G.R. No. L-37414 October 26, 1973
SERAFIN CATAGUE, et al., and FRATERNAL LABOR ORGANIZATION-ALU (FLO-ALU), petitioners, vs. THE HONORABLE JUDGE OSTERVALDO Z. EMILIA, and the BINALBAGAN-ISABELA SUGAR COMPANY, INC. (BISCOM), respondents.

FACTS

The petitioners, twenty-nine workers of respondent Binalbagan-Isabela Sugar Co., Inc. (BISCOM), were among forty plaintiffs who filed a complaint for payment of termination pay under Republic Act No. 1052, as amended (Termination Pay Act), and other benefits. They alleged dismissal without pay in May 1971. Their case was handled by Atty. Zoilo V. de la Cruz, Jr., who was also the president of their union. An amicable settlement was submitted to the Court of First Instance, presided by respondent Judge, wherein BISCOM agreed to pay a total gross amount of P28,054.26 to the forty plaintiffs. After deductions for various accounts and attorney’s fees, the net amount distributed to the petitioners was P25,550.00. The settlement was approved by the court in a decision dated January 26, 1973.
Subsequently, the twenty-nine petitioners, now represented by new counsel, filed motions for reconsideration. They contended that the amounts received under the settlement were grossly deficient, representing only about one-fifth to one-seventh of the termination pay legally due under the Termination Pay Act based on their respective lengths of service. They argued the settlement was null and void under Section 2 of the Act, which voids any contract contravening the statutory benefits. The respondent judge summarily denied their motions for reconsideration.

ISSUE

Whether the respondent judge committed grave abuse of discretion in denying the petitioners’ motions for reconsideration without conducting a hearing to determine the validity of the amicable settlement in light of the alleged violation of the Termination Pay Act.

RULING

Yes. The Supreme Court ruled that the respondent judge acted arbitrarily and with grave abuse of discretion. The Court emphasized that the petitioners’ motions squarely raised a fundamental factual and legal question: the validity of the amicable settlement. Section 2 of the Termination Pay Act expressly declares any contract or agreement contrary to the statutory benefits as null and void. By alleging that the settlement paid them amounts far less than those mandated by law, the petitioners effectively challenged its validity. The respondent court had a duty to inquire into this challenge and receive evidence on the matter. Its summary denial of the motions, based merely on the settlement’s text, was a refusal to exercise its jurisdiction.
The Court rejected the argument that the petitioners were estopped by their acceptance of the payments. Citing Dioquino v. Laurente, it held that employer and employee do not stand on equal footing; an employee’s acceptance of money under dire financial necessity constitutes adherence, not a voluntary waiver of rights. The petitioners’ immediate act of filing the motions demonstrated they did not relent on their claim. Therefore, they were entitled to a full hearing to present evidence on the actual computation of their termination benefits under the law versus the settlement amounts. The order denying reconsideration was set aside. The case was remanded to the respondent judge with instructions to conduct hearings, receive evidence from both parties, and resolve the motions in accordance with the governing principles.