Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION
G.R. No. L-39387 June 29, 1982
PAMPANGA SUGAR DEVELOPMENT CO., INC., petitioner, vs.
COURT OF INDUSTRIAL RELATIONS AND SUGAR WORKERS
ASSOCIATION, respondents.

MAKASIAR, J.:
Petitioner Pampanga Sugar Development Company, Inc. seeks the
reversal of the order dated June 6, 1974 of respondent Court of
Industrial Relations awarding to respondent Sugar Workers
Association's (Union) counsel attorney's fees equivalent to 20% of the
judgment in CIR Case No. 4264- ULP and ordering the lower court's
Examining Division to compute the wage and fringe benefits
differentials due the 28 individual workers who did not execute
quitclaims as well as attorney's fees corresponding to 20% of the
benefits due to 53 workers who entered into agreements waiving their
rights and benefits under the decision dated December 4, 1972 in the
aforecited case; also, the setting aside of the CIR resolution of
September 3, 1974 denying petitioner's motion for reconsideration of
the questioned order (pp. 15 & 57, rec.).
For a better appreciation of this case, certain prefatory facts must be
recalled. Sometime in February, 1956, the workers' affiliates of
respondent Union staged a strike against petitioner company. This
labor dispute was certified by the President to the Court of Industrial
Relations which was docketed as Case No. 13-IPA. After six years,
the said Court issued an order on November 8, 1962 directing
petitioner company to reinstate the members of respondent union. On
March 12, 1963 some 88 union members were thus reinstated by
petitioner. However, petitioner discriminated against the reemployed
workers with respect to wage rates, off-season pay, cost of living
allowance, milling bonus and Christmas bonus by depriving them of
aforesaid benefits or by granting to some members benefits lesser
than those given to members of the Pasudeco Workers Union,

another labor group in the service of petitioner. By reason of such

denial and/or grant of lower benefits to respondent's members
because of their union affiliation and union activities, respondent filed
with the CIR a complaint dated September 10, 1964 for unfair labor
practice against petitioner which case was docketed as Case No.
4264-ULP.
On December 4, 1972, the CIR handed down a decision adjudging
herein petitioner guilty of unfair labor practice acts as charged and
finding the same to have been committed, and thereby directing
petitioner to cease and desist from further committing the said unfair
labor practice acts and directing petitioner to pay wage differentials to
certain workers and fringe benefits as would be found due and
payable to them and to readmitted seasonal and casual members of
respondent union totalling 88 with the exception of 7 workers.
In a resolution dated May 28, 1973, the CIR denied petitioner's
motion for reconsideration of aforesaid decision filed on December
14, 1972. Petitioner appealed the above decision and resolution to
this Court on June 15, 1973 praying in its petition for the nullification
of said decision and motion for being contrary to law, and for the
rendition of a new judgment dismissing CIR Case No. 4264-ULP.
This Court, in its resolution of July 31, 1973, denied the said petition
for review (docketed as G.R. No. L-36994) for lack of merit. Petitioner
then moved for reconsideration of aforesaid denial which was denied
on October 4, 1973 for lack of merit. Said resolution denying the
motion for reconsideration thus became final and executory on
October 12, 1973.
With the finality of the December 4, 1972 decision having been
settled, respondent Union filed with the CIR a motion for computation
of final judgment and a petition for attorney's lien both dated October
17, 1973 (pp. 47 & 50, rec.).
Petitioner company filed its answer to motion for computation of final
judgment and the petition for attorney's lien under date of November
20, 1973 (p. 52, rec.).
The CIR, acting on the aforesaid motions of respondent Union,
issued its order of June 6, 1974 approving and granting to

respondent's counsel, Atty. Ignacio Lacsina, attorney's fees

equivalent to 20% of the total amount of final judgment or whatever
recovery or settlement is made and directing its Examining Division to
compute the wage and fringe benefits differentials due the 28
individual workers who did not waive or quitclaim their rights
established by the decision of December 4, 1972 as well as the
attorney's fees equivalent to 20% of the total wage and fringe benefits
differentials due the fifty-three (53) individual workers who executed
agreements with the company waiving and quitclaiming their rights,
benefits and privileges under the aforesaid decision (pp. 15 & 57,
rec.).
Petitioner moved for reconsideration of aforecited order on June 26,
1974 and on July 5, 1974, the arguments supporting said motion for
reconsideration followed (pp. 63 & 65, rec.).
Respondent Union then filed its motion to strike out the motion for
reconsideration dated July 23, 1974 (p. 72, rec.). In a resolution of
September 3, 1974, respondent lower court denied petitioner's
motion for reconsideration.
Thus, this appeal from the subject order and resolution of the CIR.
Petitioner alleges the following assignment of errors:
1. The Court of Industrial Relations erred in awarding attorney's fees
to the union's counsel equivalent to 20% of the total amount of final
judgment or whatever recovery or settlement is made thereunder;
because, aside from being inequitable, exorbitant, excessive and
unconscionable, the same is without legal basis.
2. The Court of Industrial Relations erred in ordering the Chief of its
examining division or his duly authorized representative to examine
the payrolls, vouchers, books of account and other pertinent
documents of petitioner, and to compute the wage and fringe-benefits
differentials allegedly due the members of respondent Union because
such examination and computation have become academic.
3. The Court of Industrial Relations erred in not denying or dismissing
the two motions filed by respondent union on October 18, 1973
praying therein that the union's counsel be awarded attorney's fees

and that an order be issued directing the examining division of the

court to compute the wage and fringe benefits differentials allegedly
due the members of the union under the decision of December 4,
1972.
Respondents, however, contend that
1. The issue of quitclaims is now res judicata;
2. The CIR finding that 81 members of respondent union are entitled
to adjudged benefits is no longer alterable after decision has become
final;
3. The CIR power to adjust unfair labor practices is unaffected by
individual settlements;
4. The rights of labor are unwaivable; quitclaims null and void; and
5. The question regarding alleged unreasonableness of award of
attorney's fees, not raised before Court a quo, is barred on appeal.
After a careful evaluation of the petitioners' and respondents'
pleadings, this Court, finds the allegations of petitioner to be without
merit.
On the first assignment of error, paragraph (a), the petitioner failed to
raise the issue before the trial court. This Court notes that petitioner's
answer to the motion for computation of final judgment and to petition
for attorney's lien filed by the respondent in the trial court did not raise
the foregoing issue. It is a well-settled doctrine in this jurisdiction that
issues not raised in the trial court may not be raised on appeal.
Otherwise, there will be no end to litigations thus defeating the ends
of justice.
Nevertheless, this Court finds the allegations to be devoid of merit.
Petitioner's contention that there is no basis for respondent's petition
for attorney's lien filed with the trial court containing allegations
relative to attorney's fees as agreed upon between him and his client,
the complainant Sugar Workers' Association, is untenable. The
written conformity of the President of said Sugar Workers Association
on behalf thereof confirms the existence of such an agreement on

attorney's fees and constitutes an irrefutable evidence of such

agreement. The trial court, therefore, had sufficient evidence upon
which it based its decision. The petitioner did not contest the
allegations contained in the respondent's petition for attorney's lien
before the trial court. This constitutes an implied admission thereof.
Moreover, it is evident from the tenor of the trial court's order issued
on June 6, 1974 that the said court carefully evaluated the
respondent's petition for attorney's lien and even reduced the
percentage from 25 IC to 20 %.
On the first assignment of error, paragraph (b), this Court likewise
finds the same to be without merit. This issue has already been
resolved by this Court when the petitioner filed its first petition for
certiorari (G.R. No. L- 36994) seeking nullification of the trial court's
judgment on the same issue. Petitioner's allegations were rejected by
this Court in said case. It may not now be repeated and raised on
appeal before this Court, the same being res judicata.
Be that as it may, the allegations of petitioner to the effect that by
reason of the quitclaims there is nothing upon which the attorney's
lien attaches, is not valid. This Court finds the quitclaims not valid.
Firstly, said quitclaims were secured on December 27, 1972 by
petitioner after it lost its case in the lower court when the latter
promulgated its decision on the case on December 4, 1972.
Obviously in its desire to deny what is due the sugar workers
concerned and frustrate the decision of the lower court awarding
benefits to them, it used its moral ascendancy as employer over said
workers to secure said quitclaims. Predicated on said quitclaims,
petitioner filed a petition for certiorari before this Court but the same
was denied by the Court on July 31, 1973 and October 4, 1973.
Petitioner now has the audacity to return before this Court still
invoking said quitclaims, which We again reject.
Secondly, while rights may be waived, the same must not be contrary
to law, public order, public policy, morals or good customs or
prejudicial to a third person with a right recognized by law (Art. 6,
New Civil Code). The quitclaim agreements contain the following
provisions in paragraph I 1, No. 3, thereof:
3. Nothing herein stipulated shall be construed as an admission

and/or recognition by the Party of The Second Part of its failure

refusal and/or omission as employer, to faithfully comply with the
pertinent laws, rules and regulations and/or agreements, nor its
liability therefor and thereunder.
Needless to state, the foregoing provisions are contrary to law, It
exempts the petitioner from any legal liability. The above- quoted
provision renders the quitclaim agreements void ab initio in their
entirety since they obligated the workers concerned to forego their
benefits, while at the same time, exempted the petitioner from any
liability that it may choose to reject. This runs counter to Article 22 of
the New Civil Code which provides that no one shall be unjustly
enriched at the expense of another.
Thirdly, the alleged quitclaim agreements are contrary to public
policy. Once a civil action is filed in court, the cause of action may not
be the subject of compromise unless the same is by leave of the
court concerned. Otherwise, this will render the entire judicial system
irrelevant to the prejudice of the national interest. Parties to litigations
cannot be allowed to trifle with the judicial system by coming to court
and later on agreeing to a compromise without the knowledge and
approval of the court. This converts the judiciary into a mere tool of
party-litigants who act according to their whims and caprices. This is
more so when the court has already rendered its decision on the
issues submitted.
In the case at bar, the lower court has already rendered a decision on
the issues presented before the alleged quitclaims agreements were
made. The quitclaim agreements were secured by petitioner while it
filed a petition for certiorari before this Court for a review of the lower
court's decision. The quiclaim agreements taken together with the
petitioner's petition for certiorari of the trial court's decision clearly and
unmistakably shows the bad faith of the petitioner and its outright
refusal to comply with its legal obligations. And now it has the
temerity to attempt to use this Court as its instrument for the purpose.
This Court rejects the contention of petitioner to the effect that the lien
of an attorney on the judgment or decree for the payment of money
and the preference thereof which he has secured in favor of his client
takes legal effect only from and after, but not before notice of said lien

has been entered in the record and served on the adverse party,
citing the cases of Menzi and Co. vs. Bastida (63 Phil. 16) and
Macondray & Co. vs. Jose (66 Phil. 590) in support thereof.
This Court finds the petitioner's contentions and citations applicable
only when the case has already been decided with finality. In the case
at bar, the original case was decided with finality only after this Court
denied the petitioner's motion for reconsideration of this Court's
denial of its petition for certiorari on the lower court's decision.
This Court is appalled by the attempt of petitioner to mislead it by
alleging that the lower court recognized the validity and effectivity of
the 53 individual agreements when it declared allegedly that "rights
may be waived. " The records show that the lower court qualified its
statement to the effect that the waiver must not be contrary to law,
public order, public policy, morals or good customs, or prejudicial to a
third person with a right recognized by law citing Article 6 of the New
Civil Code. This attempt by petitioner casts a serious doubt on the
integrity and good faith not only of the petitioner but also of its
counsel.
This Court rejects the allegation of petitioner to the effect that the 53
agreements gave substance to the policy of the Industrial Peace Act
of encouraging the parties to make all reasonable efforts to settle
their differences by mutual agreement, citing the case of Filomena
Dionela, et al. vs. CIR, et al. (L-18334, August 31, 1963).
Petitioner's contention and the case cited in support thereof apply
only where there is good faith on the part of the party litigants. In the
case at bar, petitioner acted with evident bad faith and malice.
Petitioner secured the 53 quitclaim agreements individually with the
53 sugar workers without the intervention of respondent's lawyer who
was representing them before the lower court. This subterfuge is
tantamount to a sabotage of the interest of respondent association.
Needless to say, the means employed by petitioner in dealing with
the workers individually, instead of collectively through respondent
and its counsel, violates good morals as they undermine the unity of
respondent union and fuels industrial disputes, contrary to the
declared policy in the Industrial Peace Act.

This Court likewise rejects petitioner's allegation that the 53 quitclaim

agreements were in the nature of a compromise citing the case of
Republic vs. Estenzo, et al., (L-24656, September 25, 1968, 25
SCRA 122) and Articles 2028 and 2040 of the New Civil Code.
Petitioner's allegations and citations apply only to compromises
between the party-litigants done in good faith. In the case at bar,
there was no compromise between the petitioner and the respondent
Sugar Workers Association. In respect of the 53 quitclaims, these are
not compromise agreements between the petitioner and respondent
union. They are separate documents of renunciation of individual
rights. Compromise involves the mutual renunciation of rights by both
parties on a parity basis. The quitclaims, however, bind the workers to
renounce their rights while the petitioner not only does not renounce
anything but also acquires exemption from any legal liability in
connection therewith.
On the First Assignment of Error, Paragraph (c), the petitioner
anchors his allegations on the technical procedural requirements of
Section 37, Rule 138 of the New Rules of Court. This Court, however,
finds petitioner's allegation without merit. Said provision of the Rules
of Court is meant to protect the interest of an attorney's client and the
adverse party by seeing to it that they are given the opportunity to
contest the creation of the attorney's lien. It will be noted from the
records that the client Sugar Workers Union was not only notified but
also affixed its conformity to the respondents' motion for attorney's
lien. With respect to the adverse party, the petitioner in this case, said
adverse party's interest was amply protected by the lower court when
the latter admitted petitioner's answer to respondent's motion for
computation of final judgment and to respondent's counsel's petition
for attorney's lien. Petitioner did not raise the aforesaid technicality in
its answer before the lower court. It cannot now raise it for the first
time on appeal.
On the First Assignment of Error, Paragraph (d), this Court finds
petitioner's allegations to the effect that the attorney's fees awarded
are inequitable, exorbitant, excessive and unconscionable, citing in
the process the case of Meralco Workers' Union vs. Gaerlan (32
SCRA 419), completely without basis nor merit.

Again, petitioner did not raise this issue in the lower court. It cannot
now raise said issue for the first time on appeal before this Court.
Nevertheless, petitioner has failed to prove any of its allegations.
Hence, this Court finds the same worthless. The Meralco case does
not apply in this case for the reason that the facts and circusmtances
are entirely different.
On the Second Assignment of Error, this Court finds petitioner's
allegation to the effect that the lower court erred in ordering the
computation of judgment on the ground that by reason of the
quitclaim agreements the computation of judgment has become
academic, to be without merit and grossly inane.
The allegations of petitioner are premised on its previous allegations
regarding the quitclaims. This Court has earlier stated that the
quitclaim agreements are void ab initio. The lower court was correct
in directing the computation of judgment, there being a basis therefor.
On the Third Assignment of Error, this Court likewise finds petitioner's
allegations which are based on its allegations in support of the first
and second assignments of errors, without merit, as heretofore
discussed.
WHEREFORE, THE PETITION IS HEREBY DISMISSED AND
RESPONDENT CIR (NOW THE NLRC) IS HEREBY DIRECTED TO
IMPLEMENT ITS ORDER DATED JUNE 6,1974.
COSTS AGAINST PETITIONER.
SO ORDERED.
Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.
Teehankee (Chairman), J., concur in the result.
Melencio-Herrera, J., is on leave.