Madriaga vs. Court of Appeals

A quitclaim or compromise agreement is valid and binding when voluntarily entered into with full understanding of its terms and supported by credible and reasonable consideration, and may not later be disowned simply because of a change of mind; it is only where there is clear proof that the waiver was wrangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on their face, that the courts will annul the transaction.

The case is the third occasion on which the parties have invoked the Supreme Court's power over this labor dispute. The individual petitioners are workers who were originally supplied to San Miguel Corporation (SMC) and Philippine Dairy Products Corporation (PDPC) by Skillpower Corporation and Lipercon Services, Inc. under contracts of services. Upon expiration of those contracts, the workers were denied entry to the employers' premises, prompting illegal dismissal complaints filed by the National Organization of Workingmen (NOWM) on their behalf before the NLRC. The workers were eventually declared regular employees of SMC and PDPC, with the Supreme Court extending the benefit of regularization not only to the original complainants but also to "workers similarly situated" — a category that includes the herein petitioners. The dispute thereafter centered on the implementation of the reinstatement and monetary awards, which spawned multiple orders from Voluntary Arbitrator Tito F. Genilo, two prior Supreme Court resolutions, and the execution of compromise agreements and quitclaims that the petitioners now seek to invalidate.

On March 4, 1988, the National Organization of Workingmen (NOWM) and a number of workers-complainants filed illegal dismissal complaints before the Arbitration Branch of the NLRC, NCR, Manila, against San Miguel Corporation (SMC), Philippine Dairy Products Corporation (PDPC), Magnolia Dairy Products, Skillpower Corporation, and Lipercon Services, Inc. The workers had been supplied to SMC and PDPC by Skillpower and Lipercon under contracts of services, and upon expiration of those contracts were denied entry to the employers' premises. In a conciliation conference on May 6, 1988, the parties agreed to submit all pending issues to voluntary arbitration. On July 29, 1988, Voluntary Arbitrator Tito F. Genilo rendered a decision declaring the complainants regular employees of SMC and PDPC, ordering their reinstatement with full backwages less the daily financial assistance of ₱30.00 per day previously extended by Lipercon and Skillpower.

SMC and PDPC elevated the matter to the Supreme Court via a petition for certiorari (G.R. No. 85577), which the Court dismissed on August 30, 1989 for lack of merit. The Court affirmed the Voluntary Arbitrator's ruling and notably extended the benefit of regularization not only to the original complainants but also to "workers similarly situated" — a category that includes the herein petitioners. Before that resolution became final, NOWM sought execution before the Voluntary Arbitrator, submitting three separate lists of workers totaling 223, 220, and 45 employees. Because SMC and PDPC failed to appear at the October 12 and 20, 1989 hearings despite notice, the Voluntary Arbitrator approved the lists and issued a partial writ of execution on November 10, 1989. SMC and PDPC moved for reconsideration but were denied on December 27, 1989.

On March 30, 1990, SMC and PDPC manifested that they had regularized the 88 original complainants and paid all amounts due them, claiming that 70 individuals in Annexes "A" to "A-56" were part of that group. They asserted that the remaining 49 employees could not be reinstated due to labor-saving devices rendering their functions redundant, though they assured payment of monetary benefits. Pursuant to the November 10, 1989 Order, NLRC officer Ricardo O. Atienza submitted a report on March 23, 1990 computing total backwages and wage differentials at ₱18,886,283.05. Both parties objected to this computation — SMC and PDPC arguing it should be limited to those in Annexes "A" to "A-56" and that Releases and Quitclaims had already been executed by original complainants, and the union praying for recomputation by a different examiner. The Voluntary Arbitrator accordingly ordered a recomputation by Mrs. Juanita Bautista, whose November 8, 1990 report covered only workers who had been regularized or terminated due to abolition of positions; the petitioners, who had not yet been reinstated, were not included. The total computed monetary benefits was ₱1,638,324.95.

Implementation of the November 12, 1990 Order, which adopted a "best efforts" formula for finding regular positions, proved difficult. The union complained of PDPC's continued hiring of contractual workers instead of regularizing complainants, prompting the Voluntary Arbitrator to issue successive orders directing compliance. On March 17, 1992, after finding that PDPC had been remiss in its obligation and had failed to present its plantilla to prove non-availability of positions, the Voluntary Arbitrator ordered the reinstatement of the nine remaining complainants under the special payroll and those listed in Annexes 1 and 2, excluding those already regularized or who had accepted separation pay. PDPC filed a second petition before the Supreme Court (G.R. No. 106705), which was dismissed on September 26, 1994, the Court finding no grave abuse of discretion, as PDPC's own non-compliance had necessitated the shift from "best efforts" to mandatory reinstatement.

Pursuant to that decision, PDPC reinstated the petitioners in its payroll on March 16, 1995. In April 1995, petitioners executed Receipts, Releases, and Quitclaims in favor of PDPC, each indicating receipt of ₱97,500.00 as payment for all monetary benefits due them. A Compromise Agreement was entered into by NOWM and PDPC, providing that each individual complainant would be paid ₱97,500.00 in consideration of executing an individual Receipt, Release, and Quitclaim covering all claims for backwages and other monetary awards in G.R. No. 106705. On May 23, 1995, the Voluntary Arbitrator ordered PDPC to reinstate and regularize the individual complainants, and on July 3, 1995, the petitioners were physically reinstated and given work assignments at PDPC's plant in Gen. Trias, Cavite.

On May 28, 1997, petitioners filed a motion before the Voluntary Arbitrator seeking an order directing PDPC to strictly comply with the Court's August 30, 1989 Resolution and September 26, 1994 Decision by paying backwages from the date of dismissal up to March 16, 1995 and differential pay from the date of regularization until March 16, 1995. The Voluntary Arbitrator denied this motion on November 20, 1997 for lack of merit. Petitioners then filed a petition for certiorari before the Court of Appeals, which dismissed it on September 21, 1999; their Motion for Partial Reconsideration was likewise denied on February 2, 2000. Petitioners thereafter filed the instant Petition for Certiorari before the Supreme Court on March 9, 2000, alleging that public respondents had committed serious error in abandoning established jurisprudence relative to acceptance of benefits less than the final judgment.

• Grave Abuse of Discretion: Petitioners maintained that the public respondents acted with grave abuse of discretion amounting to lack of jurisdiction or excess thereof when they upheld the validity of the Compromise Agreement entered into by NOWM and PDPC and the Receipts, Releases, and Quitclaims signed by petitioners, thereby denying petitioners their right to the full benefits of the Court's September 26, 1994 Decision.
• Entitlement to Higher Monetary Award: Petitioners argued that by virtue of the judgment rendered by the arbitrator, each individual petitioner was entitled to the payment of monetary claims computed at ₱225,000.00 each by Ricardo O. Atienza, Acting Chief, Research and Information Unit, NCR, NLRC. However, each petitioner received only ₱48,750.00 — not the ₱97,500.00 indicated in the Receipt, Release, and Quitclaim — as the other ₱48,750.00 was allegedly given to NOWM President Teofilo Rafols.
• Procedural Remedy: Petitioners filed the petition under Rule 65, alleging that public respondents had committed serious error when they abandoned established jurisprudence relative to acceptance of benefits which are less than the final judgment.

• Procedural Infirmity: PDPC argued that the petition suffered from procedural infirmities in that petitioners used the wrong mode of appeal and filed the same beyond the reglementary period, the proper remedy being a Petition for Review under Rule 45 within fifteen days from receipt of the resolution denying their Motion for Partial Reconsideration.
• Validity of Settlement: PDPC contended that the Compromise Agreement and the Receipts, Releases, and Quitclaims were validly executed, the individual complainants having freely and voluntarily accepted ₱97,500.00 each as settlement of their case, with the Voluntary Arbitrator having upheld the validity of the settlement in an order dated October 4, 1995.

• Procedural Propriety: Whether the petition should be dismissed outright for petitioners' use of the wrong mode of appeal and filing beyond the reglementary period.
• Validity of Quitclaims: Whether the public respondents committed grave abuse of discretion in upholding the validity of the Compromise Agreement and the Receipts, Releases, and Quitclaims executed by the petitioners.
• Entitlement to Monetary Claims: Whether petitioners are entitled to ₱225,000.00 each as their monetary claims, and whether the allegation that they received only ₱48,750.00 each was sufficiently proved.

• Procedural Propriety: No, but the Court treated the petition as a special civil action for certiorari under Rule 65 in the broader interest of justice, given that the labor dispute had dragged on for more than seventeen years and this was the third occasion the parties had come to the Court.
• Validity of Quitclaims: No grave abuse of discretion was committed. The Compromise Agreement and the Receipts, Releases, and Quitclaims were valid and binding, having been voluntarily entered into with reasonable consideration, and petitioners failed to present competent proof to overcome the legal presumption of regularity in their execution.
• Entitlement to Monetary Claims: No. The Atienza computation yielding ₱225,000.00 each was never approved by the Voluntary Arbitrator, having been objected to by both parties and superseded by the Bautista recomputation, which did not even include the petitioners. The allegation that only ₱48,750.00 was received was supported by bare oral allegations unsupported by any evidence.

• Procedural Propriety: The general rule is that the remedy to obtain reversal or modification of a judgment on the merits is appeal, and certiorari will not lie as a substitute for a lost remedy of appeal. Petitioners received the resolution denying their Motion for Partial Reconsideration on February 9, 2000, giving them until February 24, 2000 to file a Petition for Review under Rule 45. They instead filed a Petition for Certiorari under Rule 65 on March 9, 2000. However, the Court recognized exceptions where certiorari may be resorted to despite the availability of appeal — when the broader interests of justice so require. Given that the labor dispute had persisted for over seventeen years and this was the third time the parties had sought the Court's intervention, the Court exercised its discretion to treat the petition as a special civil action for certiorari under Rule 65, with the aim of finally putting the case to rest.

• Validity of Quitclaims: The Court applied the doctrine in Periquet vs. NLRC, which delineated the parameters for when waivers and quitclaims command judicial imprimatur: not all waivers and quitclaims are invalid as against public policy; if the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. The Court found that the Voluntary Arbitrator had issued an order on October 4, 1995 upholding the validity of the settlement, and that the individual complainants executed and signed individual Deeds of Receipt, Release and Quitclaim attesting that they freely and voluntarily accepted ₱97,500.00 each as settlement. In the absence of competent proof to destroy the legal presumption of regularity in the execution of these documents, the Compromise Agreement and the Quitclaim must stand as the law between the parties. The courts cannot invalidate them on the basis of unsubstantiated allegations.

• Entitlement to Monetary Claims: The alleged computation by Atienza yielding ₱225,000.00 each was never approved by the Voluntary Arbitrator, as said computation was objected to by the parties. The Voluntary Arbitrator instead ordered a recomputation by Mrs. Juanita Bautista, whose report did not include the petitioners because at the time of recomputation they had yet to be reinstated by PDPC. The allegation that petitioners received only ₱48,750.00, with the other half given to NOWM President Teofilo Rafols, was not proved with convincing evidence — all that petitioners could show were bare oral allegations unsupported by any evidence. Accordingly, the claim to ₱225,000.00 each had no basis in fact or in law.

• Validity of Waivers and Quitclaims (Periquet Doctrine) — Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wrangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the transaction. Where the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration is credible and reasonable, the transaction must be recognized as valid and binding. In this case, the Court applied the doctrine to uphold the Compromise Agreement and Receipts, Releases, and Quitclaims executed by the petitioners, finding no competent proof of fraud, coercion, or unconscionability.

• Certiorari as Improper Substitute for Appeal — The general rule is that certiorari will not lie as a substitute for the lost remedy of appeal. However, exceptions exist where the extraordinary remedy may be resorted to despite the availability of appeal, such as when public welfare and the advancement of public policy dictate, when the broader interests of justice so require, when the writs issued are null, or when the questioned order amounts to an oppressive exercise of judicial authority. The Court invoked the "broader interests of justice" exception given the seventeen-year history of the labor dispute and the third invocation of the Court's power.

• Legal Presumption of Regularity — In the absence of competent proof to destroy the legal presumption of regularity in the execution of documents, they must stand as the law between the parties, and courts cannot invalidate them on the basis of unsubstantiated allegations. The Court applied this presumption to the Compromise Agreement and the Receipts, Releases, and Quitclaims, petitioners having failed to present convincing evidence beyond bare oral allegations.

• "Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wrangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction." — This passage, quoting Periquet vs. NLRC, articulates the controlling standard for evaluating the validity of waivers and quitclaims in labor cases, and is the doctrinal foundation upon which the Court upheld the settlement in this case.

• "In the absence of competent proof to destroy the legal presumption of regularity in the execution of the Compromise Agreement and the Receipt, Release and Quitclaim, the Compromise Agreement and the Quitclaim must stand as the law between the parties and the courts cannot invalidate it on the basis of the unsubstantiated allegations of the petitioners." — This passage states the ratio decidendi for the ruling on the validity of the quitclaims, applying the presumption of regularity to settlement documents and placing the burden of proof on the party seeking to invalidate them.

• "the alleged computation of Ricardo O. Atienza … wherein the petitioners became entitled to P225,000.00 each was never approved by the Voluntary Arbitrator as said computation was objected to by the parties. As a result of this, the Voluntary Arbitrator ordered Mrs. Juanita Bautista to make a recomputation." — This passage disposes of the petitioners' monetary claim by establishing that the computation upon which they relied was never judicially approved and was superseded by a recomputation that did not include them.

• Periquet vs. National Labor Relations Commission, G.R. No. 91298, June 22, 1990, 186 SCRA 724 — Controlling precedent on the validity of waivers and quitclaims. The Court relied on this case to establish the parameters for when quitclaims command judicial imprimatur, applying its two-pronged test (voluntariness and reasonable consideration) to uphold the settlement documents executed by the petitioners.
• Sappari K. Sawadjaan vs. Court of Appeals, G.R. No. 141735, June 8, 2005 — Cited for the proposition that the remedy to obtain reversal or modification of a judgment on the merits is appeal, even where the error ascribed includes lack of jurisdiction or grave abuse of discretion. This case formed part of the chain of authority supporting the general rule against certiorari as a substitute for appeal.
• Paa vs. Court of Appeals, G.R. No. 126560, December 4, 1997, 282 SCRA 448 — Cited for the settled rule that a special civil action for certiorari will not lie as a substitute for the lost remedy of appeal.
• Ligon vs. Court of Appeals, G.R. No. 127683, August 7, 1998, 294 SCRA 73 — Cited as authority for the Court's exercise of discretion to treat the petition as a special civil action for certiorari under Rule 65 in the broader interest of justice.
• JMM Promotions and Management vs. Court of Appeals, G.R. No. 139401, October 2, 2002, 390 SCRA 223 — Cited in support of the proposition that absent competent proof to overcome the presumption of regularity, settlement documents must stand as the law between the parties.

• Rule 65, Rules of Court (1997 Rules of Civil Procedure) — Governs the special civil action for certiorari. The Court treated the petition under this rule despite petitioners' procedural lapse, invoking the broader interests of justice exception to the rule that certiorari cannot substitute for a lost appeal.
• Rule 45, Rules of Court (1997 Rules of Civil Procedure) — Governs petitions for review on certiorari as the proper mode of appeal from Court of Appeals decisions. The Court noted that petitioners should have filed under Rule 45 within fifteen days from receipt of the resolution denying their Motion for Partial Reconsideration.

Reynato S. Puno (Chairman), Ma. Alicia Austria-Martinez, Romeo J. Callejo, Sr., and Dante O. Tinga concurred with the decision. No separate concurring opinions were noted.