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G.R. No.

192573 October 22, 2014 Record shows that respondent has already filed its position paper while complainant,
despite ample opportunity given him, failed to file his[,] leaving this office with no option
RICARDO N. AZUELO, Petitioner, but to dismiss this case for lack of interest.
vs.
ZAMECO II ELECTRIC COOPERATIVE, INC., Respondent. WHEREFORE, let this case be, as it is hereby dismissed for lack of[merit].

DECISION SO ORDERED.8

REYES, J.: Azuelo received a copy of LA Bactin's Order dated November 6, 2006 on November 17,
2006. On November 21, 2006, Azuelo again filed a complaint with the RAB of the NLRC
Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of in San Fernando City, Pampanga for illegal dismissal with money claims against
Court seeking to annul and set aside the Decision2 dated February 26, 2010 and ZAMECO, containing the same allegations in his first complaint. The case was docketed
Resolution3 dated June 10, 2010 issued by the Court of Appeals (CA) in CA-G.R. SP No. as NLRC Case No. RAB-III-11-10779-06 and was assigned to LA Reynaldo V. Abdon
107762, which affirmed the Decision4 dated September 22, 2008 and Resolution5 dated (LA Abdon).
December 15, 2008 of the National Labor Relations Commission (NLRC) in NLRC NCR
CA No. 052567-07. On December 20, 2006, ZAMECO filed a Motion to Dismiss9 the second complaint filed
by Azuelo on the ground of res judicata. ZAMECO pointed out that Azuelo had earlier
The Facts filed a similar complaint, which was dismissed by LA Bactin due to his unreasonable
failure to submit his position paper despite ample opportunity given to him by LA Bactin.
Petitioner Ricardo N. Azuelo (Azuelo) was employed by the respondent ZAMECO II ZAMECO likewise averred that Azuelo should have appealed from LA Bactin's Order
Electric Cooperative, Inc. (ZAMECO) as a maintenance worker. It appears that sometime dated November 6, 2006 instead of filing a complaint for illegal dismissal anew.
in March 2006, Azuelo filed with the Regional Arbitration Branch (RAB) of the NLRC in
San Fernando City, Pampanga a Complaint6 for illegal dismissal and non-payment of Azuelo opposed ZAMECO's motion to dismiss,10 alleging that the dismissal of his first
benefits against ZAMECO. The complaint was docketed as NLRC Case No. RAB III-03- complaint by LA Bactin was without prejudice. He explained that his failure to submit his
9912-06 and was assigned to Labor Arbiter (LA) Mariano" L. Bactin (LA Bactin). After position paper was due to ZAMECO's refusal to furnish him with the complete
several mediations, LA Bactin ordered the parties to submit their respective position documents pertaining to his illegal dismissal. He further claimed that, since the dismissal
papers on July 14, 2006. of his first complaint was without prejudice, his remedy was either to file a motion for
reconsideration or to re-file the case within 10 days from receipt of the order of dismissal.
On July 14, 2006, Azuelo, instead of submitting his position paper, moved that the
submission of his position paper be extended to August 4, 2006, which was granted by On March 12, 2007, LA Abdon issued an Order,11 which dismissed Azuelo's second
LA Bactin. On August 4, 2006, Azuelo again failed to submit his position paper. LA complaint for illegal dismissal on the ground of res judicata. LA Abdon pointed out that
Bactin then directed Azuelo to submit his position papers on August 22, 2006. On the the dismissal of Azuelo's first complaint for illegal dismissal was with prejudice; that the
said date, Azuelo, instead of submitting his position paper, moved for the issuance of an appropriate remedy available to Azuelo against LA Bactin's dismissal of the first
order directing ZAMECO to furnish him with a complete copy of the investigation report complaint was to appeal from the same and not to file a second complaint for illegal
as regards his dismissal. ZAMECO opposed the said motion, asserting that it has already dismissal.
furnished Azuelo with a copy of its investigation report.
On appeal, the NLRC, in its Decision12 dated September 22, 2008, affirmed the Order
On November 6, 2006, LA Bactin issued an Order,7 which reads: issued on March 12, 2007 by LA Abdon. The NLRC pointed out that LA Bactin gave
Azuelo ample opportunity to submit his position paper, which he still failed to do. That
his failure to prosecute his action for unreasonable length of time indeed warranted the
dismissal of his first complaint, which is deemed to be with prejudice, unless otherwise

1
stated. Considering that the Order issued on November 6, 2006 by LA Bactin did not ruled upon was presented to it; the Court has to examine the CA decision from the prism
qualify the nature of the dismissal of the first complaint, the NLRC opined that the said of whether it correctly determined the presence or absence of grave abuse .of discretion
dismissal is with prejudice. Thus, the filing of the second complaint for illegal dismissal in the NLRC decision before it, not on the basis of whether the NLRC decision on the
is already barred by the prior dismissal of Azuelo' s first complaint. merits of the case was correct.19 "The phrase 'grave abuse of discretion' is well-defined in
our jurisprudence. It exists where an act of a court or tribunal is performed with a
Azuelo sought reconsideration13 of the Decision dated September 22, 2008 but it was capricious or whimsical exercise of judgment equivalent to lack of jurisdiction. The
denied by the NLRC in its Resolution14 dated December 15, 2008. abuse of discretion must be so patent and gross as to amount to an evasion of a positive
duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in
Azuelo then filed a petition for certiorari15 with the CA, alleging that the NLRC gravely contemplation of law, as where the power is exercised in an arbitrary and despotic
abused its discretion in ruling that the dismissal of his first complaint was with prejudice, manner by reason of passion or personal hostility."20
thus constituting a bar to the filing anew of his complaint for illegal dismissal against
ZAMECO. He likewise asserted that, since the dismissal of his first complaint was After a thorough review of the records of the instant case, the Court finds that the CA did
without prejudice, the remedy available to him, contrary to LA Abdon's ruling, was to re- not commit any reversible error in upholding the dismissal of Azuelo's second complaint
file his complaint, which he did. for illegal dismissal on the ground of res judicata. The NLRC did not abuse its discretion
in ruling that the Order issued on November 6, 2006 by LA Bactin, which dismissed the
On February 26, 2010, the CA rendered the herein assailed Decision,16 which denied the first complaint filed by Azuelo, was an adjudication on the merits.
petition for certiorari filed by Azuelo. The CA held that the NLRC did not commit any
abuse of discretion in affirming the dismissal of Azuelo' s second complaint for illegal At the core of the instant petition is the determination of the nature of the dismissal of
dismissal on the ground of res judicata. That the dismissal of the first complaint, which Azuelo's first complaint, i.e., whether the dismissal is with prejudice as held by the labor
was with prejudice, bars the filing of a subsequent complaint for illegal dismissal based tribunals. The Order issued on November 6, 2006 by LA Bactin is silent as to the nature
on the same allegations. of the dismissal; it merely stated that the complaint was dismissed due to Azuelo's failure,
despite ample opportunity afforded him, to submit his position paper.
Azuelo's Motion for Reconsideration17 was denied by the CA in its Resolution18 dated
June 10, 2010. Ultimately, the question that has to be resolved is this - whether the dismissal of a
complaint for illegal dismissal due to the unreasonable failure of the complainant to
Hence, the instant petition. submit his position paper amounts to a dismissal with prejudice.

Issue The 2005 Revised Rules of Procedure of the NLRC (2005 Revised Rules), the rules
applicable at the time of the controversy, is silent as to the nature of the dismissal of a
Essentially, the issue set forth by Azuelo for the Court's resolution is whether the complaint on the ground of unreasonable failure to submit a position paper by the
dismissal of his first complaint for illegal dismissal, on the ground of lack of interest on complainant. Nevertheless, the 2005 Revised Rules, particularly Section 3, Rule I thereof,
his part to prosecute the same, bars the filing of another complaint for illegal dismissal provides for the suppletory application of the Rules of Court to arbitration proceedings
against ZAMECO based on the same allegations. before the LAs and the NLRC in the absence of any applicable provisions therein, viz:

Ruling of the Court Section 3. Suppletory Application of the Rules of Court. - In the absence of any
applicable provisions in these Rules, and in order to effectuate the objectives of the Labor
The petition is denied. Code, the pertinent provisions of the Rules of Court of the Philippines may, in the interest
of expeditious dispensation of labor justice and whenever practicable and convenient, be
At the outset, it should be stressed that in a petition for review under Rule 45 of the Rules applied by analogy or in a suppletory character and effect. (Emphases ours)
of Court, such as the instant petition, where the CA' s disposition in a labor case is sought
to be calibrated, the Court's review is quite limited. In ruling for legal correctness, the The unjustified failure of a complainant in arbitration proceedings before the LA to
Court has to view the CA decision in the same context that the petition for certiorari it submit his position paper is akin to the case of a complainant's failure to prosecute his

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action for an unreasonable length of time in ordinary civil proceedings. In both cases, the "Under the rule of res judicata, a final judgment or decree on the merits by a court of
complainants are remiss, sans reasonable cause, to prove the material allagations in their competent jurisdiction is conclusive of the rights of the parties or their privies, in all later
respective complaints. Accordingly, the Court sees no reason not to apply the rules suits and on all points and matters determined in the previous suit. The term literally
relative to unreasonable failure to prosecute an action in ordinary civil proceedings to the means a 'matter adjudged, judicially acted upon, or settled by judgment.' The principle
unjustified failure of a complainant to submit his position paper in arbitration proceedings bars a subsequent suit involving the same parties, subject matter, and cause of action. The
before the LA. rationale for the rule is that 'public policy requires that controversies must be settled with
finality at a given point in time."'22
In this regard, Section 3, Rule 17 of the Rules of Court provides that:
Azuelo's insistence that the dismissal of his first complaint by LA Bactin was without
Section 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff prejudice since he was not remiss in pursuing his complaint for illegal dismissal is plainly
fails to appear on the date of the presentation of his evidence in chief on the complaint, or untenable. To stress, the Order dated November 6, 2006 was unqualified; hence, the
to prosecute his action for an unreasonable length of time, or to comply with these Rules dismissal is deemed with prejudice pursuant to Section 3, Rule 17 of the Rules of Court.
or any order of the court, the complaint may be dismissed upon motion of the defendant In any case, the Court finds Azuelo's failure to file his position paper, despite ample
or upon the court's own motion, without prejudice to the right of the defendant to opportunity therefor, unjustified. On this score, LA Abdon' s observation is instructive,
prosecute his counterclaim in the same or in a separate action. This dismissal shall have thus:
the effect of an adjudication upon the merits, unless otherwise declared by the court.
(Emphases ours) That complainant failed to prosecute his action for unreasonable length of time before
Labor Arbiter Bactin is supported by the records of the case. Records show that as early
"The dismissal of a case for failure to prosecute has the effect of adjudication on the as July 14, 2006, complainant was already required to submit his position paper on said
merits, and is necessarily understood to be with prejudice to the filing of another action, date. However, instead of submitting one, he requested for "more time" or until August 4,
unless otherwise provided in the order of dismissal. Stated differently, the general rule is 2006 within which to submit his position paper x x x. Came August 4, 2006, complainant
that dismissal of a case for failure to prosecute is to be regarded as an adjudication on the failed to submit the required position paper and again requested for an extension of time
merits and with prejudice to the filing of another action, and the only exception is when until August 22, 2006. The reason given was due [to] "voluminous workload" xx x.
the order of dismissal expressly contains a qualification that the dismissal is without Despite the extensions given to complainant, the latter failed to submit his position paper
prejudice."21 on due date. Instead, what complainant submitted on August 22, 2006 is a Motion For the
Issuance of Order Directing Respondent to Furnish Complainant The Complete Copy of
Thus, in arbitration proceedings before the LA, the dismissal of a complaint on account Investigation Report. As correctly ruled by Labor Arbiter Abdon, the filing of the said
of the unreasonable failure of the complainant to submit his position paper is likewise motion is of no moment. The fact remains that more than one (1) month has already
regarded as an adjudication on the merits and with prejudice to the filing of another lapsed from the time complainant was first required to submit his position paper on July
complaint, except when the 14, 2006 up to the last extension on August 22, 2006. Further, if complainant really
intends to prosecute his case within the reasonable time, he should not have waited for
LA's order of dismissal expressly states otherwise. August 22, 2006 to file said motion.

As already stated, the Order dated November 6, 2006, which dismissed Azuelo's first It is also worth stressing that under Section 7, Rule V of the NLRC Rules of Procedure,
complaint due to his unreasonable failure to submit his position paper is unqualified. It is parties are directed to submit position paper within an inextendible period of ten (10)
thus considered as an adjudication on the merits and with prejudice to filing of another calendar days from the date of termination of the mandatory conciliation and mediation
complaint. Accordingly, the NLRC did not abuse its discretion when it affirmed LA conference. Clearly, complainant went beyond this period.23 (Emphasis and italics in the
Abdon' s dismissal of the second complaint for illegal dismissal. Azuelo' s filing of a original)
second complaint for illegal dismissal against ZAMECO based on the same allegations
cannot be permitted lest the rule on res judicata be transgressed. If indeed Azuelo could not prepare his position paper due to the alleged refusal of
ZAMECO to furnish him with its investigation report on his dismissal, he should have
immediately sought the issuance of an order directing ZAMECO to produce the said

3
investigation report. However, Azuelo only moved for the production of the investigation failure to do so rendered LA Bactin' s Order dated November 6, 2006, which dismissed
report on the due date of the third extension of time granted him by LA Bactin to submit his first complaint for illegal dismissal, final and executory.
his position paper. It is thus apparent that Azuelo's motion seeking the production of the
investigation report is merely a ruse to further extend the period given to Azuelo within WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED.
which to submit his position paper. The Decision dated February 26, 2010 and Resolution dated June 10, 2010 of the Court
of Appeals in CA-G.R. SP No. 107762 are hereby AFFIRMED.
Nonetheless, Azuelo contended that technical rules of procedure, such as the rule on
dismissals of actions due to the fault of the plaintiff under Section 3, Rule 17 of the Rules G.R. No. 191825, October 05, 2016
of Court, does not apply to proceedings before the LAs and the NLRC. Hence, Azuelo DEE JAY'S INN AND CAFE AND/OR MELINDA FERRARIS, Petitioners, v. MA.
claimed, LA Abdon erred in dismissing his second complaint for illegal dismissal. LORINA RAESES, Respondent.
DECISION
LEONARDO-DE CASTRO,** J.:
The Court does not agree. Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court filed by petitioners Dee Jay's Inn and Cafe (DJIC) and Melinda Ferraris
Indeed, technical rules of procedure are not binding in labor cases.1wphi1 The LAs and (Ferraris) assailing the following: 1) Decision1 dated April 29, 2009 of the Court of
the NLRC are mandated to use every and all reasonable means to ascertain the facts in Appeals in CA-G.R. SP No. 01877-MIN, which set aside the Resolutions dated August
each case speedily and objectively, without regard to technicalities of the law or 30, 20062 and November 30, 20063 of the National Labor Relations Commission (NLRC)
procedure.24 Nevertheless, though technical rules of procedure are not ends in themselves, in NLRC CA No. M-009173-06 and ordered the remand of the case to the Labor Arbiter
for the computation of the monetary claims due respondent Ma. Lorina P. Raeses who
they are necessary for an effective and expeditious administration of justice.25
was declared to have been illegally dismissed by petitioners; and 2) Resolution4 dated
February 8, 2010 of the appellate court in the same case, which denied the Motion for
The non-applicability of technical rules of procedure in labor cases should not be made a Reconsideration of petitioners and the Motion for Partial Reconsideration of respondent.
license to disregard the rights of employers against unreasonable and/or unjustified
claims. Azuelo was given sufficient chances to establish his claim against ZAMECO, The factual antecedents are as follows:
which he failed to do when he did not submit his position paper despite several
chanRoblesvirtualLawlibraryPetitioner DJIC started its operation on December 8, 2002.
extensions granted him. He cannot now be allowed to raise anew his supposed illegal
It was registered under Republic Act No. 9178 or the Barangay Micro Business
dismissal as it would be plainly unjust to ZAMECO. It bears stressing that the Enterprises Act. Petitioner Ferraris, the owner and manager of petitioner DJIC, engaged
expeditious disposition of labor cases is mandated not only for the benefit of the the services of respondent and a certain Moonyeen J. Bura-ay (Moonyeen) as cashier and
employees, but of the employers as well. cashier/receptionist, respectively, for a monthly salary of P3,000.00 each.5chanrobleslaw

It should be made clear that when the law tilts the scale of justice in favor of labor, it is Respondent filed before the Social Security System (SSS) Office a complaint against
petitioner Ferraris for non-remittance of SSS contributions. Respondent also filed before
but a recognition of the inherent economic inequality between labor and management.
the NLRC City Arbitration Unit (CAU) XII, Cotabato City, a complaint against
The intent is to balance the scale of justice; to put up the two parties on relatively equal petitioners for underpayment/nonpayment of wages, overtime pay, holiday pay, service
positions. There may be cases where the circumstances warrant favoring labor over the incentive leave pay, 13thmonth pay, and moral and exemplary damages, docketed as
interests of management but never should the scale be so tilted if the result is an injustice NLRC CAU Case No. RAB 12-01-00026-05.6chanrobleslaw
to the employer, Justicia remini regarda est (Justice is to be denied to none).26
After conciliation efforts by the Labor Arbiter failed, the parties in NLRC CAU Case No.
Lastly, the Court notes that Azuelo sought the wrong remedy in assailing the Order dated RAB 12-01-00026-05 were ordered to submit their respective position papers. On
September 8, 2005, respondent filed her position paper, which already included a claim
November 6, 2006 issued by LA Bactin. Considering that the dismissal of Azuelo's first for illegal dismissal.7chanrobleslaw
complaint was already an adjudication on the merits, he should have filed a verified
memorandum of appeal with the RAB of the NLRC in San Fernando City, Pampanga Respondent averred that sometime in January 2005, she asked from petitioner Ferraris the
within 10 calendar days from receipt of the said order pursuant to Section 1, Rule VI of latter's share as employer in the SSS contributions and overtime pay for the 11 hours of
the 2005 Revised Rules instead of re-filing his complaint for illegal dismissal. 27 His work respondent rendered per day at petitioner DJIC. Petitioner Ferraris got infuriated
and told respondent to seek another employment. This prompted respondent to file her
complaints before the SSS Office and NLRC CAU XII. After learning of respondent's
4
complaints, petitioner Ferraris terminated respondent's employment on February 5, 2005. dismissal. In fact, there is no positive or unequivocal act on the part of [petitioners] that
Respondent submitted the Joint Affidavit of Mercy Joy Christine Bura-ay (Mercy) and would buttressed (sic) a fact that [respondent] was dismissed. Thus, the High Court
Mea Tormo (Mea) to corroborate her allegations.8chanrobleslaw said:ChanRoblesVirtualawlibrary
"While the general rule in dismissal cases is that the employer has the burden to prove
Petitioners countered that respondent and Moonyeen were not terminated from the dismissal was for just or authorized causes and after due process, said burden is
employment. According to petitioners, petitioner DJIC incurred a shortage of P400.00 in necessarily shifted to the employee if the alleged dismissal is denied by the employer
its earnings for February 4, 2005. That same day, petitioner Ferraris called respondent because a dismissal is supposedly a positive and unequivocal act by the employer.
and Moonyeen for a meeting but the two employees denied incurring any shortage. Accordingly, it is the employee that bears the burden of proving that in fact he was
Petitioner Ferraris lost her temper and scolded respondent and Moonyeen, and required dismissed. An unsubstantiated allegation on the part of the employee cannot stand as the
them to produce the missing P400.00. However, respondent and Moonyeen merely same offends due process." (De Paul / King Philip Customs Tailor, et al. vs. NLRC, G.R.
walked out and did not report back to work anymore. To support their version of events, No. 129824, March 10, 1999) Underscoring Ours.
petitioners submitted the affidavit of Ma. Eva Gorospe (Eva), another employee of The [respondent] did not controvert the [petitioners'] categorical denial and more, she
petitioners. failed to demonstrate the burden. As such, the allegations of the [respondent] to the effect
that she was dismissed remains (sic) gratuitous. In fact the High Court in the same vein
Petitioners further claimed that it was respondent herself who requested that the SSS said:ChanRoblesVirtualawlibrary
contributions not be deducted from her salary because it would only diminish her take- "The burden of proof lies upon who asserts it, not upon who denies, since by the nature of
home pay. Thus, respondent received from petitioners the amount of SSS contributions, things, he who denies a fact cannot produce any proof of it." (Sevillana vs. LT.
with the undertaking that she would, comply with the law by paying the SSS premiums International Corp., et al., POEA-NLRC Case No. L-88-12-1048, 26 March 1991;
herself as self employed. Respondent recorded her weekly wages and payment of SSS Aguilar vs. Maning International Corp., et al., POEA-NLRC Case No. L-88-08-728,
premiums in a notebook, which had since been missing.9chanrobleslaw October 8, 1990).
In the case at Bench, the positive act and/or the unequivocal act of termination is
Petitioners additionally averred that since January 2002, respondent had been living in the Factum Probandum which the [respondent] miserably failed to
petitioner Ferraris's ancestral home for free. Petitioner Ferraris even shouldered the cost demonstrate.12chanroblesvirtuallawlibrary
of P2,500.00 to have electrical connections installed at the house for the use of The Labor Arbiter also pointed out a procedural defect in respondent's charge of illegal
respondent and her family. From 2002 to 2004, petitioner Ferraris admonished dismissal against petitioners:ChanRoblesVirtualawlibrary
respondent several times for bringing her child to work, which prevented respondent Besides, the [respondent] did not aver illegal dismissal as the same was not pleaded in her
from concentrating on her job at petitioner DJIC.10chanrobleslaw verified complaint. She cannot be allowed to prove the same. The rule is clear that the
"verified position papers shall cover only those claims and causes of action raised in the
On February 21, 2006, the Labor Arbiter rendered a Decision11 in favor of petitioners, but complaint x x x" (Rule V, Section 4, Par. 2, Rules of Procedure of the NLRC, as
granted respondent's claim for 13th month pay. Amended). Incidentally, there is no proof linking to the allegation of
dismissal.13chanroblesvirtuallawlibrary
The Labor Arbiter did not give much credence to respondent's charge of illegal dismissal The Labor Arbiter also noted that petitioner DJIC, as a registered Barangay Micro
because there was no positive or unequivocal act on the part of petitioners to support the Business Enterprise (BMBE), was exempted from the coverage of the Minimum Wage
assertion that respondent was dismissed, thus:ChanRoblesVirtualawlibrary Law.
The resolution of this case hinges on our determination of whether or not [respondent]
was illegally dismissed for her to be entitled to her money claims. The Labor Arbiter decreed in the end:ChanRoblesVirtualawlibrary
WHEREFORE, premises laid, judgment is hereby rendered dismissing the complaint in
xxxx the instant case for lack of.cause of action and for not being impressed with merit.

In her position paper, the [petitioner Ferraris] categorically denied having terminated However, [petitioners] are hereby ordered, jointly and severally, to pay [respondent] the
[respondent]. The [respondent] after being reprimanded for shortages, she ceased to amount of Five Hundred Pesos (Php500.00) representing 13th month pay
report for work on February 5, 2005. This fact is attested to by [petitioners'] witness, a differential.14chanroblesvirtuallawlibrary
co-employee of the [respondent] Ma. Eva Gorospe to the effect that [respondent] and co At around the same time, Moonyeen lodged before the NLRC CAU XII a complaint
employee Moonyeen Bura-ay scolded them for shortages during a meeting on February against petitioners for unpaid overtime pay, docketed as RAB 12-01-00031-05. Later on,
5, 2005. The witness attested that they were not terminated but they did not report for Moonyeen similarly contended that she was illegally dismissed by petitioners and
work anymore the following day up to the present. This gives weight to the fact that in demanded the payment of her salary differential, holiday premium pay, service incentive
her complaint no illegal dismissal was contemplated by [respondent]. leave pay, 13th month pay, and moral damages.15 The Labor Arbiter, in a Decision dated
February 20, 2006, subsequently dismissed Moonyeen's complaint, also finding that
The records, on the other hand, is (sic) bereft of any evidence linking to the allegation of Moonyeen miserably failed to demonstrate the positive or unequivocal act of termination
5
of her employment; but petitioners were liable for underpayment of Moonyeen's the Labor Code who regularly employs more than ten (10) workers. Section 1, Rule of
13th month pay in the amount of P500.00. Book III of the Implementing Rules of the Labor Code explicitly exempts establishments
regularly employing less than ten (10) workers from the coverage of the said provision.
Respondent and Moonyeen timely filed their respective appeals before the NLRC, Employing less than ten (10) workers, [petitioners are] thus exempted under the law.
docketed as NLRC CA Nos. M-009173-06 and M-009174-06. Their appeals were
eventually consolidated. However, we see no reason to disturb the award of 13th month pay. This is an admitted
claim and the [respondent and Moonyeen] must be entitled to the
The NLRC issued a Resolution dated August 30, 2006, dismissing the appeals of same.16chanroblesvirtuallawlibrary
respondent and Moonyeen for lack of merit and affirming en toto the Labor Arbiter's Respondent filed a Motion for Reconsideration which was denied by the NLRC in a
Decisions dated February 20, 2006 and February 21, 2006. The NLRC Resolution dated November 30, 2006.
reasoned:ChanRoblesVirtualawlibrary
We uphold the findings of the Labor Arbiter. The records do not reveal of any written Respondent sought recourse from the Court of Appeals by filing a Petition for Certiorari,
document to show that [respondent and Moonyeen] were indeed dismissed. On the other imputing grave abuse of discretion on the part of the NLRC in its issuance of the
hand, [petitioners] vehemently denied having dismissed them. Therefore, under these Resolutions dated August 30, 2006 and November 30, 2006 in NLRC CA No. M-009173-
given facts, to the [respondent and Moonyeen] is shifted the burden to prove that their 06. The Petition was docketed as CA-G.R. S No. 01877-MIN.
dismissal had, in fact, taken place. The rule as exemplified by the Supreme Court is:
"Where the employee was not notified that he had been dismissed from employment In its Decision dated April 29, 2009, the Court of Appeals granted respondent's Petition.
neither was [he] prevented from returning to his work, there is no illegal dismissal["]
(Chong Guan Trading vs. NLRC, 172 SCRA 831). For, indeed, the records do not bare On the basis that any doubt should be resolved in favor of labor, the Court of Appeals
any positive or unequivocal act of [petitioners] notifying them of the termination of their held that respondent was illegally dismissed:ChanRoblesVirtualawlibrary
services, as observed by the Labor [Arbiter] a quo. It is our view that [respondent and We are constained to review [NLRC's] exercise of its discretion in affirming the Labor
Moonyeen] miserably failed to establish by substantial evidence that they were Arbiter's findings on abandonment because such conclusion does not appear to have been
dismissed. Their verbal claim supported by self serving and biased statements of two (2) substantially proved and the same is repugnant to both law and jurisprudence.
witnesses, namely, Mercy Bura-ay and Mea Tormon, who like them have an ax to grind
being complainants themselves against the same [petitioners], did not substantially prove The Labor biter, relying on the alleged ruling in De Paul, contended that the employee
their case. [Respondent and Moonyeen] did not deny [petitioners'] allegation that they x x has the burden to prove the fact of dismissal when such dismissal was denied by the
x were also the witnesses of Mercy Bura-ay and Mea Tormon in a separate case the latter employer, as when the defense of the employee's abandonment was interposed. Thus, in
filed against the same [petitioners]. Thus, we find more expressive of truth the verbal refusing to consider [respondent's] cause of action for illegal dismissal, the Labor Arbiter
declaration of [petitioners], supported by a sworn statement x x x of one witness, Eva found that [respondent] miserably failed to demonstrate any such positive or unequivocal
Gorospe, that after [respondent and Moonyeen] were reprimanded, made to explain and act on the part of Ferraris in terminating [respondent].
produce the Php400.00 shortage of their daily collection, they voluntarily ceased to report
to work anymore. We emphasize, it is not shown in the records that Gorospe was Reliance on De Paul seemed imprudent and misplaced, if not, devious because De
motivated by ill-will or was coerced by the [petitioners] into executing her sworn Paul was indefensibly misquoted in the Labor Arbiter's Decision, in that the alleged
statement. [Respondent and Moonyeen] did not dispute that they were investigated by ruling as quoted therein does not appear in the original printed text of the case in Volume
[petitioner Ferraris] on February 4, 2005 regarding shortages of their collections. Such 3[0]4 of the Supreme Court Reports Annotated (SCRA), pages 448-459.
investigation cannot by any stretch of imagination be considered dismissal of the
[respondent and Moonyeen]. On the contrary, we can only surmise that the investigation Furthermore, the Labor Arbiter's contention on the shifting of the burden of proof is
generated a force compelling enough for [respondent and Moonyeen] to quit working [for incongruous with prevailing jurisprudence which requires the concurrence of two (2)
petitioners]. Their failure to report for work is an act they alone must bear the elements before an employee may be guilty of abandonment. The first is the failure to
consequences of. By their own act, they bargained away their security of tenure under the report for work or absence without valid or justifiable reason. The second is a clear
law. intention to sever the employer-employee relationship. The second element is the more
determinativefactor and must be evinced by overt acts. Likewise, the burden of proof is
[Respondent and Moonyeen's] money claims of overtime pay, holiday pay and service on the employer to show the employee's clear and deliberate intent to discontinue
incentive leave pay must likewise fail. Overtime pay and holiday pay are some of his employment without any intention of returning; mere absence is not sufficient.
the extraordinary claims the burden of proof of which is shifted to the worker who must
prove he rendered overtime work or that he worked during holidays (Julio Cagampan, et We agree with the observation that the joint testimony of Mercy Bura-ay and Mea Torno
al. vs. NLRC, et al., 195 SCRA 533). No proof is placed on record by [respondent and in favor of [respondent], apparently returning a favor to [respondent] who also testified
Moonyeen] to prove their claimed overtime and holiday work. [Respondent and for Bura-ay and Torno in a separate labor case against Ferraris, is tainted with bias and,
Moonyeen] cannot also avail of entitlement of service incentive pay under Article 95 of thus, cannot credibly and substantially prove the fact of [respondent's] alleged dismissal.
6
However, neither should the testimony of Eva Gorospe, Ferraris's lone witness, deserve With respect [to] the other monetary claims, We find no cogent reason to disturb the
much probative weight in proving that [respondent] abandoned her job because mere ruling of the Labor Arbiter in awarding [respondent] only the amount of Php500.00
failure to report back to work on the part of [respondent], as Gorospe testified, falls short representing [respondent's] 13th month pay differential.19chanroblesvirtuallawlibrary
of the substantial evidence required in proving the existence of abandonment. The dispositive portion of the judgment of the Court of Appeals
reads:ChanRoblesVirtualawlibrary
Therefore, the Labor Arbiter, as well as [the NLRC], failed to appreciate that doubts WHEREFORE, premises considered, the petition is GRANTED. The Resolution
shroud the evidence presented by both parties, and both tribunals appeared oblivious of promulgated on August 30, 2006 by [the NLRC], affirming in toto the February 21, 2006
the dictates of jurisprudence that such doubts should be resolved in favor of the worker, Decision of the Labor Arbiter dismissing [respondent's] complaint, including the
as was pronounced in Nicario v. NLRC, et al.:ChanRoblesVirtualawlibrary November 30, 2006 Resolution denying a motion for reconsideration thereof, are SET
"It is a well-settled doctrine, that if doubts exist between the evidence presented by the ASIDE. The case should be remanded to the Labor Arbiter for the proper computation of
employer and the employee, the scales of justice must be tilted in favor of the latter. the monetary awards due to [respondent] as a result of her illegal dismissal. The Labor
It is a time-honored rule that in controversies between a laborer and his master, doubts Arbiter's grant of an award in the amount of Php500.00, representing [respondent's]
reasonably arising from the evidence, or in the interpretation of agreements and writing 13th month pay differential, is maintained.20chanroblesvirtuallawlibrary
should be resolved in the former's favor. The policy is to extend the doctrine to a greater Petitioners and respondent filed a Motion for Reconsideration and Motion for Partial
number of employees who can avail of the benefits under the law, which is in consonance Reconsideration, respectively, which were both denied by the Court of Appeals in a
with the avowed policy of the State to give maximum aid and protection of labor." Resolution dated February 8, 2010.
The foregoing doctrine should be applied in this case, especially since Ferraris did not
prove by substantial evidence a clear and deliberate intent on the part of [respondent] to Petitioners now come before this Court via the instant Petition for Review
discontinue her employment without any intention of returning. on Certiorari assigning a couple of errors on the part of the Court of
Appeals, viz.:ChanRoblesVirtualawlibrary
Furthermore; since there is an equipoise of evidence, as there is doubt as to where the 1. THE COURT OF APPEALS ERRED IN CONCLUDING THAT A CAUSE OF
evidence of the parties tilt, Ferraris, the employer who has the burden of proving not only ACTION BELATEDLY INCLUDED IN THE POSITION PAPER AND NOT
abandonment but more importantly just cause for dismissal, is deemed to have failed in ORIGINALLY PLEADED IN THE COMPLAINT CAN STILL BE GIVEN
discharging such burden. COGNIZANCE.
2. THE COURT OF APPEALS ERRED IN FINDING THAT THE NLRC ACTED
Thus, We find no legal impediment in ruling that [respondent] was in fact terminated and WITH GRAVE ABUSE OF DISCRETION ON THE BASIS THAT THE
such termination was done illegally or without any valid cause, and in patent violation of DECISION LACKED FACTUAL PROOF AND ALSO IGNORED
the procedural requirements of due process, anchored upon Ferraris's failure to discharge ESTABLISHED JURISPRUDENCE.21
her burden of proving abandonment by [respondent], including, as a corollary, the burden Petitioners argue that the present case is governed by the 2005 NLRC Rules of
of proving just cause for [respondent's] termination. In view of [respondent's] allegation Procedure, which had already supplanted the 2002 NLRC Rules of Procedure. Under the
that she was dismissed on February 5, 2005, We shall reckon [respondent's] dismissal on 2005 NLRC Rules of Procedure, only the causes of action that were pleaded in a
said date.17 (Citations omitted.) complaint would be entertained. Petitioners, in addition, assert that respondent was not
The Court of Appeals, citing Rule V, Section 7(b) of the 2005 Rules of Procedure of the dismissed from employment; instead, respondent did not report for work anymore after
NLRC and Tegimenta Chemical Phils. v. Buensalida,18 also ruled that the filing of the petitioner Ferraris scolded respondent and Moonyeen on February 4, 2005 regarding the
position paper was the operative act which foreclosed the raising of other matters P400.00 shortage in the earnings of petitioner DJIC for the day. Petitioners insist that they
constitutive of the cause of action; and respondent, by averring facts constituting her never used "abandonment" as a defense in the termination of respondent's employment;
alleged dismissal in her position paper, had properly pleaded a cause of action for illegal and they merely alleged that respondent never returned to work anymore after the
dismissal, which should have been given cognizance by the Labor Arbiter. scolding incident.

For being illegally dismissed, the Court of Appeals found respondent entitled to the The Court first addresses the procedural issue raised by petitioners.
following:ChanRoblesVirtualawlibrary
Corollary to our finding that [respondent] was in fact illegally terminated, [petitioners] The record shows that respondent filed her complaint sometime in January 2005 and
should be ordered to reinstate [respondent] without loss of seniority rights and other position paper on September 8, 2005. During said period, the 2002 NLRC Rules of
privHeges, or, in case reinstatement would no longer be feasible, to pay Procedure, as amended by NLRC Resolution No. 01-02, was still in effect. The 2005
[respondent] separation pay equivalent to one (1) month salary for every year of service, Revised Rules of Procedure of the NLRC only took effect on January 7,
with payment in either cases of [respondent's] full backwages, inclusive of allowances, 2006.22chanrobleslaw
and her other benefits or their monetary equivalent, computed from February 5, 2005, the
date [respondent] was illegally dismissed, up to the time of her actual reinstatement. Section 4, Rule V of the 2002 NLRC Rules of Procedure, as amended,
provides:ChanRoblesVirtualawlibrary
7
Section 4. Submission of Position Papers/Memoranda. - Without prejudice to the the validity of the dismissal could not be an issue. The rules of the NLRC require the
provisions of the last paragraph, Section 2, of this Rule, the Labor Arbiter shall direct submission of verified position papers by the parties should they fail to agree upon an
both parties to submit simultaneously their position papers with supporting documents amicable settlement, and bar the inclusion of any cause of action not mentioned in the
and affidavits within an inextendible period of ten (10) days from notice of termination of complaint or position paper from the time of their submission by the parties. In view of
the mandatory conference. this, Gutang's cause of action should be ascertained not from a reading of his
complaint alone but also from a consideration and evaluation of both his complaint
These verified position papers to be submitted shall cover only those claims and causes and position paper. (Citations omitted.)
of action raised in the complaint excluding those that may have been amicably settled, The Court observes herein that respondent could not have included the charge of illegal
and shall be accompanied by all supporting documents including the affidavits of their dismis al in her complaint because she filed said complaint (which were for various
respective witnesses which shall take the place of the latter's direct testimony. The money claims against petitioners) in January 2005, and petitioners purportedly
parties shall thereafter not be allowed to allege facts, or present evidence to prove dismissed her from employment only on February 5, 2005. However, since respondent
facts, not referred to and any cause or causes of action not included in the complaint subsequently alleged and argued the matter of her illegal dismissal in her position paper
or position papers, affidavits and other documents. (Emphases supplied.) filed on September 8, 2005, then the Labor Arbiter could still take cognizance of the
Stated differently, the parties could allege and present evidence to prove any cause or same.
causes of action included, not only in the complaint, but in the position papers as well.
As the Court explained in Tegimenta Chemical Phils. v. Nevertheless, on the substantive issue of whether or not respondent was illegally
Buensalida23:ChanRoblesVirtualawlibrary dismissed, the Court answers in the negative.
[T]he complaint is not the only document from which the complainant's cause of action is
determined in a labor case. Any aause of action that may not have been included in the The Court of Appeals was correct in its observation that the Labor Arbiter's quote on the
complaint or position paper, can no longer be alleged after the position paper is submitted shifting of the burden of proof in dismissal cases, supposedly from De Paul, could not
by the parties. In other words, the filing of the position paper is the operative act actually be found in said case. Yet, it does not necessarily mean that the Labor Arbiter's
which forecloses the raising of other matters constitutive of the cause of action. This ruling on the matter was fallacious or entirely baseless.
necessarily implies that the cause of action is finally ascertained only after both the
complaint and position paper are properly evaluated. In Exodus International Construction Corporation v. Biscocho,26 the Court pronounced
that "[i]n illegal dismissal cases, it is incumbent upon the employees to first establish the
A cause of action is the delict or wrongful act or omission committed by the defendant in fact of their dismiss before the burden is shifted to the employer to prove that the
violation of the primary right of the plaintiff. A complaint before the NLRC does not dismissal was legal." The Court then explained that:ChanRoblesVirtualawlibrary
contain specific allegations of these wrongful acts or omissions which constitute the "[T]his Court is not unmindful of the rule that in cases of illegal dismissal, the employer
cause of action. All that it contains is the term by which such acts or omissions bears the burden of proof to prove that the termination was for a valid or authorized
complained of are generally known. It cannot therefore be considered as the final cause." But "[b]efore the [petitioners] must bear the burden of proving that the dismissal
determinant of the cause of action. (Citation omitted.) was legal, [the respondents] must first establish by substantial evidence" that indeed they
In the more recent Our Haus Realty Development Corporation v. Parian,24 which were dismissed. "[I]f there is no dismissal, then there can be no question as to the legality
cited Samar-Med Distribution v. National Labor Relations Commission,25cralawred the or illegality thereof."27 (Citations omitted.)
Court further expounded:ChanRoblesVirtualawlibrary The Court, in Caedo v. Kampilan Security and Detective Agency, Inc.,28 expressly
A claim not raised in the pro forma complaint may still be raised in the position paper. recognized the rule that:ChanRoblesVirtualawlibrary
In illegal dismissal cases, "[w]hile the employer bears the burden x x x to prove that the
Our Haus questions the respondents' entitlement to SIL pay by pointing out that this termination was for a valid or authorized cause, the employee must first establish by
claim was not included in the pro forma complaint filed with the NLRC. However, we substantial evidence the fact of dismissal from service." The burden of proving the
agree with the CA that such omission does not bar the labor tribunals from touching upon allegations rests upon the party alleging and the proof must be clear, positive and
this cause of action since this was raised and discussed in the respondents' position paper. convincing. Thus, in this case, it is incumbent upon petitioner to prove his claim of
In Samar-Med Distribution v. National Labor Relations Commission, we dismissal. (Citations omitted.)
held:ChanRoblesVirtualawlibrary The Court reiterated in Brown Madonna Press, Inc. v. Casas,29 that "[i]n illegal dismissal
Firstly, petitioner's contention that the validity of Gutang's dismissal should not be cases, the employer has the burden of proving that the employee's dismissal was legal.
determined because it had not been included in his complaint before the NLRC is bereft However, to discharge this burden, the employee must first prove, by substantial
of merit. The complaint of Gutang was a mere checklist of possible causes of action that evidence, that he had been dismissed from employment."
he might have against Roleda. Such manner of preparing the complaint was obviously
designed to facilitate the filing of complaints by employees and laborers who are thereby It bears to point out that in the case at bar, the Labor Arbiter, the NLRC, and even the
enabled to expediently set forth their grievances in a general manner. But the non- Court of Appeals, all consistently found that respondent was not able to present
inclusion in the complaint of the issue on the dismissal did not necessarily mean that substantial evidence of her dismissal. They all rejected the joint affidavit of Mercy and
8
Mea, submitted by respondent, for being partial and biased. It appears that Mercy and We support the NLRC's approach of first evaluating whether the employee had been
Mea executed said affidavits to return a favor as respondent testified for them in their dismissed, and find that it committed no grave abuse of discretion in factually concluding
own cases against petitioners. The Court of Appeals only deviated from the findings of that Lumahan had not been dismissed from work.
the Labor Arbiter and the NLRC by also disregarding Eva's affidavit, submitted by
petitioners to corroborate their allegations, for being insufficient to prove abandonment. It should be remembered that in cases before administrative and quasi-judicial
The appellate court then applied the equipoise doctrine: with all things considered equal, agencies like the NLRC, the degree of evidence required to be met is substantial
all doubts must be resolved in favor of labor, that is, respondent. evidence, or such amount of relevant evidence that a reasonable mind might accept
as adequate to justify a conclusion. In a situation where the word of another party is
Given the jurisprudence cited in the preceding paragraphs, the application by the Court of taken against the other, as in this case, we must rely on substantial evidence because
Appeals of the equipoise doctrine and the rule that all doubts should be resolved in favor a party alleging a critical fact must duly substantiate and support its allegation.
of labor was misplaced. Without the joint affidavit of Mercy and Mea, there only
remained the bare allegation of respondent that she was dismissed by petitioners on We agree with the NLRC that Lumahan stopped reporting for work on April 22, 1999,
February 5, 2005, which hardly constitute substantial evidence of her dismissal. As both and never returned, as Nightowl sufficiently supported this position with documentary
the Labor Arbiter and the NLRC held, since respondent was unable to establish with evidence.
substantial evidence her dismissal from employment, the burden of proof did not shift to
petitioners to prove that her dismissal was for just or authorized cause. In contrast, Lumahan failed to refute, with supporting evidence, Nightowl's contention
that he did not report for work on April 22, 1999, and failed as well to prove that he
As pointed out by petitioners, they never raised abandonment as a defense as there was continued working from such date to May 15, 1999. What we can only gather from his
no dismissal in the first place. Petitioners did not argue that respondent abandoned her claim was that he did not work from May 16, 1999 to June 8, 1999; but this was after the
work which justified her dismissal from employment. Petitioners merely alleged the fact substantially proven fact that he had already stopped working on April 22, 1999.
that respondent, after being scolded on February 4, 2005, no longer returned to work
beginning February 5, 2005, which was corroborated by one of petitioners' employees, In addition, we find that Lumahan failed to substantiate his claim that he was
Eva, in her affidavit. constructively dismissed when Nightowl allegedly refused to accept him back when he
allegedly reported for work from April 22, 1999 to June 9, 1999. In short, Lumahan did
Similar to this case is the factual background in Nightowl Watchman & Security Agency, not present any evidence to prove that he had, in fact, reported back to work.
Inc. v. Lumahan,30 in which Lumahan, the employee, asserted, but failed to prove, that he
was constructively dismissed; while Nightowl, the employer, alleged that Lumahan did xxxx
not report for work anymore by a certain date but did not raise abandonment as a defense.
Quoted extensively below are the relevant portions from the ruling of the Court In the case before us, the CA clearly ignored certain compelling facts and misread the
in Nightowl:ChanRoblesVirtualawlibrary evidence on record by relying on LA Demaisip's erroneous appreciation of facts. Under
The CA erred in finding grave abuse of discretion in the NLRC's factual conclusion the circumstances, the NLRC acted well within its jurisdiction in finding that Lumahan
that Lumahan was not dismissed from work. had not been dismissed. Otherwise stated, by reversing the ruling that there was no
dismissal to speak of, the CA committed a reversible error in finding grave abuse of
In every employee dismissal case, the employer bears the burden of proving the discretion on the part of the NLRC.
validity of the employee's dismissal, i.e., the existence of just or authorized cause for
the dismissal and the observance of the due process requirements. The employer's Grave abuse of discretion implies a capricious and whimsical exercise of judgment
burden of proof, however; presupposes that the employee had in fact been equivalent to lack of jurisdiction, or the exercise of power in an arbitrary or despotic
dismissed, with the burden to prove the fact of dismissal resting on the employee. manner by reason of passion or personal hostility; or in a manner so patent and gross as
Without any dismissal action on the part of the employer, valid or otherwise, no to amount to an evasion of positive duty enjoined or to act at all in contemplation of law.
burden to prove just or authorized cause arises. It is not sufficient that a tribunal, or a quasi-judicial agency of the government, in the
exercise of its power, abused its discretion; such abuse must be grave.
We find that the CA erred in disregarding the NLRC's conclusion that there had been no
dismissal, and in immediately proceeding to tackle Nightowl's defense that Lumahan All told, we cannot agree with the CA in finding that the NLRC committed grave abuse
abandoned his work. of discretion in evaluating the facts based on the records and in concluding therefrom that
The CA should have first considered whether there had been a dismissal in the first place. Lumahan had not been dismissed.
To our mind, the CA missed this crucial point as it presumed that Lumahan had actually
been dismissed. The CA's failure to properly appreciate this point - which led to its The CA erred when it considered "abandonment of work" generally understood in
erroneous conclusion - constitutes reversible error that justifies the Court's exercise of its employee dismissal situations despite the fact that Nightowl never raised it as a
factual review power. defense.
9
In a case where the employee was neither found to have been dismissed nor to have
As no dismissal was carried out in this case, any consideration of abandonment - as abandoned his/her work, the general course of action is for the Court to dismiss the
a defense raised by an employer in dismissal situations - was clearly misplaced. To complaint, direct the employee to return to work, and order the employer to accept the
our mind, the CA again committed a reversible error in considering that Nightowl
employee.31 However, the Court recognized in Nightowl that when a considerable length
raised abandonment as a defense.
of time had already passed rendering it impossible for the employee to return to work, the
Abandonment, as understood under our labor laws, refers to the deliberate and award of separation pay is proper. Considering that more than ten (10) years had passed
unjustified refusal of an employee to resume his employment. It is a form of neglect since respondent stopped reporting for work on February 5, 2005, up to the date of this
of duty that constitutes just cause for the employer to dismiss the employee. judgment, it is no longer possible and reasonable for the Court to direct respondent to
return to work and order petitioners to accept her. Under the circumstances, it is just and
Under this construct, abandonment is a defense available against the employee who equitable for the Court instead to award respondent separation pay in an amount
alleges a dismissal. Thus, for the employer "to successfully invoke abandonment, whether
equivalent to one (1) month salary for every year of service, computed up to the time she
as a ground for dismissing an employee or as a defense, the employer bears the burden of
proving the employee's unjustified refusal to resume his employment." This burden, of stopped working, or until February 4, 2005.
course, proceeds from the general rule that places the burden on the employer to prove
the validity of the dismissal. WHEREFORE, premises considered, the Petition is GRANTED. The Decision dated
April 29, 2009 and Resolution dated February 8, 2010 of the Court of Appeals in CA-
The CA, agreeing with LA Demaisip, concluded that Lumahan was illegally dismissed G.R. SP No. 01877-MIN is REVERSED and SET ASIDE. The Resolution dated August
because Nightowl failed to prove the existence of an overt act showing Lumahan's 30, 2006 of the National Labor Relations Commission in NLRC CA No. M-009173-06,
intention to sever his employment. To the CA, the fact that Nightowl failed to send
affirming en toto the Decision dated February 21, 2006 of the Labor Arbiter in RAB 12-
Lumahan notices for him to report back to work all the more showed no abandonment
took place. 01-00026-05, is REINSTATED with MODIFICATION that petitioners Dee Jay's Inn
and Cafe and Melinda Ferraris, for just and equitable reasons extant in this case, are
The critical point the CA missed, however, was the fact that Nightowl never raised additionally ORDERED to jointly and severally pay respondent Ma. Lorina P. Raeses
abandonment as a defense. What Nightowl persistently argued was that Lumahan separation pay equivalent to one (1) month salary for every year of service, computed up
stopped reporting for work beginning April 22, 1999; and that it had been waiting for to the time she stopped working, or until February 4, 2005.
Lumahan to show up so that it could impose on him the necessary disciplinary action for
abandoning his post at Steelwork, only to learn that Lumahan had filed an illegal
dismissal complaint. Nightowl did not at all argue that Lumahan had abandoned his
work, thereby warranting the termination of his employment.

Significantly, the CA construed these arguments as abandonment of work under the


labor law construct. We find it clear, however, that Nightowl did not dismiss
Lumahan; hence, it never raised the defense of abandonment.

Besides, Nightowl did not say that Lumahan "abandoned his work"; rather, Nightowl
stated that Lumahan "abandoned his post" at Steelwork. When read together with its G.R. No. 201663, March 31, 2014
arguments, what this phrase simply means is that Lumahan abandoned his assignment at
Steelwork; nonetheless, Nightowl still considered him as its employee whose return they
EMMANUEL M. OLORES, Petitioner, v. MANILA DOCTORS COLLEGE
had been waiting for.
AND/OR TERESITA O. TURLA, Respondent.
DECISION
Finally, failure to send notices to Lumahan to report back to work should not be taken
PERALTA, J.:
against Nightowl despite the fact that it would have been prudent, given the
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
circumstance, had it done so. Report to work notices are required, as an aspect of
seeking the reversal of the January 9, 20121 and April 27, 20122 Resolutions of the Court
procedural due process, only in situations involving the dismissal, or the possibility of
of Appeals (CA) in CAG.R. SP No. 122596.
dismissal, of the employee. Verily, report-to-work notices could not be required when
dismissal, or the possibility of dismissal, of the employee does not exist. (Emphases
The facts, as found by the National Labor Relations Commission (NLRC), are as follows:
supplied, citations omitted.)

10
Respondent is a private higher educational institution dedicated to providing academic [petitioner] with gross misconduct and gross inefficiency in the performance of duty.
degrees and certificate courses related to Allied Medical Services and Liberal Arts and [Petitioner] was accused of employing a grading system not in accordance with the
Sciences. system because he: a) added 50 pts to the final examination raw scores; b) added 50 pts to
students who have not been attending classes; c) credited only 40% instead of 60% of the
[Petitioner] was hired as a parttime faculty of respondent on 07 November 2005. He was final examination; d) did not credit the essay questions; and e) added further incentives
assigned at the Humanities Department of the College of Arts and Sciences. Thereafter, (14 pts) aside from 50 pts. In so doing, [petitioner] gave grades not based solely on
he signed fixed term employment contracts as parttime instructor. From 03 November scholastic records.
2008, [petitioner] signed fixed term employment contracts, this time as a full time
instructor. On 14 April 2010, [petitioner] submitted his answer stating that he: a) did not add 50 pts
to the raw scores as verified by the dean and academic coordinator; b) made certain
For the second semester of academic year 20092010, [petitioner] was given the adjustments to help students pass; c) did not credit the essay questions because these have
following load assignments:chanRoblesvirtualLawlibrary never been discussed in the meetings with Bernardo; and d) did have the judgment to
Subject Year/Section No. of Students give an incentive for a task well done. Also on this date, [petitioner] wrote a letter to
Bioethics BSN 11B6 46 respondents Human Resources Manager asking that he should now be granted a
Bioethics BSN 11B7 40 permanent status.
Bioethics BSN 11A3 40
Meanwhile, summer classes started on 15 April 2010 without [petitioner] having signed
Bioethics BSN 11A4 40 an employment contract.
Bioethics BSN A10 41
Philosophy of Man PSYCH 11 23 Acting on the report of Bernardo, respondent created the Manila Doctors Tribunal (MDT)
Philosophy of Man HNCA 1 43 which was tasked to ascertain the truth. The MDT sent notices of hearing to [petitioner].

Respondents course syllabus for Bioethics and Philosophy of Man outlined the grading During the administrative hearing, [petitioner] stood pat on his answer. He, however,
system as follows:chanRoblesvirtualLawlibrary elucidated on his points by presenting slides.

Bioethics On 31 May 2010, the MDT submitted its recommendation to the president of respondent.
1. Class Standing (40%) The culpability of [petitioner] was established, hence, dismissal was recommended. On
07 June 2010, respondent terminated the services of [petitioner] for grave misconduct and
Quizzes; Recitation; Individual/Group Oral Presentation; Reflection/Reaction gross inefficiency and incompetence.
Papers
2. Midterm/Final Examinations (60%) Aggrieved by the decision of respondent, [petitioner] filed a case for: a) illegal dismissal
Philosophy of Man with a claim for reinstatement; b) nonpayment of service incentive leave and 13th month
1. Class Standing (40%) pay; c) moral and exemplary damages; d) attorneys fees; and e) regularization.3
In a Decision4 dated December 8, 2010, the Labor Arbiter found merit in petitioners
Term Paper and Completion of Reflection Papers; Group Debates on Current charge for illegal dismissal. However, it dismissed petitioners claim for regularization.
Issues; Group Presentation/Discussion; Exercises/Seat Work/ Board Work; The decretal portion of said decision reads:
Recitation; Quizzes; Long Test WHEREFORE, judgment is hereby made finding the [petitioner] to have been illegally
2. Midterm/Final Examinations (60%) dismissed from employment. Concomitantly, the respondent school is hereby ordered to
The midterm/final examination questionnaires for Bioethics and Philosophy of Man were reinstate him as faculty member under the same terms and conditions of his employment,
divided into two (2) parts with the following corresponding without loss of seniority rights but without backwages. However, instead of being
points:chanRoblesvirtualLawlibrary reinstated, the [petitioner] is hereby given the option to receive a separation pay
Bioethics Philosophy of Man equivalent to his full months pay for every year of service, a fraction of at least six
Part I Multiple Choice 65 pts 60 pts months to be considered a full year or the amount of P100,000.00 (his monthly salary of
Part II Essay 15 pts 20 pts P20,000.00) multiplied by the equivalent of five years service.
Total 80 pts 80 pts
Other claims are dismissed for lack of merit.
[Petitioner] submitted the final grades of his students to Mr. Jacinto Bernardo, Jr. SO ORDERED.5
(Bernardo), the chair of the Humanities Area. On 13 April 2010, Bernardo charged

11
Respondent appealed from the aforesaid decision to the NLRC. However, the same was jurisdiction, or with grave abuse of discretion, and there is no appeal, nor any plain,
denied in a Resolution6 dated February 10, 2011. The NLRC reasoned that respondents speedy and adequate remedy in the ordinary course of law. Section 15, Rule VII of the
appeal was not accompanied by neither a cash nor surety bond, thus, no appeal was 2005 Revised Rules of Procedure of the NLRC, which allows the aggrieved party to file a
perfected from the decision of the Labor Arbiter. Pertinent portion of said resolution motion for reconsideration of any decision, resolution or order of the NLRC, constitutes a
reads: plain, speedy and adequate remedy which said party may avail of. Accordingly, in the
Records disclose that the appeal was not accompanied by neither a cash nor surety bond light of the doctrine of exhaustion of administrative remedies, a motion for
as mandated by Section 6, Rule VI of the 2005 Revised Rules of Procedure of the NLRC, reconsideration must first be filed before the special civil action for certiorari may be
to wit availed of.
SECTION 6. BOND. In case the decision of the Labor Arbiter involves a monetary
award, an appeal by the employer may be perfected only upon the posting of a bond, In the instant case, the records do not show and neither does petitioner make a claim that
which shall either be in the form of cash deposit or surety bond equivalent in amount to it filed a motion for reconsideration of the challenged decision before it came to us
monetary award, exclusive of damages and attorneys fees. through this action. It had not, as well, suggested any plausible reason for direct recourse
The Supreme Court in Rural Bank of Coron (Palawan) Inc. vs. Annalisa Cortes, to this Court against the decision in question.
December 6, 2006, emphasized that:
In the case at bar, petitioner did not post a full or partial appeal bond within the WHEREFORE, the instant special civil action for certiorari is DISMISSED.
prescribed period, thus, no appeal was perfected from the Decision of the Labor Arbiter.
For this reason, the decision sought to be appealed to the NLRC had become final and SO ORDERED.10
executory, and therefore, immutable. Clearly then, the NLRC has no authority to entertain Petitioner filed a motion for reconsideration against said resolution.
the appeal much less to reverse the decision of the Labor Arbiter. Any amendment or
alteration made which substantially affects the final and executory judgment is null and In a Resolution dated April 27, 2012, the CA denied petitioners motion for
void for lack of jurisdiction, including the entire proceeding held for that purpose. reconsideration. It ruled that except for his bare allegations, petitioner failed to present
On account of this infirmity, We are (sic) do not have the jurisdictional competence to any plausible justification for dispensing with the requirement of a prior motion for
entertain the appeal. reconsideration. The CA further stated that although there are exceptions to the rule
that certiorari will not lie unless a motion for reconsideration is filed, petitioner
WHEREFORE, the appeal is DISMISSED for NonPerfection. nevertheless failed to prove that his case falls within any of the recognized exceptions.

SO ORDERED.7 Accordingly, petitioner filed the present petition.


Respondent, thus, sought reconsideration of the NLRCs resolution.
Petitioner raises the following grounds to support his petition:
In a Decision8 dated September 30, 2011, the NLRC granted respondents appeal and I.
reversed its earlier resolution. Its fallo reads:
WHEREFORE, premises considered, the appeal is GRANTED. The 08 December 2010 THE COURT OF APPEALS FAR DEPARTED FROM ACCEPTED AND USUAL
Decision if Reversed and a new one entered: a) dismissing the complaint for lack of COURSE OF JURISPRUDENCE WHEN IT IGNORED THE GROSSLY ERRONEOUS
merit; and b) ordering respondent Manila Doctors College to pay [petitioner]s service DECISION OF THE NLRC GIVING DUE COURSE TO AN APPEAL WITHOUT THE
incentive leaves for the last three years. POSTING OF A BOND AS MANDATED BY ARTICLE 223 OF THE LABOR CODE
AND THE 2005 NLRC RULES OF PROCEDURE.
SO ORDERED.9 II.
Resultantly, petitioner filed a certiorari petition with the CA.
THE COURT OF APPEALS FAR DEPARTED FROM THE ACCEPTED AND USUAL
In a Resolution dated January 9, 2012, the CA held that since petitioner failed to file a COURSE OF JURISPRUDENCE WHEN IT FAILED TO RULE THAT THE NLRC
motion for reconsideration against the NLRC decision before seeking recourse to it via DID NOT ACQUIRE JURISDICTION TO REVERSE THE 08 DECEMBER 2010
a certiorari petition, the CA dismissed petitioners special civil action for certiorari, viz.: DECISION OF THE LABOR ARBITER IN FAVOR OF PETITIONER, HENCE, THE
It appears that petitioner has not shown that other than this special civil action under Rule SAME BECAME FINAL, EXECUTORY AND UNAPPEALABLE ON THE PART OF
65, he has no plain, speedy and adequate remedy in the ordinary course of law against his RESPONDENTS.
perceived grievance. III.

It is now settled in our jurisdiction that while it is true that the only way by which a labor THE COURT OF APPEALS FAR DEPARTED FROM THE ACCEPTED AND USUAL
case may reach this Court is through a petition for certiorari under Rule 65 of the Rules COURSE OF JURISPRUDENCE WHEN IT REQUIRED PETITIONER TO FILE
of Court, it must, however, be shown that the NLRC acted without or in excess of ANOTHER MOTION FOR RECONSIDERATION AND GIVE THE NLRC MULTIPLE
12
OPPORTUNITIES TO RECONSIDER THE CASE BEFORE FILING A PETITION
FOR CERTIORARI. Sections 4 (a) and 6 of Rule VI of the New Rules of Procedure of the NLRC, as amended,
IV. reaffirm the explicit jurisdictional principle in Article 223.14 The relevant provisions state:
SECTION 4. Requisites for Perfection of Appeal. (a) The appeal shall be: 1) filed
THE COURT OF APPEALS FAR DEPARTED FROM THE ACCEPTED AND USUAL within the reglementary period provided in Section 1 of this Rule; 2) verified by the
COURSE OF JURISPRUDENCE WHEN IT FAILED TO REALIZE THAT appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, as
CIRCUMSTANCES SURROUNDING THE INSTANT CASE, NONETHELESS, amended; 3) in the form of a memorandum of appeal which shall state the grounds relied
FALLS UNDER THE EXCEPTIONS THE REQUIREMENT OF A MOTION FOR upon and the arguments in support thereof, the relief prayed for, and with a statement of
RECONSIDERATION PRIOR TO THE FILING OF A PETITION FOR CERTIORARI. the date the appellant received the appealed decision, resolution or order; 4) in three (3)
V. legibly type written or printed copies; and 5) accompanied by i) proof of payment of the
required appeal fee; ii) posting of a cash or surety bond as provided in Section 6 of
THE NLRC FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF this Rule; iii) a certificate of nonforum shopping; and iv) proof of service upon the
JURISPRUDENCE WHEN IT FAILED TO RULE THAT PETITIONER HAD other parties.
ALREADY ATTAINED REGULAR STATUS AND REVERSED THE FINDING OF
LABOR ARBITER AMANSEC THAT PETITIONER WAS ILLEGALLY xxxx
DISMISSED.11
Essentially, the issues are: (1) whether respondents appeal with the NLRC was perfected SECTION 6. BOND. In case the decision of the Labor Arbiter or the Regional
despite its failure to post a bond; and (2) whether the CA erred in dismissing petitioners Director involves a monetary award, an appeal by the employer may be perfected
Rule 65 petition. only upon the posting of a bond, which shall either be in the form of cash deposit or
surety bond equivalent in the amount to the monetary award, exclusive of damages
Petitioner asserts that Section 223 of the Labor Code and Section 6, Rule VI of the 2005 and attorneys fees.15
Revised Rules of Procedure of the NLRC are consistent in saying that in case of The posting of a bond is indispensable to the perfection of an appeal in cases involving
judgment involving a monetary amount, an appeal by the employer may be perfected monetary awards from the decisions of the Labor Arbiter. The lawmakers clearly
only upon posting a cash or surety bond. Thus, he argues that since the NLRC did not intended to make the bond a mandatory requisite for the perfection of an appeal by the
acquire jurisdiction over the instant case, the decision of the Labor Arbiter had already employer as inferred from the provision that an appeal by the employer may be perfected
become final and executory. only upon the posting of a cash or surety bond. The word only makes it clear that the
posting of a cash or surety bond by the employer is the essential and exclusive means by
Second, petitioner contends that a motion for reconsideration prior to the filing of which an employers appeal may be perfected. Moreover, the filing of the bond is not
a certiorari petition admits of certain exceptions, that is, when the order appealed from is only mandatory, but a jurisdictional requirement as well, that must be complied with in
a patent nullity and when there is urgency of relief. He argues that the instant case falls order to confer jurisdiction upon the NLRC. Noncompliance therewith renders the
under one of the exceptions, thus, it should be entertained by the court. decision of the Labor Arbiter final and executory. This requirement is intended to assure
the workers that if they prevail in the case, they will receive the money judgment in their
Conversely, respondent asserts that the decision of the Labor Arbiter does not impose a favor upon the dismissal of the employers appeal. It is intended to discourage employers
clear and unqualified monetary obligation upon the respondent, thus, it has no obligation from using an appeal to delay or evade their obligation to satisfy their employees just
to post a bond. and lawful claims.16

Respondent further avers that the CA did not commit grave abuse of discretion in Here, it is undisputed that respondents appeal was not accompanied by any appeal bond
dismissing petitioners certiorari petition for failure to comply with the mandatory despite the clear monetary obligation to pay petitioner his separation pay in the amount of
requirement of filing a motion for reconsideration. It stresses that there is no showing P100,000.00. Since the posting of a bond for the perfection of an appeal is both
that the instant case falls under one of the recognized exceptions to the rule of filing a mandatory and jurisdictional, the decision of the Labor Arbiter sought to be appealed
prior motion for reconsideration. before the NLRC had already become final and executory. Therefore, the NLRC had no
authority to entertain the appeal, much less to reverse the decision of the Labor Arbiter.
There is merit in the petition.
Nevertheless, assuming that the NLRC has jurisdiction to take cognizance of the instant
At the outset, it must be emphasized that Article 22312 of the Labor Code states that an case, this Court would still be inclined to favor petitioner because the instant case falls
appeal by the employer to the NLRC from a judgment of a Labor Arbiter, which involves under one of the recognized exceptions to the rule that a motion for reconsideration is
a monetary award, may be perfected only upon the posting of a cash or surety bond necessary prior to the filing of a certiorari petition.
issued by a reputable bonding company duly accredited by the NLRC, in an amount
equivalent to the monetary award in the judgment appealed from.13 The general rule is that a motion for reconsideration is indispensable before resort to the
13
special civil action for certiorari to afford the court or tribunal the opportunity to correct manner, the petitioner therein filed a certiorari petition without first filing a motion for
its error, if any. The rule is well settled that the filing of a motion for reconsideration is an reconsideration with the NLRC.20 Thus, the Court ruled in that case
indispensable condition to the filing of a special civil action for certiorari.17 The rationale for the requirement of first filing a motion for reconsideration before the
filing of a petition for certiorari is that the law intends to afford the tribunal, board or
The rationale for the requirement of first filing a motion for reconsideration before the office an opportunity to rectify the errors and mistakes it may have lapsed into before
filing of a petition for certiorari is that the law intends to afford the tribunal, board or resort to the courts of justice can be had. In the present case, the NLRC was already
office an opportunity to rectify the errors and mistakes it may have lapsed into before given the opportunity to review its ruling and correct itself when the respondent
resort to the courts of justice can be had.18 filed its motion for reconsideration of the NLRCs initial ruling in favor of
petitioner. In fact, it granted the motion for reconsideration filed by respondent and
However, said rule is subject to several recognized reversed its previous ruling and reinstated the decision of the Labor Arbiter
exceptions:chanRoblesvirtualLawlibrary dismissing the complaint of the petitioner. It would be an exercise in futility to
(a) Where the order is a patent nullity, as where the court a quo has no jurisdiction; require the petitioner to file a motion for reconsideration since the very issues raised
(b) Where the questions raised in the certiorari proceedings have been duly raised in the petition for certiorari, i.e., whether or not the petitioner was constructively
and passed upon by the lower court, or are the same as those raised and passed dismissed by the respondent and whether or not she was entitled to her money
upon in the lower court; claims, were already duly passed upon and resolved by the NLRC. Thus, the NLRC
(c) Where there is an urgent necessity for the resolution of the question and any further had more than one opportunity to resolve the issues of the case and in fact reversed
delay would prejudice the interests of the Government or of the petitioner or the itself upon reconsideration. It is highly improbable or unlikely under the circumstances
subject matter of the action is perishable; that the Commission would reverse or set aside its resolution granting a motion for
reconsideration.21
(d) Where, under the circumstances, a motion for reconsideration would be useless;
All told, the petition is meritorious. However, since this Court is not a trier of facts, 22 we
(e) Where petitioner was deprived of due process and there is extreme urgency for cannot rule on the substantive issue of the case, i.e., whether petitioner has attained
relief; regular status, inasmuch as the CA has not yet passed upon the factual issues raised by
(f) Where, in a criminal case, relief from an order of arrest is urgent and the granting of the parties.
such relief by the trial court is improbable;
(g) Where the proceedings in the lower court are a nullity for lack of due process; WHEREFORE, premises considered, the instant petition is hereby GRANTED and the
(h) Where the proceeding was ex parte or in which the petitioner had no opportunity to Resolutions dated January 9, 2012 and April 27, 2012, respectively, of the Court of
object; and Appeals in CAG.R. SP No. 122596, are hereby REVERSED and SET ASIDE. The
(i) Where the issue raised is one purely of law or where public interest is involved.19 case is REMANDED to the Court of Appeals for further proceedings.

In the instant case, the NLRC had all the opportunity to review its ruling and correct SO ORDERED.
itself.

The NLRC issued a ruling on February 10, 2011 in favor of petitioner dismissing
respondents appeal on the ground that the latter failed to file an appeal bond. However, G.R. No. 180147 June 4, 2014
upon a motion for reconsideration filed by respondent, the NLRC completely reversed
itself and set aside its earlier resolution dismissing the appeal. The NLRC had more than
SARA LEE PHILIPPINES, INC., Petitioner,
enough opportunity to pass upon the issues raised by both parties on appeal of the ruling
of the Labor Arbiter and the subsequent motion for reconsideration of its resolution vs.
disposing the appeal. Thus, another motion for reconsideration would have been useless EMILINDA D. MACATLANG, ET AL.,1 Respondents.
under the circumstances since the questions raised in the certiorari proceedings have
already been duly raised and passed upon by the NLRC. x-----------------------x

In a similar case, the Labor Arbiter rendered a decision dismissing petitioners case for
G.R. No. 180148
lack of merit. On appeal, the NLRC rendered a decision reversing the decision of the
Labor Arbiter and ordered the respondent therein to pay petitioner full backwages,
separation pay, salary differentials, 13th month pay and allowances. Not satisfied, ARIS PHILIPPINES, INC., Petitioner,
respondent therein moved for reconsideration of the aforesaid NLRC resolution. The vs.
NLRC, thereafter, granted respondents motion and reversed its previous ruling. In a like EMILINDA D. MACATLANG, ET AL., Respondents.

14
x-----------------------x reasonableness in the determination of the compliant amount of the bond has been
formulated to allow the review of the arbiters award. However, that rule seemingly
G.R. No. 180149 becomes inadequate when the award staggers belief but is, nonetheless, supported by the
premises of the controversy. The enormity of the award cannot prevent the settlement of
SARA LEE CORPORATION, Petitioner, the dispute. The amount of award may vary case-to-case. But the law remains constant.
vs.
EMILINDA D. MACATLANG, ET AL., Respondents. Before us are six (6) consolidated petitions for review on certiorari pertaining to
the P3,453,664,710.66 (P3.45 Billion) appeal bond, which, as mandated by Article 233 of
x-----------------------x the Labor Code, is equivalent to the monetary award adjudged by the labor arbiter in the
cases. The first 5 petitions seek a relaxation of the rule while the last petition urges its
G.R. No. 180150 strict interpretation.

CESAR C. CRUZ, Petitioner, Petitioners in G.R. Nos. 180147,180148, 180149,180150, and 180319 are Sara Lee
vs. Philippines, Inc. (SLPI), Aris Philippines, Inc. (Aris), Sara Lee Corporation (SLC), Atty.
EMILINDA D. MACA TLANG, ET AL., Respondents. Cesar Cruz (Cruz), and Fashion Accessories Philippines, Inc. (FAPI), respectively and
shall be collectively referred to as the "Corporations."
x-----------------------x
SLPI is a domestic corporation engaged in the manufacture and distribution of personal
G.R. No. 180319 care products and is a subsidiary of SLC.

FASHION ACCESSORIES PHILS., INC., Petitioner, Aris is a domestic corporation engaged in the business of producing gloves and other
vs. apparel.2
EMILINDA D. MACATLANG, ET AL., Respondents.
FAPI is a corporation engaged in the manufacture of knitted products.3
x-----------------------x
SLC, a corporation duly organized and existing under the laws of the United States of
G.R. No. 180685 America, is a stockholder of Aris. It exercised control over Aris, FAPI, and SLPI which
were all its subsidiaries or affiliates.4
EMILINDA D. MACA TLANG, ET AL., Petitioners,
vs. Cruz was the external counsel of Aris at the time of its closure. When Aris filed for its
NLRC, ARIS PHILIPPINES, INC., FASHION ACCESSORIES PHILS., INC., dissolution, Cruz became the Vice-President and Director of Aris.5
SARA LEE CORPORATION, SARA LEE PHILIPPINES, INC., COLLIN BEAL
and ATTY. CESAR C. CRUZ, Respondents. The petition docketed as G.R. No. 180685 is filed by Emilinda D. Macatlang and 5,983
other former employees of Aris. Emilinda D. Macatlang allegedly represents the
DECISION employees whose employment was terminated upon the closure of Aris.

PEREZ, J.: I.

The dilemma of the appeal bond in labor cases is epochal, present whenever the amount This controversy stemmed from a Notice of Permanent Closure filed by Aris on 4
of monetary award becomes debatably impedimental to the completion of remedies. Such September 1995 with the Department of Labor and Employment stating that it will
instances exaggerate the ambivalence between rigidity and liberality in the application of permanently cease its operations effective 9 October 1995. All employees of Aris were
the requirement that the bond must be equal to the arbiters award. The rule of duly informed.

15
Aris Philippines Workers Confederation of Filipino Workers (Union), which represents All other claims are hereby DISMISSED.
5,9846 rank-and-file employees of Aris, staged a strike for violation of duty to bargain
collectively,7 union busting and illegal closure.8 Attached and marked as Annexes "A" to "A-117" and shall form part of this decision are
the lists of complainants and their respective monetary awards.15
After conciliation, the parties entered into an agreement whereby Aris undertook to pay
its employees the benefits which accrued by virtue of the companys closure, which Upon receipt of a copy of the aforesaid decision, the Corporations filed their Notice of
settlement amounted to P419 Million9 and an additional P15 Million10 Benevolent Fund Appeal with Motion to Reduce Appeal Bond and To Admit Reduced Amount with the
to the Union. On 26 October 1995, FAPI was incorporated.11 When said incorporation National Labor Relations Commission (NLRC). They asked the NLRC to reduce the
came to the knowledge of the affected employees, they all filed 63 separate complaints appeal bond to P1 Million each on the grounds that it is impossible for any insurance
against Aris for illegal dismissal. The complaints were consolidated before the labor company to cover such huge amount and that, in requiring them to post in full the appeal
arbiter. Later amendments to the complaint included as respondents SLC, SLP, FAPI and bond would be tantamount to denying them their right to appeal.16 Aris claimed that it
Cruz, and Emilinda D. Macatlang, et al.,is captioned as the complainant, represented in was already dissolved and undergoing liquidation. SLC added that it is not the employer
the suit by Emilinda D. Macatlang. The complaints alleged that FAPI is engaged in the of Emilinda D. Macatlang, et al., and that the latter had already received from Aris their
manufacture and exportation of the same articles manufactured by Aris; that there was a separation pay and other benefits amounting to P419,057,348.24, which covers
mass transfer of Aris equipment and employees to FAPIs plant in Muntinlupa, Rizal; practically more than 10% of the monetary award.17 FAPI, for its part, claimed that its
that contractors of Aris continued as contractors of FAPI; and that the export quota of total assets would not be enough to answer for even a small portion of the award. To
Aris was transferred to FAPI.12 Essentially, the complainants insisted that FAPI was compel it to post a bond might result in complete stoppage of operations. FAPI also cited
organized by the management of Aris to continue the same business of Aris, thereby the possibility that the assailed decision once reviewed will be reversed and set
intending to defeat their right to security of tenure. They likewise impleaded in their aside.18 The Corporations posted a total of P4.5 Million.
subsequent pleadings that SLC and SLP are the major stockholders of FAPI, and Cruz as
Vice-President and Director of Aris. Emilinda D. Macatlang, et al., opposed the motion by asserting that failure to comply
with the bond requirement is a jurisdictional defect since an appeal may only be perfected
Aris countered that it had complied with all the legal requirements for a valid closure of upon posting of a cash bond equivalent to the monetary award provided by Article 223 of
business operations; that it is not, in any way, connected with FAPI, which is a separate the Labor Code.19
and distinct corporation; that the contracts of Aris with its contractors were already
terminated; and that there is no truth to the claim that its export quota with Garments and In light of the impossibility for any surety company to cover the appeal bond and the
Textile Export Board was transferred to FAPI because the export quota is non- huge economic losses which the companies and their employees might suffer if the P3.45
transferable.13 Billion bond is sustained, the NLRC granted the reduction of the appeal bond. The NLRC
issued an Order dated 31 March 200620 directing the Corporations to post an
On 30 October 2004, the Labor Arbiter rendered judgment finding the dismissal of 5,984 additional P4.5 Million bond, bringing the total posted bond to P9 Million. The
complainants as illegal and awarding them separation pay and other monetary benefits dispositive portion of the Order provides: WHEREFORE, premises considered,
amounting to P3,453,664,710.86.14 The dispositive portion of the decision read: respondents are hereby ordered to post bond, either in cash, surety or property, in the
additional amount of FOUR MILLION FIVE HUNDRED THOUSAND PESOS
WHEREFORE, premises all considered, judgment is hereby rendered dismissing the (P4,500,000.00) within an INEXTENDIBLE period of FIFTEEN (15) calendar days from
complaint for unfair labor practice (ULP); declaring that complainants were illegally receipt hereof. To the said extent, the Motion for Reduction is granted. Failure to render
dismissed; ordering respondents to jointly and severally pay them separation pay at one strict compliance with the Order entered herein shall render the dismissal of the appeal
(1) month for every year of service; backwages from the time their compensation was and the decision sought for review, as final and executory.21
withheld until the promulgation of this Decision[,] P5,000.00 moral damages
and P5,000.00 exemplary damages for each of them, and eight percent (8%) attorneys Emilinda D. Macatlang, et al., filed a petition for certiorari before the Court of Appeals,
fee of the total monetary award, less the separation pay they received upon closure of docketed as CA-G.R. SP No. 96363. They charged the NLRC with grave abuse of
API. discretion in giving due course to the appeal of petitioners despite the gross insufficiency
of the cash bond. They declared that the appeal bond must be equivalent to the amount of

16
the award.22 Another petition, this time by Pacita Abelardo, et al., was also filed before NLRC. In Resolutions dated 28 January 2008 and 18 February 2008, this Court resolved
the Court of Appeals and docketed as CA-G.R. SP No. 95919. to consolidate these six (6) cases.27

The Corporations filed a Motion to Dismiss the petition in CA-G.R. SP No. 95919 on the The Corporations argue that the Court of Appeals committed serious error in not
grounds of forum-shopping, absence of authorization from the employees for Emilinda dismissing Emilinda D. Macatlang, et al.s petition due to the filing of two (2) separate
D. Macatlang to file said petition, and for failure to state the material dates.23 petitions for certiorari, namely: Emilinda Macatlang, et al. v. Aris Philippines in CA-G.R.
SP No. 96363 (Macatlang petition) and Pacita S. Abelardo v. NLRC, Aris Philippines, et
While the case was pending, the NLRC issued a Resolution on 19 December 2006 setting al. in CAG.R. SP No. 95919 (Abelardo petition). These two petitions, the Corporations
aside the Decision of the labor arbiter and remanding the case to the "forum of origin for aver, raise identical causes of action, subject matters and issues, which are clearly
further proceedings."24 violative of the rule against forum-shopping. Moreover, the petitioners in the Abelardo
petition28 consist of 411 employees,29 all of whom are also petitioners in the Macatlang
In view of this related development, the Corporations filed their respective Manifestation petition. The Corporations question the authority of Emilinda D. Macatlang to file and
and Motion dated 30 January 2007 praying for the dismissal of the petition for certiorari sign the verification and certification of non-forum shopping because Resolusyon
for being moot and academic. Bilang09-01-1998 (Resolusyon) dated 5 September 1998 did not make any specific
reference or authority that Emilinda D. Macatlang can sign the verification and
On 26 March 2007, the Court of Appeals proceeded to reverse and set aside the 31 March certification against forum shopping on behalf of the other complainants. The
2006 NLRC Resolution and deemed it reasonable under the circumstances of the case to Corporations claim that the Macatlangs petition failed to state the material dates, such as
order the posting of an additional appeal bond of P1 Billion. The dispositive portion of when the NLRC order and resolution were received and when the motion for
the decision decreed: reconsideration thereof was filed.30

WHEREFORE, premises considered, the March 31, 2006 Decision of the 2nd Division of The Corporations impute another error on the Court of Appeals when it did not dismiss
the National Labor Relations Commission, in NLRC NCR CA No. 046685-05, which the petition for being moot and academic despite the fact that on 19 December 2006, the
reduced the required Php 3.453 BILLION Pesos appeal bond to a paltry9 Million Pesos, NLRC had already set aside the decision of the Labor Arbiter. They defend the validity of
is hereby REVERSED and SET ASIDE and a new one issued, to ensure availability of the NLRC resolution in the absence of a temporary restraining order or writ of
hard cash or reliable surety, on which victorious laborers could rely, DIRECTING private preliminary injunction issued by the Court of Appeals.31
respondents to POST additional appeal bond in the amount of Php 1 BILLION Pesos, in
cash or surety, within thirty (30) days from finality of this judgment, as pre-requisite to The Corporations assail the Court of Appeals in directing the posting of an additional
perfecting appeal.25 appeal bond of P1 Billion. They contend that the Court of Appeals overlooked the fact
that Macatlang, et al., had already received their separation pay of P419 Million and P15
All parties filed their Motion for Reconsideration but were later denied by the Court of Million Benevolent Fund which went to the union.32 The Court of Appeals also failed to
Appeals in a Resolution26dated 22 October 2007. exclude the amount awarded to complainants as damages which under the NLRC Rules
have to be excluded. The Corporations seek a liberal interpretation to the requirement of
II. posting of appeal bond in that the NLRC has the power and authority to set a reduced
amount of appeal bond.33
Six (6) petitions for review on certiorariof the Decision of the Court of Appeals were
filed before this Court. They were docketed and entitled as follows: 1) G.R. No. 180147: SLPI also adds that their right to due process was allegedly violated for the following
Sara Lee Philippines, Inc. v. Emilinda D. Macatlang, et al.; 2) G.R. No. 180148: Aris reasons: first, it was never impleaded in the complaints; second, the requirements of
Philippines, Inc. v. Emilinda D. Macatlang, et al.; 3) G.R. No. 180149: Sara Lee service of summons by publication were not complied with as admitted by the labor
Corporation v. Emilinda D. Macatlang, et al.; 4) G.R. No. 180150: Cesar C. Cruz v. arbiter himself thereby making it defective; and third, there was no showing that there
Emilinda D. Macatlang, et al.; 5) G.R. No. 180319: Fashion Accessories Phils., Inc. v. was prior resort to service of summons to the duly authorized officer of the company
Emilinda D. Macatlang, et al.; and 6) G.R. No. 180685: Emilinda D. Macatlang, et al. v. before summons by publication was made to SLPI.34

17
FAPI slams the Court of Appeals for touching on the merits of the case when the only 2. Whether Emilinda D. Macatlang was duly authorized to sign the verification
issue brought to its attention is the NLRCs ruling on the appeal bond. FAPI argues that and certificate of non-forum shopping attached to the Macatlang petition.
the Court of Appeals has no basis in stating that: (1) there were 7,637 employees of Aris
who were already laid off and became complainants when there are in fact only 5,984 3. Whether the petition should be dismissed for failure to state the material
employees of Aris involved in the illegal dismissal case; (2) that the P419 Million was dates.
not proven to have been paid to the complainants when as a matter of fact, records of the
NLRC revealed that the amount was actually paid by Aris to its employees; and (3) that a 4. Whether the service of summons by publication on SLC is defective.
dummy subsidiary referring to FAPI was formed when records disclose that the
ownership, incorporators, officers, capitalization, place of business, and product 5. Whether the subsequent NLRC ruling on the merits during the pendency of
manufactured by FAPI and Aris are different.35 the petition questioning an interlocutory order renders the instant petition moot
and academic.
On the other hand, Emilinda D. Macatlang, et al., in their petition for review on certiorari
assert that the appeal of the Corporations had not been perfected in accordance with 6. Whether the appeal bond may be reduced.
Article 223 of the Labor Code when they failed to post the amount equivalent to the
monetary award in the judgment appealed from amounting to P3.45 Billion. Emilinda D. Before we proceed to the gist of this controversy, we shall resolve the first 3 procedural
Macatlang, et al., submit that the P1 Billion bond is not equivalent to the monetary award issues first.
of P3.45 Billion. More importantly, Emilinda D. Macatlang, et al., accused the Court of
Appeals of extending the period of appeal by prescribing an additional amount to be paid IV.
within a reasonable period of time, which period it likewise determined, in contravention
of Article 223 of the Labor Code. Emilinda D. Macatlang, et al., expound that the filing The Corporations claim that the group of Macatlang committed forum shopping by filing
of a bond outside the period of appeal, even with the filing of a motion to reduce bond, two petitions before the Court of Appeals.
would not stop the running of the period of appeal. Emilinda D. Macatlang, et al., opine
that the Court of Appeals has not been conferred the power to legislate hence it should
Forum shopping is the act of a litigant who repetitively avails of several judicial remedies
have strictly followed Article 223 of the Labor Code, as the same was clear.36
in different courts, simultaneously or successively, all substantially founded on the same
transactions and on the same essential facts and circumstances, and all raising
In an Urgent Manifestation and Motion, the Corporations informed this Court of a substantially the same issues either pending in or already resolved adversely by some
Resolution dated 30 March 2009 by the Third Division of this Court entitled, "Gabriel other court, to increase his chances of obtaining a favorable decision if not in one court,
Fulido, et al. v. Aris Philippines, Inc." docketed as G.R. No. 185948 (Fulido case) then in another.38
denying the petition for review filed by complainants in that case. The Corporations
intimate that the petitioners in the Fulido case are also former employees of Aris whose
What is pivotal in determining whether forum shopping exists or not is the vexation
employments were terminated as a result of Aris permanent closure. Petitioners submit
caused the courts and parties-litigants by a party who asks different courts and/or
that Emilinda D. Macatlang, et al., and petitioners in the Fulidocase filed illegal dismissal
administrative agencies to rule on the same or related cases and/or grant the same or
cases before the NLRC seeking identical reliefs. Considering the identity in essential
substantially the same reliefs, in the process creating the possibility of conflicting
facts and basic issues involved, petitioners argue that there is compelling reason to adopt
decisions being rendered by the different courts and/or administrative agencies upon the
and incorporate by reference the conclusion reached in the Fulido case.37
same issues.39

III.
Forum shopping exists when the elements of litis pendentia are present, and when a final
judgment in one case will amount to res judicatain the other. For litis pendentia to be a
The issues raised in these consolidated cases can be summarized as follows: ground for the dismissal of an action, there must be: (a) identity of the parties or at least
such as to represent the same interest in both actions; (b) identity of rights asserted and
1. Whether the filing of two (2) petitions for certiorari, namely: the Macatlang relief prayed for, the relief being founded on the same acts; and (c) the identity in the two
petition and the Abelardo petition constitutes forum shopping.

18
cases should be such that the judgment which may be rendered in one would, regardless V.
of which party is successful, amount to res judicata in the other.40
Next, the Corporations complain that Macatlang was not duly authorized to sign the
The Macatlang petition was filed on 8 September 2006 while the Abelardo petition was verification and certification of non-forum shopping which accompanied the main
filed 10 days later, or on 18 September 2006. Indeed, these two petitions assailed the petition before the Court of Appeals. They anchored their argument on Resolusyon,
same order and resolution of the NLRC in NLRC CA No. 046685-05, entitled Emilinda which reads in part:
Macatlang, et al. v. Aris Philippines, Inc., et al., and sought for the dismissal of the
Corporations appeal for non-perfection because of failure to post the required appeal 1. Aming binigyan ng karapatan sina ERNESTO R. ARELLANO AT/O VILLAMOR
bond. A judgment in either case would have, if principles are correctly applied, amounted MOSTRALES, aming mga abogado/legal advisers ng Arellano & Associates at si
to res judicatain the other. EMILINDA D. MACATLANG, aming head complainant, bilang aming ATTORNEYS-
IN-FACT para katawanin at kanilang gampanan ang mga sumusunod na Gawain
At first glance, it appears that there is also identity of parties in both petitions which is alinsunod sa aming kagustuhan:
indicative of forum-shopping. The Macatlang petition consists of 5,984 dismissed
employees of Aris while the Abelardo petition has 411 dismissed employees, all of which a. Na, kami ay katawanin sa kaso o mga kaso laban sa mga nabanggit na Kompanya:
were already included as petitioners in the Macatlang petition. With respect to these 411 ARIS, FAPI ATSARA LEE CORP./SARA LEE PHILS., INC.at sa mga opisyales ng mga
petitioners, they could be declared guilty of forum shopping when they filed the Abelardo nabanggit; pirmahan ang anumang demanda o "complaint" at lahat namga kaukulang
petition despite the pendency of the Macatlang petition. As a matter of fact, the Abelardo papeles tulad ng Position Paper, Reply, Rejoinder, Memorandumat iba pang papeles na
petition was dismissed by the Court of Appeals in a Resolution dated 17 November2006 may kinalaman o patungkol sakasong ito simula sa NLRC, Court of Appeals, hanggang
on the ground of a defective certification on non-forum shopping, among others.41 The sa Korte Suprema;
Abelardo petition appears to be defective as the petition itself was replete with procedural
infirmities prompting the Court of Appeals to dismiss it outright. Instead of curing the b. Na, aming malayang iniaatangsa kanila ang karapatan upang makipagkasundo sa mga
defects in their petition, petitioners in Abelardo revealed that pertinent documents which nademanda sa pamamagitan ng isang "Compromise Agreement"o Kasunduan, gayon din
should have been attached with their petition were actually submitted before the ang karapatang tanggapin ang kabuuang kabayaran sa aregluhan sa kaso na ayon sa
Sixteenth Division of the Court of Appeals where the Macatlang petition was pending. kanilang pagsusuri ay mabuti at makatarungan para sa amin, kaakibat ng aming mga
Evidently, petitioners in Abelardo have foreknowledge of an existing petition but pirmang tanda ng pagsang-ayon ito bilang mayoria na nagdemanda o tanggapin ang
nevertheless proceeded to file another petition and omitting to mention it in their kabuuang bayad sa pagtatapos ng kaso, bilang aming kinatawan at ATTORNEYS-IN-
certification on non-forum shopping, either intentionally or not. Clearly, the petitioners in FACT;
the Abelardo petition committed forum shopping.
c. Na, sa kanilang puspusan at matapat na paghawak sa naturang kaso, aming ibibigay
Now, should the act of these 411 employees prejudice the rights of the 5,573 other ang sampung porsiyento (10%)ng aming "total claims"bilang attorneys fees ng aming
complainants in the Macatlang petition? The answer is no. Forum shopping happens humawak na abogado/legal adviser: sina Atty. Ernesto R. Arellano and/or Villamor A.
when there is identity of the parties or at least such as to represent the same interest in Mostrales at gayon din sa karagdagang panagot sa kanilang ginastos, gagastusin sa
both actions. We do not agree that the 411 petitioners of the Abelardo petition are pagtatanggol ng kaso bilang miscellaneous expensessa kanilang ma[a]yos na pagsulong
representative of the interest of all petitioners in Macatlang petition. First, the number is at pagtangan ng aming pangkalahatang interes sa naturang kaso.42
barely sufficient to comprise the majority of petitioners in Macatlang petition. Second, it
would be the height of injustice to dismiss the Macatlang petition which evidently enjoys From the foregoing document, it can easily be gleaned that Macatlang was assigned by
the support of an overwhelming majority due to the mistake committed by petitioners in the complainants as their attorney-in-fact to perform the following acts: 1) to represent
the Abelardo petition. In the absence of substantial similarity between the parties in them in the case/cases filed against Aris, FAPI, SLC, and SLPI; sign any complaint,
Macatlang and Abelardo petitions, we find that the petitioners in Macatlang petition did pleadings, or any other documents pertinent or related to the instant case brought before
not commit forum shopping. This view was implicitly shared by the Thirteenth Division the NLRC, Court of Appeals, and Supreme Court; 2) to enter into any compromise
of the Court of Appeals when it did not bother to address the issue of forum shopping agreement or settlement; and 3) to receive the full payment as a consequence of any
raised by petitioners therein precisely because at the time it rendered the assailed settlement. The first act necessarily encompasses the authority to sign any document
decision, the Abelardo petition had already been summarily dismissed.
19
related to NLRC NCR No. 00-04-03677-98. The petition for review on certiorari is one Well-settled is the doctrine that appeal is not a constitutional right, but a mere statutory
of these documents. Supreme Court Circular Nos. 28-91 and 04-94 require a Certification privilege. Hence, parties who seek to avail themselves of it must comply with the statutes
of Non-Forum Shopping in any initiatory pleading filed before the Supreme Court and or rules allowing it.46 The primary rule governing appeal from the ruling of the labor
the Court of Appeals while Section 1, Rule 45 of the Rules of Civil Procedure requires arbiter is Article 223 of the Labor Code which provides:
the petition for review on certiorari to be verified, thereby making the verification and
certification of non-forum shopping essential elements of a petition for review on Art. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and
certiorari, which Macatlang herself was authorized under the Resolusyon to sign. executory unless appealed to the Commission by any or both parties within ten
(10)calendar days from receipt of such decisions, awards, or orders. Such appeal may be
VI. entertained only on any of the following grounds:

The Corporations argue that the case before the Court of Appeals should have been a. If there is prima facie evidence of abuse of discretion on the part of the Labor
dismissed for failure of Macatlang to state the material dates in the petition. Section 3, Arbiter;
Rule 46 of the Rules of Court mandates that in a petition for certiorari before the Court of
Appeals, the material dates showing when notice of the judgment orfinal order or b. If the decision, order or award was secured through fraud or coercion,
resolution assailed was received, when the motion for reconsideration was filed, and including graft and corruption;
when notice of the denial thereof was received, must be indicated. Under the same rule,
failure to state the material dates shall be a ground for dismissal of the petition. The c. If made purely on questions of law; and d. If serious errors in the findings of
rationale for the requirement is to enable the appellate court to determine whether the facts are raised which would cause grave or irreparable damage or injury to the
petition was filed within the period fixed in the rules.43 However, the strict requirements appellant.
of the law may be dispensed with in the interest of justice. It may not be amiss to point
out this Courts ruling in the case of Acaylar, Jr. v. Harayo,44 and we quote: In case of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding
We also agree with the petitioner that failure to state the material dates is not fatal to his company duly accredited by the Commission in the amount equivalent to the monetary
cause of action, provided the date of his receipt, i.e., 9 May 2006, of the RTC Resolution award in the judgment appealed from. (Emphasis supplied).
dated 18 April 2006 denying his Motion for Reconsideration is duly alleged in his
Petition. In the recent case of Great Southern Maritime Services Corporation v. Acua, Article 223, under Presidential Decree No. 442, was amended by Republic Act No. 6715
we held that "the failure to comply with the rule on a statement of material dates in the to include the provision on the posting of a cash or surety bond as a precondition to the
petition may be excused since the dates are evident from the records." The more material perfection of appeal.
date for purposes of appeal to the Court of Appeals is the date of receipt of the trial
court's order denying the motion for reconsideration. The other material dates may be The requisites for perfection of appeal as embodied in Article 223, as amended, are: 1)
gleaned from the records of the case if reasonably evident.45 payment of appeal fees; 2) filing of the memorandum of appeal; and 3) payment of the
required cash or surety bond.47 These requisites must be satisfied within 10days from
In the instant case, the Corporations alleged in their petition before the Court of Appeals receipt of the decision or order appealed from.
that when they received the Resolution of the NLRC on 6 July 2006, it can be determined
whether the appeal to the Court of Appeals was filed within the 60-day reglementary In YBL v. NLRC,48 the Court was more liberal in construing Article 223. The NLRC
period. And as a matter of fact, the appeal was filed on 8 September 2006, and well dismissed the appeal for failure to post the bond. The Court favored the appellant partly
within the 60-day period. because the appeal was made just after six (6) days from the effectivity of the Interim
Rules of Republic Act No. 6715. The Court observed that both parties did not know about
VII. the new rule yet.

Having disposed the procedural issues, we now tackle the Corporations arguments, in the
main, calling for a reduction of the appeal bond.

20
It is presumed that an appeal bond is only necessary in cases where the labor arbiters only P5,072,277.73, according to the respondent's computation, was due and owing to the
decision or order contains a monetary award. Conversely, when the labor arbiter does not petitioners.
state the judgment award, posting of bond may be excused.
In sum, the NLRC may dispense of the posting of the bond when the judgment award is:
In YBL, the exact total amount due to the private respondents as separation pay was not (1) not stated or(2) based on a patently erroneous computation. Sans these two (2)
stated which would have been the basis of the bond that is required to be filed by instances, the appellant is generally required to post a bond to perfect his appeal.
petitioners under the said law.
The Court adhered to a strict application of Article 223 when appellants do not post an
From an award of backwages and overtime pay by the labor arbiter in Rada v. appeal bond at all. By explicit provision of law, an appeal is perfected only upon the
NLRC,49 petitioner therein failed to post the supersedeas bond. Nevertheless, the Court posting of a cash or surety bond. The posting of the appeal bond within the period
gave due course to the appeal for "the broader interests of justice and the desired provided by law is not merely mandatory but jurisdictional.57 The reason behind the
objective of resolving controversies on the merits." The amount of the supersedeas bond imposition of this requirement is enunciated in Viron Garments Mfg. Co., Inc. v.
could not be determined and it was only in the NLRC order that the amount was specified NLRC,58 thus:
and which bond, after extension granted by the NLRC, was timely filed by petitioner.
The requirement that the employer post a cash or surety bond to perfect its/his appeal is
In the same vein, the Court in Blancaflor v. NLRC,50 excused the failure of appellant to apparently intended to assure the workers that if they prevail in the case, they will receive
post a bond due to the failure of the Labor Arbiter to state the exact amount of back the money judgment in their favor upon the dismissal of the employer's appeal. It was
wages and separation pay due. intended to discourage employers from using an appeal to delay, or even evade, their
obligation to satisfy their employees' just and lawful claims.59
Citing Taberrah v. NLRC51 and National Federation of Labor Union v. Hon. Ladrido
III,52 the Court in Orozco v. The Fifth Division of the Court of Appeals53 postulated that Thus, when petitioners, in the cases of Ong v. Court of Appeals,60 Rural Bank of Coron
"respondents cannot be expected to post such appeal bond equivalent to the amount of the (Palawan), Inc. v. Cortes,61Sy v. ALC,62 Ciudad Fernandina Food Corporation Employees
monetary award when the amount thereof was not included in the decision of the labor Union-Association Labor Unions v. Court of Appeals,63 and Stolt-Nielsen Maritime
arbiter." The computation of the amount awarded to petitioner was not stated clearly in Services, Inc. v. NLRC,64 did not post a full or partial appeal bond, it was held that no
the decision of the labor arbiter, hence, respondents had no basis in determining the appeal was perfected. A longer look on past rulings would show that:
amount of the bond to be posted.
In Nationwide Security and Allied Services, Inc. v. NLRC,65 it was found that petitioners
Furthermore, when the judgment award is based on a patently erroneous computation, the had funds from its other businesses to post the required bond. The Court did not find as
appeal bond equivalent to the amount of the monetary award is not required to be posted. acceptable petitioners excuse, that "[using] funds from sources other than that earned
Erectors, Inc. v. NLRC54 is a good example on this point. The NLRCs order to post a from [its company is not] a sound business judgment" to exempt it from posting an
bond of P1,576,224.00 was nullified because the bond was erroneously computed on the appeal bond.
basis of the salary which the employee was no longer receiving at the time of his
separation. Petitioners failure in Mers Shoes Mfg, Inc. v. NLRC,66 to post the required bond within
the reglementary period after it has been ordered reduced, justified the dismissal of its
Also, since the computation of the award in Star Angel Handicraft v. NLRC55 was based appeal.
on erroneous wage and that a big portion of the award had already prescribed, the non-
posting of appeal bond was excused. The labor arbiters decision in Santos v. Velarde67 stated the exact award of backwages to
be paid by petitioner, thus the Court affirmed the dismissal of the appeal by the non-
In Dr. Postigo v. Phil. Tuberculosis Society, Inc.,56 respondent deferred the posting of the payment of the appeal bond within the 10-day period provided by law.
surety bond in view of the alleged erroneous computation by the labor arbiter of the
monetary award. While the labor arbiter awarded P5,480,484.25 as retirement benefits,

21
Even if petitioner in Heritage Hotel Manila v. NLRC68 questioned as basis of the appeal Supreme Court in an amount equivalent to the monetary award, exclusive of moral and
bond the computation of the monetary award, the Court did not excuse it from posting a exemplary damages and attorneys fees.
bond in a reasonable amount or what it believed to be the correct amount.
The employer as well as counsel shall submit a joint declaration under oath attesting that
69
In Banahaw Broadcasting Corporation v. Pacana III, the NLRC issued an order denying the surety bond posted is genuine and that it shall be in effect until final disposition of the
petitioners motion for recomputation of the monetary award and ordered it to post the case.
required bond within 10 days.
The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the
When BBC further demonstrated its unwillingness by completely ignoring this warning amount of the bond. (As amended by Nov. 5, 1993) (Emphasis Supplied).
and by filing a Motion for Reconsideration on an entirely new ground, we held that the
NLRC cannot be said to have committed grave abuse of discretion by making good its Thus, appellants are given the option to file a motion to reduce the amount of bond only
warning to dismiss the appeal.70 in meritorious cases. In the NLRC New Rules of Procedure promulgated in 2002, another
qualification to the reduction of an appeal bond was added in Section 6 thereof:
Upon the other hand, the Court did relax the rule respecting the bond requirement to
perfect appeal in cases where: (1) there was substantial compliance with the Rules, (2) No motion to reduce bond shall be entertained except on meritorious grounds, and only
surrounding facts and circumstances constitute meritorious grounds to reduce the bond, upon the posting of a bond in a reasonable amount in relation to the monetary award.
(3) a liberal interpretation of the requirement of an appeal bond would serve the desired (Emphasis Supplied).
objective of resolving controversies on the merits, or (4) the appellants, at the very least,
exhibited their willingness and/or good faith by posting a partial bond during the Said Rules significantly provide that:
reglementary period.71
The filing of the motion to reduce bond without compliance with the requisites in the
In Lopez v. Quezon City Sports Club Inc.,72 the posting of the amount of P4,000,000.00 preceding paragraphs, shall not stop the running of the period to perfect an appeal.
simultaneously with the filing of the motion to reduce the bond to that amount, as well as
the filing of the memorandum of appeal, all within the reglementary period, altogether Clearly therefore, the Rules only allow the filing of a motion to reduce bond on two (2)
constitute substantial compliance with the Rules. In Intertranz Container Lines, Inc. v. conditions: (1) that there is meritorious ground and (2) a bond in a reasonable amount is
Bautista,73 this Court has relaxed the appeal bond requirement when it was clear from the posted. Compliance with the two conditions stops the running of the period to perfect an
records that petitioners never intended to evade the posting of an appeal bond. In appeal provided that they are complied within the 10-day reglementary period.
Semblante v. Court of Appeals,74 the Court stated that the rule on the posting of an appeal
bond cannot defeat the substantive rights of respondents to be free from an unwarranted In Ramirez v. Court of Appeals,77 the Court did not find any merit to reduce the bond.
burden of answering for an illegal dismissal for which they were never responsible. It Although Ramirez posted an appeal bond, the same was insufficient, as it was not
was found that respondents, not being petitioners employees, could never have been equivalent to the monetary award of the Labor Arbiter. Moreover, when Ramirez sought a
dismissed legally or illegally. In the recent case of Garcia v. KJ Commercial,75 respondent reduction of the bond, he merely said that the bond was excessive and baseless without
showed willingness to post a partial bond when it posted a P50,000.00 cash bond upon amplifying why he considered it as such.
filing of a motion to reduce bond. In addition, when respondents motion for
reconsideration was denied, it posted the full surety bond. The grounds to be cited in the motion to reduce must be valid and acceptable. For
instance, in Pasig Cylinder, Mfg., Corp. v. Rollo,78 we found as acceptable reason for
The old NLRC Rules of Procedure, which took effect in 5 November 1993,76 provides: reducing the appeal bond the downscaling of their operations considered together with
the amount of the monetary award appealed. In University Plans Incorporated v.
SECTION 6. Bond. In case the decision of a Labor Arbiter POEA Administrator and Solano,79 the fact of receivership was considered as a meritorious ground in reducing the
Regional Director or his duly authorized hearing officer involves a monetary award, an appeal bond.
appeal by the employer shall be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission or the

22
Since the intention is merely to give the NLRC an idea of the justification for the reduced While McBurnie has effectively addressed the preliminary amount of the bond to be
bond, the evidence for the purpose would necessarily be less than the evidence required posted in order to toll the running of the period to appeal, there is no hard and fast rule in
for a ruling on the merits.80 As a matter of fact, in Star Angel, the NLRC was ordered to determining whether the additional bond to be posted is reasonable in relation to the
make a preliminary determination on the merits for granting a reduction of the appeal judgment award.
bond. In University Plans, the Court took into consideration the fact that petitioner was
under receivership and it was possible that petitioner has no liquid asset and it could not In Rosewood Processing Inc. v. NLRC,84 we found the reduced bond of P50,000.00
raise the amount of more than P3Million within a period of 10-days from receipt of the acceptable as substantial compliance relative to the P789,000.00 judgment award. In
Labor Arbiters judgment. Therefore, the Court ordered a remand of the case to the Nicol, the P10 Million bond was enough to perfect appeal from a P51.9 Million judgment
NLRC for the conduct of preliminary determination of the merit or lack of merit of award.
petitioners motion to reduce bond. The Court adopted the ruling in Nicol v. Footjoy
Industrial Corp., where the case was also remanded to the NLRC to determine the merits In Lopez v. Quezon City Sports Club, Inc., the NLRC ordered the posting of an
of the motion to reduce in view of our finding that the NLRC in that case gravely abused additional P6 Million and held as compliant a P10 Million bond relative to the judgment
its discretion when it dismissed Footjoys appeal, without even receiving evidence from award of P27 Million. In Pasig Cylinder Mfg. Corp. v. Rollo, we ruled that the reduced
which it could have determined the merit or lack of it of the motion to reduce the appeal appeal bond of P100,00.00 satisfies the requirement for an appeal from the judgment
bond. award of P3.13 Million. In University Plans, the P30,000.00 bond was accepted in
perfecting an appeal from a P3.013 Million judgment.
In the recent case of McBurnie v. Ganzon,81 we held that merit may "pertain to an
appellants lack of financial capability to pay the full amount of the bond, the merits of In the case at bar, the motion to reduce bond filed by the Corporations was resolved by
the main appeal such as when there is a valid claim that there was no illegal dismissal to the NLRC in the affirmative when it found that there are meritorious grounds in reducing
justify the award, the absence of an employer-employee relationship, prescription of the bond such as the huge amount of the award and impossibility of proceeding against
claims, and other similarly valid issues that are raised in the appeal. For the purpose of the Corporations properties which correspond to a lower valuation. Also, the NLRC took
determining a meritorious ground, the NLRC is not precluded from receiving evidence, into consideration the fact of partial payment of P419 Million. The NLRC found the P4.5
or from making a preliminary determination of the merits of the appellants Million bond posted by the Corporations as insufficient, hence ordering them to post an
contentions."82 additional P4.5 Million. Thus, P9 Million was held as the amount of the bond as reduced.

In order to toll the running of the period to appeal once the motion for reduction is filed, The Court of Appeals found the amount of the appeal bond adjudged by the NLRC as
McBurnie has set a parameter on what amount is reasonable for such purpose: measly and insufficient and raised it to P1 Billion. The appellate court rationalized:

To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that The required Php3.453 BILLION appeal bond sought to be reduced by the private
give parties the chance to seek a reduction of the appeal bond are effectively carried out, respondents is equivalent to an average of Php452,140.00 separation pay for each of the
without however defeating the benefits of the bond requirement in favor of a winning 7,637 employees held to be illegally dismissed by the employer who sought a reduction
litigant, all motions to reduce bond that are to be filed with the NLRC shall be of the required Php3.453 BILLION appeal bond because the employer allegedly put up
accompanied by the posting of a cash or surety bond equivalent to 10% of the monetary Php428 Million which consists of the Php419 MILLION unpaid commitment plus the
award that is subject of the appeal, which shall provisionally be deemed the reasonable Php9 Million already paid-up cash appeal bond.
amount of the bond in the meantime that an appellants motion is pending resolution by
the Commission. In conformity with the NLRC Rules, the monetary award, for the Even if we consider Php 419 MILLION unpaid commitment plus the Php 9 Million
purpose of computing the necessary appeal bond, shall exclude damages and attorneys already paid-up cash appeal bond, the unpaid appeal bond is still Php 3.025 BILLION.
fees. Only after the posting of a bond in the required percentage shall an appellants Php428 Million is still miniscule compared to the Php3.025 BILLION unpaid portion of
period to perfect an appeal under the NLRC Rules be deemed suspended.83 (Emphasis the appeal bond. What the 7,637 workers need is cash or surety guaranty in the event of
and underline supplied). renewed victory on appeal for the 7,637 petitioners-employees who were awarded one
month salary for every year of service as separation pay totaling Php3.453 BILLION
Pesos. Php419 MILLION Pesos promise and the Php3.025 BILLION unpaid appeal bond

23
both become more obscure if the employer would be permitted to subsequently employ SECTION 6. BOND. - In case the decision of the Labor Arbiter, POEA Administrator
artifices to evade execution of judgment. and Regional Director or his duly authorized hearing officer involves a monetary award,
an appeal by the employer shall be perfected only upon the posting of a cash or surety
The decision to reduce the amount of appeal bond is not a blanket power to the NLRC, bond issued by a reputable bonding company duly accredited by the Commission or the
because the discretion is not unbridled and is subject to strict guidelines because Art. 223 Supreme Court in an amount equivalent to the monetary award, exclusive of moral and
of the Labor Codeis a rule of jurisdiction that affords little leeway for liberal exemplary damages and attorneys fees.
interpretation. The order of the NLRC reducing the required appeal bond from Php 3.453
BILLION Pesos to only Php 9 MILLION Pesos is in grave abuse of its discretion and Subsequently, in an amendment by NLRC Resolution No. 01-02, Series of 2002, the rules
therefore void, not to mention that it is per se unreasonable and without factual basis. in effect at the time the appeal bond was interposed by the Corporations, the provision on
exclusion of damages and attorneys fees was retained:86
We have considered the circumstances and evidence presented in this case relative to the
motion to reduce appeal bond.1wphi1 We have taken into consideration the Php 419 SECTION 6. BOND. - In case the decision of the Labor Arbiter or the Regional Director
MILLION unpaid commitment plus the Php 9 Million already paid-up cash appeal bond, involves a monetary award, an appeal by the employer may be perfected only upon the
and the resulting unpaid appeal bond which is still Php 3.025 BILLION. We still deem it posting of a cash or surety bond. The appeal bond shall either be in cash or surety in an
proper under the law and the Constitution for the protection of labor that private amount equivalent to the monetary award, exclusive of damages and attorneys fees.
respondents be required as pre-requisite to perfecting appeal, to POST, within thirty (30)
days from finality of this judgment, additional appeal bond of Php 1 BILLION Pesos, in Thus, under the applicable rules, damages and attorneys fees are excluded from the
cash or surety, which amount is even less than one-third (1/3) of the original appeal bond computation of the monetary award to determine the amount of the appeal bond. We shall
required by law, which We hold to be reasonable under the circumstances and to be based refer to these exclusions as "discretionaries," as distinguished from the "mandatories" or
on the evidence presented in this case. The additional appeal bond of Php 1 BILLION is those amounts fixed in the decision to which the employee is entitled upon application of
equivalent to an average of Php 130,941.46 (instead of the original average of the law on wages. These mandatories include awards for backwages, holiday pay,
Php452,140.00) for each of the alleged illegally dismissed 7,637 workers.85 Notably, the overtime pay, separation pay and 13th month pay.
computation of the judgment award in this case includes damages.
As a matter of fact, in Erectors, Inc. v. NLRC,87 it was concluded that no bond is required
The NLRC Interim Rules on Appeals under Republic Act No. 6715 specifically provides if an appeal raises no question other than as regards the award of moral and/or exemplary
that damages shall be excluded in the determination of the appeal bond, thus: damages. In Cosico, Jr., v. NLRC,88 the employer was held to have substantially complied
with the requirement when it posted the bond on time based on the monetary award for
SECTION 7. Bond. In case of a judgment of the Labor Arbiter involving a monetary backwages and thirteenth month pay, excluding the exorbitant award for moral and
award, an appeal by the employer shall be perfected only upon the posting of a cash or exemplary damages.
surety bond issued by a reputable bonding company duly accredited by the Commission
in an amount equivalent to the monetary award in the judgment appealed from. The judgment award in the instant case amounted to an immense P3.45 Billion. The
award is broken down as follows: backwages, separation pay, moral and exemplary
For purposes of the bond required under Article 223 of the Labor Code, as amended, the damages. For purposes of determining the reasonable amount of the appeal bond, we
monetary award computed as of the date of promulgation of the decision appealed from reduce the total amount of awards as follows:
shall be the basis of the bond. For this purpose, moral and exemplary damages shall not
be included in fixing the amount of the bond. The mandatories comprise the backwages and separation pay. The daily wage rate of an
employee of Aris ranges from P170-P200. The average years of service ranges from 5-35
Pending the issuance of the appropriate guidelines for accreditation, bonds posted by years. The backwages were computed at 108 months or reckoned from the time the
bonding companies duly accredited by the regular courts, shall be acceptable. (Emphasis employees were actually terminated until the finality of the Labor Arbiters Decision.
supplied). When the rules were amended in 1993, attorneys fees were also excluded in Approximately, the amount to be received by an employee, exclusive of damages and
the judgment award for the purpose of computing the appeal bond, viz: attorneys fees, is about P600,000.00. The Labor Arbiter granted moral damages
amounting to P10,000.00, and another P10,000.00 as exemplary damages. The total

24
number of employees receiving P20,000.00 each for damages is 5,984, bringing the total the NLRC is DIRECTED to act with dispatch to resolve the merits of the case upon
amount of damages to P119,680,000.00. This amount should be deducted as well as perfection of the appeal.
the P419 Million unpaid commitment plus the P 9 Million already paid-up cash appeal
bond from the actual amount to determine the amount on which to base the appeal bond. SO ORDERED.
Thus, the total amount is P2.9 Billion.

We sustain the Court of Appeals in so far as it increases the amount of the required appeal
bond. But we deem it reasonable to reduce the amount of the appeal bond to P725
Million. This directive already considers that the award if not illegal, is extraordinarily
G.R. No. 198967, March 07, 2016
huge and that no insurance company would be willing to issue a bond for such big
JOSE EMMANUEL P. GUILLERMO, Petitioner, v. CRISANTO P.
money. The amount of P725 Million is approximately 25% of the basis above calculated. USON, Respondent.
It is a balancing of the constitutional obligation of the state to afford protection to labor DECISION
which, specific to this case, is assurance that in case of affirmance of the award, recovery PERALTA, J.:
is not negated; and on the other end of the spectrum, the opportunity of the employer to Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
appeal. Court seeking to annul and set aside the Court of Appeals Decision1 dated June 8, 2011
and Resolution2 dated October 7, 2011 in CA G.R. SP No. 115485, which affirmed in
toto the decision of the National Labor Relations Commission (NLRC).
By reducing the amount of the appeal bond in this case, the employees would still be
assured of at least substantial compensation, in case a judgment award is affirmed. On the The facts of the case follow.
other hand, management will not be effectively denied of its statutory privilege of appeal.
On March 11, 1996, respondent Crisanto P. Uson (Uson) began his employment with
VIII. Royal Class Venture Phils., Inc. (Royal Class Venture) as an accounting
clerk.3 Eventually, he was promoted to the position of accounting supervisor, with a
salary of Php13,000.00 a month, until he was allegedly dismissed from employment on
The Corporations invoked the decision issued by the NLRC last 19 December 2006 December 20, 2000.4
which set aside the labor arbiters decision and ordered remand of the case to the forum
of origin to have the instant petitions dismissed for being moot. On March 2, 2001, Uson filed with the Sub-Regional Arbitration . Branch No. 1,
Dagupan City, of the NLRC a Complaint for Illegal Dismissal, with prayers for
When the NLRC granted the motion to reduce the appeal bond and the Corporations backwages, reinstatement, salaries and 13thmonth pay, moral and exemplary damages and
attorney's fees against Royal Class Venture.5
posted the required additional bond, the appeal was deemed to have been perfected. The
act of the NLRC in deciding the case was based on petitioners appeal of the labor Royal Class Venture did not make an appearance in the case despite its receipt of
arbiters ruling, which it deemed to have been perfected and therefore, ripe for decision. summons.6

Prudence however dictates that the NLRC should not have decided the case on its merits On May 15, 2001, Uson filed his Position Paper7 as complainant.
during the pendency of the instant petition. The very issue raised in the petitions
determines whether or not the appeal by the Corporations has been perfected. Until its On October 22, 2001, Labor Arbiter Jose G. De Vera rendered a Decision8 in favor of the
complainant Uson and ordering therein respondent Royal Class Venture to reinstate him
resolution, the NLRC should have held in abeyance the resolution of the case to prevent to his former position and pay his backwages, 13th month pay as well as moral and
the case from being mooted. The NLRC decision was issued prematurely. exemplary damages and attorney's fees.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 96363 dated 26 Royal Class Venture, as the losing party, did not file an appeal of the
March 2007 is MODIFIED. The Corporations are directed to post 1!725 Million, in cash decision.9 Consequently, upon Uson's motion, a Writ of Execution10 dated February 15,
or surety bond, within TEN ( 10) days from the receipt of this DECISION. The 2002 was issued to implement the Labor Arbiter's decision.
Resolution of the NLRC dated 19 December 2006 is VACATED for being premature and
On May 17, 2002, an Alias Writ of Execution11 was issued. But with the judgment still
unsatisfied, a Second Alias Writ of Execution12 was issued on September 11, 2002.
25
Again, it was reported in the Sheriff's Return that the Second Alias Writ of Execution Guillermo elevated the matter to the NLRC by filing a Memorandum of Appeal with
dated September 11, 2002 remained "unsatisfied." Thus, on November 14, 2002, Uson Prayer for a (Writ of) Preliminary Injunction dated June 10, 2004.25cralawred
filed a Motion for Alias Writ of Execution and to Hold Directors and Officers of
Respondent Liable for Satisfaction of the Decision.13 The motion quoted from a portion In a Decision26 dated May 11, 2010, the NLRC dismissed Guillermo's appeal and denied
of the Sheriffs Return, which states: his prayers for injunction.
chanRoblesvirtualLawlibrary
On September 12, 2002, the undersigned proceeded at the stated present business office On August 20, 2010, Guillermo filed a Petition for Certiorari27 before the Court of
address of the respondent which is at Minien East, Sta. Barbara, Pangasinan to serve the Appeals, assailing the NLRC decision.
writ of execution. Upon arrival, I found out that the establishment erected thereat is not
[in] the respondent's name but JOEL and SONS CORPORATION, a family corporation On June 8, 2011, the Court of Appeals rendered its assailed Decision28 which denied
owned by the Guillermos of which, Jose Emmanuel F. Guillermo the General Manager of Guillermo's petition and upheld all the findings of the NLRC.
the respondent, is one of the stockholders who received the writ using his nickname
"Joey," [and who] concealed his real identity and pretended that he [was] the brother of The appellate court found that summons was in fact served on Guillermo as President and
Jose, which [was] contrary to the statement of the guard-on-duty that Jose and Joey General Manager of Royal Class Venture, which was how the Labor Arbiter acquired
[were] one and the same person. The former also informed the undersigned that the jurisdiction over the company.29 But Guillermo subsequently refused to receive all notices
respondent's (sic) corporation has been dissolved. of hearings and conferences as well as the order to file Royal Class Venture's position
paper.30 Then, it was learned during execution that Royal Class Venture had been
On the succeeding day, as per [advice] by the [complainant's] counsel that the respondent dissolved.31 However, the Court of Appeals held that although the judgment had become
has an account at the Bank of Philippine Islands Magsaysay Branch, A.B. Fernandez final and executory, it may be modified or altered "as when its execution becomes
Ave., Dagupan City, the undersigned immediately served a notice of garnishment, thus, impossible or unjust."32 It also noted that the motion to hold officers and directors like
the bank replied on the same day stating that the respondent [does] not have an account Guillermo personally liable, as well as the notices to hear the same, was sent to them by
with the branch.14ChanRoblesVirtualawlibrary registered mail, but no pleadings were submitted and no appearances were made by
On December 26, 2002, Labor Arbiter Irenarco R. Rimando issued an Order15 granting anyone of them during the said motion's pendency.33 Thus, the court held Guillermo
the motion filed by Uson. The order held that officers of a corporation are jointly and liable, citing jurisprudence that hold the president of the corporation liable for the latter's
severally liable for the obligations of the corporation to the employees and there is no obligation to illegally dismissed employees.34Finally, the court dismissed Guillermo's
denial of due process in holding them so even if the said officers were not parties to the allegation that the case is an intra-corporate controversy, stating that jurisdiction is
case when the judgment in favor of the employees was rendered.16 Thus, the Labor determined by the allegations in the complaint and the character of the relief sought. 35
Arbiter pierced the veil of corporate fiction of Royal Class Venture and held herein
petitioner Jose Emmanuel Guillermo (Guillermo), in his personal capacity, jointly and From the above decision of the appellate court, Guillermo filed a Motion for
severally liable with the corporation for the enforcement of the claims of Uson.17 Reconsideration36 but the same was again denied by the said court in the assailed
Resolution37 dated October 7, 2011.
Guillermo filed, by way of special appearance, a Motion for Reconsideration/To Set
Aside the Order of December 26, 2002.18 The same, however, was not granted as, this Hence, the instant petition.
time, in an Order dated November 24, 2003, Labor Arbiter Nia Fe S. Lazaga-Rafols
sustained the findings of the labor arbiters before her and even castigated Guillenno for Guillermo asserts that he was impleaded in the case only more than a year after its
his unexplained absence in the prior proceedings despite notice, effectively putting Decision had become final and executory, an act which he claims to be unsupported in
responsibility on Guillermo for the case's outcome against him.19 law and jurisprudence.38 He contends that the decision had become final, immutable and
unalterable and that any amendment thereto is null and void.39 Guillermo assails the so-
On January 5, 2004, Guillermo filed a Motion for Reconsideration of the above called "piercing the veil" of corporate fiction which allegedly discriminated against him
Order,20 but the same was promptly denied by the Labor Arbiter in an Order dated when he alone was belatedly impleaded despite the existence of other directors and
January 7, 2004.21 officers in Royal Class Venture.40 He also claims that the Labor Arbiter has no
jurisdiction because the case is one of an intra-corporate controversy, with the
On January 26, 2004, Uson filed a Motion for Alias Writ of Execution,22 to which complainant Uson also claiming to be a stockholder and director of Royal Class
Guillermo filed a Comment and Opposition on April 2, 2004.23 Venture.41

On May 18, 2004, the Labor Arbiter issued an Order24 granting Uson's Motion for the In his Comment,42 Uson did not introduce any new arguments but merely
Issuance of an Alias Writ of Execution and rejecting Guillermo's arguments posed in his cited verbatim the disquisitions of the Court of Appeals to counter Guillermo's assertions
Comment and Opposition. in his petition.
26
corporation. In the absence of malice, bad faith, or a specific provision of law making a
To resolve the case, the Court must confront the issue of whether an officer of a corporate officer liable, such corporate officer cannot be made personally liable for
corporation may be included as judgment obligor in a labor case for the first time only corporate liabilities.56 Indeed, in Reahs Corporation v. NLRC,57 the conferment of liability
after the decision of the Labor Arbiter had become final and executory, and whether the on officers for a corporation's obligations to labor is held to be an exception to the general
twin doctrines of "piercing the veil of corporate fiction" and personal liability of doctrine of separate personality of a corporation.
company officers in labor cases apply.
It also bears emphasis that in cases where personal liability attaches, not even all officers
The petition is denied. are made accountable. Rather, only the "responsible officer," i.e., the person directly
responsible for and who "acted in bad faith" in committing the illegal dismissal or any act
In the earlier labor cases of Claparols v. Court of Industrial Relations43 and A.C. Ransom violative of the Labor Code, is held solidarily liable, in cases wherein the corporate veil is
Labor Union-CCLU v. NLRC,44 persons who were not originally impleaded in the case pierced.58 In other instances, such as cases of so-called corporate tort of a close
were, even during execution, held to be solidarity liable with the employer corporation corporation, it is the person "actively engaged" in the management of the corporation
for the latter's unpaid obligations to complainant-employees. These included a newly- who is held liable.59 In the absence of a clearly identifiable officer(s) directly responsible
formed corporation which was considered a mere conduit or alter ego of the originally for the legal infraction, the Court considers the president of the corporation as such
impleaded corporation, and/or the officers or stockholders of the latter officer.60
corporation.45 Liability attached, especially to the responsible officers, even after final
judgment and during execution, when there was a failure to collect from the employer The common thread running among the aforementioned cases, however, is that the veil of
corporation the judgment debt awarded to its workers.46 In Naguiat v. NLRC,47 the corporate fiction can be pierced, and responsible corporate directors and officers or even
president of the corporation was found, for the first time on appeal, to be solidarily liable a separate but related corporation, may be impleaded and held answerable solidarily in a
to the dismissed employees. Then, in Reynoso v. Court of Appeals,48 the veil of corporate labor case, even after final judgment and on execution, so long as it is established that
fiction was pierced at the stage of execution, against a corporation not previously such persons have deliberately used the corporate vehicle to unjustly evade the judgment
impleaded, when it was established that such corporation had dominant control of the obligation, or have resorted to fraud, bad faith or malice in doing so. When the shield of a
original party corporation, which was a smaller company, in such a manner that the separate corporate identity is used to commit wrongdoing and opprobriously elude
latter's closure was done by the former in order to defraud its creditors, including a responsibility, the courts and the legal authorities in a labor case have not hesitated to step
former worker. in and shatter the said shield and deny the usual protections to the offending party, even
after final judgment. The key element is the presence of fraud, malice or bad faith. Bad
The rulings of this Court in A.C. Ransom, Naguiat, and Reynoso, however, have since faith, in this instance, does not connote bad judgment or negligence but imports a
been tempered, at least in the aspects of the lifting of the corporate veil and the dishonest purpose or some moral obliquity and conscious doing of wrong; it means
assignment of personal liability to directors, trustees and officers in labor cases. The breach of a known duty through some motive or interest or ill will; it partakes of the
subsequent cases of McLeod v. NLRC,49Spouses Santos v. NLRC50 and Carag v. nature of fraud.61
NLRC,51 have all established, save for certain exceptions, the primacy of Section 3152 of
the Corporation Code in the matter of assigning such liability for a corporation's debts, As the foregoing implies, there is no hard and fast rule on when corporate fiction may be
including judgment obligations in labor cases. According to these cases, a corporation is disregarded; instead, each case must be evaluated according to its peculiar
still an artificial being invested by law with a personality separate and distinct from that circumstances.62 For the case at bar, applying the above criteria, a finding of personal and
of its stockholders and from that of other corporations to which it may be connected. 53 It solidary liability against a corporate officer like Guillermo must be rooted on a
is not in every instance of inability to collect from a corporation that the veil of corporate satisfactory showing of fraud, bad
fiction is pierced, and the responsible officials are made liable. Personal liability attaches
only when, as enumerated by the said Section 31 of the Corporation Code, there is a faith or malice, or the presence of any of the justifications for disregarding the corporate
wilfull and knowing assent to patently unlawful acts of the corporation, there is gross fiction. As stated in McLeod,63 bad faith is a question of fact and is evidentiary, so that the
negligence or bad faith in directing the affairs of the corporation, or there is a conflict of records must first bear evidence of malice before a finding of such may be made.
interest resulting in damages to the corporation.54 Further, in another labor
case, Pantranco Employees Association (PEA-PTGWO), et al. v. NLRC, et al.,55 the It is our finding that such evidence exists in the record. Like the A. C. Ransom,
doctrine of piercing the corporate veil is held to apply only in three (3) basic areas, and Naguiat cases, the case at bar involves an apparent family corporation. As in those
namely: ( 1) defeat of public convenience as when the corporate fiction is used as a two cases, the records of the present case bear allegations and evidence that Guillermo,
vehicle for the evasion of an existing obligation; (2) fraud cases or when the corporate the officer being held liable, is the person responsible in the actual running of the
entity is used to justify a wrong, protect fraud, or defend a crime; or (3) alter ego cases, company and for the malicious and illegal dismissal of the complainant; he, likewise, was
where a corporation is merely a farce since it is a mere alter ego or business conduit of a shown to have a role in dissolving the original obligor company in an obvious "scheme to
person, or where the corporation is so organized and controlled and its affairs are so avoid liability" which jurisprudence has always looked upon with a suspicious eye in
conducted as to make it merely an instrumentality, agency, conduit or adjunct of another order to protect the rights of labor.64
27
Part of the evidence on record is the second page of the verified Position Paper of As for Guillermo's assertion that the case is an intra-corporate controversy, the Court
complainant (herein respondent) Crisanto P. Uson, where it was clearly alleged that Uson sustains the finding of the appellate court that the nature of an action and the jurisdiction
was "illegally dismissed by the President/General Manager of respondent corporation of a tribunal are determined by the allegations of the complaint at the time of its filing,
(herein petitioner) Jose Emmanuel P. Guillermo when Uson exposed the practice of the irrespective of whether or not the plaintiff is entitled to recover upon all or some of the
said President/General Manager of dictating and undervaluing the shares of stock of the claims asserted therein.71 Although Uson is also a stockholder and director of Royal Class
corporation."65 The statement is proof that Guillermo was the responsible officer in Venture, it is settled in jurisprudence that not all conflicts between a stockholder and the
charge of running the company as well as the one who dismissed Uson from corporation are intra-corporate; an examination of the complaint must be made on
employment. As this sworn allegation is uncontroverted - as neither the company nor whether the complainant is involved in his capacity as a stockholder or director, or as an
Guillermo appeared before the Labor Arbiter despite the service of summons and notices employee.72 If the latter is found and the dispute does not meet the test of what qualities
- such stands as a fact of the case, and now functions as clear evidence of Guillermo's bad as an intra-corporate controversy, then the case is a labor case cognizable by the NLRC
faith in his dismissal of Uson from employment, with the motive apparently being anger and is not within the jurisdiction of any other tribunal.73 In the case at bar, Uson's
at the latter's reporting of unlawful activities. allegation was that he was maliciously and illegally dismissed as an Accounting
Supervisor by Guillermo, the Company President and General Manager, an allegation
Then, it is also clearly reflected in the records that it was Guillermo himself, as President that was not even disputed by the latter nor by Royal Class Venture. It raised no intra-
and General Manager of the company, who received the summons to the case, and who corporate relationship issues between him and the corporation or Guillermo; neither did it
also subsequently and without justifiable cause refused to receive all notices and orders raise any issue regarding the regulation of the corporation. As correctly found by the
of the Labor Arbiter that followed.66This makes Guillermo responsible for his and his appellate court, Uson's complaint and redress sought were centered alone on his dismissal
company's failure to participate in the entire proceedings before the said office. The fact as an employee, and not upon any other relationship he had with the company or with
is clearly narrated in the Decision and Orders of the Labor Arbiter, Uson's Motions for Guillermo. Thus, the matter is clearly a labor dispute cognizable by the labor
the Issuance of Alias Writs of Execution, as well as in the Decision of the NLRC and the tribunals.chanrobleslaw
assailed Decision of the Court of Appeals,67 which Guillermo did not dispute in any of his
belated motions or pleadings, including in his petition for certiorari before the Court of WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated June 8,
Appeals and even in the petition currently before this Court.68 Thus, again, the same now 2011 and Resolution dated October 7, 2011 in CA G.R. SP No. 115485 are AFFIRMED.
stands as a finding of fact of the said lower tribunals which binds this Court and which it
has no power to alter or revisit.69 Guillermo's knowledge of the case's filing and existence SO ORDERED.cralawlawlibrary
and his unexplained refusal to participate in it as the responsible official of his company,
again is an indicia of his bad faith and malicious intent to evade the judgment of the labor
tribunals.

Finally, the records likewise bear that Guillermo dissolved Royal Class Venture and
helped incorporate a new firm, located in the same address as the former, wherein he is
again a stockl1older. This is borne by the Sherif11s Return which reported: that at Royal
Class Venture's business address at Minien East, Sta. Barbara, Pangasinan, there is a new
establishment named "Joel and Sons Corporation," a family corporation owned by the March 19, 2014
Guillermos in which Jose Emmanuel F. Guillermo is again one of the stockholders; that
Guillermo received the writ of execution but used the nickname "Joey" and denied being
Jose Emmanuel F. Guillermo and, instead, pretended to be Jose's brother; that the guard G.R. No. 177493
on duty confirmed that Jose and Joey are one and the same person; and that the
respondent corporation Royal Class Venture had been dissolved.70 Again, the facts ERIC GODFREY STANLEY LIVESEY, Petitioner,
contained in the Sheriffs Return were not disputed nor controverted by Guillermo, either vs.
in the hearings of Uson's Motions for Issuance of Alias Writs of Execution, in subsequent BINSWANGER PHILIPPINES, INC. and KEITH ELLIOT, Respondent.
motions or pleadings, or even in the petition before this Court. Essentially, then, the facts
form part of the records and now stand as further proof of Guillermo's bad faith and
malicious intent to evade the judgment obligation. DECISION

The foregoing clearly indicate a pattern or scheme to avoid the obligations to Uson and BRION, J.:
frustrate the execution of the judgment award, which this Court, in the interest of justice,
will not countenance.
28
We resolve this petition for review on certiorari1 assailing the decision2 dated August 18, or before September 30, 2003. Further, the agreement provided that unless and until the
2006 and the resolution3dated March 29, 2007 of the Court of Appeals (CA) in CA-G.R. agreement is fully satisfied, CBB shall not: (1) sell, alienate, or otherwise dispose of all
SP No. 94461. or substantially all of its assets or business; (2) suspend, discontinue, or cease its entire,
or a substantial portion of its business operations; (3) substantially change the nature of
The Antecedents its business; and (4) declare bankruptcy or insolvency.

In December 2001, petitioner Eric Godfrey Stanley Livesey filed a complaint for illegal CBB paid Livesey the initial amount of US$13,000.00, but not the next two installments
dismissal with money claims4 against CBB Philippines Strategic Property Services, Inc. as the company ceased operations. In reaction, Livesey moved for the issuance of a writ
(CBB) and Paul Dwyer. CBB was a domestic corporation engaged in real estate of execution. LA Eduardo G. Magno granted the writ,9 but it was not enforced. Livesey
brokerage and Dwyer was its President. then filed a motion for the issuance of an alias writ of execution,10 alleging that in the
process of serving respondents the writ, he learned "that respondents, in a clear and
Designated as Acting Member in lieu of Associate Justice Estela M. Perlas-Bernabe, per willful attempt to avoid their liabilities to complainant x x x have organized another
Special Order No. 1650 dated March 13, 2014. corporation, [Binswanger] Philippines, Inc."11 He claimed that there was evidence
showing that CBB and Binswanger Philippines, Inc. (Binswanger) are one and the same
Livesey alleged that on April 12, 2001, CBB hired him as Director and Head of Business corporation, pointing out that CBB stands for Chesterton Blumenauer
Space Development, with a monthly salary of US$5,000.00; shareholdings in CBBs Binswanger.12 Invoking the doctrine of piercing the veil of corporate fiction, Livesey
offshore parent company; and other benefits. In August 2001, he was appointed as prayed that an alias writ of execution be issued against respondents Binswanger and
Managing Director and his salary was increased to US$16,000.00 a month. Allegedly, Keith Elliot, CBBs former President, and now Binswangers President and Chief
despite the several deals for CBB he drew up, CBB failed to pay him a significant portion Executive Officer (CEO).
of his salary. For this reason, he was compelled to resign on December 18, 2001. He
claimed CBB owed him US$23,000.00 in unpaid salaries. The Compulsory Arbitration Rulings

CBB denied liability. It alleged that it engaged Livesey as a corporate officer in April In an order13 dated March 22, 2004, LA Catalino R. Laderas denied Liveseys motion for
2001: he was elected Vice-President (with a salary of P75,000.00/month), and thereafter, an alias writ of execution, holding that the doctrine of piercing the corporate veil was
he became President (at P1,200,000.00/year). It claimed that Livesey was later designated inapplicable in the case. He explained that the stockholders of the two corporations were
as Managing Director when it became an extension office of its principal in Hongkong.5 not the same. Further, LA Laderas stressed that LA Reynos decision had already become
final and could no longer be altered or modified to include additional respondents.
On December 17, 2001, Livesey demanded that CBB pay him US$25,000.00 in unpaid
salaries and, at the same time, tendered his resignation. CBB posited that the labor arbiter Livesey filed an appeal which the National Labor Relations Commission (NLRC) granted
(LA) had no jurisdiction as the complaint involved an intra-corporate dispute. in its decision14 dated September 7, 2005. It reversed LA Laderas March 22, 2004 order
and declared the respondents jointly and severally liable with CBB for LA Reynos
In his decision dated September 20, 2002,6 LA Jaime M. Reyno found that Livesey had decision15 of September 20, 2002 in favor of Livesey. The respondents moved for
been illegally dismissed. LA Reyno ordered CBB to reinstate Livesey to his former reconsideration, filed by an Atty. Genaro S. Jacosalem,16 not by their counsel of record at
position as Managing Director and to pay him US$23,000.00 in accrued salaries (from the time, Corporate Counsels Philippines, Law Offices. The NLRC denied the motion in
July to December 2001), and US$5,000.00 a month in back salaries from January 2002 its resolution of January 6, 2006.17The respondents then sought relief from the CA
until reinstatement; and 10% of the total award as attorneys fees. through a petition for certiorari under Rule 65 of the Rules of Court.

Thereafter, the parties entered into a compromise agreement 7 which LA Reyno approved The respondents charged the NLRC with grave abuse of discretion for holding them
in an order dated November 6, 2002.8 Under the agreement, Livesey was to receive liable to Livesey and in exercising jurisdiction over an intra-corporate dispute. They
US$31,000.00 in full satisfaction of LA Reynos decision, broken down into maintained that Binswanger is a separate and distinct corporation from CBB and that
US$13,000.00 to be paid by CBB to Livesey or his authorized representative upon the Elliot signed the compromise agreement in CBBs behalf, not in his personal capacity. It
signing of the agreement; US$9,000.00 on or before June 30, 2003; and US$9,000.00 on

29
was error for the NLRC, they argued, when it applied the doctrine of piercing the veil of Atty. Jacosalem of the NLRCs denial of the respondents motion for reconsideration was
corporate fiction to the case, despite the absence of clear evidence in that respect. the reckoning date for the filing of the petition for certiorari, not the receipt of a copy of
the same resolution on January 19, 2006 by the respondents counsel of record, the
For his part, Livesey contended that the petition should be dismissed outright for being Corporate Counsels Philippines, Law Offices. The cited Courts pronouncement reads:
filed out of time. He claimed that the respondents counsel of record received a copy of
the NLRC resolution denying their motion for reconsideration as early as January 19, In view of respondent judges recognition of Atty. Santos as new counsel for petitioner
2006, yet the petition was filed only on May 15, 2006. He insisted that in any event, there without even a valid substitution or withdrawal of petitioners former counsel, said new
was ample evidence supporting the application of the doctrine of piercing the veil of counsel logically awaited for service to him of any action taken on his motion for
corporate fiction to the case. reconsideration. Respondent judges sudden change of posture in insisting that Atty.
Maggay is the counsel of record is, therefore, a whimsical and capricious exercise of
The CA Decision discretion that prevented petitioner and Atty. Santos from taking a timely appeal[.] 23

The CA granted the petition,18 reversed the NLRC decision19 of September 7, 2005 and With the above citation, Livesey points out, the CA opined that a copy of the NLRC
reinstated LA Laderas order20 of March 22, 2004. The CA found untenable Liveseys resolution denying the respondents motion for reconsideration should have been served
contention that the petition for certiorari was filed out of time, stressing that while there on Atty. Jacosalem and no longer on the counsel of record, so that the sixty (60)-day
was no valid substitution or withdrawal of the respondents former counsel, the NLRC period for the filing of the petition should be reckoned from March 17, 2006 when Atty.
impliedly recognized Atty. Jacosalem as their new counsel when it resolved the motion Jacosalem secured a copy of the resolution from the NLRC (the petition was filed by a
for reconsideration which he filed. Jeffrey Jacosalem on May 15, 2006).24 Livesey submits that the CAs reliance on
Rinconada was misplaced. He argues that notwithstanding the signing by Atty. Jacosalem
On the merits of the case, the CA disagreed with the NLRC finding that the respondents of the motion for reconsideration, it was only proper that the NLRC served a copy of the
are jointly and severally liable with CBB in the case. It emphasized that the mere fact that resolution on the Corporate Counsels Philippines, Law Offices as it was still the
Binswanger and CBB have the same President is not in itself sufficient to pierce the veil respondents counsel at the time.25 He adds that Atty. Jacosalem never participated in the
of corporate fiction of the two entities, and that although Elliot was formerly CBBs NLRC proceedings because he did not enter his appearance as the respondents counsel
President, this circumstance alone does not make him answerable for CBBs liabilities, before the labor agency; further, he did not even indicate his office address on the motion
there being no proof that he was motivated by malice or bad faith when he signed the for reconsideration he signed.
compromise agreement in CBBs behalf; neither was there proof that Binswanger was
formed, or that it was operated, for the purpose of shielding fraudulent or illegal activities 2. The CA erred in not applying the doctrine of piercing the veil of corporate fiction to
of its officers or stockholders or that the corporate veil was used to conceal fraud, the case.
illegality or inequity at the expense of third persons like Livesey.
Livesey bewails the CAs refusal to pierce Binswangers corporate veil in his bid to make
Livesey moved for reconsideration, but the CA denied the motion in its resolution dated the company and Elliot liable, together with CBB, for the judgment award to him. He
March 29, 2007.21 Hence, the present petition. insists that CBB and Binswanger are one and the same corporation as shown by the
"overwhelming evidence" he presented to the LA, the NLRC and the CA, as follows:
The Petition
a.CBB stands for "Chesterton Blumenauer Binswanger."26
Livesey prays for a reversal of the CA rulings on the basis of the following arguments:
b.After executing the compromise agreement with him, through Elliot, CBB
1. The CA erred in not denying the respondents petition for certiorari dated May 12, ceased operations following a transaction where a substantial amount of CBB
2006 for being filed out of time. shares changed hands. Almost simultaneously with CBBs closing (in July
2003), Binswanger was established with its headquarters set up beside CBBs
Livesey assails the CAs reliance on the Courts pronouncement in Rinconada Telephone office at Unit 501, 5/F Peninsula Court Building in Makati City.27
Co., Inc. v. Hon. Buenviaje22 to justify its ruling that the receipt on March 17, 2006 by

30
c.Key CBB officers and employees moved to Binswanger led by Elliot, former liable were in bad faith or that there were badges of fraud in their actions against the
CBB President who became Binswangers President and CEO; Ferdie Catral, aggrieved party or parties in said cases. He reiterates his submission to the CA that the
former CBB Director and Head of Operations; Evangeline Agcaoili and Janet circumstances of the present case are different from those of the cited cases. He posits
Pei. that the closure of CBB and its immediate replacement by Binswanger could not have
been possible without Elliots guiding hand, such that when CBB ceased operations,
d.Summons served on Binswanger in an earlier labor case was received by Elliot (CBBs President and CEO) moved to Binswanger in the same position. More
Binswanger using CBBs receiving stamp.28 importantly, Livesey points out, as signatory for CBB in the compromise agreement
between him (Livesey) and CBB, Elliot knew that it had not been and would never be
e.A Leslie Young received on August 23, 2003 an online query on whether CBB fully satisfied.
was the same as Blumaneuver Binswanger (BB). Signing as Web Editor,
Binswanger/CBB, Young replied via e-mail:29 Livesey thus laments Elliots devious scheme of leaving him an unsatisfied award,
stressing that Elliot was the chief orchestrator of CBB and Binswangers fraudulent act of
We are known as either CBB (Chesterton Blumenauer Binswanger) or as Chesterton evading the full satisfaction of the compromise agreement. In this light, he submits that
Petty Ltd. in the Philippines. Contact info for our office in Manila is as follows: the Courts ruling in

Manila Philippines A.C. Ransom Labor Union-CCLU v. NLRC,37 which deals with the issue of who is liable
CBB Philippines Unit 509, 5th Floor for the workers backwages when a corporation ceases operations, should apply to his
Peninsula Court, Paseo de Roxas corner Makati Avenue situation.
1226 Makati City Philippines Contact: Keith Elliot
The RespondentsPosition
f. In a letter dated August 21, 2003,30 Elliot noted a Binswanger bid solicitation for a
project with the Philippine National Bank (PNB) which Through their comment38 and memorandum,39 the respondents pray that the petition be
denied for the following reasons:
was actually a CBB project as shown by a CBB draft proposal to PNB dated January 24,
2003.31 1. The NLRC had no jurisdiction over the dispute between Livesey and CBB/Dwyer as it
involved an intra-corporate controversy; under Republic Act No. 8799, the Regional Trial
g.The affidavit32 dated October 1, 2003 of Hazel de Guzman, another former CBB Court exercises jurisdiction over the case.
employee who also filed an illegal dismissal case against the company, attested to the
existence of Liveseys documentary evidence in his own case and who deposed that at As shown by the records, Livesey was appointed as CBBs Managing Director during the
one time, Elliot told her of CBBs plan to close the corporation and to organize another relevant period and was also a shareholder, making him a corporate officer.
for the purpose of evading CBBs liabilities.
2.There was no employer-employee relationship between Livesey and Binswanger.
33
h.The findings of facts of LA Veneranda C. Guerrero who ruled in De Guzmans favor Under Article 217 of the Labor Code, the labor arbiters and the NLRC have jurisdiction
that bolstered his own evidence in the present case. only over disputes where there is an employer- employee relationship between the
parties.
3. The CA erred in not holding Elliot liable for the judgment award.
3.The NLRC erred in applying the doctrine of piercing the veil of corporate fiction to the
Livesey questions the CAs reliance on Laperal Development Corporation v. Court of case based only on mere assumptions. Point by point, they take exception to Liveseys
Appeals,34 Sunio, et al. v. NLRC, et al.,35 and Palay, Inc., et al. v. Clave, etc., et al.,36 in submissions as follows:
support of its ruling that Elliot is not liable to him for the LAs award. He argues that in
these cases, the Court upheld the separate personalities of the corporations and their a.The e-mail statement in reply to an online query of Young (CBBs Web Editor)
officers/employees because there was no evidence that the individuals sought to be held that CBB is known as Chesterton Blumenauer Binswanger or Chesterton Petty.

31
Ltd. to establish a connection between CBB and Binswanger is inconclusive as serious lapse that even he admitted.40 This is a matter that cannot just be taken for granted
there was no mention in the statement of Binswanger Philippines, Inc. as it betrays a careless legal representation that can cause adverse consequences to the
other party.
b.The affidavit of De Guzman, former CBB Associate Director, who also
resigned from the company like Livesey, has no probative value as it was self- To our mind, Atty. Jacosalems non-observance of a simple, but basic requirement in the
serving and contained only misrepresentation of facts, conjectures and surmises. practice of law lends credence to Liveseys claim that the lawyer did not formally enter
his appearance before the NLRC as the respondents new counsel; if it had been
c.When Binswanger was organized and incorporated, CBB had already been otherwise, he would have supplied his office address to the NLRC. Also, had he
abandoned by its Board of Directors and no longer subsidized by CBB- exercised due diligence in the performance of his duty as counsel, he could have inquired
Hongkong; it had no business operations to work with. earlier with the NLRC and should not have waited as late as March 17, 2006 about the
outcome of the respondents motion for reconsideration which was filed as early as
d.The mere transfer of Elliot and Catral from CBB to Binswanger is not a October 28, 2005.
ground to pierce the corporate veil in the present case absent a clear evidence
supporting the application of the doctrine. The NLRC applied the doctrine on the To reiterate, the filing of the respondents petition for certiorari should have been
basis only of LA Guerreros decision in the De Guzman case. reckoned from January 19, 2006 when a copy of the subject NLRC resolution was
received by the Corporate Counsels Philippines, Law Offices, which, as of that date, had
e.The respondents petition for certiorari was filed on time. Atty. Jacosalem, who not been discharged or had withdrawn and therefore remained to be the respondents
was presumed to have been engaged as the respondents counsel, was deemed to counsel of record. Clearly, the petition for certiorari was filed out of time. Section 6(a),
have received a copy of the NLRC resolution (denying the motion for Rule III of the NLRC Revised Rules of Procedure provides that "[f]or purposes of appeal,
reconsideration) on March 17, 2006 when he requested and secured a copy from the period shall be counted from receipt of such decisions, resolutions, or orders by the
the NLRC. The petition was filed on May 15, 2006 or fifty-nine (59)days from counsel or representative of record."
March 17, 2006. Atty. Jacosalem may have failed to indicate his address on the
motion for reconsideration he filed but that is not a reason for him to be We now come to the issue of whether the NLRC had jurisdiction over the controversy
deprived of the notices and processes of the case. between Livesey and CBB/Dwyer on the ground that it involved an intra-corporate
dispute.
The Courts Ruling
Based on the facts of the case, we find this issue to have been rendered academic by the
The procedural question compromise agreement between Livesey and CBB and approved by LA Reyno.41 That
CBB reneged in the fulfillment of its obligation under the agreement is no reason to
The respondents petition for certiorari before the CA was filed out of time. The sixty revive the issue and further frustrate the full settlement of the obligation as agreed upon.
(60)-day filing period under Rule 65 of the Rules of Court should have been counted
from January 19, 2006, the date of receipt of a copy of the NLRC resolution denying the The substantive aspect of the case
respondents motion for reconsideration by the Corporate Counsels Philippines, Law
Offices which was the respondents counsel of record at the time. The respondents cannot Even if we rule that the respondents appeal before the CA had been filed on time, we
insist that Atty. Jacosalems receipt of a copy of the resolution on March 17, 2006 as the believe and so hold that the appellate court committed a reversible error of judgment in
reckoning date for the filing of the petition as we shall discuss below. its challenged decision.

The CA chided the NLRC for serving a copy of the resolution on the Corporate Counsels The NLRC committed no grave abuse of discretion in reversing LA Laderas ruling as
Philippines, Law Offices, instead of on Atty. Jacosalem as it believed that the labor there is substantial evidence in the records that Livesey was prevented from fully
tribunal impliedly recognized Atty. Jacosalem as the respondents counsel when it acted receiving his monetary entitlements under the compromise agreement between him and
on the motion for reconsideration that he signed. As we see it, the fault was not on the CBB, with Elliot signing for CBB as its President and CEO. Substantial evidence is more
NLRC but on Atty. Jacosalem himself as he left no forwarding address with the NLRC, a

32
than a scintilla; it means such relevant evidence as a reasonable mind might accept as to avoid payment by CBB of the last two installments of its monetary obligation to
adequate to support a conclusion.42 Livesey, as well as its other financial liabilities. Freed of CBBs liabilities, especially that
owing to Livesey, Binswanger can continue, as it did continue, CBBs real estate
Shortly after Elliot forged the compromise agreement with Livesey, CBB ceased brokerage business.
operations, a corporate event that was not disputed by the respondents. Then Binswanger
suddenly appeared. It was established almost simultaneously with CBBs closure, with no Liveseys evidence, whose existence the respondents never denied, converged to show
less than Elliot as its President and CEO. Through the confluence of events surrounding this continuity of business operations from CBB to Binswanger.1wphi1 It was not just
CBBs closure and Binswangers sudden emergence, a reasonable mind would arrive at coincidence that Binswanger is engaged in the same line of business CBB embarked on:
the conclusion that Binswanger is CBBs alter ego or that CBB and Binswanger are one (1) it even holds office in the very same building and on the very same floor where CBB
and the same corporation. There are also indications of badges of fraud in Binswangers once stood; (2) CBBs key officers, Elliot, no less, and Catral moved over to Binswanger,
incorporation. It was a business strategy to evade CBBs financial liabilities, including its performing the tasks they were doing at CBB; (3) notwithstanding CBBs closure,
outstanding obligation to Livesey. Binswangers Web Editor (Young), in an e-mail correspondence, supplied the information
that Binswanger is "now known" as either CBB (Chesterton Blumenauer Binswanger or
The respondents impugned the probative value of Liveseys documentary evidence and as Chesterton Petty, Ltd., in the Philippines; (4) the use of Binswanger of CBBs
insist that the NLRC erred in applying the doctrine of piercing the veil of corporate paraphernalia (receiving stamp) in connection with a labor case where Binswanger was
fiction in the case to avoid liability. They consider the NLRC conclusions as mere summoned by the authorities, although Elliot claimed that he bought the item with his
assumptions. own money; and (5) Binswangers takeover of CBBs project with the PNB.

We disagree. While the ostensible reason for Binswangers establishment is to continue CBBs
business operations in the Philippines, which by itself is not illegal, the close proximity
It has long been settled that the law vests a corporation with a personality distinct and between CBBs disestablishment and Binswangers coming into existence points to an
separate from its stockholders or members. In the same vein, a corporation, by legal unstated but urgent consideration which, as we earlier noted, was to evade CBBs
fiction and convenience, is an entity shielded by a protective mantle and imbued by law unfulfilled financial obligation to Livesey under the compromise agreement.47
with a character alien to the persons comprising it.43 Nonetheless, the shield is not at all
times impenetrable and cannot be extended to a point beyond its reason and policy. This underhanded objective, it must be stressed, can only be attributed to Elliot as it was
Circumstances might deny a claim for corporate personality, under the "doctrine of apparent that Binswangers stockholders had nothing to do with Binswangers operations
piercing the veil of corporate fiction." as noted by the NLRC and which the respondents did not deny.48 Elliot was well aware of
the compromise agreement between Livesey and CBB, as he "agreed and accepted" the
Piercing the veil of corporate fiction is an equitable doctrine developed to address terms of the agreement49 for CBB. He was also well aware that the last two installments
situations where the separate corporate personality of a corporation is abused or used for of CBBs obligation to Livesey were due on June 30, 2003 and September 30, 2003.
wrongful purposes.44 Under the doctrine, the corporate existence may be disregarded These installments were not met and the reason is that after the alleged sale of the
where the entity is formed or used for non-legitimate purposes, such as to evade a just majority of CBBs shares of stock, it closed down.
and due obligation, or to justify a wrong, to shield or perpetrate fraud or to carry out
similar or inequitable considerations, other unjustifiable aims or intentions, 45 in which With CBBs closure, Livesey asked why people would buy into a corporation and simply
case, the fiction will be disregarded and the individuals composing it and the two close it down immediately thereafter? 50 The answer
corporations will be treated as identical.46
to pave the way for CBBs reappearance as Binswanger. Elliots "guiding hand," as
In the present case, we see an indubitable link between CBBs closure and Binswangers Livesey puts it, is very much evident in CBBs demise and Binswangers creation. Elliot
incorporation. CBB ceased to exist only in name; it re-emerged in the person of knew that CBB had not fully complied with its financial obligation under the compromise
Binswanger for an urgent purpose agreement. He made sure that it would not be fulfilled when he allowed CBB's closure,
despite the condition in the agreement that "unless and until the Compromise Amount has
been fully settled and paid by the Company in favor of Mr. Livesey, the Company shall

33
not x x x suspend, discontinue, or cease its entire or a substantial portion of its business Ambassador Hotel, Inc. (AI-II) in 1969 as an accountant4 when the hotel was still under
operations[.]"51 construction. When hotel operations began in I971, AI-II installed Serrano as the head of
the accounting department.5 In I972, Serrano was tasked to assist in the canvass and
purchase of merchandise, as well as handle the random checking of foodstuff and bar
What happened to CBB, we believe, supports Livesey's assertion that De Guzman, CBB's
stock inventories, as additional duties.6
former Associate Director, informed him that at one time Elliot told her of CBB 's plan to Sometime in 1998, an intra-corporate controversy erupted within AHI. At the time,
close the corporation and organize another for the purpose of evading CBB 's liabilities to respondent Yolanda Chan (Chan), then the general cashier of AHI, brought to the
Livesey and its other financial liabilities.52 This wrongful intent we cannot and must not attention of AHIs President, her father Simeon Nicolas Chan (Simeon), the alleged
condone, for it will give a premium to an iniquitous business strategy where a corporation commission by Serrano of acts of misappropriation.7 Thereafter, the AHI board met and
is formed or used for a non-legitimate purpose, such as to evade a just and due passed several resolutions, namely: (1) Resolution No. 6, Series of 1998, dismissing
obligation.53 We, therefore, find Elliot as liable as Binswanger for CBB 's unfulfilled Simeon as the President and declaring all executive positions vacant and abolished; (2)
Resolution No. 7, Series of 1998, designating Chan as the new president of AHI; and (3)
obligation to Livesey.
Resolution No. 10, Series of 1998, dismissing Serrano for insubordination and loss of
trust and confidence.8
WHEREFORE, premises considered, we hereby GRANT the petition. The decision dated Simeon, however, refused to honor the foregoing resolutions and instead barred Yolanda
August 18, 2006 and the Resolution dated March 29, 2007 of the Court of Appeals are Chan from entering the hotel premises.9 Chan, in turn, invoked her right as a stockholder
SET ASIDE. Binswanger Philippines, Inc. and Keith Elliot (its President and CEO) are of AHI and demanded to be given the right to inspect the books and records of the hotel.
declared jointly and severally liable for the second and third installments of CBB 's Upon the order of Simeon, Serrano resisted Chans demand,10prompting the latter to file a
case before the Securities and Exchange Commission (SEC). Chans right to inspect the
liability to Eric Godfrey Stanley Livesey under the compromise agreement dated October
books was sustained by the SEC and finally by this Court in G.R. No. 156574,
14, 2002. Let the case record be remanded to the National Labor Relations Commission entitled Nerie Serrano v. Yolanda Chan, on March 17, 2003.11 In the meantime, the
for execution of this Decision. Regional Trial Court of Manila, Branch 46, issued a Decision sustaining the legality of
AHIs Board Resolutions.12
Costs against the respondents. On April 10, 2001, Chan assumed the presidency of, and brought her own staff to work in
AHI. Soon after, she issued Memo No. YCC-2001-2002 dated April 16, 2001, directing
Serrano to prepare a detailed account report of AHIs assets, to turn over all of AHIs cash
SO ORDERED.
and bank accounts to Chan, and to stop dealing and/or transacting for and in behalf of the
hotel.13 Other than the preparation of the account report, Serrano alleged that she was not
given any job assignment but was told to report directly and daily to Chan. Due to this
new working arrangement, Serrano, so she claimed, was forced to file her retirement on
July 31, 2001, 30 days before its effectivity. Thereafter, she prepared all the necessary
accounting documents for a smooth turnover.14
On August 7, 2001, Serrano received a letter from Chan stating that the former can no
longer avail of her retirement pay from AHI, since she had already received a lump sum
amount of PhP 137,205.07, and has been receiving monthly pensions, from the Social
G.R. No. 197003 February 11, 2013 Security System (SSS) for retiring in May 2000.15 Serrano claimed that she was not paid
NERIE C. SERRANO, Petitioner, her 13th month pay for the years 1999, 2000, and 2001.16 Even her salary from March 1,
vs. 2000 up to August 31, 2001, she added, was not paid, together with allowances from May
AMBASSADOR HOTEL, INC. and YOLANDA CHAN, Respondents. 16, 2000 to February 28, 2001, service charge from August 2000 to April 2001, and
DECISION service incentive leave pay for the year 2001.17
VELASCO, JR., J.: It is upon the foregoing factual backdrop that Serrano had filed a complaint against AHI
Before Us is a Petition for Review on Certiorari under Rule 45 assailing and seeking to and/or Chan for the nonpayment of salaries, 13th month pay, separation pay, retirement
set aside the Decision 1and Resolution2 dated March 26, 2010 and May I9, 20 II, benefits, and damages before the labor arbiter.18
respectively, of the Court of Appeals ( CA) in CA-G.R. SP No. 100612, affirming with Finding that AHI failed to discharge the burden to prove that Serrano had been paid her
modification the May 24, 2007 Resolution3 of the National Labor Relations Commission salaries and other monetary benefits19 inclusive of her retirement pay,20 Labor Arbiter
(NLRC), Third Division, in NLRC Case No. 040480-04 (NCR Case No. 00-04-04580- Fatima Jambaro-Franco ruled for Serrano. By a Decision dated April 28, 2004, the labor
03 ). arbiter awarded Serrano the total amount of PhP 1,323,693.36 representing her retirement
Records yield the following facts: benefits and other monetary awards,21 viz:
Petitioner Nerie C. Serrano (Serrano) was hired by respondent
34
WHEREFORE, premises considered, judgment is hereby rendered ordering the WHEREFORE, the decision of the NLRC is hereby REVERSED and that of the Labor
respondents Ambassador Hotel, Inc. and/or Yolanda Chan to jointly and severally pay Arbiter dated 28 April 2004 is REINSTATED and AFFIRMED.27
complainant Nerie C. Serrano the amount of ONE MILLION THREE HUNDRED In its August 24, 2009 Resolution,28 the former CA Special 8th Division denied
TWENTY THREE THOUSAND SIX HUNDRED NINETY THREE PESOS & respondents motion for reconsideration. Hence, respondents Chan and AHI filed before
36/100 (P1,323,693.36) representing her retirement benefits and other monetary award as this Court a Petition for Review on Certiorari dated October 15, 2009, docketed as G.R.
earlier computed plus attorneys fees. No. 189313, praying that the November 4, 2008 and August 24, 2009 Decision and
On appeal, the NLRC modified the labor arbiters Decision by deleting the award Resolution of the CA Special 8th Division be annulled and set aside. 29
representing Serranos retirement pay, thereby reducing the award to only PhP In a Resolution dated December 16, 2009,30 this Court dismissed respondents petition
324,680.40. The NLRC gave credence to respondents claim that the SSS had already stating that:
paid Serrano her retirement pay so that she is no longer entitled to receive the same Acting on the petition for review on certiorari assailing the Decision dated 04 November
monetary benefit awarded by the labor arbiter. 22 The dispositive portion of the NLRC 2008 and Resolution dated 24 August 2009 of the Court of Appeals in CA-G.R. SP No.
Decision provided, thus: 100569, the Court resolves to DENY the petition for failure to sufficiently show that the
PREMISES CONSIDERED, the Decision of May 7, 2004 is hereby MODIFIED by appellate court committed any reversible error in the challenged decision and resolution
deletion of the award representing retirement pay. Respondents are directed to pay as to warrant the exercise by this Court of its discretionary appellate jurisdiction. 31
complainant the following: In its March 17, 2010 Resolution,32 the Court denied with finality respondents Chan and
13th month pay AHIs motion for reconsideration.33 On May 14, 2010, the Resolution of this Court in
1999 G.R. No. 189313 became final and executory,34 thereby effectively reinstating with
2000 finality the Decision of the labor arbiter.
2001 P98,388.00 Meanwhile, in their petition for certiorari under consideration by the appellate courts
Special 4th Division, respondents AHI and Chan argued against Serranos entitlement to
Unpaid salary any monetary award and, thus, faulted the NLRC for granting her the reduced amount of
3/1/01 - 8/31//01 = 6 months PhP 324,680.40.
P32,796 x 6 mos. P295,164.00 Sustaining for the most part the respondents arguments, the CA Special 4th Division
issued the presently assailed Decision dated March 26, 2010, which affirms with
modification the NLRC Decision by deleting the award of unpaid salaries and thereby
- 196,776.00 further reducing the monetary award to PhP 27,376.80. The CA Special 4th Division
10% attorney's fees - 29,516.40 tagged Serranos unilateral computation of her salaries and benefits as self-serving. To the
CA Special 4th Division, the NLRC should have considered the Bureau of Internal
Revenue documents and payslips presented by respondents AHI and Chan, which proved
- P324,680.40 that Serranos monthly salary was only PhP 12,444, and not PhP 32,796.35 As for the
claimed unpaid salaries from March 1, 2001 to August 1, 2001, the CA Special 4th
Petitioner Serrano and respondents AHI and Chan interposed separate petitions for
Division was of the position that there is no dispute that Serrano already retired in 2000
certiorari assailing the NLRC Decision, after their respective motions for reconsideration
and she failed to prove her allegation that she rendered services for AHI thereafter.
were denied.24 At the CA, Serranos petition docketed as CA-G.R. SP No. 100569,
Hence, the appellate court found that NLRCs grant of unpaid salary is
entitled Nerie Serrano v. National Labor Relations Commission (Third Division),
erroneous.36 The fallo of the CA Special 4th Division assailed Decision declared, thus:
Ambassador Hotel, Inc. and Yolanda Chan, was raffled to the CAs Special Eighth (8th)
WHEREFORE, premises considered, the NLRCs Decision dated May 24, 2007 is
Division, while that of respondents AHI and Chans, docketed as CA-G.R. SP No.
hereby MODIFIED in that Ambassador Hotel is directed to pay private respondent the
100612, entitled Ambassador Hotel, Inc. and Yolanda Chan in her capacity as President
following:
of Ambassador Hotel, Inc. v. NLRC and Nerie C. Serrano, went to the CAs Special
a.) 13th month pay: x x x
Fourth (4th) Division.
b.) Attorneys fees equivalent to 10% of the judgment award in the amount
On November 4, 2008 in CA-G.R. SP No. 100569, the appellate courts Special 8th
of P2,488.80.
Division issued a Decision25 reversing the NLRCs Decision and reinstating and
The award of unpaid salaries representing six months, from 3/1/01 to 8/31/01
affirming the labor arbiters Decision. The CA Special 8th Division declared the
at P32,796.00 or a total of P196,776.00 is hereby deleted for lack of merit.37
deletion of the retirement pay award by the NLRC erroneous, the retirement pay under
Petitioners motion for reconsideration having been denied, she now comes to this Court
Article 287 of the Labor Code, as amended, being separate from the retirement benefits
via the instant petition praying, in the main, that the Decision in CA-G.R. SP No. 100612
claimable by a qualified employee under the Social Security Law. It explained that
of the Special 4th Division be declared without legal effect for effectively contradicting a
respondents Chan and AHI failed to prove that Serrano already received all her salaries
final and executory Decision of this Court in G.R. No. 189313.
and benefits.26 Thus, the CA Special 8th Division disposed:
The petition is meritorious.

35
This Courts December 16, 200938 Resolution and March 17, 2010 Resolution39 denying of final judgments is an important aspect of the administration of justice as it ensures an
the motion for reconsideration with finality in G.R. No. 189313 should have immediately end to litigations:
written finis to the controversy between the parties regarding the benefits of petitioner Nothing is more settled in law than that once a judgment attains finality it thereby
Serrano. The appellate courts Special 4th Division ought to have immediately dismissed becomes immutable and unalterable. It may no longer be modified in any respect, even
respondents certiorari petition docketed as CA-G.R. SP No. 100612 in view of this if the modification is meant to correct what is perceived to be an erroneous conclusion of
Courts final pronouncements in G.R. No. 189313. The principle of "bar by prior fact or law, and regardless of whether the modification is attempted to be made by the
judgment," one of the two concepts embraced in the doctrine of res judicata, the other court rendering it or by the highest court of the land. Just as the losing party has the right
being labeled as "conclusiveness of judgment," demands such action. Section 47(b), Rule to file an appeal within the prescribed period, the winning party also has the correlative
39 of the Rules of Court on the effect of a former judgment is clear: right to enjoy the finality of the resolution of his case. The doctrine of finality of
SEC. 47. Effect of final judgments or final orders. The effect of a judgment or final judgment is grounded on fundamental considerations of public policy and sound practice,
order rendered by a court of the Philippines, having jurisdiction to pronounce the and that, at the risk of occasional errors, the judgments or orders of courts must become
judgment or final order, may be as follows: final at some definite time fixed by law; otherwise, there would be no end to litigations,
xxxx thus setting to naught the main role of courts of justice which is to assist in the
(b) x x x [T]he judgment or final order is, with respect to the matter directly enforcement of the rule of law and the maintenance of peace and order by settling
adjudged or as to any other matter that could have been raised in relation justiciable controversies with finality.44 (Emphasis supplied.)
thereto, conclusive between the parties and their successors in interest by title This precept has been reiterated, time and again, in countless cases. 45 Hence, to ensure
subsequent to the commencement of the action or special proceeding, litigating for the against judicial confusion and the seeming conflict in the judiciarys decisions, courts
same thing and under the same title and in the same capacity x x x. (Emphasis supplied.) must be constantly vigilant in extending their judicial gaze to cases related to the matters
By the doctrine of res judicata, "a final judgment or decree on the merits by a court of submitted for their resolution. Certainly, to ignore the concept of judicial notice and
competent jurisdiction is conclusive of the rights of the parties or their privies in all later disregard a finding previously made by this Court and/or by a court of equal rank in a
suits on all points and matters determined in the former suit."40 To apply this doctrine in related case on the same issue, as here, is ridiculous and illogical.46 Not only will it add to
the form of a "bar by prior judgment," there must be identity of parties, subject matter, the clogged dockets of the courts, but worse, it will cause the cruel and unnecessary
and causes of action as between the first case where the first judgment was rendered and repeated vexation of a person on the same cause47that could have otherwise been avoided
the second case that is sought to be barred.41 All these requisites are present in the case at by the simple expedience of consolidating the cases.48
bar: The Court has observed that in some instances, two separate petitions brought before it
First, the parties in both G.R. No. 189313 and CA-G.R. SP No. 100612, which is the arose from two (2) conflicting decisions rendered by two (2) divisions of the CA when
subject of Our present review, are petitioner Serrano and respondents Chan and AHI. said decisions arose from one case or actually involve the same parties and cause of
Second, G.R. No. 189313 and CA-G.R. SP No. 100612 both deal with the same subject action or common questions of facts or law. This is a bane to the efficient, effective and
matter: Serranos entitlement to monetary benefits under the pertinent labor laws as an expeditious administration of justice which should be addressed at the earliest possible
employee of respondents AHI and Chan. time.
Lastly, both G.R. No. 189313 and CA-G.R. SP No. 100612 originated from one and the The procedure on consolidation of cases in the CA is embodied in Sec. 3, Rule III of the
same complaint lodged before the labor arbiter where Serrano alleged the nonpayment of Internal Rules of the CA which reads:
her salaries, 13th month pay, and retirement benefits as the cause of action. Sec. 3. Consolidation of Cases.When related cases are assigned to different Justices,
Our ruling in G.R. No. 189313 affirming in essence the Decision of the labor arbiter that they shall be consolidated and assigned to one Justice.
granted Serranos claimed unpaid salary, 13th month pay, and retirement benefits, among (a) Upon motion of a party with notice to the other party/ies, or at the instance of
others, is, therefore, conclusive on Serrano and respondents Chan and AHI on the matter the Justice to whom any of the related cases is assigned, upon notice to the
of the formers entitlement or non-entitlement to the benefits thus awarded. As a parties, consolidation shall ensue when the cases involve the same parties and/or
necessary corollary, it was a grave error on the part of the appellate court to render a related questions of fact and/or law.1wphi1
decision in CA-G.R. SP No. 100612 that runs counter to the final ruling in G.R. No. (b) Consolidated cases shall pertain to the Justice
189313. Said CA Decision offends the principle of res judicataa basic postulate to the (1) To whom the criminal case with the lowest docket number is
end that controversies and issues once decided on the merits by a court of competent assigned, if they are of the same kind;
jurisdiction shall remain in repose. As it were, the decision in G.R. No. 189313, the prior (2) To whom the criminal case with the lowest docket number is
judgment, constitutes in context an absolute bar to any subsequent action not only as to assigned, if two or more of the cases are criminal and the others are
every matter which was offered to sustain or defeat Serranos demand or claim but also as civil or special;
to any other admissible matter which might have been offered. 42 (3) To whom the criminal case is assigned and the others are civil or
It need not be stressed that a final judgment may no longer be modified in any respect, special; and
even if the modification is meant to correct erroneous conclusions of fact and (4) To whom the civil case is assigned, or to whom the civil case with
law.43 In Gallardo-Corro v. Gallardo, We explained that this principle of the immutability the lowest docket number is assigned, if the cases involved are civil and
special.
36
While Sec. 3(a) above appears to be a sound rule, perhaps a better and more effective No. 84769 which granted respondent Alexander L. Moradas's (respondent) claim to
system can be set up to preclude the recurrence of conflicting decisions involving the permanent total disability benefits in the amount of US 60,000.00, or its peso equivalent,
same case or parties and cause of action emanating from two CA divisions. It is suggested and attorney's fees.
that the CA consider the procedure in this Court that the duty to determine whether
consolidation is necessary or mandatory falls on the shoulders of the Clerk of Court
(COC) and the Division Clerks of Courts. Rather than rely on the interested party to The Facts
register a motion to consolidate or the Justice to whom the case is assigned, it is best that
it should be the Clerk of Court and the Division Clerks of Court of the CA who should be On July 17, 2000, respondent was employed as wiper for the vessel MV Commander
responsible for the review and consolidation of similarly intertwined cases. The rollos of (vessel) by petitioner INC Shipmanagement, Inc. for its principal, petitioner Interorient
cases are initially transmitted to them for verification of the requirements of the petition, Navigation, Ltd. (petitioners), for a period of 10 months, with a basic monthly salary of
more particularly the certification against forum shopping where parties state the
US 360.00, plus benefits.4
pendency of related cases and are in a better position to identify and determine if
consolidation of cases is proper. Once there exists two related cases, the Division Clerk of
Courts shall immediately inform the COC of such fact. The COC, in turn, shall posthaste On October 13, 2000, respondent claimed that while he was disposing of the garbage in
inform the two Justices of the need for consolidation and that said cases shall be referred the incinerator room of the vessel, certain chemicals splashed all over his body because
to the Justice who was assigned the lower numbered case. This will hopefully prevent a of an explosion.5 He was sent to the Burns Unit of the Prince of Wales Hospital on the
Division from deciding a case which has already been decided by another division. same day wherein he was found to have suffered deep burns. Eventually, upon his own
WHEREFORE, the Court GRANTS the petition and SETS ASIDE the Decision and request, respondent was sent home.6
Resolution dated March 26, 2010 and May 19, 2011, respectively, of the CA in CA-G.R.
SP No. 100612. The CA is ordered to adopt immediately a more effective system in its
Internal Rules to avoid two (2) divisions independently and separately deciding two (2) On October 21, 2000, he was admitted to the St. Lukes Medical Center.7 Subsequently,
cases which originated from a case decided by a court a quo or which involved the same he was diagnosed to have sustained "thermal burns, upper and lower extremities and
parties and cause of action oc common questions of law or facts to prevent the rendition abdomen, 2-3, 11%"8 for which he underwent debridement. He was referred to a
of conflicting decisions by two divisions which should otherwise have been consolidated physical therapist for his subsequent debridement through hydrotherapy. On November
in the first place. 10, 2000, the attending physician, Dr. Natalio G. Alegre II, reported that the respondents
SO ORDERED.
thermal burns were healing well and that they were estimated to fully heal within a period
of 3 to 4 months.9

Claiming that the burns rendered him permanently incapable of working again as a
seaman, respondent demanded10 for the payment of his full disability benefits under
Section 20 (B) in relation to Sections 30 and 30-A of the Philippine Overseas
Employment Agency (POEA) Standard Employment Contract (POEA-SEC), in the
amount of US$60,000.00, which petitioners refused to heed.11 Thus, respondent filed a
G.R. No. 178564 January 15, 2014
complaint against petitioners for the same, seeking as well moral and exemplary
damages, including attorneys fees.
INC. SHIPMANAGEMENT, INC., CAPTAIN SIGFREDO E. MONTERROYO
AND/OR INTERORIENT NAVIGATION LIMITED, Petitioners,
In their position paper,12 petitioners denied respondents claims, contending that his injury
vs.
was self-inflicted and, hence, not compensable under Section 20 (D) of the POEA-SEC.
ALEXANDER L. MORADAS, Respondent.
They denied that the vessels incinerator exploded and claimed that respondent burned
himself by pouring paint thinner on his overalls and thereafter set himself on fire. They
DECISION averred that he was led to commit such act after he was caught last October 10,
200013stealing the vessels supplies during a routine security inspection conducted by
PERLAS-BERNABE, J.: Captain Bodo Wirth (Captain Wirth) where respondent was informed that he was to be
dismissed.14 They also stated that just before they discovered respondent to be burning,
Assailed in this petition for review on Certiorari1 are the Decision2 dated October 31, the vessels engine room became flooded.15 They ascribed the flooding incident to
2006 and Resolution3 dated June 25, 2007 of the Court of Appeals (CA) in CA-G.R. SP
37
respondent, having been seen by fellow crew members standing at the railing around the petitioners witnesses that respondents botched attempts to sabotage the vessel and steal
portside seachest and looking at it16 and that when the bilge level alarm sounded, he was its supplies may have motivated him to inflict injuries to himself.31 Lastly, the LA denied
seen disappearing up to the boiler deck leaving small patches of water on the floor, on the respondents claim for moral and exemplary damages as well as attorneys fees since he
steps, and on the deck where he had been.17 In support thereof, petitioners submitted the failed to prove any evident bad faith or malice on petitioners part.32
report of the ship captain on the flooding as extracted from the vessels deck logbook18 as
well as the affidavits and statements executed by the vessels officers and crew members The NLRC Ruling
relative to the flooding and burning incidents. Based on the said affidavits and
statements, the vessels bosun, Antonio Gile (Gile), attested that he saw respondent go to On appeal, the National Labor Relations Commission (NLRC), in a Decision33 dated
the paint room and there soak his hands in a can full of thinner. Respondent then January 30, 2004, sustained the findings of the LA and held, inter alia, that while some of
proceeded to the incinerator door where he was set ablaze. Gile further pointed out that the statements and affidavits of the vessels officers and crew members were not
there was no fire in the incinerator at that time.19 Also, Chief Officer Antonino S. Bejada notarized, the corroborating testimonial evidence must be taken as a whole. In this
(Bejada) testified that prior to the burning incident, he had ordered an ordinary seaman accord, it gave due credence to the questioned evidence absent any showing that the
who had been burning deck waste in the incinerator to extinguish the fire with water and petitioners were motivated by ill will.34 Also, it pointed out that respondents mental or
close up the incinerator door because of bad weather conditions. Bejada then checked the physical fitness was not at issue since he was motivated to inflict injury to himself for
incinerator after the burning incident and found unburnt cardboard cartons inside with no reasons related to his impending discharge and not because of his disposition.35
sign of explosion and that the steel plates surrounding it were cool to the touch. He also
noticed that the respondents overalls had patches of green paint on the arms and body Respondent filed a motion for reconsideration but the same was denied in a
and smelled strongly of thinner. An open paint tin can was found near the place of the Resolution36 dated March 31, 2004. Dissatisfied, he filed a petition for certiorari before
incident and a cigarette lighter lying beside respondent20 which oiler Edgardo Israel the CA.
confirmed was borrowed from him even though he knew that the former did not
smoke.21 Finally, petitioners denied respondents claim for damages and attorneys fees The CA Ruling
for lack of factual and legal bases.22
On October 31, 2006, the CA rendered the assailed Decision,37 holding that grave abuse
In his Reply to the position paper,23 respondent denied burning himself, contending that of discretion tainted the NLRC ruling.
such act was contrary to human nature and logic and that there was no showing that he
was mentally unfit.24 Further, he posited that the affidavits and statements submitted by It found no logical and causal connection between the act of pilferage as well as the act of
the vessels officers and crew members have no probative value for being mere hearsay causing the flooding in the engine room and the conclusion that respondents injury was
and self-serving.25 He equally insisted on his claim for moral and exemplary damages and self-inflicted. It added that it was contrary to human nature and experience for respondent
attorneys fees.26 to burn himself.38 Further, the CA noted that the location of the burns on the different
parts of respondents body was more consistent with respondents assertion that certain
Meanwhile, or on February 29, 2001, petitioner Captain Sigfredo E. Monterroyo filed a chemicals splashed all over his body rather than petitioners theory of self-inflicted
complaint27 for disciplinary action against respondent before the POEA for his various injury.39 Moreover, it pointed out that no evidence was presented to show that respondent
infractions committed on board the vessel, namely: (a) act of dishonesty for stealing the had no business near the engine room.40 In the same vein, it observed that the mere
vessels supplies on October 10, 2000; (b) act of sabotage committed on October 13, finding of a cigarette lighter was inadequate to justify the conclusion that he burned
2000; and (c) grave misconduct for inflicting the injury to himself. 28 himself.41 Consequently, for petitioners failure to discharge the burden of proving that
respondents injury was directly attributable to him as required under Section 20 (D) of
The LA Ruling the POEA-SEC, the CA found that the NLRC gravely abused its discretion and, thus,
held petitioners liable to pay respondent permanent total disability benefits in the amount
In a Decision29 dated April 15, 2003, the Labor Arbiter (LA) ruled in favor of petitioners, of US$60,000.00, or its peso equivalent.42
dismissing respondents complaint for lack of merit. The LA held that respondents injury
was self-inflicted and that no incinerator explosion occurred that would have caused the On the other hand, respondents claims for moral and exemplary damages were denied
latters injuries.30] The LA gave more credence to the corroborating testimonies of the for lack of basis but the CA awarded him attorneys fees in the amount of P50,000.00.43

38
Aggrieved, petitioners moved for reconsideration which was, however, denied in a (B), and (D) thereof, and was lifted only on June 5, 2002, through POEA Memorandum
Resolution44 dated June 25, 2007. Hence, this petition. Circular No. 2, series of 2002,49 the determination of respondents entitlement to the
disability benefits should be resolved under the provisions of the 1996 POEA-SEC as it
The Issue Before The Court was, effectively, the governing circular at the time respondents employment contract was
executed.
The essential issue in this case is whether or not the CA erred in finding that the NLRC
gravely abused its discretion when it denied respondents claim for disability benefits. The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on compensation and
benefits for injury or illness was that an employer shall be liable for the injury or illness
The Courts Ruling suffered by a seafarer during the term of his contract. There was no need to show that
such injury was work-related except that it must be proven to have been contracted
The petition is meritorious. during the term of the contract. The rule, however, is not absolute and the employer may
be exempt from liability if he can successfully prove that the cause of the seamans injury
A. Preliminary Matters: Framework of was directly attributable to his deliberate or willful act as provided under Section 20 (D)
thereof, to wit:
Review and Governing Rules
D. No compensation shall be payable in respect of any injury, incapacity, disability or
At the outset, the Court deems it proper to elucidate on the framework in which the death of the seafarer resulting from his willful or criminal act, provided however, that the
review of this case had been conducted, in conjunction with the applicable governing employer can prove that such injury, incapacity, disability or death is directly attributable
rules to analyze its substantive merits. to seafarer.

The Courts jurisdiction in cases brought before it from the CA via Rule 45 of the Rules Hence, the onus probandi falls on the petitioners herein to establish or substantiate their
of Court is generally limited to reviewing errors of law. The Court is not the proper venue claim that the respondents injury was caused by his willful act with the requisite
to consider a factual issue as it is not a trier of facts. This rule, however, is not ironclad quantum of evidence. In labor cases, as in other administrative proceedings, only
and a departure therefrom may be warranted where the findings of fact of the CA are substantial evidence or such relevant evidence as a reasonable mind might accept as
contrary to the findings and conclusions of the NLRC and LA, as in this case. In this sufficient to support a conclusion is required.50 To note, considering that substantial
regard, there is therefore a need to review the records to determine which of them should evidence is an evidentiary threshold, the Court, on exceptional cases, may assess the
be preferred as more conformable to evidentiary facts.45 factual determinations made by the NLRC in a particular case. In Career Philippines
Shipmanagement, Inc. v. Serna,51 the Court expressed the following view:
With respect to the applicable rules, it is doctrinal that the entitlement of seamen on
overseas work to disability benefits"is a matter governed, not only by medical findings, Accordingly, we do not re-examine conflicting evidence, re-evaluate the credibility of
but by law and by contract. The material statutory provisions are Articles 191 to 193 witnesses, or substitute the findings of fact of the NLRC, an administrative body that has
under Chapter VI (Disability Benefits) of the Labor Code, in relation [to] Rule X of the expertise in its specialized field. Nor do we substitute our "own judgment for that of the
Rules and Regulations Implementing Book IV of the Labor Code. By contract, the tribunal in determining where the weight of evidence lies or what evidence is credible."
POEA-SEC, as provided under Department Order No. 4, series of 2000 of the The factual findings of the NLRC, when affirmed by the CA, are generally conclusive on
Department of Labor and Employment, and the parties Collective Bargaining Agreement this Court.
bind the seaman and his employer to each other."46
Nevertheless, there are exceptional cases where we, in the exercise of our discretionary
In the foregoing light, the Court observes that respondent executed his contract of appellate jurisdiction may be urged to look into factual issues raised in a Rule 45 petition.
employment on July 17, 2000,47 incorporating therein the terms and conditions of the For instance, when
2000 POEA-SEC which took effect on June 25, 2000. However, since the
implementation of the provisions of the foregoing 2000 POEA-SEC was temporarily In view of which POEA Memorandum Circular No. 11, series of 2000, issued on 12
suspended48 by the Court on September 11, 2000, particularly Section 20, paragraphs (A), September 2000 enforcing the Temporary restraining Order issued by the Supreme Court

39
in a Resolution dated 11 September 2000, on the implementation of the abovementioned paint on the arms and body and smelled strongly of thinner, while the open paint tin can
provision is hereby Rescinded. that was found in the vicinity contained solvent which had the same green color found on
the overalls.
xxxx
Second, respondents version that the burning was caused by an accident is hardly
the petitioner persuasively alleges that there is insufficient or insubstantial evidence on supported by the evidence on record.
record to support the factual findings of the tribunal or court a quo , as Section 5, Rule
133 of the Rules of Court states in express terms that in cases filed before administrative The purported explosion in the incinerator was belied by Gile who also claimed that there
or quasi-judicial bodies, a fact may be deemed established only if supported by was no fire in the incinerator room at the time respondent got burned. This was
substantial evidence.52 (Emphases supplied; citations omitted) corroborated by Bejada who testified having ordered an ordinary seaman that was
burning deck waste in the incinerator early that day to extinguish the fire with water and
The evident conflict between the NLRCs and CAs factual findings as shown in the close up the incinerator door because of bad weather conditions. Accordingly, an
records of this case prompts the Court to sift through their respective factual inspection of the incinerator after the incident showed that there were unburnt cardboard
determinations if only to determine if the NLRC committed grave abuse of discretion in cartons found inside with no sign of explosion and the steel plates surrounding it were
reaching its disposition, keeping in mind that the latters assessment should only meet the cool to the touch. Further, as aptly discerned by the LA, if there was really an incinerator
threshold of substantial evidence. explosion, then respondents injury would have been more serious.54

B. Application Respondent debunked Giles claim by merely asserting in his Answer and Rejoinder
before the POEA that the latter could not have been in the room at the time he got burned
In view of the above-discussed considerations and after a judicious scrutiny of the facts as he was not the first person to rescue him and concluded that he could not have soaked
on record, the Court holds that the CA erred in attributing grave abuse of discretion on his hands in a can full of thinner considering the extent of damage caused to his
the part of the NLRC in affirming the LAs dismissal of respondents complaint. This is hands.55 This argument is riddled with serious flaws: Gile could have been the second
based on the Courts observation that the NLRC had cogent legal bases to conclude that man in, and still personally know the matters he has alleged. Also, that respondent soaked
petitioners have successfully discharged the burden of proving by substantial evidence his hands in thinner is not denied by the fact that the greatest damage was not caused to it
that respondents injury was directly attributable to himself. The reasons therefor are as since the fire could have started at some part of his body considering that his overalls also
follows: had flammable chemicals. Reason also dictates that he could have extinguished the fire
on his hands sooner than the other parts of his body. In any event, the medical records of
First, records bear out circumstances which all lead to the reasonable conclusion that respondent, particularly the report56 issued by the Prince of Wales Hospital Burns
respondent was responsible for the flooding and burning incidents. Surgery, show that he suffered from "deep burn area" that was distributed over his left
upper limb, right hand, left flank and both thighs.57 To assert that respondents hands
Records show that the LA and NLRC gave credence to the corroborating testimonies of should have suffered the greatest damage is plainly argumentative and records are bereft
the crewmen pointing to respondent as the person who deliberately caused the flooding of showing as to the exact degree of burn suffered for each part.
incident. In particular, respondent was seen alone in the vicinity of the portside seachest
which cover was found to have been intentionally removed and thereby caused the To add, Bejadas statement that respondents burnt overalls had patches of green paint on
flooding. He was also seen disappearing up to the boiler deck just when the bilge level the arms and body and strongly smelled of thinner conforms with Giles claim that he
alarm sounded with patches of water left on the floor plates and on the stairways. soaked his hands in a can of thinner before approaching the incinerator (thinner may be
Respondent neither denied nor proffered any explanation on the foregoing claims found in a paint room). Such fact further fortifies petitioners assertion that his injury was
especially when all of his fellow engine room staff, except him, responded to the alarm self-inflicted as a prudent man would not dispose of garbage in the incinerator under such
and helped pump out the water in the engine room.53 As to the burning, respondent failed condition.
to successfully controvert Giles claim that he saw the former go to the paint room, soak
his hands in a can full of thinner and proceed to the incinerator door where he was set And if only to placate other doubts, the CAs finding that "some chemicals splashed [on
ablaze. In fact, respondents burnt overalls conform to the aforesaid claim as it had green respondents] body"58should not automatically mean that the "splashing" was caused by

40
pure accident. It is equally reasonable to conclude that the "splashing" as may be upholding the dismissal by the LA of his complaint for disability benefits. It is well-
inferred from both the LAs and NLRC"s findings was a by-product of respondents settled that an act of a court or tribunal can only be considered to be tainted with grave
botched sabotage attempt. abuse of discretion when such act is done in a capricious or whimsical exercise of
judgment as is equivalent to lack of jurisdiction.60 For the reasons herein detailed, the
While respondent contended that the affidavits and statements of the vessels officers and Court finds these qualities of capriciousness or whimsicality wanting in the case at bar
his fellow crew members should not be given probative value as they were biased, self- and thus, holds that the CA erred in ruling that grave abuse of discretion exists.
serving, and mere hearsay, he nonetheless failed to present any evidence to substantiate WHEREFORE, the petition is GRANTED. The Decision dated October 31, 2006 and
his own theory. Besides, as correctly pointed out by the NLRC, the corroborating Resolution dated June 25, 2007 of the Court of Appeals in CA-G.R. SP No. 84769 are
affidavits and statements of the vessels officers and crew members must be taken as a REVERSED and SET ASIDE. Accordingly, the Decision dated January 30, 2004 of the
whole and cannot just be perfunctorily dismissed as self-serving absent any showing that National Labor Relation Commission dismissing respondent Alexander L. Moradas s
they were lying when they made the statements therein.59 complaint for permanent total disability benefits and other money claims is hereby
REINSTATED.
Third, petitioners theory that respondents burns were self-inflicted gains credence
through the existence of motive. SO ORDERED.

At this juncture, the Court finds it important to examine the existence of motive in this
case since no one actually saw what transpired in the incinerator room. To this end, the
confluence of the circumstances antecedent to the burning should be examined in
conjunction with the existing accounts of the crew members. That said, both the LA and
the NLRC made a factual finding that prior to the burning incident, respondent was
caught pilfering the vessels supplies for which he was told that he was to be relieved
from his duties. This adequately supports the reasonable conclusion that respondent may
have harbored a grudge against the captain and the chief steward who denied giving him
the questioned items.1wphi1 At the very least, it was natural for him to brood over
feelings of resentment considering his impending dismissal. These incidents shore up the
G.R. No. 203115, December 07, 2015
theory that he was motivated to commit an act of sabotage which, however, backfired
ISLAND OVERSEAS TRANSPORT CORPORATION/PINE CREST SHIPPING
into his own burning. CORPORATION/CAPT. EMMANUEL L. REGIO, Petitioners, v. ARMANDO M.
BEJA, Respondent.
In this relation, the Court observes that a definitive pronouncement on respondents DECISION
mental unfitness need not be reached since the totality of the above-stated circumstances DEL CASTILLO, J.:
already figures into the rational inference that respondents burning was not a product of This Petition for Review on Certiorari1 assails the March 28, 2012 Decision2 and August
13, 2012 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 113550 affirming
an impaired mental disposition but rather an incident which sprung from his own volition.
the October 26, 2009 Decision4 and February 15, 2010 Resolution5 of the National Labor
Mental impairment connotes the lack of control over ones action. If the actor is Relations Commission (NLRC), which ordered petitioners Island Overseas Transport
conscious of what he is doing, as respondent was in this case by sabotaging the ship, then Corporation/Pine Crest Shipping Corporation/Capt. Emmanuel L. Regio (petitioners) to
a finding of mental unfitness is not needed. Differing from the CA s take on the matter, it pay respondent Armando M. Beja (Beja) US$110,000.00 as permanent total disability
is not contrary to human experience or logic for a spurned man to resort to tactics of benefits and 10% thereof as attorney's fees.
desperation, however ludicrous or extreme those tactics may be, or however untoward or
unfortunate its consequences may turn out, as in this case. Antecedent Facts

On March 6, 2007, Beja entered into a Contract of Employment6 with petitioner Island
All told, petitioners having established through substantial evidence that respondent s Overseas Transport Corp. for and on behalf of its foreign principal, petitioner Pine Crest
injury was self-inflicted and, hence, not compensable pursuant to Section 20 (D) of the Shipping Corporation, for a period of nine months as Second Assistant Engineer for the
1996 POEA-SEC, no grave abuse of discretion can be imputed against the NLRC in vessel M/V Atsuta. Beja underwent the pre-employment medical examination, where he
was declared fit for work. He boarded the vessel on March 14, 2007.
41
Below Ratings Above AB
In November 2007, Beja experienced pain and swelling of his right knee, which he
immediately reported to the Master of the vessel. On November 10, 2007, he was brought 100 82,500 110,000 137,500
to a hospital in Italy and was diagnosed to have Arthrosynovitis. He underwent
arthrocentesis of the right knee, was referred to an orthopedic surgeon and was advised to 75 61,900 82,500 103,150
take a rest.7 However, while in Spain, the pain in his right knee recurred and persisted. He 60 49,500 66,000 82,500
was brought to a physician on November 19, 2007 and was advised to be medically
repatriated. 50 41,250 55,000 68,750

Upon arrival in Manila on November 22, 2007, petitioners referred him to Nicomedes G. 40 33,000 44,000 55,000
Cruz (NGC) Medical Clinic for evaluation. The Magnetic Resonance Imaging of his right 30 24,750 33,000 41,250
knee showed Chronic Tenosynovitis with Vertical Tear, Postero-Lateral
Meniscus and Probable Tear Anterior Cruciate and Lateral Collateral Ligaments.8 Beja 20 16,500 22,000 27,500
underwent physical therapy and was advised to undergo operation.9 On April 23, 2008,
10 8,250 11,000 13,750
Anterior Cruciate Ligament Reconstruction and Partial Menisectomy of the Medial
Meniscus was done on his right knee at Medical Center Manila. 10 After the operation,
petitioners sent him for rehabilitation at St. Luke's Medical Center under the supervision Note: "Senior Officers" for the purpose of this clause means Master, Chief Officer, Chief
of Dr. Reynaldo R. Rey-Matias (Dr. Matias). Engineer and 1st Engineer.13ChanRoblesVirtualawlibrary
On May 26, 2008, the company-designated physician, Dr. Nicomedes G. Cruz (Dr. Cruz),
Meantime, while undergoing therapy, or on May 15, 2008, Beja filed a issued an assessment of Beja's disability:
complaint11 against petitioners for permanent total disability benefits, medical expenses, 1. Prognosis - guarded.
sickness allowance, moral and exemplary damages and attorney's fees. Beja alleged that
his knee injury resulted from an accident he sustained on board the vessel when a 2. Combined disability grading under the POEA schedule of disabilities:
drainage pipe fell on his knee. He claimed that from the time of his repatriation on a. Grade 10 - stretching leg of the ligaments of a knee resulting in instability of the
November 22, 2007, his knee has not recovered which rendered him incapable of joint.
returning to his customary work as seafarer. This, according to him, clearly entitles him b. Grade 13 - slight atrophy of calf muscles without apparent shortening or joint
to permanent total disability benefits pursuant to AMOSUP-JSU Collective Bargaining lesion or disturbance of weight-bearing line.14
Agreement (CBA) which provides: After more than three months of therapy, Dr. Matias issued on August 28, 2008 a medical
Article 28.1:chanRoblesvirtualLawlibrary report15stating that Beja is still under pain as verified by the Visual Analog System which
measures his pain at 6 out of 10 (10 being the highest measure of pain) and is having
A seafarer who surfers permanent disability as a result of an accident whilst in the difficulty in his knee movements. Thereafter, on August 30, 2008, Beja consulted an
employment of the Company regardless of fault, including, accidents occurring while orthopedic surgeon, Dr. Nicanor F. Escutin (Dr. Escutin), who examined and certified him
travelling to or from the ship, and whose ability to work as a seafarer is reduced as a to be unfit for sea duty in whatever capacity due to pain and difficulty of the use of his
result thereof, but excluding permanent disability due to willful acts, shall in addition to right knee despite the operation and therapy performed on him.16
sick pay, be entitled to compensation, according to the provisions of this
Agreement.12ChanRoblesVirtualawlibrary Proceedings before the Labor Arbiter
He claimed for compensation in the amount of US$137,500.00 in accordance with the
degree of disability and rate of compensation indicated in the said CBA, to wit: During the preliminary conference, petitioners offered to pay Beja the amount of
Disability US$13,345.00, corresponding to the combined disability grading given by Dr. Cruz,
which is disability Grade 10 (US$50,000 x 20.15%) and Grade 13 (US$50,000 x 6.72%)
In the event a seafarer suffers permanent disability in accordance with the provisions of under the Schedule of Disability Allowances in the POEA Standard Employment
Article 28 of this Agreement, the scale of compensation provided for under Article 28.3 Contract (POEA- SEC). Beja, however, rejected petitioners' offer and reiterated his claim
shall, unless more favourable benefits are negotiated, be:chanRoblesvirtualLawlibrary for total disability benefits as strengthened by the certification of Dr. Escutin that he
suffers from a permanent total disability, which he claimed, confirmed the findings of Dr.
xxxx Matias.
Effective from 1st January to 31st December, 2007
Petitioners, however, insisted that the combined disability assessment given by Dr. Cruz,
Degree of Disability Rate of Compensation (US$)
who for months continuously treated and monitored Beja's condition, prevails over that
% Ratings, AB & Junior Officers & Senior Officers (4) rendered by Dr. Escutin, who examined Beja only once and whose diagnosis was merely
42
based on the medical reports and findings of the company-designated physicians. 240 days resulted in his entitlement to the maximum disability benefit under the CBA, as
Petitioners further disclaimed Beja's entitlement to disability claim under the CBA as it correctly ruled by the Labor Arbiter.
expressly requires the parties to consult a third doctor whose opinion shall be binding on
them. Since Beja failed to observe this procedure which is also mandated under the In a Decision23 dated October 26, 2009, the NLRC sustained the Labor Arbiter's finding
POEA-SEC, the finding of Dr. Cruz deserves utmost respect. Petitioners also asseverated that Beja is permanently and totally disabled. It found Dr. Cruz's disability assessment
that Beja already received his sickness allowance by presenting several vouchers.17 premature and inaccurate considering that it was issued only a month after Beja's surgery
when the latter was still under medical evaluation and treatment. On the other hand, it
In a Decision18 dated February 27, 2009, the Labor Arbiter awarded Beja maximum found Dr. Escutin's evaluation of Beja's condition more credible as it conforms to Dr.
disability benefits under the CBA. The Labor Arbiter did not give credence to the Matias' medical report which was rendered after four months of therapy following the
assessment given by Dr. Cruz as it was issued after the lapse of 120 days which, by operation. The NLRC likewise ruled that Beja is entitled to compensation under the CBA
operation of law, transformed Beja's disability to total and permanent. Moreover, despite for an accident-sustained disability. It noted that his medical records reveal indications of
continued physical therapy, Bejars condition did not improve even beyond the 240-day tear and injury on his right knee that could have resulted from an accident on board. It,
maximum medical treatment period. The Labor Arbiter found doubtful Dr. Cruz's however, reduced the award from US$137,500.00 to US$110,000.00 as Beja was only a
assessment considering that he was not the one who performed the operation on Beja's Second Engineer and not a Senior Officer, thus:
knee. The Labor Arbiter denied Beja's claim for sickness allowance since payment WHEREFORE, premises considered, the Decision appealed from is hereby declared
thereof was fully substantiated by evidence presented by petitioners. The dispositive Modified to the extent only that complainant's permanent total disability award should be
portion of the Decision reads: US Dollars 110,000.00 (US$110,000.00). All other dispositions are hereby Affirmed.
WHEREFORE, premises considered, judgment is hereby rendered against the above-
named respondents ISLAND OVERSEAS TRANSPORT CORP. and/or PINE CREST SO ORDERED.24ChanRoblesVirtualawlibrary
SHIPPING CORP. and/or CAPT. EMMANUEL L. REGIO, who are hereby ordered to Petitioners' motion for reconsideration25 was denied in the NLRC Resolution26 dated
pay, jointly and severally, complainant's Permanent Total Disability benefits in the February 15, 2010.
amount of US DOLLARS ONE HUNDRED THIRTY SEVEN THOUSAND FIVE
HUNDRED (US$137,500.00), in Philippine currency at the prevailing rate of exchange Proceedings before the Court of Appeals
at the time of payment, plus ten percent (10%) thereof as attorney's fees.
Petitioners filed a Petition for Certiorari with Prayer for the Urgent Issuance of a Writ of
SO ORDERED.19ChanRoblesVirtualawlibrary Preliminary Injunction and/or Temporary Restraining Order27 to enjoin the enforcement/
Proceedings before the National Labor Relations Commission execution of the NLRC judgment. In a Resolution28 dated June 23, 2010, the CA denied
Petitioners' application for the issuance of a Temporary Restraining Order and/or Writ of
On appeal, petitioners attributed error in the Labor Arbiter in granting Beja the maximum Preliminary Injunction.
disability benefits under the CBA. Petitioners argued that since Dr. Cruz made an
assessment on May 26, 2008 or before the lapse of the maximum 240-day treatment On March 28, 2012, the CA rendered a Decision29 denying the Petition for Certiorari and
period from the date of Beja's repatriation on November 22, 2007, mere was no factual affirming the NLRC ruling. Trie CA similarly found that Beja's injury resulting from an
basis in ruling that Beja is entitled to full disability benefits. They cited Vergara v. accident while on board the vessel. It likewise found merit in Dr. Escutin's disability
Hammonia Maritime Services, Inc.,20 where it was pronounced that only after the lapse of report declaring Beja unfit to work since his injury has prevented him from performing
240 days of continuous medical treatment without any assessment given by the company his customary work as Second Engineer for more than 240 days and thus entitles him to
doctor that a medically repatriated seafarer could be adjudged as permanently and totally permanent total disability benefits in accordance with the CBA.
disabled. They also claimed that the CBA is inapplicable in Beja's case because Beja
failed to comply with the procedure regarding the third doctor referral and more Petitioners sought reconsideration30 of the CA Decision. In a CA Resolution31 dated
importantly, no proof was adduced to show that his medical condition resulted from an August 13, 2012, petitioners' motion was denied.
accident Petitioners presented a certification21 of the Master of vessel M/V Atsuta, Issues
Captain Henry M. Tejado, and a written declaration22 of the vessel's Chief Engineer,
Ramon B. Ortega, both confirming that Beja neither met an accident on board nor was Hence, petitioners filed the present Petition for Review on Certiorari raising the
injured during his stay in the vessel under their command. Finally, petitioners contended following grounds:
that assuming that the CBA applies, the award of US$137,500.00 is erroneous as Beja is I. In awarding permanent total disability benefits in favor of the Respondent in
not a Senior Officer. In fine, petitioners insisted that the disability assessment given by utter disregard of extant case laws outlining the instances when and how a
Dr. Cruz based on the POEA-SEC is binding and controlling. temporary total disability can be converted into a permanent total one.
II. In relying on the opinion of Respondent's chosen doctor to justify an award of
Beja, however, disputed petitioners' belated and self-serving denial that an accident took disability compensation contrary to the clear edicts of the POEA Contract, the
place and insisted that his failure to resume his work as Second Engineer for more than CBA and of the Supreme Court in jurisprudential precedents on the proper
43
establishment and/or determination of a seafarer's entitlement to disability medical report issued indicating that he met an accident while on board. Beja's claim was
benefits. simply based on pure allegations. Yet, evidence was submitted by petitioners disputing
III. In awarding benefits based on the compensation provided in the parties' CBA Beja's allegation. The certifications by the Master of the vessel and Chief Engineer
when the said agreement unequivocally confines compensation to injuries affirmed that Beja never met an accident on board nor was he injured while in the
arising from accident, which is absolutely wanting in this case. performance of his duties under their command. Beja did not dispute these certifications
IV. In sustaining the award of attorney's fees albeit [without] legal and factual nor presented any contrary evidence. "It is an inflexible rule that a party alleging a critical
substantiation.32 fact must support his allegation with substantial evidence, for any decision based on
Petitioners assert that Beja cannot be automatically declared as permanently and totally unsubstantiated allegation cannot stand without offending due process."34
disabled by the mere lapse of 120 days without any assessment or certification of fit to
work being issued. Citing Vergara, they argue that the 120-day period may be extended The Court also takes notice of the fact that Beja's medical condition cannot be solely
up to the maximum of 240 days if the seafarer requires further medical attention. Since attributable to accidents. His injury could have possibly been caused by other factors such
Dr. Cruz's assessment was issued within the 240-day medical treatment period, albeit as chronic wear and tear35 and aging.36 Thus, the NLRC's conclusion that the tear and
beyond 120 days, this could serve as the basis for determining Beja's disability and the injury on Beja's knee was caused by an accident on board had no factual basis but was
degree thereof. In short, Beja should have been declared as partially disabled with Grades anchored merely on speculation. The Court cannot, however, rest its rulings on mere
10 and 13 disability under the POEA-SEC, as assessed by Dr. Cruz. speculation and presumption.37

Moreover, they posit that Beja's complaint was prematurely filed and lacked cause of Thus, we find the CBA inapplicable; the determination of Beja's entitlement to disability
action for total and permanent disability benefits. According to petitioners, the lack of a benefits must, consequently, be governed by the POEA-SEC and relevant labor laws.
second opinion from Beja's chosen physician at the time of the filing of the complaint and
a third-doctor opinion is fatal to Beja's cause, for without a binding third opinion, the Beja is entitled to a total and permanent disability compensation of US$60,000.00 under
assessment of the company-designated physician stands. the POEA-SEC.

Further, they insist that Beja is not entitled to compensation under the parties' CB A Article 192(c)(1) of the Labor Code provides that:
which is only confined to injuries arising from accident. Art. 192. Permanent total disability. - x x x
Our Ruling
(c) The following disabilities shall be deemed total and
The Petition is partially meritorious. permanent:chanRoblesvirtualLawlibrary

The parties' CBA is inapplicable. (1) Temporary total disability lasting continuously for more than one hundred twenty
days, except as otherwise provided for in the Rules;
Beja based his claim for full disability benefits under the CBA, claiming that his The Rule referred to in this Labor Code provision is Section 2, Rule X of the Amended
disability resulted from an accident while in the employ of petitioners and that petitioners' Rules on Employees Compensation (AREC) implementing Title II, Book IV of the Labor
belated denial cannot negate the applicability of the CBA provisions. Code, which states:
Sec. 2. Period of Entitlement (a) The income benefit shall be paid beginning on the
We are not convinced. first day of such disability. If caused by an injury or sickness it shall not be paid longer
than 120 consecutive days except where such injury or sickness still requires medical
While, indeed, petitioners did not dispute, before the Labor Arbiter, the fact that Beja met attendance beyond 120 days but not to exceed 240 days from onset of disability in which
an accident while performing his duties, they, however, disputed the same in their appeal case benefit for temporary total disability shall be paid. However, the System may declare
with the NLRC by submitting the certifications of the Master of the vessel and Chief the total and permanent status at any time after 120 days of continuous temporary total
Engineer that no accident happened under their command. We have held that "rules of disability as may be warranted by the degree of actual loss or impairment of physical or
procedure and evidence should not be applied in a very rigid and technical sense in labor mental functions as determined by the System.
cases in order that technicalities would not stand in the way of equitably and completely Section 20 B (3) of the POEA-SEC, meanwhile provides that:
resolving the rights and obligations of the parties."33 The Court is, thus, not precluded to 3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness
examine and admit this evidence, even if presented only on appeal before the NLRC, if allowance equivalent to his basic wage until he is declared fit to work or the degree of
only to dispense substantial justice. permanent disability has been assessed by the company-designated physician but in no
case shall this period exceed one hundred twenty (120) days.
We, however, note that Beja has not presented any proof of his allegation that he met an
accident on board the vessel. There was no single evidence to show that Beja was injured For this purpose, the seafarer shall submit himself to a post-employment medical
due to an accident while doing his duties in the vessel. No accident report existed nor any examination by a company-designated physician within three working days upon his
44
return except when he is physically incapacitated to do so, in which case, a written notice therapy. Hence, although he was given Grades 10 and 13 combined disability rating by
to the agency within the same period is deemed as compliance. Failure of the seafarer to Dr. Cruz, this assessment may only be considered as tentative because he still continued
comply with the mandatory reporting requirement shall result in his forfeiture of the right his physical therapy sessions, which even went beyond 240 days.
to claim the above benefits.
In Sealanes Marine Services, Inc. v. Dela Torre,43 the seafarer was repatriated on August
If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be 4, 2010 and underwent rehabilitation until July 20, 2011, exceeding the 240 days allowed
agreed jointly between the employer and the seafarer. The third doctor's decision shall be to declare him either fit to work or permanently disabled. A partial disability rating of
final and binding on both parties. Grade 11 was issued by the company-designated physician on March 10, 2011 but the
In Vergara,38 this Court has ruled that the aforequoted provisions should be read in Court deemed this assessment only an interim one because of De La Torre's continued
harmony with each other, thus: (a) the 120 days provided under Section 20 B(3) of the physical therapy sessions. The Court then granted De La Torre the maximum disability
POEA-SEC is the period given to the employer to determine fitness to work and when compensation because despite his long treatment and rehabilitation, he was unable to go
the seafarer is deemed to be in a state of total and temporary disability; (b) the 120 days back to work as a seafarer. In applying the Kestrel ruling, the Court held that if the
of total and temporary disability may be extended up to a maximum of 240 days should seafarer's illness or injury prevents him from engaging in gainful employment for more
the seafarer require further medical treatment; and (c) a total and temporary disability than 240 days, then he shall be deemed totally and permanently disabled. The Court
becomes permanent when so declared by the company-designated physician within 120 ratiocinated that while the seafarer is partially injured or disabled, he must not be
or 240 days, as the case may be, or upon the expiration of the said periods without a precluded from earning or doing the same work he had before his injury or disability or
declaration of either fitness to work or disability assessment and the seafarer is still that which he is accustomed or trained to do.
unable to resume his regular seafaring duties.
In Belchem Philippines, Inc. v. Zafra, Jr.,44 the Court stressed that partial disability exists
39
Thus, although Section 32 of the POEA-SEC states that only those injuries or only if a seafarer is found capable of resuming sea duties within the 120/240-day period.
disabilities classified as Grade 1 are considered total and permanent, a partial and The premise is such that partial injuries did not disable a seafarer to earn wages in the
permanent disability could, by legal contemplation, become total and permanent.40 The same kind of work or similar nature for which he was trained.
Court ruled in Kestrel Shipping Co., Inc. v. Munar,41viz.: In this case, there was no assessment that Beja was found fit to resume sea duties before
Indeed, under Section 32 of the POEA-SEC, only those injuries or disabilities that are the end of the 240-day period. Also Beja's allegation that he has not been able to perform
classified as Grade 1 may be considered as total and permanent. However, if those his usual activities has not been contradicted by petitioners or by contrary documentary
injuries or disabilities with a disability grading from 2 to 14, hence, partial and evidence. In fact, in his medical report dated August 28, 2008, Dr. Matias opined that
permanent, would incapacitate a seafarer from performing his usual sea duties for a there was still difficulty in Beja's knee movements. Beja should, therefore, be deemed to
period of more than 120 or 240 days, depending on the need for further medical be suffering permanent total disability.
treatment, then he is, under legal contemplation, totally and permanently disabled. In
other words, an impediment should be characterized as partial and permanent not only It must also be stressed that Dr. Cruz did not even explain how he arrived at the partial
under the Schedule of Disabilities found in Section 32 of the POEA-SEC but should be permanent disability assessment of Beja. Dr. Cruz merely stated that Beja was suffering
so under the relevant provisions of the Labor Code and the Amended Rules on Employee from impediment Grades 10 and 13 disability but without any justification for such
Compensation (AREC) implementing Title II, Book IV of the Labor Code. That while the conclusion. Petitioners' claim that Beja only suffered a partial disability has undoubtedly
seafarer is partially injured or disabled, he is not precluded from earning doing the same no basis on record.
work he had before his injury or disability or that he is accustomed or trained to do.
Otherwise, if his illness or injury prevents him from engaging in gainful employment for Petitioners still argue that Beja's complaint is premature and as of its filing, no cause of
more than 120 or 240 days, as the case may be, he shall be deemed totally and action for total and permanent disability benefits had set in. They contend that despite the
permanently disabled. lapse of the 120-day period, Beja was still considered under a state of temporary total
disability at the time he filed his complaint. In this regard, we quote the following
Moreover, the company-designated physician is expected to arrive at a definite pronouncements in Kestrel, which involved the same circumstances as in the case at
assessment of the seafarer's fitness to work or permanent disability within the period of bar:chanRoblesvirtualLawlibrary
120 or 240 days. That should he fail to do so and the seafarer's medical condition remains
unresolved, the seafarer shall be deemed totally and permanently In this case, the following are undisputed: (a) when Munar filed a complaint for total and
disabled.42ChanRoblesVirtualawlibrary permanent disability benefits on April 17, 2007, 181 days had lapsed from the time he
Beja was repatriated on November 21, 2007. Roughly a month after his right knee signed-off from M/V Southern Unity on October 18, 2006; (b) Dr. Chua issued a
operation or on May 26, 2008, Dr. Cruz rendered a Grade 10 and 13 partial disability disability grading on May 3, 2007 or after the lapse of 197 days; and (c) Munar secured
grading of his medical condition. Thereafter, Beja's medical treatment, supervised by the opinion of Dr. Chiu on May 21, 2007; (d) no third doctor was consulted by the
another company-referred doctor, Dr. Matias, continued. On August 28, 2008, Dr. Matias parties; and (e) Munar did not question the competence and skill of the company-
issued a medical report declaring that Beja has not yet fully recovered despite continued designated physicians and their familiarity with his medical condition.
45
In addition, that it was by operation of law that brought forth the conclusive presumption
It may be argued that these provide sufficient grounds for the dismissal of Munar's that Munar is totally and permanently disabled, there is no legal compulsion for him to
complaint. Considering that the 240-day period had not yet lapsed when the NLRC was observe the procedure prescribed under Section 20-B(3) of the POEA-SEC. A seafarer's
asked to intervene, Munar's complaint is premature and no cause of action for total and compliance with such procedure presupposes that the company-designated physician
permanent disability benefits had set in. While beyond the 120-day period, Dr. Chua's came up with an assessment as to his fitness or unfitness to work before the expiration of
medical report dated May 3, 2007 was issued within the 240-day period. Moreover, the 120-day or 240-day periods. Alternatively put, absent a certification from the
Munar did not contest Dr. Chua's findings using the procedure outlined under Section 20- company-designated physician, the seafarer had nothing to contest and the law steps in to
B(3) of the POEA-SEC. For being Munar's attending physicians from the time he was conclusively characterize his disability as total and permanent.
repatriated and given their specialization in spine injuries, the findings of Dr. Periquet
and Dr. Lim constitute sufficient bases for Dr. Chua's disability grading. As Munar did This Court's pronouncements in Vergara presented a restraint against the indiscriminate
not allege, much less, prove the contrary, there exists no reason why Dr. Chiu's reliance on Crystal Shipping such that a seafarer is immediately catapulted into filing a
assessment should be preferred over that of Dr. Chua. complaint for total and permanent disability benefits after the expiration of 120 days from
the time he signed off from the vessel to which he was assigned. Particularly, a seafarer's
It must be noted, however, that when Munar filed his complaint, Dr. Chua had not yet inability to work and the failure of the company-designated physician to determine fitness
determined the nature and extent of Munar's disability. Also, Munar was still undergoing or unfitaess to work despite the lapse of 120 days will not automatically bring about a
physical therapy and his spine injury had not yet been fully addressed. Furthermore, shift in the seafarer's state from total and temporary to total and permanent, considering
when Munar filed a claim for total and permanent disability benefits, more than 120 days that the condition of total and temporary disability may be extended up to a maximum of
had gone by and the prevailing y rule then was that enunciated by this Court in Crystal 240 days.
Shipping, Inc. v. Natividad that total and permanent disability refers to the seafarer's
incapacity to perform his customary sea duties for more than 120 days. Particularly: Nonetheless, Vergara was promulgated on October 6, 2008, or more than two (2) years
Permanent disability is the inability of a worker to perform his job for more than from the time Munar filed his complaint and observance of the principle of prospectivity
120 days, regardless of whether or not he loses the use of any part of his body. As dictates that Vergara should not operate to strip Munar of his cause of action for total and
gleaned from the records, respondent was unable to work from August 18, 1998 to permanent disability that had already accrued as a result of his continued inability to
February 22, 1999, at the least, or more than 120 days, due to his medical treatment. This perform his customary work and the failure of the company-designated physician to issue
clearly shows that his disability was permanent. a final assessment.45 (Emphasis in the original)
More importantly, in Montierro v. Rickmers Marine Agency Phils., Inc.46 and Eyana v.
Total disability, on the other hand, means the disablement of an employee to earn wages Philippine Transmarine Carriers, Inc.,47 the Court applied the ruling in Kestrel, that if the
in the same kind of work or similar nature that he was trained for, or accustomed to maritime compensation complaint was filed prior to October 6, 2008, the rule on the 120-
perform, or any kind of work which a person of his mentality and attainments could do. It day period, during which the disability assessment should have been made in accordance
does not mean absolute helplessness. In disability compensation, it is not the injury which with Crystal Shipping, Inc. v. Natividad,48 that is, the doctrine then prevailing before the
is compensated, but rather it is the incapacity to work resulting in the impairment of one's promulgation of Vergara on October 6, 2008, stands; if, on the other hand, the complaint
earning capacity. was filed from October 6, 2008 onwards, the 240-day rule applies.

xxxx In the case at bar, Beja filed the complaint on May 15, 2008. Dr. Cruz issued his
assessment only on May 26, 2008 or 187 days from Beja's repatriation on November 21,
Petitioners tried to contest the above findings by showing that respondent was able to 2007. Therefore, due to Dr. Cruz's failure to issue a disability rating within the 120-day
work again as a chief mate in March 2001. Nonetheless, this information does not alter period, a conclusive presumption that Beja is totally and permanently disabled arose.
the fact that as a result of his illness, respondent was unable to work as a chief mate for Consequently, there was no need for Beja to secure an opinion from his own doctor or
almost three years. It is of no consequence that respondent was cured after a couple resort to a third doctor as prescribed under Section 20 B (3) of the POEA-SEC.
of years. The law does not require that the illness should be incurable. What is
important is that he was unable to perform his customary work for more than 120 In sum, the CA is correct in affirming the NLRC's award of permanent total disability
days which constitutes permanent total disability. An award of a total and permanent benefit to Beja. It, however, erred in pertaining to the parties' CBA in granting the award
disability benefit would be germane to the purpose of the benefit, which is to help the relative to the amount due. The Schedule of Disability Allowances under Section 32 of
employee in making ends meet at the time when he is unable to work. x x x the POEA-SEC should instead apply. Under this section, Beja is entitled to US$60,000.00
Consequently, that after the expiration of the 120-day period, Dr. Chua had not yet made (US$50,000.00 x 120%) corresponding to Grade 1 Disability assessment.
any declaration as to Munar's fitness to work and Munar had not yet fully recovered and
was still incapacitated to work sufficed to entitle the latter to total and permanent The award of attorney's fees is likewise justified in accordance with Article 2208
disability benefits. (2)49 and (8)50 of the Civil Code since Beja was compelled to litigate to satisfy his claims
for disability benefits.
46
Factual Antecedents
WHEREFORE, the Petition is PARTIALLY GRANTED. The March 28, 2012
Decision and August 13, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. Petitioners Inutan, Carte, Ayson, Cabarle, Jamili, Hular, Azucena, Tunog, Bernal, Estre,
113550 are MODIFIED in that petitioners, Island Overseas Transport Corp./Pine Crest Sagun, and Ledesma were employees of respondent Napar, a recruitment agency owned
Shipping Corp./Capt. Emmanuel L. Regio, are ordered to jointly and solidarily pay and managed by respondent Lacsamana. Napar assigned petitioners at respondent Jonas,
respondent Armando M. Beja total and permanent disability benefits in the amount of a corporation engaged in the manufacture of various food products with respondent
US$60,000.00 or its equivalent amount in Philippine currency at the time of payment, Young as its President, to work as factory workers, machine operator, quality control
plus 10% thereof as attorney's fees. inspector, selector, mixer, and warehouseman.

SO ORDERED. Sometime in September of 2002, petitioners and other co-workers (complainants) filed
before the Arbitration Branch of the NLRC three separate complaints for wage
differentials, 13th month pay, overtime pay, holiday pay, premium pay for holiday and rest
day, service incentive leave pay, and unpaid emergency cost of living allowance
(ECOLA) against respondents, docketed as NLRC NCR Case Nos. 09-76698-2002, 09-
08152-2002, and 09-08046-2002, which complaints were consolidated before Labor
Arbiter Jaime M. Reyno (LA Reyno).

On January 13, 2003, complainants and respondents entered into a Joint Compromise
Agreement7which reads:chanRoblesvirtualLawlibrary
JOINT COMPROMISE AGREEMENT
G.R. No. 195654, November 25, 2015
REYNALDO INUTAN, HELEN CARTE, NOEL AYSON, IVY CABARLE, COMPLAINANTS and the RESPONDENTS, through their' respective counsel,
NOELJAMILI, MARITES HULAR, ROLITOAZUCENA, RAYMUNDO TUNOG, respectfully submit the following Compromise Agreement.
ROGER BERNAL, AGUSTEV ESTRE, MARILOU SAGUN, AND ENRIQUE
LEDESMA, JR., Petitioners, v. NAPAR CONTRACTING & ALLIED SERVICES, WHEREAS, the parties (except Susana Larga) deciding to finally write "finis" to the
NORMAN LACSAMANA,*** JONAS INTERNATIONAL, INC., AND PHILIP instant case, have agreed to settle the instant case and to enter into a Compromise
YOUNG, Respondent. Agreement.
DECISION
DEL CASTILLO, J.: NOW THEREFORE, for and in consideration of the terms and conditions herein below
A judicially approved compromise agreement has the effect and authority of res stipulated, the parties do hereby agree:
judicata.2 It is final, binding on the parties, and enforceable through a writ of execution. 1. That the complainants should be considered regular employees of
Article 2041 of the Civil Code, however, allows the aggrieved party to rescind the Napar Contracting and Allied Services reckoned from their date of hire
compromise agreement and insist upon his original demand upon failure and refusal of and are entitled to all the benefits under the law due to regular
the other party to abide by the compromise agreement. employees;
2. That the complainants shall be re-assigned by Napar Contracting and
This Petition for Review on Certiorari2 assails the August 27, 2010 Decision3 of the Allied Services and shall ensure that they will be given work within
Court of Appeals (CA) in CA-G.R. SP No. 106724, which dismissed the Petition forty five days (45) or until February 26,2002;
for Certiorari filed by Reynaldo Inutan (Inutan), Helen Carte (Carte), Noel Ayson 3. That in case Napar Contracting and Allied Services failed to re assign
(Ayson), Ivy Cabarle (Cabarle), Noel Jamili (Jamili), Maritess Hular (Hular), Rolito or provide them work, complainants shall be reinstated in their payroll
Azucena (Azucena), Raymundo Tunog (Tunog), Jenelyn Sancho, Wilmar Bolonias, or be given their salary equivalent to the existing minimum wage x x x;
Roger Bernal (Bernal), Agustin Estre (Estre), Marilou Sagun (Sagun), and Enrique 4. That the complainants shall each receive the amount of SEVEN
Ledesma, Jr. (Ledesma), against respondents Napar Contracting & Allied Services THOUSAND PESOS as payment for their monetary claims and which
(Napar), Norman Lacsamana (Lacsamana), Jonas International, Inc. (Jonas), and Philip amount shall be considered in any future litigation;
Young (Young), and affirmed the June 26, 2008 Decision4 and October 14, 2008 5. That upon signing of this agreement and compliance with the
Resolution5 of the National Labor Relations Commission (NLRC) in NLRC CA No. stipulations herein provided, the cases shall be deemed and considered
041474-04 dismissing the consolidated complaints against respondents for illegal fully and completely satisfied and the complainants hereby release,
dismissal with money claims on the ground of res judicata. Likewise assailed is the CA's remiss and forever discharge the herein respondents, from any and all
February 10, 2011 Resolution6 which denied the Motion for Reconsideration. claims arising from the above cases;

47
6. The parties herein respectfully pray unto this Honorable Commission to complaints.
approve this Compromise Agreement and thereafter an Order be issued
declaring the judgment in the above-entitled cases fully and completely In a Decision14 dated July 29, 2004, Labor Arbiter Pablo C. Espiritu, Jr. (LA Espiritu)
satisfied. held that the conditions of the Joint Compromise Agreement particularly regarding
IN WITNESS WHEREFORE, the parties have hereunto set their hands this 13th day of reinstatement/reassignment of complainants were violated thereby justifying rescission of
January 2003.8ChanRoblesVirtualawlibrary the Joint Compromise Agreement. LA Espiritu noted that complainants were correct in
cralawlawlibrary re-filing the complaints as this was an available remedy under the NLRC Rules of
Procedure when their previous complaints were dismissed without prejudice. He struck
In an Order9 dated January 16, 2003, LA Reyno approved the Joint Compromise down respondents' contention that a motion for execution of the compromise agreement
Agreement, enjoined the parties to fully comply with its terms and dismissed the case was the proper remedy, ratiocinating that the dismissal of the cases was approved without
without prejudice. prejudice and therefore cannot be the subject of an execution.

In accordance with the Joint Compromise Agreement, complainants, on several instances, LA Espiritu then ruled that complainants were constructively dismissed as they were
reported to Napar. They were paid P7,000.00 each as part of the agreement but were placed on temporary off-detail without any work for more than six months despite being
required by Napar; (1) to submit their respective bio-data/resume and several documents regular employees of Napar. Doubting respondents' intention of reinstating complainants,
such as Police Clearance, NBI Clearance, Barangay Clearance, Mayor's Permit, Health LA Espiritu observed that the submission of requirements and compliance with the
Certificate, drug test results, community tax certificate, eye test results and procedures for rehiring should not be imposed on complainants who are not newly-hired
medical/physical examination results; (2) to attend orientation seminars; (3) to undergo employees. Thus, Napar and Lacsamana were held jointly and severally liable to pay
series of interviews; and (4) to take and pass qualifying examinations, before they could complainants their separation pay in lieu of reinstatement due to the already
be posted to their new assignments. These requirements, according to Napar, are needed strainedrelations of the parties.
to properly assess complainants' skills for new placement with the agency's other clients.
Respondents Jonas/Young, as indirect employers of complainants, were held jointly and
Complainants failed to fully comply, hence they were not given new assignments. severally liable with Napar/Lacsamana for wage differentials, 13 month pay differentials,
service incentive leave pay, unpaid ECOLA, and holiday pay to some complainants, less
Proceedings before the Labor Arbiter the P7,000.00 already received from respondents. The claims for premium pay for
holiday, rest day, overtime pay, and moral and exemplary damages were denied for lack
Sensing Napar's insincerity in discharging its obligation in reassigning them, of merit.
complainants filed anew before the Arbitration Branch of the NLRC four separate
Complaints10 for illegal dismissal, non-payment of 13th month pay, wage differentials, Proceedings before the National Labor Relations Commission
overtime pay, service incentive leave pay, holiday pay, premium pay for holiday and rest
day, and moral and exemplary damages against respondents, docketed as NLRC NCR All parties appealed to the NLRC.
Case Nos. 00-0505557-2003, 00-05-06187-2003, 00-05-06605-2003,11 and 00-07-07792-
2003. These complaints were consolidated. Complainants filed a partial appeal, arguing that LA Espiritu erred in not awarding
backwages as well as wage and 13th month pay differentials to nine of them.
In their Position Paper,12 complainants averred that Napar's failure to reinstate or provide
them work without any condition, in consonance with the terms of the Joint Compromise Respondents, for their part, argued that LA Espiritu erred in failing to recognize the final
Agreement, constitutes illegal constructive dismissal. They prayed for backwages plus and binding effect of the Joint Compromise Agreement, contending that complainants are
separation pay in lieu of reinstatement. barred from rescinding the agreement for having received P7,000.00 each as partial
compliance and refusing to comply with the requirements for their reassignment.
Respondents, in their Position Paper,13 claimed that they have fulfilled their obligation Respondents Napar and Lacsamana, in their Memorandum on Appeal,15 vehemently
under the agreement when Napar required complainants to report for work, to submit denied having illegally dismissed complainants and averred that they have the
documentary requirements, to undergo seminars and training, and to pass qualifying prerogative to impose certain requirements in order to determine their working skills vis-
exams. They contended that complainants were the ones who violated the agreement a-vis their new postings. And since they refused to comply, they have waived their right
when they refused to comply with the foregoing requirements in order to assess their to be reassigned. Respondents Jonas/Young, meanwhile, in its Notice of Appeal
working capabilities and skills for their next posting. As such, they were deemed to have Memorandum of Appeal,16 asserted that they cannot be held solidarity liable with
waived their right to be reassigned. They argued that complainants should not have filed respondents Napar and Lacsamana since only Napar is obligated to reassign complainants
new complaints but should have instead moved for the execution of the Joint under the Joint Compromise Agreement.
Compromise Agreement. They then argued that the Labor Arbiter who approved the said
Joint Compromise Agreement or LA Reyno has exclusive jurisdiction to act on the In a Decision17 dated June 26, 2008, the NLRC granted respondents' appeal. It ruled that
48
the approval of the Joint Compromise Agreement by LA Reyno operates as res complaints was barred by res judicata. According to the C A, the complainants, in re-
judicata between the parties and renders it unappealable and immediately executory. It filing their complaints due to respondents' unwarranted refusal to provide them work,
held that complainants had no cause of action when they re-filed their complaints for were essentially seeking to enforce the compromise agreement and were not insisting on
being barred by res judicata. The NLRC, in disposing of the case, ordered the issuance of their original demands that do not even include a claim for illegal dismissal. Thus, the CA
a writ of execution to enforce the Joint Compromise Agreement, ruled that complainants should have moved for the execution of the Joint Compromise
thus:chanRoblesvirtualLawlibrary Agreement instead of filing a separate and independent action for illegal dismissal. The
WHEREFORE, premises considered, the appeal of respondents is GRANTED, while that CA dismissed the Petition, viz.:chanRoblesvirtualLawlibrary
of the complainants is DISMISSED for lack of merit. The Decision of Labor Arbiter WHEREFORE, premises considered, the instant petition for certiorari is DISMISSED for
Pablo C. Espiritu, Jr. dated July 29, 2004 is REVERSED and SET ASIDE, and a new one lack of merit. Accordingly, the June 26, 2008 Decision and October 14, 2008 Resolution
is rendered DISMISSING the above-entitled complaints for having been barred by res of public respondent National Labor Relations Commission are AFFIRMED.
judicata. The Order of Labor Arbiter Jaime Reyno dated January 16, 2003 finding the
Compromise Agreement entered into by the parties on January 13, 2003 to be in order SO ORDERED.28cralawlawlibrary
and not contrary to law and approving the same, stands valid, effective and should be
enforced. Let the records of this case be forwarded to the Labor Arbiter for the issuance Complainants filed a Motion for Reconsideration29 but it was likewise denied by the CA
of a writ of execution to enforce the said Compromise Agreement. in its Resolution30 dated February 10, 2011.

SO ORDERED.18ChanRoblesVirtualawlibrary Twelve of the complainants, herein petitioners, instituted the present Petition for Review
cralawlawlibrary on Certiorari.
Issues
Complainants filed a Motion for Reconsideration,19 averring that the NLRC gravely erred
in ordering the issuance of a writ of execution despite the absence of a final judgment or Petitioners presented the following issues:chanRoblesvirtualLawlibrary
a judgment on the merits. They stand on their right to rescind the Joint Compromise I
Agreement and to insist on their original demands when respondents violated the
compromise agreement and on their right to re-file their cases as sanctioned by the rules WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT
in cases of provisional dismissal of cases, PETITIONERS' COMPLAINT IS ALREADY BARRED BY RES JUDICATA.
II
Napar and Lacsamana, on the other hand, filed a Motion for Partial
Reconsideration20 praying for the modification of the NLRC Decision in that WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT, IN
complainants be declared to have waived their right to their claims under the Joint FILING THE SECOND COMPLAINT, THE PETITIONERS ARE ENFORCING THE
Compromise Agreement for likewise violating the agreement. JOINT COMPROMISE AGREEMENT AND NOT RESCINDING IT. THUS, THE
PETITIONERS SHOULD HAVE MOVED FOR THE ISSUANCE OF A WRIT OF
Both motions were denied in the NLRC Resolution21 dated October 14, 2008. EXECUTION BEFORE THE LABOR ARBITER INSTEAD OF FILING A SECOND
COMPLAINT.
Proceedings before the Court of Appeals III

In their Petition for Certiorari22 filed before the CA, complainants insisted on their right
to rescind the Joint Compromise Agreement under Article 204123 of the Civil Code and WHETHER THE PETITIONERS ARE ENTITLED TO SEPARATION PAY IN LIEU
on their right to re-file their complaints under Section 16, Rule V of the NLRC Rules of OF REINSTATEMENT AND FULL BACKWAGES.31cralawlawlibrary
Procedure.24
Petitioners argue that the CA, in ordering the execution of the Joint Compromise
Napar and Lacsamana filed a Comment25 on the Petition. Jonas and Young, however, Agreement, has deprived them of their right of rescission under Article 2041 of the Civil
failed to file a comment. As the CA did not acquire jurisdiction over Jonas and Young and Code. They posit that due to the blatant violation by the respondents of the provisions of
on the basis of complainants' manifestation that Jonas and Young had already ceased the Joint Compromise Agreement, they only exercised the option accorded to them by
operation, Jonas and Young were dropped as party respondents by the CA in its law of rescinding the agreement and of insisting upon their original demands by filing
Resolution26 of December 16, 2009. anew their Complaints. The inclusion of illegal dismissal in their causes of action is, for
petitioners, a necessary consequence of their subsequent dismissal and the blatant
On August 27, 2010, the CA rendered a Decision27 affirming the NLRC. The CA omission of respondents' commitment to reinstate them. Petitioners thus pray for the
considered the January 16, 2003 Order of LA Reyno, which approved the Joint payment of separation pay in lieu of reinstatement and full backwages as a consequence
Compromise Agreement, as a judgment on the merits, and held that the second set of of their illegal dismissal.
49
If one of the parties fails or refuses to abide by the compromise, the other party may
Napar and Lacsamana on the other hand, aver that petitioners' sole remedy was to move either enforce the compromise or regard it as rescinded and insist upon his original
for the execution of the Joint Compromise Agreement. They aver that petitioners cannot demand.
be allowed to rescind the agreement after having violated the same and having already We explained, viz.:
enjoyed its benefits. After all, the Joint Compromise Agreement is final, binding and [B]efore the onset of the new Civil Code, there was no right to rescind compromise
constitutes as res judicata between them. agreements. Where a party violated the terms of a compromise agreement, the only
Our Ruling recourse open to the other party was to enforce the terms thereof.

The Petition has merit. Petitioners' right to rescind the Joint Compromise Agreement and When the new Civil Code came into being, its Article 2041 xxx created for the first
right to re-file their complaints must prevail. time the right of rescission. That provision gives to the aggrieved party the right to "either
enforce the compromise or regard it as rescinded and insist upon his original
Petitioners validly exercised the demand." Article 2041 should obviously be deemed to qualify the broad precept
option of rescinding the Joint enunciated in Article 2037 that "[a] compromise has upon the parties the effect and
CompromiseAgreement under authority of res judicata.
Article 2041 of the Civil Code In exercising the second option under Art. 2041, the aggrieved party may, if he chooses,
bring the suit contemplated or involved in his original demand, as if there had never been
Article 2028 of the Civil Code defines a compromise agreement as a contract whereby any compromise agreement, without bringing an action for rescission. This is because he
the parties make reciprocal concessions in order to avoid litigation or put an end to one may regard the compromise as already rescinded by the breach thereof of the other
already commenced. If judicially approved, it becomes more than a binding contract; it is party.cralawlawlibrary
a determination of a controversy and has the force and effect of a judgment.32 Article 227
of the Labor Code provides that any compromise settlement voluntarily agreed upon by To reiterate, Article 2041 confers upon the party concerned the authority, not only to
the parties with the assistance of the Bureau of Labor Relations or the regional office of regard the compromise agreement as rescinded but also, to insist upon his original
the Department of Labor and Employment shall be final and binding upon the parties. demand. We find that petitioners validly exercised this option as there was breach and
Compromise agreements between employers and workers have often been upheld as non-compliance of the Joint Compromise Agreement by respondents.
valid and accepted as a desirable means of settling disputes.33
It is undisputed that Napar failed to reassign and provide work to petitioners. Napar,
Thus, a compromise agreement, once approved, has the effect of res judicata between the however, puts the blame on petitioners for their alleged deliberate refusal to comply with
parties and should not be disturbed except for vices of consent, forgery, fraud, the requirements for reassignment to other clients. Napar claims that the imposition of
misrepresentation, and coercion.34 A judgment upon compromise is therefore not these so-called "reassessment procedures" will efficiently guide them on where to assign
appealable, immediately executory, and can be enforced by a writ of petitioners; it likewise posits that it is a valid exercise of its management prerogative to
execution.35 However, this broad precept enunciated under Article 203736 of the Civil assign workers to their principal employer.
Code has been qualified by Article 2041 of the same Code which recognizes the right of
an aggrieved party to either (1) enforce the compromise by a writ of execution, or (2) At the outset, it must be emphasized that there was no indication that petitioners
regard it as rescinded and insist upon his original demand, upon the other party's failure deliberately refused to comply with the procedures prior to their purported reassignment.
or refusal to abide by the compromise. In a plethora of cases,37 the Court has recognized Petitioners alleged that they reported to Napar several times waiting for tlieir assignment
the option of rescinding a compromise agreement due to non-compliance with its terms. and that Napar was giving them a run-around even as they tried to comply with the
We explained in Chavez v. Court of Appeals:38chanroblesvirtuallawlibrary requirements. These matters were not disputed by respondents. Thus, we cannot agree
A compromise has upon the parties the effect and authority of res judicata; but there shall with respondents were the ones who violated the compromise agreement. Moreover, we
be no execution except in compliance with a judicial compromise.cralawlawlibrary are not persuaded by Napar's assertion that petitioners' reassignment cannot be effected
without compliance with the requirements set by it. Petitioners are regular employees of
Thus, we have held that a compromise agreement which is not contrary to law, public Napar; thus, their reassignment should not involve any reduction in rank, status or
order, public policy, morals or good customs is a valid contract which is the law between salary.39 As aptly noted by LA Espiritu, petitioners are not newly-hired employees.
the parties themselves. It has upon them the effect and authority of res judicata even if Considering further that they are ordinary factory workers, they do not need special
not judicially approved, and cannot be lightly set aside or disturbed except for vices of training or any skills assessment procedures for proper placement. While we consider
consent and forgery. Napar's decision to require petitioners to submit documents and employment clearances,
However, in Heirs of Zari, et al v. Santos, we clarified that the broad precept enunciated to attend seminars and interviews and take examinations, which according to Napar is
in Art, 2037 is qualified by Art. 2041 of the same Code, which provides: imperative in order for it to effectively carry out its business objective, as falling within
the ambit of management prerogative, this undertaking should not, however, deny
petitioners their constitutional right of tenure. Besides, there is no evidence nor any
50
allegation proffered that Napar has no available clients where petitioners can be assigned were dismissed without prejudice. "A dismissal without prejudice does not operate as a
to work in the same position they previously occupied. Plainly, Napar's scheme of judgment on the merits."45 As contrasted from a dismissal with prejudice which disallows
requiring petitioners to comply with reassessment procedures only seeks to prevent and bars the filing of. a complaint, a dismissal without prejudice "does not bar another
petitioners' immediate reassignment. action involving the same parties, on the same subject matter and theory."46 The NLRC
Rules of Procedure, specifically Section 16 of Rule V thereof, provides the remedy of
"We have held that management is free to regulate, according to its own discretion and filing for a revival or re-opening of a case which was dismissed without prejudice within
judgment, all aspects of employment, including hiring, work assignments, working 10 days from receipt of notice of the order of dismissal and of re-filing the case after the
methods, time, place and manner of work, processes to be followed, supervision of lapse of the 10-day period. Petitioners are thus not barred from re-filing their Complaints.
workers, working regulations, transfer of employees, work supervision, lay off of
workers and discipline, dismissal and recall of workers. The exercise of management In choosing to rescind the Joint Compromise Agreement and re-file their complaints,
prerogative, however, is not absolute as it must be exercised in good faith and with due petitioners can rightfully include their claim of illegal dismissal. The CA took off from
regard to the rights of labor."40 Such "cannot be used as a subterfuge by the employer to the wrong premise that petitioners, in re-filing their case, cannot be said to have opted to
rid himself of an undesirable worker."41 rescind the compromise agreement since they were not insisting on their original claim. It
must be noted that when petitioners initially filed their first set of complaints for wage
Respondents' non-compliance with the strict terms of the Joint Compromise Agreement differentials, 13th month pay, overtime pay, holiday pay, premium pay for holiday and rest
of reassigning petitioners and ensuring that they will be given work within the required day, service incentive leave pay, and unpaid ECOLA (that does not include the claim of
time constitutes repudiation of the agreement. As such, the agreement is considered illegal dismissal), subsequent events transpired which brought about their unceremonious
rescinded in accordance with Article 2041 of the Civil Code. Petitioners properly chose to suspension and dismissal from work. This then led to the parties entering into the Joint
rescind the compromise agreement and exercised the option of filing anew their Compromise Agreement whereby respondents undertook to reinstate petitioners and pay
complaints, pursuant to Art. 2041. It was error on the part of the CA to deny petitioners them the sum of P7,000.00 in partial satisfaction of their claims. The compromise
the right of rescission. agreement evinces and shows that petitioners' reinstatement was part of their original
demands. Besides, respondents acknowledged that the first and second sets of Complaints
Still, respondents insist that petitioners cannot seek rescission for they have already filed by petitioners are similar in nature. Respondents even admitted that the issues raised
enjoyed the benefits of the Joint Compromise Agreement. According to respondents, in the first set of Complaints were similar to the issues raised by petitioners when they
petitioners' acceptance of the amount of P7,000.00 each bars them from repudiating and filed anew their Complaints. Nevertheless, the filing of a separate action for illegal
rescinding the agreement. dismissal shall only go against the rule on multiplicity of suits. It is settled that a plaintiff
may join several distinct demands, controversies or rights of action in one declaration,
The contention lacks merit for the following reasons. First, petitioners never accepted the complaint or petition.47 This is to avert duplicity and multiplicity of suits that would
meager amount of P7,000.00 as full satisfaction of their claims as they also expected to farther delay the disposition of the case.
be reassigned and reinstated in their jobs. In other words, their acceptance of the amount
of P7,000.00 each should not be interpreted as full satisfaction of all their claims, which In view of the foregoing, we find that both the NLRC and CA gravely erred in dismissing
included reinstatement in their jobs. The amount of P7,000.00 is measly compared to the petitioners' Complaints on the ground of res judicata. LA Espiritu correctly assumed
amount of monetary award granted by LA Espiritu and therefore makes the agreement jurisdiction and properly took cognizance of petitioners' consolidated complaints for
unconscionable and against public policy,42 At this point, it is worth noting that even illegal dismissal and other monetary claims.
quitclaims are ineffective in barring recovery for the full measure of the worker's rights
and that acceptance of benefits therefrom does not amount to estoppel.43 Lastly, it must be Petitioners are entitled to separation pay
emphasized that the Joint Compromise Agreement expressly provided that each of the and full backwages as well as to the other
complainants shall receive P7,000.00 as payment for their monetary claims and "which monetary awards granted by the
amount shall be considered in any future litigation."44 By virtue of this stipulation, the Labor Arbiter
parties in entering into the agreement did not rule out the possibility of any future claims
in the event of non-compliance. As correctly ruled by LA Espiritu, this proviso showed We, likewise, subscribe to LA Espiritu's ruling that petitioners, as regular employees, are
that petitioners were not barred from raising their money claims in the future. deemed to have been constructively and illegally dismissed by respondents. Being on
floating status and off-detailed for more than six months, not having been reinstated and
Section 16 of Rule V of the NLRC Rules reassigned by respondents, petitioners are considered to have been constructively
of Procedure allows petitioners to re-file their dismissed.48 Settled is the rule that an employee who is unjustly dismissed from work
complaints which were previously dismissed shall be entitled to reinstatement, or separation pay if reinstatement is no longer viable,
without prejudice and to his full backwages.49

The Court also takes into account the circumstance that petitioners' previous complaints LA Espiritu awarded petitioners separation pay in lieu of reinstatement. The Court agrees
51
that the award of separation pay is warranted due to the already strained relations follows:chanRoblesvirtualLawlibrary
between the parties.50 However, aside from separation pay, petitioners, for having been
illegally dismissed, should also be awarded full backwages, inclusive of allowances and On January 13, 1997, herein petitioner union staged a strike against herein respondent
their other benefits or their monetary equivalent computed from November 9, 2002 (the company's Ice Cream and Chilled Products Division, citing, as grounds, respondent's
date of their last work assignment or from the time compensation was withheld from alleged violation of the collective bargaining agreement (CBA), dismissal of union
them) up to the date of finality of this Decision. officers and members, discrimination and other unfair labor practice (ULP) acts.

While petitioners failed to raise the matter of entitlement to backwages before the CA, As a consequence, respondent filed with the National Labor Relations Commission
this does not prevent the Court from considering their entitlement to the same. The Court (NLRC) a Petition for Injunction with Prayer for Issuance of Temporary Restraining
has discretionary authority to take up new issues on appeal if it finds that their Order, Free Ingress and Egress Order, and Deputization Order.
consideration is necessary in arriving at a just decision.
On January 20, 1997, a temporary restraining order was issued by the NLRC. Thereafter,
Anent the other monetary claims in petitioners' complaints, the awards granted to them on February 7, 1997, the NLRC issued a preliminary injunction.
by LA Espiritu stand undisturbed for petitioners' failure to question the same on appeal
before the CA and even before this Court. Hence, we sustain the award of wage On February 26, 1997, respondent filed a Petition to Declare Strike Illegal.
differentials, 13th month pay differentials, service incentive leave pay, unpaid ECOLA,
and holiday pay less the P7;000.00 already received by them. Subsequently, on April 2, 1997, then Department of Labor and Employment (DOLE)
Acting Secretary, issued an Order assuming jurisdiction over the strike and certifying the
WHEREFORE, the Petition is GRANTED. The August 27, 2010 Decision and same to the NLRC.
February 10, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 106724
are REVERSED and SET ASIDE. The July 29, 2004 Decision of the Labor Arbiter On June 2, 1997, petitioner union filed a petition for certiorari with this Court,
Pablo C. Espiritu, Jr. in NLRC NCR Case Nos. 00-05-05557-2003, 00-05-06187-2003, questioning the above order of the Acting DOLE Secretary.
00-05-06605-2003 and 00-07-07792-2003 is REINSTATED. In addition, respondents
Napar Contracting & Allied Services and Norman Lacsamana are held jointly and However, after a series of conciliation meetings and discussions between the parties, they
severally liable to pay petitioners Reynaldo Inutan, Helen Carte, Noel Ayson, Ivy agreed to resolve their differences and came up with a compromise which was embodied
Cabarle, Noel Jamili, Maritess Hular, Rolito Azucena, Raymundo Tunog, Roger Bernal, in a Memorandum of Agreement (MOA) dated August 4, 1998, pertinent portions of
Agustin Estre, Marilou Sagun, and Enrique Ledesma, Jr. full backwages, inclusive of which are as follows:cralawlawlibrary
allowances and their other benefits or their monetary equivalent computed from xxxx
November 9, 2002 up to the date of finality of this Decision.
1. The COMPANY [herein respondent] shall cau6e the dismissal of all criminal cases
SO ORDERED.chanroblesvirtuallawlibrary against dismissed employees arising out of or as consequences of the strike that started on
January 13, 1997.

Future illegal acts of the UNION [herein petitioner] shall not be covered by this
G.R. No. 198675, September 23, 2015 agreement.
ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE PHILIPPINES, INC.
CHAPTER (ICE CREAM AND CHILLED PRODUCTS DIVISION), ITS 2. The UNION shall unqualifiedly withdraw its Petition for Certiorari pending with the
OFFICERS, MEMBERS, BONIFACIO T. FLORENDO, EMILIANO B. PALANAS Supreme Court.
AND GENEROSO P. LAXAMANA, Petitioners, v. NESTLE PHILIPPINES,
INC., Respondent. 3. The COMPANY and the UNION shall jointly file a motion to withdraw any and all
DECISION actions pending with the NLRC including the Certified Case, arising out of or as
PERALTA, J.: consequences of the strike that started on Jan. 13, 1997.
Assailed in the instant petition for review on certiorari under Rule 45 of the Rules of
Court are the Resolutions1 of the Court of Appeals (CA), dated June 30, 20112 and 4. As a consequence of the strike leading to the execution of this Memorandum of
September 28, 2011,3respectively, in CA-G.R. SP No. 118459. The June 30, 2011 Agreement, the UNION shall cease and desist from picketing any office or factory of the
Resolution dismissed herein petitioners' petition for review, while the September 28, 2011 COMPANY as well as any government agency or office of the Courts. It shall likewise
Resolution denied petitioners' Motion for Reconsideration. remove streamers, barricades and structures that it had put up around the
COMPANY'S Aurora Plant in Quezon City upon the execution of this Agreement and
The factual and procedural antecedents of the case are as shall forever cease and desist from re-establishing the same.
52
On November 18, 2010, the NLRC promulgated its Resolution denying petitioners'
5. The COMPANY shall issue the corresponding Certificates of Past Employment to all application for the issuance of a writ of execution on the ground of prescription.
dismissed employees.
Petitioners filed a Motion for Reconsideration but the NLRC, in its Resolution dated
6. The COMPANY shall continue to recognize the UNION as the certified bargaining February 14, 2011, dismissed it for lack of merit.
agent of all rank-and-file daily-paid employees of its Ice Cream and Chilled Products
Division up to the life of the existing Collective Bargaining Agreement. Petitioners then filed a petition for certiorari with the CA questioning the above
Resolutions of the NLRC. The basic issue raised before the CA was whether or not
7. The UNION shall immediately elect a new set of officers who will replace its petitioners' claim for payment is barred by prescription.
dismissed officers. The newly-elected officers shall exclusively come from the UNION
membership who are active employees of the COMPANY. The UNION shall inform the On June 30, 2011, the CA issued the first of its questioned Resolutions dismissing
COMPANY of the said newly-elected officers. petitioners' certiorari petition on the ground that it is a wrong mode of appeal. The CA
held that petitioners' appeal involves a pure question of law which should have been
8. The COMPANY shall pay dismissed employees their accrued benefits (i.e. Unpaid taken directly to this Court via a petition for review on certiorari under Rule 45 of the
wages, proportionate 13th and 14th months pay and vacation leave (VL) commutation), if Rules of Court.
any, up to the date of their actual work in accordance with the existing CBA and
COMPANY programs and policies and consistent with the COMPANY'S existing Petitioners filed a Motion for Reconsideration, but the CA denied it in its second
guidelines. Their respective accountabilities shall be deducted from the said accrued questioned Resolution.
benefits and that the payment of the same shall furthermore be subject to the execution
and submission to the COMPANY by the dismissed employees of the corresponding Hence, the instant petition for review on certiorari raising the following Assignment of
individual releases and quitclaims. Errors, to wit:cralawlawlibrary
Reversible Error No. 1
9. The COMPANY and the UNION agree that this Agreement shall constitute a final
resolution of all issues related to or arising from the strike that started on January 13, The Court of Appeals erred in misappreciating the facts of the case.
1997, including the dismissal of a total of one-hundred thirty (132) (sic) UNION officers Reversible Error No. 2
and members, who are all represented by Atty. Potenciano A. Flores, Jr., as herein
provided. The Court of Appeals erred in sustaining that the Petitioners' demand to be paid has
prescribed.5chanrobleslaw
x x x x4chanrobleslaw
Like petitioners' petition for certiorari filed with the CA, the main issue raised in the
On August 6, 1998, the parties filed a Joint Motion to Dismiss stating that they are no present petition is whether petitioners' claim is already barred by prescription.
longer interested in pursuing the petition for injunction filed by respondent as a
consequence of the settlement of their dispute. Petitioners' basic contention is that respondent cannot invoke the defense of prescription
because it is guilty of deliberately causing delay in paying petitioners' claims and that
On October 12, 1998, the NLRC issued its Decision approving the parties' compromise petitioners, on the other hand, are entitled to protection under the law because they had
agreement and granting their Joint Motion to Dismiss. been vigilant in exercising their right as provided for under the subject MOA.

On January 25, 2010, or after a lapse of more than eleven (11) years from the time of The Court is not persuaded.
execution of the subject MO A, petitioners filed with the NLRC a Motion for Writ of
Execution contending that they have not been paid the amounts they are entitled to in There is no dispute that the compromise agreement between herein petitioner union,
accordance with the MOA. representing its officers and members, and respondent company was executed on August
4, 1998 and was subsequently approved via the NLRC Decision dated October 12, 1998.
Respondent filed its Opposition to the Motion for Writ of Execution contending that However, considering petitioners' allegation that the terms and conditions of the
petitioners' remedy is already barred by prescription because, under the 2005 Revised agreement have not been complied with by respondent, petitioners should have moved
Rules of the NLRC, a decision or order may be executed on motion within five (5) years for the issuance of a writ of execution.
from the date it becomes final and executory and that the same decision or order may
only be enforced by independent action within a period often (10) years from the date of It is wrong for petitioners' counsel to argue that since the NLRC Decision approving the
its finality. parties' compromise agreement was immediately executory, there was no need to file a
motion for execution. It is settled that when a compromise agreement is given judicial
53
approval, it becomes more than a contract binding upon the parties.6 Having been accrues.
sanctioned by the court, it is entered as a determination of a controversy and has the force
and effect of a judgment.7 It is immediately executory and not appealable, except for It is clear from the above law and rules that a judgment may be executed on motion
vices of consent or forgery.8The non-fulfillment of its terms and conditions justifies within five years from the date of its entry or from the date it becomes final and
the issuance of a writ of execution; in such an instance, execution becomes a ministerial executory. After the lapse of such time, and before it is barred by the statute of
duty of the court.9 Stated differently, a decision on a compromise agreement is final and limitations, a judgment may be enforced by action. If the prevailing party fails to have the
executory.10 Such agreement has the force of law and is conclusive between the decision enforced by a mere motion after the lapse of five years from the date of its entry
parties.11 It transcends its identity as a mere contract binding only upon the parties (or from the date it becomes final and executory), the said judgment is reduced to a mere
thereto, as it becomes a judgment that is subject to execution in accordance with the right of action in favor of the person whom it favors and must be enforced, as are all
Rules.12 ordinary actions, by the institution of a complaint in a regular form. 13

In this respect, the law and the rules provide the mode and the periods within which a In the present case, the five-and ten-year periods provided by law and the rules are more
party may enforce his right. than sufficient to enable petitioners to enforce their right under the subject MOA. In this
case, it is clear that the judgment of the NLRC, having been based on a compromise
The most relevant rule in the instant case is Section 8, Rule XI, 2005 Revised Rules of embodied in a written contract, was immediately executory upon its issuance on October
Procedure of the NLRC which states that:cralawlawlibrary 12, 1998. Thus, it could have been executed by motion within five (5) years. It was not.
Section 8. Execution By Motion or By Independent Action. - A decision or order may be Nonetheless, it could have been enforced by an independent action within the next five
executed on motion within five (5) years from the date it becomes final and executory. (5) years, or within ten (10) years from the time the NLRC Decision was promulgated. It
After the lapse of such period, the judgment shall become dormant, and may only be was not. Therefore, petitioners' right to have the NLRC judgment executed by mere
enforced by an independent action within a period of ten (10) years from date of its motion as well as their right of action to enforce the same judgment had prescribed by the
finality. time they filed their Motion for Writ of Execution on January 25, 2010.
chanrobleslaw
It is true that there are instances in which this Court allowed execution by motion even
In the same manner, pertinent portions of Sections 4 (a) and 6, Rule III, of the NLRC after the lapse of five years upon meritorious grounds. However, in instances when this
Manual on Execution of Judgment, provide as follows:cralawlawlibrary Court allowed execution by motion even after the lapse of five years, there is, invariably,
Section 4. Issuance of a Writ: - Execution shall issue upon an order, resolution or only one recognized exception, i.e., when the delay is caused or occasioned by actions of
decision that finally disposes of the actions or proceedings and after the counsel of record the judgment debtor and/or is incurred for his benefit or advantage.14 In the present case,
and the parties have been duly furnished with the copies of the same in accordance with there is no indication that the delay in the execution of the MOA, as claimed by
the NLRC Rules of Procedure, provided:cralawlawlibrary petitioners, was caused by respondent nor was it incurred at its instance or for its benefit
a) The Commission or Labor Arbiter shall, motu proprio or upon motion of any interested or advantage.
party, issue a writ of execution on a judgment only within five (5) years from the date it
becomes final and executory, x x x It is settled that the purpose of the law (or rule) in prescribing time limitations for
xxx xxx xxx enforcing judgments or actions is to prevent obligors from sleeping on their rights. 15 In
Section 6. Execution by Independent Action. - A judgment after the lapse of five (5) years this regard, petitioners insist that they are vigilant in exercising their right to pursue
from the date it becomes final and executory and before it is barred by prescription, may payment of the monetary awards in their favor. However, a careful review of the records
only be enforced by an independent action.chanrobleslaw at hand would show that petitioners failed to prove their allegation. The only evidence
presented to show that petitioners ever demanded payment was a letter dated May 22,
Similarly, Section 6, Rule 39 of the Rules of Court, which can be applied in a suppletory 2008, signed by one Atty. Calderon, representing herein individual petitioners, addressed
manner, provides:cralawlawlibrary to respondent company and seeking proof that the company has indeed complied with the
Sec. 6. Execution by motion or by independent action. - A final and executory judgment provisions of the subject MOA.16 Considering that the NLRC Decision approving the
or order may be executed on motion within five (5) years from the date of its entry. After MOA was issued as early as October 12, 1998, the letter from petitioners' counsel, which
the lapse of such time, and before it is barred by the statute of limitations, a judgment was dated almost ten years after the issuance of the NLRC Decision, can hardly be
may be enforced by action. The revived judgment may also be enforced by motion within considered as evidence of vigilance on the part of petitioners. No proof was ever
five years from the date of its entry and, thereafter, by action before it is barred by the presented showing that petitioners did not sleep on their rights. Despite their claims to the
statute of limitations. contrary, the records at hand are bereft of any evidence to establish that petitioners
chanrobleslaw exerted any effort to enforce their rights under the subject MOA, either individually,
through their union or their counsel. It is a basic rule in evidence that each party must
Article 1144 of the Civil Code may, likewise be applied, as it provides that an action prove his affirmative allegation, that mere allegation is not evidence.17 Indeed, as
upon a written contract must be brought within ten years from the time the right of action allegation is not evidence, the rule has always been to the effect that a party alleging a
54
critical fact must support his allegation with substantial evidence which has been DEL CASTILLO, J.:
construed to mean such relevant evidence as a reasonable mind will accept as adequate to
support a conclusion.18Unfortunately, petitioners failed in this respect. While a government office1 may prohibit altogether the filing of a motion for
reconsideration with respect to its decisions or orders, the fact remains that certiorari
Even granting, for the sake of argument, that the records of the case were lost, as alleged
by petitioners, leading to the delay in the enforcement of petitioners' rights, such loss of inherently requires the filing of a motion for reconsideration, which is the tangible
the records cannot be regarded as having interrupted the prescriptive periods for filing a representation of the opportunity given to the office to correct itself. Unless it is filed,
motion or an action to enforce the NLRC Decision because such alleged loss could not there could be no occasion to rectify. Worse, the remedy of certiorari would be
have prevented petitioners from attempting to reconstitute the records and, thereafter, unavailing. Simply put, regardless of the proscription against the filing of a motion for
filing the required motion or action on time.19 reconsideration, the same may be filed on the assumption that rectification of the decision
or order must be obtained, and before a petition for certiorari may be instituted.
As a final note, it bears to reiterate that while the scales of justice usually tilt in favor of
labor, the present circumstances prevent this Court from applying the same in the instant
petition. Even if our laws endeavor to give life to the constitutional policy on social This Petition for Review on Certiorari2 seeks a review and setting aside of the September
justice and on the protection of labor, it does not mean that every labor dispute will be 20, 2007 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 100324,4 as well
decided in favor of the workers.20 The law also recognizes that management has rights as its December 14, 2007 Resolution5 denying petitioners Motion for Reconsideration.
which are also entitled to respect and enforcement in the interest of fair play.21 Stated
otherwise, while the Court fully recognizes the special protection which the Constitution, Factual Antecedents
labor laws, and social legislation accord the workingman, the Court cannot, however,
alter or amend the law on prescription to relieve petitioners of the consequences of their
inaction. Vigilantibus, non dormientibus, jura subveniunt - Laws come to the assistance On the ground that it was suffering business losses, petitioner Philtranco Service
of the vigilant, not of the sleeping.22chanroblesvirtuallawlibrary Enterprises, Inc., a local land transportation company engaged in the business of carrying
passengers and freight, retrenched 21 of its employees. Consequently, the company
WHEREFORE, the instant petition is DENIED. The Resolutions of the Court of union, herein private respondent Philtranco Workers Union-Association of Genuine
Appeals, dated June 30, 2011 and September 28, 2011, respectively, in CA-G.R. SP No. Labor Organizations (PWU-AGLU), filed a Notice of Strike with the Department of
118459, are AFFIRMED.
Labor and Employment (DOLE), claiming that petitioner engaged in unfair labor
practices. The case was docketed as NCMB-NCR CASE No. NS-02-028-07.

Unable to settle their differences at the scheduled February 21, 2007 preliminary
conference held before Conciliator-Mediator Amorsolo Aglibut (Aglibut) of the National
Conciliation and Mediation Board (NCMB), the case was thereafter referred to the Office
of the Secretary of the DOLE (Secretary of Labor), where the case was docketed as Case
No. OS-VA-2007-008.

After considering the parties respective position papers and other submissions, Acting
G.R. No. 180962 February 26, 2014 DOLE Secretary Danilo P. Cruz issued a Decision6 dated June 13, 2007, the dispositive
portion of which reads, as follows:
PIDLTRANCO SERVICE ENTERPRISES, INC., represented by its Vice-President
for Administration, M/GEN. NEMESIO M. SIGAYA, Petitioner, WHEREFORE, premises considered, we hereby ORDER Philtranco to:
vs.
PHILTRANCO WORKERS UNION-ASSOCIATION OF GENUINE LABOR 1. REINSTATE to their former positions, without loss of seniority rights, the
ORGANIZATIONS (PWU-AGLO), represented by JOSE JESSIE ILLEGALLY TERMINATED 17 "union officers", x x x, and PAY them
OLIVAR, Respondent. BACKWAGES from the time of termination until their actual or payroll
reinstatement, provided in the computation of backwages among the seventeen
DECISION
55
(17) who had received their separation pay should deduct the payments made to SO ORDERED.11
them from the backwages due them.
The CA held that, in assailing the Decision of the DOLE voluntary arbitrator, petitioner
2. MAINTAIN the status quo and continue in full force and effect the terms and erred in filing a petition for certiorari under Rule 65 of the 1997 Rules, when it should
conditions of the existing CBA specifically, Article VI on Salaries and Wages have filed a petition for review under Rule 43 thereof, which properly covers decisions of
(commissions) and Article XI, on Medical and Hospitalization until a new voluntary labor arbitrators.12 For this reason, the petition is dismissible pursuant to
agreement is reached by the parties; and Supreme Court Circular No. 2-90.13 The CA added that since the assailed Decision was
not timely appealed within the reglementary 15-day period under Rule 43, the same
3. REMIT the withheld union dues to PWU-AGLU without unnecessary delay. became final and executory. Finally, the appellate court ruled that even assuming for the
sake of argument that certiorari was indeed the correct remedy, still the petition should be
The PARTIES are enjoined to strictly and fully comply with the provisions of the existing dismissed for being filed out of time. Petitioners unauthorized Motion for
CBA and the other dispositions of this Decision. Reconsideration filed with the Secretary of Labor did not toll the running of the
reglementary 60-day period within which to avail of certiorari; thus, from the time of its
SO ORDERED.7 receipt of Acting Labor Secretary Cruzs June 13, 2007 Decision on June 14 or the
following day, petitioner had until August 13 to file the petition yet it filed the same
Petitioner received a copy of the above Decision on June 14, 2007. It filed a Motion for only on August 29.
Reconsideration on June 25, 2007, a Monday. Private respondent, on the other hand,
submitted a "Partial Appeal." Petitioner filed a Motion for Reconsideration, which was denied by the CA through the
second assailed December 14, 2007 Resolution. In denying the motion, the CA held that
In an August 15, 2007 Order8 which petitioner received on August 17, 2007, the Secretary the fact that the Acting Secretary of Labor rendered the decision on the voluntary
of Labor declined to rule on petitioners Motion for Reconsideration and private arbitration case did not remove the same from the jurisdiction of the NCMB, which thus
respondents "Partial Appeal", citing a DOLE Regulation9 which provided that voluntary places the case within the coverage of Rule 43.
arbitrators decisions, orders, resolutions or awards shall not be the subject of motions for
reconsideration. The Secretary of Labor held: Issues

WHEREFORE, the complainants and the respondents respective pleadings are hereby In this Petition,14 the following errors are assigned:
NOTED as pleadings that need not be acted upon for lack of legal basis.
THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE
SO ORDERED. 10 PETITIONER AVAILED OF THE ERRONEOUS REMEDY IN FILING A PETITION
FOR CERTIORARI UNDER RULE 65 INSTEAD OF UNDER RULE 43 OF THE
The Assailed Court of Appeals Resolutions RULES OF COURT.

On August 29, 2007, petitioner filed before the CA an original Petition for Certiorari and THE HONORABLE COURT OF APPEALS ERRED WHEN IT HELD THAT THE
Prohibition, and sought injunctive relief, which case was docketed as CA-G.R. SP No. PETITION FOR CERTIORARI WAS FILED OUT OF TIME.
100324.
THE HONORABLE COURT OF APPEALS ERRED WHEN IT DISMISSED THE
On September 20, 2007, the CA issued the assailed Resolution which decreed as follows: PETITION OUTRIGHT ON THE BASIS OF PURE TECHNICALITY.15

WHEREFORE, premises considered, the instant Petition for Certiorari and Prohibition Petitioners Arguments
with Prayer for Temporary Restraining Order and Preliminary Injunction is hereby
DISMISSED. Philtrancos pleading entitled "Reiterating Motion for The Issuance of Writ In its Petition and Reply,16 petitioner argues that a petition for certiorari under Rule 65
of Preliminary Injunction and/or Temporary Restraining Order" is NOTED. and not a petition for review under Rule 43 is the proper remedy to assail the June 13,

56
2007 Decision of the DOLE Acting Secretary, pointing to the Courts pronouncement in It cannot be said that in taking cognizance of NCMB-NCR CASE No. NS-02-028-07, the
National Federation of Labor v. Hon. Laguesma17 that the remedy of an aggrieved party Secretary of Labor did so in a limited capacity, i.e., as a voluntary arbitrator. The fact is
against the decisions and discretionary acts of the NLRC as well as the Secretary of undeniable that by referring the case to the Secretary of Labor, Conciliator-Mediator
Labor is to timely file a motion for reconsideration, and then seasonably file a special Aglibut conceded that the case fell within the coverage of Article 263 of the Labor Code;
civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. the impending strike in Philtranco, a public transportation company whose business is
imbued with public interest, required that the Secretary of Labor assume jurisdiction over
Petitioner adds that, contrary to the CAs ruling, NCMB-NCR CASE No. NS-02-028-07 the case, which he in fact did. By assuming jurisdiction over the case, the provisions of
is not a simple voluntary arbitration case. The character of the case, which involves an Article 263 became applicable, any representation to the contrary or that he is deciding
impending strike by petitioners employees; the nature of petitioners business as a public the case in his capacity as a voluntary arbitrator notwithstanding.
transportation company, which is imbued with public interest; the merits of its case; and
the assumption of jurisdiction by the Secretary of Labor all these circumstances It has long been settled that the remedy of an aggrieved party in a decision or resolution
removed the case from the coverage of Article 262,18 and instead placed it under Article of the Secretary of Labor is to timely file a motion for reconsideration as a precondition
263,19 of the Labor Code. Besides, Rule 43 does not apply to judgments or final orders for any further or subsequent remedy, and then seasonably file a special civil action for
issued under the Labor Code.20 certiorari under Rule 65 of the 1997 Rules on Civil Procedure.23 There is no distinction:
when the Secretary of Labor assumes jurisdiction over a labor case in an industry
On the procedural issue, petitioner insists that it timely filed the Petition for Certiorari indispensable to national interest, "he exercises great breadth of discretion" in finding a
with the CA, arguing that Rule 65 fixes the 60-day period within which to file the petition solution to the parties dispute.24 "[T]he authority of the Secretary of Labor to assume
from notice of the denial of a timely filed motion for reconsideration, whether such jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an
motion is required or not. It cites the Courts pronouncement in ABS-CBN Union industry indispensable to national interest includes and extends to all questions and
Members v. ABS-CBN Corporation21 that "before a petition for certiorari under Rule 65 controversies arising therefrom. The power is plenary and discretionary in nature to
of the Rules of Court may be availed of, the filing of a motion for reconsideration is a enable him to effectively and efficiently dispose of the primary dispute."25 This wide
condition sine qua non to afford an opportunity for the correction of the error or mistake latitude of discretion given to the Secretary of Labor may not be the subject of appeal.
complained of" and since "a decision of the Secretary of Labor is subject to judicial
review only through a special civil action of certiorari x x x [it] cannot be resorted to Accordingly, the Secretary of Labors Decision in Case No. OS-VA-2007-008 is a proper
without the aggrieved party having exhausted administrative remedies through a motion subject of certiorari, pursuant to the Courts pronouncement in National Federation of
for reconsideration". Labor v. Laguesma,26 thus:

Respondents Arguments Though appeals from the NLRC to the Secretary of Labor were eliminated, presently
there are several instances in the Labor Code and its implementing and related rules
In its Comment,22 respondent argues that the Secretary of Labor decided Case No. OS- where an appeal can be filed with the Office of the Secretary of Labor or the Secretary of
VA-2007-008 in his capacity as voluntary arbitrator; thus, his decision, being that of a Labor issues a ruling, to wit:
voluntary arbitrator, is only assailable via a petition for review under Rule 43. It further
echoes the CAs ruling that even granting that certiorari was the proper remedy, the same xxxx
was filed out of time as the filing of a motion for reconsideration, which was an
unauthorized pleading, did not toll the running of the 60-day period. Finally, it argues that (6) Art. 263 provides that the Secretary of Labor shall decide or resolve the labor dispute
on the merits, petitioners case could not hold water as it failed to abide by the [over] which he assumed jurisdiction within thirty (30) days from the date of the
requirements of law in effecting a retrenchment on the ground of business losses. assumption of jurisdiction. His decision shall be final and executory ten (10) calendar
days after receipt thereof by the parties.
Our Ruling
From the foregoing we see that the Labor Code and its implementing and related rules
The Court grants the Petition. generally do not provide for any mode for reviewing the decision of the Secretary of
Labor. It is further generally provided that the decision of the Secretary of Labor shall be

57
final and executory after ten (10) days from notice. Yet, like decisions of the NLRC under Rule 65 of the Rules of Court. As a rule, the law requires a motion for
which under Art. 223 of the Labor Code become final after ten (10) days, decisions of the reconsideration to enable the public respondent to correct his mistakes, if any. In Pearl S.
Secretary of Labor come to this Court by way of a petition for certiorari even beyond the Buck Foundation, Inc., vs. NLRC, this Court held:
ten-day period provided in the Labor Code and the implementing rules but within the
reglementary period set for Rule 65 petitions under the 1997 Rules of Civil Procedure. x "Hence, the only way by which a labor case may reach the Supreme Court is through a
xx petition for certiorari under Rule 65 of the Rules of Court alleging lack or excess of
jurisdiction or grave abuse of discretion. Such petition may be filed within a reasonable
xxxx time from receipt of the resolution denying the motion for reconsideration of the NLRC
decision." x x x
In fine, we find that it is procedurally feasible as well as practicable that petitions for
certiorari under Rule 65 against the decisions of the Secretary of Labor rendered under Clearly, before a petition for certiorari under Rule 65 of the Rules of Court may be
the Labor Code and its implementing and related rules be filed initially in the Court of availed of, the filing of a motion for reconsideration is a condition sine qua non to afford
Appeals. Paramount consideration is strict observance of the doctrine on the hierarchy of an opportunity for the correction of the error or mistake complained of.
the courts, emphasized in St. Martin Funeral Homes v. NLRC, on "the judicial policy that
this Court will not entertain direct resort to it unless the redress desired cannot be So also, considering that a decision of the Secretary of Labor is subject to judicial review
obtained in the appropriate courts or where exceptional and compelling circumstances only through a special civil action of certiorari and, as a rule, cannot be resorted to
justify availment of a remedy within and calling for the exercise of our primary without the aggrieved party having exhausted administrative remedies through a motion
jurisdiction."27 for reconsideration, the aggrieved party, must be allowed to move for a reconsideration of
the same so that he can bring a special civil action for certiorari before the Supreme
On the question of whether the Petition for Certiorari was timely filed, the Court agrees Court.29
with petitioners submission. Rule 65 states that where a motion for reconsideration or
new trial is timely filed, whether such motion is required or not, the petition shall be filed Indeed, what needs to be realized is that while a government office may prohibit
not later than 60 days counted from the notice of the denial of the motion.28 This can only altogether the filing of a motion for reconsideration with respect to its decisions or orders,
mean that even though a motion for reconsideration is not required or even prohibited by the fact remains that certiorari inherently requires the filing of a motion for
the concerned government office, and the petitioner files the motion just the same, the 60- reconsideration, which is the tangible representation of the opportunity given to the office
day period shall nonetheless be counted from notice of the denial of the motion. The very to correct itself. Unless it is filed, there could be no occasion to rectify. Worse, the
nature of certiorari which is an extraordinary remedy resorted to only in the absence of remedy of certiorari would be unavailing. Simply put, regardless of the proscription
plain, available, speedy and adequate remedies in the course of law requires that the against the filing of a motion for reconsideration, the same may be filed on the
office issuing the decision or order be given the opportunity to correct itself. Quite assumption that rectification of the decision or order must be obtained, and before a
evidently, this opportunity for rectification does not arise if no motion for reconsideration petition for certiorari may be instituted.
has been filed. This is precisely what the Court said in the ABS-CBN Union Members
case, whose essence continues to this day. Thus: Petitioner received a copy of the Acting Secretary of Labors Decision on June 14,
2007.1wphi1 It timely filed a Motion for Reconsideration on June 25, which was a
Section 8, Rule VIII, Book V of the Omnibus Rules Implementing the Labor Code, Monday, or the first working day following the last day (Sunday, June 24) for filing the
provides: motion. But for lack of procedural basis, the same was effectively denied by the Secretary
of Labor via his August 15, 2007 Order which petitioner received on August 17. It then
"The Secretary shall have fifteen (15) calendar days within which to decide the appeal filed the Petition for Certiorari on August 29, or well within the fresh 60-day period
from receipt of the records of the case. The decision of the Secretary shall be final and allowed by the Rules from August 17. Given these facts, the Court finds that the Petition
inappealable." x x x was timely filed.

The aforecited provision cannot be construed to mean that the Decision of the public Going by the foregoing pronouncements, the CA doubly erred in dismissing CA-G.R. SP
respondent cannot be reconsidered since the same is reviewable by writ of certiorari No. 100324.

58
WHEREFORE, the Petition is GRANTED. The assailed September 20, 2007 and SO ORDERED.
December 14, 2007 Resolutions of the Court of Appeals are REVERSED and SET
ASIDE. The Petition in CA-G.R. SP No. 100324 is ordered REINSTATED and the Court
of Appeals is DIRECTED to RESOLVE the same with DELIBERATE DISPATCH.

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