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SARA LEE PHILIPPINES v. EMILINDA D. MACATLANG

FACTS:

The case involves a motion for reconsideration filed by Sara Lee Philippines Inc. (SLPI), Aris Philippines Inc. (Aris), Sara Lee Corporation (SLC), and Cesar C. Cruz, as well as a separate motion for reconsideration filed by Fashion Accessories Phils. Inc. (FAPI). In a previous decision, the court directed the Corporations to post P725 Million, in cash or surety bond, within 10 days. The court also nullified a resolution of the National Labor Relations Commission (NLRC) dated December 19, 2006. The Motion for Reconsideration raised several grounds, including the failure to consider a compromise agreement filed by Sara Lee Corporation and the violations of due process. The case involves the dismissal of employees of Aris and the subsequent incorporation of FAPI, with the employees alleging that FAPI was a continuing business of Aris. The Labor Arbiter ruled the dismissal of Aris employees illegal and awarded them monetary benefits.

This case involves a petition for review filed by 5,984 former employees of the Aris Corporation (Corporations). The employees are seeking the payment of monetary benefits amounting to P3,453,664,710.86. The judgment award includes separation pay, backwages, moral and exemplary damages, and attorney's fees.

The Corporations filed a Notice of Appeal with Motion to Reduce Appeal Bond and initially posted a P4.5 Million bond. The National Labor Relations Commission (NLRC) granted the reduction of the appeal bond but ordered the Corporations to post an additional P4.5 Million bond.

During the pendency of the case before the Court of Appeals, the NLRC issued an order setting aside the decision of the Labor Arbiter prematurely.

The Court of Appeals then ordered the Corporations to post an additional appeal bond of P1 Billion. However, in a subsequent Supreme Court decision, the Court modified the Court of Appeals' Decision and directed the Corporations to post a lesser amount of P725 Million within ten days. The Supreme Court also resolved the issue of forum-shopping and stated that the 411 petitioners in another petition are not representative of the interest of all petitioners in this case.

The Corporations filed a Motion for Reconsideration but it was denied. They argued that the ruling in McBurnie v. Ganzon required only the posting of a bond equivalent to 10% of the monetary award. However, the Court clarified that the 10% requirement is provisional and that the NLRC has the discretion to determine the final amount of bond to be posted.

The Corporations also argued that there was no legal impediment for the NLRC to vacate the Labor Arbiter's decision without a TRO or injunction from the Court of Appeals. However, the Court stated that the principle of judicial courtesy applies in this case, as there is a strong probability that the issues before the higher court would be rendered moot and moribund due to the NLRC's ruling.

Corporations before the National Labor Relations Commission (NLRC). The NLRC, however, dismissed the appeal on the ground that the corporations failed to post the required appeal bond. Hence, the corporations filed a Motion for Reconsideration, arguing that the NLRC should have ruled on the merits of the case despite the absence of the appeal bond. They also raised other grounds such as the invalid service of summons on SLPI, SLC, and Cesar Cruz, as well as the issues of prescription, res judicata, and the applicability of the Fulido case to the present case. It was pointed out that these grounds were already raised and resolved in favor of the former Aris employees by the Labor Arbiter's Decision dated October 30, 2004.

ISSUES:

  1. Whether the principle of judicial courtesy applies in this case.

  2. Whether the other grounds raised by the Corporations in their Motion for Reconsideration should be ruled upon by the higher court.

  3. Whether the Confession of Judgment entered into by the Corporations and some of the former Aris employees is valid.

  4. Whether the compromise agreement, deemed as a Confession of Judgment, is valid and binding.

  5. Whether the compromise agreement entered into by the parties is valid.

  6. Whether the compromise agreement is unconscionable and against public policy.

RULING:

  1. The principle of judicial courtesy applies in this case. It is the exception to the general rule and it applies when there is a strong probability that the issues before the higher court would be rendered moot as a result of the continuation of the proceedings in the lower court. In this case, the 19 December 2006 ruling of the National Labor Relations Commission (NLRC) would render the appeal filed before the higher courts moot if the issue of the appeal bond is not resolved.

  2. The other grounds raised by the Corporations in their Motion for Reconsideration should not be ruled upon by the higher court at this stage of the proceedings. The labor proceedings are still incomplete and the Labor Arbiter's decision is final and executory without the NLRC stage. Therefore, ruling on the merits of the case is premature.

  3. The Confession of Judgment entered into by the Corporations and some of the former Aris employees is not valid. A confession of judgment is an acknowledgment that a debt is justly due and cuts off all defenses and right of appeal. However, the Corporations failed to obtain the consent of all the 5,984 complainants. Thus, the Confession of Judgment is void.

  4. The Supreme Court held that the compromise agreement, deemed as a Confession of Judgment, is valid and binding. A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver voluntarily, with a full understanding of what he was entering into. The terms and conditions of the compromise agreement were agreed upon by both parties through their respective counsel, and it was clear that the respondents (complainants) and their counsel have agreed to the monetary consideration and the dismissal of all pending cases. Therefore, the compromise agreement is valid and binding on both parties.

  5. The compromise agreement is not valid. The amount offered in the compromise agreement is grossly disproportionate to the judgment award, rendering it ineffective to bar the workers from claiming the full measure of their legal rights.

  6. The compromise agreement is unconscionable and against public policy. The amount offered in the compromise agreement is outrageously low and does not represent a true and fair amount that a reasonable agent may bargain for his principal. Moreover, accepting such an amount as a compromise defeats the complainants' legitimate claim. The Court has the power to strike down compromise agreements that are unconscionable and against public policy.

PRINCIPLES:

  • The principle of judicial courtesy is the exception rather than the rule. It applies when there is a strong probability that the issues before the higher court would be rendered moot as a result of the continuation of the proceedings in the lower court.

  • Ruling on the merits of a case is premature if the labor proceedings are still incomplete and the Labor Arbiter's decision is final and executory without the NLRC stage.

  • A compromise must not be contrary to law, morals, good customs, and public policy, and must have been freely and intelligently executed by and between the parties.

  • A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver voluntarily, with a full understanding of what he was entering into.

  • Voluntary settlement agreements, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties.

  • The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved in a voluntary settlement agreement except in case of noncompliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.

  • The appeal bond serves as security for the employer to ensure that there are properties on which he or she can execute upon in the event of a final, providential award. Non-payment or insufficient payment of the appeal bond frustrates this purpose. The appeal bond is valid and effective from the date of posting until the case is terminated or the award is satisfied.

  • Not all quitclaims are per se invalid, but where there is clear proof that the waiver was obtained through deception or the terms of settlement are unconscionable on its face, the law will step in to annul the transaction. The Court will strike down a compromise agreement that is unconscionable and against public policy.