G.R. No. 46613 February 26, 1990
SILLIMAN UNIVERSITY, petitioner, vs. LUCIO BENARAO, WORKMEN’S COMPENSATION COMMISSION, REGIONAL DIRECTOR OF THE DEPARTMENT OF LABOR, Region VII, and the SECRETARY OF LABOR, respondents.

FACTS

Lucio Benarao, a carpenter working on a piece-work basis for Silliman University through contractor Petronilo Nazareno, suffered a spinal cord injury on May 29, 1969, while repairing a university building. He filed a compensation claim before the Workmen’s Compensation Commission (WCC) solely against Nazareno. On April 5, 1974, the WCC awarded Benarao P3,512.51. Subsequently, on October 9, 1974, Benarao and Nazareno executed a “Memorandum of Settlement” wherein Benarao accepted P1,200.00 as full and final settlement of the award. Nazareno later appealed the award, arguing he was not liable as his contract with the university was a “labor-only” contract.
The WCC, in a decision dated July 28, 1975, set aside the original award and held Silliman University liable as the statutory employer, finding the contract with Nazareno to be a labor-only contract. Writs of execution were subsequently issued against the university. Silliman University filed an urgent motion to quash, asserting the WCC never acquired jurisdiction over it as it was never made a party to the case, received no summons, complaint, or copies of the proceedings, and had no knowledge of the case.

ISSUE

Whether the Workmen’s Compensation Commission acquired jurisdiction over Silliman University and validly rendered a decision against it.

RULING

The Supreme Court granted the petition and annulled the WCC decision. The ruling was void for two primary reasons. First, it constituted a substantial amendment of a prior final and already executed award. The original award against Nazareno became final upon his voluntary settlement with Benarao via the Memorandum of Settlement, which explicitly stated the amount was accepted as “final, complete and full settlement.” Nazareno’s subsequent appeal was therefore moot. The WCC’s second decision improperly reversed a settled matter.
Second, and fundamentally, the decision violated jurisdictional and due process principles. Jurisdiction over a party is acquired through summons or voluntary appearance. Silliman University was never impleaded as a respondent, served with process, or notified of the proceedings. The WCC shifted liability to the university without providing it any opportunity to be heard or to contest the new allegation of being the statutory employer. A judgment rendered without jurisdiction over a party is void and cannot bind that party. The Court found no need to resolve the substantive issue of employer-employee relationship, as the jurisdictional defect was fatal. The defense of failure to exhaust administrative remedies or file a motion for reconsideration was unavailing, as the order was final and the challenged act was patently illegal for lack of jurisdiction.