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WHEREFORE, the present petition is DENIED for lack

of merit.
SO ORDERED.

Ynares-Santiago (Chairperson), Chico-Nazario,

Nachura and Reyes, JJ., concur.

Petition denied.

Note.—While the issue of labor-only contracting may

involve some factual considerations, the existence of an
employer-employee relation is nonetheless a question of
law. (Filipinas [Pre-Fabricated Bldg.] Systems “FIL-
SYSTEMS,” Inc. vs. National Labor Relations Commission,
418 SCRA 404 [2003])
——o0o—— 

G.R. No. 167334. March 7, 2008.*

CATHOLIC VICARIATE, BAGUIO CITY, petitioner, vs.

HON. PATRICIA A. STO. TOMAS, Secretary of the
Department of Labor & Employment, and GEORGE
AGBUCAY, respondents.

Labor Law; Remedial Law; Jurisdictions; Estoppel; Petitioner

is barred by estoppel from raising the issue of jurisdiction.—
Assuming arguendo the absence of an employer-employee
relationship between the parties, the Secretary of Labor, invoking
Odin Security Agency v. De la Serna, 182 SCRA 472 (1990),
correctly declared that petitioner is now estopped from
questioning the jurisdiction of the Regional Director when it
actively participated in the proceedings held therein. In said case,
petitioner also submitted to the jurisdiction of the Regional
Director by taking part in the hearings before him and by
submitting a position paper. Similarly, it was

_______________

* SECOND DIVISION.

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only when the order of the Regional Director was modified did
petitioner question the former’s jurisdiction to hear and decide the
case. This Court declares that petitioner is barred by estoppel
from raising the issue of jurisdiction.
Same; Quitclaims; Not all quitclaims are per se invalid or
against public policy; Exceptions.—Not all quitclaims are per se
invalid or against public policy. A quitclaim is said to be invalid
and against public policy (1) where there is clear proof that the
waiver was wangled from an unsuspecting or gullible person, or
(2) where the terms of settlement are unconscionable on their
face. In such cases, the law will step in to annul the questionable
transaction. The second exception obtains in the case at bar.

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
  The facts are stated in the opinion of the Court.
  Agranzamendez, Liceralde, Gallardo & Associates for
petitioner.
  Joseph Sagampud, Jr., Liberato O. Ramos, Jr. and
Nicasio S. Jacob for private respondent.

TINGA, J.:

For consideration is a Petition for Review1 filed by

petitioner Catholic Vicariate of Baguio City, seeking the
annulment of the Decision2 and Resolution3 issued by the
Court of Appeals in CA-G.R. SP No. 83518.
First, the antecedents.
Petitioner contracted Kunwha Luzon Construction
(KUNWHA) to construct the retaining wall of the Baguio
Cathe-

_______________

1 Rollo, pp. 11-35.

2 Id., at pp. 38-48. Penned by Associate Justice Eugenio S. Labitoria,
and concurred in by Associate Justices Rebecca De Guia-Salvador and
Rosalinda Asuncion-Vicente.
3 Id., at pp. 50-51.

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VOL. 548, MARCH 7, 2008 33

Catholic Vicariate, Baguio City vs. Sto. Tomas

dral. KUNWHA, in turn, subcontracted CEREBA Builders

(CEREBA) to do the formworks of the church. The contract
between KUNWHA and CEREBA lasted up to the
completion of the project or on 8 September 2000.4
KUNWHA failed to pay CEREBA. Consequently, the latter
failed to pay its employees.
On 29 August 2000, respondent George Agbucay, along
with 81 other employees, lodged a complaint against
CEREBA, KUNWHA and petitioner before the DOLE-CAR
Regional Office for nonpayment of wages, special and legal
holiday premium pay. An inspection of the premises
resulted in the discovery of violations of labor standards
law, such as nonpayment of wages and holiday pay from 28
June 2000 to 5 September 2000, non-presentation of
employment records, and others.5 Petitioner, KUNWHA
and CEREBA were given five (5) days from receipt of the
notice of inspection results to rectify its violations. Despite
the notice, the parties failed to comply. A hearing was set
wherein CEREBA manifested its willingness to pay the
affected employees on the condition that KUNWHA would
pay its obligation to CEREBA. Petitioner meanwhile
manifested that the retention fee due to KUNWHA was
sufficient to pay the deficiencies due the affected
employees.
On 12 March 2001, the DOLE-CAR Regional Director
issued an Order6 holding CEREBA, KUNWHA and
petitioner jointly and severally liable to the 82 affected
workers in the amount of P1,029,952.80 or P12,560.40 for
each employee.7

_______________

4 Id., at p. 39. The Court of Appeals decision dated 28 September 2004

and the Order of the Secretary of Labor dated 23 June 2003 both indicated
that the subcontracting agreement lasted until 8 September 2000. On the
other hand, in the Order dated 19 January 2004, the completion of the
subcontracting agreement was on 18 September 2000, as manifested by
CEREBA.
5 Id., at p. 53.
6 Id., at pp. 53-59.
7 Id., at p. 59.

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34 SUPREME COURT REPORTS ANNOTATED

Catholic Vicariate, Baguio City vs. Sto. Tomas

During the pendency of its motion for reconsideration,

KUNWHA voluntarily settled the deficiencies due the 23
affected workers amounting to P84,544.00 as follows:

1. Edwin Balaoro P6,000.00

2. Jay Araneta   2,448.00

3. Renato Beado   3,128.00

4. Edgar Cortez    3,128.00
5. Cesar Cuenta    3,128.00
6. Redentor Espiritu    3,128.00
7. Abelardo Galvez    3,128.00
8. Ireneo Galvez    4,352.00
9. Jose Galvez    3,128.00
10. Roland Galvez    2,448.00
11. Rommel Galvez    3,128.00
12. Mamerto Nadela    3,128.00
13. Lito Nazareno    3,128.00
14. Orbel Nerida    2,448.00
15. Roy Padilla    3,128.00
16. Roy John Padilla    2,448.00
17. Randy Sibayan    2,448.00
18. Raymund Sibayan    2,448.00
19. Reynald Sibayan    2,448.00
20. Ronnie Villarino    3,128.00
21. Fernan Villarino    2,448.00
22. Felix Padilla 17,000.00
23. William Pitlongay   3,200.008

On 21 May 2001, the Regional Director dismissed the

complaint by reason of the said settlement. He also advised
the other employees to ventilate their claims in an
appropriate forum considering that no employer-employee
relationship exists between the parties.9

_______________

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8 Id., at p. 84.
9 Id., at p. 85.

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Catholic Vicariate, Baguio City vs. Sto. Tomas

On appeal, the Secretary of Labor reversed the ruling of

the Regional Director and held that pursuant to Articles
106 and 107 of the Labor Code, the liability of KUNWHA,
CEREBA and the Catholic Vicariate is solidary
notwithstanding the absence of an employer-employee
relationship. The Secretary of Labor ruled, however, that
there existed an employer-employee relationship between
the parties since the records show that the subcontracting
agreement was terminated only on 28 September 2000,
almost a month after the complaint was filed on 29 August
2000. The settlement with respect to the 23 workers was
declared unconscionable and the Order of the Regional
Director dated 12 March 2001 was reinstated. The
dispositive portion of the Order10 dated 23 June 2003
reads:

“WHEREFORE, premises considered, the Motion to Set Aside

Judgment/Order, herein treated as an Appeal, filed by appellant
George Agbucay is hereby GRANTED. The Order dated May 21,
2001 of the Regional Director is SET ASIDE and VACATED.
The Order dated March 21, 2001 is REINSTATED with
MODIFICATION, and CEREBA BUILDERS, KUNWHA
LUZON CONSTRUCTION and the CATHOLIC VICARIATE are
hereby ordered to pay jointly and severally, the eighty-two (82)
affected workers the amount of ONE MILLION TWENTY-NINE
THOUSAND NINE HUNDRED FIFTY-TWO & 80/100
(P1,029,952.80) Pesos. Any legitimate payments earlier made by
respondents to the twenty-three (23) complainants may be
deducted from their individual claims only upon proof of actual
receipt. Let the entire records of this case be remanded to the
Regional Office a quo for proper execution.”11

Petitioner moved for Reconsideration12 but it was denied

on 19 January 2004.13

_______________

10 Id., at pp. 92-98

11 Id., at p. 98.
12 DOLE Records, pp. 181-192.

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13 CA Rollo, pp. 38-44.

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Catholic Vicariate, Baguio City vs. Sto. Tomas

On 28 September 2004, the Court of Appeals affirmed

the order of the Secretary of Labor with the modification
that payments made in favor of the 23 workers amounting
to P84,544.00 be deducted from whatever amount still due
each of them.14
On appeal, petitioner raised three issues, namely: (1)
whether the Secretary of Labor acquired jurisdiction over
the appeal considering that this case falls within the
exception stated in Article 128(b) of the Labor Code; (2)
whether the quitclaims signed by affected employees are
valid; and (3) whether the appeal interposed by petitioner
inures to the benefit of the other affected employees.15
The appellate court held that petitioner was estopped
from questioning the jurisdiction of the Secretary of Labor,
it having attended the initial hearing and therein
manifested that it had in its possession the retention fee of
KUNWHA sufficient to answer for the deficiencies due the
affected workers. The appellate court noted that it was only
when the judgment imposed joint and several liability that
petitioner began to question the jurisdiction of the
Secretary of Labor. The appellate court further sustained
the finding of the Secretary of Labor that the settlement is
not legally acceptable as it defied public policy for being
unconscionable. Moreover, the appellate court succinctly
stated that parties who did not appeal may be benefited by
the judgment of said court insofar as it is favorable and
applicable to them.16
There is no cogent reason to disturb the assailed
judgment.
Petitioner contends that the question of jurisdiction may
be raised at any time and even on appeal. It alleges that its
participation in the hearing before the Regional Director
could not amount to estoppel because it did not have
sufficient information at that time as to the factual basis of
the presence

_______________

14 Rollo, p. 47.
15 CA Rollo, p. 11.

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16 Rollo, pp. 46-47.

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Catholic Vicariate, Baguio City vs. Sto. Tomas

or absence of jurisdiction by the Secretary of Labor or his

authorized representative.17
In resolving this jurisdictional issue, the Secretary of
Labor relied on the limitations set forth in Article 128(b)18
of the Labor Code and ruled, thus:

“It is worthy to note that as regards the power granted to

Regional Director by Article 128 of the Labor Code, as amended,
only two (2) limitations are set forth: first, where the employer
contests the findings of the labor regulations officer, and raises
issues which cannot be resolved without considering evidentiary
matters that are not verifiable in the normal course of inspection,
and second, where the employer-employee relationship no longer
exists.
xxx
Both of the above-stated limitations are wanting in this case.
Records show that, when this case was filed on August 29, 2000,
complainants were still employed with the respondent CEREBA
working for KUNWHA’s project with the Vicariate. There was no
proof that the subcontracting agreement between KUNWHA
LUZON CONSTRUCTION and CEREBA Builders was
terminated as of July 2000. The letters showing the poor
performance of CEREBA

_______________

17 Id., at p. 22.
18 Art. 128. Visitorial and enforcement power
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall
have the power to issue compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the
course of inspection. The Secretary or his duly authorized representatives shall
issue writs of execution to the appropriate authority for the enforcement of their
orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary
proofs which were not considered in the course of inspection.

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38 SUPREME COURT REPORTS ANNOTATED

Catholic Vicariate, Baguio City vs. Sto. Tomas

Builders cannot be considered as a notice of termination of the

Subcontracting Agreement for the same do not state so.
xxx
Succinctly put, since no written notice was served to
respondent CEREBA Builders terminating the Subcontracting
Agreement, the employer-employee relationship between
KUNWHA and complainants existed until the completion of the
subcontracting agreement on September 18, 2000. Considering
this, when the complainants filed this case on August 29, 2000,
the Regional Director validly acquired jurisdiction over the case.
And, jurisdiction once acquired is not lost upon the instance of the
parties but continues until the case is terminated.
xxx
It is also equally important to note that, during the initial
hearing of this case at the Regional Office, the respondents failed
to contest the findings of the Labor Employment and Enforcement
Officer. The respondents failed to present employment records
and any evidence to controvert the findings despite the reasonable
period of time afforded them. It was only when respondent
KUNWHA filed its Motion for Reconsideration from the Order
dated March 12, 2001 of the Regional Director that it submitted
documents which the Vicariate now alleged to be not verifiable in
the summary nature of the labor inspection.”19

Moreover, the issue of jurisdiction is clearly intertwined

with the existence of employer-employee relationship. It is
undisputed that the existence of an employer-employee
relationship is ultimately a question of fact.20 Thus, it can
be inferred that this petition also seeks a review of the
factual findings of the Regional Director, as affirmed by the
Secretary of Labor and the Court of Appeals. Such review
is beyond the ambit of a petition for review on certiorari.

_______________

19 Rollo, pp. 102-104.

20 Manila Water Co., Inc. v. Pena, 478 Phil. 68, 77; 434 SCRA 53, 58
(2004); Sonza v. ABS-CBN Broadcasting Corporation, G.R. No. 138051, 10
June 2004, 431 SCRA 583, 594; Fleischer Company, Inc. v. National Labor
Relations Commission, 407 Phil. 391, 399; 355 SCRA 105, 111 (2001).

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Catholic Vicariate, Baguio City vs. Sto. Tomas

Assuming arguendo the absence of an employer-

employee relationship between the parties, the Secretary of
Labor, invoking Odin Security Agency v. De la Serna,21
correctly declared that petitioner is now estopped from
questioning the jurisdiction of the Regional Director when
it actively participated in the proceedings held therein. In
said case, petitioner also submitted to the jurisdiction of
the Regional Director by taking part in the hearings before
him and by submitting a position paper. Similarly, it was
only when the order of the Regional Director was modified
did petitioner question the former’s jurisdiction to hear and
decide the case. This Court declares that petitioner is
barred by estoppel from raising the issue of jurisdiction.22
Anent the issue on the validity of the quitclaims signed
by 22 out of the 23 affected employees, petitioner avers that
they were signed voluntarily and executed under the
supervision of the Regional Director.
Not all quitclaims are per se invalid or against public
policy. A quitclaim is said to be invalid and against public
policy (1) where there is clear proof that the waiver was
wangled from an unsuspecting or gullible person, or (2)
where the terms of settlement are unconscionable on their
face. In such cases, the law will step in to annul the
questionable transaction.23 The second exception obtains in
the case at bar. As succinctly put by the Secretary of Labor:

“As to the claim that this Office failed to show why the
Quitclaims and Releases were unconscionable, despite the fact
that it was executed before the DOLE-CAR Regional Office, the
same is

_______________

21 G.R. No. 87439, 21 February 1990, 182 SCRA 472.

22 Id., at p. 479.
23 Sarocam v. Interorient Maritime Ent., Inc., G.R. No. 167813, 27 June 2006,
493 SCRA 502, 515, citing Periquet v. National Labor Relations Commission, G.R.
No. 91298, 22 June 1990, 186 SCRA 724; Maricalum Mining Corporation v. Brion,
G.R. Nos. 157696-97, 9 February 2006, 482 SCRA 87, 104.

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totally misplaced. Clear from the record is that, except for the
quitclaim signed by complainant Felix Padilla, the monetary
considerations indicated in the 22 Quitclaims and Releases were
way below the total claims of each complainants. The presence
and assistance of the representatives of the DOLE-CAR Regional
Office in the execution and consummation of the same is of no
moment. This Office, pursuant to its administrative supervision
and control over the Regional Offices and the power to review
actions and decisions of her subordinates, can exercise corrective
measures, where the circumstances warrant and to prevent
injustice.”24

Indeed, as ordered by the Regional Director, the 23

affected workers are entitled to receive P12,560.40 each or
a total of P288,889.20 for unpaid wages and special and
regular holiday premium pay.25 KUNWHA however paid
them only P84,544.00,26 less than half of what they are
entitled to as computed by the Regional Director.
Therefore, this Court is not inclined to sustain the validity
of the quitclaims although apparently they were signed
voluntarily and in the presence of the Regional Director.
Finally, petitioner asserts that the Secretary of Labor
erred in granting affirmative relief to those who did not
appeal.27 On the contrary, however, the Court of Appeals
properly affirmed the monetary award of the Secretary of
Labor to the other affected employees. While as a general
rule, a party who has not appealed is not entitled to
affirmative relief other than the ones granted in the
decision of the court below, the Court of Appeals is imbued
with sufficient authority and discretion to review matters
not otherwise assigned as errors on appeal, if it finds that
their consideration is necessary in arriving at a complete
and just resolution of the case or to serve the inter-

_______________

24 Rollo, p. 105.
25 Id., at p. 57.
26 Supra note 5.
27 Rollo, p. 32.

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ests of justice or to avoid dispensing piecemeal justice.28

The doctrine in Maternity Children’s Hospital v. Secretary
of Labor29 is instructive. In said case, the award is
extended to all employees of the establishment concerned,
including those who did not sign the complaint. This Court
explained, thus:

“The justification for the award to this group of employees who

were not signatories to the complaint is that the visitorial and
enforcement powers given to the Secretary of Labor is relevant to,
and exercisable over establishments, not over the individual
members/
employees, because what is sought to be achieved by its exercise is
the observance of, and/or compliance by, such firm/establishment
with the labor standards regulations. Necessarily, in case of an
award resulting from a violation of labor legislation by such
establishment, the entire members/employees should benefit
therefrom.”30

WHEREFORE, finding no reversible error in the

questioned Decision of the Court of Appeals, the instant
petition for review is DENIED.
SO ORDERED.

Carpio (Actg. Chairman), Carpio-Morales, Azcuna**

and Velasco, Jr., JJ., concur.

Petition denied.

Note.—Although a party cannot waive jurisdictional

issues and may raise them at any stage of the proceedings,
estoppel may bar a party from raising such issues.
(Navarosa vs. Commission on Elections, 411 SCRA 369
[2003])
——o0o——

_______________

28 St. Michael’s Institute v. Santos, 422 Phil. 723, 735; 371 SCRA 383,
394 (2001).
29 G.R. No. 78909, 30 June 1989, 174 SCRA 632.
30 Id., at pp. 649-650.
** As replacement of Justice Leonardo A. Quisumbing who is on official
leave per Administrative Circular No. 84-2007.

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