Pentagon Steel v.

CA compromise is not admissible in evidence under Section 27, Rule 130 of the Rules
of Court.
FACTS:
1. The petitioner, a corporation engaged in the manufacture of G.I. wire and nails, Issue1: whether or not respondent abandoned his job.
employed respondent Perfecto Balogo (the respondent) in its wire drawing
department. The petitioner alleged that the respondent absented himself from HELD: Respondent did not abandon his job
work on August 7, 2002 without giving prior notice of his absence. As a result, First, the respondent had a valid reason for absenting himself from work. The
the petitioner sent him a letter by registered mail dated August 12, 2002, written respondent presented a medical certificate from his doctor attesting to the fact that he
in Filipino, requiring an explanation for his absence. The petitioner sent another was sick with flu associated with diarrhea or loose bowel movement which prevented
letter to the respondent on August 21, 2002, also by registered mail, informing him from reporting for work for 10 days. The petitioner never effectively refuted the
him that he had been absent without official leave (AWOL) from August 7, 2002 respondents reason for his absence. Second, there was no clear intention on the
to August 21, 2002. Other letters were sent to the respondent by registered mail, respondents part to sever the employer-employee relationship. Considering that
all pointing out his absences; however, the respondent failed to respond. Thus, the intention is a mental state, the petitioner must show that the respondents overt acts
petitioner considered him on AWOL from August 7, 2002 point unerringly to his intent not to work anymore. That abandonment is negated finds
2. Respondent then filed a complaint with the Arbitration Branch of the NLRC for support in a long line of cases where the immediate filing of a complaint for illegal
underpayment/nonpayment of salaries and wages, overtime pay, holiday pay, dismissal was coupled with a prayer for reinstatement; the filing of the complaint for
service incentive leave, 13th month pay, separation pay, and ECOLA alleging that illegal dismissal is proof enough of the desire to return to work.
he contracted flu associated with diarrhea and suffered loose bowel movement
due to the infection. The respondent maintained that his illness had prevented him The prayer for reinstatement, as in this case, speaks against any intent to sever the
from reporting for work for ten (10) days. When the respondent finally reported employer-employee relationship. We additionally take note of the undisputed fact that
for work on August 17, 2002, the petitioner refused to take him back despite the the respondent had been in the petitioners employ for 23 years. Prior to his dismissal,
medical certificate he submitted. the respondents service record was unblemished having had no record of infraction of
3. During the conciliation proceedings on October 9, 2002, the respondent presented company rules. abandonment after the respondents long years of service and the
the medical certificate covering his period of absence. The petitioner required consequent surrender of benefits earned from years of hard work are highly unlikely.
him, however, to submit himself to the company physician to determine whether Under the given facts, no basis in reason exists for the petitioners theory that the
he was fit to return to work in accordance with existing policies. According to respondent abandoned his job.
petitioner, the respondent refused to return to work and insisted that he be paid his
separation pay. the respondent formally amended his complaint to include his Issue2: Whether or not the actions or agreements of the parties during the
claim of illegal dismissal compromise agreement could be used as evidence?
4. LA held dismissed the claim of illegal dismissal and found that no dismissal took
place. Held: NO. The correct reason for the CAs error in considering the actions and
5. NLRC found that respondent was illegally dismissed ruling that abandonment has agreements during the conciliation proceedings before the labor arbiter is Article 233
no legal basis since there was no clear intent on the respondents part to sever the of the Labor Code which states that information and statements made at conciliation
employer-employee relationship. The NLRC found it difficult to accept the proceedings shall be treated as privileged communication and shall not be used as
petitioners allegation that the respondent absented himself for unknown reasons; evidence in the Commission. Conciliators and similar officials shall not testify in any
this kind of action is inconsistent with the respondents 23 years of service and court or body regarding any matters taken up at conciliation proceedings conducted
lack of derogatory record during these years by them.
6. The CA held that the respondent was constructively dismissed when the petitioner
repeatedly refused to accept the respondent back to work despite the valid medical In the present case, we find that the CA did indeed consider the statements the parties
reason that justified his absence from work. The CA concluded that the made during conciliation; thus, the CA erred by considering excluded materials in
respondent complied with the petitioners directive to submit a written explanation arriving at its conclusion. The reasons behind the exclusion are two-fold.
when the former presented the medical certificate to explain his absences.
7. The petitioner contends that the CA cannot use the parties actions and/or First, since the law favors the settlement of controversies out of court, a person is
agreements during the negotiation for a compromise agreement as basis for the entitled to buy his or her peace without danger of being prejudiced in case his or her
conclusion that the respondent was illegally dismissed because an offer of efforts fail; hence, any communication made toward that end will be regarded as
privilege indeed, if every offer to buy peace could be used as evidence against a person
who presents it, many settlements would be prevented and unnecessary litigation would
result, since no prudent person would dare offer or entertain a compromise if his or her
compromise position could be exploited as a confession of weakness.

Second, offers for compromise are irrelevant because they are not intended as
admissions by the parties making them. A true offer of compromise does not, in legal
contemplation, involve an admission on the part of a defendant that he or she is legally
liable, or on the part of a plaintiff, that his or her claim is groundless or even doubtful,
since it is made with a view to avoid controversy and save the expense of litigation. It
is the distinguishing mark of an offer of compromise that it is made tentatively,
hypothetically, and in contemplation of mutual concessions

While we agree with the petitioner that the CA should not have considered the
agreements and/or statements made by the parties during the conciliation proceedings,
the CAs conclusion on illegal dismissal, however, was not grounded solely on the
parties statements during conciliation, but was amply supported by other evidence on
record. Based on these other pieces of evidence, the respondent was illegally dismissed;
hence, our ruling regarding the statement made during conciliation has no effect at all
on our final conclusion.