Art.

225 [218] of the Labor Code

EN BANC

G.R. No. 9115 August 31, 1956

PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU) and MAJESTIC & REPUBLIC
THEATER EMPLOYEES ASSOCIATION (PAFLU), petitioners,
vs.
HONORABLE BIENVENIDO A. TAN, Judge of the Court of First Instance of Manila and REMA,
INCORPORATED, respondents.

Cipriano Cid & Associates for petitioners.

Paredes, Caw, Acevedo & Associates for respondent, Rema, Incorporated.

BAUTISTA ANGELO, J.:

This is a petition for certiorari and prohibition with preliminary injunction seeking to nullify all the
proceedings had before respondent Judge in Civil Case No. 26169 of the Court of First Instance of
Manila, particularly that which refers to the order issued by him on May 10, 1955, enjoining the
Philippine Association of Free Labor Unions (PAFLU)m, its members, associates, or agents to cease
and desist from picketing the properties of respondent REMA, Incorporated, as well as molesting,
transferring or preventing the public from entering the Republic and Majestic theaters leased and
operated by said respondent. In due course, this Court issued the writ of preliminary injunction
prayed for upon the filing by petitioners of a bond of P500.

On May 9, 1955, REMA, Incorporated filed an action for damages with preliminary injunction against
petitioners in the Court of First Instance of Manila alleging, among other things, that the "plaintiff is
the lease and operator of the 'Republic and 'Majestic' Theaters doing business at Florentino Torres
Street, Manila, which establishments were leased by the plaintiff on April 27th, 1955 from the
Goodwill Trading Co., Inc., who on the same date acquired the said theaters by way of purchase
from the L.C. Eugenio and Co., Inc., the former owner"; that "the members of the defendant labor
union, PAFLU and the other defendants who are mostly members of the defendant labor union,
PAFLU, were formerly employed with the above-mentioned theaters when the latter were still under
the ownership, operation and management of the former owner, L. C. Eugenio and Co., Inc., but
who ceased to be such employees since the sale of the said theaters on April 27, 1955, to the
Goodwill Trading Co., Inc., and their subsequent lease to the plaintiff on the same date"; and that
"the plaintiff and the defendants have no employer-employee relation because the latter are not in
any manner the employees or laborers of the plaintiff and as such they have no labor dispute
between them."

The court, presided over by Hon. Bienvenido A. Tan, set for hearing the petition for injunction
requiring defendants (now petitioners) to appear on May 10, 1955 to show cause why the writ should
not be issued as prayed for in the complaint. On the date of hearing, defendants assailed the
jurisdiction of the court on the ground that, it involving a labor dispute or an employer-employee
relation, the sole power to determine the issue is the Court of Industrial Relations as provided for in
Republic Act No. 875. After the case has been argued orally by counsel of both parties, but without
receiving any evidence in support of the factual allegations of the petition, respondent judge
declared himself with jurisdiction to act and in effect issued on May 10, 1955 an order granting the
writ of injunction upon a plaintiff's filing a bond in the amount of P500. Hence the present petition
for certiorari.

The first issue to be determined is whether the main case involves a labor dispute or an employer-
employee relation. This needs a brief statement of the facts which led to the institution of the main
case in the lower court.

On September 11, 1954, a collective bargaining agreement was entered into by and between the
Republic Theater Enterprises and the Majestic Theater, Inc. on one hand and the Majestic and
Republic Theaters Employees Association on the other. This agreement was to run for a period of
two years. Because of the failure of the theater enterprises to comply with some terms of the
agreement, the employees of the association went on strike on January 2, 1955. In consideration of
the collective bargaining contract was modified and a new one entered into also for a term of two
years on February 16, 1955. This new agreement was signed by the Philippine Association of Free
Labor Unions (PAFLU), with which the employees association had affiliated after the conclusion of
the original collective bargaining agreement. Among the pertinent provisions of the agreement, as
amended, were that during the period of its life the association or any laborer or employee shall not
declare a strike, nor engage in picketing, while the management of the theaters in return "shall not
lockout their employees." The revised agreement also included rigid clauses in the payment of
overtime pay, night differential pay and a provision for the examination of books of the theaters on
June 30, 1955.

On March 31, 1955, the two theaters, Republic and Majestic, with all their assets and improvements
thereunto appertaining, were sold by the owner L. C. Eugenio and Co. Inc., to Goodwill Trading Co.,
Inc., which was later supplemented by another agreement executed by the same parties on April 26,
1955. On the same date, April 26, 1955, a contract of lease concerning the operation of the two
theaters was executed by Goodwill Trading Co., Inc., in favor of the REMA, Incorporated, and on
April 27, 1955, the latter corporation, as leasee and operator of the two theaters, sent a circular letter
to all the employees of the former owner requiring them to apply for employment with the new
management in a form expressly prepared for the purpose. On May 8, 1955, the employees of the
association started picketing the premises of the two theaters with the help of the members of the
Philippine Association of Free Labor Unions (PAFLU), for which reason the REMA, Incorporated
filed the present action for damages with preliminary injunction in the Court of First Instance of
Manila. And on May 20, 1955, a complaint for unfair labor practice was practice was filed before the
Court of Industrial Relations by the Majestic and Republic Theaters Employees Association against
its employers, the Republic Theater Enterprises and the Majestic Theater, Inc., alleging among other
grounds that the latter committed a breach of the collective bargaining agreement conclude between
them.

It is contended by respondents that there is no relation of employer and employee between the
REMA, Incorporated and the Republic and Majestic Theaters Employees Association for the reason
that the two theaters had already been sold by their original owner and the vendee had in turn
leased them to REMA, Incorporated which has no contractual relation whatsoever with the members
of the association. There being no employer-employee relation, they contend, there is no labor
dispute and consequently the lower court had jurisdiction to entertain the case. This claim is
disputed by petitioners.

There is no merit in this claim of respondents. While it is true that the employees of the petitioning
association do not have an actual contract of employment with REMA, Incorporated and were
actually employed by the former owner of the two theaters with whom they had concluded a
collective bargaining agreement, the fact however remains that these employees do not admit, and
in fact dispute, the genuineness and validity of the alleged transfer and for the reason they still
consider themselves as employees of the two theaters in contemplation of law. It is their stand that
the alleged transfer is fictitious and was merely resorted to by the former owner as a ruse to evade
its liability under the collective bargaining agreement because of some provisions contained therein
which in its opinion were detrimental to its interests although highly beneficial to the interests of the
employees. There is therefore the vital issue concerning the genuineness and validity of the sale
involved in the main case which in the light of the spirit of our labor legislation is deemed a labor
dispute. Thus, it was held that "The disputants need not stand in relation of employer and employee
for case to involve a 'labor dispute' within Norris-La Guardia Act regulating issuance of restraining
order or injunction in cases involving labor disputes" (Green, et al. vs. Obergfell, et al., 121 F 2d.,
461 . While, under our own Industrial Peace Act, the term "labor dispute" includes any controversy
concerning terms, tenure, or conditions of employment, "regardless of whether the disputants stand
in the proximate relation of employer and employee." [Section 2, (j), Republic Act No. 875]. In our
opinion, considering the equities involved, the relation of petitioner to respondent comes within the
purview of this definition.

The next issue that arises is: It appearing that the main case involves a labor dispute does it comes
under the jurisdiction of an ordinary court of justice or should it be left entirely to the Court of
Industrial Relations. This involves a little digression on the scope and extent of the jurisdiction of the
Court of Industrial Relations which is now conferred upon it by the Industrial Peace Act.

It should be noted that prior to the approval of the Industrial Peace Act (Republic Act No. 875) the
law that governed the jurisdiction of the Court of Industrial Relations over cases involving labor
disputes is Commonwealth Act 103. This Act gave to that court broad powers of compulsory
arbitration on any matter involving a labor dispute. In fact, that Act gave that court "jurisdiction over
the entire Philippines, to consider, investigate, decide and settle all questions, matters,
controversies, or disputes arising between, and/or affecting employers and employees or laborers,
and landlords and tenants or farm-laborers, and regulate the relations between them" (section 1). In
other words, that court take cognizance "of any industrial or agricultural dispute causing or likely to
cause a strike or lockout" with the only limitation that the employees, laborers or tenants that may
bring the matter to court exceed thirty in number (section 4). And, commenting on these broad
powers given by Commonwealth Act No. 103 to the Court of Industrial Relations, this Court said:

Resulta evidente de las disposiciones transcritas lo siguente:(a) que cuando surge una
disputa entre principal y el empleado u obrero, vgr. sobre cuestion de salarios, la Corte de
Relaciones Industriales tiene jurisdiccion en todo el territorio de Filipinas para considerar,
investigar y resolver dicha disputa, fijando los salarios que estime justos y razonables; (b)
que para los efectos de prevencion, arbitraje, decision y arreglo, el mismo Tribunal de
Relaciones Industrial tiene igualmente jurisdiccion para conocer de cualqier disputa —
industrial o agricola — resultante de cualesquier diferencias respecto de los salarios,
participaciones o compensaciones, horas de trabajo, condiciones del empleo o de la
aparceria entre los patrones y los empleados u obreros y condiciones, cuando se viere que
dicha disputa ocasiona o puede ocasioner una helga; (c) que en el ejercicio de sus
facultades arriba especificadas, el Tribunal de Relaciones Industriales no queda limitado, al
decidir la disputa, a conceder el remedio o remedios solicitados por las partes en la
controvesia, sino que incluir en la orden o decision cualquier materia o determinacion para el
proposito de arreglar la disputa o de prevenir ulteriores controversias industriales o
agricolas. (The Shell Company of Philippine Islands, Limited vs. National Labor Union, G. R.
No. L-1309, decided July 26, 1948).2

But this broad jurisdiction was somewhat curtailed upon the approval of Republic Act No. 875, the
purpose being to limit to certain specific cases, leaving the rest to the regular courts. Thus, as the
law now stands, that power is confined to the following case: (1) when the labor disputes affects an
industry which is indispensable to the national interest and is so certified by the President to the
industrial court (Section 10, Republic Act No. 875); (2) when the controversy refers to minimum
wage under the Minimum Wage Law (Republic Act No. 602); (3) when it involves hours of
employment under the Eight-Hour Labor Law (Commonwealth Act No. 444); and (4) when it involves
and unfair labor practice [section 5, (a), Republic Act No. 875]. In all other cases, even if they grow
out of a labor dispute, the Court of Industrial Relations does not have jurisdiction, the intendment of
the law being "to prevent undue restriction of free enterprise for capital and labor and to encourage
the truly democratic method of regulating the relations between the employer and employee by
means of an agreement freely entered into in collective bargaining" (section 7, Republic Act No.
875). In other words, the policy of the law is to advance the settlement of disputes between the
employers and the employees through collective bargaining, recognizing "that real industrial peace
cannot be achieved by compulsion of law" [Section section (c), in relation to section 20, (Idem.)] .

It therefore appears that with the exception of the four cases above specified the Court of Industrial
Relations has no jurisdiction even if it involves a labor dispute. And as the issue involved in the
instant case does not fall under, nor refer to any of these specified cases, it follows that the lower
court has jurisdiction to entertain the same.

The remaining issue is: Can the lower court grant an injunction in connection with the picketing of
the premises of respondent by the members of the petitioning association? If so, has respondent
judge issued the relief in accordance with law?

The pertinent provisions concerning the issuance of injunction in labor disputes are those embodied
in sections 9 and 10 Republic Act No. 875. Analyzing the provisions of these two sections, we find
that there are two groups of activities that may be reckoned with in connection with the issuance of
injunction, one as to which injunction is prohibited even if they involve or grow out of a labor dispute,
and another as to which injunction may be issued under certain conditions. For ready reference, we
will quote the pertinent provisions of those section.

As to the first group, section 9 (a) provides:

(a) No Court, Commission or Board of the Philippines shall have jurisdiction except as
provided in section ten of this Act to issue any restraining order, temporary or permanent
injunction in any case involving or growing out of labor dispute to prohibit any person or
persons participating or interested in such dispute from doing, whether singly or in concern,
any of the following acts:

(1) Ceasing or refusing to perform any work or to remain in any relation of employment;

(2) Becoming or remaining a member of any labor organization or of any employee

organization regardless of any undertaking or promise as is described in section eight of this
Act;

(3) Paying or giving to, or withholding, from any person participating or interested in such
labor dispute, any strike or unemployment benefits or insurance, or moneys or things of
value;

(4) By all lawful means aiding any person participating or interested in any labor dispute who
is being proceeded against in, or prosecuting any action or suit in any court of the
Philippines;

(5) Giving publicity to the existence of, or the facts involved in any labor dispute, whether by
advertising, speaking, patrolling, or by any method not involving fraud or violence;

(6) Assembling peaceably to act or to organize to act in promotion of their interest in a labor
dispute;

(7) Advising or notifying any person of an intention to do any of the acts heretofore specified;

(8) Agreeing with other persons to do or not to do any of the acts heretofore specified; and

(9) Advising, urging, or otherwise causing or inducing without fraud or violence, the acts
heretofore specified, regardless of any such understanding or promise as is described in
section eight of this Act.

And as to the second group, section 9 (d) and section 10 provide:

SEC. 9.

(d) No court of the Philippines shall have jurisdiction to issue a temporary or permanent
injunction in any case involving or growing out of a labor dispute, as herein defined except
after hearing the testimony of witnesses in open court (with opportunity for cross-examination
) in support of the allegations of a complaint made under oath, and testimony in position
thereto, if offered, and except after finding of fact by the Court, to the effect:

(1) That unlawful acts have been threatened and will be committed unless restrained, or
have been committed and will be continued unless restrained, but no injunction or temporary
restraining order shall be issued on account of any threat or unlawful act exception against
the person or persons, association, or organization making the threat or committing the
unlawful act or actually authorizing or ratify in the same after actual knowledge thereof;

(2) That substantial and irreparable injury to complainant's property will follow;

(3) That as to each item of relief granted greater injury will be inflicted upon complainant by
the denial of relief than will be inflicted upon defendants by the granting of relief;

(4) That complainant has no adequate remedy at law; and .

(5) That the public officers charged with the duty to protect complainant's property are unable
or unwilling to furnish adequate protection.

SEC. 10. Labor Dispute in Industries Indispensable to the National Interest. — When in the
opinion of the President of the Philippines there exist a labor dispute in an industry
indispensable to the national interest and when such labor dispute is certified by the
President to the Court of Industrial Relations, said Court may cause to be issued a
restraining order forbidding the employees to strike or the employer to lockout the
 employees, pending an investigation by the Court, and if no other solution to the dispute is
found, the Court may issue an order fixing the terms and conditions of employment.

From the above-quoted provisions it can be seen that the activities that cannot be enjoined are those
enumerated in section 9, paragraph a, even if they involve or grow out of a labor dispute. To this we
may add the case provided for in section 9, (b), when there is an unlawful combination or conspiracy
on the part of those engaged in the labor dispute in connection with the acts above enumerated. And
those that can be enjoined refer to the case certified by the President as affecting national interest
and to those enumerated in section 9, paragraph d, particularly when "unlawful acts have been
threatened and will be committed unless restrained, or have been committed and will be continued
unless restrained." Note that, as to the acts that may be enjoined, section 9 (d) contains a number of
conditions which the court must find to exist before an injunction can be granted and which are
considered as limitations on the courts's power to grant relief. This requirement was held to be
jurisdictional such that, if not followed, it may result in the annulment of the proceedings.

Section 7 declares that "no court of the United States shall have jurisdiction to issue a temporary or
permanent injunction in any case involving or growing out of a labor dispute, as herein defined"
except after a hearing of a described character, "and except after findings of fact by the court, to the
effect — (a) That unlawful acts have been threatened and will be committed unless restrained or
have been committed and will be continued unless restrained" and that no injunction "shall be issued
on account of any threat or unlawful act excepting against the person or persons, association or
organization making the threat or committing the unlawful act or organization making the threat or
committing the unlawful act or actually authorizing or ratifying the same. . ." By subsections (b) to (c)
it is provided that relief shall not be granted unless the court finds that substantial and irreparable
injury to complainants' property will follow: that as to each item or relief granted greater injury will be
inflicted upon the complainant by denying the relief than will be inflicted upon defendants by granting
it; that complainant has no adequate remedy at law; and that the public officers charged with the
duty to protect complainants' property are unable or unwilling to provide adequate protection. There
can be no question of the power of Congress thus to define and limit the jurisdiction of the inferior
courts of the United States. The District Court made one of the required findings save as to
irreparable injury and lack of remedy at law. It follows that in issuing the injunction it exceeds its
jurisdiction. (Lauf vs. E. G. Shinner & Co., Inc., Wis. 1938, 58 S. Ct. 578, 303 U. S., 323, 82 L. Ed.,
872.) (Emphasis supplied.)

With regards to activities that may be enjoined, in order to ascertain what court has jurisdiction to
issue the injunction, it is necessary to determine the nature of the controversy. When the case
involves a labor dispute that effects national interest and is certified to the Court of Industrial
Relations, or refers to the Minimum Wage Law or Eight-Hour Labor Law, there is no doubt that it is
this court that has jurisdiction over the incident. The same thing may be said when the case involves
an unfair labor practice, for under section 5 (a), Republic Act No. 875, the jurisdiction of the Court of
Industrial Relations is exclusive. But the situation varies with regard to other acts where injunction is
permissible because of the ambiguity in the language of the law. Note that the law refers to "no court
of the Philippines", which gives the connotation that if not because of the prohibition any court may
issue the injunction. It is true that the last part of section 9(d) says "after finding of fact by the Court"
and section 2 (a), in defining the word "court", it says: "Court means the Court shall be specified"; but
this definition is no authority for us to conclude that only the Court of Industrial Relations can issue
injunctions in all cases mentioned in section 9 (d) for, as already adverted to, there are cases which
may involve or grow out of a labor dispute which may not necessarily come under its jurisdiction over
cases which it does not have under the law. We are therefore forced to conclude that court can only
issue injunction and in those cases that do not, the power can be exercised by regular courts. The
instant case is one of those that do not come under its jurisdiction.

We believe however that in order that an injunction may be properly issued the procedure laid down
in section 9(d) of Republic Act 875 should be followed and cannot be granted ex-parte as allowed by
Rule 60, section 6, of the Rule of Court. The reason is that the case, involving as it does a labor
dispute, comes under said section 9 (d)of the law. That procedure requires that there should be a
hearing at which the parties should be given an opportunity to present witnesses in support of the
complaint and of the opposition, if any, with opportunity for cross-examination, and that the order
conditions required by said section as prerequisites for the granting of relief must be established and
stated in the order of the court. Unless this procedure is followed, the proceedings would be invalid
and no effect. The court would then be acting excess of its jurisdiction. (Lauf vs. E.G. Shinner & Co.,
Inc. supra.)
It appearing that in the present case such procedure was not followed, we are persuaded to
conclude that the order of respondent court of May 10, 1955 granting the writ of injunction prayed for
by plaintiff-respondent is invalid and should be nullified.

Petition is granted. The order of the respondent court dated May 10, 1955 is set aside. Costs against
REMA, Incorporated.

Bengzon, Padilla, Labrador, Endencia, and Felix, JJ., concur.

FIRST DIVISION

G.R. No. 91980 June 27, 1991

ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division), HON. CARMEN TALUSAN and
SAN MIGUEL CORPORATION, respondents.

Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for petitioner.
Jardeleza Law Offices for private respondents.

NARVASA, J.:

The controversy at bar had its origin in the "wage distortions" affecting the employees of respondent
San Miguel Corporation allegedly caused by Republic Act No. 6727, otherwise known as the Wage
Rationalization Act.

Upon the effectivity of the Act on June 5, 1989, the union known as "Ilaw at Buklod Ng Manggagawa
(IBM)" — said to represent 4,500 employees of San Miguel Corporation, more or less, "working at
the various plants, offices, and warehouses located at the National Capital Region" — presented to
the company a "demand" for correction of the "significant distortion in . . . (the workers') wages." In
that "demand," the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows:

xxx xxx xxx

(d) . . .

Where the application of the increases in the wage rates under this Section results in
distortions as defined under existing laws in the wage structure within an establishment and
gives rise to a dispute therein, such dispute shall first be settled voluntarily between the
parties and in the event of a deadlock, the same shall be finally resolved through compulsory
arbitration by the regional branches of the National Labor Relations Commission (NLRC)
having jurisdiction over the workplace.

It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute
arising under this Section within twenty (20) calendar days from the time said dispute is
formally submitted to it for arbitration. The pendency of a dispute arising from a wage
distortion shall not in any way delay the applicability of the increase in the wage rates
prescribed under this Section.

But the Union claims that "demand was ignored: 1

 The . . . COMPANY ignored said demand by offering a measly across-the-board wage
increase of P7.00 per day, per employee, as against the proposal of the UNION of P25.00
per day, per employee. Later, the UNION reduced its proposal to P15.00 per day, per
employee by way of amicable settlement.

When the . . . COMPANY rejected the reduced proposal of the UNION the members thereof,
on their own accord, refused to render overtime services, most especially at the Beer Bottling
Plants at Polo, starting October 16, 1989.

In this connection, the workers involved issues a joint notice reading as follows: 2

SAMA-SAMANG PAHAYAG: KAMING ARAWANG MANGGAGAWA NG POLO BREWERY

PAWANG KASAPI NG ILAW AT BUKLOD NG MANGGAGAWA (IBM) AY NAGKAISANG
NAGPASYA NA IPATUPAD MUNA ANG EIGHT HOURS WORK SHIFT PANSAMANTALA
HABANG HINDI IPINATUTUPAD NG SMC MANAGEMENT ANG TAMANG WAGE
DISTORTION.

The Union's position (set out in the petition subsequently filed in this Court, infra) was that the
workers' refuse "to work beyond eight (8) hours everyday starting October 16, 1989" as a legitimate
means of compelling SMC to correct "the distortion in their wages brought about by the
implementation of the said laws (R.A. 6640 and R.A. 6727) to newly-hired employees. That decision3

to observe the "eight hours work shift" was implemented on October 16, 1989 by "some 800 daily-
paid workers at the Polo Plant's production line (of San Miguel Corporation [hereafter, simply SMC])
joined by others at statistical quality control and warehouse, all members of . . . IBM . . . " There4

ensued thereby a change in the work schedule which had been observed by daily-paid workers at
the Polo Plant for the past five (5) years, i.e., "ten (10) hours for the first shift and ten (10) to fourteen
(14) hours for the second shift, from Mondays to Fridays . . ; (and on) Saturdays, . . eight (8) hours
for both shifts" — a work schedule which, SMC says, the workers had "welcomed, and encouraged"
because the automatic overtime built into the schedule "gave them a steady source of extra-
income," and pursuant to which it (SMC) "planned its production targets and budgets. 5

This abandonment of the long-standing schedule of work and the reversion to the eight-hour shift
apparently caused substantial losses to SMC. Its claim is that there ensued "from 16 October 1989
to 30 November 1989 alone . . work disruption and lower efficiency . . (resulting in turn, in) lost
production of 2,004,105 cases of beer . . ; that (i)n "money terms, SMC lost P174,657,598 in sales
and P48,904,311 in revenues . . (and the) Government lost excise tax revenue of P42 million,
computed at the rate of P21 per case collectible at the plant. These losses occurred despite such
6

measures taken by SMC as organizing "a third shift composed of regular employees and some
contractuals," and appeals "to the Union members, through letters and memoranda and dialogues
with their plant delegates and shop stewards," to adhere to the existing work schedule.

Thereafter, on October 18, 1989, SMC filed with the Arbitration Branch of the National Labor
Relations Commission a complaint against the Union and its members "to declare the strike or
slowdown illegal" and to terminate the employment of the union officers and shop stewards. The
complaint was docketed as NLRC-NCR Case No. 00-10-04917. 7

Then on December 8, 1989, on the claim that its action in the Arbitration Branch had as yet "yielded
no relief," SMC filed another complaint against the Union and members thereof, this time directly
with the National labor Relations Commission, "to enjoin and restrain illegal slowdown and for
damages, with prayer for the issuance of a cease-and-desist and temporary restraining
order. Before acting on the application for restraining order, the NLRC's First Division first directed
8

SMC to present evidence in support of the application before a commissioner, Labor Arbiter Carmen
Talusan. On December 19, 1989, said First Division promulgated a Resolution on the basis of "the
allegations of the petitioner (SMC) and the evidence adduced ex parte in support of their petition."
The Resolution —

1) authorized the issuance of "a Temporary Restraining Order for a period of twenty (20)
days . . upon . . a cash or surety bond in the amount of P50,000.00 . . . DIRECTING the
respondents to CEASE and DESIST from further committing the acts complained about
particularly their not complying with the work schedule established and implemented by the
company through the years or at the least since 1984, which schedule appears to have been
adhered to by the respondents until October 16, 1989 . . .;
 2) set the incident on injunction for hearing before Labor Arbiter Carmen Talusan on 27
December 1989 . . .

The Labor Arbiter accordingly scheduled the incident for hearing on various dates: December 27 and
29,1989, January 8, 11, 16, and 19, 1990. The first two settings were cancelled on account of the
unavailability of the Union's counsel. The hearing on January 8, 1990 was postponed also at the
instance of said counsel who declared that the Union refused to recognize the NLRC's jurisdiction.
The hearings set on January 11, 16 and 19, 1990 were taken up with the cross-examination of
SMC's witness on the basis of his affidavit and supplemental affidavits. The Union thereafter asked
the Hearing Officer to schedule other hearings. SMC objected. The Hearing Officer announced she
would submit a report to the Commission relative to the extension of the temporary restraining order
of December 9, 1989, supra, prayed for by SMC. Here the matter rested until February 14, 1990,
when the Union filed the petition which commenced the special civil action of certiorari and
prohibition at bar.
9

In its petition, the Union asserted that:

1) the "central issue . . is the application of the Eight-Hour Labor Law . . . (i.e.) (m)ay an
employer force an employee to work everyday beyond eight hours a day?

2) although the work schedule adopted by SMC with built-in automatic

overtime, "tremendously increased its production of beer at lesser cost," SMC had been
10

paying its workers "wages far below the productivity per employee," and turning a deaf ear to
the Union's demands for wage increases;

3) the NLRC had issued the temporary restraining order of December 19, 1989 "with
indecent haste, based on ex parte evidence of SMC and such an order had the effect of
"forcing the workers to work beyond eight (8) hours a day, everyday!!

4) the members of the NLRC had no authority to act as Commissioners because their
appointments had not been confirmed by the Commission on Appointment; and

5) even assuming the contrary, the NLRC, as an essentially appellate body, had no
jurisdiction to act on the plea for injunction in the first instance.

The petition thus prayed:

1) for judgment (a) annulling the Resolution of December 19, 1990; (b) declaring mandatory
the confirmation by the Commission on Appointments of the appointments of National Labor
Relations Commissioners; and (c) ordering the removal "from the 201 files of employees any
and all memoranda or disciplinary action issued/imposed to the latter by reason of their
refusal to render overtime work;" and

2) pending such judgment restraining(a) the NLR Commissioners "from discharging their
power and authority under R.A. 6715 prior to their re-appointment and/or confirmation;" as
well as (b) Arbiter Talusan and the Commission from acting on the matter or rendering a
decision or issuing a permanent injunction therein, or otherwise implementing said
Resolution of December 19, 1989.

In traverse of the petition, SMC filed a pleading entitled "Comment with Motion to Admit Comment as
Counter-Petition," in which it contended that:

1) the workers' abandonment of the regular work schedule and their deliberate and wilful
reduction of the Polo plant's production efficiency is a slowdown, which is an illegal and
unprotected concerted activity;

2) against such a slowdown, the NLRC has jurisdiction to issue injunctive relief in the first
instance;

3) indeed, the NLRC has "the positive legal duty and statutory obligation to enjoin the
slowdown complained of and to compel the parties to arbitrate . ., (and) to effectuate the
important national policy of peaceful settlement of labor disputes through arbitration;"
 accordingly, said NLRC "had no legal choice but to issue injunction to enforce the reciprocal
no lockout-no slowdown and mandatory arbitration agreement of the parties;" and

4) the NLRC "gravely abused its discretion when it refused to decide the application for
injunction within the twenty day period of its temporary restraining order, in violation of its
own rules and the repeated decisions of this . . . Court.

It is SMC's submittal that the coordinated reduction by the Union's members of the work time
theretofore willingly and consistently observed by them, thereby causing financial losses to the
employer in order to compel it to yield to the demand for correction of "wage distortions," is an illegal
and "unprotected" activity. It is, SMC argues, contrary to the law and to the collective bargaining
agreement between it and the Union. The argument is correct and will be sustained.

Among the rights guaranteed to employees by the Labor Code is that of engaging in concerted
activities in order to attain their legitimate objectives. Article 263 of the Labor Code, as amended,
declares that in line with "the policy of the State to encourage free trade unionism and free collective
bargaining, . . (w)orkers shall have the right to engage in concerted activities for purposes of
collective bargaining or for their mutual benefit and protection." A similar right to engage in concerted
activities for mutual benefit and protection is tacitly and traditionally recognized in respect of
employers.

The more common of these concerted activities as far as employees are concerned are: strikes —
the temporary stoppage of work as a result of an industrial or labor dispute; picketing — the
marching to and fro at the employer's premises, usually accompanied by the display of placards and
other signs making known the facts involved in a labor dispute; and boycotts — the concerted
refusal to patronize an employer's goods or services and to persuade others to a like refusal. On the
other hand, the counterpart activity that management may licitly undertake is the lockout — the
temporary refusal to furnish work on account of a labor dispute, In this connection, the same Article
263 provides that the "right of legitimate labor organizations to strike and picket and of employer to
lockout, consistent with the national interest, shall continue to be recognized and respected." The
legality of these activities is usually dependent on the legality of the purposes sought to be attained
and the means employed therefor.

It goes without saying that these joint or coordinated activities may be forbidden or restricted by law
or contract. In the particular instance of "distortions of the wage structure within an establishment"
resulting from "the application of any prescribed wage increase by virtue of a law or wage order,"
Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for
the correction thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as
modes of settlement of the issue. The provision states that —
11

. . . the employer and the union shall negotiate to correct the distort-ions. Any dispute arising
from wage distortions shall be resolved through the grievance procedure under their
collective bargaining agreement and, if it remains unresolved, through voluntary arbitration.
Unless otherwise agreed by the parties in writing, such dispute shall be decided by the
voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the
time said dispute was referred to voluntary arbitration.

In cases where there are no collective agreements or recognized labor unions, the
employers and workers shall endeavor to correct such distortions. Any dispute arising
therefrom shall be settled through the National Conciliation and Mediation Board and, if it
remains unresolved after ten (10) calendar days of conciliation, shall be referred to the
appropriate branch of the National Labor Relations Commission (NLRC). It shall be
mandatory for the NLRC to conduct continuous hearings and decide the dispute within
twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way delay the
applicability of any increase in prescribed wage rates pursuant to the provisions of law or
Wage Order.

xxx xxx xxx

The legislative intent that solution of the problem of wage distortions shall be sought by voluntary
negotiation or abitration, and not by strikes, lockouts, or other concerted activities of the employees
or management, is made clear in the rules implementing RA 6727 issued by the Secretary of Labor
and Employment pursuant to the authority granted by Section 13 of the Act. Section 16, Chapter I
12 13

of these implementing rules, after reiterating the policy that wage distortions be first settled
voluntarily by the parties and eventually by compulsory arbitration, declares that, "Any issue
involving wage distortion shall not be a ground for a strike/lockout."

Moreover, the collective bargaining agreement between the SMC and the Union, relevant provisions
of which are quoted by the former without the latter's demurring to the accuracy of the
quotation, also prescribes a similar eschewal of strikes or other similar or related concerted
14

activities as a mode of resolving disputes or controversies, generally, said agreement clearly stating
that settlement of "all disputes, disagreements or controversies of any kind" should be achieved by
the stipulated grievance procedure and ultimately by arbitration. The provisions are as follows:

Section 1. Any and all disputes, disagreements and controversies of any kind between the
COMPANY and the UNION and/or the workers involving or relating to wages, hours of work,
conditions of employment and/or employer-employee relations arising during the effectivity of
this Agreement or any renewal thereof, shall be settled by arbitration in accordance with the
procedure set out in this Article. No dispute, disagreement or controversy which may be
submitted to the grievance procedure in Article IX shall be presented for arbitration unless all
the steps of the grievance procedure are exhausted (Article V — Arbitration).

Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown
of work, boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-
down strikes of any kind, sympathetic or general strikes, or any other interference with any of
the operations of the COMPANY during the terms of this agreement (Article VI).

The Union was thus prohibited to declare and hold a strike or otherwise engage in non-peaceful
concerted activities for the settlement of its controversy with SMC in respect of wage distortions, or
for that matter; any other issue "involving or relating to wages, hours of work, conditions of
employment and/or employer-employee relations." The partial strike or concerted refusal by the
Union members to follow the five-year-old work schedule which they had therefore been observing,
resorted to as a means of coercing correction of "wage distortions," was therefore forbidden by law
and contract and, on this account, illegal.

Awareness by the Union of the proscribed character of its members' collective activities, is clearly
connoted by its attempt to justify those activities as a means of protesting and obtaining redress
against said members working overtime every day from Monday to Friday (on an average of 12
hours), and every Saturday (on 8 hour shifts), rather than as a measure to bring about rectification
15

of the wage distortions caused by RA 6727 — which was the real cause of its differences with SMC.
By concealing the real cause of their dispute with management (alleged failure of correction of wage
distortion), and trying to make it appear that the controversy involved application of the eight-hour
labor law, they obviously hoped to remove their case from the operation of the rules implementing
RA 6727 that "Any issue involving wage distortion shall not be a ground for a strike/lockout." The
stratagem cannot succeed.

In the first place, that it was indeed the wage distortion issue that principally motivated the Union's
partial or limited strike is clear from the facts, The work schedule (with "built-in overtime") had not
been forced upon the workers; it had been agreed upon between SMC and its workers at the Polo
Plant and indeed, had been religiously followed with mutually beneficial results for the past five (5)
years. Hence, it could not be considered a matter of such great prejudice to the workers as to give
rise to a controversy between them and management. Furthermore, the workers never asked, nor
were there ever any negotiations at their instance, for a change in that work schedule prior to the
strike. What really bothered them, and was in fact the subject of talks between their representatives
and management, was the "wage distortion" question, a fact made even more apparent by the joint
notice circulated by them prior to the strike, i.e., that they would adopt the eight-hour work shift in the
meantime pending correction by management of the wage distortion (IPATUPAD MUNA ANG
EIGHT HOURS WORK SHIFT PANSAMANTALA HABANG HINDI IPINATUTUPAD NG SMC
MANAGEMENT ANG TAMANG WAGE DISTORTION).

In the second place, even if there were no such legal prohibition, and even assuming the
controversy really did not involve the wage distortions caused by RA 6727, the concerted activity in
question would still be illicit because contrary to the workers' explicit contractual commitment "that
there shall be no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary boycotts,
refusal to handle any merchandise, picketing, sit-down strikes of any kind, sympathetic or general
strikes, or any other interference with any of the operations of the COMPANY during the term of . . .
(their collective bargaining) agreement.16

What has just been said makes unnecessary resolution of SMC's argument that the workers'
concerted refusal to adhere to the work schedule in force for the last several years, is
a slowdown, an inherently illegal activity essentially illegal even in the absence of a no-strike clause
in a collective bargaining contract, or statute or rule. The Court is in substantial agreement with the
petitioner's concept of a slowdown as a "strike on the installment plan;" as a wilfull reduction in the
rate of work by concerted action of workers for the purpose of restricting the output of the employer,
in relation to a labor dispute; as an activity by which workers, without a complete stoppage of work,
retard production or their performance of duties and functions to compel management to grant their
demands. The Court also agrees that such a slowdown is generally condemned as inherently illicit
17

and unjustifiable, because while the employees "continue to work and remain at their positions and
accept the wages paid to them," they at the same time "select what part of their allotted tasks they
care to perform of their own volition or refuse openly or secretly, to the employer's damage, to do
other work;" in other words, they "work on their own terms. But whether or not the workers' activity
18

in question — their concerted adoption of a different work schedule than that prescribed by
management and adhered to for several years — constitutes a slowdown need not, as already
stated, be gone into. Suffice it to say that activity is contrary to the law, RA 6727, and the parties'
collective bargaining agreement.

The Union's claim that the restraining order is void because issued by Commissioners whose
appointments had not been duly confirmed by the Commission on Appointments should be as it is
hereby given short shift, for, as the Solicitor General points out, it is an admitted fact that the
members of the respondent Commission were actually appointed by the President of the Philippines
on November 18, 1989; there is no evidence whatever in support of the Union's bare allegation that
the appointments of said members had not been confirmed; and the familiar presumption of
regularity in appointment and in performance of official duty exists in their favor.
19

Also untenable is the Union's other argument that the respondent NLRC Division had no jurisdiction
to issue the temporary restraining order or otherwise grant the preliminary injunction prayed for by
SMC and that, even assuming the contrary, the restraining order had been improperly issued. The
Court finds that the respondent Commission had acted entirely in accord with applicable provisions
of the Labor Code.

Article 254 of the Code provides that "No temporary or permanent injunction or restraining order in
any case involving or growing out of labor disputes shall be issued by any court or other entity,
except as otherwise provided in Articles 218 and 264 . . ." Article 264 lists down specific "prohibited
activities" which may be forbidden or stopped by a restraining order or injunction. Article 218 inter
alia enumerates the powers of the National Labor Relations Commission and lays down the
conditions under which a restraining order or preliminary injunction may issue, and the procedure to
be followed in issuing the same.

Among the powers expressly conferred on the Commission by Article 218 is the power to "enjoin or
restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require
the performance of a particular act in any labor dispute which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in
favor of such party . . ."

As a rule such restraining orders or injunctions do not issue ex parte, but only after compliance with
the following requisites, to wit:

a) a hearing held "after due and personal notice thereof has been served, in such manner as
the Commission shall direct, to all known persons against whom relief is sought, and also to
the Chief Executive and other public officials of the province or city within which the unlawful
acts have been threatened or committed charged with the duty to protect complainant's
property;"

b) reception at the hearing of "testimony of witnesses, with opportunity for cross-

examination, in support of the allegations of a complaint made under oath," as well as
"testimony in opposition thereto, if offered . . .;

c) a finding of fact by the Commission, to the effect:

 (1) That prohibited or unlawful acts have been threatened and will be committed and
will be continued unless restrained, but no injunction or temporary restraining order
shall be issued on account of any threat, prohibited or unlawful act, except against
the person or persons, association or organization making the threat or committing
the prohibited or unlawful act or actually authorizing or ratifying the same after actual
knowledge thereof;

(2) That substantial and irreparable injury to complainant's property will follow;

(3) That as to each item of relief to be granted, greater injury will be inflicted upon
complainant by the denial of relief than will be inflicted upon defendants by the
granting of relief;

(4) That complainant has no adequate remedy at law; and

(5) That the public officers charged with the duty to protect complainant's property
are unable or unwilling to furnish adequate protection.

However, a temporary restraining order may be issued ex parte under the following conditions:

a) the complainant "shall also allege that, unless a temporary restraining order shall be
issued without notice, a substantial and irreparable injury to complainant's property will be
unavoidable;

b) there is "testimony under oath, sufficient, if sustained, to justify the Commission in issuing
a temporary injunction upon hearing after notice;"

c) the "complainant shall first file an undertaking with adequate security in an amount to be
fixed by the Commission sufficient to recompense those enjoined for any loss, expense or
damage caused by the improvident or erroneous issuance of such order or injunction,
including all reasonable costs, together with a reasonable attorney's fee, and expense of
defense against the order or against the granting of any injunctive relief sought in the same
proceeding and subsequently denied by the Commission;" and

d) the "temporary restraining order shall be effective for no longer than twenty (20) days and
shall become void at the expiration of said twenty (20) days.

The reception of evidence "for the application of a writ of injunction may be delegated by the
Commission to any of its Labor Arbiters who shall conduct such hearings in such places as he may
determine to be accessible to the parties and their witnesses and shall submit thereafter his
recommendation to the Commission."

The record reveals that the Commission exercised the power directly and plainly granted to it by
sub-paragraph (e) Article 217 in relation to Article 254 of the Code, and that it faithfully observed the
procedure and complied with the conditions for the exercise of that power prescribed in said sub-
paragraph (e) It acted on SMC's application for immediate issuance of a temporary restraining
order ex parte on the ground that substantial and irreparable injury to its property would transpire
before the matter could be heard on notice; it, however, first direct SMC Labor Arbiter Carmen
Talusan to receive SMC's testimonial evidence in support of the application and thereafter submit
her recommendation thereon; it found SMC's evidence adequate and issued the temporary
restraining order upon bond. No irregularity may thus be imputed to the respondent Commission in
1âwphi1

the issuance of that order.

In any event, the temporary restraining order had a lifetime of only twenty (20) days and became
void ipso facto at the expired ration of that period.

In view of the foregoing factual and legal considerations, all irresistibly leading to the basic
conclusion that the concerted acts of the members of petitioner Union in question are violative of the
law and their formal agreement with the employer, the latter's submittal, in its counter-petition that
there was, in the premises, a "legal duty and obligation" on the part of the respondent Commission
"to enjoin the unlawful and prohibited acts and omissions of petitioner IBM and the workers
complained of, — a proposition with which, it must be said, the Office of the Solicitor General
20

concurs, asserting that the "failure of the respondent commission to resolve the application for a writ
of injunction is an abuse of discretion especially in the light of the fact that the restraining order it
earlier issued had already expired" — must perforce be conceded.
21

WHEREFORE, the petition is DENIED, the counter-petition is GRANTED, and the case is
REMANDED to the respondent Commission (First Division) with instructions to immediately take
such action thereon as is indicated by and is otherwise in accord with, the findings and conclusions
herein set forth. Costs against petitioner.

IT IS SO ORDERED.

[G.R. No. L-12820. December 20, 1957.]

SMB BOX FACTORY WORKER’S UNION (PAFLU), Petitioner, v. HON. JUDGE

GUSTAVO VICTORIANO, of the Court of First Instance of Rizal, and GONZALO
SANCHEZ, Respondents.

Cipriano Cid & Associates for Petitioner.

S. Emiliano Calma for Respondents.

SYLLABUS

1. COURTS; JURISDICTION; CASE INVOLVING UNFAIR LABOR PRACTICE; CIR

EXCLUSIVE JURISDICTION. — GS filed an action before the Court of First Instance of
Rizal against the members of the SMB Box Factory Worker’s Union seeking to enjoin the
latter from committing certain acts of violence, intimidation and other unlawful acts and
to recover certain damages arising from the commission of the aforesaid unlawful acts.
It was alleged that the members of the Union went on strike, together with either
members of the Philippine Association of Free Labor Union, with which the Union was
affiliated, formed picket line along the street leading to the box factory thereby
preventing the non-striking laborers and employees of the corporation and of the
factory from doing their work to the damage and prejudice of GS. It was prayed that a
preliminary injunction permanent and ordering the defendants to pay damages.
However before the filing of this case a prosecutor of the Court of Industrial Relations
acting on a complaint filed by the petitioning Union filed with the CIR a charge for unfair
labor practice against the SMB Box Factory owned by the SMB Inc., wherein the same
issue concerning labor relations between the parties in said Civil case was involved. In
view of the petition for preliminary injunction, but without receiving any testimonial
evidence, the Court granted the petition and issue the corresponding writ. To set aside
this order on the ground of lack of jurisdiction the defendants have interposed the
present petition for certiorari. The only issue is whether the Court of First Instance of
Rizal has jurisdiction to take cognizance of said case instituted by GS, Held: That "It
appearing that the issue involved in the main case is interwoven with the unfair labor
case pending before the Court of Industrial Relations as to which its jurisdiction is
exclusive, it is evident that it does not come under the jurisdiction of the trial court
even if it involves acts of violence, intimidation and coercion as averred in the
complaint. These acts come within the purview of Section 9 (d) of Republic Act No. 875
which may be enjoined by the Court of Industrial Relation." (Premier Shirts & Pants
Factory Chapter v. Hon. Hermogenes Calauag, Et Al., . G.R. No. L-9104)

2. ID.; ID.; ISSUANCE OF INJUNCTION; WHEN CASE INVOLVED LABOR DISPUTE;

PROCEDURE. — Where a case involves labor dispute between employer and employee,
a writ of preliminary injunction in order to have a legal effect can only be issued by the
Court following the procedure laid down in Section 9 (d) of Republic Act 875.
 DECISION

BAUTISTA ANGELO, J.:

This is a petition for certiorari which seeks to enjoin respondent Judge from enforcing
the preliminary injunction issued by him against the members of petitioning union
restraining them from exercising acts of violence and intimidation in and around the
premises of the San Miguel Brewery Box Factory located in Mandaluyong, Rizal
instituted by co-respondent Gonzalo Sanchez against the members of the same union
and other sympathizing with them for damages arising from said acts of violence and
intimidation on the ground that said respondent Judge does not have jurisdiction to act
thereon involving as it does an unfair labor practice that comes under the exclusive
jurisdiction of the Court of Industrial Relations.

On August 22, 1957, one Gonzalo Sanchez filed an action before the Court of First
Instance of Rizal against the members of the San Miguel Brewery Box Factory Workers’
Union, hereinafter referred to as union, seeking to enjoin the latter from committing
certain acts of violence, intimidation and other unlawful acts in and around the
premises of the San Miguel Brewery Box Factory located in Mandaluyong, Rizal, and to
recover certain damages arising from the commission of the aforesaid unlawful acts
(Civil Case No. 4655). It was alleged that plaintiff is the contractor of the San Miguel
Brewery, Inc. for the manufacture and repair of wooden boxes for all the products of
said corporation with the condition that he would furnish the labor but the materials
and the place of the factory would be provided for by the corporation. It was also
alleged that the defendant union is an organization of laborers who were contracted by
the plaintiff to work in the factory, the plaintiff having acted only as an independent
contractor.

On May 4, 1947, the members of the union went on strike without giving previous
notice to the plaintiff or to the Conciliation Service of the Department of Labor and,
together with other members of the Philippine Association of Free Labor Union with
which the union was affiliated, formed picket lines along the streets leading to the box
factory thereby preventing the non-striking laborers and other employees of the
corporation from working in the factory and making deliveries of the materials
manufactured therein. On July 2, 1957, an agreement was entered into between the
union and the plaintiff setting forth the conditions under which the striking laborers
would agree to return to work, and after the agreement was executed, said laborers did
in fact return to work, but on August 8, 1957, in violation of the agreement, the
members of the union went again on strike and started picketing again the streets and
premises where the factory is situated and in connection with said picketing, they
performed and committed certain acts of violence and intimidation with the aim in view
of preventing, as they did prevent, the non-striking laborers and employees of the
corporation and of the factory from doing their work to the damage and prejudice of the
plaintiff. Wherefore, plaintiff prayed that a preliminary writ of injunction be issued
pending the trial of the case on the merits and, thereafter, judgment be rendered
making the injunction permanent and ordering defendants to pay damages consisting in
not less than P40 per day representing his unearned profits from August 8, 1967 until
defendants shall have actually ceased doing the unlawful acts complained of.

Defendants, on August 28, 1957, moved to dismiss the complaint on the ground that its
subject-matter does not come within the jurisdiction of the court. They alleged that on
April 4, 1957, a prosecutor of the Court of Industrial Relations, acting on a complaint
filed by the petitioning union, filed a charge for unfair labor practice against the San
Miguel Brewery Box Factory owned and operated by the San Miguel Brewery, Inc.,
including one Pedro Bautista alleged to be the superintendent of the factory.
Respondents therein filed a motion to dismiss contending that while the box factory is
owned by said corporation, it is however operated by one Gonzalo Sanchez who acted
as an independent contractor in connection with the work performed in said factory.
The union denied that Sanchez was operating the factory as an independent contractor.

While this unfair labor case was then pending before the industrial court, the members
of the union were locked out thereby forcing them to picket the premises of the factory.
In the meantime, an agreement was entered into between the SMB Box Factory
represented by Gonzalo Sanchez on one hand, and the union on the other, setting forth
the conditions for the return of the workers. As a result, the workers returned to work,
but on August 8, 1957, the members of the union were again locked-out in violation of
the agreement whereupon they again picketed the premises which gave rise to the
institution of the action for damages by Gonzalo Sanchez against the union and other
laborers who sympathized with them.

In view of the petition for preliminary injunction contained in the complaint, the court
set a date for hearing to give the parties an opportunity to appear and argue their
respective points of view, and after the hearing, but without receiving any testimonial
evidence, the court granted the petition and issued the corresponding writ. To set aside
this order on the ground of lack of jurisdiction, defendants have interposed the present
petition for certiorari.

The only issue before us is whether the Court of First Instance of Rizal has jurisdiction
to take cognizance of Civil Case No. 4655 instituted by Gonzalo Sanchez against the
members of the petitioning union to prevent them from picketing and committing acts
of violence in the premises of the factory operated by him, and in the affirmative, if the
writ of preliminary injunction issued by it to prevent them from doing the aforesaid acts
of violence during the pendency of the case was issued in accordance with law.

It is contended in behalf of respondent Gonzalo Sanchez that the Court of First Instance
of Rizal can take cognizance of the case instituted by him because the same merely
aims at preventing the members of the petitioning union from committing acts of
violence in the premises of the factory he is operating and at recovering the damages
that he may have suffered resulting from said acts of violence. Counsel contends that
that case does not concern any labor dispute nor does it involves an unfair labor
practice and so it does not come under the jurisdiction of the Court of Industrial
Relations.

We fail to agree with this contention. While it is true that the case instituted by Gonzalo
Sanchez is merely one which concern the picketing or commission of acts of violence by
the members of the petitioning union and its purpose is primarily to prevent them from
committing said unlawful acts and incidentally to recover whatever damages he may
have suffered as an incident thereto, it cannot be denied that before the institution of
said case there was already a formal complaint of unfair labor practice filed against the
operator of the San Miguel Brewery Box Factory by the members of the said union
wherein the same issue concerning the labor relation between the parties in said civil
case was involved. The claim that Gonzalo Sanchez was not involved in the unfair labor
case pending before the Court of Industrial Relations is not quite correct for precisely
the respondents therein moved to dismiss the charge contending that the factory was
then being operated, not by the San Miguel Brewery, Inc., but by Gonzalo Sanchez as
an independent contractor, which was denied by the union and this placed before the
industrial court the issue of whether it is Sanchez or other subordinate employee of the
corporation the one responsible for the unfair labor practice complained of. In the case
instituted by Sanchez the same issue was raised by the union and so it can be said that
the two cases are directly interwoven.

On all fours with the present is the case of National Garments and Textiles Workers’
Union-Paflu (Premier Shirts & Pants Factory Chapter) v. Hon. Hermogenes Caluag, Et
Al., 99 Phil., 1067 * , wherein one Vicente Ang filed in the Court of First Instance of
Rizal against a labor union an action for injunction because of certain acts of violence
committed by its members as a result of a labor dispute that arose between them, and
because such labor dispute was already involved in two unfair labor cases that were
then pending between the same parties before the Court of Industrial Relations, this
Court held that the case belonged to the exclusive jurisdiction of the latter court. The
Court said: "It appearing that the issue involved in the main case is interwoven with the
unfair labor cases pending before the Court of Industrial Relations as to which its
jurisdiction is exclusive, it is evident that it does not come under the jurisdiction of the
trial court even if it involves acts of violence, intimidation and coercion as averred in
the complaint. These acts come within the purview of Section 9 (d) of Republic Act 875
which may be enjoined by the Court of Industrial Relations." cralaw virtua1aw library

Even assuming arguendo that the Court of First Instance of Rizal could entertain the
case instituted by Gonzalo Sanchez against petitioning union, still we declare that the
writ of preliminary injunction issued by said court cannot have any legal effect because
involving as it does a labor dispute between employer and employee, the same can only
be issued following the procedure laid down in Section 9 (d) of Republic Act 875. The
court a quo failed to do this but merely followed Rule 60, Section 6 of the Rules of
Court. Said order is therefore null and void.

"We believe however that in order that an injunction may be properly issued the
procedure laid down in section 9 (d) of Republic Act. 875 should be followed and cannot
be granted ex-parte as allowed by Rule 60, Section 6, of the Rules of Court. The reason
is that the case, involving as it does a labor dispute, comes under said section 9 (d) of
the law. That procedure requires that there should be a hearing at which the parties
should be given an opportunity to present witnesses in support of the complaint and of
the opposition, if any, with opportunity for cross-examination, and that the other
conditions required by said section as prerequisites for the granting of relief must be
established and stated in the order of the court. Unless this procedure is followed, the
proceedings would be invalid and of no effect. The court would then be acting in excess
of its jurisdiction. (Lauf v. E. G. Shinner & Co., Inc., supra)" (Philippine Association of
Free Labor Unions (PAFLU), Et. Al. v. Hon. Bienvenido A. Tan, Et Al., 99 Phil., 854; 52
Off. Gaz. (13) 5836).

Wherefore, petition is granted. The Court hereby sets aside the writ of preliminary
injunction issued by respondent Judge, without pronouncement as to costs.

The writ of preliminary injunction issued by this Court is declared permanent.

G.R. No. L-71959 November 28, 1985

TRADE UNIONS OF THE PHILIPPINES & ALLIED SERVICES LOCAL CHAPTER NO. 1158
(SUPER GARMENTS MANUFACTURING CORPORATION WORKERS UNION), petitioner,
vs.
HON. JOSE L. COSCOLLUELA JR., PRESIDING JUDGE OF BRANCH CXLVI REGIONAL TRIAL
COURT OF MAKATI AND RUSTAN COMMERCIAL CORPORATION, respondents.

RESOLUTION

ABAD SANTOS, J.:

The petition seeks to enjoin the public respondent from further proceeding in Civil Case No. 10905 of
the Regional Trial Court of Makati, Metro Manila. Upon the filing of the petition this Court issued a
temporary restraining order and required the private respondent to comment.

Petitioner union filed a notice of strike with the Ministry of Labor and Employment against Super
Garments Manufacturing Corporation on May 12, 1985. The strike commenced on June 8, 1985 and
is said to be still on.
Super Garments and Rustan Commercial Corporation have separate compartments in the same
building at Malugay and streets It is called the Yupangco building.

It is alleged by the petitioner union that goods of Super Garments were spirited out of its strike-
bound premises thru Rustan's warehouse. Whereupon, the union picketed not only Super Garments
but also Rustan. As a result Rustan filed Civil Case No. 10905 before the respondent judge for
injunction and damages thru the PECABAR law office and petition No. 971 with the National Labor
Relations Commission also to enjoin the union from picketing its premises. The petition was filed by
another counsel, Atty. Armando B. Ampil.

In Civil Case No. 10905, the respondent judge issued an order on June 21, 1985 setting "the hearing
of theapplication for a writ of preliminary injuction on June 27, 1985 at 2:00 o'clock in the afternoon."
On July 15, 1985, the respondent judge issued the writ after finding no employer-employee
relationship between the parties. This order prompted the petitioner union to come to this Court for
the purpose aforesaid.

In the meantime, petitioner union on July 12, 1985, filed a complaint for unfair labor practice against
both Super Garments and Rustan alleging that the former is but the manufacturing arm of the latter.

Petitioner union claims that respondent judge has no jurisdiction to issue an injunction because the
case is a labor dispute; that the prerogative belongs to the Minister of Labor and Employment. Upon
the other hand, private respondent Rustan says that the respondent judge has jurisdiction because
there is no labor dispute between it and the union even as it went to the National Labor Relation
Commission to seek Identical relief.

At this stage there appears to be no labor dispute between the petitioner and the private respondent
for which reason the latter was justified in seeking relief in respondent judge's court. ihe unfair labor
complaint filed by petitioner union on Page 304 July 12, 1985 does not prove a labor relationship. By
the same token it was improper for the private respondent to have filed Case No. 971 with the
National Labor Relations Commission.

In the light of the foregoing, the petition is dismissed for lack of merit and the temporary restraining
order issued on September 23, 1985 is hereby lifted. However, private respondent Rustan
Commercial Corporation is directed to withdraw its case before the National Labor Relations
Commission. No costs.

SO ORDERED,

Art. 227 of the Labor Code

G.R. No. 113827 July 5, 1996

PHILIPPINE AIRLINES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER RAMON VALENTIN C. REYES, AND
STELLAR EMPLOYEES ASSOCIATION, respondents.

ROMERO, J.:p

Not infrequently, a party comes before this Court questioning an order or resolution issued in relation to a case, but ends up prematurely
discussing the merits of the case itself. This petition illustrates the point.

On different dates between 1988 and 1991, some 150 employees recruited by Stellar Industrial
Services, Inc. (SISI) to work for petitioner Philippine Airlines, Inc. (PAL) filed several cases against
the latter for regularization, illegal dismissal, reinstatement, back wages and wage differentials. The
cases which involved essentially the same complainants were later grouped into two consolidated
cases: regularization, under Labor Arbiter Jose de Vera, and illegal dismissal, under Labor Arbiter
Ramon Valentin Reyes.

In his decision dated March 31, 1992, Labor Arbiter de Vera declared the complainants to be regular
employees of PAL and ordered the latter to pay them a total of over 46 million pesos, representing
benefits and attorney's fees. At the time of the filing of instant petition, said decision was still before
the National Labor Relations Commission (NLRC) on appeal.

On December 10, 1992, Labor Arbiter Reyes decided the illegal dismissal case based on the
pleadings and evidence submitted. He declared the dismissal by PAL of the complainants illegal and
ordered PAL to absorb complainants to its regular force and to reinstate them to their former
positions without loss of seniority rights and benefits, as provided in the PAL-PALEA CBA and to pay
them the following as provided likewise in the PAL-PALEA CBA: P23,863,702.00, representing back
wages, 13th month pay and vacation leave; rice entitlement of complainants; and P2,072,902.20, as
attorney's fees. He then absolved SISI from any liability for lack of legal and factual basis.

This decision was likewise appealed to the NLRC. On April 2, 1993, however, upon motion of the
complainants and pending resolution of the said appeal, Labor Arbiter Reyes issued a writ of
execution directing the reinstatement of 152 complainants either physically or through the payroll, at
PAL's option. 1

In an attempt to stop said execution, PAL filed on May 6, 1993 before the NLRC a petition for the
issuance of a writ of injunction with prayer for the issuance of a temporary restraining order in
relation to both the regularization and illegal dismissal cases.

On September 30, 1993, the NLRC, in a Resolution, dismissed PAL's petition for injunction for lack
2

of merit, citing Article 223 of the Labor Code, as amended by Republic Act No. 6715. The pertinent
provision of Article 223 states thus:

Art. 223. Appeal. — . . . .

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement provided herein.

xxx xxx xxx

PAL's motion for reconsideration of said resolution was also denied by the NLRC in its
resolution dated December 2, 1993. The question that thus arises is simple: Did the NLRC
3

commit grave abuse of discretion in dismissing the petition for injunction and denying the
motion for reconsideration? This is the only issue that may be raised before this Court at this
juncture.

It may be noted here that this is the second time that this petition has been filed. The first one, filed
on January 13, 1994 and docketed as G.R. No. 113172, was denied in the Court's resolution dated
January 24, 1994 "for failure of the petitioner (PAL) to submit a certification that no other action or
proceeding involving the same issues raised in this case has been filed or is pending before any
court, tribunal or agency pursuant to Circular No. 28-91 dated September 17, 1991." Petitioner
refiled the same petition on February 24, 1994, this time with all the formal requirements and still
within a "reasonable time" from notice of the denial of its motion for reconsideration on January 3,
1994.

In its petition, PAL questioned the application by the NLRC of Article 223 of the Labor Code,
asserting that "this provision does not apply where there is no 'reinstatement' to speak of as in the
instant case, where the alleged employer-employee relationship is contested because the
complainants in the case below never have been employees of the petitioner herein. The above
provision of the law is only applicable where (an) employer-employee relationship is supported by
clear evidence or where it is admitted to be existent." 4

This argument is untenable.

The intent of the law in making a reinstatement order immediately executory is much like a return-to-
work order, i.e., to restore the status quo in the workplace in the meantime that the issues raised and
the proofs presented by the contending parties have not yet been finally resolved. It is a legal
5

provision which is fair to both labor and management because while execution of the order cannot
be stayed by the posting of a bond by the employer, the workers also cannot demand their physical
reinstatement if the employer opts to reinstate them only in the payroll.

Although PAL is challenging the existence of an employer-employee relationship between it and the
complainants below, it is indisputable that prior to the filing of these numerous cases before the
Labor Arbiter, the said complainants were working for PAL. In fact, Labor Arbiter de Vera, in his
decision of March 31, 1992, declared complainants to be regular employees of PAL. So did Labor
Arbiter Reyes. It is settled that factual findings of quasi-judicial agencies, such as the NLRC, which
6

have gained expertise on matters within their jurisdictions are treated by the Supreme Court with
respect and even finality when supported by substantial evidence. We do not see any reason to
7

depart from this policy. Hence, applying Article 223 strictly, which is the only way it can truly be given
effect, PAL, as an employer, is given the choice of accepting the complainants back or simply
reinstating them in its payroll until the regularization and illegal dismissal cases are determined
definitively.

PAL's claim that Article 223 "is only applicable where (an) employer-employee relationship is
supported by clear evidence or where it is admitted to be existent," is irrelevant inasmuch as the
Labor Arbiters have declared that the complainants are employees of petitioner PAL.

Neither can the Court give weight to PAL's allegation that Labor Arbiter Reyes relied on the unilateral
declarations of the complainants in arriving at his conclusion. PAL submitted its position paper and
supporting documents which, together with those filed by the complainants and SISI, were
"thoroughly" considered by Labor Arbiter Reyes who saw no need for a formal trial or hearing as the
8

case and related matters can be resolved on the basis of the pleadings and documents submitted.
This procedure of dispensing with a formal trial or hearing at the discretion of the Labor Arbiter once
such pleadings and position papers are submitted is clearly within the powers of his office, as laid
down in Section 4, Rule V of The New Rules of Procedure of the NLRC which states:

Sec. 4. Determination of Necessity of Hearing. -- Immediately after the submission by

the parties of their position papers/memorandum, the Labor Arbiter shall motu
proprio determine whether there is need for a formal trial or hearing. At this stage, he
may, at his discretion and for the purpose of making such determination, ask
clarificatory questions to further elicit facts or information, including but not limited to
the subpoena of relevant documentary evidence, if any(,) from any party or witness.

Accordingly, the NLRC was simply applying the law when it dismissed PAL's petition for injunction
and denied the motion for reconsideration thereof. It committed no abuse of discretion, let alone
grave abuse thereof, which may be corrected by certiorari. This Court cannot touch upon the very
merits of the cases involved, as petitioner would have us do, because not only are they still pending
appeal before the NLRC, but the questioned resolutions themselves are devoid of any discussion,
substantial or otherwise, of the issues raised in the petition.

WHEREFORE, the instant petition for certiorari with prayer for the issuance of a writ of preliminary
injunction or a temporary restraining order is hereby DISMISSED, with costs against the petitioner
Philippine Airlines, Inc.

SO ORDERED.

G.R. No. 153660 June 10, 2003

PRUDENCIO BANTOLINO, NESTOR ROMERO, NILO ESPINA, EDDIE LADICA, ARMAN

QUELING, ROLANDO NIETO, RICARDO BARTOLOME, ELUVER GARCIA, EDUARDO GARCIA
and NELSON MANALASTAS, petitioners,
vs.
COCA-COLA BOTTLERS PHILS., INC., respondent.

BELLOSILLO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision
of the Court of Appeals1 dated 21 December 2001 which affirmed with modification the decision of
the National Labor Relations Commission promulgated 30 March 2001.2

On 15 February 1995 sixty-two (62) employees of respondent Coca-Cola Bottlers, Inc., and its
officers, Lipercon Services, Inc., People's Specialist Services, Inc., and Interim Services, Inc., filed a
complaint against respondents for unfair labor practice through illegal dismissal, violation of their
security of tenure and the perpetuation of the "Cabo System." They thus prayed for reinstatement
with full back wages, and the declaration of their regular employment status.

For failure to prosecute as they failed to either attend the scheduled mandatory conferences or
submit their respective affidavits, the claims of fifty-two (52) complainant-employees were dismissed.
Thereafter, Labor Arbiter Jose De Vera conducted clarificatory hearings to elicit information from the
ten (10) remaining complainants (petitioners herein) relative to their alleged employment with
respondent firm.

In substance, the complainants averred that in the performance of their duties as route helpers,
bottle segregators, and others, they were employees of respondent Coca-Cola Bottlers, Inc. They
further maintained that when respondent company replaced them and prevented them from entering
the company premises, they were deemed to have been illegally dismissed.

In lieu of a position paper, respondent company filed a motion to dismiss complaint for lack of
jurisdiction and cause of action, there being no employer-employee relationship between
complainants and Coca-Cola Bottlers, Inc., and that respondents Lipercon Services, People's
Specialist Services and Interim Services being bona fide independent contractors, were the real
employers of the complainants.3 As regards the corporate officers, respondent insisted that they
could not be faulted and be held liable for damages as they only acted in their official capacities
while performing their respective duties.

On 29 May 1998 Labor Arbiter Jose De Vera rendered a decision ordering respondent company to
reinstate complainants to their former positions with all the rights, privileges and benefits due regular
employees, and to pay their full back wages which, with the exception of Prudencio Bantolino whose
back wages must be computed upon proof of his dismissal as of 31 May 1998, already amounted to
an aggregate of P1,810,244.00.4

In finding for the complainants, the Labor Arbiter ruled that in contrast with the negative declarations
of respondent company's witnesses who, as district sales supervisors of respondent company
denied knowing the complainants personally, the testimonies of the complainants were more
credible as they sufficiently supplied every detail of their employment, specifically identifying who
their salesmen/drivers were, their places of assignment, aside from their dates of engagement and
dismissal.

On appeal, the NLRC sustained the finding of the Labor Arbiter that there was indeed an employer-
employee relationship between the complainants and respondent company when it affirmed in
toto the latter's decision.

In a resolution dated 17 July 2001 the NLRC subsequently denied for lack of merit respondent's
motion for consideration.

Respondent Coca-Cola Bottlers appealed to the Court of Appeals which, although affirming the
finding of the NLRC that an employer-employee relationship existed between the contending parties,
nonetheless agreed with respondent that the affidavits of some of the complainants, namely,
Prudencio Bantolino, Nestor Romero, Nilo Espina, Ricardo Bartolome, Eluver Garcia, Eduardo
Garcia and Nelson Manalastas, should not have been given probative value for their failure to affirm
the contents thereof and to undergo cross-examination. As a consequence, the appellate court
dismissed their complaints for lack of sufficient evidence. In the same Decision however,
complainants Eddie Ladica, Arman Queling and Rolando Nieto were declared regular employees
since they were the only ones subjected to cross-examination.5 Thus -
 x x x (T)he labor arbiter conducted clarificatory hearings to ferret out the truth between the
opposing claims of the parties thereto. He did not submit the case based on position papers
and their accompanying documentary evidence as a full-blown trial was imperative to
establish the parties' claims. As their allegations were poles apart, it was necessary to give
them ample opportunity to rebut each other's statements through cross-examination. In fact,
private respondents Ladica, Quelling and Nieto were subjected to rigid cross-examination by
petitioner's counsel. However, the testimonies of private respondents Romero, Espina, and
Bantolino were not subjected to cross-examination, as should have been the case, and no
explanation was offered by them or by the labor arbiter as to why this was dispensed with.
Since they were represented by counsel, the latter should have taken steps so as not to
squander their testimonies. But nothing was done by their counsel to that effect. 6

Petitioners now pray for relief from the adverse Decision of the Court of Appeals; that, instead, the
favorable judgment of the NLRC be reinstated.

In essence, petitioners argue that the Court of Appeals should not have given weight to respondent's
claim of failure to cross-examine them. They insist that, unlike regular courts, labor cases are
decided based merely on the parties' position papers and affidavits in support of their allegations and
subsequent pleadings that may be filed thereto. As such, according to petitioners, the Rules of Court
should not be strictly applied in this case specifically by putting them on the witness stand to be
cross-examined because the NLRC has its own rules of procedure which were applied by the Labor
Arbiter in coming up with a decision in their favor.

In its disavowal of liability, respondent commented that since the other alleged affiants were not
presented in court to affirm their statements, much less to be cross-examined, their affidavits should,
as the Court of Appeals rightly held, be stricken off the records for being self-serving, hearsay and
inadmissible in evidence. With respect to Nestor Romero, respondent points out that he should not
have been impleaded in the instant petition since he already voluntarily executed a Compromise
Agreement, Waiver and Quitclaim in consideration of P450,000.00. Finally, respondent argues that
the instant petition should be dismissed in view of the failure of petitioners 7 to sign the petition as
well as the verification and certification of non-forum shopping, in clear violation of the principle laid
down in Loquias v. Office of the Ombudsman.8

The crux of the controversy revolves around the propriety of giving evidentiary value to the affidavits
despite the failure of the affiants to affirm their contents and undergo the test of cross-examination.

The petition is impressed with merit. The issue confronting the Court is not without precedent in
jurisprudence. The oft-cited case of Rabago v. NLRC9 squarely grapples a similar challenge
involving the propriety of the use of affidavits without the presentation of affiants for cross-
examination. In that case, we held that "the argument that the affidavit is hearsay because the
affiants were not presented for cross-examination is not persuasive because the rules of evidence
are not strictly observed in proceedings before administrative bodies like the NLRC where decisions
may be reached on the basis of position papers only."

In Rase v. NLRC,10 this Court likewise sidelined a similar challenge when it ruled that it was not
necessary for the affiants to appear and testify and be cross-examined by counsel for the adverse
party. To require otherwise would be to negate the rationale and purpose of the summary nature of
the proceedings mandated by the Rules and to make mandatory the application of the technical
rules of evidence.

Southern Cotabato Dev. and Construction Co. v. NLRC11 succinctly states that under Art. 221 of the
Labor Code, the rules of evidence prevailing in courts of law do not control proceedings before the
Labor Arbiter and the NLRC. Further, it notes that the Labor Arbiter and the NLRC are authorized to
adopt reasonable means to ascertain the facts in each case speedily and objectively and without
regard to technicalities of law and procedure, all in the interest of due process. We find no
compelling reason to deviate therefrom.

To reiterate, administrative bodies like the NLRC are not bound by the technical niceties of law and
procedure and the rules obtaining in courts of law. Indeed, the Revised Rules of Court and prevailing
jurisprudence may be given only stringent application, i.e., by analogy or in a suppletory character
and effect. The submission by respondent, citing People v. Sorrel,12 that an affidavit not testified to in
a trial, is mere hearsay evidence and has no real evidentiary value, cannot find relevance in the
present case considering that a criminal prosecution requires a quantum of evidence different from
that of an administrative proceeding. Under the Rules of the Commission, the Labor Arbiter is given
the discretion to determine the necessity of a formal trial or hearing. Hence, trial-type hearings are
not even required as the cases may be decided based on verified position papers, with supporting
documents and their affidavits.

As to whether petitioner Nestor Romero should be properly impleaded in the instant case, we only
need to follow the doctrinal guidance set by Periquet v. NLRC13 which outlines the parameters for
valid compromise agreements, waivers and quitclaims -

Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of mind. It is only where there is
clear proof that the waiver was wangled from an unsuspecting or gullible person, or the
terms of settlement are unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as a valid and
binding undertaking.

In closely examining the subject agreements, we find that on their face the Compromise
Agreement14 and Release, Waiver and Quitclaim15 are devoid of any palpable inequity as the terms
of settlement therein are fair and just. Neither can we glean from the records any attempt by the
parties to renege on their contractual agreements, or to disavow or disown their due execution.
Consequently, the same must be recognized as valid and binding transactions and, accordingly, the
instant case should be dismissed and finally terminated insofar as concerns petitioner Nestor
Romero.

We cannot likewise accommodate respondent's contention that the failure of all the petitioners to
sign the petition as well as the Verification and Certification of Non-Forum Shopping in contravention
of Sec. 5, Rule 7, of the Rules of Court will cause the dismissal of the present appeal. While
the Loquias case requires the strict observance of the Rules, it however provides an escape hatch
for the transgressor to avoid the harsh consequences of non-observance. Thus -

x x x x We find that substantial compliance will not suffice in a matter involving strict
observance of the rules. The attestation contained in the certification on non-forum shopping
requires personal knowledge by the party who executed the same. Petitioners must show
reasonable cause for failure to personally sign the certification. Utter disregard of the rules
cannot justly be rationalized by harking on the policy of liberal construction (underscoring
supplied).

In their Ex Parte Motion to Litigate as Pauper Litigants, petitioners made a request for a
fifteen (15)-day extension, i.e., from 24 April 2002 to 8 May 2002, within which to file their
petition for review in view of the absence of a counsel to represent them. 16 The records also
reveal that it was only on 10 July 2002 that Atty. Arnold Cacho, through the UST Legal Aid
Clinic, made his formal entry of appearance as counsel for herein petitioners. Clearly, at the
time the instant petition was filed on 7 May 2002 petitioners were not yet represented by
counsel. Surely, petitioners who are non-lawyers could not be faulted for the procedural
lapse since they could not be expected to be conversant with the nuances of the law, much
less knowledgeable with the esoteric technicalities of procedure. For this reason alone, the
procedural infirmity in the filing of the present petition may be overlooked and should not be
taken against petitioners.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals

is REVERSED and SET ASIDE and the decision of the NLRC dated 30 March 2001 which affirmed
in toto the decision of the Labor Arbiter dated 29 May 1998 ordering respondent Coca-Cola Bottlers
Phils., Inc., to reinstate Prudencio Bantolino, Nilo Espina, Eddie Ladica, Arman Queling, Rolando
Nieto, Ricardo Bartolome, Eluver Garcia, Eduardo Garcia and Nelson Manalastas to their former
positions as regular employees, and to pay them their full back wages, with the exception of
Prudencio Bantolino whose back wages are yet to be computed upon proof of his dismissal,
is REINSTATED, with the MODIFICATION that herein petition is DENIED insofar as it concerns
Nestor Romero who entered into a valid and binding Compromise Agreement and Release, Waiver
and Quitclaim with respondent company.

SO ORDERED.
 7. EN BANC

G.R. No. L-46496 February 27, 1940

ANG TIBAY, represented by TORIBIO TEODORO, manager and propietor, and

NATIONAL WORKERS BROTHERHOOD, petitioners,
vs.
THE COURT OF INDUSTRIAL RELATIONS and NATIONAL LABOR UNION, INC., respondents.

Office of the Solicitor-General Ozaeta and Assistant Attorney Barcelona for the Court of Industrial
Relations.
Antonio D. Paguia for National Labor Unon.
Claro M. Recto for petitioner "Ang Tibay".
Jose M. Casal for National Workers' Brotherhood.

LAUREL, J.:

The Solicitor-General in behalf of the respondent Court of Industrial Relations in the above-entitled
case has filed a motion for reconsideration and moves that, for the reasons stated in his motion, we
reconsider the following legal conclusions of the majority opinion of this Court:

1. Que un contrato de trabajo, asi individual como colectivo, sin termino fijo de duracion o
que no sea para una determinada, termina o bien por voluntad de cualquiera de las partes o
cada vez que ilega el plazo fijado para el pago de los salarios segun costumbre en la
localidad o cunado se termine la obra;

2. Que los obreros de una empresa fabril, que han celebrado contrato, ya individual ya
colectivamente, con ell, sin tiempo fijo, y que se han visto obligados a cesar en sus tarbajos
por haberse declarando paro forzoso en la fabrica en la cual tarbajan, dejan de ser
empleados u obreros de la misma;

3. Que un patrono o sociedad que ha celebrado un contrato colectivo de trabajo con sus
osbreros sin tiempo fijo de duracion y sin ser para una obra determiminada y que se niega a
readmitir a dichos obreros que cesaron como consecuencia de un paro forzoso, no es
culpable de practica injusta in incurre en la sancion penal del articulo 5 de la Ley No. 213 del
Commonwealth, aunque su negativa a readmitir se deba a que dichos obreros pertenecen a
un determinado organismo obrero, puesto que tales ya han dejado deser empleados suyos
por terminacion del contrato en virtud del paro.

The respondent National Labor Union, Inc., on the other hand, prays for the vacation of the
judgement rendered by the majority of this Court and the remanding of the case to the Court of
Industrial Relations for a new trial, and avers:

1. That Toribio Teodoro's claim that on September 26, 1938, there was shortage of leather
soles in ANG TIBAY making it necessary for him to temporarily lay off the members of the
National Labor Union Inc., is entirely false and unsupported by the records of the Bureau of
Customs and the Books of Accounts of native dealers in leather.

2. That the supposed lack of leather materials claimed by Toribio Teodoro was but a scheme
to systematically prevent the forfeiture of this bond despite the breach of his CONTRACT
with the Philippine Army.
 3. That Toribio Teodoro's letter to the Philippine Army dated September 29, 1938, (re
supposed delay of leather soles from the States) was but a scheme to systematically prevent
the forfeiture of this bond despite the breach of his CONTRACT with the Philippine Army.

4. That the National Worker's Brotherhood of ANG TIBAY is a company or employer union
dominated by Toribio Teodoro, the existence and functions of which are illegal. (281 U.S.,
548, petitioner's printed memorandum, p. 25.)

5. That in the exercise by the laborers of their rights to collective bargaining, majority rule
and elective representation are highly essential and indispensable. (Sections 2 and 5,
Commonwealth Act No. 213.)

6. That the century provisions of the Civil Code which had been (the) principal source of
dissensions and continuous civil war in Spain cannot and should not be made applicable in
interpreting and applying the salutary provisions of a modern labor legislation of American
origin where the industrial peace has always been the rule.

7. That the employer Toribio Teodoro was guilty of unfair labor practice for discriminating
against the National Labor Union, Inc., and unjustly favoring the National Workers'
Brotherhood.

8. That the exhibits hereto attached are so inaccessible to the respondents that even with
the exercise of due diligence they could not be expected to have obtained them and offered
as evidence in the Court of Industrial Relations.

9. That the attached documents and exhibits are of such far-reaching importance and effect
that their admission would necessarily mean the modification and reversal of the judgment
rendered herein.

The petitioner, Ang Tibay, has filed an opposition both to the motion for reconsideration of the
respondent National Labor Union, Inc.

In view of the conclusion reached by us and to be herein after stead with reference to the motion for
a new trial of the respondent National Labor Union, Inc., we are of the opinion that it is not necessary
to pass upon the motion for reconsideration of the Solicitor-General. We shall proceed to dispose of
the motion for new trial of the respondent labor union. Before doing this, however, we deem it
necessary, in the interest of orderly procedure in cases of this nature, in interest of orderly procedure
in cases of this nature, to make several observations regarding the nature of the powers of the Court
of Industrial Relations and emphasize certain guiding principles which should be observed in the trial
of cases brought before it. We have re-examined the entire record of the proceedings had before the
Court of Industrial Relations in this case, and we have found no substantial evidence that the
exclusion of the 89 laborers here was due to their union affiliation or activity. The whole transcript
taken contains what transpired during the hearing and is more of a record of contradictory and
conflicting statements of opposing counsel, with sporadic conclusion drawn to suit their own views. It
is evident that these statements and expressions of views of counsel have no evidentiary value.

The Court of Industrial Relations is a special court whose functions are specifically stated in the law
of its creation (Commonwealth Act No. 103). It is more an administrative than a part of the integrated
judicial system of the nation. It is not intended to be a mere receptive organ of the Government.
Unlike a court of justice which is essentially passive, acting only when its jurisdiction is invoked and
deciding only cases that are presented to it by the parties litigant, the function of the Court of
Industrial Relations, as will appear from perusal of its organic law, is more active, affirmative and
dynamic. It not only exercises judicial or quasi-judicial functions in the determination of disputes
between employers and employees but its functions in the determination of disputes between
employers and employees but its functions are far more comprehensive and expensive. It has
jurisdiction over the entire Philippines, to consider, investigate, decide, and settle any question,
matter controversy or dispute arising between, and/or affecting employers and employees or
laborers, and regulate the relations between them, subject to, and in accordance with, the provisions
of Commonwealth Act No. 103 (section 1). It shall take cognizance or purposes of prevention,
arbitration, decision and settlement, of any industrial or agricultural dispute causing or likely to cause
a strike or lockout, arising from differences as regards wages, shares or compensation, hours of
labor or conditions of tenancy or employment, between landlords and tenants or farm-laborers,
provided that the number of employees, laborers or tenants of farm-laborers involved exceeds thirty,
and such industrial or agricultural dispute is submitted to the Court by the Secretary of Labor or by
any or both of the parties to the controversy and certified by the Secretary of labor as existing and
proper to be by the Secretary of Labor as existing and proper to be dealth with by the Court for the
sake of public interest. (Section 4, ibid.) It shall, before hearing the dispute and in the course of such
hearing, endeavor to reconcile the parties and induce them to settle the dispute by amicable
agreement. (Paragraph 2, section 4, ibid.) When directed by the President of the Philippines, it shall
investigate and study all industries established in a designated locality, with a view to determinating
the necessity and fairness of fixing and adopting for such industry or locality a minimum wage or
share of laborers or tenants, or a maximum "canon" or rental to be paid by the "inquilinos" or tenants
or less to landowners. (Section 5, ibid.) In fine, it may appeal to voluntary arbitration in the settlement
of industrial disputes; may employ mediation or conciliation for that purpose, or recur to the more
effective system of official investigation and compulsory arbitration in order to determine specific
controversies between labor and capital industry and in agriculture. There is in reality here a
mingling of executive and judicial functions, which is a departure from the rigid doctrine of the
separation of governmental powers.

In the case of Goseco vs. Court of Industrial Relations et al., G.R. No. 46673, promulgated
September 13, 1939, we had occasion to joint out that the Court of Industrial Relations et al., G. R.
No. 46673, promulgated September 13, 1939, we had occasion to point out that the Court of
Industrial Relations is not narrowly constrained by technical rules of procedure, and the Act requires
it to "act according to justice and equity and substantial merits of the case, without regard to
technicalities or legal forms and shall not be bound by any technicalities or legal forms and shall not
be bound by any technical rules of legal evidence but may inform its mind in such manner as it may
deem just and equitable." (Section 20, Commonwealth Act No. 103.) It shall not be restricted to the
specific relief claimed or demands made by the parties to the industrial or agricultural dispute, but
may include in the award, order or decision any matter or determination which may be deemed
necessary or expedient for the purpose of settling the dispute or of preventing further industrial or
agricultural disputes. (section 13, ibid.) And in the light of this legislative policy, appeals to this Court
have been especially regulated by the rules recently promulgated by the rules recently promulgated
by this Court to carry into the effect the avowed legislative purpose. The fact, however, that the
Court of Industrial Relations may be said to be free from the rigidity of certain procedural
requirements does not mean that it can, in justifiable cases before it, entirely ignore or disregard the
fundamental and essential requirements of due process in trials and investigations of an
administrative character. There are primary rights which must be respected even in proceedings of
this character:

(1) The first of these rights is the right to a hearing, which includes the right of the party
interested or affected to present his own case and submit evidence in support thereof. In the
language of Chief Hughes, in Morgan v. U.S., 304 U.S. 1, 58 S. Ct. 773, 999, 82 Law. ed.
1129, "the liberty and property of the citizen shall be protected by the rudimentary
requirements of fair play.

(2) Not only must the party be given an opportunity to present his case and to adduce
evidence tending to establish the rights which he asserts but the tribunal must consider the
evidence presented. (Chief Justice Hughes in Morgan v. U.S. 298 U.S. 468, 56 S. Ct. 906,
80 law. ed. 1288.) In the language of this court in Edwards vs. McCoy, 22 Phil., 598, "the
right to adduce evidence, without the corresponding duty on the part of the board to consider
it, is vain. Such right is conspicuously futile if the person or persons to whom the evidence is
presented can thrust it aside without notice or consideration."

(3) "While the duty to deliberate does not impose the obligation to decide right, it does imply
a necessity which cannot be disregarded, namely, that of having something to support it is a
nullity, a place when directly attached." (Edwards vs. McCoy, supra.) This principle
emanates from the more fundamental is contrary to the vesting of unlimited power anywhere.
Law is both a grant and a limitation upon power.

(4) Not only must there be some evidence to support a finding or conclusion (City of Manila
vs. Agustin, G.R. No. 45844, promulgated November 29, 1937, XXXVI O. G. 1335), but the
evidence must be "substantial." (Washington, Virginia and Maryland Coach Co. v. national
labor Relations Board, 301 U.S. 142, 147, 57 S. Ct. 648, 650, 81 Law. ed. 965.) It means
such relevant evidence as a reasonable mind accept as adequate to support a conclusion."
(Appalachian Electric Power v. National Labor Relations Board, 4 Cir., 93 F. 2d 985, 989;
National Labor Relations Board v. Thompson Products, 6 Cir., 97 F. 2d 13, 15; Ballston-
Stillwater Knitting Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.) . . . The
statute provides that "the rules of evidence prevailing in courts of law and equity shall not be
 controlling.' The obvious purpose of this and similar provisions is to free administrative
boards from the compulsion of technical rules so that the mere admission of matter which
would be deemed incompetent inn judicial proceedings would not invalidate the
administrative order. (Interstate Commerce Commission v. Baird, 194 U.S. 25, 44, 24 S. Ct.
563, 568, 48 Law. ed. 860; Interstate Commerce Commission v. Louisville and Nashville R.
Co., 227 U.S. 88, 93 33 S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene and
Southern Ry. Co. S. Ct. 220, 225, 74 Law. ed. 624.) But this assurance of a desirable
flexibility in administrative procedure does not go far as to justify orders without a basis in
evidence having rational probative force. Mere uncorroborated hearsay or rumor does not
constitute substantial evidence. (Consolidated Edison Co. v. National Labor Relations Board,
59 S. Ct. 206, 83 Law. ed. No. 4, Adv. Op., p. 131.)"

(5) The decision must be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected. (Interstate Commence
Commission vs. L. & N. R. Co., 227 U.S. 88, 33 S. Ct. 185, 57 Law. ed. 431.) Only by
confining the administrative tribunal to the evidence disclosed to the parties, can the latter be
protected in their right to know and meet the case against them. It should not, however,
detract from their duty actively to see that the law is enforced, and for that purpose, to use
the authorized legal methods of securing evidence and informing itself of facts material and
relevant to the controversy. Boards of inquiry may be appointed for the purpose of
investigating and determining the facts in any given case, but their report and decision are
only advisory. (Section 9, Commonwealth Act No. 103.) The Court of Industrial Relations
may refer any industrial or agricultural dispute or any matter under its consideration or
advisement to a local board of inquiry, a provincial fiscal. a justice of the peace or any public
official in any part of the Philippines for investigation, report and recommendation, and may
delegate to such board or public official such powers and functions as the said Court of
Industrial Relations may deem necessary, but such delegation shall not affect the exercise of
the Court itself of any of its powers. (Section 10, ibid.)

(6) The Court of Industrial Relations or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply accept the
views of a subordinate in arriving at a decision. It may be that the volume of work is such that
it is literally Relations personally to decide all controversies coming before them. In the
United States the difficulty is solved with the enactment of statutory authority authorizing
examiners or other subordinates to render final decision, with the right to appeal to board or
commission, but in our case there is no such statutory authority.

(7) The Court of Industrial Relations should, in all controversial questions, render its decision
in such a manner that the parties to the proceeding can know the various issues involved,
and the reasons for the decision rendered. The performance of this duty is inseparable from
the authority conferred upon it.

In the right of the foregoing fundamental principles, it is sufficient to observe here that, except as to
the alleged agreement between the Ang Tibay and the National Worker's Brotherhood (appendix A),
the record is barren and does not satisfy the thirst for a factual basis upon which to predicate, in a
national way, a conclusion of law.

This result, however, does not now preclude the concession of a new trial prayed for the by
respondent National Labor Union, Inc., it is alleged that "the supposed lack of material claimed by
Toribio Teodoro was but a scheme adopted to systematically discharged all the members of the
National Labor Union Inc., from work" and this avernment is desired to be proved by the petitioner
with the "records of the Bureau of Customs and the Books of Accounts of native dealers in leather";
that "the National Workers Brotherhood Union of Ang Tibay is a company or employer union
dominated by Toribio Teodoro, the existence and functions of which are illegal." Petitioner further
alleges under oath that the exhibits attached to the petition to prove his substantial avernments" are
so inaccessible to the respondents that even within the exercise of due diligence they could not be
expected to have obtained them and offered as evidence in the Court of Industrial Relations", and
that the documents attached to the petition "are of such far reaching importance and effect that their
admission would necessarily mean the modification and reversal of the judgment rendered herein."
We have considered the reply of Ang Tibay and its arguments against the petition. By and large,
after considerable discussions, we have come to the conclusion that the interest of justice would be
better served if the movant is given opportunity to present at the hearing the documents referred to
in his motion and such other evidence as may be relevant to the main issue involved. The legislation
which created the Court of Industrial Relations and under which it acts is new. The failure to grasp
the fundamental issue involved is not entirely attributable to the parties adversely affected by the
result. Accordingly, the motion for a new trial should be and the same is hereby granted, and the
entire record of this case shall be remanded to the Court of Industrial Relations, with instruction that
it reopen the case, receive all such evidence as may be relevant and otherwise proceed in
accordance with the requirements set forth hereinabove. So ordered.

G.R. No. 101427 November 8, 1993

CONSUELO B. KUNTING, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION (Fifth Division), CAGAYAN DE ORO CITY,
ST. JOSEPH SCHOOL, FR. ALOYSIUS CHANG and/or JOSEFINA MANUEL, respondents.

Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioner.

Castillo & Castillo Law Offices for private respondents.

BIDIN, J.:

This special civil action for certiorari seeks to set aside the decision promulgated on October 20,
1989 by the respondent National Labor Commission (NLRC) which modified the decision dated
March 1, 1989 of the Executive Labor Arbiter declaring illegal petitioner Consuelo B. Kunting's
dismissal from employment and ordering respondent St. Joseph School to pay her backwages
equivalent to six months' pay, separation pay, emergency cost of living allowance differentials, 13th
month pay and service incentive leave pay.

In 1969, Consuelo B. Kunting was employed as a teacher by respondent St. Joseph School in Gov.
Camins Avenue, Zamboanga City. She was paid a basic pay and emergency cost of living allowance
(ECOLA) except during summer period when she was paid only the basic pay. Effective January,
1988, her monthly salary was One Thousand Eight Hundred and Twenty Pesos (P1,820.00)
including ECOLA integrated into the basic wage. She was also paid the 13th month pay up to 1987
but not her service incentive leave pay (Rollo, p. 30).

Every year from 1969 until, the school year 1987-1988, Consuelo and St. Joseph executed a
Teacher's Contract. For the school year 1987-1988, her performance rating was very satisfactory
(Rollo, pp. 45-47). In spite of this, St. Joseph School did not renew her employment contract for the
school year 1988-89, thereby terminating her employment with the school. The termination letter
dated April 4, 1988 reads:

Your teaching contract with this school has already expired at the close of this school
year 1987-1988.

We regret to inform you that the administration is not renewing your contract this
coming school year 1988-1989. This notice is served upon you so that you will have
time to look for another employment or to give you full time in your business. (Ibid, p.
4).

On April 14, 1988 (Ibid, p. 31), Consuelo filed a complaint against the St. Joseph School, its Director,
Fr. Aloysius Chang, and Principal, Sister Josephine Manuel, for illegal dismissal, reinstatement and
backwages, wage differentials, 13th month pay, emergency cost of living allowance (ECOLA) and
service incentive leave pay.

With only position and supporting documents submitted by the parties as basis, Executive Labor
Arbiter Rhett Julius J. Plagata rendered the decision of March 1, 1989 declaring that Consuelo was
illegally dismissed. The dispositive portion of the decision states:
 WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered
in the above-entitled case:

(1) declaring the dismissal of Consuelo B. Kunting to be illegal, and ordering St.
Joseph School to pay her backwages in the sum of TEN THOUSAND NINE
HUNDRED TWENTY PESOS (P10,920.00) and separation pay in the sum of
FOURTEEN THOUSAND FIVE HUNDRED SIXTY PESOS (P14,560.00); (2) Further
ordering St. Joseph School to pay Consuelo B. Kunting emergency cost of living
allowance differentials in the sum of FOUR HUNDRED FIFTY FIVE PESOS
(P455.00); and service incentive leave pay, in the sum of SEVEN HUNDRED SIX &
45/100 PESOS (P706.45); and (3) Dismissing the complainant's claim for wage
differentials, for lack of merit.

SO ORDERED.

Dissatisfied, petitioner appealed to the respondent NLRC. She prayed that the Executive Labor
Arbiter's decision be modified so as to include her re-instatement to her former position without loss
of seniority rights with option to accept separation benefits and payment of full backwages from April
4, 1988 up to the actual date of re-instatement, the 13th month pay to cover the period between April
4, 1988 and her actual reinstatement, and moral damages of P25,000.00 plus attorney's fees.

In its decision, the NLRC affirmed the finding of the Executive Labor Arbiter that Consuelo was
illegally dismissed on the ground that the twin requirements of notice and hearing, which constitute
essential elements of due process in cases of dismissal of employees, were not complied with.
Inasmuch as Consuelo was a regular employee under Art. 280 of the Labor Code, the NLRC opined
that her employment for more than sixteen (16) years could not be terminated by the school on the
pretext that her "teaching Contract" had expired.

Notwithstanding its findings of illegal dismissal, the NLRC nonetheless sustained the Executive
Labor Arbiter's ruling as regards the payment of separation pay in lieu of reinstatement due to the
alleged "strained relations" between the parties which existed as a result of the illegal dismissal, and
the alleged failure of Consuelo to refute the accusations leveled against her by her employer.
However, the NLRC modified the grant of six (6) months backwages and ordered instead the
payment of backwages without qualification and deduction, computed from the date of promulgation
of its decision, i.e. October 20, 1989. It further ordered that petitioner's length of service be reckoned
from 1969 up to the promulgation of its decision.

The NLRC further upheld the Executive Labor Arbiter's decision with respect to the payment of the
13th month pay and service incentive pay and the disallowance of claim for wage differentials.
However, the NLRC, like the Executive Labor Arbiter, denied Consuelo's claims for moral damages
and attorney's fees on the ground that although they were set out in her position paper, they had not
been alleged in the complaint.

Consuelo moved for the reconsideration of the above decision but the same was denied.
Dissatisfied, she filed the instant petition.

In this petition, petitioner contends that respondent NLRC committed grave abuse of discretion
amounting to lack of jurisdiction in: (a) awarding separation pay in lieu of reinstatement after a
"clear" finding of illegal dismissal; (b) failing to award full backwages from the time of her dismissal
until actual reinstatement; (c) denying her claim for moral damages and attorney's fees, and (d)
failing to award 13th month pay for school year 1988-1989.

Before considering the merits of the substantive issues raised in this petition, private respondents'
contention that the instant petition for certiorari is not the proper remedy since the NLRC did not
commit grave abuse of discretion and that only questions of facts are involved in this case. (Ibid, p.
79), should be dealt with first.

Petitioner did not err in filing the instant petition. In Pearl S. Buck Foundation v. NLRC, 182 SCRA
446 [1990], the Court held that the only way it can review the decision of the NLRC is by way of
petition for certiorari under Rule 65 of the Rules of Court. * While factual findings of the NLRC are accorded not only
respect but also finality if supported by substantial evidence (Reyes & Lim Co., Inc. v. NLRC, 201 SCRA 772 [1991]) considering the NLRC's
expertise in their field (Chua v. NLRC, 182 SCRA 353 [1990]; Lopez Sugar Corporation v. FFW, 189 SCRA 179 [1990]), any allegations of
fact may still be considered by this Court but only to determine whether the NLRC had no jurisdiction, gravely abused its discretion, violated
due process, denied substantial justice or erroneously interpreted the law (Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., 180
SCRA 689 [1989]). Hence, certiorari is the proper remedy in this case.
We now come to the merits of the issues raised by petitioner. She contends that the NLRC gravely
abused its discretion in ordering the payment of separation pay in lieu of reinstatement
notwithstanding its finding that she had been illegally dismissed. Interrelated with this contention is
her allegation that as a consequence of the NLRC's finding of illegal dismissal, she is entitled to
reinstatement with full backwages from the time of her illegal dismissal on April 4, 1988 up to the
date of actual reinstatement in consonance with Art. 279 of the Labor Code. She argues that under
said provision of the law and the Constitution, her right to security of tenure should be upheld over
and above the perceived "strained relations" between her and private respondents.

On the other hand, public respondent maintains that the right of an unjustly dismissed employee to
reinstatement and backwages under Article 279 of the Labor Code is not without exceptions under
the prevailing jurisprudence. Thus, it is argued, reinstatement may not be ordered when it has
become a legal impossibility or to spare both employer and employee from an atmosphere of
antipathy and antagonism (Galindez v. Rural Bank of Llanera, Inc., 175 SCRA 132 [1989];
Commercial Motors Corporation v. NLRC, 192 SCRA 191 [1990]).

Indeed, an illegally dismissed employee's right to reinstatement is not absolute. The Court has a
long line of decisions concerning non-reinstatement of illegally dismissed employees on various
grounds (Divine Word High School, et al. v. NLRC, et al., 143 SCRA 346 [1986]; Asiaworld
Publishing House, Inc, v. Hon. Blas Ople. 152 SCRA [1987]; Flores v. Nuestro, 160 SCRA 568
[1988]; Galindez v. Rural Bank of Llanera, Inc. supra; Century Textile Mills v. NLRC, 161 SCRA 528
[1988]). One of these grounds is when there is a finding that the relationship between the parties has
become so strained and ruptured as to preclude a harmonious working relationship (Citytrust
Finance Corp. v. NLRC, et al., G.R. 75740, January 15, 1988, 157 SCRA 87; Commercial Motors
Corp. v, NLRC, supra). In the case at bar, however, the peculiar circumstances surrounding the
dismissal of petitioner simply do not show such kind of strained relationship as to warrant the
severance of the working relationship between the parties.

The order to grant petitioner separation pay instead of reinstatement is predicated on the following
finding of strained relations by the Executive Labor Arbiter which was sustained by the NLRC:

. . . . In the instant case, while the manner of dismissal was patently illegal, still
complainant failed to refute the charges or lapses in her conduct as a teacher, i.e.
disrespectful at time, acts of insubordination, non-improvement in her teaching
methods, etc. (Affidavit of Sister Josefina Manuel, O.P., Annex "7" respondent's
position paper, p. 7, Record). As aptly put by the Executive Labor
Arbiter, reinstatement would bring the parties in close or frequent contact in work that
may only serve to further aggravate and inflame the existing animosity and
antagonism between them. (Rollo, p. 26; Emphasis supplied).

As shown by the above-quoted portion of the decision of the NLRC, conclusion on the "strained
relations" between petitioner and private respondents was merely gathered from the latter's
evidence on the former's less than ideal conduct and nothing more. There is no proof that such
conduct actually caused animosity between her and private respondents. Besides, there is no clear
showing that the perceived "strained relations" between the parties is of so serious a nature or of
such a degree as to justify petitioner's dismissal.

"Strained relations," as amplified in Employee's Association of the Philippine American Life

Insurance Company v. NLRC, 199 SCRA 628 [1991], must be of such a nature or degree as to
preclude reinstatement. But, where the differences between the parties are neither personal nor
physical, nor serious, then there is no reason why the illegally dismissed employee should not be
reinstated rather than simply given separation pay and backwages. More so if the cause of the
perceived 'strained relations' is the filing of a complaint for illegal dismissal. As the Court held
in Globe-Mackay Cable and Radio Corporation v. NLRC, 206 SCRA 701 [1992], citing Anscor
Transport and Terminals v. NLRC, 190 SCRA 147 [1990]; Sibal v. Notre Dame of Greater Manila,
182 SCRA 538 [1990]:

Obviously, the principle of "strained relations" cannot be applied indiscriminately.

Otherwise reinstatement can never be possible simply because some hostility is
invariably engendered between the parties as a result of litigation. That is human
nature.

Besides, no strained relations should arise from a valid and legal act of asserting
one's right; otherwise an employee who shall assert his right could be easily
 separated from the service, by merely paying his separation pay on the pretext that
his relationship with his employer had already been strained.

Whatever resentments had been harbored by petitioner upon her unceremonious dismissal after
having been employed by St. Joseph School for more than sixteen (16) years is understandable.
Such resentments, however, would not suffice to deny her reemployment because to do so would
render for naught her constitutional right to security of tenure and her corollary right to reinstatement
under Article 279 of the Labor Code. Petitioner is, after all, a permanent teacher as she had
rendered more than three years of satisfactory service (St. Theresita's Academy v. NLRC, 215
SCRA 181 [1992]). Given the fact that her employer is a religious institution, there can be no room
for antagonism between the parties even after the termination of this litigation. Furthermore, this
Court in Tolentino v. NLRC, (152 SCRA 717 [1987]) held:

Security of tenure is a right of paramount value as recognized and guaranteed under

our new constitution. The state shall afford full protection to labor, . . . and promote
full employment and equality of employment opportunities for all. It shall guarantee
the right of all workers to . . . security of tenure. . . . (Sec. 3 Art. XIII on Social Justice
and Human Rights, 1987 Constitution of the Republic of the Philippines.) Such
Constitutional Right should not be denied on mere speculation of any similar unclear
and nebulous basis.

Closely related to the right to reinstatement is the employee's right to receive backwages which
represent the compensation that an unjustly dismissed employee should have received had said
employee not bee dismissed. Petitioner claims that she is entitled to full backwages (computed from
the date of dismissal until actual reinstatement) under Article 279 of the Labor Code. This
contention, however, is not supported by prevailing jurisprudence which limits the award of
backwages to three (3) years without qualification and deduction (Maranaw Hotels and Resorts
Corp. v. Court of Appeals, 215 SCRA 501 [1992], citing Sealand Service, Inc. v. NLRC, 190 SCRA
347 [1990]).

While Republic Act No. 6715 amending Sec. 279, of the Labor Code grants full backwages to
dismissed employees computed from the date of their illegal dismissal up to the date of actual
reinstatement, the same cannot be applied in the case at bar. This is because petitioner was illegally
dismissed on April 4, 1988, or before the effectivity of R.A. 6715 on March 21, 1989.

In Lantion v. NLRC (181 SCRA 513 [1990]), We held that nothing in R.A. 6715 provides for its
retroactive application. Necessarily, awards of backwages in cases of illegal dismissal initiated
before the effectivity of R.A. 6715 will have to be resolved by applying the three-year limit formulated
in the case of Mercury, Drug Co., Inc. v. CIR (56 SCRA 694 [1974]; see Ferrer v. NLRC, G.R. No.
100898, July 5. 1993).

Petitioner's claim for the thirteenth month pay is mandated by Presidential Decree No. 851 which
has been modified by Memorandum Order No. 28 issued by President Corazon C. Aquino on August
13, 1986 so as to remove the salary ceiling of P1,000 of employees entitled. The "Revised
Guidelines on the Implementation of the 13th Month Pay Law" which was issued on November 16,
1987 by then Labor Secretary Franklin M. Drilon, specifically singles out the case of private school
teachers like the petitioner herein. The guidelines state:

(c) Private School Teachers. — Private school teachers, including faculty members
of universities and colleges, are entitled to the required 13th month pay, regardless
of the number of months they teach or are paid within a year, if they have rendered
service for at least one (1) month within a year.

Applying this guideline to the petitioner, she is entitled to a 13th month pay for 1988 as she served
more than three months for that year. Although P.D. No. 851 was conceived "to further protect the
level of real wages from the ravage of world-wide inflation," it would be unfair for the employer to
grant petitioner 13th month pay for the years she had not rendered service. Thus, upon her
reinstatement, payment of the 13th pay should be in accordance with the aforequoted guideline and
that set forth in UST Faculty Union v. NLRC, 190 SCRA 215 [1990]), i.e., it shall not be granted if St.
Joseph School gives its equivalent or when the said employer shall be subjected to "double-burden."

As to the claims for moral damages and attorney's fees, there appears to be no sufficient evidence
thereon as its denial was due to petitioner's failure to aver the same in her complaint, although they
were set out in her position paper. Nonetheless, the Solicitor General correctly supported petitioner's
allegation that rules of procedures should not be applied in a very rigid and technical sense in labor
cases (Rollo., p. 90). This allegation is supported by Art. 221 the Labor Code which provides that the
rules of evidence prevailing in courts of law and equity are not controlling in labor proceedings.

Thus, instead of disregarding petitioner's claims for moral damages and attorney's fees, the
Executive Labor Arbiter should have ascertained the facts alleged by petitioner in her position paper.
The Labor Code is a social legislation intended primarily to promote and protect the rights of the
laborers. Hence, labor officials should use all reasonable means to ascertain the facts in each case
speedily and objectively without regard to technicalities of law or procedure, all in the interest of due
process (211 SCRA 509 [1992], citing Philippine Telegraph and Telephone Corporation v. NLRC,
(183 SCRA 451 [1990]). Thus, by their failure to rule on this particular claims, the Executive Labor
Arbiter and NLRC committed grave abuse of discretion as they failed to avert further delay in the
disposition of this case.

We cannot, however, subscribe to petitioner's assertion that, the issue of damages can be ruled
upon by this Court without the necessity of' remanding the same to public respondent for
determination (Rollo, pp. 101-102). While, it is true that "sound practice seeks to accommodate the
theory which avoids waste of time, effort and expense, to the parties and government, not to speak
of the delay in the disposal of the case"' (De Guzman v. NLRC, G.R. No. 90856, July 23,
1992, citing Fernandez v. Garcia, 92 Phil. 592 [1953]), nevertheless, it is in the best interest of both
parties that the determination of whether or not moral damages and/or attorney's fees should be
awarded, be left to the Executive Labor Arbiter who is in a better position to rule on said issue.

WHEREFORE, the decision of public respondent National Labor Relations Commission is hereby
AFFIRMED with modifications as follows: Private respondent is hereby ordered to reinstate
petitioner Consuelo B. Kunting to her former or equivalent position without loss of seniority rights
with payment of backwages for three (3) years and the13th month pay for 1988. The Executive
Labor Arbiter is likewise ordered to determine with dispatch petitioner's claims for moral damages
and attorney's fees. No costs.

SO ORDERED.

10

G.R. No. 122627 July 28, 1999

WILSON ABA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSIONS (Fourth Division) and ALFONSO
VILLEGAS, respondents.

BELLOSILLO, J.:

WILSON ABA filed against Hda. Sta. Ines and/or Alfonso Villegas a complaint for illegal dismissal,
legal holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay,
and salary and 13th month differentials. In his Position Paper Aba claimed he worked at Hda. Sta.
1 2

Ines from 26 December 1976 until his termination on 27 August 1990 allegedly to his union activities.
Hda. Sta. Ines and Villegas vehemently denied Aba's accusations and claimed that the latter was not
even in their employ. To prove their point, they copy of a complaint filed by Aba, this time against
Hda. Fatima and/or Alfonso Villegas for underpayment of salaries. In the complaint, Aba claimed he
was employed by Hda. Fatima on 5 January 1972 until the filing of the complaint on 6 December
1990. In view of the overlapping periods of employment, Hda. Sta. Ines and Villegas concluded it
was impossible for Aba to have been employed simultaneously by Hda. Fatima and by Hda. Sta.
Ines as he could not have served two (2) employers at the same time, especially when these
employers were 15 kilometers apart from each other.
On 17 November 1993 Labor Arbiter Geoffrey P. Villahermosa dismissed the instant complaint with
prejudice considering the apparent inconsistency in Aba's periods of employment. In his
3

Appeal Aba complained that the case should not have been dismissed as one pertained to illegal
4

dismissal, while the other to illegal unpaid salaries. Consequently, they should have been
consolidated and decided on the merits. 1âwphi1.nêt

On 10 March 1994 the National Labor Relations Commission remanded the case to the Labor
Arbiter for a decision on the merits as there were still essential factual matters which had to be
ascertained.

On remand, both parties submitted their respective position papers. In his Position Paper, Aba
alleged this time that he started working at Hda. Sta. Ines as early as 1968. On the other hand,
private respondents maintained they never employed, Aba. As they proof, they presented a copy of
the decision in RAB Case No. 09-418-90-D, Cresencio Abriga, Sr. et al v. Hda. Fatima and/or
Alfonso Villegas. In that case, Aba was awarded P1,846.00 representing his 13th-month pay from
Hda. Fatima. Private: respondents also submitted the affidavits of Cristito Tabio and Moises Ponce,
timekeeper and "cabo," respectively, at Hda. Sta. Ines attesting that Aba was never employed by
Hda. Sta. Ines.

On 25 January 1995 the Labor Arbiter dismissed the case holding that there was no employer-
employee relationship between parties. Aba appealed ascribing error on the Labor Arbiter for
rendering judgment based solely on position papers and without the benefit of any hearing. Too, Aba
claimed private respondents failed to overcome the burden of proving that his termination was for a
valid cause.

Nonetheless, upon verification of the appeal, it was shown·that Aba had failed to pay the appeal
docketing fee contrary to his assertion in the prefatory paragraph of his Memorandum of
Appeal. Consequently, the NLRC dismissed his appeal for non-payment of the appeal docketing
5

fee. Aba timely filed his Motion for Reconsideration together with the appeal docketing fee.
6

Likewise, Aba filed a Supplemental Brief for the Complainant-Appelant. Therein, he attempted to
7

relate in chronological order his employment with Hda. Sta. Ines from 1968 to 1990 and attached
therewith the affidavits of hacienda workers Gaudioso C. Rumbo and Enrique T. Manaquil. But the
8 9

NLRC denied Aba's motion; hence this petition.

Is delay in paying the appeal docketing fee fatal to petitioner's appeal? The Office of the Solicitor
General opines that the dismissal of petitioner's appeal for failure to pay the appeal docketing fee on
time was not in consonance with the constitutional mandate to protect labor and settled
jurisprudence. Accordingly, it moves for the setting aside of the decision of the NLRC which
dismissed Aba's appeal and motion for reconsideration for non-payment of the appeal docketing fee.

The petition is impressed with merit. "Appeal" means the elevation by an aggrieved party of any
decision or award of a lower body to a higher body by means of a pleading which includes the
assignment of errors, arguments in support thereof, and the relief prayed for. On the other hand,
10

"perfection of an appeal" includes the filing, within the prescribed period, of the memorandum of
appeal containing, among others, the assignment of error/s, arguments in support thereof, the relief
sought and, in appropriate cases, posting of the appeal
bond. An appeal bond is necessary·only in case of a judgment involving a monetary award, in
11

which case, the appeal may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from. 12

In the instant case, it is undisputed that the appeal was filed within the reglementary period. The
memorandum of appeal contained an assignment of errors, the arguments in support thereof, and
the reliefs sought. No appeal bond was necessary as the decision being appealed did not contain
any monetary award. Nowhere is it written that payment of appeal docketing fee is necessary for the
perfection of the appeal. Therefore, there is no question that the appeal in the instant case has been
perfected and the failure to pay the appeal docketing fee is not fatal. Besides, it is settled
jurisprudence that technical rules of evidence are not binding in any proceedings before the
Commission or any of the labor arbiters It has been the policy of this Court to resolve labor
13

disputes with the view of compassionate justice towards working class.

Corollarily, this issue has already been squarely resolved in C.W. Tan Mfg. v. NLRC wherein we
14

ruled —
 As to the issue of the non-payment of the appeal fee on time, this Court held in Del
Rosario & Sons Logging Enterprises, Inc. v. NLRC that "failure to pay the appeal
docketing fee confers a directory and not mandatory power to dismiss an appeal and
such power must be exercised with a sound discretion and with a great deal of
circumspection considering all attendant circumstances." It is true that in Acda v.
Minister of Labor we said that the payment of the appeal fee is "by no means a mere
technicality but is an essential requirement in the perfection of an appeal." However,
where as in this case the fee had been paid belatedly, the broader interest of justice
and the desired objective in deciding the case on the merits demand that the appeal
be given due course.

Significantly, Aba is even excused from paying dockets fees pursuant to Art. 277, par. (d), of the
Labor Code which provides that no docket fee shall be assessed in labor standards disputes, and 15

instant case is a labor standards dispute as it involves not only the issue of illegal dismissal but also
payment of legal holiday pay, premium pay on holiday and rest day, service incentive leave pay,
separation pay, salary and 13th month differentials.

WHEREFORE, the petition is GRANTED. The challenged decision of 20 July 1995 and the
resolution of 28 August 1995 public respondent National Labor Relations Commission are
REVERSED and SET ASIDE. Public respondent NLRC DIRECTED to decide the appeal on its
merits, taking into account not only the additional documents submitted to it but also the evidence
submitted by the parties before the Labor Arbiter. 1âwphi1.nêt

SO ORDERED.

11

G.R. No. L-55971 February 28, 1985

FLEXO MANUFACTURING CORPORATION, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION and VIRGILIO M. MANTES, respondents.

CUEVAS, J.:

The instant petition for certiorari seeks the review and reversal of the decision of respondent
National Labor relations Commission dated October 17, 1980, which ordered petitioner Flexo
Manufacturing Corporation to reinstate private respondent Virgilio M. Mantes "to his former or
equivalent position with full backwages counted from April 25, 1977 until reinstated, based on his
latest rate of pay or the minimum rate under the law, whichever is more beneficial to him, without
loss of seniority rights and privileges appurtenant thereto."

Petitioner Flexo Manufacturing Corporation is a business firm engaged in the manufacture and
printing of packaging materials for goods and merchandise. Private respondent Virgilio M. Mantes,
upon the other hand, was employed by petitioner as its slitting machine operator from 1966 to March
8, 1974 when he was terminated by petitioner on ground of abandonment. On December 20, 1975,
private respondent was rehired and assigned to his former work.

On April 18, 1977, private respondent failed to report for work having been stricken with influenza.
He was supposed to report for work in the night of said date, as he was at that time with the night
shift. In the morning, however, of that day, he requested Cristeno Magrata, a fellow worker, to deliver
his handwritten note to the management informing them of his inability to report for work due to
illness. The letter was given by Magrata to Armando Buenaventura, the foreman of private
respondent, in the morning of April 18, 1977 and even before the start of work of the night shift
workers to which private respondent belonged. 1
On April 25, 1977, private respondent went to Flexo to report for work, bringing with him a medical
certificate issued by Dr. Josefina Merano of the Caloocan Health Department certifying to the effect
that private respondent Mantes was under her medical treatment for influenza during the period from
April 18, 1977 to April 23, 1977. As it was the procedure of Flexo Manufacturing Corporation that
2

before an employee who was absent could be actually allowed to work, he must first secure a sort of
an excuse slip from both the Personnel and Production Managers, private respondent Mantes
presented the medical certificate to Mr. Robert Chan, the Production Manager and Mr. Norberto
Enciso, the Personnel Manager, both of whom refused to give the required excuse slip despite
private respondent's plea that he be allowed to report back for work. Since then, private respondent
3

was not allowed to work.

Then, sometime on the third week of May 1977, private respondent received thru the mail, a xerox
copy of a clearance application filed by petitioner, stating therein that private respondent was
4

terminated effective May 20, 1977 on the ground of abandonment, in that he was absent from April
19, 1977 and reported for work only on May 10, 1977.

Private respondent opposed petitioner's clearance application by filing a complaint on May 25,
1977, with the Department of Labor, Regional Office No. 4.
5

On May 23, 1978, Labor Arbiter Ricarte T. Soriano rendered a decision giving due course to
petitioner's application for clearance to terminate the services of private respondent and dismissing
the latter's complaint for illegal dismissal.
6

Private respondent appealed the aforesaid decision to the National Labor Relations Commission
(hereinafter referred to as NLRC).

On October 17, 1980, respondent NLRC issued its decision reversing the ruling of Labor Arbiter
Ricarte T. Soriano. The dispositive portion of the decision reads —
7

WHEREFORE, in the light of the foregoing findings, the decision appealed from is
hereby reversed.

Accordingly, the respondent is hereby ordered to reinstate the appellant to his former
or equivalent position with full backwages counted from April 25, 1977 until
reinstated, based on his latest rate of pay or the minimum rate under the law
whichever is beneficial to him without loss of seniority rights and privileges
appurtenant thereto. The application for clearance to dismiss the appellant is hereby
denied for lack of merit.

SO ORDERED.

Hence, the instant petition for certiorari with preliminary injunction, petitioner contending that
respondent NLRC acted with grave abuse of discretion and/or without jurisdiction —

1. in entertaining and favorably resolving the appeal of the private respondent from
the decision of the Labor Arbiter despite the fact that the petitioner was not notified of
the filing and pendency of said appeal so that petitioner was thus deprived of
reasonable opportunity to be heard therein, all in violation of petitioner's
constitutional right of due process;

2. in failing to inquire into the timeliness of the filing of private respondent's appeal
from the decision of Labor Arbiter Ricarte T. Soriano dated May 23, 1978 and in
failing to make a finding and ruling on said jurisdictional question considering that
there is a very serious question as to the timeliness of private respondent's said
appeal from the very face of his notice of appeal; and

3. in ordering the reinstatement of private respondent to his former or equivalent

position with full backwages counted from April 25, 1977 until reinstated, or a period
of almost four (4) years considering that the facts found by the Labor Arbiter in his
decision were not disturbed by the respondent NLRC.

We find the petition devoid of merit.

Petitioner's allegation that it was never duly served with a copy of the notice of appeal as required by
Section 9, Rule XIII of Book V of the Rules and Regulations Implementing the Labor Code which
provides —

Sec. 9. Requisite of Appeal — The appeal shall be under oath and shall state
specifically the grounds relied upon and the supporting arguments.

The appellant shall serve a copy of the appeal to the appellee and the latter shall
reply thereto within ten (10) working days from receipt thereof. Failure on the part of
the appellee to file his answer within the reglementary period shall be considered
waiver on his part.

is belied by the evidence on record which clearly shows that a copy of private respondent's notice of
appeal, as well as his memorandum on appeal, was mailed to Atty. Fermin T. Madera, petitioner's
counsel of record on July 20, 1978. This is evidenced by registry receipt No. 34120, attached as
Annex "1" of private respondent's COMMENT on the petition dated February 17, 1981. The same 8

was received by the Office of Atty. Fermin T. Madera on July 27, 1978, by a certain Mrs. G. Elbinias
as evidenced by the registry return receipt. Incidentally, Atty. Madera was the associate of Judge
9

M. Elbinias, who at that time was not yet appointed to the judiciary.

Petitioner denies having received said copy of the notice of appeal allegedly because of incomplete
address placed by the private respondent's counsel. It further contends that its failure to receive
copy of the notice of appeal from the decision of the labor arbiter to the NLRC has deprived it of its
opportunity to be heard and therefore violative of its constitutional right to due process. Petitioner
further argues that the questioned decision of the NLRC is null and void on that ground, because
private respondent's appeal should have been dismissed outright in view of his failure to serve a
copy of his appeal upon the petitioner.

There is no merit in petitioner's above-arguments. This same issue-whether or not the failure of
appellant to serve a copy of his appeal upon the appelee will result in the dismissal of the appeal is
not of first impression. It had been squarely raised and resolved by this Court in the case of J.D.
Magpayo Customs Brokerage vs. NLRC, 118 SCRA 645 where We ruled that the appellant's failure
to furnish a copy of his appeal is not a jurisdictional defect and does not justify the dismissal of his
appeal. Thus-

The failure to give a copy of the appeal to the adverse party was a mere formal
lapse, an excusable neglect. Time and again We have acted on petitions to review
the decision of the Court of Appeals even in the absence of proof of service of a copy
thereof to the Court of Appeals, as required by Section I of Rule 45, Rules of Court.
We act on the petition and simply require the petitioner to comply with the Rules.

Jurisprudential support is not absent to sustain Our action. In Estrada vs. National
Labor Relations Commission, G.R. No. 57735, March 19, 1982, 112 SCRA 688, this
Court set aside the Order of the NLRC which dismissed an appeal on the sole
ground that the appellant had not furnished the appellee a memorandum of appeal
contrary to the requirements of Art. 223 of the New Labor Code and Sec. 9, Rule XII I
of the Implementing Rules and Regulations.

The same rule was re-echoed in the later cases of Carnation Philippines Employees Labor Union-
FFW vs. National Labor Relations Commission and Pagdonsalan vs. National Labor Relations
10

Commission. 11

Neither can private respondent validly complain that it has been denied the right to
due process by having been allegedly deprived of the opportunity to answer
petitioner's appeal on account of the latter's failure to furnish the former with copy of
his memorandum of appeal. Since the entire record of the case on appeal is open for
review by the NLRC, the absence of an answer or opposition to the appeal would not
really have a significant bearing on the adjudication of the case, as would otherwise
perhaps constitute a denial of private respondent's right to due process. 12

In the case at bar, even if petitioner was not able to participate in the proceedings before respondent
NLRC, it could not have been unduly prejudiced because no additional arguments or evidence were
received. In deciding private respondent's appeal, the NLRC relied on the very same evidence and
arguments presented before the labor arbiter which included the position paper, affidavits and other
supporting documents submitted by the petitioner. Private respondent's appeal did not raise new
issues. It was anchored on practically the same grounds and the issues raised and discussed were
likewise the same as those in the proceedings before the Labor Arbiter and which the petitioner had
all the opportunity to refute. In fact, the Labor Arbiter's findings of fact were adopted by respondent
NLRC in its questioned decision, although the latter drew therefrom a different legal conclusion. It
has been ruled that "there is no denial of due process if the decision is based on evidence adduced
at the hearing or at least contained in the records."13

On the other issue of whether or not private respondent's appeal to the NLRC was seasonably filed,
the evidence on record discloses that the labor arbiter's decision which private respondent appealed
to the NLRC is dated May 23, 1978. Private respondent obtained a xerox copy of the decision on
July 6, 1978, If the ten-day period for filing the notice of appeal has to be counted from July 6, 1978,
then the notice of appeal must be filed on or before July 20, 1978 because said date is the tenth
working day from July 6, 1978. Private respondent filed his notice of appeal on July 20, 1978, which
was perfectly within the reglementary period.

It must be noted, however, that July 6, 1978 was the date private respondent himself received a
xerox copy of the decision. But the record shows that private respondent's counsel received a copy
of the labor arbiter's decision only on August 21, 1978. From this date, private respondent had ten
working days to file his notice of appeal. As it is, his notice of appeal was filed on July 20, 1978 and
even before the ten-day period had started to run. 14

Moreover, the dismissal of an employee's appeal on a purely technical ground is

inconsistent with the constitutional mandate on protection to labor. Where the rules
15

are applied to labor cases, the interpretation must proceed in accordance with the
liberal spirit of the labor laws. As this Court said in Estrada vs. NLRC —
16 17

In Phil. Blooming Mills Employees Organization vs. Philippine Blooming Mills Co.,
Inc., the Court through Mr. Justice Makasiar stressed the dominance and superiority
of constitutional rights over statutes and subordinate implementing rules and
regulations, thus: '(D)oes the mere fact that the motion for reconsideration was filed
two (2) days late defeat the rights of the petitioning employees? Or more directly and
concretely, does the inadvertent omission to comply with a mere Court of Industrial
Relations procedural rule governing the period for filing a motion for reconsideration
or appeal in labor cases, promulgated pursuant to a legislative delegation, prevail
over constitutional rights? The answer should be obvious in the light of the aforecited
cases. To accord supremacy to the foregoing rules of the Court of Industrial
Relations over basic human rights sheltered by the Constitution, is not only
incompatible with the basic tenet of constitutional government that the Constitution is
superior to any statute or subordinate rules and regulations, but also does violence to
natural reason and logic.

We now come to the more important issue of whether or not private respondent was illegally
dismissed from employment. On this point We quote with approval the following findings of
respondent Commission —

This Commission believes that the complainant-appellant was illegally dismissed

from employment. It has been duly shown by sufficient proofs by the appellant at the
time he suffered influenza on April 18, 1977, that he sent to respondent, a
handwritten note of such illness through a co-worker, Mr. Cristino Magrata, who was
then bound to their office. This note was given by Magrata to Mr. Armando
Buenaventura, foreman of the appellant who received the same (Annex "2"). On April
25, 1977, Mantes reported for work at the respondent bringing with him the Medical
Certificate of his illness issued by Dr. Josefina Merano of the Caloocan Health
Department to prove that he was sick from April 18-23, 1977 but he was not
accepted by Mr. Robert Chan, the production manager of respondent.

These facts were never disputed by the respondent by convincing proofs. Instead,
the respondent argued that the appellant absented himself from his work on April 18,
to May 10, 1977 without leave and concluded that the appellant abandoned his job
and applied later for a clearance to dismiss him. According to the respondent the
previous dismissal of the appellant due to abandonment and his past absences
without leave after he was re-employed confirmed the abandonment he made on
 April 18 to May 10, 1977. These facts allegedly confirmed also the pervasiveness of
the complainant not to adhere to company rules and regulations. These arguments of
the respondent deserves scant consideration because the same were never
substantiated.

This Commission gives more credence to the statement of the appellant which are
duly supported with convincing evidence. The absences of the appellant from April
18 to 23, 1977, could not be considered abandonment. On the contrary such
absences were justified and excusable because the same was incurred due to illness
which is duly supported with a medical certificate and the affidavit of the attending
physician who attended to the appellant. There was proper notice of such illness of
the appellant duly given to a responsible official of the respondent and this was
supported by the affidavit of the person also an employee of the respondent. As
such, there was no violation of company rules and regulations as alleged by the
respondent.

For abandonment to constitute a valid cause for termination of employment, there must be a
deliberate unjustified refusal of the employee to resume his employment. This refusal must be
clearly shown. Mere absence is not sufficient; it must be accompanied by overt acts unerringly
pointing to the fact that the employee simply does not want to work anymore. Such a situation does
18

not obtain in the case at bar. On the contrary, the evidence on record conclusively shows that private
respondent reported for work on April 25, 1977, but was not allowed to work until he received a copy
of petitioner's clearance application for his dismissal.

Besides, private respondent immediately filed a complaint for illegal dismissal, seeking his
reinstatement, on May 25, 1977, soon after he received a xerox copy of petitioner's clearance
application. It has been held that "it would be illogical for the private respondent to abandon his work
and then immediately file an action seeking his reinstatement." 19

Since there was no abandonment of work, private respondent is entitled to reinstatement with
backwages. In the case of Mercury Drug Co., Inc. vs. Court of Industrial Relations, this Court
20

adopted the policy of fixing the amount of backwages to a just and reasonable level without
qualification and deduction to do away with the attendant delay in awarding backwages because of
the extended hearing to prove the earnings elsewhere of each and every employee. In line with this
policy, We have thereafter consistently awarded backwages to the maximum of three (3) years
only.21

In the case of Capital Garment Corporation vs. Ople this Court held that "since the case has been
22

pending for four (4) years, We find that a period of two years for purposes of fixing the backwages of
petitioner is fair and reasonable." Then in the more recent case of Philippine Airlines, Inc. vs.
NLRC We ruled that "since the case has been pending for five years and four months, an award of
23

two and one-half years of backwages is just and equitable."

This case has been pending since May 1977 or a period of almost eight (8) years now. Considering
the philosophy for the fixing of backwages as indicated in the above cited decisions, it is our opinion
and we so hold that an award of backwages for three (3) years would be fair, just and reasonable.

WHEREFORE, the appealed decision of the respondent Commission is hereby MODIFIED insofar
as the payment of backwages is concerned in that the petitioner is ordered to pay private respondent
backwages for three (3) years computed on the basis of his pay as of April 25, 1977, without
qualification and deduction. The decision is AFFIRMED in all other respects. The restraining order
earlier issued is hereby ordered LIFTED.

SO ORDERED.

12
 EN BANC

G.R. No. L-17444 June 30, 1962

MARIA ELLI, ET AL., plaintiffs-appellees,

vs.
JUAN DITAN, ET AL., defendants-appellants.

Teodosio Diño, Jr. for plaintiffs-appellees.

Fernando P. Gerona, Sr. for defendants-appellants.

PAREDES, J.:

In a Forcible Entry case instituted by Juan Elli and Maria Elli, in the Justice of the Peace Court of
Bacon, Sorsogon, against Juan Ditan and Marcial Bronola, judgement was rendered, after due
hearing, the dispositive portion of which reads —

IN VIEW OF THE FOREGOING, the defendant is ordered to return the land and restore the
plaintiffs in their original possession of the land; pay the plaintiffs P200.00 as damages and
P100.00 as attorney's fees and pay the costs of this suit.

Plaintiffs and defendants were furnished with copies of the above judgment on July 17, 1959.

On July 28, 1959, the defendants, thru Atty. Fernando Gerona, Jr., "Attorney for defendants-
appellants", filed with the said Justice of the Peace Court, a Notice of Appeal. The record of the case
was received by the CFI on August 6, same year. On August 11, 1959, a Notice of Appealed Case
was sent by the Clerk, Court of First Instance, to the parties, which were received on August 15 and
17, by Maria Elli and Juan Ditan, respectively, and on September 18, 1959, by Marcial Broñola. In
spite of receipt by the parties, the defendants failed to file their Answer to the Complaint, which was
deemed reproduced. Under date of December 23, 1959, the plaintiffs, thru counsel, presented a
Motion to Declare Defendants in Default and to set date for presentation of Evidence. The CFI
declared defendants in default on January 7, 1960. On March 10, 1960, after hearing wherein the
plaintiffs presented oral as well as documentary evidence, the CFI rendered the following judgment
—

WHEREFORE, the Court hereby sentences the defendants to vacate the premises and
return the possession thereof to the plaintiffs. They are hereby senteced jointly and severally
to pay the plaintiffs the sum of P480.00 as damages. The Court cannot grant the plaintiffs a
greater amount than this, because the defendant are defaulted. The defendants shall pay the
costs of this action.

Copies of the above decision were received by the defendants, on April 5, 1960. On April 20, 1960,
defendants thru counsel, presented a pleading captioned "Motion to Reconsider Decision dated
March 10, 1960", where, in the main, it was contended that the reason for the failure to file Answer
was due to lack of notice to counsel. The defendants claim that inasmuch as they were represented
by counsel, notice should have been sent to said counsel, and there being no notice to him, there is
no service in law and, therefore, they can not be in default. On May 6, 1960, the court a quo handed
down an Order denying the motion, stating that there was no need to send the notice to counsel,
since in appeals from the Justice of the Peace Courts, no summons is necessary in order that
defendant may have to file Answer, and that the notice of receipt of appealed case may be either
sent to the attorney or the party. This Order is now before Us on appeal, defendants claiming that it
was error on the part of the lower court to consider that notice to them was sufficient.

The provisions of the rules pertinent to the issues raised by the parties the Sec. 2, of Rule 27, and
Sec. 7, Rule 40, which are reproduced below: —

Sec. 2. Every order required by its terms to be served, every pleading subsequent to the
complaint, every written motion other than one which may be heard ex-parte, and every
written notice, appearance, demand, offer of judgment or similar papers shall be filed with
the court, and served upon the parties affected thereby. If any of such parties has appeared
by an attorney or attorneys, service upon him shall be made upon his attorneys or one of
them, unless service upon the party himself is ordered by the court. Where one attorney
 appears for several parties, he shall only be entitled to one copy of any paper served upon
him by the opposite side. (Rule 27).

SEC. 7. Upon the docketing of the cause under appeal, the complaint filed in the justice of
the peace or municipal court shall be considered reproduced in the Court of First Instance
and it shall be the duty of the clerk of the court to notify the parties of that fact by registered
mail, and the period for making an answer shall begin with the date of the receipt of such
notice by the defendant. (Rule 40).

Under the above provisions, therefore, it would seem quite clear that service, notice, and the like,
should be made on the party, if not represented by counsel. The moment a party appears by
counsel, notice and other processes should be made upon said counsel, service upon the party
himself not being considered service in law. It is true that under Sec. 7, Rule 40, the Rule requires
that notification be made on the parties by registered mail. The word parties as used in said
provision, should not, however, be interpreted to mean the parties themselves. The word "parties" is
used because, more often than not, in the Justice of the Peace Court, the parties are not
represented by a lawyer. A party can appear in his own behalf, and notice to him would be sufficient.
The moment an attorney appears for any party, notice should be given to the former. ". . . where a
party appears by attorney in an action or proceeding in a court of record all notices thereafter
required to be given in the action or proceeding must be given to the attorney and not to the client;
and a notice given to the client and not to his attorney is not a notice in law." (Palad v. Cui, et al., 28
Phil. 44). In legal contemplation, therefore, and under the facts of the present case, there was no
legal service of the notice, and the defendants could not be in default.

The Order appealed from, is hereby set aside. The case is remanded for further and appropriate
proceedings in the premises. No costs. 1äwphï1.ñët

13

G.R. No. 101527 January 19, 1993

IMPERIAL TEXTILE MILLS, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, Third Division, and ANGIE
MENDOZA, respondents.

Batino Angala Salud & Fabia Law Office for petitioner.

Magtanggol C. Gunigundo for respondent.

People's Law Office for private respondent.

REGALADO, J.:

This original petition for certiorari seeks to annul the decision of the National Labor Relations
1

Commission (hereafter, respondent commission), dated June 28, 1991, finding that herein private
respondent Angie Mendoza was illegally dismissed and awarding her three years backwages and
separation pay.

We quote the undisputed facts as found by respondent commission:

Appellant Angie Mendoza had been employed with appellee since 1977. She rose
from the ranks from the position of secretary to the Finishing Department Head to
secretary to the Executive Vice President, and later to personnel manager up to
March 7, 1986. Her latest salary was P6,190.00. In the latter part of 1986, a new
management group took over appellee. Appellant, who was on leave, found out
 about changes and consequently wrote the widow of the former president of
appellee, to wit:

xxx xxx xxx

Dear Mrs. Salazar:

In compliance with my verbal promise and in abiding by the company

rules and regulations, the undersigned reported to your goodself on
March 7, the expiration of an approved one month vacation leave.

It is sad to know that during my absence, major changes took place in

ITM. There was a take-over of new management, appointment and
reorganization of new officers and other key positions have been
effected. Needless to say, the position of the undersigned as
Personnel Manager was also filled up by a newcomer.

In view of the above circumstances, I deem it proper and wise to

cease my employment, but with equivalent separation pay from the
company. I am happy to announce that I am one of the pioneer
employees, having employed (sic) in 1971 as secretary to then
Finishing Dept. Head. Being an experienced and competent
secretary, after two months I rose to the position of secretary to the
Exec. Vice President. In January 1975, I was appointed to succeed
and execute the duties and responsibilities of the resigned Personnel
Manager and at same time as secretary to the executives of the
company. During the period June 1984 to June 1985, I was
appointed in the concurrent capacity as Personnel Manager of Grand
Alliance Mills, sister company of ITM.

For fifteen years of stay, I could proudly say that I dedicated one-third
of my life in serving the company honestly and efficiently, my
employment records can fully vouch for that.

I sincerely hope that you will merit this request with your usual kind
consideration and immediate attention.

Respec
tfully
yours,

Angie
S.
Mendoz
a

On June 6, 1986, the instant complaint for illegal dismissal was filed. Complainant
alleged that she was dismissed without sufficient grounds after 14 years of service.

In its defense, respondent averred that complainant voluntarily resigned and if she
was terminated such termination was due to valid and just grounds. Being a
managerial employee she could be terminated for loss of trust and confidence. 2

Thereafter, the parties submitted their respective position papers. Petitioner then filed a motion to
dismiss alleging that: (1) private respondent's position paper is unverified and should be stricken off
3

the record; and (2) complainant failed to appear despite notice, thereby depriving petitioner of its
right to cross-examine her. In an order dated May 25, 1988, the labor arbiter dismissed the
4

complaint without prejudice, on the ground that complainant's absence deprived herein petitioner of
the opportunity to cross-examine her.

On appeal, respondent commission reversed the labor arbiter in a decision dated October 28, 1988,
5

holding that under Article 221 of the Labor Code, respondent commission and the labor arbiter have
the authority to decide cases based on position papers and documents submitted by the parties
without resorting to technical rules of evidence; and that herein petitioner was not denied due
process because on the basis of the records of the case, an intelligent decision could be arrived at
without resorting to a formal hearing. Petitioner went to this Court on a petition for certiorari, entitled
"Imperial Textile Mills, Inc. vs. National Labor Relations, et. al.," docketed as G.R. No. 86663, which
was however dismissed in our resolution of February 15, 1989.
6

The case was thereafter remanded to the labor arbiter who subsequently rendered a decision on 7

April 10, 1990 declaring the dismissal of complainant as legally effected on the ground that she
resigned voluntarily and that her dismissal was for a valid cause, that is, loss of trust and confidence.
On appeal, respondent commission rendered its questioned decision reversing the findings of the
labor arbiter and holding that herein private respondent was illegally dismissed, thus:

Was appellant illegally dismissed? We believe so. The letter dated March 31, 1986
clearly stated that she was asking for separation pay because she found out that she
had already been replaced during her leave of absence. . . . Appellant's resignation
and request for separation pay was prompted solely by her removal as indicated in
her letter. In short, complainant was forced to resign.

If it was loss of confidence that prompted appellee to remove appellant, appellee had
the burden of proving it. Appellee had not adduced an iota of evidence that would
account for the alleged "loss of confidence."

Considering, however, that complainant appears to have sought employment

elsewhere in lieu of reinstatement, an award of separation pay and three years
backwages, consistent with the rulings of the Supreme Court, is but proper. 8

Petitioner's motion for reconsideration was denied in a resolution dated August 16, 1991, hence the
9

instant petition.

1. Petitioner inceptively asserts that it was denied due process when it was not given the opportunity
to cross-examine herein private respondent during the hearing before the labor arbiter.

It is a basic rule that it is not the denial of the to be heard but the deprivation of the opportunity to be
heard which constitutes a violation of the due process clause. As held in Var-Orient Shipping Co.,
Inc., et al. vs. Achacoso, etc., et al., and subsequently reiterated in Bautista, et al. vs. Secretary of
10

Labor and Employment, et al.: "Equally unmeritorious is petitioners' allegation that they were denied
11

due process because the decision was rendered without a formal hearing. The essence of due
process is simply an opportunity to be heard, or, as applied to administrative proceedings, an
opportunity to explain ones side, or an opportunity to seek a reconsideration of the action or ruling
complained of."

There was sufficient compliance with the requirement of due process as petitioner was given the
opportunity to present its case through a motion to dismiss and a position paper filed with the labor
arbiter.

2. It is contended that while the decisions of respondent commission may be rendered based on
position papers, such rule is not applicable to the case at bar where the position paper submitted by
the private respondent is not verified. The contention is without merit.

First, the issue on the admissibility of the unverified position paper has been passed upon by this
Court in its disposition of the aforementioned petition in G.R. No. 86663 which upheld the decision of
respondent commission, reversing the order of dismissal of the labor arbiter on the ground that the
case could be resolved on the basis of the position papers submitted by the parties. In effect, it was
there held by necessary implication that the unverified position paper submitted by herein private
respondent is deemed sufficient. Besides, even the labor arbiter in his order dated May 25, 1988
admits that the unverified position paper is a mere procedural infirmity which does not affect the
merits of the case. 12

Second, well-settled is the rule that procedural technicalities do not strictly apply to proceedings
before labor arbiters for they may avail themselves of all reasonable means to speedily ascertain the
facts of a controversy. 13
3. Petitioner claims that the findings of respondent commission to the effect that the former failed to
adduce an iota of evidence that would account for the alleged "loss of confidence" is erroneous.
Petitioner raised in its position paper filed before the labor arbiter the following fact which allegedly
constitute the basis for the loss of trust and confidence, to wit:

Complainant, during the trying times of new management take over, beset by shaky
industrial relations, culminating in mass action despite requests by new managers
was nowhere to be found. If she was interested to maintain her position, she could
have at least reported to the company and brief the new managers of the existing
personnel problems. This, she opted not to do, in fact her "leave of absence" (was
placed under quote as there is nothing on record that she was granted a one month
leave of absence) ended March 7, 1986, it was only on March 31, 1986 that she
wrote the letter opting for resignation.14

Although loss of confidence is a valid cause to terminate an employee, it must nonetheless rest on
an actual breach of duty committed by the employee and not on the employer's caprices. The 15

burden of proof rests upon the employer to establish that the dismissal is for cause in view of the
16

security of tenure that employees enjoy under the Constitution and the Labor Code. The failure of
17

the employer to do so would mean that dismissal is not justified. It is likewise essential that there be
18

substantial evidence to support a charge of loss of confidence. The employer's evidence must
clearly and convincingly establish the facts upon which the loss of confidence in the employee may
fairly be made to rest.19

In the case at bar, the facts relied upon by petitioner barely establish any basis for the alleged loss of
confidence. As it is, the same is, at most, a mere allegation.

In addition, we have ruled that to constitute a valid dismissal, two requisites must concur: (1) the
dismissal must be for any of the causes provided for under Article 282 of the Labor Code, and (2)
only after the employee has been notified in writing and given the opportunity to be heard and
defend himself as required under Sections 2 and 5, Rule XIV, Book V of the Implementing Rules. In 20

the case at bar, the petitioner categorically stated in its position paper that "(t)here was never any
official communication from the new management group of the company addressed to the
complainant that her services were terminated," and yet it does not deny that it had appointed a
21

replacement for private respondent even before she wrote her aforequoted letter of March 31, 1986.

4. Finally, petitioner asserts that findings of fact of the labor arbiter should be accorded respect and
finality. Besides, the decision of the labor arbiter had become final considering that the appeal made
by private respondent with respondent commission was filed out of time. Records show that the
decision of the labor arbiter was received by private respondent on May 2, 1990, whereas the appeal
was filed with respondent commission only on May 17, 1990, which is already beyond the 10-day
reglementary period provided in the Labor Code.

While it is true that factual findings of the labor arbiter are usually binding on this Court, such
situation does not obtain in this case. As we have earlier declared, the alleged loss of confidence
was never sufficiently proven by herein petitioner.

It appears that the appeal with respondent commission was indeed filed late. The general rule is that
the perfection of an appeal in the manner and within the period prescribed by law is not only
mandatory but jurisdictional. Failure to conform to the rules will render the judgment sought to be
reviewed final and unappealable. 22

We also note, in passing, that contrary to the Solicitor General's allegation that petitioner failed to
raise the issue of timeliness of appeal before the respondent commission and is, therefore, deemed
to have waived its right to question the same, herein petitioner did raise this issue albeit belatedly, in
its reply to private respondent's memorandum of appeal. 23

Nevertheless, in some instances, this Court has disregarded such unintended lapses so as to give
due course to appeals filed beyond the reglementary period on the basis of strong and compelling
reasons, such as serving the ends of justice and preventing a grave miscarriage thereof. We are of
24

the opinion and so hold that in consideration of the merits of this case, substantial justice could be
rightfully invoked by way of an exception. This is one such case where we are convinced that
substance should prevail over and not be sacrificed for form.
5. Petitioner asseverates that since private respondent is already employed elsewhere, respondent
commission erred in awarding separation pay and three years backwages. We disagree.

In the case of Torillo vs. Leogardo, Jr., etc., et. al., we held:
25

Backwages and reinstatement are two reliefs given to an illegally dismissed

employee. They are separate and distinct from each other. However, in the event
that reinstatement is no longer possible, separation pay is awarded to the employee.
Thus, the award of separation pay is in lieu of reinstatement and not of backwages.
In other words, an illegally dismissed employee is entitled to (1) either reinstatement,
if viable, or separation pay if reinstatement is no longer viable and (2) backwages.

The payment of backwages is one of the reliefs which an illegally dismissed employee prays the
labor arbiter and the National Labor Relations Commission to render in his favor as a consequence
of the unlawful act committed by the employer. The award thereof is not private compensation or
damages but is in furtherance and effectuation of the public objectives of the Labor Code. Even
though the practical effect is the enrichment of the individual, the award of backwages is not in
redress of a private right, but, rather, is in the nature of a command upon the employer to make
public reparation for his violation of the Labor Code, such as the dismissal of an employee due to
26

the unlawful act of the employer or the latter's bad faith. Hence, we have ruled that where the
27

ground of loss of confidence has neither been established nor sufficient basis thereof presented, the
finding that respondent employee was illegally dismissed was well taken and said employee,
although not reinstated, was awarded three years backwages. 28

With respect to the award of separation pay, we declared in Santos vs. National Labor Relations
Commission, et al., that where the decision ordering the reinstatement of the employee may no
29

longer be enforced, or is no longer feasible because of the strained relations between the parties,
the employee may be awarded separation pay as an alternative to reinstatement. Such a situation
obtains in this case and considering further the confidential nature of private respondent's position,
we find no reason why the foregoing doctrine should not here apply.

WHEREFORE, no grave abuse of discretion having been committed by respondent commission, the
present petition is hereby DISMISSED for lack of merit.

SO ORDERED.

14

G.R. No. 81471 April 26, 1989

CHONG GUAN TRADING, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JOSE M. CHUA, respondents.

Neva B. Blancaver and Apolinario N. Lomabao, Jr. for petitioner.

Faustino F. Tugade for private respondent.

The Solicitor General for public respondent.

CORTES, J.:

Assailed in this petition is the decision of the National Labor Relations Commission (NLRC) in NLRC
Case No. 11-4406-83, entitled "Jose M. Chua v. Chong Guan Trading," whereby the NLRC held that
private respondent Jose M. Chua was illegally dismissed by petitioner Chong Guan Trading. The
Court after a careful examination of the pleadings filed in this case, i.e., the Petition and its Annexes,
the Comment of public respondent, the Reply and Supplemental Reply of petitioner, the
Manifestation/Opposition of private respondent, and the Rejoinder of public respondent, considered
the Comment as answer, the issues joined, and the case submitted for decision.

Jose M. Chua was employed as sales manager of Chong Guan Trading, a dealer of paper and
paper products owned by Mariano, Pepito and Efren Lim. Private respondent started working with
the petitioner way back in 1960 but it was only in 1972 that his name was registered by petitioner
with the Social Security System. [Decision of SSC in SSS Case No. 8728, p. 1; Rollo, p. 49.]

In November 1983, private respondent filed a complaint with the Office of the Labor Arbiter of the
National Capital Region charging petitioner with illegal dismissal and non-payment of overtime pay
and other benefits provided for by law. In his complaint, private respondent alleged that he was fired
by Mariano Lim because of the incident that occurred on October 28,1983.

It appears from the record that on the morning of October 28, 1983, a customer, who borrowed the
store's telephone directory, accidentally dropped it on the top-glass of the store's showcase causing
it to break. When Pepito Lim saw the already taped broken top-glass he asked for an explanation
from private respondent. In order to cover up for the customer, private respondent admitted that he
himself accidentally broke it. Pepito then got angry and hurled "unprintable words and invectives" at
private respondent. [Decision of NLRC, p. 2; Rollo, p. 14.] What transpired thereafter was disputed
by both parties. Private respondent claimed that he was dismissed by Mariano Lim when the later
ordered him to leave petitioner's premises. Petitioner, on the other hand, denied having dismissed
private respondent and claimed that it was private respondent who went home after the incident and
failed to report for work for many days thereafter. Petitioner alleged that, far from being dismissed, it
was private respondent himself who abandoned his job.

The parties filed their respective position papers and agreed to submit the case for resolution on the
basis of the pleadings.

On April 18,1984, the Labor Arbiter rendered a decision finding that there was no illegal dismissal
since private respondent was never dismissed by petitioner. The Labor Arbiter held that the
altercation that occurred between private respondent and the Lim brothers because of the broken
top-glass cannot be construed as the dismissal of the private respondent because it was only a
minor incident. No pronouncement on the issue of the alleged abandonment by private respondent
was made but the Labor Arbiter ordered the reinstatement of private respondent but without
backwages. The dispositive portion of the decision reads:

WHEREFORE, respondents are hereby ordered to reinstate complainant to his

former position without backwages, to pay him his proportionate 13th-month pay for
the year 1983 and the money equivalent of fifteen (15) days service incentive leave
pay. All his other claims including the claim for damages are hereby, DISMISSED.

SO ORDERED. [Decision of Labor Arbiter, p. 7; Rollo, p. 31 .]

Private respondent elevated the decision of the Labor Arbiter to the NLRC. In a resolution
promulgated on June 30, 1987, the NLRC dismissed the appeal for being filed out of time.

Upon motion of private respondent, the NLRC reconsidered its Resolution and gave due course to
the appeal. On December 29,1987 respondent Commission decided in favor of private respondent
and held that:

xxx xxx xxx

... we are by and large convinced that the appellant was indeed dismiss without the
attendant formalities required by law. On account of which he should therefore, be
reinstated to his former position with three (3) years backwages without qualification
or deduction.

Should reinstatement, however, be not feasible due to circumstances or

developments not attributable to the appellees, the appellant should, in addition to
the three years backwages, be paid a separation pay equivalent to one half month
 pay for every year of service, a fraction of at least six (6) months being considered as
one whole year.

The rest of the award for other benefits stays.

WHEREFORE, modified as above-indicated, the decision appealed from is hereby,

AFFIRMED.

SO ORDERED. [NLRC Decision, p. 18; Rollo, p. 18.]

From the NLRC decision, petitioner interposed the present petition.

The Court will first address the procedural issue raised by the petitioner.

Petitioner maintains that respondent NLRC has no jurisdiction to entertain the appeal flied by private
respondent, much less modify the decision appealed from, the same having become final and
executory after the lapse of ten (10) days from respondent's receipt thereof.

Article 223 of the Labor Code [Pres. Decree 442, as amended] provides for a reglementary period of
ten (10) days within which to appeal a decision of the labor arbiter to the NLRC. The ten-day period
has been interpreted by this Court in the case of Vir-jen and Marine Services, Inc. v. National Labor
Relations Commission [G.R. Nos. 58011-12, July 20, 1987, 115 SCRA 347] as ten (10) "calendar"
days and not ten (10) "working" days.

In the instant case, while the appeal was filed within ten (10) working days from receipt of the
decision, it was filed beyond the (10) calendar days prescribed by law. Private respondent received
a copy of the decision of Labor Arbiter Martinez on May 3, 1984 while the appeal was filed only on
May 15, 1984 or twelve (12) days from notice of the decision. [Resolution of NLRC, p. 1; Rollo, p.
32.]

It is true that the perfection of an appeal in the manner and within the period prescribed by law is not
only mandatory but jurisdictional, and failure to perfect an appeal has the effect of rendering the
judgment final and executory. [Narag v. National Labor Relations Commission, G.R. No. 69628,
October 28,1987, 155 SCRA 199.] However, as correctly pointed out by the Solicitor General, the
NLRC may disregard the procedural lapse where there is an acceptable reason to excuse tardiness
in the taking of an appeal. [Comment of the Office of the Solicitor General, p. 6; Rollo, p. 46; See
also Firestone Tire and Rubber Company of the Philippines v. Lariosa, G.R. No. 70479, February
27, 1987, 148 SCRA 187; MAI Philippines, Inc. v. National Labor Relations Commission, G.R. No.
73662, June 18, 1987, 151 SCRA 196.]

In this case, the appeal was filed out of time because the counsel of private respondent relied on the
footnote of the notice of the decision of the Labor Arbiter which stated that "the aggrieved party may
appeal ... within ten (10) working days, as per NLRC Resolution No. 1, series of 1977." [Decision of
NLRC, p. 1; Rollo, p. 13; Emphasis supplied.] In the case of Firestone Tire and Rubber Co. of the
Phil. v. Lariosa, [supra], which has substantially the same set of facts as this case, the Court
accepted the party's reliance on the erroneous notice in the labor arbiter's decision as a reasonable
ground for excusing non-compliance with the ten (10) calendar day period for appeal. Explaining the
reason for this ruling, the Court said:

xxx xxx xxx

Mindful of the fact that Lariosa's counsel must have been misled by the implementing
rules of the labor commission and considering that the shortened period for an
appeal is principally intended more for the employee's benefit, rather than that of the
employer, We are inclined to overlook this particular procedural lapse and to proceed
with the resolution of the instant case, [at p. 191.]

xxx xxx xxx

Thus, private respondent's late filing of the appeal notwithstanding, the Court finds that public
respondent did not commit grave abuse of discretion in giving due course to the appeal.
Having disposed of the procedural issue, the Court will now deal with the main issue in this case,
which is whether or not NLRC committed grave abuse of discretion in ordering petitioner to pay
private respondent three years backwages and separation pay (if reinstatement is no longer
possible) for the alleged illegal dismissal of private respondent.

While petitioner concedes that private respondent must be reinstated since there was no intentional
abandonment on the part of private respondent, it challenges the order for the payment of
backwages and separation pay. Petitioner contends that there was no illegal dismissal to speak of
since private respondent was never dismissed in the first place, and that justice dictates that private
respondent must simply be reinstated. [Reply, pp. 1-2; Rollo, pp. 51-52.]

Both the labor arbiter and the NLRC agree that the accidental breaking of the showcase's top-glass
was so minor an incident as to provoke an employer to dismiss a managerial employee who has
worked with him for more than twenty (20) years. [Decision of NLRC, Rollo, p. 16.] However, in
holding that private respondent was illegally dismissed by petitioner, the NLRC held that:

We agree that the accidental breaking of the showcase's top-glass was a minor
incident. Ordinarily it could not provoke an employer (who knew what its
repercussions could be) to dismiss an employee for that matter. But the appellees
[petitioner Chong Guan trading and its owners] who, we perceive, were indeed bent
on ousting the appellant [private respondent Chua] magnified it to such a serious
proportion, as shown by the unprintable words and invectives that they hurled to the
appellant, to ostensibly justify their heretofore desire to terminate him.

In short, they seized the incident as the most opportune time to implement their
obvious decision to lay-off the appellant. [Decision of NLRC, p. 4; Rollo, p. 16;
Emphasis supplied.]

The import of the above findings of the NLRC is that the breaking of the top-glass was used by
petitioner as an excuse to terminate respondent Chua in accordance with its scheme or plan to oust
him.

The Court cannot sustain the findings of respondent NLRC.

As found by the labor arbiter, no evidence was presented to establish the existence of the so-called
scheme to oust private respondent [Decision of Labor Arbiter, p. 5; Rollo, p. 29.] It was based only
on private respondent's unsupported claim that there was an "orchestrated scheme or plan" to oust
him and that this plan had been carefully laid out for a long time. Private respondent's claim is not
borne out by the record which shows that petitioner has been granting substantial cash advances to
private respondent. In fact barely a month before his alleged illegal dismissal, petitioner allowed
private respondent to make a cash advance of P4,718.00. [Decision of Labor Arbiter, p. 5; Rollo, p.
29.] If indeed there was a scheme to oust private respondent, petitioner should have denied him
further cash advances knowing that his services will soon be terminated and as a result thereof,
there may be no way to recover the cash advances.

Furthermore, the NLRC admitted in its decision that its finding that the petitioner was "indeed bent
on ousting" private respondent was based only on its "perception" and not on any evidence on
record. [Decision of NLRC, p. 4; Rollo, p. 16.] This Court, however, cannot rely on NLRC's
perception or speculations in the absence of any credible evidence to support it. [San Miguel
Corporation v. National Labor Relations Commission, G.R. No. 50321, March 13, 1984, 128 SCRA
180.] For while it is well-established that the findings of facts of the NLRC are entitled to great
respect and are generally binding on this Court [Antipolo Highway Lines, Inc. v. Inciong, G.R. No. L-
38532, June 27, 1975, 64 SCRA 441; Philippine Labor Alliance Council (PLAC) v. Bureau of Labor
Relations, G.R. No. L-41288, January 31, 1977, 75 SCRA 162; Genconsu Free Workers Union v.
Inciong, G.R. No. L-48687, July 2, 1979, 91 SCRA 311; Pan-Philippine Life Insurance Corporation v.
NLRC, G.R. No. 53721, June 29, 1982, 114 SCRA 866; Pepsi-Cola Labor Union-BLFUTUPAS Local
Chapter No. 896 v. National Labor Relations Commission, G.R. No. 58341, June 29, 1982, 114
SCRA 930; Mamerto v. Inciong, G.R. No. 53068, November 15, 1982, 118 SCRA 265; San Miguel
Corporation v. National Labor Relations Commission, G.R. No. 50321, March 13, 1984, 128 SCRA
180] it is equally well-settled that the Court will not uphold erroneous conclusions of the NLRC when
the Court finds that the latter committed grave abuse of discretion in reversing the decision of the
labor arbiter or when the findings of facts from which the conclusions were based were not
supported by substantial evidence [Insular Life Assurance Co., Ltd. Employees Association-NATU v.
Insular Life Assurance Co., Ltd., G.R. No. L- 25291, March 10, 1977, 76 SCRA 50; Kapisanan ng
Manggagawa sa Camara Shoes v. Camara Shoes, G.R. No. 50985, January 30, 1982, 111 SCRA
477.]

The question that must now be addressed by the Court is whether, absent the alleged scheme or
plan to oust private respondent, it can be inferred from the events that transpired on the morning of
October 28, 1983 that private respondent was illegally dismissed by petitioner.

Private respondent claims that Mariano Lim dismissed him when the latter said: "Lumayas ka rito."
This is disputed by the petitioner who claims that it was private respondent who voluntarily left
petitioner's premises.

After a careful examination of the events that gave rise to the present controversy as shown by the
record, the Court is convinced that private respondent was never dismissed by the petitioner. Even if
it were true that Mariano Lim ordered private respondent to go and that at that time he intended to
dismiss private respondent, the record is bereft of evidence to show that he carried out this intention.
Private respondent was not even notified that he had been dismissed. Nor was he prevented from
returning to his work after the October 28 incident. The only thing that is established from the record,
and which is not disputed by the parties, is that private respondent Chua did not return to his work
after his heated argument with the Lim brothers.

Moreover, petitioner has consistently manifested its willingness to reinstate private respondent to his
former position. This negates any intention on petitioner's part to dismiss private respondent.
Petitioner first expressed its willingness to reinstate private respondent during the initial hearing of
the case before the Labor Arbiter. [Decision of Labor Arbiter, p. 6; Rollo, p. 30.] In its position paper
the petitioner also stated that:

xxxxxxxxx

IN PASSING, we gladly reiterate ... that the management is still waiting and more
than willing to accept him [private respondent] and return to his former position,
notwithstanding his long unauthorized absences and the intentional abandonment
from his job.

xxxxxxxxx

[Annex "B" to the Petition, p. 5; Rollo, p. 24.]

This was again reiterated by the petitioner in its Reply to the Comment of public respondent filed in
connection with the instant petition. [Reply, pp. 1- 2; Rollo, pp. 51-52.]

Therefore, considering the Court's finding that private respondent was never dismissed by the
petitioner, the award of three years backwages was not proper. Backwages, in general, are granted
on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal
from work. [New Manila Candy Workers Union (NACONWA-PAFLU) v. Court of Industrial Relations,
G.R. No. L-29728, October 30, 1978, 86 SCRA 37; Durabuilt Recapping Plant and Co. v. National
Labor Relations Commission, G.R. No. 76746, July 27, 1987, 152 SCRA 328.] Where the employee
was not dismissed and his failure to work was not due to the employer's fault, the burden of
economic loss suffered by the employee should not be shifted to the employer. [SSS v. SSS
Supervisors' Union-CUGCO, G.R. No. L-31832, October 23, 1982, 117 SCRA 746; Durabuilt
Recapping Plant and Co. v. National Labor Relations Commission, supra.] In this case, private
respondent's failure to work was due to the misunderstanding between the petitioner's management
and private respondent. As correctly observed by the Labor Arbiter, private respondent must have
construed the October 28 incident as his dismissal so that he opted not to work for many days
thereafter and instead filed a complaint for illegal dismissal.[Decision of Labor Arbiter, p. 6; Rollo, p.
30.] On the other hand, petitioner interpreted private respondent's failure to report for work as an
intentional abandonment. [Annex "B "to the Petition, p. 5; Rollo, p. 24.] However, there was no intent
to dismiss private respondent since the petitioner is willing to reinstate him. Nor was there an intent
to abandon on the part of private respondent since he immediately filed a complaint for illegal
dismissal soon after the October 28 incident. It would be illogical for private respondent to abandon
his work and then immediately file an action seeking his reinstatement. [Judric Canning Corporation
v. Inciong, G.R. No. 51494, August 19, 1982, 115 SCRA 887; Flexo Manufacturing Corporation v.
National Labor Relations Commission, G.R. No. 55971, February 28, 1985, 135 SCRA 145;
Remerco Garments Manufacturing v. Ministry of Labor and Employment, G.R. Nos. 56176-77,
February 28, 1985, 135 SCRA 167.] Under these circumstances, it is but fair that each party must
bear his own loss, thus placing the parties on equal footing. [Pan American World Airways, Inc. v.
Court of Industrial Relations, et al., G.R. No. L-20434, July 30, 1966, 17 SCRA 813; SSS v. SSS
Supervisors' Union-CUGCO, supra.]

As to the separation pay, considering that petitioner has expressed its willingness to reinstate private
respondent to his former position, the order for the payment of separation pay is no longer
necessary.

WHEREFORE, premises considered, the decision of respondent NLRC is REVERSED and SET
ASIDE. The decision of the Labor Arbiter is REINSTATED.

SO ORDERED.

15

G.R. No. 91086 May 8, 1990

VIRGILIO S. CARIÑO petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, HARRISON INDUSTRIAL CORPORATION and
HARRISON INDUSTRIAL WORKERS' UNION, respondents.

Federico C. Leynes for petitioner.

Banzuela, Flores, Miralles, Rañeses Sy, Taquio & Associates for respondent Union.

Armando V. Ampil for respondent Harrison.

RESOLUTION

FELICIANO, J.:

Petitioner asks the Court to declare null and void a Decision dated 26 May 1989 of the National Labor Relations Commission (NLRC) in
NLRC Case No. NCR-00-09-03225-87 and to reinstate the Decision of the Labor Arbiter which the NLRC had modified.

Petitioner Cariño was the former President of private respondent Harrison Industrial Workers' Union
("Union"). Because he was widely believed to have grossly mismanaged Union affairs, the other
officers of the Union formed an investigating committee and several times invited petitioner Cariño to
answer the complaints and charges against him. These charges were, principally:

1. Conspiring with the company during the negotiation of the CBA, resulting in, among other things,
Article 22 entitled "Retirement" which provided for retirement pay of one (1) day's basic salary for
every year of service.

2. Paying attorney's fees to Atty. Federico Leynes, Union counsel, out of Union funds without
obtaining corresponding receipts therefor.

3. Unilaterally increasing the membership dues by an additional P17.00 per member in order to pay
increased attorney's fees.

4. Concealing the CBA, failure to present and to explain the provisions of the same prior to
ratification by the union membership.

5. Refusal to turn over the custody and management of Union funds to the Union treasurer.
Petitioner Cariño, however, failed to respond to the calls or invitations made by the investigating
committee. Finally, the investigation committee caged a general membership meeting on 11 June
1987. At this general membership meeting, the charges against petitioner were presented and
discussed and the Union decided to file a petition for special election of its officers.

On 16 June 1987, a petition for special election of officers was filed by the Union with the Bureau of
Labor Relations, Department of Labor and Employment. Several hearings were field at the BLR
always with due notice to petitioner Cariño petitioner, however, failed to appear even once.

On 5 August 1987, a general Union membership meeting was held for the impeachment of Cariño.
The general membership found Cariño guilty of the above-mentioned charges and decided to expel
him from the Union and to recommend his termination from employment. Atty. Federico Leynes also
ceased to be counsel for the Union.

The Union accordingly informed private respondent Harrison Industrial Corporation ("Company") of
the expulsion of petitioner Cariño from the Union and demanded application of the Union Security
Clause of the then existing Collective Bargaining Agreement (CBA) on 15 September 1987.
Petitioner Cariño received a letter of termination from the Company, effective the next day.

Petitioner Cariño, now represented by Atty. Leynes, the former lawyer of the Union, filed a complaint
for illegal dismissal with the Labor Arbiter.

In a Decision dated 7 October, 1988, the Labor Arbiter held that there was no just cause for the
dismissal of petitioner Cariño, none of the causes for suspension or dismissal of Union members
enumerated in the Union's Constitution and By-Laws being applicable to petitioner's situation. The
Labor Arbiter also held that the manner of petitioner's dismissal had been in disregard of the
requirements of notice and hearing laid down in the Labor Code. The Labor Arbiter ordered
petitioner's reinstatement with full backwages and payment of attorney's fees, the monetary liability
to be borne solidarily by the Company and the Union.

The Company and the Union went on appeal before the public respondent National Labor Relations
Commission (NLRC). The NLRC, in a Decision promulgated on 26 May 1989, reversed the Labor
Arbiter's award. The NLRC noted that petitioner Cariño had merely denied the serious charges of
mismanagement preferred against him, as set out in the affidavit of Dante Maroya, the incumbent
President of the Union, which affidavit had been adopted by the Union as its position paper in the
proceedings before the Labor Arbiter. The NLRC held Cariño's silence as "tantamount to [an]
admission of guilt" and as constituting the ultimate cause for his dismissal. However, the NLRC
agreed with the Labor Arbiter's finding that the manner of petitioner Cariño's dismissal was
inconsistent with the requirements of due process. The NLRC accordingly found the Company and
the Union solidarily liable, "by way of penalty and financial assistance", to petitioner Cariño for
payment of separation pay, at the rate of one-half (1/2) month's salary for each year of service.

In the instant Petition for Certiorari, petitioner Cariño basically seeks reinstatement of the Decision of
the Labor Arbiter.

1. Petitioner Cariño contended that the NLRC had erred in taking cognizance of the Union's
admittedly late appeal. We agree, however, with the Solicitor General that it is a settled principle of
remedial law that reversal of a judgment obtained by a party appealing from it also benefits a co-
party who had not appealed, or who had appealed out of time, where the rights and liabilities of both
parties under the modified decision are so interwoven and inter-dependent as to be substantively
inseparable. 1

In the instant case, the NLRC could take cognizance of the late appeal of the Union, considering that
the lawfulness of petitioner Cariño's dismissal by the Company could be determined only after
ascertaining, among other things, the validity of the Union's act of expelling Cariño from its
membership. In other words, the Company having seasonably appealed the Labor Arbiter's Decision
and the Company's and the Union's liability being closely intertwined the NLRC could properly take
account of the Union's appeal even though not seasonably filed.

2. The NLRC in effect held that there had been just cause for petitioner Cariño's dismissal. The
Court considers that the NLRC was correct in so holding, considering the following documentary
provisions:
a) Article II, Sections 4 and 5 of the Collective Bargaining Agreement between the Company and the
Union provided as follows:

Sec. 4. Any employee or worker obliged to join the UNION and/or maintain
membership therein under the foregoing sections who fails to do so and/or maintain
such membership shall be dismiss without pay upon formal request of the UNION.

Sec. 5. Any UNION member may be suspended and/or expelled by the UNION for:

a) Non-payment of dues or special assessment to the UNION.

b) Organizing or joining another UNION or affiliating with a labor federation.

c) Commission of a crime as defined by the Revised Penal Code against any UNION
officer in relation to activities for and in behalf of the UNION.

d) Participation in an unfair labor practice or any derogatory act against the UNION
or any of its officers or members; and

e) Involvement in any violation of this Agreement or the UNION's Constitution and

By-Laws.

The UNION assumes full and complete responsibility for all dismiss of any worker/employee effected
by the UNION and conceded in turn, by the COMPANY pursuant to the provisions hereof.

The UNION shall defend and hold the COMPANY free and harmless against any and all claims the
dismissed worker/employee might bring and/or obtain from the Company for such
dismissal. (Emphasis supplied)
2

b) The Constitution of the Union contains the following provisions:

(i) Article X Section 5 reads:

ARTICLE X-FEES, DUES SPECIAL ASSESSMENTS, FINES AND OTHER

PAYMENTS

xxx xxx xxx

Sec. 5. Special assessments or other extraordinary fees such as for payment of

attorney's fees shall be made only upon a resolution duly ratified by the general
membership by secret balloting.

xxx xxx xxx

(Emphasis supplied.)

(ii) Article XV entitled "Discipline" provides in Section I thereof that:

Sec. 1. Any individual union members and/or union officer may be disciplined or
expelled from the UNION by the Executive Board if the latter should find the former
guilty of charges, based on the following grounds preferred officially against him:

a) Non-payment of dues and other assessments for two (2) months;

b) Culpable violation of the Constitution and By Laws;

c) Deliberate refusal to implement policies, rules and regulations decisions and/or

support the programs or projects of the UNION as laid down by its governing organs
or its officers; and

d) Any act inimical to the interest of the UNION and/or its officers, such as but not
limited to rumor mongering which tends to discredit the name and integrity of the
 UNION and/or its officers and creating or causing to create dissension among the
UNION members thereof. (Emphasis supplied.)
4

Article XVI entitled "Impeachment and Recall" specified, in Section 1 thereof, the grounds for
impeachment or recall of the President and other Union officers, in the following terms:

a) Committing or causing the commission directly or indirectly of acts against the

interest and welfare of the UNION;

b) Malicious attack against the UNION, its officers or against a fellow UNION officer
or member;

c) Failure to comply with the obligation to turn over and return to the UNION
Treasurer within three (3) days are [sic] unexpected sum or sum of money received
an authorized UNION purpose;

d) Gross misconduct unbecoming of a UNION officer;

e) Misappropriation of UNION funds and property. This is without prejudice to the

filing of an appropriate criminal or civil action against the responsible officer or
officers by any interested party

f) Willful violation of any provisions on this Constitution or rules, regulations,

measures, resolution and decisions of the UNION. (Emphasis supplied.)
5

It appears to the Court that the particular charges raised against petitioner Cariño, set out earlier,
reasonably fall within the underscored provisions of the foregoing documents. The NLRC impliedly
recognized this when it described the charges of mismanagement against Carino as serious.

The Labor Arbiter, however, also held that petitioner Cariño had been deprived of procedural due
process on the union level in view of alleged failure to comply with the required procedure, governing
impeachment and recall proceedings set out in Article XVI, Section 2, of the Constitution of the
Union. Article XVI, Section 2 reads as follows:

a) Impeachment or recall proceedings shall be initiated by a formal petition or

resolution signed by at least thirty (30%) percent of all bona fide members of the
UNION and addressed to the Chairman of the Executive board.

b) The Board Chairman shall then convene a general membership fee to consider
the impeachment or recall of an officer or a group of officers, whether elective or
appointive

c) UNION officers against whom impeachment or recall charges have been filed shall
be given ample opportunity to defend themselves before any impeachment or recall
vote is finally taken.

d) A majority of all members of the UNION shall be required to impeach or recall

UNION officers.

e) The UNION officers impeached shall ipso facto be considered resigned or ousted
from office and shall no longer be elected nor appointed to any position in the
UNION.

f) The decision of the general membership on the impeachment or recall charge shall
be final and executory. 6

The NLRC, for its part, noted that while the prescribed procedural steps had not all been followed or
complied with, still,

Be that as it may, the general membership of the Union had spoken and decided to
expel complainant as Union President and member and ultimately, requested the
company to terminate his services per CBA prescription. It is worthy to note that the
 charges aired by Mr. Dante Maroya are serious enough for complainant to
specifically respond and explain his side at the arbitral proceedings below. While it
appears that due process was lacking at the plant level, this was cured by the
arbitration process conducted by the Labor Arbiter. Despite the ample opportunity to
explain his side, complainant failed to do so and instead, relied completely on
alleged denial of due process. Complainant's silence in this respect is tantamount to
[an] admission of guilt. (Emphasis supplied.)
7

It is true that the impeachment of Cariño had not been initiated by a formal petition or resolution
signed by at least thirty percent (30%) of an the bona fide members of the Union. A general meeting
had, however, been called to take up the charges against petitioner Carino who had been given
multiple opportunities to defend himself before the investigating committee of the Union officers and
before the general Union members as well as before the Bureau of Labor Relations. Petitioner
Cariño, however, chose to disregard all calls for him to appear and defend himself. At the general
membership meeting, therefore, petitioner Cariño was impeached and ordered recalled
by unanimous vote of the membership. Under these circumstances, failure to comply literally with
step (a) of Article XVI Section 2 of the Union's Constitution must be regarded as non-material: the
prescribed impeachment and recall proceeding had been more than substantially complied with.

4. Turning now to the involvement of the Company in the dismissal of petitioner Cariño we note that
the Company upon being formally advised in writing of the expulsion of petitioner Carino from the
Union, in turn simply issued a termination letter to Cariño, the termination being made effective the
very next day. We believe that the Company should have given petitioner Carino an opportunity to
explain his side of the controversy with the Union. Notwithstanding the Unions Security Clause in the
CBA, the Company should have reasonably satisfied itself by its own inquiry that the Union had not
been merely acting arbitrarily and capriciously in impeaching and expelling petitioner Cariño. From
what was already discussed above, it is quite clear that had the Company taken the trouble to
investigate the acts and proceedings of the Union, it could have very easily determined that the
Union had not acted arbitrarily in impeaching and expelling from its ranks petitioner Cariño. The
Company offered the excuse that the Union had threatened to go on strike if its request had not
been forthwith granted. Assuming that such a threat had in fact been made, if a strike was in fact
subsequently called because the Company had insisted on conducting its own inquiry, the Court
considers that such would have been prima facie an illegal strike. The Company also pleaded that
for it to inquire into the lawfulness of the acts of the Union in this regard would constitute interference
by the Company in the administration of Union affairs. We do not believe so.

In Liberty Cotton Mills Worker's Union, et al. v. Liberty Cotton Mills, et al. the Court held respondent
8

company to have acted in bad faith in dismissing the petitioner workers without giving them an
opportunity to present their side in their controversy with their own union.

xxx xxx xxx

It is OUR considered view that respondent company is equally liable for the payment
of backwages for having acted in bad faith in effecting the dismissal of the individual
petitioners. Bad faith on the part of respondent company may be gleaned from the
fact that the petitioner workers were dismissed hastily and summarily. At best, it was
guilty of a tortious act, for which it must assume solidary liability, since it apparently
chose to summarily dismiss the workers at the union's instance secure in the union's
contractual undertaking that the union would hold it "free from any liability" arising
from such dismissal.

xxx xxx xxx

While respondent company, under the Maintenance of Membership prevision of the

Collective Bargaining Agreement, is bound to dismiss any employee expelled by
PAFLU for disloyalty, upon its written request, this undertaking should not be done
hastily and summarily. The company acted in bad faith in dismissing petitioner
workers without giving them the benefit of a hearing. It did not even bother to inquire
from the workers concerned and from PAFLU itself about the cause of the expulsion
of the petitioner workers. Instead, the company immediately dismissed the workers
on May 29, 1964 — in a span of only one day — stating that it had no alternative but
to comply with its obligation under the Security Agreement in the Collective
Bargaining Agreement thereby disregarding the right of the workers to due process,
self-organization and security of tenure.
 xxx xxx xxx

The power to dismiss is a normal prerogative of the employer. However, this is not
without limitations. The employer is bound to exercise caution in terminating the
services of his employee especially so when it is made upon the request of a labor
union pursuant to the Collective Bargaining Agreement, as in the instant
case. Dismissals must not be arbitrary and capricious. Due process must be
observed in dismissing an employee because it affects not only his position but also
his means of livelihood. Employers should therefore respect and protect the rights of
their employees, which include the right to labor. . . .

xxx xxx xxx

(Emphasis supplied.)

In Manila Cordage Company v. Court of industrial Relations, et al., the Court stressed the
10

requirement of good faith on the part of the company in dismissing the complainant and in effect held
that precipitate action in dismissing the complainant is indication of lack of good faith.

xxx xxx xxx

The contention of the petitioners that they acted in good faith in dismissing the
complainants and, therefore, should not be held liable to pay their back wages has
no merit. The dismissal of the complainants by the petitioners was precipitate and
done with undue haste. Considering that the so-called "maintainance of
membership" clause did not clearly give the petitioners the right to dismiss the
complainants if said complainants did not maintain their membership in the Manco
Labor Union, the petitioners should have raised the issue before the Court of
industrial Relations in a petition for permission to dismiss the complainants.

xxx xxx xxx

(Emphasis supplied.)

5. We conclude that the Company had failed to accord to petitioner Cariño the latter's right to
procedural due process. The right of an employee to be informed of the charges against him and to
reasonable opportunity to present his side in a controversy with either the Company or his own
Union, is not wiped away by a Union Security Clause or a Union Shop Clause in a CBA. An
employee is entitled to be protected not only from a company which disregards his rights but also
from his own Union the leadership of which could yield to the temptation of swift and arbitrary
expulsion from membership and hence dismissal from his job.

The Court does not believe, however, that the grant of separation pay to petitioner Cariño was an
appropriate response (there having been just cause for the dismissal) to the failure of the Company
to accord him his full measure of due process. Since petitioner Cariño had clearly disdained
answering the charges preferred against him within the Union, there was no reason to suppose that
if the Company had held formal proceedings before dismissing him, he would have appeared in a
Company investigation and pleaded his defenses, if he had any, against the charges against him.
There was no indication that the Company had in fact conspired with the Union to bring about the
expulsion and dismissal of petitioner Cariño indeed, the Union membership believed it was Cariño
who had conspired with the company in the course of negotiating the CBA. Considering all the
circumstances of this case, and considering especially the nature of the charges brought against
petitioner Cariño before his own Union, the Court believes that a penalty of P5,000 payable to
petitioner Carino should be quite adequate, the penalty to be borne by the Company and the Union
solidarily The Court also considers that because the charges raised against petitioner and
unanswered by him have marked overtones of dishonesty, this is not a case where "financial
(humanitarian) assistance" to the dismissed employee is warranted. 12

WHEREFORE, the Court DISMISSED the Petition for certiorari for lack of merit but MODIFIED the
Decision of the public respondent National Labor Relations Commission dated 26 May 1989 by
eliminating the grant of separation pay and in lieu thereof imposing a penalty of P5,000.00 payable
to the petitioner to be borne solidarily by the Company and the Union. No pronouncement as to
costs.
16

EN BANC

G.R. No. 189871 August 13, 2013

DARIO NACAR, PETITIONER,

vs.
GALLERY FRAMES AND/OR FELIPE BORDEY, JR., RESPONDENTS.

DECISION

PERALTA, J.:

This is a petition for review on certiorari assailing the Decision1 dated September 23, 2008 of the
Court of Appeals (CA) in CA-G.R. SP No. 98591, and the Resolution2 dated October 9, 2009
denying petitioner’s motion for reconsideration.

The factual antecedents are undisputed.

Petitioner Dario Nacar filed a complaint for constructive dismissal before the Arbitration Branch of
the National Labor Relations Commission (NLRC) against respondents Gallery Frames (GF) and/or
Felipe Bordey, Jr., docketed as NLRC NCR Case No. 01-00519-97.

On October 15, 1998, the Labor Arbiter rendered a Decision3 in favor of petitioner and found that he
was dismissed from employment without a valid or just cause. Thus, petitioner was awarded
backwages and separation pay in lieu of reinstatement in the amount of ₱158,919.92. The
dispositive portion of the decision, reads:

With the foregoing, we find and so rule that respondents failed to discharge the burden of showing
that complainant was dismissed from employment for a just or valid cause. All the more, it is clear
from the records that complainant was never afforded due process before he was terminated. As
such, we are perforce constrained to grant complainant’s prayer for the payments of separation pay
in lieu of reinstatement to his former position, considering the strained relationship between the
parties, and his apparent reluctance to be reinstated, computed only up to promulgation of this
decision as follows:

SEPARATION PAY

Date Hired = August 1990

Rate = ₱198/day

Date of Decision = Aug. 18, 1998

Length of Service = 8 yrs. & 1 month

₱198.00 x 26 days x 8 months = ₱41,184.00

BACKWAGES

Date Dismissed = January 24, 1997

Rate per day = ₱196.00

Date of Decisions = Aug. 18, 1998

a) 1/24/97 to 2/5/98 = 12.36 mos.

 ₱196.00/day x 12.36 mos. = ₱62,986.56

b) 2/6/98 to 8/18/98 = 6.4 months

Prevailing Rate per day = ₱62,986.00

₱198.00 x 26 days x 6.4 mos. = ₱32,947.20

TOTAL = ₱95.933.76

xxxx

WHEREFORE, premises considered, judgment is hereby rendered finding respondents guilty of

constructive dismissal and are therefore, ordered:

To pay jointly and severally the complainant the amount of sixty-two thousand nine hundred eighty-
six pesos and 56/100 (₱62,986.56) Pesos representing his separation pay;

To pay jointly and severally the complainant the amount of nine (sic) five thousand nine hundred
thirty-three and 36/100 (₱95,933.36) representing his backwages; and

All other claims are hereby dismissed for lack of merit.

SO ORDERED.4

Respondents appealed to the NLRC, but it was dismissed for lack of merit in the Resolution 5 dated
February 29, 2000. Accordingly, the NLRC sustained the decision of the Labor Arbiter. Respondents
filed a motion for reconsideration, but it was denied.6

Dissatisfied, respondents filed a Petition for Review on Certiorari before the CA. On August 24,
2000, the CA issued a Resolution dismissing the petition. Respondents filed a Motion for
Reconsideration, but it was likewise denied in a Resolution dated May 8, 2001. 7

Respondents then sought relief before the Supreme Court, docketed as G.R. No. 151332. Finding
no reversible error on the part of the CA, this Court denied the petition in the Resolution dated April
17, 2002.8

An Entry of Judgment was later issued certifying that the resolution became final and executory on
May 27, 2002.9 The case was, thereafter, referred back to the Labor Arbiter. A pre-execution
conference was consequently scheduled, but respondents failed to appear.10

On November 5, 2002, petitioner filed a Motion for Correct Computation, praying that his backwages
be computed from the date of his dismissal on January 24, 1997 up to the finality of the Resolution
of the Supreme Court on May 27, 2002.11 Upon recomputation, the Computation and Examination
Unit of the NLRC arrived at an updated amount in the sum of ₱471,320.31. 12

On December 2, 2002, a Writ of Execution13 was issued by the Labor Arbiter ordering the Sheriff to
collect from respondents the total amount of ₱471,320.31. Respondents filed a Motion to Quash Writ
of Execution, arguing, among other things, that since the Labor Arbiter awarded separation pay of
₱62,986.56 and limited backwages of ₱95,933.36, no more recomputation is required to be made of
the said awards. They claimed that after the decision becomes final and executory, the same cannot
be altered or amended anymore.14 On January 13, 2003, the Labor Arbiter issued an Order15 denying
the motion. Thus, an Alias Writ of Execution16 was issued on January 14, 2003.

Respondents again appealed before the NLRC, which on June 30, 2003 issued a
Resolution17 granting the appeal in favor of the respondents and ordered the recomputation of the
judgment award.

On August 20, 2003, an Entry of Judgment was issued declaring the Resolution of the NLRC to be
final and executory. Consequently, another pre-execution conference was held, but respondents
failed to appear on time. Meanwhile, petitioner moved that an Alias Writ of Execution be issued to
enforce the earlier recomputed judgment award in the sum of ₱471,320.31. 18
The records of the case were again forwarded to the Computation and Examination Unit for
recomputation, where the judgment award of petitioner was reassessed to be in the total amount of
only ₱147,560.19.

Petitioner then moved that a writ of execution be issued ordering respondents to pay him the original
amount as determined by the Labor Arbiter in his Decision dated October 15, 1998, pending the final
computation of his backwages and separation pay.

On January 14, 2003, the Labor Arbiter issued an Alias Writ of Execution to satisfy the judgment
award that was due to petitioner in the amount of ₱147,560.19, which petitioner eventually received.

Petitioner then filed a Manifestation and Motion praying for the re-computation of the monetary
award to include the appropriate interests.19

On May 10, 2005, the Labor Arbiter issued an Order20 granting the motion, but only up to the amount
of ₱11,459.73. The Labor Arbiter reasoned that it is the October 15, 1998 Decision that should be
enforced considering that it was the one that became final and executory. However, the Labor
Arbiter reasoned that since the decision states that the separation pay and backwages are
computed only up to the promulgation of the said decision, it is the amount of ₱158,919.92 that
should be executed. Thus, since petitioner already received ₱147,560.19, he is only entitled to the
balance of ₱11,459.73.

Petitioner then appealed before the NLRC,21 which appeal was denied by the NLRC in its
Resolution22 dated September 27, 2006. Petitioner filed a Motion for Reconsideration, but it was
likewise denied in the Resolution23 dated January 31, 2007.

Aggrieved, petitioner then sought recourse before the CA, docketed as CA-G.R. SP No. 98591.

On September 23, 2008, the CA rendered a Decision24 denying the petition. The CA opined that
since petitioner no longer appealed the October 15, 1998 Decision of the Labor Arbiter, which
already became final and executory, a belated correction thereof is no longer allowed. The CA
stated that there is nothing left to be done except to enforce the said judgment. Consequently, it can
no longer be modified in any respect, except to correct clerical errors or mistakes.

Petitioner filed a Motion for Reconsideration, but it was denied in the Resolution 25 dated October 9,
2009.

Hence, the petition assigning the lone error:

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED,

COMMITTED GRAVE ABUSE OF DISCRETION AND DECIDED CONTRARY TO LAW IN
UPHOLDING THE QUESTIONED RESOLUTIONS OF THE NLRC WHICH, IN TURN, SUSTAINED
THE MAY 10, 2005 ORDER OF LABOR ARBITER MAGAT MAKING THE DISPOSITIVE PORTION
OF THE OCTOBER 15, 1998 DECISION OF LABOR ARBITER LUSTRIA SUBSERVIENT TO AN
OPINION EXPRESSED IN THE BODY OF THE SAME DECISION. 26

Petitioner argues that notwithstanding the fact that there was a computation of backwages in the
Labor Arbiter’s decision, the same is not final until reinstatement is made or until finality of the
decision, in case of an award of separation pay. Petitioner maintains that considering that the
October 15, 1998 decision of the Labor Arbiter did not become final and executory until the April 17,
2002 Resolution of the Supreme Court in G.R. No. 151332 was entered in the Book of Entries on
May 27, 2002, the reckoning point for the computation of the backwages and separation pay should
be on May 27, 2002 and not when the decision of the Labor Arbiter was rendered on October 15,
1998. Further, petitioner posits that he is also entitled to the payment of interest from the finality of
the decision until full payment by the respondents.

On their part, respondents assert that since only separation pay and limited backwages were
awarded to petitioner by the October 15, 1998 decision of the Labor Arbiter, no more recomputation
is required to be made of said awards. Respondents insist that since the decision clearly stated that
the separation pay and backwages are "computed only up to [the] promulgation of this decision,"
and considering that petitioner no longer appealed the decision, petitioner is only entitled to the
award as computed by the Labor Arbiter in the total amount of ₱158,919.92. Respondents added
that it was only during the execution proceedings that the petitioner questioned the award, long after
the decision had become final and executory. Respondents contend that to allow the further
recomputation of the backwages to be awarded to petitioner at this point of the proceedings would
substantially vary the decision of the Labor Arbiter as it violates the rule on immutability of
judgments.

The petition is meritorious.

The instant case is similar to the case of Session Delights Ice Cream and Fast Foods v. Court of
Appeals (Sixth Division),27 wherein the issue submitted to the Court for resolution was the propriety
of the computation of the awards made, and whether this violated the principle of immutability of
judgment. Like in the present case, it was a distinct feature of the judgment of the Labor Arbiter in
the above-cited case that the decision already provided for the computation of the payable
separation pay and backwages due and did not further order the computation of the monetary
awards up to the time of the finality of the judgment. Also in Session Delights, the dismissed
employee failed to appeal the decision of the labor arbiter. The Court clarified, thus:

In concrete terms, the question is whether a re-computation in the course of execution of the labor
arbiter's original computation of the awards made, pegged as of the time the decision was rendered
and confirmed with modification by a final CA decision, is legally proper. The question is posed,
given that the petitioner did not immediately pay the awards stated in the original labor arbiter's
decision; it delayed payment because it continued with the litigation until final judgment at the CA
level.

A source of misunderstanding in implementing the final decision in this case proceeds from the way
the original labor arbiter framed his decision. The decision consists essentially of two parts.

The first is that part of the decision that cannot now be disputed because it has been confirmed with
finality. This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of
reinstatement, backwages, attorney's fees, and legal interests.

The second part is the computation of the awards made. On its face, the computation the labor
arbiter made shows that it was time-bound as can be seen from the figures used in the computation.
This part, being merely a computation of what the first part of the decision established and declared,
can, by its nature, be re-computed. This is the part, too, that the petitioner now posits should no
longer be re-computed because the computation is already in the labor arbiter's decision that the CA
had affirmed. The public and private respondents, on the other hand, posit that a re-computation is
necessary because the relief in an illegal dismissal decision goes all the way up to reinstatement if
reinstatement is to be made, or up to the finality of the decision, if separation pay is to be given in
lieu reinstatement.

That the labor arbiter's decision, at the same time that it found that an illegal dismissal had taken
place, also made a computation of the award, is understandable in light of Section 3, Rule VIII of the
then NLRC Rules of Procedure which requires that a computation be made. This Section in part
states:

[T]he Labor Arbiter of origin, in cases involving monetary awards and at all events, as far as
practicable, shall embody in any such decision or order the detailed and full amount awarded.

Clearly implied from this original computation is its currency up to the finality of the labor arbiter's
decision. As we noted above, this implication is apparent from the terms of the computation itself,
and no question would have arisen had the parties terminated the case and implemented the
decision at that point.

However, the petitioner disagreed with the labor arbiter's findings on all counts - i.e., on the finding of
illegality as well as on all the consequent awards made. Hence, the petitioner appealed the case to
the NLRC which, in turn, affirmed the labor arbiter's decision. By law, the NLRC decision is final,
reviewable only by the CA on jurisdictional grounds.

The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through a
timely filed Rule 65 petition for certiorari. The CA decision, finding that NLRC exceeded its authority
in affirming the payment of 13th month pay and indemnity, lapsed to finality and was subsequently
returned to the labor arbiter of origin for execution.

It was at this point that the present case arose. Focusing on the core illegal dismissal portion of the
original labor arbiter's decision, the implementing labor arbiter ordered the award re-computed; he
apparently read the figures originally ordered to be paid to be the computation due had the case
been terminated and implemented at the labor arbiter's level. Thus, the labor arbiter re-computed the
award to include the separation pay and the backwages due up to the finality of the CA decision that
fully terminated the case on the merits. Unfortunately, the labor arbiter's approved computation went
beyond the finality of the CA decision (July 29, 2003) and included as well the payment for awards
the final CA decision had deleted - specifically, the proportionate 13th month pay and the indemnity
awards. Hence, the CA issued the decision now questioned in the present petition.

We see no error in the CA decision confirming that a re-computation is necessary as it essentially

considered the labor arbiter's original decision in accordance with its basic component parts as we
discussed above. To reiterate, the first part contains the finding of illegality and its monetary
consequences; the second part is the computation of the awards or monetary consequences of the
illegal dismissal, computed as of the time of the labor arbiter's original decision. 28

Consequently, from the above disquisitions, under the terms of the decision which is sought to be
executed by the petitioner, no essential change is made by a recomputation as this step is a
necessary consequence that flows from the nature of the illegality of dismissal declared by the Labor
Arbiter in that decision.29 A recomputation (or an original computation, if no previous computation has
been made) is a part of the law – specifically, Article 279 of the Labor Code and the established
jurisprudence on this provision – that is read into the decision. By the nature of an illegal dismissal
case, the reliefs continue to add up until full satisfaction, as expressed under Article 279 of the Labor
Code. The recomputation of the consequences of illegal dismissal upon execution of the decision
does not constitute an alteration or amendment of the final decision being implemented. The illegal
dismissal ruling stands; only the computation of monetary consequences of this dismissal is
affected, and this is not a violation of the principle of immutability of final judgments. 30

That the amount respondents shall now pay has greatly increased is a consequence that it cannot
avoid as it is the risk that it ran when it continued to seek recourses against the Labor Arbiter's
decision. Article 279 provides for the consequences of illegal dismissal in no uncertain terms,
qualified only by jurisprudence in its interpretation of when separation pay in lieu of reinstatement is
allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning
point instead of the reinstatement that the law decrees. In allowing separation pay, the final decision
effectively declares that the employment relationship ended so that separation pay and backwages
are to be computed up to that point.31

Finally, anent the payment of legal interest. In the landmark case of Eastern Shipping Lines, Inc. v.
Court of Appeals,32 the Court laid down the guidelines regarding the manner of computing legal
interest, to wit:

II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time
it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per
annum to be computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an

interest on the amount of damages awarded may be imposed at the discretion of the court at
the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or
damages except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code)
but when such certainty cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the judgment of the court is made (at
which time the quantification of damages may be deemed to have been reasonably
 ascertained). The actual base for the computation of legal interest shall, in any case, be on
the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory,
the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above,
shall be 12% per annum from such finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of credit.33

Recently, however, the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution No.
796 dated May 16, 2013, approved the amendment of Section 234 of Circular No. 905, Series of 1982
and, accordingly, issued Circular No. 799,35 Series of 2013, effective July 1, 2013, the pertinent
portion of which reads:

The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions
governing the rate of interest in the absence of stipulation in loan contracts, thereby amending
Section 2 of Circular No. 905, Series of 1982:

Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the
rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be
six percent (6%) per annum.

Section 2. In view of the above, Subsection X305.136 of the Manual of Regulations for Banks and
Sections 4305Q.1,37 4305S.338 and 4303P.139 of the Manual of Regulations for Non-Bank Financial
Institutions are hereby amended accordingly.

This Circular shall take effect on 1 July 2013.

Thus, from the foregoing, in the absence of an express stipulation as to the rate of interest that
would govern the parties, the rate of legal interest for loans or forbearance of any money, goods or
credits and the rate allowed in judgments shall no longer be twelve percent (12%) per annum - as
reflected in the case of Eastern Shipping Lines40 and Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations
for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No. 799 - but will now
be six percent (6%) per annum effective July 1, 2013. It should be noted, nonetheless, that the new
rate could only be applied prospectively and not retroactively. Consequently, the twelve percent
(12%) per annum legal interest shall apply only until June 30, 2013. Come July 1, 2013 the new rate
of six percent (6%) per annum shall be the prevailing rate of interest when applicable.

Corollarily, in the recent case of Advocates for Truth in Lending, Inc. and Eduardo B. Olaguer v.
Bangko Sentral Monetary Board,41 this Court affirmed the authority of the BSP-MB to set interest
rates and to issue and enforce Circulars when it ruled that "the BSP-MB may prescribe the maximum
rate or rates of interest for all loans or renewals thereof or the forbearance of any money, goods or
credits, including those for loans of low priority such as consumer loans, as well as such loans made
by pawnshops, finance companies and similar credit institutions. It even authorizes the BSP-MB to
prescribe different maximum rate or rates for different types of borrowings, including deposits and
deposit substitutes, or loans of financial intermediaries."

Nonetheless, with regard to those judgments that have become final and executory prior to July 1,
2013, said judgments shall not be disturbed and shall continue to be implemented applying the rate
of interest fixed therein.
1awp++i1

To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping
Lines42 are accordingly modified to embody BSP-MB Circular No. 799, as follows:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for damages. The provisions
under Title XVIII on "Damages" of the Civil Code govern in determining the measure of
recoverable damages. 1âwphi1

II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default,
i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the
Civil Code.

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or
until the demand can be established with reasonable certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run only from the date the
judgment of the court is made (at which time the quantification of damages may be deemed to have
been reasonably ascertained). The actual base for the computation of legal interest shall, in any
case, be on the amount finally adjudged.

When the judgment of the court awarding a sum of money becomes final and executory, the rate of
legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per
annum from such finality until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit.

And, in addition to the above, judgments that have become final and executory prior to July 1, 2013,
shall not be disturbed and shall continue to be implemented applying the rate of interest fixed
therein.

WHEREFORE, premises considered, the Decision dated September 23, 2008 of the Court of
Appeals in CA-G.R. SP No. 98591, and the Resolution dated October 9, 2009 are REVERSED and
SET ASIDE. Respondents are Ordered to Pay petitioner:

(1) backwages computed from the time petitioner was illegally dismissed on January 24,
1997 up to May 27, 2002, when the Resolution of this Court in G.R. No. 151332 became
final and executory;

(2) separation pay computed from August 1990 up to May 27, 2002 at the rate of one month
pay per year of service; and

(3) interest of twelve percent (12%) per annum of the total monetary awards, computed from
May 27, 2002 to June 30, 2013 and six percent (6%) per annum from July 1, 2013 until their
full satisfaction.

The Labor Arbiter is hereby ORDERED to make another recomputation of the total monetary
benefits awarded and due to petitioner in accordance with this Decision.

SO ORDERED.

G.R. No. 120062 June 8, 2000

WORKERS OF ANTIQUE ELECTRIC COOPERATIVE, INC., herein represented by EDUARDO

NIETES, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTIQUE ELECTRIC COOPERATIVE,
INC., respondents.

PARDO, J.:
What is before the Court is a petition for certiorari assailing the dismissal by the National Labor
1

Relations Commission (NLRC) of petitioner's appeal for being filed out of time. 2

We recite the antecedent facts.

On November 19, 1987, the Department of Labor and Employment (DOLE) conducted a routine
3

inspection on Antique Electric Cooperative, Inc. (ANTECO). The results showed an underpayment of
employees wages during the period of November 1, 1984 to November 15, 1987 and non-payment
4

or underpayment of 13th month pay for the years 1984, 1985 and 1986. The wage differentials were
computed at One Million Four Hundred Twenty Seven Thousand, Four Hundred Twelve Pesos and
Seventy Five Centavos (P1,427,412.75). Respondent failed to pay the wage differentials because of
its cash position. 5

On September 19, 1989, the DOLE Regional Director for Iloilo City issued an order, to wit:

WHEREFORE, premises considered, Antique Electric Cooperative and/or Paulo Lotilla is

hereby ordered to pay its workers the sum of ONE MILLION FOUR HUNDRED TWENTY
SEVEN THOUSAND FOUR HUNDRED and TWELVE and 75/100 (P1,427,412.75) PESOS,
representing the latter's wage differentials based on the attached computation within ten (10)
days from receipt of this Order.

SO ORDERED. 6

On October 10, 1989 and on September 19, 1989, the NLRC reiterated the above-quoted order.
7

On December 26, 1989, one hundred eight (108) workers of ANTECO signed a waiver, pertinently
quoted, thus:8

We, the undersigned coop employees are agreeable with the negotiation of the management
for the implementation of the back wages in the amount of FIVE HUNDRED THOUSAND
PESOS ONLY (P500,000.00) or THIRTY FIVE PERCENT (35%) in its equivalent instead in
the amount (sic) of ONE MILLION FOUR HUNDRED TWENTY SEVEN THOUSAND FOUR
HUNDED TWELVE PESOS and 75/100 (P1,427,412.75) as computed by the Department of
Labor and Employment mandated in the Order issued last October 10, 1989. We, therefore
waive our rights for (sic) the remaining amount such claim for the uncollected salary
differentials shall be forfeited after affixing our signatories herein and the stipulated amount
paid.

On June 27, 1990, the DOLE approved the waiver as it is "not contrary to law, good customs and
public policy." 9

On September 27, 1991, petitioner filed with DOLE a motion for reconsideration alleging that the
waiver was void for being contrary to the Constitution and public policy and for having been
executed under undue influence, coercion, intimidation, and without assistance of counsel. The
motion prayed for an alias writ of execution commanding the sheriff to collect the unpaid balance
stated in the order dated September 19, 1989. On October 9, 1991, DOLE denied the motion for
10

reconsideration. 11

On December 1, 1992, petitioner workers of ANTECO represented by Eduardo Nietes filed a

position paper and/or complaint or petition for salary differentials. The position paper reiterated the
12

arguments raised in the motion for reconsideration of September 27, 1991. Petitioners prayed that
the waiver be declared null and void and that ANTECO be ordered to pay the unpaid balance of 65%
of the wage differentials and moral and exemplary damages. 13

On January 11, 1993, ANTECO filed with the NLRC a manifestation moving for the position paper's
dismissal on the grounds:

1. That there is a non-joinder of the proper and indispensable parties;

2. That Eduardo Nietes has no authority to represent the alleged ANTECO workers;

3. That the alleged parties are not named in the petition;

 4. That the subject matter is already moot and academic;

5. That the alleged petitioners are in estoppel;

6. That the petition is not filed by the proper party (DOLE);

7. That the NLRC has no jurisdiction over the subject matter of the petition;

8. That there is no cause of action against respondent. 14

On October 8, 1993, the NLRC dismissed the case, reasoning that on August 31, 1993, it directed
petitioner to file formal complaints but did not do so. The NLRC dismissed the case for failure to
"acquire jurisdiction over the persons of the complainants." 15

Claiming to represent all of ANTECO's workers, on November 10, 1993, Eduardo Nietes filed an
appeal with the NLRC. He argued that the position paper satisfied the requirements of a formal
complaint. 16

On February 7, 1994, the NLRC dismissed the appeal for being filed out of time. According to the
NLRC, the appeal was filed nine (9) days late. The NLRC found that petitioner received a copy of
17

the assailed order on November 3, 1993; the appeal was filed on November 22, 1993. The NLRC
18

reasoned that the appeal "should have been filed on November 15, 1993, since November 13, 1993
was a Saturday." 19

On February 22, 1994, petitioner filed with the NLRC a motion for reconsideration alleging that the
appeal was filed by registered mail on November 11, 1992. 20

On September 14, 1994, the NLRC denied the motion for reconsideration, stating that the appeal
21 22

was filed personally on November 22, 1993, not by registered mail as claimed, and that this is
supported by the fact that the appeal fee and research fee were paid on the same date. 23

On September 28, 1994, petitioner filed with the NLRC a "petition for relief from order denying
motion for reconsideration". On April 6, 1995, the NLRC denied the same on the ground that no
24

such pleading or second motion for reconsideration is allowed under its rules. 25

Hence, this petition alleging that the NLRC committed grave abuse of discretion when it dismissed
the case on technical grounds and failed to hear and try the case on the merits. 26

We deny the petition.

In a special civil action for certiorari under Rule 65, petitioner must prove that respondent exercised
its power in an arbitrary or despotic manner by reason of passion or personal hostility. There is
27

"grave abuse of discretion" when respondent acts in a capricious or whimsical manner in the
exercise of its judgment as to be equivalent to lack of jurisdiction. 28

Respondent NLRC did not commit a grave abuse of discretion when it ruled that the appeal was filed
out of time. When it declared that the appeal was filed personally, it made a factual finding. Factual
findings of labor officials when supported by substantial evidence, as in this case, the official receipts
covering payment of appeal and legal research fees, are binding on the parties. 29

The perfection of an appeal within the reglementary period and in the manner prescribed by law is
mandatory and jurisdictional. Non-compliance therewith renders the judgment sought to appeal final
and executory. Article 223 of the Labor Code provides:
30

Art. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders.

An appeal is perfected when there is proof of payment of the appeal fee and in cases where the
employer appeals and a monetary award is involved, there is payment of the appeal bond. A mere 31

notice of appeal without complying with the other requisites shall not stop the running of the period
for perfecting an appeal. 32
However, in the higher interest of justice, we have in meritorious cases allowed late appeals from
decisions of the labor arbiter to the NLRC. We cannot allow an exception in the case at bar. Even
33

on the substantive questions, the petition must fail.

There is no proof that the case is a class suit. There is no evidence that the ANTECO workers
authorized and chose Eduardo Nietes to represent them. There is no showing that all of the workers
supposedly represented by Eduardo Nietes are joined by a common or general interest. The rule is
that the party bringing suit has the burden of proving the sufficiency of the representative character
that he claims. 34

The identities of the represented workers are not clear. The names of the real parties in interest are
not stated in the position paper. The rule is that "the full names of all the real parties in interest,
35

whether natural or juridical persons or entities authorized by law, shall be stated in the caption of the
complaint or petition. 36

There is no basis to invalidate the waiver. The petition implies that the order approving the waiver
was tainted with corruption. This is unsubstantiated. Mere allegation is not proof. The presumption is
that official business was regularly performed and that when Labor Arbiter Henry Parel approved the
waiver, he did so in good faith.
37

WHEREFORE, we find that the NLRC committed no grave abuse of discretion and hereby DISMISS
the petition. Consequently, we AFFIRM the resolutions of National Labor Relations Commission in
RAB Case No. VI-10-50392-92 (NLRC Case No. V-0503-93), dated October 8, 1993, February 7,
1994 and September 14, 1994 and April 6, 1995.

No costs. 1âwphi1.nêt

SO ORDERED.

18

G.R. No. L-51607 December 15, 1982

CESAR ACDA, petitioner,

vs.
The MINISTER OF LABOR and PAN ORIENTAL MATCH CO., INC., respondents.

Vedasto T. Sorreda for petitioner.

Angara, Abello, Concepcion, Regala & Cruz Law Offices for respondents.

DE CASTRO, J.:

Subject of this petition for certiorari is the Order 1 of respondent Minister of Labor dated 11 May 1979
upholding petitioner's dismissal and setting aside the Resolution 2 of the National Labor Relations
Commission, affirming the Decision 3 of the Labor Arbiter, which ordered respondent company to reinstate
petitioner to his former position as Sales Supervisor with full back wages from the date of his dismissal up
to actual reinstatement without loss of seniority rights.

Record reveals that on 26 September 1976, petitioner officially received his appointment bearing the
same date as Sales Supervisor Trainee, but due to the urgent need to fill up the position, he was
made to work starting 1 September 1976, before the effectivity date of the appointment. The term of
the contract is that the employment shall be temporary in nature for a period of one (1) month, and if
the respondent company should find his performance satisfactory during the said period, he would
be extended a probationary appointment.

Effective the close of working day of 31 January 1977 or within his probationary employment,
petitioner was dismissed by the respondent company on the alleged grounds of "loss of confidence
and for want in capabilities as Regional Sales Supervisor". As a consequence, petitioner filed a
complaint with the Ministry of Labor on 28 February 1977 against the respondent company
contesting his termination as illegal allegedly because respondent company denied him due process
as he was not informed beforehand of his shortcomings; that matters should have been explained to
him in order that he could rectify or defend the mistakes he committed; that the excuse of loss of
confidence has no basis in the absence of any standard of performance upon which he was rated on
the job; and that his dismissal was a plot to circumvent the law on security of tenure. For its part,
respondent company argued that as a managerial employee, petitioner's appointment was anchored
on the trust and confidence reposed in him by the Company and that when this ceased to exist, he
may be terminated, more so, within the probationary period of his employment.

On 23 August 1977, the Labor Arbiter assigned on the case rendered a decision in favor of petitioner
declaring the charges levelled against him, aside from being flimsy in character, to be without factual
and legal bases as he had explained point by point his reasons or answer against the charges, the
dismissal being triggered by "the outburst of Mr. Perez' petty jealousy," as may be gleaned from the
following circumstances:

When (petitioner) was granted a car, Mr. Perez restricted him of its use by issuing a
memorandum that it will not be used outside the greater Manila area and that it will
not be brought home in the night. The memo was set aside by the company
president in view of the activities of (petitioner) in connection with his work.

The company president also bypassed Mr. Perez in favor of (petitioner) when the
latter prepared a project analysis in connection with the company's 5-year sales
projection after which (petitioner) was directed by the company president to make
proper representations with bank officials, which normally is the task of Mr. Robert
Perez, being the Vice-President for Marketing. 4

The Labor Arbiter also took into consideration the letter dated 3 January 1977 of respondent company's
president extending his congratulations to petitioner for "excellent job performance."

On appeal at the instance of respondent company, the National Labor Relations Commission
affirmed the decision of the Labor Arbiter in its resolution dated 19 January 1978, the material
portion of which reads:

The appeal was filed in only seven copies instead of ten as required by the Rules of
this Commission. No appeal fee appears to have been paid, which means that the
appeal has not been perfected in accordance with the said Rules.

These facts notwithstanding, we read the record of this case and found no error
committed by the Labor Arbiter below. Not only has the (petitioner) convincingly
refuted the charges which are being invoked as grounds for his dismissal; he has
also shown by facts and figures, that he performed well in his job, which caused the
president of the respondent company, shortly before he was dismiss to congratulate
him 'for a job well done,' and to expect 'spectacular' performance in his area of
operation in 1977. 5

Not satisfied, respondent company appealed to the Minister of Labor. In an Order dated 11 May 1979, the
Deputy Minister, by authority of the Minister of Labor, reversed the resolution of the substance, that by the
probationary nature of petitioner's appointment, it is well within the prerogative of respondent company to
terminate the services of petitioner, if in the former's evaluation, the latter did not meet the requirements
to said position.

After his motion for reconsideration was denied in the Order 6 of 27 July 1979, petitioner came to Us,
questioning the jurisdiction of respondent Minister of Labor to entertain respondent company's appeal and
prayed for the setting aside of the Order of 11 May 1979, for being null and void, and for the revival of the
NLRC resolution sustaining his claim for illegal dismissal and backwages.
We find this petition to be impressed with merit.

Well-rooted is the principle that perfection of all appeal within the statutory or reglementary period is
not only mandatory but also jurisdictional and failure to do so renders the questioned decision final
and executory that deprives the appellate court or body of jurisdiction to alter the final judgment,
much less to entertain the appeal. 7 As may easily be gleaned from the NLRC resolution, the appeal of
respondent company to said body did not comply with the requirements prescribed in perfecting an
appeal. 8 Being so, the appeal has not been duly perfected thereby rendering the decision of the Labor
Arbiter final and executory after the lapse of the reglementary period provided by the Labor Code. The
jurisdiction of the respondent Minister entertaining the appeal may thus be questioned and rightly so,
even in the instant petition.

While it may be true, as pointed out by the Solicitor General 9 that technical rules are not binding in
labor cases, Article 221 of the Labor Code, as amended, is quite explicit in restricting its application in the
following tenor:

In any proceeding before the Commission or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law or equity shall not be controlling and it is the spirit
and intention of this Code that the Commission and its members and the Labor
Arbiters shall use every and all reasonable means to ascertain the facts in each case
say and objectively and without regard to technicalities of law or proceedings , all in
the interest of due process. ... .

Verily, non-payment of the appeal fee cannot be excused by invoking the aforequoted provision
whose scope is limited to the application of the rules of evidence and the use of all reasonable
means, in the ascertainment of facts. The requirement of an appeal fee is by no means a mere
technicality of law or procedure. It is an essential requirement in the perfection of an appeal without
which the decision appealed from would become final and executory, as if no appeal was filed at all.
And this must be so considering that the right to appeal is not a natural right nor a part of due
process but is merely a statutory privilege and may be exercised only in the manner prescribed by,
and in accordance with, the provisions of the law; 10 therefore, respondent company must conform to
the rules of appeal as provided for in labor cases, consistent with an imperious need for the prompt
disposition of labor cases in line with the policy of affording speedy labor justice.

We likewise find to be well-taken petitioner's claim that the "just cause" contemplated under the
Labor Code did not exist insofar as his dismissal is concerned. The findings of the Labor Arbiter on
this point, as upheld by the National Labor Relations Commission, are quite clear, and We find no
reversible error therein the same being substantiated by evidence of record, aside from the fact that
said findings had already attained the character of finality by the non-perfection of a proper appeal.

What makes said findings more forceful is the commendation issued by respondent company's
president to petitioner, shortly before his dismissal, congratulating the latter "for a job well done."
While the respondent company argued that petitioner could not invoke said commendation in his
favor as the president was misled into issuing the same, such is a mere claim unsupported by
sufficient proof. With the charges against petitioner found to be unsubstantiated, We are left with no
other alternative but to hold that the so-called "loss of confidence" is without basis and may not be
successfully invoked as ground for dismissal which requires some basis therefor, 11 such ground
never having been intended to afford an occasion for abuse by the employer of its prerogative, as it can
easily be subject to abuse because of its subjective nature, to dismiss employees in contravention with
the "protection of labor clause of the Constitution. 12 It is this Constitutional guaranty that accords even to
employees employed on a probationary basis the protection that their services "may be terminated only
for a just cause or when authorized by existing laws, or when he fails to qualify as a regular employee in
accordance with reasonable standards prescribed by the employer." 13

FOR THE REASONS GIVEN, the Order of respondent Minister of Labor dated 11 May 1979 is
hereby set aside and declared null and void and the Resolution of the National Labor Relations
Commission dated 19 January 1978 upholding the Decision of the Labor Arbiter dated 23 August
1977 is hereby reinstated, but the award of backwages is herein limited to three (3) years without
qualification and deduction in accordance with existing jurisprudence, with costs against the
respondent company.

SO ORDERED.
19

G.R. No. 79596 February 10, 1989

C.W.TAN MFG. and FEDERICO JAVIER as Plant Superintendent and JAIME SO as Plant
Manager, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ASSOCIATED LABOR UNIONS (ALU) and
ANGELINO BRIMON, respondents.

Eugenio Law Offices for petitioners.

The Solicitor General for public respondent.

Romeo S. Occeña for private respondents.

GANCAYCO, J.:

The issue presented in this petition assailing a decision of the public respondent National Labor
Relations Commission (NLRC) dated March 12, 1987 and its resolution dated July 20, 1987 is
whether or not the failure to furnish a copy of the memorandum of appeal from the decision of the
labor arbiter to the adverse party and to pay the docketing fee within the reglementary period of
appeal is jurisdictional in character such that non-compliance with the same renders the decision of
the labor arbiter final and executory.

On May 2, 1982 the Associated Labor Union (ALU) and Angelino Brimon, a member thereof, filed a
complaint for illegal dismissal against petitioners by virtue of a memorandum filed by petitioners
which reads as fellows:

This is to inform you that due to your undesirable attitude and intolerable violation of
the company's rules and regulations, the management has concluded to terminate
your employment.

Your record shows that the following violations were committed:

1. You have been suspended for five (5) days because of trying to coerce and threat
(sic) your co-workers to cut down their production output for personal motive to give
difficulties to the management.

2. Gross negligence (sic) in the performance of your work, that has caused
unreasonable loss on the part of the company amounting to EIGHT HUNDRED
PESOS (P800.00) in terms of raw materials and labor. The damaged units of
bathtubs were thrown to trash.

3. Loss of respect to your superior and causing grievous (sic) insult and trying to
instigate misunderstanding between the Plant Manager and the Plant
Superintendent.

With all these violations the management has deem (sic) it proper to terminate your
employment because its (sic) detrimental to the interest of the company and to its
workers as well, effective on March 4, 1982. (page 20, Records)

The immediate cause of respondent Brimon's dismissal was his having sought a leave of absence
on March 2, 1982. It is alleged that when asked by the plant manager, petitioner Jaime So, if he
secured the permission of the plant Superintendent petitioner Federico Javier, Brimon replied in the
negative when in fact he sought a leave of absence and the request was denied. Thus, when Brimon
reported for work the following day he was allegedly told to explain why he lied to petitioner. Instead
of doing so, he allegedly uttered in an arrogant manner, "Wala akong pakialam kay Dick Javier."

On his part, Brimon alleged that he filed a leave of absence for one-half (1/2) day, from 1:00 to 5:00
P.M. on March 2, 1982 which was duly approved by his immediate supervisor, as well as by
petitioner So. However, when he reported for work the following day on March 3, 1982, he was
called to the administrative office by petitioner Javier. There, Javier handed him his salary and
termination papers.

In a decision dated October 21, 1982, Labor Arbiter Porfirio E. Villanueva dismissed the complaint
on the ground that the dismissal of Brimon was for a valid cause and that he was afforded due
process. An appeal was interposed by private respondent Brimon to the public respondent NLRC.
However, in a resolution dated May 28, 1984, the appeal was dismissed for having been filed out of
time as there was no proof of service of the appeal to the adverse party. A Motion for
Reconsideration of the said Resolution was filed by private respondent.In a decision dated March
12, 1987, public respondent reconsidered its Resolution and finding that private respondent was
arbitrarily dismissed without the benefit of a formal investigation, set aside the decision of the labor
arbiter and issued a new one reinstating private respondent to his former or equivalent position
without loss of seniority rights or other privileges and benefits with full backwages from the period of
dismissal up to the actual date of reinstatement. A Motion for Reconsideration of said decision filed
by petitioners was denied by public respondent on July 20, 1987.

Hence, the instant petition where the only issue posed is whether or not the questioned decision of
the labor arbiter had become final and executory for failure of private respondents to perfect their
appeal on time.

There is no question in this case that the memorandum of appeal from the decision of the labor
arbiter to the NLRC was filed within the reglementary period by private respondent. However he
failed to furnish a copy thereof to the adverse party as required by Section 3, Rule IX of the
Implementing Regulations which provides:

The appeal shall be under oath, shall contain already the memorandum of appeal
and proof of service and shall only be considered perfected upon its filing after
payment of the required appeal fee.

Private respondent, however, promptly furnished a copy of said memorandum of appeal to

petitioners when his attention was called to this omission.

There is no question likewise that the private respondent failed to pay the required filing fee within
the reglementary period of appeal and that he paid for the same only after this case was elevated to
this Court.

The failure of the appellant (private respondent) to furnish a copy of the appeal memorandum to the
adverse party is not a jurisdictional defect, but is a mere formal lapse as ruled by this court in several
instances. And when as in this case such requirement was complied with although beyond the
1

period of appeal, the appeal should be given due course.

As to the issue of the non-payment of the appeal fee on time, this Court held in Del Rosario & Sons
Logging Enterprises, Inc. vs. NLRC that "the failure to pay the appeal docketing fee confers a
2

directory and not a mandatory power to dismiss an appeal and such power must be exercised with a
sound discretion and with a great deal of circumspection considering all attendant circumstances." It
is true that in Acda vs. Minister of Labor, We said that the payment of the appeal fee is "by no
3

means a mere technicality but is an essential requirement in the perfection of an appeal." However,
where as in this case the fee had been paid belatedly the broader interest of justice and the desired
objective in deciding the case on the merits demand that the appeal be given due course.

Petitioner, however calls the attention of this Court to the fact that in Del Rosario, the delayed
payment of the appeal fee was during the pendency of the appeal before the NLRC, while in the
present case, the delayed payment was made only when the petition was already filed before this
Court which was after the lapse of a period of over five (5) years since the filing of the appeal. It
must be noted that under Section 12 of the 1975 NLRC Rules which is applicable to this case, the
filing fee was only P25.00. 4
Under Article 221 of the Labor Code, it is provided as follows:

ART. 221. Technical rules not binding. - In any proceeding before the Commission or
any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity
shall not be controlling and it is the spirit and intention of this Code that the
Commission and its members and the Labor Arbiters shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively and
without regard to technicalities of law or procedure, all in the interest of due process.

xxx xxx xxx

From the foregoing, it is clear that the technical rules of evidence are not binding in proceedings
before the NLRC or labor arbiters and that all reasonable means should be used to ascertain the
facts of the case without regard to the technicality ties of law or procedure.

Although it is obvious that private respondent failed to pay the required docketing fee for an
unreasonable length of time, nevertheless this Court finds that under the circumstances of the case
and considering the merit of the appeal, the greater interest of justice will be served by giving due
course to the appeal despite the much delayed payment of the docketing fee. Indeed, private
respondent Brimon, being a dismissed employee, can very well be considered as a pauper litigant
whose failure to pay the nominal docketing fee of P25.00 within the reglementary period should be
treated with understanding and compassion.

As to the merit of the decision of the public respondent, petitioners do not even question the same.
Petitioners insist on its untenable stand that the decision of the labor arbiter became final and
executory and that public respondent NLRC had no authority to set aside said decision of the labor
arbiter.

The Court finds that there is a cogent basis in the finding of public respondent NLRC that private
respondent Brimon was arbitrarily dismissed without benefit of a formal investigation.

WHEREFORE, the petition is DISMISSED and the subject decision of public respondent NLRC
dated March 12, 1987 and its subsequent resolution dated July 20, 1987, are hereby AFFIRMED
with the modification that the payment of backwages of private respondent shall not exceed the
period of three (3) years. No pronouncement as to costs.

SO ORDERED.

20

G.R. No. 97357 March 18, 1992

VIRON GARMENTS MANUFACTURING, CO., INC. and DOLLY LIM, petitioners,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION (Third Division), NATIONAL FEDERATION
OF LABOR UNIONS FEDERATION OF LABOR UNIONS (NAFLU) and RODOLFO ROMERO,
MILA BUDA, MILAGROS COLCOL, IMELDA PATROPIS, ESTRELITA DUMO, SHIRLEY
MONFORTE, ERLINDA POSTALERO, ERLINDA PEÑALOSA and EMETERIA
ESPERONZATE, respondents.

GRIÑO-AQUINO, J.:

This is a petition for certiorari under Rule 65 of the Rules of Court with prayer for issuance of
temporary restraining order and writ of preliminary injunction, of the decision dated November 21,
1990 issued by the National Labor Relations Commission in NLRC Case No. RAB-III-06-022-85-B,
dismissing petitioners' appeal for failure to file the required cash or surety bond under Art. 223 of the
Labor Code, as well as the resolution dated January 31, 1991, denying petitioners' motion for
reconsideration.

On June 4, 1985, the National Federation of Labor Unions (NAFLU), Rodolfo Romero and other filed
a complaint charging petitioner Viron Garments and Dolly Lim with unfair labor practice thru illegal
shutdown, non-payment of wages and allowances for the periods of February 1-15, and May 16-31,
1985, non-payment of five (5) days of service incentive leave pay from 1983-85 and illegal deduction
of P50 to P100 from the private respondents' wages during the months of September and October,
1984.

On December 20, 1988, Labor Arbiter Dominador B. Saludares rendered a decision (pp. 57-63)
finding the petitioner guilty of unfair labor practice; ordering them jointly and severally, to restitute the
deductions made from the wages private respondents Mila Buda, Milagros Colcol, Imelda Patropis,
Rodolfo Romero, Estrelita Dumo, Shirley Monforte, Erlinda Postalero, Erlinda Peñaloza and
Emeteria Esperonzate; to immediately reinstate them to their former positions without loss of
seniority rigths, with full backwages and other benefits from June 1, 1985 up to June 1, 1988, without
deduction and qualifications.

The total award amounted to Five Million Four Hundred Sixty Nine Thousand Sixty-One Pesos and
60/100 (P5,469,061.60). The employees in due time filed a Motion for Execution.

A Motion to Quash the Writ of the Execution was filed by the Company on the ground, among
others, it had been closed for the last three years and was no longer in operation.

On July 25, 1989, Labor Arbiter Saludares issued a Writ of Execution.

The petitioners appealed to the NLRC.

On April 10, 1990, the NLRC, directed the petitioners to post a cash or surety bond equal to the
monetary awards from a reputable and duly accredited bonding company.

The petitioners asked to be excused from filing a bond until the recomputation of the backwages was
finally resolved.

Petitioners were given a non-extendible period of ten (10) days (from notice) within which to post a
cash or surety bond, otherwise, their appeal would be dismissed.

On July 6, 1990, petitioners filed a Manifestation and Motion with an attached pleading entitled
"Appeal Bond/Undertaking" which they asked the Commission to consider as substantial compliance
with its resolution dated June 20, 1990.

On November 21, 1990, the NLRC dismissed their appeal for failure to file the required cash or
surety bond. The Commission denied the petitioners' Motion for Reconsideration and on February
25, 1991, issued a Writ of Execution which was served forthwith on the petitioners together with the
Sheriff's Notice of Levy and Sale on Execution of Personal Property.

The auction sale proceeded as scheduled on March 6, 1990. A lone bidder bidded the amount of
P512,000. A certificate of sale was duly issued.

The petitioners came to this Court on a petition for certiorari, assailing as a grave abuse of
discretion, assailing as a grave abuse of discretion, the NLRC's rejection of their appeal
bond/undertaking.

Article 223 of the Labor Code, as amended by Republic Act No. 6715, provides:

Art. 223. Appeal. — Decisions, awards, or orders of the Labor Artiber are final and
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 entertained only on any of the following grounds:
 xxx xxx xxx

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 company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from. (Emphasis ours.)

Petitioners posit that the above provision was applied by the NLRC very rigidly and literally; and that
a cash or surety bond for the perfection of an appeal is not mandatory as may be inferred from the
phrase "may be," instead of "shall" used in the law.

There is no merit in the argument.

The intension of lawmakers to make the bond an indispensable requisite for the perfection of an
appeal by the employer, is clearly limned in the provision that an appeal by the employer may be
perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear,
that the lawmakers intended the posting of a cash or surety bond by the employer to be the
exclusive means by which an employer's appeal may be perfected.

The word "may" refers to the perfection of an appeal as optional on the part of the defeated party,
but not to the posting of an appeal bond, if he desires to appeal.

The meaning and the intention of the legislature in enacting a statute must be determined from the
language employed, and where there is no ambiguity in the words, there is no room for construction
(Provincial Board of Cebu vs. Presiding Judge of Cebu Court of First Instance, Branch IV, 171 SCRA
1).

The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently
intended to assure the workers that if they prevail in the case, they will receive the money judgment
in their favor upon the dismissal of the employer's appeal. It was intended to discourage employers
from using an appeal to delay, or even evade, their obligation to satisfy their employee's just and
lawful claims.

The "undertaking" which the petitioners signed, binding themselves to answer and pay the judgment
or award would not assure satisfaction of the monetary awards if they (the judgment debtors)
became insolvent during the pendency of the appeal.

WHEREFORE, the petition for certiorari is DISMISSED. The temporary restraining order which this
Court issued is hereby lifted.

SO ORDERED.

21

G.R. No. 117196 December 5, 1997

LADISLAO P. VERGARA, Petitioner, v. NATIONAL LABOR RELATIONS

COMMISSION and ARIS PHILIPPINES, INC., Respondents.

PANGANIBAN, J.:

Is an employee, who was acquitted from a criminal charge of qualified theft due to the
prosecution's failure to prove his guilt beyond reasonable doubt, entitled to automatic
reinstatement and backwages considering that his dismissal was based on the same act
that gave rise to the criminal complaint? Does the failure to post an appeal bond render
a decision of the labor arbiter final and executory even where such decision did not
include a computation of the monetary award?

The Case

Before us is a petition for certiorari under Rule 65 of the Rules of Court assailing the
April 29, 1994 Decision 1 and the August 17, 1994 Resolution 2 of the National Labor
Relations Commission in NLRC NCR Case No. 00-02-00934-89 which answered both of
the foregoing questions in the negative. The challenged Decision set aside the labor
arbiter's decision dated November 3, 1989 and entered a new one dismissing
petitioner's complaint, while the impugned Resolution denied reconsideration. The
dispositive portion of the labor arbiter's decision reads: 3

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered
finding respondent [Private Respondent Aris Philippines, Inc.] guilty of illegal dismissal
and consequently, respondent is hereby ordered to reinstate complainant [petitioner
herein] to his former position without loss of backwages from the date of the latter's
termination until his actual date of reinstatement.

Finally, being compelled to litigate, complainant is also awarded attorney's fees

equivalent to ten (10%) percent of the monetary award adjudicated to complainant.

The Facts

The facts of this case are undisputed. Public Respondent NLRC adopted the labor
arbiter's narration of facts, viz: 4

This pertains to a complaint for illegal dismissal filed by Ladislao P. Vergara against Aris
Philippines, Incorporated.

After submitting their respective position papers and replies, a hearing on the merits
was conducted where complainant Ladislao P. Vergara was presented as the only
complaining witness undergoing direct and cross-examination. During its turn,
respondent did not present any witnesses but only offered certified true copies of
transcript of stenographic notes of testimonies of its witnesses in a criminal case
entitled People of the Philippines versus Ladislao Vergara, Criminal Case No. 4229. After
the hearing on the merits, parties agreed to submit their respective memoranda after
which the case will be considered submitted for decision.

Complainant alleged in his position paper that he was once employed as [a] puncher
starting on February 20, 1986 until his termination on November 7, 1987 with a daily
compensation of P64.00; that when he reported for work on November 7, 1987, his
tour of duty was from 6:00 A.M. to 7:00 p.m.; that he passed the main gate and
proceeded directly to the guard house and/or storage area where as a company
practice he left his bag containing his reversible jacket and proceeded to the leather
department where he performed his duties and responsibilities; that during breaktime
at 8:00 a.m. he went to the canteen where he ate his baon and thereafter returned to
his work areas [sic]; that during lunch break at 11:30 a.m. complainant went again to
the canteen where he bought food and took his lunch after which he again returned to
his work area to resume his work; that at 2:00 p.m. more or less, he went to the
Personnel Department where he secured an undertime form and filled it up at the
Leather Department after which he left to go home; that from the Leather Department,
he passed at the Frisking Area where he was bodily inspected by a security guard; that
he proceeded to the Guard House where the Storage Area was located and picked up
his bag containing his jacket; that while he is [sic] [in] possession of his bag, he
proceeded to the main gate where frisking of bags [was] always conducted by a guard;
that before reaching the main gate the guard assigned at the Guard House where
Storage Area is located called him up and requested him to open his bag which he did
so obediently; that when he opened his bag he was surprised because his bag did not
anymore contain his reversible jacket but various pieces of uncut leather; that he was
brought by the guard to the Personnel Manager [to] whom he explained that he did not
know how and who placed the uncut leather inside his bag and who stole his jacket;
that unsatisfied by his explanation, he was brought to the Pasig Police Station,
unassisted by counsel, where he was detained until November 12, 1987, that on
January 26, 1988 he sent a reply to the letter of the respondent dated January 22,
1988 explaining to the latter that he had nothing to do about the leather inside his bag;
that despite his explanation letter respondent sent him a letter sometime on March 10,
1988 terminating his employment retroactive to November 7, 1987; that [a]side from
terminating his services, respondent filed a case of attempted qualified theft against
him before the Regional Trial Court of Pasig, Branch 68, docketed as Criminal Case No.
4295; that on August 17, 1988, a judgment was rendered acquitting him.

As evidence, complainant presented himself as complaining witness during hearing on

the merits where he underwent direct and cross-examinations, and offered his reply
marked as Annex "A", termination letter as Annexes "B" to "B-1", judgment of acquittal
as Annexes "C" to "C-13".

On the other hand, respondent averred that as a matter of procedure, all employees
going in and out of the company premises must pass through the main gate where their
persons as well as their personal belongings such as handcarried bags, envelopes,
sacks and the like are all subjected to routine frisking procedure by the security guards;
that on November 7, 1987 at around 2:00 p.m., complainant who was supposed to time
off at 3:00 p.m., tried to leave the company premises without leaving any request for
undertime; that one of the security guards, Mr. Wilfredo Viernes, inspected the bag of
the complainant and discovered that it contained nine (9) pieces of stripping leather
owned by the respondent company the value of which amounted to One Thousand Four
Hundred Fifty Nine Pesos and Twenty Three Centavos (P1,459.23); that respondent
brought complainant first to Mr. Gavino Bay, the Director For Employees Relation and
subsequently to the Eastern Police District, Pasig, Metro Manila for proper investigation;
that Mr. Emerlito Matas and Security Guard Wilfredo Viernes gave sworn statement
before Pat. Edgardo M. Hernandez; that after the police investigation, a complaint was
elevated to the Provincial Fiscal who having formed a prima facie case against the
complainant, filed an information for Attempted Qualified Theft before the Metropolitan
Trial Court of Pasig, Branch 68 under docket number as Criminal Case No. 4295; that
on January 14, 1988, Mr. Jesus M. Perez, the Personnel Manager of the respondent
company, sent complainant a memorandum requiring [him] to explain why no
disciplinary measure [should] be imposed against him; that on January 26, 1988,
complainant sent respondent a typewritten letter-explanation denying having attempted
to steal strips of leather; that after a careful and objective consideration of the
attendant facts, the written explanation of the complainant, the sworn statements of
Mr. Emerlito Matas and security guard Viernes, and the Information filed by Assistant
Fiscal Jose A. Mendoza, respondent decided to terminate the services of the
complainant on the grounds of gross misconduct and loss of confidence due to
attempted qualified theft; that a letter of termination was sent to complainant
furnishing the Department of Labor and Employment with a copy of the same.

As evidence, respondent adduced the following documents: Annex "A" - a certified

enumeration of the leathers found in complainant's bag[;] Annexes "B" and "C" -
respective copies of sworn statements of Security Guard Viernes and Mr. Matas[;]
Annex "D" - copy of criminal information; Annex "E" - Memorandum of the personnel
Manager requiring complainant to explain why he should not be imposed disciplinary
measure; Annex "F" - explanation letter of the complainant in answer to the
Memorandum of the Personnel Manager denying having attempted to steal strips of
leather; and Annex "G" - letter of termination to the complainant.

During the hearing on the merits, respondent did not present any witnesses. Instead it
offered certified true copies of transcript of stenographic notes of its witnesses during
the proceeding in a criminal case. Thereafter, respondent submitted its memorandum.

As stated earlier, the labor arbiter found petitioner's dismissal illegal and ordered his
reinstatement and the payment of his backwages. On May 31, 1991, Public Respondent
NLRC dismissed private respondent's appeal because of its failure to post an appeal
bond. 5 Subsequently, the NLRC reconsidered its resolution and ordered herein private
respondent to post an appeal bond in the amount of P59,904. 6 In due course, public
respondent rendered the assailed Decision setting aside that of the labor arbiter.
Thereafter, it issued the questioned Resolution denying petitioner's motion
reconsideration. 7

Hence, this petition for certiorari. 8

The Issues

Petitioner alleges grave abuse of discretion on the part of Public Respondent NLRC. 9

. . . In promulgating its Order of September 29, 1993, which in effect allowed or gave
due course to the appeal of respondent company, considering that the decision of the
labor arbiter had already become final and executory when respondent company failed
to perfect its appeal in accordance with law.

II

. . . When it promulgated its Decision of April 29, 1994, which set aside the decision of
the labor arbiter issued November 3, 1989, finding illegal the dismissal of the
petitioner, which was already final and executory, and entering a new one dismissing
the complaint for lack of merit, considering that said decision [sic] of the Respondent
Commission was issued in complete disregard of and against the evidence, established
jurisprudence and the law.

III

. . . When it promulgated its Order of August 17, 1994, denying for lack of merit the
motion for reconsideration of petitioner, considering that the said Order was issued in
complete disregard of and against the evidence, established jurisprudence, and the law.

Put simply, the issues for resolution are a follows: (1) May an appeal be given due
course in spite of appellant's failure to post a suspersedeas bond? (2) Does the
acquittal of an employee from a criminal charge, arising from the same act which was
the cause of his dismissal from employment, entitle him to automatic reinstatement?
(3) Is public respondent's denial of a motion for reconsideration, in view of the absence
of "palpable or patent" errors in its assailed Decision, a denial based on "form and
style" rather than on substance?

The Court's Ruling

The petition is without merit.

Preliminary Issue: Negligence of Petitioner's Counsel

Petitioner contends that he could not be bound by "the acts or omissions of former
counsel and with the effects of his receipt on May 30, 1994 of the decision of the public
respondent . . ." 10 The following "events and circumstances" allegedly suggest "that
there is more to this case than meets the eye:" 11

. . . The former counsel failed (1) to question the order of the public respondent dated
September 29, [1993], allowing the private respondent to post an appeal bond and
perfect itsappeal [sic] in spite of the fact that the decision of the labor arbiter had
already become final and executory, (2) to file a motion for reconsideration of the
decision of the public respondent dated April 29, 1994, dismissing the claim of the
petitioner, notwithstanding his previous motion for extension of time to file a motion for
reconsideration, and (3) to move and insist for the reinstatement of the petitioner
which was awarded and ordered by the labor arbiter and which by law, Article No. 223
of the Labor Code, as amended, was immediately executory, even pending appeal.
(Emphasis found in the original.)

Petitioner argues that the foregoing legal actions should have been undertaken by his
counsel. These alleged actions, however, will not result in the several of the assailed
Decision. In the first place, petitioner has in fact substantially raised the arguments that
were allegedly neglected by his former counsel. Thus, in his "Motion to Dismiss Appeal"
dated November 8, 1989 before the NLRC, 12 petitioner debunked the alleged finality of
the labor arbiter's decision. In any event, these allegedly omitted arguments are now
raised before this Court and will now be ruled upon.

First Issue: Posting of Supersedeas Bond

Petitioner contends that public respondent committed grave abuse of discretion in

giving due course to the appeal of private respondent. He maintains that the labor
arbiter's decision had become final and executory because private respondent failed to
"post the cash or surety bond mandated by law and the rules within the reglementary
period of ten (10) days from its receipt of the said decision."

We disagree with petitioner's contention. Normally, the filing of an appeal bond is

mandatory and jurisdictional. The facts obtaining in the present case, however, render
this rule inapplicable. First, in his award, the labor arbiter did not fix the exact amount
of backwages and attorney's fees. Second, private respondent had exerted efforts to
determine the exact computation of the monetary award as a basis for filing the correct
amount of the required appeal bond. Private respondent even filed with Public
Respondent NLRC a Manifestation on November 27, 1989 calling its attention to the
omission of the computation of the monetary award in the decision of the labor arbiter.
This shows that private respondent was willing to file the required appeal bond, but that
it was unable to do so for reasons beyond its control, i.e., the failure of the labor arbiter
to indicate the exact amount or, at least, the basis for the computation of the monetary
award. Third, private respondent immediately posted the surety bond upon receipt of
the September 29, 1993 Order fixing the amount of the award at P59,904.00. Hence,
no damage was suffered by petitioner.

It is already settled that the failure to post the appeal bond cannot prejudice the
perfection of an appeal, where the labor arbiter's decision does not fix the exact
amount of the monetary award. Thus, the Court held in Union of Filipino Workers
(UFW) vs. NLRC: 13

However, despite the late filing of the bond by private respondent We rule that public
respondent committed no grave abuse of discretion amounting to want of jurisdiction in
giving due course to the appeal of private respondent for the following reasons:

Note that the decision appealed from by private respondent did not state the exact
amount of monetary award. Rather, the labor arbiter ordered the NLRC's "Corporation
Auditing Examiner" to immediately make the computation of the award. As pointed out
by private respondent in its memorandum, "(u)p to this late date, no computations of
any kind ha(ve) been submitted by the "Corporation Auditing Examiner" in this
case . . . It was the Commission's own appeal section, which finally (evaluated and)
came up with a tentative computation which served as a basis for the respondent club
to file the bond.

On October 23, 1990, private respondent received an Order from the NLRC to submit
its bond in the amount of P529,056.00 within ten calendar days from receipt. Private
respondent had actually filed the requisite bond on October 12, 1990, even before
receipt of the said Order. The situation in which private respondent found itself was
therefore not clear-cut. The amount on which the bond would be based had not been
computed until very much later. As We ruled in NAFLU v. Ladrido: "Private respondent
cannot be expected to post such appeal bond equivalent to the amount of the monetary
award when the amount thereof was not included in the decision of the labor arbiter."
Said the court:

In the order of public respondent NLRC dated August 10, 1990, it is stated that "(T)he
policy of the Commission in situations like this (and the labor arbiter should have been
aware of this) is for the labor arbiter to forward records to the Commission [and that]
thereafter, the Commission will cause the computation of the awards and issue an order
directing the appellant to file the required bond." This appears to be a practice of the
NLRC to allow a belated filing of the required appeal bond, in the instance when the
decision of the labor arbiter involves a monetary award that has not yet been
computed, considering that the computation will still have to be made by that office. It
is understood of course, that appellant has filed the appeal on time, as in this case."

Moreover, there is no showing that private respondent abused the leniency of the
NLRC, which would merit the dismissal of its appeal as in the case of Italian Village
v. NLRC. Private respondent immediately filed the bond upon the determination of the
amount of the award." (Emphasis supplied; citations omitted.)

In this light, we agree with the public respondent's justification of its September 29,
1993 Order: 14

This pertains to the Motion for Reconsideration filed by respondent from the resolution
of the Commission dated May 31, 1991, dismissing the instant appeal for non-posting
of appeal bond.

This motion for reconsideration is predicated on the ground that respondent's non-
posting of the appeal bond is due to the fact that the Labor Arbiter's decision failed to
state the amount of backwages awarded to complainant. Moreover, respondent had
offered to post the necessary bond in accordance with law.

Second Issue: Acquittal Does Not Ipso Facto Mean Reinstatement

Petitioner assails public respondent's finding that petitioner "has been found guilty of
violating company rules and regulations, more particularly, involving acts of
dishonesty." He insists that his dismissal violated "the basic principle and essence of
due process." 15 Private respondent's memorandum on the theft charge against him and
the request for his explanation was sent only on "January 14, 1988, more than two (2)
months after the commission of the alleged theft," but he points out that he was no
longer permitted "to report for work" right after the date of the theft. 16

Petitioner's contention are not tenable.

Article 282 (c) of the Labor Code provides that an employment may be terminated
because of "[f]raud or willful breach by the employee of the trust reposed in him by his
employer or his duly authorized representative." Loss of trust and confidence as a just
cause for dismissing an employee does not require proof beyond reasonable
doubt. 17 An employer needs only to establish sufficient basis for the dismissal of the
employee. 18

The Court finds adequate basis for private respondent's loss of trust and confidence in
petitioner. It is admitted that petitioner's bag contained only his jacket when it was left
a private respondent's storage area. When petitioner was about to leave the company
premises, the guards found that his bag contained pieces of stripping leather, which
had a cumulative total size of 47.25 square feet and weighed more than a blanket and,
hence, much heavier than his jacket. He would have immediately noticed the difference
in weight between his jacket and the pieces of leather found in his bag. Thus,
petitioner's claimed ignorance of the presence of stripping leather inside his bag is at
best dubious. Under the circumstances, we apply against petitioner the disputable
presumption "[t]that a person found in possession of a thing taken in a recent wrongful
act is the taker and the doer of the whole act." 19. Besides, the evidence supporting the
criminal charge, found after preliminary investigation as sufficient to show prima
facie guilt, constitutes just cause for his termination based on loss of trust and
confidence. To constitute just cause, petitioner's malfeasance did not require criminal
conviction. 20 Verily, petitioner was dismissed not because he was convicted of theft, but
because his dishonest acts were substantially proven.

An employee's acquittal in a criminal case does not automatically preclude a

determination that he has been guilty of acts inimical to the employer's interest
resulting in loss of trust and confidence. Corollarily, the ground for the dismissal of an
employee does not require proof beyond reasonable doubt; as noted earlier,
the quantum of proof required is merely substantial evidence. 21 More importantly, the
trial court acquitted petitioner not because he did not commit the offense, but merely
because of the failure of the prosecution to prove his guilt beyond reasonable doubt. In
other words, while the evidence presented against petitioner did not satisfy
the quantum of proof required for conviction in a criminal case, it substantially proved
his culpability which warranted his dismissal from employment.

Third Issue: Assignment of "Palpable or Patent" Errors

Petitioner contends that public respondent, in its August 17, 1994 Order denying the
motion for reconsideration of the assailed Decision, was "overly concerned with form
and style, rather than with merit and substance." 22 According to petitioner, his motion
for reconsideration "pointed out the glaring errors committed by the respondent
Commission." Thus, in assailing the Decision, petitioner "used terms or language of
equivalent, if not stronger import to [sic] 'palpable and patent' in referring and calling
attention to the errors." 23 The solicitor general, in his Comment dated April 7, 1995
agrees with the contention of petitioner that public respondent "focused more on form
and style rather than on substance." 24 However, he opines that this was merely "an
error of judgment but not necessarily grave abuse of discretion" compelling reversal.

It is scarcely necessary to deal with this contention. Whether or not public respondent
was able to fully evaluate the motion for reconsideration is already moot. Petitioner has
aired in this petition the arguments in his motion for reconsideration of the NLRC
Decision, and they have been adequately addressed by this Court.
Assuming arguendo that the NLRC failed to consider the said motion for
reconsideration, petitioner was not left without any recourse.

WHEREFORE, the petition is hereby DISMISSED and the assailed Decision and
Resolution are AFFIRMED. No. pronouncement as to costs.

SO ORDERED.

22

G.R. No. 196830 February 29, 2012

CESAR V. GARCIA, CARLOS RAZON, ALBERTO DE GUZMAN, TOMAS RAZON, OMER E.

PALO, RIZALDE VALENCIA, ALLAN BASA, JESSIE GARCIA,JUANITO PARAS, ALEJANDRO
ORAG, ROMMEL PANGAN, RUEL SOLIMAN, and CENEN CANLAPAN, represented by
SERENO, and CESAR V. GARCIA, Petitioners,
vs.
KJ COMMERCIAL and REYNALDO QUE, Respondents.

DECISION
CARPIO, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court. The petition challenges
1

the 29 April 2011 Decision of the Court of Appeals in CA-G.R. SP No. 115851, affirming the 8
2

February and 25 June 2010 Resolutions of the National Labor Relations Commission (NLRC) in
3 4

NLRC-LAC-No. 12-004061-08. The NLRC set aside the 30 October 2008 Decision of the Labor
5

Arbiter in NLRC Case No. RAB-III-02-9779-06.

The Facts

Respondent KJ Commercial is a sole proprietorship. It owns trucks and engages in the business of
distributing cement products. On different dates, KJ Commercial employed as truck drivers and truck
helpers petitioners Cesar V. Garcia, Carlos Razon, Alberto De Guzman, Tomas Razon, Omer E.
Palo, Rizalde Valencia, Allan Basa, Jessie Garcia, Juanito Paras, Alejandro Orag, Rommel Pangan,
Ruel Soliman, and Cenen Canlapan (petitioners).

On 2 January 2006, petitioners demanded for a ₱40 daily salary increase. To pressure KJ
Commercial to grant their demand, they stopped working and abandoned their trucks at the Northern
Cement Plant Station in Sison, Pangasinan. They also blocked other workers from reporting to work.

On 3 February 2006, petitioners filed with the Labor Arbiter a complaint for illegal dismissal,
6

underpayment of salary and non-payment of service incentive leave and thirteenth month pay.

The Labor Arbiter’s Ruling

In his 30 October 2008 Decision, the Labor Arbiter held that KJ Commercial illegally dismissed
petitioners. The Labor Arbiter held:

After a careful examination and evaluation of the facts and evidences adduced by both parties, we
find valid and cogent reasons to declare that these complainants were illegally dismissed from their
work to be entitled to their separation in lieu of reinstatement equivalent to their salary for one (1)
month for every year of service and backwages from the time that they were terminated on January
2, 2006 up to the date of this Decision.

We carefully examined the defense set up by the respondents that these complainants were not
terminated from their employment but were the one [sic] who abandoned their work by staging strike
and refused to perform their work as drivers of the trucks owned by the respondents on January 2,
2006, vis-á-vis, he [sic] allegations and claims of the complainants that when they asked for an
increase of their salary for ₱40.00, they were illegally dismissed from their employment without due
process, and we gave more credence and value to the allegations of the complainants that they
were illegally dismissed from their employment without due process and did not abandoned [sic]
their work as the respondents wanted to project. We examined the narration of facts of the
respondents in their Position Paper and Supplemental Position Paper and we concluded that these
complainants were actually terminated on January 2, 2006 and did not abandoned [sic] their jobs as
claimed by the respondents when the respondents, in their Position Paper, admitted that their
cement plant was shutdown on January 3, 2006 and when it resumed its operation on January 7,
2006, they ordered the other drivers to get the trucks in order that the hauling of the cements will not
incur further delay and that their business will not be prejudiced.

Granting for the sake of discussion that indeed these complainants abandoned their work on
January 2, 2006, why then that [sic] the cement plant was shutdown on January 3, 2006 and
resumed operation on January 7, 2006, when there are fifty (50) drivers of the respondents and only
thirteen (13) of them were allegedly stopped from working. Further, if these complainants actually
abandoned their work, as claimed by the respondents, they miserably failed to show by substantial
evidence that these complainants deliberately and unjustifiably refused to resume their employment.

xxxx

The acts of these complainants in filing this instant case a month after they were terminated from
their work is more than sufficient evidence to prove and show that they do not have the intention of
abandoning their work. While we acknowledged the offer of the respondents for these complainants
to return back to work during the mandatory conference, the fact that these complainants were
illegally terminated and prevented from performing their work as truck drivers of the respondents and
that there was no compliance with the substantive and procedural due process of terminating an
employee, their subsequent offer to return to work will not cure the defect that there was already
illegal dismissal committed against these complainants. 7

KJ Commercial appealed to the NLRC. It filed before the NLRC a motion to reduce bond and posted
a ₱50,000 cash bond.

The NLRC’s Ruling

In its 9 March 2009 Decision, the NLRC dismissed the appeal. The NLRC held:
8

Filed with respondents-appellants’ Appeal Memorandum is a Motion to Reduce Appeal Bond and a
cash bond of ₱50,000.00 only. x x x

We find no merit on [sic] the respondents-appellants’ Motion. It must be stressed that under Section
6, Rule VI of the 2005 Revised Rules of this Commission, a motion to reduce bond shall only be
entertained when the following requisites concur:

1. The motion is founded on meritorious ground; and

2. A bond of reasonable amount in relation to the monetary award is posted.

We note that while respondents-appellants claim that they could not possibly produce enough cash
for the required appeal bond, they are unwilling to at least put up a property to secure a surety bond.
Understandably, no surety agency would normally accept a surety obligation involving a substantial
amount without a guarantee that it would be indemnified in case the surety bond posted is forfeited
in favor of a judgment creditor. Respondents-appellants’ insinuation that no surety company can
finish the processing of a surety bond in ten days time is not worthy of belief as it is contrary to
ordinary business experience. What is obvious is that respondents-appellants are not willing to
accept the usual conditions of a surety agreement that is why no surety bond could be processed.
The reduction of the required bond is not a matter of right o[n] the part of the movant but lies within
the sound discretion of the NLRC upon showing of meritorious grounds x x x. In this case, we find
that the instant motion is not founded on a meritorious ground. x x x Moreover, we note that the
₱50,000.00 cash bond posted by respondents-appellants which represents less than two (2) percent
of the monetary award is dismally disproportionate to the monetary award of ₱2,612,930.00 and that
the amount of bond posted by respondents-appellants is not reasonable in relation to the monetary
award. x x x A motion to reduce bond that does not satisfy the conditions required under NLRC
Rules shall not stop the running of the period to perfect an appeal x x x.

Conversely, respondents-appellants failed to perfect an appeal for failure to post the required bond. 9

KJ Commercial filed a motion for reconsideration and posted a ₱2,562,930 surety bond. In its 8
10

February 2010 Resolution, the NLRC granted the motion and set aside the Labor Arbiter’s 30
October 2008 Decision. The NLRC held:

x x x [T]his Commission opts to resolve and grant the Motion for Reconsideration filed by
respondent-appellant seeking for reconsideration of Our Decision promulgated on March 9, 2009
dismissing the Appeal for non-perfection, there being an honest effort by the appellants to comply
with putting up the full amount of the required appeal bond. Moreover, considering the merit of the
appeal, by granting the motion for reconsideration, the paramount interest of justice is better served
in the resolution of this case.

xxxx

Going over the record of the case, this Commission noted that in respondents’ Supplemental
Position Paper, in denying complainants’ imputation of illegal dismissal, respondents categorically
alleged "..[.] that complainants were not illegally dismissed but on January 2, 2006, they abandoned
their work by means of [‘]work stoppage[’] or they engaged in an [‘]illegal strike[’] when they
demanded for a higher rate..[.] that while their respective assigned trucks were all in the cement
plant ready to be loaded, complainants paralyzed respondents’ hauling or trucking operation by
staging a work stoppage at the premises of KJ Commercial compound by further blocking their co-
drivers not to report for work." We have observed that despite these damaging allegations,
complainants never bothered to dispute nor contradicted these material allegations. Complainants’
silence on these material allegations consequently lends support to respondents-appellants[’]
contention that complainants were never dismissed at all but had stopped driving the hauler truck
assigned to each of them when their demand for salary increase in the amount they wish was not
granted by respondents-appellants.

Moreover, contrary to the findings of the Labor Arbiter, the purported shutdown of the cement plant
being cited by the Labor Arbiter a quo as the principal cause of complainants’ purported dismissal
cannot be attributed to respondents because it was never established by evidence that respondents
were the owner [sic] of the cement plant where complainants as truck drivers were hauling cargoes
of cement with trucks owned by respondents whose business is confined to that of a cement
distributor and cargo truck hauler. Based on the undisputed account of respondents-appellants, it
appears that the cement plant was compelled to shut down because the hauling or trucking
operation was paralyzed due to complainants’ resort to work stoppage by refusing to drive their
hauler trucks despite the order of the management for them to get the trucks which blockaded the
cement plant.

Furthermore, a perusal of the complainants’ position paper and amended position paper failed to
allege the overt acts showing how they were in fact dismissed on 02 January 2006. The
complainants had not even alleged that they were specifically told that they were dismissed after
they demanded for a salary increase or any statement to that effect. Neither had they alleged that
they were prevented from reporting for work. This only shows there was never a dismissal to begin
with.

xxxx

We cannot affirm the Labor Arbiter’s conclusions absent showing a fact of termination or
circumstances under which the dismissal was effected. Though only substantial evidence is required
in proceedings before the Labor Arbiter to support a litigant’s claim, the same still requires evidence
separate and different, and something which supports the allegations affirmatively made. The
complainants’ claim that they were dismissed on 02 January 2006, absent proof thereof or any
supporting evidence thereto is at best self serving. 11

Petitioners filed a motion for reconsideration. In its 25 June 2010 Resolution, the NLRC denied the
motion for lack of merit. The NLRC held:

We stress that it is within the power and discretion of this Commission to grant or deny a motion to
reduce appeal bond. Having earlier denied the motion to reduce bond of the respondents-appellants,
this Commission is not precluded from reconsidering its earlier Decision on second look when it finds
meritorious ground to serve the ends of justice. Settled is the norm in the matter of appeal bonds
that letter-perfect rules must yield to the broader interest of substantial justice x x x. In this case, the
Decision of the Labor Arbiter had not really become final and executory as respondents timely filed a
Memorandum of Appeal with a Motion to Reduce Appeal Bond and a partial appeal bond. Although
the respondents[’] appeal was dismissed, in the earlier decision, the same Decision was later
reconsidered on considerations that the Labor Arbiter committed palpable errors in his findings and
the monetary awards to the appellees are secured by a partial bond and then later, by an appeal
bond for the full amount of the monetary awards. 12

Petitioners filed with the Court of Appeals a petition for certiorari under Rule 65 of the Rules of
13

Court.

The Court of Appeals’ Ruling

In its 29 April 2011 Decision, the Court of Appeals dismissed the petition and affirmed the NLRC’s 8
February and 25 June 2010 Resolutions. The Court of Appeals held:

After scrupulously examining the contrasting positions of the parties, and the conflicting decisions of
the labor tribunals, We find the records of the case bereft of evidence to substantiate the conclusions
reached by the Labor Arbiter that petitioners were illegally dismissed from employment.

While petitioners vehemently argue that they were unlawfully separated from work, records are
devoid of evidence to show the fact of dismissal. Neither was there any evidence offered by
petitioners to prove that they were no longer allowed to perform their duties as truck drivers or they
were prevented from entering KJ Commercial’s premises, except for their empty and general
allegations that they were illegally dismissed from employment. Such bare and sweeping statement
contains nothing but empty imputation of a fact that could hardly be given any evidentiary weight by
this Court. At the very least, petitioners should have detailed or elaborated the circumstances
surrounding their dismissal or substantiate their claims by submitting evidence to butress such
contention. Without a doubt, petitioners’ allegation of illegal dismissal has no leg to stand on.
Accordingly, they should not expect this Court to swallow their asseveration hook, line and sinker in
the absence of supporting proof. Allegation that one was illegally dismissed from work is not a magic
word that once invoked will automatically sway this Court to rule in favor of the party invoking it.
There must first be substantial evidence to prove that indeed there was illegal dismissal before the
employer bears the burden to prove the contrary. 14

Hence, the present petition.

The Issue

Petitioners raise as issue that the Labor Arbiter’s 30 October 2008 Decision became final and
executory; thus, the NLRC’s 8 February and 25 June 2010 Resolutions and the Court of Appeals’ 29
April 2011 Decision are void for lack of jurisdiction. Petitioners claim that KJ Commercial failed to
perfect an appeal since the motion to reduce bond did not stop the running of the period to appeal.

The Court’s Ruling

The petition is unmeritorious.

When petitioners filed with the Court of Appeals a petition for certiorari, they did not raise as issue
that the Labor Arbiter’s 30 October 2008 Decision had become final and executory. They
enumerated the issues in their petition:

GROUNDS FOR THE PETITION

I.

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR

EXCESS OF JURISDICTION WHEN IT REVERSED THE DECISION OF THE LABOR
ARBITER A QUO AND PRONOUNCED THAT THE PETITIONERS WERE NOT ILLEGALLY
DISMISSED DESPITE CLEAR AND SUBSTANTIAL EVIDENCE ON THE RECORDS
SHOWING THAT COMPLAINANTS WERE REGULAR EMPLOYEES TO BE ENTITLED TO
SECURITY OF TENURE AND WERE ILLEGALLY DISMISSED FROM THEIR
EMPLOYMENT.

II.

THE NLRC HAS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK

OR EXCESS OF JURISDICTION WHEN IT GIVE [sic] MUCH WEIGHT TO PRIVATE
RESPONDENTS[’] BASELESS ALLEGATIONS IN ITS [sic] MOTION FOR
RECONSIDERATION WHEN IT [sic] ALLEGED THAT COMPLAINANTS HAD
ABANDONED THEIR WORK BY MEANS OF "WORK STOPPAGE" OR THEY ENGAGED
IN AN "ILLEGAL STRIKE" WHEN THEY DEMANDED FOR A HIGHER RATE.

III.

THE NLRC GRAVELY ERRED TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION

WHEN IT CONCLUDED THAT "COMPLAINANTS PARALYZED HAULING OR TRUCKING
OPERATION BY STAGING A WORK STOPPAGE AT THE PREMISES OF KJ
COMMERCIAL COMPOUND BY FURTHER BLOCKING THEIR CO-DRIVERS NOT TO
REPORT FOR WORK" WITHOUT A SINGLE EVIDENCE TO SUPPORT SUCH
ALLEGATIONS OF PRIVATE RESPONDENTS.

IV.
 THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT THE PRINCIPAL CAUSE OF
COMPLAINANTS’ DISMISSAL WAS DUE TO THE PURPORTED SHUTDOWN OF THE
CEMENT PLANT CITED BY THE LABOR ARBITER IN HIS DECISION. 15

Accordingly, the Court of Appeals limited itself to the resolution of the enumerated issues. In its 29
April 2011 Decision, the Court of Appeals held:

Hence, petitioners seek recourse before this Court via this Petition for Certiorari challenging the
NLRC Resolutions and raising the following issues:

I.

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR

EXCESS OF JURISDICTION WHEN IT REVERSED THE DECISION OF THE LABOR
ARBITER A QUO AND PRONOUNCED THAT PETITIONERS WERE NOT ILLEGALLY
DISMISSED DESPITE CLEAR AND SUBSTANTIAL EVIDENCE ON THE RECORDS
SHOWING THAT PETITIONERS WERE REGULAR EMPLOYEES TO BE ENTITLED TO
SECURITY OF TENURE AND WERE ILLEGALLY DISMISSED FROM THEIR
EMPLOYMENT.

II.

THE NLRC HAS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK

OR EXCESS OF JURISDICTION WHEN IT GAVE MUCH WEIGHT TO PRIVATE
RESPONDENTS BASELESS ALLEGATIONS IN ITS [sic] MOTION FOR
RECONSIDERATION WHEN IT [sic] ALLEGED THAT PETITIONERS HAD ABANDONED
THEIR WORK BY MEANS OF "WORK STOPPAGE" OR THEY ENGAGED IN AN "ILLEGAL
STRIKE" WHEN THEY DEMANDED FOR A HIGHER RATE.

III.

THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT "PETITIONERS

PARALYZED HAULING AND TRUCKING OPERATION BY STAGING A WORK
STOPPAGE AT THE PREMISES OF KJ COMMERCIAL COMPOUND BY FURTHER
BLOCKING THEIR CO-DRIVERS NOT TO REPORT FOR WORK" WITHOUT A SINGLE
EVIDENCE TO SUPPORT SUCH ALLEGATIONS OF PRIVATE RESPONDENTS.

IV.

THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT THE PRINCIPAL CAUSE OF
PETITIONERS’ DISMISSAL WAS DUE TO THE PURPORTED SHUTDOWN OF THE
CEMENT PLANT CITED BY THE LABOR ARBITER IN HIS DECISION. 16

Petitoners cannot, for the first time, raise as issue in their petition filed with this Court that the Labor
Arbiter’s 30 October 2008 Decision had become final and executory. Points of law, theories and
arguments not raised before the Court of Appeals will not be considered by this Court. Otherwise, KJ
Commercial will be denied its right to due process. In Tolosa v. National Labor Relations
Commission, the Court held:
17

Petitioner contends that the labor arbiter’s monetary award has already reached finality, since
private respondents were not able to file a timely appeal before the NLRC.

This argument cannot be passed upon in this appeal, because it was not raised in the
tribunals a quo. Well-settled is the rule that issues not raised below cannot be raised for the
first time on appeal. Thus, points of law, theories, and arguments not brought to the attention
of the Court of Appeals need not — and ordinarily will not — be considered by this Court.
Petitioner’s allegation cannot be accepted by this Court on its face; to do so would be
tantamount to a denial of respondent’s right to due process.

Furthermore, whether respondents were able to appeal on time is a question of fact that cannot be
entertained in a petition for review under Rule 45 of the Rules of Court. In general, the jurisdiction of
this Court in cases brought before it from the Court of Appeals is limited to a review of errors of law
allegedly committed by the court a quo. (Emphasis supplied)
18
KJ Commercial’s filing of a motion to reduce bond and delayed posting of the ₱2,562,930 surety
bond did not render the Labor Arbiter’s 30 October 2008 Decision final and executory. The Rules of
Procedure of the NLRC allows the filing of a motion to reduce bond subject to two conditions: (1)
there is meritorious ground, and (2) a bond in a reasonable amount is posted. Section 6 of Article VI
states:

No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting
of a bond in a reasonable amount in relation to the monetary award.

The mere filing of the motion to reduce bond without compliance with the requisites in the preceding
paragraph shall not stop the running of the period to perfect an appeal.

The filing of a motion to reduce bond and compliance with the two conditions stop the running of the
period to perfect an appeal. In McBurnie v. Ganzon, the Court held:
19

x x x [T]he bond may be reduced upon motion by the employer, this is subject to the conditions that
(1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable
amount in relation to the monetary award is posted by the appellant, otherwise the filing of the
motion to reduce bond shall not stop the running of the period to perfect an appeal. 20

The NLRC has full discretion to grant or deny the motion to reduce bond, and it may rule on the
21

motion beyond the 10-day period within which to perfect an appeal. Obviously, at the time of the
filing of the motion to reduce bond and posting of a bond in a reasonable amount, there is no
assurance whether the appellant’s motion is indeed based on "meritorious ground" and whether the
bond he or she posted is of a "reasonable amount." Thus, the appellant always runs the risk of
failing to perfect an appeal.

Section 2, Article I of the Rules of Procedure of the NLRC states that, "These Rules shall be liberally
construed to carry out the objectives of the Constitution, the Labor Code of the Philippines and other
relevant legislations, and to assist the parties in obtaining just, expeditious and inexpensive
resolution and settlement of labor disputes." In order to give full effect to the provisions on motion to
reduce bond, the appellant must be allowed to wait for the ruling of the NLRC on the motion even
beyond the 10-day period to perfect an appeal. If the NLRC grants the motion and rules that there is
indeed meritorious ground and that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, the appellant may still file a motion for reconsideration as
provided under Section 15, Rule VII of the Rules. If the NLRC grants the motion for reconsideration
and rules that there is indeed meritorious ground and that the amount of the bond posted is
reasonable, then the appeal is perfected. If the NLRC denies the motion, then the decision of the
labor arbiter becomes final and executory.

In the present case, KJ Commercial filed a motion to reduce bond and posted a ₱50,000 cash bond.
When the NLRC denied its motion, KJ Commercial filed a motion for reconsideration and posted the
full ₱2,562,930 surety bond. The NLRC then granted the motion for reconsideration.

In any case, the rule that the filing of a motion to reduce bond shall not stop the running of the period
to perfect an appeal is not absolute. The Court may relax the rule. In Intertranz Container Lines, Inc.
v. Bautista, the Court held:
22

Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary award
may be perfected only upon the posting of a cash or surety bond. The Court, however, has relaxed
this requirement under certain exceptional circumstances in order to resolve controversies on their
merits. These circumstances include: (1) fundamental consideration of substantial justice; (2)
prevention of miscarriage of justice or of unjust enrichment; and (3) special circumstances of the
case combined with its legal merits, and the amount and the issue involved. 23

In Rosewood Processing, Inc. v. NLRC, the Court held:

24

The perfection of an appeal within the reglementary period and in the manner prescribed by law is
jurisdictional, and noncompliance with such legal requirement is fatal and effectively renders the
judgment final and executory. The Labor Code provides:
ART. 223. Appeal. — Decisions, awards or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders.

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 company duly accredited
by the Commission in the amount equivalent to the monetary award in the judgment appealed from.

Indisputable is the legal doctrine that the appeal of a decision involving a monetary award in labor
cases may be perfected "only upon the posting of a cash or surety bond." The lawmakers intended
the posting of the bond to be an indispensable requirement to perfect an employer’s appeal.

However, in a number of cases, this Court has relaxed this requirement in order to bring about the
immediate and appropriate resolution of controversies on the merits. Some of these cases include:
"(a) counsel’s reliance on the footnote of the notice of the decision of the labor arbiter that the
aggrieved party may appeal within ten (10) working days; (b) fundamental consideration of
substantial justice; (c) prevention of miscarriage of justice or of unjust enrichment, as where the
tardy appeal is from a decision granting separation pay which was already granted in an earlier final
decision; and (d) special circumstances of the case combined with its legal merits or the amount and
the issue involved."

In Quiambao vs. National Labor Relations Commission, this Court ruled that a relaxation of the
appeal bond requirement could be justified by substantial compliance with the rule.

In Globe General Services and Security Agency vs. National Labor Relations Commission, the Court
observed that the NLRC, in actual practice, allows the reduction of the appeal bond upon motion of
the appellant and on meritorious grounds; hence, petitioners in that case should have filed a motion
to reduce the bond within the reglementary period for appeal.

That is the exact situation in the case at bar. Here, petitioner claims to have received the labor
arbiter’s Decision on April 6, 1993. On April 16, 1993, it filed, together with its memorandum on
appeal and notice of appeal, a motion to reduce the appeal bond accompanied by a surety bond for
fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc. Ignoring petitioner’s
motion (to reduce bond), Respondent Commission rendered its assailed Resolution dismissing the
appeal due to the late filing of the appeal bond.

The solicitor general argues for the affirmation of the assailed Resolution for the sole reason that the
appeal bond, even if it was filed on time, was defective, as it was not in an amount "equivalent to the
monetary award in the judgment appealed from." The Court disagrees.

We hold that petitioner’s motion to reduce the bond is a substantial compliance with the Labor Code.
This holding is consistent with the norm that letter-perfect rules must yield to the broader interest of
substantial justice.
25

In Ong v. Court of Appeals, the Court held that the bond requirement on appeals may be relaxed
26

when there is substantial compliance with the Rules of Procedure of the NLRC or when the appellant
shows willingness to post a partial bond. The Court held that, "While the bond requirement on
appeals involving monetary awards has been relaxed in certain cases, this can only be done where
there was substantial compliance of the Rules or where the appellants, at the very least, exhibited
willingness to pay by posting a partial bond."27

In the present case, KJ Commercial showed willingness to post a partial bond. In fact, it posted a
1âwphi1

₱50,000 cash bond. In Ong, the Court held that, "Petitioner in the said case substantially complied
with the rules by posting a partial surety bond of fifty thousand pesos issued by Prudential
Guarantee and Assurance, Inc. while his motion to reduce appeal bond was pending before the
NLRC." 28

Aside from posting a partial bond, KJ Commercial immediately posted the full amount of the bond
when it filed its motion for reconsideration of the NLRC’s 9 March 2009 Decision. In Dr. Postigo v.
Philippine Tuberculosis Society, Inc., the Court held:
29

x x x [T]he respondent immediately submitted a supersedeas bond with its motion for
reconsideration of the NLRC resolution dismissing its appeal. In Ong v. Court of Appeals, we ruled
that the aggrieved party may file the appeal bond within the ten-day reglementary period following
the receipt of the resolution of the NLRC to forestall the finality of such resolution. Hence, while the
appeal of a decision involving a monetary award in labor cases may be perfected only upon the
posting of a cash or surety bond and the posting of the bond is an indispensable requirement to
perfect such an appeal, a relaxation of the appeal bond requirement could be justified by substantial
compliance with the rule. 30

WHEREFORE, the Court DENIES the petition and AFFIRMS the 29 April 2011 Decision of the Court
of Appeals in CA-G.R. SP No. 115851.

SO ORDERED.

23

G.R. No. 201237 September 3, 2014

PHILIPPINE TOURISTERS, INC. and/or ALEJANDRO R. YAGUE,JR., Petitioners,

vs.
MAS TRANSIT WORKERS UNION-ANGLO-KMU* and its members, represented by ABRAHAM
TUMALA, JR., Respondents.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari assailing the Decision dated November 25,
1 2

2011 and the Resolution dated March 12, 2012 of the Court of Appeals (CA) in CA-G.R. SP No.
3

96000 which reversed and set aside the Decision dated January 20, 2006 of the National Labor
4

Relations Commission (NLRC) in NLRC NCR CN. 30-04-01713-01/ CA No. 036901-03, thereby
reinstating the Decision dated July 14, 2003 of the Labor Arbiter (LA) finding MAS Transit, Inc. (MTI)
5

and petitioners Philippine Touristers, Inc. (PTI) and/or its president, Alejandro R. Yague, Jr. (Yague)
guilty of unfair labor practice, i.e., illegal lock out.

The Facts

On June 14, 2000, respondentSamahan ng Manggagawa sa Mas Transit-Anglo-KMU (the Union) –

a union organized through the affiliation of certain MTI bus drivers/conductors with the Alliance of
Nationalist and Genuine Labor Organizations – filed a petition for certification election before the
6

Department of Labor and Employment (DOLE) - National Capital Region (NCR), docketed as Case
No. NCR-OD-M-0006-018. The DOLE granted the Union’s petition, prompting MTI to file a motion
7

for reconsideration which was, however, denied in a Resolution dated February 7, 2001. 8

Earlier, or on September 15, 2000, MTI decided to sell its passenger buses together with its
9

Certificate of Public Convenience (CPC) issued by the Land Transportation Franchising and
Regulatory Board (LTFRB) to PTI for a total consideration of 98,345,834.43. Records disclose that
the sale of 50 passenger buses together with MTI’s CPC was approved by the LTFRB in a
Decision dated December 28, 2000. As such, PTI was issued a new CPC authorizing it to operate
10

the service on the Baclaran-Malabon via EDSA route using the passenger buses that were sold. 11

In light of the foregoing, MTI issued a "Patalastas" dated March 7, 2001 apprising all of its
12

employees of the sale and transferof its operations to PTI, and the former’s intention to pay them
separation benefits in accordance with law and based on the resources available. The employees
were also advised to apply anew withPTI should they be interested to transfer. Thereafter, or on
March 31, 2001, MTI sent each of the individual respondents a Memorandum informing them of
13 14
their termination from work, effective on said date, in line with the cessation of its business
operations caused by the sale of the passenger buses to the new owners. 15

Claiming that the sale was intended to frustrate their right to selforganization and that there was no
actual transfer of ownership of the passenger buses as the stockholders ofMTI and PTI are one and
the same, the Union, on behalf of its 98 members (respondents), filed a complaint for illegal
16 17

dismissal, unfair labor practice, i.e., illegal lock out, and damages against MTI and/or Tomas Alvarez
(Alvarez), and PTI and Yague (petitioners), before the NLRC, docketed as NLRC NCR CN. 30-04-
01713-01/ CA No. 036901-03.

In their defense, MTI and Alvarez denied that the individual respondents were illegally dismissed
18

orlocked out, contending that the closure of its business operations was valid and justified. They
claimed that the company was forced to sell its passenger buses to PTI as it was already suffering
from serious financial reverses; and that since there was nothing more to operate, it had no choice
but to cease operations. They further added that the required Establishment Termination Report was
submitted to the DOLE on March 29, 2001, whileseveral employees – including some of the
individual respondents – were paid their separation benefits. Hence, they contended that the claims
for reinstatement and backwages were without factual and legal bases. Finally, they sought the
dismissal of the complaint against 30 of the respondents since they had executed a "Sinumpaang
19

Salaysay Para sa Pag-uurong ng Demanda" dated June 11, 2001 where they categorically moved
for the withdrawal of their complaint. 20

For their part, petitioners deniedany liability to the respondents considering that no employer-
employee relationship existed between them and that petitioners were impleaded just because PTI
happened to be the buyer of some of MTI’s passenger buses. They further pointed out that PTI is
not the predecessor-in-interest of MTI as the sale involved the passenger buses only and did not
include the latter’s other assets. 21

The LA Ruling

In a Decision dated July 14, 2003, the LA ruled in favor of the respondents, finding MTI and
22

petitioners guilty of unfair labor practice, i.e., illegal lock out.

The LA held that MTI’s closure of business and cessation of operations, allegedly dueto serious
financial reverses, were actually made to subvert the right of its employees to self-organization. In 23

this relation, the LA pointed out that MTI never disclosed its intent to conduct the said closure during
the proceedings for certification election but only after the refusal of the Union officers and members
to abandon their union, despite threats from its managerial personnel todo so, under pain of
24

termination. The LA also adverted to the fact that only the Union’s officers and members were
25

locked out and terminated by MTI on March 31, 2001,while the other workers who withdrew from the
complaint were re-admitted back to work, adding too that MTI’s claim of seriousfinancial
26

reverseshad no basis in fact. Furthermore, the LA observed that there was no actual stoppage of
27

operations as the remaining employeesof MTI continuously worked for PTI, the owners and 28

stockholders of both corporations being one and the same. Accordingly, MTI and petitioners were
29

adjudged jointly and severally liable for the individual respondents’ backwages,separation pay, and
attorney’s fees. 30

The NLRC Proceedings

Dissatisfied, petitioners appealed before the NLRC by filing their Notice of Appeal and Appeal 31

Memorandum, accompanied by a Manifestation with Motion for Reduction of Bond, praying that
32 33

the required bond covering the monetary judgment of ₱12,833,210.00 (full judgment award) be
reduced in view of PTI’s liquidity problems. Simultaneously, petitioners posted South Sea Surety and
Insurance Company, Inc. (SSSICI) Surety Bond No. G(21) 002718 in the amount of ₱5,000,000.00
34

(partial bond), seeking that the same be considered as substantial compliance for purposesof
perfecting their appeal.

MTI, on the other hand, did not interpose any appeal.

Meanwhile, respondents opposed petitioners’ motion to reduce bond and moved for the dismissal of
their appeal for failure to perfect the same as the bond posted was not in an amount equivalent to
the full judgment award as mandated by law. 35
On September 12, 2003, petitionersfiled a Manifestation and Motion attaching thereto PTI’s Audited
Financial Statement (AFS) as of December 31, 2001 in support of the motion to reduce bond. 36

Pending the NLRC’s action, petitioners subsequently filed a Supplemental Manifestation on

January12, 2004, withdrawing its initial motion and, instead, submitting for approval their additional
surety bond, SSSICI Surety Bond No. G(16) 002066 in the amount of ₱7,833,210.00, to cover the
full judgment award. This was followed by another motion seeking to substitute SSSICI Surety Bond
37

No. G(21)002718 in the amount of ₱5,000,000.00 with that of SSSICI Surety Bond No. G(16)
003459 for the same amount as the former bond was found to have been erroneously and
inadvertently issued in favor of MTI and not PTI. 38

Again, respondents vehemently opposed the foregoing actions of petitioners and soughtfor the
inhibition of the Commissioners of the NLRC-Third Division for failure to dismiss the appeal despite
39

the apparent failure to perfect the same.

In a Decision dated April 19, 2004, the NLRC dismissed the appeal for petitioners’ failure to post the
40

required bond equal to the full judgment award within the ten (10)-day reglementary period
prescribed under the NLRC Rules of Procedure. It also pointed out that the partial bond petitioners
posted was invalid since it was not signed by an authorized signatory of the insurance company as
advised by the NLRC in a Memorandum dated January 5, 2004, and that the ground relied upon for
the reduction of the bond was not substantiated. Likewise, it dismissed respondents’ motion for
41

inhibition for lack of basis. 42

Undeterred, petitioners moved for reconsideration, insisting that the NLRC should adopt a liberal
43

interpretation of the rules on perfection of appeal considering that they had substantially complied
with the same and had in fact completely posted the required bond prior to the resolution of their
motion to reduce bond. 44

Finding merit in petitioners’ motion for reconsideration, the NLRC, in an Order dated September 30,
45

2004, reinstated their appeal. It held that there was substantial compliance with the rules considering
the subsequent posting of an additional bond to complete the full judgment award, adding too that
petitioners’ initial motion to reduce bond was based on a meritorious ground – that is, the inability of
PTI to post the full amount due to its liquidity problems as evidenced by its submitted
AFS. However, considering that PTI’s bonding company, SSSICI, was not authorized to transact
46

business in all courts all over the country per the Court’s Certification dated August 6, 2004,
petitioners were directedto replace the bond, which they timely complied with through the posting of
47

Supersedeas Bond No. SS-B-10150, in the amount of ₱12,833,000.00, issued on November 8,

48

2004 by the Far Eastern Surety & Insurance Company, Inc. 49

Thereafter, or on January 20, 2006, the NLRC rendered a Decision, modifying its April 19, 2004
50

Decision by dismissing the complaint against petitioners. The modification was broughtabout by the
NLRC’s finding that there were no factual and legal bases to hold petitioners jointly and severally
liable with MTI as the two corporationsare separate and distinct juridical entities with different
stockholders and owners. To this end, it ruled that the individual respondents were employeesof
51

MTI and not PTI, and that the sale of the passenger buses to PTI was not simulated or fictitious
since the deed evidencing said sale was duly notarized and approved by the LTFRB in a Decision
dated December 28, 2000. 52

Disagreeing with the NLRC, respondents filed a motion for Reconsideration which was, however,
53

denied in a Resolution dated June 30, 2006, prompting them to elevate the matter on
54

certioraribefore the CA. 55

The CA Ruling

In a Decision dated November 25, 2011,the CA annulled and set aside the modified ruling of the
56

NLRC finding the latter to have acted with grave abuse of discretion in applying a liberal
interpretation of the rules on perfection of appeal.

It held that PTI’s alleged liquidityproblems cannot be considered as a meritorious ground to reduce
the bond as there was no showing that they were incapable of posting at least a surety bond
equivalent to the full judgment award. It further observed thatthe partial bond posted was defective,
57

having been issued in favorof MTI and not PTI, and that the bonding company which issued the
samewas not authorized to transact business in all courts of the Philippines during that
time. Perforce, the CA concluded that there was no basis to extend liberality to and relax the rules
58

in favor of petitioners.

Aggrieved, petitioners filed a motion for reconsideration which was denied in a Resolution dated
59 60

March 12, 2012, hence, this petition.

The Issue Before the Court

The central issue for the Court’s resolution is whether or not the CA erred in ascribing grave abuse
of discretion on the part of the NLRC when the latter gave due courseto petitioners’ appeal and
consequently issued a modified Decision absolving petitioners from liability.

The Court’s Ruling

There is merit in the petition.

For an appeal from the LA’s ruling to the NLRC to be perfected, Article 223 (now Article 229) of the 61

Labor Code requires the posting of a cash or surety bond in an amount equivalent to the monetary
award in the judgment appealed from, viz.:

ART. 223. Appeal. – Decisions, awards, or orders of the Labor Arbiter are final and executory
unlessappealed 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 entertained only on any of the following
grounds:

1. If there is a prima facieevidence of abuse of discretion on the part of the Labor Arbiter;

2. If the decision, order or award was secured through fraud or coercion, including graft and
corruption;

3. If made purely on questions of law; and

4. If serious errors in the findingsof facts are raised which would cause grave or irreparable
damageor injury to the appellant.

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 company duly accredited
by the Commission in the amount equivalent to the monetary award in the judgment appealed from.

x x x x (Emphasis and underscoring supplied)

While it has been settled that the posting of a cash or surety bond is indispensableto the perfection
of an appeal in cases involving monetary awards from the decision of the LA, the Rules of
62

Procedure of the NLRC (the Rules), particularly Section 6, Rule VI thereof, nonetheless allows the
63

reduction of the bond upon a showing of (a) the existence of a meritorious ground for reduction, and
(b) the posting of a bond in a reasonable amount in relation to the monetary award, viz.:

SEC. 6. BOND. – In case the decision of the Labor Arbiter or the Regional Director involves a
monetaryaward, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond. The appeal bond shall either be in cash orsurety in an amount equivalent to the
monetary award, exclusive of damages and attorney’s fees. 1âwphi1

xxxx

No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting
of a bond in a reasonable amount in relation to the monetary award.

The filing of the motion to reduce bond without compliance with the requisites in the preceding
paragraph shall not stop the running of the period to perfect an appeal. (Emphasis and
1âwphi1

underscoring supplied)
In this regard, it bears stressing that the reduction of the bond provided thereunder is not a matter of
right on the part of the movant and its grant still lies within the sound discretion of the NLRC upon a
showing of meritorious grounds and the reasonableness of the bond tendered under the
circumstances. 64

In Nicol v. Footjoy Industrial Corp., the Court held that "meritorious cases" for said purpose would
65

include "instances in which (1) there was substantial compliance with the Rules, (2) surrounding
facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal
interpretation of the requirement of an appeal bond would serve the desired 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 reglementary period." Notably, in determining whether
the arguments raised by the petitioners in their motion to reduce bond is a "meritorious ground," the
NLRC is not precluded from conducting a preliminary determination of the merits of the appellant’s
contentions. And since the intention is merely to give the NLRC an idea of the justification for the
66

reduced bond, the evidence for the purpose would necessarily be less than the evidence required for
a ruling on the merits. 67

Here, it is not disputed that petitioners filed an appeal memorandum and complied with the other
requirements for perfecting an appeal, save for the posting of the full amount equivalent to the
monetary award of ₱12,833,210.00. Instead, petitioners filed a motion to reduce bond claiming that
they were suffering from liquidity problems and, in support of their claim, submitted PTI’s AFS which
showed a deficit in income. Since this claim was not amply controverted by respondents, and
68

considering further the significance of petitioners’ argument raised in their appeal, i.e., that there
exists no employer-employee relationship between PTI and the individual respondents, on the basis
of which lies their non-liability, the Court deems that the NLRC did not gravely abuse its discretion in
deciding that these circumstances constitute meritorious grounds for the reduction of the bond. 69

The absence of grave abuse of discretion in this case is bolstered by the fact that petitioners’ motion
toreduce bond was accompanied by a ₱5,000,000.00 surety bond which was seasonably posted
within the reglementary period to appeal. In McBurnie v. Ganzon, the Court ruled that, "[f]or
70

purposes of compliance with [the bond requirement under the 2011 NLRC Rules of Procedure], a
motion shall be accompanied by the posting of a provisional cash or surety bond equivalent to ten
percent (10%) of the monetary award subject of the appeal, exclusive of damages, and attorney’s
fees." Seeing no cogent reason to deviate from the same, the Court deems that the posting of the
aforesaid partial bond, being evidently more than ten percent (10%) of the full judgment award of
₱12,833,000.00, already constituted substantial compliance with the governing rules at the onset.

In this relation, it must be clarified that while the partial bond was initially tainted with defects, i.e.,
that it was initially issued in favor of MTI and not PTI, and that the bonding company, SSSICI, had no
authority to transact business in all courts of the Philippines at that time, these defects had already
been cured by the petitioners’ posting of Supersedeas Bond No. SS-B-10150, in the full amount of
₱12,833,000.00, issued on November 8, 2004 by the Far Eastern Surety & Insurance Company,
Inc., in timely compliance with the NLRC’s September 30, 2004 Order. Verily, the subsequent
71

completion of the bond, in addition to the reasons above-stated, behooves this Court to hold that the
NLRC actually had sound bases to take cognizance of petitioners’ appeal. Asthe Court sees it, the
NLRC’s reinstatement of petitioners’ appeal in this case was merely impelled by the doctrine that
letter-perfect rules mustyield to the broader interest of substantial justice, as well as the Labor
72

Code’smandate to "use every and all reasonable means to ascertain the facts in each case speedily
and objectively, without regard to technicalities of law or procedure, all in the interest of due
process." It is important to emphasize that an act of a court or tribunal can only be considered to be
73

tainted with grave abuse of discretion when such act is done in a capricious or whimsical exercise of
judgment as is equivalent to lack of jurisdiction, which clearly is not extant with respect to the
74

NLRC’s cognizanceof petitioners’ appeal before it.

Thus, the CA’s ruling granting the certiorari petition on this score must be reversed and set aside.
However, considering that there were other issues raised in the said petition relating to the
substantial merits of the case which were left undecided, a remand of the case for the CA’s
75

resolution of these substantive issues remains in order, in line with the doctrine of hierarchy of courts
as espoused in the St. Martin Funeral Home v. NLRC ruling.
76 77

WHEREFORE, the petition is GRANTED. The Decision dated November 25, 2011 and the
Resolution dated March 12, 2012 of the Court of Appeals (CA) in CA-G.R. SP No. 96000 are hereby
REVERSEDand SET ASIDE. Accordingly, the case is REMANDEDto the CA for the resolution of the
substantive issuesas discussed in this Decision.
SO ORDERED.

24

G.R. No. 168985 July 23, 2008

ACCESSORIES SPECIALIST INC., a.k.a. ARTS 21 CORPORATION, and TADAHIKO

HASHIMOTO, Petitioners,
vs.
ERLINDA B. ALABANZA, for and in behalf of her deceased husband, JONES B.
ALABANZA, Respondent.

DECISION

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the Decision1 dated April 15, 2005 and the Resolution2 dated July 12, 2005 of the Court of Appeals
(CA) in CA-G.R. SP No. 84206.

The Facts

The facts of the case, as narrated in the Decision of the CA:

On September 27, 2002, private respondent Erlinda B. Alabanza (Erlinda, for brevity), for and in
behalf of her husband Jones B. Alabanza (Jones, for brevity) filed a complaint against petitioners
Accessories Specialists, Inc. (ASI, for brevity) also known as ARTS 21 Corporation, and Tadahiko
Hashimoto for non-payment of salaries, separation pay, and 13th month pay.

In her position paper, respondent Erlinda alleged, among others, that her husband Jones was the
Vice-President, Manager and Director of ASI. Jones rendered outstanding services for the
petitioners from 1975 to October 1997. On October 17, 1997, Jones was compelled by the owner of
ASI, herein petitioner Tadahiko Hashimoto, to file his involuntary resignation on the ground that ASI
allegedly suffered losses due to lack of market and incurred several debts caused by a slam in the
market. At the time of his resignation, Jones had unpaid salaries for eighteen (18) months from May
1995 to October 1997 equivalent to ₱396,000.00 and US$38,880.00. He was likewise not paid his
separation pay commensurate to his 21 years of service in the amount of ₱462,000.00 and
US$45,360.00 and 13th month pay amounting to ₱33,000.00. Jones demanded payment of his
money claims upon resignation but ASI informed him that it would just settle first the money claims
of the rank- and-file employees, and his claims will be paid thereafter. Knowing the predicament of
the company, Jones patiently waited for his turn to be paid. Several demands were made by Jones
but ASI just kept on assuring him that he will be paid his monetary claims. Jones died on August 5,
2002 and failed to receive the same.

On the other hand, the petitioners contend that Jones voluntarily resigned on October 31, 1997.
Thus, Erlinda’s cause of action has already prescribed and is forever barred on the ground that
under Article 291 of the Labor Code, all money claims arising from an employer-employee
relationship shall be filed within three (3) years from the time the cause of action accrues. Since the
complaint was filed only on September 27, 2002, or almost five (5) years from the date of the alleged
illegal dismissal of her husband Jones, Erlinda’s complaint is now barred.

On September 14, 2003, Labor Arbiter Reynaldo V. Abdon rendered a decision ordering the
petitioners to pay Erlinda the amount of ₱693,000.00 and US$74,040.00 or its equivalent in peso or
amounting to a total of ₱4,765,200.00 representing her husband’s unpaid salaries, 13th month pay,
and separation pay, and five [percent] (5%) on the said total award as attorney’s fees.
On October 10, 2003, the petitioners filed a notice of appeal with motion to reduce bond and
attached thereto photocopies of the receipts for the cash bond in the amount of ₱290,000.00, and
appeal fee in the amount of ₱170.00.

On January 15, 2004, public respondent NLRC issued an order denying the petitioner’s motion to
reduce bond and directing the latter to post an additional bond, and in case the petitioners opted to
post a surety bond, the latter were required to submit a joint declaration, indemnity agreement and
collateral security within ten (10) days from receipt of the said order, otherwise their appeal shall be
dismissed. The pertinent portion of such order reads:

After a review however of respondents-appellants['] instant motion, We find that the same does not
proffer any valid or justifiable reason that would warrant a reduction of the appeal bond. Hence, the
same must be denied.

WHEREFORE, respondents-appellants are hereby ordered to post a cash or surety bond in the
amount equivalent to the monetary award of Four Million Seven Hundred Sixty-Five Thousand and
Two Hundred Pesos (₱4,765,200.00) granted in the appealed Decision (less the Two Hundred and
Ninety Thousand Pesos [₱290,000.00] cash bond already posted), and joint declaration, indemnity
agreement and collateral security in case respondents-appellants opted to post a surety bond, as
required by Art. 223 of the Labor Code as amended and Section 6, Rule VI of the NLRC New Rules
of Procedure as amended within an unextendible period of ten (10) calendar days from receipt of
this Order; otherwise, the appeal shall be dismissed for non-perfection thereof.

SO ORDERED.

On February 19, 2004, the petitioners moved for a reconsideration of the said order. However, the
public respondent in its resolution dated March 18, 2004 denied the same and dismissed the appeal
of the petitioners, thus:

The reduction of appeal bond is not a matter of right but rests upon our sound discretion. Thus, after
We denied respondents-appellants['] Motion to Reduce [B]ond, they should have immediately
complied with our 15 January 2004 Order directing them to post an additional cash or surety bond in
the amount equivalent to the judgment award less the cash bond already posted within the extended
period of ten (10) days. In all, respondents had twenty (20) days, including the ten (10)-day period,
prescribed under Article 223 of the Labor Code and under Section 6, Rule VI of the NLRC New
Rules of Procedure, within which to post a cash or surety bond. To seek a reconsideration of our 15
January 2004 order is tantamount to seeking another extension of the period within which to perfect
an appeal, which is however, not allowed under Section 7, Rule VI of the NLRC Rule. x x x

xxxx

WHEREFORE, premises considered, the Motion for Reconsideration filed by respondents-

appellants is hereby DENIED and the instant appeal DISMISSED for non-perfection thereof.

SO ORDERED.

On April 22, 2004, the aforesaid resolution became final and executory. Thus, herein private
respondent Erlinda filed a motion for execution.

On May 31, 2004, the petitioners filed an opposition to the said motion for execution. On June 11,
2004, Labor Arbiter Reynaldo Abdon issued an order directing the issuance of a writ of execution. 3

On May 28, 2004, petitioners filed a petition for certiorari under Rule 65 of the Rules of Court before
the CA and prayed for the issuance of a temporary restraining order (TRO) and a writ of preliminary
injunction. On June 30, 2004, the CA issued a TRO directing the respondents, their agents, assigns,
and all persons acting on their behalf to refrain and/or cease and desist from executing the Decision
dated September 14, 2003 and Resolution dated March 18, 2004 of the Labor Arbiter (LA).

On April 15, 2005, the CA issued the assailed Decision dismissing the petition. Petitioner filed a
motion for reconsideration. On July 12, 2005, the CA issued the assailed Resolution denying the
motion for reconsideration for lack of merit.
On September 8, 2005, petitioners posted the instant petition presenting the following grounds in
support of their arguments: 1) the cause of action of respondent has already prescribed; 2) the
National Labor Relations Commission (NLRC) gravely abused its discretion when it dismissed the
appeal of petitioners for failure to post the complete amount of the appeal bond; and 3) the monetary
claim was resolved by the LA with uncertainty.

The Issues

The following are the issues that should be resolved in order to come up with a just determination of
the case:

I. Whether the cause of action of respondents has already prescribed;

II. Whether the posting of the complete amount of the bond in an appeal from the decision of
the LA to the NLRC is an indispensable requirement for the perfection of the appeal despite
the filing of a motion to reduce the amount of the appeal bond; and

III. Whether there were sufficient bases for the grant of the monetary award of the LA to the
respondent.

The Ruling of the Court

We resolve to deny the petition.

Petitioners aver that the action of the respondents for the recovery of unpaid wages, separation pay
and 13th month pay has already prescribed since the action was filed almost five years from the time
Jones severed his employment from ASI. Jones filed his resignation on October 31, 1997, while the
complaint before the LA was instituted on September 29, 2002. Petitioners contend that the three-
year prescriptive period under Article 2914 of the Labor Code had already set-in, thereby barring all
of respondent’s money claims arising from their employer-employee relations.

Based on the findings of facts of the LA, it was ASI which was responsible for the delay in the
institution of the complaint. When Jones filed his resignation, he immediately asked for the payment
of his money claims. However, the management of ASI promised him that he would be paid
immediately after the claims of the rank-and-file employees had been paid. Jones relied on this
representation. Unfortunately, the promise was never fulfilled even until the time of Jones’ death.

In light of these circumstances, we can apply the principle of promissory estoppel, which is a
recognized exception to the three-year prescriptive period enunciated in Article 291 of the Labor
Code.

Promissory estoppel may arise from the making of a promise, even though without consideration, if it
was intended that the promise should be relied upon, as in fact it was relied upon, and if a refusal to
enforce it would virtually sanction the perpetration of fraud or would result in other
injustice.5 Promissory estoppel presupposes the existence of a promise on the part of one against
whom estoppel is claimed. The promise must be plain and unambiguous and sufficiently specific so
1avvphi1

that the court can understand the obligation assumed and enforce the promise according to its
terms.6

In order to make out a claim of promissory estoppel, a party bears the burden of establishing the
following elements: (1) a promise was reasonably expected to induce action or forbearance; (2) such
promise did, in fact, induce such action or forbearance; and (3) the party suffered detriment as a
result.7

All the requisites of promissory estoppel are present in this case. Jones relied on the promise of ASI
that he would be paid as soon as the claims of all the rank-and-file employees had been paid. If not
for this promise that he had held on to until the time of his death, we see no reason why he would
delay filing the complaint before the LA. Thus, we find ample justification not to follow the
prescriptive period imposed under Article 291 of the Labor Code. Great injustice will be committed if
we will brush aside the employee’s claims on a mere technicality, especially when it was petitioner’s
own action that prevented respondent from interposing the claims within the required period. 8
 II

Petitioners argue that the NLRC committed grave abuse of discretion in dismissing their appeal for
failure to post the complete amount of the bond. They assert that they cannot post an appeal bond
equivalent to the monetary award rendered by the LA due to financial incapacity. They say that strict
enforcement of the NLRC Rules of Procedure9 that the appeal bond shall be equivalent to the
monetary award is oppressive and would have the effect of depriving petitioners of their right to
appeal.10

Article 223 of the Labor Code mandates that in case of a judgment of the LA involving a monetary
award, an appeal by the employer to the NLRC may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by the Commission, in the
amount equivalent to the monetary award in the judgment appealed from.

The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary
awards from the decision of the LA.11 The intention of the lawmakers to make the bond a mandatory
requisite for the perfection of an appeal by the employer is clearly limned in the provision that an
appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The
word "only" makes it perfectly plain that the lawmakers intended the posting of a cash or surety bond
by the employer to be the essential and exclusive means by which an employer's appeal may be
perfected. The word "may" refers to the perfection of an appeal as optional on the part of the
defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal. The
meaning and the intention of the legislature in enacting a statute must be determined from the
language employed; and where there is no ambiguity in the words used, then there is no room for
construction.12

The filing of the bond is not only mandatory but also a jurisdictional requirement that must be
complied with in order to confer jurisdiction upon the NLRC.13 Non-compliance therewith renders the
decision of the LA final and executory.14 This requirement is intended to assure the workers that if
they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the
employer's appeal. It is intended to discourage

employers from using an appeal to delay or evade their obligation to satisfy their employees' just and
lawful claims.15

In the instant case, the failure of petitioners to comply with the requirement of posting a bond
equivalent in amount to the monetary award is fatal to their appeal. Section 6 of the New Rules of
Procedure of the NLRC mandates, among others, that no motion to reduce bond shall be
entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount
in relation to the monetary award. The NLRC has the full discretion to grant or deny their motion to
reduce the amount of the appeal bond. The finding of the NLRC that petitioners did not present
sufficient justification for the reduction thereof is generally conclusive upon this Court absent a
showing that the denial was tainted with bad faith.

Furthermore, we would like to reiterate that appeal is not a constitutional right, but a mere statutory
privilege. Thus, parties who seek to avail themselves of it must comply with the statutes or rules
allowing it. Perfection of an appeal in the manner and within the period permitted by law is
mandatory and jurisdictional. The requirements for perfecting an appeal must, as a rule, be strictly
followed. Such requirements are considered indispensable interdictions against needless delays and
are necessary for the orderly discharge of the judicial business. Failure to perfect the appeal renders
the judgment of the court final and executory. Just as a losing party has the privilege to file an
appeal within the prescribed period, so does the winner also have the correlative right to enjoy the
finality of the decision.16

III

The propriety of the monetary award of the LA is already binding upon this Court. As we have
repeatedly pointed out, petitioners’ failure to perfect their appeal in the manner and period required
by the rules makes the award final and executory. Petitioners’ stance that there was no sufficient
basis for the award of the payment of withheld wages, separation pay and 13th month pay must fail.
Such matters are questions of facts requiring the presentation of evidence. Findings of facts of
administrative and quasi-judicial bodies, which have acquired expertise on specific matters, are
accorded weight and respect by the Court. They are deemed final and conclusive, unless compelling
reasons are presented for us to digress therefrom.
WHEREFORE, in view of the foregoing, the petition is DENIED for lack of merit. The Decision dated
April 15, 2005 and the Resolution dated July 12, 2005 of the Court of Appeals in CA-G.R. SP No.
84206 are hereby AFFIRMED.

SO ORDERED.

25

FIRST DIVISION

G.R. Nos. 116476-84 May 21, 1998

ROSEWOOD PROCESSING, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, NAPOLEON C. MAMON, ARSENIO
GAZZINGAN, ROMEO C. VELASCO, ARMANDO L. BALLON, VICTOR E. ALDEZA, JOSE L.
CABRERA, VETERANS PHILIPPINE SCOUT SECURITY AGENCY, and/or ENGR. SERGIO
JAMILA IV, respondents.

PANGANIBAN, J.:

Under the Labor Code, an employer is solidarily liable for legal ages due security guards for the
period of time they were assigned to it by its contracted security agency. However, in the absence of
proof that the employer itself committed the acts constitutive of illegal dismissal or conspired with the
security agency in the performance of such acts, the employer shall not be liable for back wages
and/or separation pay arising as a consequence of such unlawful termination.

The Case

These are the legal principles on which this Court bases its resolution of this special civil action
for certiorari, seeking the nullification of the April 28, 1994 Resolution and the July 12, 1994 Order of
the National Labor Relations Commission, which dismissed petitioner's appeal from the labor
arbiter's Decision and denied its Motion for Reconsideration, respectively, in NLRC NCR Case Nos.
00-05-02834-91, 00-08-04630-91, 00-07-03966-91, 00-09-05617-91, 00-07-03967-91, 00-07-04455-
91, 00-08-05030-91, 00-11-06389-91, and 00-03-01642-92.

On May 13, 1991, a complaint for illegal dismissal; underpayment of wages; and for nonpayment of
overtime pay, legal holiday pay, premium pay for holiday and rest day, thirteenth month pay, cash
bond deposit, unpaid wages and damages was filed against Veterans Philippine Scout Security
Agency and/or Sergio Jamila IV (collectively referred to as the "security agency," for brevity).
Thereafter, petitioner was impleaded as a third-party respondent by the security agency. In due
course, Labor Arbiter Ricardo C. Nora rendered a consolidated Decision dated March 26, 1993,
which disposed as follows: 1

IN VIEW OF ALL THE FOREGOING, respondents Veterans Philippine Scout

Security Agency, Sergio Jamila IV, and third-party respondent Rosewood
Processing, Inc. are hereby ordered to pay jointly and severally complainants the
following amounts, to wit:
 1. Napoleon Mamon P126,411.10
2. Arsenio Gazzingan 128,639.71
3. Rodolfo Velasco 147,114.43
4. Armando Ballon 116,894.70
5. Jose L. Cabrera 133,047.81
6. Victor Aldeza 137,046.64
__________

TOTAL P789,154.39
=========

representing their monetary benefits in the amount of SEVEN HUNDRED EIGHTY

NINE THOUSAND ONE HUNDRED FIFTY FOUR PESOS AND 39/100 CENTAVOS
(P789,154.39).

Respondents are likewise ordered to pay attorney's fees in the amount of

P78,915.43 within ten (10) days from receipt of this Decision.

All other issues are hereby [d]ismissed for failure of the complainants to fully
substantiate their claims.

The appeal filed by petitioner was dismissed by the National Labor Relations Commission in its
2

Resolution promulgated April 28, 1994, for failure of the petitioner to file the required appeal bond
within the reglementary period. Pertinent portions of the challenged Resolution are herewith
3

quoted:

It appears on record that [petitioner] received their copy of the [labor arbiter's]
decision on April 2, 1993 and subsequently filed a "Notice of Appeal with
Memorandum of Appeal" on April 26, 1993, in violation of Rule VI, Section 1, 3, and
6 of the 1990 New Rules of Procedure of the NLRC . . . .

xxx xxx xxx

Clearly, the appeal filed by the [petitioners] on April 12, 1993 was not perfected
within the reglementary period, and the decision dated March 26, 1993 became final
and executory as of April 23, 1993.

WHEREFORE, the appeal is hereby DISMISSED.

In its motion for reconsideration, petitioner contended that it received a copy of the labor arbiter's
Decision only on April 6, 1993, and that it filed on April 16, 1993 within the prescribed time a Notice
of Appeal with a Memorandum on Appeal, a Motion to Reduce Appeal Bond and a surety bond
issued by Prudential Guarantee and Assurance, Inc. in the amount of P50,000. Though not opposed
4

by the complainants and the security agency, the arguments stated in the motion were not taken up
by Respondent Commission. Reconsideration was nonetheless denied by Respondent Commission
in its Order of July 12, 1994, quoted below:5

Section 14, Rule VII of the NLRC New Rules of Procedure allows [u]s to entertain a
motion for reconsideration only on "palpable or patent" errors [w]e may have
committed in [o]ur disputed April 28, 1994 resolution.

There being no such assignment here, [petitioner's] motion for reconsideration dated
May 19, 1994 is hereby DENIED for lack of merit.

Hence, this recourse. 6

In a Resolution dated March 20, 1995, this Court issued a temporary restraining order enjoining the
respondents and their agents from implementing and enforcing the assailed Resolution and Order
until further notice.
7

The Facts
Undisputed are the facts of this case, narrated by the labor arbiter as follows:

All the complainants were employed by the [security agency] as security guards:
Napoleon Mamon on October 7, 1989; Arsenio Gazzingan on September 25, 1988;
Rodolfo C. Velasco on January 5, 1987; Armando Ballon on June 28, 1990; Victor
Aldeza on March 21, 1990; and Jose L. Cabrera [in] January 1988.

Napoleon Mamon started working for the [security agency] on October 7, 1989 and
was assigned as office guard for three (3) days without any pay nor allowance as it
was allegedly an on[-the-]job training so there [was] no pay[.] On October 10, 1989,
he was transferred to the residence of Mr. Benito Ong with 12 hours duty a day
receiving a salary very much less than the minimum wage for eight (8) hours work
until February 3, 1990 when he received an order transferring him to Rosewood
Processing, Inc. effective that date . . . ; [a]t Rosewood Processing, Inc., he was
required to render also 12 hours duty every day with a salary of P2,600.00/month. He
was not given his pay for February 1 and 2 by the paymaster of [the security agency]
allegedly because the payroll could not be located so after 3 to 4 times of going back
and forth to [the security agency's] office to get his salary[;] [after] . . . two (2) days he
gave up because he was already spending more than what he could get thru
transportation alone. On May 16, 1991, Rosewood Processing, Inc. asked for the
relief of Mamon and other guards at Rosewood because they came to know that
complainants filed a complaint for underpayment on May 13, 1991 with the National
Labor Relations Commission[.] On May 18 to 19, 1991, [the security agency]
assigned him to their [m]ain [o]ffice. After that, complainant was floated until May 29,
1991 when he was assigned to Mead Johnson Philippines Corporation. [A]t about a
week later, [the security agency] received summons on complainant's complaint for
underpayment and he was called to [the security agency's] office. When he reported,
he was told to sign a "Quitclaim and Waiver['] by Lt. R. Rodriguez because according
to the latter, he [could] only get a measly sum from his complaint with the NLRC and
if he (complainant) [signed] the quitclaim and waiver he [would] be retained at his
present assignment which [was] giving quite a good salary and other benefits but if
he [did] not sign the quitclaim and waiver, he [would] be relieved from his post and
[would] no longer be given any assignment. . . . He was given up to the end of July
1991 to think it over. At the end of July 1991, h[e] was approached by the Security in
Charge A. Azuela and asked him to sign the quitclaim and waiver and when he
refused to sign, he was told that the following day August 1, 1991, he [would have]
no more assignment and should report to their office. Thinking that it was only a joke,
he reported the following day to the detachment commander Mr. A. Yadao and he
was told that the main office . . . relieved him because he did not sign the quitclaim
and waiver. He reported to their office asking for an assignment but he was told by R.
Rodriguez that "I no longer can be given an assignment so I had better resign". He
went back several times to the office of the [security agency] but every time the
answer was the same[:] that he better tender his resignation because he cannot be
given any assignment although respondent was recruiting new guards and posting
them.

Arsenio Gazzingan started to work for the [security agency] on September 29, 1988.
[Note: the introductory paragraph stated September 25, 1988.] He was assigned to
Purefoods Breeding Farm at Calauan, Laguna and given a salary of P54.00 a day
working eight (8) hours. After three (3) months, he was given an examination and
passed the same. On December 26, 1988, he was given an increase and was paid
P64.00/day working eight (8) hours; [h]e remained at the same post for 8 months and
transferred to Purefoods Feed Mill at Sta. Rosa, Laguna, with the same salary and
the same tour of duty, 8 hours[.] After four (4) months, he was transferred to
Purefoods Grand Perry at Sta. Rosa, Laguna, and after eleven (11) days on June
1989, he was transferred to Rosewood Processing, Inc. at Meycauayan, Bulacan
and required to work for 12 hours at a salary of P94.00/day for one year. [In] June
1990, he was assigned at Purefoods DELPAN [to] guard . . . a barge loaded with
corn and rendered 12 hours work/day with a salary of only P148.00/day and after 24
days, he was floated for one month. He reported to [the security agency's] office and
was assigned to Purefoods Breeder Farm in Canlubang rendering 8 hours work per
day receiving only P178.00/day. After 11 days, he asked to be transferred to
Manila[.] [B]ecause of the distance from his home . . . the transfer was approved but
instead of being transferred to Manila, he was assigned to Purefoods B-F-4 in
Batangas rendering 12 hours duty/day and receiving only P148.00 per day until
January 28, 1991[;] and again he requested for transfer which was also approved by
the [security agency's] office[,] but since then he was told to come back again and
again. [U]p to the present he has not been given any assignment. Because of the
fact that his family [was] in danger of going hungry, he sought relief from the NLRC-
NCR-Arbitration Branch.

Rodolfo Velasco started working for the [security agency] on January 5, 1987. He
was assigned to PCI Bank Elcano, Tondo Branch, as probationary, and [for] working
8 hours a day for 9 days he received only P400.00. On January 16, 1987, he was
assigned to [the security agency's] headquarters up to January 31, 1987, working 12
hours a day[; he] received only P650.00 for the 16 days. On September 1, 1988, he
was assigned to Imperial Synthetic Rubber Products rendering 12 hours duty per day
until December 31, 1988 and was given a salary of P1,600.00/month. He was later
transferred to various posts like Polypaper Products working 12 hours a day given a
salary of P1,800.00 a month; Paramount Electrical, Inc. working 12 hours a day
given P1,100.00 for 15 days; Rosewood Processing, Inc., rendering 12 hours duty
per day receiving P2,200.00/month until May 16, 1991[;] Alen Engineering rendering
12 hours duty/day receiving P1,100/month; Purefoods Corporation on Delta II
rendering 12 hours duty per day received P4,200.00 a month. He was relieved on
August 24 and his salary for the period August 20 to 23 has not been paid by [the
security agency.] He was suspended for no cause at all.

Armando Ballon started as security guard with [the security agency] July 1990 [Note:
the introductory paragraph stated June 28, 1990] and was assigned to Purefoods
Corporation in Marikina for five (5) months and received a salary of P50.00 per day
for 8 hours. He was transferred to Rosewood Processing, Inc. on November 6, 1990
rendering 12 hours duty as [d]etachment [c]ommander and a salary of
P2,700.00/month including P200.00 officer's allowance until May 15, 1991. On May
16, 1991, he applied for sick leave on orders of his doctor for 15 days but the HRM,
Miss M. Andres[,] got angry and crumpled his application for sick leave, that [was]
why he was not able to forward it to the SSS. After 15 days, he came back to the
office of [the security agency] asking for an assignment and he was told that he [was]
already terminated. Complainant found out that the reason why Miss Andres
crumpled his application for sick leave was because of the complaint he previously
filed and was dismissed for failure to appear. He then refiled this case to seek
redress from this Office.

Jose L. Cabrera started working for the [security agency] as security guard January,
1988 and was assigned to Alencor Residence rendering 12 hours duty per day and
received a salary of P2,400.00 a month for 3 months[.] [I]n May, 1988, he was
transferred to E & L Restaurant rendering 12 hours duty per day and receiv[ing] a
salary of P1,500.00 per month for 6 months[.] [I]n January, 1989, he was transferred
to Paramount rendering 12 hours duty per day receiving only P1,800.00 per month
for 6 months[.] [I]n July 1989, he was transferred to Benito Ong['s] residence
rendering 12 hours duty per day and receiving a salary of P1,400.00 per month for 4
months[.] [I]n December, 1989, he was transferred to Sea Trade International
rendering . . . 12 hours duty per day and receiving a salary of P1,900 per month for 6
months[.] [I]n July, 1990, he was transferred to Holland Pacific & Paper Mills
rendering 8 hours duty per day and receiving a salary of P2,400.00 per month until
September 1990[.] [In] October 1990, he was transferred to RMG residence
rendering 12 hours duty per day receiving a salary of P2,200.00 per month for 3
months[.] [In] February 1991, he was transferred to Purefoods Corporation at Mabini,
Batangas rendering 12 hours duty per day with a salary of P3,600.00 per month for
only one month because he was hospitalized due to a stab wound inflicted by his
[d]etachment [c]ommander. When he was discharged from the hospital and after he
was examined and declared "fit to work" by the doctor, he reported back to [the
security agency's] office but was given the run-around [and was told to] "come back
tomorrow[.]" [H]e [could] see that [the agency was] posting new recruits. He then
complained to this Honorable Office to seek redress, hiring the services of a counsel.

Victor Aldeza started working for the [security agency] on March 21, 1990 and was
assigned to Meridian Condominium, rendering 12 hours work per day and receiving a
salary of P1,500.00 per month. Although he knew that the salary was below
 minimum yet he persevered because he had spent much to get this job and stayed
on until October 15, 1990[.] On October 16, 1990, he was transferred to Rosewood
Processing, Inc., rendering 12 hours duty per day and receiving a salary of
P2,600.00 per month up to May 15, 1991[.] On the later part of May 1991, he was
assigned to UPSSA (Sandoval Shipyard) rendering 12 hours duty per day receiving a
salary of P3,200.00 per month. [Aldeza] complained to [the security agency] about
the salary but [the agency] did not heed him; thus, he filed his complaint for
underpayment[.] [The agency] upon complainant's complaint for underpayment . . . ,
instead of adjusting his salary to meet the minimum prescribed by law[,] relieved him
and left him floating[.] . . . When he complained of the treatment, he was told to
resign because he could no longer be given any assignment. Because of this,
complainant was forced to file another complaint for illegal dismissal.

Labor Arbiter's Ruling

The labor arbiter noted the failure of the security agency to present evidence to refute the
complainants' allegation. Instead, it impleaded the petitioner as third-party respondent, contending
that its actions were primarily caused by petitioner's noncompliance with its obligations under the
contract for security services, and the subsequent cancellation of the said contract.

The labor arbiter held petitioner jointly and severally liable with the security agency as the
complainants' indirect employer under Articles 106, 107 and 109 of the Labor Code, citing the case
of Spartan Security & Detective Agency, Inc. vs. National Labor Relations Commission. 8

Although the security agency could lawfully place the complainants on floating status for a period not
exceeding six months, the act was "illegal" because the former had issued a newspaper
advertisement for new security guards. Since the relation between the complainants and the agency
was already strained, the labor arbiter ordered the payment of separation pay in lieu of
reinstatement.

The award for wage differential, limited back wages and separation pay contained the following
details:

1. Napoleon Mamon

Wage Differentials P45,959.02

Backwages 72,764.38
Separation Pay 7,687.70 P126,411.10
_________

2. Arsenio Gazzingan

Wage Differentials P24,855.76

Backwages 96,096.25
Separation Pay 7,687.70 P128,639.71
__________

3. Rodolfo Velasco

Wage Differentials P66,393.58

Backwages 69,189.30
Separation Pay 11,531.55 P147,114.43
__________

4. Armando Ballon

Wage Differentials P31,176.85

Backwages 81,874.00
Separation Pay 3,843.85 P116,894.70
__________

5. Jose Cabrera
 Wage Differentials P30,032.63
Backwages 91,483.63
Separation Pay 11,531.55 P133,047.81
__________

6. Victor Aldeza

Wage Differentials P49,406.86

Backwages 83,795.93
Separation Pay 3,843.85 P137,046.64
__________
P789, 154.39
==========

Ruling of Respondent Commission

As earlier stated, Respondent Commission dismissed petitioner's appeal, because it was allegedly
not perfected within the reglementary ten-day period. Petitioner received a copy of the labor arbiter's
Decision on April 2, 1993, and it filed its Memorandum of Appeal on April 12, 1993. However, it
submitted the appeal bond on April 26, 1993, or twelve days after the expiration of the period for
appeal per Rule VI, Section 1, 3 and 6 of the 1990 Rules of Procedure of the National Labor
Relations Commission. Thus, it ruled that the labor arbiter's Decision became final and executory on
April 13, 1993.

In the assailed Order, Respondent Commission denied reconsideration, because petitioner allegedly
failed to raise any palpable or patent error committed by said commission.

Assignment of Errors

Petitioner imputes the following errors to Respondent Commission:

Respondent NLRC committed grave abuse of discretion amounting to lack of

jurisdiction when it dismissed petitioner's appeal despite the fact that the same was
perfected within the reglementary period provided by law.

Respondent NLRC committed grave abuse of discretion amounting to lack of

jurisdiction when it dismissed petitioner's appeal despite the clearly meritorious
grounds relied upon therein.

Otherwise stated, the petition raises these two issues: first, whether the appeal from the labor arbiter
to the NLRC was perfected on time; and second, whether petitioner is solidarily liable with the
security agency for the payment of back wages, wage differential and separation pay.

The Court's Ruling

The petition is impressed with some merit and deserves partial grant.

First Issue: Substantial Compliance with the

Appeal Bond Requirement

The perfection of an appeal within the reglementary period and in the manner prescribed by law is
jurisdictional, and noncompliance with such legal requirement is fatal and effectively renders the
judgment final and executory. The Labor Code provides:
9

Art. 223. Appeal. — Decisions, awards or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. . . .

xxx xxx xxx

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 company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.

xxx xxx xxx

Indisputable is the legal doctrine that the appeal of a decision involving a monetary award in labor
cases may be perfected "only upon the posting of a cash or surety bond." The lawmakers intended
10

the posting of the bond to be an indispensable requirement to perfect an employer's appeal. 11

However, in a number of cases, this Court has relaxed this requirement in order to bring about the
immediate and appropriate resolution of controversies on the merits. Some of these cases include:
12

"(a) counsel's reliance on the footnote of the notice of the decision of the labor arbiter that the
aggrieved party may appeal . . . within ten (10) working days; (b) fundamental consideration of
substantial justice; (c) prevention of miscarriage of justice or of unjust enrichment, as where the
tardy appeal is from a decision granting separation pay which was already granted in an earlier final
decision; and (d) special circumstances of the case combined with its legal merits or the amount and
the issue involved."13

In Quiambao vs. National Labor Relations Commission, this Court ruled that a relaxation of the
14

appeal bond requirement could be justified by substantial compliance with the rule.

In Globe General Services and Security Agency vs. National Labor Relations Commission, the 15

Court observed that the NLRC, in actual practice, allows the reduction of the appeal bond upon
motion of the appellant and on meritorious grounds; hence, petitioners in that case should have filed
a motion to reduce the bond within the reglementary period for appeal.

That is the exact situation in the case at bar. Here, petitioner claims to have received the labor
arbiter's Decision on April 6, 1993. On April 16, 1993, it filed, together with its memorandum on
16

appeal and notice of appeal, a motion to reduce the appeal bond accompanied by a surety
17 18

bond for fifty thousand pesos issued by prudential Guarantee and Assurance, Inc. Ignoring19

petitioner's motion (to reduce bond), Respondent Commission rendered its assailed
Resolution dismissing the appeal due to the late filing of the appeal bond.

The solicitor general argues for the affirmation of the assailed Resolution for the sole reason
that the appeal bond, even if it was filed on time, was defective, as it was not in an amount
"equivalent to the monetary award in the judgment appealed from." The Court disagrees.

We hold that petitioner's motion to reduce the bond is a substantial compliance with the
Labor Code. This holding is consistent with the norm that letter-perfect rules must yield to
the broader interest of substantial justice. 20

Where a decision may be made to rest on informed judgment rather than rigid rules, the
equities of the case must be accorded their due weight because labor determinations should
not only be "secundum rationem but also secundum caritatem." A judicious reading of the
21

memorandum of appeal would have made it evident to Respondent Commission that the
recourse was meritorious. Respondent Commission acted with grave abuse of discretion in
peremptorily dismissing the appeal without passing upon — in fact, ignoring — the motion to
reduce the appeal bond.

We repeat: Considering the clear merits which appear, res ipsa loquitur, in the appeal from
the labor arbiter's Decision, and the petitioner's substantial compliance with rules governing
appeals, we hold that the NLRC gravely abused its discretion in dismissing said appeal and
in failing to pass upon the grounds alleged in the Motion for Reconsideration.

Second Issue: Liability of an Indirect Employer

The overriding premise in the labor arbiter's Decision holding the security agency and the
petitioner liable was that said parties offered no evidence refuting or rebutting the
complainants' computation of their monetary claims. The arbiter ruled that petitioner was
liable in solidum with the agency for salary differentials based on Articles 106, 107 and 109 of
the Labor Code which hold an employer jointly and severally liable with its contractor or
subcontractor, as if it is the direct employer. We quote said provisions below:
 Art. 106. Contractor or subcontractor. — Whenever an employer enters into a
contract with another person for the performance of the former's work, the
employees of the contractor and of the latter's subcontractor, if any, shall be
paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.

xxx xxx xxx

Art. 107. Indirect employer. — The provisions of the immediately preceding

Article shall likewise apply to any person, partnership, association or
corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project.

Art. 109. Solidary liability. — The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held
responsible with his contractor or subcontractor for any violation of any
provision of this Code. For purposes of determining the extent of their civil
liability under this Chapter, they shall be considered as direct employers.

Upon the other hand, back wages and separation pay were awarded because the
complainants were constructively and illegally dismissed by the security agency, which
placed them on floating status and at the same time gave assignments to newly hired
security guards. Noting that the relationship between the security agency and the
complainants was already strained, the labor arbiter granted separation pay in lieu of
reinstatement.

In its memorandum of appeal, petitioner controverts its liability for the mentioned monetary
awards on the following grounds: 22

A. Complainant Jose Cabrera never rendered security services to [petitioner]

or was [n]ever assigned as security guard [for] the latter's business
establishment;

B. Complainants Napoleon Mamon, Arsenio Gazzingan, Rodolfo Velasco,

Armando Ballon and Victor Aldeza rendered security services to [petitioner] for
a fixed period and were thereafter assigned to other entities or establishments
or were floated or recalled to the headquarters of Veterans; and,

C. The relationship between [petitioner] and Veterans was governed by a

Contract for Guard Services under which [petitioner] dutifully paid a contract
price of P3,500.00 a month for 12 hour duty per guard and later increased to
P4,250.00 a month for 12 hour duty per guard which are within the prevailing
rates in the industry and in accordance with labor standard laws.

The first two grounds are meritorious. Legally untenable, however, is the contention
that petitioner is not liable for any wage differential for the reason that it paid the
employees in accordance with the contract for security services which it had entered
into with the security agency. Notwithstanding the service contract between the
petitioner and the security agency, the former is still solidarily liable to the employees,
who were not privy to said contract, pursuant to the aforecited provisions of the Code.
Labor standard legislations are enacted to alleviate the plight of workers whose
wages barely meet the spiraling costs of their basic needs. They are considered
written in every contract, and stipulations in violation thereof are considered not
written. Similarly, legislated wage increases are deemed amendments to the contract.
Thus, employers cannot hide behind their contracts in order to evade their or their
contractors' or subcontractors' liability for noncompliance with the statutory minimum
wage.
The joint and several liability of the employer or principal was enacted to ensure compliance
with the provisions of the Code, principally those on statutory minimum wage. The contractor
or subcontractor is made liable by virtue of his or her status as a direct employer, and the
principal as the indirect employer of the contractor's employees. This liability facilitates, if
not guarantees, payment of the workers' compensation, thus, giving the workers ample
protection as mandated by the 1987 Constitution. This is not unduly burdensome to the
23

employer. Should the indirect employer be constrained to pay the workers, it can recover
whatever amount it had paid in accordance with the terms of the service contract between
itself and the contractor.24

Withal, fairness likewise dictates that the petitioner should not, however, be held liable for
wage differentials incurred while the complainants were assigned to other companies. Under
these cited provisions of the Labor Code, should the contractor fail to pay the wages of its
employees in accordance with law, the indirect employer (the petitioner in this case), is
jointly and severally liable with the contractor, but such responsibility should be understood
to be limited to the extent of the work performed under the contract, in the same manner and
extent that he is liable to the employees directly employed by him. This liability of petitioner
covers the payment of the workers' performance of any work, task, job or project. So long as
the work, task, job or project has been performed for petitioner's benefit or on its behalf, the
liability accrues for such period even if, later on, the employees are eventually transferred or
reassigned elsewhere.

We repeat: The indirect employer's liability to the contractor's employees extends only to the
period during which they were working for the petitioner, and the fact that they were
reassigned to another principal necessarily ends such responsibility. The principal is made
liable to his indirect employees, because it can protect itself from irresponsible contractors
by withholding such sums and paying them directly to the employees or by requiring a bond
from the contractor or subcontractor for this purpose.

Similarly, the solidary liability for payment of back wages and separation pay is limited, under
Article 106, "to the extent of the work performed under the contract"; under Article 107, to
"the performance of any work, task, job or project"; and under Article 109, to "the extent of
their civil liability under this Chapter [on payment of wages]."

These provisions cannot apply to petitioner, considering that the complainants were no
longer working for or assigned to it when they were illegally dismissed. Furthermore, an
order to pay back wages and separation pay is invested with a punitive character, such that
an indirect employer should not be made liable without a finding that it had committed or
conspired in the illegal dismissal.

The liability arising from an illegal dismissal is unlike an order to pay the statutory minimum
wage, because the workers' right to such wage is derived from law. The proposition that
payment of back wages and separation pay should be covered by Article 109, which holds an
indirect employer solidarily responsible with his contractor or subcontractor for "any
violation of any provision of this Code," would have been tenable if there were proof — there
was none in this case — that the principal/employer had conspired with the contractor in the
acts giving rise to the illegal dismissal.

With the foregoing discussion in mind, we now take up in detail the petitioner's liability to
each of the complainants.

Case No. NCR-00-08-04630-91

Mamon worked for petitioner for a period of a little more than one year beginning February 3,
1990 until May 16, 1991. Inasmuch as petitioner was his indirect employer during such rime, it
should thus be severally liable for wage differential from the time of his employment until his
relief from duty. He was relieved upon the request of petitioner, after it had learned of the
complaint for underpayment of wages filed by Mamon and several other security guards.

However, this was not a dismissal from work because Mamon was still working for the
security agency and was immediately assigned, on May 29, 1991, to its other client, Mead
Johnson Philippines. His dismissal came about later, when he refused to sign a quitclaim and
waiver in favor of the security agency. Thus, he was illegally dismissed by the agency when
he was no longer employed by petitioner, which cannot thus be held liable for back wages
and separation pay in his case.

Napoleon Mamon . . . received an order transferring him to Rosewood

Processing, Inc. effective . . . February 3, 1990; . . . . On May 16, 1991,
Rosewood Processing, Inc. asked for the relief of Mamon and other guards at
Rosewood because they came to know that complainants filed a complaint for
underpayment on May 13, 1991 with the National Labor Relations
Commission[,] . . . After that, complainant was floated until May 29, 1991 when
he was assigned to Mead Johnson Philippines Corporation. . . . [A] week later,
[the security agency] received summons on complainant's complaint for
underpayment and he was called to [the security agency] office. When he
reported, he was told to sign a "Quitclaim and Waiver['] by Lt. R. Rodriguez . . .
and . . . if he [did] not sign the quitclaim and waiver, he [would] be relieved
from his post and [would] no longer be given any assignment. . . . At the end of
July 1991, he was approached by the Security in Charge, A. Azuela, . . . [for
him] to sign the quitclaim and waiver[,] and when he refused to sign, he was
told that . . . he ha[d] no more assignment and should report to their office. . . .
[H]e reported the following day to the detachment commander, Mr. A. Yadao
and he was told that the main office ha[d] relieved him . . . . He reported to their
office asking for an assignment but he was told by R. Rodriguez that "I no
longer can be given an assignment so I had better resign." He went back
several times to the office of the [security agency] but every time the answer
was the same . . . although respondent was recruiting new guards and posting
them. 25

Case No. NCR-00-07-03966-91

Gazzingan was assigned to petitioner as a security guard for a period of one year. For said
period, petitioner is solidarily liable with the agency for underpayment of wages based on
Articles 106, 107 and 109 of the Code.

Arsenio Gazzingan . . . after eleven (11) days on June 1989, . . . was transferred
to Rosewood Processing, Inc. . . . . [I]n June 1990, he was assigned at
Purefoods DELPAN . . . . After 11 days, he asked to be transferred to Manila
because of the distance from his home and the transfer was approved but
instead of being transferred to Manila, he was assigned to Purefoods B-F-4 in
Batangas . . . again he requested for transfer which was also approved by the
[security agency] office but since then he was told to come back again and
again and up to the present he has not been given any assignment. . . . . 26

His dismissal cannot be blamed on the petitioner. Like Mamon, Gazzingan had already been
assigned to another client of the agency when he was illegally dismissed. Thus, Rosewood
cannot be held liable, jointly and severally with the agency, for back wages and separation
pay.

Case No. NCR-00-07-03967-91

Rodolfo Velasco was assigned to petitioner from December 31, 1988 until May 16, 1991. Thus,
petitioner is solidarily liable for wage differentials during such period. Petitioner is not,
however, liable for back wages and separation pay, because Velasco was no longer working
for petitioner at the time of his illegal dismissal.

Rodolfo Velasco started working for the [security agency] on January 5, 1987. .
. . [On] December 31, 1988 . . . he was . . . transferred to various posts like . . .
Rosewood Processing, Inc., . . . until May 16, 1991 . . . . He was relieved on
August 24 and his salary for the period August 20 to 23 has not been paid by
[the security agency]; [h]e was suspended for no cause at all. 27

Case No. NCR-00-07-0445-91

Petitioner was the indirect employer of Ballon during the period beginning November 6, 1990
until May 15, 1991; thus, it is liable for wage differentials for said period. However, it is not
liable for back wages and separation pay, as there was no evidence presented to show that it
participated in Ballon's illegal dismissal.

. . . [H]e [Armando Ballon] was transferred to Rosewood Processing, Inc. on

November 6, 1990 rendering 12 hours duty as [d]etachment [c]ommander and
received a salary of P2,700.00/month including P200.00 officer's allowance
until May 15, 1991. On May 16, 1991, he applied for sick leave on orders of his
doctor for 15 days but the HRM, Miss M. Andres[,] got angry and crumpled his
application for sick leave that is why he was not able to forward it to the SSS.
After 15 days, he came back to the office of [the security agency] asking for an
assignment and he was told that he [was] already terminated. Complainant
found out that the reason why Miss Andres crumpled his application for sick
leave was because of the complaint he previously filed and was dismissed for
failure to appear. He then refiled this case to seek redress from this Office. 28

Case No. NCR-00-08-05030-91

Petitioner is liable for wage differentials in favor of Aldeza during the period he worked with
petitioner, that is, October 16, 1990 until May 15, 1991.

. . . On October 16, 1990, he [Aldeza] was transferred to Rosewood Processing,

Inc., . . . up to May 15, 1991[.] On the later part of May 1991, he was assigned to
UPSSA (Sandoval Shipyard) . . . . Complainant [sic] complained to [the security
agency] about the salary but [the security agency] did not heed him; thus, he
filed his complaint for underpayment[.] [The security agency] upon
complainant's complaint for underpayment reacted . . . , instead of adjusting
his salary to meet the minimum prescribed by law[,] relieved him and left him
floating[;] and when he complained of the treatment, he was told to resign
because he could no longer be given any assignment. Because of this,
complainant was forced to file another complaint for illegal dismissal. 29

The cause of Aldeza's illegal dismissal is imputable, not to petitioner, but solely to the
security agency. In Aldeza's case, the solidary liability for back wages and separation pay
arising from Articles 106, 107 and 109 of the Code has no application.

Case No. NCR-00-09-05617-91

Cabrera was an employee of the security agency, but he never rendered security services to
petitioner. This fact is evident in the labor arbiter's findings:

Jose L. Cabrera started working for the [security agency] as [a] security guard
on January, 1988 and was assigned to Alencor Residence . . . . [I]n May, 1988,
he was transferred to E & L, Restaurant . . . [.] [I]n January, 1989, he was
transferred to Paramount . . . [.] [I]n July 1989, he was transferred to Benito
Ong['s] residence . . . [.] [I]n December, 1989, he was transferred to Sea Trade
International . . . [.] [I]n July, 1990, he was transferred to Holland Pacific &
Paper Mills . . . [.] [I]n October 1990, he was transferred to RMG [R]esidence . . .
[.] [I]n February 1991, he was transferred to Purefoods Corporation at Mabini,
Batangas . . . . When he was discharged from the hospital and after he was
examined and declared "fit to work" by the doctor, he reported back to [the
security agency] office but was given the run-around [and was told to] "come
back tomorrow[,]" although he [could] see that [it was] posting new recruits.
He then complained to this Honorable Office to seek redress, hiring the
services of a counsel. 30

Hence, petitioner is not liable to Cabrera for anything.

In all these cases, however, the liability of the security agency is without question, as it did
not appeal from the Decisions of the labor arbiter and Respondent Commission.

WHEREFORE, the petition is partially GRANTED. The assailed Decision is hereby MODIFIED,
such that petitioner, with the Security agency, is solidarily liable to PAY the complainants
only wage differentials during the period that the complainants were actually under its
employ, as above detailed. Petitioner is EXONERATED from the payment of back wages and
separation pay.

The temporary restraining order issued earlier is LIFTED, but the petitioner is deemed liable
only for the aforementioned wage differentials, which Respondent Commission is required to
RECOMPUTE within fifteen days from the finality of this Decision. No costs.

SO ORDERED.

26.

EN BANC

G.R. Nos. 178034 & 178117 G R. Nos. 186984-85 October 17, 2013

ANDREW JAMES MCBURNIE, Petitioner,

vs.
EULALIO GANZON, EGI-MANAGERS, INC. and E. GANZON, INC., Respondents.

RESOLUTION

REYES, J.:

For resolution are the –

(1) third motion for reconsideration1 filed by Eulalio Ganzon (Ganzon), EGI-Managers, Inc.
(EGI) and E. Ganzon, Inc. (respondents) on March 27, 2012, seeking a reconsideration of
the Court’s Decision2 dated September 18, 2009 that ordered the dismissal of their appeal to
the National Labor Relations Commission (NLRC) for failure to post additional appeal bond
in the amount of ₱54,083,910.00; and

(2) motion for reconsideration3 filed by petitioner Andrew James McBurnie (McBurnie) on
September 26, 2012, assailing the Court en banc’s Resolution4 dated September 4, 2012
that (1) accepted the case from the Court’s Third Division and (2) enjoined the
implementation of the Labor Arbiter’s (LA) decision finding him to be illegally dismissed by
the respondents.

Antecedent Facts

The Decision dated September 18, 2009 provides the following antecedent facts and proceedings –

On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal and
other monetary claims against the respondents. McBurnie claimed that on May 11, 1999, he signed
a five-year employment agreement5 with the company EGI as an Executive Vice-President who shall
oversee the management of the company’s hotels and resorts within the Philippines. He performed
work for the company until sometime in November 1999, when he figured in an accident that
compelled him to go back to Australia while recuperating from his injuries. While in Australia, he was
informed by respondent Ganzon that his services were no longer needed because their intended
project would no longer push through.

The respondents opposed the complaint, contending that their agreement with McBurnie was to
jointly invest in and establish a company for the management of hotels. They did not intend to create
an employer-employee relationship, and the execution of the employment contract that was being
invoked by McBurnie was solely for the purpose of allowing McBurnie to obtain an alien work permit
in the Philippines. At the time McBurnie left for Australia for his medical treatment, he had not yet
obtained a work permit.

In a Decision6 dated September 30, 2004, the LA declared McBurnie as having been illegally
dismissed from employment, and thus entitled to receive from the respondents the following
amounts: (a) US$985,162.00 as salary and benefits for the unexpired term of their employment
contract, (b) ₱2,000,000.00 as moral and exemplary damages, and (c) attorney’s fees equivalent to
10% of the total monetary award.

Feeling aggrieved, the respondents appealed the LA’s Decision to the NLRC.7 On November 5,
2004, they filed their Memorandum of Appeal8 and Motion to Reduce Bond9, and posted an appeal
bond in the amount of ₱100,000.00. The respondents contended in their Motion to Reduce Bond,
inter alia, that the monetary awards of the LA were null and excessive, allegedly with the intention of
rendering them incapable of posting the necessary appeal bond. They claimed that an award of
"more than ₱60 Million Pesos to a single foreigner who had no work permit and who left the country
for good one month after the purported commencement of his employment" was a patent
nullity.10 Furthermore, they claimed that because of their business losses that may be attributed to an
economic crisis, they lacked the capacity to pay the bond of almost ₱60 Million, or even the millions
of pesos in premium required for such bond.

On March 31, 2005, the NLRC denied11 the motion to reduce bond, explaining that "in cases
involving monetary award, an employer seeking to appeal the [LA’s] decision to the Commission is
unconditionally required by Art. 223, Labor Code to post bond in the amount equivalent to the
monetary award x x x."12 Thus, the NLRC required from the respondents the posting of an additional
bond in the amount of ₱54,083,910.00.

When their motion for reconsideration was denied,13 the respondents decided to elevate the matter
to the Court of Appeals (CA) via the Petition for Certiorari and Prohibition (With Extremely Urgent
Prayer for the Issuance of a Preliminary Injunction and/or Temporary Restraining Order) 14 docketed
as CA-G.R. SP No. 90845.

In the meantime, in view of the respondents’ failure to post the required additional bond, the NLRC
dismissed their appeal in a Resolution15 dated March 8, 2006. The respondents’ motion for
reconsideration was denied on June 30, 2006.16 This prompted the respondents to file with the CA
the Petition for Certiorari (With Urgent Prayers for the Immediate Issuance of a Temporary
Restraining Order and a Writ of Preliminary Injunction)17 docketed as CA-G.R. SP No. 95916, which
was later consolidated with CA-G.R. SP No. 90845.

CA-G.R. SP Nos. 90845 and 95916

On February 16, 2007, the CA issued a Resolution18 granting the respondents’ application for a writ
of preliminary injunction. It directed the NLRC, McBurnie, and all persons acting for and under their
authority to refrain from causing the execution and enforcement of the LA’s decision in favor of
McBurnie, conditioned upon the respondents’ posting of a bond in the amount of ₱10,000,000.00.
McBurnie sought reconsideration of the issuance of the writ of preliminary injunction, but this was
denied by the CA in its Resolution19 dated May 29, 2007.

McBurnie then filed with the Court a Petition for Review on Certiorari 20 docketed as G.R. Nos.
178034 and 178117, assailing the CA Resolutions that granted the respondents’ application for the
injunctive writ. On July 4, 2007, the Court denied the petition on the ground of McBurnie’s failure to
comply with the 2004 Rules on Notarial Practice and to sufficiently show that the CA committed any
reversible error.21 A motion for reconsideration was denied with finality in a Resolution22 dated
October 8, 2007.

Unyielding, McBurnie filed a Motion for Leave (1) To File Supplemental Motion for Reconsideration
and (2) To Admit the Attached Supplemental Motion for Reconsideration, 23 which was treated by the
Court as a second motion for reconsideration, a prohibited pleading under Section 2, Rule 56 of the
Rules of Court. Thus, the motion for leave was denied by the Court in a Resolution 24 dated
November 26, 2007. The Court’s Resolution dated July 4, 2007 then became final and executory on
November 13, 2007; accordingly, entry of judgment was made in G.R. Nos. 178034 and 178117. 25

In the meantime, the CA ruled on the merits of CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916
and rendered its Decision26 dated October 27, 2008, allowing the respondents’ motion to reduce
appeal bond and directing the NLRC to give due course to their appeal. The dispositive portion of
the CA Decision reads:

WHEREFORE, in view of the foregoing, the petition for certiorari and prohibition docketed as CA GR
SP No. 90845 and the petition for certiorari docketed as CA GR SP No. 95916 are GRANTED.
Petitioners’ Motion to Reduce Appeal Bond is GRANTED. Petitioners are hereby DIRECTED to post
appeal bond in the amount of ₱10,000,000.00. The NLRC is hereby DIRECTED to give due course
to petitioners’ appeal in CA GR SP No. 95916 which is ordered remanded to the NLRC for further
proceedings.

SO ORDERED.27

On the issue28 of the NLRC’s denial of the respondents’ motion to reduce appeal bond, the CA ruled
that the NLRC committed grave abuse of discretion in immediately denying the motion without fixing
an appeal bond in an amount that was reasonable, as it denied the respondents of their right to
appeal from the decision of the LA.29 The CA explained that "(w)hile Art. 223 of the Labor Code
requiring bond equivalent to the monetary award is explicit, Section 6, Rule VI of the NLRC Rules of
Procedure, as amended, recognized as exception a motion to reduce bond upon meritorious
grounds and upon posting of a bond in a reasonable amount in relation to the monetary award." 30

On the issue31 of the NLRC’s dismissal of the appeal on the ground of the respondents’ failure to
post the additional appeal bond, the CA also found grave abuse of discretion on the part of the
NLRC, explaining that an appeal bond in the amount of ₱54,083,910.00 was prohibitive and
excessive. Moreover, the appellate court cited the pendency of the petition for certiorari over the
denial of the motion to reduce bond, which should have prevented the NLRC from immediately
dismissing the respondents’ appeal.32

Undeterred, McBurnie filed a motion for reconsideration. At the same time, the respondents moved
that the appeal be resolved on the merits by the CA. On March 3, 2009, the CA issued a
Resolution33 denying both motions. McBurnie then filed with the Court the Petition for Review on
Certiorari34 docketed as G.R. Nos. 186984-85.

In the meantime, the NLRC, acting on the CA’s order of remand, accepted the appeal from the LA’s
decision, and in its Decision35 dated November 17, 2009, reversed and set aside the Decision of the
LA, and entered a new one dismissing McBurnie’s complaint. It explained that based on records,
McBurnie was never an employee of any of the respondents, but a potential investor in a project that
included said respondents, barring a claim of dismissal, much less, an illegal dismissal. Granting that
there was a contract of employment executed by the parties, McBurnie failed to obtain a work permit
which would have allowed him to work for any of the respondents.36 In the absence of such permit,
the employment agreement was void and thus, could not be the source of any right or obligation.

Court Decision dated September 18, 2009

On September 18, 2009, the Third Division of this Court rendered its Decision 37 which reversed the
CA Decision dated October 27, 2008 and Resolution dated March 3, 2009. The dispositive portion
reads:

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP Nos.
90845 and 95916 dated October 27, 2008 granting respondents’ Motion to Reduce Appeal Bond and
ordering the National Labor Relations Commission to give due course to respondents’ appeal, and
its March 3, 2009 Resolution denying petitioner’s motion for reconsideration, are REVERSED and
SET ASIDE. The March 8, 2006 and June 30, 2006 Resolutions of the National Labor Relations
Commission in NLRC NCR CA NO. 042913-05 dismissing respondents’ appeal for failure to perfect
an appeal and denying their motion for reconsideration, respectively, are REINSTATED and
AFFIRMED.

SO ORDERED.38

The Court explained that the respondents’ failure to post a bond equivalent in amount to the LA’s
monetary award was fatal to the appeal.39 Although an appeal bond may be reduced upon motion by
an employer, the following conditions must first be satisfied: (1) the motion to reduce bond shall be
based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is
posted by the appellant. Unless the NLRC grants the motion to reduce the cash bond within the 10-
day reglementary period to perfect an appeal from a judgment of the LA, the employer is mandated
to post the cash or surety bond securing the full amount within the said 10-day period. 40 The
respondents’ initial appeal bond of ₱100,000.00 was grossly inadequate compared to the LA’s
monetary award.

The respondents’ first motion for reconsideration41 was denied by the Court for lack of merit via a
Resolution42 dated December 14, 2009.

Meanwhile, on the basis of the Court’s Decision, McBurnie filed with the NLRC a motion for
reconsideration with motion to recall and expunge from the records the NLRC Decision dated
November 17, 2009.43 The motion was granted by the NLRC in its Decision44 dated January 14,
2010.45

Undaunted by the denial of their first motion for reconsideration of the Decision dated September 18,
2009, the respondents filed with the Court a Motion for Leave to Submit Attached Second Motion for
Reconsideration46 and Second Motion for Reconsideration,47 which motion for leave was granted in a
Resolution48 dated March 15, 2010. McBurnie was allowed to submit his comment on the second
motion, and the respondents, their reply to the comment. On January 25, 2012, however, the Court
issued a Resolution49 denying the second motion "for lack of merit," "considering that a second
motion for reconsideration is a prohibited pleading x x x."50

The Court’s Decision dated September 18, 2009 became final and executory on March 14, 2012.
Thus, entry of judgment51 was made in due course, as follows:

ENTRY OF JUDGMENT

This is to certify that on September 18, 2009 a decision rendered in the above-entitled cases was
filed in this Office, the dispositive part of which reads as follows:

xxxx

and that the same has, on March 14, 2012 become final and executory and is hereby recorded in the
Book of Entries of Judgments.52

The Entry of Judgment indicated that the same was made for the Court’s Decision rendered in G.R.
Nos. 186984-85.

On March 27, 2012, the respondents filed a Motion for Leave to File Attached Third Motion for
Reconsideration, with an attached Motion for Reconsideration (on the Honorable Court’s 25 January
2012 Resolution) with Motion to Refer These Cases to the Honorable Court En Banc. 53 The third
motion for reconsideration is founded on the following grounds:

I.

THE PREVIOUS 15 MARCH 2010 RESOLUTION OF THE HONORABLE COURT ACTUALLY

GRANTED RESPONDENTS’ "MOTION FOR LEAVE TO SUBMIT A SECOND MOTION FOR
RECONSIDERATION."

HENCE, RESPONDENTS RESPECTFULLY CONTEND THAT THE SUBSEQUENT 25 JANUARY

2012 RESOLUTION CANNOT DENY THE " SECOND MOTION FOR RECONSIDERATION " ON
THE GROUND THAT IT IS A PROHIBITED PLEADING. MOREOVER, IT IS RESPECTFULLY
CONTENDED THAT THERE ARE VERY PECULIAR CIRCUMSTANCES AND NUMEROUS
IMPORTANT ISSUES IN THESE CASES THAT CLEARLY JUSTIFY GIVING DUE COURSE TO
RESPONDENTS’ "SECOND MOTION FOR RECONSIDERATION," WHICH ARE:

II.

THE 10 MILLION PESOS BOND WHICH WAS POSTED IN COMPLIANCE WITH THE OCTOBER
27, 2008 DECISION OF THE COURT OF APPEALS IS A SUBSTANTIAL AND SPECIAL
MERITORIOUS CIRCUMSTANCE TO MERIT RECONSIDERATION OF THIS APPEAL.

III.
THE HONORABLE COURT HAS HELD IN NUMEROUS LABOR CASES THAT WITH RESPECT
TO ARTICLE 223 OF THE LABOR CODE, THE REQUIREMENTS OF THE LAW SHOULD BE
GIVEN A LIBERAL INTERPRETATION, ESPECIALLY IF THERE ARE SPECIAL MERITORIOUS
CIRCUMSTANCES AND ISSUES.

IV. THE LA’S JUDGMENT WAS PATENTLY VOID SINCE IT AWARDS MORE THAN ₱60 MILLION
PESOS TO A SINGLE FOREIGNER WHO HAD NO WORK PERMIT, AND NO WORKING VISA.

V.

PETITIONER MCBURNIE DID NOT IMPLEAD THE NATIONAL LABOR RELATIONS

COMMISSION (NLRC) IN HIS APPEAL HEREIN, MAKING THE APPEAL INEFFECTIVE AGAINST
THE NLRC.

VI.

NLRC HAS DISMISSED THE COMPLAINT OF PETITIONER MCBURNIE IN ITS NOVEMBER 17,
2009 DECISION.

VII.

THE HONORABLE COURT’S 18 SEPTEMBER 2009 DECISION WAS TAINTED WITH VERY
SERIOUS IRREGULARITIES.

VIII.

GR NOS. 178034 AND 178117 HAVE BEEN INADVERTENTLY INCLUDED IN THIS CASE.

IX.

THE HONORABLE COURT DID NOT DULY RULE UPON THE OTHER VERY MERITORIOUS
ARGUMENTS OF THE RESPONDENTS WHICH ARE AS FOLLOWS:

(A) PETITIONER NEVER ATTENDED ANY OF ALL 14 HEARINGS BEFORE THE [LA]
(WHEN 2 MISSED HEARINGS MEAN DISMISSAL).

(B) PETITIONER REFERRED TO HIMSELF AS A "VICTIM" OF LEISURE EXPERTS, INC.,

BUT NOT OF ANY OF THE RESPONDENTS.

(C) PETITIONER’S POSITIVE LETTER TO RESPONDENT MR. EULALIO GANZON

CLEARLY SHOWS THAT HE WAS NOT ILLEGALLY DISMISSED NOR EVEN DISMISSED
BY ANY OF THE RESPONDENTS AND PETITIONER EVEN PROMISED TO PAY HIS
DEBTS FOR ADVANCES MADE BY RESPONDENTS.

(D) PETITIONER WAS NEVER EMPLOYED BY ANY OF THE RESPONDENTS.

PETITIONER PRESENTED WORK FOR CORONADO BEACH RESORT WHICH IS
[NEITHER] OWNED NOR CONNECTED WITH ANY OF THE RESPONDENTS.

(E) THE [LA] CONCLUDED THAT PETITIONER WAS DISMISSED EVEN IF THERE WAS
ABSOLUTELY NO EVIDENCE AT ALL PRESENTED THAT PETITIONER WAS
DISMISSED BY THE RESPONDENTS.

(F) PETITIONER LEFT THE PHILIPPINES FOR AUSTRALIA JUST 2 MONTHS AFTER
THE START OF THE ALLEGED EMPLOYMENT AGREEMENT, AND HAS STILL NOT
RETURNED TO THE PHILIPPINES AS CONFIRMED BY THE BUREAU OF
IMMIGRATION.

(G) PETITIONER COULD NOT HAVE SIGNED AND PERSONALLY APPEARED BEFORE
THE NLRC ADMINISTERING OFFICER AS INDICATED IN THE COMPLAINT SHEET
SINCE HE LEFT THE COUNTRY 3 YEARS BEFORE THE COMPLAINT WAS FILED AND
HE NEVER CAME BACK.54
On September 4, 2012, the Court en banc55 issued a Resolution56 accepting the case from the Third
Division. It also issued a temporary restraining order (TRO) enjoining the implementation of the LA’s
Decision dated September 30, 2004. This prompted McBurnie’s filing of a Motion for
Reconsideration,57 where he invoked the fact that the Court’s Decision dated September 18, 2009
had become final and executory, with an entry of judgment already made by the Court.

Our Ruling

In light of pertinent law and jurisprudence, and upon taking a second hard look of the parties’
arguments and the records of the case, the Court has ascertained that a reconsideration of this
Court’s Decision dated September 18, 2009 and Resolutions dated December 14, 2009 and January
25, 2012, along with the lifting of the entry of judgment in G.R. No. 186984-85, is in order.

The Court’s acceptance of the

third motion for reconsideration

At the outset, the Court emphasizes that second and subsequent motions for reconsideration are, as
a general rule, prohibited. Section 2, Rule 52 of the Rules of Court provides that "no second motion
for reconsideration of a judgment or final resolution by the same party shall be entertained." The rule
rests on the basic tenet of immutability of judgments. "At some point, a decision becomes final and
executory and, consequently, all litigations must come to an end."58

The general rule, however, against second and subsequent motions for reconsideration admits of
settled exceptions. For one, the present Internal Rules of the Supreme Court, particularly Section 3,
Rule 15 thereof, provides:

Sec. 3. Second motion for reconsideration. ― The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of justice by
the Court en banc upon a vote of at least two-thirds of its actual membership. There is
reconsideration "in the higher interest of justice" when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by operation of law or by the
Court’s declaration.

x x x x (Emphasis ours)

In a line of cases, the Court has then entertained and granted second motions for reconsideration "in
the higher interest of substantial justice," as allowed under the Internal Rules when the assailed
decision is "legally erroneous," "patently unjust" and "potentially capable of causing unwarranted and
irremediable injury or damage to the parties." In Tirazona v. Philippine EDS Techno-Service, Inc.
(PET, Inc.),59 we also explained that a second motion for reconsideration may be allowed in
instances of "extraordinarily persuasive reasons and only after an express leave shall have been
obtained."60 In Apo Fruits Corporation v. Land Bank of the Philippines,61 we allowed a second motion
for reconsideration as the issue involved therein was a matter of public interest, as it pertained to the
proper application of a basic constitutionally-guaranteed right in the government’s implementation of
its agrarian reform program. In San Miguel Corporation v. NLRC,62 the Court set aside the decisions
of the LA and the NLRC that favored claimants-security guards upon the Court’s review of San
Miguel Corporation’s second motion for reconsideration. In Vir-Jen Shipping and Marine Services,
Inc. v. NLRC, et al.,63 the Court en banc reversed on a third motion for reconsideration the ruling of
the Court’s Division on therein private respondents’ claim for wages and monetary benefits.

It is also recognized that in some instances, the prudent action towards a just resolution of a case is
for the Court to suspend rules of procedure, for "the power of this Court to suspend its own rules or
to except a particular case from its operations whenever the purposes of justice require it, cannot be
questioned."64 In De Guzman v. Sandiganbayan,65 the Court, thus, explained:

The rules of procedure should be viewed as mere tools designed to facilitate the attainment of
justice. Their strict and rigid application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be avoided. Even the Rules of Court envision
this liberality. This power to suspend or even disregard the rules can be so pervasive and
encompassing so as to alter even that which this Court itself has already declared to be final, as we
are now compelled to do in this case. x x x.

xxxx

The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of
justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves
to or robots of technical rules, shorn of judicial discretion. That is precisely why courts in rendering
real justice have always been, as they in fact ought to be, conscientiously guided by the norm that
when on the balance, technicalities take a backseat against substantive rights, and not the other way
around. Truly then, technicalities, in the appropriate language of Justice Makalintal, "should give way
to the realities of the situation." x x x.66 (Citations omitted)

Consistent with the foregoing precepts, the Court has then reconsidered even decisions that have
attained finality, finding it more appropriate to lift entries of judgments already made in these cases.
In Navarro v. Executive Secretary,67 we reiterated the pronouncement in De Guzman that the power
to suspend or even disregard rules of procedure can be so pervasive and compelling as to alter
even that which this Court itself has already declared final. The Court then recalled in Navarro an
entry of judgment after it had determined the validity and constitutionality of Republic Act No. 9355,
explaining that:

Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment in light of
attendant extraordinary circumstances. The power to suspend or even disregard rules of procedure
can be so pervasive and compelling as to alter even that which this Court itself had already declared
final. In this case, the compelling concern is not only to afford the movants-intervenors the right to be
heard since they would be adversely affected by the judgment in this case despite not being original
parties thereto, but also to arrive at the correct interpretation of the provisions of the [Local
Government Code (LGC)] with respect to the creation of local government units. x x x. 68 (Citations
omitted)

In Munoz v. CA,69 the Court resolved to recall an entry of judgment to prevent a miscarriage of
justice. This justification was likewise applied in Tan Tiac Chiong v. Hon. Cosico, 70 wherein the Court
held that:

The recall of entries of judgments, albeit rare, is not a novelty. In Muñoz v. CA , where the case was
elevated to this Court and a first and second motion for reconsideration had been denied with finality
, the Court, in the interest of substantial justice, recalled the Entry of Judgment as well as the letter
of transmittal of the records to the Court of Appeals.71 (Citation omitted)

In Barnes v. Judge Padilla,72 we ruled:

A final and executory judgment can no longer be attacked by any of the parties or be modified,
directly or indirectly, even by the highest court of the land.

However, this Court has relaxed this rule in order to serve substantial justice considering (a) matters
of life, liberty, honor or property, (b) the existence of special or compelling circumstances, (c) the
merits of the case, (d) a cause not entirely attributable to the fault or negligence of the party favored
by the suspension of the rules, (e) a lack of any showing that the review sought is merely frivolous
and dilatory, and (f) the other party will not be unjustly prejudiced thereby. 73 (Citations omitted)

As we shall explain, the instant case also qualifies as an exception to, first, the proscription against
second and subsequent motions for reconsideration, and second, the rule on immutability of
judgments; a reconsideration of the Decision dated September 18, 2009, along with the Resolutions
dated December 14, 2009 and January 25, 2012, is justified by the higher interest of substantial
justice.

To begin with, the Court agrees with the respondents that the Court’s prior resolve to grant , and not
just merely note, in a Resolution dated March 15, 2010 the respondents’ motion for leave to submit
their second motion for reconsideration already warranted a resolution and discussion of the motion
for reconsideration on its merits. Instead of doing this, however, the Court issued on January 25,
2012 a Resolution74 denying the motion to reconsider for lack of merit, merely citing that it was a
"prohibited pleading under Section 2, Rule 52 in relation to Section 4, Rule 56 of the 1997 Rules of
Civil Procedure, as amended."75 In League of Cities of the Philippines (LCP) v. Commission on
Elections,76 we reiterated a ruling that when a motion for leave to file and admit a second motion for
reconsideration is granted by the Court, the Court therefore allows the filing of the second motion for
reconsideration. In such a case, the second motion for reconsideration is no longer a prohibited
pleading. Similarly in this case, there was then no reason for the Court to still consider the
respondents’ second motion for reconsideration as a prohibited pleading, and deny it plainly on such
ground. The Court intends to remedy such error through this resolution.

More importantly, the Court finds it appropriate to accept the pending motion for reconsideration and
resolve it on the merits in order to rectify its prior disposition of the main issues in the petition. Upon
review, the Court is constrained to rule differently on the petitions. We have determined the grave
error in affirming the NLRC’s rulings, promoting results that are patently unjust for the respondents,
as we consider the facts of the case, pertinent law, jurisprudence, and the degree of the injury and
damage to the respondents that will inevitably result from the implementation of the Court’s Decision
dated September 18, 2009.

The rule on appeal bonds

We emphasize that the crucial issue in this case concerns the sufficiency of the appeal bond that
was posted by the respondents. The present rule on the matter is Section 6, Rule VI of the 2011
NLRC Rules of Procedure, which was substantially the same provision in effect at the time of the
respondents’ appeal to the NLRC, and which reads:

RULE VI
APPEALS

Sec. 6. BOND. – In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the
monetary award, exclusive of damages and attorney’s fees.

xxxx

No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting
of a bond in a reasonable amount in relation to the monetary award.

The filing of the motion to reduce bond without compliance with the requisites in the preceding
paragraph shall not stop the running of the period to perfect an appeal. (Emphasis supplied)

While the CA, in this case, allowed an appeal bond in the reduced amount of ₱10,000,000.00 and
then ordered the case’s remand to the NLRC, this Court’s Decision dated September 18, 2009
provides otherwise, as it reads in part:

The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary
awards from the decision of the Labor Arbiter. The lawmakers clearly intended to make the bond a
mandatory requisite for the perfection of an appeal by the employer as inferred from the provision
that an appeal by the employer may be perfected "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 which an employer’s appeal may be perfected. x x x.

Moreover, the filing of the bond is not only mandatory but a jurisdictional requirement as well, that
must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance therewith
renders the 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 favor upon
the dismissal of the employer’s appeal. It is intended to discourage employers from using an appeal
to delay or evade their obligation to satisfy their employees’ just and lawful claims.

xxxx

Thus, it behooves the Court to give utmost regard to the legislative and administrative intent to
strictly require the employer to post a cash or surety bond securing the full amount of the monetary
award within the 10[-]day reglementary period. Nothing in the Labor Code or the NLRC Rules of
Procedure authorizes the posting of a bond that is less than the monetary award in the judgment, or
would deem such insufficient posting as sufficient to perfect the appeal.
While the bond may be reduced upon motion by the employer, this is subject to the conditions that
(1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable
amount in relation to the monetary award is posted by the appellant, otherwise the filing of the
motion to reduce bond shall not stop the running of the period to perfect an appeal. The qualification
effectively requires that unless the NLRC grants the reduction of the cash bond within the 10-day
reglementary period, the employer is still expected to post the cash or surety bond securing the full
amount within the said 10-day period. If the NLRC does eventually grant the motion for reduction
after the reglementary period has elapsed, the correct relief would be to reduce the cash or surety
bond already posted by the employer within the 10-day period.77 (Emphasis supplied; underscoring
ours)

To begin with, the Court rectifies its prior pronouncement – the unqualified statement that even an
appellant who seeks a reduction of an appeal bond before the NLRC is expected to post a cash or
surety bond securing the full amount of the judgment award within the 10-day reglementary period to
perfect the appeal.

The suspension of the period to

perfect the appeal upon the filing of
a motion to reduce bond

To clarify, the prevailing jurisprudence on the matter provides that the filing of a motion to reduce
bond, coupled with compliance with the two conditions emphasized in Garcia v. KJ Commercial 78 for
the grant of such motion, namely, (1) a meritorious ground, and (2) posting of a bond in a reasonable
amount, shall suffice to suspend the running of the period to perfect an appeal from the labor
arbiter’s decision to the NLRC.79 To require the full amount of the bond within the 10-day
reglementary period would only render nugatory the legal provisions which allow an appellant to
seek a reduction of the bond. Thus, we explained in Garcia:

The filing of a motion to reduce bond and compliance with the two conditions stop the running of the
period to perfect an appeal. x x x

xxxx

The NLRC has full discretion to grant or deny the motion to reduce bond, and it may rule on the
motion beyond the 10-day period within which to perfect an appeal. Obviously, at the time of the
filing of the motion to reduce bond and posting of a bond in a reasonable amount, there is no
assurance whether the appellant’s motion is indeed based on "meritorious ground" and whether the
bond he or she posted is of a "reasonable amount." Thus, the appellant always runs the risk of
failing to perfect an appeal.

x x x In order to give full effect to the provisions on motion to reduce bond, the appellant must be
allowed to wait for the ruling of the NLRC on the motion even beyond the 10-day period to perfect an
appeal. If the NLRC grants the motion and rules that there is indeed meritorious ground and that the
amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the
motion, the appellant may still file a motion for reconsideration as provided under Section 15, Rule
VII of the Rules. If the NLRC grants the motion for reconsideration and rules that there is indeed
meritorious ground and that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, then the decision of the labor arbiter becomes final and
executory.

xxxx

In any case, the rule that the filing of a motion to reduce bond shall not stop the running of the period
to perfect an appeal is not absolute. The Court may relax the rule. In Intertranz Container Lines, Inc.
v. Bautista, the Court held:

"Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary award
may be perfected only upon the posting of cash or surety bond. The Court, however, has relaxed
this requirement under certain exceptional circumstances in order to resolve controversies on their
merits. These circumstances include: (1) fundamental consideration of substantial justice; (2)
prevention of miscarriage of justice or of unjust enrichment; and (3) special circumstances of the
case combined with its legal merits, and the amount and the issue involved." 80 (Citations omitted and
emphasis ours)
A serious error of the NLRC was its outright denial of the motion to reduce the bond, without even
considering the respondents’ arguments and totally unmindful of the rules and jurisprudence that
allow the bond’s reduction. Instead of resolving the motion to reduce the bond on its merits, the
NLRC insisted on an amount that was equivalent to the monetary award, merely explaining:

We are constrained to deny respondents’ motion for reduction. As held by the Supreme Court in a
recent case, in cases involving monetary award, an employer seeking to appeal the Labor Arbiter’s
decision to the Commission is unconditionally required by Art. 223, Labor Code to post bond in the
amount equivalent to the monetary award (Calabash Garments vs. NLRC, G.R. No. 110827, August
8, 1996). x x x81 (Emphasis ours)

When the respondents sought to reconsider, the NLRC still refused to fully decide on the motion. It
refused to at least make a preliminary determination of the merits of the appeal, as it held:

We are constrained to dismiss respondents’ Motion for Reconsideration. Respondents’ contention

that the appeal bond is excessive and based on a decision which is a patent nullity involves the
merits of the case. x x x82

Prevailing rules and jurisprudence

allow the reduction of appeal bonds.

By such haste of the NLRC in peremptorily denying the respondents’ motion without considering the
respondents’ arguments, it effectively denied the respondents of their opportunity to seek a reduction
of the bond even when the same is allowed under the rules and settled jurisprudence. It was
equivalent to the NLRC’s refusal to exercise its discretion, as it refused to determine and rule on a
showing of meritorious grounds and the reasonableness of the bond tendered under the
circumstances.83 Time and again, the Court has cautioned the NLRC to give Article 223 of the Labor
Code, particularly the provisions requiring bonds in appeals involving monetary awards, a liberal
interpretation in line with the desired objective of resolving controversies on the merits. 84 The NLRC’s
failure to take action on the motion to reduce the bond in the manner prescribed by law and
jurisprudence then cannot be countenanced. Although an appeal by parties from decisions that are
adverse to their interests is neither a natural right nor a part of due process, it is an essential part of
our judicial system. Courts should proceed with caution so as not to deprive a party of the right to
appeal, but rather, ensure that every party has the amplest opportunity for the proper and just
disposition of their cause, free from the constraints of technicalities.85 Considering the mandate of
labor tribunals, the principle equally applies to them.

Given the circumstances of the case, the Court’s affirmance in the Decision dated September 18,
2009 of the NLRC’s strict application of the rule on appeal bonds then demands a re-examination.
Again, the emerging trend in our jurisprudence is to afford every party-litigant the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities.86 Section 2, Rule I of the NLRC Rules of Procedure also provides the policy that "the
Rules shall be liberally construed to carry out the objectives of the Constitution, the Labor Code of
the Philippines and other relevant legislations, and to assist the parties in obtaining just, expeditious
and inexpensive resolution and settlement of labor disputes."87

In accordance with the foregoing, although the general rule provides that an appeal in labor cases
from a decision involving a monetary award may be perfected only upon the posting of a cash or
surety bond, the Court has relaxed this requirement under certain exceptional circumstances in
order to resolve controversies on their merits. These circumstances include: (1) the fundamental
consideration of substantial justice; (2) the prevention of miscarriage of justice or of unjust
enrichment; and (3) special circumstances of the case combined with its legal merits, and the
amount and the issue involved.88 Guidelines that are applicable in the reduction of appeal bonds
were also explained in Nicol v. Footjoy Industrial Corporation.89 The bond requirement in appeals
involving monetary awards has been and may be relaxed in meritorious cases, including instances in
which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances
constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of
an appeal bond would serve the desired 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 reglementary period.90

In Blancaflor v. NLRC,91 the Court also emphasized that while Article 22392 of the Labor Code, as
amended by Republic Act No. 6715, which requires a cash or surety bond in an amount equivalent
to the monetary award in the judgment appealed from may be considered a jurisdictional
requirement for the perfection of an appeal, nevertheless, adhering to the principle that substantial
justice is better served by allowing the appeal on the merits to be threshed out by the NLRC, the
foregoing requirement of the law should be given a liberal interpretation.

As the Court, nonetheless, remains firm on the importance of appeal bonds in appeals from
monetary awards of LAs, we stress that the NLRC, pursuant to Section 6, Rule VI of the NLRC
Rules of Procedure, shall only accept motions to reduce bond that are coupled with the posting of a
bond in a reasonable amount. Time and again, we have explained that the bond requirement
imposed upon appellants in labor cases is intended to ensure the satisfaction of awards that are
made in favor of appellees, in the event that their claims are eventually sustained by the courts. 93 On
the part of the appellants, its posting may also signify their good faith and willingness to recognize
the final outcome of their appeal.

At the time of a motion to reduce appeal bond’s filing, the question of what constitutes "a reasonable
amount of bond" that must accompany the motion may be subject to differing interpretations of
litigants. The judgment of the NLRC which has the discretion under the law to determine such
amount cannot as yet be invoked by litigants until after their motions to reduce appeal bond are
accepted.

Given these limitations, it is not uncommon for a party to unduly forfeit his opportunity to seek a
reduction of the required bond and thus, to appeal, when the NLRC eventually disagrees with the
party’s assessment. These have also resulted in the filing of numerous petitions against the NLRC,
citing an alleged grave abuse of discretion on the part of the labor tribunal for its finding on the
sufficiency or insufficiency of posted appeal bonds.

It is in this light that the Court finds it necessary to set a parameter for the litigants’ and the NLRC’s
guidance on the amount of bond that shall hereafter be filed with a motion for a bond’s reduction. To
ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the
chance to seek a reduction of the appeal bond are effectively carried out, without however defeating
the benefits of the bond requirement in favor of a winning litigant, all motions to reduce bond that are
to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond equivalent to
10% of the monetary award that is subject of the appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that an appellant’s motion is pending resolution by
the Commission. In conformity with the NLRC Rules, the monetary award, for the purpose of
computing the necessary appeal bond, shall exclude damages and attorney’s fees.94 Only after the
posting of a bond in the required percentage shall an appellant’s period to perfect an appeal under
the NLRC Rules be deemed suspended.

The foregoing shall not be misconstrued to unduly hinder the NLRC’s exercise of its discretion, given
that the percentage of bond that is set by this guideline shall be merely provisional. The NLRC
retains its authority and duty to resolve the motion and determine the final amount of bond that shall
be posted by the appellant, still in accordance with the standards of "meritorious grounds" and
"reasonable amount". Should the NLRC, after considering the motion’s merit, determine that a
greater amount or the full amount of the bond needs to be posted by the appellant, then the party
shall comply accordingly. The appellant shall be given a period of 10 days from notice of the NLRC
order within which to perfect the appeal by posting the required appeal bond.

Meritorious ground as a condition

for the reduction of the appeal bond

In all cases, the reduction of the appeal bond shall be justified by meritorious grounds and
accompanied by the posting of the required appeal bond in a reasonable amount.

The requirement on the existence of a "meritorious ground" delves on the worth of the parties’
arguments, taking into account their respective rights and the circumstances that attend the case.
The condition was emphasized in University Plans Incorporated v. Solano,95 wherein the Court held
that while the NLRC’s Revised Rules of Procedure "allows the [NLRC] to reduce the amount of the
bond, the exercise of the authority is not a matter of right on the part of the movant, but lies within
the sound discretion of the NLRC upon a showing of meritorious grounds."96 By jurisprudence, the
merit referred to may pertain to an appellant’s lack of financial capability to pay the full amount of the
bond,97 the merits of the main appeal such as when there is a valid claim that there was no illegal
dismissal to justify the award,98 the absence of an employer-employee relationship,99 prescription of
claims,100 and other similarly valid issues that are raised in the appeal.101 For the purpose of
determining a "meritorious ground", the NLRC is not precluded from receiving evidence, or from
making a preliminary determination of the merits of the appellant’s contentions. 102

In this case, the NLRC then should have considered the respondents’ arguments in the
memorandum on appeal that was filed with the motion to reduce the requisite appeal bond. Although
a consideration of said arguments at that point would have been merely preliminary and should not
in any way bind the eventual outcome of the appeal, it was apparent that the respondents’ defenses
came with an indication of merit that deserved a full review of the decision of the LA. The CA, by its
Resolution dated February 16, 2007, even found justified the issuance of a preliminary injunction to
enjoin the immediate execution of the LA’s decision, and this Court, a temporary restraining order on
September 4, 2012.

Significantly, following the CA’s remand of the case to the NLRC, the latter even rendered a
Decision that contained findings that are inconsistent with McBurnie’s claims. The NLRC reversed
and set aside the decision of the LA, and entered a new one dismissing McBurnie’s complaint. It
explained that McBurnie was not an employee of the respondents; thus, they could not have
dismissed him from employment. The purported employment contract of the respondents with the
petitioner was qualified by the conditions set forth in a letter dated May 11, 1999, which reads:

May 11, 1999

MR. ANDREW MCBURNIE

Re: Employment Contract

Dear Andrew,

It is understood that this Contract is made subject to the understanding that it is effective only when
the project financing for our Baguio Hotel project pushed through.

The agreement with EGI Managers, Inc. is made now to support your need to facilitate your work
permit with the Department of Labor in view of the expiration of your contract with Pan Pacific.

Regards,

Sgd. Eulalio Ganzon (p. 203, Records)103

For the NLRC, the employment agreement could not have given rise to an employer-employee
relationship by reason of legal impossibility. The two conditions that form part of their agreement,
namely, the successful completion of the project financing for the hotel project in Baguio City and
McBurnie’s acquisition of an Alien Employment Permit, remained unsatisfied. 104 The NLRC
concluded that McBurnie was instead a potential investor in a project that included Ganzon, but the
said project failed to pursue due to lack of funds. Any work performed by McBurnie in relation to the
project was merely preliminary to the business venture and part of his "due diligence" study before
pursuing the project, "done at his own instance, not in furtherance of the employment contract but for
his own investment purposes."105 Lastly, the alleged employment of the petitioner would have been
void for being contrary to law, since it is undisputed that McBurnie did not have any work permit. The
NLRC declared:

Absent an employment permit, any employment relationship that McBurnie contemplated with the
respondents was void for being contrary to law. A void or inexistent contract, in turn, has no force
and effect from the beginning as if it had never been entered into. Thus, without an Alien
Employment Permit, the "Employment Agreement" is void and could not be the source of a right or
obligation. In support thereof, the DOLE issued a certification that McBurnie has neither applied nor
been issued an Alien Employment Permit (p. 204, Records).106

McBurnie moved to reconsider, citing the Court’s Decision of September 18, 2009 that reversed and
set aside the CA’s Decision authorizing the remand. Although the NLRC granted the motion on the
said ground via a Decision107 that set aside the NLRC’s Decision dated November 17, 2009, the
findings of the NLRC in the November 17, 2009 decision merit consideration, especially since the
findings made therein are supported by the case records.
In addition to the apparent merit of the respondents’ appeal, the Court finds the reduction of the
appeal bond justified by the substantial amount of the LA’s monetary award. Given its considerable
amount, we find reason in the respondents’ claim that to require an appeal bond in such amount
could only deprive them of the right to appeal, even force them out of business and affect the
livelihood of their employees.108 In Rosewood Processing, Inc. v. NLRC,109 we emphasized: "Where a
decision may be made to rest on informed judgment rather than rigid rules, the equities of the case
must be accorded their due weight because labor determinations should not be ‘secundum rationem
but also secundum caritatem.’"110

What constitutes a reasonable

amount in the determination of the
final amount of appeal bond

As regards the requirement on the posting of a bond in a "reasonable amount," the Court holds that
the final determination thereof by the NLRC shall be based primarily on the merits of the motion and
the main appeal.

Although the NLRC Rules of Procedure, particularly Section 6 of Rule VI thereof, provides that the
bond to be posted shall be "in a reasonable amount in relation to the monetary award ," the merit of
the motion shall always take precedence in the determination. Settled is the rule that procedural
rules were conceived, and should thus be applied in a manner that would only aid the attainment of
justice. If a stringent application of the rules would hinder rather than serve the demands of
substantial justice, the former must yield to the latter.111

Thus, in Nicol where the appellant posted a bond of ₱10,000,000.00 upon an appeal from the LA’s
award of ₱51,956,314.00, the Court, instead of ruling right away on the reasonableness of the
bond’s amount solely on the basis of the judgment award, found it appropriate to remand the case to
the NLRC, which should first determine the merits of the motion. In University Plans, 112 the Court also
reversed the outright dismissal of an appeal where the bond posted in a judgment award of more
than ₱30,000,000.00 was ₱30,000.00. The Court then directed the NLRC to first determine the
merit, or lack of merit, of the motion to reduce the bond, after the appellant therein claimed that it
was under receivership and thus, could not dispose of its assets within a short notice. Clearly, the
rule on the posting of an appeal bond should not be allowed to defeat the substantive rights of the
parties.113

Notably, in the present case, following the CA’s rendition of its Decision which allowed a reduced
appeal bond, the respondents have posted a bond in the amount of ₱10,000,000.00. In Rosewood,
the Court deemed the posting of a surety bond of ₱50,000.00, coupled with a motion to reduce the
appeal bond, as substantial compliance with the legal requirements for an appeal from a
₱789,154.39 monetary award "considering the clear merits which appear, res ipsa loquitor, in the
appeal from the LA’s Decision, and the petitioner’s substantial compliance with rules governing
appeals."114 The foregoing jurisprudence strongly indicate that in determining the reasonable amount
of appeal bonds, the Court primarily considers the merits of the motions and appeals.

Given the circumstances in this case and the merits of the respondents’ arguments before the
NLRC, the Court holds that the respondents had posted a bond in a "reasonable amount", and had
thus complied with the requirements for the perfection of an appeal from the LA’s decision. The CA
was correct in ruling that:

In the case of Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association, President
Rodolfo Jimenez, and members, Reynaldo Fajardo, et al. vs. NLRC, Nueva Ecija I Electric
Cooperative, Inc. (NEECO I) and Patricio de la Peña (GR No. 116066, January 24, 2000), the
Supreme Court recognized that: "the NLRC, in its Resolution No. 11-01-91 dated November 7, 1991
deleted the phrase "exclusive of moral and exemplary damages as well as attorney’s fees in the
determination of the amount of bond, and provided a safeguard against the imposition of excessive
bonds by providing that "(T)he Commission may in meritorious cases and upon motion of the
appellant, reduce the amount of the bond."

In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583, it was held:

"The unreasonable and excessive amount of bond would be oppressive and unjust and would have
the effect of depriving a party of his right to appeal."
 xxxx

In dismissing outright the motion to reduce bond filed by petitioners, NLRC abused its discretion. It
should have fixed an appeal bond in a reasonable amount. Said dismissal deprived petitioners of
their right to appeal the Labor Arbiter’s decision.

xxxx

NLRC Rules allow reduction of appeal bond on meritorious grounds (Sec. 6, Rule VI, NLRC Rules of
Procedure). This Court finds the appeal bond in the amount of ₱54,083,910.00 prohibitive and
excessive, which constitutes a meritorious ground to allow a motion for reduction thereof. 115

The foregoing declaration of the Court requiring a bond in a reasonable amount, taking into account
the merits of the motion and the appeal, is consistent with the oft-repeated principle that letter-
perfect rules must yield to the broader interest of substantial justice.116

The effect of a denial of the appeal

to the NLRC

In finding merit in the respondents’ motion for reconsideration, we also take into account the
unwarranted results that will arise from an implementation of the Court’s Decision dated September
18, 2009. We emphasize, moreover, that although a remand and an order upon the NLRC to give
due course to the appeal would have been the usual course after a finding that the conditions for the
reduction of an appeal bond were duly satisfied by the respondents, given such results, the Court
finds it necessary to modify the CA’s order of remand, and instead rule on the dismissal of the
complaint against the respondents.

Without the reversal of the Court’s Decision and the dismissal of the complaint against the
respondents, McBurnie would be allowed to claim benefits under our labor laws despite his failure to
comply with a settled requirement for foreign nationals.

Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under our
labor laws, it was necessary for him to establish, first and foremost, that he was qualified and duly
authorized to obtain employment within our jurisdiction. A requirement for foreigners who intend to
work within the country is an employment permit, as provided under Article 40, Title II of the Labor
Code which reads:

Art. 40. Employment permit for non-resident aliens. Any alien seeking admission to the Philippines
for employment purposes and any domestic or foreign employer who desires to engage an alien for
employment in the Philippines shall obtain an employment permit from the Department of Labor.

In WPP Marketing Communications, Inc. v. Galera,117 we held that a foreign national’s failure to seek
an employment permit prior to employment poses a serious problem in seeking relief from the
Court.118 Thus, although the respondent therein appeared to have been illegally dismissed from
employment, we explained:

This is Galera’s dilemma: Galera worked in the Philippines without proper work permit but now
wants to claim employee’s benefits under Philippine labor laws.

xxxx

The law and the rules are consistent in stating that the employment permit must be acquired prior to
employment. The Labor Code states: "Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who desires to engage an alien for
employment in the Philippines shall obtain an employment permit from the Department of Labor."
Section 4, Rule XIV, Book I of the Implementing Rules and Regulations provides:

"Employment permit required for entry. – No alien seeking employment, whether as a resident or
non-resident, may enter the Philippines without first securing an employment permit from the
Ministry. If an alien enters the country under a non-working visa and wishes to be employed
thereafter, he may be allowed to be employed upon presentation of a duly approved employment
permit."
Galera cannot come to this Court with unclean hands. To grant Galera’s prayer is to sanction the
violation of the Philippine labor laws requiring aliens to secure work permits before their
employment. We hold that the status quo must prevail in the present case and we leave the parties
where they are. This ruling, however, does not bar Galera from seeking relief from other
jurisdictions.119 (Citations omitted and underscoring ours)

Clearly, this circumstance on the failure of McBurnie to obtain an employment permit, by itself,
necessitates the dismissal of his labor complaint.

Furthermore, as has been previously discussed, the NLRC has ruled in its Decision dated November
17, 2009 on the issue of illegal dismissal. It declared that McBurnie was never an employee of any of
the respondents.120 It explained:

All these facts and circumstances prove that McBurnie was never an employee of Eulalio Ganzon or
the respondent companies, but a potential investor in a project with a group including Eulalio
Ganzon and Martinez but said project did not take off because of lack of funds.

McBurnie further claims that in conformity with the provision of the employment contract pertaining to
the obligation of the respondents to provide housing, respondents assigned him Condo Unit # 812 of
the Makati Cinema Square Condominium owned by the respondents. He was also allowed to use a
Hyundai car. If it were true that the contract of employment was for working visa purposes only, why
did the respondents perform their obligations to him?

There is no question that respondents assigned him Condo Unit # 812 of the MCS, but this was not
free of charge. If it were true that it is part of the compensation package as employee, then McBurnie
would not be obligated to pay anything, but clearly, he admitted in his letter that he had to pay all the
expenses incurred in the apartment.

Assuming for the sake of argument that the employment contract is valid between them, record
shows that McBurnie worked from September 1, 1999 until he met an accident on the last week of
October. During the period of employment, the respondents must have paid his salaries in the sum
of US$26,000.00, more or less.

However, McBurnie failed to present a single evidence that [the respondents] paid his salaries like
payslip, check or cash vouchers duly signed by him or any document showing proof of receipt of his
compensation from the respondents or activity in furtherance of the employment contract. Granting
again that there was a valid contract of employment, it is undisputed that on November 1, 1999,
McBurnie left for Australia and never came back. x x x.121 (Emphasis supplied)

Although the NLRC’s Decision dated November 17, 2009 was set aside in a Decision dated January
14, 2010, the Court’s resolve to now reconsider its Decision dated September 18, 2009 and to affirm
the CA’s Decision and Resolution in the respondents’ favor effectively restores the NLRC’s basis for
rendering the Decision dated November 17, 2009.

More importantly, the NLRC’s findings on the contractual relations between McBurnie and the
respondents are supported by the records.

First, before a case for illegal dismissal can prosper, an employer-employee relationship must first
be established.122 Although an employment agreement forms part of the case records, respondent
Ganzon signed it with the notation "per my note."123 The respondents have sufficiently explained that
the note refers to the letter124 dated May 11, 1999 which embodied certain conditions for the
employment’s effectivity. As we have previously explained, however, the said conditions, particularly
on the successful completion of the project financing for the hotel project in Baguio City and
McBurnie’s acquisition of an Alien Employment Permit, failed to materialize. Such defense of the
respondents, which was duly considered by the NLRC in its Decision dated November 17, 2009,
was not sufficiently rebutted by McBurnie.

Second, McBurnie failed to present any employment permit which would have authorized him to
obtain employment in the Philippines. This circumstance negates McBurnie’s claim that he had been
performing work for the respondents by virtue of an employer-employee relationship. The absence of
the employment permit instead bolsters the claim that the supposed employment of McBurnie was
merely simulated, or did not ensue due to the non-fulfillment of the conditions that were set forth in
the letter of May 11, 1999.
Third, besides the employment agreement, McBurnie failed to present other competent evidence to
prove his claim of an employer-employee relationship. Given the parties’ conflicting claims on their
true intention in executing the agreement, it was necessary to resort to the established criteria for the
determination of an employer-employee relationship, namely: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee’s conduct.125 The rule of thumb remains: the onus probandi falls on the claimant to
establish or substantiate the claim by the requisite quantum of evidence. Whoever claims entitlement
to the benefits provided by law should establish his or her right thereto. 126 McBurnie failed in this
regard. As previously observed by the NLRC, McBurnie even failed to show through any document
1âwphi1

such as payslips or vouchers that his salaries during the time that he allegedly worked for the
respondents were paid by the company. In the absence of an employer-employee relationship
between McBurnie and the respondents, McBurnie could not successfully claim that he was
dismissed, much less illegally dismissed, by the latter. Even granting that there was such an
employer-employee relationship, the records are barren of any document showing that its
termination was by the respondents’ dismissal of McBurnie.

Given these circumstances, it would be a circuitous exercise for the Court to remand the case to the
NLRC, more so in the absence of any showing that the NLRC should now rule differently on the
case’s merits. In Medline Management, Inc. v. Roslinda,127 the Court ruled that when there is enough
basis on which the Court may render a proper evaluation of the merits of the case, the Court may
dispense with the time-consuming procedure of remanding a case to a labor tribunal in order "to
prevent delays in the disposition of the case," "to serve the ends of justice" and when a remand
"would serve no purpose save to further delay its disposition contrary to the spirit of fair play." 128 In
Real v. Sangu Philippines, Inc.,129 we again ruled:

With the foregoing, it is clear that the CA erred in affirming the decision of the NLRC which
dismissed petitioner’s complaint for lack of jurisdiction. In cases such as this, the Court normally
remands the case to the NLRC and directs it to properly dispose of the case on the merits.
"However, when there is enough basis on which a proper evaluation of the merits of petitioner’s case
may be had, the Court may dispense with the time-consuming procedure of remand in order to
prevent further delays in the disposition of the case." "It is already an accepted rule of procedure for
us to strive to settle the entire controversy in a single proceeding, leaving no root or branch to bear
the seeds of litigation. If, based on the records, the pleadings, and other evidence, the dispute can
be resolved by us, we will do so to serve the ends of justice instead of remanding the case to the
lower court for further proceedings." x x x.130 (Citations omitted)

It bears mentioning that although the Court resolves to grant the respondents’ motion for
reconsideration, the other grounds raised in the motion, especially as they pertain to insinuations on
irregularities in the Court, deserve no merit for being founded on baseless conclusions. Furthermore,
the Court finds it unnecessary to discuss the other grounds that are raised in the motion, considering
the grounds that already justify the dismissal of McBurnie’s complaint.

All these considered, the Court also affirms its Resolution dated September 4, 2012; accordingly,
McBurnie’s motion for reconsideration thereof is denied.

WHEREFORE, in light of the foregoing, the Court rules as follows:

(a) The motion for reconsideration filed on September 26, 2012 by petitioner Andrew James
McBurnie is DENIED;

(b) The motion for reconsideration filed on March 27, 2012 by respondents Eulalio Ganzon,
EGI-Managers, Inc. and E. Ganzon, Inc. is GRANTED.

(c) The Entry of Judgment issued in G.R. Nos. 186984-85 is LIFTED. This Court’s Decision
dated September 18, 2009 and Resolutions dated December 14, 2009 and January 25, 2012
are SET ASIDE. The Court of Appeals Decision dated October 27, 2008 and Resolution
dated March 3, 2009 in CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916 are AFFIRMED
WITH MODIFICATION. In lieu of a remand of the case to the National Labor Relations
Commission, the complaint for illegal dismissal filed by petitioner Andrew James McBurnie
against respondents Eulalio Ganzon, EGI-Managers, Inc. and E. Ganzon, Inc. is
DISMISSED.
Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as
provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES
that henceforth, the following guidelines shall be observed:

(a) The filing o a motion to reduce appeal bond shall be entertained by the NLRC subject to
the following conditions: (1) there is meritorious ground; and (2) a bond in a reasonable
amount is posted;

(b) For purposes o compliance with condition no. (2), a motion shall be accompanied by the
posting o a provisional cash or surety bond equivalent to ten percent (10,) of the monetary
award subject o the appeal, exclusive o damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to suspend the running o the 1 0-
day reglementary period to perfect an appeal from the labor arbiter's decision to the NLRC;

(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and
determine the final amount o bond that shall be posted by the appellant, still in accordance
with the standards o meritorious grounds and reasonable amount; and

(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that
exceeds the amount o the provisional bond, the appellant shall be given a fresh period o ten
1 0) days from notice o the NLRC order within which to perfect the appeal by posting the
required appeal bond.

SO ORDERED.

27

G.R. No. 195109 February 4, 2015

ANDY D. HALITE, DELFIN M. ANZALDO AND MONALIZA DL. BIHASA, Petitioners,

vs.
SS VENTURES INTERNATIONAL, INC., SUNG SIK LEE AND EVELYN RAYALA, Respondents.

DECISION

PEREZ, J.:

This is a Petition for Review on Certiorari pursuant to Rule 45 of the Revised Rules of Court,
assailing the 18 June 2010 Decision rendered by the Tenth Division of the Court of Appeals in CA-
1

G.R. SP No. 109589. In its assailed decision, the appellate court reversed the Resolution of the
National Labor Relations Commission (NLRC) which denied the Motion to Reduce Appeal Bond filed
by respondents SS Ventures International, Inc., Sung Sik Lee and Evelyn Rayala

In a Resolution dated 30 December 2010, the appellate court refused to reconsider its earlier
2

decision.

The Facts

Respondent SS Ventures International, Inc. is a domestic corporation duly engaged in the business
of manufacturing footwear products for local sales and export abroad. It is represented in this action
by respondents Sung Sik Lee and Evelyn Rayala. Petitioners Andy Balite (Balite), Monaliza Bihasa
(Bihasa) and Delfin Anzaldo (Anzaldo) were regular employees of the respondent company until
their employments were severed for violation of various company policies.
For his part, Balite was issued a Show Cause Memorandum by the respondent company on 4
August 2005 charging him with the following infractions: (1) making false reports, malicious and
fraudulent statements and rumor-mongering against the company; (2) threatening and intimidating
co-workers; (3) refusing to cooperate in the conduct of investigation; and (4) gross negligence in the
care and use of the company property resulting in the damage of the finished products. After
respondent found Balite’s explanation insufficient, he was dismissed from employment, through a
Notice of Termination on 6 September 2005.

Bihasa, on the other hand, was charged with absence without leave on two occasions and with
improper behavior, stubbornness, arrogance and uncooperative attitude towards superiors and
employees. Bihasa was likewise terminated from the service on 5 May 2006 after her explanation in
an administrative investigation was found unsatisfactory by the respondent company.

Anzaldo was also dismissed from employment after purportedly giving him due process. The records
of the infractions he committed as well as the date of his termination, however, are not borne by the
records.

Consequently, the three employees charged respondents with illegal dismissal and recovery of
backwages, 13th month pay and attorney’s fees before the Labor Arbiter.

In refuting the allegations of the petitioners, respondents averred that petitioners were separated
from employment for just causes and after affording them procedural due process of law.

On 30 December 2007, the Labor Arbiter rendered a Decision in favor of petitioners and held that
3

respondents are liable for illegal dismissal for failing to comply with the procedural and substantive
requirements in terminating employment. The decretal portion of the Labor Arbiter Decision reads:

WHEREFORE, premises considered, [petitioners] are hereby found to have been illegally dismissed
even as respondents are held liable therefore.

Consequently, respondent corporation is hereby ordered to reinstate [petitioners] to their former

positions without loss of seniority rights and other privileges with backwages initially computed at this
time and reflected below.

The reinstatement aspect of this decision is immediately executory and thus respondents are hereby
required to submit a report of compliance therewith within ten (10) days from receipt thereof.

Respondent corporation is likewise ordered to pay [petitioners] their 13th month pay and 10%
attorney’s fees.

Backwages 13th month pay Attorney’s fees

1. Andy Balite ₱162,969.04 P 17,511.00 P 18,048.00

2. Delfin Anzaldo 158,299.44 17,511.00 17,511.00

3. Monaliza Bihasa 116,506.62 17,511.00 13,401.75

All other claims are dismissed for lack of factual or legal basis. 4

Aggrieved, respondents interposed an appeal by filing a Notice of Appeal and paying the
corresponding appeal fee. However, instead of filing the required appeal bond equivalent to the total
amount of the monetary award which is ₱490,308.00, respondents filed a Motion to Reduce the
Appeal Bond to ₱100,000.00 and appended therein a manager’s check bearing the said amount.
Respondents cited financial difficulty as justification for their inability to post the appeal bond in full
owing to the partial shutdown of respondent company’s operations.

In a Resolution dated 27 November 2008, the NLRC dismissed the appeal filed by the respondents
5

for non-perfection. The NLRC ruled that posting of an appeal bond equivalent to the monetary award
is indispensable for the perfection of the appeal and the reduction of the appeal bond, absent any
showing of meritorious ground to justify the same, is not warranted in the instant case.
Similarly ill-fated was respondents’ Motion for Reconsideration which was denied by the NLRC in a
Resolution dated 30 April 2009.
6

On certiorari, the Court of Appeals reversed the NLRC Decision and allowed the relaxation of the
rule on posting of the appeal bond. According to the appellate court, there was substantial
compliance with the rules for the perfection of an appeal because respondents seasonably filed their
Memorandum of Appeal and posted an appeal bond in the amount of ₱100,000.00. While the
amount of the appeal bond posted was not equivalent to the monetary award, the Court of Appeals
ruled that respondents were able to sufficiently prove their incapability to post the required amount of
bond. The Court of Appeals disposed in this wise:
7

WHEREFORE, premises considered, finding grave abuse of discretion on the part of the [NLRC],
the instant petition is GRANTED. The [NLRC’s] Resolutions dated November 27, 2008 and April 30,
2009, respectively, are hereby SET ASIDE. [The NLRC] is hereby directed to decide petitioners’
appeal on the merits. 8

In a Resolution dated 30 December 2010, the Court of Appeals refused to reconsider its earlier
9

decision.

Petitioners are now before this Court via this instant Petition for Review on Certiorari praying that
10

the Court of Appeals Decision and Resolution be reversed and set aside on the ground that:

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ABUSE
OFDISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
REVERSED THE RESOLUTION OF THE NLRC DISMISSING RESPONDENTS’ APPEAL FOR
NON-PERFECTION THEREOF. 11

The Court’s Ruling

Petitioners, in assailing the appellate court’s decision, argue that posting of an appeal bond in full is
not only mandatory but a jurisdictional requirement that must be complied within order to confer
jurisdiction upon the NLRC. They posit that the posting of an insufficient amount of appeal bond, as
in this case, resulted to the non-perfection of the appeal rendering the decision of the Labor Arbiter
final and executory.

Banking on the appellate court’s decision, respondents, for their part, urge the Court to relax the
rules on appeal underscoring on the so-called "utmost good faith" they demonstrated in filing a
Motion to Reduce Appeal Bond and in posting a cash bond in the amount of ₱100,000.00. In
justifying their inability to post the required appeal bond, respondents reasoned that respondent
company is in dire financial condition due to lack of orders from customers constraining it to
temporarily shut down its operations resulting in significant loss of revenues. Respondents now plea
for the liberal interpretation of the rules so that the case can be threshed out on the merits, and not
on technicality.

Time and again we reiterate the established rule that in the exercise of the Supreme Court’s power
of review, the Court is not a trier of facts and does not routinely undertake the re-examination of the
12

evidence presented by the contending parties during the trial of the case considering that the
findings of facts of labor officials who are deemed to have acquired expertise in matters within their
respective jurisdiction are generally accorded not only respect, but even finality, and are binding
upon this Court, when supported by substantial evidence. The NLRC ruled that no appeal had been
13

perfected on time because of respondents’ failure to post the required amount of appeal bond. As a
result of which, the decision of the Labor Arbiter has attained finality. The Court of Appeals, on the
contrary, allowed the relaxation of the rules and held that respondents were justified in failing to pay
the required appeal bond. Despite the non-posting of the appeal bond in full, however, the appellate
court deemed that respondents were able to seasonably perfect their appeal before the NLRC,
thereby directing the NLRC to resolve the case on the merits.

The pertinent rule on the matter is Article 223 of the Labor Code, as amended, which sets forth the
rules on appeal from the Labor Arbiter’s monetary award:

ART. 223. Appeal.– Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. x x x.
 xxxx

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 company duly accredited
by the Commission in the amount equivalent to the monetary award in the judgment appealed from.
(Emphases ours).

Implementing the aforestated provisions of the Labor Code are the provisions of Rule VI of the 2011
Rules of Procedure of the NLRC on perfection of appeals which read:

Section. 1. Periods of Appeal. - Decisions, awards or orders of the Labor Arbiter shall be final and
executory unless appealed to the Commission by any or both parties within ten (10)calendar days
from receipt thereof. x x x If the 10th day or the 5th day, as the case may be, falls on a Saturday,
Sunday or holiday, the last day to perfect the appeal shall be the first working day following such
Saturday, Sunday or holiday.

xxxx

Section 4. Requisites for Perfection of Appeal. – (a) The appeal shall be:

(1) filed within the reglementary period as provided in Section 1 of this Rule;

(2) verified by the appellant himself/herself in accordance with Section 4, Rule 7 of the Rules
of Court ,as amended;

(3) in the form a of a memorandum of appeal which shall state the grounds relied upon and
the arguments in support thereof; the relief prayed for; and with a statement of the date when
the appellant received the appealed decision, award or order;

(4) in three (3) legibly typewritten or printed copies; and

(5) accompanied by:

i) proof of payment of the required appeal fee and legal research fee;

ii) posting of cash or surety bond as provided in Section 6 of this Rule; and

iii) proof of service upon the other parties.

xxxx

(b) A mere notice of appeal without complying with the other requisites aforestated shall not stop the
running of the period for perfecting an appeal.

xxxx

Section 5. Appeal Fee. - The appellant shall pay the prevailing appeal fee and legal research fee to
the Regional Arbitration Branch or Regional Office of origin, and the official receipt of such payment
shall form part of the records of the case.

Section 6. Bond. - In case the decision of the Labor Arbiter, or the Regional Director involves a
monetary award, an appeal by the employer shall be perfected only upon the posting of a bond,
which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary
award, exclusive of damages and attorney’s fees.

xxxx

The Commission through the Chairman may on justifiable grounds blacklist a bonding company,
notwithstanding its accreditation by the Supreme Court.

These statutory and regulatory provisions explicitly provide that an appeal from the Labor Arbiter to
the NLRC must be perfected within ten calendar days from receipt of such decisions, awards or
orders of the Labor Arbiter. In a judgment involving a monetary award, the appeal shall be perfected
only upon (1) proof of payment of the required appeal fee; (2) posting of a cash or surety bond
issued by a reputable bonding company; and (3) filing of a memorandum of appeal. 14

In McBurnie v. Ganzon, we harmonized the provision on appeal that its procedures are fairly
15

applied to both the petitioner and the respondent, assuring by such application that neither one or
the other party is unfairly favored. We pronounced that the posting of a cash or surety bond in an
amount equivalent to 10% of the monetary award pending resolution of the motion to reduce appeal
bond shall be deemed sufficient to perfect an appeal, to wit:

It is in this light that the Court finds it necessary to set a parameter for the litigants’ and the NLRC’s
guidance on the amount of bond that shall hereafter be filed with a motion for a bond’s reduction. To
ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the
chance to seek a reduction of the appeal bond are effectively carried out, without however defeating
the benefits of the bond requirement in favor of a winning litigant, all motions to reduce bond that are
to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond equivalent to
10% of the monetary award that is subject of the appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that an appellant’s motion is pending resolution by
the Commission. In conformity with the NLRC Rules, the monetary award, for the purpose of
computing the necessary appeal bond, shall exclude damages and attorney’s fees. Only after the
posting of a bond in the required percentage shall anappellant’s period to perfect an appeal under
the NLRC Rules be deemed suspended.

The rule We set in McBurniewas clarified by the Court in Sara Lee Philippines v. Ermilinda
Macatlang. Considering the peculiar circumstances in Sara Lee, We determined what is the
16

reasonable amount of appeal bond. We underscored the fact that the amount of 10% of the award is
not a permissible bond but is only such amount that shall be deemed reasonable in the meantime
that the appellant’s motion is pending resolution by the Commission. The actual reasonable amount
1âwphi1

yet to be determined is necessarily a bigger amount. In an effort to strike a balance between the
constitutional obligation of the state to afford protection to labor on the one hand, and the opportunity
afforded to the employer to appeal on the other, We considered the appeal bond in the amount of
₱725M which is equivalent to 25% of the monetary award sufficient to perfect the appeal, viz.:

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 ₱725 Million. This directive
already considers that the award if not illegal, is extraordinarily huge and that no insurance company
would be willing to issue a bond for such big money. The amount of ₱725 Million is approximately
25% of the basis above calculated. It is a balancing of the constitutional obligation of the state to
afford protection to labor which, specific to this case, is assurance that in case of affirmance of the
award, recovery is not negated; and on the other end of the spectrum, the opportunity of the
employer to appeal.

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 other hand,
management will not be effectively denied of its statutory privilege of appeal.

In line with Sara Lee and the objective that the appeal on the merits to be threshed out soonest by
the NLRC, the Court holds that the appeal bond posted by the respondent in the amount of
₱100,000.00 which is equivalent to around 20% of the total amount of monetary bond is sufficient to
perfect an appeal. With the employer's demonstrated good faith in filing the motion to reduce the
bond on demonstrable grounds coupled with the posting of the appeal bond in the requested
amount, as well as the filing of the memorandum of appeal, the right of the employer to appeal must
be upheld. This is in recognition of the importance of the remedy of appeal, which is an essential
part of our judicial system and the need to ensure that every party litigant is given the amplest
opportunity for the proper and just disposition of his cause freed from the constraints of
technicalities. 17

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision and Resolution
of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.
28

SECOND DIVISION

G.R. No. 180147 June 4, 2014

SARA LEE PHILIPPINES, INC., Petitioner,

vs.
EMILINDA D. MACATLANG, ET AL., Respondents.
1

x-----------------------x

G.R. No. 180148

ARIS PHILIPPINES, INC., Petitioner,

vs.
EMILINDA D. MACATLANG, ET AL., Respondents.

x-----------------------x

G.R. No. 180149

SARA LEE CORPORATION, Petitioner,

vs.
EMILINDA D. MACATLANG, ET AL., Respondents.

x-----------------------x

G.R. No. 180150

CESAR C. CRUZ, Petitioner,

vs.
EMILINDA D. MACA TLANG, ET AL., Respondents.

x-----------------------x

G.R. No. 180319

FASHION ACCESSORIES PHILS., INC., Petitioner,

vs.
EMILINDA D. MACATLANG, ET AL., Respondents.

x-----------------------x

G.R. No. 180685

EMILINDA D. MACA TLANG, ET AL., Petitioners,

vs.
NLRC, ARIS PHILIPPINES, INC., FASHION ACCESSORIES PHILS., INC., SARA LEE
CORPORATION, SARA LEE PHILIPPINES, INC., COLLIN BEAL and ATTY. CESAR C.
CRUZ, Respondents.

DECISION

PEREZ, J.:
The dilemma of the appeal bond in labor cases is epochal, present whenever the amount of
monetary award becomes debatably impedimental to the completion of remedies. Such instances
exaggerate the ambivalence between rigidity and liberality in the application of the requirement that
the bond must be equal to the arbiter’s award. The rule of reasonableness in the determination of
the compliant amount of the bond has been formulated to allow the review of the arbiter’s award.
However, that rule seemingly 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 the dispute. The amount of award may vary case-to-case. But the law
remains constant.

Before us are six (6) consolidated petitions for review on certiorari pertaining to the
₱3,453,664,710.66 (₱3.45 Billion) appeal bond, which, as mandated by Article 233 of 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 strict interpretation.

Petitioners in G.R. Nos. 180147,180148, 180149,180150, and 180319 are Sara Lee Philippines, Inc.
(SLPI), Aris Philippines, Inc. (Aris), Sara Lee Corporation (SLC), Atty. Cesar Cruz (Cruz), and
Fashion Accessories Philippines, Inc. (FAPI), respectively and shall be collectively referred to as the
"Corporations."

SLPI is a domestic corporation engaged in the manufacture and distribution of personal care
products and is a subsidiary of SLC.

Aris is a domestic corporation engaged in the business of producing gloves and other apparel. 2

FAPI is a corporation engaged in the manufacture of knitted products. 3

SLC, a corporation duly organized and existing under the laws of the United States of America, is a
stockholder of Aris. It exercised control over Aris, FAPI, and SLPI which were all its subsidiaries or
affiliates.
4

Cruz was the external counsel of Aris at the time of its closure. When Aris filed for its dissolution,
Cruz became the Vice-President and Director of Aris. 5

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 employees whose employment
was terminated upon the closure of Aris.

I.

This controversy stemmed from a Notice of Permanent Closure filed by Aris on 4 September 1995
with the Department of Labor and Employment stating that it will permanently cease its operations
effective 9 October 1995. All employees of Aris were duly informed.

Aris Philippines Workers Confederation of Filipino Workers (Union), which represents 5,984 rank-6

and-file employees of Aris, staged a strike for violation of duty to bargain collectively, union busting
7

and illegal closure.

8

After conciliation, the parties entered into an agreement whereby Aris undertook to pay its
employees the benefits which accrued by virtue of the company’s closure, which settlement
amounted to ₱419 Million and an additional ₱15 Million Benevolent Fund to the Union. On 26
9 10

October 1995, FAPI was incorporated. When said incorporation came to the knowledge of the
11

affected employees, they all filed 63 separate complaints against Aris for illegal dismissal. The
complaints were consolidated before the labor arbiter. Later amendments to the complaint included
as respondents SLC, SLP, FAPI and Cruz, and Emilinda D. Macatlang, et al.,is captioned as the
complainant, represented in the suit by Emilinda D. Macatlang. The complaints alleged that FAPI is
engaged in the manufacture and exportation of the same articles manufactured by Aris; that there
was a mass transfer of Aris’ equipment and employees to FAPI’s plant in Muntinlupa, Rizal; that
contractors of Aris continued as contractors of FAPI; and that the export quota of Aris was
transferred to FAPI. Essentially, the complainants insisted that FAPI was organized by the
12

management of Aris to continue the same business of Aris, thereby intending to defeat their right to
security of tenure. They likewise impleaded in their subsequent pleadings that SLC and SLP are the
major stockholders of FAPI, and Cruz as Vice-President and Director of Aris.
Aris countered that it had complied with all the legal requirements for a valid closure of business
operations; that it is not, in any way, connected with FAPI, which is a separate 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 Textile Export Board was transferred to
FAPI because the export quota is non-transferable. 13

On 30 October 2004, the Labor Arbiter rendered judgment finding the dismissal of 5,984
complainants as illegal and awarding them separation pay and other monetary benefits amounting to
₱3,453,664,710.86. The dispositive portion of the decision read:
14

WHEREFORE, premises all considered, judgment is hereby rendered dismissing the complaint for
unfair labor practice (ULP); declaring that complainants were illegally dismissed; ordering
respondents to jointly and severally pay them separation pay at one (1) month for every year of
service; backwages from the time their compensation was withheld until the promulgation of this
Decision[,] ₱5,000.00 moral damages and ₱5,000.00 exemplary damages for each of them, and
eight percent (8%) attorney’s fee of the total monetary award, less the separation pay they received
upon closure of API.

All other claims are hereby DISMISSED.

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

Upon receipt of a copy of the aforesaid decision, the Corporations filed their Notice of Appeal with
Motion to Reduce Appeal Bond and To Admit Reduced Amount with the National Labor Relations
Commission (NLRC). They asked the NLRC to reduce the appeal bond to ₱1 Million each on the
grounds that it is impossible for any insurance company to cover such huge amount and that, in
requiring them to post in full the appeal bond would be tantamount to denying them their right to
appeal. Aris claimed that it was already dissolved and undergoing liquidation. SLC added that it is
16

not the employer of Emilinda D. Macatlang, et al., and that the latter had already received from Aris
their separation pay and other benefits amounting to ₱419,057,348.24, which covers practically
more than 10% of the monetary award. FAPI, for its part, claimed that its total assets would not be
17

enough to answer for even a small portion of the award. To compel it to post a bond might result in
complete stoppage of operations. FAPI also cited the possibility that the assailed decision once
reviewed will be reversed and set aside. The Corporations posted a total of ₱4.5 Million.
18

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 upon posting of a cash
bond equivalent to the monetary award provided by Article 223 of the Labor Code. 19

In light of the impossibility for any surety company to cover the appeal bond and the huge economic
losses which the companies and their employees might suffer if the ₱3.45 Billion bond is sustained,
the NLRC granted the reduction of the appeal bond. The NLRC issued an Order dated 31 March
2006 directing the Corporations to post an additional ₱4.5 Million bond, bringing the total posted
20

bond to ₱9 Million. The dispositive portion of the Order provides: WHEREFORE, premises
considered, respondents are hereby ordered to post bond, either in cash, surety or property, in the
additional amount of FOUR MILLION FIVE HUNDRED THOUSAND PESOS (₱4,500,000.00) within
an INEXTENDIBLE period of FIFTEEN (15) calendar days from receipt hereof. To the said extent,
the Motion for Reduction is granted. Failure to render strict compliance with the Order entered herein
shall render the dismissal of the appeal and the decision sought for review, as final and executory. 21

Emilinda D. Macatlang, et al., filed a petition for certiorari before the Court of Appeals, docketed as
CA-G.R. SP No. 96363. They charged the NLRC with grave abuse of 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 the award. Another petition, this time by Pacita
22

Abelardo, et al., was also filed before the Court of Appeals and docketed as CA-G.R. SP No. 95919.

The Corporations filed a Motion to Dismiss the petition in CA-G.R. SP No. 95919 on the grounds of
forum-shopping, absence of authorization from the employees for Emilinda D. Macatlang to file said
petition, and for failure to state the material dates.
23

While the case was pending, the NLRC issued a Resolution on 19 December 2006 setting aside the
Decision of the labor arbiter and remanding the case to the "forum of origin for further proceedings." 24
In view of this related development, the Corporations filed their respective Manifestation and Motion
dated 30 January 2007 praying for the dismissal of the petition for certiorari for being moot and
academic.

On 26 March 2007, the Court of Appeals proceeded to reverse and set aside the 31 March 2006
NLRC Resolution and deemed it reasonable under the circumstances of the case to order the
posting of an additional appeal bond of ₱1 Billion. The dispositive portion of the decision decreed:

WHEREFORE, premises considered, the March 31, 2006 Decision of the 2nd Division of the
National Labor Relations Commission, in NLRC NCR CA No. 046685-05, which reduced the
required Php 3.453 BILLION Pesos appeal bond to a paltry9 Million Pesos, is hereby REVERSED
and SET ASIDE and a new one issued, to ensure availability of hard cash or reliable surety, on
which victorious laborers could rely, DIRECTING private 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 perfecting appeal. 25

All parties filed their Motion for Reconsideration but were later denied by the Court of Appeals in a
Resolution dated 22 October 2007.
26

II.

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: Sara Lee Philippines, Inc. v.
Emilinda D. Macatlang, et al.; 2) G.R. No. 180148: Aris Philippines, Inc. v. Emilinda D. Macatlang, et
al.; 3) G.R. No. 180149: Sara Lee Corporation v. Emilinda D. Macatlang, et al.; 4) G.R. No. 180150:
Cesar C. Cruz v. Emilinda D. Macatlang, et al.; 5) G.R. No. 180319: Fashion Accessories Phils., Inc.
v. Emilinda D. Macatlang, et al.; and 6) G.R. No. 180685: Emilinda D. Macatlang, et al. v. NLRC. In
Resolutions dated 28 January 2008 and 18 February 2008, this Court resolved to consolidate these
six (6) cases. 27

The Corporations argue that the Court of Appeals committed serious error in not dismissing Emilinda
D. Macatlang, et al.’s petition due to the filing of two (2) separate 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 al. in CAG.R. SP No. 95919 (Abelardo petition).
These two petitions, the Corporations aver, raise identical causes of action, subject matters and
issues, which are clearly violative of the rule against forum-shopping. Moreover, the petitioners in the
Abelardo petition consist of 411 employees, all of whom are also petitioners in the Macatlang
28 29

petition. The Corporations question the authority of Emilinda D. Macatlang to file and sign the
verification and certification of non-forum shopping because Resolusyon 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 certification against forum shopping on behalf of the other
complainants. The Corporations claim that the Macatlang’s petition failed to state the material dates,
such as when the NLRC order and resolution were received and when the motion for
reconsideration thereof was filed. 30

The Corporations impute another error on the Court of Appeals when it did not dismiss the petition
for being moot and academic despite the fact that on 19 December 2006, the NLRC had already set
aside the decision of the Labor Arbiter. They defend the validity of the NLRC resolution in the
absence of a temporary restraining order or writ of preliminary injunction issued by the Court of
Appeals. 31

The Corporations assail the Court of Appeals in directing the posting of an additional appeal bond of
₱1 Billion. They contend that the Court of Appeals overlooked the fact that Macatlang, et al., had
already received their separation pay of ₱419 Million and ₱15 Million Benevolent Fund which went to
the union. The Court of Appeals also failed to exclude the amount awarded to complainants as
32

damages which under the NLRC Rules have to be excluded. The Corporations seek a liberal
interpretation to the requirement of posting of appeal bond in that the NLRC has the power and
authority to set a reduced amount of appeal bond. 33

SLPI also adds that their right to due process was allegedly violated for the following reasons: first, it
was never impleaded in the complaints; second, the requirements of service of summons by
publication were not complied with as admitted by the labor arbiter himself thereby making it
defective; and third, there was no showing that there was prior resort to service of summons to the
duly authorized officer of the company before summons by publication was made to SLPI. 34
FAPI slams the Court of Appeals for touching on the merits of the case when the only issue brought
to its attention is the NLRC’s ruling on the appeal bond. FAPI argues that 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 employees of Aris involved in the illegal
dismissal case; (2) that the ₱419 Million was 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 dummy subsidiary referring to FAPI was formed when records disclose
that the ownership, incorporators, officers, capitalization, place of business, and product
manufactured by FAPI and Aris are different. 35

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 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 ₱3.45 Billion. Emilinda D. Macatlang, et al., submit that the ₱1 Billion
bond is not equivalent to the monetary award of ₱3.45 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 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 of a bond outside the period of appeal, even with the filing of a motion to reduce bond, 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 have strictly followed Article
223 of the Labor Code, as the same was clear. 36

In an Urgent Manifestation and Motion, the Corporations informed this Court of a Resolution dated
30 March 2009 by the Third Division of this Court entitled, "Gabriel Fulido, et al. v. Aris Philippines,
Inc." docketed as G.R. No. 185948 (Fulido case) 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 employments were terminated as a result of Aris’ permanent
closure. Petitioners submit that Emilinda D. Macatlang, et al., and petitioners in the Fulidocase filed
illegal dismissal cases before the NLRC seeking identical reliefs. Considering the identity in essential
facts and basic issues involved, petitioners argue that there is compelling reason to adopt and
incorporate by reference the conclusion reached in the Fulido case. 37

III.

The issues raised in these consolidated cases can be summarized as follows:

1. Whether the filing of two (2) petitions for certiorari, namely: the Macatlang petition and the
Abelardo petition constitutes forum shopping.

2. Whether Emilinda D. Macatlang was duly authorized to sign the verification and certificate
of non-forum shopping attached to the Macatlang petition.

3. Whether the petition should be dismissed for failure to state the material dates.

4. Whether the service of summons by publication on SLC is defective.

5. Whether the subsequent NLRC ruling on the merits during the pendency of the petition
questioning an interlocutory order renders the instant petition moot and academic.

6. Whether the appeal bond may be reduced.

Before we proceed to the gist of this controversy, we shall resolve the first 3 procedural issues first.

IV.

The Corporations claim that the group of Macatlang committed forum shopping by filing two petitions
before the Court of Appeals.

Forum shopping is the act of a litigant who repetitively avails of several judicial remedies in different
courts, simultaneously or successively, all substantially founded on the same transactions and on
the same essential facts and circumstances, and all raising substantially the same issues either
pending in or already resolved adversely by some other court, to increase his chances of obtaining a
favorable decision if not in one court, then in another. 38

What is pivotal in determining whether forum shopping exists or not is the vexation caused the
courts and parties-litigants by a party who asks different courts and/or administrative agencies to
rule on the same or related cases and/or grant the same or substantially the same reliefs, in the
process creating the possibility of conflicting decisions being rendered by the different courts and/or
administrative agencies upon the same issues. 39

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 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 relief prayed for, the relief being
founded on the same acts; and (c) the identity in the two cases should be such that the judgment
which may be rendered in one would, regardless of which party is successful, amount to res judicata
in the other.
40

The Macatlang petition was filed on 8 September 2006 while the Abelardo petition was filed 10 days
later, or on 18 September 2006. Indeed, these two petitions assailed the same order and resolution
of the NLRC in NLRC CA No. 046685-05, entitled Emilinda 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 bond. A judgment in either case would have, if principles are correctly
applied, amounted to res judicatain the other.

At first glance, it appears that there is also identity of parties in both petitions which is 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 were already included as petitioners in
the Macatlang petition. With respect to these 411 petitioners, they could be declared guilty of forum
shopping when they filed the Abelardo petition despite the pendency of the Macatlang petition. As a
matter of fact, the Abelardo petition was dismissed by the Court of Appeals in a Resolution dated 17
November2006 on the ground of a defective certification on non-forum shopping, among
others. The Abelardo petition appears to be defective as the petition itself was replete with
41

procedural infirmities prompting the Court of Appeals to dismiss it outright. Instead of curing the
defects in their petition, petitioners in Abelardo revealed that pertinent documents which should have
been attached with their petition were actually submitted before the Sixteenth Division of the Court of
Appeals where the Macatlang petition was pending. Evidently, petitioners in Abelardo have
foreknowledge of an existing petition but nevertheless proceeded to file another petition and omitting
to mention it in their certification on non-forum shopping, either intentionally or not. Clearly, the
petitioners in the Abelardo petition committed forum shopping.

Now, should the act of these 411 employees prejudice the rights of the 5,573 other complainants in
the Macatlang petition? The answer is no. Forum shopping happens when there is identity of the
parties or at least such as to represent the same interest in both actions. We do not agree that the
411 petitioners of the Abelardo petition are representative of the interest of all petitioners in
Macatlang petition. First, the number is 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 the support of an overwhelming majority due to the mistake committed by
petitioners in the Abelardo petition. In the absence of substantial similarity between the parties in
Macatlang and Abelardo petitions, we find that the petitioners in Macatlang petition did not commit
forum shopping. This view was implicitly shared by the Thirteenth Division of the Court of Appeals
when it did not bother to address the issue of forum shopping raised by petitioners therein precisely
because at the time it rendered the assailed decision, the Abelardo petition had already been
summarily dismissed.

V.

Next, the Corporations complain that Macatlang was not duly authorized to sign the verification and
certification of non-forum shopping which accompanied the main petition before the Court of
Appeals. They anchored their argument on Resolusyon, which reads in part:

1. Aming binigyan ng karapatan sina ERNESTO R. ARELLANO AT/O VILLAMOR MOSTRALES,

aming mga abogado/legal advisers ng Arellano & Associates at si EMILINDA D. MACATLANG,
aming head complainant, bilang aming ATTORNEYS-IN-FACT para katawanin at kanilang
gampanan ang mga sumusunod na Gawain alinsunod sa aming kagustuhan:
a. Na, kami ay katawanin sa kaso o mga kaso laban sa mga nabanggit na Kompanya: ARIS, FAPI
ATSARA LEE CORP./SARA LEE PHILS., INC.at sa mga opisyales ng mga nabanggit; pirmahan
ang anumang demanda o "complaint" at lahat namga kaukulang papeles tulad ng Position Paper,
Reply, Rejoinder, Memorandumat iba pang papeles na may kinalaman o patungkol sakasong ito
simula sa NLRC, Court of Appeals, hanggang sa Korte Suprema;

b. Na, aming malayang iniaatangsa kanila ang karapatan upang makipagkasundo sa mga
nademanda sa pamamagitan ng isang "Compromise Agreement"o Kasunduan, gayon din ang
karapatang tanggapin ang kabuuang kabayaran sa aregluhan sa kaso na ayon sa kanilang
pagsusuri ay mabuti at makatarungan para sa amin, kaakibat ng aming mga pirmang tanda ng
pagsang-ayon ito bilang mayoria na nagdemanda o tanggapin ang kabuuang bayad sa pagtatapos
ng kaso, bilang aming kinatawan at ATTORNEYS-IN-FACT;

c. Na, sa kanilang puspusan at matapat na paghawak sa naturang kaso, aming ibibigay ang
sampung porsiyento (10%)ng aming "total claims"bilang attorney’s fees ng aming humawak na
abogado/legal adviser: sina Atty. Ernesto R. Arellano and/or Villamor A. Mostrales at gayon din sa
karagdagang panagot sa kanilang ginastos, gagastusin sa pagtatanggol ng kaso bilang
miscellaneous expensessa kanilang ma[a]yos na pagsulong at pagtangan ng aming pangkalahatang
interes sa naturang kaso. 42

From the foregoing document, it can easily be gleaned that Macatlang was assigned by the
complainants as their attorney-in-fact to perform the following acts: 1) to represent them in the
case/cases filed against Aris, FAPI, SLC, and SLPI; sign any complaint, pleadings, or any other
documents pertinent or related to the instant case brought before the NLRC, Court of Appeals, and
Supreme Court; 2) to enter into any compromise agreement or settlement; and 3) to receive the full
payment as a consequence of any settlement. The first act necessarily encompasses the authority to
sign any document related to NLRC NCR No. 00-04-03677-98. The petition for review on certiorari is
one of these documents. Supreme Court Circular Nos. 28-91 and 04-94 require a Certification of
Non-Forum Shopping in any initiatory pleading filed before the Supreme Court and the Court of
Appeals while Section 1, Rule 45 of the Rules of Civil Procedure requires 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 certiorari, which Macatlang herself was authorized
under the Resolusyon to sign.

VI.

The Corporations argue that the case before the Court of Appeals should have been dismissed for
failure of Macatlang to state the material dates in the petition. Section 3, 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 resolution assailed was received, when the
motion for reconsideration was filed, and 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 rationale for the requirement is to enable the appellate court to determine whether
the petition was filed within the period fixed in the rules. However, the strict requirements of the law
43

may be dispensed with in the interest of justice. It may not be amiss to point out this Court’s ruling in
the case of Acaylar, Jr. v. Harayo, and we quote:
44

We also agree with the petitioner that failure to state the material dates is not fatal to his cause of
action, provided the date of his receipt, i.e., 9 May 2006, of the RTC Resolution 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. Acuña, we held that "the failure to comply with the rule on
a statement of material dates in the petition may be excused since the dates are evident from the
records." The more material 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 gleaned from the records of the case if reasonably evident. 45

In the instant case, the Corporations alleged in their petition before the Court of Appeals 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 period. And as a matter of fact, the
appeal was filed on 8 September 2006, and well within the 60-day period.

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

Well-settled is the doctrine that appeal is not a constitutional right, but a mere statutory privilege.
Hence, parties who seek to avail themselves of it must comply with the statutes or rules allowing
it. The primary rule governing appeal from the ruling of the labor arbiter is Article 223 of the Labor
46

Code which provides:

Art. 223. Appeal. — Decisions, awards, or orders of the Labor Arbiter are final and 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 entertained only on any of the following grounds:

a. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;

b. If the decision, order or award was secured through fraud or coercion, including graft and
corruption;

c. If made purely on questions of law; and d. If serious errors in the findings of facts are
raised which would cause grave or irreparable damage or injury to the appellant.

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 company duly accredited
by the Commission in the amount equivalent to the monetary award in the judgment appealed from.
(Emphasis supplied).

Article 223, under Presidential Decree No. 442, was amended by Republic Act No. 6715 to include
the provision on the posting of a cash or surety bond as a precondition to the perfection of appeal.

The requisites for perfection of appeal as embodied in Article 223, as amended, are: 1) payment of
appeal fees; 2) filing of the memorandum of appeal; and 3) payment of the required cash or surety
bond. These requisites must be satisfied within 10days from receipt of the decision or order
47

appealed from.

In YBL v. NLRC, the Court was more liberal in construing Article 223. The NLRC dismissed the
48

appeal for failure to post the bond. The Court favored the appellant partly 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 the new rule yet.

It is presumed that an appeal bond is only necessary in cases where the labor arbiter’s decision or
order contains a monetary award. Conversely, when the labor arbiter does not state the judgment
award, posting of bond may be excused.

In YBL, the exact total amount due to the private respondents as separation pay was not stated
which would have been the basis of the bond that is required to be filed by petitioners under the said
law.

From an award of backwages and overtime pay by the labor arbiter in Rada v. NLRC, petitioner 49

therein failed to post the supersedeas bond. Nevertheless, the Court gave due course to the appeal
for "the broader interests of justice and the desired objective of resolving controversies on the
merits." The amount of the supersedeas bond could not be determined and it was only in the NLRC
order that the amount was specified and which bond, after extension granted by the NLRC, was
timely filed by petitioner.

In the same vein, the Court in Blancaflor v. NLRC, excused the failure of appellant to post a bond
50

due to the failure of the Labor Arbiter to state the exact amount of back wages and separation pay
due.

Citing Taberrah v. NLRC and National Federation of Labor Union v. Hon. Ladrido III, the Court in
51 52

Orozco v. The Fifth Division of the Court of Appeals postulated that "respondents cannot be
53

expected to post such appeal bond equivalent to the amount of the monetary award when the
amount thereof was not included in the decision of the labor arbiter." The computation of the amount
awarded to petitioner was not stated clearly in the decision of the labor arbiter, hence, respondents
had no basis in determining the amount of the bond to be posted.
Furthermore, when the judgment award is based on a patently erroneous computation, the appeal
bond equivalent to the amount of the monetary award is not required to be posted. Erectors, Inc. v.
NLRC is a good example on this point. The NLRC’s order to post a bond of ₱1,576,224.00 was
54

nullified because the bond was erroneously computed on the basis of the salary which the employee
was no longer receiving at the time of his separation.

Also, since the computation of the award in Star Angel Handicraft v. NLRC was based on erroneous
55

wage and that a big portion of the award had already prescribed, the non-posting of appeal bond
was excused.

In Dr. Postigo v. Phil. Tuberculosis Society, Inc., respondent deferred the posting of the surety bond
56

in view of the alleged erroneous computation by the labor arbiter of the monetary award. While the
labor arbiter awarded ₱5,480,484.25 as retirement benefits, only ₱5,072,277.73, according to the
respondent's computation, was due and owing to the petitioners.

In sum, the NLRC may dispense of the posting of the bond when the judgment award is: (1) not
stated or(2) based on a patently erroneous computation. Sans these two (2) instances, the appellant
is generally required to post a bond to perfect his appeal.

The Court adhered to a strict application of Article 223 when appellants do not post an appeal bond
at all. By explicit provision of law, an appeal is perfected only upon the posting of a cash or surety
bond. The posting of the appeal bond within the period provided by law is not merely mandatory but
jurisdictional. The reason behind the imposition of this requirement is enunciated in Viron Garments
57

Mfg. Co., Inc. v. NLRC, thus:

58

The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently
intended to assure the workers that if they prevail in the case, they will receive the money judgment
in their favor upon the dismissal of the employer's appeal. It was intended to discourage employers
from using an appeal to delay, or even evade, their obligation to satisfy their employees' just and
lawful claims.
59

Thus, when petitioners, in the cases of Ong v. Court of Appeals, Rural Bank of Coron (Palawan),
60

Inc. v. Cortes, Sy v. ALC, Ciudad Fernandina Food Corporation Employees Union-Association

61 62

Labor Unions v. Court of Appeals, and Stolt-Nielsen Maritime Services, Inc. v. NLRC, did not post
63 64

a full or partial appeal bond, it was held that no appeal was perfected. A longer look on past rulings
would show that:

In Nationwide Security and Allied Services, Inc. v. NLRC, it was found that petitioners had funds
65

from its other businesses to post the required bond. The Court did not find as acceptable petitioner’s
excuse, that "[using] funds from sources other than that earned from [its company is not] a sound
business judgment" to exempt it from posting an appeal bond.

Petitioner’s failure in Mers Shoes Mfg, Inc. v. NLRC, to post the required bond within the
66

reglementary period after it has been ordered reduced, justified the dismissal of its appeal.

The labor arbiter’s decision in Santos v. Velarde stated the exact award of backwages to be paid by
67

petitioner, thus the Court affirmed the dismissal of the appeal by the non-payment of the appeal
bond within the 10-day period provided by law.

Even if petitioner in Heritage Hotel Manila v. NLRC questioned as basis of the appeal bond the
68

computation of the monetary award, the Court did not excuse it from posting a bond in a reasonable
amount or what it believed to be the correct amount.

In Banahaw Broadcasting Corporation v. Pacana III, the NLRC issued an order denying petitioner’s
69

motion for recomputation of the monetary award and ordered it to post the required bond within 10
days.

When BBC further demonstrated its unwillingness by completely ignoring this warning 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 warning to dismiss the appeal. 70

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) surrounding facts and
circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the
requirement of an appeal bond would serve the desired 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 reglementary period. 71

In Lopez v. Quezon City Sports Club Inc., the posting of the amount of ₱4,000,000.00
72

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 constitute substantial
compliance with the Rules. In Intertranz Container Lines, Inc. v. Bautista, this Court has relaxed the
73

appeal bond requirement when it was clear from the records that petitioners never intended to evade
the posting of an appeal bond. In Semblante v. Court of Appeals, the Court stated that the rule on
74

the posting of an appeal bond cannot defeat the substantive rights of respondents to be free from an
unwarranted burden of answering for an illegal dismissal for which they were never responsible. It
was found that respondents, not being petitioners’ employees, could never have been dismissed
legally or illegally. In the recent case of Garcia v. KJ Commercial, respondent showed willingness to
75

post a partial bond when it posted a ₱50,000.00 cash bond upon filing of a motion to reduce bond. In
addition, when respondent’s motion for reconsideration was denied, it posted the full surety bond.

The old NLRC Rules of Procedure, which took effect in 5 November 1993, provides: 76

SECTION 6. Bond. — In case the decision of a Labor Arbiter POEA Administrator 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 bond issued by a reputable bonding
company duly accredited by the Commission or the Supreme Court in an amount equivalent to the
monetary award, exclusive of moral and exemplary damages and attorney’s fees.

The employer as well as counsel shall submit a joint declaration under oath attesting that the surety
bond posted is genuine and that it shall be in effect until final disposition of the case.

The Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of
the bond. (As amended by Nov. 5, 1993) (Emphasis Supplied).

Thus, appellants are given the option to file a motion to reduce the amount of bond only 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:

No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the
posting of a bond in a reasonable amount in relation to the monetary award. (Emphasis Supplied).

Said Rules significantly provide that:

The filing of the motion to reduce bond without compliance with the requisites in the preceding
paragraphs, shall not stop the running of the period to perfect an appeal.

Clearly therefore, the Rules only allow the filing of a motion to reduce bond on two (2) conditions: (1)
that there is meritorious ground and (2) a bond in a reasonable amount is posted. Compliance with
the two conditions stops the running of the period to perfect an appeal provided that they are
complied within the 10-day reglementary period.

In Ramirez v. Court of Appeals, the Court did not find any merit to reduce the bond. Although
77

Ramirez posted an appeal bond, the same was insufficient, as it was not equivalent to the monetary
award of the Labor Arbiter. Moreover, when Ramirez sought a reduction of the bond, he merely said
that the bond was excessive and baseless without amplifying why he considered it as such.

The grounds to be cited in the motion to reduce must be valid and acceptable. For instance, in Pasig
Cylinder, Mfg., Corp. v. Rollo, we found as acceptable reason for reducing the appeal bond the
78

downscaling of their operations considered together with the amount of the monetary award
appealed. In University Plans Incorporated v. Solano, the fact of receivership was considered as a
79

meritorious ground in reducing the appeal bond.

Since the intention is merely to give the NLRC an idea of the justification for the reduced bond, the
evidence for the purpose would necessarily be less than the evidence required for a ruling on the
merits. As a matter of fact, in Star Angel, the NLRC was ordered to make a preliminary
80
determination on the merits for granting a reduction of the appeal 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 raise the amount of more than ₱3Million within a period
of 10-days from receipt of the Labor Arbiter’s judgment. Therefore, the Court ordered a remand of
the case to the NLRC for the conduct of preliminary determination of the merit or lack of merit of
petitioner’s 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 of the motion to reduce in
view of our finding that the NLRC in that case gravely abused its discretion when it dismissed
Footjoy’s appeal, without even receiving evidence from which it could have determined the merit or
lack of it of the motion to reduce the appeal bond.

In the recent case of McBurnie v. Ganzon, we held that merit may "pertain to an appellant’s lack of
81

financial capability to pay the full amount of the bond, the merits of the main appeal such as when
there is a valid claim that there was no illegal dismissal to justify the award, the absence of an
employer-employee relationship, prescription of claims, and other similarly valid issues that are
raised in the appeal. For the purpose of determining a ‘meritorious ground,’ the NLRC is not
precluded from receiving evidence, or from making a preliminary determination of the merits of the
appellant’s contentions."82

In order to toll the running of the period to appeal once the motion for reduction is filed, McBurnie
has set a parameter on what amount is reasonable for such purpose:

To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties
the chance to seek a reduction of the appeal bond are effectively carried out, without however
defeating the benefits of the bond requirement in favor of a winning litigant, all motions to reduce
bond that are to be filed with the NLRC shall be accompanied by the posting of a cash or surety
bond equivalent to 10% of the monetary award that is subject of the appeal, which shall provisionally
be deemed the reasonable amount of the bond in the meantime that an appellant’s motion is
pending resolution by the Commission. In conformity with the NLRC Rules, the monetary award, for
the purpose of computing the necessary appeal bond, shall exclude damages and attorney’s fees.
Only after the posting of a bond in the required percentage shall an appellant’s period to perfect an
appeal under the NLRC Rules be deemed suspended. (Emphasis and underline supplied).
83

While McBurnie has effectively addressed the preliminary amount of the bond to be posted in order
to toll the running of the period to appeal, there is no hard and fast rule in determining whether the
additional bond to be posted is reasonable in relation to the judgment award.

In Rosewood Processing Inc. v. NLRC, we found the reduced bond of ₱50,000.00 acceptable as
84

substantial compliance relative to the ₱789,000.00 judgment award. In Nicol, the ₱10 Million bond
was enough to perfect appeal from a ₱51.9 Million judgment award.

In Lopez v. Quezon City Sports Club, Inc., the NLRC ordered the posting of an additional ₱6 Million
and held as compliant a ₱10 Million bond relative to the judgment award of ₱27 Million. In Pasig
Cylinder Mfg. Corp. v. Rollo, we ruled that the reduced appeal bond of ₱100,00.00 satisfies the
requirement for an appeal from the judgment award of ₱3.13 Million. In University Plans, the
₱30,000.00 bond was accepted in perfecting an appeal from a ₱3.013 Million judgment.

In the case at bar, the motion to reduce bond filed by the Corporations was resolved by the NLRC in
the affirmative when it found that there are meritorious grounds in reducing the bond such as the
huge amount of the award and impossibility of proceeding against the Corporations’ properties which
correspond to a lower valuation. Also, the NLRC took into consideration the fact of partial payment of
₱419 Million. The NLRC found the ₱4.5 Million bond posted by the Corporations as insufficient,
hence ordering them to post an additional ₱4.5 Million. Thus, ₱9 Million was held as the amount of
the bond as reduced.

The Court of Appeals found the amount of the appeal bond adjudged by the NLRC as measly and
insufficient and raised it to ₱1 Billion. The appellate court rationalized:

The required Php3.453 BILLION appeal bond sought to be reduced by the private respondents is
equivalent to an average of Php452,140.00 separation pay for each of the 7,637 employees held to
be illegally dismissed by the employer who sought a reduction of the required Php3.453 BILLION
appeal bond because the employer allegedly put up Php428 Million which consists of the Php419
MILLION unpaid commitment plus the Php9 Million already paid-up cash appeal bond.
Even if we consider Php 419 MILLION unpaid commitment plus the Php 9 Million already paid-up
cash appeal bond, the unpaid appeal bond is still Php 3.025 BILLION. Php428 Million is still
miniscule compared to the Php3.025 BILLION unpaid portion of the appeal bond. What the 7,637
workers need is cash or surety guaranty in the event of 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 both become more obscure if the employer would be permitted to subsequently
employ artifices to evade execution of judgment.

The decision to reduce the amount of appeal bond is not a blanket power to the NLRC, because the
discretion is not unbridled and is subject to strict guidelines because Art. 223 of the Labor Codeis a
rule of jurisdiction that affords little leeway for liberal 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 therefore void, not to mention that it is per se unreasonable and without
factual basis.

We have considered the circumstances and evidence presented in this case relative to the motion to
reduce appeal bond. We have taken into consideration the Php 419 MILLION unpaid commitment
1âwphi1

plus the Php 9 Million already paid-up cash appeal bond, and the resulting unpaid appeal bond
which is still Php 3.025 BILLION. We still deem it proper under the law and the Constitution for the
protection of labor that private 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 cash or surety, which amount is even less than one-third (1/3) of the original appeal bond
required by law, which We hold to be reasonable under the circumstances and to be based on the
evidence presented in this case. The additional appeal bond of Php 1 BILLION is equivalent to an
average of Php 130,941.46 (instead of the original average of Php452,140.00) for each of the
alleged illegally dismissed 7,637 workers. Notably, the computation of the judgment award in this
85

case includes damages.

The NLRC Interim Rules on Appeals under Republic Act No. 6715 specifically provides that
damages shall be excluded in the determination of the appeal bond, thus:

SECTION 7. Bond. In case of a judgment of the Labor Arbiter involving a monetary award, an 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 in an amount equivalent to the
monetary award in the judgment appealed from.

For purposes of the bond required under Article 223 of the Labor Code, as amended, the monetary
award computed as of the date of promulgation of the decision appealed from 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.

Pending the issuance of the appropriate guidelines for accreditation, bonds posted by bonding
companies duly accredited by the regular courts, shall be acceptable. (Emphasis supplied). When
the rules were amended in 1993, attorney’s fees were also excluded in the judgment award for the
purpose of computing the appeal bond, viz:

SECTION 6. BOND. - In case the decision of the Labor Arbiter, POEA Administrator 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 bond issued by a reputable bonding
company duly accredited by the Commission or the Supreme Court in an amount equivalent to the
monetary award, exclusive of moral and exemplary damages and attorney’s fees.

Subsequently, in an amendment by NLRC Resolution No. 01-02, Series of 2002, the rules in effect
at the time the appeal bond was interposed by the Corporations, the provision on exclusion of
damages and attorney’s fees was retained: 86

SECTION 6. BOND. - In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the
monetary award, exclusive of damages and attorney’s fees.
Thus, under the applicable rules, damages and attorney’s fees are excluded from the computation of
the monetary award to determine the amount of the appeal bond. We shall refer to these exclusions
as "discretionaries," as distinguished from the "mandatories" or those amounts fixed in the decision
to which the employee is entitled upon application of the law on wages. These mandatories include
awards for backwages, holiday pay, overtime pay, separation pay and 13th month pay.

As a matter of fact, in Erectors, Inc. v. NLRC, it was concluded that no bond is required if an appeal
87

raises no question other than as regards the award of moral and/or exemplary damages. In Cosico,
Jr., v. NLRC, the employer was held to have substantially complied with the requirement when it
88

posted the bond on time based on the monetary award for backwages and thirteenth month pay,
excluding the exorbitant award for moral and exemplary damages.

The judgment award in the instant case amounted to an immense ₱3.45 Billion. The award is broken
down as follows: backwages, separation pay, moral and exemplary damages. For purposes of
determining the reasonable amount of the appeal bond, we reduce the total amount of awards as
follows:

The mandatories comprise the backwages and separation pay. The daily wage rate of an employee
of Aris ranges from ₱170-₱200. The average years of service ranges from 5-35 years. The
backwages were computed at 108 months or reckoned from the time the employees were actually
terminated until the finality of the Labor Arbiter’s Decision. Approximately, the amount to be received
by an employee, exclusive of damages and attorney’s fees, is about ₱600,000.00. The Labor Arbiter
granted moral damages amounting to ₱10,000.00, and another ₱10,000.00 as exemplary damages.
The total number of employees receiving ₱20,000.00 each for damages is 5,984, bringing the total
amount of damages to ₱119,680,000.00. This amount should be deducted as well as the ₱419
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. Thus, the total amount is ₱2.9
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 ₱725 Million. This directive
already considers that the award if not illegal, is extraordinarily huge and that no insurance company
would be willing to issue a bond for such big money. The amount of ₱725 Million is approximately
25% of the basis above calculated. It is a balancing of the constitutional obligation of the state to
afford protection to labor which, specific to this case, is assurance that in case of affirmance of the
award, recovery is not negated; and on the other end of the spectrum, the opportunity of the
employer to appeal.

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 other hand,
management will not be effectively denied of its statutory privilege of appeal.

VIII.

The Corporations invoked the decision issued by the NLRC last 19 December 2006 which set aside
the labor arbiter’s decision and ordered remand of the case to the forum of origin to have the instant
petitions dismissed for being moot.

When the NLRC granted the motion to reduce the appeal bond and the Corporations 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 petitioner’s appeal of the labor arbiter’s ruling, which it deemed to
have been perfected and therefore, ripe for decision.

Prudence however dictates that the NLRC should not have decided the case on its merits 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 resolution, the NLRC should have held in
abeyance the resolution of the case to prevent the case from being mooted. The NLRC decision was
issued prematurely.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. SP No. 96363 dated 26 March 2007
is MODIFIED. The Corporations are directed to post 1!725 Million, in cash or surety bond, within
TEN ( 10) days from the receipt of this DECISION. The Resolution of the NLRC dated 19 December
2006 is VACATED for being premature and the NLRC is DIRECTED to act with dispatch to resolve
the merits of the case upon perfection of the appeal.

SO ORDERED.

29

SECOND DIVISION

[G.R. NO. 143195. September 13, 2005]

ANDREA CAMPOSAGRADO, VIRGINIA CAMPOSAGRADO, ESTER

CAMPOSAGRADO, Represented by her attorney-in-fact, FE C. MAGSAMBOL,
and GUILLERMA CAMPOSAGRADO, represented by her attorney-in-fact,
RENATO S. CAMPOSAGRADO, Petitioners, v. PABLO S. CAMPOSAGRADO and
The Hon. COURT OF APPEALS, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before this Court is a Petition for Review under Rule 45 of the Rules of Court
seeking the reversal of the Resolution, dated June 17, 1999, issued by the Court of
Appeals (CA) which reads as follows:

Considering the report, dated May 24, 1999, of the Judicial Records Division (page
1 of the Rollo) to the effect that the appellants failed to pay in full the required
docket and other legal fees, this Court resolved to DISMISS the appeal, pursuant to
Section 4, Rule 41 in relation to Section 1(c), Rule 50 of the 1997 Rules of Civil
Procedure.

IT IS SO ORDERED.1

as well as the Resolution dated April 24, 2000, which reads:

Up for consideration is appellant's motion for reconsideration (pages 11-12 of the

Rollo) of this Court's resolution of June 17, 1999 (page 10 of the Rollo) dismissing
the appeal for the reason therein stated. Taking note of the report, dated February
24, 2000, of the Judicial Records Division (page 1 of the Rollo) to the effect that the
appellant still failed to pay the full amount of the required docket fee, the same
(motion) is hereby DENIED. The resolution of dismissal stands.

IT IS SO ORDERED.2

The factual background of the case is as follows:

Petitioners and private respondent Pablo Camposagrado are legitimate children of

Antonina and Cresenciano Camposagrado. On April 16, 1975, Antonina died
intestate leaving a parcel of land with an area of around 3,879 square meters
situated in Gen. Trias, Cavite and covered by Transfer Certificate of Title No. (70-
52) RT-6507. On August 26, 1975, Cresenciano sold one-half of the said property
to private respondent Pablo allegedly without the knowledge of petitioners. On June
7, 1976, almost a year after Antonina's death, Cresenciano also died intestate. 3

On September 10, 1991 or more than sixteen years after the death of Antonina,
private respondent Pablo filed a complaint before the Regional Trial Court (RTC) of
Cavite, Trece Martires City, against petitioners, docketed as Civil Case No. TM-329-
A, for Partition, Recovery of Possession with Damages, on the basis of the Deed of
Sale executed by Cresenciano in his favor. Private respondent Pablo prayed that
one-half of the estate be transferred to him while the remaining half be divided
among petitioners and himself.4

In their Answer, herein petitioners contend that the subject lot was paraphernal
property of the late Antonina, thus Cresenciano cannot sell one-half portion thereof,
his right thereto being inchoate, the same not having been settled and partitioned
among all the forced heirs of Antonina.5 They then prayed that the complaint be
dismissed and that private respondent be ordered to pay damages.6

On October 30, 1998, the RTC rendered its decision the fallo of which reads:

ACCORDINGLY, let the property in dispute be partitioned between plaintiff and

defendants so that Pablo Camposagrado will receive double the share of each of the
defendants; ordering defendants to pay plaintiff the sum of P30,000.00 as
attorney's fees and P50,000.00 as moral damages.

Costs against defendants.

SO ORDERED.7

Petitioners received said decision on December 28, 1998 and filed their Notice of
Appeal the following day; the collection officer of the RTC of Cavite, Trece Martires
City, demanded and collected from petitioners the appeal docket and other lawful
fees as evidenced by Official Receipt Nos. 9557982, 10392031, 7541241-B and
308968-Z on the same date; on June 17, 1999, the CA dismissed the appeal filed
by petitioners on the ground that they failed to pay in full the required docket and
other legal fees; and on April 24, 2000, the CA denied petitioners' motion for
reconsideration.8

Thus, the present petition, where the following issues are being raised:

I. IN DISMISSING THE APPEAL FOR ALLEGED FAILURE TO PAY THE REQUIRED

DOCKET AND OTHER LEGAL FEES PURSUANT TO SECTION 4, RULE 44 (sic) IN
RELATION TO SECTION I (C), RULE 50 OF THE 1997 RULES OF CIVIL PROCEDURE,
RESPONDENT COURT ACTED NOT IN ACCORD WITH THE LAW AND APPLICABLE
DECISIONS OF THIS HONORABLE COURT RENDERING ITS ORDERS, APPENDICES
"A" AND "B" HEREON, CORRECTIBLE BY CERTIORARI.

II. IN DISMISSING THE APPEAL FOR ALLEGED FAILURE TO PAY THE REQUIRED
DOCKET AND OTHER LEGAL FEES, PAYABLE UNDER THE RULES, RESPONDENT
COURT GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OF
JURISDICTION, OR ACTED IN EXCESS OR WANT OF JURISDICTION RENDERING
ITS ORDERS, APPENDICES "A" AND "B" HEREON, CORRECTIBLE BY CERTIORARI.9

Petitioners argue that: they should not be faulted or penalized for the oversight of
the collection officer; when the collection officer asked from them to pay the
amount indicated in the Official Receipts in the total sum of P415.00, petitioners
paid said amount in good faith; as ordinary folks, they believed that the amount
collected from them by the collection officer of the court is what is mandated under
the Rules; appeal being an essential part of our judicial system, the CA should have
proceeded with caution and notified petitioners that the amount collected from
them by the collection officer is deficient; petitioners were deprived of their right to
due process by the outright dismissal of their appeal; their appeal, being
meritorious, must be considered and given legal significance by the CA before
resorting to technicality; petitioners have no intention to delay the resolution of the
case.10

Private respondent in his Comment contends that: petitioners are represented by

private counsel who is presumed to be competent and diligent in his task and is
duty bound to know the correct and full amount of docket and other lawful fees to
be exacted by court personnel; petitioners, acting through their agent, should
exercise diligence in seeing to it that the full amount of docket fee is paid within the
reglementary period of appeal, failure of which is fatal to their appeal in light of the
proscription that the docket and other lawful fees should be paid in full; this Court
in Lazaro v. Court of Appeals11 held that the right to appeal is a statutory right and
one who seeks to avail of that right must comply with the statute or rule; the CA in
outrightly dismissing the appeal of petitioners acted within the bounds of law and
exercised sound discretion; in any case, the present petition involves a pure
question of fact, i.e., whether the duty of paying the correct and full amount of
docket and other legal fees devolves upon petitioners, which this Court cannot take
cognizance of.12

The sole issue that needs to be addressed in this petition is: Whether the CA
correctly denied the appeal filed by petitioners for their failure to pay the full
amount of the docket fee.

We answer in the negative.

The general rule is that payment of docket fees within the prescribed period is
mandatory for the perfection of an appeal.13 This is pursuant to Sec. 4, Rule 41 of
the 1997 Rules of Court which provides that:

Sec. 4. Appellate court docket and other lawful fees. - Within the period for taking
an appeal, the appellant shall pay to the clerk of court which rendered the
judgment or final order appealed from, the full amount of the appellate court
docket and other lawful fees. Proof of payment of said fees shall be transmitted to
the appellate court together with the original record or the record on appeal.

There are instances however when the Court applied the rule with liberality. 14 This
is in recognition of the importance of the remedy of appeal, which is an essential
part of our judicial system and the need to ensure that every party litigant is given
the amplest opportunity for the proper and just disposition of his cause freed from
the constraints of technicalities.15

This Court on several occasions has pronounced that failure to pay the appellate
docket fee does not automatically result in the dismissal of an appeal, dismissal
being discretionary on the part of the appellate court.16 A party's failure to pay the
appellate court docket fee within the reglementary period confers only a
discretionary and not a mandatory power to dismiss the proposed appeal. 17 Such
discretionary power should be used in the exercise of the court's sound judgment in
accordance with the tenets of justice and fair play with great deal of
circumspection, considering all attendant circumstances and must be exercised
wisely and prudently, never capriciously, with a view to substantial justice. 18

The records of this case show that the deficiency in the docket fee paid by
petitioners is only P5.00.19 Petitioners claim that they merely relied on the
assessment of the collecting officer as to the amount of dockets fees that should be
paid. As shown by the records, the assessment made only totaled P415.00 which
petitioners readily paid.20 These circumstances suggest that petitioners never
intended to circumvent the rules.21 The Court therefore resolves the petition in their
favor.

The Court takes note of the fact that petitioners, despite receipt of the Resolution
dated June 17, 1999, still failed to remedy their mistake and failed to pay the
deficiency in their docket fee. Under different circumstances, such inaction would
have an adverse effect on petitioners. Considering however the meager amount
which petitioners failed to pay in this case and more significantly, the principal issue
on appeal from the RTC Decision, that is, whether the trial court committed a
reversible error in ruling that private respondent Pablo is entitled to double the
share of each of his co-heirs, we find that the ends of justice would be better
served by allowing the appeal to proceed after due payment of the amount
specified.

WHEREFORE, the petition is granted. The Resolutions of the Court of Appeals dated
June 17, 1999 and April 24, 2000 are REVERSED and SET ASIDE. The Court of
Appeals is ordered to give due course to petitioners' appeal UPON payment by
petitioners of the amount of P5.00 which is the deficiency in their docket fee with
said court, within five (5) days from finality of herein Decision.

Let the records be remanded to the Court of Appeals for further proceedings.

SO ORDERED.

31

G.R. No. 156379 September 16, 2005

EMMA CORDOVA, GINALY ARNUZA, LERMA PLAZON, JOANN GAMIL, TERESITA TORION
and NENE JANIOLA, Petitioners,
vs.
KEYSA’S BOUTIQUE and/or SPS. CRIS and ELEANOR ALBARAN, Respondent.

DECISION

PUNO, J.:

Before us is a petition for certiorari under Rule 65 of the Rules of Court, assailing the Decision1 and
Resolution2 of the Court of Appeals, dated November 16, 2001 and May 27, 2002, respectively, in
CA-G.R. SP No. 60688, affirming the ruling of the National Labor Relations Commission (NLRC),
which in turn set aside the April 14, 1998 decision3 of the labor arbiter. The labor arbiter declared
illegal the dismissal of petitioners from employment; and, awarded monetary compensation in the
total amount of three hundred eighty-four thousand three hundred fifty-two pesos and fifteen
centavos (₱384,352.15).

The facts are as follows:

Petitioners claim that they were former employees of respondents in their Keysa’s Boutique located
at G. Flores Ave., Butuan City. They presented the following as their employment records:

START JOB WORKING SALARY

 DESIGNATION HOURS PER DAY

OF EMPLOYMENT
Teresita 8/1/96 Salesgirl 8 a.m. to 7 p.m. P1,200/mo
Torion
Ginaly 7/1/97 Salesgirl 8 a.m. to 7 p.m. P1,200/mo
Arnuza
Joann Gamil 11/6/95 Salesgirl 8 a.m. to 7 p.m. P1,200/mo
Lerma 7/1/96 Salesgirl 8 a.m. to 7 p.m. P1,200/mo
Plazon
Nene 6/1/97 Salesgirl 8 a.m. to 7 p.m. P1,000/mo
Janiola
Emma 8/1/92 Salesgirl 8 a.m. to 7 p.m. P2,500/mo
Cordova

On November 10, 1997, petitioners requested an increase in their salary rates from respondents to
conform to the prevailing minimum wage rate in the region, which at that time was ₱103.00, inclusive
of the cost of living allowance. They likewise requested for payment of their 13th month pay, which
they alleged has not been paid to them since the start of their employment. Respondents resented
the demand and allegedly told petitioners, "Amo man ko, ako’y magbuot" (which means "I am the
owner, and I will be the one to decide").

On November 15, 1997, petitioner Nene Janiola was dismissed from employment. On November 25,
1997, petitioners Ginaly Arnuza and Joann Gamil met the same fate. On November 28, 1997, it was
the turn of petitioners Emma Cordova, Lerma Plazon and Teresita Torion to be terminated from
employment.

Hence, petitioners filed complaints of illegal dismissal, and nonpayment/underpayment of wages,

overtime pay, 13th month pay and service incentive leave pay against respondents, before the
Regional Arbitration Branch of the Department of Labor and Employment in Butuan City. Petitioners
alleged that they are regular employees of respondents, entitled to security of tenure, and may only
be terminated from employment due to just or authorized causes.

On April 14, 1998, Labor Arbiter Rogelio Legaspi, on the basis of the position paper of petitioners,
decided in favor of the latter, awarding them the total amount of ₱384,352.15. Respondents failed to
file their position paper. They appealed to the NLRC, and included in their prayer the reduction of the
appeal bond due to financial constraints. Respondents’ "Plea to reduce and admit bond" states:

The respondents are presently in financial distress. They still have past due accounts with the RCBC
due to financial losses triggered by the recent economic woes. Lately, the mother of the respondent
was airlifted to Manila and she is in serious conditions. That again entails expenses.

Moreover, the appeal of the respondents are (sic) grounded on solid and firm foundation, only that
the evidences for the respondents were not presented and considered. If the bond be not reduced,
the substantial rights of the respondents would be greatly prejudiced all because they do not have
the amount to put up as appeal bond.4

In lieu of the bond, respondents submitted a bank certification from the Rizal Commercial Banking
Corporation (RCBC), which stated that respondents maintain a savings account with the latter bank,
having a total deposit of ₱23,008.19, as of April 23, 1998. The bank certification states:

This is to certify that SPS. CRIS & ELEANOR ALBARAN with business address at KEYSA’S
BOUTIQUE, G. FLORES AVE., BUTUAN CITY, maintains (sic) a depository account with RIZAL
COMMERCIAL BANKING CORPORATION – Butuan Branch under SA # 1-537-90450-6 with a
balance of Pesos: TWENTY THREE THOUSAND EIGHT & 19/100 (₱23,008.19) as of April 23,
1998.

This certification is issued upon client’s [clients’] request for whatever legal purposes it may serve
them.

Issued this 23nd (sic) day of April 1998.

(signed) (signed)

GIL R. RAMOS AVP SANNIE C. CAUSON, JR.

SAM/BOH Branch Manager

RCBC-Butuan5

The NLRC ruled in favor of respondents. On August 31, 1998, it set aside the April 14, 1998 decision
of the labor arbiter, and remanded the case to the latter for reception of evidence and submission of
position paper of respondents, noting that the case was precipitately decided even before the lapse
of the period within which respondents were to submit their position paper. 6

On October 28, 1999, the labor arbiter promulgated his decision,7 the dispositive portion of which
reads as follows:

WHEREFORE, premises considered, judgment is hereby entered:

1. Dismissing the complaint for illegal dismissal of complainants Plazon, Cordova and Torreon
[Torion] for lack of merit;

2. Declaring the dismissal of complainants Arnuza, Gamil and Janiola illegal; and

3. Ordering respondents to pay complainants the amounts indicated opposite their names, as shown
in Annex "A" hereof.

Complainants’ other claims are dismissed for lack of merit.

SO ORDERED.

Not satisfied, both parties appealed to the NLRC. Petitioners alleged that respondents failed to
furnish the appeal bond required to perfect their appeal of the labor arbiter’s April 14, 1998 decision.
Respondents, on the other hand, appealed the labor arbiter’s monetary award. Again, they failed to
post the required appeal bond. Instead, they filed a "Most Urgent Plea To Reduce Cash
Bond,"8 once more based on financial difficulties. From a total monetary award of ONE HUNDRED
EIGHT THOUSAND SIX HUNDRED EIGHTY-THREE PESOS AND TWENTY-THREE CENTAVOS
(₱108,683.23), respondents pray that they be allowed to post the amount of FIFTY THOUSAND
PESOS (₱50,000.00) as cash bond. Pursuant to this, respondent Eleanor Albaran executed a Deed
of Assignment9 in favor of the NLRC, 5th Division, Cagayan de Oro City in the amount of FIFTY
THOUSAND PESOS (₱50,000.00). The Deed of Assignment reads:

I, Eleanor Albaran, of legal age, Filipino and the Respondent in the case entitled Cordova, et al. v.
Keysa Boutique and/or Sps. Cris Albaran docketed as NLRC Case RAB 13-07-00053-99, Regional
Arbitration Branch No. X, referred to as the Assignor ASSIGNS in favor of the National Labor
Relations Commission, 5th Division, Cagayan de Oro City, the FIFTY THOUSAND (₱50,000.00)
pesos per Account Nos. 3588-00455-3; 3588-00454-5; and 3588-00453-7 deposited with Banco
Filipino, Butuan City Branch.

Banco Filipino and the Respondent-Appellant commit that the amount deposited shall not be
release (sic) pending resolution of the Appeal and until so ordered by the Honorable Commission.

The Assignor assigns to the National Labor Relations Commission, 5th Division, Cagayan de Oro,
the amount deposited in the event the Honorable Commission or any tribunals upheld (sic) and
affirm the decision of the Honorable Labor Arbiter.

IN WITNESS WHEREOF, the parties set their hands this November 12, 1999, City of Butuan,
Philippines.

(signed)

Eleanor Albaran
Assignor With our conformity

(signed but without printed name)

On March 8, 2000, the NLRC affirmed with modifications the decision of the labor arbiter. 10 It granted
respondents’ plea to reduce the amount of the cash bond to ₱50,000.00, pursuant to the authority
vested in him by law.11 It also ruled that the labor arbiter’s April 14, 1998 decision did not become
final and executory with the failure of respondents to post the appeal bond. According to the NLRC,
when respondents appealed the April 14, 1998 decision, they prayed for the reduction of the appeal
bond; and in substantial compliance with the bond requirement, respondents submitted a bank
certification. The NLRC gave due course to respondents’ appeal, set aside and vacated the April 14,
1998 decision of the labor arbiter, and remanded the case to the Arbitration Branch of origin for
reception of evidence of respondents; thus, rendering moot and academic respondents’ motion to
reduce the appeal bond. Hence, there is no finality of the April 14, 1998 decision to speak of.

On petition for certiorari with the Court of Appeals, the latter upheld the ruling of the NLRC.

Petitioners’ Motion for Reconsideration12 of the decision of the Court of Appeals was denied.

Hence, this petition for certiorari.13 Petitioners assail the decision of the Court of Appeals on the
following grounds:

I. The Court of Appeals gravely abused its discretion in ruling that the submission of a bank
certification in lieu of cash or surety superSEDEAS BOND WAS A MERE INCONSEQUENTIAL
INADEQUACY.

II. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN NOT FINDING THAT THE
LABOR ARBITER’S DECISION DATED 14 APRIL 1998 HAD BECOME FINAL AND EXECUTORY.

Petitioners argue that the original decision of the labor arbiter dated April 14, 1998, declaring their
dismissal illegal with a total monetary award of ₱384,352.15 had already become final for failure of
respondents to post an appeal bond. They stress that the posting of a cash or surety bond is a
requirement sine qua non for the perfection of an appeal by an employer from a decision involving a
monetary award. They insist that the certification from the RCBC – Butuan Branch, stating that
respondents maintain a depository account under SA#1-537-90450-6, with a balance of TWENTY
THREE THOUSAND EIGHT PESOS AND NINETEEN CENTAVOS (₱23,008.19), as of April 23,
1998, cannot take the place of the required cash or surety bond for the perfection of the appeal.
They assert that this kind of bank certification does not, in any way, ensure that the labor arbiter’s
award will be paid should the appeal fail.

We find for the petitioners.

Art. 223 of the Labor Code provides that 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 company duly accredited by the Commission in the amount equivalent to the
monetary award. We have ruled that the word only makes it perfectly clear that the lawmakers
intended that the posting of the bond is the exclusive means by which an employer’s appeal may be
perfected.14 The filing of a supersedeas bond, which is actually a security required from an appellant
to ensure payment of the adjudged monetary award in case the appeal fails, is indispensable to the
perfection of the appeal. We further held that the posting of a cash or surety bond for the perfection
of an appeal is jurisdictional, without which the NLRC, as in this case, does not have the authority to
review and revise the judgment of the labor arbiter.15

As a general rule, non-compliance with this legal requirement is fatal and has the effect of rendering
the appealed judgment final and executory. In some cases, however, this Court relaxed the
requirement of posting a supersedeas bond for the perfection of an appeal. The decisions in these
exceptional cases were justified by the fact that there was substantial compliance with the rule. 16

In Your Bus Lines vs. NLRC,17 this Court excused the appellant for its failure to post the bond
because it relied on the notice of the decision which, while stating the requirements for perfecting an
appeal, did not mention that a bond must be filed. In Blancaflor vs. NLRC,18 it was noted that the
failure of appellant to post a bond was in part due to the failure of the Labor Arbiter to state the exact
amount of back wages and separation pay due; thus, no basis exists for the computation of the
amount of the bond to be filed. In Cabalan Pastulan Negrito Labor Association vs. NLRC, 19 this
Court granted petitioner-appellant’s plea to give due course to its appeal despite non-posting of a
supersedeas bond on account of its insolvency and poverty. Petitioner-appellant is an association of
Negritos performing trash sorting services in the American naval base in Subic Bay. Further, the
existence of an employer-employee relationship between petitioner-appellant and private respondent
was not established. In UERM-Memorial Medical Center vs. NLRC,20 the appellant-employer was
allowed to post a property bond in lieu of a cash or surety bond. In this case, the judgment involved
more than ₱17M and its precipitate execution could adversely affect the existence of the employer
medical center. It also appeared that the real property bond was worth more than ₱102M, hence, the
posting of a real property bond was sufficient compliance with the requirements of Art. 223.

However, in the case at bar, we find no substantial compliance with the bond requirement. The
NLRC Rules state that in cases where the decision of the labor arbiter involves a monetary award,
an 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 NLRC or this Court in an amount equivalent
to the monetary award, exclusive of moral and exemplary damages and attorney’s fees. 21 We agree
with the petitioners that the bank certification submitted by respondents does not come close to the
cash or surety bond required by law. The obvious purpose of an appeal bond is to ensure, during the
period of appeal, against any occurrence that would defeat or diminish recovery by the aggrieved
employees under the judgment if subsequently affirmed.22 As petitioners pointed out, the bank
certification does not, in any way, ensure that the labor arbiter’s award will be paid should the appeal
fail. Respondents are not prevented from making withdrawals from their savings account. And, the
total amount deposited in respondents’ savings account, twenty-three thousand eight pesos and
nineteen centavos (₱23,008.19), is measly compared to the monetary award by the labor arbiter
which amounts to three hundred eighty four thousand three hundred fifty two pesos and fifteen
centavos (₱384,352.15). In Biogenerics Marketing and Research Corp. vs. NLRC,23 the NLRC,
upon
motion of the appellant to reduce the appeal bond, ordered appellant to post an additional cash or
surety bond in the amount of ₱1,950,000.00. It found no justification for a substantial reduction of the
bond. Appellant initially posted a cash bond of ₱50,000.00 for a monetary award totaling
₱2,200,000.00. The NLRC, as well as this Court, rejected the additional "bond" filed by appellant
which was denominated as an "Irrevocable Bank Guarantee" in the amount of ₱1,950,000.00 and
entered into by and between appellant and Hongkong and Shanghai Banking Corporation Limited. It
was held that the bank guarantee cannot be a substitute for the cash or surety bond contemplated
under Art. 223 of the Labor Code.

In the case at bar, the respondents cannot be excused from making a substantial compliance with
the bond requirement. The law does not require outright payment of the appealed monetary award,
but only the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the NLRC or this Court, and not a mere bank certification which only states the total
amount of deposit existing in such bank as of a certain date. The cash or surety bond will ensure
that the award will be eventually paid in case the appeal fails. A mere bank certification of the type
submitted by respondents will not. What respondents have to pay is a moderate and reasonable
sum for premiums for such bond.24

The Court of Appeals also ruled that it is not inclined to frustrate respondents’ right to appeal merely
because of such "inconsequential inadequacy." We cannot denominate the bond requirement as a
mere "inconsequential inadequacy." This requirement is intended to discourage employers from
using the appeal to delay, or even evade, their obligation to satisfy their employee's possibly just and
lawful claims.25 The right to appeal is a statutory right. A party who wants to avail of it must comply
with the requirements set by the law. We have ruled that while it is true that the NLRC Rules must be
liberally construed and that the NLRC is not bound by the technicalities of law and procedure, the
NLRC itself (and the Court of Appeals in the instant case) must not be the first to arbitrarily disregard
specific provisions of the Rules which are precisely intended to assist the parties in obtaining a just
and expeditious settlement of labor disputes. In short, the rule on liberal construction is not a license
to disregard the rules of procedure. Rules of Procedure exists for a purpose, and to disregard such
rules in the guise of liberal construction would be to defeat such purpose. 26

The consequence then of respondents’ failure to substantially comply with the mandatory
requirement of posting a bond for the perfection of the appeal is to render the April 14, 1998 decision
of the labor arbiter final and executory, and to place it beyond the power of the NLRC to review or
revise. The NLRC, thus, acted without jurisdiction in reviewing and modifying the decision of the
Labor Arbiter. Similarly, the Court of Appeals acted without jurisdiction in affirming the decision of the
NLRC.
IN VIEW THEREOF, the petition is GRANTED. The Court of Appeals’ November 16, 2001 Decision
in CA-G.R. SP No. 60688 and May 27, 2002 Resolution, affirming the March 8, 2000 Decision of the
National Labor Relations Commission, are ANNULED and SET ASIDE. The April 14, 1998 Decision
of the Labor Arbiter is REINSTATED.

SO ORDERED.

32.

G.R. No. 110419 March 3, 1997

UERM-MEMORIAL MEDICAL CENTER and DR. ISIDRO CARINO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and UERM Employees ASSOCIATION, Priscillo
Dalogdog and 516 Members-Employees of UERM Hospital, respondents.

PUNO, J.:

The question presented in this petition for certiorari under Rule 65 is whether or not in perfecting an
appeal to the National Labor Relations Commission (NLRC) a property bond is excluded by the two
forms of appeal bond — cash or surety — as enumerated in Article 223 of the Labor Code.

The facts show that on 14 December 1987 Republic Act No. 6640 took effect which mandated a ten
(P10.00) peso increase on the prevailing daily minimum wage of P54.00. In applying said law, the
petitioners granted salary increases to their employees based on the following computation, to wit:

1. To members of the faculty who are non-union members, P304.17 per month;

2. To rank-and-file employees (individual complainants who are union members),

P209.17 per month.

There was a difference of P95.00 in the salaries of the two classes of employees. Private
respondents who are rank and file employees demanded payment of the difference. Before
the parties could settle their dispute, Republic Act No. 6727 took effect on 1 July 1989 which
again increased the daily minimum wage in the private sector (whether agricultural or non-
agricultural) by P25.00. In compliance, petitioners paid their employees using the following
computation, to wit:

1. To members of the faculty who are non-union members, P760.42 a month; and

2. To rank-and-file employees (individual complainants who are union members),

P523.00 a month.

Again, there was a difference of P237.42 per month between the salaries of union members
and non-union members. In September 1987, petitioners increased the hiring rate of the new
employees to P188.00 per month. Private respondents once more demanded from the
petitioners payment of the salary differential mandated by RA No. 6727 and correction of the
wage distortion brought about by the increase in the hiring rate of new employees.

On 12 April 1988, Policy Instruction No. 54 was issued by the then Secretary of Labor Franklin
Drilon, the pertinent provision of which reads:
 . . . the personnel in subject hospitals and clinics are entitled to a full weekly wage of
seven days if they have completed the 40-hour/5-day workweek in any given
workweek.

All enforcement and adjudicatory agencies of this Department shall be guided by this
issuance in the disposition of cases involving the personnel of covered hospitals and
clinics.

Done in the City of Manila, this 12th day of April, 1988.

(Sgd)
FRANK
LIN M.
DRILO
N
Secret
ary

Petitioners challenged the validity of said Policy Instruction and refused to pay the salaries of the
private respondents for Saturdays and Sundays.

Consequently, a complaint was filed by the private respondents, represented by the Federation of
Free Workers (FFW), claiming salary differentials under Republic Act Nos. 6640 and 6727,
correction of the wage distortion and the payment of salaries for Saturdays and Sundays under
Policy Instruction No. 54.

Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage
distortion. The dispositive portion of the decision reads:

PREMISES CONSIDERED, respondents are hereby directed to pay the 517

individual complainants:

(1) Their Salary Differentials, to wit:

1.1 Under RA 6640 — P1,743,582.50

1.2 Under RA 6727 — P3,559,613.06
1.3 Policy Instruction 54 — P11,779,328.00
——————
Total P17,082,448.56

(2) Exemplary Damages of P2,000.00 each.

SO ORDERED. 1

Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of
Appeal with a Real Estate Bond consisting of land and various improvements therein worth
P102,345,650. The private respondents moved to dismiss the appeal on the ground that Article 223
2

of the Labor Code, as amended, requires the posting of a cash or surety bond. The NLRC directed
petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failure to do so
would cause the dismissal of the appeal. The petitioners filed a Motion for Reconsideration alleging it
is not in a viable financial condition to post a cash bond nor to pay the annual premium of
P700,000.00 for a surety bond. On 6 October 1992, the NLRC dismissed petitioners' appeal.
Petitioners' Motion for Reconsideration was also denied by the NLRC in a resolution dated 7 June
3

1993.

Hence, this petition assailing the two resolutions as having been issued with grave abuse of
discretion. On 28 June 1993, we temporarily enjoined the NLRC from implementing the questioned
resolutions and from executing the decision of the Labor Arbiter.

The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which
provides:
 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 company duly accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from.

We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC we
4

ruled:

. . . that while Article 223 of the Labor Code, as amended by Republic Act No. 6715,
requiring a cash or surety bond in the amount equivalent to the monetary award in
the judgment appealed from for the appeal to be perfected, may be considered a
jurisdictional requirement, nevertheless, adhering to the principle that substantial
justice is better served by allowing the appeal on the merits threshed out by the
NLRC, the Court finds and so holds that the foregoing requirement of the law should
be given a liberal interpretation.

Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations
Commission we held:
5

The intention of the lawmakers to make the bond an indispensable requisite for the
perfection of an appeal by the employer is underscored by the provision that an
appeal by the employer may be perfected "only upon the posting of a cash or surety
bond." The word "only" makes it perfectly clear, that the lawmakers intended the
posting of a cash or surety bond by the employer to be the exclusive means by which
an employer's appeal may be perfected. The requirement is intended to discourage
employers from using an appeal to delay, or even evade, their obligation to satisfy
their employees' just and lawful claims.

Considering, however, that the current policy is not to strictly follow technical rules
but rather to take into account the spirit and intention of the Labor Code, it would be
prudent for us to look into the merits of the case, especially since petitioner disputes
the allegation that private respondent was illegally dismissed.

We reiterate this policy which stresses the importance of deciding cases on the basis of their
substantive merit and not on strict technical rules. In the case at bar, the judgment involved
is more than P17 million and its precipitate execution can adversely affect the existence of
petitioner medical center. Likewise, the issues involved are not insignificant and they deserve
a full discourse by our quasi-judicial and judicial authorities. We are also confident that the
real property bond posted by the petitioners sufficiently protects the interests of private
respondents should they finally prevail. It is not disputed that the real property offered by
petitioners is worth P102,345,650. The judgment in favor of private respondent is only a little
more than P17 million.

IN VIEW WHEREOF, the resolutions dated October 6, 1992 and June 7, 1993 of the public
respondent are set aside. The case is remanded to the NLRC for continuation of proceedings. No
costs.

SO ORDERED.

33

G.R. No. 83335 October 5, 1989

ROCHE (PHILIPPINES), JERRY LOSBANES, GONZALO GALANG AND HENRICUS H.J.A.

DORTSMAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER VITO J. MINORIA AND
REYNALDO VILLAREAL, respondents.

Sycip, Salazar, Hernandez & Gatmaitan for petitioners.

Felipe S. Velasquez for private respondent.

GANCAYCO, J.:

Once again, this Court is tasked with determining the legality of the termination of an employee in
the present petition for certiorari. Petitioners seek the reversal of the Decision of the National Labor
1

Relations Commission wherein the termination of the private respondent was declared illegal.

The antecedent facts of the case are as follows:

Private respondent Reynaldo J. Villareal was employed by petitioner company as a medical

representative for the Dumaguete/Bohol area. As such, his duty was to conduct sales calls on
physicians within his territory and providing the latter with drug samples on dates specified by the
company so as to create a promotional impact for the products of Roche. Inasmuch as the nature of
the work of medical representatives like Villareal requires that they go out in the field for most of the
day, the company is unable to monitor their work hours through the bundy clock system. Thus, the
company devised a method whereby the day to day activities of these employees could nevertheless
be checked. They were required to fill out daily call reports indicating the names of physicians visited
for a particular day and the drug samples issued to the latter. Each doctor was also to sign an
acknowledgement of receipt of the drug samples indicating the date of each visit.

On September 20, 1982, petitioner Jerry Losbanes, supervisor of Roche (Phil.) for the East-West
Visayas area, wrote the private respondent informing the latter of a report filed by Johnny de la Cruz,
its marketing manager for Bulk Vitamins. Mr. de la Cruz had allegedly seen Villareal in Cebu City on
September 9, 1982 when the latter was supposed to have been in Dumaguete City as stated in his
assigned itinerary and as declared by him in his Daily Call Report for that particular day. Accusing
Villareal of "kiting" as the aforesaid practice is called, petitioner Losbanes directed the former to
explain in writing why he should not be recommended for dismissal. Realizing the gravity of such
accusation, Villareal immediately complied with the said directive by submitting his answer on
September 23. In the said answer, he emphatically denied the charges hurled at him and added that
in all his fourteen years of service to the company, not once had he indulged in the abhorred practice
of "kiting." He then invited the company to conduct an investigation of the matter and even submitted
a certification from 26 physicians covered by him on the 9th and 10th of September 1982, to prove
that he was in Negros Oriental performing his duties and not in Cebu City as claimed by Mr. de la
Cruz.Pending investigation of his case, Villareal was suspended by the company for an indefinite
period.

Without conducting any hearing whatsoever, Villareal was notified in writing of his dismissal from the
service on September 24, 1982 by petitioners Galang and Dortsman for allegedly falsifying his Daily
Call Report for September 9, 1982. His dismissal was to take effect on the 27th of the same month.

Hoping to present his side and in an attempt to change the verdict reached by the petitioners,
Villareal sought out the latter on September 28, 1982 at the Montebello Hotel in Cebu City where
they were having a meeting. However, his pleas fell on deaf ears inasmuch as the petitioners
refused to speak with him and curtly advised him that his dismissal was a closed matter as far as the
company was concerned. Instead, he was asked to turn over all company assets in his possession.
He complied with the instructions.

Shortly thereafter, the company required him to sign a letter-quitclaim as a condition for the issuance
of a certificate of employment. This request was followed by several checks issued in the name of
Villareal which purport to show that the company had already settled its obligation with him. A letter
accompanying the said checks stated that "while accepting the above payments, you confirm that
you have no claim whatsoever, to present against Roche (Phils.), Inc. in relation to your activity with
this Company or otherwise." However, private respondent rejected the same.
2
Realizing that there was no other way for him to clear his name, Villareal was prompted to seek
redress by filing a complaint with the National Labor Relations Commission . Included in his
3

complaint for illegal dismissal was his claim for 50% of the savings obtained by the company from
the cost-savings plan which he had devised for the latter in response to an inter-office memorandum
dated December 22, 1977, encouraging all employees of Roche to come up with cost-savings
proposals. The said memorandum guaranteed an incentive of 50% share in any amount saved
during the first 12 months of the implementation of the approved proposal. Private respondent claims
that the petitioner company adopted his proposals but the promised 50% share was never given to
him despite repeated demands.

After due consideration of the evidence brought before him, the labor arbiter held that the company
4

was guilty of illegal dismissal. It was ordered to pay the complainant unpaid salaries, backwages,
13th month pay along with other benefits and allowances. In the event that Villareal opted to retire,
the company was ordered to pay him his retirement benefits. Damages amounting to P155,000.00
were also awarded.

Petitioners interposed an appeal with the respondent National Labor Relations Commission. It
proved to be futile since the appeal was dismissed for lack of merit. The decision appealed from was
affirmed, albeit with certain modifications, the dispositive portion of which reads, thus:

The respondents are hereby ordered:

To reinstate complainant to his former position without loss of seniority rights and to
pay him, jointly and severally, his full back wages and benefits from the time
compensation was withheld from him covering the second half of September 1982 up
to the date of his actual reinstatement including all benefits like the 13th month pay
and other benefits and/or allowances;

To pay complainant, jointly and severally, should he opt to retire, retirement benefits
at the rate of a month's basic salary for every year of service covering the period
from September 1968 to September 1983 when he would have been eligible for
retirement, thence 1 1/2 month's salary for every year thereafter until his supposed
reinstatement had he not opted to retire.

Respondents are likewise ordered to pay complainant, jointly and severally, 50% of
the total amount saved by the respondent corporation covering a period of 12 months
from the adoption and implementation of the cost-saving proposal of complainant
provided that should there be no more existing records available as basis for
computation the (amount is hereby fixed at FIVE HUNDRED THOUSAND PESOS
(P500,000.00); Respondents are further ordered to pay complainant, jointly and
severally the sum of P 100,000.00 as Moral Damages; P50,000.00 as Exemplary
Damages and 10% of the total monetary awards as attorneys' fees.

SO ORDERED. (Emphasis supplied.)

5

A motion for reconsideration of the above-quoted Decision was denied in a minute resolution of the 6

respondent Commission.

Hence, the instant petition for certiorari where the petitioners set forth the following questions for
judicial determination:

A. Whether or not the NLRC and the Arbiter acted without or in excess of jurisdiction
and/or committed grave abuse of discretion amounting to lack of jurisdiction in:

1. Finding the company guilty of illegally dismissing Villareal for "kiting" committed
through falsification of his daily call reports.

2. Finding the company guilty of denying Villareal the due process of law, by
dismissing him without any formal investigation;

3. Finding Villareal entitled to the cost-saving bonus;

4. Finding Villareal entitled to retirement benefits; and

 5. Finding the Company in bad faith in dismissing Villareal, thus entitling the latter to
damages;

B. Whether or not the NLRC acted without or in excess of jurisdiction and/or

committed grave abuse of discretion amounting to lack of jurisdiction in granting
Villareal additional reliefs, even if the latter did not appeal from the decision of the
Arbiter. 7

This Court finds the petition bereft of merit.

Petitioners insist that they have gathered sufficient evidence to dismiss Villareal for "kiting" through
falsification of his Daily Call Report. To bolster this allegation they presented the testimony of Johnny
de la Cruz who had allegedly seen Villareal in Cebu City at around 4:30 p.m. of September 9,1982.
He averred that Villareal greeted him with the following statement: "Sir, I'm coming in from
Dumaguete City. I am not supposed to be officially in yet. Sir, don't tell them that you saw
me." Suspecting that something was irregular, de la Cruz allegedly checked the Daily Call Report
8

filed by Villareal for the said date and discovered that the latter reported that he was in Dumaguete
at that time. These circumstances, according to petitioners, clearly justify the termination of Villareal
from employment because of "kiting."

This Court finds the above-mentioned testimony doubtful.

First, it is unlikely that Villareal, upon seeing an executive of the company, would go out of his way to
confess his misdeed especially to one he hardly knows, having met the latter only once. This kind of
behavior runs contrary to ordinary experience. If it was true that Villareal was in Cebu City on that
day, it would have been more natural for him to take all precautions to avoid being seen by anyone
from the company. Or if he was actually seen he would have kept mum about his infraction of the
rules.

Secondly, it cannot be denied that Roche (Phil.) is a big organization. It employs a great number of
medical representatives to promote its products. Thus, it appears improbable that De la Cruz would
have been able to identify Villareal when the latter was not even under his direct supervision. He met
him only once and casually.

Lastly, assuming Villareal was seen in Cebu City at the time and he informed de la Cruz that he just
arrived from Dumaguete, if so then he was not "kiting." His violation, if at all, is that he returned too
soon.

In denying that they have deprived the right of Villareal to due process, the petitioners pointed out
that he was informed of the charges against him and he was given the opportunity to explain his
side. Citing Associated Citizen's Bank vs. Ople, the petitioners attempted to substantiate their
9

argument by mentioning that this Court had previously done away with the holding of a hearing in
order to comply with the constitutional requirement of due process.

However, the circumstances obtaining in the above-cited case bears no resemblance to the case at
bar. The former contemplates a situation where the employee admits his guilt and all his admissions
are corroborated by documentary evidence. Such is not the case in the present controversy where
Villareal never admitted the commission of the offense he was being charged of. The records do not
undubitably show that Villareal was actually in Cebu City on that day. A hearing was, therefore,
necessary to thresh out all doubts as to the conflicting allegations of De la Cruz and Villareal. The
failure of petitioner to give private respondent the benefit of a hearing and an investigation before his
termination constitutes an infringement of his constitutional right to due process of law. 10

Petitioners next assail the legality of the order of reinstatement made by the respondent commission
by citing San Miguel Corporation vs. NLRC where this Court found that reinstatement was
11

improper whenever the termination of an employee was due to breach of trust and confidence.
Quoting certain passages from the decision of this Court in the subsequent case of Wenphil
Corporation vs. NLRC and Mallare, petitioners tried to buttress this line of reasoning by stating that
12

the termination of an employee was proper since "it would be highly prejudicial to the interests of the
employer to impose on him the services of an employee who has been shown to be guilty of the
charges that warranted his dismissal from employment." 13
Again, an examination of the facts in the above cited cases shows that these two cases bear no
resemblance to the case at bar. In Wenphil, the employee was dismissed for his insubordination
since he had flagrantly violated company policy by engaging in a brawl with another employee within
the company premises. Likewise, in San Miguel Corporation, the employee was dismissed for
having misappropriated company funds. The said funds were disbursed by the company to be used
in posting bail for the said employee when the latter was criminally charged with damage to property
through reckless imprudence. Upon the dismissal of the case, the employee deposited the cash
bond in his account instead of returning the said amount to the company. No reasonable explanation
was given by him when confronted by his superiors. Considering the gravity of the offenses, taken
together with the evidence presented against the said employees, this Court found their dismissal to
be proper.

But such is not the case with Villareal wherein the very credibility of the only witness against him is
put in issue. Furthermore, Villareal had served the company for fourteen years with nary a complaint
from his superiors such that an offense like "kiting" would not have merited such a drastic
punishment as dismissal; that is, if he were really guilty of the said offense. Hence, the failure of the
petitioner to prove such fact "necessarily means that the dismissal is not justified, and, therefore, the
employee is entitled to be reinstated in accordance with the mandate of Article 280 of the New Labor
Code." Subsequent pronouncements of this Court reiterate this doctrine. For instance, in Dabuet
14

vs. Roche Pharmaceuticals, this Court held that reinstatement must follow as a matter of right
15

whenever the management has been found guilty of illegal dismissal.

Having established the impropriety of the dismissal of Villareal thus requiring his consequent
reinstatement, the question as to his entitlement to retirement benefits arises.

The collective bargaining agreement entered into between the management and the union provides
for an optional retirement program for employees who have been with the company for fifteen (15)
consecutive years. The company undertook to pay the basic pay for one month multiplied by the
number of years the employee has served the company for the first 15 years and a month and a
half's basic salary for every year for the subsequent years.

The provisions of the collective bargaining agreement must be respected since its terms and
conditions "constitute the law between the parties." Those who are entitled to its benefits can invoke
its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has
the right to go to court for redress.
16

The next issue is whether or not Villareal is entitled to be paid the cost saving bonus of 50% of the
amount saved by the company for the year that his proposal was implemented. This time the Court
resolves the issue in the negative.

Petitioners allege that the inter-office memorandum upon which Villareal bases his claim was not in
effect when the latter submitted his proposal. Petitioners also ask why Villareal tarried for such a
long time before filing the said claim if he honestly believed that he was entitled to the same.
Petitioners further aver that even if Villareal was legally entitled to the said bonus, prescription has
set in under Article 291 of the Labor Code. The aforementioned article provides that "all money
claims arising from employer-employee relations accruing during the effectivity of this Code shall be
filed within three (3) years from the time the cause of action accrued, otherwise, they shall be forever
barred."

This Court cannot allow Villareal to recover said claim at this late time. He should have filed his claim
against Roche the moment his cause of action accrued instead of waiting for five years before doing
so. He had, therefore, slept on his rights and should not be rewarded for his own negligence. On this
aspect, the Court must hold for the petitioners.

Petitioners then suggest that the respondent Commission abused its discretion in awarding reliefs in
excess of those stated in the decision of the labor arbiter despite the absence of an appeal by
Villareal. To stress this point, they cited Section 5(c) of the Rules of Procedure of the National Labor
Relations Commission which provides that the Commission shall, in cases of perfected appeals, limit
itself to reviewing those issues which were raised on appeal. Consequently, those which were not
raised on appeal shall be final and executory.

There is no merit in this contention. The records show that the petitioners elevated the issues
regarding the correctness of the award of damages, reinstatement with backpay, retirement benefits
and the cost-saving bonus to the respondent Commission in their appeal. This opened the said
issues for review and any action taken thereon by the Commission was well within the parameters of
its jurisdiction.

With regard to the propriety of the award of moral damages, this Court, in a long line of cases, has
consistently granted the lowly workingman the right to recover damages for unjust dismissals tainted
with bad faith. In the instant petition, the motive of the company in dismissing Villareal was far from
noble as borne by the circumstances surrounding such dismissal.

Petitioners must have known that Villareal, who had been their employee for fourteen (14) years,
had only one year to serve before he could avail of the benefits of the optional retirement plan
stipulated in the collective bargaining agreement. Consequently, the latter would be receiving a
considerable sum of money from the company and the only way they could avoid this obligation was
to find a reason, no matter how flimsy, to terminate the employment of Villareal. Conveniently,
indeed, petitioners discovered that Villareal was "kiting" and outrightly dismissed him on the basis of
the unsubstantiated allegations of one person. Their bad faith was made more apparent by their
refusal to conduct a formal investigation to give Villareal an opportunity to traverse the charges
against him. The judgment of the respondent Commission regarding the award of damages plus ten
percent (10%) of the entire monetary award must, therefore, be sustained.

Lastly, the backwages awarded to Villareal should not exceed three (3) years.

WHEREFORE, with the modification eliminating the award for cost saving bonus and that the
backwages should not exceed three (3) years, the decision of the respondent NLRC is affirmed in all
other respects, with costs against petitioners.

SO ORDERED.

34

SMI FISH INDUSTRIES, INC., AMADO C. SANTERO, JR., VIRGILIO RODAJE

and ARMANDO ESTRELLADO, Petitioners, v. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER FRUCTUOSO T. AURELLANO, JESUS DE LA
TRINIDAD, GERTRUDES ARROYO, AVELINA BENDAÑA, JESUS AZARES and
DOLORES PARRO, Respondents.

Herminio A. Liwanag for petitioners.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; COMPROMISE AGREEMENT PUTTING AN END

TO PREVIOUS CASES; WILL NOT AND CANNOT BAR THE FILING OF COMPLAINTS
FOR SUBSEQUENT OR FUTURE VIOLATION OF THE LABOR CODE. — The alleged
compromise agreement, dated January 15, 1987, has only the effect of putting an
end to those previous cases but will not and cannot bar the signatories therein from
filing complaints against petitioners for subsequent or future violations of the Labor
Code.

2. ID.; ID.; DOES NOT BIND NON-SIGNATORIES THERETO. — As duly found by the
labor arbiter, the compromise agreement was signed by only three (3) of the herein
five (5) respondents, namely, Jesus de la Trinidad. Gertrudes Arroyo and Dolores
Parro, while they were still in the employ of petitioner company. Private
respondents Avelina Bendaña and Jesus Azares were not signatories thereto, hence,
they cannot be bound by that amicable settlement or compromise agreement.

3. ID.; APPEAL; EFFECT OF FAILURE TO APPEAL. — Respondent NLRC exceeded its

jurisdiction when it ordered the reinstatement of private respondents, thereby
modifying the decision of the labor arbiter awarding separation pay in lieu of
reinstatement. As pointed out by Presiding Commissioner Lourdes C. Javier in her
partial dissent, since private respondents did not appeal from the decision of the
labor arbiter, they are presumed to be satisfied with the adjudication therein.
Accordingly, with the finality of the decision as to private respondents, the issue of
payment of separation pay instead of reinstatement has been laid to rest. It is a
well-settled procedural rule in this jurisdiction, and we see no reason why it should
not apply in this case, that an appellee who has not himself appealed cannot obtain
from the appellate court any affirmative relief other than those granted in the
decision of the court below. The appellee can only advance any argument that he
may deem necessary to defeat the appellant’s claim or to uphold the decision that
is being disputed. He can assign errors on appeal if such is required to strengthen
the views expressed by the court a quo. Such assigned errors, in turn, may be
considered by the appellate court solely to maintain the appealed decision on other
grounds, but not for the purpose of modifying the judgment in the appellee’s favor
and giving him other affirmative reliefs.

DECISION

REGALADO, J.:

Petitioners invoke the remedy of the extraordinary writ of certiorari to set aside the
resolution of respondent National Labor Relations Commission (NLRC) promulgated
on August 27, 1990 1 which affirmed, with modification, the joint decision of Labor
Arbiter Fructuoso T. Aurellano dated October 28, 1988, as well as its resolution of
December 21, 1990 denying petitioners’ motion for the reconsideration thereof. 2

On March 30, 1987, private respondents filed separate but identical complaints for
unfair labor practice, illegal dismissal, illegal suspension, illegal lay-off,
underpayment, non-payment of overtime pay, premium pay for holiday and rest
days, night-shift differential, 13th month pay, (ECOLA), service incentive leave pay,
and damages. Petitioners denied all the foregoing charges and claims. chanrobles virtual lawlibrary

After hearing and submission by the parties of their respective position papers, a
joint decision was rendered by the aforenamed labor arbiter of the NLRC Regional
Arbitration Branch No. V, Legazpi City, ordering the Payment by Petitioners to
Private respondents of separation pay equivalent to one (1) month’s pay for every
year of service and full backwages without qualification or deduction for a period
not exceeding three (3) years in the total amount of P153,476.23 in lieu of
reinstatement. 3

On December 22, 1988, petitioners appealed the aforestated joint decision to the
NLRC, disputing the findings of the labor arbiter that they violated the security of
tenure of private respondents. As already stated, a resolution was promulgated by
the NLRC affirming that joint decision of the labor arbiter, but with a modification
setting aside the payment of separation pay and ordering petitioners to reinstate
private respondents to their former or equivalent positions with backwages,
including ECOLA, 13th month pay and service incentive leave pay, equivalent to
three (3) years, without loss of privileges, seniority rights and other benefits. 4
Their motion for reconsideration having been denied by respondent NLRC,
petitioners have now come to us, raising the following arguments: chanrob1es virtual 1aw library

1. The labor arbiter and the NLRC committed grave abuse of discretion amounting
to lack of jurisdiction when they failed to consider and thus set aside the
compromise agreement; and cralawnad

2. The NLRC committed grave abuse of discretion amounting to lack of jurisdiction

when it ordered the reinstatement of the individual private respondents despite
their acceptance of the decision of the labor arbiter ordering payment of separation
pay. 5

The first issue is without merit. We cannot uphold the theory of petitioners that
private respondents are already barred from filing the present complaint by reason
of the amicable settlement which terminated NLRC Cases Nos. 0216-86 and 0338-
86 theretofore filed by herein private respondents De la Trinidad, Arroyo and Parro,
together with Orlando Gratil and Teresita Borromeo, for unfair labor Practice, illegal
dismissal, violation of labor standards, and damages.

The alleged compromise agreement, dated January 15, 1987, has only the effect of
putting an end to those previous cases but will not and cannot bar the signatories
therein from filing complaints against petitioners for subsequent or future violations
of the Labor Code. The pertinent provisions of said compromise agreement read as
follows:chanrob1es virtual 1aw library

x x x

"2. That after a series of dialogues with the management, the herein parties have
agreed to put an end to this case and settle the matter amicably: jgc:chanrobles.com.ph

"3. That the claims in the complaints stated in our petition and affidavit are hereby
withdrawn, condoned and set aside, the same having been remedied and fully
satisfied and that the continuation of this case would merely prejudice and strain
the relationship with management and the rank-in-file: chanrobles virtual lawlibrary

"4. That the parties in this case have mutually agreed to comply with the Provisions
of the Labor Standards Laws and Labor Relations Laws as exemplified in the New
Labor Code with the end-in-view (sic) to uplift the working conditions of the
respondent employer." 6

On the other hand, the instant cases for illegal dismissal and the other causes of
action hereinbefore detailed indisputably arose out of the incident on March 27,
1987, long after the execution of the above-quoted compromise agreement,
wherein petitioners, through their security guard, one Santiago Bucal, Jr.,
unjustifiedly prevented private respondents from entering their regular place of
work, after deceitfully confiscating their identification cards, in clear violation of the
Labor Code and of the very terms of the compromise agreement.

In the first place, as duly found by the labor arbiter, the compromise agreement
was signed by only three (3) of the herein five (5) respondents, namely, Jesus de la
Trinidad. Gertrudes Arroyo and Dolores Parro, while they were still in the employ of
petitioner company. Private respondents Avelina Bendaña and Jesus Azares were
not signatories thereto, hence, they cannot be bound by that amicable settlement
or compromise agreement.

Furthermore, in the earlier two cases, petitioners had contended that private
respondents were "terminated for cause," whereas in the present cases, petitioners
now maintain that private respondents are guilty of "abandonment" and allegedly
staged an "undeclared sort of strike." Public respondent, aside from declaring that
there was no evidence whatsoever of such acts imputed to private respondents,
tersely discredited this ridiculous theory of petitioners, thus: "Strike and
abandonment are two diametrically opposed terminologies. When employees stage
a strike, it is precisely to keep their jobs . . . If one abandons his job, he simply
walks away." 7

With respect to the second issue raised by petitioners, however, we find merit in
their submissions thereon. Respondent NLRC exceeded its jurisdiction when it
ordered the reinstatement of private respondents, thereby modifying the decision of
the labor arbiter awarding separation pay in lieu of reinstatement. As pointed out
by Presiding Commissioner Lourdes C. Javier in her partial dissent, since private
respondents did not appeal from the decision of the labor arbiter, they are
presumed to be satisfied with the adjudication therein. Accordingly, with the finality
of the decision as to private respondents, the issue of payment of separation pay
instead of reinstatement has been laid to rest.

It is a well-settled procedural rule in this jurisdiction, and we see no reason why it

should not apply in this case, that an appellee who has not himself appealed cannot
obtain from the appellate court any affirmative relief other than those granted in
the decision of the court below. 8 The appellee can only advance any argument that
he may deem necessary to defeat the appellant’s claim or to uphold the decision
that is being disputed. He can assign errors on appeal if such is required to
strengthen the views expressed by the court a quo. Such assigned errors, in turn,
may be considered by the appellate court solely to maintain the appealed decision
on other grounds, but not for the purpose of modifying the judgment in the
appellee’s favor and giving him other affirmative reliefs. 9

Parenthetically, we note that the Solicitor General also takes the position that,
under the factual ambiance of this case and on pragmatic considerations, the joint
decision of the labor arbiter is arguably the correct disposition that should be taken
in this labor dispute and constitutes a just resolution of the plaints of private
respondents. chanrobles law library : red

WHEREFORE, the questioned resolutions of respondent National Labor Relations

Commission, dated August 27, 1990 and December 21, 1990, are SET ASIDE and
the joint decision of Labor Arbiter Fructuoso T. Aurellano, dated October 28, 1988,
which instead of reinstating private respondents awarded them separation pay
equivalent to one (1) month’s salary for every year of service and full backwages in
the total amount of P153,476.23, is hereby REINSTATED. This judgment is
immediately executory.

SO ORDERED.

35

THIRD DIVISION
G.R. No. 148372 June 27, 2005

CLARION PRINTING HOUSE, INC., and EULOGIO YUTINGCO, petitioners,

vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (Third Division) and
MICHELLE MICLAT, respondents.

DECISION

CARPIO-MORALES, J.:

Respondent Michelle Miclat (Miclat) was employed on April 21, 1997 on a probationary basis as
marketing assistant with a monthly salary of ₱6,500.00 by petitioner Clarion Printing House
(CLARION) owned by its co-petitioner Eulogio Yutingco. At the time of her employment, she was not
informed of the standards that would qualify her as a regular employee.

On September 16, 1997, the EYCO Group of Companies of which CLARION formed part filed with
the Securities and Exchange Commission (SEC) a "Petition for the Declaration of Suspension of
Payment, Formation and Appointment of Rehabilitation Receiver/ Committee, Approval of
Rehabilitation Plan with Alternative Prayer for Liquidation and Dissolution of Corporation" 1 the
pertinent allegations of which read:

xxx

5. The situation was that since all these companies were sister companies and were
operating under a unified and centralized management team, the financial requirements of
one company would normally be backed up or supported by one of the available fundings
from the other companies.

6. The expansion exhausted the cash availability of Nikon, NKI, and 2000 because those
fundings were absorbed by the requirements of NPI and EYCO Properties, Inc. which were
placed on real estate investments. However, at the time that those investments and
expansions were made, there was no cause for alarm because the market situation was very
bright and very promising, hence, the decision of the management to implement the
expansion.

7. The situation resulted in the cash position being spread thin. However, despite the thin
cash positioning, the management still was very positive and saw a very viable proposition
since the expansion and the additional investments would result in a bigger real estate base
which would be very credible collateral for further expansions. It was envisioned that in the
end, there would be bigger cash procurement which would result in greater volume of
production, profitability and other good results based on the expectations and projections of
the team itself.

8. Unfortunately, factors beyond the control and anticipation of the management came into
play which caught the petitioners flat-footed, such as:

a) The glut in the real estate market which has resulted in the bubble economy for
the real estate demand which right now has resulted in a severe slow down in the
sales of properties;

b) The economic interplay consisting of the inflation and the erratic changes in
the peso-dollar exchange rate which precipitated a soaring banking interest.

c) Labor problems that has precipitated adverse company effect on the media and
in the financial circuit.

d) Liberalization of the industry (GATT) which has resulted in flooding the market
with imported goods;

e) Other related adverse matters.

 9. The inability of the EYCO Group of Companies to meet the obligations as they fall due on
the schedule agreed with the bank has now become a stark reality. The situation therefore is
that since the obligations would not be met within the scheduled due date, complications and
problems would definitely arise that would impair and affect the operations of the entire
conglomerate comprising the EYCO Group of Companies.

xxx

12. By virtue of this development, there is a need for suspension of all accounts o[r]
obligations incurred by the petitioners in their separate and combined capacities in the
meantime that they are working for the rehabilitation of the companies that would eventually
redound to the benefit of these creditors.

13. The foregoing notwithstanding, however, the present combined financial condition of the
petitioners clearly indicates that their assets are more than enough to pay off the credits.

x x x (Emphasis and underscoring supplied)2

On September 19, 1997, the SEC issued an Order3 the pertinent portions of which read:

xxx

It appearing that the petition is sufficient in form and

substance, the corporate petitioners’ prayer for the creation of management or receivership committ
ee and creditors’ approval of the proposed Rehabilitation Plan is hereby set for hearing on October 2
2, 1997 at 2:00 o’clock in the afternoon at the SICD, SEC Bldg., EDSA, Greenhills, Mandaluyong
City.

xxx

Finally, the petitioners are hereby enjoined from disposing any and all of their properties in any
manner, whatsoever, except in the ordinary course of business and from making any payment
outside of the legitimate business expenses during the pendency of the proceedings and as a
consequence of the filing of the Petition, all actions, claims and proceedings against herein
petitioners pending before any court, tribunal, office board and/or commission are deemed
SUSPENDED until further orders from this Hearing Panel pursuant to the rulings of the Supreme
Court in the cases of RCBC v. IAC et al., 213 SCRA 830 and BPI v. CA, 229 SCRA 223.
(Underscoring supplied)

And on September 30, 1997, the SEC issued an Order4 approving the creation of an interim receiver
for the EYCO Group of Companies.

On October 10, 1997, the EYCO Group of Companies issued to its employees the following
Memorandum:5

This is to formally announce the entry of the Interim Receiver Group represented by SGV from today
until October 22, 1997 or until further formal notice from the SEC.

This interim receiver group’s function is to make sure that all assets of the company are secured and
accounted for both for the protection of us and our creditors.

Their function will involve familiarization with the different processes and controls in our organization
& keeping physical track of our assets like inventories and machineries.

Anything that would be required from you would need to be in writing and duly approved by the top
management in order for us to maintain a clear line.

We trust that this temporary inconvenience will benefit all of us in the spirit of goodwill. Let’s extend
our full cooperation to them.

Thank you. (Underscoring supplied)

On October 22, 1997, the Assistant Personnel Manager of CLARION informed Miclat by telephone
that her employment contract had been terminated effective October 23, 1997. No reason was given
for the termination.

The following day or on October 23, 1997, on reporting for work, Miclat was informed by the General
Sales Manager that her termination was part of CLARION’s cost-cutting measures.

On November 17, 1997, Miclat filed a complaint6 for illegal dismissal against CLARION and Yutingco
(petitioners) before the National Labor Relations Commission (NLRC).

In the meantime, or on January 7, 1998, the EYCO Group of Companies issued a

Memorandum7 addressed to company managers advising them of "a temporary partial shutdown of
some operations of the Company" commencing on January 12, 1998 up to February 28, 1998:

In view of the numerous external factors such as slowdown in business and consumer demand and
consistent with Art. 286 of the Revised Labor Code of the Philippines, we are constrained to go on a
temporary partial shutdown of some operations of the Company.

To implement this measure, please submit to my office through your local HRAD the list of those
whom you will require to report for work and their specific schedules. Upon revalidation and approval
of this list, all those not in the list will not receive any pay nor will it be credited against their VL.

Please submit the listing no later than the morning of Friday, January 09, 1998.

Shutdown shall commence on January 12, 1998 up to February 28, 1998, unless otherwise recalled
at an earlier date.

Implementation of th[ese] directives will be done through your HRAD departments. (Underscoring
supplied)

In her Position Paper8 dated March 3, 1998 filed before the labor arbiter, Miclat claimed that she was
never informed of the standards which would qualify her as a regular employee. She asserted,
however, that she qualified as a regular employee since her immediate supervisor even submitted a
written recommendation in her favor before she was terminated without just or authorized cause.

Respecting the alleged financial losses cited by petitioners as basis for her termination, Miclat
disputed the same, she contending that as marketing assistant tasked to receive sales calls,
produce sales reports and conduct market surveys, a credible assessment on production and sales
showed otherwise.

In any event, Miclat claimed that assuming that her termination was necessary, the manner in which
it was carried out was illegal, no written notice thereof having been served on her, and she merely
learned of it only a day before it became effective.

Additionally, Miclat claimed that she did not receive separation pay, 13th month pay and salaries for
October 21, 22 and 23, 1997.

On the other hand, petitioners claimed that they could not be faulted for retrenching some of its
employees including Miclat, they drawing attention to the EYCO Group of Companies’ being placed
under receivership, notice of which was sent to its supervisors and rank and file employees via a
Memorandum of July 21, 1997; that in the same memorandum, the EYCO Group of Companies
advised them of a scheme for voluntary separation from employment with payment of severance
pay; and that CLARION was only adopting the "LAST IN, FIRST OUT PRINCIPLE" when it
terminated Miclat who was relatively new in the company.

Contending that Miclat’s termination was made with due process, petitioners referred to the EYCO
Group of Companies’ abovesaid July 21, 1997 Memorandum which, so they claimed, substantially
complied with the notice requirement, it having been issued more than one month before Miclat was
terminated on October 23, 1997.

By Decision9 of November 23, 1998, the labor arbiter found that Miclat was illegally
dismissed and directed her reinstatement. The dispositive portion of the decision reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered ordering the
respondent to reinstate complainant to her former or equivalent position without loss of seniority
rights and benefits and to pay her backwages, from the time of dismissal to actual reinstatement,
proportionate 13th month pay and two (2) days salary computed as follows:

a.1) Backwages – 10/23/97 to 11/30/98

₱6,500.00 x 13.25 months = ₱86,125.00

a.2) Proportionate 13th month pay

1/12 of ₱86,125 = 7,177.08

b) 13th month pay - 1997

=₱6,500 x 9.75 months/12 = 5,281.25

c) Two days salary

=₱6,500/26 x 2 days = 500.00

TOTAL ₱ 99,083.33

(Emphasis and underscoring supplied).

Before the National Labor Relations Commission (NLRC) to which petitioners appealed, they argued
that:10

1. [CLARION] was placed under receivership thereby evidencing the fact that it sustained
business losses to warrant the termination of [Miclat] from her employment.

2. The dismissal of [Miclat] from her employment having been effected in accordance with
the law and in good faith, [Miclat] does not deserve to be reinstated and paid backwages,
13th month pay and two (2) days salary.

And petitioners pointed out that CLARION had expressed its decision to shutdown its operations by
Memorandum11 of January 7, 1998 to its company managers.

Appended to petitioners’ appeal before the NLRC were photocopies of their balance sheets from
1997 to November 1998 which they claimed to "unanimously show that x x x [petitioner] company
experienced business reverses which were made the basis x x x in retrenching x x x." 12

By Resolution13 of June 17, 1999, the NLRC affirmed the labor arbiter’s decision. The pertinent
portion of the NLRC Resolution reads:

There are three (3) valid requisites for valid retrenchment: (1) the retrenchment is necessary to
prevent losses and such losses are proven; (2) written notices to the employees and to the
Department of Labor and Employment at least one (1) month prior to the intended date of
retrenchment; and (3) payment of separation pay equivalent to one (1) month pay or at least ½
month pay for every year of service, whichever is higher. The two notices are mandatory. If the
notice to the workers is later than the notices sent to DOLE, the date of termination should be at
least one month from the date of notice to the workers.

In Lopez Sugar Corporation v. Federation of Free Workers Philippine Labor Union Association
(PLUA-NACUSIP) and National Labor Relations Commission, the Supreme Court had the occasion
to set forth four standards which would justify retrenchment, being, firstly, - the losses expected
should be substantial and not merely de minimis in extent. If the loss purportedly sought to be
forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the
bona fide nature of the retrenchment would appear to be seriously in question; secondly, - the
substantial loss apprehended must be reasonably imminent, as such imminence can be perceived
objectively and in good faith by the employer. There should, in other words, be a certain degree of
urgency for the retrenchment, which is after all a drastic course with serious consequences for the
livelihood of the employees retired or otherwise laid-off; thirdly, - because of the consequential
nature of retrenchment, it must be reasonably necessary and likely to effectively prevent the
expected losses. The employer should have taken other measures prior or parallel to retrenchment
to forestall losses, i.e., cut other cost than labor costs; and lastly, - the alleged losses if already
realized and the expected imminent losses sought to be forestalled, must be proven by sufficient and
convincing evidence.

The records show that these requirements were not substantially complied with. And proofs
presented by respondents-appellants were short of being sufficient and convincing to justify valid
retrenchment. Their position must therefore fail. The reason is simple. Evidences on record
presented fall short of the requirement of substantial, sufficient and convincing evidence to persuade
this Commission to declare the validity of retrenchment espoused by respondents-appellants. The
petition before the Securit[ies] and Exchange Commission for suspension of payment does not
prove anything to come within the bounds of justifying retrenchment. In fact, the petition itself lends
credence to the fact that retrenchment was not actually reinstated under the circumstances
prevailing when it stated, "The foregoing notwithstanding, however, the present combined financial
condition of the petitioners clearly indicates that their assets are more than enough to pay off the
credits." Verily, reading further into the petition, We are not ready to disregard the fact that
the petition merely seeks to suspend payments of their obligation from creditor banks and other
financing institutions, and not because of imminent substantial financial loss. On this account, We
take note of paragraph 7 of the petition which stated: "The situation resulted in cash position being
spread thin. However, despite the thin cash positioning, the management was very positive and saw
a very viable proposition since the expansion and the additional investments would result in a bigger
real estate base which would be a very credible collateral for further expansions. It was envisioned
that in the end, there would a bigger cash procurement which would result in greater volume of
production, profitability and other good results based on the expectations and projections of the
team itself." Admittedly, this does not create a picture of retrenchable business atmosphere pursuant
to Article 283 of the Labor Code.

We cannot disregard the fact that respondent-appellants failed in almost all of the criteria set by law
and jurisprudence in justifying valid retrenchment. The two (2) mandatory notices were violated. The
supposed notice to the DOLE (Annex "4," List of Employees on Shutdown) is of no moment, the
same having no bearing in this case. Herein complainant-appellee was not even listed therein and
the date of receipt by DOLE, that is, January 18, 1999, was way out of time in relation to this case.
And no proof was adduced to evidence cost cutting measures, to say the least. Nor was there proof
shown that separation pay had been awarded to complainant-appellee.

WHEREFORE, premises considered, and finding no grave abuse of discretion on the findings of
Labor Arbiter Nieves V. De Castro, the appeal is DENIED for lack of merit.

The decision appealed from is AFFIRMED in toto. (Italics in the original; underscoring supplied;
citations omitted)

Petitioners’ Motion for Reconsideration of the NLRC resolution having been denied by
Resolution14 of July 29, 1999, petitioners filed a petition for certiorari15 before the Court of Appeals
(CA) raising the following arguments:

1. PETITIONER CLARION WAS PLACED UNDER RECEIVERSHIP THEREBY

EVIDENCING THE FACT THAT IT SUSTAINED BUSINESS LOSSES TO WARRANT THE
TERMINATION OF PRIVATE RESPONDENT MICLAT FROM HER EMPLOYMENT.

2. THE DISMISSAL OF PRIVATE RESPONDENT MICLAT FROM HER EMPLOYMENT

HAVING BEEN EFFECTED IN ACCORDANCE WITH THE LAW AND IN GOOD FAITH,
PRIVATE RESPONDENT DOES NOT DESERVE TO BE REINSTATED AND PAID
BACKWAGES, 13th MONTH PAY AND TWO (2) DAYS SALARY. (Underscoring supplied)

By Decision16 of November 24, 2000, the CA sustained the resolutions of the NLRC in this wise:

In the instant case, Clarion failed to prove its ground for retrenchment as well as compliance with
the mandated procedure of furnishing the employee and the Department of Labor and Employment
(hereafter, DOLE) with one (1) month written notice and payment of separation pay to the
employee. Clarion’s failure to discharge its burden of proof is evident from the following instances:
 First, Clarion presented no evidence whatsoever before the Labor Arbiter. To prove serious
business losses, Clarion presented its 1997 and 1998 financial statements and the SEC
Order for the Creation of an Interim Receiver, for
the first time on appeal before the NLRC. The Supreme Court has consistently disallowed
such practice unless the party making the belated submission of evidence had satisfactorily
explained the delay. In the instant case, said financial statements are not admissible in
evidence due to Clarion’s failure to explain the delay.

Second, even if such financial statements were admitted in evidence, they would not alter
the outcome of the case as statements have weak probative value. The required method of
proof in such case is the presentation of financial statements prepared by independent
auditors and not merely by company accountants. Again, petitioner failed in this regard.

Third, even audited financial statements are not enough. The employer must present the
statement for the year immediately preceding the year the employee was retrenched, which
Clarion failed to do in the instant case, to prove not only the fact of business losses but more
importantly, the fact that such losses were substantial, continuing and without immediate
prospect of abatement. Hence, neither the NLRC nor the courts must blindly accept such
audited financial statements. They must examine and make inferences from the data
presented to establish business losses. Furthermore, they must be cautioned by the fact
that "sliding incomes" or decreasing gross revenues alone are not necessarily business
losses within the meaning of Art. 283 since in the nature of things, the possibility of incurring
losses is constantly present in business operations.

Last, even if business losses were indeed sufficiently proven, the employer must still prove
that retrenchment was resorted to only after less drastic measures such as the reduction of
both management and rank-and-file bonuses and salaries, going on reduced time, improving
manufacturing efficiency, reduction of marketing and advertising costs, faster collection of
customer accounts, reduction of raw materials investment and others, have been tried and
found wanting. Again, petitioner failed to prove the exhaustion of less drastic measures short
of retrenchment as it had failed with the other requisites.

It is interesting to note that Miclat started as a probationary employee on 21 April 1997. There being
no stipulation to the contrary, her probation period had a duration of six (6) months from her date of
employment. Thus, after the end of the probation period on 22 October 1997, she became a regular
employee as of 23 October 1997 since she was allowed to work after the end of said period. It is
also clear that her probationary employment was not terminated at the end of the probation period
on the ground that the employee failed to qualify in accordance with reasonable standards made
known to her at the time of engagement.

However, 23 October 1997 was also the day of Miclat’s termination from employment on the ground
of retrenchment. Thus, we have a bizarre situation when the first day of an employee’s regular
employment was also the day of her termination. However, this is entirely possible, as had in fact
happened in the instant case, where the employer’s basis for termination is Art. 288, instead of Art.
281 of the Labor Code. If petitioner terminated Miclat with Art. 281 in mind, it would have been too
late to present such theory at this stage and it would have been equally devastating for petitioner
had it done so because no evidence exists to show that Miclat failed to qualify with petitioner’s
standards for regularization. Failure to discharge its burden of proof would still be petitioner’s
undoing.

Whichever way We examine the case, the conclusion is the same – Miclat was illegally dismissed.
Consequently, reinstatement without loss of seniority rights and full backwages from date of
dismissal on 23 October 1997 until actual reinstatement is in order.

WHEREFORE, the instant petition is hereby DISMISSED and the 29 July 1999 and 7 June 1999
resolutions of the NLRC are SUSTAINED. (Emphasis and underscoring supplied)

By Resolution17 of May 23, 2001, the CA denied petitioner’s motion for reconsideration of the
decision.

Hence, the present petition for review on certiorari, petitioners contending that:
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
SUSTAINING THE ASSAILED DECISIONS OF HONORABLE PUBLIC RESPONDENT
COMMISSION:

A. HOLDING THAT PRIVATE RESPONDENT MICLAT WAS ILLEGALLY DISMISSED; and

B. ORDERING THE REINSTATEMENT OF PRIVATE RESPONDENT MICLAT TO HER

FORMER OR EQUIVALENT POSITION WITHOUT LOSS OF SENIORITY RIGHTS AND
BENEFITS AND PAYMENT OF BACKWAGES, 1[3]th MONTH PAY AND TWO (2) DAYS
SALARY.18

Petitioners argue that the conclusion of the CA that no sufficient proof of financial losses on the part
of CLARION was adduced is patently erroneous, given the serious business reverses it had gravely
suffered as reflected in its financial statements/balance sheets, thereby leaving as its only option the
retrenchment of its employees including Miclat.19

Petitioners further argue that when a company is under receivership and a receiver is appointed to
take control of its management and corporate affairs, one of the evident reasons is to prevent further
losses of said company and protect its remaining assets from being dissipated; and that the
submission of financial reports/statements prepared by independent auditors had been rendered
moot and academic, the company having shutdown its operations and having been placed under
receivership by the SEC due to its inability to pay or comply with its obligations. 20

Respecting the CA’s holding that the financial statements CLARION submitted for the first time on
appeal before the NLRC are inadmissible in evidence due to its failure to explain the delay in the
submission thereof, petitioners lament the CA’s failure to consider that technical rules on evidence
prevailing in the courts are not controlling in proceedings before the NLRC which may consider
evidence such as documents and affidavits submitted by the parties for the first time on appeal. 21

As to the CA’s holding that CLARION failed to prove the exhaustion of less drastic measures short of
retrenching, petitioners advance that prior to the termination of Miclat, CLARION, together with the
other companies under the EYCO Group of Companies, was placed under receivership during which
drastic measures to continue business operations of the company and eventually rehabilitate itself
were implemented.22

Denying Miclat’s entitlement to backwages, petitioners proffer that her dismissal rested upon a valid
and authorized cause. And petitioners assail as grossly erroneous the award of 13th month pay to
Miclat, she not having sought it and, therefore, there was no jurisdiction to award the same. 23

The petition is partly meritorious.

Contrary to the CA’s ruling, petitioners could present evidence for the first time on appeal to the
NLRC. It is well-settled that the NLRC is not precluded from receiving evidence, even for the first
time on appeal, because technical rules of procedure are not binding in labor cases.

The settled rule is that the NLRC is not precluded from receiving evidence on appeal as technical
rules of evidence are not binding in labor cases. In fact, labor officials are mandated by the Labor
Code to use every and all reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or procedure, all in the interest of due process.
Thus, in Lawin Security Services v. NLRC, and Bristol Laboratories Employees’ Association-DFA v.
NLRC, we held that even if the evidence was not submitted to the labor arbiter, the fact that it was
duly introduced on appeal to the NLRC is enough basis for the latter to be more judicious in
admitting the same, instead of falling back on the mere technicality that said evidence can no longer
be considered on appeal. Certainly, the first course of action would be more consistent with equity
and the basic notions of fairness. (Italics in the original; citations omitted) 24

It is likewise well-settled that for retrenchment to be justified, any claim of actual or potential
business losses must satisfy the following standards: (1) the losses are substantial and not de
minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably
necessary and is likely to be effective in preventing expected losses; and (4) the alleged losses, if
already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient
and convincing evidence.25 And it is the employer who has the onus of proving the presence of these
standards.
Sections 5 and 6 of Presidential Decree No. 902-A (P.D. 902-A) ("reorganization of the securities
and exchange commission with additional powers and placing said agency under the administrative
supervision of the office of the president"),26 as amended, read:

SEC. 5 In addition to the regulatory and adjudicative functions of THE SECURITIES AND
EXCHANGE COMMISSION over corporations, partnerships and other forms of associations
registered with it as expressly granted under existing laws and decrees, it shall have original and
exclusive jurisdiction to hear and decide cases involving:

xxx

(d) Petitions of corporations, partnerships or associations declared in the state of

suspension of payments in cases where the corporation, partnership or association
possesses sufficient property to cover all debts but foresees the impossibility of meeting
them when they respectively fall due or in cases where the corporation, partnership,
association has no sufficient assets to cover its liabilities, but is under the management of a
Rehabilitation Receiver or Management Committee created pursuant to this Decree.

SEC. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following
powers:

xxx

(c) To appoint one or more receivers of the property, real and personal, which is the subject of the
action pending before the Commission in accordance with the provisions of the Rules of Court in
such other cases whenever necessary in order to preserve the rights of the parties-litigants
and/or protect the interest of the investing public and creditors: Provided, however, That the
Commission may in appropriate cases, appoint a rehabilitation receiver of corporations,
partnerships or other associations not supervised or regulated by other government
agencies who shall have, in addition to powers of the regular receiver under the provisions of
the Rules of Court, such functions and powers as are provided for in the succeeding
paragraph (d) hereof: x x x

(d) To create and appoint a management committee, board or body upon petition or motu propio to
undertake the management of corporations, partnership or other associations not supervised or
regulated by other government agencies in appropriate cases when there is imminent danger of
dissipation, loss, wastage or destruction of assets or other properties or paralization of
business operations of such corporations or entities which may be prejudicial to the interest
of minority stockholders, parties-litigants of the general public: x x x (Emphasis and
underscoring supplied).

From the above-quoted provisions of P.D. No. 902-A, as amended, the appointment of a receiver or
management committee by the SEC presupposes a finding that, inter alia, a company possesses
sufficient property to cover all its debts but "foresees the impossibility of meeting them when they
respectively fall due" and "there is imminent danger of dissipation, loss, wastage or destruction of
assets of other properties or paralization of business operations."

That the SEC, mandated by law to have regulatory functions over corporations, partnerships or
associations,27 appointed an interim receiver for the EYCO Group of Companies on its petition in
light of, as quoted above, the therein enumerated "factors beyond the control and anticipation of the
management" rendering it unable to meet its obligation as they fall due, and thus resulting to
"complications and problems . . . to arise that would impair and affect [its] operations . . ." shows that
CLARION, together with the other member-companies of the EYCO Group of Companies, was
suffering business reverses justifying, among other things, the retrenchment of its employees.

This Court in fact takes judicial notice of the Decision28 of the Court of Appeals dated June 11, 2000
in CA-G.R. SP No. 55208, "Nikon Industrial Corp., Nikolite Industrial Corp., et al. [including
CLARION], otherwise known as the EYCO Group of Companies v. Philippine National Bank,
Solidbank Corporation, et al., collectively known and referred as the ‘Consortium of Creditor
Banks,’" which was elevated to this Court via Petition for Certiorari and docketed as G.R. No.
145977, but which petition this Court dismissed by Resolution dated May 3, 2005:
Considering the joint manifestation and motion to dismiss of petitioners and respondents dated
February 24, 2003, stating that the parties have reached a final and comprehensive settlement of all
the claims and counterclaims subject matter of the case and accordingly, agreed to the dismissal of
the petition for certiorari, the Court Resolved to DISMISS the petition for certiorari (Underscoring
supplied).

The parties in G.R. No. 145977 having sought, and this Court having granted, the dismissal of the
appeal of the therein petitioners including CLARION, the CA decision which affirmed in toto the
September 14, 1999 Order of the SEC, the dispositive portion of which SEC Order reads:

WHEREFORE, premises considered, the appeal is as it is hereby, granted and the Order dated 18
December 1998 is set aside. The Petition to be Declared in State of Suspension of payments is
hereby disapproved and the SAC Plan terminated. Consequently, all committee, conservator/
receivers created pursuant to said Order are dissolved and discharged and all acts and orders
issued therein are vacated.

The Commission, likewise, orders the liquidation and dissolution of the appellee
corporations. The case is hereby remanded to the hearing panel below for that purpose.

x x x (Emphasis and underscoring supplied),

has now become final and executory. Ergo, the SEC’s disapproval of the EYCO Group of
Companies’ "Petition for the Declaration of Suspension of Payment . . ." and the order for the
liquidation and dissolution of these companies including CLARION, must be deemed to have been
unassailed.

That judicial notice can be taken of the above-said case of Nikon Industrial Corp. et al. v. PNB et
al., there should be no doubt.

As provided in Section 1, Rule 129 of the Rules of Court:

SECTION 1. Judicial notice, when mandatory. – A court shall take judicial notice, without the
introduction of evidence, of the existence and territorial extent of states, their political history, forms
of government and symbols of nationality, the law of nations, the admiralty and maritime courts of
the world and their seals, the political constitution and history of the Philippines, the official acts of
the legislative, executive and judicial departments of the Philippines, the laws of nature, the
measure of time, and the geographical divisions. (Emphasis and underscoring supplied)

which Mr. Justice Edgardo L. Paras interpreted as follows:

A court will take judicial notice of its own acts and records in the same case, of facts established
in prior proceedings in the same case, of the authenticity of its own records of another case between
the same parties, of the files of related cases in the same court, and of public records on file in
the same court. In addition judicial notice will be taken of the record, pleadings or judgment of a
case in another court between the same parties or involving one of the same parties, as well as of
the record of another case between different parties in the same court. Judicial notice will also be
taken of court personnel. (Emphasis and underscoring supplied)29

In fine, CLARION’s claim that at the time it terminated Miclat it was experiencing business reverses
gains more light from the SEC’s disapproval of the EYCO Group of Companies’ petition to be
declared in state of suspension of payment, filed before Miclat’s termination, and of the SEC’s
consequent order for the group of companies’ dissolution and liquidation.

This Court’s finding that Miclat’s termination was justified notwithstanding, since at the time she was
hired on probationary basis she was not informed of the standards that would qualify her as a
regular employee, under Section 6, Rule I of the Implementing Rules of Book VI of the Labor Code
which reads:

SEC. 6. Probationary employment. There is probationary employment where the employee, upon his
engagement, is made to undergo a trial period during which the employer determines his fitness to
qualify for regular employment, based on reasonable standards made known to him at the time of
engagement.
"Probationary employment shall be governed by the following rules:

xxx

(d) In all cases of probationary employment, the employer shall make known to the employee
the standards under which he will qualify as a regular employee at the time of his
engagement. Where no standards are made known to the employee at that time, he shall be
deemed a regular employee" (Emphasis and underscoring supplied),

she was deemed to have been hired from day one as a regular employee.30

CLARION, however, failed to comply with the notice requirement provided for in Article 283 of the
Labor Code, to wit:

ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. – The employer

may also terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the worker and the Ministry of Labor and Employment
at least one (1) month before the intended date thereof. x x x (Emphasis and underscoring
supplied)

This Court thus deems it proper to award the amount equivalent to Miclat’s one (1) month salary of
₱6,500.00 as nominal damages to deter employers from future violations of the statutory due
process rights of employees.31

Since Article 283 of the Labor Code also provides that "[i]n case of retrenchment to prevent
losses, . . . the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. . . , [a] fraction of at least six (6) months
[being] considered one (1) whole year," this Court holds that Miclat is entitled to separation pay
equivalent to one (1) month salary.

As to Miclat’s entitlement to 13th month pay, paragraph 6 of the Revised Guidelines on the 13th
Month Pay Law provides:

6. 13th Month Pay of Resigned or Separated Employee

An employee x x x whose services were terminated any time before the time for payment of the 13th
month pay is entitled to this monetary benefit in proportion to the length of time he worked during the
calendar year up to the time of his resignation or termination from the service. Thus if he worked
only from January up to September his proportionate 13th month pay shall be equivalent to 1/12 of
his total basic salary he earned during that period.

xxx

Having worked at CLARION for six months, Miclat’s 13th month pay should be computed as
follows:

(Monthly Salary x 6 ) / 12 = Proportionate 13th month pay

(₱6,500.00 x 6) / 12 = ₱3,250.00

With the appointment of a management receiver in September 1997, however, all claims and
proceedings against CLARION, including labor claims,32 were deemed suspended during the
existence of the receivership.33 The labor arbiter, the NLRC, as well as the CA should not have
proceeded to resolve respondent’s complaint for illegal dismissal and should instead have directed
respondent to lodge her claim before the then duly-appointed receiver of CLARION. To still require
respondent, however, at this time to refile her labor claim against CLARION under the peculiar
circumstances of the case — that 8 years have lapsed since her termination and that all the
arguments and defenses of both parties were already ventilated before the labor arbiter, NLRC and
the CA; and that CLARION is already in the course of liquidation — this Court deems it most
expedient and advantageous for both parties that CLARION’s liability be determined with finality,
instead of still requiring respondent to lodge her claim at this time before the liquidators of CLARION
which would just entail a mere reiteration of what has been already argued and pleaded.
Furthermore, it would be in the best interest of the other creditors of CLARION that claims against
the company be finally settled and determined so as to further expedite the liquidation proceedings.
For the lesser number of claims to be proved, the sooner the claims of all creditors of CLARION are
processed and settled.

WHEREFORE, the Court of Appeals November 24, 2000 Decision, together with its May 23, 2001
Resolution, is SET ASIDE and another rendered declaring the legality of the dismissal of
respondent, Michelle Miclat. Petitioners are ORDERED, however, to PAY her the following in
accordance with the foregoing discussions:

1) ₱6,500.00 as nominal damages for non-compliance with statutory due process;

2) ₱6,500.00 as separation pay; and

3) ₱3,250.00 as 13th month pay.

Let a copy of this Decision be furnished the SEC Hearing Panel charged with the liquidation and
dissolution of petitioner corporation for inclusion, in the list of claims of its creditors, respondent
Michelle Miclat’s claims, to be satisfied in accordance with Article 110 of the Labor Code in relation
to the Civil Code provisions on Concurrence and Preference of Credits.

Costs against petitioners.

SO ORDERED.

36

EN BANC

G.R. No. L-51182 July 5, 1983

HELMUT DOSCH, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and NORTHWEST AIRLINES, INC., respondents.

Quasha, Asperilla, Ancheta, Valmonte, Peña & Marcos Law Office for petitioner.

The Solicitor General for respondent NLRC.

Sycip, Salazar, Feliciano, Hernandez & Castillo Law Office for private respondent.

GUERRERO, J.:

This is a petition for review seeking to set aside the decision of the National Labor Relations
Commission in NLRC Case No. RB-4220 reversing the award made by the Labor Arbiter ordering
petitioner's reinstatement by private respondent Northwest Airlines, Inc. with full backwages and
other benefits decreed by law.

The antecedent facts of this case are as follows:

Petitioner Helmut Dosch an American citizen, married to a Filipina, was the resident Manager of
Northwest Airlines, Inc. (Northwest, for short) in the Philippines. He has to his credit eleven (11)
years of continuous service with the company, including nine (9) years as Northwest Manager with
station at Manila. On August 18, 1975 he received an inter-office communication from R.C. Jenkins,
Northwest's Vice President for Orient Region based in Tokyo, promoting him to the position of
Director of International Sales and transferring him to Northwest's General Office in Minneapolis,
U.S.A., effective the same day. The full text of the inter-office communication is reproduced below:

NORTHWEST ORIENT Interoffice Communication

To: H. Dosch Manager-Philippines

From: Vice-President, Orient Region
Subject: Transfer
Date: August 18,1975
Location: Tokyo

Dear Helmut:

You have completed nine (9) years of service in the Orient, and in accordance with
usual practice, it is now the Company's intention to transfer you to the General Office
in Minneapolis to broaden your experience base considering that your assignment in
the Philippines has continued for several years longer than is normal for our
overseas managers.

The Company feels that there is need for an executive with your experience to fill the
position of Director of International Sales reporting directly to the Vice President for
Sales. The Company has therefore decided to promote and transfer you to this
position effective today, August 18, 1975. Your monthly compensation will be
upgraded and the proper payroll adjustment will be made in due course effective
today.

To implement the foregoing decision of the Company and in order to effect a smooth
turnover, Mr. L.J. Gilbert, Jr. shall, effective today, August 18, 1975, take over your
functions and responsibilities as Manager.

You are expected to report to your new assignment on September 15, 1975. You
shall, however, be afforded sufficient time, which in this case shall not extend beyond
September 15, 1975, within which to wind up your affairs in the Philippines. During
this transition period, you will be on vacation leave for ten (10) days and thereafter on
travel and relocation status with pay. Please see that the Company house you
presently occupy will be made available to your successor by September 10, 1975.

We wish you success in your new assignment.

Very
truly
yours,

(Sgd.)
R. C.
JENKIN
S

Petitioner, acknowledging receipt of the above memo of August 18, 1975, expressed appreciation for
the promotion and at the same time regretted that "for personal reasons and reasons involving my
family, I am unable to accept a transfer from the Philippines" in his letter dated August 28, 1975
which reads:

R. C. JENKINS — V.P., O.R. August 28, 1975

H. DOSCH

TRANSFER
This is to acknowledge receipt of your memo of August 18, 1975, on the subject.

While I sincerely appreciate the company's confidence in my abilities as a manager,

which reflects itself in my promotion to the position of Director of International Sales, I
regret that at this time, for personal reasons and reasons involving my family, I am
unable to accept a transfer from the Philippines.

I would, therefore, prefer to remain in my position of Manager-Philippines until such

time that my services in that capacity are no longer required by Northwest Airlines.

(Sgd.)
H.
DOSCH

Petitioner tried to resume his duties as Manager, through a memorandum to the

Manila Staff which reads:

MANILA STAFF Sept. 4, 1975

H. DOSCH MNL

RESUMPTION OF DUTIES Letter No. 454/75

It gives me great pleasure to announce that I advised Mr. Jenkins by letter dated
August 28, 1975, that, for personal reasons, I have declined to accept the promotion
to the position of Director of International Sales at the General Office.

Accordingly, upon return to work from an authorized vacation of ten working days, I
am resuming my duties and responsibilities as Manager-Philippines effective today,
September 4, 1975.

I know you will join me in thanking Mr. L.J. Gilbert for taking my place as Acting
Manager-Philippines during my absence from the office.

(Sgd.)
H.
DOSCH

Telegrams were also sent by petitioner to Mr. Nightingale, Director for Finance and to
Mr. Jenkins, clearly stating petitioner's desire to remain as Manager-Philippines of
Northwest.

On September 9, 1975, the Vice-President for the Orient Region of Northwest

advised petitioner that "in view of the foregoing, your status as an employee of the
company ceased on the close of business on August 31, 1975" and "the company
therefore considers your letter of August 28, 1975, to be a resignation without
notice."

On September 16, 1975, Northwest filed a Report on Resignation of Managerial

Employee (Form No. 74-3, Revised September 1974), i.e., Helmut Dosch before
Regional Office No. IV (Manila) Department of Labor, copy thereof furnished
petitioner.

The Report was contested by the petitioner and the parties were conciliated by
Regional Office No. IV, Manila but failed to agree on a settlement. The case was thus
certified to the Executive Labor Arbiter, National Labor Relations Commission, for
compulsory arbitration, in the following wise and manner:

Pursuant to P. D. 442, as amended, and its implementing rules and regulations (I)
have the honor to transmit complaint-Case No. R04- 10-(illegible)
 COMPLAINANT/S HELMUT DOSCH

Address: c/o Atty. A.D. Valmonte

Don Pable Bldg.
114 Amorsolo St., Makati Rizal

RESPONDENT/S NORTHWEST AIRLINES, INC.

Address: 1020 Roxas Blvd., Manila

and hereby certifies the following issue(s) for arbitration:

1. Illegal dismissal.

2. x x x

3. x x x

4. x x x

5. x x x

The following issue(s) have been settled-

1. x x x

2. x x x

3. x x x

4. x x x

Attached herewith is the record of the case consisting of THIRTY ONE (31) pages

Original
Signed.

Officer-
In
Charge

February 3, 1976.

After hearing, Labor Arbiter Sofronio A. Ona rendered the decision dated December
29, 1976, the dispositive portion of which reads:

IN VIEW OF THE FOREGOING, respondent Northwest Airlines, Inc. of 1020 Roxas

Boulevard, Manila is hereby directed to reinstate complainant Helmut Dosch of
Makati, Rizal c/o Atty. A. D. Valmonte, Don Pablo Building, 114 Amorsolo Street, to
his former position with full backwages without deduction whatsoever from the time
his salary was withheld by the respondent until actual reinstatement, without loss of
seniority rights and other benefits recognized by law, including attorney's fees
equivalent to 10% of the total monetary benefits the petitioner may recover, to take
effect 10 days from receipt of this Decision.

SO ORDERED.

Manila, Philippines, December 29, 1976.

Respondent Northwest appealed from the Labor Arbiter's decision to the National Labor Relations
Commission (hereinafter referred to as NLRC) assigning the following errors: (a) the Labor Arbiter
erred in not holding that petitioner had "resigned" from his employment; (b) assuming arguendo that
petitioner "did not resign," the Labor Arbiter erred in not holding that petitioner could be dismissed for
failure/refusal to comply with the valid transfer order and for the employer's loss of trust and
confidence of his employee; (c) the Labor Arbiter erred in impliedly holding that prior clearance was
required to effect the termination of petitioner, a managerial employee; and (d) Labor Arbiter erred in
awarding reinstatement, backwages, and attorney's fees.

Petitioner filed his Reply to the appeal, supporting the findings of the Labor Arbiter and furthermore
questioned the propriety of raising for the first time on appeal the issue whether or not petitioner's
refusal to comply with the transfer order constitutes a just and sufficient cause to dismiss him.

The decision en banc of the NLRC reversed the Labor Arbiter's decision and dismissed the case for
lack of merit, holding that:

The hiring, firing, transfer, demotion and promotion of employees has been
traditionally Identified as a management prerogative. This is a function associated
with the employer's inherent right to control and manage effectively its enterprise.
The free will of management to conduct its own business affairs to achieve its
purpose cannot be denied. This exercise finds support not only in actual
management practice but has become a part of our jurisprudence in labor relations
law where, in a number of cases brought before the Supreme Court, the highest
tribunal ruled in one of these cases (Roldan vs. Cebu Portland Cement Co., C.A.
G.R. No. 24276-R, May 20, 1960, citing Gregorio Araneta Employees Union vs,
Roldan, G.R. No. L-6843, July 20, 1955; Philippine Steel Metal Workers Union vs.
CIR, G.R. No. L-3587, Dec. 11, 1951), pertinent portion of the decision reads as
follows:

... Questions affecting the direction and management of personnel are matters which
the management itself must resolve. Thus the Court has steadfastly held that the
determination of the qualifications and fitness of workers for hiring and firing,
promotion or reassignment on rotation system, are the exclusive prerogatives of
management. The management has also the right to discharge employees when
there is need to reduce personnel because of the precarious condition of the
enterprise or as a result of that closing of a section therein' (Morabe, The Law on
Dismissal, 1962 ed., p. 55 citing Pampanga Bus Co., Inc. v. Employees Association
of the Pampanga Bus Co., Inc., Case No. 17-V, Decision, August 10, 1946).

xxx xxx xxx

In the light of all the foregoing, We find that petitioner's transfer and promotion is a
valid exercise of management's prerogative. It is our view, therefore, that
respondent's decision to consider him resigned from his job after he defined
management's order to transfer and promote him to a new position at the general
office at Minnesota, U.S.A. is justified and warranted. x x x."

Petitioner now comes to Us for review of the decision.

With respect to the procedural error allegedly committed by the respondent Commission in taking
cognizance of an issue raised for the first time on appeal that of petitioner's alleged insubordination
for refusing to comply with the transfer order for him to assume the position of Director of
International Sales at Minneapolis, U.S.A., which said Commission sustained and ruled in favor of
Northwest, reversing the Labor Arbiter's decision, the records disclose that Northwest's theory from
the inception of the case to the rendition of the Labor Arbiter's decision was that petitioner was not
dismissed, fired or terminated but that he resigned from Northwest. This is plain from Northwest's
verified " Report on Resignation of Managerial Employee" in DOL Form No. 74-3 filed on September
16, 1975 with Regional Office No. IV, Department of Labor, wherein Northwest stated that the
termination of employment of "Helmut Dosch, Manager-Philippines" was due to "resignation".
Petitioner contested this report claiming that he never resigned from the company. In its " Position
Paper" dated March 10, 1976 before Regional Branch No. IV, Northwest emphasized that any issue
other than resignation of petitioner is irrelevant, thus: "As allegations relative to termination are
immaterial in this case, petitioner has no basis to claim that 'there is no legitimate ground upon which
Northwest Airlines, Inc. could have terminated the services of Mr. Dosch' or that petitioner's
resignation was 'a circumvention of the law.' In truth petitioner caused his own dissociation from
respondent."
We agree with the Labor Arbiter that "(i)n view of the overwhelming evidence to the effect that
petitioner did not resign or relinquish his position as Manager-Philippines, this Body is without any
alternative, but to declare the sole reason relied upon by respondent- resignation (Exh. 'Q') as
baseless and devoid of truth." Indeed, the letter dated August 28, 1975 sent by petitioner to R.C.
Jenkins cannot be considered as a resignation as petitioner indicated therein clearly that he
preferred to remain as Manager-Philippines of Northwest.

Realizing that its "resignation" theory was weak and flimsy, Northwest abandoned it and contended
for the first time that petitioner was guilty of insubordination when he refused to comply with the
transfer order. This change of theory on appeal is improper; it is offensive to the basic rules of fair
play and justice and violative of petitioner's constitutional right to due process of law. Appellate
courts may not entertain questions of law or fact not raised in the lower courts (Sec. 18, Rule 46,
Revised Rules of Court), for that would constitute a change of theory not permissible on appeal
(Toribio vs. Decasa, 55 Phil. 461).

It is undoubtedly the law, that, where a cause has been tried upon the theory that the
pleadings are at issue, or that a particular issue is made by the pleadings, or where
an issue is tacitly accepted by all parties as properly presented for trial and as the
only issue, the appellate court will proceed upon the same theory. (Lizarraga
Hermanos vs. Yap Tico, 24 Phil. Rep. 504; Molina vs. Somes, 24 Phil. Rep., 45.) it
would be unjust and oppressive for the appellate court to adopt a theory at variance
with that on which the case was presented to and tried by the lower court. It would
surprise the parties, to take them unaware and off their guard, and would in effect,
deprive them of their day in court. (Limpangco Sons vs. Yangco Steamship Co., 34
Phil. 597, 605-609).

Since "resignation" was the particular cause alleged by Northwest in terminating petitioner's
employment, Northwest is restricted to the ground specified and may not invoke any other cause for
the discharge. (56 CJS p. 452, citing Georgia Coast and P.R. Co. vs. McFarland, 64 S.E. 897,132
Ga 639; 56 CJS p. 435, citing Vicknair vs. Southside Plantation Co., 10 La. App. Orleans 43; Warner
vs. Fabacher, 6 La. App. Orleans, 87).

As indicated earlier, Northwest on appeal to NLRC changed its stand and claimed that petitioner was
guilty of insubordination" when he refused to comply with the transfer order made by Vice President
Jenkins dated August 18, 1975. And for such act of insubordination, Northwest claimed it lost
confidence in the petitioner.

We must, however, rightly treat the Jenkins letter as directing the promotion of the petitioner from his
position as Philippine manager to Director of International Sales in Minneapolis, U.S.A. It is not
merely a transfer order alone but as the Solicitor General correctly observes, "it is more in the nature
of a promotion that a transfer, the latter being merely incidental to such promotion." The inter-office
communication of Vice President Jenkins is captioned "Transfer" but it is basically and essentially a
promotion for the nature of an instrument is characterized not by the title given to it but by its body
and contents. (Cf. Shell Co. vs. Firemen's Insurance Co. of Newark, 100 Phil. 757; Borromeo vs.
Court of Appeals, L-22962, Sept. 28, 1972; American Rubber co. vs. Collector of Internal Revenue,
L-25965, June 29, 1975). The communication informed the petitioner that effective August 18, 1975,
he was to be promoted to the position of Director of International Sales, and his compensation would
be upgraded and the payroll accordingly adjusted. Petitioner was, therefore, advanced to a higher
position and rank and his salary was increased and that is a promotion. (People ex. rel. Campbell vs.
Partridge, 85 N.Y.S. 833, 899 App. Div. 497; State ex rel. Wolcott vs. Celebrezze, 49 N.E. 2d 948,
141 Ohio St. 627, Vol. 34 Words and Phrases, pp. 564, 565). It has been held that promotion
denotes a scalar ascent of an officer or an employee to another position, higher either in rank or
salary. (Millares vs. Subido, 20 SCRA 954).

In the Millares case above, the Supreme Court, speaking thru Acting Chief Justice J.B.L. Reyes,
distinguished between transfer and promotion as follows:

A transfer is a movement from one position to another of equivalent rank, level or

salary, without break in the service. Promotion, on the other hand, is the
advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an increase in
salary, Whereas, promotion denotes a scalar ascent of a senior officer or employee
to another position, higher either in rank or salary, transfer refers to lateral movement
from one position to another, of equivalent rank, level or salary. (p. 962)
There is no law that compels an employee to accept a promotion, as a promotion is in the nature of
a gift or a reward, which a person has a right to refuse. When petitioner refused to accept his
promotion to Director of International Sales, he was exercising a right and he cannot be punished for
it as qui jure suo utitur neminem laedit. He who uses his own legal right injures no one.

It cannot be said that petitioner's refusal to obey the transfer order was contumacious. For one,
petitioner's refusal was justified in that the position of Director of International Sales had been non-
existent since 1965 and was inexistent at the time of petitioner's promotion thereto on August 18,
1975, which fact is shown by Northwest's Manual Policies and Procedures (Exhibit "X") and admitted
by Northwest's witness, Richardson Sells, in his testimony. Northwest has not even attempted to
deny the non- existence of the position.

Assuming for the sake of argument that the communication or letter of Mr. Jenkins was basically a
transfer, under the particular and peculiar facts obtaining in the case at bar, petitioner's inability or
his refusal to be transferred was not a valid cause for dismissal.

While it may be true that the right to transfer or reassign an employee is an employer's exclusive
right and the prerogative of management, such right is not absolute. The right of an employer to
freely select or discharge his employee is limited by the paramount police power (Phil. Air Lines, Inc.
vs. Phil. Airlines Employees Association, L-24626, June 28, 1974, 57 SCRA 489) for the relations
between capital and labor are not merely contractual but impressed with public interest (Article 1700,
New Civil Code). And neither capital nor labor shall act oppressively against each other (Article
1701, New Civil Code).

There can be no dispute that the constitutional guarantee of security of tenure mandated under
Section 9, Article 2, 1973 Constitution applies to all employees and laborers, whether in the
government service or in the private sector. The fact that petitioner is a managerial employee does
not by itself exclude him from the protection of the constitutional guarantee of security of tenure.
Even a manager in a private concern has the right to be secure in his position, to decline a
promotion where, although the promotion carries an increase in his salary and rank but results in his
transfer to a new place of assignment or station and away from his family. Such an order constitutes
removal without just cause and is illegal. Nor can the removal be justified on the ground of loss of
confidence as now claimed by private respondent Northwest, insisting as it does that by petitioner's
alleged contumacious refusal to obey the transfer order, said petitioner was guilty of insubordination.

We cannot agree to Northwest's submission that petitioner was guilty of disobedience and
insubordination which respondent Commission sustained. The only piece of evidence on which
Northwest bases the charge of contumacious refusal is petitioner's letter dated August 28, 1975 to
R. C. Jenkins wherein petitioner acknowledged receipt of the former's memorandum dated August
18, 1975, appreciated his promotion to Director of International Sales but at the same time regretted
" that at this time for personal reasons and reasons of my family, I am unable to accept the transfer
from the Philippines" and thereafter expressed his preference to remain in his position, saying. " I
would, therefore, prefer to remain in my position of Manager-Philippines until such time that my
services in that capacity are no longer required by Northwest Airlines." From this evidence, We
cannot discern even the slightest hint of defiance, much less imply insubordination on the part of
petitioner.

Neither is the other ground alleged by Northwest in dismissing petitioner which is loss of confidence,
supported by evidence. On the contrary, the fact that Northwest wanted to promote petitioner to
Director of International Sales as "the Company feels there is need for an executive of (his)
experience to fill the position of Director of International Sales" as well as its Manifestation dated
March 23, 1976 that Northwest "offered to rehire petitioner as Director of International Sales with
office at Minneapolis, U.S.A." clearly indicate that Northwest had full confidence in petitioner. And so
We hold and rule that respondent Commission committed grave abuse of discretion in sustaining the
dismissal of petitioner on the ground of insubordination and loss of confidence.

Indeed, the outright dismissal of petitioner from his position as Manager-Philippines of Northwest
Airlines is much too severe, considering the length of service that petitioner has rendered for eleven
(11) fruitful and loyal years, a strong and vital factor that must be taken into account in labor law
determinations which this Court, speaking thru Chief Justice Fernando in Meracap vs. International
Ceramics Manufacturing Co., Inc., L-48235-36, July 30, 1979, 92 SCRA 412 emphasized should not
only be secundum rationem but also secundum caritatem, to wit:
 It would imply at the very least that where a penalty less punitive would suffice,
whatever missteps may be committed by labor ought not to be visited with a
consequence so severe. It is not only because of the law's concern for the
workingman. There is, in addition, his family to consider. Unemployment brings
untold hardships and sorrows on those dependent on the wage-earner. The misery
and pain attendant on the loss of jobs then could be avoided if there be acceptance
of the view that under all the circumstances of this case, petitioners should not be
deprived of their means of livelihood. Nor is this to condone what had been done by
them. For all this to condone what had been done by them. For all this while, since
private respondent considered them separated from the service, they had not been
paid. For the strictly juridical standpoint, it cannot be too strongly stressed, to follow
Davis in his masterly work, Discretionary Justice, that where a decision may be made
to rest on informed judgment rather than rigid rules, all the equities of the case must
be accorded their due weight. Finally, labor law determinations, to quote from
Bultmann, should be not only secundum rationem but also secundum caritatem.
(This excerpt was cited in Almira vs B.F. Goodrich Philippines, Inc., 58 SCRA
120,131.)

The trend of recent decisions of this Court as pointed out by Chief Justice Fernando in the recent
case of Johnny Bustillos us. Amado Inciong and Cummins Diesel Sales and Service Corporation of
the Philippines, G.R. 1,45396, January 27, 1983 has been "to vitalize the constitutional mandate of
security of tenure as an aspect of the protection accorded labor. For its forceful and authoritative
weight, We quote lengthily the careful and clear review of Our decisions as follows:

1. Meracap v. International Ceramics Mfg- Co., Inc. explains why the appeal should
be disposed in that manner. Thus: 'In a number of decisions, Philippine Air Lines,
Inc. v. Philippine Airlines Employees Association, Almira v. B.F. Goodrich
Philippines, Central Textile Mills v. National Labor Relations Commission, and
Genconsu Free Workers Union v. Inciong, this Court has sought to vitalize the
constitutional mandate of security of tenure as an aspect of the protection accorded
labor.' We do so again in this case.

2. The decision reached not only by a labor arbitrator who heard the case but also by
the National Labor Relations Commission was the reinstatement of petitioner with
back pay. The challenged order reversed it. Thus: 'In effect, complainant has no
involvement in the alleged pilferage. However, since complainant no longer enjoys
the trust and confidence reposed upon him by respondent as a Service Supervisor,
and hence, a managerial employee, respondent has every right to terminate him.
Since the termination is not for a justifiable cause, complainant is entitled to
separation pay.' No case has gone that far. Moreover, the ruling in Central Textile
Mills, Inc. v. National Relations Commission is squarely in point. Thus: 'The
weakness of the petition to repeat, is thus indisputable. Petitioner, (management)
however, would try to impart a semblance of plausibility by alleging that even on the
assumption that no theft was committed, still there was loss of confidence sufficient
to cause his dismissal In the Philippine Airlines decision referred to, the accusation
that theft was committed by the employee was likewise not borne out by the
evidence. To justify a dismissal, management relied on the allegation that there was
breach of trust, a ground analogous to loss of confidence. The Court of Industrial
Relations did not agree. Neither did this Court. Reinstatement was ordered. So it
must be in this case.' The above ruling is reinforced by a case decided last
December 15, 1982, Justice de Castro speaking for the Court in Acda v. Minister of
Labor. Thus: 'The findings of the Labor Arbiter on this point, as upheld by the
National Labor Relations Commission, are quite clear, and We find no reversible
error therein the same being substantiated by evidence of record, aside from the fact
that said findings had already attained the character of finality by the non-perfection
of a proper appeal.' The opinion goes on to state: 'With the charges against petitioner
found to be unsubstantiated, We are left with no other alternative but to hold that the
so-called 'loss of confidence' is without basis and may not be successfully invoked as
ground for dismissal which requires some basis therefor, such ground never having
been intended to afford an occasion for abuse by the employer of its prerogative, as
it can easily be subject to abuse because of its subjective nature, to dismiss
employees in contravention with the 'protection of labor' clause of the Constitution. It
is this Constitutional guaranty that accords even to employees employed on a
probationary basis the protection that their services may be terminated only for a just
 cause or when authorized by existing laws, or when he fails to qualify as a regular
employee in accordance with reasonable standards prescribed by the employer.'

3. There is likewise this excerpt from Meracap which calls for the reversal of the
assailed order of the Secretary of Labor. Thus: 'In this suit for certiorari to review the
dismissal of an appeal from a decision of the then Acting Secretary of Labor Amado
G. Inciong by respondent Ronaldo Zamora, Presidential Assistant on Legal Affairs,
ordering the dismissal of petitioner Faustino Meracap, the relevance of such a
provision becomes apparent. It was alleged by petitioner that while the termination of
his services was based on his unauthorized absences, the real reason was due to
his union activities. Respondent Zamora ruled otherwise. Such a finding of fact must
be accorded deference. Nonetheless, considering that petitioner Meracap has been
in the employ of the International Ceramics Manufacturing Company, Inc. for
eighteen years, it would appear that the punishment was much too severe. Dismissal
was not warranted. Suspension would suffice. To that extent, certiorari lies.'
Dismissal as pointed out in the latest case in point, decided fourteen days after Acda,
in the ponencia of Justice Melencio- Herrera in Visperas v. Inciong, 'is too harsh a
penalty. A penalty less punitive should have been proper.' In this case, upon mere
suspicion, later found to be unsubstantiated, he was immediately suspended. A two-
year suspension would have sufficed, not the loss of his job. The length of service
was accorded due consideration in decisions of this Tribunal ordering reinstatement,
twenty years in De Leon v. National Labor Relations Commission and Reyes v.
Philippine Duplicators and twenty-two years in Union of Supervisors v. Secretary of
Labor. Here he was in the service for eleven years when suspended.

Accordingly, We must emphasize here the long and faithful years of service that petitioner had
rendered to respondent company, eleven good years, nine of which as Manager with station at
Manila. It is plainly abusive of the company and oppressive to the petitioner that the latter is
peremptorily dismissed on the shallow claim of " resignation without notice," and thereafter
converted to alleged loss of confidence. This unjustified dismissal of the petitioner calls for Our
specific ruling in the cited case of De Leon vs. National Labor Relations Commission, 100 SCRA
691, 700, wherein the Court speaking through Justice De Castro said:

While a Managerial employee may be dismissed merely on the ground of loss of

confidence the matter of determining whether the cause for dismissing an employee
is justified on ground of loss of confidence, cannot be left entirely to the employer.
Impartial tribunals do not rely only on the statement made by employer that there is
'loss of confidence' unless duly proved or sufficiently substantiated. We find no
reason to disturb the findings of the Labor Arbiter that the charges against petitioner
were not fully substantiated, and 'there can be no valid reason for said loss of
confidence. ...

So must this Court re-enforce the constitutional protection afforded labor and assure the right of
workers to security of tenure. Justice and equity call for petitioner's reinstatement. It should be so not
only secundum rationem but also secundum caritatem.

One last point. We reject the holding of the respondent Commission that petitioner's act in accepting
from the respondent airline several pay checks relative to his pension fund and the cash value
representing an adjustment in the peso amount of his dollar base by reason of currency fluctuation
constitutes an admission if not a conformity, of his lawful separation from office on August 31, 1975.
It appears indubitably that the several pay checks mentioned by respondent NLRC were only
refunds of petitioner's contribution to the pension fund of respondent airline. The money refunded
was petitioner's own money, that which he personally contributed to the retirement plan. If petitioner
accepted the cash value representing the adjustment in the peso amount of petitioner's dollar base,
the money was legitimately and legally due to the petitioner; they are not benefits or privileges
granted by the airline to the dismissed petitioner. There can be no estoppel against petitioner's
acceptance of the refund of monies legitimately his own, nor a waiver of his right to question the
termination of his services. (Urgelio vs. Osmeña, Jr., 10 SCRA 253). Even employees who receive
their separation pay are not barred from contesting the legality of their dismissal. The acceptance of
those benefits would not amount to estoppel as held in the leading case of Mercury Drug Company
vs. CIR as aptly cited in the decision of the Labor Arbiter. (De Leon vs. NLRC, 100 SCRA 691).

In Cariño vs. Agricultural Credit and Cooperative Financing Administration, 18 SCRA 183, the
rationale of the Court's ruling rejecting the argument that acceptance of separation pay and terminal
leave benefits by the employees illegally dismissed by their employer constitutes estoppel, is stated
thus, which We re-echo as follows:

Acceptance of those benefits would not amount to estoppel The reason is plain.
Employer and employee, obviously, do not stand on the same footing. The employer
drove the employee to the wall The latter must have to get hold of money. Because,
out of job, he had to face the harsh necessities of life. He thus found himself in no
position to resist money proferred. His, then, is a case of adherence, not of choice.
One thing sure, however, is that petitioner did not relent on their claim. They pressed
it. They are deemed not to have waived any of their rights. Renuntiatio non
praesumitur.

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the decision of the National Labor Relations
Commission in Case No. RB-4220 is hereby REVERSED and SET ASIDE, and the decision of the
Labor Arbiter dated December 29, 1976 in RB-IV-4220-76 ordering petitioner's reinstatement to his
former position with full backwages for three (3) years without loss of seniority rights and other
benefits recognized by law, including attorney's fees equivalent to 10% of the total monetary benefits
which the petitioner may recover, is hereby REINSTATED. Costs against the respondent Northwest.

Petition granted.

SO ORDERED.

37

G.R. No. 152329 April 22, 2003

ALEJANDRO ROQUERO, petitioner,

vs.
PHILIPPINE AIRLINES, INC., respondent.

PUNO, J.:

Brought up on this Petition for Review is the decision of the Court of Appeals dismissing Alejandro
Roquero as an employee of the respondent Philippine Airlines, Inc.

Roquero, along with Rene Pabayo, were ground equipment mechanics of respondent Philippine
Airlines, Inc. (PAL for brevity). From the evidence on record, it appears that Roquero and Pabayo
were caught red-handed possessing and using Methampethamine Hydrochloride or shabu in a raid
conducted by PAL security officers and NARCOM personnel.

The two alleged that they did not voluntarily indulge in the said act but were instigated by a certain
Jojie Alipato who was introduced to them by Joseph Ocul, Manager of the Airport Maintenance
Division of PAL. Pabayo alleged that Alipato often bragged about the drugs he could smuggle inside
the company premises and invited other employees to take the prohibited drugs. Alipato was
unsuccessful, until one day, he was able to persuade Pabayo to join him in taking the drugs. They
met Roquero along the way and he agreed to join them. Inside the company premises, they locked
the door and Alipato lost no time in preparing the drugs to be used. When they started the procedure
of taking the drugs, armed men entered the room, arrested Roquero and Pabayo and seized the
drugs and the paraphernalia used.1 Roquero and Pabayo were subjected to a physical examination
where the results showed that they were positive of drugs. They were also brought to the security
office of PAL where they executed written confessions without the benefit of counsel. 2

On March 30, 1994, Roquero and Pabayo received a "notice of administrative charge" 3 for violating
the PAL Code of Discipline. They were required to answer the charges and were placed under
preventive suspension.
Roquero and Pabayo, in their "reply to notice of administrative charge,"4 assailed their arrest and
asserted that they were instigated by PAL to take the drugs. They argued that Alipato was not really
a trainee of PAL but was placed in the premises to instigate the commission of the crime. They
based their argument on the fact that Alipato was not arrested. Moreover, Alipato has no record of
employment with PAL.

In a Memorandum dated July 14, 1994, Roquero and Pabayo were dismissed by PAL. 5 Thus, they
filed a case for illegal dismissal.6

In the Labor Arbiter's decision, the dismissal of Roquero and Pabayo was upheld. The Labor Arbiter
found both parties at fault — PAL for applying means to entice the complainants into committing the
infraction and the complainants for giving in to the temptation and eventually indulging in the
prohibited activity. Nonetheless, the Labor Arbiter awarded separation pay and attorney's fees to the
complainants.7

While the case was on appeal with the National Labor Relations Commission (NLRC), the
complainants were acquitted by the Regional Trial Court (RTC) Branch 114, Pasay City, in the
criminal case which charged them with "conspiracy for possession and use of a regulated drug in
violation of Section 16, Article III of Republic Act 6425," on the ground of instigation.

The NLRC ruled in favor of complainants as it likewise found PAL guilty of instigation. It ordered
reinstatement to their former positions but without backwages.8 Complainants did not appeal from
the decision but filed a motion for a writ of execution of the order of reinstatement. The Labor Arbiter
granted the motion but PAL refused to execute the said order on the ground that they have filed a
Petition for Review before this Court.9 In accordance with the case of St. Martin Funeral Home vs.
NLRC and Bienvenido Aricayos,10 PAL's petition was referred to the Court of Appeals.11

During the pendency of the case with the Court of Appeals, PAL, and Pabayo filed a Motion to
Withdraw/Dismiss the case with respect to Pabayo, after they voluntarily entered into a compromise
agreement.12 The motion was granted in a Resolution promulgated by the Former Thirteenth Division
of the Court of Appeals on January 29, 2002.13

The Court of Appeals later reversed the decision of the NLRC and reinstated the decision of the
Labor Arbiter insofar as it upheld the dismissal of Roquero. However, it denied the award of
separation pay and attorney's fees to Roquero on the ground that one who has been validly
dismissed is not entitled to those benefits.14

The motion for reconsideration by Roquero was denied. In this Petition for Review on Certiorari
under Rule 45, he raises the following issues:

1. Whether or not the instigated employee shall be solely responsible for an action arising
from the instigation perpetrated by the employer;

2. Can the executory nature of the decision, more so the reinstatement aspect of a labor
tribunal's order be halted by a petition having been filed in higher courts without any
restraining order or preliminary injunction having been ordered in the meantime?

3. Would the employer who refused to reinstate an employee despite a writ duly issued be
held liable to pay the salary of the subject employee from the time that he was ordered
reinstated up to the time that the reversed decision was handed down? 15

There is no question that petitioner Roquero is guilty of serious misconduct for possessing and using
shabu. He violated Chapter 2, Article VII, section 4 of the PAL Code of Discipline which states:

"Any employee who, while on company premises or on duty, takes or is under the influence
of prohibited or controlled drugs, or hallucinogenic substances or narcotics shall be
dismissed."16

Serious misconduct is defined as "the transgression of some established and definite rule of action,
a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere
error in judgment."17 For serious misconduct to warrant the dismissal of an employee, it (1) must be
serious; (2) must relate to the performance of the employee's duty; and (3) must show that the
employee has become unit to continue working for the employer.18

It is of public knowledge that drugs can damage the mental faculties of the user. Roquero was
tasked with the repair and maintenance of PAL's airplanes. He cannot discharge that duty if he is a
drug user. His failure to do his job can mean great loss of lives and properties. Hence, even if he
was instigated to take drugs he has no right to be reinstated to his position. He took the drugs fully
knowing that he was on duty and more so that it is prohibited by company rules. Instigation is only a
defense against criminal liability. It cannot be used as a shield against dismissal from employment
especially when the position involves the safety of human lives.

Petitioner cannot complain he was denied procedural due process. PAL complied with the twin-
notice requirement before dismissing the petitioner. The twin-notice rule requires (1) the notice which
apprises the employee of the particular acts or omissions for which his dismissal is being sought
along with the opportunity for the employee to air his side, and (2) the subsequent notice of the
employer's decision to dismiss him.19 Both were given by respondent PAL.

II

Article 223 (3rd paragraph) of the Labor Code20 as amended by Section 12 of Republic Act No.
6715,21 and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715, Amending the
Labor Code,22 provide that an order of reinstatement by the Labor Arbiter is immediately executory
even pending appeal. The rationale of the law has been explained in Aris (Phil.) Inc. vs. NLRC:23

"In authorizing execution pending appeal of the reinstatement aspect of a decision of the
Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working man.

xxx xxx xxx

These duties and responsibilities of the State are imposed not so much to express sympathy
for the workingman as to forcefully and meaningfully underscore labor as a primary social
and economic force, which the Constitution also expressly affirms with equal intensity. Labor
is an indispensable partner for the nation's progress and stability.

xxx xxx xxx

. . . In short, with respect to decisions reinstating employees, the law itself has determined a
sufficiently overwhelming reason for its execution pending appeal.

xxx xxx xxx

. . . Then, by and pursuant to the same power (police power), the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a dismissed or
separated employee since that saving act is designed to stop, although temporarily since the
appeal may be decided in favor of the appellant, a continuing threat or danger to the survival
or even the life of the dismissed or separated employee and his family."

The order of reinstatement is immediately executory. The unjustified refusal of the employer to
reinstate a dismissed employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution. 24 Unless there is a
restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on PAL
to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay
Roquero the salary he is entitled to, as if he was reinstated, from the time of the decision of the
NLRC until the finality of the decision of this Court.

We reiterate the rule that technicalities have no room in labor cases where the Rules of Court are
applied only in a suppletory manner and only to effectuate the objectives of the Labor Code and not
to defeat them.25 Hence, even if the order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period and such reinstatement order is reversed
with finality, the employee is not required to reimburse whatever salary he received for he is entitled
to such, more so if he actually rendered services during the period.

IN VIEW WHEREOF, the dismissal of petitioner Roquero is AFFIRMED, but respondent PAL is
ordered to pay the wages to which Roquero is entitled from the time the reinstatement order was
issued until the finality of this decision.

SO ORDERED.

39

G.R. No. 110027 November 16, 1994

MARANAW HOTEL RESORT CORPORATION (CENTURY PARK SHERATON

MANILA), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and GINA G. CASTRO, respondents.

Cabochan, Reyes & Capones for petitioner.

Malang and Duka Law Offices for private respondent.

DAVIDE, JR., J.:

This special civil action of certiorari raises the issue of whether the National Labor Relations
Commission (NLRC) acted with grave abuse of discretion in ordering the payroll reinstatement of an
employee despite its resolution reversing the decision of the Labor Arbiter and declaring that there
was no illegal dismissal.

The factual and procedural antecedents in this case are in the main not disputed.

On 16 June 1990, private respondent Gina G. Castro was hired on a probationary basis for six
months as a guest relations officer of the Century Park Sheraton Hotel, a five-star hotel located at
Malate, Manila, owned by the petitioner. On 10 November 1990, she was dismissed on the ground
1

of failure to meet the standards set forth in her probationary employment contract. She then filed on
2

13 November 1990 with the Arbitration Branch of the National Capital Region of the NLRC a
complaint for illegal dismissal with reinstatement, back wages, and damages against the hotel and
its former general manager, Peter Grieder. The case was docketed as NLRC-NCR Case No. 00-11-
3

06059-90.
On 23 December 1991, the Labor Arbiter rendered a decision in favor of the private respondent.
4

The dispositive portion thereof reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Declaring the dismissal of complainant Gina G. Castro by

respondents to have been illegally effected;

2. Ordering respondents to immediately reinstate complainant to her

former position or substantially equivalent position without loss of
seniority rights including the payment of backwages in the amount of
Eighty-Eight Thousand Six Hundred Twenty Pesos (P88,620.00);

3. Respondents are further ordered to pay the amount of Two

Thousand Eight Hundred Pesos (P2,800.00) for unpaid 13th month
pay and Nine Thousand One Hundred Forty-Two Pesos (P9,142.00)
as ten (10%) per cent attorney's fees, which is equivalent to ten
(10%) per cent of the awards herein;

4. As to the claims for damages, the same is hereby ordered

dismissed for lack of merit.

SO ORDERED. 5

The petitioner received a copy of the decision on 28 January 1992. On

7 February 1992, within the 10-day reglementary period, it filed an appeal to the NLRC alleging
6

therein that the Labor Arbiter committed abuse of discretion and serious error in his findings of fact
and conclusions of law. It also claimed that the Labor Arbiter erred in ruling that the monthly salary of
the private respondent is P7,000.00 when it should have been P3,403.00. Also, on
7 February 1992, it filed an Omnibus Motion For Extension Of Time To File Surety Bond And To
Reduce Amount Of Bond since by reason of the above error as to the monthly salary, the back
7

salaries should only have been P40,836.00 and not P88,620.00 and the 13th-month pay should only
have been P1,134.00 and not P2,800.00. Thus, the total amount due the private respondent should
only be P41,970 and not P91,420.00. This motion was not resolved by the Labor Arbiter.

On 17 February 1992, the private respondent filed a motion for the execution of the decision on the
8

ground that the petitioner did not file the memorandum of appeal and appeal bond and that the order
of reinstatement was immediately executory. This motion was likewise not resolved.

On 14 July 1992, the petitioner filed a surety bond in the amount of P100,562.00 to answer for the
9

monetary award based on the erroneous computation by the Labor Arbiter. 10

In its resolution of 25 March 1993, the NLRC (Second Division) reversed the decision of the Labor
11

Arbiter and dismissed the complaint for lack of merit. It held that there was no illegal dismissal but
rather a failure of the private respondent to comply with the petitioner's standards for permanent
employment. It then made the following observations:

It appears however that on March 13, 1992, complainant filed a Motion For Execution
Pending Appeal which motion was inadvertently not acted upon.

Article 223 of the Labor Code provides among others, as follows:

In any event, the decision of the Labor Arbiter reinstating a dismissed

or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal.
The employee shall either be admitted back to work under the terms
and conditions prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll. The posting
of a bond by the employer shall not stay the execution for
reinstatement provided therein. (Emphasis supplied).

In view of the aforequoted provision, complainant should be considered on payroll

reinstatement, as of the date of the filing of the Motion For Execution up to the date
 of the promulgation of this Resolution and thus pay [sic] her salaries corresponding
to that period based on P4,800.00 a month which was her salary at the time of her
dismissal.

and ultimately decreed thus:

WHEREFORE, finding the appeal to be impressed with merit, the decision appealed
from is hereby REVERSED and SET ASIDE and a new one entered dismissing the
complaint for lack of merit.

However, respondents are hereby ordered to pay complainant Gina C. Castro her
salaries corresponding to the period March 13, 1992 up to the date of the
promulgation of this Resolution computed at P4,800.00 per month.

SO ORDERED. 12

Its motion for partial reconsideration seeking to delete the portion of the decision ordering it to pay
13

the private respondent the sum of P4,800.00 per month from 13 March 1992 up to 25 March 1993
having been denied by the NLRC for lack of merit, the petitioner filed the instant case raising the
14

sole issue of whether the NLRC gravely abused its discretion in decreeing the payroll reinstatement
of the private respondent and ordering the petitioner to pay the private respondent.

It maintains that the filing of the motion for execution pending appeal did not entitle the private
respondent to payroll reinstatement because this is an option granted to the employer by Article 223
of the Labor Code and the operative act therefor is the exercise by the employer of such option upon
the service upon it of the writ of execution for the reinstatement of the private respondent. In the
instant case, the motion for execution was not acted upon and no writ of execution was issued.
Hence, there was no occasion for the petitioner to exercise its option and the NLRC's order was, in
effect, an order for the payment of salary to a party for the period during which she did not work,
which is violative of the rule of "no work, no pay." Moreover, the order is inconsistent with the ruling
that the private respondent was validly dismissed.

We required the respondents to comment on the petition.

In her comment filed on 14 September 1993, the private respondent side-steps the merits of the
15

issue raised in the petition; instead, she assails the validity of the NLRC resolution and prays that the
same be declared null and void because the petitioner's appeal to the NLRC was not perfected on
time due to the petitioner's failure to put up the required surety bond within the 10-day reglementary
period. She further asks that the case be remanded to the NLRC for the execution of the decision of
the Labor Arbiter. The petitioner controverts these claims in its reply.16

In its Manifestation in Lieu of Comment filed on 12 October 1993, the Office of the Solicitor General
17

maintains that the assailed resolution of the NLRC is not in accordance with law. It prays that the
NLRC be given a new period within which to file its comment, which we granted.

In its comment filed on 14 March 1994, the NLRC contends that its challenged resolution is correct.
18

It must be stressed that the private respondent did not challenge the resolution of the NLRC
reversing the decision of the Labor Arbiter and dismissing her complaint for illegal dismissal and it is
only in this action that she questioned the timeliness of the petitioner's appeal to the NLRC. We have
ruled that the issue of the timeliness of an appeal from the decision of the Labor Arbiter to the NLRC
may not be raised for the first time before this Court. The proper step that the private respondent
19

should have taken was to file with the NLRC a motion to dismiss the appeal and to remand the
records on the ground that the decision had become final and executory. 20

The sole issue thus presented for our determination is whether or not the NLRC acted with grave
abuse of discretion in holding that the private respondent should be considered as reinstated in the
payroll from the filing of the motion for execution on 13 March 1992 until the promulgation of its
resolution and, as a necessary consequence, ordering the petitioner to pay the private respondent
her salaries corresponding to the period from 13 March 1992 up to 25 March 1993 when its
resolution was promulgated.
We agree with the petitioner that the NLRC acted with grave abuse of discretion. The petition should
thus be granted.

The resolution of the issue is found in the third paragraph of Article 223 of the Labor Code which
reads:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by
the employer shall not stay the execution for reinstatement provided herein.
(emphasis supplied).

This paragraph was inserted by Section 12 of R.A. No. 6715, which took effect on 21 March 1989.
In Aris (Phil.) Inc. vs. National Labor Relations Commission, we sustained its constitutionality as
21

an exercise of the police power of the state and further ruled that since appeal is a privilege of
statutory origin, the law may validly prescribe limitations or qualifications thereto or provide relief to
the prevailing party in the event an appeal is interposed by the losing party.

It is clear from Article 223 that if execution pending appeal is granted, the employee concerned shall
be admitted back to work under the terms and conditions prevailing prior to his dismissal or
separation. However, instead of doing so, the employer is granted the option to merely reinstate the
employee in the payroll. This would simply mean that although not admitted back to work, the
employee would nevertheless be included in the payroll and entitled to receive her salary and other
benefits as if she were in fact working.

It must be stressed, however, that although the reinstatement aspect of the decision is immediately
executory, it does not follow that it is self-executory. There must be a writ of execution which may be
issued motu proprio or on motion of an interested party. Article 224 of the Labor Code provides:

Art. 224. Execution of decisions, orders or awards. — (a) The Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor Arbiter, or med-
arbiter or voluntary arbitrator may, motu proprio or on motion of any interested party,
issue a writ of execution on a judgment within five (5) years from the date it becomes
final and executory. . . . (emphasis supplied)

The second paragraph of Section 1, Rule VIII of the New Rules of Procedure of the NLRC also
provides:

The Labor Arbiter, POEA Administrator, or the Regional Director, or his duly
authorized hearing officer of origin shall, motu proprio or upon motion of any
interested party, issue a writ of execution on a judgment only within five (5) years
from the date it becomes final and executory . . . . No motion for execution shall be
entertained nor a writ be issued unless the Labor Arbiter is in possession of the
records of the case which shall include an entry of judgment. (emphasis supplied).

In the instant case, the Labor Arbiter neither issued motu proprio a writ of execution to enforce the
reinstatement aspect of his decision nor acted on the private respondent's motion for execution filed
on 13 March 1992. The NLRC did not also resolve it prior to the promulgation of its decision more
than a year later or on 23 March 1993. The pleadings before us do not show that the private
respondent had filed a motion to resolve the motion for execution or that she had, by any other
means, called the attention of the NLRC to such motion for execution. The private respondent may
therefore be deemed to have abandoned her motion for execution pending appeal.

In the absence then of an order for the issuance of a writ of execution on the reinstatement aspect
22

of the decision of the Labor Arbiter, the petitioner was under no legal obligation to admit back to
work the private respondent under the terms and conditions prevailing prior to her dismissal or, at
the petitioner's option, to merely reinstate her in the payroll. An option is a right of election to
exercise a privilege, and the option in Article 223 of the Labor Code is exclusively granted to the
23

employer. The event that gives rise for its exercise is not the reinstatement decree of a Labor
Arbiter, but the writ for its execution commanding the employer to reinstate the employee, while the
final act which compels the employer to exercise the option is the service upon it of the writ of
execution when, instead of admitting the employee back to his work, the employer chooses to
reinstate the employee in the payroll only. If the employer does not exercise this option, it must
forthwith admit the employee back to work, otherwise it may be punished for contempt. 24

This option is based on practical considerations. The employer may insist that the dismissal of the
employee was for a just and valid cause and the latter's presence within its premises is intolerable
by any standard; or such presence would be inimical to its interest or would demoralize the co-
employees. Thus, while payroll reinstatement would in fact be unacceptable because it sanctions the
payment of salaries to one not rendering service, it may still be the lesser evil compared to the
intolerable presence in the workplace of an unwanted employee.

Since in the instant case no occasion arose for the petitioner to exercise its option under Article 223
of the Labor Code with respect to the reinstatement aspect of the decision of the Labor Arbiter, the
NLRC acted with grave abuse of discretion when it ordered that the private respondent should be
considered reinstated in the payroll from the filing of her motion for execution until the promulgation
of its resolution on 25 March 1993. As correctly contended by the Office of the Solicitor General, the
NLRC "arrogated unto itself the right to choose whether to admit the dismissed employee back to
work or to reinstate her in the payroll, which right properly pertains to the employer." Worse, the
25

NLRC resolution granted the unresolved motion for execution which had been effectively abandoned
through the private respondent's inaction and which, for obvious reasons, could no longer be
properly resolved in a resolution finally disposing the appeal. And since the resolution reversed the
decision of the Labor Arbiter and dismissed for lack of merit the private respondent's complaint for
illegal dismissal, the rationale for the order of payroll reinstatement is beyond us.

WHEREFORE, the petition is hereby GRANTED. The challenged resolution of the National Labor
Relations Commission of 25 March 1993 in NLRC-NCR Case No. 00-11-06059-90 is modified by
deleting the portion thereof ordering the petitioner to pay the private respondent her salaries
corresponding to the period from 13 March 1992 up to the date of the promulgation of the resolution.
The rest shall stand.

No pronouncement as to costs.

SO ORDERED.