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Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 180147

June 4, 2014

SARA LEE PHILIPPINES, INC., Petitioner,


vs.
EMILINDA D. MACATLANG, ET AL.,1 Respondents.
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.

DECISIO N
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 arbiters
award. The rule of reasonableness in the determination of the compliant amount of the bond has been formulated
to allow the review of the arbiters award. However, that rule seemingly 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 P3,453,664,710.66 (P3.45
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 5,9846 rank-and-file
employees of Aris, staged a strike for violation of duty to bargain collectively,7 union busting 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 companys closure, which settlement amounted to P419 Million9 and an additional
P15 Million10 Benevolent Fund to the Union. On 26 October 1995, FAPI was incorporated.11 When said
incorporation came to the knowledge of the 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 FAPIs plant in Muntinlupa, Rizal; that contractors of Aris continued as contractors of
FAPI; and that the export quota of Aris was transferred to FAPI.12 Essentially, the complainants insisted that FAPI
was organized by the 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

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 P3,453,664,710.86.14 The
dispositive portion of the decision read:
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[,] P5,000.00 moral damages and P5,000.00 exemplary
damages for each of them, and eight percent (8%) attorneys 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 P1 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.16 Aris claimed that it was already dissolved and undergoing
liquidation. SLC added that it is 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 P419,057,348.24, which covers practically
more than 10% of the monetary award.17 FAPI, for its part, claimed that its total assets would not be 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.18 The Corporations posted a total of P4.5 Million.
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 P3.45 Billion bond is sustained, the NLRC granted the
reduction of the appeal bond. The NLRC issued an Order dated 31 March 200620 directing the Corporations to
post an additional P4.5 Million bond, bringing the total posted bond to P9 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
(P4,500,000.00) 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.22 Another petition, this time by Pacita 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 forumshopping, absence of authorization from the employees for Emilinda D. Macatlang to file said petition, and for
failure to state the material dates.23

failure to state the material dates.


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 P1 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 Resolution26
dated 22 October 2007.
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 forumshopping. Moreover, the petitioners in the Abelardo petition28 consist of 411 employees,29 all of whom are also
petitioners in the Macatlang 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 Macatlangs 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 P1 Billion.
They contend that the Court of Appeals overlooked the fact that Macatlang, et al., had already received their
separation pay of P419 Million and P15 Million Benevolent Fund which went to the union.32 The Court of Appeals
also failed to exclude the amount awarded to complainants as damages which under the NLRC Rules have to be
excluded. The Corporations seek a liberal interpretation to the requirement of 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

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 NLRCs 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 P419 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 P3.45 Billion.
Emilinda D. Macatlang, et al., submit that the P1 Billion bond is not equivalent to the monetary award of P3.45
Billion. More importantly, Emilinda D. Macatlang, et al., accused the Court of Appeals of extending the period of
appeal by prescribing an additional amount to be paid 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

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 partieslitigants 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 forumshopping. 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.41 The Abelardo petition appears to be defective as the petition itself was replete with
procedural infirmities prompting the Court of Appeals to dismiss it outright. Instead of curing the 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 attorneys 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.43 However, the strict requirements of the law may
be dispensed with in the interest of justice. It may not be amiss to point out this Courts ruling in the case of
Acaylar, Jr. v. Harayo,44 and we quote:
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. Acua, 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

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.46 The primary rule governing
appeal from the ruling of the labor arbiter is Article 223 of the Labor 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.47 These requisites
must be satisfied within 10days from receipt of the decision or order appealed from.
In YBL v. NLRC,48 the Court was more liberal in construing Article 223. The NLRC dismissed the 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 arbiters 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,49 petitioner 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,50 excused the failure of appellant to post a bond due to the
failure of the Labor Arbiter to state the exact amount of back wages and separation pay due.
Citing Taberrah v. NLRC51 and National Federation of Labor Union v. Hon. Ladrido III,52 the Court in Orozco v. The
Fifth Division of the Court of Appeals53 postulated that "respondents 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." 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. NLRC54 is a good
example on this point. The NLRCs order to post a bond of P1,576,224.00 was 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. NLRC55 was based on erroneous wage and

Also, since the computation of the award in Star Angel Handicraft v. NLRC was based on erroneous 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.,56 respondent deferred the posting of the surety bond in view of
the alleged erroneous computation by the labor arbiter of the monetary award. While the labor arbiter awarded
P5,480,484.25 as retirement benefits, only P5,072,277.73, 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.57 The reason behind the
imposition of this requirement is enunciated in Viron Garments Mfg. Co., Inc. v. NLRC,58 thus:
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,60 Rural Bank of Coron (Palawan), Inc. v. Cortes,61
Sy v. ALC,62 Ciudad Fernandina Food Corporation Employees Union-Association Labor Unions v. Court of
Appeals,63 and Stolt-Nielsen Maritime Services, Inc. v. NLRC,64 did not post 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,65 it was found that petitioners had funds from its other
businesses to post the required bond. The Court did not find as acceptable petitioners 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.
Petitioners failure in Mers Shoes Mfg, Inc. v. NLRC,66 to post the required bond within the reglementary period
after it has been ordered reduced, justified the dismissal of its appeal.
The labor arbiters decision in Santos v. Velarde67 stated the exact award of backwages to be paid by petitioner,
thus the Court affirmed the dismissal of the appeal by the non-payment of the appeal bond within the 10-day
period provided by law.
Even if petitioner in Heritage Hotel Manila v. NLRC68 questioned as basis of the appeal bond the 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,69 the NLRC issued an order denying petitioners 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.,72 the posting of the amount of P4,000,000.00 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,73 this Court has relaxed the appeal bond requirement when it was clear from the records that

Inc. v. Bautista,73 this Court has relaxed the 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,74 the Court
stated that the rule on the posting of an appeal bond cannot defeat the substantive rights of respondents to be
free from an unwarranted 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,75 respondent showed willingness to post a partial bond when it posted
a P50,000.00 cash bond upon filing of a motion to reduce bond. In addition, when respondents motion for
reconsideration was denied, it posted the full surety bond.
The old NLRC Rules of Procedure, which took effect in 5 November 1993,76 provides:
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 attorneys 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,77 the Court did not find any merit to reduce the bond. Although 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,78 we found as acceptable reason for reducing the appeal bond the downscaling of their
operations considered together with the amount of the monetary award appealed. In University Plans Incorporated
v. Solano,79 the fact of receivership was considered as a 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.80 As a matter of fact,
in Star Angel, the NLRC was ordered to make a preliminary 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
P3Million within a period of 10-days from receipt of the Labor Arbiters 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
petitioners motion to reduce bond. The Court adopted the ruling in Nicol v. Footjoy Industrial Corp., where the
case was also remanded to the NLRC to determine the merits of the motion to reduce in view of our finding that
the NLRC in that case gravely abused its discretion when it dismissed Footjoys 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,81 we held that merit may "pertain to an appellants lack of financial
capability to pay the full amount of the bond, the merits of 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 appellants 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
appellants 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 attorneys fees. Only
after the posting of a bond in the required percentage shall an appellants period to perfect an appeal under the
NLRC Rules be deemed suspended.83 (Emphasis and underline supplied).
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,84 we found the reduced bond of P50,000.00 acceptable as substantial
compliance relative to the P789,000.00 judgment award. In Nicol, the P10 Million bond was enough to perfect
appeal from a P51.9 Million judgment award.
In Lopez v. Quezon City Sports Club, Inc., the NLRC ordered the posting of an additional P6 Million and held as
compliant a P10 Million bond relative to the judgment award of P27 Million. In Pasig Cylinder Mfg. Corp. v. Rollo,
we ruled that the reduced appeal bond of P100,00.00 satisfies the requirement for an appeal from the judgment
award of P3.13 Million. In University Plans, the P30,000.00 bond was accepted in perfecting an appeal from a
P3.013 Million judgment.
In the 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 P419 Million. The NLRC found the P4.5
Million bond posted by the Corporations as insufficient, hence ordering them to post an additional P4.5 Million.
Thus, P9 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 P1 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

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 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.85 Notably, the computation of the judgment award in this case includes damages.
1 w p h i1

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, attorneys 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 attorneys 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 attorneys 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
attorneys fees.
Thus, under the applicable rules, damages and attorneys 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,87 it was concluded that no bond is required if an appeal raises no
question other than as regards the award of moral and/or exemplary damages. In Cosico, Jr., v. NLRC,88 the
employer was held to have substantially complied with the requirement when it posted the bond on time based on
the monetary award for 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 P3.45 Billion. The award is broken down as

The judgment award in the instant case amounted to an immense P3.45 Billion. The award is broken down as
follows: backwages, separation pay, moral and exemplary 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 P170-P200. 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 Arbiters
Decision. Approximately, the amount to be received by an employee, exclusive of damages and attorneys fees, is
about P600,000.00. The Labor Arbiter granted moral damages amounting to P10,000.00, and another P10,000.00
as exemplary damages. The total number of employees receiving P20,000.00 each for damages is 5,984, bringing
the total amount of damages to P119,680,000.00. This amount should be deducted as well as the P419 Million
unpaid commitment plus the P 9 Million already paid-up cash appeal bond from the actual amount to determine the
amount on which to base the appeal bond. Thus, the total amount is P2.9 Billion.
We sustain the Court of Appeals in so far as it increases the amount of the required appeal bond. But we deem it
reasonable to reduce the amount of the appeal bond to P725 Million. This directive already considers that the
award if not illegal, is extraordinarily huge and that no insurance company would be willing to issue a bond for such
big money. The amount of P725 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
arbiters 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 petitioners appeal of the labor arbiters 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.
JOSE PORTUGAL PEREZ
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
ARTURO D. BRION
Associate Justice

MARIO C. DEL CASTILLO


Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice
AT T EST AT IO N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERT IF ICAT IO N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1

Due to the sheer number of complainants, the names of the 5,983 others were omitted but which could be
found in the annexes of the Labor Arbiter's decision. See Rollo (G.R. No. 180147), pp. 230-348.
2

Rollo (G.R. No. 180319, Vol. I), p. 12.

Id. at 49-50.

Id. at 13.

Rollo (G.R. No. 180150), p. 14.

The original number of complainants is 7,637, however upon counter-checking, the number was reduced
to 5,984 because a good number of complainants filed their complaints several times. See Labor Arbiter
Decision. Rollo (G.R. No. 180147), p.197.
7

The Union submitted a proposal for the renegotiation of the CBA but Aris gave no counterproposal.
Thereafter, Aris sent a notice of closure to all its employees. Id. at 208-209.
8

Rollo (G.R. No. 180148), p. 17.

Id. at 87.

10

Id. at 18.

11

Rollo (G.R. No. 180319, Vol. III), p. 1751.

12

Id. at 1752.

13

Id.

14

Id. at 359.

15

Id. at 241.

16

Id. at 360-373.

17

Rollo (G.R. No. 180147), p. 22.

18

Rollo (G.R. No. 180319, Vol. I), pp. 365-369.

19

Rollo(G.R. No. 180150), p. 431.

20

Rollo (G.R. No. 180319, Vol. I), pp. 126-131.

21

Id. at 130.

22

Rollo (G.R. No. 180147), pp. 577-578.

23

Rollo (G.R. No. 180150), pp. 26-27.

24

Rollo (G.R. No. 180147), p. 789.

25

Rollo (G.R. No. 180319, Vol. I), p. 27.

26

Id. at 29-32.

27

Rollo (G.R. No. 180149), pp. 908-909.

28

The petition was dismissed on technical grounds by the Court of Appeals on 17 November 2006. Id. at
902.
29

Id. 35-38.

30

Id. at 34-45.

31

Id. at 50.

32

Id. at 51.

33

Id. at 58.

34

Id. at 79.

35

Rollo (G.R. No. 180319, Vol. I), pp. 64-69.

36

Rollo (G.R. No. 180685), pp. 10-17.

37

Rollo (G.R. No. 180148), pp. 1191-1201.

38

SM Systems Corporation v. Camerino, G.R. No. 178591, 26 July 2010, 625 SCRA 482, 489 citing Atty.
Briones v. Henson-Cruz, 585 Phil. 63, 80 (2008).
39

Yu v. Lim,G.R. No. 182291, 22 September 2010, 631 SCRA 172, 184 citing Lim v. Judge Vianzon, 529
Phil. 472, 484-485 (2006) citing further Rudecon Management Corporation v. Singson, 494 Phil. 581, 599600 (2005).
40

In Re: Reconstitution of Transfer Certificates of Title Nos. 303168 and 303169 and Issuance of Owners
Duplicate Certificates of Title in Lieu of those Lost, Rolando Edward G. Lim, G.R. No. 156797, 6 July 2010,
624 SCRA 81, 88-89 citing Cooperative Development Authority v. Dolefil Agrarian Reform Beneficiaries
Cooperative, Inc., 432 Phil. 290, 317 (2002); Sps. Cruz v. Sps. Caraos,550 Phil. 98, 110 (2007); Republic v.
Carmel Development, Inc, 427 Phil. 723, 739 (2002); R & M General Merchandise, Inc. v. Court of Appeals,
419 Phil. 131, 145 (2001); Prubankers Association v. Prudential Bank and Trust Company,361 Phil. 744,
755 (1999); Cebu International Finance Corp. v. Court of Appeals, 374 Phil. 844, 857 (1999).
41

Rollo (G.R. No. 180149), p. 902.

42

Id. at 622.

43

Technological Institute of the Philippines Teachers and Employees Organization (TIPTEO) v. Court of
Appeals,608 Phil. 632 (2009).
44

582 Phil. 600, 612 (2008) citing Great Southern Maritime Services Corp. v. Acua, 492 Phil. 518, 525-527
(2005); Security Bank Corporation v. Indiana Aerospace University, 500 Phil. 51, 57-60 (2005).
45

Acaylar, Jr. v. Harayo, id.

46

Calipay v. National Labor Relations Commission, G.R. No. 166411, 3 August 2010, 626 SCRA 409, 416
citing McBurnie v. Ganzon, G.R. Nos. 178034, 178117, 186984-85, 18 September 2009, 600 SCRA 658,
672; Land Bank of the Philippines v. Ascot Holdings and Equities, Inc., 562 Phil. 974, 983-984 (2007);
Philippine Long Distance Telephone Company v. Raut, 613 Phil. 427 (2009) citing Accessories Specialist,
Inc. v. Alabanza, 581 Phil. 517, 530 (2008) citing further Cuevas v. Bais Steel Corporation, 439 Phil. 793,
805 (2002).
47

Ramirez v. Court of Appeals, G.R. No. 182626, 4 December 2009, 607 SCRA 752, 761 citing Ciudad
Fernandina Food Corporation Employees Union-Associated Labor Unions v. Court of Appeals, 528 Phil.
415, 430 (2006).
48

268 Phil. 169 (1990).

49

G.R. No. 96078, 9 January 1992, 205 SCRA 69, 205 SCRA 69, 76.

50

G.R. No. 101013, 2 February 1993, 218 SCRA 366.

51

342 Phil. 394 (1997).

52

274 Phil. 244 (1991).

53

497 Phil. 227, 236 (2005).

54

G.R. No. 93690, 10 October 1991, 202 SCRA 597.

55

G.R. No. 108914, 20 September 1994, 236 SCRA 580.

56

515 Phil. 601 (2006).

57

Banahaw Broadcasting Corp. v. Pacana III, G.R. No. 171673, 30 May 2011, 649 SCRA 196, 210.

58

G.R. No. 97357, 18 March 1992, 207 SCRA 339.

59

Id. at 342.

60

482 Phil. 170 (2004).

61

539 Phil. 498 (2006).

62

589 Phil. 354 (2008).

63

Supra note 42.

64

513 Phil. 642 (2005).

65

341 Phil. 393, 403 (1997).

66

350 Phil. 294 (1998).

67

450 Phil. 381 (2003).

67

450 Phil. 381 (2003).

68

614 Phil. 320 (2009).

69

Supra note 52.

70

Id.

71

Nicol v. Footjoy Industrial Corp., 555 Phil. 275, 292 (2007).

72

596 Phil. 204 (2009).

73

G.R. No. 187693, 13 July 2010, 625 SCRA 75.

74

G.R. No. 196426, 15 August 2011, 655 SCRA 444.

75

G.R. No. 196830, 29 February 2012, 667 SCRA 396.

76

As amended by Resolution No. 01-02, series of 2002. It amended certain provisions of the New Rules of
Procedure of the NLRC which was promulgated on February 12, 2002 and took effect on March 18, 2002.
77

G.R. No. 182626, 4 December 2009, 607 SCRA 752.

78

G.R. No. 173631, 8 September 2010, 630 SCRA 320.

79

G.R. No. 170416, 22 June 2011, 652 SCRA 492.

80

Id. at 506.

81

G.R. Nos. 178034 & 178117, G.R. Nos. 186984-85, 17 October 2013.

82

Id.

83

Id.

84

352 Phil. 1013 (1998).

85

Rollo (G.R. No. 180149), pp. 122-123.

86

It was likewise retained in the present 2011 NLRC Rules of Procedure.

87

Supra note 49.

88

338 Phil. 1080 (1997).

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
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.
DECISIO N
CARPIO, J.:
The Case
This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 29 April
2011 Decision2 of the Court of Appeals in CA-G.R. SP No. 115851, affirming the 8 February3 and 25 June4 2010
Resolutions of the National Labor Relations Commission (NLRC) in NLRC-LAC-No. 12-004061-08. The NLRC set
aside the 30 October 2008 Decision5 of the Labor 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 P40 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 complaint6 for illegal dismissal, underpayment of
salary and non-payment of service incentive leave and thirteenth month pay.
The Labor Arbiters 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--vis, he [sic] allegations and

work as drivers of the trucks owned by the respondents on January 2, 2006, vis--vis, he [sic] allegations and
claims of the complainants that when they asked for an increase of their salary for P40.00, 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 P50,000
cash bond.
The NLRCs Ruling
In its 9 March 2009 Decision,8 the NLRC dismissed the appeal. The NLRC held:
Filed with respondents-appellants Appeal Memorandum is a Motion to Reduce Appeal Bond and a cash bond of
P50,000.00 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. Respondentsappellants 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 P50,000.00 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 P2,612,930.00 and that the amount of bond posted by respondentsappellants 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 motion10 for reconsideration and posted a P2,562,930 surety bond. In its 8 February 2010
Resolution, the NLRC granted the motion and set aside the Labor Arbiters 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 nonperfection, 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 codrivers 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 Arbiters 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 litigants 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

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 petition13 for certiorari under Rule 65 of the Rules of Court.
The Court of Appeals Ruling
In its 29 April 2011 Decision, the Court of Appeals dismissed the petition and affirmed the NLRCs 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 Commercials
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 Arbiters 30 October 2008 Decision became final and executory; thus, the
NLRCs 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 Courts 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
Arbiters 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

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 Arbiters 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,17 the Court held:
Petitioner contends that the labor arbiters 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. Petitioners allegation cannot be accepted by
this Court on its face; to do so would be tantamount to a denial of respondents 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.18
(Emphasis supplied)
KJ Commercials filing of a motion to reduce bond and delayed posting of the P2,562,930 surety bond did not
render the Labor Arbiters 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,19 the Court held:
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,21 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 appellants 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 P50,000 cash bond. When the
NLRC denied its motion, KJ Commercial filed a motion for reconsideration and posted the full P2,562,930 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,22 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 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;

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,24 the Court held:
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 employers 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) counsels 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 arbiters 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 petitioners 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 petitioners 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,26 the Court held that the bond requirement on appeals may be relaxed 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 P50,000 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
1 w p h i1

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 NLRCs 9 March 2009 Decision. In Dr. Postigo v. Philippine Tuberculosis Society,
Inc.,29 the Court held:
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.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
ARTURO D. BRION
Associate Justice
JOSE PORTUGAL PEREZ
Associate Justice

MARIA LOURDES P. A. SERENO


Associate Justice
BIENVENIDO L. REYES
Associate Justice
AT T EST AT IO N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERT IF ICAT IO N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice

Footnotes
1 Rollo, pp. 11-41.
2 Id. at 48-55. Penned by Associate Justice Samuel H. Gaerlan, with Associate Justices Rosmari D.

Carandang and Ramon R. Garcia concurring.


3 Id. at 149-157. Penned by Presiding Commissioner Herminio V. Suelo, with Commissioners Angelo Ang

Id. at 149-157. Penned by Presiding Commissioner Herminio V. Suelo, with Commissioners Angelo Ang
Palana and Numeriano D. Villena concurring.
4 Id. at 163-167.
5 Id. at 102-119. Penned by Labor Arbiter Mariano L. Bactin.
6 Id. at 62.
7 Id. at 108-111.
8 Id. at 132-136.
9 Id. at 133-135.
10 Id. at 137-138.
11 Id. at 150-156.
12 Id. at 166.
13 Id. at 168-188.
14 Id. at 53.
15 Id. at 174-176.
16 Id. at 51-52.
17 449 Phil. 271 (2003).
18 Id. at 284-285.
19 G.R. Nos. 178034, 178117, 186984 and 186985, 18 September 2009, 600 SCRA 658.
20 Id. at 669.
21 Id. at 671.
22 G.R. No. 187693, 13 July 2010, 625 SCRA 75.
23 Id. at 84.
24 352 Phil. 1013 (1998).
25 Id. at 1028-1031.
26 482 Phil. 170 (2004).
27 Id. at 181.
28 Id. at 181-182.
29 515 Phil. 601 (2006).
30 Id. at 607-608.

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 196047

January 15, 2014

LEPANTO CONSOLIDATED MINING CORPORATION, Petitioner,


vs.
BELIO ICAO, Respondent.
DECISIO N
SERENO, CJ:
This Petition under Rule 45 of the Rules of Court seeks to annul and set aside the Court of Appeals (CA) Decision
dated 27 September 2010 and the Resolution dated 11 March 2011 in CA-G.R. SP. No. 113095.1 In the assailed
Decision and Resolution, the CA upheld the Order of the National Labor and Relations Commission (NLRC) First
Division dismissing petitioner s appeal for allegedly failing to post an appeal bond as required by the Labor Code.
Petitioner had instead filed a motion to release the cash bond it posted in another NLRC case which had been
decided with finality in its favor with a view to applying the bond to the appealed case before the NLRC First
Division. Hence, the Court is now asked to rule whether petitioner had complied with the appeal bond requirement.
If it had, its appeal before the NLRC First Division should be reinstated.
The Facts
We quote the CA s narration of facts as follows:
The instant petition stemmed from a complaint for illegal dismissal and damages filed by private respondent Belio
C. Icao [Icao] against petitioners Lepanto Consolidated Mining Company (LCMC) and its Chief Executive Officer
[CEO] Felipe U. Yap [Yap] before the Arbitration Branch of the NLRC.
Private respondent essentially alleged in his complaint that he was an employee of petitioner LCMC assigned as a
lead miner in its underground mine in Paco, Mankayan, Benguet. On January 4, 2008, private respondent
reported for the 1st shift of work (11:00 p.m. to 7:00 a.m.) and was assigned at 248-8M2, 750 Level of the mining
area. At their workplace, private respondent did some barring down, installed five (5) rock bolt support, and drilled
eight (8) blast holes for the mid-shift blast. They then had their meal break. When they went back to their
workplace, they again barred down loose rocks and drilled eight (8) more blast holes for the last round of blast.
While waiting for the time to ignite their round, one of his co-workers shouted to prepare the explosives for
blasting, prompting private respondent to run to the adjacent panels and warn the other miners. Thereafter, he
decided to take a bath and proceeded at [sic] the bathing station where four (4) of his co-workers were also
present. Before he could join them, he heard a voice at his back and saw Security Guard (SG) Larry Bulwayan
instructing his companion SG Dale Papsa-ao to frisk him. As private respondent was removing his boots, SG
Bulwayan forcibly pulled his skullguard from his head causing it to fall down [sic] to the ground including its
harness and his detergent soap which was inserted in the skullguard harness. A few minutes later, private
respondent saw SG Bulwayan [pick] up a wrapped object at the bathing station and gave it to his companion. SGs
Bulwayan and Papsa-ao invited the private respondent to go with them at the investigation office to answer
questions regarding the wrapped object. He was then charged with "highgrading" or the act of concealing,
possessing or unauthorized extraction of highgrade material/ore without proper authority. Private respondent
vehemently denied the charge. Consequently, he was dismissed from his work.

Private respondent claimed that his dismissal from work was without just or authorized cause since petitioners
failed to prove by ample and sufficient evidence that he stole gold bearing highgrade ores from the company
premises. If private respondent was really placing a wrapped object inside his boots, he should have been sitting
or bending down to insert the same, instead of just standing on a muckpile as alleged by petitioners. Moreover, it
is beyond imagination that a person, knowing fully well that he was being chased for allegedly placing wrapped ore
inside his boots, will transfer it to his skullguard. The tendency in such situation is to throw the object away. As
such, private respondent prayed that petitioners be held liable for illegal dismissal, to reinstate him to his former
position without loss of seniority rights and benefits, and to pay his full backwages, damages and attorneys fees.
For their defense, petitioners averred that SG Bulwayan saw private respondent standing on a muckpile and
inserting a wrapped object inside his right rubber boot. SG Bulwayan immediately ran towards private respondent,
but the latter ran away to escape. He tried to chase private respondent but failed to capture him. Thereafter, while
SG Bulwayan was on his way to see his co-guard SG Papsa-ao, he saw private respondent moving out of a stope.
He then shouted at SG Papsa-ao to intercept him. When private respondent was apprehended, SG Bulwayan
ordered him to remove his skullguard for inspection and saw a wrapped object placed inside the helmet. SG
Bulwayan grabbed it, but the harness of the skullguard was also detached causing the object to fall on the ground.
Immediately, SG Bulwayan recovered and inspected the same which turned out to be pieces of stone ores. Private
respondent and the stone ores were later turned over to the Mankayan Philippine National Police where he was
given a written notice of the charge against him. On January 9, 2008, a hearing was held where private
respondent, together with the officers of his union as well as the apprehending guards appeared. On February 4,
2008, private respondent received a copy of the resolution of the company informing him of his dismissal from
employment due to breach of trust and confidence and the act of highgrading.2
THE LABOR ARBITERS RULING THAT
PETITIONER LCMC IS LIABLE FOR ILLEGAL DISMISSAL
On 30 September 2008, the labor arbiter rendered a Decision holding petitioner and its CEO liable for illegal
dismissal and ordering them to pay respondent Icao P345,879.45, representing his full backwages and separation
pay.3 The alleged highgrading attributed by LCMCs security guards was found to have been fabricated;
consequently, there was no just cause for the dismissal of respondent. The labor arbiter concluded that the claim
of the security guards that Icao had inserted ores in his boots while in a standing position was not in accord with
normal human physiological functioning.4
The labor arbiter also noted that it was inconsistent with normal human behavior for a man, who knew that he was
being chased for allegedly placing wrapped ore inside his boots, to then transfer the ore to his skullguard, where it
could be found once he was apprehended.5 To further support the improbability of the allegation of highgrading,
the labor arbiter noted that throughout the 21 years of service of Icao to LCMC, he had never been accused of or
penalized for highgrading or any other infraction involving moral turpitude until this alleged incident.6
THE NLRC ORDER DISMISSING THE APPEAL
OF PETITIONER LCMC FOR FAILURE TO POST THE APPEAL BOND
On 8 December 2008, petitioner and its CEO filed an Appearance with Memorandum of Appeal7 before the NLRC.
Instead of posting the required appeal bond in the form of a cash bond or a surety bond in an amount equivalent
to the monetary award of P345,879.45 adjudged in favor of Icao, they filed a Consolidated Motion For Release Of
Cash Bond And To Apply Bond Subject For Release As Payment For Appeal Bond (Consolidated Motion).8 They
requested therein that the NLRC release the cash bond of P401,610.84, which they had posted in the separate
case Dangiw Siggaao v. LCMC,9 and apply that same cash bond to their present appeal bond liability. They
reasoned that since this Court had already decided Dangiw Siggaao in their favor, and that the ruling therein had
become final and executory, the cash bond posted therein could now be released.10 They also cited financial
difficulty as a reason for resorting to this course of action and prayed that, in the interest of justice, the motion be
granted.
In its Order dated 27 February 2009, the NLRC First Division dismissed the appeal of petitioner and the latters
CEO for non-perfection.11 It found that they had failed to post the required appeal bond equivalent to the monetary
award of P345,879.45. It explained that their Consolidated Motion for the release of the cash bond in another case
(Dangiw Siggaao), for the purpose of applying the same bond to the appealed case before it, could not be
considered as compliance with the requirement to post the required appeal bond. Consequently, it declared the
labor arbiters Decision to be final and executory. The pertinent portions of the assailed Order are quoted below:

labor arbiters Decision to be final and executory. The pertinent portions of the assailed Order are quoted below:
The rules are clear. Appeals from decision involving a monetary award maybe [sic] perfected only upon posting of
a cash or surety-bond within the ten (10) day reglementary period for filing an appeal. Failure to file and post the
required appeal bond within the said period results in the appeal not being perfected and the appealed judgment
becomes final and executory. Thus, the Commission loses authority to entertain or act on the appeal much less
reverse the decision of the Labor Arbiter (Gaudia vs. NLRC, 318 SCRA 439).
In this case, respondents failed to post the required appeal bond equivalent to the monetary award of
P345,879.45. The Consolidated Motion for Release of Cash Bond (posted as appeal bond in another case) with
prayer to apply the bond to be released as appeal bond may not be considered as compliance with the
jurisdictional requirement, as the application or posting is subject to the condition that the cash bond would be
released. Besides, even if the motion for release is approved, the ten (10) day period has long expired, rendering
the statutory right to appeal forever lost.
WHEREFORE, respondents appeal is hereby DISMISSED for non-perfection and the questioned decision is
declared as having become final and executory. Let the Motion for Release of Cash bond be forwarded to the
Third Division, this Commission, for appropriate action.
SO ORDERED.12 (Emphasis supplied)
Petitioner and its CEO filed a Motion for Reconsideration. They emphasized therein that they had tried to comply
in good faith with the requisite appeal bond by trying to produce a cash bond anew and also to procure a new
surety bond. However, after canvassing several bonding companies, the costs have proved to be prohibitive.13
Hence, they resorted to using the cash bond they posted in Dangiw Siggaao because the bond was now free,
unencumbered and could rightfully be withdrawn and used by them.14 Their motion was denied in a Resolution
dated 27 November 2009. Hence, they filed a Petition for Certiorari with the CA.
THE CA RULING AFFIRMING THE ORDER OF THE NLRC
On 27 September 2010, the CA issued its assailed Decision15 affirming the Order of the NLRC First Division, which
had dismissed the appeal of petitioner and the latters CEO. According to the CA, they failed to comply with the
requirements of law and consequently lost the right to appeal.16
The CA explained that under Article 223 of the Labor Code, an appeal from the labor arbiters Decision must be
filed within 10 calendar days from receipt of the decision. In case of a judgment involving a monetary award, the
posting of a cash or surety bond in an amount equivalent to the monetary award is mandatory for the perfection of
an appeal. In the instant case, the CA found that petitioner and its CEO did not pay the appeal fees and the
required appeal bond equivalent to P345,879.45. Instead, it filed a Consolidated Motion praying that the cash
bond it had previously posted in another labor case be released and applied to the present one. According to the
CA, this arrangement is not allowed under the rules of procedure of the NLRC.17
Furthermore, the CA said that since the payment of appeal fees and the posting of an appeal bond are
indispensable jurisdictional requirements, noncompliance with them resulted in petitioners failure to perfect its
appeal. Consequently, the labor arbiters Decision became final and executory and, hence, binding upon the
appellate court.18
Nevertheless, the CA ruled that the CEO of petitioner LCMC should be dropped as a party to this case.19 No
specific act was alleged in private respondents pleadings to show that he had a hand in Icaos illegal dismissal;
much less, that he acted in bad faith. In fact, the labor arbiter did not cite any factual or legal basis in its Decision
that would render the CEO liable to respondent. The rule is that in the absence of bad faith, an officer of a
corporation cannot be made personally liable for corporate liabilities.
THE ISSUE
The sole issue before the Court is whether or not petitioner complied with the appeal bond requirement under the
Labor Code and the NLRC Rules by filing a Consolidated Motion to release the cash bond it posted in another
case, which had been decided with finality in its favor, with a view to applying the same cash bond to the present
case.
OUR RULING

The Petition is meritorious. The Court finds that petitioner substantially complied with the appeal bond
requirement.
Before discussing its ruling, however, the Court finds it necessary to emphasize the well-entrenched doctrine that
an appeal is not a matter of right, but is a mere statutory privilege. It may be availed of only in the manner
provided by law and the rules. Thus, a party who seeks to exercise the right to appeal must comply with the
requirements of the rules; otherwise, the privilege is lost.20
In appeals from any decision or order of the labor arbiter, the posting of an appeal bond is required under Article
223 of the Labor Code, which reads:
Article 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:
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. (Emphasis and underlining supplied)
The 2011 NLRC Rules of Procedure (NLRC Rules) incorporates this requirement in Rule VI, Section 6, which
provides:
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 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
attorneys fees. (Emphases and underlining supplied)
In Viron Garments Manufacturing Co., Inc. v. NLRC,21 the Court explained the mandatory nature of this
requirement as follows:
The intention of the 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. (Emphases supplied)
We now turn to the main question of whether petitioners Consolidated Motion to release the cash bond it posted
in a previous case, for application to the present case, constitutes compliance with the appeal bond requirement.
While it is true that the procedure undertaken by petitioner is not provided under the Labor Code or in the NLRC
Rules, we answer the question in the affirmative. We reiterate our pronouncement in Araneta v. Rodas,22 where
the Court said that when the law does not clearly provide a rule or norm for the tribunal to follow in deciding a
question submitted, but leaves to the tribunal the discretion to determine the case in one way or another, the
judge must decide the question in conformity with justice, reason and equity, in view of the circumstances of the
case. Applying this doctrine, we rule that petitioner substantially complied with the mandatory requirement of
posting an appeal bond for the reasons explained below.
First, there is no question that the appeal was filed within the 10-day reglementary period.23 Except for the alleged
failure to post an appeal bond, the appeal to the NLRC was therefore in order.
Second, it is also undisputed that petitioner has an unencumbered amount of money in the form of cash in the
custody of the NLRC. To reiterate, petitioner had posted a cash bond of P401,610.84 in the separate case Dangiw
Siggaao, which was earlier decided in its favor. As claimed by petitioner and confirmed by the Judgment Division of
the Judicial Records Office of this Court, the Decision of the Court in Dangiw Siggaao had become final and
executory as of 28 April 2008, or more than seven months before petitioner had to file its appeal in the present
case. This fact is shown by the Entry of Judgment on file with the aforementioned office. Hence, the cash bond in
that case ought to have been released to petitioner then.

Under the Rule VI, Section 6 of the 2005 NLRC Rules, "[a] cash or surety bond shall be valid and effective from
the date of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied."
Hence, it is clear that a bond is encumbered and bound to a case only for as long as 1) the case has not been
finally decided, resolved or terminated; or 2) the award has not been satisfied. Therefore, once the appeal is
finally decided and no award needs to be satisfied, the bond is automatically released. Since the money is now
unencumbered, the employer who posted it should now have unrestricted access to the cash which he may now
use as he pleases as appeal bond in another case, for instance. This is what petitioner simply did. Third, the
cash bond in the amount of P401,610.84 posted in Dangiw Siggaao is more than enough to cover the appeal
bond in the amount of P345,879.45 required in the present case.
Fourth, this ruling remains faithful to the spirit behind the appeal bond requirement which is to ensure that workers
will receive the money awarded in their favor when the employers appeal eventually fails.24 There was no showing
at all of any attempt on the part of petitioner to evade the posting of the appeal bond. On the contrary, petitioners
move showed a willingness to comply with the requirement. Hence, the welfare of Icao is adequately protected.
Moreover, this Court has liberally applied the NLRC Rules and the Labor Code provisions on the posting of an
appeal bond in exceptional cases. In Your Bus Lines v. NLRC,25 the Court excused the appellants failure to post a
bond, because it relied on the notice of the decision. While the notice enumerated all the other requirements for
perfecting an appeal, it did not include a bond in the list. In Blancaflor v. NLRC,26 the failure of the appellant
therein to post a bond was partly caused by the labor arbiters failure to state the exact amount of monetary award
due, which would have been the basis of the amount of the bond to be posted. In Cabalan Pastulan Negrito Labor
Association v. NLRC27 petitioner-appellant was an association of Negritos performing trash-sorting services in the
American naval base in Subic Bay. The plea of the association that its appeal be given due course despite its nonposting of a bond, on account of
its insolvency and poverty, was granted by this Court. In UERM-Memorial Medical Center v. NLRC28 we allowed the
appellant-employer to post a property bond in lieu of a cash or surety bond. The assailed judgment involved more
than P17 million; thus, its execution could adversely affect the economic survival of the employer, which was a
medical center.
If n the above-cited cases, the Court found exceptional circumstances that warranted an extraordinary exercise of
its power to exempt a party from the rules on appeal bond, there is all the more reason in the present case to find
that petitioner substantially complied with the requirement. We emphasize that in this case we are not even
exempting petitioner from the rule, as in fact we are enforcing compliance with the posting of an appeal bond. We
are simply liberally applying the rules on what constitutes compliance with the requirement, given the special
circumstances surrounding the case as explained above.
Having complied with the appeal bond requirement, petitioner s appeal before the NLRC must therefore be
reinstated.
1 w p h i1

Finally, a word of caution. Lest litigants be misled into thinking that they may now wantonly disregard the rules on
appeal bond in labor cases, we reiterate the mandatory nature of the requirement. The Court will liberally apply
the rules only in very highly exceptional cases such as this, in keeping with the dictates of justice, reason and
equity.
WHEREFORE, premises considered, the instant Rule 45 Petition is GRANTED. The Court of Appeals Decision
dated 27 September 2010 and its Resolution dated March 2011 in CA-G.R. SP. No. 113095, which dismisse4
petitioner s Rule 65 Petition, are hereby REVERSED. Finally, the National Labor Relations Commission
Resolutions dated 27 February 2009 and 27 November 2009 are SET ASIDE and the appeal of petitioner before it
is hereby REINSTATED.
SO ORDERED.
MARIA LOURDES P. A. SERENO
Chief Justice, Chairperson
WE CONCUR:
TERESITA J. LEONARDO-DE CASTRO
Associate Justice

Associate Justice
LUCAS P. BERSAMIN
Associate Justice

MARTIN S. VILLARAMA, JR.


Associate Justice
BIENVENIDO L. REYES
Associate Justice
CERT IF ICAT IO N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1

Both the Decision and the Resolution in CA-G.R. SP. No. 113095 were penned by CA Associate Justice
Ramon R. Garcia, and concurred in by Associate Justices Rosmari D. Carandang and Manuel M. Barrios.
2

Rollo, pp. 58-61.

Id. at 124-133.

Id. at 129.

Id.

Id. at 131.

Id. at 134-150.

Id. at 151-153.

Docketed as G.R. No. 179013, the unrelated case of Dangiw Siggaao involved a different employee who
filed his Complaint for illegal dismissal against LCMC (docketed as NLRC Case No. RAB-CAR-05-0250-03)
several years before the employee in the instant case filed his. In any case, the Dangiw Siggaao Complaint
was decided by the labor arbiter in favor of the complainants. Consequently LCMC filed an appeal to the
NLRC (docketed as NLRC NCR CA No. 03767-04) which in a Decision dated 18 May 2005, reversed the
labor arbiters Decision. The CA (where the appeal was docketed as CA-GR SP No. 91681) affirmed the
NLRC in CA Decision dated 30 March 2007. The CA Decision was brought to this Court through a Petition
for Review on Certiorari which the Court dismissed on technical grounds in a Resolution dated 3 October
2007. See Consolidated Motion for Release of Cash Bond dated 8 December 2008 and Entry of Judgment,
Dangiw Siggaao v. LCMC, dated 28 April 2008 and sent to the parties on 10 July 2008, Annex "O" of the
instant Petition; rollo, pp.151-156.
10

Id. at 151.

11

Id. at 157-159.

12

Id. at 158-159.

13

Id. at 162.

14

Id.

15

Id. at 57-71.

Id. at 57-71.
16

Id. at 65.

17

Id. at 68.

18

Id.

19

Id. at 69.

20

BPI Family Savings Bank, Inc., v. Pryce Gases, Inc., G.R. No. 188365, 29 June 2011, 653 SCRA 42, 51;
National Power Corporation v. Spouses Laohoo , G.R. No. 151973, 23 July 2009, 593 SCRA 564; Philux,
Inc. v. National Labor Relations Commission , G.R. No. 151854, 3 September 2008, 564 SCRA 21, 33; Cuunjieng v. Court of Appeals, 515 Phil. 568 (2006); Stolt-Nielsen Services, Inc. v. NLRC, 513 Phil. 642 (2005);
Producers Bank of the Philippines v. Court of Appeals, 430 Phil 812 (2002); Villanueva v. Court of Appeals,
G.R. No. 99357, 27 January 1992, 205 SCRA 537; Trans International v. Court of Appeals , 348 Phil. 830
(1998); Acme Shoe, Rubber & Plastic Corporation v. Court of Appeals, 329 Phil. 531 (1996 ) ; and Ozaeta v.
Court of Appeals, 259 Phil. 428 (1989).
21

G.R. No. 97357, 18 March 1992, 207 SCRA 339, 342. See also Accessories Specialist, Inc. v. Alabanza,
G.R. No. 168985, 23 July 2008, 559 SCRA 550; Cordova v. Keysas Boutique, 507 Phil. 147 (2005); Gaudia
v. NLRC, 376 Phil. 548 (1999); and Garais v. NLRC, 326 Phil. 568 (1996).
22

81 Phil. 506 (1948).

23

NLRC Records, p. 95.

24

Accessories Specialist, Inc. v. Alabanza, 581 Phil. 517 (2008), Roos Industrial Construction, Inc. v.
National Labor Relations Commission, 567 Phil. 631 (2008), Borja Estate v. Ballad, 498 Phil. 694 (2005).
25

268 Phil. 169, 172 (1990).

26

G.R. No. 101013, 2 February 1993, 218 SCRA 366, 371.

27

311 Phil. 744 (1995).

28

336 Phil. 66 (1997).

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 195227

April 21, 2014

FROILAN M. BERGONIO, JR., DEAN G. PELAEZ, CRISANTO O. GEONGO, WARLITO O. JANAYA, SALVADOR
VILLAR, JR., RONALDO CAFIRMA, RANDY LUCAR, ALBERTO ALBUERA, DENNIS NOPUENTE and ALLAN
SALVACION, Petitioners,
vs.
SOUTH EAST ASIAN AIRLINES and IRENE DORNIER, Respondents.
DECISIO N
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the September 30, 2010 decision2 and the
January 13, 2011 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 112011.
This CA decision reversed the July 16, 2008 decision4 of the National Labor Relations Commission (NLRC), which,
in turn, affirmed the March 13, 2008 order5 of the Labor Arbiter (LA) in NLRC Case No. 00-04-05469- 2004. The
LA granted the Motion filed by petitioners Froilan M. Bergonio, Jr., Dean G. Pelaez, et.al., (collectively, the
petitioners) for the release of the garnished amount to satisfy the petitioners accrued wages.
The Factual Antecedents
On April 30, 2004, the petitioners filed before the LA a complaint for illegal dismissal and illegal suspension with
prayer for reinstatement against respondents South East Asian Airlines (SEAIR) and Irene Dornier as SEAIRs
President (collectively, the respondents).
In a decision dated May 31, 2005, the LA found the petitioners illegally dismissed and ordered the respondents,
among others, to immediately reinstate the petitioners with full backwages. The respondents received their copy of
this decision on July 8, 2005.6
On August 20, 2005, the petitioners filed before the LA a Motion for issuance of Writ of Execution for their
immediate reinstatement.
During the scheduled pre-execution conference held on September 14, 2005, the respondents manifested their
option to reinstate the petitioners in the payroll. The payroll reinstatement, however, did not materialize. Thus, on
September 22, 2005, the petitioners filed before the LA a manifestation for their immediate reinstatement.
On October 3, 2005, the respondents filed an opposition to the petitioners motion for execution.7 They claimed
that the relationship between them and the petitioners had already been strained because of the petitioners
threatening text messages, thus precluding the latters reinstatement.
On October 7, 2005, the LA granted the petitioners motion and issued a writ of execution.8
The respondents moved to quash the writ of execution with a prayer to hold in abeyance the implementation of the
reinstatement order.9 They maintained that the relationship between them and the petitioners had been so
strained that reinstatement was no longer possible.

strained that reinstatement was no longer possible.


The October 7, 2005 writ of execution was returned unsatisfied. In response, the petitioners filed a motion for recomputation of accrued wages, and, on January 25, 2006, a motion for execution of the re-computed amount. On
February 16, 2006, the LA granted this motion and issued an alias writ of execution.10
On February 21, 2006, the respondents issued a Memorandum11 directing the petitioners to report for work on
February 24, 2006. The petitioners failed to report for work on the appointed date. On February 28, 2006, the
respondents moved before the LA to suspend the order for the petitioners reinstatement.12
Meanwhile, the respondents appealed with the NLRC the May 31, 2005 illegal dismissal ruling of the LA.
In an order dated August 15, 2006,13 the NLRC dismissed the respondents appeal for non-perfection. The NLRC
likewise denied the respondents motion for reconsideration in its November 29, 2006 resolution, prompting the
respondents to file before the CA a petition for certiorari.
The NLRC issued an Entry of Judgment on February 6, 2007 declaring its November 29, 2006 resolution final and
executory. The petitioners forthwith filed with the LA another motion for the issuance of a writ of execution, which
the LA granted on April 24, 2007. The LA also issued another writ of execution.14 A Notice of Garnishment was
thereafter issued to the respondents depositary bank Metrobank-San Lorenzo Village Branch, Makati City in
the amount of P1,900,000.00 on June 6, 2007.
On December 18, 2007, the CA rendered its decision (on the illegal dismissal ruling of the LA) partly granting the
respondents petition. The CA declared the petitioners dismissal valid and awarded them P30,000.00 as nominal
damages for the respondents failure to observe due process.
The records show that the petitioners appealed the December 18, 2007 CA decision with this Court. In a resolution
dated August 4, 2008, the Court denied the petition. The Court likewise denied the petitioners subsequent motion
for reconsideration, and thereafter issued an Entry of Judgment certifying that its August 4, 2008 resolution had
become final and executory on March 9, 2009.
On January 31, 2008, the petitioners filed with the LA an Urgent Ex-Parte Motion for the Immediate Release of the
Garnished Amount.
In its March 13, 2008 order,15 the LA granted the petitioners motion; it directed Metrobank-San Lorenzo to release
the P1,900,000.00 garnished amount. The LA found valid and meritorious the respondents claim for accrued
wages in view of the respondents refusal to reinstate the petitioners despite the final and executory nature of the
reinstatement aspect of its (LAs) May 31, 2005 decision. The LA noted that as of the December 18, 2007 CA
decision (that reversed the illegal dismissal findings of the LA), the petitioners accrued wages amounted to
P3,078,366.33.
In its July 16, 2008 resolution,16 the NLRC affirmed in toto the LAs March 13, 2008 order. The NLRC afterwards
denied the respondents motion for reconsideration for lack of merit.17
The respondents assailed the July 16, 2008 decision and September 29, 2009 resolution of the NLRC via a
petition for certiorari filed with the CA.
The CAs ruling
The CA granted the respondents petition.18 It reversed and set aside the July 16, 2008 decision and the
September 29, 2009 resolution of the NLRC and remanded the case to the Computation and Examination Unit of
the NLRC for the proper computation of the petitioners accrued wages, computed up to February 24, 2006.
The CA agreed that the reinstatement aspect of the LAs decision is immediately executory even pending appeal,
such that the employer is obliged to reinstate and pay the wages of the dismissed employee during the period of
appeal until the decision (finding the employee illegally dismissed including the reinstatement order) is reversed by
a higher court. Applying this principle, the CA noted that the petitioners accrued wages could have been properly
computed until December 18, 2007, the date of the CAs decision finding the petitioners validly dismissed.
The CA, however, pointed out that when the LAs decision is "reversed by a higher tribunal, an employee may be
barred from collecting the accrued wages if shown that the delay in enforcing the reinstatement pending appeal

barred from collecting the accrued wages if shown that the delay in enforcing the reinstatement pending appeal
was without fault" on the employers part. In this case, the CA declared that the delay in the execution of the
reinstatement order was not due to the respondents unjustified act or omission. Rather, the petitioners refusal to
comply with the February 21, 2006 return-to-work Memorandum that the respondents issued and personally
delivered to them (the petitioners) prevented the enforcement of the reinstatement order.
Thus, the CA declared that, given this peculiar circumstance (of the petitioners failure to report for work), the
petitioners accrued wages should only be computed until February 24, 2006 when they were supposed to report
for work per the return-to-work Memorandum. Accordingly, the CA reversed, for grave abuse of discretion, the
NLRCs July 16, 2008 decision that affirmed the LAs order to release the garnished amount.
The Petition
The petitioners argue that the CA gravely erred when it ruled, contrary to Article 223, paragraph 3 of the Labor
Code, that the computation of their accrued wages stopped when they failed to report for work on February 24,
2006. They maintain that the February 21, 2006 Memorandum was merely an afterthought on the respondents
part to make it appear that they complied with the LAs October 7, 2005 writ of execution. They likewise argue that
had the respondents really intended to have them report for work to comply with the writ of execution, the
respondents could and should have issued the Memorandum immediately after the LA issued the first writ of
execution. As matters stand, the respondents issued the Memorandum more than four months after the issuance
of this writ and only after the LA issued the alias writ of execution on February 16, 2006.
Additionally, the petitioners direct the Courts attention to the several pleadings that the respondents filed to
prevent the execution of the reinstatement aspect of the LAs May 31, 2005 decision, i.e., the Opposition to the
Issuance of the Writ of Execution, the Motion to Quash the Writ of Execution and the Motion to Suspend the Order
of Reinstatement. They also point out that in all these pleadings, the respondents claimed that strained
relationship barred their (the petitioners) reinstatement, evidently confirming the respondents lack of intention to
reinstate them.
Finally, the petitioners point out that the February 21, 2006 Memorandum directed them to report for work at Clark
Field, Angeles, Pampanga instead of at the NAIA-Domestic Airport in Pasay City where they had been assigned.
They argue that this directive to report for work at Clark Field violates Article 223, paragraph 3 of the Labor Code
that requires the employees reinstatement to be under the same terms and conditions prevailing prior to the
dismissal. Moreover, they point out that the respondents handed the Memorandum only to Pelaez, who did not act
in representation of the other petitioners, and only in the afternoon of February 23, 2006.
Thus, the petitioners claim that the delay in their reinstatement was in fact due to the respondents unjustified acts
and that the respondents never really complied with the LAs reinstatement order.
The Case for the Respondents
The respondents counter, in their comment,19 that the issues that the petitioners raise in this petition are all factual
in nature and had already considered and explained in the CA decision. In any case, the respondents maintain
that the petitioners were validly dismissed and that they complied with the LAs reinstatement order when it
directed the petitioners to report back to work, which directive the petitioners did not heed.
The respondents add that while the reinstatement of an employee found illegally dismissed is immediately
executory, the employer is nevertheless not prohibited from questioning this rule especially when the latter has
valid and legal reasons to oppose the employees reinstatement. In the petitioners case, the respondents point
out that their relationship had been so strained that reinstatement was no longer possible. Despite this strained
relationship, the respondents point out that they still required the petitioners to report back to work if only to
comply with the LAs reinstatement order. Instead of reporting for work as directed, the petitioners, however,
insisted for a payroll reinstatement, which option the law grants to them (the respondents) as employer. Also,
contrary to the petitioners claim, the Memorandum directed them to report at Clark Field, Pampanga only for a reorientation of their respective duties and responsibilities.
Thus, relying on the CAs ruling, the respondents claim that the delay in the petitioners reinstatement was in fact
due to the latters refusal to report for work after the issuance of the February 21, 2006 Memorandum in addition
to their strained relationship.

The Courts Ruling


We GRANT the petition.
Preliminary considerations: jurisdictional
limitations of the Courts Rule 45 review of
the CAs Rule 65 decision in labor cases
In a Rule 45 petition for review on certiorari, what we review are the legal errors that the CA may have committed
in the assailed decision, in contrast with the review for jurisdictional errors that we undertake in an original
certiorari action. In reviewing the legal correctness of the CA decision in a labor case taken under Rule 65 of the
Rules of Court, we examine the CA decision in the context that it determined the presence or the absence of grave
abuse of discretion in the NLRC decision before it and not on the basis of whether the NLRC decision, on the
merits of the case, was correct. Otherwise stated, we proceed from the premise that the CA undertook a Rule 65
review, not a review on appeal, of the NLRC decision challenged before it. Within this narrow scope of our Rule 45
review, the question that we ask is: Did the CA correctly determine whether the NLRC committed grave abuse of
discretion in ruling on the case?20
In addition, the Courts jurisdiction in a Rule 45 petition for review on certiorari is limited to resolving only questions
of law.
The present petition essentially raises the question whether the petitioners may recover the accrued wages prior
to the CAs reversal of the LAs May 31, 2005 decision. This is a question of law that falls well within the Courts
power in a Rule 45 petition.
Resolution of this question of law, however, is inextricably linked with the largely factual issue of whether the
accrued wages should be computed until December 17, 2008 when the CA reversed the illegal dismissal findings
of the LA or only until February 24, 2006 when the petitioners were supposed to report for work per the February
21, 2006 Memorandum. In either case, the determination of this factual issue presupposes another factual issue,
i.e., whether the delay in the execution of the reinstatement order was due to the respondents fault. As questions
of fact, they are proscribed by our Rule 45 jurisdiction; we generally cannot address these factual issues except to
the extent necessary to determine whether the CA correctly found the NLRC in grave abuse of discretion in
affirming the release of the garnished amount despite the respondents issuance of and the petitioners failure to
comply with the February 21, 2006 return-to-work Memorandum.
The jurisdictional limitations of our Rule 45 review of the CAs Rule 65 decision in labor cases, notwithstanding, we
resolve this petitions factual issues for we find legal errors in the CAs decision. Our consideration of the facts
taken within this narrow scope of our factual review power convinced us, as our subsequent discussion will show,
that no grave abuse of discretion attended the NLRC decision.
Nature of the reinstatement aspect of the
LAs decision on a finding of illegal
dismissal
Article 223 (now Article 229)21 of the Labor Code governs appeals from, and the execution of, the LAs decision.
Pertinently, paragraph 3, Article 223 of the Labor Code provides:
Article 223. APPEAL
xxxx
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, 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. [Emphasis and underscoring supplied]
Under paragraph 3, Article 223 of the Labor Code, the LAs order for the reinstatement of an employee found
illegally dismissed is immediately executory even during pendency of the employers appeal from the decision.
Under this provision, the employer must reinstate the employee either by physically admitting him under the
conditions prevailing prior to his dismissal, and paying his wages; or, at the employers option, merely reinstating
the employee in the payroll until the decision is reversed by the higher court.22 Failure of the employer to comply

the employee in the payroll until the decision is reversed by the higher court.22 Failure of the employer to comply
with the reinstatement order, by exercising the options in the alternative, renders him liable to pay the employees
salaries.23
Otherwise stated, a dismissed employee whose case was favorably decided by the LA is entitled to receive wages
pending appeal upon reinstatement, which reinstatement is immediately executory.24 Unless the appellate tribunal
issues a restraining order, the LA is duty bound to implement the order of reinstatement and the employer has no
option but to comply with it.25
Moreover, and equally worth emphasizing, is that an order of reinstatement issued by the LA is self-executory, i.e.,
the dismissed employee need not even apply for and the LA need not even issue a writ of execution to trigger the
employers duty to reinstate the dismissed employee.
In Pioneer Texturizing Corp. v. NLRC, et. al.,26 decided in 1997, the Court clarified once and for all this selfexecutory nature of a reinstatement order. After tracing back the various Court rulings interpreting the
amendments introduced by Republic Act No. 671527 on the reinstatement aspect of a labor decision under Article
223 of the Labor Code, the Court concluded that to otherwise "require the application for and issuance of a writ of
execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the
very object and intent of Article 223, i.e., the immediate execution of a reinstatement order."28
In short, therefore, with respect to decisions reinstating employees, the law itself has determined a sufficiently
overwhelming reason for its immediate and automatic execution even pending appeal.29 The employer is dutybound to reinstate the employee, failing which, the employer is liable instead to pay the dismissed employees
salary. The Courts consistent and prevailing treatment and interpretation of the reinstatement order as
immediately enforceable, in fact, merely underscores the right to security of tenure of employees that the
Constitution30 protects.
The employer is obliged to pay the
dismissed employees salary if he
refuses to reinstate until actual
reinstatement or reversal by a higher
tribunal; circumstances that may bar an
employee from receiving the accrued wages
As we amply discussed above, an employer is obliged to immediately reinstate the employee upon the LAs finding
of illegal dismissal; if the employer fails, it is liable to pay the salary of the dismissed employee. Of course, it is not
always the case that the LAs finding of illegal dismissal is, on appeal by the employer, upheld by the appellate
court. After the LAs decision is reversed by a higher tribunal, the employers duty to reinstate the dismissed
employee is effectively terminated. This means that an employer is no longer obliged to keep the employee in the
actual service or in the payroll. The employee, in turn, is not required to return the wages that he had received
prior to the reversal of the LAs decision.31
The reversal by a higher tribunal of the LAs finding (of illegal dismissal), notwithstanding, an employer, who,
despite the LAs order of reinstatement, did not reinstate the employee during the pendency of the appeal up to
the reversal by a higher tribunal may still be held liable for the accrued wages of the employee, i.e., the unpaid
salary accruing up to the time the higher tribunal reverses the decision.32 The rule, therefore, is that an employee
may still recover the accrued wages up to and despite the reversal by the higher tribunal. This entitlement of the
employee to the accrued wages proceeds from the immediate and self-executory nature of the reinstatement
aspect of the LAs decision.
By way of exception to the above rule, an employee may be barred from collecting the accrued wages if shown
that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. To
determine whether an employee is thus barred, two tests must be satisfied: (1) actual delay or the fact that the
order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to
the employers unjustified act or omission. Note that under the second test, the delay must be without the
employers fault. If the delay is due to the employers unjustified refusal, the employer may still be required to pay
the salaries notwithstanding the reversal of the LAs decision.33
Application of the two-fold test; the

petitioners are entitled to receive their


accrued salaries until December 18, 2007
As we earlier pointed out, the core issue to be resolved is whether the petitioners may recover the accrued wages
until the CAs reversal of the LAs decision. An affirmative answer to this question will lead us to reverse the
assailed CA decision for legal errors and reinstate the NLRCs decision affirming the release of the garnished
amount. Otherwise, we uphold the CAs decision to be legally correct. To resolve this question, we apply the twofold test.
First, the existence of delay - whether there was actual delay or whether the order of reinstatement pending
appeal was not executed prior to its reversal? We answer this test in the affirmative.
To recall, on May 31, 2005, the LA rendered the decision finding the petitioners illegally dismissed and ordering
their immediate reinstatement. Per the records, the respondents received copy of this decision on July 8, 2005. On
August 20, 2005, the petitioners filed before the LA a Motion for Issuance of Writ of Execution for their immediate
reinstatement. The LA issued the Writ of Execution on October 7, 2005. From the time the respondents received
copy of the LAs decision, and the issuance of the writ of execution, until the CA reversed this decision on
December 17, 2008, the respondents had not reinstated the petitioners, either by actual reinstatement or in the
payroll. This continued non-execution of the reinstatement order in fact moved the LA to issue an alias writ of
execution on February 16, 2006 and another writ of execution on April 24, 2007.
From these facts and without doubt, there was actual delay in the execution of the reinstatement aspect of the
LAs May 31, 2005 decision before it was reversed in the CAs decision.
Second, the cause of the delay whether the delay was not due to the employers unjustified act or omission. We
answer this test in the negative; we find that the delay in the execution of the reinstatement pending appeal was
due to the respondents unjustified acts.
In reversing, for grave abuse of discretion, the NLRCs order affirming the release of the garnished amount, the
CA relied on the fact of the issuance of the February 21, 2006 Memorandum and of the petitioners failure to
comply with its return-to-work directive. In other words, with the issuance of this Memorandum, the CA considered
the respondents as having sufficiently complied with their obligation to reinstate the petitioners. And, the
subsequent delay in or the non-execution of the reinstatement order was no longer the respondents fault, but
rather of the petitioners who refused to report back to work despite the directive.
Our careful consideration of the facts and the circumstances that surrounded the case convinced us that the delay
in the reinstatement pending appeal was due to the respondents fault. For one, the respondents filed several
pleadings to suspend the execution of the LAs reinstatement order, i.e., the opposition to the petitioners motion
for execution filed on October 3, 2005; the motion to quash the October 7, 2005 writ of execution with prayer to
hold in abeyance the implementation of the reinstatement order; and the motion to suspend the order for the
petitioners reinstatement filed on February 28, 2006 after the LA issued the February 16, 2006 alias writ of
execution. These pleadings, to our mind, show a determined effort on the respondents part to prevent or suspend
the execution of the reinstatement pending appeal.
Another reason is that the respondents, contrary to the CAs conclusion, did not sufficiently notify the petitioners of
their intent to actually reinstate them; neither did the respondents give them ample opportunity to comply with the
return-to-work directive. We note that the respondents delivered the February 21, 2006 Memorandum (requiring
the petitioners to report for work on February 24, 2006) only in the afternoon of February 23, 2006. Worse, the
respondents handed the notice to only one of the petitioners Pelaez who did not act in representation of the
others. Evidently, the petitioners could not reasonably be expected to comply with a directive that they had no or
insufficient notice of.
Lastly, the petitioners continuously and actively pursued the execution of the reinstatement aspect of the LAs
decision, i.e., by filing several motions for execution of the reinstatement order, and motion to cite the respondents
in contempt and re-computation of the accrued wages for the respondents continued failure to reinstate them.
These facts altogether show that the respondents were not at all sincere in reinstating the petitioners. These facts
when taken together with the fact of delay reveal the respondents obstinate resolve and willful disregard of the
immediate and self-executory nature of the reinstatement aspect of the LAs decision.

A further and final point that we considered in concluding that the delay was due to the respondents fault is the
fact that per the 2005 Revised Rules of Procedure of the NLRC (2005 NLRC Rules),34 employers are required to
submit a report of compliance within ten (10) calendar days from receipt of the LAs decision, noncompliance with
which signifies a clear refusal to reinstate. Arguably, the 2005 NLRC Rules took effect only on January 7, 2006;
hence, the respondents could not have been reasonably expected to comply with this duty that was not yet in
effect when the LA rendered its decision (finding illegal dismissal) and issued the writ of execution in 2005.
Nevertheless, when the LA issued the February 16, 2006 alias writ of execution and the April 24, 2007 writ of
execution, the 2005 NLRC Rules was already in place such that the respondents had become duty-bound to
submit the required compliance report; their noncompliance with this rule all the more showed a clear and
determined refusal to reinstate.
All told, under the facts and the surrounding circumstances, the delay was due to the acts of the respondents that
we find were unjustified. We reiterate and emphasize, Article 223, paragraph 3, of the Labor Code mandates the
employer to immediately reinstate the dismissed employee, either by actually reinstating him/her under the
conditions prevailing prior to the dismissal or, at the option of the employer, in the payroll. The respondents' failure
in this case to exercise either option rendered them liable for the petitioners' accrued salary until the LA decision
was reversed by the CA on December 17, 2008. We, therefore, find that the NLRC, in affirming the release of the
garnished amount, merely implemented the mandate of Article 223; it simply recognized as immediate and selfexecutory the reinstatement aspect of the LA's decision.
Accordingly, we reverse for legal errors the CA decision. We find no grave abuse of discretion attended the
NLRC's July 16, 2008 resolution that affirmed the March 13, 2008 decision of the LA granting the release of the
garnished amount.
1 w p h i1

WHEREFORE, in light of these considerations, we hereby GRANT the petition. We REVERSE and SET ASIDE the
September 30, 2010 decision and the January 13, 2011 resolution of the Court of Appeals (CA) in CA-G.R. Sp No.
112011. Accordingly, we REINSTATE the July 16, 2008 decision of the National Labor Relations Commission
(NLRC) affirming the March 13, 2008 order of the Labor Arbiter in NLRC Case No. 00-04-05469-2004.
Costs against the respondents South East Asian Airlines and Irene Dornier.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MARIANO C. DEL CASTILLO
Associate Justice

JOSE PORTUGAL PEREZ


Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice
AT T EST AT IO N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERT IF ICAT IO N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of

conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1

Ratio, pp. 9-29.

Penned by Associate Justice Rosmari D. Carandang and concurred in by Associate Justices Ramon R.
Garcia and Manuel M. Barrios; id, pp. 30-44.
3

Id, pp. 45-46.

The petitioners did not attach to the rollo a copy of this July 16, 2008 NLRC decision.

Penned by Labor Arbiter Antonio R. Macam, rol!o, pp. 82-84.

See rollo, p. 47.

Rollo, pp. 47-51.

Id., pp. 54-56.

Id., pp. 57-62.

10

Id., pp. 63-66.

11

Id., p. 67.

12

Id., pp. 68-71.

13

Rollo, pp. 72-78.

14

Id., pp. 80-81.

15

Supra, note 5.
Supra, note 4.

16
17

The petitioners did not attach to the rollo copy of this Resolution.

18

Supra, note 2.

19

Rollo, pp. 103-112.

20

Montoya v. Transmed Manila Corporation, G.R. No. 183329, August 27, 2009, 597 SCRA 334, 342-343.

21

As directed by Republic
thereby Repealing Articles
Amended, Otherwise known
Code articles beginning with

Act No. 10151, entitled "An Act Allowing the Employment of Night Workers,
130 and 131 of Presidential Decree Number Four Hundred Forty-Two, as
as The Labor Code of the Philippines," approved on June 21, 2011, the Labor
Article 130 are renumbered.

22

See Air Philippines Corp. v. Zamora, 529 Phil. 718, 730 (2006); Medina v. Consolidated Broadcasting
System (CBS) DZWX, G.R. No. 99054-56, May 28, 1993, 222 SCRA 707, 711.
23

Pioneer Texturizing Corp. v. NLRC, 345 Phil. 1056, 1070, citing Medina v. Consolidated Broadcasting
System (CBS) DZWX, supra, note 22. See also Garcia, et. al. v. Phil. Airlines, Inc., 596 Phil. 510, 540
(2009).

24

Roquero v. Philippine Airlines, 449 Phil. 437, 446 (2003).

25

Ibid.

26

345 Phil. 1056.

27

Effective March 21, 1989.

28

Supra, note 26, at 1075. See also International Container Terminal Services, Inc. v. NLRC, G.R. No.
115452, December 21, 1998, 360 Phil. 527, 534.
29

See Roquero v. Philippine Airlines, Inc., supra, note 24, at 445.

30

See Article XIII, Section 3 of the 1987 Constitution.

31

See Roquero v. Philippine Airlines, Inc., supra, note 24, at 446. See also Garcia v. Philippine Airlines, Inc.,
supra, note 23, 536-539.
32

See Medina v. Consolidated Broadcasting System (CBS)-DZWX, supra, note 22, at 711; International
Container Terminal Services, Inc. v. NLRC, supra, note 28, at 535. See also Philippine Rabbit Bus Lines,
Inc. v. NLRC, 365 Phil. 598, 604; C. Alcantara & Sons v. Court of Appeals, G.R. No. 155109, September 29,
2010.
33

See Garcia v. Philippine Airlines, supra, note 23, at 541.

34

See Section 14, Rule V and Section 6, Rule XI of the Revised Rules of Procedure of the NLRC (2005).

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
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.
R ESO L UT IO N
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 Courts 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 P54,083,910.00; and
(2) motion for reconsideration3 filed by petitioner Andrew James McBurnie (McBurnie) on September 26,
2012, assailing the Court en bancs Resolution4 dated September 4, 2012 that (1) accepted the case from
the Courts Third Division and (2) enjoined the implementation of the Labor Arbiters (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 companys 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) P2,000,000.00 as moral and
exemplary damages, and (c) attorneys fees equivalent to 10% of the total monetary award.

Feeling aggrieved, the respondents appealed the LAs 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
P100,000.00. 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 P60 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 P60 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 [LAs] 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 P54,083,910.00.
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 CAG.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 LAs decision in favor of McBurnie, conditioned upon the
respondents posting of a bond in the amount of P10,000,000.00. 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 Certiorari20 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 McBurnies 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 Resolution24 dated November 26, 2007. The Courts 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
P10,000,000.00. The NLRC is hereby DIRECTED to give due course to petitioners appeal in CA GR SP No.

P10,000,000.00. 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 NLRCs 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 NLRCs 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 P54,083,910.00 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 CAs order of remand, accepted the appeal from the LAs decision, and
in its Decision35 dated November 17, 2009, reversed and set aside the Decision of the LA, and entered a new one
dismissing McBurnies 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 Decision37 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
petitioners 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 LAs 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 P100,000.00 was grossly inadequate compared to the LAs
monetary award.
The respondents first motion for reconsideration41 was denied by the Court for lack of merit via a Resolution42

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 Courts 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 Courts 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 Courts Decision rendered in G.R. Nos. 18698485.
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 Courts 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

LIBERAL INTERPRETATION, ESPECIALLY


CIRCUMSTANCES AND ISSUES.

IF

THERE

ARE

SPECIAL

MERITORIOUS

IV. THE LAS JUDGMENT WAS PATENTLY VOID SINCE IT AWARDS MORE THAN P60 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 COURTS 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) PETITIONERS 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 LAs Decision dated
September 30, 2004. This prompted McBurnies filing of a Motion for Reconsideration,57 where he invoked the fact
that the Courts Decision dated September 18, 2009 had become final and executory, with an entry of judgment

that the Courts 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 Courts 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 Courts 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
Courts 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 governments 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 Courts review of San Miguel Corporations 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 Courts 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 Muoz 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 Courts 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

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 NLRCs
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 Courts 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 attorneys
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 P10,000,000.00 and then ordered
the cases remand to the NLRC, this Courts 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 employers 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 employers 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 Commercial78 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 arbiters 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 appellants 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 bonds 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 Arbiters 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 NLRCs 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 NLRCs 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 Courts affirmance in the Decision dated September 18, 2009 of the
NLRCs 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

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 bonds 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 partys 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 NLRCs guidance on
the amount of bond that shall hereafter be filed with a motion for a bonds 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 appellants 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 attorneys fees.94 Only after the posting of a
bond in the required percentage shall an appellants period to perfect an appeal under the NLRC Rules be
deemed suspended.
The foregoing shall not be misconstrued to unduly hinder the NLRCs 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 motions 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 NLRCs 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 appellants 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 appellants 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,

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 LAs decision, and this Court, a temporary
restraining order on September 4, 2012.
Significantly, following the CAs remand of the case to the NLRC, the latter even rendered a Decision that
contained findings that are inconsistent with McBurnies claims. The NLRC reversed and set aside the decision of
the LA, and entered a new one dismissing McBurnies 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 McBurnies 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 Courts Decision of September 18, 2009 that reversed and set aside the
CAs Decision authorizing the remand. Although the NLRC granted the motion on the said ground via a
Decision107 that set aside the NLRCs 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 LAs 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

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 P10,000,000.00 upon an appeal from the LAs award of
P51,956,314.00, the Court, instead of ruling right away on the reasonableness of the bonds 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 P30,000,000.00 was P30,000.00. 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 CAs rendition of its Decision which allowed a reduced appeal bond, the
respondents have posted a bond in the amount of P10,000,000.00. In Rosewood, the Court deemed the posting
of a surety bond of P50,000.00, coupled with a motion to reduce the appeal bond, as substantial compliance with
the legal requirements for an appeal from a P789,154.39 monetary award "considering the clear merits which
appear, res ipsa loquitor, in the appeal from the LAs Decision, and the petitioners 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 LAs 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 Pea (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 attorneys 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
Arbiters 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 P54,083,910.00 prohibitive and excessive, which constitutes a

This Court finds the appeal bond in the amount of P54,083,910.00 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 Courts 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 CAs order of remand, and instead
rule on the dismissal of the complaint against the respondents.
Without the reversal of the Courts 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 nationals 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 Galeras dilemma: Galera worked in the Philippines without proper work permit but now wants to claim
employees 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 Galeras 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

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 NLRCs Decision dated November 17, 2009 was set aside in a Decision dated January 14, 2010, the
Courts resolve to now reconsider its Decision dated September 18, 2009 and to affirm the CAs Decision and
Resolution in the respondents favor effectively restores the NLRCs basis for rendering the Decision dated
November 17, 2009.
More importantly, the NLRCs 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 employments 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 McBurnies 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 McBurnies 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 employeremployee 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 employees 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
1 w p h i1

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 cases 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 petitioners
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 petitioners 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
McBurnies complaint.
All these considered, the Court also affirms its Resolution dated September 4, 2012; accordingly, McBurnies
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 Courts 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.
BIENVENIDO L. REYES
Associate Justice
WE CONCUR:
MARIA LOURDES P. A. SERENOChief Justice
Chairperson
ANTONIO T. CARPIO
Associate Justice

PRESBITERO J. VELASCO, JR.


Associate Justice

TERESITA J. LEONARDO-DE CASTRO


Associate Justice

ARTURO D. BRION
Associate Justice

DIOSDADO M. PERALTA
Associate Justice

LUCAS P. BERSAMIN
Associate Justice

(On official leave)


MARIANO C. DEL CASTILLO*
Associate Justice

(On official leave)


ROBERTO A. ABAD*
Associate Justice

MARTIN S. VILLARAMA, JR.


Associate Justice

JOSE PORTUGAL PEREZ


Associate Justice

JOSE CATRAL MENDOZA


Associate Justice

No Part
ESTELA M. PERLAS-BERNABE
Associate Justice

(On official leave)


MARVIC MARIO VICTOR F. LEONEN*
Associate Justice
CERT IF ICAT IO N
Pursuant to Section 13 Article VIII o the Constitution, I certify that the conclusions in the above Resolution had
been reached in consultation before the case was assigned to the writer o the opinion o the Court.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes

* On official leave.
1 Rollo (G.R. Nos. 186984-85), pp. 874-909; subject of the Motion for Leave to File Attached Third Motion

for Reconsideration dated March 27, 2012, id. at 867-871.


2 Penned by Associate Justice Consuelo Ynares-Santiago (retired), with Associate Justices Minita V. Chico-

Nazario (retired), Presbitero J. Velasco, Jr., Antonio Eduardo B. Nachura (retired) and Diosdado M. Peralta,
concurring; id. at 481-493.
3 Id. at 994-1010.

4 Id. at 979.
5 Id. at 165-169.
6 Id. at 424-435.
7 Docketed as NLRC NCR CA No. 042913-05.
8 Rollo (G.R. Nos. 178034 and 178117), pp. 65-106.
9 Rollo (G.R. Nos. 186984-85), pp. 216-226.
10 Id. at 216.
11 Id. at 267-271.
12 Id. at 269.
13 Id. at 324-326.
14 Rollo (G.R. Nos. 178034 and 178117), pp. 130-181.
15 Rollo (G.R. Nos. 186984-85), pp. 328-330.
16 Id. at 347-350.
17 Id. at 88-141.
18 Rollo (G.R. Nos. 178034 and 178117), pp. 251-252.
19 Id. at 263-265.
20 Id. at 28-51.
21 Id. at 297.
22 Id. at 320.
23 Id. at 322-324.
24 Id. at 350-351.
25 Id. at 240.

26 Penned by Associate Justice Arcangelita M. Romilla-Lontok (retired), with Associate Justices Mariano C.

Del Castillo (now a member of this Court) and Portia Alio-Hormachuelos (retired), concurring; rollo (G.R.
Nos. 186984-85), pp. 47-70.
27 Id. at 70.
28 Subject of CA-G.R. SP No. 90845.
29 Rollo (G.R. Nos. 186984-85), p. 67.
30 Id.
31 Subject of CA-G.R. SP No. 95916.
32 Rollo (G.R. Nos. 186984-85), p. 69.
33 Id. at 44-45.
34 Id. at 3-36.
35 Id. at 640-655.
36 Id. at 655.
37 Id. at 481-493.
38 Id. at 492.
39 Id. at 490.
40 Id. at 489.
41 Id. at 494-546.
42 Id. at 595-596.
43 Id. at 657.
44 Id. at 657-659.
45 Id. at 659. The dispositive portion of the NLRC Decision reads: WHEREFORE, the foregoing considered,

complainants Motion for Reconsideration is hereby GRANTED. The Decision of the Commission, dated
November 17, 2009, is SET ASIDE. However, let the Decision of the Commission remain on file with the case
records. SO ORDERED.
46 Id. at 598-601
47 Id. at 602-637.
48 Id. at 732-733.
49 Id. at 853.
50 Id.
51 Id. at 914.

51 Id. at 914.
52 Id.
53 Id. at 874-909.
54 Id. at 876-878.
55 By a vote of 12.
56 Rollo (G.R. Nos. 186984-85), p. 979.
57 Id. at 994-1010.
58 Verginesa-Suarez v. Dilag, A.M. No. RTJ-06-2014, August 16, 2011, 655 SCRA 454, 459-460.
59 G.R. No. 169712, January 20, 2009, 576 SCRA 625.
60 Id. at 628, citing Ortigas and Company Limited Partnership v. Velasco, 324 Phil. 483, 489 (1996).
61 G.R. No. 164195, April 5, 2011, 647 SCRA 207.
62 256 Phil. 271 (1989).
63 210 Phil. 482 (1983).
64 De Guzman v. Sandiganbayan, 326 Phil. 182, 188 (1996), citing Vda. De Ronquillo, et al. v. Marasigan,

115 Phil. 292 (1962); Piczon v. Court of Appeals, 268 Phil. 23 (1990).
65 326 Phil. 182 (1996).
66 Id. at 190-191.
67 G.R. No. 180050, April 12, 2011, 648 SCRA 400.
68 Id. at 436.
69 379 Phil. 809 (2000).
70 434 Phil. 753 (2002).
71 Id. at 762.
72 482 Phil. 903 (2004).
73 Id. at 915.
74 Rollo (G.R. Nos. 186984-85), p. 853.
75 Id.
76 G.R. No. 176951, February 15, 2011, 643 SCRA 149.
77 Rollo (G.R. Nos. 186984-85), pp. 487-489.
78 G.R. No. 196830, February 29, 2012, 667 SCRA 396.

79 Id. at 409.
80 Id. at 409-411.
81 Rollo (G.R. Nos. 186984-85), p. 244.
82 Id. at 325.
83 See Nicol v. Footjoy Industrial Corp., 555 Phil. 275, 287 (2007).
84 Cosico, Jr. v. NLRC, 338 Phil. 1080 (1997), citing Star Angel Handicraft v. National Labor Relations

Commission, G.R. No. 108914, September 20, 1994, 236 SCRA 580; Dr. Postigo v. Phil. Tuberculosis
Society, Inc., 515 Phil. 601 (2006); Rada v. NLRC, G.R. No. 96078, January 9, 1992, 205 SCRA 69, and
YBL (Your Bus Line) v. National Labor Relations Commission, 268 Phil. 169 (1990).
85 Bolos v. Bolos, G.R. No. 186400, October 20, 2010, 634 SCRA 429, 439.
86 Aujero v. Philippine Communications Satellite Corporation, G.R. No. 193484, January 18, 2012, 663

SCRA 467, 481-482, citing Heirs of the Deceased Spouses Arcilla v. Teodoro, G.R. No. 162886, August 11,
2008, 561 SCRA 545, 557.
87 Garcia v. KJ Commercial, supra note 78, at 410.
88 Intertranz Container Lines, Inc. v. Bautista, G.R. No. 187693, July 13, 2010, 625 SCRA 75, 84, citing

Rosewood Processing, Inc. v. NLRC, 352 Phil. 1013 (1998).


89 555 Phil. 275 (2007).
90 Id. at 292.
91 G.R. No. 101013, February 2, 1993, 218 SCRA 366.
92 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 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
93 See Mindanao Times Corporation v. Confesor, G.R. No. 183417, February 5, 2010, 611 SCRA 748;

Computer Innovations Center v. NLRC, 500 Phil. 573 (2005); St. Gothard Disco Pub & Restaurant v. NLRC,
G.R. No. 102570, February 1, 1993, 218 SCRA 327.
94 2011 NLRC Rules of Procedure, Rule VI, Section 6 reads:

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 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 attorneys fees.
95 G.R. No. 170416, June 22, 2011, 652 SCRA 492.
96 Id. at 503-504, citing Ramirez v. CA, G.R. No. 182626, December 4, 2004, 607 SCRA 752, 765.
97 See Nicol v. Footjoy Industrial Corp., supra note 89.

98 See Semblante v. Court of Appeals, G.R. No. 196426, August 15, 2011, 655 SCRA 444.
99 Id.
100 See Star Angel Handicraft v. National Labor Relations Commission, supra note 84.
101 See YBL (Your Bus Line) v. NLRC, supra note 84.
102 See University Plans Incorporated v. Solano, supra note 95; Nicol v. Footjoy Industrial Corp., supra note

89.
103 Rollo (G.R. Nos. 186984-85), p. 649.
104 Id. at 650.
105 Id. at 650-651.
106 Id. at 654.
107 Id. at 640-655.
108 Id. at 64-65.
109 352 Phil. 1013 (1998).
110 Id. at 1031.
111 City of Dumaguete v. Philippine Ports Authority, G.R. No. 168973, August 24, 2011, 656 SCRA 102,

117, citing Basco v. CA, 392 Phil. 251, 266 (2000).


112 Supra note 95.
113 Supra note 98.
114 Supra note 109, at 1031.
115 Rollo (G.R. Nos. 186984-85), pp. 67, 69.
116 Nicol v. Footjoy Industrial Corp., supra note 89, at 290, citing Rosewood Processing, Inc. v. NLRC, supra

note 109.
117 G.R. No. 169207, March 25, 2010, 616 SCRA 422.
118 Id. at 442-443.
119 Id.
120 Rollo (G.R. Nos. 186984-85), p. 652.
121 Id. at 652-653.
122 Lopez v. Bodega City (Video-Disco Kitchen of the Phils.) and/or Torres-Yap, 558 Phil. 666, 674 (2007).
123 Rollo (G.R. Nos. 186984-85), p. 169.

124 Supra note 103.


125 Javier v. Fly Ace Corporation, G.R. No. 192558, February 15, 2012, 666 SCRA 382.
126 Id. at 397-398.
127 G.R. No. 168715, September 15, 2010, 630 SCRA 471.
128 Id. at 486.
129 G.R. No. 168757, January 19, 2011, 640 SCRA 67.
130 Id. at 89-90.

The Lawphil Project - Arellano Law Foundation

31.\epublic of tbe ~bilippines


~upreme QCourt
:.manila

THIRD DIVISION
WATERFRONT CEBU CITY
CASINO HOTEL, INC. and
MARCO PROTACIO,
Petitioners,

G.R. No. 197556


Present:
VELASCO, JR., J., Chairperson,
PERALTA,
VILLARAMA, JR.,
REYES, and
JARDELEZA, JJ.

- versus -

ILDEBRANDO LEDESMA,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Promulgated:
March 25, 2015

~~ _SJ!?;;~~- -x

DECISION
VILLARAMA, JR., J.:
This is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure, as amended, seeking to set aside the Decision1 dated
March 17, 2011 and Resolution2 dated June 21, 2011 of the Court of Appeals
(CA) in CA-G.R. CEB SP No. 05071. The CA reversed the Decision3 dated
November 27, 2009 and Resolution4 dated February 22, 2010 ofthe National
Labor Relations Commission (NLRC) and reinstated the Decision5 dated April
29, 2009 of the Labor Arbiter (LA). The LA declared that respondent
Ildebrando Ledesma was illegally dismissed from his employment by petitioner
Waterfront Cebu City Casino Hotel, Inc. (Waterfront).
The factual antecedents follow:
Respondent was employed as a House Detective at Waterfront located
at Salinas Drive, Cebu City.

Rollo, pp. 43-56. Penned by Associate Justice Edwin D. Sorongon and concurred in by Associate
Justices Portia Alifto-Hormachuelos and Socorro B. Inting.
Id. at 58-59. Penned by Associate Justice Nina G. Antonio-Valenzuela with Associate Justices Portia
Alifio-Hormachuelos and Myra V. Garcia-Fernandez concurring.
CA ro//o, pp. 81-87.
Id. at 93-95.
Id. at 56-62.

Decision

G.R. No. 197556

On the basis of the complaints filed before Waterfront by Christe6


Mandal, a supplier of a concessionaire of Waterfront, and Rosanna Lofranco,
who was seeking a job at the same hotel, Ledesma was dismissed from
employment.7 From the affidavits8 and testimonies9 of Christe Mandal and
Rosanna Lofranco during the administrative hearings conducted by Waterfront,
the latter found, among others, that Ledesma kissed and mashed the breasts of
Christe Mandal inside the hotels elevator, and exhibited his penis and asked
Rosanna Lofranco to masturbate him at the conference room of the hotel.
On August 12, 2008, Ledesma filed a complaint10 for illegal dismissal
which was docketed as NLRC RAB-VII Case No. 08-1887-08. The LA
found that the allegations leveled against Ledesma are mere concoctions,
and concluded that Ledesma was illegally dismissed. The dispositive
portion of the April 29, 2009 Decision of the LA, reads:
WHEREFORE, in view of the foregoing, a decision is hereby
rendered declaring the suspension as well as the dismissal of herein
complainant illegal. Consequently, respondent Waterfront Cebu City
Hotel is ordered to reinstate complainant Ildebrando Ledesma to his
former position without loss of seniority right and with full backwages
reckoned from the date of the suspension up to actual reinstatement.
Herein respondent is likewise ordered to pay complainant Ledesma
service incentive leave pay in the amount of THREE THOUSAND NINE
HUNDRED TEN PESOS AND FIFTY CENTAVOS (P3,910.50) plus ten
percent (10%) of the total monetary award as attorneys fees.
All other claims are DISMISSED for lack of merit.
SO ORDERED.11

On appeal to the NLRC, the latter reversed the ruling of the LA and
held that Ledesmas acts of sexual overtures to Christe Mandal and Rosanna
Lofranco constituted grave misconduct justifying his dismissal from
employment. The fallo of the November 27, 2009 Decision of the NLRC
reads:
WHEREFORE, premises considered, the appealed Decision is
hereby REVERSED and SET ASIDE. Another one is entered declaring
the dismissal of complainant as valid.
SO ORDERED.12

The NLRC denied Ledesmas motion for reconsideration in a


Resolution dated February 22, 2010. A copy of the said Resolution was

6
7
8
9
10
11
12

Also spelled as Christie or Christy.


Records, pp. 22-24.
Id. at 55-62 and 65-66.
See the Joint Resolution/Decision of the administrative panel of Waterfront, id. at 22-24.
Id. at 1-2.
CA rollo, p. 62.
Id. at 86.

Decision

G.R. No. 197556

received by Atty. Gines Abellana (Atty. Abellana), Ledesmas counsel of


record, on March 15, 2010.13
On May 17, 2010,14 or sixty-three (63) days after Atty. Abellana
received a copy of the NLRCs Resolution denying the motion for
reconsideration, said counsel filed before the CA a petition for certiorari
under Rule 65 of the Rules of Court.
In its Comment,15 Waterfront prayed for the outright dismissal of the
petition on the ground that it was belatedly filed.
On August 5, 2010, Ledesma, now assisted by a new counsel, filed a
motion for leave to file amended petition,16 and sought the admission of his
Amended Petition for Certiorari.17 In the amended petition, Ledesma
contended that his receipt on March 24, 2010 (and not the receipt on March
15, 2010 by Atty. Abellana), is the reckoning date of the 60-day
reglementary period within which to file the petition. Hence, Ledesma
claims that the petition was timely filed on May 17, 2010.18
By its Resolution19 dated August 27, 2010, the CA granted leave of
court to Ledesma and admitted his amended petition for certiorari. The CA,
thereafter, rendered a Decision dated March 17, 2011, reversing the Decision
of the NLRC and reinstating the ruling of the LA. The fallo of the assailed
CA Decision reads:
IN LIGHT OF ALL THE FOREGOING, this petition is
GRANTED. The 27 November 2009 NLRC Decision and 22 February
2010 Resolution in NLRC Case No. VAC-09-000912-2009 is
REVERSED and SET ASIDE and the 29 April 2009 Decision of the
Labor Arbiter is hereby REINSTATED.
No pronouncement as to costs.
SO ORDERED.20

The CA denied the motion for reconsideration filed by Waterfront in a


Resolution dated June 21, 2011. Thus, the present petition for review on
certiorari where Waterfront raised the main issue of whether the petition for
certiorari was timely filed with the CA.21
In his Comment,22 Ledesma sought the dismissal of the instant
petition of Waterfront on the basis of the following formal infirmities: (1)
13
14
15
16
17
18
19
20
21
22

Id. at 5. Paragraph 14 of the Petition for Certiorari.


Id. at 3. See the date of receipt by the CA stamped at the upper right portion.
Id. at 103-110.
Id. at 112-114.
Id. at 116-135.
Id. at 118-119.
Id. at 223-224.
Rollo, p. 56.
Id. at 22.
Id. at 89-120.

Decision

G.R. No. 197556

the presentation of Gaye Maureen Cenabre, the representative of Waterfront,


of a Community Tax Certificate before the Notary Public to prove her
identity, violated A.M. No. 02-8-13-SC, and rendered the jurat in the
verification and certification on non-forum shopping of the petition as
defective; and (2) no certified true copy of the August 10, 2011 Board
Resolution quoted in the Secretarys Certificate was attached to the petition.
The Court finds Waterfronts petition to be meritorious.
The procedural infirmities23 pointed out by Ledesma are not adequate to
cause the dismissal of the present petition. Gaye Maureen Cenabre presented to
the Notary Public a Community Tax Certificate numbered 27401128 to prove
her identity instead of a current identification document issued by an official
agency bearing her photograph and signature as required by A.M. No. 02-8-13SC. This rendered the jurat in the verification/certification of non-forum
shopping of Waterfront as defective. Nonetheless, any flaw in the verification,
being only a formal, not a jurisdictional requirement, is not a fatal defect.24 In
like manner, there is no need to attach the certified true copy of the Board
Resolution quoted in the Secretarys Certificate attached to the petition. Only
the judgment, order or resolution assailed in the petition are the attachments
required under Section 4,25 Rule 45 of the Rules of Court to be duplicate
originals or certified true copies.
On the main issue, the unjustified failure of Ledesma to file his
petition for certiorari before the CA within the 60-day period is a ground for
the outright dismissal of said petition.
Section 4, Rule 65 of the Rules of Court, as amended by A.M. No. 077-12-SC, reads:
SEC. 4. When and where to file the petition. The petition shall be
filed not later than sixty (60) days from notice of the judgment, order or
resolution. In case a motion for reconsideration or new trial is timely
filed, whether such motion is required or not, the petition shall be filed not
later than sixty (60) days counted from the notice of the denial of the
motion.
If the petition relates to an act or an omission of a municipal trial
court or of a corporation, a board, an officer or a person, it shall be filed
with the Regional Trial Court exercising jurisdiction over the territorial
area as defined by the Supreme Court. It may also be filed with the Court
of Appeals or with the Sandiganbayan, whether or not the same is in aid of
the courts appellate jurisdiction. If the petition involves an act or an
omission of a quasi-judicial agency, unless otherwise provided by law or

23
24

25

Id. at 103-104.
Galicto v. Aquino III, G.R. No. 193978, February 28, 2012, 667 SCRA 150, 175, citing In-N-Out
Burger, Inc. v. Sehwani, Incorporated and/or Benitas Frites, Inc., 595 Phil. 1119, 1140 (2008).
SEC. 4. Contents of petition. The petition shall x x x (d) be accompanied by a clearly legible
duplicate original, or a certified true copy of the judgment or final order or resolution certified by the
clerk of court of the court a quo and the requisite number of plain copies thereof, and such material
portions of the record as would support the petition; x x x.

Decision

G.R. No. 197556

these rules, the petition shall be filed with and be cognizable only by the
Court of Appeals.
In election cases involving an act or an omission of a municipal or
a regional trial court, the petition shall be filed exclusively with the
Commission on Elections, in aid of its appellate jurisdiction.

In Laguna Metts Corporation v. Court of Appeals,26 we categorically


ruled that the present rule now mandatorily requires compliance with the
reglementary period. The period can no longer be extended as previously
allowed before the amendment, thus:
As a rule, an amendment by the deletion of certain words or
phrases indicates an intention to change its meaning. It is presumed that
the deletion would not have been made if there had been no intention to
effect a change in the meaning of the law or rule. The amended law or rule
should accordingly be given a construction different from that previous to
its amendment.
If the Court intended to retain the authority of the proper courts to
grant extensions under Section 4 of Rule 65, the paragraph providing for
such authority would have been preserved. The removal of the said
paragraph under the amendment by A.M. No. 07-7-12-SC of Section 4,
Rule 65 simply meant that there can no longer be any extension of the 60day period within which to file a petition for certiorari.
The rationale for the amendments under A.M. No. 07-7-12-SC is
essentially to prevent the use (or abuse) of the petition for certiorari under
Rule 65 to delay a case or even defeat the ends of justice. Deleting the
paragraph allowing extensions to file petition on compelling grounds did
away with the filing of such motions. As the Rule now stands, petitions
for certiorari must be filed strictly within 60 days from notice of
judgment or from the order denying a motion for reconsideration.27
(Additional emphasis and underscoring supplied)

In the subsequent case of Domdom v. Third & Fifth Divisions of the


Sandiganbayan,28 the absence of a specific prohibition in Section 4 of Rule
65, as amended, for the extension of the 60-day period to file a petition for
certiorari was construed as a discretionary authority of the courts to grant an
extension.
Republic v. St. Vincent De Paul Colleges, Inc.29 clarified the conflict
between the rulings in Laguna Metts Corporation30 and Domdom,31 in that
the former is the general rule while the latter is the exception, thus:
What seems to be a conflict is actually more apparent than real.
A reading of the foregoing rulings leads to the simple conclusion that
Laguna Metts Corporation involves a strict application of the general rule
that petitions for certiorari must be filed strictly within sixty (60) days
26
27
28
29
30
31

611 Phil. 530 (2009).


Id. at 536-537.
627 Phil. 341 (2010).
G.R. No. 192908, August 22, 2012, 678 SCRA 738.
Supra note 26.
Supra note 28.

Decision

G.R. No. 197556

from notice of judgment or from the order denying a motion for


reconsideration. Domdom, on the other hand, relaxed the rule and
allowed an extension of the sixty (60)-day period subject to the
Courts sound discretion.32 (Emphasis in the original)

In relaxing the rules and allowing an extension, Thenamaris


Philippines, Inc. v. Court of Appeals33 reiterated the necessity for the party
invoking liberality to advance a reasonable or meritorious explanation34 for
the failure to file the petition for certiorari within the 60-day period.
The petition for certiorari was filed
with the CA beyond the 60-day
period
Atty. Abellana, Ledesmas counsel, admittedly received a copy of the
NLRC Resolution denying the Motion for Reconsideration on March 15,
2010 while Ledesma received his copy on March 24, 2010.
Ledesma erroneously asserted in his petition for certiorari filed before
the CA, that the 60th day is May 15, 2010, counted from March 15, 2010.35 In
computing a period, the first day shall be excluded, and the last included;36
hence, the last day to file his petition for certiorari is on May 14, 2010, a
Friday. Ledesma therefore belatedly filed his petition on May 17, 2010.
Realizing his procedural faux pas, Ledesma filed an amended petition
where he contended that he timely filed his petition for certiorari on May 17,
2010 counted from his receipt of the NLRC Resolution denying his motion

32
33

34

35

36

Republic v. St. Vincent De Paul Colleges, Inc., supra note 29, at 747.
G.R. No. 191215, February 3, 2014, 715 SCRA 153, 166, citing Labao v. Flores, G.R. No. 187984,
November 15, 2010, 634 SCRA 723, 732.
Among the recognized exceptions are: (1) most persuasive and weighty reasons; (2) to relieve a
litigant from an injustice not commensurate with his failure to comply with the prescribed procedure;
(3) good faith of the defaulting party by immediately paying within a reasonable time from the time of
the default; (4) the existence of special or compelling circumstances; (5) the merits of the case; (6) a
cause not entirely attributable to the fault or negligence of the party favored by the suspension of the
rules; (7) a lack of any showing that the review sought is merely frivolous and dilatory; (8) the other
party will not be unjustly prejudiced thereby; (9) fraud, accident, mistake or excusable negligence
without appellants fault; (10) peculiar legal and equitable circumstances attendant to each case; (11) in
the name of substantial justice and fair play; (12) importance of the issues involved; and (13) exercise
of sound discretion by the judge guided by all the attendant circumstances. Thenamaris Philippines,
Inc. v. Court of Appeals, id.
Paragraph 14 of the Petition provides:
14. That the said resolution denying the motion for reconsideration was served upon
the petitioner on March 15, 2010 and the sixty (60) day period allowed by Rule 65 falls on
May 15, 2010 which is a Saturday so that the next business day is still within the period to file
the x x x petition; (CA rollo, p. 5.)
Article 13 of the Civil Code reads:
ART. 13. When the law speaks of years, months, days or nights, it shall be
understood that years are of three hundred sixty-five days each; months, of thirty days;
days, of twenty-four hours, and nights from sunset to sunrise.
If months are designated by their name, they shall be computed by the number
of days which they respectively have.
In computing a period, the first day shall be excluded, and the last day included.

Decision

G.R. No. 197556

for reconsideration on March 24, 2010.37 This stance is bereft of any legal
basis. When a party to a suit appears by counsel, service of every judgment
and all orders of the court must be sent to the counsel. This is so because
notice to counsel is an effective notice to the client, while notice to the client
and not his counsel is not notice in law.38 Receipt of notice by the counsel
of record is the reckoning point of the reglementary period.39
The negligence of Atty. Abellana in the computation of the 60-day
period, and reckoning such period from the partys receipt of the assailed
NLRC resolution were similar arguments rejected in Labao v. Flores.40 In
the Labao case,41 the respondents maintained that they should not suffer the
negligence of their counsel in the late filing of their petition for certiorari,
and the 60-day period be reckoned from their own notice of the NLRCs
denial of their motion for reconsideration. In rejecting said arguments we
ruled as follows:
The general rule is that a client is bound by the acts, even mistakes, of
his counsel in the realm of procedural technique. The exception to this rule is
when the negligence of counsel is so gross, reckless and inexcusable that the
client is deprived of his day in court. The failure of a partys counsel to notify
him on time of the adverse judgment, to enable him to appeal therefrom, is
negligence that is not excusable. We have repeatedly held that notice sent to
counsel of record is binding upon the client, and the neglect or failure of
counsel to inform him of an adverse judgment resulting in the loss of his right
to appeal is not a ground for setting aside a judgment valid and regular on its
face.42 (Emphasis omitted)

With the expiration of the 60-day period to file a petition for


certiorari, a review of the Resolution of the NLRC will be beyond the
jurisdiction of any court.43 No longer assailable, the NLRC Resolution
could not be altered or modified, as previously held in Labao v. Flores:44
The NLRCs resolution became final ten (10) days after counsels
receipt, and the respondents failure to file the petition within the required
(60)-day period rendered it impervious to any attack through a Rule 65
petition for certiorari. Thus, no court can exercise jurisdiction to review
the resolution.
Needless to stress, a decision that has acquired finality becomes
immutable and unalterable and may no longer be modified in any respect,
even if the modification is meant to correct erroneous conclusions of fact
or law and whether it will be made by the court that rendered it or by the
highest court of the land. All the issues between the parties are deemed
resolved and laid to rest once a judgment becomes final and executory;
37
38
39

40
41
42
43

44

CA rollo, pp. 118-119.


Ramos v. Sps. Lim, 497 Phil. 560, 564-565 (2005).
See Manaya v. Alabang Country Club, Inc., 552 Phil. 226, 233 (2007), citing Rams Studio and
Photographic Equipment, Inc. v. Court of Appeals, 400 Phil. 542, 549 (2000).
Supra note 33.
Id. at 733.
Id.
Thenamaris Philippines, Inc. v. Court of Appeals, supra note 33, at 169, quoting Labao v. Flores, supra
note 33, at 734.
Id. at 734-735.

Decision

G.R. No. 197556

execution of the decision proceeds as a matter of right as vested rights are


acquired by the winning party. Just as a losing party has the right to appeal
within the prescribed period, the winning party has the correlative right to
enjoy the finality of the decision on the case. After all, a denial of a
petition for being time-barred is tantamount to a decision on the merits.
Otherwise, there will be no end to litigation, and this will set to naught the
main role of courts of justice to assist in the enforcement of the rule of law
and the maintenance of peace and order by settling justiciable
controversies with finality.

Ledesma did not attempt to justify


the belated filing of his petition for
certiorari
The relaxation of procedural rules may be allowed only when there
are exceptional circumstances to justify the same.45 There should be an
effort on the part of the party invoking liberality to advance a reasonable or
meritorious explanation for his/her failure to comply with the rules.46
Moreover, those who seek exemption from the application of a procedural
rule have the burden of proving the existence of exceptionally meritorious
reason warranting such departure.47 In Philippine National Bank v.
Commissioner of Internal Revenue,48 we said:
It is an accepted tenet that rules of procedure must be faithfully
followed except only when, for persuasive and weighting reasons, they
may be relaxed to relieve a litigant of an injustice commensurate with his
failure to comply with the prescribed procedure. Concomitant to a
liberal interpretation of the rules of procedure, however, should be an
effort on the part of the party invoking liberality to adequately
explain his failure to abide by the rules. (Emphasis supplied)

Both in his petition and amended petition, Ledesma never invoked the
liberality of the CA nor endeavored to justify the belated filing of his petition.
On the contrary, Ledesma remained firm that his petition was filed with the CA
within the reglementary period.49 Absent valid and compelling reasons for the
procedural lapse, the desired leniency cannot be accorded to Ledesma.50
In sum, the late filing by Ledesma of his petition for certiorari, and his
failure to justify his procedural lapse to merit a lenient application of the
rules divested the CA of jurisdiction to entertain the petition.51
Assuming for a moment that the petition for certiorari was timely filed
with the CA, said recourse should suffer the same fate of dismissal for lack
45
46

47
48

49
50
51

Tagle v. Equitable PCI Bank, 575 Phil. 384, 405 (2008).


People v. Castaeda, Jr., G.R. No. 208290, December 11, 2013, 712 SCRA 800, 807, citing Republic v. St.
Vincent de Paul Colleges, Inc., supra note 29, at 748, further citing Labao v. Flores, supra note 33, at 732.
Gipa v. Southern Luzon Institute, G.R. No. 177425, June 18, 2014, p. 1.
G.R. No. 172458, December 14, 2011, 662 SCRA 424, 436-437, quoting Suarez v. Judge Villarama,
Jr., 526 Phil. 68, 77 (2006).
CA rollo, pp. 5 and 118-119.
See Ramirez v. Court of Appeals, 622 Phil. 782, 803 (2009).
See Thenamaris Philippines, Inc. v. Court of Appeals, supra note 33, at 169.

Decision

G.R. No. 197556

of merit. Otherwise stated, there is no substantial justice that may be served


here in disregarding the procedural flaw committed by Ledesma because the
NLRC correctly found him guilty of misconduct or improper behavior in
committing lascivious conduct and demanding sexual favors from Christe
Mandal and Rosanna Lofranco.
The CA ruled in favor of Ledesma since it believed his version that the
complainants merely invented the accusations against him because Waterfront
failed to present as evidence the CCTV footages of the alleged lascivious
conduct of Ledesma inside the elevator and the conference room. But this
argument was not even raised by Ledesma himself and it was only the CA
which utilized this as a justification to bolster its findings that Ledesma did not
commit any infraction. This being a labor case, the evidence required is only
substantial evidence which was adequately established here by the positive and
credible testimonies of the complainants.
Notably, Ledesma never refuted, at the administrative investigation
level at Waterfront, and even at the proceedings before the LA, NLRC, and
the CA, the allegations leveled against him by Rosanna Lofranco that, after
deluding her to perform a massage on him, Ledesma exhibited to her his
penis and requested that he be masturbated while inside the conference room
of the hotel. If not for the position of Ledesma as a House Detective, he will
not have access to the conference room nor will he know that the premises is
not monitored through a closed-circuit television, 52 thus giving him the
untrammeled opportunity to accomplish his lewd design on the unsuspecting
victim.
Such acts of Ledesma constituted misconduct or improper
53
behavior which is a just cause for his dismissal.
WHEREFORE, the petition for review on certiorari is GRANTED.
The March 17, 2011 Decision and June 21, 2011 Resolution of the Court of
Appeals in CA-G.R. CEB SP No. 05071 are REVERSED and SET ASIDE.
The November 27, 2009 Decision and February 22, 2010 Resolution of the
National Labor Relations Commission which found as valid the dismissal
from employment oflldebrando Ledesma are REINSTATED.
No pronouncement as to costs.
SO ORDERED.

'JR.
Associate J~

52
53

Only specific areas of the hotel are covered by surveillance cameras. See rollo, p. 33.
Its elements are: (a) must be serious; (b) must relate to the performance of the employee's duties; and
(c) must show that the employee has become unfit to continue working for the employer. See Lopez v.
NLRC (2nd Div.), 513 Phil. 731, 737 (2005); F~jitsu Computer Products Corp. of the Philippines v.
Court ofAppeals, 494 Phil. 697, 725 (2005).

Decision

G.R. No. 197556

10

WE CONCUR:

PRESBITER~

J. VELASCO, JR.
Ast,>ciate Justice
Chairperson

//'~

/~

(BIENVENIDO L. REYES
,
Associate Justice

Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

PRESBITE;t J. VELASCO, JR.


As ciate Justice
Chairp son, Third Division

A.

Decision

G.R. No. 197556

11

CERTIFICATION
Pursuant to Section 13, Article VIII of the 1987 Constitution and the
Division Chairperson's Attestation, I certify that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P.A. SERENO


Chief Justice

~l

fitN

l\epublic of tbe

~bilippine~

$>upreme <!Court
lJjaguio <!Citp
SECOND DIVISION

SMART COMMUNICATIONS, INC.,


NAPOLEON L. NAZARENO, and
RICARDO P. ISLA,*
Petitioners,

G.R. No. 204646

Present:
CARPIO, J., Chairperson,
DEL CASTILLO,
PEREZ**
,
MENDOZA, and
LEONEN,JJ.

- versus -

JOSE LENI Z. SOLIDUM,


Respondent.

Promul_s;ated:

'-, 5 APR 2

x----------------------------------------------DECISION
CARPIO, J.:
The Case
This is a petition 1 for review on certiorari under Rule 45 of the Rules
of Court. Petitioners Smart Communications, Inc. (Smart), Napoleon L.
Nazareno and Ricardo P. Isla (Isla) challenge the Cort of Appeals' 3 July
2012 Amended Decision2 and 23 November 2012 Resolution3 in CA-G.R.
SP No. 115794, affirming the National Labor Relations Commission's
(NLRC) 30 July 2010 Resolution. 4
Also referred to in the Records as Ricky P. Isla.
Designated acting member per Special Order No. 1977 dated 15 April 2015.
Rollo, pp. 10-41.
Id. at 44-54. Penned by Associate Justice Danton Q. Bueser, with Associate Justices Amelita G.
Tolentino and Ramon A. Cruz concurring.
Id. at 56-61.
Id. at 752-756. Penned by Presiding Commissioner Gerardo C. Nograles, with Commissioners
Gregorio 0. Bilog and Pablo C. Espiritu, Jr. concurring.

Decision

G.R. No. 204646

The Facts
On 26 April 2004, Smart hired respondent Jose Leni Z. Solidum
(Solidum) as Department Head for Smart Buddy Activation. Smart Buddy
Activation is under the Product Marketing Group which is headed by Isla.
On 21 September 2005, Isla gave Solidum a memorandum5 informing him
of alleged acts of dishonesty, directing him to explain why his employment
should not be terminated, and placing him under preventive suspension
without pay for 30 days. On 28 September 2005, Solidum submitted his
written explanation6 in response to the 21 September 2005 notice.
On 22 October 2005, Isla gave Solidum a memorandum7 dated 21
October 2005 informing him of a modified set of alleged acts of dishonesty,
directing him to explain why his employment should not be terminated,
extending his preventive suspension by 10 days, and inviting him to the
administrative investigation scheduled on 26 October 2005.
On 11 November 2005, Isla gave Solidum a memorandum8 dated 9
November 2005 terminating his employment for fraud or willful breach of
trust, falsification, misrepresentation, conflict of interest, serious misconduct
and dishonesty-related offenses.9
Solidum filed against Smart a complaint10 for illegal dismissal, illegal
suspension, non-payment of salaries, actual, moral and exemplary damages,
and attorneys fees.
In his 3 July 2006 Decision,11 the Labor Arbiter found that Solidums
preventive suspension and dismissal were illegal and that he was entitled to
full back wages, moral and exemplary damages, and attorneys fees. The
dispositive portion of the Decision stated:
WHEREFORE, premises all considered, judgment is hereby
rendered in favor of complainant and against respondents, as follows:
1.
Declaring the 20-day extended preventive suspension of
complainant from October 22, 2005 to November 10, 2005 illegal and
tantamount to constructive dismissal, and ordering respondents to jointly
and severally pay complainant his corresponding salaries, benefits,
privileges, allowances and other incentives/bonuses during the period
from October 22 to November 10, 2005, in the amount of P236,061.94;

5
6
7
8
9
10
11

Id. at 64-66.
Id. at 67-73.
Id. at 79-82.
Id. at 85-91.
Id. at 91.
Id. at 92-93.
Id. at 94-154. Penned by Labor Arbiter Felipe P. Pati.

Decision

G.R. No. 204646

2.
Ordering respondents to jointly and severally pay the
complainants unpaid salaries, benefits, privileges, allowances, and other
benefits/bonuses during the 30-day preventive suspension, in the amount
of P365,896.00;
3.
Declaring the dismissal of complainant effective November 11,
2005 as illegal, and ordering respondents to reinstate the complainant to
his former position, immediately upon receipt of this decision, either
physically or in the payroll, at the option of the former, and failure to
exercise their option within ten (10) days hereof, shall place the
complainant on payroll reinstatement, with payment of accrued salaries,
allowances, benefits/incentives and bonuses;
4.
Ordering respondents to jointly and severally pay complainant his
full backwages, inclusive of all benefits bonuses, privileges, incentives,
allowances or their money equivalents, from date of dismissal on
November 11, 2005 until actual reinstatement, partially computed as
follows:
a. Backwages and benefits

- P2,903,561.79

b. Quarterly performance bonus

- P935,640.00

c. Monthly Gas allowance

- P90,693.00

d. Monthly Rice allowance

- P9,000.00

e. Monthly drivers allowance

- P68,175.00

f. 13th month pay (pro-rata)

- P265,569.68

g. Unpaid accumulated leaves


2004 & 2005

- P472,123.87

h. Smart incentive entitlement

- P7,370,250.00[;]

5.
Ordering respondents to jointly and severally pay complainant for
the foregone opportunity of pursuing studies in the United Kingdom under
the British Chevening Scholarship Award, in the sum of 20,189.00 British
pounds or Peso 1,982,727.37[; and]
6.
Ordering respondents to jointly and severally pay complainant
moral damages in the amount of P2 million, exemplary damages in the
amount of P2 million, and attorneys fees equivalent to 10% of the
judgment award.
SO ORDERED.12

On 25 July 2006, Smart appealed to the NLRC. On 13 November


2006, the Labor Arbiter issued a writ of execution ordering the sheriff to
collect from petitioners P1,440,667.93, representing Solidums accrued
12

Id. at 152-154.

Decision

G.R. No. 204646

salaries, allowances, benefits, incentives and bonuses from 21 July to 20


October 2006. On 15 August and 25 October 2007, 11 February, 28 April,
23 July and 11 November 2008, and 22 January 2009, the Labor Arbiter
issued seven other alias writs of execution ordering the sheriff to collect
from petitioners Solidums accrued salaries, allowances, benefits, incentives
and bonuses.
In its 26 January 2009 Resolution,13 the NLRC reversed the Labor
Arbiters 3 July 2006 Decision and dismissed for lack of merit Solidums
complaint. Solidum filed a motion14 for reconsideration dated 9 February
2009.
On 4 May 2009, Solidum filed with the Labor Arbiter an ex-parte
motion15 praying that an alias writ of execution be issued directing the
sheriff to collect from petitioners P1,440,667.93, representing Solidums
accrued salaries, allowances, benefits, incentives and bonuses from 21
January to 20 April 2009.
In its 29 May 2009 Decision,16 the NLRC denied for lack of merit
Solidums 9 February 2009 motion for reconsideration.

The Labor Arbiters Ruling


In his 29 July 2009 Order,17 the Labor Arbiter denied for lack of merit
Solidums ex-parte motion praying that an alias writ of execution be issued
directing the sheriff to collect from petitioners P1,440,667.93, representing
Solidums accrued salaries, allowances, benefits, incentives and bonuses
from 21 January to 20 April 2009. The Labor Arbiter held that:
In the instant case, the NLRC promulgated its Decision dated
January 26, 2009 reversing this Offices Decision dated July 03, 2006.
Also, the NLRC in its Decision dated May 29, 2009 denied the
complainants motion for reconsideration of its Decision dated January 26,
2009. This Office is mindful of the fact that the NLRC is tasked with the
review of decisions promulgated by this Office, as such, it is a higher
tribunal as contemplated by law.
Verily, the recent decision of the NLRC reversing the Decision of
this Office prevents any future issuance of any writ of execution on the
reinstatement aspect in line with Gracia, et al. vs. Philippine Airlines, Inc.
and International Container Terminal Services vs. NLRC.18
13

14
15
16
17
18

Id. at 244-265. Penned by Commissioner Romeo L. Go, with Presiding Commissioner Gerardo C.
Nograles concurring and Commissioner Perlita B. Velasco inhibiting.
Id. at 266-474.
Id. at 521-523.
Id. at 510-520.
Id. at 524-528.
Id. at 527.

Decision

G.R. No. 204646

Solidum appealed to the NLRC.

The NLRCs Ruling


In its 31 May 2010 Decision,19 the NLRC reversed the Labor Arbiters
29 July 2009 Order. The NLRC held that:
In the case at bar, records show that respondents appealed from the
Labor Arbiters Decision to the Commission on July 25, 2006. The
Commission resolved respondents appeal on January 26, 2009, reversing
the Decision of the Labor Arbiter dated July 3, 2006. Notably, there is no
showing in the records that respondents reinstated complainant to his
former position. Hence, pursuant to Article 223 of the Labor Code, as
amended, relative to the reinstatement aspect of the Labor Arbiters
Decision, respondents are obligated to pay complainants salaries and
benefits, computed from July 13, 2006, when respondents received a copy
of the Labor Arbiters Decision which, among others, ordered the
reinstatement of complainant, up to the date of finality of the
Commissions resolution reversing the Labor Arbiters Decision, which,
for this purpose, is reckoned on May 29, 2009, when the Commission
denied complainants Motion for Reconsideration.
Indeed, common sense dictates that complainants entitlement to
reinstatement salaries/wages and benefits, emanating from the Labor
Arbiters order of reinstatement, presupposes that said order of
reinstatement is still enforceable. Here, the Labor Arbiters order of
reinstatement dated July 3, 2006 was no longer enforceable as of May 29,
2009 when the Commissions resolution reversing the Labor Arbiters
order of reinstatement is deemed to have become final as hereinabove
discussed.
Patently then, complainant is no longer entitled to
reinstatement salaries/wages and benefits after May 29, 2009.
Significantly, the Order of the Labor Arbiter being appealed from
by complainant, denied the latters motion for issuance of alias writ of
execution for the collection of his reinstatement salaries and benefits for
the period covering January 21, 2009 to April 20, 2009. The Labor Arbiter
thus committed serious error in denying complainants motion with
respect to his reinstatement salaries and benefits as he is entitled to the
same for the period starting July 13, 2006 to May 29, 2009.20

Solidum filed a motion21 for partial reconsideration. Petitioners filed a


motion22 for reconsideration. In its 30 July 2010 Resolution, the NLRC
granted Solidums motion for partial reconsideration and denied for lack of
merit petitioners motion for reconsideration. The NLRC held that:

19
20
21
22

Id. at 726-733.
Id. at 731-732.
Id. at 734-737.
Id. at 739-751.

Decision

G.R. No. 204646

Our Entry of Judgment dated June 01, 2010 clearly states that the
Decision promulgated by this Commission on May 29, 2009 had become
final and executory on August 10, 2009. Thus, We so hold that the date of
finality of Our Decision reversing the Labor Arbiters Decision dated July
3, 2006 is August 10, 2009, and the computation of complainants
reinstatement or accrued salaries/wages and other benefits should be up to
August 10, 2009.
Anent respondents Motion for Reconsideration, We find the same
unmeritorious.23

Petitoners appealed to the Court of Appeals.


In his alias writ24 of execution dated 22 October 2010, the Labor
Arbiter ordered the sheriff to collect from petitioners P1,440,667.93,
representing Solidums accrued salaries, allowances, benefits, incentives and
bonuses from 21 January to 20 April 2009.
The Court of Appeals Ruling
In its 25 January 2011 Decision,25 the Court of Appeals granted
petitioners petition for certiorari, prohibition and mandamus with prayer for
the issuance of a writ of preliminary injunction and/or temporary restraining
order and set aside the NLRCs 31 May 2010 Decision and 30 July 2010
Resolution. The Court of Appeals held that:
The order of the Labor Arbiter denying Private Respondents exparte motion for issuance of Alias Writ of Execution is not a final order as
there was something else to be done, namely, the resolution of his
Complaint for Illegal Dismissal against Petitioners on the merits. The
subject Order of the Labor Arbiter did not put an end to the issues of
illegal suspension and illegal dismissal, and, thus, partakes the nature of an
interlocutory order. It is jurisprudential that an interlocutory order is not
appealable until after the rendition of the judgment on the merits for a
contrary rule would delay the administration of justice and unduly burden
the courts. Being interlocutory in nature, the subject Order could not have
been validly appealed.
Moreover, as correctly argued by the Petitioners, an appeal from an
interlocutory order is a prohibited pleading under Section 4 of the 2005
Revised Rules of Procedure of the NLRC. Consequently, the Labor
Arbiters order being interlocutory and unappealable, Public Respondent
NLRC has no jurisdiction to rule on the appeal except to dismiss the same.
The assailed Decision and the Resolution, rendered in excess of the Public
Respondent NLRCs jurisdiction, are therefore null.

23
24
25

Id. at 754.
Id. at 928-933. Penned by Labor Arbiter Aliman D. Mangandog.
Id. at 875-886. Penned by Associate Justice Noel G. Tijam, with Associate Justices Marlene
Gonzales-Sison and Danton Q. Bueser concurring.

Decision

G.R. No. 204646

Besides and more importantly, records show that the Decision,


dated May 29, 2009, of the NLRC in the Illegal Dismissal Case which
effectively denied Private Respondents Complaint for Illegal Dismissal
against Petitioners already attained finality on June 1, 2010. Indeed, an
Entry of Judgment was accordingly made. Clearly, Private Respondent
can neither pray nor cause this Court to grant his Ex-parte Motion for
Issuance of Writ of Execution to reinstate him since his dismissal by
Petitioners was finally ruled to be legal; hence, the denial of his complaint
for lack of merit. Ruling on Private Respondents Ex-parte motion shall
also have an effect of reviewing a final judgment which the law and the
court abhor. It bears to stress that when a final judgment becomes
executory, it thereby becomes immutable and unalterable.26

Solidum filed a motion27 for reconsideration.


In his alias writ28 of execution dated 18 May 2011, the Labor Arbiter
ordered the sheriff to collect from petitioners P1,440,667.93, representing
Solidums accrued salaries, allowances, benefits, incentives and bonuses
from 21 April to 20 July 2009. Petitioners filed with the Court of Appeals a
motion29 to order Solidum to return P2,881,335.86, representing the total
amount under the 22 October 2010 and 18 May 2011 alias writs of
execution.
In its 3 July 2012 Amended Decision, the Court of Appeals partly
granted Solidums motion for reconsideration and denied petitioners motion
to order the return of P2,881,335.86. The Court of Appeals held that:
[T]here was a wrong appreciation of fact relative to the date of finality of
judgment. The true date when the May 29, 2009 NLRC decision became
final and executory was on August 10, 2009 and not on June 1, 2010.
(Rollo, page 1895) Conformably with the foregoing, the involved portion
of our ruling which is the subject of the discussion at hand is hereby
modified by changing the stated date therein from June 1, 2010 to August
10, 2009.
xxxx
On the last issue for consideration refund of monetary award,
We find necessary to quote the following pronouncement of the High
Court:
xxxx
The Court reaffirms the prevailing principle that
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
26
27
28
29

Id. at 884-885.
Id. at 887-905.
Id. at 934-941. Penned by Labor Arbiter Aliman D. Mangandog.
Id. at 922-927.

Decision

G.R. No. 204646

employee during the period of appeal until reversal by the


higher court. (Juanito A. Garcia vs. Philippine Airlines,
Inc., G.R. No. 164856, January 20, 2009)
In view thereof, no refund will thus be permitted by this Court.30

Petitioners filed a motion31 for partial reconsideration with motion to


order the return of P2,881,335.86. In its 23 November 2012 Resolution, the
Court of Appeals held that:
The move to reconsider the January 26, 2009 decision of the NLRC was
denied on May 29, 2009. Thereafter, an Entry of Judgment was issued
which provides in particular the following: this is to certify that on May
29, 2009, a DECISION was rendered x x x and that the same has, pursuant
to Rules of the Commission, became [sic] final and executory on Aug. 10,
2009. (Rollo, p. 1895) It appears therefore that the situation
contemplated in the last paragraph of the Section 14 had been the case
here. In view of this, We find no cogent reason to reverse our earlier
ruling that August 10, 2009 is the true date of finality of subject decision.
xxxx
In the light, however, of our earlier discussion on the true date of
finality of judgment, we cannot order the return of the amounts released
by way of the 8th and 9th Alias Writ of Execution. The wages,
allowances, incentives/benefits and bonuses received through the said
writs covered the period from January 21, 2009 to July 20, 2009, thus, the
latter is not required to reimburse the same due to the fact that one is
entitled to such amounts until the day that the reinstatement order was
reversed with finality (which in this case falls on August 10, 2009). (See
Juanito A. Garcia vs. Philippine Airlines, Inc. G.R. No. 164856, January
20, 2009)32

Hence, the present petition.

The Issues
Petitioners raised as issues that the Court of Appeals erred in ruling
that (1) the NLRCs 29 May 2009 Decision became final and executory on
10 August 2009, and (2) Solidum was entitled to P2,881,335.86,
representing the total amount under the 22 October 2010 and 18 May 2011
alias writs of execution.

30
31
32

Id. at 47-53.
Id. at 946-965.
Id. at 58-59.

Decision

G.R. No. 204646

The Courts Ruling


The petition is unmeritorious.
The NLRCs 29 May 2009 Decision became final and executory on 10
August 2009 as shown on the entry of judgment.33 The entry of judgment
states:
This is to certify that on May 29, 2009, a DECISION was rendered
in the above-entitled case, the dispositive portion of which reads as
follows:
WHERFORE, premises considered, complainants
motion for reconsideration, as well as respondents motion
for injunction are hereby both DENIED for lack of merit.
Accordingly, Our January 26, 2009 Resolution is hereby
REITERATED.
SO ORDERED.
and that the same has pursuant to the Rules of the Commission,
become final and executory on Aug. 10, 2009 and is hereby recorded in
the Book of Entries of Judgments.
Quezon City, Philippines, June 01, 2010.34 (Boldfacing supplied)

Moreover, the certification35 issued by the NLRC states that the


NLRCs 29 May 2009 Decision became final and executory on 10 August
2009:
This is to certify that the Decision in NLRC Case No. 00-1109564-05/NLRC CA No. 049875-06, entitled: Jose Leni Z. Solidum vs.
Smart Communications, Inc., Napoleon L. Nazareno, and/or Ricky P. Isla,
was promulgated on 29 May 2009; the same was mailed on 11 June
2009 and in the absence of return cards, the decision had become final
and executory on 10 August 2009, (after sixty (60) calendar days from
the date of mailing), and had been recorded in the Book of Entries of
Judgment, pursuant to Rule VII Section 14 of the 2005 Revised Rules of
Procedure of the NLRC which provides: The Executive Clerk or Deputy
Executive Clerk shall consider the decision, resolution or order as final
and executory after sixty (60) calendar days from date of mailing in the
absence of return cards, certifications from the post office, or other proof
of service to parties.36 (Boldfacing supplied)

Since the NLRCs 29 May 2009 Decision became final and executory
on 10 August 2009, Solidum is entitled to P2,881,335.86, representing his
accrued salaries, allowances, benefits, incentives and bonuses for the period
33
34
35
36

Id. at 1940. Penned by Acting Executive Clerk of Court IV Flocerfida T. Trinidad.


Id.
Id. at 1941. Penned by Labor Arbiter and Acting Executive Clerk of Court IV Elenita F. Cruz.
Id.

Decision

10

G.R. No. 204646

21 January to 20 July 2009.


In Bago v. NLRC,37 the Court held that employees are entitled to their
accrued salaries, allowances, benefits, incentives and bonuses until the
NLRCs reversal of the labor arbiters order of reinstatement becomes final
and executory, as shown on the entry of judgment. The Court held that:
Finally, on Arlyns claim that respondents unilaterally withheld
her payroll reinstatement after the NLRC reversed on September 27,
2004 the Labor Arbiters decision, Article 223, paragraph 6 of the Labor
Code provides that the decision of the NLRC on appeals from decisions of
the Labor Arbiter shall become final and executory after ten (10) calendar
days from receipt thereof by the parties. The 2002 New Rules of
Procedure of the NLRC provided:
RULE VII
xxxx
SECTION 14. FINALITY OF DECISION OF THE
COMMISSION AND ENTRY OF JUDGMENT. (a)
Finality of the Decisions, Resolutions or Orders of the
Commission. Except as provided in Rule XI, Section 9, the
decisions, resolutions or orders of the Commission/Division
shall become executory after ten (10) calendar days from
receipt of the same.
(b) Entry of Judgment. Upon the expiration of
the ten (10) calendar day period provided in paragraph (a)
of this section, the decision/resolution/order shall, as far as
practicable, be entered in a book of entries of judgment.
(c) Allowance for Delay of Mail in the Issuance of
Entries of Judgment. In issuing entries of judgment, the
Executive Clerk of Court or the Deputy Executive Clerk, in
the absence of a return card or certification from the post
office concerned, shall determine the finality of the decision
by making allowance for delay of mail, computed sixty (60)
calendar days from the date of mailing of the decision,
resolution or order.
That the Court of Appeals may take cognizance of and resolve a
petition for certiorari for the nullification of the decisions of the NLRC on
jurisdictional and due process considerations does not affect the statutory
finality of the NLRC Decision. The 2002 New Rules of Procedure of the
NLRC so provided:
RULE VIII
xxxx
37

549 Phil. 414 (2007).

G.R. No. 204646

11

Decision

SECTION 6. EFFECT OF FILING OF PETITION


FOR CERTIORARI ON EXECUTION. - A petition for
certiorari with the Court of Appeals or the Supreme Court
shall not stay the execution of the assailed decision unless a
temporary restraining order is issued by the Court of
Appeals or the Supreme Court.
In the case at bar, Arlyn received the September 27, 2004 NLRC
decision on October 25, 2004, and the January 31, 2005 NLRC Resolution
denying her Motion for Reconsideration on February 23, 2005. There is
no showing that the Court of Appeals issued a temporary restraining order
to enjoin the execution of the NLRC decision, as affirmed by its
Resolution of January 31, 2005.
If above-quoted paragraph (a) of Section 14 of Rule VII of the
2002 NLRC New Rules of Procedure were followed, the decision of the
NLRC would have become final and executory on March 7, 2005, ten
(10) calendar days from February 25, 2005. The NLRC, however,
issued on June 16, 2005 a Notice of Entry of Judgment stating that the
NLRC Resolution of January 31, 2005 became final and executory on
April 16, 2005, apparently following the above-quoted last paragraph
of Section 14 of Rule VII. No objection having been raised by any of
the parties to the declaration in the Notice of Entry of Judgment of
the date of finality of the NLRC January 31, 2005 Resolution, Arlyn's
payroll reinstatement ended on April 16, 2005. xx x

WHEREFORE, the petition is, in light of the foregoing


discussions, DENIED and the questioned decision of the court a quo is
AFFIRMED with MODIFICATION in that respondent Standard
Insurance, Co., Inc. is ordered to pay the salaries due petitioner, Arlyn
Bago, from the time her payroll reinstatement was withheld after the
promulgation on September 27, 2004 of the decision of the National
Labor Relations Commission until April 16, 2005 when it became final
and executory. 38 (Boldfacing supplied)

WHEREFORE, the petition is DENIED. The Court of Appeals' 3


July 2012 Amended Decision and 23 November 2012 Resolution in CAG.R. SP No. 115794 are AFFIRMED.
SO ORDERED.

/}~

ANTONIO T. CARPIO
Associate Justice
38

Id. at 427-430.

G.R. No. 204646

12

Decision

WE CONCUR:

...A

.Alf~;:;

Associate Justice

REZ

JOSEC

ND OZA

:--MARVIC" M.V.F. LEONEN


Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

az=~~
Associate Justice
Chairperson

Decision

13

G.R. No. 204646

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the
Division Chairperson's Attestation, I certify that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P.A. SERENO


Chief Justice

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 177467

March 9, 2011

PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR FERDINAND CORTES, AND/OR ALFRED
MAGALLON, AND/OR ARISTOTLE ARCE, Petitioners,
vs.
GERALDINE VELASCO, Respondent.
DECISIO N
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure to annul and set aside the
Resolution1 dated October 23, 2006 as well as the Resolution2 dated April 10, 2007 both issued by the Court of
Appeals in CA-G.R. SP No. 88987 entitled, "Pfizer, Inc. and/or Rey Gerardo Bacarro, and/or Ferdinand Cortes,
and/or Alfred Magallon, and/or Aristotle Arce v. National Labor Relations Commission Second Division and
Geraldine Velasco." The October 23, 2006 Resolution modified upon respondents motion for reconsideration the
Decision3 dated November 23, 2005 of the Court of Appeals by requiring PFIZER, Inc. (PFIZER) to pay
respondents wages from the date of the Labor Arbiters Decision4 dated December 5, 2003 until it was eventually
reversed and set aside by the Court of Appeals. The April 10, 2007 Resolution, on the other hand, denied
PFIZERs motion for partial reconsideration.
The facts of this case, as stated in the Court of Appeals Decision dated November 23, 2005, are as follows:
Private respondent Geraldine L. Velasco was employed with petitioner PFIZER, INC. as Professional Health Care
Representative since 1 August 1992. Sometime in April 2003, Velasco had a medical work up for her high-risk
pregnancy and was subsequently advised bed rest which resulted in her extending her leave of absence. Velasco
filed her sick leave for the period from 26 March to 18 June 2003, her vacation leave from 19 June to 20 June
2003, and leave without pay from 23 June to 14 July 2003.
On 26 June 2003, while Velasco was still on leave, PFIZER through its Area Sales Manager, herein petitioner
Ferdinand Cortez, personally served Velasco a "Show-cause Notice" dated 25 June 2003. Aside from mentioning
about an investigation on her possible violations of company work rules regarding "unauthorized deals and/or
discounts in money or samples and unauthorized withdrawal and/or pull-out of stocks" and instructing her to
submit her explanation on the matter within 48 hours from receipt of the same, the notice also advised her that she
was being placed under "preventive suspension" for 30 days or from that day to 6 August 2003 and consequently
ordered to surrender the following "accountabilities;" 1) Company Car, 2) Samples and Promats, 3)
CRF/ER/VEHICLE/SOA/POSAP/MPOA and other related Company Forms, 4) Cash Card, 5) Caltex Card, and 6)
MPOA/TPOA Revolving Travel Fund. The following day, petitioner Cortez together with one Efren Dariano
retrieved the above-mentioned "accountabilities" from Velascos residence.
In response, Velasco sent a letter addressed to Cortez dated 28 June 2003 denying the charges. In her letter,
Velasco claimed that the transaction with Mercury Drug, Magsaysay Branch covered by her check (no. 1072) in
the amount of P23,980.00 was merely to accommodate two undisclosed patients of a certain Dr. Renato Manalo.
In support thereto, Velasco attached the Doctors letter and the affidavit of the latters secretary.

On 12 July 2003, Velasco received a "Second Show-cause Notice" informing her of additional developments in
their investigation. According to the notice, a certain Carlito Jomen executed an affidavit pointing to Velasco as the
one who transacted with a printing shop to print PFIZER discount coupons. Jomen also presented text messages
originating from Velascos company issued cellphone referring to the printing of the said coupons. Again, Velasco
was given 48 hours to submit her written explanation on the matter. On 16 July 2003, Velasco sent a letter to
PFIZER via Aboitiz courier service asking for additional time to answer the second Show-cause Notice.
That same day, Velasco filed a complaint for illegal suspension with money claims before the Regional Arbitration
Branch. The following day, 17 July 2003, PFIZER sent her a letter inviting her to a disciplinary hearing to be held
on 22 July 2003. Velasco received it under protest and informed PFIZER via the receiving copy of the said letter
that she had lodged a complaint against the latter and that the issues that may be raised in the July 22 hearing
"can be tackled during the hearing of her case" or at the preliminary conference set for 5 and 8 of August 2003.
She likewise opted to withhold answering the Second Show-cause Notice. On 25 July 2003, Velasco received a
"Third Show-cause Notice," together with copies of the affidavits of two Branch Managers of Mercury Drug, asking
her for her comment within 48 hours. Finally, on 29 July 2003, PFIZER informed Velasco of its "Management
Decision" terminating her employment.
On 5 December 2003, the Labor Arbiter rendered its decision declaring the dismissal of Velasco illegal, ordering
her reinstatement with backwages and further awarding moral and exemplary damages with attorneys fees. On
appeal, the NLRC affirmed the same but deleted the award of moral and exemplary damages.5
The dispositive portion of the Labor Arbiters Decision dated December 5, 2003 is as follows:
WHEREFORE, judgment is hereby rendered declaring that complainant was illegally dismissed. Respondents are
ordered to reinstate the complainant to her former position without loss of seniority rights and with full backwages
and to pay the complainant the following:
1. Full backwages (basic salary, company benefits, all allowances
as of December 5, 2003 in the amount of

P572,780.00);

2. 13th Month Pay, Midyear, Christmas and performance bonuses


in the amount of

P105,300.00;

3. Moral damages of

P50,000.00;

4. Exemplary damages in the amount of

P30,000.00;

5. Attorneys Fees of 10% of the award excluding damages in the


amount of

P67,808.00.

The total award is in the amount of

P758,080.00.6

PFIZER appealed to the National Labor Relations Commission (NLRC) but its appeal was denied via the NLRC
Decision7 dated October 20, 2004, which affirmed the Labor Arbiters ruling but deleted the award for damages,
the dispositive portion of which is as follows:
WHEREFORE, premises considered, the instant appeal and the motion praying for the deposit in escrow of
complainants payroll reinstatement are hereby denied and the Decision of the Labor Arbiter is affirmed with the
modification that the award of moral and exemplary damages is deleted and attorneys fees shall be based on the
award of 13th month pay pursuant to Article III of the Labor Code.8
PFIZER moved for reconsideration but its motion was denied for lack of merit in a NLRC Resolution9 dated
December 14, 2004.
Undaunted, PFIZER filed with the Court of Appeals a special civil action for the issuance of a writ of certiorari
under Rule 65 of the Rules of Court to annul and set aside the aforementioned NLRC issuances. In a Decision
dated November 23, 2005, the Court of Appeals upheld the validity of respondents dismissal from employment,
the dispositive portion of which reads as follows:
WHEREFORE, the instant petition is GRANTED. The assailed Decision of the NLRC dated 20 October 2004 as

WHEREFORE, the instant petition is GRANTED. The assailed Decision of the NLRC dated 20 October 2004 as
well as its Resolution of 14 December 2004 is hereby ANNULED and SET ASIDE. Having found the termination of
Geraldine L. Velascos employment in accordance with the two notice rule pursuant to the due process
requirement and with just cause, her complaint for illegal dismissal is hereby DISMISSED.10
Respondent filed a Motion for Reconsideration which the Court of Appeals resolved in the assailed Resolution
dated October 23, 2006 wherein it affirmed the validity of respondents dismissal from employment but modified its
earlier ruling by directing PFIZER to pay respondent her wages from the date of the Labor Arbiters Decision dated
December 5, 2003 up to the Court of Appeals Decision dated November 23, 2005, to wit:
IN VIEW WHEREOF, the dismissal of private respondent Geraldine Velasco is AFFIRMED, but petitioner PFIZER,
INC. is hereby ordered to pay her the wages to which she is entitled to from the time the reinstatement order was
issued until November 23, 2005, the date of promulgation of Our Decision.11
Respondent filed with the Court a petition for review under Rule 45 of the Rules of Civil Procedure, which assailed
the Court of Appeals Decision dated November 23, 2005 and was docketed as G.R. No. 175122. Respondents
petition, questioning the Court of Appeals dismissal of her complaint, was denied by this Courts Second Division
in a minute Resolution12 dated December 5, 2007, the pertinent portion of which states:
Considering the allegations, issues and arguments adduced in the petition for review on certiorari, the Court
resolves to DENY the petition for failure to sufficiently show any reversible error in the assailed judgment to
warrant the exercise of this Courts discretionary appellate jurisdiction, and for raising substantially factual issues.
On the other hand, PFIZER filed the instant petition assailing the aforementioned Court of Appeals Resolutions
and offering for our resolution a single legal issue, to wit:
Whether or not the Court of Appeals committed a serious but reversible error when it ordered Pfizer to pay
Velasco wages from the date of the Labor Arbiters decision ordering her reinstatement until November 23, 2005,
when the Court of Appeals rendered its decision declaring Velascos dismissal valid.13
The petition is without merit.
PFIZER argues that, contrary to the Court of Appeals pronouncement in its assailed Decision dated November 23,
2005, the ruling in Roquero v. Philippine Airlines, Inc.14 is not applicable in the case at bar, particularly with regard
to the nature and consequences of an order of reinstatement, to wit:
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. 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 the Court.15 (Emphases supplied.)
It is PFIZERs contention in its Memorandum16 that "there was no unjustified refusal on [its part] to reinstate
[respondent] Velasco during the pendency of the appeal,"17 thus, the pronouncement in Roquero cannot be made
to govern this case. During the pendency of the case with the Court of Appeals and prior to its November 23, 2005
Decision, PFIZER claimed that it had already required respondent to report for work on July 1, 2005. However,
according to PFIZER, it was respondent who refused to return to work when she wrote PFIZER, through counsel,
that she was opting to receive her separation pay and to avail of PFIZERs early retirement program.
In PFIZERs view, it should no longer be required to pay wages considering that (1) it had already previously paid
an enormous sum to respondent under the writ of execution issued by the Labor Arbiter; (2) it was allegedly ready
to reinstate respondent as of July 1, 2005 but it was respondent who unjustifiably refused to report for work; (3) it
would purportedly be tantamount to allowing respondent to choose "payroll reinstatement" when by law it was the
employer which had the right to choose between actual and payroll reinstatement; (4) respondent should be
deemed to have "resigned" and therefore not entitled to additional backwages or separation pay; and (5) this
Court should not mechanically apply Roquero but rather should follow the doctrine in Genuino v. National Labor
Relations Commission18 which was supposedly "more in accord with the dictates of fairness and justice."19

Relations Commission18 which was supposedly "more in accord with the dictates of fairness and justice."19
We do not agree.
At the outset, we note that PFIZERs previous payment to respondent of the amount of P1,963,855.00
(representing her wages from December 5, 2003, or the date of the Labor Arbiter decision, until May 5, 2005) that
was successfully garnished under the Labor Arbiters Writ of Execution dated May 26, 2005 cannot be considered
in its favor. Not only was this sum legally due to respondent under prevailing jurisprudence but also this
circumstance highlighted PFIZERs unreasonable delay in complying with the reinstatement order of the Labor
Arbiter. A perusal of the records, including PFIZERs own submissions, confirmed that it only required respondent
to report for work on July 1, 2005, as shown by its Letter20 dated June 27, 2005, which is almost two years from
the time the order of reinstatement was handed down in the Labor Arbiters Decision dated December 5, 2003.
As far back as 1997 in the seminal case of Pioneer Texturizing Corporation v. National Labor Relations
Commission,21 the Court held that an award or order of reinstatement is immediately self-executory without the
need for the issuance of a writ of execution in accordance with the third paragraph of Article 22322 of the Labor
Code. In that case, we discussed in length the rationale for that doctrine, to wit:
The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately
executory even pending appeal and the posting of a bond by the employer shall not stay the execution for
reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately
enforceable, even pending appeal. To require the application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object
and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An
application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or
postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC
could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose
envisioned by Article 223. In other words, if the requirements of Article 224 [including the issuance of a writ of
execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or
award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the
legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be
necessary to achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be
achieved and the evil sought to be prevented. x x x In introducing a new rule on the reinstatement aspect of a
labor decision under Republic Act No. 6715, Congress should not be considered to be indulging in mere semantic
exercise. x x x23 (Italics in the original; emphasis and underscoring supplied.)
In the case at bar, PFIZER did not immediately admit respondent back to work which, according to the law, should
have been done as soon as an order or award of reinstatement is handed down by the Labor Arbiter without need
for the issuance of a writ of execution. Thus, respondent was entitled to the wages paid to her under the
aforementioned writ of execution. At most, PFIZERs payment of the same can only be deemed partial
compliance/execution of the Court of Appeals Resolution dated October 23, 2006 and would not bar respondent
from being paid her wages from May 6, 2005 to November 23, 2005.
It would also seem that PFIZER waited for the resolution of its appeal to the NLRC and, only after it was ordered by
the Labor Arbiter to pay the amount of P1,963,855.00 representing respondents full backwages from December
5, 2003 up to May 5, 2005, did PFIZER decide to require respondent to report back to work via the Letter dated
June 27, 2005.
PFIZER makes much of respondents non-compliance with its return- to-work directive by downplaying the reasons
forwarded by respondent as less than sufficient to justify her purported refusal to be reinstated. In PFIZERs view,
the return-to-work order it sent to respondent was adequate to satisfy the jurisprudential requisites concerning the
reinstatement of an illegally dismissed employee.
It would be useful to reproduce here the text of PFIZERs Letter dated June 27, 2005:
Dear Ms. Velasco:
Please be informed that, pursuant to the resolutions dated 20 October 2004 and 14 December 2004
rendered by the National Labor Relations Commission and the order dated 24 May 2005 issued by
Executive Labor Arbiter Vito C. Bose, you are required to report for work on 1 July 2005, at 9:00 a.m.,

Executive Labor Arbiter Vito C. Bose, you are required to report for work on 1 July 2005, at 9:00 a.m.,
at Pfizers main office at the 23rd Floor, Ayala LifeFGU Center, 6811 Ayala Avenue, Makati City,
Metro Manila.
Please report to the undersigned for a briefing on your work assignments and other responsibilities,
including the appropriate relocation benefits.
For your information and compliance.
Very truly yours,
(Sgd.)
Ma. Eden Grace Sagisi
Labor and Employee Relations Manager24
To reiterate, under Article 223 of the Labor Code, an employee entitled to reinstatement "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."
It is established in jurisprudence that reinstatement means restoration to a state or condition from which one had
been removed or separated. The person reinstated assumes the position he had occupied prior to his dismissal.
Reinstatement presupposes that the previous position from which one had been removed still exists, or that there
is an unfilled position which is substantially equivalent or of similar nature as the one previously occupied by the
employee.25
Applying the foregoing principle to the case before us, it cannot be said that with PFIZERs June 27, 2005 Letter,
in belated fulfillment of the Labor Arbiters reinstatement order, it had shown a clear intent to reinstate respondent
to her former position under the same terms and conditions nor to a substantially equivalent position. To begin
with, the return-to-work order PFIZER sent respondent is silent with regard to the position or the exact nature of
employment that it wanted respondent to take up as of July 1, 2005. Even if we assume that the job awaiting
respondent in the new location is of the same designation and pay category as what she had before, it is plain
from the text of PFIZERs June 27, 2005 letter that such reinstatement was not "under the same terms and
conditions" as her previous employment, considering that PFIZER ordered respondent to report to its main office
in Makati City while knowing fully well that respondents previous job had her stationed in Baguio City
(respondents place of residence) and it was still necessary for respondent to be briefed regarding her work
assignments and responsibilities, including her relocation benefits.
The Court is cognizant of the prerogative of management to transfer an employee from one office to another within
the business establishment, provided that there is no demotion in rank or diminution of his salary, benefits and
other privileges and the action is not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause.26 Likewise, the management prerogative to transfer personnel
must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play.
There must be no showing that it is unnecessary, inconvenient and prejudicial to the displaced employee.27
The June 27, 2005 return-to-work directive implying that respondent was being relocated to PFIZERs Makati main
office would necessarily cause hardship to respondent, a married woman with a family to support residing in
Baguio City. However, PFIZER, as the employer, offered no reason or justification for the relocation such as the
filling up of respondents former position and the unavailability of substantially equivalent position in Baguio City. A
transfer of work assignment without any justification therefor, even if respondent would be presumably doing the
same job with the same pay, cannot be deemed faithful compliance with the reinstatement order. In other words, in
this instance, there was no real, bona fide reinstatement to speak of prior to the reversal by the Court of Appeals
of the finding of illegal dismissal.
In view of PFIZERs failure to effect respondent's actual or payroll reinstatement, it is indubitable that the Roquero
ruling is applicable to the case at bar. The circumstance that respondent opted for separation pay in lieu of
reinstatement as manifested in her counsels Letter28 dated July 18, 2005 is of no moment. We do not see
respondents letter as taking away the option from management to effect actual or payroll reinstatement but, rather
under the factual milieu of this case, where the employer failed to categorically reinstate the employee to her
former or equivalent position under the same terms, respondent was not obliged to comply with PFIZERs

former or equivalent position under the same terms, respondent was not obliged to comply with PFIZERs
ambivalent return-to-work order. To uphold PFIZERs view that it was respondent who unjustifiably refused to work
when PFIZER did not reinstate her to her former position, and worse, required her to report for work under
conditions prejudicial to her, is to open the doors to potential employer abuse. Foreseeably, an employer may
circumvent the immediately enforceable reinstatement order of the Labor Arbiter by crafting return-to-work
directives that are ambiguous or meant to be rejected by the employee and then disclaim liability for backwages
due to non-reinstatement by capitalizing on the employees purported refusal to work. In sum, the option of the
employer to effect actual or payroll reinstatement must be exercised in good faith.
Moreover, while the Court has upheld the employers right to choose between actually reinstating an employee or
merely reinstating him in the payroll, we have also in the past recognized that reinstatement might no longer be
possible under certain circumstances. In F.F. Marine Corporation v. National Labor Relations Commission,29 we
had the occasion to state:
It is well-settled that when a person is illegally dismissed, he is entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages. In the event, however, that reinstatement is no longer
feasible, or if the employee decides not be reinstated, the employer shall pay him separation pay in lieu of
reinstatement. Such a rule is likewise observed in the case of a strained employer-employee relationship or when
the work or position formerly held by the dismissed employee no longer exists. In sum, an illegally dismissed
employee is entitled to: (1) either reinstatement if viable or separation pay if reinstatement is no longer viable, and
(2) backwages.30 (Emphasis supplied.)
Similarly, we have previously held that an employees demand for separation pay may be indicative of strained
relations that may justify payment of separation pay in lieu of reinstatement.31 This is not to say, however, that
respondent is entitled to separation pay in addition to backwages. We stress here that a finding of strained
relations must nonetheless still be supported by substantial evidence.32
In the case at bar, respondents decision to claim separation pay over reinstatement had no legal effect, not only
because there was no genuine compliance by the employer to the reinstatement order but also because the
employer chose not to act on said claim. If it was PFIZERs position that respondents act amounted to a
"resignation" it should have informed respondent that it was accepting her resignation and that in view thereof she
was not entitled to separation pay. PFIZER did not respond to respondents demand at all. As it was, PFIZERs
failure to effect reinstatement and accept respondents offer to terminate her employment relationship with the
company meant that, prior to the Court of Appeals reversal in the November 23, 2005 Decision, PFIZERs liability
for backwages continued to accrue for the period not covered by the writ of execution dated May 24, 2005 until
November 23, 2005.
Lastly, PFIZER exhorts the Court to re-examine the application of Roquero with a view that a mechanical
application of the same would cause injustice since, in the present case, respondent was able to gain pecuniary
benefit notwithstanding the circumstance of reversal by the Court of Appeals of the rulings of the Labor Arbiter
and the NLRC thereby allowing respondent to profit from the dishonesty she committed against PFIZER which was
the basis for her termination. In its stead, PFIZER proposes that the Court apply the ruling in Genuino v. National
Labor Relations Commission33 which it believes to be more in accord with the dictates of fairness and justice. In
that case, we canceled the award of salaries from the date of the decision of the Labor Arbiter awarding
reinstatement in light of our subsequent ruling finding that the dismissal is for a legal and valid ground, to wit:
Anent the directive of the NLRC in its September 3, 1994 Decision ordering Citibank "to pay the salaries due to the
complainant from the date it reinstated complainant in the payroll (computed at P60,000.00 a month, as found by
the Labor Arbiter) up to and until the date of this decision," the Court hereby cancels said award in view of its
finding that the dismissal of Genuino is for a legal and valid ground.
Ordinarily, the employer is required to reinstate the employee during the pendency of the appeal pursuant to Art.
223, paragraph 3 of the Labor Code, which states:
xxxx
If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is
valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the
salaries s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the

dismissed employee was entitled to receive from his/her employer under existing laws, collective bargaining
agreement provisions, and company practices. However, if the employee was reinstated to work during the
pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered
without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is
based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the
September 3, 1994 NLRC Decision.34 (Emphases supplied.)
Thus, PFIZER implores the Court to annul the award of backwages and separation pay as well as to require
respondent to refund the amount that she was able to collect by way of garnishment from PFIZER as her accrued
salaries.
The contention cannot be given merit since this question has been settled by the Court en banc.
In the recent milestone case of Garcia v. Philippine Airlines, Inc.,35 the Court wrote finis to the stray posture in
Genuino requiring the dismissed employee placed on payroll reinstatement to refund the salaries in case a final
decision upholds the validity of the dismissal. In Garcia, we clarified the principle of reinstatement pending appeal
due to the emergence of differing rulings on the issue, to wit:
On this score, the Court's attention is drawn to seemingly divergent decisions concerning reinstatement pending
appeal or, particularly, the option of payroll reinstatement. On the one hand is the jurisprudential trend as
expounded in a line of cases including Air Philippines Corp. v. Zamora, while on the other is the recent case of
Genuino v. National Labor Relations Commission. At the core of the seeming divergence is the application of
paragraph 3 of Article 223 of the Labor Code x x x.
xxxx
The view as maintained in a number of cases is that:
x x x [E]ven 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.
(Emphasis in the original; italics and underscoring supplied)
In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive
wages pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is
ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to
comply therewith.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is
valid, then the employer has the right to require the dismissed employee on payroll reinstatement to
refund the salaries [he] received while the case was pending appeal, or it can be deducted from the accrued
benefits that the dismissed employee was entitled to receive from [his] employer under existing laws, collective
bargaining agreement provisions, and company practices. However, if the employee was reinstated to work during
the pendency of the appeal, then the employee is entitled to the compensation received for actual services
rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is
based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the
September 3, 1994 NLRC Decision. (Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was
found to be valid, and to do so would constitute unjust enrichment.
Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee was
required to refund the salaries received on payroll reinstatement. In fact, in a catena of cases, the Court did not

required to refund the salaries received on payroll reinstatement. In fact, in a catena of cases, the Court did not
order the refund of salaries garnished or received by payroll-reinstated employees despite a subsequent reversal
of the reinstatement order.
The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile the
rationale of reinstatement pending appeal.
xxxx
x x x 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.36
Furthermore, in Garcia, the Court went on to discuss the illogical and unjust effects of the "refund doctrine"
erroneously espoused in Genuino:
Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the
"refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a
dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries
received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable
decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.
1 a v v p h i1

Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll
reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll
reinstatement belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino,
it is unthinkable for one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of concerned
employees declining payroll reinstatement is on the horizon.
Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a
scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve
as a bond posted in installment by the employer. For in the event of a reversal of the Labor Arbiter's decision
ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for bond
premiums. This circumvents, if not directly contradicts, the proscription that the "posting of a bond [even a cash
bond] by the employer shall not stay the execution for reinstatement."
In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund
the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of
the prevailing doctrine on reinstatement pending appeal vis--vis the effect of a reversal on appeal.
xxxx
The Court reaffirms the prevailing principle that 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. x x x.37 (Emphasis
supplied.)
In sum, the Court reiterates the principle that reinstatement pending appeal necessitates that it must be
immediately self-executory without need for a writ of execution during the pendency of the appeal, if the law is to
serve its noble purpose, and any attempt on the part of the employer to evade or delay its execution should not be
allowed. Furthermore, we likewise restate our ruling that an order for reinstatement entitles an employee to receive
his accrued backwages from the moment the reinstatement order was issued up to the date when the same was
reversed by a higher court without fear of refunding what he had received. It cannot be denied that, under our
statutory and jurisprudential framework, respondent is entitled to payment of her wages for the period after
December 5, 2003 until the Court of Appeals Decision dated November 23, 2005, notwithstanding the finding
therein that her dismissal was legal and for just cause. Thus, the payment of such wages cannot be deemed as
unjust enrichment on respondents part.
WHEREFORE, the petition is DENIED and the assailed Resolution dated October 23, 2006 as well as the
Resolution dated April 10, 2007 both issued by the Court of Appeals in CA-G.R. SP No. 88987 are hereby
AFFIRMED.

AFFIRMED.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief Justice
Chairperson
PRESBITERO J. VELASCO, JR.
Associate Justice

MARIANO C. DEL CASTILLO


Associate Justice

JOSE PORTUGAL PEREZ


Associate Justice
CERT IF ICAT IO N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice

Footnotes
1 Rollo, pp. 42-44.
2 Id. at 65-66.
3 Id. at 307-323; penned by Associate Justice Rosmari D. Carandang with Associate Justices Andres B.

Reyes, Jr. and Monina Arevalo-Zenarosa, concurring.


4 Id. at 187-201.
5 Id. at 307-310.
6 Id. at 201.
7 Id. at 234-248; penned by NLRC Commissioner Ernesto C. Verceles with Presiding Commissioner Lourdes

C. Javier and Commissioner Tito F. Genilo, concurring.


8 Id. at 247.
9 Id. at 265-266.
10 Id. at 322-323.
11 Id. at 43.
12 Rollo (G.R. No. 175122), p. 238.
13 Id. at 403.
14 449 Phil. 437 (2003).

449 Phil. 437 (2003).


15 Id. at 446.
16 Rollo, pp. 394-415.
17 Id. at 405.
18 G.R. Nos. 142732-33 and 142753-54, December 4, 2007, 539 SCRA 342.
19 Rollo, p. 411.
20 Id. at 304.
21 345 Phil. 1057 (1997).
22 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.
23 Pioneer Texturizing Corporation v. National Labor Relations Commission, supra note 21 at 1075-1076.
24 Rollo, p. 304.
25 Asian Terminals, Inc. v. Villanueva, G.R. No. 143219, November 28, 2006, 508 SCRA 346, 352.
26 Norkis Trading Co., Inc. v. Gnilo, G.R. No. 159730, February 11, 2008, 544 SCRA 279, 289.
27 Urbanes, Jr. v. Court of Appeals, G.R. No. 138379, November 25, 2004, 444 SCRA 84, 95.
28 Rollo, pp. 305-306.
29 495 Phil. 140 (2005).
30 Id. at 159.
31 F.R.F. Enterprises, Inc. v. National Labor Relations Commission, 313 Phil. 493, 502 (1995).
32 Golden Ace Builders v. Talde, G.R. No. 187200, May 5, 2010.
33 Supra note 18.
34 Id. at 363-364.
35 G.R. No. 164856, January 20, 2009, 576 SCRA 479.
36 Id. at 488-491.
37 Id. at 491-493.

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 147806

November 12, 2002

NERISSA BUENVIAJE, SONIA FLORES, BELMA OLIVIO,


GENALYN PELOBELLO, MARY JANE MENOR, JOSIE RAQUERO,
ESTRELITA MANAHAN, REBECCA EBOL, and ERLINDA ARGA, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (SPECIAL FORMER SEVENTH DIVISION),
HONORABLE ARBITER ROMULUS PROTASIO, COTTONWAY MARKETING CORPORATION and MICHAEL G.
TONG, President and General Manager, respondents.
DECISIO N
PUNO, J.:
This petition seeks to set aside the Decision dated March 13, 2000 and Resolution dated February 13, 2001 of
the Court of Appeals in CA-G.R. SP No. 53204 entitled "Cottonway Marketing Corp. vs. National Labor Relations
Commission, et al."
The facts are as follows:
Petitioners were former employees of Cottonway Marketing Corp. (Cottonway), hired as promo girls for their
garment products. In October, 1994, after their services were terminated as the company was allegedly suffering
business losses, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for illegal
dismissal, underpayment of salary, and non-payment of premium pay for rest day, service incentive leave pay and
thirteenth month pay against Cottonway Marketing Corp. and Network Fashion Inc./JCT International Trading.1
On December 19, 1995, Labor Arbiter Romulus S. Protasio issued a Decision finding petitioners' retrenchment
valid and ordering Cottonway to pay petitioners' separation pay and their proportionate thirteenth month pay.2
On appeal, the NLRC, in its Decision dated March 26, 1996, reversed the Decision of the Labor Arbiter and
ordered the reinstatement of petitioners without loss of seniority rights and other privileges. It also ordered
Cottonway to pay petitioners their proportionate thirteenth month pay and their full backwages inclusive of
allowances and other benefits, or their monetary equivalent computed from the time their salaries were withheld
from them up to the date of their actual reinstatement.3
Cottonway filed a motion for reconsideration which was denied by the Commission in a Resolution dated July 31,
1996.4
On August 30, 1996, Cottonway filed with the NLRC a manifestation stating that they have complied with the order
of reinstatement by sending notices dated June 5, 1996 requiring the petitioners to return to work, but to no avail;
and consequently, they sent letters to petitioners dated August 1, 1996 informing them that they have lost their
employment for failure to comply with the return to work order.5 Cottonway also filed a petition for certiorari with
the Supreme Court which was dismissed on October 14, 1996.6
On November 6, 1997, petitioners filed with the NLRC a motion for execution of its Decision on the ground that it

On November 6, 1997, petitioners filed with the NLRC a motion for execution of its Decision on the ground that it
had become final and executory.7
On December 4, 1996, the Research and Investigation Unit of the NLRC issued a computation of the monetary
award in accordance with the March 26 Decision of the NLRC.8
Meanwhile, Cottonway filed a motion for reconsideration of the Supreme Court Resolution of October 14, 1996
dismissing the petition for certiorari. The motion for reconsideration was denied with finality on January 13, 1997.9
On March 4, 1997, Cottonway filed a manifestation with the NLRC reiterating their allegations in their manifestation
dated August 30, 1996, and further alleging that petitioners have already found employment elsewhere.10
On March 13, 1997, the Research and Investigation Unit of the NLRC issued an additional computation of
petitioners' monetary award in accordance with the March 26 NLRC decision.11
On the same date, Cottonway filed with the NLRC a supplemental manifestation praying that the Commission allow
the reception of evidence with respect to their claim that petitioners have found new employment. The Commission
denied Cottonways prayer in an Order dated March 24, 199712 and Resolution dated July 24, 1997.13
Nonetheless, on April 8, 1998, Labor Arbiter Romulus S. Protasio issued an Order declaring that the award of
backwages and proportionate thirteenth month pay to petitioners should be limited from the time of their illegal
dismissal up to the time they received the notice of termination sent by the company upon their refusal to report
for work despite the order of reinstatement. He cited the fact that petitioners failed to report to their posts without
justifiable reason despite respondent's order requiring them to return to work immediately. The Labor Arbiter
ordered the Research and Investigation Unit to recompute the monetary award in accordance with its ruling.14
The April 8 Order of the Labor Arbiter, however, was set aside by the Commission in its Resolution dated
September 21, 1998. The Commission ruled that its Decision dated March 26, 1996 has become final and
executory and it is the ministerial duty of the Labor Arbiter to issue the corresponding writ of execution to effect full
and unqualified implementation of said decision.15 The Commission thus ordered that the records of the case be
remanded to the Labor Arbiter for execution. Cottonway moved for reconsideration of said resolution, to no avail.
Hence, Cottonway filed a petition for certiorari with the Court of Appeals seeking the reversal of the ruling of the
NLRC and the reinstatement of the Order dated April 8, 1998 issued by Labor Arbiter Romulus S. Protasio.
The appellate court granted the petition in its Decision dated March 13, 2000.16 It ruled that petitioners'
reinstatement was no longer possible as they deliberately refused to return to work despite the notice given by
Cottonway. The Court of Appeals thus held that the amount of backwages due them should be computed only up
to the time they received their notice of termination. It said:
"Petitioner's termination of private respondents' employment by reason of their failure to report for work despite
due notice being valid, it would change the substance of the questioned March 26, 1996 decision which awards
backwages to the complainants up to their reinstatement. Again, private respondents' reinstatement is no longer
possible because of the supervening event which is their valid termination. The deliberate failure to report for work
after notice to return bars reinstatement. It would be unjust and inequitable then to require petitioner to pay private
respondents their backwages even after the latter were validly terminated when in fact petitioner dutifully complied
with the reinstatement aspect of the decision. Thus, the period within which the monetary award of private
respondents should be based is limited up to the time of private respondents' receipt of the respective notices of
termination on August 27, 1998."17
The Court of Appeals denied petitioners' motion for reconsideration in a Resolution issued on February 13,
2001.18
Petitioners now question the Decision and Resolution of the Court of Appeals. They impute the following errors:
"I. That the Honorable Court of Appeals gravely abused its discretion amounting to lack of and/or in excess
of jurisdiction in rendering the assailed decision in CA-G.R. No. SP 53204 without first performing its
ministerial duty of taking initial judicial action thereon unlawfully depriving the petitioners the opportunity to
comment and/or file responsive pleadings to the petition resulting to their being unlawfully denied a day in

comment and/or file responsive pleadings to the petition resulting to their being unlawfully denied a day in
court;
II. That the Honorable Court of Appeals gravely abused its discretion amounting to lack of and/or in excess
of jurisdiction in rendering a decision in CA-G.R. No. SP 53204 reversing and setting aside the lawful and
appropriate September 21, 1998 and March 31, 1999 resolutions of the Honorable NLRC and reinstating
the irregular and illegal April 8, 1998 Order of Honorable Arbiter Romulus Protasio; and
III. That the Honorable Court of Appeals gravely abused its discretion amounting to lack of and/or in excess
of jurisdiction in issuing the February 13, 2001 Resolution which denied petitioners' motion for
reconsideration from the decision of March 13, 2000 without stating the legal basis therefor."19
We proceed directly to the central issue in this case which is the computation of petitioners' backwageswhether
it should be limited from the time they were illegally dismissed until they received the notice of termination sent by
Cottonway on August 1, 1996 as argued by respondent company, or whether it should be computed from the time
of their illegal dismissal until their actual reinstatement as argued by the petitioners.
We agree with the petitioners.
The issue of the legality of the termination of petitioners services has been settled in the NLRC decision dated
March 26, 1996. Thus, Cottonway was ordered to reinstate petitioners to their former position without loss of
seniority rights and other privileges and to pay them full backwages. The dispositive portion of the decision read:
"WHEREFORE, the decision appealed from is hereby REVERSED. Respondent Cottonway Marketing Corporation
is hereby ordered to reinstate the complainants without loss of seniority rights and other privileges and to pay
them the following: (1) their proportionate 13th month pay for 1994; and (2) their full backwages inclusive of
allowances and other benefits, or their monetary equivalent computed from the time their salaries were withheld
from them up to the date of their actual reinstatement.
SO ORDERED."
These are the reliefs afforded to employees whose employment is unlawfully severed. Reinstatement restores the
employee to the position from which he was removed, i.e., to his status quo ante dismissal, while the grant of
backwages allows the same employee to recover from the employer that which he lost by way of wages because of
his dismissal.20
Under R.A. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and
other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from
them up to the time of their actual reinstatement. If reinstatement is no longer possible, the backwages shall be
computed from the time of their illegal termination up to the finality of the decision.21 The Court explained the
meaning of "full backwages" in the case of Bustamante vs. NLRC:22
"The Court deems it appropriate, however, to reconsider such earlier ruling on the computation of backwages as
enunciated in said Pines City Educational Center case, by now holding that conformably with the evident legislative
intent as expressed in Rep. Act No. 6715, above-quoted, backwages to be awarded to an illegally dismissed
employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere
during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating
the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages
have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee.
The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was
previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere" rule. Thus, a closer
adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that,
i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the
period of his illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed
employees is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained
interpretation. Index animi sermo est." (emphasis supplied)
The Court does not see any reason to depart from this rule in the case of herein petitioners. The decision of the
NLRC dated March 26, 1996 has become final and executory upon the dismissal by this Court of Cottonways

NLRC dated March 26, 1996 has become final and executory upon the dismissal by this Court of Cottonways
petition for certiorari assailing said decision and the denial of its motion for reconsideration. Said judgment may no
longer be disturbed or modified by any court or tribunal. It is a fundamental rule that when a judgment becomes
final and executory, it becomes immutable and unalterable, and any amendment or alteration which substantially
affects a final and executory judgment is void, including the entire proceedings held for that purpose. Once a
judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and the
issuance of a writ of execution becomes a ministerial duty of the court. A decision that has attained finality
becomes the law of the case regardless of any claim that it is erroneous. The writ of execution must therefore
conform to the judgment to be executed and adhere strictly to the very essential particulars.23
To justify the modification of the final and executory decision of the NLRC dated March 26, 1996, the Court of
Appeals cited the existence of a supervening event, that is, the valid termination of petitioners' employment due to
their refusal to return to work despite notice from respondents reinstating them to their former position.
We cannot concur with said ruling. Petitioners' alleged failure to return to work cannot be made the basis for their
termination. Such failure does not amount to abandonment which would justify the severance of their employment.
To warrant a valid dismissal on the ground of abandonment, the employer must prove the concurrence of two
elements: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention
to sever the employer-employee relationship.24
The facts of this case do not support the claim of Cottonway that petitioners have abandoned their desire to return
to their previous work at said company. It appears that three months after the NLRC had rendered its decision
ordering petitioners reinstatement to their former positions, Cottonway sent individual notices to petitioners
mandating them to immediately report to work. The standard letter, signed by the companys legal counsel, Atty.
Ambrosio B. De Luna, and sent to each of the petitioners read:
"June 5, 1996
Dear Ms. Alivid,25
By virtue of the decision of the National Labor Relation(s) Commission dated March 26, 1996 in
Belma Alivid vs. Network Fashion, Inc., JCT Intl Trading and, Cotton Mktg., Corp., NLRC CASE NO.
NCR-010210-96 and NLRC NCR-00-10-07238-94, you are hereby ordered to report for work within
five (5) days from receipt of this letter, otherwise, your failure will be deemed lack of interest to
continue and considered to have abandoned your employment with the company.
Please give this matter your utmost attention.
Very truly your(s),
(Sgd) AMBROSIO B. DE LUNA
Legal Counsel"
The petitioners, however, were not able to promptly comply with the order. Instead, their counsel, Atty. Roberto LL.
Peralta, sent a reply letter to Atty. De Luna stating that his clients were not in a position to comply with said order
since the NLRC has not yet finally disposed of the case. The reply letter stated:26
"June 20, 1996
ATTY. AMBROSIO B. DE LUNA
Unit 2-D Bouganvilla (sic) Mansions
91 P. Tuazon Street, Cubao
Quezon City
Compaero,
Your letter dated June 5, 1996 to our clients, Erlinda Arga, et al., complainants in NLRC NCR CASE
NO. 00-10-07238-94, Genalyn Pelobello, et al. vs. Network Fashion, et al., was referred to us for
reply.
Please be informed that our said clients are not in a position now to comply with your order for them

Please be informed that our said clients are not in a position now to comply with your order for them
to report for work within five (5) days from receipt thereof since the National Labor Relations
Commission, First Division, has yet to finally disposed off (sic) the case.
However, if it is now a case that your client, Mr. Michael Tong, is yielding to the Decision dated March
26, 1996 of the NLRC, we are then willing to sit down with you relative to the satisfaction of the same
to avoid said decision from being enforced by the sheriff.
Trusting your cooperation on this matter.
Thank you.
Very truly yours,
(Sgd) ROBERTO LL. PERALTA
Counsel For The Complainants"
Consequently, Cottonway sent the petitioners individual notices of termination. The standard letter of termination
which was likewise signed by counsel and individually addressed to petitioners stated:
"August 1, 1996
BELMA ALIVID
c/o Sonia Flores
#1256-A St. Nino Street
Tondo(,) Manila
Dear Ms. Alivid,27
For your failure to report for work as per letter dated June 5, 1996 within the period of five days from
receipt of the same, you are considered to have lost your employment status effective this date with
the company on the ground of failure to report for work.
Please be guided accordingly.
Very truly yours,
(Sgd) Ambrosio B. De Luna
Legal Counsel of
Network Fashion(,) Inc."
We note that Cottonway, before finally deciding to dispense with their services, did not give the petitioners the
opportunity to explain why they were not able to report to work. The records also do not bear any proof that all the
petitioners received a copy of the letters. Cottonway merely claimed that some of them have left the country and
some have found other employment. This, however, does not necessarily mean that petitioners were no longer
interested in resuming their employment at Cottonway as it has not been shown that their employment in the other
companies was permanent. It should be expected that petitioners would seek other means of income to tide them
over during the time that the legality of their termination is under litigation. Furthermore, petitioners never
abandoned their suit against Cottonway. While the case was pending appeal before the NLRC, the Court of
Appeals and this Court, petitioners continued to file pleadings to ensure that the company would comply with the
directive of the NLRC to reinstate them and to pay them full backwages in case said decision is upheld. Moreover,
in his reply to the companys first letter, petitioners counsel expressed willingness to meet with the companys
representative regarding the satisfaction of the NLRC decision.
It appears that the supposed notice sent by Cottonway to the petitioners demanding that they report back to work
immediately was only a scheme to remove the petitioners for good. Petitioners failure to instantaneously abide by
the directive gave them a convenient reason to dispense with their services. This the Court cannot allow.
Cottonway cited Article 223 of the Labor Code providing that the decision ordering the reinstatement of an illegally
dismissed employee is immediately executory even pending appeal as basis for its decision to terminate the
employment of petitioners. We are not convinced. Article 223 of the Labor Code provides:
"ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to

"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
xxxxxxxxx
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. x x x
x x x x x x x x x."
The foregoing provision is intended for the benefit of the employee and cannot be used to defeat their own
interest. The law mandates the employer to either admit the dismissed employee back to work under the same
terms and conditions prevailing prior to his dismissal or to reinstate him in the payroll to abate further loss of
income on the part of the employee during the pendency of the appeal. But we cannot stretch the language of the
law as to give the employer the right to remove an employee who fails to immediately comply with the
reinstatement order, especially when there is reasonable explanation for the failure. If Cottonway were really
sincere in its offer to immediately reinstate petitioners to their former positions, it should have given them
reasonable time to wind up their current preoccupation or at least to explain why they could not return to work at
Cottonway at once. Cottonway did not do either. Instead, it gave them only five days to report to their posts and
when the petitioners failed to do so, it lost no time in serving them their individual notices of termination. We are,
therefore, not impressed with the claim of respondent company that petitioners have been validly dismissed on
August 1, 1996 and hence their backwages should only be computed up to that time. We hold that petitioners are
entitled to receive full backwages computed from the time their compensation was actually withheld until their
actual reinstatement, or if reinstatement is no longer possible, until the finality of the decision, in accordance with
the Decision of the NLRC dated March 26, 1996 which has attained finality.28
IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of Appeals dated March 13, 2000 and
Resolution dated February 13, 2001 in CA-G.R. SP No. 53204 are REVERSED and SET ASIDE. Let the records of
this case be remanded to the Labor Arbiter for execution in accordance with the Decision of the NLRC dated
March 26, 1996.
SO ORDERED.
Panganiban, Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

Footnotes

1 Original Record, vol. 1, p. 2.


2 Id., pp. 240-247.
3 Id., pp. 319-326.
4 Id., pp. 386-390.
5 Id., p. 432.
6 Id., p. 478.
7 Id., p. 479.
8 Id., p. 490.

8 Id., p. 490.
9 Original Record, vol. 2, p. 74.
10 Id., pp. 78-80.
11 Id., p. 102.
12 Id., p. 109.
13 Id.
14 Original Record, vol. 3, p. 517.
15 Id., pp. 712-718.
16 Rollo, pp. 40-50.
17 Decision, CA-G.R. SP No. 53204, pp. 10-11; Rollo, pp. 49-50.
18 Rollo, pp. 52-53.
19 Petition, Rollo, pp. 15-16.
20 De Guzman vs. NLRC, 312 SCRA 266 (1999).
21 Prudential Bank and Trust Co. vs. Reyes, 352 SCRA 316 (2001); Times Transit Credit Cooperative, Inc.

vs. NLRC, 304 SCRA 11 (1999).


22 265 SCRA 61 (1996).
23 Buaya vs. Stronghold Insurance Co., Inc., 342 SCRA 576 (2000); Equatorial Realty Development, Inc. vs.

Mayfair Theater, Inc., 332 SCRA 139 (2000).


24 Icawat vs. NLRC, 334 SCRA 75 (2000).
25 Similar letters were sent to the other petitioners, Maryjane Menor, Estrelita Manahan, Nerissa Buenviaje,

Rebecca Ebol, Josie Raguero, Genalyn Pelobello, Erlinda Arga and Sonia Flores, differing only in the name
of the addressee and the title of the complaint before the NLRC. (See Original Records, vol. 2, pp. 90-98).
26 Original Records, vol. 2.
27 Similar letters were sent to Maryjane Menor, Estrelita Manahan, Nerissa Buenviaje, Rebecca Ebol, Josie

Raguero, Genalyn Pelobello, Erlinda Arga and Sonia Flores. (See Original Records, vol. 2, pp. 81-89)
28 Association of Independent Unions in the Philippines vs. NLRC, 305 SCRA 219 (1999); Quebec, Sr. vs.

NLRC, 301 SCRA 627 (1999).


The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Baguio City
SECOND DIVISION
G.R. No. 207983

April 7, 2014

WENPHIL CORPORATION, Petitioner,


vs.
ALMER R. ABING and ANABELLE M. TUAZON, Respondents.
DECISIO N
BRION, J.:
We resolve this petition for review on certiorari1 under Rule 45 of the Rules of Court, challenging the August 31,
2012 decision2 and the June 20, 2013 resolution3 (assailed CA rulings) of the Court of Appeals (CA) in CA-G.R.
SP No. 117366.
These assailed CA rulings annulled and set aside the March 26, 2010 Decision4 and September 15, 20105
resolution (NLRC rulings) of the National Labor Relations Commission (NLRC) in NLRC CA No. 02-8233-01 (Rl08).
The NLRC rulings, in turn, fully affirmed the November 16, 2007 Order6 of the Labor Arbiter (LA) in NLRC-NCR
Case Nos. 30-03-00993-00 and 30-03-01020-00. The LAs order found that an illegal dismissal took place. Thus,
the LA directed petitioner Wenphil Corporation (Wenphil) to pay respondents Almer Abing and Anabelle Tuazon
(respondents) their backwages for the period from February 15, 2002 to November 8, 2002, pursuant to the rule
that an order of reinstatement is immediately executory even pending appeal.7
Factual Antecedents
This case stemmed from a complaint for illegal dismissal filed by the respondents against Wenphil, docketed as
NLRC NCR Case No. 30-03-00993-00.
On December 8, 2000, LA Geobel A. Bartolabac ruled8 that the respondents had been illegally dismissed by
Wenphil. According to the LA, the allegation of serious misconduct against the respondents had no factual and
legal basis.9 Consequently, LA Bartolabac ordered Wenphil to immediately reinstate the respondents to their
respective positions or to equivalent ones, whether actuall or in the payroll. Also, the LA ordered Wenphil to pay
the respondents their backwages from February 3, 2000 until the date of their actual reinstatement.10
Because of the unfavorable LA decision, Wenphil appealed to the NLRC on April 16, 200111. In the meantime, the
respondents moved for the immediate execution of the LAs December 8, 2000 decision.12
On October 29, 2001, Wenphil and the respondents entered into a compromise agreement13 before LA
Bartolabac. They agreed to the respondents payroll reinstatement while Wenphils appeal with the NLRC was
ongoing. Wenphil also agreed to pay the accumulated salaries of the respondents for the payroll period from April
5, 2001 until October 15, 2001.14 As for the remaining payroll period starting October 16, 2001, Wenphil
committed itself to credit the respective salaries of the respondents to their ATM payroll accounts until such time
that the questioned decision of LA Bartolabac is either modified, amended or reversed by the Honorable National
Labor Relations Commission.15

On January 30, 2002, the NLRC issued a resolution16 affirming LA Bartolabacs decision with modifications. Instead
of ordering the respondents reinstatement, the NLRC directed Wenphil to pay the respondents their respective
separation pay at the rate of one (1) month salary for every year of service. Also, the NLRC found that while the
respondents had been illegally dismissed, they had not been illegally suspended. Thus, the period from February
3 to February 28, 2000 during which the respondents were on preventive suspension was excluded by the NLRC
in the computation of the respondents backwages.17
Subsequently, Wenphil moved for the reconsideration18 of the NLRCs January 30, 2002 resolution, but the NLRC
denied the motion in another resolution dated September 24, 2002.19
Wenphil thereafter went up to the CA via a petition for certiorari to question the NLRCs January 30, 2002 and
September 24, 2002 resolutions.20 On August 27, 2003, the CA rendered its decision21 reversing the NLRCs
finding that the respondents had been illegally dismissed. According to the CA, there was enough evidence to
show that the respondents had been guilty of serious misconduct; thus, their dismissal was for a valid cause.22 The
respondents moved for the reconsideration of the CAs decision.23 In a resolution24 dated February 23, 2004, the
CA denied the respondents motion.
On appeal to the Supreme Court (SC) via Rule 45 (docketed as G.R. No. 16244725 and dated December 27,
2006), the SC denied the respondents petition for review on certiorari26 and affirmed the CAs August 27, 2003
decision and February 23, 2004 resolution. The respondents did not file any motion for reconsideration to
question the SCs decision; thus, the decision became final and executory on February 15, 2007.27
The Labor Arbitration Rulings
Sometime after the SCs decision in G.R. No. 162447 became final and executory, the respondents filed with LA
Bartolabac a motion for computation and issuance of writ of execution.28 The respondents asserted in this motion
that although the CAs ruling on the absence of illegal dismissal (as affirmed by the SC) was adverse to them,
under the law and settled jurisprudence, they were still entitled to backwages from the time of their dismissal until
the NLRCs decision finding them to be illegally dismissed was reversed with finality.29
LA Bartolabac granted the respondents motion and, in an order dated November 16, 2007,30 directed Wenphil to
pay each complainant their salaries on reinstatement covering the period from February 15, 2002 (the date
Wenphil last paid the respondents respective salaries) to November 8, 2002 (since the NLRCs decision finding
the respondents illegally dismissed became final and executory on February 28, 2002).
Both parties appealed to the NLRC to question LA Bartolabacs November 16, 2007 order.31 Wenphil argued that
the respondents were no longer entitled to payment of backwages in view of the compromise agreement they
executed on October 29, 2001. According to Wenphil, the compromise agreement provided that Wenphils
obligation to pay the respondents backwages should cease as soon as LA Bartolabacs decision was "modified,
amended or reversed" by the NLRC. Since the NLRC modified the LAs ruling by ordering the payment of
separation pay in lieu of reinstatement, then the respondents, under the terms of the compromise agreement,
were entitled to backwages only up to the finality of the NLRC decision.32
The respondents questioned in their appeal the determined period for the computation of their backwages; they
posited that the period for payment should end, not on November 8, 2002, but on February 14, 2007, since the
SCs decision which upheld the CAs ruling became final and executory on February 15, 2007.33
The NLRC denied the parties respective appeals in its decision dated March 26, 201034 and affirmed in toto the
LAs order. Both parties moved for the reconsideration of the NLRCs decision but the NLRC denied their
respective motions in the resolution of September 15, 2010.35
The CAs Ruling
In its decision dated August 31, 2012,36 the CA reversed the NLRC rulings and prescribed a different computation
period.
The CA ruled that the NLRC committed grave abuse of discretion when it affirmed the LAs computed period which
was from February 15, 2002 to November 8, 2002. In arriving at this conclusion, the CA cited the case of Pfizer v.
Velasco37 where this Court ruled that even if the order of reinstatement of the Labor Arbiter is reversed on appeal,

Velasco37 where this Court ruled that 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 dismissed employees wages during the period
of appeal until reversal by the higher court.38 The CA construed this "higher court" to be the CA, not the SC.
The CA reasoned out that it was a "higher court" than the NLRC when it reversed the NLRCs rulings; thus, the
period for computation should end when it promulgated its decision reversing that of the NLRC, and not on the
date when the SC affirmed its decision.
The CA likewise held that the compromise agreement did not contain any waiver of rights for any award the
respondents might have received when the NLRC changed or modified the LAs award.39
The Petition
In its petition for review with this Court, Wenphil maintained that the respondents were no longer entitled to
payment of backwages in view of the modification of the LAs ruling by the NLRC pursuant with their October 29,
2001 compromise agreement.
Wenphil argued that the CA utterly disregarded the terms of the parties compromise agreement whose terms were
very clear; the agreement reads:
3. That for the payroll period from October 16-31 and thereafter, their [respondents] salaries (net of withholding
tax, SSS, Philhealth and Pag-ibig) shall be credited every 10th and 25th of the succeeding months through their
respective ATM employees account until such time that the questioned decision of the Honorable Labor Arbiter
Geobel Bartolabac is modified, amended or reversed by the Honorable Labor Relations Commission.40 [emphasis
ours]
It was Wenphils assertion that since the NLRCs decision partly changed the decision of LA Bartolabac by
ordering payment of separation pay in lieu of reinstatement, the NLRC decision was a "modification" that should
operate to remove Wenphils obligation to pay the respondents backwages for the period of the CAs reversal of
the NLRCs illegal dismissal ruling.41 According to Wenphil, the words of the compromise agreement left no room
for interpretation as to the parties intentions;42 as a valid agreement between the parties, it must be given effect
and respected by the court.
Wenphil also contended that the CAs cited Pfizer case cannot apply to the present case since there was no
compromise agreement in Pfizer where the dismissed employee waived her entitlement to backwages.43
Finally, Wenphil claimed that the reliefs of reinstatement and backwages are only available to illegally dismissed
employees. A ruling that the respondents were still entitled to reinstatement pay notwithstanding the validity of
their dismissal, would amount to the courts tolerance of an unjust and equitable situation.44
The Courts Ruling
We resolve to DENY the petition. An order of reinstatement is immediately executory even pending appeal. The
employer has the obligation to reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court.
Under Article 223 of the Labor Code, "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."
The Court discussed reason behind this legal policy in Aris v. NLRC,45 where it explained:
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. These provisions are the
quintessence of the aspirations of the workingman for recognition of his role in the social and economic life of the
nation, for the protection of his rights, and the promotion of his welfare These duties and responsibilities of the
State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully

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. [emphasis ours]
Since the decision is immediately executory, it is the duty of the employer to comply with the order of
reinstatement, which can be done either actually or through payroll reinstatement. As provided under Article 223
of the Labor Code, this immediately executory nature of an order of reinstatement is not affected by the existence
of an ongoing appeal. The employer has the duty to reinstate the employee in the interim period until a reversal is
decreed by a higher court or tribunal.
In the case of payroll reinstatement, even if the employers appeal turns the tide in its favor, the reinstated
employee has no duty to return or reimburse the salary he received during the period that the lower court or
tribunals governing decision was for the employees illegal dismissal.
Otherwise, the situation would run counter to the immediately executory nature of an order of reinstatement. The
case of Garcia v. Philippine Airlines46 is enlightening on this point:
Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the
"refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a
dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries
received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable
decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll
reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll
reinstatement belongs to the employer, even if the employee is able and raring to return to work.
1 w p h i1

We see the situation discussed above to be present in the case before us as Wenphil observed the mandate of
Article 223 to immediately comply with the order of reinstatement by the LA. On October 29, 2001, while Wenphils
appeal with the NLRC was pending, it entered into a compromise agreement with the respondents. In this
agreement, Wenphil committed to reinstate the respondents in its payroll. However, the commitment came with a
condition: Wenphil stipulated that its obligation to pay the wages due to the respondents would cease if the
decision of the LA would be "modified, amended or reversed" by the NLRC.47
Thus, when the NLRC rendered its decision on the appeal affirming the LAs finding that the respondents were
illegally dismissed, but modifying the award of reinstatement to payment of separation pay, Wenphil stopped
paying the respondents wages.
The reinstatement salaries due to the respondents were, by their nature, payment of unworked backwages. These
were salaries due to the respondents because they had been prevented from working despite the LA and the
NLRC findings that they had been illegally dismissed.
We point out that reinstatement and backwages are two separate reliefs available to an illegally dismissed
employee. The normal consequences of a finding that an employee has been illegally dismissed are: first, that the
employee becomes entitled to reinstatement to his former position without loss of seniority rights; and second, the
payment of backwages covers the period running from his illegal dismissal up to his actual reinstatement.48 These
two reliefs are not inconsistent with one another and the labor arbiter can award both simultaneously.
Moreover, the relief of separation pay may be granted in lieu of reinstatement but it cannot be a substitute for the
payment of backwages. In instances where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay should be granted. In effect, an illegally dismissed
employee should be entitled to either reinstatement if viable, or separation pay if reinstatement is no longer be
viable, plus backwages in either instance.49 The rationale for such policy of distinction was vividly explained in
Santos v. NLRC under these terms:50
Though the grant of reinstatement commonly carries with it an award of backwages, the inappropriateness or nonavailability of one does not carry with it the inappropriateness or non-availability of the other. Separation pay was
awarded in favor of petitioner Lydia Santos because the NLRC found that her reinstatement was no longer
feasible or appropriate. As the term suggests, separation pay is the amount that an employee receives at the time
of his severance from the service and, as correctly noted by the Solicitor General in his Comment, is designed to
provide the employee with "the wherewithal during the period that he is looking for another employment." In the

provide the employee with "the wherewithal during the period that he is looking for another employment." In the
instant case, the grant of separation pay was a substitute for immediate and continued re-employment with the
private respondent Bank. The grant of separation pay did not redress the injury that is intended to be relieved by
the second remedy of backwages, that is, the loss of earnings that would have accrued to the dismissed employee
during the period between dismissal and reinstatement. Put a little differently, payment of backwages is a form of
relief that restores the income that was lost by reason of unlawful dismissal; separation pay, in contrast, is oriented
towards the immediate future, the transitional period the dismissed employee must undergo before locating a
replacement job. It was grievous error amounting to grave abuse of discretion on the part of the NLRC to have
considered an award of separation pay as equivalent to the aggregate relief constituted by reinstatement plus
payment of backwages under Article 280 of the Labor Code. The grant of separation pay was a proper substitute
only for reinstatement; it could not be an adequate substitute both for reinstatement and for backwages. In effect,
the NLRC in its assailed decision failed to give to petitioner the full relief to which she was entitled under the
statute. [emphasis ours]
Apparently, when the NLRC changed the LAs decision (specifically, the order to award separation pay in lieu of
reinstatement), Wenphil read this to mean to be the "modification" envisioned in the compromise agreement,
Wenphil likewise effectively concluded that separation pay and backwages are the same or are interchangeable
reliefs. This conclusion can be deduced from Wenphils insistence not to pay the respondents remaining
backwages under its erroneous reasoning that this was the effect of the NLRCs order to Wenphil to pay
separation pay in lieu of reinstatement.
We emphasize that the basis for the payment of backwages is different from that of the award of separation pay.
Separation pay is granted where reinstatement is no longer advisable because of strained relations between the
employee and the employer. Backwages represent compensation that should have been earned but were not
collected because of the unjust dismissal. The basis for computing separation pay is usually the length of the
employees past service, while that for backwages is the actual period when the employee was unlawfully
prevented from working.51
Had Wenphil really wanted to put a stop to the running of the period for the payment of the respondents
backwages, then it should have immediately complied with the NLRCs order to award the employees their
separation pay in lieu of reinstatement. This action would have immediately severed the employer-employee
relationship. However, the records are bereft of any evidence that Wenphil actually paid the respondents
separation pay. Thus, the employer-employee relationship between Wenphil and the respondents never ceased
and the employment status remained pending and uncertain until the CA actually rendered its decision that the
respondents had not been illegally dismissed. In the context of the parties agreement, it was only at this point that
the payment of backwages should have stopped.
A compromise agreement should not be contrary to law, morals, good customs and public policy.
While it is true that a compromise agreement is binding between the parties and becomes the law between them,52
it is also a rule that to be valid, a compromise agreement must not be contrary to law, morals, good customs and
public policy.53
In the present case, the parties compromise agreement simply provided that Wenphils obligation to pay the
respondents backwages shall end the moment the NLRC modifies, amends or reverses the illegal dismissal
decision of LA Bartolabac. On its face, there is nothing invalid with such stipulation. Indeed, had the NLRC
reversed the LA, the obligation to pay backwages would have stopped. The NLRC, however, did not decree a
reversal of the finding of illegal dismissal. In fact, it affirmed the illegal dismissal conclusion, confining itself merely
to a modification of the consequences of the illegal dismissal from reinstatement to the payment of separation
pay.
This "modification" of course we cannot accept; the option under the legal policy is solely limited to a ruling that the
respondents had not been illegally dismissed. Otherwise, we would be violating the Labor Codes policy entitling
illegally dismissed employees to their right to backwages even during the period of appeal. As we held in the case
of Garcia v. Philippine Airlines:54
The Court reaffirms the prevailing principle that 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. It settles the view that the Labor Arbiter's order of

reinstatement is immediately executory and the employer has to either re-admit them to work under the same
terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to
exercise the options in the alternative, employer must pay the employees salaries. [emphasis ours]
This ruling embodies a principle and policy of the law that cannot be watered down by any lesser agreement
except perhaps when backwages are already earned entitlements that the employee chooses to surrender for a
valuable consideration (and even then, the consideration must at least be equitable). This legal policy
emphasizes, too, the rule that separation pay cannot be a substitute for backwages but only for reinstatement.
The award of separation pay is not inconsistent with the payment of backwages. Thus, until a higher courts or
tribunals reversal of the finding that an employee had been illegally dismissed, the employee would be entitled to
receive his reinstatement salary or backwages during the period of appeal until such reversal. This is in line with
the Labor Codes policy that an order of reinstatement, which can either be actual or through the payroll, is
immediately executory and is not affected by the period of appeal.
Period for Computation of Backwages
The records show that the inconsistency between the labor arbitration rulings and the CAs ruling was on the
period for the computation of such backwages and not on whether the respondents were still entitled to such
backwages during the period of appeal until the reversal of the finding of illegal dismissal.
According to the LA, whose ruling the NLRC affirmed, the period for computation should be from February 15,
2002 until November 8, 2002 since the NLRCs decision which affirmed the LAs finding of illegal dismissal became
final and executory on November 8, 2002. The LA started the counting of the period on February 15, 2002 since
that was the day when Wenphil last paid the respondents backwages.
On the other hand, the CA, in setting aside the NLRCs rulings, relied on the case of Pfizer v. Velasco where we
ruled that the backwages of the dismissed employee should be granted during the period of appeal until reversal
by a higher court. Since the first CA decision which found that the respondents had not been illegally dismissed
was promulgated on August 27, 2003, then the reversal by the higher court was effectively made on August 27,
2003.
As against this view, the respondents argued that the period for payment of their backwages should end on
February 14, 2007 since the SC decision in G.R. No. 162447 which affirmed the CAs findings that the
respondents had not been legally dismissed became final and executory on February 15, 2007.
Among these views, the commanding one is the rule in Pfizer, which merely echoes the rulings we made in the
cases of Roquero v. Philippine Airlines55 and Garcia v. Philippine Airlines56 that the period for computing the
backwages due to the respondents during the period of appeal should end on the date that a higher court
reversed the labor arbitration ruling of illegal dismissal. In this case, the higher court which first reversed the
NLRCs ruling was not the SC but rather the CA. In this light, the CA was correct when it found that that the period
of computation should end on August 27, 2003. The date when the SCs decision became final and executory
need not matter as the rule in Roquero, Garcia and Pfizer merely referred to the date of reversal, not the date of
the ultimate finality of such reversal.
As a last minor detail, we do not agree with the CA that the date of computation should start on February 15,
2002. Rather, it should be on February 16, 2002. The respondents themselves admitted in their motion for
computation and issuance of writ of execution that the last date when they were paid their backwages was on
February 15, 2002. To start the computation on the same date would result to a duplication of wages for this day;
thus, computation should start on the following date - February 16, 2002.
WHEREFORE, in light of these considerations, we hereby DENY the petition. The Court of Appeals' decision dated
August 31, 2012 and resolution dated June 20, 2013, which annulled and set aside the March 26, 2010 decision
and September 15, 2010 resolution of the NLRC, are hereby AFFIRMED with MODIFICATION. The period for the
computation of backwages of respondents Almer R. Abing and Anabelle M. Tuazon should be from February 16,
2002 until August 27, 2003, when the Court of Appeals promulgated its decision reversing the NLRC' s finding of
illegal dismissal. No costs.
SO ORDERED.
ARTURO D. BRION

ARTURO D. BRION
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MARIANO C. DEL CASTILLO
Associate Justice

JOSE PORTUGAL PEREZ


Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice
AT T EST AT IO N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson
CERT IF ICAT IO N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
1

Rollo, p. 7-22.

Penned by Associate Justice Marina L. Buzon, and concurred in by Associate Justices Mario L. Guaria
and Santiago Javier Ranada; id. at 27-41.
3
4

Id. at 43-45.
Id. at 171-177.

Id. at 188-190.

Id. at 148-153.

LABOR CODE, article 223.

Rollo, pp. 46-67.

Id. at 62.

10

Id. at 67.

11

Id. at 9.

12

Id.

13

Id. at 98-100.

13

Id. at 98-100.

14

Id. at 99.

15

Id.

16

Id. at 101-108.

17

Id. at 107.

18

Id. at 10.

19

Id. at 109-110.

20

Id. at note 19.

21

Id. at 111-127.

22

Id. at 118.

23

Id. at note 19.

24

Id. at 125-127.

25

Anabelle Muaje-Tuazon and Almer R. Abing v. Wenphil Corporation, Elizabeth P. Orbita, and the Court of
Appeals, G.R. No. 162447, December 27, 2006, 511 SCRA 521.
26

Id. at note 19.

27

Id. at 138.

28

Id. at 139-141; on August 16, 2007.

29

Id. at 140.

30

Id. at 148-153.

31

Id. at 154-170.

32

Id. at 160.
Id. at p. 168-169.

33
34

Id. at note 4.

35

Id. at note 5.

36

Id. at note 2.

37

G.R. No. 177467, March 9, 2011, 645 SCRA 135.

38

Id. at 152.

39

Rollo, pp. 39-40.

40

Id. at 99.

41

Id. at 14-15.

42

Id. at 16.

43

Id. at 17.

44

Id. at 19.

45

G.R. No. 90501, August 5, 1991, 200 SCRA 246.

46

G.R. No. 164856, January 20, 2009, 576 SCRA 479.

47

Id. at note 15.

48

Santos v. NLRC, G.R. No. 76721, September 21, 1987, 154 SCRA 171.

49

Macasero v. Southern Industrial Gases Philippines, 597 Phil. 494 (2009).

50

Supra note 48, at 172.

51

Golden Ace Builders v. Talde, G.R. No. 187200, May 5, 2010, 620 SCRA 288.

52

Ago v. Court of Appeals, 116 Phil. 841 (1962).

53

Magbanua v. Uy, 497 Phil. 518 (2005).

54

Supra note 46.

55

G.R. No. 152329, 449 Phil. 437 (2003).

56

Supra note 46.

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 126322

January 16, 2002

YUPANGCO COTTON MILLS, INC., petitioner,


vs.
COURT OF APPEALS, HON. URBANO C. VICTORIO, SR., Presiding Judge, RTC Branch 50, Manila,
RODRIGO SY MENDOZA, SAMAHANG MANGGAGAWA NG ARTEX (SAMAR-ANGLO) represented by its
Local President RUSTICO CORTEZ, and WESTERN GUARANTY CORPORATION, respondents.
PARDO, J.:
The Case
The case is a petition for review on certiorari of the decision of the Court of Appeals1 dismissing the petition ruling
that petitioner was guilty of forum shopping and that the proper remedy was appeal in due course, not certiorari or
mandamus.
In its decision, the Court of Appeals sustained the trial court's ruling that the remedies granted under Section 17,
Rule 39 of the Rules of Court are not available to the petitioner because the Manual of Instructions for Sheriffs of
the NLRC does not include the remedy of an independent action by the owner to establish his right to his property.
The Facts
The facts, as found by the Court of Appeals, are as follows:
"From the records before us and by petitioner's own allegations and admission, it has taken the following
actions in connection with its claim that a sheriff of the National Labor Relations Commission "erroneously
and unlawfully levied" upon certain properties which it claims as its own.
"1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995.
"2. It filed an Affidavit of Adverse Claim with the National Labor Relations Commission (NLRC) on July 4,
1995, which was dismissed on August 30, 1995, by the labor Arbiter.
"3. It filed a petition for certiorari and prohibition with the Regional Trial Court of Manila, Branch 49,
docketed as Civil Case No. 95-75628 on October 6, 1995. The Regional Trial Court dismissed the case on
October 11, 1995 for lack of merit.
"4. It appealed to the NLRC the order of the Labor Arbiter dated August 13, 1995 which dismissed the
appeal for lack of merit on December 8, 1995.
"5. It filed an original petition for mandatory injunction with the NLRC on November 16, 1995. This was
docketed as Case No. NLRC-NCR-IC. 0000602-95. This case is still pending with that Commission.
"6. It filed a complaint in the Regional Trial Court in Manila which was docketed as Civil Case No. 95-76395.
The dismissal of this case by public respondent triggered the filing of the instant petition.
"In all of the foregoing actions, petitioner raised a common issue, which is that it is the owner of the

"In all of the foregoing actions, petitioner raised a common issue, which is that it is the owner of the
properties located in the compound and buildings of Artex Development Corporation, which were
erroneously levied upon by the sheriff of the NLRC as a consequence of the decision rendered by the said
Commission in a labor case docketed as NLRC-NCR Case No. 00-05-02960-90."2
On March 29, 1996, the Court of Appeals promulgated a decision3 dismissing the petition on the ground of forum
shopping and that petitioner's remedy was to seek relief from this Court.
On April 18, 1996, petitioner filed with the Court of Appeals a motion for reconsideration of the decision.4
Petitioner argued that the filing of a complaint for accion reinvindicatoria with the Regional Trial Court was proper
because it is a remedy specifically granted to an owner (whose properties were subjected to a writ of execution to
enforce a decision rendered in a labor dispute in which it was not a party) by Section 17 (now 16), Rule 39,
Revised Rules of Court and by the doctrines laid down in Sy v. Discaya,5 Santos v. Bayhon6 and Manliguez v.
Court of Appeals.7
In addition, petitioner argued that the reliefs sought and the issues involved in the complaint for recovery of
property and damages filed with the Regional Trial Court of Manila, presided over by respondent judge, were
entirely distinct and separate from the reliefs sought and the issues involved in the proceedings before the Labor
Arbiter and the NLRC. Besides, petitioner pointed out that neither the NLRC nor the Labor Arbiter is empowered to
adjudicate matters involving ownership of properties.
On August 27, 1996, the Court of Appeals denied petitioner's motion for reconsideration.8
Hence, this appeal.9
The Issues
The issues raised are (1) whether the Court of Appeals erred in ruling that petitioner was guilty of forum shopping,
and (2) whether the Court of Appeals erred in dismissing the petitioner's accion reinvindicatoria on the ground of
lack of jurisdiction of the trial court.
The Court's Ruling
On the first issue raised, we rule that there was no forum shopping:
In Golangco v. Court of Appeals,10 we held:
"What is truly important to consider in determining whether forum shopping exists or not is the vexation
caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to
rule on the same on related caused and/or grant the same or substantially the same reliefs, in the process
creating possibility of conflicting decisions being rendered by the different for a upon the same issues.
"xxx

xxx

xxx

"There is no forum-shopping where two different orders were questioned, two distinct causes of action and
issues were raised, and two objectives were sought." (Underscoring ours)
In the case at bar, there was no identity of parties, rights and causes of action and reliefs sought.
The case before the NLRC where Labor Arbiter Reyes issued a labor dispute between Artex and Samar-Anglo.
Petitioner was not a party to the case. The only issue petitioner raised before the NLRC was whether or not the
writ of execution issued by the labor arbiter could be satisfied against the property of petitioner, not a party to the
labor case.
On the other hand, the accion reinvindicatoria filed by petitioner in the trial court was to recover the property
illegally levied upon and sold at auction. Hence, the causes of action in these cases were different.
The rule is that "for forum-shopping to exist both actions must involve the same transactions, the same
circumstances. The actions must also raise identical causes of action, subject matter and issues.11

In Chemphil Export & Import Corporation v. Court of Appeals,12 we ruled that:


"Forum-shopping or the act of a party against whom an adverse judgment has been rendered in one forum,
of seeking another (and possible) opinion in another forum (other than by appeal or the special civil action
of certiorari), or the institution of two (2) or more actions or proceedings grounded on the same cause on
the supposition that one or the other would make a favorable disposition."
On the second issue, a third party whose property has been levied upon by a sheriff to enforce a decision against
a judgment debtor is afforded with several alternative remedies to protect its interests. The third party may avail
himself of alternative remedies cumulatively, and one will not preclude the third party from availing himself of the
other alternative remedies in the event he failed in the remedy first availed of.
Thus, a third party may avail himself of the following alternative remedies:
a) File a third party claim with the sheriff of the Labor Arbiter, and
b) If the third party claim is denied, the third party may appeal the denial to the NLRC.13
Even if a third party claim was denied, a third party may still file a proper action with a competent court to recover
ownership of the property illegally seized by the sheriff. This finds support in Section 17 (now 16), Rule 39,
Revised Rules of Court, to wit:
"SEC. 17 (now 16). Proceedings where property claimed by third person. - If property claimed by any other
person than the judgment debtor or his agent, and such person makes an affidavit of his title thereto or right
to the possession thereof, stating the grounds of such right or title, and serve the same upon the officer
making the levy, and a copy thereof upon the judgment creditor, the officer shall not be bound to keep the
property, unless such judgment creditor or his agent, on demand of the officer, indemnify the officer against
such claim by a bond in a sum not greater than the value of the property levied on. In case of disagreement
as to such value, the same shall be determined by the court issuing the writ of execution.
1 w p h i1 . n t

"The officer is not liable for damages, for the taking or keeping of the property, to any third-party claimant
unless a claim is made by the latter and unless an action for damages is brought by him against the officer
within one hundred twenty (120) days from the date of the filing of the bond. But nothing herein contained
shall prevent such claimant or any third person from vindicating his claim to the property by any proper
action.
"When the party in whose favor the writ of execution runs, is the Republic of the Philippines, or any officer
duly representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is
sued for damages as a result of the levy, he shall be represented by the Solicitor General and if held liable
therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of such
funds as may be appropriated for the purpose." (Underscoring ours)
In Sy v. Discaya,14 we ruled that:
"The right of a third-party claimant to file an independent action to vindicate his claim of ownership over the
properties seized is reserved by Section 17 (now 16), Rule 39 of the Rules of Court, x x x :
"xxx

xxx

xxx

"As held in the case of Ong v. Tating, et. al., construing the aforecited rule, a third person whose property
was seized by a sheriff to answer for the obligation of a judgment debtor may invoke the supervisory power
of the court which authorized such execution. Upon due application by the third person and after summary
hearing, the court may command that the property be released from the mistaken levy and restored to the
rightful owner or possession. What said court do in these instances, however, is limited to a determination of
whether the sheriff has acted rightful or wrongly in the performance of his duties in the execution of
judgment, more specifically, if he has indeed take hold of property not belonging to the judgment
debtor. The court does not and cannot pass upon the question of title to the property, with any character of
finality. It can treat of the matter only insofar as may be necessary to decide if the sheriff has acted correctly
or not. It can require the sheriff to restore the property to the claimant's possession if warranted by the

or not. It can require the sheriff to restore the property to the claimant's possession if warranted by the
evidence. However, if the claimant's proof do not persuade the court of the validity of his title or right of
possession thereto, the claim will be denied.
"Independent of the above-stated recourse, a third-party claimant may also avail of the remedy known as
"terceria', provided in Section 17 (now 16), Rule 39, by serving on the officer making the levy an affidavit of
his title and a copy thereof upon the judgment creditor. The officer shall not be bound to keep the property,
unless such judgment creditor or his agent, on demand of the officer, indemnifies the officer against such
claim by a bond in a sum not greater than the value of the property levied on. An action for damages may
be brought against the sheriff within one hundred twenty (120) days from the filing of the bond.
"The aforesaid remedies are nevertheless without prejudice to 'any proper action' that a third-party claimant
may deem suitable to vindicate 'his claim to the property.' Such a 'proper action' is, obviously, entirely
distinct from that explicitly prescribed in Section 17 of Rule 39, which is an action for damages brought by a
third-party claimant against the officer within one hundred twenty (120) days from the date of the filing of the
bond for the taking or keeping of the property subject of the 'terceria'.
"Quite obviously, too, this 'proper action' would have for its object the recovery of ownership or possession
of the property seized by the sheriff, as well as damages resulting from the allegedly wrongful seizure and
detention thereof despite the third-party claim; and it may be brought against the sheriff and such other
parties as may be alleged to have colluded with him in the supposedly wrongful execution proceedings, such
as the judgment creditor himself. Such 'proper action', as above pointed out, is and should be an entirely
separate and distinct action from that in which execution has issued, if instituted by a stranger to the latter
suit.
"The remedies above mentioned are cumulative and may be resorted to by a third-party claimant
independent of or separately from and without need of availing of the others. If a third-party
claimant opted to file a proper action to vindicate his claim of ownership, he must institute an action, distinct
and separate from that in which the judgment is being enforced, with the court of competent jurisdiction
even before or without need of filing a claim in the court which issued the writ, the latter not being a
condition sine qua non for the former. In such proper action, the validity and sufficiency of the title of the
third-party claimant will be resolved and a writ of preliminary injunction against the sheriff may be issued."
(Emphasis and underscoring ours)
In light of the above, the filing of a third party claim with the Labor Arbiter and the NLRC did not preclude the
petitioner from filing a subsequent action for recovery of property and damages with the Regional Trial Court. And,
the institution of such complaint will not make petitioner guilty of forum shopping.15
In Santos v. Bayhon,16 wherein Labor Arbiter Ceferina Diosana rendered a decision in NLRC NCR Case No. 1313-85 in favor of Kamapi, the NLRC affirmed the decision. Thereafter, Kamapi obtained a writ of execution
against the properties of Poly-Plastic Products or Anthony Ching. However, respondent Priscilla Carrera filed a
third-party claim alleging that Anthony Ching had sold the property to her. Nevertheless, upon posting by the
judgment creditor of an indemnity bond, the NLRC Sheriff proceeded with the public auction sale. Consequently,
respondent Carrera filed with Regional Trial Court, Manila an action to recover the levied property and obtained a
temporary restraining order against Labor Arbiter Diosana and the NLRC Sheriff from issuing a certificate of sale
over the levied property. Eventually, Labor Arbiter Santos issued an order allowing the execution to proceed
against the property of Poly-Plastic Products. Also, Labor Arbiter Santos and the NLRC Sheriff filed a motion to
dismiss the civil case instituted by respondent Carrera on the ground that the Regional Trial Court did not have
jurisdiction over the labor case. The trial court issued an order enjoining the enforcement of the writ of execution
over the properties claimed by respondent Carrera pending the determination of the validity of the sale made in
her favor by the judgment debtor Poly-Plastic Products and Anthony Ching.
In dismissing the petition for certiorari filed by Labor Arbiter Santos, we ruled that:
"x x x. The power of the NLRC to execute its judgments extends only to properties unquestionably belonging
to the judgment debtor (Special Servicing Corp. v. Centro La Paz, 121 SCRA 748).
"The general rule that no court has the power to interfere by injunction with the judgments or decrees of
another court with concurrent or coordinate jurisdiction possessing equal power to grant injunctive relief,
applies only when no third-party claimant is involved (Traders Royal Bank v. Intermediate Appellate Court,

applies only when no third-party claimant is involved (Traders Royal Bank v. Intermediate Appellate Court,
133 SCRA 141 [1984]). When a third-party, or a stranger to the action, asserts a claim over the property
levied upon, the claimant may vindicate his claim by an independent action in the proper civil court which
may stop the execution of the judgment on property not belonging to the judgment debtor." (Underscoring
ours)
in Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158 [1991], we ruled that:
"The well-settled doctrine is that a 'proper levy' is indispensable to a valid sale on execution. A sale unless
preceded by a valid levy is void. Therefore, since there was no sufficient levy on the execution in question,
the private respondent did not take any title to the properties sold thereunder x x x.
"A person other than the judgment debtor who claims ownership or right over the levied properties is not
precluded, however, from taking other legal remedies." (Underscoring ours)
Jurisprudence is likewise replete with rulings that since the third-party claimant is not one of the parties to the
action, he could not, strictly speaking, appeal from the order denying his claim, but should file a separate
reinvindicatory action against the execution creditor or the purchaser of the property after the sale at public
auction, or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff.17
And in Lorenzana v. Cayetano,18 we ruled that:
"The rights of a third-party claimant should not be decided in the action where the third-party claim has
been presented, but in a separate action to be instituted by the third person. The appeal that should be
interposed if the term 'appeal' may properly be employed, is a separate reinvidincatory action against the
execution creditor or the purchaser of the property after the sale at public auction, or complaint for damages
to be charged against the bond filed by the judgment creditor in favor of the sheriff. Such reinvindicatory
action is reserved to the third-party claimant."
A separate civil action for recovery of ownership of the property would not constitute interference with the powers
or processes of the Arbiter and the NLRC which rendered the judgment to enforce and execute upon the levied
properties. The property levied upon being that of a stranger is not subject to levy. Thus, a separate action for
recovery, upon a claim and prima-facie showing of ownership by the petitioner, cannot be considered as
interference.
The Fallo
WHEREFORE, the Court REVERSES the decision of the Court of Appeals and the resolution denying
reconsideration.19 In lieu thereof, the Court renders judgment ANNULLING the sale on execution of the subject
property conducted by NLRC Sheriff Anam Timbayan in favor of respondent SAMAR-ANGLO and the subsequent
sale of the same to Rodrigo Sy Mendoza. The Court declares the petitioner to be the rightful owner of the property
involved and remands the case to the trial court to determine the liability of respondents SAMAR-ANGLO, Rodrigo
Sy Mendoza, and WESTERN GUARANTY CORPORATION to pay actual damages that petitioner claimed.
Costs against respondents, except the Court of Appeals.

1 w p h i1 . n t

SO ORDERED.
Davide, Jr., C.J., Puno, Kapunan, and Ynares-Santiago, JJ., concur.

Footnote
1 In CA-G. R. SP No. 39700, promulgated on March 29, 1996, Petition, Annex "A", Rollo, pp. 65-76. Verzola,

J., ponente, Abad Santos, Jr. and Agcaoili, JJ., concurring.


2 Supra, Note 1, at pp. 67-68.
3 Petition, Annex "A", Rollo, pp. 65-71. Verzola, J., ponente, Abad Santos, Jr. and Agcaoili, JJ., concurring.

4 CA Rollo, pp. 410-438.


5 181 SCRA 378, 382 [1990].
6 199 SCRA 525 [1991].
7 232 SCRA 427, 431-432 [1994].
8 Petition, Annex "B", Rollo, pp. 73-76.
9 Petition, filed on September 27, 1996, Rollo, pp. 4-63. On October 18, 1999, we gave due course to the

petition (Rollo, pp. 724-727).


10 347 Phil. 771 [1997].
11 International Container Terminal Services, Inc. v. Court of Appeals, 319 Phil. 510 [1995].
12 231 SCRA 257 [1994].
13 Section 2, Rule VI of the Manual of Instructions for Sheriffs of the NLRC.
14 Supra, Note 7.
15 Manliquez v. Court of Appeals, 232 SCRA 427 [1994].
16 Supra, Note 8.
17 Bayer Philippines, Inc. v. Agana, 63 SCRA 355 [1975].
18 78 SCRA 425 [1977].
19 In CA-G. R. SP No. 39700.

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 182915

December 12, 2011

MARIALY O. SY, VIVENCIA PENULLAR, AURORA AGUINALDO, GINA ANIANO,o GEMMA DELA PEA,
EFREMIAoMATIAS, ROSARIO BALUNSAY, ROSALINDA PARUNGAO, ARACELIoRUAZA, REGINA RELOX,
TEODORA VENTURA, AMELIA PESCADERO, LYDIA DE GUZMAN, HERMINIA HERNANDEZ, OLIVIA ABUAN,
CARMEN PORTUGUEZ, LYDIA PENNULAR,oEMERENCIANA WOOD, PRISCILLAoESPINEDA, NANCY
FERNANDEZ, EVAo MANDURIAGA, CONSOLACION SERRANO, SIONY CASILLAN, LUZVIMINDA GABUYA,
MYRNA TAMIN, EVELYN REYES, EVA AYENG, EDNA YAP, RIZAo DELA CRUZ ZUIGA, TRINIDAD RELOX,
MARLON FALLA, MARICEL OCON, and ELVIRA MACAPAGAL, Petitioners,
vs.
FAIRLAND KNITCRAFT CO., INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 189658
SUSAN T. DE LEON, Petitioner,
vs.
FAIRLAND KNITCRAFT CO., INC., MARIALY O. SY, VIVENCIA PENULLAR, AURORA AGUINALDO, GINA
ANIANO, GEMMA DELA PEA, EFREMIA MATIAS, ROSARIO BALUNSAY, ROSALINDA PARUNGAO, ARACELI
RUAZA, REGINA RELOX, TEODORA VENTURA, AMELIA PESCADERO, RICHON APARRE, LYDIA DE GUZMAN,
HERMINIA HERNANDEZ, OLIVIA ABUAN, CARMEN PORTUGUEZ, LYDIA PENNULAR, EMERENCIANA WOOD,
PRISCILLA ESPINEDA, NANCY FERNANDEZ, EVA MANDURIAGA, CONSOLACION SERRANO, SIONY
CASILLAN, LUZVIMINDA GABUYA, MYRNA TAMIN, EVELYN REYES, EVA AYENG, EDNA YAP, RIZA DELA
CRUZ ZUIGA, TRINIDAD RELOX, MARLON FALLA, MARICEL OCON, and ELVIRA MACAPAGAL,
Respondents.
DECISIO N
DEL CASTILLO, J.:
The issues of labor-only contracting and the acquisition of a labor tribunal of jurisdiction over the person of a
respondent are the matters up for consideration in these consolidated Petitions for Review on Certiorari.
Assailed in G.R. No. 182915 is the May 9, 2008 Resolution1 of the Special Ninth Division of the Court of Appeals
(CA) in CA-G.R. SP No. 93204 which reversed and set aside the July 25, 2007 Decision2 of the CAs First Division
and ordered the exclusion of Fairland Knitcraft Co., Inc. (Fairland) from the decisions of the labor tribunals. Said
July 25, 2007 Decision, on the other hand, affirmed the November 30, 2004 Decision3 and August 26, 2005
Resolution4 of the National Labor Relations Commission (NLRC) which, in turn, reversed and set aside the
November 26, 2003 Decision5 of the Labor Arbiter finding the dismissal as valid.
On the other hand, assailed in G.R. No. 189658 is the July 20, 2009 Decision6 of the CAs Special Former Special
Eighth Division in CA-G.R. SP No. 93860, which affirmed the aforesaid November 30, 2004 Decision and August
26, 2005 Resolution of the NLRC. Likewise assailed is the October 1, 2009 CA Resolution7 denying the Motion for

26, 2005 Resolution of the NLRC. Likewise assailed is the October 1, 2009 CA Resolution7 denying the Motion for
Reconsideration thereto.
Factual Antecedents
Fairland is a domestic corporation engaged in garments business, while Susan de Leon (Susan) is the
owner/proprietress of Weesan Garments (Weesan).
On the other hand, the complaining workers (the workers) are sewers, trimmers, helpers, a guard and a secretary
who were hired by Weesan as follows:
NAME
Marialy O. Sy

DATE HIRED

SALARIES

6/23/1997

P 1,500.00/week

Apr-99

1,000.00/week

8/1/1998

1,000.00/week

Olivia Abuan

Aug-95

1,300.00/week

Evelyn Reyes

Nov-00

1,000.00/week

Myrna Tamin

Nov-00

1,000.00/week

4/1/2002

1,000.00/week

10/24/1999

700.00/week

1/21/1998

1,400.00/week

3/2/2001

1,000.00/week

11/24/1999

1,000.00/week

Emerenciana Wood

Jan-98

1,400.00/week

Carmen Portuguez

Nov-00

800.00/week

Gina G. Anano

Sep-98

1,500.00/week

Aurora Aguinaldo

Jan-00

1,000.00/week

Amelia Pescadero

Jan-96

1,000.00/week

Siony Casillan

May-02

1,000.00/week

Consolacion Serrano

Oct-01

900.00/week

Teodora Ventura

Jan-00

1,000.00/week

Regina Relox

May-97

1,500.00/week

Eufemia Matias

Mar-00

1,000.00/week

Herminia Hernandez

Aug-95

1,000.00/week

Jul-99

1,200.00/week

Eve Manduriaga

Feb-00

1,000.00/week

Priscila Espineda

Nov-00

1,300.00/week

Aracelli Ruaza

Mar-00

1,000.00/week

Nancy Fernandez

Nov-00

1,400.00/week

Eva Ayeng

Nov-00

1,000.00/week

Luzviminda Gabuya

Nov-00

1,000.00/week

Liza Dela Cuz Zuiga

Oct-01

1,200.00/week

Vivencia Penullar

Jan-00

1,500.00/week

Trinidad Relox

Aug-96

1,200.00/week

6/24/2000

840.00/week

Lydia Penullar
Lydia De Guzman

Elvira Macapagal
Edna Yap
Rosario Balunsay
Rosalinda P. Parungao
Gemma Dela Pea

Richon Aparre

Marlon Falla

Marlon Falla

6/24/2000

840.00/week

Maricel Ocon

1/15/2001

1,500.00/week8

On December 23, 2002, workers Marialy O. Sy, Vivencia Penullar, Aurora Aguinaldo, Gina Aniano, Gemma dela
Pea and Efremia Matias filed with the Arbitration Branch of the NLRC a Complaint9 for underpayment and/or nonpayment of wages, overtime pay, premium pay for holidays, 13th month pay and other monetary benefits against
Susan/Weesan. In January 2003, the rest of the aforementioned workers also filed similar complaints. Eventually
all the cases were consolidated as they involved the same causes of action.
On February 5, 2003, Weesan filed before the Department of Labor and Employment-National Capital Region
(DOLE-NCR) a report on its temporary closure for a period of not less than six months. As the workers were not
anymore allowed to work on that same day, they filed on February 18, 2003 an Amended Complaint,10 and on
March 13, 2003, another pleading entitled Amended Complaints and Position Paper for Complainants,11 to include
the charge of illegal dismissal and impleaded Fairland and its manager, Debbie Manduabas (Debbie), as
additional respondents.
A Notice of Hearing12 was thereafter sent to Weesan requesting it to appear before Labor Arbiter Ramon Valentin
C. Reyes (Labor Arbiter Reyes) on April 3, 2003, at 10:00 a.m. On said date and time, Atty. Antonio A. Geronimo
(Atty. Geronimo) appeared as counsel for Weesan and requested for an extension of time to file his clients
position paper.13 On the next hearing on April 28, 2003, Atty. Geronimo also entered his appearance for Fairland
and again requested for an extension of time to file position paper.14
On May 16, 2003, Atty. Geronimo filed two separate position papers one for Fairland15 and another for
Susan/Weesan.16 The Position Paper for Fairland was verified by Debbie while the one for Susan/Weesan was
verified by Susan. To these pleadings, the workers filed a Reply.17
Atty. Geronimo then filed a Consolidated Reply18 verified19 both by Susan and Debbie.
On November 25, 2003, the workers submitted their Rejoinder.20
Ruling of the Labor Arbiter
On November 26, 2003, Labor Arbiter Reyes rendered his Decision,21 the dispositive portion of which reads:
WHEREFORE, premises all considered, judgment is hereby rendered, as follows:
Dismissing the complaint for lack of merit; and ordering the respondents to pay each complainant P5,000.00 by
way of financial assistance.
SO ORDERED.22
Ruling of the National Labor Relations Commission
The workers filed their appeal which was granted by the NLRC. The dispositive portion of the NLRC Decision23
reads:
WHEREFORE, premises considered, the appealed decision is hereby set aside and the dismissal of complainants
is declared illegal.
Respondents are, therefore, ordered to reinstate complainants to their original or equivalent position with full
backwages with legal interests thereon from February 5, 2003, until actually reinstated and fully paid, with
retention of seniority rights and are further ordered to pay solidarily to the complainants the difference of their
underpaid/unpaid wages, unpaid holidays, unpaid 13th month pays and unpaid service incentive leaves with legal
interests thereon, to wit:
xxxx

In the event that reinstatement is not possible, respondents are ordered to pay solidarily to complainants their
respective separation pays computed as follows:
xxxx
Respondents are likewise ordered to pay ten (10%) percent of the gross award as and by way of attorneys fees.
SO ORDERED.24
Hence, Atty. Geronimo filed a Motion for Reconsideration.25 However, Fairland filed another Motion for
Reconsideration26 through Atty. Melina O. Tecson (Atty. Tecson) assailing the jurisdiction of the Labor Arbiter and
the NLRC over it, claiming that it was never summoned to appear, attend or participate in all the proceedings
conducted therein. It also denied that it engaged the services of Atty. Geronimo.
The NLRC however, denied both motions for lack of merit.27
Fairland and Susan thus filed their separate Petitions for Certiorari before the CA docketed as CA-G.R. SP No.
93204 and CA-G.R. SP No. 93860, respectively.
Ruling of the Court of Appeals in CA-G.R. SP No. 93204
On July 25, 2007, the CAs First Division denied Fairlands petition.28 It affirmed the NLRCs ruling that the workers
were illegally dismissed and that Weesan and Fairland are solidarily liable to them as labor-only contractor and
principal, respectively.
Fairland filed its Motion for Reconsideration29 as well as a Motion for Voluntary Inhibition30 of Associate Justices
Celia C. Librea-Leagogo and Regalado E. Maambong from handling the case. As the Motion for Voluntary
Inhibition was granted through a Resolution31 dated November 8, 2007, the case was transferred to the CAs
Special Ninth Division for resolution of Fairlands Motion for Reconsideration.32
On May 9, 2008, the CAs Special Ninth Division reversed33 the First Divisions ruling. It held that the labor
tribunals did not acquire jurisdiction over the person of Fairland, and even assuming they did, Fairland is not liable
to the workers since Weesan is not a mere labor-only contractor but a bona fide independent contractor. The
Special Ninth Division thus annulled and set aside the assailed NLRC Decision and Resolution insofar as Fairland
is concerned and excluded the latter therefrom. The dispositive portion of said Resolution reads:
WHEREFORE, the Motion for Reconsideration filed by the movant is GRANTED.
The July 25, 2007 Decision of the First Division of this Court finding that the NLRC did not act with grave abuse of
discretion amounting to lack or excess of jurisdiction and denying the Petition is REVERSED and SET ASIDE.
Consequently, the Decision and Resolution issued by the public respondent on November 30, 2004 and August
26, 2005, respectively, are hereby ANNULLED and SET ASIDE insofar as [it] concerns the petitioner Fairland
Knitcraft Co., Inc. [which] is hereby ordered dropped and excluded therefrom.
SO ORDERED.34
Aggrieved, the workers filed before us their Petition for Review on Certiorari docketed as G.R. No. 182915.
Ruling of the Court of Appeals in CA-G.R. SP No. 93860
With regard to Susans petition, the CA Special Ninth Division issued on May 11, 2006 a Resolution35 temporarily
restraining the NLRC from enforcing its assailed November 30, 2004 Decision and thereafter the CA Special
Eighth Division issued a writ of preliminary prohibitory injunction.36 On July 20, 2009, the Special Former Special
Eighth Division of the CA resolved the case through a Decision,37 the dispositive portion of which reads:
WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and accordingly
DISMISSED for lack of merit. The Decision dated November 30, 2004 and Resolution dated August 26, 2005 of the

National Labor Relations Commission (NLRC) in CA No. 039375-04 (NLRC NCR 00-12-11294-02, 00-01-0002703, 00-01-00131-03, 00-01-00820-03 and 00-01-01249-03) are hereby AFFIRMED and UPHELD.
The writ of preliminary prohibitory injunction issued by this Court on July 13, 2006 is hereby LIFTED and SET
ASIDE.
With cost against petitioner.
SO ORDERED.38
Susan moved for reconsideration39 which was denied by the CA in its October 1, 2009 Resolution.40
Hence, she filed before this Court a Petition for Review on Certiorari docketed as G.R. No. 189658 which was
denied in this Courts December 16, 2009 Resolution41 on technicality and for failure to sufficiently show any
reversible error in the assailed judgment.
Susan and Fairland filed their respective Motions for Reconsideration.42 But before said motions could be
resolved, the Court ordered the consolidation of Susans petition with that of the workers.43
Susans Motion for Reconsideration of this Courts December 16, 2009 Resolution in G.R No. 189658 is granted.
Consequently, her Petition for Review on Certiorari is reinstated.
With Susan and Fairlands respective Motions for Reconsideration still unresolved, this Court shall first address
them.
One of the grounds for the denial of Susans petition was her failure to indicate the date of filing her Motion for
Reconsideration with the CA as required under Section 4(b),44 Rule 45 of the Rules of Court. However, "failure to
comply with the rule on a statement of material [date] in the petition may be excused [if] the [date is] evident from
the records."45 In the case of Susan, records show that she received the copy of the Decision of the CA on July
24, 2009. She then timely filed her Motion for Reconsideration via registered mail on August 7, 2009 as shown by
the envelope46 with stamped receipt of the Batangas City Post Office bearing the date August 7, 2009. The fact of
such filing was also stated in the Motion for Extension of Time to File Petition for Review47 that she filed before this
Court which forms part of the records of this case. Hence, it is clear that Susan seasonably filed her Motion for
Reconsideration.
Moreover, while we note that Susans petition was also denied on the ground of no reversible error committed by
the CA, we deem it proper, in the interest of justice, to take a second look on the merits of Susans petition and
reinstate G.R. No. 189658. This is also to harmonize our ruling in these consolidated petitions and avoid confusion
that may arise in their execution. Hence, we grant Susans Motion for Reconsideration and consequently, reinstate
her Petition for Review on Certiorari.
As to Fairlands Motion for Reconsideration, we shall treat the same as its comment to Susans petition, Fairland
being one of the respondents therein.
Issues
In G.R. No. 189658, Susan imputes upon the CA the following errors:
I.
The Court of Appeals erred in finding that petitioner is a labor-only contractor acting as an agent of
respondent Fairland.
II.
The Court of Appeals erred in finding that the individual private respondents were illegally dismissed.
III.
The Court of Appeals erred in not resolving the issue raised by petitioner in her reply DATED JULY 8, 2006

The Court of Appeals erred in not resolving the issue raised by petitioner in her reply DATED JULY 8, 2006
regarding the propriety of the appeal taken by private respondent Richon Cainoy Aparre who was already
dead prior to the filing of the memorandum of appeal before the NLRC.48
Susans Arguments
Susan insists that the CA erred in ruling that Weesan is a labor-only contractor based on the finding that its
workplace is owned by Fairland. She maintains that the place is owned by De Luxe Shirt Factory, Inc. (De Luxe)
and not by Fairland as shown by the Contracts of Lease between Weesan and De Luxe.
Susan also avers that the CA erred in ruling that Weesan was guilty of illegal dismissal. She maintains that the
termination of the workers was due to financial losses suffered by Weesan as shown by various documents
submitted by the latter to the tribunals below. In fact, Weesan submitted its Establishment Termination Report with
the DOLE-NCR and same was duly received by the latter.
Lastly, Susan argues that the appeal of one of the workers, Richon Cainoy Aparre (Richon), should not have been
given due course because in the Notice of Appeal with Appeal Memorandum filed with the NLRC, a certain Luzvilla
A. Rayon (Luzvilla), whose identity was never established, signed for and on his behalf. However, there is no
information submitted before the NLRC that Richon is already dead, and in any event, no proper substitution was
ever made.
The Workers Arguments
The workers claim that Weesan is a labor-only contractor because it does not have substantial capital or
investment in the form of tools, equipment, machineries, and work premises, among others, and that the workers it
recruited are performing activities which are directly related to the garments business of Fairland. Hence, Weesan
should be considered as a mere agent of Fairland, who shall be responsible to the workers as if they were directly
employed by it (Fairland).49
The workers also allege that the temporary suspension of operations of Weesan was motivated not by a desire to
prevent further losses, but to discourage the workers from ventilating their claims for non-payment/underpayment
of wages and benefits. The fact that Weesan was experiencing serious business losses was not sufficiently
established and therefore the termination of the workers due to alleged business losses is invalid.50
Fairlands Arguments
Fairland maintains that it was never served with summons to appear in the proceedings before the Labor Arbiter
nor furnished copies of the Labor Arbiters Decision and Resolution on the workers complaints for illegal dismissal;
that it never voluntarily appeared before the labor tribunals through Atty. Geronimo;51 that it is a separate and
distinct business entity from Weesan; that Weesan is a legitimate job contractor, hence, the workers were actually
its (Weesans) employees; and that, consequently, the workers have no cause of action against Fairland.52
At any rate, assuming that the workers have a cause of action against Fairland, their claims are already barred by
prescription. Of the 34 individual complainants (the workers), only six were employees of Weesan during the
period of its contractual relationship with Fairland in 1996 and 1997. They were Marialy Sy, Olivia Abuan, Amelia
Pescadero, Regina Relox, Hermina Hernandez and Trinidad Relox. These workers filed their complaints in
December 2002 and January 2003 or more than four years from the expiration of Weesans contractual
arrangement with Fairland in 1997. Article 291 of the Labor Code provides that all money claims arising from
employer-employee relationship shall be filed within three years from the time the cause of action accrued;
otherwise, they shall be forever barred. Illegal dismissal prescribes in four years and damages due to separation
from employment for alleged unjustifiable causes injuring a plaintiffs right must likewise be brought within four
years under the Civil Code. Clearly, the claims of said six employees are already barred by prescription.53
In G.R. No. 182915, the workers advance the following issues:
I.
Whether x x x the National Labor Relations Commission acquired jurisdiction over the [person of the]
respondent[;]

II.
Whether x x x the decision of the National Labor Relations Commission became final and executory[; and]
III.
Whether x x x respondent is solidarily liable with WEESAN GARMENT/ SUSAN DE LEON[.]54
The Workers Arguments
The workers contend that the Labor Arbiter and the NLRC properly acquired jurisdiction over the person of
Fairland because the latter voluntarily appeared and actively participated in the proceedings below when Atty.
Geronimo submitted on its behalf a Position Paper verified by its manager, Debbie. As manager, Debbie knew of
all the material and significant events which transpired in Fairland since she had constant contact with the people
in the day-to-day operations of the company. Thus, the workers maintain that the Labor Arbiter and the NLRC
acquired jurisdiction over the person of Fairland and the Decisions rendered by the said tribunals are valid and
binding upon it.
Lastly, the workers aver that Fairland is solidarily liable with Susan/ Weesan because it was shown that the latter
was indeed the sewing arm of the former and is a mere "labor-only contractor".
Fairlands Arguments
In gist, Fairland contests the labor tribunals acquisition of jurisdiction over its person either through service of
summons or voluntary appearance. It denies that it engaged the services of Atty. Geronimo and asserts that it has
its own legal counsel, Atty. Tecson, who would have represented it had it known of the pendency of the complaints
against Fairland.
Fairland likewise emphasizes that when it filed its Motion for Reconsideration with the NLRC, it made an express
reservation that the same was without prejudice to its right to question the jurisdiction over its person and the
binding effect of the assailed decision. In the absence, therefore, of a valid service of summons or voluntary
appearance, the proceedings conducted and the judgment rendered by the labor tribunals are null and void as
against it. Hence, Fairland cannot be held solidarily liable with Susan/Weesan.
Our Ruling
We grant the workers petition (G.R. No. 182915) but deny the petition of Susan (G.R. No. 189658).
G.R. No. 189658
Susan/Weesan is a mere labor-only contractor.
"There is labor-only contracting when the contractor or subcontractor merely recruits, supplies or places workers
to perform a job, work or service for a principal. In labor-only contracting, the following elements are present:
(a) The person supplying workers to an employer does not have substantial capital or investment in the
form of tools, equipment, machineries, work premises, among others; and
(b) The workers recruited and placed by such person are performing activities which are directly related to
the principal business of the employer."55
Here, there is no question that the workers, majority of whom are sewers, were recruited by Susan/Weesan and
that they performed activities which are directly related to Fairlands principal business of garments. What must be
determined is whether Susan/Weesan has substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others.
We have examined the records but found nothing therein to show that Weesan has investment in the form of tools,
equipment or machineries. The records show that Fairland has to furnish Weesan with sewing machines for it to
be able to provide the sewing needs of the former.56 Also, save for the Balance Sheets57 purportedly submitted
by Weesan to the Bureau of Internal Revenue (BIR) indicating its fixed assets (factory equipment) in the amount of

P243,000.00, Weesan was unable to show that apart from the borrowed sewing machines, it owned and
possessed any other tools, equipment, and machineries necessary to its being a contractor or sub-contractor for
garments. Neither was Weesan able to prove that it has substantial capital for its business.
Likewise significant is the fact that there is doubt as to who really owns the work premises occupied by Weesan. As
may be recalled, the workers emphasized in their Appeal Memorandum58 filed with the NLRC that Susan/Weesan
was a labor-only contractor and that Fairland was its principal. To buttress this, they alleged that the work
premises utilized by Weesan is owned by Fairland, which significantly, was not in the business of renting
properties. They also advanced that there was no showing that Susan/Weesan paid any rentals for the use of the
premises. They contended that all that Susan had was a Mayors Permit for
Weesan indicating 715 Ricafort Street, Tondo, Manila as its address.
Susan failed to refute these allegations before the NLRC and attributed such failure to her former counsel, Atty.
Geronimo. But when Susans petition for certiorari was given due course by the CA, she finally had the chance to
answer the same by denying that Fairland owned the work premises. Susan instead claimed that Weesan rented
the premises from another entity, De Luxe. To support this, she attached to her petition two Contracts of Lease59
purportedly entered into by her and De Luxe for the lease of the premises covering the periods August 1, 1997 to
July 31, 2000 and January 1, 2001 to December 31, 2004.
On the other hand, the workers in their Comment60 filed in CA-G.R. SP No. 93204 (Fairlands petition for certiorari
before the CA), pointed out that in Fairlands Amended Articles of Incorporation,61 five out of the seven
incorporators listed therein appeared to be residents of the same 715 Ricafort St., Tondo, Manila. To the workers,
this is a clear indication that Fairland indeed owned Weesans work premises. Fairland, for its part, tried to explain
this by saying that its incorporators, just like Weesan, were also mere lessees of a portion of the multi-storey
building owned by De Luxe located at 715 Ricafort St., Tondo, Manila. It also claimed that two years prior to
Weesans occupation of said premises in 1996, the five incorporators alluded to already transferred.62
We cannot, however, ignore the apt observation on the matter made by the CAs Special Former Special Eighth
Division in its Decision in CA-G.R. SP No. 93860, viz:
The work premises are likewise owned by Fairland, which petitioner tried to disprove by presenting a purported
Contract of Lease with another entity, De Luxe Shirt Factory Co., Inc. However, there is no competent proof it
paid the supposed rentals to said owner. Curiously, under the item Rent Expenses in its audited
financial statement, only equipment rental was listed therein without any disbursement/expense for
rental of factory premises, which only buttressed the claim of private respondents that the place where they
reported to and performed sewing jobs for petitioner [Susan] and Fairland at No. 715 Ricafort St., Tondo, Manila,
belonged to Fairland.63 (Emphasis supplied.)
Susan contests this pronouncement by pointing out that although only sewing machines were specified under the
entry "Rent Expenses" in its financial statement, the rent for the factory premises is already deemed included
therein since the contracts of lease she entered into with De Luxe referred to both the factory premises and
machineries.
We, however, find this contention implausible.
We went over the said contracts of lease and noted that same were principally for the lease of the premises in 715
Ricafort St., Tondo, Manila. Only incidental thereto is the inclusion therein of the equipment found in said
premises. Hence, we cannot see why the rentals for the work premises, for which Susan even went to the extent of
executing a contract with the purported lessor, was not included in the entry for rent expenses in Weesans
financial statement. Even if we are to concede to Susans claim that the entry for rent expenses already includes
the rentals for the work premises, we wonder why the rental expenses for the year 2000 which was P396,000.00 is
of the same amount with the rental expenses for the year 2001. As borne out by the Contract of Lease covering
the period August 1, 1997 to July 31, 2000, the monthly rent for the work premises was pegged at P25,000.00.64
However, in January to December 2001, same was increased to P27,500.00.65 There being an increase in the
rentals for the work premises, how come that Weesans rental expenses for the year 2001 is still P396,000.00?
This could only mean that said entry really only refers to the rentals of sewing machines and does not include the
rentals for the work premises. Moreover, we note that Susan could have just simply submitted receipts for her

rentals for the work premises. Moreover, we note that Susan could have just simply submitted receipts for her
payments of rentals to De Luxe. However, she failed to present even a single receipt evidencing such payment.
In an attempt to prove that it is De Luxe and not Fairland which owned the work premises, Susan attached to her
petition the following: (1) a plain copy of Transfer Certificate of Title (TCT) No. 13979066 and Declaration of Real
Property67 both under the name of De Luxe; and, (2) Real Property Tax receipts issued to De Luxe for the years
2000-2004.68 However, the Court finds these documents wanting. Nowhere from the said TCT and Declaration of
Real Property can it be inferred that the property they refer to is the same property as that located at 715 Ricafort
St., Tondo, Manila. Although in said Declaration, 715 Ricafort St., Tondo is the indicated address of the declarant
(De Luxe), the address of the property declared is merely "Ricafort, Tondo I-A". The same thing can also be said
with regard to the real property tax receipts. The entry under the box Location of Property in the receipt for 2001 is
"I - 718 Ricafort" and in the receipts for 2002, 2003, and 2004, the entries are either "I Ricafort St., Tondo" or
merely "I-Ricafort St."
In sum, the Court finds that Susans effort to negate Fairlands ownership of the work premises is futile. The logical
conclusion now is that Weesan does not have its own workplace and is only utilizing the workplace of Fairland to
whom it supplied workers for its garment business.
Suffice it to say that "[t]he presumption is that a contractor is a labor-only contractor unless such contractor
overcomes the burden of proving that it has substantial capital, investment, tools and the like."69 As
Susan/Weesan was not able to adduce evidence that Weesan had any substantial capital, investment or assets to
perform the work contracted for, the presumption that Weesan is a labor-only contractor stands.70
The National Labor Relations Commission and the Court of Appeals did not err in their findings of illegal dismissal.
To negate illegal dismissal, Susan relies on the due closure of Weesan pursuant to the Establishment Termination
Report it submitted to the DOLE-NCR.
Indeed, Article 28371 of the Labor Code allows as a mode of termination of employment the closure or termination
of business. "Closure or cessation of business is the complete or partial cessation of the operations and/or shutdown of the establishment of the employer. It is carried out to either stave off the financial ruin or promote the
business interest of the employer."72 "The decision to close business [or to temporarily suspend operation] is a
management prerogative exclusive to the employer, the exercise of which no court or tribunal can meddle with,
except only when the employer fails to prove compliance with the requirements of Art. 283, to wit: a) that the
closure/cessation of business is bona fide, i.e., its purpose is to advance the interest of the employer and not to
defeat or circumvent the rights of employees under the law or a valid agreement; b) that written notice was served
on the employees and the DOLE at least one month before the intended date of closure or cessation of business;
and c) in case of closure/cessation of business not due to financial losses, that the employees affected have been
given separation pay equivalent to month pay for every year of service or one month pay, whichever is
higher."73
Here, Weesan filed its Establishment Termination Report74 allegedly due to serious business losses and other
economic reasons. However, we are mindful of the doubtful character of Weesans application for closure given
the circumstances surrounding the same.
First, workers Marialy Sy, Vivencia Penullar, Aurora Aguinaldo, Gina Aniano, Gemma Dela Pea and Efremia
Matias filed before the Labor Arbiter their complaint for underpayment of salary, non-payment of benefits,
damages and attorneys fees against Weesan on December 23, 2002.75 Summons76 was accordingly issued and
same was received by Susan on January 15, 2003.77 Meanwhile, other workers followed suit and filed their
respective complaints on January 2, 6, 17 and 28, 2003.78 Shortly thereafter or merely eight days after the filing of
the last complaint, Weesan filed with the DOLE-NCR its Establishment Termination Report.
Second, the Income Tax Returns79 for the years 2000, 2001 and 2002 attached to the Establishment Termination
Report, although bearing the stamped receipt of the Revenue District Office where they were purportedly filed,
contain no signature or initials of the receiving officer. The same holds true with Weesans audited financial
statements.80 This engenders doubt as to whether these documents were indeed filed with the proper authorities.

Third, there was no showing that Weesan served upon the workers written notice at least one month before the
intended date of closure of business, as required under Art. 283 of the Labor Code. In fact, the workers alleged
that when Weesan filed its Establishment Termination Report on February 5, 2003, it already closed the work
premises and did not anymore allow them to report for work. This is the reason why the workers on February 18,
2003 amended their complaint to include the charge of illegal dismissal.81
It bears stressing that "[t]he burden of proving that x x x a temporary suspension is bona fide falls upon the
employer."82 Clearly here, Susan/Weesan was not able to discharge this burden. The documents Weesan
submitted to support its claim of severe business losses cannot be considered as proof of financial crisis to justify
the temporary suspension of its operations since they clearly appear to have not been duly filed with the BIR.
Weesan failed to satisfactorily explain why the Income Tax Returns and financial statements it submitted do not
bear the signature of the receiving officers. Also hard to ignore is the absence of the mandatory 30-day prior
notice to the workers.
Hence, the Court finds that Susan failed to prove that the suspension of operations of Weesan was bona fide and
that it complied with the mandatory requirement of notice under the law. Susan likewise failed to discharge her
burden of proving that the termination of the workers was for a lawful cause. Therefore, the NLRC and the CA, in
CA-G.R. SP No. 93860, did not err in their findings that the workers were illegally dismissed by Susan/Weesan.
The formal substitution of the deceased
worker Richon Aparre is not necessary as his heir voluntarily appeared and participated in the proceedings before
the National Labor Relations Commission.
In Sarsaba v. Fe Vda. de Te, we held that:83
The rule on substitution of parties is governed by Section 16,84 Rule 3 of the [Rules of Court].
Strictly speaking, the rule on substitution by heirs is not a matter of jurisdiction, but a requirement of due process.
The rule on substitution was crafted to protect every party's right to due process. It was designed to ensure that
the deceased party would continue to be properly represented in the suit through his heirs or the duly appointed
legal representative of his estate. Moreover, non-compliance with the Rules results in the denial of the right to due
process for the heirs who, though not duly notified of the proceedings, would be substantially affected by the
decision rendered therein. Thus, it is only when there is a denial of due process, as when the deceased is not
represented by any legal representative or heir, that the court nullifies the trial proceedings and the resulting
judgment therein.
Here, the lack of formal substitution of the deceased worker Richon did not result to denial of due process as to
affect the validity of the proceedings before the NLRC since his heir, Luzvilla, was aware of the proceedings
therein. In fact, she is considered to have voluntarily appeared before the said tribunal when she signed the
workers Memorandum of Appeal filed therewith. "This Court has ruled that formal substitution of parties is not
necessary when the heirs themselves voluntarily appeared, participated, and presented evidence during the
proceedings."85 Hence, the NLRC did not err in giving due course to the appeal with respect to Richon.
Fairlands claim of prescription deserves scant consideration.
Fairland asserts that assuming that the workers have valid claims against it, same only pertain to six out of the 34
workers-complainants. According to Fairland, these six workers were the only ones who were in the employ of
Weesan at the time Fairland and Weesan had existing contractual relationship in 1996 to 1997. But then, Fairland
contends that the claims of these six workers have already been barred by prescription as they filed their
complaint more than four years from the expiration of the alleged contractual relationship in 1997. However, the
Court notes that the records are bereft of anything that provides for such alleged contractual relationship and the
period covered by it. Absent anything to support Fairlands claim, same deserves scant consideration.
Interestingly, we noticed Fairlands letter86 dated January 31, 2003 informing Weesan that it would temporarily not
be availing of the latters sewing services and at the same time requesting for the return of the sewing machines it
lent to Weesan. Assuming said letter to be true, why was Fairland terminating Weesans services only on January
31, 2003 when it is now claiming that its contractual relationship with the latter only lasted until 1997? Thus, we
find the contentions rather abstruse.

find the contentions rather abstruse.


G.R. No. 182915
"It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter
being served with summons."87 However, "if there is no valid service of summons, the court can still acquire
jurisdiction over the person of the defendant by virtue of the latters voluntary appearance."88
Although not served with summons, jurisdiction over Fairland and Debbie was acquired through their voluntary
appearance.
It can be recalled that the workers original complaints for non-payment/ underpayment of wages and benefits were
only against Susan/Weesan. For these complaints, the Labor Arbiter issued summons89 to Susan/Weesan which
was received by the latter on January 15, 2003.90 The workers thereafter amended their then already
consolidated complaints to include illegal dismissal as an additional cause of action as well as Fairland and Debbie
as additional respondents. We have, however, scanned the records but found nothing to indicate that summons
with respect to the said amended complaints was ever served upon Weesan, Susan, or Fairland. True to their
claim, Fairland and Debbie were indeed never summoned by the Labor Arbiter.
The crucial question now is: Did Fairland and Debbie voluntarily appear before the Labor Arbiter as to submit
themselves to its jurisdiction?
Fairland argued before the CA that it did not engage Atty. Geronimo as its counsel. However, the Court held in
Santos v. National Labor Relations Commission,91 viz:
In the instant petition for certiorari, petitioner Santos reiterates that he should not have been adjudged personally
liable by public respondents, the latter not having validly acquired jurisdiction over his person whether by personal
service of summons or by substituted service under Rule 19 of the Rules of Court.
Petitioners contention is unacceptable. The fact that Atty. Romeo B. Perez has been able to timely ask for a
deferment of the initial hearing on 14 November 1986, coupled with his subsequent active participation in the
proceedings, should disprove the supposed want of service of legal processes. Although as a rule, modes of
service of summons are strictly followed in order that the court may acquire jurisdiction over the person of a
defendant, such procedural modes, however, are liberally construed in quasi-judicial proceedings, substantial
compliance with the same being considered adequate. Moreover, jurisdiction over the person of the defendant in
civil cases is acquired not only by service of summons but also by voluntary appearance in court and submission
to its authority. Appearance by a legal advocate is such voluntary submission to a courts jurisdiction. It may be
made not only by actual physical appearance but likewise by the submission of pleadings in compliance with the
order of the court or tribunal.
To say that petitioner did not authorize Atty. Perez to represent him in the case is to unduly tax credulity. Like the
Solicitor General, the Court likewise considers it unlikely that Atty. Perez would have been so irresponsible as to
represent petitioner if he were not, in fact, authorized. Atty. Perez is an officer of the court, and he must be
presumed to have acted with due propriety. The employment of a counsel or the authority to employ an attorney, it
might be pointed out, need not be proved in writing; such fact could [be] inferred from circumstantial evidence. x x
x92 (Citations omitted.)
From the records, it appears that Atty. Geronimo first entered his appearance on behalf of Susan/Weesan in the
hearing held on April 3, 2003.93 Being then newly hired, he requested for an extension of time within which to file a
position paper for said respondents. On the next scheduled hearing on April 28, 2003, Atty. Geronimo again
asked for another extension to file a position paper for all the respondents considering that he likewise entered his
appearance for Fairland.94 Thereafter, said counsel filed pleadings such as Respondents Position Paper95 and
Respondents Consolidated Reply96 on behalf of all the respondents namely, Susan/Weesan, Fairland and
Debbie. The fact that Atty. Geronimo entered his appearance for Fairland and Debbie and that he actively
defended them before the Labor Arbiter raised the presumption that he is authorized to appear for them. As held
in Santos, it is unlikely that Atty. Geronimo would have been so irresponsible as to represent Fairland and Debbie
if he were not in fact authorized. As an officer of the Court, Atty. Geronimo is presumed to have acted with due
propriety. Moreover, "[i]t strains credulity that a counsel who has no personal interest in the case would fight for
and defend a case with persistence and vigor if he has not been authorized or employed by the party

and defend a case with persistence and vigor if he has not been authorized or employed by the party
concerned."97
We do not agree with the reasons relied upon by the CAs Special Ninth Division in its May 9, 2008 Resolution in
CA-G.R. No. 93204 when it ruled that Fairland, through Atty. Geronimo, did not voluntarily submit itself to the
Labor Arbiters jurisdiction.
In so ruling, the CA noted that Atty. Geronimo has no prior authorization from the board of directors of Fairland to
handle the case. Also, the alleged verification signed by Debbie, who is not one of Fairlands duly authorized
directors or officers, is defective as no board resolution or secretarys certificate authorizing her to sign the same
was attached thereto. Because of these, the Special Ninth Division held that the Labor Arbiter committed grave
abuse of discretion in not requiring Atty. Geronimo to show his proof of authority to represent Fairland considering
that the latter is a corporation.
The presumption of authority of counsel to appear on behalf of a client is found both in the Rules of Court and in
the New Rules of Procedure of the NLRC.98
Sec. 21, Rule 138 of the Rules of Court provides:
Sec. 21. Authority of attorney to appear An attorney is presumed to be properly authorized to represent any
cause in which he appears, and no written power of attorney is required to authorize him to appear in court for his
client, but the presiding judge may, on motion of either party and reasonable grounds therefor being shown,
require any attorney who assumes the right to appear in a case to produce or prove the authority under which he
appears, and to disclose whenever pertinent to any issue, the name of the person who employed him, and may
thereupon make such order as justice requires. An attorney willfully appearing in court for a person without being
employed, unless by leave of the court, may be punished for contempt as an officer of the court who has
misbehaved in his official transactions.
On the other hand, Sec. 8, Rule III of the New Rules of Procedure of the NLRC,99 which is the rules prevailing at
that time, states in part:
SECTION 8. APPEARANCES. - An attorney appearing for a party is presumed to be properly authorized for that
purpose. However, he shall be required to indicate in his pleadings his PTR and IBP numbers for the current year.
Between the two provisions providing for such authority of counsel to appear, the Labor Arbiter is primarily bound
by the latter one, the NLRC Rules of Procedure being specifically applicable to labor cases. As Atty. Geronimo
consistently indicated his PTR and IBP numbers in the pleadings he filed, there is no reason for the Labor Arbiter
not to extend to Atty. Geronimo the presumption that he is authorized to represent Fairland.
Even if we are to apply Sec. 21, Rule 138 of the Rules of Court, the Labor Arbiter cannot be expected to require
Atty. Geronimo to prove his authority under said provision since there was no motion to that effect from either
party showing reasonable grounds therefor. Moreover, the fact that Debbie signed the verification attached to the
position paper filed by Atty. Geronimo, without a secretarys certificate or board resolution attached thereto, is not
sufficient reason for the Labor Arbiter to be on his guard and require Atty. Geronimo to prove his authority.
Debbie, as General Manager of Fairland is one of the officials of the company who can sign the verification without
need of a board resolution because as such, she is in a position to verify the truthfulness and correctness of the
allegations in the petition.100
Although we note that Fairland filed a disbarment case against Atty. Geronimo due to the formers claim of
unauthorized appearance, we hold that same is not sufficient to overcome the presumption of authority. Such
mere filing is not proof of Atty. Geronimos alleged unauthorized appearance. Suffice it to say that an attorneys
presumption of authority is a strong one.101 "A mere denial by a party that he authorized an attorney to appear for
him, in the absence of a compelling reason, is insufficient to overcome the presumption, especially when the denial
comes after the rendition of an adverse judgment,"102 such as in the present case.
Citing PNOC Dockyard and Engineering Corporation v. National Labor Relations Commission,103 the CA likewise
emphasized that in labor cases, both the party and his counsel must be duly served their separate copies of the
order, decision or resolution unlike in ordinary proceedings where notice to counsel is deemed notice to the party.

order, decision or resolution unlike in ordinary proceedings where notice to counsel is deemed notice to the party.
It then quoted Article 224 of the Labor Code as follows:
ARTICLE 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, requiring a sheriff or a duly deputized officer to execute or enforce final decisions,
orders or awards of the Secretary of Labor and Employment or [R]egional Director, the Commission, the Labor
Arbiter or Med-Arbiter, or Voluntary Arbitrators. In any case, it shall be the duty of the responsible officer to
separately furnish immediately the counsels of record and the parties with copies of said decision,
orders or awards. Failure to comply with the duty prescribed herein shall subject such responsible officer to
appropriate administrative sanctions x x x (Emphasis in the original).104
The CA then concluded that since Fairland and its counsel were not separately furnished with a copy of the
August 26, 2005 NLRC Resolution denying the motions for reconsideration of its November 30, 2004 Decision,
said Decision cannot be enforced against Fairland. The CA likewise concluded that because of this, said
November 30, 2004 Decision which held Susan/Weesan and Fairland solidarily liable to the workers, has not
attained finality.
We cannot agree. In Ginete v. Sunrise Manning Agency105 we held that:
The case of PNOC Dockyard and Engineering Corporation vs. NLRC cited by petitioner enunciated that in labor
cases, both the party and its counsel must be duly served their separate copies of the order, decision or
resolution; unlike in ordinary judicial proceedings where notice to counsel is deemed notice to the party.
Reference was made therein to Article 224 of the Labor Code. But, as correctly pointed out by private respondent
in its Comment to the petition, Article 224 of the Labor Code does not govern the procedure for filing a petition for
certiorari with the Court of Appeals from the decision of the NLRC but rather, it refers to the execution of final
decisions, orders or awards and requires the sheriff or a duly deputized officer to furnish both the parties and
their counsel with copies of the decision or award for that purpose. There is no reference, express or implied, to
the period to appeal or to file a petition for certiorari as indeed the caption is execution of decisions, orders or
awards. Taken in proper context, Article 224 contemplates the furnishing of copies of final decisions, orders or
awards and could not have been intended to refer to the period for computing the period for appeal to the Court
of Appeals from a non-final judgment or order. The period or manner of appeal from the NLRC to the Court of
Appeals is governed by Rule 65 pursuant to the ruling of the Court in the case of St. Martin Funeral Homes vs.
NLRC. Section 4 of Rule 65, as amended, states that the petition may be filed not later than sixty (60) days from
notice of the judgment, or resolution sought to be assailed.
Corollarily, Section 4, Rule III of the New Rules of Procedure of the NLRC expressly mandates that (F)or the
purposes of computing the period of appeal, the same shall be counted from receipt of such decisions, awards or
orders by the counsel of record. Although this rule explicitly contemplates an appeal before the Labor Arbiter and
the NLRC, we do not see any cogent reason why the same rule should not apply to petitions for certiorari filed with
the Court of Appeals from decisions of the NLRC. This procedure is in line with the established rule that
notice to counsel is notice to party and when a party is represented by counsel, notices should be
made upon the counsel of record at his given address to which notices of all kinds emanating from the
court should be sent. It is to be noted also that Section 7 of the NLRC Rules of Procedure provides
that (A)ttorneys and other representatives of parties shall have authority to bind their clients in all
matters of procedure a provision which is similar to Section 23, Rule 138 of the Rules of Court. More
importantly, Section 2, Rule 13 of the 1997 Rules of Civil Procedure analogously provides that if any
party has appeared by counsel, service upon him shall be made upon his counsel. (Citations omitted;
emphasis supplied)
To stress, Article 224 contemplates the furnishing of copies of final decisions, orders or awards both to the parties
and their counsel in connection with the execution of such final decisions, orders or awards. However, for the
purpose of computing the period for filing an appeal from the NLRC to the CA, same shall be counted from receipt
of the decision, order or award by the counsel of record pursuant to the established rule that notice to counsel is
notice to party. And since the period for filing of an appeal is reckoned from the counsels receipt of the decision,
order or award, it necessarily follows that the reckoning period for their finality is likewise the counsels date of
receipt thereof, if a party is represented by counsel. Hence, the date of receipt referred to in Sec. 14, Rule VII of
the then in force New Rules of Procedure of the NLRC106 which provides that decisions, resolutions or orders of

the then in force New Rules of Procedure of the NLRC106 which provides that decisions, resolutions or orders of
the NLRC shall become executory after 10 calendar days from receipt of the same, refers to the date of receipt by
counsel. Thus contrary to the CAs conclusion, the said NLRC Decision became final, as to Fairland, 10 calendar
days after Atty. Tecsons receipt107 thereof.108 In sum, we hold that the Labor Arbiter had validly acquired
jurisdiction over Fairland and its manager, Debbie, through the appearance of Atty. Geronimo as their counsel
and likewise, through the latters filing of pleadings on their behalf.
Fairland is Weesans principal.
In addition to our discussion in G.R. No. 189658 with respect to the finding that Susan/Weesan is a mere laboronly contractor which we find to be likewise significant here, a careful examination of the records reveals other
telling facts that Fairland is Susan/Weesans principal, to wit: (1) aside from sewing machines, Fairland also lent
Weesan other equipment such as fire extinguishers, office tables and chairs, and plastic chairs;109 (2) no proof
evidencing the contractual arrangement between Weesan and Fairland was ever submitted by Fairland; (3) while
both Weesan and Fairland assert that the former had other clients aside from the latter, no proof of Weesans
contractual relationship with its other alleged client is extant on the records; and (4) there is no showing that any of
the workers were assigned to other clients aside from Fairland. Moreover, as found by the NLRC and affirmed by
both the Special Former Special Eighth Division in CA-G.R. SP No. 93860 and the First Division in CA-G.R. SP No.
93204, the activities, the manner of work and the movement of the workers were subject to Fairlands control. It
bears emphasizing that "factual findings of quasi-judicial agencies like the NLRC, when affirmed by the Court of
Appeals, as in the present case, are conclusive upon the parties and binding on this Court."110
Viewed in its entirety, we thus declare that Fairland is the principal of the labor-only contractor, Weesan.
Fairland, therefore, as the principal employer, is solidarily liable with Susan/Weesan, the labor-only contractor, for
the rightful claims of the employees. Under this set-up, Susan/Weesan, as the "labor-only" contractor, is deemed
an agent of the principal, Fairland, and the law makes the principal responsible to the employees of the "laboronly" contractor as if the principal itself directly hired or employed the employees.111
WHEREFORE, the Court,
1) in G.R. No. 189658, denies the Petition for Review on Certiorari. The assailed Decision dated July 20,
2009 and Resolution dated October 1, 2009 of the Special Former Special Eighth Division of the Court of
Appeals in CA-G.R. No. 93860 are AFFIRMED.
2) in G.R. No. 182915, grants the Petition for Review on Certiorari. The assailed Resolution dated May 9,
2008 of the Special Ninth Division of the Court of Appeals in CA-G.R. No. 93204 is hereby REVERSED and
SET ASIDE and the Decision dated July 25, 2007 of the First Division of the Court of Appeals is
REINSTATED and AFFIRMED.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
WE CONCUR:
RENATO C. CORONA
Chief Justice
Chairperson
TERESITA J. LEONARDO-DE CASTRO
Associate Justice

ARTURO D. BRION*
Associate Justice

ESTELA M. PERLAS-BERNABE*
Associate Justice
CERT IF ICAT IO N
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts
Division.
RENATO C. CORONA
Chief Justice

Footnotes
o Also spelled as Anano, Eufemia, Aracelli, Penullar, Priscila, Eve and Liza in some parts of the records.
* Designated as additional member per raffle dated October 10, 2011.
1 CA rollo (CA-G.R. SP No. 93204), pp. 1093-1109; penned by Associate Justice Bienvenido L. Reyes (now

a member of this Court) and concurred in by Associate Justices Vicente Q. Roxas and Pampio A. Abarintos.
2 Id. at 819-844; penned by Associate Justice Celia C. Librea-Leagogo and concurred in by then Presiding

Justice Ruben T. Reyes (later to become a member of this Court) and Associate Justice Regalado E.
Maambong.
3 Records, Vol. 1, pp. 231-255; penned by Presiding Commissioner Raul T. Aquino and concurred in by

Commissioners Victoriano R. Calaycay and Angelita A. Gacutan.


4 Id. at 281-282.
5 Id. at 115-120.
6 CA rollo (CA-G.R. SP No. 93860), pp. 802-823; penned by Associate Justice Martin S. Villarama, Jr. (now

a Member of this Court) and concurred in by Associate Justices Arturo G. Tayag and Ramon M. Bato, Jr.
7 Id. at 879.
8 Records, Vol. I, p. 30.
9 Id. at 2.
10 Id. at 25-28.
11 Id. at 29-35.
12 Id. at 38.
13 See Constancia for the April 3, 2003 hearing, id. at 43.
14 Id. at 44.
15 Id. at 45-48.
16 Id. at 52-56.
17 Id. at 97-100.
18 Id. at 105-108.
19 Id. at 108.

19 Id. at 108.
20 Id. at 111-112.
21 Supra note 5.
22 Records, Vol. I, p.120.
23 Supra note 3.
24 Records, Vol. I, pp. 249-254.
25 Id. at 259-261.
26 Id. at 261A-274.
27 Supra note 4.
28 Supra note 2.
29 CA rollo (CA-G.R. SP No. 93204), pp. 954-988.
30 Id. at 989-992.
31 Id. at 1037-1045; penned by Associate Justices Regalado E. Maambong and Celia C. Librea-Leagogo.
32 Upon the inhibition of Justices Leagogo (ponente) and Maambong, the case was re-raffled to Justice

Monina Arevalo-Zenarosa as new ponente on November 14, 2007. The case was again re-raffled on
January 16, 2008 to Justice Bienvenido L. Reyes (ponente) and the members of his Division. See rollo
cover of CA-G.R. SP No. 93204.
33 Supra note 1.
34 CA rollo (CA-G.R. SP No. 93204), p. 1109.
35 CA rollo (CA-G.R. SP No. 93860), pp. 730-737; penned by Associate Justice Lucas P. Bersamin (now a

Member of this Court) and concurred in by Associate Justices Renato C. Dacudao and Mariflor Punzalan
Castillo.
36 See Resolution dated July 13, 2006, id. at 789-798; penned by Associate Justice Lucas P. Bersamin

(now a member of this Court) and concurred in by Associate Justices Martin S. Villarama, Jr. (now a member
of this Court) and Ramon M. Bato, Jr.
37 Supra note 6.
38 CA rollo (CA-G.R. SP No. 93860), p. 823.
39 See Susans Motion for Reconsideration, id. at 855-862.
40 Supra note 7.
41 Rollo (G.R. No. 189658), pp. 455-456.
42 See Susans Motion for Reconsideration, id. at 529-537 and Fairlands Motion for Reconsideration, id. at

459-509.
43 Rollo (G.R. No. 182915), p. 597.

44 Section 4. Contents of petition. The petition shall x x x

xxxx
(b) Indicate the material dates showing when notice of the judgment or final order or resolution
subject thereof was received, when a motion for new trial or reconsideration, if any, was filed and
when notice of the denial thereof was received;
xxxx
45 Great Southern Maritime Services Corp. v. Acua, 492 Phil. 518, 527 (2005).
46 Stitched to the rollo of CA-G.R. SP No. 93860 between pp. 855 and 856 where the first and second

pages of Susans Motion for Reconsideration may be found.


47 Rollo (G.R. No. 189658), p. 3.
48 Id. at 20.
49 See Memorandum for Petitioners, rollo (G.R. No. 182915), pp. 408-482.
50 Id.
51 See Fairlands Motion for Reconsideration, supra note 42.
52 Id.
53 Id.
54 Rollo (G.R. No. 182915), p. 17.
55 Escario v. National Labor Relations Commission, 388 Phil. 929, 938 (2000).
56 Records, Vol. I, pp. 49-51.
57 For the years 2000, 2001 and 2002, id. at 208, 211 & 214.
58 Id. at 129-152.
59 CA rollo (CA-G.R. SP No. 93860), pp. 383-388.
60 Id. (CA-G.R. SP No. 93204), pp. 516-521.
61 Id. at 522-526.
62 See Petitioners (Fairland) Reply, id. at 543-554.
63 Id. (CA-G.R. SP No. 93860), p. 817.
64 Rollo (G.R. No. 189658), p. 311.
65 Id. at 314.
66 Id. at 440-442.
67 Id. at 443-444.

Id. at 443-444.
68 Id. at 445-449.
69 7K Corporation v. National Labor Relations Commission, G.R. No. 148490, November 22, 2006, 507

SCRA 509, 523.


70 Id.
71 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
workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof.
In case of termination due to the installation of labor saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one
(1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and
in cases of closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, 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 shall be
considered one (1) whole year.
72 Eastridge Golf Club, Inc. vs. Eastridge Golf Club Inc., Labor Union-Super, G.R. No. 166760, August 22,

2008, 563 SCRA 93, 105.


73 Id. at 106-107.
74 Records, Vol. I, p. 57.
75 Id. at 1.
76 Id. at 5.
77 See the Return Card attached to the Summons, id.
78 Id. at 9, 13, 19 and 24.
79 Id. at 58-60.
80 Id. at 62-63, 65-66 and 68-69.
81 Id. at 25.
82 San Pedro Hospital of Digos, Inc. v. Sec. of Labor, 331 Phil. 390, 406 (1996).
83 G.R. No. 175910, July 30, 2009, 594 SCRA 410, 428-429.
84 Section 16. Death of party; duty of counsel. Whenever a party to a pending action dies, and the claim

is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after
such death of the fact thereof, and to give the name and address of his legal representatives. Failure of
counsel to comply with this duty shall be a ground for disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the
appointment of an executor or administrator and the court may appoint a guardian ad litem for the
minor heirs.
The court shall forthwith order said legal representative or representatives to appear and be
substituted within a period of thirty (30) days from notice.

substituted within a period of thirty (30) days from notice.


If no legal representative is named by the counsel for the deceased party, or if the one so named
shall fail to appear within the specified period, the court may order the opposing party, within a
specified time, to procure the appointment of an executor or administrator for the estate of the
deceased and the latter shall immediately appear for and on behalf of the deceased. The court
charges in procuring such appointment, if defrayed by the opposing party, may be recovered as
costs.
85 Regional Agrarian Reform Adjudication Board v. Court of Appeals, G.R. No. 165155, April 13, 2010, 618

SCRA 181, 201.


86 Records, Vol. I, p. 51.
87 Larkins v. National Labor Relations Commission, 311 Phil. 687, 693 (1995).
88 Rapid City Realty and Development Corp. v. Villa, G.R. No. 184197, February 11, 2010, 612 SCRA 302,

305.
89 Records, Vol. I, p. 5.
90 See the return card attached to the Summons, id.
91 325 Phil. 145 (1996).
92 Id. at 155-156.
93 See Constancia for the hearing held on April 3, 2003, records, vol. I, p. 43.
94 See Constancia for the hearing held on April 28, 2003, id. at 44.
95 Id. at 45-48 & 52-56.
96 Id. at 105-108.
97 Paramount Insurance Corporation v. Japzon, G.R. No. 68037, July 29, 1992, 211 SCRA 879, 886.
98 The NLRC Rules in force at that time.
99 The present Section 8, Rule III of the 2005 Revised Rules of Procedure of the NLRC partly reads:

SECTION 8. APPEARANCES. a) A lawyer appearing for a party is presumed to be properly


authorized for that purpose. In every case, he shall indicate in his pleadings and motions his
Attorneys Roll Number, as well as his PTR and IBP numbers for the current year. x x x
100 Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue, G.R. No. 151413, February 13,

2008, 545 SCRA 10, 18-19.


101 Agpalo, Ruben E., Legal and Judicial Ethics, Eight Ed. (2009), p. 328.
102 Id. at 328-329.
103 353 Phil. 431 (1998).
104 See pp. 11-12 of the Resolution dated May 9, 2008 of the CAs Special Ninth Division, CA rollo (CA-G.R.

No. 93204), pp. 1103-1104.


105 411 Phil. 953. 957-958 (2001).

105 411 Phil. 953. 957-958 (2001).


106 Sec. 14, Rule VII of the 2005 Revised NLRC Rules now reads:

Sec. 14. FINALITY OF DECISION OF THE COMMISSION AND ENTRY OF JUDGMENT a) Finality of
the Decisions, Resolutions or Orders of the Commission. Except as provided in Section 9 of Rule X,
the decisions, resolutions or orders of the Commission shall become final and executory after ten (10)
calendar days from receipt thereof by the parties. x x x
107 See proof of receipt, records, vol. I, p. 284.
108 By then, Fairland was already being represented by Atty. Melina O. Tecson after the latter filed before

the NLRC a Motion for Reconsideration claiming that Fairland was not aware of the complaints filed against
it and that it never engaged the services of Atty. Geronimo.
109 Records, Vol. I, p. 50.
110 Association of Integrated Security Force of Bislig (AISFB)-ALU v. Court of Appeals, 505 Phil. 10, 24

(2005).
111 7K Corporation v. National Labor Relations Commission, supra note 69.

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 184007

February 16, 2011

PAQUITO V. ANDO, Petitioner,


vs.
ANDRESITO Y. CAMPO, ET AL., Respondents.
DECISIO N
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court. Petitioner Paquito V.
Ando (petitioner) is assailing the Decision2 dated February 21, 2008 and the Resolution3 dated July 25, 2008 of
the Court of Appeals (CA) in CA-G.R. CEB-SP. No. 02370.
Petitioner was the president of Premier Allied and Contracting Services, Inc. (PACSI), an independent labor
contractor. Respondents were hired by PACSI as pilers or haulers tasked to manually carry bags of sugar from the
warehouse of Victorias Milling Company and load them on trucks.4 In June 1998, respondents were dismissed
from employment. They filed a case for illegal dismissal and some money claims with the National Labor Relations
Commission (NLRC), Regional Arbitration Branch No. VI, Bacolod City.5
On June 14, 2001, Labor Arbiter Phibun D. Pura (Labor Arbiter) promulgated a decision, ruling in
respondents favor.6 PACSI and petitioner were directed to pay a total of P422,702.28, representing
respondents separation pay and the award of attorneys fees.7
Petitioner and PACSI appealed to the NLRC. In a decision8 dated October 20, 2004, the NLRC ruled that
petitioner failed to perfect his appeal because he did not pay the supersedeas bond. It also affirmed the Labor
Arbiters decision with modification of the award for separation pay to four other employees who were similarly
situated. Upon finality of the decision, respondents moved for its execution.9
To answer for the monetary award, NLRC Acting Sheriff Romeo Pasustento issued a Notice of Sale on Execution
of Personal Property10 over the property covered by Transfer Certificate of Title (TCT) No. T-140167 in the name
of "Paquito V. Ando x x x married to Erlinda S. Ando."
This prompted petitioner to file an action for prohibition and damages with prayer for the issuance of a temporary
restraining order (TRO) before the Regional Trial Court (RTC), Branch 50, Bacolod City. Petitioner claimed that
the property belonged to him and his wife, not to the corporation, and, hence, could not be subject of the
execution sale. Since it is the corporation that was the judgment debtor, execution should be made on the latters
properties.11
On December 27, 2006, the RTC issued an Order12 denying the prayer for a TRO, holding that the trial court had
no jurisdiction to try and decide the case. The RTC ruled that, pursuant to the NLRC Manual on the Execution of
Judgment, petitioners remedy was to file a third-party claim with the NLRC Sheriff. Despite lack of jurisdiction,
however, the RTC went on to decide the merits of the case.

Petitioner did not file a motion for reconsideration of the RTC Order. Instead, he filed a petition for certiorari under
Rule 6513 before the CA. He contended that the RTC acted without or in excess of jurisdiction or with grave abuse
of discretion amounting to lack or excess of jurisdiction in issuing the Order. Petitioner argued that the writ of
execution was issued improvidently or without authority since the property to be levied belonged to him in his
personal capacity and his wife. The RTC, respondent contended, could stay the execution of a judgment if the
same was unjust.14 He also contended that, pursuant to a ruling of this Court, a third party who is not a judgment
creditor may choose between filing a third-party claim with the NLRC sheriff or filing a separate action with the
courts.15
In the Decision now assailed before this Court, the CA affirmed the RTC Order in so far as it dismissed the
complaint on the ground that it had no jurisdiction over the case, and nullified all other pronouncements in the
same Order. Petitioner moved for reconsideration, but the motion was denied.
la w p h ! l

Petitioner then filed the present petition seeking the nullification of the CA Decision. He argues that he was never
sued in his personal capacity, but in his representative capacity as president of PACSI. Neither was there any
indication in the body of the Decision that he was solidarily liable with the corporation.16 He also concedes that the
Labor Arbiters decision has become final. Hence, he is not seeking to stop the execution of the judgment against
the properties of PACSI. He also avers, however, that there is no evidence that the sheriff ever implemented the
writ of execution against the properties of PACSI.17
Petitioner also raises anew his argument that he can choose between filing a third-party claim with the sheriff of
the NLRC or filing a separate action.18 He maintains that this special civil action is purely civil in nature since it
"involves the manner in which the writ of execution in a labor case will be implemented against the property of
petitioner which is not a corporate property of PACSI."19 What he is seeking to be restrained, petitioner maintains,
is not the Decision itself but the manner of its execution.20 Further, he claims that the property levied has been
constituted as a family home within the contemplation of the Family Code.21
The petition is meritorious.
Initially, we must state that the CA did not, in fact, err in upholding the RTCs lack of jurisdiction to restrain the
implementation of the writ of execution issued by the Labor Arbiter.
The Court has long recognized that regular courts have no jurisdiction to hear and decide questions which arise
from and are incidental to the enforcement of decisions, orders, or awards rendered in labor cases by appropriate
officers and tribunals of the Department of Labor and Employment. To hold otherwise is to sanction splitting of
jurisdiction which is obnoxious to the orderly administration of justice.22
Thus, it is, first and foremost, the NLRC Manual on the Execution of Judgment that governs any question on the
execution of a judgment of that body. Petitioner need not look further than that. The Rules of Court apply only by
analogy or in a suppletory character.23
Consider the provision in Section 16, Rule 39 of the Rules of Court on third-party claims:
SEC. 16. Proceedings where property claimed by third person.If the property levied on is claimed by any person
other than the judgment obligor or his agent, and such person makes an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or title, and serves the same upon the officer making the levy
and a copy thereof upon the judgment obligee, the officer shall not be bound to keep the property, unless such
judgment obligee, on demand of the officer, files a bond approved by the court to indemnify the third-party
claimant in a sum not less than the value of the property levied on. In case of disagreement as to such value, the
same shall be determined by the court issuing the writ of execution. No claim for damages for the taking or keeping
of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty
(120) days from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if
such bond is filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his
claim to the property in a separate action, or prevent the judgment obligee from claiming damages in the same or
a separate action against a third-party claimant who filed a frivolous or plainly spurious claim.

a separate action against a third-party claimant who filed a frivolous or plainly spurious claim.
When the writ of execution is issued in favor of the Republic of the Philippines, or any officer duly representing it,
the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for damages as a
result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual damages
adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for the
purpose.
On the other hand, the NLRC Manual on the Execution of Judgment deals specifically with third-party claims in
cases brought before that body. It defines a third-party claim as one where a person, not a party to the case,
asserts title to or right to the possession of the property levied upon.24 It also sets out the procedure for the filing
of a third-party claim, to wit:
SECTION 2. Proceedings. If property levied upon be claimed by any person other than the losing party or his
agent, such person shall make an affidavit of his title thereto or right to the possession thereof, stating the
grounds of such right or title and shall file the same with the sheriff and copies thereof served upon the Labor
Arbiter or proper officer issuing the writ and upon the prevailing party. Upon receipt of the third party claim, all
proceedings with respect to the execution of the property subject of the third party claim shall automatically be
suspended and the Labor Arbiter or proper officer issuing the writ shall conduct a hearing with due notice to all
parties concerned and resolve the validity of the claim within ten (10) working days from receipt thereof and his
decision is appealable to the Commission within ten (10) working days from notice, and the Commission shall
resolve the appeal within same period.
There is no doubt in our mind that petitioners complaint is a third- party claim within the cognizance of the NLRC.
Petitioner may indeed be considered a "third party" in relation to the property subject of the execution vis--vis the
Labor Arbiters decision. There is no question that the property belongs to petitioner and his wife, and not to the
corporation. It can be said that the property belongs to the conjugal partnership, not to petitioner alone. Thus, the
property belongs to a third party, i.e., the conjugal partnership. At the very least, the Court can consider that
petitioners wife is a third party within contemplation of the law.
The Courts pronouncements in Deltaventures Resources, Inc. v. Hon. Cabato25 are instructive:
Ostensibly the complaint before the trial court was for the recovery of possession and injunction, but in essence it
was an action challenging the legality or propriety of the levy vis-a-vis the alias writ of execution, including the acts
performed by the Labor Arbiter and the Deputy Sheriff implementing the writ. The complaint was in effect a motion
to quash the writ of execution of a decision rendered on a case properly within the jurisdiction of the Labor Arbiter,
to wit: Illegal Dismissal and Unfair Labor Practice. Considering the factual setting, it is then logical to conclude that
the subject matter of the third party claim is but an incident of the labor case, a matter beyond the jurisdiction of
regional trial courts.
xxxx
x x x. Whatever irregularities attended the issuance an execution of the alias writ of execution should be referred to
the same administrative tribunal which rendered the decision. This is because any court which issued a writ of
execution has the inherent power, for the advancement of justice, to correct errors of its ministerial officers and to
control its own processes.
The broad powers granted to the Labor Arbiter and to the National Labor Relations Commission by Articles 217,
218 and 224 of the Labor Code can only be interpreted as vesting in them jurisdiction over incidents arising from,
in connection with or relating to labor disputes, as the controversy under consideration, to the exclusion of the
regular courts.26
There is no denying that the present controversy arose from the complaint for illegal dismissal. The subject matter
of petitioners complaint is the execution of the NLRC decision. Execution is an essential part of the proceedings
before the NLRC. Jurisdiction, once acquired, continues until the case is finally terminated,27 and there can be no
end to the controversy without the full and proper implementation of the commissions directives.
Further underscoring the RTCs lack of jurisdiction over petitioners complaint is Article 254 of the Labor Code, to
wit:

ART. 254. INJUNCTION PROHIBITED. 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 of this Code.
That said, however, we resolve to put an end to the controversy right now, considering the length of time that has
passed since the levy on the property was made.
Petitioner claims that the property sought to be levied does not belong to PACSI, the judgment debtor, but to him
and his wife. Since he was sued in a representative capacity, and not in his personal capacity, the property could
not be made to answer for the judgment obligation of the corporation.
The TCT 28 of the property bears out that, indeed, it belongs to petitioner and his wife. Thus, even if we consider
petitioner as an agent of the corporation and, therefore, not a stranger to the case such that the provision on
third-party claims will not apply to him, the property was registered not only in the name of petitioner but also of his
wife. She stands to lose the property subject of execution without ever being a party to the case. This will be
tantamount to deprivation of property without due process.
Moreover, the power of the NLRC, or the courts, to execute its judgment extends only to properties unquestionably
belonging to the judgment debtor alone.29 A sheriff, therefore, has no authority to attach the property of any
person except that of the judgment debtor.30 Likewise, there is no showing that the sheriff ever tried to execute on
the properties of the corporation.
In sum, while petitioner availed himself of the wrong remedy to vindicate his rights, nonetheless, justice demands
that this Court look beyond his procedural missteps and grant the petition.
WHEREFORE, the foregoing premises considered, the petition is GRANTED. The Decision dated February 21,
2008 and the Resolution dated July 25, 2008 of the Court of Appeals in CA-G.R. CEB-SP. No. 02370 are hereby
REVERSED and SET ASIDE, and a new one is entered declaring NULL and VOID (1) the Order of the Regional
Trial Court of Negros Occidental dated December 27, 2006 in Civil Case No. 06-12927; and (2) the Notice of Sale
on Execution of Personal Property dated December 4, 2006 over the property covered by Transfer Certificate of
Title No. T-140167, issued by the Acting Sheriff of the National Labor Relations Commission.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
DIOSDADO M. PERALTA
Associate Justice

ROBERTO A. ABAD
Associate Justice

JOSE CATRAL MENDOZA


Associate Justice
AT T EST AT IO N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERT IF ICAT IO N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice

Footnotes
1 Rollo, pp. 26-48.
2 Penned by Associate Justice Priscilla Baltazar-Padilla, with Associate Justices Isaias P. Dicdican and

Franchito N. Diamante, concurring; rollo, pp. 50-59.


3 Id. at 75-77.
4 CA rollo, p. 191.
5 Rollo, pp. 50-51.
6 CA rollo, pp. 191-199.
7 Id. at 198.
8 Id. at 200-204.
9 Rollo, p. 51.
10 CA rollo, pp. 72-73.
11 Rollo, p. 51.
12 CA rollo, pp. 41-44.
13 Id. at 2-40.
14 Id. at 16.
15 Id. at 26-27.
16 Rollo, p. 33.
17 Id. at 34.
18 Id. at 35.
19 Id. at 36.
20 Id. at 37.
21 Id. at 39.
22 Air Services Cooperative v. CA, 354 Phil. 905, 916 (1998), citing Balais v. Hon. Velasco, 322 Phil. 790,

807 (1996).

23 2005 Revised Rules of Procedure of the National Labor Relations Commission, Section 3. Suppletory

Application of the Rules of Court. - In the absence of any applicable provision in these Rules, and in order
to effectuate the objectives of the Labor Code, the pertinent provisions of the Rules of Court of the
Philippines may, in the interest of expeditious dispensation of labor justice and whenever practicable and
convenient, be applied by analogy or in a suppletory character and effect.
24 NLRC Manual on the Execution of Judgment, Rule VI, Sec. 1.
25 384 Phil. 252, 260 (2000).
26 Id. at 260-261. (Citations omitted.)
27 Mario, Jr. v. Gamilla, 490 Phil. 607, 620 (2005), citing A Prime Security Services, Inc. v. Hon. Drilon, 316

Phil. 532, 537 (1995).


28 CA rollo, p. 109.
29 Go v. Yamane, G.R. No. 160762, May 3, 2006, 489 SCRA 107, 124; Yao v. Hon. Perello, 460 Phil. 658,

662 (2003); Co Tuan v. NLRC, 352 Phil. 240, 250 (1998).


30 Johnson and Johnson (Phils.), Inc. v. CA, 330 Phil. 856, 873 (1996).

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 190724

March 12, 2014

DIAMOND TAXI and/or BRYAN ONG, Petitioners,


vs.
FELIPE LLAMAS, JR., Respondent.
DECISIO N
BRION, J.:
In this petition for review on certiorari,1 we resolve the challenge to the August 13, 2008 decision2 and the
November 27, 2009 resolution3 of the Court of Appeals (CA) in CA-G.R. CEB-S.P. No. 02623. This CA decision
reversed and set aside the May 30, 2006 resolution4 of the National Labor Relations Commission (NLRC) in NLRC
Case No. V-000294-06 (RAB VII-07-1574-05) that dismissed respondent Felipe Llamas, Jr.'s appeal for nonperfection.
The Factual Antecedents
Llamas worked as a taxi driver for petitioner Diamond Taxi, owned and operated by petitioner Bryan Ong. On July
18, 2005, Llamas filed before the Labor Arbiter (LA) a complaint for illegal dismissal against the petitioners.
In their position paper, the petitioners denied dismissing Llamas. They claimed that Llamas had been absent
without official leave for several days, beginning July 14, 2005 until August 1, 2005. The petitioners submitted a
copy of the attendance logbook to prove that Llamas had been absent on these cited dates. They also pointed out
that Llamas committed several traffic violations in the years 2000-2005 and that they had issued him several
memoranda for acts of insubordination and refusal to heed management instructions. They argued that these acts
traffic violations, insubordination and refusal to heed management instructions constitute grounds for the
termination of Llamas employment.
Llamas failed to seasonably file his position paper.
On November 29, 2005, the LA rendered a decision5 dismissing Llamas complaint for lack of merit. The LA held
that Llamas was not dismissed, legally or illegally. Rather, the LA declared that Llamas left his job and had been
absent for several days without leave.
Llamas received a copy of this LA decision on January 5, 2006. Meanwhile, he filed his position paper6 on
December 20, 2005.
In his position paper, Llamas claimed that he failed to seasonably file his position paper because his previous
counsel, despite his repeated pleas, had continuously deferred compliance with the LAs orders for its submission.
Hence, he was forced to secure the services of another counsel on December 19, 2005 in order to comply with the
LAs directive.
On the merits of his complaint, Llamas alleged that he had a misunderstanding with Aljuver Ong, Bryans brother
and operations manager of Diamond Taxi, on July 13, 2005 (July 13, 2005 incident). When he reported for work
on July 14, 2005, Bryan refused to give him the key to his assigned taxi cab unless he would sign a prepared

on July 14, 2005, Bryan refused to give him the key to his assigned taxi cab unless he would sign a prepared
resignation letter. He did not sign the resignation letter. He reported for work again on July 15 and 16, 2005, but
Bryan insisted that he sign the resignation letter prior to the release of the key to his assigned taxi cab. Thus, he
filed the illegal dismissal complaint.
On January 16, 2006, Llamas filed before the LA a motion for reconsideration of its November 29, 2005 decision.
The LA treated Llamas motion as an appeal per Section 15, Rule V of the 2005 Revised Rules of Procedure of
the NLRC (2005 NLRC Rules) (the governing NLRC Rules of Procedure at the time Llamas filed his complaint
before the LA).
In its May 30, 2006 resolution,7 the NLRC dismissed for non-perfection Llamas motion for reconsideration treated
as an appeal. The NLRC pointed out that Llamas failed to attach the required certification of non-forum shopping
per Section 4, Rule VI of the 2005 NLRC Rules.
Llamas moved to reconsider the May 30, 2006 NLRC resolution; he attached the required certification of nonforum shopping.
When the NLRC denied his motion for reconsideration8 in its August 31, 2006 resolution,9 Llamas filed before the
CA a petition for certiorari.10
The CAs ruling
In its August 13, 2008 decision,11 the CA reversed and set aside the assailed NLRC resolution. Citing
jurisprudence, the CA pointed out that non-compliance with the requirement on the filing of a certificate of nonforum shopping, while mandatory, may nonetheless be excused upon showing of manifest equitable grounds
proving substantial compliance. Additionally, in order to determine if cogent reasons exist to suspend the rules of
procedure, the court must first examine the substantive aspect of the case.
The CA pointed out that the petitioners failed to prove overt acts showing Llamas clear intention to abandon his
job. On the contrary, the petitioners placed Llamas in a situation where he was forced to quit as his continued
employment has been rendered impossible, unreasonable or unlikely, i.e., making him sign a resignation letter as
a precondition for giving him the key to his assigned taxi cab. To the CA, the petitioners act amounted to
constructive dismissal. The CA additionally noted that Llamas immediately filed the illegal dismissal case that
proved his desire to return to work and negates the charge of abandonment.
Further, the CA brushed aside the petitioners claim that Llamas committed several infractions that warranted his
dismissal. The CA declared that the petitioners should have charged Llamas for these infractions to give the latter
an opportunity to explain his side. As matters then stood, they did not charge him for these infractions; hence, the
petitioners could not have successfully used these as supporting grounds to justify Llamas dismissal on the
ground of abandonment.
As the CA found equitable grounds to take exception from the rule on certificate of non-forum shopping, it
declared that the NLRC had acted with grave abuse of discretion when it dismissed Llamas appeal purely on a
technicality. To the CA, the NLRC should have considered as substantially compliant with this rule Llamas
subsequent submission of the required certificate with his motion for reconsideration (of the NLRCs May 30, 2006
resolution).
Accordingly, the CA ordered the petitioners to pay Llamas separation pay, full backwages and other benefits due
the latter from the time of the dismissal up to the finality of the decision. The CA awarded separation pay in lieu of
reinstatement because of the resulting strained work relationship between Llamas and Bryan following the
altercation between the former and the latters brother.
The petitioners filed the present petition after the CA denied their motion for reconsideration12 in the CAs
November 27, 2009 resolution.13
The Petition
The petitioners argue that the CA erred when it encroached on the NLRCs exclusive jurisdiction to review the
merits of the LAs decision. To the petitioners, the CA should have limited its action in determining whether grave
abuse of discretion attended the NLRCs dismissal of Llamas appeal; finding that it did, the CA should have
remanded the case to the NLRC for further proceedings.

remanded the case to the NLRC for further proceedings.


Moreover, the petitioners point out that the NLRC did not gravely abuse its discretion when it rejected Llamas
appeal. They argue that the NLRCs action conformed with its rules and with this Courts decisions that upheld the
dismissal of an appeal for failure to file a certificate of non-forum shopping.
Directly addressing the CAs findings on the dismissal issue, the petitioners argue that they did not constructively
dismiss Llamas. They maintain that Llamas no longer reported for work because of the several liabilities he
incurred that would certainly have, in any case, warranted his dismissal.
The Case for the Respondent
Llamas argues in his comment14 that the CA correctly found that the NLRC acted with grave abuse of discretion
when it maintained its dismissal of his appeal despite his subsequent filing of the certificate of non-forum shopping.
Quoting the CAs ruling, Llamas argues that the NLRC should have given due course to his appeal to avoid
miscarriage of substantial justice.
On the issue of dismissal, Llamas argues that the CA correctly reversed the LAs ruling that found him not
dismissed, legally or illegally. Relying on the CAs ruling, Llamas points out that the petitioners bore the burden of
proving the abandonment charge. In this case, the petitioners failed to discharge their burden; hence, his
dismissal was illegal.
The Courts Ruling
We do not find the petition meritorious.
Preliminary considerations: factual-issue-bar-rule
In this Rule 45 petition for review on certiorari, we review the legal errors that the CA may have committed in the
assailed decision, in contrast with the review for jurisdictional error undertaken in an original certiorari action. In
reviewing the legal correctness of the CA decision in a labor case made under Rule 65 of the Rules of Court, we
examine the CA decision in the context that it determined the presence or the absence of grave abuse of
discretion in the NLRC decision before it and not on the basis of whether the NLRC decision, on the merits of the
case, was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a
review on appeal, of the challenged NLRC decision. In question form, the question that we ask is: Did the CA
correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case?15
In addition, the Courts jurisdiction in a Rule 45 petition for review on certiorari is limited to resolving only questions
of law. A question of law arises when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts. In contrast, a question of fact exists when the doubt or controversy
concerns the truth or falsehood of facts.16
As presented by the petitioners, the petition before us involves mixed questions of fact and law, with the core issue
being one of fact. Whether the CA, in ruling on the labor case before it under an original certiorari action, can
make its own factual determination requires the consideration and application of law and jurisprudence; it is
essentially a question of law that a Rule 45 petition properly addresses.
In the context of this case, however, this legal issue is inextricably linked with and cannot be resolved without the
definitive resolution of the core factual issue whether Llamas abandoned his work or had been constructively
dismissed. As a proscribed question of fact, we generally cannot address this issue, except to the extent
necessary to determine whether the CA correctly found that the NLRC acted with grave abuse of discretion in
dismissing Llamas appeal on purely technical grounds.
For raising mixed questions of fact and law, we deny the petition outright. Even if this error were to be disregarded,
however, we would still deny the petition as we find the CA legally correct in reversing the NLRCs resolution on the
ground of grave abuse of discretion.
The CA has ample authority to make its
own factual determination
We agree that remanding the case to the NLRC for factual determination and decision of the case on the merits

would have been, ordinarily, a prudent approach. Nevertheless, the CAs action on this case was not procedurally
wrong and was not without legal and jurisprudential basis.
In this jurisdiction, courts generally accord great respect and finality to factual findings of administrative agencies,
i.e., labor tribunals, in the exercise of their quasi-judicial function.17 These findings, however, are not infallible. This
doctrine espousing comity to administrative findings of facts cannot preclude the courts from reviewing and, when
proper, disregarding these findings of facts when shown that the administrative body committed grave abuse of
discretion by capriciously, whimsically or arbitrarily disregarding evidence or circumstances of considerable
importance that are crucial or decisive of the controversy.18
Hence, in labor cases elevated to it via petition for certiorari, the CA can grant this prerogative writ when it finds
that the NLRC acted with grave abuse of discretion in arriving at its factual conclusions. To make this finding, the
CA necessarily has to view the evidence if only to determine if the NLRC ruling had basis in evidence. It is in the
sense and manner that the CA, in a Rule 65 certiorari petition before it, had to determine whether grave abuse of
discretion on factual issues attended the NLRCs dismissal of Llamas appeal. Accordingly, we do not find
erroneous the course that the CA took in resolving Llamas certiorari petition. The CA may resolve factual issues
by express legal mandate and pursuant to its equity jurisdiction.
The NLRC committed grave abuse of
discretion in dismissing Llamas appeal on
mere technicality
Article 223 (now Article 229)19 of the Labor Code states that decisions (or awards or orders) of the LA shall
become final and executory unless appealed to the NLRC within ten (10) calendar days from receipt of the
decision. Consistent with Article 223, Section 1, Rule VI of the 2005 NLRC Rules also provides for a ten (10)-day
period for appealing the LAs decision. Under Section 4(a), Rule VI20 of the 2005 NLRC Rules, the appeal shall be
in the form of a verified memorandum of appeal and accompanied by proof of payment of the appeal fee, posting
of cash or surety bond (when necessary), certificate of non-forum shopping, and proof of service upon the other
parties. Failure of the appealing party to comply with any or all of these requisites within the reglementary period
will render the LAs decision final and executory.
Indisputably, Llamas did not file a memorandum of appeal from the LAs decision. Instead, he filed, within the ten
(10)-day appeal period, a motion for reconsideration. Under Section 15, Rule V of the 2005 NLRC Rules, motions
for reconsideration from the LAs decision are not allowed;
they may, however, be treated as an appeal provided they comply with the requirements for perfecting an appeal.
The NLRC dismissed Llamas motion for reconsideration treated as an appeal for failure to attach the required
certificate of non-forum shopping per Section 4(a), Rule VI of the 2005 NLRC Rules.
The requirement for a sworn certification of non-forum shopping was prescribed by the Court under Revised
Circular 28-91,21 as amended by Administrative Circular No. 04-94,22 to prohibit and penalize the evils of forum
shopping. Revised Circular 28-91, as amended by Administrative Circular No. 04-94, requires a sworn certificate
of non-forum shopping to be filed with every petition, complaint, application or other initiatory pleading filed before
the Court, the CA, or the different divisions thereof, or any other court, tribunal or agency.
Ordinarily, the infirmity in Llamas appeal would have been fatal and would have justified an end to the case. A
careful consideration of the circumstances of the case, however, convinces us that the NLRC should, indeed, have
given due course to Llamas appeal despite the initial absence of the required certificate. We note that in his
motion for reconsideration of the NLRCs May 30, 2006 resolution, Llamas attached the required certificate of nonforum shopping.
Moreover, Llamas adequately explained, in his motion for reconsideration, the inadvertence and presented a clear
justifiable ground to warrant the relaxation of the rules. To recall, Llamas was able to file his position paper,
through his new counsel, only on December 20, 2005. He hired the new counsel on December 19, 2005 after
several repeated, albeit failed, pleas to his former counsel to submit, on or before October 25, 2005 per the LAs
order, the required position paper. On November 29, 2005, however, the LA rendered a decision that Llamas and
his new counsel learned and received a copy of only on January 5, 2006. Evidently, the LAs findings and
conclusions were premised solely on the petitioners pleadings and evidence. And, while not the fault of the LA,
Llamas, nevertheless, did not have a meaningful opportunity to present his case, refute the contents and
allegations in the petitioners position paper and submit controverting evidence.

allegations in the petitioners position paper and submit controverting evidence.


Faced with these circumstances, i.e., Llamas subsequent compliance with the certification-against-forum-shopping
requirement; the utter negligence and inattention of Llamas former counsel to his pleas and cause, and his
vigilance in immediately securing the services of a new counsel; Llamas filing of his position paper before he
learned and received a copy of the LAs decision; the absence of a meaningful opportunity for Llamas to present
his case before the LA; and the clear merits of his case (that our subsequent discussion will show), the NLRC
should have relaxed the application of procedural rules in the broader interests of substantial justice.
Indeed, while the requirement as to the certificate of non-forum shopping is mandatory, this requirement should
not, however, be interpreted too literally and thus defeat the objective of preventing the undesirable practice of
forum-shopping.23
Under Article 221 (now Article 227)24 of the Labor Code, "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."25 Consistently, we have emphasized
that "rules of procedure are mere tools designed to facilitate the attainment of justice. A strict and rigid application
which would result in technicalities that tend to frustrate rather than promote substantial justice should not be
allowed x x x. No procedural rule is sacrosanct if such shall result in subverting justice."26 Ultimately, what should
guide judicial action is that a party is given the fullest opportunity to establish the merits of his action or defense
rather than for him to lose life, honor, or property on mere technicalities.27
Then, too, we should remember that "the dismissal of an employees appeal on purely technical ground is
inconsistent with the constitutional mandate on protection to labor."28 Under the Constitution29 and the Labor
Code,30 the State is bound to protect labor and assure the rights of workers to security of tenure tenurial security
being a preferred constitutional right that, under these fundamental guidelines, technical infirmities in labor
pleadings cannot defeat.31
In this case, Llamas action against the petitioners concerned his job, his security of tenure. This is a property
right of which he could not and should not be deprived of without due process.32 But, more importantly, it is a right
that assumes a preferred position in our legal hierarchy.33
1 w p h i1

Under these considerations, we agree that the NLRC committed grave abuse of discretion when, in dismissing
Llamas appeal, it allowed purely technical infirmities to defeat Llamas tenurial security without full opportunity to
establish his cases merits.
Llamas did not abandon his work; he was
constructively dismissed
"Abandonment is the deliberate and unjustified refusal of an employee to resume his employment."34 It is a form of
neglect of duty that constitutes just cause for the employer to dismiss the employee.35
To constitute abandonment of work, two elements must concur: "(1) x x x the employee must have failed to report
for work or must have been absent without valid or justifiable reason; and (2) x x x there must have been a clear
intention [on the part of the employee] to sever the employer-employee relationship manifested by some overt
act."36 The employees absence must be accompanied by overt acts that unerringly point to the employees clear
intention to sever the employment relationship.37 And, to successfully invoke abandonment, whether as a ground
for dismissing an employee or as a defense, the employer bears the burden of proving the employees unjustified
refusal to resume his employment.38 Mere absence of the employee is not enough.39
Guided by these parameters, we agree that the petitioners unerringly failed to prove the alleged abandonment.
They did not present proof of some overt act of Llamas that clearly and unequivocally shows his intention to
abandon his job. We note that, aside from their bare allegation, the only evidence that the petitioners submitted to
prove abandonment were the photocopy of their attendance logbook and the July 15, 2005 memorandum40 that
they served on Llamas regarding the July 13, 2005 incident. These pieces of evidence, even when considered
collectively, indeed failed to prove the clear and unequivocal intention, on Llamas part, that the law requires to
deem as abandonment Llamas absence from work. Quite the contrary, the petitioners July 15, 2005
memorandum, in fact, supports, if not strengthens, Llamas' version of the events that led to his filing of the
complaint, i.e., that as a result of the July 13, 2005 incident, the petitioners refused to give him the key to his

complaint, i.e., that as a result of the July 13, 2005 incident, the petitioners refused to give him the key to his
assigned taxi cab unless he would sign the resignation letter.
Moreover, and as the CA pointed out, Llamas lost no time in filing the illegal dismissal case against them. To
recall, he filed the complaint on July 18, 2005 or only two days from the third time he was refused access to his
assigned taxi cab on July 16, 2005. Clearly, Llamas could not be deemed to have abandoned his work for, as we
have previously held, the immediate filing by the employee of an illegal dismissal complaint is proof enough of his
intention to return to work and negates the employer's charge of abandonment.41
To reiterate and emphasize, abandonment is a matter of intention that cannot lightly be presumed from certain
equivocal acts of the employee.42
The CA, therefore, correctly regarded Llamas as constructively dismissed for the petitioners' failure to prove the
alleged just cause -abandonment - for his dismissal. Constructive dismissal exists when there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely. Constructive dismissal is a
dismissal in disguise or an act amounting to dismissal but made to appear as if it were not. In constructive
dismissal cases, the employer is, concededly, charged with the burden of proving that its conduct and action were
for valid and legitimate grounds.43 The petitioners' persistent refusal to give Llamas the key to his assigned taxi
cab, on the condition that he should first sign the resignation letter, rendered, without doubt, his continued
employment impossible, unreasonable and unlikely; it, thus, constituted constructive dismissal.
In sum, the CA correctly found equitable grounds to warrant relaxation of the rule on perfection of appeal (filing of
the certificate of non-forum shopping) as there was patently absent sufficient proof for the charge of
abandonment. Accordingly, we find the CA legally correct in reversing and setting aside the NLRC's resolution
rendered in grave abuse of discretion.
WHEREFORE, in light of these considerations, we hereby DENY the petition. We AFFIRM the decision dated
August 13, 2008 and the resolution dated November 27, 2009 of the Court of Appeals in CA-G.R. CEB-S.P. No.
02623.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
MARIANO C. DEL CASTILLO
Associate Justice

JOSE PORTUGAL PEREZ


Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice
AT T EST AT IO N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERT IF ICAT IO N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of
the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO


Chief Justice

Footnotes
1

Rollo, pp. 9-29.

Penned by Associate Justice Franchito N. Diamante, and concurred in by Associate Justices Priscilla
Baltazar-Padilla and Edgardo L. delos Santos; id. at 31-42.
3

Id. at 44-45.

Penned by Commissioner Aurelio D. Menzon, and concurred in by Commissioner Oscar S. Uy and


Presiding Commissioner Gerardo C. Nograles; id. at 57-59.
5

Penned by LA Jose Gutierrez; id. at 46-47.

Id. at 48-51.

Supra note 4.

Rollo, pp. 60-69.

Id. at 71-72.

10

Id. at 73-90.

11

Supra note 2.

12

Rollo, pp. 103-124.

13

Supra note 3.

14

Rollo, pp. 129-134.

15

Montoya v. Transmed Manila Corporation, G.R. No. 183329, August 27, 2009, 597 SCRA 334, 342-343.

16

Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.

17

See Cosmos Bottling Corp. v. Nagrama, Jr., 571 Phil. 281, 300 (2008).

18

See Norkis Trading Corporation v. Buenavista, G.R. No. 182018, October 10, 2012, 683 SCRA 406, 422;
citation omitted.
19

As directed by Republic Act No. 10151, entitled "An Act Allowing the Employment of Night Workers,
thereby Repealing Articles 130 and 131 of Presidential Decree Number Four Hundred Forty-Two, as
amended, Otherwise Known as the Labor Code of the Philippines," approved on June 21, 2011, the Labor
Code articles beginning with Article 130 are renumbered.
20

Section 4. Requisites for Perfection of Appeal. - a) The appeal shall be: 1) filed within the reglementary
period provided in Section 1 of this Rule; 2) verified by the appellant himself in accordance with Section 4,
Rule 7 of the Rules of Court, as amended; 3) in the form 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 the appellant received the appealed decision, resolution or order; 4) in three (3) legibly typewritten or
printed copies; and 5) accompanied by i) proof of payment of the required appeal fee; ii) posting of a cash
or surety bond as provided in Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of
service upon the other parties.

21

Issued on February 8, 1994 and made effective on April 1, 1994.

22

Effective April 1, 1994.

23

Caa v. Evangelical Free Church of the Phils., 568 Phil. 205, 213-214 (2008), citing Vicar International
Construction, Inc. v. FEB Leasing and Finance Corporation, G.R. No. 157195, April 22, 2005, 456 SCRA
588.
24

Supra note 19.

25

See also Section 10, Rule VI of the 2005 NLRC Rules.

26

Phil. Commercial Intl Bank v. Cabrera, 494 Phil. 735, 743 (2005); citations omitted.

27

Id. at 743-744; and Caa v. Evangelical Free Church of the Phils., supra note 23, at 215.

28

Polsotin, Jr. v. De Guia Enterprises, Inc., G.R. No. 172624, December 5, 2011, 661 SCRA 523, 529.

29

See Article II, Section 18 and Article XIII, Section 3.

30

Under Article 4 of the Labor Code, all doubts in the implementation and interpretation of [its] provisions x x
x, including its implementing rules and regulations, shall be resolved in favor of labor."
31

See Spic N Span Services Corporation v. Paje, G.R. No. 174084, August 25, 2010, 629 SCRA 261, 270.

32

Polsotin, Jr. v. De Guia Enterprises, Inc., supra note 28, at 530.

33

See Spic N Span Services Corporation v. Paje, supra note 31, at 269.

34

NEECO II v. NLRC, 499 Phil. 777, 789 (2005).

35

See Article 282 (now Article 296) of the Labor Code.

36

Samarca v. Arc-Men Industries, Inc., 459 Phil. 506, 515 (2003). See also Harpoon Marine Services, Inc. v.
Francisco, G.R. No. 167751, March 2, 2011, 644 SCRA 394, 405-406; and Aliten v. U-Need Lumber &
Hardware, 533 Phil. 213, 223 (2006).
37

See ACD Investigation Security Agency, Inc. v. Daquera, G.R. No. 147473, March 30, 2004, 426 SCRA

494, 499.
38

See Samarca v. Arc-Men Industries, Inc., supra note 36, at 515; and Harpoon Marine Services, Inc. v.
Francisco, supra note 36, at 406.
39

See Aliten v. U-Need Lumber & Hardware, supra note 36 at 222; and Functional, Inc. v. Granfil, G.R. No.
176377, November 16, 2011, 660 SCRA 279, 286-287.
40

Rollo, p. 112.

41

Labor v. National labor Relations Commission, G.R. No. 110388, September 14, 1995, 248 SCRA 183,
198.
42

Josan, .JPS, Santiago Cargo Movers v. Aduna, G.R. No. 190794, February 22, 2012, 666 SCRA 679,
686; and Aliten v. U-Need Lumber & Hardware, supra note 36, at 223.
43

Galangv. Malasugui, G.R. No. 174173, March 7, 2012, 667 SCRA622, 634-635.

The Lawphil Project - Arellano Law Foundation

Today is Friday, July 31, 2015

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 167563

March 22, 2010

COLLEGE OF THE IMMACULATE CONCEPTION, Petitioner,


vs.
NATIONAL LABOR RELATIONS COMMISSION and ATTY. MARIUS F. CARLOS, PH.D., Respondents.
DECISIO N
PERALTA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the
Decision1 and Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 83321, which affirmed the Resolution
rendered by the National Labor Relations Commission (NLRC), Third Division in NLRC NCR CA No. 028096-01.
Petitioner College of the Immaculate Conception, through its former President Rev. Fr. Antonio A. Mangahas, Jr.,
appointed respondent Atty. Marius F. Carlos on June 1, 1995 as Acting Dean of the Department of Business
Administration and Accountancy. Thereafter, in a letter dated May 23, 1996, petitioner informed respondent of his
appointment as Dean of the Department of Business, Economics and Accountancy effective June 1, 1996 until
May 31, 2000. Respondent served as Dean of said department for the designated term.
In a letter dated May 15, 2000, petitioner reminded respondent that upon the expiration of his term as Dean, he
will be appointed as full-time professor of Law and Accounting without diminution of his teaching salary as Dean.
As promised, on June 1, 2000, respondent was given eight (8) teaching loads as full-time professor. Respondent
then requested for the payment of overload pay, arguing that the regular full time load of a faculty member is only
six. Petitioner, in a letter dated July 3, 2000, denied respondent's claim for overload pay and explained that
pursuant to the Faculty Manual, a full time faculty member, such as the respondent, is one who teaches at least
twenty-four units or eight (8) teaching loads per semester in the College Department. In the same letter, petitioner
requested the respondent to vacate the Dean's office. Petitioner also directed respondent to explain why no
disciplinary action should be taken against him for engaging in the practice of law and teaching law in another law
school without prior permission from the petitioner.
In his written reply, respondent admitted that he was teaching at Araullo University without written permission
because it was unnecessary. As to his law practice, he explained that the only case he was handling was a petition
for Declaration of Nullity of Marriage, which was referred to him by petitioner's Vice-President for Academic Affairs.
Respondent said that his demotion from Dean of the Department to a Faculty member was without legal basis and
that the non-renewal of his appointment as Dean was arbitrary, capricious, unlawful, tainted with abuse of
discretion, and injurious to his integrity and reputation. Further, the subsequent appointment of other personnel as
acting Dean was violative of the law.
Petitioner replied that there was no demotion in position from Dean to Faculty member, because respondents
appointment as Dean was for a fixed period of four (4) years, from June 1, 1996 to May 31, 2000, as stated in
petitioner's letter dated May 23, 1996.
Petitioner refused to accept respondent's explanation that securing petitioner's prior written permission to teach
elsewhere, or to engage in any other remunerative occupation, is unnecessary. Thus, in its letter3 dated July 17,
2000, petitioner gave respondent two options, to wit:

2000, petitioner gave respondent two options, to wit:


1. Remain as a full-time professor, but without teaching loads outside; you may also continue to practice
your profession as a lawyer, provided that any additional cases you wish to handle should be subject to the
prior written approval of the College; or
2. Become a part-time professor with an initial teaching load of fifteen (15) units, and with complete freedom
to teach elsewhere and to practice your profession. This means that you will lose your tenure as a full-time
faculty member; moreover, your teaching loads in subsequent semesters will depend upon the College's
evaluation of your performance and the teaching loads you will be carrying for that particular semester in
other schools.
Since respondent failed to respond to the aforementioned letter, petitioner again sent a letter to respondent on
September 20, 2000 to give him another chance to choose between the two foregoing options and to call his
attention to Section 16.8, CHED Memorandum No. 19, S. 1998, of which provides:
x x x faculty members teaching in more than one school must give formal notice in their teaching assignment to all
schools concerned; failure to give notices mean automatic withdrawal or cancellation of his teaching assignment
and non-assignment of teaching load for the succeeding semester.4
Respondent requested for more time to reply, but failed to do so. Thus, petitioner informed respondent that he will
not be assigned any teaching load for the succeeding semester pursuant to Section 16.8,5 CHED Memorandum
No. 19, series of 1998.
In a letter6 dated October 15, 2000, respondent protested the imposition of sanction against him arising from his
part-time teaching of law in another university. He maintained that teaching in another university is a benefit he
enjoyed since July 1, 1999 as an administrator and Dean. He further said that his part-time teaching benefit
cannot be withheld despite his alleged demotion as a faculty member. Even assuming that he violated Section
16.8, CHED Memorandum No. 19, series of 1998, respondent pointed out that under the College Faculty Manual,
teaching in another school without permission from the Department Head and the President is punishable at the
first instance by mere censure or oral reprimand.
On October 19, 2000, respondent filed a complaint7 against petitioner before Regional Arbitration Branch No. III of
San Fernando, Pampanga, for unfair labor practice, illegal dismissal, with payment of backwages and damages.
Respondent argued that the non-renewal of his appointment as Dean and his alleged demotion to a faculty
member already constituted constructive dismissal and was but a prelude to his actual dismissal. Thereafter, his
dismissal materialized when he was deprived of his teaching load.
Petitioner denied dismissing respondent and said it was only constrained to deprive respondent of his teaching
load because he refused to abide by the mandate of Section 16.8, CHED Memorandum No. 19, series of 1998.
The Labor Arbiter (LA), in his Decision8 dated February 14, 2001, ruled that respondent was illegally dismissed.
The dispositive portion of the decision reads:
WHEREFORE, in light of the foregoing, decision is hereby rendered declaring the employment termination as
illegal. Respondents are hereby ordered to reinstate the complainant to his former position without loss of seniority
rights and other privileges appurtenant thereto immediately upon receipt of this decision. Further, respondents are
hereby ordered to pay complainant's backwages which as of the date of this decision has been computed in the
amount of P54,567.00; representation allowance in the amount of P7,092.00; 13th month pay in the amount of
P5,138.25, plus moral and exemplary damages in the amount of P50,000.00 and P30,000.00, respectively.
SO ORDERED.
On March 19, 2001, the LA then issued a Writ of Execution,9 directing the Sheriff of the NLRC to implement his
Decision dated February 14, 2001. The Petitioner opted to reinstate respondent in its payroll only.10
Dissatisfied with the Labor Arbiter's finding, petitioner appealed to the NLRC, which rendered a Decision11 dated
August 13, 2003, the dispositive portion of which reads:

WHEREFORE, premises considered, the Decision dated February 14, 2001 is hereby SET ASIDE and a new one
entered DISMISSING the complaint. However, respondents are hereby ordered to reinstate complainant as fulltime professor of Law and Accountancy without backwages.
SO ORDERED.
The NLRC ruled that petitioner's non-assignment of teaching load for the respondent was merely resorted to as a
sanction pursuant to Section 16.8 of CHED Memorandum No. 19, series of 1998. It was clear that respondent's
contract as Dean was only for a period of four years, from June 1, 1996 to May 31, 2000, afterwhich, he would be
appointed as a full- time professor without diminution of salary as a dean. Thus, the LA was incorrect when it
directed the reinstatement of the respondent to his former position as a Dean. The NLRC, likewise, deleted the
award of moral and exemplary damages for lack of factual and legal basis.
Petitioner filed a Motion for Clarification and/or Partial Reconsideration,12 praying that since the respondent was
not illegally dismissed, then he should be directed to refund the petitioner all the amounts he received by way of
payroll reinstatement. The NLRC, in its Resolution13 dated January 30, 2004, denied petitioner's motion for lack of
merit.
Undaunted, petitioner filed a petition for certiorari14 with the CA alleging that the NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction when it refused to order the respondent to return all the
monetary benefits he had received on account of his payroll reinstatement as Dean. The CA, in its Decision dated
August 31, 2004, dismissed the petition and sustained the ruling of the NLRC. Petitioner filed a motion for
reconsideration, which the CA denied. Hence, the instant petition, which mainly poses the following issue:
Does the subsequent reversal of the LA's findings mean that respondent should reimburse petitioner all the
salaries and benefits he received pursuant to the immediate execution of the LA's erroneous decision ordering his
reinstatement as Department Dean?
We rule in the negative. In Air Philippines Corporation v. Zamora,15 citing Roquero v. Philippine Airlines, Inc.,16 we
held that:
x x x 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.
Petitioner, however, insists that Roquero finds no application to the case at bar, because here, respondent was
ordered reinstated to a position different from that which he previously held, i.e., the LA wrongfully ordered his
reinstatement as Dean, when he should have been reinstated only as a full-time faculty member, because this was
the position he held when he filed the complaint for illegal dismissal. Further, petitioner takes a firm stand that the
case of International Container Terminal Services, Inc v. NLRC17 refers only to a case of a dismissed employee
and is inapplicable here, where it was correctly found on appeal that the employee was not dismissed at all, but
was only sanctioned for teaching in another university without petitioner's permission.
It is not disputed at this point that the LA erred in ordering respondent's reinstatement as Dean. The NLRC ruled
that respondent should have been merely reinstated as a full-time law professor, because the term of his
appointment as Dean had long expired. However, such mistake on the part of the LA cannot, in any way, alter the
fact that during the pendency of the appeal of his decision, his order for respondent's reinstatement as Dean was
immediately executory. Article 223 of the Labor Code explicitly provides that:
Art. 223. - Appeal. x x x
xxxx
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

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)
Therefore, petitioner could not validly insist that it is entitled to reimbursement for the payment of the salaries of
respondent pursuant to the execution of the LA's decision by simply arguing that the LA's order for reinstatement
is incorrect. The pertinent law on the matter is not concerned with the wisdom or propriety of the LA's order of
reinstatement, for if it was, then it should have provided that the pendency of an appeal should stay its execution.
After all, a decision cannot be deemed irrefragable unless it attains finality.
In Garcia v. Philippine Airlines, Inc.,18 the Court made a very enlightening discussion on the aspect of
reinstatement pending appeal:
On this score, the Courts attention is drawn to seemingly divergent decisions concerning reinstatement pending
appeal or, particularly, the option of payroll reinstatement. On the one hand is the jurisprudential trend as
expounded in a line of cases including Air Philippines Corp. v. Zamora, while on the other is the recent case of
Genuino v. National Labor Relations Commission. At the core of the seeming divergence is the application of
paragraph 3 of Article 223 of the Labor Code x x x
The view as maintained in a number of cases is that:
x x x [E]ven 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. (Emphasis in the
original; italics and underscoring supplied)
In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive
wages pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is
ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to
comply therewith.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is
valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the
salaries [he] received while the case was pending appeal, or it can be deducted from the accrued benefits that the
dismissed employee was entitled to receive from [his] employer under existing laws, collective bargaining
agreement provisions, and company practices. However, if the employee was reinstated to work during the
pendency of the appeal, then the employee is entitled to the compensation received for actual services rendered
without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is
based on a just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the
September 3, 1994 NLRC Decision. (Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was
found to be valid, and to do so would constitute unjust enrichment.
Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee was
required to refund the salaries received on payroll reinstatement. In fact, in a catena of cases, the Court did not
order the refund of salaries garnished or received by payroll-reinstated employees despite a subsequent reversal
of the reinstatement order.
The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile the
rationale of reinstatement pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police power), the State may authorize an immediate

x x x 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.
In the same case, the Court went on to discuss the illogical and unjust effects of the "refund doctrine" erroneously
espoused in Genuino:
Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the
"refund doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a
dismissed employee. The employee, to make both ends meet, would necessarily have to use up the salaries
received during the pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable
decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency.
Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll
reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll
reinstatement belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino,
it is unthinkable for one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of concerned
employees declining payroll reinstatement is on the horizon.
Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a
scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve
as a bond posted in installment by the employer. For in the event of a reversal of the Labor Arbiters decision
ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for bond
premiums. This circumvents, if not directly contradicts, the proscription that the "posting of a bond [even a cash
bond] by the employer shall not stay the execution for reinstatement."
In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund
the salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of
the prevailing doctrine on reinstatement pending appeal vis--vis the effect of a reversal on appeal.
xxxx
The Court reaffirms the prevailing principle that 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. x x x
Thus, the Court resolved the impasse by reaffirming the principle earlier enunciated in Air Philippines Corporation,
that an employee cannot be compelled to reimburse the salaries and wages he received during the pendency of
his appeal, notwithstanding the reversal by the NLRC of the LA's order of reinstatement. In this case, there is even
more reason to hold the employee entitled to the salaries he received pending appeal, because the NLRC did not
reverse the LA's order of reinstatement, but merely declared the correct position to which respondent is to be
reinstated, i.e., that of full-time professor, and not as Dean.
Petitioner alleged that due to the unreasonable demand of the respondent that he be reinstated as a Dean,
instead of a faculty member, petitioner was constrained to reinstate him in the payroll only. Thus, petitioner argued
that when the respondent imposed uncalled conditions for his reinstatement, his claim for reinstatement pending
appeal was effectively nullified. We rule that respondent did not impose any unreasonable condition on his
reinstatement as a Dean, because he was merely demanding that he be reinstated in the manner set forth by the
LA in the writ of execution. Moreover, it bears stressing that the manner of immediate reinstatement, pending
appeal, or the promptness thereof is immaterial, as illustrated in the following two scenarios:
Situation No. 1. (As in the cases of Air Philippines Corporation and International Container Terminal Services, Inc.)
The LA ruled in favor of the dismissed employee and ordered his reinstatement. However, the employer did not
immediately comply with the LA's directive. On appeal, the NLRC reversed the LA and found that there was no
illegal dismissal. In this scenario, We ruled that the employee is entitled to payment of his salaries and allowances
pending appeal.
Situation No. 2. (As in the present case) The LA ruled in favor of the dismissed employee and ordered the latter's
reinstatement. This time, the employer complied by reinstating the employee in the payroll. On appeal, the LA's
ruling was reversed, finding that there was no case of illegal dismissal but merely a temporary sanction, akin to a

ruling was reversed, finding that there was no case of illegal dismissal but merely a temporary sanction, akin to a
suspension. Here, We also must rule that the employee cannot be required to reimburse the salaries he received
because if he was not reinstated in the payroll in the first place, the ruling in situation no. 1 will apply, i.e., the
employee is entitled to payment of his salaries and allowances pending appeal.
1 a v v p h i1

Thus, either way we look at it, at the end of the day, the employee gets his salaries and allowances pending
appeal. The only difference lies as to the time when the employee gets it.
Lastly, petitioner alleged that the LA's decision was tainted with fraud and graft and corruption, as the dispositive
portion of the decision cites facts not found in the pleadings and documents submitted by the parties. Allegedly,
the LA's computation of respondent's basic salary, representation allowance and 13th-month pay are not
supported by the records of the case. Petitioner even opined that the LA and the respondent connived in drafting
the decision.
Aside from the fact that this Court is not the proper forum to consider the merits of petitioner's charge of fraud and
graft and corruption against the LA and the respondent, petitioner failed to overcome the presumption of regularity
in the performance of the LA's official duties19 in rendering his decision. Petitioner was not able to show clear and
convincing proof to establish partiality, fraud and acts constituting graft and corruption. Well-entrenched in
jurisprudence is the time-honored principle that the law bestows upon a public official the presumption of regularity
in the discharge of ones official duties and functions.20 The Court held that:
x x x public respondents have in their favor the presumption of regularity in the performance of official duties which
petitioners failed to rebut when they did not present evidence to prove partiality, malice and bad faith. Bad faith
can never be presumed; it must be proved by clear and convincing evidence. x x x21
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
83321, dated August 31, 2004 and March 11, 2005, respectively, are AFFIRMED.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
RENATO C. CORONA
Associate Justice
Chairperson
PRESBITERO J. VELASCO, JR.
Associate Justice

ANTONIO EDUARDO B. NACHURA


Associate Justice

JOSE CATRAL MENDOZA


Associate Justice
AT T EST AT IO N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Associate Justice
Third Division, Chairperson
CERT IF ICAT IO N
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts
Division.

REYNATO S. PUNO
Chief Justice

Footnotes
1 Penned by Associate Justice Aurora Santiago-Lagman, with Associate Justices Portia Alio-Hormachuelos

and Rebecca De Guia-Salvador, concurring; rollo, pp. 29-40.


2 Id. at 42-43.
3 Records, pp. 26-27.
4 Id. at 28.
5 Id. at 31-32.
6 Id. at 33-38.
7 Id. at 1-2.
8 Rollo, pp. 44-67.
9 Records, pp. 208-209.
10 Id. at 212.
11 Rollo, pp. 68-84.
12 Records, pp. 480-488.
13 Id. at 494-499.
14 CA rollo, pp. 2-37.
15 G.R. No. 148247, August 7, 2006, 498 SCRA 59, 72-73. (Emphasis ours.)
16 449 Phil. 437, 446 (2003). In this case, the LA found the employees' dismissal to be valid. The NLRC

ordered reinstatement to their former positions with backwages. The CA reinstated the LA's decision insofar
as it upheld the dismissal order. The Court ruled that reinstatement is immediately executory. It is mandatory
on the employer to actually reinstate the employee or reinstate him in the payroll. If the employer failed to
reinstate the employee, the employer must pay the employee the salary he is entitled to, as if he was
reinstated, from the time the reinstatement was ordered until its reversal by a higher court.
17 360 Phil. 527 (1998). In this case, the LA found the employee's dismissal unjustified and ordered his

reinstatement with full backwages. The NLRC found the termination legal, but ordered the employer to pay
employee wages from the filing of the appeal with the NLRC until its promulgation of the decision. The Court
held that under Art. 223, the reinstatement aspect of the LA's decision, albeit under appeal, was
immediately enforceable as a consequence of which, the employer was duty-bound to choose forthwith
whether to re-admit the employee or to reinstate him in the payroll and to inform the employee of his choice
to enable the latter to act accordingly. Failing to exercise the options in the alternative, the employer must
pay the employee's salary which automatically accrued from notice of the LA's order of reinstatement until
its ultimate reversal by the NLRC.
18 G.R. No. 164856, January 20, 2009, 576 SCRA 479.

18 G.R. No. 164856, January 20, 2009, 576 SCRA 479.


19 Revised Rules on Evidence, Rule 131, Sec. 3 (m).
20 Gatmaitan v. Gonzales, G.R. No. 149226, June 26, 2006, 492 SCRA 591, 604.
21 Id., citing Fernando v. Sto. Tomas, 234 SCRA 546, 552 (1994).

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