MAXIMO P. YOUNG, DOING BUSINESS UNDER THE BUSINESS NAME, MADE DISTRIBUTION ENTERPRISE AND WILBERT YOUNG, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION AND RICARDO R. MEND…

Young versus National Labor Relations Commission

The Case

This is a labor case that reaches the Supreme Court not for a ruling on the merits of a dismissal, but for the approval of a settlement. Maximo Young, doing business under the name Made Distribution Enterprise, together with Wilbert Young, its General Manager, are the petitioners. They are ranged against the National Labor Relations Commission and Ricardo Mendoza, a delivery driver whom they had terminated. The employer asks the Court to approve a Compromise Agreement that the parties signed during mediation. The case matters because it shows how the Supreme Court treats a compromise in a labor dispute: it will approve the settlement, render judgment in accordance with it, and thereby end the litigation, provided the agreement is not contrary to law, morals, good customs, public order, or public policy.

Procedural History

The case began with a complaint for illegal dismissal, moral and exemplary damages, and attorney's fees filed by Ricardo Mendoza before the Labor Arbiter. The Labor Arbiter dismissed the complaint on the ground that Mendoza had abandoned his work. Mendoza appealed to the National Labor Relations Commission by Notice and Memorandum of Appeal. The Commission reversed and set aside the Labor Arbiter's decision and entered a new one ordering reinstatement without loss of seniority rights and payment of full backwages from March 7, 2011 up to actual reinstatement, which as of January 31, 2013 already amounted to 263,186.54 pesos, plus ten percent thereof as attorney's fees. The petitioners filed a motion for reconsideration, which the Commission denied. The petitioners then went up to the Supreme Court on a Petition for Certiorari, assailing the Commission's decision and its resolution denying reconsideration. The Court referred the case to the Philippine Mediation Center of the Court of Appeals for possible amicable settlement. The Center reported that the parties had executed a Compromise Agreement and that settlement had been successful. The Court then approved the agreement and rendered judgment in accordance therewith.

Facts

Maximo Young, doing business as Made Distribution Enterprise, employed Ricardo Mendoza. Mendoza was first hired on January 23, 2007 as a helper and later became a regular delivery driver. Wilbert Young was the company's General Manager. On January 27, 2011, during a routine delivery to a client, the helper assigned to Mendoza, Lawrence Larioza, was caught by the client stealing a ream of Marlboro cigarettes without Mendoza's knowledge. Mendoza assured the client it would not happen again and advised the client to contact the petitioners so the incident could be reported. An investigation followed, and Larioza resigned, taking full responsibility.

On February 7, 2011, the petitioners issued a Memorandum placing Mendoza under preventive suspension until further notice. Mendoza kept going to the office to regain his job but failed. The petitioners' account differs: they say nobody from the delivery team reported the incident, that the store owner reported it on February 1, 2011, and that memoranda were issued to Larioza, to Mendoza, and to another helper, Jangas, requiring written accounts. After evaluating the accounts, the company placed Mendoza and Jangas under preventive suspension while the investigation was ongoing. On February 21, 2011, after both were cleared of involvement, they were ordered to report back to work. Jangas returned the following day; Mendoza could not be contacted. The company sent a memorandum to his last known address, then another on March 18, 2011 informing him he was considered absent without leave for more than fourteen days and deemed to have abandoned his job, and finally a Final Memorandum of Termination on March 25, 2011.

Mendoza filed a complaint for illegal dismissal. The Labor Arbiter dismissed it, finding abandonment. The Commission reversed, ordering reinstatement with backwages and attorney's fees. On certiorari to the Supreme Court, the case was referred to mediation, where the parties settled for 263,186.54 pesos as full settlement of the monetary award and all claims, including reinstatement, with each side waiving further claims against the other.

Issues

• Whether or not the Compromise Agreement executed by the parties may be approved by the Court.
• Whether or not the Compromise Agreement is contrary to law, morals, good customs, public order, or public policy.

Applicable Provisions

Article 2028 of the Civil Code provides:

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced.

This defines the agreement before the Court and supplies the standard for its approval.

Article 1306 of the Civil Code provides:

The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

This is the test the Court applies to the terms the parties stipulated.

Ruling

On the first issue, the Court approved the Compromise Agreement. It held that compromise is a form of amicable settlement not only allowed but also encouraged in civil cases. The parties had voluntarily signed the agreement, and the Court found it validly executed.

On the second issue, the Court found the agreement not contrary to law, morals, good customs, public order, or public policy. It applied Article 1306, which permits the parties to establish such stipulations, clauses, terms, and conditions as they deem convenient, subject only to that limitation. Finding the agreement within the limit, the Court approved it and rendered judgment in accordance therewith, enjoining the parties to comply with and abide by its terms and conditions.

Doctrine

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. It is a form of amicable settlement that is not only allowed but also encouraged in civil cases. The contracting parties may establish such stipulations, clauses, terms, and conditions as they deem convenient, provided these are not contrary to law, morals, good customs, public order, or public policy. When the Court finds a compromise agreement validly executed and within that limitation, it approves the agreement and renders judgment in accordance therewith, and the case is deemed terminated.

Disposition

The Court approved the Compromise Agreement, rendered judgment in accordance therewith, enjoined the parties to comply with its terms, and deemed the case terminated.

Remember This

Memorize the rule that a compromise is a contract of reciprocal concessions to avoid or end litigation, encouraged by the courts and upheld unless contrary to law, morals, good customs, public order, or public policy. Examiners use this case to test the definition of compromise under Article 2028 and the limits on stipulations under Article 1306, especially where a labor award is settled and the case is terminated by judgment on the compromise.