Title
Supreme Court
Chiquita Brands, Inc. vs. Omelio
Case
G.R. No. 189102
Decision Date
Jun 7, 2017
Banana plantation workers sued for damages due to DBCP exposure; settlement approved, but writs of execution altered terms, leading to Supreme Court annulment for grave abuse of discretion.

Case Summary (G.R. No. 156819)

Petitioners

Chiquita Brands, Inc. and Chiquita Brands International, Inc. seek certiorari relief against a series of writs and orders enforcing a judicially approved worldwide compromise agreement in favor of thousands of banana‐plantation workers allegedly injured by exposure to the pesticide DBCP.

Respondents

• Regional Trial Court of Davao City, Branch 14 (Judge George E. Omelio)
• Sheriff Roberto C. Esguerra
• 1,842 Filipino claimants in Civil Case No. 95-45

Key Dates

• August 31, 1993: Banana workers file U.S. class actions; later dismissed for forum non conveniens
• May 3, 1996: Filipino claimants file Civil Case No. 95-45 in Panabo City
• December 20, 2002: RTC Panabo approves compromise and dismisses case
• April 23, 2003: Original writ of execution issued by RTC Panabo
• June 30, 2003: RTC Panabo suspends writ pending proceedings in U.S.
• December 14, 2006: RTC Panabo lifts suspension as to Chiquita and Del Monte
• February 2008: Case transferred to RTC Davao City, Branch 14
• July 10, 2009; August 11 & 12, 2009: RTC Davao issues orders amending writs to include subsidiaries and impose solidary liability
• August 26, 2009: Petition for Certiorari filed in the Supreme Court
• June 7, 2017: Supreme Court decision

Applicable Law

• 1987 Philippine Constitution
• Rules of Court, Rule 65 (Certiorari), Rule 135 (Court’s auxiliary powers)
• Civil Code articles on compromise (Arts. 2028–2037) and solidary obligations (Art. 1207)

Background of the DBCP Litigation

Thousands of plantation workers worldwide sued eleven multinational corporations in U.S. courts for injuries from DBCP exposure. The actions were dismissed on forum non conveniens grounds, directing claimants to their home jurisdictions. In 1996, 1,843 Filipino workers filed Civil Case No. 95-45 in Panabo City against the same defendants.

Judicial Approval of the Worldwide Compromise

Before pre-trial, the parties executed a “Compromise Settlement, Indemnity, and Hold Harmless Agreement” under Texas law. Key terms included:
• Escrow deposit of a confidential settlement sum within ten business days of signed agreement
• Administration of escrow and distribution of individual shares by a designated mediator (Mills)
• Execution of individual releases by claimants before counsel obtains and delivers settlement checks
• Allocation of interest to fees and potential refund to settling defendants after one year
• Releases enforceable in various jurisdictions

RTC Panabo approved the compromise by judgment on compromise in December 2002 and dismissed the case.

Dismissal and Initial Execution Proceedings

Shortly after dismissal, claimants, now under new counsel, moved for execution on the ground that the compromise required court enforcement. Petitioners argued mootness, asserting full compliance by depositing funds into escrow. RTC Panabo held that escrow deposit alone was insufficient proof of compliance and issued a writ on April 23, 2003 commanding collection directly from settling defendants of specified settlement amounts per plaintiff.

Provisional Proceedings Abroad and Suspension of Execution

Defendants sought to authenticate release documents stored in Houston, Texas, by taking evidence before Judge Grageda at the Philippine Consulate in San Francisco (Aug–Sep 2003). Claimants protested lack of jurisdiction. Judge Grageda nonetheless admitted photocopies as authentic—a process later held administratively improper, resulting in his suspension for six months.

Omnibus Order of December 14, 2006

Upon defendants’ motion, RTC Panabo:
• Granted Dow and Occidental’s motion to quash the writ (noting valid compromise compliance)
• Denied inclusion of unimpleaded subsidiaries in the writ
• Lifted suspension and ordered execution against Chiquita and Del Monte

Transfer to RTC Davao City and Further Incidents

Hostility toward Judge Grageda led to his inhibition and the transfer of Civil Case No. 95-45 to Davao City, Branch 14, under Judge Omelio. Pending incidents included motions to relocate records, allegations of judicial bias, and requests for inhibition that were denied.

Amendments Expanding the Writ of Execution

In a July 10, 2009 order, RTC Davao:
• Denied Chiquita’s motion for partial reconsideration of the 2006 omnibus order
• Amended the writ of execution to include all Chiquita subsidiaries, affiliates, related entities, successors, and assigns doing business in the Philippines (citing Clause 25 of the compromise)

An August 11, 2009 amended order further imposed solidary liability on all subsidiaries and affiliates of each settling defendant, followed by an alias writ on August 12, 2009.

Petition for Certiorari and Issues Raised

Chiquita filed a Rule 65 petition in the Supreme Court assailing six writs and orders for grave abuse of discretion, contending that:

  1. The original compromise left no matter for execution beyond escrow deposit.
  2. Execution orders varied the compromise’s terms.
  3. Formal offer of evidence was precluded by procedural delays and prior administrative impropriety.
  4. Subsidiaries and affiliates were not solidarily liable under the compromise.
  5. Judge Omelio displayed bias warranting inhibition.

Doctrine on Hierarchy of Courts

The Court reaffirmed the rule that petitions must ordinarily be filed in lower courts, with exceptions such as patent nullities or matters of transcendental importance. Given the full record and risk of prejudice from enforcement, the Supreme Court accepted direct cognizance in the interest of judicial economy.

Law on Com


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