MINDORO 

LUMBER AND HARDWARE vs
.EDUARDO D. BACAY, et. al
G.R. No. 158753,  8 June 2005
 

FACTS:

The private respondents executed a Sama-samang Salaysay sa Pag-uurong ng Sakdal (Jo
int Affidavit of Withdrawal of Complaint), declaring therein that by virtue of the amount 
each of them received (which amount was either P3,000.00 or P6,000.00 per employee
), they were withdrawing their claim against Mindoro Lumber. Their counsel then filed a 
motion to dismiss. The private respondents said that Bacay persuaded them to execute t
he JAWC. They were then withdrawing the said JAWC for the amount was grossly dispr
oportionate to their entitlement under the law, and were authorizing Lanot, the new pre
sident, to pursue their claim. Lanot then filed a motion before the DOLE-RO, praying th
at the employees be paid the amounts due to each of them, and that the said JAWC be d
eclared null and void. The RD dismissed the case while the DOLE-Sec granted it and re
manded the case to the DOLE-RO which issued writ of execution.

ISSUES: 1.) Whether or not the Sama-samang Salaysay sa Pag-uurong ng Sakdal constit
utes a valid compromise agreement considering it was not assisted by the BLR or the Re
gional Office of DOLE; and 2.) Whether or not the acknowledgment of the respondents t
hat they each received the amount of either P3,000.00 or P6,000.00 embodied in the sa
id Salaysay constitutes a valid quitclaim considering that the individual claims are rangi
ng 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 Labor Relations 
(BLR) or the DOLE Regional Office, the November 4, 1999 Order of the Regional Direct
or in Case No. LSED-RO400-9807-CI-001 nonetheless shows that when Eduardo Bacay 
appeared before the said office, he was assisted by counsel. The assistance of the BLR or 
the regional office of the DOLE in the execution of a compromise settlement is a basic re
quirement; without it, there can be no valid compromise settlement. In this case, the pet
itioner admits that the purported compromise settlement was executed by the private re
spondents without such required assistance. The closest form of assistance adverted to b
y the petitioner in this case was that of Bacay’s counsel when the latter appeared before t
he Office of the Regional Director to file the following: the Sama-samang Salaysay sa Pa
g-uurong ng Sakdal executed by the private respondents; a Sinumpaang Salaysay execut
ed by Bacay withdrawing the complaint; and the Motion to Dismiss. Such assistance, ho
wever, is not the “assistance” required by Article 227. As such, the Sama-samang Salaysa
y sa Pag-uurong ng Sakdal executed by the respondents cannot qualify as a valid compro
mise settlement.

2.) No. The petitioner is correct in saying that there are legitimate waivers that represent 
a voluntary and reasonable settlement of a worker’s claim which should be respected by 
the courts as the law between the parties. Indeed, not all quitclaims are per se invalid or 
against public policy, except (1)where there is clear proof that the waiver was wangled fr
om an unsuspecting or gullible person, or (2) where the terms of settlement are unconsc
ionable on their faces; in these cases, the law will step in to annul the questionable trans
actions. Such quitclaims are regarded as ineffective to bar the workers 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 them actually received under 
the Sama-samang Salaysay sa Pag-uurong ng Sakdal. The amount of the settlement is in
dubitably unconscionable; hence, ineffective to bar the workers from claiming the full m
easure of their legal rights.

LABREL CASES II
G.R. No. 157634 May 16, 2005

MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO LAM, petitioners,

vs.
ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO ALAMARES,
AMADO ALAMARES, EDGARDO TORREFRANCA, LOURDES CAMIGLA, TEODORO
LAURENARIA, WENEFREDO LOVERES, LUIS GUADES, AMADO MACANDOG, PATERNO
LLARENA, GREGORIO NICERIO, JOSE ATRACTIVO, MIGUEL TORREFRANCA, and
SANTOS BROÑOLA, respondents.

FACTS: Petitioner Mayon Hotel & Restaurant is a single proprietor business registered in the name
of petitioner Pacita O. Po,6 whose mother, petitioner Josefa Po Lam, manages the establishment.7
The hotel and restaurant employed about sixteen (16) employees.

Due to the expiration and non-renewal of the lease contract for the rented space occupied by the said
hotel and restaurant at Rizal Street, the hotel operations of the business were suspended on March 31,
1997.9 The operation of the restaurant was continued in its new location at Elizondo Street, Legazpi
City, while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street,
Legazpi City.10Only nine (9) of the sixteen (16) employees continued working in the Mayon
Restaurant at its new site.11
the 16 employees filed complaints for underpayment of wages and other money claims against
petitioners

Executive Labor Arbiter Gelacio L. Rivera, Jr. rendered a Joint Decision in favor of the employees.
The Labor Arbiter awarded substantially all of respondents’ money claims, and held that respondents
Loveres, Macandog and Llarena were entitled to separation pay, while respondents Guades, Nicerio
and Alamares were entitled to their retirement pay. The Labor Arbiter also held that based on the
evidence presented, Josefa Po Lam is the owner/proprietor of Mayon Hotel & Restaurant and the
proper respondent in these cases.

On appeal to the NLRC, the decision of the Labor Arbiter was reversed, and all the complaints were
dismissed.

Respondents filed a motion for reconsideration with the NLRC and when this was denied, they filed
a petition for certiorari with the CA. CA reversed the NLRC decision and the employers filed MR
which was denied, hence the case before the SC.

RULING:
1. Ownership by Josefa Po Lam
notwithstanding the certificate of registration in the name of Pacita Po, it is Josefa Po Lam who is the
owner/proprietor of Mayon Hotel & Restaurant, and the proper respondent in the complaints filed by
the employees.

First. It is significant that only Josefa Po Lam appeared in the proceedings with the Labor Arbiter.
Despite receipt of the Labor Arbiter’s notice and summons, other notices and Orders, petitioner
Pacita Po failed to appear in any of the proceedings with the Labor Arbiter in these cases, nor file her
position paper.26 It was only on appeal with the NLRC that Pacita Po signed the pleadings.27 The
apathy shown by petitioner Pacita Po is contrary to human experience as one would think that the
owner of an establishment would naturally be concerned when all her employees file complaints
against her.
Second. Mayon Hotel and Restaurant is a [business name] of an enterprise. While [petitioner] Josefa
Po Lam claims that it is her daughter, Pacita Po, who owns the hotel and restaurant when the latter
purchased the same from one Palanos in 1981, Josefa failed to submit the document of sale from said
Palanos to Pacita as allegedly the sale was only verbal although the license to operate said hotel and
restaurant is in the name of Pacita which, despite our Order to Josefa to present the same, she failed
to comply.

Third. Respondents] testified that it was Josefa who exercises all the acts and manifestation of
ownership of the hotel and restaurant like transferring employees from the Greatwall Palace
Restaurant which she and her husband Roy Po Lam previously owned; it is Josefa to whom the
employees submits (sic) reports, draws money for payment of payables and for marketing, attending
(sic) to Labor Inspectors during ocular inspections. Except for documents whereby Pacita Po appears
as the owner of Mayon Hotel and Restaurant, nothing in the record shows any circumstance or
manifestation that Pacita Po is the owner of Mayon Hotel and Restaurant. The least that can be said is
that it is absurd for a person to purchase a hotel and restaurant in the very heart of the City of Legazpi
verbally.

Article 221 of the Labor Code is clear: technical rules are not binding, and the application of
technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice.
The rule of evidence prevailing in court of law or equity shall not be controlling in labor cases and it
is the spirit and intention of the Labor Code that the Labor Arbiter shall use every and all reasonable
means to ascertain the facts in each case speedily and objectively and without regard to technicalities
of law or procedure, all in the interest of due process. Labor laws mandate the speedy administration
of justice, with least attention to technicalities but without sacrificing the fundamental requisites of
due process. As to the best evidence rule raised by the employers (certificate of registration as the
best proof of ownership)

To apply the concept of judicial admissions to respondents — who are but lowly employees – would
be to exact compliance with technicalities of law that is contrary to the demands of substantial
justice.

Petitioners were also not denied due process, as they were given sufficient opportunity to be heard on
the issue of ownership. The essence of due process in administrative proceedings is simply an
opportunity to explain one’s side or an opportunity to seek reconsideration of the action or ruling
complained of.34 And there is nothing in the records which would suggest that petitioners had
absolute lack of opportunity to be heard. Obviously, the choice not to present evidence was made by
petitioners themselves.
2. Illegal Dismissal: claim for separation pay
First, petitioners admit that since April 1997, when hotel operations were suspended due to the
termination of the lease of the old premises, respondents Loveres, Macandog, Llarena, Nicerio and
Guades have not been permitted to work. Second, even after six months of what should have been
just a temporary lay-off, the same respondents were still not recalled to work. As a matter of fact, the
Labor Arbiter even found that as of the time when he rendered his Joint Decision on July 2000 — or
more than three (3) years after the supposed “temporary lay-off,” the employment of all of the
respondents with petitioners had ceased, notwithstanding that the new premises had been completed
and the same operated as a hotel with bar and restaurant. This is clearly dismissal — or the
permanent severance or complete separation of the worker from the service on the initiative of the
employer regardless of the reasons therefor.

But they made no mention of any intent to recall these respondents to work upon completion of the
new premises.

And even assuming that the closure was due to a reason beyond the control of the employer, it still
has to accord its employees some relief in the form of severance pay.

While we recognize the right of the employer to terminate the services of an employee for a just or
authorized cause, the dismissal of employees must be made within the parameters of law and
pursuant to the tenets of fair play.66 And in termination disputes, the burden of proof is always on
the employer to prove that the dismissal was for a just or authorized cause.67 Where there is no
showing of a clear, valid and legal cause for termination of employment, the law considers the case a
matter of illegal dismissal.

G.R. No. 126625 September 18, 1997

KANLAON CONSTRUCTION ENTERPRISES CO., INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, 5TH DIVISION, and BENJAMIN RELUYA,
JR., EDGARDO GENAYAS, ERNESTO CANETE, PROTACIO ROSALES, NESTOR BENOYA,
RODOLFO GONGOB, DARIO BINOYA, BENJAMIN BASMAYOR, ABELARDO SACURA,
FLORENCIO SACURA, ISABELO MIRA, NEMESIO LACAR, JOSEPH CABIGKIS, RODRIGO
CILLON, VIRGILIO QUIZON, GUARINO EVANGELISTA, ALEJANDRO GATA, BENEDICTO
CALAGO, NILO GATA, DIONISIO PERMACIO, JUANITO SALUD, ADOR RIMPO, FELIPE
ORAEZ, JULIETO TEJADA, TEOTIMO LACIO, ONOFRE QUIZON, RUDY ALVAREZ,
CRESENCIO FLORES, ALFREDO PERMACIO, CRESENCIO ALVIAR, HERNANI SURILLA,
DIOSDADO SOLON, CENON ALBURO, ZACARIAS ORTIZ, EUSEBIO BUSTILLO,
GREGORIO BAGO, JERRY VARGAS, EDUARDO BUENO, PASCUAL HUDAYA, ROGELIO
NIETES, and REYNALDO NIETES, respondents.

FACTS: Petitioner is a domestic corporation engaged in the construction business nationwide with
principal office at No. 11 Yakan St., La Vista Subdivision, Quezon City. In 1988, petitioner was
contracted by the National Steel Corporation to construct residential houses for its plant employees in
Steeltown, Sta. Elena, Iligan City. Private respondents were hired by petitioner as laborers in the
project and worked under the supervision of Engineers Paulino Estacio and Mario Dulatre. In 1989,
the project neared its completion and petitioner started terminating the services of private
respondents and its other employees.
In 1990, private respondents filed separate complaints against petitioner before Sub-Regional
Arbitration Branch XII, Iligan City. Numbering forty-one (41) in all, they claimed that petitioner paid
them wages below the minimum and sought payment of their salary differentials and thirteenth-
month pay. Engineers Estacio and Dulatre were named co-respondents.

The preliminary conferences before the labor arbiters were attended by Engineers Estacio and
Dulatre and private respondents. At the conference of June 11, 1990 before Arbiter Siao, Engineer
Estacio admitted petitioner’s liability to private respondents and agreed to pay their wage
differentials and thirteenth-month pay on June 19, 1990. As a result of this agreement, Engineer
Estacio allegedly waived petitioner’s right to file its position paper. 1 Private respondents declared
that they, too, were dispensing with their position papers and were adopting their complaints as their
position paper.

Extension was denied by the LA Siao and ordered the employer company to pay the employees.

Petitioner appealed to respondent National Labor Relations Commission. It alleged that it was denied
due process and that Engineers Estacio and Dulatre had no authority to represent and bind petitioner.

NLRC affirmed the decisions of the Labor Arbiters.

RULING: It has been established that petitioner is a private domestic corporation with principal
address in Quezon City. The complaints against petitioner were filed in Iligan City and summons
served on Engineer Estacio in Iligan City. The question now is whether Engineer Estacio was an
agent and authorized representative of petitioner.

Under the Revised Rules of Court, 7 service upon a private domestic corporation or partnership must
be made upon its officers, such as the president, manager, secretary, cashier, agent, or any of its
directors. These persons are deemed so integrated with the corporation that they know their
responsibilities and immediately discern what to do with any legal papers served on them.

In the case at bar, Engineer Estacio, assisted by Engineer Dulatre, managed and supervised the
construction project. 9 According to the Solicitor General and private respondents, Engineer Estacio
attended to the project in Iligan City and supervised the work of the employees thereat. As manager,
he had sufficient responsibility and discretion to realize the importance of the legal papers served on
him and to relay the same to the president or other responsible officer of petitioner. Summons for
petitioner was therefore validly served on him.

Engineer Estacio’s appearance before the labor arbiters and his promise to settle the claims of private
respondents is another matter.

The general rule is that only lawyers are allowed to appear before the labor arbiter and respondent
Commission in cases before them. The Labor Code and the New Rules of Procedure of the NLRC,
nonetheless, lists three (3) exceptions to the rule, viz:

Sec. 6. Appearances. — . . . .
A non-lawyer may appear before the Commission or any Labor Arbiter only if:
(a) he represents himself as party to the case;
(b) he represents the organization or its members, provided that he shall be made to present written
proof that he is properly authorized; or
(c) he is a duly-accredited member of any legal aid office duly recognized by the Department of
Justice or the Integrated Bar of the Philippines in cases referred thereto by the latter. . . . 10

A non-lawyer may appear before the labor arbiters and the NLRC only if: (a) he represents himself as
a party to the case; (b) he represents an organization or its members, with written authorization from
them: or (c) he is a duly-accredited member of any legal aid office duly recognized by the
Department of Justice or the Integrated Bar of the Philippines in cases referred to by the latter. 11

Engineers Estacio and Dulatre were not lawyers. Neither were they duly-accredited members of a
legal aid office. Their appearance before the labor arbiters in their capacity as parties to the cases was
authorized under the first exception to the rule. However, their appearance on behalf of petitioner
required written proof of authorization. It was incumbent upon the arbiters to ascertain this authority
especially since both engineers were named co-respondents in the cases before the arbiters. Absent
this authority, whatever statements and declarations Engineer Estacio made before the arbiters could
not bind petitioner.

Nevertheless, even assuming that Engineer Estacio and Atty. Abundiente were authorized to appear
as representatives of petitioner, they could bind the latter only in procedural matters before the
arbiters and respondent Commission. Petitioner’s liability arose from Engineer Estacio’s alleged
promise to pay. A promise to pay amounts to an offer to compromise and requires a special power of
attorney or the express consent of petitioner. The authority to compromise cannot be lightly
presumed and should be duly established by evidence.

Sec. 7. Authority to bind party. — Attorneys and other representatives of parties shall have authority
to bind their clients in all matters of procedure; but they cannot, without a special power of attorney
or express consent, enter into a compromise agreement with the opposing party in full or partial
discharge of a client’s claim.

After petitioner’s alleged representative failed to pay the workers’ claims as promised, Labor
Arbiters Siao and Palangan did not order the parties to file their respective position papers. The
arbiters forthwith rendered a decision on the merits without at least requiring private respondents to
substantiate their complaints. The parties may have earlier waived their right to file position papers
but petitioner’s waiver was made by Engineer Estacio on the premise that petitioner shall have paid
and settled the claims of private respondents at the scheduled conference. Since petitioner reneged on
its “promise,” there was a failure to settle the case amicably. This should have prompted the arbiters
to order the parties to file their position papers.

Sec. 3. Submission of Position Papers/Memorandum. — Should the parties fail to agree upon an
amicable settlement, in whole or in part, during the conferences, the Labor Arbiter shall issue an
order stating therein the matters taken up and agreed upon during the conferences and directing the
parties to simultaneously file their respective verified position papers.
[G.R. Nos. 116476-84. May 21, 1998]
ROSEWOOD PROCESSING, INC., petitioner, vs. NATIONAL LABOR
RELATIONSCOMMISSION, NAPOLEON C. MAMON, ARSENIO GAZZINGAN, ROMEO C.
VELASCO, ARMANDO L. BALLON, VICTOR E. ALDEZA, JOSE L. CABRERA, VETERANS
PHILIPPINE SCOUT SECURITY AGENCY, and/or ENGR. SERGIO JAMILA IV, respondents.

ANTECEDENT FACTS: All the complainants were employed by the [security agency] as security
guards: Napoleon Mamon on October 7, 1989; Arsenio Gazzingan on September 25, 1988; Rodolfo
C. Velasco on January 5, 1987; Armando Ballon on June 28, 1990; Victor Aldeza on March 21,
1990; and Jose L. Cabrera [in] January 1988.

Mamon: first he was not paid because the security agency claims that he isonly an OJT. Next, he was
transferred to several companies but he was under paid. One time, he was not laid because the payroll
was missing. He went back several times but he later give up because he spends more for transpo
than what he is supposed to gain. He filed a case against the company but he was asked to sign a
quitclaim otherwise he shall be terminated. He refused to sign hence he was not given an assignment
and told by his superior to resign.

Gazzingan: he was assigned in Laguna, Bulacan then Canlubang. He asked that he be transferred in
Manila. Instead he was transferred in Batangas. Another request for transfer to Manile was made
however, instead of being transferred, he was not given any assignments.

Velasco: assigned from one company to another. Works for12 hours, underpaid. Suspended with no
cause at all.

Ballon: he applied for sick leave as per doctor’s advice, but it was crumpled by the HR Manager
because of the previous complaint filed.

Cabrera: assigned to several companies. He was stabbed by his commander. After being discharged
from the hospital, he was fit to work but he was not given any assignment.

Aldeza: worked for 12 hours a day in several companies successively. Filed for complaint
(underpayment of wages) he was asked to resignbecause he would no longer be given any
assognment because of the complaint he filed.

On May 13, 1991, a complaint for illegal dismissal; underpayment of wages; and for nonpayment of
overtime pay, legal holiday pay, premium pay for holiday and rest day, thirteenth month pay, cash
bond deposit, unpaid wages and damages was filed against Veterans Philippine Scout Security
Agency and/or Sergio Jamila IV (collectively referred to as the “security agency,” for brevity).
Thereafter, petitioner was impleaded as a third-party respondent by the security agency. In due
course, Labor Arbiter Ricardo C. Nora rendered a consolidated Decision dated March 26, 1993.
ordered to pay jointly and severally complainants

The appeal filed by petitioner was dismissed by the National Labor Relations Commission for failure
of the petitioner to file the required appeal bond within the reglementary period. MR is likewise
denied.

Supreme Court issued a temporary restraining order enjoining the respondents and their agents from
implementing and enforcing the assailed Resolution and Order until further notice.

RULING:
1) Appeal. The perfection of an appeal within the reglementary period and in the manner prescribed
by law is jurisdictional, and noncompliance with such legal requirement is fatal and effectively
renders the judgment final and executory.[9] The Labor Code 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.

In case of a judgment involving a monetary award, an 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 Commission in the amount equivalent to the monetary award in the judgment appealed from.

Indisputable is the legal doctrine that the appeal of a decision involving a monetary award in labor
cases may be perfected “only upon the posting of a cash or surety bond.”[10] The lawmakers
intended the posting of the bond to be an indispensable requirement to perfect an employer’s appeal.

petitioner claims to have received the labor arbiter’s Decision on April 6, 1993.[16] On April 16,
1993, it filed, together with its memorandum on appeal[17] and notice of appeal, a motion to reduce
the appeal bond[18] accompanied by a surety bond for fifty thousand pesos issued by Prudential
Guarantee and Assurance, Inc.[19] Ignoring petitioner’s motion (to reduce bond), Respondent
Commission rendered its assailed Resolution dismissing the appeal due to the late filing of the appeal
bond. We hold that petitioner’s motion to reduce the bond is a substantial compliance with the Labor
Code. This holding is consistent with the norm that letter-perfect rules must yield to the broader
interest of substantial justice.

2) Liability of Rosewood as indirect employer. The indirect employer’s liability to the contractor’s
employees extends only to the period during which they were working for the petitioner, and the fact
that they were reassigned to another principal necessarily ends such responsibility. The principal is
made liable to his indirect employees, because it can protect itself from irresponsible contractors by
withholding such sums and paying them directly to the employees or by requiring a bond from the
contractor or subcontractor for this purpose.

These provisions cannot apply to petitioner, considering that the complainants were no longer
working for or assigned to it when they were illegally dismissed. Furthermore, an order to pay back
wages and separation pay is invested with a punitive character, such that an indirect employer should
not be made liable without a finding that it had committed or conspired in the illegal dismissal.

G.R. No. 153942 June 29, 2005

SAMEER OVERSEAS PLACEMENT AGENCY, INC., petitioner,

vs.
NOE LEVANTINO, IDG HUMAN RESOURCES, INC.,
(Formerly IDG TRADING AND GENERAL SERVICES, INC.), respondents.

FACTS: Petitioner Sameer Overseas Placement Agency, Inc. (Sameer) is engaged in the recruitment
and placement of Philippine Overseas Contract Workers, and duly licensed for that purpose by the
Department of Labor and Employment and the Philippine Overseas Employment Administration
(POEA).

A complaint for illegal dismissal, underpayment of wages, and illegal deductions was filed by
respondent Noe Levantino (Levantino). Hired and deployed by Sameer for and in behalf of its
foreign principal, Arabian Fal Co., on 20 July 1994,2 Levantino’s contract provided that his office
employment was for twelve (12) months and fixed his basic monthly salary at Two Hundred
Seventy-Seven US Dollars (US$277.00). However, upon his arrival at the job site on 21 July 1994,
Levantino was made to sign another contract of employment, this time with the basic monthly salary
of Six Hundred Seventy-Nine Saudi Rial (SR679.00), plus One Hundred Eighty Saudi Rial
(SR180.00) as food allowance.

On 4 January 1995, barely six (6) months after the start of his employment, Levantino was
terminated by the foreign employer and subsequently repatriated to the Philippines. He filed on 7
February 1995 the aforementioned complaint with the POEA.

Sameer filed a third-party complaint against IDG Human Resources, Inc. (IDG), alleging that IDG
should be held liable for the claims of Levantino since Sameer’s accreditation for foreign principal,
Arabian Fal Co., had already been transferred to IDG pursuant to an affidavit of assumption of
responsibility and quitclaims.3

The Labor Arbiter Jovencio Ll. Mayor, Jr., in a Decision dated 22 September 1997, ruled that
Levantino was terminated for just or authorized cause, the employee having been unable to rebut the
allegations raised against him of poor habits, disobedience of superiors, and low productivity.4 He
concluded, however, that Levantino was not paid his basic salary in accordance with his POEA
approved contract of employment of Two Hundred Seventy-Seven US Dollars (US$277.00), and
illegal deductions were made by the foreign employer from the basic monthly salary for the food
allowance. Thus, the Labor Arbiter held that Levantino was entitled to a wage differential of Five
Hundred Seventy-Five US Dollars and Sixty Cents (US$575.60), and attorney’s fees of Fifty-Seven
US Dollars and Fifty-Six Cents (US$57.56). The Labor Arbiter likewise held that Sameer and IDG
were jointly and severally liable to pay Levantino, citing the case of Mars International Manpower,
Inc. v. NLRC..

Having received a copy of the decision on 17 October 1997, Sameer had until 28 October 1997 to
perfect the appeal, 27 October falling on a Sunday. It filed its notice of appeal and a memorandum of
appeal on 27 October 1997, along with a motion for extension of time to file a surety-appeal bond,
alleging that it was still arranging for the issuance of such with the bonding company. It was only on
3 November 1997 that it filed the appeal bond.7 Thus, the National Labor Relations Commission
(NLRC) First Division, in an Order dated 16 June 1998, dismissed the appeal for failure to perfect it
within the ten (10)-day reglementary period. The Court of Appeals Sixteenth Division affirmed the
dismissal by the NLRC; hence, the present petition.

RULING: Sameer argues that since it subsequently submitted the appeal bond, the filing of the bond
should retroact to the date of the filing of the motion for reduction, which had been filed within the
reglementary period to perfect the appeal. It characterizes the appeal bond requirement as procedural,
and urges that the case be decided on the merits. It also claims that its late filing of the appeal bond
does not damage or prejudice Levantino or the government, as its late filing complies with the
purpose of the law to guarantee the monetary award in favor of the plaintiff once it becomes final and
executory

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. . .

In case of a judgment involving a monetary award, an 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 Commission in the amount equivalent to the monetary award in the judgment appealed from.
(Emphasis supplied.)

Contrary to Sameer’s suggestion, the appeal bond requirement is not merely procedural but
jurisdictional, for without it, the NLRC does not acquire jurisdiction over the appeal.9 Applying the
express provisions of the law, the NLRC did not acquire jurisdiction over Sameer’s appeal within the
ten (10)-day reglementary period to perfect the appeal, for the appeal bond was filed was filed six (6)
days after the lapse of the reglementary period.

RULE VI. APPEALS

Section 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 requisite aforestated shall not stop the
running of the period for perfecting an appeal.

Section 6. Bond. – In case the decision of the Labor Arbiter, the Regional Director or his duly
authorized Hearing Officer involves a monetary award, an appeal by the employer shall be perfected
only upon the posting of a cash or surety bond, which shall be in effect until final disposition of the
case, issued by a reputable bonding company duly accredited by the Commission or the Supreme
Court in an amount equivalent to the monetary award, exclusive of damages and attorney’s fees.

The law does not require its outright payment, but only the posting of a bond to ensure that the award
will be eventually paid should the appeal fail. What petitioners have to pay is a moderate and
reasonable sum for the premium for such bond.

G.R. No. 152550 June 8, 2005

BORJA ESTATE AND/OR THE HEIRS OF MANUEL AND PAULA BORJA and ATTY. MILA
LAUIGAN IN HER CAPACITY AS THE ESTATE ADMINISTRATOR, petitioners,
vs.
SPOUSES ROTILLO BALLAD and ROSITA BALLAD, respondents.

FACTS: The case arose out of the complaint filed by private respondents Spouses Rotillo and Rosita
Ballad (Ballad spouses) against the Borjas for illegal dismissal, non payment of 13th month pay,
separation pay, incentive pay, holiday and premiums pay plus differential pay, and moral and
exemplary damages with the Regional Arbitration Branch No. II of the NLRC in Tuguegarao,
Cagayan, on 8 June 1999.

The Ballad spouses had been employed as overseers of the Borja Estate by its owners, the spouses
Manuel Borja and Paula Borja, since 1972. Their appointment as such was later made in writing per
the certification of appointment.

As overseers, the Ballad spouses’ duties included the collection of owner’s share of the harvest from
the tenants and the delivery of such share to the estate administrator, as well as to account for it. They
also collected monthly rentals from the lessees of the apartment and tendered the same to the
administrator. They were tasked to oversee the lands and buildings entrusted to them and were
instructed to report any untoward incident or incidents affecting said properties to the administrator.
They were allegedly required to work all day and night each week including Saturdays, Sundays and
holidays.

For their compensation, the Ballad spouses received a monthly salary of P1,000.00 for both of them,
or P500.00 each. They were provided residential quarters plus food and traveling allowances
equivalent to twelve (12) cavans of shelled corn every crop harvest. In the year 1980, said salary was
increased to P2,500.00 for each of them by Paula Borja when she came from abroad. Until the time
before their dismissal, the Ballad spouses received the same amount.

The Ballad spouses further alleged that they were appointed as the attorney-in-fact of the owners to
represent the latter in courts and/or government offices in cases affecting the titling of the Borjas’
unregistered lands, and to institute and prosecute recovery of possession thereof, as well as in
ejectment cases.

when the spouses Manuel and Paula Borja went to the United States of America, their children
Lumen, Leonora and Amelia succeeded to the ownership and management of the Borja Estate. On 16
October 1986, the Ballad spouses claimed that Amelia or Mely, then residing in Rochester, New
York, wrote then administrator Mrs. Lim informing her that the heirs had extended the services of the
Ballad spouses and ordered Mrs. Lim to pay the hospitalization expenses of Rotillo Ballad which
accrued to Ten Thousand Pesos (P10,000.00). It is also alleged that Mely had instructed Mrs. Lim to
cause the registration of the Ballad spouses as Social Security System (SSS) members so that in case
any of the latter gets sick, SSS will shoulder their medical expenses and not the Borjas.

Francisco Borja, brother of the late Manuel Borja, was appointed the new administrator, he issued
immediately a memorandum to all the tenants and lessees of the Borja Estate to transact directly with
him and to pay their monthly rentals to him or to his overseers, the Ballad spouses. Francisco Borja
allegedly promised to give the Ballad spouses their food and traveling allowances aforestated but not
the twelve (12) cavans per harvest which he reduced to two (2) cavans per harvest. Francisco Borja
also stopped giving the Ballad spouses their allowances. For twenty-seven (27) years that the Ballad
spouses were in the employ of the Borjas they were purportedly not paid holiday pay, overtime pay,
incentive leave pay, premiums and restday pay, 13th month pay, aside from the underpayment of
their basic salary.

Ballad spouses alleged that Francisco Borja unceremoniously dismissed them and caused this
dismissal to be broadcast over the radio, which caused the former to suffer shock and physical and
mental injuries such as social humiliation, besmirched reputation, wounded feelings, moral anxiety,
health deterioration and sleepless nights.

Thus, the filing of a case against petitioners before the Labor Arbiter. The Borjas interposed the
defense that respondents had no cause of action against them because the latter were not their
employees. The Borjas insisted that the Ballad spouses were allowed to reside within the premises of
the Borja Estate only as a gesture of gratitude for Rosita Ballad’s assistance in the registration of a
parcel of land; and that they were merely utilized to do some errands from time to time. As to the
money claims, the Borjas claimed the defense of prescription.

As aforestated, the Labor Arbiter ruled that the Ballad spouses had been illegally dismissed, after
concluding that they had been employees of the Borjas.

Borjas filed their appeal on 26 November 1999 before the NLRC together with a Motion for
Reduction of Bond. NLRC dismissed the petitioners’ Motion for Reduction of Bond. Petitioners’
appeal was likewise dismissed in the same Resolution for failure to post a cash or surety bond within
the reglementary period.24 Petitioners’ Motion for Reconsideration was also denied for lack of merit
in another Resolution.
Petitioners elevated the case to the Court of Appeals by way of a special civil action of certiorari. On
31 October 2001, the Court of Appeals affirmed the Resolutions of the NLRC holding that the filing
of a cash or surety bond is sine qua non to the perfection of appeal from the labor monetary’s award.

RULING: The appeal bond is required under Article 223 of the Labor Code which 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. . . . In case of a judgment involving a monetary award, an 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 Commission, in the amount equivalent to the monetary
award in the judgment appealed from.

Rule VI of the New Rules of Procedure of the NLRC implements this Article with its Sections 1, 3,
5, 6 and 7 providing pertinently as follows:

Section. 1. Periods of Appeal.- Decisions, awards, or orders of the Labor Arbiter and the POEA
Administrator shall be 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 of the Labor Arbiter or
of the Administrator, and in case of a decision of the Regional Director or his duly authorized
Hearing Officer within five (5) calendar days from receipt of such decisions, awards or orders . . .

Section 3. Requisites for Perfection of Appeal.–(a) The appeal shall be filed within the reglementary
period as provided in Sec. 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 Sec. 5 of this Rule; shall be
accompanied by 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 requisite aforestated shall not stop the
running of the period for perfecting an appeal.

Section 5. Appeal Fee.— The appellant shall pay an appeal fee of One hundred (P100.00) pesos to
the Regional Arbitration Branch, Regional Office, or to the Philippine Overseas Employment
Administration and the official receipt of such payment shall be attached to the records of the case.

Section 6. Bond.— In case the decision of the Labor Arbiter, the Regional Director or his duly
authorized Hearing Officer involves a monetary award, an appeal by the employer shall be perfected
only upon the posting of a cash or surety bond, which shall be in effect until final disposition of the
case, issued by a reputable bonding company duly accredited by the Commission or the Supreme
Court in an amount equivalent to the monetary award, exclusive of damages and attorney’s fees.
The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount of
the bond. The filing of the motion to reduce bond shall not stop the running of the period to perfect
appeal.

Section 7. No extension of Period.- No motion or request for extension of the period within which to
perfect an appeal shall be allowed.

Thus, it is clear from the foregoing that the appeal from any decision, award or order of the Labor
Arbiter to the NLRC shall be made within ten (10) calendar days from receipt of such decision,
award or order, and must be under oath, with proof of payment of the required appeal fee
accompanied by a memorandum of appeal. In case the decision of the Labor Arbiter involves a
monetary award, the appeal is deemed perfected only upon the posting of a cash or surety bond also
within ten (10) calendar days from receipt of such decision in an amount equivalent to the monetary
award.

Evidently, the posting of a cash or surety bond is mandatory. And the perfection of an appeal in the
manner and within the period prescribed by law is not only mandatory but jurisdictional.39 To
extend the period of the appeal is to delay the case, a circumstance which would give the employer
the chance to wear out the efforts and meager resources of the worker to the point that the latter is
constrained to give up for less than what is due him.
The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently
intended to assure the workers that if they prevail in the case, they will receive the money judgment
in their favor upon the dismissal of the employer’s appeal. It was intended to discourage employers
from using an appeal to delay, or even evade, their obligation to satisfy their employees’ just and
lawful claims.42
In the case at bar, while the petitioners’ Appeal Memorandum and Motion for Reduction of Bond,
which was annexed thereto, were both filed on time,43 the appeal was not perfected by reason of the
late filing and deficiency of the amount of the bond for the monetary award with no explanation
offered for such delay and inadequacy.

Exceptions are not present in this case. Examples: the Supreme Court has allowed tardy appeals in
judicious cases, e.g., where the presence of any justifying circumstance recognized by law, such as
fraud, accident, mistake or excusable negligence, properly vested the judge with discretion to
approve or admit an appeal filed out of time; where on equitable grounds, a belated appeal was
allowed as the questioned decision was served directly upon petitioner instead of her counsel of
record who at the time was already dead;45 where the counsel relied on the footnote of the notice of
the decision of the labor arbiter that the aggrieved party may appeal . . . within ten (10) working
days; in order to prevent a miscarriage of justice or unjust enrichment such as where the tardy appeal
is from a decision granting separation pay which was already granted in an earlier final decision; or
where there are special circumstances in the case combined with its legal merits or the amount and
the issue involved.
G.R. No. 87530 June 13, 1990

GERONIMO SADOL, petitioner,

vs.
PILIPINAS KAO, INC., REQUITO VEGA, BELEN GOMEZ, ARTURO GOMEZ & NLRC
SECOND DIVISION, respondents.

FACTS: Petitioner was recruited as a laborer by private respondents Requito Vega, Antonio Gomez
and Belen Gomez, who are the owners of Vega & Co., a private recruitment agency, with assignment
at respondent Pilipinas Kao, Inc. (PKI for brevity), particularly at the Pit Burning area. Sometime on
April 16, 1984, he was allegedly summarily dismissed. Hence, on July 24, 1986, he filed a complaint
for reinstatement and backwages with Region X of the Department of Labor and Employment in
Cagayan de Oro City.

November 13, 1986, the labor arbiter ordered all parties to submit their position papers. Only
petitioner complied. On December 17, 1986, petitioner filed an urgent motion that the failure of
respondent to file their position papers is a waiver and so judgment should be rendered in favor of
petitioner. Similar motions were filed by petitioner on January 23, 1987 and May 15, 1987.

June 26, 1987, the labor arbiter rendered a decision ordering private respondents to jointly and
solidarity pay petitioner his separation pay computed at one month for every year of service within
the reglementary period. Petitioner appealed to the NLRC. Said respondents also appealed but it was
filed out of time.

August 26, 1988, the Second Division of the NLRC promulgated a decision modifying the appealed
decision in that respondent PKI was ordered to reinstate petitioner to his former position without loss
of seniority rights and other accrued benefits and with full backwages from the time of dismissal up
to his actual reinstatement, and in case reinstatement is impossible, payment of full backwages and
separation pay of one (1) month salary for every year of service. The appeal of respondent Pig was
dismissed for having been filed out of time.

The PKI allegedly received a copy of the decision of the NLRC only on September 13, 1988. A
motion for reconsideration of said decision dated September 22, 1988 was filed by said respondent
and a similar motion was filed by Samahang Kabuhayan ng Barangay Luz Banzon (SKLB for
brevity) to which an opposition was filed by petitioner.

On September 30, 1988, a resolution was promulgated by the same division of the NLRC, setting
aside its decision and dismissing the case for lack of merit. A motion for reconsideration thereof filed
by petitioner who besides questioning its findings of facts raised the issue that said respondent’s
appeal having been filed out of time its motion for reconsideration of the decision should not have
been entertained as it raised issues for the first on appeal which were not raised before the labor
arbiter. This motion was denied on November 27, 1988.

RULING: There is no question that private respondents failed to file a timely appeal from the
derision of the labor arbiter while the petitioner was able to interpose his appeal within the
reglementary period. It is also an accepted postulate that issues not raised in the lower court or the
labor arbiter may not be raised for the first time on appeal.

The rules of technicality must yield to the broader interest of justice. It is only by giving due course
to the motion for reconsideration that was timely filed that the NLRC may be able, to equitably
evaluate the conflicting versions of facts presented by the parties.

Attached to respondent SKLB’s motion likewise is the joint affidavit of one Mario T. Ecarnum and
Benito U. Ecarnum who jointly stated that they were neighbors and co- workers of the complainant
in the pit burning area, in a work contracted by aforesaid respondent with respondent Pilipinas Kao,
Inc.; that complainant abandoned his work starting April 19,1984 when he went to Manila to apply
for work abroad and it wall only about eight (8) months later that he returned when he failed to
secure an overseas employment; that complainant’s prolonged absence was without prior permission
or leave of absence.

It does strike Us as odd that if indeed complainant was dismissed sometime in April 1984 it took him
almost three (3) years before filing the instant case for illegal dismissal . This circumstance adds a
significant dimension to respondent’s position that indeed complainant abandoned his job to look for
greener pastures and it was only when he failed to find such opportunity that he came back to
demand that he be allowed to resume the employment which he unceremoniously abandoned.

All the foregoing undisputed taken together, preponderate in favor of respondent SKLB’s claim of
being a lawful independent labor contractor which employed complainant who unjustifiably
abandoned his employment.

G.R. No. 130866 September 16, 1998

ST. MARTIN FUNERAL HOME, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents.

FACTS: Private respondent alleges that he started working as Operations Manager of petitioner St.
Martin Funeral Home on February 6, 1995. However, there was no contract of employment executed
between him and petitioner nor was his name included in the semi-monthly payroll. On January 22,
1996, he was dismissed from his employment for allegedly misappropriating P38,000.00 which was
intended for payment by petitioner of its value added tax (VAT) to the Bureau of Internal Revenue
(BIR).

Petitioner on the other hand claims that private respondent was not its employee but only the uncle of
Amelita Malabed, the owner of petitioner St. Martin’s Funeral Home. Sometime in 1995, private
respondent, who was formerly working as an overseas contract worker, asked for financial assistance
from the mother of Amelita. Since then, as an indication of gratitude, private respondent voluntarily
helped the mother of Amelita in overseeing the business.

January 1996, the mother of Amelita passed away, so the latter then took over the management of the
business. She then discovered that there were arrears in the payment of taxes and other government
fees, although the records purported to show that the same were already paid. Amelita then made
some changes in the business operation and private respondent and his wife were no longer allowed
to participate in the management thereof. As a consequence, the latter filed a complaint charging that
petitioner had illegally terminated his employment.

the labor arbiter rendered a decision in favor of petitioner on October 25, 1996 declaring that no
employer-employee relationship existed between the parties and, therefore, his office had no
jurisdiction over the case.

private respondent appealed to the NLRC. NLRC remanded the case to LA. MR was filed by the
petitioner which was denied.

RULING:
1) HISTORY: the legal history of the NLRC. It was first established in the Department of Labor by
P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be appealable to the
Secretary of Labor and, ultimately, to the President of the Philippines.

May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect six
months after its promulgation. 8 Created and regulated therein is the present NLRC which was
attached to the Department of Labor and Employment for program and policy coordination only. 9
Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party the remedy of appeal
from the decision of the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently amended
said provision and abolished such appeals. No appellate review has since then been provided for.

the argument that this Court has no jurisdiction to review the decisions of the NLRC, and formerly of
the Secretary of Labor, since there is no legal provision for appellate review thereof, the Court
nevertheless rejected that thesis. It held that there is an underlying power of the courts to scrutinize
the acts of such agencies on questions of law and jurisdiction even though no right of review is given
by statute; that the purpose of judicial review is to keep the administrative agency within its
jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and
balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications.

the remedy of the aggrieved party is to timely file a motion for reconsideration as a precondition for
any further or subsequent remedy, 12 and then seasonably avail of the special civil action of
certiorari under Rule 65, 13 for which said Rule has now fixed the reglementary period of sixty days
from notice of the decision. Curiously, although the 10-day period for finality of the decision of the
NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it has been held
that this Court may still take cognizance of the petition for certiorari on jurisdictional and due
process considerations if filed within the reglementary period under Rule 65.
The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the
Supreme Court were eliminated, 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. The use of
the word “appeal” in relation thereto and in the instances we have noted could have been a lapsus
plumae because appeals by certiorari and the original action for certiorari are both modes of judicial
review addressed to the appellate courts. The important distinction between them, however, and with
which the Court is particularly concerned here is that the special civil action of certiorari is within the
concurrent original jurisdiction of this Court and the Court of Appeals; 23 whereas to indulge in the
assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but
would subvert, the intention of Congress as expressed in the sponsorship speech on Senate Bill No.
1495.

2) Appeal.
-review of NLRC Decision is through Rule 65.
-jurisdiction: SC AND CA
-by way of hierarchy: the review shall be initially filed before CA.

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.

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[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.

FACTS: “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 unlawfully 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. It 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 reinvindicatoria 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]

On August 27, 1996, the Court of Appeals denied petitioner’s motion for reconsideration

RULING:
1) FORUM SHOPPING. 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.

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 reinvindicatoria 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.

2) THIRD PARTY CLAIM. 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]

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.

SNVD

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IV

G.R. No. 113725. June 29, 2000] JOHNNY S. RABADILLA, petitioner, vs.COURT OF APPEALS
AND MARIA COSCOLUELLA Y BELLEZA VILLACARLOS,respondents
FACTS: In a Codicil appended to the Last Will and Testament of testatrix Aleja Belleza, Dr. Jorge
Rabadilla, predecessor-in-interest of the herein petitioner, Johnny S. Rabadilla, was instituted as a
devisee of 511, 855 square meters of that parcel of land surveyed as Lot No. 1392 of theBacolod
Cadastre. The said Codicil, which was duly probated and admitted in Special Proceedings No. 4046
before the then Court of First Instance of Negros Occidental.

“That should Jorge Rabadilla die ahead of me, the aforementioned property and the rights which I
shall set forth hereinbelow, shall be inherited and acknowledged by the children and spouse of Jorge
Rabadilla”

a)….It is also my command, in this my addition (Codicil), that should I die and Jorge Rabadilla shall
have already received the ownership of the said Lot No. 1392 of the Bacolod Cadastre, covered by
Transfer Certificate of Title No. RT-4002 (10942), and also at the time that the lease of Balbinito G.
Guanzon of the said lot shall expire, Jorge Rabadilla shall have the obligation until he dies, every
year to give to Maria Marlina Coscolluela y Belleza, Seventy (75) (sic) piculs of Export sugar and
TwentyFive (25) piculs of Domestic sugar, until the said Maria Marlina Coscolluela y Belleza dies.
Should Jorge Rabadilla die, his heir to whom he shall give Lot No. 1392 of the Bacolod Cadastre,
covered by Transfer Certificate of Title No. RT-4002 (10492), shall have the obligation to still give
yearly, the sugar as specified in the Fourth paragraph of his testament, to Maria Marlina Coscolluela
y Belleza on the month of December of each year.

If Dr. Rabadilla or his heirs decide to sell, lease or transfer, the buyer, lessee or transferee shall also
have the same obligation to the testator’s sister. Failure to do so will forfeit the property to the sister
and nearest relatives.

Dr. Jorge Rabadilla died in 1983 and was survived by his wife Rufina and children Johnny
(petitioner), Aurora, Ofelia and Zenaida, all surnamed Rabadilla.

Coscolluella filed a case against the transferee bank and the heirs of Dr. Rabadilla. They were
declared in default except Johnny Rabadilla whose default order was lifted upon filing of an answer.
He also entered into a compromise agreement which he failed to fulfill.

RTC dismissed the complaint. CA reversed.

The petitioner theorizes further that there can be no valid substitution for the reason that the
substituted heirs are not definite, as the substituted heirs are merely referred to as “near descendants”
without a definite identity or reference as to who are the “near descendants” and therefore, under
Articles 843 and 845 as not written.

RULING: Substitution is the designation by the testator of a person or persons to take the place of
the heir or heirs first instituted. Under substitutions in general, the testator may either (1) provide for
the designation of another heir to whom the property shall pass in case the original heir should die
before him/her, renounce the inheritance or be incapacitated to inherit, as in a simple substitution, or
(2) leave his/her property to one person with the express charge that it be transmitted subsequently to
another or others, as in a fideicommissary substitution. The Codicil sued upon contemplates neither
of the two.

In simple substitutions, the second heir takes the inheritance in default of the first heir by reason of
incapacity, predecease or renunciation. In the case under consideration, the provisions of subject
Codicil do not provide that should Dr. Jorge Rabadilla default due to predecease, incapacity or
renunciation, the testatrix’s near descendantswould substitute him. What the Codicil provides is that,
should Dr. Jorge Rabadilla or his heirs not fulfill the conditions imposed in the Codicil, the property
referred to shall be seized and turned over to the testatrix’s near descendants.

No fideicommissary substitution either. Dr. Rabadilla and his heirs are allowed to alienate the
property. In fideicommissary substitution, the heir is not allowed to alienate it because his duty is to
preserve and transmit it to the second heir. Also, if Dr. Rabadilla is the fiduciary and the near
descendants of the testator are the second heirs, it violates the requirement of law that the fiduciary
and the fideicommissary must be within the one degree relationship. In fact, the near descendants are
not in anyway related to Dr. Rabadilla or his heirs.
♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣

G.R. No. 112443.January 25, 2002] TERESITA P. BORDALBA,petitioner, vs.COURT OF

APPEALS, HEIRS OF NICANOR JAYME, namely, CANDIDA FLORES, EMANNUEL JAYME,
DINA JAYME DEJORAS, EVELIA JAYME, and GESILA JAYME; AND HEIRS OF ASUNCION
JAYME-BACLAY, namely, ANGELO JAYME-BACLAY, CARMEN JAYME-DACLAN and
ELNORA JAYME BACLAY,respondents.
FACTS: a land known as Lot No. 1242 (Lot No. 799-C) with an area of 1,853 square meters and
located at Barrio Looc, Mandaue City, is the subject of the controversy. This lot is part of a parcel of
land situated on the corner of Mabini and Plaridel Streets in Mandaue City, and originally owned by
the late spouses Carmeno Jayme and Margarita Espina de Jayme.In 1947, an extra-judicial partition:
1)1/3 in favor of -(a) their grandchild Nicanor Jayme, the deceased spouse of private respondent
Candida Flores and the father of private respondents Emmanuel, Dina, Evelia and Gesila, all
surnamed Jayme; and (b) their grandchild Asuncion Jayme-Baclay, whose heirs are private
respondents Angelo Baclay, Elnora Baclay and Carmen Jayme-Daclan;

2)1/3 to their daughter Elena Jayme Vda. de Perez, mother of petitioner Teresita P. Bordalba; and

3)1/3 to an unidentified party.

Built on the land adjudicated to the heirs of the spouses is Nicanor Jayme’s house, which his family
occupied since 1945.

Elena Jayme Vda. de Perez alleged that the lot sought to be registered was originally a part of a land
owned by her late parents, the spouses Carmeno Jayme and Margarita Espina de Jayme; and that 1/3
of said land was adjudicated to her in an extra-judicial partition.She further stated that a portion of
the lot for which title is applied for is occupied by Nicanor Jayme with her permission.
Nicanor opposed stating that the land sought to be registered also covers the land adjudicated to him
by way of extra judicial partition.

petitioner was successfully granted Free Patent No. (VII-I) 11421 and Original Certificate of Title
No. 0-571 (FP) over said lot.

private respondents filed with the Regional Trial Court of Mandaue City, Branch 28, the instant
complaintagainst petitioner Teresita Bordalba, spouses Genaro U. Cabahug, and Rita Capala, Rural
Bank of Mandaue and the Director of the Bureau of Lands.

Petitioner, on the other hand, averred that Lot No. 1242 (799-C) was acquired by her through
purchase from her mother who was in possession since 1947.

the trial court, finding that fraud was employed by petitioner in obtaining Free Patent No. (VII-I)
11421 and OCT No. 0-571 (FP), declared said patent and title void and ordered its cancellation.
However, it declared that spouses Genaro U. Cabahug and Rita Capala as well as the Rural Bank of
Mandaue are purchasers and mortgagee in good faith, respectively; and consequently upheld as valid
the sale.
Appealed to CA. affirmed with modification the decision of the trial court.It ruled that since private
respondents are entitled only to 1/3 portion of Lot No. 1242 (799-C), petitioner should be ordered to
reconvey 1/3 of Lot No. 1242 (799-C) to private respondents.
RULING: Likewise untenable is the claim of petitioner that private respondents are not legal heirs of
Nicanor Jayme and Asuncion Jayme-Baclay.Other than their bare allegations todispute their heirship,
no hard evidence was presented by them to substantiate their allegations.Besides, in order that an heir
may assert his right to the property of a deceased, no previous judicial declaration of heirship is
necessary.
Considering that Lot No.1242 (799-C) is part of the parcel of land over which private respondents’
predecessors-in-interest is entitled to 1/3 pro-indiviso share, which was disregarded by petitioner
when she secured a Free Patent and Original Certificate of Title in her name, to the exclusion of
private respondents’ predecessors-in-interest, the trial court and the Court of Appeals, therefore, did
not err in upholding the right of private respondents as co-owners, and ordering the petitioner to
reconvey 1/3 of the lot in question to them.
♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣

G.R. No. 118464 December 21, 1998 HEIRS OF IGNACIO CONTI and ROSARIO
CUARIO,petitioner, vs. COURT OF APPEALS and LYDIA S. REYES as Attorney-in-Fact of
JOSEFINA S. REYES, BERNARDITA S. PALILIO, HERMINIA S. PALILIO, REMEDIOS A.
SAMPAYO, ILUMINADA A. SAMPAYO, ENRICO A. SAMPAYO CARLOS A. SAMPAYO,
GENEROSO C. SAMPAYO, MYRNA C. SAMPAYO, ROSALINO C. SAMPAYO, MANUEL C.
SAMPAYO, DELIA A. SAMPAYO, CORAZON C. SAMPAYO, NILO C. SAMPAYO, and
LOLITA A. SAMPAYO in her own behalf and as Attorney-in-Fact of NORMA A.
SAMPAYO,respondents

FACTS: Lourdes Sampayo and Ignacio Conti, married to Rosario Cuado, were the co-owners of the
property in litigation consisting of a 539-square meter lot at the corner of Zamora and Abellanosa
Streets, Lucena City, covered by TCT No. T-15374, with a house erected thereon. Lourdes died
intestate and without issue. The private respondents are all claiming to be collateral relatives of the
deceased Lourdes Sampayo, filed an action for partition and damages before RTC-Br. 54, Lucena
City.

The spouses Ignacio Conti and Rosario Cuario refused the partition on the ground that private
respondents failed to produce any document to produce that they were the rightful heirs of Lourdes
Sampayo. Ignacio died and he was substituted by his children.

At the trial, private respondents presented Lydia Sampayo Reyes and Adelaida Sampayo to prove
that they were the collateral heirs of the deceased Lourdes Sampayo and therefore entitled to her
rights as co-owner of the subject lot. Bringing with her the original copy of her certificate of live
birth showing that her father was Inocentes Reyes and her mother was Josefina Sampayo, Lydia
Sampayo Reyes testified that she was one of the nieces of Lourdes Sampayo, being the daughter of
Josefina Sampayo, the only living sibling of Lourdes. They also presnted the baptismal certificates of
Lourdes’ deceased siblings in order to prove their relations and that only Josefina is alive.

Rosario testified that the subject property was coowned in equal shares by her husband Ignacio Conti
and Lourdes Sampayo and that her family (Rosario) had been staying in the subject property since
1937. She also said that it was Ignacio who pays the real estate tax and the expenses. Liurdes also left
her share to the spouses. no will, either testamentary or holographic, was presented by petitioners to
substantiate this claim.

On 4 April 1991 the trial court declared private respodents as the rightful heirs of Lourdes Sampayo.
It further ordered private respondents and petitioners to submit a project of partition of the residential
house and lot for confirmation by the court. Appealed to CA, which in turn affirmed the decision.

RULING: a prior and separate judicial declaration of heirship was not necessary and that private
respondents became the co-owners of the portion of the property owned and registered in the name of
Lourdes Sampayo upon her death and, consequently, entitled to the immediate possession thereof and
all other incidents/rights of ownership as provided for by law, including the right to demand partition
under Art. 777 of the Civil Code. the property belongs to the heirs at the moment of death of the
decedent, as completely as if he had executed and delivered to them a deed for the same before his
death.

If there are no descendants, ascendants, illegitimate children, or a surviving spuoses, the collateral
relatives shall succeed to the entire estate of the decedent. It was established during the trial that
Lourdes died intestate and without issues. Private respondents as sister, nephews and nieces now
claim to be the collateral relatives of Lourdes.

♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♣♦♠♥♠♦♠♥♣

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III

G.R. No. L-58509 December 7, 1982

IN THE MATTER OF THE PETITION TO APPROVE THE WILL OF RICARDO B. BONILLA
deceased, MARCELA RODELAS, petitioner-appellant, vs. AMPARO ARANZA, ET AL.,
oppositors-appellees, ATTY. LORENZO SUMULONG, intervenor.
FACTS: On January 11, 1977, appellant filed a petition with the Court of First Instance of Rizal for
the probate of the holographic will of Ricardo B. Bonilla and the issuance of letters testamentary in
her favor. The petition was opposed by the appellees Amparo Aranza Bonilla, Wilferine Bonilla
Treyes Expedita Bonilla Frias and Ephraim Bonilla on the following grounds: (1) Appellant was
estopped from claiming that the deceased left a will by failing to produce the will within twenty days
of the death of the testator as required by Rule 75, section 2 of the Rules of Court; (2) The alleged
copy of the alleged holographic will did not contain a disposition of property after death and was not
intended to take effect after death, and therefore it was not a will; (3) The alleged hollographic will
itself,and not an alleged copy thereof, must be produced, otherwise it would produce no effect, as
held in Gam v. Yap, 104 Phil. 509; and (4 ) The deceased did not leave any will, holographic or
otherwise, executed and attested as required by law.
The appellees likewise moved for the consolidation of the case. Their motion was granted by the
court in an order dated April 4, 1977.
On November 13, 1978, following the consolidation of the cases, the appellees moved again to
dismiss the petition for the probate of the will. They argued that: (1) The alleged holographic was not
a last will but merely an instruction as to the management and improvement of the schools and
colleges founded by decedent Ricardo B. Bonilla; and (2) Lost or destroyed holographic wills cannot
be proved by secondary evidence unlike ordinary wills.
Upon opposition of the appellant, the motion to dismiss was denied by the court in its order of
February 23, 1979.
The appellees then filed a motion for reconsideration. On July 23, 1979, the court set aside its order
of February 23, 1979 and dismissed the petition for the probate of the will of Ricardo B. Bonilla. It is
our considered opinion that once the original copy of the holographic will is lost, a copy thereof
cannot stand in lieu of the original.
In the case of Gam vs. Yap, 104 Phil. 509, 522, the Supreme Court held that ‘in the matter of
holographic wills the law, it is reasonable to suppose, regards the document itself as the material
proof of authenticity of said wills.
MOREOVER, this Court notes that the alleged holographic will was executed on January 25, 1962
while Ricardo B. Bonilla died on May 13, 1976. In view of the lapse of more than 14 years from the
time of the execution of the will to the death of the decedent, the fact that the original of the will
could not be located shows to our mind that the decedent had discarded before his death his allegedly
missing Holographic Will.
Appellant’s motion for reconsideration was denied. Hence, an appeal to the Court of Appeals.
RULING: The only question here is whether a holographic will which was lost or cannot be found
can be proved by means of a photostatic copy. Pursuant to Article 811 of the Civil Code, probate of
holographic wills is the allowance of the will by the court after its due execution has been proved.
The probate may be uncontested or not. If uncontested, at least one Identifying witness is required
and, if no witness is available, experts may be resorted to. If contested, at least three Identifying
witnesses are required. However, if the holographic will has been lost or destroyed and no other copy
is available, the will can not be probated because the best and only evidence is the handwriting of the
testator in said will. It is necessary that there be a comparison between sample handwritten
statements of the testator and the handwritten will. But, a photostatic copy or xerox copy of the
holographic will may be allowed because comparison can be made with the standard writings of the
testator. In the case of Gam vs. Yap, 104 PHIL. 509, the Court ruled that “the execution and the
contents of a lost or destroyed holographic will may not be proved by the bare testimony of witnesses
who have seen and/or read such will. The will itself must be presented; otherwise, it shall produce no
effect. The law regards the document itself as material proof of authenticity.” But, in Footnote 8 of
said decision, it says that “Perhaps it may be proved by a photographic or photostatic copy. Even a
mimeographed or carbon copy; or by other similar means, if any, whereby the authenticity of the
handwriting of the deceased may be exhibited and tested before the probate court,” Evidently, the
photostatic or xerox copy of the lost or destroyed holographic will may be admitted because then the
authenticity of the handwriting of the deceased can be determined by the probate court.
G.R. No. 106720 September 15, 1994

SPOUSES ROBERTO AND THELMA AJERO vs. THE COURT OF APPEALS AND
CLEMENTE SAND

FACTS: In the will, decedent named as devisees, the following: petitioners Roberto and Thelma
Ajero, private respondent Clemente Sand, Meriam S. Arong, Leah Sand, Lilia Sand, Edgar Sand, Fe
Sand, Lisa S. Sand, and Dr. Jose Ajero, Sr., and their children.

On January 20, 1983, petitioners instituted for allowance of decedent’s holographic will. They
alleged that at the time of its execution, she was of sound and disposing mind, not acting under
duress, fraud or undue influence, and was in every respect capacitated to dispose of her estate by
will.

Private respondent opposed the petition on the grounds that: neither the testament’s body nor the
signature therein was in decedent’s handwriting; it contained alterations and corrections which were
not duly signed by decedent; and, the will was procured by petitioners through improper pressure and
undue influence. The petition was likewise opposed by Dr. Jose Ajero. He contested the disposition
in the will of a house and lot located in Cabadbaran, Agusan Del Norte. He claimed that said
property could not be conveyed by decedent in its entirety, as she was not its sole owner.

For one, no evidence was presented to show that the will in question is different from the will
actually executed by the testatrix. The only objections raised by the oppositors . . . are that the will
was not written in the handwriting of the testatrix which properly refers to the question of its due
execution, and not to the question of identity of will. No other will was alleged to have been executed
by the testatrix other than the will herein presented.

While the fact that it was entirely written, dated and signed in the handwriting of the testatrix has
been disputed, the petitioners, however, have satisfactorily shown in Court that the holographic will
in question was indeed written entirely, dated and signed in the handwriting of the testatrix. Three (3)
witnesses who have convincingly shown knowledge of the handwriting of the testatrix have been
presented and have explicitly and categorically identified the handwriting with which the holographic
will in question was written to be the genuine handwriting and signature of the testatrix.

As to the question of the testamentary capacity of the testratix, (private respondent) Clemente Sand
himself has testified in Court that the testatrix was completely in her sound mind when he visited her
during her birthday celebration in 1981, at or around which time the holographic will in question was
executed by the testatrix.

no evidence was presented to show sufficient reason for the disallowance of herein holographic will.
While it was alleged that the said will was procured by undue and improper pressure and influence
on the part of the beneficiary or of some other person, the evidence adduced have not shown any
instance where improper pressure or influence was exerted on the testatrix.
Considering then that it is a well-established doctrine in the law on succession that in case of doubt,
testate succession should be preferred over intestate succession, and the fact that no convincing
grounds were presented and proven for the disallowance of the holographic will of the late Annie
Sand, the aforesaid will submitted herein must be admitted to probate.

Notwithstanding the oppositions, the trial court admitted the decedent’s holographic will to probate.

Appealed to CA. Decision was reversed stating that the will was not in accordance with article 813
and 814.

RULING: It alluded to certain dispositions in the will which were either unsigned and undated, or
signed but not dated. It also found that the erasures, alterations and cancellations made thereon had
not been authenticated by decedent.

Section 9, Rule 76 of the Rules of Court provides that will shall be disallowed in any of the following
cases: (a) If not executed and attested as required by law; (b) If the testator was insane, or otherwise
mentally incapable to make a will, at the time of its execution; (c) If it was executed under duress, or
the influence of fear, or threats; (d) If it was procured by undue and improper pressure and influence,
on the part of the beneficiary, or of some other person for his benefit; (e) If the signature of the
testator was procured by fraud or trick, and he did not intend that the instrument should be his will at
the time of fixing his signature thereto.

In the same vein, Article 839 of the New Civil Code reads:

Art. 839: The will shall be disallowed in any of the following cases;

(1) If the formalities required by law have not been complied with; (2) If the testator was insane, or
otherwise mentally incapable of making a will, at the time of its execution; (3) If it was executed
through force or under duress, or the influence of fear, or threats; (4) If it was procured by undue and
improper pressure and influence, on the part of the beneficiary or of some other person; (5) If the
signature of the testator was procured by fraud; (6) If the testator acted by mistake or did not intend
that the instrument he signed should be his will at the time of affixing his signature thereto.

These lists are exclusive; no other grounds can serve to disallow a will. 5 Thus, in a petition to admit
a holographic will to probate, the only issues to be resolved are: (1) whether the instrument submitted
is, indeed, the decedent’s last will and testament; (2) whether said will was executed in accordance
with the formalities prescribed by law; (3) whether the decedent had the necessary testamentary
capacity at the time the will was executed; and, (4) whether the execution of the will and its signing
were the voluntary acts of the decedent. 6

In the case at bench, respondent court held that the holographic will of Anne Sand was not executed
in accordance with the formalities prescribed by law. It held that Articles 813 and 814 of the New
Civil Code, ante, were not complied with, hence, it disallowed the probate of said will. This is
erroneous.
The object of the solemnities surrounding the execution of wills is to close the door against bad faith
and fraud, to avoid substitution of wills and testaments and to guaranty their truth and authenticity.
Therefore, the laws on this subject should be interpreted in such a way as to attain these primordial
ends. But, on the other hand, also one must not lose sight of the fact that it is not the object of the law
to restrain and curtail the exercise of the right to make a will. So when an interpretation already given
assures such ends, any other interpretation whatsoever, that adds nothing but demands more
requisites entirely unnecessary, useless and frustrative of the testator’s last will, must be disregarded.

A reading of Article 813 of the New Civil Code shows that its requirement affects the validity of the
dispositions contained in the holographic will, but not its probate. If the testator fails to sign and date
some of the dispositions, the result is that these dispositions cannot be effectuated. Such failure,
however, does not render the whole testament void.

Likewise, a holographic will can still be admitted to probate, notwithstanding non-compliance with
the provisions of Article 814.

unless the unauthenticated alterations, cancellations or insertions were made on the date of the
holographic will or on testator’s signature, 9 their presence does not invalidate the will itself. 10 The
lack of authentication will only result in disallowance of such changes.

G.R. No. L-62952 October 9, 1985

SOFIA J. NEPOMUCENO vs. THE HONORABLE COURT OF APPEALS, RUFINA GOMEZ,

OSCAR JUGO ANG, CARMELITA JUGO.

FACTS: Martin Jugo died on July 16, 1974 in Malabon, Rizal. He left a last Will and Testament duly
signed by him at the end of the Will on page three and on the left margin of pages 1, 2 and 4 thereof
in the presence of Celestina Alejandro, Myrna C. Cortez, and Leandro Leano, who in turn, affixed
their signatures below the attestation clause and on the left margin of pages 1, 2 and 4 of the Will in
the presence of the testator and of each other and the Notary Public. The Will was acknowledged
before the Notary Public Romeo Escareal by the testator and his three attesting witnesses.

In the said Will, the testator named and appointed herein petitioner Sofia J. Nepomuceno as his sole
and only executor of his estate. It is clearly stated in the Will that the testator was legally married to a
certain Rufina Gomez by whom he had two legitimate children, Oscar and Carmelita, but since 1952,
he had been estranged from his lawfully wedded wife and had been living with petitioner as husband
and wife. In fact, on December 5, 1952, the testator Martin Jugo and the petitioner herein, Sofia J.
Nepomuceno were married in Victoria, Tarlac before the Justice of the Peace. The testator devised to
his forced heirs, namely, his legal wife Rufina Gomez and his children Oscar and Carmelita his entire
estate and the free portion thereof to herein petitioner.

On August 21, 1974, the petitioner filed a petition for the probate of the last Will and Testament of
the deceased Martin Jugo in the Court of First Instance of Rizal and asked for the issuance to her of
letters testamentary.

On May 13, 1975, the legal wife of the testator, Rufina Gomez and her children filed an opposition
alleging inter alia that the execution of the Will was procured by undue and improper influence on
the part of the petitioner; that at the time of the execution of the Will, the testator was already very
sick and that petitioner having admitted her living in concubinage with the testator, she is wanting in
integrity and thus, letters testamentary should not be issued to her.

On January 6, 1976, the lower court denied the probate of the Will on the ground that as the testator
admitted in his Will to cohabiting with the petitioner from December 1952 until his death on July 16,
1974, the Will’s admission to probate will be an Idle exercise because on the face of the Will, the
invalidity of its intrinsic provisions is evident.

The petitioner appealed to the respondent-appellate court.

On June 2, 1982, the respondent court set aside the decision of the Court of First Instance of Rizal
denying the probate of the will. The respondent court declared the Will to be valid except that the
devise in favor of the petitioner is null and void pursuant to Article 739 in relation with Article 1028
of the Civil Code of the Philippines.

the petitioner filed a motion for reconsideration. This was denied by the respondent court.

RULING: The respondents on the other hand contend that the fact that the last Will and Testament
itself expressly admits indubitably on its face the meretricious relationship between the testator and
the petitioner and the fact that petitioner herself initiated the presentation of evidence on her alleged
ignorance of the true civil status of the testator, which led private respondents to present contrary
evidence, merits the application of the doctrine enunciated in Nuguid v. Felix Nuguid, et al. (17
SCRA 449) and Felix Balanay,Jr. v. Hon. Antonio Martinez, et al. (G.R. No. L- 39247, June 27,
1975). Respondents also submit that the admission of the testator of the illicit relationship between
him and the petitioner put in issue the legality of the devise. We agree with the respondents.

elementary that a probate decree finally and definitively settles all questions concerning capacity of
the testator and the proper execution and witnessing of his last Will and testament, irrespective of
whether its provisions are valid and enforceable or otherwise.

The rule, however, is not inflexible and absolute. Given exceptional circumstances, the probate court
is not powerless to do what the situation constrains it to do and pass upon certain provisions of the
Will.

Article 739 of the Civil Code provides:

The following donations shall be void: (1) Those made between persons who were guilty of adultery
or concubinage at the time of the donation; (2) Those made between persons found guilty of the same
criminal offense, in consideration thereof; (3) Those made to a public officer or his wife, descendants
and ascendants, by reason of his office.

In the case referred to in No. 1, the action for declaration of nullity may be brought by the spouse of
the donor or donee; and the guilt of the donor and donee may be proved by preponderance of
evidence in the same action.

Article 1028 of the Civil Code provides:

The prohibitions mentioned in Article 739, concerning donationsinter vivos shall apply to
testamentary provisions.

In Article III of the disputed Will, executed on August 15, 1968, or almost six years before the
testator’s death on July 16, 1974, Martin Jugo stated that respondent Rufina Gomez was his legal
wife from whom he had been estranged “for so many years.” He also declared that respondents
Carmelita Jugo and Oscar Jugo were his legitimate children. In Article IV, he stated that he had been
living as man and wife with the petitioner since 1952. Testator Jugo declared that the petitioner was
entitled to his love and affection. He stated that Nepomuceno represented Jugo as her own husband
but “in truth and in fact, as well as in the eyes of the law, I could not bind her to me in the holy bonds
of matrimony because of my aforementioned previous marriage.

There is no question from the records about the fact of a prior existing marriage when Martin Jugo
executed his Will. There is also no dispute that the petitioner and Mr. Jugo lived together in an
ostensible marital relationship for 22 years until his death.

It is also a fact that on December 2, 1952, Martin Jugo and Sofia J. Nepomuceno contracted a
marriage before the Justice of the Peace of Victoria, Tarlac. The man was then 51 years old while the
woman was 48. Nepomuceno now contends that she acted in good faith for 22 years in the belief that
she was legally married to the testator.

G.R. No. L-54919 May 30, 1984

POLLY CAYETANO, petitioner,

vs.
HON. TOMAS T. LEONIDAS, in his capacity as the Presiding Judge of Branch XXXVIII, Court of
First Instance of Manila and NENITA CAMPOS PAGUIA, respondents.
FACTS: On January 31, 1977, Adoracion C. Campos died, leaving her father, petitioner Hermogenes
Campos and her sisters, private respondent Nenita C. Paguia, Remedios C. Lopez and Marieta C.
Medina as the surviving heirs. As Hermogenes Campos was the only compulsory heir, he executed
an Affidavit of Adjudication under Rule 74, Section I of the Rules of Court whereby he adjudicated
unto himself the ownership of the entire estate of the deceased Adoracion Campos.

Nenita C. Paguia filed a petition for the reprobate of a will of the deceased, Adoracion Campos,
which was allegedly executed in the United States and for her appointment as administratrix of the
estate of the deceased testatrix.

Nenita alleged that the testatrix was an American citizen at the time of her death and was a
permanent resident of 4633 Ditman Street, Philadelphia, Pennsylvania, U.S.A.; that the testatrix died
in Manila on January 31, 1977 while temporarily residing with her sister at 2167 Leveriza, Malate,
Manila; that during her lifetime, the testatrix made her last wig and testament on July 10, 1975,
according to the laws of Pennsylvania, U.S.A., nominating Wilfredo Barzaga of New Jersey as
executor; that after the testatrix death, her last will and testament was presented, probated, allowed,
and registered with the Registry of Wins at the County of Philadelphia, U.S.A., that Clement L.
McLaughlin, the administrator who was appointed after Dr. Barzaga had declined and waived his
appointment as executor in favor of the former, is also a resident of Philadelphia, U.S.A., and that
therefore, there is an urgent need for the appointment of an administratrix to administer and
eventually distribute the properties of the estate located in the Philippines.

an opposition to the reprobate of the will was filed by herein petitioner alleging among other things,
that he has every reason to believe that the will in question is a forgery; that the intrinsic provisions
of the will are null and void; and that even if pertinent American laws on intrinsic provisions are
invoked, the same could not apply inasmuch as they would work injustice and injury to him.

petitioner through his counsel, Atty. Franco Loyola, filed a Motion to Dismiss Opposition (With
Waiver of Rights or Interests) stating that he “has been able to verify the veracity thereof (of the will)
and now confirms the same to be truly the probated will of his daughter Adoracion.” Hence, an ex-
parte presentation of evidence for the reprobate of the questioned will was made.

satisfactorily established that Adoracion C. Campos, in her lifetime, was a citizen of the United
States of America with a permanent residence at 4633 Ditman Street, Philadelphia, PA 19124,
(Exhibit D) that when alive, Adoracion C. Campos executed a Last Will and Testament in the county
of Philadelphia, Pennsylvania, U.S.A., according to the laws thereat (Exhibits E-3 to E-3-b) that
while in temporary sojourn in the Philippines, Adoracion C. Campos died in the City of Manila
(Exhibit C) leaving property both in the Philippines and in the United States of America; that the Last
Will and Testament of the late Adoracion C. Campos was admitted and granted probate by the
Orphan’s Court Division of the Court of Common Pleas, the probate court of the Commonwealth of
Pennsylvania, County of Philadelphia, U.S.A., and letters of administration were issued in favor of
Clement J. McLaughlin all in accordance with the laws of the said foreign country on procedure and
allowance of wills (Exhibits E to E-10); and that the petitioner is not suffering from any
disqualification which would render her unfit as administratrix of the estate in the Philippines of the
late Adoracion C. Campos.
Last Will and Testament of the late Adoracion C. Campos is hereby admitted to and allowed probate
in the Philippines, and Nenita Campos Paguia is hereby appointed Administratrix of the estate of said
decedent

petitioner on April 14, 1979, confirming the withdrawal of his opposition, acknowledging the same
to be his voluntary act and deed.

Hermogenes Campos filed a petition for relief, praying that the order allowing the will be set aside
on the ground that the withdrawal of his opposition to the same was secured through fraudulent
means.

Hermogenes Campos died and left a will, which, incidentally has been questioned by the respondent,
his children and forced heirs as, on its face, patently null and void, and a fabrication, appointing Polly
Cayetano as the executrix of his last will and testament. Cayetano, therefore, filed a motion to
substitute herself as petitioner in the case granting the allowance of the will of Adoracion.

RULING: The third issue raised deals with the validity of the provisions of the will. As a general
rule, the probate court’s authority is limited only to the extrinsic validity of the will, the due
execution thereof, the testatrix’s testamentary capacity and the compliance with the requisites or
solemnities prescribed by law. The intrinsic validity of the will normally comes only after the court
has declared that the will has been duly authenticated. However, where practical considerations
demand that the intrinsic validity of the will be passed upon, even before it is probated, the court
should meet the issue.

Although on its face, the will appeared to have preterited the petitioner and thus, the respondent
judge should have denied its reprobate outright, the private respondents have sufficiently established
that Adoracion was, at the time of her death, an American citizen and a permanent resident of
Philadelphia, Pennsylvania, U.S.A. Therefore, under Article 16 par. (2) and 1039 of the Civil Code
which respectively provide:

Art. 16 par. (2).

xxx xxx xxx

However, intestate and testamentary successions, both with respect to the order of succession and to
the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under consideration, whatever may
be the nature of the property and regardless of the country wherein said property may be found.

Art. 1039.

Capacity to succeed is governed by the law of the nation of the decedent.

the law which governs Adoracion Campo’s will is the law of Pennsylvania, U.S.A., which is the
national law of the decedent. Although the parties admit that the Pennsylvania law does not provide
for legitimes and that all the estate may be given away by the testatrix to a complete stranger, the
petitioner argues that such law should not apply because it would be contrary to the sound and
established public policy and would run counter to the specific provisions of Philippine Law.

It is a settled rule that as regards the intrinsic validity of the provisions of the will, as provided for by
Article 16(2) and 1039 of the Civil Code, the national law of the decedent must apply. This was
squarely applied in the case of Bellis v. Bellis (20 SCRA 358) wherein we ruled:

It is therefore evident that whatever public policy or good customs may be involved in our system of
legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For it
has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent’s
national law. Specific provisions must prevail over general ones.

Finally, we find the contention of the petition as to the issue of jurisdiction utterly devoid of merit.
Under Rule 73, Section 1, of the Rules of Court, it is provided that:

SECTION 1. Where estate of deceased persons settled. — If the decedent is an inhabitant of the
Philippines at the time of his death, whether a citizen or an alien, his will shall be proved, or letters of
administration granted, and his estate settled, in the Court of First Instance in the province in which
he resided at the time of his death, and if he is an inhabitant of a foreign country, the Court of First
Instance of any province in which he had estate. The court first taking cognizance of the settlement
of the estate of a decedent, shall exercise jurisdiction to the exclusion of all other courts. The
jurisdiction assumed by a court, so far as it depends on the place of residence of the decedent, or of
the location of his estate, shall not be contested in a suit or proceeding, except in an appeal from that
court, in the original case, or when the want of jurisdiction appears on the record.

G.R. No. L-2538 September 21, 1951

Testate Estate of the Deceased MARIANO MOLO Y LEGASPI. JUANA JUAN VDA. DE MOLO
vs. LUZ, GLICERIA and CORNELIO MOLO.

FACTS: Mariano Molo y Legaspi died on January 24, 1941, in the municipality of Pasay, province
of Rizal, without leaving any forced heir either in the descending or ascending line. He was survived,
however, by his wife, the herein petitioner Juana Juan Vda. de Molo, and by his nieces and nephew,
the oppositors-appellants, Luz Gliceria and Cornelio, all surnamed Molo, who were the legitimate
children of Candido Molo y Legaspi, deceased brother of the testator. Mariano Molo y Legaspi left
two wills, one executed on August 17, 1918, (Exhibit A) and another executed on June 20, 1939.
(Exhibit I). The later will executed in 1918.

On February 7, 1941, Juana Juan Vda. de Molo, filed in the Court of First Instance of Rizal a
petition, which was docketed as special proceeding No. 8022 seeking the probate of the will executed
by the deceased on June 20, 1939. There being no opposition, the will was probated. However, upon
petition filed by the herein oppositors, the order of the court admitting the will to probate was set
aside and the case was reopened. After hearing, at which both parties presented their evidence, the
court rendered decision denying the probate of said will on the ground that the petitioner failed to
prove that the same was executed in accordance with law.

In view of the disallowance of the will executed on June 20, 1939, the widow on February 24, 1944,
filed another petition for the probate of the will executed by the deceased on August 17, 1918, which
was docketed as special proceeding No. 56, in the same court. Again, the same oppositors filed an
opposition to the petition based on three grounds: (1) that petitioner is now estopped from seeking
the probate of the will of 1918; (2) that said will has not been executed in the manner required by law
and (3) that the will has been subsequently revoked. But before the second petition could be heard,
the battle for liberation came and the records of the case were destroyed. Consequently, a petition for
reconstitution was filed, but the same was found to be impossible because neither petitioner nor
oppositors could produce the copies required for its reconstitution. As a result, petitioner filed a new
petition on September 14, 1946, similar to the one destroyed, to which the oppositors filed an
opposition based on the same grounds as those contained in their former opposition. Then, the case
was set for trial, and on May 28, 1948, the court issued an order admitting the will to probate already
stated in the early part of this decision. From this order the oppositors appealed.

RULING: unexpected testimony of Canuto Perez that he went out of the room to answer an urgent
call of nature when Artemio Reyes was signing the will. Vde de molo failed to present evidence that
would overcome the testimony of the witness.

As to the revocation: A subsequent will, containing a clause revoking a previous will, having been
disallowed, for the reason that it was not executed in conformity with the provisions of section 618 of
the Code of Civil Procedure as to the making of wills, cannot produce the effect of annulling the
previous will, inasmuch as said revocatory clause is void. (41 Phil., 838.)

It is universally agreed that where the second will is invalid on account of not being executed in
accordance with the provisions of the statute, or where the testator who has not sufficient mental
capacity to make a will or the will is procured through undue influence, or the such, in other words,
where the second will is really no will, it does not revoke the first will or affect it in any manner.
Mort vs. Baker University.

There is no evidence which may directly indicate that the testator deliberately destroyed the original
of the 1918 will because of his knowledge of the revocatory clause contained in the will he executed
in 1939. The only evidence we have is that when the first will was executed in 1918, Juan Salcedo,
who prepared it, gave the original and copies to the testator himself and apparently they remained in
his possession until he executed his second will in 1939. And when the 1939 will was denied probate
on November 29, 1943, and petitioner was asked by her attorney to look for another will, she found
the duplicate copy (Exhibit A) among the papers or files of the testator. She did not find the original.

If it can be inferred that the testator deliberately destroyed the 1918 will because of his knowledge of
the revocatory clause of the 1939 will, and it is true that he gave a duplicate copy thereof to his wife,
the herein petitioner, the most logical step for the testator to take is to recall said duplicate copy in
order that it may likewise be destroyed. But this was not done as shown by the fact that said duplicate
copy remained in the possession of petitioner. It is possible that because of the long lapse of twenty-
one (21) years since the first will was executed, the original of the will had been misplaced or lost,
and forgetting that there was a copy, the testator deemed it wise to execute another will containing
exactly the same testamentary dispositions. Whatever may be the conclusion we may draw from this
chain of circumstances, the stubborn fact is that there is no direct evidence of voluntary or deliberate
destruction of the first will by the testator. This matter cannot be inference or conjectur.

the doctrine of dependent relative revocation. The failure of a new testamentary disposition upon
whose validity the revocation depends, is equivalent to the non-fulfillment of a suspensive
conditions, and hence prevents the revocation of the original will. But a mere intent to make at some
time a will in the place of that destroyed will not render the destruction conditional. It must appear
that the revocation is dependent upon the valid execution of a new will. (1 Alexander, p. 751;
Gardner, p. 253.)

G.R. No. L-53546 June 25, 1992

THE HEIRS OF THE LATE JESUS FRAN and CARMEN MEJIA RODRIGUEZ vs. HON.
BERNARDO LL. SALAS, CONCEPCION MEJIA ESPINA and MARIA MEJIA GANDIONGCO

FACTS: Remedios M. Vda. de Tiosejo, a widow, died on 10 July 1972 in Cebu City with neither
descendants nor ascendants; she left real and personal properties located in Cebu City, Ormoc City
and Puerto Bello, Merida, Leyte. Earlier, on 23 April 1972, she executed a last will and testament 3
wherein she bequeathed to her collateral relatives (brothers, sisters, nephews and nieces) all her
properties, and designated Rosario Tan or, upon the latter’s death, Jesus Fran, as executor to serve
without bond. Instrumental witnesses to the will were Nazario Pacquiao, Alcio Demerre and Primo
Miro.
On 15 July 1972, Jesus Fran filed a petition with the Court of First instance of Cebu for the probate
of Remedios’ last will and testament. 4 The case was raffled to the original Branch VIII thereof
which was then presided over by Judge Antonio D. Cinco. The petition alleged that Rosario Tan is
not physically well and, therefore, will not be assuming the position of administratrix. Tan signed a
waiver in favor of Jesus Fran on the third page of the said petition. The probate court issued an order
setting the petition for hearing on 18 September 1972. Meanwhile, on 31 July 1972, the court
appointed petitioner Jesus Fran as special administrator.
On 10 August 1972, the private respondents, who are sisters of the deceased, filed a manifestation 5
alleging that they needed time to study the petition because some heirs who are entitled to receive
their respective shares have been intentionally omitted therein, and praying that they be given ample
time to file their opposition, after which the hearing be reset to another date.

Private respondents did not file any opposition. Instead, they filed on 18 September 1972 a
“Withdrawal of Opposition to the Allowance of Probate (sic) of the Will” wherein they expressly
manifested, with their “full knowledge and consent that . . . they have no objection of (sic) the
allowance of the . . . will of the late Remedios Mejia Vda. de Tiosejo,” and that they have “no
objection to the issuance of letters testamentary in favor of petitioner, Dr. Jesus Fran.” 6

No other party filed an opposition. The petition thus became uncontested.

During the initial hearing, petitioner Fran introduced the requisite evidence to establish the
jurisdictional facts.

Upon a determination that the court had duly acquired jurisdiction over the uncontested petition for
probate, Judge Cinco issued in open court an order directing counsel for petitioner to present
evidence proving the authenticity and due execution of the will before the Clerk of Court who was,
accordingly, so authorized to receive the same.

The reception of evidence by the Clerk of Court immediately followed. Petitioner Fran’s first witness
was Atty. Nazario R. Pacquiao, one at the subscribing witnesses to the will. The original of the will,
marked as Exhibit “F”, and its English translation, marked as Exhibit “F-Translation”, were
submitted to the Clerk of Court. 7 Petitioner Fran was the second and also the last witness. He
enumerated the names of the surviving heirs of the deceased.

On 13 November 1972, the probate court rendered a decision admitting to probate the will of the
testatrix, Remedios Mejia Vda. de Tiosejo, and appointing petitioner Fran as executor.

On 4 January 1973, petitioner Fran filed an Inventory of the Estate; 9 copies thereof were furnished
each of the private respondents.

Subsequently, a Project of Partition based on the dispositions made in the will and signed by all the
devisees and legatees, with the exception of Luis Fran, Remedios C. Mejia and respondent
Concepcion M. Espina, was submitted by the executor for the court’s approval. 10 Said legatees and
devisees submitted certifications wherein they admit receipt of a copy of the Project of Partition
together with the notice of hearing, and state that they had no objection to its approval. 11

After the hearing on the Project of Partition, the court issued its Order of 10 September 1973 13
approving the same, declaring the parties therein as the only heirs entitled to the estate of Remedios
Mejia Vda. de Tiosejo, directing the administrator to deliver to the said parties their respective shares
and decreeing the proceedings closed.
On 1 October 1979, private respondents filed with the new Branch VIII an Omnibus Motion for
Reconsideration of the probate judgment of 13 November 1972 and the Order of partition of 10
September 1973, in said motion, they ask the court to declare the proceedings still open and admit
their opposition to the allowance of the will, 14 which they filed on 1 October 1979. They allege that:
(a) they were not furnished with a copy of the will; (b) the will is a forgery; (c) they were not notified
of any resolution or order on their manifestation requesting time within which to file their opposition,
or of the order authorizing the clerk of court to receive the evidence for the petitioner, or of the order
closing the proceedings; (d) the reception of evidence by the clerk of court was void per the ruling in
Lim Tanhu vs. Ramolete; 15 (e) the project of partition contains no notice of hearing and they were
not notified thereof; (f) the petitioner signed the project of partition as administrator and not as
executor, thereby proving that the decedent died intestate; (g) the petitioner did not submit any
accounting as required by law; and (h) the petitioner never distributed the estate to the devisees and
legatees. Granted. MR by Fran, denied.

RULING: After the probate court rendered its decision on 13 November 1972, and there having been
no claim presented despite publication of notice to creditors, petitioner Fran submitted a Project of
Partition which private respondent Maria M. Vda. de Gandiongco voluntarily signed and to which
private respondent Espina expressed her conformity through a certification filed with the probate
court. Assuming for the sake of argument that private respondents did not receive a formal notice of
the decision as they claim in their Omnibus Motion for Reconsideration, these acts nevertheless
constitute indubitable proof of their prior actual knowledge of the same. A formal notice would have
been an idle ceremony. In testate proceedings, a decision logically precedes the project of partition,
which is normally an implementation of the will and is among the last operative acts to terminate the
proceedings. If private respondents did not have actual knowledge of the decision, they should have
desisted from performing the above acts and instead demanded from petitioner Fran the fulfillment of
his alleged promise to show them the will. The same conclusion refutes and defeats the plea that they
were not notified of the order authorizing the Clerk of Court to receive the evidence and that the
Clerk of Court did not notify them of the date of the reception of evidence. Besides, such plea must
fail because private respondents were present when the court dictated the said order.

G.R. No. 103554 May 28, 1993

TEODORO CANEDA, LORENZA CANEDA, TERESA CANEDA, JUAN CABALLERO,

AUREA CABALLERO, OSCAR LAROSA, HELEN CABALLERO, SANTOS CABALLERO,
PABLO CABALLERO, VICTOR RAGA, MAURICIA RAGA, QUIRICA RAGA, RUPERTO
ABAPO, represented herein by his Attorney-in-Fact, ARMSTICIA * ABAPO VELANO, and
CONSESO CANEDA, represented herein by his heirs, JESUS CANEDA, NATIVIDAD CANEDA
and ARTURO CANEDA, petitioners,
vs.
HON. COURT OF APPEALS and WILLIAM CABRERA, as Special Administrator of the Estate of
Mateo Caballero,respondents.
FACTS: The records show that on December 5, 1978, Mateo Caballero, a widower without any
children and already in the twilight years of his life, executed a last will and testament at his
residence in Talisay, Cebu before three attesting witnesses, namely, Cipriano Labuca, Gregorio
Cabando and Flaviano Toregosa. The said testator was duly assisted by his lawyer, Atty. Emilio
Lumontad, and a notary public, Atty. Filoteo Manigos, in the preparation of that last will. 1 It was
declared therein, among other things, that the testator was leaving by way of legacies and devises his
real and personal properties to Presentacion Gaviola, Angel Abatayo, Rogelio Abatayo, Isabelito
Abatayo, Benoni G. Cabrera and Marcosa Alcantara, all of whom do not appear to be related to the
testator. 2
Four months later, or on April 4, 1979, Mateo Caballero himself filed a petition docketed as Special
Proceeding No. 3899-R before Branch II of the then Court of First Instance of Cebu seeking the
probate of his last will and testament. The probate court set the petition for hearing on August 20,
1979 but the same and subsequent scheduled hearings were postponed for one reason to another. On
May 29, 1980, the testator passed away before his petition could finally be heard by the probate
court. 3 On February 25, 1981, Benoni Cabrera, on of the legatees named in the will, sough his
appointment as special administrator of the testator’s estate, the estimated value of which was
P24,000.00, and he was so appointed by the probate court in its order of March 6, 1981. 4

Thereafter, herein petitioners, claiming to be nephews and nieces of the testator, instituted a second
petition, entitled “In the Matter of the Intestate Estate of Mateo Caballero” and docketed as Special
Proceeding No. 3965-R, before Branch IX of the aforesaid Court of First Instance of Cebu. On
October 18, 1982, herein petitioners had their said petition intestate proceeding consolidated with
Special Proceeding No. 3899-R in Branch II of the Court of First Instance of Cebu and opposed
thereat the probate of the Testator’s will and the appointment of a special administrator for his estate.
5

Benoni Cabrera died on February 8, 1982 hence the probate court, now known as Branch XV of the
Regional Trial Court of Cebu, appointed William Cabrera as special administrator on June 21, 1983.
Thereafter, on July 20, 1983, it issued an order for the return of the records of Special Proceeding
No. 3965-R to the archives since the testate proceeding for the probate of the will had to be heard and
resolved first. On March 26, 1984 the case was reraffled and eventually assigned to Branch XII of the
Regional Trial Court of Cebu where it remained until the conclusion of the probate proceedings. 6

In the course of the hearing in Special Proceeding No. 3899-R, herein petitioners appeared as
oppositors and objected to the allowance of the testator’s will on the ground that on the alleged date
of its execution, the testator was already in the poor state of health such that he could not have
possibly executed the same. Petitioners likewise reiterated the issue as to the genuineness of the
signature of the testator therein. 7

On the other hand, one of the attesting witnesses, Cipriano Labuca, and the notary public Atty.
Filoteo Manigos, testified that the testator executed the will in question in their presence while he
was of sound and disposing mind and that, contrary to the assertions of the oppositors, Mateo
Caballero was in good health and was not unduly influenced in any way in the execution of his will.
Labuca also testified that he and the other witnesses attested and signed the will in the presence of
the testator and of each other. The other two attesting witnesses were not presented in the probate
hearing as the had died by then. 8
it is the finding of this Court that Exhibit “C” is the Last Will and Testament of Mateo Caballero and
that it was executed in accordance with all the requisites of the law. 9

Appealed to CA but it only affirmed the lower court’s decision.

RULING: Under the third paragraph of Article 805, such a clause, the complete lack of which would
result in the invalidity of the will, 22should state (1) the number of the pages used upon which the
will is written; (2) that the testator signed, or expressly caused another to sign, the will and every
page thereof in the presence of the attesting witnesses; and (3) that the attesting witnesses witnessed
the signing by the testator of the will and all its pages, and that said witnesses also signed the will and
every page thereof in the presence of the testator and of one another.

The purpose of the law in requiring the clause to state the number of pages on which the will is
written is to safeguard against possible interpolation or omission of one or some of its pages and to
prevent any increase or decrease in the pages; 23 whereas the subscription of the signature of the
testator and the attesting witnesses is made for the purpose of authentication and identification, and
thus indicates that the will is the very same instrument executed by the testator and attested to by the
witnesses. 24

Further, by attesting and subscribing to the will, the witnesses thereby declare the due execution of
the will as embodied in the attestation clause. 25 The attestation clause, therefore, provide strong
legal guaranties for the due execution of a will and to insure the authenticity thereof. 26 As it
appertains only to the witnesses and not to the testator, it need be signed only by them. 27 Where it is
left unsigned, it would result in the invalidation of the will as it would be possible and easy to add the
clause on a subsequent occasion in the absence of the testator and its witnesses. 28

It is contended by petitioners that the aforequoted attestation clause, in contravention of the express
requirements of the third paragraph of Article 805 of the Civil Code for attestation clauses, fails to
specifically state the fact that the attesting witnesses the testator sign the will and all its pages in their
presence and that they, the witnesses, likewise signed the will and every page thereof in the presence
of the testator and of each other. We agree.

It is our considered view that the absence of that statement required by law is a fatal defect or
imperfection which must necessarily result in the disallowance of the will that is here sought to be
admitted to probate.

3. We stress once more that under Article 809, the defects and imperfections must only be with
respect to the form of the attestation or the language employed therein. Such defects or imperfections
would not render a will invalid should it be proved that the will was really executed and attested in
compliance with Article 805. In this regard, however, the manner of proving the due execution and
attestation has been held to be limited to merely an examination of the will itself without resorting to
evidence aliunde, whether oral or written.

The foregoing considerations do not apply where the attestation clause totally omits the fact that the
attesting witnesses signed each and every page of the will in the presence of the testator and of each
other. 35 In such a situation, the defect is not only in the form or language of the attestation clause
but the total absence of a specific element required by Article 805 to be specifically stated in the
attestation clause of a will. That is precisely the defect complained of in the present case since there
is no plausible way by which we can read into the questioned attestation clause statement, or an
implication thereof, that the attesting witness did actually bear witness to the signing by the testator
of the will and all of its pages and that said instrumental witnesses also signed the will and every
page thereof in the presence of the testator and of one another.

[G.R. No. 116668. July 28, 1997]

ERLINDA A. AGAPAY, petitioner, vs. CARLINA (CORNELIA) V. PALANG and HERMINIA P.

DELA CRUZ, respondents.

FACTS: Miguel Palang contracted his first marriage on July 16, 1949 when he took private
respondent Carlina (or Cornelia) Vallesterol as a wife at the Pozorrubio Roman Catholic Church in
Pangasinan. A few months after the wedding, in October 1949, he left to work in Hawaii. Miguel and
Carlina’s only child, Herminia Palang, was born on May 12, 1950.

Miguel returned in 1954 for a year. His next visit to the Philippines was in 1964 and during the entire
duration of his year-long sojourn he stayed in Zambales with his brother, not in Pangasinan with his
wife and child. The trial court found evidence that as early as 1957, Miguel had attempted to divorce
Carlina in Hawaii.[1] When he returned for good in 1972, he refused to live with private respondents,
but stayed alone in a house in Pozorrubio, Pangasinan.

On July 15, 1973, the then sixty-three-year-old Miguel contracted his second marriage with nineteen-
year-old Erlinda Agapay, herein petitioner.[2] Two months earlier, on May 17, 1973, Miguel and
Erlinda, as evidenced by the Deed of Sale, jointly purchased a parcel of agricultural land located at
San Felipe, Binalonan, Pangasinan with an area of 10,080 square meters. Consequently, Transfer
Certificate of Title No. 101736 covering said rice land was issued in their names.

A house and lot in Binalonan, Pangasinan was likewise purchased on September 23, 1975, allegedly
by Erlinda as the sole vendee. TCT No. 143120 covering said property was later issued in her name.

On October 30, 1975, Miguel and Cornelia Palang executed a Deed of Donation as a form of
compromise agreement to settle and end a case filed by the latter.[3] The parties therein agreed to
donate their conjugal property consisting of six parcels of land to their only child, Herminia Palang.
[4]
Miguel and Erlinda’s cohabitation produced a son, Kristopher A. Palang, born on December 6, 1977.
In 1979, Miguel and Erlinda were convicted of Concubinage upon Carlina’s complaint.[5] Two years
later, on February 15, 1981, Miguel died.

On July 11, 1981, Carlina Palang and her daughter Herminia Palang de la Cruz, herein private
respondents, instituted the case at bar, an action for recovery of ownership and possession with
damages against petitioner before the Regional Trial Court in Urdaneta, Pangasinan (Civil Case No.
U-4265). Private respondents sought to get back the riceland and the house and lot both located at
Binalonan, Pangasinan allegedly purchased by Miguel during his cohabitation with petitioner.

Petitioner, as defendant below, contended that while the riceland covered by TCT No. 101736 is
registered in their names (Miguel and Erlinda), she had already given her half of the property to their
son Kristopher Palang. She added that the house and lot covered by TCT No. 143120 is her sole
property, having bought the same with her own money. Erlinda added that Carlina is precluded from
claiming aforesaid properties since the latter had already donated their conjugal estate to Herminia.

After trial on the merits, the lower court rendered its decision on June 30, 1989 dismissing the
complaint after declaring that there was little evidence to prove that the subject properties pertained
to the conjugal property of Carlina and Miguel Palang. The lower court went on to provide for the
intestate shares of the parties, particularly of Kristopher Palang, Miguel’s illegitimate son.

Appealed to CA. Reversed.

RULING: The sale of the riceland on May 17, 1973, was made in favor of Miguel and Erlinda. The
provision of law applicable here is Article 148 of the Family Code providing for cases of
cohabitation when a man and a woman who are not capacitated to marry each other live exclusively
with each other as husband and wife without the benefit of marriage or under a void marriage. While
Miguel and Erlinda contracted marriage on July 15, 1973, said union was patently void because the
earlier marriage of Miguel and Carlina was still susbsisting and unaffected by the latter’s de facto
separation.

Under Article 148, only the properties acquired by both of the parties through their actual joint
contribution of money, property or industryshall be owned by them in common in proportion to their
respective contributions. It must be stressed that actual contribution is required by this provision, in
contrast to Article 147 which states that efforts in the care and maintenance of the family and
household, are regarded as contributions to the acquisition of common property by one who has no
salary or income or work or industry. If the actual contribution of the party is not proved, there will
be no co-ownership and no presumption of equal shares.[9]

In the case at bar, Erlinda tried to establish by her testimony that she is engaged in the business of
buy and sell and had a sari-sari store[10] but failed to persuade us that she actually contributed
money to buy the subject riceland. Worth noting is the fact that on the date of conveyance, May 17,
1973, petitioner was only around twenty years of age and Miguel Palang was already sixty-four and a
pensioner of the U.S. Government. Considering her youthfulness, it is unrealistic to conclude that in
1973 she contributed P3,750.00 as her share in the purchase price of subject property,[11] there being
no proof of the same.
Petitioner now claims that the riceland was bought two months before Miguel and Erlinda actually
cohabited. In the nature of an afterthought, said added assertion was intended to exclude their case
from the operation of Article 148 of the Family Code. Proof of the precise date when they
commenced their adulterous cohabitation not having been adduced, we cannot state definitively that
the riceland was purchased even before they started living together. In any case, even assuming that
the subject property was bought before cohabitation, the rules of co-ownership would still apply and
proof of actual contribution would still be essential.

Since petitioner failed to prove that she contributed money to the purchase price of the riceland in
Binalonan, Pangasinan, we find no basis to justify her co-ownership with Miguel over the same.
Consequently, the riceland should, as correctly held by the Court of Appeals, revert to the conjugal
partnership property of the deceased Miguel and private respondent Carlina Palang.

Separation of property between spouses during the marriage shall not take place except by judicial
order or without judicial conferment when there is an express stipulation in the marriage settlements.

Atty. Constantino Sagun testified that Miguel Palang provided the money for the purchase price and
directed that Erlinda’s name alone be placed as the vendee.

The transaction was properly a donation made by Miguel to Erlinda, but one which was clearly void
and inexistent by express provision of law because it was made between persons guilty of adultery or
concubinage at the time of the donation, under Article 739 of the Civil Code. Moreover, Article 87 of
the Family Code expressly provides that the prohibition against donations between spouses now
applies to donations between persons living together as husband and wife without a valid marriage,
[15] for otherwise, the condition of those who incurred guilt would turn out to be better than those in
legal union.[16]

G.R. No. L-41680 October 28, 1977

JENNIFER S. REYES, petitioner,

vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES,respondents.

FACTS: November 21, 1974 decision of the Court of First Instance of Manila, Branch VI, convicting
her of the crime of estafa which was initiated upon complaint of her aunt, Adela Gerona, involving
the amount of Ten Thousand Six Hundred Ninety-Five (P10,695.00) Pesos representing the value of
the jewelries subject matter of the transaction between them that gave rise to the said criminal
complaint. Appellant was sentenced to an indeterminate penalty ranging from four (4) months and
twenty-seven (27) days of arrests mayor, as minimum, to two (2) years, eleven (11) months and ten
(10) days of prision correccional; and to indemnify the offended party in the amount of Ten
Thousand Six Hundred Ninety-Five (P10,695.00) Pesos.

On May 5, 1975, respondent Court granted petitioner an extension of ninety (90) days from even date
with warning of no further extension for firing her brief.

six days before the expiration of the aforesaid ninety-day period, petitioner’s counsel, fearing that he
might not be able to submit the appellant’s brief on time, filed a second and last extension of twenty
(20) days from August 3, 1975 within which to file the appellant’s brief, invoking as grounds thereof,
pressure of work and his appointment as vice-chairman of the Comite de Festejos of the municipality
of Pandan, Catanduanes, denied.

RESOLVED: APPEAL DISMISSED.

moved to reconsider the aforesaid August 26, 1975 resolution of dismissal and prayed therein for the
admission of appellant’s brief.

RULING: The New Rules of Court allows extension of time within which to file brief upon a
showing of a … good and sufficient cause, and only if the motion for extension is filed before the
expiration of the time sought to be extended” (Section 15, Rule 46). Indicative of this rule is the
authority of the courts to grant as many motions for extension as may be asked if good reasons are
shown (Gregorio vs. Court of Appeals, et al., 72 SCRA 120, 123-124 [1976]). The allowance or
denial of such motions (as well as the setting aside of orders previously issued) rests principally upon
the sound discretion of the court to which it is addressed, which discretion, however, must be
exercised wisely and prudently, never capriciously, with a view to substantial justice (Cucio vs.
Court of Appeals, 57 SCRA 64, 68 [1974] citing Piedad vs. Batuyong, 55 SCRA 763 [1974]).
Furthermore, “… such discretion should always be predicated on the consideration that more than the
mere convenience of the courts or of the parties in the case the ends of justice and fairness would be
served thereby” and that “it is sound judicial discretion” to allow a reasonable transfer of hearing or
request for extension timely filed ‘when no substantial rights are affected and the intention to delay is
not manifest” (ibid., quoting Limon vs. Candida 27 SCRA, 1166, 1169 [l969. It would thus appear
that the main cause of the delay in the filing of the appellant’s brief was petitioner’s inability, by
reason of financial difficulties, to obtain the necessary amount for the printing of the said brief. In
this connection, WE have recognized as sufficient ground for extending the existing period within
which to file brief the appellant’s inability, because of poverty, to obtain the money necessary to pay
the expenses of the appeal.

convinced that the ends of justice would be better served by allowing petitioner’s appeal to take its
due course and thus afford her an untrammelled review of her criminal conviction. That is
commanded by the ‘higher interest of justice dictated by a sense of fairness with which procedural
due process is Identified.’ Nothing would be lost and the right to a hearing on appeal would be
accorded full respect if under the circumstances the motion were granted. More so, when it is
considered that the failure of the appellant to file his brief within allotted time does not ipso facto
result in the dismissal of the appeal. The appellate Court has still that inherent power and discretion
to amend whatever order it had made before in order to render substantial justice.” And that
furthermore “[t]he expiration of the time to file brief, unlike lateness in filing the notice on appeal is
not a jurisdictional matter and may be waived by the sames. Even after the expiration of the time
fixed for the filing of the brief, the reviewing court may grant an extension of time, at least where no
motion to dismiss has been made. Late firing or service of briefs may be excused where no material
injury has been suffered by the appellee by reason of the delay or where there is no contention that
appellee’s cause was prejudiced.

G.R. No. 108947 September 29, 1997

ROLANDO SANCHEZ, FLORIDA MIERLY SANCHEZ, ALFREDO T. SANCHEZ and MYRNA

T. SANCHEZ, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, ROSALIA S. LUGOD, ARTURO S. LUGOD,
EVELYN LUGOD-RANISES and ROBERTO S. LUGOD, respondents.

FACTS: [Herein private respondent] Rosalia S. Lugod is the only child of spouses Juan C. Sanchez
and Maria Villafranca while [herein private respondents] Arturo S. Lugod, Evelyn L. Ranises and
Roberto S. Lugod are the legitimate children of [herein private respondent] Rosalia.
[Herein petitioners] Rolando, Florida Mierly, Alfredo and Myrna, all surnamed Sanchez, are the
illegitimate children of Juan C. Sanchez.

Following the death of her mother, Maria Villafranca, on September 29, 1967, [herein private
respondent] Rosalia filed on January 22, 1968, thru counsel, a petition for letters of administration
over the estate of her mother and the estate of her father, Juan C. Sanchez, who was at the time in
state of senility (Annex “B”, Petition).

Before the administration proceedings Special in Proceedings No. 44-M could formally be
terminated and closed, Juan C. Sanchez, [herein private respondent] Rosalia’s father, died on October
21, 1968.

On January 14, 1969, [herein petitioners] as heirs of Juan C. Sanchez, filed a petition for letters of
administration (Special Proceedings No. 1022) over the intestate estate of Juan C. Sanchez, which
petition was opposed by (herein private respondent) Rosalia.6

On October 30, 1969, however, [herein private respondent] Rosalia and [herein petitioners] assisted
by their respective counsels executed a compromise agreement (Annex “D”, Petition) wherein they
agreed to divide the properties enumerated therein of the late Juan C. Sanchez.

On November 3, 1969, petitioner Rosalia was appointed by [the trial court], and took her oath as the
administratrix of her father’s intestate estate.
On January 19, 1970, [herein petitioners] filed a motion to require administratrix, [herein private
respondent] Rosalia, to deliver deficiency of 24 hectares and or to set aside compromise agreement
(Annex “E”, Petition).

Under date of April 13, 1970, (herein private respondent) Rosalia and [herein petitioners] entered
into and executed a memorandum of agreement which modified the compromise agreement (Annex
“F”. Petition)

On October 25, 1979, or nine years later, [herein petitioners] filed, thru counsel, a motion to require
[herein private respondent] Rosalia to submit a new inventory and to render an accounting over
properties not included in the compromise agreement (Annex “G”, Petition). They likewise filed a
motion to defer the approval of the compromise agreement (Annex “H”, Ibid), in which they prayed
for the annulment of the compromise agreement on the ground of fraud.

On February 28, 1980, the [trial] court issued an order directing [herein private respondent] Rosalia
to submit a new inventory of properties under her administration and an accounting of the fruits
thereof, which prompted [herein private respondent] Rosalia to file a rejoinder on March 31, 1980
(Annex “K”, Petition).

1. That the entire intestate estate of Maria Villafranca Sanchez under Special Proceedings No. 44-M
consists of all her paraphernal properties and one-half (1/2) of the conjugal properties which must be
divided equally between Rosalia Sanchez de Lugod and Juan C. Sanchez; 2. That the entire intestate
estate of Juan C. Sanchez under Special Proceedings No. 1022 consists of all his capital properties,
one-half (1/2) from the conjugal partnership of gains and one-half (1/2) of the intestate estate of
Maria Villafranca under Special Proceedings No. 44-M; 3. That one-half (1/2) of the entire intestate
estate of Juan C. Sanchez shall be inherited by his only legitimate daughter, Rosalia V. Sanchez de
Lugod while the other one-half (1/2) shall be inherited and be divided equally by, between and
among the six (6) illegitimate children, namely: Patricia Alburo, Maria Ramuso Sanchez, Rolando
Pedro T. Sanchez, Florida Mierly T. Sanchez, Alfredo T. Sanchez and Myrna T. Sanchez;

On August 13, 1991, [herein petitioners] filed a motion for execution and opposition to [herein
private respondent] Rosalia’s motion for reconsideration (Annex “Q”, Petition).

On September 3, 1991, [the trial court] issued an Omnibus Order (Annex “S”, Petition) declaring,
among other things, that the decision at issue had become final and executory.

[Herein private respondent] Rosalia then filed a motion for reconsideration of said Omnibus Order
(Annex “T”, Petition). Said [herein private respondent] was allowed to file a memorandum in support
of her motion (Annex “V”, Petition).

On June 26, 1991, [the trial court] issued and Order denying petitioner Rosalia’s motion for
reconsideration (Annex “W”, Petition). 7

Thereafter, private respondents elevated the case to the Court of Appeals via a petition for certiorari.
The [trial court] has no authority to disturb the compromise agreement.
In due course, the Court of Appeals, as earlier stated, rendered its assailed Decision granting the
petition, setting aside the trial court’s decision and declaring the modified compromise agreement
valid and binding.

RULING: Article 2028 of the Civil Code defines a compromise agreement as “a contract whereby
the parties, by making reciprocal concessions, avoid a litigation or put an end to one already
commenced.” Being a consensual contract, it is perfected upon the meeting of the minds of the
parties. Judicial approval is not required for its perfection.

It is alleged that the lack of judicial approval is fatal to the compromise. A compromise is a
consensual contract. As such, it is perfected upon the meeting of the minds of the parties to the
contract.

For a partition to be valid, Section 1, Rule 74 of the Rules of Court, requires the concurrence of the
following conditions: (1) the decedent left no will; (2) the decedent left no debts, or if there were
debts left, all had been paid; (3) the heirs and liquidators are all of age, or if they are minors, the
latter are represented by their judicial guardian or legal representatives; and (4) the partition was
made by means of a public instrument or affidavit duly filed with the Register of Deeds. 38 We find
that all the foregoing requisites are present in this case. We therefore affirm the validity of the
parties’ compromise agreement/partition in this case.

Finally, petitioners contend that Private Respondent Rosalia T. Lugod’s alleged fraudulent acts,
specifically her concealment of some of the decedent’s properties, attended the actual execution of
the compromise agreement. 50 This argument is debunked by the absence of any substantial and
convincing evidence on record showing fraud on her part.

Not only did the parties knowingly enter into a valid compromise agreement; they even amended it
when they realized some errors in the original. Such correction emphasizes the voluntariness of said
deed.

But what the (trial court) obviously overlooked in its appreciation of the facts of this case are the
uncontroverted facts that (herein petitioners) have been in possession and ownership of their
respective distributive shares as early as October 30, 1969 and they have received other properties in
addition to their distributive shares in consideration of the compromise agreement which they now
assail.

Ganuelas vs Cawed : 123968 : April 24, 2003 : J. Carpio

FACTS: On April 11, 1958, Celestina Ganuelas Vda. de Valin (Celestina) executed a Deed of
Donation of Real Property[2] covering seven parcels of land in favor of her niece Ursulina Ganuelas
(Ursulina), one of herein petitioners.

On June 10, 1967, Celestina executed a document denominated as Revocation of Donation[4]

purporting to set aside the deed of donation. More than a month later or on August 18, 1967,
Celestina died without issue and any surviving ascendants and siblings.

After Celestina’s death, Ursulina had been sharing the produce of the donated properties with private
respondents Leocadia G. Flores, et al., nieces of Celestina.

In 1982, or twenty-four years after the execution of the Deed of Donation, Ursulina secured the
corresponding tax declarations, in her name, over the donated properties and since then, she refused
to give private respondents any share in the produce of the properties despite repeated demands.

Private respondents filed on May 26, 1986 with the RTC of San Fernando, La Union a complaint[5]
against Ursulina. The complaint alleged that the Deed of Donation executed by Celestina in favor of
Ursulina was void for lack of acknowledgment by the attesting witnesses thereto before notary public
Atty. Henry Valmonte, and the donation was a disposition mortis causawhich failed to comply with
the provisions of the Civil Code regarding formalities of wills and testaments, hence, it was void.
Prayer: return to them as intestate heirs the possession and ownership of the properties. They
likewise prayed for the cancellation of the tax declarations secured in the name of Ursulina, the
partition of the properties among the intestate heirs of Celestina, and the rendering by Ursulina of an
accounting of all the fruits of the properties since 1982 and for her to return or pay the value of their
shares.

The defendants-herein petitioners alleged in their Answer[6] that the donation in favor of Ursulina
was inter vivos as contemplated under Article 729 of the Civil Code,[7] hence, the deed did not have
to comply with the requirements for the execution of a valid will; the Revocation of Donation is null
and void as the ground mentioned therein is not among those provided by law to be the basis thereof;
and at any rate, the revocation could only be legally enforced upon filing of the appropriate
complaint in court within the prescriptive period provided by law, which period had, at the time the
complaint was filed, already lapsed.

By Decision of February 22, 1996, the trial court, holding that the provision in the Deed of Donation
that in the event that the DONEE should predecease the DONOR, the “donation shall be deemed
rescinded and of no further force and effect” is an explicit indication that the deed is a donation
mortis causa.

RULING: Crucial in the resolution of the issue is the determination of whether the donor intended to
transfer the ownership over the properties upon the execution of the deed.[22]

Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately
operative even if the actual execution may be deferred until the death of the donor, while in the latter,
nothing is conveyed to or acquired by the donee until the death of the donor-testator.[23] The
following ruling of this Court in Alejandro v. Geraldez is illuminating:[24]
If the donation is made in contemplation of the donor’s death, meaning that the full or naked
ownership of the donated properties will pass to the donee only because of the donor’s death, then it
is at that time that the donation takes effect, and it is a donation mortis causa which should be
embodied in a last will and testament.

But if the donation takes effect during the donor’s lifetime or independently of the donor’s death,
meaning that the full or naked ownership (nuda proprietas) of the donated properties passes to the
donee during the donor’s lifetime, not by reason of his death but because of the deed of donation,
then the donation is inter vivos.

The distinction between a transfer inter vivos and mortis causa is important as the validity or
revocation of the donation depends upon its nature. If the donation is inter vivos, it must be executed
and accepted with the formalities prescribed by Articles 748[25] and 749[26] of the Civil Code,
except when it is onerous in which case the rules on contracts will apply. If it is mortis causa, the
donation must be in the form of a will, with all the formalities for the validity of wills, otherwise it is
void and cannot transfer ownership.[27]

The distinguishing characteristics of a donation mortis causa are the following:

1. It conveys no title or ownership to the transferee before the death of the transferor; or, what
amounts to the same thing, that the transferor should retain the ownership (full or naked) and control
of the property while alive;

2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but
revocability may be provided for indirectly by means of a reserved power in the donor to dispose of
the properties conveyed;

3. That the transfer should be void if the transferor should survive the transferee.

As the subject deed then is in the nature of a mortis causa disposition, the formalities of a will under
Article 728 of the Civil Code should have been complied with, failing which the donation is void and
produces no effect.[35]

As noted by the trial court, the attesting witnesses failed to acknowledge the deed before the notary
public, thus violating Article 806 of the Civil Code which provides:

Art. 806. Every will must be acknowledged before a notary public by the testator and the witnesses.
The notary public shall not be required to retain a copy of the will, or file another with the office of
the Clerk of Court. (Emphasis supplied)
SPOUSES ERNESTO and EVELYN SICAD, petitioners,
vs.
COURT OF APPEALS, CATALINO VALDERRAMA, JUDY CRISTINA M. VALDERRAMA
and JESUS ANTONIO VALDERRAMA, respondents.

FACTS: DEED OF DONATION INTER VIVOS,” 1 was executed by Montinola on December 11,
1979. It named as donees her grandchildren. The deed also contained the signatures of the donees in
acknowledgment of their acceptance of the donation.

Montinola’s Secretary, Gloria Salvilla, afterwards presented the deed for recording in the Property
Registry, and the Register of Deeds cancelled TCT No. T-16105 (the donor’s title) and, in its place,
issued TCT No. T-16622 on February 7, 1980, in the names of the donees. 2 Montinola however
retained the owner’s duplicate copy of the new title (No. T-16622), as well as the property itself,
until she transferred the same ten (10) years later, on July 10, 1990, to the spouses, Ernesto and
Evelyn Sicad.

On March 12, 1987, Aurora Montinola drew up a deed of revocation of the donation, 3 and caused it
to be annotated as an adverse claim on TCT No. T-16622 (issued, as aforestated, in her
grandchildren’s names). Then, on August 24, 1990, she filed a petition with the Regional Trial Court
in Roxas City for the cancellation of said TCT No. T-16622 and the reinstatement of TCT No. T-
16105 (in her name), the case being docketed as Special Proceeding No. 3311. Her petition was
founded on the theory that the donation to her three (3) grandchildren was one mortis causawhich
thus had to comply with the formalities of a will; and since it had not, the donation was void and
could not effectively serve as basis for the cancellation of TCT No. T-16105 and the issuance in its
place of TCT No. T-16622.

The donees (Montinola’s grandchildren) opposed the petition. In their opposition dated August 29,
1990, they averred that the donation in their favor was one inter vivos which, having fully complied
with the requirements therefor set out in Article 729 of the Civil Code, was perfectly valid and
efficacious. They also expressed doubt about the sincerity of their grandmother’s intention to recover
the donated property, since she had not pursued the matter of its revocation after having it annotated
as an adverse claim.

The Trial Court then rendered judgment on March 27, 1991, holding that the donation was indeed
one inter vivos, and dismissing Aurora Montinola’s petition for lack of merit.

Montinola elevated the case to the Court of Appeals. She died while the appeal was pending.
Court of Appeals promulgated its Decision on the case affirming the judgment of the Regional Trial
Court.

The Sicad Spouses have appealed to this Court; and here, they contend that the following errors were
committed by the Appellate Tribunal, to wit:

1) ** in ruling that the donation was inter vivos and in not giving due weight to the revocation of the
donation; and 2) ** in not ordering that the case be remanded for further reception of evidence.

RULING: The evidence establishes that on December 11, 1979, when the deed of donation prepared
by Montinola’s lawyer (Atty. Treñas) was read and explained by the latter to the parties, Montinola
expressed her wish that the donation take effect only after ten (10) years from her death, and that the
deed include a prohibition on the sale of the property for such period. Accordingly, a new proviso
was inserted in the deed reading: “however, the donees shall not sell or encumber the properties
herein donated within 10 years after the death of the donor.” 14 The actuality of the subsequent
insertion of this new proviso is apparent on the face of the instrument: the intercalation is easily
perceived and identified — it was clearly typed on a different machine, and is crammed into the
space between the penultimate paragraph of the deed and that immediately preceding it. 15

Not only did Aurora Montinola order the insertion in the deed of that restrictive proviso, but also,
after recordation of the deed of donation, she never stopped treating the property as her own. She
continued, as explicity authorized in the deed itself, to possess the property, enjoy its fruits and
otherwise exercise the rights of dominion, paying the property taxes as they fell due — all these she
did until she transferred the Property to the Sicad Spouses on July 10, 1990. She did not give the new
certificate of title to the ostensible donees but retained it, too, until she delivered it to the Sicads on
the occasion of the sale of the property to them. In any event, the delivery of the title to the donees
would have served no useful purpose since, as just stated, they were prohibited to effect any sale or
encumbrance thereof for a period of ten (10) years after the ostensible donor’s decease. And
consistent with these acts denoting retention of ownership of the property was Montinola’s openly
expressed view that the donation was ineffectual and could not be given effect even after ten (10)
years from her death. For this view she sought to obtain judicial approval. She brought suit on
August 24, 1990 to cancel TCT No. T-16622 (issued to her grandchildren) premised precisely on the
invalidity of the donation for failure to comply with the requisites of testamentary dispositions.
Before that, she attempted to undo the conveyance to her grandchildren by executing a deed of
revocation of the donation on March 12, 1987, and causing annotation thereof as an adverse claim on
said TCT No. T-16622. She also exercised indisputable acts of ownership over said property by
executing, as just stated, deeds intended to pass title over it to third parties — petitioners herein.

A donation which purports to be one inter vivos but withholds from the donee the right to dispose of
the donated property during the donor’s lifetime is in truth one mortis causa. In a donationmortis
causa “the right of disposition is not transferred to the donee while the donor is still alive.”

In the instant case, nothing of any consequence was transferred by the deed of donation in question to
Montinola’s grandchildren, the ostensible donees. They did not get possession of the property
donated. They did not acquire the right to the fruits thereof, or any other right of dominion over the
property. More importantly, they did not acquire the right to dispose of the property — this would
accrue to them only after ten (10) years from Montinola’s death. Indeed, they never even laid hands
on the certificate of title to the same. They were therefore simply “paper owners” of the donated
property. All these circumstances, including, to repeat, the explicit provisions of the deed of donation
— reserving the exercise of rights of ownership to the donee and prohibiting the sale or encumbrance
of the property until ten (10) years after her death — ineluctably lead to the conclusion that the
donation in question was a donation mortis causa, contemplating a transfer of ownership to the
donees only after the donor’s demise.

[G.R. No. 110427. February 24, 1997]

The Incompetent, CARMEN CAÑIZA, represented by her legal guardian, AMPARO

EVANGELISTA,petitioner, vs. COURT OF APPEALS (SPECIAL FIRST DIVISION), PEDRO
ESTRADA and his wife, LEONORA ESTRADA, respondents.

FACTS: On November 20, 1989 birthday ko. being then ninety-four (94) years of age, Carmen
Cañiza, a spinster, a retired pharmacist, and former professor of the College of Chemistry and
Pharmacy of the University of the Philippines, was declared incompetent by judgment[1] of the
Regional Trial Court of Quezon City, in a guardianship proceeding instituted by her niece, Amparo
A. Evangelista.[3] She was so adjudged because of her advanced age and physical infirmities which
included cataracts in both eyes and senile dementia. Tangina second childhood pa. i hope this is not a
sign. Amparo A. Evangelista was appointed legal guardian of her person and estate.

Cañiza was the owner of a house and lot at No. 61 Tobias St., Quezon City. On September 17, 1990,
her guardian Amparo Evangelista commenced a suit in the Metropolitan Trial Court (MetroTC) of
Quezon City (Branch 35) to eject the spouses Pedro and Leonora Estrada from said premises.[4] The
complaint was later amended to identify the incompetent Cañiza as plaintiff, suing through her legal
guardian, Amparo Evangelista.

alleged that plaintiff Cañiza was the absolute owner of the property in question, that out of kindness,
she had allowed the Estrada Spouses, their children, grandchildren and sons-in-law to temporarily
reside in her house, rent-free; that Cañiza already had urgent need of the house on account of her
advanced age and failing health, “so funds could be raised to meet her expenses for support,
maintenance and medical treatment;” that through her guardian, Cañiza had asked the Estradas
verbally and in writing to vacate the house but they had refused to do so; and that “by the defendants’
act of unlawfully depriving plaintiff of the possession of the house in question, they ** (were)
enriching themselves at the expense of the incompetent, because, while they ** (were) saving money
by not paying any rent for the house, the incompetent ** (was) losing much money as her house
could not be rented by others.” Also alleged was that the complaint was “filed within one (1) year
from the date of first letter of demand dated February 3, 1990.”
In their Answer with Counterclaim, the defendants declared that they had been living in Cañiza’s
house since the 1960’s; that in consideration of their faithful service they had been considered by
Cañiza as her own family, and the latter had in fact executed a holographic will on September 4,
1988 by which she “bequeathed” to the Estradas the house and lot in question.

Judgment was rendered in Cañiza’s favor,[6] the Estradas being ordered to vacate the premises and
pay Cañiza P5,000.00 by way of attorney’s fees.

on appeal,[7] the decision was reversed by the Quezon City Regional Trial Court, Branch 96.[8] the
issue of defendants’ possession should be resolved is accion publiciana, the obtaining factual and
legal situation ** demanding adjudication by such plenary action for recovery of possession
cognizable in the first instance by the Regional Trial Court.”

Cañiza sought to have the Court of Appeals reverse the decision of October 21, 1992, but failed in
that attempt. In a decision[10] promulgated on June 2, 1993, the Appellate Court[11] affirmed the
RTC’s judgment in toto. It ruled that (a) the proper remedy for Cañiza was indeed an accion
publiciana in the RTC, not an accion interdictal in the MetroTC, (b) while “said will, unless and until
it has passed probate by the proper court, could not be the basis of defendants’ claim to the property,
** it is indicative of intent and desire on the part of Carmen Cañiza that defendants are to remain and
are to continue in their occupancy and possession, so much so that Cañiza’s supervening
incompetency can not be said to have vested in her guardian the right or authority to drive the
defendants out.”[12]

Through her guardian, Cañiza came to this Court praying for reversal of the Appellate Court’s
judgment. She contends in the main that the latter erred in (a) holding that she should have pursued
an accion publiciana, and not an accion interdictal; and in (b) giving much weight to “a xerox copy of
an alleged holographic will, which is irrelevant to this case.”

Appeal to SC. While pending, Carmen Cañiza died on March 19, 1994,[15] and her heirs — the
aforementioned guardian, Amparo Evangelista, and Ramon C. Nevado, her niece and nephew,
respectively — were by this Court’s leave, substituted for her.[16]

RULING: Cañiza’s act of allowing the Estradas to occupy her house, rent-free, did not create a
permanent and indefeasible right of possession in the latter’s favor. Common sense, and the most
rudimentary sense of fairness clearly require that act of liberality be implicitly, but no less certainly,
accompanied by the necessary burden on the Estradas of returning the house to Cañiza upon her
demand. More than once has this Court adjudged that a person who occupies the land of another at
the latter’s tolerance or permission without any contract between them is necessarily bound by an
implied promise that he will vacate upon demand, failing which a summary action for ejectment is
the proper remedy against him.

The Estradas’ possession of the house stemmed from the owner’s express permission. That
permission was subsequently withdrawn by the owner, as was her right; and it is immaterial that the
withdrawal was made through her judicial guardian, the latter being indisputably clothed with
authority to do so. Nor is it of any consequence that Carmen Cañiza had executed a will bequeathing
the disputed property to the Estradas; that circumstance did not give them the right to stay in the
premises after demand to vacate on the theory that they might in future become owners thereof, that
right of ownership being at best inchoate, no transfer of ownership being possible unless and until the
will is duly probated.

A will is essentially ambulatory; at any time prior to the testator’s death, it may be changed or
revoked;[29] and until admitted to probate, it has no effect whatever and no right can be claimed
thereunder, the law being quite explicit: “No will shall pass either real or personal property unless it
is proved and allowed in accordance with the Rules of Court” (ART. 838, id.).[30] An owner’s
intention to confer title in the future to persons possessing property by his tolerance, is not
inconsistent with the former’s taking back possession in the meantime for any reason deemed
sufficient. And that in this case there was sufficient cause for the owner’s resumption of possession is
apparent: she needed to generate income from the house on account of the physical infirmities
afflicting her, arising from her extreme age.

As already stated, Carmen Cañiza passed away during the pendency of this appeal. The Estradas
thereupon moved to dismiss the petition, arguing that Cañiza’s death automatically terminated the
guardianship, Amaparo Evangelista lost all authority as her judicial guardian, and ceased to have
legal personality to represent her in the present appeal. The motion is without merit.

“SEC. 18. Death of a party. — After a party dies and the claim is not thereby extinguished, the court
shall order, upon proper notice, the legal representative of the deceased to appear and be substituted
for the deceased within a period of thirty (30) days, or within such time as may be granted. If the
legal representative fails to appear within said time, the court may order the opposing party to
procure the appointment of a legal representative of the deceased within a time to be specified by the
court, and the representative shall immediately appear for and on behalf of the interest of the
deceased. The court charges involved in procuring such appointment, if defrayed by the opposing
party, may be recovered as costs. The heirs of the deceased may be allowed to be substituted for the
deceased, without requiring the appointment of an executor or administrator and the court may
appoint guardian ad litem for the minor heirs.

G.R. No. 156536 October 31, 2006

JOSEPH CUA, petitioner,

vs.
GLORIA A. VARGAS, AURORA VARGAS, RAMON VARGAS, MARITES VARGAS,
EDELINA VARGAS AND GEMMA VARGAS, respondents.

FACTS: A parcel of residential land with an area of 99 square meters located in San Juan, Virac,
Catanduanes was left behind by the late Paulina Vargas. On February 4, 1994, a notarized Extra
Judicial Settlement Among Heirs was executed by and among Paulina Vargas’ heirs, namely Ester
Vargas, Visitacion Vargas, Juan Vargas, Zenaida V. Matienzo, Rosario V. Forteza, Andres Vargas,
Gloria Vargas, Antonina Vargas and Florentino Vargas, partitioning and adjudicating unto
themselves the lot in question, each one of them getting a share of 11 square meters. Florentino,
Andres, Antonina and Gloria, however, did not sign the document. Only Ester, Visitacion, Juan,
Zenaida and Rosario signed it. The Extra Judicial Settlement Among Heirs was published in the
Catanduanes Tribune for three consecutive weeks.3

On November 15, 1994, an Extra Judicial Settlement Among Heirs with Sale4 was again executed by
and among the same heirs over the same property and also with the same sharings. Once more, only
Ester, Visitacion, Juan, Zenaida and Rosario signed the document and their respective shares totaling
55 square meters were sold to Joseph Cua, petitioner herein.

Gloria Vargas tried to redeem the property

When the offer to redeem was refused and after having failed to reach an amicable settlement at the
barangay level,9 Gloria Vargas filed a case for annulment of Extra Judicial Settlement and Legal
Redemption of the lot with the Municipal Trial Court (MTC) of Virac, Catanduanes

After trial on the merits, the MTC rendered a decision13 in favor of petitioner, dismissing the
complaint as well as the complaint-in-intervention for lack of merit, and declaring the Deed of Extra
Judicial Settlement Among Heirs with Sale valid and binding. The MTC upheld the sale to petitioner
because the transaction purportedly occurred after the partition of the property among the co-owner
heirs. The MTC opined that the other heirs could validly dispose of their respective shares.
Moreover, the MTC found that although there was a failure to strictly comply with the requirements
under Article 1088 of the Civil Code14 for a written notice of sale to be served upon respondents by
the vendors prior to the exercise of the former’s right of redemption, this deficiency was cured by
respondents’ actual knowledge of the sale, which was more than 30 days before the filing of their
complaint, and their consignation of the purchase price with the Clerk of Court, so that the latter
action came too late. Finally, the MTC ruled that respondents failed to establish by competent proof
petitioner’s bad faith in purchasing the portion of the property owned by respondents’ co-heirs.15
On appeal, the Regional Trial Court (RTC), Branch 42, of Virac, Catanduanes affirmed the MTC
decision in a judgment dated November 25, 1999. The matter was thereafter raised to the Court of
Appeals (CA).

The CA reversed the ruling of both lower courts in the assailed decision dated March 26, 2002,
declaring that the Extra Judicial Settlement Among Heirs and the Extra Judicial Settlement Among
Heirs with Sale, dated February 4, 1994 and November 15, 1994, respectively, were void and without
any legal effect. The CA held that, pursuant to Section 1, Rule 74 of the Rules of Court, 16 the
extrajudicial settlement made by the other co-heirs is not binding upon respondents considering the
latter never participated in it nor did they ever signify their consent to the same.

RULING: The procedure outlined in Section 1 of Rule 74 is an ex parte proceeding. The rule plainly
states, however, that persons who do not participate or had no notice of an extrajudicial settlement
will not be bound thereby.18 It contemplates a notice that has been sent out or issued before any deed
of settlement and/or partition is agreed upon (i.e., a notice calling all interested parties to participate
in the said deed of extrajudicial settlement and partition), and not after such an agreement has already
been executed19 as what happened in the instant case with the publication of the first deed of
extrajudicial settlement among heirs.
The publication of the settlement does not constitute constructive notice to the heirs who had no
knowledge or did not take part in it because the same was notice after the fact of execution. The
requirement of publication is geared for the protection of creditors and was never intended to deprive
heirs of their lawful participation in the decedent’s estate. In this connection, the records of the
present case confirm that respondents never signed either of the settlement documents, having
discovered their existence only shortly before the filing of the present complaint. Following Rule 74,
these extrajudicial settlements do not bind respondents, and the partition made without their
knowledge and consent is invalid insofar as they are concerned.

The general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs or
petitioners in a case and the signature of only one of them is insufficient.31Nevertheless, the rules on
forum shopping, which were designed to promote and facilitate the orderly administration of justice,
should not be interpreted with such absolute literalness as to subvert their own ultimate and
legitimate objective. Strict compliance with the provisions regarding the certificate of non-forum
shopping merely underscores its mandatory nature in that the certification cannot be altogether
dispensed with or its requirements completely disregarded.32Under justifiable circumstances, the
Court has relaxed the rule requiring the submission of such certification considering that although it
is obligatory, it is not jurisdictional.33
Thus, when all the petitioners share a common interest and invoke a common cause of action or
defense, the signature of only one of them in the certification against forum shopping substantially
complies with the rules.34 The co-respondents of respondent Gloria Vargas in this case were her
children. In order not to defeat the ends of justice, the Court deems it sufficient that she signed the
petition on their behalf and as their representative.
WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner.

RodriguezRodriguez

FACTS: Juanito Rodriguez owned a five-door apartment located at San Jose Street, Guadalupe
Nuevo,Makati City. On October 27, 1983, Juanito executed a “Huling Habilin at Testamento” giving
petitioner Cresenciana Tubo Rodriguez, his live-in partner, apartments D and E, and his children
Benjamin Rodriguez (the deceased husband of respondent Evangeline Rodriguez), apartment A,
respondent Buenaventura Rodriguez, apartment B, and respondent Belen Rodriguez, apartment C.

June 14, 1984, Juanito executed a Deed of Absolute Sale over the property in favor of petitioner.[4]
Thus, TCT No. 144865 was cancelled and a new TCT No. 150431 was issued in the name of the
petitioner.[5]
The case arose when petitioner filed on September 20, 2001 a complaint for unlawful detainer
against the respondents, alleging that she is the lawful and registered owner of the property; and that
in 1984, she allowed respondents Evangeline, Buenaventura and Belen, out of kindness and
tolerance, to personally occupy units A, B and D, respectively. However, without her knowledge and
consent, respondents separately leased the units to Montano Magpantay, Mel Navarro and Socorro
Escota, who despite repeated demands, failed and refused to vacate the premises and to pay the
rentals thereof.[6]

respondents claimed ownership over the subject property by succession. They alleged that while
petitioner is the registered owner of the property, however, she is not the lawful owner thereof
because the June 14, 1984 Deed of Absolute Sale was simulated and void.

Complaint is DISMISSED. Plaintiff is ordered to pay attorney’s fees of P10,000.00 and the costs of
suit in favor of defendants. Appeal. Reversed.

the RTC reversed the decision of the MTC. It held that petitioner’s certificate of title is a conclusive
evidence of ownership of the land described therein; and that unless and until said title has been
annulled by a court of competent jurisdiction, such title is existing and valid. This is true also with
respect to the deed of sale. The present action, which involves only the issue of physical or material
possession, is not the proper action to challenge it. Further, the MTC erred when it relied heavily on
the “Huling Habilin at Testamento,” which was not probated hence has no effect and no right can be
claimed therein. The Partition Agreement which was allegedly entered into pursuant to the Huling
Habilin at Testamento should not also be considered.

RULING: However, when the issue of ownership is raised the court is not ousted of its jurisdiction.
Section 16 of Rule 70 of the Rules of Court provides:
SEC 16. Resolving defense of ownership. – When the defendant raises the defense of ownership in
his pleadings and the question of possession cannot be resolved without deciding the issue of
ownership, the issue of ownership shall be resolved only to determine the issue of possession.

Thus, all that the trial court can do is to make an initial determination of who is the owner of the
property so that it can resolve who is entitled to its possession absent other evidence to resolve
ownership.[16] But this adjudication is only provisional and does not bar or prejudice an action
between the same parties involving title to the property.[17]

In the case at bar, petitioner’s cause of action for unlawful detainer was based on her alleged
ownership of land covered by TCT No. 150431 and that she merely tolerated respondents’ stay
thereat. However, when respondents leased the apartments to other persons without her consent, their
possession as well as those persons claiming right under them became unlawful upon their refusal to
vacate the premises and to pay the rent. On the other hand, respondents assailed petitioner’s title by
claiming that the deed of sale upon which it was based was simulated and void. They insisted that
they were co-owners thus, they have the right to possess the said property. To prove their claim, they
presented the Huling Habilin at Testamento of Juanito Rodriguez and the Partition Agreement.

COMPILED FULL TEXT CASES | DIGESTS CASE DIGESTSAN BEDA WILLS

 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 76988 January 31, 1989

GENERAL RUBBER AND FOOTWEAR CORPORATION, petitioner, 

vs.
THE HON. FRANKLIN DRILON IN HIS CAPACITY AS THE MINISTER OF LABOR &
EMPLOYMENT and THE GENERAL RUBBER WORKERS' UNION-NATU, respondents.

Paez & Pascual Law Office for petitioners.

The Solicitor General for public respondent.

Marcelino Lontok, Jr. for private respondent.

RESOLUTION

FELICIANO, J.:

The present petition involves the question of whether or not union members who did not ratify a
waiver of accrued wage differentials are bound by the ratification made by a majority of the union
members.

On 26 December 1984, Wage Order No. 6 was issued, increasing the statutory minimum wage rate
(by P2.00) and the mandatory cost of living allowance (by P3.00 for non-agricultural workers) in the
private sector, to take effect on 1 November 1984, Petitioner General Rubber and Footwear
Corporation applied to the National Wages Council ("Council") for exemption from the provisions of
Wage Order No. 6. The Council, in an Order dated 4 March 1985, denied petitioner's application,
stating in part that:

[Y]ou are hereby ordered to pay your covered employees the daily increase in
statutory minimum wage rate of P 2.00 and living allowance of P3.00 effective
November 1, 1984. ...

This decision is final.   (Emphasis supplied)

1

Petitioner filed a Motion for Reconsideration of this Order on 27 May 1985.

On 25 May 1985, some members of respondent General Rubber Workers' Union-NATU, led by one
Leopoldo Sto. Domingo, declared a strike against petitioner.   Three (3) days later, on 28 May 1985,
2

petitioner and Sto. Domingo, the latter purporting to represent the striking workers, entered into a
Return-to-Work Agreement ("Agreement"), Article 4 of which provided:
 4. The COMPANY agrees to implement in full Wage Order No. 6 effective May 30,
1985, and agrees to withdraw the Motion for Reconsideration which it filed with the
National Wages Council in connection with the Application for Exemption. In
consideration, the UNION, its officers and members, agrees not to demand or ask
from the COMPANY the corresponding differential pay from November 1, 1984 to
May 29 1985 arising out of the non-compliance of said wage order during the said
period.   (Emphasis supplied)
3

This agreement was subsequently ratified on 30 July 1985 in a document entitled "Sama-samang

Kapasyahan sa Pagpapatibay ng Return-to-Work Agreement"   by some two hundred and sixty-eight
4

(268) members of respondent union, each member signing individually the instrument of ratification.

Before the ratification of the Agreement, petitioner filed, on 5 June 1985, a Motion with the Council
withdrawing its pending Motion for Reconsideration of the Council's Order of 4 March 1985. By a
letter dated 13 June 1985, the Council allowed the withdrawal of petitioner's Motion for
Reconsideration, which letter in part stated:

In view of your compliance with Wage Order No. 6 effective May 30, 1985 pursuant
to the Return to Work Agreement ... , this Council interposes no objection to your
Motion to Withdraw ...   (Emphasis supplied)
5

Meanwhile, there were some one hundred (100) members of the union who were unhappy over the
Agreement, who took the view that the Council's Order of 4 March 1985 bad become final and
executory upon the withdrawal of petitioner's Motion for Reconsideration and who would not sign the
instrument ratifying the Agreement. On 10 July 1985, these minority union members with respondent
union acting on their behalf, applied for a writ of execution of the Council's Order. 
6

Petitioner opposed the Motion for a writ of execution, contending that the Council's approval of its
deferred compliance with the implementation of the Wage Order,  together with the majority
7

ratification of the Agreement by the individual workers,   bound the non-ratifying union members
8

represented by respondent union.

Respondent union countered that the Agreement — despite the majority ratification — was not
binding on the union members who had not consented thereto, upon the ground that ratification or
non-ratification of the Agreement, involving as it did money claims, was a personal right under the
doctrine of "Kaisahan ng Manggagawa sa La Campana v. Honorable Judge Ulpiano Sarmiento and
La Campana."  9

Finding for the Union members represented by respondent union, the then Ministry (now
Department) of Labor and Employment, in an order dated 20 September 1985 issued by National
Capital Region Director Severo M. Pucan, directed the issuance of a writ of execution and required
petitioner to pay the minority members of respondent union their claims for differential pay under
Wage Order No. 6, which totalled P90,090.00.  10

Petitioner then moved to quash the writ of execution upon the ground that the Council's order could
not be the subject of a writ of execution, having been superseded by the Agreement.   In another
11

Order dated 15 January 1986. Director Pucan, reversed his previous order and sustained petitioner's
contention that the minority union members represented by respondent union were bound by the
majority ratification, holding that the Council's 20 September 1985 Order sought to be enforced by
writ of execution should not have been issued.  12
Respondent union filed a Motion for Reconsideration, which was treated as an appeal to the Minister
of Labor. In a decision dated 19 December 1986, the Minister of Labor set aside the appealed Order
of Director Pucan. The Minister's decision held that:

It is undisputed that the 100 numbers did not sign and ratify the Return-to-Work
Agreement and therefore they cannot be bound by the waiver of benefits therein.
This, in essence, is the ruling of the High Tribunal in the La Campana case.
Accordingly, the benefits under Wage Order No. 6 due them by virtue of the final and
executory Order of the National Wages Council dated March 4, 1985 subsists in their
favor and can be subject for execution.

xxx xxx xxx

The writ of execution dated September 20, 1985 ... was clearly based on the final
Order of the National Wages Council sought to be enforced in a Motion for Execution
filed by the union. While the Return-to-Work Agreement was mentioned in the writ,
the respondent allegedly failing 'to comply with the above-stated Agreement which
had become final and executory,' we find the Agreement indeed not the basis for the
issuance of the writ.

WHEREFORE, the Order of the Director dated January 15, 1986 is hereby set aside.
Let a writ of execution be issued immediately to enforce the payment of the
differential pay under Wage Order No. 6 from November 1, 1984 to May 29, 1985 of
the 100 workers who did not sign any waiver, in compliance with the final Order of
the National Wages Council. The entire record is hereby remanded to the Regional
Director, National Capital Region for this purpose.

SO ORDERED .   (Emphasis supplied)

13

Not pleased with the adverse decision of the Minister, petitioner filed the instant Petition
for Certiorari.

Petitioner argues once again that the National Wages Council's Order of 4 March 1985 did not
become final and executory because it had been superseded by the Return-to-Work Agreement
signed by petitioner corporation and the union. At the same time, petitioner also argues that the
Return-to-Work Agreement could not be enforced by a writ of execution, because it was a
contractual document and not the final and executory award of a public official or agency.
Petitioner's contention is more clever than substantial. The core issue is whether or not Article 4 of
the Return-to-Work Agreement quoted above, could be deemed as binding upon all members of the
union, without regard to whether such members had or had not in fact individually signed and ratified
such Agreement. Article 4 of that Agreement provided for, apparently, a quid pro quo arrangement:
petitioner agreed to implement in full Wage Order No. 6 starting 30 May 1985 (and not 1 November
1984, as provided by the terms of Wage Order No. 6) and to withdraw its previously filed Motion for
Reconsideration with the National Wages Council; in turn, the union and its members would refrain
from requiring the company to pay the differential pay (increase in pay) due under Wage Order No. 6
corresponding to the preceding seven-month period from 1 November 1984 to 29 May 1985.

Thus, Kaisahan ng Mangagawa sa La Campana v. Sarmiento, (supra) is practically on all fours with

the instant case. In La Campana, what was at stake was the validity of a compromise agreement
entered into between the union and the company. In that compromise agreement, the union
undertook to dismiss and withdraw the case it had filed with the then Court of Industrial Relations,
and waived its right to execute any final judgment rendered in that case. The CIR had in that case,
rendered a judgment directing reinstatement of dismissed workers and payment of ten (10) years
backwages. The Secretary of Labor held that that compromise agreement was void for lack of
ratification by the individual members of the union. The Supreme Court upheld the decision of the
Secretary of Labor, stating among other things that:

Generally, a judgment on a compromise agreement puts an end to a litigation and is

immediately executory. However, the Rules [of Court] require a special authority
before an attorney can compromise the litigation of [his] clients. The authority to
compromise cannot lightly be presumed and should be duly established by evidence.
(Esso Philippine, Inc. v. MME, 75 SCRA 91).

As aptly held by the Secretary of Labor, the records are bereft of showing that the
individual members consented to the said agreement. Now were the members
informed of the filing of the civil case before the Court of First Instance. If the parties
to said agreement acted in good faith, why did they not furnish the Office of the
president with a copy of the agreement when they knew all the while that the labor
case was then pending appeal therein? Undoubtedly, the compromise agreement
was executed to the prejudice of the complainants who never consented thereto,
hence, it is null and void. The judgment based on such agreement does not bind the
individual members or complainants who are not parties thereto nor signatories
therein.

Money claims due to laborers cannot be the object of settlement or compromise

effected by a union or counsel without the specific individual consent of each laborer
concerned. The beneficiaries are the individual complainants themselves. The union
to which they belong can only assist them but cannot decide for them. Awards in
favor of laborers after long years of litigation must be attended to with mutual
openness and in the best of faith. (Danao Development Corp. v. NLRC, 81 SCRA
487-505). Only thus can we really give meaning to the constitutional mandate of
giving laborers maximum protection and security. It is about time that the judgment in
Case No. 584-V(7) be fully implemented considering the unreasonable delay in the
satisfaction thereof. This unfortunate incident may only weaken the workingmen's
faith in the judiciary's capacity to give them justice when due.  14

xxx xxx xxx

(Emphasis supplied)

In the instant case, there is no dispute that private respondents had not ratified the Return-to-Work
Agreement. It follows, and we so hold, that private respondents cannot be held bound by the Return-
to-Work Agreement. The waiver of money claims, which in this case were accrued money claims, by
workers and employees must be regarded as a personal right, that is, a right that must be personally
exercised. For a waiver thereof to be legally effective, the individual consent or ratification of the
workers or employees involved must be shown. Neither the officers nor the majority of the union had
any authority to waive the accrued rights pertaining to the dissenting minority members, even under
a collective bargaining agreement which provided for a "union shop." The same considerations of
public policy which impelled the Court to reach the conclusion it did in La Campana, are equally
compelling in the present case. The members of the union need the protective shield of this doctrine
not only vis-a-vis their employer but also, at times, vis-a-vis the management of their own union, and
at other times even against their own imprudence or impecuniousness.
It should perhaps be made clear that the Court is not here saying that accrued money claims
can never be effectively waived by workers and employees. What the Court is saying is that, in the
present case, the private respondents never purported to waive their claims to accrued differential
pay. Assuming that private respondents had actually and individually purported to waive such
claims, a second question would then have arisen: whether such waiver could be given legal effect
or whether, on the contrary, it was violative of public policy.   Fortunately, we do not have to address
15

this second question here.

Since Article 4 of the Return-to-Work Agreement was not enforceable against the non-consenting
union members, the Order of the National Wages Council dated 4 March 1985 requiring petitioner to
comply with Wage Order No. 6 from 1 November 1984 onward must be regarded as having become
final and executory insofar as the non-consenting union members were concerned. Enforcement by
writ of execution of that Order was, therefore, proper. It follows further that the decision of 19
December 1986 of the respondent Minister of Labor, far from constituting a grave abuse of discretion
or an act without or in excess of jurisdiction, was fully in accordance with law as laid down in La
Campana and here reiterated.

WHEREFORE, the Court Resolved to DISMISS the Petition for certiorari for lack of merit. Costs
against petitioner.

Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Footnotes

1 Records on Appeal, p. 168.

2 Id., p. 35.

3 Id., p. 34.

4 Id., pp- 9-15. Copies of these two documents were duly filed with the Bureau of
labor Relations on 1 August and 7 August 1985, respectively. Id., p. 8.

5 Id., p. 5.

6 Id., p. 4. There are actually only ninety-nine (99) members listed by respondent
union in its application for a Writ of Execution, Id., pp. 20-22.

7 Id., p. 5.

8 Id., p. 16.

9 133 SCRA 220 (1984).

10 Records on Appeal, p. 24.

11 Id., p. 43.
 12 Id., p. 74.

13 Rollo, pp. 23-24.

14 133 SCRA at 235-236.

15 See Art. 6, Civil Code.

THIRD DIVISION

[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.

DECISION
PANGANIBAN, J.:

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  under Rule 45 of the Rules of Court, assailing
[1]

the May 31, 2000 Decision  and the October 30, 2003 Resolution  of the Court of
[2] [3]

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 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.

xxxxxxxxx

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.

xxxxxxxxx

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. [5]

Ruling of the Court of Appeals

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
[6]

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 Courts Ruling

The Petition has no merit.

First Issue:
Validity of the Compromise Agreement
 A compromise agreement is a contract whereby the parties make reciprocal
concessions in order to resolve their differences and thus avoid or put an end to a
lawsuit.  They adjust their difficulties in the manner they have agreed upon,
[11]

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
[12]

(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.  To [14]

have the force of law between the parties,  it must comply with the requisites and
[15]

principles of contracts.  Upon the parties, it has the effect and the authority of res
[16]

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.  It is [18]

immediately executory and not appealable, except for vices of consent or forgery.  The
[19]

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 courts final judgment at the time they agree on a compromise.
In this case, the law allows either of them to rescind the compromise agreement. It is
evident from the quoted paragraph that such an agreement is not prohibited or void or
voidable. Instead, a remedy to impugn the contract, which is an action for rescission, is
declared available.  The law allows a party to rescind a compromise agreement,
[22]
because it could have been entered into in ignorance of the fact that there was already
a final judgment. Knowledge of a decisions finality may affect the resolve to enter into a
compromise agreement.
The second paragraph, though irrelevant to the present case, refers to the instance
when the courts decision is still appealable or otherwise subject to modification. Under
this paragraph, ignorance of the decision is not a ground to rescind a compromise
agreement, because the parties are still unsure of the final outcome of the case at this
time.
Petitioners argument, therefore, fails to convince. Article 2040 of the Civil Code
does not refer to the validity of a compromise agreement entered into after final
judgment. Moreover, an important requisite, which is lack of knowledge of the final
judgment, is wanting in the present case.

Supported by Case Law

The issue involving the validity of a compromise agreement notwithstanding a final

judgment is not novel. Jesalva v. Bautista  upheld a compromise agreement that
[23]

covered cases pending trial, on appeal, and with final judgment.  The Court noted that
[24]

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
[25] [26]

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  upheld the right to compromise prior to the execution of a

[28]

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
[29]

Appeals  recognized the right to compromise final and executory judgments, as long as
[30]

such right was exercised by the proper party litigants. [31]

Rovero v. Amparo,  which petitioners cited, did not set any precedent that all
[32]

compromise agreements after final judgment were invalid. In that case, the customs
commissioner imposed a fine on an importer, based on the appraised value of the
goods illegally brought to the country. The latters appeal, which eventually reached this
Court, was denied. Despite a final judgment, the customs commissioner still
reappraised the value of the goods and effectively reduced the amount of fine. Holding
that he had no authority to compromise a final judgment, the Court explained:

It is argued that the parties to a case may enter into a compromise about even a final
judgment rendered by a court, and it is contended x x x that the reappraisal ordered by
the Commissioner of Customs and sanctioned by the Department of Finance was
authorized by Section 1369 of the [Revised Administrative Code]. The contention
may be correct as regards private parties who are the owners of the property
subject-matter of the litigation, and who are therefore free to do with what they
own or what is awarded to them, as they please, even to the extent of renouncing
the award, or condoning the obligation imposed by the judgment on the adverse
party. Not so, however, in the present case. Here, the Commissioner of Customs is
not a private party and is not the owner of the money involved in the fine based on the
original appraisal. He is a mere agent of the Government and acts as a trustee of the
money or property in his hands or coming thereto by virtue of a favorable judgment.
Unless expressly authorized by his principal or by law, he is not authorized to accept
anything different from or anything less than what is adjudicated in favor of the
Government.  (Bold types supplied)
[33]

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,  voidable,  unenforceable,  or void.  Instead, petitioners base their
[35] [36] [37] [38]

argument on the sole fact that the agreement was executed despite a final judgment,
which the Court had previously ruled to be allowed by law.
Petitioners voluntarily entered into the compromise agreement, as shown by the
following facts: (1) they signed respondents Manifestation (filed with the labor arbiter)
that the judgment award had been satisfied;  (2) they executed a Joint Affidavit dated
[39]

May 5, 1997, attesting to the receipt of payment and the waiver of all other benefits due
them;  and (3) 6 of the 8 petitioners filed a Manifestation with the labor arbiter on
[40]

October 20, 1997, requesting that the cases be terminated because of their receipt of
payment in full satisfaction of their claims. These circumstances also reveal that
[41]

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.  In the conference, any agreement that would settle the final judgment
[42]

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,  is done by changing the object or
[43]

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.  A compromise of a final judgment
[45]

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
[46]

compromise agreement is evident, because the latter was precisely entered into to
supersede the former.

Second Issue:
Validity of the Waiver

Having ruled on the validity of the compromise agreement in the present suit, the
Court now turns its attention to the waiver of claims or quitclaim executed by petitioners.
The subject waiver was their concession when they entered into the agreement. They
allege, however, that the absence of their counsel and the labor arbiter when they
executed the waiver invalidates the document.

Not Determinative
of the Waivers Validity

The presence or the absence of counsel when a waiver is executed does not
determine its validity. There is no law requiring the presence of a counsel to validate a
waiver. The test is whether it was executed voluntarily, freely and intelligently; and
whether the consideration for it was credible and reasonable.  Where there is clear
[47]

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
[48]

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.  Relevant, however, is this reference to the NLRCs New Rules of
[49]

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,  before the Labor Arbiter.
[50]

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 arbiters absence when the waivers were executed was remedied upon
compliance with the above procedure. The Court observes that the arbiter made
searching questions during the pre-execution conference to ascertain whether
petitioners had voluntarily and freely executed the waivers.  Likewise, there was
[52]

evidence that they made an intelligent choice, considering that the contents of the
written waivers had been explained to them.  The labor arbiters absence when those
[53]

waivers were executed does not, therefore, invalidate them.

The Court declines to rule on the allegation that respondents counsels encroached
upon the professional employment of petitioners lawyer when they facilitated the
waivers.  The present action is not the proper forum in which to raise any charge of
[54]

professional misconduct. More important, petitioners failed to present any supporting

evidence.
 The third issue, which refers to the timely filing of petitioners Motion for
Reconsideration filed with the CA, will no longer be discussed because this Courts
decision has resolved the case on the merits.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED.
Costs against petitioners.
SO ORDERED.
Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur.

[1]
 Rollo, pp. 3-14.
[2]
 Id., pp. 16-28. Special Fifteenth Division. Penned by Justice Ruben T. Reyes (Division chair), with the
concurrence of Justices Andres B. Reyes Jr. and Jose L. Sabio Jr. (members).
[3]
 Id., p. 71.
[4]
 Id., p. 27.
[5]
 Assailed Decision, pp. 2-6; rollo, pp. 17-21.
[6]
 Id., pp. 8 & 23.
[7]
 Id., pp. 9 & 24.
[8]
 Assailed Resolution; rollo, p. 71.
[9]
 The case was deemed submitted for decision on October 5, 2004, upon this Courts receipt of petitioners
Memorandum, signed by Atty. Mariano R. Pefianco. Respondents Memorandum, signed by Attys.
Nicolas P. Lapea Jr. and Gilbert F. Ordoa, was received by this Court on September 8, 2004.
[10]
 Petitioners Memorandum, p. 4; rollo, p. 121.
[11]
 Art. 2028, Civil Code; Manila International Airport Authority v. ALA Industries Corporation, 422 SCRA
603, 609, February 13, 2004; Ramnani v. Court of Appeals,  413 Phil. 194, 207, July 10,
2001; Abarintos v. Court of Appeals,  374 Phil. 157, 168, September 30, 1999; Del Rosario v.
Madayag,  317 Phil. 883, 887, August 28, 1995.
[12]
 Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals, 311 SCRA 143,
154, July 26, 1999.
[13]
 Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of Appeals, supra; Abinujar v.
Court of Appeals, 313 Phil. 407, 413, April 18, 1995.
[14]
 The Learning Child, Inc. v. Lazaro, 340 SCRA 72, 75, September 7, 2000; Calla v. Maglalang, 382 Phil.
138, 143, February 9, 2000; Salazar v. Jarabe, 91 Phil. 596, 601, July 11, 1952.
[15]
 Golden Donuts, Inc. v. National Labor Relations Commission, 379 Phil. 303, 314, January 19, 2000.
[16]
 See Regal Films, Inc. v. Concepcion,  414 Phil. 807, 813, August 9, 2001; Anacleto v. Van Twest, 393
Phil. 616, 624, August 29, 2000; Del Rosario v. Madayag, supra.
[17]
 Art. 2037, Civil Code; Cebu International Finance Corporation v. Court of Appeals, 374 Phil. 844, 858,
October 12, 1999; Del Rosario v. Madayag, supra.
[18]
 Velasquez v. Court of Appeals, 426 SCRA 309, 316, March 25, 2004; Manila International Airport
Authority v. ALA Industries Corporation, supra.; Golden Donuts, Inc. v. National Labor Relations
Commission,  supra; Abarintos v. Court of Appeals, supra.
[19]
 Art. 2038; San Antonio v. Court of Appeals, 371 SCRA 536, 543, December 7, 2001; Thermphil, Inc. v.
Court of Appeals, 421 Phil. 589, 596, November 20, 2001; Salvador v. Ortoll, 343 SCRA 658,
668, October 18, 2000; Santos v. Dames, 345 Phil. 242, 247, October 2, 1997.
[20]
 Manila International Airport Authority v. ALA Industries Corporation, supra; Abinujar v. Court of
Appeals, supra.
[21]
 Petitioners Memorandum, p. 5; rollo, p. 122.
[22]
 City of Zamboanga v. Mandi, 196 SCRA 498, 502, April 30, 1991.
[23]
 105 Phil. 348, March 24, 1959.
[24]
 Id., p. 351.
[25]
 Id., p. 351.
[26]
 150-C Phil. 354, November 24, 1972.
[27]
 Id., p. 359.
[28]
 75 SCRA 234, February 17, 1977.
[29]
 Id., p. 241.
[30]
 163 SCRA 25, June 29, 1988.
[31]
 Id., p. 30.
[32]
 91 Phil. 228, May 5, 1952.
[33]
 Id., p. 234, per Montemayor, J.
[34]
 Art. 1318, Civil Code.
[35]
 Art. 1381, Civil Code.
[36]
 Art. 1390, Civil Code.
[37]
 Art. 1403, Civil Code.
[38]
 Art. 1409, Civil Code.
[39]
 Assailed Decision, p. 3; rollo, p. 18.
[40]
 Ibid.
[41]
 Id., pp. 5 & 20. In their Joint Affidavit written in their local dialect, the six petitioners attested to the truth
of all the allegations in their Joint Affidavit dated May 5, 1997 (id., pp. 9 & 24).
[42]
 1, Rule VIII (Execution Proceedings), New Rules of Procedure of the NLRC, enacted February 12,
2002.
[43]
 Arts. 1157 & 1231, Civil Code.
[44]
 Art. 1291.
[45]
 Art. 1292.
[46]
 See Dormitorio v. Fernandez,  72 SCRA 388, 393, August 21, 1976; Lu v. Yap,  74 Phil. 287, July 30,
1943. In these cases, the Court specifically found an animus novandi  or intent to substitute an
obligation that arose from a final judgment.
[47]
 Art. 2038, Civil Code; Agustilo v. Court of Appeals, 417 Phil. 218, 234, September 7, 2001; AG&P
United Rank  & File Association v. National Labor Relations Commission, 332 Phil. 937, 947,
November 29, 1996; Sicangco v. National Labor Relations Commission, 235 SCRA 96, 101,
 August 4, 1994;  Periquet v. National Labor Relations Commission, 186 SCRA 724, 730, June 22,
1990.
[48]
 Alcosero v. National Labor Relations Commission, 351 Phil. 368, 383, March 26, 1998; AG&P United
Rank  & File Association v. National Labor Relations Commission, supra; Sicangco v. National
Labor Relations Commission, supra;  Periquet v. National Labor Relations Commission, supra, p.
731.
Dire necessity may be an acceptable ground to annul quitclaims if the consideration is unconscionably
low and the employee was tricked into accepting it. Veloso v. Department of Labor and
Employment, 200 SCRA 201, 205, August 5, 1991.
[49]
 See Loyola Security  &  Detective Agency v. National Labor Relations Commission, 313 Phil. 750, 754,
May 9, 1995.
[50]
 It is apparent from the provision that the signatures of counsels and authorized representatives would
not be required if they are not present at the time the agreements are made.
[51]
 2, Rule V (Proceedings Before Labor Arbiters), New Rules of Procedure of the NLRC.
[52]
 Assailed Decision, pp. 10-11; rollo, pp. 25-26.
[53]
 Id., pp. 12 & 27.
[54]
 Petitioners Memorandum, p. 6; rollo, p. 123.

THIRD DIVISION
 
EUROTECH HAIR SYSTEMS, INC., LUTZ G.R. No. 160913
KUNACK, and JOSE BARIN,  

 
Petitioners,
Present:
   

  QUISUMBING, J., Chairperson,

  CARPIO,
CARPIO MORALES,
- versus -
TINGA, and
 
VELASCO, JR., JJ.

 
 ANTONIO S. GO, Promulgated:

Respondent.  

August 31, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

RESOLUTION
QUISUMBING,  J.:

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 companys president and general manager, respectively.

Respondent Antonio S. Go served as Eurotechs 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. Respondents responsibilities included manpower planning to
meet the monthly production targets.

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 respondents
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] Respondents 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 Arbiters 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 respondents Petition for Certiorari prayed for the Court of Appeals
correction of the NLRCs 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.

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 Companys loss of confidence on said employee.

2.            Whether or not the Court of Appeals had substantial basis to support its judgment.

3.            Whether or not the Court of Appeals ruling has violated the Companys
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
[9]
COMPROMISE AGREEMENT REACHED BETWEEN THE PARTIES.

Simply put, the issues now for our resolution are: (1) Was respondents

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 companys 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 respondents 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 employees 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 attorneys fees. He argues that since moral and exemplary
damages have been awarded to respondent, an award of attorneys 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 employees

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 employees 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
respondents inefficiency. Significant factors that might explain the companys poor
production include existing market conditions at the time, the overall spending
behavior of consumers, and the prevailing state of the countrys economy as a
whole. The companys 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
respondents alleged inefficiency constituting a willful breach of the trust and
confidence reposed in him by petitioners.

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 respondents contention, the employees 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 Arbiters 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.
 

  LEONARDO A. QUISUMBING

Associate Justice
 

WE CONCUR:

 
 

ANTONIO T. CARPIO

Associate Justice

CONCHITA CARPIO MORALES DANTE O. TINGA

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice
 

ATTESTATION

I attest that the conclusions in the above Resolution had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.

 
   LEONARDO A. QUISUMBING

Associate Justice

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, I certify that the conclusions in the above Resolution
had been reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.

  ARTEMIO V. PANGANIBAN

Chief Justice
 

[1]
 Rollo, pp. 60-72. Penned by Associate Justice Oswaldo D. Agcaoili, with Associate Justices Perlita J. Tria Tirona,
and Edgardo F. Sundiam concurring.
[2]
 Id. at 74-77.
[3]
 Id. at 79-95.
[4]
 Id. at 117-122.
[5]
 Id. at 115.
[6]
 Id. at 94.
[7]
 Id. at 569.
[8]
 Id. at 96.
[9]
 Id. at 520-521.
[10]
 Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot
be recovered, except:
(1)     When exemplary damages are awarded;
(2)     When the defendants act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest;
x x x x
(5)     Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly
valid, just and demandable claim;
x x x x
(7)     In actions for the recovery of wages of household helpers, laborers and skilled workers;
x x x x
[11]
 Asia Pacific Chartering (Phils.), Inc. v. Farolan, G.R. No. 151370, December 4, 2002, 393 SCRA 454, 466.
[12]
 Buiser v. Leogardo, Jr., No. L-63316, July 31, 1984, 131 SCRA 151, 158.
[13]
 Asia Pacific Chartering (Phils.), Inc. v. Farolan, supra note 11 at 467-468.
[14]
 Athenna International Manpower Services, Inc. v. Villanos, G.R. No. 151303, April 15, 2005, 456 SCRA 313,
320.
[15]
 Galicia v. NLRC (Second Division), G.R. No. 119649, July 28, 1997, 276 SCRA 381, 387.
[16]
 Tomas Claudio Memorial College, Inc. v. Court of Appeals, G.R. No. 152568, February 16, 2004, 423 SCRA
122, 1