deviation therefrom can be the subject of a proper appeal.
The fact alone that the labor arbiter, in recomputing the award in the original decision, raised it from the
amount of P98,883.80 to the astonishing sum of P372,451.55 19 is justification enough for the respondent NLRC
to issue the challenged temporary restraining order. In the meantime, anyway, the petitioners are protected by
the supersedeas bond put up by the respondent in the amount of the recomputed award.20

We hold therefore that the National Labor Relations Commission has the authority to look into the correctness
of the execution of the decision in this case and to consider the supervening events that may affect such
execution, like the possible set-off of the petitioners' advances or debts against their total claim, their
discontinuance from employment by abandonment or resignation, and other relevant developments.

ACCORDINGLY, the instant petition is dismissed and this case is remanded to the respondent National Labor
Relations Commission for final determination of the award due the petitioners in the execution of the decision
rendered by the labor arbiter on August 27, 1978, as affirmed by the said Commission on November 9, 1981.
SO ORDERED.