G.R. No.

162233

March 10, 2006

RONALDO B. CASIMIRO, ELISA M. LAT, JOSE L. LALAP, CELESTIN S, LACHICA,

REYNALDO S. MALLILLIN, LEONILA G. ROJO, JULIE H. SEBASTIAN, EDITHA M.
SOLOMON, EMILIANO T. TAMBAOAN III, FERNANDO G. TROZADO, Petitioners,
vs.
STERN REAL ESTATE INC. REMBRANDT HOTEL and/or GRACE KRISTIN
MEEHAN
(General Manager), and ERIC SINGSON (Owner), Respondents.
DECISION
CALLEJO, SR., J.:
This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, assailing
the Decision1 of the Court of Appeals (CA) in CA-G.R. SP. No. 64536, as well as the
Resolution2 dated February 16, 2004 denying the motion for reconsideration thereof.
Respondent Stern Real Estate & Development Corporation is a corporation duly organized and
existing under Philippine laws, engaged in the business of purchasing, selling and operating
buildings and other real properties for profit. One such property it owns is the Hotel Rembrandt
located at No. 26 Tomas Morato Avenue, corner Scout Bayoran Street, Quezon City, with Grace
Kristine Meehan as General Manager, and Eric Singson as its Director.3 The hotel has been fully
operational since 1996.
On May 6, 1999, Meehan issued the following Memorandum4 announcing a Special Separation
Program (SSP) for all interested employees:
1. Due to the hotels dire financial status, the hotel has decided to implement/offer a onetime non-recurring special separation program (SSP) that all employees can avail of for
the limited period of 10th May to 24th May 1999 only. Management, however, shall have
the sole option to approve/disapprove the application of any employee.
2. If the number of employees who apply for the Special Separation Program do not meet
the minimum number required by the company, management will be constrained to
involuntary terminate the services of employees due to financial losses. Those employees
who would be terminated after this program would only receive the legal benefits
mandated by law.
A. Guidelines
1. Covered Employees - This program is open only to all regular employees of the hotel.
- Pioneer employees will be given a special consideration.

2. Separation Pay - The hotel will pay affected employees in accordance with the
following benefit schedule per year of service (computed as 12 months) on a pro-rata
basis tax exempt.
a. Basic: One-half (1/2) month basic salary for [every] year of service or one (1)
month salary, whichever is higher.
b. Additional: (1) One year of service or less .. P1,000.00
(2) Two years of service ... P3,000.00
(3) Three years of service . P6,000.00
(4) Four years of service P10,000.00
3. Other Entitlements
a. Vacation Leaves. Employees with earned vacation leaves whose applications
for separation are accepted under this program, shall be allowed to go on terminal
leave to use up their leave credits. While they are on leave, they shall be entitled
to correspondingly share in the Service Charges. For employees whose
applications for separation are accepted but whose services are needed up to their
last day of employment, their earned leaves shall be commuted/paid in cash.
b. Thirteenth (13th) Month Pay. All employees approved to avail of the SSP will
be entitled to a pro-rata payment of the 13th month pay (i.e., from 1st January
31st May 1999)
4. The basis of computation of the separation pay is the monthly basic salary as of
Wednesday, 26th May.
5. The release of the special separation package will be around 2 weeks from the
submission of the necessary clearances.
6. All applications accepted under this Program shall be effective 31st May 1999.
7. An employee who avails of the Special Separation Program is not entitled to any other
benefits by reason of his separation. The employee waives the right to any other benefits
normally associated with his/her employment at Hotel Rembrandt.
8. Employees with physical limitations due to recurring illness or advanced age and who
can no longer perform their jobs effectively shall be given priority [u]pon the certification
of a physician designated by the hotel, if the concerned employees physical
infirmities/limitations that [sic] may adversely affect the employees job performance.
9. The hotel reserves the sole right and discretion to decide on the case of an employee.

10. The number of employees to be separated will depend on:

a. The ability of the company to fund this one time, non-recurring special
separation program.
b. The companys explicit approval of each application on a case-to-case basis.
11. This special separation program is a one-time, non-recurring program. It should not
set any precedent nor be invoked in the future.5
On May 24, 1999, the hotel management accepted 49 applications for its SSP.
On May 28, 1999, management filed an Establishment Termination Report6 before the
Department of Labor and Employment. Said report covered 29 employees whose termination
was to take effect on June 28, 1999. "Financial losses" was the main reason cited, and the other
being "company reorganization/downsizing." From June 15 to 21, 1999, letters were sent to the
employees concerned informing them that they were considered dismissed from employment one
month after receipt of such notice.7
Petitioners were among the retrenched employees.8 They later filed a complaint for "illegal
dismissal in the guise of retrenchment and underpayment/non-payment of overtime pay,
premium compensation for holiday and rest day" with prayer for moral and exemplary damages
and attorneys fees before the National Labor Relations Commission (NLRC). The complaint
was docketed as NLRC NCR Case No. 00-08-08351-99.
According to the complainants, while the hotel management claimed that they were retrenched
due to "serious financial losses," it failed to satisfy the requirements of the Labor Code in
terminating their employment: no notice was given to the Department of Labor of such intended
retrenchment and no evidence was submitted to prove that the hotel had been suffering financial
losses. Moreover, respondents had not only advertised their need for personnel vacated by
complainants;9 they had already started hiring replacements. The complainants were convinced
that their retrenchment was only a ploy to ease them out of their respective jobs.10
On March 6, 2000, Labor Arbiter Donato G. Quinto, Jr. ruled in favor of the retrenched
employees. According to the Labor Arbiter, a thorough examination of the financial statements
submitted by respondents would readily show that the expenses in 1998 were bloated as
compared to the previous year, clearly made to justify the retrenchment of the complainants.11
Moreover, the hotel had advertised job vacancies for extra banquet waiters and waitresses, and
likewise failed to rebut the charge that the "last in, first out rule" was not observed in dismissing
the employees. The Labor Arbiter also declared that while the complainants executed quitclaims
and accepted their separation pay, they were not estopped from challenging the validity of their
dismissal. The dispositive portion of the decision reads:
WHEREFORE, premises above considered, a decision is hereby issued declaring the
retrenchment of the complainants devoid of factual and legal basis, hence respondent firm[,]
Grace Kristen [sic] Meehan and Eric Singson is [sic] hereby ordered to reinstate complainants to

their former or equivalent position with full backwages minus what have been received by them
as separation benefits, reckoned from the date of their actual dismissal [or] retrenchment until
reinstated actually or in payroll, plus attorneys fees equivalent to ten (10%) percent of the
award. For this purpose, the Examination and Computation Unit of this Arbitration branch is
hereby directed to make the necessary computation of the complainants backwages which
computation is hereby adopted and to form an integral part of this decision as Annex "A."
The other claims including damages are hereby dismissed for lack of merit.12
In compliance with the Labor Arbiters directive, the Examination and Computation Unit of the
NLRC issued a computation of complainants entitlement, awarding in their favor a total of
P1,988,908.91.13
Respondents appealed the decision to the NLRC, arguing that the Labor Arbiter committed grave
abuse of discretion in disregarding the audited financial statements, and choosing to believe the
erroneous computation of the complainants without even checking the veracity of their
allegations.[14] Aside from the audited financial statements for 1997[15] and 1998,[16] and the
Audit Report[17] of Banaria, Banaria and Company, dated April 14, 1999, respondents also
attached receipts and vouchers to show that the hotel had really incurred losses.
Complainants, for their part, filed their Comments with Motion to Dismiss Appeal,[18] alleging
that respondents did not furnish them with a copy of the Memorandum of Appeal and the Motion
to Reduce Supersedeas Bond, which violated their right to due process. They also pointed out
that the cash deposit of P50,000.00 made by respondents was a "measly amount," and as such, it
was as if no appeal bond was paid and no appeal had been perfected.
In its Decision19 dated January 15, 2001, the NLRC reversed the ruling of the Labor Arbiter and
dismissed the complaints for lack of merit. It held that through the duly-audited financial
statements submitted to it, the respondent hotel was able to show that it suffered losses in 1996,
1997 and 1998 amounting to P19,272,539.37, P18,512,683.00 and P13,669,695.00, respectively.
The NLRC further ruled that the Labor Arbiter erred in disregarding these statements and giving
full credence to complainants contention that the hotels expenses were bloated. It pointed out
that respondents presented receipts on appeal to show that the repair and maintenance, light and
water expenses, and telephone and communication expenses were not fabricated. Citing The
New Valley Times Press v. National Labor Relations Commission,20 it averred that evidence
presented on appeal may be considered by it, and pointed out that the complainants did not rebut
the evidence despite due notice.
The NLRC further ruled that, contrary to the allegation of the complainants, the first-in-last-out
policy was observed by respondents, since evidence of the complainants efficiency and
performance for the past years were presented to show that this criteria was considered. The
labor tribunal pointed out that this evidence was not rebutted by the complainants. It further ruled
that complainants failed to show that they were forced to sign quitclaims when they received
their respective separation pay. Citing Veloso v. Department of Labor and Employment,21 it
declared that "dire necessity" is not an acceptable reason to set aside quitclaims otherwise valid.

Aggrieved, the retrenched employees filed before the CA a Petition for Certiorari under Rule 65
of the Revised Rules of Court. On July 20, 2001, the CA issued a Resolution22 directing
petitioners to amend their petition by dropping seven23 of them who failed to sign the verification
and certification of non-forum shopping. On October 19, 2001, petitioners Reantaso, Elisa Lat,
Lalap, Lachica, Mallillin, Rojo, Sebastian, Solomon, Tambaoan III, Trozado, and Edwin Lat
filed their Amended Petition.24 Petitioner Cabardo filed her Amended Petition on November 7,
2001.25
On July 31, 2003, the CA affirmed the ruling of the NLRC and dismissed the petition for lack of
merit.26 On the issue of the filing of the cash bond, it ruled that respondents action constituted
substantial compliance with the rules. It stated that the Labor Arbiters decision did not specify
the exact amount of the monetary award due the petitioners, prompting respondents to file a
P50,000.00 cash bond and motion for the reduction of the supersedeas bond. Once the
computation of the monetary
award was received on July 14, 2000, they immediately sought the
cancellation of the cash bond, and moved that it be substituted with a surety bond equivalent to
the monetary award. The CA further ruled that petitioners failed to show that respondents were
in bad faith or that they intended to delay payment. It observed that when the Labor Arbiter
issued the writ of execution, respondents instructed petitioners to immediately report to the hotel
on July 26, 2000. The appellate court also disagreed with petitioners contention that they were
deprived of due process when additional documents were submitted before the NLRC. Under the
New Rules of Procedure of the NLRC, the submission of new evidence is not prohibited, not
being prejudicial to the other party who could still submit counter-evidence.
Citing NDC-Guthrie Plantations, Inc. v. National Labor Relations Commission,27 the CA
declared that respondents were able to comply with all the requirements for a valid retrenchment
under Article 283 of the
Labor Code.
Aggrieved, petitioners now come to this Court, assailing the ruling of the CA on the following
grounds:
5.1. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
RULED THAT THE APPEAL OF THE RESPONDENTS WITH THE NATIONAL LABOR
RELATIONS COMMISSION WAS PERFECTED DESPITE THE FACT THAT THE APPEAL
OR SURETY BOND OF P1,988,908.91 WAS POSTED SEVENTY (70) DAYS LATE FROM
RECEIPT OF THE DECISION OF THE LABOR ARBITER.
5.2. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
RULED THAT THE PETITIONERS WERE NOT PREJUDICED WHEN THE NLRC
ADMITTED THE APPEAL MEMORANDUM AS WELL AS THE ADDITIONAL
EVIDENCE OF THE RESPONDENTS EVEN WITHOUT FURNISHING FIRST THE
PETITIONERS COPIES THEREOF MORE SPECIFICALLY THE APPEAL
MEMORANDUM.

5.3. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
RULED THAT THERE WAS A VALID RETRENCHMENT TO WARRANT THE
DISMISSAL OF THE PETITIONERS.
5.4. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
RULED THAT THE PETITIONERS EXECUTED A VALID QUITCLAIM.
5.5. THAT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION EQUIVALENT TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
ADMITTED AND ENTERTAINED THE COMMENT OF THE RESPONDENTS DESPITE
ITS ORDER THAT CONSIDERED SAID RESPONDENTS TO HAVE WAIVED THE RIGHT
TO FILE THEIR COMMENT AND SAID ORDER WAS NOT RECONSIDERED AND SET
ASIDE THUS LEGALLY STILL IN FULL FORCE AND EFFECT.28
Petitioners insist that a decision in labor cases involving a monetary award may be perfected
only upon the posting of a cash or surety bond, as mandated by Republic Act No. 6715, as well
as Section 6, Rule VI of the New Rules of Procedure of the NLRC. They aver that the reason
behind the rule is to give the workers an assurance that they will be paid in the event that they
win the case. They claim that there was no reason why respondents could not afford to deposit
the sum of P1,988.908.01. While the late filing of the supersedeas bond has been relaxed in a
number of cases, there is no cogent reason to apply a liberal interpretation in the instant case.
The word "only" in the provision, according to petitioners, makes it perfectly clear that the
lawmakers intended the posting of a cash or surety bond as the exclusive means by which an
employers appeal may be perfected. They insist that the appeal bond of P50,000.00 is
shockingly low and grossly inadequate, as it constitutes only 2.5% of the monetary award.
Petitioners also aver that, contrary to respondents claim in the appellate court, they
(respondents) were furnished a copy of the Labor Arbiters decision, as well as the computation
of the monetary award. In fact, it was respondents who did not provide them a copy of their
Memorandum of Appeal, contrary to Rule IV, Section 3 of the New Rules of Procedure of the
NLRC. On this score alone, the appeal before the NLRC should have been dismissed. Petitioners
aver that they were prevented from filing the appropriate pleadings on account of such
intentional act. They insist that additional evidence on appeal cannot be filed on personal whims
and caprices, and that "there are rules to be observed in order that the rights of the other party
will not be prejudiced and trampled upon." They conclude that petitioners intentional failure to
furnish them a copy of such appeal memorandum deprived them of their right to be heard ultimately, their right to due process.
On the merits of the case, petitioners stress that respondents were not motivated by honest
intentions in effecting their dismissal. They remind the Court that while the law recognizes the
employers right to protect its interest, such right should be exercised in a manner which does not
infringe on the employees constitutional right to security of tenure. They insist that respondents
presented "sanitized financial statements" to justify the legality of their retrenchment. They
reiterate that they were not furnished copies of said statements, hence, their failure to submit

evidence to controvert the same. Under the circumstances, respondents should have presented
respondent hotels income tax returns for the preceding years since audited financial statements
are not entirely reliable and can be easily fabricated.
On the appellate courts finding that the quitclaims they executed were valid, petitioners insist
that they were forced to do so since their employer was determined to carry out their dismissal.
Since most of them were their respective families sole breadwinners, there was no other
recourse but for them to sign such waivers out of dire necessity.
Respondents, for their part, allege that no new matter or issue was raised in the instant petition, a
mere rehash of petitioners arguments before the appellate court, and that such arguments had
already been passed upon by the appellate court.
The issues involved in this case are procedural and substantial in nature. On the procedural
aspect, petitioners question the filing of the cash bond, which, according to them, was a measly
amount as compared to the award of the Labor Arbiter. They likewise question the fact that the
CA considered the evidence submitted by respondents on appeal before the NLRC, and they
contend that this is a violation of their right to due process. On the other hand, the main and
substantial issue to be resolved by the Court is whether petitioners were validly retrenched, and,
corollarily, whether respondents presented adequate proof of financial losses, and whether the
quitclaims executed by petitioners are valid and binding.
At the outset, the Court stresses that the substantial issues for resolution are factual in nature, and
generally, factual findings of the NLRC are accorded respect. However, there is compelling
reason to deviate from this salutary principle where, as in this case, such findings of facts of the
NLRC are in conflict with that of the Labor Arbiter. Accordingly, this Court must of necessity
review the records to determine which findings should be preferred as more conformable to the
evidentiary facts.29
A careful perusal of the records show that respondents filed their Memorandum of Appeal on
May 17, 2000 before the NLRC, together with the P50,000.00 cash bond. They also filed a
Motion for Reduction of Supersedeas Bond. Thereafter, respondents new counsel filed a
Manifestation with Motion to Substitute (Cash Bond with Supersedeas Bond), alleging that a
copy of the monetary award had not been attached to the copy of the Labor Arbiters decision
which was furnished them. The NLRC approved the substitution in a Resolution30 dated
December 28, 2000. In light of the fact that in his decision, the Labor Arbiter directed the
Examination and Computation Unit of the NLRC to compute the backwages of the retrenched
employees, it would not have been possible for respondents to obtain a copy of such
computation. As such, the initial filing of the P50,000.00 cash bond was justified under the
circumstances.
The second paragraph of Article 223 of the Labor Code states that when a judgment involving
monetary award is appealed by the employer, the appeal 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. This is to assure
the workers that if they finally prevail in the case, the monetary award will be given to them

upon dismissal of the employers appeal, and is meant to discourage employers from using the
appeal to delay or evade payment of their obligations to the employees.31 However, as provided
for in Section 6, Rule VI of the New Rules of Procedure of the NLRC, such amount of the bond
may be reduced in meritorious cases, upon motion of the appellant. The exercise of this authority
is not a matter of right on the part of the movant but lies within the sound discretion of the NLRC
upon showing of meritorious grounds.32 Indeed, an unreasonable and excessive amount of bond
would be oppressive and unjust, and would have the effect of depriving a party of his right to
appeal.33
The Court likewise holds that the NLRC did not err in admitting the receipts and other evidence
attached to the Memorandum of Appeal of respondents. In Tanjuan v. Philippine Postal Savings
Bank, Inc.,34 where this Court was confronted with the similar question, i.e., whether proof of
business losses may be admitted on appeal before the NLRC, we declared that the NLRC is not
precluded from receiving evidence on appeal because technical rules of procedure are not
binding in labor cases, which rule applies to both employer and employee.35 Moreover, the fact
that evidence was not presented before the Labor Arbiter will not justify its outright rejection,
particularly since such evidence is absolutely necessary to resolve the issue of whether
retrenched employees were validly terminated.36 No less than the Labor Code directs labor
officials to use all reasonable means to ascertain the facts speedily and objectively, with little
regard to technicalities or formalities,37 while Section 10, Rule VII of the New Rules of
Procedure of the NLRC provides that technical rules are not binding.38 Indeed, the application of
technical rules of procedure may be relaxed in labor cases to serve the demand of substantial
justice.39
Contrary to petitioners claim, they were not denied due process. The essence of due process in
administrative proceedings is simply an opportunity to explain ones side or an opportunity to
present evidence in support of ones defense.40 In this case, petitioners submitted their respective
pleadings to controvert the allegations of respondents.
Article 28341 of the Labor Code of the Philippines authorizes retrenchment as one of the valid
causes to dismiss employees as a measure to avoid or minimize business losses.42 Retrenchment
is the "termination of employment initiated by the employer through no fault of the employees
and without prejudice to the latter, resorted to by management during periods of business
recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of
orders, shortage of materials, conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery, or of automation."43 Simply put, it is a
reduction in manpower, a measure utilized by an employer to minimize losses incurred in the
operation of its business. It is a management prerogative consistently recognized and affirmed by
this Court.44 In Danzas Intercontinental, Inc. v. Daguman, 45 we enumerated the requirements for
a valid retrenchment which the employer must prove by clear and convincing evidence:
x x x (1) that retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) that the employer served written notice both to the employees and to the Department of Labor
and Employment at least one month prior to the intended date of retrenchment; (3) that the

employer pays the retrenched employees separation pay equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher; (4) that the
employer exercises its prerogative to retrench employees in good faith for the advancement of its
interest and not to defeat or circumvent the employees right to security of tenure; and (5) that
the employer used fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status, efficiency, seniority, physical fitness,
age, and financial hardship for certain workers.46
In this case, respondents presented audited financial statements and receipts to prove that the
hotel had been incurring business losses. As found by the appellate court:
In the case at bar, the respondent hotel undertook a Special Separation Program (SSP) which all
employees can avail of for the limited period of May 10 to 24, 1999, due to the dire financial
status it was experiencing. Forty-nine (49) employees were accepted for this separation program.
The private respondents then decided that a retrenchment program was further needed in order to
stem the losses. The private respondents then informed the DOLE through an Establishment
Termination Report filed on May 28, 1999, that they were retrenching twenty-nine (29)
employees effective June 28, 1999, among whom included the herein petitioners. The private
respondents likewise informed these twenty-nine (29) employees that their services would be
terminated thirty (30) days after the receipt of the written notification. After one month from
receipt of the letters of termination, the twenty-nine (29) employees were given their separation
pay and the corresponding quitclaims were signed.
xxxx
The private respondents in the instant case presented balance sheets for the years 1997, 1998 and
1999 as audited by independent auditors, which showed that respondent Stern experienced net
losses for several years, as follows:
1996 = P19,272,539.77
1997 = P18,512,683.11
1998 = P13,669, 095.80
1999 = P14,626,684.36
Hence, for a period of four (4) years, respondent Stern accumulated losses amounting to around
P66,000,000.00, with no sign of abating in the future. The petitioners failed to back up their
allegation that the expenses presented in the financial statements were bloated. Nor did the
petitioners explain why independent public accountants Clemente Uson & Co. and Banaria,
Banaria and Company would knowingly allow false figures to be included in the balance sheets.
Consequently, we are more inclined to affirm the finding of the public respondent that the
expenses presented by the private respondents were not fabricated.47

Contrary to the allegation of petitioners, income tax returns are self-serving documents because
they are generally filled up by the taxpayer himself, and are still to be examined by the Bureau of
Internal Revenue for their correctness.48
The Court notes that petitioners failed to dispute the validity of the financial statements and
receipts submitted by respondents, or that any false entries were made therein. They also failed
to prove, much less impute, any ill motive on the part of the independent auditors who prepared
the financial statements which respondents submitted.
The Court also finds that the quitclaims executed by the individual petitioners in this case are
valid and binding. Indeed, quitclaims executed by employees are commonly frowned upon as
being contrary to public policy, and where there is clear proof that the waiver was wangled from
an unsuspecting or gullible person, or where the terms of settlement are unconscionable on their
faces, the law will step in to annul the questionable transactions.49 However, when such
quitclaim was made voluntarily and there is no evidence that the employer was guilty of fraud or
intimidation in obtaining such waiver, as in this case, the validity of the quitclaim must be
upheld. As the Court held in Magsalin v. National Organization of Working Men:50
x x x While quitclaims executed by employees are commonly frowned upon as being contrary to
public policy and are ineffective to bar claims for the full measure of their legal rights, there are,
however, legitimate waivers that represent a voluntary and reasonable settlement of laborers
claims which should be so respected by the Court as the law between the parties. Where the
person making the waiver has done so voluntarily, with a full understanding thereof, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as
being a valid and binding undertaking. "Dire necessity" is not an acceptable ground for annulling
the release, when it is not shown that the employee has been forced to execute it (emphasis
supplied).51
Verily, it is neither the function of the law nor its intent to supplant the prerogative of
management in running its business, such as, to compel the latter to operate at a continuing loss
simply because it has to maintain its workers in employment. Such an act would be tantamount
to the taking of property without due process of law.52
CONSIDERING THE FOREGOING, the instant petition is DENIED for lack of merit. The
Decision of the Court of Appeals in CA- CA-G.R. SP. No. 64536 is AFFIRMED.
SO ORDERED.

G.R. No. 163147

October 10, 2007

LINTON COMMERCIAL CO., INC. and DESIREE ONG, Petitioners,

vs.
ALEX A. HELLERA, FRANCISCO RACASA, DANTE ESCARLAN, DONATO SASA,
RODOLFO OLINAR, DANIEL CUSTODIO, ARTURO POLLO, ROBERT OPELIA, B.
PILAPIL, WINIFREG BLANDO, JUANITO GUILLERMO, DONATO BONETE,
ISAGANI YAP, CESAR RAGONON, BENEDICTO ILAGAN, REXTE SOLANOY,
RODOLFO LIM, ERNESTO ALCANTARA, DANTE DUMAPE, FELIPE CAGOCO, JR.,
JOSE NARCE, NELIO CANTIGA, QUIRINO C. ADA, MANUEL BANZON, JOEL F.
ADA, SATPARAM ELMER, ROMEO BALAIS, CLAUDIO S. MORALES, DANILO
NORLE, LEONCIO RACASA, NOEL LEONCIO RACASA, NOEL ACEDILLA,
ELPIDIO E. VERGABINIA, JR., CONRADO CAGOCO, ROY BORAGOY, EDUARDO
GULTIA, REYNALDO SANTOS, LINO VALENCIA, ROY DURANO, LEO VALENCIA,
ROBERTO BLANDO, JAYOMA A., NOMER ALTAREJOS, RAMON OLINAR III,
SATURNINO C. EBAYA, FERNANDO R. REBUCAS, NICANOR L. DE CASTRO,
EDUARDO GONZALES, ISAGANI GONZALES, THOMAS ANDRAB, JR., MINIETO
DURANO, ERNESTO VALLENTE, NONITO I. DULA, NESTOR M. BONETE, JOSE
SALONOY, ALBERTO LAGMAN, ROLANDO TORRES, ROLANDO TOLDO,
ROLINDO CUALQUIERA, ARMANDO LIMA, FELIX D. DUMARE, ALFREDO
SELAPIO, MARTIN V. VILLACAMPA, JR., CARLITO PABLE, DANTE ESCARLAN,
M. DURANO, RAMON ROSO, LORETA RAFAEL, and ELEZAR MELLEJOR,
Respondents.
DECISION
TINGA, J.:
This is a petition for review under Rule 45 of the Rules of Civil Procedure seeking the reversal of
the Decision1 of the Court of Appeals promulgated on 12 December 2003 as well as its
Resolution2 promulgated on 2 April 2004 denying petitioners motion for reconsideration.
This case originated from a labor complaint filed before the National Labor Relations
Commission (NLRC) in which herein respondents contended that petitioner Linton Commercial
Company, Inc. (Linton) had committed illegal reduction of work when it imposed a reduction of
work hours thereby affecting its employees.
Linton is a domestic corporation engaged in the business of importation, wholesale, retail and
fabrication of steel and its by-products.3 Petitioner Desiree Ong is Lintons vice president.4 On
17 December 1997, Linton issued a memorandum5 addressed to its employees informing them of
the companys decision to suspend its operations from 18 December 1997 to 5 January 1998 due
to the currency crisis that affected its business operations. Linton submitted an establishment
termination report6 to the Department of Labor and Employment (DOLE) regarding the
temporary closure of the establishment covering the said period. The companys operation was to
resume on 6 January 1998.

On 7 January 1997,7 Linton issued another memorandum8 informing them that effective 12
January 1998, it would implement a new compressed workweek of three (3) days on a rotation
basis. In other words, each worker would be working on a rotation basis for three working days
only instead for six days a week. On the same day, Linton submitted an establishment
termination report9 concerning the rotation of its workers. Linton proceeded with the
implementation of the new policy without waiting for its approval by DOLE.
Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of
workdays with the Arbitration Branch of the NLRC on 17 July 1998.
On the other hand, the workers pointed out that Linton implemented the reduction of work hours
without observing Article 283 of the Labor Code, which required submission of notice thereof to
DOLE one month prior to the implementation of reduction of personnel, since Linton filed only
the establishment termination report enacting the compressed workweek on the very date of its
implementation.10
Petitioners, on the other hand, contended that the devaluation of the peso created a negative
impact in international trade and affected their business because a majority of their raw materials
were imported. They claimed that their business suffered a net loss of P3,569,706.57 primarily
due to currency devaluation and the slump in the market. Consequently, Linton decided to reduce
the working days of its employees to three (3) days on a rotation basis as a cost-cutting measure.
Further, petitioners alleged that the compressed workweek was actually implemented on 12
January 1998 and not on 7 January 1998, and that Article 283 was not applicable to the instant
case.11
Pending decision of the Labor Arbiter, twenty-one (21) of the workers signed individual release
and quitclaim documents stating that they had voluntarily tendered their resignation as
employees of Linton and that they had been fully paid of all monetary compensation due them.12
On 28 January 2000, the Labor Arbiter rendered a Decision13 finding petitioners guilty of illegal
reduction of work hours and directing them to pay each of the workers their three (3)
days/weeks worth of work compensation from 12 January 1998 to 13 July 1998.
Petitioners appealed to the National Labor Relations Commission (NLRC). In a Resolution14
promulgated on 29 June 2001, the NLRC reversed the decision of the Labor Arbiter. The NLRC
held that an employer has the prerogative to control all aspects of employment in its business
organization, including the supervision of workers, work regulation, lay-off of workers,
dismissal and recall of workers. The NLRC took judicial notice of the Asian currency crisis in
1997 and 1998 thus finding Lintons decision to implement a compressed workweek as a valid
exercise of management prerogative. Moreover, the NLRC ruled that Article 283 of the Labor
Code, which requires an employer to submit a written notice to DOLE one (1) month prior to the
closure or reduction of personnel, is not applicable to the instant case because no closure was
undertaken and no reduction of employees was implemented by Linton. Lastly, the NLRC took
note that there were twenty-one (21) complainants-workers15 who had already resigned and
executed individual waivers and quitclaims. Consequently, the NRLC considered them as

dropped from the list of complainants. The workers motion for reconsideration was denied in a
Resolution16 dated 24 September 2001.
The workers then filed before the Court of Appeals17 a petition for certiorari under Rule 65 of the
Rules of Civil Procedure assailing the decision18 of the NLRC and its resolution19 that denied
their Motion for Reconsideration. In the petition, the workers claimed that the NLRC erred in
finding that the one (1) month notice requirement under Article 283 of the Labor Code did not
apply to the instant case; that Linton did not exceed the limits of its business prerogatives; and
that Linton was able to establish a factual basis on record to justify the reduction of work days.
In its Comment,20 Linton highlighted the fact that the caption, the body as well as the verification
of the petition submitted by complainants-workers indicated solely "Alex Hellera, et al." as
petitioners. Linton argued that the petition was defective and did not necessarily include the
other workers in the proceedings before the NLRC. Linton also mentioned that 21 out of the 68
complainants-workers executed individual resignation letters and individual waivers and
quitclaims.21 With these waivers and quitclaims, Linton raised in issue whether the petition still
included the signatories of said documents. Moreover, Linton pointed out that the caption of the
petition did not include the NLRC as party respondent, which made for another jurisdictional
defect. The rest of its arguments were merely a reiteration of its arguments before the NLRC.
In reversing the NLRC, the Court of Appeals, in its Decision22 dated 12 December 2003 ruled
that the failure to indicate all the names of petitioners in the caption of the petition was not
violative of the Rules of Court because the records of the case showed that there were sixty-eight
(68) original complainants who filed the complaint before the Arbitration Branch of the NLRC.
The appellate court likewise considered the quitclaims and release documents as "ready
documents" which did not change the fact that the 21 workers were impelled to sign the same.
The appellate court gave no credence to the said quitclaims, considering the economic
disadvantage that would be suffered by the employees. The appellate court also noted that the
records did not show that the 21 workers desisted from pursuing the petition and that the waivers
and quitclaims would not bar the 21 complainants from continuing the action.23
On the failure to include the NLRC as party respondent, the appellate court treated the NLRC as
a nominal party which ought to be joined as party to the petition simply because the technical
rules require its presence on record. The inclusion of the NLRC in the body of the petition was
deemed by the appellate court as substantial compliance with the rules.
On the main issues, the Court of Appeals ruled that the employees were constructively dismissed
because the short period of time between the submission of the establishment termination report
informing DOLE of its intention to observe a compressed workweek and the actual
implementation thereat was a manifestation of Lintons intention to eventually retrench the
employees. It found that Linton had failed to observe the substantive and procedural
requirements of a valid dismissal or retrenchment to avoid or minimize business losses since it
had failed to present adequate, credible and persuasive evidence that it was indeed suffering, or
would imminently suffer, from drastic business losses. Lintons financial statements for 19971998 showed no indication of financial losses, and the alleged loss of P3,645,422.00 in 1997 was

considered insubstantial considering its total asset of P1,065,948,601.00.Hence, the appellate

court considered Lintons losses as de minimis.24
Lastly, the appellate court found Linton to have failed to adopt a more sensible means of cutting
the costs of its operations in less drastic measures not grossly unfavorable to labor. Hence,
Linton failed to establish enough factual basis to justify the necessity of a reduced workweek.25
Petitioners filed a motion for reconsideration26 which the appellate court denied through a
Resolution27 dated 2 April 2004.
In filing the instant petition for review, petitioners allege that the Court of Appeals erred when it
considered the petition as having been filed by all sixty (68) workers, in disregard of the fact that
only "Alex Hellera, et al." was indicated as petitioner in the caption, body and verification of the
petition and twenty-one (21) of the workers executed waivers and quitclaims. Petitioners further
argue that the Court of Appeals erred in annulling the release and quitclaim documents signed by
21 employees because no such relief was prayed for in the petition. The validity of the release
and quitclaim was also not raised as an issue before the labor arbiter nor the NLRC. Neither was
it raised in the very petition filed before the Court of Appeals. Petitioners conclude that the Court
of Appeals, therefore, had invalidated the waivers and quitclaims motu proprio.
Petitioners also allege that the Court of Appeals erred when it held that the reduction of
workdays is equivalent to constructive dismissal. They posit that there was no reduction of salary
but instead only a reduction of working days from six to three days per week. Petitioners add that
the reduction of workdays, while not expressly covered by any of the provisions of the Labor
Code, is analogous to the situation contemplated in Article 28628 of the Labor Code because the
company implemented the reduction of workdays to address its financial losses. Lastly, they note
that since there was no retrenchment, the one-month notice requirement under Article 283 of the
Labor Code is not applicable.
First, we resolve the procedural issues of the case. Rule 7, Section 1 of the Rules of Court states
that the names of the parties shall be indicated in the title of the original complaint or petition.
However, the rules itself endorses its liberal construction if it promotes the objective of securing
a just, speedy and inexpensive disposition of the action or proceeding.29 Pleadings shall be
construed liberally so as to render substantial justice to the parties and to determine speedily and
inexpensively the actual merits of the controversy with the least regard to technicalities.30
In Vlason Enterprises Corporation v. Court of Appeals31 the Court pronounced that, while the
general rule requires the inclusion of the names of all the parties in the title of a complaint, the
non-inclusion of one or some of them is not fatal to the cause of action of a plaintiff, provided
there is a statement in the body of the petition indicating that a defendant was made a party to
such action. If in Vlason the Court found that the absence of defendants name in the caption
would not cause the dismissal of the action, more so in this case where only the names of some
of petitioners were not reflected. This is consistent with the general rule that mere failure to
include the name of a party in the title of a complaint is not fatal by itself.32

Petitioners likewise challenge the absence of the names of the other workers in the body and
verification of the petition. The workers petition shows that the petition stipulated as partiespetitioners "Alex A. Hellera, et al." as employees of Linton, meaning that there were more than
one petitioner who were all workers of Linton. The petition also attached the resolution33 of the
NLRC where the names of the workers clearly appear. As documents attached to a complaint
form part thereof,34 the petition, therefore has sufficiently indicated that the rest of the workers
were parties to the petition.
With respect to the absence of the workers signatures in the verification, the verification
requirement is deemed substantially complied with when some of the parties who undoubtedly
have sufficient knowledge and belief to swear to the truth of the allegations in the petition had
signed the same. Such verification is deemed a sufficient assurance that the matters alleged in the
petition have been made in good faith or are true and correct, and not merely speculative.35 The
verification in the instant petition states that Hellera, the affiant, is the president of the union of
"which complainants are all members and officers."36 As the matter at hand is a labor dispute
between Linton and its employees, the union president undoubtedly has sufficient knowledge to
swear to the truth of the allegations in the petition. Helleras verification sufficiently meets the
purpose of the requirements set by the rules.
Moreover, the Court has ruled that the absence of a verification is not jurisdictional, but only a
formal defect.37 Indeed, the Court has ruled in the past that a pleading required by the Rules of
Court to be verified may be given due course even without a verification if the circumstances
warrant the suspension of the rules in the interest of justice.38
We turn to the propriety of the Court of Appeals ruling on the invalidity of the waivers and
quitclaims executed by the 21 workers. It must be remembered that the petition filed before the
Court of Appeals was a petition for certiorari under Rule 65 in which, as a rule, only
jurisdictional questions may be raised, including matters of grave abuse of discretion which are
equivalent to lack of jurisdiction.39 The issue on the validity or invalidity of the waivers and
quitclaims was not raised as an issue in the petition. Neither was it raised in the NLRC. There is
no point of reference from which one can determine whether or not the NLRC committed grave
abuse of discretion in its finding on the validity and binding effect of the waivers and quitclaims
since this matter was never raised in issue in the first place.
In addition, petitioners never had the opportunity to support or reinforce the validity of the
waivers and quitclaims because the authenticity and binding effect thereof were never
challenged. In the interest of fair play, justice and due process, the documents should not have
been unilaterally evaluated by the Court of Appeals. Thus, the corresponding modification of its
Decision should be ordained.
After resolving the technical aspects of this case, we now proceed to the merits thereof. The main
issue in this labor dispute is whether or not there was an illegal reduction of work when Linton
implemented a compressed workweek by reducing from six to three the number of working days
with the employees working on a rotation basis.

In Philippine Graphic Arts, Inc. v. NLRC,40 the Court upheld for the validity of the reduction of
working hours, taking into consideration the following: the arrangement was temporary, it was a
more humane solution instead of a retrenchment of personnel, there was notice and consultations
with the workers and supervisors, a consensus were reached on how to deal with deteriorating
economic conditions and it was sufficiently proven that the company was suffering from losses.
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin41 providing for
in determining when an employer can validly reduce the regular number of working days. The
said bulletin states that a reduction of the number of regular working days is valid where the
arrangement is resorted to by the employer to prevent serious losses due to causes beyond his
control, such as when there is a substantial slump in the demand for his goods or services or
when there is lack of raw materials.
Although the bulletin stands more as a set of directory guidelines than a binding set of
implementing rules, it has one main consideration, consistent with the ruling in Philippine
Graphic Arts Inc., in determining the validity of reduction of working hoursthat the company
was suffering from losses.
Petitioners attempt to justify their action by alleging that the company was suffering from
financial losses owing to the Asian currency crisis. Was petitioners claim of financial losses
supported by evidence?
The lower courts did not give credence to the income statement submitted by Linton because the
same was not audited by an independent auditor.42 The NLRC, on the other hand, took judicial
notice of the Asian currency crisis which resulted in the devaluation of the peso and a slump in
market demand.43 The Court of Appeals for its part held that Linton failed to present adequate,
credible and persuasive evidence to show that it was in dire straits and indeed suffering, or would
imminently suffer, from drastic business losses. It did not find the reduction of work hours
justifiable, considering that the alleged loss of P3,645,422.00 in 1997 is insubstantial compared
to Lintons total asset of P1,065,948,601.76.44
A close examination of petitioners financial reports for 1997-1998 shows that, while the
company suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of
earnings45 and operating income.46 Clearly then, while Linton suffered from losses for that year,
there remained enough earnings to sufficiently sustain its operations. In business, sustained
operations in the black is the ideal but being in the red is a cruel reality. However, a year of
financial losses would not warrant the immolation of the welfare of the employees, which in this
case was done through a reduced workweek that resulted in an unsettling diminution of the
periodic pay for a protracted period. Permitting reduction of work and pay at the slightest
indication of losses would be contrary to the States policy to afford protection to labor and
provide full employment.47
Certainly, management has the prerogative to come up with measures to ensure profitability or
loss minimization. However, such privilege is not absolute. Management prerogative must be
exercised in good faith and with due regard to the rights of labor.48

As previously stated, financial losses must be shown before a company can validly opt to reduce
the work hours of its employees. However, to date, no definite guidelines have yet been set to
determine whether the alleged losses are sufficient to justify the reduction of work hours. If the
standards set in determining the justifiability of financial losses under Article 283 (i.e.,
retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered,
petitioners would end up failing to meet the standards. On the one hand, Article 286 applies only
when there is a bona fide suspension of the employers operation of a business or undertaking for
a period not exceeding six (6) months.49 Records show that Linton continued its business
operations during the effectivity of the compressed workweek, which spanned more than the
maximum period. On the other hand, for retrenchment to be justified, any claim of actual or
potential business losses must satisfy the following standards: (1) the losses incurred are
substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the
retrenchment is reasonably necessary and is likely to be effective in preventing the expected
losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to
be forestalled, are proven by sufficient and convincing evidence.50 Linton failed to comply with
these standards.
All taken into account, the compressed workweek arrangement was unjustified and
illegal.1wphi1 Thus, petitioners committed illegal reduction of work hours.
In assessing the monetary award in favor of respondents, the Court has taken the following
factors into account:
(1) The compressed workweek arrangement was lifted after six (6) months, or on 13 July
1998.51 Thus, Linton resumed its regular operations and discontinued the emergency
measure;
(2) The claims of the workers, as reflected in their pleadings, were narrowed to
petitioners illegal reduction of their work hours and the non-payment of their
compensation for three (3) days a week from 12 January 1998 to 13 July 1998. They did
not assert any other claims;
(3) As found by the NLRC, 21 of the workers are no longer entitled to any monetary
award since they had already executed their respective waivers and quitclaims. We give
weight to the finding and exclude the 21 workers as recipients of the award to be granted
in this case. Consequently, only the following workers are entitled to the award, with the
amounts respectively due them stated opposite their names:
1wphi1
1. Alex A. Hellera -

P16,368.3
0

2. Francisco Racasa -

16,458.00

3. Dante Escarlan -

15,912.00

4. Donato Sasa -

15,580.50

5. Rodolfo Olinar -

15,912.00

6. Daniel Custodio -

15,912.00

7. Arturo Pollo -

16,660.80

8. B. Pilapil -

16,075.80

9. Donato Bonete -

15,600.00

10. Isagani Yap -

15,678.00

11. Cesar Ragonon -

16,068.00

12. Benedicto Bagan -

15,775.50

13. Rexte Solanoy -

15,678.00

14. Felipe Cagoco, Jr. -

15,990.00

15. Jose Narce -

16,348.80

16. Quirino C. Ada -

15,990.00

17. Salfaram Elmer -

16,302.00

18. Romeo Balais -

16,302.00

19. Claudio S. Morales -

15,947.10

20. Elpidio E. Vergabinia - 15,561.00

21. Conrado Cagoco -

15,990.00

22. Roy Boragoy -

15,892.50

23. Reynaldo Santos -

16,200.60

24. Lino Valencia -

15,678.00

25. Roy Durano -

15,678.00

26. Leo Valencia -

15,678.00

27. Jayoma A. -

15,561.00

28. Ramon Olinar III -

15,678.00

29. Saturnino C. Ebaya -

15,919.80

30. Nicanor L. de Castro -

16,614.00

31. Eduardo Gonzales -

15,678.00

32. Isagani Gonzales -

16,469.70

33. Thomas Andrab, Jr. -

15,912.00

34. Minieto Durano -

16,660.80

35. Ernesto Vallente -

15,997.80

36. Nestor M. Bonete -

15,705.30

37. Jose Salonoy -

16,458.00

38. Alberto Lagman -

16,660.80

39. Rolando Torres -

15,678.00

40. Rolindo Cualquiera -

16,068.00

41. Armando Lima -

16,426.80

42. Alfredo Selapio -

16,060.20

43. Martin V. Villacampa - 15,939.30

44. Carlito Pable -

16,263.00

45. Dante Escarlan -

15,912.00

46. M. Durano -

16,614.00

47. Ramon Roso -

16,302.00

52

(4) The Labor Arbiters decision in favor of respondents was reversed by the NLRC.
Considering that there is no provision for appeal from the decision of the NLRC,53
petitioners should not be deemed at fault in not paying the award as ordered by the Labor
Arbiter. Petitioners liability only gained a measure of certainty only when the Court of
Appeals reversed the NLRC decision. In the interest of justice, the 6% legal interest on
the award should commence only from the date of promulgation of the Court of Appeals
Decision on 12 December 2003.
WHEREFORE, the Petition is GRANTED IN PART. The decision of the Court of Appeals
reinstating the decision of the Labor Arbiter is AFFIRMED with MODIFICATION to the effect
that the 21 workers who executed waivers and quitclaims are no longer entitled to back
payments. Petitioners are ORDERED TO PAY respondents, except the aforementioned 21
workers, the monetary award as computed,54 pursuant to the decision of the Labor Arbiter55 with
interest at the rate of 6% per annum from 12 December 2003, the date of promulgation of the
Court of Appeals decision, until the finality of this decision, and thereafter at the rate of 12%
per annum until full payment.
SO ORDERED.

G.R. No. 91298 June 22, 1990

CORAZON PERIQUET, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and THE PHIL. NATIONAL
CONSTRUCTION CORPORATION (Formerly Construction Development Corp. of
the Phils.), respondents.
Tabaquero, Albano & Associates for petitioner.
The Government Corporate Counsel for private respondent.

CRUZ, J.:
It is said that a woman has the privilege of changing her mind but this is usually allowed only in affairs of the heart where the rules are
permissibly inconstant. In the case before us, Corazon Periquet, the herein petitioner, exercised this privilege in connection with her work,
where the rules are not as fickle.
The petitioner was dismissed as toll collector by the Construction Development Corporation of the Philippines, private respondent herein, for
willful breach of trust and unauthorized possession of accountable toll tickets allegedly found in her purse during a surprise inspection.
Claiming she had been "framed," she filed a complaint for illegal dismissal and was sustained by the labor arbiter, who ordered her
reinstatement within ten days "without loss of seniority rights and other privileges and with fun back wages to be computed from the date of
1
her actual dismissal up to date of her actual reinstatement." On appeal, this order was affirmed in toto by public

respondent NLRC on August 29, 1980.

On March 11, 1989, almost nine years later, the petitioner filed a motion for the issuance of a writ of
execution of the decision. The motion was granted by the executive labor arbiter in an order dated June
26, 1989, which required payment to the petitioner of the sum of P205,207.42 "by way of implementing
3
the balance of the judgment amount" due from the private respondent. Pursuant thereto, the said
4
amount was garnished by the NLRC sheriff on July 12, 1989. On September 11, 1989, however, the
NLRC sustained the appeal of the CDCP and set aside the order dated June 20, 1989, the corresponding
5
writ of execution of June 26, 1989, and the notice of garnishment.
In its decision, the public respondent held that the motion for execution was time-barred, having been
filed beyond the five-year period prescribed by both the Rules of Court and the Labor Code. It also
rejected the petitioner's claim that she had not been reinstated on time and ruled as valid the two
quitclaims she had signed waiving her right to reinstatement and acknowledging settlement in full of her
back wages and other benefits. The petitioner contends that this decision is tainted with grave abuse of
discretion and asks for its reversal. We shall affirm instead.
Sec. 6, Rule 39 of the Revised Rules of Court, provides:
SEC. 6. Execution by motion or by independent action. A judgment may be executed
on motion within five (5) years from the date of its entry or from the date it becomes final
and executory. After the lapse of such time, and before it is barred by the statute of
limitations, a judgment may be enforced by action.
A similar provision is found in Art. 224 of the Labor Code, as amended by RA 6715, viz.
ART. 224. Execution of decision, orders, awards. (a) The Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor Arbiter or Med-

Arbiter, or the Voluntary Arbitrator may, motu propio, or on motion of any interested party,
issue a writ of execution on a judgment within five (5) years from the date it becomes final
and executory, requiring a sheriff or a duly deputized officer to execute or enforce a final
decision, order or award. ...
The petitioner argues that the above rules are not absolute and cites the exception snowed in Lancita v.
6
Magbanua, where the Court held:
Where judgments are for money only and wholly unpaid, and execution has been
previously withheld in the interest of the judgment debtor, which is in financial difficulties,
the court has no discretion to deny motions for leave to issue execution more than five
years after the judgments are entered. (Application of Molnar, Belinsky, et al. v. Long Is.
Amusement Corp., I N.Y.S, 2d 866)
In computing the time limited for suing out of an execution, although there is authority to
the contrary, the general rule is that there should not be included the time when
execution is stayed, either by agreement of the parties for a definite time, by injunction,
by the taking of an appeal or writ of error so as to operate as a supersedeas, by the
death of a party, or otherwise. Any interruption or delay occasioned by the debtor will
extend the time within which the writ may be issued without scire facias.
xxx xxx xxx
There has been no indication that respondents herein had ever slept on their rights to
have the judgment executed by mere motions, within the reglementary period. The
statute of limitation has not been devised against those who wish to act but cannot do so,
for causes beyond their central.
Periquet insists it was the private respondent that delayed and prevented the execution of the judgment in
her favor, but that is not the way we see it. The record shows it was she who dilly-dallied.
The original decision called for her reinstatement within ten days from receipt thereof following its
affirmance by the NLRC on August 29, 1980, but there is no evidence that she demanded her
reinstatement or that she complained when her demand was rejected. What appears is that she entered
into a compromise agreement with CDCP where she waived her right to reinstatement and received from
the CDCP the sum of P14,000.00 representing her back wages from the date of her dismissal to the date
7
of the agreement.
Dismissing the compromise agreement, the petitioner now claims she was actually reinstated only on
March 16, 1987, and so should be granted back pay for the period beginning November 28, 1978, date of
her dismissal, until the date of her reinstatement. She conveniently omits to mention several significant
developments that transpired during and after this period that seriously cast doubt on her candor and
bona fides.
After accepting the sum of P14,000.00 from the private respondent and waiving her right to reinstatement
in the compromise agreement, the petitioner secured employment as kitchen dispatcher at the Tito Rey
Restaurant, where she worked from October 1982 to March 1987. According to the certification issued by
8
that business, she received a monthly compensation of P1,904.00, which was higher than her salary in
the CDCP.
For reasons not disclosed by the record, she applied for re-employment with the CDCP and was on
March 16,1987, given the position of xerox machine operator with a basic salary of P1,030.00 plus
9
P461.33 in allowances, for a total of P1,491.33 monthly.

On June 27, 1988; she wrote the new management of the CDCP and asked that the rights granted her by
10
the decision dated August 29, 1980, be recognized because the waiver she had signed was invalid.
On September 19, 1988, the Corporate Legal Counsel of the private respondent (now Philippine National
Construction Corporation) recommended the payment to the petitioner of the sum of P9,544.00,
representing the balance of her back pay for three years at P654. 00 per month (minus the P14,000.00
11
earlier paid).
On November 10, 1988, the petitioner accepted this additional amount and signed another Quitclaim and
Release reading as follows:
KNOW ALL MEN BY THESE PRESENTS:
THAT, I CORAZON PERIQUET, of legal age, married and resident of No. 87 Annapolis St., Quezon City,
hereby acknowledged receipt of the sum of PESOS: NINE THOUSAND FIVE HUNDRED FORTY FOUR
PESOS ONLY (P9,544.00) Philippine currency, representing the unpaid balance of the back wages due
me under the judgment award in NLRC Case No. AB-2-864-79 entitled "Corazon Periquet vs. PNCCTOLLWAYS" and I further manifest that this payment is in full satisfaction of all my claims/demands in the
aforesaid case. Likewise, I hereby manifest that I had voluntarily waived reinstatement to my former
position as TOLL TELLER and in lieu thereof, I sought and am satisfied with my present position as
XEROX MACHINE OPERATOR in the Central Office.
Finally, I hereby certify that delay in my reinstatement, after finality of the Decision dated 10 May 1979
was due to my own fault and that PNCC is not liable thereto.
I hereby RELEASE AND DISCHARGE the said corporation and its officers from money and all claims by
way of unpaid wages, separation pay, differential pay, company, statutory and other benefits or otherwise
as may be due me in connection with the above-entitled case. I hereby state further that I have no more
claims or right of action of whatever nature, whether past, present, future or contingent against said
corporation and its officers, relative to NLRC Case No. AB-2-864-79.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of November 1988 at Mandaluyong,
12
Metro Manila. (Emphasis supplied.)
The petitioner was apparently satisfied with the settlement, for in the memorandum she sent the PNCC
13
Corporate Legal Counsel on November 24, 1988, she said in part:
Sir, this is indeed my chance to express my gratitude to you and all others who have
helped me and my family enjoy the fruits of my years of stay with PNCC by way of
granting an additional amount of P9,544.00 among others ...
As per your recommendation contained therein in said memo, I am now occupying the
position of xerox machine operator and is (sic) presently receiving a monthly salary of
P2,014.00.
Reacting to her inquiry about her entitlement to longevity pay, yearly company increases and other
statutory benefits, the private respondent adjusted her monthly salary from P2,014.00 to P3,588.00
monthly.
Then the lull. Then the bombshell.
On March 11, 1989, she filed the motion for execution that is now the subject of this petition.

It is difficult to understand the attitude of the petitioner, who has blown hot and cold, as if she does not
know her own mind. First she signed a waiver and then she rejected it; then she signed another waiver
which she also rejected, again on the ground that she had been deceived. In her first waiver, she
acknowledged full settlement of the judgment in her favor, and then in the second waiver, after accepting
additional payment, she again acknowledged fun settlement of the same judgment. But now she is
singing a different tune.
In her petition she is now disowning both acknowledgments and claiming that the earlier payments both
of which she had accepted as sufficient, are insufficient. They were valid before but they are not valid
now. She also claimed she was harassed and cheated by the past management of the CDCP and sought
the help of the new management of the PNCC under its "dynamic leadership." But now she is denouncing
the new management-for also tricking her into signing the second quitclaim.
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
wangled 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. But where it is shown that the person
making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration
for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking. As in this case.
The question may be asked: Why did the petitioner sign the compromise agreement of September 16,
1980, and waive all her rights under the judgment in consideration of the cash settlement she received? It
must be remembered that on that date the decision could still have been elevated on certiorari before this
Court and there was still the possibility of its reversal. The petitioner obviously decided that a bird in hand
was worth two on the wing and so opted for the compromise agreement. The amount she was then
waiving, it is worth noting, had not yet come up to the exorbitant sum of P205,207.42 that she was later to
demand after the lapse of eight years.
The back pay due the petitioner need not detain us. We have held in countless cases that this should be
limited to three years from the date of the illegal dismissal, during which period (but not beyond) the
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dismissed employee is deemed unemployed without the necessity of proof. Hence, the petitioner's
contention that she should be paid from 1978 to 1987 must be rejected, and even without regard to the
fact (that would otherwise have been counted against her) that she was actually employed during most of
that period.
Finally, the petitioner's invocation of Article 223 of the Labor Code to question the failure of the private
respondent to file a supersedeas bond is not well-taken. As the Solicitor General correctly points out, the
bond is required only when there is an appeal from the decision with a monetary award, not an order
enforcing the decision, as in the case at bar.
As officers of the court, counsel are under obligation to advise their clients against making untenable and
inconsistent claims like the ones raised in this petition that have only needlessly taken up the valuable
time of this Court, the Solicitor General, the Government Corporate Counsel, and the respondents.
Lawyers are not merely hired employees who must unquestioningly do the bidding of the client, however
unreasonable this may be when tested by their own expert appreciation of the pertinent facts and the
applicable law and jurisprudence. Counsel must counsel.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.