A.C. No. 7421 - Venterez vs. Cosme

On March 13, 1950, employees of the Katipunan Labor Union employed at Caltex (Philippines) Inc. initiated a strike against the company’s Cebu offices.
The dispute was referred to the Court of Industrial Relations and docketed as Case No. 430-V.
Through mediation by Judge Arsenio Roldan and a series of conferences, the parties reached an amicable settlement.

The settlement was reduced to writing and approved by the court on July 28, 1950.
Key provisions included:

No dismissal, suspension, or lay-off of employees without the court’s permission during the pendency of the case.
Prior notice of three days and an opportunity to be heard by the union before any action (dismissal, lay-off, suspension) after the case’s termination.
Provisions for suspension with reinstatement and back pay if a laborer is exonerated.
Immediate suspension by the company upon a criminal commission, with reinstatement and back pay if the laborer is found not guilty.

On July 29, 1955, Caltex (Philippines) Inc. filed a notice with the industrial court to terminate the effectiveness of the approved settlement pursuant to Section 17 of Commonwealth Act No. 103, as amended.
On August 11, 1955, the Katipunan Labor Union filed an incidental petition for the reinstatement of its president, Avelino Morales, claiming he was dismissed without proper investigation and in direct violation of the settlement’s provisions.

The Court of Industrial Relations dismissed the petition for lack of jurisdiction on the ground that the main case was terminated and no other dispute was pending there.
The union elevated the matter to the Supreme Court through a petition for review.
On May 20, 1957, the Supreme Court held that the amicable settlement was in the nature of a contract, thereby binding both parties. It emphasized that unilateral escape from contractual obligations was not allowed unless there was mutual consent or causes sufficiently recognized by a competent tribunal.
The Supreme Court set aside the dismissal order of the Industrial Court, directing further proceedings.

On February 10, 1958, Caltex (Philippines) Inc. commenced an action before the Court of First Instance of Manila seeking to annul the settlement on the ground of a mutual mistake regarding the legal effect of the settlement (i.e., that it was merely terminable pursuant to Section 17 of Commonwealth Act No. 103, not a binding contract).
The union moved to dismiss the complaint, asserting that the matter fell under the exclusive jurisdiction of the Court of Industrial Relations, citing the binding nature of the settlement as affirmed by the Supreme Court and the doctrine of res judicata.
The lower court declined to take cognizance of the present case, emphasizing adherence to the Supreme Court’s ruling and the proper forum for disputes regarding the settlement contract.

Whether the present action should be entertained by the Court of First Instance of Manila or falls under the exclusive jurisdiction of the Court of Industrial Relations.

Whether the settlement, approved by the industrial court and treated as a contract under the Civil Code, binds both parties and precludes unilateral termination.
Whether the union’s petition for reinstatement under the settlement should remain with the industrial court.

Whether the company’s claim of a mutual mistake as to the legal effect of the settlement (mistakenly treating it as merely terminable under Section 17) is a valid ground to annul the contract.
Whether a mistake of law, rather than fact, may vitiate consent to such a settlement agreement.