Kanlaon Construction Enterprises Co., Inc. v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Private respondents, hired as laborers by petitioner Kanlaon Construction Enterprises Co., Inc. for a project in Iligan City, filed separate complaints in 1990 claiming underpayment of wages and non-payment of thirteenth-month pay. They alleged that petitioner started terminating their services as the project neared completion in 1989. Procedural History: Summonses were served on petitioner through Engineer Paulino Estacio, who, along with Engineer Mario Dulatre, supervised the project. During preliminary conferences before Labor Arbiters Siao and Palangan, Engineer Estacio allegedly admitted petitioner's liability and agreed to pay the claims. Based on this, petitioner allegedly waived its right to file a position paper. When Estacio failed to pay on the agreed date, the Labor Arbiters issued orders granting the complaints, directing petitioner to pay the claims, and ordering the computation thereof. Petitioner appealed to the National Labor Relations Commission (NLRC), alleging denial of due process and lack of authority of Engineers Estacio and Dulatre to represent and bind petitioner. The NLRC affirmed the Labor Arbiters' orders. The Petition: Petitioner filed a petition for certiorari with the Supreme Court, seeking to annul the NLRC decision, arguing that it was rendered without jurisdiction and in grave abuse of discretion. Petitioner contended that it was deprived of due process, that the engineers and their counsel lacked authority to represent it, and that the decisions were based on unsubstantiated evidence.
Issue(s)
Whether the service of summons on Engineer Estacio was valid. Whether Engineers Estacio and Dulatre, as non-lawyers, had the authority to appear and bind petitioner in the proceedings before the labor arbiters. Whether Atty. Arthur Abundiente had the authority to represent petitioner before the NLRC. Whether Engineer Estacio's alleged promise to pay constituted a binding compromise agreement. Whether the labor arbiters and the NLRC violated petitioner's right to due process by rendering decisions without trial on the merits and without requiring the submission of position papers.
Ruling
The petition is granted. The decision of the National Labor Relations Commission is annulled and set aside, and the case is remanded to the Regional Arbitration Branch, Iligan City, for further proceedings.
Ratio Decidendi
On the validity of service of summons: The Court held that summons was validly served on Engineer Estacio. As the manager and supervisor of the construction project in Iligan City, he was deemed an agent of petitioner with sufficient responsibility and discretion to understand the importance of the legal papers served on him and to relay them to the proper officers of the corporation. This aligns with the rule that service upon a domestic corporation must be made upon its officers, such as its manager or agent. On the authority of non-lawyer representatives: The Court found that while Engineers Estacio and Dulatre could appear as parties to the case, their appearance on behalf of petitioner required written proof of authorization, which was absent. The Labor Code and NLRC Rules allow non-lawyers to appear only under specific exceptions, and representing a corporation in such capacity necessitates written authorization. The arbiters should have ascertained this authority, especially since the engineers were named co-respondents. On the authority of Atty. Abundiente: The Court noted that Atty. Abundiente's appearance did not cure the defect, as the appeal brief he filed was not properly verified by petitioner. Furthermore, the NLRC dismissed the appeal without delving into the merits of the authority issue, relying instead on service of notices and estoppel. On the binding effect of Engineer Estacio's promise: The Court ruled that a promise to pay, made by a representative, constitutes an offer to compromise and requires a special power of attorney or express consent from the principal to be binding. Such authority to compromise cannot be presumed and must be duly established by evidence, as explicitly stated in the NLRC Rules of Procedure. An offer to compromise is not an admission of liability and is not admissible in evidence against the offeror, to encourage settlement of disputes. On the violation of due process: The Court found that the labor arbiters gravely abused their discretion by rendering decisions without trial on the merits and without requiring the submission of position papers after the alleged amicable settlement failed. This violated petitioner's right to due process. The arbiters should have ordered the parties to file position papers, as mandated by the NLRC Rules, to allow parties to substantiate their claims and defenses, even if the arbiters are not strictly bound by technical rules of evidence.
Main Doctrine
A promise to pay, made by a non-lawyer representative during a preliminary conference, which amounts to an offer to compromise, requires a special power of attorney or express consent from the principal to be binding. Such authority cannot be presumed and must be duly established by evidence. Furthermore, labor arbiters must not dispense with the requirement of submitting position papers, as this violates the fundamental right to due process, even if they are not strictly bound by technical rules of evidence and procedure.