Republic of the Philippines

MINDANAO STATE UNIVERSITY

General Santos Campus
General Santos City
SCHOOL OF GRADUATE STUDIES
MASTER IN BUSINESS MANAGEMENT PROGRAM

LAW & LABOR MANAGEMENT RELATION

Case Digest

RICKY GALICIA, ET AL. v. NLRC, ET AL.

[G.R. No. 119649. July 28, 1997.]

PONENTE : Romero, J.
Regalado, Puno and Mendoza, JJ., concur.
Torres, Jr., J., is on leave.

FACTS : On January 8, 1992, ninety-five workers, including the twenty-

five petitioners herein, were assisted by a labor federation, the National
Organization of Workingmen (NOWM) in their suit against respondent
companies for illegal dismissal, regularization, underpayment of wages,
holiday pay, premium pay etc. After several complainants withdrew from the
case, the parties filed their respective position papers. They alleged that
Armor Industrial Corporation, Gibson Contractor Services, Juner Contractor
Services, Libra Manpower Agency and Anjo Contractor, all "labor-only"
contractors, recruited them and supplied them to Globe Paper Mills and Keng
Hua Paper Products where they performed activities directly necessary to the
companies’ principal business.

On January 15, 1994, Labor Arbiter Ernesto S. Dinopol rendered his

decision declaring the thirty remaining complainants as regular employees of
Keng Hua Paper Products, Globe Paper Mills and Armor Industrial
Corporation and ordering their reinstatement. Respondent companies were
ordered to pay backwages from February 15, 1991 up to the date of actual
reinstatement, in the total amount of P3, 223,261.00, with P107, 380.00 for
each complainant as of January 15, 1994.

On March 1, 1994, the disputed Compromise Agreement was executed

by James Yu, the Manager and Vice President of Globe Paper Mills and
Teofilo Rafols, the National President of the National Organization of
Workingmen (NOWM) representing the complainants, when most of the
latter were still in Romblon, their home province. The agreement settled the
case for and in consideration of the total sum of P300, 000.00.

Complainants arrived from Romblon on March 7, 1994. The next day,

each of the complainants signed a Quitclaim and Release which confirmed
the compromise agreement as well as receipt of their individual share
amounting to P12, 000.00 each. 1 The standard Quitclaim and Release
reads, in part:

"Na, pagsaalang-alang sa halagang LABING DALAWANG LIBONG

(P12, 000.00) PESOS bilang kabayaran sa akin ng Globe Paper
Mills Corp./Armor Industrial Corporation et. al., sa pamamagitan
ni Bro. Teofilo A. Rafols, presidente ng N.O.W.M. na siyang
aking/aming pinagkatiwalaan ang pakikipag-usap kay G. JAMES
YU,

President/General Manager ng nasabing mga Kompanya tungkol

sa pakikipag-ayos o "amicable settlement," na ang huling ALOK
ng Kompanya ay aking sinang-ayunan, dala na rin ng aking
kahirapan at kawalan ng pinagkakitaan sa matagal na panahon;"
(Emphasis supplied.)

On March 9, 1994, petitioners executed a Sama-samang Sinumpaang

Salaysay where they stated:
 "Na, batid namin na ang naturang halaga na aming tinanggap
(P12,000.00 each) ay hindi makatarungan at sapat na
kabayaran sa aming mga hinahabol na biyaya sa naturang mga
Kompanya at alinsunod sa desisyon ng Labor Arbiter, ngunit,
dala ng aming kahirapan sa buhay, bunga ng aming matagal
nang pagkakatanggal sa aming trabaho mula pa noong taon
1991 at 1992 ay napag-pasiyahan namin na pansamantalang
kunin/tanggapin ang inalok na halaga ng Kompanya, ngunit
aming ipagpapatunay ang nasabing usapin/asunto sa
kadahilanan masyado kaming api at hindi makatarungan ang
pagkakatanggap sa aming trabaho na nagdulot ng labis na
kahirapan sa aming mga mahal sa buhay, sa katunayan, ang
aming kinabubuhay ay sa tulong ng aming mga malalapit na
kamag-anak at mga kaibigan, at upang lubusang mabigyan ng
katarungan ang aming kalagayan." (Emphasis added.)

Private respondents submitted the Compromise Agreement and Joint

Motion to Dismiss before the respondent Commission which was then
considering the case on appeal from the decision of the Labor Arbiter. Herein
petitioners later filed an Opposition to the Motion to Dismiss where they
demanded the difference of what they actually received and the judgment
award in their favor.

On November 29, 1994, respondent Commission rendered its Decision

approving the Compromise Agreement, setting aside the January 15, 1994
decision of the Labor Arbiter and dismissing the instant case. 4 The NLRC
held that the complainants were fully aware of the award in their favor dated
January 15, 1994 when they voluntarily entered into the compromise
agreement on March 1, 1994. They thus disregarded the judgment award
and opted for the last and sincere offer of respondent Globe Paper Mills
instead of waiting out the appeal filed by respondents. Respondent NLRC
added that it cannot subscribe to complainants’ contention that they signed
the compromise agreement under the compulsion of "dire necessity" and
held that position as a mere afterthought.

Their motion for reconsideration having been denied on March 3, 1995,

the instant petition for certiorari was filed contesting the decision of the
NLRC.

ISSUE/s : The sole issue pertains to the validity of a compromise

agreement and quitclaims executed by the parties during the pendency of
private respondents’ appeal to the respondent Commission.

RULING : The Supreme Court ruled that the compromise agreement

entered into were invalid due to the fact that the total amount of P300,
000.00 as consideration for the quitclaims signed by the workers are
inordinately low and exceedingly unreasonable compared to P107, 480.00
per worker and total P3, 223,261.00 awarded by the Labor Arbiter.

DECISION : The instant petition is hereby GRANTED. The assailed

resolution and decision of respondent Commission are hereby SET ASIDE.
The case is REMANDED to the Commission for expeditious resolution on the
merits.

Prepared by:

HATTHA A. TACBIL
MBM - HRM
 Republic of the Philippines
MINDANAO STATE UNIVERSITY
General Santos Campus
General Santos City
SCHOOL OF GRADUATE STUDIES
MASTER IN BUSINESS MANAGEMENT PROGRAM

LAW & LABOR MANAGEMENT RELATION

Case Digest

CRUZ VS. NLRC, 203

[G.R. No. 98273 October 28, 1991]

PONENTE : Cruz, J.

Narvasa, Griño-Aquino and Medialdea, JJ., concur.

FACTS : Clarita V. Cruz went abroad pursuant to an employment

contract that she hoped would improve her future. Although a high school
graduate, she agreed to work as a domestic helper in Kuwait in
consideration of an attractive salary and vacation leave benefits she could
not expect to earn in this country.

On March 18,1988, after completing her two-year engagement, she

was back home in the Philippines with her dead dreams and an angry
grievance.

On March 23,1988, she filed a complaint against EMS Manpower and

Placement Services (Phil.) and its foreign principal, Abdul Karim Al Yahya,
for underpayment of her salary and non-payment of her vacation leave. She
also claimed that she was charged a placement fee of P7, 000.00 instead of
the legal maximum of only P5, 000.00. She alleged that her foreign
employer treated her as a slave and required her to work 18 hours a day.
She was beaten up and suffered facial deformity, head trauma and
decreased sensation in the right portion of her body.
 The private respondent, in its answer and position paper, raised the
principal defense of settlement as evidenced by the Affidavit of Desistance
executed by the complainant on June 21, 1988. In this document, she
declared inter alia that —

xxx xxx xxx

2. Thereafter going thoroughly over the facts of the case by

reconciling our records, we came to discover that it was only a
plain case of misunderstanding on our part, and that we have
already settled our differences;

3. That I am no longer interested in further continuance of the

above case against EMS Manpower & Placement Services either
criminal, civil or administrative or whatever nature as I hereby
desist now and hereafter;

4. That I am executing this affidavit of desistance to attest to the

truth of the foregoing facts and circumstances and for the
purpose of asking the dismissal of my said complaint against
EMS Manpower & Placement Services.

On the basis of this affidavit, the Philippine Overseas Employment

Administration (POEA) dismissed her complaint in a decision dated May 16,
1989. This was affirmed by the National Labor Relations Commission (NLRC)
in its resolution dated December 28, 1990, reconsideration of which was
denied on February 21, 1991.

ISSUE/s : Whether or not the POEA and the NLRC acted with grave
abuse of discretion for having upheld the AFFIDAVIT OF DESISTANCE.

RULING : Contrary to the contention of the private respondent in the

proceedings that it has no privity of contract with the petitioner, it has been
held in a long line of cases that the local recruiter is solidarily liable with the
foreign principal for all damages sustained by the overseas worker in
connection with his contract of employment. Such liability is provided for in
Section 1, Rule II, Book II, of the POEA Rules and Regulations, which has
been consistently sustained.

DECISION : The resolutions of the NLRC dated December 28, 1990, and
February 21, 1991, are SET ASIDE, and the Affidavit of Desistance is
DECLARED null and void. POEA Case No. 88-03-255 is REMANDED to the
POEA for further proceedings and expeditious resolution.

Prepared by:

HATTHA A. TACBIL
MBM - HRM
 Republic of the Philippines
MINDANAO STATE UNIVERSITY
General Santos Campus
General Santos City
SCHOOL OF GRADUATE STUDIES
MASTER IN BUSINESS MANAGEMENT PROGRAM

LAW & LABOR MANAGEMENT RELATION

Case Digest

UNITED HOUSING CORP VS. DAYRIT, 182

[G.R. No. 76422, January 22, 1990]

PONENTE : FERNAN, C.J.

FACTS : Jose M. Tapia, Jr. bought Lot 19, Block 28 from United Housing
Corporation, owner and developer of UPS-5A Subdivision, under a Novated
Contract to Sell a Parcel of Land dated July 27, 1974. Tapia has long fully
paid the purchase price of said lot but Petitioner Corporation has not
executed the Absolute Deed of Sale nor transferred the title in favor of Tapia
despite repeated demands.

Tapia filed a complaint (docketed as HSRC Case No. REM-830184-

1947) against petitioner corporation before the Human Settlements
Regulatory Commission (now Housing and Land Use Regulatory Board). A
compromise agreement was arrived at later by the parties wherein Petitioner
Corporation promised among others, to deliver the title of the subject lot
within two (2) months from the date of the compromise agreement (April
25, 1984). A judgment upon compromise was rendered on May 30, 1984.

Petitioner corporation, however, failed to honor its commitment under

said compromise agreement to secure the release of subject title and to
deliver the same to the private respondents. Respondent Tapia moved for
the execution of the judgment but was opposed by petitioner corporation.
Instead of acting on the motion, the then Regulatory Commission forwarded
the records of HSRC Case No. REM-030184-1947 entitled "Jose M. Tapia, Jr.
v. United Housing Corporation" to Senior State Prosecutor Melquiades
Gabriel for violation by herein petitioner of Section 25 of P.D. 957, consisting
in its failure to deliver the subject title to private respondent and to comply
with the Compromise Agreement submitted by the parties and approved by
the Commission. As a result, the corresponding information for violation of
P.D. 957 was filed before the Regional Trial Court of Manila, Branch XXV, in
Criminal Case No. 84-31256 against the petitioner corporation's president
and general manager.

Having failed to the effect the execution of the judgment upon

compromise, private respondents Spouses Jose M. Tapia, Jr. and Lydia C.
Tapia filed a complaint for specific performance with damages dated August
23, 1986 (docketed as Civil Case No. 86-37432) before the Regional Trial
Court of Manila. In their complaint, they prayed for, inter alia, the execution
of a deed of absolute sale over Lot 19, Block 28; United Parañaque
Subdivision V, purchased by them from the United Housing Corporation
(petitioner herein), and for the transfer and delivery of the title thereto.

On October 7, 1986, petitioner-corporation moved for the dismissal of the

aforesaid complaint on the ground of lack of jurisdiction by virtue of PD
1344, as amended by EO 648 (Charter of the Human Settlements Regulatory
Commission).

The Honorable Abelardo M. Dayrit, then presiding judge of Branch

XXXIX of the Regional Trial Court of Manila, to whom said complaint was
assigned, and after having considered the allegations set forth in petitioner's
dismissal motion and those in respondent's opposition thereto, issued an
Order dated October 27, 1986 denying the motion, hereunder quoted, as
follows:
 Finding the Motion to Dismiss filed by the defendant to be not
studiedly in order and taking into consideration the opposition to said
motion, the motion to dismiss is therefore denied.

Hence, this petition.

ISSUE/s : The main issue in this petition is whether or not a case of

specific performance decided by the Human Settlements Regulatory
Commission whose decision has already become final, may be relitigated in
the Regional Trial Court on the same issue and between the same parties.

Petitioner United Housing Corporation seeks by this petition

for certiorari and prohibition: (1) to annul the Order dated October 27, 1986
of the Regional Trial Court of Manila, Branch XXXIX, denying petitioner's
motion to dismiss Civil Case No. 37432 and (2) to restrain respondent judge
from proceeding with the hearing of aforesaid case. Petitioner likewise prays
for a preliminary injunction and/or restraining order to preserve the status
quo.

RULING : The Court has repeatedly held that a judgment upon

compromise which is a judgment embodying a compromise agreement
entered into by the parties in which they make reciprocal concessions in
order to terminate a litigation already instituted is not appealable, is
immediately executory and has the effect of res judicata.

To require private respondents to plead anew before the Housing and

Land Use Regulatory Board for the execution of the Compromise Agreement
would be circuitous and time-consuming. The fairest and most equitable
course to take under the circumstances is to write finis to the controversy
between the parties, who are both within the jurisdiction of the court, by
ordering petitioner to perform its obligation under the long final and
executory Compromise Agreement.
DECISION : The petition is hereby GRANTED. The assailed Order of October
27, 1986 is annulled and set aside. Civil Case No. 37432 of the Regional
Trial Court of Manila, Branch XXXIX is ordered dismissed. Petitioner United
Housing Corporation is however ordered to deliver to private respondents
Spouses Jose M. Tapia, Jr. and Lydia C. Tapia the title to Lot 19, Block 28 of
United Parañaque Subdivision within thirty (30) days from the finality of this
decision. No costs.

Prepared by:

HATTHA A. TACBIL
MBM - HRM
 Republic of the Philippines
MINDANAO STATE UNIVERSITY
General Santos Campus
General Santos City
SCHOOL OF GRADUATE STUDIES
MASTER IN BUSINESS MANAGEMENT PROGRAM

LAW & LABOR MANAGEMENT RELATION

Case Digest

PATERNO R. CANLAS, petitioner,

vs.
HON. COURT OF APPEALS, and FRANCISCO HERRERA, respondents.
Paterno R. Canlas Law Offices for petitioner.
Abalos, Gatdula & Bermejo for private respondent.
[G.R. No. L-77691 August 8,1988]

PONENTE : SARMIENTO, J.

FACTS : Respondent Herrera was the registered owner of 8 parcels of

land in QC. He obtained several loans from the L&R Corp. (financing
institution) equal to P420, 000.

As security, he executed deeds of mortgage in favor of the corp. over

the parcels of land. Upon failure to pay, L&R extra judicially foreclosed the
mortgage, causing the parcels of land to be sold at public auction, with L&R
as highest bidder.

Pending redemption, the respondent through petitioner counsel filed a

complaint for injunction against L & R, to enjoin consolidation of title in its
name, in which he succeeded in obtaining preliminary injunctive relief. 2
years later, parties entered into a compromise agreement whereby
respondent was allowed another year to redeem the property and that Atty.
Canlas shall be entitled to P100, 000 as attorney’s fees. The court approved
the compromise.
 Respondent remained in financial straits, failing to acquire the funds to
repay the loans and the attorney’s fees. Petitioner moved for execution as to
his fees, which was granted but not collected. Petitioner and respondent
came to an agreement that Atty. Canlas would redeem the property in favor
of the latter, executing a “Deed of Sale and Transfer of Rights of Redemption
and /or to redeem,” which enabled petitioner to redeem and register the
same in his name.

Respondent alleged that the deed was falsified and filed an action for
reconveyance and reformation of document, disbarment proceedings, and
various criminal complaints, but the court ruled otherwise, stating that it did
not change the meaning of the contract.

He then filed a suit for Annulment of Judgment in the CA. Petitioner

argues that the petition for annulment was actually a petition for certiorari
and should be dismissed.

ISSUE/s : The petitioner argues that the petition pending with the
respondent court "is actually a petition for certiorari," disguised as a
pleading for annulment of judgment and that in such a case, it faces alleged
legal impediments (1) It had been filed out of time, allegedly two years from
the issuance of the assailed orders, and (2) It was not preceded by a motion
for reconsideration. He adds that assuming annulment of judgment were
proper, no judgment allegedly exists for annulment, the aforesaid two orders
being in the nature of interlocutory issuances.

RULING: By Atty. Canlas’ own account, "due to lack of paying capacity of

respondent Herrera, no financing entity was willing to extend him any loan
with which to pay the redemption price of his mortgaged properties and
petitioner’s P100,000.00 attorney’s fees awarded in the Compromise
Judgment," a development that should have tempered his demand for his
fees. For obvious reasons, he placed his interests over and above those of
his client, in opposition to his oath to "conduct [him]self as a lawyer . . .
with all good fidelity . . . to [his] clients." The Court finds the occasion fit to
stress that lawyering is not a moneymaking venture and lawyers are not
merchants, a fundamental standard that has, as a matter of judicial notice,
eluded not a few law advocates. The petitioner’s efforts partaking of a
"shakedown" of his own client are not becoming of a lawyer and certainly, do
not speak well of his fealty to his oath to "delay no man for money."

We are not, however, condoning the private respondent's own

shortcomings. In condemning Atty. Canlas monetarily, we cannot overlook
the fact that the private respondent has not settled his liability for payment
of the properties. To hold Atty. Canlas alone liable for damages is to enrich
said respondent at the expense of his lawyer. The parties must then set off
their obligations against the other.

DECISION: The judgment is;

1. ORDERING the petitioner, Atty. Paterno Canlas, to pay to the private

respondent, Francisco Herrera, the sum of P326,000.00, as and for
damages;
2. ORDERING the petitioner to SHOW CAUSE why no disciplinary action
may be imposed on him for violation of his oath, as a lawyer, within
ten (10) days from notice, after which the same will be consolidated
with AC No. 2625;
3. DISMISSING this petition and REMANDING the case to the
respondent Court of Appeals for execution; and
4. ORDERING the petitioner to pay costs.

Prepared by:

HATTHA A. TACBIL
MBM - HRM
 Republic of the Philippines
MINDANAO STATE UNIVERSITY
General Santos Campus
General Santos City
SCHOOL OF GRADUATE STUDIES
MASTER IN BUSINESS MANAGEMENT PROGRAM

LAW & LABOR MANAGEMENT RELATION

Case Digest

CHUA vs. NLRC, 190

SCRA 558
[G.R. Nos. 89971-75 October 17, 1990]

PONENTE : GUTIERREZ, JR., J.

FACTS : In December, 1985, Stanford Microsystems, Inc. (Stanford) a

service conductor corporation filed a petition for suspension of payments and
appointment of rehabilitation receiver (Annex "A", Petition) with the
Securities and Exchange Commission (SEC). The petition was docketed as
SEC Case No. 2930. At that time, Stanford had seven (7) secured creditor
banks and more or less seven thousand one hundred twenty-four (7,124)
employees.

On February 5, 1986, the SEC declared Stanford to be in a state of

suspension of payments. It issued an order (Annex "B", Petition) appointing
Sycip Gorres & Velayo & Co. (SGV) as the rehabilitation receiver.

In view of these developments, the former employees of Stanford filed

with the Department of Labor and Employment (DOLE) cases for money
claims, to wit:

(a) STANFORD TECHNICAL AND OFFICE STAFF EMPLOYEES ASSOCIATION

(STOSEA)-FFW, THROUGH ITS PRESIDENT, NOEL VILLENA AND FOR AND IN
BEHALF OF ITS EIGHT HUNDRED SIXTY SUM (860)
MEMBERS, Complainants, v. STANFORD MICROSYSTEMS, INC. AND
CRISTINO CONCEPCION, JR., IN HIS CAPACITY AS PRESIDENT AND
GENERAL MANAGER, Respondents, NLRC-NCR CASE NOS. 1-106-86 AND 1-
117-86, filed by herein Petitioners Mario A. Mentil, Noel Villena, and Remigio
F. Santos, acting for themselves and as the duly appointed Attorneys-In-Fact
of Five Hundred Ninety Nine (599) Monthly-Paid Employees for Stanford, and
assigned to Labor Arbiter Ceferina Diosana-

-for illegal lockout and payment of thirteenth month pay,

vacation leave and sick leave benefits and subsidiary seminar
fund and recreational activities fund. This case has been decided
but execution was suspended upon motion of the complainants;

(b) RODOLFO FERNANDEZ, ET AL., Petitioners, v. STANFORD

MICROSYSTEMS, INC., Respondent, NCR CASE NO. 1-294-86, filed by herein
Petitioners Rodolfo Fernandez, for himself, Maximo E. Daquil George T.
Bartolome and Ernesto L. Concepcion, acting for themselves and as the duly
appointed Attorneys-In-Fact of Three Hundred (300) Confidential and Non-
Unionized employees of Stanford, and assigned to Labor Arbiter Raymundo
R. Valenzuela-

— which case have been archived at the instance of the

complainants;

(c) STANFORD MICROSYSTEMS, INC. LABOR UNION-FFW Petitioners, v.

STANFORD MICROSYSTEMS, INC., Respondent, CASE NO. 1-039-86, filed by
herein Petitioners Celia B. Chua, Araceli A. Elardo and Marites P. Martinez,
acting for themselves and as the duly appointed Attorneys-In-Fact of Two
Thousand Three Hundred Forty Five (2,345) Daily-Paid employees of
Stanford, and formerly assigned to Labor Arbiter Benigno C. Villarente, now
assigned to Labor Arbiter Alex Arcadio Lopez —
 — which case has been decided but the execution of the
decision and the case archived at the instance of the
complainants;

(d) LUDIVINA L. SABALZA, ADELIZA E. CANTILLO, REMIGIO P. PESTAÑO, ET

AL., Complainants v. STANFORD MICROSYSTEMS, INC. ET AL., Respondents,
CASE NO. 12-4882-86, filed by herein Petitioners Ludivina L. Ssbalza,
Adelina E. Cantillo, and Remegio P. Pestaño, acting for themselves and as
the duly appointed Attorneys-In-Fact of Three Thousand Two Hundred Forty
Four (3,244) Daily-Paid employees of Stanford, and formerly assigned to
Labor Arbiter Evangeline Lubaton —

— for payment of separation pay, back (strike duration)

pay and thirteenth month pay for 1985, cash conversion of
vacation leave and sick leave and other money claims. The
petitioner Stanford Liquidation Committee has intervened in this
case and moved to stay proceedings;

(e) SMI LABOR UNION-FFW ET AL., Petitioners

v. STANFORD MICROSYSTEMS, INC. Respondent, NCR-NS-3-124-85, CASE
NO. 3-753-86, filed by herein Petitioners Ludivina L. Sabalza, Adelina E.
Cantillo, and Remigio P. Pestaño, acting for themselves and as the duly
appointed Attorneys-In-Fact of Three Thousand Two Hundred Forty Four
(3,244) Daily-Paid employees of Stanford, and assigned to Labor Arbiter
Dominador M. Cruz —

— for payment of separation pay, back (strike duration)

pay and thirteenth month pay for 1985, cash conversion of
vacation leave and sick leave, and other money claims. The
petitioner Stanford Liquidation Committee has intervened in this
case and moved to stay proceedings;
(f) LUDIVINA SABALZA, ET AL., Petitioners v. STANFORD MICROSYSTEMS,
INC., Respondent, CASE NO. 2-628-86, filed by herein Petitioners Ludivina L.
Sabalza, Adeliza E. Cantillo, and Remigio P. Pestaño, acting for themselves
and as the duly appointed Attorneys-In-Fact of Three Thousand Two
Hundred Forty Four (3,244) Daily-Paid employees of Stanford, and assigned
to Labor Arbiter Dominador M. Cruz —

— for payment of separation pay, back (strike duration)

pay and thirteenth month pay for 1985, cash conversion of
vacation leave and sick leave, and other money claims. The
petitioner Stanford Liquidation Committee has intervened in this
case and moved to stay proceedings;

(g) LUDIVINA SABALZA, ET AL., FERNANDO R. GUMABON ET

AL., Complainants v. Stanford Microsystems, Inc., Respondent, CASE NO.
11-4543-86, filed by herein Petitioners Ludivina L. Sabalza, Adeliza E.
Cantillo, and Remigio P. Pestaño, acting for themselves and as the duly
appointed Attorneys-In-Fact of Three Thousand Two Hundred Forty Four
(3,244) Daily-Paid employees of Stanford, and formerly assigned to Labor
Arbiter Armando Polintan —

— for payment of separation pay, back (strike duration)

pay and thirteenth month pay for 1985, cash conversion of
vacation and sick leave, and other money claims. The petitioner
Stanford Liquidation Committee has intervened in this case and
moved to stay proceedings; and

(h) FERNANDO R. GUMABON ET AL., Petitioners v. STANFORD

MICROSYSTEMS, INC., Respondent, CASE NO. 3-803-86, filed by herein
Petitioners Mario A. Mentil, Noel Villena, and Remigio F. Santos, acting for
themselves and as the duly appointed Attorneys-In-Fact of Five Hundred
Ninety Nine (599) Monthly-Paid employees of Stanford, and formerly
assigned to Labor Arbiter Martinez —

— for payment of separation pay, back (strike duration)

pay and thirteenth month pay for 1985, cash conversion of
vacation leave and sick leave, and other money claims. The
petitioner Stanford Liquidation Committee has intervened in this
case and moved to stay proceedings. (Petition, pp. 40-43)

Except for cases (a), (b) and (c) which were assigned to different labor
arbiters, cases (d) to (h) were consolidated and as signed to respondent
Labor Arbiter Dominador M. Cruz. The petitioners in case (d) comprise the
former daily paid employees of Stanford who were members of the Stanford
Microsystems, Inc., Labor Union ("SMILU"). They formed a "Caretaker
Committee", and the individual members appointed Ludivina L. Sabalza,
Adeliza E. Cantillo and Remigio P. Pestano as Attorneys-In-Fact for the
purpose of prosecuting and settling their claims against Stanford, both
before the SEC and the DOLE. The Attorneys-In-Fact engaged the services of
private respondent, Atty. Vicente Ocampo, to act as their legal counsel.

In January, 1987, the SEC disapproved the Rehabilitation Plan submitted by

SGV and dismissed Stanford's Petition for Suspension of Payments and
Appointment of a Rehabilitation Receiver. (Annex "C', Petition)
Subsequently, the SEC ordered Stanford's liquidation.

The seven (7) secured creditor banks of Stanford, namely:

(a) Philippine Commercial International Bank;

(b) Far East Bank and Trust Company;

(c) Private Development Corporation of the Philippines;

(d) Equitable Banking Corporation;

(e) Union Bank of the Philippines;

(f) Philippine National Bank; and

(g) City Trust Banking Corporation

which have an aggregate principal exposure of Two Hundred Thirty One

Million Six Hundred Thousand Pesos (P231,600,000.00), and the twelve (12)
duly authorized Attorneys-In-Fact of six thousand three hundred forty one
(6,341) former employees of Stanford (89% of the total employees) with
employees' claims of approximately One Hundred Twenty Five Million Seven
Hundred Ten thousand Pesos (P125,710,000.00) reached a mutually
acceptable plan for the speedy and orderly liquidation of Stanford. Hence,
representatives of the seven (7) secured banks and the employees'
Attorneys-In- Fact assisted by their respective counsel held marathon
meetings and negotiations in the Office of Director Luna C. Piezas of the
DOLE, National Capital Region resulting in the execution of a Memorandum
of Agreement dated March 13, 1987 ("MOA", Annex "D", Petition). The MOA
was signed by all the parties and duly attested by Director Luna C. Piezas.

The principal terms of the MOA are as follows:

(a) The Secured Creditor Banks will foreclose their real estate and chattel
mortgages;

(b) The Secured Creditor Banks will consolidate and retain title to the
foreclosed properties in their respective names and contribute the same to a
'Pool of assets' under the control and administration of a Liquidation
Committee composed of eleven (11) members, representing the Secured
Creditor Banks, and the Six Thousand Three Hundred Forty One (6,341)
former employees of Stanford who authorized the MOA;
(c) The MOA Liquidation Committee will sell all the foreclosed properties and
distribute the proceeds among the Secured Creditor Banks and the Six
Thousand Three Hundred Forty One (6,341) employees. The share of the
remaining Seven Hundred Eighty Three (783) employees shall be placed in
escrow for their benefit until they claim their share;

(d) The sharing formula for the distribution of the sales proceeds principally
took into account the principal claims of the claimants; and

(e) All suits inconsistent with the MOA shall be withdrawn. (Petition, p. 30)

The eleven (11) members of the MOA Liquidation Committee are the
following:

(a) Philippine Commercial International Bank;

(b) Far East Bank and Trust Company;

(c) Private Development Corporation of the Philippines;

(d) Equitable Banking Corporation;

(e) Union Bank of the Philippines;

(f) Philippine National Bank;

(g) Citytrust Banking Corporation;

(h) Celia B. Chua, Araceli A. Elardo and Marites P. Martinez, acting for
themselves and as the duly appointed Attorneys-In-Fact of Two Thousand
Three Hundred Forty Five (2,345) former daily Paid employees of Stanford;

(i) Ludivina L. Sabalza, Adeliza E. Cantillo, and Remigio P. Pestaño, acting

for themselves and as the duly appointed Attorneys In-Fact of Three
Thousand Two Hundred Forty Four (3,244) former Daily-Paid employees of
Stanford;
(j) Mario A. Mentil, Noel Villena, and Remigio F. Santos, acting for
themselves and as the duly appointed Attorneys-In-Fact of Five Hundred
Ninety Nine (599) former Monthly-Paid employees of Stanford; and

(k) Rodolfo Fernandez, for himself, Maximo E. Daquil, George T. Bartolome

and Ernesto L. Concepcion, acting for themselves and as the duly appointed
Attorneys-In-Fact of Three Hundred (300) former confidential and Non-
Unionized employees of Stanford. (Petition, pp. 30-31)

Pursuant to the MOA, the secured creditor banks foreclosed their mortgages,
consolidated title over the real properties and contributed the same to the
"Pool of Assets." The MOA Liquidation Committee then proceeded with the
sale of the foreclosed properties.

It is to be noted that the group of employees whose attorneys-in-fact are

Ludivina L. Sabalza, Adeliza E. Cantillo and Remigio P. Pestaño were
represented in the negotiations leading to the execution of the MOA by new
counsel, the Bacungan Larcia Bacungan Law Office. Respondent Atty.
Vicente Ocampo's legal services were terminated by the attorneys-in-fact as
early as October and November 1986 in view of his refusal to represent the
group in the negotiations with the other former Stanford employees and
Stanford creditors towards an out-of-court settlement of their claims against
Stanford. This termination was confirmed in a letter dated March 9, 1987
(Annex "K", Petition) which was received by Atty. Ocampo on March 11,
1987.

ISSUE/s : WETHER OR NOT the jurisdiction of the National Labor

Relations Commission (NLRC) in issuing three (3) resolutions dated October
6, 1988, November 3, 1988 and January 3, 1990 in NLRC Injunction Case
No. 1793.
 The October 6, 1988 resolution denied for lack of merit the petitioners'
petition for writ of prohibition to stay further proceedings in the five (5)
consolidated labor cases involving the former employees of Stanford
Microsystems, Inc. pending with respondent Labor Arbiter Dominador M.
Cruz.

The November 3, 1988 resolution ordered petitioners' Liquidation

Committee of Stanford Microsystems, Inc. to defer the payment of SIX
MILLION PESOS (P6, 000,000.00) to the former employees of Stanford
Microsystems, Inc.

The January 3, 1990 resolution, among others directed petitioner

Liquidation Committee to deposit with the NLRC the deducted attorney's fees
representing ten percent (10%) of the amount due and/or to be paid to the
former employees of Stanford Microsystems Inc.

RULING : The court ruled that NLRC committed grave abuse of discretion
in refusing to stay the proceedings in the money claims pending before
respondent Labor Arbiter Cruz and when it deferred the payment of
P6,000,000.00 to the former Stanford employees.

The court agree with the petitioners that the Memorandum of

Agreement dated March 13, 1987 is valid, fair and reasonable, and is in
accord with law, morals, public policy and established jurisprudence.

DECISION : The petition is GRANTED. The questioned resolutions dated

October 6, 1988, November 3, 1988 and January 3, 1989 of the National
Labor Relations Commission are declared NULL and VOID and are hereby
SET ASIDE.

1. Respondent Labor Arbiter Dominador M. Cruz to desist from

conducting further proceedings in Case No. 12-4882-86, Case No. 3-
 753-86; Case No. 2-6280-86; Case No. 11-4543-86 and Case No. 3-
803-86;
2. Respondent National Labor Relations Commission and Labor Arbiter
Dominador M. Cruz to desist from interfering in the implementation of
the Memorandum of Agreement dated March 13, 1987 in the matter of
the liquidation Committee under the jurisdiction of the Securities and
Exchange Commission; and
3. Private respondents and Atty. Vicente T. Ocampo and associates, their
representatives, agents and any other person assisting them or acting
for them and on their behalf to desist from interfering with the
implementation of the Memorandum of Agreement, the liquidation of
the Stanford Microsystems, Inc., and the exercise by the Stanford
Liquidation Committee duly appointed by the Securities and Exchange
Commission of its functions. No costs.

Prepared by:

HATTHA A. TACBIL
MBM - HRM