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Aris Philippines permanently ceased operations on 9 October 1995 displacing 5,984 rank-and-file employees. On 26 October 1995, FAPI was incorporated prompting former Aris employees to file a case for illegal dismissal on the allegations that FAPI was a continuing business of Aris. Sarah Lee Corporation (SLC), Sarah Lee Philippines (SLP) and Cesar Cruz were impleaded as defendants being major stockholders of FAPI and officers of Aris, respectively. On 30 October 2004, the Labor Arbiter found the dismissal of 5,984 Aris employees illegal and awarded them monetary benefits amounting to P3,453,664,710.86. The judgment award is composed of separation pay of one month for every year of service, back wages, moral and exemplary damages and attorney's fees. The Corporations filed a Notice of Appeal with Motion to Reduce Appeal Bond. They posted a P4.5 Million bond. The NLRC granted the reduction of the appeal bond and ordered the Corporations to post an additional P4.5 Million bond. The 5,984 former Aris employees, represented by Emilinda Macatlang (Macatlang petition), filed a petition for review before the Court of Appeals insisting that the appeal was not perfected due to failure of the Corporations to post the correct amount of the bond which is equivalent to the judgment award. While the case was pending before the appellate court, the NLRC prematurely issued an order setting aside the decision of the Labor Arbiter for being procedurally infirmed.
The Court of Appeals, on 26 March 2007, ordered the Corporations to post an additional appeal bond of P1 Billion PETITIONERS' CONTENTION: That by the filing of the motion to reduce the bond and the positing of the bond of Php 4.5m, roughly equivalent to the 10% of the original judgment award is enough to perfect an appeal. That the Confession of Judgement submitted by the Petitioners that is only signed by some of the aggrieved workers instead of the 5,984 illegally dismissed employees and only an amount of P342,284,800.00 is enough as a substitute for a valid compromise agreement that will dismiss the cases in dispute. RESPONDENTS' CONTENTIONS: That the appeal bond made by Petitioners are not enough to perfect an appeal due to its amount being below the directed amount given by the Courts That the Confession of Judgement submitted by Petitions are not enough to satisfy the claims of Respondents for being grossly inadequate to satisfy their claims and that they lack all of the signatures and/or consent of all the 5,984 illegally dismissed employees running counter to the nature of a compromise agreement.
Whether the Confession of Judgement can be accepted as a valid compromise agreement between the parties?
NO. The Confession of Judgement cannot be accepted as a valid compromise agreement. A confession of judgment is an acknowledgment that a debt is justly due and cuts off all defenses and right of appeal. It is used as a shortcut to a judgment in a case where the defendant concedes liability. It is seen as the written authority of the debtor and a direction for entry of judgment against the debtor. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. It is an agreement between two or more persons, who, for preventing or putting an end to a lawsuit, adjust their difficulties by mutual consent in the manner which they agree on, and which every one of them prefers to the hope of gaining, balanced by the danger of losing.
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. Article 273 of the Labor Code of the Philippines authorizes compromise agreements voluntarily agreed upon by the parties, in conformity with the basic policy of the State "to promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes.” 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.
A review of the compromise agreement shows a gross disparity between the amount offered by the Corporations compared to the judgment award. The judgment award is P3,453,664,710.86 or each employee is slated to receive P577,149.85. On the other hand, the P342,284,800.00 compromise is to be distributed among 5,984 employees which would translate to only P57,200.00 per employee. From this amount, P8,580.00 as attorney's fees will be deducted, leaving each employee with a measly P48,620.00. In fact, the compromised amount roughly comprises only 10% of the judgment award.
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