Dela Rosa Liner, Inc. vs. Borela

A compromise agreement settling an illegal dismissal case does not bar a subsequent complaint for labor standards benefits where the causes of action are not identical, and a general waiver in such agreement cannot extinguish statutory labor rights — such as overtime pay, 13th-month pay, and statutory wages under wage orders — that by law and jurisprudence cannot be waived without appropriate consideration.

Dela Rosa Liner, Inc. is a public transport company owned or managed by Rosauro Dela Rosa, Sr. and Nora Dela Rosa. Respondents Calixto Borela and Estelo Amarille were respectively a bus driver and conductor employed by the company. The parties had a prior illegal dismissal and unfair labor practice case (CA-G.R. SP No. 118038) that was resolved through a compromise agreement, under which Borela received ₱350,000.00 and Amarille received ₱150,000.00, and both executed a quitclaim. The dispute in this case arises from a second complaint filed by the respondents for labor standards benefits and violation of several wage orders, which petitioners contend is barred by the first case's settlement.

Dela Rosa Liner, Inc. is a public transport company operated by spouses Rosauro Dela Rosa, Sr. and Nora Dela Rosa. Calixto Borela served as a bus driver and Estelo Amarille as a conductor for the company. The parties' relationship gave rise to two separate labor disputes that form the core of this case.

The first dispute began when Borela and Amarille filed a complaint for illegal dismissal and unfair labor practice against the petitioners. Executive Labor Arbiter Generoso V. Santos dismissed the complaint for lack of merit on November 6, 2008. On appeal, the NLRC 6th Division reversed the dismissal on March 25, 2010, awarding Borela ₱442,550.00 in backwages, ₱20,000.00 in moral and exemplary damages, and 10% attorney's fees, and awarding Amarille ₱215,775.00 in backwages, ₱50,000.00 in moral and exemplary damages, and 10% attorney's fees. On petitioners' motion for reconsideration, however, the NLRC vacated this decision and on September 30, 2010 issued a new ruling that followed the LA's original dismissal with modification, granting each respondent ₱10,000.00 in financial assistance in consideration of their long years of service.

Respondents elevated the matter to the CA via a petition for certiorari docketed as CA-G.R. SP No. 118038. While that petition was pending, the parties executed a compromise agreement on September 8, 2011. Under its terms, the parties agreed to terminate the case before the CA and that no further action based on the same grounds be brought against each other, with the agreement applying to "all claims and damages or losses either party may have against each other whether those damages or losses are known or unknown, foreseen or unforeseen." Pursuant to the agreement, Borela received ₱350,000.00 and Amarille received ₱150,000.00, and both executed a quitclaim. The CA 13th Division rendered judgment in accordance with the compromise agreement, and an entry of judgment was issued on September 28, 2011.

Fifteen days after executing the compromise agreement, on September 23, 2011, Borela and Amarille filed a second complaint against the same petitioners, this time for underpayment/non-payment of salaries, holiday pay, overtime pay, service incentive leave pay, 13th-month pay, sick leave and vacation leave, night shift differential, illegal deductions, and violation of Wage Order Nos. 13, 14, 15, and 16. Petitioners moved to dismiss the second complaint on October 26, 2011, alleging forum shopping in light of the compromise agreement that had settled the first case. Labor Arbiter Danna A. Castillon upheld the petitioners' position and dismissed the complaint on November 24, 2011. On appeal, the NLRC 1st Division granted the appeal on July 31, 2012, reversed the LA's dismissal, and reinstated the complaint, holding that the causes of action in the two cases were different — the first involving illegal dismissal and unfair labor practice, the second involving non-payment/underpayment of salaries and monetary benefits and violation of wage orders. Petitioners' motion for reconsideration was denied, prompting them to file a petition for certiorari with the CA.

The CA 15th Division denied the petition, finding no grave abuse of discretion in the NLRC's ruling that respondents did not commit forum shopping and that the case was not barred by res judicata. Petitioners' motion for reconsideration was denied on May 21, 2013, leading to the present petition before the Supreme Court.

• Forum Shopping: Petitioners argued that the respondents committed forum shopping by filing the second complaint after having settled the first case through a compromise agreement, claiming that the same action had already been settled and respondents had received a considerable amount for the settlement.
• Res Judicata: Petitioners contended that the judgment in the first case, rendered in accordance with the compromise agreement, bars the second complaint under the principle of res judicata.
• Scope of Compromise Agreement: Petitioners maintained that the compromise agreement covered all claims and causes of action that the parties may have against each other in relation to the respondents' employment, including known and unknown, foreseen and unforeseen damages or losses, and that respondents should be penalized for filing a subsequent action despite having received a considerable settlement amount.

• Timeliness of Petition: Respondents prayed for denial of the petition for having been belatedly filed, noting that petitioners' counsel received the CA resolution denying their motion for reconsideration on May 28, 2013, giving them until June 12, 2013, to file the petition, but the petition was notarized only on June 13, 2013, beyond the 15-day filing period.
• Distinct Causes of Action: Respondents argued that their second complaint involved two distinct causes of action: (1) their claim for sick leave, vacation leave, and 13th-month pay under the collective bargaining agreement of the company; and (2) the petitioners' noncompliance with wage orders since the year 2000 until the present. They quoted the NLRC 1st Division's decision almost in its entirety to support their position that they did not commit forum shopping.
• No Forum Shopping: Respondents contended that the causes of action in the present case are different from the causes of action settled in the first case cited by petitioners, and that they should be heard on their money claims.

• Timeliness of Filing: Whether the petition for review on certiorari was filed within the reglementary period under Rule 45, Section 2 of the Rules of Court.
• Forum Shopping: Whether the filing of the second complaint constituted forum shopping given the prior compromise agreement in the first case.
• Res Judicata: Whether the judgment in the first case, rendered in accordance with the compromise agreement, operates as res judicata barring the second complaint.
• Scope of Compromise Agreement and Waiver: Whether the compromise agreement's sweeping waiver of all claims — known or unknown, foreseen or unforeseen — effectively extinguished respondents' statutory labor standards claims.

• Timeliness of Filing: Yes. The petition was timely filed. The last day for filing, June 12, 2013, fell on Independence Day, a legal holiday; filing on the next working day, June 13, 2013, was deemed on time under Rule 22, Section 1, as clarified by A.M. 00-2-14 SC.
• Forum Shopping: No. The elements of forum shopping were not present because there was no identity of rights asserted and reliefs prayed for between the first and second complaints, and any judgment in the first action would not amount to res judicata in the second.
• Res Judicata: No. There was no identity of causes of action. The test under Yap vs. Chua — whether the same evidence would support both actions — was not satisfied, as the facts relevant to illegal dismissal and unfair labor practice differ from those relevant to labor standards violations and wage order compliance.
• Scope of Compromise Agreement and Waiver: No. The compromise agreement's reference to "same grounds" pertained only to the grounds raised in the first complaint. Its sweeping coverage of "all claims and damages or losses" was too broad and could not extinguish statutory labor rights — such as overtime pay, 13th-month pay, and statutory wages under wage orders — which cannot be generally waived without appropriate consideration.

• Timeliness of Filing: Under Section 1, Rule 22 of the Rules of Court, as clarified by A.M. 00-2-14 SC, when the last day on which a pleading is due falls on a Saturday, Sunday, or a legal holiday, the filing on the next working day is deemed on time. June 12, 2013 was Independence Day, a legal holiday. The filing of the petition on June 13, 2013, a working day, fully complied with the rules. This ruling followed Reiner Pacific International Shipping vs. Guevarra, where the Court explained the same principle.

• Forum Shopping: The elements of forum shopping are: (1) identity of parties; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration. While there was identity of parties, there was no identity of rights asserted and reliefs prayed for. The first complaint involved illegal dismissal/suspension and unfair labor practice with a prayer for damages and attorney's fees; the second complaint involved claims for labor standards benefits — violation of Wage Order Nos. 13, 14, 15, and 16, and non-payment of sick and vacation leave pays, 13th-month pay, service incentive leave benefit, overtime pay, and night shift differential. Because the same facts or evidence would not support both actions, the second element of forum shopping was absent.

• Res Judicata: The test for identity of causes of action, as held in Yap vs. Chua, is to ascertain whether the same evidence would support both actions, or whether there is an identity in the facts essential to the maintenance of the two actions. The facts or evidence that would determine whether respondents were illegally dismissed, illegally suspended, or subjected to unfair labor practice are not the same facts or evidence that would support the charge of noncompliance with labor standards benefits and several wage orders. The compromise agreement's phrase "same grounds" could only refer to the grounds raised in the first complaint and not to any other grounds. Accordingly, the judgment in the first case could not operate as res judicata in the second.

• Scope of Compromise Agreement and Waiver: The compromise agreement was concluded to terminate the illegal dismissal and unfair labor practice case pending before the CA. While the parties agreed that no further action based on the same grounds be brought against each other, the phrase "same grounds" referred only to the grounds in the first complaint. The agreement's coverage of "all claims and damages or losses either party may have against each other whether those damages or losses are known or unknown, foreseen or unforeseen" was too sweeping and effectively excluded any claims by respondents, including those that by law and jurisprudence cannot be waived without appropriate consideration, such as nonpayment or underpayment of overtime pay and wages. Under Article 6 of the Civil Code, rights may be waived but the waiver must not be contrary to law, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. In labor law, claims for 13th-month pay, overtime pay, and statutory wages under Wage Orders 13, 14, 15, and 16 cannot be generally waived as they are granted for workers' protection and welfare; it takes more than a general waiver to give up these legal entitlements. The amounts received under the compromise agreement (₱350,000.00 for Borela and ₱150,000.00 for Amarille) were reasonably regarded as a fair compromise of the first complaint in relation to the initial NLRC award before its reconsideration, and could not be considered as covering the labor standards claims, particularly since the compromise agreement was executed on September 8, 2011, while the labor standards complaint was filed only on September 23, 2011.

• Elements of Forum Shopping — Forum shopping requires: (1) identity of parties; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration. The Court applied this test and found the second and third elements absent because the first complaint involved illegal dismissal and unfair labor practice, while the second involved labor standards benefits and wage order violations.

• Identity of Causes of Action Test — The test to determine whether causes of action are identical is to ascertain whether the same evidence would support both actions, or whether there is an identity in the facts essential to the maintenance of the two actions. If the same facts or evidence would support both actions, they are considered the same and a judgment in the first would bar the subsequent action. The Court found that the evidence supporting a charge of illegal dismissal differs from the evidence supporting a charge of noncompliance with wage orders and labor standards benefits.

• Waiver of Statutory Labor Rights — While rights may be waived under Article 6 of the Civil Code, the waiver must not be contrary to law, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. In labor law, claims for 13th-month pay, overtime pay, and statutory wages under wage orders cannot be generally waived through a sweeping compromise agreement clause; they are granted for workers' protection and welfare, and it takes more than a general waiver to relinquish these entitlements. A compromise agreement settling an illegal dismissal case does not automatically extinguish separate and distinct labor standards claims.

• Holiday Filing Rule — Under Section 1, Rule 22 of the Rules of Court, as clarified by A.M. 00-2-14 SC, when the last day on which a pleading is due falls on a Saturday, Sunday, or a legal holiday, the filing of the pleading on the next working day is deemed on time.

• "This coverage is too sweeping and effectively excludes any claims by the respondents against the petitioners, including those that by law and jurisprudence cannot be waived without appropriate consideration such as nonpayment or underpayment of overtime pay and wages." — This passage articulates the ratio decidendi on the invalidity of a general waiver in a compromise agreement that purports to extinguish statutory labor standards benefits.

• "In labor law, respondents' claim for 13th-month pay, overtime pay, and statutory wages (under Wages Orders 13, 14, 15 and 16), among others, cannot simply be generally waived as they are granted for workers' protection and welfare; it takes more than a general waiver to give up workers' rights to these legal entitlements." — This passage defines the controlling doctrine on the waiver of statutory labor rights, distinguishing between rights that may be generally waived and those requiring appropriate consideration.

• "The phrase same grounds can only refer to the grounds raised in the first complaint and not to any other grounds." — This passage narrows the scope of the compromise agreement's waiver clause, establishing that a settlement of one cause of action does not extend to entirely different causes of action arising from the same employment relationship.

• Reiner Pacific International Shipping, et al. vs. Captain Francisco B. Guevarra, et al., G.R. No. 157020, June 19, 2013 — Followed. The Court relied on this case for the rule that when the last day for filing a pleading falls on a legal holiday, filing on the next working day is deemed on time under Rule 22, Section 1 and A.M. 00-2-14 SC.

• Oliva-De Mesa vs. Acero, Jr., G.R. No. 185064, January 16, 2012 — Followed. Cited for the enumeration of the three elements of forum shopping, which the Court applied to determine that the second complaint did not constitute forum shopping.

• Yap vs. Chua, G.R. No. 186730, June 13, 2012 — Followed. Cited for the test of identity of causes of action — whether the same evidence would support both actions — which the Court applied to distinguish the first complaint (illegal dismissal) from the second (labor standards benefits).

• Pampanga Sugar Development, Co., Inc. vs. Court of Industrial Relations, et al., 200 Phil. 204 (1982) — Followed. Cited for the principle, grounded in Article 6 of the Civil Code, that while rights may be waived, the waiver must not be contrary to law, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.

• Rule 45, Section 2, Rules of Court — Governs the period for filing a petition for review on certiorari, which must be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of the motion for reconsideration filed in due time. The Court found the petition timely filed under this rule.

• Rule 22, Section 1, Rules of Court — Provides that when the last day for doing any act required or permitted by the Rules falls on a Saturday, Sunday, or legal holiday, the act may be done on the next working day. The Court applied this provision, as clarified by A.M. 00-2-14 SC, to hold that the petition filed on June 13, 2013 was timely because June 12, 2013 was Independence Day.

• Article 6, Civil Code of the Philippines — Provides that rights may be waived, provided the waiver is not contrary to law, public policy, morals, or good customs, or prejudicial to a third person with a right recognized by law. The Court applied this provision to hold that the compromise agreement's sweeping waiver could not extinguish statutory labor standards benefits that require appropriate consideration for their waiver.

Antonio T. Carpio (Chairperson), Jose Catral Mendoza, Estela M. Perlas-Bernabe (designated as Acting Member in lieu of Associate Justice Mariano C. Del Castillo per Special Order No. 2115 dated July 22, 2015), and Marvic M.V.F. Leonen.