G.R. No. L-32915 September 30, 1971
JOSE MONTEVERDE, CRISANTO PRINCIPE, WILFREDO PRINCIPE, PETER BROWN, RAFAEL MARQUEZ and MARIO SARIAO, petitioners, vs. THE HONORABLE COURT OF INDUSTRIAL RELATIONS, FILIPINAS BISCUIT COMPANY and JAMES HUANG, respondents.

FACTS

The petitioners, employees of Filipinas Biscuit Company (FIBISCO), filed an unfair labor practice case after their dismissal for union activities. The Court of Industrial Relations (CIR) ruled in their favor on March 21, 1968, ordering their reinstatement with back wages. While FIBISCO’s motion for reconsideration was pending, the petitioners’ counsel, Atty. Juan G. Sison, Jr., filed a motion to dismiss the case “in toto and with prejudice,” stating his clients were no longer interested in reinstatement as they had found other substantial employment. Based solely on this motion, the CIR en banc issued a resolution on August 14, 1968, dismissing the case and declaring it terminated.
Subsequently, the petitioners, unable to locate Atty. Sison to execute the favorable decision, engaged new counsel. They filed a petition for execution, denying they had authorized Atty. Sison to compromise or dismiss their case. The CIR denied their motion for execution and their subsequent motion for reconsideration, prompting this petition.

ISSUE

Whether the Court of Industrial Relations acted correctly in dismissing the unfair labor practice case based solely on the motion of the petitioners’ counsel without inquiring into his authority to compromise the litigation.

RULING

The Supreme Court ruled that the CIR committed a reversible error. The legal logic is anchored on a fundamental principle of legal agency and professional responsibility. Under Section 23, Rule 138 of the Revised Rules of Court, a lawyer cannot, without special authority, compromise a client’s litigation or receive anything in discharge of a client’s claim except the full amount in cash. The authority to settle or dismiss a case, which extinguishes a client’s rights, cannot be presumed from the general retainer; it must be specifically conferred.
The CIR’s dismissal was invalid because it failed to conduct any inquiry into whether Atty. Sison possessed the requisite special authority from his clients. The record, as noted in a dissenting CIR opinion, contained no admission from the petitioners in open court authorizing such a settlement. By dismissing the case based solely on the counsel’s unilateral motion, the CIR deprived the petitioners of their vested rights under the final decision without due process. Since the petitioners expressly denied authorizing the compromise, any alleged settlement was void. Consequently, the Supreme Court set aside the CIR’s dismissal resolution and reinstated its March 21, 1968 decision. To avoid further delay, the Court, applying the precedent in Mercury Drug Co. vs. CIR, fixed the back wages at a just and reasonable amount of three years without qualification or deduction, and ordered immediate execution.