VIRGILIO S. SITJAR, SUSAN L. SALVADOR, AND ORLANDO PASION, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, KEY CONSULTANTS, INC. AND/OR HIROSHI SHINDO, RESPONDENTS.

Sitjar versus National Labor Relations Commission

The Case

This is Sitjar versus National Labor Relations Commission, a labor case in which three petitioners, Virgilio Sitjar, Susan Salvador, and Orlando Pasion, sought relief against the National Labor Relations Commission, Key Consultants, Incorporated, and Hiroshi Shindo. The decision before us is not a ruling on the merits of their labor dispute. It is a judgment approving a compromise agreement reached through mediation. The case matters because it shows the Court giving judicial approval to a settlement that ends litigation, and it illustrates the statutory basis for that approval.

Procedural History

The dispute reached the Supreme Court by way of a petition, and while the case was pending, the parties were referred to mediation. The appellate court mediator submitted a report dated 13 May 2014 stating that the parties had entered into an amicable settlement. The parties then executed a Compromise Agreement dated 13 May 2014, praying that the case be dismissed. The Supreme Court, acting on that report and agreement, rendered its judgment approving the compromise.

Facts

The petitioners and the respondents agreed to settle their case for a total amount of 60,000 pesos. The amount was covered by three checks, each dated 13 May 2014, drawn on the Philippine National Bank. One check for 20,000 pesos was payable to Virgilio Sitjar, one for 20,000 pesos to Susan Salvador, and one for 20,000 pesos to Orlando Pasion.

The parties further agreed that no further action based on the same grounds would be brought against each other. They also agreed that the settlement would apply to all claims and damages or losses either party might have against the other, whether known or unknown, foreseen or unforeseen.

The agreement was signed by Key Consultants, Incorporated and Hiroshi Shindo as respondents, and by Virgilio Sitjar, Susan Salvador, and Orlando Pasion as petitioners. It was attested by the appellate court mediator. The parties prayed that the case be dismissed.

Issues

• Whether or not the Compromise Agreement dated 13 May 2014 is in order and not contrary to law, morals, good customs, and public policy, such that it may be approved by the Court.
• Whether or not the case should be declared closed and terminated upon approval of the Compromise Agreement.

Applicable Provisions

Article 2037 of the Civil Code provides:

A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise.

This provision is the basis on which the Court gave its judicial imprimatur to the agreement, treating the compromise as binding on the parties with the effect of a final judgment.

Ruling

On the first issue, the Court found the terms and conditions of the Compromise Agreement dated 13 May 2014 to be in order and not contrary to law, morals, good customs, and public policy. It approved the agreement as prayed for, in accordance with Article 2037 of the Civil Code. The Court observed that the parties had chosen to preserve the peace by resolving the dispute among them, and it gave its judicial imprimatur on the agreement.

On the second issue, the Court enjoined the parties to strictly comply with, and in good faith, the terms, conditions, and stipulations contained in the agreement. It then declared the case closed and terminated.

Doctrine

A compromise duly approved by the Court has upon the parties the effect and authority of res judicata. When the terms of a compromise agreement are in order and not contrary to law, morals, good customs, and public policy, the Court will give its judicial imprimatur to the agreement and enjoin the parties to comply with it strictly and in good faith. Approval of the compromise closes and terminates the case.

Disposition

The Court approved the Compromise Agreement dated 13 May 2014, enjoined the parties to comply with its terms in good faith, and declared the case closed and terminated.

Remember This

Memorize this line: a compromise approved by the Court has the effect and authority of res judicata under Article 2037 of the Civil Code. Examiners use this case to test the binding effect of a judicially approved compromise agreement and the Court's approval of settlements that are not contrary to law, morals, good customs, and public policy.